· 2020-07-30 · THIS PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE...

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PRELIMINARY OFFICIAL STATEMENT DATED JULY 28, 2020

New Issue – Book Entry Only Ratings: Moody’s: “Aa2” S&P: “AA”

(See “RATINGS” herein.)

In the opinion of Dinsmore & Shohl, LLP, Bond Counsel, under existing law, (i) interest on the Bonds is not excludible from the gross income of the holders thereof for purposes of federal income taxation, and (ii) interest on the Bonds is exempt from Kentucky income taxation and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and any of its political subdivisions, all subject to the qualifications described herein under the heading “TAX STATUS.”

$33,190,000† LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT

PUBLIC FACILITIES CORPORATION TAXABLE PROJECT REFUNDING BONDS, SERIES 2020

(LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT GENERAL OBLIGATION)

Dated: Date of Delivery Due: September 1, as shown on inside front cover

The above-captioned Series 2020 Bonds (the “Bonds”) of the Lexington-Fayette Urban County Government Public Facilities Corporation (the “Corporation”), will be sold pursuant to a competitive sale as provided in the Official Terms and Conditions of Bond Sale included in Appendix G hereto. The Bonds will be available for purchase in denominations of $5,000 or any integral multiple thereof, and will pay interest on each March 1 and September 1, commencing March 1, 2021 and will bear interest and mature on the dates and in the amounts set forth on the inside cover page. The Bonds will be subject to redemption prior to maturity, as described herein. See “THE BONDS – Redemption of the Bonds.”

The Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entry form and individual purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased. Purchases of the Bonds may be made only in book-entry form by credit on the books of DTC as described herein. See “THE BONDS – Book-Entry Only System” and Appendix F.

The Bonds are being issued pursuant to the Act, the Bond Resolution of the Corporation, the Approving Ordinance of the Lexington-Fayette Urban County Government (each as defined herein), and a Trust Indenture, dated as of August 1, 2020 (the “Trust Indenture”), between the Corporation and The Huntington National Bank, as Trustee (the “Trustee”). The Bonds are being issued by the Corporation, at the request of the Lexington Center Corporation (“LCC”) to (i) refund a portion of the debt service with respect to the Series 2018 Revenue Bonds (as defined herein); (ii) refund a portion of the debt service with respect to the Series 2018A Senior Transient Room Tax Bonds (as defined herein), (iii) fund capitalized interest with respect to the Bonds, and (iv) pay expenses and costs incurred in connection with the issuance of the Bonds. This debt restructuring is intended to mitigate the collateral effects of the COVID-19 Pandemic on the revenues of LCC (see “IMPACT OF THE COVID-19 PANDEMIC” herein). See “THE PLAN OF REFUNDING” herein for additional information regarding the deferral of debt service payments with respect to the Series 2018 Revenue Bonds and the Series 2018A Senior Transient Room Tax Bonds.

The Bonds will be secured by (1) the general obligation pledge of the Lexington-Fayette Urban County Government to make rental payments (the “Lease Rental Payments”) to the Corporation pursuant to the Lease Agreement, dated as of August 1, 2020 (the “2020 Lease Agreement”), by and between the Corporation, as lessor, and the Lexington-Fayette Urban County Government, as the lessee; (2) a pledge of all of the Corporation’s right, title and interest in various funds and accounts under the Trust Indenture; and (3) a subordinated pledge of the revenues of LCC (“LCC Revenues”), which generally consist of (a) money derived under several key contracts, described herein and (b) non-operating revenues, as determined in accordance with generally accepted accounting principles, plus gifts, bequests, contributions, grants, donations and all investment income (see “SECURITY FOR THE BONDS”). THE OBLIGATION OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT CREATED BY THE 2020 LEASE AGREEMENT CONSTITUTES A FULL GENERAL OBLIGATION OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, AND THE FULL FAITH, CREDIT AND REVENUE OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT ARE PLEDGED FOR THE PROMPT PAYMENT OF THE LEASE RENTAL PAYMENTS. See “SECURITY FOR THE BONDS.”

The Bonds are offered when, as and if issued, subject to the approval of legality by Dinsmore & Shohl LLP, Cincinnati, Ohio, Bond and Disclosure Counsel. Certain legal matters have been passed upon for LCC by Dinsmore & Shohl LLP, Lexington, Kentucky. It is expected that the Bonds will be available for delivery on or about August 20, 2020.

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

BAIRDFinancial Advisor

∗Preliminary; subject to change. †Preliminary; subject to Permitted Adjustment (as defined in Appendix G hereto).

MATURITY SCHEDULE∗

$33,190,000*† LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT



Year (September 1) Amount*†

Interest Rate Yield Price CUSIP+

Serial Bonds 2049 $6,120,000 2050 6,365,000 2051 6,625,000 2052 6,900,000 2053 7,180,000

$33,190,000

∗ Preliminary; subject to change. † Preliminary; subject to Permitted Adjustment (as defined in Appendix G hereto). + CUSIP (Committee on Uniform Security Identification Procedures) is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association by S&P Global Markets Intelligence, a part of S&P Global Inc. The CUSIP numbers listed are being provided solely for the convenience of the holders only at the time of issuance of the bonds, and the Corporation does not make any representations with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the bonds as a result of various subsequent actions, including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the bonds.

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT PUBLIC FACILITIES CORPORATION

Board of Directors

Linda Gorton, President and Director Steve Kay, Vice President and Director

William O'Mara, Secretary, Treasurer and Director

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT

Mayor Linda Gorton

Council Members at Large Steve Kay (Vice Mayor)

Chuck Ellinger II Richard Moloney

Council Members by District

1st District James Brown

5th District Bill Farmer, Jr.

9th District Jennifer Mossotti

2nd District

Josh McCurn 6th District

Angela Evans 10th District

Amanda Mays Bledsoe

3rd District Mark Swanson

7th District Preston Worley

11th District Jennifer Reynolds

4th District

Susan Lamb 8th District

Fred Brown 12th District

Kathy Plomin

Commissioner of Finance William O'Mara

Clerk of the Lexington-Fayette Urban County Council Abigail Allan

TRUSTEE The Huntington National Bank, Cincinnati, Ohio

FINANCIAL ADVISOR TO THE CORPORATION

Robert W. Baird & Co. Incorporated, Louisville, Kentucky

MUNICIPAL ADVISOR TO LCC Commonwealth Economics Partners, LLC, Lexington, Kentucky

BOND AND DISCLOSURE COUNSEL Dinsmore & Shohl LLP, Cincinnati, Ohio

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LEXINGTON CENTER CORPORATION Board of Directors

Bob Elliston Chair Ray Ball Vice-Chair Deidre Lyons Secretary Bill Farmer, Jr. Treasurer Ann Bakhaus Member Thomas Gaines Member Karen Hill Member Edward Holmes Member Steve Kay Member Patrick Madden Member P.G. Peeples Member Rev. Willis Polk Member Holly Wiedemann Member

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REGARDING USE OF THIS OFFICIAL STATEMENT

This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the Lexington-Fayette Urban County Government Public Facilities Corporation. No dealer, broker, salesman or other person has been authorized by the Corporation or the Lexington-Fayette Urban County Government to give any information or to make any representation, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Lexington-Fayette Urban County Government. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The information and expressions of opinion herein are subject to change without notice. Neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Corporation or the Lexington-Fayette Urban County Government since the date hereof.

Upon issuance, the Bonds will not be registered by the Corporation or the Lexington-Fayette Urban County Government under any federal or state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity or agency except the Corporation and the Lexington-Fayette Urban County Government will have, at the request of the Lexington-Fayette Urban County Government, passed upon the accuracy or adequacy of this Official Statement or approved the Bonds for sale.

All financial and other information presented in this Official Statement has been provided by the Corporation and the Lexington-Fayette Urban County Government from its records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the Corporation and the Lexington-Fayette Urban County Government. No representation is made that past experience, as is shown by that financial and other information, will necessarily continue or be repeated in the future.

Insofar as the statements contained in this Official Statement involve matters of opinion or estimates, even if not expressly stated as such, such statements are made as such and not as representations of fact or certainty, no representation is made that any of such statements have been or will be realized, and such statements should be regarded as suggesting independent investigation or consultation of other sources prior to the making of investment decisions. Certain information may not be current; however, attempts were made to date and document sources of information. Neither this Official Statement nor any oral or written representations by or on behalf of the Corporation or the Lexington-Fayette Urban County Government preliminary to sale of the Bonds should be regarded as part of the Corporation's contract with the successful bidder or the holders from time to time of the Bonds.

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References herein to provisions of Kentucky law, whether codified in the Kentucky Revised Statutes (“KRS”) or uncodified, to the provisions of the Constitution of the Commonwealth of Kentucky (the “Kentucky Constitution”), or to the Corporation or the Lexington-Fayette Urban County Government’s ordinances or resolutions, as applicable, are references to such provisions as they presently exist. Any of these provisions may from time to time be amended, repealed or supplemented.

As used in this Official Statement, “debt service” means principal of, interest and any premium on, the obligations referred to; and “Commonwealth,” “Kentucky,” or “State” or means the Commonwealth of Kentucky. All capitalized terms used, but not otherwise defined herein shall have the meanings set forth in the Trust Indenture and/or the 2020 Lease (each as defined herein under “INTRODUCTION – Authority for the Issue”).

Certain statements in this Official Statement are forward-looking statements that are based on expectations, estimates, projections, or assumptions. When used in this Official Statement, the words “estimate,” “intend,” “project” or “projection,” “expect” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties, some of which are discussed herein, that could cause actual results to differ materially from those contemplated in such forward-looking statements. Investors and prospective investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Official Statement. Any forward-looking statements are made as of the date of this Official Statement, neither the Corporation, the Lexington-Fayette Urban County Government nor LCC undertake any obligation to update such statements to reflect subsequent events or circumstances. Actual results could differ materially from the anticipated results. See, in particular, the discussion under the caption “IMPACT OF THE COVID-19 PANDEMIC” herein.

The Corporation has deemed this Preliminary Official Statement, dated July 28, 2020, to be near final for the purposes of Securities and Exchange Commission Rule 15c2-12(b)(1), except for certain information on the cover page and herein, which has been omitted in accordance with such Rule and will be supplied with the final Official Statement.

The information presented herein regarding the COVID-19 Pandemic and its impact is current as of the date of this Official Statement. Due to the evolving nature of the circumstances described herein it is very likely that those circumstances will continue to change and unless those changes are material to the Corporation, the Lexington-Fayette Urban County Government and/or LCC, the Lexington-Fayette Urban County Government does not anticipate providing information regarding such changes. In the event that any change in circumstances or facts are material to the Corporation, the Lexington-Fayette Urban County Government and/or LCC, the Lexington-Fayette Urban County Government will supplement this Official Statement as required.

[Remainder of page intentionally left blank]

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TABLE OF CONTENTS

REGARDING USE OF THIS OFFICIAL STATEMENT ............................................................ iii INTRODUCTION .......................................................................................................................... 1

Background ................................................................................................................................. 1 Impact of the COVID-19 Pandemic ........................................................................................... 2 Purpose of the Issue .................................................................................................................... 3 Authority for the Issue ................................................................................................................ 4

THE CORPORATION ................................................................................................................... 4 LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT ................................................. 5

General ........................................................................................................................................ 5 Impact of the COVID -19 Pandemic .......................................................................................... 5 Organization ................................................................................................................................ 8 Financial Management .............................................................................................................. 10 Cash Management and Investment Policy ................................................................................ 11 Debt Limitation ......................................................................................................................... 13 Tax Limitation .......................................................................................................................... 14 Bond Anticipation Notes........................................................................................................... 14 Future Borrowings of the Lexington-Fayette Urban County Government ............................... 14

LEXINGTON CENTER CORPORATION ................................................................................. 15 General ...................................................................................................................................... 15 Impact of the COVID-19 Pandemic ......................................................................................... 15 The Property.............................................................................................................................. 20

THE BONDS ................................................................................................................................ 21 General ...................................................................................................................................... 21 Book-Entry Only System .......................................................................................................... 21 Registration, Payment and Transfer .......................................................................................... 21 Redemption ............................................................................................................................... 22

PURPOSE AND PLAN OF REFUNDING .................................................................................. 24 Purpose ...................................................................................................................................... 24 Plan of Refunding ..................................................................................................................... 25

SOURCES AND USES OF FUNDS ............................................................................................ 26 SECURITY FOR THE BONDS ................................................................................................... 26

General ...................................................................................................................................... 26 General Obligation Pledge with respect to the Lease Rental Payments ................................... 26 Funds and Accounts under the Trust Indenture ........................................................................ 28 Subordinate Pledge of LCC Revenues ...................................................................................... 28

INVESTMENT CONSIDERATIONS ......................................................................................... 29 General ...................................................................................................................................... 29 Cybersecurity ............................................................................................................................ 29 Impact of the COVID-19 Pandemic ......................................................................................... 30

SUMMARY OF THE 2020 LEASE AGREEMENT ................................................................... 30 Lease of Leased Premises ......................................................................................................... 30 Lease Rental Payments ............................................................................................................. 30 General Obligation Pledge ........................................................................................................ 31 Title ........................................................................................................................................... 31 Events of Default ...................................................................................................................... 31

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Remedies ................................................................................................................................... 32 SUMMARY OF THE TRUST INDENTURE ............................................................................. 33

Funds and Accounts .................................................................................................................. 33 Investment of Funds .................................................................................................................. 34 General Covenants .................................................................................................................... 34 Amendments ............................................................................................................................. 35 Events of Default ...................................................................................................................... 36 Remedies ................................................................................................................................... 36

LITIGATION ................................................................................................................................ 37 TAX MATTERS ........................................................................................................................... 37

State Tax Matters ...................................................................................................................... 37 Federal Tax Matters .................................................................................................................. 37

General .................................................................................................................................. 37 Tax Status of the Bonds ........................................................................................................ 39 Interest................................................................................................................................... 39 Original Issue Discount Income............................................................................................ 39 De Minimis OID ................................................................................................................... 41 Constant Yield Election ........................................................................................................ 41 Market Discount.................................................................................................................... 41 Acquisition Premium; Amortizable Bond Premium ............................................................. 42 Sale, Exchange, Retirement, or Other Taxable Disposition of Bonds .................................. 43 Defeasance or Material Modification ................................................................................... 43 Medicare Tax ........................................................................................................................ 43 Backup Withholding and Information Reporting ................................................................. 44

CONTINUING DISCLOSURE .................................................................................................... 45 General ...................................................................................................................................... 45 Compliance with Previous Undertakings.................................................................................. 45

RATINGS ..................................................................................................................................... 48 UNDERWRITING ....................................................................................................................... 49 FINANCIAL ADVISOR .............................................................................................................. 49 CONCLUDING STATEMENT ................................................................................................... 50

APPENDICES

APPENDIX A Estimated Debt Service Requirements for Outstanding General Obligation Bonds, including the Bonds

APPENDIX B Comprehensive Annual Financial Report of the Lexington-Fayette Urban County Government for the Fiscal Year Ended June 30, 2019

APPENDIX C Lexington-Fayette Urban County Government Statement of Indebtedness APPENDIX D Form of Opinion of Bond Counsel APPENDIX E Form of Continuing Disclosure Certificate APPENDIX F Book-Entry Only System APPENDIX G Official Terms and Conditions of Bond Sale




INTRODUCTION

The purpose of this Official Statement, which includes the cover page and Appendices hereto, is to set forth certain information pertaining to the issuance by the Lexington-Fayette Urban County Government Public Facilities Corporation (the “Corporation”) of the above-referenced bonds (the “Bonds”). The Lexington-Fayette Urban County Government, an urban county government and political subdivision (the “Lexington-Fayette Urban County Government”) of the Commonwealth of Kentucky (the “Commonwealth”), has directed the Corporation to act as its agency, instrumentality and constituted authority in connection with such issuance for the benefit of the Lexington Center Corporation (“LCC”), also an agency, instrumentality and constituted authority of the Lexington-Fayette Urban County Government.

Background

LCC owns and operates the Central Bank Center, which includes certain arena and convention facilities consisting of Rupp Arena (home of the University of Kentucky Men’s Basketball Team), the Lexington Convention Center, and other appurtenances and related improvements (collectively, the “Central Bank Center”). See “LEXINGTON CENTER CORPORATION – The Property” herein. At the request of LCC and the Lexington-Fayette Urban County Government in order to finance a portion of the costs of the acquisition, construction and equipping of improvements to and expansion of the Central Bank Center (the “Project”), the Kentucky Bond Development Corporation issued its:

(i) Convention Facilities Revenue Bonds, Series 2018 (Lexington Center Corporation Project) dated October 16, 2018, issued in the original principal amount of $110,855,000 (the “Series 2018 Revenue Bonds”); and

(ii) Transient Room Tax Revenue Bonds, Series 2018A (Lexington Center Corporation Project), dated October 16, 2018, issued in the original principal amount of $83,605,000 (the “Series 2018A Senior Transient Room Tax Bonds”); and

(iii) Transient Room Tax Revenue Bonds, Subordinate Series 2018B (Lexington Center Corporation Project), dated October 16, 2018, issued in the original principal amount of $13,460,000 (the “Series 2018B Subordinate Transient Room Tax Bonds” and together with the Series 2018A Senior Transient Room Tax Bonds, the “Series 2018 Transient Room Tax Bonds”).

*Preliminary; subject to Permitted Adjustment (as defined in Appendix G hereto).†Preliminary; subject to change.

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The Series 2018 Revenue Bonds are secured by a pledge of certain revenues of LCC (the “LCC Revenues”)1, and the Series 2018 Transient Room Tax Bonds are secured by receipts from certain transient room taxes assessed by the Lexington-Fayette Urban County Government (the “Transient Room Tax”)2.

Impact of the COVID-19 Pandemic

General. The outbreak of a novel strain of coronavirus that can result in a severe respiratory disease, referred to as COVID-19, was first detected in China in December 2019. COVID-19 has since spread across the world, resulting in the death of more than 500,000 people internationally3 and more than 127,000 people in the United States4. In March 2020, the outbreak of COVID-19 was declared a pandemic (the “COVID-19 Pandemic”) by the World Health Organization, as well as a U.S. national emergency and a statewide emergency in the Commonwealth. The responses of governments, business and individuals to the COVID-19 Pandemic have caused widespread and significant changes in economic activity. Certain sectors of the global, national and local economies are experiencing negative effects due to reduced consumer spending and increased unemployment, as well as government mandated and voluntary responses to mitigate the COVID-19 Pandemic, including school and business closures, event cancellations and reduced travel. Unemployment in the United States and in the Commonwealth has dramatically increased as a result of the COVID-19 Pandemic. There can be no assurances as to the materiality, severity and duration of the negative economic conditions caused by the COVID-19 Pandemic.

Impact on the Commonwealth. On March 18, 2020, pursuant to an executive order issued by the Governor of the Commonwealth, Andy Beshear, all businesses that encourage public congregation, such as entertainment, recreational, and sporting event facilities, were required to cease operations. On April 21, 2020, Governor Beshear announced the “Healthy at Work” initiative, a phased plan to reopen the economy of the Commonwealth, based on criteria set by public health experts and advice from industry experts, with progress to be monitored by the Kentucky Department for Public Health. Mayor Linda Gorton of the Lexington-Fayette Urban County Government has stated that she will not seek permission to re-open businesses in Lexington-Fayette County earlier than the rest of the Commonwealth. The Commonwealth is currently in Phase 3 of reopening, which began on June 29, 2020 and includes permission for gatherings of up to 50 people and the reopening of the Kentucky Kingdom amusement park (with extensive precautions) and a limited number of public pools. In response to increases in new cases of COVID-19 in late June and early July 2020, Governor Beshear signed an executive order mandating masks in most public places for 30 days. As of the date hereof, the Central Bank Center has not yet scheduled a date to reopen.

1 As further described herein under “LEXINGTON CENTER CORPORATION – Impact of the COVID-19 Pandemic – Impact on LCC Revenues.”2 As further described herein under “LEXINGTON CENTER CORPORATION – Impact of the COVID-19 Pandemic – Impact on Transient Room Tax Collections.”3 Source: World Health Organization 4 Source: Centers for Disease Control and Prevention

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Financial Impact on LCC. As a result of the COVID-19 Pandemic and the related actions under the state of emergency declared in the Commonwealth, many major events scheduled at the Central Bank Center and other locations within the boundaries of Lexington-Fayette Urban County Government have been cancelled, postponed or rescheduled. These cancellations have resulted in a corresponding decline in the LCC Revenues and in demand for hotel rooms, which in turn has resulted in a decline in receipts from the Transient Room Tax. The Lexington-Fayette Urban County Government has determined that it will be advantageous and in the best interests of the Lexington-Fayette Urban County Government, LCC, and the Corporation to address the current and expected material adverse change in the financial position and results of operations of LCC due to the loss of LCC Revenues and Transient Room Tax receipts by providing for the deferral of certain debt service payments with respect to the Series 2018 Revenue Bonds and the Series 2018 Transient Room Tax Bonds. See also “LEXINGTON CENTER CORPORATION – Impact of the COVID-19 Pandemic” herein.

Purpose of the Issue

At the direction of the Lexington-Fayette Urban County Government, the Corporation has adopted the Bond Resolution (as defined herein), authorizing the issuance of the Bonds, the proceeds of which will be used to:

(a) refund a portion of the debt service payable with respect to the Series 2018 Revenue Bonds, the proceeds of which were used to:

(i) finance a portion of the costs of the Project,

(ii) fund the debt service reserve fund in connection therewith, and

(iii) pay expenses and costs incurred in connection with the issuance thereof; and

(b) refund a portion of the debt service payable with respect to the Series 2018A Senior Transient Room Tax Bonds, the proceeds of which were used to:

(i) finance a portion of the costs of the Project,

(ii) refund certain outstanding notes

(iii) fund the debt service reserve fund in connection therewith, and

(iv) pay expenses and costs incurred in connection with the issuance thereof;

(c) fund capitalized interest with respect to the Bonds through and including March 1, 2023; and

(d) pay the costs of issuance of the Bonds.

(See also “PLAN OF REFUNDING” herein).

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Authority for the Issue

The Bonds are authorized pursuant to KRS Section 58.180 and Sections 273.161 to 273.390, inclusive (collectively, the “Act”), and are being issued in accordance with (i) an authorizing resolution adopted by the Board of Directors of the Corporation on July 7, 2020 (the "Bond Resolution"), in its capacity as an agency, instrumentality and constituted authority of the Lexington-Fayette Urban County Government in connection with such issuance, (ii) an ordinance adopted by the Urban County Council of the Lexington-Fayette Urban County Government (the “Urban County Council”) on July 9, 2020 (the “Approving Ordinance”), approving and ratifying the actions of the Corporation in connection with such issuance, and (iii) a Trust Indenture, dated as of August 1, 2020 (the “Trust Indenture”), by and between the Corporation and The Huntington National Bank, as trustee (the “Trustee”). The Corporation will be obligated to pay the principal of and interest on the Bonds solely from the revenues and funds pledged for their payment as provided in the Trust Indenture and the Lease Agreement, dated as of August 1, 2020 (the “2020 Lease Agreement”), between the Corporation, as lessor, and the Lexington-Fayette Urban County Government as the lessee. Prior to issuance and delivery of the Bonds, copies of the Trust Indenture and the 2020 Lease Agreement may be obtained at the office of Dinsmore & Shohl LLP, Cincinnati, Ohio.

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This Official Statement should be considered in its entirety, and no one subject discussed should be considered more or less important than any other by reason of its location in the text. Reference should be made to laws, reports or other documents referred to in this Official Statement for more complete information regarding their contents.

THE CORPORATION

The Lexington-Fayette Urban County Government Public Facilities Corporation is a nonprofit, no-stock public and governmental corporation organized and existing under the laws of the Commonwealth, including particularly KRS Section 58.180 and Sections 273.161 to 273.390, inclusive.

The Corporation’s principal purpose is to act as an agency and instrumentality of the Lexington-Fayette Urban County Government in the planning, promotion, development, financing and acquisition by the Corporation for and on behalf of the Lexington-Fayette Urban County Government of certain public improvements and public projects for the Lexington-Fayette Urban County Government which may properly be undertaken by the Lexington-Fayette Urban County Government pursuant to the general statutory laws of the Commonwealth, including KRS Chapter 58.

Any bonds or other indebtedness issued or contracted by the Corporation for or on behalf of the Lexington-Fayette Urban County Government shall, prior to the issuance thereof or incurrence thereon, be specifically approved by the Lexington-Fayette Urban County Government, acting by and through its Lexington-Fayette Urban County Council as its duly authorized and empowered governing body.

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The Corporation is governed by a board of directors composed of not less than three nor more than seven directors, consisting of the individuals from time to time holding the offices of the Mayor, Vice-Mayor and Commissioner of Finance of the Lexington-Fayette Urban County Government, and such additional individuals, not exceeding three, as may be appointed by the Mayor with the advice and consent of the Urban County Council to serve as directors of the Corporation and who shall serve, and may be removed at the pleasure of the Mayor.

The current members of the Board of Directors of the Corporation are the Mayor, the Vice-Mayor and the Commissioner of Finance. Their terms expire when they cease to hold the office and any successor members of the Urban County Council, and the Mayor, automatically become members of the Board of Directors of the Corporation upon assuming their public offices.

Additional information regarding the Corporation, including certain financial information and information regarding outstanding obligations, is set forth in Appendix B hereto.

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT General

The Lexington-Fayette Urban County Government is an urban county government created from the merger of the City of Lexington and the County of Fayette in 1974 and operates pursuant to KRS Chapter 67A. The Lexington-Fayette Urban County Government operates under a Mayor-Council form of government where executive and administrative functions are vested with the Mayor and legislative authority is vested with the Urban County Council.

Impact of the COVID -19 Pandemic

Employment. Due to business closures and reductions in service resulting from the mitigation measures taken in response to the COVID-19 Pandemic, over 25% of the population of Fayette County has filed unemployment claims. Based on statewide data for continued claims and preliminary county unemployment data, the April unemployment rate in Fayette County is more than four times greater than in February 2020 and the preliminary unemployment rate for May 2020 is still higher than Fayette County’s Great Recession peak of 8.8%. The April 2020 unemployment rate of 14.1% and preliminary May 2020 unemployment rate of 9.1% do not include reduced hours, so the actual number of unemployed or underemployed is likely much higher. The labor force in Lexington has also decreased by more than 1% in the first quarter of 2020, while in prior years the labor force has expanded or grown by the same amount or larger during this period of the year. On a positive note, many of the furloughs of Lexington-Fayette Urban County Government employees were offset by individuals using their own paid time. Additionally, the Lexington-Fayette Urban County Government estimated that over $300 million in Paycheck Protection Program (“PPP”) loans were made to Lexington businesses, providing a payroll withholding benefit of $7-8 million dollars.

Budget Impact. Prior to the impact of the COVID-19 Pandemic on the economy, the Lexington-Fayette Urban County Government budget was trending positively. The Lexington-Fayette Urban County Government encumbered positive balances in operating accounts totaling $3.4 million. The Lexington-Fayette Urban County Government extended its existing hiring freeze to most positions. These changes have generated significant expense savings to offset significant revenue declines during the last three months of FY 2020. The Lexington-Fayette Urban County Government has been able to spend approximately $5 million less per month than planned, which

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has resulted in revenues exceeding expenses through May in spite of revenue shortfalls related to the COVID-19 Pandemic. The Urban County Council budgeted the use of $2 million of budget stabilization funding from the fund balance in the FY 20 budget, which is still available for use if needed. Concurrently, the Lexington-Fayette Urban County Government is applying for available CARES Act5 relief funds to offset its FY 2020 expenses through the Kentucky Department of Local Government.

The Lexington-Fayette Urban County Government is anticipating a 7% reduction in revenues in FY 21 from last year’s budget. The total reduction is $27 million and primarily driven by 10-17% decreases in payroll withholdings and net profits. In order to balance the budget, the Lexington-Fayette Urban County Government has used the following funds: $9.0 million from the budget stabilization (a fund balance assignment), $3.0 million from the Parks Acquisition fund, $4.0 million reduction in risk insurance transfer, $200,000 from a dormant Tenant Relocation Funding, and $20.0 million from the Economic Contingency (as further described herein under “LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT - Financial Management”). The Commonwealth has allocated $25 million of CARES Act funding to the Lexington-Fayette Urban County Government and the Urban County Council has already committed to replenishing $6.4 million in the Economic Contingency. The Lexington-Fayette Urban County Government does not anticipate the need for short-term cash flow borrowing in FY 2021.


5 The “CARES Act” refers to the federal legislation known as the Coronavirus, Relief and Economic Security Act which was enacted into law on March 27, 2020. The CARES Act established the $150 billion Coronavirus Relief Fund whereby payments will be made to states and eligible units of local governments. Under the CARES Act, payments made from the Coronavirus Relief Fund may only be used to cover costs that (a) are necessary expenditures incurred due to the public health emergency with respect to COVID-19, (b) were not accounted for in the budget most recently approved as of March 27, 2020, and (c) are expenditures that were incurred from March 1, 2020 through December 30, 2020.

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The following Table 1 provides a comparison of actual and budgeted amounts for revenues and expenses for the eleven months ended May 31, 2020.

Actuals Budget Variance % Var Revenues

Payroll Withholding $190,380,333 $191,653,431 ($1,273,098) -0.7% Net Profit 25,898,089 38,432,812 (12,534,723) -32.6% Insurance 34,949,067 35,684,638 (735,571) -2.1% Franchise Fees 23,593,835 24,620,954 (1,027,119) -4.2% Other Licenses & Permits 4,996,017 4,970,260 25,757 0.5% Property Tax Accounts 25,597,398 25,730,043 (132,646) -0.5% Services 23,044,578 22,747,009 297,569 1.3% Fines and Forfeitures 171,440 238,517 (67,077) -28.1% Intergovernmental Revenue 386,652 377,957 8,695 2.3% Property Sales 80,592 137,500 (56,908) -41.4% Investment Income 1,187,376 1,038,383 148,993 14.3% Other Income 2,862,330 2,710,738 151,592 5.6%

Total Revenues $333,147,706 $348,342,241 ($15,194,535) -4.4% Expenses

Personnel 213,484,682 218,497,892 5,013,210 2.3% Operating 38,374,831 49,609,978 11,235,147 22.6% Insurance Expense 8,493,015 8,467,741 (25,274) -0.3% Debt Service 44,740,327 44,757,694 17,367 0.0% Partner Agencies 19,590,874 20,890,323 1,299,449 6.2% Capital 305,336 522,848 217,512 41.6%

Total Expenses $324,989,065 $342,746,476 $17,757,411 5.2% Transfers 5,215,164 5,833,211 618,047 96.5% Change in Fund Balance $2,943,477 ($237,446) $3,180,923

________ Source: Lexington-Fayette Urban County Government (Unaudited amounts prepared on a modified accrual basis.)


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The following Table 2 provides a comparison of actual amounts for revenues and expenses for the eleven months ended May 31, 2020 and May 31, 2019, respectively.

FY 2020 FY 2019 Variance % Var Revenue Payroll Withholding $190,380,333 $183,746,109 $6,634,223 3.6% Net Profit 25,898,089 38,634,427 (12,736,338) -33.0% Insurance 34,949,067 33,576,179 1,372,888 4.1% Franchise Fees 23,593,835 22,497,127 1,096,708 4.9% Other Licenses & Permits 4,996,017 5,139,768 (143,751) -2.8% Property Tax Accounts 25,597,398 24,863,672 733,726 3.0% Services 23,044,578 23,696,805 (652,227) -2.8% Fines and Forfeitures 171,440 217,414 (45,974) -21.1% Intergovernmental Revenue 386,652 342,915 43,737 12.8% Property Sales 80,592 219,962 (139,370) -63.4% Investment Income 1,187,376 1,457,588 (270,212) -18.5% Other Financing Sources - 1,284,712 (1,284,712) -100.0% Other Income 2,862,330 3,515,533 (653,202) -18.6% Total Revenues $333,147,706 $339,192,211 ($6,044,504) -1.8%

Expense Personnel $213,484,682 $209,773,532 ($3,711,150) -1.8% Operating 38,374,831 43,470,222 5,095,391 11.7% Insurance Expense 8,493,015 8,287,682 (205,333) -2.5% Debt Service 44,740,327 44,051,251 (689,077) -1.6% Partner Agencies 19,590,874 20,426,025 835,151 4.1% Capital 305,336 906,792 601,456 66.3% Total Expenses $324,989,065 $326,915,503 $1,926,437 0.6%

Transfers 5,215,164 4,637,442 (577,722) -37.9%

Change in Fund Balance $2,943,477 $7,639,266 ($4,695,789) ________ Source: Lexington-Fayette Urban County Government (Audited amounts for FY 2019 and unaudited amounts for FY 2020, prepared on a modified accrual basis.)

Organization

The Mayor is the chief executive officer and is elected to serve a four-year term. The Urban County Council has fifteen members, including twelve members elected from single-member districts in Fayette County who serve two-year terms and three members elected at-large who serve four-year terms. The Vice-Mayor is the at-large member who receives the most votes in the general election. (See page iii hereof for a listing of the incumbent Mayor and members of the Urban County Council.)

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The Mayor is assisted in the administration of the government by department commissioners who are appointed by the Mayor with approval of the Urban County Council. The Lexington-Fayette Urban County Government has seven departments, headed by department commissioners, which are responsible for administering programs and implementing policies. Each department is divided into divisions that are managed by division directors.

The Lexington-Fayette Urban County Government Issuer has 3,208 authorized full-time equivalent positions. Of these positions, 48.3% are police, fire and community correction personnel, and the remaining 51.7% are civil service, non-civil service, appointed or elected positions.

The Department of Finance is responsible for the custody, investment and disbursement of all funds; debt management; retirement fund administration; coordination of the annual financial audit and publication of the Comprehensive Annual Financial Report. This department includes the divisions of Accounting, Community Development, Human Resources, Purchasing, Revenue and Risk Management.

The Department of Public Safety includes the divisions of Police, Fire and Emergency Services, Community Corrections, Emergency Management/E-911 and Code Enforcement.

The Department of Environmental Quality and Public Works is responsible for providing a broad range of public services including solid waste collection and recycling, sanitary sewer conveyance and treatment, stormwater control, street maintenance, and construction design and maintenance. This department is also responsible for developing long-range capital plans for sanitary sewer and stormwater facilities. The divisions in this department include Engineering, Streets, Roads and Forestry, Traffic Engineering, Water Quality, Solid Waste, Environmental Services and Building Inspection.

The Department of Social Services provides human resources services to Fayette County residents including providing assistance to families and children, coordinating a community-wide effort to implement the new welfare reform programs and organizing programs for senior citizens. The divisions in this department include Adult and Tenant Services, Family Services and Youth Services.

The Department of General Services includes the divisions of Facilities and Fleet Management and Parks and Recreation. In addition, the Commissioner’s office oversees the management of the Lexington-Fayette Urban County Government telephone system, utilities, parking facilities and coordinates special events.

The Department of Law provides legal services for the Lexington-Fayette Urban County Government. The Corporate Counsel function prepares all legal instruments for the government and provides advice to its employees and agencies. These activities include managing the preparation of legal opinions, ordinances, resolutions, contracts and other legal documents. The Litigation function represents the Lexington-Fayette Urban County Government in civil cases and lawsuits and coordinates representation of cases handled by outside attorneys.

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Financial Management

The Mayor of the Lexington-Fayette Urban County Government submits a proposed annual operating and a five-year capital improvement budget to the Urban County Council at least sixty days prior to the beginning of the next fiscal year. The Urban County Council, upon receipt of the proposed budget, conducts a series of public hearings on the proposed budget. The Charter of the Lexington-Fayette Urban County Government provides that the Urban County Council may amend the budget; however, the adopted budget shall provide for all expenditures required by law or by other provisions of the Charter and for all debt service requirements. Other budgetary polices include that the budget must be balanced for each fund; total available funds must equal or exceed total anticipated expenditures.

The Urban County Council adopts a line-item budget ordinance and must approve all budget amendments. Budgetary control is maintained at the division level and is facilitated by the use of encumbrance accounting. As purchase orders are issued, corresponding amounts of a division’s appropriations are reserved for later payment. Requests for disbursements which will result in an overrun of budgeted expenditures must be accompanied by a request for a budget amendment. At year-end, open encumbrances are recorded as reservations of fund balance.

The diverse nature of governmental operations requires that the accounting system be organized on a fund or account group basis where each fund is considered a separate accounting entity with a separate set of self-balancing accounts. Resources are allocated to the individual funds based upon the type of activity to be funded. There are four basic fund types used by the Lexington-Fayette Urban County Government: governmental fund types, proprietary fund types, fiduciary fund types, and account groups.

The majority of general governmental operations are financed by the General Fund in the governmental fund type category. In December 1996, the Urban County Council adopted an ordinance which established an Economic Contingency Designation within the General Services District subfund to provide sufficient working capital to address emergency budgetary needs (the “Economic Contingency”). As stated in such ordinance, the ultimate goal of the Lexington-Fayette Urban County Government is to have an Economic Contingency balance of at least five percent of General Fund revenues. At the end of FY 2020, the estimated balance in the Economic Contingency was $36,526,494.

The financial statements of the Lexington-Fayette Urban County Government are prepared in accordance with Generally Accepted Accounting Principles (GAAP). The accounts of general governmental operations are maintained on a modified accrual basis where revenues are recognized in the period in which they become available and measurable, and expenditures are recognized at the time the liability is incurred. Proprietary and Pension Trust Funds are maintained on an accrual basis with all revenues and expenses recognized when transactions occur, regardless of when cash is received or disbursed.

The Charter of the Lexington-Fayette Urban County Government requires that an independent financial audit be conducted annually. Each year an audit is conducted in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. In addition, the audit is also designed to meet the requirements of the federal Single Audit

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Act of 1984, the Single Audit Act Amendment of 1996, and related OMB circular A33. The most recent annual audit for FY 2019 is attached hereto as Appendix B.

Cash Management and Investment Policy

The Department of Finance is responsible for the custody, investment and disbursement of all funds of the Lexington-Fayette Urban County Government in accordance with state law (KRS Section 66.480) and the procedures and standards adopted by the Urban County Council. It is the policy of the Lexington-Fayette Urban County Government to invest funds in a manner which will provide the highest investment return with the maximum security of principal while meeting the daily cash flow demands of the Lexington-Fayette Urban County Government. In order to ensure liquidity and reduce market and maturity risk, weekly, monthly, and annual cash flow forecasts are developed.

The funds of the Lexington-Fayette Urban County Government may be invested in the following types of investment instruments (collectively, the “Investment Obligations”):

A. Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, provided that delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian;

B. Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency, including but not limited to:

(i) United States Treasury; (ii) Export-Import Bank of the United States; (iii) Farmers Home Administration; (iv) Government National Mortgage Corporation; and (v) Merchant Marine bonds;

C. Obligations of any corporation of the United States government, including

but limited to:

(i) Federal Home Loan Mortgage Corporation; (ii) Federal Farm Credit Banks; (iii) Banks for Cooperatives; (iv) Federal Intermediate Credit Banks; (v) Federal Land Banks; (vi) Federal Home Loan Banks; (vii) Federal National Mortgage Association; and (viii) Tennessee Valley Authority;

D. Certificates of deposit issued by or other interest-bearing accounts of any

bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity or which are collateralized, to the extent uninsured, by any obligations, including surety bonds, permitted by section KRS 41.240(4);

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E. Bankers’ acceptances for banks rated in one (1) of the three (3) highest categories by a nationally recognized rating agency;

F. Commercial paper rated in the highest category by a nationally recognized rating agency;

G. Notes or certificates of indebtedness of the Commonwealth of Kentucky and of its agencies and instrumentalities;

H. Securities issued by a state or local government, or any instrumentality or agency thereof, in the United States, and rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; and

I. Shares of mutual funds, each of which shall have the following characteristics:

(i) The mutual fund shall be an open-end diversified investment company registered under the Federal Investment Company Act of 1940, as amended;

(ii) The management company of the investment company shall have been in operation for at least five (5) years; and

(iii) All of the securities in the mutual fund shall be eligible investments under this section.

Investments in the above instruments are subject to the following conditions and limitations:

A. The combined investments at any one time in the categories of the investments authorized in subsections (E), (F) and (H) (as identified in this subsection) shall not exceed 20 percent of the total invested funds;

B. No investment shall be purchased on a margin or through the use of any similar leveraging technique;

C. Repurchase agreements are to be entered into only with primary dealers. Primary dealers include banks which are members of the Federal Reserve, SEC-registered broker-dealers and those government security dealers included in the “List of Government Securities Dealers Reporting to the Market Reports Division of the Federal Reserve Bank of New York (NY Fed)”. The securities held as collateral for repurchase agreements shall be held in safekeeping by an independent third-party custodian in the name of the Lexington-Fayette Urban County Government. The securities serving as collateral will be marked to market periodically to ensure they have not fallen below the required collateralization level.

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Debt Limitation

Section 158 of the Kentucky Constitution provides that cities shall not incur indebtedness to an amount exceeding the following maximum percentages on the value of the taxable property therein, to be estimated by the last assessment previous to the incurring of the indebtedness:

(a) Cities having a population of fifteen thousand (15,000) or more, ten percent (10%);

(b) Cities having a population of less than fifteen thousand (15,000) but not less than three thousand, five percent (5%); and

(c) Cities having a population of less than three thousand (3,000), three percent (3%).

Nothing shall prevent the issue of renewal notes, or notes to fund the floating indebtedness of any urban county government, county, or taxing district. Subject to the limits and conditions set forth in that section and elsewhere in the Kentucky Constitution, the General Assembly has the power to establish additional limits on indebtedness and conditions under which debt may be incurred by cities.

KRS 66.041 provides the same limitations as are set forth in the Kentucky Constitution except that the limitations apply to “net indebtedness”. In calculating “net indebtedness,” KRS 66.031 provides that certain obligations of a municipality are not to be considered in the calculation, including self-supporting obligations, revenue bonds, and special assessment debt. (For a complete list of exempt debt see the Lexington-Fayette Urban County Government Statement of Indebtedness attached as Appendix C hereto, as further described below.)

Other infrequently-issued types of obligations are also excluded from the calculation of net indebtedness. The Lexington-Fayette Urban County Government has no such obligations outstanding. Notes issued in anticipation of bonds excluded from the calculation of net indebtedness are also excluded from such calculation.

Attached as Appendix C hereto is a Statement of Indebtedness for the Lexington-Fayette Urban County Government, certified by the Commissioner of Finance, calculating the amount of the outstanding obligations of the Lexington-Fayette Urban County Government (including the Bonds), which are subject to the total direct debt limit (10% limit). The total principal amount of general obligation debt that could be issued by the Lexington-Fayette Urban County Government, subject to the 10% total direct debt limitation is $3,321,387,500, and the Lexington-Fayette Urban County Government’s net debt subject to such limitation presently outstanding (including the Bonds) is $478,180,000 leaving a balance of approximately $2,843,207,500 of borrowing capacity issuable within such limitation.∗

However, as described below, the Lexington-Fayette Urban County Government’s ability to incur debt in these amounts is restricted by tax limitations. In the case of general obligation debt, both the debt limitations and tax limitations must be met.

∗ Preliminary; subject to change.

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Tax Limitation

The Kentucky Constitution Section 157 also indirectly imposes a debt limitation on general obligation indebtedness of Cities by limiting the tax rates cities may impose upon the value of taxable property, as follows:

(a) cities having a population of fifteen thousand or more, one dollar and fifty cents on each hundred dollars of assessed value;

(b) cities having a population of less than fifteen thousand and not less than ten thousand, one dollar on each hundred dollars of assessed value; and

(c) cities having a population of less than ten thousand, seventy-five cents on the hundred dollars.

Section 159 of the Kentucky Constitution requires the collection of an annual tax sufficient to pay the interest on contracted indebtedness and to retire indebtedness over a period not exceeding forty years. The two constitutional provisions operate as a limit on general obligation debt. Because the indirect debt limit results from tax limitations and the requirement to levy taxes to pay debt charges, it has application only to debts which are payable from taxes either initially or in the event other pledged non-tax revenues prove to be insufficient. It does not have any application where the type of debt being issued does not pledge the credit of the municipality or when the debt is payable solely out of the revenues of non-tax sources, such as utility income.

The Statement of Indebtedness attached as Appendix C hereto, certified by the Lexington-Fayette Urban County Government, sets forth the property tax rate currently levied by the Lexington-Fayette Urban County Government (0.2533 per $100 of assessed valuation, which includes 0.1733 which is dedicated for specific purposes) and certifies that the issuance of the Bonds will not cause such rate to increase to an amount which would exceed the maximum permissible rate.

Bond Anticipation Notes

Under Kentucky law, notes, including renewal notes, issued in anticipation of general obligation bonds may be issued from time to time upon the same terms and conditions as bonds except that notes may be sold by private negotiated sale in a manner determined or authorized by the legislative authority. The Lexington-Fayette Urban County Government does not have any outstanding bond anticipation notes at the present time.

Future Borrowings of the Lexington-Fayette Urban County Government

In the next twelve months, the Lexington-Fayette Urban County Government currently anticipates issuing approximately $7,622,000 of general obligation bonds to support capital improvements.

Additional information regarding Lexington-Fayette Urban County Government, including demographic, economic and financial data is included in Appendix B attached hereto.

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LEXINGTON CENTER CORPORATION

General

LCC was originally incorporated on May 23, 1972 pursuant to KRS Chapters 58 and 273 as a Kentucky nonprofit corporation (under the name of “Bluegrass Center Corporation”), to act as an agency and instrumentality of the City of Lexington and the County of Fayette in the planning, development, construction, acquisition and financing of convention and trade show facilities, sports facilities and related parking facilities pursuant to the enabling statutes and ordinances. LCC operates and manages the Property (as defined below), including the Central Bank Center.

LCC is governed by a board of directors composed of thirteen directors, appointed by the Mayor with the advice and consent of the Urban County Council. The directors serve staggered four-year terms. Directors may be reappointed. The current directors and officers of LCC are identified on page ii of this Official Statement.


Impact on LCC Revenues. The LCC Revenues consist of (a) money derived under several key contracts, described below, (b) non-operating revenues (other than income derived from the sale of assets not in the ordinary course of business or any gain or loss from extinguishment of debt or other extraordinary item), as determined in accordance with generally accepted accounting principles, plus gifts, bequests, contributions, grants, donations and all investment income.

As a result of the COVID-19 Pandemic and the related actions under the state of emergency in the Commonwealth, many major events scheduled at the Central Bank Center and other locations within the boundaries of the Lexington-Fayette Urban County Government have been cancelled, postponed or rescheduled. The event cancellations include state high school and NCAA basketball games and tournaments to be held at Rupp Arena in March. The resulting loss in operating revenues due to the cancellation of scheduled events in all venues is estimated to be approximately $4 million by December 31, 2020. Nearly a quarter of such lost revenues may be recovered through the tentative rescheduling of certain events to a future date, but future event cancellations may also occur as a collateral result of the COVID-19 Pandemic and its duration.

A significant portion of the LCC Revenues are derived from three contracts: (i) Facility Right of Use Agreement, dated February 7, 2018 (the “Facility Use Agreement”), with the University of Kentucky (the “University”); (ii) a Lexington Convention Center Renovation and Cooperative Funding Agreement, dated September 20, 2018 (the “Cooperative Funding Agreement”), with the Lexington Convention and Visitors Bureau d/b/a “Visit Lex” (“Visit Lex”); and (iii) an Amended and Restated Hotel Lease, dated May 22, 1996 (the “Hotel Lease”), with TPG Lexington, LLC. Each contract and recent actions taken to address the impact of the COVID-19 Pandemic are discussed in further detail below.

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(a) The Facility Use Agreement. The Facility Use Agreement commits the University’s men’s basketball team to playing all of its scheduled home games at Rupp Arena (“Arena”) (at least sixteen (16) annually) for the next thirteen (13) years. The men’s basketball team has played all of its home games at the Arena since 1976. In addition to the men’s basketball games, the Facility Use Agreement also allows the University to conduct several additional athletic events at the Arena (twenty-eight (28) annually), including three (3) men’s basketball pre-season events and several women’s basketball games. The University will also continue to conduct three (3) commencement events at the Arena.

Payments made by the University to LCC under the Facility Use Agreement arise out of several sources. The annual base payment for the twenty-eight (28) annual University Events will be $1,900,000.00 (the “Base Payment”). The Base Payment of $1,600,000 (Base Payment less $300,000.00, which shall remain un-indexed) will increase by 2.4% each year during the term of the Facility Use Agreement. The Base Payment will be paid in (almost) equal installments on September 30, December 31 and June 30 of each year.

Part of the Project includes the construction of four (4) Club Suites to be utilized by the University during University events. Three (3) of the Club Suites are designated as “Critical Suites” under the Facility Use Agreement. Until one or more of the Critical Suites are completed and available for use by the University, the Base Payment under the Facility Use Agreement shall be $300,000.00 per year. As each Critical Suite is completed, the Base Payment under the Facility Use Agreement will be increased by a pro-rata amount based on the patron capacity of the completed Critical Suites, indexed to inflation via the formula described above. It is anticipated that the three (3) Critical Suites will be available for use by the University for the beginning of the men’s basketball season of 2020-2021.

In addition to the Base Payment, the University may request to use the Arena for additional University-Sponsored Events on an “as available” basis. The University shall pay for these additional events on a “per event” basis at the rate of $37,570.00 per event, which rate shall increase annually by 2.4%.

Under the Facility Use Agreement, the University has acquired the Facility-Media Rights allowing the University to market signage and other sponsorship rights for University-Sponsored Events and other events held at the Arena. The University is required to pay LCC an annual payment of $4,750,000.00 for these media rights. Should the University receive annual gross revenues of at least $7,250,000.00 through its sale of the media rights, then LCC receives twenty-five (25%) percent of the annual media rights revenues above that amount.

LCC will also receive fifteen (15%) percent of the gross revenues less sales taxes from the University’s sale of programs, novelties and merchandise. LCC also controls and receives the revenues from all food and beverage concessions sold during any University-Sponsored Event.

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The University, pursuant to the terms of the Facility Use Agreement, has marketed the naming rights to the facility which houses the Lexington Convention Center and Rupp Arena to Central Bank & Trust Company and those facilities are now known as Central Bank Center and Rupp Arena at Central Bank Center. The naming rights fee, payable by the University to LCC, is $750,000.00 annually. The University is also required to pay LCC for parking privileges in LCC’s parking lot(s) during University-Sponsored Events. The amount to be paid under the Facility Use Agreement is based on market rates for comparable parking spaces in the area of the Arena, which amount is to be determined on an annual basis.

To date, the LCC Revenues related to the Facility Use Agreement have not been negatively impacted by the COVID-19 Pandemic. Payments due to LCC since the closure of the Central Bank Center in March 2020 have been made on a timely basis. It is not possible to predict whether such portion of the LCC Revenues will be negatively impacted by the COVID-19 Pandemic in the future.

(b) Cooperative Funding Agreement with Visit Lex. Visit Lex is an instrumentality of the Lexington-Fayette Urban County Government, governed by a seven-person Commission, whose mission is to market and promote the Bluegrass Region to visitors and tourists. Visit Lex has provided funds to the LCC in the past to assist with paying the financing costs for previous renovations to the Central Bank Center. LCC and Visit Lex each have an advisory member on the other’s governing board. The primary source of income for Visit Lex is derived from the Transient Room Tax collected by the LFUCG.

Pursuant to the Cooperative Funding Agreement, Visit Lex committed to contributing the sum of $750,000.00 annually, payable to LCC in monthly installments of $62,500.00. The Cooperative Funding Agreement is for an initial term of sixty-six (66) months and automatically renews for four (4) successive terms of five (5) years each and for a sixth (6th) and final fifty-four (54) month term, for a total of thirty (30) years.

Due to the significant loss of Transient Room Tax revenues caused by the COVID-19 Pandemic, Visit Lex and LCC have agreed to the deferral of a portion of the Visit Lex contributions to LCC for a three (3) year period, in the amount of $1,650,000.00 (the “Deferred Contribution”). Upon the issuance of the Bonds, Visit Lex will pay a reduced amount for the next three (3) years to LCC. Visit Lex will contribute the sum of $97,500.00 annually, payable to LCC in monthly installments of $8,125.00, during the period from July 1, 2020 to June 30, 2022, increasing to $405,000.00 annually, payable to LCC in monthly installments of $33,750.00, during the period from July 1, 2022 – June 30, 2023. Commencing July 1, 2023, Visit Lex will (i) resume contributing the sum of $750,000.00 annually, payable to LCC in monthly installments of $62,500.00 and (ii) begin to repay the Deferred Contribution, together with interest at the approximate rate of 4.25% per annum, by paying an additional monthly amount of approximately $18,098.87 for 120 consecutive months.

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(c) Hotel Lease. The current owner/operator/lessee under the Hotel Lease is TPG Lexington, LLC (“the Hotel Lessee”). The Hotel Lease is in the second 10-year extension (expiring on May 1, 2027) and can be renewed by the Hotel Lessee for four (4) additional 10-year terms (until May 1, 2067). Rental payments of 6% of gross receipts are payable on a monthly basis. Gross receipts are defined as room, food and beverage (including catering) and vending machine revenue but excludes valet, service charges and commissions, proceeds from the sale of personal property or proceeds from insurance. In addition, the Hotel Lease contains an annual fixed rent totaling $130,750.97 which adjusts annually on January 1 through the term of the Hotel Lease for changes in the Consumer Price Index. (The Hotel Lease also provides for the monthly reimbursement of monthly HVAC energy costs incurred by LCC. Energy costs are determined by a third party engineering report and measured through metered BTU results.)

LCC also has a parking agreement associated with the Hotel Lease which terminates upon termination of the Hotel Lease. The parking agreement presently has annual fixed rent of $140,648.52, payable monthly. The annual fixed rent for parking adjusts every three years through the term of the Hotel Lease for changes in the Consumer Price Index.

Pursuant to a First Amendment to Amended and Restated Lease dated May 26, 2020, but effective March 1, 2020, the Hotel Lessee was permitted to defer payment of the fixed monthly rent for a period of six (6) months (March 1, 2020 - August 31, 2020). The rent deferral was in recognition of the significant reduction in hotel room rentals caused by the COVID-19 pandemic. The Hotel Lessee will repay the deferred fixed rent over a 36 month period beginning September 1, 2020, with interest at 3.25% per annum, by paying an additional monthly amount of $4,042.86 through August 1, 2023.

Impact on Transient Room Tax Collections. The Lexington-Fayette Urban County Government assesses the Transient Room Tax at a total rate of 9.50% on the rent charged for occupancy of hotel and motel rooms located within its boundaries. 4.50% of such Transient Room Tax is collected for the benefit of LCC, consisting of 4.00% which is pledged to the payment of debt service with respect to the Series 2018 Transient Room Tax Bonds (the “Pledged Transient Room Tax”) and 0.50% which is remitted by LFUCG to the Commonwealth in connection with a grant related to the Project.

March, April, May, and June are typically busy months for the hotel industry in Lexington-Fayette County. The cancellations mentioned above, along with cancellations of other events such as the spring horse racing events to be held at Keeneland in April, have resulted in a corresponding decline in demand for hotel rooms, which in turn resulted in a decline in receipts from the Transient Room Tax. The following table provides a monthly comparison of the Pledged Transient Room Tax collections for FY 2019 and FY 2020.

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Pledged Transient Room Tax Collected for the Benefit of LCC (4.00% Rate) For Fiscal Years 2019 and 2020 (to date)

Month†

FY 2019 Monthly Totals

(4.00%)

FY 2020 Monthly Totals

(4.00%) July $ 671,724 $ 717,952

August 717,664 703,584 September 728,139 738,321

October 704,857 754,902 November 867,828 948,697 December 605,722 559,633

January 405,111 423,033 February 421,246 433,147

March 463,125 494,801 April 672,940 251,256 May 833,941 109,653 June 764,000 146,129

________ † Amounts reflect collections for the prior month, which are remitted to LCC in the following month. For example, the amount listed for June 2020 represents collections by Lexington-Fayette Urban County Government for May 2020, which were remitted to the Corporation and the Commonwealth in July 2020. Source: Lexington Center Corporation and Lexington-Fayette Urban County Government

Cost Reduction Measures. To offset declines in operating revenues, LCC implemented

several cost reduction measures beginning in March, 2020 including a pay reduction for all non-furloughed full-time employees, a mandatory hiring freeze, elimination of certain maintenance contracts, specific measures to decrease utility consumption, deferrals or cuts in discretionary spending in every area including capital expenditures, and requiring approval by the President/CEO or Chief Financial Officer for any expenditure. In mid-April, LCC furloughed over 100 (86%) of its full-time employees and in early June notified over 50 of those employees that they will be terminated as of August 1, 2020. Additionally, LCC will pursue any and all available opportunities for federal, state, or local aid and options to mitigate the negative impact of COVID-19.

Series 2018B Subordinate Transient Room Tax Bonds. It is anticipated that LCC will receive Transient Room Tax collections in an amount sufficient to pay the debt service payment due on September 1, 2020 with respect to the Series 2018B Subordinate Transient Room Tax Bonds.

Future Developments. While nearly a quarter of the lost LCC Revenues may be recovered through the tentative rescheduling of certain events to a future date, future event cancellations may also occur as a collateral result of the COVID-19 Pandemic and its duration. The resolution of the COVID-19 Pandemic conditions is unknown and the actual return of operating events remains uncertain. Until this becomes clear, LCC management intends to minimize staff and operating costs to essential levels.

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LCC management anticipates that with the new exhibit hall facilities coming on line beginning in October 2020 and a new ballroom and some meeting rooms in May 2021, utilization for the final half of fiscal year 2021 and all of fiscal year 2022 will gain momentum and provide revenues more in line with previous years. Additionally, several concerts and other events in Rupp Arena have rescheduled for calendar year 2021 rather than cancelled.

The Property

LCC holds title to certain property, including (i) the Central Bank Center, which includes Rupp Arena, the Lexington Convention Center (the “Convention Center”), and other appurtenances and related improvements, located in downtown Lexington at 430 West Vine Street, Lexington, Kentucky 40507 and (ii) a renovated historic structure known as the Lexington Opera House, located at 401 West Short Street, Lexington, Kentucky 40507 (together, the “Property”). The Convention Center was constructed in the mid-1970s and subsequently renovated and expanded in the 1990s. The Convention Center is used for conventions, trade shows, sporting events, concerts and theatrical entertainment and by individuals and organizations of the general public who apply to LCC for rental and use of the facilities on a first-come, first served basis. Rupp Arena is used for University of Kentucky (the “University”) men’s basketball games (and for certain women’s basketball games), high school basketball tournaments, graduation ceremonies for the University and local public high schools, concerts, traveling exhibitions, entertainment shows, and other events. Rupp Arena seats approximately 20,545 persons for basketball games and 13,789 to 19,575 persons for concerts, depending on the configuration of the Arena.

2018 Lease Agreement. LCC has leased the land and improvements comprising the Central Bank Center, also referred to herein as the “Leased Premises,” to the Lexington-Fayette Urban County Government under a Lease Agreement, dated as of October 1, 2018 (the “Original 2018 Lease Agreement”), in connection with the issuance of the Series 2018 Revenue Bonds, in consideration of rental payments in amounts sufficient, if the Original 2018 Lease Agreement is renewed for the successive annual renewal terms, to pay the debt service with respect to the Series 2018 Revenue Bonds and other Parity Obligations (as defined therein).

In order to facilitate a subordinate pledge of the LCC Revenues as an additional source of payment for the Bonds, LCC and the Lexington-Fayette Urban County Government will enter into a First Supplemental Lease Agreement, dated as of August 1, 2020 (the “2020 Supplement to the Original 2018 Lease Agreement”), amending and supplementing the Original 2018 Lease Agreement (as amended and supplemented, the “2018 Lease Agreement”). See “SECURITY FOR THE BONDS – Subordinate Pledge of LCC Revenues” herein.

Under the 2018 Lease Agreement, title to the Leased Premises remains with LCC, but the Lexington-Fayette Urban County Government has full possession, control, and operation of the Leased Premises for as long as such 2018 Lease Agreement remains in effect. In addition, provided that the Lexington-Fayette Urban County Government renews the 2018 Lease Agreement for all of its annual terms and does not default thereunder during an annual term, the 2018 Lease Agreement gives the Lexington-Fayette Urban County Government the power to acquire LCC’s interest in and to the Leased Premises, for a nominal charge.

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Ground Lease and 2020 Lease Agreement. In order to facilitate the issuance of the Bonds, the Lexington-Fayette Urban County Government will enter into a Ground Lease Agreement, dated as of August 1, 2020 (the “2020 Ground Lease”) and the 2020 Lease Agreement with the Corporation. Pursuant to the 2020 Ground Lease, the Lexington-Fayette Urban County Government, as ground lessor, will lease its leasehold interest in the Leased Premises to the Corporation, as ground lessee. Pursuant to the 2020 Lease Agreement, the Corporation, as lessor, will lease such leasehold interest to the Lexington-Fayette Urban County Government, in consideration of a general obligation pledge therefrom to pay lease rental payments (the “Lease Rental Payments”) in amounts sufficient to pay the principal of and interest on the Bonds when due. See “SECURITY FOR THE BONDS – General Obligation Pledge” herein.

THE BONDS

General

The Bonds will be dated their date of delivery and will accrue interest from that date as described herein. Interest on the bonds is payable semi-annually on March 1 and September 1 of each year, commencing March 1, 2021. The Bonds will mature on September 1 of each year, in the years and in the principal amounts as set forth on the inside cover page of this Official Statement.

Book-Entry Only System

The Bonds initially will be issued solely in book entry form to be held in the book-entry only system maintained by DTC. So long as such book-entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and Beneficial Owners will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Trust Indenture. For additional information about DTC and the book-entry-only system see Appendix F – “Book-Entry Only System.”

THE INFORMATION IN THIS SECTION AND IN APPENDIX F CONCERNING DTC AND DTC’S BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE CORPORATION AND THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT BELIEVE TO BE RELIABLE, BUT THE CORPORATION AND THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT TAKE NO RESPONSIBILITY FOR THE ACCURACY THEREOF.

Registration, Payment and Transfer

The Bonds are to be issued in denominations of $5,000 and any integral multiple thereof.

All Bonds shall be registered as to both principal and interest on the registration books maintained at the corporate office of the Trustee. No transfer of any Bonds shall be valid unless made on said books at the request of the Registered Owner in person or by his attorney duly authorized in writing, and similarly noted on such Bond. Bonds may be exchanged for Bonds of other authorized denominations upon surrender of the Bonds to be exchanged to the Registrar with a written request for such exchange, duly executed by the Registered Owner thereof or by his duly authorized attorney. The Registrar shall not be required to transfer or exchange any Bond on any date which is after the fifteenth day of the month preceding any interest payment date, or during

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any period beginning 15 days prior to the selection by the Trustee of Bonds to be redeemed prior to maturity and ending on the date of mailing of notice of any such redemption. The person in whose name a Bond is registered upon the books of the Corporation shall be deemed the Registered Owner thereof for all purposes.

Interest on each Bond shall be payable by check or draft mailed to the Registered Owner thereof as of the fifteenth date of the month immediately preceding that date for payment of such interest at the address shown on the registration books kept by the Trustee as Registrar. The principal of and premium, if any, on the Bonds shall be payable, without exchange or collection charges, in lawful money of the United States of America upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Trustee.

Redemption∗

Optional Redemption. The Bonds maturing on or after September 1, 2049 are subject to redemption prior to maturity, by and at the sole option of the Corporation, either in whole or in part on any date on or after September 1, 2030, in integral multiples of $5,000, at a redemption price equal to the principal amount redeemed plus accrued interest to the redemption date.

Mandatory Sinking Fund Redemption. The Bond that is a term bond in the principal amount of $_________ maturing on September 1, _____ is required to be redeemed prior to maturity in part in accordance with the mandatory sinking fund requirements of the Trust Indenture upon payment of 100% of the principal amount thereof, plus interest accrued to the redemption date on September 1, in the years and amounts, as follows

Year (September 1)

Principal Amount to be Redeemed*

TOTAL ______ †Maturity]

Redemption Procedures. The Corporation shall give written notice to the Trustee of its

election to redeem in the manner provided in and in accordance with the Trust Agreement, of the places where the amounts due upon such redemption are payable, and of the redemption date and of the principal amount of each maturity of the Bonds to be redeemed, which notice shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee.

Unless waived by any Holder of the Bonds to be redeemed, notice of any such redemption shall be given by the Trustee, on behalf of the Corporation, by mailing a copy of an official redemption notice by first class mail, postage prepaid, or by sending a confirmed facsimile, at least ∗ Preliminary; subject to change.

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30 days prior to the date fixed for redemption to the registered Holder or Holders of the Bond or Bonds at the address shown on the Register or at such other address as is furnished in writing by such registered Holder to the Registrar and the Trustee; provided that, if less than all of an outstanding Bond of one maturity in a book entry system is to be called for redemption, the Registrar and the Trustee shall give notice to the Depository or the nominee of the Depository that is the Holder of such Bond, and the selection of the beneficial interests in that Bond to be redeemed shall be at the sole discretion of the Depository and its participants; provided further, that, in connection with any optional redemption, the Registrar and the Trustee may, at the written request of the Corporation, provide for conditional notice of optional redemption to the registered Holder or Holders of a Bond or Bonds so long as any revocation of such notice is sent by first class mail, postage prepaid or sent by facsimile (immediately followed by written confirmation of receipt of such facsimile transmission) to the registered Holder of a Bond or Bonds at least ten Business Days prior to the redemption date.

All official notices of redemption shall be dated and shall state:

(1) the redemption date,

(2) the redemption price,

(3) that on the redemption date, the redemption price will become due and payable upon each Bond, and that interest thereon shall cease to accrue from and after said date, and

(4) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the designated office of the Trustee.

Prior to any redemption date, the Corporation shall deposit with the Trustee an amount of money sufficient to pay the redemption price of all the Bonds which are to be redeemed on that date, provided, however, no such deposit need be made if a conditional notice is being sent.

Failure to receive notice by mailing or any defect in that notice regarding any Bond, however, shall not affect the validity of the proceedings for the redemption of any Bonds.

Notice of any redemption hereunder with respect to Bonds held under a book entry system shall be given by the Trustee only to the Depository, or its nominee, as the Holder of such Bonds. Selection of book entry interests in the Bonds called for redemption is the responsibility of the Depository and any failure of such Depository to notify the book entry interest owners of any such notice and its contents or effect will not affect the validity of such notice of any proceedings for the redemption of such Bonds.


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PURPOSE AND PLAN OF REFUNDING∗

Purpose

The proceeds of the Bonds will be used for following purposes:

(a) refunding a portion of the Series 2018 Revenue Bonds, consisting the serial bonds maturing on September 1, 2020 through and including September 1, 2022 in the amount of $3,930,000.00 (the “Refunded Series 2018 Revenue Bonds”), as more particularly described in the table below):

Refunded Series 2018 Revenue Bonds

Maturity Date (September 1)

Interest Rate

Principal Amount to be

Refunded 2020 5.000% $1,210,000 2021 5.000% 1,300,000 2022 5.000% 1,420,000

TOTAL $3,930,000

(b) refunding a portion of the Series 2018A Senior Transient Room Tax Bonds, consisting of the serial bonds maturing on September 1, 2020 through and including September 1, 2021 in the amount of $2,655,000.00 (the “Refunded Series 2018A Senior Transient Room Tax Bonds,” as more particularly described in the table below, and together with the Refunded Revenue Bonds, the “Refunded Bonds”):

Refunded Series 2018A Senior Transient Room Tax Bonds

Maturity Date (September 1)

Interest Rate

Principal Amount to be

Refunded 2020 5.000% $1,295,000 2021 5.000% 1,360,000

TOTAL $2,655,000

(c) paying interest only with respect to the following:

(i) the Series 2018 Revenue Bonds maturing from September 1, 2023 through and including September 1, 20486, for the period from September 1, 2020 through and including March 1, 2023 (the “Refunded Series 2018 Revenue Bonds Interest Payments”), and

∗ Preliminary; subject to change. 6 Referred to herein as the “Unrefunded Series 2018 Revenue Bonds.”

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(ii) the Series 2018A Senior Transient Room Tax Bonds maturing from September 1, 2022 through and including September 1, 20487, for the period from September 1, 2020 through and including March 1, 2022 (the “Refunded Series 2018A Senior Transient Room Tax Bonds Interest Payments” and, together, with the Refunded Series 2018 Revenue Bonds Interest Payments, the “Refunded Interest Payments”) ; and

(d) funding capitalized interest through and including March 1, 2023, and

(e) paying the cost of issuance of the Bonds.

The Refunded Bonds and the Refunded Interest Payments are referred to together herein together as the “Refunded Debt Service.”

Plan of Refunding

In connection with the refunding of the Refunded Debt Service, a portion of the proceeds of the Bonds will be used to purchase non-callable, direct Obligations of, or obligations guaranteed as to principal and interest by, the United States of America (the “U.S.”), or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S. (collectively, the “Defeasance Obligations”), the principal and interest on which, when due, will provide moneys sufficient to pay when due the principal and interest (as applicable) with respect to such Refunded Debt Service on the respective payment or maturity dates.

The Defeasance Obligations and the interest earnings will be held in an escrow fund (the “Escrow Fund”) created pursuant to the Escrow Trust Agreement (the “Escrow Agreement”) between the Corporation, LCC, and The Huntington National Bank (the “Escrow Trustee”) solely for the benefit of the owners of the Refunded Bonds and the Unrefunded Bonds8 (with respect to the Refunded Interest Payments) and will not be available to pay debt service on the Bonds. The Escrow Fund shall be held by the Escrow Trustee separate and apart from all other funds or accounts held by the Escrow Trustee. The Escrow Trustee will have no lien whatsoever upon any moneys in the Escrow Fund for any of its fees and costs incurred in carrying out the provisions of the Escrow Agreement, which fees and costs will be paid to the Escrow Trustee from a portion of the proceeds of the Bonds. The accuracy of the mathematical computations of the adequacy of the amounts deposited into the Escrow Fund to pay when due the principal and interest (as applicable) with respect to such Refunded Debt Service on the respective payment, maturity, or redemption dates will be verified by Causey Demgen & Moore P.C., independent certified public accountants (the “Verification Agent”). Upon making such deposit with the Escrow Trustee and the issuance of certain irrevocable instructions to the Escrow Trustee, the Refunded Bonds will be deemed to have been paid and will no longer be outstanding and will cease to be entitled to any lien, benefit or security under the trust indenture for the Series 2018 Revenue Bonds or under the trust indenture for the Series 2018 Transient Room Tax Bonds, as applicable. The Unrefunded Bonds will remain outstanding and will continue to be entitled to the lien, benefit, and security under the trust

7 Referred to herein as the “Unrefunded Series 2018A Senior Transient Room Tax Bonds.” 8 Refers together to the Unrefunded Series 2018A Senior Transient Room Tax Bonds and the Unrefunded Series 2018 Revenue Bonds.

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indenture for the Series 2018 Revenue Bonds or under the trust indenture for the Series 2018 Transient Room Tax Bonds, as applicable.

SOURCES AND USES OF FUNDS

The following table sets forth the sources and uses of funds by the City in connection with the issuance of the Bonds:

Sources Total Bond Proceeds

Par Amount Premium

TOTAL SOURCES Uses Deposit to the Capitalized Interest Account Deposit to the Escrow Account

Cash Deposit Purchase of Escrow Obligations (SLGS)

Bond Issuance Expenses† TOTAL USES

_________________________ † Includes Underwriters’ discount, legal fees, advertising, printing, and miscellaneous costs.

SECURITY FOR THE BONDS

General

The Bonds are payable from and secured by (1) the general obligation pledge of the Lexington-Fayette Urban County Government with respect to the Lease Rental Payments under the 2020 Lease Agreement; (2) all of the Corporation’s rights, title and interest in the 2020 Sinking Fund (as defined in the Trust Indenture) and any other funds or accounts permitted by, established under or identified in the Trust Indenture, as it may hereafter be amended or supplemented; and (3) a subordinated pledge of LCC Revenues.

General Obligation Pledge with respect to the Lease Rental Payments

General Obligation Pledge. Under the 2020 Lease Agreement, the Corporation has leased its leasehold interest in the Leased Premises to the Lexington-Fayette Urban County Government. The Lease Rental Payments to be paid by the Lexington-Fayette Urban County Government to the Corporation and assigned to the Trustee to provide security for the Bonds, represent a general obligation of the Lexington-Fayette Urban County Government and the full faith, credit and taxing power of the Lexington-Fayette Urban County Government is irrevocably pledged to the payment thereof, which Lease Rental Payments shall be equal to the principal and interest payments on the Bonds issued under the Trust Indenture when due. The basic security for the general obligation debt of the Lexington-Fayette Urban County Government, including the Lease Rental Payments under the 2020 Lease Agreement, is the Lexington-Fayette Urban County Government’s ability to levy, and its pledge to levy, an annual tax to pay the interest on and principal of outstanding general obligation indebtedness, including the Lease Rental Payments, as and when the same become due and payable. The tax must be levied in an amount sufficient to pay, as the same become due, the

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Lease Rental Payments, as well as the principal of and interest on all outstanding general obligation bonds and bond anticipation notes of the Lexington-Fayette Urban County Government. The Constitution of the Commonwealth mandates the collection of a tax sufficient to pay the interest on an authorized indebtedness and the creation of a sinking fund for the payment of the principal thereof.

The Urban County Council adopted the Approving Ordinance to provide for the levy of such annual tax, which shall be collected to the extent other lawfully available monies of the Lexington-Fayette Urban County Government are not provided for the payment of the Lease Rental Payments. The Approving Ordinance provides that the funds derived from said tax levy as required or other lawfully available funds shall be placed in the sinking fund previously established by the Lexington-Fayette Urban County Government (the “Sinking Fund”), and, together with interest collected on the same, are irrevocably pledged for the payment of the interest on and principal of all bonds issued under KRS Chapter 66 and Tax Supported Leases, as defined in KRS Chapter 66, including the 2020 Lease Agreement, when and as the same fall due. Amounts shall be transferred from the Sinking Fund for the payment of the Lease Rental Payments under the 2020 Lease Agreement at the times and in the amounts required thereby.

THE OBLIGATION OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT CREATED BY THE 2020 LEASE AGREEMENT CONSTITUTES A FULL GENERAL OBLIGATION OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, AND THE FULL FAITH, CREDIT AND REVENUE OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT ARE PLEDGED FOR THE PROMPT PAYMENT OF THE LEASE RENTAL PAYMENTS.

Bankruptcy Matters. Chapter 9 of the Federal Bankruptcy Code (the “Bankruptcy Code”) contains provisions relating to the adjustment of debts of a state’s political subdivisions, public agencies and instrumentalities (“eligible entity”), such as the Lexington-Fayette Urban County Government. Under the Bankruptcy Code and in certain circumstances described therein, an eligible entity may be authorized to initiate Chapter 9 proceedings without prior notice to or consent of its creditors, which proceedings may result in material and adverse modification or alteration of the rights of its secured and unsecured creditors, including holders of its bonds and notes.

KRS Section 66.400 permits a political subdivision, such as the Lexington-Fayette Urban County Government, for the purpose of enabling such subdivision to take advantage of the provisions of the Bankruptcy Code, and for that purpose only, to file a petition stating that the subdivision is insolvent or unable to meet its debts as they mature, and that it desires to effect a plan for the composition or readjustment of its debts, and to take such further proceedings as are set forth in the Bankruptcy Code as they relate to such subdivision. No taxing subdivision is permitted, in availing itself of the provisions of the Bankruptcy Code, to scale down, cut down or reduce the principal sum of its securities except that interest thereon may be reduced in whole or in part.

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Funds and Accounts under the Trust Indenture

The Trust Indenture establishes and creates a special fund designated as the 2020 Sinking Fund for the Bonds which is held by the Trustee. The Trustee shall set aside into the 2020 Sinking Fund all sums received from the purchaser or purchasers of the Bonds as representing accrued interest and/or capitalized interest from the date of the Bonds to the date of delivery and payment. The 2020 Sinking Fund shall be held and maintained by the Trustee as the primary source of payment of the principal of and interest on the Bonds. All moneys from any source (including the LCC Payments and capitalized interest) at any time deposited in the 2020 Sinking Fund shall constitute Pledged Receipts (as defined in the Trust Indenture) for the benefit of the holders of the Bonds and the interest thereon. All Lease Rental Payments at any time becoming due and payable to the Corporation from the Lexington-Fayette Urban County Government pursuant to the terms and provisions of the 2020 Lease Agreement and all Pledged Receipts have been assigned by the Corporation to the Trustee and upon receipt thereof the same shall immediately be deposited by the Trustee in the 2020 Sinking Fund, so long as the Bonds are outstanding and the same shall be treated by the Trustee as Pledged Receipts, and shall be used and applied to the payment of the Bonds and interest thereon as due from time to time.

A DEBT SERVICE RESERVE FUND HAS NOT HAS BEEN ESTABLISHED UNDER THE TRUST INDENTURE AND THE BONDS ARE NOT ARE SECURED BY A DEBT SERVICE RESERVE FUND.

Subordinate Pledge of LCC Revenues

LCC has previously pledged the LCC Revenues to the payment of debt service with respect to the Series 2018 Revenue Bonds, pursuant to the Loan Agreement, dated as of October 1, 2018 (the “2018 Loan Agreement”), between the Kentucky Bond Development Corporation and LCC. To provide additional security for the Series 2018 Revenue Bonds, LCC entered into the Original 2018 Lease Agreement.9 Under the Original 2018 Lease Agreement, LCC leased the Leased Premises10 to the Lexington-Fayette Urban County Government. Under the Original 2018 Lease Agreement, in the event that there are insufficient revenues under the Loan Agreement to pay debt service on the Series 2018 Revenue Bonds, the Lexington-Fayette Urban County Government is required to amend its budget to provide for an amount sufficient that will (i) replenish a related debt service reserve fund in an amount required to cause the amount on deposit in that debt service reserve fund to equal the debt service reserve requirement for the Series 2018 Revenue Bonds, and (ii) pay all required debt service on the Series 2018 Revenue Bonds due in that fiscal year to the extent monies in the related debt service reserve fund are insufficient to pay all required debt service on the Series 2018 Revenue Bonds due in that fiscal year. See also “LEXINGTON CENTER CORPORATION – The Property.”

As an additional source of payment for the Bonds, LCC and the Lexington-Fayette Urban County Government have entered into the First Supplemental Lease, dated as of August 1, 2020 (the “2020 Supplement to the Original 2018 Lease Agreement”), which constitutes Funded Indebtedness that is Subordinated Indebtedness under the 2018 Loan Agreement. The 2020 Supplement to the 2018 Lease Agreement provides for the payment of “Lessor Payments” by LCC

9 See also “LEXINGTON CENTER CORPORATION – The Property” herein. 10 The “Leased Premises” refer to the land and improvements comprising the Project.

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(referred to herein as “LCC Payments”) to the Lexington-Fayette Urban County Government in the amounts required for the payment of debt service on the Bonds, on a subordinated basis to the payments required under the 2018 Loan Agreement.

For additional information regarding the LCC Revenues, see “LEXINGTON CENTER CORPORATION – Impact of the COVID-19 Pandemic – Impact on LCC Revenues.”

INVESTMENT CONSIDERATIONS

General

The Bonds, like all obligations of state and local government, are subject to changes in value due to changes in the condition of the bond market and/or changes in the financial condition of the Lexington-Fayette Urban County Government.

Prospective purchasers of the Bonds may need to consult their own tax advisors prior to any purchase of the Bonds as to the impact of the Internal Revenue Code of 1986, as amended, upon their acquisition, holding or disposition of the Bonds.

It is possible under certain market conditions, or if the financial condition of the Lexington-Fayette Urban County Government should change, that the market price of the Bonds could be adversely affected.

With regard to the risk involved in a lowering of the Lexington-Fayette Urban County Government’s bond rating, see “RATINGS” herein. With regard to creditors’ rights, see “SECURITY FOR THE BONDS - General Obligation Pledge with respect to the Lease Rental Payments – Bankruptcy Matters” herein.

Cybersecurity

In recent years, the increase in reported customer or data breaches and other fraudulent activities/attacks, have heightened awareness of data security. Similar to many organizations, the Lexington-Fayette Urban County Government relies on digital technologies to conduct customary operations, therefore the Lexington-Fayette Urban County Government could be the target of cyber-attacks. Additionally, outside parties may attempt to fraudulently induce the Lexington-Fayette Urban County Government’s employees, customers, business partners, service providers and other users of its services to disclose information in order to gain access to sensitive data and the Lexington-Fayette Urban County Government’s systems. The Lexington-Fayette Urban County Government maintains a network firewall and anti-virus software that is designed to stop cyber-attacks by third parties and minimize its impact on operations, in addition to practicing the principles of “least privilege” for all user accounts and restricts full administrative access accounts to only a few IT staff. However, the techniques used to obtain unauthorized access to, or to disable or degrade, electronic networks, computers, systems and solutions are rapidly evolving and have become increasingly complex and sophisticated. Such incidents are likely to continue, and the Lexington-Fayette Urban County Government is unable to predict the direct or indirect impact of these future attacks and activities on the Lexington-Fayette Urban County Government.

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The Lexington-Fayette Urban County Government cannot predict the full economic impact that the COVID-19 Pandemic will have on its financial condition or operations. The Lexington-Fayette Urban County Government will continue to monitor the impact on its revenue collections and operations and will implement additional expense containment and reduction measures if necessary. See “LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT – Impact of the COVID-19 Pandemic” herein.

SUMMARY OF THE 2020 LEASE AGREEMENT

The following is a summary of certain provisions of the 2020 Lease Agreement. All capitalized terms used in this summary, but not otherwise defined in this Official Statement shall have the meanings set forth in the 2020 Lease Agreement.

Lease of Leased Premises

The Corporation hereby demises, leases and lets to Lexington-Fayette Urban County Government, and the Lexington-Fayette Urban County Government rents, leases and hires from Corporation, the Leased Premises in accordance with the provisions of this Lease, to have and to hold for the Lease Term. Upon and during acquisition, construction, installation and equipping of the Project, all leasehold rights granted to the Lexington-Fayette Urban County Government by Corporation under this Lease shall vest in the Lexington-Fayette Urban County Government, without any further action on the part of Corporation.

The Corporation does hereby lease, sublease, and rent to the Lexington-Fayette Urban County Government, and the Lexington-Fayette Urban County Government does hereby lease, sublease, and rent from the Corporation, all of the Corporation’s right, title, and interest in and to the Leased Premises in which the Corporation has any right, title, and interest, including, but not limited to the Corporation’s leasehold interest and estate under any other lease or sublease of the Leased Premises, to have and to hold for the Lease Term. Upon and during acquisition, construction, installation and equipping of the Project, all leasehold rights granted to Lexington-Fayette Urban County Government by Corporation under this Lease shall vest in Lexington-Fayette Urban County Government, without any further action on the part of Corporation.

Lease Rental Payments

The Lexington-Fayette Urban County Government agrees to pay to Corporation during the Lease Term, the Lease Rental Payments specified in the 2020 Lease Agreement. The Lease Rental Payments during the Lease Term will be absolute and unconditional in all events; provided that, no Lease Rental Payments will be due from the Lexington-Fayette Urban County Government so long as, at least three Business Days prior to the applicable Payment Date, the amount required to pay debt service charges on the Bonds is on deposit in the 2020 Sinking Fund. If a Lease Rental Payment has not been included in the budget of the Lexington-Fayette Urban County Government for the fiscal year in which a payment is required, at the meeting of the Urban County Council immediately succeeding receipt of notice from the Trustee that such payment is required, such budget shall be amended to include all remaining Lease Rental Payments for that fiscal year.

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The Lexington-Fayette Urban County Government agrees to transfer the Lease Rental Payments, as specified in the 2020 Lease Agreement, into the Sinking Fund and to pay therefrom directly to the Trustee, such Lease Rental Payments for deposit directly into the 2020 Sinking Fund. Such Lease Rental Payments shall not be deemed revenues or assets of the Corporation. Each payment shall be applied first to payment of the interest component of the Lease Rental Payment to which it relates; provided, however, the Lexington-Fayette Urban County Government may make advance payments of principal components of Lease Rental Payments. Such Lease Rental Payments shall correspond to the principal of and interest on and redemption premium, if any, on the Bonds.

General Obligation Pledge

The obligation of the Lexington-Fayette Urban County Government created by the 2020 Lease Agreement shall be a full general obligation of the Lexington-Fayette Urban County Government and, for the payment of the Lease Rental Payments, the full faith, credit and revenues of the Lexington-Fayette Urban County Government are pledged for the prompt payment thereof. During the period the 2020 Lease is outstanding, there shall be levied on all the taxable property in the Lexington-Fayette Urban County Government, in addition to all other taxes, without limitation as to rate, a direct tax annually in an amount sufficient to pay the Lease Rental Payments when and as due; provided, however, that in each year to the extent that the other taxes of the Lexington-Fayette Urban County Government are available for the payment of the Lease Rental Payments and are appropriated for such purpose, the amount of such direct tax upon all of the taxable property in the Lexington-Fayette Urban County Government shall be reduced by the amount of such other taxes so available and appropriated. As provided in the Approving Ordinance, the funds derived from said tax levy hereby required or other available taxes shall be placed in the Sinking Fund and, together with interest collected on the same, are irrevocably pledged for the payment of all bonds issued under KRS Chapter 66 and Tax Supported Leases, as defined in KRS Chapter 66, including the Lease Rental Payments, when and as the same fall due.

Title

The Lexington-Fayette Urban County Government's leasehold interest shall, without any action by the Corporation or the Lexington-Fayette Urban County Government, immediately terminate upon (i) any termination of the 2020 Lease, or (ii) the occurrence of an Event of Default.

The parties agree to execute such instruments and do such things as are reasonably requested by the other party and as may be required by law in order to effectuate transfer of any and all of one party's right, title and/or interest in the Leased Premises, as is, to the other party.

Events of Default

The occurrence of any one or more of the following events constitutes an “Event of Default” under the 2020 Lease Agreement:

(a) The Lexington-Fayette Urban County Government's failure to make any Lease Rental Payment (or any other payment) as it becomes due in accordance with the terms of the 2020 Lease;

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(b) The Lexington-Fayette Urban County Government's failure to perform or observe any other covenant, condition or agreement to be performed or observed by it under the 2020 Lease Agreement or any document delivered by the Lexington-Fayette Urban County Government pursuant to or in connection with this document, and the failure is not cured or steps satisfactory to Corporation taken to cure the failure, within 15 days after written notice of the failure to the Lexington-Fayette Urban County Government by the Corporation; or

(c) The discovery by the Corporation that any material statement, representation or warranty made by the Lexington-Fayette Urban County Government in the 2020 Lease Agreement or in any writing delivered by the Lexington-Fayette Urban County Government pursuant to or in connection with the 2020 Lease is false, misleading or erroneous in any material respect.

Remedies

Upon the occurrence of an Event of Default, and as long as the Event of Default is continuing, the Corporation may, at its option, exercise any one or more of the following remedies as to the Project, to whichever the Event of Default pertains:

(a) By appropriate court action, enforce the general obligation pledge set forth in the Approving Ordinance and Section 9 of the 2020 Lease so that during the remaining Lease Term there is levied on all the taxable property of the Lexington-Fayette Urban County Government, in addition to all other taxes, without limitation as to rate, a direct tax annually in an amount sufficient to pay the Lease Rental Payments when and as due;

(b) Exercise any other right, remedy or privilege which may be available to it under the applicable laws of the Commonwealth or any other applicable law or proceed by appropriate court action to enforce the terms of the 2020 Lease or to recover damages for the breach of the 2020 Lease or to rescind the 2020 Lease as to any or all of the Project.


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SUMMARY OF THE TRUST INDENTURE

The following is a summary of certain of the terms and provisions of the Trust Indenture entered into by the Corporation and the Trustee in order to secure the payment of principal and interest on the Bonds. All capitalized terms used in this summary, but not otherwise defined in this Official Statement shall have the meanings set forth in the Trust Indenture.

Funds and Accounts

Upon the delivery of the Bonds to the purchaser or purchasers thereof and receipt of the purchase price, the same will forthwith in each case be deposited with the Trustee, as trust funds, and the Trustee will hold, treat and disburse the same, as follows:

(a) Cost of Issuance Fund. A special fund created by the Trust Indenture and designated the “Lexington-Fayette Urban County Government Public Facilities Corporation Taxable Project Refunding Bonds Costs of Issuance Fund” shall be held and maintained by the Trustee. There shall be deposited in the Costs of Issuance Fund the amount of moneys necessary to pay the cost of issuance of the Bonds from the proceeds of the Bonds as specified and determined in the Bond Resolution or in the written instructions of an authorized officer of Corporation delivered to the Trustee.

The Cost of Issuance shall be paid only from moneys credited to the Cost of Issuance Fund for the Bonds. Upon receipt of a certificate that the Cost of Issuance has been paid in full, or on the date which is 90 days from the date of the Bonds, whichever occurs first, the Trustee shall transfer all amounts remaining in the Cost of Issuance Fund to the 2020 Sinking Fund.

(b) Capitalized Interest Fund. A special fund created by the Trust Indenture and designated the “Lexington-Fayette Urban County Government Public Facilities Corporation Taxable Project Refunding Bonds Capitalized Interest Fund” shall be held and maintained by the Trustee. There shall be deposited in the Capitalized Interest Fund the amount of moneys necessary to pay the interest due with respect to the Bonds through and including the debt service payment due on March 1, 2023 from the proceeds of the Bonds, as specified and determined in the Bond Resolution or in the written instructions of an authorized officer of Corporation delivered to the Trustee.

(c) 2020 Sinking Fund. A special fund or account created by the Trust Indenture and designated the “Lexington-Fayette Urban County Government Public Facilities Corporation Taxable Project Refunding Bonds Sinking Fund” (for purposes of this Official Statement, the “2020 Sinking Fund”) shall be held and maintained by the Trustee as the primary source of payment of the principal of and interest on the Bonds. All moneys from any source at any time deposited in the 2020 Sinking Fund shall constitute Pledged Receipts for the benefit of the holders of the Outstanding Bonds and the interest thereon.

Sums from time to time in the 2020 Sinking Fund shall be continuously invested by the Trustee in Investment Obligations as directed by the Corporation acting on behalf of the Lexington-Fayette Urban County Government. The Trustee shall sell or present for

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redemption, at the best price reasonably obtainable, any Investment Obligations purchased by it as an investment whenever it shall be necessary in order to provide moneys to effectuate the purposes of the 2020 Sinking Fund.

All Lease Rental Payments at any time becoming due and payable to the Corporation from the Lexington-Fayette Urban County Government pursuant to the terms and provisions of the 2020 Lease Agreement and all Pledged Receipts have been assigned by the Corporation to the Trustee and upon receipt thereof the same shall immediately be deposited by the Trustee in the 2020 Sinking Fund so long as the Bonds are outstanding and the same shall be treated by the Trustee as Pledged Receipts, and shall be used and applied to the payment of the Bonds and interest thereon as they become due from time to time.

Investment of Funds

Moneys held in any of the aforementioned funds may be invested until required for the purposes intended in one or more “Investment Obligations,” as defined herein under “LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT - Cash Management and Investment Policy,” subject to the conditions and limitations set forth in the Trust Indenture. Investment Obligations purchased as an investment of moneys in any Fund held by the Trustee under the provisions of the Trust Indenture shall be deemed at all times to be a part of such Fund and the income or interest earned, gains realized or losses suffered by a Fund due to the investment thereof shall be retained in, credited or charged thereto as the case may be.

General Covenants

In the Trust Indenture, the Corporation among other covenants, has covenanted, as follows:

(a) Revenues to be derived from the Leased Premises. The Corporation certifies that it is the declared intention of the Corporation to continue to lease the Leased Premises to the Lexington-Fayette Urban County Government for an extended period of years, as provided in the 2020 Lease Agreement and as provided in the Bond Resolution, which authorized the execution of the 2020 Lease Agreement. The Corporation further binds and obligates itself not to sell or otherwise dispose of the Leased Premises until all of the Bonds herein authorized shall have been paid in full, or provided for through defeasement, both as to principal and interest, subject to the provisions of the Trust Indenture.

(b) Covenant Regarding Application of Revenues. The Corporation covenants for itself, its successors and assigns, to use, or cause to be used, all funds paid to it by the Lexington-Fayette Urban County Government, under the 2020 Lease Agreement or other funds received from LCC, for the following purposes and in the following order:

(i) To pay or cause to be paid to the Trustee the amounts prescribed herein for the payment of interest and principal requirements into the 2020 Sinking Fund;

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(ii) To use all additional funds, if any, after payment of the sums above set out, for the retirement of Bonds in advance of their maturity through said Trustee. If the Corporation call any Bond for payment prior to maturity, or purchase any or all of said Bonds in the open market, it shall immediately deliver said Bonds to the Trustee for cancellation, and after being cancelled by the Trustee, said Bonds shall be returned to the Corporation and shall thereafter no longer constitute the obligation(s) of the Corporation nor be entitled to the protection and security of the Trust Indenture; and

(iii) The Corporation, for itself, its successors and assigns, covenants and agrees to use or cause to be used, whatever funds shall come into its hands from the Lexington-Fayette Urban County Government specified in the 2020 Lease Agreement, in the order named herein and for no other purpose.

Amendments

Notwithstanding any other provisions of the Trust Indenture, the Trustee and the Corporation may at any time and from time to time supplement or make any amendment or change in the Trust Agreement:

(a) to cure any formal defect or ambiguity if, in the opinion of the Trustee, such amendment or change is not adverse to the interest of the Holders of the Bonds;

(b) to grant to or confer upon the Trustee for the benefit of the Holders of the Bonds any additional rights, remedies, powers, authority or security which may lawfully be granted or conferred and which are not contrary to or inconsistent with the Trust Indenture;

(c) to make necessary or advisable amendments in connection with the issuance of additional bonds in accordance with the terms of the Trust Indenture;

(d) to permit the Trustee to comply with any obligations imposed on it by law;

(e) to achieve compliance with any federal tax law; or

(f) to maintain or improve any rating on the Bonds.

Any other amendment or change will be subject to the written consent of the Holders of at least two-thirds (2/3) in a principal amount of the Bonds outstanding at the time such consent is given, or in case less than all of the Bonds then outstanding are affected by the modifications or amendment, of the Holders of at least two-thirds (2/3) of the principal amount of the Bonds so affected.

Nothing shall permit, however, or be construed as permitting (a) without consent of the holder of each Bond so affected, (i) an extension of the maturity of the principal of or the interest on any Bond, (ii) a reduction in the principal amount of any Bond or the rate of interest or premium thereon, or (iii) a reduction in the amount or extension of time of paying of any mandatory sinking fund requirements or (b) without the consent of the holders of all Bonds then outstanding, (i) the

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creation of a privilege or priority of any Bond over any other Bond, or (ii) a reduction in the aggregate principal amount of the Bonds required for consent to amendments.

Events of Default

Each of the following events is declared an “Event of Default”:

(a) the Lexington-Fayette Urban County Government shall fail for any reason to make the required semiannual Rental Payments to the Trustee, or

(b) there shall be any default in the payment of the principal of or the interest on the Bonds, when due, or

(c) the Corporation shall fail or refuse to comply with the provisions of the Act, or shall default in the performance or observance of any other of the covenants, agreements or conditions on its part contained in the Trust Indenture, any authorizing resolution of the Corporation, or the Bonds, or the Lexington-Fayette Urban County Government shall default in the performance or observance of any covenant, other than payment of rental agreements or conditions on its part contained in the Trust Indenture or the 2020 Lease, and such failure, refusal or default shall continue for a period of forty-five (45) days after written notice thereof by the Trustee, or by owners of not less than twenty-five percent (25%) in principal amount of the outstanding Bonds.

Remedies

(a) Upon the happening and continuance of any Event of Default specified in subsections (a) and (b) above, the Trustee shall proceed, or upon the happening and continuance of any Event of Default specified in subsection (c) above, the Trustee may proceed, and upon the written request of the holders of not less than twenty-five percent (25%) in principal amount of the Outstanding Bonds, shall proceed, in its own name, subject to the provisions of the Trust Indenture, to protect and enforce its rights and the rights of the Bondholders by such of the following remedies, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce such rights:

(i) by mandamus or other suit, action or proceeding at law or in equity, to enforce all rights of the Bondholders, including the right to require the Corporation to enforce fully the Lease, and to charge, collect and fully account for the Pledged Receipts, and to require the Corporation to carry out any and all other covenants or agreements with the Bondholders and to perform its duties under the Act;

(ii) by bringing suit upon the Bonds;

(iii) by action or suit in equity, require the Corporation to account as if it were the trustee of an express trust for the Holders of the Bonds; and

(iv) by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the Holders of the Bonds.

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(b) In the enforcement of any rights and remedies under this Trust Indenture, the Trustee shall be entitled to sue for, enforce payment on and receive any and all amounts then or during any default becoming, and at any time remaining, due from the Corporation for principal, interest or otherwise, under any provision of this Trust Indenture or of the Bonds, and unpaid with interest on overdue payments at the rate or rates of interest specified in the bonds, together with any and all costs and expenses of collection and of all proceedings hereunder and under the Bonds, without prejudice to any other right or remedy of the Trustee or of the Bondholders, and to recover and enforce a judgment or decree against the Corporation for any portion of such amounts remaining unpaid, with interest, costs and expenses, and to collect from any moneys available for such purpose, in any manner provided by law, the moneys adjudged or decreed to be payable.

LITIGATION

No litigation or administrative action or proceeding is pending or, to the best of the knowledge of the Corporation, the Lexington-Fayette Urban County Government or LCC or, threatened, restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Bonds, the collection of revenues or the use of revenues to pay debt service on the Bonds, or contesting or questioning the proceedings and authority under which the Bonds have been authorized and are to be issued or delivered, or the validity of the Bonds, or to prevent or restrict the operations of the Corporation, the Lexington-Fayette Urban County Government or LCC.

TAX MATTERS

A form of the opinion of Bond Counsel with respect to the Bonds is attached hereto as Appendix D.

State Tax Matters

Bond Counsel is of the opinion that, under the laws of the Commonwealth of Kentucky, as presently enacted and construed, interest on the Bonds is exempt from income taxation and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and all of its political subdivisions and taxing authorities.

Federal Tax Matters

General

The following is a summary of the principal federal income tax consequences relating to the acquisition, ownership and disposition of the Series Bonds for certain U.S. Holders (as defined below). It does not provide a complete analysis of all potential tax considerations relating to the acquisition, ownership and disposition of the Bonds. This summary is based on the tax laws of the United States, including the current provisions of the Code, its legislative history, current final, temporary and proposed Treasury regulations thereunder, published rulings and pronouncements of the IRS and court decisions, all as currently in effect and all of which are subject to change at any time, possibly with retroactive effect, so as to result in federal income tax consequences different from those described below. There can be no assurance that the IRS will not take a contrary view or that a court would not sustain a contrary view, and no ruling from the IRS has been, or is expected to be, sought on the issues discussed herein. Legislative, judicial or

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administrative changes or interpretations may occur that could alter or modify the statements and conclusions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences discussed below.

EACH PROSPECTIVE PURCHASER SHOULD SEEK ADVICE BASED ON THE PROSPECTIVE PURCHASER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. THIS SUMMARY DOES NOT ADDRESS FEDERAL GIFT, GENERATION SKIPPING OR ESTATE TAX CONSEQUENCES OR ALTERNATIVE MINIMUM, FOREIGN, STATE, LOCAL OR OTHER TAX CONSEQUENCES, NOR DOES THIS SUMMARY ADDRESS FEDERAL INCOME TAX CONSEQUENCES FOR BONDHOLDERS OTHER THAN U.S. HOLDERS (AS DEFINED BELOW). EACH PROSPECTIVE PURCHASER CONSIDERING THE PURCHASE OF BONDS SHOULD CONSULT ITS OWN TAX ADVISOR CONCERNING THESE MATTERS AND CONCERNING THE TAX TREATMENT OF BONDS UNDER STATE AND LOCAL TAX LAWS AND REGULATIONS.

The following summary deals only with Bonds held as capital assets within the meaning of Section 1221 of the Code (generally assets that are held for investment rather than as inventory or as property used in a trade or business) and not with special classes of holders, such as dealers in securities or currencies, financial institutions, insurance companies, S corporations, grantor trusts, certain former citizens or residents of the United States, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, dealers, persons holding Bonds as part of a hedging transaction, straddle, conversion transaction, synthetic security transaction or other risk reduction or integrated transaction, persons whose functional currency is not the U.S. dollar , persons who acquire the Bonds in connection with their employment or other performance of services, tax-exempt persons, mutual funds, small business investment companies, real estate mortgage investment conduits or real estate investment trusts.

If a partnership (or other entity or arrangement treated as a partnership for federal income tax purposes) acquires Bonds, the federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. A partnership holding Bonds, and partners in such a partnership, should consult its and their own tax advisors with regard to the federal income tax consequences of the acquisition, ownership, and disposition of the Bonds by the partnership.

The federal income tax discussion that appears below is included in this Official Statement for the general information of a prospective purchaser. Some or all of the discussion may not apply to a particular purchaser depending upon the particular situation of that purchaser. Each prospective purchaser should consult its own tax advisor concerning the tax consequences to such purchaser of owning and disposing of the Bonds, including the tax consequences under state, local and other tax laws and the possible effects of changes in federal or other tax laws.

As used in this Official Statement, the term “U.S. Holder” means a beneficial owner of a Bond that is, for federal income tax purposes (a) a citizen or resident of the United States for federal income tax purposes; (b) a corporation (or other entity treated as a corporation for federal income tax purposes) created or organized in or under the laws of the United States, any of the states thereof or the District of Columbia; (c) an estate, the income of which is includible in gross income for federal income tax purposes regardless of its source; (d) a trust that is subject to the

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supervision of a court within the United States and one or more United States persons as described in Section 7701(a)(30) of the Code has the authority to control all of the substantial decisions with respect to such trust; or (e) certain trusts with a valid election in effect under applicable Treasury regulations to be treated as a United States person within the meaning of the Code.

Notwithstanding the rules described below, it should be noted that, under law enacted in December 2017 that is effective for tax years beginning after December 31, 2018 in the case of original issue discount, certain taxpayers that are required to prepare certified financial statements or file financial statements with certain regulatory or governmental agencies may be required to recognize income, gain and loss with respect to the Bonds at the time that such income, gain or loss is recognized on such financial statements instead of under the rules described below. However, recently proposed regulations permit a taxpayer to apply the rules described below rather than the applicable financial statement regime as long as the taxpayer consistently applies all the rules of the proposed regulation to all items of income during the taxable year.

BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, PROSPECTIVE PURCHASERS AND BENEFICIAL OWNERS OF THE BONDS ARE STRONGLY URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR TAX SITUATIONS AND AS TO ANY FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX CONSIDERATIONS (INCLUDING ANY POSSIBLE CHANGES IN TAX LAW) AFFECTING THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE BONDS.

Tax Status of the Bonds

The Bonds are taxable debt instruments for federal income tax purposes. As such, interest on the Bonds is not excludible from the gross income of Bondholders under Section 103 of the Code and will be fully subject to federal income taxation.

Interest

Interest on the Bonds will be taxable to a Bondholder as ordinary interest income. A Bondholder using the accrual method of accounting for federal income tax purposes generally must include such interest in income as the interest accrues, while a Bondholder using the cash receipts and disbursements method of accounting generally must include such interest in income when payments are actually or constructively received. There is an exception if the Bondholder makes a constant yield election (“–Constant Yield Election”) and for original issue discount.

Original Issue Discount Income

A Bond will have original issue discount (“OID”) if it is acquired by a Bondholder at its original issuance at a discount, other than a specific de minimis discount. For purposes of this Tax Matters section, a Bond having OID is referred to as an “OID Bond.” A Bond is purchased at a discount if the “stated redemption price at maturity” (“SRPM”) of such Bond exceeds the Bond’s “issue price.” Such excess is also the amount of OID. The SRPM of a bond generally will be equal to the sum of all payments, whether principal or interest, to be made on the bond other than “Qualified Stated Interest” payments. Under applicable regulations, “Qualified Stated Interest” payments are stated interest payments based on a single fixed rate of interest or, under certain

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circumstances, a variable rate tied to an objective index, that are actually and unconditionally payable in cash or property (other than a debt instrument of the issuer) at fixed periodic intervals of one year or less during the entire term of the bond. In general, the “issue price” of a bond is the initial offering price to the public at which a substantial amount of bonds are sold, ignoring sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. The discount is de minimis if it is less than 0.25% of the Bond’s SRPM multiplied by the number of years to the Bond’s maturity. For the treatment of Bonds with de minimis OID, see “–De Minimis OID.”

Bondholders will include OID in ordinary income in accordance with special tax accounting rules for original issue discount obligations provided by the Code and U.S. Treasury Regulations (the “OID Regulations”). In general, and regardless of whether a Bondholder uses the cash or accrual method of tax accounting, the OID Regulations require that Bondholders of OID Bonds with a maturity greater than one year include in ordinary gross income the sum of the “daily portions” of original issue discount on that Bond for all days during the taxable year that such Bondholder owns the Bond. The daily portions are computed using the constant yield method (except in certain circumstances explained in the OID Regulations). The constant yield method provides that the daily portions of original issue discount on OID Bonds are determined by allocating to each day in any accrual period a ratable portion of the original issue discount allocable to that period. Accrual periods may be of any length and may vary in length over the term of the OID Bonds, provided that each accrual period is not longer than one year and each scheduled payment of principal or interest occurs either on the first or last day of an accrual period. The amount of original issue discount on OID Bonds allocable to each accrual period is generally determined by (a) calculating the product of (1) the “adjusted issue price” of the OID Bond at the beginning of the accrual period multiplied by a (2) a fraction, the numerator of which is the “yield to maturity” of the OID Bond and the denominator of which is the number of accrual periods in a year and (b) subtracting from that product, the amount, if any, payable as Qualified Stated Interest allocable to that accrual period. The “adjusted issue price” of an OID Bond at the beginning of any accrual period will generally be the sum of the issue price of the OID Bond and the amount of original issue discount allocable to all prior accrual periods (determined without regard to the amortization of any acquisition or bond premium, as described below), reduced by the amount of all prior payments made on the OID Bond, other than Qualified Stated Interest, on or before the first day of the accrual period. The yield to maturity of an OID Bond is the discount rate (appropriately adjusted to reflect the length of accrual periods) that causes the sum of the present values on the OID Bond to equal the issue price.

All payments on an OID Bond (other than Qualified Stated Interest) will generally be viewed first as payments of previously accrued original issue discount, with payments considered made from the earliest accrual periods first, and then as a payment of principal.

As described in “–Constant Yield Election,” a Bondholder may make an irrevocable election to include in income its entire return on a Bond, including payments of Qualified Stated Interest and OID.

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De Minimis OID

If a Bond has de minimis OID, Bondholders generally must include the de minimis OID in ordinary income as stated principal payments on the Bond are made. The amount of de minimis original issue discount includible in income with respect to each principal payment on the Bonds equals the product of the total amount of de minimis original issue discount on the Bond and a fraction, the numerator of which is the amount of principal payment made and the denominator of which is the stated principal amount of the Bond. Any amount of de minimis original issue discount included in income upon sale, exchange, retirement or other taxable disposition of a bond will be treated as capital gain if the Bond is a capital asset in the Bondholder’s hands.

Constant Yield Election

Under applicable regulations, a Bondholder may elect to include in gross income all income that accrues on a Bond (including stated interest, acquisition discount, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium or acquisition premium) in accordance with the constant yield method. Bondholders should consult their own tax advisors about how this election would apply to them.

Market Discount

A Bond purchased by a Bondholder after its original issue at a price lower than the Bond’s SRPM (or its “revised issue price” in the case of an OID Bond, i.e., its issue price increased for the aggregate original issue discount included in income by all holders prior to its acquisition by the Bondholder) will be considered to bear “market discount” in an amount equal to such difference except if the difference is less than a specific de minimis amount. The market discount is de minimis if it is less than the product of 0.25% of the Bond’s stated principal amount, multiplied by the remaining number of years to maturity for such Bond at the time of purchase.

In general, any partial payment of principal or any gain recognized on the maturity or disposition of a Bond having market discount will be treated as ordinary income to the extent that the gain does not exceed the “accrued market discount” on such Bond. Generally, the accrued market discount will be the total market discount on a Bond multiplied by a fraction, the numerator of which is the number of days the Bondholder held the Bond and the denominator of which is the number of days from the date the Bondholder acquired the Bond until its maturity date. A Bondholder may elect, however, to determine accrued market discount under the constant-yield method.

Bondholders who acquire Bonds at a market discount may be required to defer, until the maturity date of such Bonds or the earlier disposition in a taxable transaction, the deduction of a portion of the amount of interest that the Bondholder paid or accrued during the taxable year on indebtedness incurred or continued to purchase or carry a Bond in excess of the aggregate amount of interest (including original issue discount) includible in such Bondholder’s gross income for the taxable year with respect to such Bond. The amount of such net direct interest expense deferred in a taxable year will not exceed the amount of market discount accrued on the Bond for the days during the taxable year on which the Bondholder held the Bond and, in general, would be deductible when such market discount is includible in income. The amount of any remaining deferred deduction is to be taken into account in the taxable year in which the Bond matures or is

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disposed of in a taxable transaction. In the case of a disposition in which gain or loss is not recognized in whole or in part, any remaining deferred deduction will be allowed to the extent gain is recognized on the disposition. This deferral rule does not apply if the Bondholder elects to include such market discount in income currently as described above.

If the Bond is disposed of in a nontaxable transaction (other than as provided in Code Section 1276(c) and (d)), accrued market discount will be includible as ordinary income to the Bondholder as if the holder had sold the Bond at its then fair market value. Alternatively, a Bondholder may elect to recognize market discount as ordinary income currently as it accrues (on either a ratable or constant-yield basis), in lieu of treating a portion of any gain realized on a sale of the Bond as ordinary income. The adjusted basis of a Bond subject to this election will be increased to reflect market discount included in income, thereby reducing any gain or increasing any loss on a sale or taxable disposition. Also, if a Bondholder elects to include market discount on a current basis, the interest deduction deferral rule described above do not apply. If a Bondholder does make such election, it will apply to all market discount debt instruments that a Bondholder acquires on or after the first day of the first taxable year to which the election applies. The election may not be revoked without the consent of the IRS.

Acquisition Premium; Amortizable Bond Premium

A Bondholder that purchases a Bond for an amount that is greater than its adjusted issue price but equal to or less than the sum of all amounts payable on the Bond after the purchase date other than payments of payments of Qualified Stated Interest will be considered to have purchased the Bond at an acquisition premium. Under the acquisition premium rules, the amount of original issue discount that the Bondholder must include in its gross income for the Bond for any taxable year will be reduced (but not below zero) by the portion of acquisition premium properly allocable to that year.

If a Bondholder purchases a Bond for an amount in excess of the sum of all amounts payable on the Bond after the acquisition date (other than payments of Qualified Stated Interest), the Bondholder will be considered to have purchased the Bond with amortizable bond premium equal in amount to that excess and may elect to amortize this premium over the remaining term of the Bond, based on the Bondholder’s yield to maturity for the Bond as determined under the bond premium rules. If the Bond is redeemable prior to maturity, the amount of amortizable premium is determined with reference either to the amount payable on maturity or, if it results in a smaller premium attributable to the earlier redemption period, with reference to the amount payable on the earlier redemption date. A Bondholder may generally use the amortizable bond premium allocable to an accrual period to offset Qualified Stated Interest required to be included in the Bondholder’s income for the Bond in that accrual period. Under applicable regulations, if the amortizable bond premium allocable to an accrual period exceeds the amount of Qualified Stated Interest allocable to the accrual period, the excess would be allowed as a deduction for the accrual period, but only to the extent of the Bondholder’s prior interest inclusions on the Bond. Any excess is generally carried forward and allocable to the next accrual period. A Bondholder who elects to amortize bond premium must reduce his, her or its tax basis in the Bond by the amount of the bond premium amortized during the holding period of the Bondholder, as further described below under “–Sale, Exchange, Retirement or Other Taxable Disposition of Bonds.” An election to amortize bond premium applies to all taxable debt obligations held by the Bondholder on or after the beginning of the first taxable year to which the election applies and may be revoked only with the consent of

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the IRS. Applicable regulations provide limited automatic consent for a Bondholder to change its method of accounting for bond premium to the constant yield method if the change is made for the first taxable year (by a statement on the relevant return) for which the Bondholder must account for a Bond under those regulations. If a Bondholder does not elect to amortize bond premium, the amount of premium will be included in its tax basis in the Bond; therefore, such bond premium generally would produce a capital loss, which capital loss may be subject to limitations on deductibility.

Sale, Exchange, Retirement, or Other Taxable Disposition of Bonds

Upon the sale, exchange, redemption, retirement or other taxable disposition of a Bond, a Bondholder generally will recognize gain or loss equal to the difference between (i) the amount of cash proceeds and the fair market value of any property received for the Bond (which excludes payments for accrued interest not previously reported in income), and (ii) the Bondholder’s adjusted basis in the Bond or applicable portion of the adjusted basis. The Bondholder’s adjusted basis generally will equal the cost of the Bond to the Bondholder, increased by any original issue discount and market discount previously included in the Bondholder’s ordinary income for the Bond and reduced by any principal payments on the Bond previously received by the holder and by any amortizable bond premium used to offset Qualified Stated Interest and certain other amortizable bond premium allowed as a deduction under the regulations described above under the section entitled “–Acquisition Premium; Amortizable Bond Premium.” Except as discussed above under the section entitled “–Market Discount” for Bonds with market discount, or to the extent cash received is attributable to accrued Qualified Stated Interest, any gain or loss recognized upon a sale, exchange, redemption, retirement, or other disposition of a Bond will be capital gain or loss and will be long-term capital gain or loss if the Bondholder’s holding period in the Bond exceeds one year on the date of the disposition. The deductibility of capital losses is subject to limitations. Prospective investors should consult their tax advisors regarding the treatment of capital gains and losses as it applies to them.

Defeasance or Material Modification

The legal defeasance or other significant modification of Bonds may result in a deemed disposition of such Bonds and a deemed reissuance of a “new” Bond to the Bondholder for federal income tax purposes, in which event a Bondholder will recognize taxable gain or loss equal to the difference between the amount realized from the deemed exchange and the Bondholder’s adjusted tax basis in the Bond. The “new” Bond deemed reissued in such a defeasance or significant modification may be treated as issued with original issue discount in an amount equal to the excess, if any, of the stated principal amount of the “new” Bond over its deemed issue price. Prospective investors should consult their tax advisors regarding the tax consequences of a defeasance or material modification of the Bonds.

Medicare Tax

The income of a Bondholder that is an individual, certain trusts or an estate from a Bond is potentially subject to the 3.8% Medicare tax under Code Section 1411. Bondholders are urged to consult with their tax advisors regarding the applicability of the Medicare tax to income and gains in respect of their investment in the Bonds.

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Backup Withholding and Information Reporting

A backup withholding tax, currently at a 24% rate, and information reporting requirements generally apply to specified payments of principal, premium and interest (including original issue discount in some instances) made to, and to the proceeds of sale before maturity by, Bondholders (other than certain exempt recipients, such as organizations exempt from taxation under Section 501(a) of the Code) who fail to provide and certify certain identifying information (e.g., the holder’s taxpayer identification number) in the required manner. Under current Treasury regulations, backup withholding will not apply to payments made on a Bond or proceeds from the sale of a Bond if the Bondholder:

(a) provides its U.S. taxpayer identification number (typically on IRS Form W-9 or a successor form), certifies that it is a U.S. person, and certifies that (1) it is exempt from backup withholding, (2) it has not been notified by the IRS that it is subject to backup withholding or (3) it has been notified by the IRS that it is no longer subject to backup withholding; or

(b) establishes an exemption from backup withholding.

Any amounts withheld from a payment to a Bondholder under the backup withholding rules will be refunded or credited against that Bondholder’s federal income tax liability. The amount of any “reportable payments” for each calendar year and the amount of tax withheld, if any, with respect to those payments will be reported to the holders of the Bonds and to the IRS.


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CONTINUING DISCLOSURE

General

In the Approving Ordinance, the Lexington-Fayette Urban County Government covenants to annually provide certain financial information and operating data (the “Annual Financial Information and Operating Data”) and other information necessary to comply with the requirements of Rule 15c-12 of the Securities and Exchange Commission (the “Rule”), and to transmit the same to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system (“EMMA”). Each covenant is for the benefit of and is enforceable by the owners of the Bonds. The specific nature of the Annual Financial Information and Operating Data and a listing of events for which notices shall be provided are set forth in Appendix E – “FORM OF CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the original purchaser of the Bonds in complying with the Rule.

Compliance with Previous Undertakings

(a) Undertakings by the Lexington-Fayette Urban County Government

The Lexington-Fayette Urban County Government is currently in compliance with respect to its undertakings pursuant to certain continuing disclosure agreements with respect to its outstanding general obligation bonds and sewer system revenue bonds (the “Existing LFUCG Disclosure Agreements”).

The Lexington-Fayette Urban County Government filed its annual financial information and operating data, consisting of its Comprehensive Annual Financial Report, including its audited annual financial statements (the “LFUCG CAFR”) with the MSRB through EMMA over the past five years as follows:

Fiscal Year Filing Date 2014 November 24, 2014 2015 November 30, 2015 2016 January 24, 2017 2017 January 2, 2018 2018 February 11, 2019 2019 February 3, 2020

Each such filing was made within nine months after the end of the respective fiscal year, as required by the Existing LFUCG Disclosure Agreements.

(b) Undertakings related to Agencies and Instrumentalities of the Lexington-Fayette Urban County Government

(i) Bonds issued by the Corporation. The Corporation has previously entered into certain continuing disclosure agreements in connection with the issuance of revenue bonds (the “Existing Corporation Disclosure Agreements”). While the Corporation is currently in compliance with respect to its undertakings pursuant to the Existing Corporation Disclosure Agreements, the Corporation did not file certain prior annual

46

financial information and operating data and Event notices over the past five years in a timely manner, as set forth below:

(A) The LFUCG CAFRs for fiscal years 2011, 2012 and 2013 were not filed on the CUSIP prefix for the Corporation at the times that such filings were initially made by the Lexington-Fayette Urban County Government with respect to its other outstanding bonds, as applicable. The LFUCG CAFRs for fiscal years 2011, 2012 and 2013 were re-filed on the CUSIP prefix for the Corporation on August 31, 2016 and the Lexington-Fayette Urban County Government filed a notice of such late filing with the MSRB through EMMA on September 7, 2016.

(B) The Corporation did not file notices of certain Events in a timely manner as required under the related Existing Corporation Disclosure Agreements as follows:

(1) On September 7, 2016, the Lexington-Fayette Urban County Government, for itself and on behalf of the Corporation, filed an “Event Notice: Rating Change (Downgrades)” with the MSRB through EMMA related to a downgrade by Moody’s of its rating of the bond insurance provider related to the $66,725,000 Lexington-Fayette Urban County Government Mortgage Revenue Refunding Bonds (Courthouse Facilities Project), Series 2006 (the “2006 Corporation Bonds”) and its underlying rating of such 2006 Corporation Bonds, which filing was not made in a timely manner as required by the undertaking for such 2006 Corporation Bonds; and

(2) On October 11, 2019, the Lexington-Fayette Urban County Government, for itself and on behalf of the Corporation, filed an “Event Notice: Rating Changes/Downgrade (2018)” with the MSRB through EMMA with respect to a downgrade by Moody’s on February 2, 2018, of the rating from “Aa3” to “A1” with respect to the Corporation’s $42,590,000 Mortgage Revenue Refunding Bonds (Court Facilities Project), Series 2016 (the “2016 Corporation Bonds”), which filing was not made in a timely manner as required by the undertaking for such 2016 Corporation Bonds.

(ii) Bonds issued by LCC. LCC has previously entered into certain continuing disclosure agreements in connection with the issuance of revenue bonds by itself and by the Kentucky Bond Development Corporation for its benefit (the “Existing LCC Disclosure Agreements”). While LCC is currently in compliance with respect to its undertakings pursuant to the Existing LCC Disclosure Agreements, LCC did not file certain prior annual financial information and operating data over the past five years in a timely manner, as set forth below:

(A) On January 9, 2017, LCC made supplemental filings related to its annual financial information for the fiscal years ending June 30, 2012, June 30, 2013, June 30, 2014, June 30, 2015 and June 30, 2016. Such filing was past the

47

January 1 deadline for the preceding fiscal year, as required by the Existing LCC Disclosure Agreements.

(B) LCC filed its annual financial information for the (i) fiscal year ending June 30, 2017 on September 29, 2017; (ii) fiscal year ending June 30, 2018 on September 21, 2018, and (iii) fiscal year ending June 30, 2019 on September 19, 2019. Such filings were within the January 1 deadline for the preceding fiscal year, as required by the Existing LCC Disclosure Agreements.

(C) On January 17, 2018, LCC filed notice of the following Events, which filings were not made in a timely manner as required by the Existing LCC Disclosure Agreements: (i) an “Event Notice: Ratings Downgrades (2017)” with respect to a downgrade by Moody’s and S&P of their respective ratings of the bond insurance provider related to the $20,370,000 Lexington Center Corporation Mortgage Revenue Refunding Bonds, Series 2008A (the “2008A LCC Bonds”); (ii) an “Event Notice: Ratings Changes (2010)” with respect to a recalibration by Moody’s on April 23, 2010 of its rating from “A1” to “Aa3” on the 2008A LCC Bonds; and (iii) an “Event Notice: Ratings Changes/Downgrade (2011)” with respect to a downgrade by Moody’s on April 18, 2011 of its rating from “Aa3” to “A1” on the 2008A LCC Bonds.

(D) A notice of redemption with respect to the remaining outstanding 2008A LCC Bonds was sent by the related trustee to DTC on August 2, 2018 and the 2008A LCC Bonds were redeemed on September 4, 2018, however a notice of such bond call was not posted with the MSRB through EMMA in a timely manner, as required by the Existing LCC Disclosure Agreements. On September 25, 2018, LCC posted a notice of such bond call with the MSRB through EMMA and a notice of failure to file with respect thereto.

(iii) Bonds issued by the Lexington-Fayette Urban County Airport Board. The Lexington-Fayette Urban County Airport Board (the “Airport Board”)11 has previously entered into certain continuing disclosure agreements in connection with the issuance of airport revenue bonds (the “Existing Airport Disclosure Agreements”). While the Airport Board is currently in compliance with respect to its undertakings pursuant to the Existing Airport Disclosure Agreements, the Airport Board did not file certain prior annual financial information and operating data over the past five years in a timely manner, as set forth below:

(A) On December 22, 2011, the Airport Board filed its audited financial statements for its fiscal year ended June 30, 2011. The deadline for such filing was November 19, 2011. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

11 The Airport Board is an agency of the Lexington-Fayette Urban County Government.

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(B) On December 28, 2012, the Airport Board filed its audited financial statements for its fiscal year ended June 30, 2012. The deadline for such filing was October 26, 2012. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

(C) On February 4, 2014, the Airport Board filed its audited financial statements for its fiscal year ended June 30, 2013. The deadline for such filing was October 25, 2013. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

(D) On February 4, 2014, the Airport Board filed the annual financial information with respect to the Airport Board required pursuant to the previous undertakings (the “Board Annual Financial Information”) for its fiscal year ended June 30, 2013. The deadline for such filing was January 26, 2014. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

(E) On July 20, 2016, the Airport Board filed the Airport Board Annual Financial Information for its fiscal year ended June 30, 2015. The deadline for such filing was January 26, 2016. On July 23, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

Current and Future Disclosure

The Lexington-Fayette Urban County Government and its agencies listed above have procedures in place to assure compliance with the Rule and the respective continuing disclosure agreements in the future and, except for the late filings mentioned above, are in compliance with the continuing disclosure undertaking requirements of the Rule in connection with the respective bonds which are subject to such requirements. The Lexington-Fayette Urban County Government and its agencies intend to make timely disclosure in the future.

RATINGS

As noted on the cover page of this Official Statement, Moody’s Investors Service (“Moody’s”) has assigned its municipal bond rating of “Aa2” (stable outlook) to the Bonds and S&P Global Ratings, a division of S&P Global Inc. (“S&P”), has assigned its municipal bond rating of “AA” (stable outlook) to the Bonds. The ratings when assigned and in effect from time to time reflect only the views of the rating organizations. The explanation of its views and the meaning and significance of the rating may be obtained from the respective rating agency.

There can be no assurance that a rating when assigned will continue for any given period of time or that it will not be lowered or withdrawn entirely by the rating agency if in its judgment circumstances so warrant. Any such downward change in or withdrawal of a rating may have an adverse effect on the marketability and/or market price of the Bonds.

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UNDERWRITING

The Bonds are being purchased for reoffering by __________________, (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $_____________________ (reflecting the par amount of the Bonds, plus net original issue premium of $_________________, less underwriter’s discount of $___________). The initial public offering prices which produce the yields set forth on the cover page of this Official Statement may be changed by the Underwriter and the Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the offering prices which produce the yields set forth on the cover page.

FINANCIAL ADVISOR

Robert W. Baird & Co. Incorporated (the “Financial Advisor”) has been employed as financial advisor to the Lexington-Fayette Urban County Government in connection with the issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement. The fee for services of the Financial Advisor with respect to the sale of the Bonds is contingent upon the issuance and delivery thereof.

Commonwealth Economics Partners, LLC (the “Municipal Advisor”), is serving as the municipal advisor to LCC in connection with the issuance and sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement.


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CONCLUDING STATEMENT

The Corporation has approved and caused this Official Statement to be executed and delivered by its President. In making this Official Statement the Corporation relied upon information furnished to it by the Lexington-Fayette Urban County Government and the Corporation, and does not assume any responsibility as to the accuracy or completeness of any of the information in this Official Statement except as to copies of documents denominated “Notice of Bond Sale,” “Official Bid Form,” and “Official Terms and Conditions of Bond Sale.” The financial information supplied by the Lexington-Fayette Urban County Government and the Administrative Office of the Courts and reproduced herein is represented by the Lexington-Fayette Urban County Government to be correct.

No dealer, broker, salesman, or other person has been authorized by the Corporation, the Lexington-Fayette Urban County Government, LCC, the Financial Advisor, or the Municipal Advisor to give any information or representations, other than those contained in this Official Statement, and if given or made, such information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. Except when otherwise indicated, the information set forth herein has been obtained from the Corporation, the Lexington-Fayette Urban County Government, and/or LCC and believed to be reliable, however, such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Financial Advisor, the Municipal Advisor, or Bond Counsel. The delivery of this Official Statement at any time does not imply that information herein is correct as of any time subsequent to the date hereof.

This Official Statement has been duly executed and delivered for and on behalf of the Corporation by its President.


By: President

Dated: August _____, 2020

APPENDIX A ESTIMATED DEBT SERVICE REQUIREMENTS FOR

OUTSTANDING GENERAL OBLIGATION BONDS, INCLUDING THE BONDS

[SEE ATTACHED]

Preliminary; subject to change.

A-1

Principal Gross InterestCapitalized

Interest Net Debt Service2021 $48,571,363.03 - $704,365.56 ($704,365.56) - $48,571,363.032022 46,396,330.54 - 1,327,600.00 (1,327,600.00) - 46,396,330.542023 45,026,270.52 - 1,327,600.00 (1,327,600.00) - 45,026,270.522024 44,312,495.52 - 1,327,600.00 - $1,327,600.00 45,640,095.522025 38,084,986.76 - 1,327,600.00 - 1,327,600.00 39,412,586.762026 37,101,541.75 - 1,327,600.00 - 1,327,600.00 38,429,141.752027 35,912,924.26 - 1,327,600.00 - 1,327,600.00 37,240,524.262028 33,184,033.79 - 1,327,600.00 - 1,327,600.00 34,511,633.792029 29,662,509.40 - 1,327,600.00 - 1,327,600.00 30,990,109.402030 20,068,816.27 - 1,327,600.00 - 1,327,600.00 21,396,416.272031 15,692,271.90 - 1,327,600.00 - 1,327,600.00 17,019,871.902032 11,386,846.90 - 1,327,600.00 - 1,327,600.00 12,714,446.902033 11,384,903.14 - 1,327,600.00 - 1,327,600.00 12,712,503.142034 9,236,965.63 - 1,327,600.00 - 1,327,600.00 10,564,565.632035 8,014,650.00 - 1,327,600.00 - 1,327,600.00 9,342,250.002036 6,124,725.00 - 1,327,600.00 - 1,327,600.00 7,452,325.002037 5,504,831.25 - 1,327,600.00 - 1,327,600.00 6,832,431.252038 2,521,112.50 - 1,327,600.00 - 1,327,600.00 3,848,712.502039 1,737,337.50 - 1,327,600.00 - 1,327,600.00 3,064,937.502040 279,125.00 - 1,327,600.00 - 1,327,600.00 1,606,725.002041 - - 1,327,600.00 - 1,327,600.00 1,327,600.002042 - - 1,327,600.00 - 1,327,600.00 1,327,600.002043 - - 1,327,600.00 - 1,327,600.00 1,327,600.002044 - - 1,327,600.00 - 1,327,600.00 1,327,600.002045 - - 1,327,600.00 - 1,327,600.00 1,327,600.002046 - - 1,327,600.00 - 1,327,600.00 1,327,600.002047 - - 1,327,600.00 - 1,327,600.00 1,327,600.002048 - - 1,327,600.00 - 1,327,600.00 1,327,600.002049 - - 1,327,600.00 - 1,327,600.00 1,327,600.002050 - $6,120,000.00 1,205,200.00 - 7,325,200.00 7,325,200.002051 - 6,365,000.00 955,500.00 - 7,320,500.00 7,320,500.002052 - 6,625,000.00 695,700.00 - 7,320,700.00 7,320,700.002053 - 6,900,000.00 425,200.00 - 7,325,200.00 7,325,200.002054 - 7,180,000.00 143,600.00 - 7,323,600.00 7,323,600.00Total $450,204,040.66 $33,190,000.00 $41,302,365.56 ($3,359,565.56) $71,132,800.00 $521,336,840.66

The Lexington-Fayette Urban County Government (KY) Energy Conservation General Obligation Bonds, Series 2014C ("QECBs") were issued with a bullet maturity of $2,900,000 due on June 1, 2027. An invested sinking fund was established, into which annual principal sinking fund deposits are made. Earnings plus the annual principal deposits will be sufficient to retire the QECBs at maturity. The existing debt service represented includes the annual sinking fund deposits and net interest payments assuming the original federal rebate rate.

Series 2020

Lexington-Fayette Urban County GovernmentPublic Facilities Corporation

Estimated Debt Service Requirements for the Series 2020 Bonds

Fiscal Year

Ended June 30

Existing Net General

Obligation Debt Service

New Net General Obligation Debt

Service

Taxable Project Refunding Bonds, Series 2020(Lexington-Fayette Urban County Government General Obligation)

Debt Service with respect to the Series 2020 Bonds has been estimated based upon market conditions as of July 28, 2020. Based on such conditions, the Bonds are estimated to have an average coupon of 4.00%.

A-2

APPENDIX B COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT

FOR THE FISCAL YEAR ENDED JUNE 30, 2019

[SEE ATTACHED]

B-1

THIS PAGE INTENTIONALLY LEFT BLANK

COMPREHENSIVE ANNUAL FINANCIAL REPORT


FISCAL YEAR ENDED JUNE 30, 2019

Cover by: Amy Wallot/Communications

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT LEXINGTON, KENTUCKY

PREPARED BY THE DEPARTMENT OF FINANCE AND ADMINISTRATION

Paid for with Lexington-Fayette Urban County Government Funds

This page intentionally left blank.

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TABLE OF CONTENTS LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT Comprehensive Annual Financial Report Year Ended June 30, 2019 INTRODUCTORY SECTION Mayor’s Letter of Transmittal .................................................................................................................................. 1

Elected Officials ..................................................................................................................................................... 2 Commissioner of Finance and Administration Letter of Transmittal ...................................................................... 3 GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................................. 9 Organizational Chart .............................................................................................................................................. 10 Directory of Governmental Officials ..................................................................................................................... 11 FINANCIAL SECTION Independent Auditors’ Report ............................................................................................................................... 13 Management’s Discussion and Analysis................................................................................................................ 16 Basic Financial Statements .................................................................................................................................... 30 Government–Wide Financial Statements Statement of Net Position ........................................................................................................................... 31 Statement of Activities ............................................................................................................................... 33 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet – Governmental Funds .................................................................................................. 35 Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Funds ............ 36 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds .......... 37

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................................... 38

Proprietary Fund Financial Statements Statement of Net Position ....................................................... 39 Statement of Revenues, Expenses, and Changes in Net Position ......................................................... 41

Statement of Cash Flows ...................................................................................................................... 43 Fiduciary Fund Financial Statements Statement of Net Position ..................................................................................................................... 45 Statement of Changes in Net Position .................................................................................................. 46 Component Unit Financial Statements Statement of Net Position ..................................................................................................................... 47 Statement of Activities ......................................................................................................................... 48 Notes to Financial Statements .................................................................................................................... 49 Required Supplementary Information

Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budgetary Comparison – General Fund ........................................................................................................................... 110

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budgetary Comparison – Full Urban Services District Fund ................................................................................................ 113

Schedule of Changes in the Net Pension Liability and Related Ratios .................................................... 115 Schedule of the Government Contributions ............................................................................................. 116 Schedule of Changes in the Net Pension Liability and Related Ratios .................................................... 117 Schedule of Changes in the Net OPEB Liability and Related Ratios ....................................................... 118 Schedule of the Government’s Proportionate Share of the Net Pension Liability .................................... 119 Schedule of the Government’s Pension Contributions ............................................................................. 120 Schedule of the Government’s Proportionate Share of the Net OPEB Liability ...................................... 121 Schedule of the Government’s OPEB Contributions ............................................................................... 122

Other Supplementary Information Combining Balance Sheet – Nonmajor Governmental Funds .................................................................. 125

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Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds ..................................................................................................................... 127

Schedule of Expenditures of Federal Awards .......................................................................................... 129 Schedule of Expenditures of State Awards .............................................................................................. 132 Combining Statement of Net Position – Nonmajor Enterprise Funds ...................................................... 134

Combining Statement of Revenues, Expenses, and Changes in Net Position – Nonmajor Enterprise Funds ........................................................................................................................... 135

Combining Statement of Cash Flows – Nonmajor Enterprise Funds ....................................................... 136 Combining Statement of Net Position – Internal Service Funds .............................................................. 138 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal

Service Funds ................................................................................................................................ 139 Combining Statement of Cash Flows – Internal Service Funds ............................................................... 140 Combining Statement of Net Position – Investment Trust Funds ............................................................ 142 Combining Statement of Changes in Net Position – Investment Trust Funds.......................................... 143 Combining Statement of Net Position – Custodial Funds ........................................................................ 144 Combining Statement of Changes in Net Position – Custodial Funds ..................................................... 145 Combining Statement of Net Position – Nonmajor Component Units ..................................................... 147 Combining Statement of Activities – Nonmajor Component Units ......................................................... 148 STATISTICAL SECTION Net Position .................................................................................................................................................... 150 Changes in Net Position ................................................................................................................................. 151 Fund Balances, Governmental Funds............................................................................................................. 153 Changes in Fund Balances, Governmental Funds .......................................................................................... 154 Changes in Fund Balance, General Fund ....................................................................................................... 155 Sanitary Sewer System, Summary of Revenues and Expenses ...................................................................... 156 Net Assessed Value – Real, Tangible & Intangible Property......................................................................... 157 Property Tax Levies and Collections ............................................................................................................. 158 Direct and Overlapping Property Tax Rates .................................................................................................. 159 Principal Property Tax Payers ........................................................................................................................ 160 Direct and Overlapping License Fee Rates .................................................................................................... 161 Ten Major Occupational Tax Withholders ..................................................................................................... 162 Ratios of Outstanding Debt by Type .............................................................................................................. 163 Ratios of General Bonded Debt Outstanding ................................................................................................. 164 Schedule of Direct and Overlapping Indebtedness ........................................................................................ 165 Legal Debt Margin Information ..................................................................................................................... 166 Revenue Bond Coverage ................................................................................................................................ 167 Demographic and Economic Statistics ........................................................................................................... 168 Principal Employers, Fayette County............................................................................................................. 169 Employment by Industry, Fayette County ..................................................................................................... 170 U.S. Census Bureau Statistics ........................................................................................................................ 171 LFUCG Employees by Function/Program ..................................................................................................... 172 Operating Indicators by Function/Program .................................................................................................... 173 Capital Asset Statistics by Function/Program ................................................................................................ 174

INTRODUCTORY SECTION

Lexington-Fayette Urban County Government OFFICE OF THE MAYOR

Linda Gorton Mayor

FOLLOW MAYOR GORTON: www.facebook.com/MayorGorton www.twitter.com/MayorGorton

200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.govHORSE CAPITAL OF THE WORLD

e mber , 2019

Dear Citizen,

The Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019, reflects fiscal discipline and strong financial management:

As the year unfolded, revenue growth slowed. To stay within our budget we cut $2 million by reducingoperating expenses and discretionary accounts, and a slowdown in hiring.

One driver of increased costs was the state, which held Kentucky cities responsible for a greater share ofpension costs. We had reserved $10 million in surplus funds to cover this increase. The increase in Lexingtonin FY19 was $3.1 million. The remaining funds will be used to meet pension increases in future years.

Our rainy day fund stands at $3 million, almost double what was set aside in 2011. The fund is close to ourgoal of 10% of revenue.

As always, public safety dominated our budget in FY19. This year public safety is 55.5% of our General Fundbudget. We hired 25 new positions in our Fire Department, with 24 to staff our new station in MastersonStation, a growing area of our City. We also invested $2.7 million in new tower trucks and other vehicles in theFire Department. In the Police Department, we invested $2.5 million in new police cars.

We funded debt service for $20 million in bonds for our new convention center, which will produce jobs andhelp us attract even more visitors to our city.

We maintained funding for social service agencies at $3 million to overcome federal and state cuts in funding.Since 2012, our City has doubled funding for these grants.

We invested $12 million in paving, $850,000 for traffic signals, and $250,000 for pedestrian safety. Lexington is

living within its means, competing and winning.

Sincerely,

Linda Gorton Mayor

e mberr , 2019

ELECTED OFFICIALS

MAYOR Linda Gorton

COUNCILMEMBERS-AT-LARGE Steve Kay – Vice Mayor

Richard Moloney Chuck Ellinger

DISTRICT COUNCILMEMBERS

1 James Brown 2 Josh McCurn 3 Jake Gibbs 4 Susan Lamb 5 Bill Farmer, Jr. 6 Angela Evans 7 Preston Worley 8 Fred Brown 9 Jennifer Mossotti 10 Amanda Mays Bledsoe 11 Jennifer Reynolds 12 Kathy Plomin

MAYOR LINDA GORTON WILLIAM O’MARA

COMMISSIONER

FINANCE

200 East Main St., Lexington, KY 40507 / 859.425.2255 Phone / 859.258.3385 Fax / lexingtonky.gov

December 9, 2019 Citizens of Lexington-Fayette Urban County Honorable Mayor Linda Gorton Members of the Urban County Council Lexington-Fayette Government Dear Citizens, Mayor and Members of the Urban County Council: As Commissioner of Finance, I present the Comprehensive Annual Financial Report (CAFR) of the Lexington-Fayette Urban County Government (the Government) (LFUCG) for the fiscal year ended June 30, 2019. The CAFR has been prepared in accordance with Generally Accepted Accounting Principles (GAAP) and the reporting standards of the Governmental Accounting Standards Board (GASB). The CAFR includes all funds of the Government and its component units. The report is organized into three sections: an introductory section, a financial section, and a statistical section. This introductory section provides general information on the Government’s structure, as well as information useful in assessing the Government’s financial condition. The financial section contains the independent auditor’s report on the financial statement audit, management discussion and analysis, basic financial statements, required supplementary information, and information on individual funds not separately provided in the basic financial statements. The statistical section provides a broad range of trend data covering financial, demographic, and economic activity useful in assessing the Government’s financial condition. This CAFR was prepared by the Division of Accounting with assistance from staff in the Divisions of Finance, Revenue and Budgeting. These entities are responsible for both the accuracy of the data presented and the completeness and fairness of the presentation. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed to protect the Government’s assets from loss, theft or misuse, and to compile sufficient reliable information for preparation of the financial statements in conformance with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of internal controls should not exceed the benefits likely to be derived from their use and that such cost-benefit evaluation requires estimates and judgment by management. State statute and the Charter of the Government both require that an independent financial audit be conducted annually. The accounting firm of Strothman and Company, PLLC performed the audit for the fiscal year ended June 30, 2019. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Government for the fiscal year ended June 30, 2019 are free of material misstatements. 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 made by management; and evaluating the overall financial statement presentation. The independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the Government’s financial statements for the fiscal year ended June 30, 2019, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component in the financial section of this report. Additionally, the audit engagement also included an audit of federal grants meeting the requirements of federal grantor agencies as outlined by the Federal Single Audit Act of 1984, the Single Audit Act Amendment of 1996, and the related OMB Circular A-133. These standards require the auditor to report not only on the fairness of the representation of the financial statement, but also on the internal controls and compliance with legal requirements of the federal awards. These reports will be available in the Government’s separately issued Single Audit Report. Profile of the Government (As of June 30, 2019) Demographic Profile The City of Lexington, with a population of 323,780, is the second largest city in Kentucky. It is ideally located within 600 miles of 50% of the US population. Besides being the horse capital of the world, Lexington is also home of the state’s flagship university, the University of Kentucky, with 38,988 postsecondary students in the talent pool. Incorporated in 1775, Lexington has since grown to encompass just over 286 square miles of land. Form of Government The Government is an urban county with the powers of both a city of the second class and a county created from the merger of the City of Lexington and the County of Fayette in 1974. The Government operates pursuant to Chapter 67A of the Kentucky Revised Statutes. The Government operates under a Mayor-Council form of government, where executive and administrative functions are vested with the Mayor, and legislative authority is vested with the Urban County Council. The Mayor is assisted in the administration of the government by two senior advisors, a Chief Administration Officer (CAO), the Chief Information Officer (CIO), and seven Department Commissioners. The senior advisors, CAO, CIO and Commissioners are appointed by the Mayor with the approval of the Urban County Council. A list of principal officers begins on page 11. The Government provides a full range of services typical to Municipal governments, including:

General Government – Mayor, Councilmembers, Chief of Staff, Office of Economic Development, Internal Audit, Chief Administrative Officer, Council Clerk, Division of Risk Management, Division of Government Communications, Division of Human Resources, Division of Homelessness Prevention & Intervention, and the Division Grants & Special Programs

Information Technology – Divisions of Computer Services and Enterprise Solutions Environmental Quality & Public Works – Divisions of Environmental Services, Waste Management, Water

Quality, Streets & Roads, and Traffic Engineering Finance – Divisions of Accounting, Budgeting, Purchasing, and Revenue General Services – Divisions of Facilities & Fleet Management and Parks & Recreation Law – Divisions of Corporate Counsel, Litigation, and Claims Management Planning, Preservation and Development – Divisions of Building Inspection, Code Enforcement,

Engineering, Historic Preservation, Planning, and Purchase of Development Rights


Public Safety – Community Corrections, Emergency Management/E 911, Fire & Emergency Services, Police, and Security

Social Services – Divisions of Adult Services, Family Services, Youth Services, and Aging Services Significant Events (as of December 9, 2019) Economic Development LFUCG has developed and implemented two programs to support job growth and economic mobility. The JOBS fund has been allocated $3.5 million, of which $3.0 million has been committed to 25 companies, to support companies that are creating new jobs above the county median wage. Based on payroll reporting, the incentivized companies have created $13.9 million in new payroll in Lexington-Fayette County. Some of the companies have loans, which has also generated repaid principal and interest back into the program fund. The Economic Development Grant has allocated $300,000 between eleven (11) non-profit agencies to support workforce development programs. The job training services provided by the non-profit agencies resulted in 182 unemployed and underemployed individuals placed into employment. The median wage earned by the 182 individuals placed into employment was $10.94. The top 3 sectors represented in frequency of placements were in Hospitality, Manufacturing, and Healthcare. Lexington Convention Center In July 2018, the Lexington Convention Center broke ground on a more than $240 million renovation and expansion, which is the single largest capital project in Lexington’s history. The project had been in discussion for several years and is expected to strengthen Lexington’s convention facilities and continue a program of downtown revitalization. The total convention space will exceed 200,000 square feet when completed. An important part of the project is a refresh of the exterior, with an upgraded façade and arena upgrades as well. In addition to Lexington Convention Center Contracts, the project was funded by Lexington bond funds, an allocation from the state, and a bond issue by the Lexington Convention Center. The project is scheduled for completion in November of 2021. Town Branch Commons Construction began in July 2018 for the Town Branch Commons. The project is a linear urban trail closing the gap between our downtown parks and two major trails. Once on the Town Branch Trail, users will be able to access 22 continuous miles of dedicated walking, jogging, and cycling trails connecting the city center to the countryside. Within the downtown core, the trail separates bikers from pedestrians. As it travels along Midland Ave. the walkers and bikers are combined for a different experience. Water is featured along the path in interactive fountains and planting areas to collect storm water. The trail is separated and buffered from adjacent vehicular traffic. The trail is fully funded by a diverse array of federal and state grants that leverage local dollars. Funding sources include a $14.1M federal TIGER Grant, a $5.6M federal CMAQ Grant, a $2.9M federal TAP Grant, a $7.1M Kentucky Infrastructure Loan, and $11.8M of local dollars. Completion of the project is expected in 2022. A corresponding sanitary sewer project on the Midland Avenue section has already been completed. Consent Decree The Government is required to reduce sanitary sewer overflows as part of a court ordered settlement, the Consent Decree, with the United States (US) Department of Justice, the US Environmental Protection Agency (EPA), and


the Commonwealth of Kentucky. The Consent Decree requires Lexington to address structural, operational, and procedural issues within its storm and sanitary sewer systems in accordance with the schedule developed jointly with the EPA. To date Lexington has incurred no penalties for missing a Consent Decree imposed deadline. The sanitary sewer capital construction component of the Consent Decree consists of 116 capital improvement projects intended to rehabilitate the sanitary sewer system to prevent recurring sanitary sewer overflows and unpermitted bypasses. The cost estimate for all the Remedial Measures Plan (RMP) capital projects is $591 million, and LFUCG must complete the projects by December 31, 2026. In fiscal year 2019, work on the $65 M West Hickman Wet Weather Storage (WWS) complex was the primary focus. The 22 million gallon tank is complete with the associated pumping facility coming on-line in July 2019. Two additional WWS tanks (West Hickman 7 and East Hickman) will come on-line in FY20. A total of 26 RMP projects have been completed and another nineteen (19) are in the construction phase, totaling approximately $234.5 million in capital expenditures. The most recent projections show total RMP capital project expenses continuing to trend approximately 30% below the original estimated expenditure for the projects completed or are under construction to date. The Government will continue to closely monitor this trend as the overall project scope begins to transition away from the storage tank projects and into the pipeline upgrade projects. While the RMPs outline infrastructure improvements required for Consent Decree compliance, the Capacity, Management, Operation and Maintenance (CMOM) Program is also a requirement of the Consent Decree. The CMOM Program outlines the operational changes that must be implemented and maintained. Since launching the Consent Decree, the Division of Water Quality has completed or implemented all 154 required CMOM Program elements. Many have ongoing, continuous compliance components which are being performed. In FY19, the Government took steps to create two dedicated full-time positions to administer and manage on-going CMOM program requirements. Three of the four (4) Supplemental Environmental Projects (SEPs) that were specifically required by the Consent Decree are complete, with the flood mitigation Commonwealth SEP remaining to be completed. LFUCG has completed $18.5 million of $30 million in flood mitigation projects as required by the flood mitigation SEP and is currently constructing Phase One of the Southland/Wolf Run project (approximately $1.1 M) and the WGPL Green Infrastructure project ($160,000). The Government has met all Consent Decree compliance measures associated with the Municipal Separate Storm Sewer System (MS4) and is in full compliance with its state-issued KPDES permit. That permit expires in May 2020 and work is underway to secure a new 5 year permit. Parks and Recreation In the past year, the Division of Parks and Recreation completed many projects that stemmed directly from the 2018 Parks Master Plan. Projects included building improvements, new trail and sidewalk, ADA accessibility, and new playgrounds, included the replacement of Shillito Park playground which was built by 800+ volunteers and completed in October of 2019. Additionally, the department prepared new site development plans for a dozen parks as recommended by the Parks Master Plan and welcomed several new pieces of public art in city parks.


Strengthening Fiscal Management Introduction The Government has benefited from local economic growth and historically low interest rates that have allowed for significant investments in infrastructure and public safety. The Government has also restructured existing debt to benefit from the low interest rate environment and decrease its overall debt service burden. As the Federal Reserve considers future rate changes, the Government will monitor the bond market to ensure that it stays in a favorable position regarding its long-term debt. Local Economy The unemployment rate in Fayette County was 3.9% in June 2019, which is the same as in June 2018. The June 2019 rate was below the state rate of 4.1%. Total employment is well above pre-2008 levels. Employment, as measured by the Bureau of Labor Statistics, was 194,528 for the quarter ended December 31, 2018. By comparison, total employment was 199,897 for the quarter ending December 31, 2017 and 179,182 for the quarter ending December 31, 2007. Average annual pay has also increased in Lexington-Fayette County during that time period the average annual pay in 2007 was $39,823. By comparison, the average annual pay in 2018 was $48,000. Budget Control and Financial Management The Mayor of the Government submits a proposed annual operating budget and a five-year capital improvement budget to the Urban County Council at least sixty days prior to the beginning of each succeeding fiscal year. The Urban County Council, upon receipt of the proposed budget, conducts a series of public hearings on the proposed budget. The Charter of the Government provides that the Urban County Council may amend the budget; however, the adopted budget shall provide for all expenditures required by law and for all debt service requirements. Other budgeting polices include that the budget must be balanced for each fund, and total available funds must equal or exceed total anticipated expenditures. The Urban County Council adopts a line-item budget ordinance and must approve all budget amendments moving money within the personnel category or from one category to another (personnel, operating, capital). Budgetary control is maintained at the division level and is facilitated by the use of encumbrance accounting. As purchase orders are issued, corresponding amounts of divisional appropriations are reserved for later payment. Requests for disbursements, which will result in an overrun of budgeted expenditures, must be accompanied by a request for a budget amendment. The Administration conducts monthly departmental budget reviews. Supplemental information on budget amendments, upcoming issues, and long-term plans are discussed. These meetings, along with the standing Urban County Council Committee of Budget and Finance, give the Government a platform to discuss critical questions related to programs, policies and priorities in addition to the more routine aspects of governmental budget management. Long-Term Financial Policies Annually, the Government adopts a Capital Improvement Plan prior to the completion of the annual operating budget. The development of the capital improvement plan budget is coordinated with the development of the operating budgets. Requests for capital projects are accompanied by estimates of project impact on annual operating


costs and revenues. Additionally, multi-year forecasts of revenues and expenditures, including operating and capital expenditures, are prepared throughout the year to monitor the adequacy of funding resources and debt capacity. Cash Management and Investment Policy The Department of Finance is responsible for the custody, investment, and disbursement of all funds of the Government in accordance with the procedures and standards adopted by the Urban County Council. It is the policy of the Government to invest funds in a manner that will provide the highest investment return with the maximum security of principal while meeting the daily cash flow demands of the Government. The Government’s investments are governed by state statues (KRS 66.480) and an investment policy approved by the Urban County Council. In fiscal year 2019 all funds were invested in either obligations of the United States and its agencies or instrumentalities, mutual funds comprised of those securities, repurchase agreements, collateralized Certificates of Deposit, or commercial paper. Awards and Acknowledgements For the 27th consecutive year, the Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Lexington-Fayette Government for its comprehensive annual financial report for the fiscal year ended June 30, 2018. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the Government must publish an easily readable and efficiently organized comprehensive annual financial report whose contents conform to the program standards. This report must also satisfy generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for the period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program requirement, and we are submitting it to the GFOA to determine our eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient, and dedicated services of the staff of the Divisions of Accounting, Finance, Revenue and Budgeting. Further appreciation is extended to the Mayor, the members of the Urban County Council, Commissioners, and Division Directors for their cooperation and support. Respectfully submitted,

William O’Mara, Commissioner Department Of Finance

Lexington-Fayette Urban County GovernmentOrganizational Chart

Internal Audit

Division of

Advocate

Council

Council Clerk

CouncilUrban County Government

Mayor

County

Urban County Government

Council

Revised May 2019

CAOChief of Chief Development

Economic Development

Divisions ofGovernment

Grants & Special ProgramsHuman

ResourcesRisk

Management

Public Safety

Department of

Community

Emergency Management

Enhanced 911

Fire & Emergency

ServicesPolice

Social Services

Department of

Adult & Tenant Services

Aging & Disability Services

Family ServicesYouth Services

Divisions of

General Services

Department of

& Fleet

ManagementParks &

Divisions of

Finance

Department of

PurchasingRevenue

Divisions of

Law

Department of

Corporate Counsel

Claims Management

Divisions of

Environmental Quality &

Public Works

Department of

Environmental ServicesWaste

ManagementWater Quality

Streets & Roads

Engineering

Divisions of

Planning,

Development

Department of

Deputy CAO

Technology

Department of

Computer Services

Enterprise

Technology

Divisions ofBuilding

Code EnforcementEngineering

Historic

PlanningPurchase of

Development Rights

Bluegrass Farm to Table

Divisions of Divisions of

Diversity and Inclusion

Homelessness

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DIRECTORY OF GOVERNMENTAL OFFICIALS Council Office Stacey Maynard, Council Administrator Citizens' Advocate Office Amber Deitz, Citizens’ Advocate Council Clerk's Office Abigail Allen, Director Office of the Mayor Linda Gorton, Mayor Internal Audit Bruce Sahli, Director Office of the Chief Administrative Officer Sally Hamilton, Chief Administrative Officer Grants and Special Programs Charlie Lanter, Director Risk Management Vacant, Director Public Information Office Stacey Dimon, Supervisor LexCall Kendra Carter, Director GTV3 Chris Edwards, Supervisor Human Resources John Maxwell, Director Office of Homelessness Prevention & Intervention Polly Ruddick, Director

Purchase of Development Rights Elizabeth Overman, Program Manager Historic Preservation Bettie L. Kerr, Director

Chief Development Office Kevin Atkins, Chief Development Officer Planning Jim Duncan, Director Chief Information Office Aldona Valicenti, Chief Information Officer Computer Services Mike Nugent, Director Enterprise Solutions Phillip Stiefel, Director Finance William O'Mara, Commissioner Accounting and Payroll Phyllis Cooper, Director Purchasing Todd Slatin, Director Revenue Rusty Cook, Director Budgeting Melissa Lueker, Director Environmental Quality and Public Works Nancy Albright, Commissioner Environmental Services Susan Plueger, Director Water Quality Charles H. Martin, Director Waste Management Tracey Thurman, Director Streets and Roads Rob Allen, Director Traffic Engineering Jeff Neal, Director Building Inspection Dewey Crowe, Director Engineering Doug Burton, Director Law Susan Speckert, Commissioner Public Safety Ken Armstrong, Commissioner Community Corrections Steve Haney, Director Division of Emergency Management Patricia Dugger, Director E911 Robert Stack, Director Fire and Emergency Services Kristin Chilton, Chief Police Lawrence Weathers, Chief Code Enforcement Alex Olszowy, Director Social Services Chris Ford, Commissioner Adult Services Connie Godfrey, Director Aging Services Kristina Stambaugh, Director Family Services Joanna Rodes, Director Youth Services Stephanie Hong, Director General Services Monica Conrad, Acting Commissioner Facilities and Fleet Management Jamshid Baradaran, Director Parks and Recreation Monica Conrad, Director

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FINANCIAL SECTION

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Independent Auditors’ Report The Honorable Mayor, Members of the Urban County Council and Citizens Lexington-Fayette Urban County Government Lexington, Kentucky Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Lexington-Fayette Urban County Government (the “Government”), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Government’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the following entities:

Lexington Center Corporation Lexington Convention and Visitors Bureau Lexington-Fayette Urban County Airport Board Lexington-Fayette Urban County Department of Health Lexington Public Library Transit Authority of the Lexington-Fayette Urban County Government

Collectively, these entities represent 100%, of the assets, net position, and revenues of the discretely presented component units. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the financial statements of the entities above, is based solely on the reports of the other auditors.

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We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Government’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Government’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Government as of June 30, 2019, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principal – Adoption of GASB Accounting Standard As discussed in Note 2 to the financial statements, the Government adopted new accounting guidance, Government Accounting Standards Board (“GASB”) Statement No. 84, Fiduciary Activities, effective as of July 1, 2018. The implementation of this accounting standard resulted in the creation of a new Investment Trust Fund and a Custodial Fund and reduced the net position for Agency Funds. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 16 to 29 and budgetary comparison information on pages 110 to 114 and pension and OPEB information on pages 115 to 122 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and the other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Government’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the Schedule of Expenditures of Federal Awards and the Schedule of Expenditures of State Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and the other auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports of the other auditors, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal and awards and the schedule of expenditures of state awards are fairly stated in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2019, on our consideration of the Government’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Government’s internal control over financial reporting and compliance. Louisville, Kentucky December 9, 2019

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MANAGEMENT’S DISCUSSION AND ANALYSIS

The Management’s Discussion and Analysis of Lexington-Fayette Urban County Government’s Comprehensive Annual Financial Report (CAFR) presents a discussion and analysis of the Government’s financial performance for the fiscal year ended June 30, 2019. It is supplementary information required by the Governmental Accounting Standards Board (GASB) and is intended to provide a readable explanation of the information within the basic financial statements. It should be read in conjunction with the Letter of Transmittal (which can be found preceding this narrative on page 3) and the financial statements immediately following the analysis.

FINANCIAL HIGHLIGHTS – PRIMARY GOVERNMENT

Government–Wide Highlights

The Government early implemented GASB Statement No. 84, Fiduciary Activities. The objective of the statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The statement establishes criteria for identifying fiduciary activities of all state and local governments. As a result, the Government has identified two new fiduciary funds, the Sewer Investment Trust Fund and the Prisoner Account Fund. The Government recognized two prior period adjustments on June 30, 2019, of $29,270,139 and $627,876 respectively, to establish these new funds.

Total assets plus deferred outflows of resources of the Primary Government exceeded total liabilities and deferred inflows of resources by approximately $314.41 million at the close of fiscal year 2019. This amount includes a deficit of approximately ($711.16) million in unrestricted net position.

Governmental Activities’ net position was ($31.52) million at the end of fiscal year 2019. Of this amount, $667.27 million was the net investment in capital assets. The net investment in capital assets comprises 2,117.24% of total net position.

Business-Type Activities held a balance of $345.93 million in net position. The unrestricted fund balance at June 30, 2019 is $54.87 million, or 56.91% of Business-Type Activity expenses.

Fund Highlights

As of June 30, 2019, the Government’s governmental funds reported combined ending fund balances of $147.80 million, a decrease of $1.41 million compared to the previous fiscal year. Of this total amount, $81.20 million is restricted for various projects: public works, public safety, capital projects, grants, urban services, and energy improvements.

The General Fund, the primary operating fund of the Government, held an unassigned fund balance of $5.93 million or 1.61% of General Fund expenditures. There are two categories of committed fund balance; general government and economic stabilization. Committed funds represent amounts restricted for use by the highest level of governing authority, an ordinance passed by the Urban County Council. The total committed fund balance is $39.57 million. The committed fund balance designation for economic stabilization held a balance of $35.35 million, available for spending in the event of an economic downturn or unforeseen event. There are two categories of assigned fund balance; general government and capital projects. Assignments for general government and capital projects represent planning for various projects. These assignments total $18.46 million for fiscal year 2019.

OVERVIEW OF THE FINANCIAL STATEMENTS

Three key elements comprise the basic financial statements, including:

A) Government-Wide Financial Statements; B) Fund Financial Statements, and; C) Notes to the Financial Statements

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A. Government-Wide Financial Statements

The Government-Wide Financial Statements are designed to provide readers with a broad overview of the Government’s finances in a manner similar to a private-sector business. These statements report financial information about the entire Government, except for fiduciary activities, and provide both short-term and long-term information about the Government’s financial position, and assist in the assessment of the Government’s economic condition at the end of the fiscal year. The statements are prepared using the flow of economic resources measurement focus and the accrual basis of accounting. They take into account all revenues and expenses of the fiscal year regardless of when cash is received or paid. The Government-Wide Financial Statements include two statements: The Statement of Net Position and the Statement of Activities.

The Statement of Net Position reflects the financial position of the Government at fiscal year ended June 30, 2019. Accordingly, the Government’s net position, the difference between assets (what the citizens own) plus deferred outflows of resources and liabilities (what the citizens owe), is one way to determine the financial condition of the Government. Over time, increases or decreases in net position are one indicator of whether the financial health of the Government is improving or deteriorating. However, additional factors such as changes in the Government’s revenue structure, its tax base, and its level of assets held, should be considered in order to assess thoroughly the overall financial condition of the Government.

The Statement of Activities reflects the Government’s revenues and expenses, as well as other transactions that increase or decrease net position. Program revenues are offset by program expenses in order to provide better information regarding program costs financed by general government revenues.

The Government-Wide Financial Statements divide the Government’s activities into three types:

1. Governmental Activities – The activities in this section are mostly supported by intergovernmental revenues (federal grants) and taxes, namely licenses and permits, property taxes, and charges for services. Most services normally associated with local government fall into this category, including police, fire, solid waste, parks and general administration. Internal Service Fund balances are reported as part of Governmental Activities.

2. Business-Type Activities – These activities normally are intended to recover all or a significant portion of costs through user fees and charges to external users of goods and services provided by the Government. The Business-Type Activities of the Government include the operations of various Enterprise Funds, including sanitary sewer services, landfill and disposal costs, water quality, and leases and operating costs for public facilities related to debt issues.

3. Discretely Presented Component Units – The Government includes eight separate legal entities in its reports. Although legally separate and possessing independent qualities, the Government maintains financial accountability for these entities.

B. Fund Financial Statements

A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The Fund Financial Statements report the operations of the Government in greater detail than the Government-Wide Financial Statements by providing information about the Government’s most significant funds. Local ordinance or bond covenants may require the creation of some funds; others may be created at the discretion of the Administration for management and fiscal control of financial resources. All funds of the Government can be divided into three types of funds: Governmental Funds, Proprietary Funds, and Fiduciary Funds.

1. Governmental funds – Governmental funds are used to account for essentially the same functions reported as Governmental Activities in the Government-Wide Financial Statements. However, unlike the Government-Wide Financial Statements, governmental fund financial statements focus on near-term

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inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year.

Most of the basic services performed by the Government are reported in the governmental funds category. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can be readily converted to cash. Because the focus of governmental funds is narrower than that of the Government-Wide Financial Statements, it is useful to compare the information presented for governmental funds with similar information presented for Governmental Activities in the Government-Wide Financial Statements. By doing so, readers may better understand the long-term impact of the Government’s near term funding decisions. The governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and Governmental Activities.

2. Proprietary funds – When the Government charges a fee for services which is intended to cover the cost of providing those services – whether to outside customers or other units of the Government – those services are generally reported in the proprietary funds category. The subcategories of the proprietary funds include enterprise funds and internal service funds.

Enterprise funds are used to report the same functions presented as Business-Type Activities in the Government-Wide Financial Statements.

Internal service funds are used to accumulate and allocate costs internally among the various functions of the Government. The Government uses internal service funds to account for its health, general liability, auto, property and worker’s compensation self-insurance. These services predominantly benefit Governmental Activities rather than Business-Type Activities and they have been included with Governmental Activities in the Government-Wide Financial Statements.

The proprietary funds are reported in the same way that all activities are reported in the Government-Wide Financial Statements, but the fund statements provide more detail. The Government considers the Sanitary Sewer System Fund, the Public Facilities Corporation Fund, the Landfill Fund, and the Water Quality Fund as its major proprietary funds.

3. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the Government. Fiduciary funds are not reflected in the Government-Wide Financial Statements because the resources of those funds are not available to support the programs of the Government. The accounting used for the fiduciary funds is similar to that used for proprietary funds. The Government is the trustee, or fiduciary, for two employees’ pension funds, the City Employees’ Pension Fund and the Policemen’s and Firefighters’ Retirement Fund.

C. Notes to the Financial Statements

The notes to the financial statements provide information that is essential to a full understanding of the data provided in the Government-Wide and Fund Financial Statements. They are an integral part of the financial statements and focus on the primary government and its activities.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Analysis of Net Position

Net position may serve as a useful indicator of a government’s financial position. In Table 1 below, the Government’s combined net position (Governmental and Business-Type Activities) totaled $314.41 million as of June 30, 2019, a decrease of $57.38 million from the previous year. Total depreciation expense government wide was $73.27 million.

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The largest proportion of the Government’s net position, $942.88 million, is invested in capital assets (e.g. land, infrastructures, buildings and improvements, and machinery and equipment), minus any related debt, which is still outstanding and used to acquire those assets. The Government uses these capital assets to provide services to its citizens. As such, these assets are not available for future spending.

RestatedFY 2019 FY 2018 Change

ASSETSCurrent and other assets $369,298 $378,041 ($8,743)Capital assets 1,426,184 1,404,025 22,159 Total assets 1,795,482 1,782,066 13,416

DEFERRED OUTFLOWS OF RESOURCES 222,116 226,973 (4,857)

LIABILITIESCurrent and other liabilities 85,587 79,049 6,538Long-term liabilities 1,441,411 1,496,090 (54,679) Total liabilities 1,526,998 1,575,139 (48,141)

DEFERRED INFLOWS OF RESOURCES 176,189 62,111 114,078

NET POSITIONNet Investment in Capital Assets 942,878 965,647 (22,769)Restricted for:

Capital Projects 47,789 111,478 (63,689)Energy Improvement Projects 1,377 1,271 106Debt Service 3,762 3,440 322Capital Replacement 1,794 1,327 467Pension 21,449 20,632 817Water Quality Incentive Program 5,336 5,217 119Grants 259 250 9Maintenance and Operations 925 489 436

Unrestricted (711,158) (737,962) 26,804

Total net position $314,411 $371,789 ($57,378)

Table 1Lexington-Fayette Urban County Government

Summary of Net PositionFor Years As Stated

(in thousands)

Total Net Position

Approximately $82.69 million, or 26.30% of total net position, is subject to external restrictions regarding its use. Restricted amounts within Governmental Activities include fund balances of the general fund, the urban services fund and various special revenue funds. Please refer to the fund analysis beginning on page 25 for more information.

Table 2 indicates that the net position of Governmental Activities totaled ($31.52) million, or 2.68% of total assets, a decrease of $73.50 million from the previous year. Of this total, $667.27 million is invested in capital assets (e.g.

20

land, infrastructures, buildings and improvements, and machinery and equipment), minus any related debt, which is still outstanding and used to acquire those assets.


ASSETSCurrent and other assets $237,300 $240,112 ($2,812)Capital assets 937,563 958,377 (20,814) Total assets 1,174,863 1,198,489 (23,626)

DEFERRED OUTFLOWS OF RESOURCES 206,043 206,056 (13)

LIABILITIESCurrent and other liabilities 60,704 60,298 406Long-term liabilities 1,180,692 1,244,061 (63,369) Total liabilities 1,241,396 1,304,359 (62,963)


NET POSITIONNet Investment in Capital Assets 667,270 718,485 (51,215)Restricted for:

Capital Projects 43,876 47,044 (3,168)Energy Improvement Projects 632 607 25Debt Service 1,026 812 214Pension 21,449 20,632 817Grants 259 250 9

Maintenance and OperationsUnrestricted (766,028) (745,842) (20,186) Total net position ($31,516) $41,988 ($73,504)

Lexington-Fayette Urban County GovernmentSummary of Net Position

For Years as Stated(in thousands)

Governmental Activities

Table 3 shows the net position of Business-Type Activities totaled $345.93 million at the end of fiscal year 2019, an increase of $16.13 million from the previous fiscal year. Of total net position, $275.61 million, or 79.67%, is invested in capital assets, minus related debt which is still outstanding and used to acquire those assets. The Government uses these capital assets in the same way as the capital assets held by Governmental Activities.

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ASSETSCurrent and other assets $131,998 $137,930 ($5,932)Capital assets 488,621 445,648 42,973 Total assets 620,619 583,578 37,041

DEFERRED OUTFLOWS OF RESOURCES 16,073 20,917 (4,844)

LIABILITIESCurrent and other liabilities 24,883 18,751 6,132Long-term liabilities 260,719 252,029 8,690 Total liabilities 285,602 270,780 14,822


NET POSITIONNet Investment in Capital Assets 275,608 247,163 28,445Restricted for:

Capital Projects 3,914 64,434 (60,520)Energy Improvement Projects 746 664 82Debt Service 2,736 2,628 108Capital Replacement 1,794 1,327 467Water Quality Incentive Program 5,336 5,217 119Maintenance and Operations 925 489 436

Unrestricted 54,868 7,879 46,989 Total net position $345,927 $329,801 $16,126


Summary of Net PositionFor Years as Stated

(in thousands)

Business-Type Activities


As indicated in Chart 1, the Government funds its Governmental Activities from revenue received from four significant categories. A clear majority, 64%, of the Government’s revenue were provided through licenses and permits. This category includes fees placed on employee withholdings, business returns, insurance premiums, and franchise fees. Charges for Services were 18%, which was the second largest contributing category to governmental activity revenues. Revenues collected in this category included charges collected from the Detention Center, EMS charges, golf course collections, fees for building permits, and fees associated with parks and recreation programs. Property Taxes comprised 13% of governmental revenues. Federal and State grant funding represented 4% of governmental revenue. The remaining 1% in Other category represented miscellaneous revenues collected by the Government.

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Grants4%

Property Taxes13%

Charges for Services18%

Licenses and Permits64%

Other1%

Chart 1

Distribution of Governmental Activity Revenues

As indicated by Table 4, revenues from Governmental Activities totaled $476.28 million, which was an increase of $9.71 million, or 2.08%, from the previous fiscal year. Licenses and permits totaled $303.56 million, representing 63.74% of total revenues. As stated earlier, this category includes employee withholdings in the form of an occupational license fee (OLF). This fee is comprised of an assessment of 2.25% on the total wages received by individuals employed in Lexington-Fayette County and an assessment of 2.25% on the net profits of businesses operating in the Lexington-Fayette County area. The Government implemented a new system allowing for improvements in identifying and reporting collections within 60 days of the end of the fiscal year. Licenses and permits decreased by $1.06 million, or 0.35% from the previous fiscal year. This is primarily due to a decrease in franchise fees collected during the fiscal year. Property taxes increased by $2.50 million, due to an increase in realty taxes collected. Charges for services increased by $4.47 million from the previous fiscal year, or 5.52%. Operating and Capital grants decreased by $0.53 million from the previous fiscal year, or 1.09%.

As noted on Table 4, total expenses of Governmental Activities were $550.35 million; an increase of $15.48 million from the previous fiscal year. This is primarily due to the Government’s commitment to contributing to the renovations of the Lexington Convention Center of $20.0 million. In addition, General Government expenditures increase $1.77 million for various capital projects. Information Technology projects increased $1.24 million over the prior year due to a financial system upgrade. Community Corrections expenditures increased $1.72 million due to salary increases. Other various departments had increases totaling $4.47 million. This is offset by decreases in Public Safety of $11.43 million for capital expenditures and OPEB changes, and various other departments totaling $2.29 million.

Business-Type Activities

Also indicated on Table 4, revenues from Business-Type Activities increased by $39.56 million from the previous fiscal year. Revenues collected for services provided by the Government increased $38.8 million and other general revenues increased $0.76 million. Total expenses of Business-Type Activities increased when compared to fiscal year 2018, by $6.75 million. Primarily Sanitary Sewer and Landfill increased $9.75 million and $0.73 million, respectively. Other Business-Type Activities expenses increased approximately $0.34 million. Public Facilities and Prisoner Account expenses decreased $1.14 million and $2.93 million, respectively. The largest program among these activities is the Sanitary Sewer system, with expenses of $63.11 million during the fiscal year, representing 65.46% of all Business-Type Activities expenses.

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Restated Restated Restated2019 2018 2019 2018 2019 2018

RevenuesProgram Revenues: Charges for Services $84,848 $80,408 $111,353 $72,553 $196,201 $152,961 Operating Grants & Contributions 11,596 10,617 11,596 10,617 Capital Grants & Contributions 5,189 5,718 5,189 5,718General Revenues: Property Taxes 64,574 62,072 64,574 62,072 Licenses & Permits 303,563 304,626 303,563 304,626 Grants & Unrestricted Contributions 3,353 1,951 3,353 1,951Other General Revenues 3,155 1,179 1,749 991 4,904 2,170 Total Revenues 476,278 466,571 113,102 73,544 589,380 540,115Program Expenses General Government 45,808 24,040 45,808 24,040 Administrative Services 10,124 10,333 10,124 10,333 Health, Dental, Vision, Workers Comp, General Insurance 28,506 27,763 28,506 27,763 Chief Development Officer 1,208 263 1,208 263 Information Technology 12,248 11,012 12,248 11,012 Finance 36,311 36,669 36,311 36,669 Environmental Quality & Public Works 64,883 65,541 64,883 65,541

Planning, Preservation, & Development 46,409 46,217 46,409 46,217 Public Safety 14,632 14,914 14,632 14,914 Police 87,225 94,800 87,225 94,800 Fire & Emergency Services 89,330 92,898 89,330 92,898 Community Corrections 42,469 40,749 42,469 40,749 Social Services 15,087 14,223 15,087 14,223 General Services 12,376 13,443 12,376 13,443 Parks & Recreation 24,799 24,127 24,799 24,127 Law 2,887 2,602 2,887 2,602 Interest on Long-Term Debt 16,045 15,273 16,045 15,273 Sanitary Sewer System 63,106 53,354 63,106 53,354 Public Facilities 6,915 8,050 6,915 8,050 Landfill 4,799 4,072 4,799 4,072 Right of Way 593 530 593 530 Extended School Program 2,152 2,137 2,152 2,137 Prisoners' Account System 2,930 0 2,930 Enhanced 911 4,797 4,701 4,797 4,701 CKY Network 421 266 421 266 Water Quality 13,628 13,619 13,628 13,619 Total Expenses 550,347 534,867 96,411 89,659 646,758 624,526Increase (Decrease) in Net Position before (74,069) (68,296) 16,691 (16,115) (57,378) (84,411)Transfers

Transfers 565 (800) (565) 800 0 0Increase (Decrease) in Net Position (73,504) (69,096) 16,126 (15,315) (57,378) (84,411)Net Position, July 1 41,988 111,084 329,801 345,116 371,789 456,200Net Position, June 30 ($31,516) $41,988 $345,927 $329,801 $314,411 $371,789


Summary of Statement of ActivitiesFor Years as Stated

(in thousands)Governmental Business-Type Total Primary

Activities Activities Government

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PERSONNEL COSTS

During the year, personnel related expenses for salaries and wages covered by collective bargaining agreements increased approximately $5.19 million. Police and Community Corrections increased by $0.90 million and $0.97 million, respectively. Fire & Emergency Services increased by $3.32 million. Salary and wage costs, including benefits, for non-collective bargaining employees increased 1.60%. See Chart 2 for more information on personnel costs for Governmental Activities during fiscal year 2019.

0

10000000

20000000

30000000

40000000

50000000

60000000

Dol

lars

Chart 2Governmental Activities Personnel Costs with Benefits

Benefits

Salaries andWages

Chart 3 displays the distribution of total costs by governmental activity.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Percentof Total

Departments

Chart 3Distribution of Governmental Activity Expenses

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FUNDS OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT

As discussed earlier, the Government uses fund accounting to ensure and demonstrate compliance with Generally Accepted Accounting Principles (GAAP) and other finance-related legal requirements.

Governmental Funds

The Government’s total governmental funds for the year ended June 30, 2019 reflect a combined ending fund balance of $147.80 million, a decrease of $1.41 million from the previous fiscal year. The Government reports fund balance as nonspendable, restricted, committed, assigned, or unassigned (refer to Note 1 to the financial statements for detailed information on the fund balance classifications). The decrease is primarily due to expenditures in excess of revenues of $47.11 million, offset by net transfers out and proceeds from the issuance of bonds of $45.70 million.

The Government had $5.93 million of unassigned fund balance available in the General Fund at June 30, 2019. Unassigned fund balance of the General Fund (the Government’s main operating fund) represents approximately 1.61% of total general fund expenditures for fiscal year 2019. At the end of fiscal year 2019, the fund balance held by the General Fund totaled $67.91 million, an increase of $3.55 million, or 5.52%, from the previous fiscal year. This was primarily due to revenues in excess of expenditures of $0.65 million, offset by other financing uses of $2.87 million. In addition, there is a slight increase from a prior period adjustment of $0.03 million (see footnote 2.D. for additional details).

The Urban Services Fund is used to finance solid waste collection, streetlights, and street cleaning services for properties within designated property tax districts. At the end of the fiscal year, the Urban Services Fund held a total fund balance of $25.84 million, a decrease of $2.34 million over the prior fiscal year. This decrease is primarily due to expenditures in excess of revenues of $2.35 million, offset by transfers in of $0.01 million. Revenues of the Urban Services Fund increased by $1.56 million or 3.72% compared to the prior fiscal year. Operating expenditures increased $4.45 million over the prior fiscal year. This was primarily due to an increase in equipment, acquisitions, and construction of $4.09 million and an increase in debt expenditures of $0.42 million offset by a decrease in department expenditures of $0.06 million.

The Federal and State Grants Fund held a balance of $0.26 million for fiscal year ended June 30, 2019, an increase of $0.01 million over the prior fiscal year. This fund balance represents grant revenues received, but not spent, that are restricted for specific activities. During fiscal year 2012, an outstanding loan receivable balance was paid in full. The funding is being used for urban development projects.

The Other Governmental Funds primarily relate to costs associated with various capital bond projects. During fiscal year 2019, $52.41 million was expended on these projects. Bonds in the amount of $44.86 million were issued to reimburse these expenditures and cover any additional costs associated with the projects, for more information please see Note 3.D. to the financial statements.

Proprietary Funds

The Government’s proprietary fund statements provide the same type of information found in the Government-Wide Financial Statements, but in more detail. Total net position for the Government’s proprietary funds totaled $345.93 million as of June 30, 2019, an increase of $15.30 million from the prior fiscal year. Revenues from charges for services increased $38.8 million and total expenses increased $6.65 million when compared to the prior fiscal year.

The Sanitary Sewer System Fund held a total net position of $258.54 million, a decrease of $15.48 million over the prior year. Of the total net position held by the Sanitary Sewer System Fund, $4.46 million is restricted by bond covenants for capital replacement, projects, and debt service. In addition, $0.75 million is restricted for energy improvement projects.

The Public Facilities Corporation was created by the Government to act as an agency and instrumentality of the Government to finance and operate public projects. The net position of the Public Facilities Corporation was $19.67 million, a decrease of $0.39 million from the prior fiscal year. Operating income during fiscal year 2018 was $5.95

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million. The decrease in net position is primarily due to excess operating revenues of $0.45 million and transfers of $0.57 million, offset by non-operating expenses of $1.41 million.

The Water Quality Fund was established to account for the revenues and expenses of developing and operating storm water related activities. The net position of the Water Quality Fund totaled $20.96 million, an increase of $1.33 million from the prior fiscal year. Revenues in excess of expenses primarily contributed to this increase.

As of June 30, 2019, the total net position of the Landfill Fund held a balance of $40.96 million, an increase of $2.82 million from the prior fiscal year, a 7.40% increase. Revenues in excess of expenses primarily contributed to this increase.

The other enterprise funds were established to account for the acquisition, operation and maintenance of the Government’s facilities and services which are entirely or predominantly self-supported by user charges or where the Government has decided that periodic determination of revenues earned, expenses incurred, and net income is appropriate for capital maintenance, public policy, management control, accountability, and other purposes. As of June 30, 2019 the other enterprise funds held total net position of $4.36 million, a decrease of $2.44 million over the previous fiscal year.

GENERAL FUND BUDGETARY HIGHLIGHTS

The General Fund is the primary operating fund of the Government. Over the course of the year, the Urban County Council revises the budget numerous times; thus, exercising one of the primary duties of the Urban County Council as guardian of the Government’s funds. Supplemental appropriations are approved to reflect actual beginning fund balances and to re-appropriate funds for capital projects. As the year progresses and actual revenue collections and budgetary experience is known, amendments are processed in order to reflect the actual results and revised expectations of future revenue and expenditures.

For fiscal year 2019, General Fund revenues totaled $369.91 million, an increase of 1.59% from the previous fiscal year. Total revenues were $3.28 million below the final budgeted amount. This decrease in actual revenue is the result of a stabilization in the U.S. economy, which affected the growth rate of both business returns and franchise fees. Total ad valorem taxes and charges for services were $1.53 million above the final budgeted amount. Fines and forfeitures, intergovernmental, and property sales were $0.56 million above the final budgeted amount. Investment returns were $1.13 million above the final budgeted amount. Other income was $0.48 million above the final budgeted amount. Total licenses and permits were $6.47 below the final budgeted amount.

General Fund expenditures of the Government totaled $369.26 million, an increase of $5.89 million, or 1.62% over the previous fiscal year. Expenditures were $9.64 million below the final budgeted amount. Operating expenditures were $6.43 million below the final budgeted amount. Personnel expenditures, accounting for 63.14% of General Fund expenditures, were $2.78 million below the final budgeted amount. Divisions with collective bargaining agreements had expenditures $2.13 million below the final budgeted amount. Personnel expenditures from these divisions account for 52.97% of the General Fund expenditures. Please see Table 5 below for more details regarding the distribution of General Fund personnel costs and the changes from prior year.

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Departments 2019 2018 Change % Change

% General Fund

Expenditures

Non-Collective Bargaining DivisionsAdministrative Services $5,432 $5,217 $215 4.1% 1.5%Chief Development Officer 421 310 111 35.8% 0.1%Information Technology 4,938 4,501 437 9.7% 1.3%Department of Finance 4,781 4,802 (21) (0.4%) 1.3%Department of General Services 3,989 3,476 513 14.8% 1.1%Department of Law 2,100 2,055 45 2.2% 0.6%Department of Public Safety 4,568 4,678 (110) (2.4%) 1.2%Department of Social Services 7,177 7,038 139 2.0% 1.9%Department of Environmental Quality & PW 5,930 6,028 (98) (1.6%) 1.6%Department of Planning, Preservation & Dev 9,079 9,053 26 0.3% 2.5%General Government 6,492 6,048 444 7.3% 1.8%Parks and Recreation 13,543 13,381 162 1.2% 3.7%

Total Non-Collective Bargaining Divisions 68,450 66,587 1,863 2.8% 18.5%

Divisions with Collective BargainingPolice 69,487 66,718 2,769 4.2% 18.8%Community Corrections 26,128 24,994 1,134 4.5% 7.1%Fire & Emergency Services 69,105 64,281 4,824 7.5% 18.7%

Total Collective Bargaining Divisions 164,720 155,993 8,727 5.6% 44.6%

Total Personnel Costs with Benefits $233,170 $222,580 $10,590 4.8% 63.1%


Summary of General Fund Personnel Costs with BenefitsFor Years as Stated

(in Thousands)

CAPITAL ASSETS

The Government’s capital assets totaled $1.43 billion as of June 30, 2019, details of which are in Note 3.B. to the financial statements. This investment includes land, buildings, equipment, park facilities, roads, bridges, and sewer systems. For Governmental Activities, the net investment in capital assets totaled $667.27 million. Governmental Activities net investment in capital assets decreased by $51.22 million from the prior fiscal year. The net investment in capital assets of Business-Type Activities totaled $275.61 million, an increase of $28.45 million over the previous fiscal year.

This year’s major changes in capital assets included:

Governmental Activities total capital assets decreased by $25.11 million compared to the previous fiscal year. The decrease was primarily due to depreciation of $55.99 million, asset retirements of $0.13 million, and a prior period adjustment decrease of $4.29 million, offset by capital additions of $35.31 million. Developments in progress decreased by $24.61 million and were placed in service. Construction in progress increased by $12.39 million for various projects. Developments in progress relate to the Exaction Area Master Plan (EAMP), additional details can be found in Note 1.D.

Capital assets for Business-Type Activities increased by $41.45 million. The overall increase was primarily due to additions of $60.25 million, offset by depreciation of $17.28 million and a prior period adjustment of $1.52 million. The increase represents several projects underway related to the Government’s Remedial Measures Plan, filed with the Environmental Protection Agency. Additional information can be found in Note 5.B. to the financial statements.

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Construction in progress assets totaled $30.08 million in the Governmental Activities and $123.08 million in Business-Type Activities. The overall increase from the previous year in construction in progress assets totaled $66.60 million. The increase was primarily due to additions of $70.96 million offset by net asset retirements and reclassifications of $4.36 million.

2019 2018 2019 2018 2019 2018

Land* $62,866 $61,888 $46,422 $46,342 $109,288 $108,230Purchase of Development Rights 80,603 80,220 80,603 80,220Intangibles 12,891 7,902 3,743 4,726 16,634 12,628Buildings 108,617 112,694 28,203 31,516 136,820 144,210Vehicles, Equipment, & Furniture* 44,344 44,323 19,476 19,174 63,820 63,497Land and Leasehold Improvements 15,762 18,689 6,432 6,881 22,194 25,570Infrastructure & Sewer Lines/Plants 582,102 594,357 261,149 260,198 843,251 854,555Construction in Progress 30,082 17,689 123,080 68,869 153,162 86,558Developments in Progress* 296 24,906 116 9,465 412 34,371 Total $937,563 $962,668 $488,621 $447,171 $1,426,184 $1,409,839

* Restated beginning balance due to prior period adjustment, see Note 2.D. to the financial statements.

Governmental Activities Business-Type Activities Total Primary Government


Summary of Capital AssetsFor Years as Stated

(in thousands)

Additional information on the Government’s capital assets activity can be found in Note 3.B. to the financial statements. DEBT ADMINISTRATION

The Government began issuing General Obligation (GO) bonds in fiscal year 1999 because of changes in state law that had previously precluded this type of financing. Since GO bonds are backed by the full faith and credit of the Government, they carry a higher credit rating than other forms of debt and have lower interest rates. As a result, future debt issues on behalf of the Government will be GO debt, unless such debt is secured by Enterprise Fund activities.

Prior to the issuance of GO bonds, mortgage revenue bonds were issued through various public corporations in order to finance public projects. For mortgage revenue bonds, the Government enters into annual renewable lease agreements automatically with the corporations whereby lease payments from the Government, combined with revenues generated by the operation of the facilities, are sufficient to meet debt service obligations. The underlying security for the bond is the annual lease agreements and the underlying mortgages on the property. Revenue bonds, where only the revenues from the operation of the facilities are pledged as security for the bonds, are issued to finance improvements to the sanitary sewer system.

At the end of fiscal year 2019, the Government had $611.68 million in bonds and notes outstanding; Governmental Activities’ debt increased by $13.38 million and total debt increased by $25.91 million. The increase in debt for Governmental Activities resulted primarily from the issuance of GO bonds totaling $44.86 million, offset by principal payments and amortized bond costs in the current fiscal year on outstanding debt of $31.48 million. The Business-Type Activities debt increased $12.53 million primarily from note payable proceeds of $23.74 million, offset by principal payments and amortized bond costs of $11.21 million.

Despite legal changes that provide for the issuance of GO debt, legal limits remain on the total amount of GO indebtedness that may be incurred. The Kentucky Constitution provides that the total principal amount of GO debt cannot exceed 10% of the value of taxable property in the county, or $3.32 billion. State law provides the same

29

limitation as set forth in the constitution except that the limitation applies to “net indebtedness”, which excludes self-supporting obligations, revenue bonds, special assessment debt and non-tax supported debt issued prior to July 15, 1996 (the effective date of the previously discussed statutory change). The total amount of debt subject to the legal limitation is $362.03 million.

2019 2018 2019 2018 2019 2018General Obligation Bonds, Notes, Leases $402,421 $389,046 $138,261 $120,023 $540,682 $509,069Mortgage Revenue Bonds 43,965 46,578 43,965 46,578Revenue Bonds 27,036 30,129 27,036 30,129 Total $402,421 $389,046 $209,262 $196,730 $611,683 $585,776

Governmental Business-Type Activities Total Primary Government


Summary of Outstanding DebtFor Years as Stated

(in thousands)

The Government maintains a general obligation bond rating of “Aa2” from Moody’s and “AA” from Standard & Poor’s. The revenue bonds of the sanitary sewer system have a bond rating of “Aa2” from Moody’s and “AA” from Standard & Poor’s. The rating of the Government’s mortgage revenue debt is “Aa3” from Moody’s and “AA-” from Standard & Poor’s. The Government has not issued mortgage revenue debt since 1998 due to changes in state law that provided for the issuance of general obligation debt. Additional information regarding the Government’s long-term debt can be found in Note 3.D. to the financial statements.

NEXT YEAR’S BUDGET

The Lexington-Fayette Urban County Government Fiscal Year 2020 Budget, for all funds combined, net of interfund transfers, is $623,491 million. Significant initiatives in the budget include:

A commitment of $78.26 million for storm sewer projects and programs as required by the Environmental Protection Agency Consent Decree, which will include the issuance of Sewer Revenue Bonds. For additional information see Note 7.

GO bonds were approved as part of the fiscal year 2020 budget for $18.11 million. The bonds will fund projects for Public Safety, infrastructure improvements, voting machines, fleet replacement, and to provide funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the Government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Commissioner of Finance, 200 East Main Street, Lexington-Fayette Urban County Government, Lexington, Kentucky, 40507.

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BASIC FINANCIAL STATEMENTS


Business-Type Activities Total

Component Units

ASSETS Cash $55,254,031 $56,062,203 $111,316,234 $49,183,359 Investments 67,191,490 68,149,748 135,341,238 14,316,796 Receivables (Net) 37,618,113 5,822,634 43,440,747 3,809,883 Due from Other Governments 3,709,658 3,709,658 4,127,370 Due from Primary Government 2,238,552 Other Current Assets 753,068 Inventories and Prepaid Expenses 2,725,472 168,809 2,894,281 964,017 Net Pension Asset 21,448,799 21,448,799 Restricted Assets:

Cash 17,450,009Receivables (Net) 4,870,270 4,870,270 3,250,699Grants Receivable 1,000,000 1,000,000 1,787,982

Investments 42,057,724 1,793,860 43,851,584 270,637,255 Other 75,678 Capital Assets: Non-depreciable 183,645,881 170,198,301 353,844,182 131,526,790 Depreciable (Net) 753,917,443 318,422,210 1,072,339,653 230,472,002

Other Assets 1,424,271 1,424,271 10,384,503

Total Assets $1,174,863,152 $620,617,765 $1,795,480,917 $740,977,963

DEFERRED OUTFLOWS OF RESOURCESDeferred Amount on Bond Refunding $3,790,680 $2,945,919 $6,736,599 $1,352,203Deferred Pension Amounts 182,577,923 9,892,392 192,470,315 14,300,266Deferred Other Post Employment Benefit Amounts 19,673,995 3,234,613 22,908,608 3,228,030Deferred Amount on Note Payable 3,372,502

Total Deferred Outflows of Resources $206,042,598 $16,072,924 $222,115,522 $22,253,001

LIABILITIES Accounts, Contracts Payable and Accrued Liabilities $18,971,250 $9,935,216 $28,906,466 $14,667,207 Interest Payable 4,965,468 439,804 5,405,272 138 Internal Balances 1,494,920 (1,494,920) Due to Component Units 2,238,552 2,238,552 Unearned Revenue and Other 5,125,791 43,886 5,169,677 268,401 Claims Liabilities 27,908,401 27,908,401 Liabilities Payable from Restricted Assets: Payable 6,363,854 6,363,854 4,323,917 Bonds and Notes Payable 9,016,786 9,016,786 Interest Payable 577,955 577,955 4,728,806 Due Within One Year: Bonds and Notes Payable 31,840,000 2,527,654 34,367,654 8,834,604 Compensated Absences 3,697,727 522,475 4,220,202 247,469 Landfill Closure and Postclosure Care Costs 441,121 441,121 Due in More Than One Year: Unearned Revenue and Other 273,008 273,008 344,327 Bonds and Notes Payable 370,580,856 197,717,618 568,298,474 326,473,216 Compensated Absences 22,714,607 1,037,571 23,752,178 839,839 Landfill Closure and Postclosure Care Costs 11,964,371 11,964,371

Unfunded Other Post Retirement Benefit Liability 307,936,013 10,519,306 318,455,319 15,045,777

Unfunded Pension Liability 443,649,826 35,988,706 479,638,532 76,048,750 Total Liabilities $1,241,396,419 $285,601,403 $1,526,997,822 $451,822,451

DEFERRED INFLOWS OF RESOURCESDeferred Pension Amounts $36,914,285 $2,888,550 $39,802,835 $5,742,019Deferred Other Post Employment Benefit Amounts 134,111,743 2,274,907 136,386,650 1,870,335

Total Deferred Inflows of Resources $171,026,028 $5,163,457 $176,189,485 $7,612,354

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF NET POSITION

June 30, 2019

Primary Government

31


June 30, 2019


Business-Type Activities Total

Component Units

NET POSITIONNet Investment in Capital Assets $667,270,316 $275,607,655 $942,877,971 $258,054,553Restricted for:

Governmental and Program Funds 643,417Capital Projects 43,874,848 3,914,194 47,789,042 9,792,615Energy Improvement Projects 631,925 745,519 1,377,444Debt Service 1,026,212 2,735,764 3,761,976 44,703,462Capital Replacement 1,793,860 1,793,860Pension 21,448,799 21,448,799 Water Quality Incentive Program 5,336,048 5,336,048Grants 259,010 259,010Maintenance and Operations 925,234 925,234

Unrestricted (Deficit) (766,027,807) 54,867,555 (711,160,252) (9,397,888)

Total Net Position ($31,516,697) $345,925,829 $314,409,132 $303,796,159

Primary Government

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

32

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GeneralUrban

ServicesFederal and State Grants

Other Governmental

Funds

Total Governmental

Funds

ASSETSCash $0 $7,491,633 $0 $15,369,180 $22,860,813Investments 46,313,314 19,932,932 945,244 67,191,490Receivables:

Loans 2,043,238 2,043,238License Fees 29,686,497 29,686,497Other 11,575,307 123,075 1,222,927 12,921,309Less Allowance for Uncollectible Amounts (5,017,351) (2,043,238) (7,060,589)

Due from Other Governments 30,707 3,678,951 3,709,658Inventories and Prepaid Items 2,290,430 94,468 8,880 2,393,778Restricted Investments 1,026,838 29,087 41,001,799 42,057,724

Total Assets $85,905,742 $27,642,108 $3,708,038 $58,777,962 $176,033,850

LIABILITIES AND FUND BALANCESLiabilities:

Accounts and Contracts Payable $8,105,185 $1,508,266 $1,455,308 $2,768,185 $13,836,944Accrued Payroll & Related Liabilities 3,532,344 290,202 55,294 3,877,840Due to Other Funds 2,053,795 437,805 663,747 3,155,347Due to Component Units 2,238,552 2,238,552Unearned Revenue and Other 2,061,301 818 1,500,621 1,563,051 5,125,791Total Liabilities 17,991,177 1,799,286 3,449,028 4,994,983 28,234,474

Fund Balances:Nonspendable 2,290,430 94,468 2,384,898Restricted for:

8,233,228 8,233,2281,026,212 1,429,926 2,456,138

43,874,848 43,874,848259,010 259,010

25,745,424 25,745,424628,995 2,930 631,925

Committed for: General Government 4,228,784 4,228,784 Economic Stabilization 35,345,181 35,345,181

Assigned to: General Government 16,145,000 244,977 16,389,977

2,318,361 2,318,361Unassigned 5,931,602 5,931,602Total Fund Balances 67,914,565 25,842,822 259,010 53,782,979 147,799,376

Total Liabilities and Fund Balances $85,905,742 $27,642,108 $3,708,038 $58,777,962 $176,033,850

* Prior period adjustments were made to assets in the Exactions Area Master Plan (EAMP). There is no impact on total Governmental Fund

Public Safety

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTBALANCE SHEET

GOVERNMENTAL FUNDSJune 30, 2019

Public Works

Capital Projects Grants Projects Urban Services

Capital Projects

Energy Improvement Projects


35

Total Fund balances - Governmental Funds $147,799,376

Amounts reported for Governmental Activities in the Statement of Net Position is different because:

Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the funds.

Governmental capital assets 1,650,403,329Less accumulated depreciation (712,840,005) 937,563,324

The net pension asset is not an available resource and, therefore,is not reported in the funds. 21,448,799

Restricted receivables and other long-term assets are not availableto pay for expenditures in the current period and, therefore, are notreported in the funds.

Restricted receivables (Net) 5,870,270Other assets 1,424,271

Long-term liabilities, including bonds and notes payable, are not due andpayable in the current period and, therefore, are not reported in the funds.

Bonds and notes payable (402,420,856)Unearned revenue and other (273,008)Interest payable (4,965,468)Compensated absences (26,412,334)Unfunded pension liability and other post retirement benefits (751,585,839) (1,185,657,505)

Loss on debt refunding has been deferred in the Statement of Net Position(see Note 1.G.) 3,790,680

Outflows and inflows related to pension have been deferred in the Statement of Net Position 145,663,638

Outflows and inflows related to other post employment benefit amounts havebeen deferred in the Statement of Net Position (114,437,748)

Internal service funds are used by management to charge the costs of insurance to individual funds. The assets and liabilities of the internal service funds are included in Governmental Activities in the Statement of Net Position. 6,513,118

Internal balances due to non-governmental activities related to items listed above (1,494,920)

Net Position of Governmental Activities ($31,516,697)

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITION

June 30, 2019



36

GeneralUrban

ServicesFederal and State Grants

Other Governmental

Funds

Total Governmental

FundsREVENUES

License Fees and Permits $308,462,028 $1,654,789 $0 $0 $310,116,817Taxes 25,221,927 39,352,022 64,573,949Charges for Services 28,196,399 1,491,110 29,687,509Fines and Forfeitures 230,914 949 231,863Intergovernmental 975,875 20,137,649 8,050,338 29,163,862Exactions 243,198 243,198Property Sales 236,248 306,614 542,862Income on Investments 1,604,513 592,808 17,457 518,595 2,733,373Other 4,981,187 88,137 620,245 263,475 5,953,044

Total Revenues 369,909,091 43,486,429 20,775,351 9,075,606 443,246,477

EXPENDITURESCurrent:

Administrative Services 7,773,340 567,588 1,183,718 9,524,646Chief Development Officer 1,305,739 1,305,739Community Corrections 38,560,253 33,178 1,677,506 40,270,937Environmental Quality & Public Works 11,147,751 35,124,095 710,038 84,833 47,066,717Finance 5,817,395 23,451 32,128 5,872,974Fire and Emergency Services 78,850,987 3,319,374 82,170,361General Government 5,032,940 2,072,089 76,281 781,679 7,962,989General Services 7,912,657 183,881 8,096,538Information Technology 10,680,207 614,004 715,998 12,010,209Law 2,548,860 16,818 338,383 2,904,061Outside Agencies 22,264,873 2,838,937 25,103,810Parks and Recreation 20,625,472 24,524 2,071,104 22,721,100Planning, Preservation, & Development 12,257,456 905,834 176,194 13,339,484Police 76,675,850 3,628,233 985,367 81,289,450Public Safety 12,105,316 833,298 12,938,614Social Services 9,065,892 2,122,545 11,188,437

Debt Service:Principal 28,329,993 669,237 245,770 29,245,000Interest 15,721,258 238,503 11,323 15,971,084Other Debt Service 196,590 196,590

Capital:Equipment 1,049,728 5,329,412 617,232 6,662,525 13,658,897Acquisitions and Construction 1,536,051 992,422 6,561,584 38,428,667 47,518,724

Total Expenditures 369,262,018 45,831,500 22,854,776 52,408,067 490,356,361

Excess (Deficiency) of RevenuesOver (Under) Expenditures 647,073 (2,345,071) (2,079,425) (43,332,461) (47,109,884)

OTHER FINANCING SOURCES (USES)Issuance of Debt 42,055,000 42,055,000Premium on Bonds 2,804,065 2,804,065Transfers In 9,301,386 150,950 2,305,913 220,812 11,979,061Transfers Out (6,427,009) (145,119) (217,678) (4,352,169) (11,141,975)

Total Other Financing Sources 2,874,377 5,831 2,088,235 40,727,708 45,696,151

Net Change in Fund Balances 3,521,450 (2,339,240) 8,810 (2,604,753) (1,413,733)

Fund Balances, Beginning 64,362,714 28,182,062 250,200 56,418,133 149,213,109Adjustment to Opening Fund Balance (Note 2.D.) 30,401 (30,401)

Fund Balances, Beginning - Restated 64,393,115 28,182,062 250,200 56,387,732 149,213,109Fund Balances, Ending $67,914,565 $25,842,822 $259,010 $53,782,979 $147,799,376

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDSFor the Year Ended June 30, 2019


37

Net change in fund balances - Governmental Funds ($1,413,733)

Amounts reported for Governmental Activities in the Statementof Activities are different because:

Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is depreciated over their estimated useful lives.

Expenditure for capital assets 35,219,517Less current year depreciation (55,989,653) (20,770,136)

The net effect of various miscellaneous transactions involving capital assets(i.e. sales, trade-ins, and donations) is to decrease net position. (121,389)

The change in other assets is reported in the Statement of Activities and does not require the use of current resources, therefore the change is not reported as anexpenditure in the funds:

Other assets 39,768

Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds:

Exaction fees 77,881

Bond proceeds provide current financial resources to Governmental Funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of bond principal is an expenditure in the Governmental Funds, but the repayment reduces long-term liabilities in the Statement ofNet Position.

Issuance of debt (42,055,000)Premium on bonds (2,804,065)Principal payments 29,245,000 (15,614,065)

Some expenses in the Statement of Activities do not require the use ofcurrent financial resources and, therefore, are not reported as expenditures in the Governmental Funds.

Change in net pension asset 816,884Amortization of current year bond (discounts) premiums 2,239,225Amortization of current year bond refunding losses (452,671)Change in unfunded pension liability (28,965,544)Change in unfunded other post retirement benefit liability 105,998,402Change in deferred outflows from pension plans 695,219Change in deferred outflows from other post retirement benefits (255,900)Change in deferred inflows from pension plans (10,039,014)Change in deferred inflows from other post retirement benefits (102,789,169)Unearned revenue and other (722)Change in accrued interest payable (73,790)Change in restricted receivables (net) (274,964)Change in compensated absences (288,492) (33,390,536)

Internal Service Funds are used by management to charge self-insurance to individual funds. The net expense of the Internal Service Funds is reported within Governmental Activities. (2,311,969)

Change in net position of Governmental Activities ($73,504,179)

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2019

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,


38

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96,7

77)

Cha

nge

in N

et P

ositi

on14

,755

,252

(390

,592

)2,

818,

933

1,32

8,13

6(1

,809

,032

)16

,702

,697

(2,8

89,9

61)

Net

Pos

ition

, Beg

inni

ng27

4,52

3,16

720

,060

,984

38,1

36,5

2919

,630

,740

6,79

7,85

69,

403,

079

Adj

ustm

ent t

o O

peni

ng N

et P

ositi

on (N

ote

2.D

.)(3

0,79

3,18

8)(6

27,8

76)

Net

Pos

ition

, Beg

inni

ng -

Res

tate

d24

3,72

9,97

920

,060

,984

38,1

36,5

2919

,630

,740

6,16

9,98

09,

403,

079

Net

Pos

ition

, End

ing

$258

,485

,231

$19,

670,

392

$40,

955,

462

$20,

958,

876

$4,3

60,9

48$6

,513

,118

Adj

ustm

ent t

o re

flect

the

cons

olid

atio

n of

inte

rnal

serv

ice

fund

act

iviti

es re

late

d to

ent

erpr

ise fu

nds

(577

,992

)

Chan

ge in

net

pos

ition

of B

usin

ess-

Type

Act

iviti

es

$16,

124,

705

The

acco

mpa

nyin

g no

tes a

re a

n in

tegr

al p

art o

f the

fina

ncia

l sta

tem

ents

.

42

Cas

h Fl

ows f

rom

Ope

ratin

g A

ctiv

ities

:Re

ceip

ts fr

om C

usto

mer

s$7

6,62

7,50

4$5

,981

,045

$7,0

48,8

34$1

4,64

4,60

1$7

,514

,702

$111

,816

,686

$0Re

ceip

ts fr

om E

mpl

oyee

s and

Oth

er S

ourc

es35

,632

,336

Rece

ipts

from

Inte

rfund

Ser

vice

s Pro

vide

d

23

,115

,861

Paym

ents

to S

uppl

iers

(28,

202,

896)

(2,1

98,7

09)

(2,5

80,4

44)

(5,0

64,9

03)

(2,0

30,3

91)

(40,

077,

343)

(2,8

33,1

60)

Paym

ents

to E

mpl

oyee

s(1

2,06

8,09

5)(1

,186

,849

)(5

,779

,516

)(4

,687

,321

)(2

3,72

1,78

1)Pa

ymen

ts fo

r Int

erfu

nd S

ervi

ces U

sed

(2,1

08,2

08)

(161

,355

)(7

69,7

57)

(243

,362

)(3

,282

,682

)Pa

ymen

ts fo

r Cla

ims

(40,

039,

853)

Net

Cas

h Pr

ovid

ed b

y (U

sed

in) O

pera

ting

Act

iviti

es34

,248

,305

3,78

2,33

63,

120,

186

3,03

0,42

555

3,62

844

,734

,880

15,8

75,1

84

Cas

h Fl

ows f

rom

Non

capi

tal F

inan

cing

Act

iviti

es:

Tran

sfer

s In

172,

823,

976

568,

257

23

,939

,819

197,

332,

052

Tran

sfer

s Out

(172

,680

,119

)

12,4

17(2

3,86

9,66

2)(1

,359

,413

)(1

97,8

96,7

77)

Net

Cas

h Pr

ovid

ed b

y N

onca

pita

l Fin

anci

ng

Act

iviti

es14

3,85

756

8,25

712

,417

70,1

57(1

,359

,413

)(5

64,7

25)

0

Cas

h Fl

ows f

rom

Cap

ital a

nd R

elat

ed F

inan

cing

Act

iviti

es:

Purc

hase

of C

apita

l Ass

ets

(57,

827,

874)

(4

19,1

41)

(1,8

72,8

92)

(132

,725

)(6

0,25

2,63

2)Pr

ocee

ds fr

om N

ote

Paya

ble

23,7

41,7

44

23

,741

,744

Prin

cipa

l Pai

d on

Bon

ds(7

,921

,901

)(2

,165

,000

)(2

53,0

42)

(1

0,33

9,94

3)In

tere

st a

nd F

iscal

Age

nt F

ees P

aid

on B

onds

(2,6

73,3

88)

(1,6

72,9

28)

(87,

850)

(4

,434

,166

)Pr

ocee

ds o

n Sa

le o

f Cap

ital A

sset

s21

,654

21

,654

Net

Cas

h U

sed

in C

apita

l and

Rel

ated

Fin

anci

ng A

ctiv

ities

(44,

659,

765)

(3,8

37,9

28)

(419

,141

)(2

,213

,784

)(1

32,7

25)

(51,

263,

343)

0

Cas

h Fl

ows f

rom

Inve

stin

g A

ctiv

ities

:Pu

rcha

se o

f Inv

estm

ents

25,8

11,7

18(6

,356

)(4

02,4

54)

1,04

2(3

0,66

4)25

,373

,286

Inco

me

on In

vest

men

ts93

4,95

76,

498

432,

295

77,8

3530

,664

1,48

2,24

9

Net

Cas

h Fl

ows P

rovi

ded

by In

vest

ing

Act

iviti

es26

,746

,675

142

29,8

4178

,877

026

,855

,535

0

Net

Incr

ease

(Dec

reas

e)16

,479

,072

512,

807

2,74

3,30

396

5,67

5(9

38,5

10)

19,7

62,3

4715

,875

,184

Cas

h at

Beg

inni

ng o

f Yea

r(8

,659

,789

)2,

389,

098

14,5

47,6

3618

,205

,674

9,81

7,23

736

,299

,856

16,5

18,0

32

Cas

h at

End

of Y

ear

$7,8

19,2

83$2

,901

,905

$17,

290,

939

$19,

171,

349

$8,8

78,7

27$5

6,06

2,20

3$3

2,39

3,21

6

Ente

rpri

se F

unds

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

STA

TEM

ENT

OF

CA

SH F

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SPR

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RY

FU

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r th

e Y

ear

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d J

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30, 2

019

Busin

ess-

Type

Act

iviti

es

Gov

ernm

enta

l A

ctiv

ities

In

tern

al S

ervi

ce

Fund

s

43

Sani

tary

Sew

er

Syst

emPu

blic

Fac

ilitie

s C

orpo

ratio

nLa

ndfil

lW

ater

Qua

lity

Oth

er

Ente

rpri

se

Fund

sTo

tal

Ente

rpri

se F

unds

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

STA

TEM

ENT

OF

CA

SH F

LOW

SPR

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FU

ND

SFo

r th

e Y

ear

Ende

d J

une

30, 2

019

Busin

ess-

Type

Act

iviti

es

Gov

ernm

enta

l A

ctiv

ities

In

tern

al S

ervi

ce

Fund

sSa

nita

ry S

ewer

Sy

stem

Publ

ic F

acili

ties

Cor

pora

tion

Land

fill

Wat

er Q

ualit

y

Oth

er

Ente

rpri

se

Fund

sTo

tal

Rec

onci

liatio

n of

Ope

ratin

g In

com

e (E

xpen

ses)

to N

et C

ash

Prov

ided

by

(Use

d in

) Ope

ratin

g A

ctiv

ities

:

Ope

ratin

g In

com

e (E

xpen

ses)

$16,

055,

828

$446

,440

$2,3

74,2

21$1

,249

,074

($48

0,28

3)$1

9,64

5,28

0($

2,88

9,96

1)

Ad j

ustm

ents

to R

econ

cile

Ope

ratin

g In

com

e to

Net

Cas

h Pr

ovid

ed b

y (U

sed

in) O

pera

ting

Act

iviti

es:

Dep

reci

atio

n12

,517

,562

3,34

5,69

458

7,98

044

6,45

038

0,53

017

,278

,216

Allo

wan

ce fo

r Bad

Deb

ts39

1,29

899

,230

112,

058

602,

586

(Inc

reas

e) D

ecre

ase

in A

sset

s:A

ccou

nts R

ecei

vabl

e26

,845

(122

,038

)(1

83,4

53)

(278

,646

)O

ther

Rec

eiva

bles

67,0

3231

,104

(2,7

34)

(139

)30

,864

126,

127

7,12

8In

vent

orie

s and

Pre

paid

Exp

ense

s44

,046

(7,4

94)

(1,5

09)

84,3

3911

9,38

27,

140

Due

from

Oth

er F

unds

16,2

69,8

99D

evel

opm

ents

in P

rogr

ess

(901

)(9

01)

(Inc

reas

e) D

ecre

ase

in D

efer

red

Out

flow

s:D

efer

red

Oth

er P

ost E

mpl

oym

ent B

enef

it A

mou

nts

66,5

871,

087

38,1

189,

818

115,

610

Def

erre

d Pe

nsio

n A

mou

nts

2,22

0,51

917

7,62

41,

102,

218

674,

904

4,17

5,26

5In

crea

se (D

ecre

ase)

in L

iabi

litie

s:A

ccou

nts P

ayab

le2,

525,

650

(13,

987)

432,

681

59,2

08(2

31,0

12)

2,77

2,54

043

1,47

3A

ccru

ed P

ayro

ll51

,378

2,91

323

,728

7,32

385

,342

Clai

ms P

ayab

le2,

049,

505

Une

arne

d Re

venu

e

3

38,9

27

38

,930

Oth

er L

iabi

litie

s

(26,

915)

(440

,069

)(3

76)

(467

,360

)Co

mpe

nsat

ed A

bsen

ces

54,5

34(2

,930

)34

,750

4,23

490

,588

Unf

unde

d O

ther

Pos

t Em

ploy

men

t Ben

efit

Lia

bilit

y(9

14,6

08)

(79,

094)

(446

,903

)(2

92,5

71)

(1,7

33,1

76)

Unf

unde

d Pe

nsio

n Li

abili

ty48

2,97

141

,767

235,

993

154,

496

915,

227

Incr

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(Dec

reas

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Def

erre

d In

flow

s:D

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Oth

er P

ost E

mpl

oym

ent B

enef

it A

mou

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842,

005

72,8

1641

1,42

726

9,34

61,

595,

594

Def

erre

d Pe

nsio

n A

mou

nts

(182

,441

)(1

5,77

7)(8

9,14

6)(5

8,36

0)(3

45,7

24)

Tota

l Adj

ustm

ents

18,1

92,4

773,

335,

896

745,

965

1,78

1,35

11,

033,

911

25,0

89,6

0018

,765

,145

Net

Cas

h Pr

ovid

ed b

y (U

sed

In) O

pera

ting

Act

iviti

es$3

4,24

8,30

5$3

,782

,336

$3,1

20,1

86$3

,030

,425

$553

,628

$44,

734,

880

$15,

875,

184

44

The

acco

mpa

nyin

g no

tes a

re a

n in

tegr

al p

art o

f the

fina

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tem

ents

.

Pension Trust Funds

Investment Trust Funds

Custodial Funds

ASSETSCash and Cash Equivalents $1,400,167 $28,704,846 $2,692,422Interest Receivable 3,354,407 51

Investments, at Fair Value: Debt Securities:

Bank Loans 448,434 Corporate Debt 100,766,316 Municipal Obligations 3,807,374 US Agencies 43,439,687 US Government Obligations 37,055,547

Repurchase Agreements 34,306,745 Other Investments:

Equity Mutual Funds 400,439,689 Equity Real Estate 71,450,822 Equity Securities - Domestic 752,742 Equity Securities - International 134,851,712

Total Investments 827,319,068 0 0Total Assets $832,073,642 $28,704,846 $2,692,473

LIABILITIESAccounts Payable and Accrued Expenses $2,270 $0 $248,143Securities Lending Transactions 34,306,745

Total Liabilities $34,309,015 $0 $248,143

NET POSITIONNet position restricted for pensions $797,764,627Pool Participants $28,704,846Individuals, organizations, and Other Governments $2,444,330

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF FIDUCIARY NET POSITION

June 30, 2019


45

Pension Trust Funds

Investment Trust Funds

Custodial Funds

ADDITIONSContributions:

Employer $30,277,170 $10,166,059 $0Employer - Administration 5,104,101 Plan Members 10,356,318 3,359,262Other 112,480 653,205

Total Contributions 45,850,069 10,166,059 4,012,467

Investment Income:Net Change in Fair Value of Investments 32,142,283 Interest 10,706,261 630,076 Dividends 2,895,869

Total Investment Income 45,744,413 630,076 0Less Investment Expense 2,392,803 2,400

Net Investment Income 43,351,610 627,676 0

Income from Securities Lending Activities:Securities Lending Income 115,656 Securities Lending Expenses: Borrower Rebates (803,866) Management Fees 46,254

Total Securities Lending Expenses (Income) (757,612) 0 0Net Income on Securities Lending Activities 873,268 0 0

Total Additions 90,074,947 10,793,735 4,012,467

DEDUCTIONSBenefit Payments 67,352,952 11,359,028 848,666Administrative Expense 324,250 3,090,907

Total Deductions 67,677,202 11,359,028 3,939,573

Net Increase (Decrease) 22,397,745 (565,293) 72,894

Net Position, Beginning 775,366,882 714

Adjustment to Opening Net Position (Note 2.D.) 29,270,139 2,370,722Net Position, Beginning - Restated 775,366,882 29,270,139 2,371,436

Net Position, Ending $797,764,627 $28,704,846 $2,444,330

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT STATEMENT OF CHANGES IN FIDUCIARY NET POSITION



46

Lexington Lexington Fayette County NonmajorCenter Airport Department Component

Corporation Board of Health Units TotalASSETS

Cash $4,742,568 $5,912,121 $17,259,780 $21,268,890 $49,183,359Investments 9,285,762 5,031,034 14,316,796Receivables:

Accounts Receivable 976,207 2,017,612 70,796 592,346 3,656,961Other 26,744 126,178 152,922

Due from Primary Government 764,000 1,474,552 2,238,552Due from Other Governments 4,127,370 4,127,370Other Current Assets 296,788 456,280 753,068Inventories and Prepaid Expenses 17,152 946,865 964,017Restricted Current Assets:

Cash 16,133,612 1,316,397 17,450,009 Accounts Receivable 2,603,558 647,141 3,250,699 Investments 247,944,223 18,973,220 3,719,812 270,637,255 Grants Receivable 1,787,982 1,787,982 Other 75,678 75,678

Capital Assets:Non-depreciable 86,721,364 35,152,234 9,653,192 131,526,790Depreciable (Net) 36,445,301 135,640,877 2,722,118 55,663,706 230,472,002

Other Assets 2,029,503 8,355,000 10,384,503

Total Assets 380,494,009 226,109,263 22,099,349 112,275,342 740,977,963

DEFERRED OUTFLOWS OF RESOURCESDeferred Amount on Bond Refunding $0 $1,352,203 $0 $0 $1,352,203Deferred Amount on Note Payable 3,372,502 3,372,502Deferred Pension Amounts 7,472,199 6,828,067 14,300,266Deferred Other Post Employment Benefit Amounts 1,711,655 1,516,375 3,228,030

Total Deferred Outflows of Resources 0 1,352,203 9,183,854 11,716,944 22,253,001Total Assets and Deferred Outflows of Resources $380,494,009 $227,461,466 $31,283,203 $123,992,286 $763,230,964

LIABILITIES Accounts, Contracts Payable and Accrued Liabilities $9,383,465 $1,677,097 $962,083 $2,644,562 $14,667,207 Interest Payable 138 138 Unearned Revenue and Other 235,912 31,225 1,264 268,401 Liabilities Payable from Restricted Assets:

Accounts Payable 4,323,917 4,323,917Interest Payable 3,230,625 1,498,181 4,728,806

Noncurrent Liabilities:Due Within One Year

Compensated Absences 247,469 247,469Bonds and Notes Payable 2,810,000 3,990,000 2,034,604 8,834,604

Due in More Than One YearCompensated Absences 504,243 335,596 839,839Bonds and Notes Payable 217,555,145 80,414,503 28,503,568 326,473,216Other 344,327 344,327

Unfunded Other Post Retirement Benefit Liability 10,090,980 4,954,797 15,045,777

Unfunded Pension Liability 57,949,277 18,099,473 76,048,750

Total Liabilities $232,979,235 $92,483,937 $69,537,808 $56,821,471 $451,822,451

DEFERRED INFLOWS OF RESOURCESDeferred Pension Amounts $0 $0 $2,476,641 $3,265,378 $5,742,019Deferred Other Post Employment Benefit Amounts 903,263 967,072 1,870,335

Total Deferred Inflows of Resources 0 0 3,379,904 4,232,450 7,612,354Total Liabilities and Deferred Inflows of Resources $232,979,235 $92,483,937 $72,917,712 $61,053,921 $459,434,805

NET POSITION Net Investment in Capital Assets $123,166,665 $92,860,379 $2,722,118 $39,305,391 $258,054,553 Restricted for:

Governmental and Program Funds 146,380 497,037 643,417Capital Projects 8,004,633 1,787,982 9,792,615Debt Service 19,574,445 24,887,985 241,032 44,703,462

Unrestricted (3,230,969) 15,441,183 (44,744,039) 23,135,937 (9,397,888)

Total Net Position $147,514,774 $134,977,529 ($41,634,509) $62,938,365 $303,796,159


COMPONENT UNITSJune 30, 2019


47

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49

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS

INDEX NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................................. 50 A. Reporting Entity ........................................................................................................................... 50 B. Related Organization .................................................................................................................... 51 C. Jointly Governed Organizations ................................................................................................... 52 D. Basic Financial Statements ........................................................................................................... 52 E. Budgetary Control ......................................................................................................................... 55

F. Assets, Liabilities and Fund Equity ............................................................................................... 56 G. Deferred Inflows of Resources and Deferred Outflows of Resources ........................................... 59 H. Net Position/Fund Balances ........................................................................................................... 60 I. Use of Estimates ............................................................................................................................ 61 J. Revenues ....................................................................................................................................... 61 K. Pension ......................................................................................................................................... 62 L. Postemployment Benefits Other Than Pensions (OPEB) ............................................................. 62

NOTE 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY .......................................................... 62 A. Compliance With Finance Related Legal and Contractual Provisions ......................................... 62 B. Excess of Expenditures over Appropriations ............................................................................... 62 C. Fund Deficits ................................................................................................................................ 63 D. Prior Period Adjustments ............................................................................................................. 63

NOTE 3. DETAIL NOTES ON ALL FUNDS ..................................................................................................... 63 A. Cash, Investments, and Securities Lending ................................................................................. 63

B. Capital Assets ............................................................................................................................... 70 C. Interfund Receivables, Payables, and Transfers ........................................................................... 73 D. Long-Term Debt ........................................................................................................................... 73

NOTE 4. SELF-INSURANCE PROGRAM .......................................................................................................... 83 A. Health, Dental, and Vision Care ................................................................................................... 83 B. Insurance and Risk Management .................................................................................................. 83

NOTE 5. CONTINGENT LIABILITIES AND COMMITMENTS ...................................................................... 84 A. Litigation ...................................................................................................................................... 84 B. United States Environmental Protection Agency Consent Decree ............................................... 84 C. Federal and State Grants .............................................................................................................. 85 D. Lexington Center Corporation ...................................................................................................... 85 E. Lexington-Fayette Urban County Airport Corporation (Airport Corporation) ............................ 86 F. Lexington Public Library ............................................................................................................. 87 G. Lexington Convention and Visitors Bureau ................................................................................. 87 H. Liens and Encumbrances .............................................................................................................. 87 I. Conduit Debt ............................................................................................................................... 87 J. Encumbrances ............................................................................................................................. 88 K. Tax Abatements ........................................................................................................................... 88 L. Affordable Housing Loan Program ............................................................................................. 89 M. Jobs Fund Loan Program ............................................................................................................. 90

NOTE 6. THE SINGLE AUDIT ACT ................................................................................................................... 90 NOTE 7. SUBSEQUENT EVENTS ...................................................................................................................... 90 NOTE 8. DEFINED BENEFIT PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS ............ 91 A. Plan Descriptions ......................................................................................................................... 91 B. Summary of Significant Accounting Policies .............................................................................. 92

C. Contributions ............................................................................................................................... 92 D. Net Pension Liability ................................................................................................................... 92

E. Other Post Employment Benefit (OPEB) .................................................................................... 94 F. Pension Plan Financial Statements ............................................................................................... 99

G. The County Employees' Retirement System ............................................................................. 101 H. The County Employees' Retirement System Other Post Employment Benefit (OPEB) ............ 103

NOTE 9. RECENT GASB PRONOUNCEMENTS ............................................................................................ 107

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS

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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Lexington-Fayette Urban County Government (the Government) have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for government accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards, which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The more significant of these accounting policies are described below and, where appropriate, subsequent pronouncements will be referenced. A. Reporting Entity – The Government is a merged city-county government governed by an elected mayor and a fifteen-member council. The accompanying financial statements present the Government and its component units (traditionally separate reporting entities), for which the Government is considered to be financially accountable. The Government (the primary government) is financially accountable if it appoints a voting majority of the organization’s governing board and (1) is able to impose its will on the organization, or (2) there is a potential for the organization to provide specific financial benefit to, or impose specific financial burden on the Government. Additionally, the Government is required to consider other organizations for which the nature and significance of their relationship with the Government are such that exclusion would cause the Government’s financial statements to be misleading or incomplete. The financial statements are formatted to allow the user to clearly distinguish between the primary government and its component units. 1. Blended Component Units – The agencies and organizations listed below are, in substance, the same as the Government, despite being legally separate from the Government. Therefore, they are reported as part of the primary government. They have a governing body that is substantially the same as the governing body of the Government; provide services entirely, or almost entirely, to the Government; or otherwise exclusively, or almost exclusively, benefit the Government even though they do not provide services directly to the Government; and whose total debt outstanding is expected to be repaid entirely, or almost entirely, with resources of the Government.

The Public Library Corporation (PLC) is an instrumentality of the Government created solely for acquiring, constructing, equipping, and financing public projects to be used for public library purposes. The board consists of the Mayor, Vice Mayor, two members appointed by the Lexington Public Library, and one member appointed by the other four board members. The Policemen's and Firefighters' Retirement Fund and the City Employees’ Pension Fund are single employer, defined benefit pension plans that cover eligible Government personnel. Members of both boards are comprised of officials, employees and retirees of the Government. The Policemen's and Firefighters' Retirement Fund and the City Employees’ Pension Fund are Fiduciary Funds. The Public Facilities Corporation (PFC) was created to act as an agency and instrumentality of the Government in acquiring, developing and financing public improvements and public projects. The Mayor, Vice Mayor, and Commissioner of Finance serve ex officio on the board. The Public Parking Corporation (PPC) was created to act as an agency and instrumentality of the Government in the acquisition and financing of public parking projects. The Mayor, Vice Mayor, and Commissioner of Finance serve ex-officio on the board.

2. Discretely Presented Component Units – The agencies described below are included in the Government's reporting entity because the Government appoints the governing body or a financial benefit or burden relationship exists. Additionally, the agencies are fiscally dependent on the Government. All of these agencies are reported as discretely presented component units since the governing body is not substantively the same as the governing body of the Government, and they provide services to the citizens of Fayette County and the surrounding area as opposed to only the primary government. To emphasize that they are legally separate from the Government, they are reported in a separate column in the financial statements. Fund information for the component units, if applicable, may be found in their separately issued financial statements. Requests for separately issued financial statements should be directed to the attention of those respective entities.

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)

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The Lexington Public Library’s (Library) primary mission is to maintain a free public library in Lexington-Fayette County. The Mayor appoints all seven members of the board with approval by the Urban County Council and they may be removed by the vote of the Urban County Council. The Government provides financial support in the form of annual appropriations based upon property tax collections. The Lexington-Fayette Urban County Department of Health (Board of Health) has the general statutory responsibility of promoting and protecting the health of Fayette County residents. This entity provides critical services to the citizens of Fayette County on behalf of the Government. The Board of Health is governed by a nine-member board that is appointed by the Mayor and approved by the Urban County Council. In addition, the Urban County Council approves their Ad Valorem tax rate annually. The Lexington Transit Authority (LexTran) was organized to provide unification and coordination of a mass transportation system for Fayette County. This entity provides critical services to the citizens of Fayette County on behalf of the Government. LexTran is governed by an eight-member board appointed by the Mayor and approved by the Urban County Council. In addition, the Urban County Council approves the annual budget for LexTran. The Lexington Convention and Visitors Bureau (Visitors Bureau) was established by the Government for the purpose of promoting recreational, convention and tourist activity in Fayette County. The Government may abolish the Visitors Bureau by repealing the ordinance that created it. All nine members of the Visitors Bureau board are appointed by the Mayor and approved by the Urban County Council. The Government has a statutory authority to provide funds for the operation of the Visitors Bureau by imposing a transient room tax not exceeding four percent (4%) of qualified occupancy rental. The Lexington Center Corporation (LCC) is a non-profit, non-stock corporate agency and instrumentality of the Government. The purpose of the LCC is to plan, finance, develop and operate a convention, trade show, performing arts venue and sports facility. The thirteen-member board is appointed by the Mayor and approved by the Urban County Council. The Government has statutory authority to impose a transient room tax, not exceeding two percent (4.50%) of qualified occupancy rental, to provide funds for payment of debt service. As discussed in Note 5.D., the Government entered into a Lease Agreement that provides for an annual rental to be paid by the Government if net revenues are not sufficient to pay all debt service costs. The Lexington-Fayette Urban County Airport Board (Airport Board) is responsible for the operation, maintenance, and planning of airport facilities designed to serve the general public of the Central Kentucky area. The ten board members are appointed by the Mayor and approved by the Urban County Council. The Government has entered into a Contract Lease and Option Agreement, discussed in Note 5.E., which requires an annual rental to be paid by the Government if net revenues are not sufficient to pay all debt service costs.

B. Related Organization – A related organization is an entity for which the Government is not financially accountable. It does not impose will or have a financial benefit or burden relationship, even if the Government appoints a voting majority of the related organization’s governing board.

The Lexington-Fayette Urban County Housing Authority (Housing Authority) was created in order to develop and operate decent, safe and sanitary housing for low income, elderly and disabled residents. The appointment of the governing board by the Mayor and the scope of public service are not considered an adequate demonstration of oversight and control. The Government has no responsibility for their budget, debt, financing deficits, or fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the Housing Authority is not considered to be a component unit of the Government.

Explorium of Lexington was established to provide a unique educational opportunity for Fayette County and Central Kentucky children. The Government has no responsibility for their budget, debt, financing deficits, or


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fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the Explorium is not considered to be a component unit of the Government. The Downtown Lexington Management District was established for the purpose of providing and financing economic improvements that specifically benefit property within the District. The Government has no responsibility for their budget, debt, financing deficits, or fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the Downtown Lexington Management District is not considered to be a component unit of the Government. Parking Authority of Lexington (Parking Authority) was established to centralize all public parking functions into one entity, to improve parking operations, and ultimately to improve the availability of parking in downtown Lexington. The Government has no responsibility for their budget, debt, financing deficits, or fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the Parking Authority is not considered to be a component unit of the Government. The Downtown Lexington Partnership (DLP) promotes physical and economic development that strengthens and maintains downtown Lexington as the cultural and economic heart of Central Kentucky as well as being dedicated to enhancing downtown Lexington as a unique and vibrant destination to live, work, and play. The Government has no responsibility for their budget, debt, financing deficits, or fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the DLP is not considered to be a component unit of the Government.

C. Jointly Governed Organizations – The Government has some level of representation in the following organizations. Since the Government does not retain an ongoing financial interest or an ongoing financial responsibility for these organizations, these are not joint ventures and are not presented in the financial statements.

The Bluegrass Regional Recycling Center (BRRC) is a non-profit Kentucky corporation whose purpose is to reduce the volume of solid waste being placed in landfills and engage in activities that promote recycling. Pursuant to an Interlocal Agreement, the BRRC is operated by the Government and fourteen counties. The Government has no legal interest in or access to the resources of the BRRC. Neither does it have any legal responsibility for the deficits or debts of, or financial support to, the BRRC. The Valley View Ferry Authority is a legally separate entity that operates and maintains the Ferry on the Kentucky River at Valley View. The board consists of seven members, two appointed by the Government, three appointed by the Madison County Fiscal Court and two appointed by the Jessamine County Fiscal Court. The Government is not legally responsible for the Valley View Ferry Authority’s finances. The Government contributed $14,000 to support the Ferry’s operations in fiscal year 2019.

D. Basic Financial Statements Government-Wide and Fund Financial Statements The basic financial statements include both the government-wide and the fund financial statements. The reporting model focus is either on the Government as a whole or on major individual funds. The government-wide financial statements report information on all of the non-fiduciary activities of the Government and its component units. Both the government-wide and fund financial statements categorize primary activities as either governmental or business-type. Governmental Activities normally are supported by taxes and intergovernmental revenues. Business-Type Activities rely to a significant extent on fees and charges for support. In the Government-Wide Statement of Net Position, both the Governmental and Business-Type Activities are presented on a consolidated basis by column. The Government-Wide Statement of Activities demonstrates the degree to which the direct expenses of a function (Public Works, Police, Fire and Emergency Services, Parks and Recreation, etc.) are offset by program revenues.


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Direct expenses (including depreciation) are those that are clearly identifiable with a specific function. Program revenues are directly associated with the function and include charges for services, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Operating grants include operating-specific and discretionary (either operating or capital) grants while capital grants are capital-specific. Occupational license fees applied to gross wages and net profits, other license fees and permits, taxes, interest income, and other revenues not included in program revenues are reported as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds (by category) are summarized into a single column. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. With this measurement focus, all assets and all liabilities, including long-term assets as well as long-term debt and obligations, are included in the Statement of Net Position. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the Government considers revenues to be available if they are collected within 60 days of the end of the period. Revenues susceptible to accrual are intergovernmental revenues, investment earnings, emergency medical services fees (EMS), insurance revenues and license fees. Major revenue sources not susceptible to accrual include charges for services (other than EMS), fines and forfeitures and miscellaneous revenues. Such revenues are recorded as revenues when received because they are generally not measurable or available until actually received. Intergovernmental revenues received for specific purposes or projects are recognized when the applicable eligibility requirements are met. Revenues received before the eligibility requirements are met are reported as unearned revenue. Expenditures are recorded when the liability is incurred except: (1) principal and interest on long-term debt, pension liabilities, and claims and judgements are recorded when due, and (2) compensated absences are accounted for as expenditures in the period used. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental column, a reconciliation is presented on the page following each statement which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental column of the government-wide presentation. Internal service funds provide services primarily to other funds of the Government and are presented in summary form as part of the proprietary fund statements. Since the principal users of the internal services are the Government’s governmental activities, the internal service funds’ financial statements are consolidated into the governmental activities column in the government-wide financial statements. To the extent possible, the costs of these services are reflected in the appropriate functional activity. The internal service funds also provide services to the proprietary funds. Therefore, a portion of the net position of the internal service funds is allocated to Business-Type Activities and is reported as an adjustment on the Statement of Net Position of the proprietary funds. The Government’s fiduciary funds are presented in the fund financial statements by type (pension, investment, and custodial). Since these assets are being held for the benefit of a third party (private parties, investors, pension participants, etc.) and cannot be used for activities or obligations of the Government, these funds are not incorporated into the government-wide financial statements.


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The Government reports the following major governmental funds:

The General Fund is the primary operating unit of the Government and accounts for the revenues and expenditures not specifically provided for in other funds. Most of the essential governmental services such as police and fire protection, community services, and general administration are reported in this fund. The Urban Services Fund accounts for the taxes that are assessed on property within designated areas, or taxing districts, based on the type of services available to property owners. These services include solid waste collection, streetlights and street cleaning. Property taxes raised from the urban services taxing districts can only be used to finance these services. The Federal and State Grants Fund accounts for the receipts of intergovernmental funds that are restricted for operational and capital use of a particular function.

The Government reports the following major proprietary funds: The Sanitary Sewer System Fund accounts for the construction activities, operation and maintenance, and the payment of principal and interest for bond issues of the Government’s sanitary sewer system. The Public Facilities Corporation Fund accounts for the acquisition, construction, and operation of government-owned facilities. The Landfill Fund accounts for the operations, closure, and postclosure care costs of the Government’s landfill. The Water Quality Fund accounts for the revenues and expenses of developing and operating storm water related activities.

Additionally, the Government reports the following fund types:

Internal Service Funds account for the Government’s insurance programs for employee health, dental and vision care insurance benefits. Workers’ compensation, vehicle liability and physical damage, general liability, and property damage insurance coverage are also accounted for in Internal Service Funds. Fiduciary Funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the Government. Trust funds account for assets held by the Government under the terms of a formal trust agreement. Custodial funds generally are used to account for assets that the Government holds on behalf of others as their agent, are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations. Fiduciary funds are as follows:

Pension Trust Funds account for the revenues received, expenses incurred, and the net position available for retirement benefits of the Policemen's and Firefighters' Retirement Fund and the City Employees' Pension Fund.

Custodial Funds account for assets held by the Government for others in an agency capacity. These are funds collected from juvenile and adult offenders and disbursed to victims in accordance with court decrees, funds collected from and disbursed for inmates who are on work release, funds collected from prisoners and disbursed based on court order, funds collected from special assessments for payment of debt service for neighborhood capital projects, funds collected from noncustodial parents for child support and disbursed to the custodial parents, and funds managed by the Government on behalf of adults who are unable to manage their own money.


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Investment Trust Fund to account for all of the outstanding debt for the Sanitary Sewer System. In fiscal year 2014 the Government defeased all outstanding debt and entered into a new Sewer indenture agreement. The new indenture provides that the gross income and revenues of the System first be used to pay operating and maintenance expenses of the System. Net Revenues of the System are deposited into the Bond Account, which is held by a Trustee.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the Government’s sewer, landfill, public facilities, parking, and various other functions of the Government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include occupational license fees on wages and net profits, taxes, and interest income. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Government’s enterprise and internal service funds are charges to customers for services. Operating expenses for enterprise and internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The Government administers the Expansion Area Master Plan as follows:

The Government established a program in 1996, called the Expansion Area Master Plan (EAMP), to ensure uniform development of the Urban Services Area in Fayette County. The EAMP allows for the collection of exaction fees on new construction. The Government requires that those who develop property bear the cost of improvements in approximate proportion to the need generated by the development. Ordinance 196-96 acknowledges that it is in the best interest of the Government to encourage developers to build the system improvements identified in the Infrastructure Element of the EAMP and to provide developers who “front end” public improvements with credits against fair share fees and repayment for costs incurred in excess of their fair share. Generally credits are granted to developers via a resolution passed by the Urban County Council. The Chief Administrative Officer has the authority to grant credits outside the resolution process and has occasionally done so. Exaction fees are assessed according to the guidelines established in the EAMP. They are due and payable when a developer applies for a building permit. Fees may be satisfied either with a cash payment or the surrender of exaction credits.

E. Budgetary Control Budget Policy – The Urban County Council annually approves the budget ordinance for all operating funds of the Government, which includes governmental, proprietary, fiduciary, and agency funds. Federal and State Grant funds and capital projects funds adopt project-length budgets. Additional special revenue funds which are not budgeted include the Industrial Revenue Bond Fund, Police Confiscated Funds, and the Public Safety Fund. Budgets are adopted on a basis consistent with GAAP except that budgetary basis expenditures include purchase orders and contracts (encumbrances). Budgetary control is maintained at the division level, e.g. Division of Police, Division of Parks and Recreation, etc. The Mayor may authorize transfers within a division; however, the Urban County Council must approve by ordinance any other amendments to the budget. All budgeted amounts presented in the financial statements reflect the original budget and the amended budget which have been adjusted for legally authorized revisions of the annual budgets during the year. Appropriations lapse at year-end; however, uncompleted capital projects may be re-


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appropriated at the beginning of each fiscal year. The Council made several supplemental budgetary appropriations throughout fiscal year 2019. The net effect of these supplemental appropriations was an increase of $2,594,578 in the General Fund and a decrease of $2,130,911 in the Urban Services Fund, which included re-appropriations of encumbrances from prior fiscal years and various waste management and street light re-appropriations to the following fiscal year 2020, respectively. F. Assets, Liabilities, and Fund Equity Cash and Investments – Management has adopted written policies and procedures for cash and investment management. Cash and cash equivalents include cash on hand, demand deposits and cash with fiscal agents. Cash balances of most Government funds are pooled and invested. Interest earned from investments purchased with pooled cash is allocated to each of the funds based on the fund's average monthly cash balance, except as required by ordinance for various restricted reserves. Funds that incur a negative balance in pooled cash and investments during the year are not allocated interest. The Government has adopted GASB Statement No. 72, Fair Value Measurement and Application. This statement requires that investments in interest-earning investment contracts, external investment pools, open-end mutual funds, and debt and equity securities be reported at fair value. Investments in the Pension Trust Funds and investments with a maturity of more than one year at the time of purchase are stated at fair value. Fair value for securities traded on a national exchange is determined by the last reported sales price. All other investments are stated at cost. Receivables – Receivables are amounts due representing revenues earned or accrued in the current period. Allowances for uncollectible loans in the Federal and State Grants Fund fully reserve loan balances due to the nature of the individual projects and terms of the loans. Accounts receivable from other governments include amounts due from grantors for grants for specific programs and capital projects. The majority of other receivables in the General Fund are for taxpayer-assessed revenues that are collected 30 days after year end. Franchise fee revenues are recognized if collected within 60 days after year end. Property taxes for fiscal year 2019 were levied on August 30, 2018 on the assessed valuation of property located in Fayette County as of the preceding January 1, the lien date. The due date and collection periods for all taxes exclusive of vehicle taxes are as follows: Description Per KRS 134.020 Due date for payment of taxes Upon receipt 2% discount period By November 1 Face value amount payment dates November 2 to December 31 Delinquent date, 5% penalty January 1 to January 31 10% penalty plus 10% add on fee date April 15 Per Kentucky statute, the county sheriffs are responsible for collection of property taxes. Vehicle taxes, collected by the County Clerk of Fayette County, are due and collected in the birth month of the vehicle's licensee. During the year, property tax revenues are recognized when cash is received. At year-end, a receivable is recorded for delinquent property taxes, but revenues are only recognized for taxes collected within 60 days of the close of the fiscal year. Allowance for Uncollectable Amounts – An allowance for uncollectable amounts relates to the estimated uncollectable balance of the revenues earned or accrued that have been included in accounts receivable at year end. An allowance is recorded on receivable balances based on historical bad debt experience related to the nature of each receivable balance. Interfund Transactions – During the course of its operations, the Government has numerous transactions between funds to finance operations, provide services, construct assets, and service debt. To the extent that certain transactions between funds have not been paid or received as of June 30, 2019, balances of interfund amounts receivable or payable have been recorded as “due to/from other funds”. These accounts are eliminated on the Government-Wide Statement


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of Net Position. Any residual balances outstanding between the Governmental Activities and Business-Type Activities are reported in the government-wide financial statements as “internal balances.” Interfund transactions that would be treated as revenues or expenditures/expenses if they involved organizations external to the Government are similarly treated when involving funds of the Government. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the reimbursed fund. Transfers from funds receiving revenues to funds through which the resources are to be expended and operating subsidies are classified as transfers. Transfers between governmental and proprietary funds are netted as part of the reconciliation to the government-wide columnar presentation. Inventories and Prepaid Items – Fuel and vehicle parts inventories are stated at average cost. Other inventories are valued using the first-in, first-out method. The costs of inventory items are recognized as expenditures or expenses when used. Payments made to vendors for goods and services that will benefit periods beyond June 30, 2019 are recorded in assets as prepaid items under the consumption method. In the governmental fund financial statements, reported inventories and prepaid items are equally offset in the fund balance as nonspendable, which indicates that they do not constitute “available spendable resources” even though they are a component of total assets. Restricted Assets – Restricted assets are liquid assets that have third-party (statutory, bond covenant, or granting agency) limitations on their use. Certain proceeds of revenue bonds, as well as certain resources set aside for their payment, are classified as restricted assets on the Balance Sheet and Statement of Net Position since their use is limited by applicable bond indentures. The other restricted assets are required to be maintained until the related bonds mature. The Construction and Capital Acquisitions account is used to report proceeds of bonds and notes payable that are restricted for use in construction and capital acquisitions. The Government uses the Construction and Capital Acquisitions assets for their intended purpose before using unrestricted assets. The Maintenance and Operations account represents the resources set aside to operate, maintain and insure the Sanitary Sewer System for three full months. The Capital Replacement account represents the resources set aside to provide reasonable reserves for renewals, replacements, improvements, extensions, extraordinary major repairs and contingencies in the operation of the Sanitary Sewer System. The Debt Service account is used to report resources set aside to prevent a default in payment of principal or interest on the bonds. The Sinking Fund account represents the resources accumulated for debt service payments over the next twelve months. The balances of the restricted asset’s accounts in the governmental funds are as follows: Various purpose general obligation notes account $41,002,425Federal Grants and Contracts 29,087Debt Service on QECB Bond 1,026,212

Total restricted assets $42,057,724

The balances of the restricted asset’s accounts in the enterprise funds are as follows:

Sanitary sewer and stormwater capital replacement account $1,793,860Total restricted assets $1,793,860

Unrestricted Assets – Unrestricted assets represent unrestricted liquid assets. While Government management may have categorized and segmented portions for various purposes, the Urban County Council has the unrestricted authority to revisit or alter these management decisions.


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Capital Assets – Capital assets, which include property, plant, equipment, infrastructure (e.g. roads, bridges, traffic signals and similar items), and intangible assets, are reported in the applicable Governmental or Business-Type Activities columns in the government-wide financial statements and in the proprietary funds. Expenditures for items having a useful life greater than one year and having a cost greater than $5,000 for equipment and $25,000 for land, buildings, infrastructure and related improvements are capitalized. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are recorded at acquisition value and recorded as donations at the date received. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets of the Government are depreciated using the straight-line method over the following estimated useful lives:

Buildings 10-40 years Land and leasehold improvements 10-50 years Infrastructure 10-50 years Sanitary sewer system lines and plants 10-50 years Vehicles, equipment, and furniture 5-25 years Intangibles 3-5 years Construction in progress (CIP) represents construction projects for capital assets that have not yet been placed in service. Developments in progress (DIP) represent fees accrued on urban development projects in the EAMP currently underway that have not yet been completed, where settlement of the fees by the respective developer is expected to be made through contributing infrastructure type assets (e.g. roads, sewer systems, etc.) to the Government. CIP and DIP are not depreciated until the projects are complete and placed in service. For more information on the EAMP plan, please see page 55. Land, purchase of development rights, and permanent easements are not depreciated. The Government has a collection of artwork and historical treasures presented for public exhibition and education that are being preserved for future use. These items are not capitalized or depreciated as part of capital assets. Compensated Absences – Compensated absences include accumulated unpaid vacation, sick and holiday leave. Government employees are granted vacation and sick leave in varying amounts in accordance with administrative policy. In the event of termination, an employee is reimbursed for accumulated holiday and vacation days. Employees receive annual compensation for accumulated unused sick leave in excess of 600 hours (or 840 hours for firefighters). Employees are reimbursed for all accumulated unused sick leave upon retirement. All accumulated leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. In governmental funds, compensated absences are not payable with available and spendable resources, and, therefore, are only recorded when they have matured, for example, as a result of employee resignations and retirements. Long-Term Obligations – In the government-wide and proprietary fund financial statements, long-term debt and obligations are reported as liabilities in the applicable Governmental Activities, Business-Type Activities, or Proprietary Fund Statement of Net Position. The discounts and premiums related to bonds and notes issued are amortized over the life of the bond or note using the straight-line method. Bonds and notes payable are reported net of the applicable bond premium or discount. Issuance costs are expensed when incurred. Losses on advance refunding issues are reported as deferred outflows of resources and recognized as an outflow as required by GASB Statement No. 65. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are reported as debt service expenditures.


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The difference between the re-acquisition price (new debt) and the net carrying value of the old debt on refunded debt of the proprietary funds is amortized as a component of interest expense over the life of the old or new bonds, whichever is shorter, using the straight-line method. Long-term liabilities include the following: Compensated absences, which is the accrual for vacation time earned but not taken by employees. Principal outstanding on general obligation bonds, general obligation notes, and revenue bonds. Unfunded Post-Retirement Health Benefits, which is the net retirement health benefit obligation for the

Policemen’s and Firefighters’ Retirement Fund and the City Employees’ Pension Fund. In addition, it includes the Government’s proportionate share of the unfunded liability in the CERS multi-employer defined benefit post-employment health insurance plan.

Landfill closure and postclosure care liability, which is the estimated total cost to perform certain maintenance

and monitoring functions for thirty years after closure.

Unearned revenue and other liabilities, which is the cash received in advance of being earned, and other long term liabilities.

Unfunded postemployment benefit liability, which is the net postemployment benefits obligation for the

Policemen’s and Firefighters’ Retirement Fund. In addition, it includes the Government’s proportionate share of the unfunded postemployment benefits liability in the CERS multi-employer defined benefit pension plan.

Unfunded pension liability, which is the net retirement obligation for the Policemen’s and Firefighters’

Retirement Fund. In addition, it includes the Government’s proportionate share of the unfunded pension liability in the CERS multi-employer defined benefit pension plan.

G. Deferred Inflows of Resources and Deferred Outflows of Resources With the implementation of GASB Statements 65 and 68, and GASB Statements 74 and 75, the Government’s Statement of Net Position includes deferred inflows (or deferred outflows) of resources when appropriate. Deferred outflows of resources represent a consumption of net position that applies to one or more future periods. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s). These amounts will not be recognized as expense or revenue until the applicable period. Deferred Outflows – include the differences between reacquisition price and the net carrying amount of refunded debt obligations that is recognized as a component of interest expense over the remaining life of the old debt or the life of the new debt, whichever is shorter. In addition, it includes differences between expected and actual experience, changes of assumptions, changes in proportionate share, differences between projected and actual earnings, and differences between projected and actual earnings on investments in both pension plans and other paid employee benefit plans, and contributions to pension plans and other paid employee benefit plans made subsequent to the Government’s measurement date of June 30, 2018. Deferred Inflows – include differences between expected and actual experience, changes of assumptions, changes in proportionate share, and projected and actual earnings on investments in both pension plans and other paid employee benefit plans.


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H. Net Position/Fund Balances The government-wide and proprietary financial statements utilize a net position presentation. Net position is categorized as follows:

Net Investment in Capital Assets – is intended to reflect the portion of net position associated with capital assets (net of accumulated depreciation), less outstanding capital assets related debt, net of unspent bond proceeds. Restricted Net Position – represents amounts that are restricted for specific purposes when constraints placed on the use of resources are either (a) externally imposed by creditors, grantors, contributors, laws/regulations of other governments or constitutional provisions, or (b) resources resulting from enabling legislation. Unrestricted Net Position – This category represents amounts not appropriated for expenditures, or legally segregated for a specific future use.

In the Balance Sheet of governmental funds the difference between the assets and liabilities of governmental funds is reported as fund balance. The Government's fund balance is divided into the following classifications, as applicable:

Nonspendable – These resources include amounts that cannot be spent because they are either not spendable in form, or are legally or contractually required to be maintained intact. The Government’s nonspendable funds consisted of prepaid expenses and inventories as of June 30, 2019. Restricted – Restricted amounts represent resources that are constrained for a specific purpose by external parties, constitutional provisions, or enabling legislation. The Government had restricted funds for various projects: public works, public safety, capital projects, grants, urban services, and energy improvement as of June 30, 2019. Committed – Committed amounts are constrained for a specific purpose by the Government using its highest level of decision-making authority. For resources to be considered committed, the Urban County Council issues an ordinance that can only be changed with another corresponding ordinance. Committed fund balance for the General Fund is further classified as follows: Affordable Housing & Homelessness Intervention $2,389,219Economic Stabilization 35,345,181Chief Development Officer 1,037,431Social Services 716,425Special Programs 85,709

Committed Fund Balance $39,573,965

The Government developed and adopted a General Fund Balance (“Economic Stabilization Fund” or “Contingency Designation Fund”) Policy on December 5, 1996, and revised on April 17, 2016. It is the Government’s policy to:

Maintain a Contingency Designation Fund funding goal of ten percent (10%) of the previous year’s total General Fund Revenues. Interest earned accrues to the fund.

Budget a deposit of $50,000 per month, for each fiscal year until meeting the Contingency Designation Fund funding goal of 10% of the last completed fiscal year total General Fund revenues, beginning with the 2007 fiscal year.

Annually report to the Budget, Finance, and Economic Development Committee the dollar amount that could be deposited to the fund to maintain ten percent (10%) of the previous year’s General Fund Revenues.


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The Contingency Designation Fund balance may be used in the following circumstances: Unanticipated or unforeseen extraordinary needs of an emergency nature. Revenue stabilization to balance the budget in the event of an unanticipated shortfall. Unanticipated situations of an unusual nature involving nonrecurring expenditure(s).

The Government has made a complete and rational analysis, with justifying evidence that the Contingency Designation Fund can be maintained in the future. Assigned – Assigned amounts represent resources that the Government intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Amounts may be assigned by the Urban County Council or by the Commissioner of Finance under the authorization of the Mayor. Amounts classified as assigned have gone before the Government’s Urban County Council subsequent to June 30, 2019 for approval through ordinance. Assigned for: General Fund Non Major FundsFire & Emergency Services $197,829 $0General Government 18,242,724 244,977Police 22,808

Assigned Fund Balance $18,463,361 $244,977

Unassigned – Unassigned amounts represent resources that have not been classified as nonspendable, restricted, committed, or assigned to a specific purpose within the General Fund. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than the General Fund, if expenditures incurred for specific purposes exceed the amounts that are nonspendable, restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.

When both restricted and unrestricted resources are available for use, it is the Government’s policy to use restricted resources first, then unrestricted resources as they are needed. Likewise, fund balances that are committed or assigned would be used first for their approved purposes. Unassigned fund balances would be used as needed. I. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

J. Revenues Emergency medical service fees are billed and collected by Software Development, Inc. (SDI) as an agent for the Government. Cash collected by SDI is remitted daily to the Government. The Government records all revenues (net of an allowance for doubtful accounts) billed through the end of the fiscal year by SDI. The Government utilizes an internal billing system to collect sanitary sewer and landfill user fees, along with the water quality management fee. Unearned revenue in the government-wide and proprietary funds Statement of Net Position and the Governmental Funds Balance Sheet result from resources that the Government has received before it has a legal claim to it, such as when grant money is received prior to incurring eligible expenditures. In a subsequent period, when revenue is earned, the liability is removed and revenue recognized.


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K. Pensions For purposes of measuring the net pension liability, deferred outflows of resources, deferred inflows of resources, pension expense, information about the fiduciary net position of the County Employees’ Retirement System (CERS), and additions to/deductions from CERS’s fiduciary net position have been determined on the same basis as they are reported by CERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The liability was measured at June 30, 2018. L. Postemployment Benefits Other Than Pensions (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources, deferred inflows of resources, OPEB expense, information about the fiduciary net position of the County Employees’ Retirement System (CERS) Post Employment Health Insurance Plan (the Plan), and additions to/deductions from CERS the Plan’s fiduciary net position have been determined on the same basis as they are reported by CERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The liability was measured at June 30, 2018. NOTE 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Compliance with Finance Related Legal and Contractual Provisions Management of the Government believes it has no material violations of finance related legal and contractual provisions. B. Excess of Expenditures over Appropriations - The following divisions, in funds that have budgets adopted annually, had excess expenditures over appropriations for the fiscal year ended June 30, 2019:

ExcessExpenditures

General Fund:Circuit Judges $10,558Division of Water & Air Quality 13Enterprise Solutions 73,054Fire & Emergency Services 133,365Grants & Special Projects Agencies 72,007Indirect Cost Allocation 296,811Office of the Chief Administrative Officer 63,632Office of the CIO 23,318Office of the Mayor 13,240Purchase of Development Rights 891

Urban Services Fund:Central Purchasing $239Environmental Services 6,679Streets & Roads 75,093

Excess expenditures over appropriations were funded by favorable budget variances in other categories.


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C. Fund Deficits Proprietary funds – the Extended School Program had a fund deficit of ($626,466) as a result of the unfunded pension liability. D. Prior Period Adjustments Primary Government The following prior period adjustments were made to the Governmental fund financial statements: General Funds: Prior period adjustments totaling $30,401 between General Governmental Funds and Other Governmental Funds due to asset adjustments related to Exactions Area Master Plan (EAMP). There is no effect on the Governmental fund financial statements as a whole. The following prior period adjustments were made to the Governmental government-wide financial statements: The Governmental Funds: Net position was reduced $4,291,473, and included recognizing capital expenditures of $4,302,285 from prior years due to the close out of various Exactions Area Master Plan (EAMP) developer agreements, and recognizing prior year capital funding of $10,812 for seized and forfeited vehicles. The Business-Type Activities Funds: Net position was reduced $1,523,049 to recognize capital expenditures from prior years due to the close out of various developer agreements for Sanitary Sewer System infrastructure in the Exactions Area Master Plan (EAMP). The Government early implemented GASB Statement No. 84, Fiduciary Activities, which established criteria for identifying fiduciary activities of all state and local governments. As a result, the Prisoner’s Account net position was reduced by $627,876 and a new fiduciary custodial fund was established. In addition, the Sanitary Sewer System net position was reduced by $29,270,139 and a new fiduciary investment trust was established.

Component Units

The Fayette County Department of Health reduced net position by $72,059 to recognize grant expenditures from the prior fiscal year.

NOTE 3. DETAIL NOTES ON ALL FUNDS A. Cash, Investments and Securities Lending Primary Government The Government’s bank balances at June 30, 2019 are entirely insured by the Federal Deposit Insurance Corporation (FDIC) and/or collateralized with securities held by the Government’s agent in the Government’s name. In accordance with Kentucky Revised Statute (KRS) 66.480 as amended March18, 2019, and the Government’s investment policy, the Government is allowed to invest in the following:

1. Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, provided that delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian.

2. Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency.


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3. Obligations of any corporation of the United States government. 4. Certificates of deposit or other interest-bearing accounts issued by any bank or savings and loan

institution which are insured by the FDIC, or similar entity, or which are collateralized to the extent uninsured.

5. Bankers’ acceptances for banks rated in one (1) of the three (3) highest categories by a nationally recognized rating agency.

6. Commercial paper rated in the highest category by a nationally recognized rating agency. 7. Bonds or certificates of indebtedness of the Commonwealth of Kentucky and of its agencies and

instrumentalities. 8. Securities issued by a state or local government, or any instrumentality or agency thereof, in the United

States, and rated in one (1) of the three (3) highest categories by a nationally recognized rating agency. 9. Shares of mutual funds, each of which shall have the following characteristics:

a. The mutual fund shall be an open-end diversified investment company registered under the Federal Investment Company Act of 1940, as amended

b. The management company of the investment company shall have been in operation for at least five (5) years; and

c. All of the securities in the mutual fund shall be eligible investments under this section.

In addition, the Pension Trust Funds are allowed to invest in equity securities, corporate bonds and international stocks listed as American Depository Receipts (ADR). Investments of the Government as of June 30, 2019 are summarized and categorized in the following table:

Quoted Prices in Significant Other SignificantActive Markets for Observable Unobservable

Identical Assets Inputs InputsInvestment Type Fair Value Level 1 Level 2 Level 3

Cash and Cash Equivalents $42,801,410 $42,801,410 $0 $0Money Market Mutual Funds 68,238,825 68,238,825Certificates of Deposit 9,905,316 9,905,316U.S. Government Agency Obligations 58,247,270 58,247,270Total Investments $179,192,822 $42,801,410 $136,391,411 $0

The Government categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs. Level 2 fixed income securities are priced by industry standard vendors, such as Interactive Data Corporation (IDC), using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. IDC also monitors market indices and industry and economic events including credit rating agency actions. The Government has no Level 3 inputs. Interest Rate Risk – The risk that changes in interest rates will adversely affect the fair value of an investment. While the Government has adopted an investment policy that recommends controlling interest rate risk through maturity diversification, the policy does not place any formal limits of investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk – The risk that an issuer or other counterparty to an investment will not fulfill its obligations. Investments are made under the “prudent person rule” outlined in the Government’s investment policy. This rule is defined to mean “investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of capital as well as the probable income to be derived.” The prudent investor standard shall be applied in the context of managing the overall portfolio.


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S&PInvestment Type Fair Value Less Than 1 Year 1 to 5 6 to 10 More than 10 Rating Fair Value

Cash and Cash Equivalents $42,801,410 $42,801,410 $0 $0 $0 AA+ $46,183,540Money Market Mutual Funds 68,238,825 68,238,825Certificates of Deposit 9,905,316 2,992,756 6,002,585 909,975 NR 133,009,282U.S. Government Agency Obligations 58,247,270 30,949,213 26,798,112 499,945Total Investments $179,192,822 $144,982,205 $32,800,697 $499,945 $909,975 $179,192,822

Investment Maturities (in years)Primary Government (except Fiduciary Funds)

Concentration of Credit Risk – The risk of loss attributed to the magnitude of the Government’s investment in a single issuer. Government securities and investments in mutual funds are excluded from this risk. In order to reduce the credit risk, the investments held by a financial institution in the Government’s name should be limited to no more than 35% of the total investments, excluding that held in a Money Market Mutual Fund. Investment Trust Fund The Government’s investment trust fund operates under the Sewer indenture established to provide that the net revenues from the sewer system operations are deposited into a Bond Account held by a Trustee. The account must provide coverage of 120% of the maximum annual debt service. The fund follows the Government’s policy in accordance with Kentucky Revised Statute (KRS) 66.480 and the Government’s investment policy.



Money Market Mutual Funds $28,704,846 $28,704,846

Sewer Investment Trust Fund

Level 1 inputs are quoted prices in active markets for identical assets, Level 2 inputs are significant other observable inputs, and Level 3 inputs are significant unobservable inputs. Level 2 fixed income securities are priced by industry standard vendors, such as Interactive Data Corporation (IDC), using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. IDC also monitors market indices and industry and economic events including credit rating agency actions. The Government has no Level 3 inputs. Interest Rate Risk – The risk that changes in interest rates will adversely affect the fair value of an investment. While the Government has adopted an investment policy that recommends controlling interest rate risk through maturity diversification, the policy does not place any formal limits of investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk – The risk that an issuer or other counterparty to an investment will not fulfill its obligations. Investments are made under the “prudent person rule” outlined in the Government’s investment policy. This rule is defined to mean “investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of capital as well as the probable income to be derived.” The prudent investor standard shall be applied in the context of managing the overall portfolio.


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S&PInvestment Type Fair Value Less Than 1 1 to 5 6 to 10 More than 10 Rating Fair Value

Money Market Mutual Funds $28,704,846 $28,704,846 $0 $0 $0 NA $28,704,846

Sewer Investment Trust FundInvestment Maturities (in years)

Concentration of Credit Risk – The risk of loss attributed to the magnitude of the Government’s investment in a single issuer. Government securities and investments in mutual funds are excluded from this risk. In order to reduce the credit risk, the investments held by a financial institution in the Government’s name should be limited to no more than 35% of the total investments, excluding that held in a Money Market Mutual Fund. Pension Trust Funds The Government’s Pension Trust Funds are made up of the Policemen’s and Firefighters’ Retirement Fund (PFRF) and the City Employees’ Pension Fund (CEPF). The disclosures below are separate as the pension funds have different investment policies and different objectives. The PFRF is an active, growing fund, while the CEPF has been closed since 1983. Investments of the PFRF as of June 30, 2019 are summarized and categorized in the following table:



Debt Securities Bank Loans $448,434 $0 $448,434 $0 Corporate Debt 93,508,479 92,280,906 1,227,573 International Bonds Municipal Obligations 3,807,374 3,807,374 SL Comingle Fund 34,306,745 34,306,745 US Agencies 35,527,011 35,527,011 US Government Obligations 34,027,108 34,027,108

$201,625,151 $0 $200,397,578 $1,227,573Other Investments Equity Mutual Funds $388,205,114 $174,727,250 $213,477,864 $0 Equity Real Estate 71,450,822 71,450,822 Equity Securities - Domestic 752,742 270,985 113,011 368,746 Equity Securities - International 134,851,712 69,607,472 65,244,240

$796,885,541 $244,605,707 $550,683,515 $1,596,319

Policemen's and Firefighters' Retirement Fund

Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Level 2 domestic and international equities are priced using the closing price from the applicable exchange as provided by industry standard vendors, such as Interactive Data Corporation (IDC), which prices to capture market movements between local stock exchange closing time and portfolio valuation time each day. Level 2 fixed income securities are priced by industry standard vendors, such as IDC, using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. IDC also monitors market indices and industry and economic events including credit rating agency actions. Level 3 inputs from Corporate Debt are fair valued by a third party advisor based on quarterly financials. Level 3 inputs from domestic Equity Securities are fair valued by broker quotes daily.


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The PFRF has contracted with external investment managers to manage all of the funds. The Board has adopted an investment policy that recommends the following target allocations based on asset class:

Target Allocation

Passive Large Cap Core 10.00%Active Large Cap Growth 7.50%Active Large Cap Value 7.50%Small Cap Equity 15.00%

International Growth Equities 9.25%International Value Equities 9.25%Emerging Markets 4.50%Total Equities 63.00%

Asset Class

US Core Fixed Income 15.50%US High Yield Fixed Income 7.50%Total Fixed Income 23.00%

Real Estate 9.00%

Real Return 5.00%

Total Plan 100.00%

Interest Rate Risk – The PFRF does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair market losses arising from increasing interest rates.

Credit Risk – The PFRF investment policy manages credit risk by the limitation of certain investments within the above asset classes. For US Equity asset classes up to 15% of US Small Cap Value, 7.5% of US Large Cap Growth, 7.5% of US Large Cap Value, and 10% of Passive Large Cap Core portfolio’s current market value may be invested in ADR's. The US Core Fixed Income manager’s debt securities must have a minimum quality rating of Baa/BBB or above, while the overall portfolio weighted average credit quality rating must not fall below AA- or equivalent. The US High Yield Fixed Income manager’s portfolio may have, on average, no more than 20% of the portfolio in debt securities with a quality rating of CCC/Caa and below, while the overall portfolio rating must not fall below Baa3, BBB-, A2 or P2.


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Debt Securities A $32,782,854 Bank Loans $448,434 $0 $448,434 $0 $0 AA 74,457,602 Corporate Debt 93,508,479 3,075,333 50,583,752 30,283,179 9,566,215 AAA 3,656,051 International Bonds B 16,830,044 Municipal Obligations 3,807,374 2,376,865 369,313 1,061,196 BB 29,949,225 SL Comingle Fund 34,306,745 23,075,023 11,000,188 231,534 BBB 18,570,967 US Agencies 35,527,011 1,620,938 4,743,454 29,162,619 CC 2,370,901 US Government Obligations 34,027,108 2,442,265 13,070,273 10,123,818 8,390,752 CCC 25,200

$201,625,151 $28,592,620 $79,100,451 $45,519,764 $48,412,318 NR 618,242,697 Other Investments Equity Mutual Funds $388,205,114 Equity Real Estate 71,450,822 Equity Securities - Domestic 752,742 Equity Securities - International 134,851,712

$796,885,541

Policemen's and Firefighters' Retirement FundInvestment Maturities (in years)

Concentration of Credit Risk – Government securities and investments in mutual funds are excluded from this risk. The PFRF places a restriction on equity managers that at the time of purchase they may not invest in more than 5% of the outstanding securities of one issuer nor invest more than 5% of their portfolios’ assets in the outstanding securities with one issuer. The US Core Fixed Income manager may not invest more than 5% of the outstanding securities with one issuer nor invest more than 5% of the portfolio's assets in the outstanding securities of one issuer, except for Treasury and Agency securities. The US High Yield Fixed Income manager may not invest more than the greater of 1.5 times the index weight, or 20% of the portfolio, in any one industry. The US High Yield Fixed Income manager may not invest more than 5% of the Plan’s assets in the outstanding securities of any one issuer. Securities Lending – The PFRF has a securities lending agreement with Northern Trust, a national banking association (the agent). The agent, also the custodian for the retirement fund, acts as an agent to lend securities held in the retirement fund portfolios. Per the agreement, the PFRF has authorized the lending of domestic bonds and securities in return for collateral. Collateral for loaned securities may be in the form of cash, securities issued or guaranteed by the United States Government or its agencies or irrevocable letters of credit. The broker/dealer collateralizes their borrowing to 102% of the security value, plus accrued interest. If the broker/dealer fails to return the security upon request, then the agent will utilize the collateral to replace the security loaned. The Government does not have the ability to pledge or sell collateral securities without a borrower default. Investment of the cash collateral may be in commercial paper that is rated in the highest category of at least two nationally recognized security agencies, short-term obligations of banks, short-term obligations of the United States Government or its agencies, repurchase agreements, funding agreements issued by insurance companies rated “A” or higher by A. M. Best & Company or money market mutual funds. The investments of the collateral do not generally match the maturities of the securities lending arrangements themselves; they are typically very short-term in nature and mostly invested in overnight repurchase agreements. The agent agrees to indemnify the retirement fund for losses resulting directly or indirectly from the failure of the borrower to return the loaned securities in accordance with the terms of the loan agreement, limited to an indemnification amount equal to the difference between the market value of the loaned securities and the value of the collateral. There are no restrictions in the agreement that limit the amount of securities that can be lent at one time or to one borrower.


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As of June 30, 2019, the securities loaned in the portfolio did not have credit risk, and the fair value of securities on loan is $34,306,745. Investments of the CEPF as of June 30, 2019 are summarized and categorized in the following table:



Debt Securities: Corporate Debt $7,257,837 $0 $7,257,837 $0 US Agencies 7,912,676 7,912,676 US Government Obligations 3,028,439 3,028,439

Other Investments: Equity Mutual Funds 12,234,575 12,234,575

$30,433,527 $3,028,439 $27,405,088 $0

City Employees Pension Fund

Level 2 fixed income securities are priced by industry standard vendors, such as Interactive Data Corporation (IDC), using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. IDC also monitors market indices, and industry and economic events including credit rating agency actions. The CEPF has contracted with external investment managers to manage all of the funds. The Board has adopted an investment policy that recommends the following target allocations based on asset class:

Asset Class Target AllocationDomestic Equity 20.00%International Equity 10.00%Fixed Income 70.00%

100.00%

Interest Rate Risk – The CEPF does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair market losses arising from increasing interest rates. Credit Risk – The CEPF investment policy limits its equity manager to investments in ADR’s to 10% of the equity portfolio’s current market value. The fixed income manager's debt securities must have a minimum quality rating of Baa/BBB or above, while the overall fixed income portfolio rating must be A+ or above. No more than 10% of the equity portfolio can be of quality rating Baa/BBB and below.


Debt Securities: AAA $277,625 Corporate Debt $7,257,837 $1,248,535 $5,151,205 $858,096 $0 AA 5,167,536 US Agencies 7,912,676 7,912,676 A 4,239,332 US Government Obligations 3,028,439 983,504 2,044,935 BBB 601,783

18,198,952 9,161,211 5,151,205 1,841,601 2,044,935 NR 20,147,251Other Investments: Equity Mutual Funds 12,234,575

$30,433,527

Investment Maturities (in years)

City Employees Pension Fund

Concentration of Credit Risk – The CEPF investment policy places a restriction on equity managers that at the time of purchase, managers may not invest in more than 5% of the outstanding securities of one issuer nor invest more than 5% of their portfolios’ assets in the outstanding securities with one issuer. The fixed income manager may not invest


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in more than 5% of the outstanding securities of one issuer nor invest more than 5% of the fixed income portfolio assets in the outstanding securities of one issuer, except for Treasury and Agency securities. Component Units For complete information on custodial credit risk, interest rate risk, credit risk, and concentration of credit risk, refer to the individual reports on each component unit. Summarized investment information for the component units is included in the table below:

ReportedAmount/

Fair ValueU.S. Government and Government Agency Obligations $191,841,453Investments not subject to categorization:

Certificates of Deposit 20,251,230Money Market Funds 72,861,368

Total Investments $284,954,051

As of June 30, 2019, LCC had $3,348,169 and $796,143 in deposits and investments, respectively, which were uninsured and uncollateralized. B. Capital Assets Capital asset activity for the year ended June 30, 2019 was as follows:

Beginning Ending Balance Increases Decreases Balance

Governmental Activities:Nondepreciable Assets:

Land * $61,458,243 $1,407,539 $0 $62,865,782Purchase of Development Rights 80,219,938 383,526 80,603,464Intangibles 3,221,012 6,577,132 9,798,144Construction in Progress 17,689,270 13,360,181 (967,095) 30,082,356Developments in Progress * 21,033,377 89,352 (20,826,594) 296,135

Depreciable Assets:Buildings 186,100,240 1,810,214 187,910,454Intangibles 17,585,251 196,000 17,781,251Vehicles, Equipment & Furniture * 141,316,475 10,770,827 (5,720,529) 146,366,773Land & Leasehold Improvements 46,563,690 343,327 (57,578) 46,849,439Infrastructure 1,033,566,088 22,317,179 1,055,883,267Sewer Lines 11,749,467 11,749,467Sewer Plants 216,797 216,797

Totals at Historical Cost 1,620,719,848 57,255,277 (27,571,796) 1,650,403,329 Less Accumulated Depreciation For:

Buildings (73,405,797) (5,887,754) 0 (79,293,551)Intangibles (12,904,659) (1,784,083) 0 (14,688,742)Vehicles, Equipment & Furniture (96,982,469) (10,533,274) 5,492,528 (102,023,215)Land & Leasehold Improvements (27,874,373) (3,212,688) 0 (31,087,061)Infrastructure (449,663,446) (34,333,378) 0 (483,996,824)Sewer Lines (1,496,638) (234,140) (1,730,778)Sewer Plants (15,498) (4,336) (19,834)

Total Accumulated Depreciation (662,342,880) (55,989,653) 5,492,528 (712,840,005)Governmental Activities Capital Assets, Net $958,376,968 $1,265,624 ($22,079,268) $937,563,324

Primary Government


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Business-Type Activities:Nondepreciable Assets:

Land $46,342,136 $79,561 $0 $46,421,697Construction in Progress 68,869,365 57,599,155 (3,389,367) 123,079,153Developments in Progress * 7,942,369 3,549 (7,829,493) 116,425Intangibles 497,826 83,200 581,026

Depreciable Assets:Buildings 120,455,322 273,337 0 120,728,659Intangibles 8,966,739 132,724 0 9,099,463Vehicles, Equipment & Furniture 37,771,831 3,375,223 (664,738) 40,482,316Land & Leasehold Improvements 42,950,767 0 0 42,950,767Infrastructure 16,026,305 1,860,250 17,886,555Sewer Lines 219,264,747 8,062,991 227,327,738Sewer Plants 209,491,154 0 209,491,154

Totals at Historical Cost 778,578,561 71,469,990 (11,883,598) 838,164,953Less Accumulated Depreciation For:Buildings (88,938,863) (3,586,378) 0 (92,525,241)Intangibles (4,738,924) (1,198,994) 0 (5,937,918)Vehicles, Equipment & Furniture (18,597,850) (3,072,835) 664,737 (21,005,948)Land & Leasehold Improvements (36,069,732) (448,559) 0 (36,518,291)Infrastructure (1,706,677) (375,991) (2,082,668)Sewer Lines (78,318,131) (4,226,673) (82,544,804)Sewer Plants (104,560,786) (4,368,786) (108,929,572)

Total Accumulated Depreciation (332,930,963) (17,278,216) 664,737 (349,544,442)Business-Type Activities Capital Assets, Net $445,647,598 $54,191,774 ($11,218,861) $488,620,511

* Restated beginning balance due to prior period adjustment Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental Activities:General Government $951,454Computer Information Technology 475,946Administrative Services 535,097Finance 708,903Public Safety 1,496,931Environmental Quality & Public Works 4,694,433Police 1,563,116Fire and Emergency Services 1,945,322Law 5,574Community Corrections 2,707,973Social Services 615,862General Services 5,065,436Parks and Recreation 1,864,821Planning, Preservation, & Development 33,358,785Total depreciation expense - Governmental Activities $55,989,653


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Business-Type Activities:Sanitary Sewer System $12,517,562Public Facilities Corporation 3,345,694Landfill 587,980Right of Way 6,324Extended School Program 3,111Enhanced 911 371,095Water Quality 446,450Total depreciation expense - Business-Type Activities $17,278,216


Nondepreciable Assets:Land $32,624,350 $3,825,895 $0 $36,450,245Construction in Progress 19,721,518 20,657,329 (20,603,902) 19,774,945Other 16,995,094 58,306,507 75,301,601

Depreciable Assets:Buildings & Improvements 363,402,416 12,616,517 (12,589,472) 363,429,461Vehicles, Equipment, & Furniture 84,254,101 4,599,021 (2,445,850) 86,407,272Land & Leasehold Improvements 76,847,433 3,707,715 (20,856) 80,534,292Intangibles 49,605 20,040 69,645

Totals at Historical Cost 593,894,517 103,733,024 (35,660,080) 661,967,461Less Accumulated Depreciation (292,900,270) (21,161,672) 14,093,273 (299,968,669)

Component Unit ActivitiesCapital Assets, Net $300,994,247 $82,571,352 ($21,566,807) $361,998,792

Discretely Presented Component Units

Construction Commitments The Government has active construction projects as of June 30, 2019. The projects include improvements to buildings, sanitary sewer storm water systems and major roadways. At June 30, 2019, the Government had the following commitments on construction contracts:

Project CommitmentBuildings $3,285,451Capital Repairs & Maintenance 1,496,069Land Improvements 1,746,274Sanitary Sewer Collection System 24,658,061Sanitary Sewer Treatment System 13,848,712Storm Drainage 1,433,589Street Resurfacing Maintenance 5,927,593Streets & Roadways 5,096,672Street Lighting 78,696Traffic Control & Markings 1,229,959

$58,801,076


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Buildings are primarily financed through general obligation bonds for various renovations and construction. Capital repairs & maintenance, and traffic control & markings are funded by intergovernmental revenues and general obligation bonds. Land improvements are funded by a combination of intergovernmental revenues, general obligation bonds, and grant funds. Sanitary sewer projects are financed with both sewer revenues and Kentucky Infrastructure Authority State Revolving Fund Loans. Storm drainage improvements are supported by the water quality management fee revenues. Intergovernmental revenues, local contributions, general obligation bonds, and grants provide funding for major roadway improvements. The Urban Services funds finance the construction of street lighting. C. Interfund Receivables, Payables, and Transfers The principal purpose of the Government’s interfund transfers is indicative of funding for capital projects or subsidies of various Government operations and reallocation of special revenues. Due to our practice of cash management by pooling the Government’s funds, interfund balances exist as of June 30, 2019. In addition, Federal and State Grants revenues are based on reimbursable expenditures. The composition of interfund balances as of June 30, 2019, is as follows:

Fund Description Due from (to) General Fund

Federal & State Grants ($437,805)Other Governmental Funds (433,815) Internal Service Funds 2,925,415 Total due from General Fund $2,053,795

Receivable Entity Payable Entity AmountComponent unit - Lexington Convention and Visitor's Bureau Primary government - General fund $1,474,552Component unit - Lexington Center Corporation Primary government - General fund 764,000Total $2,238,552

Interfund Transfers:

Transfers are indicative of 1) funding for capital projects, 2) moving unrestricted revenues collected in the General Fund to subsidize various programs accounted for in other funds in accordance with budgetary authorization, and 3) reallocation of special revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them. The following schedule briefly summarizes the Government’s transfer activity:

PublicNonmajor Total Sanitary Facilities Water Nonmajor Total

General Urban Services Fed St Grants Governmental Governmental Sewer Corp Landfill Quality Proprietary ProprietaryGeneral $0 $148,020 $1,339,855 ($3,435,710) ($1,947,835) $143,857 $568,257 $0 $70,157 ($1,352,071) ($569,799)Urban Services (148,020) 142,189 (5,831) Fed St Grants (1,339,855) (142,189) (825,748) (2,307,792) (7,342) (7,342)Nonmajor Governmental 3,435,710 825,748 4,261,458 12,417 12,417Public Facilities Corp (568,257) (568,257)Nonmajor Proprietary 1,398,001 7,342 1,405,343Grand Total $2,777,579 $5,831 $2,315,134 ($4,261,458) $837,086 $156,274 $568,257 $0 $70,157 ($1,359,413) ($564,725)

D. Long-Term Debt Revenue bonds and other directly related long-term liabilities, which are intended to be paid from proprietary funds, are included in the accounts of such funds. All other long-term indebtedness is accounted for in the governmental activities column of the Government-Wide Statement of Net Position.


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Primary Government Bonds payable, notes payable, compensated absences, landfill closure and postclosure care costs, and unfunded pension liabilities at June 30, 2019 are as follows:

Original Interest Final Amount Due WithinPurpose of Issue Issue Rates Maturity Outstanding One Year

Governmental ActivitiesBonds, Notes, Loans, and Leases:

Pension Obligation,Series 2009B Police/Fire Pension Fund $70,610,000 3.50% - 6.00% 1-Apr-2029 $43,340,000 $3,370,000General Obligation, Series 2010B Refunding of 1999B and 2000A $7,735,000 1.00% - 3.00% 1-Sep-2019 850,000 850,000General Obligation, Series 2010C Refunding of 2000E $6,635,000 1.00% - 3.00% 1-Dec-2020 1,325,000 650,000Pension Obligation,Series 2010D Police/Fire Pension Fund $35,825,000 .95%-5.45% 1-Jun-2030 3,380,000 1,650,000General Obligation, Series 2010H Refunding of 2001B $4,465,000 1.00%-3.80% 1-Dec-2021 1,565,000 505,000Pension Obligation,Series 2012A Police/Fire Pension Fund $31,000,000 2.50% - 4.00% 1-Oct-2032 23,530,000 1,355,000General Obligation, Series 2012B Refunding of 2002C and 2004C $6,275,000 2.00% - 4.00% 1-Jul-2024 4,545,000 720,000General Obligation, Series 2013A Road Resurfacing $11,275,000 2.00% - 5.00% 1-Oct-2023 5,735,000 1,035,000General Obligation, Series 2013B Refunding of 2004,2005C,2006B $6,005,000 2.00% - 4.00% 1-Jul-2025 3,400,000 465,000General Obligation, Series 2013C CIP projects $17,035,000 3.00% - 4.00% 1-Oct-2037 13,860,000 695,000General Obligation, Series 2014A Refunding of 2010A $55,925,000 3.00% - 5.00% 1-Sep-2030 41,520,000 2,685,000General Obligation, Series 2014B CIP projects $24,245,000 3.25%-5.00% 1-Jan-2035 21,120,000 895,000General Obligation, Series 2014C QECB Detention Center $2,900,000 3.25% 1-Jun-2027 2,795,000General Obligation, Series 2015A Refunding of 2006C,2009A,2010G $19,845,000 3.00% - 5.00% 1-Oct-2028 15,620,000 2,060,000 General Obligation, Series 2015B CIP projects $24,860,000 2.00% - 5.00% 1-Oct-2035 19,650,000 1,920,000General Obligation, Series 2016A Historic Courthouse Renovation $22,450,000 .80%-3.00% 1-Aug-2036 20,620,000 930,000 General Obligation, Series 2016B CIP projects $8,870,000 2.00% - 5.00% 1-Aug-2036 7,750,000 595,000 General Obligation, Series 2016C CIP projects $37,555,000 2.00% - 5.00% 1-Oct-2036 32,355,000 2,805,000 General Obligation, Series 2016D Refunding of 2006D Detention Center $28,495,000 4.00% - 5.00% 1-Nov-2024 19,125,000 3,465,000 General Obligation, Series 2017A CIP projects $32,435,000 3.00% - 5.00% 1-Sep-2037 30,040,000 2,515,000 General Obligation, Series 2017B Refunding of 2010D Police/Fire Pension $22,445,000 2.00% - 2.85% 1-Jun-2030 21,680,000 300,000 General Obligation, Series 2018A CIP projects $42,055,000 3.00% - 5.00% 1-Oct-2038 42,055,000 2,375,000

Premiums and Discounts 26,560,856Total Bonds, Notes, and Loans Payable 402,420,856 31,840,000Other Liabilities:

Compensated Absences 26,412,334 3,697,727Unfunded Other Post Employment Benefit Liability 307,936,013Unfunded Pension Liability 443,649,826

Total Other Liabilities 777,998,173 3,697,727Total Governmental Activities $1,180,419,029 $35,537,727

Business-Type ActivitiesBonds, Notes and Loans:

Sanitary Sewer, Series 2014A Refunding Refunding $24,190,000 3.00% - 5.00% 1-Sep-2030 $23,690,000 $1,800,000Sanitary Sewer, Series 2014B Refunding Refunding $10,410,000 5.00% 1-Sep-2019 1,005,000 1,005,000Public Facilities, Series 2016D Refunding Refunding $42,590,000 2.65% - 5.00% 1-Oct-2031 38,370,000 2,270,000Radcliffe road A209-09 SRF Loan $113,523 2.00% 1-Jun-2030 68,270 5,607KIA Streetscape A209-8 SRF Loan $1,254,980 2.00% 1-Dec-2030 781,845 61,109So. Elkhorn A09-01 SRF Loan $14,045,119 2.00% 1-Dec-2031 9,424,364 670,709Wolf Run A10-08 SRF Loan $8,373,431 2.00% 1-Dec-2035 7,698,396 398,101A13-002 Bob-O-Link SRF Loan $2,711,427 1.75% 1-Dec-2038 2,540,066 117,378A13-003 East Lake SRF Loan $743,414 1.75% 1-Dec-2037 664,334 32,753A13-003 Century Hills SRF Loan $1,327,844 1.75% 1-Dec-2037 1,186,597 58,501A13-003 West Hickman Trk A SRF Loan $4,338,726 1.75% 1-Dec-2037 3,877,202 191,151A13-003 Woodhill Trk SRF Loan $3,588,635 1.75% 1-Dec-2037 3,206,901 158,104A13-018 E2A SRF Loan $5,264,306 1.75% 1-Dec-2037 4,816,527 229,810A13-007 AW PH3 SRF Loan $1,154,472 1.75% 1-Dec-2037 883,681 43,572A13-007 IDLHR N SRF Loan $620,324 1.75% 1-Dec-2037 554,109 27,304

A13-002 Wolf Run Trk SRF Loan $452,195 1.75% 1-Dec-2038 423,617 19,576 A13-002 Wolf Run WWS SRF Loan $5,725,025 1.75% 1-Dec-2038 5,363,207 247,837 A12-016 Blue Sky SRF Loan $1,594,026 2.00% 1-Dec-2036 1,393,429 69,572 A13-007 Walhampton Rogers SRF Loan $719,816 1.75% 1-Dec-2037 642,952 31,696 A13-007 Cardinal-Laramie PH1-3 SRF Loan $226,247 1.75% 1-Dec-2037 202,077 9,967 A13-015 Town Branch* SRF Loan $20,309,618 1.75% 1-Dec-2038 19,019,820 878,920 A14-001 Lower Cane Run WWS* SRF Loan $12,168,449 1.75% 1-Dec-2038 11,392,137 526,439 A13-015 Marquis Ave* SRF Loan $583,329 1.75% 1-Dec-2038 546,284 25,244 A13-015 UK Trunk* SRF Loan $3,009,695 1.75% 1-Dec-2038 2,818,559 130,248 A15-026 West Hickman WWS* SRF Loan $55,153,076 1.75% 1-Dec-2038 53,635,342 2,402,246 A13-007 Rodgers Rd SRF Loan $1,780,179 1.75% 1-Dec-2037 1,590,056 78,399 A17-003 Lower Griffin Gate Trunk SRF Loan $1,286,628 1.75% 1-Dec-2037 1,232,385 55,197 A17-005 Town Branch PH 1* SRF Loan $9,969,585 1.75% 1-Dec-2040 4,367,248

Premiums and Discounts 7,867,653Total Bonds, Notes, and Loans Payable 209,262,058 11,544,440Other Liabilities:

Compensated Absences 1,560,046 522,475Landfill Closure & Postclosure Care Costs 12,405,492 441,121Unfunded Other Post Employment Benefit Liability 10,519,306Unfunded Pension Liability 35,988,706

Total Other Liabilities 60,473,550 963,596Total Business-Type Activities $269,735,608 $12,508,036

*Amounts represents draws as of 6/30/2019


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Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2019, was as follows:

Beginning Balance Additions Reductions

EndingBalance

Due Within One Year

Governmental ActivitiesBonds, Notes, Loans, and Leases:

General and Pension Obligation Bonds $363,050,000 $42,055,000 ($29,245,000) $375,860,000 $31,840,000Net of Bond Premiums and Discounts 25,996,016 2,804,065 (2,239,225) 26,560,856

Total Bonds, Notes, and Loans Payable 389,046,016 44,859,065 (31,484,225) 402,420,856 31,840,000Other Liabilities:

Compensated Absences 26,123,842 1,571,920 (1,283,428) 26,412,334 3,697,727Unfunded Other Post Employment Benefit Liability 413,934,415 36,844,090 (142,842,491) 307,936,013Unfunded Pension Liability 414,684,282 150,311,639 (121,346,096) 443,649,826

Total Governmental Activities Long-Term Liabilities $1,243,788,555 $233,586,714 ($296,956,240) $1,180,419,029 $35,537,727Business-Type ActivitiesBonds, Notes, and Loans:

Revenue Bonds $27,360,000 $0 ($2,665,000) $24,695,000 $2,805,000Mortgage Revenue Bonds 40,535,000 (2,165,000) 38,370,000 2,270,000Notes and Loans 120,097,608 23,741,744 (5,509,946) 138,329,406 6,469,440

Bonds, Notes, and Loans Payable 187,992,608 23,741,744 (10,339,946) 201,394,406 11,544,440Net of Bond Premiums and Discounts 8,737,880 (870,227) 7,867,653

Total Bonds, Notes, and Loans Payable 196,730,488 23,741,744 (11,210,173) 209,262,058 11,544,440Other Liabilities:

Compensated Absences 1,469,458 190,503 (99,913) 1,560,046 522,475Landfill Closure and Postclosure Care Costs 13,722,665 (1,317,173) 12,405,492 441,121Unfunded Other Post Employment Benefit Liability 12,252,482 1,392,372 (3,125,548) 10,519,306Unfunded Pension Liability 35,073,479 2,624,291 (1,709,064) 35,988,706

Total Business-Type Activities Long-Term Liabilities $259,248,572 $27,948,910 ($17,461,870) $269,735,608 $12,508,036

Internal service funds predominately serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for Governmental Activities. For the Governmental Activities, compensated absences are generally liquidated by the General Fund and the Urban Services Fund. The General Fund is used to liquidate both the net pension obligation and the net other postemployment benefit obligation. For Business-Type Activities, landfill closure and postclosure care costs are liquidated from fees charged for landfill services. Principal and interest requirements to maturity for the Primary Government’s bonds and notes are as follows:

Fiscal Year Interest Principal Interest Principal Interest Principal Interest Principal2020 $15,416,726 $31,840,000 $3,608,028 $9,274,441 $1,684,181 $2,270,000 $20,708,935 $43,384,4412021 13,958,496 32,470,000 3,180,966 9,715,452 1,567,681 2,390,000 18,707,143 44,575,4522022 12,492,589 31,760,000 2,908,088 9,987,541 1,445,181 2,510,000 16,845,858 44,257,5412023 11,079,904 31,805,000 2,669,742 8,506,838 1,316,431 2,640,000 15,066,077 42,951,8382024 9,656,879 32,515,000 2,474,170 8,703,384 1,181,056 2,775,000 13,312,105 43,993,3842025-2029 28,682,083 137,650,000 9,375,921 46,496,679 3,637,506 16,145,000 41,695,510 200,291,6792030-2034 8,067,829 56,590,000 4,461,874 42,734,519 473,304 9,640,000 13,003,007 108,964,5192035-2040 1,285,556 21,230,000 1,035,902 27,605,552 2,321,458 48,835,552Total $100,640,062 375,860,000 $29,714,691 163,024,406 $11,305,340 38,370,000 $141,660,094 577,254,406

Less principal payable within one year 31,840,000 9,274,441 2,270,000 43,384,441Long term principaldue after one year $344,020,000 $153,749,965 $36,100,000 $533,869,965

Total Primary Government

Governmental Activities Business-Type ActivitiesGeneral Obligation Bonds, Notes,

and LoansRevenue Bonds, Notes, and

Loans Mortgage Revenue Bonds


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Component Units The Government is contingently liable for the Lexington Center Corporation and Airport Board’s debt. Principal and interest requirements for Component Units’ debt are as follows:

Fiscal YearLexington Center

CorporationLexington

Airport BoardNonmajor

Component Units Total2020 $2,810,000 $3,990,000 $2,310,509 $9,110,5092021 3,625,000 4,100,000 2,364,999 10,089,9992022 3,835,000 4,130,000 2,422,656 10,387,6562023 4,085,000 4,210,000 2,477,613 10,772,6132024 4,350,000 4,260,000 2,164,163 10,774,1632025-2029 26,180,000 22,000,000 5,211,254 53,391,2542030-2034 25,255,000 26,285,000 913,579 52,453,5792035-2039 34,070,000 11,795,000 45,865,0002040-2044 45,135,000 12,673,400 57,808,4002045-2049 58,575,000 58,575,000Total 207,920,000 80,770,000 30,538,173 319,228,173Less payable within one year (2,810,000) (3,990,000) (2,310,509) (9,110,509)Refinancing loss/premium-discount 12,445,145 3,634,503 16,079,648

Long term principal due after one year $217,555,145 $80,414,503 $28,227,664 $326,197,312

Principal

Fiscal YearLexington Center

CorporationLexington

Airport BoardNonmajor

Component Units Total2020 $9,621,625 $2,919,652 $0 $12,541,2772021 9,460,750 2,798,157 640,505 12,899,4122022 9,274,250 2,703,097 589,152 12,566,4992023 9,076,250 2,592,141 537,252 12,205,6432024 8,865,375 2,469,560 486,883 11,821,8182025-2029 40,669,125 10,215,675 430,393 51,315,1932030-2034 34,503,538 5,340,431 1,380,218 41,224,1872035-2039 27,323,250 909,345 1,022,558 29,255,1532040-2044 18,091,775 925,629 19,017,4042045-2049 6,718,125 1,110,755 7,828,880Total $173,604,063 $29,948,058 $7,123,345 $210,675,466

Interest


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General Description of the Government's Bonds and Notes Payable Revenue and Mortgage Revenue Bonds The Sanitary Sewer System (the System) issues revenue bonds to finance improvements and expansions of the sanitary sewer system operated by the Government. The Sanitary Sewer System has issued the following bonds: 1. $24,190,000 of Tax-Exempt Sewer System Revenue Refunding Bonds, Series 2014A, issued at a premium, and

payable annually in principal installments ranging from $500,000 to $3,095,000 plus interest over 13 years, to fully refund the Sewer System Revenue Bonds, Series 2009A, (Taxable Build America Bonds). The refunding provided for a cumulative savings of $1,119,864 over the life of the bonds and a net present value savings of $1,317,979 or 4.35% including the escrow of the partial BAB subsidy from the Sewer System Revenue Bonds, Series 2009A.

2. $10,410,000 of Taxable Sewer System Revenue Refunding Bonds, Series 2014B, issued at a premium and payable annually in principal installments ranging from $1,005,000 to $2,540,000 plus interest over 5 years to fully refund the Sewer System Refunding Revenue Bonds Series 2010A. The issue resulted in a net present value loss of ($284,163) or (2.42%). However, this issue was refunded in conjunction with the Tax-Exempt Sewer System Revenue Refunding Bonds, Series 2014A to provide the Government the opportunity to update the bond ordinances for current and future Sewer bond issues, see the below section on the updates to the Sewer System Bond Ordinances.

In fiscal year 2014, the Government defeased all of the outstanding debt under its prior Sewer indenture. The new indenture provides that the gross income and revenues of the System first be used to pay operating and maintenance expenses of the System. Net Revenues of the System are then deposited into the Bond Account, which is held by the Trustee, and are to be disbursed as follows: Each month, 1/6 of the next interest payment to the Interest Subaccount and 1/12 of the next principal payment

to the Principal Subaccount. If necessary, deposit to the Bond Reserve Account. Indenture is structured so that the requirement of reserve is

applied on a series specific basis. Payment of any prior deficiencies in regards to the Interest Subaccount, Principal Subaccount, and Bond Reserve

Account. If necessary, payment of administrative fees associated with the outstanding bonds. Deposit to the Rebate Fund. Payment of debt service of other debt obligations related to the Sewer System. Deposit to the Rate Stabilization Fund. Deposit to the Surplus Account. Funds can be requested by LFUCG from the Surplus Account for Operating and Maintenance or capital projects. The Indenture also outlines parity provisions for the issuance of additional bonds for the acquisition or construction of sewer system facilities. The Net Revenues of the System, as defined in the bond ordinance, must provide coverage of 120% of Maximum Annual Debt Service. The Public Facilities Corporation (PFC) was created by the Government to act as the agency and instrumentality of the Government in acquiring, developing and financing public improvements and public projects. The PFC financed various projects through bank and mortgage notes and the issuance of revenue bonds. The debt is collateralized by the properties, a pledge of specified Government revenues and lease payments from the Government sufficient to retire the debt and to provide for the operation and maintenance of the facilities. The Government entered into various contracts, leases, and option agreements with the PFC. These agreements provide that the PFC receives title to the properties mortgaged as security for the revenue bond issues, the proceeds


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of which have been used to finance the acquisition, construction, and improvements to the properties. Upon payment of the outstanding bonds, title to the properties will be conveyed to the Government. The lease agreements are renewable annually and the likelihood of the leases not being renewed is remote. The PFC issued $42,590,000 Mortgage Revenue Refunding Bonds, Series 2016D, to refund $48,910,000 total principal remaining on Series 2006 bonds, issued at a premium and payable annually in principal installments ranging from $981,387 to $3,961,556 plus interest over 16 years. The refunding provided a cumulative savings of $7,984,977 over the life of the bonds resulting in a net present value savings of $6,804,749 or 13.91% of the refunded principal. Kentucky Infrastructure Authority (KIA) State Revolving Fund (SRF) Loans SRF Loans are loans that are issued by the Commonwealth of Kentucky for infrastructure improvements. These loans are 20 year loans with a 2% interest rate. The Government has received the following KIA SRF Loans. 1. KIA Loan A209-09 Radcliffe Road issued in the amount of $113,523, payable annually in principal installments

ranging from $1,837 to $3,438 plus interest over 20 years. Financing improvements to the storm water system along Radcliffe Road in Fayette County.

2. KIA Loan A209-08 Streetscape issued in the amount of $1,254,980, payable annually in principal installments

ranging from $25,671 to $37,843 plus interest over 20 years. Financing improvements to the storm water system in the city center of Lexington. These funds were used in conjunction with the streetscape project that included upgrades to the sidewalks, sewer and storm water systems. This capital project included South Limestone, East and West Main Street, and Vine Street.

3. KIA Loan A09-01 South Elkhorn Pump station issued in the amount of $14,045,119, payable annually in

principal installments ranging from $281,600 to $423,692 plus interest over 20 years. Financing the upgrade of the South Elkhorn pump station and construction of a new 36-inch force main. The Capital Replacement Reserve Fund requirement is $43,020 annually for 10 years.

4. KIA Loan A10-08 Wolf Run Pump station issued in the amount of $10,500,000, payable annually in principal

installments ranging from $375,028 to $536,379 plus interest over 20 years for the upgrade and expansion of the Wolf Run pump station. The Capital Replacement Reserve Fund requirement is $26,250 annually for 10 years.

5. KIA Loan A13-002 issued in the amount of $8,888,648, payable annually in principal installments ranging from

$184,181 to $259,589 for the upgrades to the Bob-O-Link Trunk Line, Wolf Run Trunk Line and the Wolf Run Storage Tank Capacity Upgrade. The Capital Replacement Reserve Fund requirement is $35,000 annually for 10 years.


$205,263 to $582,140 plus interest over 20 years for the upgrades to the Eastlake Trunk Line, Century Hills Trunk Line, West Hickman Trunk Line and the Woodhill Trunk Line. The Capital Replacement Reserve Fund requirement is $25,000 annually for 10 years.


$91,001 to $252,328 plus interest over 20 years for the upgrades to the Storm Water Systems of Anniston Wickland, Idlehour, Walhamption Rogers, and Perimeter Park Neighborhoods. The Capital Replacement Reserve Fund requirement is $12,000 annually for 10 years.


$110,486 to $306,355 plus interest over 20 years for the upgrades to the Expansion Area 2A Wastewater System. The Capital Replacement Reserve Fund requirement is $15,000 annually for 10 years.


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9. KIA Loan A12-16 issued in the amount of $1,594,025, payable annually in principal installments ranging from $32,606 to $48,066 for the acquisition and conversion to a pump station of the Blue Sky Wastewater Treatment plant. The Capital Replacement Reserve Fund requirement is $4,825 annually for 10 years.


$501,433 to $704,322 for design and construction of Phase 1 of a multi-phase waste water storage facility at the Town Branch Wastewater Treatment Facility, upgrades to Marquis Avenue, and the UK Trunk Line. The Capital Replacement Reserve Fund requirement is $80,000 annually for 10 years.

11. KIA Loan A14-001 issued in the amount of $12,134,178, payable annually in principal installments ranging

from $252,567 to $357,777 for design and construction of Phase 1 of a multi-phase waste water storage facility at the Lower Cane Run Pump Station. The Capital Replacement Reserve Fund requirement is $50,000 annually for 10 years.

12. KIA Loan A15-026 issued in the amount of $67,944,188 for design and construction of Phase 1 of a multi-phase

waste water storage facility at the West Hickman Waste Water Treatment Plant. As of June 30, 2019 the Government has received only a partial draw of $55,153,076 with the remaining balance of $12,791,112 to be requested in future years. Until the remaining balance is requested, the Kentucky Infrastructure Authority does not issue an amortization schedule for the loan, nor does the Government initiate payment of principal toward the loan. Amortization estimation has been used based on information outlined in the Assistance Agreement between KIA and the Government. The Capital Replacement Reserve Fund requirement is $170,000 annually for 10 years.


$27,003 to $37,929 for the replacement of 4,700 linear feet of gravity sewer pipes. The Capital Replacement Reserve Fund requirement is $5,900 annually for 10 years.

14. KIA Loan A17-005 issued in the amount of $9,969,585 for the replacement of 5,600 linear feet of 12 inch sewer

pipes with 21 inch sewer pipes. Additionally a source water pump and a Bio-swale for surface water treatment from paved areas will be installed As of June 30, 2019 the Government has received only a partial draw of $4,367,248 with the remaining balance of $5,602,337 to be requested in future years. Until the remaining balance is requested, the Kentucky Infrastructure Authority does not issue an amortization schedule for the loan, nor does the Government initiate payment of principal toward the loan. Amortization estimation has been used based on information outlined in the Assistance Agreement between KIA and the Government. The Capital Replacement Reserve Fund Requirement is $25,000 annually for 10 years.

General Obligation Bonds and Notes The Government issues General Obligation bonds and notes to provide funds for the acquisition and construction of capital assets used by Governmental Activities. The Government has issued the following general obligation bonds and notes:

1. $70,610,000, Series 2009B, Taxable General Obligation Pension Funding Bonds, issued at a discount and

payable annually in principal installments ranging from $2,315,000 to $5,515,000 plus interest over 20 years, to finance additional contributions to the Policemen's and Firefighters' Retirement Plan.

2. $7,735,000, Series 2010B, General Obligation Refunding Bonds, for refunding the Series 1999B and 2000A

General Obligation Bonds. Issued at a discount and payable annually in principal installments ranging from $715,000 to $850,000 plus interest over 10 years. The refunding provided for a cumulative savings of $1,394,276 over the life of the bonds resulting in a net present value savings of $1,189,304 or 15.37% of the refunded principal.


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3. $6,635,000, Series 2010C, General Obligation Refunding Bonds, for refunding the Series 2000E General Obligation Bonds. Issued at a discount and payable annually in principal installments ranging from $60,000 to $675,000 plus interest over 12 years. The refunding provided for a cumulative savings of $675,874 over the life of the bonds resulting in net present value savings of $593,504 or 8.95% of the refunded principal.

4. $35,825,000, Series 2010D, Taxable General Obligation Pension Funding Bonds issued at a discount and

payable annually in principal installments ranging from $1,195,000 to $2,700,000 plus interest over 20 years, to finance additional contributions to the Policemen’s and Firefighters’ Retirement Plan. Of the outstanding balance $22,445,000 was refunded through the issuance of Series 2017B, leaving a remaining balance of $6,480,000.

5. $4,465,000, Series 2010H, General Obligation Refunding Bonds, for refunding a portion of the General

Obligation Bond Series 2001B. Issued at a discount and payable in annual principal payments ranging from $30,000 to $540,000 plus interest over 12 years. The refunding provided for a cumulative savings of $150,459 over the life of the bonds resulting in a net present value savings of $126,407 or 3.03% of the refunded principal.

6. $31,000,000, Series 2012A, Taxable General Obligation Pension Funding Bonds, issued at a premium and

payable annually in principal installments ranging from $1,170,000 to $2,110,000 plus interest over 20 years, to finance additional contributions to the Policemen’s and Firefighters’ Retirement Plan.

7. $6,275,000, Series 2012B, General Obligation Refunding Bonds, for refunding a portion of the General

Obligation Bond Series 2002C and the General Obligation Bond Series 2004C. Issued at a discount and payable in annual principal payments ranging from $20,000 to $825,000 plus interest over 12 years. The refunding provided for a cumulative savings of $597,633 over the life of the bonds resulting in net present value savings of $545,403 or 8.76% of the refunded principal.

8. $11,275,000, Series 2013A, Various Purpose General Obligation Bonds to finance various street and highway

improvements including the rehabilitation and paving of existing roads and streets throughout Lexington, Fayette County, Kentucky. Issued at a premium and payable in annual principal payments ranging from $845,000 to $1,265,000 plus interest over 10 years.

9. $6,005,000, Series 2013B, Various Purpose General Obligation Refunding Bonds, for refunding a portion of the

General Obligation Bond Series 2004C, General Obligation Bond Series 2005C and General Obligation Bond Series 2006B. Issued at a premium and payable annually in principal installments ranging from $40,000 to $925,000 plus interest over 13 years. The refunding provided for a cumulative savings of $402,579 over the life of the bonds resulting in net present value savings of $293,222 or 5.10% of the refunded principal.

10. $17,035,000, Series 2013C, Various Purpose General Obligation Bonds to finance various projects for

Departments within the Government, including but not limited to communications and computer equipment and other equipment, traffic engineering equipment, police and fire equipment, police and fire vehicles, and golf carts, remodeling and renovation of public safety buildings, Kentucky Theatre renovations, maintenance building, fire stations, street and sidewalk improvements, various park projects and improvements, HVAC system maintenance, and weather and emergency systems upgrades. Issued at a premium and payable in principal installments ranging from $595,000 to $1,195,000 plus interest over 20 years.

11. $55,925,000, Series 2014A, Various Purpose General Obligation Refunding Bonds, for refunding the General

Obligation Bond Series 2010A Build America Bonds. Issued at a premium and payable annually in principal installments ranging from $2,325,000 to $4,220,000 plus interest over 17 years. The refunding provided for a cumulative savings of $2,214,916 over the life of the bonds resulting in net present value savings of $2,437,443 or 4.35% of the refunded principal.


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12. $24,245,000 Series 2014B, Various Purpose General Obligation Bonds to finance various projects for Departments within the Government, including but not limited to financing managed email solution/exchange, storage area network, new tax revenue system, procurement website upgrade, Accela software, network infrastructure remediation, police patrol transport wagon, general repairs, life safety, autos vehicle replacement, pothole patcher, public safety ops/Lexcall center, sidewalk and catch basin repair, sidewalks, jail management system, public safety radio system, roof repair and replacement, HVAC repair and replacement, infrastructure improvements, Shillito multipurpose sports fields, Carver Center improvements, dugout replacement, aquatics improvements, Kentucky Theatre concession renovation, fire training tower, land acquisition and fire station design #24 and relocation of fire station #2, providing funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights, and construction of a new senior center. Issued at a premium and payable in annual principal payments ranging from $690,000 to $1,830,000 plus interest over 20 years.

13. $2,900,000 Series 2014C, Energy Conservation General Obligation Bonds-Federally Taxable Qualified Energy Conservation Bonds to finance energy conservation measures and other qualifying projects at the Fayette County Detention Center including, but not limited to, LED lighting retrofits, chiller plant optimization, intake HVAC retrofit, inner ring HVAC retrofits, constant-volume reheat fan reset, controls upgrade, demand controlled ventilation, Variable-Air-Volume (VAV) box occupancy controls, energy efficient motors, demand controlled ventilation, kitchen hoods, and installation of new walk-in refrigeration. Issued at par with annual sinking fund payments of $196,441 and a 70% interest subsidy with a final maturity of 12 years. In March of 2018, $105,000 in unused proceeds were redeemed in an extraordinary call per IRS guidelines. The new par amount is $2,795,000.

14. $19,845,000, Series 2015A, Various Purpose General Obligation Refunding Bonds, for refunding a portion of

the General Obligation Bond Series 2006C, General Obligation Bond Series 2009A and full refunding of Series 2010G, Various Purpose General Obligation Public Projects Recovery Zone Economic Development Bonds. Issued at a premium and payable annually in principal installments ranging from $1,080,000 to $2,985,000 plus interest over 14 years. The refunding provided for a cumulative savings of $1,118,502 over the life of the bonds resulting in net present value savings of $849,671 or 4.28% of the refunded principal.

15. $24,860,000 Series 2015B, Various Purpose General Obligation Bonds to finance various projects for

Departments within the Government, including but not limited to financing an ERP software upgrade, new Budgeting system, procurement website upgrade, general repairs, life safety, autos vehicle replacement, roof repair and replacement, HVAC repair and replacement, neighborhood paving, infrastructure improvements, parks improvements and upgrades providing funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights, and additional funding for the Emergency Operations Center. Issued at a premium and payable in annual principal payments ranging from $495,000 to $2,015,000 plus interest over 20 years.

16. $22,450,000 Series 2016A, Taxable General Obligation Bonds to finance the restoration and rehabilitation of

the historic Fayette County Courthouse (the “Historic Courthouse Project”) located at 215 West Main Street in downtown Lexington, Fayette County, Kentucky which Historic Courthouse Project will help preserve the history and architecture of Lexington-Fayette County, enhance the economic development of downtown Lexington, assist in elimination of blight, and reinforce and promote additional redevelopment activities in downtown Lexington-Fayette County. Issued at Par and payable in annual principal payments ranging from $910,000 to $1,435,000 plus interest over 20 years.

17. $8,870,000 Series 2016B, Various Purpose General Obligation Bonds to finance various projects for Departments within the Government, including but not limited to: financing the design and infrastructure improvements for Town Branch Commons Corridor (TBCC), an innovative multimodal greenway that will link two regional trail systems, the Legacy Trail and Town Branch Trail, and through its unique linear park-like design and stormwater management systems, TBCC will create a livable, sustainable streetscape in downtown


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Lexington and will connect established and emerging neighborhoods to each other, downtown, and adjacent higher education (collectively, the "Town Branch Commons Corridor Project"); streetscape and sidewalk improvements located in the Versailles Road area; and street improvements including widening, opening, extending, realigning, grading, repaving, resurfacing, and otherwise rehabilitating and improving streets, roads, thoroughfares, avenues, and expressways throughout Lexington-Fayette County. Issued at a premium and payable in annual principal payments ranging from $190,000 to $815,000 plus interest over 20 years.

18. $37,555,000 Series 2016C, Various Purpose General Obligation Bonds financing the acquisition of various

projects for departments within the Lexington-Fayette Urban County Government, including, but not limited to, (i) the construction, installation and equipping of a new fire station, software system upgrades, safety operations and other safety related projects, road resurfacing, road maintenance, road upgrades, streetscapes and sidewalk improvements, renovations, repairs and upgrades related to public buildings, renovations, repairs and upgrades related to park projects, and providing financial assistance to Lexington Center Corporation for the expansion and replacement of the Lexington Convention Center, and (ii) providing funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights. Issued at a premium and payable in annual principal payments ranging from $975,000 to $3,100,000 plus interest over 20 years.

19. $28,495,000 Series 2016D, Various Purpose General Obligation Refunding Bonds to finance the refunding of

the 2006D Detention Center Refunding Bond. Issued at a premium and payable in annual principal payments ranging from $2,920,000 to $4,180,000 plus interest over 8 years. The refunding provided for a cumulative savings of $3,942,183 over the life of the bonds resulting in net present value savings of $3,742,315 or 11.47% of the refunded principal.

20. $32,435,000 Series 2017A, Various Purpose General Obligation Bonds financing the acquisition of various

projects for departments within the Lexington-Fayette Urban County Government, including, but not limited to, (i) the construction, installation, renovations, repairs and upgrades and equipping of fire stations, software system upgrades, safety operations and other safety related projects, new firetrucks, new police equipment, new police cars, road resurfacing, road maintenance, road upgrades, streetscapes and sidewalk improvements, renovations, repairs and upgrades related to public buildings, renovations, repairs and upgrades related to park projects, and various other improvements within departments of the Lexington-Fayette Urban County Government, (ii) providing funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights. Issued at a premium and payable in annual principal payments ranging from $585,000 to $2,925,000 plus interest over 20 years.

21. $22,445,000 Series 2017B Taxable General Obligation Pension Funding Refunding Bonds issued to finance the

refunding of a portion of the 2010D Lexington-Fayette Urban County Government Taxable General Obligation Pension Funding Bonds. Issued at a premium and payable in annual principal payments ranging from $295,000 to $2,595,000 plus interest over 13 years. The refunding provided for a cumulative savings of $ 1,963,714 over the life of the bonds resulting in net present value savings of $1,964,340 or 9.82% of the refunded principal.

22. $42,055,000 Series 2018A Various Purpose General Obligation Bonds financing the acquisition of various

projects for departments within the Lexington-Fayette Urban County Government, including but not limited to software system upgrades, safety operations and other safety related projects, new firetrucks, new police cars, road resurfacing, road maintenance, streetscapes and sidewalk improvements, renovations and upgrades related to public buildings, fleet vehicle replacement, and upgrades related to park projects, and various other improvements within departments of the Lexington-Fayette Urban County Government, and (ii) providing funding for renovations to the Lexington Convention Center. Issued at a premium and payable in annual principal payments ranging from $1,060,000 to $3,595,000 plus interest over 20 years.


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Landfill Closure and Postclosure Care Cost State and Federal laws and regulations require the Government to place final covers on its landfills and to perform certain maintenance and postclosure monitoring functions at its landfills for thirty years. Since the operations and maintenance of the Government’s landfills are accounted for in an Enterprise Fund, the accrued liability for these costs are reported in the Landfill Fund as required by GASB 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs. The liability at June 30, 2019 is based on the estimated cost of maintaining and monitoring the Old Frankfort Pike Landfill (OFPLF) and the Haley Pike Landfill. Actual cost may be higher due to inflation, changes in technology, or changes in regulations and these costs will be funded by the Landfill Fund. The OFPLF ceased accepting waste decades ago. The Haley Pike Landfill ceased accepting waste in December 2011. Both of these landfills are at 100% capacity. The Haley Pike Landfill has been capped. Environmental monitoring and maintenance of the property will occur over the next 30 years, in accordance with Kentucky State Law. NOTE 4. SELF-INSURANCE PROGRAM

A. Health, Dental, and Vision Care – The Government offers health, dental, and vision care insurance options to employees of the Government. The self-insured medical and pharmacy health plan is provided by Anthem and City Pharmacy. The fully insured dental and vision plans are provided by Delta Dental and Eye Med, respectively. Third party administrators are responsible for the processing of claims and cost containment. Premiums are paid through payroll deductions and may be funded fully or partially by the Benefit Pool provided by the Government. The Health, Dental, and Vision Care Insurance Fund accounts for these activities and is reported in an internal service fund. Changes in the balances of claims liabilities during the past two years are as follows:

Surplus at June 30, 2017 $0Claims and changes in estimates 34,704,123Claims paid (34,704,123)Surplus at June 30, 2018 0Claims and changes in estimates 35,632,336Claims paid (35,632,336)Surplus at June 30, 2019 $0

B. Insurance and Risk Management – The Government is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. These risks are covered through the Property and Casualty Claims Fund (the Fund), a self-insured program established in 1982. There are five types of coverage provided by the self-insured program: auto liability, auto physical damage, general liability, property (including boiler and machinery), and workers' compensation. All assets and employees of the primary government are covered by the Fund. Premiums are paid into the Fund by the General Fund, the Urban Services Fund, and the Sanitary Sewer System Fund and are based on both exposure and experience factors. Premiums include amounts needed to pay prior and current-year claims and administrative costs. Liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR). The result of the process to estimate the claims liability depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends, and other economic and social factors. Estimated recoveries, from subrogation and excess insurance policies, for example, are another component of the claims liability estimate. Annually, as of June 30, the Fund has a third party actuary review the claim histories for all claim years for which open claims are outstanding. The actuary projects the ultimate claim payment obligation (including the IBNR claims) for each year's claim experience. The Government elected to establish the liability for these claims and loss expenses at their present value, with a discount rate of 3.5%. As of June 30, 2019 the undiscounted estimated liability was $32,676,912. The discounted estimated liability as of June 30, 2019 was $26,749,031. Changes in the balances of


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claims liabilities during the past two years are as follows:

Auto Liabilityand Physical General Workmens'

Damage Liability Property Compensation TotalLiability at June 30, 2017 $1,530,598 $5,468,856 $155,869 $16,927,626 $24,082,949Claims and changes in estimates FY18 (113,378) 402,117 5,850,015 2,565,896 8,704,650Claims Incurred FY 2018 293,551 (1,241,718) (5,843,586) (1,102,106) (7,893,859)Liability at June 30, 2018 1,710,771 4,629,255 162,298 18,391,416 24,893,740Claims and changes in estimates FY19 (1,578,434) (611,908) (602,624) (4,758,053) (7,551,019)Claims Incurred FY 2019 1,627,493 (322,117) 648,157 7,452,777 9,406,310Liability at June 30, 2019 $1,759,830 $3,695,230 $207,831 $21,086,140 $26,749,031

The Fund uses excess insurance policies, purchased from various commercial carriers, to reduce its exposure to large losses on all types of insured events or for exposures that are difficult to self-insure. These insurance policies permit recovery of losses above the self-insured retention limits from the insurance carriers, although it does not discharge the primary liability of the Self-Insured Retention Fund as the direct source for payment of claims made against the Government. Workers' compensation self-insured retention was $1,000,000 and property self-insured retention was $250,000. The following schedule indicates the types of excess insurance purchased, the SIR (self-insured retention level) maintained by the Fund, limits and some of the sub-limits of the excess insurance coverage:

Line of coverageSelf-insured Retention Per

Occurrence Excess Reinsurance Annual LimitProperty $250,000 $500,000,000 Per Occurrence Flood Loss 250,000 $50,000,000 Per Occurrence Flood-Specified (3) Locations 500,000 $5,000,000 Annual Aggregate for (3) Specified Locations Earthquake Loss 250,000 $100,000,000 Per Occurrence EDP - Equipment Only 250,000 Included in Property Limits Data, Programs or Software 250,000 $5,000,000 Sublimit Traffic Control Equipment 250,000 Included in Property LimitsCyber Coverage – First Party 75,000 $2,000,000 Aggregate (Separate Policy - Not Included in Property) Boiler and Machinery 250,000 Included in Property LimitsAuto Physical Damage 100,000 Included in Property LimitsAuto Liability 1,500,000 $2,000,000 Combined Single Limit Per occurrence/$8,000 000 Commercial Excess Liability UmbrellaGeneral Liability 1,500,000 $2,000,000 Per Occurrence with varying sublimits/$8,000 000 Commercial Excess Liability UmbrellaPublic Officials Liability 1,500,000 $2,000,000 Per Occurrence/$8,000 000 Commercial Excess Liability UmbrellaLaw Enforcement Liability 1,500,000 $2,000,000 Per Occurrence/$8,000 000 Commercial Excess Liability UmbrellaWorkers' Compensation 1,000,000 Statutory Per Occurrence Employers' Liability 1,000,000 $2,000,000 Occurrence/$2,000,000 AggregatePollution Liability 75,000 per pollution loss $1,000,000 AggregateAviation Liability 1% of Value - In Motion $20,000,000 Per Occurrence NOTE 5. CONTINGENT LIABILITIES AND COMMITMENTS A. Litigation – The Government is party to numerous legal proceedings where the ultimate outcome cannot be determined with certainty or cannot be reasonably estimated, many of which normally occur in government operations. The Government’s Department of Law estimates that there are pending cases in which there is a reasonably possible likelihood that the Government will incur some liability. As of June 30, 2019 the Government has accrued approximately $13,100,000 for potential liabilities for the cases covered by self-insurance (See Note 4.B.).

B. United States Environmental Protection Agency Consent Decree – The United States Environmental Protection Agency (EPA) and the Kentucky Environmental and Public Protection Cabinet (KYEPPC) filed suit in federal court against the Government in 2006 alleging various violations of the Clean Water Act. The Government completed negotiations with the EPA and KYEPPC to resolve the alleged violations. The resulting Consent Decree agreement was entered in the United States District Court – Eastern District of Kentucky on January 3, 2011. The settlement agreement requires the Government to undertake extensive studies, sewer improvement projects, and


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management plans to correct the problems that were alleged. The settlement affords the Government up to 13 years to correct the problems. The Government has estimated that the cost of remedial measures would approach $591 million over the life of the Consent Decree. The Government increased sanitary sewer rates to fund obligations under the Consent Decree and also adopted a storm water management fee. C. Federal and State Grants – The Government receives grant funds from various Federal and State government agencies to be used for specific designated purposes and are governed by various rules and regulations of the grantor agencies. The grant programs are subject to audit by agents of the granting authorities, the purpose of which is to ensure compliance with conditions surrounding the granting of funds. If a grantor’s review indicates that the funds have not been used for the intended purpose, the grantor may request a refund of monies advanced or refuse to reimburse the Government for its expenditures. In management’s opinion, any liability for any refunds or reimbursements which may arise as a result of audits of grant funds would not have a material impact on the financial position of the Government. Continuation of the Government’s grant programs is predicated upon the grantor’s satisfaction that the funds provided are being spent as intended and the grantor’s intent to continue their programs. D. Lexington Center Corporation – LCC is a non-profit, non-stock corporate agency and instrumentality of the Government. Under the terms of a Lease Agreement dated June 15, 1993 and Supplemental Lease Agreement (Agreement) dated September 18, 2008, LCC has leased the entire Project to the LFUCG on an annual basis. The annual rental to be paid by LFUCG to LCC shall be equal to interest and principal paid on the Series 2008A Bonds, less a credit for interest earned by investments in the Debt Service Reserve Account and Bonds Service Account, plus a credit for any revenues or assets of LCC constituting operational revenue. The Agreement grants LFUCG an exclusive option to renew the lease for additional 1-year periods through June 30, 2022, and requires notice to LCC if the lease is not to be renewed. LFUCG may acquire title to the Project on any interest payment date by notifying LCC and the Trustee 60 days before such date, and by paying to the Trustee an amount equal to principal, interest and redemption premiums on the Bonds outstanding at that time, plus costs associated with the redemption of the Bonds. This Agreement was terminated and replaced on October 1, 2018. New Lease Agreement dated October 1, 2018 (New Agreement), LCC has leased the entire Project to the LFUCG on an annual basis. The annual rental to be paid by LFUCG to LCC shall be equal to interest and principal paid on the Series 2018 Bonds. The New Agreement grants LFUCG an option to renew the lease for additional 1-year periods through June 30, 2049, and requires notice to LCC if the lease is not to be renewed. LFUCG may acquire title to the Project on any interest payment date by notifying LCC and the Trustee 60 days before such date, and by paying to the Trustee an amount equal to principal, interest and redemption premiums on the Bonds outstanding at that time, plus costs associated with the redemption of the Bonds. LCC and LFUCG entered into a Management Contract dated June 15, 1993. Under this contract, LCC has full possession and control of the Project on behalf of LFUCG. The contract also provides that, in the event operating revenues exceed operating expenses in a given year, this excess may be used to establish reasonable reserves for efficient operation, depreciation, replacement of equipment, and repairs. Any remaining surplus shall be seasonably remitted to LFUCG. Accordingly, LCC has established a Capital Replacements Reserve Account to be used to fund expected replacements and major repairs of fixed assets. And a Current Operating Reserve Account to be used to provide a reasonable reserve for the operations of LCC. The Management Contract between LCC and LFUCG is coterminous with the term of the New Agreement and is automatically renewed from year to year with the New Agreement. On July 13, 2001, LCC and the University of Kentucky (UK) Athletic Association entered into a lease agreement through the 2017-18 basketball season for the use of Rupp Arena. In December 15, 2016, the University signed a Letter of Intent with LCC outlining goals and terms to be negotiated in a new 15-year lease that would extend to 2033. On February 7, 2018 UK signed a Facility Right of Use Agreement with a minimum of 16 events must be University of Kentucky men’s basketball games. LCC is to provide UK four club spaces to be constructed in the Convention Project. The agreement has a term of 15 years and terminated June 30, 2033. An agreement between LCC and the Lexington Convention and Visitors Bureau, dated March 20, 2001, provides for annual contributions of $948,000 to LCC for the period beginning 2001 and ending 2012. Contributions shall decrease


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in the amount of $100,000 each successive fiscal year beginning in 2013, with a final contribution of $48,000 in 2021. In an agreement signed September 20, 2018 an effective date of January 1, 2019. The new agreement establishes monthly contribution from Visit LEX of $62,500 and LCC agrees to fund an “Incentive Fund” in the amount of $250,000. The first three years of the agreement, LCC shall maintain an annual limit in the fund of $125,000 thereafter. The agreement has a term of 66 months with 5-year automatic renewals and a final 54 month term for a total of 30 years. A Memorandum of Agreement dated March 23, 2016 between the Finance and Administration Cabinet (the cabinet), a governmental agency of the Commonwealth of Kentucky (the Commonwealth), LFUCG, and LCC provides that the Cabinet shall pay to LCC $60,000,000 if LFUCG agrees to levy an additional 2.5% transient room tax (2% to LCC and 0.5% to the Cabinet for the recoupment of its $60 million investment) and contribute an additional $10,000,000 to LCC. LCC agrees to finance approximately $171,000,000 through the sale of bonds, and spend all funds for the renovation, expansion, or improvement of a convention center. LCC also agrees to reimburse the Commonwealth for $2,187,500, on or before December 31, 2016, it previously received towards the Arts and Entertainment Project. LCC repaid its commitment to the Commonwealth in fiscal 2017. In October 2018, LCC received approximately $221 million through the sale of bonds for the Convention Project and the Commonwealth funded its $60 million commitment. On January 1, 2018, LCC entered into an agreement with Oak View Group LLC (OVG) to retain OVG as exclusive third party booking agent for events and concerts at Rupp Arena. This agreement expires December 31, 2022. On December 4, 2018, LCC entered into a tri-party agreement between Town Branch Fund (the Fund), LFUCG and LCC to develop, construct and maintain the Town Branch Commons park project (Park Project). The Park Project will consist of approximately 9 acres of property that is now known as the Cox Street Parking Lot. LCC commits to leasing the property to the Fund under certain lease terms that will be finalized for least 75% of the total budget cost of construction of the Park Project. LFUCG will assist the Fund with the procurement of any permits and procedures for park construction and operations. If the Fund cannot raise sufficient funds as outlined in the agreement, the agreement will be terminated on December 4, 2023, with no further obligations from the Parties. E. Lexington-Fayette Urban County Airport Corporation (Airport Corporation) – The Airport Corporation is a non-profit, non-stock corporate agency and instrumentality of the Government and the Airport Board. The Government and the Airport Board have entered into a joint and severable Contract Lease and Option Agreement that provides for leasing the Bluegrass Airport from the Airport Corporation on an annual basis beginning October 1, 1976. The annual rental to be paid by the Government to the Airport Corporation is an amount equal to interest and principal on the bonds, plus costs of operating, maintaining, and insuring the leased premises, less all receipts of the Airport Corporation that are not required to be otherwise applied. The agreement grants the Government the option to renew the lease for additional one-year periods through June 30, 2024, but the Government may elect not to renew the lease with written notice to the Airport Corporation. The Airport Corporation has had sufficient revenues to pay all debt service costs without a lease payment from the Government. The financial status is expected to remain the same. The Airport Corporation is subject to federal, state, and local regulations in regards to the discharge of various materials into the environment. Costs are routinely incurred to remove, contain, and neutralize existing environmental contaminates and these costs are generally expensed as incurred. Future costs for existing conditions are not readily determinable and are not reflected in the financial statements. The Airport Corporation is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; general liability claims; and natural disasters. The Airport Corporation manages these risks through the purchase of commercial insurance. The amount of settlements has not exceeded coverage in any of the past three fiscal years.


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F. Lexington Public Library – The Library is a non-profit, non-stock corporate agency and instrumentality of the Government. The Lexington Public Library Board of Trustees is a defendant in a lawsuit filed by the Library’s former Director, for contract damages associated with her 2009 termination by the Board. This matter came before an American Arbitration Association panel that on May 17, 2014 issued an Order of Damages totaling $907,762. On each of the panel’s findings for damages, a panel member dissented to the order except in the case of the salary remaining on the contract which totals $257,731. The Lexington Public Library Board of Trustee’s legal counsel presented to the Fayette Circuit Court arguments and memoranda supporting the Board’s position that the Arbitration Panel exceeded its authority under Kentucky law. On August 18, 2016, the Kentucky Supreme Court denied the Motion for Discretionary Review filed by the Plaintiff. The case was remanded to the Fayette Circuit Court. Since remand, the Library filed two motions for summary judgement. On August 9, 2017, the Fayette Circuit Court granted both motions for summary judgment and held that the Plaintiff was not entitled to recover damages. The deadline for appeal has not passed. On September 5, 2017, the Plaintiff filed a Notice of Appeal. The parties have fully briefed the Court of Appeals and are awaiting the Court’s decision. On March 29, 2019, the Court of Appeals affirmed the trial court’s judgment and the Plaintiff filed a Motion to Discretionary Review which is still pending. In November 1999 the Public Library Corporation (the Corporation), a component unit of the Lexington-Fayette Urban County Government, issued $3,570,000 in tax-exempt bonds for the construction of the Tates Creek Branch. As security for the bonds, the Library has pledged to transfer amounts equal to annual debt service plus the highest annual debt service amount that will be on hand in the Corporation. Through cancelable lease and sublease agreements, the Library is leasing the Tates Creek Branch from the Public Library Corporation for an annual rental equal to the annual debt service on the bonds. During the past fiscal year, the Library transferred $259,273 to the Public Library Corporation to pay current debt service. As of June 30, 2019, the Library is committed to fund a total of $260,359 through fiscal year 2020 for this purpose. G. Lexington Convention and Visitors Bureau – The Bureau has pledged a portion of its occupancy tax receipts to the Lexington Center Corporation (LCC) to support the growth and expansion of the arena and convention facilities. The Bureau's original agreement pledged $248,000 to the LCC for fiscal year 2019. A new agreement was executed effective January 1, 2019 that terminated the prior agreement and provides financial assistance through fiscal year 2024. The agreement includes five auto renewals to allows the agreement to extend through 2049. This agreement requires the Bureau to pay annually $750,000 to help meet the LCC expansion project bond requirements. The amount is payable in equal monthly installments of $62,500 being due the last day of each month. LCC may assign its rights to the Bureau's contributions to the bondholders or lenders and in such event, the Bureau would be required to make payments directly to the lender. As of June 30, 2019, the balance of funds payable under this agreement is $3,372,502 and is recognized as a deferred outflows of resources in the Statement of Net Position. Annual contribution requirements are as follows:

Fiscal Year2020 $747,5022021 750,0002022 750,0002023 750,0002024 & Beyond 375,000Total Remaining Obligations $3,372,502

H. Liens and Encumbrances – While the Government has satisfactory title to all owned assets, there may be some liens and encumbrances on such assets for matters unrelated to bond issues. Only a complete accurate title search of all properties would disclose such liens and encumbrances. I. Conduit Debt – The Government has issued Industrial Revenue Bonds to provide financial assistance to private sector and nonprofit entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities


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transfers to the private sector or nonprofit entity served by the bond issue. The Government is not obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2019, there were 15 series of Industrial Revenue Bonds outstanding with an aggregate amount payable of approximately $73,823,895. To provide for the construction of a hospital facility, the PFC issued Lease Revenue Bonds, Series 2011A (Eastern State Hospital Project). The bonds are a special limited obligation of the PFC, payable solely from and secured by a pledge of rentals to be received from a lease agreement between the PFC and the Commonwealth of Kentucky. The bonds do not constitute a debt or pledge of the faith and credit of the PFC or the Government, and accordingly have not been reported in the accompanying financial statements. At June 30, 2019, the Lease Revenue Bonds outstanding total approximately $110,250,000. J. Encumbrances – Encumbrance accounting is utilized during the year to facilitate effective budgetary control. Encumbrances are treated as budgeted expenditures in the year of incurrence of the commitment to purchase. Budgetary comparisons presented in this report are on this budgetary basis of accounting. Adjustments necessary to convert from the budgetary basis to GAAP are provided on the face of the budgetary comparison statements. In governmental funds, encumbrances outstanding at year-end represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriations, is utilized in the governmental funds. Encumbrances are not treated as expenditures or liabilities because the commitments will be honored during the subsequent year. Outstanding encumbrances for the governmental funds at June 30, 2019 were as follows:

General Fund $2,729,815Urban Service Fund 5,516,667Nonmajor Governmental Funds 15,255,284

Encumbrances are not recorded in the financial statements for proprietary fund types and Pension Trust Funds. However, the purchase orders outstanding at June 30, 2019 for these funds are as follows:

Sanitary Sewer System $43,655,786Water Quality 5,409,006Landfill 146,735Nonmajor Enterprise Funds 366,819

K. Tax Abatements – The Government participates in the Commonwealth of Kentucky’s Tax Increment Financing (TIF) program. For a full disclosure of the program requirements, please see KRS Chapters 65 and 154. Any inducements offered under the TIF program are negotiated by the Cabinet for Economic Development officials and presented as a recommendation to the Kentucky Economic Development Finance Authority for approval. There are three state participation programs available. State participation is limited to a specific project within a blighted urban redevelopment or vacant land with 5,000 seat arena development area. Only the tax revenues generated within the footprint of the specific identified project are included in the increment. The tax abatements are granted to development areas that meet two of seven specified blight/deterioration conditions established in KRS 65.7049(3), such as abandonment or deterioration of structures, presence of environmentally contaminated land, and inadequate or deteriorating public infrastructure. Abatements are obtained through application by the property owner, including proof that the improvements have been made. The state specifies a percentage reduction of up to 100% of incremental property taxes and occupational license taxes or fees for up to 30 years.


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As of June 30, 2019, the Government has property tax abatement agreements through two programs available for specific projects designated to be within the blighted redevelopment areas as follows (dollars in thousands):

Commonwealth Participation Program for Real Property Ad Valorem Tax Revenues – The Government’s revenues for realty, business returns, and employee withholdings will be reduced by an estimated $216,849 for tax credits related to fiscal year 2019 under an agreement entered into by the state in the next fiscal year. Participation requirements include a positive impact on the Commonwealth as certified by a qualified independent consultant; a minimum capital investment of $10 million; not more than 20 percent of the approved project costs or 20 percent of the finished square footage shall be devoted to retail; and pledged revenues shall not exceed 100 percent of approved public infrastructure costs. The Government has pledged 80% of its revenues for realty, business returns, and employee withholdings for 20 years. As of June 30, 2019, three state abatement agreements have been entered into with local businesses.

Commonwealth Participation Program for Mixed Use Redevelopment in Blighted Urban Areas – The Government’s revenues for realty, business returns, and employee withholdings will be reduced by an estimated $242,409 for tax credits related to fiscal year 2019 under an agreement entered into by the state in the next fiscal year. Projects must meet several qualifications for mixed use and blighted/deteriorated conditions. Participation requirements include being a new economic activity in the Commonwealth; having a positive impact on the Commonwealth; a minimum capital investment of at least $20 million but not over $200 million; and recovery of up to 100 percent of approved public infrastructure costs, and costs related to land preparation, demolition and clearance up to 20 years. The Government has pledged 80% of its revenues for realty, business returns, and employee withholdings for 20 years. As of June 30, 2019, four state abatement agreements have been entered into with local businesses.

Commonwealth Participation Program for Signature Projects – The Government’s revenues for realty, business returns, and employee withholdings will be reduced by an estimated $100,000 for tax credits related to fiscal year 2019 under an agreement entered into by the state in the next fiscal year. Participation requirements include a positive impact on the Commonwealth as certified by a qualified independent consultant; a minimum capital investment of $200 million; not more than 20 percent of the approved project costs or 20 percent of the finished square footage shall be devoted to retail; pledged revenues shall not exceed 80 percent of approved public infrastructure costs; recovery of up to 100 percent of public infrastructure costs less sales taxes paid, signature costs less sales tax paid, and financing costs related to the public infrastructure costs over a period of up to 30 years; and qualifies for a sales tax refund on the purchase of construction materials that no not qualify as an approved public infrastructure cost or an approved signature cost. The Government has pledged 80% of its revenues for realty, business returns, and employee withholdings for 30 years. As of June 30, 2019, two state abatement agreements have been entered into with local businesses.

The Government participates in the Commonwealth of Kentucky’s Kentucky Business Investment Program. This program is a state administered tax incentive, authorized by KRS 154.32, and approved by the Kentucky Economic Development Finance Authority. In order to be eligible, a company must create ten (10) new full-time jobs for Kentucky residents, incur eligible costs of at least $100,000, pay average hourly wages of at least one hundred fifty percent (150%) of the federal minimum wage, and provide a minimum level of benefits by the activation date. Incentives are approved for up to ten (10) years. The Government participates by providing an inducement of one percent (1%) of payroll taxes to the company per authorized job. This reduces the payroll taxes paid per job from 2.25% to 1.25%. The local inducement is approved by resolution of the Urban County Council. As of June 30, 2019, twenty seven (27) companies participated in that program at the local level. Payroll withholdings are reduced by an estimated amount of $889,292.

L. Affordable Housing Loan Program – On May 8, 2014 the Government passed Ordinance 52-2014 establishing the affordable housing loan program to promote housing projects by developers to provide more affordable housing options to qualifying residents of Lexington, Kentucky. The Urban County Council also issued a memorandum on August 11, 2014 establishing funding in the amount of $2,000,000 beginning in fiscal year 2015 and


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thereafter, for total funding as of June 30, 2019 of $11,500,000. As of June 30, 2019, there are $4,870,270 in outstanding loans for this program. M. Jobs Fund Loan Program – On December 5, 2013 the Government passed Ordinance 153-2013 establishing a local economic development incentive program in order to attract or expand the level of employment in Lexington-Fayette County. The purpose of the program is to provide certain qualified businesses with local funding through grants, loans, or other agreements. The program is focused on attracting innovative businesses and promoting expansion of existing businesses involved in advanced manufacturing, technology, professional shared service operations, or healthcare, or which have or will be locating their primary base of operations or headquarters in Lexington-Fayette County. In addition, Ordinance 152-2013 establishes the “Economic Development Investment Board” to perform duties related to the program. The typical maximum of any funding agreement will not exceed $50,000 for a grant agreement and $250,000 for a loan or other agreement. Upon the recommendation of the Chief Development Officer and Economic Development Investment Board, the final approval is given by the Urban County Council. The Urban County Council established funding with ordinance 51-2014 on May 15, 2014, in the amount of $1,000,000 beginning in fiscal year 2014 and thereafter for total funding as of June 30, 2019 of $3,520,000. As of June 30, 2019, there are $1,424,271 in outstanding loans for this program. NOTE 6. THE SINGLE AUDIT ACT Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-federal entities that expend $750,000 or more a year in Federal awards to have an audit performed in accordance with the provisions of the Circular. A separate supplemental report will be issued on active grant programs of the Government in accordance with applicable provisions of the Single Audit Act of 1984, P.L. 98-502 and the Single Audit Act Amendments of 1996, P.L. 104-156. NOTE 7. SUBSEQUENT EVENTS Primary Government On October 10, 2019, the Urban County Council approved the issuance of General Obligation bonds, Series 2019, with a par value of $18.11 million to finance various projects including, but not limited to, (i) safety operations and other safety related projects, fleet vehicle replacement, voting machine replacement, road paving and maintenance, and various other improvements within departments of the Government, and (ii) providing funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights. In addition the Urban County Council approved the issuance of Sewer System Revenue Series 2019, for $50 million to finance various sewer and storm water improvement projects within Lexington-Fayette County. Component Unit On September 2018, the Lexington Convention and Visitors Bureau entered into an agreement with the Lexington Center Corporation (LCC) to pledge $750,000 annually for thirty years beginning January 1, 2019 in order to support the LCC and its convention and tourism facilities. In July 2019, LCC completed a Request for Proposal procurement policy procedure for catering and concessions services for the new Convention Project along with the Rupp Arena and the Lexington Opera House venues. The Board of Directors (Board) appointed Committee selected Levy Premium Foodservice Limited Partnership (Levy) as its recommendation to provide the food services and to elevate a premium hospitality experience to LCC’s patrons. The Committee’s recommendation was ratified by the Executive Committee of the Board in July 2019. In August 2019, a Letter of Intent (LOI) was executed between Levy and LCC to formalize a contract between the two parties


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in the next sixty days. The LOI grants Levy the right and ability to incur a limited amount of pre-opening reimbursable expenses while the final contract is negotiated. Per House Bill 1 passed during the 2019 legislative session, certain agencies, including the Health Department, were authorized to pay the reduced KERS non-hazardous employer contribution rate for the year ending June 30, 2020. The authorized participating employers will contribute 49.47% (41.06% to the pension fund and 8.41% to the insurance fund) as opposed to the contribution rate of 83.43% (71.03% to the pension fund and 12.40% to the insurance fund) other KERS non-hazardous employers pay. On October 22, 2019, the Lexington Airport Board issued revenue and refunding bonds in the amount of $32,000,000. NOTE 8. DEFINED BENEFIT PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS The Policemen’s and Firefighters’ Retirement Fund (PFRF) and The City Employees’ Pension Fund (CEPF) A. Plan Descriptions The Government contributes to two single employer defined benefit pension plans: The PFRF and the CEPF. The sworn personnel of the divisions of Police and Fire are eligible to participate in the PFRF. For members whose participation date in the PFRF is prior to March 14, 2013, benefits vest after twenty years of service. The annuity is 2.5% of average salary multiplied by years of total service. For members whose participation date is on or after March 14, 2013, benefits vest after twenty-five years of service. The annuity is 2.25% of average salary multiplied by years of total service. Cost of living adjustments (COLA) will be granted on the following schedule for both current and future retirees beginning on the earlier of a member turning age 50 or being retired for five years until the PFRF, utilizing the current COLA provisions, is 85% funded. At that time, COLA’s will be granted each year by an amount, determined by the Board, of between 2% and 5% compounded annually. In addition, those receiving an annuity of over $100,000 will not be eligible to receive a COLA until the later of the proposed conditions or January 1, 2018.

Annual Annuity COLA % Above $100,000 1%

$75,000 to $99,000 1% $50,000 to $74,999 1.5% $40,000 to $49,999 1.5% $35,000 to $39,999 2% $30,000 to $24,999 2%

Under $30,000 2%

Members may add unused sick leave to service credit and average annual salary for purposes of calculating retirement benefits. The costs of administering the PFRF are financed by a combination of additional contributions as well as investment income. Civil service employees of the City of Lexington were covered by the CEPF. In 1973, the governments of the City of Lexington and Fayette County merged to form the Government. In December 1973, the City of Lexington froze admission of new entrants into the CEPF, and in January 1974 the new merged Government assumed the City of Lexington's liability for covered employees and the CEPF was closed to any new members. A member who has attained age 60 and completed 20 years of service or completed 30 years of service regardless of age may apply for retirement. Members who are 45 years old or older with 10 years of service may request a deferred retirement benefit to be paid when they reach 60 years of age. Retirees receive 2.5% of their average salary for each year of service up to 20 years plus 1% of average salary for each year of service over 20 years, with a maximum benefit of 65% of average salary. Members may add unused sick leave to service credit and average annual salary for purposes of calculating retirement benefits. Death and disability benefits are also provided under certain conditions. In addition,


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the plan includes an annual cost of living adjustment of 3% for any member retiring after July 1, 1981 that has attained age 61 or has been retired for one year. The costs of administering the CEPF are financed by a combination of additional contributions as well as investment income. Both pension plans are included in the Government’s comprehensive annual report and do not issue stand-alone financial reports. Membership for both plans consisted of the following at June 30, 2018:

Number Inactive Plan Participants: Retirees and beneficiaries currently receiving benefits 1,265 Active Plan Participants: Active members 1,144 Total 2,409

B. Summary of Significant Accounting Policies Basis of Accounting – The preparation of the financial statements of the PFRF and CEPF conform to the provisions of GASB Statement No. 68. For purposes of measuring the net pension liability/(asset) deferred outflows of resources and deferred inflows of resources related to pensions and pension expense, information about the fiduciary net position of the PFRF and CEPF, and additions to/deductions from the PFRF and CEPF fiduciary net position have been determined on the same basis as they are reported by the PFRF and CEPF. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are stated at fair value. C. Contributions

The contribution requirements and benefit provisions for the PFRF are established by state statute and Government ordinance. In fiscal year 2018, the Government contributed 37.53% to the PFRF. Administrative costs were financed by a combination of additional contributions as well as investment income. The required contribution rate is shown in the following table:

PFRF Required Contribution Rates: Government 37.53% Plan Member 12.00%

D. Net Pension Liability The Government’s net pension liability/(asset) was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability/(asset) was determined by an actuarial valuation as of that date. Additional information as of the latest actuarial valuation is presented in the following table.

Policemen's and Firefighters' Pension Fund

City Employees' Pension Fund

Valuation date July 1, 2018 July 1, 2018 Actuarial cost method Entry Age Normal Funding Entry Age Normal Funding Amortization method Level Dollar - Closed Level Dollar - Open Remaining amortization period 27 years closed 15 years open Asset valuation method 5 year smoothed market Market Actuarial assumptions: Investment rate of return 7.50% 7.00% Projected salary increases 9.50% to 3.50% N/A Cost-of-living adjustments See Note 8.A. on page 91 3.00% Inflation 2.75% N/A


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Total Pension Liability

Plan Fiduciary Net Position

Net Pension Liability

Total Pension Liability

Plan Fiduciary Net

Position

Net Pension Liability /

(Asset)(a) (b) (a)-(b) (a) (b) (a)-(b)

$903,198,847 $695,183,216 $208,015,631 $9,464,332 $30,096,248 ($20,631,916)

19,289,452 19,289,45265,525,538 65,525,538 618,238 618,238

47,795,400 47,795,400 (70,751) (70,751)

27,576,764 (27,576,764)10,750,008 (10,750,008)71,009,316 (71,009,316) 1,369,364 (1,369,364)

(59,050,010) (59,050,010) (1,264,711) (1,264,711)

(306,716) 306,716 (4,994) 4,994 8,396 (8,396)

73,560,380 49,987,758 23,572,622 (717,224) 99,659 (816,883)

$976,759,227 $745,170,974 $231,588,253 $8,747,108 $30,195,907 ($21,448,799)Balances at 6/30/2018

Contributions-employeeNet investment incomeBenefit payments, including refunds of employee contributionsAdministrative expenseOther changesNet changes

Contributions-employer

PFRF CEPFIncrease (Decrease) Increase (Decrease)

Balances at 6/30/2017

Changes for the year:

Service CostInterestDifferences between expected and actual experienceChanges of assumptions

The following presents the net pension liability of the Government’s CEPF pension plan, calculated using the discount rate of 7.00%, as well as what the CEPF’s net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate:

1% Decrease

(6.00%) Current Discount

Rate (7.00%) 1% Increase

(8.00%) CEPF’s net pension liability (asset) ($20,960,091) ($21,448,799) ($21,888,627)

The following presents the net pension liability of the Government’s PFRF pension plan, calculated using the discount rate of 7.50%, as well as what the PFRF’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

1% Decrease



(8.50%) PFRF’s net pension liability $345,694,287 $231,588,253 $136,731,011

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2018, the CEPF and PFRF reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

CEPF

Deferred Outflows of

Resources Deferred Inflows of

Resources Net difference between projected and actual earnings on pension plan investments $1,512,614 $0

Total $1,512,614 $0


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PFRF



Resources Differences between expected and actual experience $59,288,120 $0 Changes of assumptions 32,254,351 Net difference between projected and actual earnings on pension plan investments 19,893,656 Employer contributions subsequent to the Measurement date 30,389,591

Total $121,932,062 $19,893,656 Amounts reported as deferred outflows of resources and deferred inflows of resources related to the CEPF pension will be recognized in pension expense as follows:

Year ended June 30: 2020 $665,062 2021 424,197 2022 284,767 2023 138,588 2024 0 Thereafter 0

Amounts reported as deferred outflows of resources and deferred inflows of resources related to the PFRF pension will be recognized in pension expense as follows:

Year ended June 30: 2020 $28,703,449 2021 22,662,778 2022 13,660,681 2023 6,431,487 2024 190,420 Thereafter 0

E. Other Post Employment Benefit (OPEB) The Governmental Accounting Standards Board issued Statement No. 75 (GASB 75), “Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pensions” in June 2015. GASB 75’s effective date is for an employer’s fiscal year beginning after June 15, 2017. For the purposes of reporting under GASB 75, the Plan is assumed to be a single-employer defined benefit OPEB plan without a special funding situation where no assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB 75. Plan Description – In August 1999, the Urban County Council passed an ordinance that authorized the Government to provide a health insurance benefit to the retirees of both retirement funds, effective July 1, 1999 (the Plan). All retirees who continue to participate in the Government’s group health insurance plan are eligible for this benefit. Funding Policy – The Government pays the premiums for single coverage on a pay-as-you-go basis.


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Plan membership – As of June 30, 2018 the plan membership data is as follows: Number Inactive Plan Participants: Retirees and beneficiaries currently receiving benefits 1,006 Active Plan Participants: Active members 1,180 Total 2,186

Benefits Provided – The Government administers a single-employer defined benefit post-employment health insurance plan. This plan does not include the pension benefits discussed in Note 8. This plan is included in Trust Funds for the City Employees’ Pension Fund and the in the Government’s financial statements. The plan does not issue a publicly available financial report. ELIGIBILITY FOR BENEFITS FROM THE POLICEMEN’S & FIREFIGHTERS’RETIREMENT FUND Service Retirement – Employees are eligible to retire with twenty years of credited service. This can include both actual service and purchased time. Occupational Disability Retirement – Total and permanent disability incurred while in the line of duty. Disability Retirement – A member of the fund is eligible to receive a non-occupational disability if they have at least five years of service in the fund and a disabling injury that results from non-occupational causes. ELIGIBILITY FOR BENEFITS FROM CITY EMPLOYEE’S PENSION FUND Service Retirement – Employees are eligible to retire with thirty years of credited service or at age 60 with twenty years of service. Accidental Disability Retirement – Total and permanent disability incurred while in the line of duty. Ordinary Disability Retirement – A member of the fund is eligible to receive a non-occupational disability if they have at least ten years of service in the fund and a disabling injury that results from non-occupational causes that renders them totally and permanently disabled. ELIGIBILITY FOR BENEFITS – In August 1999, the Council passed an ordinance that authorized the Government to provide a health insurance benefit to the retirees of both retirement funds, effective July 1, 1999. All retirees who retire (according to the one of the retirement eligibilities listed above) after July 1, 1999 and have continuous participation in the health insurance programs sponsored by the Government are eligible to receive a health insurance benefit. AMOUNT OF ALLOWANCE – For eligible employees the Government pays the single premium for the plan coverage selected by the retiree, but not more than one hundred percent (100%) of the Government’s contribution to the health insurance component of the benefit pool for current urban-county government employees for eligible members. All payments are made to the approved provider of the group health insurance plan, not to the retiree, and the retiree shall not be entitled to receive any portion of the government contribution remaining after payment is made to the approved provider. Upon the death of an active member due to occupational causes, the Government will pay one hundred percent (100%) of the cost of the family medical coverage for the member’s surviving spouse and dependent children as long as they remain eligible for a monthly retirement allowance from the retirement fund. Upon the death of an active member due to non-occupational causes, the member’s surviving spouse and dependent children are able to stay on the plan as long as the applicable premium payments are made.


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DEPENDENT COVERAGE – Group rates under the group health insurance plan approved by the Government are made available to the spouse, dependents and disabled children of a qualified and participating retiree, if the premium is paid by the retired member, spouse, dependent, or disabled child. Upon the death of a retiree, the retiree’s surviving spouse is able to stay on the plan as long as the applicable premium payments are made. RETIREE GROUP HEALTH INSURANCE PLAN OPTIONS:

Humana PPO-A Humana PPO-B Humana HSA1 Humana HSA2 Humana Seniors Medicare Advantage Plan Anthem Seniors Standard Plan Anthem Seniors Comprehensive Plan

Retirees under age 65 may select from the Humana PPO Plan options. Retirees age 65 and older may select from any of the last three plan options above only if they are covered under Medicare Parts A and B. Medicare Part D coverage is provided to those retirees electing one of the Senior Plans above. CURRENT GROUP HEALTH MONTHLY INSURANCE PREMIUMS EFFECTIVE JANUARY 1, 2018:

Plan Option Single Two Party Humana PPO-A $732.57 $1,340.11 Humana PPO-B 542.12 991.71 Humana HSA1 493.41 902.59 Humana HSA2 484.07 769.84 Humana Seniors Medicare Advantage Plan 377.79 755.58 Anthem Seniors Standard Plan 163.31 326.62 Anthem Seniors Comprehensive Plan 212.66 425.32

The Government contributes $430.75 for an individual without the tobacco credit, $455.74 for an individual or an individual covering a spouse with the tobacco credit, and $480.74 for a family with the tobacco credit toward the premium for single coverage for retirees and $75 for surviving spouses without the tobacco credit and $100 for surviving spouses with the tobacco credit of active members who die in service due to occupational causes. The remainder of any premium is paid by retirees. OTHER POST EMPLOYMENT BENEFITS – Health care and prescription drug coverage is provided in all of the group health insurance plan options. Vision coverage is extended to those members electing the Humana Platinum Plan or the Humana Gold Plan. Total OPEB Liability (TOL) of the Government Total OPEB Liability $245,951,553 Fiduciary Net Position 0 Net OPEB Liability $245,951,553


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Actuarial Assumptions – The total OPEB liability was determined by an actuarial valuation as of July 1, 2017 and rolled forward to June 30, 2018, the measurement date. The following actuarial assumptions applied to all periods in the measurement, unless otherwise specified: Inflation 2.75% Real Wage growth N/A Wage Inflation N/A Municipal Bond Index Rate

Prior Measurement Date 3.56% Measurement Date 3.89%

Health Care Cost Trends Pre-Medicare 7.25% for 2018 decreasing to an ultimate rate of 4.75% by 2028 Post-Medicare 5.38% for 2018 decreasing to an ultimate rate of 4.75% by 2022

Discount rate – The discount rate used to measure the TOL was based on the June average of the Bond Buyer General Obligation 20-year Municipal Bond Index published weekly by The Bond Buyer. The RP-2000 Combined Table Generational with Scale AA was used for the inactive members receiving a benefit in the City Employees’ Pension Fund. The RP-2000 Combined Table Projected with scale BB to 2017 was used for the members of the Policemen’s and Firefighers’ Retirement Fund, both actives and the inactive members receiving a benefit.

Total OPEB Liability (TOL)

$341,737,302

16,561,15012,078,465

(103,220,151)

(16,252,771)(4,952,442)

(95,785,749)

$245,951,553

Interest on the TOL and Cash FlowDifferences between expected and actual experience

Net changesBalances at 6/30/2018

Benefit paymentsChanges of assumptions

Balances at 6/30/2017

Changes for the year:

Service Cost

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate – The following presents the net OPEB liability of the Government, calculated using the discount rate of 3.89%, as well as what the Government’s net OPEB liability would be if it were calculated using a discount rate 1-percentage point lower and 1-percentage point higher than the current discount rate:

1% Decrease

2.89%

Current Discount Rate

3.89%

1% Increase 4.89%

Net OPEB Liability $291,706,984 $245,951,553 $210,087,520 Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate – The following presents the net OPEB liability of the Government, as well as what the Government’s net OPEB liability would be if it were calculated using a discount rate 1-percentage point lower and 1-percentage point higher than the current healthcare cost trend rate:

1% Decrease

Current Discount Rate

1% Increase

Net OPEB Liability $211,352,099 $245,951,553 $291,274,336


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OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2018, the Government recognized OPEB expense of $2,553,900. At June 30, 2018 the Government reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:



Resources Net difference between expected and actual experience $0 $85,695,624 Changes of assumptions 0 35,011,351

Total $0 $120,706,975 Amounts to be recognized as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ended June 30: 2020 $(26,085,715) 2021 (26,085,715) 2022 (26,085,715) 2023 (26,085,715) 2024 (16,364,115) Thereafter 0

Payable to the OPEB Plan At June 30, 2018, the Government had no payables for outstanding contributions to the Plan required for the year ended June 30, 2018.


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F. Pension Plan Financial Statements

CEPFTotal Pension Trust Funds

ASSETSCash and Cash Equivalents $900,738 $499,429 $1,400,167

Interest Receivable 3,303,416 50,991 3,354,407Investments, at Fair Value:Debt Securities:

Bank Loans 448,434 448,434Corporate Debt 93,508,479 7,257,837 100,766,316Municipal Obligations 3,807,374 3,807,374SL Comingled Funds 34,306,745 34,306,745US Agencies 35,527,011 7,912,676 43,439,687US Government Obligations 34,027,108 3,028,439 37,055,547

Other Investments:Equity Mutual Funds 388,205,114 12,234,575 400,439,689Equity Real Estate 71,450,822 71,450,822Equity Securities - Domestic 752,742 752,742Equity Securities - International 134,851,712 134,851,712

Total Investments 796,885,541 30,433,527 827,319,068Total Assets $801,089,695 $30,983,947 $832,073,642

LIABILITIESAccounts Payable and Accrued Expenses $2,270 $0 $2,270Securities Lending Transactions 34,306,745 34,306,745

Total Liabilities $34,309,015 $0 $34,309,015

NET POSITIONNet position restricted for pensions $766,780,680 $30,983,947 $797,764,627

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTJune 30, 2019

PFRF


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PFRF CEPFTotal Pension Trust Funds


Employer $30,277,170 $0 $30,277,170Employer - Administration 5,059,394 44,707 5,104,101Plan Members 10,356,318 10,356,318Other 112,421 59 112,480

Total Contributions 45,805,303 44,766 45,850,069

Investment Income:Net Change in Fair Value of Investments 30,649,370 1,492,913 32,142,283Interest 10,136,928 569,333 10,706,261Dividends 2,840,439 55,430 2,895,869

Total Investment Income 43,626,737 2,117,676 45,744,413Less Investment Expense 2,305,126 87,677 2,392,803

Net Investment Income 41,321,611 2,029,999 43,351,610

Income from Securities Lending Activities:Securities Lending Income 115,656 115,656Securities Lending Expenses: Borrower Rebates (803,866) (803,866) Management Fees 46,254 46,254

Total Securities Lending Expenses (Income) (757,612) 0 (757,612)Net Income on Securities Lending Activities 873,268 0 873,268

Total Additions 88,000,182 2,074,765 90,074,947

DEDUCTIONSBenefit Payments 66,073,436 1,279,516 67,352,952Administrative Expense 317,040 7,210 324,250

Total Deductions 66,390,476 1,286,726 67,677,202

Net Increase 21,609,706 788,039 22,397,745

Net Position, Beginning 745,170,974 30,195,908 775,366,882

Net Position, Ending $766,780,680 $30,983,947 $797,764,627

STATEMENT OF CHANGES IN NET POSITIONJune 30, 2019


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G. The County Employees' Retirement System Plan description – The Government contributes to the Commonwealth of Kentucky's County Employees' Retirement System (CERS) pursuant to KRS 78.530 administered by the Board of Trustees of the Kentucky Retirement System. CERS is a cost-sharing multi-employer public employee retirement system which covers substantially all regular full-time employees of each county, school board, and any additional eligible local agencies electing to participate in the System. At June 30, 2016, there were over 1,400 local government agencies participating in CERS, which provides for retirement, disability and death benefits. Beginning October 27, 1975, all eligible full-time employees of the Government were required to participate in CERS. Contributions – Nonhazardous covered employees are required to contribute 5% of their salary to the plan. Nonhazardous covered employees who begin participation on or after September 1, 2008 are required to contribute 6% of their salary to the plan. The Government’s contribution rate for nonhazardous employees was 16.22%. Hazardous covered employees are required to contribute 8% of their salary to the plan. Hazardous covered employees who began participation on or after September 1, 2008 are required to contribute 9% of their salary to be allocated as follows: 8% will go to the member’s account and 1% will go to the KRS insurance fund. The Government’s contribution rate for hazardous employees was 24.86%. The contribution requirements and the amounts contributed to CERS were $16,718,583 and $18,775,515 respectively, for the years ended June 30, 2019 and 2018. Benefits provided – Benefits fully vest upon reaching five years of service for nonhazardous employees. Aspects of benefits for nonhazardous employees include retirement after 27 years of service or age 65. Nonhazardous employees who begin participation on or after September 1, 2008 must meet the rule of 87 (member’s age plus years of service credit must equal 87, and the member must be a minimum of 57 years of age) or the member is age 65, with a minimum of 60 months service credit. A cash balance plan was introduced for members whose participation date is on or after January 1, 2014. Benefits for hazardous employees include retirement after 20 years of service or age 55. For hazardous employees who began participation on or after September 1, 2008 aspects of benefits include retirement after 25 years of service or the member is age 60, with a minimum of 60 months of service credit. Prior to July 1, 2009, cost-of-living adjustments (COLA) were provided annually equal to the percentage increase in the annual average of the consumer price index for all urban consumers for the most recent calendar year, not to exceed 5% in any plan year. Effective July 2, 2009, and on July 1 of each year thereafter, the COLA is limited to 1.5% provided the recipient has been receiving a benefit for at least 12 months prior to the effective date of the COLA. If the recipient has been receiving a benefit for less than 12 months prior to the effective date of the COLA, the increase shall be reduced on a pro-rata basis for each month the recipient has not been receiving benefits in the 12 months preceding the effective date of the COLA. The Kentucky General Assembly reserves the right to suspend or reduce cost-of-living adjustments if, in its judgment, the welfare of the Commonwealth so demands. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions The provisions of GASB Statement No. 67, Financial Reporting for Pension Plans, were issued in June 2012. The Statement replaced the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements that meet those criteria. At June 30, 2018, the Government reported a liability of $248,050,278 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Government’s proportion of the net pension liability was based on a projection of the Government’s long term share of contributions to the pension


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plan relative to the projected contributions of all participating governmental agencies, as actuarially determined. At June 30, 2018, the Government’s portion of nonhazardous and hazardous was 3.12% and 2.41%, respectively. At June 30, 2018, the Government reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



Resources Difference between expected and actual experience $10,829,215 $2,777,420 Net difference between projected and actual earnings on pension plan investments 10,984,355 13,917,158 Change of assumptions 24,750,032 Changes in proportion and differences between Employer contributions and proportionate share of contributions 5,743,452 3,214,601 Government contributions subsequent to the measurement date 16,718,583

Total $69,025,637 $19,909,179 $16,718,583 reported as deferred outflows of resources related to pensions resulting from Government contributions subsequent to the measurement date will be recognized as a reductions of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30: 2019 $25,451,849 2020 11,268,066 2021 (3,040,357) 2022 (1,281,683) 2023 0 Thereafter 0

The total pension liability, net pension liability, and sensitivity information shown in this report are based on an actuarial valuation performed as of June 30, 2017. The total pension liability was rolled-forward from the valuation date to the plan’s fiscal year end, June 30, 2018, using generally accepted actuarial principles. There have been no changes in actuarial assumptions since June 30, 2017. However, during the 2018 legislative session, House Bill 185 was enacted, which updated the benefit provisions for active members who die in the line of duty. Benefits paid to the spouses of deceased members have been increased from 25% of the member’s final rate of pay to 75% of the member’s average pay. If the member does not have a surviving spouse, benefits paid to surviving dependent children have been increased from 10% of the member’s final pay rate to 50% of average pay for one child, 65% of average pay for two children, or 75% of average pay for three children. The Total Pension liability as of June 30, 2018 is determined using these updated benefit provisions. It is our opinion that this procedure is reasonable, appropriate, and complies with applicable requirements under GASB Statement No. 67 and No. 68. The Actuarial Cost Method is Entry Age Normal, Level Percentage of Pay, as required by GASB Statement No. 67. The Entry Age Normal actuarial cost method allocates the System’s actuarial present value of future benefits to various periods based upon service. The portion of the present value of future benefits allocated to years of service prior to the valuation date is the actuarial accrued liability, and the portion allocated to years following the valuation date is the present value of future normal costs. The normal cost is determined for each active member as the level percent of pay necessary to fully fund the expected benefits to be earned over the career of each individual active member. The normal cost is partially funded with active member contributions with the remainder funded by employer contributions.


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The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Investment rate of return 6.25%, net of pension plan investment expense, including inflation

Projected salary increases 2 %, average, including inflation Inflation 2.00%

The following presents the net pension liability of the Government’s CERS pension plan, calculated using the discount rate of 6.25%, as well as what the CERS’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.25%) or 1-percentage-point higher (7.25%) than the current rate:

1% Decrease



(7.25%) Nonhazardous $238,865,353 $189,741,862 $148,584,980 Hazardous 73,056,629 58,308,416 46,116,258

CERS’s net pension liability $311,921,982 $248,050,278 $194,701,238 Payable to the Pension Plan At June 30, 2019, the CERS reported payables of $277,063 from the Government for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2019. Detailed information about the pension plan’s fiduciary net position is available in the CERS financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, KY 40601, or by telephone at (502) 696-8800. H. The County Employees' Retirement System Other Paid Employee Benefits (OPEB) Under the provisions of Kentucky Revised Statute Section 61.645, the Board of Trustees (the Board) of Kentucky Retirement Systems (KRS) administers the Kentucky Employees Retirement System (KERS), County Employees Retirement System (CERS), and State Police Retirement System (SPRS). Although the assets of the systems are invested as a whole, each system’s assets are used only for the payment of benefits to the members of that plan, and the administrative costs incurred by those receiving an insurance benefit, in accordance with the provisions of Kentucky Revised Statute Sections 16.510, 61.515, 61.702, 78.520, and 78.630. The Board of Trustees, as of December 1, 2017, is comprised of John Farris, Chair, Governor Appointee; David L. Harris, Vice Chair, Governor Appointee; W. Joe Brothers, Governor Appointee; John E. Chilton, Governor Appointee; William S. Cook, Governor Appointee; Kelly Downard, Governor Appointee; Thomas K. Elliott, Governor Appointee (non‐voting); J. T. Fulkerson, Governor Appointee; David M. Gallagher, Governor Appointee; Matthew Monteiro, Governor Appointee; Neil P. Ramsey, Governor Appointee; Thomas B. Stephens, Personnel Secretary, Ex‐Officio; Vince Lang, elected by KERS; Keith Peercy, elected by SPRS; Betty Pendergrass, elected by CERS; Mary Helen Peter, elected by KERS; Jerry W. Powell, elected by CERS; and David Rich, elected by CERS. CERS Non‐hazardous and CERS Hazardous Insurance Funds are costsharing multiple‐employer defined benefit Other Postemployment Benefits (OPEB) plans for members that cover all regular full‐time members employed in non‐hazardous and hazardous duty positions of any state department, board, agency, county, city, school board, and any additional eligible local agencies electing to participate. The plans provide for health insurance benefits to plan members. OPEB may be extended to beneficiaries of plan members under certain circumstances.


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Relationship to Combining Financial Statements The total OPEB liability, net OPEB liability, and sensitivity information shown in this report are based on an actuarial valuation date of June 30, 2017. The total OPEB liability was rolled-forward from the valuation date to the plan’s fiscal year ending June 30, 2018 using generally accepted actuarial principles. GASB 74 requires Kentucky Retirement Systems to disclose a 10-year history of certain information in the Required Supplementary Information within their comprehensive annual financial report. The exhibits provided in this report include the applicable information for historical years that were calculated in accordance with this accounting standard. Information disclosed for years prior to June 30, 2017 were prepared by KRS’s prior actuary. There have been no changes in actuarial assumptions since June 30, 2017. However, during the 2018 legislative session, House Bill 185 was enacted, which updated the benefit provisions for active members who die in the line of duty. The system shall now pay 100% of the insurance premium for spouses and children of all active members who die in the line of duty. The Total OPEB liability as of June 30, 2018 is determined using these updated benefit provisions. It is our opinion that this procedure is reasonable, appropriate, and complies with applicable requirements under GASB Statement No. 74. The components associated with OPEB expense and deferred outflows and inflows of resources have been determined based on the net increase in fiduciary net position as shown in the Combining Statement of Changes in Plan Net Position and in accordance with requirements promulgated by GASB Statements No. 74 and 75. The net OPEB liability at June 30, 2018, is reported in the Notes to Combining Financial Statements and Required Supplementary Information. Summary of Significant Accounting and Reporting Policies Measurement Focus, Basis of Accounting and Basis of Presentation The accompanying Schedules were prepared in accordance with U.S. generally accepted accounting principles as applicable to governmental organizations. In doing so, KRS adheres to the reporting requirements established by the Governmental Accounting Standards Board (GASB). The CERS Non‐hazardous and CERS Hazardous Insurance Funds are reported as OPEB trust funds, and are accounted for on the accrual basis of accounting. OPEB contributions are determined by the KRS Board and required by the employers and employees. KRS recognized employer and employee contributions to the plans through June 30, 2017. OPEB expenses are recognized as the benefits come due for the CERS Non‐hazardous and CERS Hazardous Insurance Funds, which includes payments made to the Department of Employee Insurance (DEI), and Humana Inc. for OPEB costs incurred for the fiscal year ended June 30, 2018. KRS contracts with DEI and Humana to administer the claims. DEI administers retiree claims for retirees under the age of 65, and Humana administers retiree claims for members 65 and over. Since, the average cost of providing health care benefits to retirees under age 65 is higher than the average cost of providing health care benefits to active employees, there is an implicit employer subsidy for the non‐Medicare eligible retirees. GASB 74 requires that the liability associated with this implicit subsidy be included in the calculation of the Total OPEB Liability. Net investment income represents realized and unrealized gains and losses based on the fair value of investments, interest, and dividends, net of investment expenses. Investment income/loss is allocated to each plan based on the plan’s ownership in the respective investment account. The systems are charged administrative expenses based on the number of members and dependents electing an insurance policy provided by DEI or Humana, on a monthly basis. The administrative expenses are reported in KRS’ basic financial statements included in its CAFR for the Insurance Fund.


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The Schedule of Employer Allocations reflects employer contributions received for the fiscal year ended June 30, 2018, and includes the following for each individual employer:

employer contributing entity and reporting code; the amount of the employer contributing entity’s contributions; and, the employer contributing entity’s contributions as a percentage of total employer contributions, as

defined by this policy. The components of the net OPEB liability of CERS for the Government as of June 30, 2018, calculated in accordance with GASB Statement No. 74, are as follows (dollars in thousands):

CERS CERSNon-Hazardous Hazardous

Total OPEB Liability $130,522,654 $48,077,128Fiduciary Net Position 75,209,488 30,886,527

Net OPEB Liability $55,313,166 $17,190,600

Actuarial Methods and Assumptions to Determine the Total OPEB Liability and the Net OPEB Liability For financial reporting the actuarial valuation as of June 30, 2018, was performed by Gabriel Roeder Smith (GRS). The total OPEB liability, net OPEB liability, and sensitivity information as of June 30, 2018, were based on an actuarial valuation date of June 30, 2017. The total OPEB liability was rolled‐forward from the valuation date (June 30, 2017) to the plan’s fiscal year ending June 30, 2018, using generally accepted actuarial principles. GRS did not perform the actuarial valuation as of June 30, 2017, but did replicate the prior actuary’s valuations results on the same assumption, methods, and data, as of that date. The roll‐forward is based on the results of GRS’ replication. Subsequent to the actuarial valuation date (June 30, 2016), but prior to the measurement date, and before the required 2019 experience study, the KRS Board of Trustees reviewed investment trends, inflation, and payroll growth historical trends. Based on this review the Board adopted the following updated actuarial assumptions which were used in performing the actuarial valuation as of June 30, 2018: Inflation 3.25% Payroll Growth Rate 4.0% for CERS nonhazardous and hazardous Salary Increase 4.0%, average Investment Rate of Return 7.50% Healthcare Trend Rates Pre-65 Initial trend starting at 7.50% and gradually decreasing

to an ultimate trend rate of 5.00% over a period of 5 years

Post‐65 Initial trend starting at 7.50% and gradually decreasing to an ultimate trend rate of 5.00% over a period of 2 years

The mortality table used for active members is RP‐2000 Combined Mortality Table projected with Scale BB to 2013 (set‐back for one year for females). Discount Rate The projection of cash flows used to determine the discount rate of 5.85% for CERS Non‐hazardous, and 5.97% for CERS Hazardous assumed that local employers would contribute the actuarially determined contribution rate of projected compensation over the remaining 26 years (closed) amortization period of the unfunded actuarial accrued liability. The discount rate determination used an expected rate of return of 7.50%, and a municipal bond rate of


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3.62%, as reported in Fidelity Index’s “20 –Year Municipal GO AA Index” as of June 30, 2018. Future contributions are projected in accordance with the Board’s current funding policy, which includes the requirement that each participating employer in the System contribute the actuarially determined contribution rate, which is determined using a closed funding period (25 years as of June 30, 2018) and the actuarial assumptions and methods adopted by the Board of Trustees. These projected contributions are determined without regard to the enactment of SB 151 in 2018, which is currently being reviewed by the State Supreme Court. Current assets, future contributions, and investment earnings are projected to be sufficient to pay the projected benefit payments from the retirement system. However, the cost associated with the implicit employer subsidy is not currently being included in the calculation of the System’s actuarial determined contributions, and it is our understanding that any cost associated with the implicit subsidy will not be paid out of the System’s trust. Therefore, the municipal bond rate was applied to future expected benefit payments associated with the implicit subsidy. The following presents the net OPEB liability of the Government’s CERS OPEB Nonhazardous plan, calculated using the discount rate of 5.85%, as well as what the CERS’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.85%) or 1-percentage-point higher (6.85%) than the current rate:

1% Decrease



(6.85%) Nonhazardous $71,842,935 $55,313,166 $41,232,823

The following presents the net OPEB liability of the Government’s CERS OPEB Hazardous plan, calculated using the discount rate of 5.97%, as well as what the CERS’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.97%) or 1-percentage-point higher (6.97%) than the current rate:

1% Decrease



(6.97%) Hazardous $23,895,780 $17,190,600 $11,822,927

The following presents the net OPEB liability of the Government’s CERS OPEB plan, as well as what the Government’s net OPEB liability of the Government’s CERS OPEB plan would be if it were calculated using a discount rate 1-percentage point lower and 1-percentage point higher than the current healthcare cost trend rate:

1% Decrease



(8.50%) Nonhazardous $41,181,199 $55,313,166 $71,970,685 Hazardous 11,707,628 17,190,600 23,981,488

CERS’s net OPEB liability $52,888,827 $72,503,766 $95,952,173 Contributions The Government’s non-hazardous contribution rate was 5.26%. Hazardous covered employees who began participation on or after September 1, 2008 are required to contribute 9% of their salary to be allocated as follows: 8% will go to the member’s account and 1% will go to the KRS insurance fund. The Government’s contribution rate for hazardous employees was 10.47%. The contribution requirements and the amounts contributed to CERS were $5,762,562 and $1,135,927 respectively, for the years ended June 30, 2019 and 2018. Deferred Inflows and Outflows of Resources The Deferred Inflows and Outflows of Resources, and OPEB Expense included in the Schedule of OPEB Amounts by Employer include only certain categories of deferred outflows of resources and deferred inflows of resources.


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These include differences between expected and actual experience, changes of assumptions and differences between projected and actual earnings on plan investments. The Schedule of OPEB Amounts by Employer does not include deferred outflows/inflows of resources for changes in the employer’s proportionate share of contributions or employer contributions made subsequent to the measurement date. The net OPEB liability as of June 30, 2018, is based on the June 30, 2017, actuarial valuation rolled forward. Deferred outflows and inflows related to differences between projected and actual earnings on plan investments are netted and amortized over a closed five‐year period. At June 30, 2018, the Government reported deferred outflows if resources and deferred inflows of resources related to OPEB from the following sources:



Resources Difference between expected and actual experience $0 $8,367,118 Net difference between projected and actual earnings on pension plan investments 5,444,265 Change of assumptions 16,322,180 174,821 Changes in proportion and differences between Employer contributions and proportionate share of contributions 1,693,470 Government contributions subsequent to the measurement date 5,762,562

Total $22,084,742 $15,679,674 The $5,762,562 reported as deferred outflows of resources related to OPEB resulting from Government contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2019. Other amount reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ended June 30: 2019 $884,081 2020 884,081 2021 (64,735) 2022 145,574 2023 (765,251) Thereafter (441,244)

Payable to the OPEB Plan At June 30, 2019, the CERS reported payables credit balance of $11,007 from the Government for the outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2019. Detailed information about the OPEB plan’s fiduciary net position is available in the CERS financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, KY 40601, or by telephone at (502) 696-8800. NOTE 9. RECENT GASB PRONOUNCEMENTS The Government implemented the following accounting pronouncements during the fiscal year ended June 30, 2019: Statement No. 83, Certain Asset Retirement Obligations, this Statement addresses accounting and financial reporting for certain asset retirement obligations. An asset retirement obligation is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement.


June 30, 2019

108

Assets addressed by this Statement include nuclear power plant decommissioning, contractually required land restoration, such as the removal of wind turbines, and other similar assets. Statement No. 84, Fiduciary Activities, establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, the objective of this Statement is to improve the information that is disclosed in the notes to the financial statements relating to debt. The disclosures added by this Statement include the amount of unused lines of credit, assets pledged as collateral for debt, and terms specified in the debt agreement related to significant events of default with finance-related consequences and termination events with finance-related consequences and subjective acceleration clauses. Standards that will Become Effective for FY 2020 and Later Year Financial Statements Statement No. 87, Leases, the objective of which is to better meet the information needs financial statement users by improving accounting and financial reporting for leases by governments. (FY 2021) Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, this Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. Thus, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. (FY 2021) Statement No. 90, Majority Equity Interests – an amendment of GASB Statements No. 14 and No. 61, this Statement was issued to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. (FY 2020) Statement No. 91, Conduit Debt Obligations, the primary objectives of this Statement is to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement establishes that a conduit debt obligation is not a liability of the issuer. (FY 2021) The Government has not yet determined the effect, if any, that the adoption of these Statements may have on its financial statements.

109

REQUIRED SUPPLEMENTARY INFORMATION

Variance withFinal Budget-Positive

Original Final Actual (Negative)REVENUES

Licenses and Permits:Employee Withholdings $204,500,000 $204,500,000 $201,020,025 ($3,479,975) aBusiness Returns 45,870,000 45,870,000 43,584,527 (2,285,473) aInsurance Premiums 33,090,000 33,090,000 34,086,330 996,330Bond Deposits (1,500) (1,500)Regulated License Fee 886,500 886,500 972,606 86,106Franchise Fee 26,110,000 26,110,000 23,900,899 (2,209,101) aBank Franchise Fee 1,598,320 1,598,320 1,654,789 56,469Vehicle License 240,000 240,000 474,743 234,743Deed Tax Fee 2,000,000 2,000,000 2,158,042 158,042Registration Fee 415,000 415,000 409,570 (5,430)Filing Fee - Planning & Zoning 130,000 130,000 110,568 (19,432)Animal License 48,000 48,000 47,357 (643)Certificates of Occupancy 9,000 9,000 5,195 (3,805)Hotel - Motel License Fee 35,000 35,000 38,877 3,877

Total Licenses and Permits 314,931,820 314,931,820 308,462,028 (6,469,792)

Taxes:Realty Taxes 21,499,000 21,855,170 21,973,820 118,650Personal Taxes 1,668,000 1,602,000 1,640,783 38,783PSC Taxes 886,000 922,000 719,182 (202,818)Property Tax Discount (400,000) (400,000) (422,460) (22,460)Property Tax Commission (985,000) (997,000) (1,026,917) (29,917)Delinquent - Realty & Personal 200,000 200,000 105,857 (94,143)Motor Vehicle Ad Valorem Tax 1,928,000 1,981,000 2,164,790 183,790County Clerk Com - Motor Vehicle (72,000) (67,000) (77,123) (10,123)Supplementary Tax Bills 15,000 15,000 7,953 (7,047)Omitted Tax 100,000 100,000 136,042 36,042

Total Taxes 24,839,000 25,211,170 25,221,927 10,757

Charges for Services:Accident Report Sales 120,000 120,000 128,978 8,978Administrative Collection Fees 7,000 7,000 4,925 (2,075)Adult Probation Fees 41,725 41,725 53,498 11,773Animal Shelter Collections 18,700 18,700 16,250 (2,450)Building Permits 1,610,000 1,610,000 1,765,757 155,757Computer Services Fees 3,000 3,000 3,033 33Detention Center 8,004,500 8,754,500 9,376,782 622,282Developer Landscape Fees 6,000 6,000 2,740 (3,260)District Court Jail Fees 80,000 80,000 207,012 127,012Domestic Relations Collection 1,000 1,000 335 (665)Downtown Arts Center 96,800 96,800 96,058 (742)EMS 8,000,000 8,000,000 8,086,672 86,672Excess Fees and Collections 3,100,000 3,100,000 3,546,654 446,654Golf Course Collections 2,800,000 2,800,000 2,448,529 (351,471)Park Land Acquisition 275,000 275,000 270,894 (4,106)Parks & Recreation Programs 1,092,220 1,092,220 1,149,375 57,155Rent or Lease Income 674,144 674,144 1,038,907 364,763

Total Charges for Services 25,930,089 26,680,089 28,196,399 1,516,310 b

Fines and Forfeitures 239,000 239,000 230,914 (8,086)

Intergovernmental 825,422 897,422 975,875 78,453

Property Sales 250,000 250,000 236,248 (13,752)

Investments 477,000 477,000 1,604,513 1,127,513 c

Other Income:Contributions 3,650 74,023 158,316 84,293Other Income 800,000 800,000 948,899 148,899Penalties & Interest 1,827,500 1,827,500 1,784,080 (43,420)School Board Tax Fee 15,000 15,000 15,000 Payment in Lieu of Taxes 92,699 92,699Miscellaneous 1,095,628 1,788,867 1,982,193 193,326

Total Other Income 3,741,778 4,505,390 4,981,187 475,797Total Revenues 371,234,109 373,191,891 369,909,091 (3,282,800)

continued

Budgeted Amounts


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGETARY COMPARISON

GENERAL FUNDFor the Year Ended June 30, 2019


See Independent Auditor's Report 110


Original Final Actual (Negative)Budgeted Amounts





EXPENDITURESGeneral Government:

Council Office 3,136,104 3,170,842 2,881,886 (288,956)Office of the Mayor 1,667,689 1,732,664 1,745,904 13,240Special Programs 239,217 239,652 233,447 (6,205)Board of Elections 1,168,587 1,168,587 1,012,469 (156,118)Clerk of the Urban County Council 542,746 537,269 456,993 (80,276)County Attorney 1,161,116 1,161,116 1,143,810 (17,306)Coroner 1,271,236 1,323,745 1,260,469 (63,276)Property Valuation Administrator 366,800 366,800 366,800 Contingency 3,750,000 1,213,517 (1,213,517)Circuit Judges 427,796 427,796 438,354 10,558County Court Clerk 105,917 105,917 68,865 (37,052)Citizens' Advocate 37,251 37,251 34,382 (2,869)Commonwealth Attorney 271,024 271,024 271,024 County Judge Executive 17,804 17,804 14,259 (3,545)Indirect Cost Allocation (5,101,420) (5,101,420) (4,804,609) 296,811

Total General Government 9,061,867 6,672,564 5,124,053 (1,548,511)

Administrative Services:Office of the Chief Administrative Officer 2,107,413 1,923,537 1,987,169 63,632Government Communications 970,309 969,921 966,642 (3,279)Grants & Special Projects 698,573 631,336 703,343 72,007Human Resources 3,474,099 3,574,707 3,452,688 (122,019)Internal Audit Office 629,671 633,502 631,917 (1,585)Neighborhood Programs 44,018 31,581 (12,437)

Total Administrative Services 7,880,065 7,777,021 7,773,340 (3,681)

Chief Development OfficerChief Development Officer 1,060,376 1,440,016 1,305,739 (134,277)

Total Chief Development Officer 1,060,376 1,440,016 1,305,739 (134,277)

Department of Information Technology:Office of the CIO 1,432,515 1,556,406 1,579,724 23,318Computer Services 8,168,972 8,040,047 7,912,593 (127,454)Enterprise Solutions 1,147,450 1,173,409 1,246,463 73,054

Total Information Technology 10,748,937 10,769,862 10,738,780 (31,082)

Department of Finance:Accounting 1,614,935 1,653,345 1,509,036 (144,309)Budgeting 577,316 595,780 562,835 (32,945)Central Purchasing 626,299 689,662 674,565 (15,097)Revenue 2,398,187 2,394,110 2,333,831 (60,279)Finance Administration 852,673 870,329 795,034 (75,295)

Total Finance 6,069,410 6,203,226 5,875,301 (327,925) d

Division of Environmental Quality & Public Works:Environmental Quality & PW Admin 282,167 279,403 253,237 (26,166)Division of Water & Air Quality 13 13Division of Environmental Services 2,492,755 2,965,876 2,743,533 (222,343)Streets & Roads 3,987,589 4,046,995 3,825,695 (221,300)Traffic Engineering 4,926,367 4,934,401 4,618,920 (315,481)

Total Environmental Quality & Public Works 11,688,878 12,226,675 11,441,398 (785,277) d

Department of Planning, Preservation, & Development:Building Inspection 2,807,267 2,831,980 2,685,931 (146,049)Code Enforcement 2,258,284 2,253,598 2,145,037 (108,561)Engineering 1,679,145 1,778,789 1,715,776 (63,013)Planning, Preservation, & Development Admin 2,695,209 3,084,729 2,889,030 (195,699)Historic Preservation 456,867 451,538 406,958 (44,580)Planning 2,414,913 2,461,929 2,356,127 (105,802)Purchase of Development Rights 206,843 166,233 167,124 891

Total Planning, Preservation, & Development 12,518,528 13,028,796 12,365,983 (662,813) d

Department of Public Safety:Police 77,703,345 78,510,953 77,522,942 (988,011)Fire & Emergency Services 78,589,913 79,594,084 79,727,449 133,365Community Corrections 38,702,133 39,605,365 38,601,335 (1,004,030)Public Safety Administration 7,191,332 7,131,660 7,084,416 (47,244)DEEM/Enhanced 911 4,352,441 4,332,109 4,221,073 (111,036)Security 904,121 938,979 806,093 (132,886)

Total Public Safety 207,443,285 210,113,150 207,963,308 (2,149,842) d

Department of Social Services:Youth Services 2,554,651 2,574,982 2,512,535 (62,447)Family Services 3,122,523 3,122,793 2,795,131 (327,662)Adult Services 1,363,740 1,397,833 1,317,739 (80,094)Social Services Administration 2,573,865 2,587,800 2,442,396 (145,404)

Total Social Services 9,614,779 9,683,408 9,067,801 (615,607) dcontinued



Original Final Actual (Negative)Budgeted Amounts





EXPENDITURES, continuedDepartment of General Services:

Parks & Recreation 22,012,352 22,324,901 20,804,105 (1,520,796)Fleet & Facilities Management 6,556,496 6,585,530 5,673,775 (911,755)General Services Administration 2,631,622 2,603,297 2,238,881 (364,416)

Total General Services 31,200,470 31,513,728 28,716,761 (2,796,967) d

Department of Law:Law 2,612,784 2,688,462 2,548,860 (139,602)

Total Law 2,612,784 2,688,462 2,548,860 (139,602)

Outside Agencies:Commerce Lexington 457,000 457,000 457,000 Downtown Lexington Partnership 363,470.00 363,470 363,470 Environmental Commission 5,900 5,650 5,550 (100)World Trade Center 55,000 55,000 55,000 Grants & Special Projects Agencies 682,550 707,120 702,320 (4,800)Social Service Agencies 3,243,095 3,233,100 3,184,490 (48,610)LexArts 489,050 489,050 489,050 Lexington Public Library 16,092,960 16,574,576 16,577,574 2,998Explorium of Lexington 225,000 225,000 225,000 Carnegie Literacy Center 106,900 106,900 79,989 (26,911)Lyric Theatre 150,000 150,000 150,000

Total Outside Agencies 21,870,925 22,366,866 22,289,443 (77,423)

Debt Service:Principal 29,378,863 28,575,677 28,329,993 (245,684)Interest 15,160,309 15,847,295 15,721,258 (126,037)

Total Debt Service 44,539,172 44,422,972 44,051,251 (371,721)Total Expenditures 376,309,476 378,906,746 369,262,018 (9,644,728)

Excess (Deficiency) of Revenues Over (Under) Expenditures (5,075,367) (5,714,855) 647,073 6,361,928

OTHER FINANCING SOURCES (USES)Transfers In 7,679,710 9,204,588 9,301,386 96,798Transfers Out (4,349,831) (6,944,771) (6,427,009) 517,762

Total Other Financing Sources 3,329,879 2,259,817 2,874,377 614,560

Net Change in Fund Balance (1,745,488) (3,455,038) 3,521,450 6,976,488

Fund Balance, Beginning 3,500,000 3,500,000 64,362,714 60,862,714Adjustment to Opening Fund Balance (Note 2.D.) 30,401 30,401

Fund Balances - Restated July 1 3,500,000 3,500,000 64,393,115 60,893,115

Fund Balance, Ending $1,754,512 $44,962 $67,914,565 $67,869,603

a-revenue estimates for payroll withholdings were over by approximately $6.5 millionb-total charges for services in various categories exceeded the estimates by $1.5 millionc-investment income exceeded the estimate by $1.1 milliond-budget savings in personnel from vacant positions of $2.8 million and operating from diligent management oversight of $6.4 million



Original Final Actual (Negative)REVENUES

Licenses and Permits:Bank Franchise Fee $1,598,320 $1,598,320 $1,654,789 $56,469

Total Licenses and Permits 1,598,320 1,598,320 1,654,789 56,469

Taxes:Realty Taxes 38,901,000 39,644,000 39,848,637 204,637PSC Taxes 347,000 347,000 408,240 61,240Property Tax Discount (640,000) (670,000) (708,782) (38,782)Property Tax Commission (350,000) (350,000) (350,123) (123)Delinquent - Realty & Personal 268,000 268,000 130,627 (137,373)Supplementary Tax Bills 2,500 2,500 23,423 20,923

Total Taxes 38,528,500 39,241,500 39,352,022 110,522

Charges for Services:Rent or Lease Income 4,684 4,684Commodities 2,537,600 2,537,600 1,476,881 (1,060,719)Dumpster Permit Fees 10,300 10,300 9,545 (755)

Total Charges for Services 2,547,900 2,547,900 1,491,110 (1,056,790)

Property Sales 150,000 150,000 306,614 156,614

Fines and Forfeitures 200 200 949 749

Investments 178,000 178,000 592,808 414,808

Other Income:Penalties & Interest 65,000 65,000 75,601 10,601Miscellaneous 7,900 8,331 12,536 4,205

Total Other Income 72,900 73,331 88,137 14,806Total Revenues 43,075,820 43,789,251 43,486,429 (302,822)

EXPENDITURESGeneral Government:

Contingency 80,000 Indirect Cost Allocation 2,189,240 2,189,240 2,072,089 (117,151)

Total General Government 2,269,240 2,189,240 2,072,089 (117,151)

Administrative Services:Government Communications 583,127 884,488 571,017 (313,471)Human Resources 7,000 6,778 3,321 (3,457)

Total Administrative Services 590,127 891,266 574,338 (316,928)

Department of Information Technology:Computer Services 628,118 636,200 439,908 (196,292)Office of the CIO 200,000 200,000 174,096 (25,904)

Total Information Technology 828,118 836,200 614,004 (222,196)

Department of Finance:Central Purchasing 3,920 4,159 239Finance 28,483 24,483 19,292 (5,191)

Total Finance 28,483 28,403 23,451 (4,952)

Division of Environmental Quality & Public Works:Waste Management 30,621,990 30,720,329 26,554,677 (4,165,652) aDivision of Environmental Services 742,042 769,811 776,490 6,679Environmental Quality 692,579 924,628 608,138 (316,490)Streets & Roads 2,680,395 2,687,776 2,762,869 75,093Traffic Engineering 6,505,959 6,686,334 6,155,742 (530,592)

Total Environmental Quality & Public Works 41,242,965 41,788,878 36,857,916 (4,930,962)

Department of General Services:Fleet & Facilities Management 5,173,409 6,529,266 4,765,144 (1,764,122) b

Total General Services 5,173,409 6,529,266 4,765,144 (1,764,122)continued



FULL URBAN SERVICES DISTRICT FUNDFor the Year Ended June 30, 2019

Budgeted Amounts




Original Final Actual (Negative)



FULL URBAN SERVICES DISTRICT FUNDFor the Year Ended June 30, 2019

Budgeted Amounts


EXPENDITURES, continuedDepartment of Law:

Law 16,824 16,824 16,818 (6)Total Law 16,824 16,824 16,818 (6)

Debt Service:Principal 669,237 669,237 669,237 Interest 238,503 238,503 238,503

Total Debt Service 907,740 907,740 907,740 0Total Expenditures 51,056,906 53,187,817 45,831,500 (7,356,317)

Excess (Deficiency) of Revenues Over (Under) Expenditures (7,981,086) (9,398,566) (2,345,071) 7,053,495

OTHER FINANCING SOURCES (USES)Transfers In 150,950 150,950 Transfers Out 820 (128,057) (145,119) (17,062)

Total Other Financing Sources (Uses) 820 22,893 5,831 (17,062)

Net Change in Fund Balance (7,980,266) (9,375,673) (2,339,240) 7,036,433

Fund Balance, Beginning 23,865,000 23,865,000 28,182,062 4,317,062

Fund Balance, Ending $15,884,734 $14,489,327 $25,842,822 $11,353,495

a-savings of approximately $1.1 million in personnel, $1.7 million savings in capital expenditures, operating savings of $1.5 million primarily repairs & maintenance and professional servicesb-operating savings of $1.2 million primarily repairs & maintenance and $433,000 savings in capital expenditures


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636,

280,

881

30,7

83,5

1863

4,71

5,71

830

,182

,832

619,

901,

142

30,1

06,3

9769

5,18

3,21

630

,096

,248

Plan

fidu

ciar

y ne

t pos

ition

-end

ing

(b)

$636

,280

,881

$30,

783,

518

$634

,715

,718

$30,

182,

832

$619

,901

,142

$30,

106,

397

$695

,183

,216

$30,

096,

248

$745

,170

,974

$30,

195,

908

Net

pen

sion

liabi

lity-

endi

ng (a

) - (b

)$1

17,1

04,3

44($

18,5

34,9

88)

$146

,178

,809

($18

,944

,127

)$1

94,2

44,9

99($

19,2

65,3

45)

$208

,015

,631

($20

,631

,816

)$2

31,5

88,2

53($

21,4

48,7

00)

Plan

fidu

ciar

y ne

t pos

ition

as a

per

cent

age

of th

e to

tal

84.4

6%25

1.32

%81

.28%

268.

56%

76.1

4%27

7.71

%76

.97%

317.

99%

76.2

9%34

5.21

%pe

nsio

n lia

bilit

y

Cov

ered

pay

roll

$63,

248,

485

$0$6

2,10

2,63

2$0

$65,

934,

339

$0$7

3,36

0,31

3$0

$73,

131,

137

$0

Net

pen

sion

liabi

lity

as a

per

cent

age

of c

over

ed p

ayro

ll18

5.15

%0.

00%

235.

38%

0.00

%29

4.60

%0.

00%

283.

55%

0.00

%31

6.68

%0.

00%

*In

1973

the

City

of L

exin

gton

froz

e ne

w e

ntra

nts i

nto

the

CEPF

; In

fisca

l yea

r 201

0 th

e la

st ac

tive

empl

oyee

retir

ed

Act

uari

al A

ssum

ptio

ns:

Val

uatio

n da

te7/

1/20

137/

1/20

137/

1/20

147/

1/20

147/

1/20

157/

1/20

157/

1/20

167/

1/20

167/

1/20

177/

1/20

17A

ctua

rial c

ost m

etho

dEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alEn

try a

ge n

orm

alA

mor

tizat

ion

met

hod

Leve

l dol

lar,

clos

edLe

vel d

olla

r, op

enLe

vel d

olla

r, cl

osed

Leve

l dol

lar,

open

Leve

l dol

lar,

clos

edLe

vel d

olla

r, op

enLe

vel d

olla

r, cl

osed

Leve

l dol

lar,

open

Leve

l dol

lar,

clos

edLe

vel d

olla

r, op

enA

mor

tizai

ton

perio

d30

yea

rs15

yea

rs29

yea

rs15

yea

rs28

yea

rs15

yea

rs27

yea

rs15

yea

rs26

yea

rs15

yea

rsA

ctua

rial a

sset

val

uatio

n m

etho

d5-

year

smoo

thed

mar

ket

Mar

ket V

alue

5-ye

ar sm

ooth

ed m

arke

tM

arke

t Val

ueye

ar sm

ooth

ed m

ark

Mar

ket V

alue

5-ye

ar sm

ooth

ed m

arke

tM

arke

t Val

ue5-

year

smoo

thed

mar

ket

Mar

ket V

alue

Inve

stmen

t rat

e of

retu

rn7.

50%

7%, i

nclu

ding

infla

tion

7.50

%7%

, inc

ludi

ng in

flatio

n7.

50%

7%, i

nclu

ding

infla

tion

7.50

%7%

, inc

ludi

ng in

flatio

n7.

50%

7%, i

nclu

ding

infla

tion

Cost

of li

ving

ben

efit

incr

ease

s (m

axim

um)

NA

3.00

%N

A3.

00%

NA

3.00

%N

A3.

00%

NA

3.00

%In

flatio

n3.

00%

NA

3.00

%N

A3.

00%

NA

3.00

%N

A3.

00%

NA

Proj

ecte

d sa

lary

incr

ease

4% to

10.

50%

NA

4% to

10.

50%

NA

4% to

10.

50%

NA

4% to

10.

50%

NA

4% to

10.

50%

NA

Mor

talit

y ta

ble

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te

usin

g sc

ale

BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

This

sche

dule

is p

rese

nted

to il

lustr

ate

the

requ

irem

ent t

o sh

ow in

form

atio

n fo

r 10

year

s. H

owev

er, u

ntil

a fu

ll 10

-yea

r tre

nd is

com

pile

d, th

e G

over

nmen

t will

pre

sent

info

rmat

ion

for t

hose

yea

rs fo

r whi

ch in

form

atio

n is

avai

labl

e.

REQ

UIR

ED S

UPP

LEM

ENTA

RY IN

FORM

ATI

ON

- SI

NG

LE E

MPL

OY

ER P

ENSI

ON

SSC

HED

ULE

OF

CHA

NG

ES IN

TH

E N

ET P

ENSI

ON

LIA

BILI

TY A

ND

REL

ATE

D R

ATI

OS

LAST

TEN

FIS

CAL

YEA

RS

Fisc

al Y

ear

2018

Fisc

al Y

ear

2016

Fisc

al Y

ear

2015

Fisc

al Y

ear

2017

115

2014

See Independent Auditor's Report

Fisc

al Y

ear

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

2010

2011

2012

Polic

e &

Fire

City

*Po

lice

& F

ireCi

tyPo

lice

& F

ireCi

tyPo

lice

& F

ireCi

tyPo

lice

& F

ireCi

tyA

ctua

rially

det

erm

ined

con

tribu

tion

$30,

665,

280

$0$2

8,21

6,93

8$0

$30,

665,

280

$0$2

2,32

2,06

8$0

$23,

217,

413

$0

Cont

ribut

ions

in re

latio

n to

the

actu

aria

llyde

term

ined

con

tribu

tion

**30

,665

,280

7,86

4**

28,2

16,9

3874

,488

**30

,665

,280

22,3

22,0

6823

,217

,413

Cont

ribut

ion

defic

ienc

y (e

xces

s)$0

($7,

864)

$0($

74,4

88)

$0$0

$0$0

$0$0

Cov

ered

pay

roll

$60,

512,

412

$43,

416

$64,

258,

162

$0$5

4,59

5,79

9$0

$62,

455,

725

$0$6

3,24

8,48

5$0

Cont

ribut

ions

as a

per

cent

age

of c

over

ed

payr

oll

50.6

8%18

.11%

43.9

1%N

A56

.17%

NA

35.7

4%N

A36

.71%

NA

*In

1973

the

City

of L

exin

gton

froz

e ne

w

entra

nts i

nto

the

CEPF

; In

fisca

l yea

r 201

0 th

e la

st ac

tive

empl

oyee

retir

ed

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

e n

2015

2016

2017

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Act

uaria

lly d

eter

min

ed c

ontri

butio

n$2

2,70

5,03

6$0

$24,

755,

620

$0$2

9,80

8,75

7$0

**$2

7,58

5,16

0$0

$30,

277,

170

$0

Cont

ribut

ions

in re

latio

n to

the

actu

aria

llyde

term

ined

con

tribu

tion

22,7

05,0

3624

,755

,620

29,8

08,7

57**

27,5

85,1

6030

,277

,170

Cont

ribut

ion

defic

ienc

y (e

xces

s)$0

$0$0

$0$0

$0$0

$0$0

$0

Cov

ered

pay

roll

$6

2,10

2,63

2$0

$65,

934,

339

$0$7

3,36

0,31

3$0

$73,

131,

137

$0$7

6,97

4,39

3$0

Cont

ribut

ions

as a

per

cent

age

of c

over

ed

payr

oll

36.5

6%N

A37

.55%

NA

40.6

3%N

A37

.72%

NA

39.3

3%N

AC

hang

es in

Ass

umpt

ion:

**Co

rrect

ed b

y A

ctua

ry

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

Fisc

al Y

ear

2013

2014

*In

1973

the

City

of L

exin

gton

froz

e ne

w e

ntra

nts i

nto

the

CEPF

; In

fisca

l yea

r 201

0 th

e la

st ac

tive

empl

oyee

retir

ed

2017

Infla

tion

was

low

ered

from

3.0

0% to

2.7

5%, a

nd w

age

infla

tion

was

low

ered

from

4.0

0% to

3.5

0%.

Ado

pted

RP-

2000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

. Pr

e-Re

tirem

ent a

nd D

isabi

lity

retir

ee m

orta

lity

rate

s are

as

sum

ed to

be

the

sam

e as

the

postr

etire

men

t mor

talit

y ra

tes.

Ret

irem

ent r

ates

wer

e in

crea

sed

to b

ette

r mat

ch e

xper

ienc

e. T

erm

inat

ion

rate

s wer

e in

crea

sed

at th

e ea

rly y

ears

of s

ervi

ce.

Disa

bilit

y ra

tes w

ere

incr

ease

d to

bet

ter m

atch

exp

erie

nce.

Th

e pe

rcen

tage

of d

isabl

ed m

embe

rs w

ho re

tire

as a

resu

lt of

in-s

ervi

ce d

isabi

lity

was

incr

ease

d fro

m 7

5% to

95%

.

116

SCH

EDU

LE O

F TH

E G

OV

ERN

MEN

T'S

CON

TRIB

UTI

ON

SLA

ST T

EN F

ISCA

L Y

EARS

Fisc

al Y

ear

LAST

TEN

FIS

CAL

YEA

RSSC

HED

ULE

OF

THE

GO

VER

NM

ENT'

S CO

NTR

IBU

TIO

NS

REQ

UIR

ED S

UPP

LEM

ENTA

RY IN

FORM

ATI

ON

- SI

NG

LE E

MPL

OY

ER P

ENSI

ON

SLE

XIN

GTO

N-F

AY

ETTE

URB

AN

CO

UN

TY G

OV

ERN

MEN

T


LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

REQ

UIR

ED S

UPP

LEM

ENTA

RY IN

FORM

ATI

ON

- SI

NG

LE E

MPL

OY

ER P

ENSI

ON

S

2018

2019

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Polic

e &

Fire

City

Ann

ual m

oney

-wei

ghte

d ra

te o

f ret

urn,

net

of

inve

stmen

t exp

ense

7.45

%5.

56%

3.08

%3.

49%

-0.2

3%2.

17%

6.20

%3.

80%

18.3

7%6.

48%

11.0

9%6.

18%

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

117

2014

2015

2019

2016

2017

2018


LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

SCH

EDU

LE O

F CH

AN

GES

IN T

HE

NET

PEN

SIO

N L

IABI

LITY

AN

D R

ELA

TED

RA

TIO

SLA

ST T

EN F

ISCA

L Y

EARS

This

sche

dule

is p

rese

nted

to il

lustr

ate

the

requ

irem

ent t

o sh

ow in

form

atio

n fo

r 10

year

s. H

owev

er, u

ntil

a fu

ll 10

-yea

r tre

nd is

com

pile

d, th

e G

over

nmen

t will

pre

sent

info

rmat

ion

for t

hose

yea

rs fo

r whi

ch in

form

atio

n is

avai

labl

e.

REQ

UIR

ED S

UPP

LEM

ENTA

RY IN

FORM

ATI

ON

- SI

NG

LE E

MPL

OY

ER P

ENSI

ON

S

Fiscal Year Fiscal Year2017 2018

Police & Fire Police & FireTotal OPEB liabilityService cost $18,518,517 $16,561,150Interest 10,445,265 12,078,465Changes of benefit termsDifferences between expected and actual experience (1,289,809) (103,220,151)Changes of assumptions (30,781,223) (16,252,771)Benefit payments, including refunds of member contributions (5,638,286) (4,952,442)Net change in total OPEB liability (8,745,536) (95,785,749)

Total OPEB liability-beginning 350,482,838 341,737,302Total OPEB liability-ending 341,737,302 245,951,553

Covered payroll $73,360,313 $73,131,137

Net OPEB liability as a percentage of covered payroll 465.83% 336.32%

Source: Department of Finance, Lexington-Fayette Urban County Government

This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the Government will present information for those years for which information is available.

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOSLAST TEN FISCAL YEARS


2014

2015

2016

2017

2018

The

Gov

ernm

ent's

pro

porti

on o

f the

net

pen

sion

liabi

lity

(ass

et)

$115

,215

,078

$155

,544

,394

$187

,010

,198

$241

,742

,130

$248

,050

,278

The

Gov

ernm

ent's

pro

porti

onat

e sh

are

of th

e ne

t pen

sion

liabi

lity

(ass

et)

Non

haza

rdou

s2.

71%

2.76

%2.

96%

3.20

%3.

12%

Haz

ardo

us2.

28%

2.39

%2.

41%

2.44

%2.

41%

Cove

red

payr

oll

$72,

558,

727

$74,

948,

371

$84,

194,

948

$88,

823,

610

$89,

177,

740

The

Gov

ernm

ent's

pro

porti

onat

e sh

are

of th

e ne

t pen

sion

liabi

lity

(ass

et)

as a

per

cent

age

of it

s cov

ered

pay

roll

158.

79%

207.

54%

222.

12%

287.

12%

294.

61%

Plan

fidu

ciar

y ne

t pos

ition

as a

per

cent

age

of th

e to

tal p

ensio

n lia

bilit

y66

.06%

66.1

2%55

.19%

55.1

9%55

.19%

Act

uari

al A

ssum

ptio

ns:

Val

uatio

n da

te7/

1/20

137/

1/20

147/

1/20

157/

1/20

167/

1/20

17A

ctua

rial c

ost m

etho

dEn

try A

geEn

try A

geEn

try A

geEn

try A

geEn

try A

ge

Am

ortiz

atio

n m

etho

dLe

vel p

erce

ntag

e of

pa

yrol

l, cl

osed

Leve

l per

cent

age

of

payr

oll,

clos

edLe

vel p

erce

ntag

e of

pa

yrol

l, cl

osed

Leve

l per

cent

age

of

payr

oll,

clos

edLe

vel p

erce

ntag

e of

pa

yrol

l, cl

osed

Am

ortiz

aito

n pe

riod

30 y

ears

28 y

ears

28 y

ears

28 y

ears

27 y

ears

Act

uaria

l ass

et v

alua

tion

met

hod

5-ye

ar sm

ooth

ed m

arke

t5-

year

smoo

thed

mar

ket

5-ye

ar sm

ooth

ed m

arke

t

20%

of t

he d

iffer

ence

be

twee

n th

e m

arke

t va

lue

of a

sset

s and

the

expe

cted

act

uaria

l va

lue

of a

sset

s is

reco

gniz

ed

20%

of t

he d

iffer

ence

be

twee

n th

e m

arke

t va

lue

of a

sset

s and

the

expe

cted

act

uaria

l va

lue

of a

sset

s is

reco

gniz

ed

Inve

stmen

t rat

e of

retu

rn7.

75%

7.50

%7.

50%

7.50

%7.

75%

Cost

of li

ving

ben

efit

incr

ease

s (m

axim

um)

Infla

tion

3.50

%3.

25%

3.25

%3.

25%

3.25

%

Proj

ecte

d sa

lary

incr

ease

4.5%

, ave

rage

, in

clud

ing

infla

tion

4%, a

vera

ge, i

nclu

ding

in

flatio

n4%

, ave

rage

, inc

ludi

ng

infla

tion

4%, a

vera

ge, i

nclu

ding

in

flatio

n4%

, ave

rage

, inc

ludi

ng

infla

tion

Mor

talit

y ta

ble

1983

Gro

up A

nnui

ty

Mor

talit

y Ta

ble

for a

ll re

tired

mem

bers

and

be

nefic

iarie

s as o

f Jun

e 30

, 200

6 an

d th

e 19

94

Gro

up A

nnui

ty

Mor

talit

y Ta

ble

for a

ll ot

her m

embe

rs.

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

(set

bac

k 1

year

for f

emal

es)

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

(set

bac

k 1

year

for f

emal

es)

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

(set

bac

k 1

year

for f

emal

es)

RP-2

000

Com

bine

d Ta

ble

proj

ecte

d to

the

valu

atio

n da

te u

sing

scal

e BB

(set

bac

k 1

year

for f

emal

es)

This

sche

dule

is p

rese

nted

to il

lustr

ate

the

requ

irem

ent t

o sh

ow in

form

atio

n fo

r 10

year

s. H

owev

er, u

ntil

a fu

ll 10

-yea

r tre

nd is

com

pile

d, th

e G

over

nmen

t will

pre

sent

info

rmat

ion

for t

hose

yea

rs fo

r whi

ch in

form

atio

n is

avai

labl

e.

Sour

ce:

Ken

tuck

y Re

tirem

ent S

yste

ms

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

119

REQ

UIR

ED S

UPP

LEM

ENTA

RY IN

FORM

ATI

ON

- CE

RS P

ENSI

ON

SCH

EDU

LE O

F TH

E G

OV

ERN

MEN

T'S

PRO

PORT

ION

ATE

SH

ARE

OF

THE

NET

LIA

BILI

TYLA

ST T

EN F

ISCA

L Y

EARS


2014

2015

2016

2017

2018

Cont

ract

ually

requ

ired

cont

ribut

ion

$15,

852,

724

$10,

836,

390

$10,

952,

366

$13,

388,

248

$14,

087,

247

Cont

ribut

ion

in re

latio

n to

the

cont

ract

ually

requ

ired

cont

ribut

ion

16,1

61,7

4716

,354

,078

16,9

54,9

5913

,767

,651

14,1

62,5

24

Cont

ribut

ion

defic

ienc

y (e

xces

s)($

309,

023)

($5,

517,

688)

($6,

002,

593)

($37

9,40

3)($

75,2

77)

Gov

ernm

ent's

cov

ered

pay

roll

$72,

558,

727

$74,

948,

371

$84,

194,

948

$88,

823,

610

$89,

177,

740

Cont

ribut

ions

as a

per

cent

age

ofco

vere

d pa

yrol

l22

.27%

21.8

2%20

.14%

15.5

0%15

.88%

Cha

nges

in A

ssum

ptio

n:

2017

120

Sour

ce:

Ken

tuck

y Re

tirem

ent S

yste

ms

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

REQ

UIR

ED S

UPP

LEM

ENTA

RY IN

FORM

ATI

ON

- CE

RS P

ENSI

ON

SCH

EDU

LE O

F TH

E G

OV

ERN

MEN

T'S

CON

TRIB

UTI

ON

SLA

ST T

EN F

ISCA

L Y

EARS

This

sche

dule

is p

rese

nted

to il

lustr

ate

the

requ

irem

ent t

o sh

ow in

form

atio

n fo

r 10

year

s. H

owev

er, u

ntil

a fu

ll 10

-yea

r tre

nd is

com

pile

d, th

e G

over

nmen

t will

pre

sent

info

rmat

ion

for t

hose

yea

rs fo

r whi

ch in

form

atio

n is

avai

labl

e.


2015

The

assu

med

inve

stmen

t rat

e of

retu

rn w

as d

ecre

ased

from

7.7

5% to

7.50

%. T

he a

ssum

ed ra

te o

f inf

latio

n w

as re

duce

d fro

m 3

.50%

to 3

.25%

. The

as

sum

ed ra

te o

f wag

e in

flatio

n w

as re

duce

d fro

m 1

.00%

to 0

.75%

.Pa

yrol

l gro

wth

ass

umpt

ion

was

redu

ced

from

4.5

0% to

4.0

0%.

The

mor

talit

y ta

ble

used

for a

ctiv

e m

embe

rs is

RP-

2000

Com

bine

d M

orta

lity

Tabl

epr

ojec

ted

with

Sca

le B

B to

201

3 (m

ultip

lied

by 5

0% fo

r mal

es a

nd 3

0% fo

r fem

ales

). F

or h

ealth

y re

tired

mem

bers

and

ben

efic

iarie

s, th

e m

orta

lity

tabl

e us

ed is

the

RP-2

000

Com

bine

d M

orta

lity

Tabl

e pr

ojec

ted

with

Sca

le B

B to

201

3 (s

et b

ack

1 ye

ar fo

r fem

ales

). F

or d

isabl

ed m

embe

rs, t

he

RP-2

000

Com

bine

d D

isabl

ed M

orta

lity

Tabl

e pr

ojec

ted

with

Sca

le B

B to

201

3 (s

et b

ack

4 ye

ars f

or m

ales

) is u

sed

for t

he p

erio

d af

ter d

isabi

lity

retir

emen

t. Th

ere

is so

me

mar

gin

in th

e cu

rrent

mor

talit

y ta

bles

for p

ossib

le fu

ture

impr

ovem

ent i

n m

orta

lity

rate

s and

that

mar

gin

will

be

revi

ewed

aga

in w

hen

the

next

exp

erie

nce

inve

stiga

tion

is co

nduc

ted.

The

ass

umed

rate

s of R

etire

men

t, W

ithdr

awal

and

Disa

bilit

y w

ere

upda

ted

to

mor

e ac

cura

tely

refle

ct e

xper

ienc

e.

The

assu

med

inve

stmen

t ret

urn

was

cha

nged

from

7.5

0% to

6.2

5%. T

he p

rice

infla

tion

assu

mpt

ion

was

cha

nged

from

3.2

5% to

2.3

0%, w

hich

also

re

sulte

d in

a 0

.95%

dec

reas

e in

the

sala

ry in

crea

se a

ssum

ptio

n at

all

year

s of s

ervi

ce. T

he p

ayro

ll gr

owth

ass

umpt

ion

(app

licab

le fo

r the

am

ortiz

atio

n un

fund

ed a

ctua

rial a

ccru

ed li

abili

ties)

was

cha

nged

from

4.0

0% to

2.0

0%.

2016 2017 2018

The Government's proportion of the collective net OPEB liability (asset) $62,469,796 $84,449,594 $72,503,766

The Government's proportionate share of the net OPEB liability (asset)Nonhazardous 50,412,648 64,271,500 55,313,166Hazardous 12,057,148 20,178,094 17,190,600

Covered payroll 84,194,948 88,823,610 89,177,740

The Government's proportionate share of the net OPEB liability (asset) as a percentage of its covered payroll 74.20% 95.08% 81.30%

Plan fiduciary net position as a percentage of the total OPEB liability 359.01% 272.62% 317.54%

Source: Kentucky Retirement Systems


LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTREQUIRED SUPPLEMENTARY INFORMATION - CERS OPEB

SCHEDULE OF THE GOVERNMENT'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITYLAST TEN FISCAL YEARS


2017 2018

Contractually required contribution $5,205,891 $5,090,084

Contribution in relation to thecontractually required contribution 4,934,657 4,885,000

Contribution deficiency (excess) $271,234 $205,084

Government's covered payroll $88,823,610 $89,177,740

Contributions as a percentage ofcovered payroll 5.56% 5.48%

Source: Kentucky Retirement Systems

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTREQUIRED SUPPLEMENTARY INFORMATION - CERS OPEB

SCHEDULE OF THE GOVERNMENT'S CONTRIBUTIONSLAST TEN FISCAL YEARS



123

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

The Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. The County Aid Program Fund accounts for the allocation of county road funds from the Commonwealth of Kentucky as provided by HB 973 and adopted by the 1980 General Assembly based upon the motor fuels taxes collected. The Municipal Aid Program Fund accounts for the allocation from the Commonwealth of Kentucky as provided by KRS 174 for design, right-of-way acquisitions, utilities, construction, and other municipal road expenditures. The Industrial Revenue Bond Fund accounts for receipts and disbursements of IRB issuance fees. The Mineral Severance Fund and Coal Severance Fund account for receipts and disbursements of the Coal and Mineral Severance Tax received from the Commonwealth of Kentucky. The Police Confiscated Fund accounts for recoveries from federal criminal case settlements awarded to the LFUCG Division of Police. Expenditures are restricted to police law enforcement programs. The Police Confiscated State Fund accounts for recoveries from state criminal case settlements awarded to the Government’s Division of Police. Expenditures are restricted to police law enforcement programs. The Public Safety Fund accounts for revenues and disbursements of the House Bill 413 fees received from the Commonwealth of Kentucky.

CAPITAL PROJECTS FUNDS

Capital Projects Funds are used to account for the acquisition and construction of major capital facilities and equipment other than those financed by proprietary funds. The Lexington Cultural Center is a project to construct a performing arts and exhibit facility in downtown Lexington. The 2003 Bond Projects are for acquisition of vehicles, equipment, the next phase of replacement of the Government Center HVAC system, and fire trucks. The 2007, 2008, & 2009 Bond Projects are for park projects, computer equipment, and building renovations and improvements. The 2010 Bond Projects are to finance various projects for departments within the Government, including acquisition of equipment, infrastructure projects, and the Purchase of Development Rights program. The 2011 & 2012 Bond Projects are to finance the acquisition of various equipment for departments within the Government including but not limited to Computer Services, Public Safety, Parks and Recreation, Solid Waste, Purchase of Development Rights, Recycling Center, and Public Works utility design.

124

The 2013 Bond Projects are to finance the acquisition of vehicles and equipment, various parks projects, and complete renovation of the Emergency Operations Center. The 2014 Bond Projects will fund projects for Purchase of Development Rights, conservation easements, Public Safety radios, renovation and construction of Parks and funding for the Arena, Arts, and Entertainment District. The 2015 Bond Projects will fund projects for Purchase of Development Rights, conservation easements, Public Safety, traffic signal upgrades, renovation and construction of Parks, Facilities and Fleet Management vehicle replacement and repairs, and a new senior citizens center. The QECB Bond Project will fund renovations at the Corrections Detention Center. The 2016 Bond Projects will fund projects and infrastructure improvements for departments within the Government including but not limited to Chief Information Officer, General Services, Public Safety, and Planning, Preservation, & Development. Additional projects include a greenway that will link two regional trail systems, the Legacy Trail and Town Branch Trail; streetscape improvements on the Versailles Road Corridor; and paving. A taxable bond portion will finance the restoration and rehabilitation of the historic Fayette County Courthouse in order to preserve the history and architecture of Lexington. The 2017 Bond Projects will fund projects including, but not limited to, (i) the construction, installation and equipping of a new fire station, software system upgrades, safety operations and other safety related projects, road resurfacing, road maintenance, road upgrades, streetscapes and sidewalk improvements, renovations, repairs and upgrades related to public buildings, renovations, repairs and upgrades related to park projects, and (ii) providing funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights. The 2018 Bond Projects will fund projects for Public Safety, software upgrades, infrastructure improvements, parks projects, and building improvements. In addition it will provide funding for a program to preserve and manage agricultural, rural and natural lands, including the purchase of conservation easements or development rights. The 2019 Bond Projects will fund projects for Public Safety, software upgrades, infrastructure improvements, parks projects, and building improvements, fleet replacement, and the Lexington Convention Center renovations. The Public Library Corporation is for the acquisition, construction, equipping, and financing of public projects to be used for public library purposes. The Roads, Parks, Open Space, Storm Water Exactions are for improvements necessary to provide roads, parks, open space, and storm water management in the Expansion Area Master Plan funded by developer and property owner exaction fees.

C

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vera

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nds

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l

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ngto

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ter

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LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

For the year ending 6/30/19

Accrued AccruedFederal Direct/ (Deferred) Passed Through (Deferred)CFDA Pass-through Revenue at Revenue to Sub recipients Total Revenue at

Grantor/Program Title Number Grantor's Number July 1, 2018 Received Expenditures Expenditures June 30, 2019

US Department of Agriculture:Direct Programs:

Child Care Food Program 10.558 11475 $8,869 $21,498 $0 $12,629 $0Child Care Food Program 10.558 11475 44,554 47,231 2,677Urban Forestry 10.675 PON2-128-1900001567 5,379 5,379Purchase of Development Rights (PDR) 10.931 545C161501JPC 702,043 896,211 194,168Purchase of Development Rights (PDR) 10.931 68-5C16-16-828 90,714 90,714

Total US Department of Agriculture 710,912 962,263 0 350,121 98,770

US Department of Housing and Urban Development:Direct Programs:

Community Dev Block Grant 14.218 B14MC210004 121,001 253,380 132,730 351Community Dev Block Grant 14.218 B15MC210004 50,085 715,992 58,651 612,429 5,173Community Dev Block Grant 14.218 B16MC210004 643,646 1,511,827 96,754 773,697 2,270Community Dev Block Grant 14.218 B17MC210004 429,399 1,276,403 160,696 692,283 5,975Community Dev Block Grant 14.218 B18MC210004 773,933 470,446 355,184 51,697Emergency Solutions 14.231 E16MC210004 27,746 27,746Emergency Solutions 14.231 E17MC210004 85,982 172,449 28,851 59,776 2,160Emergency Solutions 14.231 E18MC210004 72,935 72,144 791HOME 14.239 M14MC210201 60,798 363,215 185,587 116,830HOME 14.239 M15MC210201 11,554 135,758 65,061 64,143 5,000HOME 14.239 M16MC210201 34,758 567,338 433,073 110,537 11,030HOME 14.239 M17MC210201 2,603 118,563 116,060 100HOME 14.239 M18MC210201 106,317 22,059 87,031 2,773Housing Opp for Pers with AIDS (HOPWA) 14.241 KY-H17-0017-00 83,142 477,183 416,760 6,218 28,937Continuum of Care 14.267 KY0179L4I021600 2,172 26,327 24,155Continuum of Care 14.267 KY0193L4I021700 8,147 16,441 8,294

Total US Department of Housing and Urban Development 1,552,886 6,607,513 2,126,142 3,052,245 123,760

US Department of Justice:Direct Programs:

Police Confiscated Funds 16.001 NA (1,426,296) 474,308 337,553 (1,563,051)SCAAP 16.606 2013-AP-BX-0161 (944) 910 (34)SCAAP 16.606 2014-AP-BX-0607 (30,888) 11,342 (19,546)SCAAP 16.606 2015-AP-BX-0465 (42,100) 20,927 (21,173)SCAAP 16.606 2016-AP-BX-0337 (44,231) (44,231)SCAAP 16.606 2019-AP-BX-0086 30,869 (30,869)Cops Hire 16.710 2011ULWX0015 55,142 55,142Justice Assistance Grant 16.738 2015-DJ-BX-0335 (726) 726Justice Assistance Grant 16.738 2016-DJ-BX-0185 (14,171) (14,171)Justice Assistance Grant 16.738 2017-DJ-BX-0808 149,540 149,485 (55)Comprehensive Opioid Abuse Program (COAP) 16.838 2018-AR-BX-K059 22,082 22,082

Passed through Commonwealth of Kentucky:Office Justice Delinquency Prevention 16.540 2016-JF-FX-0029 6,545 10,907 4,362Lexington Police Victim Advocate Project 16.575 VOCA-2017-LFUCG-STRE-00039 4,324 15,066 10,742Lexington Police Victim Advocate Project 16.575 VOCA-2018-LFUCG-STRE-00030 11,101 11,101Underserved Minority Victim 16.575 VOCA-2017-LFUCG-STRE-00058 12,971 29,929 16,958Underserved Minority Victim 16.575 VOCA-2018-LFUCG-STRE-00087 42,243 68,101 25,858Sexual Assault Nurse Examiner (SANE) 16.588 VAWA-2017-LFUCG-ST-00531 3,953 27,228 23,275Sexual Assault Nurse Examiner (SANE) 16.588 VAWA-2018-LFUCG-ST-00614 4,409 10,373 5,964Street Sales (Confiscated Funds) 16.738 2017-JAG-LFUCG-STRE-01160 14,081 14,081Street Sales 16.738 2017-JAG-LFUCG-STRE-01160 49,599 64,455 9,766 24,622

Total US Department of Justice (1,476,421) 914,422 64,455 711,784 (1,614,604)

See Independent Auditors Report 129




Grantor/Program Title Number Grantor's Number July 1, 2018 Received Expenditures Expenditures June 30, 2019US Department of Transportation: Passed through Commonwealth of Kentucky:

Air Quality Planning 20.205 1700006017 62,611 62,611Air Quality Planning 20.205 SC-625-1900000323 70,492 101,200 30,708Armstrong Mill Sidewalks 20.205 PO2-628-1700004143 29,700 90,854 61,154Beaumont YMCA Trail Project 20.205 PO2-628-1700004155 5,000 10,280 7,280 2,000Bicycle and Pedestrian Planning 20.205 1700006017 17,967 17,967Bicycle and Pedestrian Planning 20.205 SC-625-1900000323 37,807 52,800 14,993Citation Trail 20.205 PO2-628-1700004156 38,459 79,759 35,439 (5,861)Clays Mill Road 20.205 C-03328686Clays Mill Road 20.205 PO2-625-1500002693 78,948 159,011 80,063CNG Fueling Station (Compressed Nat.Gas) 20.205 P02-628-1600005819 482,160 482,160Federal Highway Planning 20.205 1700005044 93,327 93,327Federal Highway Planning 20.205 SC-625-1900000307 322,473 392,000 69,527Fiber Optic Cable Installation 20.205 P02-628-1600004546 3,277 268,629 282,504 17,152Forbes Road 20.205 PO2-628-1700002506 251 251 18,220 18,220Four Side 20.205 PO2-628-1600005725 5,461 9,110 6,456 2,807Intelligent Transpor. System (ITS) 20.205 PO2-625-1700002191 362,723 107,036 255,687Intelligent Transpor. System (ITS) 20.205 SC-625-1700002191 767 478,623 477,856Legacy Trail Enhancements 20.205 PO2-625-1200003879 2,195 65,160 62,965Legacy Trail Phase III 20.205 PO2-628-1400005764 16,801 16,801Lexington Community Land Trust 20.205 PO2-625-1500000828 55,358 55,358Liberty Road/Todds Road 20.205 C-04073306 7,686 (7,686)W. Loudon Avenue Streetscape 20.205 PO2-628-1800002729 4,000 8,000 4,000Man O' War & Alumni Intersection Project 20.205 PO2-625-1400004868 23,199 23,199Man O' War & Richmond Intersection Project 20.205 PO2-625-1400004869 152,541 172,931 20,390Mercer Rd/Greendale Rd Turn lanes 20.205 PO2-628-1800001345 12,215 22,299 31,777 21,693Mobility Office 20.205 1700006017 100,681 100,681Mobility Office 20.205 SC-625-1900000323 31,525 122,000 90,475Newtown Pike 20.205 C-00343167 21,326 21,326Newtown Pike Supplement #1 20.205 C-00343167 696,833 696,833Newtown Pike Supplement #2 20.205 C-00343167 773,860 1,332,321 91,680 (466,781)Old Frankfort Pike Scenic Byway Viewing Area 20.205 PO2-628-1500003392 2,442 3,399 5,841Oxford Circle Sidewalks 20.205 P02-628-1700004160 2,100 4,678 2,578Polo Club Boulevard Project 20.205 PO2-625-1300001036 18,084 27,662 14,471 4,893Rose Street Bike Lanes 20.205 C-01099430Rosemont Garden Sidewalks 20.205 PO2-628-1700004171 7,540 7,540South Elkhorn Trail 20.205 PO2-628-1700004176 7,296 15,260 8,876 912Squires Road Sidewalks 20.205 PO2-628-1600003546 2,765 2,765Todds Road Sidewalks 20.205 PO2-628-1700004177 52,110 76,032 27,665 3,743Town Branch 20.205 PO2-628-1200004353 15,550 26,625 26,444 15,369Town Branch Commons Corridor-Zone 2 20.205 PO2-628-1600003719 63,874 130,941 69,775 2,708Town Branch Trail Commons-Midland Section 20.205 PO2-628-1600005544 38,201 362,054 350,466 26,613Town Branch Trail Crossing 20.205 PO2-628-1500004792 9,526 12,566 3,040Town Branch Trail Phase IV, V, VI 20.205 PO2-628-1500003706 35,959 42,391 212,049 205,617Transit Route Facilities Inventory 20.205 PO2-620-1700000432West Hickman Trail 20.205 PO2-628-1600005956 7,516 8,173 149,250 148,593Wilson Downing Sidewalks 20.205 PO2-628-1700004178 20,632 119,393 98,761Winchester/Liberty Intersection Improvements 20.205 PO2-628-1600003038 53,600 214,400 160,800MCSAP (Motor Carrier Safety Asst.Prog.) 20.218 No Number 10,767 25,156 14,389MCSAP2 (Motor Carrier Safety Asst.Prog.) 20.218 No Number 36,345 50,286 13,941Ticketing Aggressive Cars/Trucks (TACT) 20.218 No NumberTicketing Aggressive Cars/Trucks (TACT) 20.218 No Number 2,135 16,884 15,698 949Brighton Rail Trail Phase 4 20.219 RTP 484-13Fed Transit Admin Section 5303 20.505 P030217442 29,896 29,896Fed Transit Admin Section 5303 20.505 PO30217442 16,438 48,400 31,962Traffic Safety Supplement 20.600 PO2-625-18000010731 10,126 17,044 6,918Traffic Safety Supplement 20.600 SC-625-19000008211 31,386 47,457 16,071Traffic Safety Supplement 20.600 PO2-625-18000045321 2,684 42,984 40,300Traffic Safety Supplement 20.600 SC-625-19000015351 7,276 7,276Traffic Safety Occupant Protection Prog. 20.616 SC-625-19000009091 17,648 21,499 3,851Traffic Safety 20.616 PO2-625-18000009371 7,467 10,980 3,513Traffic Safety 20.616 SC-625-19000008141 17,833 22,305 4,472Town Branch Tiger 20.933 SC-628-1800005041 6,792 890,041 883,249

Total US Department of Transportation 2,702,257 5,435,246 0 4,881,113 2,148,124





Grantor/Program Title Number Grantor's Number July 1, 2018 Received Expenditures Expenditures June 30, 2019US Environmental Protection AgencyPassed through Commonwealth of Kentucky:

Bob O Link 66.458 A13-002 SWR 54,230 54,230Lower Cane Run WWS 66.458 A14-001 SWR 127,420 127,420Lower Griffin Gate Trunk 66.458 A17-003 SWRMarquis Ave 66.458 A13-015 SWRTown Branch Commons Phase I 66.458 A17-005 SWR 4,367,248 4,367,248Town Branch WWS 66.458 A13-015 SWRUK Trunk Sewer A 66.458 A13-015 SWR 11,000 11,000West Hickman Wet Weather Storage 66.458 A15-026 SWR 226,495 19,153,076 20,336,512 1,409,931Wolf Run Wet Weather Storage 66.458 A13-002 SWR 28,770 28,770

Total US Environmental Protection Agency 226,495 23,741,744 0 24,925,180 1,409,931

US Department of Health and Human Services:Direct Programs:

Substance Abuse & Mental Health Serv. 93.243 1H79SP080309-01 323,563 323,563Passed through Commonwealth of Kentucky:

Senior Citizens 93.044 AS-2017-2018 2,170 2,170Senior Citizens 93.044 AS-2018-2019 55,284 55,284Wellness Edge Program 93.325 90PRRC0001-01-01 15,765 15,765Refugee Targeted Assistance Program 93.584 257-107042-2018 9,504 17,090 7,586Home Network 93.597 2016-2017-PUBLIC-R (279,210) 290,883 11,673Home Network 93.597 2017-2018-PUBLIC-R (236,540) 46,950 (283,490)Home Network 93.597 2018-2019-PUBLIC-R 248,290 (248,290)Head Start Program 93.600 No Number 3,033 3,033Head Start Program 93.600 No Number 28,487 31,811 3,324

Total US Department of Health and Human Services (510,547) 393,718 0 734,396 (169,869)

US Department of Homeland Security Office of Domestic Preparedness:Direct Programs:

Assistance to Firefighters 97.044 EMW-2016-FO-04181 110,286 251,369 141,083Fire Prevention 97.044 EMW-2017-FP-00614 47,618 47,618

Passed through Commonwealth of Kentucky:Hazard Mitigation Grant Prog.(HMGP_EOC) 97.039 PON2-095-13000000082Hazard Mitigation Grant Prog.(HMGP_PLAN) 97.039 PON2-095-17000013341 31,593 53,494 23,042 1,141Hazard Mitigation Grant Prog.(Thompson Rd) 97.039 PON2-095-17000013341 52,196 52,196Chemical Stockpile Emergency (CSEPP) 97.040 PO2-095-16000047103 54,674 133,501 88,081 9,254Chemical Stockpile Emergency (CSEPP) 97.040 PO2-095-17000054304 121,400 222,399 178,881 77,882Chemical Stockpile Emergency (CSEPP) 97.040 SC-095-17000054303 143,677 346,841 203,164Emergency Management Assistance 97.042 PO2-095-18000015671 30,970 37,617 6,647Emergency Management Assistance 97.042 SC-095-19000009781 36,305 76,892 40,587State Homeland Bomb Squad 97.067 SC-094-1900001087 9,240 9,240State Homeland Police 97.067 PO2-094-18000022321 8,453 8,453State Homeland Personal Protection Equip. 97.067 PO2-094-18000025391 17,668 24,000 6,332State Homeland Fire 97.067 PO2-094-17000023251 39,200 39,200

Total US Dept. of Homeland Security Office of Domestic Preparedness 396,576 995,879 0 994,521 395,218

Total Federal Financial Assistance $3,602,158 $39,050,785 $2,190,597 $35,649,360 $2,391,330

Note: Per generally accepted accounting principles, grant revenues received but not earned with purpose restrictions only are recognized as revenues and fund balance in the financial statements.


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133

NONMAJOR ENTERPRISE FUNDS

Enterprise Funds are established to account for the acquisition, operation, and maintenance of the Government's facilities and services which are entirely or predominantly self-supported by user charges or where the Government has decided that periodic determination of revenues earned, expenses incurred, and net income is appropriate for capital maintenance, public policy, management control, accountability, and other purposes. The Right of Way program was established in 2003 to account for fees levied to monitor and manage public facilities located in public rights-of-way. The Extended School Program was established in 1994 to provide before and after school care for children in participating elementary and middle schools. The Enhanced 911 Fund was established in 1996 to account for the revenues and expenses of developing and operating an enhanced 911 system. The Central Kentucky Network Fund was established in 2014 to ensure the appropriate treatment of revenues or other monies received from jurisdictions participating in the Central Kentucky 911 Network. The Small Business Development Fund was established in 2000 to promote and assist the growth and development of business concerns. This program was previously administered by the Urban County Development Corporation, a component unit of the Government, which was dissolved in March 2000. The Public Parking Corporation was established in 1984 to account for the construction and operation of government-owned parking facilities.

Right of WayExtended School

Program

Prisoners' Account System

Enhanced 911 CKY Network

Small Business

Development

Public Parking

Corporation Total

ASSETSCurrent Assets:

Cash $2,003,225 $1,056,029 $0 $5,340,212 $324,118 $154,640 $503 $8,878,727Investments 1,456,216 16,749 1,472,965Receivables:

Other Receivables 53,941 259 161,992 46,850 35,867 298,909Less Allowance for Uncollectible Accounts (35,867) (35,867)

Inventories and Prepaid Expenses 12,867 3,133 16,000Total Current Assets 2,057,166 1,056,288 0 6,971,287 374,101 171,389 503 10,630,734

Noncurrent Assets:Land Improvements 10,000 10,000Buildings 7,514 7,514Vehicles, Equipment, and Furniture 107,245 103,481 2,746,570 2,957,296Intangibles 1,490,573 1,490,573Less Accumulated Depreciation (68,067) (102,595) (3,766,624) (3,937,286)

Total Noncurrent Assets 39,178 10,886 0 478,033 0 0 0 528,097Total Assets $2,096,344 $1,067,174 $0 $7,449,320 $374,101 $171,389 $503 $11,158,831

Deferred outflows of resources:Deferred Pension Amounts $160,918 $406,766 $0 $1,132,121 $0 $0 $0 $1,699,805Deferred Other Post Employment Benefit Amounts 52,616 132,994 370,111 555,721

Total Deferred Outflows of Resources 213,534 539,760 0 1,502,232 0 0 0 2,255,526Total Assets & Deferred Outflows of Resources $2,309,878 $1,606,934 $0 $8,951,552 $374,101 $171,389 $503 $13,414,357

LIABILITIESCurrent Liabilities:

Accounts, Contracts and Retainage Payable $2,341 $39,583 $0 $60,702 $342 $0 $0 $102,968Accrued Payroll 5,194 35,775 35,984 76,953Compensated Absences 6,858 1,592 42,121 50,571

Total Current Liabilities 14,393 76,950 0 138,807 342 0 0 230,492Noncurrent Liabilities:

Compensated Absences 6,858 51,470 42,121 100,449Unfunded Other Post Employment Benefit Liability 170,875 428,533 1,176,317 1,775,725Unfunded Pension Liability 584,597 1,466,099 4,024,423 6,075,119

Total Noncurrent Liabilities 762,330 1,946,102 0 5,242,861 0 0 0 7,951,293Total Liabilities $776,723 $2,023,052 $0 $5,381,668 $342 $0 $0 $8,181,785

Deferred inflows of resources:Deferred Pension Amounts $46,921 $117,673 $0 $323,011 $0 $0 $0 $487,605Deferred Other Post Employment Benefit Amounts 36,953 92,675 254,391 384,019

Total Deferred Inflows of Resources 83,874 210,348 0 577,402 0 0 0 871,624Total Liabilities & Deferred Inflows of Resources $860,597 $2,233,400 $0 $5,959,070 $342 $0 $0 $9,053,409

NET POSITIONNet Investment in Capital Assets $39,178 $10,887 $0 $478,035 $0 $0 $0 $528,100Restricted for:

Capital Projects Unrestricted (Deficits) 1,410,103 (637,353) 2,514,447 373,759 171,389 503 3,832,848Total Net Position $1,449,281 ($626,466) $0 $2,992,482 $373,759 $171,389 $503 $4,360,948

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF NET POSITION

NONMAJOR ENTERPRISE FUNDSJune 30, 2019


Right of Way

Extended School

Program

Prisoners' Account System Enhanced 911

CKY Network

Small Business

Development

Public Parking

Corporation Total

Operating RevenuesUser Charges $0 $0 $0 $0 $0 $0 $0 $0Fees 2,126,040 4,172,108 498,913 6,797,061License Fees and Permits 682,221 682,221Other 62 4,494 4,556

Total Operating Revenues 682,221 2,126,102 0 4,176,602 498,913 0 0 7,483,838

Operating ExpensesRight of Way 587,152 587,152Extended School Program 1,917,735 1,917,735Enhanced 911 4,426,308 4,426,308CKY Network 421,115 421,115Administration 231,281 231,281Depreciation 6,324 3,111 371,095 380,530

Total Operating Expenses 593,476 2,152,127 0 4,797,403 421,115 0 0 7,964,121

Operating Income (Loss) 88,745 (26,025) 0 (620,801) 77,798 0 0 (480,283)

Nonoperating Revenues (Expenses)Income on Investments 30,237 427 30,664

Total Nonoperating Revenues 0 0 0 30,237 0 427 0 30,664

88,745 (26,025) 0 (590,564) 77,798 427 0 (449,619)

Transfers In 0Transfers Out 4,420 11,084 23,083 (1,398,000) (1,359,413)Transfer of assets to Component Units 0Transfer of assets to LexTran 0

Change in Net Position 93,165 (14,941) 0 (567,481) 77,798 427 (1,398,000) (1,809,032)

Net Position, Beginning 1,356,116 (611,525) 627,876 3,559,963 295,961 170,962 1,398,503 6,797,856Net Position, Beginning - Restated (627,876) (627,876)Net Position, Ending $1,449,281 ($626,466) $0 $2,992,482 $373,759 $171,389 $503 $4,360,948

Income (Loss) Before Transfers

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

NONMAJOR ENTERPRISE FUNDSFor the Year Ended June 30, 2019


Rig

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00

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(Dec

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1,36

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294,

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$324

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$154

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136 See

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137

INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing on a cost-reimbursement basis of services provided by one department to other departments within the Government and outside agencies associated with the Government. Individual funds included in this fund type are as follows: The Health, Dental and Vision Care Insurance Fund accounts for the Government’s self-insurance programs for employee medical, dental and vision care benefits. The Insurance and Risk Management Fund accounts for the Government's self-insurance programs for workers' compensation, vehicle liability and physical, general liability and property damage coverage.

Health, InsuranceDental and and RiskVision Care Management Total

ASSETSCurrent Assets:

Cash $2,006,010 $30,387,206 $32,393,216Due from Other Funds 2,925,415 2,925,415Receivables 765 26,895 27,660Inventories and Prepaid Expenses 331,694 331,694

Total Current Assets $2,338,469 $33,339,516 $35,677,985

LIABILITIESCurrent Liabilities:

Accounts Payable $1,179,099 $77,367 $1,256,466Claims Payable:

Reported 12,384,245 12,384,245Incurred But Not Reported 1,159,370 14,364,786 15,524,156Total Current Liabilities 2,338,469 26,826,398 29,164,867 Total Liabilities $2,338,469 $26,826,398 $29,164,867

NET POSITIONUnrestricted $0 $6,513,118 $6,513,118


INTERNAL SERVICE FUNDSJune 30, 2019


Insuranceand Risk

Health Dental Vision Care Total Management Total

Operating RevenuesPremiums $33,085,968 $2,356,858 $189,510 $35,632,336 $6,838,834 $42,471,170

Total Operating Revenues 33,085,968 2,356,858 189,510 35,632,336 6,838,834 42,471,170

Operating ExpensesClaims and Benefit Payments 29,975,564 2,191,999 193,000 32,360,563 9,728,795 42,089,358Operating Supplies and Expense 3,271,773 3,271,773 3,271,773

Total Operating Expenses 33,247,337 2,191,999 193,000 35,632,336 9,728,795 45,361,131

Operating Income (Loss) (161,369) 164,859 (3,490) 0 (2,889,961) (2,889,961)

Change in Net Position (161,369) 164,859 (3,490) 0 (2,889,961) (2,889,961)

Net Position, Beginning 375,032 (378,384) 3,352 0 9,403,079 9,403,079

Net Position, Ending $213,663 ($213,525) ($138) $0 $6,513,118 $6,513,118

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF REVENUES, EXPENSES, & CHANGES IN FUND NET POSITION

INTERNAL SERVICE FUNDSFor the Year Ended June 30, 2019

Health, Dental and Vision Care Insurance


Health, InsuranceDental and and RiskVision Care Management Total

Increase (Decrease) in Cash and Cash Equivalents:

Cash Flows from Operating Activities:Receipts from Employees and Other Sources $35,632,336 $0 $35,632,336Receipts from Interfund Services Provided 959 23,114,902 23,115,861Refunds from/(Payments to) Suppliers (2,837,493) 4,333 (2,833,160)Payments for Claims (32,166,349) (7,873,504) (40,039,853)

Net Cash Provided by Operating Activities 629,453 15,245,731 15,875,184

Net Increase in Cash and Cash Equivalents 629,453 15,245,731 15,875,184

Cash at Beginning of Year 1,376,557 15,141,475 16,518,032

Cash at End of Year $2,006,010 $30,387,206 $32,393,216

Reconciliation of Operating Loss to Net CashUsed In Operating Activities:

Operating Income (Loss) $0 ($2,889,961) ($2,889,961)

Adjustments to Reconcile Operating Incometo Net Cash Provided by Operating Activities:Decrease in Assets:

Due from Other Funds 16,269,899 16,269,899Other Receivables 959 6,169 7,128Inventories and Prepaid Expenses 7,140 7,140

Increase in Liabilities:Accounts Payable 427,140 4,333 431,473Claims Payable 194,214 1,855,291 2,049,505

Total Adjustments 629,453 18,135,692 18,765,145

Net Cash Provided by Operating Activities $629,453 $15,245,731 $15,875,184

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDSFor the Year Ended June 30, 2019


141

FIDUCIARY FUNDS

Fiduciary Funds are used to account for assets held by the Government in a trustee capacity or as an agent for individuals, private organizations, other governmental units or other funds. These include pension trust, expendable trust, and agency funds. Individual funds included in this fund type are as follows:

INVESTMENT TRUST FUND

The Sanitary Sewer Investment Trust is an investment trust fund. In fiscal year 2014, the Government defeased all outstanding debt and entered into a new Sewer indenture agreement. The new indenture provides that the gross income and revenues of the System first be used to pay operating and maintenance expenses of the System. Net Revenues of the System are deposited into the Bond Account, which is held by a Trustee.

CUSTODIAL FUNDS

The Neighborhood Sewer Projects Fund is a custodial fund that accounts for the collection of special assessments and debt service payments on financing for neighborhood capital projects. The Juvenile & Adult Probation Fund accounts for funds collected by the divisions of Youth Services and Detention Services from juvenile and adult offenders and disbursed to victims in accordance with court decrees and funds collected from and disbursed for inmates on work release. The Property & Evidence Fund accounts for monies collected from prisoners. Once the case has been adjudicated through the court system, money is distributed as ordered. The Domestic Relations Fund accounts for the child support payments collected by the Government from non-custodial parents and disbursed to custodial parents. The Representative Payee Fund accounts for funds managed by the Government on behalf of adults who are unable to manage their own money in order to prevent the exploitation, abuse, and neglect of these citizens. The Prisoners’ Account System was transferred to the Government in 1994 and accounts for the operations of the commissary at the Fayette County Detention Center.

Sewer

ASSETSCash and Cash Equivalents $28,704,846

Total Assets $28,704,846

NET POSITIONNet position restricted for pool participants $28,704,846

For the Year Ended June 30, 2019Investment Trust Funds

Statement of Net Position

142

Sewer


Employer $10,166,059Total Contributions 10,166,059

Investment Income:Interest 630,076

Total Investment Income 630,076Less Investment Expense 2,400

Net Investment Income 627,676

Total Additions 10,793,735

DEDUCTIONSBenefit Payments 11,359,028

Total Deductions 11,359,028

Net Decrease (565,293)

Net Position, Beginning 0Adjustment to Opening Fund Balance (Note 2.D.) 29,270,139

Fund Balances, Beginning - Restated 29,270,139Net Position, Ending $28,704,846

STATEMENT OF CHANGES IN NET POSITIONInvestment Trust Funds


143

Dom

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$330

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$714

$25,

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$1,9

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$246

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$248

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$0$1

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3,20

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$764

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$2,4

44,3

30

STA

TEM

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144

Dom

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$0$3

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$3,3

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247,

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406,

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653,

205

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, Beg

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314,

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$764

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$2,4

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STA

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145

146

NONMAJOR COMPONENT UNITS The Lexington Transit Authority is authorized to promote and develop mass transportation, including acquisition, operation, and extension of the existing mass transit system. The Lexington Public Library provides educational, informational, and recreational services to Lexington and Fayette County through circulating and reference materials. The Lexington Convention and Visitors Bureau promote recreational, convention, and tourist activity in Lexington and Fayette County.

Lexington Lexington Lexington Total NonmajorTransit Public Convention and Component

Authority Library Visitors Bureau UnitsASSETSCash $12,095,657 $8,440,510 $732,723 $21,268,890Investments 5,031,034 5,031,034Receivables:

Accounts Receivable 435,084 157,262 592,346Other 101,272 24,906 126,178

Due from Primary Government 1,474,552 1,474,552Due from Other Governments 4,127,370 4,127,370Inventories and Prepaid Expenses 673,623 123,493 149,749 946,865Restricted Current Assets:

Cash 1,154,162 161,472 763 1,316,397Investments 368,722 3,351,090 3,719,812

Capital Assets:Non-depreciable 4,578,833 5,051,757 22,602 9,653,192Depreciable (Net) 34,032,366 19,682,003 1,949,337 55,663,706

Other Assets 8,355,000 8,355,000

Total Assets $65,553,367 $38,883,897 $7,838,078 $112,275,342

DEFERRED OUTFLOWS OF RESOURCESDeferred Pension Amounts $2,322,983 $3,298,452 $1,206,632 $6,828,067Deferred Other Post Employment Benefit Amounts

on pension plan investments 1,128,018 388,357 1,516,375Deferred Amount on Note Payable 3,372,502 3,372,502

Total Deferred Outflows of Resources 2,322,983 4,426,470 4,967,491 11,716,944Total Assets and Deferred Outflows of Resources $67,876,350 $43,310,367 $12,805,569 $123,992,286

LIABILITIESAccounts, Contracts Payable and Accrued Liabilities $1,009,733 $1,328,603 $306,226 $2,644,562Interest Payable 138 138Unearned Revenue and Other 501 763 1,264Non-Current Liabilities:

Due Within One Year:Compensated Absences 148,821 98,648 247,469Bonds and Notes Payable 939,334 347,768 747,502 2,034,604

Due in More Than One Year:Compensated Absences 335,596 335,596Bonds and Notes Payable 17,578,078 8,300,490 2,625,000 28,503,568

Unfunded Other Post Retirement Benefit Liability 3,914,916 1,039,881 4,954,797

Unfunded Pension Liability 1,102,712 13,429,548 3,567,213 18,099,473

Total Liabilities $21,114,274 $27,321,964 $8,385,233 $56,821,471

DEFERRED INFLOWS OF RESOURCESDeferred Pension Amounts $1,808,400 $1,196,111 $260,867 $3,265,378Deferred Other Post Employment Benefit Amounts 769,894 197,178 967,072

Total Deferred Inflows of Resources 1,808,400 1,966,005 458,045 4,232,450Total Liabilities and Deferred Inflows of Resources $22,922,674 $29,287,969 $8,843,278 $61,053,921

NET POSITIONNet Investment in Capital Assets $21,247,949 $16,085,502 $1,971,940 $39,305,391Restricted for:

Governmental and Program Funds 497,037 497,037Unrestricted 23,705,727 (2,560,141) 1,990,351 23,135,937

Total Net Position $44,953,676 $14,022,398 $3,962,291 $62,938,365


NONMAJOR COMPONENT UNITSJune 30, 2019


Tota

lO

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ting

Cap

ital

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8,46

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148

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s:

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s$1

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$44,

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For

the

Yea

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Jun

e 30

, 201

9

See

Inde

pend

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udito

rs R

epor

t

STATISTICAL SECTION

149

The Lexington-Fayette Urban County Government’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the Government’s overall financial health. Financial Trends: Tables 1 – 6

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

Revenue Capacity: Tables 7 – 12

These schedules contain information to help the reader assess the Government’s most significant local revenue sources.

Debt Capacity: Tables 13 – 17

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

Demographic & Economic Indicators: Tables 18 – 21

These schedules offer demographic and economic indicators to help the reader understand the environment within which the Government’s financial activity takes place.

Operating Information: Tables 22 – 24

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

TABL

E 1

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Gov

ernm

enta

l Act

iviti

esN

et In

vestm

ent i

n Ca

pita

l Ass

ets

$920

,938

,945

$921

,236

,876

$899

,350

,344

$877

,691

,469

$860

,074

,409

$838

,877

,310

$813

,823

,945

$752

,686

,501

$718

,483

,933

$667

,270

,316

Restr

icte

d(3

1,49

4,18

1)32

,640

,718

20,2

89,1

3126

,895

,407

22,0

45,3

1434

,719

,227

58,8

84,9

3061

,892

,472

69,3

45,6

8767

,240

,794

Unr

estri

cted

(Def

icit)

(110

,023

,238

)(9

8,71

4,27

4)(9

4,63

8,12

1)(8

3,11

2,93

9)(3

50,3

53,8

04)

(370

,433

,940

)(4

03,1

66,7

99)

(741

,550

,665

)(7

66,0

27,8

07)

Tota

l gov

ernm

enta

l act

iviti

es n

et p

ositi

on88

9,44

4,76

484

3,85

4,35

682

0,92

5,20

180

9,94

8,75

579

9,00

6,78

452

3,24

2,73

350

2,27

4,93

541

1,41

2,17

446

,278

,955

(31,

516,

697)

Busin

ess-

type

Act

iviti

esN

et In

vestm

ent i

n Ca

pita

l Ass

ets

239,

666,

463

209,

276,

568

217,

434,

369

217,

313,

258

222,

913,

279

227,

825,

104

231,

848,

112

235,

845,

376

247,

162,

736

275,

607,

655

Restr

icte

d35

,249

,098

50,6

37,3

6057

,712

,759

66,1

94,8

0368

,209

,300

60,0

86,9

0669

,892

,072

77,8

40,1

8674

,759

,178

15,4

50,6

19U

nres

trict

ed (D

efic

it)14

,702

,006

33,0

23,6

6329

,435

,424

27,4

29,3

6233

,237

,351

36,1

79,9

7138

,061

,916

41,1

69,4

8839

,300

,274

54,8

67,5

55To

tal b

usin

ess-

type

act

iviti

es n

et p

ositi

on28

9,61

7,56

729

2,93

7,59

130

4,58

2,55

231

0,93

7,42

332

4,35

9,93

032

4,09

1,98

133

9,80

2,10

035

4,85

5,05

036

1,22

2,18

834

5,92

5,82

9

Prim

ary

Gov

ernm

ent

Net

Inve

stmen

t in

Capi

tal A

sset

s1,

160,

605,

408

1,13

0,51

3,44

41,

116,

784,

713

1,09

5,00

4,72

71,

082,

987,

688

1,06

6,70

2,41

41,

045,

672,

057

988,

531,

877

965,

646,

669

942,

877,

971

Restr

icte

d3,

754,

917

83,2

78,0

7878

,001

,890

93,0

90,2

1090

,254

,614

94,8

06,1

3312

8,77

7,00

213

9,73

2,65

814

4,10

4,86

582

,691

,413

Unr

estri

cted

(Def

icit)

14,7

02,0

06(7

6,99

9,57

5)(6

9,27

8,85

0)(6

7,20

8,75

9)(4

9,87

5,58

8)(3

14,1

73,8

33)

*(3

32,3

72,0

24)

(361

,997

,311

)(7

02,2

50,3

91)

**(7

11,1

60,2

52)

Tota

l prim

ary

gove

rnm

ent n

et p

ositi

on$1

,179

,062

,331

$1,1

36,7

91,9

47$1

,125

,507

,753

$1,1

20,8

86,1

78$1

,123

,366

,714

$847

,334

,714

$842

,077

,035

$766

,267

,224

$407

,501

,143

$314

,409

,132

* In

201

5, th

e G

over

nmen

t im

plem

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d G

ASB

Sta

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o. 6

8 w

hich

revi

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the

repo

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for i

ts lia

bilit

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late

d to

pen

sions

. **

In 2

018,

the

Gov

ernm

ent i

mpl

emen

ted

GA

SB S

tate

men

t No.

74

whi

ch re

vise

d th

e re

porti

ng fo

r its

liabi

lity

rela

ted

to o

ther

pai

d em

ploy

ee b

enef

its (O

PEB)

.

150

Sour

ce:

Dep

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f Fin

ance

, Lex

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Cou

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LEX

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NM

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NET

PO

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ON

LAST

TEN

FIS

CAL

YEA

RS

TABL

E 2

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Expe

nses

Gov

ernm

enta

l Act

iviti

es:

Adm

inist

rativ

e Se

rvic

es$1

,299

,382

$1,3

86,0

40$2

1,14

3,48

0$1

1,76

1,05

3$5

,342

,699

$7,4

33,4

87$7

,800

,854

$9,5

78,1

89$1

0,33

2,45

3$1

0,12

4,06

2Ch

ief D

evel

opm

ent O

ffice

r47

0,01

862

0,66

519

2,55

551

3,85

42,

074,

348

207,

793

263,

297

1,20

7,70

9Co

mm

unity

Cor

rect

ions

30,8

94,2

6131

,104

,781

31,2

86,3

6532

,631

,937

34,0

00,9

3730

,066

,104

30,8

14,4

3233

,771

,433

40,7

48,8

2642

,468

,842

Envi

ronm

enta

l Qua

lity

21,5

16,0

3423

,500

,067

Envi

ronm

enta

l Qua

lity

& P

ublic

Wor

ks80

,559

,723

83,8

78,5

3745

,339

,718

54,9

33,9

1260

,134

,890

61,2

70,0

3165

,541

,170

64,8

82,9

01Fi

nanc

e24

,047

,223

28,5

15,6

5519

,357

,661

14,7

44,0

8716

,726

,346

14,0

49,3

1939

,135

,165

49,3

93,3

9836

,669

,013

36,3

11,2

39Fi

re &

Em

erge

ncy

Serv

ices

63,1

16,0

0067

,106

,441

66,4

13,0

1562

,781

,239

67,6

89,6

8256

,832

,342

66,8

53,0

5384

,838

,719

92,8

98,3

1089

,329

,598

Gen

eral

Gov

ernm

ent

22,7

26,5

3724

,197

,239

22,9

85,0

4623

,692

,990

26,9

73,5

3725

,480

,664

30,1

80,9

1745

,598

,791

24,0

40,0

2145

,808

,696

Gen

eral

Ser

vice

s**

14,6

29,2

3814

,242

,698

10,0

41,7

0910

,898

,533

10,5

51,1

6211

,827

,132

12,4

86,4

0122

,964

,722

13,4

42,5

2512

,376

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Hea

lth, D

enta

l and

Visi

on In

sura

nce

26,7

11,4

9234

,755

,417

26,2

11,4

5725

,006

,634

24,8

93,5

4525

,000

,892

22,6

32,7

2626

,894

,758

27,7

63,2

9828

,505

,869

Info

rmat

ion

Tech

nolo

gy**

9,16

1,67

79,

713,

226

6,98

3,02

98,

401,

242

9,46

4,13

111

,174

,379

11,0

11,8

8812

,247

,559

Law

9,30

1,24

910

,227

,268

3,49

7,48

34,

006,

240

3,81

1,86

72,

650,

481

2,10

9,02

55,

652,

482

2,60

2,30

42,

886,

923

Park

s & R

ecre

atio

n18

,320

,506

19,0

64,2

9819

,386

,251

19,6

53,6

7719

,693

,483

18,8

54,5

2621

,010

,506

23,3

75,4

8624

,127

,163

24,7

99,1

78

Plan

ning

, Pre

serv

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n, &

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767,

295

47,3

43,9

8042

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53,7

76,2

2445

,359

,659

46,2

17,4

4246

,408

,689

Polic

e70

,694

,372

71,7

14,4

1568

,164

,371

69,9

45,3

2269

,822

,219

56,4

18,4

1664

,145

,155

74,4

36,6

0094

,799

,943

87,2

25,3

35Pu

blic

Saf

ety*

*11

,259

,687

11,1

62,7

6513

,042

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14,6

66,4

3710

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,283

12,5

93,4

7912

,560

,199

14,7

59,6

3114

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,489

14,6

32,4

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63,6

71,4

36So

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10,6

72,8

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780,

945

10,1

94,7

4510

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10,9

64,0

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13,0

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1114

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10,6

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Tota

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8,04

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5,59

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3,67

3,19

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sines

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41,4

53,3

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40,1

24,3

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43,6

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8741

,207

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44,2

71,1

2550

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53,3

54,2

3963

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Publ

ic F

acili

ties

10,8

06,2

6710

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10,3

33,3

209,

419,

886

8,89

5,50

78,

829,

979

9,59

6,10

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542,

566

3,96

2,01

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071,

987

4,79

9,38

2Ri

ght o

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313,

383

312,

770

298,

896

284,

470

308,

683

280,

214

336,

415

493,

872

529,

580

593,

476

Exte

nded

Sch

ool P

rogr

am2,

456,

874

2,20

7,31

02,

339,

148

2,19

8,55

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1,35

92,

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2,02

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421,

523

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7,13

91,

373,

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1,39

3,54

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393

1,25

3,42

31,

716,

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3,00

2,16

42,

930,

224

En

hanc

ed 9

113,

634,

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3,08

3,80

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2,93

0,37

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8,37

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313

4,17

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7,40

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4484

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2,76

326

6,24

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ater

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lity

4,52

8,40

36,

280,

081

9,18

2,66

98,

308,

501

9,13

9,30

28,

618,

921

11,2

90,9

4512

,062

,937

13,6

18,6

3213

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Tota

l Bus

ines

s-Ty

pe A

ctiv

ities

72,2

41,1

8773

,957

,704

72,7

73,7

3467

,744

,654

74,9

90,8

0470

,580

,846

79,9

03,2

4386

,838

,220

89,6

59,5

4996

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,084

Tota

l Prim

ary

Gov

ernm

ent

$480

,289

,060

$508

,123

,948

$477

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,214

$469

,110

,250

$488

,663

,997

$462

,132

,665

$540

,558

,681

$624

,486

,060

$624

,526

,571

$646

,759

,856

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

CHA

NG

ES IN

NET

PO

SITI

ON

LAST

TEN

FIS

CAL

YEA

RS(A

ccru

al B

asis

of A

ccou

ntin

g)

151

2010

2011

2012

2013

2014

2015

2016

2017

2018

2018

Prog

ram

Rev

enue

sG

over

nmen

tal A

ctiv

ities

:A

dmin

istra

tive

Serv

ices

$0$1

,000

$1,6

03,4

53$5

59,0

50$3

67,3

63$3

51,1

58$4

98,6

15$7

69,5

05$2

,123

,003

$395

,756

Chie

f Dev

elop

men

t Offi

cer

6,28

176

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2,50

06,

569

9,15

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Com

mun

ity C

orre

ctio

ns6,

319,

484

7,42

9,35

17,

707,

225

8,28

6,56

59,

161,

315

8,57

4,89

29,

330,

723

9,26

3,55

49,

309,

583

10,4

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78En

viro

nmen

tal Q

ualit

y1,

850,

487

2,40

6,99

7En

viro

nmen

tal Q

ualit

y &

Pub

lic W

orks

2,91

2,91

72,

757,

405

2,68

1,97

73,

140,

243

2,48

5,45

43,

113,

988

3,00

5,64

43,

180,

175

Fina

nce

3,80

7,07

73,

145,

043

2,51

1,14

22,

413,

363

3,35

8,78

11,

912,

603

472,

126

55,4

0146

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945

9,93

0Fi

re &

Em

erge

ncy

Serv

ices

6,19

1,91

36,

478,

108

7,34

0,94

66,

952,

394

7,03

6,02

98,

211,

753

9,21

0,66

86,

422,

785

6,81

7,19

28,

178,

353

Gen

eral

Gov

ernm

ent

13,5

41,1

2315

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15,0

86,3

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17,0

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Gen

eral

Ser

vice

s**

113,

498

97,8

9863

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28,8

274,

155

97,9

7118

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1,70

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4,13

9H

ealth

, Den

tal,

and

Visi

on26

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34,7

55,4

1726

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25,0

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26,8

94,7

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69In

form

atio

n Te

chno

logy

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20,8

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3,82

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981

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3,37

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18,2

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36,9

4449

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rks &

Rec

reat

ion

4,69

1,53

34,

258,

091

4,81

0,53

54,

156,

325

3,86

9,99

04,

327,

985

4,40

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14,

333,

455

4,32

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483,

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Pl

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rese

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& D

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82,

709,

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3,11

9,96

93,

114,

354

3,13

4,06

43,

100,

837

Polic

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2,40

2,84

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342

1,94

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72,

039,

209

1,64

0,75

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1,71

7,73

92,

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69,5

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2373

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Publ

ic W

orks

5,77

0,60

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088,

338

Soci

al S

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8,47

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1,76

6,79

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123

1,70

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1,66

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586,

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1,86

4,27

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Ope

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g G

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s & C

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87,4

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13,1

46,8

2210

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11,5

96,2

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pita

l Gra

nts &

Con

tribu

tions

10,4

34,5

997,

078,

729

8,31

6,23

66,

272,

539

9,20

0,57

28,

190,

685

8,31

9,31

56,

269,

038

5,71

8,46

35,

188,

577

Tota

l Gov

ernm

enta

l Act

iviti

es10

4,97

4,78

810

5,54

7,18

496

,078

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98,5

73,4

6698

,840

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100,

429,

782

96,1

93,3

8995

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96,7

43,0

8710

1,63

3,04

3Bu

sines

s-Ty

pe A

ctiv

ities

:Ch

arge

s for

Ser

vice

sSa

nita

ry S

ewer

Sys

tem

47,4

70,3

0548

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47,2

87,7

9152

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50,4

80,0

4952

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58,3

94,7

1963

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64,4

51,2

9375

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,739

Publ

ic F

acili

ties

6,40

5,53

17,

157,

088

7,15

6,66

65,

830,

285

6,37

5,79

46,

405,

783

6,98

7,55

87,

303,

362

6,14

5,35

65,

949,

941

Publ

ic P

arki

ng1,

203,

102

859,

874

977,

414

4,56

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5

Land

fill

8,24

0,76

27,

203,

610

7,18

3,61

16,

845,

329

7,06

4,98

97,

211,

864

7,05

0,93

77,

060,

342

7,02

8,05

07,

173,

603

Righ

t of W

ay47

9,01

248

3,19

641

9,67

639

2,46

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0,81

247

5,12

649

5,49

070

3,95

965

6,34

468

2,22

1Ex

tend

ed S

choo

l Pro

gram

2,09

7,14

52,

038,

391

2,33

8,24

32,

379,

751

2,20

2,17

12,

229,

896

2,28

9,08

91,

904,

620

2,06

0,46

32,

126,

102

Priso

ners

' Acc

ount

Sys

tem

1,91

5,91

01,

121,

799

1,52

4,12

71,

619,

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2,37

2,28

51,

227,

415

1,62

1,11

03,

146,

187

3,16

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6

Enha

nced

911

4,06

9,02

73,

749,

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3,99

9,65

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517,

634

4,27

3,10

63,

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4,12

6,86

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429,

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4,54

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176,

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Net

wor

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140,

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51,7

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0,73

531

9,41

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8,91

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ater

Qua

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5,58

1,10

411

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12,0

95,5

1412

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13,1

19,5

2413

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13,6

61,9

1113

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14,0

82,2

8614

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Tota

l Bus

ines

s-Ty

pe A

ctiv

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77,5

52,9

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86,5

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tal P

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1,30

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8,40

9,46

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1,63

6,87

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9,19

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2,98

6,22

8

Net

(Exp

ense

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Gov

ernm

enta

l Act

iviti

es(3

03,0

73,0

85)

(328

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)(3

09,0

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)(3

14,8

32,1

98)

(291

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)(3

64,4

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49)

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)(4

38,1

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35)

(448

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pe A

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5,31

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204,

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11,5

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15,5

40,2

4715

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12,7

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Tota

l Prim

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Gov

ernm

ent

(297

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)(3

19,4

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36)

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84,6

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39)

(303

,302

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)(2

73,7

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01)

(348

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)(4

26,6

50,0

05)

(425

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)(4

33,7

73,6

28)

Gen

eral

Rev

enue

s and

Oth

er C

hang

es in

Net

Pos

ition

Gov

ernm

enta

l Act

iviti

es:

Prop

erty

Tax

es51

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52,5

48,1

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53,5

97,3

1154

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58,6

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es a

nd P

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its21

5,19

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4,39

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623

0,58

0,20

123

8,92

4,15

824

8,27

1,27

026

5,59

6,25

327

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028

8,77

1,66

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4,62

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3,56

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rant

s & C

ontri

butio

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ot R

estri

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to S

peci

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mun

ity D

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opm

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lock

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nt2,

250,

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2,17

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2,17

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263,

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1,94

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341,

333

602,

208

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9,38

52,

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Sale

of A

sset

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242

311,

259

283,

406

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1,73

7,85

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249,

888

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71,4

47)

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(313

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210,

302

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over

nmen

tal A

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582,

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282,

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435

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431,

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324,

496,

198

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750,

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375,

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Busin

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Type

Act

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es:

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me

on In

vestm

ents

96,2

8554

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25)

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l Bus

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pe a

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5(5

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tal P

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y G

over

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6,32

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3,90

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4

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14,5

82,7

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r Per

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ustm

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ernm

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(1

2,65

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r Per

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usin

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Type

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tal P

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over

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t($

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36($

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lann

ing,

Pre

serv

atio

n, &

Dev

elop

men

t was

add

ed in

FY

13 a

nd w

as p

revi

ously

incl

uded

with

Adm

inist

ratio

n.**

In F

Y16

the

Chie

f Inf

orm

atio

n O

ffice

r was

cha

nged

to th

e D

epar

tmen

t of I

nfor

mat

ion

Tech

nolo

gy.

In a

dditi

on, t

he D

ivisi

on o

f Sec

urity

was

mov

ed fr

om th

e D

epar

tmen

t of G

ener

al S

ervi

ces t

o th

e D

epar

tmen

t of P

ublic

Saf

ety.

152

(Acc

rual

Bas

is of

Acc

ount

ing)

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

CHA

NG

ES IN

NET

PO

SITI

ON

LAST

TEN

FIS

CAL

YEA

RS (c

ontd

.)

TABL

E 3

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Gen

eral

Fun

dRe

serv

ed$1

2,01

9,89

3$0

$0$0

$0$0

$0$0

$0$0

Unr

eser

ved

Des

igna

ted

for E

cono

mic

Con

tinge

ncy

14,4

70,5

69D

esig

nate

d fo

r Pay

roll

2,92

3,16

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ndes

igna

ted

2,10

6,48

3N

onsp

enda

ble

1,49

3,73

71,

461,

447

1,40

5,19

81,

627,

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2,06

4,12

72,

102,

194

2,34

3,58

52,

480,

783

2,29

0,43

0Re

stric

ted

for:

Publ

ic S

afet

y19

8,17

539

7,68

860

2,80

781

2,35

01,

026,

212

Ener

gy Im

prov

emen

t Pro

ject

s40

8,22

763

6,87

455

2,98

955

2,01

167

6,21

859

5,07

562

8,99

5Co

mm

itted

for:

Gen

eral

Gov

ernm

ent

3,93

1,00

06,

612,

684

11,2

49,1

4611

,606

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13,3

53,5

125,

941,

545

3,64

0,12

74,

228,

784

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nom

ic S

tabi

lizat

ion

18,2

00,7

3818

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23,2

90,4

6625

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29,6

85,8

5130

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,015

,454

35,3

45,1

81A

ssig

ned

to:

Cap

ital P

roje

cts

6,97

2,22

48,

060,

560

8,13

7,25

120

,449

,635

13,9

24,9

69

4,91

3,89

6

1,

660,

938

2,31

8,36

1

G

ener

al G

over

nmen

t11

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,075

10,3

25,0

0012

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14

,000

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15

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16

,145

,000

U

rban

Ser

vice

s2,

500,

000

Una

ssig

ned

562,

360

3,26

5,87

24,

309,

677

4,17

6,64

64,

273,

341

4,78

9,65

85,

419,

629

5,75

7,98

75,

931,

602

Tota

l31

,520

,114

24,1

87,8

3544

,265

,589

54,4

11,8

1263

,751

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83,3

31,0

5087

,007

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65,3

06,1

8664

,362

,714

67,9

14,5

65

Urb

an S

ervi

ces

Rese

rve d

8,84

2,24

5D

esig

nate

d fo

r Pay

roll

154,

622

Und

esig

nate

d16

,986

,960

Non

spen

dabl

e4,

031

604

175

11,1

122,

735

2,60

322

,900

62,5

4394

,468

Restr

icte

d fo

r: U

rban

Ser

vice

Pro

ject

s20

,420

,741

22,7

67,5

7028

,631

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29,8

55,8

6831

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,398

30,3

68,7

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28,1

07,7

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Ene

rgy

Impr

ovem

ent P

roje

cts

10,3

8313

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2,93

02,

930

5,86

011

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2,93

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tal

25,9

83,8

2720

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22,7

68,1

7428

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29,8

80,2

9431

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30,3

74,2

4723

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28,1

82,0

6225

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All

Oth

er G

over

nmen

tal F

unds

Rese

rved

12,7

02,6

65U

ndes

igna

ted,

repo

rted

in:

Non

spen

dabl

e36

96,

604

22,3

7677

,859

106,

066

2,68

0

Re

stric

ted

for:

Pub

lic W

orks

10,3

57,1

768,

238,

721

9,03

2,95

311

,534

,007

8,20

2,68

86,

271,

461

5,61

8,68

27,

765,

585

8,23

3,22

8 P

ublic

Saf

ety

3,11

7,40

22,

812,

852

1,65

9,37

81,

569,

569

1,52

9,73

01,

460,

930

1,41

8,50

01,

253,

572

1,42

9,92

6 S

peci

al R

even

ue F

unds

13,7

42,0

70 C

apita

l Pro

ject

s 36

,272

,857

32,0

94,2

5719

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,031

25,2

14,6

9720

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33,7

54,2

5357

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,163

41,1

01,2

0047

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43,8

74,8

48 G

rant

s Pro

ject

s11

6,48

554

6,46

11,

262,

100

1,26

2,10

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262,

100

210,

880

232,

138

241,

043

250,

200

259,

010

Com

mitt

ed fo

r: G

ener

al G

over

nmen

t41

0,54

444

7,60

5A

ssig

ned

to:

Gen

eral

Gov

ernm

ent

445,

690

1,72

1,08

41,

327,

774

720,

741

457,

767

390,

941

244,

977

Una

ssig

ned

(974

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)(3

70,1

03)

(82,

433)

(36,

392)

To

tal

$62,

834,

077

$45,

551,

725

$31,

424,

810

$37,

637,

194

$36,

297,

645

$45,

131,

391

$66,

305,

680

$48,

837,

192

$56,

668,

333

$54,

041,

989

LFU

CG e

lect

ed to

impl

emen

t GA

SB S

tate

men

t No.

54,

Fun

d Ba

lanc

e Re

porti

ng a

nd th

e G

over

nmen

tal F

und

Type

Def

initi

ons,

in fi

scal

yea

r 201

1.

This

state

men

t allo

ws t

he e

ntity

to a

pply

pro

spec

tivel

y in

the

statis

tical

sect

ion.

The

refo

re, L

FUCG

has

not

recl

assif

ied

prio

r inf

orm

atio

n.

153

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

FUN

D B

ALA

NCE

S, G

OV

ERN

MEN

TAL

FUN

DS

LAST

TEN

FIS

CAL

YEA

RS(M

odifi

ed A

ccru

al B

asis

of A

ccou

ntin

g)

TABL

E 4

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Rev

enue

sLi

cens

es a

nd P

erm

its$2

19,5

86,2

64$2

28,8

16,4

52$2

35,2

26,1

17$2

43,6

55,2

98$2

53,5

81,9

59$2

71,3

54,4

43$2

81,2

40,6

62$2

94,9

52,5

24$3

10,3

78,7

90$3

10,1

16,8

17Ta

xes

51,1

43,1

9952

,548

,109

52,8

60,8

4053

,597

,311

54,7

59,1

9955

,241

,837

56,7

51,0

9058

,636

,843

62,0

72,3

3364

,573

,949

Char

ges f

or S

ervi

ces

21,1

82,0

0524

,158

,224

26,2

62,8

2226

,365

,849

26,7

97,0

8728

,036

,635

29,1

75,2

0027

,222

,202

27,3

27,0

7429

,687

,509

Fine

s and

For

feitu

res

268,

459

220,

449

176,

319

311,

930

258,

112

235,

626

222,

201

234,

820

185,

061

231,

863

Inte

rgov

ernm

enta

l41

,088

,818

33,6

22,6

6635

,125

,072

32,3

65,4

9138

,199

,741

35,0

10,7

1638

,232

,668

28,7

19,9

1627

,179

,190

29,1

63,8

62Ex

actio

ns60

1,99

396

,613

129,

603

532,

410

486,

643

2,07

4,47

731

7,37

051

4,33

714

8,44

724

3,19

8G

rant

Mat

ch2,

619,

353

Prop

erty

Sal

es49

9,11

92,

681,

463

453,

540

462,

570

181,

052

529,

770

585,

626

1,76

6,59

333

2,63

554

2,86

2In

com

e on

Inve

stmen

ts30

0,14

912

9,83

958

9,90

2(5

09,7

85)

263,

298

1,94

1,30

11,

341,

478

602,

208

1,02

9,38

52,

733,

373

Oth

er9,

988,

984

8,99

8,51

34,

002,

075

3,43

6,94

64,

067,

219

5,24

4,90

94,

536,

586

5,01

1,98

26,

771,

390

5,95

3,04

4To

tal R

even

ues

347,

278,

343

351,

272,

328

354,

826,

290

360,

218,

020

378,

594,

310

399,

669,

714

412,

402,

881

417,

661,

425

435,

424,

305

443,

246,

477

Expe

nditu

res

Adm

inist

rativ

e Se

rvic

es1,

098,

505

1,20

9,50

419

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,467

10,3

70,9

725,

014,

372

7,43

1,87

38,

060,

766

9,25

9,94

89,

397,

369

9,52

4,64

6Ch

ief D

evel

opm

ent O

ffice

r45

8,93

261

3,74

319

0,33

953

7,98

61,

107,

841

963,

105

1,32

2,14

61,

305,

739

Envi

ronm

enta

l Qua

lity

20,3

98,4

5722

,544

,214

Envi

ronm

enta

l Qua

lity

& P

ublic

Wor

ks36

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,403

37,0

37,3

1136

,407

,046

40,3

87,5

8942

,819

,684

43,3

05,2

2346

,744

,561

47,0

66,7

17Fi

nanc

e11

,979

,265

9,27

1,85

45,

405,

089

5,11

5,50

25,

020,

225

5,22

5,80

65,

536,

971

5,97

7,86

26,

004,

097

5,87

2,97

4G

ener

al G

over

nmen

t6,

962,

873

7,38

2,55

05,

059,

177

5,64

7,40

75,

678,

539

6,30

6,98

06,

542,

424

6,55

6,90

76,

354,

511

7,96

2,98

9G

ener

al S

ervi

ces*

*26

,370

,443

25,7

63,1

1024

,095

,490

26,5

17,7

9024

,348

,481

26,1

39,2

3829

,278

,819

30,0

38,9

9730

,457

,511

30,8

17,6

38In

form

atio

n Te

chno

logy

**10

,287

,205

8,45

0,62

86,

018,

607

7,51

3,80

99,

187,

214

9,96

4,61

613

,127

,259

12,0

10,2

09La

w9,

327,

861

10,2

37,2

073,

571,

448

3,99

4,32

74,

035,

393

2,84

4,75

72,

275,

312

10,4

62,4

172,

590,

350

2,90

4,06

1O

utsid

e A

genc

ies

18,1

23,2

9719

,244

,315

20,5

71,7

2720

,260

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24,7

39,5

0623

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,807

28,7

36,5

3822

,958

,277

23,4

70,9

3225

,103

,810

Plan

ning

, Pre

serv

atio

n, &

Dev

elop

men

t*3,

659,

901

8,67

0,01

710

,436

,351

12,4

86,7

3614

,614

,512

14,5

06,6

0513

,339

,484

Publ

ic S

afet

y**

191,

233,

566

160,

552,

216

193,

328,

465

172,

413,

558

173,

507,

393

177,

216,

505

186,

290,

364

209,

591,

012

211,

574,

153

216,

669,

362

Publ

ic W

orks

22,5

14,8

2621

,858

,996

Soci

al S

ervi

ces

9,61

5,42

38,

402,

054

7,80

4,74

98,

222,

664

8,19

6,04

18,

422,

005

9,19

0,56

710

,296

,721

10,8

52,5

4811

,188

,437

Deb

t Ser

vice

:Pr

inci

pal

26,2

30,0

0020

,035

,000

18,4

65,0

0017

,855

,000

21,9

25,0

0020

,850

,000

22,0

10,0

0021

,470

,000

26,8

55,0

0029

,245

,000

Inte

rest

and

Oth

er9,

409,

512

13,7

03,2

4312

,927

,929

13,1

08,7

4013

,667

,645

12,5

58,1

3313

,938

,702

15,0

73,0

8815

,356

,878

16,1

67,6

74Ca

pita

l70

,941

,523

49,0

10,0

3829

,785

,796

28,3

36,9

1748

,815

,941

51,0

92,1

2870

,848

,354

95,0

73,8

6143

,876

,088

61,1

77,6

21To

tal E

xpen

ditu

res

434,

492,

756

377,

664,

929

377,

401,

672

353,

153,

928

386,

234,

545

400,

586,

967

448,

310,

292

505,

606,

546

462,

490,

008

490,

356,

361

Exce

ss (D

efic

ienc

y) o

f Rev

enue

sov

er (u

nder

) Exp

endi

ture

s(8

7,21

4,41

3)(2

6,39

2,60

1)(2

2,57

5,38

2)7,

064,

092

(7,6

40,2

35)

(917

,253

)(3

5,90

7,41

1)(8

7,94

5,12

1)(2

7,06

5,70

3)(4

7,10

9,88

4)O

ther

Fin

anci

ng S

ourc

es (U

ses)

Tran

sfer

s In

6,72

3,50

43,

843,

657

18,1

02,6

757,

226,

272

28,3

08,8

9521

,319

,957

24,8

33,9

4811

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,277

12,3

85,6

1011

,979

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Tran

sfer

s Out

(4,9

85,6

50)

(3,7

73,1

23)

(18,

493,

131)

(7,8

22,6

95)

(29,

163,

490)

(21,

316,

119)

(25,

134,

821)

(11,

801,

402)

(12,

710,

446)

(11,

141,

975)

Deb

t Pro

ceed

s (ne

t of b

ond

refu

ndin

g)11

9,51

5,00

019

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,000

37,2

75,0

0021

,177

,299

78,3

50,1

3149

,993

,988

56,1

80,0

0070

,278

,668

54,8

08,2

7942

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Prem

ium

(Disc

ount

) on

Bond

s Iss

ued

(7,1

30,1

68)

(4,5

80,2

55)

(6,0

14,9

21)

(4,5

49,0

25)

(60,

617,

275)

(19,

150,

513)

3,36

2,96

0(2

7,62

6,77

3)(1

5,46

7,35

3)2,

804,

065

Tota

l Oth

er F

inan

cing

Sou

rces

(Use

s)11

4,12

2,68

615

,210

,279

30,8

69,6

2316

,031

,851

16,8

78,2

6130

,847

,313

59,2

42,0

8742

,431

,770

39,0

16,0

9045

,696

,151

Net

Cha

nge

in F

und

Bala

nces

$26,

908,

273

($11

,182

,322

)$8

,294

,241

$23,

095,

943

$9,2

38,0

26$2

9,93

0,06

0$2

3,33

4,67

6($

45,5

13,3

51)

$11,

950,

387

($1,

413,

733)

Deb

t Ser

vice

as a

Per

cent

age

of

Non

capi

tal E

xpen

ditu

res*

9.5%

10.2

%8.

7%9.

1%10

.1%

9.1%

9.0%

7.8%

9.9%

9.4%

*Pla

nnin

g, P

rese

rvat

ion,

& D

evel

opm

ent w

as a

dded

in F

Y13

and

was

pre

viou

sly in

clud

ed w

ith A

dmin

istra

tion.

**In

FY

16 th

e Ch

ief I

nfor

mat

ion

Offi

cer w

as c

hang

ed to

the

Dep

artm

ent o

f Inf

orm

atio

n Te

chno

logy

. In

add

ition

, the

Div

ision

of S

ecur

ity w

as m

oved

from

the

Dep

artm

ent o

f Gen

eral

Ser

vice

s to

the

Dep

artm

ent o

f Pub

lic S

afet

y.

154

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

CHA

NG

ES IN

FU

ND

BA

LAN

CES,

GO

VER

NM

ENTA

L FU

ND

SLA

ST T

EN F

ISCA

L Y

EARS

(Mod

ified

Acc

rual

Bas

is of

Acc

ount

ing)

TABL

E 5

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Rev

enue

sLi

cens

es a

nd P

erm

its$2

18,3

33,0

96$2

27,4

86,7

34$2

33,8

98,0

45$2

42,3

04,6

33$2

52,1

96,9

81$2

69,9

28,7

53$2

79,7

96,6

74$2

93,4

45,6

70$3

08,8

11,8

07$3

08,4

62,0

28Ta

xes

20,2

22,9

4520

,992

,845

20,8

80,3

5121

,368

,326

21,8

99,7

3821

,826

,464

22,5

99,9

7523

,068

,237

24,5

28,5

7425

,221

,927

Char

ges f

or S

ervi

ces

21,0

02,0

8024

,084

,059

23,8

79,4

8424

,202

,174

24,6

43,2

2125

,633

,499

27,4

09,2

4924

,604

,479

24,8

65,1

5428

,196

,399

Fine

s and

For

feitu

res

262,

040

215,

493

170,

001

309,

442

257,

039

234,

615

220,

612

234,

363

184,

729

230,

914

Inte

rgov

ernm

enta

l1,

156,

085

2,44

1,41

71,

942,

553

1,97

8,89

11,

720,

761

797,

537

858,

600

546,

939

775,

621

975,

875

Prop

erty

Sal

es47

3,78

41,

985,

318

152,

194

137,

719

56,6

8831

8,53

620

5,56

01,

265,

147

248,

629

236,

248

Inco

me

on In

vestm

ents

62,9

01(2

,381

)39

0,82

3(5

56,7

77)

432,

454

1,56

4,89

577

5,01

233

9,88

955

6,64

11,

604,

513

Oth

er5,

640,

858

4,15

9,71

52,

213,

409

2,38

8,30

02,

509,

949

4,19

8,34

43,

669,

875

3,50

2,01

74,

131,

498

4,98

1,18

7To

tal R

even

ues

267,

153,

789

281,

363,

200

283,

526,

860

292,

132,

708

303,

716,

831

324,

502,

643

335,

535,

557

347,

006,

741

364,

102,

653

369,

909,

091

Expe

nditu

res a

nd O

ther

Fina

ncin

g So

urce

s (U

ses)

Adm

inist

rativ

e Se

rvic

es1,

098,

505

1,20

9,50

415

,973

,425

8,11

2,08

72,

656,

141

5,61

7,56

06,

177,

391

7,52

4,23

27,

751,

744

7,77

3,34

0Ch

ief D

evel

opm

ent O

ffice

r15

8,93

216

3,74

318

2,07

426

7,68

31,

001,

763

845,

523

1,28

8,53

21,

305,

739

Envi

ronm

enta

l Qua

lity

3,21

76,

407

Envi

ronm

enta

l Qua

lity

& P

ublic

Wor

ks8,

380,

410

8,10

3,75

07,

366,

215

9,81

4,92

411

,746

,025

11,7

30,7

9612

,369

,277

11,4

41,3

98Fi

nanc

e8,

297,

391

7,93

6,58

95,

387,

968

5,10

1,15

85,

022,

088

5,35

0,46

95,

494,

593

5,90

9,13

15,

938,

150

5,87

5,30

1G

ener

al G

over

nmen

t 3,

206,

859

3,87

2,27

11,

700,

098

3,47

6,73

03,

664,

554

4,10

9,33

84,

265,

335

4,33

3,73

73,

444,

293

5,12

4,05

3G

ener

al S

ervi

ces*

*26

,464

,121

25,4

14,1

5524

,165

,031

26,7

74,6

1329

,847

,860

27,9

06,6

9531

,355

,145

31,5

46,1

7830

,722

,576

28,7

16,7

61In

form

atio

n Te

chno

logy

**7,

366,

977

7,82

0,81

16,

018,

605

8,21

3,08

38,

887,

236

10,4

71,2

0710

,804

,309

10,7

38,7

80La

w8,

601,

967

9,60

7,30

83,

494,

863

3,92

6,00

83,

974,

171

2,31

5,20

52,

182,

164

10,1

86,1

082,

454,

494

2,54

8,86

0O

utsid

e A

genc

ies

16,7

86,2

0016

,935

,373

17,2

06,2

9117

,121

,904

18,9

35,3

3719

,540

,759

20,2

64,3

5920

,528

,503

20,9

87,1

9122

,289

,443

Plan

ning

, Pre

serv

atio

n, &

Dev

elop

men

t*2,

738,

011

7,74

2,32

99,

540,

472

11,8

72,2

5813

,588

,891

13,3

99,7

2012

,365

,983

Publ

ic S

afet

y**

183,

918,

587

154,

017,

726

187,

071,

884

167,

821,

104

165,

631,

441

172,

810,

800

186,

461,

715

206,

803,

147

203,

622,

135

207,

963,

308

Publ

ic W

orks

18,2

96,9

6316

,628

,445

Soci

al S

ervi

ces

7,43

9,40

56,

801,

050

6,00

3,51

36,

566,

634

6,63

3,88

36,

821,

502

7,87

0,87

89,

209,

025

9,26

2,53

29,

067,

801

Deb

t Ser

vice

27,7

49,2

0633

,701

,269

30,9

37,8

1929

,748

,196

34,1

60,7

6831

,970

,746

34,4

81,1

0935

,216

,103

41,3

30,8

7944

,051

,251

Oth

er F

inan

cing

(Sou

rces

) Use

s(4

0,46

5,80

9)(3

,207

,654

)(3

7,03

1,12

8)2,

332,

547

2,54

1,67

264

3,86

21,

181,

014

694,

993

366,

171

(2,8

74,3

77)

Fina

ncin

g So

urce

s (U

ses)

268,

763,

589

280,

743,

254

263,

449,

106

281,

986,

485

294,

377,

138

304,

923,

098

333,

240,

985

368,

587,

574

363,

742,

003

366,

387,

641

Net

Cha

nge

in F

und

Bala

nce

($1,

609,

800)

$619

,946

$20,

077,

754

$10,

146,

223

$9,3

39,6

93$1

9,57

9,54

5$2

,294

,572

($21

,580

,833

)$3

60,6

50$3

,521

,450

*Pla

nnin

g, P

rese

rvat

ion,

& D

evel

opm

ent w

as a

dded

in F

Y13

and

was

pre

viou

sly in

clud

ed w

ith A

dmin

istra

tion.

**In

FY

16 th

e Ch

ief I

nfor

mat

ion

Offi

cer w

as c

hang

ed to

the

Dep

artm

ent o

f Inf

orm

atio

n Te

chno

logy

. In

add

ition

, the

Div

ision

of S

ecur

ity w

as m

oved

from

the

Dep

artm

ent o

f Gen

eral

Ser

vice

s to

the

Dep

artm

ent o

f Pub

lic S

afet

y.

155

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

en

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

CHA

NG

ES IN

FU

ND

BA

LAN

CE, G

ENER

AL

FUN

DLA

ST T

EN F

ISCA

L Y

EARS

(Bud

geta

ry B

asis

of A

ccou

ntin

g)

TABL

E 6

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Rev

enue

sSe

wer

Ser

vice

Cha

rges

$45,

578,

971

$45,

663,

797

$44,

334,

743

$45,

990,

027

$46,

577,

092

$46,

845,

571

$53,

005,

210

$60,

085,

888

$60,

398,

087

$61,

524,

855

Sew

er T

ap o

n Fe

es1,

072,

452

1,52

3,16

91,

944,

010

2,32

5,78

72,

013,

656

2,48

2,24

53,

249,

636

2,15

4,65

22,

923,

533

2,11

9,92

5Ex

actio

ns28

7,67

788

5,73

015

0,12

04,

002,

945

801,

569

426,

085

411,

513

294,

332

329,

120

273,

763

Oth

er In

com

e44

8,88

077

6,33

961

5,62

460

9,02

11,

155,

128

2,29

7,11

61,

127,

145

912,

835

82,9

8812

,257

,683

Tota

l Rev

enue

s47

,387

,980

48,8

49,0

3547

,044

,497

52,9

27,7

8050

,547

,445

52,0

51,0

1757

,793

,504

63,4

47,7

0763

,733

,728

76,5

34,5

29

Ope

ratin

g Ex

pens

esTr

eatm

ent P

lant

8,50

2,53

18,

411,

093

7,93

3,47

78,

217,

471

7,93

5,85

47,

318,

958

6,71

3,70

67,

116,

239

8,15

7,62

97,

745,

135

Colle

ctio

n Sy

stem

4,29

7,16

65,

544,

184

5,06

4,27

34,

405,

020

4,46

1,05

24,

187,

968

4,41

3,64

14,

536,

910

1,83

2,85

62,

467,

916

Adm

inist

ratio

n18

,974

,390

18,2

43,1

8317

,142

,578

16,2

16,6

1920

,773

,379

20,1

19,4

5821

,566

,883

24,0

11,1

5828

,262

,383

37,7

48,0

88D

epre

ciat

ion

7,11

3,94

47,

214,

960

7,29

9,44

27,

683,

896

8,04

7,82

78,

471,

363

9,13

0,30

510

,568

,196

12,1

37,1

2112

,517

,562

Tota

l Ope

ratin

g Ex

pens

es38

,888

,031

39,4

13,4

2037

,439

,770

36,5

23,0

0641

,218

,112

40,0

97,7

4741

,824

,535

46,2

32,5

0350

,389

,989

60,4

78,7

01

Ope

ratin

g In

com

e8,

499,

949

9,43

5,61

59,

604,

727

16,4

04,7

749,

329,

333

11,9

53,2

7015

,968

,969

17,2

15,2

0413

,343

,739

16,0

55,8

28N

et N

onop

erat

ing

Reve

nues

/(Exp

ense

s)(2

,909

,369

)(2

,486

,197

)(1

,697

,841

)(2

,649

,715

)(1

,451

,967

)(1

,710

,547

)(2

,005

,954

)(4

,005

,015

)(2

,289

,314

)(1

,444

,433

)Tr

ansf

ers I

n3,

010,

299

422,

187

1,20

8,93

588

,369

,088

6,23

0

15

0,00

0

172,

823,

976

Tran

sfer

s Out

(394

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)(4

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,344

)(4

66,1

38)

(1,0

39,1

94)

(88,

351,

969)

354

(4,2

36)

(185

,026

)56

,435

(172

,680

,119

)N

et In

com

e/Ch

ange

in N

et P

ositi

on$5

,195

,711

$5,6

76,3

73$7

,862

,935

$13,

924,

800

$7,8

94,4

85$1

0,24

9,30

7$1

3,95

8,77

9$1

3,02

5,16

3$1

1,26

0,86

0$1

4,75

5,25

2

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

e n

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

SAN

ITA

RY S

EWER

SY

STEM

SUM

MA

RY O

F RE

VEN

UES

AN

D E

XPE

NSE

S

156

TABL

E 7

Fisc

al

Yea

rRe

siden

tial

Farm

sCo

mm

erci

al

Oil,

M

iner

al &

Ti

mbe

r Ri

ghts

Tang

ible

Inta

ngib

leTo

tal

Less

Inta

ngib

leTo

tal T

axab

le

Ass

esse

d V

alue

Tota

l Dire

ct T

ax

Rate

(Per

$10

0 of

A

sses

sed

valu

e)

2010

$14,

887,

510

$866

,958

$6,3

10,7

33$1

,530

$5,0

76,6

06$2

7,14

3,33

7$2

7,14

3,33

70.

2535

2011

15,0

43,3

2688

0,21

96,

377,

418

2,24

14,

975,

027

27,2

78,2

3127

,278

,231

0.25

3520

1215

,164

,243

898,

982

6,42

1,87

71,

880

5,01

4,69

827

,501

,680

27,5

01,6

800.

2535

2013

15,2

35,6

4889

7,66

76,

523,

119

1,49

95,

333,

542

27,9

91,4

7527

,991

,475

0.25

3520

1415

,299

,695

899,

945

6,75

7,30

81,

127

5,39

5,49

328

,353

,568

28,3

53,5

680.

2535

2015

15,7

41,0

2491

9,46

67,

162,

151

1,08

05,

793,

103

29,6

16,8

24*

29,6

16,8

240.

2535

2016

15,4

97,0

9191

1,67

36,

935,

829

995

5,52

7,61

128

,873

,199

*28

,873

,199

0.25

3820

1716

,346

,959

948,

410

7,50

9,40

21,

345

5,80

1,30

430

,607

,420

30,6

07,4

200.

2538

2018

17,3

58,4

2074

6,35

28,

117,

423

1,74

05,

953,

135

32,1

77,0

7032

,177

,070

0.25

3320

1917

,859

,282

752,

367

8,78

9,53

51,

889

5,81

0,80

233

,213

,875

33,2

13,8

750.

2533

Not

e:*

Yea

r 201

5 &

201

6 da

ta w

as fl

ippe

d: C

orre

cted

Erro

r

157

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

Prop

erty

is a

sses

sed

at 1

00%

fair

mar

ket v

alue

. Th

e in

tang

ible

pro

perty

tax

rate

was

repe

aled

as o

f Jan

uary

1, 2

006

per K

entu

cky

Revi

sed

Stat

ute

132.

208.

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

NET

ASS

ESSE

D V

ALU

E

REA

L, T

AN

GIB

LE, &

INTA

NG

IBLE

PRO

PERT

Y(In

Tho

usan

ds)

TABL

E 8

Fisc

al

Yea

rTa

xes L

evie

d fo

r th

e Fi

scal

Yea

rA

mou

nt%

of L

evy

Am

ount

% o

f Lev

y

2010

$51,

262,

112

$50,

085,

884

97.7

%$1

,176

,228

*$5

1,26

2,11

210

0.0%

2011

52,2

64,2

2051

,732

,977

99.0

%53

1,24

3*

52,2

64,2

2010

0.0%

2012

52,6

31,2

8352

,011

,046

98.8

%62

0,23

7*

52,6

31,2

8310

0.0%

2013

53,1

36,1

5952

,567

,908

98.9

%56

8,25

1*

53,1

36,1

5910

0.0%

2014

53,5

98,0

2653

,147

,356

99.2

%45

0,67

0*

53,5

98,0

2610

0.0%

2015

54,7

98,1

8753

,072

,141

96.9

%1,

551,

084

54,6

23,2

2699

.7%

2016

55,9

35,4

2754

,402

,567

97.3

%54

,402

,567

97.3

%20

1758

,046

,716

56,1

07,8

2996

.7%

56,1

07,8

2996

.7%

2018

61,7

78,9

6859

,899

,917

97.0

%59

,899

,917

97.0

%20

1963

,891

,892

62,1

13,7

5697

.2%

62,1

13,7

5697

.2%

Not

e:D

ata

prov

ided

by

the

Sher

iff's

Tax

Settl

emen

t Rep

ort

*Cor

rect

ed to

refle

ct c

olle

ctio

ns to

dat

e by

fisc

al y

ear o

f lev

ies

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

Colle

ctio

ns in

Su

bseq

uent

Y

ears

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

PRO

PERT

Y T

AX

LEV

IES

AN

D C

OLL

ECTI

ON

SLA

ST T

EN F

ISCA

L Y

EARS

158

Colle

cted

with

in th

e Fi

scal

Yea

r of

Lev

yTo

tal C

olle

ctio

ns to

Dat

e

`TA

BLE

9

Faye

tteCo

mm

onw

ealth

Soil

&St

reet

Stre

etTo

tal

Coun

tyof

Ex

tens

ion

Wat

erH

ealth

Gen

eral

Refu

seLi

ghts

Clea

ning

Dire

ctSc

hool

Ken

tuck

ySe

rvic

esCo

nser

vatio

nD

epar

tmen

tLe

xtra

nTo

tal

2010

0.08

000.

1431

0.02

100.

0094

0.25

350.

6280

0.12

200.

0032

0.00

040.

0280

0.06

001.

0951

2011

0.08

000.

1431

0.02

100.

0094

0.25

350.

6280

0.12

200.

0032

0.00

040.

0280

0.06

001.

0951

2012

0.08

000.

1431

0.02

100.

0094

0.25

350.

6280

0.12

200.

0032

0.00

040.

0280

0.06

001.

0951

2013

0.08

000.

1431

0.02

100.

0094

0.25

350.

6280

0.12

200.

0032

0.00

040.

0280

0.06

001.

0951

2014

0.08

000.

1431

0.02

100.

0094

0.25

350.

6740

0.12

200.

0033

0.00

040.

0280

0.06

001.

1412

2015

0.08

000.

1431

0.02

100.

0094

0.25

350.

6960

0.12

200.

0034

0.00

050.

0280

0.06

001.

1634

2016

0.08

000.

1431

0.02

100.

0097

0.25

380.

7400

0.12

200.

0035

0.00

050.

0280

0.06

001.

2078

2017

0.08

000.

1431

0.02

100.

0097

0.25

380.

7500

0.12

200.

0035

0.00

060.

0280

0.06

001.

2179

2018

0.08

000.

1426

0.02

100.

0097

0.25

330.

7500

0.12

200.

0035

0.00

060.

0280

0.06

001.

2174

2019

0.08

000.

1426

0.02

100.

0097

0.25

330.

8100

0.12

200.

0035

0.00

060.

0280

0.06

001.

2774

Not

e:be

redu

ced

for t

hose

taxp

ayer

s rec

eivi

ng le

ss th

an fu

ll ur

ban

serv

ices

.

Ove

rlapp

ing

Rate

s

All

taxp

ayer

s in

Faye

tte C

ount

y ar

e su

bjec

t to

the

Gen

eral

Ser

vice

rate

. Tot

al D

irect

rate

is fo

r tax

paye

rs re

ceiv

ing

com

plet

e ur

ban

serv

ices

. Ra

tes w

ould

The

annu

al in

crea

se in

real

pro

perty

tax

reve

nue,

exc

ludi

ng n

ew a

sses

smen

ts, m

ust b

e 4%

or l

ess.

Any

am

ount

ove

r 4%

is su

bjec

t to

a re

call

vote

.

159

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

LFU

CG D

irect

Rat

esU

rban

Ser

vice

sFi

scal

Y

ear

DIR

ECT

AN

D O

VER

LAPP

ING

PRO

PERT

Y T

AX

RA

TES

LAST

TEN

FIS

CAL

YEA

RS(R

ATE

PER

$10

0)

TABL

E 10

Nam

eTa

xabl

e A

sses

sed

Val

ueRa

nk

% o

f Tot

al C

ity

Taxa

ble

Ass

esse

d V

alue

Taxa

ble

Ass

esse

d V

alue

Rank

% o

f Tot

al C

ity

Taxa

ble

Ass

esse

d V

alue

Hap

Pro

perty

Ow

ner,

LP$1

39,5

00,0

001

0.46

%$0

Faye

tte M

all S

PE L

LC

138,

573,

200

20.

45%

117,

000,

000

10.

43%

Fritz

Far

m R

etai

l Com

pany

LLC

86,2

60,0

003

0.28

%Pa

ssco

Frit

z Fa

rm M

ngr L

LC T

TEE

64,1

57,0

004

0.21

%Fa

yette

Mid

dle

Anc

hor L

LC63

,000

,000

50.

21%

Hea

lthso

uth

Ken

tuck

y Re

al E

state

56,4

46,1

006

0.18

%N

ewto

wn

Cros

sing

II LL

C53

,000

,000

70.

17%

War

Adm

iral P

lace

54,6

62,0

008

0.18

%St

rata

Rac

quet

LLC

51,5

00,0

009

0.17

%Si

r For

ty 5

7 LL

C50

,000

,000

100.

16%

Four

th Q

uarte

r Pro

perti

es*

94,6

05,3

002

0.35

%Le

xmar

k In

tern

atio

nal I

nc.

55,8

06,6

003

0.20

%W

eing

arte

n Re

alty

Inc.

48,2

74,2

004

0.18

%W

ar A

dmira

l Pla

ce44

,970

,900

50.

16%

Faye

tte P

laza

CM

BS L

LC40

,000

,000

60.

15%

Ball

Real

ty In

c.38

,488

,100

70.

14%

Dia

mon

droc

k G

riffin

35,9

50,0

008

0.13

%M

eije

r Sto

res,

Ltd

33,5

73,6

009

0.12

%M

id A

mer

ican

Apt

s LLC

32,7

00,0

0010

0.12

%

Tota

l$7

57,0

98,3

002.

47%

$541

,368

,700

1.98

%

*Hap

Pro

perti

es p

urch

ased

Ham

burg

Pav

illio

n fro

m F

ourth

Qua

rter P

rope

rties

in Ju

ly 2

014.

160

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

PRIN

CIPA

L PR

OPE

RTY

TA

X P

AY

ERS

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

2011

2019

CURR

ENT

YEA

R A

ND

NIN

E Y

EARS

AG

O

TABL

E 11

Fisc

al

Yea

rLF

UCG

Dire

ct

Rate

Faye

tte C

ount

y Sc

hool

Tota

l

2010

2.25

%0.

50%

2.75

%20

112.

25%

0.50

%2.

75%

2012

2.25

%0.

50%

2.75

%20

132.

25%

0.50

%2.

75%

2014

2.25

%0.

50%

2.75

%20

152.

25%

0.50

%2.

75%

2016

2.25

%0.

50%

2.75

%20

172.

25%

0.50

%2.

75%

2018

2.25

%0.

50%

2.75

%20

192.

25%

0.50

%2.

75%

161

LIC

ENSE

FEE

RA

TES

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

DIR

ECT

AN

D O

VER

LAPP

ING

LAST

TEN

FIS

CAL

YEA

RS

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

TABL

E 12

Nam

e20

19 R

ank

2011

Ran

k

Uni

vers

ity o

f Ken

tuck

y1

1Fa

yette

Cou

nty

Boar

d of

Edu

catio

n2

3Ba

ptist

Hea

lthca

re3

7Le

xmar

k In

tern

atio

nal

42

Lexi

ngto

n-Fa

yette

Urb

an C

ount

y G

over

nmen

t5

4St

. Jos

eph

Hos

pita

l6

6D

efen

se F

inan

ce &

Acc

tg S

yste

m (f

orm

erly

Dep

t of V

eter

ans A

ffairs

)7

5A

maz

on.c

om8

Val

volin

e In

tern

atio

nal,

Inc.

9Le

xing

ton

Clin

ic10

9L3

Com

mun

icat

ions

8A

shla

nd, I

nc.

10

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

TEN

MA

JOR

OCC

UPA

TIO

NA

L TA

X W

ITH

HO

LDER

SCU

RREN

T Y

EAR

AN

D N

INE

YEA

RS A

GO

162

TABL

E 13

Fisc

al

Yea

rG

ener

al

Obl

igat

ion

Bond

sQ

ECB

Bond

Leas

e Re

venu

e N

otes

Pay

able

Bond

A

ntic

ipat

ion

Not

esRe

venu

e Bo

nds

Mor

tgag

e Re

venu

e Bo

nds

Not

es P

ayab

leTo

tal P

rimar

y G

over

nmen

t

% o

f Pe

rson

al

Inco

me

Prim

ary

Gov

ernm

ent

Deb

t Per

Ca

pita

2010

$308

,355

,000

$0$0

$8,0

00,0

00$6

4,56

5,00

0$6

3,89

0,00

0$0

$444

,810

,000

3.8%

$1,4

9920

1130

3,86

5,00

060

,055

,000

61,9

90,0

0015

,105

,027

441,

015,

027

3.6%

1,46

4*

2012

315,

714,

650

48,1

21,3

2756

,708

,664

14,7

66,5

3043

5,31

1,17

13.

4%1,

425

2013

314,

541,

343

45,4

00,3

9854

,830

,752

14,4

03,7

2742

9,17

6,22

03.

3%1,

390

*20

1431

0,04

0,73

1

42,5

90,8

0952

,872

,841

27,7

85,1

5743

3,28

9,53

83.

2%*

1,39

1*

2015

319,

736,

652

2,90

0,00

0**

38,5

61,4

6953

,625

,000

36,9

68,8

8945

1,79

2,01

03.

2%*

1,43

5*

2016

356,

149,

549

2,90

0,00

0**

35,8

50,0

0051

,315

,000

64,2

67,0

0051

0,48

1,54

93.

6%1,

603

2017

375,

507,

126

2,90

0,00

0**

33,0

17,7

0649

,080

,404

86,8

72,5

3854

7,37

7,77

43.

5%1,

699

2018

386,

251,

016

2,79

5,00

0**

30,1

29,0

0046

,578

,000

120,

023,

000

585,

776,

016

3.6%

1,80

920

1939

9,62

5,85

62,

795,

000

**30

,129

,000

43,9

65,0

0052

2,44

4,00

099

8,95

8,85

6na

na

Not

e:

Det

ails

rega

rdin

g LF

UCG

out

stand

ing

debt

can

be

foun

d in

the

note

s to

the

finan

cial

stat

emen

ts.Se

e ta

ble

18 fo

r pop

ulat

ion

data

.Pe

rson

al in

com

e da

ta 2

019

not a

vaila

ble

at ti

me

of p

ublic

atio

n.Po

pula

tion

data

for 2

019

not a

vaila

ble

at ti

me

of p

ublic

atio

n.

*

Upd

ated

in 2

017

**

Mov

ed th

e Q

ualif

ied

Ener

gy C

onse

rvat

ion

Bond

(QEC

B) fr

om th

e G

ener

al O

blig

atio

n Bo

nds t

otal

.

163

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

RATI

OS

OF

OU

TSTA

ND

ING

DEB

T BY

TY

PELA

ST T

EN F

ISCA

L Y

EARS

Busin

ess-

type

Act

iviti

esG

over

nmen

tal A

ctiv

ities

TABL

E 14

Fisc

al

Yea

rG

ener

al O

blig

atio

n Bo

nds

% o

f Ass

esse

d V

alue

of P

rope

rty

Per C

apita

2010

$308

,355

,000

1.14

%$1

,054

*20

1130

3,86

5,00

01.

11%

1,00

9*

2012

315,

714,

650

1.15

%1,

033

*20

1331

4,54

1,34

31.

12%

1,01

8*

2014

310,

040,

731

1.09

%99

6*

2015

322,

636,

652

***

1.09

%1,

025

*20

1635

9,04

9,54

9**

*1.

24%

1,12

720

1737

8,40

7,12

6**

*1.

24%

1,17

420

1838

9,04

6,01

6**

*1.

21%

1,20

220

1940

2,42

0,85

6**

*1.

21%

na**

Not

es:

to th

e fin

anci

al st

atem

ents.

* U

pdat

ed in

201

7**

Pop

ulat

ion

data

for 2

019

not a

vaila

ble

at ti

me

of p

ublic

atio

n.**

*Upd

ated

form

ual t

o in

clud

e Q

ECB

bond

on

Tabl

e 13

164

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

See

Tabl

e 7

for p

rope

rty v

alue

dat

e an

d Ta

ble

18 fo

r pop

ulat

ion

data

.

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

RATI

OS

OF

GEN

ERA

L BO

ND

ED D

EBT

OU

TSTA

ND

ING

LAST

TEN

FIS

CAL

YEA

RS

Det

ails

rega

rdin

g LF

UCG

out

stand

ing

debt

can

be

foun

d in

the

note

s

TABLE 15

Debt Outstanding (1)

Estimated Percentage

Applicable (2)

Estimated Share of Overlapping

Debt

$110,855,000 4.37% $4,844,334Mortgage Revenue Bonds, Series 2018A 83,605,000 4.37% 3,653,517Mortgage Revenue Bonds, Series 2018B 13,460,000 4.37% 588,198

Lexington Public Library709,583 2.37% 16,814

2,300,000 5.18% 119,0585,400,000 5.18% 279,5286,770,000 5.18% 350,446

11,230,000 5.18% 581,315Fixed Rate General Airport, Revenue, and Refunding Bond 2016A (non-AMT) 4,450,000 5.18% 230,352Fixed Rate General Airport, Revenue, and Refunding Bond 2016B (AMT) 4,500,000 5.18% 232,940Fixed Rate General Airport, Revenue, and Refunding Bond 2016C (Fed Taxable) 36,525,000 5.18% 1,890,698Fixed Rate General Airport, Revenue, and Refunding Bond 2016D (non-AMT) 5,345,000 5.18% 276,681Fixed Rate General Airport, Revenue, and Refunding Bond 2016E (AMT) 4,250,000 5.18% 219,999

431,275,134 100.00% 431,275,134444,559,014402,420,856

$846,979,870

Notes

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSCHEDULE OF DIRECT AND OVERLAPPING INDEBTEDNESS

AS OF JUNE 30, 2019

(1) Industrial Revenue Bonds, Industrial Development Bonds, and Multi-Family and Single Family Housing Bonds are not included in this schedule of overlapping debt as they are not secured by the full faith and credit of Lexington-Fayette Urban County Government.

Mortgage Revenue Bonds, Series 2018Lexington Center Corporation

Variable Rate, Revenue Bonds Series 2014A

Source: Department of Finance, Lexington-Fayette Urban County Government

(2) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in LFUCG or by ratio of total revenue of overlapping unit to total revenue of LFUCG.

Fayette County School & Kentucky School Commission BondsSubtotal, Overlapping Debt

Lexington-Fayette Urban County Government Airport Corporation

Variable Rate General Airport, Revenue, and Refunding Bond 2009B (AMT)

LFUCG, Direct DebtTotal Direct and Overlapping Indebtedness

Fixed Rate General Airport, Revenue, and Refunding Bond 2012A (AMT)

Fixed Rate General Airport, Revenue, and Refunding Bond 2009A (non-AMT)

Fixed Rate General Airport, Revenue, and Refunding Bond 2012B (non-AMT)

165

TABL

E 16

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Ass

esse

d V

alue

$27,

143,

337

$27,

278,

231

$27,

501,

680

$27,

991,

475

$28,

353,

568

$29,

616,

824

$28,

873,

199

$30,

607,

420

$32,

177,

070

$32,

177,

070

Deb

t lim

it (1

0% o

f A

sses

sed

Val

ue)

$2,7

14,3

34$2

,727

,823

$2,7

50,1

68$2

,799

,148

$2,8

35,3

57$2

,961

,682

$2,8

87,3

20$3

,060

,742

$3,2

17,7

07$3

,217

,707

Tota

l net

deb

t ap

plic

able

to li

mit

171,

510

108,

710

203,

817

194,

414

200,

820

171,

917

162,

861

184,

801

183,

990

362,

029

Lega

l deb

t mar

gin

$2,5

42,8

24$2

,619

,113

$2,5

46,3

51$2

,604

,734

$2,6

34,5

37$2

,789

,765

$2,7

24,4

59$2

,875

,941

$3,0

33,7

17$2

,855

,678

Tota

l net

deb

t ap

plic

able

to th

e lim

it as

a p

erce

ntag

e of

deb

t lim

it6.

32%

3.99

%7.

41%

6.95

%7.

08%

5.80

%5.

64%

6.04

%5.

72%

11.2

5%

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

166

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

LEG

AL

DEB

T M

ARG

IN IN

FORM

ATI

ON

LAST

TEN

FIS

CAL

YEA

RS(In

Tho

usan

ds) Fi

scal

Yea

r

TABL

E 17

Less

:N

etLe

ss:

Net

Fisc

alG

ross

Ope

ratin

gA

vaila

ble

Gro

ssO

pera

ting

Ava

ilabl

eY

ear

Reve

nue

Expe

nses

Reve

nue

Prin

cipa

lIn

tere

stCo

vera

geRe

venu

eEx

pens

esRe

venu

ePr

inci

pal

Inte

rest

Cove

rage

2010

$47,

446

$31,

774

$15,

672

$4,0

40$1

,849

2.66

$6,4

31$2

,670

$3,7

61$2

,643

$2,6

610.

7120

1149

,383

32,1

9817

,185

4,51

02,

608

2.41

7,15

92,

789

4,37

01,

900

2,57

00.

9820

1248

,023

30,1

4017

,883

11,1

173,

181

1.25

7,15

72,

697

4,46

01,

970

2,49

51.

0020

1352

,769

28,8

3923

,930

3,41

32,

400

4.12

5,83

02,

305

3,52

52,

050

2,41

60.

7920

1451

,542

33,1

7018

,372

3,50

52,

348

3.14

6,37

62,

111

4,26

52,

130

2,33

40.

9620

1551

,440

31,6

2619

,814

2,06

71,

917

4.97

6,40

62,

436

3,97

02,

215

2,24

70.

8920

1658

,234

32,6

9425

,540

3,09

42,

536

4.54

6,98

82,

708

4,28

02,

310

2,64

60.

8620

1763

,289

35,6

6427

,625

3,68

82,

644

4.36

7,30

52,

625

4,68

02,

405

2,27

41.

0020

1864

,355

38,2

5326

,102

5,22

03,

039

3.16

6,14

92,

960

3,18

92,

055

1,87

50.

8120

1977

,698

47,9

6129

,737

7,92

22,

673

2.81

5,95

62,

158

3,79

82,

165

1,67

30.

99

Less

:N

etSp

ecia

lFi

scal

Gro

ssO

pera

ting

Ava

ilabl

eA

sses

smen

tY

ear

Reve

nue

Expe

nses

Reve

nue

Prin

cipa

lIn

tere

stCo

vera

geCo

llect

ions

Prin

cipa

lIn

tere

stCo

vera

ge

2010

$1,2

03$5

39$6

64$7

50$3

60.

84$0

$0$0

0.00

2011

861

600

261

20

1297

854

043

8

2013

54

1

2014

2015

2016

1

1

2017

2018

2019

Not

e:de

prec

iatio

n, o

r am

ortiz

atio

n ex

pens

es.

167

Deb

t Ser

vice

Sani

tary

Sew

er S

yste

m

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

REV

ENU

E BO

ND

CO

VER

AG

ELA

ST T

EN F

ISCA

L Y

EARS

(In T

hous

ands

)

Publ

ic F

acili

ties C

orpo

ratio

n

Deb

t Ser

vice

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

Spec

ial A

sses

smen

t Bon

ds

Deb

t Ser

vice

Det

ails

rega

rdin

g LF

UCG

out

stand

ing

debt

can

be

foun

d in

the

note

s to

the

finan

cial

stat

emen

ts. O

pera

ting

expe

nses

do

not i

nclu

de in

tere

st,

Publ

ic P

arki

ng C

orpo

ratio

n

Deb

t Ser

vice

TABL

E 18

Fisc

al Y

ear

Popu

latio

nPe

rson

al In

com

e (T

hous

ands

)Pe

r Cap

ita P

erso

nal

Inco

me

Empl

oyed

Une

mpl

oyed

Une

mpl

oym

ent

Rate

2010

296,

717

$11,

568,

412

$38,

988

151,

190

12,0

967.

4%*

2011

301,

272

*12

,147

,960

40,3

22*

153,

602

11,3

246.

9%*

2012

305,

201

*12

,701

,835

41,6

18*

156,

579

9,68

85.

8%*

2013

308,

501

*12

,826

,933

41,5

78*

158,

648

9,76

95.

8%*

2014

310,

725

*13

,472

,243

*43

,357

*15

8,84

87,

983

4.8%

*20

1531

4,76

7*

14,2

24,6

29*

45,1

91*

160,

099

6,42

33.

9%*

2016

318,

449

*14

,338

,062

*45

,025

*16

3,63

76,

153

3.6%

*20

1732

2,19

3**

15,6

02,8

93**

48,4

27**

167,

944

6,36

03.

6%*

2018

323,

780

**16

,247

,217

**50

,180

**16

9,04

85,

801

3.3%

2019

nana

nana

nana

* U

pdat

ed in

201

8**

Upd

ated

in 2

019

Not

e:

Popu

latio

n, P

erso

nal I

ncom

e an

d Pe

r Cap

ita P

erso

nal I

ncom

e da

ta fo

r 201

9 no

t ava

ilabl

e at

tim

e of

pub

licat

ion.

Empl

oyed

, Une

mpl

oyed

and

Une

mpl

oym

ent R

ate

date

for 2

019

not a

vaila

ble

at ti

me

of p

ublic

atio

n.

Sour

ce:

The

Bure

au o

f Eco

nom

ic A

naly

sisSo

urce

: U

.S. C

ensu

s Bur

eau

168

Sour

ce:

The

Bure

au o

f Lab

or S

tatis

tics

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

DEM

OG

RAPH

IC A

ND

ECO

NO

MIC

STA

TIST

ICS

LAST

TEN

FIS

CAL

YEA

RS

Civi

lian

Labo

r For

ce

TABL

E 19

Nam

eEm

ploy

ees

Rank

Perc

enta

ge o

f To

tal C

ity

Empl

oym

ent

Empl

oyee

sRa

nk

Perc

enta

ge o

f To

tal C

ity

Empl

oym

ent

Uni

vers

ity o

f Ken

tuck

y12

,800

17.

57%

12,2

78

17.

99%

Faye

tte C

ount

y Pu

blic

Sch

ools

6,18

12

3.66

%5,

500

23.

58%

Lexi

ngto

n-Fa

yette

Urb

an C

ount

y G

over

nmen

t2,

945

31.

74%

3,30

0

4

2.15

%A

maz

on.c

om2,

700

41.

60%

Cond

uent

2,50

05

1.48

%V

eter

ans M

edic

al C

ente

r2,

086

61.

23%

Bapt

ist H

ealth

care

1,85

27

1.10

%2,

496

71.

62%

Ken

tuck

yOne

Hea

lth1,

847

81.

09%

Lem

ark

Inte

rnat

iona

l 1,

600

90.

95%

3,00

0

5

1.95

%Lo

ckhe

ed M

artin

1,10

010

0.65

%1,

800

91.

17%

St.Jo

seph

Hos

pita

l3,

500

32.

28%

ACS

a Z

erox

Com

pany

2,

700

61.

76%

Wal

-Mar

t2,

027

81.

32%

Kro

ger

1,65

5

10

1.08

%35

,611

21.0

7%38

,256

24.9

0%

Sour

ce:

Lexi

ngto

n Ch

ambe

r of C

omm

erce

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

PRIN

CIPA

L EM

PLO

YER

S, F

AY

ETTE

CO

UN

TYCU

RREN

T Y

EAR

AN

D N

INE

YEA

RS A

GO

2019

2011

169

TABL

E 20

Yea

rCo

nstru

ctio

n

Educ

atio

n an

d H

ealth

Se

rvic

esFi

nanc

ial

Act

iviti

esIn

form

atio

nLe

isur

e an

d H

ospi

talit

yM

anuf

actu

ring

Nat

ural

Re

sour

ces

and

Min

ing

Oth

er

Serv

ices

Prof

essi

onal

and

Bu

sine

ss

Serv

ices

Trad

e,

Tran

spor

tatio

n,

and

Util

ities

Oth

ers

Tota

l Em

ploy

men

t by

Plac

e of

Wor

k20

01*

9,33

120

,008

8,36

74,

593

18,1

9415

,185

2,02

84,

819

19,2

4133

,600

7713

5,44

320

02*

8,24

920

,919

8,33

04,

670

17,7

5614

,703

1,95

94,

786

20,8

6633

,424

7113

5,73

320

03*

8,72

721

,100

8,35

94,

365

18,1

9913

,874

1,89

04,

746

21,7

6534

,276

135

137,

436

2004

*8,

451

21,3

778,

822

3,83

318

,109

14,1

331,

959

4,84

822

,944

34,2

0820

013

8,88

420

05*

8,56

821

,728

8,90

13,

803

18,3

6014

,703

2,05

64,

727

23,6

4434

,567

274

141,

331

2006

*8,

291

21,9

809,

222

3,74

319

,572

14,8

782,

552

4,71

825

,608

34,4

1622

814

5,20

820

07*

8,62

820

,919

8,81

13,

600

19,6

2615

,299

2,47

34,

696

25,3

5234

,347

304

144,

055

2008

*7,

723

21,0

358,

583

5,08

619

,427

14,9

292,

260

4,94

123

,700

34,3

2022

914

2,23

320

09*

7,10

921

,603

7,92

14,

403

19,4

5513

,194

2,04

35,

138

23,7

4532

,697

2413

7,33

220

10*

6,49

121

,983

8,22

65,

711

19,9

3012

,632

1,88

15,

444

25,1

0633

,256

5414

0,71

420

11*

6,79

023

,640

8,26

65,

680

19,4

9511

,962

2,08

85,

383

25,9

8833

,620

4014

2,95

220

12*

6,73

324

,230

8,00

05,

396

20,3

1812

,226

2,01

05,

347

27,5

1534

,619

6114

6,45

520

13*

7,14

423

,727

7,87

55,

030

21,1

8612

,214

1,90

65,

303

32,3

7635

,860

101

152,

722

2014

*7,

545

23,5

277,

638

5,21

822

,346

12,2

292,

000

4,92

630

,600

37,2

1843

153,

290

2015

*8,

742

24,9

957,

734

4,89

123

,556

12,2

441,

957

5,02

432

,858

37,8

8553

159,

939

2016

*9,

591

25,1

657,

859

2,33

523

,579

11,9

111,

775

5,32

830

,942

39,4

5847

157,

990

2017

*9,

633

25,9

187,

858

2,17

323

,971

11,4

452,

001

5,31

930

,750

40,7

6746

159,

881

2018

9,49

726

,777

7,98

72,

216

24,0

5611

,506

1,94

85,

421

27,5

9238

,887

4915

5,93

6

*The

Gov

ernm

ent h

as c

orre

cted

yea

rs 2

001-

2017

to re

flect

the

corre

ct e

mpl

oym

ent n

umbe

rs p

er c

ateg

ory.

In

addi

tion,

fisc

al y

ears

200

1-20

06 h

ave

been

upd

ated

to re

flect

cat

egor

ies u

sing

cur

rent

indu

stry

sta

ndar

ds.

Sour

ce: B

urea

u of

Lab

or S

tatis

tics

170

Refle

cts C

urre

nt In

dust

ry S

tand

ards

EM

PLO

YM

ENT

BY IN

DU

STRY

, FA

YET

TE C

OU

NTY

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

TABLE 21

Value % Value % Value %Population and Number of Households

Population Under 18 years 50,416 22.4% 55,533 21.3% 62,633 21.2% 18 - 64 years 152,638 67.7% 178,805 68.7% 202,032 68.3% 65 years and over 22,312 9.9% 26,174 10.0% 31,138 10.5% Total 225,366 100.0% 260,512 100.0% 295,803 100.0%

Number of Households 89,529 108,288 123,043

Economic and Education Family Income Less than $10,000 5,979 10.5% 3,587 5.6% 4,407 6.3% $10,000 - $24,999 12,365 21.7% 8,947 14.1% 8,791 12.7% $25,000 - $49,999 20,889 36.8% 17,124 26.9% 15,164 21.9% $50,000 - $74,999 10,790 19.0% 14,759 23.2% 12,913 18.6% $75,000 or more 6,850 12.0% 19,231 30.2% 28,149 40.5% Total Families 56,873 100.0% 63,648 100.0% 69,424 100.0%

Median Family Income $35,936 $53,264 $63,086

Mean Family Income $44,467 $52,261 $76,373

Per Capita Income $20,355 $23,109 $25,561

School Enrollment Elementary/Secondary 32,858 36,938 43,918 College 28,339 31,508 41,238

Education for Individuals 25+ years of age Less than 9th grade 11,760 8.3% 8,539 5.1% 8,813 4.6% High School, No Diploma 16,365 11.5% 15,213 9.1% 13,986 7.3% High School Graduate 33,238 23.4% 37,448 22.4% 43,875 22.9% College 1 - 3 years 37,299 26.2% 46,420 27.8% 54,796 28.6% College 4 or more years 43,454 30.6% 59,615 35.6% 70,123 36.6% Total 142,116 100.0% 167,235 100.0% 191,593 100.0%

Unemployment Rate 3.7% 1.8% 7.0%

171

Source: U.S. Census Bureau

LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTU.S. CENSUS BUREAU STATISTICS

1990 Census 2000 Census 2010 Census

TABL

E 22

Func

tion/

Prog

ram

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Adm

inist

rativ

e Se

rvic

es91

86

12

9

94

47

49

76

78

79

74

G

ener

al G

over

nmen

t73

70

66

66

67

69

65

67

67

71

Fi

nanc

e &

Adm

inist

ratio

n10

3

94

68

65

69

70

73

74

73

71

In

form

atio

n Te

chno

logy

44

52

52

51

49

54

Gen

eral

Ser

vice

sPa

rks &

Rec

reat

ion

138

13

2

140

13

9

138

14

4

146

14

4

139

13

9

Oth

er13

4

130

97

93

98

102

10

2

97

92

93

La

w26

26

37

40

39

42

23

23

23

21

Pl

anni

ng, P

rese

rvat

ion,

& D

evel

opm

ent

39

12

8

137

14

3

146

14

7

133

Pu

blic

Saf

ety

Fire

& E

mer

genc

y Se

rvic

esFi

refig

hter

s & O

ffice

rs52

2

520

50

0

520

56

6

560

56

5

558

56

8

623

Ci

vilia

ns15

18

17

16

16

18

18

26

25

16

Po

lice

Offi

cers

542

51

1

504

52

4

542

51

8

554

57

2

604

59

7

Civi

lians

102

93

127

12

6

122

11

2

87

10

4

112

10

5

Com

mun

ity C

orre

ctio

ns29

4

284

32

1

312

33

0

298

29

3

340

32

0

313

O

ther

75

79

81

80

68

74

73

92

91

74

Publ

ic W

orks

& D

evel

opm

ent

244

O

ther

240

En

viro

nmen

tal Q

ualit

y &

Pub

lic W

orks

508

48

4

451

45

3

468

47

5

488

50

4

Was

te M

anag

emen

t20

6

196

W

ater

& A

ir Q

ualit

y14

9

151

O

ther

15

16

Soci

al S

ervi

ces

113

99

94

96

96

98

108

10

9

114

11

1

2,84

2

2,

745

2,68

9

2,

694

2,82

1

2,

796

2,84

6

2,

956

2,99

1

2,

999

The

follo

win

g D

epar

tmen

tal r

eorg

aniz

atio

n to

ok p

lace

in F

Y20

12:

Com

mun

icat

ions

, Ent

erpr

ise S

olut

ions

, Inf

orm

atio

n Te

chno

logy

and

Peo

pleS

oft m

oved

from

Chi

ef In

form

atio

n O

ffice

r to

Adm

inist

rativ

e Se

rvic

es; H

istor

ic P

rese

rvat

ion,

Pla

nnin

g an

d Pu

rcha

se o

f Dev

elop

men

t Ri

ghts

mov

ed fr

om P

ublic

Wor

ks to

Adm

inist

rativ

e Se

rvic

es; R

isk M

anag

emen

t mov

ed fr

om L

aw to

Adm

inist

rativ

e Se

rvic

es; B

udge

ting

mov

ed fr

om A

dmin

istra

tive

Serv

ices

to F

inan

ce; C

hief

Dev

elop

men

t A

dmin

istra

tion

was

cre

ated

und

er C

hief

Dev

elop

men

t Offi

cer;

Offi

ce o

f Eco

nom

ic D

evel

opm

ent m

oved

from

Gen

eral

Gov

ernm

ent t

o Ch

ief D

evel

opm

ent O

ffice

r; Co

mm

unity

Dev

elop

men

t cha

nged

to G

rant

s an

d Sp

ecia

l Pro

ject

s and

mov

ed fr

om F

inan

ce to

Adm

inist

rativ

e Se

rvic

es; H

uman

Res

ourc

es m

oved

from

Fin

ance

to L

aw; E

nviro

nmen

tal Q

ualit

y an

d Pu

blic

Wor

ks w

ere

mer

ged

to fo

rm E

nviro

nmen

tal Q

ualit

y&

Pub

lic W

orks

; Pol

ice

and

Fire

Pen

sion

mov

ed fr

om P

ublic

Saf

ety

to F

inan

ce; B

uild

ing

Insp

ectio

n m

oved

from

Pub

lic W

orks

to P

ublic

Saf

ety;

Com

mun

ity C

orre

ctio

ns, P

olic

e an

d Fi

re a

nd E

mer

genc

y Se

rvic

esm

oved

to P

ublic

Saf

ety.

Plan

ning

, Pre

serv

atio

n, &

Dev

elop

men

t was

add

ed in

FY

2013

and

was

pre

viou

sly in

clud

ed w

ith A

dmin

istra

tive

Serv

ices

.Th

e fo

llow

ing

Dep

artm

enta

l reo

rgan

izat

ion

took

pla

ce in

FY

2014

:D

ivisi

on o

f Eng

inee

ring

mov

ed fr

om E

nviro

nmen

tal Q

ualit

y &

Pub

lic W

orks

to P

lann

ing,

Pre

serv

atio

n &

Dev

elop

men

t; D

ivisi

on o

f Cod

e En

forc

emen

t and

Div

ision

of B

uild

ing

Insp

ectio

n m

oved

from

Pub

lic

Safe

ty to

Pla

nnin

g, P

rese

rvat

ion

& D

evel

opm

ent;

Com

pute

r Ser

vice

s & D

ivisi

on o

f Ent

erpr

ise S

olut

ions

mov

ed fr

om A

dmin

istra

tive

Serv

ices

to C

hief

Info

rmat

ion

Offi

cer

The

follo

win

g D

epar

tmen

tal r

eorg

aniz

atio

n to

ok p

lace

in F

Y20

15:

The

Div

ision

of H

uman

Res

ourc

es m

oved

from

Law

and

Risk

Man

agem

ent t

o A

dmin

istra

tive

Serv

ices

In F

Y20

16 th

e Ch

ief I

nfor

mat

ion

Offi

cer w

as c

hang

ed to

the

Dep

artm

ent o

f Inf

orm

atio

n Te

chno

logy

. In

add

ition

, the

Div

ision

of S

ecur

ity w

as m

oved

from

the

Dep

artm

ent o

f Gen

eral

Ser

vice

s to

the

Dep

artm

ent o

f Pub

lic S

afet

y.

Sour

ce:

Dep

artm

ent o

f Fin

ance

, Lex

ingt

on-F

ayet

te U

rban

Cou

nty

Gov

ernm

ent

LFU

CG E

MPL

OY

EES

BY F

UN

CTIO

N/P

ROG

RAM

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

172

(Exc

ludi

ng T

empo

rary

, Sea

sona

l, an

d Pa

rt-Ti

me

Empl

oyee

s)LA

ST T

EN F

ISCA

L Y

EARS

TABL

E 23

Func

tion/

Prog

ram

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Fire

and

Em

erge

ncy

Serv

ices

Emer

genc

y M

edic

al C

alls

32,1

9934

,197

37,0

0036

,619

37,9

7142

,151

43,0

7646

,476

47,9

3051

,245

False

Cal

ls2,

653

2,87

02,

673

2,58

52,

983

3,07

72,

898

2,91

53,

108

3,15

4 Fi

re In

cide

nts

1,12

91,

337

1,56

41,

293

1,22

61,

249

1,24

81,

364

1,12

51,

028

Goo

d In

tent

Cal

ls1,

265

1,27

11,

153

1,10

71,

108

1,18

01,

180

1,12

816

91,

252

Haz

ardo

us M

ater

ials

Calls

1,19

21,

118

1,24

81,

451

1,68

61,

766

2,02

11,

976

1,82

71,

900

Oth

er62

7960

4454

4034

4632

25

Resc

ues

451

460

421

449

443

462

501

545

570

740

Rupt

ure

- Gas

, Wat

er, e

tc.

4547

3634

3135

4144

4540

Serv

ice

Calls

1,22

71,

529

1,70

71,

598

2,20

91,

968

2,09

92,

336

2,83

83,

061

Polic

ePh

ysic

al A

rrests

17

,126

15,2

4820

,214

14,5

9213

,773

17,4

4216

,356

*10

,990

**12

,481

**14

,801

**Pa

rkin

g V

iola

tions

46,9

4942

,675

41,8

4947

,201

46,7

0943

,055

45,3

6048

,776

43,3

0544

,488

Traf

fic V

iola

tions

64,9

5463

,546

52,0

8640

,478

48,1

9344

,795

36,5

6137

,635

37,1

7347

,019

Park

s and

Rec

reat

ion

Roun

ds o

f Gol

f10

7,56

589

,291

95,3

8296

,607

90,4

1091

,407

101,

535

102,

082

90,9

1585

,906

Pool

Visi

ts18

8,38

918

5,42

120

5,35

316

9,82

014

2,06

214

5,91

116

7,35

115

2,46

613

7,85

514

1,38

2Bu

ildin

g In

spec

tion

Perm

its Is

sued

13,6

4613

,090

13,6

2313

,860

16,1

4115

,363

16,6

53**

*13

,343

***

9,75

2**

*9,

188

***

Insp

ectio

ns28

,915

24,5

6323

,957

24,5

1823

,262

21,9

0927

,406

***

13,5

17**

*15

,850

***

18,9

51**

*Sa

nita

ry S

ewer

sTa

p-on

Insp

ectio

ns

946

625

644

861

897

930

786

811

573

584

Ave

rage

dai

ly se

wag

e tre

atm

ent (

mgd

)36

4139

3942

4141

3335

47So

lid W

aste

Ann

ual T

ons o

f Ref

use

Colle

cted

141,

831

138,

331

134,

788

135,

595

137,

728

138,

714

149,

226

155,

493

159,

320

175,

537

Ann

ual T

ons o

f Rec

ycla

bles

Col

lect

ed18

,831

20,4

0221

,834

22,4

4622

,583

22,5

0921

,436

21,0

4119

,502

15,0

52A

nnua

l Ton

s of Y

ard

Was

te C

olle

cted

18,1

9918

,049

21,8

0120

,492

19,9

8421

,609

21,9

3324

,053

21,4

2529

,181

Oth

er P

ublic

Wor

ksSt

reet

Res

urfa

cing

(mile

s)30

1528

2227

2751

6141

106

*

T

he p

hysic

al a

rrest

data

was

bas

ed o

n th

e ja

il im

port

data

.**

The

phy

sical

arre

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ta is

bas

ed o

n tic

ket d

ata.

***

In

the

prio

r fisc

al y

ears

per

mits

wer

e co

unte

d as

issu

ed, i

n th

e ne

w sy

stem

per

mits

are

cou

nted

by

addr

ess.

In p

rior f

iscal

yea

rs in

spec

tions

wer

e co

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d, in

clud

ing

driv

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insp

ectio

ns.

The

curre

nt sy

stem

lim

its

the

num

ber o

f ins

pect

ions

per

day

, elim

inat

ing

driv

e-by

insp

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LEX

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TON

-FA

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TE U

RBA

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OU

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GO

VER

NM

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IND

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ayet

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Cou

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Gov

ernm

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173

TABL

E 24

Func

tion/

Prog

ram

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Fire

and

Em

erge

ncy

Serv

ices

Num

ber o

f Fire

Sta

tions

2323

2323

2323

2323

2323

Num

ber o

f Eng

ines

2323

2222

2222

2222

2222

Num

ber o

f Aer

ials

77

77

77

77

77

Num

ber o

f EC

Uni

ts10

1010

1010

1111

1112

12N

umbe

r of H

az-M

at U

nits

22

22

22

22

22

Num

ber o

f Spe

cial

Ope

ratio

ns*

11

11

Polic

eSt

atio

ns3

33

33

33

22

2Pa

trol U

nits

444

440

429

424

424

430

457

480

517

550

Park

s and

Rec

reat

ion

Acr

es o

f Par

ks4,

917

4,91

74,

282

4,28

24,

282

4,28

24,

282

4,28

24,

273

4,27

3N

umbe

r of G

olf C

ours

es6

65

55

55

55

5N

umbe

r of S

wim

min

g Po

ols

99

77

77

77

76

Sani

tary

Sew

ers

Trea

tmen

t Cap

acity

(mgd

)64

6464

6464

6464

6464

64So

lid W

aste

Colle

ctio

n Tr

ucks

119

113

119

119

116

118

123

135

127

128

Oth

er P

ublic

Wor

ksSt

reet

s (m

iles)

1,62

81,

634

1,63

61,

638

1,64

11,

652

1,66

31,

667

1,67

31,

669

Acr

es in

Cou

nty

182,

762

182,

762

182,

762

182,

762

182,

762

182,

762

182,

762

182,

762

182,

762

182,

761

Acr

es in

Urb

an S

ervi

ces A

rea

54,6

1854

,618

54,6

1854

,618

54,6

1854

,618

54,6

1854

,618

54,6

1854

,662

Traf

fic S

igna

ls37

638

038

237

637

836

537

437

737

938

4

LEX

ING

TON

-FA

YET

TE U

RBA

N C

OU

NTY

GO

VER

NM

ENT

CAPI

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ASS

ET S

TATI

STIC

S BY

FU

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Gov

ernm

ent

174

C-1

APPENDIX C LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT

STATEMENT OF INDEBTEDNESS∗†

KY CONST. §§157 AND 158 KRS §66.041

1. The assessed valuation of all the taxable property in the County asestimated on the last certified assessment is ........................................................... $33,213,875,000

2. The current population of the LFUCG is .............................................................................. 314,449

3. The total of all bonds, notes and other obligations currently issuedand outstanding, including the present issue of $33,190,000*† is ................................ $927,364,977*

4. Bonds, notes and other obligations excluded from the calculationof net indebtedness are as follows:*

(a) Obligations issued in anticipation of the levy or collection of special assessments which are payable solely from those assessments or are otherwise self-supporting obligations ......................................................................................................................... $0

(b) Obligations issued in anticipation of the collection of current taxes or revenues for the fiscal year which are payable within that fiscal year .......................................................................................... $0

(c) Obligations, which are not self-supporting obligations, issued after July 15, 1996 by any instrumentality of the LFUCG created for the purpose of financing public projects for which there has been no pledge to the payment of debt charges of any tax of the LFUCG or for which there is no covenant by the LFUCG to collect or levy a tax to pay debt charges ........................................................................................... $0

(d) Self-supporting obligations and other obligations for which there has been no pledge to the payment of debt charges of any tax of the LFUCG or for which there is no covenant by the LFUCG to collect or levy a tax to pay debt charges ...................................................................................................................... $0

(e) Obligations issued to pay costs of public projects to the extent they are issued in anticipation of the receipt of, and are payable as to principal from, federal or state grants within that fiscal year ........................................................................................................ $0

∗ Preliminary; subject to change. † Preliminary; subject to Permitted Adjustment (as defined in Appendix G hereto).

C-2

(f) Leases entered into under KRS 65.940 to 65.956 after July 15, 1996 which are not tax-supported leases .................................................. $449,184,977

(g) Bonds issued in the case of an emergency, when the public health or safety should so require .......................................................................... $0

(h) Bonds issued to fund a floating indebtedness ................................................................... $0

Total Exempt Obligations ............................................................................................ $449,184,977

5. The total of bonds, notes and other obligations subject to the debt

limitation set forth in KRS 66.041 (3 minus 4) is ....................................................... $478,180,000∗

6. The total of bonds, notes and other obligations subject to the debt limitation set forth in KRS 66.041 as computed in 5 above, does not exceed 10%+ of the assessed valuation of all the taxable property in the LFUCG or $3,321,387,500.

7. The current tax rate of the LFUCG, for other than school purposes, upon the value of the taxable property therein is $0.2533 (which includes 0.1733 which is dedicated for specific purposes) per $100 for real and personal property which does not exceed the maximum permissible tax rate for the LFUCG as set forth in Section 157 of the Kentucky Constitution.

8. The issuance of the bonds, notes or other obligations set forth in 3 hereof will not cause the tax rate set forth in 7 hereof to increase in an amount which would exceed the maximum permissible tax rate for the LFUCG as set forth in Section 157 of the Kentucky Constitution.

IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of _________, 2020.

Commissioner of Finance

Lexington-Fayette Urban County Government

∗ Preliminary; subject to change. + 10% for cities having a population of fifteen thousand or more; 5% for cities having a population of less than fifteen thousand but not less than three thousand; and 3% for cities having a population of less than three thousand.

APPENDIX D FORM OF OPINION OF BOND COUNSEL

The form of the legal approving opinion of Dinsmore & Shohl LLP, Bond Counsel, is set

forth as follows. The actual opinion will be delivered on the date of delivery of the Bonds referred to therein and may vary from the form set forth to reflect circumstances both factual and legal at the time of such delivery. Recirculation of the Final Official Statement shall create no implication that Dinsmore & Shohl LLP has reviewed any of the matters set forth in such opinion subsequent to the date of such opinion.

[Closing Date]

Lexington-Fayette Urban County Government Public Facilities Corporation Lexington, Kentucky Lexington-Fayette Urban County Government Lexington, Kentucky

Re: $____________ Lexington-Fayette Urban County Government Public Facilities

Corporation Taxable Project Refunding Bonds, Series 2020 (Lexington-Fayette Urban County Government General Obligation) (the “Bonds”)

All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Trust Indenture and/or the Lease (each as defined herein).

Ladies and Gentlemen:

We have examined the transcript of proceedings relating to the issue of the above-referenced Bonds, dated their date of delivery of the Lexington-Fayette Urban County Government Public Facilities Corporation (the “Corporation”), acting as an agency and instrumentality and as the constituted authority of the Lexington-Fayette Urban County Government, bearing interest and maturing as set forth in the Bond Resolution adopted by the Corporation on July 7, 2020 (the “Bond Resolution”) and the Certificate of Award executed by the President of the Corporation, dated August ___, 2020. Pursuant to the Bond Resolution, the Corporation has authorized a Trust Indenture, dated as of August 1, 2020, (the “Trust Indenture”), by and between the Corporation and The Huntington National Bank, as trustee (the “Trustee”).

The Bonds are authorized pursuant to the Constitution and Statutes of the Commonwealth of Kentucky (the “Commonwealth”), particularly Chapter 56, Sections 58.010 to 58.140, inclusive, and Section 58.180 and Sections 273.161 to 273.390, inclusive, of the Kentucky Revised Statutes, a resolution of the Lexington-Fayette Urban County Government and the Bond Resolution.

In addition, the Leased Premises (as defined in the Trust Indenture) are being leased by the Corporation to the Lexington-Fayette Urban County Government (the “Urban County Government”) for a period coterminous with the final maturity of the Bonds, pursuant to a Lease Agreement, dated as of August 1, 2020 (the “2020 Lease Agreement”) by and between the

D-1

Corporation and the Urban County Government. Lease rental payments (the “Lease Rental Payments”) by the Urban County Government to the Corporation under the 2020 Lease Agreement are required to be sufficient to pay when due the principal of and the interest and the redemption premium, if any, on the Bonds.

In our capacity as Bond Counsel, we have examined such documents and matters and conducted such research as we have deemed necessary to enable us to express the opinions set forth herein. As to certain questions of fact, we have relied upon statements and certifications of certain of the officers, officials, directors and employees of the Corporation, consulting engineers and consulting financial experts and public officials. In rendering the opinions set forth herein, we have assumed the authenticity of all documents submitted to us as originals, the legal capacity of natural persons and the conformity to the originals of all documents submitted to us as copies. We have assumed that parties to contracts and documents other than the Corporation had the requisite power and authority to enter into and perform all obligations of all contracts and documents to which they are parties. We have assumed the due authorization by all requisite action, and the execution and delivery by such other parties of such contracts and documents, and the validity and binding effect thereof on such other parties. We have also relied, for purposes of the opinions set forth below, on the representations and warranties made in such documents by all parties thereto.

We have examined certified copies of the Trust Indenture, the Bond Resolution and the 2020 Lease Agreement and have relied on the representations made therein by the parties thereto, without undertaking to verify the same by independent investigation. We have also examined a conformed copy of an executed and authenticated 2019 Series A Bond.

Based upon the foregoing, it is our opinion that, as of the date hereof:

1. The Corporation is a duly organized and existing nonprofit, no stock corporation, organized and existing under the provisions of Chapter 58 and Chapter 273 of the Kentucky Revised Statutes to act as the agency and instrumentality of the Lexington-Fayette Urban County Government.

2. The Corporation has the valid right and lawful authority to adopt the Bond Resolution, enter into the Trust Indenture, enter into the 2020 Lease Agreement, issue the Bonds and perform its duties, obligations and covenants pursuant to the terms and conditions of the Bond Resolution.

3. The Bonds have been duly authorized and issued by the Corporation at the direction of the Lexington-Fayette Urban County Government and are the valid and binding limited and special obligations of the Corporation enforceable in accordance with their terms.

4. The Trust Indenture and the 2020 Lease Agreement have been duly authorized, executed and delivered by the Corporation and constitute valid and binding legal obligations of the Corporation, enforceable in accordance with their respective terms.

5. The 2020 Lease Agreement has been duly authorized, executed and delivered by the Urban County Government and constitutes a valid and binding legal obligation of the Urban County Government, enforceable in accordance with its terms.

D-2

6. The Lease Rental Payments, as defined in the 2020 Lease Agreement, unless paid from other sources, are payable from taxes to be levied by the Urban County Government without limitation as to rate.

7. The Bonds are valid and binding special obligations of the Corporation and are enforceable in accordance with their terms, payable from and secured by a pledge of the Pledged Receipts, as defined in the Trust Indenture, and the Lease Rental Payments.

8. Under existing law, including current statutes, regulations, rulings and judicial decisions, interest on the Bonds is fully includible in gross income for federal income tax purposes.

9. Under the laws of the Commonwealth of Kentucky, as presently enacted and construed, interest on the Bonds is exempt from income taxation by the Commonwealth of Kentucky, and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and all of its political subdivisions and taxing authorities.

Except as stated above, we express no opinion as to any federal or Kentucky tax consequences arising from the receipt of interest on the Bonds.

The scope of this opinion is strictly limited to matters addressed above and no opinion is expressed hereby regarding such other federal or Kentucky tax consequences that may arise due to ownership of the Bonds.

In giving this opinion, we have relied upon covenants and certifications of facts, estimates and expectations made by officials of the Corporation and the Urban County Government and others contained in the transcript which we have not independently verified. Rights of the holders of the Bonds and the enforceability thereof under the same may be subject to the exercise of judicial discretion, the sovereign police powers of the Commonwealth of Kentucky and the Constitutional powers of the United States of America, and to bankruptcy, insolvency, reorganization, moratorium and other laws for the relief of debtors.

Very truly yours,

D-3

APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE

[SEE ATTACHED]

E-1

CONTINUING DISCLOSURE CERTIFICATE

THIS CONTINUING DISCLOSURE CERTIFICATE (the “Certificate”) is executed and delivered the ______ day of August, 2020 by the LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, a political subdivision of the Commonwealth of Kentucky (the “Urban County Government”) and the LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT PUBLIC FACILITIES CORPORATION, a nonprofit, nonstock corporation acting as the agency, instrumentality and constituted authority for the Urban County Government (the “Corporation”) in connection with the issuance of its $33,190,000∗ Lexington-Fayette Urban County Government Public Facilities Corporation Taxable Project Refunding Bonds, Series 2020 (Lexington-Fayette Urban County Government General Obligation) (the “Bonds”). The Bonds are authorized pursuant to KRS Section 58.180 and Sections 273.161 to 273.390, inclusive (collectively, the “Act”), and are being issued in accordance with (i) an authorizing resolution adopted by the Board of Directors of the Corporation on July 7, 2020 (the "Bond Resolution"); (ii) an ordinance adopted by the Urban County Council of the Lexington-Fayette Urban County Government (the “Urban County Council”) on July 9, 2020 (the “Approving Ordinance”), approving and ratifying the actions of the Corporation in connection with such issuance; and (iii) a Trust Indenture, dated as of August 1, 2020 (the “Trust Indenture”), by and between the Corporation and The Huntington National Bank, as trustee (the “Trustee”). The Urban County Government certifies, covenants and agrees as follows:

SECTION 1. Purpose of the Certificate.

This Certificate is being executed and delivered by the Urban County Government to provide for the disclosure of certain information concerning the Bonds on an on-going basis as set forth herein for the benefit of Bondholders (as hereinafter defined) in accordance with the provisions of Securities and Exchange Commission Rule 15c2-12, as amended from time to time (the “Rule”).

SECTION 2. Definitions; Scope of this Certificate.

All terms capitalized but not otherwise defined herein shall have the meanings assigned to those terms in the Rule, the Trust Indenture, and/or the Bonds. Notwithstanding the foregoing, the term “Disclosure Agent” shall mean the Urban County Government, or any disclosure agent appointed or engaged by the Urban County Government; any successor disclosure agent shall automatically succeed to the rights and duties of the Disclosure Agent hereunder, without any amendment hereto. The following capitalized terms shall have the following meanings:

“Annual Financial Information” shall mean a copy of the annual audited financial information prepared for the Urban County Government which shall include, if prepared, a balance sheet, a statement of revenue and expenditure and a statement of changes in fund balances. All such financial information shall be prepared using Governmental Accounting Standards Board (GASB), provided, however, that the Urban County Government may change the accounting principles used for preparation of such financial information so long as the Urban County Government includes as information provided to the public a statement to the effect that different accounting principles are being used, stating the reason

∗ Preliminary; subject to change.

E-2

for such change and how to compare the financial information provided by the differing financial accounting principles Any or all of the items listed above may be set forth in other documents, including Offering Documents of debt issues of the Urban County Government or related public entities, which have been transmitted to the MSRB, or may be included by specific reference to documents available to the public on the MSRB's Internet Website or filed with the SEC.

“Beneficial Owner” shall mean any person which has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including personal holding Bonds through nominees, depositories or other intermediaries).

“Bondholders” shall mean any holder of the Bonds and any Beneficial Owner thereof.

“Event” shall mean any of the following events with respect to the Bonds:

(i) Principal and interest payment delinquencies;

(ii) Non-payment related defaults, if material;

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties;

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties;

(v) Substitution of credit or liquidity providers, or their failure to perform;

(vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax-exempt status of the security;

(vii) Modifications to rights of security holders, if material;

(viii) Bond calls, if material, and tender offers (except for mandatory scheduled redemptions not otherwise contingent upon the occurrence of an event);

(ix) Defeasances;

(x) Release, substitution or sale of property securing repayment of the securities, if material;

(xi) Rating changes;

E-3

(xii) Bankruptcy, insolvency, receivership or similar event of the obligated person (Note: For the purposes of this event, the event is considered to occur when any of the following occur: The appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person);

(xiii) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;

(xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material;

(xv) Incurrence of a Financial Obligation of the District, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the District, any of which affect security holders, if material; and

(xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the District, any of which reflect financial difficulties.

The SEC requires the listing of (i) through (xvi) although some of such events may not be applicable to the Bonds.

For purposes of this transaction with respect to Events as set forth in the Rule:

(a) there are no debt service reserve funds applicable to the Bonds;

(b) there are no credit enhancements applicable to the Bonds;

(c) there are no liquidity providers applicable to the Bonds; and

(d) there is no property securing the repayment of the Bonds.

“MSRB” shall mean the Municipal Securities Rulemaking Board.

“Offering Document” shall mean the Official Statement dated August ____, 2020.

E-4

“Operating Data” shall mean an update of the Operating Data contained in the Offering Document as provided in Appendix B thereto.

“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the offering of the Bonds.

“SEC” shall mean the Securities and Exchange Commission.

“State” shall mean the Commonwealth of Kentucky.

SECTION 3. Disclosure of Information.

(A) Information Provided to the Public. Except to the extent this Certificate is modified or otherwise altered in accordance with Section 4 hereof, the Urban County Government shall make, or shall cause the Disclosure Agent to make, public the information set forth in subsections (1), (2) and (3) below:

(1) Annual Financial Information and Operating Data. Annual Financial Information and Operating Data at least annually not later than nine months following the end of the Urban County Government’s fiscal year beginning with the fiscal year ending June 30, 2020 and continuing with each fiscal year thereafter. If the Disclosure Agent is an entity or person other than the Urban County Government, then the Urban County Government shall provide the Annual Financial Information and Operating Data to the Disclosure Agent not later than fifteen (15) Business Days prior to the disclosure date referenced above. The Annual Financial Information and Operating Data may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information; provided that the audited financial statements of the Urban County Government may be submitted separately from the balance of the Operating Data and later than the date required above for the filing of the Annual Financial Information and Operating Data if they are not available by that date.

(2) Event Notices. Notice of the occurrence of an Event, in a timely manner, not in excess of ten (10) business days after the occurrence of the Event.

(3) Failure to Provide Annual Financial Information or Operating Data. Notice of the failure of Urban County Government to provide the Annual Financial Information or Operating Data by the date required herein.

(4) Other. Notice of any material change in the accounting principles applied in the preparation of its annual financial statements, any change in its fiscal year, or any failure to appropriate funds necessary to perform this Continuing Disclosure Certificate.

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(B) Information Provided to Public. Annual Financial Information and, subject to the timing requirement set forth in subsection (A)(2) of this Section 3, notice of all Event occurrences shall be made public on the same day as notice thereof is given to the Bondholders of outstanding Bonds, if required pursuant to the Authorizing Legislation or the Bonds, and shall not be made public before the date of such notice.

(C) Means of Making Information Public.

(1) Information shall be deemed to be made public by the Urban County Government or the Disclosure Agent under this Certificate if it is transmitted as provided in subsection (C)(2) of this Section 3 by the following means:

(a) to the Bondholders of outstanding Bonds, by first class mail, postage prepaid;

(b) to the MSRB, in an electronic format as prescribed by the MSRB, accompanied by identifying information as prescribed by the MSRB (a description of such format and information as presently prescribed by the MSRB is included in Exhibit A hereto); and/or

(c) to the SEC, by (i) electronic facsimile transmissions confirmed by first class mail, postage prepaid, or (ii) first class mail, postage prepaid; provided that the Urban County Government or the Disclosure Agent is authorized to transmit information to the SEC by whatever means are mutually acceptable to the Disclosure Agent or the Urban County Government, as applicable, and the SEC.

(2) Information shall be transmitted to the following:

(a) all information to be provided to the public in accordance with subsection (A) of this Section 3 shall be transmitted to the MSRB;

(b) all information described in clause (a) shall be made available to any Bondholder upon request, but need not be transmitted to the Bondholders who do not so request.

(c) to the extent the Urban County Government is obligated to file any Annual Financial Information or Operating Data with the MSRB pursuant to this Agreement, such Annual Financial Information or Operating Data may be set forth in the document or set of documents transmitted to the MSRB, or may be included by specific reference to documents available to the public on the MSRB’s Internet Website or filed with the SEC.

With respect to requests for periodic or occurrence information from Bondholders, the Urban County Government or Disclosure Agent may require payment by requesting holders of a reasonable charge for duplication and transmission of the information and for the Urban County Government's or Disclosure Agent's administrative expenses incurred in providing the information.

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SECTION 4. Amendment or Modification.

Notwithstanding any other provision of this Certificate, the Urban County Government may amend this Certificate and any provision of this Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel expert in federal securities laws to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule as well as any change in circumstance.

SECTION 5. Miscellaneous.

(A) Termination. The Urban County Government's obligations under this Certificate shall terminate when all of the Bonds are or are deemed to be no longer outstanding by reason of redemption or legal defeasance or at maturity.

(B) Additional Information. Nothing in this Certificate shall be deemed to prevent the Urban County Government from disseminating any other information, using the means of dissemination set forth in this Certificate or any other means of communication, or including any other information in any Annual Financial Statement or notice of occurrence of an Event, in addition to that which is required by this Certificate. If the Urban County Government chooses to include any information in any Annual Financial Statement or notice of occurrence of an Event in addition to that which is specifically required by this Certificate, the Urban County Government shall have no obligation under this Certificate to update such information or include it in any future Annual Financial Statement or notice of occurrence of an Event.

(C) Defaults: Remedies. In the event of a failure of the Urban County Government or the Disclosure Agent to comply with any provision of this Certificate any Bondholder may take such action as may be necessary and appropriate, including seeking an action in mandamus or specific performance to cause the Urban County Government or the Disclosure Agent to comply with its obligations under this Certificate. A default under this Certificate shall not constitute a default on the Bonds and the sole remedy available in any proceeding to enforce this Certificate shall be an action to compel specific performance.

(D) Beneficiaries. This Certificate shall inure solely to the benefit of the Urban County Government, the Disclosure Agent, the Participating Underwriter and Bondholders, or beneficial owners thereof, and shall create no rights in any other person or entity.

SECTION 6. Additional Disclosure Obligations.

The Urban County Government acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933, the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, may apply to the Urban County Government, and that under some circumstances compliance with this Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Urban County Government under such laws.

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SECTION 7. Notices.

Any notices or communications to the Urban County Government may be given as follows:

Lexington-Fayette Urban County Government 200 East Main Street Lexington, KY 40507 Attention: Commissioner of Finance Phone: (859) 258-3300 Fax: (859) 258-3385


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[Signature page to the Continuing Disclosure Certificate]

IN WITNESS WHEREOF, the Urban County Government and the Corporation have caused its duly authorized officer to execute this Certificate as of the day and year first above written.


By:

Linda Gorton Mayor

ATTEST: By:

Clerk, Urban County Council


By: Name: Linda Gorton Title: President

ATTEST:

William O’Mara Secretary-Treasurer

Lexington-Fayette Urban County Government Public Facilities Corporation

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EXHIBIT A

MSRB PROCEDURES FOR SUBMISSION OF CONTINUING DISCLOSURE DOCUMENTS AND RELATED INFORMATION

Securities and Exchange Commission Release No. 34-59061 (the “Release”) approves an MSRB rule change establishing a continuing disclosure service of the MSRB’s Electronic Municipal Market Access system (“EMMA”). The rule change establishes, as a component of EMMA, the continuing disclosure service for the receipt of, and for making available to the public, continuing disclosure documents and related information to be submitted by issuers, obligated persons and their agents pursuant to continuing disclosure undertakings entered into consistent with Rule 15c2-12 (“Rule 15c2-12”) under the Securities Exchange Act of 1934. The following discussion summarizes procedures for filing continuing disclosure documents and related information with the MSRB as described in the Release.

All continuing disclosure documents and related information is to be submitted to the MSRB, free of charge, through an Internet-based electronic submitter interface or electronic computer-to-computer data connection, at the election of the submitter. The submitter is to provide, at the time of submission, information necessary to accurately identify: (i) the category of information being provided; (ii) the period covered by any annual financial information, financial statements or other financial information or operating data; (iii) the issues or specific securities to which such document is related or otherwise material (including CUSIP number, issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon rate); (iv) the name of any obligated person other than the issuer; (v) the name and date of the document; and (vi) contact information for the submitter.

Submissions to the MSRB are to be made as portable document format (PDF) files configured to permit documents to be saved, viewed, printed and retransmitted by electronic means. If the submitted file is a reproduction of the original document, the submitted file must maintain the graphical and textual integrity of the original document. In addition, such PDF files must be word-searchable (that is, allowing the user to search for specific terms used within the document through a search or find function), provided that diagrams, images and other non-textual elements will not be required to be word-searchable.

All submissions to the MSRB’s continuing disclosure service are to be made through password protected accounts on EMMA by (i) issuers, which may submit any documents with respect to their municipal securities; (ii) obligated persons, which may submit any documents with respect to any municipal securities for which they are obligated; and (iii) agents, designated by issuers and obligated persons to submit documents and information on their behalf. Such designated agents are required to register to obtain password-protected accounts on EMMA in order to make submissions on behalf of the designating issuers or obligating persons. Any party identified in a continuing disclosure undertaking as a dissemination agent or other party responsible for disseminating continuing disclosure documents on behalf of an issuer or obligated person will be permitted to act as a designated agent for such issuer or obligated person, without a designation being made by the issuer or obligated person as described above, if such party certifies through the EMMA on-line account management utility that it is authorized to disseminate continuing disclosure documents on behalf of the issuer or obligated person under the continuing

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disclosure undertaking. The issuer or obligated person, through the EMMA on-line account management utility, is able to revoke the authority of such party to act as a designated agent.

The MSRB’s Internet-based electronic submitter interface (EMMA Dataport) is at www.emma.msrb.org.

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APPENDIX F BOOK-ENTRY ONLY SYSTEM

The following information concerning DTC and DTC's book-entry system has been obtained from DTC and contains statements that are believed to describe accurately DTC, the method of effecting book-entry transfers of securities distributed through DTC and certain related matters, but neither the Corporation nor the Trustee takes any responsibility for the accuracy of such statements.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC.

DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries

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made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede &. Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of

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such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

The Corporation may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Corporation believes to be reliable, but the Corporation takes no responsibility for the accuracy thereof.

APPENDIX G OFFICIAL TERMS AND CONDITIONS OF BOND SALE

[SEE ATTACHED]

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OFFICIAL TERMS AND CONDITIONS OF BOND SALE




SALE: TUESDAY, AUGUST 4, 2020, AT 11:30 A.M., E.T.

*********************************

BIDS SUBMITTED THROUGH BiDCOMPTM/PARITY®

Notice is hereby given that electronic bids will be received by the Lexington-Fayette Urban County Government Public Facilities Corporation (the “Corporation”) until 11:30 a.m., E.T. on Tuesday, August 4, 2020 (or at such later time and date announced by 12:00 p.m., E.T. on the day preceding the Bid Opening via the BiDCOMPTM/Parity® system or The Municipal Market Monitor (TM3)) for the purchase of its Taxable Project Refunding Bonds, Series 2020 (Lexington-Fayette Urban County Government General Obligation), in the approximate principal amount of $33,190,000*† (the “Bonds”). The Bonds are more fully described in the Preliminary Official Statement dated Tuesday, July 28, 2020, available at www.i-dealprospectus.com. Prior to opening the bids, the Corporation reserves the right to change the principal amount and terms related to the Bonds, cancel the sale, or change the sale date. Such notice of change will be posted via the BiDCOMPTM/Parity® system or www.i-dealprospectus.com. Electronic bids must be submitted through the BiDCOMPTM/Parity® system as described herein and no other form of bid or provider of electronic bidding services will be accepted. Bids will be opened and acted upon later that same day.

The Corporation shall comply with the Notice of Sale requirements of Chapter 424 of the Kentucky Revised Statutes by advertising for bids for the purchase of the Bonds. Advertisement may be publicized by newspaper publication in The Courier-Journal, published in Louisville, Kentucky, the Lexington Herald-Leader, published in Lexington, Kentucky, and The Bond Buyer, published in New York City, New York or, in the alternative, by posting a notice of sale to a nationally recognized electronic bidding system.


* Preliminary; subject to change. † Preliminary; subject to Permitted Adjustment (as defined herein).

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http://www.i-dealprospectus.com/

http://www.i-dealprospectus.com/

STATUTORY AUTHORITY, SECURITY, AND PURPOSE OF ISSUE

Statutory Authority

The Bonds are authorized pursuant to Section 58.180 and Sections 273.161 to 273.390, inclusive, of the Kentucky Revised Statutes and are being issued in accordance with (i) an authorizing resolution adopted by the Board of Directors of the Corporation on July 7, 2020 (the "Bond Resolution"), in its capacity as an agency, instrumentality and constituted authority of the Lexington-Fayette Urban County Government in connection with such issuance, (ii) an ordinance adopted by the Urban County Council of the Lexington-Fayette Urban County Government (the “Urban County Council”) on July 9, 2020 (the “Approving Ordinance”), approving and ratifying the actions of the Corporation in connection with such issuance, and (iii) a Trust Indenture, dated as of August 1, 2020 (the “Trust Indenture”), by and between the Corporation and The Huntington National Bank, as trustee (the “Trustee”).

Security

The Corporation will be obligated to pay the principal of and interest on the Bonds solely from the revenues and funds pledged for their payment as provided in the Trust Indenture and the Lease Agreement, dated as of August 1, 2020 (the “2020 Lease Agreement”), between the Corporation, as lessor, and the Lexington-Fayette Urban County Government as the lessee. All capitalized terms used and not otherwise defined herein, shall have the meanings set forth in the Trust Indenture or the 2020 Lease Agreement.

The Bonds will be secured by (1) the General Obligation Pledge1 of the Lexington-Fayette Urban County Government to make rental payments (the “Lease Rental Payments”) to the Corporation pursuant to the Lease Agreement, dated as of August 1, 2020 (the “2020 Lease Agreement”), by and between the Corporation, as lessor, and the Lexington-Fayette Urban County Government, as the lessee; (2) a pledge of all of the Corporation’s right, title and interest in various funds and accounts under the Trust Indenture; and (3) a subordinated pledge of the revenues of LCC (“LCC Revenues”), which generally consist of (a) money derived under several key contracts, described herein and (b) non-operating revenues, as determined in accordance with generally accepted accounting principles, plus gifts, bequests, contributions, grants, donations and all investment income.

THE OBLIGATION OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT CREATED BY THE 2020 LEASE AGREEMENT CONSTITUTES A FULL GENERAL OBLIGATION OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, AND THE FULL FAITH, CREDIT AND REVENUE OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT ARE PLEDGED FOR THE PROMPT PAYMENT OF THE LEASE RENTAL PAYMENTS.

1 The “General Obligation Pledge” refers to the ability of the Lexington-Fayette Urban County Government to levy and its pledge to levy an ad valorem tax on all property within Lexington-Fayette County in a sufficient amount to pay the principal of and interest on the Bonds when due.

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Background

The Lexington-Fayette Urban County Government, an urban county government and political subdivision of the Commonwealth of Kentucky (the “Lexington-Fayette Urban County Government”), has directed the Corporation to act as its agency, instrumentality and constituted authority in connection with the issuance of the Bonds for the benefit of the Lexington Center Corporation (“LCC”), also an agency, instrumentality and constituted authority of the Lexington-Fayette Urban County Government.

LCC owns and operates the Central Bank Center, which includes certain arena and convention facilities consisting of Rupp Arena (home of the University of Kentucky Men’s Basketball Team), the Lexington Convention Center, and other appurtenances and related improvements (collectively, the “Central Bank Center”). In 2018, at the request of LCC, the Kentucky Bond Development Corporation previously issued its:

(i) Convention Facilities Revenue Bonds, Series 2018 (Lexington Center Corporation Project) dated October 16, 2018, in the original principal amount of $110,855,000 (the “Series 2018 Revenue Bonds”); and

(ii) Transient Room Tax Revenue Bonds, Series 2018A (Lexington Center Corporation Project), dated October 16, 2018, in the original principal amount of $83,605,000 (the “Series 2018A Senior Transient Room Tax Bonds”); and

(iii) Transient Room Tax Revenue Bonds, Subordinate Series 2018B (Lexington Center Corporation Project), dated October 16, 2018, issued in the original principal amount of $13,460,000 (the “Series 2018B Subordinate Transient Room Tax Bonds” and together with the Series 2018A Senior Transient Room Tax Bonds, the “Series 2018 Transient Room Tax Bonds”);

the proceeds of which were used to finance a portion of the costs of the acquisition, construction and equipping of improvements to and expansion of the Central Bank Center (the “Project”). The Series 2018 Revenue Bonds are secured by certain revenues of LCC (the “LCC Revenues”) and the Series 2018 Transient Room Tax Bonds are secured by receipts from a transient room tax assessed by the Lexington-Fayette Urban County Government (the “Transient Room Tax”).

As a result of the COVID-19 pandemic and the related actions under the state of emergency declared in the Commonwealth of Kentucky (the “Commonwealth”), many major events scheduled at the Central Bank Center and other locations within the boundaries of Lexington-Fayette Urban County Government have been cancelled, postponed or rescheduled. These cancellations have resulted in a corresponding decline in certain LCC revenues (the “LCC Revenues”) and in demand for hotel rooms, which in turn has resulted in a decline in receipts from the Transient Room Tax. The Lexington-Fayette Urban County Government has determined that it will be advantageous and in the best interests of the Lexington-Fayette Urban County Government, LCC, and the Corporation to address the current and expected material adverse change in the financial position and results of operations of LCC due to the loss of LCC Revenues and Transient Room Tax receipts by providing for the deferral of certain debt service payments with respect to the Series 2018 Revenue Bonds and the Series 2018 Transient Room Tax Bonds.

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Purpose of the Issue

At the direction of the Lexington-Fayette Urban County Government, the Corporation has adopted the Bond Resolution (as defined herein), authorizing the issuance of the Bonds, the proceeds of which will be used to:

(a) refund a portion of the debt service payable with respect to the Series 2018 Revenue Bonds, the proceeds of which were used to:

(i) finance a portion of the costs of the Project, (ii) fund the debt service reserve fund in connection therewith, and (iii) pay expenses and costs incurred in connection with the issuance

thereof; and

(b) refund a portion of the debt service payable with respect to the Series 2018A Senior Transient Room Tax Bonds, the proceeds of which were used to:

(i) finance a portion of the costs of the Project, (ii) refund certain outstanding notes (iii) fund the debt service reserve fund in connection therewith, and (iv) pay expenses and costs incurred in connection with the issuance

thereof;

(c) fund capitalized interest with respect to the Bonds through and including March 1, 2023; and

(d) pay the cost of issuance of the Bonds.


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BOND MATURITIES, REDEMPTION PROVISIONS AND PAYING AGENT

Maturity Schedule

The Bonds will be dated their date of initial delivery, bearing interest from such date, payable on each March l and September 1, commencing March 1, 2021.

Year (September 1)

Principal Amount to be Redeemed*†

2049 $6,120,000 2050 6,365,000 2051 6,625,000 2052 6,900,000 2053† 7,180,000

TOTAL $33,190,000 Optional Redemption*

The Bonds maturing on or after September 1, 2049 are subject to redemption prior to maturity, by and at the sole option of the Corporation, either in whole or in part on any date on or after September 1, 2030, in integral multiples of $5,000, at a redemption price equal to the principal amount redeemed plus accrued interest to the redemption date.

Redemption Procedures

The Corporation shall give written notice to the Trustee of its election to redeem in the manner provided in and in accordance with the Trust Indenture, of the places where the amounts due upon such redemption are payable, and of the redemption date and of the principal amount of each maturity of the Bonds to be redeemed, which notice shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee.

Unless waived by any Holder of the Bonds to be redeemed, notice of any such redemption shall be given by the Trustee, on behalf of the Corporation, by mailing a copy of an official redemption notice by first class mail, postage prepaid, or by sending a confirmed facsimile, at least 30 days prior to the date fixed for redemption to the registered Holder or Holders of the Bond or Bonds at the address shown on the Register or at such other address as is furnished in writing by such registered Holder to the Registrar and the Trustee; provided that, if less than all of an outstanding Bond of one maturity in a book entry system is to be called for redemption, the Registrar and the Trustee shall give notice to the Depository or the nominee of the Depository that is the Holder of such Bond, and the selection of the beneficial interests in that Bond to be redeemed shall be at the sole discretion of the Depository and its participants; provided further, that, in connection with any optional redemption, the Registrar and the Trustee may, at the written request of the Corporation, provide for conditional notice of optional redemption to the registered Holder or Holders of a Bond or Bonds so long as any revocation of such notice is sent by first class mail,

* Preliminary; subject to change. † Preliminary; subject to Permitted Adjustment (as defined herein).

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postage prepaid or sent by facsimile (immediately followed by written confirmation of receipt of such facsimile transmission) to the registered Holder of a Bond or Bonds at least ten Business Days prior to the redemption date.

Trustee, Paying Agent and Registrar

The Huntington National Bank, Cincinnati, Ohio, will serve as the trustee, bond registrar, paying agent, payee bank, and transfer agent, with respect to the Bonds (the “Trustee”)

BIDDING CONDITIONS AND RESTRICTIONS

The terms and conditions of the sale of the Bonds are as follows:

(A) Electronic Bidding Process. Electronic bids for the Bonds must be submitted through BiDCOMPTM/Parity® system and no other provider of electronic bidding services will be accepted. Subscription to the BiDCOMPTM/Parity® Competitive Bidding System is required in order to submit an electronic bid. The Corporation will neither confirm any subscription nor be responsible for the failure of any prospective bidders to subscribe. For the purposes of the bidding process, the time as maintained by BiDCOMPTM/Parity® shall constitute the official time with respect to all bids whether in electronic or written form. To the extent any instructions or directions set forth in BiDCOMPTM/Parity® conflict with the terms of the Official Terms and Conditions of Bond Sale, this Official Terms and Conditions of Bond Sale shall prevail. Electronic bids made through the facilities of BiDCOMPTM/Parity® shall be deemed an offer to purchase in response to the Notice of Bond Sale and shall be binding upon the bidders as if made by signed, sealed written bids delivered to the Corporation. The Corporation shall not be responsible for any malfunction or mistake made by or as a result of the use of the electronic bidding facilities provided and maintained by BiDCOMPTM/Parity®. The use of BiDCOMPTM/Parity® facilities are at the sole risk of the prospective bidders.

(B) Underwriter’s Discount. Underwriter’s Discount as submitted by the successful bidder shall be held constant. The Underwriter’s Discount as submitted by the successful bidder shall be held constant. The Underwriter’s Discount shall be defined as the difference between the purchase price of the Bonds submitted by the bidder and the price at which the Bonds will be issued to the public, calculated from information provided by the bidder, divided by the par amount of the Bonds bid.

(C) Minimum Purchase Bids. Bidders are required to bid for the entire issue of the Bonds at a minimum price of not less than $32,526,200 (98.00% of par) (excluding original issue discount, if applicable), PAYABLE IN IMMEDIATELY AVAILABLE FUNDS. The maximum interest rate for any maturity is 6.000%, and the interest rate shall be in multiples of 1/8 or 1/100 of 1%, or both.

(D) Determination of Best Purchase Bid. The determination of the best purchase bid for the Bonds shall be made on the basis of all bids submitted for exactly $33,190,000 principal amount of Bonds offered for sale hereunder; but the Lexington-Fayette Urban County Government may adjust the principal amount of Bonds which may be awarded to such best bidder upward by up to $3,315,000 or decreased by an unlimited

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amount (the “Permitted Adjustment”) and to pay the percentage purchase price based upon the aggregate amount of the final bond issue. In the event of such Bonds Permitted Adjustment, no rebidding or recalculation of a submitted bid will be required or permitted. The price at which such adjusted principal amount of Bonds will be sold will be the same price per $1,000 of Bonds as the price per $1,000 for the $33,190,000 of Bonds bid.

(E) Term Bonds. Bidders have the option of specifying that any of the Bonds maturing in any two or more consecutive years may, in lieu of maturing in each of such years, be combined to comprise one or more maturities of such Bonds, scheduled to mature in the latest of such years and be subject to mandatory sinking fund redemption at par in each of the years and in the principal amounts of the applicable term Bonds, scheduled in the year of maturity of the term of the applicable Bonds, which principal amount shall mature in that year.

(F) CUSIP Numbers. The successful purchaser shall pay the CUSIP Service Bureau charge with respect to the Bonds purchased. The CUSIP identification numbers will be printed on the Bonds at the expense of the Corporation. Improper imprintation or the failure to imprint the CUSIP numbers shall not constitute cause for a failure or refusal by the purchaser to accept delivery of and pay for the Bonds in accordance with the terms of any accepted proposal for the purchase of the Bonds.

(G) Final Official Statement. The Corporation will provide to the successful purchaser a Final Official Statement in accordance with SEC Rule 15c2-12. A final Official Statement will be provided in Electronic Form to the successful bidder, in sufficient time to meet the delivery requirements of the successful bidder under SEC and Municipal Securities Rulemaking Board Delivery Requirements, at no cost to the Purchaser.

(H) Good Faith Amount. Bids need not be accompanied by a certified or bank cashier's good faith check, but the successful bidder will be required to wire transfer to the order of the Corporation an amount equal to 2% of the amount of the principal amount of Bonds awarded, by the close of business on the day following the award. Said good faith amount will be forfeited as liquidated damages in the event of a failure of the successful bidder to take delivery of the Bonds when ready. The good-faith amount will be applied (without interest) to the purchase price upon delivery of the Bonds. The successful bidder shall not be required to take delivery and pay for the Bonds unless delivery is made within 45 days from the date the bid is accepted.

(I) DTC. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. They will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Series 2020 Bond certificate will be issued for each maturity of the Bonds of each series, each in the aggregate principal amount of such maturity, and will be deposited with DTC. Purchases of the Bonds under the DTC system must be made by or through securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations (the “Direct Participants”), which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2020

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Bond (a “Beneficial Owner”) is in turn to be recorded on the records of Direct Participants or securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant (the “Indirect Participants”). Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. The successful bidder may also elect to notify the Financial Advisor (as defined herein) within twenty-four (24) hours of the award that standard bond certificates be issued. In the event that certificated Bonds are to be issued at the election of a successful bidder, the costs of printing such Series 2020 Bond Certificates shall be borne by such bidder.

(J) Tax Treatment. In accordance with the final approving legal opinion of Dinsmore & Shohl LLP, Lexington, Kentucky (“Bond Counsel”), on the date of the delivery of the Bonds to the successful bidder, under existing law (i) interest on the Bonds is not excludible from the gross income of the holders thereof for purposes of federal income taxation, and (ii) interest on the Bonds is exempt from Kentucky income taxation and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and any of its political subdivisions. See “TAX TREATMENT” herein.

(K) Financial Advisor. Bidders are advised that Robert W. Baird & Co. Incorporated has been employed as the financial advisor (the “Financial Advisor”) to the Lexington-Fayette Urban County Government in connection with the issuance of the Bonds. Commonwealth Economics Partners, LLC, is serving as the municipal advisor to LCC (the “Municipal Advisor”) in connection with the issuance and sale of the Bonds. The fees of the Financial Advisor and the Municipal Advisor for services rendered with respect to the sale of the Bonds are contingent upon the issuance and delivery thereof.

(L) Determination of Best Bid. Unless bids for the Bonds are rejected, the determination of the best bids for the Bonds will be awarded on an all or none basis on the sale date to the bidder whose bid results in the lowest true interest cost (TIC) to be calculated as that rate (or yield) that, when used in computing the present worth of all payments of principal and interest on the Bonds (compounded semi-annually from the date of the Bonds), produces an amount equal to the purchase price of the Bonds, exclusive of accrued interest. For purposes of calculating the true interest cost, the principal amount of any Term Bonds scheduled for mandatory sinking fund redemption as part of the Term Bond shall be treated as a serial maturity in such year for the applicable series of Bonds. In the event that two or more bidders offer to purchase the Bonds at the same lowest true interest rate, the President of the Corporation, upon the advice of the Secretary-Treasurer of the Corporation, shall determine (in his/her sole discretion) which of the bidders shall be awarded such series of the Bonds. Corporation officials will accept or reject such best bid, provided, however, the Corporation reserves the right to adjust such principal amounts of the Bonds to determine the maturities of its final bond issue and thereafter to increase

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or decrease the total amount of Bonds sold to such best bidder (in $5,000 denominations).. In the event of any such adjustment, no rebidding or recalculation of the bids submitted will be required and the underwriting discount bid by the successful bidder shall be held constant. Underwriting discount is hereby defined as the difference between the purchase price of the Bonds submitted by the successful bidder and the price at which the Bonds are reoffered to the public, divided by the par amount of the Bonds which were bid. Underwriting discount shall be calculated from information submitted by the successful bidder. The Corporation expressly reserves the right: (i) to waive any informalities, (ii) to reject all bids, any incomplete bid or any bid not fully complying with all of the requirements set forth herein, and (iii) to solicit new bids or proposals for the sale of the Bonds or otherwise provide for the public sale of the Bonds if all bids are rejected or the winning bidder defaults, such action to be consistent with Kentucky law.

(M) Additional Information. Additional information, including the Preliminary Official Statement and the Official Terms and Conditions of Bond Sale, may be obtained from the Corporation's Financial Advisor, Robert W. Baird & Co. Incorporated, 500 West Jefferson Street, Louisville, Kentucky 40202, Attention Mr. Chip Sutherland (502) 588-8462 or at http://www.rwbaird.com/public-finance/Baird-Forward-Competitive-Calendar. Further information regarding BiDCOMPTM/Parity® may be obtained from Ipreo, 1359 Broadway - 2nd Floor, New York, NY 10018, Telephone: (877) 588-5030 / (212) 849-5021.

(N) Bid Award. The Corporation expects to award the bid no later than 5:00 p.m. E.T. on Tuesday, August 4, 2020.

(O) Payment of Additional Fees. If the successful bidder seeks to obtain insurance guaranteeing the payment of the principal and/or interest on the Bonds, the Corporation agrees that it will cooperate with the successful bidder in obtaining such insurance, but all of the expenses and charges in connection therewith shall be borne by such bidder and the Corporation shall not be liable to any extent therefor. The Corporation has applied for ratings on the Bonds from Moody's Investors Service, Inc. and S&P Global Ratings, a division of S&P Global, Inc., and will pay the fees associated therewith.


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http://www.rwbaird.com/public-finance/Baird-Forward-Competitive-Calendar

CONTINUING DISCLOSURE

In the Approving Ordinance, the Lexington-Fayette Urban County Government covenants to annually provide certain financial information and operating data (the “Annual Financial Information and Operating Data”) and other information necessary to comply with the requirements of Rule 15c-12 of the Securities and Exchange Commission (the “Rule”), and to transmit the same to the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access system (“EMMA”). Each covenant is for the benefit of and is enforceable by the owners of the Bonds. The specific nature of the Annual Financial Information and Operating Data and a listing of events for which notices shall be provided are set forth in Appendix F – “FORM OF CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the original purchaser of the Bonds in complying with the Rule.

Compliance with Previous Undertakings

(a) Undertakings by the Lexington-Fayette Urban County Government

The Lexington-Fayette Urban County Government is currently in compliance with respect to its undertakings pursuant to certain continuing disclosure agreements with respect to its outstanding general obligation bonds and sewer system revenue bonds (the “Existing LFUCG Disclosure Agreements”).

The Lexington-Fayette Urban County Government filed its annual financial information and operating data, consisting of its Comprehensive Annual Financial Report, including its audited annual financial statements (the “LFUCG CAFR”) with the MSRB through EMMA over the past five years as follows:

Fiscal Year Filing Date 2014 November 24, 2014 2015 November 30, 2015 2016 January 24, 2017 2017 January 2, 2018 2018 February 11, 2019 2019 February 3, 2020

Each such filing was made within nine months after the end of the respective fiscal year, as required by the Existing LFUCG Disclosure Agreements.

(b) Undertakings related to Agencies and Instrumentalities of the Lexington-Fayette Urban County Government

(i) Bonds issued by the Corporation. The Corporation has previously entered into certain continuing disclosure agreements in connection with the issuance of revenue bonds (the “Existing Corporation Disclosure Agreements”). While the Corporation is currently in compliance with respect to its undertakings pursuant to the Existing Corporation Disclosure Agreements, the Corporation did not file certain prior annual financial information and operating data and Event notices over the past five years in a timely manner, as set forth below:

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(A) The LFUCG CAFRs for fiscal years 2011, 2012 and 2013 were not filed on the CUSIP prefix for the Corporation at the times that such filings were initially made by the Lexington-Fayette Urban County Government with respect to its other outstanding bonds, as applicable. The LFUCG CAFRs for fiscal years 2011, 2012 and 2013 were re-filed on the CUSIP prefix for the Corporation on August 31, 2016 and the Lexington-Fayette Urban County Government filed a notice of such late filing with the MSRB through EMMA on September 7, 2016.

(B) The Corporation did not file notices of certain Events in a timely manner as required under the related Existing Corporation Disclosure Agreements as follows:

(1) On September 7, 2016, the Lexington-Fayette Urban County Government, for itself and on behalf of the Corporation, filed an “Event Notice: Rating Change (Downgrades)” with the MSRB through EMMA related to a downgrade by Moody’s of its rating of the bond insurance provider related to the $66,725,000 Lexington-Fayette Urban County Government Mortgage Revenue Refunding Bonds (Courthouse Facilities Project), Series 2006 (the “2006 Corporation Bonds”) and its underlying rating of such 2006 Corporation Bonds, which filing was not made in a timely manner as required by the undertaking for such 2006 Corporation Bonds; and

(2) On October 11, 2019, the Lexington-Fayette Urban County Government, for itself and on behalf of the Corporation, filed an “Event Notice: Rating Changes/Downgrade (2018)” with the MSRB through EMMA with respect to a downgrade by Moody’s on February 2, 2018, of the rating from “Aa3” to “A1” with respect to the Corporation’s $42,590,000 Mortgage Revenue Refunding Bonds (Court Facilities Project), Series 2016 (the “2016 Corporation Bonds”), which filing was not made in a timely manner as required by the undertaking for such 2016 Corporation Bonds.

(ii) Bonds issued by LCC. LCC has previously entered into certain continuing disclosure agreements in connection with the issuance of revenue bonds by itself and by the Kentucky Bond Development Corporation for its benefit (the “Existing LCC Disclosure Agreements”). While LCC is currently in compliance with respect to its undertakings pursuant to the Existing LCC Disclosure Agreements, LCC did not file certain prior annual financial information and operating data over the past five years in a timely manner, as set forth below:

(A) On January 9, 2017, LCC made supplemental filings related to its annual financial information for the fiscal years ending June 30, 2012, June 30, 2013, June 30, 2014, June 30, 2015 and June 30, 2016. Such filing was past the January 1 deadline for the preceding fiscal year, as required by the Existing LCC Disclosure Agreements.

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(B) LCC filed its annual financial information for the (i) fiscal year ending June 30, 2017 on September 29, 2017; (ii) fiscal year ending June 30, 2018 on September 21, 2018, and (iii) fiscal year ending June 30, 2019 on September 19, 2019. Such filings were within the January 1 deadline for the preceding fiscal year, as required by the Existing LCC Disclosure Agreements.

(C) On January 17, 2018, LCC filed notice of the following Events, which filings were not made in a timely manner as required by the Existing LCC Disclosure Agreements: (i) an “Event Notice: Ratings Downgrades (2017)” with respect to a downgrade by Moody’s and S&P of their respective ratings of the bond insurance provider related to the $20,370,000 Lexington Center Corporation Mortgage Revenue Refunding Bonds, Series 2008A (the “2008A LCC Bonds”); (ii) an “Event Notice: Ratings Changes (2010)” with respect to a recalibration by Moody’s on April 23, 2010 of its rating from “A1” to “Aa3” on the 2008A LCC Bonds; and (iii) an “Event Notice: Ratings Changes/Downgrade (2011)” with respect to a downgrade by Moody’s on April 18, 2011 of its rating from “Aa3” to “A1” on the 2008A LCC Bonds.

(D) A notice of redemption with respect to the remaining outstanding 2008A LCC Bonds was sent by the related trustee to DTC on August 2, 2018 and the 2008A LCC Bonds were redeemed on September 4, 2018, however a notice of such bond call was not posted with the MSRB through EMMA in a timely manner, as required by the Existing LCC Disclosure Agreements. On September 25, 2018, LCC posted a notice of such bond call with the MSRB through EMMA and a notice of failure to file with respect thereto.

(iii) Bonds issued by the Lexington-Fayette Urban County Airport Board. The Lexington-Fayette Urban County Airport Board (the “Airport Board”)2 has previously entered into certain continuing disclosure agreements in connection with the issuance of airport revenue bonds (the “Existing Airport Disclosure Agreements”). While the Airport Board is currently in compliance with respect to its undertakings pursuant to the Existing Airport Disclosure Agreements, the Airport Board did not file certain prior annual financial information and operating data over the past five years in a timely manner, as set forth below:

(A) On December 22, 2011, the Airport Board filed its audited financial statements for its fiscal year ended June 30, 2011. The deadline for such filing was November 19, 2011. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

(B) On December 28, 2012, the Airport Board filed its audited financial statements for its fiscal year ended June 30, 2012. The deadline for such filing was October 26, 2012. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

2 The Airport Board is an agency of the Lexington-Fayette Urban County Government.

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(C) On February 4, 2014, the Airport Board filed its audited financial statements for its fiscal year ended June 30, 2013. The deadline for such filing was October 25, 2013. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

(D) On February 4, 2014, the Airport Board filed the annual financial information with respect to the Airport Board required pursuant to the previous undertakings (the “Board Annual Financial Information”) for its fiscal year ended June 30, 2013. The deadline for such filing was January 26, 2014. On September 7, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

(E) On July 20, 2016, the Airport Board filed the Airport Board Annual Financial Information for its fiscal year ended June 30, 2015. The deadline for such filing was January 26, 2016. On July 23, 2016, the Airport Board filed a notice of such late filing with the MSRB through EMMA.

Current and Future Disclosure

The Lexington-Fayette Urban County Government and its agencies listed above have procedures in place to assure compliance with the Rule and the respective continuing disclosure agreements in the future and, except for the late filings mentioned above, are in compliance with the continuing disclosure undertaking requirements of the Rule in connection with the respective bonds which are subject to such requirements. The Lexington-Fayette Urban County Government and its agencies intend to make timely disclosure in the future.

Voluntary Disclosure

On July 24, 2020, LCC filed two Voluntary Disclosure Notices with the MSRB through EMMA, in connection with the Series 2018 Revenue Bonds and the Series 2018 Transient Room Tax Bonds, respectively. LCC voluntarily submitted the Notices in order to keep the marketplace apprised regarding the collateral effects of the COVID-19 Pandemic on its operations and the sources of payment for each respective Series and the proposed debt restructuring through the issuance of the Bonds.

TAX TREATMENT

In the opinion of Bond Counsel, under existing law, (i) interest on the Bonds is not excludible from the gross income of the holders thereof for purposes of federal income taxation, and (ii) interest on the Bonds is exempt from Kentucky income taxation and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and any of its political subdivisions. The form of the opinion of Bond Counsel regarding the Bonds to be delivered at closing is attached as Appendix D to the Preliminary Official Statement.

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These Official Terms and Conditions of Bond Sale have been duly executed and delivered for and on behalf of the Corporation by its President.

/s/ Linda Gorton President

Lexington-Fayette Urban County Government Public Facilities Corporation

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