THE CITY

OF

NEW YORKNEW YORK

COMPREHENSIVE

ANNUAL FINANCIAL REPORT

OF THE

COMPTROLLERFOR THE

FISCAL YEAR ENDED JUNE 30, 2016

SCOTT M. STRINGERComptroller

Compliments of

SCOTT M. STRINGER

Comptroller

The City

of

New York

ComprehensiveAnnual Financial Report

of the

Comptrollerfor the

Fiscal Year Ended June 30, 2016

SCOTT M. STRINGERComptroller

MICHELE MARK LEVINE, CPADeputy Comptroller/Chief Accountant

scott m. stringerComptroller

Comprehensive Annual Financial Report of the Comptroller of The City of New Yorkfor the Fiscal Year Ended June 30, 2016

________________

Table of Contents

PART IINTRODUCTORY SECTION

Comptrollers Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiiiCertificate of Achievement for Excellence in Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxvThe Government of The City of New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxviPrincipal Officials of The City of New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxvii

PART IIFINANCIAL SECTION

Independent Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Managements Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

PART II-ABASIC FINANCIAL STATEMENTS

Government-wide Financial Statements: Statement of Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Statement of Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Statement of Activitiesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Statement of Activitiesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Fund Financial Statements: Governmental FundsBalance SheetJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Governmental FundsBalance SheetJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Governmental FundsStatement of Revenues, Expenditures, and Changes in Fund Balances for the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Governmental FundsStatement of Revenues, Expenditures, and Changes in Fund Balances for the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activitiesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . 50 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activitiesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . 51 General FundStatement of Revenues, Expenditures, and Changes in Fund BalanceBudget and Actualfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 General FundStatement of Revenues, Expenditures, and Changes in Fund BalanceBudget and Actualfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Fiduciary FundsStatement of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Fiduciary FundsStatement of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Fiduciary FundsStatement of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . 56 Fiduciary FundsStatement of Changes in Fiduciary Net Positionfor the year ended June 30, 2015 . . . . . . . . 57 Component UnitsStatement of Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Component UnitsStatement of Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Component UnitsStatement of Activitiesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Component UnitsStatement of Activitiesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . 61

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Notes to Financial Statements: A. Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 B. Reconciliation of Government-Wide and Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 C. Stewardship, Compliance, and Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 D. Detailed Notes on All Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 E. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

PART II-BREQUIRED SUPPLEMENTARY INFORMATION

A. Schedule of Changes in the Citys Net Pension Liability and Related Ratios forSingle-Employer Pension Plans at June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

B. Schedule of the Citys Proportionate Share of the Net Pension Liabilities of Cost-SharingMultiple-Employer Pension Plans at June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

C. Schedule of City Contributions for All Pension Plans for the Fiscal Years ended June 30 . . . . . . . . . . . . . . 143 D. Schedule of Funding Progress for the New York City Other Postemployment Benefits Plan . . . . . . . . . . . . 147

PART II-CSUPPLEMENTARY INFORMATION COMBINING FINANCIAL INFORMATIONGOVERNMENTAL FUNDS

Nonmajor Governmental FundsCombining Balance SheetJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152Nonmajor Governmental FundsCombining Balance SheetJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153Nonmajor Governmental FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balancesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154Nonmajor Governmental FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balancesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Schedule NGF1Nonmajor Capital Projects FundsCombining Balance Sheet ScheduleJune 30, 2016 . . . . . 156Schedule NGF2Nonmajor Capital Projects FundsCombining Balance Sheet ScheduleJune 30, 2015 . . . . . 157Schedule NGF3Nonmajor Capital Projects FundsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158Schedule NGF4Nonmajor Capital Projects FundsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159Schedule NGF5Nonmajor Debt Service FundsCombining Balance Sheet ScheduleJune 30, 2016 . . . . . . . . 160Schedule NGF6Nonmajor Debt Service FundsCombining Balance Sheet ScheduleJune 30, 2015 . . . . . . . . 161Schedule NGF7Nonmajor Debt Service FundsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162Schedule NGF8Nonmajor Debt Service FundsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163Schedule NGF9Nonmajor Debt Service FundsNew York City Tax Lien TrustsCombining Balance Sheet ScheduleJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164Schedule NGF10Nonmajor Debt Service FundsNew York City Tax Lien TrustsCombining Balance Sheet ScheduleJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165Schedule NGF11Nonmajor Debt Service FundsNew York City Tax Lien TrustsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2016 . . . . . . . . . . . 166Schedule NGF12Nonmajor Debt Service FundsNew York City Tax Lien TrustsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2015 . . . . . . . . . . . 167Schedule NGF13Nonmajor Special Revenue FundsCombining Balance Sheet ScheduleJune 30, 2016 . . . . 168Schedule NGF14Nonmajor Special Revenue FundsCombining Balance Sheet ScheduleJune 30, 2015 . . . . 169Schedule NGF15Nonmajor Special Revenue FundsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170Schedule NGF16Nonmajor Special Revenue FundsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171Schedule NGF17Nonmajor Special Revenue FundsNew York City Tax Lien TrustsCombining Balance Sheet ScheduleJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172Schedule NGF18Nonmajor Special Revenue FundsNew York City Tax Lien TrustsCombining Balance Sheet ScheduleJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173Schedule NGF19Nonmajor Special Revenue FundsNew York City Tax Lien TrustsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2016 . . . 174Schedule NGF20Nonmajor Special Revenue FundsNew York City Tax Lien TrustsCombining Schedule of Revenues, Expenditures and Changes in Fund Balancesfor the year ended June 30, 2015 . . . 175

vi

PART II-DSUPPLEMENTARY INFORMATION COMBINING FINANCIAL INFORMATIONFIDUCIARY FUNDS

Pension and Other Employee Benefit Trust FundsCombining Statement of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180Pension and Other Employee Benefit Trust FundsCombining Statement of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181Pension and Other Employee Benefit Trust FundsCombining Statement of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182Pension and Other Employee Benefit Trust FundsCombining Statement of Changes in Fiduciary Net Positionfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183Schedule F1Pension Trust FundsCombining Schedule of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . 184Schedule F2Pension Trust FundsCombining Schedule of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . 185Schedule F3Pension Trust FundsCombining Schedule of Changes in Fiduciary Net Position for the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186Schedule F4Pension Trust FundsCombining Schedule of Changes in Fiduciary Net Position for the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187Schedule F5Pension Trust FundsNew York City Employees Retirement System Combining Schedule of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188Schedule F6Pension Trust FundsNew York City Employees Retirement System Combining Schedule of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189Schedule F7Pension Trust FundsNew York City Employees Retirement System Combining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . . . 190Schedule F8Pension Trust FundsNew York City Employees Retirement System Combining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2015. . . . . . . . . . . 191Schedule F9Pension Trust FundsTeachers Retirement SystemCombining Schedule of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192Schedule F10Pension Trust FundsTeachers Retirement SystemCombining Schedule of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193Schedule F11Pension Trust FundsTeachers Retirement SystemCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194Schedule F12Pension Trust FundsTeachers Retirement SystemCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195Schedule F13Pension Trust FundsBoard of Education Retirement SystemCombining Schedule of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196Schedule F14Pension Trust FundsBoard of Education Retirement SystemCombining Schedule of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197Schedule F15Pension Trust FundsBoard of Education Retirement SystemCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198Schedule F16Pension Trust FundsBoard of Education Retirement SystemCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199Schedule F17Pension Trust FundsNew York City Police Pension FundsCombining Schedule of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200Schedule F18Pension Trust FundsNew York City Police Pension FundsCombining Schedule of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201Schedule F19Pension Trust FundsNew York City Police Pension FundsCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202Schedule F20Pension Trust FundsNew York City Police Pension FundsCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203Schedule F21Pension Trust FundsNew York City Fire Pension FundsCombining Schedule of Fiduciary Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204Schedule F22Pension Trust FundsNew York City Fire Pension FundsCombining Schedule of Fiduciary Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205Schedule F23Pension Trust FundsNew York City Fire Pension FundsCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206Schedule F24Pension Trust FundsNew York City Fire Pension FundsCombining Schedule of Changes in Fiduciary Net Positionfor the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207Schedule F25Other Employee Benefit Trust FundsDeferred Compensation Plans Combining Schedule of Fiduciary Net PositionDecember 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208

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Schedule F26Other Employee Benefit Trust FundsDeferred Compensation Plans Combining Schedule of Fiduciary Net PositionDecember 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209Schedule F27Other Employee Benefit Trust FundsDeferred Compensation Plans Combining Schedule of Changes in Fiduciary Net Positionfor the year ended December 31, 2015 . . . . . . 210Schedule F28Other Employee Benefit Trust FundsDeferred Compensation Plans Combining Schedule of Changes in Fiduciary Net Positionfor the year ended December 31, 2014 . . . . . . 211Schedule F29Agency FundsSchedule of Changes in Assets and Liabilities for the year ended June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212Schedule F30Agency FundsSchedule of Changes in Assets and Liabilities for the year ended June 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

PART II-ESUPPLEMENTARY INFORMATION COMBINING FINANCIAL INFORMATIONCOMPONENT UNITS

Nonmajor Component UnitsCombining Statement of Net PositionJune 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . 218Nonmajor Component UnitsCombining Statement of Net PositionJune 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . 220Nonmajor Component UnitsCombining Statement of Activitiesfor the year ended June 30, 2016 . . . . . . . . . . 222Nonmajor Component UnitsCombining Statement of Activitiesfor the year ended June 30, 2015 . . . . . . . . . . 224

PART II-FOTHER SUPPLEMENTARY INFORMATION

General Fund: Schedule G1Summary of Federal, State and Other Aid Receivables at June 30, 2016 . . . . . . . . . . . . . . . . . . 230 Schedule G2Revenues vs. Budget by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Schedule G3Revenues vs. Budget by Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 Schedule G4Expenditures and Transfers vs. Budget by Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Schedule G5Expenditures and Transfers vs. Budget by Unit of Appropriation Within Agency . . . . . . . . . . . 277 Schedule G6Expenditures and Transfers by Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312

Capital Projects Fund: Schedule CP1Aid Revenues by Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 Schedule CP2Expenditures by Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 Schedule CP3Expenditures and Commitments vs. Authorizations by Agency Through Fiscal Year 2016 . . . 324 Schedule CP4Expenditures by Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326

Capital Assets Used in the Operation of Governmental Funds: Schedule CA1Capital Assets Used in the Operation of Governmental Funds by Source . . . . . . . . . . . . . . . . 330 Schedule CA2Capital Assets Used in the Operation of Governmental Funds by Function . . . . . . . . . . . . . . 331 Schedule CA3Schedule of Changes by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331

PART IIISTATISTICAL SECTION

Schedules of Financial Trends Information: Net Position by CategoryTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 Changes in Net PositionTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 Fund BalancesGovernmental FundsTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 Changes in Fund BalancesGovernmental FundsTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341 General Fund Revenues and Other Financing SourcesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 General Fund Expenditures and Other Financing UsesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Capital Projects Fund Aid RevenuesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 Capital Projects Fund ExpendituresTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 General Fund and Capital Projects FundSources and Uses of CashTen Year Trend . . . . . . . . . . . . . . . . . . 363

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Schedules of Revenue Capacity Information: Assessed Value and Estimated Actual Value of Taxable PropertyTen Year Trend . . . . . . . . . . . . . . . . . . . . . . 366 Property Tax RatesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Property Tax Levies and CollectionsTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Assessed Valuation and Tax Rate by ClassTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 Collections, Cancellations, Abatements and Other Discounts as a Percent of Tax LevyTen Year Trend . . . . 372 Largest Real Estate Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 Personal Income Tax RevenuesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 Uncollected Parking Violation FinesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375

Schedules of Debt Capacity Information: Ratios of Outstanding Debt by TypeTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 Ratios of City General Bonded Debt PayableTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 Legal Debt Margin InformationTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 Pledged-Revenue Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 Capital and Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 Leased City-Owned Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385

Schedules of Demographic and Economic Information: PopulationTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388 Personal IncomeTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388 Nonagricultural Wage and Salary EmploymentTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389 Persons Receiving Public AssistanceTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 Employment Status of the Resident PopulationTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391

Schedules of Operating Information: Number of Full Time City EmployeesTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 Operating Indicators by Function/ProgramTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 Capital Assets Statistics by Function/ProgramTen Year Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 Capital AssetsDepreciation/Amortization and Replacement Cost Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405

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The City of New York

ComprehensiveAnnual Financial Report

of theComptroller

Part I

INTRODUCTORY SECTION

Fiscal Year Ended June 30, 2016

THE CITY OF NEW YORK OFFICE OF THE COMPTROLLER

SCOTT M. STRINGERCOMPTROLLER

October 31, 2016

TO THE PEOPLE OF THE CITY OF NEW YORK

I am pleased to present The City of New Yorks Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2016. Thisreport, the third issued under my administration, shows that The City of New York (City) completed its fiscal year with a GeneralFund surplus, as determined by Generally Accepted Accounting Principles (GAAP), for the 36th consecutive year.

The General Fund remains a primary indicator of the financial activity and legal compliance for the City within the financialreporting model promulgated by the Governmental Accounting Standards Board (GASB). The General Fund had revenues andother financing sources in Fiscal Year 2016 of $79.986 billion and expenditures and other financing uses of $79.981 billion,resulting in a surplus of $5 million. These expenditures and other financing uses include transfers and subsidy payments of$4.038 billion to help eliminate the projected budget gap for Fiscal Year 2017. Fiscal year expenditures and other financing useswere $1.951 billion more than in Fiscal Year 2015, an increase of 2%. Excluding the transfers and subsidy payments to eliminatefuture fiscal year projected gaps, expenditures and other financing uses increased by $1.514 million or 2%. A detailed analysisof the Citys fund and government-wide financial statements is provided in Managements Discussion and Analysis (MD&A),which immediately precedes the basic financial statements contained in this report.

ECONOMIC CONDITIONS IN FISCAL YEAR 2016 AND OUTLOOK FOR FISCAL YEAR 2017

The Citys economy, as measured by the change in real gross city product, grew 3.1% in Fiscal Year 2016, lower than the 3.5%growth in the previous year, but higher than the nations 1.7 %. Similarly, New York Citys private-sector added 98,100 jobs, again of 2.7%, in Fiscal Year 2016, less than the 3.8% added in Fiscal Year 2015, but better than the nations 2.2% gain.

Although the Citys job growth slowed, the composition of newly created jobs improved in Fiscal Year 2016 relative to theprevious five years. About 47% of new private-sector jobs were in the low-wage sector and the remainder was almost equallydivided between middle- and high-wage sectors. Since Fiscal Year 2011, over half of the new private sector jobs created were inthe low-wage sector. Thus, recent job growth trends could signal the return of higher wage jobs. Low-wage jobs pay less than$60,000 and high-wage jobs pay above $119,000 per year. Wages in between are considered medium.

Also, of the total new private-sector jobs created, 45% were in the local sector and 55% were in the export sector, the highestpercentage of export sector jobs since the 58% in Fiscal Year 2012. Export industries, including finance, legal and information,bring wealth from outside of the City. On the other hand, local sector jobs provide support for the export sector and the localpopulation. They include construction, education, and health services.

The unemployment rate fell to 5.3% in Fiscal Year 2016, the lowest rate since Fiscal Year 2008. The labor force grew by 18,100,bringing it to a record level of almost 4.2 million. The Citys residential employment also hit a record high of about 4 million andled to an employment-population ratio of 57.6%, the highest on record. The unemployment rates in all five boroughs fell inFiscal Year 2016 to their lowest level since Fiscal Year 2008. In Fiscal Year 2016, the unemployment rate was 4.5% in Manhattan,4.6% in Queens, 5.3% in Staten Island, 5.4% in Brooklyn, and 7.2% in the Bronx.

Strong job gains have pushed wages higher, except in the securities industry. Overall wages excluding securities industry wages,increased in the first three quarters of Fiscal Year 2016 according to the latest data available. On a year-over-year basis, wages inNew York City grew 0.6% in the first three quarters of Fiscal Year 2016. This is lower than the 2.2% for the nation and the

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historical (since 2001) first three quarters average growth of 2.4%. However, overall growth was dragged down by a 6.5% declinein securities industry wages. Excluding the securities industry, total wage rates grew 2.5%. The decline in securities industrywages could be attributable to a decline in bonuses as a result of lower profits and more stringent federal regulations. Wagesgrew the most in administrative support services (9.7%) and education services (8.1%).

Wall Street profits, as measured by the pre-tax profits for the NYSE member firms, fell 33.5% in Fiscal Year 2016, on a year-over-year basis. The main reasons were losses in trading and underwriting as well as an increase in interest expenses resultingfrom weaknesses in the global economy, market volatility, and uncertainties regarding the U.S. presidential election.

The Outlook for the Citys Economy

Economic growth is expected to continue in both the City and the U.S. at a weak to moderate pace in Fiscal Year 2017. The cityseconomy is influenced by the national economy and while the citys economy has outperformed the nation, there is growingconcern that prolonged national economic weaknesses could lead to a recession and drag the city along.

Despite many years of stimulus from the Federal Reserve (Fed), economic growth in the nation has averaged 1.8% per year sincethe end of the great recession in Fiscal Year 2009. Inflation rates remain below the Feds target rate of 2.0%. Although the labormarket continues to improve, wage growth is still weak and it is widely believed that the Fed lacks the ammunition to fight aneconomic downturn. A weak economy is viewed to be more susceptible to shocks and there are many uncertainties that could leadto a massive shock, including ongoing weaknesses in the global economy, the U.S. presidential election and the uncertainty it createsregarding the future direction of economic policy and market volatility. These uncertainties increase the likelihood of a recession.

Although all of the above are a cause for concern, some data show that the fears of a recession are exaggerated. According to thelatest Blue Chip Economic Indicators published on September 10, 2016, the odds of a U.S. recession beginning in 2017 are23.7%. According to the Federal Reserve Bank of New York, the probability of a recession 12 months ahead is less than 8.4% asof September. Both probabilities are low by historical standards.

Other causes of concern include the economic slowdown in China and the United Kingdoms vote to withdraw from the EuropeanUnion (E.U.), known as Brexit. If Chinas economic slowdown persists, it has the potential to cause a financial shock that couldhave negative impacts on the global economy. However, it is likely that China will use its monetary resources if necessary to limitany further slowdown and thus mitigate the impact on the global economy. The major concern regarding Brexit is the potential of abreakup of the E.U. which would have significant impact on the European economies and financial markets. However it is likelythat E.U. policy makers will take pre-emptive measures to avert a breakup, or if that fails, minimize its fallout.

Many of the leading economic indicators of a recession show no immediate danger. Some of the best leading indicators of afuture recession are an inverted yield curve, when the short-term yield (i.e., 3-month Treasury) is higher than the long-term rate(i.e., 10-year Treasury); sharp, sustained declines in the stock market; rising interest rates; big spikes in oil prices; rising inflationrates; and overinvestment in residential investment. None of these leading indicators currently signaling a recession.

Furthermore, there are some positive domestic factors that should induce real GDP growth. Chief among these factors is therebuilding of business inventories. Inventory depletion has been a culprit in reducing GDP growth for the past five consecutivequarters. During that time, it has deducted anywhere between 0.4 to 1.2 percentage points from GDP growth. This trend isexpected to reverse in Fiscal Year 2017 and consequently boost GDP growth. Second, consumer demand should remain strong.Tight labor markets, low inflation rates, and increasing wealth from strong housing and stock markets, together with highconsumer confidence should keep consumer spending strong.

Finally, the Fed is very aware of downside risks and is unlikely to make a hawkish policy mistake. There will probably be, atmost, two rate hikes in Fiscal Year 2017 and the yield on the 10-year Treasury will probably reach 2.2% by end of Fiscal Year2017. This should bode well for domestic demand, consumer spending, private investment, and government expenditure. Also,the low interest rate environment should help the housing market and the stock market to recover more. The low interest rateenvironment could also be a great opportunity for the government to increase spending on infrastructure.

Therefore, while the U.S. economy could slow down further next year, a severe recession is unlikely given the information thatis currently available. This should help the city continue its moderate growth.

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REPORTS FROM THE DIVISIONS AND BUREAUS OF THE COMPTROLLERS OFFICE

BUREAU OF BUDGET

Division of Fiscal and Budget Studies

The Division of Fiscal and Budget Studies in the Comptrollers Bureau of Budget monitors the Citys finances, capital spending,and economy. In analyzing the Citys budget and financial plan, the division focuses on the Citys debt capacity and economicoutlook. After each budget modification, the division conducts an in-depth analysis of the Mayors budget proposal and shortlythereafter releases a report to the general public that highlights the major findings. The report reviews the main components ofthe Citys budget, analyzing the soundness of the Citys budgetary and economic assumptions, changes in expense and capitalbudget priorities, and financial and economic conditions and developments affecting the Citys fiscal outlook and budget.Modification of the Citys current year budget and four-year financial plan occurs quarterly during the fiscal year. Coincidingwith the release of quarterly modifications, the budget review and preparation generally adheres to the following cycle: (1) theMayors submission of a preliminary budget for the ensuing fiscal year in January, (2) the Mayors presentation of the ExecutiveBudget to the City Council in April, (3) budget adoption prior to July 1, the beginning of the new fiscal year, and (4) the firstquarterly modification to the Adopted Budget, which is typically released in November. As part of the budget process, thedivision prepares a number of reports and letter statements as mandated by the New York City Charter:

An annual report to the City Council on the state of the Citys economy and finances by December 15, including anevaluation of the Citys updated financial plan.

An annual report on the Citys capital debt and obligations including the maximum amount of debt the City maysoundly incur in subsequent fiscal years and the indebtedness against the General Obligation debt limit in the currentand subsequent three fiscal years as stipulated by the New York State Constitution.

A certified statement of debt service submitted by the Comptroller to the Mayor and the City Council by March 1.The statement, which is published in The City Record, contains a schedule of the appropriations for debt service forthe subsequent fiscal year.

A letter statement certifying the Adopted Budget Resolutions and filed with the City Clerk.

FY 2016 Analysis

The City adopted a Fiscal Year 2016 (July 1-June 30) budget totaling $77.953 billion (less Interfund Agreements) on June 26,2015. Actual Fiscal Year 2016 tax revenues were $1.4 billion more than projected in the Fiscal Year 2016 Adopted Budget due tothe ongoing economic recovery and to conservative forecasting. Similarly, non-tax City-funds revenues were $514 million morethan projected in the Fiscal Year 2016 Adopted Budget. A reduction of $1 billion to the General Reserve, the roll of a $500million Capital Stabilization Reserve to Fiscal Year 2017, debt service savings of $581 million, and a net decrease of $502million in all other City-funds expenditures along with the aforementioned revenue increases provided the City with additionalresources above the Adopted Budget projections.

The additional resources cited above allowed the City to deposit an additional $500 million into the Retiree Health BenefitsTrust Fund. The remaining resources were used to prepay $1.734 billion of Fiscal Year 2017 New York City Transitional FinanceAuthority debt service, $1.76 billion of Fiscal Year 2016 General Obligation debt service, $100 million of lease debt service and$400 million of subsidies to the NYC Health + Hospitals.

Division of Financial Analysis

The Division of Financial Analysis (DFA) within the Bureau of Budget monitors the daily cash balance in the Citys CentralTreasury to ensure adequate levels of cash-on-hand throughout the fiscal year. DFA forecasts daily cash balances to determinethe potential need and timing for seasonal borrowing. The Comptroller issues a Cash Letter with these projections and regularlyupdates it throughout the year. DFA also prepares the Quarterly Cash Report, which provides an overview of the Citys cashposition and highlights major changes during the quarter. The Citys Central Treasury carried an average daily unrestricted cashbalance of $10.68 billion during Fiscal Year 2016, with a fiscal year-end balance of $11.72 billion. For the twelfth consecutiveyear, the City did not need to issue short-term notes.

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BUREAU OF LAW AND ADJUSTMENT

The Bureau of Law & Adjustment (BLA) is responsible for carrying out the Comptrollers Charter-mandated responsibility ofadjusting claims for and against the City.

Claims against the City arise out of the vast undertakings of City agencies and NYC Health + Hospitals. The City is generallyuninsured with respect to risks, including, but not limited to, property damage and personal injury claims. Generally, the cost ofclaims is paid out of the Citys General Fund.

The City spent $720 million on judgments and claims in Fiscal Year 2016, an increase of $40 million from the prior year. TheComptrollers Office also approved approximately $9.1 million in affirmative settlementsthat is monies paid to the City basedon its claims against othersin Fiscal Year 2016.

In Fiscal Year 2016, the Comptrollers Office collected $7.8 million from claimants who received settlements from the City andwho had outstanding obligations to the City for public assistance and child support. This achievement was made possible bypartnering with other City agencies, particularly with the Human Resources Administration/Department of Social Services, toimprove the automated City systems.

The Comptrollers Office continues to expand efforts to collect compensation from those who have damaged City property. InFiscal Year 2016, the Comptrollers Office collected $1.68 million in property damage affirmative claims.

The Comptrollers Office has been successfully working with the New York State Office of Victims Services and the New YorkState Attorney Generals Office to identify settlements reached with convicted persons from which victims can recover money(Son of Sam Law-New York State Executive Law 632-a). BLA has collected a total of $286,000 in settlements for victims ofcrime by the end of Fiscal Year 2016. As of the end of the fiscal year, the Comptroller was withholding $1.1 million pending theoutcome of crime victims civil actions against the convicted persons settlements.

BUREAU OF LABOR LAW

The Bureau of Labor Law (BLL) determines prevailing wage rates and enforces the prevailing wage laws on New York Citypublic works projects and building service contracts. BLLs statutory authority is contained in Sections 220 and 230 of the NewYork State Labor Law, which provides that the New York City Comptroller shall be the enforcer of these laws. BLL alsodetermines prevailing wage rates and prosecutes prevailing wage and living wage cases under Section 421-a of the New YorkState Real Property Tax Law and Section 6-109 of the New York City Administrative Code, and investigates alleged violations ofSections 6-130 and 6-134 of the New York City Administrative Code.

In Fiscal Year 2016, BLL assessed over $10.2 million in back pay and interest against private contractors. In addition, BLLassessed over $1.6 million in penalty money against those contractors. During the same fiscal year, BLL opened up 98 new casesand resolved 88 cases. In that same time period, BLL debarred 14 contractors from New York State and City public works foregregious conduct.

During Fiscal Year 2016, the Comptroller issued final Orders after trials at the New York City Office of Administrative Trials andHearings in three cases of note:

Paramount Security Group and its owner were ordered to pay over $1.8 million in unpaid wages, benefits, interestand civil penalties for a willful violation involving 28 security guards employed at NYC Health & Hospitals offices.NYC Health & Hospitals was faulted for continuing to approve contractual reimbursement rates that did not allowfor payment of prevailing wages and benefits.

Astro Communications was ordered to pay over $3 million in unpaid wages, benefits, interest and civil penalties andwas debarred from public works projects for five years for willful violations involving 25 employees on HHC contractsfor installation of telephone and data cables at two public hospitals.

Astoria General Contracting and its owner were ordered to pay over $1.1 million in unpaid wages, benefits, interestand civil penalties and were debarred from public works projects for five years for willful violations involving threeemployees on New York City Department of Education contracts for ironwork at numerous public schools.

In addition, in August 2015 BLL launched an outreach initiative to connect over 1,000 workers with unclaimed prevailing wageawards worth over $3.7 million, partnering with community, labor and news media organizations.

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BUREAU OF PUBLIC FINANCE

The Comptrollers Bureau of Public Finance, in conjunction with the Mayors Office of Management and Budget, is chargedwith issuing debt to finance the Citys capital program and managing the Citys portfolio of outstanding bonds. The City borrowsfor capital projects in accordance with Comptrollers Directive 10, which allows for borrowing on projects with a useful life offive years or longer and costing $35,000 or more.

In Fiscal Year 2016, the City and the New York City Transitional Finance Authority, which is a blended component unit, issued$7.31 billion of long-term debt to finance the Citys capital needs and refinance higher interest rate bonds. The New York CityTax Lien Trust, NYCTLT 2015-A, sold $71.80 million bonds to monetize delinquent taxes and other liens. Also, the New YorkCity Municipal Water Finance Authority (Water Authority), a discretely presented component unit, issued $2.39 billion of long-term debt to finance the Water Authoritys capital plan and to refinance outstanding bonds for interest savings.

With continued economic and political uncertainty in global markets, the City and its related issuers enjoyed a continued lowinterest rate environment. The City was able to both finance its new money capital needs at attractive rates and refinanceoutstanding high-coupon bonds to provide direct budget relief to City taxpayers and water and sewer ratepayers. The City issueda total of $3.86 billion of refunding bonds through the General Obligation (GO), New York City Transitional Finance Authority(TFA), and Water Authority credits. This accounted for 39% of the total issuance for these credits and generated a total of$770.65 million in budgetary savings over the life of the bonds.

The City and its related issuers file required Continuing Disclosure relevant to their respective bondholders with the MunicipalSecurities Rulemaking Board (MSRB) Electronic Municipal Market Access (EMMA). These disclosures are available atemma.msrb.org.

General Obligation (GO)

New York City GO bonds have been issued for over 200 years and are backed by the Citys faith and credit. All real propertysubject to taxation by the City is subject to the levy of ad valorem taxes, without limitation as to rate or amount, to pay theprincipal of and interest on GO bonds.

As of June 30, 2016, the Citys outstanding GO debt totaled $38.07 billion, consisting of $31.13 billion of fixed ratebonds and $6.94 billion of variable rate bonds.

All GO bonds issued by the City in Fiscal Year 2016 were refunding bonds. A total of $2.51 billion was issued torefund certain outstanding bonds at lower interest rates. In Fiscal Year 2016, the City also converted $74.06 millionof outstanding bonds between interest rate modes.

The proceeds of the refunding issues were placed in irrevocable escrow accounts to pay, when due, principal, interest,and applicable redemption premium, if any, on the refunded bonds. The refundings produced budgetary dissavings of$18.39 million in Fiscal Year 2016 and budgetary savings of $170.72 million and $82.53 million in Fiscal Years 2017and 2018 respectively. The refundings will generate $428.53 million in budgetary savings over the life of the bondsand approximately $397.22 million on a net present value basis.

During Fiscal Year 2016, rating agencies Standard & Poors and Fitch Ratings maintained the GO rating at AA.Moodys Investors Service continued to rate GO bonds Aa2.

During Fiscal Year 2016, New York City General Obligation variable rate debt traded at the following average interest rates:

Tax-Exempt Taxable ___________ _________

Dailies(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10% Weeklies(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.12% 0.47%Auction Rate Securities 7 Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.72% Index Floaters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.77% 1.08%2-Day Mode(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10%

(1) Remarketed with bank credit and/or liquidity support; rates do not include bank fees.

New York City Transitional Finance Authority (TFA)

Future Tax Secured Bonds

The New York State Legislature created the Transitional Finance Authority (TFA) in 1997 so the City could continue to fund itscapital commitments in the face of an approaching General Obligation debt limit. The TFA, a bankruptcy-remote separate legal

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entity, was authorized to issue debt secured by the Citys collections of personal income tax and, if necessary, sales tax. TFA isauthorized to have $13.50 billion of Future Tax Secured debt outstanding without limitation. In addition, the law provides thatfurther Future Tax Secured Bonds outstanding over the $13.50 billion limit, together with the amount of indebtedness contractedby the City, will not exceed the debt limit of the City. As of June 30, 2016, the debt incurring margin within the debt limit of theCity was $22.98 billion on a combined basis for General Obligation and TFA Future Tax Secured Bonds.

In September 2001, the New York State Legislature approved a special TFA authorization of $2.5 billion to fund capital andoperating costs relating to or arising from the events of September 11, 2001 (Recovery Bonds). The legislature also authorizedthe TFA to issue debt without limit as to principal amount that would be secured solely by state or federal aid received as a resultof the disaster. The TFA has issued $2 billion in Recovery Bonds. TFA Recovery Bonds do not count against the debt limitsdescribed above.

As of June 30, 2016, the total debt outstanding of TFA Future Tax Secured Bonds was $29.31 billion, consisting of$1.03 billion of Senior Bonds and $28.28 billion Subordinate Bonds, which includes $906.43 million of RecoveryBonds.

Of the $4.05 billion TFA bonds issued in Fiscal Year 2016, a total of $3.65 billion was issued for new money capitalpurposes and $399.66 million was issued to refund certain outstanding bonds at lower interest rates. In Fiscal Year2016, the TFA did not convert any outstanding bonds between interest rate modes. The proceeds of the refundingswere placed in irrevocable escrow accounts to pay, when due, principal, interest, and applicable redemption premium,if any, on the refunded bonds. The refundings will generate $67.76 million in budgetary savings over the life of thebonds and approximately $63.21 million on a net present value basis.

As of June 30, 2016, the TFAs outstanding variable rate debt totaled $4.25 billion, consisting of $1.01 billion ofSenior Bonds and $3.24 billion of Subordinate Bonds, which includes $726.70 million of Recovery Bonds. DuringFiscal Year 2016, TFAs variable rate debt traded at the following average interest rates:

Tax-Exempt ___________

Dailies(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.13%Weeklies(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.17%Auction Rate Securities 7 Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.46%Index Floaters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.79%2-Day Mode(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10%

In Fiscal Year 2016, Standard & Poors and Fitch Ratings maintained AAA ratings on both Senior Lien and SubordinateLien TFA Bonds. Moodys Investors Service maintained its rating of Aaa on Senior Lien and Aa1 on SubordinateLien Bonds.

(1) Remarketed with bank credit and/or liquidity support; rates do not include bank fees.

Transitional Finance Authority Building Aid Revenue Bonds (TFA BARBs)

In Fiscal Year 2006, the New York State Legislature authorized the TFA to issue bonds and notes or other obligations in anamount outstanding of up to $9.40 billion to finance a portion of the Citys educational facilities capital plan. The legislationfurther authorized the City to assign to the TFA all or any portion of the state aid payable to the City or the Department ofEducation pursuant to Section 3602.6 of the New York State Education Law (State Building Aid) as security for the obligations.Pursuant to this authority, the TFA BARBs credit was created. TFA BARBs are not secured by personal income tax or sales taxrevenues and do not count against the TFA Future Tax Secured Bond debt limits.

In Fiscal Year 2016, TFA issued a total of $750 million BARBs as new money tax-exempt fixed rate bonds. As of June30, 2016, the TFA BARBs outstanding totaled $8.04 billion, all of which is fixed rate.

Both Fitch Ratings and Standard & Poors rate BARBs at AA, while Moodys Investor Services maintained their Aa2rating.

TSASC, Inc.

TSASC, Inc. is a special purpose, bankruptcy-remote local development corporation created under the Not-for-Profit CorporationLaw of the State of New York. TSASC was created as a financing entity whose purpose is to issue and sell bonds and notes tofund a portion of the Citys capital program. TSASC issued debt secured by tobacco settlement revenues (TSRs), which are paidby cigarette companies as part of a Master Settlement Agreement (MSA) with 46 states, including the State of New York, andother U.S. Territories.

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TSASC had no financing activity in Fiscal Year 2016. As of June 30, 2016, TSASC had approximately $1.14 billionof bonds outstanding.

TSASC bond ratings vary by maturity. As of June 30, 2016, Standard and Poors rated TSASC bonds maturing June 1,2022 at BBB-; June 1, 2026 at BB-; June 1, 2034 at B and June 1, 2042 at B-. On June 15, 2016 Fitch Ratingswithdrew all ratings assigned on U.S. tobacco settlement asset-backed securities.

Sales Tax Asset Receivable Corporation (STAR)

STAR is a local development corporation that was created in 2004 by the City of New York to issue bonds for the payment of theoutstanding bonds of the Municipal Assistance Corporation of the City of New York (MAC) and the outstanding bonds of theCity held by MAC. STAR bonds are secured by $170 million paid annually through June 30, 2034 to the Corporation from theNew York State Local Government Assistance Corporation. The Corporation issued $2.5 billion of bonds on November 4, 2004.On September 24, 2014 STAR refinanced the remaining $2.04 billion from the 2004 issuance.

STAR did not have any financing activity in Fiscal Year 2016. As of June 30, 2016, STAR had $1.96 billion of debtoutstanding.

STAR maintained its Aa1 rating from Moodys Investor Services and AA+ from Fitch Ratings throughout Fiscal2016. Standard & Poors also maintained its longstanding AAA rating.

Fiscal Year 2005 Securitization Corporation (FSC)

FSC is a local development corporation created by the City of New York to issue bonds in order to facilitate the restructuring ofan escrow account used to pay debt service on refunded City bonds. In Fiscal Year 2005, $498.85 million of taxable bonds wereissued and are secured by a portfolio of securities previously funded with General Obligation bond proceeds.

FSC had no financing activity in Fiscal Year 2016. As of June 30, 2016, FSC had $175.17 million of debt outstanding.

As of June 30, 2016, the bonds were rated AA+ by Standard and Poors, Aaa by Moodys Investor Services and AAAby Fitch Ratings.

Hudson Yards Infrastructure Corporation (HYIC)

HYIC is a local development corporation established by the City in 2005 to provide financing for infrastructure improvements topromote economic development and growth on Manhattans far West Side, including the extension of the No. 7 subway line. TheHudson Yards Financing District is an approximately 45 square block area generally bounded by Seventh and Eighth Avenues onthe east, West 43rd Street on the north, Eleventh and Twelfth Avenues on the west, and West 29th and 30th Streets on the south.Principal on HYIC bonds is payable from revenues generated by the new development in the Hudson Yards District. To theextent that such revenues are not sufficient to cover interest payments, the City has agreed, subject to appropriation, to makeinterest support payments to HYIC. The interest support payments do not cover principal repayment of the bonds.

HYIC had no financings in Fiscal Year 2016. As of June 30, 2016, HYIC had $3.00 billion bonds outstanding.

The bonds are rated A by Standard & Poors, A2 by Moodys Investors Service, and A by Fitch.

New York City Educational Construction Fund (ECF)

ECF is a public benefit corporation established to facilitate the construction of new school facilities and improvements to existingCity elementary and secondary school buildings, thereby increasing the number of seats for the New York City Department ofEducation. ECF also encourages comprehensive neighborhood development by enabling mixed-use real estate projects whichfeature new school facilities. The City is required to make rental payments on the school portions of the ECF projects sufficientto make debt service payments as they come due on ECF Bonds, less the revenue received by the ECF from the non-schoolportions of the ECF projects.

ECF had no financings in Fiscal Year 2016. As of June 30, 2016, ECF had $240.41 million bonds outstanding.

The bonds are rated AA- by Standard & Poors and Aa3 by Moodys Investors Service.

New York City Tax Lien Trusts

The New York City Tax Lien Trusts (NYCTLTs) are Delaware statutory trusts which were created to acquire certain liens securingunpaid real estate taxes, water rents, sewer surcharges, and other payables to the City and the New York City Water Board in

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exchange for the proceeds from bonds issued by the NYCTLTs, net of reserves funded by the bond proceeds and bond issuancecosts. The City is the sole beneficiary of the NYCTLTs and is entitled to receive distributions from the NYCTLTs after paymentsto the bondholders and certain reserve requirements have been satisfied.

In Fiscal Year 2016, the New York City Tax Lien Trust, NYCTLT 2015-A, sold $71.80 million bonds.

As of June 30, 2016, the New York City Tax Lien Trusts had $31.86 million in bonds outstanding.

The bonds are rated AAA by Kroll Bond Rating Agency, Inc. and Aaa by Moodys Investors Service.

New York City Municipal Water Finance Authority

The New York City Municipal Water Finance Authority, a bankruptcy-remote separate legal entity established in Fiscal Year 1986,has the power to issue bonds to finance the renovation and improvement of the Citys water and sewer facilities. The Authority,together with the New York City Water Board and the New York City Department of Environmental Protection (DEP), administersthe Citys water and wastewater system. DEP operates and maintains the system, while the Water Board has the primaryresponsibility to levy and collect water and wastewater rates and charges, and the Authority finances the systems capital needs.

As of June 30, 2016, the amount of long-term, fixed rate Water Authority debt outstanding was $24.26 billionincluding $1.71 billion of First Resolution and $22.55 billion Second Resolution bonds.

During Fiscal Year 2016, the Water Authority issued $2.39 billion in revenue bonds. Of this total, $1.44 billion wasissued for new money capital purposes and $951.42 million was issued to refund outstanding bonds for interest savings.Additionally, as of June 30, 2016 the Water Authority had $318.83 million in bond anticipation notes outstanding.

The proceeds of the refunding issues were placed in irrevocable escrow accounts to pay, when due, principal, intereston the refunded bonds. The refundings will generate $274.36 million of savings for rate payers over the life of thebonds and $199.41 million in net present value savings.

Of the total Fiscal Year 2016 issuance, approximately $2.14 billion Water Authority bonds were issued as fixed ratedebt and $250.00 million were issued as variable rate debt.

As of June 30, 2016, the amount of outstanding Water Authority variable rate debt outstanding was $4.94 billion ofwhich $1.55 billion was First Resolution and $3.39 billion Second Resolution. This does not include commercialpaper. During Fiscal Year 2016, interest on the Water Authoritys variable rate debt traded at the following averageinterest rates:

Tax-Exempt ___________

Dailies(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10%Weeklies(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.12%

The Water Authority also maintained its tax-exempt commercial paper program, enabling it to access the short-termmarket at advantageous interest rates. The Water Authoritys commercial paper authorization remained at $600million in Fiscal Year 2016. At the end of Fiscal Year 2016, the Water Authority had $200 million of commercialpaper outstanding.

During Fiscal Year 2016, Standard & Poors, Fitch, and Moodys Investors Service maintained their ratings for theWater Authoritys First Resolution bonds at AAA, AA+ and Aa1 respectively. Bonds issued under the Water AuthoritysSecond Resolution were upgraded by Moodys Investor Services in November 2015 to Aa1 from Aa2 and are ratedAA+ by Standard & Poors and Fitch.

(1) Remarketed with bank credit and/or liquidity support; rates do not include bank fees.

Interest Rate Exchange Agreements

To lower borrowing costs over the life of its bonds and to diversify its existing portfolio, the City has from time to time enteredinto interest rate exchange agreements (swaps) and sold options to enter into swaps at future dates. The City received specificauthorization to enter into such agreements under Section 54.90 of the New York State Local Finance Law. No new swaps wereinitiated in Fiscal Year 2016 and one outstanding swap was terminated. As of June 30, 2016, the outstanding notional amount onthe Citys swap agreements in connection with General Obligation debt and City-related debt of the Dormitory Authority of theState of New York was $1.49 billion.

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The Water Authority has also entered into interest rate exchange agreements. In Fiscal Year 2016, the Authority did not initiateor alter any swaps. As of June 30, 2016, the outstanding notional amount on the Water Authoritys various swap agreements was$401.00 million.

BUREAU OF ASSET MANAGEMENT

About the Bureau of Asset Management

The Comptroller is by law the custodian of City-held trust funds and the assets of the New York City Public Pension Funds, andserves as Trustee on four of the five funds. Further, the Comptroller is delegated to serve as investment advisor by all fivepension boards. The Comptrollers Bureau of Asset Management oversees the investment portfolio for each system and relateddefined contribution funds. In this role, the Comptroller provides investment advice, implements Board decisions, and reports oninvestment performance. The Bureau of Asset Management advises the Boards on all investment-related topics, includinginvestment policy and strategy, asset allocation, manager structure, manager selection and financial and economic developmentsthat may affect the systems. The systems portfolios are managed predominantly by external investment managers, and arelargely invested in publicly traded securities, with additional allocations to private equity, real estate, infrastructure, hedge funds,and opportunistic fixed income investments.

Investment Policy

City Treasury

The Comptrollers Office, through the Bureau of Asset Management, invests the Citys cash reserves subject to conservativeinvestment guidelines. City Treasury and fiduciary funds assets were invested in obligations of the U.S. Treasury, various federalagencies, high grade commercial paper, and medium term notes. The maturities of the investments range from one day to five yearswith an average of 300 days. Despite the Federal Reserve Bank maintaining a low interest rate environment, the City earned anaverage of 0.70%, which compares with the average return of 0.18% on three month Treasury bills, and 0.62% for a representativeinstitutional money market fund index. The City earned $145 million in its short-term accounts during Fiscal Year 2016.

Pension Funds

The Comptrollers Office, through the Bureau of Asset Management, serves as the financial advisor to the City pension funds.The Citys primary pension trust funds are New York City Employees Retirement System (NYCERS), Teachers RetirementSystem of The City of New York (TRS), New York City Police Pension Fund (Police), New York City Fire Pension Fund (Fire),and the New York City Board of Education Retirement System (BERS). Each of these pension systems provides pension benefitsthrough its Qualified Pension Plan (QPP) as well as certain other retirement benefits that vary by plan and retiree status. The Citypension funds paid benefits totaling $14.1 billion during Fiscal Year 2016. Employer and employee contributions to the Citypension funds were $10.8 billion and $1.9 billion, respectively. As of June 30, 2016, the City pension systems had aggregateinvestment assets, excluding cash from the settlement of pending purchases and sales, of $165.2 billion representing an increaseof $2.3 billion from the June 30, 2015 value of $162.9 billion. During the fiscal year, the market value of the assets ranged froma low of $153.9 billion to a high of $165.2 billion. These assets include funds invested by certain employee investment plans.

Assets are managed in accordance with investment policy statements adopted periodically by each of the City pension fundsBoard of Trustees in consultation with the Comptrollers Office and the City pension funds independent consultants. Theallocation to each asset class is based in part on an analytical study indicating the expected rates of return and levels of risk andcorrelations for various asset allocations. The policy mix ranged from 63% equity to 70% equity among funds, and each fundpermits the mix to float within a narrow range to limit portfolio turnover and to accommodate tactical shifts.

Collectively as of June 2016, the City pension funds utilize 22 domestic equity managers, 15 international equity managers, 15hedge fund managers, 31 fixed income managers, 13 opportunistic fixed income managers, 117 private equity managers, 46private real estate managers, 5 infrastructure managers and 6 real estate equity securities managers. The City pension fundsassets are invested for the benefit of the plan participants and their beneficiaries. With the exception of certain private equity, realestate, infrastructure and opportunistic fixed income investments where registration is not required, all fund assets are managedby registered investment advisers pursuant to guidelines issued by the Comptrollers Office.

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The chart below summarizes the City pension funds investment asset allocation (in millions) as of June 30, 2016.

(Cash includes all short term securities with terms of less than five years.)

(In Millions) U.S. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,443 REITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,740 Intl Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,184 Fixed Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,156 Opportunistic Fixed Income . . . . . . . . . . . . . . . . . . . . . . 4,146 Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,534 Real Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,707 Hedge Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,992 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,340 ________ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $165,242 ________ ________

U.S. Equity

For Fiscal Year 2016, the broad U.S. equity market, as measured by the Russell 3000 Index, returned 2.14% as compared to7.29% for Fiscal Year 2015. The total U.S. equity return for the City pension funds investment assets for Fiscal Year 2016 was1.59% as compared to 6.80% for Fiscal Year 2015. Overall, approximately 15.6% of the City pension funds invested in U.S.equity are actively managed versus 84.4% passively managed by index managers, which compares to 15.7% and 84.3%,respectively during Fiscal Year 2015. The returns of the U.S. equity market during Fiscal Year 2016 occurred as the U.S. economyexperienced slow growth and lower oil prices with continued low interest rates. In the broader economy, unemployment ratesapproached cyclical lows and inflation remained subdued.

Two of the five New York City pension funds have allocations to Real Estate Investment Trusts (REITs), and another invests inREITs to temporarily invest a portion of its Real Assets unfunded commitments. The City pension funds REITs returned 15.9%for Fiscal Year 2016 compared to 6.0% for Fiscal Year 2015. The one year returns for the program benchmark, DJ US Select RealEstate Securities Index, for Fiscal Years 2016 and 2015 were 22.7% and 5.3%, respectively.

International Equity

The City pension funds assets invested in total international equity returned -8.86% for Fiscal Year 2016 as compared to -5.44%for Fiscal Year 2015.

For Fiscal Year 2016, the Morgan Stanley Capital International Europe, Australasia, Far East Investable Market Index (MSCIEAFE IMI) returned -9.33% as compared to -3.78% for Fiscal Year 2015. The Citys developed markets managers returned-8.32% for Fiscal Year 2016 as compared to -3.10% for Fiscal Year 2015. At the end of Fiscal Year 2016, EAFE and emergingmarkets assets as a percent of total fund assets were 9.2% and 7.2%, respectively, versus 10.05% and 7.0% in Fiscal Year 2015.

For the Fiscal Year 2016, the MSCI Emerging Markets Index returned -12.05% as compared to -5.12% for Fiscal Year 2015. TheCitys emerging markets managers returned -10.42% for Fiscal Year 2016 as compared to -9.11% for Fiscal Year 2015.

International markets had negative returns that coincided with a number of factors, including slowing growth in China, weakeconomic prospects and negative interest rates in Europe and weak commodities markets.

U.S. Equity 34.2%

REITS 1.7%

Int'l. Equity16.5%

Fixed Income 30.4%

OFI 2.5% Private Equity

6.4% Real Assets 4.7%

Cash 2.0%

Hedge Funds

1.8%

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Fixed Income

As of June 30, 2016, the fixed income program represented 34.9% of the City pension funds investment assets with a marketvalue of $57.61 billion across the systems. The Citigroup Core+5 Investment Grade Index returned 7.16% for Fiscal Year 2016while the Barclays Aggregate Index returned 6.00%. The total overall U.S. fixed income return for Fiscal Year 2016 was 4.24%as compared to 1.54% in Fiscal Year 2015. Investment grade bonds saw positive returns for the fiscal year: 7.26% for theCitigroup Investment Grade Credit Index, 4.29% for the Citigroup Mortgage Index, and 11.98% for the Citigroup Treasury/Agency+5 Index. Treasury Inflation-Protected Securities (TIPS) also saw positive returns, returning 4.35% for the fiscal year as measuredby the Barclays Capital U.S. TIPS Index. For Fiscal Year 2016, the high yield sector as measured by the Citigroup BB/B Indexreturned 0.83% and convertible bonds sector returned -5.10% as measured by the Bank of America All U.S. Convertibles ex-Mandatory Index. The Bank Loan sector returned 0.93% as measured by the Credit Suisse US Leveraged Loan Index.

Opportunistic Fixed Income

As of June 30, 2016, the opportunistic fixed income program comprised $4.2 billion in assets under management, with totalcommitments of $6.1 billion. In Fiscal Year 2016, New York Citys pension funds committed $200 million to new opportunisticfixed income mandates. These flexible mandates seek to profit from investing in long-biased, alternative credit-oriented strategies,such as distressed debt, non-performing loans, direct lending, commercial real estate debt, commercial mortgage-backed securities(CMBS), residential mortgage-backed securities (RMBS), collateralized loan obligations (CLOs) and other private and publiccredit-related exposures in domestic and global markets. Opportunistic fixed income partnerships are generally structured togive investment managers the flexibility to take advantage of opportunities as they arise across the aforementioned strategies.

Net of fees, the program returned -1.59% (net) in Fiscal Year ending June 30, 2016, compared to its primary benchmark, 10%(net), and its secondary benchmark, the JPMorgan Global High Yield Index plus 3%, which produced 4.59%. Since its inception,the program returned 6.90% (net).

Private Equity

As of June 30, 2016, the private equity program represented 6.4% of the City pension funds investment assets with a marketvalue of $10.5 billion (cash flow adjusted) and unfunded capital commitments of $7.6 billion, resulting in a total exposure of$18.1 billion across 212 funds and 117 managers. As of June 30, 2016, the private equity program generated a one-year 4.4%Internal Rate of Return (IRR), compared to its benchmark (Russell 3000 + 300 basis points) of 5.1%. For the 10 years endingJune 30, 2016, the private equity program generated a 9.0% IRR, compared to its benchmark of 10.4%. The private equityportfolio remains diversified, based on total exposure (cash flow adjusted), with 61% allocated to buyouts, 10% secondaries, 8%growth equity, 8% special situations, 4% co-investment, 2% energy, and 7% other, which includes venture capital, mezzanine,and funds-of-funds. The City pension funds received distributions of $1.9 billion and funded $2.0 billion for new and existinginvestments during Fiscal Year 2016 as compared to $2.4 billion and $1.9 billion in Fiscal Year 2015, respectively.

During Fiscal Year 2016, City pension funds made $3.0 billion of new commitments to 11 funds across 9 managers versus $1.5billion to 13 funds across 12 managers during the prior fiscal year. This includes the City pension funds $500 million in-housePrivate Equity Emerging Manager Program which committed $70 million during Fiscal Year 2016. Overall, the private equityprogram continues to strategically seek geographically diversified investment opportunities across most sub-asset classes withan aim to maintain a consistent investment pace.

The private equity industry continues to experience a strong fundraising environment, despite signs of strain to global economicgrowth, asset prices at record levels, weakness in energy commodity markets and general equity and debt capital marketsvolatility. This has been due to robust investor demand and meaningful liquidity as investors recycle distributions received frommanagers and seek to maintain or increase their allocations to private equity. Deal activity has moderated as managers faceincreasing valuations due to competition for assets from both private equity managers and strategic buyers. The strong M&A-driven valuations have provided support to exit activity, which in turn has provided distributions and liquidity to investors.However, the volatility of the public markets has led to a meaningful slowdown in private equity-backed IPOs. The industry hasalso witnessed an increase in fund restructurings and extensions, as managers and investors seek liquidity solutions for fundsthat are approaching the end of their terms.

Real Estate

As of June 30, 2016, the real estate program had approximately $10.4 billion in commitments to 68 investments and 46 managers.This compares to $9.5 billion in commitments at the end of Fiscal Year 2015. During Fiscal Year 2016, the City pension fundsmade $1.3 billion in new commitments (including co-investments) to eight funds versus $1.2 billion to seven funds in the priorfiscal year.

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The City pension funds invest in real estate primarily through commingled funds, and these new additions enhance the diversificationof this global portfolio by geography, property type, investment strategy, vintage and manager. Three of the eight investmentsrepresent an additional deployment of capital to proven investment partners which enable the City to expand its relationshipswith managers that deliver solid performance over cycles.

As of June 30, 2016, the real estate program represents 6.0% of the City pension funds investment assets. The City pensionfunds $4.1 billion of net invested capital in real estate programs had a market value of $7.0 billion based on general partnerestimates at June 30, 2016 and unfunded capital commitments of $3.2 billion. The portfolio is well diversified by geographicregion and property type with allocations to all the major sectors including residential (24.8%), office (31.4%), industrial (10.7%),retail (14.4%), hotel (6.6%), and other (12.0%).

Bolstered by liquid markets, the low cost of capital and increasing demand for space, the U.S. real estate recovery has reachedan expansionary stage in prime markets. Abroad, well capitalized real estate investors are taking advantage of deep distresscaused by macroeconomic, regulatory and capital market pressures. As of June 30, 2016, the portfolio generated a one-year netreturn of 11.9% time-weighted return compared to its benchmark (NFI-ODCE +100 basis points) of 11.9%. Since inception, thenet IRR increased from 7.8% to 8.3% year-over-year from June 30, 2015, to June 30, 2016. Mindful of vintage risk and pocketsof peak pricing surfacing in certain gateway real estate markets, the real estate program will continue to selectively identifyopportunities that will complement the existing portfolio.

Hedge Funds

Certain City pension funds invest in hedge funds, and they continued to build out their hedge fund portfolio in Fiscal Year 2016.The City pension funds continue to increase their investments in direct hedge funds which are now 90% of the portfolio. Theremainder of the portfolio is held in a fund of funds structure.

The total hedge fund return for the City pension funds for the fiscal year ended June 30, 2016 was -3.65% net of all fees. Thehedge fund benchmark return was -4.73% (HFRI Fund of Hedge funds index +1%).

Infrastructure

The infrastructure program seeks to gain exposure to capital-intensive assets that underpin the global economy. These assetstypically have a low volatility return profile with a high percentage of returns coming in the form of current yield. Targetedinvestments within the infrastructure program seek to lower correlation with public equities and fixed income and to hedgeagainst inflation.

As of June 30, 2016, the infrastructure program represented 0.4% of the City pension funds assets with a market value of $635million and total exposure of $1.7 billion across six funds and five managers. During Fiscal Year 2016, the City pension fundsmade $650.0 million of new commitments to two funds across two managers through the infrastructure program. The infrastructureprogram generated Internal Rates of Return (IRR) of 10% during Fiscal Year 2016 and 11% since inception. The benchmark forthe infrastructure program, CPI +4%, generated a return of 5.3% as of June 2016, respectively.

Corporate Governance and Responsible Investment

The City pension funds, through the Corporate Governance and Responsible Investment group within the Bureau of AssetManagement, actively monitor their investments and promote corporate governance and responsible business practices that seekto protect and create long-term shareowner value. These activities include actively voting proxies and pro-actively engaging withcompanies and regulators to improve corporate governance, enhance corporate disclosure and strengthen shareowner rights.

During Fiscal Year 2016, the Comptrollers Office voted on 30,326 individual ballot items at 3,658 annual and special meetingsfor domestic portfolio companies, as well as for select international holdings. Of all votes cast, 77.7% were for the management-recommended vote. Major proxy voting issues included: (a) the election of directors, (b) management proposals to ratify auditors,approve executive compensation, and approve mergers and acquisitions, and (c) shareowner proposals on a wide range ofenvironmental, social and governance (ESG) policies and practices.

In addition to proxy voting, the City pension funds also seek to protect and create long-term shareowner value by proactivelyadvancing company-specific and regulatory reforms to strengthen investor rights, improve corporate governance, align executivepay with long-term performance and promote sustainable business practices. The City pension funds are among the most activeinstitutional investors in terms of filing shareowner proposals and also engage with portfolio companies through letters anddialogue, often in collaboration with other institutional investors.

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During Fiscal Year 2016, the Comptrollers Office, on behalf of the City pension funds, submitted 80 shareowner proposals to atotal of 78 portfolio companies. Overall, approximately two-thirds of the proposals (54 out of 80) were withdrawn after thecompanies agreed to take steps to implement the request. Three additional proposals that had been submitted during Fiscal 2015went to a vote in Fiscal Year 2016.

In a continuation of the Boardroom Accountability Project launched by the City pension funds in Fiscal Year 2015, most of thepropos