Agenda Item #2AFINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORTS
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2006
TABLE OF CONTENTS
Independent Auditors' Report ......... ......... ......... ......... ......... ......... .................. ......... ...........
1-ii
Management's Discussion and Analysis ii
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets............. ......... ......... ......... ........: ......... ......... ......... ......... .............. 1
Statement of Activities ..... ......... .........................................................`................ .......................... 2
Fund Financial Statements
Balance Sheet - Governmental Funds......:................ ......... .............................................................
3
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ......... ........ ......... ......... .................. ......... ......... ....................... 4
Statement of Revenues, Expenditures, and Changes in Fund
Balances - Governmental Funds ......... ........:.................. ......... ......... ......... `......... ..............
5
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities.. .................. .................. ......... .......... ................. ......... ..............
6
Statement of Net Assets -Proprietary Funds...... ...................... ..............:.. ......... ......... ..............
7
Statement of Revenues, Expenses, and Changes in Net Assets -
Proprietary Funds
.....8
Statement of Cash Flows - Proprietary Funds.... .................. ......... ......... ............................
9-10
Statement of Fiduciary Net Assets - Fiduciary Funds....... ...... .................. ......... .....................11
Statement of Changes in Fiduciary Net Assets - Fiduciary Funds................. .......... ......................12'
Notes to Financial Statements ...... .................. ......... ......... ............................................
13-29
Required Supplementary Information
Schedules of Pension Funding Progress................................ .................. ......... ....................30
Schedules of Contributions from Employer and Other
Contributing Entities......... ..................... ...... ......................................................
...31
Schedule of Revenues, Expenditures, and Changes in
Fund Balance - Budget and Actual - General Fund......... ........ .................. ........ ..................32-33
Note to Schedule of Revenues, Expenditures, and Changes in Fund
Balance - Budget and Actual - General Fund ..... ......... ......... ......... .......... ........ .....................
34
Supplementary Information
Combining Balance Sheet -Nonmajor Governmental Funds ...,.:.. ......... ......... ......... ......:...........35-36
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances -Nonmajor"Governmental Funds..........:....................................37-38
Combining Statement of Fiduciary Net Assets - Fiduciary Funds..............................................................
39
Combining Statement of Changes in Fiduciary Net Assets -
Fiduciary Funds .............. ........ .......... ......,.. ................. ......... ......... ......... .....................40
Historical Revenues and Expenses.... ......... ......... ....................: .............................:....................
41
Major Utility Customers ........ ......... .................. .................... ......... ......... ......... .....................42
Summary of Water Usage.....:...................:................................. .............................. ......... ...........43
Summary of Wastewater Treatment - Atlantic Beach Sewer
Division ............................. ......... ............................. .................. ..........................................44
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORTS
CITY OF ATLANTIC BEACH, FLORIDA
- SEPTEMBER 30, 2006
TABLE OF CONTENTS
(Concluded)
Supplementary Information (Concluded)
Summary of Wastewater Treatment - Buccaneer Sewer Division..............................................................
45
Other Bond Covenant Disclosures ... .................... ................................................ ......................46
Schedules of Net Revenues in Accordance with Bond Resolutions
Enterprise Funds (Water and Sewer) .... ........ ......... ......... ............................ ......... ............
47
Additional Elements of Report Prepared in Accordance with
Government Auditing Standards, Issued by the Comptroller
General of the United States
Schedule of Expenditures of Federal Awards .... ........: ......... ...........................................................
48
Note to Schedule of Expenditures of Federal Awards .. ......... ......... ......... .................. ............
49
Independent Auditors' Report on Internal Control Over
Financial Reporting and on Compliance and Other
Matters Based on an Audit of Basic Financial Statements
Performed in Accordance with Government Auditing Standards ... .................. ..................50-51
Management Letter ......... :................. .................. ......... ...............................................52-53
Purvis
Gray
&
Corn an
INDEPENDENT AUDITORS' REPORT
Honorable Mayor, City Commissioners "
and City Manager
Atlantic Beach, Florida
We have audited the accompanying financial statements of the governmental activities, the business -type'
activities, each major fund, and the aggregate remaining fund information of the City of Atlantic Beach,
Florida (the City), as of and for the year ended September 30, 2006, which collectively comprise the City's
basic financial statements as listed in the table of contents. These financial statements are the responsibility
of the City's management. Our responsibility is to express an opinion on these financial statements based on
our audit. The prior year, summarized comparative information has been derived from the City's 2005
financial statements and; in our report dated December 14, 2005, we expressed an unqualified opinion on
those financial statements.
We conducted our audit in accordance with auditing standards generallyaccepted 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 basic financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business' -type activities, each major fund, and the
aggregate remaining fund information' of the City, as of September 30, 2006, and the respective changes in
financial position and cash flows, where applicable, thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated December 13 2006,
on our consideration of the City's internal' control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, 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 anopinion 'on the internal` control over financial reporting or
on compliance. That report is an integral part of, an audit performed in accordance with Government
Auditing Standards and should be considered in conjunction' with this report in considering the results of our
audit.
Certified Public Accountants
P.O. Box 23999 222 N.E. lst Street '• Gainesville, Florida 32602 • (352) 378-2461 FAX (352) 378-2505
Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court, Suite # 100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899
' MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF. AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SECTIONS
i
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT
(Concluded)
The management's discussion and analysis, budgetary comparison schedules, and the required
supplementary information as listed in the table of contents, are not a required part of the basic financial
statements but are supplementary information required by accounting principles generally accepted in the
United States of America. We have applied certain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The combining nonmajor -fund statements, schedule of
expenditures of federal awards and other supplementary information listed in the table of contents is
presented for the purpose of additional analysis and are not a required part of the basic financial statements.
The combining nonmajor fund financial statements and the schedule of expenditures of federal awards have
been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our
opinion are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The other supplementary information has not been subjected to the auditing procedures applied in the audit
of the basic financial statements, and accordingly we express no opinion on them.
December 13, 2006
Gainesville, Florida LTJ l
ii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
As management of the City of Atlantic Beach, we offer readers of our financial statements this narrative'
overview and analysis for the fiscal year ended September 30, 2006.
Overview of the Financial Statements
This discussion and analysis' is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements are comprised of three components: 1) government
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This
report' also contains other supplementary information in addition to the basic financial statements
themselves. The purpose of each of the three components of the basic financial statements is described
below.
Government -wide Financial Statements
The government -wide financial statements are designed` to provide readers with a broad overview of the
City of Atlantic Beach's finances, in a manner similar to a private sector business. They include the
Statement of Net Assets and the Statement of Activities.
The Statement of Net Assets presents information' on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
i serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
r The Statement of Activities' presents information showing how the City's net assets changed during the
most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related' cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods.
Both of the government -wide' financial statements` distinguish functions of the City that are principally
supported by taxes, licenses and permits, and intergovernmental revenues, referred to as "governmental
activities," from other functions that are intended to recover all or a significant portion of their costs
through user fees and charges, referred to as "business -type activities." The governmental activities of
the City include public safety, transportation, parks and recreation, physical environment (i.e.,
infrastructure), debt, and general government, which include administration and other support functions.
The business -type activities of the City include the utility, comprised of the water and sewer systems; the
stormwater system; and the sanitation enterprise. The government -wide financial statements can be
found on pages 1-2 of this report.
Fund Financial Statements
I_
A fund is a grouping of related accounts that is used to maintain control over resources that have been
` segregated for specific activities of objectives.. The City of Atlantic Beach, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal
requirements. All of the funds of the City can be categorized into either governmental funds, proprietary
funds, or fiduciary funds.
.iii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Continued)
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 inflows and
outflows of available resources, as well as on balances of available resources at the end of the fiscal
year. Such information may be useful in evaluating a City's near-term financing requirements.
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
financing decisions. Reconciliations are provided between the Governmental Fund's Balance Sheet
and the Statement of Net Assets and the Governmental Fund's Statement of Revenues,
Expenditures, and Changes in Fund Balances and Statement of Activities to facilitate this
comparison between governmental funds and governmental activities.
The City of Atlantic Beach maintains 15 individual governmental funds. Information is presented
separately in the Governmental Fund's Balance Sheet and in the Governmental Fund's Statement of
s Revenues, Expenditures, and Changes in Fund Balances for the General Fund, which is considered
to be a major fund. Data from the other 14 Governmental Funds are combined into a single,
aggregated presentation called Nonmajor Governmental Funds. Individual fund data for each of
these Nonmajor Governmental Funds is provided in the form of combining statements. These
combining statements can be found on pages 35-38 of this report.
The City of Atlantic Beach adopts an annual appropriated budget for all funds but is only required
to present a budget comparison for its General Fund. This Schedule of Revenues, Expenditures, and
Changes in Fund Balance, Budget and Actual - General Fund budgetary comparison schedule has
been provided to demonstrate compliance with this budget.
Proprietary Funds
The City of Atlantic Beach maintains only one type of proprietary fund and that is enterprise funds.
The enterprise funds are used to account for the activities of the water and sewer (utility),
stormwater, and sanitation activities.
The proprietary fund financialstatements provide the same type of information as the government
wide financial statements, only in more detail. Separate information of the utility, stormwater and
sanitation activities, which are considered to be major funds` of the City of Atlantic Beach, can be
found in the basic proprietary fund financial statements on pages 7-10 of this report.
Fiduciary funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the City
(i.e., pension beneficiaries). Fiduciary funds are not reflected in the government -wide financial
statements because the resources of those funds are not available to support the City's' own
programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statements can be found on pages 11-12 of this report.'
Notes to the Financial Statements'
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements. The notes can
be found on pages 13-29 of this report.
iv
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Continued)
Other information
In addition to the basicfinancial statements and accompanying notes, this report also presents certain
required supplementary information concerning the City's progress in funding' its obligation to provide
pension benefits to its employees and a budgetary comparison schedule for the General Fund. Required
supplementary information can be found on pages 30-34 of this report.
Government -wide Financial Analysis
Net assets may serve over time as a useful indicator of a City's financial position. As can be seen in the
summarized table below, the City's assets exceeded liabilities by $72,764,000 at the close of the fiscal
year ended September 30, 2006.
Byfar the largest portion of the City's net assets, $59,117,000 (81.2 %), reflects its investment in capital
assets (i.e., land,, buildings, equipment, and infrastructure), less any related, outstanding debt used to
acquire those assets.' The City uses these capital assets to provide services to citizens; consequently,
these assets are not available" for future spending. Although the City's investment in capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities. The City's capital assets, net of depreciation, were adjusted upward by $34,666,000, due to
implementation of GASB Statement No. 34. These accounting guidelines required retroactive reporting
of governmental infrastructure assets (i.e., roads, sidewalks, etc.) and primarily' affected' governmental
activities. Further explanation is described in Note 2 to these financial statements found on page 19.
This adjustment was offset by the fiscal year net decrease, due to depreciation, of $1,009,000.
s A portion of the City's net assets, $2,632,000 (3.6%), represents resources that are subject to external
restrictions on how they may used. The remaining balance of unrestricted net assets, $11,015,000, is
s
used to meet the government's ongoing obligations to citizens and creditors.
City of Atlantic Beach's Net Assets
September 30, 2006 and 2005
(In Thousands)
x
Governmental Business -type
Activities Activities Totals
2006 2005 2006 2005 2006 2005
t
Current and other assets $7,886 $6,966 $8,519 $9,118 $16,405 $16,084
Capital assets 42,094 9,241 36,597 35,792 78,691 45,033
4 Total Assets 49,980 16,207 45,116 44,910 95,096 61,117
Long-term liabilities
outstanding 675 752 18,636 19,331 19,311. 20,083
Other liabilities 750 724' 2,271 2,414 3,021 3,138
Total Liabilities 1,425 1,476_ 20,907 21,745 22,332 23,221'
Net Assets
Invested in capital assets,
net of related debt 41,608 8,705 17,509 15,776 59,117 24,481
Restricted 1,877 1,796 755 911 2,632 2,706
Unrestricted 5,070 ' 4,230 5,945 6,478 11,015 10,709
Total Net Assets $48,555 $14,731 $24,209 $23,165 $72,764 $37,896
v
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Continued)
As illustrated in the schedule below, the,City was able to report positive balances in all categories of net
assets, both for the government as a whole,
as well as for its separate
governmental and business
-type `
activities. The same situation
held true
for the prior fiscal year.
City of Atlantic Beach's
Change in Net Assets
For the Years Ended September 30, 2006
and 2005
(In Thousands)
Governmental
Business -type
Activities
Activities
Totals
2006
2005
2006
2005
2006
2005
Revenues
Program Revenues:
Charges for services
$1,172
$1,112
$7,887
$7,720
$9,083
$8,832
Operating grants &
contributions
979
153
2
7
202
160
Capital grants &
contributions
236
849
343
1,820 ;
1,161
2,669
General Revenues:
Property taxes
3,530
2,990
0
0
3,530
2,990
Sales taxes
1,458
1,385
0
0
1,458
1,385
Franchise and utility taxes
1,718
1,601
0
0
1,718
1,601
State revenue sharing
306
469
0
0-
481
469
Discretionary sales surtax
741'
688
0 `
0
741
688
i Interest revenue
314
170
310
180
624
350
` Miscellaneous
65
389
0
0
63
389
Gain on disposal of
fixed assets
0
8
2
0'
2
8
Total Revenues
10,519
9,814
8,544 -'
- 9,727
- 19,063
19,541
Expenses
General government
1,360
1,233
0 ,
0
1,360- '
1,233
Public safety
4,645
4,553
0
0
4,645
4,553
Transportation
2,101
1,391
0
0
2,101
1,391
Parks & recreation
1,191
1,045
0
0
1,191
1,045
Interest on long-term debt
21
23
0
0
21
23
utility
0
0
7,273
6,829
7,273
6,829
Stormwater
0
0
1,080
937
1,080
937
Sanitation
0
0
1,190
1,132
1,190
1,132
? Total Expenses
s<
9,318
8,245
9,543
8,898
18,861
17,143
F Transfers
206
1,782
206
1,782
0
0
Change in Net Assets
1,407
(213)
(1,205)
2,611
202
2,398
Net Assets -Beginning
14,731
14,944
23,165
20,554
37,896
35,498
Adjustments to
Beginning. Balance'
32,417
0
2,249
0
34,666
0
Net Assets -Ending
$48,555
$14,731
$24,209
$23,165
$72,764
$37,896
vi
'
-
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Continued)
Fund Financial Analysis
As noted earlier, the City of Atlantic Beach uses fund accounting to ensure and demonstrate compliance
with finance -related legal requirements. Following is a summary of fund activity for the fiscal year:
■ Governmental Funds
At the end of the current fiscal year, the City's governmental funds reported,a combined ending
fund balance of $7,493,000, an increase of $971,000 in comparison with the prior year.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year,
unreserved fund ` balance was $5,580,000, which represented 58% of total General Fund
expenditures and transfers out. The net result of various revenue and expense items resulted in an
increase to the City's General Fund of $891,000 (18.9%) during the current fiscal year. This .
increase is chiefly due to a growth in property taxes from soaring property values during this
timeframe and rising interest rates resulting in increased interest revenues.
Nonmajor governmental funds consisting of Special Revenue Funds and the Debt Service Fund
have a combinedfund balance of $1,877,000. Of this fund balance, $77,000 is reserved for future
debt service payments. The net increase in fund balance after transfers in nonmajor governmental
funds was $81,000._
■ Proprietary Funds
The City's proprietary funds provide the same type of information found in the government -wide
financial statements, but in more detail. Net assets in the proprietary funds decreased by;
$1,205,000 during the fiscal year. Depreciation, a noncash expense that is not budgeted or
recovered through user charges, significantly contributed to the decrease in net assets. The water
and sewer incremental rate adjustments, impacting the Utility Fund, are just keeping up with the
rise in operating expenses. The Stormwater Fund is being subsidized by the gas tax, as the $4 per
ERU rate is only partially, approximately one-third, covering the operating expenses of that
program. An anticipated 25% programmed rate increase in fiscal year 2007 in the Sanitation Fund
is expected to cover increased operating costs for fuel and renegotiated hauler charges. Even with
these decreases, unrestricted net assets in the Enterprise Funds amounted to $6,208,000 at the end
of fiscal year 2006.
General Fund Budgetary Highlights
The City revised its General Fund budget during the year for additional appropriations necessary to
r ensure that the actual charges would not exceed appropriations for the respective programs. The
difference between the original expenditure budget and `the `final amended budget was $426,000. Items
encumbered for $201,000, but not spent by the end of 2005 were added to the fiscal year 2006 budget.
The budget was amended to -add $94,000 to the streets division budget for the addition of some
pedestrian paths. Funding of $45,000 was included for a consultant to assist with Community Character
guidelines. An additional $58,000 was added to the legal division for various settlements related to
employment matters.
vii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Continued)
Although the City budgeted adecrease in fund balance of $323,000, the fundbalanceactually increased
by, $891,000. This was due to positive variances in revenues of $536,000 and expenditures of $680,000.
An overall positive variance of $1,213,000 was attributed to conservative budgeting for both revenues
and expenditures. In addition to conservative budgeting, the expenditure variance of $680,000 was
partially_ a consequence of encumbered expenditures at fiscal year end of $176,000 that were rebudgeted
in fiscal year 2007, but the corresponding budget was not liquidated in fiscal year 2006.
Capital Assets
As reflected in the schedule of capital assets found below, the City's investment in capital assets for its
governmental and business -type activities as of September 30, 2006, ,totaled $78,690,000 (net of
accumulated depreciation). This -investment in capital assets includes land, buildings, improvements, ,
machinery and equipment, utility infrastructure, roads, bike paths and sidewalks. Major capital asset
events during the fiscal year include:
• Retroactive reporting of governmental infrastructure, including roadways and sidewalks, and the
underlying land value, in accordance with GASB Statement No. 34, added $32.4 million (net of
accumulated depreciation) to the City's governmental capital assets.
• Approximately $2.3 million (net of accumulated depreciation) was added to business -type capital
£ assets for storm sewers and related drainage infrastructure originally considered governmental
activity infrastructure and therefore, not previously accounted for in the City's financial records
until implementation of GASB Statement No. 34. Further explanation is described in Note 2 to
these financial statements on page 19.
City of Atlantic Beach's Capital Assets
r (Net of Depreciation).
(In Thousands)
Governmental Business -type
Activities Activities Totals
2006 2005 2006 2005 2006 2005
Land $9,844$1,605 $771 $771 $10,615 $2,376
Building and Improvements 30,909 6,511 35,124 33,945 66,033 40,456
Equipment 1,110 885 579 432 1,689 1,317
Construction in Progress 230 240 123 644 - 353 884
Total $42,093 $9,241 $36,597 $35,792 $78,690 $45,033
Additional information on the City of Atlantic Beach's capital assets can be found in Note 7 on pages 22-
24 of this report.
viii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Continued)
Long-term Debt
At the end of the 2006 fiscal year, the City of Atlantic Beach had total bonded debt outstanding of
$19,836,000. This amount was comprised of bonds secured solely by specified revenue sources (i.e.,
revenue bonds)." A detailed listing of the City's debt can be found in the table below:
City of Atlantic Beach's Outstanding Debt
Revenue Bonds
(In Thousands)
Governmental Business -type
Activities Activities Totals
Utility System Revenue Bonds, Series 2004 $0 $17,453 $17,453
Utility System Revenue Bonds, Series 1996 0 1,301 1,301
SunTrust Revenue Refunding Bonds, Series 1999 485 597 1,082
Total $485 $19,351 $19,836
The City_ has been able to pay for ongoing capital projects related to governmental activities since
borrowing funds in 1989 (refunded in 1999 to take advantage reduced interest rates). Therefore, it has a
f high capacity for additional debt, if needed. The City's scheduled debt outstanding decreased by
$715,000 (3.5%) during the current fiscal year. This decrease was due to loan repayments. The Utility
3 System Revenue Refunding Bonds, Series 2004, and the Utility System Revenue Bonds; Series 1996,
carry an insured "Aaa" rating from Moody's Investor Services. Additional information on the City's
long-term debt can be found in Note 8 on pages 24=25 of this report.
Economic Factors
® Taxable property values in the City of Atlantic Beach continue to grow. However, the housing
market and proposedproperty tax reform legislation could have an impact on this critical source
of revenues to the City.
I
■ The City's utility service jurisdiction had a decline of 141 accounts or 1.7% during the current
year. Although the number of accounts went down over the year, the actual volume of water sold
increased by 1.2%. Part of the decline is attributed to a few mobile home parks being emptied
i for new development.
■ The City's rate of return on investments in pooled cash rose to 5.39% for the year, up from only
3.20% in the previous year. This represents a 68% increase in rate of return from the State Board
Administration.
■ New environmental regulations, Total Maximum Daily Load (TMDL), that limit the amount of
nitrogen discharged' into the St. John's River from the City's wastewater treatment plants, will
require a major investment of resources to comply and the transfer of costs to the water and
sewer_ customers through higher rates. The specific requirements and associated costs' are still
being studied.
ix;
f
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
(Concluded)
Budget Highlights
■ The City did not raise the ad valorem millage rate for the 2006/2007 budget year. A rate of
2.9974 mils was maintained, as in the prior year.
■ Water and sewer service rates were increased 3% to keep up with the rising cost of operations.
■ A 16% rate increase in sanitation revenues was budgeted to cover increased costs of the waste
hauler, due to fuel and expiration of the current contract. More current information indicates that
rates will increase by 25%.`
Requests for Information
The financial report is designed to provide a general overview of the City of Atlantic Beach's finances
for all those with an interest in the City's finances. Questions concerning any of the information provided
in this report or requests for additional financial information should be addressed to the City of Atlantic
Beach, Finance Director, 800 Seminole Road, Atlantic Beach, Florida, 32233.
Jim Hanson Nelson Van Liere, CPA
City Man ger Finance Director
1
I
x
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET
ASSETS
SEPTEMBER 30,
2006,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2005
Governmental
Business -Type `
Totals
Activities
Activities
2006
2005
Assets ',-
Equity in Pooled Cash and Cash Equivalents
$ 6,703,886
$ 5,132,957 $
11,836,843 $
11,480,371
Receivables, Net
21,450
504,705
526,155
655,795
Due from Other Governments
1,113,691
6,497
1,120,188
984,654
Inventories
29,231
45,100
74,331
37,449
Special Assessments - Current
2,816
31,503
34,319
38,463
Notes Receivable`- Current
760
28,766
29,526
30,517
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents
0
2,227,854
2,227,854
2,214,247
Capital Assets:
Land
9,843,717
771,345
10,615,062
2,376,681
Buildings
4,130,312
4,335,149
8,465,461
8,454,227
Improvements Other Than Buildings ;
37,031,184
55;504,679
92,535,863
52,394,680
Equipment
3,015,495
1,632,089
4,647,584 -
3,999,992
Accumulated Depreciation
(12,157,490)
(25,769,940)
(37,927,430)
(23,077,692)
Construction in Progress'
230,289
123,235-
353,524
884,822
Prepaid Items
7,520
0
7,520
7,520
Special Assessments- Noncurrent
0
65,290
65,290
121,013`
Notes Receivable - Noncurrent
6,840
194,278
201,118
216,344
Other Noncurrent Assets
0
18,800
18,800
18,800
Unamortized Loan Costs
0
263,592
263;592
279,189
Total Assets
49,979,701
45,115,899
95,095,600
61,117,072
Liabilities
Accounts Payable and Other Current Liabilities
354,067
287,873
641,940
834,583
Due to Other Governments
0
5,467
5,467
5,568
Deferred Revenue '
37,676
115,891
153,567
191,979
Deposits
1,200
0'
1,,200
1,750
Compensated Absences - Current
350,000
108,000
458,000
370,000
Accrued Interest Payable
6,814
0
6,814
7,516
Payable from Restricted Assets:
Current Maturities of Bonds Payable
0
785,005-
785,005
767,150'
Accrued Interest Payable
0
432,296
432,296
451,849
Customer Deposits
0
536,040
536,040
535,365
Noncurrent Liabilities:
Due Within One Year
44,344.
0
44,344
50,066
Due in More Than One Year
441,009
18,566,075
19,007,084
19,734,102
Compensated Absences
189,603
70,138
259,741
270,910
Total Liabilities
1,424,713
20,906,785
22,331,498
23,220,838
Net Assets
Invested in Capital Assets, Net of Related Debt
41,608,154
17,509,069
59,117,223
24,481,391
Restricted for:
Renewal and Replacement
0
500,000=
500,000
500,000
Debt Service
77,265
0
77,265
76,101
Road and Street Expenditures
321,384
255,368,
576,752
844,139
Tourism and Recreation
192,395
0
192,395
162,376
Tree Replacement
20,913
0
20,913
30,978
Public Safety
7,636
0
7,636
16,480
Police Training
6,982
0
6,982
8,422-
Capital Projects
1,249,976
0
1,249,976
1,067,575
Unrestricted
5,070,283
5,944,677
11,014,960
10,708,772
Total Net Assets
$ 48,554,988
$ 24,209,114 $
72;764,102 $
37896,234
See accompanying notes.
1
CITY OF ATLANTIC BEACH, FLORIDA
BALANCESHEET
GOVERNMENTAL
FUNDS
SEPTEMBER 30,
2006,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2005
2006
Nonmajor
Totals
Governmental
Governmental -
2005
General
Funds
Funds
Totals
Assets "
Equity in Pooled Cash and Cash Equivalents
$ 5,019,719 '
$ 1,684,167
$ 6,703,886 $
5,875,099
Receivables, Net
21,450
0
21,450
74,511
Due from Other Funds
116,286
0
116,286
69,776
Due from Other Governments
- 754,390
359,301
1,113,691
984,654
Inventories
29,231
0
29,231
13,470
Special Assessment Receivable - Current
2,816
0
2,816
3,313
Notes Receivable - Current
760
0
760
760
Prepaid Items
7,520
0
7,520
7,520
Notes Receivable -Noncurrent
6,840
- 0
6,840
7;600
Total Assets
5,959,012
2,043,468
8,002,480
7,036,703
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities
303,436
50,631
354,067
364,661
Due to Other Funds
0
116,286
116,286 `
69,775
Deposits
1,200 `
0
1,200 ;
1,750
Deferred Revenue
37,676
0
37,676
78,585
Total Liabilities
342,312
166,917
509,229
514,771
Fund Balances
Reserved for:
Debt Service
0
77,265
77,265
76,101
Inventories
29,231
0
29,231
13,470
Prepaids
7,520
0
7,520
7,520
Unreserved, Reported in:
General Fund
5,579,949
0
5,579,949
4,705,045
Special Revenue Funds
0
1,799,286
1,799,286
1,719,796
Total Fund Balances
5,616,700
1,876,551
7,493,251
6,521,932
Total Liabilities and Fund Balances
$ 5,959,012
$ 2,043,468
$ 8,002,480 $
7,036,703
See accompanying notes.
3
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30,
2005
2006
Nonmajor
Totals
Governmental
Governmental
2005
General
Funds
Funds
Totals
Revenues
Taxes
$ 5,247,638
$ 1,356,441
$ 6,604,079
$ 5,913,036
Licenses and Permits
455,278
0
455,278
410,434
State -shared Revenues
1,964,668
0
1,964,668
1,877,649
Other Intergovernmental Revenues
578,334
329,849
908,183
977,257
Charges for Services
20,531
0
20,531
17,889
Fines and Forfeitures
126,439
0
126,439
10I,664
Interest Income
242,518
71,090
313,608
170,265
Miscellaneous Revenues
55,975
140
56,115
204,639
Interfund Charges
1,324,156
0
1,324,156
1,194,535
Total Revenues
10,015,537
1,757,520
11,773,057
10,867,368
Expenditures
Current:
General Government
2,414,267
118,982
2,533,249
2,322,065
Public Safety
4;325,290
126,708
4,451,998
4,334,938
Transportation
1,335,453
274,121
1,609,574
1,257,933
Parks and Recreation
990,675
31,895
1,022,570
918,228
Debt Service:
Principal
0
50,066
50,066
48,950
Interest and Other
0
21,439
21,439
23;480
Capital Outlay
528,971
798,287
1,327,258
1,397,534
(Total Expenditures)
(9,594,656)
(1,421,498)
(11,016,154)
(10,303,128)
Excess of Revenues Over
Expenditures
420,881
336,022
756,903
564,240
Other Financing Sources (Uses)
Transfers in
463,709
70,000
533,709
806,319
Transfers (out)
0
(325,368)
(325,368)
(2,457,507)
Sale of General Fixed Assets
6,075
0
6,075
8,055
Total Other Financing (Uses)
469,784
(255,368)
214,416
(1,643,133)
Net Change in Fund Balances
890,665
80,654
971,319
(1,078,893)
Fund Balances, Beginning of Year
4,726,035
1,795,897
6,521,932
7,600,825
Fund Balances, End of Year
$ 5,616,700
$ 1,876,551
$ 7,493,251
$ 6,521932
See accompanying notes.
5
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2006,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2005
2006
Business -Type Activities - Enterprise Funds
2005
Utility
Stormwater Sanitation
Totals
Totals'
Assets
Current Assets:
Equity in Pooled Cash and Cash Equivalents
$ 2,002,462
$ 2,650,645 $
479,850
$ 5,132,957
$ 5,605,272
Accounts Receivable, Net
429,889
16,389
58,427 '
504,705
581,284
Inventories
45,100
0
0
45,100
23,979
Due from Other Governments
6,497
0
0
6,497
0
Special Assessments - Current
31,503
0
0
31,503
35,150
Notes Receivable - Current
28,766
0
0
28,766
29,757
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents
2,070,175 `
157,679
0
2,227,854
2,214,247
Capital Assets:
Land
749,499
21,846
0
771,345
771,345
Buildings
4,335,149
0
0'
4,335,149
4,332,715
Improvements Other Than Buildings
44,200,100
11,304,579
0
55,504,679
48,384,050
Equipment
1,352,878 `
253,482-
25,729
1,632,089
1,409,776
(Accumulated Depreciation)
(20,905,589)
(4,848,920)
(15,431)
(25,769,940)
(19,750,206)
Construction in Progress
39,646
- 83,589
0
123,235
644,385
Special' Assessments -Noncurrent
65,290
0
0
65,290
121,013
Notes Receivable - Noncurrent ' ;
194,278'
0
0
194,278
208,744
Other Noncurrent Assets
18,800
0
0
18,800
18,800
Unamortized Loan Costs
227,351
36,241
0
263,592
279,189
Total Assets
34,891,794
9,675,530
548,575
45,1 15,899
44,909,500
Liabilities
Current Liabilities Payable from Current
Assets:
Accounts Payable and Accrued Liabilities
176,414
19,358
92,101
287,873
469,921
Due to Other Governments
5,467
0
0
5,467
5,568
Deferred Revenue '
60,649
11,936
43,306
115,891
113,394
Compensated Absences - Current
108,000
0
0'
108,000
70,000
Current Liabilities Payable from Restricted
Assets:
Current Maturities of Bonds Payable
682,951
102,054
0
785,005
767,150
Accrued Interest Payable
376,671
55,625
0
432,296
451,849
Customer Deposits
536,040
0
0
536,040
535,365
Noncurrent Liabilities:
Due in More Than One Year
16,046,374
2,519,701
0
18,566,075
19,248,749
Compensated Absences - Noncurrent
70,138
10
0
70,138
82,825
Total Liabilities
18,062,704
2,708,674'
135,407
20,906,785
21,744,821
Net Assets
Invested in Capital Assets, Net of Related Debt
13,042,358
4,192,821
10,298
17,245,477
15,776,165
Restricted for Renewal and Replacement
500,000
0 `
0
500,000
500,000
Restricted for Road and Street Expenditures
0
255,368
0
255,368
410,174
Unrestricted
3,286,732
2,518,667
402,870
6,208,269
6,478,340
Total Net Assets
$ 16,829,090
$ 6,966,856 $
413,168
$ 24,209,114
$ 23,164,679
See accompanying notes.
7
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS '
PROPRIETARY FUNDS
FOR THE
YEAR ENDED SEPTEMBER 30, 2006,
WITH COMPARATIVE TOTALS FOR
THE YEAR ENDED SEPTEMBER 30, 2005
2006
Business -Type Activities - Enterprise Funds
2005
Utility
Stormwater
Sanitation
Totals
Totals
Cash Flows from Operating Activities
Cash Received from Customers
$ 6,292,289
$ 383,571 $
1,305,766 $
7,981,626 $
7,697,531
Cash Paid to Suppliers ,'
(2,319,809)
(200,988)
(1,046,420)
(3,567,217)
(3,422,155)
Cash Paid to Employees
(1,494,555)
(230,970),
- (4,722)
(1,730,247)
(1,619,941)
Cash Paid for Interfund Services
(909,956)
(172,346)
(140,570)
(1,222,872)
(1,097,752)
Net Cash Provided by (Used in) Operating
Activities
1,567,969
(220,733)
114,054
1,461,290
1,557,683
Cash Flows from Noncapital Financing
Activities
Connection Charges
20,055
0
0
20,055
37,570
Transfers in,
0
255,368
0
255,368
2,457,369
Transfers (out)
(231,856)
0
(231,853)
(463,709)
(675,305)
Net Cash Provided by (Used in) Noncapital
Financing Activities
(211,801)
255,368
(231,853)
(188,286)
1,819,634
Capital and Related Financing Activities
Intergovernmental Revenues
0
0
0
0
45,442
Collections on Notes Receivable
20,850
0
0
20,850
(54,315)
Collections on Special Assessments
59,370
0
0
59,370
40,706
Capital Contributions
243,374
0
0
243,374
371,110
Proceeds from Sale of Fixed Assets
2,340
0
0
2,340
0
Fixed Asset Additions -
(491,489)
(263,422)
(3,400)
(758;311)
(1,060,097)
Principal Payments on Bonds Payable
(668,999)
(98,559)
0
(767,558)
(510,000)
Interest Paid
(727,969)
(114,020)
0
(841,989)
(1,142,350)
Net Cash Provided by (Used in) Capital
and Related Financing Activities
(1,562,523)
(476,001)
(3,400)
(2,041,924)
(2,309,504)
Cash Flows from Investing Activities
Interest Received
159,959
126,344
23;909
310,212
180,039
Net Increase (Decrease) in Cash and
Cash Equivalents
(46,396)
(315,022)
(97,290)
(458,708)
1,247,852
Cash and Cash Equivalents,
Beginning of Year
4,119,033
3,123,346
577,140
7,819,519
6,571,667
Cash and Cash Equivalents,
End of Year
$ 4,072,637
$ 2,808,324 $
479,850 $
7,360,811 $
7,819,519
See accompanying notes.
9
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30 2006,
WITH COMPARATIVE TOTALS FOR SEPTEMBER
30, 2005 ,
Pension Trust Funds
2006
2005
Assets `
Cash and Cash Equivalents with Trustee $
41,498
$ 33,177
Investments with Trustee
12,853,203
11,546,415
Total Assets
12,894,701
11,579,592
Liabilities
Accounts Payable and Accrued Liabilities
3,965
23,698
Total Liabilities
3,965
23,698
Net Assets
Held in Trust for Pension Benefits
12,890,736
11;555,894
Total Net Assets $ 12,890,736 -
$ 11,555,894
See accompanying notes.
11
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30 2006
Note 1 Summary of Significant Accounting Policies
The accounting policies of the City of Atlantic ' Beach, Florida, (the City), conform to
accounting principles generally accepted in the United States of America as applicable to
governments. The followingis a summary of the more significant policies used in the
preparation of these financial statements.
Reporting Entity
The City was incorporated in 1957, under a charter in accordance with the laws of the State of
Florida, Florida Statutes Section 57-1126. The City operates under a form of government
which comprises an elected City Commission (four Commissioners and a Mayor -
Commissioner) and provides, under the administration of an appointed' City Manager, the
following services: public safety, public works (streets' and infrastructure),' recreation,
sanitation, stormwater,'planning, zoning, water and sewer, and general government services.
As outlined in Governmental Accounting Standards' Board (GASB) Statement No. 14, The
Reporting Entity, and GASB Statement No. 39, Determining Whether Certain Organizations
are Component Units on Amendment to, GASB Statement No. 14, the financial reporting entity
consists of the primary government, organizations for which the primary government is
financially accountable, and other organizations whose exclusions would cause, the reporting
entity's financial statements to be misleading or incomplete. Each potential component unit is
individually evaluated using specific criteria outlined in GASB Statement No. 14, to determine
whether the entity is: (1) part of the primary government; (2) a component unit which should
be included in the reporting entity (blended or discreetly presented); or (3) an organization
which should be excluded from the reporting entity entirely. The principal criteria for
classifying' a potential component unit include the legal separateness of the organization, the
financial accountability of the primary, government for the potential component unit resulting
from either the primary government's` ability to impose its will on the potential component
unit, or the potential component unit's fiscal dependency on the primary government. Based
upon the application of these criteria, the City has no component units.
Government -wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net assets and the statement
of activities) report information on all of the nonfiduciary'activities of the City. For the most
part, the effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business -type activities, which rely to a significant extent on fees and charges
for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with`a specific function or activity.' Indirect costs are included in the program
expense reported for individual functions and activities. Program revenues include: (1)
charges to customers or applicants who purchase, use, or directly benefit from goods, services,
or privileges provided by a given function or activity; and (2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or activity.
Taxes and other items not properly included among program revenues are reported instead as
general revenues.
13
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Continued)
Note 1 Summary of Significant Accounting -Policies (Continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Concluded)
Fund Financial Statements (Concluded)
The City reports the following major governmental fund:
■ The General Fund is the City's primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in another
fund.
The City reports the following major proprietary funds:
■ The Utility Fund accounts for the activities of the City's water and sewer distribution
systems.
■ The Sanitation Fund accounts for the activities of the City's sanitation' system.
■ The Stormwater Fund accounts for the activities of the City's stormwater systema
Additionally, the City reports the following fund types:
■ Special Revenue Funds—The special revenue funds are used to account for the proceeds
of specific revenue sources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
■ Debt Service Funds—The debt service fund is used to account for the accumulation of
resources for, and the payment of, long-term general obligation debt principal, interest and
related costs other than obligations' payable from the operations of the proprietary funds.
■ Capital Projects Funds—The capital projects funds are used to account for the financial
resources to be used for the acquisition or construction of majorcapital' facilities and
improvement projects (other than those financed by proprietary funds or special revenue
funds).
® Pension Trust Funds—These funds account for the activities of the Employees
Retirement System, which accumulates resources for pension benefit payments to
qualified police officers and general employees.
Proprietary Funds
Private sector standards of accounting and financial' reporting issued prior to December 1,
1989, generally are followed in both the government -wide and 'proprietary fund financial
statements to the extent that those standards' do not conflict with or contradict guidance of
GASB. Governments also have the option of following subsequent private sector guidance for
their business -type activities and enterprise funds,- subject to this same limitation. The City
has elected not to follow subsequent private sector guidance:
15
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Continued)
Note 1 Summary of Significant Accounting Policies (Continued)
Receivables
Receivables are recorded at their net realizable value. The allowance for uncollectible
accounts and assessments at September 30, 2006, in the enterprise funds is $42,731.
Interfund Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding
at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current
portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of
interfund loans). All other outstanding balances between funds are reported as "due to/from
other funds." Advances between funds, as reported in the fund financial statements, are offset
by a fund balance reserve account in applicable governmental' funds to indicate that they are
not available for appropriationand are not expendable available financial resources. Any
residual balances outstanding between the governmental activities and business-type activities
are reported in the government-wide financial statements as "internal balances."
Inventories
Inventories consisting principally of expendable materials, supplies and fuel are determined by
physical count at the City's year end on an annual basis and are valued at the lower of cost
(first-in, first-out) or market. On the balance sheet - governmental funds, the inventory
balance reported is offset by a fund balance reserve which indicates that it does not constitute
"available spendable resources even though it is a component of net current assets. The cost
of governmental fund-type inventories is recorded as an expenditure when consumed.
Restricted Assets
Certain enterprise fund assets are required to be segregated from other current assets due to
various bond indenture agreements and City ordinances. These assets are legally restricted for
specific purposes, such as debt service, new construction, and renewals and replacements.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
drainage improvements, sidewalks, and similar items), are reported in the applicable
governmental or business-type activities columns in the government-wide financial'
statements. Property, plant, and equipment with initial, individual costs that equal or exceed
$1,000 and estimated useful lives of over one year are recorded as capital assets. Capital
assets are recorded` at historical `cost or estimated historical 'cost if purchased or constructed.
Donated capital assets are recorded at estimated fair market value at the date of donation.
The City has implemented the provision of GAS13 Statement No. 34. In this process,
infrastructure assets are being accounted for using 'different methods. For governmental
activities, the cost or estimated cost of roads, sidewalks and drainage are presented currently
and prospectively. After a complete inventory, valuation, and determination of cost, or
estimated cost of 'donated roads, sidewalks and drainage,' infrastructure was added to the
current and prospective values to arrive at total estimated cost during the fiscal year ended
September 30, 2006. For business-type activities, infrastructure assets have been capitalized at
cost. Utility improvements are being depreciated over their useful lives.
17
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Continued)
Note 1- Summary of Significant Accounting Policies (Concluded)
Property Taxes
The assessment of all properties and the collection of all property taxes are made through the
Property Appraiser and Tax Collector of the City of Jacksonville, Florida. General property
taxes are recorded as received, in cash; which approximates taxes levied less discounts for the
current fiscal year.
Taxes are levied on November l of each year. All taxes become delinquent on April 1 of the
following year. Discounts are allowed for early payment. On or 'prior to June 1, interest-
bearing certificates are sold for all uncollected real property taxes. Unsold certificates are held
by the City of Jacksonville, Florida.
Interfund Transactions
During the course of normal operations, the City has various transactions between funds to
construct assets and comply with local ordinances and other legal restrictions. These
transactions are reflected as transfers. In addition, certain transfers have been made between
systems and accounts of the utility enterprise fund as required by bond covenants.
Prior Period Information
The financial statements include certain prior year summarized comparative information in
total. Such information does not include sufficient detail to constitute a presentation in
conformity with generally accepted accounting principles. Accordingly, such information
should be read in conjunction with the City's financial' statements for the year ended
September 30, 2005, from which the summarized information was derived.
Note 2 - Prior Period'Adiustment
Pursuant to GASB Statement No. 34, the City was required` to record` its historical
infrastructure assets in the year ended September 30, 2006. Additionally, the City had the
option to use the depreciation method or the alternative (maintenance of service condition)
method in relationship to certain long-lived infrastructure assets. The City has elected to use
the depreciation method for reporting infrastructure assets. The resulting adjustment to
beginning net assets on the statement of activities was $34,665,975,' consisting' of $32,416,930
in governmental activities for roads and sidewalks and $2,249,043 in business -type activities
related to stormwater infrastructure assets.
Note 3 Cash and Investments
The City maintains a cash and investment pool that is designed for use by all funds, except for
those monies which are periodically transferred to the pension custodian, In addition,
investments are separately held and individually accounted: for by several of the City's funds
where contractual; arrangements and bond covenants provide for and =require such
arrangements. The deposits and investments of the pension trust funds which have been
transferred to the pension custodian are held separately from those of other City funds and are
required to be administered by an investment manager.
At September 30, 2006, the carrying amount of cash on hand and on deposit with banks,,
including interest-bearing deposits was $173,516, and the related bank balance was $793,574.
Monies which are placed on deposit with financial institutions in the form of demand deposit
19
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Continued)
Note 3 - Cash and Investments (Concluded)
Credit Risk—Thedeposits and investments with state agencies (State Board of
Administration) are not classified by credit risk since they are held by independent agencies.
The City is a member of the Local Government Surplus Funds Trust Fund Investment Pool
(the Pool) that is administered by the State Board of Administration of Florida (SBA). This
pool is a "2a-7 like" pool which has the characteristics of a money market fund. Therefore,
the fair value of the City's position in the Pool is the same as the value of the Pool shares. The
City's investment in the SBA Pool is not rated by a nationally recognized statistical rating
agency as of the date of these financial statements. Funds that have not been transferred to the
Pool are placed in a money market fund. The Bank of America Repurchase Agreement is
invested in treasury funds and isnot classified by credit risk since this is a mutual fund. There
were no violations of the legal or contractual provisions for deposits and investments.
It is the City's Police Officers' Retirement System and General Employees' Retirement System
Pension Trust Fund's policy to limit its investment in corporate debt issues to those that meet or
exceed a credit rating of "A" by Moody's or Standard & Poor's rating services, and no more
than 10% (at cost) of the fixed income portfolio total value can be invested in the securities of
any single corporate issuer. At September 30, 2006, the City's retirement systems' fixed income
security portfolio consisted of only mutual funds and other pooled investments, and therefore
were not rated by a nationally recognized rating agency.
Note 4 Special Assessments
During 1991, the City imposed a special assessment on residents in a certain area of the City
known as "Section H" to recover a portion of the costs of water and wastewater improvements
constructed by the City in that area. Assessments are payable' in equal annual installments
through 2011 plus interest at 5.35% (reduced from 8% in 1999).
During 1993, the City imposed other special assessments on residents in certain areas of the
City known as "Ocean Grove Unit 2," "Dewees," and "Seminole" (shown below as Other
Assessments) to recover the cost of water and wastewater improvements constructed by the
City in those areas. Assessments are payable in equal monthly installments through 2007 plus
interest at 5.91%.
During 1998, the City imposed a special assessment on residents in certain area of the City
known as `Beach Avenue" to recover the costs of sewer improvements constructed by the City
in that area. Assessments are payable in equal monthly installments through 2010 plus interest
at 6.00%.
Following is a summary of the outstanding balances at September 30, 2006:
21
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30 2006
- (Continued)
Note 7 - Capital Assets (Continued)
Beginning
Ending
Governmental Activities (Conc/raded)
Balance
Increases
Decreases
Balance
Capital Assets Being Depreciated:
Buildings
$ 4,121,512
$ 11234
$ 2,434
$ 4,130,312
Improvements OtherThadBuildings
36,155,980
886,752
11,548
37,031,184
Machinery and Equipment
2,582,738
538,021
105,264
3,015,495
Total Capital Assets Being Depreciated
42,860,230
1,436,007
119,246
44,176,991
Less Accumulated Depreciation for:
Buildings
951,291
98,686
0
1,049,977
Improvements Other Than Buildings
8,637,198
569,400
4,440
9,202,158
Machinery and Equipment
1,698,321
284,563
77,529
1,905,355
Total Accumulated Depreciation
11286,810
952,649
81,969
12,157,490
Total Capital Assets Being Depreciated,
Net
31573,420
483,358
37.277
32,019,501
Governmental Activities Capital
Assets, Net
$ 41,657,574
$ 1372931
$ 936,998
$ 42 093' X07
Business -type Activities
Capital Assets Not Being Depreciated:
Land
$ 771,345
$ 0
$ 0
$ 771,345
Construction in Progress
644,385
530,390
1,051540
123,235
Total Capital Assets Not Being
Depreciated
1,415,730
530,390
1,051,540
894,580
Capital Assets Being Depreciated:
Buildings
4,332,715
2,434
0
4,335,149
Improvements Other Than Buildings
54,457,507
1,047,172
0
55,504,679'
Machinery and Equipment
1,409,776
260,420
35,884
1,634312
Total Capital Assets Being Depreciated
60,199,998
1,310,026
35,884
61,474,140
Less Accumulated Depreciation for:
Buildings,
3,241,172
147,653
0
3,388,825
Improvements Other Than Buildings
19,355,457
1,972,329
0
21,327,786
Machinery and Equipment
977,990
113,446
35,884
1,055,552,
Total Accumulated Depreciation
23,574,619
2,233,428
35,884
25,772,163
Total Capital Assets Being Depreciated,
Net
36,625,379
(923,402)
0
35,701,977
Business -type Activities Capital Assets,
Net
$ 38,041,109
$ (393,012)
$ 1,051,540
$ 36,596 557
Depreciation expense was charged to functions/programs as follows:"-
Governmental Activities
General Governmental
$ 125,253
Public Safety
184,883
Transportation
482,847
Parks and Recreation
159,666
Total Depreciation Expense -Governmental Activities
$ 952,649
23
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Continued)'
Note 8 Long-term Debt (Concluded)
Interest and amortization incurred during the year ended September 30, 2006, was $20,737 in
the debt service fund and $924,424 in the enterprise funds. Of the amount incurred in the
enterprise funds, $0 was capitalized.
The City is also required to maintain certain debt service coverage ratios in accordance with
bond resolutions. As of September 30, 2006, and during the year then ended, the City was in
compliance with those ratios.
The following is a summary of the changes in long-term debt of the City for the year ended
September 30, 2006:
Balance Balance ' Due
October 1, September 30, Within
2005 Additions Reductions 2006 One Year
Governmental Activities
Revenue Bonds Payable $ 535;419 $ 0 $ 50,066 $ 485,353 $ 44,344
CompensatedAbsences 488,085 448,057 396,539 539,603 350,000
Total Governmental Activities
Long-term Liabilities 1.023.504 $ 448,057 $ 446 605 1024.956 $__324, 344
Business -type Activities
Revenue Bond Payable $' 22,029,009 $ 0 $ 767,559 $ 21,261,450 $ 785,005
Less Deferred Amounts:
For Issuance Discounts 237,972 0 13,211 224,761 13,211
Loss on Bond Refunding 1,775,136 0; 89,527 1,685,609 89,527
Total Revenue Bonds Payable 20,015,901 0 664,821 19,351,080 682,267
Compensated Absences 152,825 133,551 108,240 178,136 108,000
Total Business -type Activities -
Long-term Liabilities $ 20.168,726 $ 133,551 $ 773 061 1 S-79
0-267
Advanced Refunding
The City issued $19,500,000 of Series 2004 Utilities System Revenue Refunding Bonds to
refund a portion of the City's outstanding Series 1996 Utilities System Revenue Bonds. The
refunded portion is considered to be defeased and the liability has been removed from the City's
financial statements. The outstanding balance of the defeased Series 1996 Utilities System
Revenue Bonds is $17,840,000 at September 30, 2006.
Note 9 Defined Benefit Pension Plans
Plan Descriptions and Contribution Information
The City maintains two separate single -employer pension plans, one for police officers and
one for general employees, which cover substantially" all full-time City employees. The
pension plans do not issue separate stand-alone financial statements. Membership of each plan
consists of the following at September 30, 2005, the date of the latest actuarial valuation:
25
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Continued)
Note 9 - Defined Benefit Pension Plans (Concluded)
Annual Pension Costs and Net Pension Asset (Concluded)
General
Employees ' PoliceTotals
Annual Required Contribution (ARC) $ 480,029 $ 350,161 $ 830,190
(Contributions Made) (480,029) (370,172) (850,201)
Net Pension Obligation, End of Year $ 0 $(20,011) $ (20.011)
The City has funded the Police Retirement Plan in excess of the computed ARC for 2006'
based upon the 2005 actuarial valuation. No pension' asset has been recorded in the
accompanying financial statements pending computation of the 2006 actuarial valuation.
Other Pension Plan Information
The annual required contributions for the current year were determined as part of the
September 30, 2005, actuarial valuations for the General Employees' and Police Retirement
Plans using the individual entry -age actuarial cost method. The actuarial assumptions include
an 8.0% rate of return on investments and projected salary increases, which range from 5.5%
to 8.5% for both plans. The assumptions did not include postretirement benefit increases.
The actuarial value of assets was determined using market value and a funding value
adjustment for both plans. The unfunded actuarial accrued liabilities are being amortized over
remaining amortization periods of to 30 years.
Three-year trend information:
Annual Percentage of Net Pension
Fiscal Year Ended Pension Cost APC Asset/
September 30, (APC) Contributed (Liability)
General Employees
2004 -$ 381,518 100% $ 0
2005 464,893 100% 0
2006 480,029 100% 0
Police
2004 242,637 100% 0
2005 297,361 100% 0
2006 350,161 106% 20,011
Note 10 Interfund Accounts
Individual fund interfund receivables and payables at September 30, 2006, consist of the
following:
Due From Due to Other
Other Funds Funds
General $ 116,286 $ 0
Nonmajor Governmental 0 116,286
27
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Concluded)
Note 12 - Commitments (Concluded)
The Florida Department of Environmental Protection (FDEP) will determine individualized
timelines for completing plantand stormwater upgrades. The FDEP will be allowing 2 -to -4 -
year time periods to complete plant upgrades. Stormwater improvements may be granted a
longer compliance period. The estimated range of costs for the treatment plant upgrades and a
reclaimed water facility will be from $5 to $11 million. The City anticipates some grant funds
to be available for the reclaimed water facility and stormwater' improvements related to
TMDL. The point -source improvements will be less expensive than stormwater improvements
to remove'similar amounts of nitrogen' so trading point -source projects that go beyond the
TMDL requirements to offset stormwater needs may save the City a considerable amount. It
is undetermined, at this time, what the net cost will be to the City.
Note 13 Contingencies
The City is a defendant' in several lawsuits which arose in the ordinary course of the City's
business. It is the City's position that the probability is unlikely that material amounts will
ever be payable as a result of these proceedings.
Note 14 Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters for which the City carries commercial
insurance. Insurance against losses are provided through the Florida League of Cities, Inc. and
Risk Management Associates, Inc. for the following types of risk:
■ Workers' Compensation and Employer's Liability "
■ Automobile Liability
s Automobile Physical Damage '
■ Accidental Death and Dismemberment
■ General Liability
■ Public Officials' Liability
■ Property Coverage
The City's coverage' for workers' compensation is under a retrospectively rated policy.
Premiums are accrued based on the ultimate cost to -date of the City's experience for this type
of risk.
Note 15 Subsequent Event
Subsequent to yearend, the City acquired a parcel of land for future stormwater improvements
in the amount of $870,573.
29
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF PENSION FUNDING PROGRESS
SEPTEMBER 30, 2006
General Employees' Retirement Plan
UAAL as
Valuation Funded Annual Covered Percentage of
Date AVA AAL UAAL Ratio, Payroll Payroll
9/30/01 $ 5,587,000 $ '6,986,000 $ 1,399,000 80.0% $ 2,462,000 56.8%
9/30/02 5,747,000 7,479,000 1,732,000 76.8% 2,768,000 62.6%
9/30/03 5,951,000 8,186,000 2,235,000 72.7% 2,856,000 78.3%
9/30/04 6,273,000 ' 9,005,000 2,732,000 69.7% 3,051,000 89.5%'
9/30/05 6,802,000 9,822,000 3,020,000 69.3% 3,182,000 94.9%
Police Retirement Plan
UAAL as
Valuation Funded Annual Covered Percentage of
Date AVA AAL UAAL Ratio Payroll Payroll
9/30/01 $ 4,068,000 $ 5,016,000 $ 948,000 81.1% $ 1,155,000 82.1%
9/30/02 4,230,000 5,334,000 1,104,000 79.3% 1,195,000 92.4%
9/30/03 4,373,000 5,986,000 1,613,000 73.1% 1,129,000 142.9%
9/30/04 4,534,000 6,405,000 1,871,000 70.8% 1,360,000 137.6%
9/30/05 4,775,000 6,997,000 2,222,000 68.2% 1,402,000 158.5%d
Analysis of the dollar amounts of actuarial value of assets, actuarial accrued" liability, or unfunded
actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a
percentage of the actuarial accrued liability provides one indication of the system's funded status on a
going concern basis. Analysis of this percentage over time indicates whether the system is becoming
financially stronger or weaker. Generally, the greater this percentage, the stronger the plan. The
unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing
the unfunded actuarial accrued liability as a percentage of covered payroll approximatelyadjusts for the
effects of inflation and aids analysis of the progress being made in accumulating sufficient assets to pay
benefits when due. Generally, the smaller this percentage, the stronger the plan:
30
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER
AND OTHER CONTRIBUTING ENTITIES
SEPTEMBER 30, 2006
General Employees' Retirement Plan
Annual
Required
Year Ended Contributed Percentage
September 30, (ARC) Contributed
2002 $ 288,070 100%`
2003 315,106 100%
2004 381,518 100%
2005 464,893 100%
2006 480,029 100%
Police Retirement Plan -
Annual
Required
Year Ended Contributed Percentage
September 30 (ARC) Contributed
2002 $ 240,242 100%
2003 225,991 100%
2004 242,637 100%
2005 297,361 100%
2006 350,161 106%°
The information presented in the required supplementary schedules was determined as part of the
actuarial valuation at the dates indicated. Additional information for the general employees' and police
retirement plans as of the latest actuarial valuation follows:
Valuation Date September 30, 2005
Actuarial Cost Method Entry -Age Actuarial Cost Method
Amortization MethodLevel Percent of Payroll, Closed
Remaining Amortization Period 5 to 30 Years
Asset Valuation Method Funding Value
Actuarial Assumptions
Investment Rate of Return . 8.00%
Projected Salary Increases 5.50%
Inflation 5.00%
31
32
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED` SUPPLEMENTARY
INFORMATION
SCHEDULE
OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE
BUDGET AND ACTUAL -
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER
30, 2006
Variance With
Final Budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Revenues
Property Taxes
$ 3,410,968
$ 3,410,968 $
3,529,832
$ 118,864
Nonproperty Taxes
1,553,170
1,553,170
1,717,806
164,636
Licenses and Permits
478,650
478,650
455,278
(23,372)
State -shared Revenues
1,838,489
1,838,489
1,964,668
126,179
Other Intergovemmental Revenues 572,044
572,044
578,334
6,290
Charges for Services
15,400
15,400
20,531
5,131
Fines and Forfeitures
153,917
153,917
126,439
(27,478)
Interest Income
90,000
90,000
242,518
152,518
Miscellaneous Revenues
50,970
50,970
55,975
5,005
Interfund Charges
1,315,661
1,315,661 '
1,324,156
8,495
Total Revenues
9,479,269
9,479,269
_ 10,015,537
536,268
Expenditures
General Government:
Legislative
- 45,938
53,538
52,454
1,084`
Legal Counsel
100,569
161,571
155,706
5,865
Planning and Zoning
191,026
271,060
213,873
57,187
City Clerk
228,270
241,993
212,859
29,134
City Manager
229,880
229,880
219,334
10,546
Finance and Accounting'
874,047
875,784
803,844
71,940
Human Resources
187,448
187,448
172,733
14,715
Information Technology
473,070
'481,257
369,887'
111,370
Other
410,866
434,104
349,674
84,430
Total General Government
2,741,114
2,936,635
2,550,364
386,271
Public Safety:
Law Enforcement
3,217,539
3,221,970
3,107,135
114,835
Lifeguards
176,969
176,969
172,338
4,631
Fire Control
874,171
882,471
870,127
12,344
Code Enforcement
59,579
59,579
58,846
733
Building
233,523
255,144
245,904
9,240
Total Public Safety
4,561,781
4,596,133
4,454,350
141,783
Transportation: "
Public Works' Administration 469,649
479,151'
439,647
39,504
Streets and Roads
801,717
973,625
906,299
67,326
Fleet Maintenance
266,900
266,900
241,395
25,505
Total Transportation
1,538,266
1,719,676
1,587,341
132,335
Parks and Recreation
1,007,580
1,022,247
1,002,601
19,646
(Total Expenditures)
(9,848,741)
(10,274,691) (9,594,656)
680,035
32
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2006
(Concluded)
Variance With
Final Budget -"
Budgeted Amounts Actual
Positive
Original Final Amounts
(Negative)
Excess of Revenues Over
Expenditures $ (369,472) $ (795,422) $ 420,881
$ 1,216,303
Other Financing Sources (Uses)
Transfers in 463,709 463,709 463,709
0
Transfers out 0 0 0
0
Sale of General Fixed Assets 9,000 9,000 6,075
(2,925)
Total Other Financing Sources (Uses) 472,709 472,709 469,784
(2,925)
Excess of Revenues and Other Financing
Sources Over Expenditures and
Other Financing Uses 103,237 (322,713) 890,665
1,213,378
Fund Balances, Beginning of Year 4,726,035 4,726,035 4,726,035
0
Fund Balances, End of Year $ 4,829,272 $ 4,403,322 $ 5,616,700
$ 1,213,378'
33
CITY OF ATLANTIC BEACH, FLORIDA -
REQUIRED SUPPLEMENTARY INFORMATION
NOTE TO SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Budgets and Budgetary Accounting
General governmental revenue and expenditures accounted for in budgetary funds are controlled by a
budgetary accounting system in accordance with various legal requirements which govern the City's
operations. Budgets are monitored at varying levels of classification detail; however,expenditures cannot
legally exceed total appropriations at the individual fund level. Encumbrances are recorded. Unexpended
items which are unencumbered at year end must be reappropriated in the subsequent year.
Budgets are adopted for all governmental funds (general, special revenue, debt service and capital
projects funds). The City Manager is authorized to transfer budgeted amounts within departments within
any fund; however, any revisions that increase the total expenditures of any department or fund must be
approved by the City Commission. All necessary supplemental appropriations are adopted by the City
Commission and are included in the reported budgetary data. The budget presented in the accompanying
required supplemental information is prepared in conformity with accounting principles generally
accepted in the United States of America.
34
36
2006
Special Revenue Funds
Totals
Totals
Nonmajor
Radio
Contraband
Police Miscellaneous
Special
Debt
Governmental
2005
ommunication
Forfeiture
Grants
Grants
Revenue
Service
Funds
Totals
2,658
$ 3,541
$ 0 $
0
' $ 1,606,902
$ 77,265
$ 1,684,167
$ 1,618,989
4,978
0
42,963
88,005
359,301
0
359,301
297,905
7,636
3,541
42,963
88,005
1,966,203
77,265
2,043,468
1,916,894
0
0
14,682
0
50,631
0
50,631
51,222
0
0
28,281
88,005
116,286
0
116,286
69,775
0
0
42,963
88,005
166,917 "
0
166,917
120,997
0
0
0
0
0
77,265
77,265
76,101
7,636
3,541
0
0
1,799,286
0
1,799,286
1,719,796
7,636
3,541
0
0
1,799,286
77,265
1,876,551
1,795,897
7,636
$ 3,541
$ 42,963 $
88,005
" $ 1,966,203
$ 77,265
$ 2,043,468
$ 1,916,894
36
2006
Special Revenue Funds
Totals
Totals
Nonmajor
Radio
Contraband
Police Miscellaneous
Special
Debt
Governmental
2005
ommunication
Forfeiture
Grants
Grants
Revenue
Service
Funds
Totals
0
$ 0
$ 0 $
0 $
1,356,441
$ 0
$ 1,356,441
$ 1,321,972
4 29,003
0
137,450
154,987
329,849
0
329,849
366,505
153
169
0
0
68,421
2,669
71,090
38,633
p
p
0
0
140
0
140
79,137
29,156
169
137,450
154,987
1,754,851
2,669
1,757,520
1,806,247
0
0
0
_'60130
118,982
0
118,982
68,596
38,000
550
78,658
0
126,708
0
126,708
150,460
p
0
0
0
0
50,066
50,066
48,950
0
0
0
0
0
21,439
21,439
23,480
0
0
58,792
93,027
798,287
0
798,287
1,157,718
(38,000)
(550)
(137,450)
(154,987)
(1,349,993)
(71,505)
(1,421,498)
(1,449,204)
(8,844)
(381)
0
0
404,858
(68,836)
336,022
357,043
0
0
0'
0
0
70,000
70,000
97,989
0
0
0
0
(325,368)
0
(325,368)
(516,184)
0
0
0
0
(325,368)
70,000
(255,368)
(418,195),
(8,844)
(381)
0
0
79,490
1,164
80,654
(61,152)
16,480
3,922
0
0
1,719,796
76,101
1,795,897
1,857,049
>$ 7,636
$ 3,541
$ 0 $
0 $
1,799,286
$ 77,265
$ 1,876,551
$ 1,795,897
38
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY
FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006,
WITH COMPARATIVE TOTALS FOR THE
YEAR ENDED SEPTEMBER 30, 2005
Pension Trust Funds
Police
General
Officers'
Employees'
Retirement
Retirement
2006 '
2005
Plan
Plan
Totals
Totals
Additions
Contributions:
Employees
$ 18,721
$ 112,511 $
131,232 $
673,448
Employer
261,354
480,029
741,383
105,721
State of Florida
108,819
0
108,819
108,818
Total Contributions
388,894
592,540
981,434
887,987
Net Increase in Fair Value of Investments 350,293
562,100
912,393
923,131
Interest and Dividends
89,504
133,990
223,494
95,425
Total Additions
828,691
1,288,630
2,117,321
1,906,543
Deductions
RefundsofContributions
350
12,814
13,164
9,532
Benefits
346,586
342,535
689,121
597,490
Investment Expenses
22,342
27,131
49,473
72,775
Administrative Expenses
16,080
14,641
30,721
24,192
Total Deductions
385,358
397,121
782,479
703,989
Net Increase
443,333
891,509
1,334,842
1,202,554
Net Assets, Beginning of Year
4,740,335
6,815,559
11,555,894
10,353,340
Net Assets, End of Year
$ 5,183,668
$; " 7,707,068 $
12,890,736 $
11,555,894
CITY OF ATLANTIC BEACH, FLORIDA
MAJOR UTILITY CUSTOMERS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
(UNAUDITED)
Annual
Billings
Navy (Federal Government) $ 390,538
Fleet Landing (Retirement Community) 150,200
Oaks of Atlantic Beach (Mobile Rome Park) 117,447
Hannah (Regional) Park 104,324
Lakes of Mayport (Apartment Complex) 89,543
John Creek Estate (Mobile Home Park) 87,785
Sea Turtle Inn (Hotel) 64,590
City of Atlantic Beach, Florida 60,890,
Atlantic Arms (Apartment Complex) 57,196
Canterbury Court (Apartment Complex) 54,994
Total $ 1,177,507
42
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46
CITY OF ATLANTIC BEACH, FLORIDA
OTHER
BONDCOVENANT DISCLOSURES
FOR THE YEARS ENDED SEPTEMBER 30, 2002 THROUGH 2006
(UNAUDITED)
Utility Service Tax Collections (Unaudited)
(Last Five Years)
Year
Electricity
Telecom Gas
Fuel Oil
Total
2002
$ 339,138
$ 680,595 $ 26,959 $
224 $
1,046,916
2003
355,151
581,898 32,567
236
969,852,
2004
351,752
552,716 26,850
126
931,444
2005
367,186
586,369 28,015
77
981,647
2006
372,226
596,368 23,711
132
992,437
Ad Valorem Tax Collections (Unaudited),
(Last Five Years)
Year
Current Delinquent
Total
2002
$ 2,256,475 $ 6,781 $
2,263,256
2003'
2,530,175 (4,220)
2,525,955
2004
2,719,108 95
2,719,203
2005
2,988,234 1,841
2,990,075
2006
3,528,853 979
3,529,832
46
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Federal Pass -Through Entity CFDA Contract/Grant
Program
Program
Federal Proeram Title Number Number
Award
' Expenditures*
U.S. Department of Housing and Urban
Development Passed Through City
of Jacksonville, Florida
Community Development Block
Grant 14.218 5629-31 $
163,575
$ 154,986
U.S. Department of Housing and Urban
Development Passed Through Habitat
for Humanity of the Jacksonville
Beaches
Self -Help Homeownership Opportunity
Program 14.247 SH04-001
156,008
4,830
U.S. Department of Justice, Bureau of
Justice Assistance, Passed Through
City of Jacksonville
Byrne Grant - Crime Suppression 16.738 5629-33
73,760
73,760
U.S. Department of Justice, Department
of Homeland Security, Passed Through
City of Jacksonville, Florida
Urban Area Security Initiative
(UASI Program) 97.008 5629-37
137,810
137,810
U.S. Department of Justice Passed
Through Florida Department of Law
Enforcement
JAG - CSU Video 16.738 2006-JAGD-DUVA-3-M9-076
6,536
6,420
JAG -AB -CAD 16.738 2006-JAGD-DUVA-4-M8-227
65,000
40,215
State Homeland Security - ODP SWAT 97.004 2006-SHSP-DUVA-3-N9-027
20,000
17,056
U.S. Department of Justice Passed
Through Bureau; of Justice Assistance
Bulletproof Vest Partnership Grant 16.607 03018357
4,550
4,550
Total Federal Awards $ 627,239
$ 439,627
Includes Grant Expenditures Only (Matching Funds Not Reported).
48
Purvis
Gray 8`
Cqmp ny
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
We have audited the basic financial statements of the City of Atlantic Beach, Florida (the City), as of and
for the year ended September 30, 2006, and have issued our report thereon dated December 13, 2006. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting in
order to determine our auditing procedures for the purpose of expressing our ' opinion on the basic
financial statements and not to provide an opinion on the internal control over financial reporting. Our
consideration of the internal control over financial reporting would not necessarily disclose all matters in
the internal control that might be material weaknesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that misstatements caused by error or fraud in amounts that would be material
in relation to the basic financial statements being audited may occur and not be detected within a timely
period by employees in the normal course of performing, their assigned functions. We noted no matters
involving the internal control over financial reporting and its operation that we consider to be material
weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's basic financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and materialeffect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other` matters that are required to be
reported under Government Auditing Standards.
Certified Public Accountants
P.O. Box 23999 • 222 N.E_ 1st Street • Gainesville, Florida 32602 • (352) 378-2461 FAX (352) 378-2505
Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 (850) 224-7144 •FAX (850) 224 1762
2201 Cantu Court, Suite #100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899
MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.C': PRACTICE SECTIONS
50
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
z
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED
AO IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
(Concluded)'
This report is intended solely for the information and use of management, the City Commissioners, and
the office of the Auditor General, State of Florida and agencies providing state and federal financial
assistance and is not intended to be and should not be used by anyone other than these specified parties.
December 13, 2006 C6potf
L/`
Gainesville, Florida �L� C r
51
r urvis
GLay8.
Cpan
k
MANAGEMENT LETTER
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
We have audited the basic financial statements of the City of Atlantic Beach, Florida (the City), as of and
for `the fiscal year ended September 30, 2006, and have issued our report thereon dated December 13,
2006:
We have issued our independent auditors' report on compliance and on internal control over financial
reporting dated December 13, 2006. Disclosures in that report, if any, should be considered in
conjunction with this management letter.
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; and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations. Additionally, our audit was conducted in accordance with
the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local
governmental entity audits performed in the State of Florida and require that certain items be addressed in
this letter.
The Rules of the Auditor General [Section 10.554(1)(h)l.] require that we address in the management
letter, if not already addressed in the independent auditors' report on compliance and internal controls,
whether or not recommendations made in the preceding annual financial audit reports have been
followed.There were no comments made in the preceding annual financial audit reports.
The Rules of the Auditor General [Section 10.554(1)(h)2.] require that we determine whether the City
complied with Section 218.415, Florida Statutes, regarding investment of public funds. Our audit
disclosed no matters requiring comment as outlined in Section 218.415, Florida Statutes.
The Rules of the Auditor General [Section 10.554(1)(h)3.] require disclosure in the management letter
any findings or recommendations to improve financial management, accounting procedures, and internal
controls. Our audit disclosed no matters required to be disclosed by the Rules of the Auditor General
[Section 10.554(l)(h)3.].
The Rules of the Auditor General [Sections 10.554(1)(h)4.] require disclosure in the management letter of
the following matters if not already addressed in the auditors' report on compliance and internal control;
violations of laws, rules, and regulations which may or may not materially affect the financial statements;
illegal or improper expenditures that may or may not materially affect the financial statements; improper
or inadequate accounting procedures (e.g., . the omission of required disclosures from the financial
statements) failures to properly record financial transactions; and other inaccuracies, 'shortages, and
defalcations and instances of fraud discovered by, or that come to the attention of the auditor . None of
the aforementioned was discovered within the scope of our audit.
Certified Public Accountants
P.O. Box 23999 • 222 N.E. 1st Street • Gainesville, Florida 32602 • (352) 378-2461 • FAX (352)378-2505
Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court, Suite #100 • Sarasota, Florida 34232 (941) 379-2800 • FAX (941) 379-2899
MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S-EC. PRACTICE SECTIONS
52
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
l
MANAGEMENT LETTER
- (Concluded)
As required by the Rules of the Auditor General [Section 10.554(1)(h)6.(a)], the scope of our audit
included a review of the provisions of Section 218.503 (1), Florida Statutes, Determination of Financial
Emergency. In connection with our audit, we determined that the City does not meet the conditions of a
financial emergency as a consequence of the conditions described in Section 21$.503(1), Florida Statutes.
Also, as required by the Rules of the Auditor General, we applied financial condition assessment
procedures pursuant to Rule 10.556(7). The application of such procedures did not reveal evidence of
"deteriorating financial condition" as the term is defined in Rule 10.554(1)(h)6.(c).
As required by the Rules of the Auditor General [Section 10.554(l)(h)6.(b)], we determined that the
annual financial report for the City for the fiscal year ended September 30, 2006, was filed with the
Department of Banking and Finance pursuant to Section 218.32 (1) (a), Florida Statutes, and is in
agreement with the annual financial audit report for the fiscal year ended September 30, 2006.
This report is intended solely for the information and use of the Auditor General of the State of Florida,'
management, and the City Commissioners, and is not intended to be and should not be used by anyone
other than these specified parties.
December 13, 2006 ^
Gainesville, Florida
N�, 1 Z—LP
53