Audit Report - 2002-2003CITY OF ATLANTIC BEACH, FLORIDA
FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
CITY OF ATLANTIC BEACH, FLORIDA
FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
TABLE OF CONTENTS
Page
Number(s)
Independent Auditors' Report 1 - 2
Management's Discussion and Analysis 3 - 16
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets 18
Statement of Activities 19
Fund Financial Statements
Balance Sheet -Governmental Funds 20
Reconciliation of the Balance Sheet -Governmental Funds to the Statement of Net
Assets 21
Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental
Funds 22
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances -Governmental Funds to the Statement of Activities 23
Statement of Net Assets -Proprietary Funds 24
Statement of Revenues, Expenses and Changes in Fund Net Assets -Proprietary
Funds 25
Statement of Cash Flows -Proprietary Funds 26 - 27
Statement of Fiduciary Net Assets -Fiduciary Funds 28
Statement of Changes in Fiduciary Net Assets -Fiduciary Funds 29
Notes to Financial Statements 30 - 47
Required Supplementary Information
Schedules of Pension Funding Progress 49
Schedules of Contributions from Employer and Other Contributing Entities 50
Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and
Actual -General Fund 51
Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget 52
and Actual -General Fund
Supplementary Information
Combining Balance Sheet - Nonmajor Governmental Funds 54 - 55
Combining Statement of Revenues, Expenditures and Change in Fund Balances -
Nonmajor Governmental Funds 56 - 57
Single Audit
Schedule of Expenditures of Federal Awards 58
Notes to the Schedule of Expenditures of Federal Awards 59
Schedule of Findings and Questioned Costs 60
Independent Auditors' Report on Compliance and Internal Control over Compliance
Applicable to Each Major Federal Awards Program 61 - 62
Independent Auditors' Report on Compliance and on Internal Control Over
Financial Reporting Based on an Audit of Basic Financial Statements Performed
in Accordance with GovernmentAuditing Standards 63
Management Letter of Independent Auditors Required by Chapter 10.550, Rules of
the Auditor General 65 - 66
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'T'HIS PAGE INTENTIONALLY LEFT BLANK.
JAMES MOORS ~ CO., P.L.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor, City Commissioners, and City Manager
of the City of 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, as of and for the year ended September 30, 2003, 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 of Atlantic Beach, Florida's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the 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.
As described in Note 14 to the basic financial statements, the City of Atlantic Beach, Florida, adopted
Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements -and
Management's Discussion and Analysis -for State and Local Governments, GASB Statement No. 37,
Basic Financial Statements -and Management's Discussion and Analysis -for State acid Local
Governments: Ont~tibus, GASB Statement No. 38, Certain Financial Statement Note Disclosures and
GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in
Governmental Fund Fi~rancial Statements. This results in a change in the format and content of the basic
financial statements.
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 of Atlantic Beach, Florida, as of September 30,
2003, 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.
1n accordance with Government Auditing Standards, we have also issued a report dated December 5,
2003, on our consideration of the City of Atlantic Beach, Florida's internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and
grants. That report is an integral part of an audit performed in accordance with Govermment Auditing
Standards and should be read in conjunction with this report in considering the results of our audit.
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The management's discussion and analysis 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 supplementary information. However, we
did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the City of Atlantic Beach, Florida's, basic financial statements. The combining
fund statements listed in the table of contents are presented for purposes of additional analysis and are not
a required pari of the basic financial statements of the City of Atlantic Beach, Florida. The accompanying
schedule of expenditures of federal awards is presented for purposes of additional analysis as required b}~
the United States Office of Management and Budget Circular A-133, Audits of States, Locul
Governments, and Non-Profit O~blunizations, and is not a required part of the basic financial statements of
the City of Atlantic Beach, Florida. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
Daytona Beach, Florida
December 5, 2003
~~.
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CITY OF ATLANTIC BEACH
800 SEMINOLE ROAD
ATLANTIC BEACH, FLORIDA 32233-5445
TELEPHONE: (904) 247-SS00
FAX: (904) 247-5877
SUNCOM: 852-5800
http://ci.atlantic-bcach.fl.us
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENTS' DISCUSSION & ANALYSIS
As management of the City of Atlantic Beach, we offer readers of the City of Atlantic Beach's financial
statements this narrative overview and analysis of the financial activities of the City of Atlantic Beach for
the fiscal year ended September 30, 2003.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City of Atlantic Beach's basic
financial statements. The City of Atlantic Beach's basic financial statements comprise 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. Please note, the City presents prior comparative financial information when
available; however, summary comparative data is not included in this discussion and analysis.
Comparative data will be presented in future years as this information becomes available.
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.
T'he 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
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
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 penods (e.g.,
uncollected franchise fees, special assessments or earned personal leave, etc.).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes, licenses and permits, and intergovernmental revenues (governmental activities) from
other functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities). The governmental activities of the City include general government,
public safety, transportation and parks and recreation. The business-type activities of the City include the
utility comprised of the water and sewer systems, the stormwater utility and the sanitation enterprise. The
government-wide financial statements can be found on pages 18 - 19 of this report.
Fund financial statements-A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or 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 divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.
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Governmental funds-Governmental funds arc 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 spendable resources, as well as on balances of spendable resources available 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. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City of Atlantic Beach maintains sixteen individual governmental funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of revenues,
expenditures, and changes in fund balances for the general fund that is considered to be a major fund.
Data from the other fifteen governmental funds arc combined into a single, aggregated presentation.
The City of Atlantic Beach adopts an annual appropriated budget (or all funds. A General Fund budgetary
comparison schedule has been provided to demonstrate compliance with this budget.
Proprietary funds-Until this year, the City of Atlantic Beach maintained two types of proprietary
funds. The enterprise type funds to account for the activities of the water, sewer, stormwater and
sanitation activities and the internal service type funds to account for those funds whose activities were
servicing primarily other City departments. The City has now consolidated all of the internal service
funds into the General Fund and now charges only the enterprise funds for the services provided.
Enterprise funds arc used to report the same functions presented as business-type activities in the
government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information of the utility,
stormwater and sanitation activities, which arc considered to be major funds of the City of Atlantic Beach.
The basic proprietary fund financial statements can be found on pages 24 - 27 of this report.
Fiduciary funds-Fiduciary funds are used to account for resources held for the benefit of parties outside
the City. The only fiduciary funds the City of Atlantic Beach maintains now are the police and general
employee pension funds. Fiduciary funds are not reflected in the government-wide financial statement
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, which include the pension trust funds, can be found on pages 28 - 29 of this report.
Notes to the financial statements-The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 30 - 47 of this report.
Other information-In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information concerning the City of Atlantic Beach's
schedule of contributions and it'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 49 - 52 of this report.
Combining statements-Referred to earlier in connection with nonmajor governmental funds, arc
presented immediately following the required supplementary information. Combining fund statements
can be found on pages 54 - 57 of this report.
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Financial Hi~l~liehts:
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a City's financial position. In the
case of the City of Atlantic Beach, assets exceed liabilities by $34,903,612 at the close of the most recent
fiscal year.
By far the largest portion of the City's net assets, $22,402,820, reflects its investment in capital assets
(e.g. land, buildings, improvements other than buildings, equipment), less any related debt used to
acquire those assets that is still outstanding. 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.
City of Atlantic Beach's Net Assets
September 30, 2003
(In Thousands)
Governmental
Activities
Current and other assets
Capital assets
Total Assets
Long-term liabilities outstanding
Other liabilities
Tota] Liabilities
$ 8,184
8,078
16,262
Net Assets
Business-
type
Activities
$ 8,688
35,641
44,329
Total
$ 16,872
43,719
60,591
1,025 20,648 21,673
573 3,441 4,014
1,598 24,089 25,687
Invested in capital assets, net of related debt 7,448 14,955 22,403
Restricted 1,777 895 2,672
Unrestricted 5,439 4,390 9,829
Total Net Assets $ 14,664 $ 20,240 $ 34,904
A portion of the. City's net assets, $2,672,774, represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets $9,828, 018 may
be used to meet the government's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City is 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.
During the current fiscal year, the City of Atlantic Beach's net assets increased by $657,494. This is an
amount that represents the net of a large increase in the net assets as a result of the governmental
activities offset by a decrease in net assets resulting from the business type activities.
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It should be noted that the City of Atlantic Beach's total bonded debt decreased by $1,000,172 (4.4%,)
during the current fiscal year. The decrease was made up of the scheduled principal retirement of the
Utility System Revenue Bonds, series 1996 of 5487,723, the early retirement of the SunTrust 1995
Revenue Note payable associated with governmental activities in the amount of 5468,257 and the
scheduled principal payments of the 1999 SunTrust refunding revenue bonds of 544,192.
The operations of the City are funded using pooled cash shared and allocated by both the governmental
fund types and the business fund types. In line with other cities using pooled cash investments, the City's
rate of return on investments in pooled cash went from 2.08% last year to only l .52°/<, in the current year.
This represents a 27% decrease in rate of return.
"hhe following is a summary of activities for the City during the fiscal year ended September 30, 2003:
City of Atlantic t;3each's Change in Net Assets
(In Thousands)
Revenues:
Program revenues:
Charges for services
Operating grants & contributions
Capital grants & contributions
Genera] Revenues:
Property taxes
Sales Taxes
Franchise and utility taxes
Intergovernmental revenue
Interest revenue
Miscellaneous
Total Revenues
Expenses:
General Government
Public Safety
Transportation
Culture & Recreation
Interest on long-term debt
Utility
Storm Water
Sanitation
Total Expenses
Increase (decrease) in net assets
Before transfers
Transfers
Increase in net assets
Net assets October 1, 2002
Net assets September 30, 2003
I?;USIIICSS-
Governmcntal type
Activities Activities Total
5 1,144 5 7,133 5
613 60
1,011 713
~,s2s -
1,263 -
],514 -
346 -
95 87
4l 277 _
5 5,558 5 5,270 5
573
4,16S
1,393
l ,003
33
5,277
673
1,724
2,s2s
1,263
1,514
346
155
zis:
ir, r~r
- 873
- 416s
- 1393
- 1003
- 33
6,685 6685
988 988
1,027 1027
8,70 ] 16,171
7,470
1,085 (431) 657
279 (279) -
1,367 (710) G57
13,297 20,950 34,247
5 14,664 5 20,240 5 34,904
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Operating Revenues and Expenses by Function -Governmental Activities
a,soo,ooo
a,ooo,ooo
s,soo,ooo
s,ooo,ooo
2,500,000
2,000,000
1,500,000
7,000,000
500,000
0
i
General Public Satety Public Works Culture 8 Intereston lon0•
Government Recreation term debt
t3Expenses Operating Program Revenues
Revenues by Source -Governmental Activities
Msoellaneous
0%
Interest Revenue
1%
Franchise & lJtiliiy Taxes
• 18%
Sales Taxes
15%
Intergovemrtrnhal Revenue
4%
Charges for Services
13%
Property Taxes
30%
Operating Grants &
Contributions
7%
Capital Grants &
Contributions
12%
']
Governmental activities-C'overnmcntal activities increased the City of Atlantic Beach's net assets by
$1,367,104. The most significant reasons for this large increase arc that the City received $502,361 in
local option gas taxes and $583,616 of discretionary sales taxes, most of which were used to acquire
capital assets. In addition to these proceeds, the City also received grant funds, interest and other
miscellaneous revenues, some of which were also used to increase net assets.
Business-tune activities-Business-type activities decreased the City or Atlantic Beach's net assets by
$709,610. Key elements of this decrease are as follows:
The business type activities resulted in an operating loss of $219,630. `Phis is primarily the result
of the $467,746 operating loss of the stormwater utility. 1'he City has over the last few years
begun to allocate all expenses associated with the stormwater system including salary for
maintenance from the general fund to the utility. The fees arc insufficient to cover operations and
the deficit is funded with transfers from the Gas Tax and General funds.
o One of the largest contributors to the overall decrease in net assets is depreciation on existing
assets. Depreciation for the current year was $1,636,788.
Charges for services for business-type activities remained relatively constant from the previous
fiscal year. The overall increase in charges for services for the business type activities was 3`%.
This was primarily due to the $1.00 per equivalent residential unit, (ERU), per month, increase in
the stormwater utility rate. The sanitation utility generated a small increase over last year while
the water and sewer utilities had substantively no increase from the previous year.
o While both the stormwater and sanitation charges for services came in over projections by a small
margin, the water and sewer revenues did not achieve their projected targets. Water and sewer
charges for services fell $233,801 below expectations.
Capital contributions are also a major revenue source for the Water and Sewer Fund during the
current fiscal year, producing $712,682 in revenue. This increase is the direct result of utility
impact fees and grant proceeds. Impact fees must be used for utility system capital expansion.
Operating Expenses and Program Revenues -Business Activities
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
OExpenses ^Operating Program Revenues
Interest revenue decreased in the business-type activities by $104,795 (-46%). 'I'hc decrease is consistent
with the market interest rate decline and lower cash balances.
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Utility Storm Water Sanitation
Revenue by Source -Business-type Activities
89'
1%
~°/a
®Charges for Services ^ Interest Revenue ^ Capital Grants & Contributions
Financial Analysis of the City's Funds-As noted earlier, the City of Atlantic Beach uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds-The focus of the City's governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a
City's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal
year, the City's governmental funds reported combined ending fund balances of $7,617,640, a decrease of
$192,400 in comparison with the prior year. Approximately 77% of this total amount, $5,834,952,
constitutes unreserved General Fund balance. Another $1,703,298 (22%) is unrestricted mostly in Special
Revenue Funds with a small amount of that in capital project funds. The remainder of the governmental
fund balance $79,390, is reserved to indicate that it is not available for spending because it has already
been committed to pay debt service, or that it exists in the form of inventory.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved
fund balance of the General Fund was $5,834,952. Unreserved fund balance represents 67% of total
General Fund expenditures and transfers out. The fund balance of the City's General Fund increased by
$299,278 during the current fiscal year. Key factors in this change are as follows:
Properly taxes of $2,525,955 increased by $262,698 (11.6%) during the year. This increase is
based on an increase in the taxable property value of approximately $56.3 million, of which
$12 million of that increase is the result of new construction. The operating property tax
millage for the fiscal year was 3.1721 mills compared with 3.0323 for the prior fiscal year.
Property Tax proceeds account for approximately 30% of the general fund revenues.
Franchise and utility service taxes of $1,516,283 decreased by $127,824 (-8%) from prior year.•
The decrease can be attributed to a change in the communications service tax rate from the
City adopted state recommended revenue neutral rate that was initially adopted during the
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evaluation period to the state maximum rate of 5.22%. Phis reduction was planned for and the
revenue reduction of $153,583 was anticipated. The other franchise and utility tax revenues
were slightly up from last year.
State Sales Tax of $1,262,468 increased by only $11,363 (1%) from prior year receipts. "1'hc
state revenue analysts anticipated this small increase and the City budgeted accordingly.
Building permits, application review fees and construction inspection fees totaled $345,671
and increased by $143,962 (71%) from prior year receipts. This is the result of increased
volume in new construction and remodeling projects, stricter enforcement for permitting
requirements as well as new fees for plan reviews and substantial increases in the permit tees.
The increase in volume is most likely generated from the record low interest rates.
In the current year, the City moved all of the revenues and expenses related to the now
eliminated internal service funds to the General Fund. The activities previously reported in the
internal service fund included City Manager, Finance and Administration, 1-fuman Resources,
Public Works Administration and Fleet Maintenance. Charges for services included in the
General Fund revenues of $1,306,099 represent an allocation of costs associated with the
business type activities. The expenses of City Manager, Finance and I-luman Resources arc
now represented as divisions of the General Fund Administration Department. "fhe Public
Works Administration and Fleet Maintenance are also new divisions under the Public Works
Department of the General Fund.
In the General Fund alone, interest earnings decreased by $33,193 (31 %). `The decrease in
interest revenue is reflected throughout the City's portfolio and the direct result of the
economy's interest rate decline.
For the most part, the increase in expenses closely paralleled growth and demand for services
except for personal service expenditures. Specifically, the cost for personal services within the
various departments across the City increased significantly due to wage increases and rising
health care costs. Total personal services expenditures in the departments within the General
Fund increased by $348,138 (7.1%) from the prior year.
Non-major Governmental Funds consisting of special revenue funds, debt service funds, and capital
project funds have a combined fund balance of $1,777,274. Of this fund balance, $73,976 is reserved for
future debt service payments. The net decrease in fund balance during the current year in non-major
governmental funds was $491,678. Utilization of fund equity for advances to other funds, prepayment of
long term debt mentioned above and acquisition of capital assets arc the reasons i'or this decrease.
Proprietary funds-The City of Atlantic Beach's proprietary funds provide the same type of information
found in the government-wide financial statements, but in more detail.
Unrestricted net assets of the Water and Sewer fund at the end of the year amounted to $4,389,553. "1'hc
total decrease in net assets was $709,610. Other factors concerning the financial position of these funds
have already been addressed in the discussion of the City's business-type activities.
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General Fund Bud~etary Hi~hli~hts
Over the course of the year, the City revised its General Fund budget only twice. The additional
appropriations were necessary to ensure that the actual charges would not exceed appropriations for the
respective programs. The difference between the original budget and the final amended budget was
$71,478. The increase in appropriations and can briefly summarized as follows:
$10,000 Funding for non-contract fleet maintenance due to unexpected repairs of city vehicles.
$10,500 Increase in the Streets Maintenance for the costs associated with the Howell Park Well
abandonment.
$ 8,956 Increase in the transfer to the Stormwater Utility Fund for $8,956 for a change order to
the stormwater master plan update project.
$42,022 For the Hopkins Creek Drainage project design.
$71 Total Increase
Having made those adjustments, the actual revenues and expenditures resulted in positive variances. In
total, actual revenues exceeded budgeted revenues by $184,471. The primary reasons for this are as
follows:
The communications services tax revenues were budgeted to be only $425,000 and were
actually $581,897. This $156,897 variance is due to the budget amount reflecting a
conservative estimate of reduced revenues based on a rate reduction. The rate reduction did
not have as much of an affect on the revenues as expected.
Building permit fees were budgeted based on historical trends at $109,800 and what was
actually received was $280,404. Low interest rates is most likely the reason for increased
building permits and in addition to that, the Building Department doubled the fees and added
some new inspection fees to the program. The program revenues for the Building Department
resulted with a $170,604 positive variance.
Offsetting the large variances was a negative variance in the local government half-cent sales
tax revenues. This was budgeted at $1,404,932 and actual receipts were only $1,262,467. The
negative variance of $142,464 was not anticipated, however, the 2003/2004 budget is much
more conservative as a result.
The expenditures of the general fund also resulted a positive variance of $479,094. Across the board,
conservative budgeting left small amounts in every program at the end of the year. A few items that were
significant were as follows:
The overall personnel expense category was $147,050 under budget. The primary reason for
this was the vacant positions throughout the general fund and especially in those in the
Police Department.
Another large variance that occurred in the public safety was in the Fire Control program.
The budget for the contract with Jacksonville was overstated by $63,567.
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The budgeted transfer to the City's Pension funds of 530,000 was not made leaving a positive variance
for transfers. Instead, the expenditures for administration of the pension funds were paid for by the
general fund directly.
Although the City budgeted a decrease in fund balance of $394,287, the fund balance actually increased
5299,278 due to positive variances in revenues, expenditures and transfers totaling 5693,~G5.
Capital Asset and Debt Administration
Capital Assets-The City of Atlantic Beach's investment in capital assets for its governmental and
business-type activities as of September 30, 2003 amounted to $43,718,955 (net of accumulated
depreciation). This net investment in capital assets includes land, buildings, improvements other than
buildings, and equipment, less accumulated depreciation on those assets, and construction in progress.
"I'he total increase in the net investment in capital assets for the current f seal year was 54,996,283. Of
this total, $1,089,581 relates to governmental activities and 53,906,702 relates to business-type activities.
The detail for capita] asset activities can be found in Note G to the accompanying financial statements.
Activity related to additions, deletions and construction in progress arc described in more detail below.
Governmental Capital Asset Activities
Governmental capital asset additions this fiscal year totaled 51,587,189
I3uildintt improvements: The Adele Grage Community Center renovations were completed for
5485,361, and the center re-opened in January 2003.
Park improvements: A fishing pier was constructed for 5111,743 in the Citiy's park on Dutton
Island. This park improvement vas funded 50% by a Florida Inland Navigation District grant.
Improvements to Rose Park, including site clearing, fencing, shelters and playground equipment,
accounted for $49,898.
Infrastructure improvements: Infrastructure assets improving drainage on Dewees and Coquina
Streets were constructed during the fiscal year for 5134,394. Paving and drainage improvements
on Jordan Street totaling 5116,302 were funded through the Community Development I31ock
grant. The extension of Church Road for 5152,180 was 50`% funded by the City of Jacksonville.
Sidewalks were replaced in multiple locations throughout the City for 549,190.
Machinery and equipment: The additions to this category of assets totaled $395,185. A ne~~~
radio communication system compatible with the City of Jacksonville; six new vehicles used for
governmental activities; and, computer-related equipment for the Polio Department -ten ne~ti~
laptop computers to be used by the patrolmen, a new server, and a new report management
system -were the primary assets acquired during the fiscal year ended September 3U, 2003.
A variety of facility, park, and infrastructure improvements accounted for the remaining 592,936
of governmental capital asset additions as of September 30, 2003.
-12-
Governmental capital asset deletions this fiscal year totaled $357,724. Items sold at auction,
including vehicles and a tractor; obsolete computer equipment and an imaging system; removal
of assets associated with the Adele Grage Center prior to renovation; and, GASB 34-related
reclassifications and write-offs of impaired assets account for the assets removed from the City's
records.
Construction in progress at the close of the fiscal year pertaining to governmental improvements
reached $725,730.
Park improvements: The boardwalk, trails, and pavilions added to complement the pier and other
improvements to the Dutton Island Park totaled $118,187.
Infrastructure improvements: Infrastructure related to the Core City improvement project
accounted for $573,908. Outstanding commitments to complete the governmental portion of this
project amounted to $78,436 at September 30, 2003. In addition, the City committed $126,845 to
provide additional infrastructure, landscaping and irrigation to Town Center.
The remaining $33,635 of construction in progress represents miscellaneous governmental
improvements.
Business-type Capital Asset Activities
Business-type capital asset additions this fiscal year totaled $G60,223.
Stormwater improvements: A significant project completed during this fiscal year was an update
to the Stormwater Master Plan for $105,440. Drainage improvements constructed at various
locations throughout the City, previously recorded as governmental assets but transferred to the
Stormwater Fund during GASB34 reclassification (see capital asset reconciling item on Page 14
of the accompanying financial statements), added $113,089 to the business-type capital assets
during this fiscal year.
Utility improvements: Various phases of ongoing water and sewer projects were completed
during the fiscal year. One of the larger projects included replacement of the force main at Lift
Station B for $120,685. Ground storage and diesel fuel tanks were replaced for $122,892. Piping
modifications, air main and valve improvements at Wastewater Treatment Plant No. 1 amounted
to $90,793.
Machinery and equipment: The additions to this category of assets totaled $80,590. Radios
associated with the new communications system and aheavy-duty truck and trailer, to be used
for stormwater-related activities, represented the primary assets acquired.
A variety of utility and stormwater improvements accounted for the remaining $26,734 of
business-type capital asset additions as of September 30, 2003.
Business-type capital asset deletions this fiscal year totaled $196,124. Items sold at auction;
obsolete computer equipment; and, a GASB 34-related write-off of the impaired pre-1995
Stormwater Master Plan account for the assets removed from the City's records.
Construction in progress at the close of the fiscal year pertaining to business-type improvements
reached $8,027,392.
-13-
stormwatcr improvements: The Core City project accounted for 55,968,507 of the
construction in progress balance at the close of the fiscal year. This project includes stormwatcr
system, utility system and general government infrastructure assets. Utility and stormwatcr
commitments to complete this project amount to $152,947 and $252,916, respectively.
Utility improvements: Construction in progress related to utility relocations required to facilitate
construction of the Wonderwood Connector totaled $656,549. A new sludge holding tank being
built at Wastewater Treatment Plant No. 2 had an accumulated value of $506,741 at the end of
the fiscal year.
A 300,000 gallon elevated water tank worth $65,000 was contributed to the City and relocated
from Kissimmee, Florida. Construction in progress related to this project totaled 5280,540,
which included the donated value. Commitments to relocate, instal] and coat the tank total
5251,830.
A water main replacement on Ocean Boulevard from Ahern to 8"' Street was being constructed.
The balance in construction in progress at the end of the fiscal year was 5260,457.
Installation of a SCADA system at various locations throughout the City, which will provide for
off-site monitoring of the plants, totaled 5132,300.
Costs associated with the City's bid to acquire the Navy's water and sewer facilities ut the
Mayport Naval Station amounted to $117,872 at the end of the fiscal year.
The remaining 5104,426 of construction in progress represents miscellaneous stormwatcr and
utility improvements.
CITY OF ATLANTIC I3EAC13'S CAI'IT'AL ASSETS
(Net of llepreciation)
(ln "fhousands)
13usiness-
Goverumcntal type
Activities Activities
Total
Land 5 1,604 5 7~0 5 2,354
Buildings and improvements other than buildings 4,748 26,506 31,24
Equipment 1,000 358 1,35 8
Construction in progress 72~ 8.027 8,72
l
T
t 5 8,077 5 35,64] 5 43,718
o
a
Additional information on the City of Atlantic Beach's capital assets can be found in Note 6 on pages 39
- 40 oi~this report.
-14-
I.on~-term debt At the end of the 2003 fiscal year, the City of Atlantic Beach had total bonded debt
outstanding of $21,697,866. Of this amount, $1,404,178 comprises debt backed by the utility services
taxes. The remaining $20,293,688 of the City of Atlantic Beach's debt represents the utility revenue
bonds secured by the revenues of the water and sewer utility systems.
CITY OF ATLANTIC BEACH'S OUTSTANDING DEBT
Revenue Bonds
Business-
Utility System Revenue Bonds, Series 1996
SunTrust Revenue Refunding Bonds, Series 1999
Total
Governmental type
Activities Activities Total
$ - $ 20,293,688 $ 20,293,688
629,918 774,260 1,404,178
$ 629,918 $ 21,067,948 $ 21,697,866
The City's total debt decreased by $1,000,172 (4.4%) during the current fiscal year. During the fiscal
year, the government paid off the outstanding balance of the SunTrust Revenue Note, Series 1995 to take
advantage of savings on interest rates. The Utility Revenue System Revenue Bonds Series 1996 carries
an insured "AAA" rating and an underlying rating of "Aaa" from Moody's.
Under Florida statues, no debt limit margin is placed on local governments.
Additional information on the City's long-term debt can be found in Note 7 on pages 41- 42 of this
report.
Economic Factors and Next Year's Budgets and Rates
Taxable property values in The City of Atlantic Beach continue to grow. The 2003 taxable
value is 99.6 million more than the previous year bringing the total value to $929,633,312 and
representing a 12% increase.
The City's utility service jurisdiction grew less than 1% in the number of accounts during the
current year. Total number of active accounts went from approximately 7,869 to 7,935.
The St. Johns Water Management District has instructed the City to begin the process of
adopting water conserving rates. The City is now in the process of developing those rates and
expects to have a rate restructure this year. The conservation rates being developed would
include an inclining block structure. Addressing the Water Management's concerns is a part
of the process of renewing the City's consumptive use permit for drawing water from the
aquifer.
The average rate of return for the pooled short-term investments has declined 26% from the
prior year. The interest rates from the State Board Administration went from 2.08% to 1.52%.
The City receives allocations of revenues collected by the state and county for sales taxes;
local option gas taxes state revenue sharing, convention development taxes and discretionary
sales taxes. All of these sources are forecasted by the Florida Legislative Committee on
Intergovernmental Relations and have been consistent with their predictions. These revenue
-15-
overall for the last few years. The sum total of these revenue sources grew by only 2% from the
previous year.
Housing starts of single-family homes and duplexes combined for this fiscal year were 115,
compared to the previous year of S 1. This represents an increase of 34 units or 42%.
All of these factors were considered in preparing the City of Atlantic Beach's budget for the
2003/2004 fiscal year. Some budgetary highlights for next year are as follows:
a During t1~e current fiscal year, unreserved fund balance in the General Fund increased to
$5,834,952 plus an additional $5,414 reserved for inventory, totaling $5,840,366. [n the
2003/2004 fiscal year budget the City of Atlantic Beach has appropriated $707,000 of
expenditures in excess of budgeted revenues to be transferred to the stormwater utility for
purposes of acquiring property for a major stormwater project.
o The property tax millage rate for the 2003/2004 budget was adopted at 3.0394.
o Water and sewer service rates were increased by ].5 percent for all customers for the
2003/2004 budget year. These rate increases were necessary to address the increasing
operational costs of the utility system. The rates were last increased October 1, 2001.
Requests for information
This 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, 800 Seminole Road, Atlantic Beach, Florida, 32233.
Jim Ha on
City anager
s
~~ ~~ ~~~
Nelson Van Liere, CPA
Finance Director
-16-
BASIC FINANCIAL STATEMENTS
These basic financial statements contain Government-wide
Financial Statements, Fund Financial Statements and Notes to
Financial Statements.
-17-
CITI' OF ATLANTIC BEACH, FLORIDA, FLORIDA
STATED1EN"r OF NET ASSETS
SI;I'"1'i:hiBER 30, 2003
ASSETS
Equity in pooled cash and cash equivalents
Receivables - ncl
Duc from other governntenu
brvcntorics
Special assessments -current
Note rcccivablc -current
Restricted assets:
Equity in pooled cash and cash equivalents
Capital assets:
Land
Buildings
Improvements other than buildings
Equipment
Accumulated depreciation
Construction in progress
Special assessments -noncurrent
Note rcccivablc -noncurrent
Other noncurrent assets
Unamortized loan costs
Total assets
LIABILITIES
Accounts payable and other current liabilities
Dcfctted revenue
Deposits
Accrued intcrest payable
Payable from restricted assets:
Accounts payable
Current maturities o1'bonds payable
Accmed intcrest payable
Customer deposits
Noncurrent liabilities:
Duc within one year
Duc in more than one year
Total liabilities
NET ASSETS
Invested in capiutl assets, net of related debt
Restricted for
Renewal and replacement
Debt service
Road and street expenditures
Tourism and recreation
Trcc replacement
Public safety
f'olicc training
Capital projects
Unrestriclcd
Towl net assets
Govcrumental Business-type
Activities Activilies '1'utal
S 7,264,747 S 4,003,724 S 11,268,471
15,188 488,665 503,856
896,373 9,720 906,093
5,414 SO,SG7 55,981
1,964 S],G75 83,639
- 10,362 10,362
- 3,x32,298 3,432,295
1,604,311 749,x9) 2,353,810
3,590,418 4,332,715 7,923,133
2,312,398 37,337,911 39,650,309
2,355,314 1,199,800 3,55,114
(2,510,279) (16,006,255) (18,516,534)
725,730 8,027,392 8,753,122
- 174,285 174,2$5
- 36,268 36,268
- 15,800 18,800
- 381,732 381,732
1 6,261,575 44,329,1 G 1 60,590,739
522,489 I ,204,654 I, 727,143
40,893 127,506 168,399
700 - 700
5,842 - S,842
- 489.202 489,202
- 541,91a 541,914
- 603,920 603,920
- 473,571 473,571
440,573 122,461 563,034
584,368 20,526,034 21,110,402
1,597,865 24,089,262 25,687,127
7,447,974 Ia,95a,546 22,402,820
- S95,500 59,500
73,976 - 73,976
1,531,597 - 1,531,597
89,686 - 59,686
25.466 - 25,466
102 - 102
19,633 - 19,633
36,81a - 36,814
5,438,465 4,389,53 9,828,018
S 14,663,713 S 20,239,899 S 34,903,612
"fhc accompanying notes to financial statements arc an integral part of th(s statement.
-1S-
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°:
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
BALANCE SHEET' -
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
ASSETS
Equity in pooled cash and cash equivalents
Receivables, net
Due from other funds
Due from other governments
]nventories
Special assessment receivable -current
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable a~td accrued liabilities
Due to other funds
Deposits
Deferred revenue
Total liabilities
Fund balances:
Reserved for:
Debt service
Other
Unreserved, reported in:
Genera] fund
Special revenue funds
Capital projects fund
Total fund balances
Total liabilities and fund balances
Nonmajor "Total
Goacrnmeutal Governmental
S 6,667,626 S 1,607,121 S 7,264,747
15,188 - 15,188
32,917 - 32,917
569,2 ] 0 327, l G3 S9G,373
5,414 - 5,414
1,964 - 1,964
S 6,282,319 $ 1,934,284 S 8,2 ] 6,603
S 398,396 $ 124,093 S 622,489
- 32,917 32,9 ] 7
700 - 700
42,857 - 42,857
44l ,953 157,010 598,963
- 73,976
5,414 -
5,834,952 -
- 1,666,484
- 36,814
5,840,366 1,777,274
73,976
6,414
5,834,952
] ,666,484
36,814
7, 617, 640
S 6,282,319 S 1,934,284 S 8,2 ] 6,603
The accompanying notes to financial statements arc an integral part of this statement.
-20-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
RECONCILIATION OF BALANCE SHEET -GOVERNMENTAL FUNDS TO THE
TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2003
Fund balances -total governmental funds ~ 7,617,640
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets used in governmental activities are not financial resources and,
therefore are not reported in the funds.
Total capital assets 10,588,171
Less: Accumulated depreciation 2,510,279 8,077,892
Because special assessment revenues will not be collected for several months
after the close of the City's fiscal year, they are not considered as "available"
revenue in the governmental funds, and therefore, reported as deferred
revenues. In the statement of net assets, which is presented on the accrual
basis, no deferral is reported since the revenue is fully recognized in the
statement of activities. 1,964
Long-term liabilities are not due and payable in the current period and accordingly
are not reported as fund liabilities. Interest on long-term debt is not accrued
in the governmental funds, but rather is recognized as an expenditure when due.
All liabilities, both current and long-term, are reported in the statement of net
assets. Long-term liabilities at year end consist of:
Revenue bonds payable 629,918
Compensated absences 395,023
Accrued interest payable 8,842 (1,033,783)
Net assets of governmental activities
$ 14,663,713
The accompanying notes to financial statements are an integral part of this statement.
-21 -
CITT OF ATLANTIC BEACH, FLORIDA, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNllS
FOR Tf-IE YEAR ENDED SEPTEMBER 30, ?003
Revenues
Taxes
Licenses and permits
State-shared revenues
Other intergovernmental revenues
Charges for services
Pines and forfeitures
Interest income
Miscellaneous revenues
"Dotal revenues
Expenditures
Current:
General government
Public safety
't'ransportation
Parks and recreation
llebt service:
Principal
Interest and other
Capital outlay
Total expenditures
Excess (deficiency) of revenues over
cspcnditures
Other financinb sources (uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year, as restated
1' and balances, end of year
Nonmajor 'l'ocal
Governmental Governmental
General Fwids Funds
$ 4,042,231 S 1,165,157 S 5,207,388
44l ,808 - 441,80S
1,573,121 - 1,573,121
416,539 430,367 S46,I06
1,431,004 - 1,431,UU4
145,003 - 145,003
72,367 25,393 97,760
97,731 36,842 134,573
8,2 ] 9,804 ] ,657,759 9,877,563
2,083,773 52,752 2,136,525
3,930,290 52,971 3,983,261
l ,271,281 186,792 1,458,073
905,037 - 905,037
- 512,449 ~ 12,449
- 33,729 33,729
- 1,433,451 1,433,45]
8,190,38 l 2,272,144 10,462,525
29,423 (614,385) (584,962)
745,433 530,771 1,276,204
(475,578) (408,064) (883,642)
269,855 122,707 392,Sfi2
299,278 (491,678) (]92,400)
5,541,088 2,268,952 7,810,040
S 5,840,366 S 1,777,274 S 7,617,640
The accompanying notes to financial statements are an integral part of this statement.
~~
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Net change in fund balances -total governmental funds
Amounts reported for governmental activities in the statement of activities
are different because:
Govemmental funds report capital purchases as expenditures. However, in
the statement of activities, the cost of those assets is depreciated over
their estimated useful lives and reported as depreciation expense.
Expenditures for capital assets 1,730,351
Less: Current year depreciation ~ 452,823
Less: Transfer of capital asset to proprietary funds 113,089
In the statement of activities, only the loss on the sale/disposal of capital assets is
reported. However, in the governmental funds, the proceeds from the sale increase
financial resources. Thus, the change in net assets differs from the change in
fund balance by the cost of the capital assets sold/disposed.
Because special assessment revenues will not be collected for several months after
the close of the City's fiscal year end, they are not considered as "available"
revenues in the governmental funds. In the statement of activities, presented on
the accrual basis, these revenues are recognized.
Repayment of long-term debt principal is an expenditure in the governmental funds,
but the repayment reduces long-term liabilities in the statement of net assets
Some expenses reported in the statement of activities do not require the use of
current financial resources and therefore are not reported as expenditures in
governmental funds.
Debt interest expense
Compensated absences
Change in net assets - govemmental activities
1,164,439
(74,857)
(14,084)
512,449
G21
(29,064) (28,443)
$ (192,400)
$ 1,367,104
The accompanying notes to financial statements are an integral part of this statement.
- 23 -
CITY OF ATLANTIC BEACII, hLOF21llA, FLORIDA
STATEMENT Or NE'I'ASSETS -
PROPRIETARY FUNDS
SEPTEA9BER 30, 2003
)3usiness-Type Activities-Enterprise Funds
Utility Storn»vatcr Sanitation 'T'otal
r1 SS ETS
Current assets:
Equity in pooled cash and cash
cquivalcnts S 2,988,333 S 342,855 S 672,536 S 4,003,724
Accounts rcccivablc -net 412,452 17,309 58,907 488,CiG8
Inventories 9,720 - - 9,720
Duc from other governments 34,65() 15,9 ] 7 - 50,567
Special assessments -current 81,675 - - 81,675
Note rcccivablc -current 10,362 - - 10,362
Restricted assets:
Equity in pooled cash and cash
cquivalcnts 2,401,251 1,031,047 - 3,432,298
Capital assets:
Land 749,499 - 749,499
Buildings 4,332,715 - - 4,332,715
Improvements other than buildings 35,243,466 2,094,445 - 37,337,91 1
Equipment 993,461 19U,G30 15,709 1,199,500
Accumulated depreciation (15,698,952) (294,694) (12,609) (1 6,006,255)
Construction in progress 5,204,387 2,823,005 - 8,027,3>2
Special assessments -noncurrent 174,285 - - 174,285
Note rcccivablc -noncurrent 3(,268 - - 36,268
Other noncurrent assets 18,800 - - 18,800
Unamoritzcd loan costs 321,453 GU,279 - 381,732
Total assets 37,313,825 6,280,793 734,543 44,329,161
LIABILITIES
Current liabilities payable from current
assets:
Accounts payable and accrued
liabilities 597,706 535,254 71,694 1,204,654
Deferred revenue 72,635 1 1,981 42,890 127,506
Current liabilities payable from
restricted assets:
Accounts payable 336,948 152,254 - 489,202
Current maturities of bonds payable 441,082 100,832 - 541,914
Accrued interest payable 487,851 1 16,069 - 603,920
Customer deposits 473,571 - - 473,571
Noncurrent liabilities:
Uuc within one year 122,461 - - ] 22,461
Duc in more than one year 16,937,899 3,588,]35 - 20,526,034
Totalliabilitics 19,470,153 4,504,525 114,584 24,089,262
NE'T' ASSETS
Invested in capital assets, net of
related debt 13,767,048 1,184,698 3,100 14,954,846
Restricted for renewal and replacement CiG1,799 233,701 - 895,500
Unrestricted 3,414,825 357,869 G 16,859 4,389,553
Total net assets S 17,843,672 S 1,776,268 S 619,959 S 20,239,899
"fhe accompanying notes to financial statements are an integral part of this statement.
-24-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS -
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Business-Type Activities - Enterprise Funds
Utility Stormwater Sanitation Totals
Operating revenues
Charges for services:
Customer charges $ 5,465,381. $ 370,455 $ 1,250,113 $ 7,085,949
Miscellaneous revenues 337,224 - - 337,224
Total operating revenues 5,802,605 370,455 1,250,113 7,423,173
Operating expenses
Personal services 1,342,843 193,909 4,255 1,541,007
Contractual services 842,425 114,543 875,426 1,832,394
Supplies 311,419 34,201 - 345,620
Repairs and maintenance 108,994 30,094 - 139,088
Heat, light and power 469,732 - - 469,732
Depreciation 1,533,154 102,029 1,605 1,636,788
Other expenses 1,168,547 363,425 146,202 1,678,174
Total operating expenses 5,777,114 838,201 1,027,488 7,642,803
Operating income (loss) 25,491 (467,746) 222,625 (219,630)
Nonoperating revenues (expenses)
Connection charges 47,179 - - 47,179
Other intergovernmental revenues 26,339 - - 26,339
Interest income 71,967 6,464 9,032 87,463
Interest expense (890,936) (146,929) - (1,037,865)
Amortization of loan costs (16,818) (3,148) - (19,966)
Total nonaperating revenues
(expenses) (762,269) (143,613) 9,032 (896,850)
Income (loss) before contributions
and transfers
Capital contributions and grants
Transfers in
Transfers out
Change in net assets
Nct assets, beginning of year
Net assets, end of year
(736,778) (611,359) 231,657 (1,116,480)
319,040 367,303
- 357,067
(424,360) -
- 686,343
- 357,067
(212,180) (636,540)
(842,098) 113,011
18,685,770 1,663,257
19,477 (709,610)
600,482 20,949,509
$ 17,843,672 $ 1,776,268 $ 619,959 $ 20,239,899
The accompanying notes to financial statements are an integral part of this statement.
-25-
CITY OF' ATLANTIC BEACH, hLORIDA, FLORIDA
STATEMEN'[' OF CASH FLO~~'S -
PROPI2IETARY FUNDS
FOR'I'1IE YEAR ENDED SGP7'EAII3EI2 30, 2003
Cash flows from operating activities
Casli received from customers
Cash paid to suppliers
Cash paid to employees
Net cash provided by
operating activities
Caste flows from noncapital
financing activities
Connection charbes
Interbovernmental revenues
Transfers in
Transfers out
Net cash provided by (used in)
noncapital financing activities
Cash flows from capital and related
financing activities
Collections on note receivable
Collections on special assessments
Capital contributions
nixed asset additions
Principal payments on bonds payable
Interest paid
Net cash used in capital and related
financing activities
Cash flows from investing activities
Interest received
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents, bebinning of year
Cash and cash equivalents, end of year
Business-Type Activities -Enterprise Funds
Utility Storrs»vatcr Sanitation 'Totals
S 5,862,266
(2,379,536)
(1,324,404)
2,158,326
47,179
(9,116)
(424,360)
S 427,423 S I ,251,787 S 7,54 ] ,476
(283,449) (1,020,348) (3,683,333)
(193,909) (4,255) (1,522,568)
(49,935) 227,184 2,335,575
243,978 -
- (212,180)
243,978 (212,180)
10,362 -
55,22 I -
319,040 351,386
(3,305,939) (1,922,157)
(396,759) (90,964)
(865,427) (149,075)
(4,183,502) (1,810,810)
47, ] 79
(9,116)
243,978
(636,540)
10,362
55,21
670,426
(5,228,096)
(487,723)
(1,014,502)
- t.,,»-,,., ~..~
71,967 6,464 9,032 87,463
(2,339,506) (1,610,303) 24,036 (3,925,773)
7,729,090 2,984,205 648,500 1 1,361,795
S 5,389,584 S 1,373,902 ~ 672,536 S 7,436,022
The accompanying notes to financial statements are an integral part of'this statement.
_ 2Ci _ (Continued)
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
STATEMENT OF CASH FLOWS -
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
(Continued)
• Business-tvpe Activities -Enterprise Funds
Utility Storm~vatcr Sanitation Totals
Reconciliation of operating income
to net cash provided by
operating activities
Operating income (loss) $ 25,491 $ (467,746) $ 222,625 $ (219,630)
Adjustments to reconcile operating
income to net cash provided by
(used in) operating activities:
Depreciation 1,533,154 102,029 1,605 1,636,788
Loss on disposal of capital assets 10,363 183,691 - 194,054
Change in assets and liabilities:
Accounts receivable (9,094) 44,987 (41,216) (5,323)
Inventory 33,378 - - 33,378
Accounts payable and accrued
liabilities 477,836 75,123 1,280 554,239
Customer deposits 22,459 - - 22,459
Accrued compensated absences 18,445 - - 18,445
Deferred revenue 46,294 11,981 42,890 101,165
Net cash provided by
operating activities $ 2,158,326 $ (49,935) $ 227,184 $ 2,335,575
Reconciliation of cash and cash
equivalents to balance sheet
Equity in pooled cash and cash
equivalents in current assets $ 2,988,333 $ 342,855 $ 672,536 $ 4,003,724
Restricted equity in pooled cash and
cash equivalents 2,401,251 1,031,047 - 3,432,298
Total cash and cash equivalents $ 5,389,584 $ 1,373,902 $ 672,536 $ 7,436,022
Noncasl~ activity
Net capitalized interest expense $ 65,405 $ 90,916 $ - $ 156,321
Transfer of asset from governmental
activities $ - $ 113,089 $ - $ 113,089
Amounts payable on construction
in progress $ - $ 396,601 $ - $ 396,601
The accompanying notes to financial statements are an integral part of this statement.
-27-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS -
FIDUCIARY FUNDS
SEPTEI•413ER 30, 2003
Pension
Trust
Funds
ASSETS
Cash and cash equivalents with trustee S 41,905
Investments with trustee 9,429,797
Total assets 9,471,705
LIABILITIES
Accounts payable and accrued liabilities 20,647
NET ASSETS
I-Ield in Trust for Pension Benefits 9,451,08
Total net assets 5 9,451,055
The accompanying; notes to financial statements are an integral part of this financial statement.
-25-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS -
FIDUCIARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Pension
Trust
Funds
Additions
Contributions:
Employees $ 83,995
Employer 470,858
State of Florida 88,641
Total contributions 643,494
Net increase in fair value of investments 917,661
Investment expenses (77,232)
Total additions 1,483,923
Deductions
Refunds of contributions 8,062
Benefits 484,892
Total deductions 492,954
Net increase 990,969
Net assets, beginning of year
Net assets, end of year
8,460,089
$ 9,451,058
The accompanying notes to financial statements are an integral part of this statement.
-29-
CITY OF ATLANTIC BEACH, FLORIllA
NOTES TO FINANCIAL STATEMENTS
SEPTEM I3ER 30, 2003
(1) Summary of Significant Accounting Policies:
The accounting; policies of the City of Atlantic Beach, Florida, Florida (the City), conform to accounting
principles generally accepted in the United States of America as applicable to governments. "fhe
following is a summary of the more sig,Tnificant policies used in the preparation of these financial
statements.
(a) Reporting entity-The City of Atlantic Beach, Florida, Florida was incorporated in 197,
under a charter in accordance with the laws of the State of Florida, Florida Statutes Section ~7-
l 126. The City operates under a form of government which comprises an elected City Commission
(four Commissioners and aMayor-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. 14,1'hc
Reporting Crotty, and GASB Statement No. 39, Determining lVhcther Certain Orgunizulions arc
Component U-rits art Amendmcrrt to GASB Stalcrucnt No. 14, the financial reporting entity consists
of the primary government, organizations for which the primary governments 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: a)
part of the primary government; b) a component unit which should be included in the reporting
entity (blended or discreetly presented); or c) 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.
(b) Government-vide and fund t7nancial statements-"1'he government-~~~ide 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. Governmentul actrvities, which normally arc supported by taxes
and intergovernmental revenues, arc reported separately from hus•ines•s-type uctil~ities, 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 arc offset by program revenues. Direcl expenses arc those that arc clearly identifiable
with a specific fw~ction or activity. Indirect costs arc included in the program expense reported for
individual functions and activities. Prvgrum 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 arc 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 rel~enues.
-30-
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(1) Summary of Significant Accounting Policies: (Continued)
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary
funds, even though the latter are excluded from the government-wide financial statements. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
(c) Measurement focus, basis of accounting, and financial statement presentation-The
government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounti~tg, as are the proprietary fund and fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues
in the year for which they are levied. Grants and similar items are recognized as revenue as soon as
al] eligibility requirements imposed by the provider have been met.
As a general rule the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges
between the City's water and sewer function and various other functions of the City. Elimination of
these charges would distort the direct costs and program revenues reported for the various functions
concerned.
Amounts reported as program revenues include: (1) charges to customers or applicants for goods,
services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as general
revenues rather than as program revenues. Likewise, general revenues include all taxes.
Governmental fund financial statements are reported using t11e current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon
as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the government considers revenues to be available if they are collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgments, are recorded only when
payment is due.
Taxes, intergovernmental revenue, licenses and permits, charges for services, and interest
associated with the current fiscal period are all considered to be susceptible to accrual and so have
been recognized as revenues of the current fiscal period. Only the portion of special assessments
receivable due within the current fiscal period is considered to be susceptible to accrual as revenue
of the current period. All other revenue items are considered to be measurable and available only
when cash is received by the City.
-31-
CITl' OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(1) Summary of Significant Accounting Policies: (Continued)
The City reports the following major governmental fund:
The General Fu~rd 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 and
for the use of bond construction proceeds for capital projects related to the utility system.
The Sa~trtatio~t Fu~td accounts for the activities of the City's sanitation system.
The Stor»nvater Fund accounts for the activities of the City's stonnwater system.
Additionally, the City reports the following fund types:
Special Revenue Funds-The special revenue funds arc 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 genera] 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 arc used to account for the financial
resources to be used for the acquisition or construction of major capital 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.
Private-sector standards of accounting and financial reporting issued prior to llecember ] , 19b9,
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 the Governmental
Accounting Standards Board. Governments also have the option of following subsequent private-
sector guidance for their business-type activities and enterprise funds, subject to this same
limitation. "I'he City has elected not to follow subsequent private-sector guidance.
-32-
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(1) Summary of Significant Accoiintin~ Policies: (Continued)
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection with a proprietary fund's principal ongoing operations. The principal operating
revenues of the City's enterprise funds are charges to customers for sales and services. Operating
expenses for enterprise funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition are reported as
nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
(d) Budgets-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.
The City uses encumbrance accounting. All appropriations lapse at year end. Unexpended items
which are encumbered at year end are reappropriated in the subsequent year. Encumbrances of
governmental funds at September 30, 2003 were $376,500.
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.
(e) Cash and investments-Except where prohibited, cash resources of the individual funds are
combined to form a pool of cash and investments. Investments in the pooled cash fund consist
primarily of cash invested with the State Board of Administration. Interest income earned on the
pooled cash and investments is distributed to the appropriate funds based on the average monthly
balance of investments in each fund.
Investments are valued at fair market value (see Note 2).
For the purposes of the statement of cash flows, the City's proprietary funds consider cash and cash
equivalents to include cash and investments with an original maturity of three months or less.
(f) Receivables-Receivables are recorded at their net realizable value. The allowance for
uncollectible accounts and assessments at September 30, 2003, in the enterprise funds is $91,520.
- 33 -
CITY OF ATLANTIC BEACH, FLORIllA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, ?003
(1) Summary of Si~nif7cant Accounting Policies: (Continued)
(g) Interfwid receivables and payables-Activity between funds that are representative of
]ending/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 non-current 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 appropriation and are not expendable available financial
resources. Any residual balances outstanding between the governmental activities and business-type.
activities arc reported in the government-wide financial statements as "internal balances."
(h) 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.
(i) Restricted assets-Certain enterprise fund assets arc required to be segregated from other
current assets due to various bond indenture agreements and City ordinances. These assets arc
legally restricted for specific purposes, such as debt service, new construction, and renewals and
replacements.
(j) 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 51,000
and estimated useful lives of over one year arc recorded as capita] assets. Capital assets arc
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 Governmental Accounting Standard Board's Statement
Number 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 arc
presented currently and prospectively. After a complete inventory, valuation and determination of
cost, or estimated cost of donated roads, sidewalks and drainage, infrastructure will be added to the
current and prospective values to arrive at total estimated cost prior to the fiscal year ending
September 30, 2007. For business-type activities, infrastructure assets have been capitalized at cost.
Utility improvements are being depreciated over their useful lives.
Major outlays for capital assets and improvements are capitalized as projects arc constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets lives are not capitalized.
-34-
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(1) Summary of Significant Accounting Policies: (Continued)
Properly, plant, and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Assets Years
Buildings and improvements 10 - 40
Improvements other than buildings 10 - 50
Machinery and equipment 3 - 40
(k) Long-term obligations-In the government-wide financial statements, and proprietary fund
types in the fund financial statements, long-term debt and other long-term obligations are reported
as liabilities in the applicable governmental activities, business-type activities, or proprietary fund
type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is reported
as other financing sources. Premiums received on debt issuances are reported as other financing
sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
(]) Compensated absences-Accumulated unpaid vacation and sick pay are accrued when
incurred in the government-wide and proprietary fund financial statements. A liability for these
amounts is reported. The computed liability is in accordance with GASB Statement No. 16,
Accounting for Compensated Absences.
(m) Revenue recognition iJtility revenues are reported on the accrual basis in the
accompanying financial statements. Restricted grant revenues, which are received but not
expended, are recorded as deferred revenues. Grant revenues receivable are recorded when
reimbursable expenditures on those grants have been incurred but not reimbursed.
(n) 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 can ent fiscal year.
Taxes are levied on November 1 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.
(o) Interfund transactions~uring 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.
- 35 -
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEIVII3ER 30, 2003
(2) Deposits 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. "I'he 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, 2003, the carrying amount of cash on hand and on deposit with banks, including interest-
bearing deposits was 5633,958, and the related bank balance was 5442,700. Monies which arc placed on
deposit with financial institutions in the form of demand deposit accounts, time deposit accounts and
certificates of deposit are defined as public deposits. All of the City's public deposits are held in qualified
public depositories pursuant to Florida Statutes, Chapter 280, "Florida Security for Yublic Deposits Act."
Under the Act, all qualified public depositories are required to pledge eligible collateral having a market
value equal to or greater than the average daily or monthly balance of all public deposits, times the
depository's collateral pledged level. The pledging level may range from 50%~ to 125% depending upon the
depository's financial condition and establishment period. All collateral must be deposited with an approved
financial institution.
Any losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as
collateral and, if necessary, assessments against other qualified public depositories of the same type as the
depository in default. Accordingly, all deposits are considered category one credit risk under GASB
Statement No. 3.
The City's investment practices are also governed by hlorida Statutes, which allow the City to invest in
certificates of deposit, money market certificates, obligations of the U.S. Treasury, its agencies and
instrumentalities, repurchase and reverse repurchase agreements collateralized by U.S. securities, and the
State Board of Administration. The pension trust funds are also authorized to invest in corporate bonds,
preferred stocks, common stocks, and mutual funds.
Cash and investments at September 30, 2003, are categorized in accordance with GASB Statement No. 3 to
indicate the level of risk assumed by the City. The pension investments held by Sun'I'rust Trust Department
and Merrill Lynch are considered to be category one credit risk investments, which means that they are fully
insured (5100,000 per participant). The deposits 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 fool) 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. Funds that have not been transferred to the state investment pool arc
placed in a money market fund. The Bank of America Repurchase Agreement is invested in treasury funds
and is not classified by credit risk since this is a mutual fund. 'I'hcrc were no violations of the legal or
contractual provisions for deposits and investments.
-3G-
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(2) Deposits and Investments: (Continued)
The total cash and cash equivalents and investment balances of the City at September 30, 2003, are
comprised of the following items:
Cash and cash equivalents
Petty cash on hand $ 1,938
Checking and repurchase agreement 442,700
Investment with State Board of Administration 14,298,039
Total cash and cash equivalents 14,742,677
Less: Cash and cash equivalents, restricted, including $41,908 of
cash and cash equivalents with trustee 3,474,206
Total cash and cash equivalents, unrestricted $ 11,268,471
Pension trust investments
SunTrust Short-Term Treasury Portfolio $ 26,732
SunTrust High-Grade Equity Fund 4,417,957
SunTrust High-Grade Bond Fund 4,130,537
Merrill Lynch American Euro Pacific Growth 854,500
Merrill Lynch Ready Assets 71
Total pension trust investments $ 9,429,797
Restricted cash and investments at September 30, 2003, in the enterprise funds follows:
Customer Renewal and
Deposits Replacement
Construction
Account Debt Service Total
Enterprise fund
Utility fund $ 473,571 $ 500,000 $ 498,747 $ 928,933 $ 2,401,251
Stormwater Fund $ - $ - $ 814,146 $ 216,901 $ 1,031,047
(3) 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 2010 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 2004 plus interest at 5.91 %.
-37-
CITY OF ATLANTIC BEACH, FLORIllA
NOTES TO I'INANCIAL STATEMENTS
SEPTEMI3ER 30, 2003
(3) Special Assessments: (Continued)
During 1998, the City imposed a special assessment on residents in a certain area of the City kno~~m 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 200) plus interest at G.00~%,.
During 2002, the City imposed a special assessment on residents in a certain area of the City kno~~m as
"Selva Marina" to recover the costs of water lines, stormwater improvements and street improvements
constructed by the City in that area. Assessments arc payable in equal monthly installments over one year
plus interest at 7.00%.
Following is a summary of the outstanding balances at September 30, 2003:
Special assessment receivable,
September 30, 2003
Less: current portion
Special assessment receivable -
noncurrent
(4) Receivables:
13cach
Section 1-I Avenue Sch~a Other
Assessment Assessments Marina Assessments 'Total
5 223,000 5 18,570 5 1,964 $ 14,390 5 257,924
57,000 14,844 1,964 9,831 83,639
5 1 GG,000 5 3,726 5 - 5 4,559 5 174,285
Receivables, net of the allowance for doubtful accounts at September 30, 2003, consists of the following:
Less
Total Allowance Accounts
Accowrts for lloubtful Receivable
Fund Receivable Accounts Net
General 5 15,188 5 - 5 15, 188
Utility 493,673 (81,221) 412,452
Stormwater 19, ] G3 (1,854) 17,309
Sanitation 67,352 (8,440 58,907
Total 5 595,376 5 (91,520) 5 503,856
Included in accounts receivable arc 5203,261 of water and sewer revenues earned but not billed as of
September 30, 2003.
-38-
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(5) Note Receivable:
During 1993, the City signed an agreement with a new mobile home park customer which allowed the
customer to pay its sewer connection fee over an extended period. An initial down payment of $20,000
was received in 1993 on the total connection fee of $175,432. Per agreement, the remainder will be paid
in 180 equal monthly installments of $863.51 beginning April 1, 1993, with no interest ($10,362 was
received during 2003). The City has reserved the right to terminate service in the event of nonpayment.
Following is a summary of the outstanding balance at September 30, 2003:
Note receivable, September 30, 2003 $ 46,630
Less: Current portion 10,362
Note receivable -noncurrent $ 36,268
(6) Capital Assets:
Capital asset activity for the fiscal year ended September 30, 2003 is as follows:
Governmental activities:
Capital assets, not being depreciated -
Land
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated -
Buildings
Improvements other than buildings
Machinery and equipment
Total capital assets, being depreciated
Less accumulated depreciation for-
Buildings
Improvements other than buildings
Machinery and equipment
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net
Beginning
Balance Increases Decreases
$ 1,604,311 $ - $ -
582,567 720,536 577,373
2,186,878 720,536 577,373
3,064,161
1,766,959
2,197,545
7,028,665
526,257
665,747
395,185
1,587,189
120,308
237,416
357,724
707,335
289,143
1,230,754
2,227,232
4,801,433
$ 6,988,311
73,715
92,240
286,868
452,823
1,134,366
$ 1,854,902
7,219
162,557
169,776
187,948
$ 765,321
Ending
Balance
$ 1,604,311
725,730
2,330,041
3,590,418
2,312,398
2,355,314
8,258,130
781,050
374,164
1,355,065
2,510,279
5,747,851
$ 8,077,892
-39-
CITI' Or ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(6) Capital Assets: (Continued)
'The beginning balance of governmental activities capital assets has been adjusted to reflect the removal
of improvements to infrastructure assets totaling $1,263,420 that were previously reported in the general
fixed assets account group.
13cl;innittg Endllig
Balance Increases llecrcases Balance
Business-type activities:
Capital assets, not being depreciated -
Land
Construction in progress
Total capital assets, not being
dcprcciatcd
Capital assets, being depreciated -
Buildings
hnprovements other than buildings
Machinery and equipment
Total capital assets, being dcprcciatcd
Less accumulated depreciation for -
Buildings
Improvements other tliat~ buildings
Machinery and equipment
Total accumulated depreciation
Total capital assets, being depreciated, net
Business-type activities capital assets, net
$ 749,499 S - S - S 749,499
2,949,829 5,204,775 127,212 8,027,392
3,699,328 5,204,775 127,212 8,776,891
4,328,554 4, 161 - 4,332,715
36,946,133 575,472 183,694 37,337,911
1,131,640 80,590 12,430 1,199,800
42,406,327 660,223 196,124 42,870,426
2,795,949 148,332 - 2,944,28 ]
10,843,879 1,376,622 - 12,220,501
731,466 111,834 1,828 841,472
14,371,294 1,636,788 1,828 16,006,254
28,035,033 (976,565) 194,296 26,864,172
S 31,734,361 S 4,228,210 S 321,508 $ 35,641,063
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
Genera] governmental
Public safety
"Transportation
Parks and recreation
Total depreciation expense-governmental activities
Business-type activities:
Utility
Stormwater
Sanitation
Total depreciation expense-business-type activities
S 1 17,934
161,836
74,068
~)R X5;5
S 452,823
S 1,533,154
102,029
i rns
-4U-
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(7) Long-Term Debt:
Revenue bonds payable are comprised of the following:
Utilities System Revenue Bonds, Series 1996 payable in annual installments of principal
and semiannual installments of interest through October 1, 2025, bearing coupon rates
of 3.90% to 5.50%, secured solely by a pledge of and lien on net water and sewer
system revenues and certain other revenues as defined in the bond ordinances. $ 20,695,000
SunTrust Revenue Refunding Bonds, Series 1999 payable in annual installments of
principal and semiannual installments of interest a rate of 4.20%. The note is secured
by the City's utility service taxes. 1,417,006
Total revenue bonds payable 22,112,006
Less: Unamortized discount 401,312
Less: Unamortized refunding loss 12,828
Long-term debt, net $ 21,697,866
The annual requirements to amortize all revenue bonds payable outstanding at September 30, 2003, are
as follows:
Governmental Activities Long-Term Debt Business-Type Activities Long -Term Debt
Year Ending
September 30, Principal Intcrest Total Principal Intcrest Total
2004 $ 45,550 $ 25,536 $ 71,086 $ 541,915 $ ],137,338 $ 1,679,253
2005 48,950 23,485 72,435 571, I G4 1,111,634 1,682,798
2006 SO,000 21,439 71,505 592,557 1,084,373 1,676,930
2007 53,213 19,270 72,483 621,491 ],055,346 1,676,837
2008 53,930 17,042 70,972 652,387 1,024,046 1,676,433
2009 - 2013 309,014 48,084 357,098 3,801,114 4,663,738 8,464,852
2014 - 201 S 69,195 31,457 100,652 4,551,460 3,433,134 7,984,594
2019 - 2023 - - - 5,825,000 2,024,689 7,849,689
2023 - 2027 - - - 4,325,000 365,338 4,690,338
Totals $ 629,918 $ 186,313 $ 816,231 $ 21,482,088 $ 15,899,636 $ 37,381,724
Interest incurred during the year ended September 30, 2003, was $33,729 in the debt service fund and
$1,194,184 in the enterprise funds. Of the amount incurred in the enterprise funds, $156,321 was
capitalized.
The City is also required to maintain certain debt service coverage ratios in accordance with bond
resolutions. As of September 30, 2003, and during the year then ended, the City was in compliance with
those ratios.
On October 1, 2002, the City paid the outstanding balance of the SunTrust Revenue Note, Series 1995 in
the amount of $468,257. The note was scheduled to mature on January 1, 2006 and was secured by a
pledge of non-ad valorem revenues.
-41 -
CITY OF ATLANTIC BEACH, rLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(7) Long-Term Debt: (Continued)
The following is a summary of the changes in long-term debt of the City for the year ended September
30, 2003:
I3alancc I3alancc llue
October 1, September ~~'ithin
2002 Additions Reductions 30, 2003 One Year
Governmental Activities:
Revenue bonds payable
Compensated absences
Governmental activities - long-
term liabilities
Business-type Activities:
Revenue bond payable
Less deferred amounts:
For issuance discounts
Loss on bond refunding;
Total revenue bonds payable
Compensated absences
Business-type activities -long;
term liabilities
~ 1,142,367 5 - 5 512,449 S 629,918 5 45,550
365,959 436,180 407,116 395,023 395,023
5 1,508,326 5 436,180 5 919,565 51,024,941 5 440,573
72,002,304 - 520,21E 21,482,088 541,914
432,522 - 31,210 401,312 -
14,111 - 1,283 12,828 -
21,555,67] - 487,723 21,067,948 541,914
104,01 G 99,814 81,369 122,461 122,461
521,659,687 5 99,814 5 569,092 5 21,190,409 5 664,375
(8) Defined Benefit Pension Plans:
(a) Plan descriptions and contribution information-The City maintains ttvo separate single-
employer pension plans, one for police officers and one for general employees, which cover
substantially all full-time City employees. "fhe pension plans do not issue separate stand-alone
financial statements. Membership of each plan consists of the following at September 30, 2002, the
date of the latest actuarial valuation:
General
Employees Police
Retirees and beneficiaries receiving benefits
Disabled members and beneficiaries receiving
benefits
Terminated plan members entitled to but not
yet receiving benefits
Active plan members
Total
25 7
2 2
13 3
75 26
115 38
- 42 -
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(8) Defined Benefit Pension Plans: (Continued)
(i) General Employees' Retirement Plan
Pla» Descriptio~i The General Employees' Retirement Plan provides retirement,
disability and death benefits to plan members and their beneficiaries. The City
Commission has the authority to establish and amend the benefit provisions of the plan.
Co»tributiolis--The City is required to contribute at an actuarially determined rate. Plan
members are required to contribute 2.0% of their annual covered salary. Contribution
requirements are established by City code, which may be amended by the City
Commission.
(ii) Police Retirement Plan
Pla» Description The Police Retirement Plan provides retirement, disability and death
benefits to plan members and their beneficiaries. The Police Retirement Plan is governed
by the Policemen's Pension Board of Trustees, although the City Commission retains the
authority to establish and amend the benefit provisions of the plan.
Co»tributio~zs-Plan members are required to contribute 1.0% (4.815% for nonunion
participants) of their annual covered salary. The City is required to contribute at
actuarially determined rates, if State of Florida contributions are not sufficient. Per City
code, the City Commission may amend established contribution requirements.
(b) Annual pension costs and net pension asset The City's annual pension cost and net
pension asset to the General Employee's and Police Retirement Plans for the current year were as
follows:
General
Employees Police Total
Annual required contribution (ARC)
Interest on net pension obligation
Adjustment to ARC
Annual pension cost
Contributions made
Net pension asset, end of year
$ 315,106 $ 225,991 $ 541,097
315,106 225,991 541,097
(315,106) (244,393) (559,499)
$ - $ 18,402 $ 18,402
Because a valuation has not been done as of September 30, 2003, the net pension asset has not been
recorded in the accompanying financial statements. Administrative expenses of the plans totaling
$23,702 were paid by the general fund.
- 43 -
CITY OF ATLANTIC BEACH, FLORIDt1
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(8) Defined Benefit Pension Plans: (Continued)
(c) Other pension plan information=The annual required contributions for the current year
were determined as part of the September 30, 2000, actuarial valuations for the Genera] Employees'
and Police Retirement Plans using the individual entry-age actuarial cost method. "I'he 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 post retirement benciit
increases.
The actuarial value of assets was determined using market value and a funding value adjustment f~~r
both plans. The unfunded actuarial accrued liabilities arc being amortized over remaining
amortization periods of 7 to 30 years.
Three-year trend information:
Allllllal Ycrcentage
Fiscal Year Ended PCIlSIOIl Cost of APC Net Pension
September 30, (AI'C) Contributed Asset.
General Employees
2001 266,148 100% -
2002 288,070 100% -
2003 315,106 100% -
Police
20U ] 183,092 100°/~ -
2002 240,242 100% -
2003 225,991 108%~ ~ 18,402
(9) Intcrfund Accounts:
Individual fund interfund receivables and payablcs, at September 30, 2003, consist of the following:
lluc prom Due to Other
Other Funds Funds
General
Non-major governmental
~ 32,917 S -
- 32,917
$ 32,917 S 32,917
- 44 -
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(10) Interfund Transfers:
Transfers of resources from a fund receiving revenue to the fund through which the resources are to be
expended are recorded as transfers and are reported as other financing sources (uses) in the
Governmental Funds and as transfers in (out) in the Proprietary Funds. Following is a summary of
interfund transfers for the year ended September 30, 2003:
Nonmajor
General Governmental Stormwatcr Total
Fund Funds Fund Transfers Out
General Fund $ - $ 424,600 $ 164,067 $ 588,667
Nonmajor Governmental
Funds 108,893 106,171 193,000 408,064
Utility Fund 424,360 - - 424,360
Sanitation Fund 212,180 - - 212,180
Total transfers in $ 745,433 $ 530,771 $ 357,067 $ 1,633,271
Transfers are used to move revenues from the fund that ordinance or budget requires to collect them to
the fund that ordinance or budget requires to expend them.
During the year ended September 30, 2003, the General Fund transferred assets to the Stormwatcr Fund
with a net book value of $113,089. No amounts were reported in the governmental funds as the amount
did not involve the transfer of financial resources. However, the Stormwatcr Fund did report a transfer in
for the capital resources received. The Statement of Revenues, Expenditures and Changes in Fund
Balances for Governmental Funds reports transfers out of $475,578, which is $588,667 less the
transferred assets of $113,089.
(11) Commitments:
As of September 30, 2003, the City had outstanding commitments on contracts in progress as follows:
Unexpended
Contract
Project Type Amounts
Utility system improvements
Stormwatcr system improvements
General government improvements
$ 478,519
273,928
315,608
On June 2, 1999, the City entered into an agreement with the City of Jacksonville, Florida, whereas the
City of Jacksonville will provide advanced life support and fire services to the residents and businesses
located in Atlantic Beach. The term of the agreement shall be from the effective date and continuing for a
period of 25 years unless terminated earlier by the parties (such parties must provide a one year notice).
For the year ended September 30, 2003, the City incurred $748,061 in services under this agreement. The
amount will be adjusted annually by an amount equal to 103% of the previous year's amount for all
services provided by the City of Jacksonville.
- 45 -
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMI3EI2 30, ?003
(12) Contin~encics:
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.
(13) 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
^ 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.
(14) Prior Ycar Restatements:
In 2003, the City implemented Governmental Accounting Standards Board (GASH) Statement No. 34
Basic Financial Statement - and Managcnrcrrt's Discussion urrd Arrulysis - fvr Stutc and Local
Goverrur:cuts, Statement No. 37, Basic FllrarlClal Staterrrerrts - Urld MaJlal~rGr)rL'!rt ~S' Drscrtssrorr urrd
Arrulysis -for- Stute urrd Local Goverrrrnerrts: Omnibus, Statement No. 38, Certuin Firrarrciul Stutenrcrrt
Note Disclosures, and Interpretation No. G, Recogrritiar and Mcusurem~nt of Certuin Liabilities and
Expenditures irr Governmental Fund Finarrcrul Stutenrents. GASI3 Number 34 established new Cnancial
requirements for all state and local governments and consist of the following:
m Management's Discussion and Analysis
Basic Financial Statements
Government-wide financial statements, prepared using the economic resources measurement focus
and the accrual basis of accounting.
Fund financial statements that focus on major governmental funds and enterprise funds.
Notes to the financial statements.
Required supplementary information which requires disclosure regarding the modified approach used
to record information.
- 4G -
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(14) Prior Year Restatements: (Continued)
Additionally, this new statement required the elimination of the effect of internal service activities and
required the recording of infrastructure assets and related depreciation.
The impact of these restatements on governmental type activities is as follows:
Fund balance, September 30, 2002
Reclassification of Internal Service Fund
Adjusted Fund Balance, September 30, 2002
Capital assets -net
Other long-term assets
Bonds and capital leases payable -net
Accrued interest payable
Compensated absences
Net assets -governmental activities as of September 30, 2003
Nonmajor
Governmental
General Fund Funds Total
$ 5,556,211 $ 2,268,952 $ 7,825,163
(15,123) - (15,123)
5,541,088 2,268,952 7,810,040
6,988,311 - 6,988,311
16,047 - 16,047
(1,142,367) - (1,142,367)
(9,463) - (9,463)
(365,959) - (365,959)
$ 11,027,657 $ 2,268,952 $ 13,296,609
- 47 -
REQUIItEll SUI'I'LEIIIENTARY INFORMATION
-4b-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF PENSION FUNDING PROGRESS
SEPTEMBER 30, 2003
General Employees' Retirement Plan
Annual UAAL as
Valuation Funded Covered Percentage
Date AVA AAL UAAL Ratio Payroll of Payroll
9/30199 $ 4,650,000 $ 5,796,000 $ 1,146,000 80.2% $ 2,185,000 52.4%
9/30100 5,229,000 6,462,000 1,233,000 80.9% 2,330,000 52.9%
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%
Police Retirement Plan
Annual UAAL as
Valuation Funded Covered Percentage
Date AVA AAL UAAL Ratio Payroll of Payroll
9/30/99 $ 3,393,000 $ 4,089,000 $ 696,000 83.0% $ 1,018,000 68.4%
9/30/00 3,791,000 4,615,000 824,000 82.1% 1,213,000 67.9%
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%
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 approximately adjusts 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.
- 49 -
CITY OF ATLANTIC BEACH, FLORIllA, FLORIDA
REQUIRED SUPPLEMENTARI' INFOI~IVIATION
SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER
AND OTHER CONTRIBUTING ENTITIES
SEI'TEMBEI2 30, 2003
General Employees' Retirement Plan
Annual
Required
Year Ended Contributed I'crcentagc
September 30, (ARC) Contributed
2000 $ 259,4]4 100%~
2001 266,148 100%
2002 288,070 ] 00"/<,
2003 315, 106 ] 00`%,
Police Retirement Plan
Year Ended
September 30
Annual
Required
Contributed
(ARC)
Percentage
Contributed
2000 $ 179,988 100`%,
2001 183,091 100'%
2002 240,242 100`%
2003 22.5,991 108`%
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 llatc
Actuarial Cost Method
Amortization Method
Remaining Amortization Period
Asset Valuation Method
Actuarial Assumptions
Investment Rate of Return
Projected Salary Increases
Inflation
September 30, 2002
Entry-Age Actuarial Cost Method
Level Percent of Payroll, Closed
7 to 30 years
Funding Value
8.00°/~
~.~0`%,
5.00°/~
-50-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL- GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Variance with
Budgeted Amounts Final Budget -
Positivc
Original Final Actual Amounts (Negative)
REVENUES
Taxes $ 3,816,964 $ 3,816,964 $ 4,042,23 ] $ 225,267
Licenses and permits 273,100 .273,100 441,808 168,708
State-shared revenues 1,729,248 1,729,248 1,573,121 (156,127)
Other intergovernmental revenues 406,254 406,254 416,539 10,285
Charges for services 1,436,695 1,443,032 1,431,004 (12,028)
Fines and forfeitures 158,735 158,735 145,003 (13,732)
Interest income 100,000 100,000 72,367 (27,633) .
Miscellaneous revenues 108,000 108,000 97,73 ] (10,269)
Total revenues 8,028,996 8,035,333 8,219,804 184,471
EXPENDITURES
Current:
General government:
Legislative 42,929 42,929 41,340 1,589
Legal counsel 121,318 121,318 83,596 37,722
Planning and zoning 123,358 123,358 105,461 17,897
City clerk 237,070 237,070 202,002 35,068
Citymanagcr 257,428 257,428 235,492 21,936
Finance and accounting 1,066,956 1,066,956 1,029,947 37,009
Human resources 161,355 161,355 153,839 7,516
Other 262,085 262,088 232,096 29,992
Total general government 2,272,502 2,272,502 2,083,773 188,729
Public safety:
Law cnfarccmcnt 2,797,865 2,797,865 2,699,783 98,082
Lifeguards 154,628 154,628 148,310 6,318
Firccontrol 834,765 834,765 767,651 67,114
Code enforcement 53,480 53,480 50,228 3,252
Building 297,278 298,557 264,3]8 34,239
Total public safety 4,138,016 4,139,295 3,930,290 209,005
Transportation: -
Publicworks administration 435,274 435,274 424,017 11,257
Streets and roads 655,284 665,784 620,564 45,220
Flcct maintcnancc 219,451 228,172 226,700 1,472
Total transportation 1,310,009 1,329,230 1,271,281 57,949
Parks and recreation 928,448 928,448 905,037 23,411
Total expenditures 8,648,975 8,669,475 8,190,381 479,094
Excess of revenues over (under) expenditures (619,979) (634,142) 29,423 663,565
Other financing sources (uses):
Transfers in 745,433 745,433 745,433 -
Transfcrs out (454,600) (505,578) (475,578) 30,000
Total other financing sources (uses) 290,833 239,855 269,855 30,000
Excess of revenues and other sources
over (under) expenditures and other uses (329,146) (394,287) 299,278 693,565
Fund balances, beginning of year 5,541,085 5,541,088 5,541,088 -
Fund balances, end of year $ 5,211,942 $ 5,146,801 $ 5,840,366 $ 693,565
Sce notes to schedule of revenues, expenditures and changes in fund balance -budget and actual -genera] fund
-51-
CITY OF ATLANTIC BEACFI, FLORIDA, FLORIDA
NOTES TO SCHEDULE OF REVENUES, EJ-:PENDITURES
ANll CI~ANGES IN FUNll BALANCE -
BUDGET AND ACTUAL -GENERAL FUNll
FOI2 THE YEAR ENDED SEPTEMBER 30, ?003
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 arc monitored at varying levels of
classification detail; however, expenditures cannot legally exceed total appropriations at the individual
fund level. )/ncumbrances arc recorded. Unexpended items which arc 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 arc adopted by the City Commission a~ld
arc 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.
-52-
SUPPLEMENTARY INFORMATION
- 53 -
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r
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
SCHEDULE OF EXPENll1TUItES OF FEllEI2AL AV1'ARUS
FOR THE YEAR ENDED SEI'TEMI3ER 30, 2003
Federal/
Pass=Through Entity CFUA
Federal Program Title Number
U.S. llcpartmcnt of Housing and
Urban llevclopment Passed through
City of Jacksonville, Florida
Community Development Block Grant 14.218
U.S. Department of Justice Passed
through Florida Department of Law
Enforcement
Byrne Grant -Mobile Computers 16.579
U.S. llcpartmcnt of Justice Passed
through Office of Justice Programs
Local Law Enforcement Block Grant -
FY2001 16.592
Local Law Enforcement Block Grant -
FY2002 16.592
U.S. Department of Justice Passed
through Bureau of Justice Assistance
Bulletproof Vest Partnership Grant 16.607
Contract/ Cram Number
Nrogram
A tir~a rd
Program
Expenditures
5629-22
03-CJ-SA-04-26-02-029
200 ] -LB-Ba-4109
2002-LB-BX- ] 699
03018357
U.S. llcpartmcnt of Environmental
Protection Passed through Florida
Department of Environmental
Protection
Nonpoint Source lmplementation - 319
Program 66.460 C9994515-99-0
'Ibtal Federal Awards
-58-
S 180,658 8 ] 70,570
44,999 44,694
14,402 9,170
15,720 15,720
5,385
428,450
5,385
367,303
G89,614 $ 612,842
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
(1) Basis of Presentation:
The accompanying Schedule of Expenditures of Federal Awards includes the Federal award activity of
the City of Atlantic Beach, Florida, Florida and is presented on the modified accrual basis of accounting.
The information in this schedule is presented in accordance with the requirements of OMB Circular A-
133, Audits of States, Local Governments and Non-Profit Organizations.
-59-
CITY OF ATLANTIC BEACH, FLORIDA, FLORIDA
SCHEDULE OF FINDINGS ANll QUESTIONED COSTS
FOR THE PEAR ENDED SEPTEMBER 30, ?003
I. Summary oI' Auditors' Results:
Financial Statements:
o Type of audit report issued on the basic financial statements: Unqualified
There were no reportable conditions related to internal control disclosed by the audit of the
basic financial statements.
The audit did not disclose any noncompliance which was material to the basic financial
statements.
Type of report issued on compliance for major programs: Unqualified
o The audit did not disclose any audit findings, which arc required to be reported in accordance
with Section 510(a) of OMB Circular A-l 33.
Major program identification:
CFDA Number 66.460 - Nonpoint Source lmplcmentation
Dollar threshold used to distinguish between "Type A and "Type B programs was 5300,000.
Auditee did not qualify as a low-risk auditec as defined in OMB Circular A-133.
lI. Basic Financial Statements Findings:
None.
III. Federal Award Findings and Questioned Costs:
None.
IV. Summary Sclicdulc oI' Prior Audit Findings:
m "There were no audit findings for the year ended September 30, 2002 relative to federal
programs requiring action on the part of the auditce for that fiscal year.
V. Corrective Action Plan:
There was no corrective action plan necessary for the year ended September 30, 2003 since
there were no audit findings in the auditors' report for that fiscal year.
-60-
JAMES MOORS ~ CO., P.L.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
OVER COMPLIANCE APPLICABLE TO EACH MAJOR FEDERAL AWARDS PROGRAM
To the Honorable Mayor, City Commissioners, and City Manager
Of City of Atlantic Beach, Florida, Florida:
Compliance
We have audited the compliance of the City of Atlantic Beach, Florida, Florida, with the types of
compliance requirements described in the U.S. Off ce of Mattage»tent and Budget (OMB) Circular A=133
Compliance Supplement that are applicable to each of its major federal awards programs for the year
ended September 30, 2003. The City of Atlantic Beach, Florida, Florida's major federal awards programs
are identified in the summary of auditors' results section of the accompanying Schedule of Findings and
Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable
to each of its major federal awards programs is the responsibility of the City of Atlantic Beach, Florida,
Florida's management. Our responsibility is to express an opinion on the City of Atlantic Beach, Florida,
Florida's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Gover~tntetit 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. Those standards and OMB Circular A-133
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect
on a major federal awards program occurred. An audit includes examining, on a test basis, evidence
about the City of Atlantic Beach, Florida, Florida's compliance with those requirements and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City
of Atlantic Beach, Florida, Florida's compliance with those requirements.
In our opinion; the City of Atlantic Beach, Florida, Florida, complied, in all material respects, with the
requirements referred to above that are applicable to each of its major federal awards programs for the
year ended September 30, 2003.
Internal Control Over Compliance
The management of the City of Atlantic Beach, Florida, Florida, is responsible for establishing and
maintaining effective internal control over compliance with requirements of laws, regulations, contracts
and grants applicable to federal awards programs. In planning and performing our audit, we considered
the City of Atlantic Beach, Florida, Florida's internal control over compliance with requirements that
could have a direct and material effect on a major federal awards program in order to determine our
auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the
internal control over compliance in accordance with OMB Circular A-133.
-61-
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
internal control that might be material weaknesses. A material weakness is a condition in which the
design or operation of one or more of the internal control components does not reduce to a relatively ]ow
level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants
that would be material in relation to a major federal awards prol,~ram 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 compliance and its operation that we consider to
be material weal.~nesses.
This report is intended solely for the information and use of the City Commission and management, and
respective federal awarding agencies and pass-through entities, and is not intended to be and should not
be used by anyone other than these specified parties.
~~
Daytona Beach, Florida
December 5, 2003
-62-
JAMES MOORS &. CO., P.L.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
OVER FINANCIAL REPORTING BASED ON AN AUDIT OF BASIC FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERN1l1ENTAUDITING
STANDARDS
To the Honorable Mayor, City Commissioners, and City Manager
Of City of Atlantic Beach, Florida, Florida:
We have audited the basic financial statements of City of Atlantic Beach, Florida, Florida, as of and for
the year ended September 30, 2003, and have issued our report thereon dated December 5, 2003. 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 Gover-unent Auditing Standards,
issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether City of Atlantic Beach, Florida, Florida's basic
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and
material effect 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 that are required to be
reported under Government Auditing Standards.
Internal Control Over Financial Repnrtin~
In planning and performing our audit, we considered City of Atlantic Beach, Florida, Florida'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 assurance 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 over financial reporting that might be material
weaknesses. A material weakness is a 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 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.
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.
Daytona Beach, Florida
December 5, 2003
d~ ~~.
- 63 -
THIS PAGE INTENTIONALLY LEI~T BLANK.
-64-
JAMES MOORS ~ CO., P.L.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
MANAGEMENT LETTER OF INDEPENDENT AUDITORS
REQUIRED BY CHAPTER 10.550 RULES OF THE AUDITOR GENERAL
To the Honorable Mayor, City Commissioners, and City Manager
of City of Atlantic Beach, Florida, Florida:
We have audited the basic financial statements of City of Atlantic Beach, Florida, Florida, as of and for
the fiscal year ended September 30, 2003, and have issued our report thereon dated December 5, 2003.
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 Gover~z--re-rt Auditing Sta-rdards,
issued by the Comptroller General of the United States. We have issued our Independent Auditors'
Report on Compliance and on Internal Control Over Financial Reporting dated December 5, 2003.
Disclosures in that report, if any, should be considered in conjunction with this management letter.
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) (g) l.a.) require that we comment as to whether or
not inaccuracies, shortages, defalcations, fraud, and/or violations of laws, rules, regulations, and
contractual provisions reported in the preceding annual financial audit report have been corrected. There
were no comments n-ade in the preceding annual financial audit report.
The Rules of the Auditor General (Section 10.554 (1) (g) l.b.) require that we comment as to whether or
not recommendations made in the preceding annual financial audit report have been followed. There
were no recommendations made in the preceding annual financial audit report.
As required by the Rules of the Auditor General (Section 10.554 (1) (g) 2.), the City of Atlantic Beach,
Florida has complied with Section 218.415, Florida Statutes, regarding the investment of public funds.
The Rules of the Auditor General (Sections 10.554 (1) (g) 3., and 4.) require disclosure in the
management letter of the following matters if not already addressed in the auditors' report on compliance
and internal control or schedule of findings and questioned costs: (1) recommendations to improve
financial management, accounting procedures, and internal controls; (2) violations of laws, rules,
regulations, and contractual provisions that have occurred, or were likely to have occurred, and were
discovered within the scope of the audit; (3) illegal or improper expenditures discovered within the scope
of the financial audit that may or may not materially affect the financial statements; (4) improper or
inadequate accounting procedures (e.g., the omission of required disclosures from the financial
statements); (5) failures to properly record financial transactions; and, (6) other inaccuracies, shortages,
defalcations and instances of fraud discovered by, or that came to the attention of, the auditor. None of
the aforementioned was discovered within the scope of our audit. .
- 65 -
The Rules of the Auditor General (Section 10.554 (1) (g) 5.) also require that the name or official title and
legal authority for the primary government and each component unit of the reporting entity be disclosed
in the management letter, unless disclosed in the notes to the financial statements. The City of Atlantic
Beach, Florida, was established by Florida Statutes Section ] 65.031(4), Chapter 57-1126. There are no
component units related to the City of Atlantic Beach, Florida, Florida.
As required by the Rules of the Auditor Genera] (Section 10.554 (1) (g) 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 of Atlantic Beach, Florida,
Florida, is not in a state of financial emergency as a consequence of the conditions described in Section
2 ] 8.503(1), Florida Statutes.
As required by the Rules of the Auditor General (Section 10.554 (1) (g) 6.b.), we determined that the
annual financial report for the City of Atlantic Beach, Florida, Florida, for the fiscal year ended
September 30, 2003, was filed with the Department of Banking Finance pursuant to Section 218.32 (] )
(a), Florida Statutes, and is in agreement with the annual financial audit report for the fiscal year ended
September 30, 2003.
As required by the Rules of the Auditor General (Section 10.554 (1) (g) 6.c.), the scope of our audit
included application of financial condition assessment procedures pursuant to Rule 10.556(8) of the
Auditor General. It is management's responsibility to monitor the City's financial condition, and our
financial condition assessment was based in part on representations made by management and the review
of financial information provided by same.
'T'his 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.
~ ~~
Daytona Beach, Florida
December 5, 2003
-66-