Audit Report - 2004-2005
~"'
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORTS
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2005
~:
1'"' FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORTS
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2005
TABLE OF CONTENTS
~' independent Auditors' Report ......................................................................................................................1-2
Management's Discussion and Analysis ....................................................................................................3-16
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets ........................................................................................................................... 17
Statement of Activities .......................................................................................................
. 18
.
...................
Fund Financial Statements:
Balance Sheet -Governmental Funds .......... 19
...........................................................................................
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ....................................................................................................................... 20
Statement of Revenues, Expenditures, and Changes in Fund
Balances -Governmental Funds ......... 21
.................................................................................................
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ......................................................................:.................................................. 22
Statement of Net Assets -Proprietary Funds .......................................................................................... 23
Statement of Revenues, Expenses, and Changes in Net Assets -
Proprietary Funds ................................................................................................................................. 24
Statement of Cash Flows -Proprietary Funds ...................................................................................25-26
Statement of Fiduciary Net Assets -Fiduciary Funds ............................................................................ 27
Statement of Changes in Fiduciary Net Assets -Fiduciary Funds ......................................................... 28
Notes to Financial Statements
29 4
.......................................................................................................
- 5
Required Supplementary Information
Schedules of Pension Funding Progress ...................................................................................................... 46
"" Schedules of Contributions from Employer and Other
~; Contributing Entities .......................... ....................................47
..................................................................
Schedule of Revenues, Expenditures, and Changes in
~ Fund Balance -Budget and Actual -General Fund ...........................................................................48-49
Notes to Schedule of Revenues, Expenditures, and Changes in Fund
Balance -Budget and Actual -General Fund ......................................................................................... 50
`°"' Supplementary Information
Combining Balance Sheet -Nonmajor Governmental Funds ................................................................51-52
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances -Nonmajor Governmental Funds ..........................................................53-54
", Combining Statement of Fiduciary Net Assets ............................................................................................ 55
Combining Statement of Changes in Fiduciary Net Assets -
Fiduciary Funds ....................................................................................................................................... 56
Historical Revenues and Expenses ................................................... ............ 57
`: Major Utility Customers ............................................................................................................................... 58
Summary of Water Usage ............................................................................................................................. 59
l""" Summary of Wastewater Treatment -Atlantic Beach Sewer
t Division .................................................................................................................................................... 60
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORTS
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2005
TABLE OF CONTENTS
(Concluded)
Supplementary Information (Concluded)
~ Summary of Wastewater Treatment -Buccaneer Sewer Division .............................................................. 61
~' Other Bond Covenant Disclosures ............................................................................................................... 62
Y Schedules of Net Revenues in Accordance with Bond Resolutions
(Unaudited) -Enterprise Funds (Water and Sewer) ............................................................................... 63
Additional Elements of Report Prepared in Accordance with
Government Auditing Standards, Issued by the Comptroller
+~ General of the United States
Schedule of Expenditures of Federal Awards ......................................................................................... 64
Notes to Schedule of Expenditures of Federal Awards .......................................................................... 65
~,,,. Independent Auditors' Report on Internal Control Over
Financial Reporting and on Compliance and Other
` Matters Based on an Audit of Basic Financial Statements
Performed in Accordance with Government Auditing
~' Standards ....................................................................................... ......66-67
..........................................
Management Letter ........................................................................................................................... 68-69
INDEPENDENT AUDITORS' REPORT
F
!"'
Purvis
ray g,
INDEPENDENT AUDITORS' REPORT
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Atlantic Beach,
Florida (the City), as of and for the year ended September 30, 2005, which collectively comprise the City's
basic financial statements as listed in the table of contents. These financial statements are the responsibility
of the City's management. Our responsibility is to express an opinion on these fmancial 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
el• to obtain reasonable assurance about whether the basic financial statements are free of materia! misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
fmancial position of the governmental activities, the business-type activities, each major fund, and the
aggregate remaining fund information of the City, as of September 30, 2005, and the respective changes in
financial position and cash flows, where applicable, thereof for the year then ended in conformity with
~""' accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated December 14, 2005,
on our consideration of the City's internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of
that report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing and not to provide an opinion on the internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in conjunction with this report in considering the results of our
audit.
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 required supplementary information. However, we did not audit the
information and express no opinion on it.
Certified Public Accountants
~ P.O. Box 23999 • 222 N.E. 1st Street • Gainesville, Florida 32602 • (352) 378-2461 • FAX (352) 378-2505
Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 • {850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court,. Suite # 100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899
MEMBERS CIF AMERICAN AND FLORIDA WSTffUTES OF CfRTIf1E0 PUBLIC hCCOUNTANTS
MEMBER Of AMfRICAN INSTITUTE OF CERTIf1ED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.G PRACTICE SECTIONS
t
~•
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT
(Concluded)
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The combining nonmajor fund statements, schedule of
expenditures of federal awards and other supplementary information listed in the table of contents is
presented for the purpose of additional analysis and are not a required part of the basic financial statements.
The combining nonmajor fund financial statements and the schedule of expenditures of federal awards have
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The other supplementary information has not been subjected to the auditing procedures applied in the audit
of the basic financial statements and, accordingly, we express no opinion on them.
December 14, 2005 .~~~~~ ~ a'M'°~
Gainesville, Florida ..~.d
2
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, 2005.
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.
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.
The statement of net assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
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 periods (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 storm water utility. and the sanitation enterprise.
The government-wide financial statements can be found on pages 17-18 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.
Governmental funds--Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
~ government-wide financial statements, governmental fund financial statements focus on near-term
~: inflows and outflows of available resources, as well as on balances of available resources at the end of the
fiscal year. Such information may be useful in evaluating a City's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
~" statements, it is useful to compare the information presented for governmental funds with similar
information presented. for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government's near-term financing
!* decisions. 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 seventeen 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 sixteen governmental funds are combined into a single, aggregated presentation.
The City of Atlantic Beach adopts an annual appropriated budget for all funds. A General Fund
budgetary comparison schedule has been provided to demonstrate compliance with this budget.
"' Proprietary funds-The City of Atlantic Beach maintains only one type of proprietary fund and that is
the enterprise funds. The enterprise type funds are used to account for the activities of the water, sewer,
storm water and sanitation activities. Enterprise funds are used to report the same functions presented as
e~ 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,
A storm water and sanitation activities, which are considered to be major funds of the City of Atlantic
'` Beach. The basic proprietary fund financial statements can be found on pages 23-26 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 27-28 of this report.
Notes to the financial statements-The notes provide additional information that is essential to a full
X understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 29-45 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 46-50 of this report.
Combining statements-Referred to earlier in connection with non-major governmental funds, are
presented immediately following the required supplementary information. Combining fund statements
can be found on pages 51-56 of this report.
Financial Hi~ghts
~ 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 $37,896,234 at the close of the most recent
fiscal year.
By far the largest portion of the City's net assets, $24,481,391, 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
~"
"~ 4
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, 2005
(In Thousands)
. Governmental Business-type
Activities Activities Total
"" 2005 2004 2005 2004 2005 2004
Current and other assets $6,966 $8,369 $9,118 $7,282 $16,084 $15,651
Capital assets 9,241 8,323 35,792 35,899 45,033 44,222
~'"` Total Assets 16,207 16,692 44,910 43,181 61,117 59,873
Long-term liabilities outstanding 752 584 19,331 20,033 20,083 20,617
Other liabilities 724 1,164 2,414 2,594 3,138 3,758
~'"' Total Liabilities 1,476 1,748 21,745 22,627 23,221 24,375
Net Assets
Invested in capital assets, net of
~ related debt 8,705 7,739 15,776 14,663 24,481 22,402
Restricted 1,796 1,857 911 1,101 2,707 2,958
Unrestricted 4,230 5,348 6,478 4,790 10,708 10,138
""'" Total Net. Assets $14,731 $14,944 $23,165 $20,554 $37,896 $35,498
A portion of the City's net assets, $2,706,071, represents resources that are subject to external restrictions
on how they may be used. The remaining balance of unrestricted net assets $10,708,772 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 $2,398,119. This
*^ amount represents a $212,473 decrease in the net assets as a result of the governmental activities and a
$2,610,592 increase in the net assets of the business type activities.
To take advantage of declining interest rates, the City issued $19,500,000 of Series 2004 Utilities System
Revenue Refunding Bonds at an average coupon rate of 4.03% to refund a portion of the City's
outstanding Series 1996 Utilities System Revenue Bonds that had a rate of 5.425%. The refunding will
lower the City's required debt service payments over the term of the of the bonds by a total of $1,020,807.
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 1.33% last year to 3.20% in the current year. This
represents a 140% increase in rate of return.
The following is a summary of activities for the City during the fiscal year ended September 30, 2005:
City of Atlantic Beach's Change in Net Assets
(In Thousands)
Governmental Business-type
Activities Activities Total
2005 2004 2005 2004 2005 2004
Revenues:
Program revenues: 4,~°
3
++~ Charges for services $1,112 $1,156
$7,720 $7
218 $8
832 8
374
Operating grants & , , ,
contributions 153 209 7 203 160 412
Capital grants &
~" contributions 849 785 1,820 686 2,669 1,471
General Revenues: ~~(,
X~
Property taxes
T
S
l 2,990 2,719
,~`~ -
'~~' - 2,990 2,719
a
es
axes 1,385 1,314
~~„ - - 1,385 1,314
Franchise and utility taxes 1,601 1,470 ~$` - - 1
601 1
470
State Revenue Sharing 469 356 - - ,
469 ,
356
Discretionary Sales Surtax 688 599 - 688 599
~"" Interest revenue 170 81 180 65 350 146
Miscellaneous 389 173 - - 389 173
Gain / (Loss) on Disposition
'"" of Fixed Assets 8 (10) ~ (119) 8 (129)
Total Revenues $9,814 8,852 $9,727 8,053 $19,541 16,905
Expenses: .~
~~'~
General Government 1,233 ~o -
1,043 Y
`~' - 1,233 1,043
Public Safety 4,553 4,392 k ~
- - 4,553 4,392
Transportation 1,391 1,373 - - 1,391 1,373
'""~ Parks & Recreation 1,045 940 - - 1,045 940
Interest on long-term debt 23 25 - - 23 25
Water and Sewer Utility - - 6,829 6,484 6,829 6,484
~. Storm Water - - 937 839 937 839
Sanitation - - 1,132 1,215 1,132 1,215
Total Expenses 8,245 7,773 s~ 8,898 8,538 17,143 16,311
n~'`
"" Increase (decrease) in net assets
Before transfers 1,569 1,079 829 (485) 2,398 594
Transfers (1,782) (799) 1,782 799 - -
Increase,(decrease)in net
assets (213) 280 2,611 314 2,398 594
Net assets October 1, 2004 14,944 14,664 20,554 20,240 35,498 34,904
~ Net assets September 30, 2005 $14,731 $14,944 $23,165 $20,554 $37,896 $35,498
~"" 6
Operating Revenues and Expenses by Function -Governmental Activities
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
General Public Safety Transportation Parks 8 Interest on long-
Government Recreation term debt
®Expenses ^ Operating Program Revenues
Revenues by Source -Governmental Activities
Discretionary Sales Tax
Franchise & Utility
16%
Sales
14
State Revenue Sharing
r 5%
I Interest Revenue
I 2%
Other
i 3°h
7
arges for Services
11%
Operating Grants &
Contributions
2%
Capital Grants &
Contributions
9%
Property Taxes
31%
Governmental activities- The City of Atlantic Beach's net assets were decreased by $212,473 related
to governmental activities. General revenues were $7,699,809, exceeding the program expenses of
$6,130,218, including depreciation of $533,063, by $1,569,591. The City transferred $1,782,064 to the
Storm Water Utility Fund to provide funding for the Hopkins Creek retention pond construction and for a
small storm water drainage project that would otherwise be unfunded. One reason for the excess
revenues is the $688,015 of discretionary sales taxes, most of which were used to acquire capital assets,
and the receipt of grant funds, interest and other miscellaneous revenues, some of which were also used to
increase net assets.
~ Business-type activities-Business-type activities resulted in a net increase to the City or Atlantic
Beach's net assets of $2,610,592. Key revenue and expense elements affecting the change include the
following items:
.. • The business type activities resulted in an operating loss of $252,473. This is primarily the result
i of a $410,839 operating loss in the storm water utility. The storm water utility revenue is
generated from a $4.00 per equivalent residential unit or (ERU), of impervious surface charge and
only covers about a half of the utilities operating expenses. The General Fund and the Local
Option Gas Tax Fund help to subsidize the operations of the Storm Water Utility Fund. The
Utility Fund, (water and sewer), generated operating income in the amount of $10,243. The
~ single largest operating expense is depreciation. This non-cash expense was $1,801,682 for the
year. The Sanitation Fund had operating income of only $148,123 for fiscal year 2005. Charges
for services for the Sanitation fund were $1,280,318, and represents a decrease of $2,534 from
last year indicating no growth in revenues while at the same time the contracted waste removal
cost has increased due to cost of living increases and a recently imposed fuel surcharge. The
result of the Sanitation operation was a decrease in net assets of $57,197 after the transfer to the
General Fund of $225,100.
• The revenue generated from charges for services for the business-type activities increased by
$502,234 or 7.0% and is attributable to the water and sewer utility system. The increase is mostly
the result of a water and sewer rate restructure, imposing increasing block rates for residential
usage designed to encourage conservation of discretionary usage. This change was implemented
in August of 2004. Also, along with the rate restructure, the City incorporated into its charges for
"' service a previously reported capital contribution charge called the State Revenue Generation
~ Charge which represents about $93,173 of the change. The revenues reported in 2004 were
reduced by a $70,189 credit to a large customer for newly discovered changes to the unit count of
the multi residential facility. These components were offset by lower consumption resulting from
the conservation efforts of the customers. After considering the above changes to the rate
structure, the City realized a 5.4% increase in charges. This increase is slightly higher than the
S.0% anticipated.
• Both the Storm Water Utility Fund and Sanitation Fund charges for services were about the same
,~ as last year. The City will need to address the long term effects of rising costs with relatively no
~ increases in revenues for both storm water and sanitation activities in the near future.
• Capital contributions were also a major revenue source for the Utility Fund during the 2005 fiscal
year, producing $1,820,549 in revenue. This revenue includes capital contributions from new
developments totaling $1,412,901. Projects for which the City received contributions include
$798,080 for the Junior Enlisted Men's Housing, $413,846 for Paradise Preserve and some
~ smaller amounts for Paradise Oaks, Richardson Lane, Forsyth Court and Cornell Lane. In
addition, utility impact fees and capital improvement charges accounted for the remaining
$407,648 of revenue in this category. These fees and charges must be used for utility system
'- capital improvements.
r
r
r
r
r
r
r
r
r
• Interest revenue increased in the business-type activities by $114,761. The increase is consistent
with the market interest rate inclines and higher cash balances as a result of unused project
monies in fund balance.
Operating Expenses and Program Revenues -Business Activities
Ss,ooo,ooo ; -- - - --
Se,ooo,ooo x'.865,61-8
57,000,000 36.82.9-.20 - - __ -- - - -
- '.:~
~w ;:
56,000,000 ~ ~~tv - - -- - -- -- - --
~~~~
~ . ~..
Ss,ooo,ooo -- --- --- -- --- _-- ---
~- ~~
Sa,ooo,ooo ~ ---- --- -- -
Ss,ooo,ooo ~ ~~~ ~ ` --- - - -- -_ - -- -
~ 2'' , ~ ~ - -- - - - - - - -
52,000,000 ~ ~,, - i1 ,285,579
51,000,000 ~~ ~d4+P k' 5937,108 51,132,193
--- -_
_- ~`Mia'} 5395,801
So .rk - i -
~,ooo,ooo
$8,000,000
~,ooo,ooo
$s,ooo,ooo
X5,000,000
~ooo,ooo
$3,000,000
$~,~,~
$1,000,000
$0
Utility Storm Water Sanitation
'®Expenses ^Operating Program Revenues
Revenue by Source -Business-type Activities
$1,820,549
- - --
$180,039
Charges for Operating Grants & Interest R~enue Capital Grarrts ~
Services Contributions Contributlons
Financial Analysis of the City's Fund~As noted earlier, the City of Atlantic Beach uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements.
9
~"
Governmental Funds---The focus of the Gty's governmental funds is to provide information on near-
term inflows, outflows, and balances of available 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 $6,521,932, a decrease of
$1,078,893 in comparison with the prior year. Approximately (72%) of this total amount, $4,705,045,
constitutes unreserved General Fund balance. Another $1,719,796 (26%) is unrestricted in Special
Revenue Funds. The remainder of the governmental fund balance, $97,091, is reserved to indicate that it
is not available for spending. It has already been committed to pay debt service, or 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 $4,705,045, which represented. 43% of total General Fund
expenditures and transfers out. The net result of various revenue and expense items resulted in a decrease
to the City's General Fund of $1,067,741 during the current fiscal year. Key factors in this change were
as foliows:
• Property taxes of $2,990,075 were received during the. year. This represented a $270,872 or
9.96% increase over the previous year. This increase is based on an increase in the taxable
~,, property value of approximately $92.4 million, of which $9.75 million of that increase is the
result of new construction, additions or remodeling. The operating property tax millage for the
fiscal year was 3.0394 mills, the same as last year. Property Tax proceeds account for
approximately 33.2% of the general fund revenues.
• Franchise and utility service taxes of $1,600,990 increased by $131,012 or 8.9% from prior
year. Approximately $82,000 of the increase was from the electric franchise fees due to
increasing fuel costs and a $33,000 increase in the communications service tax was realized.
• State Sales Tax of $1,384,515 increased by only $70,717 or 5.4% from the prior year receipts.
o„• The state revenue analysts anticipated this small increase, and the City budgeted accordingly.
• Building permits, application review fees, and construction inspection fees totaled $308,710
+ and increased by $14,129 or 4.8% from prior year receipts.
• Interfund Charges for services included in the General Fund revenues this year were
$1,194,535 and represent an allocation of costs associated with the business-type activities.
City Manager, Finance and Administration, Information Technology and Human Resources
are divisions of the General Fund Administration Department. The Public Works
Administration and Fleet Maintenance are divisions under the Public Works Department of the
General Fund.
• Interest earnings in the Governmental Funds increased by $88,867 or (109%). The increase in
interest revenue is reflected throughout the City's portfolio and the direct result of the increase
~°"" in the rate of return on the State Board Administration Investment Pooled Funds that the City
is primarily invested in.
~,,, • For the most part, the increase in expenses were minor except for personal service
expenditures. Specifically, the cost for personal services within the various departments across
the City increased significantly due to wage increases. Total salary expenditures in the
departments within the General Fund increased by $265,676 or 6.90% from the prior year.
Benefits were reduced by $107,849 or 7.06% due to lower health insurance premiums.
• Other increased expenses of the General Fund were legal fees for zoning issues and an
increase in contract services for Public Works and Parks and Recreation maintenance
contracts.
10
~""
!""' Non-major Governmental Funds consisting of special revenue funds, debt service funds, and capital
project funds have a combined fund balance of $1,795,897. Of this fund balance, $76,101 is reserved for
future debt service payments. Total revenues of $1,806,247 were $236,597 more than the previous year
~* due to higher collections of half cent sales tax and gas tax revenues. Total expenses of $1,449,204 consist
mostly of capital outlay of $1,157,718, which includes the city hall expansion, resulting in an excess of
revenues over expenses of $357,043. Transfers of $418,195 were made to other funds. The net decrease
~,,, in fund balance, as the result of the transfers during the current year, in non-major governmental funds
was $61,152.
w~ 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 Utility Fund at the end of the year amounted to $3,266,636. The total
"'~"~ increase in net assets was $926,632. Other factors concerning the financial. position of these funds have
already been addressed in the discussion of the City's business-type activities.
General Fund Budgetary Highlights
Over the course of the year, the City revised its General Fund budget only four times. The additional
appropriations were necessary to ensure that the actual charges would not exceed appropriations for the
,,,~ respective programs. The difference between the original expenditure budget and the final amended
budget was $325,709. The increase in appropriations is primarily the result of the following items. Other
small amounts were adjusted that account for the difference.
In March of 2005, the General Fund budget was amended to increase appropriations by $269,410.
This adjustment included $106,000 for legal expenses related to the Johnston Island zoning lawsuit.
An additional $100,000 was transferred to the Sewer Utility Fund for the septic tank to public sewer
~'"~` system conversion assistance program. Another $20,000 was added to the Information Technology
budget to fund a consultant and WEB page enhancements. Other amounts were added to fund beach
access parking, beach renourishment, increased electrical costs and town center maintenance
~"" increases.
In May of 2005, the General Fund budget was amended with a decrease in appropriations by a net of
~• $13,309. Revenues were increased by $76,984. The revenues represented a transfer from excess
unused funds in the Governmental Capital Project Fund and to create a budget for the proceeds
received from F.E.M.A. cost reimbursements. The expenses were increased by $63,675 for two
,~, items. The Planning Department was increased by $54,075 to fund a consultant hired to assist the
city with developing guidelines in an attempt to preserve community character. The Human
Resources budget was increased by $12,600 to pay a consultant to perform a pay and classification
~ study.
In July of 2005, the General Fund budget was amended with an increase of $25,800. The Legal
Division budget was increased by $22,000 to fund settlements and arbitrations related to personnel
~" issues and $3,800 was added to the City Commission's travel budget.
When funds are encumbered, but not spent, budgets for those funds automatically are added to the
subsequent year. In fiscal year 2005, $66,824 was added to the budget for items not spent in 2004.
"~'"' 11
""° Having made those adjustments, the actual revenues and expenditures resulted in positive variances. In
total, actual revenues exceeded budgeted revenues by $453,214. The primary reasons for this are as
follows:
• The state shared revenues of $1,877,649 exceeded budgeted estimates by a total of $224,061.
The budget estimates used by the city for state shared revenues is estimated by the state and is
~. typically conservative.
• Property tax revenues exceeded budgeted amounts by $60,264. The city conservatively
,,,, budgets 96% of the assessment, taking into consideration the discounts for early payment of up
to 4%. Total receipts were $2,990,074.
• Non-Property taxes were budgeted at $1,503,494. Actual receipts amounted to $1,600,989,
resulting in a $97,495 increase. Included in this amount are the communications service tax of
$586,369. This is $52,475 over conservative estimates. Also included in this amount are
funds from the Jacksonville Electric Authority (JEA) franchise agreement and the utility
~""" service tax on electricity. Combined, these two revenue sources were $44,235 over estimates
with total receipts of $980,235. Contributing to this increase in revenues was a rate increase
imposed by JEA.
• Building permit and plan check fees continue to come in at high levels. The total fees
increased $14,129 over last year's receipts of $308,709. Low interest rates coupled with
increasing equity due to rising property values is most likely the reason for the sustained
increased level of building permits from improvements, as well as new construction.
~„ • Revenues for court fines are down significantly due to a change in the allocation of fine
proceeds from Duval County. The City collected $125,392 in 2004, but only $81,880 in 2005,
a reduction of $43,512.
• Although equity in pooled cash and cash equivalents went down over the year by $1,306,072,
interest on deposits for the General Fund increased $68,128, due to rising interest rates. Last
year the General Fund earned $63,504 in interest, compared to $131,632 this year.
• Other General Fund revenues tracked close to budgeted amounts, as expected, revealing minor
variances.
The expenditures including transfers, of the general fund also resulted in a positive variance of
$555,097. Across the board, conservative budgeting left small amounts in every program at the end
of the year. This averages to a 4.9% variance across all programs. By expenditure category, the
following are noteworthy.
Salary and Benefit expenses were $55,730 under budget. The majority of this was in the City
Administration departments of City Clerk and Finance. Also, the Animal Control division
and Public Works departments were under budget due to turnover. Off-setting these savings
was a large overrun in Public Safety Patrol of $67,188.
• Operating Expenses were $286,240 under budget. This variance is mostly made up of
various small amounts citywide. A few of the larger items include the $65,815 in left over
~"' funds of the Streets and Roads Division of Public Works mostly from professional services,
and contract services for fly over maintenance and Town Center maintenance. The Planning
Department did not spend the funds dedicated to the community character consultants in the
~"' amount of $35,034 by year end. Those funds were carried forward to 2006. The City was
also under budget by $36,803 in training and $43,148 in supplies.
~'" 12
~ Capital items unspent represented a variance of $203,995. The majority of this was due to
Public Works projects, primarily sidewalks and pedestrian paths, that were not finished by
year end. Parks and Recreation also had not paid for a floating dock by year end, which
resulted in a small portion of this variance.
Although the City budgeted a decrease in fund balance of $2,076,109, the fund balance actually only
~!"" decreased by $1,067,741. This was due to the positive variances in revenues totaling $453,214 and
expenditures, transfers and other financing sources totaling $555,097. This resulted in a overall positive
variance of $1,008,368.
Cauital 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, 2005, .amounts to $45,032,710 (net of accumulated
depreciation). This investment in capital assets includes land, buildings, improvements other than
,,, buildings, and machinery and equipment. The City of Atlantic Beach's investment in capital assets for
the current fiscal year increased by 3.4% or $1,488,386.
CITY OF ATLANTIC BEACH'S CAPITAL ASSETS
(Net of Depreciation)
(In Thousands)
Land
°"~ Buildings and improvements other than buildings
Equipment
Construction in progress
Total
Governmental activities
Governmental
Activities
1,605 $
6,511
885
240
Business-
type
Activities Total
771 $ 2,376
33,945 40,456
432 1,317
644 884
$ 9,241 $ 35,792 $ 45,033
The balance of governmental assets at the end of the prior fiscal year was $ 8,323,000. Additions totaling
$1,367,000, net of items transferred out of construction in progress and placed into service and removal of
surplus or obsolete equipment, less the change in accumulated depreciation of $449,000, accounted for the
$918,000 net increase and final balance of $9,241,000 at fiscal year end 2005. Depreciation expense of
$533,000 was reduced by the accumulated depreciation associated with the removal of surplus or obsolete
equipment, resulting in the net change to accumulated depreciation of $449,000. The top five significant
items contributing to the $1,367,000 of costs added to capital assets used for governmental activities during
fiscal year 2005 are described below.
Descri tion Amount
Ci Hall ex ansion $ 452,000
Skateboard ark 196,000
Develo er contributed road im rovements 179,000
Multi- u ose athwa s 176,000
Ci -wide securi im rovements ates and locks 143,000
~"' 13
~„'
Business-tvpe activities
"" The balance of business-type assets at the end of the prior fiscal year was $35,221,000. Additions totaling
$2,580,000, net of items transferred out of construction in progress and placed into service and removal of
surplus or obsolete equipment, less the change in accumulated depreciation of $2,009,000, accounted for
the $571,000 net increase and final balance of $35,792,000 at fiscal year end 2005. Depreciation expense
of $2,029,000 was reduced by the accumulated depreciation associated with the removal of surplus or
obsolete equipment, resulting in the net change to accumulated depreciation of $2,009,000. The top five
~ significant items contributing to the $2,580,000 of costs added to capital assets used for business-type
activities during fiscal year 2005 are described below.
A
Descri tion Amount
Develo er contributed water and sewer infrastructure $ 1,413,000
Headwork im rovements to Wastewater Treatment Plant # 2 324,000
Water line im rovements to 10 Street and Beach Avenue 1$7,000
Draina a im rovements to Geor a and Dudley Streets 110,000
SCADA at lift stations 97,000
Additional information on the City of Atlantic Beach's capital assets can be found in Note 6 on pages 38 -
40 of this report.
~- Long-term debt-At the end of the 2005 fiscal year, the City of Atlantic Beach had total bonded debt
~' outstanding of $20,551,320. Of this amount, $1,194,166 comprises debt backed by the utility services
taxes. The remaining $19,357,154 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-
Governmental type
~"'" Activities Activities Total
Utility System Revenue Bonds, Series 2004 $ $ 17,529,187 $ 17,529,187
~* Utility System Revenue Bonds, Series 1996 1,827,967 1,827,967
SunTrust Revenue Refunding Bonds, Series 1999 535,419 658,747 1,194,166
Total $ 535,419 $ 20,015,901 $ 20,551,320
F
To take advantage of declining interest rates, the City issued $19,500,000 of Series 2004 Utilities System
Revenue Refunding Bonds to refund a portion of the City's outstanding Series 1996 Utilities System
Revenue Bonds. The refunding resulted in an accounting loss of $1,834,734 and an economic gain of
$1,020,807. Overall, the City's total, net debt outstanding, which represents the outstanding liabilities
less unamortized discounts and refunding losses, decreased by $591,574 or (2.8%) during the current
~„ fiscal year. The Utility System Revenue Refunding Bonds, Series 2004, and the Utility System Revenue
Bonds, Series 1996, both carry an insured "AAA" rating and an underlying rating of "Aaa" from Moody's
Investor Services.
14
~"
m•
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 40- 41 of this report.
Economic Factors and Next Year's Bud ets and Rates
• Taxable property values in the City of Atlantic Beach continue to grow. The 2005 taxable
value is $193.3 million more than the previous year bringing the total value to $1,215,336,902,
~,,, and represents an 18.9% increase. The City was able to adopt a balanced budget and reduce
the millage to from 3.0394 to 2.9974 mills.
The City's utility service jurisdiction grew only .07% in the number of accounts during the
current year. Total number of active accounts went from approximately 8,195 to 8,258.
Although the number of accounts grew over the year, the actual volume of water sold
decreased by 6.5%, resulting in the revenues expected due to the rate change. The City has
concluded that the reduction in volume was due to the conservation efforts of our customers.
• Per the St. Johns Water Management District's requirements, the City adopted water
conservation rates for residential customers late in the year. The rate structure put into place in
August 2004 has an inclining block structure that charges a premium for high consumption
and irrigation. The new rate structure also has generated the expected 5% increase in revenues
~,. for the water and sewer utility, we expect these rates to continue to encourage conservation.
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 Florida Department of Environmental Protection and the U.S. Environmental Protection
Agency will be issuing a Total Maximum Daily Load requirement for Nitrogen in effluent
discharges to the St. Johns River. This means the City of Atlantic Beach will likely be
required to upgrade both wastewater treatment plants, which currently provide Secondary
Treatment, to provide Advanced Waste Treatment. Rough cost estimates for the upgrades are
$6 to 7 million. This mandate will most likely lead to additional debt and possible future rate
increases. At this time, the city is currently trying to mitigate the issues and is hoping grant
funds will become available for the project.
• The City's rate of return on investments in pooled cash rose to 3.20% for the year, up from
only 1.33% in the previous year. This represents a 141% increase in rate of return from the
State Board Administration.
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
sources represent approximately 29.3% of the governmental revenues and have been steady
overall for the last few years, however, this past year these revenues were significantly over
budget by $363,496. It appears that this trend is continuing into 2006. The sum total of these
revenue sources grew by 10.6% from the previous year.
~"" 15
• Housing starts of single-family homes and duplexes combined for this fiscal year were 61,
compared to the previous year of 41. This represents a increase of 20 units or 49%.
* All of these factors were considered in preparing the City of Atlantic Beach's budget for the 2005!2006
fiscal year, Some budgetary highlights for next year are as follows:
,•. During the current fiscal year, unreserved fund balance in the General Fund decreased to
$4,655,045 plus an additional $20,920 reserved for inventory, totaling $4,676,035. This drastic
reduction was the result of a $1,758,384 transfer to the storm water utclity for purposes of
~ constructing a storm water retention pond and some small local drainage projects. For the
fiscal yeaz 2006, fund balance is budgeted to increase $103,239.
• The properly tax millage rate for the 2005/2006 budget was adopted at 2.9974.
• Water and sewer service rates were increased 3%. This increase is reflected in the 2005/2006
budget and is needed to fund capital improvements and a master plan for the utility system
F.
• The Sanitation revenues budgeted include a 10% rate increase effective in March. A major
contributing factor to this was the addition of a fuel cost adjustment to the contracted cost of
providing the service.
Requests for Information
f
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 Ciiy'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 Hans Nelson Van Liere, CPA
City ager Finance Director
~,,, 16
!"'"
a:
BASIC FINANCIAL STATEMENTS
These basic financial statements contain Government-wide Financial Statements, Fund Financial
Statements and Notes to Financial Statements.
s~+
~*
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2005
Assets
Equity in Pooled Cash and Cash Equivalents
Receivables, Net
Due from Other Governments
Inventories
Special Assessments -Current
Note Receivable -Current
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents
Capital Assets:
Land
Buildings
Improvements Other Than Buildings
Equipment
Accumulated Depreciation
Construction in Progress
Prepaid Items
Special Assessments -Noncurrent
Notes Receivable -Noncurrent
Other Noncurrent Assets
Unamortized Loan Costs
Total Assets
Liabilities
Accounts Payable and Other Current Liabilities
Due to Other Governments
Deferred Revenue
Deposits
Compensated Absences -Current
Accrued Interest Payable
Payable from Restricted Assets:
Current Maturities of Bonds Payable
Accrued Interest Payable
Customer Deposits
Noncurrent Liabilities:
Due Within One Year
Due in More Than One Year
Compensated Absences
Total Liabilities
Net Assets
~" Invested in Capital Assets, Net of Related Debt
Restricted for:
Renewal and Replacement
Debt Service
Road and Street Expenditures
Tourism and Recreation
Tree Replacement
„~, Public Safety
Police Training
Capital Projects
Unrestricted
'~"' Total Net Assets
Governmental Business-Type
Activities Activities Total
$ 5,875,099
74,511
984,654
i 3,470
3,313
760
$ 5,605,272
581,284
0
23,979
35,150
29,757
11,480,371
655,795
984,654
37,449
38,463
30,517
2,214,247
1,605,336
4,121,512
4,010,630
2,582,738
(3,320,008)
240,437
7,520
0
7,600
0
0
16,207,572
771,345
4,332,715
48,384,050
1,417,254
(19,757,684)
644,385
0
121,013
208,744
18,800
279,189
44,909,500
364,660
0
78,585
1,750
300,000
7,516
0
0
0
50,066
485,353
188,085
1,476,015
8,705,226
0
76,101
433,965
162,376
30,978
16,480
8,422
1,067,575
4,230.434
$ 14,731,557
469,923
5,568
113,394
0
70,000
0
767,150
451,849
535,365
0
19,248,749
82,825
21,744,823
15,776,165
500,000
0
410,174
0
0
0
0
0
6,478.338
$ 23,164,677
2,214,247
2,376,681
8,454,227
52,394,680
3,999,992
(23,077,692)
884,822
7,520
121,013
216,344
18,800
279,189
61,117,072
834,583
5,568
191,979
1,750
370,000
7,516
767,150
451,849
535,365
50,066
19,734,102
270,910
23,220,838
24,481,391
500,000
76,101
844,139
162,376
30,978
16,480
8,422
1,067,575
10.708.772
$ 37,896,234
See accompanying notes.
17
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'1"" CITY OF ATLANTIC BEACH, FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2005
Nonmajor Total
Governmental Governmental
General Funds Funds
~"'"
Assets
Equity in Pooled Cash and Cash Equivalents $ 4,256,110 $ 1,618,989 $ 5,875,099
Receivables, Net 74,511 0 74,511
Due from Other Funds 69,776 0 69,776
Due from Other Governments 686,749 297,905 984,654
~,,, Inventories 13,470 0 13,470
Special Assessment Receivable -Current 3,313 0 3,313
Notes Receivable -Current 760 0 760
Prepaid Items 7,520 0 7
520
Notes Receivable -Noncurrent 7,600 0 ,
7,600
Total Assets 5,119,809 1,916,894 7,036,703
Liabilities and Fund Balances
t~* Liabilities
Accounts Payable and Accrued Liabilities
Due to Other Funds
~,. Deposits
Deferred Revenue
Total Liabilities
Fund Balances
Reserved for:
Debt Service
Inventories
Prepaids
Unreserved, Reported in:
General Fund
Special Revenue Funds
Total Fund Balances
313,439 51,222 364,661
0 69,775 69,775
1,750 0 1,750
78,585 0 78,585
393,774 120,997 514,771
0 76,101 76,101
13,470 0 13,470
7,520 0 7,520
4,705,045 0 4,705,045
0 1,719,796 1,719,796
4,726,035 1,795,897 6,521,932
Total Liabilities and Fund Balances
$ 5,119,809 $ 1,916,894 $ 7,036,703
See accompanying notes.
19
CITY OF ATLANTIC BEACH, FLORIDA '"
RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2005
Total Fund Balances of Governmental Funds $ 6,521,932
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 $ 12,560,653
Less: Accumulated Depreciation' (3,320,008)
9,240,645
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
i
end consist of:
Revenue Bonds Payable 535,419 *~
Compensated Absences 488,085 5
Accrued Interest Payable 7,516
(1,031,020) ,,,~
Total Net Assets of Governmental Activities $ 14,731,557
fr
S
'°$
See accompanying notes.
20
4""
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Nonmajor Total
~. Governmental Governmental
General Funds Funds
Revenues
~°" Taxes $ 4,591,064 $ 1,321,972 $ 5,913,036
Licenses and Permits 410,434 0 410,434
State-shared Revenues 1,877,649 0 1,877,649
Other Intergovernmental Revenues 610,752 366,505 977
257
Charges for Services 17,889 0 ,
17,889
Fines and Forfeitures 101,664 0 101,664
~,,,, Interest Income 131,632 38,633 170,265
Miscellaneous Revenues 125,502 79,137 204,639
Interfund Charges 1,194,535 0 1,194,535
~ Total Revenues 9,061,121 1,806,247 10,867,368
Expenditures
Current:
!~" General Government 2,253,469 68,596 2
322
065
~ Public Safety 4,184,478 150,460 ,
,
4,334,938
Transportation 1,257,933 0 1,257,933
!~ Parks and Recreation 918,228 0 918,228
Debt Service:
Principal 0 48,950 48,950
~„ Interest and Other 0 23,480 23,480
Capital Outlay 239,816 1,157,718 1,397,534
{Total Expenditures) (8,853,924) (1,449,204) (10,303,128)
1
Excess of Revenues Over
Expenditures 207,197 357,043 564,240
~,
Other Financing Sources (Uses)
Transfers in 708,330 97,989 806,319
'"' Transfers out
S
l
f G
l (1,941,323) (516,184) (2,457,507)
a
e o
enera
Fixed Assets 8,055 0 8,055
Total Other Financing {Uses) (1,224,938) (418,195) (1,643,133)
!~"'~ Net Change in Fund Balances (1,017,741) (61,152) (1,078,893)
Fund Balances, Beginning of Year 5,743,776 1,857,049 7,600,825
~+.
Fund Balances, End of Year $ 4,726,035 $ 1,795,897 $ b,521,932
z
See accompanying notes.
~°" 21
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Net Change in Fund Balances -Total Governmental Funds
Amounts Reported for Governmental Activities in the Statement of
Activities are Different Because:
Governmental 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
Less: Current Year Depreciation
$ (1,078,893)
$ 1,397,534
(533,063)
864,471
Certain nonexchange revenues reported in the statement of activities are
not considered current fmancial resources and, therefore, are not
reported as revenue in the governmental funds.
Certain nonexchange revenues reported in the governmental funds are not
reported in the statement of activities due to the revenues being earned
in prior years.
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 fmancial resources and, therefore, are not reported
as expenditures in governmental funds.
Debt Interest Expense
Compensated Absences
Transfer of Capital Assets
183,959
(49,980)
48,950
665
(50,769)
(130,876)
(180,980)
Change in Net Assets -Governmental Activities
$ (212,473)
s
See accompanying notes.
22
~'" CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
~ ~ SEPTEMBER 30, 2005
Business-Type Activities -Enterprise Funds
_ Utility Stormwater Sanitation Total
~^' Current Assets:
Equity in Pooled Cash and Cash Equivalents $ 2,060,993 $ 2,967,139 $ 577,140 $ 5,605
272
Accounts Receivable, Net 483,539 21,269 76,476 ,
581
284
~,,, Inventories 23,979 0 0 ,
23
979
Due from Other Governments 0 0 0 ,
0
Special Assessments -Current 35,150 0 0 35,150
' Note Receivable -Current 29,757 0 0 29
757
~" Restricted Assets: ,
Equity in Pooled Cash and Cash Equivalents 2,058,040 156,207 0 2,214
247
Capital Assets: ,
Land 749,499 21,846 0 771,345
Buildings 4,332,715 0 0 4,332,715
Improvements Other Than Buildings 43,367,474 5,016,576 0 48,384,050
"" Equipment 1,194,188 190,630 24,958 1,409,776
! Accumulated Depreciation (19,047,210) (687,117
(15,879)
(19,750,206)
Construction in Progress 546,819 97,566 0 644
385
Special Assessments -Noncurrent 121,013 0 0 ,
121
013
,~, Note Receivable -Noncurrent 208,744 0 0 ,
208,744
Other Noncurrent Assets 18,800 0 0 18,800
Unamortized Loan Costs 240,855 38,334 0 279,189
a. Total Assets .36,424,355 7,822,450 662,695 44,909,500
Liabilities
Current Liabilities Payable from Clzrrent Assets:
Accounts Payable and Accrued Liabilities 365,439 8,854 95,630 469,923
Due to Other Governments 5,568 0 0 5,568
Deferred Revenue 60,837 11,473 41,084 113,394
~ Compensated Absences -Current 70,000 0 0 70,000
Current Liabilities Payable from Restricted Assets:
Current Maturities of Bonds Payable 668,591 98,559 0 767,150
~' Accrued Interest Payable 394,201 57,648 0 451,849
Customer Deposits 535 365 0 0 535,365
Noncurrent Liabilities:
Due in More 'Than One Year 16,b41,177 2,607,572 0 19,248,749
!~""" Compensated Absences -Noncurrent 82 825 0 0 82,825
Total Liabilities 18,824,003 2,784,106 136,714 21,744,823
Net Assets
s Invested in Capital Assets, Net of Related Debt 13,833,716 1,933,370 9,079 15,776,165
Restricted for Renewal and Replacement 500,000 0 0 500,000
~ Restricted for Road and Street Expenditures 0 410,174 0 410
174
' Unrestricted 3,266,636 2,694,800 516,902 ,
6,478,338
Total Net Assets $ 17,600,352 $ 5,038,344 $ 525,981 $ 23,164,677
See accompanying notes.
~"" 23
'!
3
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Operating Revenues
Charges for Services:
Customer Charges
Miscellaneous Revenues
Total Operating Revenues
Operating Expenses
Personal Services
Contractual Services
Supplies
Repairs and Maintenance
Heat, Light and Power
Depreciation
Intergovernmental Charges
Other Expenses
(Total Operating Expenses)
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Connection Charges
Intergovernmental Revenue
Interest Income
Interest Expense
Amortization of Loan Costs
Totat Nonoperating (Expenses) Revenues
(Loss) Income Before Contributions
and Transfers
Capital Contributions and Grants and Transfers
Capital Contributions and Grants
Transfers in
Transfers out
Total Capital Contributions and Grants and
Transfers
Change in Net Assets
Net Assets, Beginning of Year
Net Assets, End of Year
Business-Type Activities -Enterprise Funds
Utility Stormwater Sanitation Totals
$ 5,983,590 $ 376,351 $ 1,280,318 $ 7,640,259
22,567 19,433 0 42,000
6,006,157 395,784 1,280,318 7,682,259
1,421,413 214,383 4,433 1,640,229
782,773 132,708 991,148 1,906,629
280,252 39,189 3,998 323,439
134,418 24,621 0 159,039
501,396 0 0 501,396
1,801,682 225,001 1,760 2,028,443
820, 246 148,794 128,712 1,097,752
253,734 21,927 2,144 277,805
(5,995,914) (806,623) (1,132,195) (7,934,732)
10,243 (410,839) 148,123 (252,473)
37,570 0 0 37,570
1,342 17 5,261 6,620
109,549 55,971 14,519 180,039
(819,620) (128,364) 0 (947,984)
(13,672) (2,121) 0 (15,793)
(684,831) (74,497) 19,780 (739,548)
(674,588) (485,336) 167,903 (992,021)
1,820,549 0 0 1,820,549
230,876 2,226,493 0 2,457,369
(450,205) 0 (225,100) (675,305)
1,601,220 2,226,493 (225,100) 3,602,613
926,632 1,741,157 (57,197) 2,610,592
16,673,720 3,297,187 583,178 20,554,085
$ 17,600,352 $ 5,038,344 $ 525,981 $ 23,164,677
See accompanying notes.
24 '"
~"'' CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
P
Cash Flows from Operating Activities
~'""' Cash Received from Customers
Cash Paid to Suppliers
Cash Paid to Employees
~* Cash Paid for Interfund Services
Net Cash Provided by (Used in) Operating
Activities
Cash Flows from Noncapital Financing
Activities
Connection Charges
Transfers in
Transfers out
Net Cash Provided by (Used in) Noncapital
Financing Activities
Business-Type Activities -Enterprise Funds
Ut~l~ty Stormwater Sanitation Totals
$ 5,944,967 $ 389,912 $ 1,362,652 $ 7,697,531
(2,030,976) (250,862) (1,140,317) (3,422,155)
(1,401,125) (214,383) (4,433) (1,619,941)
(820,246) (148,794) (128,712) (1,097,752)
1,692,620 (224,127) 89,190 1,557,683
37,570 0
230,876 2,226,493
(450,205) 0
(181,759) 2,226,493 (225,100)
0 37,570
0 2,457,369
(225,100) (675,305)
1,819,634
Capital and Related Financing Activities
~'"' Intergovernmental Revenues 39,611 570 5,261 45,442
Collections on Note Receivable (54,315) 0 0 (54,315)
Collections on Special Assessments 40,706 0 0 40,706
Capital Contributions 371,110 0 0 371,110
Fixed Asset Additions (999,740) (56,857) (3,500) (1,060,097)
Principal Payments on Bonds Payable (438,702) (71,298) 0 (Si0,000)
i,,,, Interest Paid (987,616) (154,734) 0 (1,142,350)
Net Cash Provided by (Used in) Capital and
Related Financing Activities (2,028,946) (282,319) 1,761 (2,309,504)
Cash Flows from Investing Activities
Interest Received 109,549 55,971 14,519 180,039
Net Increase (Decrease) in Cash and Cash
Equivalents (408,536) 1,776,018 (119,630) 1,247,852
Cash and Cash Equivalents, Beginning of Year 4,527,569 1,347,328 696,770 6,571,667
~""
Cash and Cash Equivalents, End of Year $
4,119,033 $
3,123,346 $
577,140 $
7,819,519
!~'
See accompanying notes.
f'"` 25
'~
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
(Concluded)
Reconciliation of Operating Income to Net
Cash Provided by (Used in) Operatin¢
Activities
Operating Income (Loss)
Adjustments to Reconcile Operating
Income to Net Cash Provided by
(Used in) Operating Activities:
Depreciation
Bad Debt Expense
Change in Assets and Liabilities:
Accounts Receivable
Inventory
Accounts Payable and Accrued
Liabilities
Customer Deposits
Deferred Revenue
Net Cash Provided by (Used in) Operating
Activities
Reconciliation of Cash and Cash Eauivalents
to Balance Sheet
Equity in Pooled Cash and Cash
Equivalents in Current Assets
Restricted Equity in Pooled Cash and
Cash Equivalents
Total Cash and Cash Equivalents
Noncash Activi
Business-Type Activities -Enterprise Funds
Utility Stormwater Sanitation Totals
$ 10,243 $ (410,839) $ 148,123 $ (252,473)
1,801,682 225,001 1,760 2,028,443
19,639 287 1,630 21,556
(89,591) (5,871) 83,828 (11,634)
(6,917) 0 0 (6,917)
(71,486) (32,685) (146,287) (250,458)
29,506 0 0 29,506
(456) (20) 136 (340)
$ 1,692,620 $ (224,127) $ 89,190 $ 1,557,683
$ 2,060,993 $ 2,967,139 $
2,058,040 156,207 _
$ 4,119,033 $ 3,123,346 $
577,140 $ 7,819,519
Noncash Transfers $ 130,876 $ 0 $ 0 $ 130,876
Proceeds from Issuance of Refunding Bonds 16,773,900 2,726,100 0 19,500,000
Defeasance of Bonds (16,556,333) (2,690,741) 0 (19,247,074)
Issuance Costs of Refunding Bonds (217,567) (35,359) 0 (252,926)
'~
See accompanying notes.
26
577,140 $ 5,605,272
0 2,214,247
~'"
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30, 2005
~"
Assets
Cash and Cash Equivalents with Trustee
Investments with Trustee
Total Assets
• Liabilities
Accounts Payable and Accrued Liabilities
Total Liabilities
Net Assets
~ Held in Trust for Pension Benefits
Total Net Assets
Pension
Trust
Funds
$ 33,177
11,546,415
11,579,592
23,698
23,698
11,555,894
$ 11.555,894
See accompanying notes.
27
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Additions
Contributions:
Employer
Employees
State of Fiorida
Total Contributions
Net Increase in Fair Value of Investments
Interest and Dividends
Total Additions
Deductions
Refunds of Contributions
Benefits
Investment Expenses
Total Deductions
Net Increase
Net Assets, Beginning of Year
Net Assets, End of Year
See accompanying notes.
28
Pension
Trust
Funds
$ 673,448
105,721
108,818
887,987
923,131
95,425
1,906,543
9,532
597,490
96,967
703,989
1,202,554
10,353,340
$ 11,555,894
,~
~"'
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
Note 1 - Summary of Significant Accounting Policies
The accounting policies of the City of Atlantic Beach, Florida, (the City), conform to
accounting principles generally accepted in the United States of America as applicable to
governments. The following is a summary of the more significant policies used in the
preparation of these financial statements.
Reporting Entity
The City was incorporated in 1957, under a charter in accordance with the laws of the State of
Florida, Florida Statutes Section 57-1126. The City operates under a form of government
which comprises an elected City Commission (four Commissioners and a Mayor-
Commissioner) and provides, under the administration of an appointed City Manager, the
following services: public safety, public works (streets and infrastructure), recreation,
sanitation, stormwater, planning, zoning, water and sewer, and general government services.
As outlined in Governmental Accounting Standards Board (GASB) Statement No. 14, The
Reporting Entity, and GASB Statement No. 39, Determining Whether Certain Organizations
are Component Units an Amendment to GASB Statement 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.
Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement
of activities) report information on all of the nonfiduciary activities of the City. For the most
part, the effect of interfund activity has been removed from these statements. Governmental
~ activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or activity. Indirect costs are included in the program
~" expense reported for individual functions and activities. Program revenues include: (1)
charges to customers or applicants who purchase, use, or directly benefit from goods, services,
or privileges provided by a given function or activity, and (2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or activity.
: Taxes and other items not properly included among program revenues are reported instead as
general revenues.
'"` 29
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 "~
(Continued)
Note 1- Summary of Significant Accounting Policies (Continued)
Government-wide and Fund Financial Statements (Concluded)
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.
Measurement Focus,. Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, 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 all 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. ~
Fund Financial Statements
Governmental fund financial statements are reported using the 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 sixty 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.
30
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
~,. Note 1- Summary of Significant Accounting Policies (Continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
(Concluded)
Fund Financial Statements (Concluded)
The City reports the following major governmental fund:
^ The General Fund is the City's primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in another
fund.
The City reports the following major proprietary funds:
^ The Utility Fund accounts for the activities of the City's water and sewer distribution
systems.
±!"" ^ The Sanitation Fund accounts for the activities of the City's sanitation system.
^ The Stormwater Fund accounts for the activities of the City's stormwater system
.
Additionally, the City reports the following fund types:
^ Special Revenue Funds-The special revenue funds are used to account for the proceeds
of specific revenue sources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
r~ ^ Debt Service Funds-The debt service fund is used to account for the accumulation of
resources for, and the payment of, long-term general obligation debt principal, interest and
related costs other than obligations payable from the operations of the proprietary funds.
^ Capital Projects Funds-The capital projects funds are used to account for the financial
resources to be used for the acquisition or construction of 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
i qualified Police Officers and General Employees.
~ Proprietary Funds
Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government-wide and proprietary fund financial
statements to the extent that those standards do not conflict with or contradict guidance of 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. The City has elected not to follow subsequent private-sector
~'" guidance.
'"" 31
"~
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 1- Summary of Si~nilicant Accounting Policies (Continued)
Proprietary Funds (Concluded)
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.
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, 2005, were $442,019.
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.
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.
32
!!*
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 1 - Summary of Significant Accounting Policies (Continued)
Receivables
~.. Receivables are recorded at their net realizable value. The allowance for uncollectible
accounts and assessments at September 30, 2005, in the enterprise funds is $57,847.
~ Interfund Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding
at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current
portion of interfund loans) or "advances to/from other funds" (i.e., the 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
are reported in the government-wide financial statements as "internal balances."
Inventories
Inventories consisting principally of expendable materials, supplies and fuel are determined by
physical count at the City's year end on an annual basis and are valued at the lower of cost
(first-in, first-out) or market. On the balance sheet -governmental funds, the inventory
balance reported is offset by a fund balance reserve which indicates that it does not constitute
"available spendable resources" even though it is a component of net current assets. The cost
of governmental fund-type inventories is recorded as an expenditure when consumed.
Restricted Assets
Certain enterprise fund assets are required to be segregated from other current assets due to
various bond indenture agreements and City ordinances. These assets are legally restricted for
specific purposes, such as debt service, new construction, and renewals and replacements.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
drainage improvements, sidewalks, and similar items), are reported in the applicable
governmental or business-type activities columns in the government-wide financial
statements. Property, plant, and equipment with initial, individual costs that equal or exceed
$1,000 and estimated useful lives of over one year are recorded as capital assets. Capital
assets are recorded at historical cost or estimated historical cost if purchased or constructed.
Donated capital assets are recorded at estimated fair market value at the date of donation.
The City has implemented the provision of 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 draina a are resented currentl and ros ectivel After a com fete invento
g P Y P P Y• p ry, 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.
"~ 33
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 1 - Summary of Significant Accounting Policies (Continued)
Capital Assets (Concluded)
Major outlays for capital assets and improvements are capitalized as projects are 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.
Property, 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
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.
Revenue Recognition
Utility 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.
r
34
s
3'
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
~"° SEPTEMBER 30, 2005
(Continued)
Note 1 - Summary of Significant Accounting Policies (Concluded)
Property Taxes
The assessment of all properties and the collection of all property taxes are made through the
Property Appraiser and Tax Collector of the City of Jacksonville, Florida. General property
taxes are recorded as received, in cash, which approximates taxes levied less discounts for the
current fiscal year.
Taxes are levied on November 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.
Interfund Transactions
During the course of normal operations, the City has various transactions between funds to
construct assets and comply with local ordinances and other legal restrictions. These
,~.. transactions are reflected as transfers. In addition, certain transfers have been made between
systems and accounts of the utility enterprise fund as required by bond covenants.
Note 2 - Cash and Investments
The City maintains a cash and investment pool that is designed for use by all funds, except for
~" those monies which are periodically transferred to the pension custodian. In addition,
investments are separately held and individually accounted for by several of the City's funds
where .contractual arrangements and bond covenants provide for and require such
~"` arrangements. The deposits and investments of the pension trust funds which have been
transferred to the pension custodian are held separately from those of other City funds and are
required to be administered by an investment manager.
At September 30, 2005, the carrying amount of cash on hand and on deposit with banks,
including interest-bearing deposits was $1,283,089, and the related bank balance was
$1,703,034. Monies which are 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 Public 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.
~'" 35
s
Note 2 -
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Cash and Investments (Continued)
The City's investment practices are also governed by Florida 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, 2005, are categorized in accordance with GASB
Statement No. 3 to indicate the level of risk assumed by the City. The pension investments
held by SunTrust Trust Department and Merrill Lynch are considered to be category one credit
risk investments, which means that they are fully insured ($100,000 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 Pool) that is administered by the
State Board of Administration of Florida (SBA). This pool is a " 2a-7 like" pool which has the
characteristics of a money market fund. Therefore, the fair value of the City's position in the
Pool is the same as the value of the Pool shares. Funds that have not been transferred to the
state investment pool are 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. There were no violations of the legal or contractual provisions for deposits and
investments.
The total cash and cash equivalents and investment balances of the City at September 30,
2005, are comprised of the following items:
Cash and Cash Equivalents
Petty Cash on Hand $ 2,550
Cash in Banks (Including Repurchase Agreement) 1,283,089
State Board of Administration Investment Pool 12,442,156
Total Cash and Cash Equivalents 13.727,795
Less Cash and Cash Equivalents, Restricted,
Including $33,177 of Cash and Cash Equivalents
with Trustee X2,247,424)
Total Cash and Cash Equivalents, Unrestricted
Pension Trust Investments
SunTrust Retirement Reserve Fund $ 171,522
SunTrust Small Cap Equity Fund 432,072
SunTrust Mid Cap Bond Fund 418,724
SunTrust High-grade Intermediate Bond Fund 401,737
SunTrust High-grade Bond Fund 3,726,393
Marketable Equity Securities 4,783,642
Merrill Lynch American Euro Pacific Growth 1,612,255
Merrill Lynch Ready Assets 70
Total Pension Trust Investment $ 11.546.415
36
!~
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
~. Note 2 - Cash and Investments (Concluded)
Restricted cash and investments at September 30, 2005, in the enterprise funds follows:
Customer Renewal and
Deposits Replacement Debt Service Total
Enterprise Fund
Utility Fund $ _535 X65 $ 500.000 1.0 ~ ~~ 2058_
~ Stormwater Fund
~ $ 0 $ 0 156.207 $ 156207
,,,,, Credit Risk -The City's investment in the State Board of Administration Local Government
Investment Pool is not rated by a nationally recognized statistical rating agency as of the date of
these financial statements.
It is the City's Police Officers' Retirement System and General Employees' Retirement System
Pension Trust Funds policy to limit its investment in corporate debt issues to those that meet or
exceed a credit rating of "A" by Moody's or Standard & Poor's rating services, and no more
~""' than 10% (at cost) of the fixed income portfolio total value can be invested in the securities of
any single corporate issuer. At September 30, 2005, the City's retirement systems' fixed income
security. portfolio consisted of only mutual funds and other pooled investments, and therefore,
were not rated by a nationally recognized rating agency.
Note 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 2011 plus interest at 5.35% (reduced from 8% in 1999).
During 1993, the City imposed other special assessments on residents in certain areas of the
City known as "Ocean Grove Unit 2," "Dewees," and "Seminole" (shown below as Other
Assessments) to recover the cost of water and wastewater improvements constructed by the
~" City in those areas. Assessments are payable in equal monthly installments through 2007 plus
interest at 5.91%.
~"" During 1998, the City imposed a special assessment on residents in a .certain area of the City
known as "Beach Avenue" to recover the costs of sewer improvements constructed by the City
in that area. Assessments are payable in equal monthly installments through 2010 plus interest
~ at 6.00%.
Following is a summary of the outstanding balances at September 30, 2005.
~"" 37
""~
F
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
{Continued)
Note 3 - Special Assessments (Concluded)
Special Assessment Receivable,
September 30, 2005
Less Current Portion
Total Special Assessment Receivable -
Noncurrent
Note 4 - Receivables
Beach
Section H Avenue Other
Assessment Assessments Assessments Total
$ i 13,586 $ 14,740 $ 31,(50 $ 159,476
(30,000) (3,000) (5.463) (38,463)
Receivables, net of the allowance for doubtful accounts at September 30, 2005, consists of the
following:
Less
Fund
General
Utility
Stormwater
Sanitation
Total
Total Allowance Accounts
Accounts for Doubtful Receivable
Receivable Accounts Net
$ 89,117 $ (14,606) $ 74,511
531,855 (48,316) 483,539
23,104. (1,835) 21,269
84,172 (7,696) 76.476
$ 728,248 (72.453) $ 655,795
Included in accounts receivable are $91,609 of water and sewer revenues earned but not billed
as of September 30, 2005.
Note 5 - Notes Receivable
It is the City's policy to allow its water and sewer customers to pay connection fees over an
extended period.
Following is a summary of the outstanding balance at September 30, 2005:
Note Receivable, September 30, 2005 $ 246,861
Less Current Portion (30,517)
Total Note Receivable -Noncurrent $ 216,344
Note 6 - Capital Assets
Capital asset activity for the fiscal year ended September 30, 2005, is as follows:
Beginning Ending
Governmental Activities Balance Increases Decreases Balance
Capital Assets Not Being Depreciated:
Land $ 1,604,311 $ 1,025 $ 0 $ 1,605,336
Conshuction in Progress 336.324 1.129,781 1.225,668 240.437
Total Capital Assets Not Being Depreciated 1,940.635 1.130,806 1.225,668 1.845.773
38
~*
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 6 - Capital Assets (Continued)
Beginning Ending
~, Governmental Activities (Concluded) Balance Increases Decreases Balance
Capital Assets Being Depreciated:
Buildings $ 3,605,833 $ 515,679 $ 0 $ 4,121,512
Improvements Other Than Buildmgs 3,175,690 834,940 0 4,0(0,630
Machinery and Equipment 2.471.454 266.967 155.683 2.582.738
Total Capital Assets Being Depreciated __ 9.252,977 1.617.586 155.683 10.714.880
Less Accumulated Depreciation for:
r"' Buildings 861,081 90,210 0 951,291
Improvements Other Than Buildings 503,915 166,481 0 670,396
Machinery and Equipment 1505541 _ 276371 83591 1,698321
~ Total Accumulated Depreciation 2.870537 533,062 83591 3320,008
Total Capital Assets Being Depreciated,
Net 6,382,440 1.084524 72,092 7394.872
Governmental Activities Capital
Assets, Net $ g ~ ~ ~~ .t.tn $ 1
,22 760
.P~_ 9 ~ 45
Business-type Activities
Capital Assets Not Being Depreciated:
'-~ Land $ 749,499 $ 21,846 $ 0 $ 771,345
Construction in Progress _ 1,538598 982,629 1.876.842 644385
Total Capital Assets Not Being
!A
Depreciated
2.288.097
1,004,475
1.876.842
1.415.730
Capital Assets Being Depreciated:
Buildings 4,332,715 0 0 4,332,715
Improvements Other Than Buildings 45,045,036 3,339,014 0 48,384,050
Machinery and Equipment 1.296,905 157.439 44568 1.409.776
Total Capital Assets Being Depreciated 50.674.656 3.496,453 44568 54,126.541
Less Accumulated Depreciation for:
Buildings 3,093,031 148,141 0 3,241,172
Improvements Other Than Buildings 13,761,989 1,769,055 0 15,531,044
Machinery and Equipment _ 886.484 111.247 19.741 977.990
rrw Total Accumulated Depreciation 17,741,504 2.028,443 19.741 19,750.206
Total Capital Assets Being Depreciated,
Net _ 32.933.152 1.468.010 24,827 34376335
Business-type Activities Capital Assets,
~' Net $ 35 ~2~ X47 aR5 $__ 1,901,669 $ 35 797 (1(,S
Depreciation expense was charged to functions/programs as follows:
Governmental Activities
General Governmental $ 98,329
Public Safety 189,795
Transportation 124,139
Parks and Recreation 120,800
Total Depreciation Ezpense -Governmental Activities $ 533 063
39
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 6 -
Note 7 -
Capital Assets (Concluded)
Business-type Activities
Utility $ 1,801,683
Stormwater 225,001
Sanitation 1.760
Total Depreciation Expense -Business-type Activities $ 2.028.444
Lon -term Debt
Revenue bonds payable are comprised of the following:
Utilities System Revenue Refunding Bonds, Series 2004, Payable
in Annual Installments of Principal and Semiannual Installments
of Interest Through October 1, 2025, Bearing Coupon Rates
of 2.00% to 4.50%, 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 $ 19,500,000
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 1,860,000
SunTrust Revenue Refunding Bonds, Series 1999, Payable in
Annual Installments of Principal and Semiannual Installments
of Interest at a Rate of 4.20%. The Note is Secured by the
City's Utility Service Taxes 1,204,428
Total Revenue Bonds Payable 22,564,428
Less Unamortized Discount (237,972)
Less Unamortized Refunding Loss (1,775,136)
Total Long-term Debt, Net 20.551 320
The annual requirements to amortize all revenue bonds payable outstanding at September 30,
2005, are as follows:
Year Ending
September 30,
2006
2007
2008
2009
2010
2011 - 2015
2016 - 2020
2021 - 2025
2026 - 2028
Total
Governmental Activities Long-term Debt
Principal Interest Total
$ 50,066 $ 21,439 $ 71,505
53,213 19,270 72,483
53,930 17,046 70,976
56,686 14,673 71,359
59,305 12,262 71,567
262,219 22,604 284,823
0 0 0
0 0 0
0 0 0
$ 535,419 $ 107,294 $ 642,713
Business-Type Activities Long-term Debt
Principal Interest Total
$ 767,557 $ 837,036 $ 1,604,593
796,490 804,509 1,600,999
832,386 777,882 1,610,268
850,829 756,80( 1,607,630
874,102 732,854 1,606,956
4,727,645 3,207,055 7,934,700
5,270,000 2,276,716 7,546,716
6,445,000 1,062,022 7,507,022
1,465,000 33,288 1,498,288
$ 22,029,009 $10,488,163 $ 32,517,172
"~
40
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
t"*' Note 7 - Long-term Debt (Concluded)
Interest and amortization incun•ed during the year ended September 30, 2005, was $23,480 in
~. the debt service fund and $947,984 in the enterprise funds. Of the amount incurred in the
enterprise funds, $0 was capitalized.
~ The City is also required to maintain certain debt service coverage ratios in accordance with
bond resolutions. As of September 30, 2005, and during the year then ended, the City was in
compliance with those ratios.
The following is a summary of the changes in long-term debt of the City for the year ended
September 30, 2005:
Balance Balance Due
October 1, September 30, Within
2004 Additions Reductions 2005 One Year
Governmental Activities
Revenue Bonds Payable $ 584,369 $ 0 $ 48,950 $ 535,419 $ 50,066
Compensated Absences 437.315 353.589 302.819 488.085 488.085
Total Governmental Activities -
Long-term Liabilities $ 1A2L684 $ 353.589 $ 351.769 $ 1.023.504 $ 538.151
Business-type Activities
Revenue Bond Payable $ 20,940,173 $ 19,500,000 $ 18,411,164 $ 22,029,009 $ 767,557
Less Deferred Amounts:
For Issuance Discounts 370,103 214,091 346,222 237,972 0
Loss on Bond Refunding 11.545 1.834.734 71.143 1,775,136 0
Total Revenue Bonds Payable 20.558.525 17.451.175 17.993.799 20.015,90( 767,557
Compensated Absences 132.537 90.885 70.597 152.825 152.825
Total Business-type Activities -
Long-term Liabilities $ 20.69L062 $ 17.542.060 18.064.396 $ 20.168.726. 92 3R2
Advanced Refunding
e** The City issued $19,500,000 of Series 2004 Utilities System Revenue Refunding Bonds to
refund a portion of the City's outstanding Series 1996 Utilities System Revenue Bonds. The
refunded portion is considered to be defeased and the liability has been removed from the City's
..• financial statements. The refunding resulted in an accounting loss of $1,834,734 and an
economic gain of $1,020,807. The outstanding balance of the defeased Series 1996 Utilities
System Revenue Bonds is $17,840,000 at September 30, 2005.
Note 8 - Defined Benefit Pension Plans
Plan Descriptions and Contribution Information
The City maintains two separate single-employer pension plans, one for police officers and
one for general employees, which cover substantially all full-time City employees. The
"" pension plans do not issue separate stand-alone financial statements. Membership of each plan
x consists of the following at September 30, 2004, the date of the latest actuarial valuation:
41
~!
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 8 - Deiined Benefit Pension Plans (Continued)
Plan Descriptions and Contribution Information (Concluded)
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
^
General Employees' Retirement Plan
General
Emplovees Police
28 8
12 5
86 27
128 43
• Plan Description
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.
• Contributions
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.
Police Retirement Plan
• Plan 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.
• Contributions
Plan members are required to contribute 1.0% (4.$15% 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.
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
Emplovees Police Total
Annual Required Contribution (ARC) $ 464,893 $ 297,361 $ 762,254
Contributions Made (464,893) (317,372) (782,265)
Net Pension Obligation, End' of Year $ 0 ~ (20 011) $ (20.011)
42
CITY OF ATLANTIC BEACII, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 8 - Defined Benefit Pension Plans (Concluded)
Annual Pension Costs and Net Pension Asset (Concluded)
os. The City has funded the Police Retirement Plan in excess of the computed ARC for 2005
based upon the 2004 actuarial valuation. No pension asset has been recorded in the
accompanying financial statements pending computation of the 2004 actuarial valuation.
Other Pension Plan Information
The annual required contributions for the current year were determined as part of the
September 30, 2004, actuarial valuations for the General Employees' and Police Retirement
Plans using the individual entry-age actuarial cost method. The actuarial assumptions include
an 8.0% rate of return on investments and projected salary increases, which range from 5.5%
to 8.5% for both plans. The assumptions did not include post retirement benefit increases.
The actuarial value of assets was determined using market value and a funding value
adjustment for both plans. The unfunded actuarial accrued liabilities are being amortized over
remaining amortization periods of 5 to 30 years.
Three-year trend information:
Annual Percentage
Fiscal Year Ended Pension Cost of APC Net Pension
~,,,, September 30, (APC) Contributed Asset
General Employees
2003 $ 315,106 100% $ 0
2004 381,518 100% Q
2005 464,893 100% 0
~"` Police
2003 $ 225,991 100% $ 0
2004 242,637 100% 0
~"" 2005 297,361 107% 20,011
Note 9 - Interfund Accounts
Individual fund Interfund receivables and payables, at September 30, 2005, consist of the
following:
~,~„ Due From Due to Other
Other Funds Funds
General $ 69,776 $ 0
"" Nonmajor Governmental 0 69,776
'~ 43
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(Continued)
Note 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, 2005:
Nonmajor
Utility General Governmental Stormwater Total
Fund Fund Funds Fund Transfers Out
General Fund $ 100,000 $ 0 $ 25,004 $ 1,816,319 $ 1,941,323
Nonmajor Govern-
mental Funds 0 33,025 72,985 410,174 S 16,184
Utility Fund 0 450,205 0 0 450,205
Sanitation Fund 0 225,100 0 0 225,100
Governmental Activities 130.876 0 0 0 130.876
Total Transfers in
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.
Note 11- Commitments
As of September 30, 2005, the City had outstanding commitments on contracts to progress as
follows:
Unexpended
Contract
Proiect Type Amounts
Utility System Improvements $ 146,939
Stormwater System Improvements 16,548
General Government Improvements 442,019
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, 2005,
the City incurred $793,618 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.
44
i""
Y
CITY OF ATLANTIC BEACH, FLORIDA
NOTE5 TO FINANCIAL STATEMENTS
'"" SEPTEMBER 30, 2005
(Concluded)
Note 12 - Contingencies
The City is a defendant in several lawsuits which arose in the ordinary course of the City's
business. It is the City's position that the probability is unlikely that material amounts will
ever be payable as a result of these proceedings.
Note 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.
"' 45
~""
A
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
"° SCHEDULES OF PENSION FUNDING PROGRESS
SEPTEMBER 30, 2005
General Employees' Retirement Plan
Valuation
Funded
Annual Covered UAAL as
Percentage of
Date AVA AAL UAAL Ratio Payroll Payroll
9/30/00 $ 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%
9/30/03 5,951,000 8,186,000 2,235,000 72.7% 2,856,000 78.3%
9/30/04 6,273,000 9,005,000 2,732,000 69.7% 3,051,000 89.5%
Police Retirement Plan
Valuation
Funded
Annual Covered UAAL as
Percentage of
Date AVA AAL UAAL Ratio Payroll Payroll
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% 1,1SS,000 82.1%
9/30/02 4,230,000 5,334,000 1,104,000 79.3% 1,195,000 92.4%
9/30/03 4,373,000 5,986,000 1,613,000 73.1% 1,129,000 142.9%
9/30/04 4,534,000 6,405,000 1,871,000 70.8% 1,360,000 137.6%
~'" 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.
46
~*
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
`~ SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER
AND OTHER CONTRIBUTING ENTITIES
SEPTEMBER 30, 2005
General Employees' Retirement Plan
~*
Annual
Required
Year Ended Contributed Percentage
"~ September 30, (ARC) Contributed
2001 $ 266,148 100%
2002 288,070 ,~~ 100%
2003 315,106 Y°° ~ 100%
2004 381,518.~~'°~ 100%
2005 464,893 }Z~ ~ 100%
Police Retirement Plan
Annual
Required
,a,,, Year Ended Contributed Percentage
September 30 (ARC) Contributed
"'~ 2001 $ 183,091 ~;y 100%
2002 240,242 ~~>~ 5 100%
~
2003 225,991-
~, 100%
2004 242,637 ~'~¢` 100%
2005 297,361 X2'Z~' 107%
"" The information presented in the required supplementary schedules was determined as part of the
actuarial valuation at the dates indicated. Additional information for the general employees' and police
retirement plans as of the latest actuarial valuation follows:
Valuation Date September 30, 2004
Actuarial Cost Method Entry-Age Actuarial Cost Method
~+ Amortization Method Level Percent of Payroll, Closed
Remaining Amortization Period 5 to 30 Years
Asset Valuation Method Funding Value
~,,, Actuarial Assumptions
Investment Rate of Return 8.00%
Projected Salary Increases 5.50%
_ Inflation 5.00%
1'"
47
"' CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2005
~!* Variance with
Final Budget -
Budgeted Amounts Actual Positive
"""
Revenues Original Final .Amounts (Negative)
Property Taxes
Nonproperty Taxes $ 2,929,810 $ 2,929,810 $ 2,990,074 $ 60,264
~„
Licenses and Permits 1,503,494
432,500 1,503,494
432
500 1,600,989
410
434 97,495
22
0
State-shared Revenues
1,653,588 ,
1,653,588 ,
1,877,649 (
,
66)
224
061
Other Intergovernmental Revenues 530,500 580,459 610,752 ,
30
293
~'" Charges for Services
Fines and Forfeitures 1,400 1,400 22,459 ,
21,059
Interest Income 144,500
62,000 144,500
62
000 101,664
131
632 (42,836)
69
6
Miscellaneous Revenues
47,100 ,
72,100 ,
70,932 ,
32
(1
168)
,,,, Interfund Charges 1,178,055 1,178,055 1,194,535 ,
16
480
Total Revenues _ 8,482,947 _ 8,557,906 9,011,120 ,
453,214 ~ y~
Expenditures
Current:
General Government:
Legislative 43,796 47,607 44,889 2
718
~ Legal Counsel 89,802 218,202 206,573 ,
11
629
Planning and Zoning 124,059 175,134 143,315 ,
31
819
City Clerk 231,583 244,276 189,813 ,
54
463
City Manager 220,256 220,256 207,568 ,
12
688
r~ Finance and Accounting 844,727 846,227 804,069 ,
42
158
Human Resources 178,350 192,945 172,712 ,
20
233
Information Technology 293,472 316,073 289,303 ,
26
770
Other
Total General Government 281,916 281,924 232,267 ,
49,657 1
$7
2,307,961 2,542,644 2,290,509 a
252,135 ~tl
Public Safety:
„w Law Enforcement 2,917,744 2,923,056 2,923
055 1
Lifeguards 169,23 5 166,500 ,
164,922 1
578
Fire Control 815,281 815,231 815,197 ,
34
~ Code Enforcement SS,824 S7,S81 S7,S80 I
Building 321,339 321,339 316,745 4
594
Total Public Safety 4,279,423 _ 4,283,707 4,277,499 ,
6,208 i
~, Transportation:
Public Works Administration 413,097 421,925 402,950 18
975
Streets and Roads 883,799 932,980 699,871 ,
233
109
* Fleet Maintenance 233,400 237,425 236,269 ,
1
156
" Total Transportation 1,530,296 1,592,330 _ 1,339,090 ,
253,240
Parks and Recreation 956,501 981,209 946,825 34
384
~"" (Total Expenditures) (9,074,181) (9,399,890) (8,853,923) ,
545,967] U,~.
~' t_
~"" 48
P
~"" CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2005
(Concluded)
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Excess of Revenues Over
Expenditures $ (591,234) $ (841,984) $ 157,197 $ 999,181
~'"" Other Financing Sources (Uses)
Transfers in 675,305 708,330 708,330 0
Transfers out (1,850,455) (1,950,455) (1,941,323) 9
132
~. Sale of General Fixed Assets 8,000 8,000 8,055 ,
55
Total Other Financing (Uses) (1 167 150) (1 234 125) (1,224,938) 9,187
~,,, (Deficiency) of Revenues and Other
Financing Sources (Under) Expenditures
and Other Financing Uses (1,758,384) (2,076,109) (1,067,741) 1,008,368
Fund Balances, Beginning of Year 5,743,776 5,743,776 5,743,776 p
Fund Balances, End of Year $ 3,985,392 $ 3,667,667 $ 4,676,035 $ 1,008,368
~*'
~"' 49
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Budgets and Budgetary Accounting
General governmental revenue and expenditures accounted for in budgetary funds are controlled by a
budgetary accounting system in accordance with various.. legal requirements which govern the City's
operations. Budgets are monitored at varying levels of classification detail; however, expenditures cannot
legally exceed total appropriations at the individual fund level. Encumbrances are recorded. Unexpended
items which are unencumbered at year end must be reappropriated in the subsequent year.
Budgets are adopted for all governmental funds (general, special revenue, debt service and capital
""' projects funds). The City Manager is authorized to transfer budgeted amounts within departments within
F' 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.
~"" 50
SUPPLEMENTARY INFORMATION
'"
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Assets
Equity in Pooled Cash and Cash
Equivalents
Due from Other Governments
Total Assets
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued
Liabilities
Due to Other Funds
Total Liabilities
Fund Balances
Reserved for:
Debt Service
Unreserved Reported in:
Special Revenue Funds
Total Fund Balances
Total Liabilities and Fund Balances
Special Revenue
Convention
Tree Local Option Miscellaneous Development Half-Cent
Replacement Gas Tax Grants Tax Sales Tax
$ 30,978 $ 332,493 $ 0 $ 156,365 $ 1,002,807
0 101,472 46,076 6,011 115,990
30,978 433,965 46,076 162,376 1,118,797
0 0 0 0
0 0 46,076 0
0 0 46,076 0
51,222
51,222
0 0 0 0 0
30,978 433,965 0 162,376 1,067,575
30,978 433,965 0 162,376 1,067,575
$ 30,978 $ 433,965 $ 46,076 $ 162,376 $ 1,118,797
",
i
51
"`
Special Revenue Total
Nonmajor
Court Cost Radio Contraband Folice Debt Capital Governmental
Training Communication Forfeiture Grants Total Service Projects F
d
un
s
$ 3,469 $ 12,854 $ 3,922 $ 0 $ 1,542,888 $ 76,101 $ 0 $ 1,618,989
1,031 3,626 0 23,699 297,905 0 0 297,905
4,500 16,480 3,922 23,699 1,840,793 76,101 0 1
916
894
,
,
0 0 0 0 51,222 0 51,222
0 0 0 23,699 69,775 0 0 69,775
0 0 0 23,699 120,997 0 0 120,997
0 0 0 0 0 76,101 0 76,101
4,500 16,480 3,922 0 1,719,796 0 0 1,719,796
4,500 16,480 3,922 0 1,719,796 76,101 0 1,795,897
$ 4,500 $ 16,480 $ 3,922 $ 23,699 $ 1,840,793 $ 76,101 $ 0 $ 1,916,894
'~" 52
CITY OF ATLANTIC BEACH, FLORIDA '""
COMBINING STATEMENT O F REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
Special Revenue Funds
Convention
Tree Local Option Miscellaneous Development Half-Cent
Replacement Gas Tax Grants Tax Sales Tax
Revenues
Taxes
$ 0
$ 549,557 $ 0
$ 84,399
$ 688,016
~°"!,
t
Other Intergovernmental
Revenues 0 0 213,597 35,000 0
Interest income 0 7,616 0 3,580 24,942 "~
Miscellaneous Revenues 13,777 0 0 65,000 360
Total Revenues 13,777 557,173 213,597 187,979 713,318
Expenditures
Current:
General Government 0 0 43,596 25,000 0 ,,,,~
Public Safety 0 0 0 0 0
Debt Service:
Principal 0 0 0 0 0
Interest and Other 0 0 0 0 0
Capital Outlay 0 16,629 170,163 175,482 788,910
(Total Expenditures) 0 (16,629) (213,759) (200,482) (788,910)
Excess (Deficiency) of Revenues
Over (Under) Expenditures 13,777 540,544 (162) (12,503) (75,592)
Other Financing Sources (Uses)
Transfers in 0 0 0 0 0
Transfers out 0 (482,609) 0 0 0 •~
Total Other Financing Sources
(Uses) 0 (482,609) 0 0 0
""~
Net Change in Fund Balances. 13,777 57,935 {162) (12,503) (75,592)
Fund Balances, Beginning of Ye ar 17,201 376,030 162 174,879 1,143,167 ,~,,
Fund Balances, End of Year $ 30,978 $ 433,965 $ 0 $ 162,376 $ 1,067,575
".
53
r
Special Revenue Funds
Total
Court Cost
Radio
Contraband
Police
Debt
Capital Nonmajor
Governmental
Training Communication Forfeiture Grants Total S
i
erv
ce Projects Funds
$ 0 $ 0 $ 0 $ 0 $ 1,321,972 $ 0 $ 0 $ 1,321,972
6,730 23,948 0 87,230 366,505 0 0 366
505
295 457 99 (106) 36,883 1,464 286 ,
38
633
0 0 0 0 79,137 0 0 ,
79
137
7,025 24,405 99 .87
124 1
804
497 1
464 ,
, ,
, , 286 1,806,247
0 0
13,000 31,210
0 0
0 0
0 0
(13,000) (31,210)
(5,975) (6,805)
0 0 68,596 0 0 68,596
0 106,250 150,460 0 0 150,460
0 0 0 48,950
0 0 0 23,480
0 6,534 1,157,718 0
0 (112,784) (1,376,774) (72,430)
99 (25,660) 427,723 (70,966)
0 48,950
0 23,480
0 1,157,718
0 (1,449,204)
~o~ ~~., ,,,..
0 0 0 25,554 25,554 72,435 0 97,989
0 0 (550) (5,089) (488,248) 0
(27,936)
(S 16,184)
0 D (550) 20,465 (462,694) 72,435 (27,936) (418,195)
(5,975) (6,805) (451) (5,195) (34,971) 1,469 (27,650) (61,152)
~ 10,475 23,285 4,373 5,195 1,754,767 74,632 27,650 1,857,049
$ 4,500 $ 16,480 $ 3,922 $ 0 $ 1,719,796 $ 76,101 $ 0 $ 1,795,897
`~' S4
CITY OF ATLANTIC BEACH, FLORIDA
COMBII~TING ST ATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30, 2005
Police General Total
Employees' Employees' Pension
Retirement Retirement Trust
Plan Plan Funds
Assets
Cash and Cash Equivalents with Trustee $ 13,791 $ 19,386 $ 33,177
Investments with Trustee 4,736,831 6,809,584 11,546,415
Total Assets 4,750,622 6,828,970 11,579,592
Liabilities
Accounts Payable and Accrued Liabilities 10,287 13,411 23,698
Total Liabilities 10,287 13,411 23,698
"'t
Net Assets
Held in Trust for Pension Benefits 4,740,335 6,815,559 11,555,894
Total Net Assets $ 4,740,335 $ 6,815,559 $ 11,555,&94
'*1
55 '*1
~""'" CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
~ FOR THE YEAR ENDED SEPTEMBER 30, 2005
Additions
Contributions:
Employees
Employer
State of Florida
Total Contributions
Net Increase in Fair Value of Investments
Interest and Dividends
Total Additions
Deductions
Refunds of Contributions
Benefits
Investment Expenses
Administrative Expenses
Total Deductions
Net Increase
Net Assets, Beginning of Year
~' Net Assets, End of Year
Police General Total
Employees' Employees' Pension
Retirement Retirement Trust
Plan Plan Funds
$ 208,555 $ 464,893 $ 673,448
25,622 80,099 105,721
108,818 0 108,818
342,995 544,992 887
987
,
362,151 560,980 923,131
38,741 56,684 95,425
743,887 1,162,656 1,906,543
487 9,045 9,532
289,787 307,703 597,490
31,586 41,189 72,775
10,835 13,357 24,192
332,695 371,294 703
989
,
411,192 791,362 1,202,554
4,329,143 6,024,197 10
353
340
,
,
$ 4,740,335 $ 6,815,559 $ 11,555,894
i_
56
""1
CITY OF ATLANTIC BEACH, FLORIDA
HISTORICAL REVENUES AND EXPENSES
FOR THE YEARS ENDED SEPTEMBER 30, 2001 THROUGH 2005
(UNAUDITED)
2001 2002 2003 2004 2005
Revenues
Operating Revenues:
Water:
Customer Charges $ 1,913,167 $ 2,064,123 $ 2,012,087 $ 2,256,905 $ 2,459,456
Miscellaneous Charges 231,298 248,894 337,224 15,828 22,567
Total Water 2,144,465 2,313,017 2,349,311 2,272,733 2,482,023
Sewer:
Customer Charges 3,413,108 3,602,415 3,372,934 3,256,305 3,524,134
Total Operating Revenues 5,557,573 5,915,432 5,722,245 5,529,038 6,006,157
Nonoperating Revenues:
Interest Income:
Water 123,274 50,487 29,161 20,184 50,946
Sewer 236,332 68,075 42,806 28,104 57,008
Total Nonoperating Revenues 359,606 118,562 71,967 48,288 107,954
Total Revenues 5,917,179 6,033,994 5,794,212 5,577,326 6,114,111
Expenses
Operating Expenses:
Water
Sewer
Total Operating Expenses
Administrative, Nondivisional and
Other:
Water
Sewer
Total Administrative, Nondivisional
and Other
Total Expenses
Net Revenue
Capital Improvement Charges
Sewer
1,051,904 1,110,478 1,110,532 1,023,734 945,643
1,836,399 1,732,289 1,964,887 1,918,713 1,827,176
2,888,303 2,842,767 3,075,419 2,942,447 2,772,819
381,287 424,162 548,905 52b,729 538,189
702,681 642,329 619,635 539,217 883,224
1,083,968 1,066,491 1,168,540 1,065,946 1,421,413
3,972,271 3,909,258 4,243,959 4,008,393 4,194,232
1,944,908 .2,124,736 1,550,253 1,568,933 1,919,879
137,965 145,471 153,878 112,311 0
Net Revenues Available for Debt Service 2,082,873 2,270,207 1,704,131 1,681,244 1,919,879
Nonoperating Income (Expense)
Interest Expense (874,231) (883,468) (890,937) (939,746) (819,620)
Loan Amortization (16,618) (16,680) (16,818) (16,817) (13,b72)
Total Nonoperating (Expense) (890,849) (900,148) (907,755) (956,563) (833,292)
Net Income Before Depreciation and
Operating Transfers $ 1,192,024 $ 1,370,059 $ 796,376 $ 724,681 $ 1,086,587
57
~"
CITY OF ATLANTIC BEACH, FLORIDA
MAJOR UTILITY CUSTOMERS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
(UNAUDITED)
Navy (Federal Government)
Fleet Landing (Retirement Community)
City of Atlantic Beach, Florida
Hannah (Regional) Park
Oaks of Atlantic Beach (Mobile Home Park)
Sea Turtle Inn (Hotel)
John Creek Estate (Mobile Home Park)
~ Canterbury Court (Apartment Complex)
Lakes of Mayport (Apartment Complex)
r
Atlantic Arms (Apartment Complex)
Tota!
Annual
Billings
$ 369,206
155,449
54,770
91,272
87,043
115,289
93,297
52,199
81,905
49,017
$ 1,149,447
58
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CITY OF ATLANTIC BEACH, FLORIDA
OTHER BOND COVENANT DISCLOSURES
FOR THE YEARS ENDED SEPTEMBER 30, 2001 THROUGH 2005
(UNAUDITED)
Utility Service Tax Collections (Unaudited)
(Last Five Years)
Year Electricity Telecom Gas
2001 $ 344,198 $ 189,139
2002 339,138 680,595
2003 355,151 581,898
2004 351,752 552,716
2005 367,186 586,369
45,056
26,959
32,567
26,850
28,015
Ad Valorem Tax Collections (Unaudited)
(Last Five Years)
Fuel Oil
$ 194
224
236
126
77
Year Current Delinquent Total
2001 $ 2,132,923 $ 1,466 $ 2,134,389
2002 2,256,475 6,781 2,263,256
2003 2,530,175 (4,220) 2,525,955
2004 2,719,108 95 2,719,203
2005 2,988,234 1,841 2,990,075
Total
$ 578,587
1,046,916
969,852
931,444
981,647
62
i
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULES OF NET REVENUES IN ACCORDANCE
WITH BOND RESOLUTIONS
(UNAUDITED)
ENTERPRISE FUNDS (WATER AND SEWER)
FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
Gross Revenues
Utility
Connection Charges
Interest
Total Gross Revenues
Operating Expenses
Personal Services
Contractual Services
Supplies
Repairs and Maintenance
Heat, Light and Power
Intergovernmental Charges
Loss on Disposal of Fixed Assets
Other Expenses
(Total Operating Expenses)
Total Net Revenues in Accordance with
Bond Resolutions
Capital Facilities Charges
Special Assessments -New
Net Revenues Plus Capital Facilities Charges and
Special. Assessments
Total Debt Service
Debt Service Coverage Ratio
Debt Service Coverage Ratio Excluding Capital
Facilities Charges
Required Debt Service Coverage Ratio
Required Debt Service Coverage Ratio, Excluding
Capital Facilities Charges
2005 2004
$ 5,983,589. $ 5,513,210
- 98,350 188,384
109,554 48,288
6,191,493 5,749,882
1,421,412 1,377,156
782,774 594,194
280,250 266,231
138,688 187,130
501,395 454,750
820,246 841,332
3,465 119,125
249,466 229,232
(4,197,696) (4,069,150)
1,993,797 1,6$0,732
367,298 625,353
0 0
2,361,095 2,306,085
1,482,050 1,590,431
159.31% 145.00%
134.53% 105.68%
110.00% 110.00%
105.00% 105.00%
63
ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE
WITH GOVERNMENTAUDITINGSTANDARDS, ISSUED BY THE
COMPTROLLER GENERAL OF THE UNITED STATES
CITY OF ATLANTICE BEACH, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
°'"' FOR THE YEAR ENDED SEPTEMBER 30, 2005
Federal Pass-Through Entity CFDA ContractlGrant Program Program
Federal PCOECam Title Number Number Award Expenditures*
U.S. Department of Housing and
Urban Development Passed Through
City of Jacksonville, Florida
Community Development Block
Grant 14.218 5629-26 $ 179,475 $ 109,563
Community Development Block
Grant 14.218 5629-28 137,938 104,196
U.S. Department of Justice Passed
Through Florida Department of
Law Enforcement
Byrne Grant -Crime Suppression 16.579 OS-CJ-K3-04-26-02-1 93,075 75,013
Local Law Enforcement Block Grant -
Mobile Video 16.592 2005-LEBG-DWA-1-L4-005 4,970 4,970
U.S. Department of Justice Passed
Through Bureau of Justice Assistance
Project Safe Neighborhood 16.609 N/A 12,000 7,247
U.S. Department of Transportation
Passed Through Florida Department
of Transportation
Emergency Relief Program Agreement 20.205 A0400 11.242 11.242
Total Federal Awards $ 449.599 $ 312.
* Includes Grant Expenditures Only (Matching Funds Not Reported)
5
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
'"` FOR THE YEAR ENDED SEPTEMBER 30, 2005
(1) Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the Federal award
activity of the City of Atlantic Beach, Florida, and is presented on the modified accrual basis of
accounting.
r;
~"' 65
P
~, UrV1S
4 Gra
. Y8.
Conte;
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
We have audited the basic financial statements of City of Atlantic Beach, Florida, as of and for the year
~: ended September 30, 2005, and have issued our report thereon dated December 14, 2005. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
~,,, the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Atlantic Beach, 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 an opinion on the internal control over
financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control that might be material weaknesses. A material
~ weakness is a reportable condition in which the design or operation of one or more of the internal control
components does not reduce to a relatively low level the risk that misstatements caused by error or fraud
in amounts that would be material in relation to the basic financial statements being audited may occur
~, and not be detected within a timely period by employees in the normal course of performing their
~' assigned functions. We noted no matters involving the internal control over financial reporting and its
operation that we consider to be material weaknesses.
Comuliance and Other Matters
As part of obtaining reasonable assurance about whether City of Atlantic Beach, Florida's basic financial
°~" statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and
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 or other matters that
are required to be reported under Government Auditing Standards.
Certified Public Accountants
P.O. Box 23999 • 222 N.E. 1st Street • Gainesville, Florida 32602 • (352) 378-2461 • FAX (352) 378-2505
Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court, Suite # 100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899
MEMBERS OF AMERCAN ANO FLORIDA INSTRUTES Of CERTIFIED PUBLIC PLCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBUC PCCOUNTANTS PRIVATE COMPANIES ANO S.E.C. PRKTICE SECTIONS
t
66
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED
w. IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS
(Concluded)
~„ This report is intended solely for the information and use of management, the City Commissioners, and
the office of the Auditor General, State of Florida and agencies providing state and federal financial
assistance and is not intended to be and should not be used by anyone other than these specified parties.
~""
December 14, 2005 ~ ^ ~`~ ~~
'~"' Gainesville, Florida ~(.tt~,,~.o- aLU ,
~"' 67
~:
~"
•
Purvis
Grate A
MANAGEMENT LETTER
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
We have audited the basic financial statements of City of Atlantic Beach, Florida, as of and for the fiscal
year ended September 30, 2005, and have issued our report thereon dated December 14, 2005.
~"" We conducted our audit in accordance with auditing standards generally accepted in the United States of
r;; America and the standards applicable to financial audits contained in Government Auditing Standards,
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 14, 2005.
g 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 made in the preceding annual financial audit report.
The Rules of the Auditor General [Section 10.554(1)(g)1.(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)(8)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.
Certified Public Accountants
P.O. Box 23999 • 222 N.E. 1st Street • Gainesville, Florida 32602 • (352) 378-2461 • FAX (352) 378-2505
laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court, Suite # 100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899.
~ MEMBERS Of AMERICAN AND FLORIOW MSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN WSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SEC710NS
68
3
Honorable Mayor, City Commissioners
and City Manager
Atlantic Beach, Florida
MANAGEMENT LETTER
(Concluded)
~,,~, 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 165.031(4), Chapter 57-1126. There are no
component units related to the City of Atlantic Beach, Florida.
As required by the Rules of the Auditor General [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, is not
in a state of financial emergency as a consequence of the conditions described in Section 218.503(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, for the fiscal year ended September 30,
2005, was filed with the Department of Banking Finance pursuant to Section 218.32 (1) {a), Florida
Statutes, and is in agreement with the annual financial audit report for the fiscal year ended September 30,
2005.
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 of Atlantic Beach Florida'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.
This report is intended solely for the infornation and use of the Auditor General of the State of Florida,
management, and the City Commissioners, and is not intended to be and should not be used by anyone
!~-' other than these specified parties.
December 14, 2005 ~~
Gainesville, Florida ~~~..~-a-+ ~ ~`~' 1
U
[
69