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Audit Report - 2006-2007 ""~ FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2007 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2007 TABLE OF CONTENTS Independent Auditors' Report ...................................................................................................................... i-ii ... .. anagement's Discussion and Analysis .................................................................................................. ui-xii Basic Financial Statements Government-wide Financial Statements Statement of Net Assets .................................................................................................................... ......... 1 Statement of Activities .............................................................................................................................. 2 Fund Financial Statements Balance Sheet -Governmental Funds ....................................................................................................... 3 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets ......................................................................................................................... 4 Statement of Revenues, Expenditures, and Changes in Fund Balances -Governmental Funds ............................................................................................................ 5 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................................................................................................................... 6 Statement of Net Assets -Proprietary Funds ............................................................................................ 7 Statement of Revenues, Expenses, and Changes in Net Assets - Proprietary Funds ................................................................................................................................... 8 Statement of Cash Flows -Proprietary Funds .....................................................................................9-10 Statement of Fiduciary Net Assets -Fiduciary Funds ............................................................................ 11 Statement of Changes in Fiduciary Net Assets -Fiduciary Funds ......................................................... 12 Notes to Financial Statements ...................................................................................................... . 13-29 Required Supplementary Information Schedules of Pension Funding Progress ...................................................................................................... 30 ~"' Schedules of Contributions from Employer and Other Contributing Entities ................................................................................................................................ 31 Schedule of Revenues, Expenditures, and Changes in ~.. Fund Balance -Budget and Actual -General Fund ...........................................................................32-33 Note to Schedule of Revenues, Expenditures, and Changes in Fund Balance -Budget and Actual -General Fund ......................................................................................... 34 '~ Supplementary Information Combining Balance Sheet -Nonmajor Governmental Funds ................................................................35-36 Combining Statement of Revenues, Expenditures, and ~"* Changes in Fund Balances -Nonmajor Governmental Funds ..........................................................37-38 Combining Statement of Fiduciary Net Assets -Fiduciary Funds .............................................................. 39 Combining Statement of Changes in Fiduciary Net Assets - ~„ Fiduciary Funds ....................................................................................................................................... 40 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2007 TABLE OF CONTENTS (Concluded) Supplementary Information (Concluded) Historical Revenues and Expenses ...............................................................................................................41 Major Utility Customers ............................................................................................................................... 42 Summary of Water Usage ............................................................................................................................. 43 Summary of Wastewater Treatment -Atlantic Beach Sewer Division .................................................................................................................................................... 44 Summary of Wastewater Treatment -Buccaneer Sewer Division .............................................................. 45 Other Bond Covenant Disclosures .......................................:....................................................................... 46 Schedules of Net Revenues in Accordance with Bond Resolutions Enterprise Funds (Water and Sewer) .................................................................................. 47 Additional Elements of Report Prepared in Accordance with ,~. Government Auditing Standards, Issued by the Comptroller General of the United States and Other Contract Requirements. Schedule of Expenditures of Federal Awards and State Financial Assistance Projects ....................................................................................................48 Note to Schedule of Expenditures of Federal Awards '" and State Financial Assistance Projects .............................................................................................49 Schedule of Expenditures of the City of Jacksonville ~'" Public Service Grant ........................................................................................................................... 50 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 ......................................................................51-52 Management Letter ............................................................................................................................53-54 a. INDEPENDENT AUDITORS' REPORT Purvis Grav R 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, 2007, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the City's 2006 financial statements and, in our report dated December 13, 2006, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of September 30, 2007, 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 February 8, 2008, 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. 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 • 7ailahassee, 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 ANO f1OR10A INSTITUTES Of CERTIflfO PUBLIC ACCOUN7ANT5 MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES ANO S.E.C. PRACT1Cf SECTIONS I s. !~"" Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida INDEPENDENT AUDITORS' REPORT (Concluded) The management's discussion and analysis, budgetary comparison schedules, and the other required supplementary information as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our. audit was conducted for the purpose of forming opinions on the financial statements that collectively ~* comprise the City's basic financial statements. The combining nonmajor fund. statements, schedule of expenditures of federal awards and state financial assistance projects, 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, the schedule of expenditures of federal awards and state financial assistance projects, and the schedule of expenditures of the City of Jacksonville Public Service Grant 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. February 8, 2008 Gainesville, Florida ~, u ~. CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 As management of the City of Atlantic Beach (the City), we offer readers of our financial statements this narrative overview and analysis for the fiscal year ended September 30, 2007. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. The purpose of each of the three components of the basic financial statements is described below. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Atlantic Beach's finances, in a manner similar to aprivate-sector business. They include the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may 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. Ali changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are ~, reported in this statement for some items that will only result in cash flows in future fiscal periods. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes, licenses and permits, and intergovernmental revenues, referred to as "governmental activities", from other functions that are intended to recover all or a significant portion of their costs through user fees and charges, referred to as "business-type activities". The governmental activities of the City include public safety, transportation, parks and recreation, conservation and resource management, physical environment (i.e., infrastructure), debt, and general government, which include administration and other support functions. The business-type activities of the City include the utility, comprised of the water and sewer systems, the stormwater system and the sanitation enterprise. The government-wide financial statements can be found on pages 1 - 2 of this report. Fund Financial Statements .• 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 categorized into either governmental funds, proprietary funds, or fiduciary funds. iii ~. CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 (Continued) ^ Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of available resources, as well as on balances of available resources at the end of the fiscal year. Such information may be useful in evaluating a City's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Reconciliations are provided between the Governmental Funds Balance Sheet and the Statement of Net Assets and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities to facilitate this comparison between governmental funds and governmental activities. The City of Atlantic Beach maintains sixteen individual governmental funds. Information is ~* presented separately in the Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund, which is considered to be a major fund. Data from the other fifteen governmental funds are combined into a single, aggregated presentation called Nonmajor Governmental Funds. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements. These combining statements can be found on pages 35 - 38 of this report. The City of Atlantic Beach adopts an annual appropriated budget for all funds but is only required to present a budget comparison for its General Fund. The Schedule of Revenues, Expenditures, and Changes in Fund Balance, Budget and Actual -General Fund budgetary comparison schedule has been provided to demonstrate compliance with this budget. ^ Proprietary Funds The City of Atlantic Beach maintains only one type of proprietary fund and that is enterprise funds. The enterprise funds are used to account for the activities of the water and sewer (utility), !"` stormwater, and sanitation activities. The proprietary fund financial statements provide the same type of information as the government- wide financial statements, only in more detail. Separate information of the utility, stormwater and sanitation activities, which are considered to be major funds of the City of Atlantic Beach, can be found in the basic proprietary fund financial statements on pages 7 - 10 of this report. ^ Fiduciary Funds ~ Fiduciary funds are used to account for resources held for the benefit of parties outside the City (i.e., pension beneficiaries). Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 11 - 12 of this report. iv !'"' ~"" CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 ~* (Continued) Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can ,~, be found on pages 13-29 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees and a budgetary comparison schedule for the Generat Fund. Required supplementary information can be found on pages 30-34 of this report. Government-wide Financial Analysis Net assets may serve over time as a useful indicator of a City's financial position. As can be seen in the summarized table below, the City's assets exceeded liabilities by $ 72,928,292 at the close of the fiscal year ended September 30, 2007. By far the largest portion of the City's net assets, $59,314,460 (81%), reflects its investment in capital ~"" assets (i.e., land, buildings, equipment, and infrastructure), less any related, outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in capital assets is ~• reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities A portion of the City's net assets, $2,943,227 (4%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $10,670,605, is ,~ used to meet the government's ongoing obligations to citizens and creditors. v ~" *" CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 (Continued) City of Atlantic Beach's Net Assets September 30, 2007 and 2006 (In Thousands) Governmental Business-type Activities Activities Totals 2007 2006 2007 2006 2007 2006 Current and other assets $8,249 $7,886 $8,040 $8,519 $16,289 $16,405 Capital assets 42,004 42,094 36,399 36,596 78,403 78,690 Total Assets 50,253 49,980 44,439 45,115 94,692 95,095 Long-term liabilities Outstanding 633 675 17,938 18,636 18,571 19,311 Other liabilities 806 750 2,387 2,270 3,193 3,020 Total Liabilities 1,439 1,425 20,325 20,906 21,764 22,331 Net Assets Invested in capital assets, net of related debt $41,572 $41,608 $17,742 $17,509 $59,314 $59,117 Restricted 2,443 1,877 500 755 2,943 2,632 Unrestricted 4,799 5,070 5,872 5,945 10,671 11,015 Total Net Assets $48,814 $48,555 $24,114 $24,209 $72,928 $72,764 As illustrated in the schedule below, the City was able to report positive balances in all categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. vi ~. ~„ Revenues: Program Revenues: Charges for services Operating grants and contributions Capital grants and contributions General Revenues: Property taxes Sales taxes Franchise and utility taxes ~„ State revenue sharing Discretionary sales surtax Interest revenue Miscellaneous ~""' Gain on disposal of fixed assets Total Revenues Expenses: General Government Public Safety Transportation Parks and Recreation Conservation and Resource Management Interest on long-term debt Utility Stormwater Sanitation Total Expenses Transfers Change in net assets ~„ Net assets-Beginning Adjustments to beginning balance Net assets-Ending ~" CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 (Continued) City of Atlantic Beach's Change in Net Assets For the Years Ended September 30, 2007 and 2006 (In Thousands) Governmental Business-type Activities Activities Totals 2007 2006 2007 2006 2007 2006 $1,173 $1,172 7,917 $7,887 $9,090 $9,059 943 979 0 2 943 981 274 236 562 343 836 579 3,868 3,530 0 0 3,868 3,530 1,392 1,457 0 0 1,392 1,457 1,691 1,718 0 0 1,691 1,718 347 306 0 0 347 306 723 741 0 0 723 741 395 314 336 310 731 624 81 65 0 0 81 65 9 0 0 2 9 2 10,896 10,518 8,815 8,544 19,711 19,062 $1,488 $1,360 $0 $0 $1,488 $1,360 4,771 4,645 0 0 4,771 4,645 2,163 2,101 0 0 2,163 2,101 1,227 1,181 0 0 1,227 1,181 11 10 0 0 11 10 t9 21 0 0 19 21 0 0 7,385 7,273 7,385 7,273 0 0 1,158 1,080 1,158 1,080 0 0 1,325 1,190 1,325 1,.190 9,679 9,318 9,868 9,543 19,547 18,861 (958) 206 958 206 0 0 259 1,406 (95) (1,205) 164 201 48,555 14,732 24,209 23,165 72,764 37,897 0 32,417 0 2,249 0 34,666 $48,814 $48,555 $24,114 $24,209 $72,928 $72,764 vii s~ CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30,.2007 (Continued) Fund Financial Analysis As noted earlier, the City of Atlantic Beach uses fund accounting to ensure and demonstrate compliance with ftnance-related legal requirements. Following is a summary of fund activity for the fiscal year. ^ Governmental Funds At the end of the current fiscal year, the City's governmental funds reported a combined ending fund balance of $7,848,601, an increase of $355,350 in comparison with the prior year. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance was $5,383,236, which represented 50% 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 $26,707 (1.0%) during the current fiscal year. This decrease is chiefly due to °"' increased revenues being off-set by a large transfer of $600,000 to the Storm Water Utility Fund. Nonmajor governmental funds consisting of special revenue funds and the debt service fund have a '~"" combined fund balance of $2,258,608. Of this fund balance, $78,542 is reserved for future debt service payments. The net increase in fund balance after transfers in nonmajor governmental funds was $382,057. ^ Proprietary Funds ~.- The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net assets in the proprietary funds decreased by $95,236 during the fiscal year. In fiscal year 2007, charges for service had only nominal increases while ~,. operating expenses including depreciation increased $358,089. After nonoperating revenues and expenses are added, the loss was $1,480,709 before transfers. A combination of contributed capital and transfers in increased net assets by $1,385,473 resulting in the change in net assets above. „~, Depreciation, a non-cash expense that is not budgeted or recovered through user charges, significantly contributed to the decrease in net assets. The Public Utilities' incremental rate adjustment of three percent effective for fiscal year 2007 resulted in no increase in revenues for the year. A reduction in customers has off set a very slight increase in volume of water sold. The Stormwater Fund continues to be heavily subsidized by the Gas Tax Fund and the General Fund, as the $4 per ERU rate is only partially, approximately one-third, covering the operating expenses of that program. During fiscal year 2007, the Sanitation Fund was supported by a rate increase to cover the increased cost of providing semi-automated collection service and increased contractor costs. The Sanitation Fund netted an increase of $18,615 after having contributed $120,600 to the General Fund. The unrestricted net assets of the enterprise funds amounted to $5,871,745 at the end of fiscal year 2007. This is a total decrease of $591,892 from 2006. Vlll ~'" CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 • (Continued) General Fund Budgetary Highlights The City revised its General Fund budget during the year for additional appropriations 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 an increase of $412,416. This increase was the result of two types of adjustments. ~ The first was that the budget was increased by $176,000 for items encumbered but not spent by the end of fiscal year 2006. That included a Public Works budget increase of approximately $34,000. Significant transactions contributing to this increase were: ^ $12,000 for replacement of the current fuel management system used to track vehicle and equipment fuel usage by City personnel. The prior system had frequent operational issues and was unreliable. ^ $11,500 for trimming 577 palm trees in Town Center and around the Mayport Flyover where the trees were becoming a hazard and date droppings were a nuisance. The Public Safety budget received a $13,000 amendment, primarily for the purchase of two (2) laser radar units for police vehicles for $6,000. The Recreation budget .was also adjusted by $13,000. Most of this adjustment was fora $6,800 encumbrance to install a swing set at Veteran's Memorial Park. An additional $116,000 was added to the City Administration budget: ^ $62,000 to replace the first-generation, wireless network system with underground fiber optic cabling to provide for more reliable computer network communications between City Hall and the outlying departments and facilities; and ^ $33,300 for a consultant to assist the City with the Community Character planning and zoning project. The second type of increase is the result of items that arose during the year that were not anticipated. During the course of the year, the budget was increased approximately $274,000 for a number of small projects including $19,000 for a dune walkover paid for by grant funds, repairs to infrastructure in the town center area for $10,000 and a propane gas tank removal for $15,000. The largest addition to the budget was $200,000 for the purchase of some marsh land for conservation. The property was not purchased by year-end. By the end of fiscal year 2007, the General Fund expenditure budget indicated a surplus of $893,501. Part of the surplus in the amount of $142,000 was for items or projects not purchased or completed by the end of the fiscal year. These items are to be added to the fiscal year 2008 budget and include the following: The Public Works budget will roll approximately $84,000 into next year. Following are the significant transactions in this area that were not completed in fiscal year 2007: '" ix ~, e~ ~!` CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 (Continued) ^ Construction of concrete storage bins at the Public Works yard to segregate road repair material and prevent loss due to contamination or water content; ^ Removal of an underground propane tank to construct planned infrastructure improvements in the Royal Palms subdivision; ^ Preparation of a debris management plan, that meets FEMA guidelines, to increase the FEMA reimbursement rate by 5% and allow claims for regular labor,. rather than just overtime labor, for disaster reimbursement; ^ Scanning plans and documents into the City's document management system; and ^ Installing turtle-friendly street lights to shield and mitigate distractions for hatching sea turtles on the beach. The Public Safety budget will roll $35,000 into next year, primarily for purchasing the City's first hybrid vehicle for $23,600. An additional $23,000 will roll into the City Administration budget for next year. These funds will be used to pay for: ^ Actuarial consulting services to assist the City with implementation and compliance with new accounting regulations to account and report for post employment benefits (GASB # 45); ^ An assessment of the City's enterprise-wide software needs with our current software provider, Sungard HTE; and ^ The purchase and installation of utility software to manage files and reports generated on our AS400 computer system. Although the City budgeted a decrease in fund balance of $799,406, the fund balance actually only decreased by $26,707. This was due to positive variances in expenditures of $893,501. An overall positive variance of $772,669 was attributed mostly to conservative budgeting for expenditures and items being rolled to next year as indicated above. Long-term Debt At the end of the 2007 fiscal year, the City of Atlantic Beach had total bonded debt outstanding of $19,089,465. This amount was comprised of bonds secured solely by specified revenue sources (i.e., revenue bonds). A detailed listing of the City's debt can be found in the table below. City of Atlantic Beach's Outstanding Debt R" Revenue Bonds September 30, 2007 (In Thousands) Governmental Business-type Activities Activities Totals ~+ Utility System Revenue Bonds, Series 2004 $0 $17,376 $17,376 Utility System Revenue Bonds, Series i99b 0 749 749 SunTrust Revenue Refunding Bonds, Series 1999 432 532 964 ~ Total $432 $18,657 $19,089 x CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 (Continued) The City has been able to pay for ongoing capital projects related to governmental activities since ~ borrowing funds in 1989 (refunded in 1999 to take advantage reduced interest rates). Therefore, it has a high capacity for additional debt, if needed. The City's scheduled debt outstanding decreased by $746,968 (3.8%) during the current fiscal year. This decrease was due to loan repayments. The Utility System Revenue Refunding Bonds, Series 2004, and the Utility System Revenue Bonds, Series 1996, ~ carry an insured "Aaa" rating from Moody's Investor Services. Additional information on the City's long-term debt can be found in note 7 on pages 24 - 25 of this report. Capital Assets As reflected in the schedule of capital assets found on the following schedule, the City's investment in capital assets for its governmental and business-type activities as of September 30, 2007, totaled $78,403,925 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, utility infrastructure, roads, bike paths and sidewalks. Major capital asset events during the fiscal year include the purchase of land for the Hopkins Creek retention pond for $870,000 and the purchase of a trash truck for $132,000. Significant infrastructure improvements added to the City's assets during the fiscal year include utility installations on Begonia Street and in the Sawgrass Chapel Place subdivision, a Beaches Habitat project, totaling $296,000, and treatment plant rehabilitation for $140,000. Donated infrastructure acquired from developers for the Scheidel Condominiums and Oaks of Atlantic Beach projects amounted to $333,000. Depreciation on building and improvements exceeded acquisitions for the fiscal year resulting in a net decrease of $1,562 between fiscal years 2007 and 2006 in this asset category. City of Atlantic Beach's Capital Assets (Net of Depreciation) (In Thousands) Governmental Activities Business-type Activities Totals 2007 2006 2007 2006 2007 2006 Land $9,844 $9,844 $1,642 $771 $11,486 $10,615 Building and Improvements 30,686 30,909 33,785 35,124 64,471 66,033 equipment 1,317 1,110 644 579 1,961 t,689 Construction in Progress 157 230 328 123 485 353 Total $42,004 $42,093 $36,399 $36,597 $78,403 $78,690 Additional information on the City of Atlantic Beach's capital assets can be found in note 6 on pages 22 - °" 24 of this report. Economic Factors ^ Taxable property values in the City of Atlantic Beach continue to grow. However, the housing market and proposed property tax, reform legislation could have an impact on this critical source of revenues to the City. Currently the ad valorem tax revenue represents about 36% of budgeted revenues. xi e,,,, CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENTS' DISCUSSION AND ANALYSIS SEPTEMBER 30, 2007 (Concluded) ^ The City's utility service jurisdiction had a decline of 354 accounts or 2.96% during the current year. Although the number of accounts went down over the year, the actual volume of water sold increased by 1.09%. Part of the decline is attributed to a few mobile home parks being emptied for new development. '""" ^ The City's rate of return on investments in pooled cash remained around 5% during the year. Unfortunately, the market has drastically changed due to the collapse of the sub-prime mortgages and the slowing of .the housing industry. Interest rates for the upcoming year are expected to be ++~ substantially lower. ^ New environmental regulations, Total Maximum Daily Load (TMDLj, that .limit the amount of ~ nitrogen discharged into the St. John's River from the City's wastewater treatment plants, will require a major investment of resources to comply and the transfer of costs to the water and sewer customers through higher rates. The specific requirements and associated costs are still being ~ studied. To fund these and other projects as well as to fund increasing operating costs, the City has approved a rate ordinance increasing fees 10% per year for three years. Budget Highlights ^ The City did not raise the ad valorem mi(lage rate for the 2007/2008 budget year. A rate of 2.9974 mils was maintained as a result of a unanimous vote to override the recently passed tax reform legislation. The percentage by which the adopted rate exceeded the rolled back rate was 8.91%. ^ Water and sewer service rates were increased ten percent to keep up with the rising cost of operations and to help fund future capital improvements. ^ This year the City is planning to spend significant amounts of capital on the Hopkins Creek Retention Pond construction, sewer collection system rehabilitation, and the design of the Royal Palms area drainage improvements. ^ A 19 percent rate increase in Sanitation revenues was budgeted to cover the increased costs of the waste hauler for converting to semi-automated pick up and the addition of a fuel adjustment clause in the new contract. Requests for Information ~,,, The financial report is designed to provide a general overview of the City of Atlantic Beach's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of „~, Atlantic Beach, Finance Director, 800 Seminole Road, Atlantic Beach, Florida 32233. Jim Hanson Nelson Van Liere, C.P.A. City Manager Finance Director xu ~'" ~" BASIC FINANCIAL STATEMENTS These basic financial statements contain Government-wide Financial Statements, Fund Financial Statements and Notes to Financial Statements. CITY OF ATLANTIC BEACH, FLORIDA ~,,, STATEMENT OF NET ASSETS SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2006 Governmental Business-Type Totals ~'"" Activities Activities 2007 2006 Assets Equity in Pooled Cash and Cash Equivalents $ 7,231,450 $ 4,733,139 $ i 1,964,589 $ 11,836,843 ~. Receivables, Net 1,150 512,011 513,161 526,155 Due from Other Governments 985,044 3,247 988,291 1,120,188 Inventories 14,618 41,528 56,146 74,331 Special Assessments -Current 2,816 36,692 39,508 34,319 ~ Notes Receivable -Current 760 24,254 25,014 29,526 Restricted Assets: Equity in Pooled Cash and Cash Equivalents 0 2,252,272 2,252,272 2,227,854 Capital Assets: l~ Land 9,843,717 1,641,918 11,485,635 10,615,062 Buildings 4,134,377 4,356,384 8,490,761 8,465,461 Improvements Other Than Buildings 37,496,211 56,300,997 93,797,208 92,535,863 Equipment 3,286,696 1,829,189 5, l 15,885 4,657,285 Accumulated Depreciation (12,913,630) (28,057,381) (40,971,011) (37,937,131) Construction in Progress 157,096 328,351 485,447 353,524 Prepaid Items 7,520 0 7,520 7,520 Special Assessments -Noncurrent 0 26,730 26,730 65,290 *~"' Notes Receivable -Noncurrent 5,320 162,068 167,388 201,118 Other Noncurrent Assets 0 0 0 18,800 Unamortized Loan Costs 0 247,994 247,994 263,592 Total Assets 50,253,145 44,439,393 94,692,538 95,095,600 Liabilities Accounts Payable and Other Current Liabilities 373,617 369,342 742,959 641,940 Due to Other Governments 0 5,605 5,605 5,467 ~„ Deferred Revenue 3,966 135,248 139,214 153,567 Deposits 22,494 0 22,494 1,200 . Compensated Absences -Current 400,000 90,838 490,838 458,000 Accrued Interest Payable 6,067 0 6,067 6,814 ~. Payable from Restricted Assets: Current Maturities of Bonds Payable 0 832,386 832,386 785,005 Accrued Interest Payable 0 413,028 413,028 432,296 Customer Deposits 0 541,086 541,086 536,040 ~., Noncurrent Liabilities: Due Within One Year 53,930 0 53,930 44,344 Due in More Than One Year 378,210 17,824,939 18,203,149 19,007,084 Compensated Absences 200,447 113,043 313,490 259,741 ~. Total Liabilities 1,438,731 20,325,515 21,764,246 22,331,498 Net Assets Invested in Capital Assets, Net of Related Debt 41,572,327 17,742,133 59,314,460 59,117,223 Restricted for: ~"' Renewal and Replacement 0 500,000 500,000 500,000 Debt Service 78,542 0 78,542 77,265 Road and Street Expenditures 365,538 0 365,538 321,384 ~ Tourism and Recreation 237,915 0 237,915 192,395 Tree Replacement 9,713 0 9,713 20,913 Public Safety 22,136 0 22,136 7,636 Police Training 23,151 0 23,151 6,982 ~ Building Code Enforcement 184,619 0 184,619 71,421 Capital Projects 1,521,613 0 1,521,613 1,249,976 Unrestricted 4,798,860 5,871,745 10,670,605 11,198,907 Total Net Assets $ 48,814,414 _ ~ 24,113,878 ~ 72,928,292 _$ 72,764,102 I"" See accompanying notes. 1 ~. 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C ' CG 'L W a~[7aHaU~aSa~'~~~nv~i~a a t7 F° cra E-° H '"d ~ CITY OF ATLANTIC BEACH, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS ~„ SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2006 2007 Nonmajor Totals Governmental Governmental 2006 General Funds Funds Totals Assets Equity in Pooled Cash and Cash Equivalents Receivables, Net Due from Other Funds Due from Other Governments Inventories Special Assessment Receivable -Current Notes Receivable -Current Prepaid Items Notes Receivable -Noncurrent Total Assets Liabilities and Fund Balances $ 5,140,749 $ 2,090,701 $ 7,231,450 $ 6,703,886 1,150 0 1,150 21,450 103,040 0 103,040 116,286 646,191 338,853 985,044 1,113,691 14,b18 0 14,618 29,231 2,816 0 2,816 2,816 760 0 760 760 7,520 0 7,520 7,520 5,320 0 5,320 6,840 5,922,164 2,429,554 8,351,718 8,002,480 Liabilities Accounts Payable and Accrued Liabilities 325,255 48,362 373,617 354,067 Due to Other Funds 0 103,040 103,040 116,286 Deposits 2,950 19,544 22,494 1,200 Deferred Revenue 3,966 0 3,966 37,676 Total Liabilities 332,171 170,946 503,117 509,229 Fund Balances ~'" Reserved for: Debt Service 0 78,542 78,542 77,265 Inventories 14,618 0 14,618 29,231 Prepaids 7,520 0 7,520 7,520 Building Code Enforcement 184,619 0 184,619 71,421 Unreserved, Reported in: ~ General Fund 5,383,236 0 5,383,236 5,508,528 Special Revenue Funds 0 2,180,066 2,180,066 1,799,286 Total Fund Balances 5,589,993 2,258,608 7,848,601 7,493,251 Total Liabilities and Fund Balances $ 5,922,164 $ 2,429,554 $ 8,351,718 $ 8,002,480 ~. See accompanying notes. 3 '~ CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2006 Total Fund Balances of Governmental Fuuds 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 (Less Accumulated Depreciation) Long-term liabilities are not due and payable in the curcent period and, accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due. All Liabilities, both current and long-term, are reported in the statement of net assets. Long-term liabilities at year end consist of: Revenue Bonds Payable Compensated Absences Accrued Interest Payable Total Net Assets of Governmental Activities 2007 2006 $ 7,848,601 $ 7,493,251 $ 54,918,097 $ 54,250,996 (12,913,630) (12,157,489) 42,004,467 42,093,507 432,140 485,353 600,447 539,603 6,067 6,814 (1,038,654) (1,031,770) $ 48,814,414 $ 48,554,988 See accompanying notes. 4 ~, CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 a~ Revenues Taxes Licenses and Permits State-shared Revenues Other intergovernmental Revenues Charges for Services Fines and Forfeitures Interest Income Miscellaneous Revenues Interfund Charges Total Revenues Expenditures Current: General Government Public Safety Transportation Parks and Recreation Conservation and Resource Management Debt Service: Principal Interest and Other Capital Outlay (Total Expenditures) Excess of Revenues Over Expenditures Other Financing Sources (Uses) Transfers in Transfers (out) Sale of General Fixed Assets Total Other Financing (Uses) Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year 2007 Nonmajor Totals Governmental Governmental General Funds Funds $ 5,559,554 $ 1,336,254 $ 6,895,808 $ 6,604,079 444,348 0 444,348 455,278 1,890,799 0 1,890,799 1,964,668 634,358 283,176 917,534 908,183 34,691 0 34,691 20,53 t 123,900 0 123,900 126,439 302,500 92,830 395,330 313,608 67,620 700 68,320 56,115 1,350,761 0 1,350,761 1,324,156 10,408,531 1,712,960 12,121,491 11,773,057 2,635,562 41,799 2,677,361 2,533,249 4,418,472 122,359 4,540,831 4,451,998 1,407,120 248,405 1,655,525 1,609,574 1,062,476 0 1,062,476 1,012,505 0 11,200 11,200 10,065 0 53,213 53,213 50,066 0 19,269 19,269 21,439 568,807 409,658 978,465 1,327,258 (10,092,437) (905,903) (10,998,340) (11,016,154) 316,094 807,057 1,123,151 756,903 247,411 70,648 318,059 533,709 (600,000) (495,648) (1,095,648) (325,368) 9,788 0 9,788 6,075 (342,801) (425,000) (767,801) 214,416 (26,707) 382,057 355,350 971,319 5,616,700 1,876,551 7,493,251 6,521,932 $ 5,589,993 $ 2,258,608 $ 7,84$,601 $ 7,493,251 See accompanying notes. 5 2006 Totals r 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, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 2007 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) Certain revenues related to the acquisition of capital assets are not reported in governmental funds because they do not represent cun•ent financial resources, however, they are reported as capital contributions in the statement of activities. 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. Governmental funds report sale of general fixed assets as financial resources. The gain on disposal of general fixed assets is not reflected in the governmental funds: Proceeds from Sale of General Fixed Assets Gain on Disposal of General Fixed Assets Some expenses/revenues reported in the statement of activities do not require the use of or provide current financial resources and, therefore, are not reported as expenditures in governmental funds: Debt Interest Expense Compensated Absences Transfer of Capital Assets Change in Net Assets -Governmental Activities 2006 $ 355,350 $ 971,319 $ 978,465 $ 1,327,258 (1,003,814) (952,649) (25,349) 374,609 117,291 64,724 53,213 50,066 (9,788) (6,075) 8,987 240 (801) (5,835) 747 702 (60,844) (51,518) (180,181) 2,434 (240,278) (48,382) $ 259,426 $ 1,406,501 See accompanying notes. 6 .. '. ~" r CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2006 Assets Current Assets: Equity in Pooled Cash and Cash Equivalents Accounts Receivable, Net Inventories Due from Other Governments Special Assessments -Current Notes 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 Special Assessments -Noncurrent Notes Receivable -Noncurrent Other Noncurrent Assets Unamortized Loan Costs Total Assets 2007 Business-Type Activities -Enterprise Funds 2006 Utility Stormwater Sanitation Totals Totals $ 2,114,117 $ 2,238,005 $ 381,017 $ 4,733,139 $ 5,132,957 411,967 20,111 79,933 512,011 504,705 41,528 0 0 41,528 45,100 0 0 3,247 3,247 6,497 36,692 0 0 36,692 31,503 24,254 0 0 24,254 28,766 2,091,845 160,427 0 2,252,272 2,227,854 749,499 892,419 0 1,641,918 771,345 4,356,384 0 0 4,356,384 4,335,149 44,922,003 11,378,994 0 56,300,997 55,504,679 1,410,273 253,483 165,433 1,829,189 1,641,790 (22,834,852) (5,192,878) {29,65 t) (28,057,381) (25,779,641) 97,173 231,178 0 328,351 123,235 26,730 0 0 26,730 65,290 162,068 0 0 162,068 194,278 0 0 0 0 18,800 213,847 34,147 0 247,994 263,592 33,823,528 10,015,886 599,979 44,439,393 45,115,899 " Liabilities Current Liabilities Payable from Current Assets: .,w Accounts Payable and Accrued Liabilities 242,206 14,823 112,313 369,342 287 873 Due to Other Governments 5,605 0 0 5,605 , 5,467 Deferred Revenue 67,284 12,081 55,883 135,248 115,891 Compensated Absences -Current 90,838 0 0 90,838 108 000 Current Liabilities Payable from Restricted , Assets: Current Maturities of Bonds Payable 725,439 106,947 0 832,386 785,005 Accrued Interest Payable 359,548 53,480 0 413,028 432,296 Customer Deposits 541,086 0 0 541,086 536,040 Noncurrent Liabilities: ~ Due in More Than One Year 15,398,002 2,426,937 0 17,824,939 18,566,075 Compensated Absences -Noncurrent 113,043 0 0 113,043 70,138 Total Liabilities 17,543,051 2,614,268 168,196 20,325,515 20,906,785 Net Assets Invested in Capital Assets, Net of Related Debt 12,577,039 5,029,312 135,782 17,742,133 17,245,477 Restricted for Renewal and Replacement 500,000 0 0 500,000 500,000 Unrestricted 3,203,438 2,372,306 296,001 5,871,745 6,463,637 Total Net Assets $ 16,280,477 $ 7,401,618 $ 431,783 $ 24,113,878 $ 24,209,114 See accompanying notes. 7 CITY OF ATLANTIC BEACH, FLORH)A STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 20 07 Business-Type Activities -Enterprise Funds 2006 Utility Stormwater Sanitation Totals Totals Operating Revenues Charges for Services: Customer Charges $ 6,061,251 $ 380,309 $ 1,429,031 $ 7,870,591 $ 7,827,073 Franchise Permits 0 0 7,500 7,500 0 Miscellaneous Revenues 38,809 240 0 39,049 59,877 Total Operating Revenues 6,100,060 380,549 1,436,531 7,917,140 7,886,950 Operating Expenses Personal Services 1,626,313 252,760 24,567 1,903,640 1,755,560 Contractual Services 749,987 171,635 1,140,162 2,061,784 2,020,732 Supplies 315,044 35,380 0 350,424 335,534 Repairs and Maintenance 171,866 26,843 0 198,709 173,780 Heat, Light and Power 540,276 0 0 540,276 553,934 Depreciation 1,922,717 343,959 14,220 2,280,896 2,233,428 Intergovernmental Charges 927,381 172,519 142,162 1,242,062 1,222,872 Other Expenses 346,113 31,645 3,811 381,569 305,431 (Total Operating Expenses) (6,599,697) (1,034,741) (1,324,922) (8,959,360) (8,601,271) Operating (boss) Income (499,637) (654,192) 111,609 (1,042,220) (714,321) Nonoperating Revenues (Expenses) Connection Charges 18,376 0 0 18,376 20,055 Franchise Fees 0 0 3,961 3,961 0 Intergovernmental Revenue 111,036 0 578 111,614 81,736 Interest Income 200,059 113,065 23,067 336,191 310,212 Interest Expense (769,816) (121,142) 0 (890,958) (924,424) Gain on Disposal of Fixed Assets 0 0 0 0 2,340 Amortization of Loan Costs (15,289) (2,384) 0 (17,673) (17,673) Total Nonoperating (Expenses) Revenues (455,634) (10,461) 27,606 (438,489) (527,754) (Loss) Income Before Contributions and Transfers (955,271) (664,653) 139,215 (1,480,709) (1,242,075) Capital Contributions and Grants and Transfers Capital Contributions and Grants 359,703 68,000 0 427,703 243,374 Transfers in 173,766 1,031,415 0 1,205,181 257,802 Transfers (out) (126,811) 0 (120,600) (247,411) (463,709) ' Total Capital Contributions and Grants and Transfers 406,658 1,099,415 (120,600) 1,385,473 37,467 Change in Net Assets (548,613) 434,762 18,615 (95,23b) (1,204,608) Net Assets, Beginning of Year 16,829,090 6,966,856 413,168 24,209,114 25,413,722 Net Assets, End of Year $ 16,280,477 $ 7,401,618 $ 431,783 $ 24,113,878 $ 24,209,114 See accompanying notes. 8 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 2007 sw sw 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 Franchise Fees Transfers in Transfers (out) Net Cash Provided by (Used in) Noncapital Financing Activities Capital and Related Financing Activities Intergovernmental Revenues Collections on Notes Receivable Collections on Special Assessments Capital Contributions Proceeds from Sale of Fixed Assets Fixed Asset Additions Principal Payments on Bonds Payable Interest Paid Net Cash Provided by (Used in) Capital and Related Financing Activities Cash Flows from Investing Activities Interest Received Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Yesr Cash and Cash Equivalents, End of Year Business-Type Activities -Enterprise Funds 2006 Utility Stormwater Sanitation Totals Totals $ 6,134,167 $ 376,972 $ 1,424,355 $ 7,935,494 $ 7,981,626 (2,032,991) (270,038) (1,123,761) (3,426,790) (3,567,217) (1,600,570) (252,760) (24,567) (1,877,897) (1,730,247) (927,381) (172,519) (142,162) (1,242,062) (1,222,872) 1,573,225 (318,345) 133,865 1,388,745 1,461,290 18,376 0 0 18,376 20,055 0 0 3,961 3,961 0 0 1,025,000 0 1,025,000 255,368 (126,811) 0 (120,600) (247,4 i 1) (463,709) (108,435) 1,025,000 (116,639) 799,926 (188,286) 111,036 0 578 i l 1,614 0 36,722 0 0 36,722 20,850 33,371 0 0 33,371 59,370 150,392 0 0 150,392 243,374 0 0 0 0 2,340 (468,438) (1,018,163) (139,704) (1,626,305) (758,311) (694,434) (102,054) 0 (796,488) (767,558) (700,173',) (109,395) 0 (809,568) (841,989) (1,531,524) (1,229,612) (139,126) (2,900,262) (2,041,924) 200,059 113,065 23,067 336,191 310,212 133,325 (409,892) (98,833) (375,400) (458,708) 4,072,637 2,808,324 479,850 7,360,811 7,819,519 $ 4,205,962 $ 2,398,432 $ 381,017 $ 6,985,4(1 $ 7,360,811 See accompanying notes. 9 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 (Concluded) 2007 Reconciliation of Ooeratiee Income to Net Cash Provided by (Used in) Operative Activities Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities: Depreciation Provision for Uncollectible Accounts Change in Assets and Liabilities: Accounts Receivable Inventory Compensated Absences Accounts Payable and Accrued Liabilities Customer Deposits Defen•ed 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 Activity Noncash Transfers Noncash Capital Grants Business-Type Activities -Enterprise Funds 2006 Utility Stormwater Sanitation Totals Totals $ (499,637) $ (654,192) $ 111,609 $ (1,042,220) $ (714,321) 1,922,717 343,959 14,220 2,280,896 2,233,428 20,793 0 0 20,793 25,354 22,426 (3,722) (24,753) (6,049) 91,614 3,572 0 0 3,572 (21,121) 25,743 0 0 25,743 25,313 ~w 65,930 (4,535) 20,212 81,607 (182,149) 5,046 0 0 5,046 675 6,635 145 12,577 19,357 .2,497 ,,,q $ 1,573,225 $ (318,345) $ 133,865 $ 1,388,745 $ 1,461,290 $ 2,114,117 $ 2,238,005 $ 381,017 $ 4,733,139 $ 5,132,957 2,091,845 160,427 0 2,252,272 2,227,854 $ 4,205,962 $ 2,398,432 $ 381,017 $ 6,985,411 $ 7,360,811 $ 173,766 $ 6,415 $ 0 $ 180,181 $ 2,434 $ 209,311 $ 68,000 $ 0 $ 277,311 $ 75,240 See accompanying notes. 10 .~. CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2006 Assets Cash and Cash Equivalents Investments Total Assets Liabilities Accounts Payable and Accrued Liabilities DROP Plan Payable Total Liabilities Pension Trust Funds 2007 2006 $ 36,131 $ 41,498 15,430,215 13,101,427 15,466,346 13,142,925 4,950 3,965 471,214 248,224 476,164 252,189 Net Assets Held in Trust for Pension Benefits Total Net Assets See accompanying notes. 11 14,990,182 12,890,736 $ 14,990,182 $ 12,890,736 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 Additions Contributions: Employer Employees 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 See accompanying notes. 12 Pension Trust Funds 2007 2006 $ 784,051 $ 741,383 193,723 131,232 108,818 108,819 1,086,592 981,434 1,519,142 912,393 375,234 223,494 2,980,968 2,117,32 t 26,806 13,164 818,852 689,121 9,018 49,473 26,846 30,721 881,522 782,479 2,099,446 1,334,842 12,890,736 11,555,894 $ 14,990,182 $ 12,890,736 t F ~,,, CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 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 on Amendment to GASB Statement No. 14, the financial reporting entity ~""" consists of the primary government, organizations for which the primary government is financially accountable, and other organizations whose exclusions would cause the reporting entity's financial statements to be misleading or incomplete. Each potential component unit is ~" individually evaluated using specific criteria outlined in GASB Statement No. 14, to determine whether the entity is: (1) part of the primary government; (2) a component unit which should be included in the reporting entity (blended or discreetly presented); or (3) an organization ,. which should be excluded from the reporting entity entirely. The principal criteria for classifying a potential component unit include the legal separateness of the organization, the financial accountability of the primary government for the potential component unit resulting ~„ from either the primary government's ability to impose its will on the potential component unit, or the potential component unit's fiscal dependency on the primary government. Based upon the application of these criteria, the City has no component units. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on ail 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 is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Indirect costs are included in the program expense reported for individual functions and activities. Program revenues include: (1) ~ charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or activity; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Taxes and other items not properly included among program revenues are reported instead as general revenues. 13 "~# CITY OF ATLANTIC BEACH, FLORII)A ,,,,~ NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (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 aze 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 alt 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 vazious 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. "" 14 .~. CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (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. ^ 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 qualified police officers and general employees. Proprietary Funds Private sector standards of accounting and financial reporting issued prior to December 1, ,~.. 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of GASB. Governments also have the option of following subsequent private sector guidance for ~, their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private sector guidance. 15 *A1 CITY OF ATLANTIC BEACH, FLORIDA ,,,~; NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) _ Note 1 - Summary of Significant 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, 200'7, were $604,418. Budgets are adopted for all governmental funds (general, special revenue, debt service and capital projects). 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 3). 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. '"! 16 ~* CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 ~,,, {Continued) Note 1- Summary of Significant AccountinE Policies (Continued) Receivables Receivables are recorded at their net realizable value. The allowance for uncollectible accounts and assessments at September 30, 2007, in the enterprise funds is $63,524. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for 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. 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. 17 ~. CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Capital Assets (Concluded) 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 Infrastructure 25 - 100 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. '~ *,~ 18 ~. CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 _ (Continued) Note 1 - Summary of Significant Accounting Policies (Concluded) °A~ 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. Ail taxes become delinquent on April 1 of the following year. Discounts are allowed for early payment. On or prior to June 1, interest- bearing certificates are sold for all uncollected real property taxes. Unsold certificates are held by the City of Jacksonville, Florida. Interfund Transactions During the course of normal operations, the City has various transactions between funds to construct assets and comply with local ordinances and other legal restrictions. These transactions are reflected as transfers. In addition, certain transfers have been made between systems and accounts of the utility enterprise fund as required by bond covenants. Prior Period Information The financial statements include certain prior year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the City's financial statements for the year ended September 30, 2006, from which the summarized information was derived. 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 for pension investment purposes. In addition, investments are separately held and individually accounted for where contractual arrangements and bond covenants provide for and require such arrangements. 1""' At September 30, 2007, the carrying amount of cash on hand and on deposit with banks, including interest-bearing deposits was $217,761, and the related bank balance was $351,344. 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. Alt collateral must be deposited with an approved financial institution. 19 CITY OF ATLANTIC BEACH, FLORIDA „~ NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) _ Note 2 - Cash and Investments (Continued) 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. 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. The total cash and cash equivalents and investment balances of the City at September 30, 2007, are comprised of the following items: Cash and Cash Equivalents Petty Cash on Hand $ 2,550 Cash in Banks (Including Repurchase Agreement) 215,210 State Board of Administration Investment Pool 14,035,232 Total Cash and Cash Equivalents 14,252,992 Less Cash and Cash Equivalents, Restricted, Including $36,131 of Cash and Cash Equivalents with Trustee (2,288,403) Total Cash and Cash Equivalents, Unrestricted Pension Trust Investments Merrill Lynch Money Market $ 850 Merrill Lynch American Euro Pacific Growth 2,068,523 Merrill Lynch American Growth Fund 2,871,938 Merrill Lynch American Washington Mutual 2,751,072 Pimco Fund -Bond Mutual Fund 5,823,075 Baron Fund -Stock Mutual Fund 760,933 Royce Fund -Pennsylvania Mutual Fund 682,610 ICMA 401 DROP -Participant Directed 471.214 Total Pension Trust Investment $ 15.430.215 Restricted cash and investments at September 30, 2007, in the enterprise funds follows: Customer Renewal and Deaosits Realacement Debt Service Totals Enterprise Fund Utility Fund $ 541.086 $ 500.000 $ 1.050.849 x_2.091.935 Stormwater Fund $ 0 $ 0 160. $ 160.427 20 '""4 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) Note 2 - Cash and Investments (Concluded) Credit Risk-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. The City's investment in the SBA Pool is not rated by a nationally recognized statistical rating agency as of the date of these financial statements. Funds that have not been transferred to the Pool are placed in a money market fund. The Bank of America Repurchase Agreement is invested in treasury funds and 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. ~ It is the City's Police Officers' Retirement System and General Employees' Retirement System Pension. Trust Fund's policy to limit its investment in corporate debt issues to those that meet or exceed a credit rating of "A" by Moody's or Standard & Poor's rating services, and no more than 10% (at cost) of the fixed income portfolio total value can be invested in the securities of any single corporate issuer. At September 30, 2007, 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 - Saecial 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 December 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, 2007: 21 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) Note 3 - Special Assessments (Concluded) Special Assessment Receivable, September 30, 2007 (Less Current Portion) Total Special Assessment Receivable -Noncurrent. Note 4 - Receivables Beach Section H Avenue Other Assessment Assessments Assessments Totals $ 55,616 $ 6,714 $ 3,908 $ 66,238 (34,000) (1,600) (3,908) (39,508) Receivables, net of the allowance for doubtful accounts at September 30, 2007, consist of the following: Less Fund General Utility Stormwater Sanitation Total Total Allowance Accounts Accounts for Doubtful Receivable Receivable Accounts Net $ 183,324 $ (182,174) $ 1,150 466,732 (54,765) 411,967 21,384 (1,273) 20,111 87,419 (7,486) 79,933 $ 758.859 (245.698) $ 513.161 Included in accounts receivable are $165,817 of water and sewer revenues earned, but not billed as of September 30, 2007. 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, 2007: Notes Receivable, September 30, 2007 (Less Current Portion) Total Note Receivable -Noncurrent Note 6 - Capital Assets $ 192,402 (25,014) $ 167.388 Capital asset activity for the fiscal year ended September 30, 2007, is as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities Capital Assets Not Being Depreciated: Land $ 9,843,717 $ 0 $ 0 $ 9,843,717 Construction in Progress 230.289 S i 7.515 (590,708) 157.096 Total Capital Assets Not Being Depreciated 10.074.006 517.515 (590.708) 10.000.813 22 a "'"1 ~"' t !~" ~"' CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) Note 6 - Capital Assets (Continued) Beginning Ending Balance Increases Decreases Balance Governmental Activities (Concluded) Capital Assets Being Depreciated: Buildings $ 4,130,312 $ 4,065 $ 0 $ 4,134,377 Improvements Other Than Buildings 37,031,184 465,027 0 37,496,21 l Machinery and Equipment 3.015.495 519.675 (248,474) 3,286.696 Total Capital Assets Being Depreciated 44,176,991 988.767 (248,474) 44,917,284 Less Accumulated Depreciation for: Buildings (1,049,977) (98,040) 0 (1,148,017) Improvements Other Than Buildings (9,202,158) (593,906) 0 (9,796,064) Machinery and Equipment (1,905.3551 _5311,868) 247,674 (1,969.549) Total Accumulated Depreciation (12,157,490) (1,003.814) 247,674 (12,913.630) Total Capital Assets Being Depreciated, Net 32,019.501 ((5.047) (800) 32.003,654 Governmental Activities Capital Assets, Net $ 42.093.507 $ 502.468 $ ($91.508) $ 42 004.467 Business-type Activities Capital Assets Not Being Depreciated: Land $ 771,345 $ 870,573 $ 0 $ 1,641,918 Construction in Progress 123.235 726.034 (520.918) 328.351 Total Capital Assets Not Being Depreciated 894.580 1.596.607 (520,918) 1,970.269 Capital Assets Being Depreciated: Buildings 4,335,149 21,235 0 4,356,384 Improvements Other Than Buildings 55,504,679 798,228 (1,910) 56,300,997 Machinery and Equipment 1.641.789 188.645 (1,245) 1,829,189 Total Capital Assets Being Depreciated 61.481,617 1.008,108 (3.155) 62.486.570 Less Accumulated Depreciation for: Buildings (3,388,825) (148,217) 0 (3,537,042) Improvements Other Than Buildings (2(,327,786) (2,008,993) 1,910 (23,334,869) Machinery and Equipment (1,063.029) (123.686) 1.245 (1.185.470) Total Accumulated Depreciation (25.779.640) (2.280.896) 3.155 (28,057,381) Total Capital Assets Being Depreciated, Net 35.701,977 (1,272.788) 0 34.429.189 Business-type Activities Capital Assets, Net ~ 36.596.557 $ 323.819 $ (520.918) $ 36399.458 Depreciation expense was charged to functions/programs as follows: Governmental Activities General Governmental $ 145,149 Public Safety 194,288 Transportation 507,714 Parks and Recreation 156.663 Total Depreciation Expense -Governmental Activities z 23 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) Note 6 - Note 7 - Capital Assets (Concluded) Business-type Activities Utility $ 1,922,717 Stormwater 343,959 Sanitation 14,220 Total Depreciation Expense -Business-type Activities $ 2.280.896 Lone:-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 $ 19,150,000 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 775,000 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 972,097 Total Revenue Bonds Payable 20,897,097 (Less Unamortized Discount) (211,550) (Less Unamortized Refunding Loss) (1,596,082) Total Long-term Debt, Net $ 19.089.465 The annual requirements to amortize all revenue bonds payable outstanding at September 30, 2007, are as follows: Governmental Activities Year Ending Long-term Debt September 30, Principal Interest Total 2008 $ 53,930 $ 17,046 $ 70,976 2009 Sb,686 14,673 71,359 2010 59,305 12,262 71,567 2011 61,620 9,723 71,343 2012 63,690 7,101 70,791 2013 - 2017 136,909 5,781 142,690 2018 - 2022 0 0 0 2023 - 2025 0 0 0 Total $ 432,140 $ 66,586 $ 498,726 Business-Type Activities Long-term Debt Principal Interest Total $ 832,386 $ 777,882 $ 1,610,268 850,829 756,801 1,607,630 874,102 732,854 1,606,956 901,994 705,628 1,607,622 929, 581 675,671 1, 605,252 4,886,065 2,862,079 7,748,144 5,695,000 1,831,256 7,526,256 5,495,000 504,447 5,999,447 $ 20,464,957 $ 8,846,618 $ 29,311,575 24 CITY OF ATLANTIC BEACH, FLORIDA '` NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 „~ (Continued) Note 7 - Lone-term Debt (Concluded) ~"°" Interest and amortization incurred during the year ended September 30, 2007, was $18,522 in the debt service fund and $890,958 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, 2007, and during the year then ended, the City was in compliance with those ratios. e•• The following is a summary of the changes in long-term debt of the City for the year ended September 30, 2007: Balance Balance Due October 1, September 30, Within 2006 Additions Reductions 2007 One Year Governmental Activities Revenue Bonds Payable Compensated Absences Total Governmental Activities - Long-term Liabilities $ 485,353 $ 0 $ (53,213) $ 432,140 $ 53,930 539.603 494.864 (434,020) 600,447 400,000 Business-type Activities Revenue Bond Payable Less Deferred Amounts: For issuance Discounts Loss on Bond Refunding Total Revenue Bonds Payabte Compensated Absences Total Business-type Activities - Long-term Liabilities $ 21,261,450 $ 0 $ (796,493)$ 20,464,957 $ 832,386 (224,761) 0 13,211 (211,550) (13,211) {1,685,609) 0 89,527 _x,1,596,082) (89,527) 19,351,080 0 (693,755) 18,657,325 729,648 178,136 144,372 (118,627) 203.881 90.838 Conduit Debt The City has issued Health Facility Revenue Bonds to provide financial assistance to private- sector entities for the acquisition and construction of health care facilities deemed to be in the public interest. These bonds are secured by the financed properly and are payable solely from the payments received on the underlying mortgage loans. There is no obligation on the part of the City or any political subdivision for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of September 30, 2007, there were two series of Health Facility Revenue Bonds outstanding, with an aggregate principal amount payable of $47,980,000. 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 ~,,,, consists of the following at September 30, 2006, the date of the latest actuarial valuation: 25 Note 8 - CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (Continued) Defined Benefit Pension Plans (Continued) Plan Descriptions and Contribution Information (Concluded) General Emplovees Retirees and Beneficiaries Receiving Benefits 33 Disabled Members and Beneficiaries Receiving Benefits 2 Terminated Plan Members Entitled to but Not Yet Receiving Benefits 13 Active Plan Members 81 Total ^ General Employees' Retirement Plan Police 10 6 24 43 • Plan Description The General Employees' Retirement Plan (the. 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 5.0% 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 (Plan) provides retirement, disability and death benefits to Plan members and their beneficiaries. The 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% (4.815% for nonunion participants) of their annual covered salary. Effective September 23, 2007, all plan members are required to contribute 4.815% 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 Employees' and Police Retirement Plans for the current year were as follows: 26 ~,,, CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 ,s (Continued) Note 8 - Defined Benefit Pension Plans (Concluded) Annual Pension Costs and Net Pension Asset (Concluded) General Emalovees Police Totals Annual Required Contribution (ARC) $ 482,364 $ 390,494 $ 872,858 (Contributions Made) (482,364) {410,506) (892,870) Net Pension Obligation, End of Year $ 0 $ (20.012) $ (20 012) The City has funded the Police Retirement Plan in excess of the computed ARC for 2007 based upon the 2006 actuarial valuation. No pension asset has been recorded in the accompanying financial statements pending computation of the 2007 actuarial valuation. Other Pension Plan Information The annual required contributions for the current year were determined as part of the September 30, 2006, actuarial valuations for the General Employees' and Police Retirement Plans using the individual entry-age actuarial cost method. The actuariat assumptions include ~,,, an 8.0% rate of return on investments, projected salary increases of 5.5% per year attributable to inflation, and projected salary increases of 0% to 3% attributable to seniority/merit. The assumptions did not include postretirement benefit increases. The actuarial value of assets was determined using market value and a funding value adjustment for both plans. The unfunded actuarial accrued liabilities are being amortized over remaining amortization periods of 2 to 29 years. Three-year trend information: Fiscal Year Ended Annual Pension September 30, Cost (APC) General Employees 2005 $ 464,893 2006 480,029 2007 482,364 Police 2005 297,361 2006 350,161 2007 390,494 Percentage of APC Contributed 100% 100% 100% 100% 100% 105% Net Pension Asset/ (Liability) $ 0 0 0 0 0 20,012 Note 9 - Interfund Accounts Individual fund interfund receivables and payables at September 30, 2007, consist of the following: Due From Due to Other Other Funds Funds General ~. Nonmajor Governmental $ 103,040 $ 0 0 103,040 27 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 (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, 2007: Transfers In Nonmajor Utility General Governmental Stormwater Total Transfers Out Fund Fund Funds Fund Transfers Nonmajor Govemmental Funds $ 0 $ 0 $ 70,648 $ 425,000 $ 495,648 Utility Fund 0 126,811 0 0 126,811 Sanitation Fund 0 120,600 0 0 120,600 General Fund 0 0 0 600,000 600,000 Governmental Activities 173,766 0 0 6.415 180.181 Total Transfers $ 173.766 $ 247.411 $ 70.648 $ 1.031.415 $ 1.523.240 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, 2007, the City had outstanding commitments on contracts in progress as follows: Project Tvae Utility System Improvements Stormwater System Improvements General Government Improvements Unexpended Contract Amounts $ 148,678 298,586 425,357 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 the City. 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, 2007, the City incurred $841,949 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. Over the next several years, the City will be making utility system improvements to meet the Total Maximum Daily Load (TMDL) of nitrogen being discharged into the St. Johns River. The allowable load will be allocated between the industrial and wastewater point sources and the City's Stormwater systems which discharge to the river or its tributaries. The new nitrogen limit will require the City to upgrade at least one, and possibly both wastewater treatment plants. Building a reclaimed water facility that will eliminate a portion of our discharge to the river is also being considered. 28 -, -~; CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2007 ~,. (Concluded) Note 11- Commitments (Concluded) The Florida Department of Environmental Protection (FDEP) will determine individualized timelines for completing plant and stormwater upgrades. The FDEP will be allowing 2-to-4 year time periods to complete plant upgrades. Stormwater improvements may be granted a """' longer compliance period. The estimated range of costs for the treatment plant upgrades and a reclaimed water facility will be from $5 to $11 million. The City anticipates some grant funds to be available for the reclaimed water facility and stormwater improvements related to ~"' TMDL. The point-source improvements will be less expensive than stormwater improvements to remove similar amounts of nitrogen, so trading point-source projects that go beyond the TMDL requirements to offset stormwater needs may save the City a considerable +•~+~ amount. It is undetermined, at this time, what the net cost will be to the City. Note 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; and ^ 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. 29 REQUIRED SUPPLEMENTARY INFORMATION s^ ~. CITY OF ATLANTIC BEACH, FLORIDA REQUIItED SUPPLEMENTARY INFORMATION SCHEDULES OF PENSION FUNDING PROGRESS ® SEPTEMBER 30, 2007 „~, General Employees' Retirement Plan Valuation Funded Annual Covered UAAL as Percentage Date AVA AAL UAAL Ratio Payroll of Payroll 9130/02 $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% Ew 9/30/05 6,802,000 9,822,000 3,020,000 69.3% 3,182,000 94.9% 9/30/06 7,609,000 10,505,000 2,896,000 72.4% 3,195,000 90.6% Police Retire ment Plan Valuation Funded . Annual Covered UAAL as Percentage Date AVA AAL UAAL Ratio Payroll of Payroll 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% 9130/05 4,775,000 6,997,000 2,222,000 68.2% 1,402,000 158.5% 9/30/06 5,175.000 7,034,000 1,859,000 73.6% 1,254,000 148.2% 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. 30 a* ~"" ~ CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER ~,,, AND OTHER CONTRIBUTING ENTITIES SEPTEMBER 30, 2007 General Employees' Retirement Plan Annual Required Year Ended Contributed Percentage September 30, (ARC) Contributed 2003 $315,106 100% 2004 381,518 100% 2005 464,893 i 00% ~"" 2006 480,029 100% 2007 482,364 100% Police Retirement Plan Annual Required Year Ended Contributed Percentage September 30 (ARC) Contributed 2003 $225,991 100% 2004 242,637 100% 2005 297,361 100% 2006 350,161 100% 2007 390,494 105% 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 Actuarial Cost Method Amortization Method Remaining Amortization Period ~„ Asset Valuation Method Actuarial Assumptions Investment Rate of Return Projected Inflationary Salary Increases Projected Merit Salary Increases Inflation September 30, 2006 Entry-Age Actuarial Cost Method Level Percent of Payroll, Closed 5 to 30 Years Funding Value 8.00% 5.50% 0.00% to 3.00% 5.00% ~ 31 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, 2007 Revenues Property Taxes Nonproperty Taxes Licenses and Permits State-shared Revenues Other Intergovernmental Revenues Charges for Services Fines and Forfeitures Interest Income Miscellaneous Revenues Interfund Charges Total Revenues Expenditures ~ General Government: Legislative Legal Counsel Planning and Zoning w City Clerk City Manager Finance and Accounting ~ Human Resources Information Technology - Other Total General Government Public Safety: Law Enforcement Lifeguards Fve Control Code Enforcement Building Total Public Safety Transportation: Public Works Administration Streets and Roads Fleet Maintenance Total Transportation Parks and Recreation (Total Expenditures) Budgeted Amounts Original Final Actual Amounts Variance With Final Budget - Positive (lYegative) $ 3,890,275 $ 3,890,275 $ 3,868,172 $ (22,103) 1,692,697 1,692,697 1,691,382 (1,315) 454,447 454,447. 444,348 (10,099) 1,945,035 1,945,035 1,890,799 (54,236) 612,437 812,437 634,358 (178,079) 19,918 19,918 34,691 14,773 102,700 102,700 123,900 21,200 230,000 230,000 302,500 72,500 36,448 46,448 67,620 21,172 1,335,894 1,335,894 1,350,761 14,867 10,319,851 10,529,851 10,408,531 (121,320) 50,898 51,598 51,557 41 120,075 127,675 127,613 62 256,429 251,013 234,236 16,777 251,798 260,003 231,715 28,288 234,090 234,090 230,247 3,843 894,613 899,843 890,600 9,243 217,268 217,268 184,814 32,454 453,470 519,612 474,992 44,620 378,435 380,385 378,182 2,203 2,857,076 2,941,487 2,803,956 137,531 3,479,199 3,487,758 3,314,450 173,308 186,987 190,668 181,167 9,501 869,606 869,606 869,391 215 65,041 65,041 63,802 1,239 224,948 224,948 158,669 66,279 4,825,781 4,838,021 4,587,479 250,542 461,855 466,697 442,219 24,478 1,004,659 1,036,297 838,597 197,700 251,700 274,324 259,079 15,245 1,718,214 1,777,318 1,539,895 237,423 1,172,451 1,429,112 1,161,107 268,005 (10,573,522) (10,985,938) (10,092,437) 893,501 32 ,~, CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL -GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2007 """ (Concluded) Variance With Final Budget - Budgeted Amounts Actuat Positive Original Final Amounts (Negative) ~ Excess of Revenues Over Expenditures $ (253,671) $ (456,087) $ 316,094 $ 772,181 ',,, Other Financing Sources (Uses) Transfers in 247,411 247,411 247,411 0 Transfers (out) (600,000) (600,000) (600,000) 0 Sate of General Fixed Assets 9,270 9,270 9,788 518 Total Other Financing Sources (Uses) (343,319) (343,319) (342,801) 518 (Deficiency) of Revenues and Other Financing Sources (Under) Expenditures and Other Financing Uses (596,990) (799,406) (26,707) 772,699 a. Fund Balances, Beginning of Year 5,616,700 5,616,700 5,616,700 0 Fund Balances, End of Year $ 5,019,710 $ 4,817,294 $ 5,589,993 $ 772,699 33 ~" CITY OF ATLANTIC BEACH, FLORIDA REQUIItED SUPPLEMENTARY INFORMATION NOTE TO SCHEDULE OF REVENUES, EXPENDITURES, ~. AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL -GENERAL FUND FOR. THE YEAR ENDED SEPTEMBER 30, 2007 Budgets and Budgetary Accounting General governmental revenue and expenditures accounted for in budgetary funds are controlled by a '"' budgetary accounting system in accordance with various legal requirements which govern the City's operations. Budgets are monitored at varying levels of classification detail; however, expenditures cannot legally exceed total appropriations at the individual fund level. Encumbrances are recorded. Unexpended +~ items which are unencumbered at year end must be reappropriated in the subsequent year. Budgets are adopted for all governmental funds (general, special revenue, debt service and capital projects funds). The City Manager is authorized to transfer budgeted amounts within departments within any fund; however, any revisions that increase the total expenditures of any department or fund must be approved by the City Commission. All necessary supplemental appropriations are adopted by the City ~, Commission and are included in the reported budgetary data. The budget presented in the accompanying required supplemental information is prepared in conformity with accounting principles generally accepted in the United States of America. ~, 34 SUPPLEMENTARY INFORMATION CITY OF ATLANTIC BEACH, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 2007 Assets Equity in Pooled Cash and Cash Equivalents Due from Other Govemments Total Assets Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities Deposits 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 Funds Convention Tree Local Option Development Half-Cent Court Cost Replacement Gas Tax Tax Sales Tax Training $ 9,713 $ 290,649 $ 237,915 $ 1,414,879 $ 2,945 0 100,021 10,000 l 19,964 1,028 9,713 390,670 247,915 1,534,843 3,973 's4 0 25,132 10,000 13,230 0 0 0 0 0 0 0 0 0 0 0 ~ 0 25,132 10,000 13,230 0 "'! 0 0 0 0 0 ""4 9,713 365,538 237,915 1,521,613 3,973 9,713 365,538 237,915 1,521,613 3,973 $ 9,713 $ 390,670 $ 247,915 $ 1,534,843 $ 3,973 ,,,~ 35 21107 Special Revenue Funds Totals !~" Totals Nonmajor Radio Contraband Police Miscellaneous Special Debt Governmental 2006 Communication Forfeiture Grants Grants Revenue Service Funds Totals S 17,336 $ 38,722 $ 0 $ 0 $ 2,012,159 $ 78,542 $ 2,090,701 $ 1,684,167 4,800 0 4,$55 98,185 338,853 0 338,853 359,301 ~ 22,136 38,722 4,855 98,185 2,351,012 78,542 2,429,554 2,043,468 0 0 0 0 48,362 0 48,362 50,631 0 19,544 0 0 19,544 0 19,544 0 0 0 4,855 98,185 103,040 0 103,040 116,286 0 19,544 4,855 98,185 170,946 0 170,946 166,917 0 0 0 22,136 19,178 0 ~ 22,136 19,178 0 0 0 78,542 78,542 77,265 0 2,180,066 0 2,180,066 1,799,286 0 2,180,066 78,542 2,258,608 1,876,551 ~, S 22,136 $ 38,722 $ 4,855 S 98,185 $ 2,351,012 $ 78,542 S 2,429,554 $ 2,043,468 ~* 36 "~ CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 aoo7 Revenues Taxes Other Intergovernmental Revenues Interest Income Miscellaneous Revenues Total Revenues Expenditures Current: General Government Public Safety Transportation Parks and Recreation Conservation and Resource Management Debt Service: Principal Interest and Other Capital Outlay (Total Expenditures) (Deficiency) Excess of Revenues (Under) Over Ezpeaditures Other Financing Sources (Uses) Transfers in Transfers (out) Total Other Financing Sources (Uses) Net Change in Fnad Balances Fund Balances, Beginning of Year Fund Balances, Eod of Year Special Revenue Funds Coaveotioo Tree Local Option Development Half-Coat Coart Cost Radio Replaceroeat Gas Tax Tax Sales Tax Training Commuaicatioa S 0 S 542,919 S 70,032 S 723,303 S 0 S 0 0 0 0 0 8,409 31,987 0 13,213 4,788 65,684 72 352 0 0 700 0 0 0 0 556,132 80,520 788,987 8,481 32,339 "~ 0 0 35,000 0 0 0 0 0 0 0 7,949 17,839 0 247,793 0 612 0 0 0 0 0 0 0 0 11,200 0 0 0 0 0 ,,,~ 0 0 0 0 0 0 0 0 0 0 0 0 0 5,537 0 279,738 0 0 "* (11,200) (253,330) (35,000) (280,350) (7,949) (17,839) (11,200) 302,802 45,520 508,637 532 14,500 0 0 0 0 0 0 0 (258,648) 0 (237,000) 0 0 0 (258,648) 0 (237,000) 0 0 (11,200) 44,154 45,520 271,637 532 14,500 20,913 321,384 192,395 1,249,976 3,441 7,636 S 9,713 S 365,538 S 237,915 S 1,521,613 S 3,973 S 22,136 "~! 37 aoo7 Special Revenue Funds Totals Totals Nonmajor Cootrabaad Police Miscellaneous Special Debt Governmental 2006 Forfeiture Grants Grants Revenue Service Funds Totals $ 0 $ 0 $ 0 $ 1,336,254 $ 0 $ 1,336,254 S 1,356,441 15,027 120,364 107,389 283,176 0 283,176 329,849 ~ 610 0 0 89,719 3,111 92,830 71,090 0 0 0 700 0 700 !40 15,637 120,364 107,389 1,709,849 3,111 1,712,960 1,757,520 0 0 6,799 41,799 0 41,799 118,982 0 96,571 0 122,359 0 122,359 126,708 0 0 0 248,405 0 248,405 274,121 0 0 0 0 0 0 2(,830 0 0 0 11,200 0 11,200 10,065 0 0 0 0 53,213 53,213 50,066 0 0 0 0 19,269 19,269 21,439 d 23,793 100,590 409,658 0 409,658 798,287 0 (120,364) (107,389) (833,421) (72,482) (905,903) (1,421,498) 15,637 0 0 876,428 (69,371) 807,057 336,022 0 0 0 0 70,648 70,648 70,000 0 0 0 (495,648) 0 (495,648) (325,368) 0 0 0 (495,648) 70,648 (425,000) (255,368) 15,637 0 0 380,780 1,277 382,057 80,654 3,541 0 0 1,799,286 77,265 (,876,551 1,795,897 $ 19,178 $ 0 $ 0 S 2,180,066 $ 78,542 $ 2,258,608 $ 1,876,551 38 "' CITY OF ATLANTIC BEACH, FLORIDA ,,,~ COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2007, •~ WITH COMPARATIVE TOTALS FOR SEPTEMBER 3 0, 2006 Pension Trust Funds .. Police General Officers' Employees' "'" Retirement Retirement 2007 2006 Plan Plan Totals Totals Assets ~ '" Cash and Cash Equivalents $ 16,842 $ 19,289 $ 36,131 $ 41,498 Investments 6,208,070 9,222,145 15,430,215 13,101,427 Total Assets 6,224,912 9,241,434 15,466,346 13,142,925 Liabilities Accounts Payable and Accrued Liabilities 2,125 2,825 4,950 3,965 DROP Plan Payable 300,091 171,123 471,214 248,224 Total Liabilities 302,216 173,948 476,164 252,189 "~+~ Net Assets Held in Trust for Pen sion Benefits 5,922,696 9,067,486. 14,990,182 12,890,736 Total Net Assets $ 5,922,696 $ 9,067,486 $ 14,990,182 $ 12,890,736 ""'~! 39 e~• CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS ~"' FOR THE YEAR ENDED SEPTEMBER 30, 2007, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2006 Pension Trust Funds ~ Additions Contributions: Employer Employees 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 Police General Officers' Employees' Retirement Retirement Plan Plan 2007 2006 Totals Totals $ 301,688 $ 482,363 $ 784,OS1 $ 741,383 19,757 173,966 193,723 131,232 108,818 0 108,818 108,819 430,263 656,329 1,086,592 981,434 594,260 924,882 1,519,142 912,393 148,122 227,112 375,234 223,494 1,172,645 1,808,323 2,980,968 2,117,321 14,809 11,997 26,806 13,164 399,599 419,253 818,852 689,121 6,089 2,929 9,018 49,473 13,120 13,726 26,846 30,721 433,617 447,905 881,522 782,479 739,028 1,360,418 2,099,446 1,334,842 Net Assets, Beginning of Year 5,183,668 7,707,068 12,890,736 11,SSS,894 Net Assets, End of Year $ 5,922,696 $ 9,067,486 $ 14,990,182 $ 12,890,736 40 CITY OF ATLANTIC BEACH, FLORIDA HISTORICAL REVENUES AND EXPENSES FOR THE YEARS ENDED SEPTEMBER 30, 2003 THROUGH 2007 (UNAUDITED) 2003 2004 2005 2006 2007 Revenues Operating Revenues: Water: Customer Charges $ 2,012,087 $ 2,25b,905 $ 2,459,456 $ 2,554,325 $ 2,531,304 Miscellaneous Charges 337,224 15,828 22,567 59,667 38,809 Total Water 2,349,311 2,272,733 2,482,023 2,613,992 2,570,113 Sewer: Customer Charges 3,372,934 3,256,305 3,524,134 3,609,816 3,529,947 Total Operating Revenues 5,722,245 5,529,038 6,006,157 6,223,808 6,100,060 Nonoperating Revenues: Interest Income: Water 29,161 20,184 50,946 83,149 117,793 Sewer 42,806 28,104 57,008 76,810 82,266 Total Nonoperating Revenues 71,967 48,288 107,954 159,959 200,059 Total Revenues 5,794,212 5,577,326 6,1.14,111 6,383,767 6,300,119 Expenses Operating Expenses: Water 1,110,532 1,023,734 945,643 1,067,498 1,159,651 Sewer 1,964,887 1,918,713 1,827,176 1,977,608 1,891,016 Total Operating Expenses 3,075,419 2,942,447 2,772,819 3,045,106 3,050,667 Administrative, Nondivisional and Other: Water 548,905 526,729 538,189 582,858 553,519 Sewer 619,635 539,217 883,224 937,010 1,072,794 Total Administrative, Nondivisional and Other 1,168,540 1,065,946 1,421,413 1,519,868 1,626,313 (Total Expenses) (4,243,959) (4,008,393) (4,194,232) (4,564,974) (4,676,980) Net Revenue 1,550,253 1,568,933 1,919,879 1,818,793 1,623,139 Capital Improvement Charges Sewer 153,878 112,311 0 0 0 Net Revenues Available for Debt Service 1,704,131 1,681,244 1,919,879 1,818,793 1,623,139 Nonoperating Income (Expense) Interest Expense (890,937) (939,746) (819,620) (798,991) (769,816) Loan Amortization (16,818) (16,817) (13,672) (15,289) (15,289) Total Nonoperating (Expense) (907,755) (956,563) (833,292) (814,280) (785,105) Net Income Before Depreciation and Operating Transfers $ 796,376 $ 724,681 $ 1,086,587 $ 1,004,513 $ 838,034 41 ^~ ''1 CITY OF ATLANTIC BEACH, FLORIDA MAJOR UTILITY CUSTOMERS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (UNAUDITED) Navy (Federal Government) Fleet Landing (Retirement Community) Oaks of Atlantic Seach (Mobile Home Park) Lakes of Mayport (Apartment Complex) City of Atlantic Beach, Florida John Creek Estate (Mobile Home Park) Hanna Park (Regional Park) Atlantic Arms (Apartment Complex) Sea Turtle Inn (Hotel) Sea Oats (Apartment Complex) Total 42 Annual Billings $ 427,124 224,877 105,527 102,326 95,302 92,064 81,546 73,088 68,457 57,343 $ 1,327,654 O O N d H W ~ ~ M ^ W H ~ ~~„~ P~~~~ 3 Ey G a ~~~~ H a d W O M.~.1 V W a 0 w o o a o o~~ o ~ o ~ ~ O O~ N d: N t~ vi pp ~ ~ O ~f' O Y1 M M Y7 ~D O ~ L d d ~ V Q v U a ~O Q~ O~ O O O~ M h M O~ y ~ N N N O O~ (~ t`~ ~O ~ d A M M M M M M N N N N ~ ~ Q Q O O ~-+ ~ 00 ~ I~ ~D ~--~ ~ O O n~~ h ~ N~ o o N ~ M M M M M M ~t ~' ~ M r O H .-. H H ~ d .-~ O 00 M O O O O .-• t~ S N N N~ N N ~ N N N N 7 LQ ~ ~ L ~O 00 I~ ~O O ~O O Q~ 6l V) Vl V ~ N ~ V'~ O M 00 C ~ .-. ~. --~ ~-+ .-. .~ N N N ~ r ' U f q '~ fl L 3 O O~ ~ O ~ 00 y1 M ~O O~ O O M d~ ~ 00 00 00 ~O ~O O H ~~ O O~ N t~ V" M O O ~O d o0 l~ ~O t~ O O O~ C~ M ~Y a N N M~ h ~F1 v1 V1 'ct M V N N N N N N N ~ N N N d ~ ~ N~ O N N b h~ ~ ~ l~ 00 O~ O N M N N N N i i i i i i i ~ ~, v v v v v v ~ v ~ d V oao~ooaoeo ~, ~ 0 0 0 0 0 0 0 0 0 0 ~ w ~ ~t ~D ~n N ~O a~ O O O ~ d d ~ O oo .-~ .-+ (V M ri N N d ~ d V Q ; U a d M h M N ~ ~ v ~ ° ~ v i o O o o o o M . l 00 ~ N O~ N ~7 00 M '~ +"~ M M ~A Yl V1 V1 N ~ ~ 'C}' + + ~ N N N N N N N N N N O ~ ~ O a o0 O~ O N M ~ '~ ~ ~ L O~ C~ 0 0 0 0 0 0 0 0 y O~ O~ 0 0 0 0 0 0 0 0 ,y N N N N N N N N .. V O .~ .; A .~, a~ U Q U O .~ .~ w a°~i U 04 N ~.+ ~, adi ~, a~ y .~ G. y~ G U 0 °o N N a '~ M v •a ~* ~' F C dwz~ ~E~,,OE C `i' ~ W ~ c .. 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V' (~ 00 M O~ ~ ~D ~O ~D ~C ~O ~O ~O l~ t~ ~O w O F L v1 -~ N t~ O 00 l~ ~--~ O ~O ~D N O~ M ~O t~ 00 ~ O p W 00 O~ 00 00 O~ O~ M ~--~ O~ ^ . ~ U ~ D L 07 3 O C~ l t~ --+ N M O~ O t~ ,+r, ~ d' ~ 00 V7 N O~ N v1 p N M~ V'1 ~O 00 O~ Q~ O O i", ~t '~ ~ ~f d' ~ C' ~ v1 V't ~~~o a o 0 0 ~o ai ~o v a? ~n ~n ~o t~ 0 0 0 ~~ a~ , O O ~~ ~--~ N M 0 0 0 y~~ « 3 ~ Q v . 7 ~U a .~ a~ _ N O~ 00 00 00 --~ ~t O~ Y7 ~ C ~O ~D ~D t~ ~ ~ n .-» ~ ' ~ p h ~O M V1 l O~ O O O c1 N ~ ~ ~ M M ~M. .M- ~ ~ ~ ~ ~ ~ D p ~ ~"' O . ~ a V1 y ~i N V 00 O~ O~ N M~ h ~D l~ O ~ O~ O~ 0 0 0 0 0 0 0 0 p O~ O~ 0 0 0 0 0 0 0 0 p ~ ^' N N N N N N N N N * t. a ,~ eed aHZ~ odor a~~~ w~~~ a A WdWE H ~ E a' 3 W ` G k.~V~ O ~t ~ ~t U ~ vii aA 3~ y ~d ~~ a d o o a~~~ o e ~ ~O O~ v7 l~ ~ Q~ M v1 ~O ~ qp ~ ~ V 1 M ~ M ~D N O~ 00 'ct R{ w C G O C v ~ e v V a .-~ .-~ 00 V'1 V1 M V' ~O N .N-~ O O~ O~ 00 T 00 00 l~ ~D I~ ~ -~ 0 0 0 0 0 0 0 0 0 bD 0 L ~ (~ N l~ ~ M 00 ~O 00 V' V1 O d v1 M O~ ~D O~ N M O ~ O ^ O O~ oo O O ~O ~D ~n ~ ~ ~ vi er ~' vi vi 'ct ~ ~ a+ O F C ~ V ~ ~ ~ ~O ~t ^~ N N ++ ~ ~ N N N N N N N N N N > U > D ~ ~ ~, 3 N O~ M 00 01 00 7 M ~O ~ ~ 00 ~O t~ O C~ O O h ~D ~ !}' cf h M~ M N ~n M N ~ N N N N N N N N N N a ~n ~o .~ 0 0 0 0 o a a o a o a ~ ~ ~ ~ ~ a~ y N~ `~ ~ v1 ~O O~ 0 0 ' ~ ~ ~ ~ ~ ~--~ ~--~ N vi O C O O d ~ ' .. D C C u ~ t .~, N ~ a L U as ~ a ~ y .S] ~ l~ N.N N h M N h t~ ~ y ~ O `V' N O 00 ~O (~ ~O 00 ~O N N 00 O --+ 00 N M l~ M b ~' O O~ N N ^~ --~ O O O .-+ .-. .-. .-. r. .-, Cam. w ~ u, O a° a a v U ti" _ 0 o ~ ~ 0 0 0 O~ O~ 0 0 0 O~ Q~ 0 0 0 0 0 0 0 0 C ~ N N N N N N N N ~ * y a a 1"' CITY OF ATLANTIC BEACH, FLORIDA OTHER BOND COVENANT DISCLOSURES FOR THE YEARS ENDED SEPTEMBER 30, 2003 THROUGH 2007 "'~` (UNAUDITED) Utility Service Tax Collections (Unaudited) (Last Five Years) Year Electricity Telecom Gas Fuel Oil Total 2003 $ 355,151 $ 581,898 $ 32,567 $ 236 $ 969,852 ~ 2004 351,752 552,716 26,850 126 931,444 " 2005 367,186 586,369 28,015 77 981 647 2006 372,226 596,368 23,711 132 , 992 437 2007 363,285 602,177 22,413 35 , 987,910 {fir Ad Valorem Tax Collections (Unaudited) (Last Five Years) Year Total 2003 $ 2,525,955 2004 2,7 t 9,203 2005 2,990,075 2006 3,529,832 2007 3,868,172 46 t'; '" CITY OF ATLANTIC BEACH, FLORIDA SCHEDULES OF NET REVENUES IN ACCORDANCE WITH BOND RESOLUTIONS ENTERPRISE FUNDS (WATER AND SEWER) FOR THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED) Gross Revenues Utility Connection Charges Interest Total Gross Revenues Operating Expenses Personal Services Contractual Services Supplies Repairs and Maintenance Heat, Light and Power [ntergovernmental 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 2007 2006 $ 6,061,251 $ 6,164,142 190,681 191,550 200,059 159,967 6,451,991 6,515,659 1,626,313 1,519,869 749,987 856,407 315,044 294,364 171,866 154,641 540,276 553,933 927,381 909,956 0 2,340 346,113 _ 275,805 (4,676,980) (4,567,315) 1,775,011 1,948,344 127,933 213,274 0 0 $ 1,902,944 $ 2,161,618 $ 1,510,430 $ 1,533,862 125.99% 140.93% 117.52% 127.02% 110.00% 110.00% 105.00% 105.00% "~ 47 ~ ~'" ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS, ISSUED BY THE COMPTROLLER GENERAL OF THE UNITED STATES AND OTHER CONTRACT REQUIREMENTS 0 ! a! a. CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS FOR THE YEAR ENDED SEPTEMBER 30, 2007 CFDA/ Grantor/Pass-Through Entity CSFA Contract/Grant Program Program Federal Program Title Number Number Award Expenditures* Federal Awards U.S. Department of Housing and Urban Development Passed Through City of Jacksonville, Florida Community Development Block Grant 14.218 5629-40 $ 126,177 $ 107,389 U.S. Department of Housing and Urban Development Passed Through Habitat for Humanity of the Jacksonville Beaches ' Self-Help Homeownership Opportunity Program 14.247 SH04-001 115,383 110,553 U.S. Department of Justice Passed Through City of Jacksonville, Florida City of Atlantic Beach -Crime Suppression 16.738 5629-33 46,670 46,670 Urban Area Security Initiative (UASI Program) 97.067 5629-39 50,390 50,390 U.S. Department of Justice Fiscal Year 2006 Bulletproof Vest Partnership Grant 16.607 2006-BUBX-06134745 881 881 Fiscal Year 2007 Bulletproof Vest Partnership Grant 16.607 2007-BUBX-07040584 1,177 589 U.S. Department of Justice Passed Through Florida Department of Law Enforcement JAG - AB -CAD 16.738 2006-JAGC-DUVA-4-M8-227 65,000 23,793 State Homeland Security - ODP SWAT 97.004 2006-SHSP-DUVA-3-N9-027 20,000 1,830 JAG - AB Crime Suppression 2007 16.738 2007-JAGC-DUVA-t-P3-196 45,000 45,000 JAG -Emergency Notification System 16.738 2007-JAGD-DUVA-I-P4-027 3,071 3,071 U.S. Department of Transportation Passed Through the University of North Florida, Institute of Police Technology and Management Sustained Enforcement Initiative Incentive Program 20.601 K8-07-06-20 2,280 2,280 U.S. Department of Justice Passed Through Florida Department of Community Affairs Fiscal Year 2006 SHSGP, Issue 2l 97.067 07-DS-SN-04-26-02 4,120 0 Total Federal Awards ~~$~Q $ 392.446 State Financial Assistance Florida Department of Environmental Protection Hopkins Creek Regional Retention Facility Florida Department of Community Affairs, Florida Communities Trust Dutton Island Preserve Expansion Phase II Total State Financial Assistance Total Federal Awards and State Financial Assistance 37.039 LP6002 $ 400,000 $ 0 52.002 07-CT-1X-06-F6-A1-077 1.875.000 0 $ 2.275.000 $ 0 '~ Includes Grant Expenditures Oniy (Matching Funds Not Reported). 48 CITY OF ATLANTIC BEACH, FLORIDA NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ,,, AND STATE FINANCIAL ASSISTANCE PROJECTS FOR THE YEAR ENDED SEPTEMBER 30, 2007 Note I - Basis of Presentation The accompanying schedule of expenditures of federal awards and state financial assistance ~"` projects includes the federal awards and state financial assistance projects activity of the City of Atlantic Beach, Florida, and is presented on the modified accrual basis of accounting. 49 ~"" ~" CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF EXPENDITURES OF THE CITY OF JACKSONVILLE ~„ PUBLIC SERVICE GRANT FOR THE YEAR ENDED SEPTEMBER 30, 2007 (Spent with Prior Year Item Budgeted .Actual Awards) Carrvforward Capital Expenditures ~, Sewer and Water Sewer $ 100,000 $ 100,000 $ 0 $ 0 Utility Tap in 13,905 0 0 13,905 Infrastructure -Program Income 3,683 3,683 0 0 Utility Tap in 7,999 3,116 0 4,883 "" Infrastructure 590 .590 0 0 Total $ 126.177 $ 107.389 $ 0 $ 18.788 ~ SO G ay gis Company r REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLL~NCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITINGSTANDARDS Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida We have audited the 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, 2007, which collectively comprise the City's basic financial statements and have issued our report thereon dated February 8, 2008. 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. r• Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial ~, statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. ~. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of ,~ control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. ~' A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be ,~ prevented or detected by the City's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Certified Public Accountants P.O. Box 23999 • 222 N.E. 1st Street • Gainesville, Florida 32602 • 1352) 378-2461 • FAX (352) 378-2505 ~"" Laurel Ridge Professional Center • 2347 S.E. 17th Street • Cicala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542 443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762 2201 Cantu Court, Suite # 100 • Sarasota, Florida 34232 • (941) 379-2800 • fAX (941) 379-2899 MEMBERS OF AMERICAN AND FLORIDA INSTITUTES Of CERTIflfO PUBLIC ACCOUNTANTS ~1 MEMBER OF AMfRICAN 1N5T1TUTE Of CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES ANO S.f.C. PRACTICE SECTIONS x 51 1A"'" ~,,, Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida 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 GOVERIVMENTAUDITIIVGSTANDARDS (Concluded) Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and 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. 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. February 8, 2008 Gainesville, Florida 52 Purvis MANAGEMENT LETTER Honorable Mayor, City Commissioners and City Manager ,~„ Atlantic Beach, Florida We have audited the basic financial statements of the City of Atlantic Beach, Florida (the City), as of and •. for the fiscal year ended September 30, 2007, and have issued our report thereon dated February 8, 2008. 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. We have issued our report on compliance and on internal control over financial reporting dated February 8, 2008. 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, unless otherwise required to be reported in the report on compliance and internal controls, this letter is required to include the following information. The Rules of the Auditor General [Section 10.554(1)(1)1.] require that we address in the management letter, if not already addressed in the auditors' report on compliance and internal controls, whether or not recommendations made in the preceding annual financial audit reports have been followed. There were no comments made in the preceding annual financial audit report. The Rules of the Auditor General [Section 10.554(1)(1)2.] require that we determine whether the City complied with Section 218.415, Florida Statutes, regarding investment of public funds. Our audit disclosed no matters requiring comment as outlined in Section 218.415, Florida Statutes. The Rules of the Auditor General [Section 10.554(1)(1)3.] require that we disclose in the management ~,. letter any recommendations to improve financial management, accounting procedures, and internal controls. Our audit disclosed no matters required to be disclosed by the Rules of the Auditor General [Section 10.554(1)(1)3.]. The Rules of the Auditor General [Sections 10.554(1x1)4.] require disclosure in the management letter of violations of provisions of contracts and grant agreements or abuse that have an effect on the financial statements that is less than material but more than inconsequential. In connection with the audit, we did not note any such violations or abuse. Certified Pablic Accountants P.O. Box 23999 • 222 N.E. 1 st 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 • 1850) 224-7144 • FAX (850) 224-1762 2201 Cantu Court, Suite #100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899 MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SECTIONS 53 ~. Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida MANAGEMENT LETTER (Concluded) For matters that are inconsequential to the financial statements, considering both quantitative and qualitative factors, the Rules of the Auditor General [Section 10.554(1)(1)5.] allow professional judgment when deciding whether to report the following: (a) violations of laws, rules, regulations and contractual provisions or abuse that have occurred, or were likely to have occurred, and would have an immaterial effect on the financial statements; (b) improper expenditures or illegal acts that would have an immaterial effect on the financial statements; and (c) control deficiencies that are not significant deficiencies, including, but not limited to (1) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financial statements); (2) failure to properly record financial transactions; and (3) other inaccuracies, shortages, defalcations and instances of fraud discovered by, or that come to the attention of, the auditor. We have no matters to report in this section under the Rules of the Auditor General [Section 10.554(1x1)5.]. As required by the Rules of the Auditor General [Section 10.554(1)(1)6.], the name and legal authority for the primary government is disclosed in the notes to the financial statements. As required by the Rules of the Auditor General [Section 10.554(1)(i)7.a.], the scope of our audit included a review of the provisions of Section 218.503(1), Florida Statutes, Determination of Financial Emergency. [n connection with our audit, we determined that the City does not meet the conditions of a financial emergency as a consequence of the conditions described in Section 218.503(1), Florida Statutes. As required by the Rules of the Auditor General [Section 10.554(1)(i)7.b.], we determined that the annual ~* financial report for the City for the fiscal year ended September 30, 2007, was filed with the Florida Department of Financial Services 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, 2007. As required by the Rules of the Auditor General [Section 10.554(1)(i)7.c. and 10.556(7)], we applied financial condition assessment procedures. It is management's responsibility to monitor the City's ~ financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. This management letter is intended solely for the information and use of the Auditor General of the State ~" of Florida, management, and the City Commissioners, and is not intended to be and should not be used by anyone other than these specified parties. c t..drny~,ur February 8, 2008 Gainesville, Florida ~• ~ 54