Audit Report - 2008-2009 FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2009
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2009
TABLE OF CONTENTS
Independent Auditors' Report ~
Management's Discussion and Analysis ..................................................................................................iii-xiv
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 7-8
Statement of Revenues, Expenses, and Changes in Net Assets -
Proprietary Funds 9-10
Statement of Cash Flows -Proprietary Funds 11-13
Statement of Fiduciary Net Assets -Fiduciary Funds .............................................................................14
Statement of Changes in Fiduciary Net Assets -Fiduciary Funds .........................................................15
Notes to Financial Statements ........................................................................................................16-36
Required Supplementary Information
Schedules of Pension Funding Progress .......................................................................................................37
Schedules of Contributions from Employer and Other Contributing
Entities ......................................................................................................................................................38
Other Postemployment Benefits Plan -Schedule of Funding Progress .......................................................39
Other Postemployment Benefits Plan -Schedule of Contribution
from Employer ..........................................................................................................................................40
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual -General Fund ....................................................................................................41-42
Note to Schedule of Revenues, Expenditures, and Changes in Fund
Balance -Budget and Actual -General Fund ..........................................................................................43
Supplementary Information
Combining Balance Sheet -Nonmajor Governmental Funds 44-45
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances -Nonmajor Governmental Funds 46-47
Combining Statement of Fiduciary Net Assets -Fiduciary Funds ..............................................................48
Combining Statement of Changes in Fiduciary Net Assets -
Fiduciary Funds ........................................................................................................................................49
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2009
TABLE OF CONTENTS
(Concluded)
Supplementary Information (Concluded)
Historical Revenues and Expenses ...............................................................................................................50
Major Utility Customers ................................................................................................................................51
Summary of Water Usage .............................................................................................................................52
Summary of Wastewater Treatment -Atlantic Beach Sewer
Division ....................................................................................................................................................53
Summary of Wastewater Treatment -Outside City Sewer Division ...........................................................54
Other Bond Covenant Disclosures ................................................................................................................55
Schedules of Net Revenues in Accordance with Bond
Resolutions -Enterprise Funds (Water and Sewer) ................................................................................56
Additional Elements of Report Prepared in Accordance with
Government Auditing Standards, Issued by the Comptroller
General of the United States; the Rules of the Auditor General
of the State of Florida; and Other Contract Requirements
Schedule of Expenditures of Federal Awards .........................................................................................57
Note to Schedule of Expenditures of Federal Awards ............................................................................58
Schedule of Source and Expenditure of the City Grant Funds 59
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 60-61
Management Letter 62-63
Purvis
Gray g,
Comp
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, 2009, 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 2008 financial statements and, in our report dated March 3, 2009, we expressed
unqualified opinions on the respective financial statements of the governmental activities, the business-
type activities, each major fund, and the aggregate remaining fund information.
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 opinions.
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, 2009, 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 January 30, 2010,
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 • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court, Suite #100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899
MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SECTIONS
1
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 accompanying schedule of expenditures of federal
awards, the combining and individual nonmajor fund statements 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 and individual nonmajor fund financial statements, the schedule
of expenditures of federal awards, and the schedule of source and expenditure of City grant funds 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.
~'tiuko, Gu~av>~ , LLB
January 30, 2010
Gainesville, Florida
ii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
As management of the City of Atlantic Beach, Florida (the City), we offer readers of our financial
statements this narrative overview and analysis for the fiscal year ended September 30, 2009.
Overview of the Financial Statements
This management's 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's finances, in a manner similar to a private sector business. They include the Statement of Net
Assets and the Statement of Activities.
The Statement of Net Assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Net assets are reported as one of three categories:
invested in capital assets -net of related debt; restricted; or unrestricted. Restricted net assets are further
classified as either net assets restricted by enabling legislation or net assets that are otherwise restricted.
Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial
position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City's net assets changed during the
most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods.
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes 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, the sanitation service and the building code enforcement
enterprise fund. The government-wide financial statements can be found on pages 1 - 2 of this report.
iii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
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, 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.
¦ 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 maintains eleven 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 ten governmental funds are combined into a single, aggregated
presentation called Nonmajor Governmental Funds. Fund data for these nonmajor governmental
funds is provided in the form of combining statements. These combining statements can be found on
pages 44 - 47 of this report.
The City 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 on pages 41 - 42 of this
report has been provided to demonstrate compliance with this budget.
¦ Proprietary Funds
The City 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, building code
enforcement 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,
sanitation and building code enforcement activities can be found in the basic proprietary fund
financial statements on pages 7 - 13 of this report.
iv
CITY OF ATLANTIC BEACH, FLORH)A
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
¦ 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 14 - 15 of this report.
Notes to Financial Statements
The notes to 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 16 - 36 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 General
Fund. Required supplementary information can be found on pages 37 - 43 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 on page vi of this analysis, the City's assets exceeded liabilities by $69,575,000
at the close of the fiscal year ended September 30, 2009.
By far the largest portion of the City's net assets, $56,642,000 (82%), 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, $4,184,000 (6%), represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets, $8,749,000,
is used to meet the government's ongoing obligations to citizens and creditors.
v
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
City of Atlantic Beach's Net Assets
September 30, 2009 and 2008
(In Thousands)
Governmental Business-type
Activities Activities Totals
2009 2008 2009 2008 2009 2008
Current and other assets $5,775 $8,623 $10,009 $8,251 $15,784 $16,874
Capital assets 41,090 41,668 32,837 33,694 73,927 75,362
Total Assets 46,865 50,291 42,846 41,945 89,711 92,236
Long-term liabilities
outstanding 529 461 16,443 17,247 16,972 17,708
Other liabilities 760 1,352 2,404 2,585 3,164 3,937
Total Liabilities 1,289 1,813 18,847 19,832 20,136 21,645
Net Assets:
Invested in capital assets,
net of related debt 40,768 41,290. 15,874 15,999 56,642 57,289
Restricted 2,034 1,992 2,150 2,274 4,184 4,266
Unrestricted 2,774 5,196 5,975 3,840 8,749 9,036
Total Net Assets $45,576 $48,478 $23,999 $22,113 $69,575 $70,591
As illustrated in the schedule on page vii of this analysis, 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
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
City of Atlantic Beach's Change in Net Assets
For the Years Ended September 30, 2009 and 2008
(In Thousands)
Governmental Business-type
Activities Activities Totals
2009 2008 2009 2008 2009 2008
Revenues:
Program Revenues:
Charges for services $1,722 $],925 $9,430 $8,718 $11,152 $10,643
Operating grants and
contributions 860 733 0 121 860 854
Capital grants and
contributions 96 101 399 1,272 495 1,373
General Revenues:
Property taxes 4,089 4,269 0 0 4,089 4,269
Sales taxes 1,112 1,255 0 0 1,112 1,255
Business and utility taxes 1,162 1,155 0 0 1,162 1,155
State revenue sharing 273 319 0 0 273 319
Discretionary sales surtax 630 686 0 0 630 686
Interest revenue 18 171 25 138 43 309
Miscellaneous 6] 61 0 0 61 61
Impairment (Loss) 0 0 0 (2,659) 0 (2,659)
(Loss) gain on disposal of
fixed assets 0 0 7 1 7 1
Total Revenues 10,023 10,675 9,861 7,591 19,884 18,266
Expenses:
General government 2,163 1,962 0 0 2,163 1,962
Public safety 4,734 4,879 0 0 4,734 4,879
Transportation 2,201 1,733 0 0 2,201 1,733
Parks and recreation 1,139 1,106 0 0 1,139 1,106
Conservation and resource
management 21 0 0 0 21 0
Interest on long-term debt 14 16 0 0 14 16
Utility 0 0 7,623 7,685 7,623 7,685
Stormwater 0 0 1,199 1,277 1,199 1,277
Sanitation 0 0 1,504 1,679 1,504 1,679
Building code enforcement 0 0 302 265 302 265
Total Expenses 10,272 9,696 10,628 10,906 20,900 20,602
Transfers (2,653) 1,315 2,653 1,315 0 0
Change in net assets (2,902) (336) 1,886 (2,000) (1,016) (2,336)
Net assets-Beginning 48,478 48,814 22,113 24,113 70,591 72,927
Net assets-Ending $45,576 $48,478 $23,999 $22,113 $69,575 $70,591
vii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
Fund Financial Analysis
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements. Following is a summary of fund activity for the fiscal year:
¦ Governmental Funds
At the end of the current fiscal year, the City's governmental funds reported a combined ending fund
balance of $5,454,857, a decrease of $2,271,731 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 $3,224,735, which equated to 25% 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 $2,314,471 or 40.4% during the current fiscal year. This decrease is chiefly
due to transferring a significant portion of fund balance to the Public Utility fund for a new well and
the design of a sewer plant upgrade.
Nonmajor governmental funds consisting of special revenue funds, and the debt service fund, and the
capital projects fund have a combined fund balance of $2,034,076. Of this fund balance, $74,617 is
reserved for future debt service payments and $160,788 is reserved for contractual obligations
unexpended, but encumbered at year end. The net increase in fund balance after transfers in
nonmajor governmental funds was $42,740.
¦ 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 increased $1,885,520
during the fiscal year. In fiscal year 2009, the utility incremental rate adjustment of 10% resulted in
an increase in customer charges for the year of $599,499. This was achieved by increasing the rate
on the lowest block of consumption, so that potential reduced volumes would not dampen the much
needed revenue increase. Operating expenses, including depreciation, decreased $263,765. After
non-operating revenues and expenses are added, the loss was $1,125,993 before transfers. Offsetting
this loss, was an increase to net assets of $1,885,520 from a combination of contributed capital and
transfers in. Appearing in the 2008 totals of the statement of revenues and expenses is the presence
of a "Special Item." The special item is a reduction of fund balance as the result of writing down the
value of the Buccaneer sewer plant in the amount of $2,659,110. This represents an impairment loss
on the asset. The City determined that plant abandonment was the most beneficial option to meet
new regulatory standards. The impairment loss and depreciation are both non-cash expenses that are
not budgeted or recovered through user charges.
viii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
The Stormwater revenues benefited from a 25% rate increase of $1.00 per ERU or equivalent
residential unit. Although this added approximately $100,000 in revenue, the operating expenses of
the Stormwater Fund continue to be heavily subsidized by the Gas Tax Fund and the General Fund.
The $5.00 per ERU rate is approximately one-third of the operating expenses of that program.
During fiscal year 2009, the Sanitation Fund was supported by a cost of living rate increase of 4% to
cover the increased contract service costs of providing semi-automated collection service. The
Sanitation Fund netted an increase to net assets of $63,469, after having contributed $247,800 to the
General Fund.
The unrestricted net assets of the enterprise funds amounted to $5,975,030 at the end of fiscal year
2009. The total increase in net assets of $1,885,520 from 2008 was primarily due to the large
transfers in from the General Fund for capital projects in Royal Palms and Utility water and sewer
upgrades.
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget included a $78,906 (decrease)
in revenues, a $310,199 increase in appropriations, and a $2,053,200 increase in transfers and can
briefly be summarized as follows:
Revenues
• ($128,947) Reduction of State-shared revenues such as Saes Taxes
• ($94,000) Reduction in interest income due to lower yields and lower cash balances
• $93,948 Increased interfund charges for fleet maintenance charges not budgeted
• $36,025 Grant Award for public safety
• $14,068 Miscellaneous sources were increased
Expenditures
• $176,075 Items encumbered but not spent by the end of fiscal year 2008
• ($56,200) Public Works ped-path and sidewalk construction
• ($52,000) Information Technology upgrades
• ($10,000) Gate at Dutton Island
• ($5,000) Playground equipment
• $36,025 Public Safety DUI Enforcement Grant
• $251,990 Employment settlement agreement for a wrongfully terminated police officer
• $30,000 Additional attorney fees
• ($60,691) Miscellaneous other reductions across all departments
Transfers
• $124,100 Transfer to the Stormwater utility to compensate for lower interest earnings
• $800,000 Transfer to Water Fund for new well project
• $1,100,000 Transfer to Sewer Fund for design cost of a sewer plant upgrade
• $29,100 Miscellaneous other transfer increases
ix
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
Net Budget
The overall net difference from the original budget to the adjusted final budget was a budgeted
decrease in fund balance of $3,947,460 instead of a decrease of $1,505,155. This represented a
change of $2,442,305 from what was originally proposed. The actual decrease in fund balance was
$2,314,471 and was due to shifting funds to capital projects as planned.
Capital Assets and Debt Administration
Capital Assets-The City's investment in capital assets, net of related depreciation, for its
governmental and business-type activities as of September 30, 2009, amounted to $73,927,004.
This investment in capital assets includes land, buildings and infrastructure improvements,
equipment, and construction in progress.
The total change in the City's capital assets, net of related depreciation, for the current fiscal year
was a decrease of $578,268 (1.4%) for governmental activities and a decrease of $857,508 (2.5%)
for business-type activities.
Capital asset events during the current fiscal year included the following:
¦ Governmental Activities
Land increased $190,000 when the City acquired passive, preservation park land on the
Intracoastal marsh, known as the "River Branch Preserve."
Building and Improvements reflected a net decrease of $530,000. This represented a
capital asset increase of $178,000, offset by an increase to accumulated depreciation of
$710,000. Acquisitions this year included: playground equipment replacement in Russell
Park, bridge replacement in Howell Park at the Pine Street access, extension of the beach
walkover at 3`d Street, Community Development Block Grant (CDBG)-funded sidewalk and
drainage improvements on George Street, the "In Search of Atlantis" statute, fencing at the
Aquatic Gardens retention pond, and water fountains in various locations in the City.
Equipment assets decreased a net $26,000 from last fiscal year to fiscal year ended
September 30, 2009. This net decrease was comprised of assets acquired for a value of
$366,000, offset by equipment disposed with a net book value of $19,000, and an addition to
the allowance for depreciable equipment of $373,000. Assets acquired in this category were:
computer software totaling $23,000, including records management and dispatch software;
seven outfitted, fleet vehicles for $173,000; computer equipment for $142,000, including a
replacement backup server; email server; scanner for plans and maps in the Building
Department; new copier at City Hall; and, new network switch for the computer room. The
remaining assets acquired for $28,000 were primarily police-related equipment, such as radar
units and interview room surveillance equipment, partially funded through grants. The City
disposed of $442,000 of equipment, all fully depreciated except for computer equipment with
a book value of $19,000. The actual useful lives of this computer equipment did not reach
the typical estimated lives used for depreciation purposes. Assets disposed during the fiscal
x
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
year included six vehicles, an IBM AS400 mainframe computer and optical drive, a copier,
forty-six 800 MHZ radios, a dispatch console and auxiliary radio system, and a diesel tractor.
As of September 30, 2009, the City received approximately $9,500 in proceeds from
equipment disposed through auction sales.
Construction in progress decreased $350,000 upon completion of the Mayport Road
median project. Since Mayport Road is owned and financially maintained by the Florida
Department of Transportation, the amount spent on these improvements is no longer
included as a capital asset of the City. The remaining balance of $137,000 in construction in
progress at September 30, 2009 is for construction of new tennis courts at Donner Park,
funded through the CDBG, and a spatial needs assessment for a new police building.
¦ Business-tune Activities
Building and Improvements decreased a net $779,000. Assets in this category increased by
$1,415,000 and were offset by an increase in allowance for depreciation of new and existing
assets of $2,194,000. Projects completed and moved from construction in progress and
moved to depreciable assets included sewer system rehabilitation of $1,179,000 and the
Ardella Road drainage project for $34,000. Developer contributions of water and sewer
lines in the Haywood Estates subdivision represented an additional $147,000 of business-
type improvement assets. Miscellaneous sewer-related infrastructure improvements
accounted for the remaining $55,000 of additions to this category.
Equipment decreased a net $44,000. The composition of this net decrease included
acquisitions of $87,000 and disposal of $65,000 of fully depreciated (book value of $0)
computers, motor vehicles, and office and lab equipment, and an increase in the allowance
for depreciation of $131,000. The most notable changes in this category for the fiscal year
ending September 30, 2009 were: acquisition of a spare jet mixer pump for the wastewater
treatment plant, a replacement tractor, and a new truck for public utilities; and, two roll-off
containers for the sanitation division. A fully depreciated tractor was traded in for the new
tractor and two trucks were sold at auction, netting proceeds of approximately $6,500.
Construction in progress decreased, net of additions and deletions for assets moved into
depreciable assets, by $34,000. Of the $748,000 balance in construction in progress at
September 30, 2009, sewer system design of the improvements related to the Total
Maximum Daily Load (TMDL) of nitrogen discharge accounted for $407,000, Royal Palms
area stormwater drainage project for $335,000, and $5,000 had been expended for permitting
and engineering services to replace a well at one of the City's water plants. The well project,
estimated to cost approximately $600,000, will be funded through the State Revolving Fund
loan program. Approximately 25°l0 of the final TMDL design work was complete at
September 30, 2009. Both the Royal Palms and well projects are anticipated to be completed
within the next twelve months.
xi
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
City of Atlantic Beach's Capital Assets
(Net of Depreciation)
(In Thousands)
Governmental Business-type
Activities Activities Totals
2009 2008 2009 2008 2009 2008
Land $10,034 $9,844 $1,656 $1,656 $11,690 $11,500
Building and Improvements 29,584 30,114 29,885 30,664 59,469 60,778
Equipment 1,335 1,361 548 592 1,883 1,953
Construction in Progress 137 350 748 782 885 1,132
Total $41,090 $41,669 $32,837 $33,694 $73,927 $75,363
Additional information on the City's capital assets can be found in note 6 on pages 26 - 27 of this report.
Long-term Debt
At the end of the 2009 fiscal year, the City had total bonded debt outstanding of $17,501,105. This
amount was comprised of bonds secured solely by specified revenue sources (i.e., revenue bonds).
A detailed listing of the City's debt can be found in the table below.
City of Atlantic Beach's Outstanding Debt
Revenue Bonds
September 30, 2009
(In Thousands)
Governmental Business-type
Activities Activities Totals
Utility System Revenue Bonds, Series 2004 $0 $16,078 $16,078
Utility System Revenue Bonds, Series 1996 0 705 705
SunTrust Revenue Refunding Bonds, Series 1999 322 397 719
Total $322 $17,180 $17,502
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 of reduced interest rates). Therefore, it has
a high capacity for additional debt, if needed. In fiscal year 2009, the City was able to replenish the
$85,400 of rate stabilization funds used to meet the City's required debt service coverage in 2008, in
accordance with the Utility System Revenue Refunding Bonds, Series 2004, and the Utility System
Revenue Bonds, Series 1996, bond covenants. A utility rate increase provided sufficient revenues to
meet the required coverage ratio. Debt service coverage calculations can be found on page 56. The
City's scheduled debt outstanding decreased by $804,778 (4.4%) during the current fiscal year. This
decrease was due to scheduled loan repayments. Additional information on the City's long-term debt can
be found in note 7 on pages 27 - 29 of this report.
xii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(Continued)
Economic and Budgetary Highlights
The City is faced with many of the same economic hurdles that other cities in Florida are coping with.
Decreasing revenues and increasing costs have made the budget itself a strategic planning issue again for
2010. Some of the economic hurdles that the City must overcome this year and into the future are
highlighted below.
Revenue Highlights:
¦ Taxable property values in the City decreased from the previous year by about 5%. As a result, the
City Commission had to raise the millage rate by 5% just to generate the same ad valorem tax
revenues as received in 2009. Ad valorem taxes represent about 35% of the General Fund revenues.
¦ State-shared revenues are also on the decline. From 2008 to 2009, the combination of sales tax and
revenue sharing revenues decreased $202,339. The projection for 2010 is an additional decrease of
$51,301. These two sources accounted for about 13% of the General Fund revenues.
¦ Throughout the year, the City has embraced the investment policy of protecting principal during the
economic crises and has kept the excess funds invested fully insured CD's and a public interest-
bearing checking account. As a result of having funds in low risk investments, we continue to realize
very low returns. Total investment earnings for 2009 were $43,439, down from $309,135 in 2008.
This amounted to a decrease of $265,696. Already, it is evident that 2010 interest returns will not be
much better.
¦ In 2009, the Utility increased rates to generate an additional estimated 10% to help fund rising costs
of operations. To avoid reductions in revenues due to the conservation efforts of our citizens and to
fund the issuance of debt for plant upgrades, the rate increase was weighted more towards the first
3,000 gallons of consumption. One more significant rate increase of this type went into effect in
October of 2009. The City also passed new system development charges to replace impact fees and
connection charges in 2009. Although the charges are significantly higher than the previous charges,
the drop in construction due to the economic slowdown has resulted in insignificant revenues in
2009.
¦ The City passed a $1.00 per ERU increase in the Storm Water Utility rates for 2009. This helps to
reduce the program's dependency on transfers from the General Fund and the Gas Tax Fund adding
an additional $100,000 annually to revenues.
¦ The City passed a 4% garbage collection rate increase for 2009, adding an additional $42,055, to
offset the cost of living increase the hauler imposed on the City. This was not as much as planned
due to a reduction in the commercial customer services.
¦ The City benefited from the American Recovery and Reinvestment Act (ARRA), in 2009 by
receiving $38,538 in stimulus funds to retain two full-time police officers for June through
September of 2009. The City also has received approval to continue to fund those positions with a
supervisor working in the Mayport Road area during fiscal year 2010 in the amount of $263,558.
xiii
CITY OF ATLANTIC BEACH,. FLORIDA
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2009
(CvrrcCurfed}
Expenditure Highlights:
¦ Upcoming far 2010, the City anticipates that payroll-related costs will increase minimally as no raises
were budgeted. Restructuring the health insurance benefit was done to keep those. costs in line but
employer pension contributions will increase X150,006 for next year.
¦ The City has planned to incur a large amount of new debt over the next two years, due to the new
environmental regulations for Total Maximum Daily Load (TMDL) that limit the amount of nitrogen
discharged into the St. John's River from the City's wastewater treatment plants. This. will. require a
major plant upgrade and abandoning one of our two plants to make operations more efficient. The
City will also fund a new well and. water main projects with State Revolving Loan funds at a very low
interest rate.
¦ Cun ently underway this year is the design and construction of the Royal Palms drainage project.
This project is to be funded from cash reserves and i estimated to cost $2,800,000. This project will
significantly reduce the cash on hand for the City this year.
¦ .Fiscal year 2010 will likely see the completion of the design for a new public safety building, using.
additional debt. as the primary funding source. The construction. of the building, however, remains
unbudgeted. The current. plan is to pledge discretionary half-cent sales tax revenue,. thereby limiting
the amount available for mare routine projects in future years.
Requests for Information
The financial ieport is designed to provide a general overview of the City'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
City Man er Finance Director
xiv
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, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
2009
Governmental Business-type 2008
Activities Activities Totals Totals
Assets
Equity in Pooled Cash and Cash Equivalents $ 4,746,902 $ 6,791,296 $ 11,538,198 $ 11,941,870
Receivables-Net 13,146 557,127 570,273 571,832
Due from Other Governments 890,600 0 890,600 1,589,421
Inventories 14,674 28,224 42,898 65,506
Special Assessments -Current 0 6,455 6,455 30,213
Notes Receivable -Current 760 17,987 18,747 18,544
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents 0 2,288,857 2,288,857 2,248,051
Capital Assets:
Land 10,034,127 1,656,018 11,690,145 11,499,735
Buildings 4,134,377 4,356,384 8,490,761 8,490,761
Improvements Other Than Buildings 37,799,178 59,417,899 97,217,077 95,622,831
Equipment 3,315,975 1,873,609 5,189,584 5,243,987
Accumulated Depreciation (14,330,629) (35,214,658) (49,545,287) (46,626,731)
Construction in Progress 137,122 747,602 884,724 1,132,197
Prepaid Items 105,014 0 105,014 47,400
Special Assessments -Noncurrent 0 0 0 2,380
Notes Receivable -Noncurrent 3,800 102,681 106,481 126,342
Unamortized Loan Costs 0 216,799 216,799 232,397
Total Assets 46,865,046 42,846,280 89,711,326 92,236,736
Liabilities
Accounts Payable and Other Current Liabilities 277,442 314,743 592,185 1,398,921
Due to Other Governments ~ 0 6,015 6,015 5,819
Deferred Revenue ].3,168 158,906 172,074 202,643
Deposits 29,429 0 29,429 31,660
Compensated Absences -Current 435,000 132,000 567,000 509,500
Accrued Interest Payable 4,514 0 4,514 5,301
Payable from Restricted Assets:
Current Maturities of Bonds Payable 0 874,101 874,101 850,829
Accrued Interest Payable 0 388,853 388,853 403,545
Customer Deposits 0 529,811 529,811 528,465
Noncurrent Liabilities:
Due Within One Year 59,305 0 59,305 56,686
Due in More Than One Year 262,224 16,305,475 16,567,699 17,398,370
Compensated Absences 189,166 131,741 320,907 253,309
Other Postemployment Benefits Obligation 18,296 5,778 24,074 0
Total Liabilities 1,288,544 18,847,423 20,135,967 21,645,048
Net Assets
Invested in Capital Assets -Net of Related Debt 40,768,621 15,874,077 56,642,698 57,289,293
Restricted for:
Renewal and Replacement 0 500,000 500,000 500,000
Debt Service 74,617 861,751 936,368 916,324
Road and Street Expenditures 281,918 0 281,918 253,277
Tourism and Recreation 29,170 0 29,170 244,322
Tree Replacement 14,822 0 14,822 31,183
Public Safety 17,722 0 17,722 17,583
Police Training 140,410 0 140,410 163,678
Building Code Enforcement 0 37,402 37,402 135,142
Capital Projects 1,475,417 750,597 2,226,014 2,003,993
Unrestricted 2,773,805 5,975,030 8,748,835 9,036,893
Total Net Assets $ 45,576,502 $ 23,998,857 $ 69,575.359 $ 70,591,688
See accompanying notes.
1
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009
Program Revenues Net (Expense) Revenue and Changes in Net Assets
Operating Capital Primary Government
Charges for Grants and Grants and Governmental Business-type 2008
Functions/Programs Expenses Services Contributions Contributions Activities Activities Totals Totals
Primary Government
Governmental Activities:
General Government $ 2,162,898 $ 918,751 $ 171,944 $ 0 $ (1,072,203) $ 0 $ (1,072,203) $ (1,145,611)
Public Safety 4,733,908 626,130 83,651 36,025 (3,988,102) 0 (3,988,102) (3,797,379)
Transportation 2,201,229 116,836 599,810 0 (1,484,583) 0 (1,484,583) (1,021,030)
Parks and Recreation 1,138,730 60,711 4,812 60,067 (1,013,140) 0 (1,013,140) (1,010,764)
Conservation and Resource
Management 21,275 0 0 0 (21,275) 0 (21,275) 0
Physical Environment 0 0 0 0 0 0 0 53,027
Interest/Fiscal Charges on
Long-term Debt 13,885 0 0 0 (13,885) 0 (13,885) (16,274)
Total Governmental Activities 10,271,925 1,722,428 860,217 96,092 (7,593,188) 0 (7,593,188) (6,938,031)
Business-type Activities:
Utility 7,622,924 6,895,575 0 367,092 0 (360,257) (360,257) (1,028,334)
Stormwater 1,199,612 519,529 0 32,328 0 (647,755) (647,755) 52,274
Sanitation 1,504,071 1,814,297 0 0 0 310,226 310,226 235,028
Building Code Enforcement 301,667 200,329 0 0 0 (101,338) (101,338) (55,223)
Total Business-type Activities 10,628,274 9,429,730 0 399,420 0 (799,124) (799,124) (796,255)
Total Primary Government $ 20,900,199 $ 11,152,158 _ $ 860,217 $ 495,512 (7,593,188) (799,124) (8,392,312) (7,734,286)
General Revenues
Property Taxes 4,089,288 0 4,089,288 4,269,435
Sales Taxes 1,112,294 0 1,112,294 1,255,152
Business and Utility Taxes 1,161,781 0 1,161,781 1,156,042
State Revenue Sharing 272,441 0 272,441 319,140
Discretionary Sales Surtax 629,680 0 629,680 685,927
Interest Revenue 18,081 25,358 43,439 309,135
Miscellaneous 60,590 0 60,590 60,401
Gain on Sale of Fixed Assets 0 6,470 6,470 1,560
Special Item -Impairment Loss 0 0 0 (2,659,110)
Transfers (2,652,816) 2,652,816 0 0
Total General Revenues, Special Item, and Transfers 4,691,339 2,684,644 7,375,983 5,397,682
Change in Net Assets (2,901,849) 1,885,520 (1,016,329) (2,336,604)
Net Assets, Beginning of Year 48,478,351 22,113,337 70,591,688 72,928,292
Net Assets, End of Year $ 45,576,502 $ 23,998,857 $ 69,575,359 $ 70,591,688
See accompanying notes.
2
CITY OF ATLANTIC BEACH, FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
2009
Nonmajor Totals
Governmental Governmental 2008
General Funds Funds Totals
Assets
Equity in Pooled Cash and Cash Equivalents $ 2,858,043 $ 1,888,859 $ 4,746,902 $ 7,602,158
Receivables -Net 13,146 0 13,146 21,142
Due from Other Funds 63,844 0 63,844 30,125
Due from Other Governments 635,214 255,386 890,600 921,392
Inventories 14,674 0 14,674 25,510
Special Assessment Receivable -Current 0 0 0
Notes Receivable -Current 760 0 760 760
Prepaid Items 105,014 0 105,014 47,400
Notes Receivable -Noncurrent 3,800 0 3,800 4,560
Total Assets 3,694,495 2,144,245 5,838,740 8,653,047
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities 257,086 20,356 277,442 810,752
Due to Other Funds 0 63,844 63,844 30,125
Deposits 3,460 25,969 29,429 31,660
Deferred Revenue 13,168 0 13,168 53,922
Total Liabilities 273,714 110,169 383,883 926,459
Fund Balances
Reserved for:
Debt Service 0 74,617 74,617 77,300
Inventories 14,674 0 14,674 25,510
Prepaids 105,014 0 105,014 47,400
Encumbrances 76,358 160,788 237,146 317,815
Unreserved -Reported in:
General Fund 3,224,735 0 3,224,735 5,486,267
Special Revenue Funds 0 1,169,394 1,169,394 1,439,359
Capita] Projects Fund 0 629,277 629,277 332,937
Total Fund Balances 3,420,781 2,034,076 5,454,857 7,726,588
Total Liabilities and Fund Balances $ 3,694,495 $ 2,144,245 $ 5,838,740 $ 8,653,047
See accompanying notes.
3
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
2009 2008
Total Fund Balances of Governmental Funds $ 5,454,857 $ 7,726,588
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 $ 55,420,779 $ 55,340,965
(Accumulated Depreciation} (14,330,629) (13,672,547)
41,090,150 41,668,418
Long-term liabilities are not due and payable
in the current period and, accordingly, are
not reported as fund liabilities. Interest
on long-term debt is not accrued in the
governmental funds, but rather is recognized
as an expenditure when due. All liabilities,
both current and long-term, are reported in
the statement of net assets. Long-term
liabilities at year-end consist of:
Revenue Bonds Payable 321,529 378,215
Compensated Absences 624,166 533,139
Other Postemployment Benefits Obligation 18,296 0
Accrued Interest Payable 4,514 5,301
(968,505) (916,655)
Total Net Assets of Governmental Activities $ 45,576,502 $ 48,478,351
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, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009
Nonmajor Totals
Governmental Governmental 2008
General Funds Funds Totals
Revenues
Taxes $ 5,251,070 $ 1,155,966 $ 6,407,036 $ 6,627,688
Franchise Fees and Permits 907,771 0 907,771 780,848
State-shared Revenues 1,517,742 0 1,517,742 1,720,081
Other Intergovernmental Revenues 158,770 164,301 323,071 142,895
Charges for Services 684,650 0 684,650 659,411
Fines and Forfeitures 90,881 32,051 122,932 484,294
Interest Income 13,134 4,947 18,081 170,678
Miscellaneous Revenues 34,295 4,914 39,209 39,559
Interfund Charges 1,499,385 0 1,499,385 1,394,394
Total Revenues 10,157,698 1,362,179 11,519,877 12,019,848
Expenditures
Current:
General Government 3,008,583 42,988 3,051,571 2,701,061
Public Safety 4,429,381 47,019 4,476,400 4,724,100
Transportation 1,441,376 252,227 1,693,603 1,686,775
Parks and Recreation 964,004 0 964,004 969,581
Conservation and Resource
Management 0 21,275 21,275 0
Debt Service:
Principal 0 56,686 56,686 53,925
Interest and Other 0 14,673 14,673 17,040
Capital Outlay 434,049 436,071 870,120 706,653
(Total Expenditures) (10,277,393) (870,939) (11,148,332) (10,859,135)
(Deficiency) Excess of Revenues
(Under) Over Expenditures (119,695) 491,240 371,545 1,160,713
Other Financing Sources (Uses)
Transfers in 366,700 398,500 765,200 790,599
Transfers (out) (2,571,016) (847,000) (3,418,016) (2,091,860)
Sale of General Fixed Assets 9,540 0 9,540 18,535
Total Other Financing (Uses) (2,194,776) (448,500) (2,643,276) (1,282,726)
Net Change in Fund Balances (2,314,471) 42,740 (2,271,731) (122,013)
Fund Balances, Beginning of Year 5,735,252 1,991,336 7,726,588 7,848,601
Fund Balances, End of Year $ 3,420,781 $ 2,034,076 $ 5,454,857 $ 7,726,588
See accompanying notes.
5
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTNITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2004,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009 2008
Net Change in Fund Balances -Total Governmental Funds $ (2,271,731) $ (122,013)
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 $ 870,120 $ 706,653
(Current Year Depreciation) (1,082,640) (1,039,077)
(212,520) (332,424)
Certain revenues related to the acquisition of capital
assets are not reported in governmental funds
because they do not represent current financial
resources, however, they are reported as capital
contributions in the statement of activities. 2,400 53,027
Repayment oflong-term debt principal is an
expenditure in the governmental funds, but the
repayment reduces long-term liabilities in the
statement of net assets. 56,686 53,925
Governmental funds report sale of general fixed
assets as financial resources. The gain or loss on
disposal of general fixed assets is not reflected
in the governmental funds:
Proceeds from Sale of General Fixed Assets (9,540) (20,830)
(Loss) or Gain on Disposal of General Fixed Assets (8,270) (22,277)
(17,810) (43,107)
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 790 766
Compensated Absences (91,028) 67,309
Other Postremployment Benefits Obligation (18,296) 0
Transfer of Capital Assets (350,340) (13,546)
(458,874) 54,529
Change in Net Assets -Governmental Activities $ (2,901,844) $ (336,063}
See accompanying notes.
6
CITY OF ATLANTIC BEACH, FLORH)A
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
Assets
Current Assets:
Equity in Pooled Cash and Cash Equivalents $ 2,179,631 $ 4,028,205 $ 525,931 $ 57,529 $ 6,791,296 $ 4,339,712
Accounts Receivable -Net 449,821 26,346 80,960 0 557,127 550,690
Inventories 28,224 0 0 0 28,224 39,996
Due from Other Governments 0 0 0 0 0 668,029
Special Assessments -Current 6,455 0 0 0 6,455 30,213
Notes Receivable -Current 17,987 0 0 0 17,987 17,784
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents 2,126,070 162,787 0 0 2,288,857 2,248,051
Capital Assets:
Land 749,499 906,519 0 0 1,656,018 1,656,018
Buildings 4,356,384 0 0 0 4,356,384 4,356,384
Improvements Other Than Buildings 46,528,187 12,889,712 0 0 59,417,899 58,002,508
Equipment 1,410,743 253,483 171,883 37,500 1,873,609 1,851,779
(Accumulated Depreciation) (29,138,685) (5,963,610) (80,157) (32,206) (35,214,658) (32,954,184)
Construction in Progress 412,992 334,610 0 0 747,602 781,857
Special Assessments -Noncurrent 0 0 0 0 0 2,380
Notes Receivable -Noncurrent 102,681 0 0 0 102,681 121,782
Unamortized Loan Costs 186,839 29,960 0 0 216,799 232,397
Total Assets 29,416,828 12,668,012 698,617 62,823 42,846,280 41,945,396
See accompanying notes.
7
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
(Concluded)
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
Liabilities
Current Liabilities Payable from Current
Assets:
Accounts Payable and Accrued Liabilities $ 150,902 $ 12,333 $ 145,283 $ 6,225 $ 314,743 $ 588,169
Due to Other Governments 5,870 0 0 145 6,015 5,819
Deferred Revenue 81,570 16,884 60,452 0 158,906 148,721
Compensated Absences -Current 120,000 0 0 12,000 132,000 59,500
Current Liabilities Payable from Restricted
Assets:
Current Maturities of Bonds Payable 762,261 111,840 0 0 874,101 850,829
Accrued Interest Payable 337,906 50,947 0 0 388,853 403,545
Customer Deposits 529,811 0 0 0 529,811 528,465
Noncurrent Liabilities:
Due in More Than One Year 14,071,056 2,234,419 0 0 16,305,475 17,076,841
Compensated Absences -Noncurrent 130,780 0 0 961 131,741 170,170
Other Postemployment Benefits Obligation 3,782 1,200 0 796 5,778 0
Total Liabilities 16,193,938 2,427,623 205,735 20,127 18,847,423 19,832,059
Net Assets
Invested in Capital Assets -Net of Related Debt 9,672,641 6,104,415 91,727 5,294 15,874,077 15,999,090
Restricted for:
Renewal and Replacement 500,000 0 0 0 500,000 500,000
Building Code Enforcement 0 0 0 37,402 37,402 135,142
Debt Service 749,911 111,840 0 0 861,751 839,024
Capital Projects 27,229 723,368 0 0 750,597 800,000
Unrestricted 2,273,109 3,300,766 401,155 0 5,975,030 3,840,081
Total Net Assets $ 13,222,890 $ 10,240,389 $ 492,882 $ 42,696 $ 23,998,857 $ 22,113,337
See accompanying notes.
8
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
Operating Revenues
Charges for Services:
Customer Charges $ 6,840,216 $ 500,126 $ 1,791,797 $ 200,329 $ 9,332,468 $ 8,591,502
Franchise Permits 0 0 2,500 0 2,500 5,000
Miscellaneous Revenues 55,359 19,403 0 0 74,762 108,413
Total Operating Revenues 6,895,575 519,529 1,794,297 200,329 9,409,730 8,704,915
Operating Expenses
Personal Services 1,776,755 277,375 25,646 238,774 2,318,550 2,200,291
Contractual Services 811,874 144,083 1,268,936 767 2,225,660 2,702,620
Supplies 286,852 18,644 0 5,496 310,992 398,233
Repairs and Maintenance 178,397 38,361 7,729 7,281 231,768 237,762
Heat, Lights and Power 683,833 0 0 0 683,833 575,344
Depreciation 1,897,004 398,069 26,886 3,344 2,325,303 2,326,596
Intergovernmental Charges 987,079 178,863 164,250 38,806 1,368,998 1,273,498
Other Expenses 250,346 25,848 6,555 7,199 289,948 304,473
(Total Operating Expenses) (6,872,140) (1,081,243) (1,500,002) (301,667) (9,755,052) (10,018,817)
Operating Income (Loss) 23,435 (561,714) 294,295 (101,338) (345,322) (1,313,902)
Nonoperating Revenues (Expenses)
Connection Charges 8,395 0 0 0 8,395 11,490
Franchise Fees 0 0 20,000 0 20,000 13,186
Intergovernmental Revenue (Expense) (3,115) 32,328 (4,069) 0 25,144 129,884
Interest Income 14,849 9,212 1,043 254 25,358 138,457
Interest Expense (732,939) (116,076) 0 0 (849,015) (871,148)
Gain on Disposal of Fixed Assets 6,470 0 0 0 6,470 1,560
Amortization of Loan Costs (14,730) (2,293) 0 0 (17,023) (17,023)
Total Nonoperating Revenues (Expenses) (721,070) (76,829) 16,974 254 (780,671) (593,594)
See accompanying notes.
9
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
(Concluded)
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
(Loss) Income Before Contributions
and Transfers $ (697,635) $ (638,543) $ 311,269 $ (101,084) $ (1,125,993) $ (1,907,496)
Capital Contributions and Grants
' and Transfers
Capital Contributions and Grants 358,697 0 0 0 358,697 1,251,258
Transfers in 1,146,916 1,867,600 0 0 3,014,516 1,706,840
Transfers (out) (113,900) 0 (247,800) 0 (361,700) (392,033)
Total Capital Contributions and Grants
and Transfers 1,391,713 1,867,600 (247,800) 0 3,011,513 2,566,065
Special Item -Impairment Loss 0 0 0 0 0 (2,659,110)
Change in Net Assets 694,078 1,229,057 63,469 (101,084) 1,885,520 (2,000,541)
Net Assets, Beginning of Year 12,528,812 9,011,332 429,413 143,780 22,113,337 24,113,878
Net Assets, End of Year $ 13,222,890 $ 10,240,389 $ 492,882 $ 42,696 $ 23,998,857 $ 22,113,337
See accompanying notes.
10
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
Cash Flows from Operating Activities
Cash Received from Customers $ 6,884,604 $ 514,068 $ 1,792,443 $ 200,329 $ 9,391,444 $ 8,679,835
Cash Paid to Suppliers (2,399,649) (257,998) (1,300,557) (22,075) (3,980,279) (4,010,607)
Cash Paid to Employees (1,745,190) (276,175) (25,646) (231,690) (2,278,701) (2,174,502)
Cash Paid for Interfund Services (987,079) (178,863) (164,250) (38,806) (1,368,998) (1,273,498)
Net Cash Provided by (Used in) Operating
Activities 1,752,686 (198,968) 301,990 (92,242) 1,763,466 1,221,228
Cash Flows from Noncapital Financing
Activities
Connection Charges 8,395 0 0 0 8,395 11,490
Franchise Fees 0 0 20,000 0 20,000 13,186
Transfers in 1,146,916 1,867,600 0 0 3,014,516 1,693,293
Transfers (out) (113,900) 0 (247,800) 0 (361,700) (392,033)
Net Cash Provided by (Used in) Noncapital
Financing Activities 1,041,411 1,867,600 (227,800) 0 2,681,21 ] 1,325,936
Capital and Related Financing Activities
Intergovernmental Revenues 5,789 32,328 116,911 0 155,028 3,247
Collections on Notes Receivable 18,898 0 0 0 18,898 46,756
Collections on Special Assessments 26,138 0 0 0 26,138 30,829
Capital Grants 212,409 538,145 0 0 750,554 642,837
Proceeds from Sale of Fixed Assets 6,470 0 0 0 6,470 1,560
Fixed Asset Additions (943,262) (369,145) (5,600) 0 (1,318,007) (2,199,533)
Principal Payments on Bonds Payable (750,682) (109,243) 0 0 (859,925) (832,401)
Interest Paid (653,563) (103,238) 0 0 (756,801) (776,564)
Net Cash Provided by (Used in) Capital
and Related Financing Activities (2,077,803) (11,153) 111,311 0 (1,977,645) (3,083,269)
See accompanying notes.
11
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
(Continued)
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
Cash Flows from Investing Activities
Interest Received $ 14,849 $ 9,212 $ 1,043 $ 254 $ 25,358 $ 138,457
Net Increase (Decrease) in Cash and
Cash Equivalents 731,143 1,666,691 186,544 (91,988) 2,492,390 (397,648
Cash and Cash Equivalents, Beginning of Year 3,574,558 2,524,301 339,387 149,517 6,587,763 6,985,411
Cash and Cash Equivalents, End of Year $ 4,305,701 $ 4,190,992 $ 525,931 $ 57,529 $ 9,080,153 $ 6,587,763
R_ econciliation of Operatine Income (Loss) to
Net Cash Provided by (Used in) Operating
Activities
Operating Income (Loss) $ 23,435 $ (561,714) $ 294,295 $ (101,338) $ (345,322) $ (1,313,902)
Adjustments to Reconcile Operating
Income (Loss) to Net Cash Provided by
(Used in) Operating Activities:
Depreciation 1,897,004 398,069 26,886 3,344 2,325,303 2,326,596
Provision for Uncollectible Accounts 16,940 3,714 2,726 0 23,380 (12,748)
Change in Assets and Liabilities:
Accounts Receivable (19,973) (6,320) (3,524) 0 (29,817) (25,932)
Inventory 11,772 0 0 0 11,772 1,532
Compensated Absences 27,783 0 0 6,288 34,071 25,789
OPEB Obligation 3,782 1,200 0 796 5,778 0
Accounts Payable and Accrued Liabilities (217,059} (34,776) (20,063) (1,332) (273,230) 219,041
Customer Deposits 1,346 0 0 0 1,346 (12,621)
Deferred Revenue 7,656 859 1,670 0 10,185 13,473
Net Cash Provided by (Used in) Operating
Activities $ 1,752,686 $ (198,968) $ 301,990 $ (92,242) $ 1,763,466 $ 1,221,228
See accompanying notes.
12
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
(Concluded)
2009
Business-type Activities -Enterprise Funds
Building Code 2008
Utility Stormwater Sanitation Enforcement Totals Totals
Reconciliation of Cash and Cash
Equivalents to Balance Sheet
Equity in Pooled Cash and Cash
Equivalents in Current Assets $ 2,179,631 $ 4,028,205 $ 525,931 $ 57,529 $ 6,791,296 $ 4,339,712
Restricted Equity in Pooled Cash
and Cash Equivalents 2,126,070 162,787 0 0 2,288,857 2,248,051
Total Cash and Cash Equivalents $ 4,305,701 $ 4,190,992 $ 525,931 $ 57,529 $ 9,080,153 $ 6,587,763
Noncash Activity
Noncash Transfers $ 0 $ 0 $ 0 $ 0 $ 0 $ 13,547
Noncash Capital Grants $ 146,288 $ 0 $ 0 $ 0 $ 146,288 $ 70,276
See accompanying notes.
13
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
Pension Trust Funds
2009 2008
Assets
Cash and Cash Equivalents $ 41,878 $ 167,615
Investments 15,224,287 13,792,416
Total Assets 15,266,165 13,960,031
Liabilities
Accounts Payable and Accrued Liabilities 58 0
Excess Premium Tax Liability 120,454 120,454
DROP Plan Payable 477,228 586,284
Total Liabilities 597,740 706,738
Net Assets 253,293
Held in Trust for Pension Benefits 14,668,425 13,
Total Net Assets $ 14,668,425 $ 13,253,293
See accompanying notes.
14
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
Pension Trust Funds
2009 2008
Additions
Contributions:
Employer $ 784,900 $ 678,041
Employees 288,763 254,070
State of Florida 86,433 88,806
Total Contributions 1,160,096 1,020,917
Net Increase (Decrease) in
Fair Value of Investments 818,849 (2,219,670)
Interest and Dividends 417,914 449,592
Total Additions 2,396,859 (749,161)
Deductions
Refunds of Contributions 35,472 17,595
Benefits 909,137 843,661
Investment Expenses 591 0
Administrative Expenses 36,527 26,030
Total Deductions 981,727 887,286
Net Increase (Decrease) 1,415,132 (1,636,447)
Net Assets, Beginning of Year 13,253,293 14,889,740
Net Assets, End of Year $ 14,668,425 $ 13,253,293
See accompanying notes.
15
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
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 all of the nonfiduciary activities of the City. For the most
part, the effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment 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.
16
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 1- Summary of Significant Accounting Policies (Continued)
Government-wide and Fund Financial Statements (Concluded)
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government-wide financial
statements. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary
fund financial statements. Revenues are recorded when earned and expenses are recorded when
a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been
met.
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other
charges between the City's water and sewer function and various other functions of the City.
Elimination of these charges would distort the direct costs and program revenues reported for the
various functions concerned.
Amounts reported as program revenues include: (1) charges to customers or applicants for
goods, services, or privileges provided; (2) operating grants and contributions; and (3) capital
grants and contributions, including special assessments. General revenues include all taxes.
Net assets are reported as one of three categories: (1) invested in capital assets, net of related
debt; (2) restricted; or (3) unrestricted.
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.
17
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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 records reservations for portions of governmental fund balances which are legally
segregated for specific use or which do not represent available spendable resources and,
therefore, not available for appropriation. Unreserved fund balance indicates the portion of
fund balance which is available for appropriation in future periods. Reservations of fund
balance are established for debt service, inventories, prepaids, and encumbrances.
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 distribution and sewer
collection and treatment 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.
¦ The Building Code Enforcement Fund accounts for the activities of the City's Building
Department.
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.
18
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 1- Summary of Significant Accountine Policies (Continued)
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.
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.
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, 2009, were $237,146.
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 certificates
of deposit. Interest income earned on the pooled cash and investments is distributed to the
appropriate funds based on the average monthly balance of investments in each fund.
Investments are valued at fair market value (see Note 2).
For the purposes of the statement of cash flows, the City's proprietary funds consider cash and
cash equivalents to include cash and investments with an original maturity of three months or
less.
19
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 1 - Summary of Significant Accounting Policies (Continued)
Receivables
Receivables are recorded at their net realizable value.
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).
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 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.
Use of Restricted Funds
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.
Fund Balance Designations
Designations of fund balance reflect tentative plans for future use of financial resources. The
City has designated $300,000 in the general fund for the purpose of acquisition of firefighting
equipment and other necessary expenses in connection with potential reestablishment of a City
fire department.
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.
20
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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.
Accordingly, grant revenues are recorded using the modified accrual basis in governmental
funds and the accrual basis in the proprietary funds. Restricted grant revenues, which are
received but not expended, are recorded as deferred revenues.
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 properly
taxes are recorded as received, in cash, which approximates taxes levied less discounts for the
current fiscal year.
21
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 1- Summary of Significant Accounting Policies (Concluded)
Property Taxes (Concluded)
Taxes are levied on November 1 of each year. All taxes become delinquent on April 1 of the
following year. Discounts are allowed for early payment. On or prior to June 1, interest-
bearing certificates are sold for all uncollected real property taxes. Unsold certificates are held
by the City of Jacksonville, Florida.
Interfund Transactions
During the course of normal operations, the City has various transactions between funds to
construct assets and comply with local ordinances and other legal restrictions. These
transactions are reflected as transfers. In addition, certain transfers have been made between
systems and accounts of the utility enterprise fund as required by bond covenants.
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, 2008, from which the summarized information was derived.
Reclassifications
Certain accounts in the prior year financial statements have been reclassified for comparative
purposes to conform with the presentation in the current year financial statements.
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.
At September 30, 2009, the carrying amount of cash on hand and on deposit with banks,
including interest-bearing deposits was $5,848,010, and the related bank balance was
$5,974,431. Monies which are placed on deposit with financial institutions in the form of
demand deposit accounts, time deposit accounts, and certificates of deposit are defined as
public deposits. All of the City's public deposits are held in qualified public depositories
pursuant to Florida Statutes Chapter 280, Florida Security for Public Deposits Act. Under the
Act, all qualified public depositories are required to pledge eligible collateral having a market
value equal to or greater than the average daily or monthly balance of all public deposits, times
the depository's collateral pledged level. The pledging level may range from 50% to 125%
depending upon the depository's financial condition and establishment period. All collateral
must be deposited with an approved financial institution.
22
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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,
2009, are comprised of the following items:
Cash and Cash Equivalents
Petty Cash on Hand $ 2 900
Cash in Banks 5,845,110
Fifth Third Bank -Certificates of Deposit 8,019,642
State Board of Administration Investment Pool 1,280
Total Cash and Cash Equivalents 13,868,932
(Cash and Cash Equivalents -Restricted, Including
$41,878 of Cash and Cash Equivalents in
Pension Trust Fund) (2,330,735)
Total Cash and Cash Equivalents, Unrestricted $ 11.538.197
Pension Trust Investments
UBS -Growth Fund of America $ 2,492,316
UBS -Washington Mutual 2,234,986
UBS -Baron Asset 1,163,917
UBS -Royce Pennsylvania Mutual 1,221,816
UBS - Europacific Growth 2,229,385
UBS - PIMCO Total Return 5,403,787
UBS - RMA Money Market 852
ICMA 401 DROP -Participant Directed 477,228
Total Pension Trust Investment $ 15.224.287
Restricted cash and investments at September 30, 2009, in the enterprise funds follows:
Renewal System
and Develop-
Enterprise Customer Replace- Debt ment
Funds Deposits ment Service Charges Totals
Utility Fund $ 529 811 $ 500 000 $ 1 069 030 $ 27 229 $ 2.126.070
Stormwater Fund $ 0 $ 0 $ 162 787 $ 0 $ 162.787
23
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 2 - Cash and Investments (Concluded)
Credit Risk-It is the City's Police Officers' Retirement System and General Employees'
Retirement System Pension Trust Funds' policy to limit its investment in corporate debt issues to
those that meet or exceed a credit rating of "A" by Moody's or Standard & Poor's rating
services, and no more than 10% (at cost) of the fixed income portfolio total value can be
invested in the securities of any single corporate issuer. At September 30, 2009, 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.
Custodial Credit Risk-For an investment, custodial credit risk is the risk that, in the event of
the failure of the counterparty, the City will not be able to recover the value of its investments
or collateral securities that are in thepossession of an outside party.
The City's investment policy does not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision
for deposits: The Finance Director may execute a third party Custodial Safekeeping Agreement
with a commercial bank having trust powers or a trust company which is chartered by the United
States government or the State of Florida. All securities purchased and/or collateral obtained by
the City shall be properly designated as an asset of the City and held in safekeeping by the trust
department or trust company, and no withdrawal of such securities, in whole or in part, shall be
made from safekeeping, except by an authorized City staff member. The third party Custodial
Safekeeping Agreement shall include letters of authority from the City with details as to
responsibilities of parties, notification of security purchases, sales, deliver, repurchase
agreements, wire transfers, safekeeping and transaction costs, procedures in case of wire failure
or other unforeseen mishaps, including liability of each party.
Note 3 - Special Assessments
During 1991, the City imposed a special assessment on residents in a certain area of the City
known as "Section H" to recover a portion of the costs of water and wastewater improvements
constructed by the City in that area. Assessments are payable in equal annual installments
through 2011 plus interest at 5.35% (reduced from 8% in 1999).
During 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%.
24
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 3 - Special Assessments (Concluded)
Following is a summary of the outstanding balances at September 30, 2009:
Beach
Section H Avenue
Assessment Assessments Totals
Special Assessment Receivable $ 5,444 $ 1,011 $ 6,455
(Current Portion) (5.444) X1,011) _ X6,455)
Tatal Special Assessment
Receivable -Noncurrent $ 0 $ 0 $ 0
Note 4 - Receivables
Receivables, net of the allowance for doubtful accounts at September 30, 2009, consist of the
following:
Less
Total Allowance Accounts
Accounts for Doubtful Receivable
Fund Receivable Accounts Net
General $ 193,328 $ (l 80,182) $ 13,146
Utility 483,318 (33,497) 449,821
Stormwater 30,957 (4,611) 26,346
Sanitation 88,625 _7,665) 80,960
Total $ 796,228 (225.955) $ 570.273
Included in accounts receivable are $207,239 of water and sewer revenues earned, but not
billed as of September 30, 2009.
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, 2009:
Notes Receivable $ 120,668
(Current Portion) (17,987)
Total Note Receivable -Noncurrent $ 102.681
25
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 6 - Capital Assets
Capital asset activity for the fiscal year ended September 30, 2009, is as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities
Capital Assets Not Being Depreciated:
Land $ 9,843,717 $ 190,410 $ 0 $ 10,034,127
Construction in Progress 350.340 137.122 (350,340) 137,122
Total Capital Assets Not Being Depreciated 10,194,057 327.532 (350,340) 10,171,249
Capital Assets Being Depreciated:
Buildings 4,134,377 0 0 4,134,377
Improvements Other Than Buildings 37,620,323 178,855 0 37,744,178
Machinery and Equipment 3,392,208 366.136 (442,369) 3,315,975
Total Capital Assets Being Depreciated 45,146,908 544,991 (442.369) 45.249,530
Less Accumulated Depreciation for:
Buildings (1,245,183) (96,191) 0 (1,341,374)
Improvements Other Than Buildings (10,395,971) (614,011) 1,435 (11,008,547)
Machinery and Equipment (2,031,393) (372,438) 423.123 (1.980,708)
Total Accumulated Depreciation (13,672,547) (1,082,640) 424,558 (14.330,629)
Total Capital Assets Being Depreciated, Net 31,474,361 (537,649) (17,811) 30,418,901
Governmental Activities Capital Assets, Net 41.668.418 (210.117) (368.151) $ 41.090.150
Business-type Activities
Capital Assets Not Being Depreciated:
Land $ 1,656,018 $ 0 $ 0 $ 1,656,018
Construction in Progress 781.857 613.549 (647,804) 747,602
Total Capital Assets Not Being Depreciated 2,437,875 613.549 (647.804) 2.403.620
Capital Assets Being Depreciated:
Buildings 4,356,384 0 0 4,356,384
Improvements Other Than Buildings 58,002,508 1,415,391 0 59,417,899
Machinery and Equipment 1,851,779 86,b59 (64.829) 1,873,609
Total Capital Assets Being Depreciated 64,210,671 1.502,050 (64,829) 65,647,892
Less Accumulated Depreciation for:
Buildings (3,703,424) (138,271) 0 (3,841,645)
Improvements Other "Than Buildings (27,991,052) (2,056,094) 0 (30,047,146)
Machinery and Equipment (1,259,708) _130,938) 64.829 (1,325,817)
Tota]AccumulatedDepreciation (32.954,184) (2.325,303) 64,829 X35.214,658)
Total Capital Assets Being Depreciated, Net 31,25b,487 (823,253) 0 30,433,234
Business-type Activities Capital Assets, Net $ 33 694.362 (209.7041 (647.804) $ 32.836.854
Depreciation expense was charged to functions/programs as follows:
26
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 6 - Capital Assets (Concluded)
Governmental Activities
General Governmental $ 172,987
Public Safety 227,588
Transportation 515,042
Parks and Recreation 167,023
Total Depreciation Expense -Governmental Activities 1.082.640
Business-type Activities
Utility $ 1,897,004
Stormwater 398,069
Sanitation 26,886
Building Code Enforcement 3,334
Total Depreciation Expense -Business-type Activities $ 2.325.303
Note 7 - Long-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 $ 17,655,000
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 725,000
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 723,272
Total Revenue Bonds Payable 19,103,272
(Unamortized Discount) (185,137)
(Unamortized Refunding Loss) (1,417,030)
Total Long-term Debt, Net 17.501.105
The annual requirements to amortize all revenue bonds payable outstanding at September 30,
2009, are as follows:
27
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 7 - Long-term Debt (Continued)
Governmental Activities Business-type Activities
Year Ending Lon¢-term Debt Lone-term Debt
Seatember 30 Princiaal Interest Total Princiaal Interest Total
2010 $ 59,305 $ 12,262 $ 71,567 $ 874,101 $ 732,855 $ 1,606,956
2011 61,620 9,723 71,343 901,994 705,627 1,607,621
2012 63,690 7,101 70,791 929,581 675,671 1,605,252
2013 67,712 4,324 72,036 959,606 643,489 1,603,095
2014 69,202 1,457 70,659 996,461 608,865 1,605,326
201.5 - 2019 0 0 0 5,075,000 2,481,350 7,556,350
2020-2024 0 0 0 6,180,000 1,333,254 7,513,254
2025 - 2029 0 0 0 2.865,000 130,826 2.995,826
Total $ 321 529 $ 34.867 $ 356.396 18.781.743 7.311. $26 093.680
Interest and amortization incurred during the year ended September 30, 2009, was $14,673 in
the debt service fund and $849,015 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, 2009, and during the year then ended, the City was in
compliance with those ratios.
The following is a summary of the changes in long-term debt of the City for the year ended
September 30, 2009:
Balance Balance Due
October 1, September 30, Within
2008 Additions Reductions 2009 One Year
Governmental Activities
Revenue Bonds Payable $ 378,215 $ 0 $ (56,686) $ 321,529 $ 59,305
Compensated Absences 533,139 559,049 (468,022) 624,166 435,000
OPEB Obligation 0 18.296 0 18,296 0
Total Governmental Activities -
Long-term Liabilities $ 911.354 $ 577.345 (524.708) $ 963 991 $ 49Q,305
Business-type Activities
Revenue Bonds Payable $ 19,632,571 $ 0 $ (850,828) $ 18,781,743 $ 874,101
Less Deferred Amounts:
For Issuance Discounts (198,346) 0 13,209 (185,137) (13,209)
Loss on Bond Refunding (1,506,557) 0 89.527 (1,417,030) (89,527)
Total Revenue Bonds Payable 17,927,668 0 (748,092) 17,179,576 771,365
Compensated Absences 229,670 176,210 (142,139) 263,741 132,000
OPEB Obligation 0 5.778 0 5.778 0
Total Business-type Activities -
Long-term Liabilities $ 18 157.338 $ 181 988 (890.231) 17.449.095 $ 903365
28
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 7 - Lons?-term Debt (Concluded)
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 property 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, 2009, there were two series of Health Facility Revenue Bonds
outstanding, with an aggregate principal amount payable of $53,335,000.
Pledged Revenue
The City has pledged certain revenues to repay certain bonds and notes outstanding as of
September 30, 2009. The following table reports the revenues, sometimes net of related
operating expenses, pledged for each debt issue, the amounts of such revenues received in the
current year, the current year principal and interest paid on the debt, the approximate
percentage of each revenue which is pledged to meet the debt obligation, and the date through
which the revenue is pledged under the debt agreement, and the total pledged future revenues
for each debt, which is the amount of the remaining principal and interest on the bonds and
notes at September 30, 2009:
Outstanding
Principal Estimated Principal
Pledged Revenue and Interest Percentage and Pledged
Description of Bonds Revenue Received Paid Pled¢ed Interest Throueh
1996 -Utility System Revenue Utility
Bonds Revenues $ 2,093,474 $ 65,445 3.13% $ 1,115,293 2025
1999 -Utility System Refunding Utility
Bonds Service Tax $ 456,608 $ 160,522 35.16% $ 801,702 2014
2004 -Utility System Refunding Utility
Bonds Revenues $ 2,093,474 $ 1,453,022 69.41% $ 24,533,081 2025
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, 2008, the date of the latest actuarial valuation:
29
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 8 - Defined Benefit Pension Plans (Continued)
Plan Descriptions and Contribution Information (Concluded)
General
Employees Police
Retirees and Beneficiaries Receiving Benefits 34 13
Disabled Members and Beneficiaries Receiving
Benefits 4 3
Terminated Plan Members Entitled to but Not
Yet Receiving Benefits 14 3
Active Plan Members 83 26
Total 135 45
¦ General Employees' Retirement Plan
Plan Description
The General Employees' Retirement Plan (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 (14.03% of
valuation payroll for the year ended September 30, 2008). 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 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 (combined City and State contributions were 21.9%
of valuation payroll for the year ended September 30, 2008). Per City Code, the City
Commission may amend established contribution requirements.
Other Pension Plan Information
The ARC for the current year were determined as part of the September 30, 2008, actuarial
valuations for the General Employees' and Police Retirement Plans using the entry-age
actuarial cost method. The actuarial 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 6.3% attributable to seniority/merit. The assumptions did not
include postretirement benefit increases.
30
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 8 - Defined Benefit Pension Plans (Continued)
Other Pension Plan Information (Concluded)
The actuarial value of assets was determined using techniques that spread the effects of short-
term volatility in the market value of investments over afour-year period. The unfunded
actuarial accrued liabilities are being amortized over remaining amortization periods of 1 to 30
years as a level percentage of active member payroll.
Three-year trend information:
Fiscal Year Ended Annual Pension Percentage of Net Pension
September 30 Cost (APCI APC Contributed Asset/(Liability)
General Employees
2007 $ 482,364 100% $ 0
2008 457,005 100% 0
2009 528,428 100% 0
Police
2007 $ 390,494 100% $ 0
2008 309,841 100% 0
2009 345,280 100% 0
Funded Status and Funding Progress
The following is funded status information for each Plan as of September 30, 2008, the most
recent actuarial valuation date and is intended to help users assess (i) the Plan's funded status
on a going concern basis, and (ii) progress being made toward accumulating the assets needed
to pay benefits when due.
General Employees' Retirement Plan
Actuarial Accrued Liability:
Active Participants $ 7,971 310
Retired Participant and Beneficiaries Currently Receiving Benefits 3,808,057
Vested Terminated Participants Not Yet Receiving Benefit 844,717
Total Actuarial Accrued Liability 12,624,084
Actuarial Value of Assets (Market Value was $8,167,648) 9.208,773
Unfunded Actuarial Accrued Liability $ 3.415.311
The General Employees' Retirement Plan is 72.9% funded and the Unfunded Actuarial
Accrued Liability represents 91.6% of covered payroll as of September 30, 2008.
Police Retirement Plan
Actuarial Accrued Liability:
Active Participants $ 3,141,605
Retired Participant and Beneficiaries Currently Receiving Benefits 4,861,603
Vested Terminated Participants Not Yet Receiving Benefit 108,525
Total Actuarial. Accrued Liability 8,111,733
Actuarial Value of Assets (Market Value was $5,085,645) 5,763,883
Unfunded Actuarial Accrued Liability $ 2.347.850
31
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 8 - Defined Benefit Pension Plans (Concluded)
Funded Status and Funding Progress (Concluded)
The Police Retirement Plan is 71.1% funded and the Unfunded Actuarial Accrued Liability
represents 159.1% of covered payroll as of September 30, 2008.
The schedule of funding progress, presented as RSI following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of Plan
assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
Note 9 - Postemployment Benefits Other Than Pensions
For the fiscal year ended September 30, 2009, the City implemented GASB Statement No. 45,
Accounting and Reporting by Employers for Postemployment Benefits Other than Pensions
(OPEB), for certain postemployment health care benefits provided by the City. The
requirements of this statement were implemented prospectively.
Plan Description
The City of Atlantic Beach administers asingle-employer defined benefit health care plan (the
Plan) that provides medical insurance benefits to its employees and their eligible dependents.
In accordance with Section 112.0801 of the Florida Statutes, because the City provides a
medical plan to active employees of the City and their eligible dependents, the City is also
required to provide retirees with the opportunity to participate in this Plan. Benefit provisions
for the Plan are established by the City Commission and may be amended by the City
Commission. The City does not issue stand-alone financial statements for the Plan.
Membership in the Plan consisted of the following at September 30, 2006, the date of the
latest actuarial valuation:
Retirees and Beneficiaries Receiving Benefits 3
Terminated Plan Members Entitled to but Not
Yet Receiving Benefits 6
Active Plan Members 105
Total 114
Funding Policy
Contribution rates for the Plan are established on an annual basis by the City Commission.
Eligible retirees and their covered dependents receiving benefits contribute 100% of the
blended (active and retiree combined) equivalent premium rates. For the year ended
September 30, 2009, the total retiree contributions for health insurance premiums from the
three retirees that received health care benefits were $15,309. While the City does not directly
contribute towards the costs of retiree premiums via an explicit subsidy, the ability of retirees
to obtain health insurance coverage at a blended, group rate constitutes a significant economic
benefit to retirees, or an "implicit" subsidy. This implicit subsidy is considered to be an other
postemployment benefit (OPEB) obligation of the City. The City is currently funding this
OPEB obligation on apay-as-you-go basis. Annual required contributions (ARC) amounted
to $49,133 for the current fiscal year. The annual required contribution is based on
32
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 9 - Postemployment Benefits Other Than Pensions (Continued)
Funding Policy (Concluded)
a rate of 1.02% of projected payroll of $4,812,000 or an average $468 per active participant.
For the year ended September 30, 2009, the City estimated it implicitly subsidized $25,059 of
health care costs for its retirees and covered dependents. This implied subsidy reduced the
annual ARC to a net expense of $24,074.
Annual OPEB Cost and Net OPEB Obligation
The City's annual OPEB cost (expense) is calculated based on the annual required contribution
of the employer (ARC), an amount actuarially determined in accordance with the parameters
of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year to amortize any unfunded actuarial liabilities
(or funding excess) over a period not to exceed 30 years. The following table shows the
components of the City's annual OPEB cost for the year, the amount actually contributed to
the Plan, and changes in the City's net OPEB obligation to the retiree health plan:
Annual Required Contribution $ 49,133
Interest on Net OPEB Obligation 0
Adjustment to Annual Required Contribution 0
Annual OPEB Cost (Expense) 49,133
Employer Contribution (25,059)
Interest on Employer Contributions 0
Increase in Net OPEB Obligation 24,074
Net OPEB Obligation -Beginning of Year 0
Net OPEB Obligation -End of Year $ 24,074
The City reflected the $24,074 increase in net OPEB obligation at September 30, 2009, by
recording an obligation of $18,296 for governmental activities and $5,778 for business-type
activities in its government-wide statement of net assets. The utility fund reported a net OPEB
obligation of $3,782, while the sanitation fund, stormwater fund, and building code
enforcement fund reported $0, $1,200 and $796, respectively. The OPEB obligation is a
function of annual required contributions, interest, adjustments to the annual required
contribution, annual pension costs and actual employers' contributions made to the Plan.
No trust or agency fund has been established for the Plan and there were no adjustments to the
annual required contribution or interest earnings.
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and
the net OPEB obligation as of September 30, 2009, are presented below. Data is only
presented for the fiscal year ending September 30, 2009, the first year in which GASB
Statement No. 45 implementation is required.
33
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 9 - Postemployment Benefits Other Than Pensions (Concluded)
Annual OPEB Cost and Net OPEB Obligation (Concluded)
Percentage
Fiscal Annual of Annual Net
Year OPEB OPEB Cost OPEB
Ended Cost Contributed Obligation
September 30, 2009 $ 49,133 51.0% $ 24,074
Funded Status and Funding Progress
As of September 30, 2006, the date of the latest actuarial valuation, the unfunded actuarial
accrued liability for benefits was $470,703, all of which was unfunded. The covered payroll
(annual payroll of active employees covered by the Plan) was $4,812,000, and the ratio of the
unfunded actuarial accrued liability to the covered payroll was 9.78%. The projection of
future benefit payments for an ongoing plan involves estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, mortality, and the health care cost
trend. Amounts determined regarding the funded status of the Plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of Plan
assets is increasing or decreasing over time, relative to the actuarial accrued liabilities for
benefits.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The methods and assumptions used
include techniques that are designed to reduce the effects of short-term volatility in actuarial
accrued liabilities, consistent with the long-term perspective of the calculations.
In the actuarial valuation as of September 30, 2006, the date of the latest actuarial valuation,
the Individual Entry-Age Actuarial Cost method was used to determine all liabilities, with the
liability for each active employee assumed to accrue over his/her working lifetime based on
elapsed time from his/her date of hire until retirement. The unfunded actuarial accrued
liability is being amortized using a level (principal and interest combined) percent of payroll
contribution method. The valuation is based on an open amortization period (open basis), i.e.,
one that begins again or is recalculated at each actuarial valuation date. Using the maximum
number of years allowed by GASB, a 30-year amortization period, the period may increase,
decrease, or remain stable.
Other significant actuarial assumptions include a 4% discount rate, an annual health care cost
trend rate of 11% initially, reduced by decrements to an ultimate rate of 4% after 10 years,
projected salary increases of 4% to 7% annually, and future participation rates of 20% for
general employees and 10% for police up to Medicare eligibility with a 2% participation rate
thereafter.
34
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Continued)
Note 10- Interfund Accounts
Individual fund Interfund receivables and payables at September 30, 2009, consist of the
following:
Due Due
from Other to Other
Funds Funds
General $ 63,844 $ 0
Nonmajor Governmental 0 63,844
Note 11 - 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, 2009:
Transfers In
Nonmajor
Utility General Governmental Stormwater Total
Transfers Out Fund Fund Funds Fund Transfers
Nonmajor Governmental
Funds $ 0 $ 5,000 $ 398,500 $ 443,500 $ 847,000
Utility Fund 0 113,900 0 0 113,900
Sanitation Fund 0 247,800 0 0 247,800
General Fund 1.146.916 0 0 1.424,100 2.571,016
Total Transfers 1.146.916 $ 366 700 $ 398.500 1.867.600 x_3.779.716
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 12 - Commitments
As of September 30, 2009, the City had outstanding commitments on contracts in progress as
follows:
Unexpended
Project Tvae Contract Amounts
Utility System Improvements $ 1,143,592
Stormwater System Improvements 3,114,613
General Government Improvements 219,482
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, 2009, the
35
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Concluded)
Note 12 - Commitments (Concluded)
City incurred $893,224 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.
The City is in the process of 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 wastewater point sources and the City's stormwater
systems which discharge to the river or its tributaries. The new nitrogen limit resulted in the
City having to upgrade one wastewater treatment plant and discontinue another. An
impairment loss of $2,659,110 was recorded in 2008 to account for discontinuation of this
plant. Design of the new lift station and force main is underway. Construction of the force
main is anticipated in 2010. The lift station construction will begin after the upgrades to
Wastewater Treatment Plant #1 are complete. 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. The stormwater upgrades are complete. Plant upgrades are accommodating the
remaining stormwater nitrogen loads. The estimated range of costs for the treatment plant
upgrades, force main, lift station, 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,
treatment plant upgrades 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 will save the City a considerable amount. It is undetermined, at
this time, what the net cost will be to the City.
Note 13 - Contingencies
The City is a defendant in ,several lawsuits which arose in the ordinary course of the City's
business. To the extent the outcome of such litigation has been determined to result in
probable loss to the City, an estimated loss has been accrued in the accompanying financial
statements. The outcome of the remaining claims cannot be determined at this time.
Note 14 - Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters for which the City carries commercial
insurance. Insurance against losses are provided through the Florida League of Cities, Inc. and
Risk Management Associates, Inc. for the following types of risk:
¦ Workers' Compensation and Employer's Liability ¦ General Liability
¦ Automobile Liability ¦ Public Officials' Liability
¦ Automobile Physical Damage ¦ Property Coverage
¦ Accidental Death and Dismemberment
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.
36
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF PENSION FUNDING PROGRESS
SEPTEMBER 30, 2009
General Emaloyees' Retirement Plan
Actuarial UAAL as
Actuarial Accrued Annual Percentage
Valuation Value of Liability Unfunded Funded Covered of Covered
Date Assets (AALI AAL Ratio Pavroll Pavroll
9/30/04 $ 6,273,000 $ 9,005,000 $ 2,732,000 69.7% $ 3,051,000 89.5%
9/30/OS* 6,802,000 9,822,000 3,020,000 69.3% 3,182,000 94.9%
9l30l06* 7,609,000. 10,505,000 2,896,000 72.4% 3,195,000 90.6%
9130/07 8,594,000 11,668,000 3,074,000 73.7% 3,476,000 88.4%
9/30/08* 9,209,000 ]2,624,000 3,415,000 72.9% 3,727,000 91.6%
Police Retirement Plan
Actuarial UAAL as
Actuarial Accrued Annual Percentage
Valuation Value of Liability Unfunded Funded Covered of Covered
Date Assets (AALI AAL Ratio Pavroll Pavroll
9/30/04 $ 4,534,000 $ 6,405,000 $ 1,871,000 70.8% $ 1,360,000 137.6%
9/30/OS* 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%
9/30/07* 5,663,000 7,620,000 1,957,000 74.3% 1,453,000 134.7%
9130/08 5,764,000 8,112,000 2,348,000 71.1% 1,476,000 159.1%
* After changes in benefits and/or actuarial assumptions andlor actuarial cost methods.
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.
37
CITY OF ATLANTIC BEACH, FLORH)A
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER
AND OTHER CONTRIBUTING ENTITIES
SEPTEMBER 30, 2009
General Employees' Retirement Plan
Annual
Required
Year Ended Contributed Percentage
September 30 (ARC) Contributed
2005 $ 464,893 100%
2006 4$0,029 100%
2007 482,364 100%
2008 4S7,OOS 100%
2009 528,428 100%
Police Retirement Plan
Annual
Required
Year Ended Contributed Percentage
September 30 (ARC) Contributed
2005 $ 297,361 100%
2006 350,161 100%
2007 390,494 100%
2008 309,841 ]00%
2009 345,280 100%
The information presented in the required supplementary schedules was determined as part of the
actuarial valuation at the dates indicated. Additional information for the general employees' and police
retirement plans as of the latest actuarial valuation follows:
Valuation Date September 30, 2008
Actuarial Cost Method Entry-Age Actuarial Cost Method
Amortization Method Level Percent of Payroll, Closed
Remaining Amortization Period 1 to 30 Years
Asset Valuation Method Funding Value
Actuarial Assumptions
Investment Rate of Return 8.00%
Projected Inflationary Salary Increases S.SO%
Projected Merit Salary Increases 0.00% to 6.30%
Inflation 5.00%
38
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POSTEMPLOYMENT BENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
SEPTEMBER 30, 2009
Actuarial UAAL as
Actuarial Accrued Annual Percentage
Valuation Value of Liability Unfunded Funded Covered of Covered
Date Assets (AAL) AAL Ratio Pavroll Pavroll
9/30/06 $ 0 $ 470,703 $ 470,703 0.0% $ 4,812,000 9.78%
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.
39
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POSTEMPLOYMENT BENEFITS PLAN
SCHEDULE OF CONTRIBUTIONS FROM EMPLOYER.
SEPTEMBER 30, 2009
Annual
Required
Year Ended Contributed Percentage
September 30, (ARC) Contributed
2009 $ 49,133 51
40
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Variance With
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues
Property Taxes $ 4,117,874 $ 4,117,874 $ 4,089,288 $ (28,586)
Nonproperty Taxes 1,143,676 1,143,676 1,161,782 18,106
Franchise Fees and Permits 790,725 790,725 907,771 117,046
State-shared Revenues 1,711,812 1,582,865 1,517,742 (65,123)
Other Intergovernmental Revenues 43,250 93,343 158,770 65,427
Charges for Services 660,608 660,608 684,650 24,042
Fines and Forfeitures 81,100 81,100 90,881 9,781
Interest Income 140,000 46,000 13,134 (32,866)
Miscellaneous Revenues 25,300 25,300 34,295 8,995
lnterfund Charges 1,379,729 1,473,677 1,499,385 25,708
Total Revenues 10,094,074 10,015,168 10;15?,698 142,530
Expenditures
General Government:
Legislative 48,076 48,076 41,586 6,490
Legal Counsel 114,614 114,614 110,453 4,161
Planning and Zoning 211,567 224,428 202,960 21,468
City Clerk 264,832 278,851 237,079 41,772
City Manager 556,068 556,068 535,306 20,762
Finance and Accounting 962,234 963,666 945,419 18,247
Human Resources 217,756 213,856 190,784 23,072
Information Technology 515,333 518,926 455,202 63,724
Other 424,942 430,010 423,335 .6,675
Total General Government 3,315,422 3,348,495 3,142,124 206,371
Public Safety:
Law Enforcement 3,448,496 3,783,084 3,431,746 351,338
Lifeguards 194,897 194,900 183,546 11,354
Fire Control 918,128 918,128 909,661 8,467
Code Enforcement 67,115 67,254 65,396 1,858
Total Public Safety 4,628,636 4,963,366 4,590,349 373,017
Transportation:
Public Works Administration 465,698 457,595 456,863 732
Streets and Roads 853,685 775,914 743,992 31,922
Fleet Maintenance 247,329 258,379 253,193 5,186
Total Transportation 1,566,712 1,491,888 1,454,048 37,840
Parks and Recreation 1,194,259 1,211,479 1,090,872 120,607
(Total Expenditures) (10,705,029) (11,015,228) (10,277,393) 737,835
41
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2009
(Concluded)
Variance With
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
(Deficiency) of Revenues (Under)
Expenditures $ (610,955) $ (1,000,060) $ (119,695) $ 880,365
Other Financing Sources (Uses)
Transfers in 395,800 366,700 366,700 0
Transfers (out) (1,300,000) (3,324,100) (2,571,016) 753,084
Sale of General Fixed Assets 10,000 10,000 9,540 (460)
Total Other Financing Sources (Uses) (894,200) (2,947,400) (2,194,776) 752,624
(Deficiency) of Revenues and Other
Financing Sources (Under) Expenditures
and Other Financing Uses (1,505,155) (3,947,460) (2,314,471) 1,632,989
Fund Balances, Beginning of Year 6,140,718 5,569,919 5,735,252 165,333
Fund Balances, End of Year $ 4,635,563 $ 1,622,459 $ 3,420,781 $ 1,798,322
42
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
NOTE TO SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Budgets and Budgetary Accounting
General governmental revenues 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.
43
SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009
Special Revenue Funds
Convention
Tree Local Option Development Half-cent Court Cost Radio
Replacement Gas Tax Tax Sales Tax Training Communication
Assets
Equity in Pooled Cash and
Cash Equivalents $ 14,822 $ 222,381 $ 20,094 $ 720,685 $ 134,767 $ 18,749
Due from Other Governments 0 66,597 9,076 104,667 648 2,112
Total Assets 14,822 288,978 29,170 825,352 135,415 20,861
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued
Liabilities 0 7,060 0 0 755 3,139
Due to Other Funds 0 0 0 0 0 0
Deposits 0 0 0 0 0 0
Total Liabilities 0 7,060 0 0 755 3,139
Fund Balances
Reserved for:
Debt Service 0 0 0 0 0 0
Encumbrances 0 140,000 0 0 0 0
Unreserved -Reported in:
Special Revenue Funds 14,822 141,918 29,170 825,352 134,660 17,722
Capital Projects Funds 0 0 0 0 0 0
Total Fund Balances 14,822 281,918 29,170 825,352 134,660 17,722
Total Liabilities and Fund
Balances $ 14,822 $ 288,978 $ 29,170 $ 825,352 $ 135,415 $ 20,861
44
2009
Special Revenue Funds
Totals Totals
Community Special Nonmajor
Contraband Development Revenues Debt Capital Governmental 2008
Forfeiture Block Grant Funds Service Projects Funds Totals
$ 32,679 $ 0 $ 1,164,177 $ 74,617 $ 650,065 $ 1,888,859 $ 2,095,233
0 72,286 255,386 0 0 255,386 223,756
32,679 72,286 1,419,563 74,617 650,065 2,144,245 2,318,989
960 8,442 20,356 0 0 20,356 269,9]8
0 63,844 63,844 0 0 63,844 30,125
25,969 0 25,969 0 0 25,969 27,610
26,929 72,286 110,169 0 0 110,169 327,653
0 0 0 74,617 0 74,617 77,300
0 0 140,000 0 20,788 160,788. 141,740
5,750 0 1,169,394 0 0 1,169,394 1,439,359
0 0 0 0 629,277 629,277 332,937
5,750 0 1,309,394 74,617 650,065 2,034,076 1,991,336
$ 32,679 $ 72,286 $ 1,419,563 $ 74,617 $ 650,065 $ 2,144,245 $ 2,318,989
45
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
2009
Special Revenue Funds
Convention
Tree Local Option Development Half-cent Court Cost Radio
Replacement Gas Tax Tax Sales Tax Training Communication
Revenues
Taxes $ 0 $ 466,220 $ 60,066 $ 629,680 $ 0 $ 0
Other Intergovernmental
Revenues 0 0 0 0 0 0
Fines and Forfeitures 0 0 0 0 5,868 18,912
Interest Income 671 189 2,038 370 62
Miscellaneous Revenues 4,914 0 0 0 0 0
Total Revenues 4,914 466,891 60,255 631,718 6,238 18,974
Expenditures
Current:
General Government 0 0 40,000 0 0 0
Public Safety 0 0 0 0 24,660 18,835
Transportation 0 178,750 0 73,477 0 0
Conservation and Resource
Management 21,275 0 0 0 0 0
Debt Service:
Principal 0 0 0 0 0 0
Interest and Other 0 0 0 0 0 0
Capital Outlay 0 0 235,407 16,445 0 0
(Total Expenditures) (21,275) (178,750) (275,407) (89,922) (24,660) (18,835)
(Deficiency) Excess of Revenues
(Under) Over Expenditures (16,361) 288,141 (215,152) 541,796 (18,422) 139
Other Financing Sources (Uses)
Transfers in 0 0 0 0 0 0
Transfers (out) 0 (259,500) 0 (587,500) 0 0
Total Other Financing
Sources (Uses) 0 (259,500) 0 (587,500) 0 0
Net Change in Fund Balances (16,361) 28,641 (215,152) (45,704) (18,422) 139
Fund Balances, Beginning of Year 31,183 253,277 244,322 871,056 153,082 17,583
Fund Balances, End of Year $ 14,822 $ 281,918 $ 29,170 $ 825,352 $ 134,660 $ 17,722
46
2009
Special Revenue Funds
Totals Totals
Community Special Nonmajor
Contraband Development Revenue Debt Capital Governmental 2008
Forfeiture Block Grant Funds Service Projects Funds Totals
$ 0 $ 0 $ 1,155,966 $ 0 $ 0 $ 1,155,966 $ 1,202,211
0 164,301 164,301 0 0 164,301 36,418
7,271 0 32,051 0 0 32,051 183,875
101 0 3,431 ]76 1,340 4,947 40,717
0 0 4,914 0 0 4,914 23,765
7,372 164,301 1,360,663 176 1,340 1,362,179 1,486,986
0 2,988 42,988 0 0 42,988 40,000
3,524 0 47,019 0 0 47,019 48,605
0 0 252,227 0 0 252,227 244,493
0 0 21,275 0 0 21,275 0
0 0 0 56,686 0 56,686 53,925
0 0 0 14,673 0 14,673 ] 7,040
8,694 161,313 421,859 0 ]4,212 436,071 302,195
(12,218) (164,301) (785,368) (71,359) (]4,212) (870,939) (706,258)
(4,846) 0 575,295 (71,183) (12,872) 491,240 780,728
0 0 0 68,500 330,000 398,500 398,566
0 0 (847,000) 0 0 (847,000) (1,446,566)
0 0 (847,000) 68,500 330,000 (448,500) (1,048,000)
(4,846) 0 (271,705) (2,683) 317,128 42,740 (267,272)
10,596 0 1,581,099 77,300 332,937 1,991,336 2,258,608
$ 5,750 $ 0 $ 1,309,394 $ 74,617 $ 650,065 $ 2,034,076 $ 1,991,336
47
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2008
Pension Trust Funds
Police General
Officers' Employees'
Retirement Retirement 2009 2008
Plan Plan Totals Totals
Assets
Cash and Cash Equivalents $ 33.,754 $ 8,124 $ 41,878 $ 167,615
Investments 5,922,208 9,302,079 15,224,287 13,792,416
Total Assets 5,955,962 9,310,203 15,266,165 13,960,031
Liabilities
Accounts Payable and Accrued Liabilities 29 29 58 0
Excess Premium Tax Liability 120,454 0 120,454 120,454
DROP Plan Payable 380,373 96,855 477,228 586,284
Total Liabilities 500,856 96,884 597,740 706,738
Net Assets
Held in Trust for Pension Benefits 5,455,106 9,213,319 14,668,425 13,253,293
Total Net Assets $ 5,455,106 $ 9,213,319 $ 14,668,425 $ 13,253,293
48
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FHUCIARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008
Pension Trust Funds
Police General
Officers' Employees'
Retirement Retirement 2009 2008
Plan Plan Totals Totals
Additions
Contributions:
Employer $ 256,474 $ 528,426 $ 784,900 $ 678,041
Employees 88,691 200,072 288,763 254,070
State of Florida 86,433 0 86,433 88,806
Total Contributions 431,598 728,498 1,160,096 1,020,917
Net Increase (Decrease) in Fair
Value of Investments 271,938 546,911 818,849 (2,219,670)
Interest and Dividends 159,931 257,983 417,914 449,592
Total Additions 863,467 1,533,392 2,396,859 (749,161)
Deductions
Refunds of Contributions 3,440 32,032 35,472 17,595
Benefits 474,002 435,135 909,137 843,661
Investment Expenses 591 0 591 0
Administrative Expenses 15,973 20,554 36,527 26,030
Total Deductions 494,006 487,721 981,727 887,286
Net Increase (Decrease) 369,461 1,045,671 1,415,132 (1,636,447)
Net Assets, Beginning of Year 5,085,645 8,167,648 13,253,293 14,889,740
Net Assets, End of Year $ 5,455,106 $ 9,213,319 $ 14,668,425 $ 13,253,293
49
CITY OF ATLANTIC BEACH, FLORIDA
HISTORICAL REVENUES AND EXPENSES
FOR THE YEARS ENDED SEPTEMBER 30, 2005 THROUGH SEPTEMBER 30, 2009
(UNAUDITED)
2005 2006 2007 2008 2009
Revenues
Operating Revenues:
Water:
Customer Charges $ 2,459,456 $ 2,554,325 $ 2,531,304 $ 2,514,161 $ 2,738,565
Miscellaneous Charges 22,567 59,667 38,809 82,737 40,906
Total Water 2,482,023 2,613,992 2,570,113 2,596,898 2,779,471
Sewer:
Customer Charges 3,524,134 3,609,816 3,529,947 3,726,556 4,116,104
Total Operating Revenues 6,006,157 6,223,808 6,100,060 6,323,454 6,895,575
Nonoperating Revenues:
Interest Income:
Water 50,946 83,149 117,793 53,378 7,963
Sewer 57,008 76,810 82,266 26,901 6,886
Total Nonoperating Revenues 107,954 159,959 200,059 80,279 14,849
Total Revenues 6,114,111 6,383,767 6,300,119 6,403,733 6,910,424
Expenses
Operating Expenses:
Water 945,643 1,067,498 1,159,651 1,019,907 1,087,283
Sewer 1,827,176 1,977,608 1,891,016 2,275,505 2,111,097
Total Operating Expenses 2,772,819 3,045,106 3,050,667 3,295,412 3,198,380
Administrative, Nondivisional and
Other:
Water 538,189 582,858 553,519 628,122 634,541
Sewer 883,224 937,010 1,072,794 1,071,893 1,142,214
Total Administrative, Nondivisional
and Other 1,421,413 1,519,868 1,626,313 1,700,015 1,776,755
(Total Expenses) (4,194,232) (4,564,974) (4,676,980) (4,995,427) (4,975,135)
Net Revenues Available for Debt Service 1,919,879 1,818,793 1,623,139 1,408,306 1,935,289
Nonoperating Income (Expense)
Interest Expense (819,620) (798,991) (769,816) (752,384) (732,939)
Loan Amortization (13,672) (15,289) (15,289) (14,730) (14,730)
Total Nonoperating (Expense) (833,292) (814,280) (785,105) (767,114) (747,669)
Net Income Before Depreciation and
Operating Transfers $ 1,086,587 $ 1,004,513 $ 838,034 $ 641,192 $ 1,187,620
50
CITY OF ATLANTIC BEACH, FLORIDA
MAJOR UTILITY CUSTOMERS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
(UNAUDITED)
Annual
Billings
Fleet Landing (Retirement Community) $ 327,308
Navy (Federal Government) 274,245
Oaks of Atlantic Beach (Mobile Home Park) 145,304
Atlantic Arms (Apartment Complex) 137,472
Sea Oats (Apartment Complex) 128,601
Lakes of Mayport (Apartment Complex) 122,334
City of Atlantic Beach, Florida 115,264
John Creek Estate (Mobile Home Park) 109,769
Hanna Park (Regional Park) 93,238
One Ocean (Hotel) 69,589
Total $ 1,523,124
5]
CITY OF ATLANTIC BEACH, FLORIDA
SUMMARY OF WATER USAGE
FOR THE YEARS ENDED SEPTEMBER 30, 2000 THROUGH SEPTEMBER 30, 2009
(UNAUDITED)
Annual Water System Customers Average Average
Total Percentage Single Unit Multi-Unit Demand Percentage
Year Population Change CAB BUC Total CAB BUC Total (MGD) Change
2000* 23,944 0.3% 4,956 2,361 7,317 1,560 2,211 3,771 3.29 0.12%
2001 23,898 -0.2% 5,008 2,472 7,480 1,580 2,111 3,691 3.10 -5.92%
2002 24,167 1.1% 5,248 2,507 7,755 1,473 2,315 3,788 3.20 3.16%
2003 23,441 -3.0% 5,324 2,504 7,828 1,569 2,305 3,874 3.09 -3.38%
2004 24,007 2.4% 5,222 2,593 7,815 2,006 2,281 4,287 2.93 -5.15%
2005 22,914 -4.5% 5,263 2,590 7,853 2,367 1,939 4,306 2.75 -6.14%
2006 23,208 1.3% 5,256 2,430 7,686 2,107 2,164 4,271 2.73 -0.73%
2007 23,151 -0.2% 5,283 2,346 7,629 1,895 2,079 3,974 2.69 -1.47%
2008 23,200 0.2% 5,285 2,341 7,626 2,006 2,288 4,294 2.50 -7.06%
2009 23,058 -0.6% 5,166 2,342 7,508 1,917 2,159 4,076 2.30 -8.00%
Atlantic Beach Division (CAB)
Buccaneer Division (BUC)
* Per 2000 Census, prior and subsequent years are estimated.
52
CITY OF ATLANTIC BEACH, FLORIDA
SUMMARY OF WASTEWATER TREATMENT
ATLANTIC BEACH SEWER DIVISION
FOR THE YEARS ENDED SEPTEMBER 30, 2000 THROUGH SEPTEMBER 30, 2009
(UNAUDITED)
Annual Average Annual
Percentage Sewer Customers Flow Percentage
Year Population Change Single Unit Multi-Unit Totat (MGD) Change
2000* 13,368 -1.8% 4,467 1,921 6,388 1.6220 6.00%
2001 13,568 1.5% 4,587 1,892 6,479 1.5600 -3.82%
2002 13,771 1.5% 4,651 1,837 6,488 1.6830 7.88%
2003 13,418 -2.6% 4,822 1,960 6,782 1.7380 3.27%
2004 13,911 3.7% 4,913 1,978 6,891 1.5980 -8.06%
2005 14,064 1.1 % 4,999 2,3 87 7,3 86 1.8160 13.64%
2006 14,079 0.1% 5,020 2,111 7,131 1.5990 -11.95%
2007 14,015 -0.5% 5,057 1,900 6,957 1.6370 2.38%
2008 13,819 -1.4% 5,086 1,904 6,990 1.6380 0.06%
2009 13,819 0.0% 4,997 1,903 6,900 1.5820 -3.42%
* Per 2000 Census, prior and subsequent years are estimated.
53
CITY OF ATLANTIC BEACH, FLORIDA
SUMMARY OF WASTEWATER TREATMENT
OUTSIDE CITY SEWER DIVISION
FOR THE YEARS ENDED SEPTEMBER 30, 2000 THROUGH SEPTEMBER 30, 2009
(UNAUDITED) -
Annual Average Annual
Percentage Sewer Customers Flow Percentage
Year Population Change _ Single Unit Multi-Unit Total (MGD) Change
2000* 10,576 15.40% 2,563 2,491 5,054 0.918 -3.47%
2001 10,330 1.50% 2,378 2,555 4,933 0.875 -4.68%
2002 10,396 1.50% 2,409 2,489 4,898 0.905 3.43%
2003 10,023 -2.60% 2,398 2,668 5,066 0.843 -6.85%
2004 10,096 -5.00% 2,504 2,497 5,001 0.824 -2.25%
2005 8,850 -0.12% 2,503 2,145 4,648 0.746 -9.47%
2006 9,129 3.00% 2,356 2,268 4,624 0.682 -8.58%
2007 9, l36 0.00% 2,267 2,268 4,535 0.712 4.40%
2008 9,381 0.03% 2,263 2,482 4,745 0.704 -1.12%
2009 9,239 -0.02% 2,258 2,355 4,613 0.651 -7.53%
* Per 2000 Census, prior and subsequent years are estimated.
54
CITY OF ATLANTIC BEACH, FLORIDA
OTHER BOND COVENANT DISCLOSURES
FOR THE YEARS ENDED SEPTEMBER 30, 2005 THROUGH SEPTEMBER 30, 2009
(UNAUDITED)
Utility Service Tax Collections
(Last Five Years)
Year Electricity Telecom Gas Fuel Oil Total
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
2008 392,842 612,671 28,758 33 1,034,304
2009 430,774 600,716 25,815 18 1,057,323
Ad Valorem Tax Collections
(Last Five Years)
Year Total
2005. $ 2,990,075
2006 3,529,832
2007 3,868,172
2008 4,269,435
2009 4,089,288
55
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, 2009 AND SEPTEMBER 30, 2008
(UNAUDITED)
2009 2008
Gross Revenues
Utility $ 6,840,216 $ 6,240,717
Connection Charges 89,169 144,566
Interest 14,849 80,279
Transfer from (to) Rate Stabilization Fund (85,400) (a) 85,400 (a)
Total Gross Revenues 6,858,834 6,550,962
Operating Expenses
Personal Services 1,776,755 1,700,015
Contractual Services 787,291 924,969
Supplies 296,697 345,432
Repairs and Maintenance 185,504 206,383
Heat, Lights and Power 683,833 575,344
Intergovernmental Charges 987,079 948,969
Loss (Gain) on Disposal of Fixed Assets (6,470) (1,560)
Other Expenses 233,469 253,719
(Total Operating Expenses) (4,944,158) (4,953,271)
Total Net Revenues in Accordance with Bond Resolutions 1,914,676 ],597,691
Capital Facilities Charges 178,799 170,894
Special Assessments -New 0 0
Net Revenues Plus Capital Facilities Charges and
Special Assessments $ 2,093,475 $ 1,768,585
Total Debt Service $ 1,518,467 $ 1,521,583
Debt Service Coverage Ratio 137.87% 116.23%
Debt Service Coverage Ratio Excluding Capital
Facilities Charges 126.09% 105.00%
Required Debt Service Coverage Ratio 110.00% 110.00%
Required Debt Service Coverage Ratio, Excluding Capital
Facilities Charges 105.00% 105.00%
(a) Rate Stabilization Fund:
Balance, Beginning of Year $ 314,600 $ 400,000
Transfer/Redeposit to Revenue Fund 85,400 (85,400)
Balance, End of Year $ 400,000 $ 314,600
56
ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS, ISSUED BY THE
COMPTROLLER GENERAL OF THE UNITED STATES; THE
RULES OF THEAUDITOR GENERAL OF THE STATE OF
FLORIDA; AND OTHER CONTRACT REQUIREMENTS
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
CFDA Grant/Contract Program
Grantor/Pass-Through Entity Number Number Awards Expenditures
Federal Awards
U.S Department of Housing and Urban Development
Indirect Programs:
Passed Through City of Jacksonville, Florida:
Community Development Block Grant (CDBG) 14.218 5629-43 $ 214,284 $ 164,301
U.S Department of Homeland Security
Indirect Programs:
Passed Through City of Jacksonville, Florida:
Homeland Security Grant Program 97.067 09-DS-48-04-26-01 48,650 0
U.S. Department of Justice
Direct Programs:
Bulletproof Vest Partnership Program 16.607 2009-BUBX-08055226 2,628 2,628
Recovery Act -Edward Byrne Memorial Justice Assistance
Grant Program ARRA-16.804 2009-SB-B9-1335 33,538 33,538
Indirect Programs:
Passed Through Florida Department of Law Enforcement:
Edward Byrne Memorial Justice Assistance Grant Program 16.738 2009-JAGC-DUVA-3-T7-I 10 43,455 43,455
Edward Byrne Memorial Justice Assistance Grant Program 16.738 2009-JAGD-DUVA-2-T8-104 1,735 1,735
Subtotal Expenditures - 16.738 45,190 45,190
Total U.S. Department of Justice 81,356 81,356
U.S Department of Transportation
Indirect Programs:
Passed Through Florida Department of Transportation
State and Community Highway Safety 20.600 AL-09-05-OS 36,025 36,025
Total Expenditures of Federal Awards $ 380,315 $ 281,682
* Includes grant expenditures only (matching funds not reported).
57
CITY OF ATLANTIC BEACH, FLORIDA
NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Note 1 - Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal awards
activity of the City of Atlantic Beach, Florida, and is presented on the modified accrual basis of
accounting.
58
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULE OF SOURCE AND EXPENDITURE OF CITY GRANT FUNDS
PER ORDINANCE CODE CHAPTER 118.205(e)
FOR FISCAL YEAR 2008-2009
City of Jacksonville Public Service Grants Received as a
Subgrant Recipient Per Interlocal Agreement
Receipt of City Funds
Fiscal Year
2008 - 2009
Grant No. 5629-43
Amount of Award (Per City of Jacksonville Budget Ordinance) $ 214,284 (A)
Actual Funds Received from City of Jacksonville in Last Audit Period 0
Actual Amount Received This Period (155,859) (B)
Amount Remaining to be Distributed $ 58,425
Expenditures of City Funds
City Fiscal Year 2008-2009 Grant No. 5629-43 - $214,284 (A)
Actual
10/01/2008 - Remaining
Item Budgeted 9/30/2009 Balance
Septic Tank to Sewer Conversions
No. 003917 $ 15,552 $ 2,988 $ 12,564
Tennis Courts and Park Improvements
at Donner Park No. 003914 147,000 113,618 33,382
Sidewalk Construction and Improvements
No. 003702 51,732 39,253 12,479
Total $ 214,284 $ 155,859 $ 58,425
(A) $99,353 in unspent funds from the prior fiscal year and $10,669 of housing rehabilitation funds refunded
from prior year recipients, due to eligibility status change, was included in the 2008-2009 grant agreement,
in addition to the original budgeted appropriation of $104,262.
(B) Expenditures on the Schedule of Expenditures of Federal Awards (page 52) of $164,301 includes retainage
for work completed on project No. 003914 of $8,442, but not paid, as of September 30, 2009.
59
Purvis
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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 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, 2009, which collectively comprise the City's basic
financial statements and have issued our report thereon dated January 30, 2010. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting 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 deficiency in internal control 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
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 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 • (352) 378-2461 • FAX (352) 378-2505
Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542
443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-7 762
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
60
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 GOVERNMENTAUDITINGSTANDARDS
(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 GovernmentAuditing Standards.
This report is intended solely for the information and use of management, the City Commissioners, the
office of the Florida Auditor General, 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.
, LLB
January 30, 2010
Gainesville, Florida
61
Purvis
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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, 2009, and have issued our report thereon dated January 30, 2010.
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 internal control
over financial reporting and compliance and other matters. Disclosures in this report, which is dated
January 30, 2010, 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 governs the conduct of local governmental entity audits performed in the State of
Florida. This letter includes the following information, which is not included in the aforementioned
auditor's report:
Section 10.554(1)(1)1., Rules of the Auditor General, requires that we determine whether or not corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
audit report. There were no comments made in the preceding annual financial audit report.
Section 10.554(1)(1)2., Rules of the Auditor General, requires our audit to include a review of the
provisions of Section 218.415, Florida Statutes, regarding investment of public funds. In connection with
our audit, we determined that the City complied with Section 218.415, Florida Statutes.
Section 10.554(1)(1)3., Rules of the Auditor General, requires that we address in the management letter
any recommendations to improve financial management. In connection with our audit, we did not have
any such recommendations.
Sections 10.554(1)(1)4., Rules of the Auditor General, requires that we address violations of provisions of
contracts or 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 have any such findings.
Certified Public 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 • (850) 224-7144 • FAX (850) 224-1762
2201 Cantu Court, Suite #100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899
MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SECTIONS
62
Honorable Mayor, City Commissioners and
City Manager
Atlantic Beach, Florida
MANAGEMENT LETTER
(Concluded)
Section 10.554(1)(1)5., Rules of the Auditor General, provides that the auditor may, based on professional
judgment, report the following matters that have an inconsequential effect on financial statements,
considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant
agreements, fraud, illegal acts, or abuse, and (2) control deficiencies that are not significant deficiencies.
In connection with our audit, we did not have any such findings.
Section 10.554(1)(1)6., Rules of the Auditor General, requires that the name or official title and legal
authority for the primary government be disclosed in this management letter, unless disclosed in the notes
to the financial statements. This information is included in Note 1 to the financial statements.
Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement to be included as to whether
or not the local government has met one or more of the conditions described in Section 218.503(1),
Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we
determined that the City does not meet any of the conditions described in Section 218.503(1), Florida
Statutes.
Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the annual
financial report for the City for the fiscal year ended September 30, 2009, was filed with the Florida
Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with
the annual financial audit report for the fiscal year ended September 30, 2009. In connection with our
audit, we determined that these two reports were in agreement.
Pursuant to Section 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, 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.
Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is
not limited. Auditing standards generally accepted in the United States of America require us to indicate
that this letter is intended solely for the information and use of management, the City Commissioners, the
office of the Florida Auditor General, 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.
f~~l ~u~a~ , LLf
January 30, 2010
Gainesville, Florida
63