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Annual Financial Report - 2009-2010 - vFINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2010 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2010 TABLE OF CONTENTS Independent Auditors' Report ...................................................................................................................... i-ii Management’s Discussion and Analysis .................................................................................................. iii-xiii 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 ........................................................................................................ 16-38 Required Supplementary Information Schedules of Pension Funding Progress ....................................................................................................... 39 Schedules of Contributions from Employer and Other Contributing Entities ................................................................................................................................................. 40-41 Other Postemployment Benefits Plan - Schedule of Funding Progress ...................................................... 42 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund ..................................................................................................... 43-44 Note to Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ......................................................................................... 45 Supplementary Information Combining Balance Sheet - Nonmajor Governmental Funds ................................................................ 46-47 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds ......................................................................... 48-49 Combining Statement of Fiduciary Net Assets - Fiduciary Funds .............................................................. 50 Combining Statement of Changes in Fiduciary Net Assets - Fiduciary Funds ....................................................................................................................................... 51 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2010 TABLE OF CONTENTS (Concluded) Supplementary Information (Concluded) Historical Revenues and Expenses ............................................................................................................... 52 Major Utility Customers ............................................................................................................................... 53 Summary of Water Usage ............................................................................................................................. 54 Summary of Wastewater Treatment - Atlantic Beach Sewer Division .................................................................................................................................................... 55 Summary of Wastewater Treatment - Outside City Sewer Division ........................................................... 56 Other Bond Covenant Disclosures ............................................................................................................... 57 Schedules of Net Revenues in Accordance with Bond Resolutions - Enterprise Funds (Water and Sewer) ................................................................................ 58 Additional Elements of Report Prepared in Accordance With Government Auditing Standards, Issued by the Comptroller General of the United States; the Provisions of the Office of Management and Budget (OMB) Circular A-133; the Rules of the Auditor General of the State of Florida; and Other Contract Requirements Schedule of Expenditures of Federal Awards ......................................................................................... 59 Note to Schedule of Expenditures of Federal Awards ............................................................................ 60 Schedule of Findings and Questioned Costs – Federal Programs ..................................................... 61-62 Schedule of Source and Expenditure of the City Grant Funds ............................................................... 63 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 ................................................................................... 64-65 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditing Standards .................................................................................................. 66-67 Management Letter ........................................................................................................................... 68-69 INDEPENDENT AUDITORS’ REPORT 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, 2010, 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 2009 financial statements and, in our report dated January, 30, 2010, 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, 2010, 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. As described in Note 1 to the financial statements, the City adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, in 2010 and to the 2009 prior year summarized information. In accordance with Government Auditing Standards, we have also issued a report dated February 25, 2011, 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. i Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida INDEPENDENT AUDITORS' REPORT (Concluded) Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and other required supplementary information on pages iii through xiii and 39 through 45 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The supplementary information on pages 46 through 58 is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards, is presented for the purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. February 25, 2011 Gainesville, Florida ii iii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 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, 2010. 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, road maintenance and construction, 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. 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. iv CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) Fund Financial Statements (Concluded) ■ 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 twelve 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 eleven 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 46 - 49 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 43 - 44 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. ■ 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. v CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) 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 - 38 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 39 - 45 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 $71,445,000 at the close of the fiscal year ended September 30, 2010. By far the largest portion of the City’s net assets, $58,501,000 (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, $4,028,000 (6%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $8,916,000, is used to meet the government’s ongoing obligations to citizens and creditors. vi CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) City of Atlantic Beach’s Net Assets September 30, 2010 and 2009 (In Thousands) Governmental Business-type Activities Activities Totals 2010 2009 2010 2009 2010 2009 Current and other assets $7,402 $5,775 $8,696 $10,009 $16,098 $15,784 Capital assets 40,591 41,090 35,175 32,837 75,766 73,927 Total Assets 47,993 46,865 43,871 42,846 91,864 89,711 Long-term liabilities outstanding 565 529 16,168 16,443 16,733 16,972 Other liabilities 688 760 2,998 2,404 3,686 3,164 Total Liabilities 1,253 1,289 19,166 18,847 20,419 20,136 Net Assets: Invested in capital assets, net of related debt 40,329 40,768 18,172 15,874 58,501 56,642 Restricted 2,581 2,034 1,447 2,150 4,028 4,184 Unrestricted 3,830 2,774 5,086 5,975 8,916 8,749 Total Net Assets $46,740 $45,576 $24,705 $23,999 $71,445 $69,575 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. vii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) City of Atlantic Beach’s Change in Net Assets For the Years Ended September 30, 2010 and 2009 (In Thousands) Governmental Business-type Activities Activities Totals 2010 2009 2010 2009 2010 2009 Revenues: Program Revenues: Charges for services $1,771 $1,722 $10,393 $9,430 $12,164 $11,152 Operating grants and contributions 856 860 0 0 856 860 Capital grants and contributions 321 96 483 399 804 495 General Revenues: Property taxes 4,146 4,089 0 0 4,146 4,089 Sales taxes 1,046 1,112 0 0 1,046 1,112 Business and utility taxes 1,241 1,162 0 0 1,241 1,162 State revenue sharing 268 273 0 0 268 273 Discretionary sales surtax 611 630 0 0 611 630 Interest revenue 228 18 274 25 502 43 Miscellaneous 101 61 0 0 101 61 (Loss) gain on disposal of fixed assets 0 0 0 7 0 7 Total Revenues 10,589 10,023 11,150 9,861 21,739 19,884 Expenses: General government 1,969 2,163 0 0 1,969 2,163 Public safety 4,732 4,734 0 0 4,732 4,734 Road maintenance and construction 1,719 2,201 0 0 1,719 2,201 Parks and recreation 1,139 1,139 0 0 1,139 1,139 Conservation and resource management 15 21 0 0 15 21 Interest on long-term debt 12 14 0 0 12 14 Utility 0 0 7,329 7,623 7,329 7,623 Stormwater 0 0 1,167 1,199 1,167 1,199 Sanitation 0 0 1,494 1,504 1,494 1,504 Building code enforcement 0 0 293 302 293 302 Total Expenses 9,586 10,272 10,283 10,628 19,869 20,900 Transfers 161 (2,653) (161) 2,653 0 0 Change in net assets 1,164 (2,902) 706 1,886 1,870 (1,016) Net assets-Beginning 45,576 48,478 23,999 22,113 69,575 70,591 Net assets-Ending $46,740 $45,576 $24,705 $23,999 $71,445 $69,575 viii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (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 $7,105,451, an increase of $1,650,594 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, the unassigned fund balance was $1,618,862, which equated to 17% of total General Fund expenditures without transfers out. The net result of various revenue and expense items resulted in an increase to the City’s General Fund of $1,099,558 or 32% during the current fiscal. This increase primarily resulted from better than expected tax revenues and interest earnings on investment on the revenue side. On the expense side, there were budget surpluses throughout all departments of the General Fund, the largest being Public Safety with a positive variance of $270,366. These variances along with the budgeted increase of $176,645 combined for the total increase. Nonmajor governmental funds consisting of special revenue funds, and the debt service fund, and the capital projects fund have a combined fund balance of $2,585,112. Of this fund balance, $74,209 is restricted as a debt service reserve and $2,133,505 is restricted for capital projects. The net increase in fund balance after transfers in nonmajor governmental funds was $551,036. ■ 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 $706,117 during the fiscal year. In fiscal year 2010, the utility incremental utility rate adjustment of 10% resulted in an increase in customer charges for the year of $946,032. The utility rates were increased for the purpose of funding the additional debt service on debt acquired to fund the sewer plant upgrades and to off-set the downward trend in consumption. Operating expenses, including depreciation, decreased $312,372. After non-operating revenues and expenses are added, the income was $398,471 before transfers and capital contributions. Adding to this income was an increase to net assets of $307,646 from a combination of contributed capital and net transfers in. The Stormwater Fund continues to benefit from a 25% rate increase of $1.00 per ERU or equivalent residential unit in 2009. 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 $81,496, after having contributed $245,164 to the General Fund. There was no increase for cost of living in 2010. The unrestricted net assets of the enterprise funds amounted to $5,085,619 at the end of fiscal year 2010. The total increase in net assets of $706,117 from 2009 was primarily due to the 10% rate increase of the utility fund. ix CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) General Fund Budgetary Highlights Differences between the original budget and the final amended budget included a $313,380 (decrease) in revenues, a $271,484 decrease in appropriations, and a $926,098 decrease in transfers. The decrease in revenues occurred when the city chose to move the budget for Florida Department of Law Enforcement grant proceeds and expenditures to a special revenue fund. This reduced the intergovernmental revenues from Federal Grants by $383,580. The corresponding grant related expense budgets were also moved to the special revenue fund. These decreased amounts were slightly off-set by increases for budgets related to the donated funds for projects such as the dog park, skateboard park lights and additional holiday lights in the Town Center area. The largest budget change from the original to final budget was the reduction of the transfer from the utility fund to the General Fund of $892,560. This reduction was necessary due to the postponement of the acquisition of debt to fund the transfer until fiscal year 2011. The transfer represents funds used to pay for the design of the sewer plant upgrades in the utility fund. Net Budget The overall net difference from the original budget to the adjusted final budget was a budgeted decrease in fund balance of $176,645, instead of an increase of $1,144,639. This represented a change of $967,994 from what was originally proposed. The actual increase in fund balance was $1,099,558. 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, 2010, amounted to $75,766,409. This investment in capital assets includes land, land improvements, land easements, 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 $498,625 (1.2%) for governmental activities and an increase of $2,338,030 (7.1%) for business-type activities. Capital asset events during the current fiscal year included the following: ■ Governmental Activities Land Improvements reflected a net increase of $92,816. This represented a capital asset increase of $189,740 offset by an increase to accumulated depreciation of $96,924. Acquisitions this year included: bridge replacements in Howell Park (3); installation of lights at the Skate Park; Community Development Block Grant (CDBG)-funded construction of tennis courts (2), installation of a bench, shelter, and irrigation system at Donner Park; Community Development Block Grant (CDBG)-funded water fountain and concrete parking lot at Jordan Park. Building and Improvements reflected a net decrease of $500,616. This represented a capital asset increase of $124,054, offset by disposed assets with a net book value of $6,305, and an addition to the allowance for depreciable equipment of $618,365. Acquisitions this year included: Community Development Block Grant (CDBG)-funded sidewalks on Dudley Street and Dutton Island Road; Community Development Block Grant (CDBG)-funded shelter at Jordan Park; Community Development Block Grant (CDBG)-funded rest rooms, accessory building and sidewalks at Donner Park; and a Police storage building at the Public Works Yard. x CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) Capital Assets and Debt Administration (Continued) ■ Governmental Activities (Concluded) Equipment assets reflected a net decrease of $77,926. This net decrease was comprised of assets acquired for a value of $314,940, offset by equipment disposed with a net book value of $14,475 and an addition to the allowance for depreciable equipment of $378,391. Assets acquired in this category were: six outfitted, fleet vehicles for $139,397, two partially funded through grants; a “Your Speed Sign” trailer for the Police Department, partially funded through a grant; computer equipment for $82,087, including servers & routers, a scanner for documents in the Human Resources & Finance Department, an upgrade to the wireless connection with 902 Assisi, and laptop computers (23), partially funded through grants. The remaining assets acquired for $84,669 were primarily police-related equipment, such as digital video mirrors, laser speed units, tasers, personal audio & video recorders (2), and radios, partially funded through grants. The City disposed of $163,857 of equipment, with a book value of $11,964. Assets disposed during the fiscal year included four vehicles, obsolete equipment and computers. As of September 30, 2010, the City received approximately $8,700 in proceeds from equipment disposed through auction sales. Construction in progress decreased $122,910 upon completion of the Donner Park improvements. The remaining balance of $124,223 in construction in progress at September 30, 2010 is for: the kayak & canoe launch at River Branch Preserve, funded by Convention Development funds; the improvements at Veteran’s Park, partially funded through a donation from the City of Jacksonville; and the design of a new police building. ■ Business-type Activities Land Easements reflected a net increase of $215,187. This represented a capital asset increase of $215,282 offset by an increase to accumulated amortization of $95. Acquisitions this year for the sewer force main were from The Estates of Atlantic Beach in the amount of $140,921; the Department of the Navy in the amount of $4,757; and the Naval Continuing Care Retirement Foundation, Inc. in the amount of $69,604, of which $69,569 was donated. Building and Improvements decreased a net $1,923,627. Assets in this category increased by $258,286 and were offset by an increase in allowance for depreciation of new and existing assets of $2,181,913. The project completed and moved from construction in progress to depreciable assets was the installation of a generator at the Mimosa Cove Lift Station in the amount of $31,912. The water main project at Ocean Boulevard between 10 & 14th Street was completed at a cost of $146,583. Developer contributions of water and sewer lines in the Huang Villas subdivision represented an additional $26,335 of business- type improvement assets. Miscellaneous sewer-related infrastructure improvements accounted for the remaining $53,456 of additions to this category. Equipment decreased a net $111,693. The composition of this net decrease included acquisitions of $12,380 and disposal of $5,154 of fully depreciated (book value of $0) lab equipment, and an increase in the allowance for depreciation of $124,073. The items acquired were: a chlorine analyzer, tapping machines (2), an ice machine and a laptop computer. Construction in progress increased $4,158,163. The remaining balance of $4,905,765 in construction in progress at September 30, 2010 is: $1,158,623 for the improvements related to the Total Maximum Daily Load (TMDL) of nitrogen discharge, $2,835,800 for Royal Palms area stormwater drainage project, $470,763 for the replacement of Well #2, $352,894 for the Salt Air gravity sewer rehabilitation project and $87,685 for other miscellaneous water & sewer projects. Both the Royal Palms and well projects are anticipated to be completed within the next fiscal year. xi CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (Continued) Capital Assets and Debt Administration (Concluded) ■ Business-type Activities (Concluded) City of Atlantic Beach’s Capital Assets (Net of Depreciation) (In Thousands) Governmental Business-type Activities Activities Totals 2010 2009 2010 2009 2010 2009 Land and Easements $10,034 $10,034 $1,871 $1,656 $11,905 $11,690 Building and Improvements 29,176 29,584 27,962 29,885 57,138 59,469 Equipment 1,257 1,335 436 548 1,693 1,883 Construction in Progress 124 137 4,906 748 5,030 885 Total $40,591 $41,090 $35,175 $32,837 $75,766 $73,927 Additional information on the City’s capital assets can be found in note 6 on pages 28 - 29 of this report. Long-term Debt At the end of the 2010 fiscal year, the City had total bonded debt outstanding of $17,167,562. This amount was comprised of debt secured solely by specified revenue sources. A detailed listing of the City’s debt can be found in the table below. City of Atlantic Beach’s Outstanding Debt September 30, 2010 (In Thousands) Governmental Business-type Activities Activities Totals Utility System Revenue Bonds, Series 2004 $0 $15,402 $15,402 Utility System Revenue Bonds, Series 1996 0 683 683 SunTrust Revenue Refunding Bonds, Series 1999 262 324 586 F.D.E.P. State Revolving Funds Loan, 2009 0 497 497 Total $262 $16,906 $17,168 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. A 10% utility rate increase provided sufficient revenues to meet the required coverage ratio and has positioned the utility well for the additional debt related to the TMDL project. Debt service coverage calculations can be found on page 58. The City’s scheduled debt outstanding decreased by $333,543 (1.9%) during the current fiscal year. This decrease was due to scheduled loan repayments off-set by the addition of $497,127 borrowed from the State Revolving Loan Program for TMDL. Additional information on the City’s long-term debt can be found in note 7 on pages 29 - 31 of this report. xii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2010 (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 2011. 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 4%. The City Commission voted to keep the millage rate the same at 3.1553 mills and therefore a budget reduction of $120,528 was estimated for the 2011 ad valorem taxes. Ad valorem taxes represent about 40% of the General Fund revenues. ■ State-shared revenues are also on the decline. From 2009 to 2010, the combination of sales tax and revenue sharing revenues decreased $69,503. The projection for 2011 reverses the trend and increases it by $95,993. These two sources account for about 13% of the General Fund revenues. ■ In 2010, the City changed investment tactics and revised its investment policy. We now have a large portion of the City’s excess funds invested in treasuries and agency investment types. This has benefitted the City by keeping those excess funds in the most secured investments and diversified as well. The investments purchased mostly fixed income investments with the intent to hold them to maturity. Funds that may be needed in the short term are still invested in a public interest-bearing checking account. Total investment earnings for 2010 were $501,399, up from $43,439 in 2009. This amounted to an increase of $457,960. This increase is the result of the City taking an active role in investing excess funds in longer term investments yielding significantly more than the short term CDs or cash accounts previously invested in. ■ In 2010, the city increased the water and sewer rates to generate an additional estimated 10% to help fund the anticipated debt for the plant and collection system upgrades. 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 2010. ■ The City has not passed a rate increase for the Storm Water Utility since 2009. Currently the utility is dependent on transfers from the Gas Tax Fund to fund about half of its operating budget. The current fee is $5.00 per equivalent residential unit. The long term plan adopted by the City within the annual budget anticipates raising this fee to 6.00 per ERU in 2012. Each dollar increase represents about $100,000 in additional revenues. ■ In 2009, the City was awarded $33,538 of stimulus funds from the American Recovery and Reinvestment Act (ARRA) to retain two full-time police officers. Program objectives could not be met because of grant timing, so the funds were re-obligated in fiscal year 2010 for the purchase of a police vehicle. The City was awarded $263,558 of ARRA funds in fiscal year 2010 for the retention of the two full-time officers and a coordinator to continue the Mayport revitalization efforts. The unspent grant amount from fiscal year 2010 has been approved to fund the coordinator position from January through April 2011. Additionally, ARRA stimulus funds in the estimated amount of $796,109 were awarded the City through a State Revolving Fund loan to assist with water improvement projects. As of September 30, 2010, $514,158 of expenditures had been incurred and $495,576 of this cost had been reimbursed through the program. BASIC FINANCIAL STATEMENTS These basic financial statements contain Government-wide Financial Statements, Fund Financial Statements, and Notes to Financial Statements. GovernmentalBusiness-type 2009 ActivitiesActivitiesTotalsTotals Assets Equity in Pooled Cash and Investments 6,400,071$ 5,241,109$ 11,641,180$ 11,538,198$ Receivables - Net 9,410 584,878 594,288 570,273 Due from Other Governments 949,842 248,790 1,198,632 890,600 Inventories25,763 21,598 47,361 42,898 Special Assessments - Current 0 1,252 1,252 6,455 Notes Receivable - Current760 14,874 15,634 18,747 Restricted Assets: Equity in Pooled Cash and Cash Equivalents 0 2,307,294 2,307,294 2,288,857 Capital Assets: Land 10,034,127 1,656,018 11,690,145 11,690,145 Buildings 4,210,688 4,356,384 8,567,072 8,490,761 Easements 0 215,282 215,282 0 Improvements Other Than Buildings 38,001,801 59,676,185 97,677,986 97,217,077 Equipment 3,464,547 1,880,835 5,345,382 5,189,584 Accumulated Depreciation (15,243,861) (37,515,585) (52,759,446) (49,545,287) Construction in Progress 124,223 4,905,765 5,029,988 884,724 Prepaid Items 12,628 0 12,628 105,014 Notes Receivable - Noncurrent 3,040 74,715 77,755 106,481 Unamortized Loan Costs 0 201,202 201,202 216,799 Total Assets 47,993,039 43,870,596 91,863,635 89,711,326 Liabilities Accounts Payable and Other Current Liabilities251,106 614,650 865,756 588,558 Construction Retainages Payable 0 299,057 299,057 3,627 h 0 7241 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30, 2010, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2009 2010 See accompanying notes. 1 Due to Other Governments 0 7,241 7,241 6,015 Deferred Revenue 9,255 155,123 164,378 172,074 Deposits 5,770 0 5,770 29,429 Compensated Absences - Current 418,200 113,600 531,800 567,000 Accrued Interest Payable 3,681 0 3,681 4,514 Payable from Restricted Assets: Current Maturities of Bonds Payable 0 899,102 899,102 874,101 Current Portion of Loan Payable 0 11,248 11,248 0 Accrued Interest Payable 0 374,862 374,862 388,853 Customer Deposits 0 522,605 522,605 529,811 Noncurrent Liabilities: Due Within One Year 59,305 0 59,305 59,305 Due in More Than One Year 202,920 15,994,988 16,197,908 16,567,699 Compensated Absences 253,218 157,331 410,549 320,907 Other Postemployment Benefits Obligation 49,075 15,815 64,890 24,074 Total Liabilities 1,252,530 19,165,622 20,418,152 20,135,967 Net Assets Invested in Capital Assets - Net of Related Debt 40,329,300 18,171,691 58,500,991 56,642,698 Restricted for: Renewal and Replacement 0 500,000 500,000 500,000 Debt Service 74,209 889,162 963,371 936,368 Public Safety 183,627 0 183,627 158,132 Road Maintenance and Construction 138,943 0 138,943 281,918 Parks and Recreation 50,839 0 50,839 29,170 Other Capital Projects 2,133,505 37,821 2,171,326 2,226,014 Other Purposes 0 0 0 14,822 Building Code Enforcement 0 20,681 20,681 37,402 Unrestricted 3,830,086 5,085,619 8,915,705 8,748,835 Total Net Assets 46,740,509$ 24,704,974$ 71,445,483$ 69,575,359$ See accompanying notes. 1 Oper a t i n g Ca pit a l Ch a r ges f o r Gr a n t s a n d Gr a n t s a n d Go v e r n m e n t a l Bu s i n e s s - t yp e 2009 Fu n c t i o n s / P r o gra m s Ex pen s e s S e r v i c e s C o n t r i b u t i o n s Co n t r i b u t i o n s Ac t i v i t i e s A c t i v i t i e s T o t a l s T o t a l s Pr i m a r y G o v e r n m e n t Go v e r n m e n t a l A c t i v i t i e s : Ge n e r a l G o v e r n m e n t 1, 9 6 9 , 1 9 6 $ 9 3 4 , 0 2 9 $ 0 $ 0 $ (1, 0 3 5 , 1 6 7 ) $ 0 $ (1,035,167)$ (1,072,203)$ Pu b l i c S a f e t y 4, 7 3 2 , 1 4 7 6 6 8 , 2 9 0 2 7 7 , 0 9 7 8 1 , 7 8 9 (3, 7 0 4 , 9 7 1 ) 0 (3,704,971) (3,988,102) Ro a d M a i n t e n a n c e a n d C o n s t r u c t i o n 1 , 7 1 8 , 6 0 2 1 2 1 , 6 7 4 5 7 8 , 9 3 1 0 (1, 0 1 7 , 9 9 7 ) 0 (1,017,997) (1,484,583) Pa r k s a n d R e c r e a t i o n 1 , 1 3 9 , 4 1 9 4 7 , 0 5 3 0 2 3 8 , 4 0 1 (85 3 , 9 6 5 ) 0 (853,965) (1,013,140) Co n s e r v a t i o n a n d R e s o u r c e Ma n a gem e n t 14 , 8 2 2 0 0 0 (14 , 8 2 2 ) 0 (14,822) (21,275) In t e r e s t / F i s c a l C h a r ges o n Lo n g - t e r m D e b t 1 1 , 4 7 3 0 0 0 ( 1 1 , 4 7 3 ) 0 ( 1 1 , 4 7 3 ) (13,885) To t a l G o v e r n m e n t a l A c t i v i t i e s 9, 5 8 5 , 6 5 9 1 , 7 7 1 , 0 4 6 8 5 6 , 0 2 8 3 2 0 , 1 9 0 (6, 6 3 8 , 3 9 5 ) 0 (6,638,395) (7,593,188) Bu s i n e s s - t yp e A c t i v i t i e s : Ut i l i t y 7,32 8 ,55 6 7 ,87 0 ,49 1 0 4 8 3 ,07 9 0 1 ,02 5 ,01 4 1 ,025,014 (360,257) St o r m w a t e r 1, 1 6 6 , 9 8 8 5 0 7 , 5 1 3 0 0 0 (65 9 , 4 7 5 ) (659,475) (647,755) Sa n i t a t i o n 1 4 9 4 5 1 5 1 7 9 8 8 6 9 0 0 0 30 4 3 5 4 304354310226 Pr o g r a m R e v e n u e s Pr i m a r y G o v e r n m e n t Ne t ( E x p e n s e ) R e v e n u e a n d C h a n g e s i n N e t A s s e t s 20 1 0 CI T Y O F A T L A N T I C B E A C H , F L O R I D A WI T H C O M P A R A T I V E T O T A L S F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 9 FO R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 1 0 , ST A T E M E N T O F A C T I V I T I E S Se e a c c o m p a n y i n g n o t e s . 2 San it ati on 1,49 4 ,51 5 1,79 8 ,86 9 0 0 0 30 4 ,35 4 304,354 310,226 Bu i l d i n g C o d e E n f o r c e m e n t 29 2 , 7 5 2 21 5 , 9 3 5 0 0 0 (76 , 8 1 7 ) (76,817) (101,338) To t a l B u s i n e s s - t yp e A c t i v i t i e s 10 , 2 8 2 , 8 1 1 10 , 3 9 2 , 8 0 8 0 48 3 , 0 7 9 0 59 3 , 0 7 6 593,076 (799,124) To t a l P r i m a r y G o v e r n m e n t 19 , 8 6 8 , 4 7 0 $ 1 2 , 1 6 3 , 8 5 4 $ 8 5 6 , 0 2 8 $ 8 0 3 , 2 6 9 $ (6, 6 3 8 , 3 9 5 ) 59 3 , 0 7 6 (6,045,319) (8,392,312) Ge n e r a l R e v e n u e s Pr o per t y T a x e s 4, 1 4 6 , 4 3 2 0 4 , 1 4 6 , 4 3 2 4,089,288 Sa l e s T a x e s 1, 0 4 5 , 6 3 0 0 1 , 0 4 5 , 6 3 0 1,112,294 Bu s i n e s s a n d U t i l i t y T a x e s 1, 2 4 0 , 6 2 4 0 1 , 2 4 0 , 6 2 4 1,161,781 St a t e R e v e n u e S h a r i n g 26 8 , 3 3 9 0 2 6 8 , 3 3 9 272,441 Di s c r e t i o n a r y S a l e s S u r t a x 61 1 , 2 0 6 0 6 1 1 , 2 0 6 629,680 In t e r e s t R e v e n u e 22 7 , 5 1 0 2 7 3 , 8 8 9 5 0 1 , 3 9 9 43,439 Mi s c e l l a n e o u s 10 1 , 8 1 3 0 1 0 1 , 8 1 3 60,590 Ga i n o n S a l e o f F i x e d A s s e t s 0 0 0 6,470 Tr a n s f e r s 16 0 , 8 4 8 (1 6 0 , 8 4 8 ) 0 0 To t a l G e n e r a l R e v e n u e s , S pec i a l I t e m , a n d T r a n s f e r s 7, 8 0 2 , 4 0 2 1 1 3 , 0 4 1 7 , 9 1 5 , 4 4 3 7,375,983 Ch a n g e i n N e t A s s e t s 1, 1 6 4 , 0 0 7 7 0 6 , 1 1 7 1 , 8 7 0 , 1 2 4 (1,016,329) Ne t A s s e t s , B e gin n i n g o f Y e a r 45 , 5 7 6 , 5 0 2 2 3 , 9 9 8 , 8 5 7 6 9 , 5 7 5 , 3 5 9 70,591,688 Ne t A s s e t s , E n d o f Y e a r 46 , 7 4 0 , 5 0 9 $ 2 4 , 7 0 4 , 9 7 4 $ 7 1 , 4 4 5 , 4 8 3 $ 69,575,359$ Se e a c c o m p a n y i n g n o t e s . 2 NonmajorTotals GovernmentalGovernmental2009 GeneralFundsFundsTotals Assets Equity in Pooled Cash and Investments 3,981,530$ 2,418,541$ 6,400,071$ 4,746,902$ Receivables - Net 9,410 0 9,410 13,146 Due from Other Funds 101,822 0 101,822 63,844 Due from Other Governments 629,349 320,493 949,842 890,600 Inventories 25,763 0 25,763 14,674 Notes Receivable - Current 760 0 760 760 Prepaid Items 12,628 0 12,628 105,014 Notes Receivable - Noncurrent 3,040 0 3,040 3,800 Total Assets 4,764,302 2,739,034 7,503,336 5,838,740 Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities 233,458 17,648 251,106 277,442 Due to Other Funds 0 101,822 101,822 63,844 Deposits 1,250 4,520 5,770 29,429 Deferred Revenue 9,255 29,932 39,187 13,168 TotalLiabilities 243963 153922 397885 383883 2010 CITY OF ATLANTIC BEACH, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2010, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2009 See accompanying notes. 3 Total Liabilities 243,963 153,922 397,885 383,883 Fund Balances Nonspendable: Inventories 25,763 0 25,763 14,674 Prepaids 12,628 0 12,628 105,014 Restricted for: Public Safety 0 183,627 183,627 158,132 Road Maintenance and Construction 0 138,943 138,943 281,918 Parks and Recreation 0 50,839 50,839 26,670 Debt Service Reserve 0 74,209 74,209 74,617 Other Capital Projects 0 2,133,505 2,133,505 1,475,416 Other Purposes 0 0 0 2,500 Committed to: Conservation and Resource Management 0 3,989 3,989 14,822 Assigned to: Re-establishment of Fire Department 300,000 0 300,000 300,000 Operating Reserves 2,563,086 0 2,563,086 2,571,960 Unassigned:1,618,862 0 1,618,862 429,134 Total Fund Balances 4,520,339 2,585,112 7,105,451 5,454,857 Total Liabilities and Fund Balances 4,764,302$ 2,739,034$ 7,503,336$ 5,838,740$ See accompanying notes. 3 Total Fund Balances of Governmental Funds 7,105,451$ 5,454,857$ 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 55,835,386$ 55,420,779$ (Accumulated Depreciation)(15,243,861)(14,330,629) 40,591,525 41,090,150 Nonexchange receivables that do not provide curent financial resources and, therefore, are not reported revenues in the funds.29,932 Long-term liabilities are not due and payable 20102009 CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2010, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2009 See accompanying notes. 4 gpy 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 262,225 321,529 Compensated Absences 671,418 624,166 Other Postemployment Benefits Obligation 49,075 18,296 Accrued Interest Payable 3,681 4,514 (986,399) (968,505) Total Net Assets of Governmental Activities 46,740,509$ 45,576,502$ See accompanying notes. 4 NonmajorTotals GovernmentalGovernmental2009 GeneralFunds Funds Totals Revenues Property Taxes 4,146,432$ 0$ 4,146,432$ 4,089,288$ Nonproperty Taxes 1,240,624 1,144,269 2,384,893 2,317,748 Permits, Fees and Special Assessments 920,033 0 920,033 907,771 Intergovernmental Revenues 1,450,744 494,476 1,945,220 1,840,813 Fines and Forfeitures 111,161 31,838 142,999 122,932 Charges for Services 686,485 0 686,485 684,650 Interest Income 141,374 86,136 227,510 18,081 Miscellaneous Revenues 57,160 29,989 87,149 39,209 Interfund Charges 1,419,917 0 1,419,917 1,499,385 Total Revenues 10,173,930 1,786,708 11,960,638 11,519,877 Expenditures Current: General Government 2,819,769 2,500 2,822,269 3,051,571 Public Safety 4,190,416 305,564 4,495,980 4,476,400 2010 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010, See accompanying notes. 5 Public Safety 4,190,416 305,564 4,495,980 4,476,400 Road Maintenance and Construction 1,413,931 117,058 1,530,989 1,693,603 Parks and Recreation 948,811 0 948,811 964,004 Conservation and Resource Management 0 14,822 14,822 21,275 Debt Service: Principal 0 59,299 59,299 56,686 Interest and Other 0 12,261 12,261 14,673 Capital Outlay 260,305 334,706 595,011 870,120 (Total Expenditures)(9,633,232) (846,210) (10,479,442) (11,148,332) Excess of Revenues Over Expenditures 540,698 940,498 1,481,196 371,545 Other Financing Sources (Uses) Transfers in 638,848 1,102,038 1,740,886 765,200 Transfers (out)(88,538) (1,491,500) (1,580,038) (3,418,016) Sale of General Fixed Assets8,550 0 8,550 9,540 Total Other Financing (Uses)558,860 (389,462) 169,398 (2,643,276) Net Change in Fund Balances 1,099,558 551,036 1,650,594 (2,271,731) Fund Balances, Beginning of Year 3,420,781 2,034,076 5,454,857 7,726,588 Fund Balances, End of Year 4,520,339$ 2,585,112$ 7,105,451$ 5,454,857$ See accompanying notes. 5 Net Change in Fund Balances - Total Governmental Funds 1,650,594$ (2,271,731)$ 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 595,009$ 870,120$ (Current Year Depreciation)(1,093,681) (1,082,640) (498,672) (212,520) 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.18,165 2,400 Certain nonexchange revenues reported in the statement of activities are not considered current financialresourcesandthereforearenotreported CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS 2010 2009 TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2010, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009 See accompanying notes. 6 financial resources and, therefore, are not reported as revenue in the governmental funds.29,932 0 Repayment of long-term debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets.59,299 56,686 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 (8,550) (9,540) (Loss) or Gain on Disposal of General Fixed Assets(9,519) (8,270) (18,069) (17,810) 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 Expense788 790 Compensated Absences(47,251) (91,028) Other Postemployment Benefits Obligation(30,779) (18,296) Transfer of Capital Assets 0 (350,340) (77,242) (458,874) Change in Net Assets - Governmental Activities 1,164,007$ (2,901,849)$ See accompanying notes. 6 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t T o t a l s Totals As s e t s Cu r r e n t A s s e t s : Eq u i t y i n P o o l e d C a s h a n d I n v e s t m e n t s 2, 3 1 2 , 0 8 8 $ 2, 2 7 4 , 0 2 8 $ 60 7 , 6 8 1 $ 47 , 3 1 2 $ 5,241,109 $ 6,791,296$ Ac c o u n t s R e c e i v a b l e - N e t 50 0 , 3 8 3 22 , 3 8 7 62 , 1 0 8 0 5 8 4 , 8 7 8 557,127 In v e n t o r i e s 21 , 5 9 8 0 0 0 21,598 28,224 Du e f r o m O t h e r G o v e r n m e n t s 24 8 , 7 9 0 0 0 0 2 4 8 , 7 9 0 0 Sp e c i a l A s s e s s m e n t s - C u r r e n t 1, 2 5 2 0 0 0 1,252 6,455 No t e s R e c e i v a b l e - C u r r e n t 14 , 8 7 4 0 0 0 14,874 17,987 Re s t r i c t e d A s s e t s : Eq u i t y i n P o o l e d C a s h a n d C a s h E q u i v a l e n t s 2, 1 4 2 , 5 9 5 16 4 , 6 9 9 0 0 2 , 3 0 7 , 2 9 4 2,288,857 Ca p i t a l A s s e t s : Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s 20 1 0 CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F N E T A S S E T S PR O P R I E T A R Y F U N D S SE P T E M B E R 3 0 , 2 0 1 0 , WI T H C O M P A R A T I V E T O T A L S F O R S E P T E M B E R 3 0 , 2 0 0 9 Se e a c c o m p a n y i n g n o t e s . 7 Ca p i t a l As s e t s : La n d 74 9 , 4 9 9 90 6 , 5 1 9 0 0 1 , 6 5 6 , 0 1 8 1,656,018 Bu i l d i n g s 4, 3 5 6 , 3 8 4 0 0 0 4 , 3 5 6 , 3 8 4 4,356,384 Ea s e m e n t s 21 5 , 2 8 2 0 0 0 2 1 5 , 2 8 2 0 Im p r o v e m e n t s O t h e r T h a n B u i l d i n g s 46 , 7 8 6 , 4 7 3 12 , 8 8 9 , 7 1 2 0 0 5 9 , 6 7 6 , 1 8 5 59,417,899 Eq u i p m e n t 1, 4 1 7 , 9 6 9 25 3 , 4 8 3 17 1 , 8 8 3 37 , 5 0 0 1,880,835 1,873,609 (A c c u m u l a t e d D e p r e c i a t i o n ) (3 1 , 0 1 2 , 9 2 7 ) (6 , 3 6 0 , 1 5 1 ) (1 0 6 , 9 5 7 ) (3 5 , 5 5 0 ) (3 7 , 5 1 5 , 5 8 5 ) (35,214,658) Co n s t r u c t i o n i n P r o g r e s s 2, 0 6 9 , 9 6 5 2, 8 3 5 , 8 0 0 0 0 4 , 9 0 5 , 7 6 5 747,602 No t e s R e c e i v a b l e - N o n c u r r e n t 74 , 7 1 5 0 0 0 74,715 102,681 Un a m o r t i z e d L o a n C o s t s 17 3 , 3 3 5 27 , 8 6 7 0 0 2 0 1 , 2 0 2 216,799 To t a l A s s e t s 30 , 0 7 2 , 2 7 5 13 , 0 1 4 , 3 4 4 73 4 , 7 1 5 49 , 2 6 2 43,870,596 42,846,280 Se e a c c o m p a n y i n g n o t e s . 7 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t TotalsTotals Li a b i l i t i e s Cu r r e n t L i a b i l i t i e s P a y a b l e f r o m C u r r e n t As s e t s : Ac c o u n t s P a y a b l e a n d A c c r u e d L i a b i l i t i e s 1 5 6 , 2 3 1 $ 3 5 1 , 4 1 8 $ 1 0 0 , 1 7 1 $ 6 , 8 3 0 $ 6 1 4 , 6 5 0 $ 3 1 1 , 1 1 6 $ Co n s t r u c t i o n R e t a i n a g e s P a y a b l e 4 8 , 7 2 9 2 5 0 , 3 2 8 0 0 2 9 9 , 0 5 7 3 , 6 2 7 Du e t o O t h e r G o v e r n m e n t s 7 , 1 5 0 0 0 9 1 7 , 2 4 1 6 , 0 1 5 De f e r r e d R e v e n u e 7 8 , 1 3 4 1 6 , 8 2 3 6 0 , 1 6 6 0 1 5 5 , 1 2 3 1 5 8 , 9 0 6 Co m p e n s a t e d A b s e n c e s - C u r r e n t 99 , 3 0 0 0 0 1 4 , 3 0 0 1 1 3 , 6 0 0 1 3 2 , 0 0 0 Cu r r e n t L i a b i l i t i e s P a y a b l e f r o m R e s t r i c t e d As s e t s : Cu r r e n t P o r t i o n o f B o n d s P a y a b l e 7 8 3 , 7 6 7 1 1 5 , 3 3 5 0 0 8 9 9 , 1 0 2 8 7 4 , 1 0 1 Cu r r e n t P o r t i o n o f L o a n s P a y a b l e 1 1 , 2 4 8 0 0 0 1 1 , 2 4 8 0 Ac c r e d I n t e r e s t P a a b l e 32 5 4 9 8 49 3 6 4 0 0 374862388853 WI T H C O M P A R A T I V E T O T A L S F O R S E P T E M B E R 3 0 , 2 0 0 9 20 1 0 Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s (C o n c l u d e d ) CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F N E T A S S E T S PR O P R I E T A R Y F U N D S SE P T E M B E R 3 0 , 2 0 1 0 , Se e a c c o m p a n y i n g n o t e s . 8 Acc r u e d Int e r e s t Pay a bl e 32 5 ,49 8 49 ,36 4 0 0 374,862 388,853 Cu s t o m e r D e p o s i t s 5 2 2 , 6 0 5 0 0 0 5 2 2 , 6 0 5 5 2 9 , 8 1 1 Non c u r r e n t L i a b i l i t i e s : Du e i n M o r e T h a n O n e Y e a r 1 3 , 8 6 1 , 7 2 1 2 , 1 3 3 , 2 6 7 0 0 1 5 , 9 9 4 , 9 8 8 1 6 , 3 0 5 , 4 7 5 Co m p e n s a t e d A b s e n c e s - N o n c u r r e n t 15 4 , 0 5 5 0 0 3 , 2 7 6 1 5 7 , 3 3 1 1 3 1 , 7 4 1 Ot h e r P o s t e m p l o y m e n t B e n e f i t s O b l i g a t i o n 10 , 4 7 4 3 , 2 0 7 0 2 , 1 3 4 1 5 , 8 1 5 5 , 7 7 8 To t a l L i a b i l i t i e s 16 , 0 5 8 , 9 1 2 2 , 9 1 9 , 7 4 2 1 6 0 , 3 3 7 2 6 , 6 3 1 1 9 , 1 6 5 , 6 2 2 1 8 , 8 4 7 , 4 2 3 Ne t A s s e t s In v e s t e d i n C a p i t a l A s s e t s - N e t o f R e l a t e d D e b t 1 0 , 0 5 0 , 5 1 5 8 , 0 5 4 , 3 0 0 6 4 , 9 2 6 1 , 9 5 0 1 8 , 1 7 1 , 6 9 1 1 5 , 8 7 4 , 0 7 7 Re s t r i c t e d f o r : Re n e w a l a n d R e p l a c e m e n t 50 0 , 0 0 0 0 0 0 5 0 0 , 0 0 0 5 0 0 , 0 0 0 Bu i l d i n g C o d e E n f o r c e m e n t 0 0 0 2 0 , 6 8 1 2 0 , 6 8 1 3 7 , 4 0 2 De b t S e r v i c e 7 7 3 , 8 2 7 1 1 5 , 3 3 5 0 0 8 8 9 , 1 6 2 8 6 1 , 7 5 1 Ca p i t a l P r o j e c t s 3 7 , 8 2 1 0 0 0 3 7 , 8 2 1 7 5 0 , 5 9 7 Un r e s t r i c t e d 2 , 6 5 1 , 2 0 0 1 , 9 2 4 , 9 6 7 5 0 9 , 4 5 2 0 5 , 0 8 5 , 6 1 9 5 , 9 7 5 , 0 3 0 To t a l N e t A s s e t s 14 , 0 1 3 , 3 6 3 $ 1 0 , 0 9 4 , 6 0 2 $ 5 7 4 , 3 7 8 $ 2 2 , 6 3 1 $ 2 4 , 7 0 4 , 9 7 4 $ 2 3 , 9 9 8 , 8 5 7 $ Se e a c c o m p a n y i n g n o t e s . 8 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t To t a l s Totals Op e r a t i n g R e v e n u e s Ch a r g e s f o r S e r v i c e s : Cu s t o m e r C h a r g e s 7, 8 1 8 , 1 0 4 50 7 , 5 1 3 $ 1, 7 7 2 , 1 7 2 $ 21 5 , 9 3 5 $ 10 , 3 1 3 , 7 2 4 $ 9,332,468$ Fr a n c h i s e P e r m i t s 0 0 5, 0 0 0 0 5,000 2,500 Mi s c e l l a n e o u s R e v e n u e s 52 , 3 8 7 0 0 0 52,387 74,762 To t a l O p e r a t i n g R e v e n u e s 7, 8 7 0 , 4 9 1 50 7 , 5 1 3 1, 7 7 7 , 1 7 2 21 5 , 9 3 5 10 , 3 7 1 , 1 1 1 9,409,730 Op e r a t i n g E x p e n s e s Pe r s o n a l S e r v i c e s 1, 7 4 6 , 9 4 4 27 8 , 1 8 8 26 , 4 0 6 24 0 , 8 0 5 2, 2 9 2 , 3 4 3 2,318,550 Co n t r a c t u a l S e r v i c e s 64 3 , 4 1 4 14 1 , 2 8 9 1, 2 5 7 , 8 6 6 39 8 2, 0 4 2 , 9 6 7 2,225,660 Su p p l i e s 29 2 , 8 8 9 24 , 3 7 6 0 3, 7 9 4 321,059 310,992 Ri d M i 20 1 0 Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s WI T H C O M P A R A T I V E T O T A L S F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 9 CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F R E V E N U E S , E X P E N S E S , A N D CH A N G E S I N N E T A S S E T S PR O P R I E T A R Y F U N D S FO R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 1 0 , Se e a c c o m p a n y i n g n o t e s . 9 Re p a i r s a n d M a i n t e n a n c e 14 5 , 5 2 4 1 2 , 3 1 7 6 , 5 7 2 7 , 7 0 9 1 7 2 , 1 2 2 2 3 1 , 7 6 8 He a t , L i g h t s a n d P o w e r 65 9 , 0 3 0 0 0 0 6 5 9 , 0 3 0 6 8 3 , 8 3 3 De p r e c i a t i o n 1, 8 7 9 , 3 9 6 3 9 6 , 5 4 0 2 6 , 8 0 1 3 , 3 4 4 2 , 3 0 6 , 0 8 1 2 , 3 2 5 , 3 0 3 In t e r g o v e r n m e n t a l C h a r g e s 95 5 , 8 4 6 1 6 8 , 4 9 9 1 6 5 , 2 1 2 3 0 , 9 9 8 1 , 3 2 0 , 5 5 5 1 , 3 6 8 , 9 9 8 Ot h e r E x p e n s e s 28 0 , 5 8 7 3 0 , 5 7 4 1 1 , 6 5 8 5 , 7 0 4 3 2 8 , 5 2 3 2 8 9 , 9 4 8 (T o t a l O p e r a t i n g E x p e n s e s ) (6, 6 0 3 , 6 3 0 ) (1, 0 5 1 , 7 8 3 ) (1, 4 9 4 , 5 1 5 ) (29 2 , 7 5 2 ) (9, 4 4 2 , 6 8 0 ) (9,755,052) Op e r a t i n g I n c o m e ( L o s s ) 1, 2 6 6 , 8 6 1 (54 4 , 2 7 0 ) 28 2 , 6 5 7 (76 , 8 1 7 ) 928,431 (345,322) No n o p e r a t i n g R e v e n u e s ( E x p e n s e s ) Co n n e c t i o n C h a r g e s 14 , 5 8 5 0 0 0 1 4 , 5 8 5 8 , 3 9 5 Fr a n c h i s e F e e s 0 0 2 1 , 6 9 7 0 2 1 , 6 9 7 2 0 , 0 0 0 In t e r g o v e r n m e n t a l R e v e n u e ( E x p e n s e ) 0 0 0 0 0 2 5 , 1 4 4 In t e r e s t I n c o m e 15 9 , 1 4 3 9 0 , 6 8 8 2 2 , 3 0 6 1 , 7 5 2 2 7 3 , 8 8 9 2 5 , 3 5 8 In t e r e s t E x p e n s e (71 0 , 1 9 6 ) (11 2 , 9 1 2 ) 0 0 (823,108) (849,015) Ga i n o n D i s p o s a l o f F i x e d A s s e t s 0 0 0 0 0 6 , 4 7 0 Am o r t i z a t i o n o f L o a n C o s t s (14 , 7 3 0 ) (2, 2 9 3 ) 0 0 (17,023) (17,023) To t a l N o n o p e r a t i n g R e v e n u e s ( E x p e n s e s ) (55 1 , 1 9 8 ) (24 , 5 1 7 ) 44 , 0 0 3 1, 7 5 2 (529,960) (780,671) Se e a c c o m p a n y i n g n o t e s . 9 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t To t a l s Totals In c o m e ( L o s s ) B e f o r e C o n t r i b u t i o n s a n d T r a n s f e r s 71 5 , 6 6 3 $ (5 6 8 , 7 8 7 ) $ 32 6 , 6 6 0 $ (7 5 , 0 6 5 ) $ 398,471 $ (1,125,993)$ Ca p i t a l C o n t r i b u t i o n s a n d G r a n t s an d T r a n s f e r s Ca p i t a l C o n t r i b u t i o n s a n d G r a n t s 46 8 , 4 9 4 0 0 0 4 6 8 , 4 9 4 358,697 Tr a n s f e r s i n 0 4 2 3 , 0 0 0 0 55 , 0 0 0 478,000 3,014,516 Tr a n s f e r s ( o u t ) (3 9 3 , 6 8 4 ) 0 ( 2 4 5 , 1 6 4 ) 0 ( 6 3 8 , 8 4 8 ) (361,700) To t a l C a p i t a l C o n t r i b u t i o n s a n d G r a n t s WI T H C O M P A R A T I V E T O T A L S F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 9 20 1 0 Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s (C o n c l u d e d ) CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F R E V E N U E S , E X P E N S E S , A N D CH A N G E S I N N E T A S S E T S PR O P R I E T A R Y F U N D S FO R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 1 0 , Se e a c c o m p a n y i n g n o t e s . 10 an d T r a n s f e r s 74 , 8 1 0 4 2 3 , 0 0 0 ( 2 4 5 , 1 6 4 ) 5 5 , 0 0 0 3 0 7 , 6 4 6 3 , 0 1 1 , 5 1 3 Ch a n g e i n N e t A s s e t s 79 0 , 4 7 3 ( 1 4 5 , 7 8 7 ) 8 1 , 4 9 6 ( 2 0 , 0 6 5 ) 7 0 6 , 1 1 7 1 , 8 8 5 , 5 2 0 Ne t A s s e t s , B e g i n n i n g o f Y e a r 13 , 2 2 2 , 8 9 0 1 0 , 2 4 0 , 3 8 9 4 9 2 , 8 8 2 4 2 , 6 9 6 2 3 , 9 9 8 , 8 5 7 2 2 , 1 1 3 , 3 3 7 Ne t A s s e t s , E n d o f Y e a r 14 , 0 1 3 , 3 6 3 $ 1 0 , 0 9 4 , 6 0 2 $ 5 7 4 , 3 7 8 $ 2 2 , 6 3 1 $ 2 4 , 7 0 4 , 9 7 4 $ 2 3 , 9 9 8 , 8 5 7 $ Se e a c c o m p a n y i n g n o t e s . 10 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t TotalsTotals Ca s h F l o w s f r o m O p e r a t i n g A c t i v i t i e s Ca s h R e c e i v e d f r o m C u s t o m e r s 7, 7 8 2 , 6 8 9 $ 5 0 6 , 6 3 1 $ 1 , 7 8 7 , 6 9 2 $ 2 1 5 , 9 3 5 $ 1 0 , 2 9 2 , 9 4 7 $ 9 , 3 9 1 , 4 4 4 $ Ca s h P a i d t o S u p p l i e r s ( 1 , 9 3 2 , 8 8 2 ) 3 8 5 , 6 3 7 ( 1 , 3 1 3 , 1 6 2 ) ( 1 7 , 0 5 4 ) ( 2 , 8 7 7 , 4 6 1 ) ( 3 , 9 8 0 , 2 7 9 ) Ca s h P a i d t o E m p l o y e e s ( 1 , 7 3 7 , 6 7 7 ) ( 2 7 6 , 1 8 1 ) ( 2 6 , 4 0 6 ) ( 2 3 4 , 8 5 2 ) ( 2 , 2 7 5 , 1 1 6 ) ( 2 , 2 7 8 , 7 0 1 ) Ca s h P a i d f o r I n t e r f u n d S e r v i c e s ( 9 5 5 , 8 4 6 ) ( 1 6 8 , 4 9 9 ) ( 1 6 5 , 2 1 2 ) ( 3 0 , 9 9 8 ) ( 1 , 3 2 0 , 5 5 5 ) ( 1 , 3 6 8 , 9 9 8 ) Ne t C a s h P r o v i d e d b y ( U s e d i n ) O p e r a t i n g Ac t i v i t i e s 3, 1 5 6 , 2 8 4 4 4 7 , 5 8 8 2 8 2 , 9 1 2 ( 6 6 , 9 6 9 ) 3 , 8 1 9 , 8 1 5 1 , 7 6 3 , 4 6 6 Ca s h F l o w s f r o m N o n c a p i t a l F i n a n c i n g Ac t i v i t i e s Co n n e c t i o n C h a r g e s 1 4 , 5 8 5 0 0 0 1 4 , 5 8 5 8 , 3 9 5 Fr a n c h i s e F e e s 0 0 2 1 , 6 9 6 0 2 1 , 6 9 6 2 0 , 0 0 0 Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F C A S H F L O W S PR O P R I E T A R Y F U N D S FO R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 1 0 , WI T H C O M P A R A T I V E T O T A L S F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 9 20 1 0 Se e a c c o m p a n y i n g n o t e s . 11 , ,, Tr a n s f e r s i n 0 42 3 , 0 0 0 0 55 , 0 0 0 478,000 3,014,516 Tr a n s f e r s ( o u t ) (3 9 3 , 6 8 4 ) 0 ( 2 4 5 , 1 6 4 ) 0 ( 6 3 8 , 8 4 8 ) (361,700) Ne t C a s h P r o v i d e d b y ( U s e d i n ) N o n c a p i t a l Fi n a n c i n g A c t i v i t i e s (3 7 9 , 0 9 9 ) 42 3 , 0 0 0 (2 2 3 , 4 6 8 ) 55 , 0 0 0 (124,567) 2,681,211 Ca p i t a l a n d R e l a t e d F i n a n c i n g A c t i v i t i e s In t e r g o v e r n m e n t a l R e v e n u e s (2 4 8 , 7 9 0 ) 0 0 0 ( 2 4 8 , 7 9 0 ) 1 5 5 , 0 2 8 Co l l e c t i o n s o n N o t e s R e c e i v a b l e 3 1 , 0 7 9 0 0 0 3 1 , 0 7 9 1 8 , 8 9 8 Co l l e c t i o n s o n S p e c i a l A s s e s s m e n t s 5 , 2 0 3 0 0 0 5 , 2 0 3 2 6 , 1 3 8 Ca p i t a l G r a n t s 3 7 2 , 5 9 0 0 0 0 3 7 2 , 5 9 0 7 5 0 , 5 5 4 Pr o c e e d s f r o m L o a n 4 9 5 , 5 7 6 0 0 0 4 9 5 , 5 7 6 0 Pr o c e e d s f r o m S a l e o f F i x e d A s s e t s 0 0 0 0 0 6 , 4 7 0 Fi x e d A s s e t A d d i t i o n s ( 2 , 0 4 7 , 0 1 7 ) ( 2 , 5 0 1 , 1 9 0 ) 0 0 ( 4 , 5 4 8 , 2 0 7 ) ( 1 , 3 1 8 , 0 0 7 ) Pr i n c i p a l P a y m e n t s o n B o n d s P a y a b l e ( 7 6 2 , 2 6 2 ) ( 1 1 1 , 8 4 0 ) 0 0 ( 8 7 4 , 1 0 2 ) ( 8 5 9 , 9 2 5 ) In t e r e s t P a i d ( 6 3 3 , 7 2 5 ) ( 1 0 0 , 5 1 1 ) 0 0 ( 7 3 4 , 2 3 6 ) ( 7 5 6 , 8 0 1 ) Ne t C a s h P r o v i d e d b y ( U s e d i n ) C a p i t a l an d R e l a t e d F i n a n c i n g A c t i v i t i e s (2 , 7 8 7 , 3 4 6 ) ( 2 , 7 1 3 , 5 4 1 ) 0 0 ( 5 , 5 0 0 , 8 8 7 ) ( 1 , 9 7 7 , 6 4 5 ) Se e a c c o m p a n y i n g n o t e s . 11 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t TotalsTotals Ca s h F l o w s f r o m I n v e s t i n g A c t i v i t i e s Sa l e ( P u r c h a s e ) o f I n v e s t m e n t s (2 , 4 3 5 , 0 0 4 ) $ (1 , 3 3 3 , 0 4 9 ) $ (3 3 2 , 1 6 9 ) $ (2 5 , 8 6 1 ) $ (4,126,083) $ 0$ In t e r e s t R e c e i v e d 15 9 , 1 4 3 90 , 6 8 8 22 , 3 0 6 1, 7 5 2 273,889 25,358 Ne t C a s h P r o v i d e d b y ( U s e d i n ) In v e s t i n g A c t i v i t i e s (2 , 2 7 5 , 8 6 1 ) (1 , 2 4 2 , 3 6 1 ) (3 0 9 , 8 6 3 ) (2 4 , 1 0 9 ) (3,852,194) 25,358 Ne t I n c r e a s e ( D e c r e a s e ) i n C a s h a n d Ca s h E q u i v a l e n t s (2 , 2 8 6 , 0 2 2 ) (3 , 0 8 5 , 3 1 4 ) (2 5 0 , 4 1 9 ) (3 6 , 0 7 8 ) (5,657,833) 2,492,390 Ca s h a n d C a s h E q u i v a l e n t s , B e g i n n i n g o f Y e a r 4, 3 0 5 , 7 0 1 4, 1 9 0 , 9 9 2 52 5 , 9 3 1 57 , 5 2 9 9,080,153 6,587,763 Ca s h a n d C a s h E q u i v a l e n t s , E n d o f Y e a r 2, 0 1 9 , 6 7 9 $ 1, 1 0 5 , 6 7 8 $ 27 5 , 5 1 2 $ 21 , 4 5 1 $ 3,422,320 $ 9,080,153$ Re c o n c i l i a t i o n o f O p e r a t i n g I n c o m e ( L o s s ) t o Ne t C a s h P r o v i d e d b y ( U s e d i n ) O p e r a t i n g Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F C A S H F L O W S PR O P R I E T A R Y F U N D S FO R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 1 0 , (C o n t i n u e d ) 20 1 0 WI T H C O M P A R A T I V E T O T A L S F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 9 Se e a c c o m p a n y i n g n o t e s . 12 Ne t Ca s h Pr o v i d e d by (U s e d in ) Op e r a t i n g Ac t i v i t i e s Op e r a t i n g I n c o m e ( L o s s ) 1, 2 6 6 , 8 6 1 $ (5 4 4 , 2 7 0 ) $ 28 2 , 6 5 7 $ (7 6 , 8 1 7 ) $ 928,431 $ (345,322)$ Ad j u s t m e n t s t o R e c o n c i l e O p e r a t i n g In c o m e ( L o s s ) t o N e t C a s h P r o v i d e d b y (U s e d i n ) O p e r a t i n g A c t i v i t i e s : De p r e c i a t i o n 1, 8 7 9 , 3 9 6 39 6 , 5 4 0 26 , 8 0 1 3, 3 4 4 2,306,081 2,325,303 Pr o v i s i o n f o r U n c o l l e c t i b l e A c c o u n t s 26 , 5 9 8 4, 7 8 0 8, 0 4 6 0 39,424 23,380 Ch a n g e i n A s s e t s a n d L i a b i l i t i e s : Ac c o u n t s R e c e i v a b l e (7 7 , 1 6 0 ) (8 2 1 ) 10 , 8 0 6 0 (67,175) (29,817) In v e n t o r y 6, 6 2 6 0 0 0 6 , 6 2 6 1 1 , 7 7 2 Co m p e n s a t e d A b s e n c e s 2 , 5 7 5 0 0 4 , 6 1 5 7 , 1 9 0 3 4 , 0 7 1 OP E B O b l i g a t i o n 6 , 6 9 2 2 , 0 0 7 0 1 , 3 3 8 1 0 , 0 3 7 5 , 7 7 8 Ac c o u n t s P a y a b l e a n d A c c r u e d L i a b i l i t i e s 5 5 , 3 3 8 5 8 9 , 4 1 3 ( 4 5 , 1 1 2 ) 5 5 1 6 0 0 , 1 9 0 ( 2 7 3 , 2 3 0 ) Cu s t o m e r D e p o s i t s ( 7 , 2 0 6 ) 0 0 0 ( 7 , 2 0 6 ) 1 , 3 4 6 De f e r r e d R e v e n u e ( 3 , 4 3 6 ) ( 6 1 ) ( 2 8 6 ) 0 ( 3 , 7 8 3 ) 1 0 , 1 8 5 Ne t C a s h P r o v i d e d b y ( U s e d i n ) O p e r a t i n g Ac t i v i t i e s 3, 1 5 6 , 2 8 4 $ 4 4 7 , 5 8 8 $ 2 8 2 , 9 1 2 $ ( 6 6 , 9 6 9 ) $ 3 , 8 1 9 , 8 1 5 $ 1 , 7 6 3 , 4 6 6 $ Se e a c c o m p a n y i n g n o t e s . 12 Bu i l d i n g C o d e 2009 Ut i l i t y S t o r m w a t e r S a n i t a t i o n E n f o r c e m e n t TotalsTotals Re c o n c i l i a t i o n o f C a s h a n d C a s h Eq u i v a l e n t s t o B a l a n c e S h e e t Eq u i t y i n P o o l e d C a s h a n d C a s h Eq u i v a l e n t s i n C u r r e n t A s s e t s 2, 3 1 2 , 0 8 8 $ 2, 2 7 4 , 0 2 8 $ 60 7 , 6 8 1 $ 47 , 3 1 2 $ 5,241,109 $ 6,791,296$ Re s t r i c t e d E q u i t y i n P o o l e d C a s h an d C a s h E q u i v a l e n t s 2, 1 4 2 , 5 9 5 16 4 , 6 9 9 0 0 2 , 3 0 7 , 2 9 4 2,288,857 Eq u i t y i n P o o l e d I n v e s t m e n t s (2 , 4 3 5 , 0 0 4 ) (1 , 3 3 3 , 0 4 9 ) (3 3 2 , 1 6 9 ) (2 5 , 8 6 1 ) (4,126,083) 0 To t a l C a s h a n d C a s h E q u i v a l e n t s 2, 0 1 9 , 6 7 9 $ 1, 1 0 5 , 6 7 8 $ 27 5 , 5 1 2 $ 21 , 4 5 1 $ 3,422,320 $ 9,080,153$ WI T H C O M P A R A T I V E T O T A L S F O R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 9 (C o n c l u d e d ) 20 1 0 Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s CI T Y O F A T L A N T I C B E A C H , F L O R I D A ST A T E M E N T O F C A S H F L O W S PR O P R I E T A R Y F U N D S FO R T H E Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 1 0 , Se e a c c o m p a n y i n g n o t e s . 13 No n c a s h A c t i v i t y Non c a s h T r a n s f e r s 0 $ 0 $ 0 $ 0 $ 0 $ 0$ Non c a s h C a p i t a l G r a n t s 95 , 9 0 4 $ 0 $ 0 $ 0 $ 95,904 $ 146,288$ Se e a c c o m p a n y i n g n o t e s . 13 2010 2009 Assets Cash and Cash Equivalents 43,421$ 41,878$ Investments 16,607,936 15,224,287 Interest Receivable 51,639 0 Total Assets 16,702,996 15,266,165 Liabilities Accounts Payable and Accrued Liabilities 2,650 58 Excess Premium Tax Liability 120,454 120,454 DROP Plan Payable 151,128 477,228 Total Liabilities 274,232 597,740 Net Assets Held in Trust for Pension Benefits 16,428,764 14,668,425 Total Net Assets 16,428,764$ 14,668,425$ Pension Trust Funds WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2009 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2010, See accompanying notes. 14 See accompanying notes. 14 2010 2009 Additions Contributions: Employer 938,763$ 784,900$ Employees 279,546 288,763 State of Florida 88,806 86,433 Total Contributions 1,307,115 1,160,096 Net Increase (Decrease) in Fair Value of Investments 1,126,411 818,849 Interest and Dividends 393,184 417,914 Total Additions 2,826,710 2,396,859 Deductions Refunds of Contributions 13,587 35,472 Benefits 953,293 909,137 Investment Expenses 45,580 591 Administrative Expenses 53,911 36,527 Total Deductions 1,066,371 981,727 Pension Trust Funds WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 See accompanying notes. 15 Net Increase 1,760,339 1,415,132 Net Assets, Beginning of Year 14,668,425 13,253,293 Net Assets, End of Year 16,428,764$ 14,668,425$ See accompanying notes. 15 16 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 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. 17 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (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, other postemployement benefits, 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. 18 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Concluded) Fund Financial Statements (Concluded) The City reports the following major governmental fund: ■ The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The City reports the following major proprietary funds: ■ The Utility Fund accounts for the activities of the City’s water 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. 19 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Fund Balance Classification Beginning with fiscal year 2010, the City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balances more transparent. The following classifications describe the relative strength of the spending constraints: ■ Nonspendable Fund Balance—amounts that are not in nonspendable form (such as inventory) or are required to be maintained intact. ■ Restricted Fund Balance—amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. ■ Committed Fund Balance—amounts constrained to specific purposes by the City itself, using its highest level of decision-making authority (i.e., City Commission). To be reported as committed, amounts cannot be used for any other purpose unless the City takes the same highest level action to remove or change the constraint. ■ Assigned Fund Balance—amounts the City intends to use for a specific purpose. Intent can be expressed by the City Commissioner or by an official or body to which the City Commission delegates the authority. ■ Unassigned Fund Balance—amounts that are available for any purpose. Positive amounts are reported only in the General Fund. Beginning fund balances for the City’s governmental funds have been restated to reflect the above classifications. The City Commission establishes (and modifies or rescinds) fund balance commitments by passage of an ordinance or resolution. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as a designation or commitment of the fund (such as funds for the re-establishment of a fire department). Assigned fund balance is established by City Commission through adoption or amendment of the budget as intended for specific purpose (such as the purchase of fixed assets, construction, debt service, or for other purposes). In the General Fund, the City strives to maintain a committed fund balance operating reserve to be used for unanticipated emergencies of approximately 25% of the subsequent year’s budgeted General Fund payroll and operating expenditures. 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. 20 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Proprietary Funds (Concluded) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 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, 2010, were $234,633. 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. 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. 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). 21 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) 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. 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. 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 22 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) 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 property taxes are recorded as received, in cash, which approximates taxes levied less discounts for the current fiscal year. Taxes are levied on November 1 of each year. All taxes become delinquent on April 1 of the following year. Discounts are allowed for early payment. On or prior to June 1, interest- bearing certificates are sold for all uncollected real property taxes. Unsold certificates are held by the City of Jacksonville, Florida. Interfund Transactions During the course of normal operations, the City has various transactions between funds to construct assets and comply with local ordinances and other legal restrictions. These transactions are reflected as transfers. In addition, certain transfers have been made between systems and accounts of the utility enterprise fund as required by bond covenants. 23 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 1 - Summary of Significant Accounting Policies (Concluded) 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, 2009, from which the summarized information was derived. Upon implementation of GASB No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the prior year summarized information has been presented to conform with 2010 presentation. 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, 2010, the carrying amount of cash on hand and on deposit with banks, including interest-bearing deposits was $6,334,086, and the related bank balance was $6,691,796. 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 25% to 125% depending upon the depository’s financial condition and establishment period. All collateral must be deposited with an approved financial institution. Any losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. Under the City’s investment policies, general investments’ activities are governed by Florida Statutes and are authorized to invest in obligations of the U.S. Treasury, demand deposits, U.S. government agency securities, certificates of deposit, U.S. government sponsored enterprises, government fixed income mutual funds, and local government investment pools. Pension trust funds can invest in the aforementioned and, additionally, authorized investments include domestic and foreign equity securities, domestic and foreign fixed income securities, and cash equivalent securities. 24 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 2 - Cash and Investments (Continued) Following are the investments, credit ratings, and maturities of the City’s governmental and business-type activities at September 30, 2010: Investment Maturities Investment Credit Fair Less Type Rating Value Than 1 1-5 6-10 Total U.S. Treasuries Aaa $ 3,395,169 $ 0 $ 0 $ 3,395,169 $ 3,395,169 U.S. Agencies Aaa 2,210,678 1,038,777 (a) 0 1,171,901 2,210,678 U.S. Government Mortgage Backed Securities Aaa 2,034,080 2,034,080 (b) 0 0 2,034,080 Florida PRIME AAAm 44 44 0 0 44 Fund B Surplus Trust Funds Investment Pool Unrated 204 0 0 204 204 Total $ 7,640,175 $ 3,072,901 $ 0 $ 4,567,274 $ 7,640,175 (a) These bonds mature May 2020, but are callable May 2011 (b) These securities mature May 2015 and 2018, but are callable November 2010 Listed below are the investments and maturities in the City’s pension trust funds at September 30, 2010: Investment Maturities Investment Fair Less More Type Value * Than 1 1-5 6-10 Than 10 Total Common Stocks $ 8,756,468 $ 8,756,468 $ 0 $ 0 $ 0 $ 8,756,468 International Bonds 70,126 0 53,951 16,175 0 70,126 Corporate Bonds 1,185,287 0 685,116 424,652 75,519 1,185,287 Mortgage and Asset Backed Securities 984,427 0 0 0 984,427 984,427 Mutual Funds – Fixed Income 1,686,331 0 0 0 1,686,331 1,686,331 Government and GSE Bonds 3,120,324 405,779 1,764,876 786,081 163,588 3,120,324 Municipal Bonds 16,777 0 0 0 16,777 16,777 ICMA – Self Directed 151,128 151,128 0 0 0 151,128 Total $ 15,970,868 $ 9,313,375 $ 2,503,943 $ 1,226,908 $ 2,926,642 $ 15,970,868 * Fair value balances reported include interest receivable. 25 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 2 - Cash and Investments (Continued) The total pension investment balances of the City at September 30, 2010, are comprised of the following items: Moody’s Percent Investment Credit of Type Rating Total Corporate Bonds A1 2.83% Corporate Bonds A2 5.53% Corporate Bonds A3 1.84% Corporate Bonds AA2 1.30% Corporate Bonds AA3 2.22% Corporate Bonds AAA 0.63% Corporate Bonds BAA1 0.86% Corporate Bonds BAA2 1.13% Corporate Bonds BAA3 0.22% Corporate Bonds BBA2 0.24% Government and GSE Bonds AAA 44.16% International Bonds A2 0.43% International Bonds AA2 0.23% International Bonds BAA1 0.11% International Bonds BAA2 0.22% Mortgage and Asset Asset Backed Securities AAA 13.94% Municipal Bonds AAA 0.24% Mutual Funds – Fixed Income NR 23.87% In addition to the above investments, the City’s pension trust funds had money market funds totaling $688,707 at September 30, 2010. Restricted cash and investments at September 30, 2010, in the enterprise funds follows: Renewal System and Develop- Enterprise Customer Replace- Debt ment Funds Deposits ment Service Charges Totals Utility Fund $ 522,605 $ 500,000 $ 1,082,169 $ 37,821 $ 2,142,595 Stormwater Fund $ 0 $ 0 $ 164,699 $ 0 $ 164,699 26 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 2 - Cash and Investments (Concluded) Credit Risk—It is the City’s Police Officers’ Retirement System Trust Funds’ investment policy to, at a minimum, limit 85% of the market value its investment in fixed income securities to those that meet or exceed a credit rating of “A” by Moody’s or Standard & Poor’s rating services. It is the City’s General Employees’ Retirement System Trust Funds’ investment policy to, at a minimum, limit 80% of the total fixed income portfolio to “investment grade” or higher. Also, no more than 10% (at cost) of the fixed income portfolio total value can be invested in the securities of any single corporate issuer or 15% (at cost) of the plan’s total assets can be invested in foreign securities. 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 the possession 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%. 27 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 3 - Special Assessments (Concluded) Following is a summary of the outstanding balances at September 30, 2010: Beach Section H Avenue Assessment Assessments Totals Special Assessment Receivable $ 734 $ 519 $ 1,252 (Current Portion) (734) (519) (1,252) Total Special Assessment Receivable - Noncurrent $ 0 $ 0 $ 0 Note 4 - Receivables Receivables, net of the allowance for doubtful accounts at September 30, 2010, consist of the following: Less Total Allowance Accounts Accounts for Doubtful Receivable Fund Receivable Accounts Net General $ 189,625 $ (180,215) $ 9,410 Utility 543,064 (42,681) 500,383 Stormwater 30,078 (7,690) 22,388 Sanitation 75,053 (12,945) 62,108 Total $ 837,820 $ (243,531) $ 594,289 Included in accounts receivable are $228,168 of water and sewer revenues earned, but not billed as of September 30, 2010. 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, 2010: Notes Receivable $ 89,589 (Current Portion) (14,874) Total Note Receivable - Noncurrent $ 74,715 28 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 6 - Capital Assets Capital asset activity for the fiscal year ended September 30, 2010, is as follows: Beginning Ending Balance Increases (Decreases) Balance Governmental Activities Capital Assets Not Being Depreciated: Land $ 10,034,127 $ 0 $ 0 $ 10,034,127 Construction in Progress 137,122 110,011 (122,910) 124,223 Total Capital Assets Not Being Depreciated 10,171,249 110,011 (122,910) 10,158,350 Capital Assets Being Depreciated: Buildings 4,134,377 77,811 (1,500) 4,210,688 Improvements Other Than Buildings 37,799,178 235,983 (33,360) 38,001,801 Machinery and Equipment 3,315,975 314,940 (166,368) 3,464,547 Total Capital Assets Being Depreciated 45,249,530 628,734 (201,228) 45,677,036 Less Accumulated Depreciation for: Buildings (1,341,374) (93,934) 450 (1,434,858) Improvements Other Than Buildings (11,008,547) (621,355) 28,105 (11,601,797) Machinery and Equipment (1,980,708) (378,391) 151,893 (2,207,206) Total Accumulated Depreciation (14,330,629) (1,093,680) 180,448 (15,243,861) Total Capital Assets Being Depreciated, Net 30,918,901 (464,946) (20,780) 30,433,175 Governmental Activities Capital Assets, Net $ 41,090,150 $ (354,935) $ (143,690) $ 40,591,525 Business-type Activities Capital Assets Not Being Depreciated: Land $ 1,656,018 $ 0 $ 0 $ 1,656,018 Construction in Progress 747,602 4,158,557 (394) 4,905,765 Total Capital Assets Not Being Depreciated 2,403,620 4,158,557 (394) 6,561,783 Capital Assets Being Depreciated: Buildings 4,356,384 0 0 4,356,384 Easements 0 215,282 0 215,282 Improvements Other Than Buildings 59,417,899 258,286 0 59,676,185 Machinery and Equipment 1,873,609 12,380 (5,154) 1,880,835 Total Capital Assets Being Depreciated 65,647,892 485,948 (5,154) 66,128,686 Less Accumulated Depreciation for: Buildings (3,841,695) (138,098) 0 (3,979,793) Easements 0 (95) 0 (95) Improvements Other Than Buildings (30,047,146) (2,043,815) 0 (32,090,961) Machinery and Equipment (1,325,817) (124,073) 5,154 (1,444,736) Total Accumulated Depreciation (35,214,658) (2,306,081) 5,154 (37,515,585) Total Capital Assets Being Depreciated, Net 30,433,234 (1,820,133) 0 28,613,101 Business-type Activities Capital Assets, Net $ 32,836,854 $ 2,338,424 $ (394) $ 35,174,884 29 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 6 - Capital Assets (Concluded) Depreciation expense was charged to functions/programs as follows: Governmental Activities General Governmental $ 177,228 Public Safety 227,718 Road Maintenance and Construction 508,038 Parks and Recreation 180,697 Total Depreciation Expense - Governmental Activities $ 1,093,681 Business-type Activities Utility $ 1,879,396 Stormwater 396,540 Sanitation 26,801 Building Code Enforcement 3,344 Total Depreciation Expense - Business-type Activities $ 2,306,081 Note 7 - Long-term Debt Revenue Bonds and Loan 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 $ 16,880,000 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 700,000 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 589,866 Florida Department of Environmental Protection, State Revolving Fund Loan Payable in Semiannual Installments of Principal and Interest, With Financing Rates of 2.71%, Secured Solely by a Pledge of Net Water and Sewer System Revenues, After Payment of all Yearly Payment Obligations on Account of the Senior Revenue Obligations, As Defined in the Loan Agreement 497,127 Total Revenue Bonds and Loan Payable 18,666,993 (Unamortized Discount) (171,928) (Unamortized Refunding Loss) (1,327,503) Total Long-term Debt, Net $ 17,167,562 30 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 7 - Long-term Debt (Continued) The annual requirements to amortize all revenue bonds and loan payable outstanding at September 30, 2010, are as follows: Governmental Activities Business-type Activities Year Ending Long-term Debt Long-term Debt September 30 Principal Interest Total Principal * Interest Total 2011 $ 61,620 $ 9,723 $ 71,343 $ 910,350 $ 716,434 $ 1,626,784 2012 63,690 7,101 70,791 961,087 696,661 1,657,748 2013 67,712 4,324 72,036 991,962 663,630 1,655,592 2014 69,203 1,457 70,660 1,029,692 628,132 1,657,824 2015 0 0 0 974,126 591,774 1,565,900 Thereafter 0 0 0 13,846,837 3,522,169 17,369,006 Total $ 262,225 $ 22,605 $ 284,830 $ 18,714,054 $ 6,818,800 $25,532,854 * This table reports the total available loan amount of $806,409 of the State Revolving Fund loan. At September 30, 2010, the actual balance of the loan was $497,127. Interest and amortization incurred during the year ended September 30, 2010, was $12,261 in the debt service fund and $823,120 in the enterprise funds. Of the amount incurred in the enterprise funds, no interest was capitalized. The City is also required to maintain certain debt service coverage ratios in accordance with bond resolutions. As of September 30, 2010, 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, 2010: Balance Balance Due October 1, September 30, Within 2009 Additions Reductions 2010 One Year Governmental Activities Revenue Bonds Payable $ 321,529 $ 0 $ (59,304) $ 262,225 $ 59,305 Compensated Absences 624,166 506,977 (459,725) 671,418 418,200 OPEB Obligation 18,296 30,779 0 49,075 0 Total Governmental Activities - Long-term Liabilities $ 963,991 $ 537,756 $ (519,029) $ 982,718 $ 477,505 Business-type Activities State Revolving Fund Loan $ 0 $ 497,127 $ 0 $ 497,127 $ 11,248 Revenue Bonds Payable 18,781,743 0 (874,101) 17,907,642 899,102 Less Deferred Amounts: For Issuance Discounts (185,137) 0 13,209 (171,928) 0 Loss on Bond Refunding (1,417,030) 0 89,527 (1,327,503) 0 Total Revenue Bonds Payable 17,179,576 497,127 (771,365) 16,905,338 910,350 Compensated Absences 263,741 166,330 (159,140) 270,931 113,600 OPEB Obligation 5,778 10,037 0 15,815 0 Total Business-type Activities - Long-term Liabilities $ 17,449,095 $ 673,494 $ (930,505) $ 17,192,084 $ 1,023,950 31 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 7 - Long-term Debt (Concluded) State Revolving Fund Loan – State of Florida Department of Environmental Protection On December 14, 2009, the City authorized a loan agreement to finance construction costs to replace a well at Water Treatment Plant No. 1 and a transmission main on Ocean Boulevard. The total loan available is $806,409, of which $495,576 has been drawn down as of September 30, 2010. Capitalized interest added to the loan as of September 30, 2010 is $1,551. Repayment is currently scheduled to commence on May 15, 2011, in the amount of $26,248 and semiannually thereafter on May 15 and November 15, each year until all amounts due under the agreement have been fully paid. Interest is payable at a rate of 2.71% per annum. The Department of Environmental Protection has not provided the City with a final debt service schedule as of September 30, 2010. 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, 2010, there were two series of Health Facility Revenue Bonds outstanding, with an aggregate principal amount payable of $49,540,000. Pledged Revenue The City has pledged certain revenues to repay certain bonds and notes outstanding as of September 30, 2010. 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, 2010: Outstanding Principal Estimated Principal Pledged Revenue and Interest Percentage and Pledged Description Revenue Received Paid Pledged Interest Through 1996 – Utility System Revenue Utility Bonds Revenues $ 3,343,846 $ 64,133 1.92% $ 1,015,160 2025 1999 – Utility System Refunding Utility Bonds Service Tax $ 512,668 $ 160,522 35.16% $ 640,713 2014 2004 – Utility System Refunding Utility Bonds Revenues $ 3,343,846 $ 1,433,400 42.87% $ 23,079,676 2025 Florida Department of Environmental Utility Protection, SRF Loan Revenues $ 3,343,846 $ 0 0% $ 603,704 2031 32 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) 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. Combining statements are included in the supplementary information to the basic financial statements. Membership of each plan consists of the following at September 30, 2009, the date of the latest actuarial valuation: General Employees Police Retirees, Disabled Members and Beneficiaries Receiving Benefits 38 16 Terminated Plan Members Entitled to but Not Yet Receiving Benefits 12 4 Active Plan Members 87 27 Total 137 47 ■ General Employees’ Retirement Plan ● Plan Description The General Employees’ Retirement Plan (the Plan) provides retirement, disability and death benefits to Plan members and their beneficiaries. The City Commission has the authority to establish and amend the benefit provisions of the Plan. ● Contributions The City is required to contribute at an actuarially determined rate (14.03% of valuation payroll for the year ended September 30, 2009). 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 (the 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 21.93% of valuation payroll for the year ended September 30, 2009). Per City Code, the City Commission may amend established contribution requirements. Other Pension Plan Information The ARC for the current year was determined as part of the September 30, 2009, 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% to 8.5% per year including price inflation of 3% and a payroll growth assumption of 5.5%. The assumptions did not include postretirement benefit increases. 33 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (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 a four-year period. The unfunded actuarial accrued liabilities are being amortized over remaining amortization periods of one to thirty 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 (APC) APC Contributed Asset/(Liability) General Employees 2007 $ 482,364 100% $ 0 2008 456,965 100% 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, 2009, 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 $ 9,019,550 Retired Participant and Beneficiaries Currently Receiving Benefits 3,912,640 Vested Terminated Participants Not Yet Receiving Benefit 749,964 Total Actuarial Accrued Liability 13,682,154 Actuarial Value of Assets (Market Value was $9,213,319) 9,841,341 Unfunded Actuarial Accrued Liability $ 3,840,813 The General Employees’ Retirement Plan is 71.9% funded and the Unfunded Actuarial Accrued Liability represents 95.6% of covered payroll as of September 30, 2009. Police Retirement Plan Actuarial Accrued Liability: Active Participants $ 3,796,714 Retired Participant and Beneficiaries Currently Receiving Benefits 4,754,663 Vested Terminated Participants Not Yet Receiving Benefit 137,360 Total Actuarial Accrued Liability 8,688,737 Actuarial Value of Assets (Market Value was $5,457,479) 5,921,648 Unfunded Actuarial Accrued Liability $ 2,767,089 34 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 8 - Defined Benefit Pension Plans (Concluded) Funded Status and Funding Progress (Concluded) The Police Retirement Plan is 68.2% funded and the Unfunded Actuarial Accrued Liability represents 163.1% of covered payroll as of September 30, 2009. 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 Fiscal year 2009 was the year of implementation of GASB Statement No. 45, Accounting and Reporting by Employers for Postemployment Benefits Other than Pensions (OPEB), and the City elected to implement prospectively. Plan Description The City of Atlantic Beach administers a single-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 as of October 1, 2009, the date of the latest actuarial valuation: Retirees and Beneficiaries Receiving Benefits 3 Active Plan Members 110 Total 113 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. 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 a pay-as-you-go basis. Annual required contributions (ARC) amounted to $55,368 for the current fiscal year. The annual required contribution is based on a rate of 0.9% of projected payroll of $5,828,339 or an average $503 per active participant. For the year ended September 30, 2010, the City estimated it implicitly subsidized $14,685 of health care costs for its retirees and covered dependents. This implied subsidy reduced the annual OPEB cost to a net expense of $40,816, after interest on the Net OPEB Obligation and adjustments to ARC. 35 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 9 - Postemployment Benefits Other Than Pensions (Continued) 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 $ 55,368 Interest on Net OPEB Obligation 963 Adjustment to Annual Required Contribution (830) Annual OPEB Cost (Expense) 55,501 Employer Contribution (14,685) Increase in Net OPEB Obligation 40,816 Net OPEB Obligation - Beginning of Year 24,074 Net OPEB Obligation - End of Year $ 64,890 The City reflected the $40,816 increase in net OPEB obligation at September 30, 2010, by recording an obligation of $30,779 for governmental activities and $10,037 for business-type activities in its government-wide statement of net assets. The utility fund reported a net OPEB obligation of $10,474, while the stormwater fund, sanitation fund, and building code enforcement fund reported $3,207, $0, and $2,134, 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. 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, 2010, are presented below. Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Obligation September 30, 2009 $ 49,133 51.0% $ 24,074 September 30, 2010 $ 55,501 26.5% $ 64,890 36 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 9 - Postemployment Benefits Other Than Pensions (Concluded) Funded Status and Funding Progress As of October 1, 2009, the date of the latest actuarial valuation, the unfunded actuarial accrued liability for benefits was $497,883, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the Plan) was $5,828,339, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 8.54%. 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 October 1, 2009, the date of the latest actuarial valuation, the Entry-Age Actuarial Cost Method was used, which spreads the costs evenly as a percent of pay throughout the collective careers of those in the covered workforce. The unfunded actuarial accrued liability is being amortized using a level (principal and interest combined) percent of payroll over a 29 period. Other significant actuarial assumptions include a 4% discount rate, an annual health care cost trend rate of 12%, followed by a 9% for the next year reduced by decrements of 0.5% each year to the ultimate value of 5%, projected salary increases of 4% annually (including general price inflation of 3.0%), and future participation rates of 15% up to Medicare eligibility with a 2% participation rate thereafter. Note 10 - Interfund Accounts Individual fund interfund receivables and payables at September 30, 2010, consist of the following: 37 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Continued) Note 10 - Interfund Accounts Due Due from Other to Other Funds Funds General $ 101,822 $ 0 Nonmajor Governmental 0 101,822 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, 2010: Transfers In Nonmajor Stormwater BCE General Governmental Total Transfers Out Fund Fund Fund Funds Transfers Nonmajor Governmental Funds $ 423,000 $ 0 $ 0 $ 1,068,500 $ 1,491,500 Utility Fund 0 0 393,684 0 393,684 Sanitation Fund 0 0 245,164 0 245,164 General Fund 0 55,000 0 33,538 88,538 Total Transfers $ 423,000 $ 55,000 $ 638,848 $ 1,102,038 $ 2,218,886 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, 2010, the City had outstanding commitments on contracts in progress as follows: Unexpended Project Type Contract Amounts Utility System Improvements $ 639,947 Stormwater System Improvements 582,254 General Government Improvements 200,601 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, 2010, the City incurred $920,021 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. 38 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (Concluded) Note 12 - Commitments (Concluded) 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 that 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. Construction has begun on the new force main and the upgrade of the main wastewater treatment plant. The Florida Department of Environmental Protection (FDEP) has included a timeline for completing the work in an Administrative Order - begin construction by April 30, 2011, end construction by December 31, 2012, begin operation of upgraded WWTP #1 by March 31, 2013, abandon Buccaneer WWTP by July 31, 2013, operational level attained by October 1, 2013. The estimated cost of $10.2 million includes $2 million of additional improvements for sludge and odor control, which are currently under design. 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 Public Risk Insurance Agency and LB Bryan and Company 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. Note 15 - Subsequent Event On December 14, 2010, the City issued the Utilities System Revenue Bonds, Series 2010A, in the amount of $10,100,000 to fund the costs of sewer and plant upgrades of the City’s utility system and the Utilities System Revenue Refunding Bonds, Series 2010B, in the amount of $690,000 to refund the City’s outstanding Utilities System Revenue Refunding Bonds, Series 1996. REQUIRED SUPPLEMENTARY INFORMATION 39 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF PENSION FUNDING PROGRESS SEPTEMBER 30, 2010 General Employees’ Retirement Plan Actuarial UAAL as Actuarial Accrued Annual Percentage Valuation Value of Liability Unfunded Funded Covered of Covered Date Assets (AAL) AAL Ratio Payroll Payroll 9/30/05* $ 6,802,000 $ 9,822,000 $ 3,020,000 69.3% $ 3,182,000 94.9% 9/30/06* 7,609,000 10,505,000 2,896,000 72.4% 3,195,000 90.6% 9/30/07 8,594,000 11,668,000 3,074,000 73.7% 3,476,000 88.4% 9/30/08* 9,209,000 12,624,000 3,415,000 72.9% 3,727,000 91.6% 9/30/09 9,841,000 13,682,000 3,841,000 71.9% 4,019,000 95.6% Police Retirement Plan Actuarial UAAL as Actuarial Accrued Annual Percentage Valuation Value of Liability Unfunded Funded Covered of Covered Date Assets (AAL) AAL Ratio Payroll Payroll 9/30/05* $ 4,775,000 $ 6,997,000 $ 2,222,000 68.2% $ 1,402,000 158.5% 9/30/06 5,175,000 7,034,000 1,859,000 73.6% 1,254,000 148.2% 9/30/07* 5,663,000 7,620,000 1,957,000 74.3% 1,453,000 134.7% 9/30/08 5,764,000 8,112,000 2,348,000 71.1% 1,476,000 159.1% 9/30/09* 5,922,000 8,689,000 2,767,000 68.2% 1,697,000 163.1% * After changes in benefits and/or actuarial assumptions and/or 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. 40 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER AND OTHER CONTRIBUTING ENTITIES SEPTEMBER 30, 2010 General Employees’ Retirement Plan Contribution Annual Rate as a Required Year Ended Percent of Contributed Percentage September 30 Payroll (ARC) Contributed 2005 15.02% $ 464,893 100% 2006 16.09% 480,029 100% 2007 13.99% 482,364 100% 2008 13.62% 457,005 100% 2009 14.03% 528,428 100% 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’ retirement plan as of the latest actuarial valuation follows: Valuation Date September 30, 2009 Contribution Rate Employer 16.60% Plan Members 5.00% Actuarial Cost Method Entry Age Amortization Method Closed, Level % of Pay Method Equivalent Single Amortization Period 13.64 Years Asset Valuation Method 4-Year Smoothed Actuarial Assumptions Investment Rate of Return 8.0% Projected Salary Increases 5.5% - 8.5% Includes Price Inflation 3.0% Cost of Living Adjustments None Payroll Growth Assumption 5.5% 41 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER AND OTHER CONTRIBUTING ENTITIES SEPTEMBER 30, 2010 (Concluded) Police Retirement Plan Contribution Annual Rate as a Required Year Ended Percent of Contributed September 30 Payroll (ARC) 2005 24.31% $ 297,361 2006 23.76% 350,161 2007 25.70% 390,494 2008 22.80% 309,841 2009 21.93% 345,280 The information presented in the required supplementary schedules was determined as part of the actuarial valuation at the dates indicated. Additional information for the police retirement plan as of the latest actuarial valuation follows: Valuation Date September 30, 2009 Contribution Rates Employer 21.660% Plan Members 4.815% Actuarial Cost Method Entry Age Amortization Method Closed, Level % of Pay Method Equivalent Single Amortization Period 17.72 Years Asset Valuation Method 4-Year Smoothed Actuarial Assumptions Investment Rate of Return 8.0% Projected Salary Increases 5.5% - 8.5% Includes Price Inflation 3.0% Cost of Living Adjustments None Payroll Growth Assumption 5.5% 42 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS SEPTEMBER 30, 2010 Actuarial UAAL as Actuarial Accrued Annual Percentage Valuation Value of Liability Unfunded Funded Covered of Covered Date Assets (AAL) AAL Ratio Payroll Payroll 9/30/06 $ 0 $ 470,703 $ 470,703 0.0% $ 4,812,000 9.78% 10/1/09 $ 0 $ 497,883 $ 497,883 0.0% $ 5,828,339 8.54% 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. Variance With Final Budget - Budgeted Amounts Actual Positive OriginalFinalAmounts(Negative) Revenues Property Taxes 4,120,406$ 4,120,406$ 4,146,432$ 26,026$ Nonproperty Taxes 1,189,726 1,189,726 1,240,624 50,898 Permits, Fees and Special Assessments896,425 896,425 920,033 23,608 Intergovernmental Revenues 1,852,525 1,468,945 1,450,744 (18,201) Fines and Forfeitures 83,950 83,950 111,161 27,211 Charges for Services 685,097 685,097 686,485 1,388 Interest Income 5,000 5,000 141,374 136,374 Miscellaneous Revenues 10,515 80,715 57,160 (23,555) Interfund Charges 1,411,676 1,411,676 1,419,917 8,241 Total Revenues 10,255,320 9,941,940 10,173,930 231,990 Expenditures General Government: Legislative 43,303 43,303 42,764 539 Legal Counsel 110,296 110,296 98,422 11,874 Planning and Zoning 198,890 198,890 197,317 1,573 City Clerk 249,646 249,717 220,147 29,570 City Manager 547,798 429,102 413,616 15,486 BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2010 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 43 yg Finance and Accounting 969,655 978,462 934,896 43,566 Human Resources 209,395 209,395 198,817 10,578 Information Technology 431,327 433,348 370,616 62,732 Other 415,701 415,736 396,390 19,346 Total General Government 3,176,011 3,068,249 2,872,985 195,264 Public Safety: Law Enforcement 3,667,787 3,380,614 3,130,169 250,445 Lifeguards 170,035 180,401 172,201 8,200 Fire Control 937,525 937,859 936,392 1,467 Code Enforcement 68,154 68,154 57,900 10,254 Total Public Safety 4,843,501 4,567,028 4,296,662 270,366 Road Maintenance and Construction: Public Works Administration 475,881 476,554 445,211 31,343 Streets and Roads 805,398 843,739 758,799 84,940 Fleet Maintenance 256,453 256,453 246,049 10,404 Total Road Maintenance and Construction 1,537,732 1,576,746 1,450,059 126,687 Parks and Recreation 1,039,845 1,113,582 1,013,526 100,056 (Total Expenditures)(10,597,089) (10,325,605) (9,633,232) 692,373 43 Variance With Final Budget - Budgeted Amounts Actual Positive OriginalFinalAmounts(Negative) Excess of Revenues Over Expenditures (341,769)$ (383,665)$ 540,698$ 924,363$ Other Financing Sources (Uses) Transfers in 1,531,408 638,848 638,848 0 Transfers (out)(55,000) (88,538) (88,538) 0 Sale of General Fixed Assets 10,000 10,000 8,550 (1,450) Total Other Financing Sources (Uses)1,486,408 560,310 558,860 (1,450) Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses 1,144,639 176,645 1,099,558 922,913 Fund Balances, Beginning of Year 3,420,781 3,420,781 3,420,781 0 Fund Balances, End of Year 4,565,420$ 3,597,426$ 4,520,339$ 922,913$ BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2010 (Concluded) CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 4444 45 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, 2010 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. SUPPLEMENTARY INFORMATION Convention TreeLocal OptionDevelopmentHalf-centCourt CostRadio ReplacementGas TaxTaxSales TaxTrainingCommunication Assets Equity in Pooled Cash and Investments3,989$ 76,633$ 20,426$ 348,168$ 130,293$ 19,902$ Due from Other Governments 0 73,744 41,071 101,449 564 1,843 Total Assets 3,989 150,377 61,497 449,617 130,857 21,745 Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities 0 11,434 2,726 0 0 0 Due to Other Funds 0 0 0 0 0 0 Deferred Revenue 0 0 29,932 0 0 0 Deposits 0 0 0 0 0 0 Total Liabilities 0 11,434 32,658 0 0 0 Special Revenue Funds CITY OF ATLANTIC BEACH, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009 2010 46 Total Liabilities 0 11,434 32,658 0 0 0 Fund Balances Restricted for: Public Safety0 0 0 0 130,857 21,745 Road Maintenance and Construction 0 138,943 0 0 0 0 Parks and Recreation 0 0 28,839 0 0 0 Debt Service Reserve 0 0 0 0 0 0 Other Capital Projects 0 0 0 449,617 0 0 Other Purposes 0 0 0 0 0 0 Committed: Conservation and Resource Management 3,989 0 0 0 0 0 Total Fund Balances 3,989 138,943 28,839 449,617 130,857 21,745 Total Liabilities and Fund Balances 3,989$ 150,377$ 61,497$ 449,617$ 130,857$ 21,745$ 46 Totals Totals Community SpecialNonmajor ContrabandDevelopmentPoliceRevenuesDebtCapitalGovernmental2009 ForfeitureBlock GrantGrantsFundsServiceProjectsFundsTotals 12,038$ 0$ 23,995$ 635,444$ 74,209$ 1,708,888$ 2,418,541$ 1,888,859$ 0 15,230 86,592 320,493 0 0 320,493 255,386 12,038 15,230 110,587 955,937 74,209 1,708,888 2,739,034 2,144,245 0 0 488 14,648 0 3,000 17,648 20,356 0 15,230 86,592 101,822 0 0 101,822 63,844 0 0 0 29,932 0 0 29,932 0 4,520 0 0 4,520 0 0 4,520 25,969 4,520 15,230 87,080 150,922 0 3,000 153,922 110,169 2010 Special Revenue Funds 47 4,520 15,230 87,080 150,922 0 3,000 153,922 110,169 7,518 0 23,507 183,627 0 0 183,627 158,132 0 0 0 138,943 0 0 138,943 281,918 0 0 0 28,839 0 22,000 50,839 0 0 0 0 0 74,209 0 74,209 74,617 0 0 0 449,617 0 1,683,888 2,133,505 1,475,417 0 0 0 0 0 0 0 29,170 0 0 0 3,989 0 0 3,989 14,822 7,518 0 23,507 805,015 74,209 1,705,888 2,585,112 2,034,076 12,038$ 15,230$ 110,587$ 955,937$ 74,209$ 1,708,888$ 2,739,034$ 2,144,245$ 47 Convention TreeLocal OptionDevelopmentHalf-centCourt Cost Radio ReplacementGas TaxTaxSales TaxTrainingCommunication Revenues Taxes0$ 462,688$ 70,375$ 611,206$ 0$ 0$ Other Intergovernmental Revenues0 0 0 0 0 0 Fines and Forfeitures0 0 0 0 6,403 20,303 Interest Income0 2,895 854 13,059 4,765 720 Miscellaneous Revenues3,989 0 1,000 0 0 0 Total Revenues 3,989 465,583 72,229 624,265 11,168 21,023 Expenditures Current: General Government0 0 2,500 0 0 0 Public Safety0 0 0 0 14,971 17,000 Road Maintenance and Construction 0 117,058 0 0 0 0 CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS 2010 Special Revenue Funds FOR THE YEAR ENDED SEPTEMBER 30, 2010, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009 48 Construction 0 117,058 0 0 0 0 Conservation and Resource Management14,822 0 0 0 0 0 Debt Service: Principal0 0 0 0 0 0 Interest and Other0 0 0 0 0 0 Capital Outlay0 0 70,060 0 0 0 (Total Expenditures)(14,822) (117,058) (72,560) 0 (14,971) (17,000) (Deficiency) Excess of Revenues (Under) Over Expenditures (10,833) 348,525 (331) 624,265 (3,803) 4,023 Other Financing Sources (Uses) Transfers in 0 0 0 0 0 0 Transfers (out)0 (491,500) 0 (1,000,000) 0 0 Total Other Financing Sources (Uses)0 (491,500) 0 (1,000,000) 0 0 Net Change in Fund Balances (10,833) (142,975) (331) (375,735) (3,803) 4,023 Fund Balances, Beginning of Year 14,822 281,918 29,170 825,352 134,660 17,722 Fund Balances, End of Year 3,989$ 138,943$ 28,839$ 449,617$ 130,857$ 21,745$ 48 Totals Totals CommunitySpecialNonmajor ContrabandDevelopmentPoliceRevenueDebtCapitalGovernmental2009 ForfeitureBlock GrantGrantsFundsServiceProjectsFundsTotals 0$ 0$ 0$ 1,144,269$ 0$ 0$ 1,144,269$ 1,155,966$ 0 138,094 356,382 494,476 0 0 494,476 164,301 5,132 0 0 31,838 0 0 31,838 32,051 467 0 0 22,760 2,652 60,724 86,136 4,947 0 0 0 4,989 0 25,000 29,989 4,914 5,599 138,094 356,382 1,698,332 2,652 85,724 1,786,708 1,362,179 0 0 0 2,500 0 0 2,500 42,988 0 0 273,593 305,564 0 0 305,564 47,019 0 0 0 117,058 0 0 117,058 252,227 Special Revenue Funds 2010 49 0 0 0 117,058 0 0 117,058 252,227 0 0 0 14,822 0 0 14,822 21,275 0 0 0 0 59,299 0 59,299 56,686 0 0 0 0 12,261 0 12,261 14,673 3,831 138,094 92,820 304,805 0 29,901 334,706 436,071 (3,831) (138,094) (366,413) (744,749) (71,560) (29,901) (846,210) (870,939) 1,768 0 (10,031) 953,583 (68,908) 55,823 940,498 491,240 0 0 33,538 33,538 68,500 1,000,000 1,102,038 398,500 0 0 0 (1,491,500) 0 0 (1,491,500) (847,000) 0 0 33,538 (1,457,962) 68,500 1,000,000 (389,462) (448,500) 1,768 0 23,507 (504,379) (408) 1,055,823 551,036 42,740 5,750 0 0 1,309,394 74,617 650,065 2,034,076 1,991,336 7,518$ 0$ 23,507$ 805,015$ 74,209$ 1,705,888$ 2,585,112$ 2,034,076$ 49 PoliceGeneral Officers'Employees' RetirementRetirement20102009 PlanPlanTotalsTotals Assets Cash and Cash Equivalents21,597$ 21,824$ 43,421$ 41,878$ Investments6,073,128 10,534,808 16,607,936 15,224,287 Interest Receivable38,327 13,312 51,639 0 Total Assets 6,133,052 10,569,944 16,702,996 15,266,165 Liabilities Accounts Payable and Accrued Liabilities1,641 1,009 2,650 58 Excess Premium Tax Liability120,454 0 120,454 120,454 DROP Plan Payable0 151,128 151,128 477,228 Total Liabilities 122,095 152,137 274,232 597,740 Net Assets Held in Trust for Pension Benefits6,010,957 10,417,807 16,428,764 14,668,425 WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2009 Pension Trust Funds CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2010, 50 Total Net Assets 6,010,957$ 10,417,807$ 16,428,764$ 14,668,425$ 50 PoliceGeneral Officers'Employees' RetirementRetirement20102009 PlanPlanTotalsTotals Additions Contributions: Employer339,471$ 599,292$ 938,763$ 784,900$ Employees81,183 198,363 279,546 288,763 State of Florida88,806 0 88,806 86,433 Total Contributions509,460 797,655 1,307,115 1,160,096 Net Increase in Fair Value of Investments443,923 682,488 1,126,411 818,849 Interest and Dividends145,313 247,871 393,184 417,914 Total Additions 1,098,696 1,728,014 2,826,710 2,396,859 Deductions Refunds of Contributions7,981 5,606 13,587 35,472 Benefits490,492 462,801 953,293 909,137 Investment Expenses 17,278 28,302 45,580 591 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Pension Trust Funds CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010, 51 Investment Expenses 17,278 28,302 45,580 591 Administrative Expenses27,094 26,817 53,911 36,527 Total Deductions 542,845 523,526 1,066,371 981,727 Net Increase 555,851 1,204,488 1,760,339 1,415,132 Net Assets, Beginning of Year 5,455,106 9,213,319 14,668,425 13,253,293 Net Assets, End of Year 6,010,957$ 10,417,807$ 16,428,764$ 14,668,425$ 51 20062007200820092010 Revenues Operating Revenues: Water: Customer Charges2,554,325$ 2,531,304$ 2,514,161$ 2,738,565$ 3,182,324$ Miscellaneous Charges 59,667 38,809 82,737 40,906 44,859 Total Water 2,613,992 2,570,113 2,596,898 2,779,471 3,227,183 Sewer: Customer Charges 3,609,816 3,529,947 3,726,556 4,116,104 4,643,308 Total Operating Revenues 6,223,808 6,100,060 6,323,454 6,895,575 7,870,491 Nonoperating Revenues: Interest Income: Water 83,149 117,793 53,378 7,963 153,782 Sewer 76,810 82,266 26,901 6,886 5,361 Total Nonoperating Revenues 159,959 200,059 80,279 14,849 159,143 Total Revenues 6,383,767 6,300,119 6,403,733 6,910,424 8,029,634 Expenses Operating Expenses: Water 1,067,498 1,159,651 1,019,907 1,087,283 1,040,949 Sewer 1,977,608 1,891,016 2,275,505 2,111,097 1,936,210 Total Operating Expenses 3,045,106 3,050,667 3,295,412 3,198,380 2,977,159 CITY OF ATLANTIC BEACH, FLORIDA HISTORICAL REVENUES AND EXPENSES FOR THE YEARS ENDED SEPTEMBER 30, 2006 THROUGH SEPTEMBER 30, 2010 (UNAUDITED) 52 oOpegpeses ,,,,7 ,9,,9,,977,9 Administrative, Nondivisional and Other: Water582,858 553,519 628,122 634,541 633,631 Sewer 937,010 1,072,794 1,071,893 1,142,214 1,113,313 Total Administrative, Nondivisional and Other 1,519,868 1,626,313 1,700,015 1,776,755 1,746,944 (Total Expenses)(4,564,974) (4,676,980) (4,995,427) (4,975,135) (4,724,103) Net Revenues Available for Debt Service 1,818,793 1,623,139 1,408,306 1,935,289 3,305,531 Nonoperating Income (Expense) Interest Expense (798,991) (769,816) (752,384) (732,939) (710,196) Loan Amortization (15,289) (15,289) (14,730) (14,730) (14,730) Total Nonoperating (Expense)(814,280) (785,105) (767,114) (747,669) (724,926) Net Income Before Depreciation and Operating Transfers 1,004,513$ 838,034$ 641,192$ 1,187,620$ 2,580,605$ 52 Annual Billings Fleet Landing (Retirement Community)345,335$ Navy (Federal Government)131,335 Oaks of Atlantic Beach (Mobile Home Park)135,720 Atlantic Arms (Apartment Complex)124,654 Sea Oats (Apartment Complex)110,516 Lakes of Mayport (Apartment Complex)119,782 City of Atlantic Beach, Florida 139,539 John Creek Estate (Mobile Home Park)118,798 Hanna Park (Regional Park)140,506 Mayport Trace (Apartment Complex)89,953 CITY OF ATLANTIC BEACH, FLORIDA MAJOR UTILITY CUSTOMERS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (UNAUDITED) 53 Total 1,456,138$ 53 An n u a l AverageAverage To t a l P e r c e n t a g e DemandPercentage Ye a r P o p u l a t i o n C h a n g e C A B B U C T o t a l C A B B U C T o t a l ( M G D ) C h a n g e 20 0 1 2 3 , 8 9 8 - 0 . 2 % 5 , 0 0 8 2, 4 7 2 7, 4 8 0 1, 5 8 0 2, 1 1 1 3, 6 9 1 3.10 -5.92% 20 0 2 24 , 1 6 7 1. 1 % 5 , 2 4 8 2, 5 0 7 7, 7 5 5 1, 4 7 3 2, 3 1 5 3, 7 8 8 3.20 3.16% 20 0 3 23 , 4 4 1 -3 . 0 % 5 , 3 2 4 2, 5 0 4 7, 8 2 8 1, 5 6 9 2, 3 0 5 3, 8 7 4 3.09 -3.38% 20 0 4 24 , 0 0 7 2. 4 % 5 , 2 2 2 2, 5 9 3 7, 8 1 5 2, 0 0 6 2, 2 8 1 4, 2 8 7 2.93 -5.15% 20 0 5 22 , 9 1 4 -4 . 5 % 5 , 2 6 3 2, 5 9 0 7, 8 5 3 2, 3 6 7 1, 9 3 9 4, 3 0 6 2.75 -6.14% 20 0 6 23 , 2 0 8 1. 3 % 5 , 2 5 6 2, 4 3 0 7, 6 8 6 2, 1 0 7 2, 1 6 4 4, 2 7 1 2.73 -0.73% 20 0 7 23 , 1 5 1 -0 . 2 % 5 , 2 8 3 2, 3 4 6 7, 6 2 9 1, 8 9 5 2, 0 7 9 3, 9 7 4 2.69 -1.47% 20 0 8 23 , 2 0 0 0. 2 % 5 , 2 8 5 2, 3 4 1 7, 6 2 6 2, 0 0 6 2, 2 8 8 4, 2 9 4 2.50 -7.06% 20 0 9 23 , 0 5 8 -0 . 6 % 5 , 1 6 6 2, 3 4 2 7, 5 0 8 1, 9 1 7 2, 1 5 9 4, 0 7 6 2.30 -8.00% 20 1 0 22 , 9 0 8 -0 . 6 % 5 , 1 7 1 2, 3 2 6 7, 4 9 7 1, 9 0 4 2, 1 3 5 4, 0 3 9 2.32 0.87% At l a n t i c B e a c h D i v i s i o n ( C A B ) Si n g l e U n i t Mu l t i - U n i t Wa t e r S y s t e m C u s t o m e r s CI T Y O F A T L A N T I C B E A C H , F L O R I D A SU M M A R Y O F W A T E R U S A G E FO R T H E Y E A R S E N D E D S E P T E M B E R 3 0 , 2 0 0 1 T H R O U G H S E P T E M B E R 3 0 , 2 0 1 0 (U N A U D I T E D ) 54 At l a n t i c Be a c h Di v i s i o n (C A B ) Bu c c a n e e r D i v i s i o n ( B U C ) 54 An n u a l A v e r a g e A n n u a l Pe r c e n t a g e F l o w P e r c e n t a g e Ye a r P o p u l a t i o n C h a n g e S i n g l e U n i t M u l t i - U n i t T o t a l ( M G D ) C h a n g e 2 0 0 1 1 3 , 5 6 8 1 . 5 % 4 , 5 8 7 1 , 8 9 2 6 , 4 7 9 1 . 5 6 0 0 - 3 . 8 2 % 2 0 0 2 1 3 , 7 7 1 1 . 5 % 4 , 6 5 1 1 , 8 3 7 6 , 4 8 8 1 . 6 8 3 0 7 . 8 8 % 2 0 0 3 1 3 , 4 1 8 - 2 . 6 % 4 , 8 2 2 1 , 9 6 0 6 , 7 8 2 1 . 7 3 8 0 3 . 2 7 % 2 0 0 4 1 3 , 9 1 1 3 . 7 % 4 , 9 1 3 1 , 9 7 8 6 , 8 9 1 1 . 5 9 8 0 - 8 . 0 6 % 2 0 0 5 1 4 , 0 6 4 1 . 1 % 4 , 9 9 9 2 , 3 8 7 7 , 3 8 6 1 . 8 1 6 0 1 3 . 6 4 % 2 0 0 6 1 4 , 0 7 9 0 . 1 % 5 , 0 2 0 2 , 1 1 1 7 , 1 3 1 1 . 5 9 9 0 - 1 1 . 9 5 % 2 0 0 7 1 4 , 0 1 5 - 0 . 5 % 5 , 0 5 7 1 , 9 0 0 6 , 9 5 7 1 . 6 3 7 0 2 . 3 8 % 2 0 0 8 1 3 , 8 1 9 - 1 . 4 % 5 , 0 8 6 1 , 9 0 4 6 , 9 9 0 1 . 6 3 8 0 0 . 0 6 % 2 0 0 9 1 3 , 8 1 9 0 . 0 % 4 , 9 9 7 1 , 9 0 3 6 , 9 0 0 1 . 5 8 2 0 - 3 . 4 2 % 2 0 1 0 1 3 , 7 7 9 - 0 . 3 % 4 , 9 8 7 1 , 9 1 2 6 , 8 9 9 1 . 5 1 9 0 - 3 . 9 8 % (U N A U D I T E D ) Se w e r C u s t o m e r s CI T Y O F A T L A N T I C B E A C H , F L O R I D A SU M M A R Y O F W A S T E W A T E R T R E A T M E N T AT L A N T I C B E A C H S E W E R D I V I S I O N FO R T H E Y E A R S E N D E D S E P T E M B E R 3 0 , 2 0 0 1 T H R O U G H S E P T E M B E R 3 0 , 2 0 1 0 5555 An n u a l Av e r a g e Annual Pe r c e n t a g e Fl o w Percentage Ye a r P o p u l a t i o n C h a n g e S i n g l e U n i t M u l t i - U n i t To t a l (M G D ) Change 2 0 0 1 10 , 3 3 0 1. 5 0 % 2, 3 7 8 2, 5 5 5 4, 9 3 3 0. 8 7 5 -4.68% 2 0 0 2 10 , 3 9 6 1. 5 0 % 2, 4 0 9 2, 4 8 9 4, 8 9 8 0. 9 0 5 3.43% 2 0 0 3 10 , 0 2 3 -2 . 6 0 % 2, 3 9 8 2, 6 6 8 5, 0 6 6 0. 8 4 3 -6.85% 2 0 0 4 10 , 0 9 6 -5 . 0 0 % 2, 5 0 4 2, 4 9 7 5, 0 0 1 0. 8 2 4 -2.25% 2 0 0 5 8, 8 5 0 -0 . 1 2 % 2, 5 0 3 2, 1 4 5 4, 6 4 8 0. 7 4 6 -9.47% 2 0 0 6 9, 1 2 9 3. 0 0 % 2, 3 5 6 2, 2 6 8 4, 6 2 4 0. 6 8 2 -8.58% 2 0 0 7 9, 1 3 6 0. 0 0 % 2, 2 6 7 2, 2 6 8 4, 5 3 5 0. 7 1 2 4.40% 2 0 0 8 9, 3 8 1 0. 0 3 % 2, 2 6 3 2, 4 8 2 4, 7 4 5 0. 7 0 4 -1.12% 2 0 0 9 9, 2 3 9 -0 . 0 2 % 2, 2 5 8 2, 3 5 5 4, 6 1 3 0. 6 5 1 -7.53% 2 0 1 0 9, 1 2 9 -0 . 0 1 % 2, 2 4 3 2, 3 2 8 4, 5 7 1 0. 5 7 2 -12.14% (U N A U D I T E D ) Se w e r C u s t o m e r s CI T Y O F A T L A N T I C B E A C H , F L O R I D A SU M M A R Y O F W A S T E W A T E R T R E A T M E N T OU T S I D E C I T Y S E W E R D I V I S I O N FO R T H E Y E A R S E N D E D S E P T E M B E R 3 0 , 2 0 0 1 T H R O U G H S E P T E M B E R 3 0 , 2 0 1 0 5656 YearElectricityTelecom Gas Fuel Oil Total 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 2010 486,475 624,254 26,158 34 1,136,921 Year Total 2006 3,529,832$ 2007 3,868,172 2008 4,269,435 2009 4,089,288 2010 4,146,432 Ad Valorem Tax Collections (Last Five Years) CITY OF ATLANTIC BEACH, FLORIDA OTHER BOND COVENANT DISCLOSURES FOR THE YEARS ENDED SEPTEMBER 30, 2006 THROUGH SEPTEMBER 30, 2010 (UNAUDITED) Utility Service Tax Collections (Last Five Years) 5757 2010 2009 Gross Revenues Utility 7,818,104$ 6,840,216$ Connection Charges 67,772 89,169 Interest 159,143 14,849 Transfer from (to) Rate Stabilization Fund 0 (85,400) (a) Total Gross Revenues 8,045,019 6,858,834 Operating Expenses Personal Services 1,740,254 1,776,755 Contractual Services 643,365 787,291 Supplies 304,219 296,697 Repairs and Maintenance 156,853 185,504 Heat, Lights and Power 659,030 683,833 Intergovernmental Charges 955,846 987,079 Loss (Gain) on Disposal of Fixed Assets 0 (6,470) Other Expenses 241,606 233,469 (Total Operating Expenses)(4,701,173) (4,944,158) Total Net Revenues in Accordance with Bond Resolutions 3,343,846 1,914,676 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, 2010 AND SEPTEMBER 30, 2009 (UNAUDITED) 58 Capital Facilities Charges 120,432 178,799 Special Assessments - New 0 0 Net Revenues Plus Capital Facilities Charges and Special Assessments 3,464,278$ 2,093,475$ Total Debt Service 1,517,533$ 1,518,467$ Debt Service Coverage Ratio 228.28%137.87% Debt Service Coverage Ratio Excluding Capital Facilities Charges 220.35%126.09% 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 Year400,000$ 314,600$ Transfer/Redeposit to Revenue Fund0 85,400 Balance, End of Year400,000$ 400,000$ 58 ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS, ISSUED BY THE COMPTROLLER GENERAL OF THE UNITED STATES; THE PROVISIONS OF THE OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR A-133; THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA; AND OTHER CONTRACT REQUIREMENTS 59 CFDA Grant/Contract Contract Program Funds Number Number Period Awards Expenditures *Received Federal Awards 14.218 5629-45 10/01/2009 - 9/30/2010 165,473$ 146,535$ 131,305$ 97.039 10HM-88-04-26-02-017 02/04/2010 - 02/04/2013 282,000 248,790 0 16.607 2009-BUBX-09049665 04/01/2009 - 09/30/2011 2,505 2,505 2,505 ARRA-16.804 2009-SB-B9-1335 03/01/2009 - 02/28/2013 33,538 10,031 0 16.738 2010-JAGC-DUVA-4-4X-099 10/01/2009 - 09/30/2010 45,000 45,000 40,287 16.738 2010-JAGC-DUVA-5-4X-019 10/01/2009 - 09/30/2010 75,000 75,000 63,709 16.738 2010-JAGD-DUVA-2-4Y-029 04/01/2010 - 09/30/2010 5,205 5,205 0 125,205 125,205 103,996 ARRA-16.803 2009-ARRC-DUVA-2-W7-319 10/01/2010 - 09/30/2010 263,558 231,177 165,794 424,806 368,918 272,295 ARRA-66.468 DW160710 N/A 796,109 514,418 495,576 Total Expenditures of Federal Awards 1,668,388$ 1,278,661$ 899,176$ * Includes grant expenditures only (matching funds not reported). Capitalization Grants for Drinking Passed Through Florida Department of Law Enforcement: Grant Program Edward Byrne Memorial Justice Assistance Grant Program Edward Byrne Memorial Justice Assistance Edward Byrne Memorial Justice Assistance Edward Byrne Memorial Justice Assistance Recovery Act - Edward Byrne Memorial Justice Asistance Grant Program Grant Program Water State Revolving Fund Grantor/Pass-Through Entity U.S Environmental Protection Agency Grant Program Protection: Passed Through Florida Department of Environmental Indirect Programs: Indirect Programs: Direct Programs: Indirect Programs: Indirect Programs: Subtotal Expenditures - 16.738 Total U.S. Department of Justice CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 Bulletproof Vest Partnership Program Passed Through Florida Division of Emergency U.S. Department of Justice U.S Department of Housing and Urban Development Passed Through City of Jacksonville, Florida: Community Development Block Grant (CDBG) Management Hazzard Mitigation Grant Program U.S Department of Homeland Security 60 CITY OF ATLANTIC BEACH, FLORIDA NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 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. 61 CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FEDERAL PROGRAMS FOR THE YEAR ENDED SEPTEMBER 30, 2010 1. Summary of Audit Results Financial Statements I. Type of Audit Report Issued on Financial Statements Unqualified Opinion II. Material Weakness and/or Significant Deficiency in Internal Control Audit did not disclose any material weaknesses and/or significant deficiencies in internal control over financial reporting. III. Noncompliance Material to Auditee Financial Statements Audit disclosed no material instances of noncompliance. Federal Awards IV. Material Weaknesses and/or Significant Deficiencies in Internal Control Over Major Federal Programs Audit disclosed no material weaknesses and/or significant deficiencies in internal control over major programs that are required to be reported in the schedule of findings and questioned costs. V. Type of Audit Report Issued on Compliance with Requirements Applicable to Major Federal Programs Unqualified Opinion VI. Audit Findings Relative to Section .510(a) of OMB Circular A-133 The audit disclosed no findings required to be reported under Section .510(a) of OMB Circular A-133. VII. The Program Tested as a Major Program Included the Following: Federal Federal Program CFDA No. Capitalization Grants for Drinking Water State Revolving Fund ARRA-66.468 Edward Byrne Memorial Justice Assistance Grant Program ARRA- 16.803 VIII. Dollar Threshold Used to Distinguish Between Type A and Type B Programs $300,000 62 CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FEDERAL PROGRAMS FOR THE YEAR ENDED SEPTEMBER 30, 2010 (Concluded) 2. Findings Related to the Financial Statements Required to be Reported Under Generally Accepted Government Auditing Standards (GAGAS) The audit disclosed no findings which are required to be reported under GAGAS. 3. Findings and Questioned Costs for Major Federal Programs Required to be Reported Under Section .510(a) of OMB Circular A-133 The audit disclosed no findings which are required to be reported under Section .510(a). Receipt of City Funds Fiscal Year 2009- 2010 Grant No. 5629-45 Amount of Award (Per City of Jacksonville Budget Ordinance)165,473$ (A) Actual Funds Received from City of Jacksonville in Last Audit Period0 Actual Amount Received This Period(146,535)(B) Amount Remaining to be Distributed 18,938$ Expenditures of City Funds City FY 2009-2010 Grant #5629-45 - $165,473 (A) Actual 10/01/2009 -Remaining Item Budgeted 09/30/10 Balance City of Jacksonville Public Service Grants Received as a Subgrant Recipient Per Interlocal Agreement CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF SOURCE AND EXPENDITURE OF CITY GRANT FUNDS PER ORDINANCE CODE CHAPTER 118.205(e) FOR FISCAL YEAR 2009-2010 63 Item Budgeted 09/30/10 Balance Donner Park Improvements # 00391461,741$ 60,273$ 1,468$ Jordan Park Improvements # 00410660,00042,53017,470 Sidewalk Improvements # 00410743,73243,7320 Total 165,473$ 146,535$ 18,938$ (B) Expenditures on the Schedule of Expenditures of Federal Awards page 59 of $34,144 excludes retainage for work completed on project No. 003914 of $8,442 as of September 30, 2009, but paid in FY 2009/10, and includes retainage for work completed on the same project of $2,913, but not paid, as of June 30, 2010. (A) $58,425 in unspent funds from the prior fiscal year and $3,316 of housing rehabilitation funds refunded from prior year recipient's was included in the 2009-2010 grant agreement, in addition to the original budgeted appropriation of $103,732 (Ord. 2009-634-E). 63 64 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida Compliance We have audited the compliance of the City of Atlantic Beach, Florida (the City) with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A- 133 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30, 2010. The City’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of City’s management. Our responsibility is to express an opinion on City’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of City’s compliance with those requirements. In our opinion, the City, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended September 30, 2010. Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 (Concluded) Internal Control Over Compliance (Concluded) A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards 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, as of and for the year ended September 30, 2010, and have issued our report thereon dated February 25, 2011, which contained unqualified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial statements as a whole. The schedule of expenditures of federal awards is presented for the purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. This report is intended solely for the information and use of management, the City Commissioners, others within the entity, the office of the Florida Auditor General, and federal and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. February 25, 2011 Gainesville, Florida 65 66 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida We have audited the 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, 2010, which collectively comprise the City’s basic financial statements and have issued our report thereon dated February 25, 2011. 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. 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 GOVERNMENT AUDITING STANDARDS (Concluded) Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the City Commissioners, others within the entity, the office of the Florida Auditor General, and federal and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. February 25, 2011 Gainesville, Florida 67 68 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, 2010, and have issued our report thereon dated February 25, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. We have issued our independent auditors’ report on internal control over financial reporting and compliance and other matters, independent auditors’ report on compliance with requirements applicable to each major federal program and on internal control over compliance, and schedule of findings and questioned costs. Disclosures in those reports and schedule, which is dated February 25, 2011, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with 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 auditors’ report or schedule. Section 10.554(1)(i)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)(i)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)(i)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)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, 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. Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida MANAGEMENT LETTER (Concluded) Section 10.554(1)(i)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)(i)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, 2010, 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, 2010. 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, others within the entity, the office of the Florida Auditor General, and federal and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. February 25, 2011 Gainesville, Florida 69