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Annual Financial Report - 2010-2011 - vFINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2011 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2011 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 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 Net Assets - Fiduciary Funds ............................................................................................. 14 Statement of Changes in 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 Net Assets - Fiduciary Funds ............................................................................... 50 Combining Statement of Changes in Net Assets - Fiduciary Funds ........................................................... 51 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2011 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 and State Financial Assistance Projects ........................................................................................................................ 59-60 Note to Schedule of Expenditures of Federal Awards and State Financial Assistance Projects ............................................................................................................. 61 Schedule of Findings and Questioned Costs - Federal Awards and State Financial Assistance Projects ............................................................................................... 62-63 Schedule of Source and Expenditure of the City Grant Funds ............................................................... 64 Report on Compliance with Requirements Applicable to Each Major Program and State Project and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General ........................................................................................... 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 .................................................................................................. 67-68 Management Letter ........................................................................................................................... 69-70 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, 2011, 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 2010 financial statements and, in our report dated February 25, 2011, 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, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated February 24, 2012, 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 and state 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 Chapter 10.550, Rules of the Auditor General 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 24, 2012 Gainesville, Florida ii iii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2011 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, 2011. 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, 2011 (Continued) ■ Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of available resources, as well as on balances of available resources at the end of the fiscal year. Such information may be useful in evaluating a City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Reconciliations are provided between the Governmental Funds Balance Sheet and the Statement of Net Assets and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities to facilitate this comparison between governmental funds and governmental activities. The City maintains thirteen 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, 2011 (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 begin on page 16 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 beginning on page 39 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 $73,539,147 at the close of the fiscal year ended September 30, 2011. By far the largest portion of the City’s net assets, $59,502,932 (81%), reflects its investment in capital assets (i.e., land, buildings, equipment, and infrastructure), less any related, outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities A portion of the City’s net assets, $4,412,694 (6%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $9,623,521, (13%), 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, 2011 (Continued) City of Atlantic Beach’s Net Assets September 30, 2011 and 2010 (In Thousands) Governmental Business-type Activities Activities Totals 2011 2010 2011 2010 2011 2010 Current and other assets $9,083 $7,402 $8,541 $8,696 $17,624 $16,098 Capital assets 40,661 40,591 38,577 35,175 79,238 75,766 Total Assets 49,744 47,993 47,118 43,871 96,862 91,864 Long-term liabilities outstanding 515 565 18,703 16,168 19,218 16,733 Other liabilities 854 688 3,250 2,998 4,104 3,686 Total Liabilities 1,369 1,253 21,953 19,166 23,322 20,419 Net Assets: Invested in capital assets, net of related debt 40,460 40,329 19,043 18,172 59,503 58,501 Restricted 2,901 2,581 1,512 1,447 4,413 4,028 Unrestricted 5,014 3,830 4,610 5,086 9,624 8,916 Total Net Assets $48,375 $46,740 $25,165 $24,705 $73,540 $71,445 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, 2011 (Continued) City of Atlantic Beach’s Change in Net Assets For the Years Ended September 30, 2011 and 2010 (In Thousands) Governmental Business-type Activities Activities Totals 2011 2010 2011 2010 2011 2010 Revenues: Program Revenues: Charges for services $1,798 $1,771 $11,028 $10,393 $12,826 $12,164 Operating grants and contributions 735 856 0 0 735 856 Capital grants and contributions 442 321 1,225 483 1,667 804 General Revenues: Property taxes 3,968 4,146 0 0 3,968 4,146 Sales taxes 1,106 1,046 0 0 1,106 1,046 Business and utility taxes 1,221 1,241 0 0 1,221 1,241 State revenue sharing 273 268 0 0 273 268 Discretionary sales surtax 635 611 0 0 635 611 Interest revenue 206 228 143 274 349 502 Miscellaneous 50 101 0 0 50 101 (Loss) gain on disposal of fixed assets 0 0 0 0 0 0 Total Revenues 10,434 10,589 12,396 11,150 22,830 21,739 Expenses: General government 2,137 1,969 0 0 2,137 1,969 Public safety 4,797 4,732 0 0 4,797 4,732 Road maintenance and construction 1,821 1,719 0 0 1,821 1,719 Parks and recreation 1,215 1,139 0 0 1,215 1,139 Conservation and resource management 0 15 0 0 0 15 Interest on long-term debt 9 12 0 0 9 12 Utility 0 0 7,763 7,329 7,763 7,329 Stormwater 0 0 1,193 1,167 1,193 1,167 Sanitation 0 0 1,500 1,494 1,500 1,494 Building code enforcement 0 0 302 293 302 293 Total Expenses 9,979 9,586 10,758 10,283 20,737 19,869 Transfers 1,178 161 (1,178) (161) 0 0 Change in net assets 1,633 1,164 460 706 2,093 1,870 Net assets-Beginning 46,740 45,576 24,705 23,999 71,445 69,575 Net assets-Ending $48,373 $46,740 $25,165 $24,705 $73,538 $71,445 viii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2011 (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 $8,681,779, an increase of $1,576,328 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 $2,739,992, which equated to 27% 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 $1,258,003 or 28% during the current fiscal. This increase primarily resulted from a large budgeted transfer from the Utility Fund. This represented a return of funds that were transferred to the Utility Fund in 2009 for the sewer treatment plant upgrade design work. The General Fund revenues were close to budgeted amounts and were otherwise about the same as 2010. The expenditures of the General Fund were lower than expected by $393,193, mostly from capital project monies not being spent. There were budget surpluses throughout all departments of the General Fund, the largest being Public Works with a positive variance of $147,054. These variances along with the budgeted increase of $726,718 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 $2,903,437. Of this fund balance, $72,585 is restricted as a debt service reserve and $2,469,621 is restricted for capital projects. The net increase in fund balance after transfers in nonmajor governmental funds was $318,325. ■ 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 $459,580 during the fiscal year. In fiscal year 2011, a utility rate adjustment of 9% to the sewer related charges only and increased sales resulted in an increase in customer charges for the year of $632,408. The utility rates were increased for the purpose of funding the additional debt service acquired for the sewer plant upgrades. Operating expenses, including depreciation, increased $451,061. After non- operating revenues and expenses are added, the income was $430,586 before transfers and capital contributions. Adding to this income was an increase to net assets of $28,994 from a combination of contributed capital and net transfers in. The Stormwater Fund continues to be subsidized by the Local Option Gas Tax Fund to support its operating expenses. This year’s transfer was $143,000 and enabled the fund to limit its reduction in net assets to $507,490. The $5.00 per ERU rate is approximately one-third of the operating expenses of that program and generated only $509,447 of revenues for the year. During fiscal year 2011, the Sanitation Fund netted an increase to net assets of $22,963, after having contributed $252,519 to the General Fund. There was no rate increase for cost of living in 2011. The unrestricted net assets of the enterprise funds amounted to $4,609,689 at the end of fiscal year 2011. The total decrease in unrestricted net assets of $475,930 from 2010 was primarily due to the $572,587 operating loss in the Storm Water fund. ix CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2011 (Continued) General Fund Budgetary Highlights Differences between the original budget and the final amended budget included a $37,450 increase in revenues, a $175,007 increase in appropriations, and a $72,000 increase in transfers. The increase in revenues was to create a budget for donations for the dog park and for Town Center holiday lights. The increases in appropriations are for the same items as the revenue increase plus the budget increase for encumbrances rolling forward from 2010 of $135,463. The $72,000 increase in transfers to the Convention Development Fund was to advance fund a match for a portion of a grant funded dock extension into the Marsh. The most significant General Fund budget highlight for 2011 was that the budget as amended included an excess of revenues over expenditures of $726,718. This represents the returned funds from Public Utilities for the reimbursement of the sewer plant upgrade design work. Net Budget The overall net difference from the final budgeted revenues and adjusted final budgeted expenses was an excess of $726,718. The actual increase in fund balance was $1,119,916. This resulted in a $393,198 excess above what was budgeted in the General Fund. 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, 2011, amounted to $79,237,759. 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 an increase of $69,020 (0.17%) for governmental activities and an increase of $3,402,330 (9.7%) for business-type activities. Capital asset events during the current fiscal year included the following: ■ Governmental Activities Buildings reflected a net decrease of $29,014. This represented a capital asset increase of $64,450, offset by disposed assets with a net book value of $477, and an addition to the allowance for depreciation of $92,987. Acquisitions this year included: roof and siding replacements at the Public Safety Building; Better Jacksonville Half Cent Sales Tax-funded metal roof replacement at Donner Park; and Florida Energy Commission Grant (ARRA)-funded purchase of a 5 ton HVAC system for City Hall. Intangible Assets reflected a net increase of $76,596. This represented a capital asset increase of $60,415, offset by a Financial Statement reclassification with a net book value of $50,276, and an addition to the allowance for depreciation of $34,095. Acquisitions this year included purchases of a land easement for the Dog Park and computer software. x CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2011 (Continued) Improvements Other Than Buildings reflected a net decrease of $377,330. This represented a capital asset increase of $256,047 offset by an addition to the allowance for depreciation of $633,377. Acquisitions this year included: completion of the Dog Park; the fabrication and installation of two gates, one at Dutton Island and one at Tideview Park; Community Development Block Grant (CDBG) funded installation of basketball court lights, a security camera, security lighting, and the conversion of a clay baseball field to sod at Donner Park; and the installation of a flag and flag pole, construction of a stage and pavilion at Veteran’s Park funded by a City of Jacksonville grant and donated funds. Equipment assets reflected a net decrease of $167,947. This net decrease was comprised of assets acquired for a value of $292,753, offset by equipment disposed with a net book value of $40,794, offset by a Financial Statement reclassification with a net book value of ($50,276), and an addition to the allowance for depreciation of $369,630. Assets acquired in this category were: six outfitted, fleet vehicles, one partially funded through a grant; the build-out of the SWAT truck fully funded through a City of Jacksonville grant; computer equipment including servers and routers, printers, a color copier and laptop computers (6); police-related equipment, such as digital video mirrors, laser speed units, radios; and mowers for Public Works. The City disposed of $329,798 of equipment, with a book value of $40,794. Assets disposed during the fiscal year included seven vehicles, obsolete equipment and computers. As of September 30, 2011, the City received approximately $20,937 in proceeds from equipment disposed through auction sales. Construction in progress increased $566,712. The remaining balance of $690,935 in construction in progress at September 30, 2011 is for: the kayak and canoe launch at River Branch Preserve, funded by Convention Development funds; the improvements at Veteran’s Park; and the design of a new police building. ■ Business-type Activities Buildings reflected a net decrease of $142,040 from an addition to the allowance for depreciation in that amount. Intangible Assets reflected a net decrease of $191. This net decrease was comprised of an offset by a Financial Statement reclassification of fully depreciated assets and an addition to the allowance for depreciation of $191. Improvements Other Than Buildings reflected a net increase of $2,907,236. This represented a capital asset increase of $5,024,655 offset by an addition to the allowance for depreciation of $2,117,419. Acquisitions this year included: replacement of a well, rehabilitation of a well and ground storage tank at Water Plant 1; rehabilitation of the Salt Air gravity sewer; lift stations’ upgrades; rehabilitation of an elevated tank at Water Plant 4; rehabilitation of a ground storage tank at Water Plant 4; rehabilitation of Sea Oats sewer; completion of the Royal Palms stormwater project; and installation of bulkheads on Cavalla Road. Equipment assets reflected a net decrease of $21,537. This net decrease was comprised of assets acquired for a value of $96,207, offset by equipment disposed with a net book value of $1,310, offset by a Financial Statement reclassification with a net book value of ($11,113), and an addition to the allowance for depreciation of $105,321. Assets acquired in this category were: a chlorinator, a spectrophotometer, an ice machine, dumpsters (2), a roll on/off container, a refrigerated sampler, a handheld GPS, and a Caterpillar loader backhoe. The City disposed of $92,233 of equipment, with a book value of $1,310. Assets disposed during the fiscal year included two backhoes (traded in on the new one), obsolete equipment and computers. As of September 30, 2011, the City received approximately $27 in proceeds from equipment disposed through auction sales. xi CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2011 (Continued) ■ Business-type Activities (Concluded) Construction in progress increased $658,861. The remaining balance of $5,564,626 in construction in progress at September 30, 2011 is for the improvements related to the Total Maximum Daily Load (TMDL) of nitrogen discharge and the sewer rehabilitation project on Sea Oats Drive. City of Atlantic Beach’s Capital Assets (Net of Depreciation) (In Thousands) Governmental Business-type Activities Activities Totals 2011 2010 2011 2010 2011 2010 Land and Easements $10,034 $10,034 $1,656 $1,871 $11,690 $11,905 Building and Improvements 28,847 29,176 30,942 27,962 59,789 57,138 Equipment 1,089 1,257 414 436 1,503 1,693 Construction in Progress 691 124 5,565 4,906 6,256 5,030 Total $40,661 $40,591 $38,577 $35,175 $79,238 $75,766 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 2011 fiscal year, the City had total bonded debt outstanding of $19,697,955. 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, 2011 (In Thousands) Governmental Business-type Activities Activities Totals Utility System Revenue Bonds, Series 2004 $0 $14,705 $14,705 Utility System Revenue Bonds, Series 2010A-1 0 892 892 Utility System Revenue Bonds, Series 2010B 0 668 668 SunTrust Revenue Refunding Bonds, Series 1999 $201 248 449 F.D.E.P. State Revolving Funds Loan, 2010 0 755 755 F.D.E.P. State Revolving Funds Loan, 2009 0 2,229 2,229 Total $201 $19,497 $19,698 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. The only Governmental Activity Debt outstanding will be fully paid off in fiscal year 2014. xii CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT’S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2011 (Continued) Long-term Debt (Concluded) The City has increased its total outstanding long term debt for the purpose of upgrading the Sewer plant to meet new standards as well as for a new water well. The project is currently under construction and the outstanding debt increase of $2,530,393 pertains to an amount drawn down on a loan as of year-end. The remaining increase in long term debt outstanding will occur as the project is completed. A 9% utility rate increase on the sewer portion of the bill provided sufficient revenues to meet the required coverage ratio including new debt 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 also refinanced the remaining portion of the 1996 utility revenue bonds at a lower interest rate. Additional information on the City’s long-term debt can be found in note 7 on pages 29-32 of this report. 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 health insurance and pension contributions have made the budget itself a strategic planning issue again for 2012. Some of the economic hurdles that the City must overcome this year and into the future are highlighted below. Revenue Highlights: ■ The 2011 taxable property values are about 4% lower than the 2010 values. The City Commission voted to keep the millage rate the same at 3.1553 mills resulting in a reduction in collections of $179,199. The final gross taxable value was $1,312,461,298. For 2012, the City Commission voted to roll-up the millage to 3.3285 mills and therefore the ad valorem tax collections should remain about the same. Ad valorem taxes are estimated to represent about 36% of the General Fund revenues for 2012. ■ State-shared revenues ended the year with a 4.35% increase over 2010. From 2010 to 2011, the combination of General Fund sales taxes and revenue sharing collections increased $63,010. The projection for 2012 continues the trend and slightly increases it by $32,443. These two sources account for about 13% of the General Fund revenues. ■ In 2011, the City sold many of the agency and treasury obligations purchased in 2010 for considerable gains. Those that weren’t sold were called. Due to the changing market, the City chose to move some of the excess funds into fixed income mutual funds. In order to move more funds into this type of investments, this also required some modifications to the City’s investment policy that were implemented early in October of 2011. Those changes having been made, the City plans to wait until long term rates are in favor and remain in mutual funds until long term rates improve. ■ In Fiscal Year 2011, the City increased the sewer rates to generate an additional $433,611 in sewer revenues by increasing the rate 9% to help fund the anticipated debt for the sewer treatment plant and collection system upgrades scheduled to be completed in December of 2012. The rate increase did generate the desired additional funds as planned. It is the last of a series of utility rate increases. There are no water or sewer rate increases scheduled for 2012. ■ In addition to the funds borrowed from the State Revolving Loan Program for the sewer plant upgrades, the City received $1,000,000 from a Florida Department of Environmental Protection grant. BASIC FINANCIAL STATEMENTS These basic financial statements contain Government-wide Financial Statements, Fund Financial Statements, and Notes to Financial Statements. GovernmentalBusiness-type 2010 ActivitiesActivitiesTotalsTotals Assets Equity in Pooled Cash and Investments 7,984,902$ 5,125,063$ 13,109,965$ 11,641,180$ Receivables - Net 2,542 694,826 697,368 594,288 Due from Other Governments 1,022,219 0 1,022,219 1,198,632 Inventories15,212 46,191 61,403 47,361 Special Assessments - Current 0 658 658 1,252 Notes Receivable - Current760 10,051 10,811 15,634 Restricted Assets: Equity in Pooled Cash and Cash Equivalents0 2,382,037 2,382,037 2,307,294 Capital Assets: Land 10,034,127 1,656,018 11,690,145 11,690,145 Buildings 4,272,600 4,356,384 8,628,984 8,567,072 Improvements Other Than Buildings 38,257,848 64,700,840 102,958,68897,677,986 Equipment 3,112,382 1,873,696 4,986,078 5,345,382 Intangibles-Easements and Computer Software 330,584 244,709 575,293 215,282 (Accumulated Depreciation and Amortization)(16,037,932) (39,819,059) (55,856,991) (52,759,446) Construction in Progress 690,936 5,564,626 6,255,562 5,029,988 Prepaid Items 55,548 0 55,548 12,628 Notes Receivable - Noncurrent 2,280 77,091 79,371 77,755 Unamortized Loan Costs 0 204,660 204,660 201,202 Total Assets 49,744,008 47,117,791 96,861,799 91,863,635 Liabilities Accounts Payable and Other Current Liabilities391,974 833,459 1,225,433 865,756 Construction Retainages Payable0 241,532 241,532 299,057 Due to Other Governments 0 9,385 9,385 7,241 Deferred Revenue 2,542 160,322 162,864 164,378 Deposits4,238 0 4,238 5,770 Compensated Absences - Current 452,400 127,100 579,500 531,800 Accrued Interest Payable2,816 0 2,816 3,681 Payable from Restricted Assets: Current Portion of Bonds Payable0 971,270 971,270 899,102 Current Portion of Loan Payable0 12,942 12,942 11,248 Accrued Interest Payable0 374,280 374,280 374,862 Customer Deposits0 519,449 519,449 522,605 Noncurrent Liabilities: Due Within One Year63,690 0 63,690 59,305 Due in More Than One Year136,914 18,513,139 18,650,053 16,197,908 Compensated Absences - Noncurrent236,009 164,840 400,849 410,549 Other Postemployment Benefits Obligation78,832 25,519 104,351 64,890 Total Liabilities 1,369,415 21,953,237 23,322,652 20,418,152 Net Assets Invested in Capital Assets - Net of Related Debt 40,459,941 19,042,991 59,502,932 58,500,991 Restricted for: Renewal and Replacement 0 500,000 500,000 500,000 Debt Service 72,585 970,951 1,043,536 963,371 Public Safety 163,435 0 163,435 183,627 Road Maintenance and Construction 141,726 0 141,726 138,943 Parks and Recreation 4,801 0 4,801 50,839 Other Capital Projects 2,469,621 17,358 2,486,979 2,171,326 Other Purposes 48,652 0 48,652 0 Building Code Enforcement 0 23,565 23,565 20,681 Unrestricted 5,013,832 4,609,689 9,623,521 8,915,705 Total Net Assets 48,374,593$ 25,164,554$ 73,539,147$ 71,445,483$ CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30, 2011, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2010 2011 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 2 0 1 0 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 2, 1 3 6 , 6 4 6 $ 9 6 3 , 6 1 8 $ 0 $ 7 , 3 2 5 $ (1, 1 6 5 , 7 0 3 ) $ 0 $ (1,165,703)$ (1,035,167)$ Pu b l i c S a f e t y 4, 7 9 7 , 2 4 8 6 3 8 , 3 6 0 1 5 7 , 0 3 6 3 5 , 5 1 5 (3, 9 6 6 , 3 3 7 ) 0 (3,966,337) (3,704,971) 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 , 8 2 0 , 5 5 5 1 0 1 , 1 6 5 5 6 2 , 5 5 1 0 (1, 1 5 6 , 8 3 9 ) 0 (1,156,839) (1,017,997) Pa r k s a n d R e c r e a t i o n 1 , 2 1 5 , 3 4 9 9 4 , 4 4 1 1 5 , 0 0 0 3 9 9 , 6 4 3 (70 6 , 2 6 5 ) 0 (706,265) (853,965) 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 48 0 0 0 0 (48 0 ) 0 (480) (14,822) 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 8 , 8 5 8 0 0 0 ( 8 , 8 5 8 ) 0 ( 8 , 8 5 8 ) (11,473) 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, 9 7 9 , 1 3 6 1 , 7 9 7 , 5 8 4 7 3 4 , 5 8 7 4 4 2 , 4 8 3 (7, 0 0 4 , 4 8 2 ) 0 (7,004,482) (6,638,395) 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 7,76 2 ,66 5 8 ,51 6 ,94 2 0 1 ,22 4 ,78 0 0 1 ,97 9 ,05 7 1 ,979,057 1,025,014 St o r m w a t e r 1, 1 9 3 , 3 7 6 5 0 9 , 4 4 7 0 0 0 (68 3 , 9 2 9 ) (683,929) (659,475) Sa n i t a t i o n 1 4 9 9 7 3 4 1 7 5 9 3 6 2 0 0 0 25 9 6 2 8 259628304354 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 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 A C T I V I T I E 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 1 , 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 1 0 Pr i m a r y G o v e r n m e n t 20 1 1 Pr o g r a m R e v e n u 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 9 ,73 4 1,75 9 ,36 2 0 0 0 25 9 ,62 8 259,628 304,354 Bu i l d i n g C o d e E n f o r c e m e n t 3 0 2 , 3 6 0 2 4 2 , 3 4 6 0 0 0 (60 , 0 1 4 ) (60,014) (76,817) 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 1 0 , 7 5 8 , 1 3 5 1 1 , 0 2 8 , 0 9 7 0 1 , 2 2 4 , 7 8 0 0 1 , 4 9 4 , 7 4 2 1 , 4 9 4 , 7 4 2 593,076 To t a l P r i m a r y G o v e r n m e n t 20 , 7 3 7 , 2 7 1 $ 1 2 , 8 2 5 , 6 8 1 $ 7 3 4 , 5 8 7 $ 1 , 6 6 7 , 2 6 3 $ (7, 0 0 4 , 4 8 2 ) 1 , 4 9 4 , 7 4 2 (5,509,740) (6,045,319) Ge n e r a l R e v e n u e s Pr o per t y T a x e s 3, 9 6 8 , 2 3 3 0 3 , 9 6 8 , 2 3 3 4,146,432 Sa l e s T a x e s 1, 1 0 6 , 3 2 9 0 1 , 1 0 6 , 3 2 9 1,045,630 Bu s i n e s s a n d U t i l i t y T a x e s 1, 2 2 1 , 0 2 5 0 1 , 2 2 1 , 0 2 5 1,240,624 St a t e R e v e n u e S h a r i n g 27 2 , 8 7 5 0 2 7 2 , 8 7 5 268,339 Di s c r e t i o n a r y S a l e s S u r t a x 63 5 , 4 4 6 0 6 3 5 , 4 4 6 611,206 In t e r e s t R e v e n u e 20 6 , 3 0 3 1 4 2 , 8 4 5 3 4 9 , 1 4 8 501,399 Mi s c e l l a n e o u s 50 , 3 4 8 0 5 0 , 3 4 8 101,813 Tr a n s f e r s 1, 1 7 8 , 0 0 7 ( 1 , 1 7 8 , 0 0 7 ) 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 8, 6 3 8 , 5 6 6 (1, 0 3 5 , 1 6 2 ) 7 , 6 0 3 , 4 0 4 7,915,443 Ch a n g e i n N e t A s s e t s 1, 6 3 4 , 0 8 4 4 5 9 , 5 8 0 2 , 0 9 3 , 6 6 4 1,870,124 Ne t A s s e t s , B e g i n n i n g 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 Ne t A s s e t s , E n d o f Y e a r 48 , 3 7 4 , 5 9 3 $ 2 5 , 1 6 4 , 5 5 4 $ 7 3 , 5 3 9 , 1 4 7 $ 71,445,483$ Se e a c c o m p a n y i n g n o t e s . 2 NonmajorTotals GovernmentalGovernmental2010 GeneralFundsFundsTotals Assets Equity in Pooled Cash and Investments5,234,895$ 2,750,007$ 7,984,902$ 6,400,071$ Receivables - Net 436 2,106 2,542 9,410 Due from Other Funds78,053 0 78,053 101,822 Due from Other Governments 647,308 374,911 1,022,219 949,842 Inventories15,212 0 15,212 25,763 Notes Receivable - Current760 0 760 760 Prepaid Items55,548 0 55,548 12,628 Notes Receivable - Noncurrent2,280 0 2,280 3,040 Total Assets 6,034,492 3,127,024 9,161,516 7,503,336 Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities252,401 139,573 391,974 251,106 Due to Other Funds0 78,053 78,053 101,822 Deposits1,275 2,963 4,238 5,770 Deferred Revenue2,474 2,998 5,472 39,187 Total Liabilities 256,150 223,587 479,737 397,885 Fund Balances Nonspendable: Inventories15,212 0 15,212 25,763 Prepaids55,548 0 55,548 12,628 Restricted for: Public Safety 0 163,435 163,435 183,627 Road Maintenance and Construction0 141,726 141,726 138,943 Parks and Recreation0 4,801 4,801 50,839 Debt Service Reserve0 72,585 72,585 74,209 Other Capital Projects0 2,469,621 2,469,621 2,133,505 Other Purposes0 48,652 48,652 0 Committed to: Conservation and Resource Management 0 3,509 3,509 3,989 Assigned to: Re-establishment of Fire Department 300,000 0 300,000 300,000 Operating Reserves2,667,660 0 2,667,660 2,563,086 Unassigned:2,739,922 (892) 2,739,030 1,618,862 Total Fund Balances 5,778,342 2,903,437 8,681,779 7,105,451 Total Liabilities and Fund Balances 6,034,492$ 3,127,024$ 9,161,516$ 7,503,336$ 2011 CITY OF ATLANTIC BEACH, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2011, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2010 See accompanying notes. 3 Total Fund Balances of Governmental Funds 8,681,779$ 7,105,451$ 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 Assets56,698,477$ 55,835,386$ (Accumulated Depreciation)(16,037,932)(15,243,861) 40,660,545 40,591,525 Nonexchange receivables that do not provide curent financial resources and, therefore, are not reported revenues in the funds.2,930 29,932 Long-term liabilities are not due and payable in the current period and, accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due. All liabilities, both current and long-term, are reported in the statement of net assets. Long-term liabilities at year-end consist of: Revenue Bonds Payable200,604 262,225 Compensated Absences688,409 671,418 Other Postemployment Benefits Obligation 78,832 49,075 Accrued Interest Payable2,816 3,681 (970,661) (986,399) Total Net Assets of Governmental Activities 48,374,593$ 46,740,509$ 20112010 CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2011, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2010 See accompanying notes. 4 NonmajorTotals GovernmentalGovernmental2010 GeneralFundsFundsTotals Revenues Property Taxes3,968,233$ 0$ 3,968,233$ 4,146,432$ Nonproperty Taxes1,221,025 1,154,826 2,375,851 2,384,893 Permits, Fees and Special Assessments955,141 0 955,141 920,033 Intergovernmental Revenues 1,526,451 421,943 1,948,394 1,945,220 Fines and Forfeitures80,465 41,402 121,867 142,999 Charges for Services697,376 180 697,556 686,485 Interest Income142,769 63,534 206,303 227,510 Miscellaneous Revenues49,124 50,452 99,576 87,149 Interfund Charges1,438,862 0 1,438,862 1,419,917 Total Revenues 10,079,446 1,732,337 11,811,783 11,960,638 Expenditures Current: General Government 3,008,608 0 3,008,608 2,822,269 Public Safety 4,353,179 197,203 4,550,382 4,495,980 Road Maintenance and Construction1,418,670 235,012 1,653,682 1,530,989 Parks and Recreation995,245 0 995,245 948,811 Conservation and Resource Management 0 480 480 14,822 Debt Service: Principal0 61,620 61,620 59,299 Interest and Other0 9,723 9,723 12,261 Capital Outlay 312,058 838,974 1,151,032 595,011 (Total Expenditures)(10,087,760) (1,343,012) (11,430,772) (10,479,442) (Deficiency) Excess of Revenues (Under) Over Expenditures (8,314) 389,325 381,011 1,481,196 Other Financing Sources (Uses) Transfers in 1,381,007 938,500 2,319,507 1,740,886 Transfers (out)(132,000) (1,009,500) (1,141,500) (1,580,038) Sale of General Fixed Assets17,310 0 17,310 8,550 Total Other Financing (Uses)1,266,317 (71,000) 1,195,317 169,398 Net Change in Fund Balances 1,258,003 318,325 1,576,328 1,650,594 Fund Balances, Beginning of Year 4,520,339 2,585,112 7,105,451 5,454,857 Fund Balances, End of Year 5,778,342$ 2,903,437$ 8,681,779$ 7,105,451$ 2011 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011, See accompanying notes. 5 Net Change in Fund Balances - Total Governmental Funds 1,576,328$1,650,594$ 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 1,151,032$595,009$ (Current Year Depreciation)(1,130,087)(1,093,681) 20,945 (498,672) 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.89,346 18,165 Certain nonexchange revenues reported in the statement of activities are not considered current CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS 20112010 TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010 See accompanying notes. 6 stateetoactvtesaeotcosdeedcuet financial resources and, therefore, are not reported as revenue in the governmental funds.(27,002) 29,932 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.61,621 59,299 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(17,309) (8,550) (Loss) or Gain on Disposal of General Fixed Assets(23,962) (9,519) (41,271) (18,069) 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 Expense865 788 Compensated Absences(16,991) (47,251) Other Postemployment Benefits Obligation (29,757) (30,779) (45,883) (77,242) Change in Net Assets - Governmental Activities 1,634,084$1,164,007$ See accompanying notes. 6 Bu i l d i n g C o d e 2 0 1 0 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 T o t a l s 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 3 , 3 8 1 , 4 4 0 $ 1 , 0 2 6 , 9 8 9 $ 6 6 1 , 6 4 3 $ 5 4 , 9 9 1 $ 5 , 1 2 5 , 0 6 3 $ 5 , 2 4 1 , 1 0 9 $ Ac c o u n t s R e c e i v a b l e - N e t 6 1 4 , 2 6 3 2 4 , 1 0 3 5 6 , 4 6 0 0 6 9 4 , 8 2 6 5 8 4 , 8 7 8 Du e f r o m O t h e r G o v e r n m e n t s 0 0 0 0 0 2 4 8 , 7 9 0 In v e n t o r i e s 4 6 , 1 9 1 0 0 0 4 6 , 1 9 1 2 1 , 5 9 8 Sp e c i a l A s s e s s m e n t s - C u r r e n t 6 5 8 0 0 0 6 5 8 1 , 2 5 2 No t e s R e c e i v a b l e - C u r r e n t 1 0 , 0 5 1 0 0 0 1 0 , 0 5 1 1 4 , 8 7 4 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 , 2 1 5 , 8 0 1 1 6 6 , 2 3 6 0 0 2 , 3 8 2 , 0 3 7 2 , 3 0 7 , 2 9 4 Ca p i t a l A s s e t s : 20 1 1 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 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 1 , 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 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 7 4 9 , 4 9 9 9 0 6 , 5 1 9 0 0 1 , 6 5 6 , 0 1 8 1 , 6 5 6 , 0 1 8 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 , 3 5 6 , 3 8 4 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 4 8 , 4 9 9 , 2 9 4 1 6 , 2 0 1 , 5 4 6 0 0 6 4 , 7 0 0 , 8 4 0 5 9 , 6 7 6 , 1 8 5 Eq u i p m e n t 1 , 4 0 6 , 3 3 7 2 5 3 , 4 8 2 1 7 6 , 3 7 7 3 7 , 5 0 0 1 , 8 7 3 , 6 9 6 1 , 8 8 0 , 8 3 5 In t a n g i b l e s - E a s e m e n t s a n d C o m p u t e r S o f t w a r e 2 2 6 , 3 9 4 0 0 1 8 , 3 1 5 2 4 4 , 7 0 9 2 1 5 , 2 8 2 (A c c u m u l a t e d D e p r e c i a t i o n a n d A m o r t i z a t i o n ) ( 3 2 , 8 3 9 , 1 5 9 ) ( 6 , 7 9 0 , 9 1 2 ) ( 1 3 3 , 3 8 2 ) ( 5 5 , 6 0 6 ) ( 3 9 , 8 1 9 , 0 5 9 ) ( 3 7 , 5 1 5 , 5 8 5 ) Co n s t r u c t i o n i n P r o g r e s s 5 , 5 6 4 , 6 2 6 0 0 0 5 , 5 6 4 , 6 2 6 4 , 9 0 5 , 7 6 5 No t e s R e c e i v a b l e - N o n c u r r e n t 7 7 , 0 9 1 0 0 0 7 7 , 0 9 1 7 4 , 7 1 5 Un a m o r t i z e d L o a n C o s t s 1 7 8 , 7 2 5 2 5 , 9 3 5 0 0 2 0 4 , 6 6 0 2 0 1 , 2 0 2 To t a l A s s e t s 34 , 4 8 7 , 5 9 5 $ 1 1 , 8 1 3 , 8 9 8 $ 7 6 1 , 0 9 8 $ 5 5 , 2 0 0 $ 4 7 , 1 1 7 , 7 9 1 $ 4 3 , 8 7 0 , 5 9 6 $ 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 2 0 1 0 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 yab l e a n d O t h e r C u r r e n t L i a b i l i t i e s 7 1 4 , 6 4 9 $ 6 , 7 3 8 $ 1 0 5 , 0 0 3 $ 7 , 0 6 9 $ 8 3 3 , 4 5 9 $ 6 1 4 , 6 5 0 $ 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 2 4 1 , 5 3 2 0 0 0 2 4 1 , 5 3 2 2 9 9 , 0 5 7 Du e t o O t h e r G o v e r n m e n t s 7 , 2 7 1 0 0 2 , 1 1 4 9 , 3 8 5 7 , 2 4 1 De f e r r e d R e v e n u e 8 4 , 6 8 2 1 6 , 8 8 6 5 8 , 7 5 4 0 1 6 0 , 3 2 2 1 5 5 , 1 2 3 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 11 2 , 1 0 0 1 , 0 0 0 0 1 4 , 0 0 0 1 2 7 , 1 0 0 1 1 3 , 6 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 8 5 1 , 8 2 2 1 1 9 , 4 4 8 0 0 9 7 1 , 2 7 0 8 9 9 , 1 0 2 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 2 , 9 4 2 0 0 0 1 2 , 9 4 2 1 1 , 2 4 8 Ac c r e d I n t e r e s t P a a b l e 32 7 4 9 2 46 7 8 8 0 0 374280374862 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 ) SE P T E M B E R 3 0 , 2 0 1 1 , 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 1 0 20 1 1 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 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 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 7 ,49 2 46 ,78 8 0 0 374,280 374,862 Cu s t o m e r D e p o s i t s 5 1 9 , 4 4 9 0 0 0 5 1 9 , 4 4 9 5 2 2 , 6 0 5 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 6 , 4 8 3 , 4 1 4 2 , 0 2 9 , 7 2 5 0 0 1 8 , 5 1 3 , 1 3 9 1 5 , 9 9 4 , 9 8 8 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 8 , 9 7 1 1 , 0 5 4 0 4 , 8 1 5 1 6 4 , 8 4 0 1 5 7 , 3 3 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 16 , 9 4 4 5 , 1 4 7 0 3 , 4 2 8 2 5 , 5 1 9 1 5 , 8 1 5 To t a l L i a b i l i t i e s 19 , 5 3 1 , 2 6 8 2 , 2 2 6 , 7 8 6 1 6 3 , 7 5 7 3 1 , 4 2 6 2 1 , 9 5 3 , 2 3 7 1 9 , 1 6 5 , 6 2 2 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 , 5 5 2 , 3 9 0 8 , 4 4 7 , 3 9 7 4 2 , 9 9 5 2 0 9 1 9 , 0 4 2 , 9 9 1 1 8 , 1 7 1 , 6 9 1 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 De b t S e r v i c e 8 5 1 , 5 0 3 1 1 9 , 4 4 8 0 0 9 7 0 , 9 5 1 8 8 9 , 1 6 2 Ot h e r C a p i t a l P r o j e c t s 1 7 , 3 5 8 0 0 0 1 7 , 3 5 8 3 7 , 8 2 1 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 3 , 5 6 5 2 3 , 5 6 5 2 0 , 6 8 1 Un r e s t r i c t e d 3 , 0 3 5 , 0 7 6 1 , 0 2 0 , 2 6 7 5 5 4 , 3 4 6 0 4 , 6 0 9 , 6 8 9 5 , 0 8 5 , 6 1 9 To t a l N e t A s s e t s 14 , 9 5 6 , 3 2 7 $ 9 , 5 8 7 , 1 1 2 $ 5 9 7 , 3 4 1 $ 2 3 , 7 7 4 $ 2 5 , 1 6 4 , 5 5 4 $ 2 4 , 7 0 4 , 9 7 4 $ 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 2 0 1 0 Ut i l i t y St 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 T o t a l s Oper a t i n g R e v e n u e s Ch a r ges f o r S e r v i c e s : Cu s t o m e r C h a r ges 8 , 4 5 0 , 5 1 2 $ 5 0 9 , 4 4 7 $ 1 , 7 3 1 , 9 2 5 $ 2 4 2 , 3 4 6 $ 1 0 , 9 3 4 , 2 3 0 $ 1 0 , 3 1 3 , 7 2 4 $ Fr a n c h i s e P e r m i t s 0 0 7 , 5 0 0 0 7 , 5 0 0 5 , 0 0 0 Mi s c e l l a n e o u s R e v e n u e s 6 6 , 4 3 0 0 0 0 6 6 , 4 3 0 5 2 , 3 8 7 To t a l O per a t i n g R e v e n u e s 8, 5 1 6 , 9 4 2 5 0 9 , 4 4 7 1 , 7 3 9 , 4 2 5 2 4 2 , 3 4 6 1 1 , 0 0 8 , 1 6 0 1 0 , 3 7 1 , 1 1 1 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 9 3 , 8 2 3 2 5 1 , 0 6 3 1 9 , 3 7 1 2 5 2 , 1 1 5 2 , 3 1 6 , 3 7 2 2 , 2 9 2 , 3 4 3 Co n t r a c t u a l S e r v i c e s 9 0 0 , 0 5 6 1 7 3 , 8 7 5 1 , 2 6 7 , 9 4 0 0 2 , 3 4 1 , 8 7 1 2 , 0 4 2 , 9 6 7 Su pp li e s 3 1 6 , 9 0 2 1 7 , 9 2 4 0 6 , 3 4 2 3 4 1 , 1 6 8 3 2 1 , 0 5 9 Re pai r s a n d M a i n t e n a n c e 1 5 7 , 4 0 9 1 2 , 4 7 6 6 , 5 1 3 6 , 8 2 6 1 8 3 , 2 2 4 1 7 2 , 1 2 2 Ut i l i t i e s 6 9 4 , 5 0 6 0 0 0 6 9 4 , 5 0 6 6 5 9 , 0 3 0 De pre c i a t i o n 1 , 9 1 7 , 1 5 5 4 3 0 , 7 6 2 2 6 , 4 2 5 1 , 7 4 2 2 , 3 7 6 , 0 8 4 2 , 3 0 6 , 0 8 1 In t e r gov e r n m e n t a l C h a r ges 9 7 2 , 6 5 2 1 7 1 , 2 9 4 1 6 5 , 8 8 1 3 1 , 0 5 4 1 , 3 4 0 , 8 8 1 1 , 3 2 0 , 5 5 5 Ot h e r E x pen s e s 2 5 7 , 1 1 0 2 4 , 6 4 0 1 3 , 6 0 4 4 , 2 8 1 2 9 9 , 6 3 5 3 2 8 , 5 2 3 (T o t a l O p e r a t i n g E x p e n s e s ) (7 , 0 0 9 , 6 1 3 ) ( 1 , 0 8 2 , 0 3 4 ) ( 1 , 4 9 9 , 7 3 4 ) ( 3 0 2 , 3 6 0 ) ( 9 , 8 9 3 , 7 4 1 ) ( 9 , 4 4 2 , 6 8 0 ) Op e r a t i n g I n c o m e ( L o s s ) 1, 5 0 7 , 3 2 9 ( 5 7 2 , 5 8 7 ) 2 3 9 , 6 9 1 ( 6 0 , 0 1 4 ) 1 , 1 1 4 , 4 1 9 9 2 8 , 4 3 1 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 ges 1 7 , 7 7 9 0 0 0 1 7 , 7 7 9 1 4 , 5 8 5 Fr a n c h i s e F e e s 0 0 1 9 , 9 3 7 0 1 9 , 9 3 7 2 1 , 6 9 7 In t e r e s t I n c o m e 9 2 , 3 9 5 3 3 , 4 3 9 1 5 , 8 5 4 1 , 1 5 7 1 4 2 , 8 4 5 2 7 3 , 8 8 9 In t e r e s t E x pen s e (72 6 , 0 5 7 ) (10 9 , 4 7 4 ) 0 0 (835,531) (823,108) (Lo s s ) o n D i s pos a l o f F i x e d A s s e t s (1, 2 8 3 ) 0 0 0 (1,283) 0 Am o r t i z a t i o n o f L o a n C o s t s (25 , 7 1 2 ) (1, 8 6 8 ) 0 0 (27,580) (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 ) (6 4 2 , 8 7 8 ) ( 7 7 , 9 0 3 ) 3 5 , 7 9 1 1 , 1 5 7 ( 6 8 3 , 8 3 3 ) ( 5 2 9 , 9 6 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 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 20 1 1 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 1 0 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 1 , 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 2 0 1 0 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 T o t a l s 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 86 4 , 4 5 1 $ ( 6 5 0 , 4 9 0 ) $ 2 7 5 , 4 8 2 $ ( 5 8 , 8 5 7 ) $ 4 3 0 , 5 8 6 $ 3 9 8 , 4 7 1 $ 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 1, 2 0 7 , 0 0 1 0 0 0 1 , 2 0 7 , 0 0 1 4 6 8 , 4 9 4 Tr a n s f e r s i n 0 1 4 3 , 0 0 0 0 6 0 , 0 0 0 2 0 3 , 0 0 0 4 7 8 , 0 0 0 Tr a n s f e r s ( o u t ) (1 , 1 2 8 , 4 8 8 ) 0 ( 2 5 2 , 5 1 9 ) 0 ( 1 , 3 8 1 , 0 0 7 ) ( 6 3 8 , 8 4 8 ) 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 an d T r a n s f e r s 78 , 5 1 3 1 4 3 , 0 0 0 ( 2 5 2 , 5 1 9 ) 6 0 , 0 0 0 2 8 , 9 9 4 3 0 7 , 6 4 6 Ch a n g e i n N e t A s s e t s 94 2 , 9 6 4 ( 5 0 7 , 4 9 0 ) 2 2 , 9 6 3 1 , 1 4 3 4 5 9 , 5 8 0 7 0 6 , 1 1 7 Ne t A s s e t s , B e g i n n i n g 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 Ne t A s s e t s , E n d o f Y e a r 14 , 9 5 6 , 3 2 7 $ 9 , 5 8 7 , 1 1 2 $ 5 9 7 , 3 4 1 $ 2 3 , 7 7 4 $ 2 5 , 1 6 4 , 5 5 4 $ 2 4 , 7 0 4 , 9 7 4 $ 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 1 , 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 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 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 ) 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 20 1 1 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 1 0 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 2 0 1 0 Ut i l i t y S t o r m w a t e r Sa 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 8 , 4 0 6 , 4 5 4 $ 5 0 7 , 7 9 4 $ 1 , 7 4 3 , 6 6 1 $ 2 4 2 , 3 4 6 $ 1 0 , 9 0 0 , 2 5 5 $ 1 0 , 2 9 2 , 9 4 7 $ Ca s h P a i d t o S u p p l i e r s ( 1 , 7 9 2 , 1 5 8 ) ( 5 7 3 , 5 9 5 ) ( 1 , 2 8 3 , 2 2 5 ) ( 1 7 , 2 1 0 ) ( 3 , 6 6 6 , 1 8 8 ) ( 2 , 8 7 7 , 4 6 1 ) Ca s h P a i d t o E m p l o y e e s ( 1 , 7 6 9 , 6 3 7 ) ( 2 4 7 , 0 6 9 ) ( 1 9 , 3 7 1 ) ( 2 4 9 , 5 8 2 ) ( 2 , 2 8 5 , 6 5 9 ) ( 2 , 2 7 5 , 1 1 6 ) 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 7 2 , 6 5 2 ) ( 1 7 1 , 2 9 4 ) ( 1 6 5 , 8 8 1 ) ( 3 1 , 0 5 4 ) ( 1 , 3 4 0 , 8 8 1 ) ( 1 , 3 2 0 , 5 5 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, 8 7 2 , 0 0 7 ( 4 8 4 , 1 6 4 ) 2 7 5 , 1 8 4 ( 5 5 , 5 0 0 ) 3 , 6 0 7 , 5 2 7 3 , 8 1 9 , 8 1 5 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 7 , 7 7 9 0 0 0 1 7 , 7 7 9 1 4 , 5 8 5 Fr a n c h i s e F e e s 0 0 1 9 , 9 3 7 0 1 9 , 9 3 7 2 1 , 6 9 6 fi 0 14 3 0 0 0 0 60 0 0 0 20300048000 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 1 , 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 1 0 20 1 1 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 1 4 3 , 0 0 0 0 6 0 , 0 0 0 2 0 3 , 0 0 0 4 7 8 , 0 0 0 Tr a n s f e r s ( o u t ) ( 1 , 1 2 8 , 4 8 8 ) 0 ( 2 5 2 , 5 1 9 ) 0 ( 1 , 3 8 1 , 0 0 7 ) ( 6 3 8 , 8 4 8 ) 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 (1 , 1 1 0 , 7 0 9 ) 1 4 3 , 0 0 0 ( 2 3 2 , 5 8 2 ) 6 0 , 0 0 0 ( 1 , 1 4 0 , 2 9 1 ) ( 1 2 4 , 5 6 7 ) 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 24 8 , 7 9 0 0 0 0 2 4 8 , 7 9 0 ( 2 4 8 , 7 9 0 ) 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 2 , 4 4 7 0 0 0 2 , 4 4 7 3 1 , 0 7 9 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 9 4 0 0 0 5 9 4 5 , 2 0 3 Ca p i t a l G r a n t s 1 , 2 0 7 , 0 0 1 0 0 0 1 , 2 0 7 , 0 0 1 3 7 2 , 5 9 0 Pr o c e e d s f r o m L o a n 3, 9 9 1 , 0 1 2 9 6 , 4 6 2 0 0 4 , 0 8 7 , 4 7 4 4 9 5 , 5 7 6 Fi x e d A s s e t A d d i t i o n s ( 5 , 1 6 4 , 5 9 2 ) ( 7 2 6 , 3 6 2 ) ( 4 , 4 9 4 ) 0 ( 5 , 8 9 5 , 4 4 8 ) ( 4 , 5 4 8 , 2 0 7 ) Pr i n c i p a l P a y m e n t s o n L o n g - t e r m D e b t (1 , 3 8 1 , 4 2 3 ) ( 2 0 9 , 0 0 1 ) 0 0 ( 1 , 5 9 0 , 4 2 4 ) ( 8 7 4 , 1 0 2 ) In t e r e s t P a i d (6 1 6 , 6 3 5 ) ( 9 5 , 4 2 3 ) 0 0 ( 7 1 2 , 0 5 8 ) ( 7 3 4 , 2 3 6 ) 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 (1 , 7 1 2 , 8 0 6 ) ( 9 3 4 , 3 2 4 ) ( 4 , 4 9 4 ) 0 ( 2 , 6 5 1 , 6 2 4 ) ( 5 , 5 0 0 , 8 8 7 ) 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 2 0 1 0 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 9 4 1 , 0 3 0 $ 1 , 0 1 4 , 5 6 2 $ 1 5 5 , 5 6 8 $ 1 1 , 1 8 4 $ 2 , 1 2 2 , 3 4 4 $ ( 4 , 1 2 6 , 0 8 3 ) $ In t e r e s t R e c e i v e d 9 4 , 0 6 7 2 9 , 9 8 6 1 5 , 8 5 4 3 , 1 7 8 1 4 3 , 0 8 5 2 7 3 , 8 8 9 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 1, 0 3 5 , 0 9 7 1 , 0 4 4 , 5 4 8 1 7 1 , 4 2 2 1 4 , 3 6 2 2 , 2 6 5 , 4 2 9 ( 3 , 8 5 2 , 1 9 4 ) 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, 0 8 3 , 5 8 9 ( 2 3 0 , 9 4 0 ) 2 0 9 , 5 3 0 1 8 , 8 6 2 2 , 0 8 1 , 0 4 1 ( 5 , 6 5 7 , 8 3 3 ) 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 2, 0 1 9 , 6 7 9 1 , 1 0 5 , 6 7 8 2 7 5 , 5 1 2 2 1 , 4 5 1 3 , 4 2 2 , 3 2 0 9 , 0 8 0 , 1 5 3 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 4, 1 0 3 , 2 6 8 $ 8 7 4 , 7 3 8 $ 4 8 5 , 0 4 2 $ 4 0 , 3 1 3 $ 5 , 5 0 3 , 3 6 1 $ 3 , 4 2 2 , 3 2 0 $ 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 1 , (C o n t i n u e d ) 20 1 1 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 1 0 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 , 5 0 7 , 3 2 9 $ ( 5 7 2 , 5 8 7 ) $ 2 3 9 , 6 9 1 $ ( 6 0 , 0 1 4 ) $ 1 , 1 1 4 , 4 1 9 $ 9 2 8 , 4 3 1 $ 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 , 9 1 7 , 1 5 5 4 3 0 , 7 6 2 2 6 , 4 2 5 1 , 7 4 2 2 , 3 7 6 , 0 8 4 2 , 3 0 6 , 0 8 1 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 2 4 , 6 5 4 5 , 0 5 1 1 1 , 7 1 2 0 4 1 , 4 1 7 3 9 , 4 2 4 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 ( 1 3 8 , 5 3 4 ) ( 6 , 7 6 7 ) ( 6 , 0 6 4 ) 0 ( 1 5 1 , 3 6 5 ) ( 6 7 , 1 7 5 ) In v e n t o r y (2 4 , 5 9 3 ) 0 0 0 ( 2 4 , 5 9 3 ) 6 , 6 2 6 Co m p e n s a t e d A b s e n c e s 1 7 , 7 1 6 2 , 0 5 4 0 1 , 2 3 9 2 1 , 0 0 9 7 , 1 9 0 OP E B O b l i g a t i o n 6 , 4 7 0 1 , 9 4 0 0 1 , 2 9 4 9 , 7 0 4 1 0 , 0 3 7 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 8 , 4 1 8 ( 3 4 4 , 6 8 0 ) 4 , 8 3 2 2 3 9 2 1 8 , 8 0 9 6 0 0 , 1 9 0 Cu s t o m e r D e p o s i t s ( 3 , 1 5 6 ) 0 0 0 ( 3 , 1 5 6 ) ( 7 , 2 0 6 ) De f e r r e d R e v e n u e 6 , 5 4 8 6 3 ( 1 , 4 1 2 ) 0 5 , 1 9 9 ( 3 , 7 8 3 ) 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, 8 7 2 , 0 0 7 $ ( 4 8 4 , 1 6 4 ) $ 2 7 5 , 1 8 4 $ ( 5 5 , 5 0 0 ) $ 3 , 6 0 7 , 5 2 7 $ 3 , 8 1 9 , 8 1 5 $ 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 2 0 1 0 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 3 , 3 8 1 , 4 4 0 $ 1 , 0 2 6 , 9 8 9 $ 6 6 1 , 6 4 3 $ 5 4 , 9 9 1 $ 5 , 1 2 5 , 0 6 3 $ 0 $ 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 , 2 1 5 , 8 0 1 1 6 6 , 2 3 6 0 0 2 , 3 8 2 , 0 3 7 0 Eq u i t y i n P o o l e d I n v e s t m e n t s ( 1 , 4 9 3 , 9 7 3 ) ( 3 1 8 , 4 8 7 ) ( 1 7 6 , 6 0 1 ) ( 1 4 , 6 7 8 ) ( 2 , 0 0 3 , 7 3 9 ) ( 4 , 1 2 6 , 0 8 3 ) 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 4, 1 0 3 , 2 6 8 $ 8 7 4 , 7 3 8 $ 4 8 5 , 0 4 2 $ 4 0 , 3 1 3 $ 5 , 5 0 3 , 3 6 1 $ ( 4 , 1 2 6 , 0 8 3 ) $ 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 1 0 (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 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 1 , 20 1 1 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 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 0 $ 0 $ 0 $ 0 $ 0 $ 9 5 , 9 0 4 $ Se e a c c o m p a n y i n g n o t e s . 13 20112010 Assets Cash and Cash Equivalents51,110$ 43,421$ Interest Receivable38,486 51,639 Investments at Fair Value16,764,501 16,607,936 Total Assets 16,854,097 16,702,996 Liabilities Accounts Payable and Accrued Liabilities338 2,650 Excess Premium Tax Liability120,454 120,454 DROP Plan Payable228,430 151,128 Total Liabilities 349,222 274,232 Total Net Assets Held in Trust for Pension Benefits16,504,875$ 16,428,764$ Pension Trust Funds WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2010 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2011, See accompanying notes. 14 20112010 Additions Contributions: Employer 1,123,410$ 939,452$ Employees267,604 279,546 State of Florida86,391 88,117 Total Contributions1,477,405 1,307,115 Net Increase (Decrease) in Fair Value of Investments(540,275) 1,126,411 Interest and Dividends434,302 393,184 Total Additions 1,371,432 2,826,710 Deductions Refunds of Contributions12,514 13,587 Benefits 1,096,243 953,293 Investment Expenses 105,175 45,580 Administrative Expenses 81,389 53,911 Total Deductions 1,295,321 1,066,371 Net Increase 76,111 1,760,339 Net Assets, Beginning of Year 16,428,764 14,668,425 Net Assets, End of Year 16,504,875$ 16,428,764$ Pension Trust Funds WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011, See accompanying notes. 15 16 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 Note 1 - Summary of Significant Accounting Policies The accounting policies of the City of Atlantic Beach, Florida (the City), conform to accounting principles generally accepted in the United States of America as applicable to governments. The following is a summary of the more significant policies used in the preparation of these financial statements. Reporting Entity The City was incorporated in 1957, under a charter in accordance with the laws of the State of Florida, Florida Statutes Section 57-1126. The City operates under a form of government which comprises an elected City Commission (four Commissioners and a Mayor- Commissioner) and provides, under the administration of an appointed City Manager, the following services: public safety, public works (streets and infrastructure), recreation, sanitation, stormwater, planning, zoning, water and sewer, and general government services. As outlined in Governmental Accounting Standards Board (GASB) Statement No. 14, The Reporting Entity, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units an Amendment to GASB Statement No. 14, the financial reporting entity consists of the primary government, organizations for which the primary 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, 2011 (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. The major exception to this general rule are 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. 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, 2011 (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. 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: 19 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Fund Balance Classification (Concluded) ■ 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 Commission 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. When both restricted and unrestricted resources are available for use, it is the City’s practice to use restricted resources first, then unrestricted resources as they are needed. When unrestricted resources (committed, assigned and unassigned) are available for use in any governmental fund, it is the City’s practice to use committed resources first, then assigned, and then unassigned as needed. 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, 2011 (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. 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, 2011 (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 considered non-spendable fund balance 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 in the City’s enterprise funds, 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, 2011 (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. 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, 2011 (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, 2010, from which the summarized information was derived Note 2 - Cash and Investments The City maintains a cash and investment pool that is designed for use by all funds, except for those monies which are periodically transferred for pension investment purposes. In addition, investments are separately held and individually accounted for where contractual arrangements and bond covenants provide for and require such arrangements. At September 30, 2011, the carrying amount of cash on hand and on deposit with banks, including interest-bearing deposits was $11,385,072, and the related bank balance was $11,946,277. 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, 2011 (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, 2011: Investment Maturities Investment Credit Fair Less Type Rating Value Than 1 1-5 6-10 Total PIMCO GNMA Fund Class A Unrated $ 1,071,820 $ 1,071,820 $ 0 $ 0 $ 1,071,820 Putnam US Government Income Trust Class A Shares Unrated 1,066,569 1,066,569 0 0 1,066,569 Eaton Vance Government Obligations Fund Class A Unrated 1,008,204 1,008,204 0 0 1,008,204 Loomis Sayles Limited Term Governmental & Agency Fund Class A Unrated 998,362 998,362 0 0 998,362 Florida PRIME AAAm 104 104 0 0 104 Fund B Surplus Trust Funds Investment Pool Unrated 173 0 0 173 173 Total $ 4,145,232 $ 4,145,059 $ 0 $ 173 $ 4,145,232 Listed below are the investments and maturities in the City’s pension trust funds at September 30, 2011: Investment Maturities Investment Fair Less More Type Value * Than 1 1-5 6-10 Than 10 Total Common Stocks $ 8,316,929 $ 8,316,929 $ 0 $ 0 $ 0 $ 8,316,929 International Bonds 66,743 0 49,013 17,730 0 66,743 Corporate Bonds 1,394,445 0 746,740 575,407 72,298 1,394,445 Mortgage and Asset Backed Securities 1,208,663 0 0 0 1,208,663 1,208,663 Mutual Funds – Fixed Income 1,945,666 0 0 0 1,945,666 1,945,666 Government and GSE Bonds 2,886,372 0 1,704,317 675,283 506,772 2,886,372 Municipal Bonds 17,650 0 0 0 17,650 17,650 ICMA – Self Directed 228,430 228,430 0 0 0 228,430 Total $ 16,064,898 $ 8,545,359 $ 2,500,070 $ 1,268,420 $ 3,751,049 $ 16,064,898 * Fair value balances reported include interest receivable. 25 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 2 - Cash and Investments (Continued) The total pension investment balances of the City at September 30, 2011, are comprised of the following items: Moody’s Percent Investment Credit of Type Rating Total Corporate Bonds A1 2.34% Corporate Bonds A2 4.39% Corporate Bonds A2+ 0.78% Corporate Bonds A3 3.23% Corporate Bonds AA2 1.40% Corporate Bonds AA3 2.55% Corporate Bonds AAA 0.41% Corporate Bonds BAA1 1.37% Corporate Bonds BAA2 1.58% Corporate Bonds BAA3 0.32% Corporate Bonds BBA1 0.17% Government and GSE Bonds AAA 38.40% International Bonds A2 0.41% International Bonds AA2 0.24% International Bonds BAA2 0.24% Mortgage and Asset Asset Backed Securities AAA 16.07% Municipal Bonds AAA 0.23% Mutual Funds – Fixed Income NR 25.87% In addition to the above investments, the City’s pension trust funds had money market funds totaling $738,089 at September 30, 2011. Restricted cash and investments at September 30, 2011, in the enterprise funds follows: Renewal System Enterprise Customer and Debt Development Funds Deposits Replacement Service Charges Totals Utility Fund $ 532,769 $ 500,000 $ 1,165,674 $ 17,358 $ 2,215,801 Stormwater Fund $ 0 $ 0 $ 166,236 $ 0 $ 166,236 26 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (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 60% 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 45% of the total fixed income portfolio to “investment grade” or higher. Also, no more than 5% (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, 2011 (Continued) Note 3 - Special Assessments (Concluded) Following is a summary of the outstanding balances at September 30, 2011: Beach Section H Avenue Assessment Assessments Totals Special Assessment Receivable $ 139 $ 519 $ 658 (Current Portion) (139) (519) (658) Total Special Assessment Receivable - Noncurrent $ 0 $ 0 $ 0 Note 4 - Receivables Receivables, net of the allowance for doubtful accounts at September 30, 2011, consist of the following: Less Total Allowance Accounts Accounts for Doubtful Receivable Fund Receivable Accounts Net General $ 181,169 $ (180,733) $ 436 Non-Major Governmental Funds 2,106 0 2,106 Utility 660,433 (46,170) 614,263 Stormwater 33,606 (9,503) 24,103 Sanitation 78,493 (22,033) 56,460 Total $ 955,807 $ (258,439) $ 697,368 Included in accounts receivable are $286,987 of water and sewer revenues earned, but not billed as of September 30, 2011. 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, 2011: Notes Receivable $ 87,142 (Current Portion) (10,051) Total Note Receivable - Noncurrent $ 77,091 28 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 6 - Capital Assets Capital asset activity for the fiscal year ended September 30, 2011, 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 124,223 589,959 (23,246) 690,936 Total Capital Assets Not Being Depreciated 10,158,350 589,959 (23,246) 10,725,063 Capital Assets Being Depreciated: Buildings 4,210,688 64,450 (2,538) 4,272,600 Intangible Assets 0 375,535 (44,951) 330,584 Improvements Other Than Buildings 38,001,801 256,047 0 38,257,848 Machinery and Equipment 3,464,547 292,752 (644,917) 3,112,382 Total Capital Assets Being Depreciated 45,677,036 988,784 (692,406) 45,973,414 Less Accumulated Depreciation for: Buildings (1,434,858) (92,987) 2,060 (1,525,785) Intangible Assets 0 (298,935) 44,951 (253,984) Improvements Other Than Buildings (11,601,797) (633,377) 0 (12,235,174) Machinery and Equipment (2,207,206) (369,630) 553,847 (2,022,989) Total Accumulated Depreciation (15,243,861) (1,394,929) 600,858 (16,037,932) Total Capital Assets Being Depreciated, Net 30,433,175 (406,145) (91,548) 29,935,482 Governmental Activities Capital Assets, Net $ 40,591,525 $ 183,814 $ (114,794) $ 40,660,545 Business-type Activities Capital Assets Not Being Depreciated: Land $ 1,656,018 $ 0 $ 0 $ 1,656,018 Construction in Progress 4,905,765 4,407,554 (3,748,693) 5,564,626 Total Capital Assets Not Being Depreciated 6,561,783 4,407,554 (3,748,693) 7,220,644 Capital Assets Being Depreciated: Buildings 4,356,384 0 0 4,356,384 Intangible Assets 215,282 29,427 0 244,709 Improvements Other Than Buildings 59,676,185 5,024,655 0 64,700,840 Machinery and Equipment 1,880,835 96,207 (103,346) 1,873,696 Total Capital Assets Being Depreciated 66,128,686 5,150,289 (103,346) 71,175,629 Less Accumulated Depreciation for: Buildings (3,979,793) (142,040) 0 (4,121,833) Intangible Assets (95) (29,617) 0 (29,712) Improvements Other Than Buildings (32,090,961) (2,117,419) 0 (34,208,380) Machinery and Equipment (1,444,736) (105,321) 90,923 (1,459,134) Total Accumulated Depreciation (37,515,585) (2,394,397) 90,923 (39,819,059) Total Capital Assets Being Depreciated, Net 28,613,101 2,755,892 (12,423) 31,356,570 Business-type Activities Capital Assets, Net $ 35,174,884 $ 7,163,446 $ (3,761,116) $ 38,577,214 29 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 6 - Capital Assets (Concluded) Depreciation expense was charged to functions/programs as follows: Governmental Activities General Governmental $ 166,992 Public Safety 243,195 Road Maintenance and Construction 511,387 Parks and Recreation 208,513 Total Depreciation Expense - Governmental Activities $ 1,130,087 Business-type Activities Utility $ 1,917,155 Stormwater 430,762 Sanitation 26,425 Building Code Enforcement 1,742 Total Depreciation Expense - Business-type Activities $ 2,376,084 Note 7 - Long-term Debt Revenue Bonds and Loans payable are comprised of the following: Revenue Bonds Payable 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 $ 16,085,000 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 451,250 Utilities System Revenue Bonds, Series 2010A-1, Payable in Annual Installments of Principal and Semiannual Installments of Interest Through April 1, 2026, Bearing Coupon Rates of 3.59%, Secured Solely by a Pledge of and Lien on Net Water and Sewer System Revenues 892,560 Utilities System Revenue Refunding Bonds, Series 2010B, Payable in Annual Installments of Principal and Semiannual Installments of Interest Through April 1, 2026, Bearing Coupon Rates of 3.68%, Secured Solely by a Pledge of and Lien on Net Water and Sewer System Revenues 690,000 30 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 7 - Long-term Debt (Continued) Loans Payable Florida Department of Environmental Protection, Disbursements and Capitalized Interest for a $806,409 State of Florida Revolving Loan # DW160710, Issued to Finance the Construction Costs to Replace a Well at Water Treatment Plant No. 1 and a Transmission Main on Ocean Boulevard, Payable in Semiannual Installments of Principal and Interest Through November 15, 2030, 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 $ 754,600 Florida Department of Environmental Protection, Disbursements, Service Fee and Capitalized Interest for a Combined $10,513,076 State of Florida Revolving Loan # WW160700, Issued to Finance the Construction of Treatment and Transmission Facilities for the Buccaneer WWTP Phaseout Improvements and TMDL Compliance Program WWTP # 1, Payable in Semiannual Installments of Principal and Interest Through May 15, 2032, with Financing Rates of 3.14% and 2.88%, 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 2,229,012 Total Revenue Bonds and Loan Payable 21,102,422 (Unamortized Discount) (144,158) (Unamortized Refunding Loss) (1,260,309) Total Long-term Debt, Net $ 19,697,955 The annual requirements to amortize all revenue bonds and loan payable outstanding at September 30, 2011, are as follows: Governmental Activities Business-type Activities Year Ending Long-term Debt Long-term Debt September 30 Principal Interest Total Principal Interest Total 2012 $ 63,690 $ 7,101 $ 70,791 $ 1,002,775 $ 716,802 $ 1,719,577 2013 67,712 4,324 72,036 1,128,083 749,414 1,877,497 2014 69,198 1,457 70,655 1,169,669 710,115 1,879,784 2015 0 0 0 1,117,991 669,847 1,787,838 2016 0 0 0 1,157,903 628,982 1,786,885 Thereafter 0 0 0 15,325,401 3,553,296 18,878,697 Total $ 200,600 $ 12,882 $ 213,482 $ 20,901,822 $ 7,028,456 $27,930,278 Interest and amortization incurred during the year ended September 30, 2011, was $9,723 in the debt service fund and $835,531 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, 2011, and during the year then ended, the City was in compliance with those ratios. 31 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 7 - Long-term Debt (Continued) The following is a summary of the changes in long-term debt of the City for the year ended September 30, 2011: Balance Balance Due October 1, September 30, Within 2010 Additions Reductions 2011 One Year Governmental Activities Revenue Bonds Payable $ 262,225 $ 0 $ (61,621) $ 200,604 $ 63,690 Compensated Absences 671,418 484,042 (467,051) 688,409 452,400 OPEB Obligation 49,075 29,748 0 78,823 0 Total Governmental Activities - Long-term Liabilities $ 982,718 $ 513,790 $ (528,672) $ 967,836 $ 516,090 Business-type Activities State Revolving Fund Loans $ 497,127 $ 2,504,914 $ (18,429) $ 2,983,612 $ 12,942 Revenue Bonds Payable 17,907,642 1,582,560 (1,571,996) 17,918,206 971,270 Less Deferred Amounts: For Issuance Discounts (171,928) 0 27,770 (144,158) 0 Loss on Bond Refunding (1,327,503) (23,494) 90,688 (1,260,309) 0 Total Revenue Bonds Payable 16,408,211 1,559,066 (1,453,538) 16,513,739 971,270 Compensated Absences 270,931 178,291 (157,282) 291,940 127,100 OPEB Obligation 15,815 9,704 0 25,519 0 Total Business-type Activities - Long-term Liabilities $ 17,192,084 $ 4,251,975 $ (1,629,249) $ 19,814,810 $ 1,111,312 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, 2011, there were two series of Health Facility Revenue Bonds outstanding, with an aggregate principal amount payable of $46,490,000. Pledged Revenue The City has pledged certain revenues to repay certain bonds and notes outstanding as of September 30, 2011. 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, 2011: 32 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 7 - Long-term Debt (Concluded) Outstanding Principal Estimated Principal Pledged Revenue and Interest Percentage and Pledged Description Revenue Received Paid Pledged Interest Through 1999 – Utility System Refunding Utility Bonds Service Tax $ 515,680 $ 160,486 31.12% $ 480,227 2014 2004 – Utility System Refunding Utility Bonds Revenues $ 3,533,375 $ 1,450,819 41.06% $ 21,628,858 2025 2010A-1 – Utility System Revenue Utility Bonds Revenues $ 3,533,375 $ 9,524 0.27% $ 1,156,395 2026 2010B – Utility System Refunding Utility Bonds Revenues $ 3,533,375 $ 7,513 0.21% $ 898,279 2026 Florida Department of Environmental Protection, SRF Utility Loan Revenues $ 3,533,375 $ 26,248 0.74% $ 983,509 2031 Florida Department of Environmental Protection, SRF Utility Loan Revenues $ 3,533,375 $ 0 0.00% $ 2,996,492 2032 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, 2011, the date of the latest actuarial valuation: General Employees Police Retirees, Disabled Members and Beneficiaries Receiving Benefits 47 17 Terminated Plan Members Entitled to but Not Yet Receiving Benefits 11 5 Active Plan Members 83 26 Total 141 48 ■ 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. 33 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 8 - Defined Benefit Pension Plans (Continued) Plan Descriptions and Contribution Information (Concluded) ■ General Employees’ Retirement Plan (Concluded) ● Contributions The City is required to contribute at an actuarially determined rate (16.60% of valuation payroll for the year ended September 30, 2011). 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 26.49% of valuation payroll for the year ended September 30, 2011). 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, 2011, 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 5.0% to 23.0% per year including price inflation of 3.0% and a payroll growth assumption of 4.0%. The assumptions did not include postretirement benefit increases. 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 2009 $ 528,428 100% $ 0 2010 599,292 100% 0 2011 722,769 100% 0 Police 2009 $ 345,280 100% $ 0 2010 425,823 100% 0 2011 487,032 100% 0 34 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 8 - Defined Benefit Pension Plans (Concluded) Funded Status and Funding Progress The following is funded status information for each Plan as of September 30, 2011, 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 Total Actuarial Accrued Liability $ (16,053,066) Actuarial Value of Assets (Market Value was $10,448,470) 11,119,463 Unfunded Actuarial Accrued Liability $ (4,933,603) The General Employees’ Retirement Plan is 69.3% funded and the Unfunded Actuarial Accrued Liability represents 132.0% of covered payroll as of September 30, 2011. Police Retirement Plan Total Actuarial Accrued Liability $ (10,065,007) Actuarial Value of Assets (Market Value was $6,056,405) 6,305,176 Unfunded Actuarial Accrued Liability $ (3,759,831) The Police Retirement Plan is 62.6% funded and the Unfunded Actuarial Accrued Liability represents 234.1% of covered payroll as of September 30, 2011. 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 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 35 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 9 - Postemployment Benefits Other Than Pensions (Continued) 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 another 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 $58,516 for the current fiscal year. The annual required contribution is based on a rate of 1.0% of projected payroll of $5,828,329 or an average $532 per active participant. For the year ended September 30, 2011, the City estimated it implicitly subsidized $19,333 of health care costs for its retirees and covered dependents. This implied subsidy reduced the annual OPEB cost to a net expense of $39,461, after interest on the Net OPEB Obligation and adjustments to ARC. 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 $ 58,516 Interest on Net OPEB Obligation 2,596 Adjustment to Annual Required Contribution (2,318) Annual OPEB Cost (Expense) 58,794 Employer Contribution (19,333) Increase in Net OPEB Obligation 39,461 Net OPEB Obligation - Beginning of Year 64,890 Net OPEB Obligation - End of Year $ 104,351 The City reflected the $39,461 increase in net OPEB obligation at September 30, 2011, by recording an obligation of $29,757 for governmental activities and $9,704 for business-type activities in its government-wide statement of net assets. The utility fund reported a net OPEB obligation of $16,944, while the stormwater fund, sanitation fund, and building code enforcement fund reported $5,147, $0, and $3,428, 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, 2011, are presented on the following page. 36 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 9 - Postemployment Benefits Other Than Pensions (Concluded) Annual OPEB Cost and Net OPEB Obligation (Concluded) Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Obligation September 30, 2009 $ 49,133 51.0% $ 24,074 September 30, 2010 $ 55,501 26.5% $ 64,890 September 30, 2011 $ 58,794 32.9% $ 104,351 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 $5,828,329, 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%), 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, 2011, consist of the following: 37 CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011 (Continued) Note 10 - Interfund Accounts (Concluded) Due Due from Other to Other Funds Funds General $ 78,053 $ 0 Nonmajor Governmental 0 78,053 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, 2011: Transfers In Nonmajor Stormwater BCE General Governmental Total Transfers Out Fund Fund Fund Funds Transfers Nonmajor Governmental Funds $ 143,000 $ 0 $ 0 $ 866,500 $ 1,009,500 Utility Fund 0 0 1,128,488 0 1,128,488 Sanitation Fund 0 0 252,519 0 252,519 General Fund 0 60,000 0 72,000 132,000 Total Transfers $ 143,000 $ 60,000 $ 1,381,007 $ 938,500 $ 2,522,507 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, 2011, the City had outstanding commitments on contracts in progress as follows: Unexpended Project Type Contract Amounts Utility System Improvements $ 5,800,852 Stormwater System Improvements 58,941 General Government Improvements 507,572 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, 2011, the City incurred $947,622 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, 2011 (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 $2.7 million of additional improvements for sludge and odor control, which are currently under construction. 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. REQUIRED SUPPLEMENTARY INFORMATION 39 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF PENSION FUNDING PROGRESS SEPTEMBER 30, 2011 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 9/30/07 $ 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% 09/30/10 10,618,000 15,180,000 4,562,000 69.9% 3,838,000 118.9% 09/30/11 11,119,000 16,053,000 4,934,000 69.3% 3,738,000 132.0% 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 9/30/07* $ 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% 09/30/10* 6,164,000 9,449,000 3,285,000 65.2% 1,639,000 200.4% 09/30/11 6,305,000 10,065,000 3,760,000 62.6% 1,606,000 234.1% * 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, 2011 General Employees’ Retirement Plan Contribution Annual Rate as a Required Year Ended Percent of Contributed Percentage September 30 Payroll (ARC) Contributed 2007 13.99% $ 482,364 100% 2008 13.62% 457,005 100% 2009 14.03% 528,428 100% 2010 14.84% 599,292 100% 2011 16.6% 722,769 100% 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, 2011 Contribution Rate Employer 26.34% Plan Members 5.00% Actuarial Cost Method Entry Age Amortization Method Closed, Level % of Pay Method Equivalent Single Amortization Period 7.23 Years Asset Valuation Method 4-Year Smoothed Actuarial Assumptions Investment Rate of Return 8.0% Projected Salary Increases 5.5% - 14.0% Includes Price Inflation 3.0% Cost of Living Adjustments None Payroll Growth Assumption 4.0% 41 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF CONTRIBUTIONS FROM EMPLOYER AND OTHER CONTRIBUTING ENTITIES SEPTEMBER 30, 2011 (Concluded) Police Retirement Plan Contribution Annual Rate as a Required Year Ended Percent of Contributed September 30 Payroll (ARC) 2007 25.70% $ 390,494 2008 22.80% 309,841 2009 21.93% 345,280 2010 26.62% 425,823 2011 26.49% 487,032 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, 2011 Contribution Rates Employer 30.410% Plan Members 4.815% Actuarial Cost Method Entry Age Amortization Method Closed, Level % of Pay Method Equivalent Single Amortization Period 24.60 Years Asset Valuation Method 4-Year Smoothed Actuarial Assumptions Investment Rate of Return 8.0% Projected Salary Increases 5.0% - 23.0% Includes Price Inflation 3.0% Cost of Living Adjustments None Payroll Growth Assumption 3.35% 42 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS SEPTEMBER 30, 2011 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 AmountsActual Positive OriginalFinalAmounts *(Negative) Revenues Property Taxes3,971,035$ 3,971,035$ 3,968,233$ (2,802)$ Nonproperty Taxes1,242,320 1,242,320 1,221,025 (21,295) Permits, Fees and Special Assessments957,750 957,750 955,141 (2,609) Intergovernmental Revenues 1,544,233 1,559,233 1,526,451 (32,782) Fines and Forfeitures84,900 84,900 80,465 (4,435) Charges for Services707,054 707,054 697,376 (9,678) Interest Income120,000 120,000 142,769 22,769 Miscellaneous Revenues18,100 40,550 49,124 8,574 Interfund Charges1,441,700 1,441,700 1,438,862 (2,838) Total Revenues 10,087,092 10,124,542 10,079,446 (45,096) Expenditures Governing Body: City Commission 42,260 42,260 41,205 1,055 City Clerk 244,452 244,452 238,582 5,870 City Attorney 104,845 126,845 121,860 4,985 Total Governing Body 391,557 413,557 401,647 11,910 City Administration: City Manager 458,626 515,406 500,980 14,426 General Government 445,255 435,255 395,229 40,026 Human Resources202,389 206,839 205,296 1,543 Information Technology 423,756 448,321 405,509 42,812 Finance982,185 1,002,239 1,001,418 821 Total City Administration 2,512,211 2,608,060 2,508,432 99,628 Planning and Zoning 228,228 228,228 188,159 40,069 Public Safety: Police3,274,698 3,278,138 3,240,525 37,613 School Crossing Guards9,808 11,211 11,068 143 Animal Control 89,001 90,380 89,811 569 Fire968,101 970,435 967,704 2,731 Lifeguards212,649 215,232 199,937 15,295 Code Enforcement 68,211 68,286 66,160 2,126 Total Public Safety 4,622,468 4,633,682 4,575,205 58,477 BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 43 Variance With Final Budget - Budgeted AmountsActual Positive OriginalFinalAmounts *(Negative) Expenditures (Concluded) Public Works: Administration and Streets1,308,603$ 1,329,827$ 1,213,523$ 116,304$ Fleet Maintenance277,812 277,812 247,062 30,750 Total Public Works 1,586,415 1,607,639 1,460,585 147,054 Parks and Recreation: Recreation and Special Events390,524 392,160 383,871 8,289 Parks Maintenance750,421 773,505 707,948 65,557 Total Parks and Recreation 1,140,945 1,165,665 1,091,819 73,846 (Total Expenditures)(10,481,824) (10,656,831) (10,225,847) 430,984 (Deficiency) of Revenues (Under) Expenditures (394,732) (532,289) (146,401) 385,888 Other Financing Sources (Uses) Transfers in1,381,007 1,381,007 1,381,007 0 Transfers (out)(60,000) (132,000) (132,000) 0 Sale of General Fixed Assets10,000 10,000 17,310 7,310 Total Other Financing Sources (Uses)1,331,007 1,259,007 1,266,317 7,310 Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses 936,275 726,718 1,119,916 393,198 Fund Balances, Beginning of Year 4,520,339 4,520,339 4,520,339 0 Fund Balances, End of Year 5,456,614$ 5,247,057$ 5,640,255$ 393,198$ * Includes encumbrance balances carried forward to fiscal year 2012 totalling $138,087. FOR THE YEAR ENDED SEPTEMBER 30, 2011 (Concluded) CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - GENERAL FUND 44 45 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTE TO SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Budgets and Budgetary Accounting General governmental revenues and expenditures accounted for in budgetary funds are controlled by a budgetary accounting system in accordance with various legal requirements which govern the City’s operations. Budgets are monitored at varying levels of classification detail; however, expenditures cannot legally exceed total appropriations at the individual fund level. Encumbrances are recorded. Unexpended items which are unencumbered at year-end must be reappropriated in the subsequent year. Budgets are adopted for all governmental funds (general, special revenue, debt service and capital projects funds). The City Manager is authorized to transfer budgeted amounts within departments within any fund; however, any revisions that increase the total expenditures of any department or fund must be approved by the City Commission. All necessary supplemental appropriations are adopted by the City Commission and are included in the reported budgetary data. The budget presented in the accompanying required supplemental information is prepared in conformity with accounting principles generally accepted in the United States of America. SUPPLEMENTARY INFORMATION Convention TreeLocal OptionDevelopmentHalf-centCourt CostRadio ReplacementGas TaxTaxSales TaxTrainingCommunication Assets Equity in Pooled Cash and Investments3,509$ 75,012$ 50,225$ 167,095$ 131,635$ 11,915$ Receivables - Net2,106 0 0 0 0 0 Due from Other Governments0 76,000 108,531 106,000 452 1,436 Total Assets 5,615 151,012 158,756 273,095 132,087 13,351 Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities0 9,286 110,104 0 0 1,596 Due to Other Funds0 0 0 0 0 0 Deposits0 0 0 0 0 0 Deferred Revenue2,106 0 0 0 0 0 Total Liabilities 2,106 9,286 110,104 0 0 1,596 Fund Balances Restricted for: Public Safety0 0 0 0 132,087 11,755 Road Maintenance and Construction0 141,726 0 0 0 0 Parks and Recreation0 0 0 0 0 0 Debt Service Reserve0 0 0 0 0 0 Other Capital Projects0 0 0 273,095 0 0 Other Purposes0 0 48,652 0 0 0 Committed: Conservation and Resource Management3,509 0 0 0 0 0 Unassigned:0 0 0 0 0 0 Total Fund Balances 3,509 141,726 48,652 273,095 132,087 11,755 Total Liabilities and Fund Balances 5,615$ 151,012$ 158,756$ 273,095$ 132,087$ 13,351$ Special Revenue Funds CITY OF ATLANTIC BEACH, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010 2011 46 TotalsTotals Community SpecialNonmajor ContrabandDevelopmentPoliceEnergyRevenuesDebtCapitalGovernmental2010 ForfeitureBlock GrantsGrantsGrantsFundsServiceProjectsFundsTotals 22,556$ 0$ 0$ 0$ 461,947$ 72,585$ 2,215,475$ 2,750,007$ 2,418,541$ 0 0 0 0 2,106 0 0 2,106 0 0 44,898 36,811 783 374,911 0 0 374,911 320,493 22,556 44,898 36,811 783 838,964 72,585 2,215,475 3,127,024 2,739,034 0 0 4,439 0 125,425 0 14,148 139,573 17,648 0 44,898 32,372 783 78,053 0 0 78,053 101,822 2,963 0 0 0 2,963 0 0 2,963 29,932 0 109 0 783 2,998 0 0 2,998 4,520 2,963 45,007 36,811 1,566 209,439 0 14,148 223,587 153,922 19,593 0 0 0 163,435 0 0 163,435 183,627 0 0 0 0 141,726 0 0 141,726 138,943 0 0 0 0 0 0 4,801 4,801 50,839 0 0 0 0 0 72,585 0 72,585 74,209 0 0 0 0 273,095 0 2,196,526 2,469,621 2,133,505 0 0 0 0 48,652 0 0 48,652 0 0 0 0 0 3,509 0 0 3,509 3,989 0 (109) 0 (783) (892) 0 0 (892) 0 19,593 (109) 0 (783) 629,525 72,585 2,201,327 2,903,437 2,585,112 22,556$ 44,898$ 36,811$ 783$ 838,964$ 72,585$ 2,215,475$ 3,127,024$ 2,739,034$ 2011 Special Revenue Funds 47 Convention TreeLocal OptionDevelopmentHalf-centCourt Cost Radio ReplacementGas TaxTaxSales TaxTrainingCommunication Revenues Taxes0$ 452,798$ 66,582$ 635,446$ 0$ 0$ Other Intergovernmental Revenues0 0 129,901 0 0 0 Fines and Forfeitures0 0 0 0 6,418 18,602 Charges for Services0 0 0 0 0 0 Interest Income0 1,238 2,334 5,532 3,183 408 Miscellaneous Revenues0 0 0 0 202 0 Total Revenues 0 454,036 198,817 640,978 9,803 19,010 Expenditures Current: General Government0 0 0 0 0 0 Public Safety0 0 0 0 8,573 29,000 Road Maintenance and Construction0 235,012 0 0 0 0 ConservationandResource 2011 Special Revenue Funds FOR THE YEAR ENDED SEPTEMBER 30, 2011, CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010 48 Conservation and Resource Management480 0 0 0 0 0 Debt Service: Principal0 0 0 0 0 0 Interest and Other0 0 0 0 0 0 Capital Outlay0 4,741 251,004 19,500 0 0 (Total Expenditures)(480) (239,753) (251,004) (19,500) (8,573) (29,000) (Deficiency) Excess of Revenues (Under) Over Expenditures (480) 214,283 (52,187) 621,478 1,230 (9,990) Other Financing Sources (Uses) Transfers in 0 0 72,000 0 0 0 Transfers (out)0 (211,500) 0 (798,000) 0 0 Total Other Financing Sources (Uses)0 (211,500) 72,000 (798,000) 0 0 Net Change in Fund Balances (480) 2,783 19,813 (176,522) 1,230 (9,990) Fund Balances, Beginning of Year 3,989 138,943 28,839 449,617 130,857 21,745 Fund Balances, End of Year 3,509$ 141,726$ 48,652$ 273,095$ 132,087$ 11,755$ 48 Totals Totals CommunitySpecialNonmajor ContrabandDevelopmentPoliceEnergyRevenueDebtCapitalGovernmental2010 ForfeitureBlock GrantsGrantsGrantsFundsServiceProjectsFundsTotals 0$ 0$ 0$ 0$ 1,154,826$ 0$ 0$ 1,154,826$ 1,144,269$ 0 75,527 159,923 6,592 371,943 0 50,000 421,943 494,476 16,382 0 0 0 41,402 0 0 41,402 31,838 0 0 0 0 0 0 180 180 0 525 0 0 0 13,220 1,219 49,095 63,534 86,136 0 0 0 0 202 0 50,250 50,452 29,989 16,907 75,527 159,923 6,592 1,581,593 1,219 149,525 1,732,337 1,786,708 0 0 0 0 0 0 0 0 2,500 4,832 0 154,798 0 197,203 0 0 197,203 305,564 0 0 0 0 235,012 0 0 235,012 117,058 Special Revenue Funds 2011 49 0 0 0 0 480 0 0 480 14,822 0 0 0 0 0 61,620 0 61,620 59,299 0 0 0 0 0 9,723 0 9,723 12,261 0 75,636 28,632 7,375 386,888 452,086 838,974 334,706 (4,832) (75,636) (183,430) (7,375) (819,583) (71,343) (452,086) (1,343,012) (846,210) 12,075 (109) (23,507) (783) 762,010 (70,124) (302,561) 389,325 940,498 0 0 0 0 72,000 68,500 798,000 938,500 1,102,038 0 0 0 0 (1,009,500) 0 0 (1,009,500) (1,491,500) 0 0 0 0 (937,500) 68,500 798,000 (71,000) (389,462) 12,075 (109) (23,507) (783) (175,490) (1,624) 495,439 318,325 551,036 7,518 0 23,507 0 805,015 74,209 1,705,888 2,585,112 2,034,076 19,593$ (109)$ 0$ (783)$ 629,525$ 72,585$ 2,201,327$ 2,903,437$ 2,585,112$ 49 PoliceGeneral Officers'Employees' RetirementRetirement20112010 PlanPlanTotalsTotals Assets Cash and Cash Equivalents29,766$ 21,344$ 51,110$ 43,421$ Interest Receivable29,883 8,603 38,486 51,639 Investments at Fair Value6,133,830 10,630,671 16,764,501 16,607,936 Total Assets 6,193,479 10,660,618 16,854,097 16,702,996 Liabilities Accounts Payable and Accrued Liabilities304 34 338 2,650 Excess Premium Tax Liability120,454 0 120,454 120,454 DROP Plan Payable16,316 212,114 228,430 151,128 Total Liabilities 137,074 212,148 349,222 274,232 Total Net Assets Held in Trust for Pension Benefits6,056,405$ 10,448,470$ 16,504,875$ 16,428,764$ WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2010 Pension Trust Funds CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2011, 50 PoliceGeneral Officers'Employees' RetirementRetirement20112010 PlanPlanTotalsTotals Additions Contributions: Employer400,641$ 722,769$ 1,123,410$ 939,452$ Employees79,200 188,404 267,604 279,546 State of Florida86,391 0 86,391 88,117 Total Contributions566,232 911,173 1,477,405 1,307,115 Net (Decrease) Increase in Fair Value of Investments(69,342) (470,933) (540,275) 1,126,411 Interest and Dividends144,229 290,073 434,302 393,184 Total Additions 641,119 730,313 1,371,432 2,826,710 Deductions Refunds of Contributions6,853 5,661 12,514 13,587 Benefits512,386 583,857 1,096,243 953,293 Investment Expenses37,299 67,876 105,175 45,580 Administrative Expenses39,133 42,256 81,389 53,911 Total Deductions 595,671 699,650 1,295,321 1,066,371 Net Increase 45,448 30,663 76,111 1,760,339 Net Assets, Beginning of Year 6,010,957 10,417,807 16,428,764 14,668,425 Net Assets, End of Year 6,056,405$ 10,448,470$ 16,504,875$ 16,428,764$ WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2010 Pension Trust Funds CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011, 51 20072008200920102011 Revenues Operating Revenues: Water: Customer Charges2,531,304$ 2,514,161$ 2,738,565$ 3,188,599$ 3,382,973$ Miscellaneous Charges38,809 82,737 40,906 44,859 46,424 Total Water2,570,113 2,596,898 2,779,471 3,233,458 3,429,397 Sewer: Customer Charges3,453,293 3,691,220 4,112,335 4,644,090 5,085,318 Miscellaneous Charges76,654 35,336 3,769 7,528 20,006 Total Sewer3,529,947 3,726,556 4,116,104 4,651,618 5,105,324 Total Operating Revenues6,100,060 6,323,454 6,895,575 7,885,076 8,534,721 Nonoperating Revenues: Interest Income: Water117,793 53,378 7,963 153,782 108,762 Sewer82,266 26,901 6,886 5,361 (16,367) Total Nonoperating Revenues200,059 80,279 14,849 159,143 92,395 Total Revenues 6,300,119 6,403,733 6,910,424 8,044,219 8,627,116 Expenses Operating Expenses: Water1,159,651 1,019,907 1,087,283 1,120,172 1,292,948 Sewer1,891,016 2,275,505 2,111,097 2,367,631 2,569,748 Total Operating Expenses3,050,667 3,295,412 3,198,380 3,487,803 3,862,696 Administrative, Nondivisional and Other: Water553,519 628,122 634,541 554,538 545,971 Sewer1,072,794 1,071,893 1,142,214 681,893 685,074 Total Administrative, Nondivisional and Other1,626,313 1,700,015 1,776,755 1,236,431 1,231,045 (Total Expenses)(4,676,980) (4,995,427) (4,975,135) (4,724,234) (5,093,741) Nonoperating Income (Expense) Interest Expense(769,816) (752,384) (732,939) (710,196) (726,058) Loan Amortization(15,289) (14,730) (14,730) (14,730) (25,712) Total Nonoperating (Expense)(785,105) (767,114) (747,669) (724,926) (751,770) Net Income Before Depreciation and Operating Transfers 838,034$ 641,192$ 1,187,620$ 2,595,059$ 2,781,605$ FOR THE YEARS ENDED SEPTEMBER 30, 2007 THROUGH SEPTEMBER 30, 2011 HISTORICAL REVENUES AND EXPENSES CITY OF ATLANTIC BEACH, FLORIDA (UNAUDITED) 52 Annual Billings Navy (Federal Government)389,173$ Fleet Landing (Retirement Community)354,055 City of Atlantic Beach, Florida 146,815 Oaks of Atlantic Beach (Mobile Home Park)142,224 Lakes of Mayport (Apartment Complex)132,622 John Creek Estate (Mobile Home Park)125,406 Atlantic Arms (Apartment Complex)114,443 Sea Oats Plantation (Apartment Complex)113,539 Hanna Park (Regional Park)104,183 Mayport Trace (Apartment Complex)99,037 Total 1,721,497$ CITY OF ATLANTIC BEACH, FLORIDA MAJOR UTILITY CUSTOMERS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (UNAUDITED) 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 2 2 4 , 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 . 2 0 3.16% 20 0 3 2 3 , 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 . 0 9 -3.38% 20 0 4 2 4 , 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 . 9 3 -5.15% 20 0 5 2 2 , 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 . 7 5 -6.14% 20 0 6 2 3 , 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 . 7 3 -0.73% 20 0 7 2 3 , 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 . 6 9 -1.47% 20 0 8 2 3 , 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 . 5 0 -7.06% 20 0 9 2 3 , 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 . 3 0 -8.00% 20 1 0 2 2 , 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 . 3 2 0.87% 20 1 1 2 1 , 2 0 5 - 7 . 4 % 5 , 1 7 9 2 , 3 5 3 7 , 5 3 2 1 , 9 0 3 2 , 1 3 4 4 , 0 3 7 2 . 4 1 3.88% At l a n t i c B e a c h D i 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 ) Si n g l e U n i t M u 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 2 T H R O U G H S E P T E M B E R 3 0 , 2 0 1 1 (U N A U D I T E D ) 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 20 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 % 20 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 % 20 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 % 20 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 % 20 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 % 20 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 % 20 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 % 20 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 % 20 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 % 20 1 1 1 2 , 6 5 5 - 8 . 2 % 5 , 0 4 1 1 , 7 9 1 6 , 8 3 2 1 . 4 7 6 2 - 2 . 8 2 % (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 2 T H R O U G H S E P T E M B E R 3 0 , 2 0 1 1 55 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 20 0 2 1 0 , 3 9 6 0 . 6 0 % 2 , 4 0 9 2 , 4 8 9 4 , 8 9 8 0 . 9 0 5 0 3 . 4 3 % 20 0 3 1 0 , 0 2 3 - 3 . 6 0 % 2 , 3 9 8 2 , 6 6 8 5 , 0 6 6 0 . 8 4 3 0 - 6 . 8 5 % 20 0 4 1 0 , 0 9 6 0 . 7 0 % 2 , 5 0 4 2 , 4 9 7 5 , 0 0 1 0 . 8 2 4 0 - 2 . 2 5 % 20 0 5 8 , 8 5 0 - 1 2 . 3 0 % 2 , 5 0 3 2 , 1 4 5 4 , 6 4 8 0 . 7 4 6 0 - 9 . 4 7 % 20 0 6 9 , 1 2 9 3 . 2 0 % 2 , 3 5 6 2 , 2 6 8 4 , 6 2 4 0 . 6 8 2 0 - 8 . 5 8 % 20 0 7 9 , 1 3 6 0 . 1 0 % 2 , 2 6 7 2 , 2 6 8 4 , 5 3 5 0 . 7 1 2 0 4 . 4 0 % 20 0 8 9 , 3 8 1 2 . 7 0 % 2 , 2 6 3 2 , 4 8 2 4 , 7 4 5 0 . 7 0 4 0 - 1 . 1 2 % 20 0 9 9 , 2 3 9 - 1 . 5 0 % 2 , 2 5 8 2 , 3 5 5 4 , 6 1 3 0 . 6 5 1 0 - 7 . 5 3 % 20 1 0 9 , 1 2 9 - 1 . 2 0 % 2 , 2 4 3 2 , 3 2 8 4 , 5 7 1 0 . 5 7 2 0 - 1 2 . 1 4 % 20 1 1 8 , 5 5 0 - 6 . 3 0 % 2 , 2 8 2 2 , 3 3 4 4 , 6 1 6 0 . 6 1 6 5 7 . 7 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 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 2 T H R O U G H S E P T E M B E R 3 0 , 2 0 1 1 56 YearElectricityCommunicationsGasFuel OilTotal 2007363,285$ 602,177$ 22,413$ 35$ 987,910$ 2008392,842 612,671 28,758 33 1,034,304 2009430,774 600,716 25,815 18 1,057,323 2010486,475 624,254 26,158 34 1,136,921 2011487,585 604,567 28,062 33 1,120,247 YearTotal 20073,868,172$ 20084,269,435 20094,089,288 20104,146,432 20113,968,233 Ad Valorem Tax Collections (Last Five Years) CITY OF ATLANTIC BEACH, FLORIDA OTHER BOND COVENANT DISCLOSURES FOR THE YEARS ENDED SEPTEMBER 30, 2007 THROUGH SEPTEMBER 30, 2011 (UNAUDITED) Utility Service Tax Collections (Last Five Years) 57 20112010 Gross Revenues Utility8,516,942$ 7,870,491$ Connection Charges17,779 14,585 Interest92,395 159,143 Transfer from (to) Rate Stabilization Fund0 0 (a) Total Gross Revenues 8,627,116 8,044,219 Operating Expenses Personal Services1,793,823 1,746,944 Contractual Services900,056 643,414 Supplies316,902 292,889 Repairs and Maintenance157,409 145,524 Utilities694,506 659,030 Intergovernmental Charges972,652 955,846 Loss on Disposal of Fixed Assets1,283 0 Other Expenses257,110 280,587 (Total Operating Expenses)(5,093,741) (4,724,234) Total Net Revenues in Accordance with Bond Resolutions 3,533,375 3,319,985 Total Debt Service 1,543,339$ 1,517,533$ Debt Service Coverage Ratio 228.94%218.78% Required Debt Service Coverage Ratio 100.00%100.00% (a) Rate Stabilization Fund: Balance, Beginning of Year400,000$ 400,000$ Transfer/Redeposit to Revenue Fund0 0 Balance, End of Year400,000$ 400,000$ 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, 2011 AND SEPTEMBER 30, 2010 (UNAUDITED) 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 CF D A G r a n t / C o n t r a c t C o n t r a c t P r o g r a m F u n d s Nu m b e r N u m b e r P e r i o d A w a r d s E x p e n d i t u r e s * R e c e i v e d Fe d e r a l A w a r d s 14 . 2 1 8 B 0 8 U C 1 2 0 0 - 1 7 / 5 6 2 9 - 5 1 1 0 / 0 1 / 2 0 1 0 - 9 / 3 0 / 2 0 1 1 1 , 4 6 8 $ 1 , 4 6 8 $ 1,468$ 14 . 2 1 8 B 0 9 U C 1 2 0 0 - 1 7 / 5 6 2 9 - 5 1 1 0 / 0 1 / 2 0 1 0 - 9 / 3 0 / 2 0 1 1 1 7 , 4 7 0 1 7 , 4 7 0 17,470 14 . 2 1 8 B 1 0 U C 1 2 0 0 - 1 7 / 5 6 2 9 - 5 1 1 0 / 0 1 / 2 0 1 0 - 9 / 3 0 / 2 0 1 1 1 1 2 , 2 2 5 5 6 , 5 8 9 11,800 13 1 , 1 6 3 7 5 , 5 2 7 30,738 14 . 2 2 8 5 6 2 9 - 4 8 0 6 / 1 4 / 2 0 1 0 - 0 6 / 1 4 / 2 0 1 2 1 7 8 , 0 0 7 1 0 9 0 30 9 , 1 7 0 7 5 , 6 3 6 30,738 97 . 0 3 9 1 0 H M - 8 8 - 0 4 - 2 6 - 0 2 - 0 1 7 0 2 / 0 4 / 2 0 1 0 - 0 2 / 0 4 / 2 0 1 3 2 8 2 , 0 0 0 3 3 , 2 1 0 282,000 97 . 0 6 7 5 6 2 9 - 5 2 0 2 / 1 6 / 2 0 1 1 - 0 5 / 3 1 / 2 0 1 1 3 0 , 2 8 1 3 0 , 2 8 1 0 31 2 , 2 8 1 6 3 , 4 9 1 282,000 16 . 6 0 7 2 0 1 0 - B U B X - 1 0 0 5 3 1 2 7 0 4 / 0 1 / 2 0 1 0 - 0 9 / 3 0 / 2 0 1 2 2 , 2 0 5 2 , 0 3 8 0 AR R A - 1 6 . 8 0 4 2 0 0 9 - S B - B 9 - 1 3 3 5 0 3 / 0 1 / 2 0 0 9 - 0 2 / 2 8 / 2 0 1 3 3 3 , 5 3 8 2 3 , 5 0 7 0 16 . 7 3 8 2 0 1 0 - J A G C - D U V A - 5 - 4 X - 0 1 9 1 0 / 0 1 / 2 0 0 9 - 0 9 / 3 0 / 2 0 1 0 0 2 , 0 0 0 0 16 . 7 3 8 2 0 1 1 - J A G C - D U V A - 1 - B 2 - 0 6 8 1 0 / 0 1 / 2 0 1 0 - 0 9 / 3 0 / 2 0 1 1 4 2 , 0 0 0 4 2 , 0 0 0 29,690 16 . 7 3 8 2 0 1 1 - J A G C - D U V A - 2 - B 2 - 1 3 5 1 0 / 0 1 / 2 0 1 0 - 0 9 / 3 0 / 2 0 1 1 8 0 , 4 1 6 8 0 , 4 1 6 55,915 16 . 7 3 8 2 0 1 1 - J A G D - D U V A - 2 - B 3 - 0 0 6 0 2 / 0 1 / 2 0 1 1 - 0 6 / 3 0 / 2 0 1 1 5 , 1 2 5 5 , 1 2 5 5,125 12 7 , 5 4 1 1 2 9 , 5 4 1 90,730 AR R A - 1 6 . 8 0 3 2 0 0 9 - A R R C - D U V A - 2 - W 7 - 3 1 9 1 0 / 0 1 / 2 0 1 0 - 0 4 / 3 0 / 2 0 1 1 2 6 3 , 5 5 8 3 2 , 3 8 1 32,381 42 4 , 6 3 7 1 8 5 , 4 2 9 123,111 42 6 , 8 4 2 1 8 7 , 4 6 7 123,111 AR R A - 8 1 . 0 4 1 1 7 4 9 5 / A R S 0 2 8 0 1 / 3 1 / 2 0 1 1 - 0 4 / 3 0 / 2 0 1 2 2 3 4 , 7 8 9 7 , 3 7 5 6,592 AR R A - 8 1 . 1 2 8 5 6 2 9 - 5 0 0 7 / 2 7 / 2 0 1 0 - 0 7 / 2 6 / 2 0 1 2 1 0 3 , 4 0 0 0 0 33 8 , 1 8 9 7 , 3 7 5 6,592 Ed w a r d B y r n e M e m o r i a l J u s t i c e A s s i s t a n c e G r a n t P r o g r a m Pa s s e d T h r o u g h F l o r i d a D e p a r t m e n t o f A g r i c u l t u r e a n d C o n s u m e r S e r v i c e s : U. S . D e p a r t m e n t o f E n e r g y In d i r e c t P r o g r a m s : Su b t o t a l J A G C l u s t e r E x p e n d i t u r e s : Su b t o t a l E x p e n d i t u r e s - 1 6 . 7 3 8 Pa s s e d T h r o u g h C i t y o f J a c k s o n v i l l e , F l o r i d a : Ed w a r d B y r n e M e m o r i a l J u s t i c e A s s i s t a n c e G r a n t P r o g r a m Pa s s e d T h r o u g h C i t y o f J a c k s o n v i l l e , F l o r i d a : U r b a n A r e a S e c u r i t y I n i t i a t i v e Ed w a r d B y r n e M e m o r i a l J u s t i c e A s s i s t a n c e G r a n t P r o g r a m Re c o v e r y A c t - E d w a r d B y r n e M e m o r i a l J u s t i c e A s s i s t a n c e G r a n t P r o g r a m Ed w a r d B y r n e M e m o r i a l J u s t i c e A s s i s t a n c e G r a n t P r o g r a m St a t e E n e r g y P r o g r a m To t a l U . S . D e p a r t m e n t o f J u s t i c e Ha z z a r d M i t i g a t i o n G r a n t P r o g r a m FL E n e r g y E f f i c i e n c y a n d C o n s e r v a t i o n B l o c k G r a n t To t a l U . S . D e p a r t m e n t o f E n e r g y Di r e c t P r o g r a m s : To t a l U . S . D e p a r t m e n t o f H o m e l a n d S e c u r i t y Su b t o t a l E x p e n d i t u r e s - 1 4 . 2 1 8 Ed w a r d B y r n e M e m o r i a l J u s t i c e A s s i s t a n c e G r a n t P r o g r a m In d i r e c t P r o g r a m s : Pa s s e d T h r o u g h F l o r i d a D e p a r t m e n t o f L a w E n f o r c e m e n t : JA G C l u s t e r : Bu l l e t p r o o f V e s t P a r t n e r s h i p P r o g r a m Pa s s e d T h r o u g h F l o r i d a D i v i s i o n o f E m e r g e n c y M a n a g e m e n t : U. S . D e p a r t m e n t o f J u s t i c e Co m m u n i t y D e v e l o p m e n t B l o c k G r a n t ( C D B G ) In d i r e c t P r o g r a m s : In d i r e c t P r o g r a m s : Pa s s e d T h r o u g h C i t y o f J a c k s o n v i l l e , F l o r i d a : 20 0 8 D i s a s t e r R e c o v e r y P r o g r a m ( C D B G ) U. S D e p a r t m e n t o f H o m e l a n d S e c u r i t y Co m m u n i t y D e v e l o p m e n t B l o c k G r a n t ( C D B G ) To t a l U . S . D e p a r t m e n t o f H o u s i n g a n d U r b a n D e v e l o p m e n t 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 SC H E D U L E O F E X P E N D I T U R E S O F F E D E R A L A W A R 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 1 Co m m u n i t y D e v e l o p m e n t B l o c k G r a n t ( C D B G ) AN D S T A T E F I N A N C I A L A S S I S T A N C E P R O J E C T S Gr a n t o r / P a s s - T h r o u g h E n t i t y U. S D e p a r t m e n t o f H o u s i n g a n d U r b a n D e v e l o p m e n t 59 (C o n c l u d e d ) CF D A G r a n t / C o n t r a c t C o n t r a c t P r o g r a m F u n d s Nu m b e r N u m b e r P e r i o d A w a r d s E x p e n d i t u r e s * R e c e i v e d Fe d e r a l A w a r d s AR R A - 6 6 . 4 6 8 D W 1 6 0 7 1 0 N / A 7 9 6 , 1 0 9 $ 2 5 5 , 3 2 3 $ 274,165$ To t a l E x p e n d i t u r e s o f F e d e r a l A w a r d s 2, 1 8 2 , 5 9 1 $ 5 8 9 , 2 9 2 $ 716,606$ St a t e F i n a n c i a l A s s i s t a n c e 37 . 0 7 7 W W 1 6 0 7 0 0 N / A 1 0 , 3 6 8 , 5 7 6 $ 2 , 9 7 2 , 1 1 8 $ 2,219,301$ 37 . 0 3 9 2 0 0 9 - 1 2 - 2 6 6 6 4 0 8 / 3 0 / 2 0 1 0 - 0 9 / 3 0 / 2 0 1 4 1 , 0 0 0 , 0 0 0 1 , 0 0 0 , 0 0 0 1,000,000 To t a l E x p e n d i t u r e s o f S t a t e F i n a n c i a l A s s i s t a n c e 11 , 3 6 8 , 5 7 6 $ 3 , 9 7 2 , 1 1 8 $ 3,219,301$ To t a l E x p e n d i t u r e s o f F e d e r a l A w a r d s a n d S t a t e F i n a n c i a l A s s i s t a n c e 13 , 5 5 1 , 1 6 7 $ 4 , 5 6 1 , 4 1 0 $ 3,935,907$ * I n c l u d e s g r a n t e x p e n d i t u r e s o n l y ( m a t c h i n g f u n d s n o t r e p o r t e d ) . St a t e w i d e S u r f a c e W a t e r R e s t o r a t i o n a n d W a s t e w a t e r P r o j e c t s St a t e w i d e S u r f a c e W a t e r R e s t o r a t i o n a n d W a s t e w a t e r P r o j e c t s In d i r e c t P r o g r a m s : Ca p i t a l i z a t i o n G r a n t s f o r D r i n k i n g Wa t e r S t a t e R e v o l v i n g F u n d F l o r i d a D e p a r t m e n t o f E n v i r o n m e n t a l P r o t e c t i o n : Di r e c t P r o g r a m s : Pa s s e d T h r o u g h S t . J o h n s R i v e r W a t e r M a n a g e m e n t D i s t r i c t Gr a n t o r / P a s s - T h r o u g h E n t i t y Pa s s e d T h r o u g h F l o r i d a D e p a r t m e n t o f E n v i r o n m e n t a l P r o t e c t i o n : 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 SC H E D U L E O F E X P E N D I T U R E S O F F E D E R A L A W A R D S AN D S T A T E F I N A N C I A L A S S I S T A N C E P R O J E C T 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 1 In d i r e c t P r o g r a m s : U . S . E n v i r o n m e n t a l P r o t e c t i o n A g e n c y 60 61 CITY OF ATLANTIC BEACH, FLORIDA NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards and state financial assistance projects includes the federal and state awards activity of the City of Atlantic Beach, Florida, under programs of the federal government and projects of the state government for the year ended September 30, 2011. The information is presented in accordance with the requirement of OMB Circular A-133, Audits of State and Local Governments and Non-Profit Organizations and the State of Florida Single Audit Act. Because the schedule presents only a selected portion of the operations of the City, it is not intended and does not present the financial position, changes in net assets or cash flows of the City. Expenditures reported on the Schedule are presented on the accrual basis of accounting. 62 CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS FOR THE YEAR ENDED SEPTEMBER 30, 2011 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 and State Projects IV. Material Weaknesses and/or Significant Deficiencies in Internal Control Over Major Federal Programs and State Financial Assistance Projects Audit disclosed no material weaknesses and/or significant deficiencies in internal control over major programs or projects 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 and State Financial Assistance Projects Unqualified Opinion VI. Audit Findings Relative to Section .510(a) of OMB Circular A-133 and the State of Florida Single Audit Act The audit disclosed no findings required to be reported under Section .510(a) of OMB Circular A-133 or the State of Florida Single Audit Act. VII. The Program and Projects Tested as a Major Program Included the Following: Federal Program CFDA No. Capitalization Grants for Drinking Water State Revolving Fund ARRA-66.468 Edward Byrne Memorial Justice Assistance Grant Program 16.738 Edward Byrne Memorial Justice Assistance Grant Program ARRA-16.803 Edward Byrne Memorial Justice Assistance Grant Program ARRA-16.804 State Projects CSFA No. Wastewater Treatment Facility Construction 37.077 Statewide Surface Water Restoration and Wastewater Projects 37.039 63 CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS FOR THE YEAR ENDED SEPTEMBER 30, 2011 (Concluded) 1. Summary of Audit Results (Concluded) Federal Awards and State Projects (Concluded) VIII. Dollar Threshold Used to Distinguish Between Type A and Type B Programs $300,000 IX. Auditee Qualification as Low-Risk Auditee The Auditee does not qualify as low-risk under OMB Circular A-133. 2. Findings Related to the Financial Statements Required to be Reported Under Generally Accepted Government Auditing Standards (GAGAS) The audit disclosed no findings which are required to be reported under GAGAS. 3. Findings and Questioned Costs for Major Federal Programs and State Assistance Projects Required to be Reported Under Section .510(a) of OMB Circular A-133 and the State of Florida Single Audit Act The audit disclosed no findings which are required to be reported under Section .510(a) or the State Single Audit Act. Source of City Funds Fiscal Year 2010-2011 Grant No. 5629-51 Amount of Award (Per City of Jacksonville Budget Ordinance)131,163$ (A) Actual Funds Received from City of Jacksonville in Last Audit Period0 Actual Funds Received this Period (30,738) Amount Earned but Not Received this Period(44,789) Unspent Award Amount 55,636$ Expenditure of City Funds City FY 2010-2011 Grant #5629-51 - $131,163 (A) Actual 10/01/10Remaining Project / Federal Grant NumberBudgeted 09/30/11 Balance Donner Park Improvements # 003914 / B08UC1200-171,468$ 1,468$ 0$ Donner Park Improvements # 004415 / B09UC1200-1717,47017,4700 Donner Park Improvements # 004415 / B10UC1200-17112,22556,58955,636 Total 131,163$ 75,527$ 55,636$ Ord. # 2009-634-E of carryforward funds, respectively) was included in the 2010-11 grant agreement, (A) $18,938 in unspent funds from prior fiscal years ($1,468 per Ord. # 2008-643-E and $17,470 per in addition to the original budgeted appropriation of $112,225, per Ord. # 2010-612-E. CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF SOURCE AND EXPENDITURE OF THE CITY GRANT FUNDS PER ORDINANCE CODE CHAPTER 118.301(e) FOR FISCAL YEAR 2010-2011 Subgrant Recipient Per Interlocal Agreement City of Jacksonville Public Service Grants Received as a 64 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL 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 and the requirement described in the Department of Financial Services, State Compliance Supplement, that are applicable to each of its major federal programs and state projects for the year ended September 30, 2011. The City’s major federal programs and state projects 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 and state projects is the responsibility of the City’s management. Our responsibility is to express an opinion on the 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, and Chapter 10.550, Rules of the Auditor General. Those standards, OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General, 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 or state project 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 the 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 and state projects for the year ended September 30, 2011. 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 and state projects. 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 or state project 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, 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. 65 Honorable Mayor, City Commissioners and City Manager Atlantic Beach, Florida REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL (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 or state project 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 or state project 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. 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 24, 2012 Gainesville, Florida 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, 2011, which collectively comprise the City’s basic financial statements and have issued our report thereon dated February 24, 2012. 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. 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. 67 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) 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 24, 2012 Gainesville, Florida 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, 2011, and have issued our report thereon dated February 24, 2012. 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 24, 2012, 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. 69 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, 2011, 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, 2011. 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 24, 2012 Gainesville, Florida 70