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Amended Agenda Item 2ADRAFT FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA ! SEPTEMBER 30, 2015 AMENDED ITEM 2A JUNE 27, 2016 DRAFT FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30,2015 TABLE OF CONTENTS Independent Auditors' Report. ..................................................................................................................... i-iii Management's Discussion and Analysis .................................................................................................... iv-xi Basic Financial Statements Government-wide Financial Statements Staten1ent of Net Position .......................................................................................................................... 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 Position ....................................................................................................................... 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 Staten1ent of Activities ............................................................................................................................ 6 Statement ofNet Position-Proprietary Funds ...................................................................................... 7-8 Statement of Revenues, Expenses, and Changes in Net Position- Proprietary Funds .............................................................................................................................. 9-10 Statement of Cash Flows -Proprietary Funds ................................................................................... 11-13 Statement of Fiduciary Net Position ........................................................................................................ 14 Statement of Changes in Fiduciary Net Position ..................................................................................... 15 Notes to Financial Statements ........................................................................................................ 16-44 Required Supplementary Information General Employees' Pension Plan: Schedule of Changes in Net Pension Liability and Related Ratios ....................................................... .45 Schedule of Contributions ........................................................................................................................ 46 Police Officers' Pension Plan: Schedule of Changes in Net Pension Liability and Related Ratios ....................................................... .47 Schedule of Contributions ........................................................................................................................ 48 Other Postemployment Benefits Plan-Schedule of Funding Progress ...................................................... .49 Schedule of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual-General Fund .................................................................................................... 50-51 Note to Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -General Fund ........................................................................................ 52 DRAFT Supplementary Information FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF ATLANTIC BEACH, FLORIDA SEPTEMBER 30, 2015 TABLE OF CONTENTS (Concluded) Combining Balance Sheet-Nonmajor Governmental Funds ................................................................ 53-54 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -Non major Governmental Funds ......................................................................... 55-56 Combining Statement of Fiduciary Net Position .......................................................................................... 57 Combining Statement of Changes in Fiduciary Net Position ................................. , .................................... 58 Historical Revenues and Expenses ............................................................................................................... 59 Schedules ofNet Revenues in Accordance with Bond Resolutions-Enterprise Funds (Water and Sewer) ................................................................................ 60 Other Bond Covenant Disclosures ................................................................................................................ 61 Other Statistical Information Major Utility Customers ................................................................................................................................ 62 Additional Elements of Report Prepared in Accordance With Government Auditing Standards, Issued by the Comptroller General of the United States; the Rules of tlte Auditor General of the State of Florida; and Other Contract Requirements Schedule of Source and Expenditure of the City Grant Funds .............................................................. 63 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Perfonned in Accordance with Government Auditing Standards .......................................................................................... 64-65 Independent Accountants' Report on Compliance with Section 218.415, Florida Statutes ...................................................................................................... 66 Management Letter ............................................................................................................................ 67-68 DRAFT INDEPENDENT AUDITORS' REPORT DRAFT GPurvis ray~ ____________________ Co_m_· Qany INDEPENDENT AUDITORS' REPORT Honorable Mayor, City Commissioners, and City Manager Atlantic Beach, Florida Report on the Financial Statements 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, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auqitor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Certified Public Accountants P.O. Box 141270 • 222 N.E. 1st Street • Gainesville, Florida 32614-1270 • (352) 378-2461 • FAX (352) 378-2505 L<~urel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 ~ FAX (352) 732-0542 443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (B50) 224-1762 5001 Lakewood Ranch Blvd. N., Suite 101 • Sarasota, Florida 34240 • (941) 907-0350 • FAX (941) 907-0309 Mr:MBFRS Of AMf:RICAI\ AND r-L0,11DA INSTITUTES Of CERTIFIW PUBLIC ACCOUNTANTS M[MBER OF AM::RICAN 11\STITL;TF Or CERTIFifO PUBLIC ACCOUI\TANTS PRIVATF. COMPANIES Ai'o:O U.r::. PRJ\CTICE SECTI()I\$ DRAFT Honorable Mayor, City Commissioners, and City Manager Atlantic Beach, Florida INDEPENDENT AUDITORS' REPORT (Continued) 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 infonnation of the City, as of September 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 15 to the financial statements, during the current year, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. These statements require employers pa:tiicipating in defined benefit pension plans to report the net pension liability and other pension related deferred inflows and outflows related to these plans. In connection with the implementation of these statements, the City decreased its beginning net position in the governmental activities by $4,529,366 and decreased beginning net position in the business-type activities by $1,057,204. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Iriformation Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other required information on pages iv-xi and 45-52 be presented to supplement the basic financial statements. Such infmmation, although not a part of the basic financial statements, is required by GASB, 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 infonnation 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 infonnation because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information 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 53-61, the other statistical information section on page 62, and the schedule of expenditures of grant funds per the City of Jacksonville's Ordinance Code Chapter 118.202(e) are presented for purposes of additional analysis and are not a required part of the basic financial statements. ii DRAFT Honorable Mayor, City Commissioners, and City Manager Atlantic Beach, Florida INDEPENDENT AUDITORS' REPORT (Concluded) Other Matters (Concluded) Other Information (Concluded) The supplementary information and schedule of expenditures of grant funds per the City of Jacksonville's Ordinance Code Chapter 118.202(e) are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and ce1tain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information and schedule of expenditures of grant funds per the City of Jacksonville's Ordinance Code Chapter 118.202( e) are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The other statistical information section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have issued our report dated , on our consideration of the City's internal control over financial reporting and on our tests of its compliance with ce1tain provisions of laws, regulations, contracts, and 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 intemal control over financial reporting or on compliance. That report is an integral part of an audit perfonned in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Repol't on Summarized Comparative Information We have previously audited the City's 2014 financial statements, and our report dated April 20, 2015, expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2014, is consistent, in all material respects, with the audited financial statements from which it was derived. Gainesville, Florida 11l DRAFT CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 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, 2015. 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 repmt 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 Position and the Statement of Activities. The Statement of Net Position presents information on all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between reported as net position. Net position is reported as one of three categories: invested in capital assets -net of related debt; restricted; or unrestricted. Restricted net position is further classified as either net position restricted by enabling legislation or net position that is otherwise restricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position ofthe City is improving or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position 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 "govemmental 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, 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. • Governmental Funds Govemmental funds are used to account for essentially the same functions reported as govemmental activities in the govemment-wide financial statements. However, unlike the government-wide financial statements, govemmental fund financial statements focus on near-tem1 inflows and outflows of available iv DRAFT CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (Continued) Fund Financial Statements (Concluded) • Governmental Funds (Concluded) 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 Position and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities to facilitate this comparison between governmental funds and governmental activities. The City maintains twelve individual governmental funds. Information is presented separately in the Governmental Funds Balance Sheet and in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund, which is considered to be a major fund, Data from the other eleven governmental funds are combined into a single, aggregated presentation called Nonmajor Governmental Funds. Fund data for these nonmajor governmental funds is provided in the form of combining statements. These combining statements can be found on pages 53 -58 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 ofRevenues, Expenditures, and Changes in Fund Balance Budget and Actual -General Fund budgetary comparison schedule and notes on pages 50 -52 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 infotmation 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 repmt. • Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the City (i.e., pension beneficiaries). Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 14 -15 of this report. Notes to Financial Statements The notes to financial statements provide additional infmmation 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 ofthis report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information conceming 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 45 of this report. v DRAFT CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (Continued) Govemment-wide Financial Analysis Net position may serve over time as a useful indicator of a City's financial position. As can be seen in the summarized table below, the City's assets exceeded liabilities by $71,375,000 at the close of the fiscal year ended September 30, 2015. During the year, the City's net financial position was negatively impacted by the implementation of two GASB reporting changes. The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions; and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. With the new reporting changes, the City is allocated its proportionate share ofthe General Employee Pension Plan and the Police Pension Plan's net pension assets, deferred outflows of resources, deferred inflows of resources, and pension expenses. A restatement to record the effects of the new reporting guidance decreased beginning net position by $4,529,000 in governmental activities and $1,057,000 in business type activities. By far the largest portion of the City's net position, $58,936,000 (82%), reflects its investment in capital assets (i.e., land, buildings, equipment, and infi·astructure), 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 position, $4,765,000 (7%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $7,673,000 (11 %), is used to meet the government's ongoing obligations to citizens and creditors. Current and other assets Capital assets Total Assets Deferred Outflow Long-term liabilities outstanding Other liabilities Total Liabilities Deferred Inflow Net Position: Invested in capital assets, net of related debt Restricted Unrestricted Total Net Position City of Atlantic Beach's Net Position September 30, 2015 and 2014 (In Thousands) Governmental Business-type Activities Activities 2015 2014 2015 2014 $11,965 $11,345 $9,466 $8,362 39,542 39,215 39,607 41,190 51,507 50,560 49,073 49,552 2,993 0 2,083 1,187 8,374 503 22,235 21,504 707 638 2,924 2,774 9,081 1,141 25,159 24,278 40 0 0 0 39,542 39,214 19,394 20,758 3,883 4,004 883 798 1,954 6,201 5,720 4,905 $45,379 $49,419 $25,997 $26,461 vi Totals 2015 2014 $21,431 $19,707 79,149 80,405 l 00,580 100,112 5,076 I, 187 30,609 22,007 3,631 3,412 34,240 25,419 40 0 58,936 59,972 4,766 4,802 7,674 11,106 $71,376 $75,880 DRAFT CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (Continued) As illustrated in the schedule on page vi, the City was able to repott positive balances in all categories of net position, both for the government as a whole, as well as for its separate govemmental and business-type activities. The same situation held true for the prior fiscal year. City of Atlantic Beach's Change in Net Position For the Years Ended September 30,2015 and 2014 (In Thousands) Governmental Business-type Activities Activities Totals 2015 2014 2015 2014 2015 2014 Revenues: Program Revenues: Charges for Services $1,739 $1,786 $11,114 $11,015 $12,853 $12,801 Operating Grants and Contributions 642 627 0 0 642 627 Capital Grants and Contributions 217 299 342 776 559 1,075 General Revenues: Property Taxes 4,113 3,908 0 0 4,113 3,908 Sales Taxes 1,296 1,208 0 0 1,296 1,208 Business and Utility Taxes 1,109 1,136 0 0 1,109 1,136 State Revenue Sharing 322 300 0 0 322 300 Discretionary Sales Surtax 772 722 0 0 772 722 Investment Earnings (Loss) 3 313 (5) 213 (2) 526 Miscellaneous 53 64 0 0 53 64 Total Revenues 10,266 10,363 11,451 12,004 21,717 22,367 Expenses: General Government 1,935 2,054 0 0 1,935 2,054 Public Safety 5,350 5,184 0 0 5,350 5,184 Road Maintenance and Construction 1,771 1,872 0 0 1,771 1,872 Parks and Recreation 1,299 1,309 0 0 1,299 1,309 Interest/Fiscal Charges on Long-term Debt 0 0 0 0 0 0 Utility 0 0 7,278 7,309 7,278 7,309 Stormwater 0 0 1,092 1,153 1,092 1,153 Sanitation 0 0 1,560 1,869 1,560 1,869 Building Code Enforcement 0 0 350 239 350 239 Total Expenses 10,355 10,419 10,280 10,570 20,635 20,989 Transfel's 578 621 (578) (621} 0 0 Change in Net Position 489 565 593 813 1,082 1,378 Net position-Beginning (As Restated) 44,890 48,854 25,404 25,648 70,294 74,502 Net Position-Ending $45,379 $49,419 $25,997 $26,461 $71,376 $75,880 vii DRAFT CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (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 financial information for the fiscal year, rounded to the nearest thousand dollars: • Governmental Funds At the end of the current fiscal year, the City's governmental funds reported a combined ending fund balance of $11,449,000, an increase of $51 7,000 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 $4,633,000, which equated to 44% of total General Fund expenditures without transfers. The net result of various revenue and expense items resulted in an increase to the City's General Fund of $63 8,000 or 9% during the current fiscal. The expenditures of the General Fund were lower than expected, mostly from unfilled positions. Nonmajor governmental funds consisting of special revenue funds, the debt service fund, and the capital projects fund have a combined fund balance of $3,890,000. Of this fund balance, $3,326,000 is restricted for capital projects. The net decrease in fund balance after transfers in nonmajor governmental funds was $121,000. • Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. During the fiscal year the proprietary funds recorded revenues of $11,020,000, expenses of$9,572,000, net non-operating costs of$(619,000) and net capital contributions, grants and transfers of $(236,000). The net position in the proprietary funds increased $592,000 as a result of the fiscal year's activities. The unrestricted net position of the enterprise funds amounted to $5,720,000 at the end of fiscal year 2015. Stormwater rates stayed constant in Fiscal year 2015 as there were no rate changes. The $8.39 per ERU is approximately 84%, compared to 79% for the prior year, of the total operating expenses of $1,029,000 needed to fully fund the operation with charges for service. During fiscal year 2015, the Sanitation Fund netted an increase in net position of $43,000. General Fund Budgetary Highlights The final expense budget included a $405,000 increase in appropriations. The portion ofthe increase in appropriations for the encumbrances rolling forward from 2014 was $347,000. Net Budget The initial budget had a negative variance of $92,000 (page 50). The actual increase in fund balance was $728,000. This resulted in a $820,000 excess variance above the original budget. viii DRAFT CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (Continued) 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 30,2015, amounted to $79,149,000. 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 $328,000 (.4%) for governmental activities and a decrease of$1,583,000 (1.97%) for business- type activities. Capital asset events during the current fiscal year included the following: • Governmental Activities Buildings, net of accumulated depreciation, decreased by $36,000 through annual depreciation of the capital assets. Intangible Assets reflected a net increase of $31,000 through annual depreciation of the capital assets. This asset category includes land easements and computer software. Improvements Other Than Buildings reflected a net increase of $233,000. This represents capital asset increase of $920,000, offset by depreciation of $687,000. Major projects in this category include: Rose Park Development, Marsh Overlook and Kayak Launch, Francis Ave. drainage improvements, improvements at Bull Park, and renovations at Russell Park. Equipment reflected a net increase of$121,000. This represents capital asset increase of$414,000, offset by depreciation of $293,000. Some of the assets acquired in this category were: new phone system throughout the City, 3 police interceptors, 2 trailers, and computer hardware. Constr~1ction in progress decreased $21,000. Major projects included in this category are the Russell Park Renovation, Marsh Project Pedestrian Path, and the Robert Street ditch design. • Business-type Activities Buildings reflected a net decrease in asset value of $10,000 from depreciation. Improvements Other Than Buildings reflected a net decrease of $2,049,000. This represents capital asset increases of $167,000, offset by depreciation of $2,217,000. The largest increases in this category are improvements were the reclaimed water plant project and Francis Avenue Drainage drainage improvements. Equipment reflected a net increase of $89,000. This represents capital asset increase of $176,000, offset by depreciation of$88,000. Some of the assets acquired this year consisted of 4 vehicles being utilized by the Public Works Department. Construction in Progress had a net increase of $388,000, costs incurred were for design of Saltair Sidewalk and Drainage Project and Seminole Streetscape. ix DRAFT Land Intangibles Buildings Improvements-Other Equipment Construction in Progress Total CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (Continued) City of Atlantic Beach's Capital Assets (Net of Depreciation) (In Thousands) Governmental Business-type Activities Activities 2015 2014 2015 2014 $10,363 $10,363 $1,656 $1,656 38 7 214 215 2,599 2,635 70 80 25,151 24,918 36,577 38,626 994 874 529 440 397 418 560 173 $39,542 $39,215 $39,606 $41,190 Totals 2015 2014 $12,019 $12,019 252 222 2,669 2,715 61,728 63,544 1,523 1,314 957 591 $79,148 $80,405 Additional information on the City's capital assets can be found in Note 5 on pages 27-28 of this report. Long-term Debt At the end of the 2015 fiscal year, the City had total bonded debt outstanding of$20,213,000. 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, 2015 Utilities System Revenue Bond, Series 2014 F.D.E.P. State Revolving Funds Loan, 2010 F.D.E.P. State Revolving Funds Loan, 2009 Total (In Thousands) Business-type Activities $12,881 628 6,704 $20,213 Debt service coverage calculations can be found on page 61. Additional information on the City's long- term debt can be found in Note 6 on pages 28-31 of this report. X DRAFT Revenue Highlights: CITY OF ATLANTIC BEACH, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2015 (Concluded) • Total revenue for 2015 was $3,000 lower than 2014 revenue (page 2). Most 2015 revenue sources were higher than previous year with the exception of Investment Earnings which came in $524,000 higher in 2014. • The2015 taxable prope1iyvalues were about 6.18% higher than the 2014 values. The City Commission voted to use the same rate of 3.3285 mills, instead of the roll-back rate of 3.1567. The purpose for adopting the millage rate of 3.3285 was to maintain a level of ad valorem tax revenue sufficient to maintain adequate funding for the existing level of services at the estimated cost and to continue to maintain the City's infrastructure and adequate reserves. The final gross taxable property value was $1,278,868,000. Ad valorem taxes of $4,113,000 represent 40% of the General Fund revenues for 2015. • The 2015 Intergovernmental revenues of$1,749,000 make up 17.06% of general fund revenues. This is an increase of$114,000 over 2014. • The City's investment portfolio is valued at approximately $15,773,000 as of September 30,2015. The investment showed a loss of$2,000 for the year, compared to a gain of$526,000 in the prior year. Over the past five years, the City has recognized an overall investment earnings gain of $1,119,000. Expenditure Highlights: • Expenditures increased in current year by $143,000 when compared to prior year. This increase was a result of a $543,000 increased investment in capital outlay being offset by decreases of $160,000 in General Government and $136,000 in Road Maintenance and Constmction. • In 2015 a larger investment in the City's infrastructure resulted in capital expenditures increasing from $893,000 in 2014 to $1,436,000 in 2015. TI1e major projects in that were completed or started in 2015 were improvements at Bull Park, improvements at Russell Park, Francis A venue drainage improvements, and Saltair drainage improvements. • Transfers in 2015 represents the movement of funds from the Public Utility Funds and the Sanitation Fund to the General Fund and the Half Cent Sales Tax Funds to a project fund. A transfer of $160,000 from the Gas Tax Fund to the General Fund helped fund street maintenance. Requests for Information The financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Atlantic Beach, Finance Director, 800 Seminole Road, Atlantic Beach, Florida 32233. Russell Caffey Director of Finance XI DRAFT BASIC FINANCIAL STATEMENTS These basic financial statements contain Government-wide Financial Statements, Fund Financial Statements, and Notes to Financial Statements. DRAFT CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2015, WITH COMPARATNE TOTALS FOR SEPTEMBER 30, 2014 2015 Governmental Business-type 2014 Activities Activities Totals Totals Assets Equity in Pooled Cash and Investments $ 10,945,323 $ 7,495,552 $ I8,440,875 $ 16,049,275 Receivables -Net 450 548,386 548,836 632,235 Due fi·om Other Governments 936,932 35,244 972,I76 1,216,599 Inventories 20,827 12,827 33,654 42,197 Notes Receivable -Current 760 15,759 16,519 15,759 Restricted Assets: Equity in Pooled Cash and Cash Equivalents 0 1,218,056 1,218,056 1,578,519 Capital Assets: Land 10,363,002 1,656,018 12,019,020 12,019,020 Buildings 4,574,646 4,356,384 8,931,030 8,848,043 Improvements Other Than Buildings 40,075,877 79,512,656 119,588,533 118,501,652 Equipment 4,050,946 2,328,381 6,379,327 5,789,079 Intangibles -Easements and Computer Software 381,939 244,709 626,648 585,788 (Accumulated Depreciation and Amortization) (20,301,137) (49,051,642) (69,352,779) (65,929,677) Construction in Progress 396,861 560,408 957,269 590,420 Prepaid Items 58,786 16,105 74,891 45,218 Notes Receivable-Noncurrent 1,520 124,426 125 946 127,828 Total Assets 51,506,732 49,073,269 100,580,00 I 100,111,955 Deferred Outflows of Resources-Noncurrent Unamortized Refunding Loss 0 1,079,432 1,079,432 1,187,375 Pension Related 2,992,625 1,003,201 3,995,826 0 Total Assets and Deferred Outflows 54 499 357 51 155,902 I 05,65 5,259 I 01,299,330 Liabilities Accounts Payable and Other Current Liabilities 491,380 375,992 867,372 1,477,509 Constn1ction Retainages Payable 0 24,819 24,819 56,696 Due to Other Governments 0 11,066 11,066 10,194 Uneamed Revenue 22,017 178,289 200,306 187,875 Deposits 2,736 0 2,736 9,199 Compensated Absences -Current 191,157 68,035 259,192 334,127 Payable from Restricted Assets: Current Portion of Bonds Payable 0 1,090,000 1,090,000 0 Current Portion of Loan Payable 0 336,895 336,895 286,174 Accrued Interest Payable 0 252,483 252,483 97,471 Customer Deposits 0 586,894 586,894 952,496 Noncurrent Liabilities: Due in More Than One Year 0 19,865,122 19,865,122 21,332,540 Compensated Absences-Noncurrent 382,074 139,787 521,861 465,720 Other Postemployment I3enefits Obligation 178,501 59,798 238,299 208,681 Net Pension Liability 7,813,357 2,170,163 9,983,520 0 Total Liabilities 9,081,222 25,159,343 34,240,565 25,418,682 Deferred Inflow of Resources Pension Related 39.827 0 39 827 0 Net Position Net Investment in Captial Assets 39,542,134 19,394,329 58,936,463 59,972,986 Restricted for: Renewal and Replacement 0 250,000 250,000 250,000 Debt Service 0 381,162 381,162 286,174 Public Safety 180,762 0 180,762 168,310 Road Maintenance and Construction 248,141 0 248,141 159,677 Other Capital Projects 3,325,789 0 3,325,789 3,588,843 Other Purposes 128,595 0 128,595 86,906 Building Code Enforcement 0 251,255 251,255 261,288 Unrestricted 1,952 887 5.719,813 7 672,700 11,106,464 Total Net Position $ 45.378 308 $ 25,996.559 s 71.374,867 $ 75.880,648 See accompanying notes. I Functions/Programs Primary Government Governmental Activities: General Government $ Public Safety Road Maintenance and Construction Parks and Recreation Conservation and Resource Management Interest/Fiscal Charges on Long-tenn Debt Total Governmental Activities Business-type Activities: Utility Storm water Sanitation Building Code Enforcement Total Business-type Activities Total Primary Government $ CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30,2014 2015 0 ::D )> Prog_ram Revenues Net (Expense) Revenue and Changes in Net Position Tl Expenses 1,935,146 5,349,726 1,771,375 1,298,116 1,800 0 10 356,163 7,277,596 1,091,752 1,560,020 350 671 10.280.039 20,636,202 Operating Charges for Grants and Capital Grants and Services Contributions Contributions $ 882,415 $ 0 $ 0 661,428 76,938 0 119,194 559,281 89,937 75,703 0 127,058 0 6,083 0 0 0 0 1,738,740 642.302 216,995 7,988,066 0 341,713 859,315 0 0 1,825,560 0 0 441 588 0 0 11,114,529 0 341.713 ~ 12.853.269 $ 642,302 $ 558.708 General Revenues Property Taxes Sales Taxes Business and Utility Taxes State Revenue Sharing Discretionary Sales Surtax Investment Earnings (Loss) Miscellaneous Transfers Total General Revenues and Transfers Change in Net Position Net Position, Beginning of Year Prior Period Adjustment Net Position, Beginning of Year (as Restated) Net Position, End of Year See accompanying notes. 2 Primarv Government Governmental Business-type 2014 Activities Activities Totals Totals $ (1,052,731) $ 0 $ (1,052,731) $ (1, 177, 176) (4,611 ,360) 0 (4,611,360) ( 4,384,339) (1 ,002,963) 0 (1,002,963) (1,079,014) (1 ,095,355) 0 (1,095,355) (1,075,088) 4,283 0 4,283 8,180 0 0 0 (486} {7, 758, 126} 0 {7. 758,126} (7,707,923} 0 1,052,183 1,052,183 1,409,974 0 (232,437) (232,437) (293,978) 0 265,540 265,540 (78,798) 0 90,917 90.917 183.984 0 I 176 203 1 176.203 1.221,182 {7,758,126} 1,176,203 {6,581,923) (6,486,741} 4,113,476 0 4,113,476 3,908,365 1,296,201 0 1,296,201 1,208,547 1,109,471 0 1,109,471 1,135,931 321,521 0 321,521 300,007 772,098 0 772,098 721,981 3,170 (5,518) (2,348) 525,970 52,293 0 52,293 64,556 578 210 (578,210) 0 0 8,246,440 {583,728) 7,662,712 7,865,357 488,314 592,475 1,080 789 1,378,616 49,419,360 26,461,288 75,880,648 74,502,032 {4,529,366} {1,057,204) {5,586,570} 0 44,889 994 25,404,084 70,294,078 74,502,032 $ 45378,308 $ 25,996,559 $ 71 374.867 $ 75.880,648 DRAFT CITY OF ATLANTIC BEACH, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2014 Assets Equity in Pooled Cash and Investments Receivables-Net Due from Other Funds Due from Other Governments Inventories Notes Receivable-Current Prepaid Items Notes Receivable -Noncurrent Total Assets Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities Due to Other Funds Deposits Unearned Revenue Total Liabilities Fund Balances N onspendab le: Inventories Prep aids Restricted for: Public Safety Road Maintenance and Construction Other Capital Projects Other Purposes Committed to: Conservation and Resource Management Assigned to: Operating Reserves Unassigned Total Fund Balances Total Liabilities and Fund Balances 2015 Non major Governmental General $ 7,122,799 $ 450 10,781 689,932 20,827 760 58,786 1,520 7 905 855 322,756 0 2,625 22,017 347,398 20,827 58,786 10,287 0 0 0 0 2,836,042 4,632,515 7,558,457 $ 7,905,855 $ See accompanying notes. 3 Funds 3,822,524 0 0 247,000 0 0 0 0 4,069,524 168,624 10,781 111 0 179,516 0 0 170,475 248,141 3,325,789 128,595 18,956 0 (1,948) 3,890,008 4,069,524 Totals Governmental Funds $ 10,945,323 450 10,781 936,932 20,827 760 58,786 1,520 11,975,379 491,380 10,781 2,736 22,017 526,914 20,827 58,786 180,762 248,141 3,325,789 128,595 18,956 2,836,042 4,630,567 11,448,465 $ 11,975,379 2014 Totals $ 10,312,186 2,730 6,531 988,067 29,370 0 13,008 0 11,351,892 393,083 6,531 9,199 10,905 419,718 29,370 13,008 168,310 159,677 3,588,843 86,906 14,673 2,685,355 4,186,032 10,932,174 $ 11,351,892 DRAFT CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,2014 2015 2014 Total Fund Balances of Governmental Funds Amounts Reported for Governmental Activities in the Statement of Net Position are Different Because: Capital assets used in govemmental activities are not financial resources and, therefore, are not reported in the funds: Total Capital Assets (Accumulated Depreciation) Certain pension related amounts are being deferred and amortized over a period of years or are being deferred as contributions to the pension plan made after the measurement date: Deferred Outflows Related to Pensions Defen-ed Inflows Related to Pensions Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the govenunental funds: Compensated Absences Other Postemployment Benefits Obligation Net Pension Liability Total Net Position of Governmental Activities $ 59,843,271 (20,301,137) 2,992,625 (39,827) (573,231) (178,501) (7 ,813 ,3 57) $ 11,448,465 39,542,134 2,952,798 (8,565,089) $ 45,378,308 See accompanying notes. 4 $ 58,407,187 (19,192,636) 0 0 (570,520) (156,845) 0 $ 10,932,174 39,214,551 0 (727,365) $ 49,419,360 DRAFT CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2014 2015 Non major Totals Governmental Governmental 2014 General Funds Funds Totals Revenues Property Taxes $ 4,113,476 $ 0 $ 4,113,476 $ 3,908,365 Nonproperty Taxes 1,109,470 1,362,169 2,471,639 2,388,508 Permits, Fees, and Special Assessments 858,232 0 858,232 863,978 Intergovemmental Revenues 1,748,737 164,876 1,913,613 1,912,864 Fines and Forfeitures 77,434 12,348 89,782 154,443 Charges for Services 742,416 0 742,416 756,446 Investment Earnings (Loss) 4,435 (2,025) 2,410 312,039 Miscellaneous Revenues 49,909 7,181 57,090 57,870 Interfund Charges 1,545,981 0 1,545,981 1,443,440 Total Revenues 10,250,090 1,544,549 11,794,639 11,797,953 Expenditures Current: General Government 2,845,102 0 2,845,102 3,004,357 Public Safety 4,868,455 103,287 4,971,742 4,973,414 Road Maintenance and Construction 1,3 I 7,266 274,068 1,591,334 1,727,874 Parks and Recreation 1,027,605 500 1,028,105 1,060,821 Conservation and Resource Management 0 1,800 1,800 0 Debt Service: Principal 0 0 0 69,203 Interest and Other 0 0 0 1,457 Capital Outlay 575,334 860,752 1,436,086 892,798 (Total Expenditures) (1 0,633,762) (1,240,407) (11,874,169) (11,729,924) (Deficiency) Excess of Revenues (Under) Over Expenditures (383,672) 304,142 (79,530) 68,029 Other Financing Sources (Uses) Transfers in 1,003,210 85,000 1,088,210 1,342,003 Transfers (out) 0 (510,000) (510,000) (721,208) Sale of General Fixed Assets 17,611 0 17,611 31,654 Total Other Financing Sources (Uses) 1,020,821 (425,000) 595,821 652,449 Net Change in Fund Balances 637,149 (120,858) 516,291 720,478 Fund Balances, Beginning of Year 6,921,308 4,010,866 10,932,174 10,211,696 Fund Balances, End of Year $ 7 558 457 $ 3,890,008 $ 11.448.465 $ 10,932,174 See accompanying notes. 5 DRAFT CITY OF ATLANTIC BEACH, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2014 2015 2014 Net Change in Fund Balances-Tota!Dovernmental Funds Amounts Reported for Governmental Activities in the Statement of Activities are Different Because: Governmental funds report capital purchases as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives and reported as depreciation expense; Expenditures for Capital Assets $ 1,436,084 (Current Year Depreciation) (1,108,501) Certain nonexchange revenues reported in the statement of activities are not considered current fmancial resources and, therefore, are not reported as revenue in the governmental funds. Repayment of long-tem1 debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. The changes in net pension liability and pension related defeiTed outflows and inflows of resources result in an adjustment to pension expense in the statement of activities, but not in the govermnental fund statements. Some expenses/revenues reported in the statement of activities do not require the use of or provide cun·ent financial resources and, therefore, are not reported as expenditures in governmental funds: Debt Interest Expense 0 Compensated Absences (2,711) Net Pension Asset 0 Other Postemployment Benefits Obligation (21,656) Change in Net Position-Governmental Activities See accompanying notes. 6 $ 516,291 $ $ 892,798 (1,099,082) 327,583 0 0 (331, 193) 970 (5,719) (2,271) (21,119) (24,367) $ 488,314 $ 720,478 (206,284) 9,799 69,203 0 (28,139) 565,057 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2014 2015 Business-type Activities -Enterprise Funds Building Code Utility Stormwater Sanitation Enforcement Assets Current Assets: Equity in Pooled Cash and Investments $ 4,914,330 $ 1,779,734 $ 397,201 $ 404,287 Accounts Receivable-Net 428,823 53,992 65,571 0 Due from Other Governments 35,244 0 0 0 Inventories 12,827 0 0 0 Notes Receivable-Current 15,759 0 0 0 Prepaid Items 16,105 0 0 0 Restricted Assets: Equity in Pooled Cash and Cash Equivalents 1,218,056 0 0 0 Capital Assets: Land 749,499 906,519 0 0 Buildings 4,356,384 0 0 0 Improvements Other Than Buildings 63,047,605 16,465,051 0 0 Equipment 1,758,710 337,447 189,877 42,347 Intangibles -Easements and Computer Software 226,394 0 0 18,315 (Accumulated Depreciation and Amortization) (40,152,145) (8,659,899) (181,360) (58,238) Construction in Progress 253,048 307,360 0 0 Notes Receivable-Noncurrent 124,426 0 0 0 Total Assets 3720052065 11 '190,204 471 289 406,711 Deferred Outflows of Resources-Noncurrent Unamortized Refunding Loss 939,106 140,326 0 0 Pension Related 844,812 43,193 10,153 105,043 Total Assets and Deferred Outflows 1,783,918 183,519 10,153 105,043 See accompanying notes. 7 Totals $ 7,495,552 548,386 35,244 12,827 15,759 16,105 1,218,056 1,656,018 4,356,384 79,512,656 2,328,381 244,709 (49,051,642) 560,408 124,426 49,0732269 1,079,432 1,003,201 2,082,633 $ 2014 Totals 5,737,089 629,505 228,532 12,827 15,759 32,210 1,578,519 1,656,018 4,356,384 79,345,283 2,151,907 244,709 (46,737,041) 172,514 127,828 49,552,043 1,187,375 0 1,187,375 0 ::D )> 11 -I 0 CITY OF ATLANTIC BEACH, FLORIDA :D STATEMENT OF NET POSITION PROPRIETARY FUNDS )> SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR SEPTEMBER30, 2014 11 (Concluded) 2015 -I Business-tyEe Activities -Enteq~rise Funds Building Code 2014 Utility Stormwater Sanitation Enforcement Totals Totals Liabilities Current Liabilities Payable from Current Assets: Accounts Payable and Other Current Liabilities $ 207,318 $ 46,939 $ 112,398 $ 9,337 $ 375,992 $ 1,084,426 Construction Retainages Payable 6,255 18,564 0 0 24,819 56,696 Due to Other Governments 7,086 0 0 3,980 11,066 10,194 Unearned Revenue 89,038 29,102 60,149 0 178,289 176,970 Compensated Absences -Current 62,125 1,094 0 4,816 68,035 109,167 Current Liabilities Payable from Restricted Assets: Current Portion of Bonds Payable 948,300 141,700 0 0 1,090,000 0 Current Portion of Loans Payable 336,895 0 0 0 336,895 286,174 Accrued Interest Payable 231,341 21,142 0 0 252,483 97,471 Customer Deposits 586,894 0 0 0 586,894 952,496 Noncurrent Liabilities: Due in More Than One Year 18,192,022 1,673,100 0 0 19,865,122 21,332,540 Compensated Absences-Noncurrent 134,869 0 0 4,918 139,787 120,160 Other Postemp1oyment Benefits Obligation 41,896 10,112 0 7,790 59,798 51,836 Net Pension Liability 1,827,529 93,436 21,964 227,234 2,170,163 0 Total Liabilities 22,671,568 2,035,189 194,511 258,075 25,159,343 24,278,130 Net Position Net Investment in Capital Assets 11,701,384 7,682,004 8,517 2,424 19,394,329 20,758,435 Restricted for: Renewal and Replacement 250,000 0 0 0 250,000 250,000 Debt Service 381,162 0 0 0 381,162 286,174 Building Code Enforcement 0 0 0 251,255 251,255 261,288 Unrestricted 3,784,869 1,656,530 278,414 0 5,719,813 4,905,391 Total Net Position $ 16,117,415 $ 9,338,534 $ 286 931 $ 253,679 $ 25,996,559 $ 26,461,288 See accompanying notes. 8 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COl\IIPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER30, 2014 2015 Business-type Activities -Enterprise Funds Building Code Utility Stormwater Sanitation Enforcement Totals Operating Revenues Charges for Services: Customer Charges $ 7,892,897 $ 859,315 $ 1,756,608 $ 441,588 $ 10,950,408 Franchise Permits 0 0 7,500 0 7,500 Miscellaneous Revenues 62 419 0 0 0 62,419 Total Operating Revenues 7,955,316 859,315 -1,764,108 441,588 __ 11,020,327 Operating Expenses Personal Services 1,968,049 190,302 25,736 299,145 2,483,232 Contractual Services 638,961 127,173 1,386,682 965 2,153,781 Supplies 388,737 40,291 1,115 2,745 432,888 Repairs and Maintenance 120,049 18,015 5,858 3,780 147,702 Utilities 372,361 0 0 0 372,361 Depreciation 1,835, 798 474,295 2,892 1,616 2,314,601 Intergovernmental Charges 1,113,777 160,883 137,737 35,027 1,447,424 Other Expenses 194 619 18,033 0 7 393 220 045 (Total Operating Expenses) (6,632,351) (1,028,992) (1,560,020) (350,671) (9,572,034) Operating Income (Loss) 1,322,965 (169,677) 204,088 90,917 1,448,293 Nonoperating Revenues (Expenses) Connection Charges 32,750 0 0 0 32,750 Franchise Fees 0 0 61,452 0 61,452 Investment Earnings (Loss) (11,976) (2,166) 491 8,133 (5,518) Interest Expense (556,635) (48,040) 0 0 (604,675) Gain on Disposal of Fixed Assets 9,897 0 0 0 9,897 Amortization of Refunding Loss {98,5072 04,7202 0 0 (113,2272 Total Nonoperating Revenues (Expenses) (624,471) (64,926) 61,943 8,133 (619,321) See accompanying notes. 9 $ 2014 Totals 10,897,732 2,500 60,333 10,960,565 2,186,305 2,664,229 402,441 170,509 367,452 2,289,758 1,345,224 254 643 (9,680,561) 1,280,004 9,189 45,699 213,172 (861,481) 24,685 ~52,8432 (621,579) 0 ::D )> , -I CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30,2014 Income (Loss) Before Contributions and Transfers $ Capital Contributions and Grants and Transfers Capital Contributions and Grants Transfers in Transfers (out) Total Capital Contributions and Grants and Transfers Change in Net Position Net Position, Beginning of Year Prior Period Adjustments Net Position, Beginning of Year (As Restated) Net Position, End of Year $ (Concluded) 2015 Business-tyEe Activities -Enter(!rise Funds Utility Storm water Sanitation 698,494 $ (234,603) $ 341,713 0 0 260,000 (615,167) 0 (273,454) 260,000 425,040 25,397 16,582,663 9,358,655 (890,288) (45,518) 15,692,375 9,313,137 16,117,415 $ 9,338,534 $ See accompanying notes. 10 266,031 0 0 (223,043) (223,043) 42,988 254,643 (10,700) 243,943 286,931 Building Code Enforcement $ 99,050 0 0 0 0 99,050 265,327 (110,698) 154,629 $ 253,679 $ $ 0 :D )> Tl _, 2014 Totals Totals 828,972 $ 658,425 341,713 775,929 260,000 285,000 (838,210) (905,795) (236,497) 155,134 592,475 813,559 26,461,288 25,647,729 (1,057,204) 0 25,404,084 25,647,729 25,996,559 $ 26,461,288 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30,2014 Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Customer for Return of Deposit Cash Paid to Suppliers Cash Paid to Employees Cash Paid for Interfund Services Net Cash Provided by (Used in) Operating Activities Cash Flows from Noncapital Financing Activities Connection Charges Franchise Fees Transfers in Transfers (out) Net Cash Provided by (Used in) Noncapital Financing Activities Capital and Related Financing Activities Capital Grants Proceeds from Loan Fixed Asset Additions Proceeds from Sale ofPPE Principal Payments on Long-term Debt Issuance Costs Paid Interest Paid Net Cash Provided by (Used in) Capital and Related Financing Activities $ 2015 Business-type Activities -Enterprise Funds Building Code Utility Stormwater Sanitation Enforcement Totals 8,027,673 $ 855,370 $ 1,764,044 $ 441,588 $ 11,088,675 0 0 0 (355,732) (355,732) (2, 146,833) (178,164) (1,719,936) (23,857) (4,068,790) (1,894,067) (179,444) (24,625) (271,071) (2,369,207) (1,113,777) (160,886) (137,737) (35,027) (1,447,427) 2,872,996 336,876 (118,254) (244,099) 2,847,519 32,750 0 61,452 0 94,202 0 0 0 0 0 0 260,000 0 0 260,000 (615, 167) 0 (223,043) 0 (838,210) (582,417) 260,000 (161,591) 0 (484,008) 535,001 0 0 0 535,001 0 0 0 0 0 (456,090) (275,650) 0 0 (731,740) 9,897 0 0 0 9,897 (326,697) 0 0 0 (326,697) 0 0 0 0 0 (419,577) (27,585) 0 0 (447,162) (657,466) (303,2~ 0 0 (960,701) See accompanying notes. 11 $ 2014 Totals 11,325,520 0 (2,957,201) (2,210,303) (1,345,224) 4,812,792 9,189 45,699 285,000 (905,795) (565,907) 547,397 13,960,000 (2,399,80 1) 24,685 (16,087,763) (52,843) (1, 187,382) (5,195,707) 0 ::D )> 11 --i CITY OF ATLANTIC BEACH, FLORIDA 0 STATEMENT OF CASH FLOWS JJ PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, )> WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER30,2014 (Continued) 2015 11 Business-tyEe Activities -Enterprise Funds -1 Building Code 2014 Utility Storm water Sanitation Enforcement Totals Totals Cash Flows from Investing Activities Sale (Purchase) of Investments $ (865,804) $ (91,667) $ 286,614 $ 247,968 $ (422,889) $ (435,976) Interest Received (11,976) (2,166) 491 8,841 (4,810) 213,985 Net Cash Provided by (Used in) Investing Activities (877,780) ~93,833) 287,105 256,809 (427,699) (221,991) Net Increase (Decrease) in Cash and Cash Equivalents 755,333 199,808 7,260 12,710 975,111 (1,170,813) Cash and Cash Equivalents, Beginning of Year 489,017 161,326 73,338 69,326 793,007 1,963,820 Cash and Cash Equivalents, End of Year $ 1,244,350 $ 361,134 $ 80,598 $ 82,036 $ 1,768,118 $ 793,007 Reconciliation of O~erating Income (Loss} to Net Cash Provided b:y (Used in} O~erating Activities Operating Income (Loss) $ 1,322,965 $ (169,677) $ 204,088 $ 90,917 $ 1,448,293 $ 1,280,004 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation 1,835,798 474,295 2,892 1,616 2,314,601 2,289,758 Change in Assets and Liabilities: Accounts Receivable 88,923 (4,415) 13 0 84,521 (8,188) Inventory 0 0 0 0 0 50,049 Prep aids 16,105 0 0 0 16,105 148,937 Compensated Absences (24,817) 0 0 3,176 (21,641) (31, 762) OPEB Obligation 6,370 636 0 956 7,962 7,764 Accounts Payable and Accrued Liabilities (448,211) 30,706 (326,281) 3,475 (740,311) 703,087 Customer Deposits (17,492) 136 0 (355,732) (373,088) 378,617 Unearned Revenue 926 470 (77) 0 1,319 (5,474) Change in Deferred Outflow (514, 144) (26,287) (6, 179) (63,928) (610,538) 0 Change in Net Pension Liability 606,573 31,012 7,290 75,421 720,296 0 Net Cash Provided by (Used in) Operating Activities $ 2.872,996 $ 336 876 $ {118,254) $ (244,099) $ 2.847.519 $ 4.812.792 See accompanying notes. 12 CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER30,2014 (Concluded) Reconciliation of Cash and Cash Eguivalents to Balance Sheet Equity in Pooled Cash and Cash Equivalents in Current Assets $ Restricted Equity in Pooled Cash and Cash Equivalents Equity in Pooled Investments Total Cash and Cash Equivalents $ 2015 Business-type Activities-Enterprise Funds Building Code Utility Stormwater Sanitation Enforcement 4,914,330 $ 1,779,734 $ 1,218,056 0 (4,888,036) ~I ,418,6002 1,244,350 $ 361,134 $ See accompanying notes. 13 397,201 $ 404,287 0 0 (316,603) (322,251) 80,598 $ 82,036 Totals $ 7,495,552 1,218,056 (6,945,490) $ 1,768,118 $ $ 2014 Totals 5,737,089 1,578,519 (6,522,6012 793,007 0 JJ )> .,., -I DRAFT CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,2014 Pension Trust Funds Assets Cash and Cash Equivalents Interest Receivable Investments at Fair Value Total Assets Liabilities Accounts Payable and Accrued Liabilities Total Liabilities Net Position Net Position Restricted for Pensions See accompanying notes. 14 $ $ 2015 2014 137,107 $ 37,480 8,921 64,250 23,355,432 23,066,411 23,501,460 23,168,141 0 114 0 114 23,501,460 $ 23,168,027 DRAFT CITY OF ATLANTIC BEACH, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Pension Trust Funds 2015 2014 Additions Contributions: Employer $ 1,437,627 $ 1,514,183 Employees 248,545 260,478 State of Florida 103,528 96,217 Total Contributions 1,789,700 1,870,878 Net (Decrease) Increase in Fair Value oflnvestments 189,300 792,566 Interest and Dividends 139,274 441,637 Total Additions 2,118,274 3,105,081 Deductions Refunds of Contributions 28,505 70,596 Benefits 1,555,728 1,222,239 Investment Expenses 122,714 101,021 Administrative Expenses 77,894 54,272 Total Deductions 1,784,841 1,448,128 Change in Net Position 333,433 1,656,953 Net Position, Beginning of Year (as Restated) 23,168,027 21,511,074 Net Position, End of Year See accompanying notes. 15 $ 23,501,460 $ 23,168,027 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 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 ofthe State of Florida, Florida Statutes Section 57-1126. The City operates under a form of goveniment which comprises an elected City Commission (foUl' Commissioners and a Mayor-Commissioner) and provides, under the administration of an appointed City Manager, the following se1vices: public safety, public works (streets and infrastructure), recreation, sanitation, stormwater, reuse, planning, zoning, water and sewer, and general government services. In accordance with the Codification qf Governmental and Financial Reporting Standards, 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. The Governmental Accounting Standards Board (GASB) has set forth criteria for consideration in determining financial accountability. These criteria include appointing a majority of an organization's governing body and: (I) the ability of the City to impose its will on that organization; or (2) the potential for that organization to provide specific benefits to or impose specific financial burdens on the City. Other considerations are whether the organization is legally separate, whether the City holds the corporate powers of the organization, and whether there is fiscal dependency by the organization on the City. 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 position and the statement of activities) report information on all of the non fiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Indirect costs are included in the program expense reported for individual functions and activities. Program revenues include: (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or activity; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Taxes and other items not properly included among program revenues are reported instead as general revenues. 16 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 1 -Summary of Significant Accounting Policies (Continued) Government-wide and Fund Financial Statements (Collcluded) 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 repm1ed 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 is charges between the City's water and sewer function and various other functions ofthe City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts repmted 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 position is reported as one of three categories: (I) Net Investment in Capital Assets; (2) Resh·icted; or (3) Unrestricted. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accmal 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 cunent 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 CUITent fiscal period. Expenditures· generally are recorded when a liabj]jty is incurred, as under acctual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, other postemployment benefits, pension expense, and claims and judgments, are recorded only when payment is due. Taxes, intergovernmental revenue, licenses and pennits, 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 cunent fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. 17 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 1 -Summary of Significant Accounting Policies (Continued) Fund Financial Statements (Concluded) The City repmts the following major governmental fund: • The Geneml 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 ofthe City's water distribution, sewer collection and treatment systems, and reuse system. • The Sanitation Fund accounts for the activities of the City's sanitation system. • The Stormwatcr 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 ofthe 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 Fund Balance is reported in five components -nonspendable, restricted, committed, assigned, and unassigned: • Nonspendable Fund Balance--amounts that are not in spendable 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. 18 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 1 -Summary of Significant Accounting Policies (Continued) Fund Balance Classification (Concluded) • Committed Fund Balance-amounts constrained to specific purposes by the City itself, using its highest level of decision-making authority (i.e., ordinance passed by 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. 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. 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 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 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 repmted 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. 19 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 1 -Summary of Significant Accounting Policies (Continued) Budgets (Concluded) 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. Investment earnings and losses on the pooled cash and investments are 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). 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 nonspendable 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. 20 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 1-Summary of Significant Accounting Policies (Continued) 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 Buildings and lmprovements Improvements Other Than Buildings Infrastructure Machinery and Equipment Long-term Obligations Years 10-40 10-50 25-100 3-40 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 position. Bond premiums, discounts, and refunding losses are deferred and amortized over the life of the bonds using the effective interest method. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service expenditures. In the fund financial statements, govemmental 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 govemment-wide and proprietary fund financial statements. 21 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Co~ttinued) Note 1 -Summary of Significant Accounting Policies (Concluded) Deferred Inflows/Outflows of Resources Deferred inflows of resources reported on applicable governmental fund types represent revenues which are measureable but not available in accordance with the modified accrual basis of accounting. The deferred inflows will be recognized as revenue in the fiscal year they are earned or become available. Deferred outflows of resources represent consumption of net position that is applicable to a future reporting period. Deferred outflows have a positive effect on net position, similar to assets. Pension Related -Pension Related Deferred Inflows and Outflows represent the difference between expected and actual experience with regard to economic or demographic factors and changes to assumptions in the measurement of total pension liability, and the differences between expected and actual earnings on pension plan investments. These amounts are reported as deferred inflows or outflows of resources, to be recognized in expense over time. Also included in deferred outflows are amounts contributed to the pension plans subsequent to the measurement date. See Note 7 for infonnation on Pension Related Deferred Inflows and Outflows. Revenue Recognition Utility revenues are repmted 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 unearned revenues. Property Taxes The assessment of all prope1ties 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 nonnal operations, the City has various transactions between funds to construct assets and comply with local ordinances and other legal restrictions. These transactions are reflected as transfers. In addition, certain transfers have been made between systems and accounts of the utility enterprise fund as required by bond covenants. Prior Period Information The financial statements include ce1tain prior year summarized comparative infonnation 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, 2014, from which the summarized information was derived. 22 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) 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. ln addition, investments are separately held and individually accounted for where contractual arrangements and bond covenants provide for and require such arrangements. At September 30, 2015, the carrying amount of cash on hand and on deposit with banks, including interest-bearing deposits was $4,022,717, and the related bank balance was $4,369,095. 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 (the 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. The City elected to adopt a written investment policy as authorized under Florida Statutes. Under the City's investment policies, general investments' activities 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 and corporate fixed income mutual funds, corporate notes and bonds, 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. Following are the investments, credit ratings, and maturities of the City's governmental and business-type activities at September 30,2015: 23 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 2 -Cash and Investments (Continued) Investment Maturities Less More Investment Credit Fair Than 1-5 6-10 Than TyQe Rating Value I Year Years Years 10 Years Money Market Funds: Morgan Stanley, N.A. Unrated $ 7,168 $ 7,168 $ 0 $ 0 $ 0 Mutual Funds: Alliance Limited Duration High Income Mutual Fund Unrated 1,189,005 1,189,005 0 0 0 Delaware Diversified Income A Unrated 2,483,596 2,483,596 0 0 0 Guggenheim Floating Rate Strategy Class A Unrated 4,165,322 4,165,322 0 0 0 Invesco Floating Rate Income Class A Unrated 727,801 727,801 0 0 0 Lord Abbett Short Duration Income Class A Mutual Fund Unrated 3,011,218 3,011,218 0 0 0 Voya Floating Rate A Unrated 4,166,004 4,166,004 0 0 0 Florida PRIME A-1 22,817 22 817 0 0 0 Total $15,:Z:Z2 931 $ 15 :Z:Z2 231 $ Q $ 0 $ Q Total $ 7,168 1,189,005 2,483,596 4,165,322 727,801 3,011,218 4,166,004 22,817 $15112 231 Listed below are the investments and maturities in the City's pension trust funds at September 30, 2015: Investment Maturities Investment Fair Less Than 1-5 6-10 More Than Ty[!e Value* 1 Year Years Years 10 Years Total Cash Deposits and Money Markets $ 7,381,526 $ 7,381,526 $ 0 $ 0 $ 0 $ 7,381,526 Common Stocks 14,302,996 14,302,996 0 0 0 14,302,996 Corporate Bonds 1,011,304 119,447 364,489 527,368 0 1,011,304 Government and GSE Bonds 151,447 0 110,387 41,060 0 151,447 ICMA Self Directed 517 080 517 080 0 0 0 517 080 Total $ 23 364.353 $ 22 3?1 049 $ 474 816 .$_____568 428 $ 0 $ 23 364 353 * Fair value balances reported include interest receivable. The total pension investment balances ofthe City at September 30, 2015, are comprised ofthe following items: 24 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 2-Cash and Investments (Continued) Moody's Investment Credit Ty(!e Rating Corporate Bonds AI Corporate Bonds A2 Corporate Bonds A3 Corporate Bonds AAI Corporate Bonds AA3 Corporate Bonds AAA Corporate Bonds BAAl Corporate Bonds BAA2 Corporate Bonds BAA3 Government and GSE Bonds AAA Stocks NR Cash and Money Market NR ICMA Self Directed NR Percent of Total 0.32% 0.21% 0.74% 0.11% 0.21% 0.10% 1.64% 0.63% 0.39% 0.64% 61.21% 31.59% 2.21% Credit Risl<-lt is the City's Police Officers' Retirement System Trust Fund's and the City's General Employees' Retirement System Trust Fund's investment policies to, at a minimum, limit 80% of the total fixed income portfolio to those that are rated investment grade of higher. The Police Officers' Retirement System Trust Fund's investment policy defines investment grade as "BBB", Baa", or their equivalent. Also, no more than 10% (at cost) ofthe fixed income portfolio total value can be invested in the securities of any single corporate issuer. The maximum allocation to International Equities is 25%. 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. 25 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 2-Cash and Investments (Concluded) Restricted cash and investments at September 30, 2015, in the enterprise funds follows: Enterprise Funds Renewal Customer and Deposits Replacement Debt Service Totals Utility Fund $ 586.894 $ 250.000 $ 3 8 1.162 !!!,$ ===ll,.,;2~18g..g,05~6 Note 3-Receivables Receivables, net of the allowance for doubtful accounts at September 30, 2015, consist of the following: Less Total Allowance Accounts Accounts for Doubtful Receivable Fund Receivable Accounts Net General $ 1,210 $ 0 $ 1,210 Utility 447,683 (18,860) 428,823 Storm water 69,589 (15,597) 53,992 Sanitation 119 173 (53,602) 65 571 Total $ 631,655 $ (88,Q52) s 542,526 Included in accounts receivable are $203,390 of water and sewer revenues earned, but not billed as of September 30,2015. Note 4-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, 2015: Notes Receivable (Current Portion) Total Notes Receivable-Noncurrent 26 $ $ 140,185 (I 5,759) 124.426 DRAFT Note 5 -Capital Assets CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Capital asset activity for the fiscal year ended September 30, 2015, is as follows: Beginning Balance Increases (Decreases) Governmental Activities Capital Assets Not Being Depreciated: Land $ 10,363,002 $ 0 $ 0 $ Construction in Progress 417 906 898 463 (919,508) Total Capital Assets Not Being Depreciated 10,780,908 898.463 (919,508) Capital Assets Being Depreciated: Buildings 4,491,659 82,987 0 Intangible Assets 341,079 40,860 0 Improvements Other Than Buildings 39,156,369 919,508 0 Machinery and Equipment 3,637,172 413 774 0 Total Capital Assets Being Depreciated 47,626.279 1 457 129 0 Less Accumulated Depreciation for: Buildings (1,856,760) (118,933) 0 Intangible Assets (334,215) (9,741) 0 Improvements Other Than Buildings (14,238,285) (686,756) 0 Machinery and Equipment (2,763,376) (293,071) 0 Total Accumulated Depreciation (19.192,636) (1,108,501) 0 Total Capital Assets Being Depreciated, Net 28,433,643 348 628 0 Governmental Activities Capital Assets, Net L39 214 551 $ 1 247 091 $ (919.508) $ Business-type Activities Capital Assets Not Being Depreciated: Land $ 1,656,018 $ 0 $ 0 $ Construction in Progress 172 514 555 267 (167,373) Total Capital Assets Not Being Depreciated 1,828,532 555.267 (167,373) Capital Assets Being Depreciated: Buildings 4,356,384 0 0 Intangible Assets 244,709 0 0 Improvements Other Than Buildings 79,345,283 167,373 0 Machinery and Equipment 2,151,907 176 474 0 Total Capital Assets Being Depreciated 86,098,283 343 847 0 Less Accumulated Depreciation for: Buildings (4,275,987) (9,903) 0 Intangible Assets (30,282) (190) 0 Improvements Other Than Buildings (40,718,977) (2,216,682) 0 Machinery and Equipment (1,7Jl,795) (87,826) 0 Total Accumulated Depreciation (46,737,041) (2,314,601) 0 Total Capital Assets Being Depreciated, Net 39,361,242 (1,970,754) 0 Business-type Activities Capital Assets, Net $ 41 189 774 $ (1 .415,1Rl} $ (167 373) $ 27 Ending Balance 10,363,002 396 861 10,759,863 4,574,646 381,939 40,075,877 4 050 946 49,083,408 ( 1,975,693) (343,956) (14,925,041) (3,056,447) (20,301,137) 28,782,271 39 542 134 1,656,018 560 408 2 216 426 4,356,384 244,709 79,512,656 2,328.381 86,442,130 ( 4,285,890) (30,472) (42,935,659) (1, 799,621) ( 49,05 I ,642) 37,390,488 39 606 914 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 5 -Capital Assets (Concluded) Depreciation expense was charged to functions/programs as follows: Governmental Activities General Governmental Public Safety Road Maintenance and Construction Parks and Recreation Total Depreciation Expense-Governmental Activities Business-type Activities Utility Storm water Sanitation Building Code Enforcement Total Depreciation Expense-Business-type Activities Note 6-Long-term Debt Revenue Bonds and Loans payable are comprised of the following: Revenue Bond Payable Utilities System Revenue Refunding Bond, Series 2014, Payable in Atmual Installments of Principal and Semiannual Installments oflnterest Through October 1, 2025, Bearing Coupon Rates of2.330%, Secured Solely by a Pledge of and Lien on Net Water and Sewer System Revenues and Certain Other Revenues as Defined in the Bond Ordinance Loans Payable Florida Department of Environmental Protection, Disbursements and Capitalized Interest for a $773,030 State of Florida Revolving Loan #DW\60710, 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 ofNet 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 Florida Department of Environmental Protection, Disbursements, Service Fee, and Capitalized Interest for a Combined $9,368,576 State of Florida Revolving Loan #WW160700, Issued to Finance the Construction of Treatment and Transmission Facilities for the Buccaneer WWTP Phase-out Improvements and TMDL Compliance Program WWTP #1, Payable in Semiannual Installments of Principal and Interest Through May 15, 2032, with Financing Rates of3. 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 ofthe Senior Revenue Obligations, as Defined in the Loan Agreement Total Revenue Bonds and Loans Payable 28 $ 141,838 193,301 535,805 237 557 $ 1.108 501 $ 1,835,798 474,295 2,892 1 616 $ 2.314.601 $ 13,960,000 627,866 6 704 151 $ 21 222,017 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 6-Long-term Debt (Continued) The annual requirements to amortize all revenue bonds and loans payable outstanding at September 30, 2015, are as follows: Business-type Activities Year Ending Long-term Debt September 30 PrinciQal Interest Total 2016 $ 1,426,895 $ 537,506 $ 1,964,401 2017 1,507,413 500,776 2,008,189 2018 1,543,259 462,611 2,005,870 2019 1,584,443 423,466 2,007,909 2020 1,620,979 383,330 2,004,309 2021-2025 8,735,952 1,278,514 10,014,466 2026-2030 3,863,525 387,235 4,250,760 2031-2032 I 009 551 39 294 I 048 845 Total $ 21 222 017 $ 4 012,732 $ 25 304742 Interest and amortization incurred during the year ended September 30, 2015, amounted to $717,902. Ofthe amount incurred, 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, 2015, and during the year then ended, the City was in compliance with those ratios. The following is a summary of the changes in long-term debt of the City for the year ended September 30, 2015: Balance Balance Due October 1, September 30, Within 2014 Additions Reductions 2015 One Year Governmental Activities Compensated Absences $ 570,520 $ 377,045 $ (374,334)$ 573,231 $ 191,157 OPEB Obligation 156,845 21,656 0 178,501 0 Net Pension Liability 5,747,103 2,066,254 0 7 813 357 0 Total Governmental Activities- Long-term Liabilities $ 6,474,468 $ 2 464955 $ (314 334)$ 8 565 089 $ 19] 151 29 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 6-Long-term Debt (Continued) Balance Balance October 1, September 30, 2014 Additions Reductions 2015 Business-type Activities State Revolving Fund Loans $ 7,658,714 $ 0 $ (326,697)$ 7,332,017 Revenue Bonds Payable 13,960,000 0 0 13,960,000 Less Deferred Amounts: Loss on Bond Refunding (1,187,375) 0 107 943 ( 1,079,432) Total Revenue Bonds Payable 12,772,625 0 107 943 12,880,568 Total Bonds/Loans Payable 20,431,339 0 (218,754) 20,212,585 Compensated Absences 229,327 123,786 (145,291) 207,822 OPEB Obligation 51,836 7,962 0 59,798 Net Pension Liability 1,449,865 720,298 0 2,170.163 Total Business-type Activities. Long-term Liabilities $ 22 162.161 $ 852 Q46 $ (364.045)$ 22,65Q 368 Conduit Debt Due Within One Year :!! 336,895 1,090,000 0 1,090,000 1,426,895 68,035 0 0 $ I 424 23Q The City has issued Health Facility Revenue and Refunding 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, 2015, there are two series of Health Facility Revenue and Refunding Bonds outstanding, with an aggregate principal amount payable of $56,080,000. Pledged Revenue The City has pledged certain revenues to repay cet1ain bonds and notes outstanding as of September 30, 2015. 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 30,2015: 30 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 6-Long-term Debt (Concluded) Note 7- Outstanding Net Principal Estimated Principal Pledged Revenue and Interest Percentage and Pledged Descri[!tion Revenue Received Paid Pledged Interest Through 2014-Utility System Utility Refunding Bonds Revenues $ 3,180,693 $ 206,907 * 6.51% $15,828,426 2026 Florida Department of Environmental Utility Protection, SRF Loan Revenues 3,180,693 49,879 1.57% 773,121 2031 Florida Department of Environmental Utility Protection, SRF Loan Revenues 3,180,693 511,953 16.10% 8,703,202 2032 * First principal payment was not due until October I, 2015. Defined Benefit Pension Plans Plan Descriptions The City maintains two separate single-employer defined benefit pension plans, one for police officers and one for general employees, which cover substantially all full-time City employees hired before September 1, 2008. The general employees' defined benefit plan is closed to new entrants. Full-time general employees hired on or after September 1, 2008, are covered by the defined contribution plan disclosed in Note 8. The pension plans do not issue separate stand- alone financial statements. Combining statements are included in the supplementary information to the basic financial statements. General Employees' Retirement Plan Plan Description The General Employees' Retirement Plan (Plan) provides retirement, disability, and death benefits to Plan members and their beneficiaries. The City Commission has the authority to establish and amend the benefit provisions of the Plan. The Plan is govemed by a Retirement Plan Board appointed by the City Commission and comprised of five members, two of which will be eligible legal residents of the City, two of which will be general employees elected by the majority of general employees who are members of the Plan, and one of which will be elected by the other four members. Plan membership in the General Employees' Retirement Plan as of September 30, 2015 and 2014, is as follows: 31 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7-Defined Benefit Pension Plans (Continued) General Employees' Retirement Plan (Continued) Plan Description (Concluded) September 30, Retirees and Beneficiaries Inactive Plan Members or Beneficiaries Currently Receiving Benefits Inactive Plan Members Entitled to but Not Yet Receiving Benefits Active Plan Members Total Plan Benefits 2015 59 12 48 112 September 30, 2014 56 11 56 123 Normal retirement is available upon the attainment of age sixty and the completion of five years of credited service. Early retirement is available with a reduced benefit upon the attainment of age fifty-five and the completion of five years of credited service. For members hired before April24, 2005, the normal retirement benefit shall equal 2.85% of average final compensation for each year of credited service. For members hired on or after April 24, 2005, the normal retirement benefit shall equal 2.50% of average final compensation for each year of credited service. The Plan includes a deferred retirement option program (DROP) under which members eligible for normal retirement may have their monthly pension benefit credited to an account while continuing to be actively employed for up to five years. As of September 30, 2015, Plan net position included $29,039 of DROP account balances. Contributions The City is required to contribute at an actuarially dete1mined rate (32.67%) of valuation payroll for the year ended September 30, 2015. City contributions to the Plan were $863,613 for the year ended September 30,2015. Plan members are required to contribute 6.0% oftheir annual covered salary. Contribution requirements are established by City code, which may be amended by the City Commission. Measurement Date As previously described, the City implemented GASB 68 during the current year for its pension plans. As permitted by the standard, the City elected to use a measurement date to value the net pension liability and related deferred inflows and outflows as of September 30, 2014, one year prior to the reporting date. The City's Pension Plans do no issue separate financial statements. Therefore, the disclosures required by GASB 67 as of September 30, 2015, are also included below. Total Pension Plan Fiduciary Net Pension Liabili!l: Net Position Liabili!l: Balances at September 30,2013 $ 17,282,101 $ 13,770,7ll $ 3,511,390 Changes for the Year: SetVice Cost 399,576 0 399,576 Interest 1,386,245 0 1,386,245 Changes in Assumptions 1,814,460 0 1,814,460 Contnbutions -Employer 0 950,980 (950,980) Contributions -State 0 0 0 Contributions -Employee 0 157,383 (157,383) Net Investment Income 0 778,981 (778,981) Benefit Payments, Including Refunds of Contributions (707,218) (707,218) 0 Administrative &penses 0 {31,529~ 31,529 Net Changes 2,893,063 1,148,597 1,744,466 Balances at September 30,2014 $ 20,175,164 $ 14,919,308 $ 5,255,g56 32 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7 -Defined Benefit Pension Plans (Continued) General Employees' Retirement Plan (Continued) Measurement Date (Concluded) September 30, 2015 Total Pension Liability Plan Net Position Net Pension Liability General Employees' Retirement Plan Net Position as a Percentage of Total Pension Liability $ $ 20,788,102 (15,008.338) 5.779 764 72.20% For the year ended September 30, 2015, the City recognized total pension expense of $1,129,434. The City reported deferred outflows of resources and deferred inflows of resources related to the General Employees' Pension Plan from the following sources: Deferred Outflows of Resources Changes in Assumptions Differences Between Project and Actual Eamings Contributions Made Subsequent to Measurement Date Total Deferred Outflows of Resources $ $ 1,296,043 269,969 863 613 2.429.625 Contributions made after the measurement date (shown above) will be recognized in the fiscal year ended September 30, 2016. Other amounts reported as deferred outflows of resources related to pensions will be recognized in pension expense as follows: Year Ended September 30 Plan Investments 2016 2017 2018 2019 2020 Thereafter Total $ $ Amount 585,909 585,909 326,701 67,493 0 0 1 566.012 The Retirement Plan Board is responsible for establishing and amending the Plan's investment policies. The Plan's cunent investment policy gives the Board discretion to allocate assets with assistance of the Plan's investment consultant No formal targets are stated in the investment policy although the maximum allocation to international equities is 25%. 33 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7-Defined Benefit Pension Plans (Continued) General Employees' Retirement Plan (Continued) Actuarial Assumptions The total pension liability was determined by actuarial valuations for the Plan as of September 30, 2014, rolled forward to September 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation: Salary Increases: Investment Rate of Return: Mortality: Date ofExperience Study: 2.50% Age based ranging from 5.00%-13.50% 7 .00%, net of investment expenses, including inflation RP2000 Combined Health Participant Mortality Table for males and females with generational projections from the Year 2000 Projection Scale AA Other significant actuarial assumptions used in the September 30, 2013 valuation were based on the results of an actuarial experience study for the period October 1, 2001 -September 30, 2010. The long-tenn expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense of0.50% and intlation of2.50%) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of retum by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inf1ation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation (see the discussion of the pension plans' investment policy) are st1mmarized in the following table: Target Long-term Expected Asset Class Allocation Real Net Rate of Return US Large-Cap Growth Stocks 13% 7.4% US Large-Cap Value Stocks 12% 7.0% US Mid-Cap Growth Stocks 3% 8.6% US Mid-Cap Value Stocks 4% 7.8% US Mid-Cap Core Stocks 3% 6.9% US Small-Cap Growth Stocks 5% 9.6% US Small-Cap Value Stocks 5% 8.6% International Equities 5% 7.2% US Investment Grade Bonds 40% 1.8% Cash (US 90-day T-hill) 10% 0.2% 34 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7-Defined Benefit Pension Plans (Continued) General Employees' Retirement Plan (Concluded) Actuarial Assumptions (Concluded) Discount rate. A single discount rate was used to measure the total pension liability. The single discount rate was based on the expected rate of return on Plan investments of 7.00%. The projection of cash flows used to determine the single discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of retum on Plan investments (7 .00%) was applied to all periods of projected benefit payments to dete1mine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability ofthe City, calculated using the discount rate of7.00%, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1- percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate: As of September 30, 2015: Net Pension 1% Decrease Cunent Discount 1% Increase Liability (6.00%) Rate (7.00%) (8.00%} General Employees' Pension Plan $ 8,074,!70 $ 5,779,764 $ 3,819,787 As of September 30,2014: Net Pension 1% Decrease Current Discount 1% Increase Liabilit~ (6.00%) Rate (7.00%} (8.00%) General Employees' Pension Plan $ 7,489,269 $ 5,255,856 $ 3,344,704 Police Officers' Retirement Plan Plan Description The Police Officers' Retirement Plan (Police Plan) provides retirement, disability, and death benefits to Police Plan members and their beneficiaries. The Police 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 Police Plan. The Policemen's Pension Board of Trustees is appointed by the City Commission and comprised of five members, two of which will be eligible legal residents of the City, two of which will be police officers elected by the majority of police officers who are members of the Police Plan, and one of which will be elected by the other four trustees. Membership in the Police Officers' Retirement Plan as of September 30, 2015 and 2014, is as follows: 35 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7 -Defined Benefit Pension Plans (Continued) Police Officers' Retirement Plan (Continued) Plan Description (Concluded) September 30, Retirees and Beneficiaries 2015 Inactive Plan Members or Beneficiaries Currently Receiving Benefits 20 ln(lctive Plan Members Entitled to but Not Yet Receiving Benefits 5 Active Plan Members 21 Total 46 Plan Benefits September 30, 2014 20 4 22 46 For members hired before January 1, 2013, normal retirement is available upon the attainment of age fifty and the completion of twenty years of credited service, the attainment of age fifty- five and the completion of ten years of credited service, the completion of twenty-five years of credited service regardless of age, or the attainment of age sixty and the completion of five years of credited service. For members hired on or after January 1, 2013, normal retirement is available upon the attainment of age fifty-five and the completion often years of credited service or the attainment of age fifty-two and the completion of twenty-five years of credited service. Early retirement is available with a reduced benefit upon the attainment of age fifty and the completion of ten years of credited service. For members hired before January 1, 2013, the normal retirement benefit shall equal3.00% of average final compensation for each year of credited service. For members hired on or after Janumy 1, 2013, the nonnal retirement benefit shall equal2.00% of average final compensation for each year of credited service. The Police Plan includes a DROP under which members eligible for normal retirement may have their monthly pension benefit credited to an account while continuing to be actively employed for up to five years. As of September 30, 2015, Police Plan net position included $488,041 of DROP account balances. Contributions The City is required to contribute, at actuarially determined rates, if State of Florida contributions are not sufficient (combined City and State contributions were 41.48% of valuation payroll for the year ended September 30, 20 15). City and State contributions to the Police Plan were $677,542 for the year ended September 30, 2015. Police Plan members are required to contribute 7.0% of their annual covered salary. Per City Code, the City Commission may amend established contribution requirements. Measurement Date As previously described, the City implemented GASB 68 during the current year for its pension plans. As permitted by the standard, the City elected to use a measurement date to value the net pension liability and related deferred inflows and outflows as of September 30, 2014, one year prior to the reporting date. The City's Pension Plans do no issue separate financial statements. Therefore, the disclosures required by GASB 67 as of September 30, 2015, are also included below: 36 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7-Defined Benefit Pension Plans (Continued) Police Officers' Retirement Plan (Continued) Measurement Date (Concluded) Total Pension Plan Fiduciary Balances atSeptember30,2013 Changes for the Year: Service Cost Interest Changes of Assumptions Contributions -Employer Contributions -State Contributions -Employee Net Investment Income Benefit Payments, including Refunds ofContributions Administrative Expenses Net Changes Balances at September 30,2014 September 30, 2015 Total Pension Liability Plan Net Position Net Pension Liability Liabili!l: $ ll,Ol7,205 269,182 879,486 1,275,669 0 0 0 0 (585,616) 0 1,838,721 $ 12,855,926 Police Officers' Retirement Plan Net Position as a Percentage of Total Pension Liability Net Position $ 7,331,627 0 0 0 563,203 96,217 103,095 642,480 (585,616} (22,742) 796,637 $ 8,128,264 $ $ Net Pension $ $ Uabili!l: 3,685,578 269,182 879,486 1,275,669 (563,203} (96,217) (103,095} (642,480} 0 22,742 1,042,084 4,727,662 13,402,655 {8,493, 122) 4.909 533 63.37% For the year ended September 30,2015, the City recognized total pension expense of$749,144. The City repmied deferred outflows of resources and deferred inflows of resources related to the Police Officers' Pension Plan from the following sources: Defened Outflows of Resources Differences Between Project and Actual Earnings Contributions Made Subsequent to Measurement Date Total Deferred Outflows of Resources Deferred Inflows of Resources Differences Between Project and Actual Eamings Total Deferred Outflows of Resources 37 $ $ $ _$ 992,187 574 014 1 566 201 39.827 39 827 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7-Defined Benefit Pension Plans (Continued) Police Officers' Retirement Plan (Coutinued) Deferred Inflows of Resources (Concluded) Contributions made after the measurement date (shown above) will be recognized in the fiscal year ended September 30, 2016. Other amounts repmted as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended September 30 Amount 2016 $ 273,525 2017 273,525 2018 273,525 2019 131,785 2020 0 Thereafter 0 Total $______ 952,360 Plan Investments The Policemen's Pension Board of Trustees is responsible for establishing and amending the Police Plan's investment policies. The Police Plan's current investment policy gives the Board discretion to allocate assets with assistance of the Police Plan's investment consultant. No formal targets are stated in the investment policy although the maximum allocation to international equities is 25%. Actuarial Assumptions The total pension liability was determined by actuarial valuations for the Plan as of September 30, 2014, rolled forward to September 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation: Salary Increases: Investment Rate of Return: Mortality: Date of Experience Study: 2.50% Age based ranging from 4.50%-22.50% 7.00%, net of investment expenses, including inflation RP2000 Combined Health Patticipant Mortality Table for males and females with generational projections from the Year 2000 Projection Scale AA Other significant actuarial assumptions used in the September 30, 2014, valuation were based on the results of an actuarial experience study for the period October 1, 2001-September 30,2010. The long-term expected rate of return on pension plan investments was detennined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense of 0.50% and inflation of2.50%) are developed for each major asset class. These ranges are combined to produce the long-tetm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation (see the discussion of the pension plans' investment policy) are summarized in the following table: 38 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 7-Defined Benefit Pension Plans (Concluded) Police Officers' Retirement Plan (Concluded) Actuarial Assumptions (Concluded) Asset Class Target Allocation US Large-Cap Growth Stocks 13% US Large-Cap Value Stocks 12% US Mid-Cap Growth Stocks 3% US Mid-Cap Value Stocks 4% US Mid-Cap Core Stocks 3% US Small-Cap Growth Stocks 5% US Small-Cap Value Stocks 5% International Equities 5% US Investment Grade Bonds 40% Cash (US 90-day T -bill) 10% Long-term Expected Real Net Rate of Return 7.4% 7.0% 8.6% 7.8% 6.9% 9.6% 8.6% 7.2% 1.8% 0.2% Discount rate. A single discount rate was used to measure the total pension liability. The single discount rate was based on the expected rate of return on Police Plan investments of7.00%. The projection of cash flows used to determine the single discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Police Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Police Plan members. Therefore, the long-term expected rate of return on Police Plan investments (7 .00%) was applied to all periods of projected benetit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the City, calculated using the discount rate of7.00%, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1- percentage-point lower (6.00%) or !-percentage-point higher (8.00%) than the current rate: September 30, 2015 Net Pension Liability 1% Decrease (6.00%) Current Discount Rate (7.00%) 1% Increase (8.00%) Police Officers' Pension Plan $ 6,525,880 $ 4,909,533 $ 3,565,056 September 30, 2014 Net Pension Liability Police Officers' Pension Plan $ 1% Decrease (6.00%) 6,321,181 $ 39 Current Discount Rate (7.00%) 4,727,662 $ 1% Increase (8.00%) 3,399,917 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 8-Defined Contribution Plan The City passed an ordinance in 2013 closing the General Employees' defined benefit plan to new entrants and creating the City of Atlantic Beach Defined Contribution Plan. The City's 457 defined contribution plan is administered through ICMA, which covers all eligible employees employed with the City on or after September 1, 2008, who are not covered by the City's Police Officers' defined benefit plan. Under the 457 Plan, the City contributes an employer matching contribution of up to 6% of earnings during the first ten years of service. Following ten years of service, the City contributes a fixed contribution of 4% of earnings. Employees have the option to voluntarily contribute to the 457 Plan. Employer matching contributions from the City were $57,604 and $44,268 for the years ended September 30, 2015 and 2014, respectively. Under the 457 Plan, an employee is considered fully vested after 5 years of completed service. Note 9-Postemploymeut Benefits Other Than Pensions Plan Description The City of Atlantic Beach administers a single-employer defined benefit health care plan (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 oppmtunity to pmticipate 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, 2012, the date of the latest actuarial valuation: Retirees and Beneficiaries Receiving Benefits Active Plan Members Total Funding Policy 2 90 92 Contribution rates for the Plan are established on an annual basis by the City Commission. Eligible retirees and their covered dependents receiving benefits contribute I 00% 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 Contribution (ARC) amounted to $49,705 for the current fiscal year. The ARC is based on a rate of 1.0% of projected payroll of $4,204,177 or an average $486 per active pmticipant. For the year ended September 30, 2015, the City estimated it implicitly subsidized $19,740 of health care costs for its retirees and covered dependents. This implied subsidy reduced the annual OPES cost to a net expense of $29,617 after interest on the Net OPEB Obligation and adjustments to ARC. 40 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 9-Postemployment Benefits Other Than Pensions (Continued) Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost (expense) is calculated based on the ARC of the employer, 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 Interest on Net OPEB Obligation Adjustment to Annual Required Contribution Annual OPEB Cost (Expense) Employer Contribution Increase in Net OPEB Obligation Net OPEB Obligation-Beginning ofYear Net OPEB Obligation-End of Year $ $ 49,705 8,347 (8,695) 49,357 (19,740) 29,617 208.681 238.298 The City reflected the $29,617 increase in net OPEB obligation at September 30, 2015, by recording an obligation of $21,655 for governmental activities and $7,962 for business-type activities in its government-wide statement of net position. The utility fund reported a net OPEB obligation of$41,896, while the stormwater fund, sanitation fund, and building code enforcement fund reported $10,112, $0, and $7,790, respectively. The OPEB obligation is a function of ARCs, interest, adjustments to the ARC, 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 30,2015, are presented below. Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Ob1igation September 30,2013 $ 43,987 28.5% $ 179,798 September 30, 2014 46,487 37.9% 208,681 September 30, 2015 49,357 20.7% 238,298 Funded Status and Funding Progress As of October l, 2012, the date of the latest actuarial valuation, the actuarial accrued liability for benefits was $360,584, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the Plan) was $4,204,177, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 8.58%. 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 ARCs 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. 41 DRAFT CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) Note 9 -Postemployment Benefits Other Than Pensions (Concluded) 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, 2012, the date of the latest actuarial valuation, the Entry-Age Normal 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 26-year period. Other significant actuarial assumptions include a 4% discount rate, an annual health care cost trend rate of -17%, followed by 11% for the next year, followed by 7.5% 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 of3%), 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, 2015, consist of the following: Due Due from Other to Other Funds Funds General $ 10,781 $ 0 Nonmajor Governmental 0 10,781 Interfund receivable/payables are due to timing differences associated with grant reimbursements. The receivable/payables are expected to be received/paid within one year. Note 11 -Interfund Transfers Transfers of resources fi·om a fund receiving revenue to the fund through which the resources are to be expended are recorded as transfers and are repotied as other financing sources (uses) in the governmental funds and as transfers in (out) in the proprietary funds. Following is a summary ofinterfund transfers for the year ended September 30, 2015: Transfers In Nonmajor Storm water General Governmental Total Transfers Out Fund Fund Funds Transfers Nonmajor Governmental Funds $ 260,000 $ 165,000 $ 85,000 $ 510,000 Utility Fund 0 615,167 0 615,167 Sanitation Fund 0 223,043 0 223 043 Total Transfers $ 260,000 $ I 003 210 $ 85 000 $ 1 348 210 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. 42 DRAFT Note 12-Commitments CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Continued) As of September 30, 2015, the City had outstanding commitments on contracts in progress as follows: Project Type Utility System Improvements Stormwater System Improvements General Government Improvements Unexpended Contract Amounts $ 225,819 82,399 578,207 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, 2015, the City incurred $1,066,557 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. 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 can·ies 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. 43 DRAFT Note 15-Other Disclosures CITY OF ATLANTIC BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2015 (Concluded) New Accounting Pronouncements During the year, the City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. GASB 68 establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expenses/expenditures related to the City's pension plans. For defined benefit pensions, GASB 68 identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their present value, and attribute that present value to periods of employee service. GASB 68 also addresses note disclosure and required supplementary information. As permitted by the standard, the City chose to use a measurement date of the net pension liability one year prior to the reporting date. GASB 71 requires a government that is transitioning to the new standards to recognize a beginning deferred outflow of resources to its pension contributions made subsequent to the measurement date of the beginning net pension liability of the initial fiscal year of implementation. As a result of these statements, beginning Net Position was reduced as follows: Govemmental Activities Governmental Activities Business-type Activities Utility Storm water Sanitation Building Code Enforcement Total Business-type Activities- Enterprise Funds Total Restatement of Net Position Components ofthe restatement consist of the following: Net Pension Liability Deferred Outflows -Contributions Made During Fiscal Year Ended September 30, 2015 Total Restatement of Net Position 44 $ $ $ 4,529,366 890,288 45,518 10,700 110 698 1,057,204 5,586,510 7,196,968 ( 1, 61 0.398) 5.586,570 DRAFT REQUIRED SUPPLEMENTARY INFORMATION DRAFT CITY OF ATLANTIC BEACH, FLORIDA GENERAL EMPLOYEES' PENSION PLAN SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Total Pension Liability Setvice Cost Interest Difference Between Actual and Expected Experience Changes in Assumptions Benefit Payments Refunds Net Change in Total Pension Liability Total Pension Liability -Beginning Total Pension Liability -Ending (a) Plan Fiduciary Net Position Contributions-Employer Contributions-Employee Net Investment Income Benefit Payments Refunds Administrative Expenses Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position -Beginning Plan Fiduciary Net Position -Ending (b) Net Pension Liability-Ending (a) -(b) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Covered Employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll September 30, 2015 $ 402,093 1,404,316 (162,280) 0 (1,031,191) 0 612,938 20,175,164 20,788,102 863,613 136,191 162,326 (1,031,191) 0 (41,909) 89,030 14,919,308 15,008,338 $ 5,779,764 72.20% $ 2,643,589 218.63% The data presented above was measured using actuarial methods prescribed by GASB 67/68. Additional years will be added to this schedule annually, until 10 years of data is presented. 45 September 30,2014 $ 399,576 1,386,245 0 1,814,460 (697,702) (9,516) 2,893,063 17,282,101 20,175,164 950,980 157,383 778,981 (697,702) (9,516) (31,5291 1,148,597 13,770,711 14,919,308 $ 5,255,856 73.95% $ 3,026,642 173.65% DRAFT CITY OF ATLANTIC BEACH, FLORIDA GENERAL EMPLOYEES' PENSION PLAN SCHEDULE OF CONTRIBUTIONS Actuarially Determined Contribution September 30, 2015 $ 863,613 863,613 September 30, 2014 $ 950,980 950,980 Contributions in Relation to the Actuarially Determined Contribution Contribution Deficiency (Excess) $ 0 $ 0 Covered Employee Payroll $ 2,643,589 $ 3,026,642 Contributions as a Percentage of Covered Employee Payroll 32.67% 31.42% Additional years wi II be added to this schedule annually until I 0 years of data is presented. NOTES TO SCHEDULE Valuation Date: October 1, 2013 Actuarially determined contribution rates are calculated as of September 30, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding Method: Amortization Method: Remaining Amortization Period: Asset Valuation Method: Inflation: Salary Increases: Interest Rate: Members' Contribution Rate: Retirement Age: Post Retirement COLA: Mottality: Date ofthe Most Recent Experience Study: Entry Age Normal Cost Method Closed, Level Dollar Method 10 years 4-year Smoothed Market Value: Difference between the expected and actual return on market value of assets phased in over a period offour (4) years (at the rate of25% per year), adjusted to be no greater than 120% and no less than 80% of the fair market value. 3.0% per year 5.5%-14.0% 7.0% per year compounded annually, net of investment related expenses. 6.00% Experience-based table of rates that vary by age. None RP2000 Combined Healthy Pmticipant Mortality Table for males and females with generational projections from the yem· 2000 Projection Scale AA. Other significant actuarial assumptions used in the September 30, 2013 valuation were based on the results of an actuarial experience study for the period October 1, 200 I - September 30, 2010. 46 DRAFT CITY OF ATLANTIC BEACH, FLORIDA POLICE OFFICERS' PENSION PLAN SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS Se~tember 30, 2015 SeEtember 30, 2014 Total Pension Liability Service Cost $ 291,761 $ 269,182 Interest on the Total Pension Liability 900,982 879,486 Difference Between Actual and Expected Experience (213,426) 0 Changes in Assumptions 0 1,275,669 Benefit Payments (524,537) (524,537) Refunds (28,505) (61,079) Other (Excess Premium Tax Liability) 120,454 0 Net Change in Total Pension Liability 546,729 1,838,721 Total Pension Liability -Beginning 12,855,926 11,017,205 Total Pension Liability-Ending (a) 13,402,655 12,855,926 Plan Fiduciary Net Position Contributions -Employer 574,014 563,203 Contributions -State I 03,528 96,217 Contributions -Member 112,354 103,095 Net Investment Income 43,534 642,480 Benefit Payments (524,537) (524,537) Refunds (28,505) (61,079) Administrative Expenses (35,984) (22,742) Other (Excess Premium Tax Liability) 120,454 0 Net Change in Plan Fiduciary Net Position 364,858 796,637 Plan Fiduciary Net Position -Beginning 8,128,264 7,331,627 Plan Fiduciary Net Position-Ending {b) 8,493,122 8,128,264 Net Pension Liability-Ending (a)-{b) $ 4,909,533 $ 4,727,662 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 63.37% 63.23% Covered Employee Payroll $ 1,633,327 $ 1,696,583 Net Pension Liability as a Percentage of Covered Employee Payroll 300.58% 278.66% The data presented above was measured using actuarial methods prescribed by GASB 67/68. Additional years will be added to this schedule annually unti110 years of data is presented. 47 DRAFT CITY OF ATLANTIC BEACH, FLORIDA POLICE OFFICERS' PENSION PLAN SCHEDULE OF CONTRIBUTIONS Actuarially Dete1mined Contribution* Contributions in Relation to the Actuarially Determined Contribution* Contribution Deficiency (Excess) September 30, 2015 $ 665,091 677,542 September 30, 2014 $ 654,280 659,420 $ (12,451) $ (5, 140) Covered Employee Payroll $ 1,633,327 $ 1,696,583 Contributions as a Percentage of Covered Employee Payroll 41.48% 38.87% *Amounts include the contribution from the State ofFlorida. Additional years will be added to this schedule annually until I 0 years of data is presented. NOTES TO SCHEDULE Valuation Date: October I, 2013 Actuarially determined contribution rates are calculated as of September 3 0, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding Method: Amortization Method: Remaining Amortization Period: Asset Valuation Method: Inflation: Salary Increases: Payroll Growth: Interest Rate: Retirement Age: Post Retirement COLA: Mortality: Date of the Most Recent Experience Study: Entry Age Normal Cost Method Closed, Level% of Pay Method 26 years Smoothed market value over a period of four (4) years, as prescribed under Internal Revenue Procedure 2000-40, adjusted to be no greater than 120% and no less than 80% of the fair market value. 3.0% per year 5.0%-23.0% 1.88% per year 7.0% per year compounded annually, net of in_vestment related expenses. Experience-based table of rates based on year of eligibility. None RP2000 Combined Healthy Participant Mortality Table for males and females with generational projections from the year 2000 Projection Scale AA. Significant assumptions used in the September 30, 2013 valuation were based on the results of an actuarial experience study for the period of October 1, 2001 - September 30, 2010. 48 DRAFT Valuation Date 9/30/06 $ 10/1/09 10/1/12 CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS SEPTEMBER 30, 2015 Actuarial Actuarial Accrued Unfunded Annual Value of Liability AAL Funded Covered Assets (AAL} (UAAL} Ratio Payroll 0 $ 470,703 $ 470,703 0.0% $ 4,812,000 0 497,883 497,883 0.0% 5,828,339 0 360,584 360,584 0.0% 4,204,177 UAALas Percentage of Covered Payroll 9.78% 8.54% 8.58% 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. 49 DRAFT Revenues Property Taxes Nonproperty Taxes CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL-GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 Budgeted Amounts Actual Original Final Amounts* $ 4,055,229 $ 4,055,229 $ 4,113,476 1,133,812 1,133,812 1,109,470 Permits, Fees, and Special Assessments 857,743 857,743 858,232 Intergovernmental Revenues 1,704,051 1,704,051 1,748,737 Fines and Forfeitures 83,700 83,700 77,434 Charges for Services 774,658 774,658 742,416 Interest Income 116,250 116,250 4,435 Miscellaneous Revenues 49,385 56,885 49,909 lnterfund Charges 1,549,137 1,549,137 1,545,981 Total Revenues 10,323,965 10,331,465 10,250,090 Expenditures Governing Body: City Commission 41,665 41,665 38,708 City Clerk 288,265 292,368 253,017 City Attorney 132,000 132,000 96,150 Total Governing Body ' 461,930 466,033 387,875 City Administration: City Manager 261,506 261,506 235,093 General Government 521,706 557,322 461,303 Human Resources 194,531 194,531 187,215 Information Technology 835,706 876,662 809,654 Finance 906,827 934,421 859,608 Total City Administration 2,720,276 2,824,442 2,552,873 Planning and Zoning 152,292 245,166 145,206 Public Safety: Police 3,941,813 3,955,249 3,597,391 School Crossing Guards 9,693 9,693 9,850 Animal Control 96,506 96,627 91,161 Fire 1,310,639 1,314,338 1,312,786 Code Enforcement 64,455 64,455 50,204 Total Public Safety 5,423,106 5,440,362 5,061,392 50 Variance With Final Budget - Positive (Negative) $ 58,247 (24,342) 489 44,686 (6,266) (32,242) (111,815) (6,976) (3, 156) (81,375) 2,957 39,351 35,850 78,158 26,413 96,019 7,316 67,008 74,813 271,569 99,960 357,858 (157) 5,466 1,552 14,251 378,970 DRAFT CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGETANDACTUAL-GENERALFUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 (Concluded) Budgeted Amounts Actual Original Final Amounts* Expenditures (Concluded) Public Works: Administration and Streets $ 1,292,899 $ I,318,688 Fleet Maintenance 269,624 269,624 Total Public Works 1,562,523 1,588,3I2 Parks and Recreation: Recreation and Special Events 364,353 364,353 Parks Maintenance 735,210 896,491 Total Parks and Recreation I,099,563 1,260,844 (Total Expenditures) (I 1,419,690) (11 ,825, 159) (Deficiency) of Revenues (Under) Expenditures (1,095,725) (1,493,694) Other Financing Sources (Uses) Transfers in 1,003,210 1,003,210 Transfers (out) 0 (322,709) Sale of General Fixed Assets 0 0 Total Other Financing Sources (Uses) 1,003,210 680,50I Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses (92,515) (813,I93) Fund Balances, Beginning of Year 5,637,789 5,236,590 Fund Balances, End of Year $ 5,545,274 $ 4,423,397 * Actual amounts include a reversal of$(346,721) prior year encumbrance roll-forward, plus current year encumbrance roll-forward of $257,113. 51 $ I,150,691 261,471 1 ,412,I62 346,294 637,421 983,715 (10,543,223) (293, 133) 1,003,210 0 17,611 I,020,821 727,688 6,574,588 $ 7,302,276 Variance With Final Budget - Positive (Negative) $ I67,997 8,153 176,150 18,059 259,070 277,129 1,281,936 1,200,561 0 322,709 I 7,611 340,320 1,540,881 1,337,998 $ 2,878,879 DRAFT CITY OF ATLANTIC BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTE TO SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGETANDACTUAL-GENERALFUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 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 re-appropriated 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 confonnity with accounting principles generally accepted in the United States of America. 52 DRAFT SUPPLEMENTARY INFORMATION DRAFT CITY OF ATLANTIC BEACH, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30,2014 2015 Special Revenue Funds Convention Tree Local Option Development Half-cent Court Cost Replacement Gas Tax Tax Sales Tax Training Assets Equity in Pooled Cash and Investments $ 18,956 $ 169,795 $ 102,939 $ 637,775 $ 105,927 Due from Other Governments 0 78,346 25,656 131,190 230 Total Assets 18,956 248,141 128,595 768,965 106,157 Liabilities and Fund Balances Liabilities Accounts Payable and Accrued Liabilities 0 0 0 124,107 0 Due to Other Funds 0 0 0 0 0 Deposits 0 0 0 0 0 Total Liabilities 0 0 0 124,107 0 Fund Balances Restricted for: Public Safety 0 0 0 0 106,157 Road Maintenance and Construction 0 248,141 0 0 0 Other Capital Projects 0 0 0 644,858 0 Other Purposes 0 0 128,595 0 0 Committed: Conservation and Resource Management 18,956 0 0 0 0 Unassigned 0 0 0 0 0 Total Fund Balances 18,956 248,141 128,595 644,858 106,157 Total Liabilities and Fund Balances $ 18,956 $ 248,141 $ 128,595 $ 768,965 $ 106,157 53 DRAFT Special Revenue Funds Radio Communication $ 14,208 797 15,005 0 0 0 0 15,005 0 0 0 0 0 15,005 Contraband $ Forfeiture 47,231 0 47,231 0 0 Ill Ill 47,120 0 0 0 0 0 47,120 Community Development Block Grants $ 2,314 0 2,314 4,262 0 0 4,262 0 0 0 0 0 (1,948) (1,948) $ 2015 Police Grants 5,828 10,781 16,609 3,635 10,781 0 14,416 2,193 0 0 0 0 0 2,193 $ Totals Special Revenues Funds 1,104,973 247,000 1,351,973 132,004 10,781 Ill 142,896 170,475 248,141 644,858 128,595 18,956 (1,948) 1,209,077 $ Capital Projects 2,717,551 0 2, 717,551 36,620 0 0 36,620 0 0 2,680,931 0 0 0 2,680,931 Totals Nonmajor Governmental $ Funds 3,822,524 247,000 4,069,524 168,624 10,781 Ill 179,516 170,475 248,141 3,325,789 128,595 18,956 (1,948) 3,890,008 $ 2014 Totals 3,739,371 287,946 4,027,317 3,521 6,531 6,399 16,451 160,767 159,677 3,588,843 86,906 14,673 0 4,010,866 $ 15,005 $ 47,231 $ 2,314 =$===1=6,=6=09= $ 1,351,973 $ 2,717,551 $ 4,069,524 $ 4,027,317 54 DRAFT CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30,2014 2015 Special Revenue Funds Convention Tree Local Option Development Half-cent Court Cost Replacement Gas Tax Tax Sales Tax Training Revenues Taxes $ 0 $ 450,707 $ 127,059 $ 772,098 $ 0 Other Intergovernmental Revenues 0 0 0 0 0 Fines and Forfeitures 0 0 0 0 3,859 Investment Earnings (Loss) 0 567 (370) 340 (I 19) Miscellaneous Revenues 6,083 0 0 0 0 Total Revenues 6,083 451,274 126,689 772,438 3,740 Expenditures Current: Culture and Recreation 0 0 0 0 0 Public Safety 0 0 0 0 12,999 Road Maintenance and Construction 0 202,810 0 71,258 0 Conservation and Resource Management 1,800 0 0 0 0 Debt Service: Principal 0 0 0 0 0 Interest and Other 0 0 0 0 0 Capital Outlay 0 0 0 344,186 0 (Total Expenditures) (1,800) (202,810) 0 (415,444) (12,999) Excess (Deficiency) ofRevenues Over (Under) Expenditures 4,283 248,464 126,689 356,994 (9,259) Other Financing Sources (Uses) Transfers in 0 0 0 0 0 Transfers (out) 0 (160,000) (85,000) (260,000) 0 Total Other Financing Sources (Uses) 0 (160,000) (85,000) (260,000) 0 Net Change in Fund Balances 4,283 88,464 41,689 96,994 (9,259) Fund Balances, Beginning of Year 14,673 159,677 86,906 547,864 115,416 Fund Balances, End of Year $ 18,956 $ 248,141 $ 128,595 $ 644,858 $ 106,157 55 DRAFT 2015 Special Revenue Funds Totals Totals Community Special Nonmajor Radio Contraband Development Police Revenue Capital Governmental 2014 Communication Forfeiture Block Grants Grants Funds Projects Funds Totals $ 12,305 $ 0 $ 0 $ 0 $ 1,362,169 $ 0 $ 1,362,169 $ 1,252,577 0 0 89,937 74,939 164,876 0 164,876 278,510 0 8,489 0 0 12,348 0 12,348 59,909 (47) (71) 0 0 300 (2,325) (2,025) 96,491 0 1,098 0 0 7,181 0 7,181 3,724 12,258 9,516 89,937 74,939 1,546,874 (2,325) 1,544,549 1,691,211 0 0 500 0 500 0 500 0 0 0 0 72,746 85,745 17,542 103,287 122,354 0 0 0 0 274,068 0 274,068 285,478 0 0 0 0 1,800 0 1,800 0 0 0 0 0 0 0 0 69,203 0 0 0 0 0 0 0 1,457 0 0 91,385 0 435,571 425,181 860,752 390,159 0 0 (91,885) (72,746) (797,684) (442, 723) ( 1,240,407) (868,651) 12,258 9,516 (1,948) 2,193 749,190 (445,048) 304,142 822,560 0 0 0 0 0 85,000 85,000 275,500 0 (5,000) 0 0 (510,000) 0 (510,000) (721,208) 0 (5,000) 0 0 (510,000) 85,000 (425,000) (445,708) 12,258 4,516 (1,948) 2,193 239,190 (360,048) (120,858) 376,852 2,747 42,604 0 0 969,887 3,040,979 4,010,866 3,634,014 $ 15,005 $ 47,120 $ (1,948) $ 2,193 $ 1,209,077 $ 2,680,931 $ 3,890,008 $ 4,010,866 56 DRAFT CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2015, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,2014 Pension Trust Funds Police General Officers' Employees' Retirement Retirement 2015 Plan Plan Totals Assets Cash and Cash Equivalents $ 68,372 $ 68,735 $ 137,107 Interest Receivable 3,355 5,566 8,921 Investments at Fair Value 8,421,395 14,934,037 23,355,432 Total Assets 8,493,122 15,008,338 23,501,460 Liabilities Accounts Payable and Accrued Liabilities 0 0 0 Total Liabilities 0 0 0 Total Net Position Held in Trust for Pension Benefits (as Restated) $ 8,493,122 $ 15,008,338 $ 23,501,460 57 2014 Totals $ 37,480 64,250 23,066,411 23,168,141 114 114 $ 23,168,027 DRAFT CITY OF ATLANTIC BEACH, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED SEPTEMBER 30, 2015 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Pension Trust Funds Police General Officers' Employees' Retirement Retirement 2015 2014 Plan Plan Totals Totals Additions Contributions: Employer $ 574,014 $ 863,613 $ 1,437,627 $ 1,514,183 Employees 112,354 136,191 248,545 260,478 State of Florida 103,528 0 103,528 96,217 Total Contributions 789,896 999,804 1,789,700 1,870,878 Net (Decrease) Increase in Fair Value ofinvestments 37,142 152,158 189,300 792,566 Interest and Dividends 50,642 88,632 139,274 441,637 Total Additions 877,680 1,240,594 2,118,274 3,105,081 Deductions Refunds of Contributions 28,505 0 28,505 70,596 Benefits 524,537 1,031,191 1,555,728 1,222,239 Investment Expenses 44,250 78,464 122,714 101,021 Administrative Expenses 35,985. 41,909 77,894 54,272 Total Deductions 633,277 1,151,564 1,784,841 1,448,128 Change in Net Position 244,403 89,030 333,433 1,656,953 Net Position, Beginning of Year (as Restated) 8,248,719 14,919,308 23,168,027 21,511,074 Net Position, End of Year $ 8,493,122 $ 15,008,338 $ 23,501,460 $ 23,168,027 58 DRAFT CITY OF ATLANTIC BEACH, FLORIDA IDSTORICAL REVENUES AND EXPENSES FOR THE YEARS ENDED SEPTEMBER 30, 2011 THROUGH SEPTEMBER 30, 2015 2011 2012 2013 2014 2015 Revenues Operating Revenues: Water: Customer Charges $ 3,382,973 $ 3,069,998 $ 3,006,787 $ 2,955,863 $ 2,992,677 Miscellaneous Charges 46,424 48,815 52,996 54,852 62,286 Total Water 3,429,397 3,118,813 3,059,783 3,010,715 3,054,963 Sewer: Customer Charges 5,085,318 5,015,358 5,109,868 4,938,510 4,934,151 Miscellaneous Charges 20,006 3,303 1,651 1,237 107 Total Sewer 5,105,324 5,018,661 5,111,519 4,939,747 4,934,258 Total Operating Revenues 8,534,721 8,137,474 8,171,302 7,950,462 7,989,221 Nonoperating Revenues: Investment Income (Loss): Water 108,762 197,492 (115,023) 186,681 (7,718) Sewer (16,367) (21 ,01 0) 18,426 (43,9542 (4,257) Total Nonoperating Revenues 92,395 176,482 {96,597) 142,727 (11 ,9752 Total Revenues 8,627,116 8,313,956 8,074,705 8,093,189 7,977,246 Expenses Operating Expenses: Water 1,292,948 1,303,708 1,228,763 1,287,783 1,442,578 Sewer 2,569,748 2,493,500 2,005,653 2,170,495 2,055,780 Total Operating Expenses 3,862,696 3,797,208 3,234,416 3,458,278 3,498,358 Administrative, Nondivisional and Other: Water 545,971 518,506 521,600 530,715 563,356 Sewer 685,074 696,922 674,514 677,464 734,839 Total Administrative, Non- divisional and Other 1,231,045 1,215,428 1,196,114 1,208,179 1,298,195 (Total Expenses) (5,093,7412 (5,012,636) (4,430,530) ( 4,666,457) (4,796,553) Net Revenues Available for Debt Service 3,533,375 3,301,320 3,644,175 3,426, 732 3,180,693 Nonoperating Income (Expense) Interest Expense (71 0,196) (726,058) (766,111) (896,571) (556,635) Loan Amortization (14,730) (25, 712) (12,787) (162,552) (98,507~ Total Nonoperating Income (Expense) (724,926) (751,770) (778,898) (1,059,123) (655, 142) Net Income Before Depreciation and Operating Transfers $ 2,808,449 $ 2,549,550 $ 2,865,277 $ 2,367,609 $ 2,525,551 59 DRAFT CITY OF ATLANTIC BEACH, FLORIDA SCHEDULESOFNETREVENUESINACCORDANCE WITH BOND RESOLUTIONS ENTERPRISE FUNDS (WATER AND SEWER) FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND SEPTEMBER 30, 2014 2015 Gross Revenues Utility $ 7,955,290 $ Connection Charges 33,932 Interest (11,977) Total Gross Revenues 7,977,245 Operating Expenses Personal Services 1,968,047 Contractual Services 638,961 Supplies 388,737 Repairs and Maintenance 120,049 Utilities 372,361 Intergovernmental Charges 1,113,777 Other Expenses 194,619 (Total Operating Expenses) (4,796,551) Total Net Revenues in Accordance with Bond Resolutions $ 3,180,694 $ Total Debt Service $ 768,739 * $ Debt Service Coverage Ratio 413.75% Required Debt Service Coverage Ratio 100.00% (a) Rate Stabilization Fund: Balance, Beginning of Year $ 400,000 $ Transfer/Redeposit to Revenue Fund 0 Balance, End of Year $ 400,000 $ *The 2014 Series Refunding Bonds' first principal payment was not due until October 1, 2015. 60 2014 7,933,418 17,044 142,727 8,093,189 1,802,458 788,322 366,425 133,621 367,452 986,547 221,633 ( 4,666,458) 3,426,731 2,001,479 171.21% 100.00% 400,000 0 400,000 DRAFT CITY OF ATLANTIC BEACH, FLORIDA OTHER BOND COVENANT DISCLOSURES FOR THE YEARS ENDED SEPTEMBER 30, 2011 THROUGH SEPTEMBER 30, 2015 Year 2011 2012 2013 2014 2015 Electricity $ 487,585 452,183 459,672 473,097 476,997 Utility Service Tax Collections (Last Five Years) Communications $ 604,567 567,909 576,839 522,654 526,996 Gas $ 28,062 23,187 20,849 16,911 15,555 Ad Valorem Tax Collections (Last Five Years) Year Total 2011 $ 3,968,233 2012 3,961,395 2013 3,843,755 2014 3,908,365 2015 4,113,476 61 Fuel Oil Total $ 33 $ 1,120,247 14 1,043,293 17 1,057,377 29 1,012,691 7 1,019,555 DRAFT OTHER STATISTICAL INFORMATION DRAFT CITY OF ATLANTIC BEACH, FLORIDA MAJOR UTILITY CUSTOMERS FOR THE YEAR ENDED SEPTEMBER 30, 2015 (UNAUDITED) Fleet Landing (Retirement Community) Oaks of Atlantic Beach (Mobile Home Park) Navy (Federal Government) City of Atlantic Beach, Florida Arium Atlantic Beach (Apartment Complex) John Creek Estate (Mobile Home Park) Hanna Park (Regional Park) Avesta Homes (Apartment Complex) One Ocean Resort (Hotel) Sea Oats Plantation (Apartment Complex) Total 62 Annual Billings $ 386,590 1,644,484 294,668 143,636 129,311 126,044 105,919 81,911 77,958 60,727 $ 3,051,248 DRAFT ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS, ISSUED BY THE COMPTROLLER GENERAL OF THE UNITED STATES; THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA; AND OTHER CONTRACT REQUIREMENTS DRAFT CITY OF ATLANTIC BEACH, FLORIDA SCHEDULE OF SOURCE AND EXPENDITURE OF THE CITY GRANT FUNDS PER ORDINANCE CODE CHAPTER 118.301(e) Source of City Funds FOR FISCAL YEAR 2014-2015 City of Jacksonville Public Service Grants Received as a Su bgrant Recipient Per Inter local Agreement Fiscal Year 2014-2015 Grant No. 5629-57 Amount of Award (Per City of Jacksonville Budget Ordinance) $ 91,386 Actual Funds Received from City of Jacksonville in Last Audit Period Actual Funds Received this Period Amount Earned but Not Received this Period Unspent Award Amount Expenditure of City Funds $ 0 (89,937) 0 1,449 (A) City Fiscal Year 2014-2015 Grant #5629-76-includes carry-over of$9,192fi"om 2013-2014 Grant #5629-56. Project I Federal Grant Number Area Neighborhood Infrastructure Improvements # 005525/Bl4UC120017 Total 63 Budgeted $ 91,386 $ 91,386 Actual 10/1/2014 Remaining 9/30/2015 Balance $ 89,937 $ 1,449 $ 89,937 $ 1,449 (A) DRAFT Purvis Gray&.. ____________________ C_om_Qany INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor, City Commissioners, and City Manager Atlantic Beach, Florida We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Atlantic Beach, Florida, (the City), as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated ____ _ Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion on the effectiveness of City's internal control. 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 conect, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial repmiing was for the limited purpose described in the first paragraph of this section and was not designed to identifY all deficiencies in internal control that might be material weaknesses or, significant deficiencies. We consider the following deficiency in internal control to be a material weakness: Certified Public Accountants P.O. Box 141270 • 222 N.E. 1st Street w Gainesville, Florida 32614-1270 • (352) 378-2461 • FAX (352) 378-2505 L;lUrel Ridge Professional Center ~ 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542 443 East College Avenue ~ Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762 5001 Lakewood Ranch 131vd. N., Suite "101 • Sarasota, Florida 34240 • (941) 907-03.50 • FAX (941) 907-0309 MI:MBERS OF AMERIC\N AND FLORIDA INS!IruTES Of CEJ(TirJED PUIJLIC ACCOUNTANTS MlMillR Of AMERICAN INSTITUT[ OF CfRTiriELll'llilUC •ICCOl''HAi-iTS PRIVATE CCJ,\-WANIES A~'() ~.E.C PRACTICE SECTIDNS 64 DRAFT Honorable Mayor, City Commissioners, and City Manager Atlantic Beach, Florida INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Concluded) Internal Control Over Financial Reporting (Concluded) 15-1-Financial Close and Reporting Condition-At the commencement of final fieldwork it was noted that the preliminary working trial balance did not reflect all of the required closing entries, including but not limited to the accrual and reversal of numerous balance sheet accounts. It was also noted that a large prior year accrual was improperly booked to expense in fiscal year 2015. A deficiency in the financial repmting and close process could result in numerous errors and increases the risk of undetected misstatements. Recommendation-We recommend that the City's finance department evaluates their monthly and yearly financial close and repmting process. In addition, the finance department should perform variance analysis throughout the year over major balance and income statement accounts in order to identify and correct any errors in a timely manner. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from 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 repmted under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the .results of that testing, and not to provide an opinion on the effectiveness of the City's internal contwl or on compliance. This report is an integral pa11 of an audit perfmmed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Gainesville, Florida 65 DRAFT GPurvis ray~ ____________________ Co_m_Qany JNDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES Honorable Mayor, City Commissioners, and City Manager Atlantic Beach, Florida We have examined the City of Atlantic Beach, Florida's (the City) compliance with Section 218.415, Florida Statutes during the period ended September 30, 2015, as required by Section 10.556(10)(a), Rules of the Auditor General. Management is responsible for the City's compliance with those requirements. Our responsibility is to express an opinion on the City's compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA) and, accordingly, included examining, on a test basis, evidence about the City's compliance with those requirements and petforming such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination of the City's compliance with specified requirements. In our opinion, the City complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2015. This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the City, its management, and is not intended to be, and should not be, used by anyone other than these specified pru.ties. Gainesville, Florida Certified Public Accountants P.O. Box 141270 "222 N.E. 1st Street • Gainesville, Florida 32614-1270 • (352) 378-2461 • FAX (352) 378-2505 Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 ~ FAX (352) 732-0542 443 East College Avenue • Tallahassee, Florida 32301 • (850j 224-7144 • FAX (850) 224-1762 5001 Lakewood Ranci1 Blvd. N .. Suite 101 .. Sarasota, Florida 34240 • (941) 907-0350 • FAX (941) 907-0309 MFMBFRS OF AMERICAN AND FL(JRIOA INoTITLJTF.S Of CFRTIFIFO i'URI.IC ACCOUNTANTS MfMRF.R Of AMERICAN 11-.'STITl.JTE OF CERTIFIHJ PUBLIC ACCOl ''-IT ANTS PRIVATE COMPA/':I[S ANO S.f.C PRACTICE SKTIOK!, 66 DRAFT GPurvis ray~ ____________________ C_om_P-any MANAGEMENT LETTER Honorable Mayor, City Commissioners, and City Manager City of Atlantic Beach Atlantic Beach, Florida Report on the Financial Statements We have audited the financial statements of the City of Atlantic Beach, Florida (the City) as of and for the year ended September 30, 2015, and have issued our report thereon dated _____ _ Auditors' Responsibility We conducted our audit 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. Other Reports and Schedule We have issued our Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Perfonned in Accordance with Government Auditing Standards, and Independent Accountants' Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter I 0.550, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated , should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)l., 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 report. There were no recommendations made in the preceding annual financial repmt. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity 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. Financial Condition Section 10.554(1)(i)5.(a), Rules of the Auditor General, requires a statement to be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503(1 ), Florida Statutes, and identification of the specific conditions met. In connection with our audit, we detennined that the City did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Certified Public Accountants P.O. Box 141270 • 222 N.E. 1st Street • Gainesville, Florida 32614-1270 "(352) 378-2461 • FAX (352) 378-2505 Laurel Ridge Proiessional Center • 2347 S.E. 17th Street .. Ocala, Florida 3447·1 " (352) 732-3872 • FAX (352) 732-0542 . 443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 ~ FAX (850) 224-1762 5001 Lakewood Ranch Blvd, 1~., Suite 101 • Sarasota, Florida 34240 • (941) 907-03.50 • FAX (941) 907-0309 ML~\B[RS OF AMlRi\At-; AND ~LORIDA />;Sl/TUHS Or O:RHriEO PUUL!C ACCOUNTANTS ML~llJER Of AMERICA!~ /.'-:STIT\JH 01' C[I{Tif'I[LJI'UB!.Il ACCOUNTANTS PRI\'AH COMPANIES A', . .J S.LC. PRACT/C[ SlCI/01\S 67 DRAFT Honorable Mayor, City Commissioners, and City Manager City of Atlantic Beach At,lantic Beach, Florida Financial Condition (Concluded) MANAGEMENT LETTER (Concluded) Pursuant to Sections 10.554(l)(i)5(c) and 10.556(8), 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. Annual Financial Report Section 10.554(1)(i)5.(b), Rules of the Auditor General, requires that we detennine whether the annual financial repmt for the City for the fiscal year ended September 30, 2015, 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, 2015. In connection with our audit, we determined that these two reports were in agreement. Special District Component Units Section 10.554(l)(i)5.(d), Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of a county, municipality, or special district, provided the financial infmmation necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we determined that there were no special district component units that were required to be reported in accordance with Section 218.39(3)(b), Florida Statutes. Other Matters Section 10.554(l)(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. Section 10.554(l)(i)4., Rules of the Auditor General, requires that we address noncompliance with 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 which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the infmmation and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management, and is not intended to be and should not be used by anyone other than these specified patties. We wish to take this oppmtunity to thank you and your staff for the cooperation and courtesies extended to us during the course of our audit. Please let us know if you have any questions or comments conceming this letter, our accompanying reports, or other matters. Gainesville, Florida 68