COAB CAFR FY16
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2016
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2016
TABLE OF CONTENTS
Independent Auditors’Report
.....................................................................................................................i-iii
Management’s Discussion and Analysis
....................................................................................................iv-xi
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position..........................................................................................................................1
Statement of Activities..............................................................................................................................2
Fund Financial Statements
Balance Sheet -Governmental Funds.......................................................................................................3
Reconciliation ofBalance 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
Statement of Activities...........................................................................................................................6
Statement of Net 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 ofFiduciary Net Position.......................................................................................................14
Statement of Changes inFiduciary Net Position....................................................................................15
Notes to Financial Statements
........................................................................................................16-45
Required Supplementary Information
General Employees’ Pension Plan:
Schedule of Changes in NetPensionLiability and Related Ratios........................................................46
Schedule of Contributions.......................................................................................................................47
Schedule of Investment Returns..............................................................................................................48
Police Officers’ Pension Plan:
Schedule of Changes in Net PensionLiability and Related Ratios........................................................49
Schedule of Contributions.......................................................................................................................50
Schedule of Investment Returns..............................................................................................................51
Other Postemployment Benefits Plan -Schedule of Funding Progress......................................................52
Schedule of Revenues, Expenditures, and Changes in FundBalances -
Budget and Actual -General Fund.....................................................................................................53-54
Note to Schedule of Revenues, Expenditures, and Changes in Fund
Balances-Budget and Actual -General Fund........................................................................................55
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS’REPORT
CITY OF ATLANTIC BEACH, FLORIDA
SEPTEMBER 30, 2016
TABLE OF CONTENTS
(Concluded)
Supplementary Information
Combining Balance Sheet -Nonmajor Governmental Funds................................................................56-57
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances -Nonmajor Governmental Funds.........................................................................58-59
Combining Statement of Fiduciary Net Position.........................................................................................60
Combining Statement of Changes in Fiduciary Net Position......................................................................61
Historical Revenues and Expenses...............................................................................................................62
Schedules of Net Revenues in Accordance with Bond
Resolutions -Enterprise Funds(Water and Sewer)................................................................................63
Other Bond Covenant Disclosures...............................................................................................................64
Other Statistical Information
Major Utility Customers...............................................................................................................................65
AdditionalElements of Report Prepared in AccordanceWith
Issued by theComptroller
Government Auditing Standards,
General of the United States; the
Rules of the Auditor General
of the State of Florida;and Other Contract Requirements
Schedule of Source and Expenditure of the City Grant Funds...............................................................66
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..........................................................................................67-68
Independent Accountants’ Report on Compliance with
Section 218.415, Florida Statutes.......................................................................................................69
Management Letter............................................................................................................................70-72
Management Response Letter...........................................................................................................73-74
INDEPENDENT AUDITORS’REPORT
INDEPENDENT AUDITORS’REPORT
Honorable Mayor, City Commissioners,and
City Manager
City of Atlantic Beach
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, 2016, 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
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor 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’sinternal
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.
i
Honorable Mayor, City Commissioners,and
City Manager
City of Atlantic Beach
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 information of the City, as of September 30, 2016, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and other requiredinformation on pages iv–xi and 46–55bepresented to
supplement the basic financial statements. Such information, 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 information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any assurance
on the information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
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 56–64,theother
statistical information section on page 65, and the schedule of expenditures of grant funds per the City of
Jacksonville’s Ordinance Code Chapter 118.202(e)on page 66are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
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 certain 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.
ii
Honorable Mayor, City Commissioners,and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS’REPORT
(Concluded)
Other Reporting Requiredby
Government Auditing Standards
In accordance with Government Auditing Standards, we have issued our report dated August 8, 2017,on
our consideration of the City’s internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, 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 internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standardsin considering the City’s internal control over financial reporting and
compliance.
Report on Summarized Comparative Information
We have previously audited the City’s 2015financial statements, and our report dated June 23, 2016,
expressed an unmodifiedopinion on those audited financial statements. In our opinion, the summarized
comparative information presented hereinas of and for the year ended September 30, 2015, is consistent,
in all material respects, with the audited financial statements from which it was derived.
August 8, 2017
Gainesville, Florida
iii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION ANDANALYSIS
SEPTEMBER 30, 2016
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, 2016.
Overview of the Financial Statements
This management’s discussion and analysis is intended to serve as an introduction to theCity’s basic
financial statements.The City’s basic financial statements are comprised of three components:
1)government-wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains othersupplementary information in addition to the basic financial
statements themselves. The purpose of each of the three components of the basic financialstatements 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 privatesector business. They include the Statement of Net Position
and the Statement of Activities.
The Statement of Net Positionpresents information on all of the City’s assets, deferred outflows of
resources, liabilities,and deferred inflows of resourceswith the difference between reported as net position.
Net positionisreported as one of three categories: invested in capital assets-net of related debt;restricted;
or unrestricted. Restricted net positionis further classified as either net positionrestricted by enabling
legislation or net position that isotherwise restricted. Over time, increases or decreases in net positionmay
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City’s net positionchanged 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 “governmental activities,” from other
functions that are intended to recover all or a significant portion of their costs through user fees and charges,
referred to as “business-type activities.”The governmental activities of the City include public safety, road
maintenance and construction, parks and recreation,conservation and resource management,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 1-2of 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
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of available
iv
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION ANDANALYSIS
SEPTEMBER 30, 2016
(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 Positionand 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 elevenindividual governmental funds. Information is presented separately in the
Governmental FundsBalance 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 tengovernmental 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 56-61of this report.
The City adopts an annual appropriated budget for all funds but is only required to present abudget
comparison for its General Fund. TheSchedule of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual -General Fund budgetary comparison schedule and notes on pages 53-54of this
report has been provided to demonstrate compliance with this budget.
Proprietary Funds
The City maintains only one type of proprietary fund and that is enterprise funds. The enterprise funds
are used to account for the activities of the water and sewer (utility), stormwater, building code
enforcement,and sanitation activities.
The proprietary fund financial statements provide the same type of information as the government-wide
financial statements, only in more detail. Separate information of the utility, stormwater,sanitation and
building code enforcement activities can be found in the basic proprietary fund financial statements on
pages 7-13of this report.
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the City (i.e.,
pension beneficiaries). Fiduciary funds are not reflected in the government-wide financial statements
because the resources of those funds are not available to support the City’s own programs. The
accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary
fund financial statements can be found on pages 14 -15 of this report.
Notes to Financial Statements
The notes to financial statements provide additional information that is essential to a full understanding of the
data provided in the government-wide and fund financial statements. The notes begin on page 16 of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the City’s progress in funding its obligation to provide
pension benefits to its employees and a budgetarycomparison schedule for the General Fund. Required
supplementary information can be found beginning on page 46of this report.
v
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2016
(Continued)
Government-wide Financial Analysis
Net positionmay serve over time as a useful indicator of a City’s financial position. As can be seen inthe
summarized table below, the City’s assets exceeded liabilities by $78,050,000at the close of the fiscal year
ended September 30, 2016.
By far the largest portion of the City’s net position,$64,277,000(82%), reflectsits investment in capital assets
(i.e., land, buildings, equipment, and infrastructure), less any related, outstanding debt used to acquire those
assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City’s investment in capital assets is reported net of related debt,
it should be noted that the resources needed to repay this debt must be provided from other sources, since the
capital assets themselves cannot be used to liquidate these liabilities.
A portion of the City’s net position,$5,528,000(7%),represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net position,$8,245,000
(11%),is used to meet the government’s ongoing obligations to citizens and creditors.
City of Atlantic Beach’s Net Position
September 30, 2016and 2015
(In Thousands)
GovernmentalBusiness-type
ActivitiesActivitiesTotals
201620152016201520162015
Current and other assets$12,272$11,965$11,365$9,466$23,637$21,431
Capital assets42,46039,54241,08439,60783,54479,149
Total Assets54,73251,50752,44949,073107,181100,580
Deferred Outflow3,5782,9932,1362,0835,7145,076
Long-term liabilities
outstanding8,8608,37420,95522,23529,81530,609
Other liabilities1,5487073,2082,9244,7563,631
Total Liabilities10,4089,08124,16325,15934,57134,240
Deferred Inflow2254049027440
Net Position:
Invested in capital assets,
net of related debt42,08739,54222,19019,39464,27758,936
Restricted3,8233,8831,7058835,5284,766
Unrestricted1,7671,9546,4785,7208,2457,674
Total Net Position$47,677$45,379$30,373$25,997$78,050$71,376
vi
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2016
(Continued)
As illustrated in the schedule on page vi, the City was able to report positive balances in all categories of
net position, both for the government as a whole, as well as for its separate governmental and business-type
activities. The same situation held true for the prior fiscal year.
City of Atlantic Beach’s Change in Net Position
For the Years Ended September 30, 2016and 2015
(In Thousands)
GovernmentalBusiness-type
ActivitiesActivitiesTotals
201620152016201520162015
Revenues:
Program Revenues:
Charges for Services$1,732$1,739$11,538$11,114$13,270$12,853
Operating Grants and
Contributions66764200667642
Capital Grants and
Contributions1,9132173,8283425,741559
General Revenues:
Property Taxes4,4834,113004,4834,113
Sales Taxes1,3311,296001,3311,296
Business and Utility Taxes1,1231,109001,1231,109
State Revenue Sharing33232200332322
Discretionary Sales Surtax80677200806772
Investment Earnings (Loss)1683138(5)306(2)
Miscellaneous7053007053
Total Revenues
12,62510,26615,50411,45128,12921,717
Expenses:
General Government2,3301,935002,3301,935
Public Safety5,5625,350005,5625,350
Road Maintenance and
Construction1,9011,771001,9011,771
Parks and Recreation1,3851,299001,3851,299
Interest/Fiscal Charges on
Long-term Debt000000
Utility007,1307,2787,1307,278
Stormwater001,1631,0921,1631,092
Sanitation001,5461,5601,5461,560
Building Code Enforcement00438350438350
Total Expenses
11,17810,35510,27710,28021,45520,635
Transfers851578(851)(578)00
Change in Net Position2,2984894,3765936,6741,082
Net Position-Beginning45,37944,89025,99725,40471,37670,294
Net Position-Ending
$47,677$45,379$30,373$25,997$78,050$71,376
vii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2016
(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 $10,931,000, a decrease of $517,000in 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
unassignedfund balance was $4,217,000, which equated to 36%oftotal General Fund expenditures
without transfers. The net result of various revenue and expense items resulted in adecreaseto the City’s
General Fund of $381,000 or 5% duringthe current fiscal.The decrease was a result of a transfers of
$200,000 to purchase land for park expansion and $575,000 for the public safety building project. These
transfers were offset by surplus of budget over expenditures, mostly unfilled positions.
Nonmajor governmental funds consisting of special revenue funds,the debt service fund, and the capital
projects fundhave a combined fund balance of $3,754,000.Of this fund balance,$3,823,334is
restrictedfor capital projectsand other uses.The net decrease in fund balance after transfers in
nonmajor governmental funds was $136,000.
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
$11,433,000, expenses of $9,648,000, net non-operating costs of $(386,000) and net capital contributions,
grants and transfers of $2,978,000. The net positionin the proprietary funds increased $4,376,000as a
result of the fiscal year’s activities. The unrestricted net position of the enterprise funds amounted to
$6,477,905at the end of fiscal year 2016.
Stormwater ratesstayed constant in fiscal year 2016as there were no rate changes.The $8.39 per ERU
is approximately 79%, compared to 84%for the prior year,of the total operating expenses of
$1,110,000needed to fully fund the operation with charges for service.
During fiscal year 2016,the Sanitation Fund netted anincrease in net position of $86,000.
General Fund Budgetary Highlights
Net Budget
The overall net difference from the final budgeted revenues and adjusted final budgeted expenses was a
deficit of $1,267,000. The actual decrease in fund balance was $381,000. This resulted in an $885,000
excess variance above what was budgeted.
viii
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2016
(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, 2016, amounted to $83,544,000. 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 $2,918,000 or 7.38%for governmental activities and aincrease of $1,477,000 or 3.01%for
business-type activities.
Capital asset events during the current fiscal year included the following:
Governmental Activities
Buildings,
net of accumulated depreciation,decreased by $120,000through annual depreciation of
the capital assets.
Intangible Assets
reflected a net increase of $18,000through annual depreciation of the capital
assets.This asset category includes land easements and computer software.
Improvements Other Than Buildings
reflected a net increase of $585,000. This represents capital
asset increase of $1,263,000,offset by depreciationof $678,000.
Equipment
reflected a net increase of $74,000. This represents capital asset increase of $292,000,
offset by depreciation of $218,000.
Construction in progress
increased $2,160,000.
Land
reflected anincrease of $201,000.
Business-type Activities
Buildings
reflected a net decrease in asset value of $9,000 from depreciation.
Improvements Other Than Buildings
reflected a net increase of $1,318,000. This represents capital
asset increases of $3,563,000, offset by depreciation of $2,245,000.
Equipment
reflected a net decrease of $12,000. This represents capital asset increase of $73,000,
offset by depreciation of $84,000.
Construction in Progress
had a net increase of $180,000.
ix
CITY OF ATLANTIC BEACH, FLORIDA
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2016
(Continued)
City of Atlantic Beach’s Capital Assets
(Net of Depreciation)
(In Thousands)
GovernmentalBusiness-type
ActivitiesActivitiesTotals
201620152016201520162015
Land$10,564$10,363$1,656$1,656$12,220$12,019
Intangibles5638214214270252
Buildings2,4792,59962702,5412,669
Improvements-Other25,73625,15137,89536,57763,63161,728
Equipment1,0689945175291,5851,523
Construction in Progress2,5573977405603,297957
Total$42,460$39,542$41,084$39,606$83,544$79,148
Additional information on the City’s capital assets can be found in Note 5 on pages28-29of this report.
Long-term Debt
At the end of the 2016fiscal year, the City had total bonded debt outstanding of $19,865,000. This amount
was comprised of debtsecured 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, 2016
(In Thousands)
Business-type
Activities
Utilities System Revenue Bond, Series 2014$12,870
F.D.E.P. State Revolving Funds Loan, 2010595
F.D.E.P. State Revolving Funds Loan, 20096,400
Total$19,865
Debt service coverage calculations can be found on page 63. Additional information on the City’s long-
term debt can be found in Note 6 on pages 29–31of this report.
x
BASIC FINANCIAL STATEMENTS
These basic financial statements contain Government-wide Financial Statements, Fund Financial
Statements,and Notes to Financial Statements.
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2015
2016
GovernmentalBusiness-type2015
ActivitiesActivitiesTotalsTotals
Assets
Equity in Pooled Cash and Investments$11,206,230$8,581,809$19,788,039$18,440,875
Receivables - Net50611,071611,121548,836
Due from Other Governments1,047,92935,2441,083,173972,176
Inventories8,98612,82721,81333,654
760
Notes Receivable - Current15,75916,51916,519
Restricted Assets:
Equity in Pooled Cash and Cash Equivalents01,984,8141,984,8141,218,056
Capital Assets:
Land10,563,5721,656,01812,219,59012,019,020
Buildings4,574,6464,356,3848,931,0308,931,030
Improvements Other Than Buildings41,339,13683,075,473124,414,609119,588,533
Equipment4,343,0332,401,0826,744,1156,379,327
Intangibles - Easements and Computer Software409,797244,709654,506626,648
(Accumulated Depreciation and Amortization)(21,327,563)(51,390,230)(72,717,793)(69,352,779)
Construction in Progress2,557,045740,4113,297,456957,269
Prepaid Items6,68606,68674,891
Notes Receivable - Noncurrent1,520123,346124,866125,946
Total Assets54,731,82752,448,717107,180,544100,580,001
Deferred Outflows of Resources
Unamortized Refunding Loss0971,489971,4891,079,432
Pension Related3,578,5781,164,7084,743,2863,995,826
Total Deferred Outflows of Resources3,578,5782,136,1975,714,7755,075,258
Liabilities
Accounts Payable and Other Current Liabilities1,091,004549,9031,640,907867,372
Construction Retainages Payable141,9426,255148,19724,819
Due to Other Governments010,93410,93411,066
Unearned Revenue1,689181,993183,682200,306
Deposits4,17204,1722,736
Compensated Absences - Current308,643106,084414,727259,192
Payable from Restricted Assets:
Current Portion of Bonds Payable01,160,0001,160,0001,090,000
Current Portion of Loan Payable0347,412347,412336,895
Accrued Interest Payable0235,654235,654252,483
Customer Deposits0609,753609,753586,894
Noncurrent Liabilities:
Due in More Than One Year018,357,70918,357,70919,865,122
Compensated Absences - Noncurrent368,822128,226497,048521,861
Other Postemployment Benefits Obligation203,70467,974271,678238,299
Net Pension Liability 8,288,1942,401,10310,689,2979,983,520
Total Liabilities10,408,17024,163,00034,571,17034,240,565
Deferred Inflow of Resources
Pension Related224,99849,180274,17839,827
Net Position
Net Investment in Capital Assets42,087,08122,190,21564,277,29658,936,463
Restricted for:
Renewal and Replacement0250,000250,000250,000
Debt Service0390,038390,038381,162
Public Safety161,1660161,166180,762
Road Maintenance and Construction1,067,15401,067,154248,141
System Development Fees0735,023735,023290,885
Other Capital Projects2,433,05602,433,0563,325,789
Other Purposes161,9580161,958128,595
Building Code Enforcement0329,553329,553251,255
Unrestricted1,766,8226,477,9058,244,7277,381,815
Total Net Position$47,677,237$30,372,734$78,049,971$71,374,867
See accompanying notes.
1
CITY OF ATLANTIC BEACH, FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2015
2016
NonmajorTotals
GovernmentalGovernmental2015
GeneralFundsFundsTotals
Assets
Equity in Pooled Cash and Investments$7,105,473$4,100,757$11,206,230$10,945,323
Receivables - Net50050450
Due from Other Funds75,035075,03510,781
Due from Other Governments636,272411,6571,047,929936,932
Inventories8,98608,98620,827
Notes Receivable - Current7600760760
Prepaid Items6,68606,68658,786
Notes Receivable - Noncurrent1,52001,5201,520
Total Assets7,834,7824,512,41412,347,19611,975,379
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities653,290437,7141,091,004491,380
Construction Retainages Payable0141,942141,9420
Due to Other Funds075,03575,03510,781
Deposits2,7461,4264,1722,736
Unearned Revenue1,68901,68922,017
Total Liabilities657,725656,1171,313,842526,914
Deferred Inflows of Resources0102,723102,7230
Fund Balances
Nonspendable:
Inventories8,98608,98620,827
Prepaids6,68606,68658,786
Restricted for:
Public Safety0161,166161,166180,762
Road Maintenance and Construction01,067,1541,067,154248,141
Other Capital Projects02,433,0562,433,0563,325,789
Other Purposes0161,958161,958128,595
Committed to:
Conservation and Resource Management034,91134,91118,956
Assigned to:
Operating Reserves2,944,07102,944,0712,836,042
Unassigned4,217,314(104,671)4,112,6434,630,567
Total Fund Balances7,177,0573,753,57410,930,63111,448,465
Total Liabilities and Fund Balances
$7,834,782$4,512,414$12,347,196$11,975,379
See accompanying notes.
3
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2015
20162015
Total Fund Balances of Governmental Funds$10,930,631$11,448,465
Amounts Reported for Governmental
Activities in the Statement of Net Position
are Different Because:
Capital assets used in governmental
activities are not financial resources
and, therefore, are not reported in
the funds:
Total Capital Assets$63,787,229$59,843,271
(Accumulated Depreciation)(21,327,563)(20,301,137)
42,459,66639,542,134
Nonexchange receivables that do not
provide current financial resoures and,
therefore, are not reported revenues
in the funds.102,7230
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 Pensions3,578,5782,992,625
Deferred Inflows Related to Pensions(224,998)(39,827)
3,353,5802,952,798
Long-term liabilities are not due and payable
in the current period and, therefore, are
not reported in the governmental funds:
Compensated Absences(677,465)(573,231)
Other Postemployment Benefits Obligation(203,704)(178,501)
Net Pension Liability(8,288,194)(7,813,357)
(9,169,363)(8,565,089)
Total Net Position of Governmental Activities$47,677,237$45,378,308
See accompanying notes.
4
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2015
2016
NonmajorTotals
GovernmentalGovernmental2015
GeneralFundsFundsTotals
Revenues
Property Taxes$4,482,739$0$4,482,739$4,113,476
Nonproperty Taxes1,123,0101,398,2302,521,2402,471,639
Permits, Fees, and Special Assessments848,3080848,308858,232
Intergovernmental Revenues1,819,735567,7342,387,4691,913,613
Fines and Forfeitures54,33321,58975,92289,782
Charges for Services786,0530786,053742,416
Investment Earnings (Loss)107,46060,534167,9942,410
Miscellaneous Revenues53,67415,95569,62957,090
Interfund Charges1,550,32001,550,3201,545,981
Total Revenues10,825,6322,064,04212,889,67411,794,639
Expenditures
Current:
General Government3,221,83603,221,8362,845,102
Public Safety5,349,97584,5475,434,5224,971,742
Road Maintenance and Construction1,419,317308,5321,727,8491,591,334
Parks and Recreation1,109,06001,109,0601,028,105
Conservation and Resource
Management0001,800
Capital Outlay577,4182,187,6472,765,0651,436,086
(Total Expenditures)(11,677,606)(2,580,726)(14,258,332)(11,874,169)
(Deficiency) of Revenues (Under)
Expenditures(851,974)(516,684)(1,368,658)(79,530)
Other Financing Sources (Uses)
Transfers in 1,045,8741,140,3002,186,1741,088,210
Transfers (out)(575,300)(760,050)(1,335,350)(510,000)
Sale of General Fixed Assets00017,611
Total Other Financing Sources (Uses)470,574380,250850,824595,821
Net Change in Fund Balances(381,400)(136,434)(517,834)516,291
Fund Balances, Beginning of Year7,558,4573,890,00811,448,46510,932,174
Fund Balances, End of Year
$7,177,057$3,753,574$10,930,631$11,448,465
See accompanying notes.
5
CITY OF ATLANTIC BEACH, FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2015
20162015
Net Change in Fund Balances - Total Governmental Funds$(517,834)$516,291
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 $2,765,065$1,436,084
Donated Infrastructure1,178,8930
(Current Year Depreciation)(1,026,427)(1,108,501)
2,917,531327,583
Certain nonexchange revenues reported in the
statement of activities are not considered current
financial resources and, therefore, are not
reported as revenue in the governmental funds.102,7230
The changes in net pension liability and pension
related deferred outflows and inflows of
resources result in an adjustment to pension
expense in the statement of activities, but
not in the governmental fund statements.(74,055)(331,193)
Some expenses/revenues reported in the statement
of activities do not require the use of or provide
current financial resources and, therefore, are not
reported as expenditures in governmental funds:
Compensated Absences(104,233)(2,711)
(25,203)
Other Postemployment Benefits Obligation(21,656)
(129,436)(24,367)
Change in Net Position - Governmental Activities$2,298,929$488,314
See accompanying notes.
6
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF FIDUCIARY
NET POSITION
SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2015
Pension Trust Funds
20162015
Assets
Cash and Cash Equivalents$358,042$137,107
Money Markets1,975,3244,846,615
Due from Other Governments112,9720
Interest Receivable17,8218,921
Investments at Fair Value23,535,34918,508,817
Total Assets
25,999,50823,501,460
Liabilities
Accounts Payable and Accrued Liabilities00
Total Liabilities
00
Net Position
Net Position Restricted for Pensions$25,999,508$23,501,460
See accompanying notes.
14
CITY OF ATLANTIC BEACH, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2015
Pension Trust Funds
20162015
Additions
Contributions:
Employer$1,841,817$1,437,627
Employees245,218248,545
State of Florida112,972103,528
Total Contributions2,200,0071,789,700
Net (Decrease) Increase in
Fair Value of Investments2,032,332189,300
Interest and Dividends390,564139,274
Total Additions4,622,9032,118,274
Deductions
Refunds of Contributions55,56928,505
Benefits1,906,7001,555,728
Investment Expenses100,158122,714
Administrative Expenses62,42877,894
Total Deductions2,124,8551,784,841
Change in Net Position2,498,048333,433
Net Position, Beginning of Year 23,501,46023,168,027
Net Position, End of Year$25,999,508$23,501,460
See accompanying notes.
15
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
Note 1 -Summary of Significant Accounting Policies
The accounting policies of the City of AtlanticBeach, Florida,(the City),conform to accounting
principles generally accepted in the United States of America as applicable to governments. The
following is a summary of the more significant policies used in the preparation of these financial
statements.
Reporting Entity
The City was incorporated in 1957, under a charter in accordance with the laws of the State of
Florida, Florida Statutes Section 57-1126. The City operates under a form of government which
comprises an elected City Commission (four Commissioners and a Mayor-Commissioner) and
provides, under the administration of an appointed City Manager, the following services:public
safety, public works (streets and infrastructure), recreation, sanitation, stormwater,reuse,
planning, zoning, waterand sewer, and general government services.
In accordance with the Codification of 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:(1) 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 positionand the statement
of activities) report information on all of the nonfiduciary activities of the City. For the most
part, the effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment isoffset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or activity. Indirect costs are included in the program
expense reported for individual functions and activities. Program revenues include:(1)charges
to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or activity;and (2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or activity.
Taxes and other items not properly included among program revenues are reported instead as
general revenues.
16
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 1 -Summary of Significant Accounting Policies
(Continued)
Government-wide and Fund Financial Statements
(Concluded)
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary
funds, even though the latter are excluded from the government-wide financial statements. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements
The government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues
in the year for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.
As a general rule,the effect of interfund activity has been eliminated from the government-wide
financial statements. The major exception to this general rule ischarges between the City’s water
and sewer function and various other functions of the City. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenuesinclude: (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 positionisreported as one of three categories:(1)Net Investment in Capital Assets;
(2)Restricted; or (3) Unrestricted.
Fund Financial Statements
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon
as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current period.
For this purpose, the government considers revenues to be available if they are collected within
sixty days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences, other postemployment benefits,pension expense,
and claims and judgments, are recorded only when payment is due.
Taxes, intergovernmental revenue, licenses and permits, charges for services, and interest
associated with the currentfiscal period are all considered to be susceptible to accrual and so have
been recognized as revenues of the current fiscal period. All other revenue items are considered
to be measurable and available only when cash is received by the City.
17
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 1 -Summary of Significant Accounting Policies
(Continued)
Fund Financial Statements
(Concluded)
The City reports the following major governmental fund:
General Fund
The 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:
Utility Fund
The accounts for the activities of the City’s water distribution,sewercollection
and treatment systems, and reuse system.
Sanitation Fund
The accounts for the activities of the City’s sanitation system.
StormwaterFund
The accounts for the activities of the City’s stormwater system.
Building Code Enforcement Fund
The accounts for the activities of the City’sBuilding
Department.
Additionally, the City reports the following fund types:
Special Revenue Funds
—The special revenue funds are used to account for the proceeds of
specific revenue sources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
Debt Service Funds
—The debt service fund is used to account for the accumulation of
resources for, and the payment of, long-term general obligation debt principal, interest,and
related costs other than obligations payable from the operations of the proprietary funds.
Capital Projects Funds
—The capital projects funds are used to account for the financial
resources to be used for the acquisition or construction of major capital facilities and
improvement projects (other than those financed by proprietary funds or special revenue funds).
Pension Trust Funds
—These funds account for the activities of the Employees’Retirement
System, which accumulates resources for pension benefit payments to qualified police
officers and general employees.
Fund Balance Classification
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
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(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 takesthe 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 Commissionorby 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 purchaseof
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 salesand services,
administrative expenses, and depreciation on capital assets. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
Budgets
General governmental revenue and expenditures accounted for in budgetary funds are controlled
by a budgetary accounting system in accordance with various legal requirements which govern the
City’s operations. Budgets are monitored at varying levels of classification detail; however,
expenditures cannot legally exceed total appropriations at the individual fund level.
19
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER30, 2016
(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 requiredsupplemental 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 andinvestments.Investment earnings and losseson 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 nonspendablefund 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 dueto
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 funds, it is the
City’s policy to use restricted resources first, then unrestricted resources as they are needed.
20
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(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:
AssetsYears
Buildings and Improvements10–40
Improvements Other Than Buildings10–50
Infrastructure25–100
Machinery and Equipment3–40
Long-term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement of
net position. Bond premiums,discounts,and refunding lossesare deferred and amortized over
the life of the bonds usingthe effective interest method. Bond issuance costs are expensed when
incurred with the exception of bond insurance, which is amortized over the term of the related
debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period.The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources while discounts on debt issuances are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as
debt service expenditures.
Compensated Absences
Accumulated unpaid vacation and sick pay are accrued when incurred in the government-wide
and proprietary fund financial statements.
21
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 1 -Summary of Significant Accounting Policies
(Continued)
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
orbecome 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.
Unamortized Refunding Loss—the difference between the net reacquisition cost of new debt and
the net carrying amount of the old debt is recorded as a deferred outflow of resources. The
unamortized refunding loss is recognized as expense over the remaining term of the new debt
usingthe straight-line method.
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 information on Pension Related Deferred Inflows and Outflows.
Revenue Recognition
Utility revenues are reported on the accrual basis in the accompanying financial statements.
Grant revenues are recorded using the modified accrual basis in governmental funds and the
accrual basis in the proprietary funds. Restricted grant revenues, which are received but not
expended, are recorded as unearnedrevenues.
PropertyTaxes
The assessment of all properties and the collection of all property taxes are made through the
Property Appraiser and Tax Collector of the City of Jacksonville, Florida. General property taxes
are recorded as received, in cash, which approximates taxes levied less discounts for the current
fiscal year.
Taxes are levied on November 1 of each year. All taxes become delinquent on April 1 of the
following year. Discounts are allowed for early payment. On or prior to June 1, interest-bearing
certificates are sold for all uncollected real property taxes. Unsold certificates are held by the
City of Jacksonville, Florida.
Interfund Transactions
During the course of normal operations, the City has various transactions between funds to
construct assets and comply with local ordinances and other legal restrictions. These transactions
are reflected as transfers. In addition, certain transfers have been made between systems and
accounts of the utility enterprise fund as required by bond covenants.
22
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 1 -Summary of Significant Accounting Policies
(Concluded)
Prior Period Information
The financial statements include certain prior year summarized comparative information in total.
Such information does not include sufficient detail to constitute a presentation in conformity with
generally accepted accounting principles. Accordingly, such information should be read in
conjunction with the City’s financial statements for the year ended September 30, 2015, from
which the summarized information was derived.
Future GASB Pronouncement Implementations
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions, replaces the requirements of Statements No. 45, Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and
No.57,OPEB Measurements by Agent Employers and Agent Multi-Employer Plans,for OPEB.
This Statement establishes new accounting and financial reporting requirements for governments
whose employees are provided with OPEB, including the recognition and measurement of
liabilities, deferred outflows ofresources, deferred inflows ofresources,and expenses.For each
qualifying plan providing postemployment benefits other than pensions, employers are required
to report the difference between the actuarial OPEB liability and the related plan’s fiduciary net
position as the net OPEB liability on the statement of net position. Previously, a liability was
recognized only to the extent that contributions made to each plan were exceeded by the actuarially
calculated contributions for those plans. Additionally, Statement No. 75 sets forth note disclosure
and required supplementary disclosure requirements for defined contribution OPEB.The City is
currently evaluating the impact that adoption of this Statement will have on its financial
statements. This statement is effective for fiscal years beginning after June 15, 2017.
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 forpension investment purposes. In addition,
investments are separately held and individually accounted for where contractual arrangements
and bond covenants provide forand require such arrangements.
At September 30, 2016, the carrying amount of cash on hand and on deposit with banks, including
interest-bearing deposits was $6,021,553,and the related bank balance was $6,321,970.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 StatutesChapter 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.
23
CITY OFATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 2 -Cash and Investments
(Continued)
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, 2016:
Investment Maturities
LessMore
InvestmentCreditFairThan1-56-10Than
TypeRatingValue1 YearYearsYears10 YearsTotal
Money Market Funds:
Morgan Stanley, N.A.Unrated$4,239,633$4,239,633$0$0$0$0
Mutual Funds:
Delaware Diversified Income AUnrated2,557,3112,557,3110000
Guggenheim Floating Rate
Strategy Class AUnrated4,301,6684,301,6680000
Invesco Floating Rate
Income Class AUnrated769,809769,8090000
Voya Floating Rate AUnrated4,217,9874,217,9870000
Florida PRIMEA-122,93422,9340000
Total
$16,109,342$16,109,342$0$0$0$0
Listed below are the investments and maturities in the City’s pension trust funds at September30,
2016:
Investment Maturities
InvestmentFairLess Than1-56-10More Than
TypeValue*1YearYearsYears10 YearsTotal
Cash Deposits and
Money Markets$2,333,366$2,333,366$0$0$0$2,333,366
Common Stocks14,461,52614,461,52600014,461,526
Corporate Bonds2,895,480229,0751,752,637642,789270,9792,895,480
Mutual Funds2,512,9262,512,9260002,512,926
Government and
GSE Bonds3,202,17652,0041,516,148737,958896,0663,202,176
ICMA Self Directed481,062481,062000481,062
Total
$25,886,536$20,069,959$3,268,785$1,380,747$1,167,045$25,886,536
* Fair value balances reported include interest receivable.
The total pension investment balances of the City at September 30, 2016, are comprised of the
following items:
24
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 2-Cash and Investments
(Continued)
Moody’sPercent
InvestmentCreditof
TypeRatingTotal
Corporate BondsA10.478%
Corporate BondsA20.487%
Corporate BondsA32.561%
Corporate BondsAA10.481%
Corporate BondsAAA1.854%
Corporate BondsBAA13.820%
Corporate BondsBAA20.501%
Corporate BondsBAA31.004%
Government and GSE BondsAAA8.908%
Federal MBSPoolNR3.462%
Mutual FundsNR1.599%
StocksNR63.973%
Cash and Money MarketNR9.014%
ICMA Self DirectedNR1.858%
Credit Risk
—It 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 investmentgrade as
“BBB”, Baa”,or their equivalent.
Also, no more than 10% (at cost) of the fixed income portfolio total value can be invested in the
securitiesof 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 properlydesignated 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.
Fair Value Measurements
The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value
into three levels:
25
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 2 -Cash and Investments
(Continued)
Fair Value Measurements
(Concluded)
Level 1 Inputs
are quoted prices (unadjusted) for identical assets or liabilities in active
markets that a government can access at the measurement date.
Level 2 Inputs
are inputs other than quoted prices included within Level 1 that are
observable for an asset or liability, either directly or indirectly.
Level 3 Inputs
are unobservable inputs for an asset or liability.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to
Level 3 inputs. If a price for an identical asset or liability is not observable, a government should
measure fair value using another valuation technique that maximizes the use of relevant
observable inputs and minimizes the use of unobservable inputs.
The City’s investments are measured at fair value on a recurring basis. Fair value measurements
are categorized based on the valuation inputs used to measure an asset’s fair value in the hierarchy
described above. The fair value measurements for the City’s operating investments are as follows
at September 30, 2016:
Fair Value Measurements Using
Quoted Prices inSignificant OtherSignificant
Active Markets forOberservableUnobservable
Identical AssetsInputsInputs
Investments by Fair Value LevelAmount(Level 1)(Level 2)(Level 3)
City Investments:
Mutual Funds$ 11,846,775$ 11,846,775$ 0$ 0
Subtotal - City Investments11,846,77511,846,77500
General Employees' Pension Plan:
U.S. Treasury Obligations and
Federal Agency Securities2,216,6721,202,1001,014,5720
Corporate Bonds1,999,68101,999,6810
Mutual Funds862,144862,14400
Equities9,890,6209,890,62000
ICMA Self Directed41,29841,29800
Subtotal - General Employees' Pension Plan15,010,41511,996,1623,014,2530
Police Officers' Pension Plan:
U.S. Treasury Obligations and
Federal Agency Securities985,504531,391454,1130
Corporate Bonds895,7990895,7990
Mutual Funds1,650,7821,650,78200
Equities4,570,9064,570,90600
ICMA Self Directed439,764439,76400
Subtotal - Police Officers' Pension Plan8,542,7557,192,8431,349,9120
Total Investments Measured at Fair Value
$ 35,399,945$ 31,035,780$ 4,364,165$ 0
Weighted
Investments Measured at the Net AssetAverage Credit
Value (NAV)AmountMaturityRisk
Governmental Funds:
State Board of Administration (SBA):
Florida Prime$ 22,93450 DaysAAAm (S&P)
26
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 2 -Cash and Investments
(Concluded)
Restricted cash and investments at September 30, 2016, in the enterprise funds follows:
RenewalSystem
EnterpriseCustomerandDebtDevelopment
FundsDepositsReplacementServiceFeesTotals
Utility Fund$609,753$250,000$390,038$735,023$1,984,814
Note 3-Receivables
Receivables, net of the allowance for doubtful accounts at September 30, 2016, consist of the
following:
Less
TotalAllowanceAccounts
Accountsfor DoubtfulReceivable
FundReceivableAccountsNet
General$50$0$50
Utility511,151(19,689)491,462
Stormwater49,634049,634
Sanitation80,648(10,673)69,975
Total
$641,483$(30,362)$611,121
Included in accounts receivable are $239,334 of water and sewer revenues earned, but not billed
as of September 30, 2016.
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, 2016:
Notes Receivable$139,105
(Current Portion)(15,759)
Total Notes Receivable -Noncurrent
$123,346
27
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 5-Capital Assets
Capital asset activity for the fiscal year ended September 30, 2016, is as follows:
BeginningEnding
BalanceIncreases(Decreases)Balance
Governmental Activities
Capital Assets Not BeingDepreciated:
Land$10,363,002$200,570$0$10,563,572
Construction in Progress396,8612,185,413(25,229)2,557,045
TotalCapital Assets Not
Being Depreciated10,759,8632,385,983(25,229)13,120,617
Capital Assets BeingDepreciated:
Buildings4,574,646004,574,646
Intangible Assets381,93927,8580409,797
Improvements Other ThanBuildings40,075,8771,263,259041,339,136
Machinery and Equipment4,050,946292,08704,343,033
Total Capital Assets BeingDepreciated49,083,4081,583,204050,666,612
Less Accumulated Depreciationfor:
Buildings(1,975,693)(119,803)0(2,095,496)
Intangible Assets(343,956)(10,289)0(354,245)
Improvements Other ThanBuildings(14,925,041)(677,862)0(15,602,903)
Machinery and Equipment(3,056,447)(218,472)0(3,274,919)
Total Accumulated Depreciation(20,301,137)(1,026,426)0(21,327,563)
Total Capital Assets Being
Depreciated, Net28,782,271556,778029,339,049
Governmental Activities Capital
Assets, Net
$39,542,134$2,942,761$(25,229)$42,459,666
Business-type Activities
Capital Assets Not Being Depreciated:
Land$1,656,018$0$0$1,656,018
Construction in Progress560,408368,486(188,483)740,411
Total Capital Assets Not BeingDepreciated2,216,426368,486(188,483)2,396,429
Capital Assets Being Depreciated:
Buildings4,356,384004,356,384
Intangible Assets244,70900244,709
Improvements Other Than Buildings79,512,6563,562,816083,075,472
Machinery and Equipment2,328,38172,70202,401,083
Total Capital Assets Being Depreciated86,442,1303,635,518090,077,648
Less Accumulated Depreciation for:
Buildings(4,285,890)(8,812)0(4,294,702)
Intangible Assets(30,473)(190)0(30,663)
Improvements Other Than Buildings(42,935,659)(2,245,268)0(45,180,927)
Machinery and Equipment(1,799,622)(84,316)0(1,883,938)
Total Accumulated Depreciation(49,051,644)(2,338,586)0(51,390,230)
Total Capital Assets Being Depreciated,
Net37,390,4861,296,932038,687,418
Business-type Activities Capital Assets,
Net
$39,606,912$1,665,418$(188,483)$41,083,847
28
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 5-Capital Assets
(Concluded)
Depreciation expense was charged to functions/programs as follows:
Governmental Activities
General Governmental$127,738
Public Safety151,640
Road Maintenance and Construction517,354
Parks and Recreation229,694
Total Depreciation Expense -Governmental Activities
$1,026,426
Business-type Activities
Utility$1,824,225
Stormwater510,724
Sanitation1,543
Building Code Enforcement2,094
Total Depreciation Expense -Business-type Activities
$2,338,586
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 Annual
Installments of Principal and Semiannual Installments of Interest Through
October 1, 2025, Bearing Coupon Rates of 2.330%, 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$12,870,000
Loans Payable
Florida Department of Environmental Protection
, Disbursementsand
Capitalized Interest for a $773,030 State of Florida Revolving Loan
#DW160710, Issued to Finance the Construction Costs to Replace a
Well at Water Treatment Plant No. 1 and a Transmission Main on
Ocean Boulevard, Payable in Semiannual Installments of Principal
and Interest Through November 15, 2030, with Financing Rates of
2.71%, Secured Solely by a Pledge of Net Water and Sewer System
Revenues, After Payment of all Yearly Payment Obligations on Account
of the Senior Revenue Obligations, as Defined in the Loan Agreement594,779
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 of 3.14% and 2.88%, Secured Solely
by a Pledge of Net Water and Sewer System Revenues, After Payment
of all Yearly Payment Obligations on Account of the Senior Revenue
Obligations, as Defined in the Loan Agreement6,400,342
Total Revenue Bonds and Loans Payable
$19,865,121
29
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 6 -Long-term Debt
(Continued)
The annual requirements to amortize all revenue bonds and loans payable outstanding at
September 30, 2016, are as follows:
Business-type Activities
Year EndingLong-term Debt
September 30Principal InterestTotal
2017$1,507,413$500,776$2,008,189
20181,543,259462,6112,005,870
20191,584,443423,4662,007,909
20201,620,979383,3302,004,309
20211,657,875342,2512,000,126
2022-20268,961,2511,056,52110,017,772
2027-20312,489,757294,4612,784,218
2032500,14411,809511,953
Total
$19,865,121$3,475,225$23,340,346
Interest and amortization incurred during the year ended September 30, 2016, amounted to
$628,619. Of the 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, 2016, 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, 2016:
BalanceBalanceDue
October 1,September 30,Within
2015AdditionsReductions2016One Year
Governmental Activities
Compensated Absences$573,231$384,711$(280,477)$677,465$308,643
OPEB Obligation178,50125,2030203,7040
Net Pension Liability7,813,357474,83708,288,1940
Total Governmental Activities -
Long-term Liabilities
$8,565,089$884,751$(280,477)$9,169,363$308,643
Business-type Activities
State Revolving Fund Loans$7,332,017$0$(336,896)$6,995,121$347,412
Revenue Bonds Payable13,960,0000(1,090,000)12,870,0001,160,000
Total Bonds/Loans Payable21,292,0170(1,426,896)19,865,1211,507,412
Compensated Absences207,822142,197(115,709)234,310106,084
OPEB Obligation59,7988,176067,9740
Net Pension Liability2,170,163230,94002,401,1030
Total Business-type Activities -
Long-term Liabilities
$23,729,800$381,313$(1,542,605)$22,568,508$1,613,496
30
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 6-Long-term Debt
(Concluded)
Conduit Debt
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 andare 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, 2016, there are two series of Health Facility Revenue and
Refunding Bonds outstanding, with an aggregate principal amount payable of $55,085,000.
Pledged Revenue
The City has pledged certain revenues to repay certain bonds and notes outstanding as of
September 30, 2016. 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 notesat September 30, 2016:
Outstanding
NetPrincipalEstimatedPrincipal
PledgedRevenueand InterestPercentageandPledged
DescriptionRevenueReceivedPaidPledgedInterestThrough
2014–Utility SystemUtility
Refunding BondsRevenues$3,652,076$1,402,56938.40%$14,425,8582026
Florida Department of
EnvironmentalUtility
Protection, SRF LoanRevenues3,652,07649,8791.37%723,2422031
Florida Department of
EnvironmentalUtility
Protection, SRF LoanRevenues3,652,076511,95314.02%8,191,2462032
Note 7-Defined Benefit Pension Plans
Plan Descriptions
The City maintains two separate single-employerdefined benefitpension 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 planis 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 statementsare included in the supplementary information
to the basic financial statements.
31
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7-Defined Benefit Pension Plans
(Continued)
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 governed 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, 2016and 2015,isas follows:
September 30,September 30,
Retirees and Beneficiaries20162015
Inactive Plan Members or Beneficiaries
Currently Receiving Benefits6764
Inactive Plan Members Entitled to but Not
Yet Receiving Benefits1212
Active Plan Members3943
Total
118119
Plan Benefits
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
April 24, 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, 2016, Plan
net position included $41,298 of DROP account balances.
Contributions
The City is required to contribute at an actuarially determined rate (52.06%) of valuation payroll
for the year ended September 30, 2016. City contributions to the Plan were $1,112,344 for the
year ended September 30, 2016. Plan members are required to contribute 6.0% of their annual
covered salary. Contribution requirements are established by City code, which may be amended
by the City Commission.
Measurement Date
The City elected to use a measurement date to value the net pension liability and related deferred
inflows and outflows as of September 30, 2015, one year prior to the reporting date. The City’s
Pension Plans do notissue separate financial statements. Therefore, the disclosures requiredfor
the Planas of September 30, 2016, are also included below.
32
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
General Employees’ Retirement Plan
(Continued)
Total PensionPlan FiduciaryNet Pension
LiabilityNet PositionLiability
Balances at September 30, 2014$ 20,175,164$ 14,919,308$ 5,255,856
Changes for the Year:
Service Cost402,0930402,093
Interest1,404,31601,404,316
Difference Between Expected and Actual
Experience of the Total Pension Liability(162,280)0(162,280)
Contributions - Employer0863,613(863,613)
Contributions - State000
Contributions - Employee0136,191(136,191)
Net Investment Income0162,326(162,326)
Benefit Payments, Including
Refunds of Contributions(1,031,191)(1,031,191)0
Administrative Expenses0(41,909)41,909
Net Changes612,93889,030523,908
Balances at September 30, 2015$ 20,788,102$ 15,008,338$ 5,779,764
September 30, 2016
Total Pension Liability$21,530,799
Plan Net Position(16,524,333)
Net Pension Liability
$5,006,466
General Employees’ Retirement Plan Net Position as a Percentage
of Total Pension Liability76.75%
For the year ended September 30, 2016, the City recognized total pension expense of $1,381,429.
The City reported deferred outflowsof resources and deferred inflows of resources related to the
General Employees’ Pension Plan from the following sources:
Deferred Outflows of Resources
Changes in Assumptions$777,626
Net Difference Between Projected and Actual Earnings906,045
Contributions Made Subsequent to Measurement Date1,112,344
Total Deferred Outflows of Resources
$2,796,015
Deferred Inflows of Resources
Difference Between Expected and Actual Experience$111,567
Total Deferred Inflows of Resources
$111,567
33
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
General Employees’ Retirement Plan
(Continued)
Contributions made after the measurement date (shown above) will be recognized in the fiscal
year ended September 30, 2017. Other amounts reported as deferred outflows of resources related
to pensions will be recognized in pension expense as follows:
Year Ended
September 30Amount
2017$711,088
2018451,880
2019233,244
2020175,892
Total
$1,572,104
Plan Investments
The Retirement Plan Board is responsible for establishing and amending the Plan’s investment
policies. The Plan’s current 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 tointernational equities is 25%.The money-weighted
rate of return on Plan investments, net of investment related expenses, was 10.18% and 1.10% for
the years ended September 30, 2016 and 2015, respectively.
Actuarial Assumptions
The total pension liability was determined by actuarial valuations for the Plan as of September30,
2015, rolled forward to September 30, 2016, using the following actuarial assumptions, applied to
all periods included in the measurement:
Inflation:2.50%
Salary Increases:Age based ranging from 5.00% -13.50%
Investment Rate of Return:7.00%, net of investment expenses, including
inflation
Mortality:RP2000 Combined Health Participant Mortality
Table for males and females with generational
projections from the Year 2000 Projection Scale
AA
Date of Experience Study:Other significant actuarial assumptions used in the
September 30, 2015 valuation were based on the
results of an actuarial experience study (dated
February 15, 2011) for the period October 1, 2001
-September 30, 2010
The long-term 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 of 0.50% and inflation of 2.50%) are
developed for each major asset class. These ranges are combined to produce the long-term
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:
34
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
General Employees’ Retirement Plan
(Concluded)
Actuarial Assumptions
(Concluded)
TargetLong-term Expected
Asset ClassAllocationReal Net Rate of Return
US Large-Cap Growth Stocks13%7.4%
US Large-Cap Value Stocks12%7.0%
US Mid-Cap Growth Stocks3%8.6%
US Mid-Cap Value Stocks4%7.8%
US Mid-Cap Core Stocks3%6.9%
US Small-Cap Growth Stocks5%9.6%
US Small-Cap Value Stocks5%8.6%
International Equities5%7.2%
US Investment Grade Bonds40%1.8%
Cash (US 90-day T-bill)10%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 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 betweenactuarially 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 return on Plan investments (7.00%) was applied to all periods of
projected benefit 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 of 7.00%, 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, 2016:
Net Pension1% DecreaseCurrent Discount1% Increase
Liability(6.00%)Rate (7.00%)(8.00%)
General Employees’
Pension Plan$7,323,796$5,006,466$3,014,515
As of September 30, 2015:
Net Pension1% DecreaseCurrent Discount1% Increase
Liability(6.00%)Rate (7.00%)(8.00%)
General Employees’
Pension Plan$8,074,170$5,779,764$3,819,787
35
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
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 September30, 2016and
2015, isas follows:
September 30,September 30,
Retirees and Beneficiaries20162015
Inactive Plan Members or Beneficiaries
Currently Receiving Benefits2121
Inactive Plan Members Entitled to but Not
Yet Receiving Benefits56
Active Plan Members2319
Total
4946
Plan Benefits
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 of tenyears 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 equal 3.00% of
average final compensation for each year of credited service. For members hired on or after
January 1, 2013, the normal retirement benefit shall equal 2.00% 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, 2016, Police
Plan net position included $439,764 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 57.47% of valuation payroll for
the year ended September 30, 2016). City and State contributions to the Police Plan were
$842,455 for the year ended September30, 2016. Police Plan members are required to contribute
8.0% of their annual covered salary. Per City Code, the City Commission may amend established
contribution requirements.
36
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
Police Officers’ Retirement Plan
(Continued)
Measurement Date
The City elected to use a measurement date to value the net pension liability and related deferred
inflows and outflows as of September 30, 2015, one year prior to the reporting date. The City’s
Pension Plans do no issue separate financial statements. Therefore, the disclosures required for
the Plan as of September 30, 2016, are also included below:
Total PensionPlan FiduciaryNet Pension
LiabilityNet PositionLiability
Balances at September 30, 2014
$ 12,855,926$ 8,128,264$ 4,727,662
Changes for the Year:
Service Cost291,7610291,761
Interest900,9820900,982
Changes of Assumptions000
Difference Between Expected and Actual
Experience of the Total Pension Liability(213,426)0(213,426)
Contributions - Employer0574,014(574,014)
Contributions - State0103,528(103,528)
Contributions - Employee0112,354(112,354)
Net Investment Income043,534(43,534)
Benefit Payments, including
Refunds of Contributions(553,042)(553,042)0
Pension Plan Administrative Expense0(35,984)35,984
Other120,454120,4540
Net Changes546,729364,858181,871
Balances at September 30, 2015
$ 13,402,655$ 8,493,122$ 4,909,533
September 30, 2016
Total Pension Liability$13,856,425
Plan Net Position(9,473,354)
Net Pension Liability
$4,383,071
Police Officers’ Retirement Plan Net Position as a Percentage
of Total Pension Liability68.37%
For the year ended September 30, 2016, the City recognized total pension expense of $869,568. The
City reported deferred outflows of resources and deferred inflows of resources related to the Police
Plan from the following sources:
37
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
Police Officers’ Retirement Plan
(Continued)
Measurement Date
(Concluded)
Deferred Outflows of Resources
Net DifferenceBetween Projectedand Actual Earnings
on Pension Plan Investments$396,110
Assumption Changes708,705
Contributions Made Subsequent to Measurement Date842,455
Total Deferred Outflows of Resources
$1,947,270
Deferred Inflows of Resources
Differences Between Project and Actual Experience$162,610
Total Deferred Outflows of Resources
$162,610
Contributions made after the measurement date (shown above) will be recognized in the fiscal
year ended September 30, 2017. Other amounts reported as deferred outflows and inflows of
resources related to pensions will be recognized in pension expense as follows:
Year Ended
September 30Amount
2017$329,204
2018329,204
2019187,464
202096,333
20210
Thereafter0
Total
$942,205
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%.The money-weighted rate of return on Plan investments, net of investment related
expenses, was 9.93% and 0.53% for the years ended September 30, 2016 and 2015, respectively.
Actuarial Assumptions
The total pension liability was determined by actuarial valuations for the Plan as of September30,
2015, rolled forward to September 30, 2016, using the following actuarial assumptions, applied to
all periods included in the measurement:
38
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Continued)
Police Officers’ Retirement Plan
(Continued)
Actuarial Assumptions
(Continued)
Inflation:2.50%
Salary Increases:Age based ranging from 4.50% -22.50%(including
2.5% price inflation)
Investment Rate of Return:7.00% per year compounded annually,net of
investmentexpenses
Mortality:RP2000 Combined Health Participant Mortality
Table for males and females with generational
projections from the Year 2000 Projection Scale AA
Date of Experience Study:Other significant actuarial assumptions used in the
September 30, 2015, 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 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 of 0.50% and inflation of 2.50%) are
developed for each major asset class. These ranges are combined to produce the long-term
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 assetallocation (see the
discussion of the pension plans’ investment policy) are summarized in the following table:
Long-term Expected
Asset ClassTarget AllocationReal Net Rate of Return
US Large-Cap Growth Stocks13%7.4%
US Large-Cap Value Stocks12%7.0%
US Mid-Cap Growth Stocks3%8.6%
US Mid-Cap Value Stocks4%7.8%
US Mid-Cap Core Stocks3%6.9%
US Small-Cap Growth Stocks5%9.6%
US Small-Cap Value Stocks5%8.6%
International Equities5%7.2%
US Investment Grade Bonds40%1.8%
Cash (US 90-day T-bill)10%0.2%
39
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 7 -Defined Benefit Pension Plans
(Concluded)
Police Officers’ 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 PolicePlan 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
memberrate. Based on those assumptions, the PolicePlan’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 PolicePlan investments (7.00%) was applied
to all periods of projected benefit 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 of 7.00%, 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:
September 30, 2016
Net Pension1% DecreaseCurrent Discount1% Increase
Liability(6.00%)Rate (7.00%)(8.00%)
Police Officers’
Pension Plan$6,035,220$4,383,071$3,000,045
September 30, 2015
Net Pension1% DecreaseCurrent Discount1% Increase
Liability(6.00%)Rate (7.00%)(8.00%)
Police Officers’
Pension Plan$6,525,880$4,909,533$3,565,056
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 coversall 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
$64,723 and $57,604 for the years ended September 30, 2016 and 2015, respectively. Under the
457 Plan, an employee is considered fully vested after 5years of completed service.
40
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 9-Postemployment 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 opportunity to participate in this Plan. Benefit provisions for the Plan
are established by the City Commission and may be amended by the City Commission. The City
does not issue stand-alone financial statements for the Plan.
Membership in the Plan consisted of the following, as of October 1, 2015, the date of the latest
actuarial valuation:
Retirees and Beneficiaries Receiving Benefits2
Active Plan Members108
Total
110
Funding Policy
Contribution rates for the Plan are established on an annual basis by the City Commission.
Eligible retirees and their covered dependents receiving benefits contribute 100% of the blended
(active and retiree combined) equivalent premium rates. While the City does not directly
contribute towards the costs ofretiree 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 isconsidered 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 $49,250
for the current fiscal year. The ARCis based ona rate of .09%of projected payroll of $5,459,992
or an average $456per active participant. For the year ended September30, 2016, the City
estimated it implicitly subsidized $15,042of health care costs for its retirees and covered
dependents. This implied subsidy reduced the annual OPEB cost to a net expense of $33,379
after interest on the Net OPEB Obligation and adjustments to ARC.
Annual OPEB Cost and Net OPEB Obligation
The City’s annual OPEB cost (expense) is calculated based on the 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:
41
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 9-Postemployment Benefits Other Than Pensions
(Continued)
Annual OPEB Cost and Net OPEB Obligation
Annual Required Contribution$49,250
Interest on Net OPEB Obligation9,532
Adjustment to Annual Required Contribution(10,361)
Annual OPEB Cost (Expense)48,421
Employer Contribution(15,042)
Increase in Net OPEB Obligation33,379
Net OPEB Obligation -Beginning of Year 238,298
Net OPEB Obligation -End of Year$271,677
The City reflected the $33,379increase in net OPEB obligation at September 30, 2016, by
recording an obligation of $25,203for governmental activities and $8,176for business-type
activities in its government-wide statement of net position. The utility fund reported a net OPEB
obligation of $48,244, while the stormwater fundand building code enforcementfund reported
$10,741and $8,989, 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 thePlan.
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, 2016, are presented below.
Percentage
FiscalAnnualof AnnualNet
YearOPEBOPEBCostOPEB
EndedCostContributedObligation
September 30, 2014$46,48737.87%$208,681
September 30, 201549,35739.99%238,298
September 30, 201648,42131.07%271,677
Funded Status and Funding Progress
As of October 1, 2015,the date of the latest actuarial valuation, the actuarial accrued liability for
benefits was $406,200, all of which was unfunded. The covered payroll (annualpayroll of active
employeescovered by the Plan) was $5,459,992, and the ratio of the unfunded actuarial accrued
liability to the covered payroll was 7.44%. 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 healthcare cost trend. Amounts determined regarding the funded
status of the Plan and the ARCsof 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.
42
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(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 actuarialvaluation as of October 1, 2015, 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 interestcombined)
percent of payroll over a 23-year period.
Other significant actuarial assumptions include a 4% discount rate, an annual health care cost
trend rate of 9%, followed by 8%for the next year, followed by 6.25% for the next year, reduced
by decrements of 0.45% eachyear to the ultimate value of 4.45%, andprojected salary increases
of 4% annually (including general price inflation of 2.5%).
Note 10-Interfund Accounts
Individual fund interfund receivables and payables at September 30, 2016, consist of the following:
DueDue
from Otherto Other
FundsFunds
General$75,035$0
Nonmajor Governmental075,035
Interfund receivable/payables are due to timing differencesassociated with grant reimbursements.
The receivable/payables are expected to be received/paid within one year.
Note 11-Interfund Transfers
Transfers of resources from a fund receiving revenue to the fund through which the resources are
to be expended are recorded as transfers and are reported as other financing sources (uses) in the
governmental funds and as transfers in (out) in the proprietary funds. Following is a summary
of interfund transfers for the year ended September 30, 2016:
Transfers In
Nonmajor
GeneralGovernmentalTotal
Transfers OutFundFundsTransfers
General Fund$0$575,300$575,300
Nonmajor GovernmentalFunds195,050565,000760,050
Utility Fund621,0900621,090
Sanitation Fund229,7340229,734
Total Transfers
$1,045,874$1,140,300$2,186,174
43
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Continued)
Note 11 -Interfund Transfers
(Concluded)
Transfers are used to move revenues from the fund that ordinance or budget requires to collect
them to the fund that ordinance or budget requires to expend them.
Note 12-Commitments
As of September 30, 2016, the City had outstanding commitments on contracts in progress as
follows:
Unexpended
Project TypeContract Amounts
Utility System Improvements$911,064
Stormwater System Improvements21,684
Building Department8,854
General Government Improvements880,245
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, 2016, the City incurred
$1,099,125in 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 theremaining claims cannot be determined at this time.
Note 14-Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to,and destruction
of assets; errors and omissions; and natural disasters for which the City carries commercial
insurance. Insurance against losses are provided through the Public Risk Insurance Agency and
LB Bryan and Company for the following types of risk:
Workers’ Compensation and Employer’s LiabilityGeneral Liability
Automobile LiabilityPublic Officials’ Liability
Automobile Physical DamageProperty 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.
44
CITY OF ATLANTIC BEACH, FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(Concluded)
Note 15-Other Disclosures
Deficit Fund Balance
CDBG Fund
The City has an accumulated negative fund balanceof$104,671at September 30,2016,in the
CDBG fund.This is due to a timing difference between when the expenditures occurred and when
the related reimbursements were received.This negative fund balance will be recovered in fiscal
year 2017.
Subsequent Event
On October 7, 2016, Hurricane Matthew hit Atlantic Beach, causing extensive damage to the
City’s beaches requiring substantial debris clean up. The cost of removing debris was
approximately $341,187.A portion of the costs to remove debris and repair damages are expected
to be reimbursed by the Federal Emergency Management Agency, however, these amounts are not
yet known.
45
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
GENERAL EMPLOYEES' PENSION PLAN
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
September 30,September 30,September 30,
201620152014
Total Pension Liability
Service Cost$348,604$402,093$399,576
Interest1,437,2961,404,3161,386,245
Difference Between Actual and
Expected Experience164,601(162,280)0
Changes in Assumptions001,814,460
Benefit Payments(1,175,906)(1,031,191)(697,702)
Refunds(31,898)0(9,516)
Net Change in Total Pension Liability742,697612,9382,893,063
Total Pension Liability - Beginning
20,788,10220,175,16417,282,101
Total Pension Liability - Ending (a)21,530,79920,788,10220,175,164
Plan Fiduciary Net Position
Contributions - Employer1,112,344863,613950,980
Contributions - Employee128,204136,191157,383
Net Investment Income1,515,746162,326778,981
Benefit Payments(1,175,906)(1,031,191)(697,702)
Refunds(31,898)0(9,516)
Administrative Expenses(32,495)(41,909)(31,529)
1,515,99589,0301,148,597
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
15,008,33814,919,30813,770,711
Plan Fiduciary Net Position - Ending (b)16,524,33315,008,33814,919,308
Net Pension Liability - Ending (a) - (b)$5,006,466$5,779,764$5,255,856
Plan Fiduciary Net Position as a Percentage of
the Total Pension Liability76.75%72.20%73.95%
Covered Employee Payroll $2,136,733$2,269,850$2,623,050
Net Pension Liability as a Percentage of Covered
Employee Payroll234.30%254.63%200.37%
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.
46
CITY OF ATLANTIC BEACH, FLORIDA
GENERAL EMPLOYEES' PENSION PLAN
SCHEDULE OF CONTRIBUTIONS
September 30,September 30,September 30,
201620152014
Actuarially Determined Contribution$1,112,344$863,613$950,980
Contributions in Relation to the Actuarially
Determined Contribution1,112,344863,613950,980
Contribution Deficiency (Excess)$0$0$0
Covered Employee Payroll$2,136,733$2,269,850$2,623,050
Contributions as a Percentage of Covered
Employee Payroll52.06%38.05%36.25%
Additional years will be added to this schedule annually until 10 years of data is presented.
NOTES TO SCHEDULE OF CONTRIBUTIONS
Valuation Date:September 30, 2014
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:Entry Age Normal Cost Method
Amortization Method:Closed, Level Dollar Method
10 years
Remaining Amortization Period:
4-year Smoothed Market Value: Difference between the expected and actual return on
Asset Valuation Method:
market value of assets phased in over a period of four (4) years (at the rate of 25% per
year), adjusted to be no greater than 120% and no less than 80% of the fair market value.
Inflation:2.5% per year
Salary Increases:Age Based Ranging from 5.0% to 13.5% (including 2.5% price inflation)
Interest Rate: 7.0% per year compounded annually, net of investment related expenses.
Retirement Age: Experience-based table of rates that vary by age.
Post Retirement COLA:None
Mortality:RP2000 Combined Healthy Participant Mortality Table for males and females with
generational projections from the year 2000 Projection Scale AA.
Date of the Most Recent
Experience Study: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.
47
SCHEDULE OF INVESTMENT RETURNS
GENERAL EMPLOYEES' PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2016
CITY OF ATLANTIC BEACH, FLORIDA
September 30,September 30,
20162015
Annual Money - Weighted Rate of Return
Net of Investment Expense10.18%1.10%
Additional years will be added to this schedule annually until 10 years of data is presented.
48
CITY OF ATLANTIC BEACH, FLORIDA
POLICE OFFICERS' PENSION PLAN
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
September 30,September 30,September 30,
201620152014
Total Pension Liability
Service Cost$279,863$291,761$269,182
Interest on the Total Pension Liability931,370900,982879,486
Difference Between Actual and Expected Experience(2,998)(213,426)0
Changes in Assumptions001,275,669
Benefit Payments(730,794)(524,537)(524,537)
Refunds(23,671)(28,505)(61,079)
Other (Excess Premium Tax Liability)0120,4540
Net Change in Total Pension Liability453,770546,7291,838,721
Total Pension Liability - Beginning
13,402,65512,855,92611,017,205
Total Pension Liability - Ending (a)13,856,42513,402,65512,855,926
Plan Fiduciary Net Position
Contributions - Employer729,483574,014563,203
Contributions - State112,972103,52896,217
Contributions - Member117,274112,354103,095
Net Investment Income804,90143,534642,480
Benefit Payments(730,794)(524,537)(524,537)
Refunds(23,671)(28,505)(61,079)
Administrative Expenses(29,933)(35,984)(22,742)
Other (Excess Premium Tax Liability)0120,4540
Net Change in Plan Fiduciary Net Position980,232364,858796,637
Plan Fiduciary Net Position - Beginning
8,493,1228,128,2647,331,627
Plan Fiduciary Net Position - Ending (b)9,473,3548,493,1228,128,264
Net Pension Liability - Ending (a) - (b)$4,383,071$4,909,533$4,727,662
Plan Fiduciary Net Position as a Percentage of
the Total Pension Liability68.37%63.37%63.23%
Covered Employee Payroll $1,465,925$1,404,425$1,472,786
Net Pension Liability as a Percentage of Covered
Employee Payroll299.00%349.58%321.00%
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.
49
CITY OF ATLANTIC BEACH, FLORIDA
POLICE OFFICERS' PENSION PLAN
SCHEDULE OF CONTRIBUTIONS
September 30,September 30,September 30,
201620152014
Actuarially Determined Contribution*$825,700$665,091$654,280
Contributions in Relation to the Actuarially
Determined Contribution*842,455677,542659,420
Contribution Deficiency (Excess)$(16,755)$(12,451)$(5,140)
Covered Employee Payroll$1,465,925$1,404,425$1,472,786
Contributions as a Percentage of Covered
Employee Payroll57.47%48.24%44.77%
*Amounts include the contribution from the State of Florida.
Additional years will be added to this schedule annually until 10 years of data is presented.
NOTES TO SCHEDULE
Valuation Date:September 30, 2014
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:Entry Age Normal Cost Method
Amortization Method:Closed, Level % of Pay Method
Remaining Amortization Period: 30 years
Asset Valuation Method: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.
Inflation:2.5% per year
Salary Increases:Age Based Ranging from 4.5% to 22.5% (including 2.5% price inflation)
Payroll Growth: 3.50%
Interest Rate: 7.0% per year compounded annually, net of investment related expenses.
Retirement Age: Experience-based table of rates that vary by age
Post Retirement COLA:None
Mortality:RP2000 Combined Healthy Participant Mortality Table for males and females
with generational projections from the year 2000 Projection Scale AA.
Date of the Most Recent
Experience Study:Significant assumptions used in the September 30, 2014 valuation were based on the
results of an actuarial experience study for the period of October 1, 2001 -
September 30, 2010.
50
SCHEDULE OF INVESTMENT RETURNS
POLICE OFFICERS' PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2016
CITY OF ATLANTIC BEACH, FLORIDA
September 30,September 30,
20162015
Annual Money - Weighted Rate of Return
Net of Investment Expense9.93%0.53%
Additional years will be added to this schedule annually until 10 years of data is presented.
51
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POSTEMPLOYMENTBENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
SEPTEMBER 30, 2016
ActuarialUAAL as
ActuarialAccruedUnfundedAnnualPercentage
ValuationValue ofLiabilityAALFundedCoveredof Covered
DateAssets(AAL)(UAAL)RatioPayrollPayroll
10/1/09$0$497,883$497,8830.0%$5,828,3398.54%
10/1/120360,584360,5840.0%4,204,1778.58%
10/1/150406,200406,2000.0%5,459,9927.44%
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.The actuarial accrued liability (AAL)
decreased significantly from the last valuation duetoa decrease in the number of retirees receiving post-
employment health benefits, as well as a change in the medical trend assumption.
52
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, 2016
Variance With
Final Budget -
Budgeted AmountsActual Positive
OriginalFinalAmounts (Negative)
Revenues
Property Taxes$4,351,110$4,351,110$4,482,739$131,629
Nonproperty Taxes1,137,9271,137,9271,123,010(14,917)
Permits, Fees, and Special Assessments903,350903,350848,308(55,042)
Intergovernmental Revenues1,779,1421,779,1421,819,73540,593
Fines and Forfeitures82,90082,90054,333(28,567)
Charges for Services709,628709,628786,05376,425
Interest Income118,731118,731107,460(11,271)
Miscellaneous Revenues45,00045,00053,6748,674
Interfund Charges1,549,1371,549,1371,550,3201,183
Total Revenues
10,676,92510,676,92510,825,632148,707
Expenditures
Governing Body:
City Commission40,38440,38439,951433
City Clerk277,768281,793263,46018,333
City Attorney96,000237,185235,8241,361
Total Governing Body
414,152559,362539,23520,127
City Administration:
City Manager244,939244,939243,6751,264
General Government487,240492,118433,45058,668
Human Resources211,041211,041213,383(2,342)
Information Technology701,149785,697777,6448,053
Finance887,601925,084884,84040,244
Total City Administration
2,531,9702,658,8792,552,992105,887
Planning and Zoning149,364241,811237,4664,345
Public Safety:
Police4,250,9774,286,5984,081,284205,314
School Crossing Guards9,8909,89010,017(127)
Animal Control96,88797,28874,05523,233
Fire1,341,4551,341,4691,322,61418,855
Code Enforcement68,49268,49244,37224,120
Total Public Safety
5,767,7015,803,7375,532,342271,395
53
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, 2016
(Concluded)
Variance With
Final Budget -
Budgeted AmountsActual Positive
OriginalFinalAmounts (Negative)
Expenditures (Concluded)
Public Works:
Administration and Streets$1,297,622$1,337,879$1,222,994$114,885
Fleet Maintenance275,090304,919234,03070,889
Total Public Works
1,572,7121,642,7981,457,024185,774
Parks and Recreation:
Recreation and Special Events432,501634,888589,88745,001
Parks Maintenance854,399872,586768,660103,926
Total Parks and Recreation
1,286,9001,507,4741,358,547148,927
(Total Expenditures)
(11,722,799)(12,414,061)(11,677,606)736,455
(Deficiency) of Revenues (Under)
Expenditures(1,045,874)(1,737,136)(851,974)885,162
Other Financing Sources (Uses)
Transfers in1,045,8741,045,8741,045,8740
Transfers (out)0(575,300)(575,300)0
Total Other Financing Sources (Uses)1,045,874470,574470,5740
(Deficiency) of Revenues and Other
Financing Sources (Under) Expenditures
and Other Financing Uses0(1,266,562)(381,400)885,162
Fund Balances, Beginning of Year5,936,5545,936,5547,558,4571,621,903
Fund Balances, End of Year$5,936,554$4,669,992$7,177,057$2,507,065
54
CITY OF ATLANTIC BEACH, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
NOTE TO SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL -GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2016
Budgets and Budgetary Accounting
General governmental revenuesand 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 transferbudgeted 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.
55
SUPPLEMENTARY INFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2015
2016
Special Revenue Funds
LocalConvention
TreeOptionDevelopmentHalf-centCourt Cost
ReplacementGas TaxTaxSales TaxTraining
Assets
Equity in Pooled Cash
and Investments$34,911$220,546$146,684$628,966$87,466
Due from Other
Governments078,80015,274138,842220
Total Assets
34,911299,346161,958767,80887,686
Liabilities, Deferred
Inflows of Resources
and Fund Balances
Liabilities
Accounts Payable and
Accrued Liabilities000020
Construction Retainages Payable00000
Due to Other Funds00000
Deposits00000
Total Liabilities
000020
Deferred Inflows
00000
Fund Balances
Restricted for:
Public Safety000087,666
Road Maintenance and
Construction0299,3460767,8080
0
Other Capital Projects0000
Other Purposes00161,95800
Committed:
Conservation and Resource
Management34,9110000
Unassigned00000
Total Fund Balances
34,911299,346161,958767,80887,666
Total Liabilities, Deferred
Inflows of Resources and
Fund Balances
$34,911$299,346$161,958$767,808$87,686
56
2016
Special Revenue Funds
TotalsTotals
Community SpecialNonmajor
RadioContrabandDevelopmentPoliceRevenuesCapitalGovernmental2015
CommunicationForfeitureBlock GrantsGrantsFundsProjectsFundsTotals
$23,683$49,447$2,314$2,193$1,196,210$2,904,547$4,100,757$3,822,524
7630167,8569,902411,6570411,657247,000
24,44649,447170,17012,0951,607,8672,904,5474,512,4144,069,524
01,160106,9850108,165329,549437,714168,624
00000141,942141,9420
0065,1339,90275,035075,03510,781
01,426001,42601,426111
02,586172,1189,902184,626471,491656,117179,516
00102,7230102,7230102,7230
24,44646,86102,193161,1660161,166170,475
00001,067,15401,067,154248,141
000002,433,0562,433,0563,325,789
0000161,9580161,958128,595
000034,911034,91118,956
00(104,671)0(104,671)0(104,671)(1,948)
24,44646,861(104,671)2,1931,320,5182,433,0563,753,5743,890,008
$24,446$49,447$170,170$12,095$1,607,867$2,904,547$4,512,414$4,069,524
57
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2015
2016
Special Revenue Funds
LocalConvention
TreeOptionDevelopmentHalf-centCourt Cost
ReplacementGas TaxTaxSales TaxTraining
Revenues
Taxes$0$465,173$126,652$806,405$0
Other Intergovernmental
Revenues00000
Fines and Forfeitures00002,776
Investment Earnings (Loss)04,1511,7118,8251,293
Miscellaneous Revenues15,9550000
Total Revenues
15,955469,324128,363815,2304,069
Expenditures
Current:
Culture and Recreation00000
Public Safety000022,560
Road Maintenance and
Construction0228,119080,4130
Conservation and Resource
Management00000
Capital Outlay000141,8670
(Total Expenditures)
0(228,119)0(222,280)(22,560)
Excess (Deficiency) of Revenues
Over (Under) Expenditures
15,955241,205128,363592,950(18,491)
Other Financing Sources (Uses)
Transfers in 00000
Transfers (out)0(190,000)(95,000)(470,000)0
Total Other Financing
Sources (Uses)
0(190,000)(95,000)(470,000)0
Net Change in Fund Balances
15,95551,20533,363122,950(18,491)
Fund Balances, Beginning of Year
18,956248,141128,595644,858106,157
Fund Balances, End of Year
$34,911$299,346$161,958$767,808$87,666
58
2016
Special Revenue Funds
Totals Totals
CommunitySpecialNonmajor
RadioContrabandDevelopmentPoliceRevenueCapitalGovernmental2015
CommunicationForfeitureBlock GrantsGrantsFundsProjectsFundsTotals
$0$0$0$0$0$1,398,230$1,362,169
$ 1,398,230
00335,31765,417400,734167,000567,734164,876
9,1389,6750021,589021,58912,348
3037090016,99243,54260,534(2,025)
000015,955015,9557,181
9,44110,384335,31765,4171,853,500210,5422,064,0421,544,549
0000000500
0738061,24984,547084,547103,287
0000308,5320308,532274,068
00000001,800
04,855438,0404,168588,9301,598,7172,187,647860,752
0(5,593)(438,040)(65,417)(982,009)(1,598,717)(2,580,726)(1,240,407)
9,4414,791(102,723)0871,491(1,388,175)(516,684)304,142
000001,140,3001,140,30085,000
0(5,050)00(760,050)0(760,050)(510,000)
0(5,050)00(760,050)1,140,300380,250(425,000)
9,441(259)(102,723)0111,441(247,875)(136,434)(120,858)
15,00547,120(1,948)2,1931,209,0772,680,9313,890,0084,010,866
$24,446$46,861$(104,671)$2,1932,$3,753,574$3,890,008
$ 1,320,518$ 433,056
59
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF FIDUCIARY
NET POSITION
SEPTEMBER 30, 2016,
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2015
Pension Trust Funds
PoliceGeneral
Officers'Employees'
RetirementRetirement20162015
PlanPlanTotalsTotals
Assets
Cash and Cash Equivalents$197,427$160,615$358,042$137,107
Money Markets620,2001,355,1241,975,3244,846,615
Due from Other Governments112,9720112,9720
Interest Receivable8,6609,16117,8218,921
Investments at Fair Value8,534,09515,001,25423,535,34918,508,817
Total Assets
9,473,35416,526,15425,999,50823,501,460
Liabilities
Accounts Payable and Accrued Liabilities0000
Total Liabilities
0000
Total Net Position
Held in Trust for Pension
Benefits
$9,473,354$16,526,154$25,999,508$23,501,460
60
CITY OF ATLANTIC BEACH, FLORIDA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2016
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2015
Pension Trust Funds
PoliceGeneral
Officers'Employees'
RetirementRetirement20162015
PlanPlanTotalsTotals
Additions
Contributions:
Employer$729,483$1,112,334$1,841,817$1,437,627
Employees117,014128,204245,218248,545
State of Florida112,9720112,972103,528
Total Contributions959,4691,240,5382,200,0071,789,700
Net Increase in Fair Value
of Investments697,0751,335,2572,032,332189,300
Interest and Dividends141,007249,557390,564139,274
Total Additions
1,797,5512,825,3524,622,9032,118,274
Deductions
Refunds of Contributions23,67131,89855,56928,505
Benefits730,7941,175,9061,906,7001,555,728
Investment Expenses32,92167,237100,158122,714
Administrative Expenses29,93332,49562,42877,894
Total Deductions
817,3191,307,5362,124,8551,784,841
Change in Net Position
980,2321,517,8162,498,048333,433
Net Position, Beginning of Year
8,493,12215,008,33823,501,46023,168,027
Net Position, End of Year$9,473,354$16,526,154$25,999,508$23,501,460
61
CITY OF ATLANTIC BEACH, FLORIDA
HISTORICAL REVENUES AND EXPENSES
FOR THE YEARS ENDED SEPTEMBER 30, 2012 THROUGH SEPTEMBER 30, 2016
20122013201420152016
Revenues
Operating Revenues:
Water:
Customer Charges$3,069,998$3,006,787$2,955,863$2,992,677$3,177,331
Miscellaneous Charges48,81552,99654,85262,28662,477
Total Water3,118,8133,059,7833,010,7153,054,9633,239,808
Sewer:
Customer Charges5,015,3585,109,8684,938,5104,934,1515,045,673
Miscellaneous Charges3,3031,6511,2371070
Total Sewer5,018,6615,111,5194,939,7474,934,2585,045,673
Total Operating Revenues8,137,4748,171,3027,950,4627,989,2218,285,481
Nonoperating Revenues:
Investment Income (Loss):
Water197,492(115,023)186,681(7,718)58,092
Sewer(21,010)18,426(43,954)(4,257)38,929
Total Nonoperating Revenues176,482(96,597)142,727(11,975)97,021
Total Revenues
8,313,9568,074,7058,093,1897,977,2468,382,502
Expenses
Operating Expenses:
Water1,303,7081,228,7631,287,7831,442,5781,379,495
Sewer2,493,5002,005,6532,170,4952,055,7802,064,614
Total Operating Expenses3,797,2083,234,4163,458,2783,498,3583,444,109
Administrative, Nondivisional
and Other:
Water518,506521,600530,715563,356561,069
Sewer696,922674,514677,464734,839725,248
Total Administrative, Non-
divisional and Other1,215,4281,196,1141,208,1791,298,1951,286,317
(Total Expenses)
(5,012,636)(4,430,530)(4,666,457)(4,796,553)(4,730,426)
Net Revenues Available for
Debt Service
3,301,3203,644,1753,426,7323,180,6933,652,076
Nonoperating Income (Expense)
Interest Expense(726,058)(766,111)(896,571)(556,635)(481,693)
Loan Amortization(25,712)(12,787)(162,552)(98,507)(93,910)
Total Nonoperating Income
(Expense)
(751,770)(778,898)(1,059,123)(655,142)(575,603)
Net Income Before Depreciation
and Operating Transfers$2,549,550$2,865,277$2,367,609$2,525,551$3,076,473
62
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULES OF NET REVENUES IN ACCORDANCE
WITH BOND RESOLUTIONS
ENTERPRISE FUNDS (WATER AND SEWER)
FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND SEPTEMBER 30, 2015
20162015
Gross Revenues
Utility$8,246,818$7,955,290
Connection Charges38,66433,932
Interest97,020(11,977)
Total Gross Revenues
8,382,5027,977,245
Operating Expenses
Personal Services2,074,7621,968,047
Contractual Services552,627638,961
Supplies307,175388,737
Repairs and Maintenance121,248120,049
Utilities360,845372,361
Intergovernmental Charges1,113,7771,113,777
Other Expenses199,992194,619
(Total Operating Expenses)
(4,730,426)(4,796,551)
Total Net Revenues in Accordance with Bond Resolutions$3,652,076$3,180,694
Total Debt Service$2,104,658$768,739*
Debt Service Coverage Ratio173.52%413.75%
Required Debt Service Coverage Ratio110.00%110.00%
* The 2014 Series Refunding Bonds' first principal payment was not due until October 1, 2015.
63
CITY OF ATLANTIC BEACH, FLORIDA
OTHER BOND COVENANT DISCLOSURES
FOR THE YEARS ENDED SEPTEMBER 30, 2012 THROUGH SEPTEMBER 30, 2016
Utility Service Tax Collections
(Last Five Years)
YearElectricityCommunicationsGasFuel OilTotal
2012$452,183$567,909$23,187$14$1,043,293
2013459,672576,83920,849171,057,377
2014473,097522,65416,911291,012,691
2015476,997526,99615,55571,019,555
2016483,516500,29517,88161,001,698
Ad Valorem Tax Collections
(Last Five Years)
YearTotal
2012$3,961,395
20133,843,755
20143,908,365
20154,113,476
20164,482,739
64
OTHER STATISTICALINFORMATION
CITY OF ATLANTIC BEACH, FLORIDA
MAJOR UTILITY CUSTOMERS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
(UNAUDITED)
Annual
Billings
Fleet Landing (Retirement Community)$382,806
Navy (Federal Government)315,648
John Creek Estate (Mobile Home Park)128,853
PBH Mayport LLC123,396
Oaks of Atlantic Beach (Mobile Home Park)123,611
Arium Atlantic Beach (Apartment Complex)116,908
City of Atlantic Beach, Florida111,115
Hanna Park (Regional Park)108,730
Avesta Homes (Apartment Complex)83,150
One Ocean Resort (Hotel)81,635
$1,575,852
Total
65
ADDITIONALELEMENTS OF REPORT PREPAREDIN
ACCORDANCEWITH
GOVERNMENT AUDITINGSTANDARDS,
ISSUED BY THECOMPTROLLERGENERAL OF
THE UNITEDSTATES;THEOF
RULES OF THE AUDITOR GENERAL
THESTATE OFFLORIDA;ANDOTHER CONTRACT REQUIREMENTS
CITY OF ATLANTIC BEACH, FLORIDA
SCHEDULE OF SOURCE AND EXPENDITURE OF THE CITY GRANT FUNDS
PER ORDINANCE CODE CHAPTER 118.301(e)
FOR FISCAL YEAR 2015-2016
City of Jacksonville Public Service Grants Received as a
Subgrant Recipient Per Interlocal Agreement
Source of City Funds
Fiscal Year
2015-2016
Grant No. 5629-57
Amount of Award (Per City of Jacksonville
(A)
Budget Ordinance)$676,549
Actual Funds Received from City of
Jacksonville in Last Audit Period0
Actual Funds Received this Period(335,318)
(B)
Amount Earned but Not Received this Period(102,722)
Unspent Award Amount$238,509
Expenditure of City Funds
(A) City Fiscal Year 2015-2016 Grant #5629-76 - includes carry-over of $1,449 from 2014-2015 Grant.
(B) Includes receivable at September 30, 2016 in the amount of $64,793, received in December of 2016
and $37,929 of retainage payable, which has not yet been requested for reimbursement.
Actual
10/1/2015Remaining
Project / Federal Grant NumberBudgeted9/30/2016Balance
Area Neighborhood Infrastructure Improvements
# 005525 / B14UC120017$676,549$438,040$238,509
Total$676,549$438,040$238,509
66
INDEPENDENT AUDITORS’REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OFBASIC FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Honorable Mayor, City Commissioners,and
City Manager
City of Atlantic Beach
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, 2016, and the related
notes to the financial statements, which collectively comprise the City’s basic financial statements, and
have issued our report thereon datedAugust 8, 2017.
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 ofexpressing 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.
Adeficiency in internal controlexists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis.Amaterial weaknessis 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.Asignificant deficiencyis 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 controlover financial reportingwas 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 bea material weakness:
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Honorable Mayor, City Commissioners,and
City Manager
City of Atlantic Beach
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
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 reporting and close process could result in
numerous errors and increases the risk of undetected misstatements.
RecommendationWe recommend that the City’s finance department evaluates their monthly and yearly
financial close and reporting process. In addition, the finance department should perform variance analysis
throughout the year over major balancesheetand income statement accounts in order to identify and correct
any errors in a timely manner.
FY 2016 UpdateDuring the 2016 audit we noted improvements in the accrual and reversal ofroutine
balance sheet accounts; however, significant journal entries relating to donated infrastructure, capital
outlay, and payroll clearing accounts were needed. We recommend that the City’s finance department
continues to improve their process for closing out the City’s books.
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 reported
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’sinternal
control or on compliance.This report is an integral part of an audit performed in accordance with
Government Auditing Standardsin considering the City’s internal control and compliance.Accordingly,
this communication is not suitable for any other purpose.
August 8, 2017
Gainesville, Florida
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INDEPENDENT ACCOUNTANTS’REPORTON COMPLIANCE
WITH SECTION 218.415, FLORIDA STATUTES
Honorable Mayor, City Commissioners,and
City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have examined the City of AtlanticBeach, Florida’s (the City) compliance with Section 218.415,
Florida Statutes during the period ended September 30, 2016, 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 performing 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, 2016.
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 notintended to be, and should not be, used by anyone other than these specified parties.
August 8, 2017
Gainesville, Florida
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MANAGEMENT LETTER
Honorable Mayor, City Commissioners,and
City Manager
City of AtlanticBeach
AtlanticBeach, Florida
Report on the Financial Statements
We have audited the financial statements of the City of AtlanticBeach, Florida (the City) as of and for the
year ended September 30, 2016, and have issued our report thereon dated August 8, 2017.
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; and Chapter 10.550, Rules of the Auditor General.
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 Performed 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 10.550, Rules of the Auditor General. Disclosures in those reports and schedule,
which are dated August 8, 2017, should be considered in conjunction with this management letter.
Prior Audit Findings
Section 10.554(1)(i)1.,Rules of the Auditor General,requires that we determine whether ornot corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
report.Corrective actions have not been taken to address the prior year audit finding 15-01.
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
Sections10.554(1)(i)5.(a)and 10.556(7),Rules of the Auditor General,require that we apply appropriate
procedures and report the results of our determination as to whether or not the City has met one or more of
the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s)
met.In connection with our audit, we determined that the Citydid not meet any of the conditions described
in Section 218.503(1), Florida Statutes.
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Honorable Mayor, City Commissioners,and
City Manager
City of AtlanticBeach
AtlanticBeach, Florida
MANAGEMENT LETTER
(Continued)
Financial Condition
(Concluded)
Pursuant to Sections 10.554(1)(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
Sections10.554(1)(i)5.(b.)and 10.556(7),Rules of the Auditor General,requirethat we apply appropriate
procedures and report the results of our determination as to whether the annual financial report for the City
for the fiscal year ended September 30, 2016, 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, 2016.In connection with our audit, we determined that these two reports were in
agreement.
Special District Component Units
Section 10.554(1)(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
information 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(1)(i)2.,Rules of the Auditor General,requires that we address in the management letter any
recommendations to improve financial management. In connection with our audit, wehave the following
recommendations:
16-1–Payroll Clearing Fund
ConditionDuring the audit it was noted that the payroll clearing fund was not properly cleared as of
September 30, 2016. Currently, the clearing account has a cash balance and offsetting liability of
approximately $60,000.
RecommendationWe recommend that management review this fund to determine the reason for the balance.
We also recommend that management periodically review the fund during each fiscal year in order to reduce
the likelihood of an uncleared balancesheet.
16-2–Donated Infrastructure
ConditionDuring the review of capital assets it was noted that donated infrastructure that was accepted by
the City in the amount of $1,900,496 hadnotbeenrecordedin the City’s fixed asset records. These amounts
have since been recorded into the fixed asset records.
RecommendationWe recommend that the management implement procedures in order to properly identify
donated infrastructure in the correct accounting period.
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Honorable Mayor, City Commissioners, and
City Manager
City of AtlanticBeach
AtlanticBeach, Florida
MANAGEMENT LETTER
(Concluded)
Other Matters
(Concluded)
16-3–Timeliness of the Financial Report
ConditionFlorida Statutes 218.39 requires that municipalities have an annual financial audit of its accounts
and records completed within ninemonths after the end of its fiscal year. Due to delays as a result of not all
the necessary information being provided in a timely manner, the audit was not completed until the end of
July 2017.
RecommendationWe recommend that management evaluate and implement procedures to expedite the
closing and finalizing of the City’s accounting records.
Section 10.554(1)(i)3.,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 information 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 parties.
August 8, 2017
Gainesville, Florida
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