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FY 1998 CAFRCITY OF EDGEWATER, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED September 30, 1998 /E wA\ '%%Z- MEETING THE NEEDS OF THE FUTURE TODAY recyclo �. City of Edgewater, Florida Comprehensive Annual Financial Report Fiscal Year Ended September 30, 1998 Prepared by: Finance Department Karen A. Rickelman, CGFO Finance Director This page intentionally left blank. Introductory Section n1 rr Imi Ili This page intentionally left blank. mg w ■1 a mi City of Edgewater, Florida Comprehensive Annual Financial Report Fiscal year ended September 30, 1998 Mayor Randy G. Allman City Council District 1 —James K. Gornto District 2 —Myron F. Hammond District 3 —Gary W. Roberts District 4— Judith R. Lichter City Manager Kenneth Hooper City Clerk Susan J. Wadsworth City Attorney Nikki Clayton City Auditors Ernst & Young LLP -v - This page intentionally left blank. City of Edgewater, Florida Comprehensive Annual Financial Report Fiscal year ended September 30, 1998 Table of Contents Introductory Section Pages PrincipalCity Officials ................................................................................. ............................... v Tableof Contents .............................................................. ............................... .........................vii -ix Certificateof Achievement .......................................................................... ............................... xi OrganizationChart ...................................................................................... ............................... xvii Letterof Transmittal .................................................................................. ............................... 1 -10 Financial Section Report of Independent Auditors .................................................................... .............................15 General Purpose Financial Statements (Combined Statements — Overview) Combined Balance Sheet —All Fund Types and Account Groups .......... ..........................18 -21 Combined Statement of Revenues, Expenditures and Changes in Fund Balances —All Governmental Fund Types ................................ .............................22 Statement of Revenues, Expenditures and Changes in Fund Balances— Budget and Actual— General Fund ...................................... .............................23 Combined Statement of Revenues, Expenses and Changes in Retained Earnings —All Proprietary Fund Types .................................................. .............................24 Combined Statement of Cash Flows —All Proprietary Fund Types ... ............................... 25 -26 Combined Statement of Changes in Plan Net Assets —All Pension TrustFunds ............................................................................................. .............................27 Notes to Financial Statements ............................................................. ............................... 29 -59 Required Supplementary Information: Schedule of Pension Funding Progress ................................................... .............................60 Schedule of Employer Contributions ...................................................... .............................61 Schedules of Pension Funding and Employer Contributions ................. .............................62 Combining, Individual Fund and Account Group Financial Statements and Schedules Proprietary Fund Type: Enterprise Funds — Combining Balance Sheet .................................................................... ..........................66 -67 Combining Statement of Revenues, Expenses and Changes in Retained Earnings ............................................................ .............................68 Combining Statement of Cash Flows ................................................. ..........................69 -70 - vii - r Financial Section (continued) Statistical Section Statistical Information Table I - Pages Fiduciary Fund Types: Combining Statement of Plan Net Assets —All Pension Trust Funds .... .............................72 General Governmental Revenues by Source .................. ............................... Combining Statement of Changes in Plan Net Assets —All Pension TrustFunds .......................................................................................... .............................73 Property Tax Levies and Collections .................................. .............................94 Supporting Schedules General Fixed Assets Account Group: Assessed and Estimated Actual Value of Taxable Property .............................95 Scheduleby Source ................................................................................. .............................76 Schedule by Function and Activity ......................................................... .............................77 Property Tax Rates —All Direct and Overlapping Governments .....................96 Schedule of Changes by Function and Activity ...................................... .............................78 Table VI - General Long -Term Debt Account Group Schedule of General Long -Term Debt .................................................... .............................80 Computation of Overlapping Debt ...................................... .............................98 General Fund: Table VIII - Schedule of Revenues and Other Financing Sources— Budget andActual ......................................................................................... ............................... 81 -82 Schedule of Expenditures— Budget and Actual ............................... ............................... 83 -86 Statistical Section Statistical Information Table I - General Governmental Expenditures by Function ......... ............................... 90 -91 Table II - General Governmental Revenues by Source .................. ............................... 92 -23 Table III - Property Tax Levies and Collections .................................. .............................94 Table IV - Assessed and Estimated Actual Value of Taxable Property .............................95 Table V - Property Tax Rates —All Direct and Overlapping Governments .....................96 Table VI - Special Assessments Collections ......................................... .............................97 Table VII - Computation of Overlapping Debt ...................................... .............................98 Table VIII - Demographic Statistics ........................................................ .............................99 Table IX - Property Value, Construction and Bank Deposits ............... ............................100 Table X - Summary of Ten Largest Single Unit Water Users ............. ............................101 , Table XI - Principal Taxpayers .............................. ............................... ............................102 Table XII - Miscellaneous Statistical Data .............. ............................... ............................103 Table XIII - Water and Sewer Revenue Bond Coverage ......................... ............................104 - viii - Other Reports Pages Report of Independent Auditors on Supplementary Information— Schedules of Expenditures of Federal Awards and ' State Financial Assistance ......................................... ............................... ............................107 Schedule of State Financial Assistance .......................... ............................... ............................108 Schedule of Expenditures of Federal Awards ................ ............................... ............................109 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government AuditingStandards .................................................... ............................... ........................111 -112 ManagementLetter ........................................................ ............................... ........................113 -115 Independent Auditors Required Disclosure in Accordance ' with Government Auditing Standards, 1994 Revision ............................. ........................116 -117 . I -ix- This page intentionally left blank. C Certificate of Achievement for Excellence in Financial Reporting This page intentionally left blank. City of Edgewater, Florida Certificate of Achievement For the year ended September 30, 1997 1 The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Edgewater, Florida for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 1997. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of a state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. - xiii - This page intentionally left blank. Certificate of Achievement for Excellence in Financial Reporting Presented to City of Edgewater, Florida t For its Comprehensive Annual Financial Report for the Fiscal Year Ended ' September 30, 1997 A Certificate of Achievement for Excellence in Financial ' Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial ' reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 4� F fUNITEU STATES r / w r MO N 2� CANADA \ ca" O U T EN N President SIAL CNICAG� 1 0`� Executive Director 1w Ow ri w This page intentionally left blank. no .r .i i [I Organization Chart This page intentionally left blank. ' City of Edgewater, Florida Organizational Chart 1 -xix- ■r 9 This page intentionally left blank. ti go l' : di Letter of Transmittal This page intentionally left blank. i THE CITY OF EDGE WATER POST OFFICE BOX 100 - EDGEWATER, FLORIDA 32132 -0100 December 18, 1998 Honorable Mayor and Members of the City Council City of Edgewater, Florida The Comprehensive Annual Financial Report (CAFR) of the City of Edgewater, Florida, (hereinafter referred to as "the City "), for the fiscal year ended September 30, 1998, is submitted herewith pursuant to Chapter 10.550 of the Rules of the Auditor General of the State of Florida. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The comprehensive annual financial report is presented in four sections: introductory, financial, statistical and other reports. The introductory section includes this transmittal letter, the government's organizational chart and a list of principal officials. The financial section includes the general purpose financial statements and the combining and individual fund and account group financial statements and schedules, as well as the auditor's report on the financial statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multiyear basis. The other reports section includes various reports and schedules. 11 This report includes all funds and account groups of the City. The City provides a full range of services. These services include police and fire protection; water and sewer services; reclaimed water services; sanitation services; stormwater management; the ' construction and maintenance of highways, streets, and infrastructure; recreational activities and cultural events. In addition to general government activities, the City Council has financial accountability and oversight of the Police Officers', Firefighters', and General Employees' Retirement Systems; therefore, these activities are included in the reporting entity. 11 ri Honorable Mayor and Members of the City Council City of Edgewater, Florida Page 2 December 18, 1998 Economic Condition and Outlook am The City is located in southeast Volusia County, adjacent to I -95 and just south of New Smyrna Beach, along the Indian River and two miles west of the Atlantic Ocean. The City is within the economic zone of Central Florida which roughly follows Interstate 4 from Tampa through Orlando to the communities along the Atlantic coast in Volusia County. Edgewater has experienced a high rate of growth in the last five years. Edgewater's population during that period increased from 16,745 to 18,761, a 12.04% increase for the period or an average of 2.3% per year over the last five years. A large and expanded paint factory, a building industry, boat building and other light manufacturing provide employment. NASA, and related supporting enterprises at Cape Canaveral, provide further employment opportunities. Many residents commute to DeLand and Orlando for business employment. Edgewater Landing, a recently completed adult manufactured home community, was selected as one of "America's 50 Best Retirement Communities." To the west, the City has annexed property along Indian River Boulevard (SR442) from the previous City limits to I -95. Widening of Indian River Boulevard by the FDOT is expected to commence within two years. To meet the recreational needs of a growing population, Volusia County built River Breeze Park, a 35 acre regional park three miles south of the City, fronting the Indian River Lagoon. Within the City limits, the South Campus of Daytona Beach Community College continues to meet the educational and commercial needs of a growing community. The community currently has a 3.2% unemployment rate, below the state average of 4.2 %. During the past three years, property taxable assessment values have increased 10.56 %. As the economy grows we expect the growth trends experienced by the City will continue. The City continues exploring several options to increase economic growth within the City and improve economic development within Volusia County. Towards this goal the City previously contracted for a Business Climate Analysis and Natural Linkage Study. The study has served as a tool for the City's Economic Development Board to increase its level of activity and focus on action/result oriented initiatives. The study further endeavors to facilitate increased partnerships between various economic development agencies, local businesses and the City. i Honorable Mayor and Members of the City Council City of Edgewater, Florida Page 3 December 18, 1998 In partnership with the Florida Inland Navigation District (FIND), and their expected infrastructure improvements of $1,000,000, the City is pursuing the development of a business /industrial park. Phase I will consist of roadway and underground utility improvements on the 230 acres of property recently acquired by FIND. The proposed business /industrial park is to be located on a 400 acre tract of land zoned for industrial use. The proposed project will enable the City to develop and provide the necessary adjacent site improvements for the FIND development. The Daytona Beach Community College, which has a campus adjacent to the proposed project, may assist in attracting new jobs through the creation of a marine industry technology center on a portion of the proposed project. Major Initiatives For the Year. completed the City of Edgewater's Western Reserve Area Master Plan for potable water, sewer and reclaimed water. This plan provides the blueprint for infrastructure improvements to accommodate the orderly growth and development of Western Edgewater. The improvements are planned by sections to enable development in several different areas without having to complete the entire system. Some of the eastern most portions of the system may be completed in concert with the FIND Project to further encourage industrial development and buildout of the Park Avenue -North Air Park Road corridor. The City completed a Southern Service Area Master Plan some years ago and will be updating this report to optimize quality development in the Southern corridor of U.S. Highway 1. The City has negotiated a wholesale water agreement with Volusia County to serve the equivalent of 1,600 customers. Additionally, the City installed the infrastructure necessary to provide Cory Estates, a community just outside the City limits, with improved potable water. The City has annexed approximately two square miles of land, including an interchange at I -95 and SR442. This annexation brought the City's water plant within its borders and provides for future growth. With the roadway improvements to SR442, the interchange area will be a location for residential and commercial development. prime To provide for the orderly growth of the City to the west, both along the SR442 ' annexation and the Park Avenue Industrial Area, the City's consulting engineers completed the City of Edgewater's Western Reserve Area Master Plan for potable water, sewer and reclaimed water. This plan provides the blueprint for infrastructure improvements to accommodate the orderly growth and development of Western Edgewater. The improvements are planned by sections to enable development in several different areas without having to complete the entire system. Some of the eastern most portions of the system may be completed in concert with the FIND Project to further encourage industrial development and buildout of the Park Avenue -North Air Park Road corridor. The City completed a Southern Service Area Master Plan some years ago and will be updating this report to optimize quality development in the Southern corridor of U.S. Highway 1. The City has negotiated a wholesale water agreement with Volusia County to serve the equivalent of 1,600 customers. Additionally, the City installed the infrastructure necessary to provide Cory Estates, a community just outside the City limits, with improved potable water. Honorable Mayor and Members , of the City Council City of Edgewater, Florida Page 4 December 18, 1998 The road and drainage capital improvements project for the Florida Shores area was +r completed at a cost of $14,687,000. Approximately 9,600 lots within the assessment area were assessed $736.19, at an interest rate of 6.44% over a 16 year period. The City is paying 33% of the cost of the roadway capital improvement cost. The City obtained two 15 year Bank Qualified loans totaling $13,199,400. The borrowed funds, the construction period earnings, and the prepayments and first payments, combined with collected Stormwater Fees funded the capital improvement project. To obtain a favorable interest rate, the City pledged revenues from the local option gas tax, utility services tax, and special assessments levied. The ad valorem tax rate was increased to fund the City's portion of the capital improvement project. The stormwater drainage improvements are funded through the use of the stormwater management utility fee. Construction started in September 1995 and was completed, ahead of schedule and below budget. Completion of „r this project contributes to increased property values in the assessment district specifically and the City in general. For the Future. The City is planning the development of a 26 acre recreational complex on City owned property located in the central portion of the City. The complex will include a gymnasium, YMCA, softball fields and tennis facilities. The new complex will begin construction by July 1999. The Fire/Rescue Department has initiated the construction of a second Fire/Rescue I station located within the Florida Shores Subdivision. Construction should be completed in April 1999, and upon completion, response time should average less than four (4) minutes per call. The City Council has authorized the staffing of the new fire station with „ li eight (8) additional full time Fire/Rescue personnel. Department Focus. The Police Department has provided another excellent year of law enforcement service which is reflected in the recently published Crime Statistics. The City has the second lowest crime rate in Florida among cities with a population of 18,000. The Detective Division solved the last remaining homicide of this department, leaving no like cases unsolved. The department was one of the first in Volusia County to receive COPS FAST and COPS MORE Grants. These grants enabled the department to implement Community Policing and computerize its patrol cars to put more officers on the street to interact with the community. Through the Community Policing (Bicycle Patrol), two hundred (200) 1 t Honorable Mayor and Members of the City Council I' City of Edgewater, Florida Page 5 December 18, 1998 bicycle helmets were distributed to needy children to comply with the new bicycle helmet law. They also conduct bicycle rodeos, fingerprinting of children and assist in a variety of community functions. The Fire/Rescue Department continues to provide Advanced Life Support Emergency Medical Treatment to the community. With the addition of the new fire station in the Florida Shores Subdivision, the department will be able to respond to multiple incidents more efficiently. In addition to responding to emergency and nonemergency incidents, ' Fire/Rescue personnel provide many other services to City employees and the community. Some of these services are blood pressure screenings, CPR/First Aid ' training, disaster preparedness, Community Emergency Response Team (CERT) training and immunizations. Future goals to enhance the level of services offered to City residents include: the ability to complete extensive 12 lead EKGs and to transmit them to the physician from the patient's residence, contract Fire/Rescue service to the unincorporated areas of the City, and to provide emergency transport of unstable medical /trauma patients to the emergency department. Financial Information City management is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal controls are designed to provide reasonable assurance, but not absolute assurance, that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the benefits likely to be derived; (2) the valuation of costs and benefits requires estimates and judgments by management. During previous years the City implemented investment policies in response to national events, improved internal control measures over cash and investments, and increased legislative review. Federal and State Awards. As a recipient of Federal and State financial assistance, the City also is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to these programs. Their internal controls are subject to periodic evaluation by management. Honorable Mayor and Members of the City Council City of Edgewater, Florida Page 6 December 18, 1998 Budgeting Controls. In addition, the City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. The City Manager has the authority to exercise legal budgetary control at the fund level. Authority to adjust the various fund budgets is held by the City Council. The legally adopted annual operating budgets consist of. (1) the general fund; (2) the water and sewer fund; (3) the refuse fund; (4) stormwater management fund; and (5) the internal service /self insurance fund. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbrance amounts lapse at year end. However, encumbrances generally are either absorbed or appropriated as part of the following year's budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound fiscal management. General Government Functions. The following schedule presents a summary of General Fund revenues for the fiscal year ended September 30, 1998 and percent of the total amount and amount of increases and decreases in relation to prior year revenues. General Revenues by Source General Fund Percent of Increase (Decrease) Revenue Source Amount Total from 1997 Taxes $5,484,239 80.24% $336,277 Licenses and permits 185,503 2.71 6,367 Intergovernmental revenues 667,988 9.78 (20,298) Charges for services 123,692 1.81 12,214 Fines and forfeitures 75,309 1.10 (7,938) Miscellaneous revenues 297,743 4.36 51,236 Totals $6,834,474 100.00% $377,858 Government Fund Balances. The General Fund's reserved/unreserved fund balance of $3,491,473 is up $579,662 from last year. The increase was primarily the result of operating expenditures $633,889 less than budgeted. The City has exceeded its goal of an unreserved fund balance of 15% to 20% of operating expenditures. The undesignated fund balance is $2,419,373, which increased $579,779 from last year's $1,839,594. Cash Management. Residual cash held during the year was invested primarily with the State Board of Administration. Debt Administration. The City's general long -term debt totaled $8,457,081 at September 30, 1998, a decrease of $524,036. The debt consisted of the long -term portions of expected employee benefits payable in future periods, capital road and drainage improvement bonds (Series 1995A and 1995B), and a note payable to Volusia County for the 800 MHz Radio System. 1 Risk Management. The City of Edgewater contracts for all known risk elements through the purchase of ' insurance from outside insurance companies. These policies carry low retentions with limits averaging $1,000,000 per risk insured. As a government entity, the City is Honorable Mayor and Members ' of the City Council City of Edgewater, Florida Page 7 December 18, 1998 The following schedule presents a summary of General Fund expenditures for the fiscal year ended September 30, 1998 and percent of the total amount and amount of increases and decreases in relation to prior year expenditures. Expenditures and Other Uses Classified ' by Major Functions General Fund Percent of Increase (Decrease) ' Function Amount Total from 1997 General Government $1,871,415 29.88% $292,792 Public Safety 3,012,478 48.11 33,225 Transportation 328,927 5.25 (71,295) Culture/Recreation 601,396 9.60 11,275 Capital Outlay 414,808 6.63 92,287 Debt Service 33,189 .53 (1,471) Totals $6,262,213 100.00% $356,813 Government Fund Balances. The General Fund's reserved/unreserved fund balance of $3,491,473 is up $579,662 from last year. The increase was primarily the result of operating expenditures $633,889 less than budgeted. The City has exceeded its goal of an unreserved fund balance of 15% to 20% of operating expenditures. The undesignated fund balance is $2,419,373, which increased $579,779 from last year's $1,839,594. Cash Management. Residual cash held during the year was invested primarily with the State Board of Administration. Debt Administration. The City's general long -term debt totaled $8,457,081 at September 30, 1998, a decrease of $524,036. The debt consisted of the long -term portions of expected employee benefits payable in future periods, capital road and drainage improvement bonds (Series 1995A and 1995B), and a note payable to Volusia County for the 800 MHz Radio System. 1 Risk Management. The City of Edgewater contracts for all known risk elements through the purchase of ' insurance from outside insurance companies. These policies carry low retentions with limits averaging $1,000,000 per risk insured. As a government entity, the City is up Honorable Mayor and Members up of the City Council City of Edgewater, Florida Page 8 December 18, 1998 protected by Florida's sovereign immunity statutes. Under these statutes, liability claims, in most cases, in excess of $100,000 per person or $200,000 per occurrence require that a claim bill be passed by the Florida legislature before judgment can be collected. The City contracts for its worker's compensation exposure through the Florida Municipal Insurance Trust. The loss experience has been excellent over the previous two years so the City elected to change to first dollar coverage with a fixed two year premium starting October 1, 1997. A medical health and dental plan, as well as an employee assistance program (EAP), are provided to all full time employees. The medical plan provides for two options of coverage under either a Preferred Physician Organization (PPO) or Health Maintenance Organization (HMO) option. Utility Operations. The City's Water and Sewer Fund operations continue to report gains in the number of new customers connecting to the utility. As of year end, the City served over 7,900 water customers, over 7,600 sewer customers, and 1,595 reclaimed water customers. On October 1, 1994, the Water Rate Study was implemented per City ordinance. This increase, coupled with the existing sewer rates and water and sewer impact fees, .r continues to support the operational revenue requirements of the system and capital improvement projects. On October 1, 1994, the Stormwater Management fee was doubled to bring in excess of $350,000 to support the debt service requirements of the completed capital drainage improvements. Pension Trust Funds. , The Municipal Police Officers' Retirement Trust Fund was created by Ordinance under the provisions of Chapter 185, Florida Statutes. During the year, revenues were derived from State of Florida contributions of $62,640, interest and dividend earnings of $137,924, net appreciation in fair value of plan assets was $67,894, employees contributions of $11,252 and City contributions of $112,957. At September 30, 1998, the fund balance was $2,345,036. The General Employees' Pension Trust Fund includes all full time City employees, .r except police officers, firefighters, City Manager, City Attorney, employees hired after October 1, 1996, and those employees not vested in the General Employees' Plan who , opted to participate in the new General Employees' Money Purchase Plan and Trust established October 1, 1996. This plan, as well as the Police Officers' plan, are administered as Flexible Pension Investment contracts by The Principal Financial Group. ' During the year, the City contributed $463,396 to the general employees' plan, interest i� Honorable Mayor and Members of the City Council City of Edgewater, Florida Page 9 December 18, 1998 +� and dividends earnings were $395,368, while net appreciation in fair value of plan assets was $221,675. At September 30, 1998, the fund balance was $6,886,545. +` The Firefighters' Pension Fund was created by Ordinance under the provisions of Chapter 175, Florida Statutes. This plan is administered by the Firefighters' Pension Board. During the year, revenues were derived from State of Florida contributions of $48,813, interest and dividend earnings of $9,731, net appreciation in fair value of plan assets of $6,738, employees contributions of $20,812, and City contributions of $13,508. At September 30, 1998, the fund balance was $546,090. General Fixed Assets. The general fixed assets of the City are those fixed assets used in the performance of general governmental functions and exclude the fixed assets of the Enterprise Funds and the cost of certain public domain or "infrastructure" general fixed assets which have been excluded from the General Fixed Assets Account Group in accordance with generally accepted accounting principles. As of September 30, 1998, the general fixed assets of the City amounted to $19,626,353. This amount represents the original or estimated cost and is considerably less than present value. Depreciation of general fixed assets is not recognized in the City's accounting system. Other Information Independent Audit. State Statute requires an annual audit by independent certified public accountants. The accounting firm of Ernst & Young LLP was selected by the City Council. The audit was designed to meet the requirements set forth in State and Federal Statutes. The report of independent certified public accountants on the general purpose financial statements and combining and individual fund statements and schedules is r included in the financial section of this report. Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Edgewater for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 1997. The Certificate of Achievement is a prestigious national +n award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. M Honorable Mayor and Members of the City Council City of Edgewater, Florida Page 10 December 18, 1998 A Certificate of Achievement is valid for a period of one year only. The City of Edgewater has received a Certificate of Achievement for the last 15 consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. Acknowledgments. The preparation of the comprehensive annual financial report on a timely basis was made possible by the dedicated service of the entire staff of the Finance Department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. In closing, we would also like to thank the members of the Edgewater City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Kenneth R. Hooper Karen A. Rickelman, CGFO City Manager Finance Director 1 � I � I Financial Section I J F 1 ' This Section is composed of the following parts: ' Report of Independent Auditors General Purpose Financial Statements (Including Notes to Financial Statements) Combining, Individual Fund and Account Group ' Financial Statements and Schedules I J F 1 This page intentionally left blank. Report of Independent Auditors This page intentionally left blank. L' W E ERNST & YOUNG L L P ■ Certified Public Accountants ■ Phone: 407 872 6600 Suite 1700 390 North Orange Avenue Orlando, Florida 32801 -1671 Report of Independent Auditors The Honorable Mayor, City Council and City Manager City of Edgewater, Florida We have audited the accompanying general purpose financial statements of the City of Edgewater, Florida (the City) as of and for the year ended September 30, 1998, as listed in the table of contents. These general purpose financial statements are the responsibility of the City's .l management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. �. Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Governmental Accounting Standards Board (GASB) Technical Bulletin 98 -1, Disclosures about Year 2000 Issues, requires disclosure of certain matters regarding the Year 2000 issue. The City has included such disclosures in Note 19. Because of the unprecedented nature of the Year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until the year 2000 and thereafter. Accordingly, insufficient audit evidence exists to support the disclosures required by GASB TB 98 -1. Further, we do not provide assurance that the City's Year 2000 remediation efforts will be successful in whole or in part, or that parties with which the City does business will be Year 2000 ready. In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine evidence regarding Year 2000 disclosures, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Edgewater, Florida at September 30, 1998, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. 15 Ernst &Young LLP is a member of Ernst &Young International, Ltd. M As discussed in Note 18 to the general purpose financial statements, during the year ended September 30, 1998, the City of Edgewater, Florida adopted GASB 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. In accordance with Government Auditing Standards, we have also issued a report dated December 18, 1998 on our consideration of the City of Edgewater's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was made primarily for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining and individual fund and account group financial statements, schedules, and required supplementary information, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in our audit of the general purpose financial statements and, in our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine evidence regarding Year 2000 disclosures, as explained in the fourth preceding paragraph, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. The statistical section has not been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, accordingly, we express no opinion on it. lf>� f um¢l.Li' U (/ December 18, 1998 16 1 1 ' General Purpose Financial Statements (Combined Statements — Overview) ' The diverse nature of a governmental operation and the necessity of complying with legal provisions require accounting systems unlike those commonly used by commercial enterprises. Rather than establishing a single unified set of accounts for recording and summarizing all financial transactions, the accounts of a governmental unit are organized on the basis of funds or account groups. The general purpose financial statements were prepared to allow the user of the financial report to obtain an overview and broad perspective of the City's ' financial position ahead of the comparable data on a detailed basis by individual funds. n J City of Edgewater, Florida T Combined Balance Sheet All Fund Types and Account Groups 1W September 30, 1998 Governmental Fund Types Proprietary Fund Types Debt Internal General Service Enterprise Service M Assets Pooled cash and cash equivalents $ 4,076,370 $ 224,575 $ 3,878,602 $ 286,691 Investments – – – – Receivables: Taxes 60,219 – – – w Accounts 20,909 – 420,510 – Unbilled accounts – – 238,679 – Ili Accrued interest – – – 1,690 Special assessments -- current 21,014 – – – Due from other governments 36,085 – 1,217 – Due from other funds – – – 16,497 Inventory 5,065 – 54,022 – Prepaids 4,792 – 7,266 1,041 Restricted assets: Customer deposits: Cash and cash equivalents Sinking fund: – – 379,117 – Cash and cash equivalents – – 1,073,584 – Accrued interest receivable – – 3,605 – Renewal and replacement fund: Cash and cash equivalents – – 1,149,547 – Development fund: Cash and cash equivalents – – 1,704,120 – Construction fund: Special assessments —current – 281,544 – – Special assessments— noncurrent – 4,576,919 – – Investments – – – – Wastewater special assessment fund: Cash and cash equivalents – – 2,167,467 – Special assessments —current – – 608,872 – Special assessments— noncurrent – – 12,636,833 – Accrued interest receivable – – 590,159 – 0 1i Advances to other funds – – – 98,142 Land – – 570,789 – Buildings – – 20,023,941 – Improvements – – 32,125,412 – Machinery and equipment – – 1,534,623 – Accumulated depreciation – – (9,058,466) – Construction in progress – – 84,790 – Unamortized debt issuance costs – – 534,873 – Amount available for debt service – – – – Amount to be provided for payment of long -term debt – – – – lid Total assets $ 4,224,454 $ 5,083,038 $ 70,729,562 $ 40 4, 06 1 See accompanying notes. 18 t Account Groups Fiduciary General General Totals Fund Type Fixed Long -Term (Memorandum Only) Trust Assets Debt 1998 1997 $ - $ - $ - $ 8,466,238 $ 7,639,418 9,780,604 - - 9,780,604 8,333,404 - - - 60,219 83,848 - - - 441,419 430,873 - - - 238,679 224,384 11 - - 1,701 4,026 - - - 21,014 29,412 - - - 37,302 98,642 - - - 16,497 15,794 - - - 59,087 65,313 225 - - 13,324 21,081 - - - 379,117 358,411 - - - 1,073,584 1,073,806 - - - 3,605 1,974 - - - 1,149,547 976,574 - - - 1,704,120 1,682,628 - - - 281,544 265,575 - - - 4,576,919 4,891,180 - - - - 1,718 - - - 2,167,467 2,513,205 - - - 608,872 580,364 - - - 12,636,833 13,290,922 - - - 590,159 618,428 - - - 98,142 114,639 - 1,415,499 - 1,986,288 1,940,676 - 1,673,839 - 21,697,780 21,182,987 - 13,833,620 - 45,959,032 45,745,451 - 2,602,768 - 4,137,391 3,979,625 - - - (9,058,466) (7,591,110) - 100,627 - 185,417 306,536 - - - 534,873 587,834 - - 224,575 224,575 152,481 - - 8,232,506 8,232,506 8,828,636 $ 9,780,840 $ 19,626,353 $ 8,457,081 $ 118,305,389 $ 118,448,735 Page 1 of 2 19 f City of Edgewater, Florida Combined Balance Sheet All Fund Types and Account Groups September 30, 1998 Liabilities, equity and other credits Liabilities: Accounts payable $ Accrued liabilities Accrued interest payable Claims payable Due to other funds Deferred revenue Refundable deposits Notes payable— current Obligations under capital lease— current Payable from restricted assets: Customer deposits Accrued interest payable Bonds payable -- current Revenue bonds payable —current Contracts payable State revolving loan payable —current Advances from other funds Accumulated employee benefits Notes payable — long -term Bonds payable — long -term Revenue bonds payable —net— long -term State revolving loan payable —long -term Obligations under capital lease— long -term Total liabilities Fund equity and other credits: Contributed capital: Contributions from governmental agencies Contributions from customers Contributions —other Investment in general fixed assets Retained earnings: Governmental Fund Types Proprietary Fund Types Debt Internal General Service Enterprise Service 103,718 $ – $ 73,251 $ 4,668 400,576 – 181,994 - - – 35 - - – – 86,000 16,497 – – – 111,898 4,858,463 – – 2,150 – – - - – 3,642 - - – 9,671 – – – 379,117 - - – 517,311 - - – 203,188 - - – 310,000 – – – 1,027,413 – 98,142 – – - - – 140,057 - - – 21,165 - - – 3,106,300 - - – 13,181,688 - - – 20,306,288 – 732,981 4,858,463 39,461,120 90,668 – 2,324,358 - - 22,826,174 - - – 936,008 – Reserved – – 2,226,736 – Unreserved – – 2,955,166 313,393 Fund balances: Reserved 935,381 224,575 – – Unreserved: Designated 136,719 – – – Undesignated 2,419,373 – – – Total fund equity and other credits 3,491,473 224,575 31,268,442 313,393 Total liabilities, fund equity and other credits $ 4,224,454 $ 5,083,038 $ 70,729,562 $ 404,061 20 M No 06 as M Page 2 of 2 Fiduciary Fund Type Trust Account Groups General General Fixed Long -Term Assets Debt Totals (Memorandum Only) 1998 1997 $ 3,169 $ - $ - $ 184,806 $ 311,354 - - - 582,570 593,593 - - - 35 40 - - - 86,000 132,000 - - - 16,497 15,794 - - - 4,970,361 5,282,468 - - - 2,150 2,275 - - - 3,642 3,465 - - - 9,671 22,142 - - - 379,117 358,411 - - - 517,311 540,429 - - - 203,188 192,785 - - - 310,000 290,000 - - - - 23,517 - - - 1,027,413 991,434 - - - 98,142 114,639 - - 321,504 461,561 491,352 - - 131,145 152,310 174,272 - - 8,004,432 11,110,732 11,780,246 - - - 13,181,688 13,479,420 - - - 20,306,288 21,333,701 - - - - 9,671 3,169 - 8,457,081 53,603,482 56,143,008 2,324,358 2,412,486 22,826,174 23,072,159 - - 936,008 970,254 - 19,626,353 - 19,626,353 19,298,878 - - 2,226,736 2,052,353 - - 3,268,559 3,076,836 9,777,671 - - 10,937,627 ' 9,354,713 - - - 136,719 228,454 - - - 2,419,373 1,839,594 9,777,671 19,626,353 - 64,701,907 62,305,727 $ 9,780,840 $ 19,626,353 $ 8,457,081 $ 118,305,389 $ 118,448,735 NU City of Edgewater, Florida Combined Statement of Revenues, Expenditures and Changes in Fund Balance All Governmental Fund Types Year ended September 30, 1998 Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Interest Special assessments: Principal Interest Miscellaneous Total revenues Expenditures: Current: General government Public safety Transportation Culture /recreation Capital outlay Debt service Miscellaneous Total operating expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources Excess of revenues and other financing sources over expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year See accompanying notes. 22 Governmental Fund Types Debt General Service Totals (Memorandum Only) $5,484,239 $ - $5,484,239 185,503 - 185,503 667,988 - 667,988 123,692 - 123,692 75,309 - 75,309 - 24,910 24,910 - 293,138 293,138 - 316,148 316,148 297,743 - 297,743 6,834,474 634,196 7,468,670 1,871,415 - 1,871,415 3,012,478 - 3,012,478 328,927 - 328,927 601,396 - 601,396 414,808 - 414,808 33,189 911,370 944,559 - 4,161 4,161 6,262,213 915,531 7,177,74 572,261 (281,335) 290,926 Uk 372,528 353,429 725,957 (365,127) - (365,127) 7,401 353,429 360,830 579,662 72,094 651,756 2,911,811 152,481 3,064,292 $3,491,473 $224,575 $3,716,048 City of Edgewater, Florida Statement of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual General Fund Year ended September 30, 1998 Excess (deficiency) of revenues over (under) expenditures (303,457) 572,261 875,718 551,216 Other financing sources (uses): Operating transfers in 372,528 372,528 - 380,258 Operating transfers out (376,611) (365,127) 11,484 (378,274) Total other financing sources (uses) (4,083) 7,401 11,484 1,984 Excess (deficiency) of revenues and other financing sources (uses) over (under) expenditures (307,540) 579,662 887,202 553,200 Fund balances at beginning of year 2,911,811 2,911,811 - 1,772,170 Residual equity transfer - - - 586,441 Fund balances at end of year $2,604,271 $3,491,473 $887,202 $2,911,811 See accompanying notes. 23 Variance Favorable 1997 Budget Actual (Unfavorable) Actual ' Revenues: Taxes $5,414,871 $5,484,239 $ 69,368 $5,147,962 ' Licenses and permits Intergovernmental 179,800 621,224 185,503 667,988 5,703 46,764 179,136 688,286 Charges for services 115,050 123,692 8,642 111,478 Fines and forfeitures 72,300 75,309 3,009 83,247 ' Miscellaneous 189,400 297,743 108,343 246,507 Total revenues 6,592,645 6,834,474 241,829 6,456,616 Expenditures: ' Current: General government 2,217,586 1,871,415 346,171 1,578,623 Public safety 3,071,186 3,012,478 58,708 2,979,253 ' Transportation 378,833 328,927 49,906 400,222 Culture /recreation 625,064 601,396 23,668 590,121 Capital outlay 554,420 414,808 139,612 322,521 Debt service - principal 34,068 18,323 15,745 18,043 Debt service - interest 14,945 14,866 79 16,617 Total expenditures 6,896,102 6,262,213 633,889 5,905,400 Excess (deficiency) of revenues over (under) expenditures (303,457) 572,261 875,718 551,216 Other financing sources (uses): Operating transfers in 372,528 372,528 - 380,258 Operating transfers out (376,611) (365,127) 11,484 (378,274) Total other financing sources (uses) (4,083) 7,401 11,484 1,984 Excess (deficiency) of revenues and other financing sources (uses) over (under) expenditures (307,540) 579,662 887,202 553,200 Fund balances at beginning of year 2,911,811 2,911,811 - 1,772,170 Residual equity transfer - - - 586,441 Fund balances at end of year $2,604,271 $3,491,473 $887,202 $2,911,811 See accompanying notes. 23 City of Edgewater, Florida Combined Statement of Revenues, Expenses and Changes in Retained Earnings All Proprietary Fund Types Operating revenues: Charges for services Miscellaneous Total operating revenues Operating expenses: Personal services Contractual services Operating supplies and expenses Repairs and maintenance Claims and judgments Total operating expenses Year ended September 30, 1998 Proprietary Fund Types Totals Internal (Memorandum Only) Enterprise Service 1998 1997 $5,953,342 $ - $5,953,342 $5,773,309 35,371 - 35,371 114,778 5,988,713 - 5,988,713 5,888,087 Operating income (loss) before depreciation Less depreciation expense Operating income (loss) Nonoperating revenues (expenses): Interest revenue State recycling grant Interest/amortization expense Loss on disposal of fixed assets Total nonoperating revenues (expenses) Income (loss) before operating transfers Operating transfers: Operating transfers in Operating transfers out Net loss Add back depreciation expense related to 2,425,630 - 2,425,630 2,266,971 539,970 206,825 746,795 731,197 622,804 265 623,069 679,238 165,301 - 165,301 210,594 - (38,500) (38,500) (15,329) 3,753,705 168,590 3,922,295 3,872,671 2,235,008 (168,590) 2,066,418 2,015,416 (1,492,488) - (1,492,488) (1,375,846) 742,520 (168,590) 573,930 639,570 1,209,061 24,751 1,233,812 1,230,373 6,144 - 6,144 20,506 (1,828,781) - (1,828,781) (1,792,313) (432) - (432) (2,110) (614,008) 24,751 (589,257) (543,544) 128,512 (143,839) (15,327) 96,026 11,698 - 11,698 16,654 (372,528) - (372,528) (380,258) (232,318) (143,839) (376,157) (267,578) contributed assets 742,263 - 742,263 726,539 Net increase (decrease) in retained earnings 509,945 (143,839) 366,106 458,961 Retained earnings at beginning of year 4,671,957 457,232 5,129,189 4,670,228 Retained earnings at end of year $5,181,902 $ 313,393 $5,495,295 $5,129,189 See accompanying notes. 24 City of Edgewater, Florida Combined Statement of Cash Flows All Proprietary Fund Types Year ended September 30, 1998 Cash flows from operating activities: Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services Other operating revenues Net cash provided by (used in) operating activities Cash flows provided by (used in) capital and related financing activities: Acquisition and construction of capital assets Interest paid Contributions for acquiring assets Principal payments: Revenue bonds State revolving loan Capital leases Note payable Total cash flows used in capital and related financing activities Cash flows provided by (used in) noncapital and related financing activities: Operating transfers to other funds Operating transfers from other funds Proceeds from state recycling grant Advance made to General Fund Repayment of advance from General Fund Total cash flows (used in) provided by noncapital and related financing activities Cash flows provided by investing activities: Sale of investments Interest revenue Total cash flows provided by investing activities Page 1 of 2 Totals Internal (Memorandum Only) Enterprise Service 1998 1997 $ 5,986,523 $ — $ 5,986,523 $ 5,847,053 (1,386,100) (228,759) (1,614,859) (2,169,963) (2,396,083) — (2,396,083) (2,260,676) 47,607 2,204,340 (228,759) 1,975,581 1,464,021 (532,240) — (532,240) (2,133,925) (1,798,944) — (1,798,944) (1,728,017) 999,487 — 999,487 1,185,590 (470,531) — (470,531) (450,508) (991,434) — (991,434) (1,087,012) (22,142) — (22,142) (20,712) (3,462) — (3,462) (3,298) (2,819,266) — (2,819,266) (4,237,882) (372,528) — (372,528) (380,258) 11,698 — 11,698 16,654 23,195 — 23,195 22,682 — (912) (912) (861) — 16,497 16,497 15,585 (337,635) 15,585 (322,050) (326,198) 1,718 — 1,718 2,228,041 1,235,699 24,981 1,260,680 1,259,721 1,237,417 24,981 1,262,398 3,487,762 Net increase (decrease) in cash and cash equivalents 284,856 (188,193) 96,663 387,703 Cash and cash equivalents at beginning of year 10,067,581 474,884 10,542,465 10,154,762 Cash and cash equivalents at end of year $10,352,437 $286,691 $10,639,128 $10,542,465 See accompanying notes W, City of Edgewater, Florida Combined Statement of Cash Flows All Proprietary Fund Types Year ended September 30, 1998 Classified as Unrestricted assets: Cash, cash equivalents and equity in pooled cash Restricted assets: Cash, cash equivalents and equity in pooled cash Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) Depreciation Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Increase in accounts receivable (Increase) decrease in inventory Increase in unbilled accounts receivable Increase in prepaids Increase in customer deposits Decrease in accounts payable Decrease in claims payable Increase (decrease) in accrued liabilities Increase in accrued employee benefits Net cash provided by (used in) operating activities Page 2 of 2 ' Totals Internal (Memorandum Only) Enterprise Service 1998 1997 $ 3,878,602 $ 286,691 $ 4,165,293 $ 3,937,841 3,878,602 286,691 4,165,293 3,937,841 6,473,835 — 6,473,835 6,604,624 6,473,835 — 6,473,835 6,604,624 $10,352,437 $ 286,691 $10,639,128 $10,542,465 $ 742,520 $(168,590) $ 573,930 $ 639,570 1,492,488 — 1,492,488 1,375,846 (8,600) — (8,600) (5,956) 2,026 — 2,026 (4,713) (14,295) — (14,295) (9,516) (1,847) (525) (2,372) (4,696) 20,706 — 20,706 22,045 (54,295) (13,644) (67,939) (176,854) — (46,000) (46,000) (28,000) 16,027 — 16,027 (353,298) 9,610 — 9,610 9,593 $ 2,204,340 $(228,759) $1,975,581 $ 1,464,021 Significant transactions not affecting cash flows of the Enterprise Fund: Water and sewer line contributed by customer $ 45,849 $ — $ 45,849 $ 34,993 Loss on disposition of fixed assets — — — (2,110) Baffle box contributed by Volusia County — — — 72,332 See accompanying notes 26 M City of Edgewater, Florida Combined Statement of Plan Net Assets All Pension Trust Funds September 30, 1998 Assets Investments: Debt and other interest bearing investments Equity securities Other Total investments Interest and dividends receivable Prepaid expenses Total assets Liabilities Accounts payable Total liabilities Net assets held in trust for pension benefits See accompanying notes. $6,381,087 2,707,107 692,410 9,780,604 11 225 9,780,840 3,169 3,169 $9,777,671 27 City of Edgewater, Florida Combined Statement of Changes in Plan Net Assets All Pension Trust Funds For the fiscal year ended September 30, 1998 Additions: 109,509 Contributions: 1,454,705 Employer $ 589,861 Employees 32,064 State of Florida 111,453 Total contributions 733,378 Investment income: $9,777,671 Investment and dividend income 543,023 Net appreciation in fair value of plan investments 296,307 839,330 Investment expenses (8,494) Net investment income 830,836 Total additions 1,564,214 Deductions: Benefits payments 109,509 Income before administrative expenses 1,454,705 Administrative expenses 35,503 Net increase 1,419,202 Net assets held in trust for pension benefits: Beginning of year 8,358,469 End of year $9,777,671 See accompanying notes. E� M W 28 ■i City of Edgewater, Florida Notes to Financial Statements September 30, 1998 1. Significant Accounting Policies The City of Edgewater, Florida is a political subdivision of the State of Florida located in Volusia County. The Town of Edgewater was originally incorporated under the general law on October 20, 1924, "Municipal Charters" Volume 4, page 117. The town became the City of Edgewater when its initial charter was adopted by Chapter 275.32 Special Acts of 1951. The legislative branch of the City is composed of a Mayor and four (4) member elected Council. The City Council is governed by the City Charter and by state and local laws and regulations. The City Council is responsible for the establishment and adoption of policy. The execution of such policy is the responsibility of the Council appointed City Manager. The accounting policies of the City of Edgewater conform to generally accepted accounting principles as applicable to governments. The following is a summary of the significant policies. A. Reporting Entity: The accompanying general purpose financial statements present the financial position, results of operations and cash flows of the applicable fund types and account groups governed by the City Council of the City of Edgewater, Florida in accordance with governmental accounting standards. There are no potential component units which would require inclusion in the City's general purpose financial statements under the requirements of Government Accounting Standards Board Statement No. 14. B. Basis of Presentation: The City maintains its accounting records in accordance with the principles and policies applicable to governmental units set forth by the Governmental Accounting Standards Board (GASB) as well as generally accepted accounting principles (GAAP) as promulgated by the Financial Accounting Standards Board (FASB). For its proprietary funds, the City has elected not to apply FASB statements and interpretations issued after November 30, 1989. C. Fund Accounting: The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Government r Ib 29 City of Edgewater, Florida Notes to Financial Statements (continued) 1. Significant Accounting Policies (continued) C. Fund Accounting (continued): resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The purposes of the City's various funds and account groups are as follows: Governmental Fund Types: General Fund —The General Fund is the general operating fund of the City. It is used to account for all financial resources, except those required to be accounted for in another fund. Debt Service Fund —The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long -term debt principal, interest, and related costs. Proprietary Fund Types: Enterprise Funds — Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises —where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Internal Service Funds — Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City, or to other governments, on a cost - reimbursement basis. Fiduciary Fund Type: Trust Funds — Pension Trust Funds are used to account for assets held by the City in a trustee capacity for individuals, private organizations, other governments, and/or other funds. Account Groups: General Fixed Assets —The General Fixed Assets Account Group is used to account for all fixed assets of the City, except fixed assets of proprietary funds. General Long -Term Debt —The General Long -Term Debt Account Group is used to account for all the outstanding principal balances of any general and special obligation bonds or notes of the City, except long -term debt of proprietary funds. 30 City of Edgewater, Florida Notes to Financial Statements (continued) 1. Significant Accounting Policies (continued) D. Measurement Focus: Governmental Fund Type —The General and Debt Service Funds are accounted for on a "spending" or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on the balance sheet. Accordingly, the reported unreserved undesignated fund balance (net current assets) is considered to be the measure of available, spendable or appropriable resources. Governmental Fund Type operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Proprietary Fund Types — Enterprise and Internal Service Funds are accounted for on an "income determination" measurement focus. Accordingly, all assets and liabilities are included on their balance sheets, and the reported fund equity (total reported assets, less total reported liabilities) provides an indication of the economic net worth of the fund. Operating statements for Proprietary Fund Types (on an income determination measurement focus) report increases (revenues) and decreases (expenses) in total economic net worth. Fiduciary Fund Type— Pension Trust Funds are accounted for in the same manner as Proprietary Fund Types since capital maintenance is critical. ' Account Groups —The General Long -Term Debt and General Fixed Assets Account Groups are concerned only with the measurement of financial position. They are not involved with the measurement of results of operations. ' E. Basis of Accounting: Basis of accounting refers to when revenues and expenditures or expenses are recognized in ' the accounts and reported in the general purpose financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The General and Debt Service Funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis, revenues are recognized when they become ' measurable and available as net current assets. Revenues which are susceptible to accrual include property taxes, franchise taxes, charges for services and investment earnings. Expenditures are generally recognized under the modified accrual basis of accounting when ' the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long -term debt which are recognized when due and inventories which are recognized when consumed. 31 City of Edgewater, Florida Notes to Financial Statements (continued) 1. Significant Accounting Policies (continued) E. Basis of Accounting (continued): All Proprietary and Pension Trust Funds are accounted for using the accrual basis of accounting. Their revenues are recognized when they are earned and their expenses are recognized when they are incurred. F. Budgets and Budgetary Accounting: The City follows these procedures in establishing the budgetary data reflected in the financial statements: (1) Prior to the end of the fiscal year, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. (2) Budget workshops are scheduled by the City Manager as needed. (3) The general summary of the budget and notice of public hearing is published in the local newspaper. (4) Public hearings are conducted to obtain taxpayer comments. (5) Prior to October 1, the budgets are legally enacted through passage of a resolution. (6) The City Manager is authorized to transfer budgeted amounts within and between divisions and departments; however, any revisions that alter the total appropriations of any fund must be approved by the City Council. (7) The level of classification detail at which expenditures may not legally exceed appropriations is the fund level. (8) Appropriations lapse at the close of the fiscal year to the extent they have not been expended. (9) Budgets are adopted for the General Fund on a basis consistent with generally accepted accounting principles. Budgets are also adopted for the enterprise and internal service funds; however, these data are not presented under generally accepted accounting principles. 32 I City of Edgewater, Florida I Notes to Financial Statements (continued) ' 1. Significant Accounting Policies (continued) ' F. Budgets and Budgetary Accounting (continued): (10) The City Council, by Ordinance or Resolution, may make supplemental ' appropriations in excess of those originally estimated for the year up to the amount of available revenues. There were no material supplemental appropriations made in the current year. ' G. Receivables: Unbilled Utility Accounts Receivable — Water, sewer and refuse operating revenues are ' generally recognized on the basis of cycle billings rendered monthly. The unbilled portion was accrued at year end by calculating the cycle billing the City sent to its customers and prorating the number of days applicable to the current year. ' Property Taxes —Under Florida law, the assessment of all properties and the collection of all county, municipal and school board property taxes are consolidated in the offices of the ' County Property Appraiser and County Tax Collector. The laws of the state regulating tax assessment are also designed to assure a consistent property valuation method state -wide. State Statutes permit municipalities to levy property taxes at a rate of up to 10 mills. The t current millage rate assessed by the City is 6.440. The property tax calendar is as follows: ' Valuation Date January 1, 1997 ' Property Appraiser prepares the assessment roll with values as of January 1, 1997, submits this preliminary roll for approval by the State and notifies each taxing authority of their respective valuations. July 1, 1997 ' City ouncil holds two required public hearings and adopts a budget and ad valorem tax Y q P g P g millage rate(s) for the coming fiscal year. September, 1997 Property Appraiser certifies the assessment roll and all real and tangible personal property ' taxes are due and payable (levy date). November 1, 1997 33 City of Edgewater, Florida Notes to Financial Statements (continued) 1. Significant Accounting Policies (continued) G. Receivables (continued): A Notice of Taxes is mailed to each property owner on the assessment roll. Taxes may be paid November 1997 through March 1998, with the following applicable discounts: Month Discount Percent November 4% December 3 January 2 November 1, 1997 February 1 through March 0 March 31, 1998 All unpaid taxes on real and tangible personal property become delinquent. April 1, 1998 A list of unpaid tangible personal property taxes and a list of unpaid real property taxes is advertised. April and May, 1998 Tax certificates are sold on all real estate parcels with unpaid real property taxes (lien date). June 1, 1998 A court order is obtained authorizing the seizure and sale of personal property if the taxpayer fails to pay the delinquent personal property taxes. June, 1998 In accordance with the modified accrual basis of accounting, property taxes that are measurable, but not available, are reported as taxes receivable and deferred revenue. The deferred revenues will be recognized in the fiscal year in which they become available. H. Investments: Investments are stated at fair value based on quoted market prices except for investments in the State Board of Administration Pool, a 2a 7 -like pool, which are carried at amortized cost, which approximates fair value. I. Inventories: Inventories are stated at cost on the first -in, first -out method of accounting. The effect of this method is to flow costs through operations in the order in which they are purchased and to assign a balance sheet cost more nearly at current replacement values. Inventory in the General Fund is recorded as an expenditure at the time inventory is used (consumption method). 34 I City of Edgewater, Florida Notes to Financial Statements (continued) ' 1. Significant Accounting Policies continued g g (continued) ' J. Fixed Assets: Fixed assets purchased in the Governmental Fund Type are recorded as expenditures at the ' time of purchase. Assets are capitalized at cost in the General Fixed Assets Account Group. Donated fixed assets are recorded in the general fixed assets at fair market value at the time received. No depreciation has been provided on general fixed assets, and the City does not ' capitalize infrastructure general fixed assets. The fixed assets of the enterprise funds are capitalized at cost when purchased. Donated ' fixed assets are capitalized at their fair market value at the date received and classified as contributions. Interest is capitalized on enterprise fund assets acquired with tax- exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense ' incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period. Depreciation is provided using the straight -line method over the assets' estimated useful lives. Depreciation expense on assets from ' contributed capital is added back to retained earnings and deducted from contributed capital. The estimated useful lives of the various classes of depreciable assets are as follows: ' Assets Years Water system 25 -65 years Sewer system 6 -65 years Refuse collection facilities 10 years Machinery and equipment 3 -25 years Stormwater system 6 -65 years K. Unamortized Debt Issuance Costs: Issuance costs include expenses associated with issuance of the revenue bonds and expenses associated with the issuance of state revolving loans. Issuance costs are amortized ' over the life of the debt using the effective interest method. L. Compensated Absences: ' The City records compensated absences in the General Fund as an expenditure for the amount accrued during the year that would normally be liquidated with expendable available financial resources. The remainder of the liability is reported in the General Long - Term Debt Account Group. Proprietary Fund Types accrue compensated absences in the period they are earned. 35 ■r City of Edgewater, Florida I Notes to Financial Statements (continued) I 1. Significant Accounting Policies (continued) I M. Reserves: I Reserves indicate that portion of fund balance /retained earnings that is not available for appropriation or which is legally segregated for a specific future use. The description of I each reserve indicates the purpose for which it was intended. N. Reserve for Encumbrances: ' Encumbrances outstanding at year end represent the estimated amount of the expenditures ultimately to result if unperformed contracts in process at year end are completed. Such encumbrances do not constitute expenditures or liabilities, but rather reservations of fund ' balance for subsequent years' appropriation. O. Contributed Capital: ' Proprietary Fund contributed capital represents outside contributions from other funds, governmental entities, developers and customers. The contributions were collected to establish such funds or to finance fixed asset additions. P. Long -Term Debt: Debt recorded in the General Long -Term Debt Account Group is paid from Governmental Fund resources. Debt recorded in the Enterprise Fund is paid from Enterprise Fund resources. Q. Combined Statements "Memorandum Only" Total Columns: Total columns on the Combined Statements —All Fund Types and Account Groups are captioned "Memorandum Only" to indicate that they are presented only to facilitate ` financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Interfund eliminations have not been made in the aggregation of these data. R. Reclassifications: Certain September 30, 1997 account balances have been reclassified in this report to conform with the financial statement presentation used in 1998. S. Cash and Cash Equivalents: The City classifies all highly liquid investments with an original maturity of ninety days or less as cash and cash equivalents. n 36 r f 1 City of Edgewater, Florida Notes to Financial Statements (continued) Deposits and Investments The City maintains a cash and investment pool that is available for use by all funds, except the fiduciary fund types. Each fund type's portion of this pool is included on the combined balance sheet in "Pooled Cash and Cash Equivalents." In addition, investments are separately held by several of the City's funds. The deposits and investments of the pension trust funds are held separately from those of other City funds. A. Deposits: Florida Statutes require depositories of public funds to provide collateral each month at least equal to fifty percent of the average daily balance of all public deposits in excess of deposit insurance. The collateral is held by the State Treasurer or other custodian with full legal rights maintained by the Treasurer to transfer ownership. Any loss not covered by the pledged securities and deposit insurance would be assessed by the State Treasurer and paid by the other public depositories. At September 30, 1998, the carrying amount of the City's deposits and petty cash was $481,410 and the bank balance was $1,214,387. Since the City's banks are on the list of state qualified public depositories, the entire amount of deposits is considered fully collateralized or insured. The City classifies investments in the State Board of Administration account as cash and cash equivalents due to the liquid nature of the account. B. Investments: The City's investment procedures are regulated by State Statute. Acceptable investment instruments participated in during the year include repurchase agreements and the local government investment trust fund of the State Board of Administration. Investments of the Municipal Police Officers' Retirement Trust and General Employees' Pension were managed by Principal Mutual Life Insurance Company. Investments consist principally of bonds, stocks, mutual funds and commercial and residential mortgages, all of which are authorized by the City. The Firefighters' Pension Fund's investments are governed by an investment policy adopted by the Fund's Board of Trustees. The basic allowable investment instruments include obligations of, or obligations the principal and interest of which are guaranteed by, the U.S. Government; time deposits or savings accounts of a national bank, a state bank insured by the Federal Deposit Insurance Corporation; bonds issued by the State of Israel; and bonds, stocks or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia. 37 F = City of Edgewater, Florida Notes to Financial Statements (continued) 2. Deposits and Investments (continued) B. Investments (continued): The following schedule categorizes the level of risk assumed by the City relating to investments held. Category I includes investments insured or registered or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty or by its trust department or agent, but not in the City's name. Category Total 1 2 3 (fair value) Repurchase agreements $ — $1,072,875 $ — $ 1,072,875 Investments not subject to categorization: Deposits with State Board of Administration 13,385,788 Investments with Principal Mutual Life Insurance Corp. (pension investments) 9,231,501 Investments with SunTrust Bank of Central Florida, N.A. (pension investments) 549,103 $24,239,267 Reconciliation of deposits and investments to amounts reported on the combined balance sheet: Total deposits and investments: Deposits Investments Total Combined balance sheet classification: Pooled cash and cash equivalents Restricted cash and cash equivalents Investments Total $ 481,410 24,23 9,267 24,720,677 $ 8,466,238 6,473,835 9,780,604 $24,720,677 M so rr 38 16 City of Edgewater, Florida Notes to Financial Statements (continued) 3. Accounts Receivable Accounts receivable and the related allowance for doubtful accounts at September 30, 1998 are as follows: 4. Changes in General Fixed Assets A summary of changes in general fixed assets follows: Land Buildings Improvements other than buildings Equipment Construction in progress Total 5. Capitalization of Interest Balance Balance October 1 September 30 1997 Additions Deletions 1998 $ 1,369,887 $ 45,612 $ — $ 1,415,499 1,572,522 101,317 — 1,673,839 13,832,642 978 — 13,833,620 Internal Trust and 92,551 2,602,768 40,398 General Enterprise Service Agency Total Receivables: Interest $ — $ 593,764 $1,690 $11 $ 595,465 Taxes 60,219 — — — 60,219 Accounts 20,909 717,801 — — 738,710 Special assessments 21,014 13,245,705 — — 13,266,719 Gross receivables 102,142 14,557,270 1,690 11 14,661,113 Less allowance for uncollectibles — (58,612) — — (58,612) Net total receivables $102,142 $14,498,658 $1, 690 $11 $14,602,501 4. Changes in General Fixed Assets A summary of changes in general fixed assets follows: Land Buildings Improvements other than buildings Equipment Construction in progress Total 5. Capitalization of Interest Balance Balance October 1 September 30 1997 Additions Deletions 1998 $ 1,369,887 $ 45,612 $ — $ 1,415,499 1,572,522 101,317 — 1,673,839 13,832,642 978 — 13,833,620 2,483,429 211,890 92,551 2,602,768 40,398 72,631 12,402 100,627 $19,298,878 $432,428 $104,953 $19,626,353 The City did not capitalize any interest costs during the year. Interest costs incurred and charged to expenditure /expense amounted to $2,285,706 for 1998. M, City of Edgewater, Florida , Notes to Financial Statements (continued) ' 6. Changes in General Long -Term Debt ' Balance Balance October 1 September 30 1997 Additions Deletions 19 Compensated absences $ 360,905 $682,108 $ 721,509 $ 321,504 Capital Improvement Bonds, Series 1995 A 5,957,820 – 330,263 5,627,557 Capital Improvement Bonds, Series 1995 B 2,512,924 – 136,049 2,376,875 Note payable — Volusia County 149,468 – 18,323 131,145 $8,981,117 $682,108 $1,206,144 $8,457,081 7. Capital Leases and Notes Payable The asset acquired under capital lease in the proprietary funds is for a vactor truck. The vactor truck has been capitalized in the Water and Sewer Fund at a cost of $127,303. Amortization of the cost of this asset is included with depreciation expense. The interest rate on the vactor truck lease is 6.69 %. The following is a schedule by years of future minimum installments under capital leases, together with the present value of the net minimum lease payments as of September 30, 1998: Proprietary Year ending September 30 Funds 1999 $9,833 Less amount representing interest (162) Total $9,671 The City has a 5% note payable to finance the purchase of additional equipment for the countywide 800 MHz Radio System. Payments are due semi - annually until 2004 and will be made from operating revenues. IN 1 I City of Edgewater, Florida Notes to Financial Statements (continued) 7. Capital Leases and Notes Payable (continued) The annual requirements to amortize notes payable as of September 30, 1998 are as follows: I 1 8. Special Assessment and Stormwater Revenue Bonds The Special Assessment and Stormwater Revenue Bonds resolutions provide for: (1) Establishment and maintenance of a certain fund and accounts- (a) Special Assessment Improvement Bonds Sinking Fund including; (1) 1995 Debt service account; (2) 1995 Bond amortization account; (3) 1995 Bonds reserve account; (4) 1995 Bonds redemption account. (2) Restrictions on the use of cash from operations in order of priority: (a) All Special Assessments shall be applied and deposited only into the 1995 subaccounts listed above. Moneys and Authorized Investments on deposit at any time in the 1995 subaccounts may be used only for the payment of Debt Service on, or redemption of the price of, the 1995 Bonds. 41 Year ending General Long -Term Water and Refuse Stormwater Management September 30 Debt Sewer Fund Fund Fund Total 1999 $ 25,570 $ 3,211 $ 896 $ 729 $ 30,406 2000 25,570 3,211 896 729 30,406 2001 25,570 3,211 896 729 30,406 2002 25,570 3,211 896 729 30,406 2003 25,570 3,211 896 729 30,406 ' 2004 25,570 3,211 896 729 30,406 153,420 19,266 5,376 4,374 182,436 Less amount ' representing interest (22,275) (2,794) (777) (638) (26,484) Total $131,145 $16,472 $4,599 $3,736 $155,952 I 1 8. Special Assessment and Stormwater Revenue Bonds The Special Assessment and Stormwater Revenue Bonds resolutions provide for: (1) Establishment and maintenance of a certain fund and accounts- (a) Special Assessment Improvement Bonds Sinking Fund including; (1) 1995 Debt service account; (2) 1995 Bond amortization account; (3) 1995 Bonds reserve account; (4) 1995 Bonds redemption account. (2) Restrictions on the use of cash from operations in order of priority: (a) All Special Assessments shall be applied and deposited only into the 1995 subaccounts listed above. Moneys and Authorized Investments on deposit at any time in the 1995 subaccounts may be used only for the payment of Debt Service on, or redemption of the price of, the 1995 Bonds. 41 City of Edgewater, Florida Notes to Financial Statements (continued) 8. Special Assessment and Stormwater Revenue Bonds (continued) (b) All Stormwater Fees shall be deposited into the Stormwater Utility Management Fund (the "Utility Fund "). After the provision for the payment of operating expenses of the City's Stormwater Utility, the City shall transfer to the 1995 Bonds subaccount Stormwater Utility Fees until the aggregate amount transferred is equal to the amount certified by the City's Director of Finance as the portion of that fiscal year's debt service necessary to be paid out of the Stormwater Utility Fees. (c) All Non - Advalorem Revenues (except Franchise Taxes) shall make up for any deficiency in meeting the debt service requirement after all of the aforementioned pledged revenues have been exhausted. (3) Early redemption- The City may prepay up to 10% without penalty. Should the prepayments exceed the amount allowed by the bank, the prepayments are subject to a penalty using a predetermined formula based on certain interest factors. (4) Investment Restrictions- Moneys on deposit in the funds described above may be invested and reinvested in Authorized Investments as described in the bond resolution. The Special Assessment and Stormwater Revenue Bonds consist of the following: Series 1995A Series 1995B Interest Rates: 5.22% 5.58% Interest Dates: April 1, October 1 April 1, October 1 Final Maturity: October 1, 2010 October 1, 2010 Original Amount Issued: $9,234,660 $3,964,740 The 1995 Bonds are secured by the revenues pledged in order of priority; (1) assessment revenues, (2) Stormwater Revenues, (3) Utility Taxes, (4) All Non - Advalorem Revenues (except Franchise Taxes). imi 42 City of Edgewater, Florida Notes to Financial Statements (continued) 8. Special Assessment and Stormwater Revenue Bonds (continued) Annual requirements to amortize all bonded debt outstanding as of September 30, 1998 are as follows: General Bond year ended October 1 Long -Term Debt Stormwater Fund Total 1999 $ 911,370 $ 376,813 $ 1,288,183 2000 911,370 376,813 1,288,183 2001 911,370 376,813 1,288,183 2002 911,370 376,813 1,288,183 2003 911,370 376,813 1,288,183 2004 -2008 4,556,851 1,884,064 6,440,915 2009 -2010 1,822,740 753,626 2,576,366 10,936,441 4,521,755 15,458,196 Less interest (2,932,009) (1,212,267) (4,144,276) Net $ 8,004,432 $3,309,488 $11,313,920 9. Water and Sewer Revenue Bonds The Water and Sewer Revenue Bonds resolutions provide for: (1) Establishment and maintenance of various funds and accounts- (a) Construction Fund records the cost of the project financed by the bonds; (b) Revenue Fund records all income or earnings derived from the system; (c) Operation and Maintenance Fund records the cost of operation and maintenance of the system; (d) Sinking Fund records the debt service requirements which include principal, interest and bond amortization installments; (e) Renewal and Replacement Fund records the costs of extensions, enlargements, or additions to, or replacements of, capital assets or emergency repairs thereto; and 43 City of Edgewater, Florida I Notes to Financial Statements (continued) I 9. Water and Sewer Revenue Bonds continued I (f) Rate Stabilization Fund records transfers to and from the Revenue Fund as budgeted by the City Council for purposes of rate stabilization. (2) Restrictions on the use of cash from operations in order of priority— (a) Deposits are made to the Operations and Maintenance Fund each month in an ' amount which will pay the costs of operation and maintenance for the next month; (b) Deposits to the Sinking Fund are made monthly in an amount equal to one -sixth (1/6) of the interest coming due on the next semi - annual interest payment date and one - twelfth (1/12) of the principal coming due on the next annual principal payment date or one - twelfth (1/12) of the bond amortization installment coming due during the next year; (c) Deposits to the Reserve Fund are required to make up any deficiency in its balance as compared to the reserve requirement; (d) Deposits to the Renewal and Replacement Fund are required each month in an amount equal to one - twelfth (1/12) of five per centum (5 %) of the gross revenues of the system for the previous fiscal year; provided, however, that so long as there shall be on deposit in the Renewal and Replacement Fund a balance of at least five per centum (5 %) of the value of the fixed assets of the system, no additional deposits shall be required; (e) Deposits will next be made into the Rate Stabilization Fund for the amount budgeted for the then current period; and J (f) Thereafter for any lawful purposes. (3) Early redemption— The bond resolution provides for early redemption of outstanding bonds at call rates varying from 100% to 102% of the instruments' face value, dependent upon the call date. r 44 City of Edgewater, Florida Notes to Financial Statements (continued) 9. Water and Sewer Revenue Bonds (continued) (4) Investment restrictions — (a) Funds are required to be continuously secured in the same manner as the state and municipal deposits of funds are required to be secured by the Laws of the State of Florida; and (b) Moneys on deposit in the funds described above may be invested and reinvested in Authorized Investments as described in the bond resolution. The Revenue Bonds consist of the following: Series 1993 Series 1991 Interest Rates: 2.75% to 5.5% 5.4% to 7.0% Interest Dates: April 1, October 1 April 1, October 1 Final Maturity: October 1, 2021 October 1, 2021 Original Amount Issued: $12,460,000 $13,580,000 The 1993 bonds and remaining 1991 bonds and interest thereon are secured by a first lien on and pledge of the net revenues of the water and sewer system and a first lien on and pledge of Allowable Impact Fees imposed on new users of the system. Bond transactions for the City for the year ended September 30, 1998 are as follows: Balance Balance October 1, Bonded Indebtedness September 30, 1997 Additions Deletions 1998 Water and Sewer Revenue Bonds, Series 1993 $12,235,000 $ — $ 60,000 $12,175,000 Water and Sewer Revenue Bonds, Series 1991 1,725,000 — 230,000 1,495,000 $13,960,000 $ — $290,000 $13,670,000 45 City of Edgewater, Florida Notes to Financial Statements (continued) 9. Water and Sewer Revenue Bonds (continued) Annual requirements to amortize all bonded debt outstanding as of September 30, 1998 are as follows: Bond Year ending October 1 Principal Interest Total 1999 $ 310,000 $ 760,018 $ 1,070,018 2000 325,000 742,025 1,067,025 2001 345,000 722,687 1,067,687 2002 365,000 701,813 1,066,813 2003 385,000 683,262 1,068,262 2004 -2008 2,250,000 3,087,680 5,337,680 2009 -2013 2,950,000 2,393,887 5,343,887 2014 -2018 3,865,000 1,473,775 5,338,775 2019 -2021 2,875,000 327,350 3,202,350 Totals 13,670,000 $10,892,497 $24,562,497 Less unamortized discount (178,312) Net $13,491,688 The City presently has outstanding bonds which have been refunded and are considered defeased as follows: Water and Sewer Revenue Bonds: Series 1964 Series 1991 Gulf Breeze Local Government Loan Total $ 89,000 11,050,000 550,000 $11,689,000 Since U.S. Government obligations are held in escrow for payment of the principal and interest, these bonds are not liabilities of the City. 10. Special Assessments Debt /State Revolving Fund Loans The City financed a portion of its wastewater improvements for the Florida Shores capital improvement projects with two loans from the State of Florida Revolving Fund loan program. The City received the loans on a reimbursement basis as costs were incurred. The City executed agreements with the State for these loans in the amount of $25,809,428. 46 I � I � I � I � I I I I City of Edgewater, Florida Notes to Financial Statements (continued) 10. Special Assessments Debt /State Revolving Fund Loans (continued) The State Revolving Fund (SRF) loans are secured by a junior lien on and pledge of the net revenues of the water and sewer system and the special assessment revenues levied against the benefiting property owners in Florida Shores. The assessments are payable over 20 years with interest of 6.007% until December 1, 1994 and of 5.35% thereafter. Since many taxpayers take advantage of prepayment discounts, actual interest rates paid may be less than the stated amounts. The SRF loans consist of the following: Treatment Loan Collections Loan Interest Rates: 3.16% to 3.78% 3.57% to 3.78% Payment Frequency: 20 annual payments 20 annual payments Payment Amount: $516,458 $1,294,980 Maturity Date: September 30, 2013 October 31, 2013 Remaining annual requirements to amortize the full $25,809,428 of loans are as follows: Fiscal Year Ending Treatment Loan Collections Loan Total 1999 $ 516,458 $ 1,294,980 $ 1,811,438 2000 516,458 1,294,980 1,811,438 2001 516,458 1,294,980 1,811,438 2002 516,458 1,294,980 1,811,438 2003 516,458 1,294,980 1,811,438 2004 -2008 2,582,292 6,474,898 9,057,190 2009 -2013 2,582,292 6,474,898 9,057,190 2014 — 1,294,980 1,294,980 7,746,874 20,719,676 28,466,550 Less interest (1,899,885) (5,232,964) (7,132,849) $5,846,989 $15,486,712 $21,333,701 47 City of Edgewater, Florida Notes to Financial Statements (continued) 11. Deferred Revenues Deferred revenues at September 30, 1998 consist of the following: Delinquent taxes Occupational licenses received in advance Deferred special assessments Total $ 60,219 34,780 4,875,362 $4,970,361 12. Fund Equity Reserves and Designations At September 30, 1998, the retained earnings of the enterprise funds were reserved as follows: Enterprise Funds Renewal and replacement Revenue bond retirement Equipment purchases $ 984,968 1,077,189 164,579 $2,226,736 At September 30, 1998, fund balances were reserved and designated as follows: General Debt Fund Service Trust Reserved for: ., Capital projects $ 586,441 $ — $ — Land, parks and open spaces 86,926 — — Fire donations 3,889 — — Inventories 5,065 — — Prepaids 4,792 — — Encumbrances 195,690 — — Law enforcement trust 47,208 — — Employees' pension benefits — — 9,777,671 DARE program 5,370 — — Debt service — 224,575 — 935,381 224,575 9,777,671 ' 1 48 1 '� City of Edgewater, Florida Notes to Financial Statements (continued) 12. Fund Equity Reserves and Designations (continued) General Debt Fund Service Trust Designated for: Fire station 86,786 — — Special road resurfacing 49,933 — — 136,719 — — $1,072,100 $224,575 $9,777,671 13. Segment Information for Enterprise Funds The City of Edgewater maintains three Enterprise Funds which provide water, sewer, garbage and stormwater management services. Segment information for the year ended September 30, 1998 follows: .. Water and Refuse Stormwater Sewer Collection Management Fund Fund Fund Total Operating revenues $ 4,027,116 $1,231,358 $ 730,239 $ 5,988,713 Operating expenses 2,325,608 1,083,528 344,569 3,753,705 Depreciation 1,273,371 58,364 160,752 1,492,488 Operating income 428,136 89,466 224,918 742,520 Operating transfers in — — 11,698 11,698 Operating transfers out (250,000) (91,485) (31,043) (372,528) Net income (loss) (309,584) 32,255 45,011 (232,318) Operating grants — 6,144 — 6,144 Contributed capital: Increases 373,904 — — 373,904 Decreases (732,773) (3,281) (6,209) (742,263) Property, plant and equipment: Additions 752,991 — 21,871 774,862 Disposals (291,433) — (270) (291,703) Working capital 3,504,940 447,146 379,618 4,331,704 Total assets 65,056,755 817,798 4,855,009 70,729,562 Total fund equity 29,051,700 713,621 1,503,121 31,268,442 Long -term liabilities payable from operating revenues 33,596,675 35,037 3,123,786 36,755,498 .. City of Edgewater, Florida Notes to Financial Statements (continued) 14. Pension Plans— Defined Benefit A. Plan Descriptions: 1. Police Officers' Retirement Trust Fund: The Police Officers' Retirement Trust Fund is a single employer defined benefit retirement system established pursuant to state statute. The funding methods and determination of benefits payable are provided in the various acts of the Florida Legislature, the Board of Trustees, and the City Council. The statutes provide, in general, that funds are to be accumulated from employee contributions, City contributions, state appropriations and income from investment of accumulated funds. Actuarial deficiencies, as determined by the state are funded by the City. The investments of the fund are administered, managed and operated by its Board of Trustees using the services of the Finance Department and Principal Mutual Life Insurance Company. Investments are reported at fair value. Full -time police officers are eligible to participate in the Police Officers' Retirement Trust Fund on the first of the month following the completion of three months of continuous service with vesting beginning upon their first day of employment with the City. Participating police employees contribute 1% of their salary to the plan. The City is required by statute to contribute remaining amounts necessary based upon actuarial valuations to the fund as performed in accordance with State Statute. Employees vest for full benefits after five years of service. Benefit amounts are calculated based on the three years which give the highest average out of the last five years. Members will receive a benefit amount equal to 2% of that average multiplied by years of actual service. 2. General Employees' Pension Fund: The General Employees' Pension Fund is a single employer defined benefit retirement system and contains the assets of the General Employees' Pension Fund. The funding methods and determination of benefits payable are provided by various acts of the City Council, including subsequent amendments thereto. The code provides, in general, that funds are to be accumulated from City contributions, and income from investment of accumulated funds. Investments are reported at fair value. The General Employees' Pension Fund includes all full -time City employees, except police, firefighters, City Attorney, City Engineer, Public Works Director and City Manager. Employees become eligible for the plan after three months of continuous employment with vesting beginning as of the first day of employment. No employee 50 City of Edgewater, Florida Notes to Financial Statements (continued) 14. Pension Plans— Defined Benefit (continued) A. Plan Descriptions: (continued) contributions are required. The City's policy is to contribute amounts as determined by actuarial valuations. Employees vest for full benefits after five years of service. Benefit amounts are calculated based on the three consecutive years which give the highest average out of the last ten years. Members will receive a benefit amount equal to 2% of that average multiplied by years of accrual service. The General Employees' Pension Fund was amended in October 1996, which closed ' off the plan to any new employees hired by the City after October 1, 1996. Employees hired after October 1, 1996, however, are eligible for the City's 401(a) Defined ' Contribution Plan. Employees hired prior to October 1, 1996, and not vested in the General Employees' Pension Fund as of September 30, 1997, may elect to participate in the 401(a) Defined Contribution Plan. 3. Firefighters' Pension Fund: The Firefighters' Pension Fund is a single employer defined benefit retirement system established pursuant to state statute in July 1990, with an effective date of November 1989. The funding methods and determination of benefits payable are provided in the various acts of the Florida Legislature, Firefighters' Pension Board and the City Council. The statutes provide in general, that funds are to be accumulated from employee contributions, City contributions, state appropriations and income from investment of accumulated funds. Investments are reported at fair value. Full -time firefighters are eligible to participate in the Firefighters' Pension Fund upon their first day of employment with the City. Participating fire employees contribute 5% of their salary to the plan. The City is required by statute to contribute remaining amounts necessary based upon actuarial valuations to the fund as performed in accordance with State Statute. Employees vest for full benefits after five years of service. Benefit amounts are calculated based on the three consecutive years which give the highest average out of the last ten years. Members will receive a benefit amount equal to 2.5% of that average multiplied by years of accrual service. 51 City of Edgewater, Florida Notes to Financial Statements (continued) 14. Pension Plans— Defined Benefit (continued) A. Plan Descriptions: (continued) Membership data of the Pension Plans are summarized as follows: Retirees and beneficiaries currently receiving benefits and vested terminated employees Active employees: Fully vested Nonvested B. Significant Accounting Policies: Police General Officers Employees Firefighters 8 54 1 25 81 8 10 14 2 City of Edgewater's financial statements for the three pension funds are prepared using the accrual basis of accounting. Employer and plan member contributions are recognized in the period that contributions are due. Investments in the three pension funds are reported at fair value according to the independent custodian for each plan using various third party pricing sources. In 1997 the City adopted GASB Statement No. 25 on pension accounting and reporting. This Statement requires the disclosure of any investments in any one organization that represents 5% or more of plan net assets. All investments in the Police Officers' Retirement Trust Fund and the General Employees Pension Fund are invested in the Principal Financial Group's various investment portfolios. There are no investments in any one organization in the Firefighters' Pension Fund that exceeds 5% of plan net assets. C. Contribution Requirements and Contributions Made: The Florida Legislature, City Council and each Pension Board governs the City and employee contribution requirements for the Police Officers' Retirement Trust Fund and Firefighters' Pension Fund. The City's contribution to the General Employees' Pension Fund is an actuarially determined periodic amount that increases gradually over time so that sufficient assets will be available to pay benefits when due. No employee contributions are required. 52 City of Edgewater, Florida Notes to Financial Statements (continued) M 14. Pension Plans— Defined Benefit (continued) C. Contribution Requirements and Contributions Made (continued): The City's contribution to the Police Officers' Retirement Trust Fund and Firefighters' Pension Fund is an actuarially determined periodic amount. The employees' contribution for these plans is 1% and 5% of their salary, respectively. Contributions provided by the State of Florida are in accordance with State statutes. In 1998 the annual contribution made for the Police Officers' Retirement Trust Fund, General Employees' Pension Fund, and Firefighters' Pension Fund were $175,597, $463,396, and $62,320, respectively. Annual pension cost and contribution information for the last three fiscal years are as r „ follows: Police Officers' Retirement Trust Fund err 53 ft Year Ended Annual Pension Percentage Sept. 30 Cost Contributed 1998 $172,948 100% 1997 138,191 100 1996 151,867 100 General Employees' Pension Fund Year Ended Annual Pension Percentage Sept. 30 Cost Contributed 1998 $462,796 100% 1997 546,020 100 1996 526,514 100 Firefighters' Pension Fund Year Ended Annual Pension Percentage Sept. 30 Cost Contributed 1998 $61,653 100% 1997 65,735 100 1996 48,530 100 err 53 ft M City of Edgewater, Florida Notes to Financial Statements (continued) 14. Pension Plans— Defined Benefit (continued) D. Actuarial Methods and Significant Assumptions: The valuation method used for funding the police and general employees pension funds is the Entry Age Normal— Frozen Initial Liability Actuarial Cost Method. This method spreads the total cost of the projected pension benefits for each employee from the date first eligible for the plan to normal retirement age. The Firefighters Pension Fund uses the Aggregate Actuarial Cost Method, which does not identify or separately amortize unfunded actuarial liabilities. Police General Officers Employees Firefighters Valuation date 10/01/97 10/01/97 10/01/97 Amortization method Level Dollar - Level Dollar - N/A Closed Period Closed Period Remaining amortization period 10 years 6 years N/A Asset valuation method Market Market Market Actuarial assumptions: Investment rate of return 7.5% 8.0% 7.5% Salary increases: Merit A salary scale is A salary scale is 4.5% used which results used which results in a variable rate in a variable rate of increases for of increases for merit based on the merit based on the participant's age. participant's age. Inflation 3.4% 4.5% 3.0% Retirement age 55 and 5 years of 60 with 5 years of 55 with 5 years of plan participation accrued service or service or age 52 or 25 years of plan after 30 years of and 25 years of participation, accrued service service, whichever whichever is is earliest. earliest 54 .r Ud Id Id a 1 r I C s City of Edgewater, Florida Notes to Financial Statements (continued) 15. Pension Plans— Defined Contribution A. Senior Executives The City adopted a defined contribution pension plan effective January 1, 1993. The plan is a money purchase plan administered for the City by the International City Managers Association. Eligible employees are certain senior City executives, presently the City Manager and City Attorney. The plan provides for an employer contribution equal to 15% of employee earnings and a voluntary employee contribution. Employees are 100% vested immediately upon participation. Employees direct the investment of funds contributed to the plan on their behalf. The City amended the defined contribution plan effective June 1, 1997. The amendment adjusts the City's contribution requirement to 18.75% of employee earnings. Employer contributions made during the year amounted to $17,323. The City adopted a defined contribution pension plan effective January 1, 1998 for the then City Manager, J. Kevin Grace. The plan is a money purchase plan administered for the City by the Public Employees Benefit Services Corporation (PEBSCO). The plan provides for an employer contribution equal to 17.25% of employee earnings. Employees are 100% vested immediately upon participation. Employees direct the investment of funds contributed to the plan on their behalf. Employer contributions made during the year amounted to $8,674. B. General Employees The City adopted a defined contribution plan effective October 1, 1996. The plan is a money purchase plan administered for the City by the Principal Financial Group. Eligible employees are employees hired effective October 1, 1996, or thereafter that would otherwise qualify for the General Employees' Pension Plan. Employees hired prior to October 1, 1996, and not vested in the General Employees' Pension Plan may also elect, instead, to participate in the defined contribution plan. The plan provides for an employer contribution equal to 12% of employee earnings. Employees who elect to participate in this plan that were hired prior to October 1, 1996 will have the following contributions made: Term of % Contributed for % Contributed for Employment Prior Earnings Prior to Earnings After to October 1, 1996 October 1, 1996 October 1, 1996 3 months - 2 years 10% 12% 2 years - 4 years 11 12 4 years - 5 years 12 12 55 M City of Edgewater, Florida im Notes to Financial Statements (continued) M 15. Pension Plans— Defined Contribution (continued) ie Employees are 100% vested immediately upon participation. Employees direct the investment of funds contributed to the plan on their behalf. Employer contributions made during the year amounted to $63,638. 16. Commitments and Contingencies A. Litigation: The City is engaged in various liability claims incidental to the conduct of its general government operations at September 30, 1998. It is expected that the City's liability carrier would pay any judgment which might be entered, less any applicable self - insured retention, which amounts would not be material to the City's financial statements. B. Risk Management: The City is self insured and assumes the following risk categories: 1. The payment of claims and judgments involving the acts of officers or employees of the City or property belonging to the City. 2. Providing for the insurance of any real or personal property or operation of the City against risks or hazards. 3. The maintenance of hurricane disaster funds. 4. The recovery of tort claims against other parties. 5. Fines and forfeitures levied against employees as a result of being found responsible for preventable accidents. 6. Amounts received from parties contracting with the City for providing insurance coverage to protect parties for risks involving activities or property associated with r the contracts. Self- insurance activities are recorded in the City's Internal Service Fund. Incurred but not reported claims of $86,000 were recorded at September 30, 1998 based on an actuarial ;Y 56 ur M City of Edgewater, Florida Notes to Financial Statements (continued) in l 1 p - ie 16. Commitments and Contingencies (continued) assessment of the plan made by the City. The following is a reconciliation of the changes in aggregate claims liabilities: Balance at Current Year Balance at Beginning of Claims and Changes Claims End of Fiscal Year in Estimates Payments Fiscal Year 1996 -1997 $160,000 $(15,329) $12,671 $132,000 1997 -1998 132,000 (46,000) — 86,000 In addition to the self insurance programs, the City has other insurance policies covering various business risks including property and general liability. Liability limits are in excess of $39.1 million and terms associated with property insurance include total deductibles of approximately $11,000, with a 90% coinsurance provision. The City has obtained excess insurance coverage with varying retentions and limits to further limit exposure to large losses. There have been no significant reductions in insurance coverage from the prior year and settlements have not exceeded insurance coverage during the past three years. 17. Contributed Capital During the year, contributed capital in the enterprise funds changed by the following amounts: Water and Refuse Stormwater Source Sewer Collection Management Totals Impact fees —water Impact fees — wastewater Connection fees —water Connection fees — wastewater Connection fees — reclaimed water Joe Martin Patriot Properties Red Carpet Helicopter Community Development Block Grant Depreciation on contributed assets: Current year Net change Contributed capital, October 1 Contributed capital, September 30 $ 125,850 $ – $ – $ 125,850 57,729 – – 57,729 35,035 – – 35,035 43,983 – – 43,983 40,848 – – 40,848 15,220 – – 15,220 20,195 – – 20,195 10,434 – – 10,434 24,610 – – 24,610 (732,773) (3,281) (6,209) (742,263) (358,869) (3,281) (6,209) (368,359) 26,293,984 29,535 131,380 26,454,899 $25,935,115 $26,254 $125,171 $26,086,540 57 so City of Edgewater, Florida M Notes to Financial Statements (continued) M 18. Accounting Change M During the current year, the City adopted Government Accounting Standards Board Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. In accordance with the provisions of this Statement, the assets of the City's section 457 deferred compensation plan have been placed in trust for the exclusive benefit of the plan participants. As a result of adopting this Statement, the assets of the plan are no longer subject to the claims of the general creditors of the City and therefore are not included in the accompanying financial statements. 19. Year 2000 Issue The Year 2000 issue is the result of shortcomings in many electronic data processing system sand other electronic equipment that may adversely affect the government's operations as early as fiscal year 1999. .r The City of Edgewater has completed an inventory of computer systems and other electronic equipment that may be affected by the Year 2000 issue and that are necessary to conducting City W of Edgewater operations. The City has identified the following systems requiring Year 2000 remediation: • Financial reporting and budgeting, accounts payable, purchasing, payroll /personnel, utility billing, accounts receivable, occupational license, fixed asset, and cash receipts systems. The City is currently remediating its financial reporting and budgeting, accounts payable, purchasing, payroll /personnel, utility billing, accounts receivable, occupational license, fixed asset, and cash receipts systems. Validation and testing of these systems have yet to be completed. A contract of $69,000 has been committed for purchase of hardware and software for this project as of October 1998. Personal computers. An assessment of personal computers has been done for all facilities r+ throughout the City. The City has upgraded or is in the process of upgrading these computers to be Year 2000 compliant. The City has spent or committed approximately $5,000 on this process. Validation and testing is being done as computers are upgraded. • Wastewater plant. The City's wastewater plant recently underwent an upgrading of controls and equipment due to the age of the old systems. In doing so, the upgraded controls and equipment enabled the plant to be Year 2000 compliant with no Year 2000 problems. 58 Mi City of Edgewater, Florida Notes to Financial Statements (continued) M 19. Year 2000 Issue (continued) • Water plant. The City's water plant was determined not to be Year 2000 compliant in 1998 and that no support was available to upgrade. Therefore, the system is presently being replaced for a software cost of $9,600 by an outside vendor. Validation and testing will be done in May 1999. • 911 police and fire emergency reporting system. The 911 police and fire emergency reporting system is provided to the City by an outside vendor. This vendor is responsible for remediating these systems and is solely responsible for any costs associated with this project. • Telephone system. The City's telephone system is maintained by an outside vendor who has verified the system to be Year 2000 compliant and is solely responsible for any costs associated with this project. • Traffic control system. The traffic control systems and flashers within our City are maintained by the County who has verified the system to be Year 2000 compliant and is solely responsible for any costs associated with this project. ' • Banking relationships. The City has received notification from its primary banking facilities that they are aware of the Year 2000 problem and that they are in various stages of implementation, remediation, and testing in order to become compliant. ' • Electrical distribution system. Another vendor is remediating the electrical distribution system. The City has been advised that its systems will be Year 2000 compliant by June 1999. To date, $50 million has been budgeted by this vendor to remedy all areas of critical and important systems. As devices are corrected or determined to be Year 2000 ready, a testing program is carried out to help ensure continued service to its customers. • Tax collection. Tax collection for the City is handled by Volusia County. The County is responsible for remediating this system and is solely responsible for any costs associated with this project. The City has been notified that their system is Year 2000 compliant. Because of the unprecedented nature of the Year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until the year 2000 and thereafter. Management cannot assure that the City of Edgewater is or will be Year 2000 ready, that the City of Edgewater's remediation efforts will be successful in whole or in part, or that parties with whom the City of Edgewater does business will be Year 2000 ready. F 1 City of Edgewater, Florida Required Supplementary Information Schedule of Pension Funding Progress Last Six Years Actuarial Valuation Date Actuarial Value of Assets (a) Police Officers' Retirement Trust Fund Actuarial Accrued Unfunded Liability (AAL) (Assets in Funded Covered - Entry Age Excess of) AAL Ratio Payroll (b) (b -a) (alb) (c) Unfunded (Assets in Excess of) AAL as a Percentage of Covered Payroll ((b -a) /c) Mi 10/01/92 $ 727,268 $1,074,100 $346,832 67.7 $775,280 44.7% 10/01/93 931,249 1,271,723 340,474 73.2 838,277 40.6 1 10/01/94 1,129,976 1,523,213 393,237 74.2 871,746 45.1 10/01/95 1,388,559 1,768,521 379,962 78.5 920,059 41.3 10/01/96 1,679,636 2,001,604 321,968 83.9 918,376 35.1 10/01/97 1,827,091 2,166,313 339,222 84.3 1,001,927 33.9 General Employees' Pension Fund Actuarial Unfunded (Assets in Actuarial Accrued Unfunded Excess of) AAL as a Actuarial Value of Liability (AAL) (Assets in Funded Covered Percentage of Valuation Assets - Entry Age Excess of) AAL Ratio Payroll Covered Payroll Date (a) (b) (b -a) (a /b) (c) ((b -a) /c) 10/01/92 $1,495,163 $2,261,024 $765,861 66.1 $2,404,295 31.9% 10/01/93 2,041,962 2,816,720 774,758 72.5 2,516,803 30.8 10/01/94 2,612,304 3,509,876 897,572 74.4 2,807,289 32.0 10/01/95 3,302,594 4,139,201 836,607 79.8 2,738,633 30.5 10/01/96 4,075,673 4,850,901 775,228 84.0 2,912,784 26.6 10/01/97 5,245,266 5,873,295 628,029 89.3 2,682,998 23.4 Firefighters' Pension Fund Actuarial Unfunded (Assets in r Actuarial Accrued Unfunded Excess of) AAL as a Actuarial Value of Liability (AAL) (Assets in Funded Covered Percentage of Valuation Assets - Entry Age Excess of) AAL Ratio Payroll Covered Payroll Date (a) (b) (b -a) (a/b) (c) ((b -a) /c) *a 10/01/92 N/A N/A N/A N/A N/A - 10/01/93 N/A N/A N/A N/A N/A - 10/01/94 161,996 161,996 - 100 307,944 - 10/01/95 234,236 234,236 - 100 293,818 - 10/01/96 304,103 304,103 - 100 345,757 - 10/01/97 462,670 462,670 - 100 350,613 - M NOTE: The City began the Firefighters' Pension Fund in 1991 with the State of Florida. W However, in fiscal year 1995, the City separated the plan from the State of Florida. Prior to 1995, the City was required to have actuarial valuations performed on a triennial basis. Therefore, the actuarial valuation information as of 10/01/92 and 10/01/93 are not available. See accompanying note to required supplementary information. 4 r 60 City of Edgewater, Florida Required Supplementary Information Schedule of Employer Contributions Last Six Years Police Officers' Retirement Trust Fund Year Ended Sept. 30 1993 1994 1995 1996 1997 1998 Annual Pension Cost $133,941 145,093 159,583 151,867 138,191 172,948 General Employees' Pension Fund Percentage Contributed 100% 100 100 100 100 100 Year Ended Annual Pension Percentage Sept. 30 Cost Contributed 1993 $397,472 100% 1994 444,074 100 1995 568,685 100 1996 526,514 100 1 997 546,020 100 1998 462,296 100 Firefighters' Pension Fund Year Ended Annual Pension Percentage Sept. 30 Cost Contributed 1993 $30,806 100% 1994 35,784 100 1995 48,848 100 1996 48,530 100 1997 65,735 100 1998 61,653 100 See accompanying note to required supplementary information. 61 City of Edgewater, Florida Note to the Required Supplementary Information Schedules of Pension Funding Progress and Employer Contributions 1. Actuarial Methods and Significant Assumptions: The valuation method used for funding the police and general employees pension funds is the Entry Age Normal— Frozen Initial Liability Actuarial Cost Method. This method spreads the total cost of the projected pension benefits for each employee from the date he is first eligible for the plan to his normal retirement age. The Firefighters Pension Fund uses the Aggregate Actuarial Cost Method, which does not identify or separately amortize unfunded actuarial liabilities. Police General Officers Employees Firefighters Valuation date 10/01/97 10/01/97 10/01 /97 Amortization method Level Dollar— Level Dollar— N/A Closed Period Closed Period Remaining amortization period 10 years 6 years N/A Asset valuation method Market Market Market Actuarial assumptions: Investment rate of return 7.5% 8.0% 7.5% Salary increases: Merit A salary scale is A salary scale is 4.5% used which results used which results in a variable rate in a variable rate of increases for of increases for merit based on the merit based on the participant's age. participant's age. Inflation 3.4% 4.5% 3.0% Retirement age 55 and 5 years of 60 with 5 years of 55 with 5 years of plan participation accrued service or service or age 52 or 25 years of plan after 30 years of and 25 years of participation, accrued service service, whichever whichever is is earliest. earliest Ufa I Combining, Individual Fund and Account Group Financial Statements and Schedules ' These financial statements provide a more detailed view of the "General Purpose Financial Statements" presented in the preceding subsection. Combining statements are presented when there is more than one fund of a given fund type. Individual fund statements are presented when there is only one fund of ■ a given type. They are also necessary to present budgetary comparisons. it � I � I � I � I I I This page intentionally left blank. Proprietary Fund Type Enterprise Funds Enterprise Funds account for operations that are financed and operated in a manner similar to private enterprise, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Water and Sewer Fund The Water and Sewer Fund accounts for the fiscal activities of the City's water and sewer treatment and distribution operations, as well as the funding and payment of related debt. Refuse Collection Fund The Refuse Collection Fund accounts for the fiscal activities of the City's refuse collection and disposal operation. Stormwater Management Fund The Stormwater Management Fund accounts for the fiscal activities of the City's stormwater drainage operation, as well as the funding and payment of related debt. 1 Assets Current assets: Pooled cash and cash equivalents Accounts receivable Unbilled accounts receivable Due from other governments Inventory Prepaid expenses Total current assets Restricted assets: Customer deposits: Cash and cash equivalents Revenue bond sinking fund: Cash and cash equivalents Accrued interest receivable Renewal and replacement fund: Cash and cash equivalents Development fund: Cash and cash equivalents Construction fund: Investments Wastewater special assessment funds: Cash and cash equivalents Special assessments - current Special assessments - noncurrent Accrued interest receivable Total restricted assets Plant and equipment: Plant in service: Land Water plant Sewer plant Refuse collection facility Improvements other than buildings Machinery and equipment Less accumulated depreciation Construction in progress Other assets: Unamortized debt issuance costs Total assets City of Edgewater, Florida Combining Balance Sheet All Enterprise Funds September 30, 1998 Water and Refuse Stormwater September 30 Sewer Collection Management 1998 1997 Fund Fund Fund Total Total $ 3,027,014 $ 455,935 $ 395,653 $ 3,878,602 $ 3,462,957 420,510 - - 420,510 411,909 179,634 59,045 - 238,679 224,384 - 1,217 - 1,217 18,268 45,168 - 8,854 54,022 56,048 7,153 88 25 7,266 5,420 3,679,479 516,285 404,532 4,600,296 4,178,986 379,117 - - 379,117 358,411 1,073,584 - - 1,073,584 1,073,806 3,605 - - 3,605 1,974 984,968 164,579 - 1,149,547 976,574 1,704,120 - - 1,704,120 1,682,628 - - - - 1,718 2,167,467 - - 2,167,467 2,513,205 608,872 - - 608,872 580,364 12,636,833 - - 12,636,833 13,290,922 590,159 - - 590,159 618,428 20,148,725 164,579 - 20,313,304 21,098,030 570,789 - - 570,789 570,789 9,522,507 - - 9,522,507 9,522,507 10,464,117 - - 10,464,117 10,050,640 - 37,317 - 37,317 37,317 27,625,896 75,273 4,424,243 32,125,412 31,912,809 660,590 525,038 348,995 1,534,623 1,496,197 48,843,899 637,628 4,773,238 54,254,765 53,590,259 (8,219,084) (500,694) (338,688) (9,058,466) (7,591,110) 40,624,815 136,934 4,434,550 45,196,299 45,999,149 84,790 - - 84,790 266,138 40,709,605 136,934 4,434,550 45,281,089 46,265,287 518,946 - 15,927 534,873 587,834 $ 65,056,755 817,798 4,855,009 $ 70,729,562 $ 72,130,137 66 Water and Refuse Stormwater September 30 Sewer Collection Management 1998 1997 Fund Fund Fund Total Total Liabilities and fund equity Current liabilities (payable from current assets): Accounts payable Accrued liabilities Accrued interest payable Notes payable -- current Obligations under capital lease Total current liabilities (payable from current assets) Current liabilities (payable from restricted assets): Customer deposits Accrued interest payable Bonds payable- current Revenue bonds payable- current Contracts payable State revolving loan payable Total current liabilities (payable from restricted assets) Other liabilities: Accumulated employee benefits Notes payable - long -term Bonds payable - long -term Revenue bonds payable- net - long -term State revolving loan payable - long -term Obligations under capital lease- long -term Total liabilities $ 40,999 $ 25,316 $ 6,936 $ 73,251 $ 127,546 121,451 43,130 17,413 181,994 165,967 - 19 16 35 40 2,418 675 549 3,642 3,465 9,671 - - 9,671 22,142 174,539 69,140 24,914 268,593 319,160 379,117 - - 379,117 358,411 517,311 - - 517,311 540,429 - - 203,188 203,188 192,785 310,000 - - 310,000 290,000 - - - - 23,517 1,027,413 - - 1,027 991,434 2,233,841 - 203,188 2,437,029 2,396,576 94,645 31,113 14,299 140,057 130,447 14,054 3,924 3,187 21,165 24,804 - - 3,106,300 3,106,300 3,309,502 13,181,688 - - 13,181,688 13,479,420 20,306,288 - - 20,306,288 21,333,701 - - - - 9,671 33,596,675 35,037 3,123,786 36,755,498 38,287,545 36,005,055 104,177 3,351,888 39,461,120 41,003,281 11 Fund equity: ' Contributed capital: Contributions from governmental agencies 2,172,933 26,254 125,171 2,324,358 2,412,486 ' Contributions from customers Contributions -other 22,826,174 936,008 - - - - 22,826,174 936,008 23,072,159 970,254 25,935,115 26,254 125,171 26,086,540 26,454,899 Retained earnings: Reserved for renewal and replacement 984,968 - - 984,968 858,611 ' Reserved for revenue bond retirement 1,077,189 1,077,189 1,075,779 Reserved for equipment purchases 164,579 164,579 117,963 Unreserved 1,054,428 522,788 1,377,950 2,955,166 2,619,604 3,116,585 687,367 1,377,950 5,181,902 4,671,957 Total fund equity 29,051,700 713,621 1,503,121 31,268,442 31,126,856 Wr Total liabilities and fund equity $ 65,056,755 $ 817,798 4,855,009 70,729,562 $ 72,130,137 11 City of Edgewater, Florida Combining Statement of Revenues, Expenses and Changes in Retained Earnings All Enterprise Funds Operating revenues: Charges for services: Water sales Sewer sales Refuse collection charges Stormwater utility fees Penalties Miscellaneous Total operating revenues Operating expenses: Personal services Contractual services Materials and supplies Repairs and maintenance Claims and judgments Refuse Stormwater Year ended September 30 Water and Collection Management 1998 1997 Sewer Fund Fund Fund Total Total $2,083,806 $ - $ - $2,083,806 $1,983,802 1,806,763 - - 1,806,763 1,749,470 - 1,231,223 - 1,231,223 1,216,751 - - 730,230 730,230 720,317 101,320 - - 101,320 102,969 35,227 135 9 35,371 114,778 4,027,116 1,231,358 730,239 5,988,713 5,888,087 1,541,258 602,486 281,886 2,425,630 2,266,971 121,464 402,907 15,599 539,970 550,762 549,972 48,518 24,314 622,804 678,589 112,914 29,617 22,770 165,301 210,594 Total operating expenses 2,325,608 1,083,528 344,569 3,753,705 3,706,916 Operating income before depreciation 1,701,508 147,830 385,670 2,235,008 2,181,171 Less depreciation expense (1,273,372) (58,364) (160,752) (1,492,488) (1,375,846) Operating income 428,136 89,466 224,918 742,520 805,325 Nonoperating revenues (expenses): Interest revenue 1,154,607 28,381 26,073 1,209,061 1,195,134 State Recycling Grant - 6,144 - 6,144 20,506 Loss on disposal of fixed assets (432) - - (432) (2,110) Interest/amortization expense (1,641,895) (251) (186,635) (1,828,781) (1,792,313) Total nonoperating revenues (expenses) (487,720) 34,274 (160,562) (614,008) (578,783) Income (loss)before operating transfers (59,584) 123,740 64,356 128,512 226,542 Operating transfers in - - 11,698 11,698 16,654 Operating transfers out (250,000) (91,485) (31,043) (372,528) (380,258) Net income (loss) (309,584) 32,255 45,011 (232,318) (137,062) Add back depreciation expense related to contributed assets 732,773 3,281 6,209 742,263 726,539 Net increase in retained earnings 423,189 35,536 51,220 509,945 589,477 Retained earnings at beginning of year 2,693,396 651,831 1,326,730 4,671,957 4,082,480 Retained earnings at end of year $3,116,585 $ 687,367 $1,377,950 $5,181,902 $4,671,957 :: 1 City of Edgewater, Florida Combining Statement of Cash Flows All Enterprise Funds Water and Sewer Fund Page 1 of 2 Refuse Stormwater Year ended September 30 Collection Management 1998 1997 Fund Fund Total Total Cash flows from operating activities: Cash received from customers $4,026,669 $1,229,615 $730,239 $ 5,986,523 $ 5,847,053 Cash payments to suppliers for goods and services (834,916) (479,662) (71,522) (1,386,100) (1,982,789) Cash payments to employees for services (1,506,373) (604,900) (284,810) (2,396,083) (2,260,676) Other operating revenues - - - - 47,607 Net cash provided by operating activities 1,685,380 145,053 373,907 2,204,340 1,651,195 Cash flows provided by (used in) capital and related financing activities: Acquisition and construction of capital assets (510,369) - (21,871) (532,240) (2,133,925) Interest paid (1,614,471) (254) (184,219) (1,798,944) (1,728,017) Contributions for acquiring assets 999,486 1 - 999,487 1,185,590 Principal payments: Revenue bonds (277,732) - (192,799) (470,531) (450,508) State revolving loan (991,434) - - (991,434) (1,087,012) Capital leases (22,142) - - (22,142) (20,712) Note payable (2,300) (641) (521) (3,462) (3,298) Total cash flows provided by (used in) capital and related financing activities (2,418,962) (894) (399,410) (2,819,266) (4,237,882) Cash flows (used in) provided by noncapital and related financing activities: Operating transfers to other funds (250,000) (91,485) (31,043) (372,528) (380,258) Operating transfers from other funds - - 11,698 11,698 16,654 Proceeds from state recycling grant - 23,195 - 23,195 22,682 Total cash flows used in noncapital and related financing activities (250,000) (68,290) (19,345) (337,635) (340,922) Cash flows provided by investing activities: Interest revenue 1,181,245 28,381 26,073 1,235,699 1,224,265 Sale of investments - - 1,718 1,718 2,228,041 Total cash flows provided by investing activities 1,181,245 28,381 27,791 1,237,417 3,452,306 Net increase (decrease) in cash and cash equivalents 197,663 104,250 (17,057) 284,856 524,697 Cash and cash equivalents at beginning of year 9,138,607 516,264 412,710 10,067,581 9,542,884 Cash and cash equivalents at end of year $9,336,270 $ 620,514 $395,653 $10,352,437 $10,067,581 .' City of Edgewater, Florida Page 2 of 2 Combining Statement of Cash Flows All Enterprise Funds Significant transactions not affecting cash flows: Water and sewer line contributed by customer $ 45,849 $ Loss on disposition of fixed assets — Baffle box contributed by Volusia County — $ — $ 45,849 $ 34,993 (2,110) 72,332 t 70 Water and Refuse Stormwater Year ended September 30 Sewer Collection Management 1998 1997 Fund Fund Fund Total Total Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income $ 428,136 $ 89,466 $224,918 $ 742,520 $ 805,325 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 1,273,372 58,364 160,752 1,492,488 1,375,846 Increase in accounts receivable (8,600) — — (8,600) (5,956) Increase in unbilled accounts receivable (12,552) (1,743) — (14,295) (9,516) Decrease (increase) in inventory 5,712 — (3,686) 2,026 (4,713) Increase in customer deposits 20,706 — — 20,706 22,045 Decrease (increase) in prepaid expenses (6,270) 4,448 (25) (1,847) (4,515) Decrease in accounts payable (50,361) (3,068) (866) (54,295) (183,616) (Decrease) increase in accrued liabilities 20,943 (654) (4,262) 16,027 (353,298) Increase (decrease) in accrued employee benefits 14,294 (1,760) (2,924) 9,610 9,593 Net cash provided by operating activities $1,685,380 $145,053 $373,907 $2,204,340 $1.651.195 Significant transactions not affecting cash flows: Water and sewer line contributed by customer $ 45,849 $ Loss on disposition of fixed assets — Baffle box contributed by Volusia County — $ — $ 45,849 $ 34,993 (2,110) 72,332 t 70 0 im Fiduciary Fund Types These funds account for assets held by a governmental unit in a trustee capacity or as an agent for individual private organizations, other governmental units, and/or other funds. ft Pension Trust Funds Municipal Police Officers' Retirement Trust Fund The Police Officers' Retirement Trust Fund is used to account for the fiscal activities of the Edgewater Police Pension Board, which accumulates assets and ultimately pays benefits to qualified retirees of the Edgewater Police Department in accordance with a defined benefit plan. General Employees' Pension Fund The General Employees' Pension Fund is used to account for the fiscal activities of the Board of Trustees for the City of Edgewater's General Employees' Pension Fund, which accumulates assets and will ultimately pay benefits to qualified retirees of the City of Edgewater in accordance with a defined benefit plan. Municipal Firefighters' Retirement Trust Fund The Firefighters' Retirement Trust Fund is used to account for the fiscal activities of the Edgewater Firefighter Pension Board, which accumulates assets and ultimately pays benefits to qualified retirees of the Edgewater Fire Department in accordance with a defined benefit plan. No City of Edgewater, Florida Combining Statement of Plan Net Assets All Pension Trust Funds Assets Investments: Debt and other interest bearing investments Equity securities Other Total investments September 30, 1998 Municipal Police General Officers' Employees' Firefighters' Retirement Pension Pension Trust Fund Trust F und Fund Total $1,654,830 $4,487,051 $239,206 $6,381,087 432,546 1,970,122 304,439 2,707,107 257,579 429,372 5,459 692,410 2,344,955 6,886,545 549,104 9,780,604 Prepaid expenses 225 — — 225 Interest and dividends receivables — — 11 11 Total assets 2,345,180 6,886,545 549,115 9,780,840 Liabilities Accounts payable Total liabilities Net assets held in trust for pension benefits 144 — 3,025 3,169 144 — 3,025 3,169 $2,345,036 $6,886,545 $546,090 $ 9,777,671 W M 72 fti City of Edgewater, Florida Combining Statement of Changes in Plan Net Assets All Pension Trust Funds a M For the fiscal year ended September 30, 1998 Municipal Additions: Police General Officers' Employees' Firefighters' Retirement Pension Pension Trust Fund Trust Fund Fund Total ' Investment expenses Net investment income Total revenues $ 112,957 Additions: $ 13,508 Contributions: 11,252 Employer 20,812 Employees 62,640 State of Florida ' Total contributions 186,849 Investment income: 83,133 Investment and dividend income 137,924 Net appreciation in fair value of 9,731 plan investments ' Investment expenses Net investment income Total revenues $ 112,957 $ 463,396 $ 13,508 $ 589,861 11,252 - 20,812 32,064 62,640 - 48,813 111,453 186,849 463,396 83,133 733,378 137,924 395,368 9,731 543,023 67,894 221,675 6,738 296,307 205,818 617,043 16,469 839,330 (1,166) - (7,328) (8,494) 204,652 617,043 9,141 830,836 391,501 1,080,439 92,274 1,564,214 Deductions: Benefits payments 27,723 81,786 - 109,509 Income before administrative expenses 363,778 998,653 92,274 1,454,705 Administrative expenses 11,739 16,079 7,685 35,503 Net increase 352,039 982,574 84,589 1,419,202 Net assets held in trust for pension benefits: Beginning of year 1,992,997 5,903,971 461,501 8,358,469 End of year $2,345,036 $6,886,545 $546,090 $9,777,671 � I � I � I � I 73 � I This page intentionally left blank. M r M M Supporting Schedules Financial schedules are presented to provide greater detailed information than reported in the preceding financial statements. This information, in many cases, has been spread throughout the report and is brought together here for greater clarity. Financial schedules are not necessary for fair presentation in conformity with generally accepted accounting principles. IM This page intentionally left blank. �.r im General Fixed Assets Account Group General Fixed Assets are those fixed assets of the City which are not accounted for in an Enterprise or Trust Fund. To be classified as a fixed asset in this category a specific piece of property must possess three attributes: (1) tangible nature; (2) a life longer than the current fiscal year; and (3) a significant value. The General Fixed Assets are a self - balancing account group which require adequate accounting procedures and records to assure their protective custody. M an W M M M M M M M City of Edgewater, Florida General Fixed Assets Account Group Schedule of General Fixed Assets By Source September 30 1998 1997 General fixed assets: Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Total general fixed assets $ 1,415,499 $ 1,369,887 1,673,839 1,572,523 13,833,620 13,832,642 2,602,768 2,483,428 100,627 40,398 $19,626,353 $19,298,878 Investment in general fixed assets from: General Fund revenues Federal grants and entitlements Gifts Total investment in general fixed assets $11,139,418 $10,797,875 668,689 678,257 7,818,246 7,822,746 $19,626,353 $19,298,878 W City of Edgewater, Florida General Fixed Assets Account Group Schedule of General Fixed Assets By Function and Activity September 30, 1998 77 Improvements Machinery Otherthan and Function and Activity Total Land Buildings Buildings Equipment General government $ 500,279 $ 300 $ 175,818 $ 28,257 $ 295,904 Public safety 2,253,976 105,591 472,315 4,624 1,671,446 Highways and streets 13,201,564 6,906 64,039 12,743,724 386,895 Library 565,073 45,811 512,526 — 6,736 Recreation 3,004,834 1,256,891 449,141 1,057,015 241,787 Total general fixed assets allocated to function 19,525,726 $1,415,499 $1,673,839 $13,833,620 $2,602,768 Construction in progress 100,627 Total general fixed assets $19,626,353 77 City of Edgewater, Florida General Fixed Assets Account Group Schedule of Changes In General Fixed Assets By Function and Activity For the year ended September 30, 1998 General Fixed General Fixed Assets Assets October 1 September 30, Function and Activity 1997 Additions Deletions 1998 General government Public safety Highways and streets Library Recreation Construction in progress $ 502,993 $ 11,704 $ 14,418 $ 500,279 2,108,805 198,113 52,942 2,253,976 13,203,394 4,345 6,175 13,201,564 565,073 — — 565,073 2,878,215 149,042 22,423 3,004,834 40,398 72,631 12,402 100,627 $19,298,878 $435,835 $108,360 $19,626,353 78 General Long -Term Debt Account Group ' The General Long -Term Debt Account Group is a self - balancing account group set up to account for the unmatured general long -term debt of a government. ' General long -term debt consists of the noncurrent portion of all debt other than interfund advances expected to be repaid from funds received by governmental ' fund types. In the City of Edgewater, Florida, the account group has been established to account for the noncurrent liability associated with the accrual of employee compensated absences. Rather, that portion of the total liability for compensated absences which is not expected to be liquidated with expendable available ' financial resources within the next year. ll II � I City of Edgewater, Florida General Long -Term Debt Account Group Schedule of General Long -Term Debt September 30 1998 1997 Amount available for debt service Amount to be provided for the payment of general long- term debt Total available and to be provided General long -term debt payable: Accrued noncurrent portion of employee compensated absences payable Capital improvement bonds —Series 1995A Capital improvement bonds — Series 1995B Note payable — Volusia County Total general long -term debt payable $ 224,575 $ 152,481 8,232,506 8,828,636 $8,457,081 $8,981,117 $ 321,504 $ 360,905 5,627,557 5,957,820 2,376,875 2,512,924 131,145 149,468 $8,457,081 $8,981,117 80 r City of Edgewater, Florida Page 1 of 2 .. Schedule of Revenues and Other Financing Sources - Budget and Actual General Fund Revenues Taxes: Ad valorem taxes Franchise fees Utility service taxes State sales tax Local option gas Licenses and permits: ' Occupational licenses Building permits Intergovernmental revenues: State revenue sharing Mobile home fees Gasoline tax rebate Cigarette tax 2¢ additional Beverage licenses County occupational licenses Federal grants State grants Firefighters' supplemental compensation Other transportation Charges for services: Zoning fees Recreation fees and charges Miscellaneous Driveway use permit Year ended September 30, 1998 Variance Favorable Budget Actual (Unfavorable) $2,484,871 $2,491,303 $ 6,432 619,500 643,473 23,973 1,290,500 1,339,347 48,847 740,000 728,628 (11,372) 280,000 281,488 1,488 5,414,871 5,484,239 69,368 59,200 58,533 (667) 120,600 126,970 6,370 179,800 185,503 5,703 416,000 418,014 2,014 22,500 22,743 243 8,200 9,277 1,077 50,223 51,949 1,726 7,600 9,071 1,471 19,000 19,771 771 87,192 110,658 23,466 - 16,082 16,082 1,800 2,470 670 8,709 7,953 (756) 621,224 667,988 46,764 4,800 4,175 (625) 75,000 83,892 8,892 29,350 30,905 1,555 5,900 4,720 (1,180) 115,050 123,692 8,642 81 a City of Edgewater, Florida Page 2 of 2 Schedule of Revenues and Other Financing Sources (continued) Budget and Actual General Fund Year ended September 30, 1998 Fines and forfeitures: Court fines Police education Parking Miscellaneous: Interest revenue Sale of property and equipment Miscellaneous Total revenues 6,592,645 6,834,474 241,829 Other financing sources: Transfer from Water /Sewer, Refuse and Stormwater Funds 372,528 372,528 — Total other financing sources 372,528 372,528 — Total revenues and other financing sources $6,965,173 $7,207,002 $241,829 W a el 82 id Variance Favorable Budget Actual (Unfavorable) 68,000 71,542 3,542 3,700 3,342 (358) 600 425 (175) 72,300 75,309 3,009 157,000 254,333 97,333 4,000 5,554 1,554 28,400 37,856 9,456 189,400 297,743 108,343 Total revenues 6,592,645 6,834,474 241,829 Other financing sources: Transfer from Water /Sewer, Refuse and Stormwater Funds 372,528 372,528 — Total other financing sources 372,528 372,528 — Total revenues and other financing sources $6,965,173 $7,207,002 $241,829 W a el 82 id ft M City of Edgewater, Florida Schedule of Expenditures Budget and Actual General Fund Financial and administrative: Personal services Operating expenditures Total financial and administrative General government $ 1,159 City Council: 24,502 Personal services ' Operating expenditures 1,077 Total legislative 1 Personal services r City Manager: 2,153 Personal services ' Operating expenditures 278,386 Capital outlay 12,758 Total executive City of Edgewater, Florida Schedule of Expenditures Budget and Actual General Fund Financial and administrative: Personal services Operating expenditures Total financial and administrative ' Legal department: $ 1,159 Personal services 24,502 Operating expenditures ' Total legal department 1,077 City Clerk: 1 Personal services r Operating expenditures 2,153 Capital outlay ' Debt service 278,386 Total City Clerk ' Other government services: $ 1,159 Operating expenditures 24,502 Capital outlay 63,310 Operating contingency 1,077 Total other government services 177,441 10,605 r 86,187 M Page 1 of 4 Year ended September 30, 1998 Actual Budget Actual (Over) Under (Revised) Expenditures Budget $ 38,890 $ 37,731 $ 1,159 24,420 24,502 (82) 63,310 62,233 1,077 188,046 177,441 10,605 88,340 86,187 2,153 2,000 2,000 - 278,386 265,628 12,758 228,695 214,514 14,181 33,800 31,979 1,821 262,495 246,493 16,002 109,267 101,447 7,820 131,840 125,953 5,887 241,107 227,400 13,707 98,144 96,601 1,543 60,982 54,437 6,545 1,000 - 1,000 4,641 1,524 3,117 164,767 152,562 12,205 162,770 147,309 15,461 1,560 1,981 (421) 225,148 - 225,148 389,478 149,290 240,188 83 M City of Edgewater, Florida Page 2 of 4 ' Schedule of Expenditures (continued) Budget and Actual General Fund Year ended September 30, 1998 Actual , r Budget Actual (Over) Under (Revis Expenditures Budget General government (continued) 101,874 100,839 1,035 Operating expenditures Community development: 2,696 1,694 Capital outlays 800 Personal services 366,898 349,508 17,390 Operating expenditures 74,090 52,015 22,075 Capital outlay 10,160 7,966 2,194 Debt service 1,063 1,063 - Total community development 452,211 410,552 41,659 Economic development: Operating expenditures 20,850 18,715 2,135 Total economic development 20,850 18,715 2,135 Personnel administration: Personal services 86,509 83,290 3,219 Operating expenditures 8,540 5,369 3,171 Debt service 235 - 235 Total personnel administration 95,284 88,659 6,625 Maintenance: Personal services 101,874 100,839 1,035 Operating expenditures 4,390 2,696 1,694 Capital outlays 800 800 - Debt service 168 168 - Total maintenance 107,232 104,503 2,729 Engineer: Personal services 153,878 156,584 (2,706) Operating expenditures 10,215 4,298 5,917 Capital outlay 1,000 - 1,000 Debt service 225 225 - Total engineer 165,318 161,107 4,211 Total general government 2,240,438 1,887,142 353,296 F-1111 City of Edgewater, Florida Page 3 of 4 Schedule of Expenditures (continued) Budget and Actual General Fund Year ended September 30, 1998 Actual Budget Actual (Over) Under (Revised) Expenditures Budget Public safety Police division: Personal services Operating expenditures Capital outlay Debt service Total police division Fire division: Personal services Operating expenditures Capital outlay Debt service Total fire division Civil defense: Operating expenses Total civil defense Total public safety Transportation Public works: Personal services Operating expenditures Capital outlay Debt service Total public works Total transportation Culture /recreation Libraries: Operating expenditures Capital outlays Total libraries 1,972,799 1,962,514 10,285 306,395 291,256 15,139 97,200 81,592 15,608 33,609 21,139 12,470 2,410,003 2,356,501 53,502 614,163 608,121 6,042 170,825 146,427 24,398 274,850 157,003 117,847 6,828 6,827 1 1,066,666 918,378 148,288 7,004 4,160 2,844 7,004 4,160 2,844 3,483,673 3,279,039 204,634 273,173 266,585 6,588 105,660 62,342 43,318 4,300 4,345 (45) 981 981 - 384,114 334,253 49,861 384,114 334,253 49,861 8,025 4,964 - 16,282 3,061 (16,282) 8,025 21,246 (13,221) :& City of Edgewater, Florida Schedule of Expenditures (continued) Budget and Actual General Fund Culture /recreation (continued) Parks department: Personal services Operating expenditures Capital outlay Debt service Total parks department Total culture /recreation Total expenditures Other financing uses: Transfer to Debt Service Fund Transfer to Stormwater Management Fund Total other financing uses Total expenditures and other financing uses Page 4 of 4 Year ended September 30, 1998 Actual Budget Actual (Over) Under (Revised) Expenditures Budget 423,179 421,712 1,467 193,860 174,720 19,140 161,550 142,839 18,711 1,263 1,262 1 779,852 740,533 39,319 787,877 761,779 26,098 6,896,102 6,262,213 633,889 359,798 16,813 353,429 11,698 6,369 5,115 376,611 365,127 11,48 $7,272,713 $6,627,340 $645,373 Note: The capital outlay and debt service expenditures have been allocated to each of the functional expenditures. :. Statistical Section I 1 I 1 1 This page intentionally left blank. Im m 70 Statistical Information Comments Relative to Statistical Section The following statistical tables that are recommended for inclusion by the Government Finance Officers Association are not included for the reasons stated below: A. Ratio of Net General bonded Debt to Assessed Value and Net Bonded Debt per Capita —Last Ten Fiscal Years —The City has not had any general bonded debt over the past ten fiscal years. B. Ratio of Annual Debt Service for General bonded Debt to Total General Expenditures —Last Ten Fiscal Years —The City has not had any general bonded debt over the past ten fiscal years. C. Florida Statutes and the Charter of the City of Edgewater, Florida, set no legal debt margin. Table I City of Edgewater, Florida General Governmental Expenditures by Function (1) Last Ten Fiscal Years Fiscal Year General Ended Total Government Public Safety Transportation 1989 $ 3,782,620 $ 686,494 $1,283,362 $758,808 1990 4,117,986 953,731 1,560,058 628,087 1991 4,964,456 1,124,113 1,923,639 713,485 1992 4,864,427 1,236,591 2,268,333 577,909 1993 5,412,429 1,283,289 2,429,353 616,813 1994 5,536,175 1,374,732 2,618,319 539,395 1995 5,965,527 1,475,527 2,774,643 484,726 1996 12,357,998 1,496,667 2,762,925 429,734 1997 11,563,627 1,578,623 2,979,253 400,222 1998 7,177,744 1,871,415 3,012,478 328,927 (1) Includes General, Capital Projects and Debt Service Funds. a M IM a M IN M ft IN 91 Culture and Recreation Capital Outlay (2) Debt Service Claims and Judgments $303,404 $ 741,312 $ 9,240 — 301,785 577,807 96,518 — 391,747 684,116 247,362 — 521,751 106,456 153,387 — 522,092 426,366 134,516 — 559,520 402,505 41,704 — 599,877 557,493 73,261 — 623,604 6,054,969 990,099 — 590,121 5,061,279 954,129 — 601,396 414,808 944,559 — a M IN M ft IN 91 Table II City of Edgewater, Florida General Governmental Revenues by Source (1) Last Ten Fiscal Years Fiscal Year Ended Total Taxes Licenses and Permits Inter - Governmental Revenues 1989 $3,936,004 $2,630,784 $209,853 $522,700 1990 4,164,601 2,919,777 167,527 537,037 1991 4,291,774 3,320,548 120,803 513,480 1992 4,558,741 3,549,919 123,279 546,840 1993 4,989,875 3,774,500 133,884 778,541 1994 5,507,841 4,333,768 169,855 580,153 1995 6,830,328 4,386,811 160,758 549,529 1996 7,547,035 5,016,151 181,459 574,174 1997 7,293,444 5,147,962 179,136 688,286 1998 7,468,670 5,484,239 185,503 667,988 (1) Includes General, Capital Projects and Debt Service Funds. 92 Charges for Services Fines and Forfeitures Interest Special Assessments Miscellaneous Revenue $ 275,850 $ 98,124 $ - $ - $198,693 199,995 98,069 - - 242,196 87,037 100,194 - - 149,712 105,811 89,233 - - 143,659 100,463 104,826 - - 97,661 195,180 108,739 - - 120,146 1,380,438 96,340 - - 256,452 146,434 97,328 813,149 298,767 419,573 111,478 83,247 547,977 288,851 246,507 123,692 75,309 24,910 609,286 297,743 93 (1) Each fiscal year contains data from the ad valorem assessment roll of the preceding year (i.e., fiscal year 1998 contains the 1997 assessment roll tax collections). (2) Source: "Certification of Final Taxable Value" (Form DR -422). • , r Table III i City of Edgewater, Florida Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Total Total Tax Percent of Levy M Year Ended Tax Levy Collections Collected 1989 $1,232,093 $1,192,780 96.81% 1990 1,292,528 (2) 1,279,899 99.02 1991 1,414,943 1,368,737 96.73 1992 1,528,324 (2) 1,490,549 97.52 1993 1,592,474 1,534,987 96.39 r 1994 2,073,547 2,010,161 96.94 , 1995 2,113,146 2,040,928 96.58 1996 2,608,024 2,516,081 96.47 1997 2,528,985 2,440,210 96.49 ' 1998 2,576,393 2,491,303 96.70 (1) Each fiscal year contains data from the ad valorem assessment roll of the preceding year (i.e., fiscal year 1998 contains the 1997 assessment roll tax collections). (2) Source: "Certification of Final Taxable Value" (Form DR -422). • , (1) Obtained from the Revised Recapitulation of the Ad Valorem Assessment Rolls of Edgewater, Florida provided by Volusia County, Florida Finance Department. (2) Each fiscal year contains the ad valorem assessment roll of the preceding year (i.e., fiscal year 1998, contains data on the 1997 assessment roll). (3) Assessed taxable values for all fiscal years presented are stated net of the constitutional homestead exemption of $25,000. 95 Table IV City of Edgewater, Florida Assessed and Estimated Actual Value of Taxable Property (1) Last Ten Fiscal Years (In thousands) Ratio of Total Ratio of Total Assessed to Assessed (2) Total (3) Taxable Value Fiscal Year Assessed Estimated Actual Estimated Assessed to Estimated Ended Value Value Actual Value Taxable Value Actual Value 1989 $331,993 $331,993 100.00 $232,917 70.16 1990 379,025 379,025 100.00 270,525 71.37 1991 424,565 424,565 100.00 308,805 72.73 1992 453,643 453,643 100.00 332,346 73.26 1993 474,058 474,058 100.00 346,190 73.03 1994 484,289 484,289 100.00 352,153 72.72 1995 499,443 499,443 100.00 361,840 72.45 1996 516,875 516,875 100.00 367,272 71.06 1997 542,399 542,399 100.00 383,761 70.75 1998 561,103 561,103 100.00 400,061 71.29 (1) Obtained from the Revised Recapitulation of the Ad Valorem Assessment Rolls of Edgewater, Florida provided by Volusia County, Florida Finance Department. (2) Each fiscal year contains the ad valorem assessment roll of the preceding year (i.e., fiscal year 1998, contains data on the 1997 assessment roll). (3) Assessed taxable values for all fiscal years presented are stated net of the constitutional homestead exemption of $25,000. 95 Table V City of Edgewater, Florida Property Tax Rates -All Direct and Overlapping Governments Last Ten Fiscal Years Tax rates per $1,000 of assessed taxable values Edgewater Southeast Volusia Inlet and FbMa Inland St Johns Water FmWYear General School Vohjsia Hospital Mosquito Port Navigation Management Ended F uW District Comty District Control Authority District District Total 1989 5.300 8.803 5.122 1.898 0.309 0.104 0.040 0.281 21.857 1990 4.890 9.185 5.184 1.853 0.339 0.099 0.037 0.346 21.933 1991 4.600 9.548 5.191 2.218 0.324 0.095 0.055 0.358 22.389 1992 4.600 9.548 5.070 2.218 0.316 0.093 0.053 0.358 22.256 1993 4.600 9.548 5.063 2.329 0.315 0.093 0.052 0.358 22.358 1994 5.888 9.869 5.627 2.332 0.318 0.094 0.051 0.470 24.649 1995 5.840 10.277 5.716 2.292 0.287 0.094 0.049 0.482 25.037 1996 7.101 10.887 6.172 2.285 0.262 0.094 0.040 0.482 27.323 1997 6.590 10.821 6.217 2.247 0.238 0.093 0.038 0.482 26.726 1998 6.440 10.487 6.381 2.132 0.238 0.090 0.050 0.482 26.300 Tax rates per $1,000 of assessed taxable values Table VI City of Edgewater, Florida Special Assessments Collections NOTE: Special assessments program began in 1992. Therefore, this schedule only has activity from 1993 -1998. 97 Water and Sewer Fund Since Levy Road Improvement Assessments Current Current Current Current Fiscal Assessments Assessments Assessments Assessments Year Ended Due Collected Due Collected 1993 $ 87,975 $257,497 $ — $ — 1994 453,668 766,062 — — 1995 473,499 586,927 771,418 1,366,243 1996 529,579 608,631 238,813 298,767 1997 554,850 644,377 251,480 288,851 1998 580,364 624,088 265,575 293,139 NOTE: Special assessments program began in 1992. Therefore, this schedule only has activity from 1993 -1998. 97 Table VII City of Edgewater, Florida Computation of Overlapping Debt September 30, 1998 Overlapping Governments Volusia County Endangered Land Volusia County School District Total overlapping debt (1) Data provided by above agencies. (2) The City does not have any general obligation long -term debt outstanding. OT-11 Percentage City of Applicable to Edgewater Net Debt the City of Share of Outstanding Edgewater Debt $ 8,247,416 2.82% $ 232,577 137,917,585 2.82 3,889,276 $4,121,853 (1) Data provided by above agencies. (2) The City does not have any general obligation long -term debt outstanding. OT-11 Table VIII City of Edgewater, Florida Demographic Statistics Last Ten Fiscal Years Fiscal Year (1) Estimated Population (2) Registered Voters (3) Per Capita Income (4) County Unemployment Rate (5) School Percent Enrollment Attendance (6) Median Age 1989 13,313 7,262 $15,359 4.5 1,227 97 - 1990 15,351 8,074 15,894 5.6 1,304 97 37.1 1991 15,975 8,481 16,183 7.3 1,381 97 - 1992 16,394 8,910 16,609 8.3 1,449 95 - 1993 16,745 9,261 17,261 6.4 1,495 96 - 1994 17,096 9,024 16,526 6.4 1,540 95 - 1995 17,484 10,942 18,730 4.9 1,534 95 - 1996 17,820 11,158 18,815 4.2 1,524 95 - 1997 18,077 11,196 19,455 4.0 1,546 95 - 1998 18,761 11,821 19,787 3.2 1,495 96 - (1) Obtained from University of Florida, Bureau of Economics and Business Research. Census Bureau estimate for April 1998. (2) Obtained from Volusia County Supervisor of Elections. (3) Obtained from U.S. Department of Commerce, Bureau of Economic Analysis. (4) State of Florida, Department of Labor and Employment Security. (5) Volusia County School Board- includes grades K -5, Edgewater Elementary School and Indian River Elementary School. (6) Census Bureau (1990) and New Smyrna Beach, Edgewater, Oak Hill, Chamber of Commerce Age Distribution (1987 -CACI Source book). .. Table IX City of Edgewater, Florida Property Value, Construction and Bank Deposits Last Ten Fiscal Years Fiscal Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 (1) Commercial Construction Units Value 8 $ 2,228 4 616 6 727 15 11,073 2 138 5 900 8 1,987 13 2,379 20 2,224 35 2,465 (In thousands) (2) Residential Construction Units Value 374 $22,459 300 14,862 125 7,740 141 6,816 106 6,877 126 8,015 70 5,799 124 10,068 105 7,626 116 9,944 (4) Assessed Value $331,993 379,025 424,565 453,643 474,058 484,289 499,443 516,875 542,399 561,103 (1) Provided directly from bank and savings and loan associations. (2) Obtained from revised recapitulation of the ad valorem assessment rolls of the City of Edgewater. 100 (3) Deposits (1) Savings Banks and Loan 42,142 64,014 55,662 81,900 56,382 86,469 80,794 84,285 76,568 89,859 88,750 91,544 93,927 95,542 96,342 87,419 190,381 - 209,575 - (4) Assessed Value $331,993 379,025 424,565 453,643 474,058 484,289 499,443 516,875 542,399 561,103 (1) Provided directly from bank and savings and loan associations. (2) Obtained from revised recapitulation of the ad valorem assessment rolls of the City of Edgewater. 100 do Table X City Of Edgewater, Florida Summary of Ten Largest Single Unit Water Users September 30, 1998 FY -1998 average monthly consumption: 39,457,583 gallons i I � I � I � I � I [1 (1) Based on individual meter connections per City of Edgewater, Florida, records. (2) The total average monthly consumption for the ten largest water users increased from the previous year by a total of 3,672,000 gallons. (3) Water restrictions implemented by the St. Johns River Water Management District, Volusia County, and the City of Edgewater continue to be in effect. Reclaimed water has been available to the Florida Shores area since 1994. A total of 1,595 customers were connected to the reclaimed/reuse water system at year end. 101 Average Consumption Percent of r ' Per Month (Gallons) Total Gallons Customers (1) Consumed County of Volusia 3,465,000 8.78% Eastern Shores Mobile Village 410,000 1.04 Coronado Paint Company 400,000 1.01 Blue Gables, Inc. 142,000 .36 Volusia County Schools 134,000 .34 ,.� Halifax Court 122,000 .31 Belmont Homes 114,000 .29 Belmont Homes 112,000 .28 Publix Supermarket, Inc. 101,000 .26 Winn Dixie 99,000 .25 5,099,000 12.92% FY -1998 average monthly consumption: 39,457,583 gallons i I � I � I � I � I [1 (1) Based on individual meter connections per City of Edgewater, Florida, records. (2) The total average monthly consumption for the ten largest water users increased from the previous year by a total of 3,672,000 gallons. (3) Water restrictions implemented by the St. Johns River Water Management District, Volusia County, and the City of Edgewater continue to be in effect. Reclaimed water has been available to the Florida Shores area since 1994. A total of 1,595 customers were connected to the reclaimed/reuse water system at year end. 101 Table M City of Edgewater, Florida Principal Taxpayers September 30, 1998 Percent of Assessed Total Assessed Customers Valuation Valuation Florida Power & Light BellSouth Communications, Inc. Coronado Paint Company, Inc. FWI I LLC Edgewater Commons Bel Aire Investments, Inc. First Federal Savings and Loan Association Tarmac FL. Inc. Cablevision Industries of Fl. Carder, James and Rosemary $ 7,222,957 1.29% 5,150,780 .92 4,364,956 .78 3,323,809 .59 3,074,991 .55 1,903,500 .34 1,730,445 .31 1,479,304 .26 1,363,347 .24 1,320,556 .23 $30,934,645 5.51% Source: 1997 ad valorem tax rolls of the City of Edgewater, Florida. DR -403AM FY -1998 total assessed valuation $561,103,038. 102 ■r Table XII " City of Edgewater, Florida Miscellaneous Statistical Data September 30, 1998 The City of Edgewater lies just south of New Smyrna Beach, along the Atlantic coastline. Beginning as the small village of Hawk's Park with 115 permanent residents in 1871, the name +� was formally changed to Edgewater in 1925. The apiaries of the early days evolved into a large honey company which exports internationally. A large paint factory, a thriving building industry, boat building, garment factories and other light manufacturing provide employment. A friendly city with a small town flavor, Edgewater has a wide variety of residential options. City Operations: Community Facilities: Police Department: Nearest Commercial Airport: Sworn Officers 34.5 Daytona Beach International Civilian Employees 10 Reserve Officers 1 Financial Institutions 5 .rr Animal Control Officers 2 Churches 14 Libraries 1 Fire Department: Post Office locations 1 Insurance rating Class 5 Electric service: W Number of stations 1 Florida Power & Light Full time firefighters 10 Telephone Service: Volunteer firefighters 30 Bell South Civilian employees 1 Cable TV Service: Reserves 3 Time Warner Communications, Inc. City Parks (Active and Open Space) 14 Park acreage 137 Garbage/Trash Collection: Type: Pickups /wk 10/1/96 Residential service 2 $11.50 Commercial/Industrial service 2 $13.00 Recycling 1 $ 1.50 Water Service: Sewer Service: Source: Florida Upper Aquifer System Type: Advanced Wastewater Treatment Plant capacity: 5.0 mgd Average Daily Flow: 1.640 mgd Average daily demand 1.55 mgd Plant Capacity: 2.750 mgd Treatment Lime softening Avg. Capacity Used Daily 59.6% Avg. Daily Reclaimed Water 1.076 mgd Monthly Residential and Commercial Rates: Effective 10/1/94 Reclaimed Consumption Water Sewer Water Minimum $8.00 $9.55 $5.00 Additional 1,000 gallons $1.25 -$3.90 $3.18 Stormwater Management Fee Effective 10/1/94 E Per Equivalent Drainage Unit (EDU) Without site mitigation $6.00 With site mitigation $2.92 ' Sources: Volusia County, Florida, County Data Profile 1990 -1991 Compiled by the Volusia County Business Development Corporation. do 103 Table XIII City of Edgewater, Florida Water and Sewer Revenue Bond Coverage Fiscal year 1998 calculations: Gross revenues: Operating revenues Net (4) Total Operating Payments to Revenues Pledged Funds (1) and Renewal & Available Special Available Total Bond Bond Fiscal Gross Maintenance Replacement for All Assessment for All Service Service Year Revenues Expenses Funds Bonds Funds Bonds Requirement Coverage 2,325,604 Allowable impact fees: 1998 $5,221,320 $2,325,604 $252,675 $2,643,041 $2,014,536 $4,657,577 $2,877,834 1.62 1997 5,053,500 2,344,814 254,359 2,454,327 2,591,850 5,046,177 3,016,930 1.67 1996 5,087,174 2,650,451 263,392 2,173,331 3,130,743 5,304,074 3,011,792 1.76 1995 5,266,387 2,174,461 239,057 2,852,869 3,552,615 6,405,484 3,013,700 2.13 Interest Total Funds 820,004 1,596,402 Total Bond (2) Fiscal Available Allowable Impact Service Bond Service Year for All Bonds Fees Total Requirement Coverage 1998 $4,657,577 $502,273 $5,159,850 $2,877,834 1.79 1997 5,046,177 504,807 5,550,984 3,016,930 1.84 1996 5,304,074 501,972 5,806,046 3,011,792 1.93 1995 6,405,484 503,286 6,908,770 3,013,700 2.29 Fiscal year 1998 calculations: Gross revenues: Operating revenues $4,027,116 Connection fees 119,866 Interest revenues (3) 1,074,337 5,221,319 Operation and maintenance expenses: Total operating expenses $3,598,975 Depreciation 1,273,371 2,325,604 Allowable impact fees: Bond service requirement $1,066,398 Impact fee percentage 47.1% 502,273 Bond service requirements: Sr. Lien Jr. Lien Total Principal $ 290,000 $ 991,434 $1,281,434 Interest 776,398 820,004 1,596,402 $1,066,398 $1,811,438 $2,877,836 (1) Required coverage is 1.00 (2) Required coverage is 1.15 (3) Excludes interest earned on construction and impact fee funds (4) Includes cumulative collection of assessment principal and interest less amounts used for debt service payments less collections recognized as revenue in current year 104 Other Reports This page intentionally left blank. =M ERNST & YOUNG LLP 1 C ■ Certified Public Accountants ■ Phone: 407 872 6600 Suite 1700 390 North Orange Avenue Orlando, Florida 32801 -1671 Report of Independent Auditors on Supplementary Information Schedules of Expenditures of Federal Awards and State Financial Assistance The Honorable Mayor, City Council and City Manager City of Edgewater, Florida We have audited the general purpose financial statements of City of Edgewater, Florida (the City) as of and for the year ended September 30, 1998, and have issued our report thereon dated December 18, 1998, which was qualified because insufficient audit evidence exists to support the disclosures required by GASB TB 98 -1. Except as discussed in the preceding paragraph, we conducted our audit in accordance with generally accepted auditing standards 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. rr Our audit was made for the purpose of forming an opinion on the general purpose financial statements of City of Edgewater, Florida taken as a whole. The accompanying schedules of expenditures of federal awards and state financial assistance are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. The �G information in these schedules has been subjected to the auditing procedures applied in the audit ■■YY of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. LLP December 18, 1998 7 107 Ernst &Young LLP is a member of Ernst &Young International, Ltd. City of Edgewater, Florida Schedule of State Financial Assistance Year ended September 30, 1998 State of Florida: Department of Environmental Protection: Recycling and Education Grant (RE- 98 -62) Total State Financial Assistance Program Program Receipts Dis bursements $6,144 $7,089 $6,144 $7,089 1 1 1 1 108 M City of Edgewater, Florida Schedule of Expenditures of Federal Awards .. Year ended September 30, 1998 Federal Pass - Through Actual Actual Actual CFDA Grantor's Program Program Matching Number Number Receipts Expenditures Expenditures rrr U.S. Department of Housing and Urban Development Passed through County of Volusia Community Development Block Grant/Entitlement Program 14.218 B- 95 -UC -12 -008 $ 24,610 $ 24,610 $ – Total U.S. Department of Housing and Urban Development 24,610 24,610 – U.S. Department of Justice (Direct) Public Safety Partnership and Community Policing Grants — Universal Hiring/FAST Grant 16.710 95 -CF -WX -1526 78,143 78,143 25,649 Public Safety Partnership and Community Policing Grants — Local Law Enforcement Block Grant 16.710 96 -LB -VX -2702 – 18,079 4,150 Public Safety Partnership and Community Policing Grants — MORE Grant 16.710 96 -CM -WX -0402 5,047 5,047 1,683 Bureau of Justice Administration Local Law Enforcement Block Grant 16.710 97 -LB -VX -3733 27,468 4,192 – Total U.S. Department of Justice 110,658 105,461 31,482 Total Expenditures of Federal Awards $135,268 $130,071 $31,482 t 1 1 1 1 109 This page intentionally left blank. =� ERNST & YOUNG L L P ■ Certified Public Accountants ■ Phone: 407 872 6600 Suite 1700 390 North Orange Avenue Orlando, Florida 32801 -1671 Report on Compliance and on Internal Control over Financial ' Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards The Honorable City Mayor, City Council, and City Manager City of Edgewater, Florida We have audited the general purpose financial statements of City of Edgewater, Florida (the City), as of and for the year ended September 30, 1998, and have issued our report thereon dated December 18, 1998, which was qualified because insufficient audit evidence exists to support the disclosures required by GASB TB 98 -1. Except as discussed in the preceding sentence, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of general purpose 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 that are required to be reported under Government Auditing Standards. Internal Control over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial 111 Ernst &Young LLP is a member of Ernst &Young International, Ltd. Id statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving internal control over financial reporting that we have reported to management of the City in a separate letter dated December 18, 1998. This report is intended solely for the information of the City Council, management and federal and state awarding agencies and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. lf>� -f t7 UP December 18, 1998 112 in =M ERNST & YOUNG L L P M ■ Certified Public Accountants ■ Phone: 407 872 6600 Suite 1700 390 North Orange Avenue Orlando, Florida 32801 -1671 Management Letter ..� Honorable Mayor, City Council and City Manager City of Edgewater, Florida The purpose of this report is to disclose conditions which do not materially affect the City's financial statements and disclose other items as required by the Rules of the Auditor General, State of Florida. The following comments and recommendations are made to assist the City Council and management in administering future operations. Appropriate action was taken on all comments incorporated in the 1997 Management Letter. Current Year Findings During the course of our audit of the financial statements of the City, certain matters came to our attention. We offer the following suggestions which we feel could both strengthen controls and increase operating efficiency. After you consider these suggestions, we are available to discuss methods of implementation at your convenience. Year 2000 Attention continues to be directed toward the Year 2000 problem. The situation is very serious and complex, and it threatens virtually all areas of a city's operations to some degree. Your operations could be significantly affected if you, your customers or your suppliers do not deal effectively with the Year 2000 issue. Our responsibility as your auditors is to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. As such, our audit of the City's financial statements is not designed to determine the City's readiness for the Year 2000. Further, we have no responsibility with regard to the City's efforts to make its systems, or any other systems, such as those of vendors, service providers, or any other third parties Year 2000 ready, or to provide assurance on whether the City has addressed or will be able to address all affected systems on a timely basis. In conjunction with our audit planning, we made limited inquiries of selected personnel regarding the City's Year 2000 readiness plan. Based on our limited inquiries, management informed us they believe the City is on schedule and will complete the Year 2000 plan by the middle of fiscal year 1999. 113 Ernst &Young LLP is a member of Ernst &Young International, Ltd. Year 2000 (continued) We recommend that you continue to monitor the plan's progress, as well as continuously reassess your systems and operations to identify areas of risk not previously identified. It is critical that the City implement its plan on schedule. Budget Adoption Section 166.241, Florida Statutes, provides that the governing body of each municipality shall adopt a budget each fiscal year, and states that the budget must be adopted by ordinance unless otherwise specified in the city's charter. Although the City advertised and held public hearings, the City's 1998 fiscal year budget was adopted by resolution rather than ordinance as required by the referenced statute. We recommend that the City consult with its legal counsel to determine what, if any, actions are necessary regarding the current budget, and implement procedures to ensure that future budgets are adopted pursuant to statutory guidelines. Wire Transfer Agreements During our review of documentation related to the City's investment accounts held by the State Board of Administration (SBA), we noted that the same employees authorized to transmit or withdraw City funds are also authorized to notify the SBA of changes in account information. We further noted that only one signature was required for a change in account information. Under these circumstances, certain employees have the ability to both withdraw City funds from the SBA and change the accounts to which such funds should be transmitted without any independent review or verification. We recommend that management review all SBA wire transfer agreements and make changes to the authorization listings to provide for the separation of the incompatible authorizations noted herein. We also recommend that the SBA wire transfer agreements be changed to require two authorized signatures for changes in account information. Other Required Disclosures Annual Financial Report of Units of Local Government The City filed its annual financial report with the Department of Banking and Finance for the fiscal year ended September 30, 1997, as required by Section 218.32(1)(b), Florida Statutes. Based on our review of the financial information contained in that report, no material differences were found in comparing this information to that of the City's audited financial statements. The Annual Financial Report for the year ended September 30, 1998 has not been prepared as of this date. State of Financial Emergency Disclosure During the course of our audit of the City, nothing came to our attention that would cause us to believe that the City was in a state of financial emergency as a consequence of conditions described in by Section 218.503(1), Florida Statutes. 114 .r M Other Required Disclosures During the course of our audit of the City, nothing came to our attention to indicate that the City failed to comply with the State Revolving Fund loan covenants. This report is intended solely for the information and use of the City Council, management and the Auditor General, State of Florida and is not intended to be and should not be used by anyone other than these specified parties. We wish to thank the City Manager, Finance Director, department heads and all their staff for their assistance and cooperation during our recent audit. If we can be of any further assistance or service regarding these matters, please do not hesitate to call us. f UP December 18, 1998 115 Independent Auditors Required Disclosure in Accordance with Government Auditing Standards, 1994 Revision You have engaged us to conduct an audit of the City of Edgewater, Florida's general purpose financial statements for the years ended September 30, 1998 and 1997, in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities for testing and reporting on internal controls and on compliance with applicable laws and regulations under those standards are described in the table below. In addition, the table contrasts our responsibilities in this engagement with other procedures that could be performed in other financial- related audits. Our Responsibility Regarding Service Our Responsibility Regarding Compliance with Laws and Provided Internal Controls Regulations Financial We consider internal control to plan the Statement nature, timing and extent of audit Audit— procedures for the purpose of expressing Generally our opinion on the general purpose Accepted financial statements. We report, orally or Auditing in writing, any reportable conditions, Standards including material weaknesses that we (GAAS) identify as a result of our audit procedures. Our report does not provide assurance on the internal control structure. Financial In addition to the GAAS responsibilities, Statement we are required to issue a written report on Audit— our consideration of internal control and Government identify material weaknesses and Auditing reportable conditions, if any. Our reports Standards do not provide assurance on internal control. We design the audit to provide reasonable assurance of detecting irregularities that are material to the general purpose financial statements and illegal acts that have a direct and material effect on the general purpose financial statement amounts. In addition to the GAAS responsibilities, we design our audit to provide reasonable assurance of detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a direct and material effect on the general purpose financial statements. We issue a written report on the results of these procedures; however, our report does not express an opinion on compliance. 116 Our Responsibility Regarding Service Our Responsibility Regarding Compliance with Laws and Provided Internal Controls Regulations OMB Circular A- 133 We consider internal control over federal award program compliance. Our tests of controls include the controls over all major federal programs (aggregate expenditures of all major programs that are to encompass at least 25% of total federal program expenditures). We report on such consideration and testing, and disclose reportable conditions including material weaknesses we identify. Our report does not provide assurance on the internal control over compliance. We perform procedures for the purpose of expressing an opinion whether major federal programs (aggregate expenditures of all major programs are to encompass at least 25% of total federal program expenditures) have been administered in compliance with applicable laws and regulations. Other Procedures We could be engaged to perform agreed - upon procedures related to, or examine and report on, management's written assertion as to the design and operating effectiveness of internal control. The engagement would be conducted in accordance with American Institute of Certified Public Accountants ( AICPA) standards for attestation engagements. We could be engaged to perform agreed -upon procedures related to, or examine and report on, management's written assertion regarding compliance. The engagement could be conducted at the financial statement level, or could result in a determination as to whether nonmajor federal financial assistance programs have been administered in accordance with applicable laws and regulations. The engagement would be conducted in accordance with AICPA standards for attestation engagements. 117 This page intentionally left blank. I 1 w �l 1 I W03990022OR City of Edgewater Financial Overview September 30, 1998 W kw IV .. t. fm City of Edgewater Financial Analysis Selected Balance Sheet Items September 30, 1998 (In Thousands) Assets Cash and investments: Operating Restricted Receivables: Current Restricted Property, plant and equipment —net Liabilities Current liabilities Liabilities payable from restricted assets Long -term liabilities Equity Contributed capital Investment in general fixed assets Retained earnings Fund balances l W03990022OR 1 Increase 1998 1997 (Decrease) $18,247 $15,973 $2 9 274 6,474 6,606 (132) 763 773 (10) 18 19,648 (950) 64 65,564 (657) 867 1 (196) 2 5 437 2,397 40 50,300 54 (3 26,087 26 (368) 19,626 19 327 5,495 5,129 366 13,494 11,423 2 5 071 l W03990022OR 1 City of Edgewater Financial Analysis Per Capita Revenues General Fund Years ended September 30, 1998, 1997, 1996, 1995 and1994 W03NW22OR 2 1998 1997 1996 1995 1994 Taxes $292 $285 $281 $250 $253 Licenses and permits 10 10 10 9 10 Intergovernmental 36 38 32 31 34 Charges for services 7 6 8 5 11 Fines and forfeitures 4 5 5 5 6 Miscellaneous 16 14 24 8 7 Total $365 $358 $360 $308 $321 Population 18,761 18,077 17,820 17,568 17,096 W03NW22OR 2 Or No City of Edgewater Financial Analysis Per Capita Expenditures General Fund Years ended September 30, 1998, 1997, 1996, 1995 and 1994 sw aw jo UW ft r t 1998 1997 1996 1995 1994 Operating: General government $100 $ 87 $ 84 $ 84 $ 80 Public safety 161 165 155 158 153 Transportation 18 22 24 28 32 Culture /recreation 32 33 35 34 33 311 307 298 304 298 Capital outlay 22 18 12 20 24 Debt service 2 2 4 4 2 Totals $335 $327 $314 $328 $324 VC3990022OR 3 0 � M o c b�4 � No 0 � O bA N 00 000 0 O � 1 6�4 V M a� b4 69 s�. i. O bl] o � 0 U a > S a o .� • _ o bA O pA O bA O � (U Q Z � H V ao CC ti W cd W I C - 13 M L a) 0 ::3 w a, a� a� 0 � M o c b�4 � No 0 o M � O O N 00 000 0 O � 1 6�4 o M � O O N 00 000 0 O N 1 m M b4 69 o M ON w 0 N 7 � O O N N 000 0 O N 1 m M b4 69 ON w 0 N 7 s�. o � 0 a > S a o .� • _ o bA O pA O bA O � (U Q Z � H O z ON w 0 N 7 N 00 r r ct cc U a � W � I O � 7� O� U w c� a� a� a� c a� m �a 0 H r 0 _ E O LM w _ d x W) °° w °° ° n °° ° c� CD LO ° Iq M M N N T— T" m m m m sr an Cd C� V a� � a C 00 th� W � I�1 Cd ^ � ^' I E � L . I 1 1` 00 O� Q� C7 07 r r 0 d �a c m a �v 0 d s c 0 d d U c 0 R 0 a N C R H f; w cc V J2 7 a c m E m S is m c M 0 LO CD L CD LO CD M M N N T— T— +r 0 0 rl- w O L L co LL r L r W O U 00 N U LO to ct LO w I cn AQ ° r � r �■1 ?■ti v 0 CD CD CD CD CD C) CD LO LO V + Y 0 0 rl- w O L L co 0) t A � 0) Q� LL T-- LL r c� ts, c� o ct � U � a� o� 0 a 00 cr 0 N N O O m > O � _M M _M _ M_ dP} Ef). Eft 69. fek 09. Comparative Financial Analysis W03990022OR k 1 1 i 1 1 r 4 YY City of Edgewater General Government Total Revenues (per capita dollars) 700 $631 Mc 611111 100 0 Population: 18,503 18,761 13,110 W03990022OR 7 City of Edgewater PKII M 300 Kill] 100 � o 1 1 1 1 1 1 L L W03990022OR General Government Tax Revenues (per capita dollars) $292 $263 • New Smyrna • Edgewater South Daytona io City of Edgewater Ad Valorem Taxable Assessed Value (per capita dollars) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 I Millage rates 5.285 6.440 4.184 1 W03990022OR 11 100 :C .0 M 20 0 F u Ll 1 V403990022OR City of Edgewater General Government Intergovernmental Revenues (per capita dollars) 12 City of Edgewater General Government Administrative Expenditures (per capita dollars) HM, W03"W22OR 13 City of Edgewater General Government Public Safety Expenditures (per capita dollars) 350 300 250 200 150 100 50 0 $311 $161 $200 New Smyrna ■ Edgewater South Daytona W03990022OR 14 City of Edgewater r r i 160 140 120 100 80 60 40 20 0 W03990022OR General Government Debt Service Expenditures (per capita dollars) • New Smyrna • Edgewater South Daytona is City of Edgewater General Government Days Fund Balance meets Total Expenditures 200 179 150 -[--" 1 118 100 ■New Smyrna ■ Edgewater 0 South Davtona 50 D W03990022OR 16 a.� City of Edgewater Proprietary Fund Equity (per capita dollars) 1 1 1 1 1 1 C 700 600 -Z 500 $428 400 27 ■ New Smyrna 300 ■ Edgewater 200 El South Daytona 100 0 W03990022OR 1