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Home My WebLink About2021 - 2022CITY OF SEBASTIAN, FLORIDA CITY OF JjB HOME OF PELICAN ISLAND ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended September 30, 2022 CITY COUNCIL Jim Hill Fred Jones Mayor Vice -Mayor Ed Dodd Council Member Bob McPartlan Christopher Nunn Council Member Council Member Prepared by: Administrative Services Department This page intentionally left blank. CITY OF SEBASTIAN, FLORIDA Table of Contents Page INTRODUCTORY SECTION 1 City Officials 2 Letter of Transmittal 3 Organizational Chart 8 FINANCIAL SECTION 9 Independent Auditors' Report 11 Management's Discussion and Analysis 15 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position 30 Statement of Activities 31 Fund Financial Statements: Balance Sheet — Governmental Funds 34 Reconciliation of Fund Balances for Governmental Funds to Net Position of Governmental Activities 37 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 38 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 41 Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual: General Fund 42 Riverfront Redevelopment Special Revenue Fund 44 Stormwater Utility Special Revenue Fund 45 American Recovery Plan Special Revenue Fund 46 Statement of Net Position — Proprietary Funds 47 Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds 48 Statement of Cash Flows — Proprietary Funds 49 Statement of Fiduciary Net Position 51 Statement of Changes in Fiduciary Net Position 52 Notes to Financial Statements 53 CITY OF SEBASTIAN, FLORIDA Table of Contents Page Required Supplementary Information: Single -employer Pension Trust Fund: Schedule of Changes in Net Pension Liability and Related Ratios 96 Schedule of Investment Returns 99 Schedule of Contributions 100 Coastal Florida Public Employees Association Pension Plan: Schedule of Employer Contributions 103 Combining and Individual Fund Financial Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet 106 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 108 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual: Local Option Gas Tax Special Revenue Fund 110 Parking In -Lieu -Of Special Revenue Fund 111 Recreation Impact Fee Special Revenue Fund 112 Law Enforcement Forfeiture Special Revenue Fund 113 Other: Capital Assets used in the Operations of Governmental Funds: Comparative Schedule by Source 116 Schedule by Function and Activity 117 Schedule of Changes by Function and Activity 118 CITY OF SEBASTIAN, FLORIDA Table of Contents Page STATISTICAL SECTION (UNAUDITED) 119 Statistical Section Table of Contents 121 Financial Trends Information Net Position by Component 122 Changes in Net Position 124 Fund Balances, Governmental Funds 128 Changes in Fund Balances, Governmental Funds 130 Program Revenues by Function/Program 132 Revenue Capacity Information Tax Revenues by Source 134 Direct and Overlapping Property Tax Rates 135 Actual and Estimated Value of Taxable Property 136 Principal Property Taxpayers 138 Property Tax Levies and Collections 139 Debt Capacity Information Ratios of Outstanding Debt by Type 140 Legal Debt Margin Information 142 Pledged Revenue Coverage 144 Demographic and Economic Information Demographic and Economic Statistics 146 Principal Employers 148 Operating Information Full -Time Equivalent City Government Employees by Function/Program 150 Operating Indicators by Function/Program 152 Capital Asset Statistics by Function/Program 154 Internal Control and Compliance Independent Auditors' Management Letter 159 Independent Accountants' Report 163 This page intentionally left blank. INTRODUCTORY SECTION CITY OF SEBASTIAN, FLORIDA CITY OFFICIALS For the Year Ended September 30, 2022 Paul Carlisle City Manager Manny Anon, Jr., Esq. City Attorney DEPARTMENT HEADS Daniel Acosta Police Chief Lisa Frazier Community Development Director Wayne Eseltine Building Official Scott Baker Public Facilities Director Jeanette Williams City Clerk Kenneth W. Killgore Administrative Services Director/CFO Karen Miller City Engineer Greg Gardner Golf Course Director Brian Benton Leisure Services Director K MY OF SEBTAN ;;9:s�w HOME OF PELICAN ISLAND March 7, 2023 To the Citizens of the City of Sebastian, Florida: We are submitting the Annual Comprehensive Financial Report of the City of Sebastian, Florida for the fiscal year ended September 30, 2022. State law requires that every general- purpose local government publish a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended September 30, 2022. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based on a comprehensive framework of internal control that is established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Chapter 218.39, Florida Statutes requires that the City's financial statements be audited by a certified public accountant. The City's independent Certified Public Accountants, Rehmann Robson, has issued an unmodified ("clean") opinion on the City of Sebastian's financial statements for the year ended September 30, 2022. The independent auditors' report is located on pages 11-14. Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Sebastian, Florida is located in Indian River County approximately midway through the east coast of the Florida Peninsula (between Melbourne and Vero Beach) in an area known as the Treasure Coast. It is recognized as the Home of Pelican Island, the first designated wildlife refuge in the United States, a Millennium City, and a Tree City USA. It was first incorporated as the Town of Sebastian in 1924. In the late 1950s General Development Corporation purchased the land from the Mackle family of Miami and began the development of a planned community that is now the City of Sebastian. The City has a population of 25,915 residents. The City is empowered to levy a property tax on both real and personal property located within its boundaries. It also is empowered by state statute to extend its corporate limits by annexation, which it has done from time to time. The City is a Florida municipal corporation with a five -member City Council. City Council members serve a two-year term. Annual elections are held on the first Tuesday following the first Monday in November and two members are elected in even -numbered years and three members are elected in odd -numbered years. Elections are non -partisan and at -large. Mayor and Vice Mayor are elected from among the members of every newly seated Council at a Special meeting following the election each year. The City has operated under a Council -City Manager form of government since 1989. The City provides a wide range of services including general government administration, police protection, the construction and maintenance of local roads, public works, recreational and cultural activities, a golf course, a general aviation airport, and a building department to enforce building and fire codes. This report includes all funds of the City. In evaluating the City as a reporting entity, we have included all component units for which the City Council is financially accountable. The component units have been blended with the financial statements presented for the Primary Government because the component unit's governing body is the same as the City Council or because the component unit exclusively serves the City. The blended component units are the Community Redevelopment Agency and Sebastian Police Officer's Pension Trust Fund. The Council is required to adopt a final budget no later than the close of the fiscal year. This annual budget serves as the foundation for the City's financial planning and control. The budget is prepared by fund, function (e.g., transportation), and department (e.g., public works). Shifts in appropriations within department totals and capital project totals may be done administratively on the authority of the City Manager. Total fund appropriation changes and use of contingency appropriations must be approved by the City Council. Local Economy The region (which includes the City of Sebastian and the surrounding unincorporated area within the same county) has a fluctuating labor force depending on agricultural demand and is a strong retirement community. Although the labor force fluctuates, unemployment in the region increased to high levels for several years but has shown good improvement in the last few years. As of September 2022, the Florida Research & Economic Database reported an improved unemployment rate of 3.1 %, which corresponds with improvements being enjoyed at the state and national levels. However, the overall unemployment rate for the area has historically not been as good as that of the State of Florida. The largest major industry sector was Health Care with 17.83% of the employment, followed by Retail Trade with 15.75% of the employment, Construction with 8.72% of the employment and Accommodation & Food Services with 10.59%. According to Federal Reserve Economic Data reports, 91 % of the population age 18 or older are high school graduates or higher and 42.5% hold an associate's degree or higher. Federal Reserve Economic Data reports also indicated that the area median age for 2021 was 54.2 and the median household income was $61,351. Sebastian offers all of the Florida amenities a business needs to consider. Close connection to metropolitan areas without the south Florida hustle and bustle, quality housing for affordable prices, some of the best schools in the State, quality medical services and leisure activities that are second to none. Transportation is efficient in Sebastian, offering nearby access to major freight transportation routes. Interstate Highway 1-95, the major north -south trucking route on the Florida east coast, is just six miles west. The Florida East Coast Railroad (FEC) runs directly through Sebastian. FEC offers freight service from Miami and Ft. Lauderdale ports of entry, as well as direct connections with other major rail lines at Jacksonville. Lonq-term Financial Planninq The voters of Indian River County in November 2003 extended the Infrastructure Sales Surtax in the amount of $.01 per $1.00 sale for an additional fifteen years and seven months beginning in January 2004. In November 2016, the voters once again extended the Surtax until December 31, 2034. This Infrastructure Sales Surtax is essential in providing for the City's emergency vehicle and capital improvement needs. In addition, the City has funded a 4 number of other capital projects with impact fees and has actively pursued grant funding for some major transportation and environmental improvements. It has also employed the use of a Community Redevelopment Agency that is funded by means of tax -increment financing. The millage was levied at a reduced rate of 3.0043 for fiscal year 2022. However, the City had an increase in ad valorem values due to improvements and additions to the tax rolls. Construction activity resulted in a total of 229 permits being issued for new construction in fiscal year 2022 with a cost of $62.9 million compared to a total of 255 permits being issued for new construction in fiscal year 2021 with a cost of $75.1 million. In reviewing these numbers, new commercial increased from 3 permits costing $541,365 in 2021 to 4 permits costing $3.6 million in 2022 and new single family residential increased from 175 costing $41.5 million in 2021 to 225 costing $59.3 in 2022. The increase in residential construction can be primarily attributed to the continuing high outlook for the housing market. General Fund unassigned fund balance has been fully restored to an amount above the $5 million minimum target after being spent down due to Hurricanes Matthew and Irma. By year end, the unassigned fund balance was 60.2% of the general fund expenditures during the year. The City has been steadfast and refused to spend down these balances because the City understands reliance on accumulated fund balances to fund operating expenditures is not a prudent fiscal strategy and because having sufficient balances are essential to handle emergencies such as hurricanes. To this end, the budget for fiscal year 2023 was balanced without a reduction of fund balances. Maior Initiatives Administration During 2022, the City recovered the remaining unpaid reimbursements from FEMA and the State related to Hurricane Matthew that occurred in October 2016. The City managed to document a total of about $1,582,000 of eligible expenditures and with $148,626 finally received in 2022, no further reimbursements are expected. During 2019, the City had received all the $533,000 in qualified reimbursements initially documented from Hurricane Irma that occurred in September 2017. In October 2019, the City experienced about $38,000 of expenditures as a result of Hurricane Dorian and the reimbursement process for that event was completed during 2020. In September 2022 the City had some damage from Hurricane Ian but those expenditures have not yet been reimbursed. In November 2022, some additional damage resulted from Hurricane Nicole but those expenditures have also not been reimbursed. Expenditures necessary to handle these storm events are paid from General Fund unassigned fund balance, so it is important to recover these outlays as soon as possible. At year end, the new Public Facilities Facility was almost completed that will include the City garage and be the staging area for public works personnel and equipment. This $9.6 million structure is located on Airport property and is designed to also include fully equipped classrooms for holding training sessions. In conjunction with its construction, improvements were made to provide sewer service to that area of the Airport property. During the year, efforts continued to make use of advanced technology by upgrading computer servers, improving the network and acquiring better audio visual equipment. In addition, funding was allocated to replace vehicles and heavy equipment; playground improvements; park improvements; and construction of Hangar D. Plus, the City allocated funds received from the American Rescue Act, primarily to major improvements to the Stormwater system. Stormwater — The City initiated an extensive study to examine alternatives to controlling vegetative overgrowth in the stormwater systems drainage systems. Efforts continued to account for all Stormwater operating expenditures within the Stormwater Revenue fund in order to improve transparency about how stormwater fees are spent. Preliminary approval was received for a FEMA grant to address drainage improvements that are needed in the Stonecrop area of the City. Traffic & Transportation — The City continues working on transportation improvements. An inventory of roadway conditions was performed and a six year plan for funding road resurfacing and road reconstruction work is being developed. Necessary street repaving work is funded using local option gas taxes and required major road reconstruction are funded with discretionary sales taxes. In addition, discretionary sales taxes are used to replace heavy construction equipment needed for maintaining City rights -of -way and transportation infrastructure. Airport - The Sebastian Municipal Airport's infrastructure is being developed with the intent of attracting economic development and stimulating the business climate in order to create jobs in the community. Land leases are a primary source of airport revenues and over 150 acres of property is available for lease, for both aviation and non -aviation businesses. The Airport's limited resources continue to be leveraged by aggressively seeking and obtaining grants from the Florida Department of Transportation (FDOT) and Federal Aviation Administration (FAA) to develop the necessary infrastructure. Public Safetv — The Building Department continues to have a high level of permitting activity. It also operates as the City Fire Marshal so we can insure more timely response and review of development plans. The Police Department continues to participate in the accreditation program offered by the commission for Florida Law Enforcement Accreditation. The designation encourages the Police Department to establish goals and objectives with provisions for periodic updating; constant reevaluation of whether departmental resources are being employed in accordance with agency goals, objectives and mission; constant reevaluation of departmental policies and procedures as documented in the department's written directive system; to accommodate correction of internal deficiencies and inefficiencies before they become public problems; and the opportunity to reorganize without the appearance of personal attacks. Standards and performance measurements resulting from the accreditation process will continue to guide both Sebastian Police Department and city administration in alleviating potentially adverse conditions. Culture/Recreation — The City continued efforts to promote the "working waterfront" concept on the riverfront properties that were purchased with grant funding, with City matching funds provided by discretionary sales taxes. In other areas, the City continued supporting the use of Riverview Park for gatherings organized by various community groups, including the Clam Bake, Chamber of Commerce and Art Club. The City also used recreation impact fees to construct Pickle Ball Courts and to upgrade the scoreboards at the ballfields. Future plans are to focus on one major park each year to address needed major facility improvements and replacements, including "all-inclusive" features to accommodate those with special needs. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awards a Certificate of Achievement for Excellence in Financial Reporting. This is a prestigious national 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 must publish an easily readable and efficiently 11 organized annual comprehensive financial report. This report must satisfy both U.S. generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report meets the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for a certificate. The preparation of this report would not be possible without the dedicated service of the Administrative Services Department accounting staff. Their efforts toward improving the accounting and financial reporting systems has led to the improved quality of information reported to the City Council, State and Federal agencies and the citizens of the City of Sebastian. We sincerely appreciate their contributions. Respectfully submitted, Paul E. Carlisle City Manager Kenneth W. Killgore Administrative Services Director/CFO 7 CITY OF SEBASTIAN, FLORIDA ORGANIZATIONAL CHART Fiscal Year 2022/2023 CITIZENS OF SEBASTIAN CITY COUNCIL CITY CITY CLERK MANAGER BOARDS & COMMISSIONS CITY ATTORNEY I I I I . I I i ADMINISTRATIVE COMMUNITY CITY GOLF LEISURE SERVICES SERVICES POLICE BUILDING DEVELOPMENT ENGINEER COURSE AND PUBLIC FACILITIES FINANCE & PLANNING AN -� PARK ACCOUNTING ADMINISTRATION ROADS ZONING FACILITIES HUMAN COMMUNITY -� RECREATION RESOURCES OPERATIONS REDEVELOPMENT STORNINi'.4TER PROGRAMS AGENCY MANAGEMENT INFORMATION 0 INVESTIGATIONS FLEET -► CEMETERY SYSTEMS MANAGEMENT PROJECT DISPATCH ►-�0 FACILITIES ACCOUNTING AIRPORT MAINTENANCE CONTRACTS& CODE PROCUREMENT ENFORCEMENT FINANCIAL SECTION This page intentionally left blank. 10 Rehmann EMPOWER YOUR PURPOSE' INDEPENDENT AUDITORS' REPORT March 7, 2023 Honorable Mayor and Members of City Council City of Sebastian, Florida Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida (the "City'), as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of September 30, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof, and the budgetary comparisons for the general fund and each major special revenue fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Independent Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 0\VC CTHE GLOBAL ADVISORY AR VD=..... MCMOCR O!' HLBAND ACCOUNTING NETWORK 11 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Independent Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: exercise professional judgment and maintain professional skepticism throughout the audit. identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, no such opinion is expressed. evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. 12 conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control —related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the schedules for the pension plans, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual comprehensive financial report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors' report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. 13 In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated March 7, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. fk' 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis The City of Sebastian's (the "City") discussion and analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the City's financial activity, (c) identify changes in the City's financial position, (d) identify any material deviations from the financial plan, and (e) identify individual fund issues or concerns. Since the Management's Discussion and Analysis (MD&A) is designed to focus on the current years activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter and the City's financial statements. Financial Highlights The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year 2022 by $75,218,209 (net position). Of this amount, $3,008,817 (unrestricted net position) may be used to meet the City's on -going obligations to citizens and creditors. The City's total net position from governmental activities increased by $3,353,641 and from business -type activities increased by $3,219,705. Net position was increased in governmental activities, primarily as a result of an increase in net capital assets. Net position of business -type activities also increased, primarily from an increase in net capital assets. Governmental funds reported a combined ending fund balance of $15,487,887, a decrease of $1,386,114 from the prior year. Almost 49% of this amount, $7,563,921, is unassigned and available for spending. The Golf Course Fund reported a positive change in the unrestricted deficit in net position attributed to a increase in fee revenue. The Airport Fund reported a positive change in unrestricted net position resulting from an increase in rental revenue. The Building Fund reported an increase in unrestricted net position, as a result of decreases in the expense recorded for State mandated rebates. In total, the City's enterprise funds reported an increase in overall net position at the end of the year. Overview of the Financial Statements The annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the City as a whole and present a longer -term view of the City's finances. For governmental activities, the fund financial statements tell how these services were financed in the short-term as well as what remains for future spending. Fund financial statements also report the City's operations in more detail by providing information about the City's most significant funds. The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Government -wide Financial Statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 16 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, physical environment, transportation, economic environment, and cultural and recreation. The business -type activities of the City include the golf course, airport and building operations. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains numerous individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Riverfront Redevelopment Fund, Stormwater Utility Fund, American Rescue Plan Fund, Discretionary Sales Tax Fund, and Transportation Improvements Fund all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements and schedules elsewhere in this report. The City adopts an annual appropriated budget for its General Fund and special revenue funds. Budgetary comparison statements or schedules have been provided for these funds to demonstrate compliance with this budget. Proprietary Funds. The City maintains one type of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for the golf course, airport, and building department. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the City's golf course, airport and building department, which are major funds. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. 17 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. Government -wide Financial Analysis As previously stated, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $75,218,209 at the close of the most recent fiscal year. Net Position Governmental Activities Business -type Activities Total 2022 2021 2022 2021 2022 2021 Current and other assets $ 22,298,663 $ 23,378,445 $ 5,026,841 $ 4,249,996 $ 27,325,504 $ 27,628,441 Capital assets, net 46,632,964 42,177,771 21,026,248 18,385,940 67,659,212 60,563,711 Total assets 68,931,627 62,547,785 26,053,089 17,314,173 94,984,716 88,192,152 Deferred outflows of resources 3,075,039 940,147 - - 3,075,039 940,147 Long-term debt outstanding 1,758,856 2,399,740 222,092 289,656 1,980,948 2,689,396 Other liabilities 10,097,298 5,379,735 4,971,795 4,568,689 15,069,093 9,948,424 Total liabilities 11,856,154 7,607,693 5,193,887 2,385,296 17,050,041 12,637,820 Deferred inflows of resources 3,080,885 5,000,902 2,710,620 2,848,714 5,791,505 7,849,616 Net position Net investment in capital assets 46,341,824 41,252,989 18,585,143 15,862,090 64,926,967 57,115,079 Restricted 7,282,425 10,142,786 - - 7,282,425 10,142,786 Unrestricted (deficit) 3,445,378 2,320,211 (436,561) (933,213) 3,008,817 1,386,998 Total net position $ 57,069,627 $ 53,715,986 $ 18,148,582 $ 14,928,877 $ 75,218,209 $ 68,644,863 A substantial portion of the City's net position, $64,926,967 (86.3 percent), reflects its investment in capital assets (e.g., land, construction in progress, leased land, buildings, non -building improvements, machinery and equipment, and infrastructure), less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position of $7,282,425 (9.7 percent) represents resources that are subject to external restrictions on how they may be used. The City may use the remaining balance of unrestricted net position of $3,008,817 (4.0 percent) to meet its ongoing obligations to citizens and creditors. I CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, for the government as a whole and for its separate governmental activities. Capital grants increased due to the additional grant awards for public housing renovations and for extending sewer system. Intergovernmental revenue also increased due to the significant increase in receipts of discretionary sales taxes. Charges for services in the business -type activities increased as a result of increased levels of activity at the golf course. Total expenses in the governmental activities increased primarily due to greater equipment purchases and personnel cost. Change in Net Position Governmental Activities Business -type Activities Total 2022 2021 2022 2021 2022 2021 Revenues Program revenues: Charges for services $ 3,188,160 $ 3,117,335 $ 3,758,670 $ 3,455,455 $ 6,946,830 $ 6,572,790 Operating grants 2,066,434 2,093,941 - - 2,066,434 2,093,941 Capital grants 4,910,478 4,265,728 3,295,019 560,394 8,205,497 4,826,122 General revenues: Property taxes 4,988,598 4,991,306 - - 4,988,598 4,991,306 Other taxes 3,172,766 3,030,261 - 3,172,766 3,030,261 Intergovernmental 3,526,318 3,066,490 - - 3,526,318 3,066,490 Other 2,182,141 1,717,052 19,407 3,582 2,201,548 1,720,634 Total revenues 24,034,895 22,282,113 7,073,096 4,019,431 31,107,991 26,301,544 Expenses General government 5,158,135 4,907,738 - - 5,158,135 4,907,738 Public safety 7,703,234 6,453,141 - - 7,703,234 6,453,141 Physical environment 3,259,272 2,848,779 - - 3,259,272 2,848,779 Transportation 2,153,685 2,136,727 - - 2,153,685 2,136,727 Economic environment 291,969 256,771 - - 291,969 256,771 Cultural and recreation 1,606,579 1,481,096 - - 1,606,579 1,481,096 Interest and fiscal charges 14,644 19,522 - - 14,644 19,522 Golf course - - 1,659,271 1,575,587 1,659,271 1,575,587 Airport - 1,427,667 1,339,582 1,427,667 1,339,582 Building - - 1,260,189 1,544,157 1,260,189 1,544,157 Total expenses 20,187,518 18,103,774 4,347,127 4,459,326 24,534,645 22,563,100 Change in net position, before transfers 3,847,377 4,178,339 2,725,969 (439,895) 6,573,346 3,738,444 Transfers (493,736) (122,937) 493,736 122,937 - - Change in net position 3,353,641 4,055,402 3,219,705 (316,958) 6,573,346 3,738,444 Net position, beginning of year 53,715,986 49,660,584 14,928,877 15,245,835 68,644,863 64,906,419 Net position, end of year $ 57,069,627 $ 53,715,986 $ 18,148,582 $ 14,928,877 $ 75,218,209 $ 68,644,863 19 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Governmental Activities. Governmental activities increased the City's net position by $3,353,641. Key elements of this increase are as follows: Governmental revenues increased by $1,752,782 primarily as a result of fluctuations in the following categories: Capital grants increased by $644,750 primarily as a result of grants for public home renovations and extending sewer service in the north area of the City. Intergovernmental revenue increased by $459,828 due primarily to marked increases in receipts of discretionary sales taxes. Other revenue increased by $465,089 due to sales of surplus equipment and additional collections of code enforcement fines. Governmental expenses increased by $2,083,744 primarily as a result of fluctuations in the following categories: General government expenses increased by $250,397 primarily as a result of the purchase of computer software and repairs of the Yacht Club Pier. Public safety expenses increased by $1,250,093 due primarily to the purchase of vehicles and added personnel. Physical environment expenses increased by $410,493 due to the cost of work on the Stormwater Master Plan. $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Expenses and Program Revenues - Governmental Activities ■ Expenses M Prnarnm Rauani- General Public safety Physical Transportation government environment mmm� Economic Cultural and environment recreation Interest and fiscal charges 20 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Intl Othertaxes 20% Revenues by Source - Governmental Activities 21% Other 2% Charges for services 1 , 1oi Operating grants 9% Capital grants 20% Business -type Activities. Business -type activities increased the City's net position by $3,219,705. The key elements of this increase are as follows: Charges for service increased by $303,215 from prior year primarily related to an increase in fees collected at the golf course due to additional activity. Capital grants increased by $2,734,625 due to recognizing grant funding of construction projects at the airport. Building expenses decreased by $283,968 from prior year primarily due to the lower amount recognized as state mandated rebates. Expenses and Program Revenues - Business -type Activities $4,500,000 ■ Expenses $4,000,000 ■ Program Revenues $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Golf course Airport Building 21 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Revenues by Source - Business -type Activities Capital grants 47 Financial Analysis of the City's Funds Charges for services 53 As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $15,457,887, an decrease of $1,386,114 from the prior year. Of this amount, 49 percent ($7,563,921) constitutes unassigned fund balance, which is available for spending at the City's discretion. The remainder of fund balance is classified as one of the following: A) Nonspendable for 1) inventories and prepaids, or 2) is nonspendable as permanent fund corpus for cemetery perpetual care; B) restricted for capital projects or due to debt service and special revenue fund designations; or C) is committed for development by local ordinance. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the General Fund was $7,993,009 while total fund balance amounted to $8,195,001. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 60.2 percent of total General Fund expenditures, while total fund balance represents 61.7 percent of that same amount. 22 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis The fund balance of the City's General Fund increased by $1,505,206 during the current fiscal year. Key factors in this change are as follows: Tax revenues increased by $211,804. The increase is due to an increase in taxable values. Franchise fees revenues increased by $187,042. The increase is due to an increase in electric franchise fee collections. Intergovernmental increased by $670,083. The increase is due to an increase sales tax revenue shared by the State. General government expenditures increased by $296,147. The increase is due to personnel cost as well as higher prices for materials and outside services. Public safety expenditures increased by $303,624. The increase is due to personnel and prices for supplies and services. Transfers out to other funds increased by $268,408. The increase is due to transfers made to do repairs required to the Yacht Club Pier. The Riverfront Redevelopment Fund ended the year with $627,885 in fund balance, an increase of $86,641 from the prior year. The increase is due to an effort to accumulate monies to be used for capital improvements that will enhance the redevelopment area. The Stormwater Utility Fund ended the year with a fund balance of $1,957,125, an increase of $238,862 from the prior year. The increase is due to setting aside funds toward major improvements that will be identified in the Stormwater Master Plan. The City's American Rescue Plan Fund ended the year with a fund balance of $22,200. This fund accounts for the advanced funding received from the American Rescue Plan Act which is available for spending in future years. The Discretionary Sales Tax Fund has a total fund balance $2,875,588, a decrease of $3,229,155 from the prior year. The decrease is the result of the funds needed for construction of the new public works compound. The Transportation Improvements Fund has a total fund balance deficit of $342,697, an increase in the deficit of $253,454 from the prior year. The deficit is the result of unpaid retainage due that will not be reimbursed by the fund providing the resources for the work until it is paid. Proprietary Funds. The City's proprietary fund financial statements provide the same type of information found in the government -wide financial statements, but in more detail. The total net position of the golf course fund at the end of the fiscal year amounted to a deficit of $145,394, while the unrestricted net position (deficit) amounted to $(1,320,330). Net position has increased $149,423, while the unrestricted net position (deficit) changed from $(1,659,133) to $(1,320,330). This is mainly due to higher fee revenue resulting from more activity. The total net position of the airport fund at the end of the fiscal year amounted to $17,522,238, while the unrestricted net position amounted to $134,520. Net position has increased by $3,052,588 due to capital contributions being applied to construction of capital assets. The total net position of the building fund at the end of the fiscal year amounted to $771,738. This is a increase of $17,694 from the prior year, which was primarily due to the recognition of rebates payable and state mandated rebates expense of $297,191 to comply with Florida statute 553.80. The statute does not allow a local government to carry forward an amount exceeding the average of its operating budget for the previous four fiscal years. 23 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Other factors concerning the finances of these three funds have already been addressed in the discussion of the City's business -type activities. Budgetary Highlights The General Fund originally budgeted for no changes in the fund balance. The actual increase in fund balance resulted from the following significant variances: Property tax revenues were slightly less than budgeted with just over 96% of the tax roll being collected. 96% of the tax roll is budgeted as being collected, based on experience. No less than 95% must be budgeted per Florida statutes. Intergovernmental revenues were $853,093 more than budgeted due to significant increases in state revenue sharing payments and federal and state reimbursements for hurricane damages. General Fund expenditures had an overall favorable budgetary variance of $838,249, which was a 5.9% difference from the amended budget total. Over the course of the fiscal year, the City Council formally approved revisions to the City budget four times. These budget adjustments fell into four major categories. The first includes amendments to allocate funds for extraordinary and unexpected expenditures from Reserves or added revenues. The second includes new allocations funded by transfers from the equipment & facilities R&R Reserve. The third includes project transfers to cancel or close out capital projects or reallocate funds between them to address budget shortages. The fourth includes transfers to address budget shortages in operating budget accounts resulting from properly classifying charges or for unanticipated expenditures. The main components of the increases are as follows: Amendments 22,500 to allocate General Fund Reserves to employee compensation study 203,306 to allocate DST Reserves to replace a Wheeled End Loader 99,824 to allocate additional 1% pay adjustments to all employees 24,000 to allocate FDOT Grant and DST Reserves to buy security cameras 182,009 to allocate General Fund Reserves, DST Reserves and Stormwater Reserves to work previously ordered but not received 5,236,487 to allocate Reserves to transfer accounts to fund unfinished projects from prior years 1,013,984 to allocate FDOT and SJRWMD Grants to provide sewer services 30,000 to allocate CRA Reserves for a forensic analysis of the Crab E. Bills restaurant 32,000 to allocate an Airport Rescue Grant from the FAA for Airport improvements 70,000 to allocate FDOT Grant and Tenant Contribution to add an office at Hangar "C" 300,000 to allocate American Rescue Plan funds toward the Concha Dam project 481,012 to allocate American Rescue Plan funds to employee retention payments 3,775 to increase DST Reserves for unused budget not required to replace a truck 500,000 to adjust FEMA Grant and DST Reserves to adjust amounts for canal improvements 1,850 to allocate donated funds to improvements at Riverview Park 3,128 to allocate donated funds for a new baseball field scoreboard 25,000 to allocate a lease signing bonus to cover additional professional services work 2,500 to allocate DST Reserves and FAA and FDOT Grants for an independent fee estimate fee 34,548 to allocate Airport Reserve for an increase in prices for the Hangar "D" project 133,517 to allocate Community Development Block Grant proceeds to an Annual Action Plan 74,778 to adjust Community Development Block Grant Cares that will be resubmitted later 22,000,000 to reprogram FEMA Grant and DST Reserves for canal improvements to a future year 113,876 to allocate DST Reserves to purchase cyber security backup software 107,183 to adjust Water Management District Grant for a reduced estimate for the work 9,540 to allocate General Fund Reserves to pay outside legal counsel for a lawsuit 24 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Amendments (Concluded) $ 29,148 to allocate General Fund Reserves for demolition expenses on Harbor Lights property 495,000 to adjust DST and CRA Reserves to defer Harrison Street Park project to a future year 20,049 to adjust amount for analysis of Crab E. Bills restaurant to a lesser amount 92,827 to allocate FDOT Grant and DST Reserves to the taxi lane construction project 25,728 to adjust Recreation Impact Fee Reserves to defer baseball dugouts project to next year 218,894 to adjust FAA and FDOT Grants and DST Reserves for added costs of runway project 109,394 to adjust Lagoon Council Grant and CRA Reserves to funds used by end of funding cycle 4,705 to adjust CRA Reserves to actual cost of a sewer conversion study 46,637 to adjust FDOT Grant and DST Reserves to the cost of constructing a square hangar site General Fund Equipment & Facilities Renewal & Replacement (R&R) Reserve Allocations $ 60,338 to use General Fund R&R Account for replace vehicle with engine failure 19,723 to use General Fund R&R Account for replace an obsolete security system 4,820 to use General Fund R&R Account for unexpected repairs to a lift station 4,702 to use General Fund R&R Account for repairs to a Police Department gate 6,962 to use General Fund R&R Account to replace a fountain at a park 2,463 to use General Fund R&R Account to replace lights in the Senior Center 14,925 to use General Fund R&R Account for repairs to several air conditioners 3,643 to use General Fund R&R Account for repairs to another air conditioner 5,463 to use General Fund R&R Account for repairs to a standby generator 42,996 to use General Fund R&R Account to replace a second vehicle with engine failure 8,965 to use General Fund R&R Account to replace the City Hall condenser coil 5,514 to use General Fund R&R Account to replace Splash Pad controls and a pump 19,723 to change funding for an obsolete security system to a FAA Grant 14,871 adjustment to budgeted accounts to purchase online employee application software 7,499 adjustment between accounts to purchase an event trailer for the Police Department Project Budget Transfers $ 23,291 adjustment within various projects for improvements to a Stormwater pond Operating Budget Transfers $ 32,050 adjustment within various personnel accounts for an employee holiday bonus 38,005 adjustment for hiring an Airport Manager and reducing General Fund service charge 4,800 adjustment between accounts to do an appraisal on a property 1,831 adjustment to apply insurance proceeds from accident to repair of a damaged vehicle 4,000 adjustment to apply proceed from a vehicle sold to the replacement of a vehicle During the fiscal year, total General Fund actual expenditures were $838,249 less than final amended budgetary estimates. The overall variance on revenues and expenditures resulted in an increase of $1,505,206 to existing fund balances. This was primarily due to expenditures being less due to a significant number of vacancies and intergovernmental revenues being budgeted very conservatively with the expectation that they would decline in concept with measures to lower inflation. 25 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Capital Asset and Debt Administration Capital Assets. At the end of fiscal year 2022, the City had $67,659,212 invested in a broad range of capital assets, including land, police and public works equipment, buildings, park facilities, roads, bridges, and stormwater drainage structures. This amount represents a net increase (including additions and deductions) of $7,095,501, or 11.7%, over last year. The following table illustrates the changes in capital assets. More detailed information regarding capital assets can be found within Note 7 on Capital Assets in the Financial Statements section of the annual comprehensive financial report. Capital Assets (Net of Depreciation/Amortization) Governmental Activities Business -type Activities Total 2022 2021 2022 2021 2022 2021 Land $ 9,123,041 $ 9,123,041 $ 9,060 $ 9,060 $ 9,132,101 $ 9,132,101 Construction in progress 9,520,507 3,759,159 3,899,378 968,556 13,419,885 4,727,715 Leased land 165,858 171,782 2,370,005 2,473,049 2,535,863 2,644,831 Buildings 6,629,473 7,023,552 6,784,974 7,069,290 13,414,447 14,092,842 Non -building improvements 2,776,548 2,626,712 951,025 1,055,692 3,727,573 3,682,404 Machinery and equipment 2,567,123 2,692,602 153,843 230,361 2,720,966 2,922,963 Infrastructure 15,850,414 16,780,923 6,857,963 6,579,932 22,708,377 23,360,855 Total capital assets, net $ 46,632,964 $ 42,177,771 $ 21,026,248 $ 18,385,940 $ 67,659,212 $ 60,563,711 Governmental activities had the following major changes during the fiscal year: An increase in construction in progress from the Public Works Facility. A decrease in buildings mainly due to depreciation. An increase in non -building improvements from park renovations. A decrease in machinery and equipment mainly due to depreciation. A decrease in infrastructure mainly due to depreciation. Business -type activities had the following major changes during the fiscal year: An increase in construction in progress from a hew hangar. A decrease in buildings mainly due to depreciation. A decrease in buildings mainly due to depreciation. A decrease in machinery and equipment mainly due to depreciation. An increase in infrastructure by adding sewer and lift station. 26 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Long-term Debt. At the end of the current fiscal year, the City had total long-term debt outstanding of $1,980,948. Of this amount, $121,000 consist of notes pledging specific revenues to the repayment of the debt. More detailed information regarding these activities and funds can be found within Note 8 on Long-term Debt in the Financial Statements section of the annual comprehensive financial report. Notes payable Compensated absences Pollution remediation Capital lease Total Governmental Activities 2022 2021 $ 121,000 $ 753,000 $ 1,546,656 1,555,540 91,200 91,200 $ 1,758,856 $ 2,399,740 $ Total Long-term Debt Business -type Activities Total 2022 2021 2022 2021 - $ - $ 121,000 $ 753,000 222,092 238,855 1,768,748 1,794,395 - - 91,200 91,200 - 50,801 - 50,801 222,092 $ 289,656 $ 1,980,948 $ 2,689,396 The City's total debt decreased by $708,448 (26.3%) during the current fiscal year. The net decrease was attributable to annual principal payments that occurred during the year. The City's debt is primarily a bank note which is not rated AAA by rating agencies. Other obligations of the City include accrued vacation pay and sick leave. Economic Factors and Next Year's Budget and Rates The City's elected and appointed officials considered many factors when setting the next fiscal year 2023 budget, tax rates, and fees that will be charged for the business -type activities. One of those factors is the economy. Sebastian's local economy consists largely of retail and service industries. Less than one percent is devoted to industrial activities. Construction of new homes is the largest single business in the area. Some of the largest retail stores include Publix Supermarket and Wal-Mart Stores, Inc.® The Indian River County unemployment rate in September 2022 was 3.1 percent and less than the higher levels of previous years, which is a positive sign and analogous to the economic pattern existing throughout the state and nation. The City experienced a 14.8% overall increase in property values for 2023. A reduced millage of 2.9050 was levied for taxes to be recorded in fiscal year 2023. With increases in other revenue sources, that amount of property taxes was sufficient to cover projected expenditures. The Golf Course continues to benefit from the excellent condition of the facility. The Golf Course also benefited from favorable weather and by the addition of new customers. Sizable operating losses for the Airport are primarily the result of depreciation on capital assets. The City actively pursues grant funds for constructing new facilities at the Airport that can generate additional rental revenues. Those new facilities also benefit the local economy by creating new jobs, demand for housing and support to existing businesses. A good level of revenues from building permit fees continued, the Building Enterprise Fund reported a positive change in net position and $294,748 of operating income. There are signs that steady activity in the local housing market is continuing, which is encouraging. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional information, contact the Administrative Services Department at City of Sebastian, 1225 Main Street, Sebastian, Florida 32958. 27 This page intentionally left blank. U:3 BASIC FINANCIAL STATEMENTS 29 CITY OF SEBASTIAN, FLORIDA Statement of Net Position September 30, 2022 Primary Government Governmental Business -type Activities Activities Total Assets Cash and cash equivalents $ 12,501,974 $ 1,991,336 $ 14,493,310 Restricted cash and cash equivalents 452,561 - 452,561 Investments 3,084,154 584,831 3,668,985 Permanently restricted investments 785,290 - 785,290 Receivables 4,288,943 3,368,814 7,657,757 Internal balances 967,747 (967,747) - Prepaid items 143,155 30,208 173,363 Inventories 74,839 17,797 92,636 Deposits held in escrow - 1,602 1,602 Capital assets not being depreciated 18,643,548 3,908,438 22,551,986 Capital assets being depreciated/amortized, net 27,989,416 17,117,810 45,107,226 Total assets 68,931,627 26,053,089 94,984,716 Deferred outflows of resources Deferred pension amounts 3,075,039 - 3,075,039 Liabilities Accounts payable and accrued liabilities 1,179,866 2,473,393 3,653,259 Accrued interest payable 782 - 782 Deposits payable 93,090 - 93,090 Unearned revenue 2,878,818 57,297 2,936,115 Leases payable: Due within one year 1,691 36,086 37,777 Due in more than one year 168,449 2,405,019 2,573,468 Long-term liabilities: Due within one year 227,894 - 227,894 Due in more than one year 1,530,962 222,092 1,753,054 Net pension liability (due in more than one year) 5,774,602 - 5,774,602 Total liabilities 11,856,154 5,193,887 17,050,041 Deferred inflows of resources Deferred pension amounts 391,883 - 391,883 Deferred lease amounts 2,689,002 2,710,620 5,399,622 Total deferred inflows of resources 3,080,885 2,710,620 5,791,505 Net position Net investment in capital assets 46,341,824 18,585,143 64,926,967 Restricted for: Perpetual care: Nonexpendable 420,405 - 420,405 Expendable 626,133 626,133 Special revenue uses: Economic environment 22,200 22,200 Infrastructure improvements 3,575,627 3,575,627 Redevelopment expenses 627,885 627,885 Stormwater expenses 1,957,125 1,957,125 Law enforcement events 53,050 53,050 Unrestricted (deficit) 3,445,378 (436,561) 3,008,817 Total net position $ 57,069,627 $ 18,148,582 $ 75,218,209 The accompanying notes are an integral part of these basic financial statements. 30 CITY OF SEBASTIAN, FLORIDA Statement of Activities For the Year Ended September 30, 2022 Program Revenues Operating Capital Net Charges Grants and Grants and (Expense) Functions / Programs Expenses for Services Contributions Contributions Revenue Primary government Governmental activities: General government $ 5,158,135 $ 769,115 $ 306,367 $ 4,711,995 $ 629,342 Public safety 7,703,234 217,282 233,737 19,083 (7,233,132) Physical environment 3,259,272 2,132,049 - - (1,127,223) Transportation 2,153,685 - 1,041,474 (1,112,211) Economic environment 291,969 - 484,856 - 192,887 Cultural and recreation 1,606,579 69,714 - 179,400 (1,357,465) Interest and fiscal charges 14,644 - - - (14,644) Total governmental activities 20,187,518 3,188,160 2,066,434 4,910,478 (10,022,446) Business -type activities: Golf course 1,659,271 1,812,201 - - 152,930 Airport 1,427,667 688,723 - 3,295,019 2,556,075 Building 1,260,189 1,257,746 - - (2,443) Total business -type activities 4,347,127 3,758,670 - 3,295,019 2,706,562 Total primary government $ 24,534,645 $ 6,946,830 $ 2,066,434 $ 8,205,497 $ (7,315,884) continued... 31 CITY OF SEBASTIAN, FLORIDA Statement of Activities For the Year Ended September 30, 2022 Changes in net position Net revenue (expense) General revenues: Property taxes, levied for general purposes Public utility taxes Franchise fees Intergovernmental - unrestricted Interest earnings Gain on sale of capital assets Miscellaneous Transfers Total general revenues and transfers Change in net position Net position, beginning of year Net position, end of year Primary Government Governmental Business -type Activities Activities Total $ (10,022,446) $ 2,706,562 $ (7,315,884) 4,988,598 - 4,988,598 3,172,766 - 3,172,766 1,571,571 - 1,571,571 3,526,318 - 3,526,318 142,209 17,582 159,791 - 1,825 1,825 468,361 - 468,361 (493,736) 493,736 - 13,376,087 513,143 13,889,230 3,353,641 3,219,705 6,573,346 53,715,986 14,928,877 68,644,863 $ 57,069,627 $ 18,148,582 $ 75,218,209 concluded The accompanying notes are an integral part of these basic financial statements. 32 This page intentionally left blank. 33 CITY OF SEBASTIAN, FLORIDA Balance Sheet Governmental Funds September 30, 2022 Special Revenue Funds American Riverfront Stormwater Rescue General Redevelopment Utility Plan Assets Cash and cash equivalents $ 5,679,186 $ 502,708 $ 1,606,628 $ 2,294,048 Investments 1,507,276 125,689 351,162 575,424 Accounts receivable 455,420 - - - Due from other funds 465,000 - Due from other governments 446,659 - 118 Leases receivable 2,729,574 51,918 - Prepaid items 127,153 395 15,607 Inventories 74,839 - - Advance to other funds - - - - Total assets $ 11,485,107 $ 680,710 $ 1,973,515 $ 2,869,472 Liabilities Negative equity in pooled cash $ - $ - $ - $ - Accounts payable and accrued liabilities 239,724 1,611 16,390 Due to other governments 288,058 - - Deposits payable 93,090 - Unearned revenue 31,446 - - 2,847,272 Total liabilities 652,318 1,611 16,390 2,847,272 Deferred inflows of resources Deferred lease amounts 2,637,788 51,214 - - Fund balances (deficits) Nonspendable 201,992 395 15,607 - Restricted - 627,490 1,941,518 22,200 Committed - - - - Unassigned (deficit) 7,993,009 - - - Total fund balances (deficits) 8,195,001 627,885 1,957,125 22,200 Total liabilities, deferred inflows of resources and fund balances $ 11,485,107 $ 680,710 $ 1,973,515 $ 2,869,472 The accompanying notes are an integral part of these basic financial statements. 34 Capital Projects Funds Nonmajor Total Discretionary Transportation Governmental Governmental Sales Tax Improvements Funds Funds $ 1,490,629 $ 56,647 $ 1,332,988 $ 12,962,834 361,167 948,726 3,869,444 - - 455,420 - - 465,000 521,045 84,209 1,052,031 - - 2,781,492 143,155 - 74,839 502,747 - - 502,747 $ 2,875,588 $ 56,647 $ 2,365,923 $ 22,306,962 $ - $ - $ 8,299 $ 8,299 399,344 234,739 891,808 - - 288,058 - 93,090 - 100 2,878,818 399,344 243,138 4,160,073 2,689,002 - 420,405 638,399 2,875,588 1,379,222 6,846,018 - 409,549 409,549 - (342,697) (86,391) 7,563,921 2,875,588 (342,697) 2,122,785 15,457,887 $ 2,875,588 $ 56,647 $ 2,365,923 $ 22,306,962 35 This page intentionally left blank. 36 CITY OF SEBASTIAN, FLORIDA Reconciliation Fund Balances for Governmental Funds to Net Position of Governmental Activities September 30, 2022 Fund balances - total governmental funds $ 15,457,887 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources, and therefore are not reported in the funds. Capital assets not being depreciated 18,643,548 Capital assets being depreciated/amortized, net 27,989,416 Certain liabilities, such as notes payable, are not due and payable in the current period, and therefore are not reported in the funds. Notes payable (121,000) Leases payable (170,140) Compensated absences (1,546,656) Pollution remediation liability (91,200) Accrued interest on long-term debt (782) Certain pension -related amounts, such as the net pension liability and deferred amounts are not due and payable in the current period or do not represent current financial resources and therefore are not reported in the funds. Net pension liability (5,774,602) Deferred outflows related to the net pension liability 3,075,039 Deferred inflows related to the net pension liability (391,883) Net position of governmental activities $ 57,069,627 The accompanying notes are an integral part of these basic financial statements. 37 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2022 Special Revenue Funds American Riverfront Stormwater Rescue General Redevelopment Utility Plan Revenues Taxes: Property $ 4,602,933 $ 385,665 $ $ Public utility 3,172,766 - Franchise fees 1,571,571 Licenses and permits 189,643 Intergovernmental 4,193,171 484,856 Impact fees - - Charges for services 778,572 1,952,168 Fines 82,430 - - - Investment earnings 37,095 5,813 21,427 20,587 Other revenues 413,229 36,704 100 - Contributions and donations 9,278 - - - Total revenues 15,050,688 428,182 1,973,695 505,443 Expenditures Current: General government 4,189,699 - - 90,345 Public safety 6,616,143 - 235,155 Physical environment 140,814 1,484,100 32,794 Transportation 1,124,746 - - 41,210 Economic environment - 291,969 - Cultural and recreation 1,049,772 - 81,508 Debt service: Principal - - Lease principal 1,642 Interest and fiscal charges 5,153 - Capital outlay 151,245 - 139,072 - Total expenditures 13,279,214 291,969 1,623,172 481,012 Revenues over (under) expenditures 1,771,474 136,213 350,523 24,431 Other financing sources (uses) Transfers in 48,094 - - - Transfers out (314,362) (49,572) (111,661) (3,844) Total other financing sources (uses) (266,268) (49,572) (111,661) (3,844) Net changes in fund balances 1,505,206 86,641 238,862 20,587 Fund balances (deficits), beginning of year 6,689,795 541,244 1,718,263 1,613 Fund balances (deficits), end of year $ 8,195,001 $ 627,885 $ 1,957,125 $ 22,200 The accompanying notes are an integral part of these basic financial statements. 9V Capital Projects Funds Nonmajor Total Discretionary Transportation Governmental Governmental Sales Tax Improvements Funds Funds $ $ $ $ 4,988,598 3,172,766 1,571,571 189,643 4,711,995 922,680 10,312,702 - 179,400 179,400 164,032 2,894,772 - 21,315 103,745 39,349 17,938 142,209 - 18,328 468,361 - 1,850 11,128 4,751,344 1,325,543 24,034,895 - 426,814 4,706,858 3,061 6,854,359 741,138 2,398,846 33,900 1,199,856 - 291,969 1,131,280 632,000 632,000 - 1,642 - - 12,635 17,788 7,151 6,333,137 1,062,070 7,692,675 7,151 6,333,137 2,911,618 24,927,273 4,744,193 (6,333,137) (1,586,075) (892,378) - 6,079,683 1,971,674 8,099,451 (7,973,348) - (140,400) (8,593,187) (7,973,348) 6,079,683 1,831,274 (493,736) (3,229,155) (253,454) 245,199 (1,386,114) 6,104,743 (89,243) 1,877,586 16,844,001 $ 2,875,588 $ (342,697) $ 2,122,785 $ 15,457,887 39 This page intentionally left blank. .s CITY OF SEBASTIAN, FLORIDA Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended September 30, 2022 Net change in fund balances - total governmental funds $ (1,386,114) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital assets purchased/constructed 7,681,314 Depreciation/amortization expense (3,201,563) Loss on disposal of capital assets (24,558) Note proceeds provide current financial resources to governmental funds in the period issued, but issuing notes increases long-term liabilities in the statement of net position. Repayment of note principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal payments on long-term liabilities 632,000 Principal payments on leases payable 1,642 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Change in accrued interest payable on long-term debt 3,144 Change in the accrual for compensated absences 8,884 Change in the net pension liability and related deferred amounts (361,108) Change in net position of governmental activities $ 3,353,641 The accompanying notes are an integral part of these basic financial statements. 41 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended September 30, 2022 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Taxes: Property $ 4,701,435 $ 4,701,435 $ 4,602,933 $ (98,502) Public utility 3,262,083 3,262,083 3,172,766 (89,317) Franchise fees 1,418,581 1,418,581 1,571,571 152,990 Licenses and permits 170,350 170,350 189,643 19,293 Intergovernmental 3,113,075 3,340,078 4,193,171 853,093 Charges for services 771,650 733,645 778,572 44,927 Fines 50,900 50,900 82,430 31,530 Investment earnings 17,500 17,500 37,095 19,595 Other revenues 212,100 244,061 413,229 169,168 Contributions and donations 6,500 9,628 9,278 (350) Total revenues 13,724,174 13,948,261 15,050,688 1,102,427 Expenditures Current: General government: City council 60,500 60,500 57,224 (3,276) City manager 330,971 337,616 334,429 (3,187) City clerk 280,644 282,724 258,614 (24,110) City attorney 210,280 211,922 202,390 (9,532) Administrative services 751,020 772,626 736,778 (35,848) Management information services 593,313 597,680 543,469 (54,211) Facilities maintenance 547,753 580,599 554,627 (25,972) Community development 521,223 540,916 474,689 (66,227) Non -departmental 1,025,675 1,052,616 1,027,479 (25,137) Total general government 4,321,379 4,437,199 4,189,699 (247,500) Public safety: Police administration 949,318 1,148,596 1,068,301 (80,295) Police operations 3,651,498 3,685,002 3,615,448 (69,554) Police detective division 1,168,848 1,184,843 1,157,606 (27,237) Police dispatch unit 668,653 676,053 596,667 (79,386) Code enforcement division 199,043 201,223 178,121 (23,102) Total public safety 6,637,360 6,895,717 6,616,143 (279,574) continued... 42 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended September 30, 2022 Physical environment: Cemetery Transportation: Roads and maintenance Fleet management Total transportation Culture and recreation: Leisure services Debt service: Lease principal Interest and fiscal charges Total debt service Capital outlay Total expenditures Revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net changes in fund balance Fund balance, beginning of year Fund balance, end of year Actual Over Original Final (Under) Final Budget Budget Actual Budget $ 132,937 $ 142,356 $ 140,814 $ (1,542) 1,039,923 1,042,277 898,676 (143,601) 221,187 231,094 226,070 (5,024) 1,261,110 1,273,371 1,124,746 (148,625) 1,164,387 1,196,316 1,049,772 (146,S44) 1,642 1,642 1,642 - 5,153 5,153 5,153 - 6,795 6,795 6,795 - 235,206 165,709 151,245 (14,464) 13,759,174 14,117,463 13,279,214 (838,249) (35,000) (169,202) 1,771,474 1,940,676 35,000 691,978 48,094 (643,884) - (529,527) (314,362) (215,165) 35,000 162,451 (266,268) (428,719) - (6,751) 1,505,206 1,511,957 6,689,795 6,689,795 6,689,795 - $ 6,689,795 $ 6,683,044 $ 8,195,001 $ 1,511,957 concluded The accompanying notes are an integral part of these basic financial statements. 43 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Riverfront Redevelopment Special Revenue Fund For the Year Ended September 30, 2022 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Taxes: Property $ 431,641 $ 431,641 $ 385,665 $ (45,976) Investment earnings 4,780 4,780 5,813 1,033 Other revenues 36,000 36,000 36,704 704 Total revenues 472,421 472,421 428,182 (44,239) Expenditures Current: Economic environment 320,827 330,778 291,969 (38,809) Revenues over expenditures 151,594 141,643 136,213 (5,430) Other financing sources (uses) Transfers in 123,406 15,287 - (15,287) Transfers out (275,000) (156,930) (49,572) (107,358) Total other financing sources (uses) (151,594) (141,643) (49,572) 92,071 Net changes in fund balance - - 86,641 86,641 Fund balance, beginning of year 541,244 541,244 541,244 - Fund balance, end of year $ 541,244 $ 541,244 $ 627,885 $ 86,641 The accompanying notes are an integral part of these basic financial statements. 44 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Stormwater Utility Special Revenue Fund For the Year Ended September 30, 2022 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Charges for services $ 1,952,000 $ 1,952,000 $ 1,952,168 $ 168 Investment earnings 4,244 4,244 21,427 17,183 Otherrevenues - - 100 100 Total revenues 1,956,244 1,956,244 1,973,695 17,451 Expenditures Current: Physical environment 1,792,947 1,797,860 1,484,100 (313,760) Capital outlay 103,000 154,037 139,072 (14,965) Total expenditures 1,895,947 1,951,897 1,623,172 (328,725) Revenues over expenditures 60,297 4,347 350,523 346,176 Other financing sources (uses) Transfers in 154,703 668,506 - (668,506) Transfers out (215,000) (672,853) (111,661) (561,192) Total other financing sources (uses) (60,297) (4,347) (111,661) (107,314) Net change in fund balance - - 238,862 238,862 Fund balance, beginning of year 1,718,263 1,718,263 1,718,263 - Fund balance, end of year $ 1,718,263 $ 1,718,263 $ 1,957,125 $ 238,862 The accompanying notes are an integral part of these basic financial statements. 45 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - American Recovery Plan Special Revenue Fund For the Year Ended September 30, 2022 Revenues Intergovernmental Investment earnings Total revenues Expenditures Current: General government Public safety Physical environment Transportation Cultural and recreation Total expenditures Revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balance Fund balance, beginning of year Fund balance, end of year Actual Over Original Final (Under) Final Budget Budget Actual Budget $ - $ - $ 484,856 $ 484,856 - - 20,587 20,587 - - 505,443 505,443 90,345 90,345 90,345 - 235,155 235,155 235,155 - 32,794 32,794 32,794 - 41,210 41,210 41,210 - 81,508 81,508 81,508 - 481,012 481,012 481,012 - (481,012) (481,012) 24,431 505,443 57,500 3,181,012 - (3,181,012) (557,500) (2,700,000) (3,844) (2,696,156) (500,000) 481,012 (3,844) (484,856) (981,012) - 20,587 20,587 1,613 1,613 1,613 - $ (979,399) $ 1,613 $ 22,200 $ 20,587 The accompanying notes are an integral part of these basic financial statements. 46 CITY OF SEBASTIAN, FLORIDA Statement of Net Position Proprietary Funds September 30, 2022 Assets Current assets: Cash and cash equivalents Investments Accounts receivable Due from other governments Leases receivable Prepaid items Inventories Deposits held in escrow Total current assets Noncurrent assets: Leases receivable Advance to other funds Capital assets: Land Construction in process Leased land Buildings Non -building improvements Machinery and equipment Infrastructure Less accumulated depreciation/amortization Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable and accrued liabilities Due to other funds Due to other governments Rebates payable Unearned revenue Current portion of leases payable Total current liabilities Noncurrent liabilities: Advance from other fund Leases payable Compensated absences Total noncurrent liabilities Total liabilities Deferred inflows of resources Deferred lease amounts Net position Net investment in capital assets Unrestricted (deficit) Total net position (deficit) Business -type Activities - Enterprise Funds Golf Course Airport Building Total $ 267,038 $ 156,204 $ 1,568,094 $ 1,991,336 76,028 117,242 391,561 584,831 - 192 - 192 45 577,273 60 577,378 25,500 37,777 - 63,277 4,783 19,927 5,498 30,208 17,797 - - 17,797 493 616 493 1,602 391,684 909,231 1,965,706 3,266,621 154,499 2,573,468 - 2,727,967 - - 1,112,843 1,112,843 9,060 - 9,060 - 3,899,378 3,899,378 2,473,049 - 2,473,049 697,985 9,367,542 10,065,527 1,107,668 1,694,288 2,801,956 391,937 1,018,106 139,728 1,549,771 1,437,440 12,991,503 - 14,428,943 (2,492,038) (11,592,159) (117,239) (14,201,436) 3,770,540 19,961,186 1,135,332 24,867,058 4,162,224 20,870,417 3,101,038 28,133,679 6,291 284,852 24,197 315,340 465,000 - - 465,000 4,383 1,098 7,319 12,800 - - 2,145,253 2,145,253 33,174 20,823 3,300 57,297 36,086 - - 36,086 544,934 306,773 2,180,069 3,031,776 1,112,843 502,747 - 1,615,590 2,405,019 - - 2,405,019 70,065 2,796 149,231 222,092 3,587,927 505,543 149,231 4,242,701 4,132,861 812,316 2,329,300 7,274,477 174,757 2,535,863 - 2,710,620 1,174,936 17,387,718 (1,320,330) 134,520 $ (145,394) $ 17,522,238 $ The accompanying notes are an integral part of these basic financial statements. 22,489 18,585,143 749,249 (436,561) 771,738 $ 18,148,582 47 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended September 30, 2022 Business -type Activities - Enterprise Funds Golf Course Airport Building Total Operating revenues Charges for fees and rents: Building permit fees $ - $ $ 1,257,746 $ 1,257,746 Golf course fees 1,765,139 - 1,765,139 Rents 35,242 590,945 626,187 Otherrevenues 11,820 97,778 - 109,598 Total operating revenues 1,812,201 688,723 1,257,746 3,758,670 Operating expenses Salaries, wages and employee benefits 402,598 130,481 715,666 1,248,745 Contractual services, materials and supplies 917,972 312,878 238,328 1,469,178 Depreciation/amortization 263,620 963,568 9,004 1,236,192 Total operating expenses 1,584,190 1,406,927 962,998 3,954,115 Operating income (loss) 228,011 (718,204) 294,748 (195,445) Nonoperating revenues (expenses) Investment income 828 752 16,002 17,582 Interest expense (75,081) (20,740) - (95,821) Gain on sale of capital assets 1,825 1,825 State mandated rebates - (297,191) (297,191) Total nonoperating revenues (expenses) (74,253) (18,163) (281,189) (373,605) Income (loss) before capital contributions and transfers 153,758 (736,367) 13,559 (569,050) Capital contributions - 3,295,019 - 3,295,019 Transfers in 493,936 4,335 498,271 Transfers out (4,335) - (200) (4,535) Change in net position 149,423 3,052,588 17,694 3,219,705 Net position, beginning of year (294,817) 14,469,650 754,044 14,928,877 Net position, end of year $ (145,394) $ 17,522,238 $ 771,738 $ 18,148,582 The accompanying notes are an integral part of these basic financial statements. EM CITY OF SEBASTIAN, FLORIDA Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2022 Cash flows from operating activities Cash received from customers and users Cash payments to suppliers Cash payments for employee services Net cash provided by operating activities Cash flows from noncapital financing activities Interest paid on advance from other fund Cash payments to other funds Cash receipts from other funds Net cash provided by (used in) by noncapital financing activities Cash flows from capital and related financing activities Principal paid on long-term debt Interest paid on long-term debt Principal paid on leases payable Interest paid on leases payable Acquisition and construction of capital assets Proceeds from sale of capital assets Receipts from capital contributions Net cash used in capital and related financing activities Cash flows from investing activities Purchases of investments Investment income Net cash used in investing activities Net increase(decrease)in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Business -type Activities - Enterprise Funds Golf Course Airport Building Total $ 1,755,788 $ 379,699 $ 1,255,883 $ 3,391,370 (913,817) (114,421) (231,401) (1,259,639) (432,438) (128,113) (704,957) (1,265,508) 409,533 137,165 319,525 866,223 - (20,740) - (21,630) (71,085) - - (71,085) 478,177 35,885 514,062 (71,085) 457,437 35,885 421,347 (50,801) - - (50,801) (890) (31,944) (31,944) (74,191) (74,191) - (3,885,259) (3,885,259) 8,505 2,079 10,584 - 3,295,019 3,295,019 (149,321) (588,161) (736,592) (76,028) (117,242) (99,032) (292,302) 828 752 16,002 17,582 (75,200) (116,490) (83,030) (274,720) 113,927 (110,049) 272,380 276,258 153,111 266,253 1,295,714 1,715,078 $ 267,038 $ 156,204 $ 1,568,094 $ 1,991,336 continued... 49 CITY OF SEBASTIAN, FLORIDA Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2022 Cash flow from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation/amortization expense Changein: Accounts receivable Due from other governments Leases receivable Prepaid items Inventories Accounts payable and accrued liabilities Due to other governments Unearned revenue Accrued compensated absences Deferred lease amounts Total adjustments Net cash provided by operating activities Business -type Activities - Enterprise Funds Golf Course Airport Building Total $ 228,011 $ (718,204) $ 294,748 $ (195,445) 263,620 963,568 9,004 1,236,192 39 24 - 63 (45) (235,761) (60) (235,866) 23,884 33,586 - 57,470 9,259 2,237 12,094 23,590 (2,783) - - (2,783) (2,321) 196,220 (5,167) 188,732 (3,920) (418) (953) (5,291) (47,245) 2,513 (850) (45,582) (29,840) 2,368 10,709 (16,763) (29,126) (108,968) - (138,094) 181,522 855,369 24,777 1,061,668 $ 409,533 $ 137,165 $ 319,525 $ 866,223 concluded Noncash Transactions For the year ended September 30, 2022, the building fund recognized rebates payable and state mandated rebates expense of $297,191 to comply with Florida statute 553.80. The statute does not allow a local government to carry forward an amount exceeding the average of its operating budget for the previous four fiscal years. The accompanying notes are an integral part of these basic financial statements. 50 CITY OF SEBASTIAN, FLORIDA Statement of Fiduciary Net Position Fiduciary Fund - Pension Trust September 30, 2022 Assets Receivables: Interest and dividends Investments, at fair value: Money market funds United States government obligations Mortgage backed securities Collateralized mortgage obligations Municipal obligations Domestic corporate bonds Foreign corporate bonds Domestic corporate equities Foreign corporate equities Exchange -traded fund equities Partnerships Real estate investment trust Total investments Total assets Net position Restricted for pension benefits Police Officers' Pension 31,175 559,484 548,915 763,540 1,606,304 217,667 1,024,516 79,794 7,752,650 2,467,284 2,453,471 22,212 955,903 18,451,740 18,482,915 $ 18,482,915 The accompanying notes are an integral part of these basic financial statements. 51 CITY OF SEBASTIAN, FLORIDA Statement of Changes in Fiduciary Net Position Fiduciary Fund - Pension Trust For the Year Ended September 30, 2022 Police Officers' Pension Additions Contributions: Employer $ 799,032 Plan members 227,488 State 227,003 Total contributions 1,253,523 Investment income (loss): Net decrease in fair value of investments (3,771,376) Interest and dividends 496,090 Total investment loss (3,275,286) Investment expenses (144,048) Net investment loss (3,419,334) Total additions (net of investment loss) (2,165,811) Deductions Benefits 824,301 Administrative expenses 70,188 Total deductions 894,489 Change in net position (3,060,300) Net position, beginning of year 21,543,215 Net position, end of year $ 18,482,915 The accompanying notes are an integral part of these basic financial statements. 52 NOTES TO FINANCIAL STATEMENTS 53 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Sebastian (the "City"), a Florida Municipal Corporation, was incorporated in 1924 under Sections 1826-1832 of the Revised Florida Statutes. The City has a population of 25,454 living in an area of approximately 16.3 square miles. The governing body is a five member elected City Council with a mayor elected from the five members. The City Council appoints the City Manager who is responsible for the administration of all City services. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. Reporting Entity As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the City is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations and as such, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government -wide financial statements to emphasize that they are legally separate from the government. The City has no discretely presented component units. Blended Component Units Blended component units are legally separate entities that are from the City but so intertwined with the City that they are, in substance, the same as the City. Discretely presented component units are entities legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has two component units that are blended with the primary government for financial statement purposes because the component unit's governing body is substantially the same as the City Council and/or there is a financial benefit/burden relationship between the primary government and the component unit. Community Redevelopment Agency (CRA) — The governing body of the CRA is identical to the Sebastian City Council and there is a benefit/burden relationship to the City. The CRA is accounted for in a special revenue fund entitled "Riverfront Redevelopment." F.S. Section 163.387(8) requires an independent audit of the fund each fiscal year and a report of such audit. The City has presented the CRA as a major fund of the City to satisfy this requirement simply due to the scope of the audit for a major fund being broader than a nonmajor fund. 54 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Fiduciary Component Units City of Sebastian Police Officers' Pension Plan (the "Plan") — The City sponsors and administers a single - employer, defined benefit pension plan, which covers the City's police officers. The Plan was established and may be amended by the City Council and is administered by a 5-member Board of Trustees. The Plan is administered through a qualified trust. The Plan is included as a fiduciary component unit of the City because (1) the System is a legally separate entity; (2) the City Council appoints a voting majority of the Plan Board of Trustees; and (3) the City makes contributions to the Plan on behalf of its participants. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 55 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period, except for expenditure -driven grants which must be collected within one year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. The City reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all the financial resources of the general government, except those accounted for and reported in another fund. The Riverfront Redevelopment Special Revenue Fund accounts for revenues and expenditures to be used for special operations in the defined City's riverfront redevelopment area. The Stormwater Utility Special Revenue Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for system maintenance. The American Rescue Plan Special Revenue Fund accounts for all financial resources of the American Rescue Plan Act grant program administered by the City. The Discretionary Sales Tax Capital Projects Fund accounts for the financial resources that are legally restricted for infrastructure improvements and equipment purchases. The Transportation Improvements Capital Projects Fund accounts for the financial resources that are used for improvements and equipment purchases in support of the City's roadway infrastructure. The City reports the following major proprietary funds: The Golf Course Fund accounts for the activities of the municipal golf course. The Airport Fund accounts for the activities of the municipality's general aviation airport. The Building Fund accounts for the activities of the municipality's building department that enforces state and local regulations pertaining to construction. 56 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Additionally, the City reports the following fund types: Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The Permanent Fund is used to record the activity and balance of the Cemetery Trust which provides funds for perpetual care of cemetery lots. The Pension Trust Fund accounts for the activities of the Police Officer's Retirement System, which accumulates resources for pension benefit payments to qualified police officers. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. The General Fund provides certain central services to other funds of the City which are presented as program expenses in the funds receiving services. The related General Fund revenue has been netted against program expense in the government -wide statement of activities. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Restricted net position represents resources that are subject to restrictions beyond the government's control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity Deposits and Investments The City considers cash on hand and demand deposits, restricted cash deposits, and short-term investments with maturities of three months or less when purchased to be cash for the statement of cash flows. Cash in excess of current requirements is invested in various interest -bearing securities and disclosed as part of the City's investments. 57 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Investments consist of U.S. Treasury Securities, U.S. Government Agency Securities, common stock, guaranteed investment contracts and the Local Government Surplus Funds Trust Fund Investment pool. The Local Government Surplus Funds Trust Fund is administered by the Florida State Board of Administration, which is not a registrant with the Securities and Exchange Commission. However, the Board has adopted operating procedures consistent with the requirements for a 2a-7 fund or accounts. In accordance with the regulations of 2a-7 like pools, the City's share of investments held at the State Board of Administration are reported at amortized cost, which approximates fair value. This pool is regulated by the State and the fair value of the position in the pool is the same as the value of the pool share. Investment earnings are allocated to the participating funds at the end of each month based upon the ratio of each participant's investment to the total pooled investments. Other investments, including the Police Officers' Pension Fund, are reported at their fair value based on the quoted market price or the best available information. Internal Balances Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Advances between funds are offset by nonspendable fund balance in General Fund and restricted fund balance in other applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Restricted Assets Certain amounts reported as cash and cash equivalents are classified as restricted assets. These include balances in the debt service funds that are set aside to meet bonded debt requirements, balances in the capital projects funds to be used for the payment of project costs and balances in the Cemetery Fund that are either not permitted to be spent or can only be spent for items incidental to cemetery expansions. The amount of the Cemetery Fund investments is also classified as restricted assets and reported as restricted investments. Receivables All trade and property tax receivables are shown net of an allowance for uncollectibles, as applicable. Amounts due from other governments include amounts due from grantors for specific programs and capital projects. Program grants and capital grants for capital assets are recorded as receivables and revenues at the time reimbursable project costs are incurred. Revenues received in advance of project costs being incurred are deferred. Receivables consist of trade receivables, due from other governments and interest receivable and are recorded at the net realizable value. As of September 30, 2022, the City has no allowance for doubtful accounts, since all receivables are considered collectible. 63 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Leases Lessee. The City is a lessee for noncancellable leases of land. The City recognizes a lease liability and an intangible right -to -use lease asset (lease asset) in the government -wide and proprietary fund financial statements. The City recognizes lease liabilities with an initial, individual value of $5,000 or more. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price (if applicable) that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. Lessor. The City is a lessor for noncancellable leases of certain properties. The City recognizes a lease receivable and a deferred inflow of resources in the government -wide, governmental fund financial statements, and proprietary fund financial statements At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. The City uses its estimated incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable if certain changes occur that are expected to significantly affect the amount of the lease receivable. 59 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Other Assets Inventories are valued at cost using the average cost method. Inventory in the General Fund consists of materials and supplies held for consumption. The cost is recorded as an expenditure/expense at the time the individual inventory items are consumed. Inventory in the Golf Course consists of supplies held for resale. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government -wide and fund financial statements. Capital Assets Capital assets, which include land, construction in progress, leased land, buildings, non -building improvements, machinery and equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $750 and an estimated useful life in excess of one year. Such assets are recorded at historical cost, if purchased, and at estimated acquisition cost at date of gift, if donated. Major additions are capitalized while maintenance and repairs that do not improve or extend the life of the respective assets are expensed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities, if any, is included as part of the capitalized value of the asset constructed. Capital assets are depreciated/amortized using the straight-line method over the following estimated useful lives: Years Buildings and improvements 10-40 Public domain infrastructure 40-50 System infrastructure 15-30 Improvements other than buildings 10-40 Machinery, equipment and other 5-15 Airport runways 20 .e CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Deferred Outflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources until then. The City reports deferred outflows of resources related to its pension plan. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave benefits and these are accounted for using the termination payment method. All vacation and sick leave amounts are accrued in the government -wide and proprietary funds financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Unearned Revenue Governmental funds report unearned revenue in connection with resources that have been received, but not yet earned. Deferred Inflows of Resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources until that time. The City reports deferred inflows of resources related to its pension plan and leases receivable. The deferred lease amounts are amortized over the remaining life of the lease. Long-term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 61 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Fund Equity Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council (the government's highest level of decision -making authority). A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City Council has the authority and reports assigned fund balance for amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance is the residual classification for the General Fund. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than the general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. When the government incurs an expenditure for purposes for which various fund balance classifications can be used, it is the government's policy to use restricted fund balance first, then committed fund balance, assigned fund balance, and finally unassigned fund balance. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plan and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 2. BUDGETARY INFORMATION Budgets are prepared annually on a modified accrual basis with encumbrance accounting for all governmental funds except the capital project funds, which are approved on a "life of the project basis", and the permanent fund, which is not budgeted. All annual appropriations lapse at year end. M CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements On or before the third Friday in May of each year, all agencies of the government submit requests for appropriations to the government's City Manager so that a budget may be prepared. Before July 31, the proposed budget is presented to the government's council for review. The council holds budget workshops and public hearings and a final budget must be prepared and adopted no later than September 30. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Special Revenue and Debt Service funds. Encumbrances outstanding at year end are carried forward and reappropriated to the next year's budget. Actual results of operations presented in accordance with U.S. generally accepted accounting principles (GAAP basis) and the City's accounting policies do not recognize encumbrances as expenditures until the period in which the actual goods or services are received and a liability is incurred. It is necessary to include budgetary encumbrances to reflect actual revenues and expenditures on a basis consistent with the City's legally adopted budget. The legal level of budgetary control is at the departmental level for the general fund and at the activity level for special revenue funds. During the year ended September 30, 2022, the City incurred expenditures in in excess of the amounts appropriated, as follows: Law Enforcement Forfeiture fund Public safety Final Budget Actual Variance 3,061 $ 3,061 63 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 3. DEPOSITS AND INVESTMENTS Following is a reconciliation of deposit and investment balances as of September 30, 2022: Statement of Net Position Cash and cash equivalents $ 14,493,310 Restricted cash and cash equivalents 452,561 Investments 3,668,985 Permanently restricted investments 785,290 Statement of Fiduciary Net Position Police officers' pension fund investments 18,451,740 Total $ 37,851,886 Deposits and investments Bank deposits: Checking and savings accounts $ 14,943,441 Investments: Investments, at fair value 4,454,275 Police officers' pension fund investments 18,451,740 Cash on hand 2,430 Total $ 37,851,886 Custodial Credit Risk — Deposits. Custodial credit risk is the risk that, in the event of a bank failure, the City's deposits might not be returned. At September 30, 2022, the carrying amount of the City of Sebastian's deposits with banks was $14,943,441 and the bank balance was $15,066,877. All the deposits were covered by the FDIC or collateralized in accordance with the "Florida Security for Public Deposits Act". Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral having a market value equal to 50% of the average daily balance for each month that all public deposits are in excess of any applicable deposit insurance. If the public deposits exceed the total amount of the regulatory capital accounts of a bank or the regulatory net worth of a savings association, the required collateral shall have a market value equal to 125% of the deposits. Custodial Credit Risk — Investments. On April 23, 2003, Sebastian City Council formally adopted an investment policy pursuant to Section 218.415, Florida Statutes that established permitted investments, asset allocation limits and issuer limits, credit ratings requirements and maturity limits for all investments except the Pension Trust Funds. The City maintains a common cash and investment pool for the use of all funds, except the Pension Trust Funds, which are held with third party trustees and are governed by rules established by Florida Statute Chapter 185. 64 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Investment holdings during the year included United States Government Agencies which were reported at fair value in accordance with GASB Statement No. 31 "Accounting and Financial Reporting for Certain Investments and for External Investment Pools". These investments were held in trust by the City's bank depository in the City's name or by the Custodian of the Pension Trust Funds. Section 218.415, Florida Statutes, limits the types of investments that the City can invest in unless specially authorized in the City's investment policy. The City's formal investment policy, for all investments except the Pension Trust Fund, allows for the following investments: Florida Local Government Surplus Funds Trust Fund, United States Government Securities, United States Government Agencies, Federal Instrumentalities, Interest Bearing Time Deposit or Saving Accounts, Repurchase Agreements, Commercial Paper, High Grade Corporate Notes, Bankers' Acceptances, State and/or Local Government Taxable and/or Tax -Exempt Debt, Registered Investment Companies (Money Market Mutual Funds), and Intergovernmental Investment Pool. Florida Statutes Chapter 185 regulates the types of investment that may be held by the Police Pension Trust Fund. The investment guidelines have been augmented by City ordinance that have adopted specific investment policies. Compliance with the policies and guidelines has been evaluated by the pension board. 65 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements As of September 30, 2022, the City had the following investments and effective duration presented in terms of years: Investment Maturity (Years) Investment Type Fair Value No Maturities Less than 1 From 1-3 From 4-6 Over 7 General investments Local government surplus funds trust fund ("SBA") $ 3,927,383 $ $ 3,927,383 $ $ $ Florida Local Government Investment Trust 526,892 526,892 $ 4,454,275 $ $ 4,454,275 $ $ $ Police officers' pension fund investments Money market $ 559,484 $ $ 559,484 $ - $ - $ United States government obligations 548,915 - 76,885 81,027 391,003 Mortgage backed securities 763,540 188,775 266,400 308,365 Collateralized mortgage obligations 1,606,304 149,191 235,185 1,221,928 Municipal obligations 217,667 - 92,820 - 124,847 Domestic corporate bonds 1,024,516 30,183 418,699 170,147 405,487 Foreign corporate bonds 79,794 - 36,667 - 43,127 Domestic corporate equities 7,752,650 7,752,650 - - Foreign corporate equities 2,467,284 2,467,284 Exchange -traded fund equities 2,453,471 2,453,471 Partnerships 22,212 22,212 Real estate investment trust 955,903 955,903 - - - - $ 18,451,740 $ 13,651,520 $ 589,667 $ 963,037 $ 752,759 $ 2,494,757 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Interest Rate Risk. The City's investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. Investment maturities shall not exceed thirty-six (36) months. Investments of construction funds shall have a term appropriate to the need for funds and in accordance with debt covenants. Credit Risk. The City investment policy that covers all investments, except the Pension Trust Fund, permits investments in the following securities, which are limited to credit quality ratings from nationally recognized agencies as follows: Mutual funds shall be rated "m" or "AAm-G" or better by Standard & Poor's, or the equivalent by another rating agency. State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least "Aa" by Moody's and "AA" by Standard & Poor's for long-term debt, or rated at least "MIG-2" by Moody's and 'SP-2" by Standard & Poor's for short-term debt. Bankers' acceptances issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, at the time of purchase, the short-term paper is rated, at a minimum, "P-I" by Moody's Investors Services and "A -I" Standard & Poor's. Commercial paper of any United States company that is rated, at the time of purchase, "Prime-1" by Moody's and "Ad" by Standard & Poor's (prime commercial paper). Corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long-term debt rating, at the time of purchase, at a minimum "Aa" by Moody's and a minimum long-term debt rating of "AA" by Standard & Poor's. As of September 30, 2022, the City's investment securities, for all investments except the Pension Trust Fund, were all individually rated AAAm by Standard & Poor's. The investment ratings for the Pension Trust Fund ranged between AAA through BBB-. As of September 30, 2022, the City had $3,927,383 invested in the State Board of Administration's Local Government Surplus Trust Funds Investment Pool, which consist of accounts in Pool A. Pool A had a rating by Standard and Poor's Rating Services as "AAAm" on September 30, 2022 and amounts may be withdrawn without penalty. Additionally, the City had $526,892 invested in the Florida Local Government Investment Trust which had a rating by Standard and Poor's Rating Services as "AAAm" on September 30, 2022. Investment in the City's pension trust funds are limited by State Statutes Chapter 185 and by an investment policy adopted by the fund's Board of Trustees on December 31, 2016. The allowable investment instruments include: United States government and agency issues, bankers acceptances and certificates of deposit by United States banks, savings accounts with banks or other financial institutions incorporated in the United States and commercial paper rated A-2 or P-2 or higher by Moody's or Standard and Poor's. See table below for credit ratings by investment type. In addition, common stocks of corporations listed on a recognized national stock exchange, plus issues convertible into common stock are also allowed. No more than ten percent (10%) of the cost value of total assets may be invested in foreign securities. 67 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Custodial Credit Risk. The City's investment policy pursuant to Section 218.415(18), Florida Statutes requires securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all securities purchased by, and all collateral obtained by the City should be properly designated as an asset of the City. The securities must be held in an account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida as defined in Section 658.12, Florida Statutes, or by a national association organized and existing under the laws of the United States, which is authorized to accept and execute trusts and which is doing business in the State of Florida. Certificates of deposits maintained by book -entry at the issuing bank shall clearly identify the City as the owner. Concentration of Credit Risk. The City's investment policy has established asset allocation and issuer limits on the following investments, which are designed to reduce concentration of credit risk of the City's investment portfolio. A maximum of 100% of available funds may be invested in the SBA and in the United States Government Securities, 50% of available funds may be invested in United States Government agencies with a 25% limit on individual issuers, 80% of available funds may be invested in Federal Instrumentalities with a 40% limit on individual issuers, 25% of available funds may be invested in non-negotiable interest bearing time certificates of deposits with a 15% limit on individual issuers, 50% of available funds may be invested in repurchase agreements excluding one (1) business day agreements and overnight sweep agreements with a 25% limit on any one institution, 25% of available funds may be directly invested in prime commercial paper with a 10% limit on individual issuers, 15% of available funds may be directly invested in corporate notes with a 5% limit on individual issuers, 25% of available funds may be directly invested in Bankers' Acceptances with a 10% limit on individual issuers, 20% of available funds may be invested in taxable and tax-exempt debts, 50% of available funds may be invested in money market mutual fund with a 25% limit on individual issuers, 10% of available funds may be invested in intergovernmental investment pools. The City's pension trust fund's investment policy adopted by the fund's Board of Trustees has established asset allocation and issuer limits on the following investments, which are designed to focus on performance. A maximum of 100% of available funds may be invested in fixed income securities and a maximum of 60% of available funds may be invested in equity securities. M.: CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements As of September 30, 2022, the City had the following issuer concentration based on fair value and investment ratings: Issuer Local government surplus funds trust fund ("SBA") Florida Local Government Investment Trust Money market United States government obligations Mortgage backed securities Collateralized mortgage obligations Municipal obligations Domestic corporate bonds Foreign corporate bonds Domestic corporate equities Foreign corporate equities Exchange -traded fund equities Partnerships Real estate investment trust Total General Investments Percentage of Amount Portfolio $ 3,927,383 88.17% 526,892 11.83% - 0.00% - 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00 0.00 0.00% 0.00 - 0.00% $ 4,454,275 100.00% Pension Investments Percentage of S&P/Moody Amount Portfolio Ratings 559,484 548,915 763,540 1,606,304 217,667 1,024,516 79,794 7,752,650 2,467,284 2,453,471 22,212 955,903 $ 18,451,740 0.00 0.00 3.03% 2.97% 4.14% 8.71 1.18% 5.55% 0.43 42.02 13.37% 13.30% 0.12% 5.18% 100.00 AAAm AAAm Not Rated AA+ Aaa AAA/A- AAA/A- AAA/B B B- A+/A- Not Rated Not Rated Not Rated Not Rated Not Rated CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Foreign Currency Risk. Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. Foreign currency risk is mitigated by requiring the portfolio to be broadly diversified by number of holdings, by geographic location and across industry sectors. Country exposures are monitored through a monthly performance report. The exposure to foreign currency risk is as follows: Pension Investment (currency in U.S. dollar) Investments Foreign corporate bonds $ 79,794 Foreign corporate equities 21467,284 Total $ 2,547,078 Fair Value Measurement The City categorizes the fair value measurements of its investments within the fair value hierarchy established by generally accepted accounting principles. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs — other than quoted prices included within Level 1 - that are observable for the asset or liability, either directly or indirectly. Finally, Level 3 inputs are unobservable and are based on estimates and assumptions. These levels are determined by the management's review of the type and substance of investments held by the City. Level 2 inputs use one of the following valuation techniques depending on the investment: a) traditional net asset valuation (dividing the asset value by the number of units owned), b) matrix pricing technique (relying on the securities' relationship to other benchmark quoted securities instead of exclusively on quoted prices for specific securities), or c) quoted market prices for similar assets in active markets or quoted prices for identical or similar assets in markets that are not active. 70 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The City has the following recurring fair value measurements as of September 30, 2022: Level Level Level Total Local government surplus funds trust fund ("SBA") $ 3,927,383 $ - $ - $ 3,927,383 Florida Local Government Investment Trust 526,892 - - 526,892 Money market 559,484 - - 559,484 United States government obligations 10,625 538,290 - 548,915 Mortgage backed securities - 763,540 - 763,540 Collateralized mortgage obligations - 1,606,304 - 1,606,304 Municipal obligations - 217,667 - 217,667 Domestic corporate bonds 46,535 977,981 - 1,024,516 Foreign corporate bonds - 79,794 - 79,794 Domestic corporate equities 7,752,650 - - 7,752,650 Foreign corporate equities 1,423,704 1,043,580 - 2,467,284 Exchange -traded fund equities 2,453,471 - - 2,453,471 Partnerships - - 22,212 22,212 Real estate investment trust - - 955,903 955,903 $ 16,700,744 $ 5,227,156 $ 978,115 $ 22,906,015 4. RECEIVABLES Receivables are comprised of the following at year-end: Governmental Business -type Activities Activities Total Accounts receivable $ 455,420 $ 192 $ 455,612 Leases receivable 2,781,492 2,791,244 5,572,736 Due from other governments 1,052,031 577,378 1,629,409 $ 4,288,943 $ 3,368,814 $ 7,657,757 Of the governmental activities and business -type activities amounts reported for receivables above, leases receivable in the amount of $2,720,511 and $2,727,967, respectively, are not expected to be collected within one year. 71 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following at year-end: Governmental Business -type Activities Activities Accounts payable and accrued liabilities Rebates payable Due to other governments Total $ 891,808 $ 315,340 $ 1,207,148 - 2,145,253 2,145,253 288,058 12,800 300,858 $ 1,179,866 $ 2,473,393 $ 3,653,259 6. INTERFUND RECEIVABLES AND PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2022, was as follows: Due to and from primary government funds General Fund Golf Course Due from Other Due to Other Funds Funds $ 465,000 $ - - 465,000 $ 465,000 $ 465,000 These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Advances to and from primary government funds Discretionary Sales Tax Golf Course Airport Building Advance from Advance to Other Funds Other Funds $ - $ 502,747 1,112, 843 - 502,747 - - 1,112,843 $ 1,615,590 $ 1,615,590 72 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The balance of $502,747 advanced to the airport fund from the discretionary sales tax fund is being repaid in accordance with Resolution No. R-08-20 for the initial $285,000 advance and with Resolution No. R-10-22 authorizing an additional $290,000 advance. Both of these advances provided for repayment over a thirty year period. The $1,112,843 was advanced from the Building Fund to replace the irrigation system and make other improvements at the Golf Course. For the year ended September 30, 2022, interfund transfers consisted of the following: Transfers in Transportation Nonmajor Improvements Governmental Transfers out General Fund Fund Funds Airport Fund Building Fund Total General Fund $ $ $ 310,720 $ 3,642 $ $ 314,362 Riverfront Redevelopment Fund 49,572 - 49,572 Stormwater Utility Fund 721 110,940 111,661 American Rescue Plan Fund - 3,844 - 3,844 Discretionary Sales Tax Fund - 6,060,559 1,422,495 490,294 7,973,348 Nonmajor Governmental Funds 47,173 19,124 74,103 - 140,400 Building Fund 200 - - 200 Golf Course - - - - 4,335 4,335 Total $ 48,094 $ 6,079,683 $ 1,971,674 $ 493,936 $ 4,335 $ 8,597,722 Transfers are used to: (1) move revenues from the fund that is required to collect them to the fund that is required or allowed to expend them; (2) move receipts restricted to or allowed for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 73 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 7. CAPITAL ASSETS Capital asset activity for the primary government for the year ended September 30, 2022, was as follows: Beginning Ending Balance* Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated Land $ 9,123,041 $ Construction in progress 3,759,159 12,882,200 Capital assets, being depreciated/amortized: Leased land 171,782 Buildings 14,344,679 Non -building improvements 7,794,033 Machinery and equipment 11,231,799 Infrastructure 45,929,953 79,472,246 Less accumulated depreciation/amortization for: Leased land - Buildings (7,321,127) Non -building improvements (5,167,321) Machinery and equipment (8,539,197) Infrastructure (29,149,030) (50,176,675) Total capital assets being depreciated/amortized, net Governmental activities capital assets, net - $ - $ - $ 9,123,041 5,761,348 - 9,520,507 5,761,348 - 18,643,548 - - - 171,782 - - - 14,344,679 480,811 (51,907) - 8,222,937 914,698 (833,083) - 11,313,414 524,457 - - 46,454,410 1,919,966 (884,990) - 80,507,222 (5,924) - - (5,924) (394,079) - - (7,715,206) (329,024) 49,956 - (5,446,389) (1,017,570) 810,476 - (8,746,291) (1,454,966) - - (30,603,996) (3,201,563) 860,432 - (52,517,806) 29,295,571 (1,281,597) (24,558) $ 42,177,771 $ 4,479,751 $ (24,558) $ 27,989,416 - $ 46,632,964 * The City implemented the provisions of GASB Statement No. 87, Leases, in the current year. In accordance with this Statement, leased assets have been added to the beginning balances shown above and a corresponding lease payable has been recorded for the same amount. 74 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Beginning Balance* Business -type activities Capital assets, not being depreciated Ending Additions Disposals Transfers Balance Land $ 9,060 $ - $ $ $ 9,060 Construction in progress 968,556 3,071,968 - (141,146) 3,899,378 977,616 3,071,968 - (141,146) 3,908,438 Capital assets, being depreciated/amortized: Leased land 2,473,049 - - - 2,473,049 Buildings 10,065,527 - - - 10,065,527 Non -building improvements 2,807,051 - (5,095) - 2,801,956 Machinery and equipment 1,575,071 60,560 (85,860) - 1,549,771 Infrastructure 13,565,461 752,731 (30,395) 141,146 14,428,943 30,486,159 813,291 (121,350) 141,146 31,319,246 Less accumulated depreciation/amortization for: Leased land (103,044) - (103,044) Buildings (2,996,237) (284,316) - - (3,280,553) Non -building improvements (1,751,359) (104,667) 5,095 - (1,850,931) Machinery and equipment (1,344,710) (128,572) 77,354 - (1,395,928) Infrastructure (6,985,529) (615,593) 30,142 - (7,570,980) (13,077,835) (1,236,192) 112,591 - (14,201,436) Total capital assets being depreciated/amortized, net 17,408,324 (422,901) (8,759) 141,146 17,117,810 Business -type activities capital assets, net $ 18,385,940 $ 2,649,067 $ (8,759) $ - $ 21,026,248 * The City implemented the provisions of GASB Statement No. 87, Leases, in the current year. In accordance with this Statement, leased assets have been added to the beginning balances shown above and a corresponding lease payable has been recorded for the same amount. 75 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Depreciation/amortization expense was charged to functions/programs of the primary government as follows: Depreciation/amortization of governmental activities by function General government $ 435,885 Public safety 514,626 Physical environment 826,515 Transportation 947,461 Cultural and recreation 477,076 Total governmental activities $ 3,201,563 Depreciation/amortization of business -type activities by function Golf course $ 263,620 Airport 963,568 Building 9,004 Total business -type activities 8. LONG-TERM DEBT $ 1,236,192 Revenue notes are secured by and payable from the revenues of the respective funds that issued them. The City entered into a nine (9) year loan agreement in 2012 with a local bank for $2,296,000 to provide financing to repave certain roads in the City and payoff an outstanding loan. The City pledged Local Option Gas Tax revenues to repay the note payable. The funds are accumulated in the Local Option Gas Tax Special Revenue fund for repayment of principal and interest. The City issued a nine (9) year, $3,096,000 Stormwater Utility Refunding Revenue Note, Series 2013 in December 2013. The City has pledged stormwater fee revenues for repayment of principal and interest. These proceeds and other stormwater fee revenues were used to totally advance refund all of the outstanding Stormwater Utility Revenue Bonds prior to September 30, 2014. As of September 30, 2022, there was no outstanding in -substance defeased debt. 76 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The following is a summary of governmental activities long-term debt transactions for the year ended September 30, 2022: Beginning Ending Due Within Balance Additions Deductions Balance One Year Governmental activities Notes from direct borrowings and direct placements $ 753,000 $ - $ (632,000) $ 121,000 $ 121,000 Compensated absences 1,555,540 636,027 (644,911) 1,546,656 106,894 Pollution remediation 91,200 - - 91,200 - Totals governmental activities $ 2,399,740 $ 636,027 $ (1,276,911) $ 1,758,856 $ 227,894 Notes pavable Florida Gas Tax Revenue Note, due in one final installment of $121,000 plus interest at 1.94% through 2023. $ 121,000 Annual debt service requirements to maturity for long-term debt are as follows: Governmental Activities Year Ended September 30, Principal Interest 2023 $ 121,000 $ 1,174 A pollution remediation obligation was recorded for a Florida Department of Environmental (FDEP) Order dated March 10, 1997. This was related to an incident of petroleum contamination at the Public Works Department on April 22, 1991. The City was named as the party responsible for the cleanup but FDEP determined the discharge is eligible under the Petroleum Cleanup Participation Program and will not compel site rehabilitation prior to funding becoming available from that program. The program has a funding cap of $400,000, with a 25% required cost share percentage. The City must also pay for a limited contamination assessment report sufficient to determine the extent of the contamination and cleanup. Based on the information available, the City estimated its expenditure to be $91,200 dependent on the extent of work that is eventually required and recorded a long-term liability of $91,200. This liability would generally be liquidated by the General Fund. 77 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The following is a summary of business -type activities long-term debt transactions for the year ended September 30, 2022: Beginning Ending Due Within Balance Additions Deductions Balance One Year Business -type activities Compensated absences $ 238,855 $ 30,256 $ (47,019) $ 222,092 - installment purchase 50,801 - (50,801) - - Totals business -type activities $ 289,656 $ 30,256 $ (97,820) $ 222,092 $ - For the governmental activities, compensated absences are generally liquidated by the General Fund. For business -type activities, compensated absences are allocated to and liquidated by the Golf Course, Airport or Building funds. 9. LEASES Lessee - The City is involved in two agreements as a lessee that qualify as a long-term lease agreements. Below is a summary of the nature of these agreements. The agreements qualify as an intangible, right -to - use assets and not financed purchases, as the City will not own the assets at the end of the contract terms and the noncancelable term of the agreements surpasses one year. Remaining Term of Agreements Asset Type Leased land 23 - 28 years The assets acquired through the lease are summarized as follows: Governmental Business -type Activities Activities Leased land $ 171,782 $ 2,473,049 Less accumulated amortization (5,924) (103,044) Net book value $ 165,858 $ 2,370,005 M* CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The net present value of future minimum payments as of September 30, 2022, were as follows: Governmental Activities Business -type Activities Year Ended September 30, Principal Interest Principal Interest 2023 $ 1,691 $ 5,104 $ 36,086 $ 73,233 2024 1,742 5,053 40,448 72,151 2025 1,794 5,001 45,039 70,937 2026 1,848 4,947 49,870 69,586 2027 2,107 4,892 54,950 68,090 2028 - 2032 14,931 23,341 360,437 312,394 2033 - 2037 23,766 20,598 531,436 248,559 2038 - 2042 35,041 16,389 747,764 156,464 2043 - 2047 49,305 10,316 575,075 35,200 2048 - 2050 37,915 2,321 - - Totals $ 170,140 $ 97,962 $ 2,441,105 $ 1,106,614 Lease liability activity for the year ended September 30, 2022, was as follows: Beginning Ending Due Within Balance * Additions Deductions Balance One Year Governmental activities Leases payable $ 171,782 $ - $ (1,642) $ 170,140 $ 1,691 Business -type activities Leases payable $ 2,473,049 $ - $ (31,944) $ 2,441,105 $ 36,086 * The City implemented the provisions of GASB Statement No. 87, Leases, in the current year. In accordance with this Statement, leases payable have been added to the beginning balances shown above and a corresponding lease asset has been recorded for the same amount. Lessor - The City is involved in six agreements as a lessor that qualify as long-term lease agreements. Below is a summary of these agreements. These agreements qualify as long-term lease agreements as the City will not surrender control of the assets at the end of the term and the noncancelable term of the agreements surpasses one year. Total lease revenue for the governmental and business -type activities for the year ended September 30, 2022 was $147,647 and $138,094, respectively. 79 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Governmental Activities Asset Type Cell phone towers Buildings Business -type Activities Asset Type Leased Land Buildings Remaining Term of Agreements 23 - 24 years 18 months 23 - 28 years 6 years Lease receivable activity for the year ended September 30, 2022, was as follows: Beginning Balance Additions Governmental activities Leases receivable $ 2,836,649 $ Business -type activities Leases receivable $ 2,848,714 $ Ending Deductions Balance - $ (55,157) $ 2,781,492 - $ (57,470) $ 2,791,244 Ee CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Regulated lease agreements - In accordance with GASB No. 87, the Airport does not recognize a lease receivable and a deferred inflow of resources for regulated leases. Regulated leases are certain leases that are subject to external laws, regulations, or legal rulings, e.g. the U.S. Department of Transportation and the Federal Aviation Administration, regulated aviation leases between airports and aeronautical users. The leasing operations of the Airport consist principally of the leasing of land, hangars, and office space. The lease agreements consist of both cancelable and noncancelable agreements and permit the Airport to periodically adjust rents and maximize operational flexibility. Leased land, hangars, and office space are leased on an exclusive basis. Minimum future rentals under such noncancelable lease agreements as of September 30, 2022 are as follows: Fiscal Year Ended Amount 2023 $ 371,225 2024 307,259 2025 279,234 2026 287,605 2027 296,226 2028 - 2032 1,619,682 2033 - 2037 1,236,894 2038 - 2042 864,557 2043 - 2045 312,979 Totals $ 5,575,661 The Airport recognized $356,762 of rental income for the year ended September 30, 2022. i(IM:J:IOU4:iWilk /J:/*1 The City is permitted by State law to levy taxes up to 10 mills on assessed valuation. The millage rate levied by the City for the fiscal year ended September 30, 2022, was 3.0043 mills. Total tax collections were approximately 96.7% of the total tax levy. The tax levy of the City is established by City Council. Under Florida law, the assessment of all properties and the collection of municipal taxes are provided by offices of the County's Property Appraiser and Tax Collector. Ad Valorem taxes are levied on property values as of January 1. The fiscal year for which taxes are levied begins October 1. Taxes are due November I and become delinquent on April 1. All taxes unpaid as of May 30 are subject to a tax certificate sale. Property tax revenues are recognized in the fiscal year for which they are levied and also become due and payable. E� CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 11. CONTINGENT LIABILITIES Various suits and claims are currently pending against the City. It is impossible for the City to accurately quantify the exposure involved given the jury's latitude in assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The City intends to vigorously defend against these lawsuits and believes it has a good chance of prevailing on their merits. The City is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial position of the City. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal and state governments. Any disallowed claims, including amounts already collected, may constitute a liability to the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. 12. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of or damage to and destruction of assets; errors and omissions; and natural disasters. The City purchases commercial insurance with various deductibles for different types of losses. The cost of this insurance is accounted for in the General Fund, Golf Course Fund, Airport Fund, and Building Fund. Settled claims have not exceeded this commercial coverage in the past three fiscal years. 13. BENEFIT PLANS Police Officer's Pension Plan Defined Benefit Pension Plan Plan Description. The Police Officers' Pension Plan is a Florida Statute Chapter 185 single -employer defined benefit plan. Only City police officers participate in the Police Pension Plan. The state provides a contribution to the Police Pension Plan through a distribution of funds collected from insurance premium taxes. The pension plan data provided in these financial statements are from the actuarial valuation as of October 1, 2021 to determine the required contribution for the fiscal year ending September 30, 2022. Although the Police Officers' Pension Plan provides separate reporting, which may be obtained in the Finance department, it is also a component unit (reporting as a Pension Trust Fund) of the City's financial reporting entity. Basis of Accounting. Financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due, and the employer has made formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. E CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Method Used to Value Investments. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. Investments that do not have an established market are reported at estimated fair value. Investments in securities of a single organization (excluding mutual funds and those issued or guaranteed by the U.S. government) held by the pension plan did not exceed five percent of the total plan assets. Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The plan's asset allocation policy is shown on the following pages. Concentrations. At September 30, 2022, the plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5 percent or more of the plan's fiduciary net position. Please see Note 3 for details of these concentrations. Plan Membership. Membership of the Plan consisted of the following at October 1, 2021, the date of the latest actuarial valuation: Inactive plan members or beneficiaries currently receiving benefits 21 Inactive plan members entitled to but not yet receiving benefits 11 Active plan members 39 Total membership 71 Benefit Provisions and Contribution Requirements. The Police Officers' Pension Plan provides retirement and disability benefits to plan members and beneficiaries. This plan is administered by a separate local Board of Trustees. Chapter 185, Florida Statutes, as amended governs all benefit provisions of the plan. Contribution requirements, in accordance with Chapter 185, Florida Statutes, are established by City ordinance, as provided in Chapter 58, Article III of the Sebastian City Code. The City Council has the authority to amend funding requirements. Contributions. Members contribute 8% of their salary. City and state contributions consist of the remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, over a period not exceeding 30 years. State contributions are reported as revenues and expenditures in the General Fund before being reported in the Pension Trust Fund. Rate of Return. For the year ended September 30, 2022, the annual money -weighted rate of return on pension plan investments, net of pension plan investment expense, was -15.63 percent. The money - weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. EI CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Net Pension Liability of the City. The components of the net pension liability of the City at September 30, 2022, were as follows: Total pension liability $ 24,257,517 Less: Plan fiduciary net position (18,482,915) City's net pension liability $ 5,774,602 Plan fiduciary net position as percentage of total pension liability 76.19% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of October 1, 2021 updated to September 30, 2022 (the measurement date) using the following actuarial assumptions applied to all measurement periods. Inflation 2.30% Salary increases Service based Discount rate 7.10% Investment rate of return 7.10% Mortality Rate Healthy Active Lives: Female: PubS.H-2010 (Below Median) for Employees, set forward one year. Male: PubS.H-2010 (Below Median) for Employees, set forward one year. Mortality Rate Healthy Retiree Lives: Female: PubS.H-2010 for Healthy Retirees, set forward one year. Male: PubS.H-2010 (Below Median) for Healthy Retirees, set forward one year. Mortality Rate Beneficiary Lives: Female: PubG.H-2010 (Below Median) for Healthy Retirees. Male: PubG.H- 2010 (Below Median) for Healthy Retirees, set back one year. Mortality Rate Disabled Lives: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees. All mortality rates are projected generationally with Mortality Improvement Scale MP-2018. The most recent actuarial experience study used to review the other significant assumptions was dated September 13, 2019. E� CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Long-term Expected Real Rate of Return. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce a long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2022 are summarized in the following table: Expected Long-term Money - Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 52.50% 5.56% 2.92% International equity 12.50% 4.36% 0.55% Fixed income 25.00% 1.24% 0.31% Real Estate 5.00% 4.24% 0.21% Master Limited Partnerships 5.00% 4.37% 0.22% Total 100.00% 4.21 % Inflation 2.26% Diversified portfolio additional returns 0.63% Investment rate of return 7.10% Not only is the time horizon longer for an actuarial valuation relative to the time horizon over which the above projected returns were generated, but also there is an additional correlation resulting from a diversified portfolio that will provide additional returns, as reflected above. Discount Rate. The discount rate used to measure the total pension liability was 7.10 percent. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. E s, CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.10 percent, as well as what the City's net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.10 percent) or one percentage point higher (8.10 percent) than the current rate. Net Pension Liability One Percent Current One Percent Decrease Discount Rate Increase 6.10% 7.10% 8.10% $ 8,674,748 $ 5,774,602 $ 3,361,246 Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Balances at September 30, 2021 Changes for the year: Service cost Interest on total pension liability Differences between expected and actual experience Assumption changes Benefit payments, including refunds of employee contributions Employer contributions State contributions Employee contributions Pension plan net investment loss Administrative expense Net changes Balances at September 30, 2022 Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 23,049,447 $ 21,543,215 $ 1,506,232 582,925 - 582,925 1,648,636 - 1,648,636 (199,190) - (199,190) (824,301) (824,301) - - 799,032 (799,032) - 227,003 (227,003) - 227,488 (227,488) - (3,419,334) 3,419,334 - (70,188) 70,188 1,208,070 (3,060,300) 4,268,370 $ 24,257,517 $ 18,482,915 $ 5,774,602 State statutes mandate that the State contribution be recorded as revenue to the General Fund and then paid to the Pension Trust Fund. M. CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended September 30, 2022, the City recognized pension expense of $1,387,143. At September 30, 2022, the City reported pension -related deferred outflows of resources and deferred inflows of resources from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Difference between expected and actual experience $ 397,911 $ 167,990 $ 229,921 Changes in assumptions 190,490 223,893 (33,403) Net difference between projected and actual earnings on pension plan investments 2,486,638 - 2,486,638 $ 3,075,039 $ 391,883 $ 2,683,156 Amounts reported as pension -related deferred outflows of resources and deferred inflows of resources will be recognized in pension expense as follows: Year Ended September 30, Amount 2023 $ 690,320 2024 494,040 2025 459,052 2026 1,039,744 Total $ 2,683,156 Payable to the Pension Plan. At September 30, 2022, the City had no amounts payable for contributions to the police officer's pension plan. M. CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Coastal Florida Public Employees Association Negotiated Defined Benefit Pension Plan Plan Description. The Communication Workers of America / International Typographical Union Negotiated Pension Plan (NPP), which began in 1967, is a multi -employer cost -sharing, defined benefit plan. The plan is available to any Coastal Florida Public Employees Association bargaining unit member and benefits are portable from one contributing employer to another. The plan is not a state or local governmental plan, is used to provide defined benefit pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers, has no predominant state or local governmental employer and issues audited financials following FASB guidelines, which can be obtained at http://www.cwaitu.com. The City of Sebastian approved the plan by Resolution No. R-01-36, effective April 29, 2001. There is currently no expiration date of the collective -bargaining agreement requiring contributions to the pension plan. The total number of governmental employees covered as of September 30, 2022, was 55. Normal Pension. Minimum age 65: 5 years of service credit required if any portion of service credit was earned after January 1, 1989. 10 years of service credit required if employees' coverage ended before January 1, 1989. Once the service credit amount is accrued, the employee is vested and cannot lose the right to a pension. Early Pension. Minimum age 62: 20 years of service credit required if employed after January 1, 1989, and 25 years of service credit required if employment ended before January I, 1993. Pension amounts are permanently reduced based on age on the effective date, because the payments are expected to be made for a longer period of time. Disability Pension. No minimum age and the pension amount is not reduced for age; there must be a Social Security Disability Award, 10 years of actual service credit and a contribution for covered employment must have been made within three calendar years preceding the entitlement date to Social Security Disability Pension. An application must be filed with the plan within 6 months of the Social Security Notice of Award date to receive pension retroactive to the Social Security entitlement date. Lump Sum Disability Benefit. If the employee has been awarded a Social Security Disability Award with the date of entitlement before May 1, 2009 and is vested, but not immediately eligible to receive any pension described above, the employee may be eligible for a lump sum disability benefit. Death Benefit. If the employee dies before becoming a pensioner and has at least $250 contributed on the employees' behalf, a lump sum death benefit equal to total contributions credited on the employees' behalf or 36 times the Normal Pension amount, if greater, will be paid to employees' beneficiary. If the employee is married at the time of death, the spouse will have the choice of a lump sum or a monthly survivor benefit. E.�3 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Withdrawal Benefit. If the employee did not earn enough service credit to qualify for a normal pension, the employee may be eligible for a lump sum withdrawal benefit, based on total contributions, after the employee has incurred a break in service. Benefit Provisions and Contribution Requirements: The NPP provides retirement and disability benefits to plan members and beneficiaries. The plan is administered at the plan office in Colorado Springs, Colorado. Contribution requirements are established by the CWA contract, effective date October 1, 2011, which is negotiated every 3 years, and approved by City Council. Benefit Provisions and Contribution Requirements. The NPP provides retirement and disability benefits to plan members and beneficiaries. The plan is administered at the plan office in Colorado Springs, Colorado. Contribution requirements are established by the CWA contract, effective date October 1, 2013, which is negotiated every 3 years, and approved by City Council. Employer Withdrawal Liability. Under federal law, employers who partially or completely withdraw from a multiemployer plan are assessed withdrawal liability for their proportionate share of the plan's unfunded vested liabilities as of the beginning of the year in which they withdraw. Withdrawal liability is usually paid in quarterly installments as determined by a statutory formula over a maximum of 20 years. Funding Policy. Administration costs of the pension plan are financed by the plan. The employer contribution rate, expressed as a percentage of compensation, was 9.0% for the 2020-2021 fiscal year. Employees do not contribute to this plan. Contributions which are equal to 100% of the required contribution for each year to the CWA Pension Plan are as follows: Year Ended September 30, 2018 2019 2020 2021 2022 Defined Contribution 401(a) Plan Amount $ 217,695 241,992 239,161 241,312 272,529 Plan Description. The ICMA Retirement Corporation's 401 Retirement Plan is a Defined Contribution Plan "qualified" under Section 401(a) of the Internal Revenue Code. Each participant has a plan account to which contributions are made. Plan benefits are based on the total amount of money in the employees' account at retirement or other eligible event. The plan is available to all management staff and may be rolled over to another "qualified" employer plan that accepts rollovers, or Traditional IRA's. Plan Participation. As of September 30, 2022, there were a total of 21 employees participating in the plan. Periodic Payments. Retirement benefits can be paid monthly, quarterly, semi-annual (at six-month intervals only) or annual payments until assets are fully paid out. Rollover. Retirement benefits can be rolled over to another employer plan (including a 457 deferred compensation plan) that accepts rollovers, or to a Traditional IRA. EC CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Lump Sum. Retirement benefits can be paid either partially or by total distribution of the employees' account balance. Annuities. Retirement benefits can be utilized to purchase an annuity. Benefit Provisions and Contribution Requirements. The 401 provides retirement benefits to plan members and beneficiaries. The plan is administered by the ICMA Retirement Corporation. Contribution requirements are established by the City of Sebastian, Management Benefit Package, revised October 1, 2006, and approved by the City Manager. Funding Policy. The administration costs of the pension plan are financed by the Plan. The employer contribution rate, expressed as a percentage of compensation, was 9% for the 2020-2021 fiscal year. Employees do not contribute to this Plan. Contributions which are equal to 100% of the required contribution for each year to the 401 Defined Contribution Plan are as follows: Year Ended September 30, 2018 2019 2020 2021 2022 14. OTHER POSTEMPLOYMENT BENEFITS Amount $ 142,347 151,754 163,374 174,006 184,900 In addition to the pension benefits described in Note 13, the City provides postemployment benefits pursuant to Section 112.0801, Florida Statutes. This permits participation in the health insurance program by retirees and their eligible dependents at a cost to the retiree that is no greater than the cost at which coverage is available for active employees. The City, by policy, has elected to provide qualified retirees with partial subsidy. In this respect, the City operates a single -employer plan. Employees are eligible to receive a partial subsidy from the Retiree Medical Plan upon retirement, if they are enrolled in the active medical plan immediately prior to retiring and achieved at least 20 years of service in a full time capacity. If eligible, the City pays 50% of the costs of single coverage group health insurance for up to 2 years after retirement. Such premiums are expected to be funded on a pay-as-you-go basis. An actuarial valuation of the City's liability for these benefits in accordance with GASB Statement No. 75 has not been performed. Inasmuch as the plan is only open to a small number of City employees, management has determined that the net other postemployment benefit liability would be immaterial to the financial statements taken as a whole. .O CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 15. FUND BALANCES AND NET POSITION In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies fund balances based primarily on the extent to which it is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balances of governmental funds is as follows: American Nonmajor Riverfront Stormwater Rescue Discretionary Transportation Governmental General Fund Redevelopment Utility Plan Sales Tax Improvements Funds Total Nonspendable: Prepaid items $ 127,153 $ 395 $ 15,607 $ $ $ $ $ 143,155 Inventories 74,839 - - - - - - 74,839 Permanent fund corpus - - - 420,405 420,405 Total nonspendable 201,992 395 15,607 - - - 420,405 638,399 Restricted for: Perpetualcare - - - 626,133 626,133 Infrastructure - 2,875,588 700,039 3,575,627 Redevelopment 627,490 - - - 627,490 Stormwater - 1,941,518 - 1,941,518 Law enforcement - 53,050 53,050 Economic environment - - - 22,200 - - - 22,200 Total restricted 627,490 1,941,518 22,200 2,875,588 1,379,222 6,846,018 Committed for: Capital projects - - - - - - 1,850 1,850 Recreational system development - - - - - - 318,551 318,551 Development of public parking 89,148 89,148 Total committed 409,549 409,549 Unassigned (deficit) 7,993,009 - - - - (342,697) (86,391) 7,563,921 Total fund balances (deficits), governmental funds $ 8,195,001 $ 627,885 $ 1,957,125 $ 22,200 $ 2,875,588 $ (342,697) $ 2,122,785 $ 15,457,887 91 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Fund Balance Deficit The Transportation Improvements fund, a major governmental fund, had a deficit in fund balance of $342,697 at September 30, 2022. The Capital Projects fund, a nonmajor governmental fund, had a deficit in fund balance of $86,391 at September 30, 2022. Both deficits will be eliminated when transfers budgeted from the discretionary sales tax fund are made, following vendor payments that were recorded as accounts payable at year end. Net Position Deficit The Golf Course fund, a major business -type fund, had a deficit in unrestricted net position of $1,320,330 at September 30, 2022. The deficit will be eliminated when the Golf Course repays the general fund for amounts advanced. 16. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of September 30, 2022, was as follows: Capital assets: Capital assets not being depreciated Capital assets being depreciated, net Related debt: Notes payable Leases payable Net investment in capital assets 17. COMMITMENTS AND CONTINGENCIES Contracts and Other Commitments Governmental Business -type Activities Activities $ 18,643,548 27,989,416 46,632,964 121,000 170,140 291,140 $ 3,908,438 17,117, 810 21,026,248 2,441,105 2,441,105 Total $ 22,551,986 45,107,226 67,659,212 121,000 2,611,245 2,732,245 $ 46,341,824 $ 18,585,143 $ 64,926,967 The City has various major contracts and other commitments outstanding as of September 30, 2022. Outstanding major contracts include completion of the Public Facilities Compound; Establishing Sewer Service to the Compound; Completing the Stormwater Master Plan; Improvements to the Stonecrop Drainage Area; Construction of Hangar D; Runway Rehabilitation Design and the CDBG Housing Repair Program. Major funding has also been committed toward Road Improvements; Sliplining Drainage Pipes; Sidewalk Replacements; Concha Dam Replacement; Gardenia Ditch Improvements; and the Schumann Drive Culvert Project. M CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements A summary of these projects at September 30, 2022 is as follows: Major contracts Public Facilities Compound Establish Sewer Service to Compound Stormwater Master Plan Stonecrop Drainage Area Construction of Hangar D Runway Rehabilitation Design CDBG Housing Repairs Total Major Commitments Road Improvements Sliplining Drainage Pipes Sidewalk Replacements Concha Dam Replacement Gardenia Ditch Improvements Schumann Drive Culvert Total 18. CORONAVIRUS (COVID-19) Total Paid as of Encumbered at Total Contract September 30, September 30, Price 2022 2022 $ 9,639,316 $ 9,150,734 $ 488,582 1,906,801 1,659,570 128,526 700,000 648,400 51,600 860,000 29,266 830,734 2,317,253 2,304,811 12,442 221,394 4,194 217,199 256,233 133,514 10,369 $ 15,900,997 $ 13,930,489 $ 1,739,452 Total Paid as of Encumbered at Total September 30, September 30, Commitments 2022 2022 $ 500,000 $ - $ - 250,000 - 71,090 190,000 8,200 16,720 700,000 - - 750,000 - 8,697 750,000 - - $ 940,000 $ 8,200 $ 87,810 In March 2020, the World Health Organization declared the novel coronavirus outbreak (COVID-19) to be a global pandemic. While the pandemic has resulted in an increase in the demands on the City to provide services to its patrons, the Federal Government has also provided significant resources to help mitigate the impacts of COVID-19. Over the past two years, the City has been awarded funds from various sources to be used to respond to the impacts of the COVID-19 pandemic. Of the amount awarded, approximately $517,000 was expended and recognized as revenue during the current fiscal year. With these additional Federal resources, at this time management does not believe that the negative financial impact of the pandemic, if any, would be material to the City. 93 This page intentionally left blank. REQUIRED SUPPLEMENTARY INFORMATION 95 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Changes in Net Pension Liability and Related Ratios Total pension liability Service cost Interest on total pension liability Change in excess state money Changes of benefit terms Differences between expected and actual experience Changes of assumptions Contributions - buy back Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability, beginning of year Total pension liability, end of year Plan fiduciary net position Employer contributions State contributions Employee contributions Buy back contributions Pension plan net investment income (loss) Benefit payments Administrative expense Net change in plan fiduciary net position Plan fiduciary net position, beginning of year Plan fiduciary net position, end of year Net pension liability Plan fiduciary net position as a percentage of total pension liability Covered payroll Net pension liability as a percentage of covered payroll Fiscal Year Ended September 30, 2022 2021 2020 $ 582,925 $ 546,747 $ 600,789 1,648,636 1,539, 609 1,451,768 (199,190) 249,038 408,904 274,475 (447,786) (824,301) (794,272) (684,963) 1,208,070 1,815,597 1,328,712 23,049,447 21,233,850 19,905,138 24,257,517 23,049,447 21,233,850 799,032 686,778 703,814 227,003 206,017 208,645 227,488 220,466 229,327 (3,419,334) 4,116,810 974,847 (824,301) (794,272) (684,963) (70,188) (70,384) (67,989) (3,060,300) 4,365,415 1,363,681 21,543, 215 17,177,800 15,814,119 18,482,915 21,543,215 17,177,800 $ 5,774,602 $ 1,506,232 $ 4,056,050 76.19% 93.47% 80.90% $ 2,843,600 $ 2,755,823 $ 2,866,586 203.07% 54.66% 141.49% W. Fiscal Year Ended September 30, 2019 2018 2017 2016 2015 2014 2013 $ 609,880 $ 589,149 $ 479,778 $ 418,143 $ 403,611 $ 396,147 $ 367,653 1,371,857 1,270,670 1,179,511 1,027,558 979,259 914,243 853,018 - (84,863) - - 22,218 24,386 - - - 613,973 - (4,316) - - (25,912) 164,601 20,758 59,175 (240,633) - 22,520 - 382,825 626,069 223,200 - 52,749 - - - - (617,282) (700,733) (495,629) (493,765) (496,363) (452,892) (465,435) 1,413,812 1,238,824 2,181,216 1,637,180 886,976 881,884 755,236 18,491,326 17,252,502 15,071,286 13,434,106 12,547,130 11,665,246 10,910,010 19,905,138 18,491,326 17,252,502 15,071,286 13,434,106 12,547,130 11,665,246 595,045 525,296 337,201 322,998 320,179 401,103 396,603 198,770 188,923 168,628 169,027 145,700 147,868 145,961 223,495 204,854 177,585 167,309 161,270 160,494 154,683 52,749 - - - - - - 261,888 1,028,549 1,371,657 1,067,139 (60,326) 951,910 1,029,818 (617,282) (700,733) (495,629) (493,765) (496,363) (452,892) (465,435) (67,867) (82,088) (45,633) (28,025) (39,673) (27,815) (32,153) 646,798 1,164,801 1,513,809 1,204,683 30,787 1,180,668 1,229,477 15,167,321 14,002,520 12,488,711 11,284,028 11,253,241 10,072,573 8,843,096 15,814,119 15,167,321 14,002,520 12,488,711 11,284,028 11,253,241 10,072,573 $ 4,091,019 $ 3,324,005 $ 3,249,982 $ 2,582,575 $ 2,150,078 $ 1,293,889 $ 1,592,673 79.45% 82.02% 81.16% 82.86% 84.00% 89.69% 86.35% $ 2,793,692 $ 2,560,670 $ 2,438,012 $ 2,263,866 $ 2,154,612 $ 2,106,767 $ 2,131,399 146.44% 129.81% 133.30% 114.08% 99.79% 61.42% 74.72% 97 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Changes in Net Pension Liability and Related Ratios Notes to the Schedule of Changes in the City's Net Pension Liability and Related Ratios Changes in assumptions - For measurement date 09/30/2021, the investment rate of return was lowered from 7.20% to 7.10%, net of investment related expenses. Changes in assumptions - For the measurement date 09/30/2020, as mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the rates used in Milliman's July 1, 2019 FRS valuation report for special risk employees, with appropriate risk and collar adjustments made based on plan demographics. Changes in assumptions - For the measurement date 09/30/2019, amounts reported as changes of assumptions resulted of an Experience Study dated September 13, 2019, the Board approved the following changes: investment return assumption was decreased from 7.30% to 7.20% per year compounded annually, net of investment related expenses. The following changes to demographic assumptions were made: updates to the future salary increase assumption, updates to assumed rates of retirement, updates to the assumed rates of disability, updates to assumed rates of withdrawal. Changes in assumptions - For the measurement date 09/30/2017, amounts reported as changes of assumptions resulted from the following changes: the investment return assumption has been lowered from 7.45% to 7.30% per year. As mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed from the rates used by the Florida Retirement System actuary in the July 1, 2015 actuarial valuation to the rates used in the July 1, 2016 actuarial valuation for special risk lives. Changes in benefit terms - For the measurement date 09/30/2017, amounts reported as changes of benefit terms resulted from Ordinance 0-17-03, adopted and effective August 23, 2017, amended/implemented the following benefit provisions: member contribution rate, benefit accrual rate, and cost -of -living adjustment. Changes in assumptions - For the measurement date 09/30/2016, amounts reported as changes of assumptions resulted from the following changes: the investment return assumption was lowered from 7.60% to 7.45%. As a result of Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the assumptions used by the Florida Retirement System for special risk employees. The inflation assumption rate was lowered from 3.00% to 2.30%, matching the long-term inflation assumption utilized by the Plan's investment consultant. Changes in assumptions - For measurement date 09/30/2015, amounts reported as changes of assumptions were resulted from lowering the investment return assumption from 7.75% to 7.60%. CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Investment Returns Fiscal Year Ending Annual Return September 30, (1) 2013 11.51% 2014 9.42% 2015 -0.45% 2016 9.39% 2017 10.90% 2018 7.35% 2019 1.79% 2020 6.04% 2021 23.63% 2022 -15.63% (') Annual money -weighted rate of return, net of investment expenses CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined City State Deficiency Covered of Covered September 30, Contribution Contribution Contribution (Excess) Payroll Payroll 2013 $ 506,560 $ 396,603 $ 145,961 $ (36,004) $ 2,131,399 25.46% 2014 524,585 401,103 147,868 (24,386) 2,106,767 26.06% 2015 596,502 320,179 145,700 130,623 2,154,612 21.62% 2016 667,764 322,998 169,027 175,739 2,263,866 21.73% 2017 768,277 337,201 168,628 262,448 2,438,012 20.75% 2018 673,456 525,296 188,923 (40,763) 2,560,670 27.89% 2019 793,409 595,045 198,770 (406) 2,793,692 28.41% 2020 871,442 703,814 208,645 (41,017) 2,866,586 31.83% 2021 835,014 686,778 206,017 (57,781) 2,755,823 32.40% 2022 932,701 799,032 227,003 (93,334) 2,843,600 36.08% 100 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Notes to Schedule of Contributions Valuation date October 1, 2020 Notes Actuarially determined contribution amounts are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding method Individual entry age normal actuarial cost Amortization method Level percentage of pay, closed Remaining amortization period 13 Years (as of October 1, 2022) Mortality Healthy Active Lives: Female: RP2000 Generational, 100% Combined Healthy White Collar, Scale BB; Male: RP2000 Generational, 10% Combined Healthy White Collar / 90% Combined Healthy Blue Collar, Scale BB Healthy Inactive Lives: Female: RP2000 Generational, 100% Annuitant White Collar, Scale BB; Male: RP2000 Generational, 10% Annuitant White Collar / 90% Annuitant Blue Collar, Scale BB Disabled Lives: Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale; Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale The above assumption rates were mandated by Chapter 2015-157, Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in Milliman's July 1, 2018 FRS valuation report for special risk employees. We feel this assumption sufficiently accommodates future mortality improvements. Interest rate 7.20% per year compounded annually, net of investment related expenses Salary increases Credited Service Assumption First year 16.00% Years 1- 3 6.50% Years 4 - 13 5.80% 14 Years and Greater 3.80% Payroll growth 1.51% (prior year 2.36%) for purposes of amortizing the Unfunded Actuarial Accrued Liability. This assumption cannot exceed the ten-year average payroll growth, in compliance with Part VII of Chapter 112, Florida Statutes. 101 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Notes to Schedule of Contributions Final salary load Final salary is increased with a load assumption as shown below based on credited service on 10/1/2014: Service on Load 10/01/2014 Assumption 5 or more years 20% 2 - 5 Years 10% Less than 1 year 0% Retirement rates Members with less than 25 years of credited service are assumed to retire at the following rates: Age Assumption 50 30% 51-54 5% 55 50% 56 50% 57 100% Members with at least 25 years of credited service are assumed to retire immediately. Disability rates Age based rates with increasing probability of disablement at higher ages. A sample of rates are shown below: Age Assumption 30 0.24% 40 0.42% 50 1.08% 60 5.40% Additionally, it is assumed that 75% of disablements and active Member deaths are service related. Termination rates Credited Service Assumption 0 - 2 Years 15.00% 3 - 14 Years 4.00% 15 years and Greater 0.00% Actuarial asset method All assets are valued at market value with an adjustment made to uniformly spread actuarial investment gains and losses (as measured by actual market value investment return against expected market value investment return) over a four-year period. 102 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Coastal Florida Public Employees Association Pension Plan Schedule of Employer Contributions Fiscal Year Ending September 30, 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Annual Required Contributions 202,612 204,361 217,916 200,889 204,035 217,695 241,992 239,161 241,312 272,529 Notes to Schedule of Employer Contributions - Coastal Florida Public Employees Association Pension Plan Critical Status. Under federal pension law, a plan generally will be considered to be in "critical" status if either the funded percentage of the plan is less than 65 percent or if certain other tests are met. If a pension plan enters critical status, the trustees of the plan are required to adopt a rehabilitation plan. Rehabilitation plans establish steps and benchmarks for pension plans to improve their funding status over a specified period of time. The Plan's actuary has certified that for the 2022 Plan year, the Plan was in critical status because the Plan has a deficit in the minimum funding standard account. The Board of Trustees adopted a rehabilitation plan on March 8, 2010, that for new pensions: eliminates the 60 month minimum guarantee in the Life/5 pension option; increases the minimum age for Early Pension from age 60 to 62 (with 20 years of service credit); removes the Early Pension subsidy by increasing the reduction factors; discontinues the offering of retroactive pension payments; and required 5 years of service credit to vest for participants reaching normal retirement age before a break in service. A mandatory increase in contributions is not required under the Rehabilitation Plan, but decreases in contribution rates or the exclusion of covered employees are not permitted. A copy of the rehabilitation plan may be obtained be contacting the Coastal Pension Plan office. 103 This page intentionally left blank. 104 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 105 CITY OF SEBASTIAN, FLORIDA Combining Balance Sheet Nonmajor Governmental Funds September 30, 2022 Assets Cash and cash equivalents Investments Due from other governments Total assets Liabilities Negative equity in pooled cash Accounts payable and accrued liabilities Unearned revenue Total liabilities Fund balances (deficits) Nonspendable Restricted Committed Unassigned (deficit) Total fund balances (deficits) Total liabilities and fund balances Special Revenue Funds Debt Service Stormwater Local Law Utility Option Parking Recreation Enforcement Revenue Gas Tax In -Lieu -of Impact Fee Forfeiture Bonds 2003 $ 631,362 $ - $ 254,965 $ 42,448 $ - 89,248 63,586 10,602 68,677 - - - $ 700,039 $ 89,248 $ 318,551 $ 53,050 $ 100 100 700,039 - - 53,050 - 89,148 318,551 - 700,039 89,148 318,551 53,050 $ 700,039 $ 89,248 $ 318,551 $ 53,050 $ 106 Capital Projects Funds Permanent Total Stormwater Nonmajor Capital Capital Utility Governmental Projects Improvements Improvements Cemetery Funds $ $ 1,850 $ 141,115 $ 261,248 $ 1,332,988 - - 785,290 948,726 13,528 - 2,004 - 84,209 $ 13,528 $ 1,850 $ 143,119 $ 1,046,538 $ 2,365,923 $ 8,299 $ $ - $ $ 8,299 91,620 143,119 234,739 - - 100 99,919 143,119 243,138 420,405 420,405 - 626,133 1,379,222 1,850 - 409,549 (86,391) - (86,391) (86,391) 1,850 1,046,538 2,122,785 $ 13,528 $ 1,850 $ 143,119 $ 1,046,538 $ 2,365,923 107 CITY OF SEBASTIAN, FLORIDA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2022 Revenues Intergovernmental Impact fees Charges for services Fines Investment earnings Other revenues Contributions and donations Total revenues Expenditures Current: General government Public safety Physical environment Transportation Debt service: Principal Interest and fiscal charges Capital outlay Total expenditures Revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances (deficits), beginning of year Fund balances (deficits), end of year Special Revenue Funds Debt Service Stormwater Local Law Utility Option Parking Recreation Enforcement Revenue Gas Tax In -Lieu -of Impact Fee Forfeiture Bonds 2003 $ 756,984 $ $ - $ $ - 179,400 - - 21,315 5,107 742 2,641 414 397 - 16,828 - 1,500 - 762,091 17,570 182,041 23,229 397 3,061 33,900 - 237,000 395,000 5,801 6,834 4,870 - - 281,571 - - 3,061 401,834 480,520 17,570 182,041 20,168 (401,437) 220,605 (19,124) (121,276) - (19,124) - (121,276) - 220,605 461,396 17,570 60,765 20,168 (180,832) 238,643 71,578 257,786 32,882 180,832 $ 700,039 $ 89,148 $ 318,551 $ 53,050 $ - W. Capital Projects Funds Permanent Total Stormwater Nonmajor Capital Capital Utility Governmental Projects Improvements Improvements Cemetery Funds $ 146,613 $ $ 19,083 $ $ 922,680 - - 179,400 164,032 164,032 - 21,315 8,637 17,938 - 18,328 1,850 1,850 146,613 1,850 19,083 172,669 1,325,543 426,814 426,814 - - - - 3,061 20,304 630,834 90,000 741,138 - - - 33,900 632,000 - - - - 12,635 595,912 446,978 7,853 6,457 1,062,070 1,022,726 467,282 638,687 96,457 2,911,618 (876,113) (465,432) (619,604) 76,212 (1,586,075) 911,355 467,282 372,432 - 1,971,674 - - - (140,400) 911,355 467,282 372,432 - 1,831,274 35,242 1,850 (247,172) 76,212 245,199 (121,633) - 247,172 970,326 1,877,586 $ (86,391) $ 1,850 $ - $ 1,046,538 $ 2,122,785 109 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Local Option Gas Tax Special Revenue Fund For the Year Ended September 30, 2022 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Intergovernmental $ 750,128 $ 750,128 $ 756,984 $ 6,856 Investment earnings 945 945 5,107 4,162 Total revenues 751,073 751,073 762,091 11,018 Expenditures Current: Transportation 44,300 44,300 33,900 (10,400) Debt service: Principal 237,000 237,000 237,000 - Interest and fiscal charges 5,801 5,801 5,801 - Capital outlay 4,870 4,870 4,870 - Total expenditures 291,971 291,971 281,571 (10,400) Revenues over expenditures 459,102 459,102 480,520 21,418 Other financing uses Transfers out (459,102) (471,826) (19,124) (452,702) Net changes in fund balance - (12,724) 461,396 474,120 Fund balance, beginning of year 238,643 238,643 238,643 - Fund balance, end of year $ 238,643 $ 225,919 $ 700,039 $ 474,120 110 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parking In -Lieu -Of Special Revenue Fund For the Year Ended September 30, 2022 Revenues Investment earnings Other revenues Total revenues Other financing sources (uses) Transfers out Net change in fund balance Fund balance, beginning of year Fund balance, end of year Original Final Budget Budget Actual Actual Over (Under) Final Budget $ 141 $ 141 $ 742 $ 601 2,928 2,928 16,828 13,900 3,069 3,069 17,570 14,501 (3,069) (3,069) - (3,069) - - 17,570 11,432 71,578 71,578 71,578 - $ 71,578 $ 71,578 $ 89,148 $ 11,432 111 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Recreation Impact Fee Special Revenue Fund For the Year Ended September 30, 2022 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Impact fees $ 150,000 $ 150,000 $ 179,400 $ 29,400 Investment earnings 10,000 10,000 2,641 (7,359) Total revenues 160,000 160,000 182,041 22,041 Other financing sources (uses) Transfers in 65,000 161,074 - 161,074 Transfers out (225,000) (321,074) (121,276) (199,798) Total other financing sources (uses) (160,000) (160,000) (121,276) (38,724) Net change in fund balance - - 60,765 60,765 Fund balance, beginning of year 257,786 257,786 257,786 - Fund balance, end of year $ 257,786 $ 257,786 $ 318,551 $ 60,765 112 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Law Enforcement Forfeiture Special Revenue Fund For the Year Ended September 30, 2022 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Fines $ 1,000 $ 1,000 $ 21,315 $ 20,315 Investment earnings 250 250 414 164 Other revenues - - 1,500 1,500 Total revenues 1,250 1,250 23,229 21,979 Expenditures Current: Public safety - - 3,061 3,061 Revenues over expenditures 1,250 1,250 20,168 18,918 Other financing sources (uses) Transfers out (1,250) (1,250) - 1,250 Net change in fund balance - - 20,168 20,168 Fund balance, beginning of year 32,882 32,882 32,882 - Fund balance, end of year $ 32,882 $ 32,882 $ 53,050 $ 20,168 113 This page intentionally left blank. 114 CAPITAL ASSETS 115 CITY OF SEBASTIAN, FLORIDA Comparative Schedule by Source Capital Assets Used in the Operation of Governmental Funds September 30, 2022 Governmental funds capital assets Land Construction in progress Leased land Buildings Non -building improvements Machinery and equipment Infrastructure Total governmental funds capital assets Investment in governmental funds capital assets (by sources) Federal grants State grants County grants General Fund Law enforcement trust fund Recreational impact fee Stormwater utility fee Riverfront redevelopment Cemetery trust fund Donations Sales taxes Motor fuel taxes Revenue bond debt Parking in Lieu of Fee Capital projects Total investment in governmental funds capital assets 2022 2021 $ 9,123,041 $ 9,123,041 9,520,507 3,759,159 171,782 171,782 14, 344, 679 14, 344, 679 8,222,937 7,794,033 11, 313, 414 11,231,799 46,454,410 45,929,953 $ 99,150,770 $ 92,354,446 $ 4,779,766 $ 4,734,302 3,127,709 3,125,704 507,031 507,031 11,050,543 11,417,046 117,439 117,460 3,853,634 3,725,331 8,947,728 8,806,652 3,073,201 3,061,899 822,603 816,146 2,965,996 2,965,996 39,096,649 32,290,652 6,113,260 6,089,258 13,815,028 13,816,786 90,621 90,621 789,562 789,562 $ 99,150,770 $ 92,354,446 116 CITY OF SEBASTIAN, FLORIDA Schedule by Function and Activity Capital Assets Used in the Operation of Governmental Funds September 30, 2022 Machinery Leased Non -Building and Functions / Programs Land Land Buildings Improvements Equipment Infrastructure Total General government: City manager $ $ $ $ $ 85,092 $ $ 85,092 City clerk 4,003 4,003 Administrative services 1,100 2,294 3,394 MIS 5,841 87,545 1,718,861 1,812,247 Facilities maintenance 1,091,573 30,724 875,670 1,997,967 Community development - 84,426 - 23,103 107,529 Non -departmental 4,474,459 6,184,991 126,504 204,370 598,890 11,589,214 Total general government 4,474,459 7,366,831 245,873 2,913,393 598,890 15,599,446 Public safety: Administration 9,560 3,799,272 98,173 430,400 - 4,337,405 Road patrol - - - 3,064,973 3,064,973 Code enforcement - 64,818 64,818 Investigations 4,871 416,006 32,262 453,139 Communications - 26,927 - 26,927 Building department - - - 6,295 - 6,295 Total public safety 9,560 3,799,272 103,044 4,009,419 32,262 7,953,557 Physical environment: Stormwater - - 12,991 2,080,419 20,479,737 22,573,147 Cemetery 572,181 201,153 220,025 55,918 92,167 1,141,444 Total physical environment 572,181 201,153 233,016 2,136,337 20,571,904 23,714,591 Transportation: Central garage - 130,489 114,192 226,254 674 471,609 Roads and drainage 47,125 166,907 1,036,134 1,210,283 22,396,214 24,856,663 Total transportation 47,125 297,396 1,150,326 1,436,537 22,396,888 25,328,272 Economic environment: Non -departmental 2,308,392 - 1,040,590 - - - 3,348,982 Cultural and recreation: Parks and recreation 1,711,324 171,782 1,639,437 6,490,678 817,728 2,854,466 13,685,415 Total $ 9,123,041 $ 171,782 $ 14,344,679 $ 8,222,937 $ 11,313,414 $ 46,454,410 89,630,263 Construction in progress 9,520,507 Total $ 99,150,770 117 CITY OF SEBASTIAN, FLORIDA Schedule of Changes by Function and Activity Capital Assets Used in the Operation of Governmental Funds September 30, 2022 Capital Assets Capital Assets October 1, Transfers Transfers September 30, Functions / Programs 2021 Additions Disposals In Out 2022 General government: City manager $ 49,954 $ 35,138 $ $ $ $ 85,092 City clerk 4,003 - 4,003 Administrative services 3,394 - 3,394 MIS 1,856,073 204,500 248,326 1,812,247 Facilities maintenance 1,958,233 72,380 1,363 31,283 1,997,967 Community development 129,277 - 21,748 - 107,529 Non -departmental 11,589,350 - 136 - 11,589,214 Total general government 15,590,284 312,018 271,573 31,283 15,599,446 Public safety: Administration 4,328,552 8,853 - - 4,337,405 Road patrol 3,066,261 312,824 314,112 3,064,973 Code enforcement 64,818 - - 64,818 Investigations 413,478 84,301 44,640 453,139 Communications 26,927 - - 26,927 Building department 6,295 - - 6,295 Total public safety 7,906,331 405,978 358,752 - 7,953,557 Physical environment: Stormwater 22,475,467 143,081 46,303 34,524 33,622 22,573,147 Cemetery 1,134,987 6,457 - - - 1,141,444 Total physical environment 23,610,454 149,538 46,303 34,524 33,622 23,714,591 Transportation: Central garage 477,731 - 35,603 31,283 1,802 471,609 Roads and drainage 24,765,885 234,847 143,167 33,622 34,524 24,856,663 Total transportation 25,243,616 234,847 178,770 64,905 36,326 25,328,272 Economic environment: Non -departmental 3,355,544 - 6,562 - - 3,348,982 Cultural and recreation: Parks and recreation 12,889,058 817,585 23,030 1,802 - 13,685,415 Total 88,595,287 1,919,966 884,990 101,231 101,231 89,630,263 Construction in progress 3,759,159 5,761,348 - - - 9,520,507 Total $ 92,354,446 $ 7,681,314 $ 884,990 $ 101,231 $ 101,231 $ 99,150,770 118 STATISTICAL SECTION 119 This page intentionally left blank. 120 CITY OF SEBASTIAN, FLORIDA 0 Statistical Section Table of Contents This part of the City's Annual Comprehensive Financial Report presents detailed information to assist the user in understanding what the financial statements, note disclosures and required supplementary information say about the overall economic condition of the City of Sebastian, Florida. Page Financial Trends These schedules contain trend information to help the reader understand and evaluate how the City's financial condition, performance and well-being have changed over time. 122 Revenue Capacity These schedules contain information to help the reader assess the City's ability to generate its most significant local revenue source, the property tax. 134 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and its ability to issue additional debt in the future. 140 Demographic and These schedules present various demographic and economic Economic Information indicators to help the reader understand the environment within which the City operates and how they affect the City's financial activities. 146 Operating Information These schedules contain information about the City's operations and resources to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 150 Sources: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Report for the relevant year. The City implemented GASB Statement No. 34 in 2001; schedules presenting government -wide information include data beginning in that year. 121 CITY OF SEBASTIAN, FLORIDA Net Position by Component Last Ten Fiscal Years Fiscal Year 2022 2021 2020 2019 2018 Governmental activities Net investment in capital assets $ 46,341,824 $ 41,252,989 $ 37,919,832 $ 37,080,967 $ 37,568,980 Restricted 7,282,425 10,142,786 10,637,069 8,976,174 6,419,900 Unrestricted 3,445,378 2,320,211 1,103,683 2,056,430 1,649,796 Total governmental activities net position $ 57,069,627 $ 53,715,986 $ 49,660,584 $ 48,113,571 $ 45,638,676 Business -type activities Net investment in capital assets $ 18,585,143 $ 15,862,090 $ 16,263,098 $ 16,995,851 $ 14,972,789 Unrestricted (deficit) (436,561) (933,213) (1,017,263) (654,928) (777,422) Total business -type activities net position $ 18,148,582 $ 14,928,877 $ 15,245,835 $ 16,340,923 $ 14,195,367 Primary Government Net investment in capital assets $ 64,926,967 $ 57,115,079 $ 54,182,930 $ 54,076,818 $ 52,541,769 Restricted 7,282,425 10,142,786 10,637,069 8,976,174 6,419,900 Unrestricted 3,008,817 1,386,998 86,420 1,401,502 872,374 Total primary government net position $ 75,218,209 $ 68,644,863 $ 64,906,419 $ 64,454,494 $ 59,834,043 122 Table 1- Unaudited Fiscal Year 2017 2016 2015 2014 2013 $ 37,461,026 $ 35,886,087 $ 35,220,857 $ 35,210,526 $ 32,038,749 5,113,543 5,209,372 4,997,724 5,115,627 5,839,440 1,236,088 3,615,777 3,467,014 3,330,400 4,577,440 $ 43,810,657 $ 44,711,236 $ 43,685,595 $ 43,656,553 $ 42,455,629 $ 13,384,969 $ 11,989,666 $ 10,517,895 $ 10,439,804 $ 10,846,501 (1,008,976) (717,053) 67,779 (103,116) (306,497) $ 12,375,993 $ 11,272,613 $ 10,585,674 $ 10,336,688 $ 10,540,004 $ 50,845,995 $ 47,875,753 $ 45,738,752 $ 45,650,330 $ 42,885,250 5,113,543 5,209,372 4,997,724 5,115,627 5,839,440 227,112 2,898,724 3,534,793 3,227,284 4,270,943 $ 56,186,650 $ 55,983,849 $ 54,271,269 $ 53,993,241 $ 52,995,633 123 CITY OF SEBASTIAN, FLORIDA Changes in Net Position Last Ten Fiscal Years Expenses Governmental activities: General government Public safety Physical environment Transportation Economic environment Cultural and recreation Interest on debt Total governmental activities expenses Business -type activities: Golf Course Airport Building Total business -type activities expenses Total primary government expenses Program revenue Governmental activities: Charges for services: General government Public safety Physical environment Cultural and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenue Business -type activities: Charges for services: Golf Course Airport Building Operating grants and contributions Capital grants and contributions Total business -type activities program revenue Total primary government program revenue Net(expense)revenue Governmental activities Business -type activities Total primary government net (expense)revenue Fiscal Year 2022 2021 2020 2019 2018 $ 5,158,135 $ 4,907,738 $ 5,071,184 $ 3,970,541 $ 3,926,479 7,703,234 6,453,141 6,856,836 6,613,707 6,227,299 3,259,272 2,848,779 2,534,320 3,106,764 3,431,933 2,153,685 2,136,727 2,037,807 2,022,117 1,949,882 291,969 256,771 315,985 402,986 238,597 1,606,579 1,481,096 1,402,691 1,434,296 1,279,635 14,644 19,522 28,711 38,539 56,523 20,187,518 18,103,774 18,247,534 17,588,950 17,110,348 1,659,271 1,427,667 1,260,189 4,347,127 24,534,645 1,575,587 1,339,582 1,544,157 4,459,326 22,563,100 1,551,926 1,282,084 1,869,767 4,703,777 22,951,311 1,533,749 1,336,180 715,846 3,585,775 21,174,725 1,555,853 1,328,258 664,066 3,548,177 20,658,525 769,115 769,986 684,938 532,721 466,261 217,282 157,625 130,502 147,121 74,216 2,132,049 2,119,101 2,037,874 2,161,464 1,064,659 69,714 70,623 41,316 54,769 52,160 2,066,434 2,093,941 1,726,719 803,092 1,776,070 4,910,478 4,265,728 3,647,329 251,088 181,050 10,165,072 9,477,004 8,268,678 3,950,255 3,614,416 1,812,201 1,498, 561 1,525,184 1,400, 939 1,257,047 688,723 578,916 552,789 536,442 583,310 1,257,746 1,377,978 937,839 864,068 911,643 - - - 46,771 115,907 3,295,019 560,394 471,888 2,670,116 2,120,953 7,053,689 4,015,849 3,487,700 5,518,336 4,988,860 17,218,761 13,492,853 11,756,378 9,468,591 8,603,276 (10,022,446) (8,626,770) (9,978,856) (13,638,695) (13,495,932) 2,706,562 (443,477) (1,216,077) 1,932,561 1,440,683 (7,315,884) (9,070,247) (11,194,933) (11,706,134) (12,055,249) 124 Fiscal Year 2017 2016 2015 2014 Table 2 - Unaudited 2013 $ 3,379,369 $ 3,285,607 $ 3,015,536 $ 2,923,398 $ 2,784,485 6,549,037 5,476,136 5,164,197 4,908,374 4,928,203 3,769,377 2,538,752 2,759,461 2,310,539 2,039,380 2,279,149 1,861,946 2,024,814 1,828,569 1,845,429 106,577 364,675 194,630 247,891 155,214 1,326,245 1,191,488 1,293,246 1,229,369 1,232,345 63,141 82,943 100,468 235,071 368,432 17,472, 895 14,801,547 14, 552, 352 13, 683, 211 13, 353,488 1,537,332 1,584,214 1,409,829 1,406, 770 1,377,039 1,361,134 1,197,549 1,038,361 1,031,464 1,146,905 586,752 546,649 531,087 465,717 417,887 3,485,218 3,328,412 2,979,277 2,903,951 2,941,831 20,958,113 18,129,959 17,531,629 16,587,162 16,295,319 362,631 374,581 372,255 407,068 314,158 124,800 98,446 80,763 76,132 67,297 1,021,038 1,049,735 1,087,642 1,073,015 1,101,864 48,781 53,959 67,940 67,371 70,982 250,292 323,101 345,937 186,295 332,627 947,274 809,932 994,546 739,785 770,123 2,754,816 2,709,754 2,949,083 2,549,666 2,657,051 1,058,939 1,135, 357 1,333,189 1,277,660 1,302,441 499,321 516,403 457,318 470,703 481,759 747,950 810,069 712,620 700,751 706,964 116,055 - - - - 1,566,737 841,668 702,154 235,215 230,868 3,989,002 3,303,497 3,205,281 2,684,329 2,722,032 6,743,818 6,013,251 6,154,364 5,233,995 5,379,083 (14,718,079) (12,091,793) (11,603,269) (11,133,545) (10,696,437) 503,784 (24,915) 226,004 (219,622) (219,799) (14,214,295) (12,116,708) (11,377,265) (11,353,167) (10,916,236) continued... 125 CITY OF SEBASTIAN, FLORIDA Changes in Net Position Last Ten Fiscal Years General revenue and other changes in net position Governmental activities: Property taxes, levied for general purposes Public utility taxes Franchise fees Intergovernmental - unrestricted Investment earnings Miscellaneous Transfers Total governmental activities Business -type activities: Investment earnings Gain on sale of capital assets Miscellaneous Transfers Total business -type activities Total primary government general revenue Change in net position Governmental activities Business -type activities Total primary government change in net position Fiscal Year 2022 2021 2020 2019 2018 $ 4,988,598 $ 4,991,306 $ 4,270,497 $ 4,325,759 $ 4,153,194 3,172,766 3,030,261 2,940,406 2,882,460 2,808,172 1,571,571 1,384,529 1,316,849 1,343,744 1,316,792 3,526,318 3,066,490 2,541,474 7,109,496 6,887,664 142,209 61,247 180,988 378,657 216,185 468,361 271,276 381,999 277,970 312,401 (493,736) (122,937) (106,344) (204,496) (370,457) 13,376,087 12,682,172 11,525,869 16,113,590 15,323,951 17,582 3,582 10,377 8,499 8,234 1,825 - 4,268 - - 493,736 122,937 106,344 204,496 370,457 513,143 126,519 120,989 212,995 378,691 13,889, 230 12,808,691 11,646,858 16,326,585 15,702, 642 3,353,641 4,055,402 1,547,013 2,474,895 1,828,019 3,219,705 (316,958) (1,095,088) 2,145,556 1,819,374 $ 6,573,346 $ 3,738,444 $ 451,925 $ 4,620,451 $ 3,647,393 126 Table 2 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 $ 4,147,115 $ 3,942,048 $ 3,594,210 $ 3,248,113 $ 3,221,304 5,945,386 5,762,921 5,555,270 5,320,051 5,123,046 1,271,403 1,257,430 1,241,515 1,190,233 1,118,886 2,616,522 2,466,546 2,365,137 2,208,700 2,063,450 135,614 77,317 65,256 43,293 74,650 290,269 316,239 240,179 338,901 315,296 (588,809) (705,067) 2,988 (14,822) (37,734) 13, 817, 500 13,117,434 13, 064, 555 12,334,469 11, 878, 898 10,787 6,787 5,368 1,484 4,391 - - 20,602 - 274 588,809 705,067 (2,988) 14,822 37,734 599,596 711,854 22,982 16,306 42,399 14,417,096 13,829,288 13,087,537 12, 350, 775 11,921,297 (900,579) 1,025,641 1,461,286 1,200,924 1,182,461 1,103,380 686,939 248,986 (203,316) (177,400) $ 202,801 $ 1,712,580 $ 1,710,272 $ 997,608 $ 1,005,061 concluded 127 CITY OF SEBASTIAN, FLORIDA Fund Balances, Governmental Funds Last Ten Fiscal Years Fiscal Year 2022 2021 2020 2019 2018 Governmental funds General fund: Nonspendable $ 201,992 $ 341,851 $ 182,803 $ 94,564 $ 234,852 Restricted - 110,994 88,782 103,900 77,185 Committed - - - - Assigned - 12,157 12,157 12,157 13,871 Unassigned 7,993,009 6,224,793 5,419,259 5,988,440 5,047,473 Total General fund 8,195,001 6,689,795 5,703,001 6,199,061 5,373,381 All other governmental funds: Nonspendable 436,407 1,001,453 1,085,337 1,036,571 1,542,466 Restricted 6,846,018 9,034,265 9,471,281 7,850,346 4,822,199 Committed 409,549 329,364 223,723 553,172 707,667 Unassigned (deficit) (429,088) (210,876) - (5,730) (3,048) Total all other governmental funds 7,262,886 10,154,206 10,780,341 9,434,359 7,069,284 Total governmental funds $ 15,457,887 $ 16,844,001 $ 16,483,342 $ 15,633,420 $ 12,442,665 128 Table 3 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 $ 342,505 $ 227,651 $ 316,036 $ 369,329 $ 368,564 63,016 46,262 38,544 7,969 28,632 12,350 10,840 8,692 7,129 7,020 4,089,275 5,526,675 5,289,322 5,348,905 5,065,242 4,507,146 5,811,428 5,652,594 5,733,332 5,469,458 941,061 996,778 928,758 1,390,073 1,323,838 4,131,416 4,193,653 4,181,787 3,756,950 4,647,950 995,144 977,868 815,688 625,007 589,364 (26,370) (129,401) (58,618) (64,875) - 6,041,251 6,038,898 5,867,615 5,707,155 6,561,152 $ 10,548,397 $ 11,850,326 $ 11,520,209 $ 11,440,487 $ 12,030,610 129 CITY OF SEBASTIAN, FLORIDA Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years Fiscal Year 2022 2021 2020 2019 2018 Revenues Taxes $ 8,161,364 $ 8,021,567 $ 7,210,903 $ 7,208,219 $ 6,961,366 Franchise fees 1,571,571 1,384,529 1,316,849 1,343,744 1,316,792 Licenses and permits 189,643 195,920 150,240 146,812 165,922 Intergovernmental 10,312,702 9,176,859 7,739,019 7,996,330 8,648,064 Impact fees 179,400 214,500 143,875 129,550 141,050 Charges for services 2,894,772 2,868,088 2,691,093 2,698,117 1,443,123 Fines 103,745 53,327 53,297 51,146 48,251 Investment earnings 142,209 61,247 180,988 378,657 216,185 Contributions and donations 468,361 271,276 381,999 277,970 55,670 Other revenues 11,128 34,800 32,628 37,796 312,401 Total revenues 24,034,895 22,282,113 19,900,891 20,268,341 19,308,824 Expenditures Current: General government 4,706,858 4,457,302 4,498,327 3,536,154 3,492,883 Public safety 6,854,359 6,314,019 6,275,459 6,035,675 5,659,861 Physical environment 2,398,846 1,858,226 1,633,435 1,871,853 2,195,332 Transportation 1,199,856 1,197,835 1,129,260 1,142,412 1,079,509 Economic environment 291,969 256,771 315,985 402,986 238,597 Cultural and recreation 1,131,280 986,734 955,164 1,027,371 875,172 Debt service: Principal 632,000 620,000 611,000 601,000 590,000 Lease principal 1,642 - - - - Interest 17,788 23,927 35,023 45,846 56,523 Capital outlay 7,692,675 6,083,703 3,490,972 2,209,793 2,856,222 Total expenditures 24,927,273 21,798,517 18,944,625 16,873,090 17,044,099 Revenues over (under) expenditures (892,378) 483,596 956,266 3,395,251 2,264,725 Other financing sources (uses) Transfers in 8,099,451 5,632,516 3,280,101 2,451,428 4,427,037 Transfers out (8,593,187) (5,755,453) (3,386,445) (2,655,924) (4,797,494) Total other financing sources (uses) (493,736) (122,937) (106,344) (204,496) (370,457) Net change in fund balances $ (1,386,114) $ 360,659 $ 849,922 $ 3,190,755 $ 1,894,268 Debt service as a percentage of noncapital expenditures' 3.8% 4.1% 4.2% 4.4% 4.6% 1 To calculate the ratio, divide the total debt service expenditures (principal plus interest) by total noncapital expenditures (the difference between the total expenditures and capitalized capital outlay expenditure). 130 Table 4 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 $ 10,738,778 $ 10,326,654 $ 9,782,109 $ 9,123,879 $ 8,894,880 1,271,403 1,257,430 1,241, 515 1,190, 233 1,118, 886 135,900 136,614 147,219 138,564 45,500 2,991,190 2,709,066 2,742,950 2,373,695 2,411,395 102,700 163,800 281,450 168,350 169,000 1,353,009 1,391,495 1,397, 395 1,431,101 1,462, 522 96,842 73,059 63,035 54,140 60,190 135,614 77,317 65,256 43,293 78,411 45,420 80,581 48,124 36,801 22,406 290,269 316,239 241,597 338,901 315,296 17,161,125 16,532,255 16,010,650 14,898,957 14,578,486 2,943,790 3,053,554 2,717,049 2,575,605 2,447,893 5,134,388 4,968,258 4,666,343 4,623,060 4,425,000 2,565,532 1,316,697 1,498,706 1,110,788 1,075,162 1,333,927 1,168,919 1,187,871 1,165,004 1,158,945 73,491 331,589 161,545 144,612 122,730 927,374 849,789 893,394 888,795 847,781 931,000 1,935,000 1,567,000 2,306,000 1,307,000 68,512 92,907 108,678 413,995 393,447 3,896,231 1,780,358 3,133,330 2,246,399 2,115,561 17,874, 245 15,497,071 15,933,916 15,474,258 13,893, 519 (713,120) 1,035,184 76,734 (575,301) 684,967 7,184,858 3,694,279 4,989,726 3,903,204 3,598,949 (7,773,667) (4,399,346) (4,986,738) (3,918,026) (3,636,683) (588,809) (705,067) 2,988 (14,822) (37,734) $ (1,301,929) $ 330,117 $ 79,722 $ (590,123) $ 647,233 7.2% 14.8% 13.1% 20.6% 14.4% 131 CITY OF SEBASTIAN, FLORIDA Program Revenues by Function/Program Last Ten Fiscal Years Program revenues Governmental activities: General government Public safety Physical environment Transportation Economic environment Cultural and recreation Total governmental activities Business -type activities: Charges for services: Golf Course Airport Building Total business -type activities Total primary government Fiscal Year 2022 2021 2020 2019 2018 $ 5,787,477 $ 5,689,371 $ 4,749,501 $ 1,096,978 $ 1,997,400 470,102 393,259 399,361 444,199 346,239 2,132,049 2,119,101 2,037,874 2,161,464 1,064,659 1,041,474 990,150 896,751 13,295 12,908 484,856 - - - - 249,114 285,123 185,191 234,319 193,210 10,165,072 9,477,004 8,268,678 3,950,255 3,614,416 1,812,201 1,498,561 1,525,184 1,401,260 1,355,652 3,983,742 1,139,310 1,024,677 3,253,008 2,704,263 1,257,746 1,377,978 937,839 864,068 928,945 7,053,689 4,015,849 3,487,700 5,518,336 4,988,860 $ 17,218,761 $ 13,492,853 $ 11,756,378 $ 9,468,591 $ 8,603,276 132 Table 5 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 $ 390,921 $ 479,395 $ 534,524 $ 413,727 $ 471,299 334,270 306,381 254,381 246,010 233,309 1,021,038 1,049,735 1,087,642 1,073,015 1,101,864 687,310 656,484 643,146 565,692 560,713 - - - 15,501 - 321,277 217,759 429,390 235,721 289,866 2,754,816 2,709,754 2,949,083 2,549,666 2,657,051 1,170,591 1,135,357 1,333,189 1,277,660 1,302,441 2,070,461 1,358,071 1,159,472 705,918 712,627 747,950 810,069 712,620 700,751 706,964 3,989,002 3,303,497 3,205,281 2,684,329 2,722,032 $ 6,743,818 $ 6,013,251 $ 6,154,364 $ 5,233,995 $ 5,379,083 133 CITY OF SEBASTIAN, FLORIDA Table 6 - Unaudited Tax Revenues by Source Governmental Funds For the Last Ten Fiscal Years (Rate per $1,000 of assessed value) Public Property Millage Tax Year Fiscal Year Utility z Taxes 1 Total Rate 2012 2013 $ 2,534,434 $ 3,221,304 $ 5,755,738 3.7166 2013 2014 2,581,427 3,248,113 5,829,540 3.7166 2014 2015 2,638,711 3,594,210 6,232,921 3.8556 2015 2016 2,686,322 3,942,048 6,628,370 3.8556 2016 2017 2,708,980 4,147,115 6,856,095 3.8000 2017 2018 2,808,172 4,153,194 6,961,366 3.4000 2018 2019 2,882,460 4,325,759 7,208,219 3.1514 2019 2020 2,940,406 4,270,497 7,210,903 2.9399 2020 2021 3,030,261 4,991,306 8,021,567 3.1514 2021 2022 3,172,766 4,988,598 8,161,364 3.0043 1 Property taxes comprise the City's largest and most significant own -source revenue. z Public utility taxes include a 10% tax on electric, water, gas and propane purchases, plus a communication services tax. 134 CITY OF SEBASTIAN, FLORIDA Direct and Overlapping Property Tax Rates For the Last Ten Fiscal Years (Rate per $1,000 of taxable value) Table 7 - Unaudited City Direct Rates Overlapping Rates County School Board Tax Fiscal Basic Debt Total Total Basic Debt ' Year Year Rate Service Direct County' Rate Service Total Other Z 2012 2013 3.7166 0.0000 3.7166 6.2572 7.9230 0.3900 8.3130 1.3546 2013 2014 3.7166 0.0000 3.7166 5.6207 8.1160 - 8.1160 1.7128 2014 2015 3.8556 0.0000 3.8556 5.6868 7.9950 7.9950 1.7126 2015 2016 3.8556 0.0000 3.8556 5.9468 7.9550 7.9550 1.6993 2016 2017 3.8000 0.0000 3.8000 5.9755 7.4100 7.4100 1.5170 2017 2018 3.4000 0.0000 3.4000 6.1214 7.0530 7.0530 1.5390 2018 2019 3.1514 0.0000 3.1514 6.1086 6.7930 6.7930 1.5396 2019 2020 2.9399 0.0000 2.9399 6.1698 6.5690 6.5690 1.4091 2020 2021 3.1514 0.0000 3.1514 5.9006 6.3960 6.3960 1.3929 2021 2022 3.0043 0.0000 3.0043 5.9006 6.2680 6.2680 1.2933 Note: Tax rates are uniformly applied to taxable values based on a single millage rate determined by each taxing entity. The millage rate is expressed as $1.00 per $1,000 of the taxable value. 1 Millage includes General Fund, MSTUs, Emergency Services District and Land Bonds Z All Special Taxing Districts Source: Indian River County Property Tax Collector's Office 135 CITY OF SEBASTIAN, FLORIDA Actual and Estimated Value of Taxable Property For the Last Ten Fiscal Years Real Property Personal Property Tax Fiscal Assessed Estimated Assessed Estimated Year Year Value Actual Value Value Actual Value 2012 2013 $ 1,273,059,710 $ 1,591,324,639 $ 48,922,492 $ 48,922,492 2013 2014 1,210,328,690 1,512,910,863 47,410,545 47,410,545 2014 2015 1,267,035,970 1,583,794,963 53,045,209 53,045,209 2015 2016 1,363,105,220 1,703,881,525 55,646,868 55,646,868 2016 2017 1,447,311,640 1,809,139,550 59,305,756 59,305,756 2017 2018 1,578,743,546 1,973,429,433 62,277,711 62,277,711 2018 2019 1,705,459,458 2,131,824,323 66,819,663 66,819,663 2019 2020 1,843,910,442 2,304,888,053 73,492,650 73,492,650 2020 2021 2,089,301,313 2,611,626,641 76,063,937 76,063,937 2021 2022 2,338,149,496 2,922,686,870 88,760,233 88,760,233 Source: Indian River County Property Appraiser 136 Table 8 - Unaudited Less: Total Total Total Ratio of Tax -Exempt Taxable Direct Tax Estimated Taxable to Property Value Rate Actual Value Actual Value $ 444,524,142 $ 877,458,060 3.7166 $ 1,640,247,130 53.5% 437,040,114 820,699,121 3.7166 1,560,321,408 52.6% 435,071,311 885,009,868 3.8556 1,636,840,172 54.1% 451,939,888 966,812,200 3.8556 1,759,528,393 55.0% 468,930,126 1,037,687,270 3.8000 1,868,445,306 55.5% 486,428,425 1,154,592,832 3.4000 2,035,707,144 56.7% 509,133,351 1,263,145,770 3.1514 2,198,643,986 57.5% 533,734,358 1,383,688,734 2.9399 2,378,380,703 58.2% 581,830,114 1,583,535,136 3.1514 2,687,690,578 58.9% 607,432,125 1,819,477,604 3.0043 3,011,447,103 60.4% 137 CITY OF SEBASTIAN, FLORIDA Principal Property Taxpayers Current Year and Nine Years Ago Taxpayer Florida Power & Light (Utility/Electric) Comcast of Florida, Inc. (Communications) Wal-Mart Stores, Inc. (Retail) Park Place Community, LLC (Rental/Retail) Sebastian Senior Real Estate, LLC (Group Home) Hartwell Groves, Inc. (Agriculture) BW US 1, Inc. (Commercial) Real Sub, LLC CSGBSH Sebastian, LLC MPA Sebastian, LLC CR512 Shopping Center Bellsouth Communications (Utility/Telephone) Pelican Isles (Housing) Sebastian Inlet (Restaurant/Hotel) WinnDixie Shopping Center (Retail) Total Taxable Value Source: Indian River County Property Appraiser Taxable Value $ 39,458,587 12,684,850 8,793,720 8,418,594 7,244,050 6,554,793 5,717,965 5,243,586 5,241,210 5,214,745 $ 104,572,100 $ 1,819,477,604 2022 Fiscal Year Rank 1 2 3 4 5 6 7 8 9 10 Percentage of Total City Taxable Taxable Value Value 2.17 % $ 13,865,501 0.70 - 0.48 8,370,920 0.46 6,686,739 0.40 - 0.36 3,975,240 0.31 5,589,340 0.29 - 0.29 0.29 - - 4,910,100 4,742,812 3,891,480 3,297,870 - 3,256,080 5.75 % $ 58,586,082 $ 877,458,060 Table 9 - Unaudited 2013 Fiscal Year Percentage of Total City Taxable Rank Value 1 1.58 % 2 0.95 3 0.76 7 0.45 4 0.64 5 0.56 6 0.54 8 0.44 9 0.38 10 0.37 6.67 % 138 CITY OF SEBASTIAN, FLORIDA Property Tax Levies and Collections For the Last Ten Fiscal Years Table 10 - Unaudited Collected within the Fiscal Year of the Levy Total Collections to Date Taxes Levied Delinquent and Tax Fiscal forthe Percentage Penalty Tax Percentage Year Year Fiscal Year Amount of Levy Collections Amount of Levy 2012 2013 $ 3,261,161 $ 2,947,248 96.63% $ 7,733 $ 2,954,981 90.61% 2013 2014 3,050,210 2,975,299 96.77% 754 2,976,053 97.57% 2014 2015 3,412,244 3,295,549 96.28% 2,241 3,297,790 96.65% 2015 2016 3,727,641 3,530,235 95.00% 72,789 3,603,024 96.66% 2016 2017 3,943,212 3,726,976 95.00% 77,898 3,804,874 96.49% 2017 2018 3,925,616 3,703,536 94.00% 83,126 3,786,662 96.46% 2018 2019 3,980,678 3,861,686 97.00% 79,857 3,941,543 99.02% 2019 2020 4,067,907 3,791,174 93.00% 76,083 3,867,257 95.07% 2020 2021 4,683,490 4,470,263 95.00% 63,371 4,533,634 96.80% 2021 2022 4,761,264 4,536,864 95.00% 66,069 4,602,933 96.67% Source: Indian River County Property Appraiser and Department of Revenue, Certification of Final Taxable Value, DR-422. 139 CITY OF SEBASTIAN, FLORIDA Ratios of Outstanding Debt By Type For the Last Ten Fiscal Years Table 11- Unaudited Business -Type Activities Roadway Infrastructure Stormwater Golf Course Total Percentage Fiscal Improvement Sales Tax Utility Revenue Capital Primary of Personal Year Notes Bonds/Noted Bonds/Notes Lease Government Income 2013 $ 2,099,000 $ 4,600,000 $ 3,215,000 $ $ 9,914,000 0.0013% 2014 1,896,000 2,730,000 2,982,000 7,608,000 0.0008% 2015 1,689,000 1,722,000 2,630,000 6,041,000 0.0006% 2016 1,478,000 353,000 2,275,000 4,106,000 0.0003% 2017 1,263,000 - 1,912,000 254,453 3,429,453 0.0003% 2018 1,044,000 1,541,000 206,167 2,791,167 0.0002% 2019 820,000 1,164,000 156,171 2,140,171 0.0002% 2020 591,000 782,000 104,403 1,477,403 0.0002% 2021 358,000 395,000 50,801 803,801 0.0001% 2022 121,000 - - 121,000 z 1 The Infrastructure Sales Tax and Stormwater Utility Revenue Bonds were refunded in 2014 with Bank Notes. z Information not yet available. Per Capita 447 341 267 193 142 113 85 58 38 38 140 This page intentionally left blank. 141 CITY OF SEBASTIAN, FLORIDA Legal Debt Margin Information For the Last Ten Fiscal Years Legal Debt Margin as a Percentage of Debt Limit Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Fiscal Year 2022 2021 2020 2019 $ 90,973,880 $ 79,176,757 $ 74,102,711 $ 69,183,437 121,000 753,000 1,373,000 1,984,000 $ 90,852,880 $ 78,423,757 $ 72,729,711 $ 67,199,437 Legal Debt Margin Calculation for Fiscal Year 2022 0.13% 0.95% 1.85% 2.87% Assessed value $ 2,426,909,729 Less: Exempt property (607,432,125) Taxable Value 1,819,477,604 Debt limit (5% of taxable value) 90,973,880 Debt applicable to limit: Revenue bonds/notes 121,000 Total net debt applicable to limit 121,000 Legal debt margin $ 90,852,880 Direct and Overlapping Governmental Activities Debt - General Obligations Bonds The City of Sebastian has no overlapping general obligation bonded debt for the year ended September 30, 2022 and only uses Local Option Gas Taxes and Discretionary Sales Taxes to repay the outstanding revenue notes. Property taxes are not used for any debt service payments. 142 Table 13 - Unaudited Fiscal Year 2018 2017 2016 2015 2014 2013 $ 63,157,289 $ 57,729,642 $ 48,340,610 $ 48,340,610 $ 44,250,493 $ 41,034,956 2,585,000 3,175,000 6,041,000 6,041,000 7,608,000 9,914,000 $ 60,572,289 $ 54,554,642 $ 42,299,610 $ 42,299,610 $ 36,642,493 $ 31,120,956 4.09% 5.50% 12.50% 12.50% 17.19% 24.16% 143 CITY OF SEBASTIAN, FLORIDA Pledged Revenue Coverage For the Last Ten Fiscal Years Stormwater Utility Revenue Bonds, Series 2003 Debt Service Table 14 - Unaudited Fiscal Gross Year Revenues' Principal Interest Total Coverage 2013 $ 1,007,221 $ 290,000 $ 148,048 $ 438,048 2.30 2014 - - - - - 2015 - - - - - 2016 - - - - - 2017 - - - - - 2018 - - - - - 2019 - - - - - 2020 - - - - - 2021 - - - - - 2022 - - - - - Note: Detail regarding the City's outstanding debt can be found in the notes to the financial statements. 1 Total revenues including charges for services, rents and interest. 2 Required coverage was 1.35. Bank notes were used in 2013 to refund the bonds 144 This page intentionally left blank. 145 CITY OF SEBASTIAN, FLORIDA Demographic and Economic Statistics For the Last Ten Calendar Years Personal Income (thousands Year Population of dollars)' 2013 22,188 $ 7,731,263 $ 2014 22,296 9,139,902 2015 22,622 10,055,169 2016 23,137 10,380,777 2017 24,192 11,312,198 2018 24,630 11,972,663 2019 25,168 12,924,659 2020 25,658 13,750,177 2021 25,454 15,565,785 2022 25,915 4 Per Capita Median Personal Household School Unemployment Income' Income' Enrollment 2 Rate' 54,448 $ 44,326 6,739 8.8 63,140 47,548 6,034 6.5 68,653 49,887 5,930 6.1 71,181 49,813 6,132 6.2 73,274 51,797 6,122 4.3 76,059 52,243 6,459 3.9 80,818 61,193 6,186 3.2 84,607 72,934 6,118 5.9 95,109 61,351 5,868 4.6 4 4 5,484 3.1 Sources: 1 Florida Research & Economic Database (FRED). Information available for Indian River County Only. z Indian River County School Board 3 Indian River County Property Appraiser 4 Information not yet available. Note: School enrollment consists of Sebastian River High School, Sebastian River Middle School, Liberty Magnet, Treasure Coast Elementary, Pelican Island Elementary, Sebastian Elementary, Storm Grove Middle School and Sebastian Charter Junior High School. 146 Table 15 - Unaudited Property Total State Taxes Taxable Unemployment Per Property Rate Capita Value 3 6.9 $ 145.18 $ 877,458,060 5.6 145.68 820,699,121 4.8 158.88 885,009,868 4.8 170.38 966,812,200 3.7 171.43 1,037,687,270 3.3 168.62 1,154, 592, 83 2 2.7 173.25 1,263,145,770 7.2 170.40 1, 383, 688, 734 4.8 196.05 1,583,535,136 2.7 177.62 1, 819, 477, 604 147 CITY OF SEBASTIAN, FLORIDA Principal Employers Current Year and Nine Years Ago Employer Indian River Medical Center (Healthcare) School District of Indian River County (Government) Indian River County (Government) Publix Supermarkets (Food/Beverage) Piper Aircraft, Inc. (Manufacturer) Wal-Mart (Retail) Sebastian River Medical Center (Healthcare) Visiting Nurse Association (Healthcare) John's Island (Residential/Resort) Indian River Estates (Retirement/Life care) City of Vero Beach (Government) CVS Warehouse/Distribution (Distribution) Disney Vero Beach (Resort Hotel) Saint Edward's School (Education) City of Sebastian (Government) Captain Hirams (Restaurant/Resort) Flight Safety International (Education) B&W Quality Growers (Agricultural) Vero Beach Hotel and Spa Grand Harbor Management (Developer) Sun Ag, Inc. (Agriculture) Medical Data Systems (Collection Agency) Employees 2,112 2,039 1,455 1,380 980 806 750 500 495 486 374 336 279 223 188 174 170 142 135 125 2022 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 13,149 Total Average County Employees 50,929 Source: Indian River County Community Development Report. Note: Principal employers information available for Indian River County Only. Percentage of Total County Employment 4.15 % 4.00 2.86 2.71 1.92 1.58 1.47 0.98 0.97 0.95 0.73 0.66 0.55 0.44 0.37 0.34 0.33 0.28 0.27 0.25 0.00 0.00 25.81 Employees 1,699 2,013 1,348 1,092 750 701 576 401 550 350 460 276 281 171 174 162 253 225 175 11,657 59,304 Table 16 - Unaudited 2013 Rank 2 1 3 4 5 6 7 10 8 11 9 14 12 18 17 20 13 15 16 Percentage of Total County Employment 2.86 % 3.39 2.27 1.84 1.26 1.18 0.97 0.68 0.93 0.59 0.78 0.47 0.47 0.00 0.29 0.29 0.27 0.00 0.00 0.43 0.38 0.30 19.65 148 This page intentionally left blank. 149 CITY OF SEBASTIAN, FLORIDA Full -Time Equivalent City Government Employees By Function/Program For the Last Ten Fiscal Years Full-time Equivalent Employees as of September 30 Function 2022 2021 2020 2019 2018 General government City council 2.5 2.5 2.5 2.5 2.5 City manager 2.0 2.0 2.0 2.0 2.0 City clerk 2.5 2.5 2.5 2.5 2.5 City attorney 1.0 1.0 1.0 - - Administrative Services 6.0 6.0 6.0 6.0 6.0 Management information 6.0 5.0 5.0 5.0 5.0 Audio/visual - - - - - Facilities maintenance 3.0 4.0 4.0 3.0 3.0 Community development 5.0 5.0 5.0 4.0 4.0 Public safety Police 65.0 64.0 64.0 64.0 64.0 Building 9.5 8.5 7.5 7.5 7.5 Code enforcement 3.0 3.0 3.0 3.0 3.0 Transportation Roads and drainage 10.0 10.0 10.0 9.5 9.5 Fleet management 3.0 3.0 3.0 3.5 3.5 Airport 2.5 1.5 1.5 1.5 2.0 Physical environment Cemetery 2.0 2.0 2.0 2.0 2.0 Stormwater utility 15.5 13.5 13.5 14.5 14.5 Cultural and recreation Leisure services 16.0 15.0 16.0 21.0 21.0 Golf course 9.0 9.0 9.0 9.0 11.0 Total 163.5 157.5 157.5 160.5 163.0 Source: City of Sebastian, Florida 2012-2022 Annual Budgets Method: Using 1.0 for each full-time employee and 0.5 for each part-time and seasonal employee. 150 Table 17 - Unaudited Full-time Equivalent Employees as of September 30 2017 2016 2015 2014 2013 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.0 2.0 2.0 2.5 3.0 5.0 5.0 3.0 6.0 4.0 5.5 5.5 5.0 2.0 2.0 2.0 2.0 3.0 2.5 1.0 - - - 2.5 3.5 5.0 5.0 4.0 3.0 2.0 4.0 4.0 3.0 57.5 57.5 57.0 57.0 55.5 5.0 5.0 5.0 5.0 5.0 3.0 3.0 3.0 3.0 3.0 11.5 11.0 10.0 10.0 10.0 3.5 3.5 3.5 3.5 3.5 3.0 1.0 1.0 1.0 2.0 1.5 2.0 2.0 2.0 2.0 8.0 9.0 9.0 9.0 9.0 18.0 19.0 20.0 20.0 20.0 13.0 10.0 10.0 10.0 10.0 147.5 141.5 146.5 146.5 142.5 151 CITY OF SEBASTIAN, FLORIDA Operating Indicators By Function/Program For the Last Ten Fiscal Years Fiscal Year Function 2022 2021 2020 2019 2018 General government Number of annexations approved 4 1 Acres of annexed property 49.2 - - 1,118 Purchase orders issued 387 350 350 293 355 Public Safety Police Physical arrests 276 363 397 525 516 Traffic violations 3,011 2,448 2,350 4,627 3,678 Parking violations 25 17 37 30 55 Building New construction permits issued 229 255 178 170 167 Estimated value of construction (in millions) $ 62.9 $ 649.5 $ 46.9 $ 42.4 $ 39.8 Transportation Asphalt for road maintenance (tons) 44 127 64 188 120 Physical environment Cemetery Cemetery internments 97 91 75 74 60 Grave deeds sold 106 61 62 59 30 Stormwater Swales maintained (miles) 150 150 150 150 150 Ditches maintained (miles) 80 80 80 80 80 Road crossings maintained 50 50 50 50 50 Cultural and recreation Program participants 3,490 3,970 4,371 6,823 6,495 Number of discount cards 784 711 693 690 643 Number of golf course memberships 190 121 152 134 123 Average daily golf revenue $ 4,961 $ 4,117 $ 4,179 $ 3,837 $ 3,100 Sources: City of Sebastian Police Department, Growth Management, Public Works, Golf Course and Building Department. 1 New commercial and residential only. 152 Table 18 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 2 - - - - 4.00 289 328 254 242 233 356 258 287 347 440 3,192 3,065 3,725 4,587 4,491 49 73 60 29 80 147 191 142 175 170 $ 37.2 $ 43.4 $ 40.6 $ 40.0 $ 35.9 20 20 10 20 30 62 61 71 67 65 29 39 43 47 38 300 300 300 280 280 80 75 75 50 50 70 68 68 68 50 6,268 7,280 7,647 7,571 8,113 657 631 653 653 710 119 127 93 84 86 $ 3,100 $ 3,100 $ 3,653 $ 3,500 $ 3,569 153 CITY OF SEBASTIAN, FLORIDA Capital Asset Statistics By Function/Program For the Last Ten Fiscal Years Fiscal Year Function 2022 2021 2020 2019 2018 General Government Square footage occupied 21,500 21,500 21,500 21,500 21,500 Departmental vehicles 3 3 3 3 6 Public Facilities Site square footage 379,068 - - - Public safety Police stations 1 1 1 1 1 Police department Square footage 25,600 25,600 25,600 25,600 25,600 Building department Square footage 2,500 2,500 2,500 2,500 2,500 Police vehicles 72 78 78 78 71 Building inspector vehicles 5 4 4 4 4 Transportation Streets (miles) 156 156 156 156 156 Streetlights 1 1,100 1,100 1,100 1,100 1,100 Airport vehicles 2 3 3 3 5 Public service vehicles 14 17 17 16 13 Physical environment Public service vehicles 19 18 18 18 18 Cultural and recreation Parks vehicles 8 8 8 8 5 Recreation centers 2 2 2 2 2 Park acreage 315.01 315.01 315.01 315.01 315.01 Recreation center square footage 4,859 4,859 4,859 4,859 4,859 Park maintenance vehicles - 9 9 9 - Golf course vehicles - - - Sources: City of Sebastian Administrative Services Department and Park and Recreation Division 1 This number represents actual unmetered street lights in the City (source: Florida Power & Light - January billing). 154 Table 19 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 21,500 21,500 21,500 21,500 21,500 6 4 5 5 6 1 1 1 1 1 25,600 25,600 25,600 25,600 25,600 2,500 2,500 2,500 2,500 2,500 71 70 66 62 61 4 4 4 3 3 156 156 156 156 156 1,100 1,085 1,085 1,085 1,080 4 4 3 1 1 12 12 12 15 17 19 17 17 10 10 5 6 18 18 18 2 2 2 2 2 315.01 315.01 315.01 315.01 315.01 4,859 4,859 4,859 4,859 4,859 12 12 12 9 12 1 1 155 This page intentionally left blank. 156 INTERNAL CONTROL AND COMPLIANCE 157 This page intentionally left blank. 158 Rehmann EMPOWER YOUR PURPOSE' INDEPENDENT AUDITORS' MANAGEMENT LETTER March 7, 2023 Honorable Mayor and Members of City Council City of Sebastian, Florida Report on the Financial Statements We have audited the financial statements of the City of Sebastian, Florida as of and for the fiscal year ended September 30, 2022 and have issued our report thereon dated March 7, 2023. Auditors' Responsibility We conducted our audit in accordance with United States generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Auditor General. Other Reports and Schedule We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, and Independent Accountants' Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated March 7, 2023, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. O\VC ARC AN VD=PCNDCVT M C MOCK OT HLBAHE GLOBAL ADVISORY ND ACCOUNTING NETWORK 159 Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The legal authority for the City of Sebastian, Florida is disclosed in the notes to the financial statements. The City of Sebastian, Florida's component unit, the Police Officer's Pension Plan, was established under Section 58- 46 through 58-54 Code of Ordinances in October 1989. Financial Condition and Management Section 10.554(1)(i)5.a., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the City of Sebastian, Florida has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specified condition(s) met. In connection with our audit, we determined that the City of Sebastian, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management's responsibility to monitor the City of Sebastian, Florida's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Special District Component Units Section 10.554(1)(i)5.d. Rules of the Auditor General, requires, if appropriate, that we communicate the failure of a special district that is a component unit of a county, municipality, or special district, to provide the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district component units that failed to provide the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes. Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings. 160 Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the City Council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. —,�4�L44y— LLC 161 This page intentionally left blank. 162 Rehmann EMPOWER YOUR PURPOSE° INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE WITH LOCAL GOVERNMENT INVESTMENT POLICIES March 7, 2023 Honorable Mayor and Members of City Council City of Sebastian, Florida We have examined the City of Sebastian, Florida's (the "City's") compliance with the local government investment policy requirements of Section 218.415, Florida Statutes, during the year ended September 30, 2022. Management of the City is responsible for the City's compliance with the specified requirements. Our responsibility is to express an opinion on the City's compliance with the specified requirements based on our examination. Independent Accountants' Responsibility Our responsibility is to express an opinion on the City's compliance with those requirements based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the City is in compliance with specified requirements established by Florida Statute and performing such procedures as we considered necessary in the circumstances. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the City's compliance with specified requirements. Opinion In our opinion, the City complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2022. Purpose of this Report This report is intended solely for the information of management, the City, the City Council and the Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties. L LC \VC ARC AN VD=PCNDCVT MCMOCR Of ELB AHE GLOBAL ADVISORY ND ACCOUNTING NETWORK 163