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Home My WebLink About2022-2023 CITY OF SEBASTIAN, FLORIDA Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2023 CITY COUNCIL Fred Jones Christopher Nunn Mayor Vice-Mayor Ed Dodd Council Member Bob McPartlan Kelly Dixon Council Member Council Member Prepared by: the Administrative Services Department City of Sebastian, Florida Table of Contents September 30, 2023 INTRODUCTORY SECTION Letter of Transmittal .................................................................................................... 1 Principal Officials .......................................................................................................... 6 City of Sebastian, Florida Organizational Chart ........................................................... 7 Certificate of Achievement for Excellence in Financial Reporting ............................... 8 FINANCIAL SECTION Independent Auditor’s Report ..................................................................................... 11 Management’s Discussion and Analysis ...................................................................... 15 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ..................................................................................... 28 Statement of Activities .......................................................................................... 30 Fund Financial Statements: Balance Sheet – Governmental Funds .................................................................. 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement Of Net Position ................................................................................................. 34 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ............................................................. 36 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........ 38 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund…………………………………………………………………………………………….. .. 39 Riverfront Redevelopment Special Revenue Fund ........................................... 41 Stormwater Utility Fund ................................................................................... 42 American Rescue Plan Fund ............................................................................. 43 Discretionary Sales Tax Fund ............................................................................ 44 Statement of Net Position – Proprietary Fund .................................................... 45 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Fund ....................................................................... 47 Statement of Cash Flows – Proprietary Fund ...................................................... 48 Statement of Fiduciary Net Position .................................................................... 50 Statement of Changes in Fiduciary Net Position ................................................. 51 Notes to Financial Statements .................................................................................. 53 Required Supplementary Information: Single-employer Pension Trust Fund: Schedule of Changes in Net Pension Liability and Related Ratios – Last Ten Fiscal Years ........................................................................... 96 Notes to Schedule of Changes in Net Pension Liability and Related Ratios ........ 98 Schedule of Investment Returns – Last Ten Fiscal Years ..................................... 99 Schedule of Contributions – Last Ten Fiscal Years ............................................... 100 Notes to Schedule of Contributions .................................................................... 102 City of Sebastian, Florida Table of Contents September 30, 2023 Coastal Florida Public Employees Association Pension Plan: Schedule of Employer Contributions ................................................................... 105 Combining Fund Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet .................................................................................... 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................................................................................... 110 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Local Option Gas Tax Fund ................................................................................... 112 Parking In-Lieu-of Fund ........................................................................................ 113 Recreation Impact Fee Fund ................................................................................ 114 Law Enforcement Forfeiture Fund ....................................................................... 115 Other Schedules: Capital Assets used in the Operations of Governmental Funds: Comparative Schedule by Source ........................................................................ 118 Schedule by Function and Activity ....................................................................... 119 Schedule of Changes by Function and Activity .................................................... 120 STATISTICAL SECTION (UNAUDITED) Financial Trends Information: Schedule A1 – Net Position by Component ................................................................. 125 Schedule A2 – Changes in Net Position ...................................................................... 126 Schedule A3 – Fund Balances – Governmental Funds................................................. 128 Schedule A4 – Changes in Fund Balances – Governmental Funds .............................. 129 Schedule A5 – Program Revenues by Function/Program ............................................ 130 Revenue Capacity Information: Schedule B1 – Tax Revenues by Source Governmental ............................................. 131 Schedule B2 – Direct and Overlapping Property Tax Rates ........................................ 132 Schedule B3 – Assessed Value and Estimated Actual Value of Taxable Property ....... 133 Schedule B4 – Principal Property Taxpayers ............................................................... 134 Schedule B5 – Property Tax Levies and Collections .................................................... 135 Debt Capacity Information: Schedule C1 – Ratios of Outstanding Debt by Type .................................................... 136 Demographic and Economic Information: Schedule D1 – Demographic and Economic Statistics ................................................. 137 Schedule D2 – Principal Employers ............................................................................. 138 Operating Information: Schedule E1 – Full-Time Equivalent City Government Employees by Function/Program .............................................................................................. 139 Schedule E2 – Operating Indicators by Function/Program ......................................... 140 Schedule E3 – Capital Asset Statistics by Function/Program………………………………………. 141 City of Sebastian, Florida Table of Contents September 30, 2023 REPORTS ON INTERNAL CONTROL AND COMPLIANCE MATTERS Independent Auditor’s 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 ............................ 143 Independent Auditor’s Management Letter ................................................................ 149 Independent Accountant’s Report on Compliance with Local Government Investment Policies .................................................................................................... 153 THIS PAGE IS INTENTIONALLY LEFT BLANK. City of Sebastian, Florida Transmittal Letter September 30, 2023 - 1 - May 31, 2024 To the Honorable Mayor, Members of City Council, and the Citizens of the City of Sebastian, Florida: We are submitting the Annual Comprehensive Financial Report of the City of Sebastian, Florida (the “City”) for the fiscal year ended September 30, 2023. 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, 2023. 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, Carr, Riggs & Ingram, LLC, have issued an unqualified (“clean”) opinion on the City of Sebastian’s financial statements for the year ended September 30, 2023. The independent auditor’s report is located on page 11 to 14. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s 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 26,405 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 non-partisan and at-large and are held on the first Tuesday following the first Monday in November. Two members are elected in even-numbered years City of Sebastian, Florida Transmittal Letter September 30, 2023 - 2 - and three members are elected in odd-numbered years. The 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, community development, maintenance of local roads, public works, City garage, stormwater system maintenance, 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 Officers’ Pension Trust Fund. The City Council is required to adopt a budget no later than the close of the previous 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 2023, the Florida Research & Economic Database reported an unemployment rate of 4.0%, which generally corresponds with 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 economy was historically made up of agriculture (citrus and cattle), construction and tourism. Increases in the health care,, information technology, and light manufacturing industries and service sector jobs have supplemented these industries to boost the local economy in recent years. While the citrus industry has faced challenges in recent years due to citrus greening and foreign competition, construction and tourism have remained vibrant. The largest major industry sector is 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 indicates that the area median age for 2022 was 54.8 and the median household income was $69,462. City of Sebastian, Florida Transmittal Letter September 30, 2023 - 3 - 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 I-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 in Jacksonville. Long-term Financial Planning 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 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 2.9050 for fiscal year 2023. However, the City had a 14.8% increase in ad valorem values primarily due to an 11.8% increase in overall property values of existing properties by the Indian River County Property Appraiser. New construction activity slowed down as compared to the prior year. Results were a total of 190 permits being issued for new construction in fiscal year 2023 with a value of $51.2 million compared to a total of 229 permits being issued for new construction in fiscal year 2022 with a value of $62.9 million. In reviewing these numbers, new commercial decreased from 4 permits valued at $3.6 million in 2022 to 1 permit valued at $25,250 in 2023 and new single family residential decreased from 225 permits valued at $59.3 million in 2022 to 189 permits valued at $47.6 million in 2023. The decrease in new construction can be primarily attributed to the slowdown experienced in the housing market. General Fund unassigned fund balance has been fully restored to an amount greater than the $5 million minimum target level for emergencies. By year end, the unassigned fund balance was 57.0% 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 2024 was balanced without a reduction of fund balances. Major Initiatives Administration During 2023, the new Public Facilities Facility was completed. This facility includes the City garage and is designed to be a staging area for the daily operations of public works personnel and equipment. City of Sebastian, Florida Transmittal Letter September 30, 2023 - 4 - 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 and park improvements; and renovations to the Yacht Club facility. Plus, the City allocated funds received from the American Rescue Act, primarily for roadway work and major improvements to the Stormwater system. A Stormwater Master Plan and an update to the Community Redevelopment Agency planning study were almost complete by year end. In addition, funds were allocated to initiate the development of a City-wide Strategic Plan to guide further policy and operational decisions for the City Council and management team. The City Council appointed a new City Manager during the year and employee morale has improved, with everyone looking forward to being a better team. The City Council and general public have also expressed confidence that positive work will be accomplished. Stormwater – The City continues its efforts to account for all Stormwater operating expenditures within the Stormwater Revenue fund to improve transparency on how stormwater fees are being spent. Funds were allocated from the American Rescue Plan Act (ARPA) proceeds toward making some major improvements to the Stormwater system. Traffic & Transportation The City also allocated American Rescue Plan Act (ARPA) funding, discretionary sales taxes and local option gas taxes to reconstruct roadways identified in the comprehensive study of the City’s roadways. In addition, discretionary sales taxes continue to be used for the replacement of heavy construction equipment needed for maintaining City rights-of-way and transportation infrastructure. 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 Safety The Building Department continues to have a strong level of permitting activity. It also operates as the City Fire Marshal so we can ensure a 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. This designation encourages the Police Department to establish goals and objectives with provisions for periodic updating; constant reevaluation of whether City of Sebastian, Florida Transmittal Letter September 30, 2023 - 5 - 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; correction of internal deficiencies and inefficiencies before they become public problems; and provides the opportunity to reorganize without the appearance of personal attacks. Standards and performance measurements resulting from the accreditation process will continue to guide both the Sebastian Police Department and city administration in alleviating potentially adverse conditions. Culture/Recreation The City has 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. Funding is also being designated to that purpose from the Community Redevelopment Agency. In other areas, the City continued supporting the use of Riverview Park for gatherings organized by various community groups, including the Annual Clam Bake, Chamber of Commerce Movies in the Park and Art Club shows. The City is also using recreation impact fees to address needed major facility improvements and replacements at each park, 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 organized comprehensive annual 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 this comprehensive annual 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 Finance 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. City of Sebastian, Florida Principal Officials September 30, 2023 - 6 - City Officials Brian Benton City Manager Jeanette Williams City Clerk Jennifer Cockcroft City Attorney Department Heads Daniel Acosta Police Chief Kenneth W. Kilgore Finance Director Karen Miller City Engineer Wayne Eseltine Building Official Greg Gardner Golf Course Director Cynthia Watson Human Resources Director Jeff Sabo Airport Manager Barbara Brooke-Reese MIS Manager As of September 30, 2023 City of Sebastian, Florida Organizational Chart September 30, 2023 - 7 - City of Sebastian, Florida Certificate of Achievement for Excellence in Financial Reporting September 30, 2023 - 8 - - 9 - FINANCIAL SECTION - 10 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 11 - Carr, Riggs & Ingram, LLC 215 Baytree Drive Melbourne, Florida 32940 321.255.0088 386.336.4189 (fax) CRIcpa.com INDEPENDENT AUDITOR’S REPORT The Honorable Mayor and City Council City of Sebastian, Florida Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida, as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City of Sebastian, Florida’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida as of September 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund, and the Riverfront Development, Stormwater Utility, American Rescue Plan and Discretionary Sales Tax special revenue funds 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 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 Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Sebastian, Florida 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. Emphasis of Matter As described in Note 2 to the financial statements, net position and fund balances as of September 30, 2022, have been restated to adjust prior year-end balances due to missing or inaccurate accruals. Our opinion is not modified with respect to this matter. - 12 - 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 of Sebastian, Florida’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. Auditor’s 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 auditor’s 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 generally accepted auditing standards 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 generally accepted auditing standards 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 of Sebastian, Florida’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. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Sebastian, Florida’s ability to continue as a going concern for a reasonable period of time. - 13 - 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 on (pages 15 to 25) and pension supplementary information on (pages 96 to 105) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Sebastian, Florida’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements, 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 was derived from and relates 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 nonmajor fund financial statements 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 report. The other information comprises the introductory section, other schedules, and statistical sections but does not include the basic financial statements and our auditor’s 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. 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. - 14 - Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 31, 2023, on our consideration of the City of Sebastian, Florida’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 of Sebastian, Florida’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 of Sebastian, Florida’s internal control over financial reporting and compliance. Melbourne, Florida May 31, 2024 City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 15 - As management of the City of Sebastian (“the City”), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2023. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1-5 of this report. 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 most recent fiscal year by $81,876,668 (net position). Of this amount, $6,216,589 represents unrestricted net position, which may be used to meet the government’s ongoing obligations to citizens and creditors. • The City’s total net position increased by $3,698,641 from fiscal year 2023 activities, and $2,959,818 from prior period adjustments (See Note 2). • At the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $21,211,111 an increase of $4,994,112 from current year activity (plus $759,112 in prior period adjustments) in comparison with the prior year and $4,759,112. Approximately 44% of this amount ($9,315,227) is available for spending at the government’s discretion (assigned and unassigned fund balance). • At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the general fund was $9,398,963, or approximately 57% of total general fund expenditures. • The City’s total outstanding long-term debt increased by $1,448,963 during the current fiscal year, primarily due to a new lease liability for locating the City public works compound on the Airport’s property. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) the notes to the financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. 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 financial information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference 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. City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 16 - 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 for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 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, public works, recreation, and community development. The business-type activities of the City include a Golf Course, Airport and Building permitting function. The government-wide financial statements can be found on pages 28-31 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be 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. Consequently, the governmental fund financial statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. 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 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 fifteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the riverfront redevelopment fund, stormwater utility fund, American Rescue Plan Act (ARPA) fund and discretionary sales tax fund, which are considered to be major funds. Data from the other ten 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 elsewhere in this report. The City of Sebastian adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund, the riverfront redevelopment fund, City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 17 - Stormwater utility fund, ARPA fund and discretionary sales tax fund, to demonstrate compliance with their budgets. The basic governmental fund financial statements can be found on pages 32-38 of this report. Proprietary funds. The City maintains one type of proprietary fund and each is an enterprise fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund type to account for its Golf Course, Airport and Building activities. 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 Golf Course, Airport and Building activities, which are each considered to be a major fund. The basic proprietary fund financial statements can be found on pages 45-49 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reported in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City maintains one type of fiduciary fund. The Pension trust fund is used to report resources held in trust for retirees and beneficiaries covered by the Police Officers’ Retirement Plan. The fiduciary fund financial statements can be found on pages 50-51 of this report. 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. The notes to the financial statements can be found on pages 53-93 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City’s budgetary compliance and pension and other post-employment benefits obligations. The City adopts an annual appropriated budget for its general fund and other major funds. Budgetary comparison statements have been provided for each of these funds to demonstrate compliance with this budget. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 108-111 of this report. The Statistical Section includes tables and schedules to provide a more detailed picture of the financial condition of the City than those presented in the financial statements. These include assorted multi-year financial and statistical information and can be found on pages 123-141 of this report. City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 18 - Government-wide Overall Financial Analysis As noted earlier, net position over time may serve as a useful indicator of a government's financial position. In the case of the City of Sebastian, Florida, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $81,876,668 at the close of the most recent fiscal year. City of Sebastian’s Net Position By far the largest portion of the City’s net position (78.5%) reflects its investment in capital assets (e.g., land, buildings, improvements other than buildings, machinery and equipment, and construction in progress), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to its citizens. Accordingly, 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 (13.9%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $6,216,589 is unrestricted and may be used to meet the government's ongoing obligations to citizens and creditors. At September 30, 2023, the City is able to report positive balances in all reported categories of net position, both for the government as a whole, as well as for its separate governmental and business- type activities. The same situation held true for the prior fiscal year. Governmental Activities Business-type Activities Total 2023 2022 2023 2022 2023 2022 Current and other assets 27,185,227$ 22,298,663$ 6,119,475$ 5,026,841$ 33,304,702$ 27,325,504$ Capital assets 47,281,598 46,632,964 21,230,654 21,026,248 68,512,252 67,659,212 Total assets 74,466,825 68,931,627 27,350,129 26,053,089 101,816,954 94,984,716 Deferred outflows 1,581,799 3,075,039 - - 1,581,799 3,075,039 Long-term liabilities 8,318,703 7,703,598 2,649,893 2,663,197 10,968,596 10,366,795 Other liabilities 3,432,761 4,152,556 128,522 2,530,690 3,561,283 6,683,246 Total liabilities 11,751,464 11,856,154 2,778,415 5,193,887 14,529,879 17,050,041 Deferred inflows 2,814,450 3,080,885 4,177,756 2,710,620 6,992,206 5,791,505 Net position: Net investment in capital assets 45,464,209 46,341,824 18,795,822 18,585,143 64,260,031 64,926,967 Restricted 11,400,048 7,282,425 - - 11,400,048 7,282,425 Unrestricted 4,618,453 3,445,378 1,598,136 (436,561) 6,216,589 3,008,817 Total net position 61,482,710$ 57,069,627$ 20,393,958$ 18,148,582$ 81,876,668$ 75,218,209$ City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 19 - Statements of Activities The following table reflects the condensed Statements of Activities for the current and prior year: Governmental Activities. During the current fiscal year, net position for governmental activities increased by $3,619,105 from the prior fiscal year, plus a prior period adjustments of $793,978 (see Note 2). General revenues increased overall by approximately 23.0% due to increases in property taxes from increased values, utility taxes and franchise fees due to increased rates, and increased investment earnings due to higher interest rates. Program revenues decreased by approximately 13.6%, primarily due to decreased reimbursements from amounts received from FEMA and the State for damages and cleanup expenditures from hurricanes experienced in the past years that did not occur in the current year. Governmental expenses increased $1,298,265 (6.4%) compared to the fiscal year ending September 30, 2022. The most significant increase for expenses were for wages and employee benefit related costs. The current year reflects negotiated pay increases resulting from a pay and benefits study on all City positions, which demonstrated the need to substantially raise the pay rates of most of the employees. In particular, law enforcement and maintenance workers were significantly increased to Governmental Activities Business-type Activities Total 2023 2022 2023 2022 2023 2022 Revenues: Program revenues: Charges for services 3,228,198$ 3,188,160$ 3,509,418$ 3,758,670$ 6,737,616$ 6,946,830$ Operating grants and contributions 581,139 2,066,434 - - 581,139 2,066,434 Capital grants and contributions 4,977,894 4,910,478 365,388 3,295,019 5,343,282 8,205,497 General revenues: Property taxes 5,537,364 4,988,598 - - 5,537,364 4,988,598 Public utility and telecommunication taxes 3,523,529 3,172,766 - - 3,523,529 3,172,766 Franchise fees 1,775,486 1,571,571 - - 1,775,486 1,571,571 Shared revenues 4,721,538 3,526,318 - - 4,721,538 3,526,318 Investment earnings 505,805 142,209 68,008 17,582 573,813 159,791 Miscellaneous 367,022 468,361 147,428 - 514,450 468,361 Gain on disposition 18,701 - 182,556 1,825 201,257 1,825 Total revenues 25,236,676 24,034,895 4,272,798 7,073,096 29,509,474 31,107,991 Expenses: General government 5,224,980 5,158,135 - - 5,224,980 5,158,135 Public safety 8,093,434 7,703,234 1,007,261 1,260,189 9,100,695 8,963,423 Physical environment 3,440,202 3,259,272 - - 3,440,202 3,259,272 Transportation 2,704,831 2,153,685 1,531,134 1,427,667 4,235,965 3,581,352 Economic environment 338,114 291,969 - - 338,114 291,969 Cultural and recreation 1,617,044 1,606,579 1,786,655 1,659,271 3,403,699 3,265,850 Interest and fiscal charges 67,178 14,644 - - 67,178 14,644 Total expenses 21,485,783 20,187,518 4,325,050 4,347,127 25,810,833 24,534,645 Excess (deficiency) of revenues over (under) expenses 3,750,893 3,847,377 (52,252) 2,725,969 3,698,641 6,573,346 Other financing sources (uses) Transfers in (out)(131,788) (493,736) 131,788 493,736 - - Net other financing sources (uses)(131,788) (493,736) 131,788 493,736 - - Increase in net position 3,619,105 3,353,641 79,536 3,219,705 3,698,641 6,573,346 Net position - beginning of year 57,069,627 53,715,986 18,148,582 14,928,877 75,218,209 68,644,863 Prior period adjustment 793,978 - 2,165,840 - 2,959,818 - Net position - beginning (restated)57,863,605 53,715,986 20,314,422 14,928,877 78,178,027 68,644,863 Net position - ending 61,482,710$ 57,069,627$ 20,393,958$ 18,148,582$ 81,876,668$ 75,218,209$ City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 20 - address their lower than market pay rates. The lower pay rates were inhibiting the ability of the City to hire and maintain employees in those positions and was considered essential to addressing that issue. Seven additional positions were also added for the purpose of sustaining a proactive and responsive workforce at the level expected by the public. The first chart that follows compares each program’s expenses with the revenues generated by the program. The next chart displays the City’s revenues by source. Public safety represents the City’s major services and the majority of resources used to fund the service are not generated by the program. Revenues from taxes and other general resources provide the remaining funding necessary for public safety. Expenses and Program Revenues-Governmental Activities City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 21 - Revenues by Source – Governmental Activities Business-type Activities. Business-type activities increased the City’s net position by $79,536, plus a prior period adjustment of $2,165,840 (See Note 2). Operating revenues for the Golf Course increased by $90,495, attributed to better weather and the good condition of the greens and fairways. Golf Course expenses increased by $127,384 due to increased maintenance fees. This resulted in slightly less net program revenue but insurance proceeds and gains on fixed asset disposals of $211,990, resulted in a $347,564 change in net position. Operating revenues for the Airport increased by $18,794 while operating expenses increased by $103,467. Most of the increase in operating expenses was due to the higher amount for employee compensation. This resulted in a $206,520 decrease in net position for the Airport. The net position of the Building Fund increased $2,094,444 from that reported for the prior year because of a restatement of a rebates payable account ($2,145,253) that was previously considered a liability, and accrued payroll ($10,699). Otherwise, the Building Fund experienced a reduction in net position of $61,508 resulting from a decline in permitting fees. Financial Analysis of Governmental Funds 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 City’s net resources available for spending at the end of the fiscal year. City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 22 - As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $21,211,111, an increase of $5,753,224 (including a prior period adjustment of $759,112) in comparison with the prior year. Approximately 44% of this total amount ($9,315,227) constitutes unassigned fund balance, which has not been appropriated for a specific purpose and is available for spending at the government's discretion. The remainder of fund balance represents a legally restricted funding source, has been committed to a specific purpose by City action or is not in liquid form available for new spending. The $998,269 of nonspendable fund balance represents prepaid items that have been disbursed for future expenditures, such as insurance or maintenance agreements, as well as inventories of supplies and fuel. The restricted funds include funds of $553,543 to be used for perpetual care at the Cemetery; $1,871,491 restricted for stormwater projects; $229,659 that is for law enforcement purposes; $888,580 limited to community development in the Riverfront Redevelopment boundaries; $73,599 for funds restricted to American Rescue Plan Act projects; and $7,178,612 restricted to infrastructure improvements. The committed fund balances totaling $102,131 in two of the nonmajor funds are being expended for development of public parking and to complete other capital projects. The $249,700 was expended by the Riverfront Redevelopment Agency during the fiscal year ended September 30, 2023, and closed the year with a positive fund balance of $889,285. Under the stimulus bill, the American Rescue Plan Act was enacted during 2021, to provide ARPA funds to local governments in order to facilitate the ongoing recovery from the COVID-19 pandemic. ARPA closed the year with a $73,599 positive fund balance. 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 $9,398,963, while total fund balance reached $12,907,883. 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 57% of total General Fund expenditures, while total fund balance represents 60% of that same amount. The fund balance of the City’s General Fund increased by $1,357,417 during the current fiscal year, compared to an increase of $1,505,206 in the prior year. The City saw increased expenditures in the General Fund. Key factors in these results are as follows: • Total revenues of the General Fund increased by $1,368,771, largely as a result of increases in payment of taxes, franchise fees and investment earnings, which were due to higher property values and increased rates. • General Fund expenditures increased $3,205,430 compared to the prior year. Increased payroll costs and increased capital outlay, which included the leased land, were the main contributing factors. City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 23 - Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. • Unrestricted net position of the Golf Course Fund at the end of the year amounted to a deficit of $1,435,953. The total increase in net position for this fund was $347,564. • Unrestricted net position of the Airport Fund at the end of the year amounted to $376,560. There was decrease in net position of $206,520. • Unrestricted net position of the Building Fund at the end of the year amounted to $2,657,529. The net position was reduced by $61,508. Other factors concerning the finances of these funds have already been addressed in the discussion of the City’s business-type activities. General Fund Budgetary Highlights During the year ended September 30, 2023, significant budgetary variances between the final amended budget and actual results include the following: • Revenues fell short of the budgeted amounts for property taxes ($44K) as a result of taxpayers taking advantage of early payment discounts. All other revenue categories exceeded budget estimates, as utility rates were raised, intergovernmental payments were increased and investment earnings improved due to higher interest rates. • Management information services was significantly less than anticipated ($87k). This was due to delays in implementing upgrades to various software and hardware items. • Facility maintenance expenditures for maintenance activities were less than provided for with budgeted amounts ($63K). • Community development costs were less than budgeted by $192K due to deferral of work scheduled for master plan updates and due to position vacancies remaining unfilled for extended periods. • Other variances were not substantial. There were budget amendments during the year to adjust collections anticipated for intergovernmental revenues. There were a number of budget amendments for expenditures ($826K) during the year. Those amendments were primarily to re-appropriate unexpended budgets for capital outlays that had not been completed in the prior year ($215K); to cover additional cost for an interim City Attorney while that position was vacant ($143k); and to provide funds for negotiated employee pay adjustments ($223K). Capital Assets and Debt Administration Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2023, amounted to $68,512,252 (net of accumulated depreciation). This investment in capital assets includes land, right to use land, buildings, improvements, machinery and equipment, park facilities, roads, highways, and other infrastructure items. The percentage increase from prior year (fiscal year 2022) in the City’s investment in capital assets was approximately 1.3%, due to significant transfers of construction in progress from prior year, which are now being capitalized. City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 24 - City of Sebastian’s Capital Assets (net of depreciation) Major capital asset events during the current fiscal year included the following: • In the City’s governmental activities, the construction of the new public works facility was completed. This facility was placed on property that is being rented from the Airport. • In the City’s business-type activities, infrastructural work was completed to provide sewer service on the north-west side of the Airport. Construction was completed on Hangar “D” to provide an additional facility to generate rental income in support of the Airport. Additional information on the City’s capital assets can be found in Note 6 on pages 77-78 of this report. Long-term Debt. At the end of the current fiscal year, the City had no notes payable outstanding. Only leases and the pollution remediation are outstanding as of September 30, 2023. The increase in lease liabilities is due to the public works department entering into a new lease with the Airport for their facility. Economic Factors and Next Year’s Budgets and Rates The following economic factors currently affect the City of Sebastian and were considered in developing the 2023-2024 fiscal year budget. • The estimate for 2024 shows the City’s population will be 26,406. • The City maintains over 157 miles of roadways, 150 miles of swales, 80 miles of ditches and 50 road crossings. • Over 51 acres of undeveloped property were annexed in the past two years. The City expects a substantial increase in population, as well as commercial growth in the future. • Employee starting pay rates have been increased but it has still been difficult to attract qualified applicants to replace vacancies. Governmental Activities Business-type Activities Total 2023 2022 2023 2022 2023 2022 Land 9,123,041$ 9,123,041$ 9,060$ 9,060$ 9,132,101$ 9,132,101$ Construction in progress 221,687 9,520,507 248,515 3,899,378 470,202 13,419,885 Right to use land 1,766,771 165,858 2,266,961 2,370,005 4,033,732 2,535,863 Buildings 15,902,551 6,629,473 9,053,695 6,784,974 24,956,246 13,414,447 Improvements other than buildings 2,491,873 2,776,548 980,803 951,025 3,472,676 3,727,573 Machinery and equipment 3,200,749 2,567,123 690,649 153,843 3,891,398 2,720,966 Infrastructure 14,574,926 15,850,414 7,980,971 6,857,963 22,555,897 22,708,377 Total 47,281,598$ 46,632,964$ 21,230,654$ 21,026,248$ 68,512,252$ 67,659,212$ Governmental Activities Total 2023 2022 2023 2022 2023 2022 Notes from direct borrowings -$ 121,000$ -$ -$ -$ 121,000$ Pollution remediation 50,000 91,200 - - 50,000 91,200 Lease liabilities 1,817,389 170,140 2,405,019 2,441,105 4,222,408 2,611,245 Total 1,867,389$ 382,340$ 2,405,019$ 2,441,105$ 4,272,408$ 2,823,445$ Business-type Activities City of Sebastian, Florida Management's Discussion and Analysis September 30, 2023 - 25 - • The pricing for goods and services continues to escalate. • The difficulty of obtaining bids on construction projects that are reasonably affordable continues to delay their accomplishment. All of these factors were considered in preparing the City’s budget for the fiscal year ending September 30, 2024. Requests for Information This financial report is designed to provide a general overview of the City of Sebastian, Florida’s finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Sebastian, Attention: Finance Director, 1225 Main Street, Sebastian, Florida, 32958. - 26 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 27 - CITY OF SEBASTIAN, FLORIDA Basic Financial Statements City of Sebastian, Florida Statement of Net Position The accompanying notes are an integral part of this financial statement. - 28 - Governmental Business-type September 30, 2023 Activities Activities Total ASSETS Cash and cash equivalents 16,203,899$ 2,017,624$ 18,221,523$ Restricted cash and cash equivalents 641,395 - 641,395 Investments 3,627,466 458,466 4,085,932 Permanently restricted investments 580,373 - 580,373 Receivables 451,590 29,227 480,817 Internal balances 916,357 (916,357)- Due from other governments 1,649,931 63,737 1,713,668 Prepaid items 318,651 71,807 390,458 Inventory 75,054 16,955 92,009 Deposits held in escrow - 1,109 1,109 Leases receivable: Due within one year 45,218 80,510 125,728 Due in more than one year 2,675,293 4,296,397 6,971,690 Capital assets not being depreciated 9,344,728 257,575 9,602,303 Capital assets being depreciated/amortizated, net 37,936,870 20,973,079 58,909,949 Total assets 74,466,825 27,350,129 101,816,954 DEFERRED OUTFLOWS OF RESOURCES Deferred pension amounts 1,581,799 - 1,581,799 Total deferred outflows of resources 1,581,799 - 1,581,799 LIABILITIES Accounts payable and accrued liabilities 329,819 83,859 413,678 Deposits payable 93,090 - 93,090 Due to other governments 134,310 10,816 145,126 Unearned revenue 2,875,542 33,847 2,909,389 Leases payable: Due within one year 10,840 40,448 51,288 Due in more than one year 1,806,549 2,364,571 4,171,120 Compensated absences Due within one year 97,996 8,900 106,896 Due in more than one year 1,622,553 235,974 1,858,527 Long-term liabilities: Due within one year 18,750 - 18,750 Due in more than one year 31,250 - 31,250 Net pension liability 4,730,765 - 4,730,765 Total liabilities 11,751,464 2,778,415 14,529,879 - 29 - Governmental Business-type September 30, 2023 Activities Activities Total DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 273,095 - 273,095 Deferred lease amounts 2,541,355 4,173,439 6,714,794 Unavailable revenue - 4,317 4,317 Total deferred inflows of resources 2,814,450 4,177,756 6,992,206 NET POSITION Net investment in capital assets 45,464,209 18,795,822 64,260,031 Restricted for: Perpetual care: Nonexpendable 604,564 - 604,564 Expendable 553,543 - 553,543 Special revenue uses: Economic environment 73,599 - 73,599 Infrastructure improvements 7,178,612 - 7,178,612 Redevelopment 888,580 - 888,580 Stormwater 1,871,491 - 1,871,491 Law enforcement 229,659 - 229,659 Unrestricted 4,618,453 1,598,136 6,216,589 Total net position 61,482,710$ 20,393,958$ 81,876,668$ City of Sebastian, Florida Statement of Activities The accompanying notes are an integral part of this financial statement. - 30 - For the year ended September 30, 2023 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental activities: General government 5,224,980$ 733,072$ -$ 4,791,515$ Public safety 8,093,434 288,122 459,868 86,929 Physical environment 3,440,202 2,140,145 - - Transportation 2,704,831 - - - Economic environment 338,114 - 121,271 - Cultural and recreation 1,617,044 66,859 - 99,450 Interest and fiscal charges 67,178 - - - Total governmental activities 21,485,783 3,228,198 581,139 4,977,894 Business-type activities: Golf course 1,786,655 1,902,696 - - Airport 1,531,134 707,517 - 365,388 Building 1,007,261 899,205 - - Total business-type activities 4,325,050 3,509,418 - 365,388 Total primary government 25,810,833$ 6,737,616$ 581,139$ 5,343,282$ General revenues: Property taxes, levied for general purposes Public utility taxes Franchise fees Intergovernmental shared revenue - unrestricted Interest earnings Gain on sale of capital assets Miscellaneous Transfers, net Total general revenues Change in net position Net position, beginning of year as previously reported Prior period adjustment (see Note 2) Net position, beginning of year Net position, end of year - 31 - Governmental Business-type Activities Activities Total 299,607$ -$ 299,607$ (7,258,515) - (7,258,515) (1,300,057) - (1,300,057) (2,704,831) - (2,704,831) (216,843) - (216,843) (1,450,735) - (1,450,735) (67,178) - (67,178) (12,698,552) - (12,698,552) - 116,041 116,041 - (458,229) (458,229) - (108,056) (108,056) - (450,244) (450,244) (12,698,552) (450,244) (13,148,796) 5,537,364 - 5,537,364 3,523,529 - 3,523,529 1,775,486 - 1,775,486 4,721,538 - 4,721,538 505,805 68,008 573,813 18,701 182,582 201,283 367,022 147,402 514,424 (131,788)131,788 - 16,317,657 529,780 16,847,437 3,619,105 79,536 3,698,641 57,069,627 18,148,582 75,218,209 793,978 2,165,840 2,959,818 57,863,605 20,314,422 78,178,027 61,482,710$ 20,393,958$ 81,876,668$ and Changes in Net Position Net (Expense) Revenue City of Sebastian, Florida Balance Sheet - Governmental Funds The accompanying notes are an integral part of this financial statement. - 32 - Riverfront Stormwater American September 30, 2023 General Redevelopment Utility Rescue Plan ASSETS Cash and cash equivalents 6,438,135$ 757,343$ 1,611,250$ 2,468,610$ Investments 1,777,027 134,158 284,878 438,622 Accounts receivable, net 451,590 - - - Lease receivable 2,703,035 17,476 - - Due from other funds 496,865 - - - Due from other governments 677,109 - 223 - Prepaid items 289,068 705 28,878 - Inventories 75,054 - - - Advance to other funds - - - - Total assets 12,907,883$ 909,682$ 1,925,229$ 2,907,232$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts payable and accrued liabilities 174,402$ 3,326$ 24,860$ -$ Deposits payable 93,090 - - - Due to other funds - - - - Due to other governments 134,310 - - - Deposits payable - - - - Unearned revenue 41,809 - - 2,833,633 Total liabilities 443,611 3,326 24,860 2,833,633 DEFERRED INFLOWS OF RESOURCES Deferred lease amounts 2,524,284 17,071 - - Deferred revenue - business tax receipts - - - - Deferred revenue - ARPA - - - - Total deferred inflows of resources 2,524,284 17,071 - - FUND BALANCES Nonspendable 364,122 705 28,878 - Restricted Perpetual care - - - - Stormwater - - 1,871,491 - Law enforcement 176,903 - - - Community redevelopment - 888,580 - - Economic environment - - - 73,599 Infrastructure - - - - Committed Capital projects - - - - Development of public parking - - - - Unassigned (deficit)9,398,963 - - - Total fund balances 9,939,988 889,285 1,900,369 73,599 Total liabilities, deferred inflows of resources and fund balances 12,907,883$ 909,682$ 1,925,229$ 2,907,232$ Special Revenue The accompanying notes are an integral part of this financial statement. - 33 - Total Discretionary Nonmajor Governmental Sales Tax Funds Funds 3,471,950$ 2,098,006$ 16,845,294$ 636,864 936,290 4,207,839 - - 451,590 - 2,720,511 19,046 - 515,911 786,770 185,829 1,649,931 - - 318,651 - - 75,054 467,311 - 467,311 5,381,941$ 3,220,125$ 27,252,092$ -$ 127,231$ 329,819$ - - 93,090 - 66,865 66,865 - - 134,310 - - - - 100 2,875,542 - 194,196 3,499,626 - - 2,541,355 - - - - - - - - 2,541,355 - 604,564 998,269 - 553,543 553,543 - - 1,871,491 - 52,756 229,659 - - 888,580 - - 73,599 5,381,941 1,796,671 7,178,612 - 4,350 4,350 - 97,781 97,781 - (83,736) 9,315,227 5,381,941 3,025,929 21,211,111 5,381,941$ 3,220,125$ 27,252,092$ City of Sebastian, Florida Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position The accompanying notes are an integral part of this financial statement. - 34 - September 30, 2023 Total fund balances - governmental funds 21,211,111$ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets 102,418,780$ Less accumulated depreciation/amortization (55,137,182)47,281,598 Deferred outflows and deferred inflows of resources related to pensions, related earnings are not recognized in the governmental funds; however, they are recorded in the statement of net position under full accrual accounting. Deferred outflows related to pensions 1,581,799 Deferred inflows related to pensions (273,095) 1,308,704 Long-term liabilities, including capital lease obligations, compensated absences, and net pension liability are not due and payable in the current period and therefore are not reported in the funds. Net pension liability (4,730,765) Compensated absences (1,720,549) Lease liabilities (1,817,389) Pollution remediation (50,000)(8,318,703) Net position of governmental activities 61,482,710$ - 35 - THIS PAGE IS INTENTIONALLY LEFT BLANK. City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds The accompanying notes are an integral part of this financial statement. - 36 - Riverfront Stormwater American For the year ended September 30, 2023 General Redevelopment Utility Rescue Plan Revenues Taxes Property 5,102,270$ 469,960$ -$ -$ Public utility 3,523,529 - - - Franchise fee 1,775,486 - - - Licenses and permits 163,719 - - - Intergovernmental 4,235,990 - - 13,639 Charges for services 971,900 - 1,949,304 - Fines and forfeitures 170,718 - - - Investment earnings 198,440 18,989 54,803 63,398 Impact fees - - - - Contributions and donations 182,453 - - - Other revenues 94,954 35,701 - - Total revenues 16,419,459 524,650 2,004,107 77,037 Expenditures Current: General government 4,734,458 - - - Public safety 7,195,331 - - - Physical environment 161,384 - 1,844,948 11,999 Recreation 1,103,676 - - - Transportation 1,297,320 - - - Economic environment - 249,700 - - Capital outlay 1,928,820 - 43,836 - Debt service: Principal 8,868 - - - Interest 54,787 - - - Total expenditures 16,484,644 249,700 1,888,784 11,999 Excess (deficiency) of revenues over (under) expenditures (65,185) 274,950 115,323 65,038 Other financing sources (uses) Transfers in - - - - Transfers out (280,811) (13,550) (185,199) (13,639) Lease/debt proceeds 1,656,117 - - - Proceeds from sale of capital assets 47,296 - - - Net other financing sources (uses)1,422,602 (13,550) (185,199) (13,639) Net change in fund balances 1,357,417 261,400 (69,876) 51,399 Fund balances, beginning 8,195,001 627,885 1,957,125 22,200 Prior period adjustments 387,570 - 13,120 - Fund balances, beginning, restated 8,582,571 627,885 1,970,245 22,200 Fund balances, ending 9,939,988$ 889,285$ 1,900,369$ 73,599$ Special Revenue The accompanying notes are an integral part of this financial statement. - 37 - Capital Projects Total Discretionary Nonmajor Governmental Sales Tax Funds Funds -$ -$ 5,572,230$ - - 3,523,529 - - 1,775,486 - - 163,719 4,791,515 963,074 10,004,218 - 181,096 3,102,300 - 50 170,768 93,413 76,762 505,805 - 99,450 99,450 - 18,100 200,553 - 4,128 134,783 4,884,928 1,342,660 25,252,841 - 394,739 5,129,197 - 484,464 7,679,795 - 374,676 2,393,007 - - 1,103,676 - 11,300 1,308,620 - - 249,700 - 1,807,874 3,780,530 - 121,000 129,868 - 1,174 55,961 - 3,195,227 21,830,354 4,884,928 (1,852,567) 3,422,487 - 3,071,227 3,071,227 (2,668,320) (41,496) (3,203,015) - - 1,656,117 - - 47,296 (2,668,320) 3,029,731 1,571,625 2,216,608 1,177,164 4,994,112 2,875,588 1,780,088 15,457,887 289,745 68,677 759,112 3,165,333 1,848,765 16,216,999 5,381,941$ 3,025,929$ 21,211,111$ City of Sebastian, Florida Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities The accompanying notes are an integral part of this financial statement. - 38 - For the year ended September 30, 2023 Net change in fund balances - total governmental funds 4,994,112$ 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 as depreciation/amortization expense. This is the amount by which capital outlay exceeded depreciation in the current period. Capital outlay 3,780,530$ Depreciation/amortization (3,103,301) 677,229 In the statement of activities, the gain (loss) on the disposal of capital assets is reported, whereas in the governmental funds, disposals are not reported. Thus, the change in net position differs from the change in fund balance by the net book value of the disposed capital assets.(28,595) Some revenues will not be collected within 60 days after the close of the City's fiscal year-end and are not considered as "available" revenue in the governmental funds. In the statement of net position, presented on the accrual basis, these revenues are recognized.(34,866) The change in pollution remediation reported in the statement of activities does not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds.41,200 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the financial resources of governmental funds. Neither transaction, however, has any effect on net position. This is the net effect of these differences in the treatment of long-term debt and related items. Capital lease proceeds (1,656,117)$ Note principal 121,000 Lease principle 8,868 (1,526,249) Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, pension is reported regardless of when the financial resources are available. Accrued interest 782 Police officers' pension and related deferred outflows and inflows (330,615) (329,833) Compensated absences 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.(173,893) Change in net position of governmental activities 3,619,105$ City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual General Fund The accompanying notes are an integral part of this financial statement. - 39 - Actual Original Final (Budgetary Variance with For the year ended September 30, 2023 Budget Budget Basis)Final Budget Revenues Taxes Property 5,146,342$ 5,146,342$ 5,102,270$ (44,072)$ Public utility 3,210,987 3,210,987 3,523,529 312,542 Franchise fee 1,567,286 1,567,286 1,775,486 208,200 Licenses and permits 163,700 163,700 163,719 19 Intergovernmental 3,811,968 4,084,464 4,235,990 151,526 Charges for services 850,370 850,870 971,900 121,030 Fines and forfeitures 50,500 50,500 170,718 120,218 Investment earnings 27,500 27,500 198,440 170,940 Contributions and donations 10,500 10,500 182,453 171,953 Other revenues 75,000 75,000 94,954 19,954 Total revenues 14,914,153 15,187,149 16,419,459 1,232,310 Expenditures General government: City council 62,725 62,725 55,940 6,785 City manager 306,745 342,355 342,501 (146) City clerk 222,575 226,599 229,176 (2,577) City attorney 236,730 379,606 377,066 2,540 Administrative services 823,320 623,711 605,155 18,556 Management information services 717,540 728,199 641,676 86,523 Facilities maintenance 629,685 738,654 675,421 63,233 Community development 660,690 701,873 510,255 191,618 Human resources - 231,971 224,879 7,092 Non-departmental 1,064,329 1,072,510 1,072,389 121 Total general government 4,724,339 5,108,203 4,734,458 373,745 Public safety: Police administration 858,600 1,164,215 1,122,500 41,715 Police operations 3,915,000 4,052,931 4,028,630 24,301 Police detective division 1,286,629 1,330,478 1,206,998 123,480 Police dispatch unit 748,330 751,150 690,332 60,818 Code enforcement division 202,100 202,679 146,871 55,808 Total public safety 7,010,659 7,501,453 7,195,331 306,122 Physical environment: Cemetery 163,740 162,104 161,384 720 Transportation: Roads and maintenance 1,130,210 1,135,004 1,039,941 95,063 Fleet management 259,680 274,812 257,379 17,433 Total transportation 1,389,890 1,409,816 1,297,320 112,496 City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual General Fund The accompanying notes are an integral part of this financial statement. - 40 - Actual Original Final (Budgetary Variance with For the year ended September 30, 2023 Budget Budget Basis)Final Budget Culture and recreation: Leisure services 1,245,420 1,257,869 1,103,676 154,193 Capital outlay 379,874 300,376 1,928,820 (1,628,444) Debt service: Lease principal 70,231 70,231 8,868 61,363 Interest and fiscal charges - - 54,787 (54,787) Total expenditures 14,984,153 15,810,052 16,484,644 (674,592) Excess (deficiency) of revenues over (under) expenditures (70,000) (622,903) (65,185) 557,718 Other financing sources (uses) Transfers in 35,000 35,000 - (35,000) Transfers out - (418,030) (280,811) 137,219 Lease/debt proceeds - - 1,656,117 1,656,117 Proceeds from sale of capital assets 35,000 35,000 47,296 12,296 Net other financing sources (uses)70,000 (348,030) 1,422,602 1,770,632 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses - (970,933) 1,357,417 2,328,350 Fund balance, beginning of year, restated 8,582,571 8,582,571 8,582,571 - Fund balance, end of year 8,582,571$ 7,611,638$ 9,939,988$ 2,328,350$ City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual Riverfront Redevelopment Special Revenue Fund The accompanying notes are an integral part of this financial statement. - 41 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Taxes: Property 380,580$ 380,580$ 469,960$ 89,380$ Investment earnings 7,719 7,719 18,989 11,270 Other revenues 36,000 36,000 35,701 (299) Total revenues 424,299 424,299 524,650 100,351 Expenditures Current: Economic environment 260,918 292,869 249,700 43,169 Excess of revenues over expenditures 163,381 131,430 274,950 143,520 Other financing sources (uses) Transfers out (15,000) (70,001) (13,550) 56,451 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 148,381 61,429 261,400 199,971 Fund balance, beginning of year 627,885 627,885 627,885 - Fund balance, end of year 776,266$ 689,314$ 889,285$ 199,971$ City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual Stormwater Utility Fund The accompanying notes are an integral part of this financial statement. - 42 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Charges for services 1,952,055$ 1,952,055$ 1,949,304$ (2,751)$ Investment earnings 7,566 7,566 54,803 47,237 Total revenues 1,959,621 1,959,621 2,004,107 44,486 Expenditures Current: Physical environment 2,217,854 2,211,917 1,844,948 366,969 Capital outlay 41,300 56,393 43,836 12,557 Total expenditures 2,259,154 2,268,310 1,888,784 379,526 Excess (deficiency) of revenues over (under) expenditures (299,533) (308,689) 115,323 424,012 Other financing sources (uses) Transfers out - (361,192) (185,199) 175,993 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (299,533) (669,881) (69,876) 600,005 Fund balance, beginning of year 1,970,245 1,970,245 1,970,245 - Fund balance, end of year 1,670,712$ 1,300,364$ 1,900,369$ 600,005$ City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual American Rescue Plan Fund The accompanying notes are an integral part of this financial statement. - 43 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Intergovernmental -$ -$ 13,639$ 13,639$ Investment earnings (loss)12,000 12,000 63,398 51,398 Total revenues 12,000 12,000 77,037 65,037 Expenditures Current: Physical environment 12,000 12,000 11,999 1 Total expenditures 12,000 12,000 11,999 1 Excess (deficiency) of revenues over (under) expenditures - - 65,038 65,038 Other financing sources (uses) Transfers out (2,698,656) (2,696,156) (13,639) 2,682,517 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (2,698,656) (2,696,156) 51,399 2,747,555 Fund balance, beginning of year 22,200 22,200 22,200 - Fund balance, end of year (2,676,456)$ (2,673,956)$ 73,599$ 2,747,555$ City of Sebastian, Florida Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual Discretionary Sales Tax Fund The accompanying notes are an integral part of this financial statement. - 44 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Intergovernmental 5,160,637$ 5,160,637$ 4,791,515$ (369,122)$ Investment earnings (loss)98,209 98,209 93,413 (4,796) Total revenues 5,258,846 5,258,846 4,884,928 (373,918) Expenditures Current: Capital outlay - - - - Total expenditures - - - - Excess (deficiency) of revenues over (under) expenditures 5,258,846 5,258,846 4,884,928 (373,918) Other financing sources Transfers out (4,395,472) (7,425,064) (2,668,320) 4,756,744 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 863,374 (2,166,218) 2,216,608 4,382,826 Fund balance, beginning of year 3,165,333 3,165,333 3,165,333 - Fund balance, end of year 4,028,707$ 999,115$ 5,381,941$ 4,382,826$ City of Sebastian, Florida Statement of Net Position - Proprietary Fund The accompanying notes are an integral part of this financial statement. - 45 - September 30, 2023 Golf Course Airport Building Total ASSETS Current assets: Cash and cash equivalents 14,672$ 517,525$ 1,485,427$ 2,017,624$ Investments 111,645 84,017 262,804 458,466 Accounts receivable, net 29,227 - - 29,227 Due from other funds - - 29,099 29,099 Due from other governments - 63,737 - 63,737 Leases receivable 27,192 53,318 - 80,510 Prepaid items 8,443 45,746 17,618 71,807 Inventory 16,955 - - 16,955 Deposits held in escrow - 616 493 1,109 Total current assets 208,134 764,959 1,795,441 2,768,534 Noncurrent assets: Leases receivable 127,307 4,169,090 - 4,296,397 Advance from other funds - - 1,052,392 1,052,392 Capital assets: Land - 9,060 - 9,060 Construction in process - 248,515 - 248,515 Leased Land 2,473,049 - - 2,473,049 Buildings 697,985 11,711,244 189,061 12,598,290 Non-building improvements 1,196,494 1,731,122 - 2,927,616 Machinery and equipment 662,738 972,148 144,929 1,779,815 Infrastructure 1,428,751 14,791,374 - 16,220,125 Less accumulated depreciation/amortization (2,408,732) (12,491,747) (125,337) (15,025,816) Total capital assets, net of accumulated depreciation/amortization 4,050,285 16,971,716 208,653 21,230,654 Total noncurrent assets 4,177,592 21,140,806 1,261,045 26,579,443 Total assets 4,385,726 21,905,765 3,056,486 29,347,977 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 2,039 63,427 18,393 83,859 Due to other funds 459,099 19,046 - 478,145 Due to other governments 4,944 1,171 4,701 10,816 Compensated absences 5,819 2,856 225 8,900 Unearned revenue 33,847 - - 33,847 Current portion of leases payable 40,448 - - 40,448 Total current liabilities 546,196 86,500 23,319 656,015 Noncurrent liabilities: Advance from other funds 1,052,392 467,311 - 1,519,703 Leases payable 2,364,571 - - 2,364,571 Compensated absences 67,623 4,919 163,432 235,974 Total noncurrent liabilities 3,484,586 472,230 163,432 4,120,248 Total liabilities 4,030,782 558,730 186,751 4,776,263 Business-type Activities - Enterprise Funds City of Sebastian, Florida Statement of Net Position - Proprietary Fund The accompanying notes are an integral part of this financial statement. - 46 - September 30, 2023 Golf Course Airport Building Total DEFERRED INFLOWS OF RESOURCES Deferred lease amounts 145,631 4,027,808 - 4,173,439 Deferred revenue - 764 3,553 4,317 Total deferred inflows of resources 145,631 4,028,572 3,553 4,177,756 NET POSITION Net investment in capital assets 1,645,266 16,941,903 208,653 18,795,822 Unrestricted (deficit)(1,435,953) 376,560 2,657,529 1,598,136 Total net position 209,313$ 17,318,463$ 2,866,182$ 20,393,958$ Business-type Activities - Enterprise Funds City of West Melbourne, Florid City of Sebastian, Florida Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Fund - 47 - For the year ended September 30, 2023 Golf Course Airport Building Total Operating revenues: Charges for fees and rents: Building permit fees -$ -$ 899,205$ 899,205$ Golf course fees 1,868,169 - - 1,868,169 Rents 34,527 707,517 - 742,044 Other revenues 10,036 86,040 - 96,076 Total operating revenues 1,912,732 793,557 899,205 3,605,494 Operating expenses: Salaries, wages and employee benefits 439,405 197,997 823,770 1,461,172 Contractual services, materials and supplies 1,066,108 326,039 175,393 1,567,540 Depreciation and amortization 210,858 986,988 8,098 1,205,944 Total operating expenses 1,716,371 1,511,024 1,007,261 4,234,656 Operating income (loss)196,361 (717,467) (108,056) (629,162) Nonoperating revenues (expenses): Investment income 14,354 11,963 41,691 68,008 Interest expense (70,284) (20,110) - (90,394) Gain/(Loss) on disposal of fixed assets 163,648 18,934 - 182,582 Insurance proceeds 48,342 2,984 - 51,326 Total nonoperating revenues (expenses)156,060 13,771 41,691 211,522 Income before capital contributions and transfers 352,421 (703,696) (66,365) (417,640) Capital contributions - 365,388 - 365,388 Transfers in - 131,788 4,857 136,645 Transfers out (4,857) - - (4,857) Change in net position 347,564 (206,520) (61,508) 79,536 Net position, beginning of year (145,394) 17,522,238 771,738 18,148,582 Prior period adjustment (see Note 2)7,143 2,745 2,155,952 2,165,840 Net position, beginning of year, restated (138,251) 17,524,983 2,927,690 20,314,422 Net position, end of year 209,313$ 17,318,463$ 2,866,182$ 20,393,958$ Business-type Activities - Enterprise Funds City of Sebastian, Florida Statement of Cash Flows - Proprietary Fund - 48 - For the year ended September 30, 2023 Golf Course Airport Building Total Cash flows from operating activities: Cash received from customers and users 1,874,696$ 1,187,054$ 901,366$ 3,963,116$ Cash payments to suppliers (1,062,165) (565,559) (168,192) (1,795,916) Cash payments for employee services (439,405) (197,997) (823,770) (1,461,172) Net cash provided by/(used in) operating activities 373,126 423,498 (90,596) 706,028 Cash flows from noncapital financing activities: Cash payments to other governments - - (2,618) (2,618) Cash receipts to other governments 561 73 - 634 Cash payments for transfers/advances to other funds (65,308) (35,436) 29,504 (71,240) Cash receipts for transfers/advances to other funds - 131,788 4,857 136,645 Net cash provided by/(used) in noncapital financing activities (64,747) 96,425 31,743 63,421 Cash flows from capital and related financing activities: Principal paid on leases payable (36,086) - - (36,086) Interest paid on leases payable (70,284) (20,110) - (90,394) Acquisition and construction of capital assets (645,102) (570,986) (194,262) (1,410,350) Proceeds from sale of capital assets 163,648 18,934 - 182,582 Receipts from capital contributions - 365,388 - 365,388 Insurance proceeds 48,342 2,984 - 51,326 Net cash provided by/(used) in capital and related financing activities (539,482) (203,790) (194,262) (937,534) Cash flows from investing activities: Purchases of investments - 33,225 128,757 161,982 Sale of investments (35,617) - - (35,617) Investment income 14,354 11,963 41,691 68,008 Net cash provided by/(used) in investing activities (21,263) 45,188 170,448 194,373 Net increase (decrease) in cash and cash equivalents (252,366) 361,321 (82,667) 26,288 Cash and cash equivalents, beginning of year 267,038 156,204 1,568,094 1,991,336 Cash and cash equivalents, end of year 14,672$ 517,525$ 1,485,427$ 2,017,624$ Business-type Activities - Enterprise Funds City of Sebastian, Florida Statement of Cash Flows - Proprietary Fund (Continued) The accompanying notes are an integral part of this financial statement. - 49 - For the year ended September 30, 2023 Golf Course Airport Building Total Reconciliation of operating income to net cash provided by/(used in) operating activities: Operating income (loss)196,361$ (717,467)$ (108,056)$ (629,162)$ Adjustments to reconcile operating income to net cash provided by/(used by) operating activities: Depreciation/amortization expense 210,858 986,988 8,098 1,205,944 Change in assets and liabilities: (Increase) decrease in assets: Accounts receivable (29,227) 192 - (29,035) Due from other governments - 513,536 60 513,596 Due from other funds - - 1,848 1,848 Leases receivable 25,500 (1,611,163) (1,585,663) Prepaid items (3,660) (25,819) (12,120) (41,599) Inventory 842 - - 842 Deposits held in escrow 493 - - 493 Increase (decrease) in liabilities: Accounts payable and accrued liabilities 2,891 (218,680) 4,895 (210,894) Due to other funds (5,856) 19,046 - 13,190 Unearned revenue 673 (20,823) (3,300) (23,450) Compensated absenses 3,377 4,979 14,426 22,782 Deferred lease amounts (29,126) 1,491,945 - 1,462,819 Deferred revenue - 764 3,553 4,317 Total adjustments 176,765 1,140,965 17,460 1,335,190 Net cash provided by/(used in) operating activities 373,126$ 423,498$ (90,596)$ 706,028$ Business-type Activities - Enterprise Funds City of Sebastian, Florida Statement of Fiduciary Net Position The accompanying notes are an integral part of this financial statement. - 50 - Police Officers' Pension Trust September 30, 2023 Fund ASSETS Receivables: Interest and dividends 25,838$ Investments at fair value: Money market funds 1,889,186 United States government obligations 1,314,454 Mortgage backed securities 636,455 Collateralized mortgage obligations 876,170 Municipal obligations 127,329 Domestic corporate bonds 833,743 Foreign corporate bonds 270,601 Domestic corporate equities 8,209,569 Foreign corporate equities 3,093,238 Exchange-traded fund equities 2,687,965 Partnerships 18,875 Real estate investment trust 796,916 Total investments 20,754,501 Total assets 20,780,339 FIDUCIARY NET POSITION Restricted for pension benefits 20,780,339$ City of Sebastian, Florida Statement of Changes in Fiduciary Net Position The accompanying notes are an integral part of this financial statement. - 51 - Police Officers' Pension Trust For the year ended September 30, 2023 Fund ADDITIONS Contributions: Employer 763,666$ Plan members 234,525 State 272,496 Total contributions 1,270,687 Investment income: Net increase in the fair value of investments 1,794,047 Interest and dividends 532,234 Total investment income 2,326,281 Less investment-related expense (137,400) Net investment income 2,188,881 Total additions 3,459,568 DEDUCTIONS Benefit payments 1,071,895 Administrative expenses 90,249 Total deductions 1,162,144 Change in net position 2,297,424 Fiduciary net position, beginning of year 18,482,915 Fiduciary net position, end of year 20,780,339$ - 52 - THIS PAGE IS INTENTIONALLY LEFT BLANK. City of Sebastian, Florida Notes to Financial Statements - 53 - Note 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 26,405 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. 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. 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. The accounting policies of the City conform to generally accepted accounting principles (GAAP) as applied to governmental units. The more significant accounting policies used by the City are described below. Blended Component Unit Community Redevelopment Agency (CRA) The CRA was formally established in March 1995 with the adoption of Ordinance No. 0-95-08 by the City Council. The CRA was organized to finance development within the geographic boundaries of the community redevelopment area. Although legally separate, the CRA is governed by the 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." The CRA financial statements are included in the City’s Annual Comprehensive Financial Report as a special revenue fund for the year ended September 30, 2023. City of Sebastian, Florida Notes to Financial Statements - 54 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 to external customers 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 accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in City of Sebastian, Florida Notes to Financial Statements - 55 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) 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. 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. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. 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. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year end). All other revenue items are considered to be measurable and available only when cash is received by the government. The proprietary and pension are reported using the economic resources measurement focus and the accrual basis of accounting. Government-Wide Financial Statements While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates governmental funds, while business-type activities incorporate the City’s enterprise funds. 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. 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. City of Sebastian, Florida Notes to Financial Statements - 56 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Financial Statements The fund financial statements provide information about the City’s funds, including its fiduciary funds and blended component units. Separate statements for each fund category—governmental, proprietary, and fiduciary—are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, and internal service funds and fiduciary funds each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Fiduciary funds are used to report assets held in a trustee or custodial capacity for others that cannot be used to support the government’s own programs. Custodial funds are purely custodial and do not involve measurement of results of operations. 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 Special Revenue Fund accounts for the financial resources that are legally restricted for infrastructure improvements and equipment purchases. 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. 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. City of Sebastian, Florida Notes to Financial Statements - 57 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Financial Statements (Continued) 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 Officers’ Pension Plan, which accumulates resources for pension benefit payments to qualified police officers. 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. Deposits available within various funds of the Primary Government were consolidated for investment purposes. Substantially all deposits of the Primary Government at September 30, 2023, were invested using the pooled investment concept. Interest earned was allocated monthly to the City based on its month ending cash and investment balances in proportion to the Primary Government. Investments for the City are reported at fair value for the position in the State Board of Administration (“SBA”) Local Government Surplus Trust Fund (Florida PRIME) external investment pool. The SBA City of Sebastian, Florida Notes to Financial Statements - 58 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) Deposits and Investments (Continued) Local Government Surplus Trust Fund external investment pool meets all of the specified criteria in Section I50: Investments of the GASB Codification to qualify to elect to measure its investments at amortized cost. Accordingly, the fair value of the Agency’s position in the pool is equal to the value of pooled shares. The City is empowered by statute to invest in the following instruments and may divest itself of such investments, at prevailing market prices or rates subject to the limitations of Section 218.415 – a) the Local Government Surplus Funds Trust Fund, administered by the Florida State Board of Administration or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, as provided in s. 163.01, Florida Statutes; b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; c) savings accounts in state-certified qualified public depositories, as defined in Florida Statute 280.02; d) certificates of deposits and Repurchased Agreements in state-certified qualified public depositories, as defined in Florida Statute 280.02; e) direct obligation of the U.S. Treasury; and f) Federal agencies and instrumentalities. Banks and savings and loans in which City funds are deposited must be classified as a qualified public depository as defined in the Florida Security for Public Deposits Act, Chapter 280, Florida Statutes, before any deposits are made with those institutions. 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.” These amounts are eliminated in the governmental and business-type activities columns of the statement of net position, except for any residual balance outstanding between the governmental and business-type activities at the end of the fiscal year, which are reported in the government-wide financial statements as internal balances. Advances between funds are offset by nonspendable fund balance in the 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, City of Sebastian, Florida Notes to Financial Statements - 59 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) Restricted Assets (Continued) 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 and payables All trade and tax receivables are shown net of an allowance for uncollectible, 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, 2023, the City has no allowance for doubtful accounts, since all receivables are considered collectible. Lease Receivables - The City’s lease receivables are measured at the present value of lease payments expected to be received during the least term. Under the lease agreement, the City may receive variable lease payments that are dependent upon the lessee’s revenue. The variable payments are recorded as an inflow of resources in the period the payment is received. Leases 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 City of Sebastian, Florida Notes to Financial Statements - 60 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) Leases (Continued) 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. 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. Inventory and Prepaid Items 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. City of Sebastian, Florida Notes to Financial Statements - 61 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) 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. Land and construction in progress are not depreciated. Remaining 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 Deferred Outflows/Inflows 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 position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports the deferred outflows related to pensions, reported in the government-wide statements of net position. The deferred outflows related to pensions are an aggregate of items related to pensions as calculated in accordance with GASB Codification Section P20: Pension Activities – Reporting for Benefits Provided through Trusts That Meet Specified Criteria. The deferred outflows related to pensions will be recognized as either pension expense or a reduction in the net pension liability in future reporting years. City of Sebastian, Florida Notes to Financial Statements - 62 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) Deferred Outflow/Inflow 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 position 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, lease amounts, and tax revenue. The City has three (3) items that qualify for reporting as deferred inflows of resources. The deferred inflows related to pensions are an aggregate of items related to pensions as calculated in accordance with GASB Codification Section P20: Pension Activities – Reporting for Benefits Provided through Trusts That Meet Specified Criteria. The deferred inflows related to pensions will be recognized as a reduction to pension expense in future reporting years. The deferred inflows related to leases are associated with amounts owed to the City, as lessor, by entities leasing the City’s capital assets. Unavailable revenue, which arises only under a modified accrual basis of accounting, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 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 before eligibility requirements are met. 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 City of Sebastian, Florida Notes to Financial Statements - 63 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) Long-term Obligations (continued) 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. Categories and Classification of Net Position and Fund Balance Net position flow assumption – Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied. Fund balance flow assumptions – Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources. In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. Fund balance policies – Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The City itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, specifies the following classifications: Nonspendable fund balance – Nonspendable fund balances are 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 – Restricted fund balances are restricted when constraints placed on the use of resources are either: (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. City of Sebastian, Florida Notes to Financial Statements - 64 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity (Continued) Categories and Classification of Net Positon and Fund Balance (continued) Committed fund balance – The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the City’s highest level of decision-making authority. The governing council is the highest level of decision-making authority for the City that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Assigned fund balance – Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as committed. The governing council (council) has by resolution authorized the finance director to assign fund balance. The council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. Unassigned fund balance – Unassigned fund balance is the residual classification for the General Fund. 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. Subsequent Events Management has evaluated subsequent events through the date that the financial statements were available to be issued, May 31, 2024, and determined there were no events that occurred that City of Sebastian, Florida Notes to Financial Statements - 65 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Subsequent Events (continued) required disclosure. No subsequent events occurring after this date have been evaluated for inclusion in these financial statements. Recently Issued and Implemented Accounting Pronouncements In May 2020, the GASB issued GASB Statement No. 96, Subscription-Based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to- use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Assets and liabilities resulting from SBITAs should be recognized and measured using the facts and circumstances that existed at the beginning of the fiscal year in which this Statement is implemented. Governments are permitted, but are not required, to include in the measurement of the subscription asset capitalizable outlays associated with the initial implementation stage and the operation and additional implementation stage incurred prior to the implementation of this Statement. There are no changes to the financial statements related to the implementation of this Statement. The Governmental Accounting Standards Board has issued statements that will become effective in future years. These statements are as follows: GASB Statement No. 100, Accounting Changes and Error Corrections, This Statement establishes accounting and financial reporting requirements for (a) accounting changes and (b) the correction of an error in previously issued financial statements (error correction). This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. This Statement prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections. This Statement requires that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. This Statement requires disclosure in notes to financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects on beginning balances of each accounting change and error correction should be disclosed by reporting unit in a tabular format to reconcile beginning City of Sebastian, Florida Notes to Financial Statements - 66 - Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recently Issued and Implemented Accounting Pronouncements (Continued) balances as previously reported to beginning balances as restated. Furthermore, this Statement addresses how information that is affected by a change in accounting principle or error correction should be presented in required supplementary information (RSI) and supplementary information (SI). The requirements of this Statement are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter. GASB Statement No. 101, Compensated Absences, The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter. The City is evaluating the requirements of the above statements and the impact on reporting. Note 2: PRIOR PERIOD RESTATEMENTS Certain amounts for prior fiscal years have been reclassified to be consistent with the fiscal year 2023 presentation. In fiscal year 2023, the City restated opening net position and fund balances to correct errors in prior years financial statements. Adjustments to opening net position are enumerated below: City of Sebastian, Florida Notes to Financial Statements - 67 - Note 2: PRIOR PERIOD RESTATEMENTS (Continued) Governmental Activities Business-type Activities Total Net position, September 30, 2022, as previously reported 57,069,627$ 18,148,582$ 75,218,209$ Cumulative effect in applying the unavailable revenue of tax revenue (1)34,866 - 34,866 Cumulative effect in applying the accrual recognition of intergovermental, franchise, fees, and utility tax revenues (2)605,987 - 605,987 Cumulative effect of the accrued payroll liability (3)153,125 20,587 173,712 Cumulative effect of restatement of rebates payable (4)- 2,145,253 2,145,253 Beginning net position, as restated 57,863,605$ 20,314,422$ 78,178,027$ Government-wide Statements General Fund Stormwater Utility Fund Discretionary Sales Tax Fund Local Option Gas Tax Fund Fund balance, September 30, 2022, as previously reported 8,195,001$ 1,957,125$ 2,875,588$ 700,039$ Cumulative effect in applying the accrual recognition of intergovermental, franchise, fees, and utility tax 247,565 - 289,745 68,677 revenues (2) Cumulative effect of the accrued payroll liability (3)140,005 13,120 - - Beginning fund balance, as restated 8,582,571$ 1,970,245$ 3,165,333$ 768,716$ Golf Course Fund Airport Fund Building Fund Net position, September 30, 2022, as previously reported (145,394)$ 17,522,238$ 771,738$ Cumulative effect of the accrued payroll liability (3)7,143 2,745 10,699 Cumulative effect of restatement of rebates payable (4)- - 2,145,253 Beginning net position, as restated (138,251)$ 17,524,983$ 2,927,690$ City of Sebastian, Florida Notes to Financial Statements - 68 - Note 2: PRIOR PERIOD RESTATEMENTS (Continued) (1) The County used the incorrect millage rate for the City in fiscal year 2022. The County was notified of the error in June of 2023. The County wired the City the difference in July of 2023. This amount should have been recognized as revenue in the Statement of Activities for the year ending September 30, 2022. (2) In the prior year, revenue and receivables related to taxes and fees levied by the State and remitted to the City were not recorded in the period levied or earned. An additional receivable amount needed to be recorded. (3) In the prior year, expenses related to payroll transactions for services provided were not recognized in the period in which they was earned. (4) In prior year, the City had recorded rebates payable in response to Florida Statues 553.80; however, the City does not intend to remit the rebate payable. Note 3: 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. 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, 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, and Special Revenue 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. City of Sebastian, Florida Notes to Financial Statements - 69 - Note 3: BUDGETARY INFORMATION (Continued) The legal level of budgetary control is at the departmental level for the general fund and at the fund level for special revenue funds. During the year ended September 30, 2023, the City incurred expenditures in in excess of the amounts appropriated, as follows: Final Budget Actaul Variance General fund City Manager 342,355$ 342,501$ (146)$ City Clerk 226,599$ 229,176$ (2,577)$ Local Option Gas Tax fund Transportation 10,800$ 11,300$ (500)$ Law Enforcement Forfeiture fund Public Safety -$ 1,501$ (1,501)$ Note 4: DEPOSITS AND INVESTMENTS As of September 30, 2023, $250,000 of the City’s bank balances is covered by federal depository insurance (FDIC). Monies invested in amounts greater than the insurance coverage are secured by the qualified public depositories pledging securities with the State Treasurer in such amounts required by the Florida Security for Public Depositories Act. In the event of a default or insolvency of a qualified public depositor, the State Treasurer will implement procedures for payment of losses according to the validated claims of the City pursuant to Section 280.08, Florida Statutes. The investment program is established in accordance with the City’s investment policy, pertinent bond resolutions and Section 218.45, Florida Statutes, which allows the City to invest in the Florida State Board of Administration intergovernmental investment pool or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, direct obligations of the United States Government, obligations of the different agencies of the Federal Government, registered money market funds and accounts of state qualified public depositories. The investing of public funds with the Florida State Board of Administration (SBA) - Local Government Surplus Funds Trust Fund is governed by Section 218.407, Florida Statutes. The SBA is under regulatory oversight of the State of Florida. The investment pool consists largely of corporate notes and commercial paper. On September 30, 2023, the City had $4,120,465 invested. The fair value of the City’s position in the pool is equal to the value of the pooled shares or net asset value. The City participates in the Florida Local Government Investment Trust fund, (Florida LGIT), external investment pool. The Florida LGIT is a common law trust established under the laws of the State of Florida and is designed to meet both short and medium term cash management needs of its participants. The Fund is sponsored by the Florida Court Clerks and Comptrollers and the Florida Association of Counties and is directed by a board of trustees. The fair value of the City’s position in City of Sebastian, Florida Notes to Financial Statements - 70 - Note 4: DEPOSITS AND INVESTMENTS (Continued) the pool is equal to the value of the pooled shares or net asset value. On September 30, 2023, the City had $545,840 invested. Under GASB Codification I50: Investments, if a participant has an investment in a qualifying external investment pool that measures for financial reporting purposes all of its investments at amortized cost it should disclose the presence of any limitations or restrictions on withdrawals (such as redemption notice periods, maximum transaction amounts, and the qualifying external investment pool’s authority to impose liquidity fees or redemption gates) in the notes to the financial statements. Deposits available within various funds, except pension trust funds, were consolidated for investment purposes. Interest earned was allocated to the various funds based on their average cash and investment balances. The pension trust funds are authorized to invest in corporate bonds and stocks, money markets funds, and mortgages and notes. 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. City of Sebastian, Florida Notes to Financial Statements - 71 - Note 4: DEPOSITS AND INVESTMENTS (Continued) Following is a reconciliation of deposit and investment balances as of September 30, 2023: Statement of Net Position Cash and cash equivalents 18,221,523$ Restricted cash and cash equivalents 641,395 Investments 4,085,932 Permanently restricted investments 580,373 Statement of Fiduciary Net Position Police officers' pension fund investments 20,754,501 Total 44,283,724$ Deposits and investments Bank deposits: Checking and savings accounts 18,860,488$ Investments: Investments, at fair value 4,666,305 Police officers' pension fund investments 20,754,501 Cash on hand 2,430 Total 44,283,724$ 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, 2023, the carrying amount of the City of Sebastian's deposits with banks was $18,860,488 and the bank balance was $19,325,277. 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 fair 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 fair 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. 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, to be held with a third party custodian; and all securities purchased by, and all collateral obtained by the City to be properly designated as an asset of the City. The securities must be held in an account separate and apart from City of Sebastian, Florida Notes to Financial Statements - 72 - Note 4: DEPOSITS AND INVESTMENTS (Continued) 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. 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 "A-I" 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, 2023, the City's investment securities, for all investments except the Pension Trust Fund, were all individually rated AAAm by Standard & Poor's or Moody’s. The investment ratings for the Pension Trust Fund ranged between AAA through BBB-. 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 & 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. City of Sebastian, Florida Notes to Financial Statements - 73 - Note 4: DEPOSITS AND INVESTMENTS (Continued) 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. As of September 30, 2023, the City had the following issuer concentration based on fair value and investment ratings. Fair Value – GASB Codification Section 3100: Fair Value Measurements establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the codification are described as follows: Level 1 (L1): Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the City has the ability to access. Level 2 (L2): Inputs to the valuation methodology include: • quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in inactive markets; • inputs other than quoted prices that are observable for the asset or liability; • inputs that are derived principally from or corroborated by observable market data by correlation or other means. City of Sebastian, Florida Notes to Financial Statements - 74 - Note 4: DEPOSITS AND INVESTMENTS (Continued) Level 3 (L3): Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Equities: Valued at publicly trade market prices. Fixed Income: Valued using pricing models maximizing the use of observable inputs for similar securities. Partnerships and Real Estate trust: Valued at net asset value, with approximate fair value, or discounted cash flows. As of September 30, 2023, the City had the following investments and effective duration presented in terms of years: Investment type Level Fair Value No Maturities Less than 1 1-5 More than 5 years S&P/Moody Rating General investments Local government surplus funds trust fund ("SBA")L1 $ 4,120,465 $ - $ 4,120,465 -$ -$ AAAm Florida Local Government Investment Trust L1 545,840 - 545,840 - - AAAm Total primary government investments $ 4,666,305 $ - $ 4,666,305 -$ -$ Investment type Fair Value No Maturities Less than 1 1-5 More than 5 years S&P/Moody Rating Police officers' pension fund investments Money market L1 1,889,186$ -$ 1,889,186$ -$ -$ AA+ US government obligations L2 1,314,454 - 363,446 388,023 562,985 Aaa Mortgage backed securities L2 636,455 - 1,551 105,137 529,767 AAA/A- Collateralized mortgage obligations L2 876,170 - - - 876,170 AAA/A- Municipal obligations L2 127,329 - 7,954 - 119,375 AAA/BBB- Domestic corporate bonds L2 833,743 - - 326,251 507,492 A+/A- Foreign corporate bonds L2 270,601 - - 162,636 107,965 Not Rated Domestic corporate equities L1 8,209,569 8,209,569 - - - Not Rated Foreign corporate equities L1/L2 3,093,238 3,093,238 - - - Not Rated Exchange-traded fund equities L1 2,687,965 2,687,965 - - - Not Rated Partnerships NPV 18,875 18,875 - - - Not Rated Real estate investment trust NPV 796,916 796,916 - - - Not rated Total fiduciary fund investments 20,754,501$ 14,806,563$ 2,262,137$ 982,047$ 2,703,754$ Investment Maturities (in years) Investment Maturities (in years) Investment Fair Value Unfunded Commitments Redemption Frequency (if currently eligible) Redemption Notice Period Partnership 18,875$ N/A N/A N/A Real estate investment trust 796,916$ N/A Quarterly 90 days City of Sebastian, Florida Notes to Financial Statements - 75 - Note 5: INTERFUND RECEIVABLES AND PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2023, was as follows: Due to and from primary government funds Due from Other Funds Due to Other Funds General Fund 496,865$ -$ Discretionary Sales Tax Fund 19,046 - Nonmajor Funds - 66,865 Building Fund 29,099 - Airport Fund - 19,046 Golf Course Fund - 459,099 Total 545,010$ 545,010$ 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 Advance from Other Funds Advance to Other Funds Discretionary Sales Tax -$ 467,311$ Golf Course 1,052,392 - Airport 467,311 - Building - 1,052,392 Total 1,519,703$ 1,519,703$ The balance of $467,311 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 airport is being charged 4% interest on the advances. The $1,052,392 was advanced from the Building Fund to replace the irrigation system and make other improvements at the Golf Course. This advance is to be repaid over 20 years. The Golf course is being charge 1.3% interest on the advance. City of Sebastian, Florida Notes to Financial Statements - 76 - Note 5: INTERFUND RECEIVABLES AND PAYABLES AND TRANSFERS (Continued) For the year ended September 30, 2023, interfund transfers consisted of the following: Total Nonmajor Transfers General Governmental Airport Building Description Out Fund Funds Fund Fund Governmental funds: General Fund (280,811)$ -$ 280,811$ -$ -$ American Rescue Plan Fund (13,639) - 13,639 - - Discretionary Sales Tax Fund (2,668,320) - 2,536,532 131,788 - Riverfront Redevelopment Fund (13,550) - 13,550 - - Stormwater Utility Fund (185,199) - 185,199 - - Nonmajor Governmental Funds (41,496) - 41,496 - - Total governmental funds (3,203,015) - 3,071,227 131,788 - Proprietary funds: Golf Course Fund (4,857) - - - 4,857 Total proprietary funds (4,857) - - - 4,857 Total (3,207,872)$ -$ 3,071,227$ 131,788$ 4,857$ Transfers In ProprietaryGovernmental 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. City of Sebastian, Florida Notes to Financial Statements - 77 - Note 6: CAPITAL ASSETS Capital asset activity for the primary government for the year ended September 30, 2023, was as follows: Governmental activities: Beginning Balance* Increases / Transfers Decreases / Transfers Ending Balance Capital assets, not being depreciated/amortized: Land 9,123,041$ -$ -$ 9,123,041$ Construction in progress 9,520,507 1,840,431 (11,139,251) 221,687 Total capital assets, not being depreciated/amortized 18,643,548 1,840,431 (11,139,251) 9,344,728 Capital assets, being depreciated/amortized: Right to use land *171,782 1,656,117 - 1,827,899 Buildings 14,344,679 9,645,957 (1,129) 23,989,507 Improvements other than buildings 8,222,937 41,775 (196,952) 8,067,760 Machinery and equipment 11,313,414 1,614,103 (310,564) 12,616,953 Infrastructure 46,454,410 121,398 (3,875) 46,571,933 Total capital assets being depreciated/amortized 80,507,222 13,079,350 (512,520) 93,074,052 Less accumulated depreciation/amortization for: Right to use land (5,924) (55,204) - (61,128) Buildings (7,715,206) (372,879) 1,129 (8,086,956) Improvements other than buildings (5,446,389) (316,189) 186,691 (5,575,887) Machinery and equipment (8,746,291) (962,143) 292,230 (9,416,204) Infrastructure (30,603,996) (1,396,886) 3,875 (31,997,007) Total accumulated depreciation/amortization (52,517,806) (3,103,301) 483,925 (55,137,182) Total capital assets being depreciated/amortized, net 27,989,416 9,976,049 (28,595) 37,936,870 Governmental activities capital assets, net 46,632,964$ 11,816,480$ (11,167,846)$ 47,281,598$ * The City leases land from the Airport Fund. The lease is noted as an addition within the governmental fund but not a reduction in the Business type activity as the assets are still owned by the Airport. City of Sebastian, Florida Notes to Financial Statements - 78 - Note 6: CAPITAL ASSETS (Continued) Business-type activities: Beginning Balance* Increases / Transfers Decreases / Transfers Ending Balance Capital assets, not being depreciated/amortized: Land 9,060$ -$ -$ 9,060$ Construction in progress 3,899,378 - (3,650,863) 248,515 Total capital assets, not being depreciated/amortized 3,908,438 - (3,650,863) 257,575 Capital assets, being depreciated/amortized: Right to use land 2,473,049 - - 2,473,049 Buildings 10,065,527 2,532,763 - 12,598,290 Improvements other than buildings 2,801,956 125,660 - 2,927,616 Machinery and equipment 1,549,771 604,269 (374,225) 1,779,815 Infrastructure 14,428,943 1,799,871 (8,689) 16,220,125 Total capital assets being depreciated/amortized 31,319,246 5,062,563 (382,914) 35,998,895 Less accumulated depreciation/amortization for: Right to use land (103,044) (103,044) - (206,088) Buildings (3,280,553) (264,042) - (3,544,595) Improvements other than buildings (1,850,931) (95,882) - (1,946,813) Machinery and equipment (1,395,928) (66,113) 372,875 (1,089,166) Infrastructure (7,570,980) (676,863) 8,689 (8,239,154) Total accumulated depreciation/amortization (14,201,436) (1,205,944) 381,564 (15,025,816) Total capital assets being depreciated/amortized, net 17,117,810 3,856,619 (1,350) 20,973,079 Business-type activities capital assets, net 21,026,248$ 3,856,619$ (3,652,213)$ 21,230,654$ Depreciation/amortization expense was charged to functions/programs of the primary government as follows: Depreciation/amortization of governmental activies by function General government 442,458$ Public safety 462,694 Physical environment 765,194 Transportation 898,785 Cultural and recreation 534,170 Total governmental activities 3,103,301$ Depreciation/amortization of governmental activies by function Business-type activities: Golf course 210,858$ Airport 986,988 Building 8,098 Total governmental activities 1,205,944$ City of Sebastian, Florida Notes to Financial Statements - 79 - Note 7: LONG-TERM DEBT Revenue notes are secured by and payable from the revenues of the respective funds that issued them. • The City issued a nine (9) year, $3,096,000 Stormwater Utility Refunding Revenue Note, Series 2013 in December 2013. The City has pledged stormwater fee revenues for repayment of principal and interest. These proceeds and other stormwater fee revenues were used to totally refund all of the outstanding Stormwater Utility Revenue Bonds prior to September 30, 2023. • As of September 30, 2023, there was no outstanding in-substance defeased debt. The following is a summary of governmental activities long-term debt transactions for the year ended September 30, 2023: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Notes from direct borrowings 121,000$ -$ (121,000)$ -$ -$ Compensated absences 1,546,656 750,156 (576,263) 1,720,549 97,996 Lease liabilities 170,140 1,656,117 (8,868) 1,817,389 10,840 Pollution remediation 91,200 - (41,200) 50,000 18,750 Governmental activities long-term liabilities 1,928,996$ 2,406,273$ (747,331)$ 3,587,938$ 127,586$ 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 $50,000 dependent on the extent of work that is eventually required and recorded a current liability of $18,750 and a long-term liability of $31,250. This liability would generally be liquidated by the General Fund. The following is a summary of business-type activities long-term debt transactions for the year ended September 30, 2023: Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type activities: Compensated absences 222,092$ 84,305$ (61,523)$ 244,874$ 8,900$ Lease liabilities 2,441,105 - (36,086) 2,405,019 40,448 Business-type activities long-term liabilities 2,663,197$ 84,305$ (97,609)$ 2,649,893$ 49,348$ City of Sebastian, Florida Notes to Financial Statements - 80 - Note 8: 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. The net present value of future minimum payments as of September 30, 2023, were as follows: Principal Interest Principal Interest 2024 10,840$ 54,521$ 40,448$ 72,151$ 2025 12,922 16,129 45,039 70,937 2026 15,119 53,808 49,870 69,586 2027 17,640 53,355 54,950 68,090 2028 20,299 52,826 60,289 66,441 2029 - 2033 146,631 253,245 391,435 301,581 2034 - 2038 237,492 226,072 570,779 232,616 2039 - 2043 353,580 183,818 797,324 134,031 2044 - 2048 500,623 122,367 394,885 17,948 2049 - 2052 502,243 37,986 - - Totals 1,817,389$ 1,054,127$ 2,405,019$ 1,033,381$ Governmental Activites Business-type Activites Year Ended September 30, Lease liability activity for the year ended September 30, 2023, was as follows: 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. The principal lease revenue for the governmental and business-type activities for the year ended September 30, 2023 was $60,981 and $70,453, respectively. The lease interest revenue for the governmental and business type activities for year ended September 30, 2023 was $83,445 and $133,421, respectively. City of Sebastian, Florida Notes to Financial Statements - 81 - Note 8: LEASES (Continued) Lessor (Continued) Regulated Lease Agreements The Airport’s operations include certain lease agreements that are classified as regulated leases under paragraph 42 of GASB Statement No. 87, Leases. These agreements consist of aeronautical lease agreements, as defined by the Federal Aviation Administration, which are made up of air carrier agreements, facility agreements that directly or substantially relate to the movement of passengers, ticketing, baggage, mail and cargo, and aircraft storage and maintenance service agreements. Upon the conclusion of the lease and options, or upon default, ownership of the premises reverts to the airport. Rates cannot exceed a reasonable amount and the Airport cannot deny potential lessees the right to enter into leases if facilities are available, provided that the potential lessee’s use of the facilities complies with use restrictions. The Airport recognizes the revenues from these lease agreements as inflows each year based on the payment provisions of each lease contract. The Airport recognized $363,580 of regulated lease revenue principal and $11,247 of regulated lease interest for the year ended September 30, 2023. The future revenues as of September 30, 2023 are as follows. Fiscal Year Ended Principal Interest Amount 2024 476,490$ 14,535$ 491,025$ 2025 466,227 14,422 480,649 2026 476,488 14,739 491,227 2027 487,041 15,066 502,107 2028 497,891 15,401 513,292 2029 - 2033 2,251,031 69,632 2,320,663 2034 - 2038 1,744,473 53,846 1,798,319 2039 - 2043 1,598,960 49,452 1,648,412 2044 - 2045 402,810 12,458 415,268 Totals 8,401,411$ 259,551$ 8,660,962$ Note 9: PROPERTY TAXES 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, 2023, was 2.9050 mills. Total tax collections were approximately 96% 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 City of Sebastian, Florida Notes to Financial Statements - 82 - Note 9: PROPERTY TAXES (Continued) 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. Note 10: 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. Note 11: BENEFIT PLANS Police Officers’ 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, 2022 to determine the required contribution for the fiscal year ending September 30, 2023. 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. Plan Membership. The Plan is administrated by a Board of Trustees comprised of two (2) City Council appointees, two (2) members of the System, elected by the Membership and a fifth Trustee elected by the other four (4) members of the Board of Trustees and appointed by City Council. Membership of the Plan consisted of the following at October 1, 2022, the date of the latest actuarial valuation: City of Sebastian, Florida Notes to Financial Statements - 83 - Note 11: BENEFIT PLANS (Continued) Police Officers’ Pension Plan (Continued) Defined Benefit Pension Plan (Continued) Plan membership as of October 1, 2022: Inactive plan members or beneficiaries currently receiving benefits 23 Inactive plan members entitled to but not yet receiving benefits 12 Active plan members 35 Total plan members 70 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, as provided in Chapter 112, Florida Statues. State contributions are reported as revenues and expenditures in the General Fund before being reported in the Pension Trust Fund. For 2023, employee contributions to the plan totaled $234,525, while the City and State contributions were $1,036,162, or 35.35% of covered payroll. Normal retirement. Normal retirement is the earlier of: 1) Age 55 and 10 years of credited service, or 2) age 52 and 25 years of credited service, regardless of age. Upon retirement, the member receives a monthly benefit equal to 3.0% of Average Final Compensation (AFC) for each year of credited service, if member hired prior to April 11, 2012, otherwise 2.0% of AFC for each year of credited service through September 30, 2016, plus 3% of AFC for years of credited service after September 30, 2016. Early retirement. Members are eligible for early retirement upon attaining age 50 and completing 10 years of credited service. Accrued benefits are reduced by 3% for each year from the otherwise normal retirement date. Vesting. 100% after 10 years of credit service. Members will receive the vested portion of his (her) accrued benefit payable at otherwise normal retirement date. Deferred Retirement Option Plan (DROP). Eligibility is based on satisfaction of normal retirement requirements Participation is not to exceed 60 months. Rate of return is 1.30% annual interest, compounded monthly. Amount is distributed in lump sum at termination of employment. City of Sebastian, Florida Notes to Financial Statements - 84 - Note 11: BENEFIT PLANS (Continued) Police Officers’ Pension Plan (Continued) Defined Benefit Pension Plan (Continued) Disability. Eligibility for a service-incurred disability is covered from date of employment. Eligibility for a non-service incurred liability vests after 10 years of credited service. The benefit for a service- incurred disability is the member’s accrued benefit but not less than 42% of AFC and not less than 25% of AFC for a non-service incurred disability. The duration is payable for life, with ten years certain, or until recovery (as determined by the Board). Pre-Retirement death benefits. Eligibility for pre-retirement death benefits for non-vested is the refund of accumulated contributions. For vested, accrued benefit is payable to beneficiary for 10 years at otherwise normal retirement date. Retirement death benefits. Benefits are payable to beneficiary in accordance with option selected at retirement. Cost of living adjustment. A 1% automatic cost-of-living adjustment (COLA), beginning on the first October 1 following age 58 for Members retiring after August 23, 2017 with at least 15 years of Credited Service. The COLA is applicable to all categories of retirement, including Normal, Early, Vesting, Disability, and pre-retirement death beneficiaries. Rate of Return. For the year ended September 30, 2023, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 11.66 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Net Pension Liability of the City. The components of the net pension liability of the City at September 30, 2023, were as follows: Total pension liability 25,496,816$ Plan fiduciary net position (20,766,051) Sponsor's net pension liability (asset)4,730,765$ Plan fiduciary net position as a percentage of total pension liability (asset)81.45% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of October 1, 2022 updated to September 30, 2023 (the measurement date) using the following actuarial assumptions applied to all measurement periods. City of Sebastian, Florida Notes to Financial Statements - 85 - Note 11: BENEFIT PLANS (Continued) Police Officers’ Pension Plan (Continued) Defined Benefit Pension Plan (Continued) Inflation 2.30% Salary increases Service based Discount rate 7.10% Investment rate of return 7.10% Mortality Rate Healthy Active Lives: PubS.H-2010 (Below Median) for Employees, set forward one year. Mortality Rate Healthy Retiree Lives: PubS.H-2010 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. 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, 2023 are summarized in the following table: Asset Class: Target Allocation Long-term Expected Real Rate of Return Domestic equity 52.5%5.31% International equity 12.5%4.15% Fixed income 25.0%1.20% Private real estate 5.0%3.90% MLP/Energy infrastructure 5.0%3.33% Total 100.0% City of Sebastian, Florida Notes to Financial Statements - 86 - Note 11: BENEFIT PLANS (Continued) Police Officers’ Pension Plan (Continued) Defined Benefit Pension Plan (Continued) 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. 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. Current 1% Decrease Discount Rate 1% Increase (6.10%)(7.10%)(8.10%) Net Pension Liability (asset)7,726,331$ 4,730,765$ 2,237,266$ City of Sebastian, Florida Notes to Financial Statements - 87 - Note 11: BENEFIT PLANS (Continued) Police Officers’ Pension Plan (Continued) Defined Benefit Pension Plan (Continued) Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) (a)(b)(a) - (b) Balances at September 30, 2022 24,257,517$ 18,482,915$ 5,774,602$ Changes for the year: Service cost 582,328 - 582,328 Interest 1,725,577 - 1,725,577 Change in excess State money - - - Differences between expected and actual experience 3,289 - 3,289 Changes of assumptions - - - Changes of benefit terms - - - Contributions - employer - 763,666 (763,666) Contributions - state - 272,496 (272,496) Contributions - employee - 234,525 (234,525) Net investment income - 2,174,593 (2,174,593) Benefit payments, including refunds of employee contributions (1,071,895) (1,071,895) - Administrative expense - (90,249) 90,249 Net changes 1,239,299 2,283,136 (1,043,837) Balances at September 30, 2023 25,496,816$ 20,766,051$ 4,730,765$ Increase (Decrease) State statutes mandate that the State contribution be recorded as revenue to the General Fund and then paid to the Pension Trust Fund. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended September 30, 2023, the City recognized pension expense of $1,366,777. At September 30, 2023, the City reported pension-related deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Deferred Net Deferred Outflows of Inflows of Outflows of Resources Resources Resources Differences between expected and actual experience 263,452$ 123,833$ 139,619$ Changes of assumptions 140,991 149,262 (8,271) Net differences between projected and actual earnings on pension plan investments 1,177,356 - 1,177,356 Total 1,581,799$ 273,095$ 1,308,704$ City of Sebastian, Florida Notes to Financial Statements - 88 - Note 11: BENEFIT PLANS (Continued) Police Officers’ Pension Plan (Continued) Defined Benefit Pension Plan (Continued) Amounts reported as pension-related deferred outflows of resources and deferred inflows of resources will be recognized in pension expense as follows: Year ending September 30, 2024 323,007$ 2025 288,019 2026 868,711 2027 (171,033) 2028 - Thereafter - Total 1,308,704$ Payable to the Pension Plan. At September 30, 2023, the City had no amounts payable for contributions to the Police Officers’ Pension Plan. Coastal Florida Public Employees Association Negotiated Defined Benefit Pension Plan Plan Description: All City employees who are members of Coastal Florida Public Employees Association, in addition to participating in the Employees’ Retirement System, also participate in the Communication Workers of America / International Typographical Union Negotiated Pension Plan (NPP). The NPP, which is a non-governmental union-sponsored plan with no predominant governmental employer, provides pensions to employees of governmental entities and to employees of non-governmental entities. The NPP is a cost-sharing multiemployer defined benefit pension plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. The NPP is administered by the Fund’s Board of Trustees. Eligibility and benefit provisions are defined in the NPP document adopted by the Board of Trustees. As of September 30, 2023, 66 employees were members of the NPP. Consistent with the provisions of GASB Statement No. 78, which provides an exception for non- governmental sponsored plans, no determination of the proportionate net pension liability, pension expense, or deferred outflows or inflows of resources, if any, is made for this cost-sharing defined benefit pension plan. 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. City of Sebastian, Florida Notes to Financial Statements - 89 - Note 11: BENEFIT PLANS (Continued) Coastal Florida Public Employees Association (Continued) Negotiated Defined Benefit Pension Plan (continued) Early Pension. Minimum age 62: 20 years of service credit (5 years of service for disabled participants). 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 employee’s behalf, a benefit under Option B on the date that the participant would have been eligible for a pension benefit. Beneficiaries of unmarried participants receive 100% of employer contributions payable in 60 equal monthly installments commencing at the participant’s earliest retirement age. 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 by a third-party administrator, Frank M. Vaccaro & Associates, Inc. Contribution requirements are established by the CWA contract, effective date April 29, 2001, which does not specify an ending date. Benefit Provisions and Contribution Requirements. The NPP provides retirement and disability benefits to plan members and beneficiaries. The plan is administered by a third-party administrator, Frank M. Vaccaro & Associates, Inc. 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. City of Sebastian, Florida Notes to Financial Statements - 90 - Note 11: BENEFIT PLANS (Continued) Coastal Florida Public Employees Association (Continued) Negotiated Defined Benefit Pension Plan (continued) Funding Policy. The contribution requirements are established by contract and may be amended by union negotiation. Under the current contract, which expires September 30, 2025, the employer contribution rate, expressed as a percentage of compensation, was 9.0%. Employees do not contribute to this plan. Contributions which are equal to 100% of the required contribution for the year ended September 30, 2023 to the CWA Pension Plan was $255,388. Information regarding the NPP, including audited financial statements, can be obtained from the Board of Trustees at the following address: CWA/ITU Negotiated Pension Plan 27 Roland Avenue, Suite 200, Mount Laurel, NJ 08054, or at cwaitunpp.org. The Multiemployer Pension Plan Amendments Act of 1980 imposes certain liabilities upon employers associated with multiemployer pension plans who withdraw from or terminate such plans. The City has no plans to withdraw or partially withdraw from the Plan. Defined Contribution 401(a) Plan 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 employee’s 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 IRAs. Plan Participation. As of September 30, 2023, there were a total of 25 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. Lump Sum. Retirement benefits can be paid either partially or by total distribution of the employee’s 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. City of Sebastian, Florida Notes to Financial Statements - 91 - Note 11: BENEFIT PLANS (Continued) Defined Contribution 401(a) Plan (Continued) 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 employer contribution rate, expressed as a percentage of compensation, was 9% for the 2022-2023 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 were $202,148. Note 12: OTHER POSTEMPLOYMENT BENEFITS In addition to the pension benefits described in Note 11, 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. Management has determined that the net other postemployment benefit liability is immaterial to the financial statements taken as a whole. Note 13: 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. The capital projects fund had a negotiated unassigned fund balances of $83,736. Detailed information on fund balances of governmental funds is as follows: City of Sebastian, Florida Notes to Financial Statements - 92 - Note 13: FUND BALANCES AND NET POSITION (Continued) General Fund Riverfront Redevelopment Fund Stormwater Utility Fund American Rescue Plan Act Discretionary Sales Tax Nonmajor Governmental Funds Total Nonspendable: Prepaid items 289,068$ 705$ 28,878$ -$ -$ -$ 318,651$ Inventories 75,054 - - - - - 75,054 Permanent fund corpus - - - - - 604,564 604,564 Total nonspendable 364,122 705 28,878 - - 604,564 998,269 Restricted for: Prepetual care - - - - - 553,543 553,543 Infrastructure - - - - 5,381,941 1,796,671 7,178,612 Redevelopment - 888,580 - - - - 888,580 Stormwater - - 1,871,491 - - - 1,871,491 Law enforcement 176,903 - - - - 52,756 229,659 Economic environment - - - 73,599 - - 73,599 Total restricted 176,903 888,580 1,871,491 73,599 5,381,941 2,402,970 10,795,484 Committed for: Capital projects - - - - - 4,350 4,350 Development of public parking - - - - - 97,781 97,781 Total committed - - - - - 102,131 102,131 Unassigned (deficit)9,398,963 - - - - (83,736) 9,315,227 Total funds balances (deficits), governmental funds 9,939,988$ 889,285$ 1,900,369$ 73,599$ 5,381,941$ 3,025,929$ 21,211,111$ Note 14: NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of September 30, 2023, was as follows: Governmental Business-type Activities Activities Total Capital assets: Capital assets not being depreciated 9,344,728$ 257,575$ 9,602,303$ Capital assets being depreciated, net 37,936,870 20,973,079 58,909,949 Total capital assets 47,281,598$ 21,230,654$ 68,512,252$ - - - Less related debt: Retainage payable - 29,813 29,813 Leases payable 1,817,389 2,405,019 4,222,408 Net investment in capital assets 45,464,209$ 18,795,822$ 64,260,031$ City of Sebastian, Florida Notes to Financial Statements - 93 - Note 15: COMMITMENTS AND CONTINGENCIES During the ordinary course of its operation, the City is party to various claims, legal actions, and complaints. While the ultimate effect of such litigation cannot be ascertained at this time, in the opinion of the City Attorney, the liabilities which may arise from such actions would not result in losses which would exceed the liability insurance limits in effect at the time the claim arose or otherwise materially affect the financial condition of the City or results of activities. The City has various major contracts and other commitments outstanding as of September 30, 2023. Major funding has been committed toward Road Improvements, Slip lining Drainage Pipes, Concha Dam Replacement, Gardenia Ditch Improvements, and Schumann Drive Culvert Project. A summary of these projects at September 30, 2023 is as follows: Total Commitments Total Paid as of September 30, 2023 Encumbered at September 30, 2023 Major Commitments Road Improvements 500,000$ -$ -$ Sliplining Drainage Pipes 329,786 49,061 - Concha Dam Replacement 700,000 - - Gardenia Ditch Improvements 750,000 9,887 3,756 Schumann Drive Culvert 750,000 7,596 - Total outstanding commitments 3,029,786$ 66,544$ 3,756$ - 94 - THIS PAGE IS INTENTIONALLY LEFT BLANK. City of West Melbourne, - 95 - REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT’S DISCUSSION AND ANALYSIS City of West Melbourne, CC City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Fiscal Years - 96 - For the year ended September 30,2023 2022 2021 Total pension liability Service cost 582,328$ 582,925$ 546,747$ Interest on total pension liability 1,725,577 1,648,636 1,539,609 Change in excess state money - - - Changes of benefit terms - - - Differences between expected and actual experience 3,289 (199,190) 249,038 Changes of assumptions - - 274,475 Contributions - buy back - - - Benefit payments, including refunds of employee contributions (1,071,895) (824,301) (794,272) Net change in total pension liability 1,239,299 1,208,070 1,815,597 Total pension liability - beginning 24,257,517 23,049,447 21,233,850 Total pension liability - ending (a)25,496,816$ 24,257,517$ 23,049,447$ Plan fiduciary net position Contributions - employer 763,666$ 799,032$ 686,778$ Contributions - state 272,496 227,003 206,017 Contributions - employee 234,525 227,488 220,466 Contributions - buy back - - - Pension plan net investment income (loss)2,174,593 (3,419,334) 4,116,810 Benefit payments, including refunds of employee contributions (1,071,895) (824,301) (794,272) Administrative expense (90,249) (70,188) (70,384) Net change in plan fiduciary net position 2,283,136 (3,060,300) 4,365,415 Plan fiduciary net position - beginning 18,482,915 21,543,215 17,177,800 Plan fiduciary net position - ending (b)20,766,051$ 18,482,915$ 21,543,215$ Net pension liability - ending (a) - (b)4,730,765$ 5,774,602$ 1,506,232$ Plan fiduciary net position as a percentage of the total pension liability 81.45%76.19%93.47% Covered payroll(1)2,931,563 2,843,600 2,755,823$ Net pension liability as a percentage of covered payroll 161.37%203.07%54.66% City of West Melbourne, CC City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Schedule of Changes in Net Pension Liability and Related Ratios Last Ten Fiscal Years - 97 - 2020 2019 2018 2017 2016 2015 2014 600,789$ 609,880$ 589,149$ 479,778$ 418,143$ 403,611$ 396,147$ 1,451,768 1,371,857 1,270,670 1,179,511 1,027,558 979,259 914,243 - - (84,863) - - 22,218 24,386 - - - 613,973 - (4,316) - 408,904 (25,912) 164,601 20,758 59,175 (240,633) - (447,786) 22,520 - 382,825 626,069 223,200 - - 52,749 - - - - - (684,963) (617,282) (700,733) (495,629) (493,765) (496,363) (452,892) 1,328,712 1,413,812 1,238,824 2,181,216 1,637,180 886,976 881,884 19,905,138 18,491,326 17,252,502 15,071,286 13,434,106 12,547,130 11,665,246 21,233,850$ 19,905,138$ 18,491,326$ 17,252,502$ 15,071,286$ 13,434,106$ 12,547,130$ 703,814$ 595,045$ 525,296$ 337,201$ 322,998$ 320,179$ 401,103$ 208,645 198,770 188,923 168,628 169,027 145,700 147,868 229,327 223,495 204,854 177,585 167,309 161,270 160,494 - 52,749 - - - - - 974,847 261,888 1,028,549 1,371,657 1,067,139 (60,326) 951,910 (684,963) (617,282) (700,733) (495,629) (493,765) (496,363) (452,892) (67,989) (67,867) (82,088) (45,633) (28,025) (39,673) (27,815) 1,363,681 646,798 1,164,801 1,513,809 1,204,683 30,787 1,180,668 15,814,119 15,167,321 14,002,520 12,488,711 11,284,028 11,253,241 10,072,573 17,177,800$ 15,814,119$ 15,167,321$ 14,002,520$ 12,488,711$ 11,284,028$ 11,253,241$ 4,056,050$ 4,091,019$ 3,324,005$ 3,249,982$ 2,582,575$ 2,150,078$ 1,293,889$ 80.90%79.45%82.02%81.16%82.86%84.00%89.69% 2,866,586$ 2,793,692$ 2,560,670$ 2,438,012$ 2,263,866$ 2,154,612$ 2,106,767$ 141.49%146.44%129.81%133.30%114.08%99.79%61.42% City of West Melbourne, CC City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Notes to Schedule of Changes in Net Pension Liability and Related Ratios - 98 - 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 O-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 West Melbourne, CC City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Schedule of Investment Returns - 99 - Fiscal Year Ending September 30, Annual Return* 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% 2023 11.66% *Annual money-weighted rate of return. City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Schedule of Contributions Last Ten Fiscal Years - 100 - For the year ended September 30,2023 2022 2021 Actuarially determined contribution 897,058$ 932,701$ 835,014$ Contributions in relation to the actuarially determined contributions - City 763,666 799,032 686,778 Contributions in relation to the actuarially determined contributions - State 272,496 227,003 206,017 Contribution deficiency (surplus)(139,104)$ (93,334)$ (57,781)$ Covered payroll(1)2,931,563$ 2,843,600$ 2,755,823$ Contributions as a percentage of covered payroll 35.35%36.08%32.40% Notes to the schedule: (1) Covered payroll includes defined benefit plan actives, investment plan members and members in DROP. - 101 - 2020 2019 2018 2017 2016 2015 2014 871,442$ 793,409$ 673,456$ 768,277$ 667,764$ 596,502$ 524,585$ 703,814 595,045 525,296 337,201 322,998 320,179 401,103 208,645 198,770 188,923 168,628 169,027 145,700 147,868 (41,017)$ (406)$ (40,763)$ 262,448$ 175,739$ 130,623$ (24,386)$ 2,866,586$ 2,793,692$ 2,560,670$ 2,438,012$ 2,263,866$ 2,154,612$ 2,106,767$ 31.83%28.41%27.89%20.75%21.73%21.62%26.06% City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Notes to Schedule of Contributions - 102 - Valuation date October 1, 2021 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 Entry Age Normal Actuarial Cost Method. The following loads are applied for determining the minimum required contribution: Interest - a half year, based on current 7.10% assumption. Salary - None. Amortization method New UAAL amortization bases are amortized over the following amortization periods: Experience: 15 Years. Assumption/Method Changes: 15 Years. Benefit Changes: 15 Years. Bases established prior to the valuation date are adjusted proportionally to match the Expected Unfunded Actuarial Accrued Liability as of the valuation date, in order to align prior year bases with the portion of the current year UAAL associated with prior year sources. Remaining amortization period 15 Years (as of October 1, 2022) Mortality 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. 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. Beneficiary Lives: Female: PubG.H-2010 (Below Median) for Healthy Retirees. Male: PubG.H-2010 (Below Median) for Healthy Retirees, set back one year. Disabled Lives: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees. All rates are projected generationally with Mortality Improvement Scale MP-2018. We feel this assumption City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Notes to Schedule of Contributions - 103 - sufficiently accommodates future mortality improvements. The previously described mortality 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, 2021 FRS valuation report for special risk employees, with appropriate adjustments made based on plan demographics. Interest rate 7.10% 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% 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. Final salary load Final salary is increased with a load assumption as shown below based on credited service on 10/1/2014: Service on 10/1/2014 Load Assumption 5 or more years 20% 2 – 5 years 10% Less than 1 year 0% City of Sebastian, Florida Required Pension Supplementary Information Single-employer Pension Trust Fund Notes to Schedule of Contributions - 104 - 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. City of Sebastian, Florida Required Pension Supplementary Information Coastal Florida Public Employee Association Pension Plan Schedule of Employer Contributions - 105 - Fiscal Year Ending September 30, Annual Required Contributions 2014 204,361$ 2015 217,916 2016 200,889 2017 204,035 2018 217,695 2019 241,992 2020 239,161 2021 241,312 2022 272,529 2023 255,388 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 by contacting the Coastal Pension Plan office. - 106 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 107 - COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES City of Sebastian, Florida Combining Balance Sheet – Nonmajor Governmental Funds - 108 - Law Local Option Parking Recreation Enforcement September 30, 2023 Gas Tax In-Lieu-of Impact Fee Forfeiture ASSETS Cash and cash equivalents 1,080,870$ -$ 330,932$ 44,809$ Investments 191,657 97,881 58,432 7,947 Due from other governments 134,780 - - - Total assets 1,407,307$ 97,881$ 389,364$ 52,756$ LIABILITIES Accounts payable and accrued liabilities -$ -$ -$ -$ Due to other funds - - - - Unearned revenue - 100 - - Total liabilities - 100 - - FUND BALANCES Nonspendable - - - - Restricted 1,407,307 - 389,364 52,756 Committed - 97,781 - - Total fund balances 1,407,307 97,781 389,364 52,756 Total liabilities and fund balances 1,407,307$ 97,881$ 389,364$ 52,756$ -$ Special Revenue - 109 - Permanent Total Stormwater Nonmajor Capital Capital Utility Transportation Governmental Projects Improvements Improvements Improvements Cemetery Funds -$ 54,255$ 9,406$ -$ 577,734$ 2,098,006$ - - - - 580,373 936,290 32,116 16,283 2,650 - - 185,829 32,116$ 70,538$ 12,056$ -$ 1,158,107$ 3,220,125$ 48,987$ 66,188$ 12,056$ -$ -$ 127,231$ 66,865 - - - - 66,865 - - - - - 100 115,852 66,188 12,056 - - 194,196 - - - - 604,564 604,564 (83,736) - - - 553,543 2,319,234 - 4,350 - - - 102,131 (83,736) 4,350 - - 1,158,107 3,025,929 32,116$ 70,538$ 12,056$ -$ 1,158,107$ 3,220,125$ -$ -$ Capital Projects City of Sebastian, Florida Combining Statement of Revenues, Expenditures and Changes in Fund Balance Nonmajor Governmental Funds - 110 - Law Local Option Parking Recreation Enforcement For the year ended September 30, 2023 Gas Tax In-Lieu-of Impact Fee Forfeiture REVENUES Intergovernmental 756,414$ -$ -$ -$ Impact fees - - 99,450 - Charges for services - - - - Fines - - - 50 Investment earnings 20,308 4,505 8,202 1,157 Other revenues - 4,128 - - Contributions and donations - - - - Total revenues 776,722 8,633 107,652 1,207 EXPENDITURES Current: General government - - - - Public safety - - - 1,501 Physical environment - - - - Transportation 11,300 - - - Capital outlay - - - - Debt service: Principal 121,000 - - - Interest 1,174 - - - Total expenditures 133,474 - - 1,501 Excess (deficiency) of revenues over (under) expenditures 643,248 8,633 107,652 (294) Other financing sources (uses) Transfers in - - - - Transfers out (4,657) - (36,839) - Total other financing sources (uses)(4,657) - (36,839) - Net change in fund balances 638,591 8,633 70,813 (294) Fund balance, beginning of year 700,039 89,148 318,551 53,050 Prior period adjustment 68,677 - - - Fund balance, beginning of year, restated 768,716 89,148 318,551 53,050 Fund balance, end of year 1,407,307$ 97,781$ 389,364$ 52,756$ Special Revenue - 111 - Permanent Total Stormwater Nonmajor Capital Capital Utility Transportation Governmental Projects Improvements Improvements Improvements Cemetery Funds 119,731$ 86,283$ 646$ -$ -$ 963,074$ - - - - - 99,450 - - - - 181,096 181,096 - - - - - 50 - - - - 42,590 76,762 - - - - - 4,128 15,600 2,500 - - - 18,100 135,331 88,783 646 - 223,686 1,342,660 394,739 - - - - 394,739 - - - 482,963 - 484,464 - 111,843 167,833 - 95,000 374,676 - - - - - 11,300 1,108,166 41,238 497,621 143,732 17,117 1,807,874 - - - - - 121,000 - - - - - 1,174 1,502,905 153,081 665,454 626,695 112,117 3,195,227 (1,367,574) (64,298) (664,808) (626,695) 111,569 (1,852,567) 1,370,229 66,798 664,808 969,392 - 3,071,227 - - - - - (41,496) 1,370,229 66,798 664,808 969,392 - 3,029,731 2,655 2,500 - 342,697 111,569 1,177,164 (86,391) 1,850 - (342,697) 1,046,538 1,780,088 - - - - - 68,677 (86,391) 1,850 - (342,697) 1,046,538 1,848,765 (83,736)$ 4,350$ -$ -$ 1,158,107$ 3,025,929$ -$ Capital Projects City of Sebastian, Florida Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual Local Option Gas Tax Fund - 112 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Intergovernmental 792,601$ 792,601$ 756,414$ (36,187)$ Investment earnings 2,479 2,479 20,308 17,829 Total revenues 795,080 795,080 776,722 (18,358) Expenditures Transportation 5,400 10,800 11,300 (500) Principal 121,000 121,000 121,000 - Interest 1,174 1,174 1,174 - Total expenditures 127,574 132,974 133,474 (500) Excess (deficiency) of revenues over (under) expenditures 667,506 662,106 643,248 (18,858) Other financing sources (uses) Transfers out (925,000) (946,458) (4,657) 941,801 Net other financing sources (uses)(925,000) (946,458) (4,657) 941,801 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (257,494) (284,352) 638,591 922,943 Fund balance, beginning of year 768,716 768,716 768,716 - Fund balance, end of year 511,222$ 484,364$ 1,407,307$ 922,943$ City of Sebastian, Florida Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual Parking In-Lieu-Of Fund - 113 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Investment earnings 195$ 195$ 4,505$ 4,310$ Other revenues 344 344 4,128 3,784 Total revenues 539 539 8,633 8,094 Expenditures Transportation - - - - Total expenditures - - - - Excess (deficiency) of revenues over (under) expenditures 539 539 8,633 8,094 Fund balance, beginning of year 89,148 89,148 89,148 - Fund balance, end of year 89,687$ 89,687$ 97,781$ 8,094$ City of Sebastian, Florida Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual Recreation Impact Fee Fund - 114 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Investment earnings 13,389$ 13,389$ 8,202$ (5,187)$ Impact fees 150,000 150,000 99,450 Total revenues 163,389 163,389 107,652 (5,187) Expenditures Culture and recreation - - - - Total expenditures - - - - Excess (deficiency) of revenues over (under) expenditures 163,389 163,389 107,652 (55,737) Other financing sources (uses) Transfers out (55,000) (228,474) (36,839) 191,635 Net other financing sources (uses)(55,000) (228,474) (36,839) 191,635 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 108,389 (65,085) 70,813 135,898 Fund balance, beginning of year 318,551 318,551 318,551 - Fund balance, end of year 426,940$ 253,466$ 389,364$ 135,898$ City of Sebastian, Florida Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual Law Enforcement Forfeiture Fund - 115 - Original Final Variance with For the year ended September 30, 2023 Budget Budget Actual Final Budget Revenues Fines and forfeitures 1,000$ 1,000$ 50$ (950)$ Investment earnings 160 160 1,157 997 Total revenues 1,160 1,160 1,207 47 Expenditures Public safety - - 1,501 (1,501) Total expenditures - - 1,501 (1,501) Excess (deficiency) of revenues over (under) expenditures 1,160 1,160 (294) (1,454) Fund balance, beginning of year 53,050 53,050 53,050 - Fund balance, end of year 54,210$ 54,210$ 52,756$ (1,454)$ - 116 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 117 - CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS City of Sebastian, Florida Capital Assets Used in the Operation of Governmental Funds Comparative Schedule by Source September 30, 2023 - 118 - Governmental Funds capital assets:FY 2023 FY 2022 Land $9,123,041 $9,123,041 Right to use land 1,827,899 171,782 Buildings and structures 23,989,507 14,344,679 Non-building improvements (IOTB)8,067,760 8,222,937 Machinery and equipment (Equip & Furniture)12,616,953 11,313,414 Infrastructure 46,571,933 46,454,410 Construction in Progess 221,687 9,520,507 Total Govt Funds Capital Assets $102,418,780 $99,150,770 Investment in Governmental Funds capital assets by sources: Federal grants $4,803,135 $4,779,765 State grants 3,127,467 3,127,709 County grants 507,031 507,031 General Fund 12,648,121 11,050,544 Law enforcement trust fund 108,939 117,439 Recreational impact fee 3,889,427 3,853,634 Stormwater utility fee 9,058,118 8,947,728 Riverfront redevelopment 3,072,710 3,073,201 Cemetery trust fund 839,720 822,603 Donations 2,965,996 2,965,996 Sales taxes 40,587,845 39,096,649 Motor fuel taxes 6,115,060 6,113,260 Revenue bond debt 13,815,028 13,815,028 Parking in Lieu of Fee 90,621 90,621 Capital projects 789,562 789,562 Total Investment in Govt Funds Capital Assets $102,418,780 $99,150,770 City of Sebastian, Florida Capital Assets Used in Operation of Governmental Funds Schedule by Function and Activity September 30, 2023 - 119 - Improvements Machinery Right to use Other than and Land land Buildings Buildings Equipment Infrastructure Totals General government: City Manager -$ -$ -$ -$ 61,427$ -$ 61,427$ City Clerk - - - - 4,003 - 4,003 Finance - - - 1,100 2,294 - 3,394 MIS - - 5,841 77,745 1,780,696 - 1,864,282 Facilities Maintenance - - 10,733,910 29,361 937,800 - 11,701,071 Comm Dev/Growth Mgmt - - 84,426 - 48,129 - 132,555 Non-Departmental 4,474,459 - 6,184,989 126,503 204,375 598,891 11,589,217 Subtotal 4,474,459 - 17,009,166 234,709 3,038,724 598,891 25,355,949 Public Safety: Administration 9,560 - 3,799,272 98,173 432,814 - 4,339,819 Road Patrol - - - - 3,776,930 - 3,776,930 Code Enforcement - - - - 64,818 - 64,818 Investigations - - - 4,871 420,532 32,262 457,665 Communications - - - - 26,927 - 26,927 Building Department - - - - 6,295 - 6,295 Subtotal 9,560 - 3,799,272 103,044 4,728,316 32,262 8,672,454 Transportation: Central Garage - - 130,489 9,038 184,941 674 325,142 Roads and Drainage 47,125 1,656,117 164,537 1,003,738 1,224,601 22,392,339 26,488,457 Subtotal 47,125 1,656,117 295,026 1,012,776 1,409,542 22,393,013 26,813,599 Economic Environment: Non-Departmental 2,308,392 - 1,040,590 - - - 3,348,982 Subtotal 2,308,392 - 1,040,590 - - - 3,348,982 Physical Environment: Stormwater - - - 18,334 2,507,247 20,599,010 23,124,591 Cemetery 572,181 - 201,153 237,142 57,201 92,167 1,159,844 Subtotal 572,181 - 201,153 255,476 2,564,448 20,691,177 24,284,435 Culture/Recreation: Parks and Recreation 1,711,324 171,782 1,644,300 6,461,755 875,923 2,856,590 13,721,674 Subtotal 1,711,324 171,782 1,644,300 6,461,755 875,923 2,856,590 13,721,674 Total 9,123,041$ 1,827,899$ 23,989,507$ 8,067,760$ 12,616,953$ 46,571,933$ 102,197,093 Construction in progress 221,687 Total 102,418,780$ Function and Activity City of Sebastian, Florida Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity September 30, 2023 - 120 - Governmental Governmental Funds Funds Capital Assets Transfers Transfers Capital Assets October 1, 2022 Additions Deletions In Out September 30, 2023 General government: City Manager 85,092$ -$ 23,665$ -$ -$ 61,427$ City Clerk 4,003 - - - - 4,003 Admin Services 3,394 - - - - 3,394 MIS 1,812,247 85,556 33,520 - - 1,864,283 Facilities Maintenance 1,997,967 9,733,998 21,472 - 9,421 11,701,072 Community Development 107,529 25,027 - - - 132,556 Non-Departmental 11,589,214 - - - - 11,589,214 Subtotal 15,599,446 9,844,581 78,657 - 9,421 25,355,949 Public Safety: Administration 4,337,405 - - 2,414 - 4,339,819 Road Patrol 3,064,973 781,366 69,405 - - 3,776,934 Code Enforcement 64,818 - - - 64,818 Investigations 453,139 8,900 4,375 - - 457,664 Communications 26,927 - - - - 26,927 Building Department 6,295 - - - - 6,295 Subtotal 7,953,557 790,266 73,780 2,414 - 8,672,457 Physical Environment: Stormwater 22,573,147 570,229 18,784 - - 23,124,592 Cemetery 1,141,444 19,390 990 - - 1,159,844 Subtotal 23,714,591 589,619 19,774 - - 24,284,436 Transportation: Central Garage 471,609 7,598 154,065 - - 325,142 Roads and Drainage 24,856,663 1,681,225 51,574 7,007 4,863 26,488,458 Subtotal 25,328,272 1,688,823 205,639 7,007 4,863 26,813,600 Economic Environment: Non-Departmental 3,348,982 - - - - 3,348,982 Subtotal 3,348,982 - - - - 3,348,982 Culture & Recreation: Parks and Recreation 13,685,415 166,061 134,670 4,863 - 13,721,669 Subtotal 13,685,415 166,061 134,670 4,863 - 13,721,669 Total 89,630,263 13,079,350 512,520 14,284 14,284 102,197,093 Construction in Progress 9,520,507 1,840,431 11,139,251 - - 221,687 Total 99,150,770$ 14,919,781$ 11,651,771$ 14,284$ 14,284$ 102,418,780$ Function and Activity - 121 - STATISTICAL SECTION - 122 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 123 - STATISTICAL SECTION This part of the City of Sebastian, Florida's Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Table of Contents A. Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Schedule A1 Net Position by Component Schedule A2 Changes in Net Position Schedule A3 Fund Balances – Governmental Funds Schedule A4 Changes in Fund Balances – Governmental Funds Schedule A5 Program Revenue by Function/Program B. Revenue Capacity These schedules contain information to help the reader assess the City's most significant local own- source revenues - ad valorem property taxes, occupational license taxes, and building permits revenues. Schedule B1 Tax Revenues by Source Governmental Funds Schedule B2 Direct and Overlapping Property Tax Rates Schedule B3 Actual and Estimated Value of Taxable Property Schedule B4 Principal Property Taxpayers Schedule B5 Property Tax Levies and Collections C. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of debt outstanding and the City's ability to issue additional debt in the future, as necessary. Schedule C1 Ratios of Outstanding Debt by Type - 124 - D. Demographic and Economic Information Financial Trends These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Schedule D1 Demographic and Economic Statistics Schedule D2 Principal Employers E. Operating Information These schedules contain service and infrastructure data 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. Schedule E1 Full-Time Equivalent City Government Employees by Function/Program Schedule E2 Operating Indicators by Function/Program Schedule E3 Capital Asset Statistics by Function/Program Additional Notes Unless otherwise noted, the information in these schedules is derived from the City's Annual Comprehensive Financial Report (ACFR) for the relevant year. City of Sebastian, Florida Net Position by Component Schedule A1 Last Ten Fiscal Years - 125 - 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Governmental activities Net investment in capital assets 45,464,209$ 46,351,824$ 41,252,989$ 37,919,832$ 37,080,967$ 37,568,980$ 37,461,026$ 35,886,087$ 35,220,857$ 35,210,526$ Restricted 11,400,048 7,282,425 10,142,786 10,637,069 8,976,174 6,419,900 5,113,543 5,209,372 4,997,724 5,115,627 Unrestricted 4,618,453 3,445,378 2,320,211 1,103,683 2,056,430 1,649,796 1,236,088 3,615,777 3,467,014 3,330,400 Total govermental activities net position 61,482,710 57,079,627 53,715,986 49,660,584 48,113,571 45,638,676 43,810,657 44,711,236 43,685,595 43,656,553 Business-type activities Net investment in capital assets 18,795,822 18,585,143 15,862,090 16,263,098 16,995,851 14,972,789 13,384,969 11,989,666 10,517,895 10,439,804 Unrestricted 1,598,136 (436,561) (933,213) (1,017,263) (654,928) (777,422) (1,008,976) (717,053) 67,779 (103,116) Total business-type activities net position 20,393,958 18,148,582 14,928,877 15,245,835 16,340,923 14,195,367 12,375,993 11,272,613 10,585,674 10,336,688 Primary government Net investment in capital assets 64,260,031 64,936,967 57,115,079 54,182,930 54,076,818 52,541,769 50,845,995 47,875,753 45,738,752 45,650,330 Restricted 11,400,048 7,282,425 10,142,786 10,637,069 8,976,174 6,419,900 5,113,543 5,209,372 4,997,724 5,115,627 Unrestricted 6,216,589 3,008,817 1,386,998 86,420 1,401,502 872,374 227,112 2,898,724 3,534,793 3,227,284 Total primary government net position 81,876,668$ 75,228,209$ 68,644,863$ 64,906,419$ 64,454,494$ 59,834,043$ 56,186,650$ 55,983,849$ 54,271,269$ 53,993,241$ City of Sebastian, Florida Changes in Net Position Schedule A2 Last Ten Fiscal Years - 126 - 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Expenses: Governmental activities: General government 5,224,980$ 5,158,135$ 4,907,738$ 5,071,184$ 3,970,541$ 3,926,479$ 3,379,369$ 3,285,607$ 3,015,536$ 2,923,398$ Public safety 8,093,434 7,703,234 6,453,141 6,856,836 6,613,707 6,227,299 6,549,037 5,476,136 5,164,197 4,908,374 Physical environment 3,440,202 3,259,272 2,848,779 2,534,320 3,106,764 3,431,933 3,769,377 2,538,752 2,759,461 2,310,539 Transportation 2,704,831 2,153,685 2,136,727 2,037,807 2,022,117 1,949,882 2,279,149 1,861,946 2,024,814 1,828,569 Economic environment 338,114 291,969 256,771 315,985 402,986 238,597 106,577 364,675 194,630 247,891 Culture and recreation 1,617,044 1,606,579 1,481,096 1,402,691 1,434,296 1,279,635 1,326,245 1,191,488 1,293,246 1,229,369 Interest and fiscal charges 67,178 14,644 19,522 28,711 38,539 56,523 63,141 82,943 100,468 235,071 Total governmental activities expenses 21,485,783 20,187,518 18,103,774 18,247,534 17,588,950 17,110,348 17,472,895 14,801,547 14,552,352 13,683,211 Business-type activities:Golf course 1,786,655 1,659,271 1,575,587 1,551,926 1,533,749 1,555,853 1,537,332 1,584,214 1,409,829 1,406,770 Airport 1,531,134 1,427,667 1,339,582 1,282,084 1,336,180 1,328,258 1,361,134 1,197,549 1,038,361 1,031,464 Building 1,007,261 1,260,189 1,544,157 1,869,767 715,846 664,066 586,752 546,649 531,087 465,717 Total business-type activities expenses 4,325,050 4,347,127 4,459,326 4,703,777 3,585,775 3,548,177 3,485,218 3,328,412 2,979,277 2,903,951 Total primary government expenses 25,810,833 24,534,645 22,563,100 22,951,311 21,174,725 20,658,525 20,958,113 18,129,959 17,531,629 16,587,162 Program Revenues: Governmental activities: Charges for services: General government 733,072 769,115 769,986 684,938 532,721 466,261 362,631 374,581 372,255 407,068 Public safety 288,122 217,282 157,625 130,502 147,121 74,216 124,800 98,446 80,763 76,132 Physical environment 2,140,145 2,132,049 2,119,101 2,037,874 2,161,464 1,064,659 1,021,038 1,049,735 1,087,642 1,073,015 Culture and recreation 66,859 69,714 70,623 41,316 54,769 52,160 48,781 53,959 67,940 67,371 Operating grants and contributions 581,139 2,066,434 2,093,941 1,726,719 803,092 1,776,070 250,292 323,101 345,937 186,295 Capital grants and contributions'4,977,894 4,910,478 4,265,728 3,647,329 251,088 181,050 947,274 809,932 994,546 739,785 Total government activities program revenue 8,787,231 10,165,072 9,477,004 8,268,678 3,950,255 3,614,416 2,754,816 2,709,754 2,949,083 2,549,666 Business-type activities: Charges for services Golf course 1,902,696 1,812,201 1,498,561 1,525,184 1,400,939 1,257,047 1,058,939 1,135,357 1,333,189 1,277,660 Airport 707,517 688,723 578,916 552,789 536,442 583,310 499,321 516,403 457,318 470,703 Building 899,205 1,257,746 1,377,978 937,839 864,068 911,643 747,950 810,069 712,620 700,751 Operating grants and contributions - - - - 46,771 115,907 116,055 - - - Capital grants and contributions 365,388 3,295,019 560,394 471,888 2,670,116 2,120,953 1,566,737 841,668 702,154 235,215 Total business-type activities program revenue 3,874,806 7,053,689 4,015,849 3,487,700 5,518,336 4,988,860 3,989,002 3,303,497 3,205,281 2,684,329 Total primary government program revenue 12,662,037 17,218,761 13,492,853 11,756,378 9,468,591 8,603,276 6,743,818 6,013,251 6,154,364 5,233,995 Net (expense) revenue Governmental activities (12,698,552) (10,022,446) (8,626,770) (9,978,856) (13,638,695) (13,495,932) (14,718,079) (12,091,793) (11,603,269) (11,133,545) Business-type activities (450,244) 2,706,562 (443,477) (1,216,077) 1,932,561 1,440,683 503,784 (24,915) 226,004 (219,622) Total primary government net (expense) revenue (13,148,796) (7,315,884) (9,070,247) (11,194,933) (11,706,134) (12,055,249) (14,214,295) (12,116,708) (11,377,265) (11,353,167) Continued… City of Sebastian, Florida Changes in Net Position Schedule A2 (Continued) Last Ten Fiscal Years - 127 - 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 General Revenues and other changes in net position: Governmental activities: Property taxes, levied for general purposes 5,537,364 4,988,598 4,991,306 4,270,497 4,325,759 4,153,194 4,147,115 3,942,048 3,594,210 3,248,113 Public utility taxes 3,523,529 3,172,766 3,030,261 2,940,406 2,882,460 2,808,172 5,945,386 5,762,921 5,555,270 5,320,051 Franchise fees 1,775,486 1,571,571 1,384,529 1,316,849 1,343,744 1,316,792 1,271,403 1,257,430 1,241,515 1,190,233 Intergovernmental unrestricted 4,721,538 3,526,318 3,066,490 2,541,474 7,109,496 6,887,664 2,616,522 2,466,546 2,365,137 2,208,700 Investment earnings 505,805 142,209 61,247 180,988 378,657 216,185 135,614 77,317 65,256 43,293 Miscellaneous 385,723 468,361 271,276 381,999 277,970 312,401 290,269 316,239 240,179 338,901 Transfers (131,788) (493,736) (122,937) (106,344) (204,496) (370,457) (588,809) (705,067) 2,988 (14,822) Total governmental activities 16,317,657 13,376,087 12,682,172 11,525,869 16,113,590 15,323,951 13,817,500 13,117,434 13,064,555 12,334,469 Business-type activities: Investment earnings 68,008 17,582 3,582 10,377 8,499 8,234 10,787 6,787 5,368 1,484 Gain on sale of capital assets 182,556 1,825 - 4,268 - - - - - - Miscellaneous 147,428 - - - - - - - 20,602 - Transfers 131,788 493,736 122,937 106,344 204,496 370,457 588,809 705,067 (2,988) 14,822 Total business-type activities 529,780 513,143 126,519 120,989 212,995 378,691 599,596 711,854 22,982 16,306 Total primary government general revenue 16,847,437 13,889,230 12,808,691 11,646,858 16,326,585 15,702,642 14,417,096 13,829,288 13,087,537 12,350,775 Change in net position Governmental activities 3,619,105 3,353,641 4,055,402 1,547,013 2,474,895 1,828,019 (900,579) 1,025,641 1,461,286 1,200,924 Business-type activities 79,536 3,219,705 (316,958) (1,095,088) 2,145,556 1,819,374 1,103,380 686,939 248,986 (203,316) Total primary government change in net position 3,698,641$ 6,573,346$ 3,738,444$ 451,925$ 4,620,451$ 3,647,393$ 202,801$ 1,712,580$ 1,710,272$ 997,608$ City of Sebastian, Florida Fund Balances – Governmental Funds Schedule A3 Last Ten Fiscal Years - 128 - 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 General Fund Nonspendable 364,122$ 201,992$ 341,851$ 182,803$ 94,564$ 234,852$ 342,505$ 227,651$ 316,036$ 369,329$ Restricted 176,903 - 110,994 88,782 103,900 77,185 63,016 46,262 38,544 7,969 Committed - - - - - - - - - - Assigned - - 12,157 12,157 12,157 13,871 12,350 10,840 8,692 7,129 Unassigned 9,398,963 7,993,009 6,224,793 5,419,259 5,988,440 5,047,473 4,089,275 5,526,675 5,289,322 5,348,905 Total General Fund 9,939,988$ 8,195,001$ 6,689,795$ 5,703,001$ 6,199,061$ 5,373,381$ 4,507,146$ 5,811,428$ 5,652,594$ 5,733,332$ All other governmental funds Non-spendable 634,147$ 436,407$ 1,001,453$ 1,085,337$ 1,036,571$ 1,542,466$ 941,061$ 996,778$ 928,758$ 1,390,073$ Restricted 10,618,581 6,846,018 9,034,265 9,471,281 7,850,346 4,822,199 4,131,416 4,193,653 4,181,787 3,756,950 Committed 102,131 409,549 329,364 223,723 553,172 707,667 995,144 977,868 815,688 625,007 Unassigned (83,736) (429,088) (210,876) - (5,730) (3,048) (26,370) (129,401) (58,618) (64,875) Total all other governmental funds 11,271,123$ 7,262,886$ 10,154,206$ 10,780,341$ 9,434,359$ 7,069,284$ 6,041,251$ 6,038,898$ 5,867,615$ 5,707,155$ Total governmental funds 21,211,111$ 15,457,887$ 16,844,001$ 16,483,342$ 15,633,420$ 12,442,665$ 10,548,397$ 11,850,326$ 11,520,209$ 11,440,487$ City of Sebastian, Florida Changes in Fund Balances – Governmental Funds Schedule A4 Last Ten Fiscal Years - 129 - 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Revenues: Taxes 9,095,759$ 8,161,364$ 8,021,567$ 7,210,903$ 7,208,219$ 6,961,366$ 10,738,778$ 10,326,654$ 9,782,109$ 9,123,879$ Franchis fees 1,775,486 1,571,571 1,384,529 1,316,849 1,343,744 1,316,792 1,271,403 1,257,430 1,241,515 1,190,233 Licenses and permits 163,719 189,643 195,920 150,240 146,812 165,922 135,900 136,614 147,219 138,564 Intergovernmental 10,004,218 10,312,702 9,176,859 7,739,019 7,996,330 8,648,064 2,991,190 2,709,066 2,742,950 2,373,695 Impact fees 99,450 179,400 214,500 143,875 129,550 141,050 102,700 163,800 281,450 168,350 Charges for services 3,102,300 2,894,772 2,868,088 2,691,093 2,698,117 1,443,123 1,353,009 1,391,495 1,397,395 1,431,101 Fines 170,768 103,745 53,327 53,297 51,146 48,251 96,842 73,059 63,035 54,140 Investment earnings 505,805 142,209 61,247 180,988 378,657 216,185 135,614 77,317 65,256 43,293 Contributions and donations 200,553 468,361 271,276 381,999 277,970 55,670 45,420 80,581 48,124 36,801 Other revenues 134,783 11,128 34,800 32,628 37,796 312,401 290,269 316,239 241,597 338,901 Total revenues 25,252,841 24,034,895 22,282,113 19,900,891 20,268,341 19,308,824 17,161,125 16,532,255 16,010,650 14,898,957 Expenditures: Current: General government 5,129,197 4,706,858 4,457,302 4,498,327 3,536,154 3,492,883 2,943,790 3,053,554 2,717,049 2,575,605 Public safety 7,679,795 6,854,359 6,314,019 6,275,459 6,035,675 5,659,861 5,134,388 4,968,258 4,666,343 4,623,060 Physical environment 2,393,007 2,398,846 1,858,226 1,633,435 1,871,853 2,195,332 2,565,532 1,316,697 1,498,706 1,110,788 Transportation 1,308,620 1,199,856 1,197,835 1,129,260 1,142,412 1,079,509 1,333,927 1,168,919 1,187,871 1,165,004 Economic environment 249,700 291,969 256,771 315,985 402,986 238,597 73,491 331,589 161,545 144,612 Culture and recreation 1,103,676 1,131,280 986,734 955,164 1,027,371 875,172 927,374 849,789 893,394 888,795 Debt service: Principal retired 121,000 632,000 620,000 611,000 601,000 590,000 931,000 1,935,000 1,567,000 2,306,000 Lease principal 8,868 1,642 - - - - - - - - Interest 55,961 17,788 23,927 35,023 45,846 56,523 68,512 92,907 108,678 413,995 Capital outlay 3,780,530 7,692,675 6,083,703 3,490,972 2,209,793 2,856,222 3,896,231 1,780,358 3,133,330 2,246,399 Total expenditures 21,830,354 24,927,273 21,798,517 18,944,625 16,873,090 17,044,099 17,874,245 15,497,071 15,933,916 15,474,258 Revenues over (under) expenditures 3,422,487 (892,378) 483,596 956,266 3,395,251 2,264,725 (713,120) 1,035,184 76,734 (575,301) Other Financing Sources (Uses) Transfers in 3,071,227 8,099,451 5,632,516 3,280,101 2,451,428 4,427,037 7,184,858 3,694,279 4,989,726 3,903,204 Transfers out (3,203,015) (8,593,187) (5,755,453) (3,386,445) (2,655,924) (4,797,494) (7,773,667) (4,399,346) (4,986,738) (3,918,026) Lease/Debt proceeds 1,656,117 - - - - - - - - - Proceeds from sale of capital assets 47,296 - - - - - - - - - Total other financing sources (uses)1,571,625 (493,736) (122,937) (106,344) (204,496) (370,457) (588,809) (705,067) 2,988 (14,822) Net Change in Fund Balances 4,994,112 (1,386,114) 360,659 849,922 3,190,755 1,894,268 (1,301,929) 330,117 79,722 (590,123) Debt Service as a % of noncapital expenditures Noncapital Expenditures 1.0%3.8%4.1%4.2%4.4%4.6%7.2%14.8%13.1%20.6% City of Sebastian, Florida Program Revenues by Function/Program Schedule A5 Last Ten Fiscal Years - 130 - 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Program Revenues Governmental activities: General government 5,524,587$ 5,787,477$ 5,689,371$ 4,749,501$ 1,096,978$ 1,997,400$ 390,921$ 479,395$ 534,524$ 413,727$ Public safety 834,919 470,102 393,259 399,361 444,199 346,239 334,270 306,381 254,381 246,010 Physical environment 2,140,145 2,132,049 2,119,101 2,037,874 2,161,464 1,064,659 1,021,038 1,049,735 1,087,642 1,073,015 Transportation - 1,041,474 990,150 896,751 13,295 12,908 687,310 656,484 643,146 565,692 Economic environment 121,271 484,856 - - - - - - - 15,501 Cultural and recreation 166,309 249,114 285,123 185,191 234,319 193,210 321,277 217,759 429,390 235,721 Total governmental activities 8,787,231$ 10,165,072$ 9,477,004$ 8,268,678$ 3,950,255$ 3,614,416$ 2,754,816$ 2,709,754$ 2,949,083$ 2,549,666$ Business-type activities: Charges for services: Golf Course 1,902,696$ 1,812,201$ 1,498,561$ 1,525,184$ 1,401,260$ 1,355,652$ 1,170,591$ 1,135,357$ 1,333,189$ 1,277,660$ Airport 1,072,905 3,983,742 1,139,310 1,024,677 3,253,008 2,704,263 2,070,461 1,358,071 1,159,472 705,918 Building 899,205 1,257,746 1,377,978 937,839 864,068 928,945 747,950 810,069 712,620 700,751 Total business-type activities 3,874,806$ 7,053,689$ 4,015,849$ 3,487,700$ 5,518,336$ 4,988,860$ 3,989,002$ 3,303,497$ 3,205,281$ 2,684,329$ Total primary government 12,662,037$ 17,218,761$ 13,492,853$ 11,756,378$ 9,468,591$ 8,603,276$ 6,743,818$ 6,013,251$ 6,154,364$ 5,233,995$ City of Sebastian, Florida Tax Revenues by Source Governmental Schedule B1 Last Ten Fiscal Years - 131 - Fiscal Year Property Taxes Utility Taxes and Franchise Fees Inter- Governmental(1)Other Revenue(2)Totals 2023 $ 5,572,230 $ 5,299,015 $ 10,004,218 $ 4,377,378 $ 25,252,841 2022 4,988,598 4,744,337 10,312,702 3,989,258 24,034,895 2021 4,991,306 4,414,790 9,176,859 3,699,158 22,282,113 2020 4,270,497 4,257,255 7,739,019 3,634,120 19,900,891 2019 4,325,759 4,226,204 7,996,330 3,720,048 20,268,341 2018 4,153,194 4,124,964 8,648,064 2,382,602 19,308,824 2017 4,147,115 3,980,383 6,873,873 2,159,754 17,161,125 2016 3,942,048 3,943,752 6,407,350 2,239,105 16,532,255 2015 3,594,210 3,880,226 6,292,138 2,244,076 16,010,650 2014 3,248,113 3,771,660 3,432,903 4,446,281 14,898,957 (1) Includes half-cent sales taxes, one-cent discretionary sales tax, cigarette and motor fuel taxes, local option gas taxes and police pension premium taxes. (2) Includes mobile home taxes, alcohol beverage licenses, and municipal fuel rebate taxes. Amounts do not include non-recurring grants or contributions. City of Sebastian, Florida Direct and Overlapping Property Tax Rates Schedule B2 Last Ten Fiscal Years (Rate per $1,000 of taxable value) - 132 - City Direct Rate Fiscal Year Operating Millage Indian River County Indian River County Schools Special Districts Total Overlapping Total Overlapping and Direct 2023 2.9050 5.9006 5.9850 1.0677 12.9533 15.8583 2022 3.0043 5.9006 6.2680 1.2933 13.4619 16.4662 2021 3.1514 5.9006 6.3960 1.3929 13.6895 16.8409 2020 2.9399 6.1698 6.5690 1.4091 14.1479 17.0878 2019 3.1514 6.1086 6.7930 1.5396 14.4412 17.5926 2018 3.4000 6.1214 7.0530 1.5390 14.7134 18.1134 2017 3.8000 5.9755 7.4100 1.5170 14.9025 18.7025 2016 3.8556 5.9468 7.9550 1.6993 15.6011 19.4567 2015 3.8566 5.6868 7.9950 1.7126 15.3944 19.2510 2014 3.7166 5.6207 8.1160 1.7128 15.4495 19.1661 Overlapping Rates City of Sebastian, Florida Assessed Value and Estimated Actual Value of Taxable Property Schedule B3 Last Ten Fiscal Years - 133 - Tax Year Fiscal Year Ended September 30 Real Property Personal Property Less: Tax-Exempt Property Total Taxable Assessed Value Total Direct Tax Rate Estimated Actual Taxable Value Taxable Assessed Value as a Percentage of Actual Taxable Value 2022 2023 $ 2,616,004,251 $ 105,014,540 636,371,809$ 2,084,646,982$ 2.9050$ 3,375,019,854$ 61.77%- 2021 2022 2,338,149,496 88,760,233 607,432,125 1,819,477,604 3.0043 3,011,447,103 60.42%- 2020 2021 2,089,301,313 76,063,937 581,830,114 1,583,535,136 3.1514 2,687,690,578 58.92%- 2019 2020 1,843,910,442 73,492,650 533,734,358 1,383,668,734 2.9399 2,378,380,703 58.18%- 2018 2019 1,705,459,458 66,819,663 509,133,351 1,263,145,770 3.1514 2,198,643,986 57.45%- 2017 2018 1,578,743,546 62,277,711 486,428,425 1,154,592,832 3.4000 2,035,707,144 56.72%- 2016 2017 1,447,311,640 59,305,756 468,930,126 1,037,687,270 3.8000 1,868,445,306 55.54%- 2015 2016 1,363,105,220 55,646,868 451,939,888 966,812,200 3.8556 1,759,528,393 54.95%- 2014 2015 1,267,035,970 53,045,209 435,071,311 885,009,868 3.8556 1,636,840,172 54.07%- 2013 2014 1,210,328,690 47,410,545 437,040,114 820,699,121 3.7166 1,560,321,408 52.60% City of Sebastian, Florida Principal Property Taxpayers Schedule B4 Current Year and Nine Years Prior - 134 - Taxpayer Taxable Assessed Value Rank Percentage of Total Assessed Value Taxable Assessed Value Rank Percentage of Total Assessed Value Florida Power & Light (Utility/Electric)$ 55,973,758 1 2.69%15,782,005 1 1.78% Comcast of Florida Inc. (Communications)15,611,973 2 0.75%6,501,387 4 0.73% Walmart Stores Inc. (Retail)8,866,380 3 0.43%8,468,400 2 0.96% Park Place Community LLC (Rental/Retail)8,720,694 4 0.42%6,786,642 3 0.77% Sebastian Senior Real Estate LLC 7,234,992 5 0.35%- - Hartwell Groves Florida LLC (Commercial)6,536,124 6 0.31%3,996,530 8 0.45% BW US 1 Inc. (Commercial)5,779,502 7 0.28%5,971,370 5 0.67% CSMA BLT LLC (Commercial)5,739,257 8 0.28%- - Real Sub LLC (Retail)5,280,017 9 0.25%- - CSGBSH Sebastian LLC 5,230,574 10 0.25%- - CR512 Shopping Center 5,600,600 6 0.63% Bellsouth Communications (Utility/Telephone)4,518,986 7 0.51% Pelican Isles (Housing)3,934,710 9 0.44% Sebastian Inlet Marina & Trading Inc. (Restaurant/Hotel 3,359,400 10 0.38% Total taxable assessed value for principal property taxpayers $ 124,973,271 6.01%$ 64,920,030 7.32% Total Taxable Value 2,084,646,982$ $885,009,868 2023 2014 City of Sebastian, Florida Property Tax Levies and Collections Schedule B5 Last Ten Fiscal Years - 135 - Fiscal Year Ended September 30, Total Tax Levy for Fiscal Year Amount Collected Percentage of Levy Collections in Subsequent Years Amount Collected Percentage of Levy 2023 $ 5,264,275 $ 5,019,086 95.3%83,184$ $ 5,102,270 96.9% 2022 4,761,264 4,536,854 95.3%66,069 4,602,923 96.7% 2021 4,683,490 4,470,263 95.4%63,371 4,533,634 96.8% 2020 4,067,907 3,791,174 93.2%76,083 3,867,257 95.1% 2019 3,980,678 3,861,686 97.0%79,857 3,941,543 99.0% 2018 3,925,616 3,703,536 94.3%83,126 3,786,662 96.5% 2017 3,943,212 3,726,976 94.5%77,898 3,804,874 96.5% 2016 3,727,641 3,530,235 94.7%72,789 3,603,024 96.7% 2015 3,412,244 3,295,549 96.6%2,241 3,297,790 96.6% 2014 3,050,210 2,975,299 97.5%754 2,976,053 97.6% Collected Within the Fiscal Year of the Levy Total Collections to Date City of Sebastian, Florida Ratios of Outstanding Debt By Type Schedule C1 Last Ten Fiscal Years - 136 - Government Type Business Type Activities Activities Roadway Infrastructure Stormwater Total Percentage Improvement Sales Taxes Utility Revenue Lease Lease Primary of Personal Per Fiscal Year Notes Bonds/Notes1 Bonds/Notes Liability Liability Government Income Capita 2014 1,896,000$ 2,730,000$ 2,982,000$ -$ -$ 7,608,000$ 0.0008%341 2015 1,689,000 1,722,000 2,630,000 - - 6,041,000 0.0006%267 2016 1,478,000 353,000 2,275,000 - - 4,106,000 0.0003%193 2017 1,263,000 - 1,912,000 - 254,453 3,429,453 0.0003%142 2018 1,044,000 - 1,541,000 - 206,167 2,791,167 0.0002%113 2019 820,000 - 1,164,000 - 156,171 2,140,171 0.0002%85 2020 591,000 - 782,000 - 104,403 1,477,403 0.0001%58 2021 358,000 - 395,000 50,801 803,801 0.0046%38 2022 121,000 - - 170,140 2,441,105 2,732,245 0.0001%38 2023 - - - 1,817,389 2,405,019 4,222,408 ** * Information not yet available City of Sebastian, Florida Demographic and Economic Statistics Schedule D1 Last Ten Fiscal Years - 137 - Year Population (a)Per Capita Income School Enrollment Unemployment Rate (a) 2023 26,405 (b)5,757 3.9% 2022 25,915 75,552$ 5,484 3.1% 2021 25,454 95,109 5,868 4.6% 2020 25,658 84,607 6,118 5.9% 2019 25,168 80,818 6,186 3.2% 2018 24,630 76,059 6,459 3.9% 2017 24,192 73,274 6,122 4.3% 2016 28,137 71,181 6,132 6.2% 2015 22,622 68,658 5,930 6.1% 2014 22,296 63,140 6,034 6.5% Sources: (a)University of Florida Bureau of Economic and Business Research (b)Information not yet available. City of Sebastian, Florida Principal Employers Schedule D2 For the Current Year and Nine Years Prior - 138 - Employer Number of Employees Rank Number of Employees Rank School District of Indian River County 2,234 1 2,123 1 Cleveland Clinic Indian River Hospital 2,027 2 1,605 2 Indian River County 1,455 3 1,354 3 Publix Supermarket 1,380 4 1,092 4 Piper Aircraft Inc.1,100 5 850 5 Wal-Mart 806 6 701 6 Sebastian River Medical Center 750 7 576 7 Johns Island Residential Resort 495 8 550 8 Indian River Estates Retirement Community 486 9 Visiting Nurse Association 300 10 401 10 City of Vero Beach 460 9 11,033 9,712 2023 2014 Source: Principal employers in City of Sebastian were determined from listings provided by the Economic Development Commission of Florida’s Space Coast. City of Sebastian, Florida Full-Time Equivalent City Government Employees by Function/Program Schedule E1 Last Ten Fiscal Years - 139 - Function 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 General Government City Council 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 City Manager 2.0 2.0 2.0 2.0 2.0 2.0 2.5 2.5 2.0 2.0 City Clerk 2.0 2.5 2.5 2.5 2.5 2.5 2.5 3.0 5.0 5.0 City Attorney 1.0 1.0 1.0 1.0 ------ Finance 6.0 5.0 11.5 11.5 11.5 11.5 11.0 14.0 14.0 11.0 Management Information 6.0 6.0 2.5 2.5 2.5 2.5 2.0 2.0 2.0 2.0 Audio/Visual ------2.5 1.0 -- Human Resources 2.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Facilities Maintenance 4.0 3.0 4.0 4.0 3.0 3.0 2.5 3.5 5.0 5.0 Community Development 7.0 5.0 5.0 5.0 4.0 4.0 3.0 2.0 4.0 4.0 Total General Government 32.5 28.0 32.0 32.0 29.0 29.0 29.5 31.5 35.5 32.5 Public Safety Police 68.0 65.0 64.0 64.0 64.0 64.0 57.5 57.5 57.0 57.0 Code Enforcement 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Building 11.5 9.5 8.5 7.5 7.5 7.5 5.0 5.0 5.0 5.0 Total Public Safety 82.5 77.5 75.5 74.5 74.5 74.5 65.5 65.5 65.0 65.0 Transportation Roads and Drainage 10.0 10.0 10.0 10.0 9.5 9.5 11.5 11.0 10.0 10.0 Fleet Management 3.5 3.0 3.0 3.0 3.5 3.5 3.5 3.5 3.5 3.5 Airport 2.5 2.5 10.0 10.0 10.0 8.0 9.0 8.0 8.0 9.0 Total Transportation 16.0 15.5 23.0 23.0 23.0 21.0 24.0 22.5 21.5 22.5 Physical Environment Cemetery 2.0 2.0 2.0 2.0 2.0 2.0 1.5 2.0 2.0 2.0 Stormwater 14.0 15.5 13.5 13.5 14.5 14.5 8.0 9.0 9.0 9.0 Total Physical Environment 16.0 17.5 15.5 15.5 16.5 16.5 9.5 11.0 11.0 11.0 Culture and Recreation Parks 16.0 16.0 13.0 15.0 13.0 9.0 9.0 9.0 9.0 9.0 Golf Course 9.0 9.0 3.0 4.0 4.0 4.0 3.0 3.0 4.0 4.0 Total Culture and Recreation 25.0 25.0 16.0 19.0 17.0 13.0 12.0 12.0 13.0 13.0 Total Employees 172.0 163.5 162.0 164.0 160.0 154.0 140.5 142.5 146.0 144.0 City of Sebastian, Florida Operating Indicators by Function/Program Schedule E2 Last Ten Fiscal Years - 140 - City of Sebastian, Florida Capital Asset Statistics by Function/Program Schedule E3 Last Ten Fiscal Years - 141 - Function/Program 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 General Government: City Hall Square Footage 21,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500 Public Safety: Police Station Square Footage 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 25,600 Building Department Square Footage 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 Public Works: Public Works Compound Square Footage 379,068 379,068 379,068 379,068 379,068 379,068 379,068 379,068 379,068 379,068 Miles of Streets 156 156 156 156 156 156 156 156 156 156 Number of Street Lights 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,085 1,085 1,085 Recreation and Community Development: Tennis courts 4 4 4 4 4 4 4 4 4 4 Pickle Ball Courts 1 1 1 1 0 0 0 0 0 0 Ballfields 8 8 8 8 8 8 8 8 8 8 Park Facility Acres 138 138 138 138 138 138 138 138 138 138 Nature Preserve Acres 244 244 244 244 244 244 244 244 244 244 18 Hole Golf Course 1 1 1 1 1 1 1 1 1 1 Airport Total Number of Acres 625 625 625 625 625 625 625 625 625 625 Acres Available for Development 85 85 103 105 105 105 105 108 108 108 - 142 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 143 - Carr, Riggs & Ingram, LLC 215 Baytree Drive Melbourne, Florida 32940 321.255.0088 386.336.4189 (fax) CRIcpa.com INDEPENDENT AUDITOR’S 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 Honorable Mayor and Members of the City Council City of Sebastian, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida (the “City”), as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated May 31, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described below as items MW 2023-001 through MW 2023-005 to be material weaknesses. A significant deficiency is a deficiency or a combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We considered deficiencies described in the schedule of findings as items SD 2023-006 and SD 2023-007 to be significant deficiencies. MW 2023-001 REVIEW OF PROPERTY TAX RECEIPTS Criteria: GASB Codification (GASBC) 1600, Basis of Accounting requires governmental funds use the modified accrual basis of accounting. - 144 - Condition: The City did not review the 2022 millage rate used by the County timely, and therefore did not record the correct amount of property tax revenues in that year. Cause: The City did not review the rates used by the County prior to recording the revenue received by the County. Effect: Opening net position was understated by $34,866 in the governmental activities. Recommendation: We recommend the City review rates used for property taxes prior to recording the amount paid by the County. Management’s Response: The County initially mislead the City by stating they were not required to contribute to the CRA Fund based on a millage higher than the City. We later found that this was not the case, since our CRA was established prior to the provision of the State Statues being amended. When notified, the County promptly paid the difference. MW 2023-002 BUILDING PERMITS Criteria: The US Government Accountability Office (GAO) and the Committee of Sponsoring Organizations (COSO) describe internal controls as a process implemented by management that is designed to provide reasonable assurance regarding the achievement of objectives. Condition: The City does not have a complete fee schedule that ties to the fees within MyGovernmentOnline (MGO) and there is not a documented review of the building department fees entered into MGO. Cause: The City does not have an adequate process in place for entering fees into MGO, including requiring a review of the fees schedule prior to the software developer entering the rates. In addition, the City has no complete list of fees approved by City Council, to compare to those in MGO. Effect: Fees could be entered incorrectly in MGO causing revenues to be misstated. Recommendation: The City should have a documented process related to the fee schedule, which should include reconciling all fees within MGO to a City Council approved fee schedule. Management’s Response: Review shall be done as required to make the proper accruals. MW 2023-003 CUTOFF Criteria: GASB codification (GASBC) 1600, Basis of Accounting requires governmental funds use the modified accrual basis of accounting and enterprise funds use the full accrual basis of accounting. Condition: The City did not report revenue, due from other governments, expenses and accrued expenses consistent with generally accepted accounting principles. Cause: The City did not have proper cutoff regarding revenue and due from other governments. Several revenue streams, where funds are received from the State, are remitted two months in arrears instead of one month. The documentation received from the State is not always clear. The - 145 - City did not accrue payroll for the portion of the pay period that occurred prior to the end of the fiscal year. Effect: The beginning governmental and business-type activities net position was understated by $759,112 and $20,587, respectively. Beginning fund balance for the general fund, stormwater utility fund, discretionary sales tax fund and the local option gas tax fund were understated by $387,570, $13,120, $289,745, and $68,677, respectively. Beginning new position balances for the golf course fund, airport fund, and building fund were understated by $7,143, $2,745, and $10,699, respectively. Recommendation: During the year-end close process, the City should review cash receipts and cash payments occurring subsequent to year-end to determine if accruals should be recorded. Management’s Response: An effort will be made to further identify this concern and have it resolved. MW 2023-004 BUILDING DEPARTMENT EXCESS FUNDS Criteria: Section 553.80(7)(a) of Florida Statutes has been updated to limit the amount of unexpended building permit funds carried forward to future fiscal years to no more than the City’s average operating budget for enforcing the Florida Building Code for the previous four (4) fiscal years. A local government must use any funds in excess of this limitation to rebate or reduce fees. Condition: The City required a prior period adjustment to fund balance and net position for the building fund and business-type activities for $2,145,253 due to incorrect recording of a rebate payable in response to Florida Statutes. After this adjustment, the City was not in compliance with Florida Statue 533.80(7)(a), which requires the building fund’s fund balance not to exceed the City’s average operating budget for enforcing the Florida Building Code for the previous four fiscal years. Cause: The City recorded a rebates payable in response to the Florida Statute; however, the City has not remitted the rebate and does not have an intention to remit the funds. Effect: The City is not in compliance with Florida Statutes. Recommendation: The City should identify how it intends to reduce the amount of the unexpended building department balances in order to be incompliance with Florida Statutes. Management’s Response: The City needs State guidance on an acceptable method to comply. The excess accumulated over many years. Selecting an arbitrary date for the rebate calculation could be considered biased and unfair. MW 2023-005 RESTRICTED DONATIONS Criteria: GASB Codification (GASBC) 1600, Basis of Accounting requires governmental funds use the modified accrual basis of accounting, which requires a government to recognize revenue and expenditures in the period in which the transaction occurs. Condition: The City did not report revenue and expenditures consistent with GAAP resulting in an understatement of revenue and understatement of expenditures related to restricted donations for public safety. - 146 - Cause: The City tracks the restricted revenue and expenditures within liabilities accounts, and did not gross up the revenues and expenditures at year-end. Effect: Revenues and expenditures were understated, and liabilities were overstated, resulting in restricted fund balance in the general fund increasing $176,903. Recommendation: We recommend the City implement procedures to ensure revenues and expenditure transactions are entered into the general ledger when the transactions occurs, and not net restricted donations and expenditures in liability accounts. Management’s Response: Procedures will be implemented to adjusted revenue and expenditures at year-end. SD 2023-006 LEASES Criteria: The US Government Accountability Office (GAO) and the Committee of Sponsoring Organizations (COSO) describe internal controls as a process implemented by management that is designed to provide reasonable assurance regarding the achievement of objectives. GASB Codification 1600, Basis of Accounting requires governmental funds use the modified accrual basis of accounting and enterprise funds to use the full accrual basis of accounting. Condition: The City did not maintain evidence of review of the Excel spreadsheet used to create the airport lease invoices, and the City did not properly recognize a material lease receivable to the airport fund from the public works department. Cause: The City did not implement a control to included documentation of the review of the lease spreadsheet that the City uses to create airport leases. The City completed internal transfers for the lease payment for the new lease between the Public Works department and the Airport which caused the City to not properly recognize the lease receivables for the Airport. Effect: The lease receivables were understated by approximately $1.6 million, deferred inflows were understated by approximately $1.6 million. Recommendation: We recommend the City document review of the Excel spreadsheet used to create airport lease invoices, and review all internal leases are included in the lease liability calculations prior to finalizing the trial balance at year-end. Management’s Response: The lease liability calculations will be reviewed prior to year-end in the future. SD 2023-007 SEGREGATION OF DUTIES Criteria: The City should have proper controls in place to ensure the payroll information is reviewed by someone other than the person entering the information. The City should also have proper controls in place to ensure the person determining the golf course fees is not the one who enters the rates into the system and reviews their accuracy. Condition: There was a lack of segregation of duties over who enters employee changes within payroll and who reviews the information to ensure it was properly entered. There was also a lack of segregation of duties over golf fees and who enters the fees within the golf course software. - 147 - Cause: There is no review of updated payroll information after it is entered into the system, and there is no segregation of who determines golf course fees, who enters them into the system and who reviews them. Effect: Payroll expenditures may be inaccurate if improper information is entered into the payroll system. Golf patrons may be over or under charged. Recommendation: We recommend that the City require the person entering the payroll information in to the system not be the same person reviewing the information. We recommend that the person who determines the golf fees not enter the information into the golf course software, and there should be review of the golf fees after they are entered in the system. Management’s Response: Secondary review of these entries will be established and documented. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Sebastian, Florida’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The City of Sebastian’s Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described above. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Melbourne, Florida May 31, 2024 - 148 - - 149 - THIS PAGE IS INTENTIONALLY LEFT BLANK. - 150 - Carr, Riggs & Ingram, LLC 215 Baytree Drive Melbourne, Florida 32940 321.255.0088 386.336.4189 (fax) CRIcpa.com INDEPENDENT AUDITOR’S MANAGEMENT LETTER 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 (the “City”) as of and for the fiscal year ended September 30, 2023, and have issued our report thereon dated May 31, 2024. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Florida Auditor General. Other Reporting Requirements We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards and Independent Accountant’s 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 Florida Auditor General. Disclosures in those reports, which are dated May 31, 2024, 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. The status of each finding and recommendation made in the preceding annual financial audit report is noted below. Prior Year Management Letter Comments: Status MC 2022-001 Federal Reporting Requirements Cleared MC 2022-002 State E-Verify Requirements Cleared - 151 - 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 of the City of Sebastian, Florida. The City of Sebastian, Florida’s component unit, the Police Officers’ Pension Plan, was established under Section 58-46 through 58-54 Code of Ordinance in October 1989. Financial Condition and Management Sections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and communicate 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 to identify the specific 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.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the City of Sebastian, Florida. 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 have the following recommendation: 2023-008 INVENTORY Criteria: Under generally accepted accounting standards (GAAP), inventory items should be recorded as inventory when purchased and reported as expense when consumed. Condition: During the inventory count, there were three items sampled where the City’s count did not match the recount. Cause: There was no secondary count performed. Effect: There could be an misstatement of inventory balances. Recommendation: We recommend the City conduct second counts on inventory. Management Response: Second counts will be conducted when needed to confirm those discrepancies cannot be explained. - 152 - Special District Component Units Section 10.554(1)(i)5.c., 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 us to communicate 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 had the following finding: 2023-009 BUDGET Criteria: The City’s legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is defined as being at the department level for the fund and at the fund level for the special revenue funds. Condition: The City was over budget at the legal budgetary level in the general fund for the City Manager and the City Clerk by $146 and $2,577, respectively. The City was over budget at the legal budgetary level in the Local Option Gas Tax Fund for transportation by $500. The City was over budget at the legal budgetary level in the Law Enforcement Forfeiture fund for public safety by $1,501. Cause: An entry for accrued payroll was required (see comment 2023-006), which caused the departments in the general fund to be over budget. While various spending within the special revenue fund cause the funds to be over budget. Effect: The City was out of compliance with Florida Statutes. Recommendation: We recommend the City implement procedures to ensure all cash and accrual transactions are entered into the general ledger on a timely basis to provide for financial reporting that are reviewed for actual results compared to budgeted appropriations, and adjust the budget as necessary within 60 days of year end. Management Response: An effort will be made to ensure all transactions are timely entered and any necessary budget adjustments are made within the 60 days. - 153 - Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal, State and other granting agencies, the members of the City Council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. Melbourne, Florida May 31, 2024 - 154 - Carr, Riggs & Ingram, LLC 215 Baytree Drive Melbourne, Florida 32940 321.255.0088 386.336.4189 (fax) CRIcpa.com INDEPENDENT ACCOUNTANT’S REPORT ON COMPLIANCE WITH LOCAL GOVERNMENT INVESTMENT POLICIES Honorable Mayor and Members of City Council City of Sebastian, Florida We have examined the City of Sebastian, Florida’s (the “City”) compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2023. Management of the City of Sebastian, Florida 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. Our examination was conducted in accordance with attestation standards established by the AICPA. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the City complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the City complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the examination engagement. Our examination does not provide a legal determination on the City’s compliance with specified requirements. In our opinion, the City complied, in all material respects, with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2023. This report is intended solely for the information and use of City Council, management and the State of Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties. Melbourne, Florida May 31, 2024