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HomeMy WebLinkAbout2020 - 2021CITY OF SEBASTIAN, FLORIDA CITY OF JjB HOME OF PELICAN ISLAND ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended September 30, 2021 CITY COUNCIL Jim Hill Fred Jones Mayor Vice -Mayor Ed Dodd Council Member Bob McPartlan Christopher Nunn Council Member Council Member Prepared by: Administrative Services Department CITY OF SEBASTIAN, FLORIDA Table of Contents Page INTRODUCTORY SECTION 1 City Officials 2 Letter of Transmittal 3 Organizational Chart 9 GFOA Certificate of Achievement 10 FINANCIAL SECTION 11 Independent Auditors' Report 13 Management's Discussion and Analysis 17 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position 32 Statement of Activities 33 Fund Financial Statements: Balance Sheet — Governmental Funds 36 Reconciliation of Fund Balances for Governmental Funds to Net Position of Governmental Activities 39 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 40 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 43 Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual: General Fund 44 Riverfront Redevelopment Special Revenue Fund 46 Stormwater Utility Special Revenue Fund 47 American Recovery Plan Special Revenue Fund 48 Statement of Net Position — Proprietary Funds 49 Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds 50 Statement of Cash Flows — Proprietary Funds 51 Statement of Fiduciary Net Position 53 Statement of Changes in Fiduciary Net Position 54 Notes to Financial Statements 55 CITY OF SEBASTIAN, FLORIDA Table of Contents Page Required Supplementary Information: Single -employer Pension Trust Fund: Schedule of Changes in Net Pension Liability and Related Ratios 96 Schedule of Investment Returns 99 Schedule of Contributions 100 Coastal Florida Public Employees Association Pension Plan: Schedule of Employer Contributions 103 Combining and Individual Fund Financial Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet 106 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 108 Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual: Local Option Gas Tax Special Revenue Fund 110 Parking In -Lieu -Of Special Revenue Fund 111 Recreation Impact Fee Special Revenue Fund 112 Law Enforcement Forfeiture Special Revenue Fund 113 Other: Capital Assets used in the Operations of Governmental Funds: Comparative Schedule by Source 116 Schedule by Function and Activity 117 Schedule of Changes by Function and Activity 118 CITY OF SEBASTIAN, FLORIDA Table of Contents Page STATISTICAL SECTION (UNAUDITED) Statistical Section Table of Contents 121 Financial Trends Information Net Position by Component 122 Changes in Net Position 124 Fund Balances, Governmental Funds 128 Changes in Fund Balances, Governmental Funds 130 Program Revenues by Function/Program 132 Revenue Capacity Information Tax Revenues by Source 134 Direct and Overlapping Property Tax Rates 135 Actual and Estimated Value of Taxable Property 136 Principal Property Taxpayers 138 Property Tax Levies and Collections 139 Debt Capacity Information Ratios of Outstanding Debt by Type 140 Legal Debt Margin Information 142 Pledged Revenue Coverage 144 Demographic and Economic Information Demographic and Economic Statistics 146 Principal Employers 148 Operating Information Full -Time Equivalent City Government Employees by Function/Program 150 Operating Indicators by Function/Program 152 Capital Asset Statistics by Function/Program 154 Internal Control and Compliance Independent Auditors' 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 159 Independent Auditors' Management Letter 161 Independent Accountants' Report 165 INTRODUCTORY SECTION CITY OF SEBASTIAN, FLORIDA CITY OFFICIALS For the Year Ended September 30, 2021 Paul Carlisle City Manager Manny Anon, Jr., Esq. City Attorney DEPARTMENT HEADS Daniel Acosta Police Chief Lisa Frazier Community Development Director Wayne Eseltine Building Official Scott Baker Public Facilities Director Jeanette Williams City Clerk Kenneth W. Killgore Administrative Services Director/CFO Vacant City Engineer Greg Gardner Golf Course Director Brian Benton Leisure Services Director K CITY OF SEBAb!1111 'AN T HOME OF PELICAN ISLAND February 22, 2022 To the Citizens of the City of Sebastian, Florida: We are submitting the Annual Comprehensive Financial Report of the City of Sebastian, Florida for the fiscal year ended September 30, 2021. 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, 2021. 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 require that the financial statements of the City of Sebastian be audited by a certified public accountant. The City's independent Certified Public Accountants, Rehmann Robson, has issued an unmodified ("clean") opinion on the City of Sebastian's financial statements for the year ended September 30, 2021. The independent auditors' report is located on page 13, 14 and 15. Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Sebastian, Florida is located in Indian River County approximately midway through the east coast of the Florida Peninsula (between Melbourne and Vero Beach) in an area known as the Treasure Coast. It is recognized as the Home of Pelican Island, the first designated wildlife refuge in the United States, a Millennium City, and a Tree City USA. It was first incorporated as the Town of Sebastian in 1924. In the late 1950s General Development Corporation purchased the land from the Mackle family of Miami and began the development of a planned community that is now the City of Sebastian. The City has a population of 25,454 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 covers approximately 16.3 square miles. 3 The City is a Florida municipal corporation with a five -member City Council. Council members serve a two- year term. Annual elections are held on the first Tuesday following the first Monday in November and two members are elected in even -numbered years and three members are elected in odd -numbered years. Elections are non -partisan and at -large. Mayor and Vice Mayor are elected from among the members of every newly seated Council at a Special meeting following the election each year. The City has operated under a Council -City Manager form of government since 1989. The City provides a wide range of services including general government administration, police protection, the construction and maintenance of local roads, public works, recreational and cultural activities, a golf course, a general aviation airport, and a building department to enforce building and fire codes. This report includes all funds of the City. In evaluating the City as a reporting entity, we have included all component units for which the City Council is financially accountable. The component units have been blended with the financial statements presented for the Primary Government because the component unit's governing body is the same as the City Council or because the component unit exclusively serves the City. The blended component units are the Community Redevelopment Agency and Sebastian Police Officer's Pension Trust Fund. The Council is required to adopt a final budget no later than the close of the fiscal year. This annual budget serves as the foundation for the City's financial planning and control. The budget is prepared by fund, function (e.g., transportation), and department (e.g., public works). Shifts in appropriations within department totals 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 was showing good improvement in the last few years, until measures to control the COVID-19 virus restricted the normal operations of businesses. As of September 2021, the Florida Research & Economic Database reported an unemployment rate of 4.6%, which corresponds with levels experienced at the state and national levels. The largest major industry sector was Health Care and Social Assistance with 20.6% of the employment, followed by Retail with 17.5% of the employment and Accommodations/Food Services with 11.7% of the employment. According to the U.S. Census Bureau, 89% of the population age 25 or older are high school graduates and 29 % hold a bachelor's degree or higher. The area median age was 53.5 and the median household income for 2020 was $72,934, as reported by the U.S. Census Bureau. 4 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 easy in Sebastian, offering easy access to major freight transportation routes. 1- 95, the major north -south trucking route on the Florida east coast, is just six miles west. The Florida East Coast Railroad (FEC) runs directly through Sebastian. FEC offers freight service from Miami and Ft. Lauderdale ports of entry, as well as direct connections with other major rail lines at Jacksonville. 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 for another fifteen year period. 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 rate of 3.1514 for fiscal year 2021. The City had an increase in ad valorem values due to improvements and additions to the tax rolls. However, the millage increase was approved because of concerns that intergovernmental revenues would decline due to the pandemic. Construction activity resulted in a total of 255 permits being issued for new construction in fiscal year 2021 with a cost of $75.1 million compared to a total of 178 permits being issued for new construction in fiscal year 2020 with a cost of $46.9 million. In reviewing these numbers, new commercial was 3 permits costing $11.3 million in 2021 and 1 permit costing $.5 million in 2020, with new residential constructions changing from 175 permits costing $41.5 million in 2020 to 252 permits costing $63.5 in 2021. These comparable amounts support the premise that favorable conditions still exist for the local construction industry. At year end, General Fund unassigned fund balance is $6,224,793 and above the $5 million minimum target. The unassigned fund balance was 48.9% of the general fund expenditures and transfers out. 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 2022 was balanced without a reduction of fund balances. k, Major Initiatives Administration The City continues to pursue the remaining unpaid reimbursements from Federal Emergency Management Agency (FEMA) and the State related to Hurricane Matthew that occurred in October 2016. The City managed to document about $1,582,000 of eligible expenditures and has recovered all but about $144,000 from that event. A few days after the end of 2021, the City was paid most of that amount, leaving only $44,000 that should still be recovered. During the 2019 fiscal year, the City received all the $533,000 in qualified reimbursements initially documented from Hurricane Irma that occurred in September 2017. A subsequent allocation of another $14,700 in FEMA's share of the eligible costs from Hurricane Irma was received in 2020. In October of 2019, about $32,000 of expenditures were then experienced as a result of Hurricane Dorian and the reimbursement process for that event was initiated and entirely completed during the 2020 fiscal year. Expenditures necessary to handle these storm events are paid from General Fund unassigned fund balance, so the City strives to recover these outlays as soon as possible. The City has continued to make use of advanced technology by upgrading computer servers, improving the network and acquiring better audio visual equipment. With the COVID-19 Pandemic requiring stringent measures to safeguard the public and City employees while conducting business and holding open meetings, additional investments in technology continue to be aggressively pursued. Stormwater The City accounts for all Stormwater operating expenditures within the Stormwater Revenue fund in order to improve transparency about how stormwater fees are being spent. Special committees have established best management practices that minimize chemical spraying and still keep the canals and drainage systems clear of vegetative growth and functioning properly. Preliminary approval was received for a FEMA grant to address drainage improvements that are needed in the Stonecrop area of the City. A consultant has been hired to prepare a stormwater master plan to guide future decision making. Traffic & Transportation The City continues working on transportation improvements. Using a six year plan for funding road resurfacing and road reconstruction work. Based on the plan, necessary street repaving work is funded using local option gas taxes and required major road reconstruction is funded by discretionary sales taxes. In addition, discretionary sales taxes are used to replace heavy construction equipment needed for maintaining City rights -of -way and transportation infrastructure. M. Airport The Sebastian Municipal Airport's infrastructure is being developed with the intent of attracting economic development and stimulating the business climate in order to create jobs in the community. Land leases are a primary source of airport revenues and over 150 acres of property is available for lease, for both aviation and non -aviation businesses. The Airport's limited resources continue to be leveraged by aggressively seeking and obtaining grants from the Florida Department of Transportation (FOOT) and Federal Aviation Administration (FAA) to develop the necessary infrastructure. Construction of Hanger "D" has been initiated with grant funds matched by funds from discretionary sales taxes. In partnership with the County, grant funding has also been obtained to provide sewer service to tenants on the west side of the Airport. This endeavor was initiated in concert with the construction of a new Public Facilities Garage and Staging Facility. Public Safety The Building Department continued measures to effectively operate as the City Fire Marshal which has insured more timely response and review of development plans. Construction activity has continued to be strong and is steadily increasing the Building Fund's carryover balance. A recent State mandate requires excess carryover balances from permit fees to be refunded. The City has recorded a liability for the excess but is unable to make such refunds until such time as further guidance is prescribed on how they must be determined. The Police Department continues to participate in the accreditation program offered by the commission for Florida Law Enforcement Accreditation. The designation encourages the Police Department to establish goals and objectives with provisions for periodic updating; constant reevaluation of whether departmental resources are being employed in accordance with agency goals, objectives and mission; constant reevaluation of departmental policies and procedures as documented in the department's written directive system; to accommodate correction of internal deficiencies and inefficiencies before they become public problems; and the opportunity to reorganize without the appearance of personal attacks. Standards and performance measurements resulting from the accreditation process will continue to guide both Sebastian Police Department and city administration in alleviating potentially adverse conditions. Culture & Recreation The City continued efforts to promote the "working waterfront" concept on the riverfront properties that were purchased with grant funding, with City matching funds provided by discretionary sales taxes. In other areas, the City continued supporting the use of Riverfront Park for gatherings organized by various community groups, including the Clam Bake, Chamber of Commerce and Art Club. The City is using recreation impact fees to upgrade the identification signage at all the parks and to focus on one or two major parks each year to address needed major facility improvements and replacements, including "all- inclusive" features to accommodate those with special needs. 7 FINAL DRAFT 02/18/2022 Page 12 of 169 Awards and Acknowledgements The Certificate of Achievement for Excellence in Financial Reporting to the City of Sebastian for last year's annual comprehensive financial report for the fiscal year ended September 30, 2020. 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 annual comprehensive financial report. This report must satisfy both U.S. generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not be possible without the dedicated service of the Administrative Services Department accounting staff. Their efforts toward improving the accounting and financial reporting systems has led to the improved quality of information reported to the City Council, State and Federal agencies and the citizens of the City of Sebastian. We sincerely appreciate their contributions. Respectfully submitted, Paul Carlisle City Manager Kenneth W. Killgore Administrative Services Director/CFO H: CITY CLERK CITY OF SEBASTIAN, FLORIDA Organizational Chart Fiscal Year 2020/2021 CITIZENS OF SEBASTIAN CITY COUNCIL CITY MANAGER BOARDS & COMMISSIONS CITY ATTORNEY I ADMINISTRATIVE pOLICE BUILDING LDCEOVMELOPMEN MUNITYCITY PUBLIC LEISURESERVICES T ENGINEER FACILITIES SERVICES COURSE FINANCE & ADMINISTRATION PLANNING AND ROADS FACILITIES PARK ACCOUNTING ZONING FACILITIES MAINTENANCE COMMUNITY HUMAN OPERATIONS REDEVELOPMENT FSTO RMWATER FLEET RECREATION RESOURCES AGENCY MANAGEMENT PROGRAMS MANAGEMENT ~� INFORMATION INVESTIGATIONS CEMETERY SYSTEMS PROJECT DISPATCH AIRPORT ACCOUNTING CONTRACTS& CODE PROCUREMENT ENFORCEMENT 0j CITY OF SEBASTIAN, FLORIDA Govemment Fi uce Officers Agsoeiation Certificate f Achievement for Excellence in Financial Reporting Preseuied to City of Sebastian Florida For its Arnival ComprehetiFAve Financial Report For the Fiscal Year Ended epte-mb-cr 30, 2020 Exe=ive Director/CEO 10 FINANCIAL SECTION 11 This page intentionally left blank. 12 Rehmann INDEPENDENT AUDITORS' REPORT February 22, 2022 Honorable Mayor and Members of City Council City of Sebastian, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business - type activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida (the "City'), as of and for the year ended September 30, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Independent Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 13 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to previously 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, 2021, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund and each major special revenue fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the schedules for the pension plans, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, 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. 14 Other 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 introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. 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 information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 22, 2022, 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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. 4L,4�4L-01�- LLC 15 This page intentionally left blank. 16 MANAGEMENT'S DISCUSSION AND ANALYSIS 17 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis The City of Sebastian's (the "City") discussion and analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the City's financial activity, (c) identify changes in the City's financial position, (d) identify any material deviations from the financial plan, and (e) identify individual fund issues or concerns. Since the Management's Discussion and Analysis (MD&A) is designed to focus on the current years activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter and the City's financial statements. Financial Highlights The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year 2021 by $68,644,863 (net position). Of this amount, $1,386,998 (unrestricted net position) may be used to meet the City's on -going obligations to citizens and creditors. The City's total net position from governmental activities increased by $4,055,402 and from business -type activities decreased by $316,958. Net position was increased in governmental activities, primarily as a result of the favorable investment returns experienced by the Police Officer's Pension Plan that reduced the net pension liability. Net position of business -type activities decreased with the recoding of a liability for rebating permit fees which the state has mandated. Governmental funds reported a combined ending fund balance of $16,844,001, an increase of $360,659 from the prior year. Almost 36% of this amount, $6,013,917, is unassigned and available for spending. The Golf Course Fund reported a negative change in the unrestricted deficit in net position attributed to a decline in fee revenue. The Airport Fund reported a negative change in the deficit in unrestricted net position resulting from the amount of operating loss. The Building Fund reported a decrease in unrestricted net position, as a result of increases in the expense recorded for State mandated rebates. In total, the City's enterprise funds reported a decrease in overall net position at the end of the year. Overview of the Financial Statements The annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the City as a whole and present a longer -term view of the City's finances. For governmental activities, the fund financial statements tell how these services were financed in the short-term as well as what remains for future spending. Fund financial statements also report the City's operations in more detail by providing information about the City's most significant funds. The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Government -wide Financial Statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, physical and economical environment, transportation and cultural and recreation. The business -type activities of the City include the golf course, airport and building operations. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains numerous individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Riverfront Redevelopment Fund, Stormwater Utility Fund, American Rescue Plan, Discretionary Sales Tax Fund, and Transportation Improvements fund all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements and schedules elsewhere in this report. The City adopts an annual appropriated budget for its General Fund and special revenue funds. Budgetary comparison statements or schedules have been provided for these funds to demonstrate compliance with this budget. Proprietary Funds. The City maintains one type of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for the golf course, airport, and building department. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the City's golf course, airport and building department, which are major funds. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. 19 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. Government -wide Financial Analysis As previously stated, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $68,644,863 at the close of the most recent fiscal year. Net Position Governmental Activities Business -type Activities Total 2021 2020 2021 2020 2021 2020 Current and other assets $ 20,541,796 $ 17,592,698 $ 1,401,282 $ 516,175 $ 21,943,078 $ 18,108,873 Capital assets, net 42,005,989 39,292,832 15,912,891 16,367,501 57,918,880 55,660,333 Total assets 62,547,785 56,885,530 17,314,173 16,883,676 79,861,958 73,769,206 Deferred outflows of resources 940,147 1,361,274 - - 940,147 1,361,274 Long-term debt outstanding 2,399,740 2,987,676 289,656 340,409 2,689,396 3,328,085 Other liabilities 5,207,953 5,173,737 2,095,640 1,297,432 7,303,593 6,471,169 Total liabilities 7,607,693 8,161,413 2,385,296 1,637,841 9,992,989 9,799,254 Deferred inflows of resources 2,164,253 424,807 - - 2,164,253 424,807 Net position Net investment in capital assets Restricted Unrestricted (deficit) Total net position 41,252,989 37,919,832 15,862,090 16,263,098 57,115,079 54,182,930 10,142,786 10,637,069 - - 10,142,786 10,637,069 2,320,211 1,103,683 (933,213) (1,017,263) 1,386,998 86,420 $ 53,715,986 $ 49,660,584 $ 14,928,877 $ 15,245,835 $ 68,644,863 $ 64,906,419 A substantial portion of the City's net position, $57,115,079 (83.2 percent), reflects its investment in capital assets (e.g., land, buildings, machinery and equipment), less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position of $10,142,786 (14.8 percent) represents resources that are subject to external restrictions on how they may be used. The City may use the remaining balance of unrestricted net position of $1,386,998 (2.0 percent) to meet its ongoing obligations to citizens and creditors. 20 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, for the government as a whole and for its separate governmental activities. Program revenues for governmental activities increased in all categories primarily from increases in capital grants and contributions, resulting from the lifting of restrictions that were mandated on businesses the year before. General revenues from property taxes and other taxes increased due to due to adopting a higher millage and additional taxable values. Intergovernmental revenue also increased due to the lifting of restrictions on businesses the year before. Charges for services in the business -type activities increased as a result of increased levels of construction activity. Total expenses in the business -type activities decreased due to a lesser amount recorded for State mandated rebates. Change in Net Position Governmental Activities Business -type Activities Total 2021 2020 2021 2020 2021 2020 Revenues Program revenues: Charges for services $ 3,117,335 $ 2,894,630 $ 3,455,455 $ 3,015,812 $ 6,572,790 $ 5,910,442 Operating grants 2,093,941 1,726,719 - - 2,093,941 1,726,719 Capital grants 4,265,728 3,647,329 560,394 471,888 4,826,122 4,119,217 General revenues: Property taxes 4,991,306 4,270,497 - - 4,991,306 4,270,497 Other taxes 3,030,261 2,940,406 3,030,261 2,940,406 Intergovernmental 3,066,490 2,541,474 3,066,490 2,541,474 Other 1,717,052 1,879,836 3,582 14,645 1,720,634 1,894,481 Total revenues 22,282,113 19,900,891 4,019,431 3,502,345 26,301,544 23,403,236 Expenses General government 4,907,738 5,071,184 - - 4,907,738 5,071,184 Public safety 6,453,141 6,856,836 6,453,141 6,856,836 Physical environment 2,848,779 2,534,320 2,848,779 2,534,320 Transportation 2,136,727 2,037,807 2,136,727 2,037,807 Economic environment 256,771 315,985 256,771 315,985 Cultural and recreation 1,481,096 1,402,691 1,481,096 1,402,691 Interest and fiscal charges 19,522 28,711 19,522 28,711 Golf course - - 1,575,587 1,551,926 1,575,587 1,551,926 Airport 1,339,582 1,282,084 1,339,582 1,282,084 Building 1,544,157 1,869,767 1,544,157 1,869,767 Total expenses 18,103,774 18,247,534 4,459,326 4,703,777 22,563,100 22,951,311 Change in net position, before transfers 4,178,339 1,653,357 (439,895) (1,201,432) 3,738,444 451,925 Transfers (122,937) (106,344) 122,937 106,344 - - Change in net position 4,055,402 1,547,013 (316,958) (1,095,088) 3,738,444 451,925 Net position, beginning of year 49,660,584 48,113,571 15,245,835 16,340,923 64,906,419 64,454,494 Net position, end of year $ 53,715,986 $ 49,660,584 $ 14,928,877 $ 15,245,835 $ 68,644,863 $ 64,906,419 21 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis The City's net position increased by $3,738,444 during the current fiscal year. The primary reason for the increase of $4,055,402 in net position for governmental activities primarily due to the favorable investment returns experienced by the Police Officer's Pension Plan that reduced the net pension liability. For business -type activities, the $316,958 decrease in net position when compared to the prior year decrease of $1,095,088 is attributable to the higher operating revenues which were offset by an additional expense recorded for state mandated rebates. Governmental Activities. Governmental activities increased the City's net position by $4,055,402. Key elements of this increase are as follows: Total assets increased by $5,662,255 due to construction in progress on the new public works compound. Total liabilities decreased by $553,720 from amortized payments on long-term debt. The changes in the net pension liability, deferred outflows and deferred inflows of resources from the Police Officer's Pension Plan increased the City's net position by $389,245. 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Expenses and Program Revenues - Governmental Activities ■ Expenses General Public safety Physical government environment In Othertaxes 20% _1" L Transportation Economic Cultural and environment recreation Revenues by Source - Governmental Activities 22% Other Operating grants 9% ipital grants 19% Interest and fiscal charges 22 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Business -type Activities. Business -type activities decreased the City's net position by $316,958. The key elements of this decrease are as follows: Increase in current and other assets of $885,107 resulting from an increase in cash flows from operating activities. Decrease in net capital assets of $454,610 mainly due to depreciation on Airport infrastructure improvements. Increase in total liabilities of $747,455 from recording the State mandated requirements on permit fee rebates. 1,800,000 - 1,600,000 - 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Golf course Cap Expenses and Program Revenues - Business -type Activities ■ Expenses ■Program Revenues Airport Revenues by Source - Business -type Activities Building or services is6% 23 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Financial Analysis of the City's 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 government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $16,844,001, an increase of $360,659 from the prior year. Of this amount, 36 percent ($6,013,917) constitutes unassigned fund balance, which is available for spending at the City's discretion. The remainder of fund balance is classified as one of the following: A) Nonspendable for 1) inventories and prepaids, or 2) is nonspendable as permanent fund corpus for cemetery perpetual care; B) restricted for capital projects or due to debt service and special revenue fund designations; C) is committed for development by local ordinance; or D) has been assigned for other specific uses in the City's general operations. 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 $6,224,793 while total fund balance amounted to $6,689,795. 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 49.1 percent of total General Fund expenditures, while total fund balance represents 52.8 percent of that same amount. The fund balance of the City's General Fund increased by $986,794 during the current fiscal year. Given that the fund balance decreased by $496,060 the prior fiscal year, there was actually a change in fund balance of $1,482,854. Key factors in this change are as follows: Property tax revenues increased by $666,377. The increase is due to adopting a higher millage and additional taxable values. Charges for services increased by $99,443. The increase is due to adjustments to administrative fees charged to other funds. Intergovernmental increased by $509,366. The increase is due to the lifting of restrictions on businesses the year before. Public utility taxes increased by $89,855. The increase is due to the greater number of customers. Franchise fees increased by $67,680. The increase is due to the greater number of customers. All other revenues decreased by $114,095. The decrease is due to a reduction in claims paid by the insurance company. Transfers out to other funds decreased by $41,263. The decrease is due to transfers made for a project completed in the prior year. Expenditures decreased by $205,491. The decrease is due to fewer expenditures for capital outlays. The Riverfront Redevelopment Fund ended the year with $541,244 in fund balance, an increase of $62,584 from the prior year. The increase is due to an effort to accumulate monies to be used for capital improvements that will enhance the redevelopment area. The Stormwater Utility Fund ended the year with a fund balance of $1,718,263, an increase of $342,514 from the prior year. The increase is due to funding a consultant's work to compile a comprehensive mast plan document. The American Rescue Plan Fund received advanced funding of $1,666,064 from the American Rescue Plan Act which is available for spending in future years. The City is waiting on the U.S. Department of Treasury to publish final guidelines on the eligible uses for these funds. 24 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis The Discretionary Sales Tax Fund has a total fund balance $6,104,743, a decrease from the $6,785,087 total fund balance of the prior year. The decrease is the result of the funds needed for construction of the new public works compound. The Transportation Improvements Fund has a total fund balance deficit of $89,243. The deficit is the result of payments to contractors no yet reimbursed by the fund providing the resources for the project. Proprietary Funds. The City's proprietary fund financial statements provide the same type of information found in the government -wide financial statements, but in more detail. The total net position of the golf course fund at the end of the fiscal year amounted to a deficit of $294,817, while the unrestricted net position (deficit) amounted to $(1,659,133). Net position has decreased $84,845, while the unrestricted net position (deficit) changed from $(1,711,345) to $(1,659,133). This is mainly due to because depreciation expense is exceeding cash flow from operating activities. The total net position of the airport fund at the end of the fiscal year amounted to $14,469,650, while the unrestricted net position amounted to $3,369. Net position has decreased by $76,466 while the unrestricted net position (deficit) has changed from $(194,744) to $3,369. The improvement in the unrestricted net position is because depreciation expense is exceeding cash flows from operating activities. The total net position of the building fund at the end of the fiscal year amounted to $754,044. This is a decrease of $155,647 from the prior year, which was primarily due to the recognition of rebates payable and state mandated rebates expense of $740,620 to comply with Florida statute 553.80. The statute does not allow a local government to carry forward an amount exceeding the average of its operating budget for the previous four fiscal years. Other factors concerning the finances of these three funds have already been addressed in the discussion of the City's business -type activities. Budgetary Highlights The General Fund originally budgeted for no changes in the fund balance. The actual increase in fund balance resulted from the following significant variances: Property tax revenues were slightly less than budgeted with just over 96% of the tax roll being collected. 96% of the tax roll is budgeted as being collected, based on experience. No less than 95% must be budgeted per Florida statutes. Intergovernmental revenues were more than budgeted due to expectations that sales taxes would be less because of the pandemic. General Fund expenditures had an overall favorable budgetary variance of $712,010, which was a 5.3% difference from the amended budget total. 25 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Over the course of the fiscal year, the City Council formally approved revisions to the City budget four times. These budget adjustments fell into four major categories. The first includes amendments to allocate funds for extraordinary and unexpected expenditures from Reserves or added revenues. The second includes new allocations funded by transfers from the equipment & facilities R&R Reserve. The third includes project transfers to cancel or close out capital projects or reallocate funds between them to address budget shortages. The fourth includes transfers to address budget shortages in operating budget accounts resulting from properly classifying charges or for unanticipated expenditures. The main components of the increases are as follows: Amendments 150,086 to allocate funds to cover employee 2% raises approved with the PEA and PBA Labor Agreements. 44,140 to allocate Local Option Gas Taxes budget for sidewalks for road paving. 65,956 to allocate a private contribution, plus DST and Parking -in -Lieu Funds to the Working Waterfront Parking/Shoreline project. 127,095 to allocate approved CDBG funding toward the CDBG action plan project. 65,284 to allocate General Fund, CRA and Building Fund Reserves to budgeted items ordered but not received in FY2020. 14,600 to allocate funds to cover Holiday Bonuses granted to all employees. 21,329 to allocate Stormwater Reserves to repair roadway damaged due to failing culverts. 277,516 to allocate DST Reserves for matching funds on a Grant awarded for the construction of Square Hangars. 59,669 to allocate funds to cover employee 1% raises we said would be considered if we were able to handle financially. 44,000 to allocate DST Reserves to purchase six City Gateway signs. 4,550,417 to allocate DST Reserves for the balance needed for the guaranteed maximum price contract on the Public Works Compound. 161,762 to allocate additional Grant proceeds and DST Reserves to cover an increase in project costs of the Airport Taxiway project. 500,000 to allocate DST and Stormwater Reserves to increase the budget for preparing the Stormwater Master Plan to $700,000. 28,519 to allocate DST Reserves to update the Email Server for protection against cyber security threats. 358,962 to allocate General Fund Reserves to replace the Yacht Club Seawall. 38,633 to allocate Stormwater Reserves for engineering work needed to address the ditch between Gardenia and Evernia Street. 29,341 to allocate DST Reserves to install an electronic marquee sign at City Hall. 19,640 to allocate General Fund Reserves for a structural evaluation of Crab E Bill's restaurant. 32,705 to allocate Airport Reserves for engineering inspections on Hangar D construction. 26,363 to allocate an increase to an FAA grant for the higher cost for the Taxiway. 25,000 to allocate DST Reserves for the additional costs of the N. Central Avenue Sidewalks project. 26,778 to allocate DST Reserves for engineering services needed for Working Waterfront improvements. 10,206 to allocate the proceeds from a JAG Grant to be used for the purchase of Police equipment. 267,958 to allocate the proceeds from a St. Johns River Water Management District grant in order to get sewer service to the Airport. General Fund Equipment & Facilities Renewal & Replacement (R&R) Reserve Allocations $ 57,964 to use General Fund R&R Account for replacement of a City Hall air conditioner. 6,221 to use General Fund R&R Account for replacement of an air conditioner in the Police Department server room. 1,224 to use General Fund R&R Account for replacement of an electronic lock at the Hardee Park restroom. 14,837 to use General Fund R&R Account to do emergency repairs to the seawall. 5,000 to use General Fund R&R Account to replace the Community Center roof. 26 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis General Fund Equipment & Facilities Renewal & Replacement (R&R) Reserve Allocations (Concluded) $ 2,730 to use General Fund R&R Account to cover unexpected irrigation system repairs in the parks. 6,653 to use General Fund R&R Account to cover unexpected repairs to the Observation Deck. Project Budget Transfers $ 105,913 adjustment to cover added street reconstruction work using funds budgeted for resurfacing. 39,292 adjustment to reallocate DST funds for Police vehicles to the purchase a body camera system. 7,147 adjustment to use unexpended Sidewalk/Bikepath project budget and Cemetery Reserves for a Cemetery roadway. 54,833 adjustment to close the N. Central Avenue Event Plaza project; the Pickleball project; and the Email Server project. 9,260 adjustment between account line items within the Network Infrastructure Project. 42,800 adjustment between account line items within the project for a Baseline Survey of Riverview Park Event Complex. 12,478 adjustment to close the Park Improvements project funding for the F2021 allocation. 7,911 adjustment to close the Park Improvements project funding for the F2021 allocation. 54,643 adjustments closing the Community Center Office project which was postponed; the Working Waterfront project that was completed; the FY2021 allocation to the Slip lining project; and the unspent COSty Equipment project. Operating Budget Transfers $ 4,255 adjustment within Airport accounts to replace an air conditioner for Building 5. 10,895 adjustments within Stormwater Fund accounts to rent equipment for ditch work while excavator was out of service. 1,325 adjustments within CRA Fund accounts to purchase Mini Reefs at the Working Waterfront Dock. 3,077 adjustments within CRA Fund accounts to cover additions to the landscape maintenance contract. 540,050 adjustment to revise revenue and expenditure accounts to the actual amount of CARES Act funding. 15,000 adjustment within the Law Enforcement forfeiture Fund for an award by the courts of a confiscated vehicle. 11,458 adjustment to allocate a JAG Grant to training, supplies and equipment for the Police Department. 7,457 adjustment within Police Department accounts to purchase a cart to be used at COPE events. 17,000 adjustments within Stormwater Fund accounts to cover repairs to SW606 and SW620. 10,688 adjustments within Police Department accounts to purchase night vision monoculars and other surveillance equipment. 1,110 adjustment within Stormwater Fund accounts to perform sampling at the Garden Club. During the fiscal year, total General Fund actual expenditures were $712,010 less than final amended budgetary estimates. The overall variance on revenues and expenditures resulted in an increase of $986,794 to existing fund balances. This was primarily due to an amendment to the budget for replacing the Yacht Club seawall that could not be accomplished before year- end. 27 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Capital Asset and Debt Administration Capital Assets. At the end of fiscal year 2021, the City had $57,918,880 invested in a broad range of capital assets, including land, police and public works equipment, buildings, park facilities, roads, bridges, and stormwater drainage structures. This amount represents a net increase (including additions and deductions) of $2,258,547, or 4.1%, over last year. The following table illustrates the changes in capital assets. More detailed information regarding capital assets can be found within Note 7 on Capital Assets in the Financial Statements section of the annual comprehensive financial report. Capital Assets (Net of Depreciation) Governmental Activities Business -type Activities Total 2021 2020 2021 2020 2021 2020 Land $ 9,123,041 $ 9,123,041 $ 9,060 $ 9,060 $ 9,132,101 $ 9,132,101 Buildings 7,023,552 7,429,990 7,069,290 7,353,716 14,092,842 14,783,706 Improvements 2,626,712 2,857,412 1,055,692 1,172,099 3,682,404 4,029,511 Equipment 2,692,602 2,948,383 230,361 340,826 2,922,963 3,289,209 Infrastructure 16,780,923 16,526,722 6,579,932 7,217,300 23,360,855 23,744,022 Construction in progress 3,759,159 407,284 968,556 274,500 4,727,715 681,784 Total capital assets, net $ 42,005,989 $ 39,292,832 $ 15,912,891 $ 16,367,501 $ 57,918,880 $ 55,660,333 Governmental activities had the following major changes during the fiscal year: A decrease in Buildings mainly due to depreciation. A decrease in Improvements due to depreciation. A decrease in Equipment due to depreciation. An increase in Infrastructure mainly due to roadway work. An increase in Construction in progress with the expenditures on the public works compound. Business -type activities had the following major changes during the fiscal year: A decrease in Buildings mainly due to depreciation. A decrease in Improvements mainly due to depreciation. A decrease in Equipment mainly due to depreciation. A decrease in Infrastructure due to depreciation. An increase in Construction in progress with the expenditures on Hangar D. W] CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Long-term Debt. At the end of the current fiscal year, the City had total long-term debt outstanding of $2,689,396. Of this amount, $753,000 consist of notes pledging specific revenues to the repayment of the debt. More detailed information regarding these activities and funds can be found within Note 8 on Long-term Debt in the Financial Statements section of the annual comprehensive financial report. Total Long-term Debt Governmental Activities Business -type Activities Total 2021 2020 2021 2020 2021 2020 Notes payable $ 753,000 $ 1,373,000 $ - $ - $ 753,000 $ 1,373,000 Compensated absences 1,555,540 1,523,476 238,855 236,006 1,794,395 1,759,482 Pollution remediation 91,200 91,200 - - 91,200 91,200 Capital lease - - 50,801 104,403 50,801 104,403 Total $ 2,399,740 $ 2,987,676 $ 289,656 $ 340,409 $ 2,689,396 $ 3,328,085 The City's total debt decreased by $638,689 (19.2%) during the current fiscal year. The net decrease was attributable to annual principal payments that occurred during the year. The City's debt is primarily bank notes which are not rated AAA by rating agencies. Other obligations of the City include accrued vacation pay and sick leave. Economic Factors and Next Year's Budget and Rates The City's elected and appointed officials considered many factors when setting the next fiscal year 2022 budget, tax rates, and fees that will be charged for the business -type activities. One of those factors is the economy. Sebastian's local economy consists largely of retail and service industries. Less than one percent is devoted to industrial activities. Construction of new homes is the largest single business in the area. Some of the largest retail stores include Publix Supermarket and Wal-Mart Stores, Inc.° The Indian River County unemployment rate in September 2021 was 5.9 percent and less than the higher levels of previous years, which is a positive sign and analogous to the economic pattern existing throughout the state and nation. The City experienced a 6.55% overall increase in property values for 2022. The same millage of 3.1514 was levied for taxes to be recorded in fiscal year 2022. With increases in other revenue sources, that amount of property taxes was sufficient to cover projected expenditures. The Golf Course continues to benefit from the excellent condition of the facility. The Golf Course also benefited from favorable weather and by the new customers that left competing Golf Courses when they had temporarily closed because of the COVID-19 Pandemic. Sizable operating losses for the Airport are primarily the result of depreciation on capital assets. The City actively pursues grant funds for constructing new facilities that can generate additional rental revenues. Those new facilities also benefit the local economy by creating new jobs, demand for housing and support to existing businesses. Although a good level of revenues from building permit fees continued, the Building Enterprise Fund reported a reduction in net position due to recording a liability for rebating permit fees in accordance with a State mandate. There are signs that steady activity in the local housing market is continuing, which is encouraging. 29 CITY OF SEBASTIAN, FLORIDA Management's Discussion and Analysis Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional information, contact the Administrative Services Department at City of Sebastian, 1225 Main Street, Sebastian, Florida 32958. 30 BASIC FINANCIAL STATEMENTS 31 CITY OF SEBASTIAN, FLORIDA Statement of Net Position September 30, 2021 Primary Government Governmental Business -type Activities Activities Total Assets Cash and cash equivalents $ 12,235,304 $ 1,715,078 $ 13,950,382 Restricted cash and cash equivalents 1,445,039 - 1,445,039 Investments 3,443,706 292,529 3,736,235 Permanently restricted investments 706,076 - 706,076 Receivables 1,320,187 341,767 1,661,954 Internal balances 1,018,506 (1,018,506) - Prepaid items 317,593 53,798 371,391 Inventories 55,385 15,014 70,399 Deposits held in escrow - 1,602 1,602 Capital assets not being depreciated 12,882,200 977,616 13,859,816 Capital assets being depreciated, net 29,123,789 14,935,275 44,059,064 Total assets 62,547,785 17,314,173 79,861,958 Deferred outflows of resources Deferred pension amounts 940,147 - 940,147 Liabilities Accounts payable and accrued liabilities 1,893,007 1,992,761 3,885,768 Accrued interest payable 3,926 - 3,926 Deposits payable 93,090 - 93,090 Unearned revenues 1,711,698 102,879 1,814,577 Long-term liabilities: Due within one year 729,975 50,801 780,776 Due in more than one year 1,669,765 238,855 1,908,620 Net pension liability (due in more than one year) 1,506,232 - 1,506,232 Total liabilities 7,607,693 2,385,296 9,992,989 Deferred inflows of resources Deferred pension amounts 2,164,253 - 2,164,253 Net position Net investment in capital assets 41,252,989 15,862,090 57,115,079 Restricted for: Debt service 176,906 - 176,906 Perpetualcare: Nonexpendable 970,326 970,326 Special revenue uses: Economic environment 1,613 1,613 Infrastructure improvements 6,343,386 6,343,386 Redevelopment expenses 541,244 541,244 Stormwater expenses 1,965,435 1,965,435 Law enforcement events 143,876 143,876 Unrestricted (deficit) 2,320,211 (933,213) 1,386,998 Total net position $ 53,715,986 $ 14,928,877 $ 68,644,863 The accompanying notes are an integral part of these basic financial statements. 32 CITY OF SEBASTIAN, FLORIDA Statement of Activities For the Year Ended September 30, 2021 Functions / Programs Primary government Governmental activities: General government Public safety Physical environment Transportation Economic environment Cultural and recreation Interest and fiscal charges Total governmental activities Business -type activities: Golf course Airport Building Total business -type activities Total primary government Expenses $ 4,907,738 $ 6,453,141 2,848,779 2,136,727 256,771 1,481,096 19,522 18,103,774 Program Revenues Operating Capital Charges Grants and Grants and for Services Contributions Contributions 769,986 $ 157,625 2,119,101 70,623 3,117,335 881,925 $ 4,037,460 $ 221,866 13,768 990,150 214,500 2,093,941 4,265,728 Net (Expense) Revenue 781,633 (6,059,882) (729,678) (1,146,577) (256,771) (1,195,973) (19,522) (8,626,770) 1,575,587 1,498,561 - - (77,026) 1,339,582 578,916 - 560,394 (200,272) 1,544,157 1,377,978 - - (166,179) 4,459,326 3,455,455 - 560,394 (443,477) $ 22,563,100 $ 6,572,790 $ 2,093,941 $ 4,826,122 $ (9,070,247) continued... 33 CITY OF SEBASTIAN, FLORIDA Statement of Activities For the Year Ended September 30, 2021 Changes in net position Net revenue (expense) General revenues: Property taxes, levied for general purposes Public utility taxes Franchise fees Intergovernmental - unrestricted Interest earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net position, beginning of year Net position, end of year Primary Government Governmental Business -type Activities Activities Total $ (8,626,770) $ (443,477) $ (9,070,247) 4,991,306 - 4,991,306 3,030,261 - 3,030,261 1,384,529 - 1,384,529 3,066,490 - 3,066,490 61,247 3,582 64,829 271,276 - 271,276 (122,937) 122,937 - 12, 682,172 126,519 12,808, 691 4,055,402 (316,958) 3,738,444 49,660,584 15,245,835 64,906,419 $ 53,715,986 $ 14,928,877 $ 68,644,863 concluded The accompanying notes are an integral part of these basic financial statements. 34 This page intentionally left blank. 35 CITY OF SEBASTIAN, FLORIDA Balance Sheet Governmental Funds September 30, 2021 Special Revenue Funds American Riverfront Stormwater Rescue General Redevelopment Utility Plan Assets Cash and cash equivalents $ 4,573,806 $ 435,564 $ 1,409,966 $ 1,336,569 Investments 1,423,511 116,138 354,142 331,108 Accounts receivable 332,009 - - - Due from other funds 500,000 Due from other governments 431,984 Inventories 55,385 - - Prepaid items 286,466 1,054 30,073 Advance to other funds - - - - Total assets $ 7,603,161 $ 552,756 $ 1,794,181 $ 1,667,677 Liabilities Accounts payable and accrued liabilities $ 347,615 $ 11,512 $ 75,918 $ - Due to other governments 427,027 - - Refunds payable 93,090 - Unearned revenue 45,634 - - 1,666,064 Total liabilities 913,366 11,512 75,918 1,666,064 Fund balances Nonspendable 341,851 1,054 30,073 - Restricted 110,994 540,190 1,688,190 1,613 Committed - - - - Assigned 12,157 Unassigned (deficit) 6,224,793 - - - Total fund balances 6,689,795 541,244 1,718,263 1,613 Total liabilities and fund balances $ 7,603,161 $ 552,756 $ 1,794,181 $ 1,667,677 The accompanying notes are an integral part of these basic financial statements. 36 Capital Projects Funds Nonmajor Total Discretionary Transportation Governmental Governmental Sales Tax Improvements Funds Funds $ 4,099,552 $ 603,733 $ 1,221,153 $ 13,680,343 1,064,280 - 860,603 4,149,782 - - 332,009 - - - 500,000 440,254 11,814 104,126 988,178 - - - 55,385 - 317,593 518,506 - - 518,506 $ 6,122,592 $ 615,547 $ 2,185,882 $ 20,541,796 $ 17,849 $ 704,790 $ 308,296 $ 1,465,980 - - - 427,027 93,090 - - - 1,711,698 17,849 704,790 308,296 3,697,795 - - 970,326 1,343,304 6,104,743 699,529 9,145,259 - 329,364 329,364 - 12,157 (89,243) (121,633) 6,013,917 6,104,743 (89,243) 1,877,586 16,844,001 $ 6,122,592 $ 615,547 $ 2,185,882 $ 20,541,796 37 This page intentionally left blank. 9:3 CITY OF SEBASTIAN, FLORIDA Reconciliation Fund Balances for Governmental Funds to Net Position of Governmental Activities September 30, 2021 Fund balances - total governmental funds $ 16,844,001 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources, and therefore are not reported in the funds. Capital assets not being depreciated 12,882,200 Capital assets being depreciated, net 29,123,789 Certain liabilities, such as notes payable, are not due and payable in the current period, and therefore are not reported in the funds. Notes payable (753,000) Compensated absences (1,555,540) Pollution remediation liability (91,200) Accrued interest on long-term debt (3,926) Certain pension -related amounts, such as the net pension liability and deferred amounts are not due and payable in the current period or do not represent current financial resources and therefore are not reported in the funds. Net pension liability (1,506,232) Deferred outflows related to the net pension liability 940,147 Deferred inflows related to the net pension liability (2,164,253) Net position of governmental activities $ 53,715,986 The accompanying notes are an integral part of these basic financial statements. 39 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2021 Special Revenue Funds American Riverfront Stormwater Rescue General Redevelopment Utility Plan Revenues Taxes: Property $ 4,533,634 $ 457,672 $ $ Public utility 3,030,261 - Franchise fees 1,384,529 Licenses and permits 195,920 Intergovernmental 3,523,088 Impact fees - Charges for services 763,145 1,953,246 Fines 38,277 - - Investment earnings 14,386 1,466 5,415 1,613 Other revenues 221,978 36,000 - - Contributions and donations 4,800 - - - Total revenues 13,710,018 495,138 1,958,661 1,613 Expenditures Current: General government 3,893,552 1,478 - - Public safety 6,312,519 - - Physical environment 179,002 1,475,820 Transportation 1,095,871 - - Economic environment - 256,771 Culture and recreation 986,734 - Debt service: Principal - Interest and fiscal charges - - Capital outlay 209,592 - 123,824 Total expenditures 12,677,270 258,249 1,599,644 - Revenues over (under) expenditures 1,032,748 236,889 359,017 1,613 Other financing sources (uses) Transfers in - - - - Transfers out (45,954) (174,305) (16,503) Total other financing sources (uses) (45,954) (174,305) (16,503) - Net changes in fund balances 986,794 62,584 342,514 1,613 Fund balances, beginning of year 5,703,001 478,660 1,375,749 - Fund balances, end of year $ 6,689,795 $ 541,244 $ 1,718,263 $ 1,613 The accompanying notes are an integral part of these basic financial statements. 40 Capital Projects Funds Nonmajor Total Discretionary Transportation Governmental Governmental Sales Tax Improvements Funds Funds $ $ $ $ 4,991,306 3,030,261 1,384,529 195,920 4,037,460 11,814 1,604,497 9,176,859 - - 214,500 214,500 151,697 2,868,088 - 15,050 53,327 35,198 3,169 61,247 - 13,298 271,276 - - 30,000 34,800 4,072,658 11,814 2,032,211 22,282,113 - - 562,272 4,457,302 1,500 6,314,019 203,404 1,858,226 101,964 1,197,835 - 256,771 - 986,734 620,000 620,000 - - 23,927 23,927 17,849 3,983,248 1,749,190 6,083,703 17,849 3,983,248 3,262,257 21,798,517 4,054,809 (3,971,434) (1,230,046) 483,596 - 3,882,191 1,750,325 5,632,516 (4,735,153) - (783,538) (5,755,453) (4,735,153) 3,882,191 966,787 (122,937) (680,344) (89,243) (263,259) 360,659 6,785,087 2,140,845 16,483,342 $ 6,104,743 $ (89,243) $ 1,877,586 $ 16,844,001 41 This page intentionally left blank. M CITY OF SEBASTIAN, FLORIDA Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended September 30, 2021 Net change in fund balances - total governmental funds $ 360,659 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital assets purchased/constructed 6,083,703 Depreciation expense (3,344,430) Loss on disposal of capital assets (26,116) Note proceeds provide current financial resources to governmental funds in the period issued, but issuing notes increases long-term liabilities in the statement of net position. Repayment of note principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal payments on long-term liabilities 620,000 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Change in accrued interest payable on long-term debt 4,405 Change in the accrual for compensated absences (32,064) Change in the net pension liability and related deferred amounts 389,245 Change in net position of governmental activities $ 4,055,402 The accompanying notes are an integral part of these basic financial statements. 43 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended September 30, 2021 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Taxes: Property $ 4,563,724 $ 4,563,724 $ 4,533,634 $ (30,090) Public utility 3,122,777 3,122,777 3,030,261 (92,516) Franchise fees 1,462,101 1,462,101 1,384,529 (77,572) Licenses and permits 149,200 149,200 195,920 46,720 Intergovernmental 2,484,751 2,702,226 3,523,088 820,862 Charges for services 744,033 744,033 763,145 19,112 Fines 50,900 50,900 38,277 (12,623) Investment earnings 61,500 61,500 14,386 (47,114) Other revenues 309,100 311,774 221,978 (89,796) Contributions and donations 8,000 8,000 4,800 (3,200) Total revenues 12,956,086 13,176,235 13,710,018 533,783 Expenditures Current: General government: City council 59,737 59,737 55,883 (3,854) City manager 286,148 292,499 285,944 (6,555) City clerk 211,347 215,122 205,203 (9,919) City attorney 197,538 201,426 195,695 (5,731) Administrative services 693,359 707,722 656,305 (51,417) Management information services 508,634 516,961 513,328 (3,633) Facilities maintenance 540,388 566,223 524,383 (41,840) Community development 490,950 505,873 477,729 (28,144) Non -departmental 950,800 988,990 979,082 (9,908) Total general government 3,938,901 4,054,553 3,893,552 (161,001) Public safety: Police administration 862,635 1,077,355 1,020,630 (56,725) Police operations 3,463,863 3,529,897 3,428,512 (101,385) Police detective division 1,084,327 1,111,091 1,098,241 (12,850) Police dispatch unit 653,778 662,359 577,507 (84,852) Code enforcement division 193,315 197,439 187,629 (9,810) Total public safety 6,257,918 6,578,141 6,312,519 (265,622) continued... 44 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended September 30, 2021 Physical environment: Cemetery Transportation: Roads and maintenance Fleet management Total transportation Culture and recreation: Leisure services Capital outlay Total expenditures Revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net changes in fund balance Fund balance, beginning of year Fund balance, end of year Actual Over Original Final (Under) Final Budget Budget Actual Budget $ 208,114 $ 211,522 $ 179,002 $ (32,520) 979,829 994,604 883,945 (110,659) 208,427 214,824 211,926 (2,898) 1,188,256 1,209,428 1,095,871 (113,557) 1,047,085 1,076,578 986,734 (89,844) 213,910 259,058 209,592 (49,466) 12,854,184 13,389,280 12,677,270 (712,010) 101,902 (213,045) 1,032,748 1,245,793 185,000 682,684 - (682,684) (286,902) (469,639) (45,954) (423,685) (101,902) 213,045 (45,954) (258,999) - - 986,794 986,794 5,703,001 5,703,001 5,703,001 - $ 5,703,001 $ 5,703,001 $ 6,689,795 $ 986,794 concluded The accompanying notes are an integral part of these basic financial statements. 45 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Riverfront Redevelopment Special Revenue Fund For the Year Ended September 30, 2021 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Taxes: Property $ 443,884 $ 443,884 $ 457,672 $ 13,788 Investment earnings 10,331 10,331 1,466 (8,865) Other revenues 36,000 36,000 36,000 - Total revenues 490,215 490,215 495,138 4,923 Expenditures Current: General government 1,400 1,478 1,478 - Economic environment 298,817 301,816 256,771 (45,045) Total expenditures 300,217 303,294 258,249 (45,045) Revenues over expenditures 189,998 186,921 236,889 49,968 Other financing sources (uses) Transfers in - 209,013 - (209,013) Transfers out (189,998) (395,934) (174,305) (221,629) Total other financing sources (uses) (189,998) (186,921) (174,305) 12,616 Net changes in fund balance - - 62,584 62,584 Fund balance, beginning of year 478,660 478,660 478,660 - Fund balance, end of year $ 478,660 $ 478,660 $ 541,244 $ 62,584 The accompanying notes are an integral part of these basic financial statements. 46 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Stormwater Utility Special Revenue Fund For the Year Ended September 30, 2021 Revenues Charges for services Investment earnings Total revenues Expenditures Current: Physical environment Capital outlay Total expenditures Revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balance Fund balance, beginning of year Fund balance, end of year Actual Over Original Final (Under) Final Budget Budget Actual Budget $ 2,039,714 $ 2,039,714 $ 1,953,246 $ (86,468) 44,844 44,844 5,415 (39,429) 2,084,558 2,084,558 1,958,661 (125,897) 1,511,306 242,050 1,753,356 331,202 1,572,286 254,200 1,826,486 258,072 469,111 1,475,820 123,824 1,599,644 359,017 (300,000) (695,981) (16,503) (300,000) (226,870) (16,503) 31,202 31,202 342,514 1,375,749 1,375,749 1,375,749 $ 1,406,951 $ 1,406,951 $ 1,718,263 $ The accompanying notes are an integral part of these basic financial statements. (96,466) (130,376) (226,842) 100,945 (469,111) (679,478) 210,367 311,312 311,312 47 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - American Recovery Plan Special Revenue Fund For the Year Ended September 30, 2021 Revenues Investment earnings Net change in fund balance Fund balance, beginning of year Fund balance, end of year Actual Over Original Final (Under) Final Budget Budget Actual Budget $ - $ - $ 1,613 $ 1,613 1,613 1,613 $ - $ - $ 1,613 $ 1,613 The accompanying notes are an integral part of these basic financial statements. 48 CITY OF SEBASTIAN, FLORIDA Statement of Net Position Proprietary Funds September 30, 2021 Business -type Activities - Enterprise Funds Golf Course Airport Building Total Assets Current assets: Cash and cash equivalents $ 153,111 $ 266,253 $ 1,295,714 $ 1,715,078 Investments - - 292,529 292,529 Accounts receivable 39 216 - 255 Due from other governments - 341,512 341,512 Inventories 15,014 - - 15,014 Deposits held in escrow 493 616 493 1,602 Prepaid items 14,042 22,164 17,592 53,798 Total current assets 182,699 630,761 1,606,328 2,419,788 Noncurrent assets: Advance to other funds - - 1,144,593 1,144,593 Capital assets: Land - 9,060 - 9,060 Buildings 697,985 9,367,542 10,065,527 Improvements other than buildings 1,107,668 1,699,383 2,807,051 Machinery and equipment 405,366 1,029,977 139,728 1,575,071 Infrastructure 1,437,440 12,128,021 - 13,565,461 Construction in process - 968,556 968,556 Less accumulated depreciation (2,233,342) (10,736,258) (108,235) (13,077,835) Total noncurrent assets 1,415,117 14,466,281 1,176,086 17,057,484 Total assets 1,597,816 15,097,042 2,782,414 19,477,272 Liabilities Current liabilities: Accounts payable and accrued liabilities 8,612 88,632 29,364 126,608 Due to other funds 500,000 - - 500,000 Due to other governments 8,303 1,516 8,272 18,091 Unearned revenues 80,419 18,310 4,150 102,879 Rebates payable - - 1,848,062 1,848,062 Current portion of leases payable 50,801 - - 50,801 Total current liabilities 648,135 108,458 1,889,848 2,646,441 Noncurrent liabilities: Compensated absences 99,905 428 138,522 238,855 Advance from other fund 1,144,593 518,506 - 1,663,099 Total noncurrent liabilities 1,244,498 518,934 138,522 1,901,954 Total liabilities 1,892,633 627,392 2,028,370 4,548,395 Net position Net investment in capital assets 1,364,316 14,466,281 31,493 15,862,090 Unrestricted (deficit) (1,659,133) 3,369 722,551 (933,213) Total net position (deficit) $ (294,817) $ 14,469,650 $ 754,044 $ 14,928,877 The accompanying notes are an integral part of these basic financial statements. 49 CITY OF SEBASTIAN, FLORIDA Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended September 30, 2021 Operating revenues Charges for fees and rents: Building permit fees Golf course fees Rents Other revenues Total operating revenues Operating expenses Salaries, wages and employee benefits Contractual services, materials and supplies Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses) Investment income Interest expense Loss on disposal of capital assets State mandated rebates Total nonoperating revenues (expenses) Loss before capital contributions and transfers Capital contributions Transfers in Transfers out Change in net position Net position, beginning of year Net position, end of year Golf Course Business -type Activities - Enterprise Funds Airport Building Total $ - $ $ 1,370,648 $ 1,370,648 1,456,432 - 1,456,432 30,001 495,395 - 525,396 12,128 83,521 7,330 102,979 1,498,561 578,916 1,377,978 3,455,455 404,919 62,691 631,113 1,098,723 963,980 277,936 160,095 1,402,011 203,186 977,841 12,095 1,193,122 1,572,085 1,318,468 803,303 3,693,856 (73,524) (739,552) 574,675 (238,401) 869 2,713 3,582 (2,789) (21,114) - (23,903) (713) (234) (947) - (740,620) (740,620) (3,502) (20,245) (738,141) (761,888) (77,026) (759,797) (163,466) (1,000,289) 560,394 - 560,394 122,937 7,819 130,756 (7,819) - - (7,819) (84,845) (76,466) (155,647) (316,958) (209,972) 14,546,116 909,691 15,245,835 $ (294,817) $ 14,469,650 $ 754,044 $ 14,928,877 The accompanying notes are an integral part of these basic financial statements. 50 CITY OF SEBASTIAN, FLORIDA Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2021 Cash flows from operating activities Cash received from customers and users Cash payments to suppliers Cash payments for employee services Net cash provided by operating activities Cash flows from noncapital financing activities Interest paid on advance from other fund Cash payments to other funds Cash receipts from other funds Net cash provided by (used in) by noncapital financing activities Cash flows from capital and related financing activities Repayment of long term debt Acquisition and construction of capital assets Proceeds from sale of capital assets Receipts from capital contributions Net cash used in capital and related financing activities Cash flows from investing activities Purchases of investments Investment income Net cash provided by (used in) investing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Business -type Activities - Enterprise Funds Golf Course $ 1,500,411 $ (977,903) (399,357) 123,151 (2,789) (38,366) (41,155) (53,602) (13,429) 189 (66,842) 15,154 137,957 $ 153,111 $ Airport Building Total 578,979 $ 1,376,582 $ 3,455,972 (246,274) (170,528) (1,394,705) (63,757) (632,760) (1,095,874) 268,948 573,294 965,393 (21,114) - (23,903) (150,000) - (188,366) 113,552 38,366 151,918 (57,562) 38,366 (60,351) (53,602) (703,262) (22,957) (739,648) - 189 560,394 560,394 (142,868) (22,957) (232,667) - (93,167) (93,167) 869 2,713 3,582 869 (90,454) (89,585) 69,387 498,249 582,790 196,866 797,465 1,132,288 266,253 $ 1,295,714 $ 1,715,078 continued... 51 CITY OF SEBASTIAN, FLORIDA Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2021 Cash flow from operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense Changein: Accounts receivable Due from other governments Inventories Prepaid items Accounts payable and accrued liabilities Due to other governments Unearned revenues Accrued compensated absences Total adjustments Net cash provided by operating activities Business -type Activities - Enterprise Funds Golf Course Airport $ (73,524) $ (739,552) $ Building Total 574,675 $ (238,401) 203,186 977,841 12,095 1,193,122 460 243 - 703 - (18,158) (18,158) (1,453) (1,453) (5,111) (16,005) (9,741) (30,857) (7,359) 47,667 (692) 39,616 51 (120) 1,450 1,381 1,339 18,098 (2,846) 16,591 5,562 (1,066) (1,647) 2,849 196,675 1,008,500 (1,381) 1,203,794 $ 123,151 $ 268,948 $ 573,294 $ 965,393 concluded Non -cash Transactions For the year ended September 30, 2021, the building fund recognized rebates payable and state mandated rebates expense of $740,620 to comply with Florida statute 553.80. The statute does not allow a local government to carry forward an amount exceeding the average of its operating budget for the previous four fiscal years. The accompanying notes are an integral part of these basic financial statements. 52 CITY OF SEBASTIAN, FLORIDA Statement of Fiduciary Net Position Fiduciary Fund - Pension Trust September 30, 2021 Assets Receivables: Interest and dividends Investments, at fair value: Money market funds United States government obligations Mortgage backed securities Collateralized mortgage obligations Municipal obligations Domestic corporate bonds Foreign corporate bonds Domestic corporate equities Foreign corporate equities Exchange -traded fund equities Partnerships Real estate investment trust Total investments Total assets Net position Restricted for pension benefits Police Officers' Pension 25,946 615,211 46,629 1,005,585 1,438,416 236,500 1,410,313 181,366 9,773,781 3,105,670 2,889,738 13,591 800,469 21,517,269 21, 543, 215 $ 21,543,215 The accompanying notes are an integral part of these basic financial statements. 53 CITY OF SEBASTIAN, FLORIDA Statement of Changes in Fiduciary Net Position Fiduciary Fund - Pension Trust For the Year Ended September 30, 2021 Police Officers' Pension Additions Contributions: Employer $ 686,778 Plan members 220,466 State 206,017 Total contributions 1,113,261 Investment income: Net increase in fair value of investments 3,875,564 Interest and dividends 377,627 Total investment income 4,253,191 Investment expenses (136,381) Net investment earnings 4,116,810 Total additions 5,230,071 Deductions Benefits 794,272 Administrative expenses 70,384 Total deductions 864,656 Change in net position 4,365,415 Net position, beginning of year 17,177,800 Net position, end of year $ 21,543,215 The accompanying notes are an integral part of these basic financial statements. 54 NOTES TO FINANCIAL STATEMENTS 55 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Sebastian (the "City"), a Florida Municipal Corporation, was incorporated in 1924 under Sections 1826-1832 of the Revised Florida Statutes. The City has a population of 25,454 living in an area of approximately 16.3 square miles. The governing body is a five member elected City Council with a mayor elected from the five members. The City Council appoints the City Manager who is responsible for the administration of all City services. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. Reporting Entity As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the City is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations and as such, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government -wide financial statements to emphasize that they are legally separate from the government. The City has no discretely presented component units. Blended Component Units Blended component units are legally separate entities that are from the City but so intertwined with the City that they are, in substance, the same as the City. Discretely presented component units are entities legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has two component units that are blended with the primary government for financial statement purposes because the component unit's governing body is substantially the same as the City Council and/or there is a financial benefit/burden relationship between the primary government and the component unit. Community Redevelopment Agency (CRA) — The governing body of the CRA is identical to the Sebastian City Council and there is a benefit/burden relationship to the City. The CRA is accounted for in a special revenue fund entitled "Riverfront Redevelopment." F.S. Section 163.387(8) requires an independent audit of the fund each fiscal year and a report of such audit. The City has presented the CRA as a major fund of the City to satisfy this requirement simply due to the scope of the audit for a major fund being broader than a nonmajor fund. 56 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Fiduciary Component Units City of Sebastian Police Officers' Pension Plan (the "Plan") — The City sponsors and administers a single - employer, defined benefit pension plan, which covers the City's police officers. The Plan was established and may be amended by the City Council and is administered by a 5-member Board of Trustees. The Plan is administered through a qualified trust. The Plan is included as a fiduciary component unit of the City because (1) the System is a legally separate entity; (2) the City Council appoints a voting majority of the Plan Board of Trustees; and (3) the City makes contributions to the Plan on behalf of its participants. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 57 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period, except for expenditure -driven grants which must be collected within one year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. The City reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all the financial resources of the general government, except those accounted for and reported in another fund. The Riverfront Redevelopment Special Revenue Fund accounts for revenues and expenditures to be used for special operations in the defined City's riverfront redevelopment area. The Stormwater Utility Special Revenue Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for system maintenance. The American Rescue Plan Special Revenue Fund accounts for all financial resources of the American Rescue Plan Act grant program administered by the City. The Discretionary Sales Tax Capital Projects Fund accounts for the financial resources that are legally restricted for infrastructure improvements and equipment purchases. The Transportation Improvements Capital Projects Fund accounts for the financial resources that are used for improvements and equipment purchases in support of the City's roadway infrastructure. The City reports the following major proprietary funds: The Golf Course Fund accounts for the activities of the municipal golf course. The Airport Fund accounts for the activities of the municipality's general aviation airport. The Building Fund accounts for the activities of the municipality's building department that enforces state and local regulations pertaining to construction. CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Additionally, the City reports the following fund types: Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The permanent fund is used to record the activity and balance of the Cemetery Trust which provides funds for perpetual care of cemetery lots. The pension trust fund accounts for the activities of the Police Officer's Retirement System, which accumulates resources for pension benefit payments to qualified police officers. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. The General Fund provides certain central services to other funds of the City which are presented as program expenses in the funds receiving services. The related General Fund revenue has been netted against program expense in the government -wide statement of activities. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Restricted net position represents resources that are subject to restrictions beyond the government's control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Equity Deposits and Investments The City considers cash on hand and demand deposits, restricted cash deposits, and short-term investments with maturities of three months or less when purchased to be cash for the statement of cash flows. Cash in excess of current requirements is invested in various interest -bearing securities and disclosed as part of the City's investments. 59 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Investments consist of U.S. Treasury Securities, U.S. Government Agency Securities, common stock, guaranteed investment contracts and the Local Government Surplus Funds Trust Fund Investment pool. The Local Government Surplus Funds Trust Fund is administered by the Florida State Board of Administration, which is not a registrant with the Securities and Exchange Commission. However, the Board has adopted operating procedures consistent with the requirements for a 2a-7 fund or accounts. In accordance with the regulations of 2a-7 like pools, the City's share of investments held at the State Board of Administration are reported at amortized cost, which approximates fair value. This pool is regulated by the State and the fair value of the position in the pool is the same as the value of the pool share. Investment earnings are allocated to the participating funds at the end of each month based upon the ratio of each participant's investment to the total pooled investments. Other investments, including the Police Officers' Pension Fund, are reported at their fair value based on the quoted market price or the best available information. Internal Balances Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Advances between funds are offset by nonspendable fund balance in General Fund and restricted fund balance in other applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Restricted Assets Certain amounts reported as cash and cash equivalents are classified as restricted assets. These include balances in the debt service funds that are set aside to meet bonded debt requirements, balances in the capital projects funds to be used for the payment of project costs and balances in the Cemetery Fund that are either not permitted to be spent or can only be spent for items incidental to cemetery expansions. The amount of the Cemetery Fund investments is also classified as restricted assets and reported as restricted investments. Receivables All trade and property tax receivables are shown net of an allowance for uncollectibles, as applicable. .e CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 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, 2021, the City has no allowance for doubtful accounts, since all receivables are considered collectible. Other Assets Inventories are valued at cost using the average cost method. Inventory in the General Fund consists of materials and supplies held for consumption. The cost is recorded as an expenditure/expense at the time the individual inventory items are consumed. Inventory in the Golf Course consists of supplies held for resale. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government -wide and fund financial statements. Capital Assets Capital assets, which include land, buildings, improvements, 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. 61 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Capital assets are depreciated 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 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 until then. The City reports deferred outflows of resources related to its pension plan. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave benefits and these are accounted for using the termination payment method. All vacation and sick leave amounts are accrued in the government -wide and proprietary funds financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Unearned Revenue Governmental funds report unearned revenue in connection with resources that have been received, but not yet earned. Deferred Inflows of Resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net 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. M CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Long-term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council (the government's highest level of decision -making authority). A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City Council has the authority and reports assigned fund balance for amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance is the residual classification for the General Fund. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds it is not appropriate to report a positive unassigned fund balance amount. However, in governmental funds other than the general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. When the government incurs an expenditure for purposes for which various fund balance classifications can be used, it is the government's policy to use restricted fund balance first, then committed fund balance, assigned fund balance, and finally unassigned fund balance. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plan and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 63 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 2. BUDGETARY INFORMATION Budgets are prepared annually on a modified accrual basis with encumbrance accounting for all governmental funds except the capital project funds, which are approved on a "life of the project basis", and the permanent fund, which is not budgeted. All annual appropriations lapse at year end. On or before the third Friday in May of each year, all agencies of the government submit requests for appropriations to the government's City Manager so that a budget may be prepared. Before July 31, the proposed budget is presented to the government's council for review. The council holds budget workshops and public hearings and a final budget must be prepared and adopted no later than September 30. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Special Revenue and Debt Service funds. Encumbrances outstanding at year end are carried forward and reappropriated to the next year's budget. Actual results of operations presented in accordance with U.S. generally accepted accounting principles (GAAP basis) and the City's accounting policies do not recognize encumbrances as expenditures until the period in which the actual goods or services are received and a liability is incurred. It is necessary to include budgetary encumbrances to reflect actual revenues and expenditures on a basis consistent with the City's legally adopted budget. The legal level of budgetary control is at the departmental level for the general fund and at the activity level for special revenue funds. During the year ended September 30, 2021, the City incurred expenditures in in excess of the amounts appropriated, as follows: Local Option Gas Tax fund Debt service - Interest and fiscal charges Law Enforcement Forfeiture fund Public safety Final Budget Actual $ 10,340 $ 10,398 $ 1,500 Variance 58 1,500 64 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 3. DEPOSITS AND INVESTMENTS Following is a reconciliation of deposit and investment balances as of September 30, 2021: Statement of Net Position Cash and cash equivalents $ 13,950,382 Restricted cash and cash equivalents 1,445,039 Investments 3,736,235 Permanently restricted investments 706,076 Statement of Fiduciary Net Position Police officers' pension fund investments 21,517,269 Total $ 41,355,001 Deposits and investments Bank deposits: Checking and savings accounts $ 15,392,991 Investments: Investments, at fair value 4,442,311 Police officers' pension fund investments 21,517,269 Cash on hand 2,430 Total $ 41,355,001 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, 2021, the carrying amount of the City of Sebastian's deposits with banks was $15,392,991 and the bank balance was $15,366,023. All the deposits were covered by the FDIC or collateralized in accordance with the "Florida Security for Public Deposits Act". Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral having a market value equal to 50% of the average daily balance for each month that all public deposits are in excess of any applicable deposit insurance. If the public deposits exceed the total amount of the regulatory capital accounts of a bank or the regulatory net worth of a savings association, the required collateral shall have a market value equal to 125% of the deposits. Custodial Credit Risk - Investments. On April 23, 2003, Sebastian City Council formally adopted an investment policy pursuant to Section 218.415, Florida Statutes that established permitted investments, asset allocation limits and issuer limits, credit ratings requirements and maturity limits for all investments except the Pension Trust Funds. The City maintains a common cash and investment pool for the use of all funds, except the Pension Trust Funds, which are held with third party trustees and are governed by rules established by Florida Statute Chapter 185. C� CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Investment holdings during the year included United States Government Agencies which were reported at fair value in accordance with GASB Statement No. 31 "Accounting and Financial Reporting for Certain Investments and for External Investment Pools". These investments were held in trust by the City's bank depository in the City's name or by the Custodian of the Pension Trust Funds. Section 218.415, Florida Statutes, limits the types of investments that the City can invest in unless specially authorized in the City's investment policy. The City's formal investment policy, for all investments except the Pension Trust Fund, allows for the following investments: Florida Local Government Surplus Funds Trust Fund, United States Government Securities, United States Government Agencies, Federal Instrumentalities, Interest Bearing Time Deposit or Saving Accounts, Repurchase Agreements, Commercial Paper, High Grade Corporate Notes, Bankers' Acceptances, State and/or Local Government Taxable and/or Tax -Exempt Debt, Registered Investment Companies (Money Market Mutual Funds), and Intergovernmental Investment Pool. Florida Statutes Chapter 185 regulates the types of investment that may be held by the Police Pension Trust Fund. The investment guidelines have been augmented by City ordinance that have adopted specific investment policies. Compliance with the policies and guidelines has been evaluated by the pension board. CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements As of September 30, 2021, the City had the following investments and effective duration presented in terms of years: Investment Maturity (Years) Investment Type Fair Value No Maturities Less than 1 From 1-3 From 4-6 Over 7 General investments Local government surplus funds trust fund ("SBA") $ 3,894,229 $ $ 3,894,229 $ $ $ Florida Local Government Investment Trust 548,082 548,082 $ 4,442,311 $ $ 4,442,311 $ $ $ Police officers' pension fund investments Money market $ 615,211 $ $ 615,211 $ $ $ United States government obligations 46,629 - 46,629 Mortgage backed securities 1,005,585 76,344 340,478 588,763 Collateralized mortgage obligations 1,438,416 44,683 161,146 1,232,587 Municipal obligations 236,500 - 88,464 - 148,036 Domestic corporate bonds 1,410,313 76,413 337,256 504,800 491,844 Foreign corporate bonds 181,366 - - 126,302 55,064 Domestic corporate equities 9,773,781 9,773,781 - - Foreign corporate equities 3,105,670 3,105,670 Exchange -traded fund equities 2,889,738 2,889,738 Partnerships 13,591 13,591 Real estate investment trust 800,469 800,469 - - - - $ 21,517,269 $ 16,583,249 $ 691,624 $ 546,747 $ 1,132,726 $ 2,562,923 67 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Interest Rate Risk. The City's investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. Investment maturities shall not exceed thirty-six (36) months. Investments of construction funds shall have a term appropriate to the need for funds and in accordance with debt covenants. Credit Risk. The City investment policy that covers all investments, except the Pension Trust Fund, permits investments in the following securities, which are limited to credit quality ratings from nationally recognized agencies as follows: Mutual funds shall be rated "m" or "AAm-G" or better by Standard & Poor's, or the equivalent by another rating agency. State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least "Aa" by Moody's and "AA" by Standard & Poor's for long-term debt, or rated at least "MIG-2" by Moody's and 'SP-2" by Standard & Poor's for short-term debt. Bankers' acceptances issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, at the time of purchase, the short-term paper is rated, at a minimum, "P-I" by Moody's Investors Services and "A -I" Standard & Poor's. Commercial paper of any United States company that is rated, at the time of purchase, "Prime-1" by Moody's and "Ad" by Standard & Poor's (prime commercial paper). Corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long-term debt rating, at the time of purchase, at a minimum "Aa" by Moody's and a minimum long-term debt rating of "AA" by Standard & Poor's. As of September 30, 2021, the City's investment securities, for all investments except the Pension Trust Fund, were all individually rated AAAm by Standard & Poor's. The investment ratings for the Pension Trust Fund ranged between AAA through BBB-. As of September 30, 2021, the City had $3,894,229 invested in the State Board of Administration's Local Government Surplus Trust Funds Investment Pool, which consist of accounts in Pool A. Pool A had a rating by Standard and Poor's Rating Services as "AAAm" on September 30, 2021 and amounts may be withdrawn without penalty. Additionally, the City had $548,082 invested in the Florida Local Government Investment Trust which had a rating by Standard and Poor's Rating Services as "AAAm" on September 30, 2021. Investment in the City's pension trust funds are limited by State Statutes Chapter 185 and by an investment policy adopted by the fund's Board of Trustees on December 31, 2016. The allowable investment instruments include: United States government and agency issues, bankers acceptances and certificates of deposit by United States banks, savings accounts with banks or other financial institutions incorporated in the United States and commercial paper rated A-2 or P-2 or higher by Moody's or Standard and Poor's. See table below for credit ratings by investment type. In addition, common stocks of corporations listed on a recognized national stock exchange, plus issues convertible into common stock are also allowed. No more than ten percent (10%) of the cost value of total assets may be invested in foreign securities. M.: CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Custodial Credit Risk. The City's investment policy pursuant to Section 218.415(18), Florida Statutes requires securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all securities purchased by, and all collateral obtained by the City should be properly designated as an asset of the City. The securities must be held in an account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida as defined in Section 658.12, Florida Statutes, or by a national association organized and existing under the laws of the United States, which is authorized to accept and execute trusts and which is doing business in the State of Florida. Certificates of deposits maintained by book -entry at the issuing bank shall clearly identify the City as the owner. Concentration of Credit Risk. The City's investment policy has established asset allocation and issuer limits on the following investments, which are designed to reduce concentration of credit risk of the City's investment portfolio. A maximum of 100% of available funds may be invested in the SBA and in the United States Government Securities, 50% of available funds may be invested in United States Government agencies with a 25% limit on individual issuers, 80% of available funds may be invested in Federal Instrumentalities with a 40% limit on individual issuers, 25% of available funds may be invested in non-negotiable interest bearing time certificates of deposits with a 15% limit on individual issuers, 50% of available funds may be invested in repurchase agreements excluding one (1) business day agreements and overnight sweep agreements with a 25% limit on any one institution, 25% of available funds may be directly invested in prime commercial paper with a 10% limit on individual issuers, 15% of available funds may be directly invested in corporate notes with a 5% limit on individual issuers, 25% of available funds may be directly invested in Bankers' Acceptances with a 10% limit on individual issuers, 20% of available funds may be invested in taxable and tax-exempt debts, 50% of available funds may be invested in money market mutual fund with a 25% limit on individual issuers, 10% of available funds may be invested in intergovernmental investment pools. The City's pension trust fund's investment policy adopted by the fund's Board of Trustees has established asset allocation and issuer limits on the following investments, which are designed to focus on performance. A maximum of 100% of available funds may be invested in fixed income securities and a maximum of 60% of available funds may be invested in equity securities. CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements As of September 30, 2021, the City had the following issuer concentration based on fair value and investment ratings: Issuer Local government surplus funds trust fund ("SBA") Florida Local Government Investment Trust Money market United States government obligations Mortgage backed securities Collateralized mortgage obligations Municipal obligations Domestic corporate bonds Foreign corporate bonds Domestic corporate equities Foreign corporate equities Exchange -traded fund equities Partnerships Real estate investment trust Total General Investments Percentage of Amount Portfolio $ 3,894,229 87.66% 548,082 12.34 - 0.00% - 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00 0.00 0.00% 0.00% - 0.00% $ 4,442,311 100.00% Pension Investments Percentage of S&P/Moody Amount Portfolio Ratings 615,211 46,629 1,005,585 1,438,416 236,500 1,410,313 181,366 9,773,781 3,105, 670 2,889,738 13,591 800,469 $ 21,517,269 0.00 0.00 2.86% 0.22% 4.67% 6.68 1.10% 6.55% 0.84 45.42 14.43 13.43% 0.06% 3.72% 100.00% AAAm AAAm Not Rated AA+ Aaa AAA/A- AAA/A- AAA/B B B- AA-/A- Not Rated Not Rated Not Rated Not Rated Not Rated 70 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Foreign Currency Risk. Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. Foreign currency risk is mitigated by requiring the portfolio to be broadly diversified by number of holdings, by geographic location and across industry sectors. Country exposures are monitored through a monthly performance report. The exposure to foreign currency risk is as follows: Pension Investment (currency in U.S. dollar) Investments Foreign corporate bonds $ 181,366 Foreign corporate equities 3,105,670 Total $ 3,287,036 Fair Value Measurement The City categorizes the fair value measurements of its investments within the fair value hierarchy established by generally accepted accounting principles. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs — other than quoted prices included within Level 1 - that are observable for the asset or liability, either directly or indirectly. Finally, Level 3 inputs are unobservable and are based on estimates and assumptions. These levels are determined by the management's review of the type and substance of investments held by the City. Level 2 inputs use one of the following valuation techniques depending on the investment: a) traditional net asset valuation (dividing the asset value by the number of units owned), b) matrix pricing technique (relying on the securities' relationship to other benchmark quoted securities instead of exclusively on quoted prices for specific securities), or c) quoted market prices for similar assets in active markets or quoted prices for identical or similar assets in markets that are not active. 71 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The City has the following recurring fair value measurements as of September 30, 2021: Level 1 Local government surplus funds trust fund ("SBA") $ 3,894,229 $ Florida Local Government Investment Trust 548,082 Money market 615,211 United States government obligations - Mortgage backed securities - Collateralized mortgage obligations - Municipal obligations - Domestic corporate bonds 68,910 Foreign corporate bonds - Domestic corporate equities 9,773,781 Foreign corporate equities 1,600,881 Exchange -traded fund equities 2,889,738 Partnerships - Real estate investment trust - Level 2 46,629 1,005,585 1,438,416 236,500 1,341,403 181,366 1,504,789 $ 19,390,832 $ 5,754,688 $ 4. RECEIVABLES Receivables are comprised of the following at year-end: Accounts receivable Due from other governments Leve13 Total $ 3,894,229 548,082 615,211 46,629 1,005,585 1,438,416 236,500 1,410, 313 181,366 9,773,781 3,105, 670 - 2,889,738 13,591 13,591 800,469 800,469 814,060 $ 25,959,580 Governmental Business -type Activities Activities Total $ 332,009 $ 255 $ 332,264 988,178 341,512 1,329,690 $ 1,320,187 $ 341,767 $ 1,661,954 72 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements S. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following at year-end: Governmental Business -type Activities Activities Total Accounts payable and accrued liabilities $ 1,465,980 $ 126,608 $ 1,592,588 Rebates payable - 1,848,062 1,848,062 Due to other governments 427,027 18,091 445,118 $ 1,893,007 $ 1,992,761 $ 3,885,768 6. INTERFUND RECEIVABLES AND PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2021, was as follows: Due to and from primary government funds Due from Other Due to Other Funds Funds General Fund $ 500,000 $ - Golf Course - 500,000 $ 500,000 $ 500,000 These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Advances to and from primary government funds Discretionary Sales Tax Golf Course Airport Building Advance from Advance to Other Funds Other Funds $ - $ 518,506 1,144,593 - 518,506 - - 1,144,593 $ 1,663,099 $ 1,663,099 73 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The balance of $518,506 advanced to the airport fund from the discretionary sales tax fund is being repaid in accordance with Resolution No. R-08-20 for the initial $285,000 advance and with Resolution No. R-10- 22 authorizing an additional $290,000 advance. Both of these advances provided for repayment over a thirty year period. The $1,144,593 was advanced from the Building Fund to replace the irrigation system and make other improvements at the Golf Course. For the year ended September 30, 2021, interfund transfers consisted of the following: Transfers in Transportation Nonmajor Improvements Governmental Transfers out Fund Funds Airport Fund Building Fund Total General Fund $ - $ 45,954 $ - $ - $ 45,954 Riverfront Redevelopment Fund - 174,305 - - 174,305 Stormwater Utility Fund - 16,503 - - 16,503 Discretionary Sales Tax Fund 3,402,826 1,209,390 122,937 - 4,735,153 Nonmajor Governmental Funds 479,365 304,173 - - 783,538 Golf Course - - - 7,819 7,819 Total $ 3,882,191 $ 1,750,325 $ 122,937 $ 7,819 $ 5,763,272 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. 74 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 7. CAPITAL ASSETS Capital asset activity for the primary government for the year ended September 30, 2021, was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated Land $ 9,123,041 $ - $ - $ - $ 9,123,041 Construction in progress 407,284 5,670,957 - (2,319,082) 3,759,159 9,530,325 5,670,957 - (2,319,082) 12,882,200 Capital assets, being depreciated: Buildings 14,344,679 - - - 14,344,679 Non -building improvements 7,764,086 3,361 (93,791) 120,377 7,794,033 Machinery and equipment 11,005,969 396,294 (621,082) 450,618 11,231,799 Infrastructure 44,266,641 13,091 (97,866) 1,748,087 45,929,953 77,381,375 412,746 (812,739) 2,319,082 79,300,464 Less accumulated depreciation for: Buildings (6,914,689) (406,438) - - (7,321,127) Non -building improvements (4,906,674) (337,929) 77,282 - (5,167,321) Machinery and equipment (8,057,586) (1,099,380) 617,769 - (8,539,197) Infrastructure (27,739,919) (1,500,683) 91,572 - (29,149,030) (47,618,868) (3,344,430) 786,623 - (50,176,675) Total capital assets being depreciated, net 29,762,507 (2,931,684) (26,116) 2,319,082 29,123,789 Governmental activities capital assets, net $ 39,292,832 $ 2,739,273 $ (26,116) $ - $ 42,005,989 75 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Beginning Balance Ending Additions Disposals Transfers Balance Business -type activities Capital assets, not being depreciated: Land $ 9,060 $ - $ $ $ 9,060 Construction in progress 274,500 694,056 - 968,556 283,560 694,056 - 977,616 Capital assets, being depreciated: Buildings 10,069,602 - (4,075) - 10,065,527 Non -building improvements 2,878,576 - (71,525) - 2,807,051 Machinery and equipment 1,537,102 45,592 (7,623) - 1,575,071 Infrastructure 13,565,461 - - - 13,565,461 28,050,741 45,592 (83,223) - 28,013,110 Less accumulated depreciation for Buildings (2,715,886) (284,426) 4,075 - (2,996,237) Non -building improvements (1,706,477) (115,695) 70,813 - (1,751,359) Machinery and equipment (1,196,276) (155,633) 7,199 - (1,344,710) Infrastructure (6,348,161) (637,368) - - (6,985,529) (11,966,800) (1,193,122) 82,087 - (13,077,835) Total capital assets being depreciated, net 16,083,941 (1,147,530) (1,136) - 14,935,275 Business -type activities capital assets, net $ 16,367,501 $ (453,474) $ (1,136) $ - $ 15,912,891 Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 399,789 Public safety 522,179 Physical environment 962,265 Transportation 974,478 Cultural and recreation 485,719 Total governmental activities $ 3,344,430 Depreciation of business -type activities by function Golf course $ 203,186 Airport 977,841 Building 12,095 Total business -type activities $ 1,193,122 76 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 8. LONG-TERM DEBT Revenue notes are secured by and payable from the revenues of the respective funds that issued them. The City entered into a nine (9) year loan agreement in 2012 with a local bank for $2,296,000 to provide financing to repave certain roads in the City and payoff an outstanding loan. The City pledged Local Option Gas Tax revenues to repay the note payable. The funds are accumulated in the Local Option Gas Tax Special Revenue fund for repayment of principal and interest. The City issued a nine (9) year, $3,096,000 Stormwater Utility Refunding Revenue Note, Series 2013 in December 2013. The City has pledged stormwater fee revenues for repayment of principal and interest. These proceeds and other stormwater fee revenues were used to totally advance refund all of the outstanding Stormwater Utility Revenue Bonds prior to September 30, 2014. As of September 30, 2021, 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, 2021: Beginning Ending Due Within Balance Additions Deductions Balance One Year Governmental activities Notes from direct borrowings and direct placements $ 1,373,000 $ - $ (620,000) $ 753,000 $ 632,000 Compensated absences 1,523,476 592,367 (560,303) 1,555,540 97,975 Pollution remediation 91,200 - - 91,200 - Totals governmental activities $ 2,987,676 $ 592,367 $ (1,180,303) $ 2,399,740 $ 729,975 Notes pavable Florida Gas Tax Revenue Note, due in bi-annual installments of $118,000 to $121,000 plus interest at 1.94% through 2023. $ 358,000 2013 Stormwater Utility Refunding Revenue Note, Series 2013, due in one final annual installment of $395,000 plus interest at 1.73%. 395,000 $ 753,000 77 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements The following is a summary of business -type activities long-term debt transactions for the year ended September 30, 2021: Beginning Ending Due Within Balance Additions Deductions Balance One Year Business -type activities Compensated absences $ 236,006 $ 62,412 $ (59,563) $ 238,855 - Capitallease 104,403 - (53,602) 50,801 50,801 Totals business -type activities $ 340,409 $ 62,412 $ (113,165) $ 289,656 $ 50,801 Annual debt service requirements to maturity for long-term debt are as follows: Governmental Activities Business -type Activities Year Ended September 30, Principal Interest Principal Interest 2022 $ 632,000 $ 12,635 $ 50,801 $ 890 2023 121,000 1,174 - - $ 753,000 $ 13,809 $ 50,801 $ 890 For the governmental activities, compensated absences are generally liquidated by the General Fund. For business -type activities, compensated absences are allocated to and liquidated by the Golf Course, Airport or Building funds. A pollution remediation obligation was recorded for a Florida Department of Environmental (FDEP) Order dated March 10, 1997. This was related to an incident of petroleum contamination at the Public Works Department on April 22, 1991. The City was named as the party responsible for the cleanup but FDEP determined the discharge is eligible under the Petroleum Cleanup Participation Program and will not compel site rehabilitation prior to funding becoming available from that program. The program has a funding cap of $400,000, with a 25% required cost share percentage. The City must also pay for a limited contamination assessment report sufficient to determine the extent of the contamination and cleanup. Based on the information available, the City estimated its expenditure to be $91,200 dependent on the extent of work that is eventually required and recorded a long-term liability of $91,200. This liability would generally be liquidated by the General Fund. ZU CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 9. LEASES Operating Leases - Lessee The City is obligated under a lease for land accounted for as an operating lease. Operating leases do not give rise to property rights or lease obligations. Total costs for the lease was $106,135 for the fiscal year ended September 30, 2021. This represents the Golf Fund's lease obligation for the property used as the City's golf course which resides partially on the Airport Fund's grounds. The following is a schedule by years for future minimum rental payments required under the operating lease that has initial or remaining noncancelable lease terms in excess of one year at September 30, 2021: Year Ended Golf Course September 30, Lessee 2022 $ 106,135 2023 106,135 2024 106,135 2025 106,135 2026 106,135 2027-2031 530,675 2032-2036 530,675 2037-2041 530,675 2042-2045 424,540 Total $ 2,547,240 79 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Operating Leases - Lessor The City is the lessor of numerous properties including two communication towers with terms of up to fifty- five years. The communication towers have a cost of $39,285 and have been fully depreciated. Following is a schedule by year of minimum future rental income on noncancelable operating leases: Year Ended Governmental September 30, Activities 2022 $ 132,336 2023 114,624 2024 99,769 2025 85,040 2026 88,441 2027-2031 498,188 2032-2036 606,122 2037-2041 737,440 2042-2046 897,208 2047-2051 1,091,591 2052-2055 1,041,237 Total $ 5,391,996 The Airport Fund is the lessor of various properties (land with a cost basis of $9,060) with lease terms varying from twenty to thirty years. These include the lease to the Golf Course Fund requiring annual payments of $106,135 through 2045. Following is a schedule by year of minimum future rental income on noncancelable operating leases: Future minimum rental commitments are as follows: Year Ended Business -type September 30, Activities 2022 $ 481,260 2023 487,940 2024 426,786 2025 396,837 2026 401,322 2027-2031 1,999,316 2032-2036 1,626,889 2037-2041 1,216,630 2042-2045 706,488 Total $ 7,743,468 Hsi CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 10. 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, 2021, was 3.1514 mills. Total tax collections were approximately 99.7% of the total tax levy. The tax levy of the City is established by City Council. Under Florida law, the assessment of all properties and the collection of municipal taxes are provided by offices of the County's Property Appraiser and Tax Collector. Ad Valorem taxes are levied on property values as of January 1. The fiscal year for which taxes are levied begins October 1. Taxes are due November I and become delinquent on April 1. All taxes unpaid as of May 30 are subject to a tax certificate sale. Property tax revenues are recognized in the fiscal year for which they are levied and also become due and payable. weL•] 0kI10[c140ka4r_1:114k91*1 Various suits and claims are currently pending against the City. It is impossible for the City to accurately quantify the exposure involved given the jury's latitude in assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The City intends to vigorously defend against these lawsuits and believes it has a good chance of prevailing on their merits. The City is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial position of the City. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal and state governments. Any disallowed claims, including amounts already collected, may constitute a liability to the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. iIPANRM'A►Fi/_L/_Lh4LFA14il,kI 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. E� CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 13. BENEFIT PLANS Police Officer's Pension Plan Defined Benefit Pension Plan Plan Description. The Police Officers' Pension Plan is a Florida Statute Chapter 185 single -employer defined benefit plan. Only City police officers participate in the Police Pension Plan. The state provides a contribution to the Police Pension Plan through a distribution of funds collected from insurance premium taxes. The pension plan data provided in these financial statements are from the actuarial valuation as of October 1, 2020 to determine the required contribution for the fiscal year ending September 30, 2021. 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. Method Used to Value Investments. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. Investments that do not have an established market are reported at estimated fair value. Investments in securities of a single organization (excluding mutual funds and those issued or guaranteed by the U.S. government) held by the pension plan did not exceed five percent of the total plan assets. Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The plan's asset allocation policy is shown on the following pages. Concentrations. At September 30, 2021, the plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5 percent or more of the plan's fiduciary net position. Please see Note 3 for details of these concentrations. Plan Membership. Membership of the Plan consisted of the following at October 1, 2020, the date of the latest actuarial valuation: Inactive plan members or beneficiaries currently receiving benefits 18 Inactive plan members entitled to but not yet receiving benefits 10 Active plan members 40 Total membership 68 EMi CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Benefit Provisions and Contribution Requirements. The Police Officers' Pension Plan provides retirement and disability benefits to plan members and beneficiaries. This plan is administered by a separate local Board of Trustees. Chapter 185, Florida Statutes, as amended governs all benefit provisions of the plan. Contribution requirements, in accordance with Chapter 185, Florida Statutes, are established by City ordinance, as provided in Chapter 58, Article III of the Sebastian City Code. The City Council has the authority to amend funding requirements. Contributions. Members contribute 8% of their salary. City and state contributions consist of the remaining amount required in order to pay current costs and amortize unfunded past service cost, if any, over a period not exceeding 30 years. State contributions are reported as revenues and expenditures in the General Fund before being reported in the Pension Trust Fund. Rate of Return. For the year ended September 30, 2021, the annual money -weighted rate of return on pension plan investments, net of pension plan investment expense, was 23.63 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, 2021, were as follows: Total pension liability $ 23,049,447 Less: Plan fiduciary net position (21,543,215) City's net pension liability $ 1,506,232 Plan fiduciary net position as percentage of total pension liability 93.47% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of October 1, 2020 updated to September 30, 2021 (the measurement date) using the following actuarial assumptions applied to all measurement periods. Inflation 2.30% Salary increases Service based Discount rate 7.10% Investment rate of return 7.10% E CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Mortality Rate Healthy Active Lives: Female: PubS.H-2010 (Below Median) for Employees, set forward one year. Male: PubS.H-2010 (Below Median) for Employees, set forward one year. Mortality Rate Healthy Retiree Lives: Female: PubS.H-2010 for Healthy Retirees, set forward one year. Male: PubS.H-2010 (Below Median) for Healthy Retirees, set forward one year. Mortality Rate Beneficiary Lives: Female: PubG.H-2010 (Below Median) for Healthy Retirees. Male: PubG.H- 2010 (Below Median) for Healthy Retirees, set back one year. Mortality Rate Disabled Lives: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees. All mortality rates are projected generationally with Mortality Improvement Scale MP-2018. The most recent actuarial experience study used to review the other significant assumptions was dated September 13, 2019. 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, 2021 are summarized in the following table: Expected Long-term Money - Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 52.50% 5.59% 2.93% International equity 12.50% 4.47% 0.56% Fixed income 25.00% 1.35% 0.34% Real Estate 5.00% 4.45% 0.22% Master Limited Partnerships 5.00% 2.67% 0.13% Total 100.00% 4.18% Inflation 2.30% Diversified portfolio additional returns 0.62% Investment rate of return 7.10% Not only is the time horizon longer for an actuarial valuation relative to the time horizon over which the above projected returns were generated, but also there is an additional correlation resulting from a diversified portfolio that will provide additional returns, as reflected above. E- CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Discount Rate. The discount rate used to measure the total pension liability was 7.10 percent (prior year 7.20 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 (Asset) 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 (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.10 percent) or one percentage point higher (8.10 percent) than the current rate. Net Pension Liability (Asset) One Percent Current One Percent Decrease Discount Rate Increase 6.10% 7.10% 8.10% $ 4,343,570 $ 1,506,232 $ (851,8381 Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Balances at September 30, 2020 Changes for the year: Service cost Interest on total pension liability Differences between expected and actual experience Assumption changes Benefit payments, including refunds of employee contributions Employer contributions State contributions Employee contributions Pension plan net investment income Administrative expense Net changes Balances at September 30, 2021 Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 21,233,850 $ 17,177,800 $ 4,056,050 546,747 - 546,747 1,539,609 - 1,539,609 249,038 - 249,038 274,475 - 274,475 (794,272) (794,272) - - 686,778 (686,778) - 206,017 (206,017) - 220,466 (220,466) - 4,116,810 (4,116,810) - (70,384) 70,384 1,815,597 4,365,415 (2,549,818) $ 23,049,447 $ 21,543,215 $ 1,506,232 lM CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements State statutes mandate that the State contribution be recorded as revenue to the General Fund and then paid to the Pension Trust Fund. Changes in assumptions - For measurement date September 30, 2021, the investment rate of return was lowered from 7.20% to 7.10%, net of investment related expenses. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended September 30, 2021, the City recognized pension expense of $503,550. At September 30, 2021, the City reported pension -related deferred outflows of resources and deferred inflows of resources from the following sources: Difference between expected and actual experience $ Changes in assumptions Net difference between projected and actual earnings on pension plan investments Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources 546,916 $ 12,957 $ 533,959 393,231 298,524 94,707 - 1,852,772 (1,852,772) $ 940,147 $ 2,164,253 $ (1,224,106) Amounts reported as pension -related deferred outflows of resources and deferred inflows of resources will be recognized in pension expense as follows: Year Ended September 30, 2022 2023 2024 2025 2026 Amount $ (97,294) (262,172) (458,452) (493,440) 87,252 Total $ (1,224,106) Payable to the Pension Plan. At September 30, 2021, the City reported $0 payable to the police officer's pension plan. M. CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Coastal Florida Public Employees Association Negotiated Defined Benefit Pension Plan Plan Description. The Communication Workers of America / International Typographical Union Negotiated Pension Plan (NPP), which began in 1967, is a multi -employer cost -sharing, defined benefit plan. The plan is available to any Coastal Florida Public Employees Association bargaining unit member and benefits are portable from one contributing employer to another. The plan is not a state or local governmental plan, is used to provide defined benefit pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers, has no predominant state or local governmental employer and issues audited financials following FASB guidelines, which can be obtained at http://www.cwaitu.com. The City of Sebastian approved the plan by Resolution No. R-01-36, effective April 29, 2001. There is currently no expiration date of the collective -bargaining agreement requiring contributions to the pension plan. The total number of governmental employees covered as of September 30, 2021, was 62. Normal Pension. Minimum age 65: 5 years of service credit required if any portion of service credit was earned after January 1, 1989. 10 years of service credit required if employees' coverage ended before January 1, 1989. Once the service credit amount is accrued, the employee is vested and cannot lose the right to a pension. Early Pension. Minimum age 62: 20 years of service credit required if employed after January 1, 1989, and 25 years of service credit required if employment ended before January I, 1993. Pension amounts are permanently reduced based on age on the effective date, because the payments are expected to be made for a longer period of time. Disability Pension. No minimum age and the pension amount is not reduced for age; there must be a Social Security Disability Award, 10 years of actual service credit and a contribution for covered employment must have been made within three calendar years preceding the entitlement date to Social Security Disability Pension. An application must be filed with the plan within 6 months of the Social Security Notice of Award date to receive pension retroactive to the Social Security entitlement date. Lump Sum Disability Benefit. If the employee has been awarded a Social Security Disability Award with the date of entitlement before May 1, 2009 and is vested, but not immediately eligible to receive any pension described above, the employee may be eligible for a lump sum disability benefit. Death Benefit. If the employee dies before becoming a pensioner and has at least $250 contributed on the employees' behalf, a lump sum death benefit equal to total contributions credited on the employees' behalf or 36 times the Normal Pension amount, if greater, will be paid to employees' beneficiary. If the employee is married at the time of death, the spouse will have the choice of a lump sum or a monthly survivor benefit. H:N CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Withdrawal Benefit. If the employee did not earn enough service credit to qualify for a normal pension, the employee may be eligible for a lump sum withdrawal benefit, based on total contributions, after the employee has incurred a break in service. Benefit Provisions and Contribution Requirements: The NPP provides retirement and disability benefits to plan members and beneficiaries. The plan is administered at the plan office in Colorado Springs, Colorado. Contribution requirements are established by the CWA contract, effective date October 1, 2011, which is negotiated every 3 years, and approved by City Council. Benefit Provisions and Contribution Requirements. The NPP provides retirement and disability benefits to plan members and beneficiaries. The plan is administered at the plan office in Colorado Springs, Colorado. Contribution requirements are established by the CWA contract, effective date October 1, 2013, which is negotiated every 3 years, and approved by City Council. Employer Withdrawal Liability. Under federal law, employers who partially or completely withdraw from a multiemployer plan are assessed withdrawal liability for their proportionate share of the plan's unfunded vested liabilities as of the beginning of the year in which they withdraw. Withdrawal liability is usually paid in quarterly installments as determined by a statutory formula over a maximum of 20 years. Funding Policy. Administration costs of the pension plan are financed by the plan. The employer contribution rate, expressed as a percentage of compensation, was 9.0% for the 2020-2021 fiscal year. Employees do not contribute to this plan. Contributions which are equal to 100% of the required contribution for each year to the CWA Pension Plan are as follows: Year Ended September 30, 2017 2018 2019 2020 2021 Defined Contribution 401(a) Plan Amount $ 204,035 217,695 241,992 239,161 241,312 Plan Description. The ICMA Retirement Corporation's 401 Retirement Plan is a Defined Contribution Plan "qualified" under Section 401(a) of the Internal Revenue Code. Each participant has a plan account to which contributions are made. Plan benefits are based on the total amount of money in the employees' account at retirement or other eligible event. The plan is available to all management staff and may be rolled over to another "qualified" employer plan that accepts rollovers, or Traditional IRA's. Plan Participation. As of September 30, 2021, there were a total of 22 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. M CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 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 employees' account balance. Annuities. Retirement benefits can be utilized to purchase an annuity. Benefit Provisions and Contribution Requirements. The 401 provides retirement benefits to plan members and beneficiaries. The plan is administered by the ICMA Retirement Corporation. Contribution requirements are established by the City of Sebastian, Management Benefit Package, revised October 1, 2006, and approved by the City Manager. Funding Policy. The administration costs of the pension plan are financed by the Plan. The employer contribution rate, expressed as a percentage of compensation, was 9% for the 2020-2021 fiscal year. Employees do not contribute to this Plan. Contributions which are equal to 100% of the required contribution for each year to the 401 Defined Contribution Plan are as follows: Year Ended September 30, Amount 2017 $ 120,879 2018 142,347 2019 151,754 2020 163,374 2021 174,006 14. OTHER POSTEMPLOYMENT BENEFITS In addition to the pension benefits described in Note 13, the City provides postemployment benefits pursuant to Section 112.0801, Florida Statutes. This permits participation in the health insurance program by retirees and their eligible dependents at a cost to the retiree that is no greater than the cost at which coverage is available for active employees. The City, by policy, has elected to provide qualified retirees with partial subsidy. In this respect, the City operates a single -employer plan. Employees are eligible to receive a partial subsidy from the Retiree Medical Plan upon retirement, if they are enrolled in the active medical plan immediately prior to retiring and achieved at least 20 years of service in a full time capacity. If eligible, the City pays 50% of the costs of single coverage group health insurance for up to 2 years after retirement. Such premiums are expected to be funded on a pay-as-you-go basis. An actuarial valuation of the City's liability for these benefits in accordance with GASB Statement No. 75 has not been performed. Inasmuch as the plan is only open to a small number of City employees, management has determined that the net other postemployment benefit liability would be immaterial to the financial statements taken as a whole. M CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 15. FUND BALANCES -GOVERNMENTAL FUNDS In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies fund balances based primarily on the extent to which it is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balances of governmental funds is as follows: American Nonmajor Riverfront Stormwater Rescue Discretionary Transportation Governmental General Fund Redevelopment Utility Plan Sales Tax Improvements Funds Total Nonspendable: Inventory $ 55,385 $ - $ - $ - $ - $ - $ - $ 55,385 Prepaids 286,466 1,054 30,073 317,593 Permanent fund corpus - - - 970,326 970,326 Total nonspendable 341,851 1,054 30,073 970,326 1,343,304 Restricted for: Debt service - - - 180,832 180,832 Infrastructure - 6,104,743 238,643 6,343,386 Redevelopment 540,190 - - - 540,190 Stormwater - 1,688,190 247,172 1,935,362 Law enforcement 110,994 - 32,882 143,876 Economic environment - - - 1,613 - - 1,613 Total restricted 110,994 540,190 1,688,190 1,613 6,104,743 - 699,529 9,145,259 Committed for: Recreational system development - - - - - - 257,786 257,786 Development of public parking 71,578 71,578 Total committed - 329,364 329,364 Assigned for: Law enforcement events 12,157 - - - - - - 12,157 Unassigned (deficit) 6,224,793 - - - - (89,243) (121,633) 6,013,917 Total fund balances, governmental funds $ 6,689,795 $ 541,244 $ 1,718,263 $ 1,613 $ 6,104,743 $ (89,243) $ 1,877,586 $ 16,844,001 all CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements Fund Balance Deficit The Transportation Improvements fund, a major governmental fund, had a deficit in fund balance of $89,243 at September 30, 2021. The Capital Projects fund, a nonmajor governmental fund, had a deficit in fund balance of $121,633 at September 30, 2021. Both deficits will be eliminated when transfers budgeted from the discretionary sales tax fund are made, following vendor payments that were recorded as accounts payable at year end. 16. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of September 30, 2021, was as follows: Capital assets: Capital assets not being depreciated Capital assets being depreciated, net Related debt: Notes payable Capital lease Net investment in capital assets 17. COMMITMENTS AND CONTINGENCIES Contracts and Other Commitments Governmental Business -type Activities Activities $ 12,882,200 29,123,789 42,005,989 753,000 753,000 $ 977,616 14,935,275 15,912,891 50,801 50,801 Total $ 13,859,816 44,059,064 57,918,880 753,000 50,801 803,801 $ 41,252,989 $ 15,862,090 $ 57,115,079 The City has various major contracts and other commitments outstanding as of September 30, 2021. Outstanding major contracts include completion of the Public Facilities Compound; Establishing Sewer Service to the Compound; Repairing the Yacht Club Seawall; Completing the Stormwater Master Plan; Improvements to the Stonecrop Drainage Area; Construction of Taxi Lane; Construction of Hangar D; and Square Hangar Engineering. Major funding has also been committed toward the design and construction of the Harrison Street Park Plaza, eliminating septic tanks with the Septic to Sewer grant program and making Seawall and Canal Improvements. 91 CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements A summary of these projects at September 30, 2021 is as follows: Major contracts Public Facilities Compound Establish Sewer Service to Compound Yacht Club Seawall Stormwater Master Plan Stonecrop Drainage Area Construction of Taxi Lane Construction of Hangar D Square Hangar Engineering Total Total Paid as of Encumbered at Total Contract September 30, September 30, Price 2021 2021 $ 9,907,274 $ 3,248,743 $ 6,484,379 1,000,000 358,962 40,291 318,671 700,000 19,725 680,275 860,000 21,416 838,584 757,409 109,049 578,905 2,282,705 827,410 1,490,047 227,516 32,097 237,378 $ 16,093,866 $ 4,298,731 $ 10,628,239 Total Paid as of Encumbered at Total September 30, September 30, Commitments 2021 2021 Major Commitments Harrison Street Park Plaza $ 270,000 $ - $ Septic to Sewer 200,000 63,225 Seawall and Canal Improvements 1,000,000 - Total $ 1,470,000 $ 63,225 $ M CITY OF SEBASTIAN, FLORIDA Notes to Financial Statements 18. CORONAVIRUS (COVID-19) In March 2020, the World Health Organization declared the novel coronavirus outbreak (COVID-19) to be a global pandemic. The pandemic has resulted in operational challenges for the City as it determines the appropriate methods to provide services to its residents. The City received over $2,217,000 (and expended approximately $551,000) during 2021 from various funding sources to be used to respond to the impacts of the COVID-19 pandemic through the Coronavirus Relief Fund and other funding sources. At this time, management does not believe that any ongoing negative financial impact related to the pandemic would be material to the City. 93 This page intentionally left blank. REQUIRED SUPPLEMENTARY INFORMATION 95 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Changes in Net Pension Liability and Related Ratios Total pension liability Service cost Interest on total pension liability Change in excess state money Changes of benefit terms Differences between expected and actual experience Changes of assumptions Contributions - buy back Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability, beginning of year Total pension liability, end of year Plan fiduciary net position Employer contributions State contributions Employee contributions Buy back contributions Pension plan net investment income (loss) Benefit payments Administrative expense Net change in plan fiduciary net position Plan fiduciary net position, beginning of year Plan fiduciary net position, end of year Net pension liability Fiscal Year Fiscal Year Fiscal Year Ending Ending Ending September 30, September 30, September 30, 2021 2020 2019 $ 546,747 $ 600,789 $ 609,880 1,539,609 1,451,768 1,371,857 249,038 408,904 (25,912) 274,475 (447,786) 22,520 - 52,749 (794,272) (684,963) (617,282) 1,815,597 1,328,712 1,413,812 21,233,850 19,905,138 18,491,326 23,049,447 21,233,850 19,905,138 686,778 703,814 595,045 206,017 208,645 198,770 220,466 229,327 223,495 - - 52,749 4,116,810 974,847 261,888 (794,272) (684,963) (617,282) (70,384) (67,989) (67,867) 4,365,415 1,363,681 646,798 17,177,800 15,814,119 15,167,321 21, 543,215 17,177,800 15,814,119 $ 1,506,232 $ 4,056,050 $ 4,091,019 Plan fiduciary net position as a percentage of total pension liability 93.47% 80.90% 79.45% Covered payroll $ 2,755,823 $ 2,866,586 $ 2,793,692 Net pension liability as a percentage of covered payroll 54.66% 141.49% 146.44% W. Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Ending Ending Ending Ending Ending Ending September 30, September 30, September 30, September 30, September 30, September 30, 2018 2017 2016 2015 2014 2013 $ 589,149 $ 479,778 $ 418,143 $ 403,611 $ 396,147 $ 367,653 1,270,670 1,179,511 1,027,558 979,259 914,243 853,018 (84,863) - - 22,218 24,386 - - 613,973 - (4,316) - 164,601 20,758 59,175 (240,633) - 382,825 626,069 223,200 - (700,733) (495,629) (493,765) (496,363) (452,892) (465,435) 1,238,824 2,181,216 1,637,180 886,976 881,884 755,236 17,252,502 15,071,286 13,434,106 12,547,130 11,665,246 10,910,010 18,491,326 17,252,502 15,071,286 13,434,106 12,547,130 11,665,246 525,296 337,201 322,998 320,179 401,103 396,603 188,923 168,628 169,027 145,700 147,868 145,961 204,854 177,585 167,309 161,270 160,494 154,683 1,028,549 1,371,657 1,067,139 (60,326) 951,910 1,029,818 (700,733) (495,629) (493,765) (496,363) (452,892) (465,435) (82,088) (45,633) (28,025) (39,673) (27,815) (32,153) 1,164,801 1,513,809 1,204,683 30,787 1,180,668 1,229,477 14,002,520 12,488,711 11,284,028 11,253,241 10,072,573 8,843,096 15,167,321 14,002,520 12,488,711 11,284,028 11,253,241 10,072,573 $ 3,324,005 $ 3,249,982 $ 2,582,575 $ 2,150,078 $ 1,293,889 $ 1,592,673 82.02% 81.16% 82.86% 84.00% 89.69% 86.35% $ 2,560,670 $ 2,438,012 $ 2,263,866 $ 2,154,612 $ 2,106,767 $ 2,131,399 129.81% 133.30% 114.08% 99.79% 61.42% 74.72% 97 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Changes in Net Pension Liability and Related Ratios Notes to the Schedule of Changes in the City's Net Pension Liability and Related Ratios Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. Changes in assumptions - For measurement date 09/30/2021, the investment rate of return was lowered from 7.20% to 7.10%, net of investment related expenses. Changes in assumptions - For the measurement date 09/30/2020, as mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the rates used in Milliman's July 1, 2019 FRS valuation report for special risk employees, with appropriate risk and collar adjustments made based on plan demographics. Changes in assumptions - For the measurement date 09/30/2019, amounts reported as changes of assumptions resulted of an Experience Study dated September 13, 2019, the Board approved the following changes: investment return assumption was decreased from 7.30% to 7.20% per year compounded annually, net of investment related expenses. The following changes to demographic assumptions were made: updates to the future salary increase assumption, updates to assumed rates of retirement, updates to the assumed rates of disability, updates to assumed rates of withdrawal. Changes in assumptions - For the measurement date 09/30/2017, amounts reported as changes of assumptions resulted from the following changes: the investment return assumption has been lowered from 7.45% to 7.30% per year. As mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed from the rates used by the Florida Retirement System actuary in the July 1, 2015 actuarial valuation to the rates used in the July 1, 2016 actuarial valuation for special risk lives. Changes in benefit terms - For the measurement date 09/30/2017, amounts reported as changes of benefit terms resulted from Ordinance 0-17-03, adopted and effective August 23, 2017, amended/implemented the following benefit provisions: member contribution rate, benefit accrual rate, and cost -of -living adjustment. Changes in assumptions - For the measurement date 09/30/2016, amounts reported as changes of assumptions resulted from the following changes: the investment return assumption was lowered from 7.60% to 7.45%. As a result of Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the assumptions used by the Florida Retirement System for special risk employees. The inflation assumption rate was lowered from 3.00% to 2.30%, matching the long-term inflation assumption utilized by the Plan's investment consultant. Changes in assumptions - For measurement date 09/30/2015, amounts reported as changes of assumptions were resulted from lowering the investment return assumption from 7.75% to 7.60%. CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Investment Returns Fiscal Year Ending Annual Return September 30, (1) 2013 11.51% 2014 9.42% 2015 -0.45% 2016 9.39% 2017 10.90% 2018 7.35% 2019 1.79% 2020 6.04% 2021 23.63% (') Annual money -weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Schedule of Contributions Fiscal Year Actuarially Ending Determined City September 30, Contribution Contribution 2013 $ 506,560 $ 396,603 $ 2014 524,585 401,103 2015 596,502 320,179 2016 667,764 322,998 2017 768,277 337,201 2018 673,456 525,296 2019 793,409 595,045 2020 871,442 703,814 2021 835,014 686,778 Actual Contribution Contribution as Percentage State Deficiency Covered of Covered Contribution (Excess) Payroll Payroll 145,961 $ (36,004) $ 2,131,399 25.46% 147,868 (24,386) 2,106,767 26.06% 145,700 130,623 2,154,612 21.62% 169,027 175,739 2,263,866 21.73% 168,628 262,448 2,438,012 20.75% 188,923 (40,763) 2,560,670 27.89% 198,770 (406) 2,793,692 28.41% 208,645 (41,017) 2,866,586 31.83% 206,017 (57,781) 2,755,823 32.40% 100 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Notes to Schedule of Contributions Valuation date October 1, 2019 Notes Actuarially determined contribution amounts are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Funding method Individual entry age normal actuarial cost Amortization method Level percentage of pay, closed Remaining amortization period 14 Years (as of October 1, 2021) Mortality Healthy Active Lives: Female: RP2000 Generational, 100% Combined Healthy White Collar, Scale BB; Male: RP2000 Generational, 10% Combined Healthy White Collar / 90% Combined Healthy Blue Collar, Scale BB Healthy Inactive Lives: Female: RP2000 Generational, 100% Annuitant White Collar, Scale BB; Male: RP2000 Generational, 10% Annuitant White Collar / 90% Annuitant Blue Collar, Scale BB Disabled Lives: Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale; Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale The above assumption rates were mandated by Chapter 2015-157, Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in Milliman's July 1, 2018 FRS valuation report for special risk employees. We feel this assumption sufficiently accommodates future mortality improvements. Interest rate 7.20% (prior year 7.30%) 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 2.36% for purposes of amortizing the Unfunded Actuarial Accrued Liability. This assumption cannot exceed the ten-year average payroll growth, in compliance with Part VII of Chapter 112, Florida Statutes. 101 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Single -employer Pension Trust Fund Notes to Schedule of Contributions Final salary load Final salary is increased with a load assumption as shown below based on credited service on 10/1/2014: Service on Load 10/01/2014 Assumption 5 or more years 20% 2 - 5 Years 10% Less than 1 year 0% Retirement rates Members with less than 25 years of credited service are assumed to retire at the following rates: Age Assumption 50 30% 51-54 5% 55 50% 56 50% 57 100% Members with at least 25 years of credited service are assumed to retire immediately. Disability rates Age based rates with increasing probability of disablement at higher ages. A sample of rates are shown below: Age Assumption 30 0.24% 40 0.42% 50 1.08% 60 5.40% Additionally, it is assumed that 75% of disablements and active Member deaths are service related. Termination rates Credited Service Assumption 0 - 2 Years 15.00% 3 - 14 Years 4.00% 15 years and Greater 0.00% Actuarial asset method All assets are valued at market value with an adjustment made to uniformly spread actuarial investment gains and losses (as measured by actual market value investment return against expected market value investment return) over a four-year period. 102 CITY OF SEBASTIAN, FLORIDA Required Supplementary Information Coastal Florida Public Employees Association Pension Plan Schedule of Employer Contributions Fiscal Year Ending September 30, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Annual Required Contributions 210,258 202,612 204,361 217,916 200,889 204,035 217,695 241,992 239,161 241,312 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 2021 Plan year, the Plan was in critical status because the Plan has a deficit in the minimum funding standard account. The Board of Trustees adopted a rehabilitation plan on March 8, 2010, that for new pensions: eliminates the 60 month minimum guarantee in the Life/5 pension option; increases the minimum age for Early Pension from age 60 to 62 (with 20 years of service credit); removes the Early Pension subsidy by increasing the reduction factors; discontinues the offering of retroactive pension payments; and required 5 years of service credit to vest for participants reaching normal retirement age before a break in service. A mandatory increase in contributions is not required under the Rehabilitation Plan, but decreases in contribution rates or the exclusion of covered employees are not permitted. A copy of the rehabilitation plan may be obtained be contacting the Coastal Pension Plan office. 103 This page intentionally left blank. 104 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 105 CITY OF SEBASTIAN, FLORIDA Combining Balance Sheet Nonmajor Governmental Funds September 30, 2021 Special Revenue Funds Debt Service Stormwater Local Law Utility Option Parking Recreation Enforcement Revenue Gas Tax In -Lieu -of Impact Fee Forfeiture Bonds 2003 Assets Cash and cash equivalents $ 172,128 $ - $ 206,168 $ 1,551 $ 180,832 Investments - 71,578 51,618 31,331 - Due from other governments 66,515 - - - - Total assets $ 238,643 $ 71,578 $ 257,786 $ 32,882 $ 180,832 Liabilities Accounts payable and accrued liabilities $ - $ - $ - $ - $ - Fund balances Nonspendable - - - Restricted 238,643 - - 32,882 180,832 Committed - 71,578 257,786 - - Unassigned (deficit) - - - - - Total fund balances 238,643 71,578 257,786 32,882 180,832 Total liabilities and fund balances $ 238,643 $ 71,578 $ 257,786 $ 32,882 $ 180,832 106 Capital Projects Funds Permanent Total Stormwater Nonmajor Capital Capital Utility Governmental Projects Improvements Improvements Cemetery Funds $ 79,317 $ 34,715 $ 282,192 $ 264,250 $ 1,221,153 - - - 706,076 860,603 12,987 17,000 7,624 - 104,126 $ 92,304 $ 51,715 $ 289,816 $ 970,326 $ 2,185,882 $ 213,937 $ 51,715 $ 42,644 $ - $ 308,296 - 970,326 970,326 247,172 - 699,529 - 329,364 (121,633) (121,633) (121,633) 247,172 970,326 1,877,586 $ 92,304 $ 51,715 $ 289,816 $ 970,326 $ 2,185,882 107 CITY OF SEBASTIAN, FLORIDA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2021 Revenues Intergovernmental Impact fees Charges for services Fines Investment earnings Other revenues Contributions and donations Total revenues Expenditures Current: General government Public safety Physical environment Transportation Debt service: Principal Interest and fiscal charges Capital outlay Total expenditures Revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year Special Revenue Funds Debt Service Stormwater Local Law Utility Option Parking Recreation Enforcement Revenue Gas Tax In -Lieu -of Impact Fee Forfeiture Bonds 2003 $ 755,418 $ $ - $ $ - 214,500 - - 15,050 502 101 279 50 455 - 11,798 - 1,500 - 755,920 11,899 214,779 16,600 455 1,500 101,964 - 233,000 387,000 10,398 - 13,529 34,372 15,000 - 379,734 - - 16,500 400,529 376,186 11,899 214,779 100 (400,074) - - - - 400,961 (525,946) (121,037) - (525,946) - (121,037) - 400,961 (149,760) 11,899 93,742 100 887 388,403 59,679 164,044 32,782 179,945 $ 238,643 $ 71,578 $ 257,786 $ 32,882 $ 180,832 W. Capital Projects Funds Permanent Total Stormwater Nonmajor Capital Capital Utility Governmental Projects Improvements Improvements Cemetery Funds $ 665,312 $ 169,999 $ 13,768 $ $ 1,604,497 - - - 214,500 151,697 151,697 - 15,050 1,782 3,169 - - 13,298 30,000 30,000 665,312 199,999 13,768 153,479 2,032,211 562,272 562,272 - - - - 1,500 49,716 68,224 85,464 203,404 - - - 101,964 620,000 - - - - 23,927 522,947 1,051,072 95,845 29,954 1,749,190 1,085,219 1,100,788 164,069 115,418 3,262,257 (419,907) (900,789) (150,301) 38,061 (1,230,046) 298,274 900,789 150,301 - 1,750,325 - - - (136,555) (783,538) 298,274 900,789 150,301 (136,555) 966,787 (121,633) - - (98,494) (263,259) 247,172 1,068,820 2,140,845 $ (121,633) $ $ 247,172 $ 970,326 $ 1,877,586 109 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Local Option Gas Tax Special Revenue Fund For the Year Ended September 30, 2021 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Intergovernmental $ 724,105 $ 724,105 $ 755,418 $ 31,313 Investment earnings 13,808 13,808 502 (13,306) Total revenues 737,913 737,913 755,920 18,007 Expenditures Current: Transportation 5,400 101,965 101,964 (1) Debt service: Principal 233,000 233,000 233,000 - Interest and fiscal charges 10,340 10,340 10,398 58 Capital outlay 257,510 160,945 34,372 (126,573) Total expenditures 506,250 506,250 379,734 (126,516) Revenues over expenditures 231,663 231,663 376,186 144,523 Other financing uses Transfers out (500,000) (538,670) (525,946) (12,724) Net changes in fund balance (268,337) (307,007) (149,760) 157,247 Fund balance, beginning of year 388,403 388,403 388,403 - Fund balance, end of year $ 120,066 $ 81,396 $ 238,643 $ 157,247 110 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parking In -Lieu -Of Special Revenue Fund For the Year Ended September 30, 2021 Original Final Budget Budget Revenues Investment earnings $ 1,376 $ 1,376 $ Other revenues 3,000 3,000 Net change in fund balance 4,376 4,376 Fund balance, beginning of year 59,679 59,679 Fund balance, end of year $ 64,055 $ 64,055 $ Actual Over (Under) Final Actual Budget 101 $ (1,275) 11,798 8,798 11,899 7,523 59,679 - 71,578 $ 7,523 111 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Recreation Impact Fee Special Revenue Fund For the Year Ended September 30, 2021 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Impact fees $ 150,000 $ 150,000 $ 214,500 $ 64,500 Investment earnings 5,000 5,000 279 (4,721) Total revenues 155,000 155,000 214,779 59,779 Other financing uses Transfers out (155,000) (277,839) (121,037) (156,802) Net change in fund balance - (122,839) 93,742 216,581 Fund balance, beginning of year 164,044 164,044 164,044 - Fund balance, end of year $ 164,044 $ 41,205 $ 257,786 $ 216,581 112 CITY OF SEBASTIAN, FLORIDA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Law Enforcement Forfeiture Special Revenue Fund For the Year Ended September 30, 2021 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Fines $ 1,000 $ 16,000 $ 15,050 $ (950) Investment earnings 250 250 50 (200) Other revenues - - 1,500 1,500 Total revenues 1,250 16,250 16,600 350 Expenditures Current: Public safety - - 1,500 1,500 Capital outlay - 15,000 15,000 - Total expenditures - 15,000 16,500 1,500 Net change in fund balance 1,250 1,250 100 (1,150) Fund balance, beginning of year 32,782 32,782 32,782 - Fund balance, end of year $ 34,032 $ 34,032 $ 32,882 $ (1,150) 113 This page intentionally left blank. 114 CAPITAL ASSETS 115 CITY OF SEBASTIAN, FLORIDA Comparative Schedule by Source Capital Assets Used in the Operation of Governmental Funds September 30, 2021 Governmental funds capital assets Land Buildings and structures Non -building improvements Machinery and equipment Infrastructure Construction in progress Total governmental funds capital assets Investment in governmental funds capital assets (by sources) Federal grants State grants County grants General Fund Law enforcement trust fund Recreational impact fee Stormwater utility fee Riverfront redevelopment Cemetery trust fund Donations Sales taxes Motor fuel taxes Revenue bond debt Parking in Lieu of Fee Capital projects Total investment in governmental funds capital assets 2021 2020 $ 9,123,041 $ 9,123,041 14, 344, 679 14, 344, 679 7,794,033 7,764,086 11,231,799 11,005,969 45,929,953 44,266,641 3,759,159 407,284 $ 92,182,664 $ 86,911,700 $ 4,734,302 $ 4,501,672 3,125,704 2,947,351 507,031 507,031 11,245,264 11,786,989 117,460 102,460 3,725,331 3,593,730 8,806,652 8,680,628 31061,899 2,706,509 816,146 649,638 2,965,996 2,936,010 32,290,652 28,273,753 6,089,258 5,528,960 13,816,786 13,816,786 90,621 90,621 789,562 789,562 $ 92,182,664 $ 86,911,700 116 CITY OF SEBASTIAN, FLORIDA Schedule by Function and Activity Capital Assets Used in the Operation of Governmental Funds September 30, 2021 Machinery Non -Building and Functions / Programs Land Buildings Improvements Equipment Infrastructure Total General government: City manager $ $ $ $ 49,954 $ $ 49,954 City clerk 4,003 4,003 Administrative services 1,100 2,294 3,394 MIS 5,841 72,555 1,777,677 1,856,073 Facilities maintenance 1,091,573 32,086 834,574 1,958,233 Community development - 84,426 - 44,851 129,277 Non -departmental 4,474,459 6,184,991 126,639 204,371 598,890 11,589,350 Total general government 4,474,459 7,366,831 232,380 2,917,724 598,890 15,590,284 Public safety: Administration 9,560 3,799,272 89,320 430,400 - 4,328,552 Road patrol - - - 3,066,261 3,066,261 Code enforcement - 64,818 - 64,818 Investigations 1,700 379,516 32,262 413,478 Communications - 26,927 - 26,927 Building department - - - 6,295 - 6,295 Total public safety 9,560 3,799,272 91,020 3,974,217 32,262 7,906,331 Transportation: Central garage - 130,489 114,192 232,376 674 477,731 Roads and drainage 47,125 166,907 1,055,101 1,270,018 22,226,734 24,765,885 Total transportation 47,125 297,396 1,169,293 1,502,394 22,227,408 25,243,616 Economic environment: Non -departmental 2,308,392 1,040,590 6,562 - - 3,355,544 Physical environment: Stormwater - - 3,870 1,991,860 20,479,737 22,475,467 Cemetery 572,181 201,153 213,568 55,918 92,167 1,134,987 Total physical environment 572,181 201,153 217,438 2,047,778 20,571,904 23,610,454 Culture/recreation: Parks and recreation 1,711,324 1,639,437 6,077,340 789,686 2,499,489 12,717,276 Total $ 9,123,041 $ 14,344,679 $ 7,794,033 $ 11,231,799 $ 45,929,953 88,423,505 Construction in progress 3,759,159 Total $ 92,182,664 117 CITY OF SEBASTIAN, FLORIDA Schedule of Changes by Function and Activity Capital Assets Used in the Operation of Governmental Funds September 30, 2021 Capital Assets Capital Assets October 1, Transfers Transfers September 30, Functions / Programs 2020 Additions Disposals In Out 2021 General government: City manager $ 49,954 $ $ $ $ $ 49,954 City clerk 4,003 4,003 Administrative services 3,394 3,394 MIS 1,544,294 3,000 47,035 355,814 1,856,073 Audio visual/broadcast 18,420 - - - 18,420 - Facilities maintenance 1,915,785 74,585 36,787 4,650 - 1,958,233 Community development 129,277 - - - 129,277 Non -departmental 11,043,161 - - 546,189 - 11,589,350 Total general government 14,708,288 77,585 83,822 906,653 18,420 15,590,284 Public safety: Special operations - - - - - - Administration 4,335,046 14,731 8,237 4,328,552 School resource - - - - - Road patrol 3,372,712 47,679 354,130 3,066,261 Community policing - - - - Code enforcement 64,818 - - - 64,818 Investigations 425,351 6,500 50,635 32,262 413,478 Communications 26,927 - - - 26,927 Building department 6,295 - - - 6,295 Total public safety 8,231,149 54,179 419,496 40,499 7,906,331 Transportation: Central garage 477,731 - - - - 477,731 Roads and drainage 23,806,876 78,149 41,191 981,321 59,270 24,765,885 Total transportation 24,284,607 78,149 41,191 981,321 59,270 25,243,616 Economic environment: Non -departmental 3,355,544 - - - - 3,355,544 Physical environment: Stormwater 22,293,263 123,824 28,665 87,045 22,475,467 Cemetery 968,498 29,954 17,928 154,463 1,134,987 Total physical environment 23,261,761 153,778 46,593 241,508 23,610,454 Culture/recreation: Parks and recreation 12,663,067 49,055 221,637 226,791 12,717,276 Total 86,504,416 412,746 812,739 2,396,772 77,690 88,423,505 Construction in progress 407,284 5,670,957 - - 2,319,082 3,759,159 Total $ 86,911,700 $ 6,083,703 $ 812,739 $ 2,396,772 $ 2,396,772 $ 92,182,664 118 STATISTICAL SECTION 119 This page intentionally left blank. 120 CITY OF SEBASTIAN, FLORIDA Statistical Section Table of Contents This part of the City's Annual Comprehensive Financial Report presents detailed information to assist the user in understanding what the financial statements, note disclosures and required supplementary information say about the overall economic condition of the City of Sebastian, Florida. Page Financial Trends These schedules contain trend information to help the reader understand and evaluate how the City's financial condition, performance and well-being have changed over time. 122 Revenue Capacity These schedules contain information to help the reader assess the City's ability to generate its most significant local revenue source, the property tax. 134 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and its ability to issue additional debt in the future. 140 Demographic and These schedules present various demographic and economic Economic Information indicators to help the reader understand the environment within which the City operates and how they affect the City's financial activities. 146 Operating Information These schedules contain information about the City's operations and resources to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 150 Sources: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Report for the relevant year. The City implemented GASB Statement No. 34 in 2001; schedules presenting government -wide information include data beginning in that year. 121 CITY OF SEBASTIAN, FLORIDA Net Position by Component Last Ten Fiscal Years Fiscal Year 2021 2020 2019 2018 2017 Governmental activities Net investment in capital assets $ 41,252,989 $ 37,919,832 $ 37,080,967 $ 37,568,980 $ 37,461,026 Restricted 10,142,786 10,637,069 8,976,174 6,419,900 5,113,543 Unrestricted 2,320,211 1,103,683 2,056,430 1,649,796 1,236,088 Total governmental activities net position $ 53,715,986 $ 49,660,584 $ 48,113,571 $ 45,638,676 $ 43,810,657 Business -type activities Net investment in capital assets $ 15,862,090 $ 16,263,098 $ 16,995,851 $ 14,972,789 $ 13,384,969 Unrestricted (deficit) (933,213) (1,017,263) (654,928) (777,422) (1,008,976) Total business -type activities net position $ 14,928,877 $ 15,245,835 $ 16,340,923 $ 14,195,367 $ 12,375,993 Primary Government Net investment in capital assets $ 57,115,079 $ 54,182,930 $ 54,076,818 $ 52,541,769 $ 50,845,995 Restricted 10,142,786 10,637,069 8,976,174 6,419,900 5,113,543 Unrestricted 1,386,998 86,420 1,401,502 872,374 227,112 Total primary government net position $ 68,644,863 $ 64,906,419 $ 64,454,494 $ 59,834,043 $ 56,186,650 122 Table 1- Unaudited Fiscal Year 2016 2015 2014 2013 2012 $ 35,886,087 $ 35,220,857 $ 35,210,526 $ 32,038,749 $ 31,500,173 5,209,372 4,997,724 5,115,627 5,839,440 6,192,777 3,615,777 3,467,014 3,330,400 4,577,440 3,607,228 $ 44,711,236 $ 43,685,595 $ 43,656,553 $ 42,455,629 $ 41,300,178 $ 11,989,666 $ 10,517,895 $ 10,439,804 $ 10,846,501 $ 11,181,823 (717,053) 67,779 (103,116) (306,497) (490,298) $ 11,272,613 $ 10,585,674 $ 10,336,688 $ 10,540,004 $ 10,691,525 $ 47,875,753 $ 45,738,752 $ 45,650,330 $ 42,885,250 $ 42,681,996 5,209,372 4,997,724 5,115,627 5,839,440 6,192,777 2,898,724 3,534,793 3,227,284 4,270,943 3,116,930 $ 55,983,849 $ 54,271,269 $ 53,993,241 $ 52,995,633 $ 51,991,703 123 CITY OF SEBASTIAN, FLORIDA Changes in Net Position Last Ten Fiscal Years Expenses Governmental activities: General government Public safety Physical environment Transportation Economic environment Culture and recreation Interest on debt Total governmental activities expenses Business -type activities: Golf Course Airport Building Total business -type activities expenses Total primary government expenses Program revenue Governmental activities: Charges for services: General government Public safety Physical environment Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenue Business -type activities: Charges for services: Golf Course Airport Building Operating grants and contributions Capital grants and contributions Total business -type activities program revenue Total primary government program revenue Net(expense)revenue Governmental activities Business -type activities Total primary government net (expense) revenue Fiscal Year 2021 2020 2019 2018 2017 $ 4,907,738 $ 5,071,184 $ 3,970,541 $ 3,926,479 $ 3,379,369 6,453,141 6,856,836 6,613,707 6,227,299 6,549,037 2,848,779 2,534,320 3,106,764 3,431,933 3,769,377 2,136,727 2,037,807 2,022,117 1,949,882 2,279,149 256,771 315,985 402,986 238,597 106,577 1,481,096 1,402, 691 1,434,296 1,279,635 1,326,245 19,522 28,711 38,539 56,523 63,141 18,103,774 18,247,534 17,588,950 17,110,348 17,472,895 1,575,587 1,339,582 1,544,157 4,459,326 22,563,100 1,551,926 1,282,084 1,869,767 4,703,777 22,951,311 1,533,749 1,336,180 715,846 3,585,775 21,174,725 1,555,853 1,328,258 664,066 3,548,177 20,658,525 1,537,332 1,361,134 586,752 3,485,218 20,958,113 769,986 684,938 532,721 466,261 362,631 157,625 130,502 147,121 74,216 124,800 2,119,101 2,037,874 2,161,464 1,064,659 1,021,038 70,623 41,316 54,769 52,160 48,781 2,093,941 1,726,719 803,092 1,776,070 250,292 4,265,728 3,647,329 251,088 181,050 947,274 9,477,004 8,268,678 3,950,255 3,614,416 2,754,816 1,498,561 1,525,184 1,400,939 1,257,047 1,058,939 578,916 552,789 536,442 583,310 499,321 1,377,978 937,839 864,068 911,643 747,950 - - 46,771 115,907 116,055 560,394 471,888 2,670,116 2,120,953 1,566,737 4,015,849 3,487,700 5,518,336 4,988,860 3,989,002 13,492,853 11,756,378 9,468,591 8,603,276 6,743,818 (8,626,770) (9,978,856) (13,638,695) (13,495,932) (14,718,079) (443,477) (1,216,077) 1,932,561 1,440,683 503,784 (9,070,247) (11,194,933) (11,706,134) (12,055,249) (14,214,295) 124 Fiscal Year 2016 2015 2014 2013 Table 2 - Unaudited 2012 $ 3,285,607 $ 3,015,536 $ 2,923,398 $ 2,784,485 $ 2,640,677 5,476,136 5,164,197 4,908,374 4,928,203 5,025,274 2,538,752 2,759,461 2,310,539 2,039,380 2,007,902 1,861,946 2,024,814 1,828,569 1,845,429 1,800,432 364,675 194,630 247,891 155,214 170,960 1,191,488 1,293,246 1,229,369 1,232,345 1,239,512 82,943 100,468 235,071 368,432 562,496 14, 801, 547 14,552,352 13, 683, 211 13,353,488 13, 447, 253 1,584, 214 1,409,829 1,406, 770 1,377,039 1,394,731 1,197, 549 1,038,361 1,031,464 1,146, 905 1,166, 588 546,649 531,087 465,717 417,887 397,295 3,328,412 2,979,277 2,903,951 2,941,831 2,958,614 18,129,959 17,531,629 16,587,162 16,295,319 16,405,867 374,581 372,255 407,068 314,158 214,488 98,446 80,763 76,132 67,297 66,474 1,049,735 1,087,642 1,073,015 1,101,864 876,693 53,959 67,940 67,371 70,982 66,954 323,101 345,937 186,295 332,627 187,333 809,932 994,546 739,785 770,123 791,265 2,709,754 2,949,083 2,549,666 2,657,051 2,203,207 1,135,357 1,333,189 1,277,660 1,302,441 1,394,844 516,403 457,318 470,703 481,759 491,367 810,069 712,620 700,751 706,964 419,705 841,668 702,154 235,215 230,868 150,083 3,303,497 3,205,281 2,684,329 2,722,032 2,455,999 6,013,251 6,154,364 5,233,995 5,379,083 4,659,206 (12,091,793) (11,603,269) (11,133,545) (10,696,437) (11,244,046) (24,915) 226,004 (219,622) (219,799) (502,615) (12,116,708) (11,377,265) (11,353,167) (10,916,236) (11,746,661) continued... 125 CITY OF SEBASTIAN, FLORIDA Changes in Net Position Last Ten Fiscal Years General revenue and other changes in net position Governmental activities: Property taxes, levied for general purposes Sales and use taxes Franchise fees State shared revenues not restricted to specific programs Investment earnings Miscellaneous Transfers Total governmental activities Business -type activities: Investment earnings Gain on sale of capital assets Miscellaneous Transfers Total business -type activities Total primary government general revenue Change in net position Governmental activities Business -type activities Total primary government change in net position Fiscal Year 2021 2020 2019 2018 2017 $ 4,991,306 $ 4,270,497 $ 4,325,759 $ 4,153,194 $ 4,147,115 3,030,261 2,940,406 2,882,460 2,808,172 5,945,386 1,384,529 1,316,849 1,343,744 1,316,792 1,271,403 3,066,490 2,541,474 7,109,496 6,887,664 2,616,522 61,247 180,988 378,657 216,185 135,614 271,276 381,999 277,970 312,401 290,269 (122,937) (106,344) (204,496) (370,457) (588,809) 12,682,172 11,525,869 16,113, 590 15,323,951 13,817, 500 3,582 10,377 8,499 8,234 10,787 - 4,268 - - - 122,937 106,344 204,496 370,457 588,809 126,519 120,989 212,995 378,691 599,596 12,808, 691 11,646,858 16,326, 585 15,702,642 14,417,096 4,055,402 1,547,013 2,474,895 1,828,019 (900,579) (316,958) (1,095,088) 2,145,556 1,819,374 1,103,380 $ 3,738,444 $ 451,925 $ 4,620,451 $ 3,647,393 $ 202,801 126 Table 2 - Unaudited Fiscal Year 2016 2015 2014 2013 2012 $ 3,942,048 $ 3,594,210 $ 3,248,113 $ 3,221,304 $ 3,063,495 5,762,921 5,555,270 5,320,051 5,123,046 4,852,413 1,257,430 1,241,515 1,190,233 1,118,886 1,124,568 2,466,546 2,365,137 2,208,700 2,063,450 1,934,733 77,317 65,256 43,293 74,650 82,129 316,239 240,179 338,901 315,296 201,538 (705,067) 2,988 (14,822) (37,734) 22,489 13,117,434 13,064,555 12,334,469 11,878,898 11, 281,365 6,787 5,368 1,484 4,391 6,563 - 20,602 - 274 4,125 705,067 (2,988) 14,822 37,734 (22,489) 711,854 22,982 16,306 42,399 (11,801) 13,829,288 13,087,537 12, 350,775 11,921,297 11, 269,564 1,025,641 1,461,286 1,200,924 1,182,461 37,319 686,939 248,986 (203,316) (177,400) (514,416) $ 1,712,580 $ 1,710,272 $ 997,608 $ 1,005,061 $ (477,097) concluded 127 CITY OF SEBASTIAN, FLORIDA Fund Balances, Governmental Funds Last Ten Fiscal Years Fiscal Year 2021 2020 2019 2018 2017 Governmental funds General fund: Nonspendable $ 341,851 $ 182,803 $ 94,564 $ 234,852 $ 342,505 Restricted 110,994 88,782 103,900 77,185 63,016 Committed - - - - - Assigned 12,157 12,157 12,157 13,871 12,350 Unassigned 6,224,793 5,419,259 5,988,440 5,047,473 4,089,275 Total General fund 6,689,795 5,703,001 6,199,061 5,373,381 4,507,146 All other governmental funds: Nonspendable 1,001,453 1,085,337 1,036,571 1,542,466 941,061 Restricted 9,034,265 9,471,281 7,850,346 4,822,199 4,131,416 Committed 329,364 223,723 553,172 707,667 995,144 Unassigned (210,876) - (5,730) (3,048) (26,370) Total all other governmental funds 10,154,206 10,780,341 9,434,359 7,069,284 6,041,251 Total governmental funds $ 16,844,001 $ 16,483,342 $ 15,633,420 $ 12,442,665 $ 10,548,397 128 Table 3 - Unaudited Fiscal Year 2016 2015 2014 2013 2012 $ 227,651 $ 316,036 $ 369,329 $ 368,564 $ 370,450 46,262 38,544 7,969 28,632 - - - - - 2,861,708 10,840 8,692 7,129 7,020 35,707 5,526,675 5,289,322 5,348,905 5,065,242 1,734,307 5,811,428 5,652,594 5,733,332 5,469,458 5,002,172 996,778 928,758 1,390,073 1,323,838 1,289,693 4,193,653 4,181,787 3,756,950 4,647,950 4,371,826 977,868 815,688 625,007 589,364 719,686 (129,401) (58,618) (64,875) - - 6,038,898 5,867,615 5,707,155 6,561,152 6,381,205 $ 11,850,326 $ 11,520,209 $ 11,440,487 $ 12,030,610 $ 11,383,377 129 CITY OF SEBASTIAN, FLORIDA Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years Revenues Taxes Franchise fees Licenses, fees and permits Intergovernmental Impact fees Charges for services Fines Investment earnings Contributions and donations Other revenues Total revenues Expenditures Current: General government Public safety Physical environment Transportation Economic environment Culture and recreation Debt service: Principal Interest Capital outlay Total expenditures Revenues over (under) expenditures Other financing sources (Uses) Issuance of long-term debt Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapitalexpenditures' Fiscal Year 2021 2020 2019 2018 2017 $ 8,021,567 $ 7,210,903 $ 7,208,219 $ 6,961,366 $ 10,738,778 1,384,529 1,316,849 1,343,744 1,316,792 1,271,403 195,920 150,240 146,812 165,922 135,900 9,176,859 7,739,019 7,996,330 8,648,064 2,991,190 214,500 143,875 129,550 141,050 102,700 2,868,088 2,691,093 2,698,117 1,443,123 1,353,009 53,327 53,297 51,146 48,251 96,842 61,247 180,988 378,657 216,185 135,614 271,276 381,999 277,970 55,670 45,420 34,800 32,628 37,796 312,401 290,269 22,282,113 19,900,891 20,268, 341 19, 308,824 17,161,125 4,457,302 4,498,327 3,536,154 3,492,883 2,943,790 6,314,019 6,275,459 6,035,675 5,659,861 5,134,388 1,858,226 1,633,435 1,871,853 2,195,332 2,565,532 1,197,835 1,129, 260 1,142,412 1,079,509 1,333,927 256,771 315,985 402,986 238,597 73,491 986,734 955,164 1,027,371 875,172 927,374 620,000 611,000 601,000 23,927 35,023 45,846 6,083,703 3,490,972 2,209,793 21,798, 517 18,944,625 16,873,090 483,596 956,266 3,395,251 5,632,516 (5,755,453) (122,937) $ 360,659 $ 4.1% 590,000 56,523 2,856,222 17,044,099 2,264,725 931,000 68,512 3,896,231 17,874,245 (713,120) 3,280,101 2,451,428 4,427,037 7,184,858 (3,386,445) (2,655,924) (4,797,494) (7,773,667) (106,344) (204,496) (370,457) (588,809) 849,922 $ 3,190,755 $ 1,894,268 $ (1,301,929) 4.2% 4.4% 4.6% 7.2% 1 To calculate the ratio, divide the total debt service expenditures (principal plus interest) by total noncapital expenditures (the difference between the total expenditures and capitalized capital outlay expenditure). 130 Table 4 - Unaudited Fiscal Year 2016 2015 2014 2013 2012 $ 10,326,654 $ 9,782,109 $ 9,123,879 $ 8,894,880 $ 8,465,990 1,257,430 1,241,515 1,190, 233 1,118,886 1,124, 568 136,614 147,219 138,564 45,500 22,431 2,709,066 2,742,950 2,373,695 2,411,395 2,088,038 163,800 281,450 168,350 169,000 58,500 1,391,495 1,397,395 1,431,101 1,462,522 1,158,075 73,059 63,035 54,140 60,190 57,575 77,317 65,256 43,293 78,411 86,516 80,581 48,124 36,801 22,406 216,091 316,239 241,597 338,901 315,296 201,888 16,532,255 16,010,650 14,898,957 14,578,486 13,479,672 3,053,554 2,717,049 2,575,605 2,447,893 2,410,345 4,968,258 4,666,343 4,623,060 4,425,000 4,523,802 1,316,697 1,498,706 1,110,788 1,075,162 1,042,349 1,168,919 1,187,871 1,165,004 1,158,945 1,208,411 331,589 161,545 144,612 122,730 138,531 849,789 893,394 888,795 847,781 876,502 1,935,000 1,567,000 2,306,000 1,307,000 3,321,000 92,907 108,678 413,995 393,447 472,399 1,780,358 3,133,330 2,246,399 2,115,561 1,767,058 15,497,071 15,933,916 15,474,258 13,893,519 15,760,397 1,035,184 76,734 (575,301) 684,967 (2,280,725) - - - - 2,296,000 3,694,279 4,989,726 3,903,204 3,598,949 3,694,765 (4,399,346) (4,986,738) (3,918,026) (3,636,683) (3,672,276) (705,067) 2,988 (14,822) (37,734) 2,318,489 $ 330,117 $ 79,722 $ (590,123) $ 647,233 $ 37,764 14.8% 13.1% 20.6% 14.4% 27.1% 131 CITY OF SEBASTIAN, FLORIDA Program Revenues by Function/Program Last Ten Fiscal Years Program revenues Governmental activities: General government Public safety Physical environment Transportation Economic environment Culture and recreation Total governmental activities Business -type activities: Charges for services: Golf Course Airport Building Total business -type activities Total primary government Fiscal Year 2021 2020 2019 2018 $ 5,689,371 $ 4,749,501 $ 1,096,978 $ 1,997,400 $ 393,259 399,361 444,199 346,239 2,119,101 2,037,874 2,161,464 1,064,659 990,150 896,751 13,295 12,908 285,123 185,191 234,319 193,210 9,477,004 8,268,678 3,950,255 3,614,416 2017 390,921 334,270 1,021,038 687,310 321,277 2,754,816 1,498,561 1,525,184 1,401,260 1,355,652 1,170,591 1,139,310 1,024,677 3,253,008 2,704,263 2,070,461 1,377,978 937,839 864,068 928,945 747,950 4,015,849 3,487,700 5,518,336 4,988,860 3,989,002 $ 13,492,853 $ 11,756,378 $ 9,468,591 $ 8,603,276 $ 6,743,818 132 Table 5 - Unaudited Fiscal Year 2016 2015 2014 2013 2012 $ 479,395 $ 534,524 $ 413,727 $ 471,299 $ 230,550 306,381 254,381 246,010 233,309 228,392 1,049,735 1,087,642 1,073,015 1,101,864 876,693 656,484 643,146 565,692 560,713 560,055 - - 15,501 - 13,998 217,759 429,390 235,721 289,866 293,519 2,709,754 2,949,083 2,549,666 2,657,051 2,203,207 1,135,357 1,333,189 1,277,660 1,302,441 1,394,844 1,358,071 1,159,472 705,918 712,627 641,450 810,069 712,620 700,751 706,964 419,705 3,303,497 3,205,281 2,684,329 2,722,032 2,455,999 $ 6,013,251 $ 6,154,364 $ 5,233,995 $ 5,379,083 $ 4,659,206 133 CITY OF SEBASTIAN, FLORIDA Tax Revenues by Source Governmental Funds For the Last Ten Fiscal Years (Rate per $1,000 of assessed value) Table 6 - Unaudited Public Property Tax Year Fiscal Year Utility z Taxes 1 Total 2011 2012 $ 2,387,553 $ 3,063,495 $ 5,451,048 2012 2013 2,534,434 3,221,304 5,755,738 2013 2014 2,581,427 3,248,113 5,829,540 2014 2015 2,638,711 3,594,210 6,232,921 2015 2016 2,686,322 3,942,048 6,628,370 2016 2017 2,708,980 4,147,115 6,856,095 2017 2018 2,808,172 4,153,194 6,961,366 2018 2019 2,882,460 4,325,759 7,208,219 2019 2020 2,940,406 4,270,497 7,210,903 2020 2021 3,030,261 4,991,306 8,021,567 Millage Rate 3.3041 3.7166 3.7166 3.8556 3.8556 3.8000 3.4000 3.1514 2.9399 3.1514 1 Property taxes comprise the City's largest and most significant own -source revenue. z Public utility taxes include a 10% tax on electric, water, gas and propane purchases, plus a communication services tax. 134 CITY OF SEBASTIAN, FLORIDA Direct and Overlapping Property Tax Rates For the Last Ten Fiscal Years (Rate per $1,000 of taxable value) Table 7 - Unaudited City Direct Rates Overlapping Rates County School Board Tax Fiscal Basic Debt Total Total Basic Debt ' Year Year Rate service Direct County' Rate Service Total Other Z 2011 2012 3.3041 0.0000 3.3041 6.9590 7.8940 0.3500 8.2440 1.3546 2012 2013 3.7166 0.0000 3.7166 6.2572 7.9230 0.3900 8.3130 1.3546 2013 2014 3.7166 0.0000 3.7166 5.6207 8.1160 - 8.1160 1.7128 2014 2015 3.8556 0.0000 3.8556 5.6868 7.9950 7.9950 1.7126 2015 2016 3.8556 0.0000 3.8556 5.9468 7.9550 7.9550 1.6993 2016 2017 3.8000 0.0000 3.8000 5.9755 7.4100 7.4100 1.5170 2017 2018 3.4000 0.0000 3.4000 6.1214 7.0530 7.0530 1.5390 2018 2019 3.1514 0.0000 3.1514 6.1086 6.7930 6.7930 1.5396 2019 2020 2.9399 0.0000 2.9399 6.1698 6.5690 6.5690 1.4091 2020 2021 3.1514 0.0000 3.1514 5.9006 6.3960 6.3960 1.3929 Note: Tax rates are uniformly applied to taxable values based on a single millage rate determined by each taxing entity. The millage rate is expressed as $1.00 per $1,000 of the taxable value. 1 Millage includes General Fund, MSTUs, Emergency Services District and Land Bonds Z All Special Taxing Districts Source: Indian River County Property Tax Collector's Office 135 CITY OF SEBASTIAN, FLORIDA Actual and Estimated Value of Taxable Property For the Last Ten Fiscal Years Real Property Personal Property Tax Fiscal Assessed Estimated Assessed Estimated Year Year Value Actual Value Value Actual Value 2011 2012 $ 1,392,267,434 $ 1,740,334,293 $ 55,234,086 $ 55,234,086 2012 2013 1,273,059,710 1,591,324,639 48,922,492 48,922,492 2013 2014 1,210,328,690 1,512,910,863 47,410,545 47,410,545 2014 2015 1,267,035,970 1,583,794,963 53,045,209 53,045,209 2015 2016 1,363,105,220 1,703,881,525 55,646,868 55,646,868 2016 2017 1,447,311,640 1,809,139,550 59,305,756 59,305,756 2017 2018 1,578,743,546 1,973,429,433 62,277,711 62,277,711 2018 2019 1,705,459,458 2,131,824,323 66,819,663 66,819,663 2019 2020 1,843,910,442 2,304,888,053 73,492,650 73,492,650 2020 2021 2,089,301,313 2,611,626,641 76,063,937 76,063,937 Source: Indian River County Property Appraiser 136 Table 8 - Unaudited Less: Total Total Total Ratio of Tax -Exempt Taxable Direct Tax Estimated Taxable to Property Value Rate Actual Value Actual Value $ 460,752,786 $ 986,748,734 3.3041 $ 1,795,568,379 55.0% 444,524,142 877,458,060 3.7166 1,640,247,130 53.5% 437,040,114 820,699,121 3.7166 1,560,321,408 52.6% 435,071,311 885,009,868 3.8556 1,636,840,172 54.1% 451,939,888 966,812,200 3.8556 1,759,528,393 55.0% 468,930,126 1,037,687,270 3.8000 1,868,445,306 55.5% 486,428,425 1,154,592,832 3.4000 2,035,707,144 56.7% 509,133,351 1,263,145,770 3.1514 2,198,643,986 57.5% 533,734,358 1,383,688,734 2.9399 2,378,380,703 58.2% 581,830,114 1,583,535,136 3.1514 2,687,690,578 58.9% 137 CITY OF SEBASTIAN, FLORIDA Table 9 - Unaudited Principal Property Taxpayers Current Year and Nine Years Ago 2021 Fiscal Year 2012 Fiscal Year Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Taxpayer Value Rank Value Value Rank Value Florida Power & Light (Utility/Electric) $ 34,056,684 1 2.15 % $ 13,828,553 1 1.40 Comcast of Florida, Inc. (Communications) 12,964,811 2 0.82 - - - Wal-Mart Stores, Inc. (Retail) 8,458,488 3 0.53 8,432,070 2 0.85 Park Place Community, LLC (Rental/Retail) 8,132,074 4 0.51 6,684,799 3 0.68 Sebastian Senior Real Estate, LLC (Group Home) 7,285,194 5 0.46 - - - Hartwell Groves, Inc. (Agriculture) 6,162,609 6 0.39 4,236,520 7 0.43 BW US 1, Inc. (Commercial) 5,310,330 7 0.34 6,147,300 4 0.62 Real Sub, LLC 5,042,390 8 0.32 - - - CSGBSH Sebastian, LLC 5,041,898 9 0.32 MPA Sebastian, LLC 4,981,866 10 0.31 IPF/Sebastian LLC (Retail) - - - 5,214,160 5 0.53 Bellsouth Communications (Utility/Telephone) 5,202,931 6 0.53 Sebastian Medical Suites (Healthcare) 3,891,480 8 0.39 Sebastian Inlet (Restaurant/Hotel) 3,321,780 9 0.34 WinnDixie Shopping Center (Retail) 3,283,720 10 0.33 $ 97,436,344 6.15 % $ 60,243,313 6.10 Total Taxable Value $ 1,583,535,136 $ 986,748,734 Source: Indian River County Property Appraiser 138 CITY OF SEBASTIAN, FLORIDA Property Tax Levies and Collections For the Last Ten Fiscal Years Table 10 - Unaudited Collected within the Fiscal Year of the Levy Total Collections to Date Taxes Levied Delinquent and Tax Fiscal forthe Percentage Penalty Tax Percentage Year Year Fiscal Year Amount of Levy Collections Amount of Levy 2011 2012 $ 3,260,316 $ 2,799,146 96.55% $ 9,279 $ 2,808,425 86.14% 2012 2013 3,261,161 2,947,248 96.63% 7,733 2,954,981 90.61% 2013 2014 3,050,210 2,975,299 96.77% 754 2,976,053 97.57% 2014 2015 3,412,244 3,295,549 96.28% 2,241 3,297,790 96.65% 2015 2016 3,727,641 3,530,235 95.00% 72,789 3,603,024 96.66% 2016 2017 3,943,212 3,726,976 95.00% 77,898 3,804,874 96.49% 2017 2018 3,925,616 3,703,536 94.00% 83,126 3,786,662 96.46% 2018 2019 3,980,678 3,861,686 97.00% 79,857 3,941,543 99.02% 2019 2020 4,067,907 3,791,174 93.00% 76,083 3,867,257 95.07% 2020 2021 4,683,490 4,470,263 95.00% 63,371 4,533,634 96.80% Source: Indian River County Property Appraiser and Department of Revenue, Certification of Final Taxable Value, DR-422. 139 CITY OF SEBASTIAN, FLORIDA Ratios of Outstanding Debt By Type For the Last Ten Fiscal Years Table 11- Unaudited Business -Type Activities Roadway Infrastructure Stormwater Golf Course Total Percentage Fiscal Improvement Sales Tax Utility Revenue Capital Primary of Personal Year Notes Bonds/Noted Bonds/Notes Lease Government Income 2012 $ 2,296,000 $ 5,420,000 $ 3,505,000 $ $ 11,221,000 0.0015% 2013 2,099,000 4,600,000 3,215,000 9,914,000 0.0013% 2014 1,896,000 2,730,000 2,982,000 7,608,000 0.0008% 2015 1,689,000 1,722,000 2,630,000 6,041,000 0.0006% 2016 1,478,000 353,000 2,275,000 4,106,000 0.0003% 2017 1,263,000 - 1,912,000 254,453 3,429,453 0.0003% 2018 1,044,000 1,541,000 206,167 2,791,167 0.0002% 2019 820,000 1,164,000 156,171 2,140,171 0.0002% 2020 591,000 782,000 104,403 1,477,403 0.0002% 2021 358,000 395,000 50,801 803,801 z 1 The Infrastructure Sales Tax and Stormwater Utility Revenue Bonds were refunded in 2014 with Bank Notes. z Information not yet available. Per Capita 510 447 341 267 193 142 113 85 58 38 140 This page intentionally left blank. 141 CITY OF SEBASTIAN, FLORIDA Legal Debt Margin Information For the Last Ten Fiscal Years Legal Debt Margin as a Percentage of Debt Limit Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit Fiscal Year 2021 2020 2019 2018 $ 79,176,757 $ 74,102,711 $ 69,183,437 $ 63,157,289 753,000 1,373,000 1,984,000 2,585,000 $ 78,423,757 $ 72,729,711 $ 67,199,437 $ 60,572,289 Legal Debt Margin Calculation for Fiscal Year 2021 0.95% 1.85% 2.87% 4.09% Assessed value $ 2,165,365,250 Less: Exempt property (581,830,114) Taxable Value 1,583,535,136 Debt limit (5% of taxable value) 79,176,757 Debt applicable to limit: Revenue bonds/notes 753,000 Total net debt applicable to limit 753,000 Legal debt margin $ 78,423,757 Direct and Overlapping Governmental Activities Debt - General Obligations Bonds The City of Sebastian has no overlapping general obligation bonded debt for the year ended September 30, 2021 and only uses Local Option Gas Taxes and Discretionary Sales Taxes to repay the outstanding revenue notes. Property taxes are not used for any debt service payments. 142 Table 13 - Unaudited Fiscal Year 2017 2016 2015 2014 2013 2012 $ 57,729,642 $ 48,340,610 $ 48,340,610 $ 44,250,493 $ 41,034,956 $ 43,872,903 3,175,000 6,041,000 6,041,000 7,608,000 9,914,000 11,221,000 $ 54,554,642 $ 42,299,610 $ 42,299,610 $ 36,642,493 $ 31,120,956 $ 32,651,903 5.50% 12.50% 12.50% 17.19% 24.16% 25.58% 143 CITY OF SEBASTIAN, FLORIDA Pledged Revenue Coverage For the Last Ten Fiscal Years Stormwater Utility Revenue Bonds, Series 2003 Debt Service Table 14 - Unaudited Fiscal Gross Year Revenues' Principal Interest Total Coverage 2012 $ 810,382 $ 280,000 $ 159,248 $ 439,248 1.84 2013 1,007,221 290,000 148,048 438,048 2.30 2014 - - - - - 2015 - - - - - 2016 - - - - - 2017 - - - - - 2018 - - - - - 2019 - - - - - 2020 - - - - - 2021 - - - - - Note: Detail regarding the City's outstanding debt can be found in the notes to the financial statements. 1 Total revenues including charges for services, rents and interest. 2 Required coverage was 1.35. Bank notes were used in 2013 to refund the bonds 144 This page intentionally left blank. 145 CITY OF SEBASTIAN, FLORIDA Demographic and Economic Statistics For the Last Ten Calendar Years Personal Income (thousands Year Population of dollars)' 2012 21,995 $ 7,429,653 $ 2013 22,188 7,731,263 2014 22,296 9,139,902 2015 22,622 10,055,169 2016 23,137 10,380,777 2017 24,192 11,312,198 2018 24,630 11,972,663 2019 25,168 12,924,659 2020 25,658 13,750,177 2021 25,454 4 Per Capita Median Personal Household School Unemployment Income' Income' Enrollment 2 Rate' 52,855 $ 42,638 5,208 11.8 54,448 44,326 6,739 8.8 63,140 47,548 6,034 6.5 68,653 49,887 5,930 6.1 71,181 49,813 6,132 6.2 73,274 51,797 6,122 4.3 76,059 52,243 6,459 3.9 80,818 61,193 6,186 3.2 84,607 72,934 6,118 5.9 4 4 5,868 4.6 Sources: 1 Florida Research & Economic Database (FRED). Information available for Indian River County Only. z Indian River County School Board 3 Indian River County Property Appraiser 4 Information not yet available. Note: School enrollment consists of Sebastian River High School, Sebastian River Middle School, Liberty Magnet, Treasure Coast Elementary, Pelican Island Elementary, Sebastian Elementary, Storm Grove Middle School and Sebastian Charter Junior High School. 146 Table 15 - Unaudited Property Total State Taxes Taxable Unemployment Per Property Rate Capita Value 3 8.6 $ 139.28 $ 986,748,734 6.9 145.18 877,458,060 5.6 145.68 820,699,121 4.8 158.88 885,009,868 4.8 170.38 966,812,200 3.7 171.43 1, 037, 687, 270 3.3 168.62 1,154, 592, 83 2 2.7 173.25 1,263,145,770 7.2 170.40 1, 383, 688, 734 4.8 196.05 1,583,535,136 147 CITY OF SEBASTIAN, FLORIDA Principal Employers Current Year and Nine Years Ago Employer School District of Indian River County (Government) Indian River Medical Center (Healthcare) Indian River County (Government) Publix Supermarkets (Food/Beverage) Piper Aircraft, Inc. (Manufacturer) Wal-Mart (Retail) Sebastian River Medical Center (Healthcare) John's Island (Residential/Resort) Indian River Estates (Retirement/Life care) Visiting Nurse Association (Healthcare) City of Vero Beach (Government) CVS Warehouse/Distribution (Distribution) Disney Vero Beach (Resort Hotel) Saint Edward's School (Education) City of Sebastian (Government) Captain Hirams (Restaurant/Resort) Flight Safety International (Education) B&W Quality Growers (Agricultural) Vero Beach Hotel and Spa Grand Harbor Management (Developer) Medical Data Systems (Collection Agency) Sun Ag, Inc. (Agriculture) Employees 2,121 2,027 1,521 1,380 1,000 806 750 589 486 484 374 336 279 223 179 174 170 142 135 125 2021 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 13,301 Total Average County Employees 65,492 Source: Indian River County Community Development Report. Note: Principal employers information available for Indian River County Only. Percentage of Total County Employment 3.24 % 3.10 2.32 2.11 1.53 1.23 1.15 0.90 0.74 0.74 0.57 0.51 0.43 0.34 0.27 0.27 0.26 0.22 0.21 0.19 0.00 0.00 20.33 Employees 2,013 1,608 1,354 1,006 700 727 569 550 350 399 492 276 281 171 174 168 240 253 175 225 11,731 56,732 Table 16 - Unaudited 2012 Rank 1 2 3 4 6 5 7 8 11 10 9 13 12 19 18 20 15 14 17 16 Percentage of Total County Employment 3.55 % 2.83 2.39 1.77 1.23 1.28 1.00 0.97 0.62 0.70 0.87 0.49 0.50 0.00 0.30 0.31 0.30 0.42 0.00 0.45 0.31 0.40 20.69 148 This page intentionally left blank. 149 CITY OF SEBASTIAN, FLORIDA Full -Time Equivalent City Government Employees By Function/Program For the Last Ten Fiscal Years Full-time Equivalent Employees as of September 30 Function 2021 2020 2019 2018 2017 General government City council 2.5 2.5 2.5 2.5 2.5 City manager 2.0 2.0 2.0 2.0 2.5 City clerk 2.5 2.5 2.5 2.5 2.5 City attorney 1.0 1.0 - - - Administrative Services 6.0 6.0 6.0 6.0 6.0 Management information 5.0 5.0 5.0 5.0 2.0 Audio/visual - - - - 2.5 Facilities maintenance 4.0 4.0 3.0 3.0 2.5 Community development 5.0 5.0 4.0 4.0 3.0 Public safety Police 64.0 64.0 64.0 64.0 57.5 Building 8.5 7.5 7.5 7.5 5.0 Code enforcement 3.0 3.0 3.0 3.0 3.0 Transportation Roads and drainage 10.0 10.0 9.5 9.5 11.5 Fleet management 3.0 3.0 3.5 3.5 3.5 Airport 1.5 1.5 1.5 2.0 3.0 Physical environment Cemetery 2.0 2.0 2.0 2.0 1.5 Stormwater utility 13.5 13.5 14.5 14.5 8.0 Culture and recreation Leisure services 15.0 16.0 21.0 21.0 18.0 Golf course 9.0 9.0 9.0 11.0 13.0 Total 157.5 157.5 160.5 163.0 147.5 Source: City of Sebastian, Florida 2012-2021 Annual Budgets Method: Using 1.0 for each full-time employee and 0.5 for each part-time and seasonal employee. 150 Table 17 - Unaudited Full-time Equivalent Employees as of September 30 2016 2015 2014 2013 2012 2.5 2.5 2.5 2.5 2.5 2.5 2.0 2.0 2.0 2.0 3.0 5.0 5.0 3.0 3.0 4.0 5.5 5.5 5.0 5.0 2.0 2.0 2.0 3.0 3.0 1.0 - - - - 3.5 5.0 5.0 4.0 3.0 2.0 4.0 4.0 3.0 3.0 57.5 57.0 57.0 55.5 55.0 5.0 5.0 5.0 5.0 4.0 3.0 3.0 3.0 3.0 3.0 11.0 10.0 10.0 10.0 10.0 3.5 3.5 3.5 3.5 3.5 1.0 1.0 1.0 2.0 3.0 2.0 2.0 2.0 2.0 1.0 9.0 9.0 9.0 9.0 9.0 19.0 20.0 20.0 20.0 20.0 10.0 10.0 10.0 10.0 10.0 141.5 146.5 146.5 142.5 140.0 151 CITY OF SEBASTIAN, FLORIDA Operating Indicators By Function/Program For the Last Ten Fiscal Years Fiscal Year Function 2021 2020 2019 2018 2017 General government Number of annexations approved 1 Acres of annexed property - - 1,118 - Purchase orders issued 350 350 293 355 289 Public Safety Police Physical arrests 363 397 525 516 356 Traffic violations 2,448 2,350 4,627 3,678 3,192 Parking violations 17 37 30 55 49 Building New construction permits issued 255 178 170 167 147 Estimated value of construction (in millions) $ 649.5 $ 46.9 $ 42.4 $ 39.8 $ 37.2 Transportation Asphalt for road maintenance (tons) 127 64 188 120 20 Physical environment Cemetery Cemetery internments 91 75 74 60 62 Grave deeds sold 61 62 59 30 29 Stormwater Swales maintained (miles) 150 150 150 150 300 Ditches maintained (miles) 80 80 80 80 80 Road crossings maintained 50 50 50 50 70 Culture and recreation Program participants 3,970 4,371 6,823 6,495 6,268 Number of discount cards 711 693 690 643 657 Number of golf course memberships 121 152 134 123 119 Average daily golf revenue $ 4,117 $ 4,179 $ 3,837 $ 3,100 $ 3,100 Sources: City of Sebastian Police Department, Growth Management, Public Works, Golf Course and Building Department. 1 New commercial and residential only. 152 Table 18 - Unaudited Fiscal Year 2016 2015 2014 2013 2012 2 - - - 4.00 - 328 254 242 233 201 258 287 347 440 441 3,065 3,725 4,587 4,491 4,319 73 60 29 80 167 191 142 175 170 66 $ 43.4 $ 40.6 $ 40.0 $ 35.9 $ 14.7 20 10 20 30 50 61 71 67 65 65 39 43 47 38 38 300 300 280 280 280 75 75 50 50 50 68 68 68 50 50 7,280 7,647 7,571 8,113 9,713 631 653 653 710 786 127 93 84 86 88 $ 3,100 $ 3,653 $ 3,500 $ 3,569 $ 3,822 153 CITY OF SEBASTIAN, FLORIDA Capital Asset Statistics By Function/Program For the Last Ten Fiscal Years Fiscal Year Function 2021 2020 2019 2018 2017 General Government Square footage occupied 21,500 21,500 21,500 21,500 21,500 Departmental vehicles 3 3 3 6 6 Public safety Police stations 1 1 1 1 1 Police department Square footage 25,600 25,600 25,600 25,600 25,600 Building department Square footage 2,500 2,500 2,500 2,500 2,500 Police vehicles 78 78 78 71 71 Building inspector vehicles 4 4 4 4 4 Transportation Streets (miles) 156 156 156 156 156 Streetlights 1 1,100 1,100 1,100 1,100 1,100 Airport vehicles 3 3 3 5 4 Public service vehicles 17 17 16 13 12 Physical environment Public service vehicles 18 18 18 18 19 Culture and recreation Parks vehicles 8 8 8 5 5 Recreation centers 2 2 2 2 2 Park acreage 315.01 315.01 315.01 315.01 315.01 Recreation center square footage 4,859 4,859 4,859 4,859 4,859 Park maintenance vehicles 9 9 9 - 12 Golf course vehicles - - - - Sources: City of Sebastian Administrative Services Department and Park and Recreation Division 1 This number represents actual unmetered street lights in the City (source: Florida Power & Light - January billing). 154 Table 19 - Unaudited Fiscal Year 2016 2015 2014 2013 2012 21,500 21,500 21,500 21,500 21,500 4 5 5 6 1 1 1 1 1 1 25,600 25,600 25,600 25,600 25,600 2,500 2,500 2,500 2,500 2,500 70 66 62 61 66 4 4 3 3 3 156 156 156 156 156 1,085 1,085 1,085 1,080 1,228 4 3 1 1 1 12 12 15 17 17 17 17 10 10 9 6 18 18 18 18 2 2 2 2 2 315.01 315.01 315.01 315.01 315.01 4,859 4,859 4,859 4,859 4,859 12 12 9 12 13 1 1 1 155 This page intentionally left blank. 156 INTERNAL CONTROL AND COMPLIANCE 157 This page intentionally left blank. 158 Rehmann INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS February 22, 2022 Honorable Mayor and Members of City Council City of Sebastian 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, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated February 22, 2022. 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 a 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. 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. 159 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the 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. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal 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. LLC 160 Rehmann INDEPENDENT AUDITORS' MANAGEMENT LETTER February 22, 2022 Honorable Mayor and Members of City Council City of Sebastian Sebastian, Florida Report on the Financial Statements We have audited the financial statements of the City of Sebastian, Florida as of and for the fiscal year ended September 30, 2021 and have issued our report thereon dated February 22, 2022. Auditors' Responsibility We conducted our audit in accordance with United States generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Auditor General. Other Reports and Schedule We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, and Independent Accountants' Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated February 22, 2022, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. 161 Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The legal authority for the City of Sebastian, Florida is disclosed in the notes to the financial statements. The City of Sebastian, Florida's component unit, the Police Officer's Pension Plan, was established under Section 58-46 through 58-54 Code of Ordinances in October 1989. Financial Condition and Management Section 10.5S4(1)(i)5.a., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the City of Sebastian, Florida has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specified condition(s) met. In connection with our audit, we determined that the City of Sebastian, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management's responsibility to monitor the City of Sebastian, Florida's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Special District Component Units Section 10.554(1)(i)5.d. Rules of the Auditor General, requires, if appropriate, that we communicate the failure of a special district that is a component unit of a county, municipality, or special district, to provide the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district component units that failed to provide the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes. Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings. 162 Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the City Council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. LLC 163 This page intentionally left blank. 164 Rehmann INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE WITH LOCAL GOVERNMENT INVESTMENT POLICIES February 22, 2022 Honorable Mayor and Members of City Council City of Sebastian Sebastian, Florida We have examined the City of Vero Beach, Florida's (the "City's") compliance with the local government investment policy requirements of Section 218.415, Florida Statutes, during the year ended September 30, 2021. Management of the City is responsible for the City's compliance with the specified requirements. Our responsibility is to express an opinion on the City's compliance with the specified requirements based on our examination. Independent Accountants' Responsibility Our responsibility is to express an opinion on the City's compliance with those requirements based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the City is in compliance with specified requirements established by Florida Statute and performing such procedures as we considered necessary in the circumstances. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the City's compliance with specified requirements. Opinion In our opinion, the City complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2021. Purpose of this Report This report is intended solely for the information of management, the City, the City Council and the Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties. 4&44�14L4-0- LLC 165