HomeMy WebLinkAbout2004 - 2005
em OF
SEBAST~
HOME OF PELICAN ISlAND
1225 MAIN STREET. SEBASTIAN, FLORIDA 32958
TELEPHONE: (772) 589-5330 · FAX (772) 589-5570
To:
Thru:
Honorable Mayor and Council Members
AI Minner, City Manager ~~ A/J.t./J!J//&/l/
Shai Francis, CPA, Director of Financ~'
March 1, 2006
Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2005
From:
Date:
Re:
Enclosed please find the Comprehensive Annual Financial Report (CAFR) for the year October 1, 2004
through September 30,2005.
Your attention is first directed to the Letter of Transmittal starting on page v. This is our transmittal letter
to the City Council summarizing the events of the past year, economic conditions, as well as other
information and major initiatives for the future. The information contained in the transmittal letter should
be read in conjunction with the Managements Discussion and Analysis (MD&A) following the auditor's
report and starting on page 5. All data set forth in the transmittal letter and the MD&A is expanded upon
in greater detail throughout the remainder of the document.
The report provides comparative information regarding net assets as a whole and whether the City is better
or worse off than the prior year. For fiscal year ended September 30, 2005, the MD&A shows that the City
is better off financially than it was a year ago. For FY 2005, the City has implemented Governmental
Accounting Standards Board Statement No. 40 Deposit and Investment Risk Disclosures. The new
requirement addresses common deposit and investment risks related to credit risk, concentration of credit
risk, interest risk, and foreign currency risk. The disclosure starts on page 35.
An Independent Auditor's Management Letter is also included in this report, which starts on page 119. The
letter addresses audit findings along with recommendations from the independent auditor and includes
management responses for the corrective actions to be taken.
A comprehensive annual financial report of this nature could not have been prepared on a timely basis
without the dedicated efforts of all staff members concerned. I would like to thank the entire staff of the
Finance Department for their invaluable assistance in the preparation of this report. As always, it is the
Finance department's goal to provide consistent and effective communication of the financial condition of
the City of Sebastian and believe this CAFR achieves that goal.
In addition, enclosed please find the Auditor's communications letter with the City Council and
Management. If you have any questions, please call me at 388-8205.
.'~''i:4~ HOYMAN, DOBSON & COMPANY, P.A.
';:",,,';:"i~,.;o;',,~. ,",.," "".:;";;;,,,,, CERTIFIED PUBLIC ACCOUNTANTS
---- ~~~~1~~:r.~~~@t;i~~:;sf"~'-'--"-"-~ -,.-,.
275 Bay tree Drive, Melbourne, Florido 32940, 327-255-0088, Fax 321-259-8648, www.hoyman.com
Charles W Hoymon, Jr
Barbara J Oswalt
Thomas L. Kirk
Karen E. Kirkland
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bierning
Honorable Mayor and Members of the City Council
City of Sebastian, Florida
We have audited the financial statements of the City of Sebastian, Florida for the year ended September 30, 2005
and have issued our report thereon dated January 19,2006. Professional standards require that we provide you
with the following information related to our audit.
Our Responsibility under U.S. Generallv Accepted Auditing Standards, OMB Circular A-133 and the Florida
Single Audit Act
As stated in our engagement letter dated June 18, 2001, our responsibility, as described by professional standards,
is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial
statements are free of material misstatements. Because an audit is designed to provide reasonable, but not
absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that
material errors, fraud, or illegal acts, may exist and not be detected by us.
In planning and performing our audit, we considered the City of Sebastian's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the fmancial
statements and not to provide assurance on the internal control over financial reporting. We also considered
internal control over compliance with requirements that could have a direct and material effect on a major federal
program or state project in order to determine our auditing procedures for the purpose of expressing our opinion
on compliance and to test and report on internal control over compliance in accordance with the OMB Circular A-
133 and the Florida Single Audit Act.
As part of obtaining reasonable assurance about whether the City of Sebastian's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts
and grants, noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not an objective of
our audit. Also, in accordance with OMB Circular A-133 and the Florida Single Audit Act, we examined, on a
test basis, evidence about the City of Sebastian's compliance with the types of compliance requirements described
in the Us. Office of Management and Budget (OMB) Circular A-I33 Compliance Supplement applicable to each
of its major federal programs and the Florida Single Audit Act Compliance Supplement applicable to each of its
major state projects for the purpose of expressing an opinion on the City of Sebastian's compliance with those
requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal
determination on the City of Sebastian's compliance with those requirements.
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Honorable Mayor and Members of the City Council
City of Sebastian, Florida
Page Two
Significant Accounting Policies
Management has the responsibility for selection and use of appropriate accounting policies. In accordance with
the terms of our engagement letter, we will advise management about the appropriateness of accounting policies
and their application. The significant accounting policies used by the City of Sebastian are described in Note 1 to
the financial statements. No new accounting policies were adopted and the application of existing policies was not
changed during the year ended September 30, 2005. We noted no transactions entered into by City of Sebastian
during the year that were both significant and unusual, and of which, under professional standards, we are
required to inform you, or transactions for which there is a lack of authoritative guidance or consensus.
Accounting Estimates
Accounting estimates are an integral part of the fmancial statements prepared by management and are based on
management's knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the fmancial statements and
because of the possibility that future events affecting them may differ significantly from those expected. The most
sensitive estimates affecting the financial statements were management's estimate of the useful lives of property
and equipment, which is based on useful lives of similar assets, and management's accruals for compensated
absences, which are based on the termination method. We evaluated key factors and assumptions used to develop
the useful lives in determining they are reasonable in relation to the financial statements taken as a whole. We
also evaluated the key factors and assumptions used to develop the accruals for compensated absences in
determining they are reasonable in relation to the financial statements taken as a whole. The accrual was based on
a three year moving average of actual vacation and sick time used by City employees. The accrual is allocated to
current and long term liabilities.
Audit Adjustments
For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the
financial statements that, in our judgment, may not have been detected except through our auditing procedures.
An audit adjustment mayor may not indicate matters that could have a significant effect on the City of
Sebastian's fmancial reporting process (that is, cause future financial statements to be materially misstated). In
our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the City of Sebastian,
either individually or in the aggregate, indicate matters that could have a significant effect on the City of
Sebastian's financial reporting process. In addition, the attached schedule summarizes uncorrected misstatements
of the financial statements. Management has determined that their effects are immaterial, both individually and in
the aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards defme a disagreement with management as a matter, whether or
not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be
significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements
arose during the course of our audit.
Honorable Mayor and Members of the City Council
City of Sebastian, Florida
Page Three
Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an
accounting principle to the governmental unit's financial statements or a determination of the type of auditor's
opinion that may be expressed on those statements, our professional standards require the consulting accountant
to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
Issues Discussed Prior to Retention of Independent Auditors
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City of Sebastian's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a condition
to our retention.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing our audit.
This information is intended solely for the use of the City Council and management of the City of Sebastian,
Florida, federal and state awarding agencies and the State of Florida Office of the Auditor General and is not
intended to be and should not be used by anyone other than these specified parties.
Very truly yours,
:ft:~~~l~ rf.~ r
January 19,2006
CITY OF SEBASTIAN
Summary of Passed Adjustments
For the Year Ended September 30, 2005
Fund
Golf Course
Description
Record 2005 rent concession liability
Rental Expense
Rent Concession Liability
Status
passed
Debit
Credit
Increase
(Decrease) in
Net Income
$ 20,000
Reverse forgiveness of 2004 rent concession liability
Rental Expense 30,000
Rent Concession Liability 30,000
Effect of audit differences $
passed
Airport
. passed
Record 2004 and 2005 rental income
Receivable
Rental Income
Summary of Audit Differences:
Funds
Golf Course Total liabilities understated
Total liabilities (see Financial Statements)
Understatement as a percentage of liabilities
Total expenses understated
Total expenses (see Financial Statements)
overstatement as a percentage of expenses
Airport
Total assets understated
Total assets (see Financial Statements)
Understatement as a percentage of assets
Total revenue understated
Total revenue (see Financial Statements)
Understatement as a percentage of revenue
20,000
20,000
50,000
50,000
Effect of audit differences
Net effect business type activities $
50,000
1,530,342
3.3%
50,000
1,376,420
3.6%
50,000
9,128,909
0.5%
50,000
434,818
11.5%
30,000
50,000
$
(50,000)
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The aerial photo graph on the cover of these financial
statements views the City of Sebastian's New Municipal Complex
completed in 2005.
The photograph captures the City's new City Hall, the
renovated and expanded Police Department, the new Friendship
Park, a new building to house the Boys and Girls Club of America,
the newly resurfaced Main Street, and the old City Hall building.
In 2006, the old City Hall building hereinafter referred to as
"Old Sebastian Elementary School Rehabilitation Project", with
financial assistance provided from the Department of State, Division
of Historical Resources, will be restored to its original state. This
building will be home to the Sebastian Area Historical Society and
the Sebastian Historical Museum.
III
Aerial photograph provided courtesy of'
Skydive Sebastian of South Florida, Inc.
C ITV 0 F
SEBASTIAN, FLORIDA
CIIT OF
SEBASTIA"
HOME OF PELICAN ISLAND
Comprehensive Annual Financial Report
For the Year Ended September 30, 2005
CITY COUNCIL
1'lathan 1\IlcCollllm...............................1\IlaJror
Brian S. Bllrkeen................................. Vice-1\Ilayor
Lisanne Monier ................................... COllncilmember
Sal1'leglia ............................................. COllncilmember
Andrea COJr .......................................... COllncilmember
Prepared By: Shai Francis, CPA, CGFO
Director of Finance
(lIT OF
EBASTIA
HOME OF PELICAN ISLAND
TillS PAGE INTENTIONALLY LEFT BLANK
INTRODUCTORY SECTION
This section contains the following subsections:
~ Table of Contents
~ Letter of Transmittal
~ Certificate of Achievement for Excellence in Financial
Reporting for the Fiscal Year Ended September 30/
2004
~ Organizational Chart
~ List of Officials
CITY OF SEBASTIAN, FLORIDA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2005
TABLE OF CONTENTS
INTRODUCTORY SECTION Pal!e
T able of Contents........................................................................................................................................... 11
Letter of Transmittal...................................................................................................................................... v
Certificate of Achievement for Excellence in Financial Reporting ............................................................... IX
Organizational Chart.......................................................................................................................... ............ X
List of Officials.............................................................................................................................................. Xl
FINANCIAL SECTION
Independent Auditors' Report ....................................................................................................................... 3
Management's Discussion and Analysis..... ........................................................... ....................................... 5
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets.......................................................................................................................... 15
Statement of Activities ........................................................................................................................... 16
Fund Financial Statements:
Balance Sheet - Governmental Funds .................................................................................................... 18
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds........................................................................................................................... 20
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances
of Governmental Funds to the Statement of Activities ....................................................................... 22
Statement of Net Assets - Proprietary Funds ......................................................................................... 23
Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds .................... 24
Statement of Cash Flows - Proprietary Funds ...................................................................................... 25
Statement of Fiduciary Net Assets - Fiduciary Funds............................................................................ 27
Statement of Changes in Fiduciary Net Assets - Fiduciary Fund .......................................................... 28
Notes to Financial Statements................................................................................................................... 29
Required Supplementary Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- General Fund............................................................................................................................ 49
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Discretionary Sales Tax Special Revenue Fund ...................................................................... 50
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Community Development Block Grant Special Revenue Fund............................................... 51
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Riverfront Redevelopment Agency Special Revenue Fund..................................................... 52
Notes to the Required Supplementary Information - Budget Comparisons .............................................. 53
Police Officers' Pension Plan - Schedule of Contributions from the Employer and other
Contributing Entities.............................................................................................................................. 54
Combinill!! and Individual Fund Statements and Schedules
Combining Balance Sheet - Nonmajor Governmental Funds ....................................................................... 58
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor
Governmental Funds.................................................................................................................................. 62
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Local Option Gas Tax Special Revenue Fund............................................................................. 66
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Recreation Impact Fee Special Revenue Fund ............................................................................ 67
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Stormwater Utility Special Revenue Fund .................................................................................. 68
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Law Enforcement Forfeiture Special Revenue Fund................................................................... 69
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- G.R.E.A.T. Program Special Revenue Fund ............................................................................... 69
11
Pa!!:e
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Stormwater Utility Revenue Bonds 2003 Debt Service Fund ..................................................... 70
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and
Actual- Discretionary Sales Surtax Revenue Bonds 2003 Debt Service Fund......................................... 71
Statement of Changes in Assets and Liabilities - Agency Fund ................................................................... 72
Capital Assets Used in the Operation of Governmental Funds - Comparative
Schedule by Source ................................................................................................................................... 73
Capital Assets Used in the Operation of Governmental Funds - Schedule
by Function and Activity ........................................................................................................................... 74
Capital Assets Used in the Operation of Governmental Funds - Schedule of Changes
by Function and Activity ........................................................................................................................... 75
STATISTICAL SECTION (Unaudited)
Financial Trends
Net assets by Component - Last Five Fiscal Years .................................................................................. 79
Changes in Net Assets - Last Five Fiscal Years ....................................................................................... 80
Fund Balances, Governmental Funds - Last Ten Fiscal Years ................................................................ 82
Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years .............................................. 84
Program Revenues by Function/Program - Last Five Fiscal Years .......................................................... 86
Revenue Capacity
Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years ................................................ 87
Property Tax Rates, Direct and Overlapping Governments - Last Ten Fiscal Years ............................... 88
Assessed Valuation and Estimated True Values of Taxable Property - Last Ten Fiscal Years ............... 90
Principal Taxpayers - Year 2005 and Year 1998 ..................................................................................... 92
Property Tax Levies and Collections - Last Ten Fiscal Years ................................................................. 93
Debt Capacity
Ratios of Outstanding Debt by Type - Last Ten Fiscal Years .................................................................. 94
Computation of Legal Debt Margin - September 30, 2005 ...................................................................... 95
Direct and Overlapping Governmental Activities Debt, General Obligation Bonds -
September 30, 2004 .............................................................................................................................. 95
Ratios of General Bonded Debt Outstanding and Legal Debt Margin - Last Six Fiscal Years ................ 96
Pledged Revenue Coverage - Last Ten Fiscal Years ............................................................................... 98
Economic and Demographic Information
Demographic and Economic Statistics - Last Ten Years ......................................................................... 100
Principal Employers - Year 2004 and Five Years Ago ............................................................................ 102
Operating Information
Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years ........ 103
Operating Indicators by Function/Program - Last Seven Fiscal Years .................................................... 104
Capital Asset Statistics by Function/Program - Last Seven Fiscal Years ................................................ 105
SINGLE AUDIT SECTION
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
Governmental Auditing Standards............................................................................................................. 109
Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Program
and on Internal Control Over Compliance in Accordance with OMB Circular A-133 .............................. III
Schedule of Findings and Questioned Costs - Federal Programs and State Projects .................................... 113
Schedule of Expenditures of Federal Awards and State Financial Assistance .............................................. 117
Independent Auditors' Management Letter ................................................................................................... 121
111
CIIT OF
SEBASTIA
HOME OF PELICAN ISLAND
THIS PAGE INTENTIONALL Y LEFT BLANK
iv
em OF
SEBAST~
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HOME OF PELICAN ISLAND
1225 MAIN STREET. SEBASTIAN, FLORIDA 32958
TELEPHONE: (772) 589-5330 · FAX (772) 589-5570
February 10. 2006
Honorable Mayor and City Council
City of Sebastian. Florida
Dear Council Members:
We are submitting the Comprehensive Annual Financial Report of the City of Sebastian. Florida for the
fiscal year ended September 30, 2005, as prepared by the City's Finance department. State law requires
that every general-purpose local government publish within six months of the close of each fiscal year a
complete set of audited financial statements. This report is published to fulfill that requirement for the
fiscal year ended September 30. 2005.
Management assumes full responsibility for the completeness and reliability of the information
contained in this repol1, based on a comprehensive framework of internal control that it 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 21839. Florida Statutes requires that the financial statements of the City of Sebastian be audited
by a certified public accountant selected by the City Council. The City's independent Certified Public
Accountants. Hoyman, Dobson & Company. P.A, has issued an unqualified ("clean') opinion on the
City of Sebastian's financial statements for the year ended September 30. 2005. The independent
auditors' report is located on page 3 and 4.
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. lt 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.
The City of Sebastian was first incorporated as the Town of Sebastian in 1924. In the late 1950s General
Development Corporation purchased the land from the Mackie family of Miami and began the
development of a planned community that is now the City of Sebastian. The City has a population of
20,048 living in an area of approximately 14.6 square miles. The City is empowered to levy a property
tax on both real and personal propel1y located within its boundaries. It also is empowered by state statute
v
to extend its corporate limits by annexation, which it has done from time to time, The City has seen
rapid growth in the past several years and it is anticipated to continue,
The City is a Florida municipal corporation with a five-member City Council comprised of five council
members. Council members serve a four-year term, Annual elections are held on the second Tuesday in
March 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 operates under a Council-City Manager form of government since 1999.
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, and a general aviation airport.
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 Councilor because the component unit
exclusively serves the City. The blended component units are the Riverfront Redevelopment Agency
and the 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
fund 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 a strong retirement
community. Although the labor force fluctuates, unemployment in the region has been between 4% and
9.7% over the past ten years. Retail sales and the service industries remain the largest sectors of
employment in the Sebastian area. The historical overall unemployment rate for the area over the past
ten years and the projected unemployment rate for the next ten years are greater than that of the State of
Florida. This high number indicates that the influx of residents to the area continues to outpace job
creation. According to the U.S. Census Bureau (2000), 86% of the population age 25 or older are high
school graduates and 23.1 % hold a bachelor's degree or higher. The geographical area of the City of
Sebastian, just north of the Treasure Coast, houses a number of high-tech industries including NASA
and various aerospace industry-related businesses, This attracts a workforce with a higher than average
education and technical skills to the vicinity, The area median age for 2000 was 49.2 per U.S Census
Bureau and median household income for 2003 was $50,900 per the Florida Research & Economic
Database.
The City of Sebastian currently enjoys a favorable economic environment and local indicators (building
permits, both commercial and residential) suggest continued stability.
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
VI
2004. This Infrastructure Sales Surtax is estimated to provide the City in excess of $40 million dollars
over the life of the extension for the City's emergency vehicle and capital improvement needs.
Strong growth in the City continued and has provided the City funding for a high level of services to
City residents and visitors without increasing the property tax millage rate. Property tax revenues
increased 17.4% and the assessed value for real property has increased by 32%, Construction activity in
fiscal year 2005 was strong with 774 permits being issued for construction with a value of $115 million.
Unreserved, undesignated fund balance in the general fund (23.3% of total general fund expenditure
budget) exceeds the policy guidelines set by the Council for budgetary and planning purposes (i.e.,
minimum of 15% of total general fund expenditure budget), In an effort to be more in line with the
adopted policy guideline, the City Council actually has reduced the fiscal year 2006 millage rate by
14.3 %. Two annexations in 2005 added 26 acres of residential land and 3 acres of commercial land. The
new residential land, together with the annexations of 2004 will provide 1148 new homes in Sebastian.
The development of vacant land already in the city limits has resulted in the completion of an apartment
complex containing 150 dwelling units, In addition, a number of commercial projects have been
completed or are under construction, including a major grocery store, a professional building, a medical
office, a service garage, and five contractor-trade building projects, Currently under review are two
banking buildings, two officelretail buildings, and three townhouse developments totaling 244 units. The
annexations will have a significant impact on the property tax base and property tax revenues.
Maior Initiatives
Stormwater - The main focus of stormwater effort expended for the past fiscal year has been on the
City's Stormwater Management Program, including capital projects, maintenance, citizen response and
education, and forward planning. In fiscal year 2005, City Council has reprioritized the stormwater
projects with main focus shifted to Collier Creek Improvements, and reallocated the Stormwater
Revenue Bonds, Series 2003 bond money to be more in line with community needs. In addition, with the
adoption of City Ordinance 05-16 (allows stormwater utility fees to be utilized to fund the General Fund
stormwater operation), the City's ability to deal with stormwater maintenance issues is enhanced,
Traffic & Transportation - Up coming traffic and transportation related projects include major corridor
projects and special programs involving bridges, sidewalks and bike paths, street paving and
maintenance, and forward planning and review, A significant feature of this program is that several
projects (Barber Street Realignment, Laconia Street Extension to CR-51O, Fleming Street Extension to
US 1, and planning and improvements related to CR-512 and CR-510) are being done in a collaborative
working arrangement with Indian River County.
Airport - The Airport is undergoing a reconstruction and economic development revitalization, as a
result of master planning initiatives, primarily funded with Federal Aviation Administration and Florida
State grants. Due to the increase in lease demand, development of a business plan has become critical
for establishing minimum standards and guidelines for both aviation and non-aviation development. The
plan will be completed in March 2006, Staff anticipates this plan will enhance leasehold opportunities.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Sebastian for its
comprehensive annual financial report for the fiscal year ended September 30, 2004. The Certificate of
Achievement 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
va
Achievement, a government must publish an easily readable and efficiently organized comprehensive
annual financial report. This report must satisfy both U.S. generally accepted accounting principles and
applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual 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 Finance
department 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
citi ns of e City of Sebastian. We sincerely appreciate their contributions.
~7r~
Shai L. Francis, CPA, CGFO
Director of Finance
Vlll
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Sebastian,
Florida
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2004
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
~~~~
President
~/~
Executive Director
IX
CITY
CLERK
ADMINISTRATION
SCHOOL RESOURCE
ROAD PATROL
COMMUl'.TIY
POLICING
CODE
ENFORCEMENT
DETECTIVE
SUPPORT
SERVICES
DISPATCH
PROFESSIONAL
ST Af\1>ARDS
SPECIAL
OPERATIONS
CITY OF SEBASTIAN, FLORIDA
ORGANIZATIONAL CHART
CITIZENS OF
SEBASTIAN
CITY COUNCIL
CITY
MANAGER
FL.~ANCE
MANAGEl\IENT
INFOR.I\IA TION
SYSTEM
HUMAN RESOURCES
EN GL.~EERIN G
STORMWA TER
GROWTH
MANAGEMENT
BUILDING
DEPARTMENT
GOLF COURSE
AIRPORT
x
BOARDS &
COMMISSIONS
CITY
ATTORNEY
CEMETERY
BUILDING
l\L.\INTENANCE
CITY OF SEBASTIAN, FLORIDA
CITY OFFICIALS
City Manager
City Clerk
City Attorney
AL MINNER
SALLY A. MAIO, MMC
RICH STRINGER
DEPARTl\tIENT HEADS:
Police Chief
Director of Finance
City Engineer
Public Works Director
Growth Management Director
Building Director
Human Resources Director
Golf Course Director
Airport Director
JAMES A. DAVIS
SHAI L. FRANCIS, CPA, CGFO
DA VID W. FISHER, P,E.
TERR Y HILL
REBECCA GROHALL
WAYNE ESELTINE
JAMES SEXTON
GREG GARDNER
JASON MILEWSKI
Xl
CllY OF
EBASTIA
HOME OF PELICAN ISLAND
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FINANCIAL SECTION
This section contains the following subsections:
~ Independent Auditor's Report
~ Management's Discussion and Analysis
~ Government-wide Financial Statements
~ Fund Financial Statements
~ Notes to Financial Statements
~ Required Supplementary Information
~ Combining and Individual Fund Statements
and Schedules
1
CIIT OF
SEBASTIA
HOME OF PELICAN ISLAND
THIS PAGE INTENTIONALLY LEFT BLANK
2
~-.::A"c HOYMAN, DOBSON & COMPANY, P.A.
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215 Baytree Drive. Melbourne, Florida 32940, 321-255-0088, Fax 327-259-8648, www.hoyman,com
Independent Auditors' Report
Charles W Haymon, J[
Barbaro J Oswell
Thomas L Kirk
Koren E Klfklond
Deborah A. Bradley
D1~ECTO~ EMERITUS
Roger W Dobson
Eugene K Bierning
Honorable Mayor and Members of City Council
City of Sebastian
Sebastian, Florida
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida,
as of and for the year ended September 30, 2005, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the City of
Sebastian, Florida's, management. 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 fmancial audits contained in Government Auditine 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 of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and
the significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our op~ions.
In our opinion, the fmancial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each maj<?r fund,
and the aggregate remaining fund information of the City of Sebastian, Florida, as of September 30, -2005,
and the respective changes in fmancial position and cash flows, where applicable, thereof for the year then
ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards. we have also issued our report dated January 19,2006,
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 the internal control
over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditine Standards and should be considered in assessing the results of our
audit.
The management's discussion and analysis on pages 5-14 and the required supplementary information on
pages 49-54 are not a required part of the basic financial statements but are supplementary information
required by accounting principles generally accepted in the United States of America. , We have applied
certain limited procedures, which consisted principally of inquiries of management regarding. the meth~ of
measurement and presentation of the required supplementary information. However, we dId not audIt the
information and express no opinion on it.
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Honorable Mayor and Members of City Council
City of Sebastian
Page Two
Our audit was conducted for the purpose of forming opinions on the [mancial statements that collectively
comprise the City of Sebastian, Florida's basic [mancial statements. The introductory section, combining
and individual nonmajor fund [mancial statements and statistical tables are presented for purposes of
additional analysis and are not a required part of the basic financial statements. The combining and
individual nonrnajor fund financial statements have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole. The introductory section and statistical tables have not
been subjected to the auditing procedures applied in the audit of the basic [mancial statements and,
accordingly, we express no opinion on them.
The accompanying schedule of expenditures of federal awards and state fmancial assistance is presented for
purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations; and Chapter 10.550 Rules of the
Auditor General, and is also not a required part of the basic financial statements of the City of Sebastian,
Florida, Such information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic
[mancial statements taken as a whole.
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Hoyman, Dobson & Company, P.A.
January 19,2006
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 (beginning
on page v) and the City's financial statements (beginning on page 15).
HIGHLIGHTS
Financial Highlights
· The assets of the City exceeded its liabilities at the close of the fiscal year 2005 by $40.353.192 (net
assets). Of this amount. $9,819.864 (unrestricted net assets) may be used to meet the government's on
going obligations to citizens and creditors.
· The city's total net assets increased by $6.226.370. The increase is mainly attributable to increases in tax
revenues and state shared revenues.
· As of the close of current fiscal year. the City's governmental funds reported combined ending fund
balance of 20,074,635, an increase of $600,973 in comparison with the prior year. Approximately 82% of
this amount, $16,393,329, is available for spending at the City's discretion (unreserved, undesignated
fund balance),
· At the end of the current fiscal year. unreserved, undesignated fund balance for the general fund was
$3,250,980, or a 35% increase from prior year general fund unreserved and undesignated fund balance.
The key factor in this increase was the increase in tax revenue collections.
USING THIS ANNUAL REPORT
The annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of
Activities (on pages 15 and 16) provide information about the activities of the City as a whole and present a
longer-term view of the City's finances. Fund fmancial statements begin on page 18. For governmental
activities. these statements tell how these services were fmanced 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 remaining statements provide financial information
about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the
government.
Reporting the City as a Whole
Our analysis of the City as a whole begins on page 15. One of the most important questions asked about the
City's finances is. "Is the City as a whole better off or worse off as a result of the year's activities?" The
Statement of Net Assets and the Statement of Activities report information about the City as a whole and about its
activities in a way that helps answer this question. These statements include all assets and liabilities using the
accmal basis of aCCOllllting. which is similar to the accounting used in most private-sector companies. All of the
current year's revenues and expenses are taken into account regardless of when cash is received or paid.
These two statements report the City's net assets and changes in them. You can think of the City's net assets -
the difference between assets and liabilities - as one way to measure the City's financial health. or financial
position. Over time, increases or decreases in the City's net assets. is one indicator of whether its financial
5
health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as
changes in the City's property tax base and the condition of the City's roads, to assess the overall health of the
City.
In the Statement of Net Assets and the Statement of Activities, we divide the City into two kinds of activities:
. Governmental activities - Most of the City's basic services are reported here, including the police, public
works, parks and recreation, and general administration. Property taxes, franchise fees, and state shared
revenue finance most of these activities.
. Business-type activities - The City charges a fee to customers to help it cover all or most of the cost of
certain services it provides. The City's Golf Course and Airport are reported here.
Fund Financial Statements
Our analysis of the City's major funds begins on page 18. The fund financial statements provide detailed
information about the most significant funds - not the City as a whole. Some funds are required to be established
by State law and by bond covenants. However, the City Council establishes many other funds to help it control
and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain
taxes, grants, and other money (like the local option gas tax and infrastructure sales surtax (a.k.a. Discretionary
Sales Tax)).
Governmental Funds
Most of the City's basic services are reported in governmental funds, which focus on how money flows into and
out of those funds and the balances left at year-end that are available for spending. These funds are reported using
an accounting method called modified accrual accounting, which measures cash and all other financial assets that
can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the
City's general government operations and the basic services it provides. Governmental fund information helps
you determine whether there are more or fewer financial resources that can be spent in the near future to finance
the City's programs. We describe the relationship (or differences) between governmental activities (reported in
the Statement of Net Assets and the Statement of Activities) and governmental funds in reconciliations at the
bottom of the fund financial statements.
The City maintains seventeen individual governmental funds, Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes
in fund balances for the general fund, discretionary sales tax special revenue fund, community development block
grant special revenue fund, riverfront redevelopment special revenue fund, and stormwater utility improvements
capital project fund, all of which are considered to be major funds. Data from the other twelve governmental
funds are combined into a single, aggregated presentation, Individual fund data for each non major governmental
fund is provided in the form of combining statements begins on page 55.
Annual budgets are adopted for all governmental funds except the capital project funds, which are approved on a
"life ofthe project basis", and the permanent fund, which is not budgeted. The budgetary comparison statements
have been provided for all governmental funds except capital project funds to demonstrate compliance with the
budget.
The basic governmental fund financial statements can be found on pages 18-22 of this report.
Proprietary Funds
When the City charges customers for the services it provides - whether to outside customers or to other units of
the City - these services are generally reported in proprietary funds. Proprietary funds are reported in the same
way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the
6
City's enterprise funds (a component of proprietary funds) are the same as the business-type activities we report
in the government-wide statements but provide more detail and additional information, such as cash flows, for
proprietary funds.
The basic proprietary fund financial statements can be found on page 23-26 of this report.
Fiduciary Funds
The City is the trustee. or fiduciary, for the Police Officers' Pension Plan. The City's fiduciary activities are
reported in separate Statements of Fiduciary Net Assets and Changes in Fiduciary Net Assets on page 27 and 28.
We exclude these activities from the City's other financial statements because the City cannot use these assets to
finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for
their intended purposes.
The City holds deposits for various individuals and businesses for contract performance that are then returned
when the contract has been completed. These deposits are accounted for in an Agency fund, where assets equal
liabilities.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to the financial statements can be found on pages 29-
48 of this report.
Other Information
In addition to the basic financial statements and accompanying notes. this repOlt also presents certain required
supplementary information concerning the City's major funds budget and actual comparison and progress in
funding its obligation to provide pension benefits to its employees, Required supplementary information can be
found on pages 49-54 of this report.
THE CITY AS A WHOLE
Financial Analysis of the City as a Whole
The City's combined net assets increased $6.2 million from $34.1 million to $40.3 million or 15%. Looking at
the net assets and net revenues of the governmental and business-type activities, the increase occurred in both the
governmental-type activities and the business-type activities. Our analysis focuses on net assets (Table I) and
changes in net assets (Table 2) of the City's governmental and business-type activities.
GOVERNMENT-WIDE STATEMENTS
Statement of Net Assets
The following table reflects the condensed Statements of Net Assets:
7
Table 1
Statements of Net Assets
as of September 30, 2005 and 2004
(in thousands)
Governmental Acth'Uies Business-type Activities
2005 2004 2005 2004
$ 22,018 $ 22,069 $ 2,049 $ 3,079 $
30,331 28,114 8,817 6,105
$ 52,349 $ 50,183 $ 10.866 $ 9,184 $
$ 18.385 S 19,561 S 1,440 $ 1,663 $
2.383 2.979 653 1.037
$ 20.768 $ 22.540 $ 2,093 $ 2,700 $
Total Primary Government
2005 2004
24.067 $ 25,148
39.148 34,2]9
63.215 $ 59,367
Current and othcr assets
Capital assets
Total assets
Non-current liabilities
Othcr liabi]itics
Total liabilities
$
21.224
4,016
25,240
19,825
3,036
22,86]
$
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
$ 17,103
5,396
9,082
$ 31.581
$ 16,412
4.060
7,171
$ 27,643
$
$
s
$
20,677
4,566
8,884
34,127
7,460
574
739
8,773
4,265
506
1.713
6,484
24,563
5,970
9,821
40.354
$
$
$
$
For more detail information see the Statement of Net Assets on page 15.
Total net assets of the governmental activities increased from $27.643 million to $31.581 million. Total net assets
for business-type activities increased from $6.484 million to $8.773 million.
The increase in governmental activities capital assets is due to public facilities. transportation, and stormwater and
drainage projects. The decrease in governmental activities non-current liabilities is due to the payment of long-
term debt. The increase in unrestricted net assets is due to the increase in tax revenues. franchise fees, and stale
shared revenues.
The increase in net assets - invested in capital assets of the City's business-type activities is primarily due to the
increase in capital assets funded by the Federal Aviation Administration and the Florida Department of
Transportation for the City's municipal airport,
The following table shows the revenue and expenses of the total primary government.
8
Table 2
Changes in Net Assets
For the Fiscal Years Ended September 30, 2005 and 2004
(in thousands)
Governmental Business-type Total Primal)'
Activities Activities Government
2005 2004 2005 2004 2005 2004
REVEl'llJES
Program revenues:
Charges for services S 2,612 S 2,936 $ 1,817 $ 1,850 $ 4,429 $ 4,786
Operating grants and contributions 2,802 1,145 13 68 2,815 1,213
Capital grants and contributions 1,782 1.354 2,290 2,451 4,072 3,805
General revenues:
Property taxes 4,018 3,421 4,018 3,421
Other taxes 4,719 4.035 4,719 4,035
Intergovernmental 3,024 2,493 3,024 2,493
Other 517 786 46 24 563 810
Total revenues 19,474 16,170 4,166 4,393 23,640 20.563
EXPENSES
General government 3,262 2,415 3,262 2,415
Public safety 4,817 4,502 4,817 4,502
Physical environment 1,284 1,279 1,284 1,279
Transponation 4,035 3,289 4,035 3.289
Economic environment 32 86 32 86
Culture and recreation 1,260 824 1,260 824
Golf Course 1,465 1.527 1,465 1.527
Airpon 519 351 519 351
Interest and fiscal charges 740 722 740 722
Total expenses 15,430 13,117 \,984 1,878 17,414 14,995
Change in net assets before transfers 4.044 3,053 2,182 2,515 6,226 5,568
Transfers ( 107) (446) 107 446
Increase in net assets 3,937 2,607 2,289 2,961 6,226 5,568
Net assets - October I. 2004 27,643 25,036 6,484 3.523 34,127 28,559
Net assets - September 30, 2005 $ 31,580 $ 27,643 $ 8,773 $ 6,484 $ 40,353 $ 34,127
Overall the total revenues increased $3.077 million from the previous year. The total cost of all programs
increased by 16% ($2.419 million), Our analysis below separately considers the operations of governmental and
business-type activities.
Governmental Activities
Governmental activities revenues exceed expenses by $4.044 million. Total revenues increased approximately
$3.304 million from the previous year. Increases in grant revenues are mainly due to reimbursements received
from FEMA and the State for damages caused by Hurricanes Frances and Jeanne, which impacted the City during
the last month of operations in FY 2004. Increase in property values generates an increase in property taxes. The
strong local economy plus population growth of the City contributed to increases in sales taxes and state shared
revenues. Total expenses increased $2.313 million from the previous year. Increased spending was primarily due
to the hurricanes for debris removal, signage replacements, and repair works for public facilities.
9
The following is a graphic illustration of the comparison for governmental activities revenue and expenses.
Gm"ernmental Acthities for Fiscal Year 2005 and Fiscal Year 20O.t
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RevenuelExpense types
102005.20041
Business-type Activities
Revenues of the City's business-type activities (see Table 2) decreased by 5% (a decrease of $0,227 million in
fiscal year 2005 compared to an increase of $L667 million in fiscal year 2004) and expenses rose 5.6%. The
decrease in revenues is mainly due to a decrease in golf course revenues, which is contributed to the hurricanes.
The City's Municipal Airport enjoys a continued interest by the Florida Department of Transportation-Aviation
Section and Federal Aviation Administration to upgrade the airport facilities as evidenced by repeated support via
grant funding. Capital contributions remain constant from prior year, which constitutes a major part of the
program revenues.
Following is a graphic comparison of the City's business-type activities.
Business- T}'pe Acthities Comparison
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10
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, unreserved 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 the City completed the fiscal year, its governmental funds (as presented in the balance sheet on pages 18-19)
reported a combined fund balance of $20 million, which is an increase of $0.5 million over the prior year of $19.5
million. Approximately 81.7% of this total amount ($16.4 million) constitutes unreserved, undesignated fund
balance, which is available for spending at the City's discretion. The remainder of fund balance is reserved or
designated to indicate that it is not available for new spending because it has already been committed 1) to pay
debt service ($233,411), 2) to fund the advances from general fund to airpOIt capital project ($1,000,000), 3) to
fund the building code enforcement reserve ($1,139,289), 4) to generate income to pay for the perpetual care of
the municipal cemetery ($578,367), or 5) for a variety of other restricted or designated purposes ($730,239),
The general fund is the chief operating fund of the City. At the end of the fiscal year, unreserved, undesignated
fund balance of the general fund was $3,250,980, while total fund balance reached $6,103,467. As a measure of
the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to
total fund expenditures, Unreserved, undesignated fund balance represents 25 percent of total general fund
expenditures, while total fund balance represents 47 percent of that same amount.
The fund balance of the City's general fund increased by $988,575 during the current fiscal year, Key factors in
this growth are as follows:
· Tax revenues increased by $710,432. as a result of property value and population increases,
· Franchise fees increased by $115,790, as a result of population increase.
The discretionary sales tax revenue special revenue fund has a total fund balance of $1,279,261, all of which is
unreserved and undesignated. The increase of the total fund balance from prior year ($392,988) is mainly due to
an increase in discretionary sales surtax collection. which is population driven.
The community development block grant special revenue fund has a total fund balance of $52. The purpose of
the fund is to account for the Small Cities reimbursable Grant for infrastructure improvements in the Louisiana
Avenue.
The riverfront redevelopment special revenue fund has a total fund balance of $376,682, all of which is
unreserved and undesignated. The increase of the total fund balance from prior year ($90,825) is mainly due to
property value increases,
The stormwater utility improvements capital project fund has a total fund balance of $5,148,086, all of which
is available for spending at the City's discretion. The decrease of the total fund balance from prior year
($5,359.493) is due to the spend down on debt proceeds of the Stormwater Utility Revenue Bonds, Series 2003.
11
Proprietary Funds
The City's proprietary funds provide the same type of information found 111 the government-wide financial
statements. but in more detail.
Unrestricted net assets of the golf course fund at the end of the fiscal year amounted to $71,534, and those for the
airport fund amounted to $666,985. The golf course fund has a decrease in unrestricted net assets from prior year
($589,543) mainly due to the decrease of golf revenues caused by the hurricanes. The airport fund has a decrease
in unrestricted net assets from prior year ($384,595) mainly due to the construction of airport capital projects.
Other factors concerning the finances of these two funds have already been addressed in the discussion of the
City's business-type activities.
General Fund Budgetary Highlights
Over the course of the fiscal year. the City Council revised the City budget four times. These budget amendments
fall into two categories. The first category includes amendments and supplemental appropriations that were
approved shortly after the beginning of the year and reflect the actual beginning balances (versus the amounts
originally estimated in July 2004). The second category includes the changes that the Council made during the
year to take into account the City's staff restructuring efforts. During the fiscal year. the City amended the
general fund budget in the amount of $2,901,391 for encumbrances carried forward, intergovernmental revenues,
contributions, and insurance reimbursements. Following are the main components of the increase:
· $2,384.195 supplemental appropriation to the public works and engineering departments for the debris
clean up. property damages, and signage repairs costs associated with the two major hurricanes that
impacted the City during the last month of FY 2004.
· $314.520 supplemental appropriation to general fund departments for encumbered amounts and insurance
reimbursements carried forward from the prior fiscal year.
· $117,621 supplemental appropriation to the police department for the pension contribution.
The increase is possible because of revenues received and anticipated to be received. Those revenues included
grant revenues associated with FEMA, State. and Federal Highway Administration for reimbursement of
hurricane costs ($2,384,195), State police pension contributions ($117,621), insurance reimbursements carried
forward from prior fiscal year associated with hurricane damages ($252.067), and the encumbered amount carried
forward from the prior fiscal year ($62,455).
During the fiscal year, total general fund actual revenues exceeded final amended budgetary estimates and total
general fund actual expenditures were less than the final amended budgetary estimates. therefore, eliminating the
need to draw upon existing fund balance.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of fiscal year 2005 the City had $54,944,580 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 $6.847,727, or 14%, over last year.
The following table illustrates the changes in capital assets. See page 38 and page 39 in the notes to the financial
statements for detailed changes in capital assets.
12
Table 3
Governmental Business-type
Activities Activities Totals
2005 2004 2005 2004 2005 2004
Land $ 5.489,774 $ 4,653,603 $ 9,060 $ 9,060 $ 5.498,834 $ 4,662,663
Buildings 9,890,903 2,194,247 1,555,358 1,554,008 11,446,261 3,748,255
Improvements 4,152,943 2,431,270 779,905 710,405 4,932,848 3,141,675
Equipment 6.100,906 5,186.908 585.282 560,111 6.686.188 5,747.019
Infrastructure 17.203,261 15,766.358 3.313.755 2,547,667 20.517.016 18.314.025
Construction-in
Progress 1.006.241 9,769,145 4.857,192 2,714,071 5.863,433 12,483.216
Totals $ 43,844.028 $ 40,00 I ,531 $ 11,lOO,552 $ 8,095,322 $ 54,944,580 $ 48,096,853
Governmental activities had the following major increases during the fiscal year:
. An increase in buildings mainly due to the capitalization of new City Hall Complex project and Police
Department expansion.
· An increase in infrastructure mainly due to the capitalization of Louisiana Avenue improvements project.
. An increase in land mainly due to the capitalization of new City Hall Complex project land
improvements.
· An increase in equipment mainly due to the capitalization of new City Hall Complex project security
system and A V equipment.
Business-type activities had the following major increases during the fiscal year:
· An increase in construction in progress primarily due to the airport administration-building project.
· An increase in infrastructure primarily due to the completion of the airport access road project.
Debt
At September 30, 2005, the City had $19.564.551 in bonds. notes and capital leases outstanding versus
$21.265,049 at September 30,2004 - a decrease of 8% - as shown in the following table:
Tahle 4
Governmental
Activities
2005
2004
B usiness- type
Activities
2005 2004
Totals
2005 2004
Infrastructure sales surtax revenue
bonds. Series 2003 $ 8,490.000 $ 9,015.000
Infrastructure sales surtax revenue
bonds.Series2003A
$
$
$ 8,490.000 $ 9.015.000
2.000,000
2,125.000
2.000.000
2,125.000
Stonnwater utility revenue bonds.
Series 2003 5.290.000 5,525.000
Notes payable (backed by local
option gas tax) 2.004,718 2,209,745
Capital lease obligation (backed
by City) 422.456 550,452
Recreational facilities
improvements and refunding
revenue bonds, series 2001
Totals $ 18.207.174 $ 19,425,197
5.290,000
5,525.000
2,004,718
2,209,745
422.456
550,452
1,357.377
$ 1.357,377
1,839,853
$ 1,839,853
1,357,377
S 19,564,551
1,839,853
$ 21,265.050
13
The decrease in debt is solely attributable to the retirement of debts. The Infrastructure Sales Surtax Revenue
Bonds. Series 2003 and Series 2003A and the Stormwater Utility Revenue Bonds. Series 2003 are insured by
AAA rated insurance agencies. the bonds are all rated AAA. which is the highest rating given by rating agencies.
The City"s Recreational Facilities Improvement and Refunding Revenue Bonds, Series 2001 carries an AAA
rating from Standard & Poor's, a rating it has held since 1992. All of the City's other debt, primarily notes and a
capital lease. are not rated. Other obligations of the City include accrued vacation pay and sick leave.
Additional information on the City's long-term debt can be found on pages 42 through 44 in the notes to the
fmancial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City's elected and appointed officials considered many factors when setting the fiscal year 2006 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 PubIix Supermarket and Wal-Mart Stores. Inc.@ The Indian River County unemployment rate
in 2005 was 4% down from 7.6% in the previous year and down from a high of 11% in 1994. This indicates that
business growth in the area remains strong as evidenced by the construction of several new commercial
establishments in the area, Still, employment in the county fluctuates seasonally due to farm workers. Continued
stability and the increase of annual residential building permits issued provides a trend for steady economic
development in the area.
These indicators were taken into account when adopting the General Fund budget for fiscal year 2006. Amounts
available for appropriation in the General Fund budget are $11,975,141, an increase of 7.7% from the original
fiscal year 2005 budget of $11,121,267 and a decrease of 15% from the final fiscal year 2005 budget. The 7.7%
increase is mainly due to increases in estimated property taxes and public services taxes to be received due to
growth. The 15% decrease from the final fiscal year 2005 budget is mainly due to the hurricane related
expenditures in FY 2005, The City will use the increases in tax revenues to finance programs we currently offer,
as well as. the effect that we expect inflation to have on program costs.
The Golf Course has experienced a decrease in golf revenues in FY 2005 mainly due to the two hurricanes that
impacted the City in the last month of FY 2004. The loss of revenues has caused the City to not meet the
Recreational Facilities Improvement and Refunding Revenue Bonds, Series 200 I bond coverage requirement,
which is the net revenues equal to at least 125% of the annual debt service payment. City staff continues to
monitor the revenue stream and intends to adjust rates whenever necessary to meet the bond coverage
requirement.
REQUEST FOR INFO~1A TION
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 Finance Department at City of
Sebastian. 1225 Main Street. Sebastian, Florida 32958,
14
City of Sebastian, Florida
Statement of Net Assets
September 30, 2005
GOl'ernmental Business-type
Acthritics Actil'ities Total
ASSETS
Cash and cash equivalents $ 76.364 $ 48,603 $ 124,967
Investments 9,938.932 1,215.227 11,154.159
Receivables 1,907,566 165.552 2,073,118
Special assessment receivable 3,849 3,849
Internal balances 35,416 (35,416)
Prepaid items 73.537 1,959 75,496
Inventory 52,011 9.140 61,151
Restricted assets:
Temporarily restricted:
Cash and cash equivalents 272,532 272.532
Investments 8,486,771 574,105 9,060.876
Pennanently restricted:
Investments 502,688 502,688
Overfunded pension costs 122,420 122,420
Deferred charges 545.419 69,485 614.904
Capital assets not being depreciated:
Land 5,489,774 9.060 5,498,834
Construction in progress 1.006,241 4,857,192 5,863.433
Capital assets (net of accumulated depreciation):
Buildings 8,613,768 1.235,507 9.849.275
Improvements other than buildings 3.190,999 566,327 3,757,326
Machinery and equipment 2.126.619 127.656 2.254.275
Infrastructure 9.903.990 2.021,580 11,925.570
Total assets 52.348.896 10.865.977 63,214.873
LL\BILITIES
Accounts payable and other current
liabilities 1.304,908 561.596 1,866.504
Matured bonds payable 900,000 900,000
Accrued interest payable 103,389 103,389
Deferred revenues 75.138 91.269 166.407
Non-current liabilities:
Due within one year 423,384 2,968 426,352
Due in more than one year 17,961,454 1,437.575 19.399.029
Total liabilities 20,768,273 2,093,408 22.861,681
NET ASSETS
Invested in capital assets. net of related debt 17,103,399 7,459.945 24.563,344
Restricted for:
Capital projects 2.354,871 2,354.871
Debt service 233,411 316,690 550,101
Road projects 1,072.900 1.072,900
Perpetual care:
Expendable 75,679 75,679
Nonexpendable 502.688 502.688
Building code enforcement 1.139,289 1,139.289
Other purposes 17,041 257,415 274.456
Unrestricted 9,081,345 738,519 9,819,864
Total net assets $ 31,580,623 $ 8.772.569 $ 40,353.192
The accompanying notes to financial statements are an integral part of this financial statement.
15
City of Sebastian, Florida
Statement of Activities
For the year ended September 30, 2005
Program Revenues
Operating Capiwl
Charges for Grants and Grants and
FunctionlProeram Expenses Sen'ices Contributions Contributions
Governmental activities:
General government $ 3,262,276 $ 370,609 $ 216,918 $
Public safety 4,816,614 1,356.385 146,311 34,861
Physical environment 1,283.889 828.907 67,116 2,798
Transportation 4,034,900 2,038,825 1,354,058
Economic environment 32,128
CulturaUrecreation 1,260,395 56,199 333,341 390,237
Interest and fiscal charges 740,372
Total governmental activities 15,430,574 2,612,100 2,802,511 1,781,954
Business-type activities:
Gol f Course 1,464,532 1,381,817 13,582
Airport 519,235 434,818 2,289,986
Total business-type activities 1,983,767 1,816,635 13,582 2,289,986
Total government $ 17,414,341 $ 4,428,735 $ 2,816,093 $ 4,071,940
General Revenues:
Property taxes, levied for general purposes
Sales and use taxes
Franchise fees
State shared revenues
Interest earnings
Miscellaneous
Total general revenues
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning
Net assets - ending
The accompanying notes to financial statements are an integral part of this financial statement.
16
Net (Expense) Revenue and
Changes in Net Assets
Governmental Business-type
Activities Activities Towl
$ (2,674,749) $ - $ (2,674,749)
(3,279,057) (3,279,057)
(385,068) (385,068)
(642,017) (642.017)
(32.128) (32.128)
(480,618) (480,618)
(740.372) (740,372)
(8.234,009) (8.234.009)
(69,133) (69,133)
2.205.569 2,205.569
2,136,436 2.136,436
(8,234,009) 2.136,436 (6,097.573)
4,017,555 4.017,555
4,718.691 4,718,691
886.390 886,390
2,138.020 2.138.020
398,518 45.709 444.227
118.760 300 119.060
12.277.934 46.009 12.323.943
(106.500) 106,500
12,171,434 152,509 12.323.943
3,937.425 2,288,945 6.226,370
27,643,198 6,483,624 34,126.822
$ 31,580.623 S 8,772,569 $ 40.353,192
17
ASSETS
Cash and cash equivalt:nts
Investments
Accounts receivables
Special assessments receivable
Due from other funds
Due from other governments
Interest receivable
Inventory
Prepaid items
Advance to other funds
Total assets
LIABILITIES ASD Fl':'\D BALA~CES
Liabilities:
Accounts payable S
Retainage payable
Due to other funds
Due to other govel1llTll::nts
Deferred revenues
Total liabilities
Fund balances:
Reserved for:
Advance to other funds
Debt service
Capital projects
Property and casualty
Cemetery care
Law enforcement
Emergency services
Equipment replacement
Building code enforcement
Unreserved:
Designated for employee events
Designated for law enforcement
Undesignated, reported in:
General fund
Special revenue funds
Capital project funds
Total fund balances
Total liabilities and fund balances S
City of Sebastian, Florida
Balance Sheet
Governmental Funds
September 30, 2005
Community
Developmcnt
Block Grant
Gcncral
$
26,269 $
5,587,402
220,085
3,849
244,935
940,128
53.934
52.011
73,537
35,416
7,237,566 S
Discretionary
Sales Tax
Rivcrfront
Rcdevclopment
Stormwater
l: tili t).
I mpro\'cments
26,081
5,117,842
2,798
57,992
1,279,294 S
381,695 S
5.204,713
The accompanying notes to financial statements are an integral part of this financial statement.
s
493,739 S
561,373
78,987
1,134,099
35.416
964,584
100,000
350,000
259.437
1.139.289
1,830
1,931
3,250,980
6,103,467
7,237,566 S
12,673 $
1,015,377
52 $
22,325 $
358,462
249,040
2,204
235,041
56,627
56,627
5,148,086
5,148,086
5,204,713
1,279,261
1,279,294 S
376,682
381,695 S
18
Amounts reported for govemmentaJ activities in the statement of net assets are different because:
Capital assets used in govenunental activities are not financial resources, therefore, are not reported in the funds.
Negative net pension obligation resulting from overfunding of the police officers' pension phUl.
Long-term liabilities are not due tUld payable in the current period and, therefore, are not reported in the funds.
Accrued long term debt interest expenses are not financial uses, therefore, are not reported in the funds.
Special assessment receivables are not fimUlcial resources in the current period, therefore, m'e reported as defen'ed revenues.
Net assets of governmental activities
908
235,093 S
33 S
5,013 S
S
235,041
33
235,041
5,013
1,279,261
52
376,682
52
235,093 S
Other Total
Governmental Governmental
Funds Funds
$ 261,496 S 348,896
6,849,308 18,928,391
900 220,985
3,849
244,935
127,961 1,554,968
16,575 131,613
52,011
183,922 257,459
35,416
S 7,440,162 S 21,778,523
$ 172,190 S 727,602
90,991 90,991
9,894 244,935
561,373
78.987
273,075 1,703,888
35,416
233,411 233,411
964,584
100,000
578,367 578,367
17,041 17,041
350,000
259,437
1,139,289
1.830
1.931
3,250,980
3,079,401 4,735,396
3,258,867 8,406,953
7,167,087 20,074,635
$ 7,440,162
30,331,391
122,420
(18,664,361)
(287,311)
3,849
S 31,580,623
19
City of Sebastian, Florida
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Year Ended September 30, 2005
ConmlUnity Stormwater
Discretionary Development Riverfront Utility
General Sales Tax Block Grant Redevelopment Improvements
REVEi\'l,TES:
Taxes:
Property S 3,729,916 S S S 287,639 $
Public utility 2,005,124
Sales 2,713,567
Motor fuel
Franchise fees 886,390
Licenses and pennits 1,587.675
mtergovernmental 4,773,371 606,640 2,798
Impact fees
Charges for services 116,893
Fines 88,095
Special assessments 11,023
mvestment earnings 88,314 56,225 8,748 118,774
Contributions and donations 25,234
Other revenue 116,195
Total revenues 13,428,230 2,769,792 606,640 296,387 121,572
EXPE!\'DITlJRES:
Current:
General government 2,982,852
Public safety 4,613,389
Physical environment 940,070
Transportation 3,307,923 10,211
Economic environment 32,128
Culture and recreation 1,065,122
Debt Service:
Principal
mterest and fiscal charges
Capital projects 475,769
Total expenditures 12,909,356 10,211 32,128 475,769
Excess (deficiency) of revenues
over (under) expenditures 518,874 2,769,792 596,429 264,259 (354,197)
OTHER Fll\~'\CL"IG
SOURCES (USES)
Transfers in 469,701 21,598 142,790
Transfers out (1,883,519) (596,377)
Total other financing sources (uses) 469,701 (1,883,519) (596,377) 21,598 142,790
Net changes in fund balances 988,575 886,273 52 285,857 (211.407)
Fund balances - beginning 5,114,892 392.988 90,825 5,359,493
Fund balances - ending $ 6,103,467 S 1,279,261 S 52 S 376,682 S 5,148,086
The accompanying notes to financial statements are an integral part of this financial statement.
20
Other
Governmental
Funds
s
747.418
178,886
385,775
819,637
7,604
126.457
2,363
265
2,268,405
Total
Governmental
FWlds
s
4,017,555
2,005,124
2,713,567
747,418
886,390
1,587,675
5,561,695
385,775
936,530
95,699
11,023
398,518
27,597
116,460
19,491,026
2,982,852
19,845 4,633,234
4,564 944,634
326,883 3,645,017
32,128
1,065,122
1,218,023 1,218,023
711,736 711.736
3,075,038 3,550,807
5,356,089 18,783,553
(3,087,684) 707,473
3,111,176 3,745,265
(1,371.869) (3,85 L765)
1.739,307 (106,500)
(1,348,377) 600,973
8,515,464 19,473,662
S 7,167,087 S 20,074,635
21
City of Sebastian, Florida
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
To the Statement of Activities
For the Year Ended September 30, 2005
Net change in fund balances - total governmental funds
Amount reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlay as expenditures. However, in the statement of activities,
the cost of those assets is allocated over their estimated useful lives as depreciation expense.
Governmental funds only report the disposal of assets to the extent proceeds are received from the
sale. In the statement of activities, a gain or loss is reported for each disposal.
Overfunded pension contributions are reported as expenditures in the fund financial statements and
recorded as a net pension asset on the statement of net assets.
Repayment of bond principal, note; principal, and capital lease principal are expenditures in the;
governmental funds, but the; payment reduces long-term liabilities in the statement of net assets.
Some expenses reported in the; statement of activities do not require the use of current I1nancial
resources, therefore, are not reported as expenditures in the governmental funds.
Some revenues reported in the governmental funds have been recognized as revenues in the prior
fiscal year in the statement of activities.
Change in net assets of governme;ntal activities
The accompanying notes to financial statements are an integral part of this financial statement.
22
s
600,973
2.227,074
(9.243)
414
1,218,023
(88,793)
(11,023)
s
3,937,425
City of Sebastian, Florida
Statement of Net Assets
Proprietary Funds
September 30, 2005
Enterprise Funds
Golf Course Airport Totals
ASSETS
Current assets:
Cash and cash equivalents S 1,821 $ 46,782 $ 48.603
Investments 162.182 1,053,045 1,215,227
Restricted cash. cash equivalents and
investments:
Revenue bond covenant accounts 574.105 574,105
Accounts receivable 48 2.175 2.223
Due from other governments 161.776 161,776
Interest receivable 248 1,305 1,553
Inventory 9.140 9,140
Prepaid items 1.575 384 1.959
Total current assets 749,119 1,265,467 2,014,586
Noncurrent assets:
Deferred charges 69,485 69,485
Capital assets:
Land 9.060 9,060
Buildings 334,538 1.220,820 1,555,358
Improvements other than buildings 2 I 6.906 562,999 779.905
Machinery and equipment 336,760 248,522 585.282
Infrastructure 1,616.948 1,696,807 3.313,755
Construction in process 4,857,192 4,857,192
Less accumulated depreciation (1,551,272) (731.958) (2,283,230)
Total noncurrent assets 1,023,365 7,863,442 8,886,807
Total assets 1,772,484 9,128,909 10,901,393
LL\BILITIES
Current liabilities:
Accounts payable 33.240 189,605 222,845
Advance from other fund 35,416 35,416
Due to other governments 9,837 333 10,170
Deferred revenues 86.058 5,211 91,269
Compensated absences 1.159 1,809 2,968
Retainage payable 328.581 328,581
Total currentliabiIities 130.294 560,955 691,249
Non-current liabilities:
Compensated absences 42,671 37.527 80, I 98
Bonds payable (net of unamOltized premium
and deferred amoullt on refunding) 1,357.377 1,357,377
Total non-currellt liabilities 1,400,048 37,527 1,437,575
Total liabilities 1,530,342 598,482 2,128,824
N'ET ASSETS
Invested in capital assets, net of related debt (403,497) 7.863,442 7,459,945
Restricted for:
Debt service 316,690 316,690
Other purposes 257,415 257,415
Unrestricted 71,534 666,985 738.519
Total net assets S 242,142 S 8,530,427 S 8,772,569
The accompanying notes to financial statements are an integral part of this financial statement.
23
City of Sebastian, Florida
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
For the Year Ended September 30, 2005
Enterprise Funds
Golf Course Airport Totals
Operating revenues:
Charges for fees and rents:
Golf course fees pledged as
security for revenue bonds $ 1,341,281 $ $ J,341,281
Rents 22,485 213,174 235,659
Other revenue 18,051 221,644 239,695
Total operating revenues 1,381,817 434,818 1,816,635
Operating expenses:
Salaries, wages and employee benefits 306,448 214,739 521,187
Contractual services, materials and supplies 964,389 111,274 1,075,663
Depreciation 105,583 193,222 298,805
Total operating expenses 1,376,420 519,235 1,895,655
Operating income (loss) 5,397 (84,417) (79,020)
Nonoperating revenues (expenses):
Interest income 24,368 24,368
Interest income pledged as security
for revenue bonds 21,341 21,341
Intergovernmental 13,582 13,582
Gain on disposal of fixed assets 300 300
Interest expense (74,215) (74.215)
Bond amortization expense (13,897) (13,897)
Total nonoperating revenues (expenses) (52,889) 24,368 (28,521)
Loss before capital contJibutions
and transfers (47.492) (60.049) (107,541)
Capital contributions 2,289,986 2,289,986
Transfers in 106,500 106,500
Change in net assets (47,492) 2,336.437 2,288,945
Total net assets - beginning 289,634 6,193,990 6,483,624
Total net assets - ending $ 242,142 $ 8,530,427 $ 8,772.569
The accompanying notes to financial statements are an integral part of this financial statement.
24
The accompanying notes to financial statements are an integral part of this financial statement.
25
City of Sebastian, Florida
Statement of Cash Flows
Proprietary Funds
For the Year Ended September 30, 2005
(Continued)
Enterprise Fund..
Golf Course Airport Totals
Reconciliation of operating income (loss) to
net cash provided (used) by operating activities:
Operating income (loss) $ 5,397 $ (84,417) $ (79,020)
Adjustments to reconcile operating income to net
cash provided (used) by operating activities:
Depreciation expense 105,583 193,222 298.805
(Increase) Decrease in assets:
Accounts receivable 165.661 9,749 175,410
Prepaid expenses (384) (384)
Inventories 49 49
Increase (Decrease) in liabilities:
Accounts payable 14.903 (443,864 ) (428,961)
Due to other governments 8,979 3 8,982
Rent concession liability (30,000) (30.000)
Accrued compensated absences 933 19.269 20.202
Deferred revenues 72,279 (1.608) 70,671
Total adjustments 338,387 (223,613) 114.774
Net cash provided (used) by operating activities $ 343.784 $ (308,030) $ 35.754
Cash and cash equivalents reconciliation:
Current assets:
Cash and cash equivalents S 1,821 $ 46.782 $ 48,603
Investments 162,182 1,053.045 1,215,227
Restricted asset:
Investments 574,105 574,105
Cash and cash equivalents at September 30 S 738.108 $ 1.099,827 $ 1.837.935
The accompanying notes to tinancial statements are an integral part of this financial statement.
26
City of Sebastian, Florida
Statement of Fiduciary Net Assets
Fiduciary Funds
September 30, 2005
Pension
Trust Agency
Police
Officers' Performance
Pension Deposits
ASSETS
Cash and cash equivalents $ 1,247,907 $ 165,340
Receivables:
Interest and dividends 14,296
Total receivables 1,262,203 165,340
Investments, at fair value:
U.S. government obligations 86,639
Federal agency notes 179,038
Federal agencies - mortgage back 708,638
Common stock 1.916,702
Total investments 2,891,017
Total assets 4,153,220 165,340
LIABILITIES
Refunds payable 165,340
Total liabilities 165,340
!'o"ET ASSETS
Held in tnlSt for pension benefits S 4,153,220 $
The accompanying notes to financial statements are an integral part of this financial statement.
27
City of Sebastian, Florida
Statement of Changes in Fiduciary Net Assets
Fiduciary Fund - Pension Trust
For the Year Ended September 30, 2005
Police
Officers'
Pension
ADDITIONS
Contributions:
Employer
Plan members
State
Net investment earnings
S 240,166
81,626
117,621
439,413
203,012
116,086
319,098
(18,136)
300,962
740,375
Total contributions
Investment earnings:
Net increase in fair value of investments
Interest and dividends
Total investment earnings
Less investment expenses
Total additions
DEDUCTIONS
Net assets - beginning of year
86,761
18,081
7,721
112,563
627,812
3,525,408
$ 4,153,220
Benefits
Refunded contributions
Administrative expenses
Total deductions
Change in net assets
Net assets - end of year
The accompanying notes to financial statements are an integral part of this fin~mcial statement.
28
City of Sebastian, Florida
Notes to the Financial Statements
September 30, 2005
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Sebastian (the "City"), a Florida Municipal Corporation, was incorporated in 1924 under Sections 1826- ~832 of the Revi~ed
Florida Statutes. The City has a population of approximately 20,048 living in an area of approximately 14.6 square miles. The governmg
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 U.S. generally accepted accounting principles as applied to
governmental units. The more signiticant of the City's accounting policies are described below:
A. Reportine Entitv
In evaluating the City as a reporting entity, management has included all component units in accordance with Governmental
Accounting Standards Board (GASB) Statement No. 14, "Defining the Financial Reporting Entity". The Financial Reporting Entity
consists of the City of Sebastian (the primary government) and its blended component units. Blended component units are legally
separate organizations for which the City Council is financially accountable. The component units discussed below are included in
the City's reporting entity.
Blended Component Units
The following component units 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 or because the component unit exclusively serves the City. The
financial statements of these component units may be obtained from the Finance Department of the City of Sebastian.
Community Redevelopment Agency (CRA) - The governing body of the CRA is the Sebastian City Council. 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 is broader than a non-major fund.
City of Sebastian Police Officers' Pension Plan - The City Council only appoints two of the five members of the governing board,
but it is financially responsible for funding the police officers' pension benefits. The City of Sebastian Police Officers' Pension Trust
Fund only exists to provide pension benefits to City of Sebastian police officers. It is accounted for as a Pension Trust fund entitled
"Police Officers' Pension".
B. Government-wide and fund financial statements
The government-wide financial statements (Le., the statement of net assets and the statement of changes in net assets) report
information on all of the nonfiduciary activities of the primary government and its blended component units. For the most part, the
effect ofinterfund 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.
Separate fund financial statements are provided for governmental funds, proprietary funds. and tiduciary 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 tlle fund financial statements.
GASB Statement No. 34 Basic Financial Statements and Management Discussion and Analvsis for State and Local Governments sets
forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the
governmental and enterprise funds combined) for the determination of major funds. The nonmajor funds are combined in a column
in the fund financial statements and detailed in the combining section.
C. Measurement Focus. Basis of Accountine. and Financial Statement Presentation
1. Economic Resources Measurement Focus and Accrual Basis of Accountine
The government-wide financial statements are reported using the economic resources measurelllellt focus and the accrual basis
of accounting, as are the proprietary fund and fiduciary fund financial statements. This means that revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash t10ws. 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.
29
In applying the "susceptible to accrual"' concept to intergovernmental revenues pursuant to GASB Statement No. 33, Accounting
and Financial ReDorting for Nonexchange Transactions as amended by GASB Statement No. 36. Recioient Reoorting of Certain
Shared Nonexchange Revenues (the City may act as either provider or recipient), the provider should recognize liabilities and
expenses and the recipient should recognize receivables and revenue when the applicable eligibility requirements including time
requirements. are met Resources transmitted before the eligibility requirements are met should, under most circumstances, be
reported as advances by the provider and deferred revenue by the recipient.
Private-sector standards of accounting and financial reporting issued prior to December I, 1989, generally are followed in both
the government-wide and proprietary fund financial statements to the extent that those standards do not contlict with or
contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following
subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The
government has elected not to follow subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by
program revenues. Direct e:cpenses are those that are clearly identifiable with a specific function or segment. Program
revenlles 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 revenlles.
Proprietary funds distinguish operating revenues and e.xpenses 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 golf course fund are charges to customers for sales and services and
for the airport fund lease revenue. Operating expenses for enterprise funds include 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.
The agency fund reports only assets and liabilities; therefore, it does not have a measurement focus. However. it uses the accrual
basis of accounting to recognize receivables and payables.
2. Modified Accrual
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. "Available" means
collectible within thc current period or soon enough thereafter to be used to pay liabilities of the current period. For this
purpose. the City considers revenues to be available if they are collected within sixty (60) days of the end of the current fiscal
period except grant revenues. The City considers grant revenues to be available if they are collected within one year of the end
of the current fiscal period. All material revenues, except for occupational licenses and property taxes, are considered
measurable and available and are thus susceptible to accrual. Occupational licenses are not considered available since neither a
legally enforceable claim exists nor were the related services provided before October I, 2004. Expenditures are generally
recognized under the modified accrual basis of accounting when the related fund liability is incurred, if measurable. An
exception to this general rule is principal and interest on general long-term obligations, which are recognized when due.
Property taxes, public utility taxes. tranchise fees, sales and fuel taxes, licenses, and interest associated with the current tiscal
period are all considered to be susceptible to accrual and so have been recognized a~ revenues in the current fiscal period. Only
the ponion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as
revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received
by the City.
The government reports the following major governmental funds:
The general fund is the government's primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
The discretionary sales tax fimd accounts for the financial resources used for infrastructure improvements
and equipment purchases.
The eOlllmunity redevelopment block grant fimd accounts for the Small Cities Grant for infrastructure
improvements in the Louisiana Avenue area of the City.
The riverfront redevelopment fimd accounts for tax increment revenues that are legally restricted for the
redevelopment of the City's riverfront area.
30
The storllll\'ater /Ifility improvements fimd accounts for the resources associated with debt and stormwater
assessment fees for the purpose of constructing stormwater related improvements.
The government reports the following major proprietary funds:
The golf course fUlld accounts for the activities of the municipal golf course.
The airporlfillld accounts for the activities of the municipality's general aviation airport.
Additionally. the government reports the following fund types:
The pension In/sl fimd accounts for the activities of the Police Officer's Retirement System, which
accumulates resources for pension benefit payments to qualified police officers.
The performance deposits fimd accounts for deposits placed by bidders and developers to guarantee
performance pursuant to bid or contract and for deposits for use of City owned buildings and parks to
guarantee performance pursuant to contract. These funds are held by the City as agent for individuals and
businesses.
D. Assets. Liabilities and Fund Eauitv
1. Cash and cash equivalents
Cash and cash equivalents represents all investments that are short term, highly liquid, and readily convertible to a specified
cash value. These investments generally have original maturities of three months or less. Cash equivalents consist of cash in
banks and on hand.
2. Investments
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 (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.
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 Slate and the fair value of the
position in the pool is the same as the value of the pool share. Investment earnings of the Pool 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. Except for
the Pool, investments, including the Police Officers' Pension Fund, are reported at their fair value based on the quoted market
price or the best available information.
3. Interfund Receivables and Pavables
During the course of operations, transactions occur between individual funds that may result in amounts owed between funds.
Short-term interfund loans are reported as "due to and from other funds". Due to and from other funds are eliminated in the
Statement of Net Assets. There were no interfund loans between the Governmental funds and Proprietary funds as of September
30, 2005.
Advances between funds, as reported in the fund financial statements, arc offset by a fund balance reserve account in applicable
governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.
As of September 30, 2005, the General Fund has an advance to the Airport Capital Project Fund in the amount of $35,4 I 6. The
advance is a loan authorized by the City Council to the Airport Capital Project Fund for capital improvements.
4. Receivables
Receivables consist of trade receivables, due from other governments and interest receivable (see Note IV.C. on page 37 for
detail) and are recorded at the net realizable value. The Cily, as of September 30, 2005, has no allowance for doubtful accounts,
since all receivables are considered collectible.
5. Inventorv and Preoaid Items
Inventory is 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 Lime the individual inventory items are consumed.
Invemory in the Golf Course fund consists of supplies held for resale.
Certain payments to vendors reflect costs applicable to future accounting periods and arc recorded as prepaid items in both
government-wide and fund financial statements.
31
6. Restricted Assets
Certain net assets of the City are classified as restricted assets on the statement of net assets because their use is limited either by
law through constitutional provision or enabling legislation: or by restrictions imposed externally by creditors, grantors,
contributors. or laws or regulations of other governments. In a fund with both restricted and unrestricted assets, qualified
expenses are considered to be paid first from restricted net assets and then from unrestricted net assets.
7. Capital Assets
Capital assets. which include land, buildings, imprO\ements, equipment, and infrastructure assets (e.g., roads, bridges,
sidewalks, and similar items), are reponed 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 fair
market value 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.
All infrastructure assets acquired prior to the implementation of GASB Statement 34 were capitalized as projects and were
completed or assets were acquired. Therefore. the initial capitalization of general infrastructure assets was not necessary.
Capital asset depreciation is recognized using the straight-line method over the estimated useful lives as follows:
Classification Range of Lives
Buildings and improvements 10-40 years
Public domain infrastructure 40-50 years
System infrastructure 15-30 years
Improvements other than buildings 10-40 years
Machinery. equipment and other 5-15 ycars
Airport runways 20 years
8. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave benefits and are accounted
for using the termination payment method. All vacation and sick leave amounts are accrued in the government-wide and
proprietary financial statements. A liability for these amounts is reponed in governmental funds only if they have matured. for
example, as a result of employee resignations and retirements.
9. Lon!!- Term Liabilities
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 assets. Bond premiums and discounts. as well as issuance costs, are deferred and
amonized over the life of the bonds using the straight-line method. Bonds payable are recorded net of the applicable bond
premium or discount. Bond issuance costs are reponed as deferred charges and amortized over the life of the related debt. In
the fund financial statements, governmental fund types recognize bond premium and discounts, as well as debt issuance costs,
during the current period. The face amount of debt issued is reponed as other financing sources. Premiums received on debt
issuances are reponed as other financing sources while discounts on debt issuances are reponed as other financing uses.
Issuance costs. whether or not withheld from the actual debt proceeds received. are reported as debt service expenditures.
10. Fund EQuity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for
appropriation or are legally restricted by outside parties for use for a specific purpose. The nature and purpose of these rescrves
are explained as follows:
Reservedfor advance to other fllnds - represents long-term interfund loan.
Reserved for debt service - represents, in accordance with legal restrictions, amounts for payment of
principal and interest maturing in later years.
Reservedfor capital projects - represents amounts restricted for capital projects.
Reserved for property and casllalty - represents amounts restricted for property and casually claims.
Reservedfor cemetery care - represents amounts restricted for use in ccmetery maintenance.
Reserved for law enforcement - represents. in accordance with State Statutes, funds required to be spent
on drug education and awareness activities.
Reserved for emergency services - represents amount restricted for natural disasters.
Reserved for eqllipment replacement - represents amounts restricted for the replacement of capital assets.
Reserved for blli/ding code enforcement - represents, in accordance with Florida Statutes, amount
restricted to be spent on building code enforcement.
32
Designations of unreserved fund balances are not required by law or accounting principles, but are further classifications of fund
equity to identify funds that are not earmarked for specific purposes.
II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
A. Exulanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement
of Net Assets
The governmental fund balance sheet includes a reconciliation between ftllld balance-TOtal govemmelllal funds and net assets-
govemmental activities as reported in the government-wide statement of net assets.
"Total fund balances" of the City's governmental funds ($20,074,635) differs from "net assets" of governmental acl1vltles
($31.580,623) reported in the statement of net assets. This difference primarily results from the long-term economic focus of the
statement of net assets versus the current financial resources focus of the governmental fund balance sheet. The effect of the
differences is illustrated below.
Caoital related items
When capital assets (property, plant, equipment) that are to be used in the governmental activities are purchased or constructed, the
cost of those assets are reported as expenditures in governmental funds. However, the statement of net assets included those capital
assets among the assets of the City as a whole.
Cost of capital assets
Accumulated depreciation
Total
$ 43,844,028
(13.512.637)
$ 30.331.391
Net oension obligation
When net pension obligation is a negative amount. the amount is presented as an asset on the statement of net assets.
Negative net pension obligation
$
122 420
Lonl!-terrn debt transactions
Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and accordingly
are not reported as fund liabilities (both current and long-term) are reported in the statement of net assets. Balances at September 30,
2005 were:
Bonds payable:
Infrastructure sales surtax revenue bonds,
Series 2003
Less: Deferred charge for issuance costs
$(8.490,000)
243.663
$(8,246,337)
Infrastructure sales surtax revenue bonds,
Series 2003A
Less: Deferred charge for issuance costs
(2,000,000)
95.321
(1.904,679)
Stonnwater utility revenue bonds,
Series 2003
Less: Deferred charge for issuance costs
Less: Deferred charge for bond discounts
(5,290,000)
182,185
13.748
(5,094.067)
Notes payable
Less: Deferred charge for issuance costs
(2,004,718)
5,979
( I. 998. 739)
Capital lease payable
Less: Deferred charge for issuance costs
(422.456)
4,523
(417,933)
Compensated absences
Total
(1.002.606)
$(] 8 664 36 \)
Accrued interest
Accrued liabilities in the statement of net assets differs from the amount reported in governmental funds due to accrued interest on
bonds payable. notes payable, and capital lease.
Bonds
Notes
Capital lease
Total
$ (268,077)
(8.344)
( 10.890)
$ (287 3 \1)
33
Deferred revenues
Deferred revenues in the statement of net assets differ from lhe amount reported in the governmental funds due to special assessment
receivables. Governmental fund financial statements report unearned revenues or revenues which are measurable but not available as
deferred revenues. However, deferred revenues in governmemal funds are susceptible to full accrual on governmem-wide financial
statements.
Deferred revenues reduced
$
3.849
B. Explanation of Differences Bctwcen the Go\'crnmental Fund Statcment of Rcvenues. Expcnditurcs. and Chanees
in Fund Balances and the Govcrnment-wide Statement of Activitics
The "net change in fund balances" for governmemal funds ($600,973) differs from the "change in net assets" for governmental
activities ($3,937,425) reported in the statement of activities. The differences arise primarily from the long-term economic focus of
the statement of activities versus the current financial resources focus of the governmental funds. The effect of the differences is
illustrated below.
Capital related items
When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those
assets are reported as expenditures in governmental funds, However. in the statement of activities, the costs of those assets is
allocated over their estimated useful lives and reported as depreciation expense. As a result. fund balances decrease by the amount of
financial resources expended, whereas net assets decrease by the amount of depreciation expense charged for the year.
Capital outlay
Depreciation expense
Difference
$ 3,980,918
(1.753.844)
$ 2227.074
In the statement of activities, only the gain and loss on the sale of capital assets are reported. However, in the governmental funds, the
proceeds from the sale increase financial resources.
Loss on sale of fixed assets
$
(9.243)
Pension obligation
When net pension obligation is a negative amount, the amount represents over funding and reduces the expenses in the statement of
activities.
Increase in negative net pension obligation
$
414
Long-term debt transactions
Repayments of bond principal, notes payable principal, and capital lease principal are reported as expenditures in the governmental
funds and. thus, have the effect of reducing fund balance because current financial resources have been used. However, the principal
payments reduce the liabilities in the statement of net assets and do not result in an expense in the statement of activities.
Bond principal paymem made
Notes payable principal payment made
Capital lease principal payment made
Total
$ 885,000
205.027
127.996
$ 1218023
Some expenses reported in the statement of activities do not require the use of current linancial resources, therefore, are not reported
as expenditures in governmental funds.
Net change in compensated absences
Net accrued bond interest expense
Net accrued notes interest expense
Net accrued capital lease interest expense
Amortization of issuance costs
Net adjustment
$
(60,157)
8,459
853
3,300
(41.248)
(88.793)
$
SDecial assessment revenues
Revenues collected on special assessments are reported in the governmental funds. However, in the statement of activities, the
assessment revenues are recognized when they are earned.
Special assessment revenues
$
(l1.023)
34
III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budl!etarv Information
Budgets are prepared annually on a modilied accrual basis with encumbrance accounting for all governmemal 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 latcr 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. Debt Service, and Capital Projects 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. (See page 49 through page 53)
IV. DETAIL NOTES ON ALL FUNDS
A. Deposits
At September 30,2005, the carrying amount of the City of Sebastian's deposits with banks was $559,861 and the bank balance was
$541.693. 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.
B. 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 to protect
City's cash and investment assets. The City maintains a common cash and investment pool for the use of all funds. Pension Trust
Funds are held with third party trustees and are governed by rules established by Florida Statute Chapter 185.
As of September 30, 2005. the City had the following investments and effective duration presented in terms of years:
Investment Maturitv (Year)
Investment Tvoe Fair Value Less Than 1 From 1-3 From 4-6 Over 7
Go\'crnmcnt-wide
U.S Agencies $ 4,428.760 $ S 4,428,760 $ $
Guaranteed investment contract 5.529.185 5,529,185
Cenifieate of deposit 1.500.000 1,500.000
Local government surplus fund trust
fund investment pool 9.259,778 9,259,778
20,717,723 16,288,963 4,428,760
Fiducial")' Funds
United States Treasuries 86.639 86,639
United States Agencies 179.038 71.438 107,600
Domestic corporate bonds 708,638 708,638
Domestic corporate equities 1,916.702 1,916,702
2,891,017 1.916,702 71,438 902,877
Total fair value $ 23,608,740 $ 18,205,665 $ 4,428,760 $ 71.438 $ 902,877
Investment holdings consist of $4,428.760 in direct obligations of the United States Treasury Securities and Federal instrumentalities
which are 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 are held in trust by the City's bank depository in the City's name.
Section 218.415, Florida Statutes. limits the types ofinvestrnents that the City can invest in unless specially authorized in the City's
investment policy. The City has a formal investment policy that allows for the following investments: Florida Local Government
35
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 andlor 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.
Interest receivable on the government-wide and fiduciary investment portfolios amounted to $]33,166 and $14,296. respectively, as
of September 30, 2005.
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.
Included in the government-wide investment portfolio, the City has 54,428,760 in Federal Instrumentalities that have embedded
options consisting of the option at the discretion of the issuer to call their obligation or pay a stated increase in the interest rate. These
securities have different call dates, and mature on January 2007, May 2007, and May 2008.
Credit Risk
The City investment policy permits for investments in the folloViing investments, which arc limited to credit quality ratings from
nationally recognized agencies as follows:
Mutual funds shall be rated "m" or hAAm-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-]" by Moody's
Investors Services and "A-]" Standard & Poor's. Commercial paper of any United States company that is rated, at the time of
purchase, "Prime-I" by Moody's and "A-I" by Standard & Poor's (prime commercial paper). Corporate notes issued by corporations
organized and operating within the United States or by depository institutions licensed by the United States that have a long term debt
rating, at the time of purchase, at a minimum "Aa" by Moody's and a minimum long term debt rating of "A A" by Standard & Poor's.
As of September 30, 2005, the City's investment securities were all individually rated AAA by Standard & Poor's and Aaa by
Moody's Investor Services.
The City's $9,259,778 investment deposit in the Local Government Surplus Funds Trust Fund investment pool was unrated as of
September 30, 2005.
The City's $5,529,185 guaranteed investment contract represents the investment of construction funds, which has a term appropriate
to the need for funds and in accordance with debt covenants. The investment contract is with Citigroup, which is AallAA-rated
Company. The investment was unrated as of September 30, 2005.
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. The allowable investment instruments include United States Government Obligations, Certificates of
Deposit. and Repurchase Agreements with major money center banks. Commercial Paper rated A-I by Standard & Poor's or P-I by
Moody's or better, with the exception of the custodian's savings account. In addition, common stocks and equity securities having
prospects of attractive returns from a combination of appreciation are also allowed.
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,
As of September 30, 2005, the City's investment portfolio was held with a third-party custodian as required by the City's investment
policy.
36
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% limits on individual issuers, 50% of available funds may be
invested in repurchase agreements excluding one (I) business day agreements and overnight sweep agreements with a 25% limit on
anyone 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 funds 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 perfonnance.
A maximum of 100% of available funds may be invested in fixed income securities and a maximum of 50% of available funds may
be invested in equity securities.
As of September 30, 2005, the City had the following issuer concentration based on fair value:
Government-wide Fiduciary Funds
Percentage of Percentage of
Issuer Amount Portfolio Amount Portfolio
Local government surplus funds trust
fund rSBA") S 9.259.778 44.69% $ 0.00%
United States Treasuries 0.00% 86,639 3.00%
United States Agencies 4,428,760 21.38% 179.038 6.19%
Guaranteed investment contract 5,529,185 26.69% 0.00%
Certi ficate 0 f deposit 1,500.000 7.24% 0.00%
Domestic corporate bonds 0.00% 708,638 24.51%
Domestic corporate equities 0.00% 1,916,702 66.30%
Total S 20,717,723 100.00% $ 2,891,017 100.00%
C. Receivable and Payable Balances
Receivables
Receivables at September 30, 2005 were as follows:
Due From
Other
Interest Accounts Governments Total
Governmental activities:
General $ 53,934 $ 220,085 $ 940,128 $ 1,214,147
Discretionary sales tax 2,204 249,040 251,244
Community Development Block Grant 235,041 235,041
Riverfront redevelopment 908 908
Stonnwater utility improvements 57,992 2.798 60,790
Other governmental 16,575 900 127.961 145,436
Total - governmental activities S 131,613 $ 220,985 S 1,554,968 $ 1,907.566
Business-type activities:
Golf course $ 248 $ 48 $ $ 296
Airport 1,305 2,175 161,776 165.256
Total - business-type activities $ 1,553 $ 2,223 $ 161,776 $ 165,552
All receivables are anticipated to be collected.
37
Payables
Payables at September 30, 2005 were as follows:
Salaries Due to
and Other
Vendors Retainage Benefi ts Government Total
Governmental activities:
General $ 162,516 $ $ 331,223 $ 486,315 S 980,054
Discretionary sales tax 33 33
Riverfront redevelopment 5,013 5,013
Stormwater utility improvements 56,627 56,627
Other governmental 172,190 90,991 263,181
Total - governmental activities $ 396.379 $ 90,991 $ 331,223 $ 486,315 $ 1.304,908
Business-type activities:
Golf course $ 23,945 $ $ 9,295 $ 9,837 $ 43,077
Airport 183,493 328,581 6,112 333 518,519
Total - business-type activities $ 207,438 S 328,581 $ 15,407 $ 10,170 $ 561,596
Governmental funds report deferred revellue in connection with receivables for revenues that are not considered to be available to
liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have
been received, but not yet earned. At September 30, 2005, the various components of deferred revenue and ulleamed revellue
reponed in the governmental funds were as follows:
Unavailable Deferred
Special assessments not yet due (General fund) $ 3,849 $
Occupational licenses received in advance (General Fund) 75,138
Total deferred/unearned revenue for governmental funds $ 3,849 $ 75,138
D. Capital Assets
Capital asset activity for the year ended September 30, 2005 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Go\'ernmental activities:
Capital assets, not being depreciated:
Land $ 4,653,603 $ 836,171 $ $ 5.489,774
Construction in progress 9.769,145 558,374 (9,321,278) 1,006,241
Total capital assets, not being depreciated 14,422,748 1,394,545 (9,321,278) 6,496,015
Capital assets, being depreciated:
Buildings 2,194,247 7,756,421 (59,765) 9,890,903
Improvements other than buildings 2,431,270 1,725,695 (4,022) 4,152,943
Machinery and equipment 5,186,908 1,021,316 (107,318) 6,100,906
Infrastructure 15,766,358 1,436,903 17,203,261
Total capital assets being depreciated 25,578,783 1l,940,335 (171,105) 37,348,013
Less accumulated depreciation for:
Buildings (1,050,758) (249,131) 22,754 (1,277,135)
Improvements other than buildings (826,247) (138,476) 2,779 (961,944)
Machinery and equipment (3,313,539) (764,393) 103,645 (3,974,287)
Infrastructure (6,697,427) (601,844) (7,299,271)
Total accumulated depreciation (11,887,971) (1,753,844) 129,178 (13,512,637)
Total capital assets, being depreciated, net 13,690,812 10, ] 86,491 (41,927) 23,835,376
Governmental activities capital assets, net $ 28, I ]3,560 $ 11,581,036 $ (9,363,205) $ 30,331,391
38
Beginning Ending
Balance Increases Decreases Balance
Business-type activities:
Capital assets, not being depreciated:
Land $ 9,060 $ $ $ 9,060
Construction in progress 2,7]4,071 2,909,209 (766,088) 4,857,192
Total capital assets, not being depreciated 2,723,131 2,909,209 (766,088) 4,866,252
Capital assets, being depreciated:
Buildings 1,554,008 1,350 1,555,358
Improvements other than buildings 710,405 69,500 779,905
Machinery and equipment 560,111 35,754 (10,583) 585,282
Infrastructure 2,547,667 766,088 3,313,755
Total capital assets being depreciated 5,372,191 872,692 (10,583) 6,234,300
Less accumulated depreciation for:
Buildings (280,036) (39,815) (319,851)
Improvements other than buildings (170,478) (43,100) (213,578)
Machinery and equipment (403,483) (60,226) 6.083 (457,626)
Infrastructure (1,136,511) (155,664) (1,292,175)
Total accumulated depreciation (1,990.508) (298,805) 6,083 (2,283,230)
Total capital assets, being depreciated. net 3,381,683 573,887 (4,500) 3,951,070
Business-type activities capital assets, net $ 6,104,814 $ 3,483,096 $ (770,588) $ 8,817,322
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
General government
Public safety
Transportation
Physical environment
Cultural and recreation
Total depreciation expense-governmental activities
Business-type activities:
Golf Course
Airport
Total depreciation expense-business-type activities
$
367,306
383,567
454,147
326,315
222,509
1,753,844
$
$
105,583
193,222
298,805
$
Construction Commitments
The government has active construction projects as of September 30, 2005. The projects include construction of municipal airport
administration building and rehabilitation of Municipal Airport runway and taxiway.
Remaining Major
Proiect Spent-to date Commitment Funding Source
Rehab Runway 9-27 Phase II $ 1,133,399 $ 180,803 FAA Grant
Municipal airport administration building 1,168,112 850,493 FOOT Grant
Rehabilitate taxiway A 1,440,937 29,889 FAA Grant
Total $ 3.742,448 $ 1,061,185
39
E. Interfund Balances
Interfund balances at September 30, 2005 consisted of the following amount:
Due to General Fund from:
Nonmajor governmental funds:
G.R.E.A.T. Program Fund
Community Development Block Grant
Total
$ 9,894
235,041
$ 244,935
The balance of $244,935 due to the general fund from the G.R.E.A.T. Program Fund and Community Development Block Grant
Fund represents short-term cash loans that will be repaid within the next twelve months.
F. Interfund Transfers
Transfers are used to I) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget
requires to expend them, 2) utilize unrestricted revenues collected in the General fund to finance various programs accounted for in
other funds in accordance with budgetary authorizations, and 3) utilize discretionary sales tax revenues for infrastructure
improvements and equipment purchases which must be accounted for in other funds. Following is a schedule of Interfund Transfers:
Transfers In
Transfers Out:
Community Development Block Grant
Discretionary sales tax fund
Nonmajor governmental funds
Total transfers out
General
Fund
$
279,013
190,688
$ 469,701
Stormwater
Utility
Improvements Riverfront
Fund Redevelopment
Nonmajor
Governmental
Funds
Airport
Capital
Project
Fund Total
$ $ 596,377
\06,500 1,883,519
1,371,869
$ \06,500 $ 3,851,765
$ $ $ 596,377
1,498,006
142,790 21,598 1.016,793
$ 142,790 $ 21,598 $ 3,111,176
G. Leases
1. Operatinl! Leases-Lessee
The City is obligated under certain leases for land and golf carts accounted for as operating leases. Operating leases do not give rise
to property rights or lease obligations. Total costs for such leases were $172,250 for the fiscal year ended September 30, 2005. The
following is a schedule by years for future minimum rental payments required under operating leases in the Golf Course Proprietary
fund that have initial or remaining noncancelable lease terms in excess of one year as of September 30, 2005:
Golf Course
Golf
Year Endin!! Seotember 30. to: Airport Carts
2006 $ 175,000 $ 52,250
2007 175,000 \07.988
2008 175,000
2009 175,000
2010 175,000
2011-2015 1,250,000
Totals $ 2,125,000 $ 160,238
2. Capital Leases-Lessee
The City has entered into a lease agreement as lessee for financing the acquisition of heavy construction equipment for its public
works department. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the
present value of its future minimum lease payments as of the inception dare.
The property being leased is included in the statement of net assets governmental activities column and has a cost of $859,859 and a
carrying value of $420,209. For fiscal year 2005, total depreciation expense for the leased equipment is $100,342. The assets
acquired through the capital lease are as follows:
40
Activities
Asset:
Machinery and equipment
Less: Accumulated depreciation
Total
$
$
859,859
(439,650)
420,209
The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2005 were as
follows:
Year Endilll! SePtember 30.
2006
2007
2008
Total minimum lease payments
Less: amount representing interest
Present value of minimum lease payments
3. Operatinl! Leases-Lessor
Governmental
Activities
$
154,693
154,694
154,694
464,081
(41,625)
422,456
$
The City is the lessor of two communication tower leases \\~th lease terms of twenty-five years. Following is a schedule by year of
minimum future rental income on noncancelable operating leases:
Year Ending SePtembcr 30.
2006
2007
2008
2009
2010
2011-2015
2016-2020
2021-2025
TOlal minimum future rentals
Governmental
Activities
$
34,965
35,833
39,135
40,073
41,049
229,947
277,041
259,419
957,462
$
The airport is the lessor of various properties (land with a cost basis of $9,060) with lease terms varying from twenty to thirty years.
Following is a schedule by year of minimum future rental income on noncancelable operating leases:
Y ear Endilll~ SePtember 30,
2006
2007
2008
2009
2010
2011-2015
2016-2020
2021-2025
2026-2030
2031-2035
TOlal minimum future rentals
41
Business-type
Activities
$ 276,355
278,214
280,129
282,102
284,134
1,828,343
576,922
627.756
705,906
607,733
$ 5,747,594
H. Lone:-term Oblie:ations
1. Revenue Bonds/Notes
Revenue bonds/notes are secured by and payable from the revenues of the respective funds that issued them.
a. The City entered into a fifteen (15) year loan agreement in 1998 with a local bank for S3,268,890 to provide financing to
repave certain roads in the City. The City pledged Local Option Gas Tax and Municipal Gas Tax to repay the note payable.
The funds are accumulated in the Local Option Gas Tax Special Revenue fund for repayment of principal and interest.
b. The City issued a ten (10) year, S2,435,Ooo Recreational Facilities Improvement and Refunding Revenue Bonds, Series
2001 in March 2001. The City has pledged Golf Course revenues along with a covenant to budget and appropriate for
repayment of principal and interest.
c. The City issued a fifteen (15) year, $9,500,000 Infrastructure Sales Surtax Revenue Bonds, Series 2003 in April 2003. The
City has pledged Infrastructure Sales Surtax revenues for repayment of principal and interest.
d. The City issued a fifteen (15) year, S2,125,000 Infrastructure Sales Surtax Revenue Bonds, Series 2003A in December
2003. The City has pledged Infrastructure Sales Surtax revenues for repayment of principal and interest.
e. The City issued a nineteen (19) year, S5.630.0OO $tonnwater Utility Revenue Bonds, Series 2003 in November 2003. The
City has pledged Stonnwater Fee Revenues along with a covenant to budget and appropriate for repayment of principal and
interest.
2. Bond Coverae:c
a. The City has covenanted in the Recreational Facilities Improvement and Refunding Revenue Bonds, Series 2001 Bond
Resolution to fix, establish and maintain such rates, fees, rentals and other charges and collect such fees, rates, rentals, and
other charges for the product, services. facilities and use of its facilities, and revise the same from time to time, whenever
necessary, as will always provide in each fiscal year net revenues equal to at least one hundred twenty-five percent (125%)
of the annual debt service becoming due in such fiscal year.
The following table indicates the degree of compliance with the bond resolution covenants in the Golf Course Fund at
September 30,2005.
Gross revenues available for compliance (charges
for services. interest, and rent revenues)
Opearting and maintenance
expenses (excluding depreciation expense, amortization,
airport lease payment, and one time hurricane repair
expenses)
Amount of revenue over
direct operating expenses
S 1,395,436
1,023,002
Debt service requirement
Percent coverage for the year
ended September 30, 2005
$ 372.434
S 306,690
121%
City management continues to monitor the Golf Course operation and intends to adjust rates whenever necessary to meet
the bond coverage requirement.
b. The City has covenanted in the Stonnwater Utility Revenue Bonds. Series 2003 Bond Resolution to fix, establish, maintain
and collect stonnwater fees, and revise the same from time to time whenever necessary, so as to always provide in each
fiscal year stormwater fee revenues and investment earnings equal to at least one hundred thirty-five percent (135%) of the
annual debt service becoming due in each fiscal year.
42
The following table indicates the degree of compliance with the bond resolution covenants in the storm water utility fund at
September 30, 2005.
Gross revenues available for compliance $ 792,886
Debt service requirement $ 441,673
Percent coverage for the year
ended September 30, 2004 180%
3. Chanees in Lone-term Liabilities
The following is a summary of changes in Long-Term Liabilities of the City for the year ended September 30,2005:
Beginning Ending Due within
Balance Additions Reductions Balance One Year
Governmental activities:
Bonds payable:
Infrastructure Sales Surtax Revenue
Bonds, Series 2003 S 9,015,000 S S 525,000 S 8,490,000 S 535,000
Infrastructure Sales Sunax Revenue
Bonds, Series 2003A 2,125,000 125,000 2,000,000 130,000
Stonnwater Utility Revenue Bonds,
Series 2003 5,525,000 235,000 5,290,000 235,000
Total bonds payable 16,665,000 885,000 15,780,000 900,000
Notes payable 2,209,745 205,027 2,004,718 214,122
Capital leases 550,452 127,996 422,456 134,204
Compensated absences 1,020,961 658,899 602,196 1,077,664 75,058
Governmental activity
long-tenn liabilites $ 20,446,158 S 658,899 S 1,820,219 S 19,284,838 S 1,323,384
Beginning Ending Due within
Balance Additions Reductions Balance One Year
Business-type activities:
Bonds payable:
Recreational Facilities Improvement and
Refunding Revenue Bonds, Series 200 I $ 1,885,000 $ $ 490,000 S 1,395,000 $
Less deferred amount:
Issuance premium 4,785 798 3,987
Loss on refunding (49,932) (8,322) (41,610)
Total bonds payable 1,839,853 482,476 1,357,377
Compensated absences 62,964 55,264 35,062 83,166 2,968
Business-type activity
long-tenn liabilites $ 1,902,817 S 55,264 $ 517,538 S 1,440,543 $ 2,968
For the governmental activities, compensated absences are generally liquidated by the general fund.
43
4. Debt Service Requirements to 1\Iaturitv
The annual requirement to amortize all bonded debt outstanding at September 30, 2005, including interest requirements, is as
follows:
Governmental Activities
Roadway InfrdStructure Infrastructure Stormwater
Improvement SalesSunax SalesSunax Utility
Note Revenue Bonds, Revenue Bonds, Revenue Bonds,
Fiscal Payable Series 2003 Series 2003A Series 2003
Year 4.40% Interest 2% to 4.125% In terest 2% to 4% In teres t 2% to 4.5% Interest
2006 S 214,121 S 85,879 $ 535,000 $ 298,356 $ 130,000 $ 69,488 $ 235,000 $ 201.973
2007 223,647 76,353 550,000 286,319 130,000 66,888 240,000 197.272
2008 233,596 66,404 565,000 269,819 135,000 63,800 245,000 191,873
2009 243,987 56,013 585,000 252,869 ] 35,000 60,088 255,000 185,135
2010 254,841 45,159 600,000 233,856 145,000 56,037 260,000 177 ,485
2011-2015 834,526 65,474 3,335,000 844,348 780,000 201,987 1,460,000 737,788
2016-2020 2.320,000 190,274 545,000 44,000 1,775,000 423,335
2021.2022 820,000 55,800
S 2,004,718 $ 395,282 $ 8,490,000 $ 2,375,841 $ 2,000,000 $ 562,288 $ 5,290,000 $ 2, ] 70,661
Business-type Activities
Golf Course
Refunding
Bonds,
Fiscal Series 200 1
Year 4% to 4.2% Interest
2006* $ S 28,345
2007 255,000 51.590
2008 270,000 41,090
2009 280,000 30,090
2010 290,000 18.545
2011 300,000 6,300
Less unamortized
Bond premium 3,987
Loss on refundil (41,610)
$ 1,357,377 S 175,960
*principal ($250,000) and interest ($33,345) due on October I, 2005 was paid on September 30, 2005.
I. Restricted Assets:
Certain cash and claims to cash, that are legally restricted, have been shown as restricted in the statement of net assets as follows:
Govermental Business-type
Activities Activities
233,411 $ 316,690
1,072,900
2,354,871
1,139,289
Debt service
Road paving
Capital projects
Building code enforcement
Renewal and replacement
Rent
Cemetery perpetual care
Law enforcement
Total
$
82,415
175,000
$
578,367
17,041
5,395,879
$
574,105
44
V. OTHER INFORMA nON
A. Property Tax
The City is permiued 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, 2005. was 4.5904 mills. Total tax collections were approximately 99.6% 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 Iiened on
property values as of January I. The tiscal year for which taxes are levied begins October I. Taxes are due November 1 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.
B. Grants from Other Governmental Units
Federal, State and local government grants represent an important source of supplementary funding used to finance infrastructure,
recreation, law enforcement. and environmental activities beneficial to the community. These grants are recorded in the General,
Special Revenue. Capital Project, and Enterprise funds. A grant receivable is recorded when the City has a right to reimbursement
and expects to receive the grant within a year under the related grant- The grants normally specify the purpose for which the funds
may be used and are subject to audit by the grantor agency or its representative.
The following is the amount of grant revenue for fiscal year 2005.
Primary Government
General government
Public safety
Physical environment
Transportation
Cultural/Recreation
Airport
Golf course
Total reporting entity
Amount
$ 202.753
167,740
69,914
2,645,465
337,803
2,289,986
13.582
$ 5.727,243
C. Police Pension Plan - Defined Benefit 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 report dated October 11,2005. 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.
Employee membership data as of the actuarial report for period ending October 1,2004, dated October 11,2005 is as follows:
Police Pension
Plan 2004
Retirees and beneficiaries currently
receiving benefits
Terminated employees entitled to
refund of employee contribution
but not yet recei ved
Fully, partially, and non-vested
active plan participants
Total
3
.n
.II
Benefit Provisions and Contribll1ion ReqlliremeTl1s. The Police Officers' Pension Plan provides retirement and disability benelits 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, arc
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.
Fllnding Policy. The employer. employee, and State contribution requirements are applicable to the Plan and actuarially determined
on a bi-annual basis in accordance with Florida State Statute. Administration costs of the pension plan are financed by the Plan. The
employee contribution rate, expressed as a percentage of compensation, was 5.0% for the 2004-2005 fiscal year. The employer
contribution rate, expressed as a percentage of compensation, was 13.1 % for the 2004-2005 fiscal year. The employer contribution is
$240,166 and the State contribution is $1 I7 ,621, which represents state shared revenue that is levied on property and casualty
insurance premiums and collected by the State. The State contribution was recognized and recorded in the general fund and the
45
corresponding expenditure was recorded as public safety expenditure. The City is required to contribute the remaining amounts to
ensure that the Plan is actuarially sound.
Required trend information for the Police Officers' Pension Plan was as follows:
Amount
Actuariallv Determined Contribution
2002
2003
2004
$ 0
$ 140,721
$ 173,025
Percenta2e of APC contributed
2002
2003
2004
100.00%
109.00%
101.00%
Since the employer contribution exceeded the annual pension costs, there is no net pension obligation for the plan.
The annual required contribution for the Police Officers' Pension Plan was determined as pan of the October 1, 2004, actuarial
valuation using the aggregate actuarial cost method. This method does not identify or separately amortize unfunded actuarial accrued
liabilities. The actuarial assumptions included (a) an 8.0% rate of return (net of administrative costs) and (b) projected salary
increases of 6% per year, including inflation at 3%. There is no unfunded actuarial accrued liability as of September 30, 2005.
Reserves. All of the net assets of the Police Pension Plan are legally reserved for plan participant benefits.
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 /0 Vallie Investme1l1S and Concentration of 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.
Development of Net Pension Obligation (NPO)
This municipal Defined Benefit Plan has been subject to the minimum funding standards since the adoption of the "Florida Protection
of Public Employee Retirement Benefit Act" (Part VII of Chapter 112, Florida Statutes) in 1980. Accordingly, the sponsor has
funded the actuarially determined required contributions for all years from October I, 1987, through the transition date, October I,
1997. Thus, the NPO on October I, 1997, is $0.
The development of the Net Pension Obligation as of September 30, 2004 is as follows:
9/3012002 9/30/2003 9/3012004
Actuarially Determined Contribution (A) $ S 140,721 S 173,025
Interest on NPO (8,268) (8,867) (9.760)
Adjustment to (A) 9,402 10,083 11,100
Annual Pension Cost 1,134 141,937 174,365
Contributions made 8,620 153,111 174,780
Increase in NPO (7,486) (11,174) (415)
NPO beginning of year (103,346) (110,832) (122,006)
NPO end of year $ (110,832) S (122,006) S (122,421)
46
D. CW A I ITU Nc!otiated Pension Plan - Defined Benefit Plan
Plan Descriplion: The CWA/ITU Negotiated Pension Plan (NPP), which began in 1967, is a multi-employer, defined benefit plan.
The Plan is available to any Communication Workers of America (CW A) bargaining unit member, and benefits are portable from one
contributing employer to another.
Benefits
Normal Pension: Minimum age 65: 5 years of Service Credit required if any portion of service credit was earned after January I,
1989. 10 years of Service Credit required if employees' coverage ended before January I, 1989. Once the Service Credit amount is
accrued, the employee is vested and cannot lose the right to a pension.
Early Pension: Minimum age 60: 20 years of Service Credit required if employed after January 1, 1989. 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 five 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 is in receipt of a Social Security Disability A ward and is vested, but not immediately
eligible to receive any pension described above, the employee may be eligible for a lump sum equal to total contributions credited on
the employees behalf (or 36 times the Normal Pension amount, if greater). If the employee is immediately eligible for a pension but
not yet receiving one, the employee can still qualify for a lump sum if the employee submits two physicians' written statements that
the disability will lead to death within one year of the date of application.
Death Benefit: If the employee dies before becoming a pensioner and has at lease $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.
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.
Benefil Provisions and COlllribulion Requiremellls: 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 CW A contract, effective date October I, 2003, which is negotiated every 3 years, and approved by City Council.
Funding Policy: Administration costs of the pension plan are financed by the plan. The employer contribution rate, expressed as a
percentage of compensation. was 9.00% for the 2004-2005 fiscal year. Employees do not contribute to this plan. Contributions to the
CW A Pension Plan for the fiscal years ended September 30, 2003, 2004 and 2005 were $190.422, $205,056, and $216,464
respectively, which are equal to 100% of the required contribution for each year.
E. 401 Plan - Defined Contribution Plan
Plan Descriplion: 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 of the City of Sebastian, and may be rolled over to another "qualified" employer plan that accepts rollovers, or
Traditional IRA 's.
Benefits
Periodic Payments: Retirement benefits can be paid monthly, quarterly, semi-annual (at six-month intervals only) or annual
payments until assets are fully paid out.
Rollover: Retirement benefits can be rolled over to another employer plan (including a 457 deferred compensation plan) that accepts
roll overs, or to a Traditional IRA.
Lump Sum: Retirement benefits can 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 Conlribwion Reql/iremellls: 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 1,2003. and approved by the City Manager.
47
Funding Policy: Administration costs of the pension plan are financed by the Plan. The employer contribution rate, expressed as a
percentage of compensation, was 9.00% for the 2004-2005 fiscal year. Employees do not contribute to this Plan. Contributions to
the 40 I Detined Contribution Plan for the fiscal years ended September 30, 2003. 2004 and 2005 were $113.653. $125,745, and
$146,840 respectively. which are equal to 100% of the required contribution for each year.
F. Insurance
The City is exposed to various risks of loss related to torts; theft of or damage to and destruction of assets; en'ors and omissions; and
natural disasters. The City purchases commercial insurance with various deductiblcs for different types of losses. The cost of this
insurance is accounted for in the general fund, golf course fund and airport fund. Settled claims have not exceeded this commercial
coverage in the past three liscal years.
G. Subsequent Events
On January 11,2006. City Council approved the cancellation of an agreement with E & D Contracting for the Historic School House
Renovation Project. The total project was estimated to be $736,400. The cancellation was due to the inability of E&D Contracting to
obtain a state contractor's license.
In October 2005, the City was impacted by hurricane Wilma. The total financial impact is estimated to be approximately $220,000.
On October I, 2005, the building department has been reclassified as an enterprise fund of the City. The building department's
residual operating fund balance $1,139,289 has been restricted in the statement of net assets.
48
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
General Fund
For the Year Ended September 30, 2005
Actual Variance with
Budget Amounts Amounts on Final Budget.
a Budgetary Positive
Original Final Basis (Negative)
REVEl'oo"UES:
Taxes:
Property S 3,744,564 S 3,744,564 S 3,729,916 S (14,648)
Public utility 1,978,986 1,978,986 2,005,124 26,138
Franchise fees 844,293 844,293 886,390 42,097
Licenses and pemlits 1,317,494 1,321,494 1,587,675 266,181
Intergovernmental 1,929,834 4,464,266 4,773,37] 309,105
Charges for services 174,937 187,425 116,893 (70,532)
Fines 118,615 118,615 88,095 (30,520)
Special assessments 11,023 11,023
Investment earnings 102,844 102,844 88,314 (14,530)
Contributions and donations 18, ()()() 28,700 25,234 (3,466)
Other revenue 47,747 52,956 116,195 63,239
Total revenues 10,277,314 12,844,143 13,428,230 584,087
EXPENDITURES:
Current:
General government 2,553,711 3,207,665 3,008,791 198,874
Public safety 4,571,364 4,891,841 4,634,723 257,118
Physical environment 1,187,595 1,230,452 944,570 285,882
Transportation \'702,228 3,445,058 3,284,226 160,832
Culture and recreation 936,369 1,191.993 1,055,222 136,771
Total expenditures 10,951,267 13,967,009 12,927,532 1,039,477
Excess (deficiency) ofrevenues
over (under) expendittrres (673,953) (1,122,866) 500,698 1.623,564
OTHER FINANCING
SOURCES (USES)
Transfers in 527,828 547,870 469,701 (78,169)
Transfers out
Total other financing sources (uses) 527,828 547,870 469,701 (78,169)
Net changes in fund balances (146,125) (574.996) 970,399 1.545.395
Fund balances - beginning 5,114,892 5,114,892 5,114,892
Fund balances - ending S 4,968,767 S 4,539,896 6,085,291 S 1,545,395
Explanation of differences:
Encumbrances for equipment and supplies ordered but not received are reported in the year
the orders are placed for budgetary purposes, but are reported in the year the equipment and
supplies are received for GAAP purposes.
Current year encumbrances 81,153
Prior year encumbrances (62,977)
Amount reported as ending fund balance in the statement of revenues, expenditures and
changes in fund balance for the General Fund. $ 6,103,467
The accompanying notes to required supplementary information are an integral part of this schedule.
49
City of Sebastian, Florida
Schedule of Revenue, Expenditures, and Changes in Fund Balances - Budget and Actual
Discretionary Sales Tax Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Budget Amounts Amounts on Final Budget.
a Budgetary Positiye
Original Final Basis (~egatiYe)
REVE~LJES:
Taxes:
Sales $ 2.250,000 $ 2,250,000 S 2,713,567 S 463,567
Investment earnings 15,000 15,000 56,225 41,225
Total revenues 2,265,000 2,265,000 2,769,792 504,792
OTllER HNANCING USES
Transfers out (2,027,596) (2,197,463) (1,883,519) 313,944
Net changes in fund balances 237,404 67,537 886,273 818,736
Fund balances - beginning 392,988 392,988 392,988
Fund balances - ending S 630,392 $ 460,525 $ 1,279,261 $ 818,736
The accompanying notes to required supplementary information are an integral part of this schedule.
50
City of Sebastian, Florida
Schedule of Revenue, Expenditures, and Changes in Fund Balances - Budget and Actual
Community Development Block Grant Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Budget Amounts Amounts on Final Budget -
a Budgetary Positive
Original Final Basis (Negath'e)
REVE!'.'UES:
Intergovernmental $ 636,699 $ 636,699 $ 606,640 $ (30,059)
Total revenues 636,699 636,699 606.640 (30,059)
EXPENDITURES:
Current:
Transponation 40,322 40,322 34,211 6,1 I I
Total expenditures 40,322 40,322 34,211 6,111
Excess (deficiency) of revenues
over (under) expenditures 596,377 596,377 572,429 (23,948)
OTHER FINANCING USES
Transfers out (596,377) (596,377) (596,377)
Net changes in fund balances (23.948) (23,948)
Fund balances - beginning
Fund balances - ending $ $ (23.948) $ (23,948)
Explanation of differences:
Encumbrances for professional services comracted but not completed is reponed in the
year the service is contracted for budgetary purposes. but are reponed in the year the
services are received for GAAP purposes.
Current year encumbrances 24,000
Amount reponed as ending fund balance in the statement of revenues, expenditures and
changes in fund balance for the Community Development Block Grant Fund. S 52
The accompanying notes to required supplementary information are an integral part of this schedule.
51
City of Sebastian, Florida
Schedule of Revenue, Expenditures, and Changes in Fund Balances - Budget and Actual
Riverfront Redevelopment Agency Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Budget Amounts Amounts on Final Budget -
a Budgetar:y Positive
Original Final Basis (Negative)
REVENUES:
Taxes:
Property $ 288,139 $ 288,139 $ 287,639 $ (500)
Investment earnings 3,000 3,000 8,748 5,748
Total revenues 291,139 291.139 296,387 5,248
EXPEr-.'DITURES:
Current:
Economic environment 64.440 64,440 32,128 32,312
Total expenditures 64,440 64,440 32,128 32,312
Excess of revenues over
over expenditures 226,699 226,699 264,259 37,560
OTHER FINA1~CING SOlJRCES
Transfers in 21.598 21,598
Net changes in fund balances 226,699 248,297 285,857 37,560
Fund balances - beginning 90,825 90,825 90,825
Fund balances - ending $ 317,524 $ 339,122 $ 376,682 $ 37,560
The accompanying notes to required supplementary information are an integral part of this schedule.
52
City of Sebastian, Florida
Notes to the Required Supplementary Information - Budget Comparisons
September 30, 2005
A. Budeetary Basis
Annual budgets are adopted 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. Since all accounting principles applied for purposes
of developing data on a budgetary basis differ significantly from those used to present financial statements in conformity
with U.S. generally accepted accounting principles, reconciliations of the resultant timing differences have been
provided on page 49 through page 52. All annual appropriations lapse at year-end.
B. Budeetary Information
The appropriated budget is prepared by fund, function. and department. The government' s department heads, with the
City manager's approval. may make transfers of appropriations within a department or division. Transfers of
appropriations between departments andlor divisions require approval of the City council. The legal level of budgetary
control (Le.. the level at which expenditures may not legally exceed appropriations) is the fund level. The council made
four supplementary budgetary appropriations throughout the year. The 15t quarter budget amendment highlighted a net
increase of $329,695, which represents fund balance carried over from prior fiscal year to fund outstanding
encumbrances and hurricane repairs. The 3rd quarter budget amendment highlighted a net increase of $1,349,682. which
represents FEMA and State reimbursement received in the 3rd quarter for hurricane damage. The 4th quarter budget
amendment highlighted a net increase of $1,181,061, which represents FEMA, Federal Highway Administration. and
State reimbursement received in the 4lh quarter due to hurricanes. Other supplemental budgetary appropriations made in
the general fund were not material.
C. Budeeted Expenditures Exceeded Reyenues
Budgeted expenditures exceeded revenues in the Community Development Block Grant special revenue fund. However,
this is pursuant to the legally adopted budget to expend available fund equity (cash carry forward) and does not
constitute a deficit.
53
City of Sebastian, Florida
REQUIRED SUPPLEMENTARY INFORMATION
Police Officers' Pension Plan
Governmental Accounting Standards Board Statements No. 25 and 27, Financial Reportinl! for Defined Benefit
Pension Plans and Note Disclosures for Defined Contribution Plans and Accountinl! for Pensions bv State and Local
Governmental Employers require supplementary information be reported on the local pension plans in addition to
that provided in the Notes to the Financial Statements. This information is presented in the following schedules:
SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER
AND OTHER CONTRIBUTING ENTITIES
LAST SIX FISCAL YEARS
Fiscal
Year
2004
2003
2002
2001
2000
1999
Annual
Required
Contributions
$ 279,741
233.435
61,342
80.740
68,954
129.435
City
Contribution
$ 174.780
153,111
8,620
29,134
27,704
103,548
State
Contribution
$ 106,716
92.714
82,877
68,646
112,773
46,790
Percentage
Contributed
100.63
105.31%
149.16%
121.10%
203.73%
116.15%
The information presented in the required supplementary schedules was determined as part of the actuarial evaluation
at the date indicated. Additional information as of the latest actuarial valuation is as follows:
Contribution rates as of 9/30/04
City
Plan members
Annual pension cost
Contributions made
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
13.1 %
5.0%
$ 173,025
$ 174,780
10/1/2002
Frozen Entry Age
Level Percentage of Pay, Closed
30 Years (as of 1/01/2002)
Market Value
54
Nonmajor Governmental Funds
S5
Special Revenue Funds
Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for
particular purposes.
Local Option Gas Tax Fund - This fund is used to account for the government's share of motor fuel tax revenues
that are legally restricted to transportation related expenditures within the government's boundaries.
Recreation Impact Fee Fund - This fund is used to account for recreation impact fees that are restricted for use in
the expansion or construction of recreational facilities.
Stonnwater Utility Fee Fund - This fund is used to account for fees collected on a per unit basis that are restricted
for the purposes of managing the City's Stormwater system.
Law Enforcement Forfeiture Fund - This fund is used to account for the receipt of forfeited cash and equipment
associated with police activities and is restricted to police related equipment purchases and community education
initiatives.
G.R.E.A.T. Program Fund - This fund is used to account for a federal law enforcement grant to be used for gang
resistance, education and training for school children from grade school through middle schoo\.
Debt Service Fund
Debt service funds are used to account for the accumulation of pledged funds that are legally restricted to pay
debts.
Stormwater Utility Revenue Bonds Debt Service Fund - This fund is used to account for the accumulation of
storm water utility fees pledged to pay the principal. interest, and fiscal charges on the Storm water Utility Revenue
Bonds.
Discretionary Sales Surtax Revenue Bonds Debt Service Fund - This fund is used to account for the accumulation
of discretionary sales tax monies pledged to pay the principal, interest, and fiscal charges on the Discretionary
Sales Surtax Revenue bonds.
Capital Projects Funds
Capital projects funds are used to account for the acquisition and construction of major capital facilities other than
those financed by proprietary funds.
General Capital Projects Fund - This fund is used to account for the construction of non-stonnwater related
improvements and general capital construction projects. Governmental resources and State grant revenues are
used to finance the improvements in this fund.
Capital Improvements Fund - This fund is used to account for the accumulated resources associated with
infrastructure improvements such as parks and building.
Transportation Improvements Fund - This fund is used to account for transportation related construction such as,
roads. intersections, and sidewalks and is funded with governmental resources, impact fees and State grants.
Public Facilities Improvements Fund - This fund accounts for the resources associated with debt for the purpose
of constructing and equipping a new city hall complex and renovation and expansion of the police station.
56
Permanent Fund
Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not
principaL may be used for purposes that support the reporting government's programs.
Cemetery Permanent Fund - This fund is used to account for principal trust amounts received, sale of cemetery
lots and related interest income. One-half of the cemetery lot sales and the interest portion of the trust can be used
to maintain the community cemetery.
57
City of Sebastian, Florida
Combining Balance Sheet
Nonmajor Governmental Funds
September 30, 2005
Special Revenue Funds
Local Law
Option Recreation Stormwater Enforcement
Gas Tax Impact Fee Utility Forfeiture
ASSETS
Cash and cash equivalents $ 3,255 $ 6,491 $ 4,520 $ 45
Investments 242,992 960.906 1.757,143 16,650
Receivables - net
Due from other governments 104,749 8,856
Interest receivable 207 3,234 2,386
Prepaid items
Total assets $ 351,203 $ 970,631 $ 1,772,905 $ 16,695
LIABILITIES AND FUI\'D BALANCES
Liabilities:
Accounts payable $ 11 $ 5S $ 15,272 $ 390
Retainage payable
Due to other funds
Total liabilities II 55 15,272 390
Fund balances:
Reserved for:
Debt service
Cemetery care
Law enforcement 16,305
Unreserved 351,192 970,576 1,757,633
Total fund balances 351,192 970.576 1,757,633 16.305
Total liabilities and fund balances $ 351,203 $ 970,63 I $ 1.772,905 $ 16,695
58
Debt Senice Funds
Stormwater Discretionary
Utlity Sales Surtax
G,R.E.A.T. Revenue Revenue
Program Total Bonds 2003 Bonds 2003 Total
$ 734 $ 15.045 $ 315 $ 101 $ 416
2.977,691 19,907 29,165 49,072
9,894 123.499
2 5,829 1
183,922 183,922
S 10,630 S 3.122,064 $ 20,223 $ 213,188 $ 233,411
$
$
15,728 $
$
$
9,894
9,894
9.894
25,622
20.223 213,188 233.411
736 17,041
3,079,401
736 3,096,442 20,223 213,188 233,411
$ 10,630 $ 3.122.064 S 20,223 $ 213,188 $ 233,411
59
City of Sebastian, Florida
Combining Balance Sheet
Nonmajor Governmental Funds
September 30, 2005
(Continued)
Capital Projects Funds
General Public
Capital Capital Transportation Facilities
Projects Improvements Improvements Improvements Total
ASSETS
Cash and cash equivalents $ $ 11,497 $ 4,077 $ 225,034 S 240,608
Investments 1,524,255 1,312,950 417,435 3,254,640
Receivables - net 900 900
Due from other governments 4,462 4,462
Interest receivable 3,050 1,998 590 5,638
Prepaid items
Total assets $ $ 1,543,264 $ 1,319,025 $ 643,959 $ 3,506,248
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ $ 1,256 $ 155,134 $ 156,390
Retainage payable 90,991 90,991
Due to other funds
Total liabilities 1,256 246,125 247,381
Fund balances:
Reserved for:
Debt service
Cemetery care
Law enforcement
Unreserved 1,542,008 1,072,900 643,959 3,258,867
Total fund balances 1,542,008 1,072,900 643,959 3,258,867
Total liabilities and fund balances $ $ 1,543,264 $ 1.319.025 $ 643,959 $ 3,506,248
60
Permanent
Fund Total
Other
Governmental
Ccmcter,y Funds
$ 5,427 S 261,496
567,905 6,849,308
900
127,961
5,107 16,575
183,922
$ 578,439 S 7,440,162
$
72 S
172,190
90,991
9,894
72
273,075
233,411
578,367 578,367
17,041
6,338,268
578,367 7,167,087
$ 578.439 $ 7,440,162
61
City of Sebastian, Florida
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended September 30, 2005
Special Revenue Funds
Local Law
Option Recreation Stormwater Enforcement G.R.E.A.T.
Gas Tax Impact Fee Utility Forfeiture Program Total
REVENUES:
Taxes:
Motor fuel $ 747,418 $ $ $ $ S 747.418
Intergovernmental 163.770 10,654 174.424
Impact fees 385,775 385.775
Charges for services 758,887 758,887
Fines 7,604 7.604
Investment earnings 27,934 19,482 33,999 320 11 81,746
Contributions and donations 2,363 2,363
Odler revenue 265 265
Total revenues 939,122 405,257 792,886 10,552 10,665 2,158,482
EXPENDITURES:
Current:
Public safety 9,182 10,663 19,845
Physical environment 1,789 1.789
Transportation 326,883 326,883
Debt Service:
Principal 205,027 205,027
Interest and fiscal charges 94,973 94,973
Capital projects
Total expenditures 626,883 1,789 9.182 10,663 648,517
Excess (deficiency) of revenues
over (under) expenditures 312,239 405,257 791,097 1,370 2 1,509,965
OTHER FINANCING
SOURCES (USES)
Transfers in
Transfers out (240,000) (335,121) (745.458) ( 1,320,579)
Total other financing sources (uses) (240,000) (335,121) (745,458) ( 1,320,579)
Net changes in fund balances 72,239 70,136 45,639 1,370 2 189,386
Fund balances - beginning 278,953 900,440 1.711,994 14,935 734 2,907,056
Fund balances - ending $ 351,192 $ 970,576 $ 1,757,633 $ 16,305 $ 736 $ 3,096,442
62
Debt service Funds
Stormwater Discretionary
Utility Sales Surtax
Revenue Revenue
Bonds 2003 Bonds 2003 Total
$
$
$
422
4,326
4,748
422
4,326
4,748
235,000
207,547
650,000
382,519
885,000
590,066
442,547
1,032,519
1,475,066
(442,125)
(\ ,028,193)
(1,470,318)
441,672 793,313 1,234,985
441,672 793,313 1,234,985
(453) (234,880) (235,333)
20,676 448,068 468.744
$ 20,223 $ 213,188 $ 233.411
63
City of Sebastian, Florida
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended September 30, 2005
(Continued)
Capit:ll Projects Funds
General Public
Capital Capital Transportation Facilities
Projects Impro'"ements Improvements Improvements Total
REVENUES:
Taxes:
Motor fuel $ S $ S $
Intergovernmental 4,462 4,462
Impact fees
Charges for services
Fines
Investment earnings 702 4.059 28,117 32,878
Contributions and donations
Other revenue
Total revenues 5,164 4,059 28,117 37,340
EXPENDITURES:
Current:
Public safety
Physical environment
Transportation
Debt Service:
Principal 127,996 127,996
Interest and fiscal charges 26,697 26,697
Capital outlay 92,503 1,033,832 1.948,703 3,075,038
Total expenditures 154,693 92,503 1,033,832 1,948,703 3,229,731
Excess (deficiency) of revenues
over (under) expenditures (154,693) (87,339) (1,029,773) (1,920,586) (3,192,391 )
OTHER FINANCING
SOURCES (USES)
Transfers in 154,693 375,121 1,146,377 200,000 1.876,191
Transfers out (21,598) (21,598)
Total other financing sources (uses) 154,693 353,523 1,146,377 200,000 1,854,593
Net changes in fund balances 266,184 116,604 (1,720,586) (1,337,798)
Fund balances - beginning 1,275,824 956,296 2,364,545 4,596,665
Fund balances - ending $ $ 1.542,008 $ 1,072,900 $ 643,959 $ 3,258,867
64
Permanent
Fund Total
Other
Governmental
Cemetery Funds
$ $ 747,418
178,886
385,775
60,750 819,637
7,604
7,085 126,457
2,363
265
67,835 2,268,405
19,845
2,775 4,564
326,883
1,218,023
711.736
3.075,038
2,775 5,356,089
65,060 (3,087.684)
3,\11,176
(29,692) (1,371,869)
(29,692) 1,739,307
35,368 (1,348,377)
542,999 8,515,464
$ 578,367 S 7,167,087
65
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Local Option Gas Tax Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts on Final Budget -
Final II Budgetary Positive
Bud~et Basis (Ne~ative)
REVE~l;ES:
Motor fuellaXes S 750,000 $ 747,418 $ (2,582)
Intergovernmental 161,906 163,770 1,864
Investment earnings 12,000 27,934 15,934
Total revenues 923,906 939,122 15,216
EXPE~l)ITURES:
Current:
TrdIlsporlalion 390,006 326,883 63,123
Debt service:
Principal 205,027 205,027
Interest and fiscal charges 94,973 94,973
Total expenditures 690,006 626,883 63,123
Excess of revenues over expenditures 233,900 312,239 78.339
OTHER FI:\A~CING CSES
Transfers out (240,000) (240.000)
Net changes in fund balances (6,100) 72.239 78,339
Fund balances - beginning 278,953 278,953
Fund balances - ending S 272,853 $ 351,192 $ 78,339
66
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Recreation Impact Fee Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts 011 Final Budget .
Final II Budgetary Positive
Budget Basis (Negative)
REVENUES:
hnpact fees $ 360,000 $ 385,775 $ 25,775
Investment earnings 4,500 19,482 14,982
Total revenues 364,500 405,257 40,757
EXPEI\l)ITURES:
Current:
Culture and recreation
Total expenditures
Excess of revenues over expenditures 364,500 405,257 40,757
OTHER FINANCING USES
Transfers out (335,121) (335,121)
Net changes in fund balances 29,379 70,136 40,757
Fund balances - beginning 900,440 900,440
Fund balances - ending $ 929,819 $ 970,576 $ 40,757
67
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances. Budget and Actual
Stormwater Utility Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts on Final Budget -
Final a Budgetary ])ositive
Budget Basis (Negative)
REVEl'.'UES:
Charges for services $ 804,980 $ 758,887 $ (46,093)
Investment earnings 27,000 33,999 6,999
Total revenues 831,980 792,886 (39,094)
EXPEl'IllITURES:
Current:
Physical environment 3,500 1,789 1.711
Total expenditures 3,500 1,789 1,711
Excess of revenues over expenditures 828,480 791,097 (37,383)
OTHER FINANCING USES
Transfers out (745,458) (745,458)
Total other financing uses (745,458) (745,458)
Net changes in fund balances 83,022 45,639 (37,383)
Fund balances - beginning 1,711.994 1,711,994
Fund balances - ending $ 1,795,016 $ 1,757,633 $ (37,383)
68
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Law Enforcement Forfeiture Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts on Final Budget -
Final a Budgetary Positiye
Budget Basis (Negative)
REVENUES:
Fines S 5,000 $ 7,604 $ 2,604
Investment earnings 320 320
Contributions 5,000 2,363 (2,637)
Other revenues 265 265
Total revenues 10,000 10,552 552
EXPEi\l)ITURES:
Current:
Public safety 12,348 9,182 3,166
Total expenditures 12,348 9,182 3,166
Excess (deficiency) of revenues over (under) expenditures (2,348) 1,370 3,718
Fund balances - beginning 14,935 14,935
Fund balances - ending $ 12,587 $ 16,305 $ 3,718
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
G.R.E.A. T. Program Special Revenue Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts 011 Final Budget.
Final a Budgetary Positive
Budget Basis (Negative)
$ 10,654 S 10,654 $
9 11 2
10,663 10,665 2
REVENUES:
Intergovernmental
Investment earnings
Total revenues
EXPE!'\l)ITURES:
Current:
Public safety
Total expenditures
10,663 10,663
10,663 10,663
2 2
734 734
S 734 $ 736 $ 2
Excess of revenues over expenditures
Fund balances - beginning
Fund balances - ending
69
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Stormwater Utility Re\'enue Bonds 2003 Debt Service Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts on Final Budget -
Final a Budgetary Positiye
Budget Basis (Negative)
REVEl\'UES:
Investment earnings $ 301 $ 422 $ 121
Total revenues 301 422 121
EXPElIlllITURES:
Debt service:
Principal 235,000 235,000
Interest and fiscal charges 207,548 207,547
Total expenditures 442,548 442,547
Deficiency of revenues under expenditures (442,247) (442,125) 122
OTHER FINANCING SOURCES
Transfers in 441,672 441,672
Total other financing sources 441,672 441,672
Net changes in fund balances (575) (453) 122
Fund balances - beginning 20,676 20.676
Fund balances - ending $ 20,101 $ 20,223 $ 122
70
City of Sebastian, Florida
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Discretionary Sales Surtax Revenue Bonds 2003 Debt Service Fund
For the Year Ended September 30, 2005
Actual Variance with
Amounts on Final Budget.
Final a Budgetary Positive
Budget Basis (Negative)
REVENUES:
Investment earnings $ 3,000 $ 4,326 $ 1,326
Total revenues 3,000 4.326 1,326
EXPEl'IDlTURES:
Current:
Physical environment 300 300
Debt service:
Principal 650,000 650,000
Interest and fiscal charges 383,544 382,519 1,025
Total expenditures 1,033,844 1,032,519 1,325
Deficiency of revenues under expenditures (1,030,844) (1,028,193) 2.651
OTHER FINANCING SOURCES
Transfers in 1,030,844 793,313 (237,531 )
TOlal other financing sources 1,030,844 793,313 (237,531 )
Net changes in fund balances (234,880) (234,880)
Fund balances - beginning 448,068 448,068
Fund balances. ending $ 448,068 $ 213,188 $ (234,880)
71
City of Sebastian, Florida
Statement of Changes in Assets and Liabilities
Agency Fund
For the Year Ended September 30, 2005
Balance Balance
October 1, September 30,
2004 Additions Deletions 2005
ASSETS
Cash and cash equivalents $ 148,760 $ 18,735 $ 2,155 $ 165,340
Total assets $ 148.760 $ 18.735 $ 2.155 $ 165.340
LIABILITIES
148,760
$ 3,030
18.985
$ 3.030
2.405
$
Accounts payable
Performance deposits held in escrow
$
165,340
Total liabilities
$ 148,760
$ 22.015
$ 5,435
$
165.340
72
City of Sebastian, Florida
Capital Assets Used in the Operation of Governmental Funds
Comparative Schedule By Source
September 30, 2005
Governmental Funds capital assets: FY 2004 FY 2005
Land $ 4,653,603 $ 5,489,774
Buildings and structures 2,1 94,246 9,890.903
Improvement other than buildings 2,431.270 4.152.943
Machinery and equipment 5.186,908 6.100.906
Infrastructure 15,766.359 17,203.261
Capital projects 9.769,145 1,006.241
Total capital assets $ 40,001.531 $ 43,844.028
Investment in Governmental Funds capital assets by sources:
Federal grants $ 903.074 $ 1. 725,772
State grants 1.005,706 1.278.258
County grants 712.211 712.211
General fund lO,324,160 10,469,659
Law enforcement trust fund 58,377 48.737
Recreational impact fee 164.063 200. 186
Stormwater utility fee 16.241
Cemetery trust fund 186,395 184,185
Donations 2.319.828 2,296,054
Sales taxes 6.917,821 7.314.896
Motor fuel taxes 4.377 ,844 4.378,033
Revenue bond debt 3.262,907 14,213.555
Capital projects 9,769,145 1,006.241
Total investment in capital assets $ 40.001,531 S 43,844.028
73
City of Sebastian, Florida
Capital Assets Used in the Operation of Govermllental Funds
Schedule by Function and Acthity
September 30, 2005
Improvements Machinery
Other than mid
Function mid Activity Lwd Buildings Buildings Equipment Infrastructure Totals
General government
Legislative $ $ S 1,100 $ 11,482 S S 12,582
City manager 4,341 4,341
City clerk 184,324 184,324
City attorney 5,970 5,970
Finance 60,521 60,521
MIS 100,096 100,096
Humml resources 5,467 5,467
Building mainten,Ulce 45,000 4,926 71,519 121,445
Growth mmlagement 85,555 19,704 105,259
Non-deparunental 3,427,598 5,114,963 260,202 426,481 212,700 9,441,944
Subtotal 3,427,598 5,245,518 266.228 889,905 212,700 10,041,949
Public safety:
Special operations 2,051 2,051
Administration 9,560 3,343,047 74,514 283,082 3,710,203
School resource 26,855 26,855
Road patrol 1,196,867 1,196,867
Community policing 162,581 162,581
Code enforcement 49,277 49,277
Professional Stnd, 21,822 21,822
Investigations 175,098 175,098
Support services 58,304 58,304
Communications 80,860 80,860
Building department 15,183 92,169 107,352
Subtotal 9,560 3,358,230 74,514 2,148,966 5,591,270
Transportation:
Engineering 78 146,361 155,293 180,031 276,100 757,863
Central garage 111,654 82,419 134,448 328,521
Roads and drainage 47,047 201,623 594,865 892,017 10,135,057 11,870,609
Subtotal 47,125 459,638 832,577 1,206,496 10,411,157 12,956,993
Physical Environment
Stonnwater 1,377,466 5,242,000 6,619,466
Cemetery 272,190 47,519 78,354 31,074 22,717 451,854
Subtotal 272,190 47,519 78,354 1,408,540 5,264,717 7,071,320
Culture/Recreation:
Parks and recreation 1.733,301 779,998 2,901,270 446,999 1,314,687 7,176,255
Subtotal 1,733,301 779,998 2,901,270 446,999 1,314,687 7,176,255
Total $ 5,489,774 $ 9,890,903 S 4,152,943 $ 6,100,906 $ 17,203,261 $ 42,837,787
Construction in progress 1,006,241
Total S 43,844,028
74
City of Sebastian, Florida
Capital Assets Used in the Operation of Governmental Funds
Schedule of Changes By Function and Activity
September 30, 2005
Governmental Governmental
Funds Funds
Capital Assets Transfers Transfers Capital Assets
Function and Activity October 1, 2004 Additions Deletions In Out September 30, 2005
General government:
Legislative $ 17,181 $ $ 4.599 $ $ $ 12,582
City manager 22,075 1,750 1,612 17,596 4,341
City clerk 74,728 111,111 1,515 184,324
City attorney 2,114 5,784 1,928 5,970
Finance 62,541 2,281 2,650 1,476 3,127 60,521
MIS 95,405 3,673 5,712 9,502 2,772 100,096
Human resources 6.982 1,515 5,467
Building maintenance 23,042 98,403 121,445
Growth management 108,253 698 2,296 105,259
Non-departmental 3,517,536 5,931,246 25,542 20,629 1,928 9,441,941
Subtotal 3,906,815 6,071,353 40,951 137,406 32,677 10,041,946
Public Saftey:
Special operations 1,200 2,779 1,928 2,051
Administration 696,060 3,078,322 55,175 9,006 3,710,201
School resource 46,866 20,011 26,855
Road patTol 1,047,273 196,195 1,721 44.880 1.196,867
Community policing 134,796 2,048 29,833 162.581
Code enforcement 33,227 16,050 49,277
Professional Stnd. 18,607 3,215 21.822
Investigations 154,561 61,979 42,242 800 175,098
Support services 58,304 58,304
Communications 73,362 6,904 594 80,860
Building department 92,720 14,583 1,417 1,368 107,352
Subtotal 2,355,776 3,359,183 121,197 54,688 57,182 5,591,268
Transportation:
Engineering 441,534 9,555 4,090 312,379 1,515 757,863
Central garage 288,508 40,014 328,522
Roads and drainage 16,188,279 1,268,051 840 3,030 5,587,911 11,870,609
Subtotal 16,918,321 1,317,620 4,930 315,409 5,589,426 12,956,994
Physical Environment:
Stormwater 1,438,551 48,837 5,133.593 1,515 6,619,466
Building maintenance
Cemetery 453,726 1,244 3,116 451,854
Subtotal 1,892,277 50,081 3,116 5,133,593 1,515 7,071,320
Culture & Recreation:
Parks and recreation 5,159,197 1,978,269 911 43,537 3,833 7,176,259
Subtotal 5,159,197 1,978,269 911 43,537 3,833 7,176,259
Total 30,232,386 12,776,506 171.1 05 5,684,633 5,684,633 42,837,787
Construction in progress 9,769,145 558,374 9,321,278 1.006,241
Total $ 40,001,531 $ 13,334,880 $ 9,492,383 $ 5,684,633 $ 5,684,633 $ 43,844,028
75
ellY OF
SEBASTI4
HOME OF PELICAN ISLAND
THIS PAGE INTENTION ALL Y LEFT BLANK
76
Statistical Section
This part of the City of Sebastian, Florida's comprehensive annual financial report
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says
about the city's overall financial health.
Contents
Financial Trends
These schedules contain trend information to help the reader understand how
the city's financial performance and well-being have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the city's most
significant local revenue source, the property tax, and the municipal sales tax.
Debt Capacity
These schedules present information to help the reader assess the affordability
of the city's current levels of outstanding debt and the city's ability to issue
additional debt in the future.
Economic and Demographic Information
These schedules offer economic and demographic indicators to help the reader
understand the environment within which the city's financial activities take
place.
Operating Information
These schedules contain service and infrastructure data to help the reader
understand how the information in the city's financial report relates to the
services the city provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year. The city implemented
GASB Statement 34 in 2001; schedules presenting government-wide information include
information beginning in that year.
77
Pa2e(s)
79-86
87-93
94-99
100-102
103-105
CITY OF
SEBASTIA
.,
HOME OF PELICAN ISLAND
THIS PAGE INTENTIONALLY LEFT BLANK
78
City of Sebastian, Florida
Net Assets by Component
Last Five Fiscal Years
(accrual basis of accollnting)
2005 2004 2003 2002 2001
Governmental Activities
Invested in Capital Assets, Net of Related Debt $ 17.103,399 $ 16,412,401 $ 16,339.222 $ 14,242,832 $12.778.007
Restricted 5,395,879 4,059,674 3,235,266 3,289,670 2,270,654
Unrestricted 9,081,345 7,171,123 (I) 5,461.224 5,865,388 5,417,630
Total Governmental Activities Nel Assets $ 31,580,623 $27,643,198 $ 25,035,712 $ 23,397,890 $20,466,291
Business-Type Activities
Invested in Capital Assets, Net of Related Debt S 7.459,945 S 4,264,961 $ 1.545.867 $ 363,827 $ 150,722
Restricted 574,105 506,006 505,435 458,014 640.973
Unrestricted 738,519 1,712.657 1,471.457 1,120,224 985,863
Total Business-Type Activities Net Assets S 8.772,569 $ 6,483,624 $ 3,522,759 $ 1,942,065 $ 1,777,558
Primary government
Invested in Capital Assets, Net of Related Debt $ 24,563,344 $ 20,677,362 $ 17,885,089 $ 14,606,659 $12,928,729
Restricted 5,969,984 4,565,680 3,740,701 3,747,684 2,911,627
Unrestricted 9,819,864 8.883,780 6,932,681 6,985.612 6,403,493
TOlal Primary Go\'emmellf Net Assets $ 40,353,192 $ 34,126,822 $ 28,558.471 $ 25.339.955 $22.243,849
(1) The large increase for unrestricted net assets from 2003 to 2004 is mainly due to increase in State revenue sharing and tax
revenues.
79
Cit). of Sebastian, Florida
Changes in Net Assets
Last Five Fiscal Years
(accrual basis of accolllltillg)
2005 2004 2003 2002 2001
Program Revenues
Governmental Activities:
Charges for Services:
General Government $ 370,609 $ 376,327 $ 247,774 $ 172,135 $ 183,502
Public Safety 1,356,385 1,660,032 824,821 625,924 554,350
Physical Environment 828,907 850,887 799,637 785,683
Economic Environment 24,869 18,753
CulturaURecreation 56,199 48,590 46,736 73,013 35,050
Operating Grants and Contributions 2,802,511 1,144,528 920,829 958,229 902,001
Capital Grants and Contributions 1,781,954 1,353,959 640.894 872,490 581,941
Total Govemmenlal Activities Program Revellues $ 7,196,565 $ 5,434,323 $ 3,480,691 $ 3,512,343 $ 2,275,597
Business-Type Activities:
Charges for Services:
Golf Course $ 1,381.817 $ 1,648,308 $ 1,377.245 $ 1,365,027 $ 1.088,104
Airport 434,818 201,890 168,451 179,373 193,649
Operating Grants and Contributions 13,582 67,576 51,087 123,673
Capilal Grants and Contributions 2,289,986 2,451,212 1,149,437 214,175 299,334
Total Business-Type Activities Program Revenues $ 4,120,203 $ 4,368,986 $ 2,695,133 $ 1,809,662 $ 1,704,760
Total Primary Govemmelll Program Revenues $ 11,316,768 $ 9,803,309 $ 6.175.824 $ 5,322,005 $ 3,980,357
Expenses
Governmental Activities:
General Government $ 3,262.276 S 2,414,865 $ 1,620,616 $ 2,010,288 $ 1,676,383
Public Safety 4,816.614 4,502,109 3,39] ,831 2,945.701 2,526,514
Physical Environment 1,283,889 1,279,257 1,920,200 508,616 452,116
Transportation 4,034,900 3,288.532 2,401,037 2,258,18] 1,630,098
Economic Environment 32,128 86,041 166,024 223,207 241,692
CulturaURccreation 1,260,395 823,974 747.910 881.260 768,802
Interest and Fiscal Charges 740,372 722,007 312.367 168,749 160,954
Total Govemmelllal Activities Expemes $ 15,430,574 $13,116,785 $ 10,559,985 $ 8.996,002 $ 7,456,559
Business-Type Activities:
Golf Course $ 1,464,532 $ 1,527,051 $ 1,363,359 $ 1,393.551 S 1,341,001
Airport 519,235 350,949 315,941 283,726 313,877
Total Business-Type Activities Expenses S 1,983,767 $ 1,878,000 $ 1.679.300 S 1,677.277 $ 1,654,878
Total Primary Govemment Expenses $17,414,341 $ 14,994,785 $ 12,239,285 S 10.673.279 $ 9,111,437
(continued)
80
Cit)' of Sebastian, Florida
Changes in Net Assets (continued)
Last Five Fiscal Years
(accrual basis of accotllltillg)
2005 2004 2003 2002 2001
Net (Expensc)/Re\'cnue
Governmental Activities $ (8.234.009) $ (7,682,462) $ (7,079,294) $ (5,483,659) $ (5,180,962)
B usiness- Type Activities 2,136,436 2,490,986 1,015,833 132,385 49,882
Total Primary Govemment Net Expense $ (6,097,573) $ (5,191,476) $ (6,063.461) $ (5,351,274) $ (5,131,080)
General Revenues and Other Changes in Net Assets
Governmental Activities:
Propcrty Taxes, Levied for General Purposes $ 4,017,555 $ 3,420,971 $ 2,944,456 $ 2,615,939 $ 2,557,333
Sales and Use Taxes 4,718,691 4,035,545 3,705,922 2,844,825 3,013,293
Franchise Fees 886.390 770,600 756,194 766,901 753,024
State Shared Revenues 2,138,020 1,721,956 1.523,524 2,068,753 1,336,046
Interest Earnings 398,518 398,158 241,358 118,840 236,307
Miscellaneous 118,760 388,562 79,662
Transfers ( 106,500) (445,844) (534,000)
Total GOl'emmenlal Activities $ 12,171,434 S 10,289,948 $ 8,7]7,116 S 8,415.258 $ 7,896,003
Business-Type Activitics:
Intcrest Earnings $ 45,709 $ 23,774 $ 21.789 $ 32,122 $ 99,521
Miscellaneous 300 261 9,072
Transfers 106,500 445,844 534,000
Total Business-Type Activities $ 152.509 $ 469,879 $ 564,861 S 32,122 $ 99,521
Total Primary Govemmenl $ 12,323,943 $ 10,759,827 $ 9,281,977 S 8,447,380 $ 7.995,524
Change in Net Assets
Governmental Activities $ 3,937,425 $ 2,607,486 $ 1,637,822 $ 2,931,599 $ 2,715,041
Business-Type Activities 2,288,945 2.960,865 1,580,694 164.507 149.403
Total Primary GOl'emment Change ill Net Assets $ 6,226,370 $ 5,568,351 $ 3,218,516 $ 3,096,106 $ 2,864,444
81
City of Sebastian, Florida
Fund Balances. Governmental Funds
Last Ten Fiscal Years
(modified ace mal basis of accollllting)
2005 2004 2003 2002 2001
General Fund
Reserved $ 2,848.726 $ 2,693,710 $ 1,402,398 $ 232.088 $ 121.256
Unreserved 3,254.741 2.421,182 2,479,452 3,690.659 3,406,083
TOlal Gelleral Fund $ 6.103,467 $ 5,114.892 $ 3,881,850 $ 3,922,747 S 3,527.339
All Other Governmental Funds
Reserved $ 828,819 $ 4.208,170 $ 1,596,981 $ 1,503,172 $ 1.306.269
Unreserved, Reported in:
Special Revenue funds 4,735.396 3,355,229 2.211,585 1,808,288 548,174
Capital Projectc; funds 8,406.953 6.795,371 9.993,933 (I) 2.384,557 2,609,201
Total All Other Governmental Funds $ 13,971.168 $ 14,358,770 $ 13,802.499 $ 5,696.017 $ 4,463.644
Total Govemmelltal Funds $ 20,074,635 $ 19.473,662 $ 17,684.349 $ 9.618.764 $ 7,990,983
(1) The large increase in unreserved fund balance reported in capital projects funds from 2002 to 2003 is due to the
issuance of City's Infrastructure Sales Surtax Revenue Bonds. Series 2003.
82
2000 1999 1998 1997 1996
$ 64,341 $ 43.113 $ 3,303.761 $ 7,940 $ 6.666
2,786,252 2,699.955 3.468.381 3,710,621 3.072.721
S 2,850,593 $ 2.743.068 $ 6,772,142 $ 3,718,561 $ 3,079.387
$ 2,021,740 $ 605,270 S 168.093 $ 167.980 S 144.320
456,461 217,969
1,562,299 4.027,673
$ 4.040,500 $ 4,850.912 $ 168.093 $ 167,980 $ 144,320
$ 6,891.093 $ 7,593,980 $ 6.940,235 $ 3,886,541 $ 3,223,707
83
City of Sebastian, Florida
Changes in Fund Balances. Governmental Funds
Last Ten Fiscal Years
(modified accnlal basis of accollnting)
2005 2004 2003
Reyenues
Property and Other Local Taxes $9.483.664 $8.179344 $7.325,932
Franchise Fees 886390 770.600 756.194
Charges for Services 936.530 962.677 921.1I9
Licenses and Permits 1.587,675 1.867.920 878,097
Fines 95,699 1I8.918 1I9.752
Intergovernmental 5,561,695 3.115,520 1.785,237
Impact Fees 385.775 557.700 395,850
Special Assessments 11,023 28,424 22.560
Investment Earnings 398.518 398.158 241.358
Miscellaneous 144.057 378.268 91.078
Total Revenues 19.491.026 16.377.529 12.537.177
Expenditures
Current:
General Government 2.982,852 2,269,656 2.001.823
Public Safety 4,633,234 4,159.619 3,689.170
Physical Environment 944,634 1.142.905 1.392.071
Transportation 3.645.017 2.913,935 1.646.304
Economic Environment 32,128 86.041 166.024
Cultural and Recreation 1.065.122 771.219 672.179
Debt service:
Principal Retirement 1.218.023 985.974 361.024
Interest and Fiscal Charges 711.736 887.564 158,043
Capital Projects 3.550.807 8.682.239 3,350.954
Total Er:pendilllres 18.783.553 21.899.152 13,437.592
Excess of Revenues Over (Under) Expenditllres 707,473 (5.521.623) (9000415)
Other Financing Sources (Uses)
Debt Proceeds 7.756.780 9.500.000
Lease Proceeds
Transfers In 3,745.265 2.745.754 2.992.908
Transfers Out (3.851.765) (3.191.598) (3.526.908)
Total Other Financing Sources (Uses) ( 106.500) 7.310.936 8.966.000
Net Change in Fund Balances $ 600,973 $1.789.313 $ 8.065.585
Debt Service as a Percentage of Noncapital Expenditures 20.9% 15,2% 5.4%
84
2002 2001 2000 1999 1998 1997 1996
$ 6,228,107 $6.223,280 $ 6,273,070 $5,837,968 $5,612,313 $ 5,250,861 $ 4,931,996
766,901 753,024
1.123.670 300,046 159,701 33.097 74,485 84,051 74,657
578,695 487,618 475.345 448,928 388,936 345.463 321.149
127.027 148,676 140.672 89,697 72,723 59,198 82,477
2.841.315 1.968.416 2,318,091 1,865,375 1,697,747 1,332,676 1,166,881
255,775
31,756 28,528 128.154 44,964 30,522 68,474 135.336
206,567 417.707 689,395 512.407 290,406 261.548 260.414
126,823 196,311 246,774 650
12,286.636 10,523,606 10,431,202 8,833,086 8,167,132 7,402,271 6,972,910
2.230,870 1,647.858 1,946.702 1,837,031 2,074,479 1,879.432 2,625.066
2,588,526 2,482,393 2,129,662 2,122,823 1,847,503 1,706,546 1,627,955
508,616 452.116 345,844 412,990 82,699 79,528 80,941
1.427.992 1,084,401 1,228.234 1,007,426 1, 160,404 1,273,318 1,187,354
327,911 273,927 617 4,830 8,492 64,657 26.342
732,729 612,038 555,584 488,499 348.546 190,651 174,303
344,553 222,954 212,860 225,243 182,434 173,471 227,526
174,864 152,093 151.536 160,940 29,522 40,704 27.771
2.322.794 3.402,365 4,713,604 1,915,620 2,640,389 1,331.130 1.124,542
10.658,855 10,330.145 11,284,643 8,175,402 8,374,468 6,739.437 7,101,800
1,627,781 193,461 (853,441) 657.684 (207,336) 662,834 ( 128,890)
900,000 3,261,030 527.993
34,942
2,009.173 2.130,744 2,134,510 1,861,364 258 2,720 4.030
(2,009,173) (2,130,744) (2,134,510) 0,861,364) (258) (2,720) (4,030)
900,000 3.261.030 562.935
$1.627.781 $1.093,461 $ (853,441) $ 657.684 $ 3,053,694 $ 662.834 $ 434.045
6.3% 5.4% 5.5% 6.2% 3.7% 4.0% 4.3%
85
City of Sebastian, Florida
Prograrn Revenues by FunctionlProgram
Last Five Fiscal Years
(accrllal basis of accountillg)
2005 2004 2003 2002 2001
Function/Program
Governmental Activities:
General Government $ 587,527 $ 392,471 $ 1,095,902 $ 172,135 $ 226,786
PubIc Safety 1.537.557 1,850,710 929,952 785,373 633.230
Physical Environment 898.821 914,318 1.136,507 785,683 779,837
Transportation 3,392,883 1,670,534 1,580,076 3,038,913 2,285,809
Economic Environment 24,869 18,753
CulturallRecreation 779,777 606,290 663,459 566,959 168,335
Total Governmental Activities $ 7.196,565 $ 5,434,323 $ 5,405,896 $ 5,373.932 $ 4,112,750
Business-type activities:
Golf Course $ 1,395.399 $ 1,715,884 $ 1,377,245 $ 1.365,517 $ 1.088,104
Airport 2,724,804 2,653,102 1,317,888 444,145 616.656
Total Business-Type Activities $ 4,120,203 $ .J,368.986 $ 2,695,133 $ 1,809.662 $ 1,704,760
Total Primary Governmem $ 11,316,768 $ 9,803,309 $ 8,101,029 $ 7,183,594 $ 5,817,510
86
City of Sebastian, Florida
Tax Revenues by Source. Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
fiscal Year Property Taxes Public Utility Sales Tax Motor Fuel Total
2005 $ 4.017.555 $ 2.005,124 $ 2.713.567 $ 747.418 $ 9.483,664
2004 3.420.971 1.854.632 2.180.913 722.828 8.179.344
2003 2.944.456 1.780.717 1.925.205 675.554 7.325.932
2002 (1) 2.717.564 983.236 1.861.589 665.718 6.228.107
2001 2.608.989 1.151.685 1.861.608 600.998 6.223.280
2000 (2) 2.323.566 1.044.595 1.704.749 549,800 5.622.710
1999 (3) 2,734.068 413,045 1.553.672 484.054 5.184.839
1998 2,810.622 370.170 1.412,207 440,843 5.033.842
1997 2.664.153 345,977 1.244.543 453.858 4.708.531
1996 2,619,790 335,240 1.059.291 381.131 4,395.452
(I) Fiscal Year 2002 propeny tax revenue reflects a change in the propeny tax millage rate from 5.??oo to 4.5904.
(2) Fiscal Year 2000 propeny tax revenue reflects a change in the propeny tax millage rate from 6.5000 to 5.??oo.
(3) Fiscal Year 1999 propeny tax revenue reflects a change in the propeny tax millage rate from 6.9000 to 6.5000.
Millage Rate represents the dollar of tax per one thousand dollars of taxable valuation.
87
City of Sebastian, Florida
Property Tax Rates
Direct and Overlapping Governments
Last Ten Fiscal Years
City of Sebastian Indian River County School Board
Debt Total Total Debt Total
Fiscal Operating Service City County(t) Operating Service School
Year Millage Millage Millage Millage Millage Millage Millage Other(2)
1996 6.9000 6.9000 8.66433 9.13800 1.21000 10.34800 2.74083
1997 6.9000 6.9000 8.56874 9.15400 1.16500 10.31900 2.64544
1998 6.9000 6.9000 8.30490 9.00300 1.13700 10.14000 2.49690
1999 6.5000 6.5000 8.33160 8.61400 1.00000 9.61400 (3)
2000 5.0000 5.0000 8.24360 8.61400 1.00000 9.61400 1.52091
2001 5.0000 5.0000 8.24860 8.67700 0.88000 9.55700 1.62899
2002 4.5904 4.5904 8.08410 8.40200 0.68000 9.08200 1.14845
2003 4,5904 4.5904 8.03020 8.10200 0.63000 8.73200 1.43875
2004 4.5904 4.5904 7.93960 8.17900 0.53100 8.71000 1.69278
2005 4.5904 4.5904 7.35050 8.01900 0.48000 8.49900 1.43029
(1) Millage includes General Fund, M.S.T.U.s, Emergency Services District and Land Bonds.
(2) All Special Taxing Districts.
(3) Information not available.
Source: Indian River County Property Appraiser's Office
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City of Sebastian, Florida
Assessed Valuation and Estimated True Values of Taxable Property
Last Ten Fiscal Years
Real Property Personal Property
Exemptions
Fiscal Assessed Estimated Assessed Estimated Real
Year Value Actual Value Value Actual Value Property
1996 $ 531,461.580 $ 664.326,975 $ 24.774,960 $ 24.774.960 $ 161.007.095
1997 563,855.210 704.819.013 30.303.882 30,303,882 172.4 78.432
1998 587.811.960 734,764,950 31.210.876 31.210.876 177 ,515.747
1999 626,274.970 782,843,713 46.027.721 46.027.721 187.751.454
2000 656.619.860 820,774.825 42,216,162 41.533,985 190.327.263
2001 754.577.150 943,221.438 45,195,579 45,195.579 198.445.669
2002 829.224.615 1.036,530,769 45.355,170 45.355.170 205.977.066
2003 946,293.950 1.182,867.438 48,613,628 48,613,628 217.554.663
2004 1,157,275.164 1.446.593,955 51,330,277 51.330,277 228,262.825
2005 1.526.923.406 1,908,654.258 51,827,624 51.827.624 271,466,364
Source: Indian River County Property Appraiser
(1) Total assessed value based on approximately 80 percent of estimated actual value.
90
Total
Assessed
Value
$ 556.236.540
594.159.092
619.022.836
672,302.691
698.836.022
799.772,729
874.579.785
994.907.578
1.208.605,441
1,578,751.030
Total
Estimated
Acmal Value
$ 689.101,935
735,122.895
765.975,826
828.871.434
862,308.810
988.417.017
1.081.885,939
1.231.481.066
1.497.924.232
1.960.481.882
91
City of Sebastian, Florida
Principal Taxpayers
Year 2005 and Year 1998
2005 1998
Real Percentage Real Percentage
Property of Total Property of Total
Assessed Assessed Assessed Assessed
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Florida Power & Light $ 15,407,800 2.19% $ 6,448,890 3 1.02%
Wal-Mart Stores Inc. 12,001,110 2 1.70% 7,843,080 2 1.24%
Maronda Homes Inc. 10.549,810 3 1.50%
BeLlSouth Communications 8.086,380 4 1.15% 7,930,440 1.26%
512 Commerce Center LLC 6,897,720 5 0.98%
BWUS 1 Inc 5,712,340 6 0.81%
Adams Homes Of Northwest FL 5,558,050 7 0.79%
Fischer, Henry Anthony 4,987,844 8 0.71%
Sandy Pines LID 4,728,268 9 0.67%
Mercedes Homes Inc. 4,245,330 10 0.60%
Lynch, Robert N. (Bishop) 3,665,790 4 0.58%
Park Place MHP Ltd 2,737,650 5 0.43%
Grace's Landing Ltd 2,111,580 6 0.34%
Falcon Cable Media 1,618,367 7 0.26%
Winn Dixie Stores Inc. 1,586,073 8 0.25%
Sebastian Center Ltd 1,316,420 9 0.21%
Ringhaver Equipment 780,155 10 0.12%
$ 78,174,652 11.10% $ 36,038,445 5.71%
Total Assessed Valuation $ 850,999,257 $ 630,218,290
(1) Principal property tax payers for nine years ago is not available. The information is available from 1998
and forward.
Source: Indian River County Property Appraiser's Office
92
City of Sebastian, Florida
Property Tax Levies And Collections
Last Ten Fiscal Years
Percent of Percent of
Total Current Current Tax Delinquent Total Total Tax
Tax Tax Collections Tax Tax Collections
Year Levy Collections To Tax Levy Collections (1) Collections To Tax Levy
2005 $ 3.888.488 S 3,723,912 96 % $ 1.712 $ 3,725.624 95.81 %
2004 3.216.940 3,130.521 97 34,247 3,164,768 98.38
2003 2.862,650 2,725.515 95 26,908 2,752,423 96.15
2002 2.635.277 2,489,854 94 36,421 2.526,275 95.86
2001 2.542.544 2.455.930 97 51.690 2.507,620 98.63
2000 2.422.756 2.283.898 94 35,050 2.318.948 95.72
1999 2,869,796 2,726,857 95 2.912 2.729,769 95,12
1998 2,909,597 2,679,819 92 130,803 2,810,622 96.60
1997 2,727,083 2.513,627 92 150.526 2.664.153 97.69
1996 2.667,313 2.463,039 92 156.752 2.619,791 98.22
Source: Indian river County Property Appraiser and Tax Collector
(1) Does not include penalties and interest on delinquent taxes.
93
City of Sebastian, Florida
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Business-type
Governmental Activities Activities
Water Line Roadway Infrastructure Stormwater Golf Course Total
Assessment Improvement Sales Tax Utility Revenue Revenue Primary Per
Year Bonds Notes Bonds Bonds Bonds Government Capita
2005 $ $ 2,004,718 $ 10,490,000 S 5,290,000 $ 1,395,000 $ 19,179.718 $ 957
2004 2,209,745 11,140,000 5,525,000 1.885.000 20,759,745 1,072
2003 77.615 2,406,028 9,500,000 2,115,000 14,098,643 765
2002 134,299 2,593,939 2,335,000 5,063,238 295
2001 187,901 2,773,847 2.435,000 5,396,748 324
2000 238.589 2,946,113 1,500,000 (1) 4,684.702 290
1999 286.521 3,111,041 1,610,000 5,007,562 319
1998 322,044 3,268,890 (2) 1,715,000 5,305,934 351
1997 367.764 158,250 1,815,000 2,341,014 162
1996 415,303 (3) 276,566 1,910,000 2,601,869 186
(l) Golf Course Revenue Bonds, Series 1996 was refunded in 200 l.
(2)The City issued a $3,268,890 promissory note to finance costs of roadway improvements in 1998.
(3) The City issued a $527,993 Revenue Bonds in 1996 for the the costs to construct a
waterline along the riverfront.
94
City of Sebastian, Florida
Computation of Legal Debt Margin
September 30, 2005
Assessed Valuation
Assessed taxable real property value
Add back: exempl real property
Total assessed value of real property
$
1.255.457.042
271.466.364
1.526.923.406
$
Legal debt margin:
Debt limitation - 5 percent of total assessed real property value (1)
Debt applicable to limitation
Total bonded debt S
Less: revenue bonds
Total applicable to limitation
$ 76.346,170
18.207.174
( 15.780.000)
2.427.174
$ 73.918.996
Legal debt margin
(1) City adopted financial policies state the City will limit its total outstanding general obligation debt to
five percent of the assessed valuation of real property.
City of Sebastian, Florida
Direct and Overlapping Governmental Activities Debt
General Obligation Bonds
September 30. 2005
The City of Sebastian has no overlapping general obligation bonded debt.
95
City of Sebastian, Florida
Ratios of General Bonded Debt Outstanding and Legal Debt Margin
Last Seven Fiscal Year
2005 2004 2003 2002
Debt Limit (1) $ 76.346.170 $ 57.863.758 $ 47.314.698 $ 82.922.462
Total net debt applicable to limit 2.427.174 2.760.196 3.078.556 3.382.896
Legal debt margin $ 73.918.996 $ 55,103.562 $ 44,236.142 $ 79,539,566
Total net debt applicable to the limit
as a percentage of debt limit 3.18% 4,77% 6.51% 4.08%
(1) Under the City's adopted financial policies. the City's outstanding general obligation
debt should not exceed 5% of the assessed valuation ofreaI property. The percentage
was dropped from 10% to 5% in fiscal year 2003.
*Data from 1996 through 1998 not available
96
2.001
$ 75.457.715
3,673.847
$ 71.783.868
4.87%
2,000
$ 65,661.986
2,946.113
$ 62.715.873
4.49%
1999
$ 62.627.497
3.111,041
$ 59.516.456
4.97%
97
City of Sebastian, Florida
Pledged-Revenue Coverage
Last Ten Fiscal Years
Recreational Facilities Improvement and Refunding Revenue Bonds. Series 2001
Less: Net
Fiscal Gross Operating Available Debt Service
Year Revenues(l) Expenses (2) Revenue Principal Interest Total Coverage
1996 $1,213,952 $ 808.254 $405,698 $ 90,000 $ 116.830 $ 206,830 (3) 1.96 (4)
1997 1,356.609 833.382 523.227 95,000 1I2.600 207.600 (3) 2.52 (4)
1998 1.351,368 874.334 477.034 100,000 107.850 207,850 (3) 2.30 (4)
1999 1.414.976 891.914 523,062 105,000 102,650 207,650 (3) 2.52 (4)
2000 1,450.487 947.145 503,342 1I0,000 96,980 206,980 (3) 2.43 (4)
2001 1.165.091 (5) 1.043,741 (5) 121.350 (6) (7)
2002 1.386,424 1,020,640 365,784 100.000 94.290 194.290 (6) 1.88 (7)
2003 1.400.154 968.052 432.102 220,000 85.490 305.490 (6) 1.41 (7)
2004 1.497,053 1,108,770 388.283 230.000 76.290 306,290 (6) 1.27 (7)
2005 1.395,436 1,023,002 372.434 240,000 66.690 306.690 (6) 1.21 (7)
Note: Detail regarding the City's outstanding debt can be found in the notes to the financial statements.
(I) Total revenues including charges for services, rents. and interest.
(2) Total direct operating expenses excludes depreciation, amortization, annual Airport lease payment,
and one time hurricane repaire and upgrade.
(3) Golf Course Bond, Series 1985 refunded in 1992 with Series 1992.
(4) Required coverage is 1.0.
(5) Golf Course closed for four months for renovations.
Golf Course Bond. Series 1992 refunded with Recreational Facilities Improvement and Refunding
(6) Revenue Bonds, Series 2001.
(7) Required coverage is 1.25.
(8) Total revenues consist of stormwater utility fees and interest.
(9) Required coverage is 1.35.
98
Stormwater Utility Revenue Bonds. Series 2003
Gross
Revenues(8)
$ 779,724
792,886
Principal
$ 105,000
235.000
Debt Service
Interest
$ 104.386
206.673
Total
$ 209.386
441.673
99
Coverage(9)
3.72
1.80
City of Sebastian, Florida
Demographic and Economic Statistics
Last Ten Years
Total Per Capita Median
Personal Personal Household Median
Year Population Income (1) Income (1) Income (1) Age (2)
2005 20.048 (5) (5) (5) (5)
2004 19.365 (5) (5) (5) (5)
2003 18.425 $4,804.190.000 $39.953 $50.900 (5)
2002 17.167 4,592.277 .000 $38.925 (5) (5)
2001 16.667 4.552.238.000 $39.462 (5) (5)
2000 16.181 4.207.683.000 $37.110 $40.063 49.2
1999 15.707 3.983.019.000 $35,788 $37,947 (5)
1998 15,115 3.770.896.000 $34.608 $37,398 (5)
1997 14.470 3,494,975,000 $32.881 $35,895 (5)
1996 13,967 3,260.652.000 $31.479 (5) (5)
Sources:
(1) Florida Research & Economic Database. Information available for Indian River County only.
(2) U.S. Census Bureau
(3) Indian River County School Board
(4) Indian River County Property Appraiser
(5) Information not available
100
Educational
Attainment:
Bachelor's Degree School Unemployment Total Assessed
or higher (2) Enrollment (3) Rale (1) Property Value (4)
(5) % 5,258 4% $ 1,578.751,030
(5) 4.917 7.6 1.208.605.441
(5) 4.340 7.5 994.907.578
(5) 4.309 7.8 874,579.785
(5) 1.371 7.4 799,772,729
23.1 1.342 6.5 698.836.022
(5) 1.383 7.5 672,302.691
(5) 1.410 7,9 619.022.836
(5) 1.324 8.1 594.159.092
(5) 1.313 9,0 556.236.540
101
City of Sebastian, Florida
Principal Employers
Year 2004 and Five Years Ago
2004
Employer
N umber of
Employees
Publix Supermarket
Gracewood Fruit Packing
The New Piper Aircraft
Wal-Mart
Hale Indian River Groves
Sebastian River Medical Center
John's Island
Winn-Dixie
Indian River Estate
Disney's Vero Beach Resort
Visiting Nurse Association
Total
Total County Employees
931
700
688
540
500
500
500
306
399
375
332
5,771
56.681
1999
Percentage
of Total County
Employment
1.64 %
1.24
1.21
0.95
0.88
0.88
0,88
0.54
0.70
0.66
0.59
10.18 %
Employer
Number of
Employees
The New Piper Aircraft
Publix Supermarket
Wal-Mart
Sun Ag. Inc.
Winn-Dixie
Hale Indian River Groves
Gracewood Fruit Packing
Dodgertown Complex
John's Island
Graves Brothers
Total
Total County Employees
1249
792
774
550
520
505
500
438
415
400
6.143
43.592
Source: Indian River County Chamber of Commerce
* Principal employers information available for Indian River County only.
102
Percentage
of Total County
Employment
2.87 %
1.82
1.78
1.26
1.19
1.16
1.15
1.00
0.95
0.92
14.09 %
City of Sebastian, Florida
Full- Time Equivalent City Government Employees by FunctionlProgram
Last Ten Fiscal Years
2005 2004 2003 2002 2001 2000 1999 1998 1997 1996
--- ----
Function/orolrram
General Government:
City Council 2.5 ., - 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5
..:>
City Manager 5.0 4.0 4.0 4.0 4.0 3.0 3.0 3.0 3.0 4.0
City Clerk 4.0 4.0 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
City Attorney 2.0 1.0 1.0 1.0 1.0 1.0 0.0 0.0 0.0 0.0
Finance 5.0 5.0 5.0 6.0 6.0 5.0 5.0 5.0 5.0 7.0
Mgmt Information Svcs 2.0 2.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Human Resources 3.0 3.0 3.0 3.0 3.0 3.0 2.0 2.0 2.0 2.0
Building Maintenance 2.0 0.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
Growth Management 4.0 4.0 4.0 4.0 4.0 4.0 6.0 0.0 0.0 0.0
Public Safety:
Police Department 59.0 56.5 54.5 53.0 52.5 50.0 47.0 45.0 43.0 40.5
Building Department 9.0 8.0 7.0 7.0 6.0 6.0 6.0 0.0 0.0 0.0
Transportation:
Roads & Drainage 12.5 14.5 11.5 (1) 23.5 26.5 27.5 24.0 22.0 27.0 26.0
Central Garage 3.0 3.0 3.0 3.0 3.0 3.0 3.5 3.5 3.5 3.5
Airport 3.5 2.5 2.5 1.5 1.0 0.5 0.5 0.5 0.5 0.0
Physical Environment:
Engineering 8.0 8.0 7.5 8.0 6.5 6.5 6.0 6.0 6.5 6.0
Stonnwater Utility 13.0 12.0 12.0 (1) 1.0 0.0 0.0 0.0 0.0 0.0 0.0
Cultural/Recreation:
Parks & Recreation 23.5 17.5 16.5 14.0 14.0 10.0 10.0 10.0 5.0 5.0
Cemetery 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Golf Course 12.5 13.5 13.5 14.5 12.5 12.5 11.5 11.5 11.5 11.5
--- ----
Totals: 175.5 163.0 159.5 157.0 153.5 145.5 138.0 122.0 120.5 1I9.0
--- - ----
--- ----
(I) Eleven employees were moved from roads & drainage to stormwater starting fiscal year 2003.
Source: City of Sebastian, Rorida 1997-2006 Annual Budgets
Method: Using 1.0 for each full-time employee, and 0.50 for each part-time and seasonal employee
103
City of Sebastian, Florida
Operating Indicators by Function/Program
Last Seven Fiscal Years
Function/program 2005 2004 2003 2002 2001 2000 1999
General Goyernment
Number of Annexation Approved I 6 3 0 1 1 0
Acres of Annexed Property 26 484 80 0 80 6 0
Purchase Orders Issued 369 408 372 357 411 406 397
Public Safety
Police Department
Physical Arrest 786 653 557 515 627 738 481
Traffic Violations 5,457 5,431 1,939 2,528 2,781 3,562 2.413
Parking Violations 303 3,801 632 207 198 305 53
Building Department
Construction Permits Issued 774 577 544 363 315 317 210
Estimated Valuc of Construction (in
millions) $ 114.7 $ 112.3 $ 82.7 $ 38.9 $ 29.0 (I) $ 9.8
Transportation
Road Maintenance (man hours)* 100 878 850 827 (1) (1) (I)
Asphalt for road maintenance (tons) 125 88 79 75 (I) (I) (I)
Concrete for road maintenance (yards) (2) 0 283 277 275 (I) (1) (I)
Physical Emironment
Cemetcry
Cemetcry Internments 79 69 81 73 78 77 52
Gravc Decds Sold 56 86 45 54 67 85 34
Stormwater
Mile of Swales Maintained 280 280 280 280 280 (1) (I)
Mile of Ditches Maintained 50 50 50 50 50 (1) (I)
Road Crossing Maintained 30 30 30 30 30 (I) (I)
Catch Basins/Culverts 275 275 275 250 248 (I) (1)
Recreation
Recreation Center attendance 5,504 7,498 (I) (I) (I) (1) (1)
Number of Discount Cards 1,000 993 855 890 746 791 (I)
Number of Golf Course Memberships 85 116 137 169 190 212 (I)
Average daily golf revenue $3,854 $4,207 $3,693 $3,588 $2,844 $8,348 $4,996
(1) Information not available
(2) All road maintenance utilized asphalt, no concrete curbing was installed.
Sources: City of Sebastian Police Department, Growth Management, Public Works, Engineering
Department, Golf Course, and Building Department.
*Data from 1996 through 1998 not available
104
City of Sebastian, Florida
Capital Asset Statistics by FunctionlProgram
Last Seven Fiscal Years
Function/program 2005 2004 2003 2002 2001 2000 1999
General Government
Square Footage Occupied 21.500 5,516 5,516 5,516 5,516 5,516 5,516
Departmental Vehicles 5 2 2 2 3 3 3
Public Safety
Police Stations 1 1 1 1 1 1 I
Square Footage of Police Department 25,600 8,700 8.700 8,700 8,700 8,700 8.700
Square Footage of Building Department 2,500 1.716 1,716 1.716 1.716 1.716 1.716
Police Vehicles 52 47 42 40 33 32 24
Building Inspector Vehicles 5 4 4 5 4 3 2
Transportation
Streets (miles) 156 156 149.6 140.0 140.0 140.0 140.0
Number of Streetlights 3,555 3,543 3.543 3,531 3,531 3,319 1,156
Airport 1 1 1 1 1 1 1
Public Service Vehicles 14 24 18 22 19 16 16
Physical Environment
Public Service Vehicles 13 6 7 4 4 4 4
Recreation
Number of Parks 12 12 12 10 10 10 9
Recreation Centers 2 2 2 2 2 2 2
Park Acreage 223.37 223.37 223.37 207.85 196.47 196.47 194.38
Recreation Center Square Footage 4,859 4,859 4.859 4,859 4,859 4.859 4,859
Park Maintenance Vehicles 10 8 6 6 5 5 5
Golf Course 1 1 1 1 1 1 1
Golf Course Maintenance Vehicles 0 0 0 0 0 0 0
Sources: City of Sebastian Finance Department and Growth Management Department
*Data from 1996 through 1998 not available
105
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106
SINGLE AUDIT SECTION
The Single Audit Section contains various independent auditor's
reports and schedules as required by the Florida Single Audit Act,
Chapter 215.97, Florida Statutes for state and local governments that
receive state assistance.
~ Independent Auditor's Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Governmental Auditing Standards
~ Independent Auditor's Report on Compliance with requirements
Applicable to Each Major Program and on Internal Control over
Compliance in Accordance with OMS Circular A-133
~ Schedule of Findings and Questioned Costs - Federal Programs
and State Projects
~ Schedule of Expenditures of Federal Awards and State Financial
Assistance
107
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~"HOYMAN DOBSON & COMPANY P.A.
~ CERTIFIED 'PUBLIC ACCOUNTANTS '
----a-e ~4'-~:-':::-::~ .'.~_'.~_}~
215 Boytree Drive, Melbourne, Florida 32940, 321-2550088, Fox 321-259-8648, www.hoymon.com
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 Auditinl! Standards
(hode> W Hayman, J[
Barbaro J Oswalt
Thoma~ l Kirk
Koren E Kirkland
Deborah A. Bradley
1Jl2ECTOR EMERllUS
Roger W Dobson
Eugene K. Bjerning
Honorable Mayor and Members of City Council
City of Sebastian
Sebastian, Florida
We have audited the financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Sebastian, Florida as of and for the year ended
September 30, 2005, which collectively comprise the City's basic fmancial statements, and have issued our
report thereon dated January 19, 2006. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City of Sebastian, Florida's internal control over
fmancial reporting in order to det~ine our auditing procedures for the purpose of expressing our opinion on
the financial statements and not to provide an opinion on the internal control over financial reporting. Our
consideration of the internal control over financial reporting would not necessarily disclose all matters in the
internal contt:ol that might be material weaknesses. A material weakness is a reportable condition in which
the design or operation of one or more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the
fmancial statements being audited may occur and not be detected within a timely period by employees in the
nonnal course of performing their assigned functions. We noted no matters involving the internal control
over financial reporting and its operation that we consider to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Sebastian, Florida's fmancial statements
are free of material misstatement, we perfonned tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
We noted certain matters that we reported to management of the City of Sebastian in a separate letter,
Independent Auditors' Management Letter Comments, dated January 19, 2006.
This report is intended solely for the information and use of the City of Sebastian, Florida and management,
federal and state awarding agencies and pass-through entities, and the State of Florida Office of the Auditor
General and is not intended to be and should not be used by anyone other than these specified parties.
1;!:;~b1~ot~1 fff-
January 19,2006
. :'..;Y..l!'iJ..... 1~ 1. -- 11J9~.1lli1il
1 . American Institute af Certified Public Accaunlants . Flarida Institute of Certified Public Accountants' SEe Practice Seelion of the A./.C.PA. . CPAmeflco Internotional
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. CERTIFIED'PUBLlC ACCOUNTANTS '
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215 Baytree Drive, Melbourne, Florida 32940, 321-2550088, Fox 321-259-8648, www.hoymon.com
Charles W Haymon, J[
Barbaro J Oswalt
Thomas l. Kirk
Koren E. Kirkland
Deborah A. Bradley
DU/EOOQ EMERITUS
Roger W Dobson
Eugene K Bjerning
Independent Auditors' Report on Compliance with Requirements Applicable
to Each Major Program and on Internal Control Over Compliance
in Accordance with OMB Circular A-133
Honorable Mayor and Members of City Council
City of Sebastian
Sebastian, Florida
Compliance
We have audited the compliance of the City of Sebastian, Florida with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Circular A-133 Comoliance StrDDlement,
and the requirements described in the Executive Office of the Governor's State Projects Compliance
Supplement, that are applicable to each of its major federal programs and state projects for the year ended
September 30, 2005. The City of Sebastian, Florida's major federal programs and state projects are identified
in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.
Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major
federal programs and state projects is the responsibility of the City of Sebastian, Florida's management. Our
responsibility is to express an opinion on the City of Sebastian, Florida's compliance based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards. issued by
the Comptroller General of the United States; OMB Circular A-133, Audits of States. Local Governments.
and Non-Profit Organizations: and Chapter 10.550. Rules of the Auditor General. Those standards, OMB
Circular A-133, and Chapter 10.550. Rules of the Auditor General, require that we plan and perform the audit
to obtain reasonable assurance about whether non-compliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program or state project
occurred. An audit includes examining, on a test basis, evidence about the City of Sebastian, Florida's
compliance with those requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not
provide a legal determination on the City of Sebastian, Florida's compliance with those requirements.
In our opinion, the City of Sebastian, Florida complied, in all material respects, with the requirements
referred to above that are applicable to each of its major federal programs and state projects for the year
ended September 30, 2005. However, we noted a certain rnatter that we reported to management of the City
of Sebastian in a separate letter, Independent Auditors' Management Letter Comments, dated January 19,
2006.
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Honorable Mayor and Members of City Council
City of Sebastian
Page Two
Internal Control Over Compliance
The management of the City of Sebastian, Florida is responsible for establishing and maintaining
effective internal control over compliance with the requirements of laws, regulations, contracts, and
grants applicable to federal programs and state projects. In planning and performing our audit, we
considered the City of Sebastian, Florida's internal control over compliance with requirements that could
have a direct and material effect on a major federal program or state project in order to determine our
auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the
internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.550. Rules of
the Auditor General.
Our consideration of the internal control over compliance would not necessarily disclose all matters in
the internal control that might be material weaknesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that non-compliance with applicable requirements of laws, regulations,
contracts, and grants caused by error or fraud that would be material in relation to a major federal
program or state project being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We noted no matters involving
the internal control over compliance and its operation that we consider to be material weaknesses.
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This report is intended solely for the information and use of the City of Sebastian, Florida and management,
federal and state awarding agencies and pass-through entities, and the State of Florida Office of the Auditor
General and is not intended to be and should not be used by anyone other than these specified parties.
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Hoyman, Dobson & Company, P A
January 19,2006
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CITY OF SEBASTIAN, FLORIDA
Schedule of Findings and Questioned Costs -
Federal Programs And State Projects
Fiscal Year Ended September 30, 2005
SECTION I - SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of Auditors' report issued:
Internal control over fi~ancial reporting:
Material weakness(es) identified?
Reportable conditions(s) identified not considered
to be material weaknesses?
Noncompliance material to financial statements noted?
Federal Awards
Internal control over maior programs and oroiects:
Material weakness(es) identified?
Reportable conditions(s) identified not considered
to be material weaknesses?
Tvpe of Auditors' report issued on compliance
for maior orograms and oroiects:
Identification of maior orOlrrams:
Name of Federal Program
u.s. Department of Transportation - Airport Improvement
Program
Department of Homeland Security - Federal Emergency
Management Agency
Dollar threshold used to distinguish between
Tvoe A and Tvpe B orolrrams
Auditee qualified as low-risk auditee?
113
Unqualified
Unqualified
yes
x
no
yes
yes
x
X
none reported
yes
no
X
no
yes
X
none reported
Federal CFDANo.
X
20.106
97.036
$300.000
yes
no
CITY OF SEBASTIAN, FLORIDA
Schedule of Findings and Questioned Costs (Continued)
Federal Programs And State Projects
Fiscal Year Ended September 3.0, 2005
State Awards
Internal control over maior -proiects:
Material wealmess(es) identified?
Reportable conditions(s) identified not considered
To be material weaknesses?
yes
yes
Type of auditors' report issued on compliance for
major projects:
Unqualified
Any audit findings disclosed that are required
to be reported in accordance with Chapter 10.550,
Rules of the Auditor General?
yes
Identification ofmaior proiects:
Name of State Proiect
Florida Department of Transportation -
Clear Runway 9/27 Safety Areas
Wetland and Environmental Mapping & Reports
Infrastructure Development
Construct Access Roads
Install Security Upgrades
Construct Administration Building
Reactivate Runway 9/27, Phase II
Rehab Taxiway A and Apron and Construct
Administration Building Apron
State CSF A No.
55.004
55.004
55.004
55.004
55.004
55.004
55.004
55.004
Dollar threshold used to distinguish
Between Type A and Type B Projects:
$182.388
SECTION II - FINANCIAL STATEMENT FINDIl\GS
No matters were reported.
114
x
x
x
no
none reported
no
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CITY OF SEBASTIAN, FLORIDA
Schedule of Findings and Questioned Costs (Continued)
Federal Programs And State Projects
Fiscal Year Ended September 30, 2005
SECTION III - FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL PROGRAMS
No matters were reported.
SECTION IV - FINDINGS AND QUESTIONED COSTS - MAJOR STATE PROJECTS
No matters were reported.
115
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CITY OF SEBASTIAN, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS
AND STATE FINANCIAL ASSISTANCE
FOR THE FISCAL YEAR El'.'DED SEPTEMBER 30, 2005
Federal/ State Agency
Pass-through Entit).
Federal Pr02l"am / State Proiect
CFDA
CSFA
No.
Contract
Grant
No.
Expenditures
State
Matchinl!
u.s. Department of Justice
Direa Programs:
Officc of Justice Programs
COPS Secure Our Schools 16.710 2004CKWX0453 S 32.616 S
BullerproofVest Pannership 16.607 N/A 2,246
G3I1g Resist3l1ce Education & Training (G.R.E.A.T.) 21.053 2004-JV-FX.0136 760
G3I1g Resistance Education & Training (G.R.E.A.T.) 21.053 2005-JV-FX-0029 9,894
Indircct Programs:
Passcd through Rorida Department of Law Enforccment
Local Law Enforcement Block Grant 16.592 200S-LEBG-INRI-3-1...l-I40 4.604
Total U.s. Department of Justice 50.120
U,S. Department of Transportation
Direct Programs:
Federal A\iation Administration - Airpon Improvement Program
CIC3r Runway 9/27 Safety Areas 20.106 3.12-0145-003-2002 48,175
Rehabilitate Runway 9/27; Construct Taxiway "B" 20.106 3-12-0145-004-2003 420,263
Rehabilitate Taxiway A; ConsllUct General A \ialion Terminal Apron 20.106 3-12-0145-005-2004 1,195,671
Hurricane Gram Offcr 20.106 lZ.Qt4S.EI-200S 38,413
Indirect Program: Pass thru Indi3l1 River County
Federal Highway Administration
Disaster Relief Funding 20.205 FL-04-04 168,106
Total U.s. Department of Transportation 1.870,628
DCllartment of Homeland Security
Indircct Program - Pass thru Rorida Department of Community Affairs
Fcderal Emergency Management Agency
Hurricane Frances 97.036 FEMA-] 545-DR-FL 624,129 30.682
Hurricane Jeanne 97.036 FEMA-1561-DR-FL 1,794,882 85.361
Total Department of Homeland Security 2,4] 9.0ll 1]6,043
U.s. Department of Housing and Urban De\'elopment
Indirect Program - Pass thru Rorida Department of Community Affairs
Small Cities Community Development Block Grant
Lousi3l1a Avenue Improvement Progl'am 14.228 03 DB-1 A-I 0-40-02-N34 606,640
Total U.s. Department of Housing and Urban Development 606,640
TOTAL EXPENDITURES OF FEDERAL A WARDS: S 4,946,399 S 116,043
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CITY OF SEBASTIAN, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS
AND STATE FINANCIAL ASSISTANCE (CONTINUED)
FOR THE FISCAL YEAR ENDED SEPTEI\IBER 30, 2005
Federal I State Agency
Pass-through Entit).
Federal "rHeam I State Proiect
CFDA
CSFA
No.
Contract
Grant
No.
Expenditures
Department of Emironmental Protection
Direct Projects:
Florida Recre:uion Development Assistance Program
Rive....,iew Park Expansion 37.017 F03394 S 4,462
Total Department of En\ironll\enta] Proection 4,462
Department of Transportation
Direct Projects:
Joint Participation Agreement with Aorida
DepartJllent or Transponation A\1ation
Adminis1r.llion:
Clear Runway 9127 Safety Areas 55.004 .w7SS~-I-94-O 1 3,400
Wetland and Environmental :-tapping & Repons 55.004 .w763~-1-94-0I ].009
Inrr.utructUh: De\'Clopmem 55.004 .w768~-1.94-0 1 324,759
Construct Access Roads 55.004 407706-1-94-01 19,333
Install Security Upgrades 55.004 412373-1-94-01 1.045
Construct Adminstration Building 55.004 412382-1-94-0 I 185,050
Reactivale Runway 9127, Phase II 55.004 412384-1-94-0 I 21,402
Rehab Taxiway A & Apron and Construct Administration
Building Apron 55.004 415216-1-94-01 31,465
District Maintenance
Ugbting Maintenance and Compensation Agreement 55.023 405122-1-72-63 16,036
Total Department of Transportation 603,499
TOTAL. EXPE~DlTURES OF STATE FINANCIAL ASSISTANCE: S 607.961
The accompanying notes are an integral pan of the audil.
118
CITY OF SEBASTIAN, FLORIDA
Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance
September 30, 2005
The accounting policies and presentation of the Single Audit Report of City of Sebastian, Florida, (the
"City") have been designed to conform to generally accepted accounting principles as applicable to
governmental unites. including the reporting and cornpliance requirements of the Audits of State. Local
Governments, and Non-Profit Organizations and Office of rnanagement and Budget Circular A-133.
A. Reportine Entitv
The reporting entity consists of City of Sebastian, the primary government, and each of its component
units. The City includes a Schedule of Expenditures of federal Awards and State Financial Assistance
in the Single Audit Section.
B. Basis of Accountine
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the
accounts and reported in the financial statements. Basis of accounting relates to the timing of
measurements made, regardless of the rneasurement focus.
The modified accrual basis of accounting is followed in the Schedule of Expenditures of Federal
Awards and State Financial Assistance. Under the modified accrual basis, revenues are recognized
when they become 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 City considered revenues to be available if they are collected within one year after
the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred. as
under accrual accounting.
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elIT OF
SEBASTIA
HOME OF PELICAN ISLAND
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CERTIFIED PUBLIC ACCOUNTANTS
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215 Boytree Drive, Melbourne, Florida 32940, 321-2550088, Fox 321-259-8648, www.hoymon.com
Cnarles W Haymon. J[
Barbaro J Oswoll
Thomas l Kirk
Koren E Kirldand
Deboran A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
Independent Auditors'
Management Letter
Honorable Mayor and Members of City Council
City of Sebastian
Sebastian, Florida
We have audited the fmancial statements of the City of Sebastian, Florida, as of and for the fiscal year
ended September 30,2005, and have issued our report thereon dated January 19,2006.
We conducted our audit in a~cordance with United States generally accepted auditing standards; the
standards applicable to financial audits contained in Government Auditinl! Standards, issued by the
Comptroller General of the United States and OMB Circular A-B3 Audits of States. Local Governments,
and Non-Profit Organizations. We have issued our Independent Auditors' Report on Internal Control over
Financial Reporting and on Compliance and Other Matters, Independent Auditors' Report on Compliance
with Requirements Applicable to Each Major Program and on Internal Control Over Compliance with OMB
Circular A-133 and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule,
which are dated January 19,2006, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General.
Those rules (Section 10.554(l)(g)1.a.) require that we address in the management letter, if not already
addressed in the auditors' reports on compliance and internal controls or schedule of fmdings and
questioned costs, whether or not inaccuracies, shortages, defalcations, fraud, and/or violations of laws,
rules, regulations, and contractual provisions reported in the preceding annual fmancial audit report have
been corrected. There were no findings of this nature in the prior year audit report.
The Rules of the Auditor General (Section 10.554(l)(g)1.b.) require that we address in the management
letter, ifnot already addressed in the auditors' reports on compliance and internal controls or schedule of
findings and questioned costs, whether or not recommendations made in the preceding annual financial
audit report have been followed. The status of the findings from the prior year management letter is as
follows:
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Honorable Mayor and Members of City Council
City of Sebastian
Page Two
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Findinl!
Status
I. Grant compliance Repeated/RevisedlRenamed Purchasing
2. Information Technology - Logical Access Controls
A. through D. Cleared
E. RepeatedlRevised
3. Information Technology - Operations Cleared
4. FEMA Expenditure Cleared
As required by the Rules of the Auditor General (Section l0.554(1)(g)2.), the scope of our audit included
a review of the provisions of Section 218.415., Florida Statutes, regarding the investment of public funds.
In connection with our audit, we determined that the City of Sebastian, Florida complied with Section
218.415, Florida Statutes.
The Rule~ of the Auditor General (Section 10.554(1)(g)4.) require disclosure in the management letter of
the following matters ifnot already addressed in the auditors' reports on compliance and internal controls
or schedule of findings and questioned costs: (1) "iolations of laws, rules, regulations, and contractual
provisions that have occurred" or are likely to have occurred; (2) improper or illegal expenditures, (3)
improper or inadequate accounting procedures (e. g., the omission of required disclosures from the
financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies,
shortages, defalcations, and instances of fraud d~scovered by, or that come to the attention of, the auditor.
We noted the" following matters:
1. Purchasing
Criteria: An objective of internal control is to ensure purchasing transactions are executed In
compliance with laws, regulations, and the provisions of grant agreements and contracts.
Condition: The system to monitor compliance with laws, regulations, grant agreements and contracts
could be strengthened.
Context: The decentralized system places accountability with the individual departments requiring
more individuals to be lmowledgeable of the City's purchasing policies.
Effect: Failure to monitor the bid process could result in the City being in non-compliance with State
statutes or grant agreements and a reduction in federal or state grant funding.
~
Recommendation: Although we noted no significant issues during our testing, we recommend that the
City develop policies and procedures to strengthen internal controls over the bid process that allow for
the best performance of the decentralized system while enabling management to monitor compliance
with State Statutes, grant agreements and City policies. We recommend that clear guidelines be
provided to the departments enabling them to consistently follow the City's existing procurement
policies and procedures. A checklist in the front of each bid file could be one form of guidance. We
further recommend implementing a central numbering system to index all bids as a management tool
for monitoring the bid process.
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Honorable Mayor and Members of City Council
City of Sebastian
Page Three
Management response: Since changing the process, to date, no violations of state statutes or grant
agreements have occurred. To assist in this transition, City management will centralize a "filing"
station for the procurement process where bids will be filed and indexed in the City Manager's office.
2. Information Technology - Logical Access Controls
E. Criteria: Access to the network is authorized only to active employees with ajob requirement for
access.
Condition: Network access authorization was not updated.
Context: We noted from the list of terminated employees we reviewed that only one still had an
active account on the network. We also noted that there were some accounts that had either NEVER
accessed the organization's network or had not done so for over 30 days which poses the risk of these
accounts being used to access the organization's systems without being noticed.
Recommendation: We recommend that policies governing the termination of employees clearly
outline how to handle the password for terminated employees. The account should at a minimum be
disabled and the password changed. The security officer should be provided with names of
terminated employees as soon as administratively possible and then should perform periodic reviews
of the active accounts on the network and in the various applications. .
Management response: A Management Information System Policy and Procedure has been
developed and implemented to address the security issues. MIS staff will follow the policy and
procedure more closely in the future to make sure network access authorization is updated as soon as
the notice has been received from the Human Resources Department.
3. Rental Agreement
Criteria: Generally, rent expense under non-cancelable operating leases should be recognized on a
straight-line method over the period of the lease.
Condition: Management did not record the rental expense or the related liability for the golf course
lease with the airport based on generally accepted accounting principles. These principles require
the expense be recorded on a straight-line basis over the life of the lease and a liability should be
recognized. In addition, the revenue to the airport also was not recognized on a straight-line basis
and the receivable was not recorded. The accounting treatment by management was based on
obtaining FAA approval of a new lease agreement that would not require rent increases.
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Honorable Mayor and Members of City Council
City of Sebastian
Page Four
Context: The adjustment to straight-line for fiscal year 2005 is $20,000 and for fiscal year 2004 is
$30,000.
Effect: The golf course expenses are understated by $50,000. The airport revenue is understated by
$20,000. If the rent concession liability had been recorded the golf course loss would have increased
from $47,492 to $97,492 reducing the unrestricted fund balance from $71,534 to $21,534.
Cause: The City contends the $120,000 is the fair rental amount based on the operations of the golf
course and investigation of other golf courses paying rent to FAA funded comparable airports and
believes the FAA will approve removing the rent increases from the agreement. The City has been in
verbal communication with the FAA regarding changing the rental agreement.
Recommendation: We recommend the City fo]]ow the terms of the existing lease, account for the
rental payments following the generally accepted method of recording the rent using the straight-line
basis over the life of the lease and only implement the change after a new lease is in place.
Management response: The generally accepted accounting principle to straight-line an anticipated
expense has no pragmatic approach to the overall financial well being of the Golf Course Fund.
except to "smooth-out" the 'effects of a scheduled increasing expense. The method implemented by
management was reviewed and approved by financial advisors. Management staff is currently
reviewing the potential of a fund merger, which will make obsolete the current lease schedule. The
FAA has reviewed and approved this proposal. This merger has not been made by the end of FY 05
and once implemented will make null and void the necessity of this accounting practice.
The Rules of the Auditor General (Section 1O.554(l)(g)5.) also require that the name or official title and
legal authority for the primary government and each component unit of the reporting entity be disclosed
in the management letter, unless disclosed in the notes to the financial statements. The legal authority for
the City of Sebastian, Florida is disclosed in the footnotes. The City of Sebastian, Florida's cornponent
unit, the Police Officer's Pension Plan, was established under Section 58-46 through 58-54 Code of
Ordinances in October 1989.
As required by the Rules of the Auditor General (Section 10.554(l)(g)6.a.), the scope of our audit
included a review of the provisions of Section 218.503(1), Florida Statutes, regarding [mancial
emergencies. In connection with our audit, we determined that the City of Sebastian, Florida has not met
any of the financial emergency conditions described in Section 218.503(1), Florida Statutes.
As required by the Rules of the Auditor General (Section 10.554(l)(g)6.b.), we determined that the
annual financial report for the City of Sebastian, Florida for the fiscal year ended September 30, 2005,
filed with the Department of Financial Services pursuant to Section 218.32, Florida Statutes, is in
agreement with the annual [mancial audit report for the fiscal year ended September 30, 2005.
124
Honorable Mayor and Members of City Council
City of Sebastian
Page Five
As required by the Rules of the Auditor General (Section 10.554(1)(g)6.c. and 10.556), we applied
financial condition assessment procedures. It is management's responsibility to monitor the entity's
financial condition, and our financial condition assessment was based in part on representations made by
management and the review of fmancial information provided by the sarne.
This report is intended solely for the information and use of the City of Sebastian, Florida and management
federal and state awarding agencies and pass through entities, and the State of Florida Office of the Auditor
General and is not intended to be and should not be used by anyone other than these specified parties.
~lJo0m~~(ftl,
Hoyman, Dobson & Company, P A
January 19, 2006
125