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Home My WebLink About2007 - 2008CIN OF SEBASTIAN, FLORIDA GTY OF ~~ :.~, .~ .° HOME OF PELICAN ISLAND Comprehensive Annual Financial Report For the Year Ended September 30, 2008 CITY COUNCIL Andrea B. Coy .................................... Mayor Sal Neglia ............................................. Vice-Mayor Al Paternoster ..................................... Councilmember Dale I. Simchick ................................. Councilmember Eugene Wolff ....................................... Councilmember Prepared By: Finance Department GTY OF _ .~ F-R ~'<d{ ^'~~ HOME OF PELICAN ISLAND THIS 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 Fiscal Year Ended September 30, 2007 - Organizational Chart - List of Officials CITY OF SEBASTIAN, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2008 TABLE OF CONTENTS INTRODUCTORY SECTION Page Table of Contents ........................................................................................................................................... ii Letter of Transmittal ...................................................................................................................................... v Certificate of Achievement for Excellence in Financial Reporting ............................................................... ix Organizational Chart ...................................................................................................................................... x List of Officials .............................................................................................................................................. xi 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 ............................................................................................................................ 52 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -Discretionary Sales Tax Special Revenue Fund ....................................................................... 53 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual - Riverfront Redevelopment Agency Special Revenue Fund ..................................................... 54 Notes to the Required Supplementary Information -Budget Comparisons .............................................. 55 Police Officers' Pension Plan -Schedule of Contributions from the Employer and other Contributing Entities ............................................................................................................................... 56 Combining and Individual Fund Statements and Schedules Combining Balance Sheet - Nonmajor Governmental Funds ....................................................................... 60 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governrental Funds .................................................................................................................................. 64 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -Local Option Gas Tax Special Revenue Fund ............................................................................. 68 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -Recreation Impact Fee Special Revenue Fund ............................................................................ 69 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual - Stormwater Utility Special Revenue Fund .................................................................................. 70 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -Law Enforcement Forfeiture Special Revenue Fund ................................................................... 71 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual - G.R.E.A.T. Program Special Revenue Fund ............................................................................... 71 11 Page Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual - Stormwater Utility Revenue Bonds 2003 Debt Service Fund ..................................................... 72 Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual -Discretionary Sales Surtax Revenue Bonds 2003 Debt Service Fund ......................................... 73 Statement of Changes in Assets and Liabilities -Agency Fund .................................................................... 74 Capital Assets Used in the Operation of Governmental Funds -Comparative Schedule by Source .................................................................................................................................... 75 Capital Assets Used in the Operation of Governmental Funds -Schedule by Function and Activity ........................................................................................................................... 76 Capital Assets Used in the Operation of Governmental Funds -Schedule of Changes by Function and Activity ........................................................................................................................... 77 STATISTICAL SECTION (Unaudited) Financial Trends Net assets by Component -Last Seven Fiscal Years ............................................................................... 80 Changes in Net Assets -Last Seven Fiscal Years .......................................:............................................ 82 Fund Balances, Governmental Funds -Last Ten Fiscal Years ................................................................. 86 Changes in Fund Balances, Governmental Funds -Last Ten Fiscal Years .............................................. 88 Program Revenues by Function/Program -Last Eight Fiscal Years ........................................................ 90 Revenue Capacity Tax Revenues by Source, Governmental Funds -Last Ten Fiscal Years ................................................. 92 Property Tax Rates, Direct and Overlapping Governments -Last Ten Fiscal Years ............................... 93 Assessed Valuation and Estimated True Values of Taxable Property -Last Ten Fiscal Years ............... 94 Principal Taxpayers -Year 2008 and Year 1998 ..................................................................................... 96 Property Tax Levies and Collections -Last Ten Fiscal Years ................................................................. 97 Debt Capacity Ratios of Outstanding Debt by Type -Last Ten Fiscal Years .................................................................. 98 Computation of Legal Debt Margin -September 30, 2008 ...................................................................... 99 Direct and Overlapping Governmental Activities Debt, General Obligation Bonds - September 30, 2008 .............................................................................................................................. 99 Ratios of General Bonded Debt Outstanding and Legal Debt Margin -Last Ten Fiscal Years ............... 100 Pledged Revenue Coverage -Last Ten Fiscal Years ................................................................................ 102 Economic and Demographic Information Demographic and Economic Statistics -Last Ten Years ......................................................................... 104 Principal Employers -Year 2008 and 1999 ............................................................................................. 106 Operating Information Full-time Equivalent City Government Employees by Function/Program -Last Ten Fiscal Years ........ 107 Operating Indicators by Function/Program -Last Ten Fiscal Years ........................................................ 108 Capital Asset Statistics by Function/Program -Last Ten Fiscal Years .................................................... 109 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 ............................................................................................................. 113 Independent Auditors' Management Letter ................................................................................................... 115 111 aPr of ' _ -~~~ HOME OF PELICAN ISLAND THIS PAGE INTENTIONALLY LEFT BLANK iv QiY OF ., ~, ..- HOME OF PELICAN ISLAND 1225 MAIN STREET • SEBASTIAN, FLORIDA 32958 TELEPHONE: (772) 589-5330 • FAX (772) 589-5570 March 20, 2009 Honorable Mayor and City Council City of Sebastian, Florida D°ar Council Members: We are submitting the Comprehensive Annual Financial Report of the City of Sebastian, Florida for the fiscal year ended September 30, 2008, 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, 2008. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based on a comprehensive framework of internal control that is established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Chapter 218.39, Florida Statutes requires that the 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, Harris, Cotherman, Jones, Price & Associates, has issued an unqualified ("clean') opinion on the City of Sebastian's financial statements for the year ended September 30, 2008. 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. It is recognized as the Home of Pelican Island, the first designated wildlife refuge in the United States, a Millennium City, and a Tree City USA. 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 Mackle family of Miami and began the development of a planned community that is now the City of Sebastian. The City has a population of 22,924 living in an area of approximately 14.6 square miles. The City is empowered to levy a property tax on both real and personal property located within its boundaries. It also is empowered by state statute to extend its corporate limits by annexation, which it has done from time to time. v The City is a Florida municipal corporation with afive-member City Council. Council members serve a two-year term. Annual elections are held on the second Tuesday in November and two members are elected in even-numbered years and three members are elected in odd-numbered years. Elections are non-partisan and at-large. Mayor and Vice Mayor are elected from among the members of every newly seated Council at a Special meeting following the election each year. The City has operated under a Council-City Manager form of government since 1989. The City provides a wide range of services including general government administration, police protection, the construction and maintenance of local roads, public works, recreational and cultural activities, a golf course, a general aviation airport, and a building department to enforce building codes. This report includes all funds of the City. In evaluating the City as a reporting entity, we have included all component units for which the City Council is financially accountable. The component units have been blended with the financial statements presented for the Primary Government because the component unit's governing body is the same as the City Council or because the component unit exclusively serves the City. The blended component units are the 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 maybe 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 Econom Ti,e 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 steadily declined through 2006 but has significantly increased over the past two 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 2005 was $44,450 per the Florida Research & Economic Database. Long-term Financial Planning The voters of Indian River County in November 2003 extended the Infrastructure Sales Surtax in the amount of $.O1 per $1.00 sale for an additional fifteen years and seven months beginning in January 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. In addition, the City has funded a number of other capital projects with impact fees and has actively pursued grant funding for some major transportation and environmental improvements. It has also employed the use of a Community Redevelopment Agency that is funded by means of tax-increment financing. vi Strong growth in the City tax base 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 2.0%, although the millage was reduced from 3.0519 to 2.9917. Construction activity in fiscal year 2008 was not as strong as fiscal year 2007, with just 60 permits being issued for construction in fiscal year 2008 with a value of $21.0 million. The decline is primarily attributed to the slowdown of the housing market. Unreserved, undesignated fund balance in the general fund (46.0% of total general fund expenditure budget) exceeds the policy guidelines set by the Council for budgetary and planning purposes (i.e., minimum of 25% of total general fund expenditure budget). The City is reluctant to spend down these balances due to uncertainty about the future due to the slow down of building activity and because the City has no assurance regarding how severe further State mandated reductions to City tax revenues will be. The State already required a millage reduction and placed a cap on future increases in ad valorem taxes. The City has concerns that some of the proposed measures under discussion may result in revenue reductions that will severely diminish the City's ability to provide the services required by our residents and visitors. The budget for next year incorporates reductions in operating expenditures and elimination of any new capital equipment in anticipation that expenses will have to be further reduced to deal with these restricted measures. Major Initiatives Stormwater -The main focus of stormwater effort expended for the past fiscal year has continued to be on the City's Stormwater Management Program, including capital projects, maintenance, citizen response and education, and forward planning. In fiscal year 2007, City began a program to upgrade the current Swale system by installing '/4 rounds. The City also started outsourcing the Swale and ditch maintenance work to enable City crews to focus on different stormwater maintenance practices. Traffic & Transportation -The City continues working on a long-term street-resurfacing program for the next 10 to 15 years. City administration will also continue to program funding for streetscape projects to help maintain public safety and beautification efforts. In addition, capital improvement programming for sidewalk installation throughout the City will continue for both the short and long term as funding and resources permit. Airport -The Sebastian Municipal Airport's infrastructure is being developed to attract economic development opportunities that will stimulate the business climate and create jobs in the community. The current Master Plan serves as the guiding document for airport planning. Land leases are a primary sources of airport revenues and over 150 acres of property is available for lease, for both aviation and non-aviation businesses. Also important are sales from aself--serve fueling facility. These features are highlighted in the recently updated and improved website. The Airport's limited resources continue to be leveraged by aggressively seeking and obtaining grants available from the Florida Department of Transportation (FDOT) and Federal Aviation Administration (FAA) to provide the funding needed to develop the necessary infrastructure. Recent improvements include a fully automated weather observation system, solar powered LED taxiway lighting and a precision approach path indicator system. These and other ventures will help diversify airport revenues, providing for a stronger enterprise fund that has the potential to increase taxable values. vii Public Safety -The Police Department continues to provide a Community Police Officer who participates in community events and offers special services, such as child safety seat inspections, youth safety talks, neighborhood safety meetings and school security surveys. The City continues to sponsor the School Resources Officer Program at the two elementary schools located within the City. In addition, the Sebastian Police Department K-9 Unit has been increased to enable this capability on every work shift. The K-9 Unit became possible as a result of numerous charitable efforts in the community. It is effective in assisting officers with narcotics detection, location of missing persons and tracking criminal suspects more expeditiously. Road Patrol and Special Operations continue to serve the community by patrolling the city to deter crime and maintain the community policing philosophy. 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, 2007. 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 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 citizens of the City of Sebastian. We sincerely appreciate their contributions. ~i ~~'~~J'I <~~._ _ Kenneth W. Killgore Director of Finance viii Respectfully submitted, .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, 2007 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. NGE ~Fp ~ ~ ~ ~' President ~~r.~ Executive Director 1X CITY OF SEBASTIAN, FLORIDA ORGANIZATIONAL CHART CITIZENS OF SEBASTIAN CITY COUNCIL CITY CITY CLERK MANAGER POLICE I FINANCE MANAGEMENT ADMINISTRATION INFORMATION SYSTEM ROAD PATROL HUMAN RESOURCES CODE I ENGINEERING ENFORCEMENT DETECTIVE SUPPORT GROWTH MANAGEMENT SERVICES DISPATCH I ~.I BUILDING DEPARTMENT GOLF COURSE AIRPORT BOARDS & I COMMISSIONS CITY ATTORNEY PUBLIC WORKS ROADS & MAINTENANCE PARKS & RECREATION CENTRAL GARAGE CEMETERY BUILDING MAINTENANCE STORMWATER X CITY OF SEBASTIAN, FLORIDA CITY OFFICIALS City Manager City Clerk City Attorney DEPARTMENT HEADS: Police Chief Director of Finance City Engineer Public Works Director Growth Management Director Building Director Human Resources Director Golf Course Director Airport Director AL MINNER SALLY A. MAIO, MMC RICH STRINGER JAMES A. DAMS KENNETH W. KILLGORE DAVID W. FISHER, P.E. JERRY CONVERSE REBECCA GROHALL WAYNE ESELTINE DEBRA KRUEGER GREG GARDNER JOSEPH GRIFFIN X1 CITY OF n N.~~ i HOME OF PELICAN ISLAND THIS PAGE INTENTIONALLY LEFT BLANK xii 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 anoF ~r~ << THIS PAGE INTENTIONALLY LEFT BLANK _: ~ I f; ~-- F ~ ~W ww wy s. w r~~N' HOME OF PELICAN ISLAND Harris, Cotherman, Jones, Price ~ Associates Certified Public Accountants -Chartered 5070 North Highway AlA, Suite 250 Vero Beach, FL 32963 Tel 772.234.8484 Fax 772-234-8488 Independent Auditors' Report 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, 2008, 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 an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Sebastian, Florida as of September 30, 2008, and the respective changes in financial 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 March 10, 2009 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 Auditing Standards and should be considered in assessing the results of our audit. The management's discussion and analysis and the required supplemental information, as listed in the table of contents are not a required part of the basic financial statements but are supplemental 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 methods of measurement and presentation of the required supplemental information. However, we did not audit the information and express no opinion on it. "Providing Vision and Direction to our Clients" Member AICPA Member AICPA Division For CPA Firms Member FICPA Private Companies Practice Section 3 Harris, Cotherman, Jones, Price & Associates Certified Public Accountants -Chartered Honorable Mayor and Members of City Council City of Sebastian Page two Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City of Sebastian, Florida's basic financial statements. The introductory section, combining and individual nonmajor fund financial 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 nonmajor 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 financial statements and, accordingly, we express no opinion on them. The accompanying schedule of expenditures of state financial assistance is presented for purposes of additional analysis as required by the Florida Single Audit Act 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 financial statements taken as a whole. ~, ~a+tdctsn~la.+t, L~riwr f~ttat ~ l~eec~~c~ty ~,~tJ+~id l~ubl~e Al!~nr~xh'~s - ~h~n~~erd Vero Beach, Florida March 10, 2009 4 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 2008 by $48,819,011 (net assets). Of this amount, $5,788,260 (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 $1,910,151 resulting from an increase of $2,245,952 from governmental activities and $335,801 decrease from business-type activities • As of the close of current fiscal year, the City's governmental funds reported combined ending fund balance of $19,526,369, a decrease of $485,469 in comparison with the prior year. Approximately 46% of this amount, $8,943,393, 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 $5,534,856, or a 2% increase from prior year general fund unreserved and undesignated fund balance. The key factor in this increase was the reduction of the reserve for equipment replacement, as those balances were applied to replace equipment during the fiscal year. 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, 16, and 17) provide information about the activities of the City as a whole and present a longer-term view of the City's finances. Fund financial statements begin on page 18. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City's operations in more detail by providing information about the City's most significant funds. The 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 accrual basis of accounting, 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. 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, Airport, and Building operations 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 eighteen 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, 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 ten governmental funds are combined into a single, aggregated presentation. Individual fund data for each nonmajor governmental fund is provided in the form of combining statements beginning on page 60. 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. 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. 6 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 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- 50 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report 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 51-56 of this report. THE CITY AS A WHOLE Financial Analysis of the City as a Whole The City's combined net assets increased $1.8 million from $46.9 million to $48.8 million or 4%. Looking at the net assets and net revenues of the governmental and business-type activities, an increase in net assets of governmental-type activities was offset by a decrease in net assets of the business-type activities. Our analysis focuses on net assets (Table 1) and changes in net assets (Table 2) of the City's governmental and business-type activities. 7 GOVERNMENT-WIDE STATEMENTS Statement of Net Assets The following table reflects the condensed Statements of Net Assets: Table 1 Statements of Net Assets as of September 30, 2008 and 2007 (in thousands) Governmental Activities Business-type Activities Total Primary Government 2008 2007 2008 2007 2008 2007 Current and other assets $ 21,016 $ 22,173 $ 1,848 $ 2,371 $ 22,864 $ 24,544 Capital assets 34,468 32,942 9,966 10,013 44,434 42,955 Total assets $ 55,484 $ 55,115 $ 11,814 $ 12,384 $ 67,298 $ 67,499 Non-current liabilities $ 15,868 $ 17,110 $ 1,086 $ 1,323 $ 16,954 $ 18,433 Other liabilities 1,231 1,866 294 291 1,525 2,157 Total liabilities $ 17,099 $ 18,976 $ 1,380 $ 1,614 $ 18,479 $ 20,590 Net assets: Invested in capital assets, net of related debt $ 24,134 $ 21,469 $ 9,111 $ 8,896 $ 33,245 $ 30,365 Restricted 9,216 9,420 570 570 9,786 9,990 Unrestricted 5,035 5,250 753 1,304 5,788 6,554 Total net assets $ 38,385 $ 36,139 $ 10,434 $ 10,770 $ 48,819 $ 46,909 For more detail information see the Statement of Net Assets on page 15. Total net assets of the governmental activities increased from $36.139 million to $38.385 million. Total net assets for business-type activities decreased from $10.770 million to $10.434 million. The increase in governmental activities capital assets is due to projects that were completed during the period. The decrease in governmental activities non-current liabilities is due to normal amortization of the long-term debt. The decrease in unrestricted net assets is mainly due to the corresponding increase in restricted net assets caused from investment in capital assets. The overall decrease in net assets for business-type activities is due to the use of unrestricted assets during the period. 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. 8 The following table shows the revenue and expenses of the total primary government. Table 2 Changes in Net Assets For the Fiscal Years Ended September 30, 2008 and 2007 (in thousands) Governmental Business-type Total Primary Activities Activities Government 2008 2007 2008 2007 2008 2007 REVENUES Program revenues: Charges for services $ 1,426 $ 1,493 $ 2,309 $ 2,406 $ 3,735 $ 3,899 Operating grants and contributions 786 193 - - 786 193 Capital grants and contributions 836 1,014 494 500 1,330 1,514 General revenues: Property taxes 5,149 5,090 - - 5,149 5,090 Other taxes 4,754 4,777 - - 4,754 4,777 Intergovernmental 1,990 2,084 - - 1,990 2,084 Other 1,993 2,446 54 137 2,047 2,583 Total revenues 16,934 17,097 2,857 3,043 19,791 20,140 EXPENSES General government 3,375 3,084 - - 3,375 3,084 Public safety 5,227 5,377 - - 5,227 5,377 Physical environment 1,806 1,695 - - 1,806 1,695 Transportation 2,111 2,276 - - 2,111 2,276 Economic environment 113 606 - - 1 13 606 Culture and recreation 1,421 1,237 - - 1,421 1,237 Golf Course - - 1,488 1,534 1,488 1,534 Airport - - 1,100 1,047 1,100 1,047 Building - - 605 905 605 905 Interest and fiscal charges 635 668 - - 635 668 Total expenses 14,688 14,943 3,193 3,486 17,881 18,429 Change in net assets before transfers 2,246 2,154 (336) (443) 1,910 1,711 Transfers - 43 - (43) - - Increase in net assets 2,246 2,197 (336) (486) 1,910 1,711 Net assets -October 1, 2007 36,139 33,942 10,770 11,256 46,909 45,198 Net assets -September 30, 2008 $ 38,385 $ 36,139 $ 10,434 $ 10,770 $ 48,819 $ 46,909 Overall the total revenues decreased $349 thousand from the previous year. The total cost of all programs decreased by 3.0% ($548 thousand). Our analysis below separately considers the operations of governmental and business-type activities. Governmental Activities Governmental activities revenues exceed expenses by $2.246 million. Total revenues decreased approximately $0.163 million from the previous year. The decline was primarily in categories affected by the slowdown in economic activity. Less was received in Recreation Impact fees and a downturn was noted in sales taxes and state shared revenues. Total expenses decreased $.255 million from the previous year. The largest decrease in spending was in the category of transportation. 9 The following is a graphic illustration of the comparison for governmental activities revenue and expenses. Governmental Activities Comparison for Fiscal Year 2008 and Fiscal Year 2007 6,000 , s,ooo - ------ ~ ~ a,ooo ~ - --- ---- £ ~ 3,000 1 - -- d F, 2,000 ~ - ~ - 1,000 - - - ~T~- < se<~ee~~<a <a~~<a e<~ «tbe<~a~<~~e~t <e~e~a ~~~e~~ sa=e°°~e~°<«t,°<~Se c<e~<,°e d` ae~C Gra<~'eS`OQe<~t~G~~~ 4<oQ ate<~b°~e Geese<a~~° ~~bea~e~~ ~t~~o~~c`;~ a~ao `°o~t Q ~c GJ lO`e<e Revenue/Expensetyyes ®2008 ^ 2007 Business-type Activities Revenues of the City's business-type activities (see Table 2) decreased $0.186 million primarily because of a decline in investment income and due to a reduction in building permit fees as a result of the slowdown in activity. Expenses fell by 8.3% for all the City's business-type activities, with expenses for Golf Course dropping 3.0% and Building Enterprise falling by 33.1%. Airport expenses increased 5.0%, primarily due to additional depreciation on capital assets. 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. Following is a graphic comparison of the City's business-type activities. Business-Type Activities Comparison for Fiscal Year 2008 and Fiscal Yea12007 3,000 - 2,500 ~ ^a 2,000 c a ~ o N F 1,500 ° :_ 1,000 500 es tiS ~S Oe e5 e5 e5 Sete ~i~~ `~i~o ie~eo e~4e~5 eS•Qe~s e'~Qe~S Gb~i~eS~oi OQeiQt~~ G`~Q~~~ O~re~ °`fGoatSe ~,tQ°tt ~J~vav°~ G Revenue/Expense types 2008 ^ 2007 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 $19.5 million, which is a decrease of $0.5 million over the prior year of $20.0 million. Approximately 45.8% of this total amount ($8.9 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 ($0.4 million), 2) to fund capital projects ($8.3 million), 3) to generate income to pay for the perpetual care of the municipal cemetery ($0.8 million), or 4) for a variety of other restricted or designated purposes ($1.1 million). 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 $5,534,856, while total fund balance was $6,308,182. 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 46 percent of total general fund expenditures, while total fund balance represents 52 percent of that same amount. The fund balance of the City's general fund decreased by $82,605 during the current fiscal year. Key factors in this reduction are as follows: • Intergovernmental revenues decreased by $79,405, due to lower sales tax and state shared revenues. • Investment earnings decreased by $138,379, as a result of the decline in interest rates. • Capital outlay decreased by $97,103, as compared to the amounts previously expended. The discretionary sales tax revenue special revenue fund has a total unreserved and undesignated fund balance of $1,119,945. The decrease of the total fund balance from prior year ($1,006,994) is mainly due to transfers made to the capital project funds for capital improvements and the advance made to the airport fund. The riverfront redevelopment special revenue fund has an unreserved and undesignated fund balance of $16,404. The decrease of the total fund balance from the prior year ($339,561) is mainly due to transfers made to the capital project funds for capital improvements. The transportation improvements capital project fund has a total fund balance of $2,797,157, all of which is encumbered or reserved for transportation related construction such as roads, intersections and sidewalks. The stormwater utility improvements capital project fund has a total fund balance of $5,039,510, all of which is reserved for stormwater capital projects. The increase of the total fund balance from the prior year ($419,625) is due to transfers from special revenue funds to fund several stormwater capital projects. 11 Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The total net assets of the golf course fund at the end of the fiscal year amounted to $446,367, while the unrestricted net assets amounted to $633. Compared to the prior year in the same category, net assets are $32,723 less than the prior year, while the unrestricted net assets has a decrease of $237,211 from the prior year. This is mainly due to the decline in operating income as compared to the prior year. Detailed golf course net assets information is presented on page 23. The total net assets of the airport fund at the end of the fiscal year amounted to $9,160,573, while the unrestricted net assets (deficit) amounted to ($43,470). Compared to the prior year in the same category, net assets have decreased by $78,798 while the unrestricted net assets have decreased $101,423 to result in a deficit of $43,470. The decrease in unrestricted net assets is mainly due to the construction of airport capital projects. The total net assets of the building fund at the end of the fiscal year amounted to $827,536, while the unrestricted net assets amounted to $795,914. The building fund experienced a large operating loss, as a result of the slowdown in activity and drop in building permit fees. Other factors concerning the finances of these three 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 four categories. The first category includes amendments and supplemental appropriations that were approved shortly after the beginning of the year and reflect fund balances carried over from the prior fiscal year to fund outstanding encumbrances. The second category includes adjustments for unanticipated revenues. The third category includes the changes that the Council made during the year to take into account the City's offering of an employee early retirement program and to cover additional costs for ditch and Swale mowing. The fourth category includes supplemental appropriations for required police pension contributions. During the fiscal year, the City amended the general fund budget in the amount of $273,263 for all these items. The main components of the increase are as follows: • $62,445 supplemental appropriation to general fund departments for encumbered amounts carried forward from the prior fiscal year. • $25,004 supplemental appropriation for unanticipated proceeds from a COPS in Schools Grant. • $12,000 supplemental appropriation for revenue from the lease of the old school house 2"d floor. • $4,089 supplemental appropriation for an insurance reimbursement on a damaged city vehicle. • $6,525 supplemental appropriation for unanticipated proceeds from a JAG grant • $15,400 supplemental appropriation for a contribution from the Greer Trust for police expenditures. • $122,800 supplemental appropriation to the police department for the required pension contribution. • $25,000 supplemental appropriation for cost associated with an employee's early retirement. During the fiscal year, total general fund actual revenues were less than final amended budgetary estimates and total general fund actual expenditures were less than the final amended budgetary estimates. The shortfall in anticipated revenues was mainly due to a decline in intergovernmental revenues, specifically the City's share of sales tax proceeds. Lower than anticipated investment earnings also contributed to the shortfall. Positive variances on expenditures resulted in a much lower draw on existing fund balances than had been anticipated. 12 CAPITAL ASSET AND DEBT ADMINISTRATION C~.pital Assets At the end of fiscal year 2008 the City had $66,042,300 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 $3,808,395, or 6.1%, 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. Table 3 Governmental Business-type Activities Activities Totals 2008 2007 2008 2007 2008 2007 Land $ 5,696,946 $ 5,696,946 $ 9,060 $ 9,060 $ 5,706,006 $ 5,706,006 Buildings $ 11,158,739 10,996,497 3,726,258 3,232,472 14,884,997 14,228,969 Improvements $ 5,149,267 4,970,638 1,866,928 1,216,078 7,016,195 6,186,716 Equipment $ 7,390,752 6,820,051 922,575 804,465 8,313,327 7,624,516 Infrastructure $ 22,259,149 18,677,191 6,226,110 5,817,369 28,485,259 24,494,560 Construction-in Progress $ 1,520,565 2,692,704 115,951 1,300,434 1,636,516 3,993,138 Totals $ 53,175,418 $ 49,854,027 $ 12,866,882 $ 12,379,878 $ 66,042,300 $ 62,233,905 Governmental activities had the following major increases during the fiscal year: • An increase in buildings mainly due to renovation of the Community Center. • An increase in improvements due to the capitalization of work completed at parks and playgrounds. An increase in equipment mainly due to capitalization of new police vehicles. An increase in infrastructure mainly due to the work on roadways and stormwater drainage system. Business-type activities had the following major increases during the fiscal year: • An increase in buildings mainly due to the completion of the municipal airport maintenance building. • An increase in improvements mainly due to work on the municipal airport lighting and signage. An increase in equipment mainly due to the purchase of municipal airport maintenance equipment. An increase in infrastructure mainly due to installation of the municipal airport fuel tank. A decrease in construction in progress primarily due to the completion of airport security upgrades. Debt On September 30, 2008, the City had $15,203,147 in bonds, notes and capital leases outstanding versus $16,791,805 on September 30, 2007 - a decrease of 9.5% - as shown in the table on the following page: 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 were initially insured by AAA rated insurance agencies and rated AAA, which is the highest rating given by rating agencies. The City's Recreational Facilities Improvement and Refunding Revenue Bonds, Series 2001 received a AAA rating from Standard & Poor's. However, ratings on the insurance agencies have recently been downgraded. 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 45 in the notes to the financial statements. 13 Infrastructure sales surtax revenue Table 4 Governmental Activities _ 2008 2007 Business-type Activities 2008 2007 Totals 2008 2007 bonds, Series 2003 $ 6,840,000 $ 7,405,000 $ - $ - $ 6,840,000 $ 7,405,000 Infrastructure sales surtax revenue bonds, Series 2003A 1,605,000 1,740,000 - - 1,605,000 1,740,000 Stormwater utility revenue bonds, Series 2003 4,570,000 4,815,000 - - 4,570,000 4,815,000 Notes payable (backed by local option gas tax) 1,333,197 1,566,840 - - 1,333,197 1,566,840 Capital lease obligation (backed by City) - 147,539 - - - 147,539 Recreational facilities improvements and refunding revenue bonds, series 2001 - - 854,950 1,117,426 854,950 l,l 17,426 Totals $ 14,348,197 $ 15,674,379 $ 854,950 $ 1,117,426 $ 15,203,147 $ 16,791,805 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The City's elected and appointed officials considered many factors when setting the fiscal year 2009 budget, tax rates, and fees that will be charged for the business-type activities. One of those factors is the economy. Sebastian's local economy consists largely of retail and service industries. Less than one percent is devoted to industrial activities. Construction of new homes is the largest single business in the area. Some of the largest retail stores include Publix Supermarket and Wal-Mart Stores, Inc.® The Indian River County unemployment rate in 2008 was 9.7% up from 6.0% in the previous year. This is analogous to the economic slowdown being experienced throughout the state and nation. In fiscal year 2008, the city experienced a major reduction in property value (11.8% decrease) and a large decrease in construction permits (from 116 to 60). The decrease in construction permits reflects the state and national trend and is consistent with the overall housing market. These indicators were taken into account when adopting the General Fund budget for fiscal year 2009. Amounts available for appropriation in the General Fund budget are $11,850,747, a decrease of l.l% from the original fiscal year 2008 budget of $11,980,334. Uncertainty about the slowdown in building activity and concern about measures that may be enacted by the State to limit revenues and spending has caused the City to limit spending. The City has determined that it should proceed cautiously and be in a better position to address those mandates. The Golf Course has experienced a decrease in golf revenues in fiscal year 2008 mainly due to a slow down in number of rounds being played. Although it was able to reduce operating expenses, it was unable to meet the bond coverage requirement on the Recreational Facilities Improvement and Refunding Revenue Bonds, Series 2001 bond issue. The coverage requirement is defined as the net revenues being equal to at least 125% of the annual debt service payment. City management continues to monitor the operation and intends to develop recommendations that could resolve the deficiency. REQUEST FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional information, contact the Finance Department at City of Sebastian, 1225 Main Street, Sebastian, Florida 32958. 14 City of Sebastian, Florida Statement of Net Assets September 30, 2008 ASSETS Governmental Activities Business-type Activities Total Cash and cash equivalents $ 2,425,586 $ 1,222,230 $ 3,647,816 Investments 6,767,902 399,597 7,167,499 Receivables 897,838 60,505 958,343 Special assessment receivable 3,849 - 3,849 Internal balances 485,000 (485,000) - Prepaid items 114,788 20,683 135,471 Inventory 66,740 32,013 98,753 Restricted assets: Temporarily restricted: Cash and cash equivalents 1,525,634 - 1,525,634 Investments 7,566,234 570,149 8,136,3 83 Permanently restricted: Cash and cash equivalents 500,240 - 500,240 Investments 151, ~ 35 - 151,135 Overfunded pension costs 100,275 - 100,275 Deferred charges 410,424 27,794 438,218 Capital assets not being depreciated: Land 5,696,946 9,060 5,706,006 Construction in progress 1,520,565 115,951 1,636,516 Capital assets (net of accumulated depreciation): Buildings 8,870,828 3,230,862 12,101,690 Improvements other than buildings 3,498,624 1,502,474 5,001,098 Machinery and equipment 1,949,498 358,833 2,308,331 Infrastructure 12,931,651 4,749,021 17,680,672 Total assets 55,483,757 11,814,172 67,297,929 LIABILITIES Accounts payable and other current liabilities 989,164 125,349 1,114,513 Accrued interest payable 239,167 17,845 257,012 Deferred revenues Unearned revenues 3,269 139,353 142,622 Rent concession liability - 11,000 11,000 Non-current liabilities: Due within one year 1,338,905 301,985 1,640,890 Due in more than one year 14,528,717 784,164 15,312,881 Total liabilities 17,099,222 1,379,696 18,478,918 NET ASSETS Invested in capital assets, net of related debt 24,133,550 9,111,251 33,244,801 Restricted for: Capital projects 4,926,792 - 4,926,792 Debt service 424,782 310,090 734,872 Road projects 3,023,949 - 3,023,949 Community redevelopment 16,404 - 16,404 Perpetual care: Expendable 620,792 - 620,792 Nonexpendable 151,135 - 151,135 Other purposes 51,947 260,059 312,006 Unrestricted 5,035,184 753,076 5,788,260 Total net assets $ 38,384,535 $ 10,434,476 $ 48,819,011 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, 2008 Function/Program Governmental activities: General government Public safety Physical environment Transportation Economic environment Cultural/recreation Interest and fiscal charges Total governmental activities Business-type activities: Golf Course Airport Building Total business-type activities Total government Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions $ 3,375,178 $ 353,836 $ 21,349 ~ - 5,226,512 85,009 433,108 - 1,805,755 903,285 313,000 39,992 2,111,360 - 18,559 601,390 113,101 - - - 1,420,734 83,378 - 194,225 634,891 - - - 14,687,531 1,425,508 786,016 835,607 1,488,472 1,438,233 - - 1,099,653 523,989 - 494,098 605,422 347,189 - - 3,193,547 2,309,411 - 494,098 $ 17,881,078 $ 3,734,919 $ 786,016 $ 1,329,705 General Revenues: Property taxes, levied for general purposes Sales and use taxes Franchise fees State shared revenues not restricted to specific programs Interest earnings Miscellaneous Total general revenues 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 Total $ (2,999,993) $ - $ (2,999,993) (4,708,395) - (4,708,395) (549,478) - (549,478) (1,491,411) - (1,491,411) (113,101) - (113,101) (1,143,131) - (1,143,131) (634,891) - (634,891) (11,640,400) - (11,640,400) - (50,239) (50,239) - (81,566) (81,566) - (258,233) (258,233) - (390,038) (390,038) (11,640,400) (390,038) (12,030,438) 5,149,047 - 5,149,047 4,753,718 - 4,753,718 1,199,762 - 1,199,762 1,989,606 - 1,989,606 634,919 54,237 689,156 159,300 - 159,300 _ 13,886,352 54,237 13,940,589 2,245,952 (335,801) 1,910,151 36,138,583 10,770,277 46,908,860 $ 38,384,535 $ 10,434,476 $ 48,819,011 1~ City of Sebastian, Florida Balance Sheet Governmental Funds September 30, 2008 Stormwater Discretionary Riverfront Transportation Utility General Sales Tax Redevelopment Improvements Improvements ASSETS Cash and cash equivalents $ 1,233,186 $ 226,402 $ 17,520 $ 178,843 $ 357,164 Investments 4,766,675 682,162 - 2,749,678 4,816,557 Accounts receivables 244,190 - - - - Special assessments receivable 3,849 - - - - Due from other governments 232,744 210,070 - 16,140 31,200 Interest receivable 1,769 1,319 23 - - Inventory 66,740 - - - - Prepaid items 114,788 - - - - Advance to other funds 200,000 285,000 - - - Total assets $ 6,863,941 $ 1,404,953 $ 17,543 $ 2,944,661 $ 5,204,921 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 527,409 $ 8 $ 1,139 $ 139,191 $ 165,411 Retainage payable - - - 8,312 - Due to other governments 21,232 - - - - Deferred revenues 3,849 - - - - Unearned revenues 66 - - - - Other deposits held in escrow 3,203 - - - - Total liabilities 555,759 8 1,139 147,503 165,411 Fund balances: Reserved for: Encumbrance 8,473 - - - - Advance to other funds 200,000 285,000 - - - Debt service - - - - - Capital projects - - - 2,797,157 5,039,510 Property and casualty 100,000 - - - - Cemetery care - - - - - Law enforcement - - - - - Emergency services 350,000 - - - - Equipment replacement 81,400 - - - - Unreserved: Designated for employee events 8,367 - - - - Designated for law enforcement 25,086 - - - - Undesignated, reported in: General fund 5,534,856 - - - - Special revenue funds - 1,119,945 16,404 - - Total fund balances 6,308,182 1,404,945 16,404 2,797,157 5,039,510 Total liabilities and fund balances $ 6,863,941 $ 1,404,953 $ 17,543 $ 2,944,660 $ 5,204,921 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources, therefore, are not reported in the funds. Negative net pension obligation resulting from overfunding of the police officers' pension plan. Accrued other post employment and temunation benefits are not financial uses, therefore, are not reported in the funds. Long-term liabilities are not due and 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. Accrued arbitrage rebate is reported as liabilities. Some interest receivables are not financial resources in the current period and, therefore, are not reported in the funds. Special assessment receivables are not financial resources in the current period, therefore, are reported as deferred revenues. Net assets of governmental activities The accompanying notes to financial statements are an integral part of this financial statement. 18 Other Total Governmental Governmental Funds Funds $ 2,438,345 $ 4,451,460 1,470,200 14,485,272 - 244,190 - 3,849 57,967 548,121 2,830 5,941 - 66,740 - 114,788 - 485,000 $ 3,969,342 $ 20,405,361 $ 9,171 $ 842,329 - 8,312 - 21,232 - 3,849 - 66 - 3,203 9,171 878,991 8,473 485,000 424,782 424,782 439,327 8,275,994 - 100,000 771,927 771,927 51,947 51,947 - 350,000 - 81,400 - 8,367 - 25,086 - 5,534,856 2,272,188 3,408,537 3,960,171 19,526,369 $ 3,969,342 34,468,112 100,275 (292,367) (15,256,031) (239,167) (26,091) 99,586 3,849 19 City of Sebastian, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2008 Stormwater Discretionary Riverfront Transportation Utility General Sales Tax Redevelopment Improvements Improvements REVENUES: Taxes: Property $ 4,645,663 $ - $ 503,384 $ - $ - Public utility 2,250,781 - - - - Sales - 2,502,937 - - - Motor fuel - - - - - Franchise fees 1,199,762 - - - - Licensesand permits 163,471 - - - - Intergovernmental 2,141,810 - - 161,400 352,992 Impact fees - - - - - Charges for services 319,123 - - - - Fines 46,132 - - - - Investment earnings 202,380 46,721 10,891 23,432 191,575 Contributions and donations 300,368 - - - - Other revenue 154,044 - 75 - - Total revenues 11,423,534 2,549,658 514,350 184,832 544,567 EXPENDITURES: Current: General government 3,087,789 - - - - Public safety 4,677,533 - - - - Physical environment 1,368,507 - - - - Transportation 1,339,308 - - - - Economic environment - - 113,101 - - Culture and recreation 1,079,379 - - - - Debt Service: Principal - - - - - Interest and fiscal charges - - - - - Capital outlay 490,161 - 106,249 1,123,953 1,443,386 Total expenditures 12,042,677 - 219,350 1,123,953 1,443,386 Excess (deficiency) of revenues over (under) expenditures (619,143) 2,549,658 295,000 (939,121) (898,819) OTHER FINANCING SOURCES (USES) Transfers in 536,538 - - 1,795,812 1,318,444 Transfers out - (3,556,652) (634,561) - - Total other financing sources (uses) 536,538 (3,556,652) (634,561) 1,795,812 1,318,444 Net changes in fund balances (82,605) (1,006,994) (339,561) 856,691 419,625 Fund balances -beginning 6,390,787 2,411,939 355,965 1,940,466 4,619,885 Fund balances -ending $ 6,308,182 $ 1,404,945 $ 16,404 $ 2,797,157 $ 5,039,510 The accompanying notes to financial statements are an integral part of this financial statement. 20 Other Total Governmental Governmental Funds Funds $ - $ 5,149,047 - 2,250,781 - 2,502,937 601,390 601,390 - 1,199,762 - 163,471 18,559 2,674,761 32,825 32,825 890,494 1,209,617 19,114 65,246 172,313 647,312 1,885 302,253 5,181 159,300 1,741,761 16,958,702 3,087,789 85 4,677,618 86 1,368,593 205,737 1,545,045 - 113,101 - 1,079,379 1,326,182 1,326,182 611,554 611,554 471,161 3,634,910 2,614,805 17,444,171 (873,044) (485,469) 2,029,102 5,679,896 (1,488,683) (5,679,896) 540,419 - (332,625) (485,469) 4,292,796 20,011,838 $ 3,960,171 $ 19,526,369 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, 2008 Net change in fund balances -total governmental funds Amount reported for governmental activities in the statement of activities are different because: Some interest revenues reported in the statement of activities do not constitute current financial resources, therefore, are not reported as revenues in governmental funds. 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. An amount previously capitalized as construction in progress was expensed due to the project being cancelled. 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 financial resources, therefore, are not reported as expenditures in the governmental funds. Change in net assets of governmental activities The accompanying notes to financial statements are an integral part of this financial statement. (485,469) 13,698 1,585,940 (26,891) (32,850) (21,637) 1,326,182 (113,021) $ 2,245,952 22 r ASSETS Current assets: Cash and cash equivalents Investments Restricted cash, cash equivalents and investments: Revenue bond covenant accounts Accounts receivable Due from other governments Interest receivable Inventory Prepaid items Total current assets Nonc^irrent assets: Deferred charges Capital assets: Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Construction in process Less accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Advance from other fund Due to other governments Unearned revenues Accrued termination benefits Compensated absences Matured bonds payable Total current liabilities Non-current liabilities: Accrued termination benefits Compensated absences Unfunded OPEB obligation Rent concession liability Bonds payable (net of unamortized premium and deferred amount on refunding) Total non-current liabilities Total liabilities City of Sebastian, Florida Statement of Net Assets Proprietary Funds September 30, 2008 Enterprise Funds Golf Course Airport Building Totals $ 162,191 $ 477,977 $ 582,062 $ 1,222,230 2,525 - 397,072 399,597 570,149 - - 570,149 - 11,000 - 11,000 - 47,865 - 47,865 208 619 813 1,640 9,796 22,217 - 32,013 9,351 6,288 5,044 20,683 754,220 565,966 984,991 2,305,177 27,794 - - 27,794 - 9,060 - 9,060 331,228 3,395,030 - 3,726,258 206,265 1,660,663 - 1,866,928 360,060 501,988 60,527 922,575 1,100,951 5,125,159 - 6,226,110 - 115,951 - 115,951 (1,267,969) (1,603,808) (28,904) (2,900,681) 758,329 9,204,043 31,623 9,993,995 1,512,549 9,770,009 1,016,614 12,299,172 57,960 61,604 15,602 135,166 - 485,000 - 485,000 6,795 1,233 - 8,028 62,549 - 76,804 139,353 - - 12,342 12,342 1,588 1,647 6,408 9,643 280,000 - - 280,000 408,892 549,484 111,156 1,069,532 64,485 42,209 6,854 17,743 11,000 - 7,097 7,097 58,465 165,159 12,360 36,957 - 11,000 574,951 - - 574,951 657,290 59,952 77,922 795,164 1,066,182 609,436 189,078 1,864,696 NET ASSETS Invested in capital assets, net of related debt (124,415) 9,204,043 31,623 9,111,251 Restricted for: Debt service 310,090 - - 310,090 Other purposes 260,059 - - 260,059 Unrestricted (deficit) 633 (43,470) 795,913 753,076 Total net assets $ 446,367 $ 9,160,573 $ 827,536 $ 10,434,476 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, 2008 Operating revenues: Charges for fees and rents: Building permit fees Golf course fees pledged as security for revenue bonds Rents Other revenue Total operating revenues Operating expenses: Salaries, wages and employee benefits Contractual services, materials and supplies Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Interest income Interest income pledged as security for revenue bonds Interest expense Bond amortization expense Gain on disposal of capital assets Loss on disposal of capital assets Total nonoperating revenues (expenses) Income/(loss) before capital contributions and transfers Capital contributions Change in net assets Total net assets -beginning Total net assets -ending Enterprise Funds Golf Course Airport Building Totals $ - $ - $ 347,189 $ 347,189 1,400,163 - - 1,400,163 29,308 294,211 - 323,519 8,762 225,854 - 234,616 1,438,233 520,065 347,189 2,305,487 367,819 234,405 435,882 1,038,106 979,350 386,045 157,435 1,522,830 82,881 479,203 12,105 574,189 1,430,050 1,099,653 605,422 3,135,125 8,183 (579,588) (258,233) (829,638) - 2,768 33,953 36,721 17,516 - - 17,516 (43,215) - - (43,215) (13,897) - - (13,897) - 3,924 - 3,924 (1,310) - - (1,310) (40,906) 6,692 33,953 (261) (32,723) (572,896) (224,280) - 494,098 - (829,899) 494,098 (32,723) (78,798) (224,280) (335,801) 479,090 9,239,371 1,051,816 10,770,277 $ 446,367 $ 9,160,573 $ 827,536 $ 10,434,476 The accompanying notes to financial statements are an integral part of this fmancial statement. 24 City of Sebastian, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users Cash payments to suppliers Cash payments for employee services Net cash provided (used) by operating activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Proceeds from sale of assets Receipt from capital grants Receipt from advance from other fund Principal paid on revenue bond maturities Bond issuance costs Interest paid on revenue bonds Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Interest on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, October 1 Cash and cash equivalents, September 30 Enterprise Funds Golf Course Airport Building Totals $ 1,431,642 $ 514,398 $ 411,116 $ 2,357,156 (953,343) (415,883) (]57,468) (1,526,694) (357,710) (219,011) (448,984) (1,025,705) 120,589 (120,496) (195,336) (195,243) (26,945) (519,115) 3,924 656,567 285 000 (546,060) (270,000) - 7,525 - (48,615) - (338,035) 426,376 - 3,924 - 656,567 - 285,000 - (270,000) - 7,525 - (48,615) - 88,341 17,370 2,275 40,453 60,098 17,370 2,275 40,453 60,098 (200,076) 308,155 (154,883) (46,804) 934,941 169,822 1,134,017 2,238,780 $ 734,865 $ 477,977 $ 979,134 $ 2,191,976 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, 2008 (Continued) Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense (Increase) Decrease in assets: Accounts receivable Prepaid expenses Inventories Increase (Decrease) in liabilities: Accounts payable Due to other governments Rent concession liability Accrued termination benefits Accrued compensated absences Accrued OPEB liability Unearned revenues Total adjustments Net cash provided (used) by operating activities Cash and cash equivalents reconciliation: Current assets: Cash and cash equivalents Investments Restricted asset: Investments Cash and cash equivalents at September 30 Enterprise Funds Golf Course Airport Building Totals $ 8,183 $ (579,588) $ (258,233) ~ (829,638) 82,881 479,203 12,105 574,189 - 4,896 - 4,896 (2,542) 1,623 7 (912) 378 4,886 - 5,264 30,656 (36,026) (40) (5,410) (484) (321) - (805) (2,000) - - (2,000) - - (18,550) (18,550) 9,343 13,704 4,311 27,358 765 1,690 1,137 3,592 (6,591) (10,563) 63,927 46,773 112,406 459,092 62,897 634,395 $ 120,589 $ (120,496) $ (195,336) $ (195,243) $ 162,191 $ 477,977 $ 582,062 $ 1,222,230 2,525 - 397,072 399,597 570,149 - - 570,149 $ 734,865 $ 477,977 $ 979,134 $ 2,191,976 The accompanying notes to financial statements are an integral part of this financial statement. 26 City of Sebastian, Florida Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2008 Pension Trust Police Officers' Pension ASSETS Cash and cash equivalents Interest and dividends receivable Investments, at fair value: United States treasuries United States agency notes Domestic corporate bonds Domestic corporate equities Total investments Total assets LIABILITIES Refunds payable Total liabilities NET ASSETS Held in trust for pension benefits $ 436,731 32,390 398,420 1,051,396 799,081 2,756,798 5,005,695 5,474,816 Agency Performance Deposits $ 408,710 408,710 408,710 408,710 $ 5,474,816 $ - 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, 2008 Police Officers' Pension ADDITIONS Contributions: Employer $ 376,769 Plan members 108,051 State 122, 800 Total contributions 607,620 Investment earnings: Net decrease in fair value of investments (784,607) Interest and dividends 193,805 Total investment earnings (590,802) Less investment expenses (33,833) Net investment earnings (624,635) Total additions (17,015) DEDUCTIONS Benefits 105,203 Refunded contributions 21,463 Administrative expenses 18,279 Total deductions 144,945 Change in net assets (161,960) Net assets - beginnuig ofyear 5,636,776 Net assets -end of year $ 5,474,816 The accompanying notes to financial statements are an integral part of this financial statement. 28 City of Sebastian, Florida Notes to the Financial Statements September 30, 2008 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Sebastian (the "City"), a Florida Municipal Corporation, was incorporated in 1924 under Sections 1826-1832 of the Revised Florida Statutes. The City has a population of 22,9241iving in an area of approximately 14.6 square miles. The governing body is a five member elected City Council with a mayor elected from the five members. The City Council appoints the City Manager who is responsible for the administration of all City services. The financial statements of the City have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units. The more significant of the City's accounting policies are described below: A. ReportinE Entity 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" and Statement No. 39 - an amendment of GASB No. 14. 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 anon-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 (i.e., 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 of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 Basic Financial Statements and Management Discussion and Analysis 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. 29 C. Measurement Focus. Basis of Accountine, and Financial Statement Presentation 1. Economic Resources Measurement Focus and Accrual Basis of Accountin The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. 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 flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. In applying the "susceptible to accrual" concept to intergovernmental revenues pursuant to GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions as amended by GASB Statement No. 36, Recipient Reporting 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 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict 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 expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the golf course fund and the building fund are charges to customers for 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 the 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 1, 2007. 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, franchise fees, sales and fuel taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues in the current fiscal period. Only the portion 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. 30 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 fund accounts for the financial resources used for infrastructure improvements and equipment purchases. The riverfront redevelopment fund accounts for tax increment revenues that are legally restricted for the redevelopment of the City's riverfront area. The transportation improvements fund accounts for transportation related construction such as, roads, intersections, and sidewalks and is funded with governmental resources, impact fees, local option gas tax, and state grants. The stormwater utility improvements fund 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 fund accounts for the activities of the municipal golf course. The airport fund accounts for the activities of the municipality's general aviation airport. The building fund accounts for the activities associated with the building permit and inspection program. Additionally, the government reports the following fund types: The pension trust fund accounts for the activities of the Police Officer's Retirement System, which accumulates resources for pension benefit payments to qualified police officers. The performance deposits fund accounts for deposits placed by bidders and developers to guarantee performance pursuant to bid or contract. These funds are held by the City as agent for individuals and businesses. D. Assets, Liabilities and Fund Eguity 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 fora 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 State 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 Payables 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, 2008. Advances between funds, as reported in the fund financial statements, are 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, 2008, the airport fund has been advanced $200,000 from the general fund and $285,000 from the discretionary sales tax fund. 31 4. Receivables Receivables consist of trade receivables, due from other governments and interest receivable (see Note IV.C. on page 39 for detail) and are recorded at the net realizable value. The City, as of September 30, 2008, has no allowance for doubtful accounts, since all receivables are considered collectible. 5. Inventory and Prepaid 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 time the individual inventory items are consumed. Inventory in the Golf Course fund consists of supplies held for resale. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 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, improvements, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $750 and an estimated useful life in excess of one year. Such assets are recorded at historical cost, if purchased, and at 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 years 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 these 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 reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. 9. Long-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 amortized 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 reported 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 reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 32 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 reserves are explained as follows: Reserved for encumbrance -represents encumbrances outstanding at year end that the City intends to honor as commitments. Reserved for debt service -represents, in accordance with legal restrictions, amounts for payment of principal and interest maturing in later years. Reserved for capital projects -represents amounts restricted for capital projects. Reserved for property and casualty -represents amounts restricted for property and casualty claims. Reserved for cemetery care -represents amounts restricted for use in cemetery 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 equipment replacement -represents amounts restricted for the replacement of capital assets. 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. Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Assets The governmental fund balance sheet includes reconciliation between fund balance-total governmental funds and net assets- governmental activities as reported in the government-wide statement of net assets. "Total fund balances" of the City's governmental funds ($19,526,369) differs from "net assets" of governmental activities ($38,384,535) 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. Capital 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 $ 53,175,418 (18,707,306) 34 Net pension 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 $ 100,275 Other most employment and termination benefits Accrued other post employment and termination benefits are not financial uses, therefore, are not reported in the fund. Other post employment benefits Termination benefits Total $ (275,829) (16,538) $ (292.3671 33 Long-term 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, 2008 were: Bonds payable: Infrastructure sales surtax revenue bonds, Series 2003 $(6,840,000) Less: Deferred charge for issuance costs 185,184 $(6,654,816) Infrastructure sales surtax revenue bonds, Series 2003A (1,605,000) Less: Deferred charge for issuance costs 72,443 (1,532,557) Stormwater utility revenue bonds, Series 2003 (4,570,000) Less: Deferred charge for issuance costs 149,059 Less: Deferred charge for bond discounts 11,249 (4,409,692) Notes payable (1,333,197) Less: Deferred charge for issuance costs 3,738 (1,329,459) Contamination liability (91,200) Compensated absences (1,238,307) Total $(] 5.256.0311 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 and notes payable. Bonds $ (233,618) Notes X5,549) Total $ (239.1671 Arbitrage rebate Accrued liabilities in the statement of net assets differs from the amount reported in governmental funds due to accrued arbitrage rebate on invested bond proceeds. Arbitrage rebate payable Accrued receivable Some interest receivables are not financial resources in the current period, therefore, are not reported in the funds. Interest receivables ~ 99 586 Deferred revenues Deferred revenues in the statement of net assets differ from the 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 governmental funds are susceptible to full accrual on government-wide financial statements. Deferred revenues reduced ~ 3,849 34 B. Explanation of Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-wide Statement of Activities The "net change in fund balances" for governmental funds (a decrease of $485,469) differs from the "change in net assets" for governmental activities (an increase of $2,245,952) 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. Interest receivables Some interest earnings reported in the statement of activities do not constitute current financial resources, therefore, are not reported as revenues in governmental funds. Interest earnings $ 13 698 Canizal 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 $ 3,634,910 Depreciation expense (2,048,970) Difference 1 In the statement of activities, the gain and loss on the sale and disposal of capital assets are reported. However, in the govemmental funds, only the proceeds from the sale increase financial resources. Loss on disposal of fixed assets 026.8911 During the year, a charge for engineering services previously capitalized as construction in progress was expensed due to the project being cancelled. Reclassification of construction in progress to expenditures Pension obligation When net pension obligation is a negative amount, the amount represents over funding and reduces the expenses in the statement of activities. Decrease in negative net pension obligation Lois-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 payment made $ 945,000 Notes payable principal payment made 233,643 Capital lease principal payment made 147,539 Total 1 Some expenses reported in the statement of activities do not require the use of current financial resources, therefore, are not reported as expenditures in governmental funds. Accrued arbitrage expense $ (26,091) Net change in compensated absences (60,082) Net accrued bond interest expense 13,138 Net accrued notes interest expense 972 Net accrued capital lease interest expense 3,803 Amortization of issuance costs (41,250) Other post employment benefits (27,352) Termination benefits 23,841 Net adjustment $ (113,021) 35 III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Budgets are prepared annually on a modified accrual basis with encumbrance accounting for all governmental funds except the capital project funds, which are approved on a "life of the project basis", and the permanent fund, which is not budgeted. All annual appropriations lapse at year end. On or before the third Friday in May of each year, all agencies of the government submit requests for appropriations to the government's City Manager so that a budget maybe prepared. Before July 31, the proposed budget is presented to the government's council for review. The council holds budget workshops and public hearings and a final budget must be prepared and adopted no later than September 30. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Special Revenue, 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 52 through page 54) IV. DETAIL NOTES ON ALL FUNDS A. Deposits At September 30, 2008, the carrying amount of the City of Sebastian's deposits with banks was $5,809,865 and the bank balance was $5,768,414. 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 Apri123, 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. Investment holdings consist of $2,982,410 in United States Government Agencies 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 of investments 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 Surplus Funds Trust Fund, United States Government Securities, United States Government Agencies, Federal Instrumentalities, Interest Bearing Time Deposit or Saving Accounts, Repurchase Agreements, Commercial Paper, High Grade Corporate Notes, Bankers' Acceptances, State and/or Local Government Taxable and/or Tax-Exempt Debt, Registered Investment Companies (Money Market Mutual Funds), and Intergovernmental Investment Pool. Florida Statutes Chapter 185 regulates the types of investment that may be held by the Police Pension Trust Fund. The investment guidelines have been augmented by City ordinance that have adopted specific investment policies. Compliance with the policies and guidelines has been evaluated by the pension board. 36 As of September 30, 2008, the City had the following investments and effective duration presented in terms of years: Investment Twe Government-wide United States Treasuries U.S Agencies Guaranteed investment contract Certificate of deposit Local government surplus fund trust fund investment pool Fiduciary Funds United States Treasuries United States Agencies Domestic corporate bonds Domestic corporate equities Total fair value Investment Maturit ~Yearl Fair Value Less Than 1 From 1-3 From 4-6 Over 7 $ 1,999,900 $ 1,999,900 $ - $ - $ - 2,982,410 2,982,410 - - - 3,726,284 3,726,284 - - - 1,540,759 998,684 542,075 - - 5,475,664 5,475,664 - - - 15,725,017 15,182,942 542,075 - - 398,420 302,064 - - 96,356 1,051,396 65,366 208,412 71,138 706,480 799,081 - 203,733 372,606 222,742 2,756,798 2,756,798 - - - 5,005,695 3,124,228 412,145 443,744 1,025,578 $ 20,730,712 $ 18,307.170 $ 954,220 $ 443,744 $ 1,025,578 Interest receivable on the government-wide and fiduciary investment portfolios amounted to $99,586 and $32,390, respectively, as of September 30, 2008. Interest Rate Risk The City's investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. Investment maturities shall not exceed thirty-six (36) months. Investments of construction funds shall have a term appropriate to the need for funds and in accordance with debt covenants. Credit Risk The City investment policy permits for investments in the following investments, which are limited to credit quality ratings from nationally recognized agencies as follows: Mutual funds shall be rated "m" or "AAm-G" or better by Standard & Poor's, or the equivalent by another rating agency. State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least "Aa" by Moody's and "AA" by Standard & Poor's for long-term debt, or rated at least "MIG-2" by Moody's and `SP-2" by Standard & Poor's for short-term debt. Bankers' acceptances issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, at the time of purchase, the short-term paper is rated, at a minimum, "P-1" by Moody's Investors Services and "A-1" Standard & Poor's. Commercial paper of any United States company that is rated, at the time of purchase, "Prime-1" by Moody's and "A-1" by Standard & Poor's (prime commercial paper). Corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long term debt rating, at the time of purchase, at a minimum "Aa" by Moody's and a minimum long term debt rating of "AA" by Standard & Poor's. As of September 30, 2008, the City's investment securities were all individually rated AAA by Standard & Poor's and Aaa by Moody's Investor Services. On October 1, 2007, the city had $9,096,573 invested in the State Board of Administration's Local Government Surplus Funds Trust Fund Investment Pool (Pool). On November 29, 2007, the State Board of Administration implemented a temporary freeze on the assets held in the Pool due to an unprecedented amount of withdrawals from the Fund coupled with the absence of market liquidity for certain securities within the Pool. The significant amount of withdrawals followed reports that the Pool held asset-backed commercial paper that was subject to sub prime mortgage risk. On December 4, 2007, the Pool was restructured into two separate pools. Pool A consisted of all money market appropriate assets, which was approximately $12 billion or 86% of Pool assets. Pool B consisted of assets that had either defaulted on a payment, paid more slowly than expected, and/or had any significant credit and liquidity risk, which was approximately $2 billion or 14% of Pool assets. At the time of the restructuring, all current pool participants had their existing balances proportionately allocated into Pool A and Pool B. Initially, participants were limited on the amounts that could be withdrawn from Pool A without penalty but full liquidity was restored subsequent to year end. Pool B participants are still prohibited from making withdrawals. Market valuations of the assets held in Pool B are not readily available and full realization of the principle value of Pool B assets is not readily determinable. 37 As of September 30, 2008, the city has $5,041,473 invested in Pool A and $434,191 invested in Pool B. Pool A had a rating by Standard and Poor's Rating Services as "AAAM" on September 30, 2008. Additional information regarding the Local Government Surplus Funds Trust Fund maybe obtained from the State Board of Administration. The City's $3,726,284 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 Royal Bank of Canada, which is Aal/AA-rated Company. The investment was unrated as of September 30, 2008. 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-1 by Standard & Poor's or P-1 by Moody's or better, with the exception of the custodian's savings account. In addition, common stocks and equity securities having prospects of amactive 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 bybook-entry at the issuing bank shall clearly identify the City as the owner. As of September 30, 2008, the City's investment portfolio was held with athird-party custodian as required by the City's investment policy. 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 maybe 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 (1) business day agreements and overnight sweep agreements with a 25% limit on any one institution, 25% of available funds may be directly invested in prime commercial paper with a 10% limit on individual issuers, 15% of available funds may be directly invested in corporate notes with a 5% limit on individual issuers, 25% of available funds may be directly invested in Bankers' Acceptances with a 10% limit on individual issuers, 20% of available funds may be invested in taxable and tax-exempt debts, 50% of available funds may be invested in money market mutual fund with a 25% limit on individual issuers, 10% of available funds maybe 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 performance. A maximum of 100% of available funds may be invested in fixed income securities and a maximum of 50% of available funds maybe invested in equity securities. As of September 30, 2008, the City had the following issuer concentration based on fair value: Issuer Local government surplus funds trust fund ("SBA") United States Treasuries United States Agencies Guaranteed investment contract Certificate of deposit Domestic corporate bonds Domestic corporate equities Total Government-wide Percentage of Amount Portfolio $ 5,475,664 34.82% $ 1,999,900 12.72% 2,982,410 18.97% 3,726,284 23.70% 1,540,759 9.80% - 0.00% - 0.00% 2,756,798 55.07% $ 15,725,017 100.00% $ 5,005,695 100.00% Fiduciary Funds Percentage of Amount Portfolio - 0.00% 398,420 7.96% 1,051,396 21.01% - 0.00% - 0.00% 799,081 15.96% 38 C. Receivable and Payable Balances Receivables Receivables at September 30, 2008 were as follows: Governmental activities: General Discretionary sales tax Riverfront redevelopment Transportation improvements Stormwater utility improvements Other governmental Total -governmental activities Business-type activities: Golf course Airport Building Total -business-type activities All receivables are anticipated to be collected. Payables Due From Interest Accounts Other Receivable Receivable Governments Total $ 101,355 $ 244,190 $ 232,744 $ 578,289 1,319 - 210,070 211,389 23 - - 23 - - 16,140 16,140 - - 31,200 31,200 2,830 - 57,967 60,797 $ 105,527 $ 244,190 $ 548,121 $ 897,838 $ 208 $ - $ - $ 208 619 11,000 47,865 59,484 813 - - 813 $ 1,640 $ 11,000 $ 47,865 $ 60,505 Payables at September 30, 2008 were as follows: Governmental activities: General Discretionary sales tax Riverfront redevelopment Transportation Improvements Stormwater utility improvements Other governmental Total -governmental activities Business-type activities: Golf course Airport Building Total -business-type activities Salaries Due to and Other Vendors Retainage Benefits Government Total $ 235,324 $ - $ 383,190 $ 47,418 $ 665,932 8 - - - 8 1,139 - - - 1,139 139,191 8,312 - - 147,503 165,411 - - - 165,411 9,171 - - - 9,17] $ 550,244 $ 8,312 $ 383,190 $ 47,418 $ 989,164 $ 25,113 $ - $ 15,002 $ 6,795 $ 46,910 52,771 - 8,833 1,233 62,837 976 - 14,626 - 15,602 $ 78,860 $ - $ 38,461 $ 8,028 $ 125,349 Governmental funds report deferred revenue 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, 2008, the various components of deferred revenues and unearned revenue reported in the governmental funds were as follows: Deferred Unearned Ravennrc Ravennec Special assessments not yet due (General fund) Local business taxes received in advance (General Fund) Total deferred/uneamed revenue for governmental funds S,iS4y - 66 $ 3,849 $ 66 39 D. Capital Assets Capital asset activity for the year ended September 30, 2008 was as follows: Governmental activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Business-type activities: Capital assets, not being depreciated: Beginning Ending Balance Increases Decreases Balance $ 5,696,946 $ - $ - $ 5,696,946 2,692,704 784,644 (1,956,783) 1,520,565 8,389,650 784,644 (1,956,783) 7,217,511 10,996,497 163,757 (1,515) 11,158,739 4,970,638 178,629 - 5,149,267 6,820,051 812,594 (241,893) 7,390,752 18,677,191 3,619,219 (37,261) 22,259,149 41,464,377 4,774,199 (280,669) 45,957,907 (1,911,637) (377,789) 1,515 (2,287,911) (1,400,700) (249,943) - (1,650,643) (5,032,429) (629,656) 220,831 (5,441,254) (8,567,348) (791,582) 31,432 (9,327,498) (16,912,114) (2,048,970) 253,778 (18,707,306) 24,552,263 2,725,229 (26,891) 27,250,601 $ 32,941,913 $ 3,509,873 $ (1,983,674) $ 34,468,112 Beginning Ending Balance Increases Decreases Balance Land $ 9,060 $ - $ - $ 9,060 Construction in progress 1,300,434 47,052 (1,231,535) 115,951 Total capital assets, not being depreciated 1,309,494 47,052 (1,231,535) 125,011 Capital assets, being depreciated: Buildings 3,232,472 493,786 - 3,726,258 Improvements other than buildings 1,216,078 650,850 - 1,866,928 Machinery and equipment 804,465 159,879 (41,769) 922,575 Infrastructure 5,817,369 408,741 - 6,226,110 Total capital assets being depreciated 11,070,384 1,713,256 (41,769) 12,741,871 Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net (398,903) (96,493) - (495,396) (267,707) (96,747) - (364,454) (508,012) (96,189) 40,459 (563,742) (1,192,329) (284,760) - (1,477,089) (2,366,951) (574,189) 40,459 (2,900,681) 8,703,433 1,139,067 (1,310) 9,841,190 $ 10,012,927 $ 1,186,119 $ (1,232,845) $ 9,966,201 Depreciation expense was charged to functions/programs of the government as follows: 40 Governmental activities: General government $ 323,931 Public safety 446,156 Transportation 510, 58 4 Physical environment 433,265 Cultural and recreation 335,034 Total depreciation expense-governmental activities $ 2,048,970 Business-type activities: Golf Course $ 82,881 Airport 4 79, 20 3 Building 12,105 Total depreciation expense-business-type activities $ 574,189 Construction Commitments The City has various construction commitments outstanding at September 30, 2008. The major commitments include the following: Project Pedestrian Bridges Easy Street Renovations 1/4 Round Swale Rehabilitation Total E. Advances Remaining Spent-to date Commitment $ 150,211 $ 476,084 720,163 203,782 534,719 226,636 $ 1,405,093 $ 906,502 Advance balances at September 30, 2008 consisted of the following amounts: Advance from General Fund to the Airport Fund $ 200,000 Advance from Discretionary Sales Tax Fund to the Airport Fund 285,000 Total $ 485,000 Discretionary Sales Tax ^...,a The balance of $285,000 advanced to the airport fund from the discretionary sales tax fund is to be repaid over a thirty year period in accordance with Resolution No. R-08-20. The balance of $200,000 advanced to the airport from general fund represents a cash loan made in 2007 without any specified terms for repayment. F. Interfund Transfers Transfers are used to 1) move revenues from the fund that statute or budget requires them to be collected in to the fund that statute or budget requires for the to be expended in, and 2) 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: Transfer Out: Transfers In: General Fund Transportation Improvements Stormwater Utility Improvements Nonmajor Governmental Funds Total Transfers Out ~ - 581,251 Riverfront Redevelopment $ - 619,561 DST (Discretionary Sales Tax) Local Option Gas Tax and DST DST (Discretionary Sales Tax) Nonmajor Governmental Funds Total $ 536,538 $ 536,538 595,000 1,795,812 1,318,444 - - 1,318,444 1,656,957 15,000 2,029,102 3,701,059 $ 3,556,652 $ 634,561 $ 3,160,640 $ 7,351,853 Major Funding Source 41 G. Leases 1. Operating 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 $238,835 for the fiscal year ended September 30, 2008. 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, 2008: Golf Course Golf Year Ending September 30, to: Airport Carts 2009 175,000 71,820 2010 175,000 132,075 2011 250,000 - 2012 250,000 - 2013 250,000 - 2014-2015 500,000 - Totals $ 1,600,000 $ 203,895 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 date. 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 $135,132. For fiscal year 2008, total depreciation expense for the leased equipment is $52,487. The assets acquired through the capital lease are as follows: Activities Asset: Machinery and equipment $ 859,859 Less: Accumulated depreciation (724,727) Total $ 135,132 The final lease payment was made during the year ending September 30, 2008. 3. Operating Leases-Lessor The City is the lessor in two communication tower leases with lease terms of up to fifty-five years. The tower has a cost of $39,285 and a carrying value of $8,675. For fiscal year 2008, total depreciation expense for the leased tower is $1,865. Following is a schedule by year of minimum future rental income on noncancelable operating leases: Governmental Year Endine September 30. Activities 2009 59,798 2010 60,967 2011 62,182 2012 66,326 2013 67,641 2014-2018 366,751 2019-2023 377,361 2023 -2027 365 ,9 OS 2028-2032 427,652 2033-2037 502,777 2038-2042 594,178 2043-2047 705,381 2048-2052 840,676 2053-2055 380,518 Total minimum future rentals $ 4,878,1 13 42 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: Business-type iti i A Year Ending Cgp em r 0. 2009 es v ct 284,847 2010 287,636 2011 365,594 2012 368,895 2013 371,920 2014-2018 1,111,108 2019-2023 623,435 2024-2028 715,189 2029-2033 718,848 2034-2038 233,192 Total minimum future rentals $ 5,080,664 H. Lone-term Oblieations 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 $3,268,890 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, $2,435,000 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, $2,125,000 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, $5,630,000 Stormwater Utility Revenue Bonds, Series 2003 in November 2003. The City has pledged Stormwater Fee Revenues along with a covenant to budget and appropriate for repayment of principal and interest. 2. Bond Coveraee 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. 43 The following table indicates the degree of compliance with the bond resolution covenants in the Golf Course Fund at September 30, 2008. Gross revenues available for compliance (charges $ 1,455,749 for services, interest, and rent revenues) Operating and maintenance expenses (excluding depreciation expense, amortization, and airport lease payment) 1,174,169 Amount of revenue over direct operating expenses $ 281,580 Debt service requirement $ 311,090 Percent coverage for the year ended September 30, 2008 91 City management continues to monitor the Golf Course operation and intends to develop recommendations that could resolve the deficiency in the bond coverage requirement. b. The City has covenanted in the Stormwater Utility Revenue Bonds, Series 2003 Bond Resolution to fix, establish, maintain and collect stormwater 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. The following table indicates the degree of compliance with the bond resolution covenants in the stormwater utility fund at September 30, 2008. Gross revenues available for compliance $ 856,568 Debt service requirement $ 436,873 Percent coverage for the year ended September 30, 2008 196% 3. ChanSes in Long-term Liabilities The following is a summary of changes in Long-Term Liabilities of the City for the year ended September 30, 2008: Beginning Balance Additions Governmental activities: Bonds payable: Infrastructure Sales Surtax Revenue Bonds, Series 2003 Infastructure Sales Surtax Revenue Bonds, Series 2003A StormwaterUtility Revenue Bonds, Series 2003 Less deferred amount: Issuance discount- stormwater Utility Revenue Bonds, Series 2003 Total bonds payable Notes payable Capital leases Compensated absences Unfunded OPEB obligation Termination benefits Governmental activity long-term liabilities $ 7,405,000 $ 1,740,000 4,815,000 Ending Due within Reductions Balance One Year - $ 565,000 $ 6,840,000 $ 585,000 - 135,000 1,605,000 135,000 - 245,000 4,570,000 255,000 (12,082) - (833) (11,249) - 13,947,918 - 944,167 13,003,751 975,000 1,566,840 - 233,643 1,333,197 243,994 147,539 - 147,539 - - 1,178,225 576,305 516,223 1,238,307 111,115 248,477 27,352 - 275,829 - 40,379 - 23,841 16,538 8,796 $ 17,129,378 $ 603,657 $ 1,865,413 $ 15,867,622 $ 1,338,905 44 Beginning Balance B~ainess-type activities: Bonds payable: Recreational Facilities Improvement and Refunding Revenue Bonds, Series 2001 Less deferred amount: Issuance premium Loss on refunding Total bonds payable Compensated absences Unfunded OPEB obligation Termination benefits Business-type activity long-tern liabilities $ 1,140,000 $ Ending Due within Additions Reductions Balance One Year - $ 270,000 $ 870,000 $ 280,000 2,392 (24,966) - 798 - (8,323) 1,594 - (16,643) - 1,117,426 - 262,475 854,951 280,000 147,444 68,054 40,696 174,802 9,643 33,365 3,592 - 36,957 - 37,663 - 18,224 19,439 12,342 $ 1,335,898 $ 71,646 $ 321,395 $ 1,086,149 $ 301,985 For the governmental activities, compensated absences are generally liquidated by the general fund. 4. Debt Service Requirements to Maturity T'he annual requirement to amortize all bonded debt outstanding at September 30, 2 008, including interest requirements, is as follows: Govemmental Activities Roadway Infrastructure Infrastructure Stormwater Improvement SalesSurtax SalesSurtax Utility Note Revenue Bonds, Revenue Bonds, Revenue Bonds, Fiscal Payable Series 2003 Series 2003A Series 2003 Year 4.40% Interest 2% to 4.125% Interest 2% to 4% Interest 2% to 4.5% Interest 2009 243,990 56,010 585,000 252,869 135,000 60,088 255,000 185,135 2010 254,843 45,157 600,000 233,856 145,000 56,037 260,000 177,485 2011 266,180 33,820 620,000 214,356 145,000 51,325 270,000 169,035 2012 278,019 21,981 645,000 193,276 150,000 46,250 280,000 159,247 2013 290,165 9,835 665,000 170,378 155,000 40,813 290,000 148,048 2014-2018 - - 3,725,000 456,612 875,000 107,600 1,640,000 559,692 2019-2022 - - - - - - 1,575,000 180,900 $ 1,333,197 $ 166,803 $ 6,840,000 $ 1,521,347 $ 1,605,000 $ 362,113 $ 4,570,000 $ 1,579,542 Business-type Activities Golf Course Refunding Bonds, Fiscal Series 2001 Year 4% to 4.2% In terest 2009 280,000 30,090 2010 290,000 18,545 2011 300,000 6,300 Less unamortized Bond premium 1,594 - Loss on refunding (16,643) - $ 854,951 $ 54,935 45 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 Debt service $ 424,782 $ 310,090 Capital projects 7,950,741 - Renewal and replacement - 85,059 Rent - 175,000 Cemetery perpetual care 771,927 - Law enforcement forfeiture fund 51,947 - Community redevelopment agency 16,404 - Total $ 9,215,801 $ 570,149 The government-wide statement of net assets reports $9,785,950 of restricted net assets, of which all is restricted by enabling legislation. V. OTHER INFORMATION A. Property Tax The City is permitted by State law to levy taxes up to 10 mills on assessed valuation. The millage rate levied by the City for the fiscal year ended September 30, 2008, was 2.9917 mills. Total tax collections were approximately 94.25% 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 liened on property values as of January 1. The fiscal year for which taxes are levied begins October 1. 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 project funds have been expended and 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 maybe used and are subject to audit by the grantor agency or its representative. T'he following is the amount of grant revenue for fiscal year 2008. Primary Government Amount General government $ 7,000 Public safety 19,458 Physical environment 352,992 Transportation 18,559 Cultural/Recreation 161,400 Airport 494,098 Total reporting entity $ 1,053,507 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 biennial actuarial valuation completed October 23, 2007 to determine the required contribution for the fiscal year ending September 30, 2008 and disclosure information provided by the state as of October 1, 2007. 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. 46 Employee membership data as of the actuarial report is as follows: Retirees and beneficiaries currently receiving benefits 4 Terminated employees entitled to refund of employee Contribution but not yet received 1 Fully, partially, and non-vested active plan participants 37 Total 42 Benefit Provisions and Contribution Requirements. The Police Officers' Pension Plan provides retirement and disability benefits to plan members and beneficiaries. This Plan is administered by a separate local Board of Trustees. Chapter 185, Florida Statutes, as amended governs all benefit provisions of the Plan. Contribution requirements, in accordance with Chapter 185, Florida Statutes, are established by City ordinance, as provided in Chapter 58, Article III of the Sebastian City Code. The City Council has the authority to amend funding requirements. Funding 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 2007-2008 fiscal year. The employer contribution rate, expressed as a percentage of compensation, was 15.5% for the 2007-2008 fiscal year. The employer contribution is $376,769 and the State contribution is $122,800, 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 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. Annual pension costs and related information was as follows: Contribution rates as of 9/30/07: City Plan members Annual pension cost Contributions made Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method 15.5% 5.0% $ 289,390 $ 270,454 10/ 1 /2004 Frozen Entry Age Level Percentage of Pay, Closed 28 Years (as of 10/01/2004) Market Value Required trend information for the Police Officers' Pension Plan was as follows: Amount Actuarially Required Contribution 2005 $ 212,636 2006 $ 243,301 2007 $ 289,390 Percentage of APC contributed 2005 113.00% 2006 90.00% 2007 93.00% The annual required contribution for the Police Officers' Pension Plan was determined as part of the October 1, 2007, 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%. Reserves. All of the net assets of the Police Pension Plan are legally reserved for plan participant benefits. 47 Basis of Accounting. Financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due, and the employer has made formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Method Used to Value Investments 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 1, 1987, through the transition date, October 1, 1997. Thus, the NPO on October 1, 1997, is $0. The funding status as required by GASB Statements No. 25 and 27 is presented in the required supplemental information section on page 56. The development of the Net Pension Obligation as of September 30, 2007 is as follows: 9/30/2005 9/30/2006 9/30/2007 Actuarially DeterminedCornribution(A) $ 212,636 $ 243,301 $ 289,390 Interest onNPO (9,794) (11,889) (9,753) Adjustment to (A) 11,138 15,181 12,454 Annual Pension Cost 213,980 246,593 292,091 Contributions made 240,167 219,898 270,454 Increase in NPO (26,187) 26,695 21,637 NPO beginning of year (122,420) (148,607) (121,912) NPO end of year $ (148,607) $ (121,912) $ (100,275) D. CWA / ITU Negotiated Pension Plan -Defined Benefit Plan Plan Description: The CWA/ITU Negotiated Pension Plan (NPP), which began in 1967, is amulti-employer, defined benefit plan. The Plan is available to any Communication Workers of America (CWA) bargaining unit member, and benefits are portable from one contributing employer to another. Normal Pension: Minimum age 65: 5 years of Service Credit required if any portion of service credit was earned after January 1, 1989. 10 years of Service Credit required if employees' coverage ended before January 1, 1989. Once the Service Credit amount is accrued, the employee is vested and cannot lose the right to a pension. Early Pension: Minimum age 60: 20 years of Service Credit required if employed after January 1, 1989. 25 years of Service Credit required if employment ended before January 1, 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 Award 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. 48 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 Norma] 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. Benefit Provisions and Contribution Requirements: The NPP provides retirement and disability benefits to plan members and beneficiaries. 'The plan is administered at the Plan Office in Colorado Springs, Colorado. Contribution requirements are established by the CWA contract, effective date October 1, 2006, 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 2007-2008 fiscal year. Employees do not contribute to this plan. Contributions to the CWA Pension Plan for the fiscal years ended September 30, 2006, 2007 and 2008 were $229,159, $254,909, and 241,718 respectively, which are equal to 100% of the required contribution for each year. E. 401 Plan -Defined Contribution Plan Plan Description: T'he ICMA Retirement Corporation's 401 Retirement Plan is a Defined Contribution Plan "qualified" under Section 401(a) of the Internal Revenue Code. Each participant has a plan account to which contributions are made. Plan benefits are based on the total amount of money in the employees' account at retirement or other eligible event. The Plan is available to all management staff and may be rolled over to another "qualified" employer plan that accepts rollovers, or Traditional IRA's. Periodic Payments: Retirement benefits can be paid monthly, quarterly, semi-annual (at six-month intervals only) or annual payments until assets are fully paid out. Rollover: Retirement benefits can be rolled over to another employer plan (including a 457 deferred compensation plan) that accepts rollovers, or to a Traditional IRA. Lump Sum: Retirement benefits can paid either partially or by total distribution of the employees' account balance. Annuities: Retirement benefits can be utilized to purchase an annuity. Benefit Provisions and Contribution Requirements: The 401 provides retirement benefits to plan members and beneficiaries. The plan is administered by the ICMA Retirement Corporation. Contribution requirements are established by the City of Sebastian, Management Benefit Package, revised October 1, 2006, and approved by the City Manager. Funding Policy: 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 2007-2008 fiscal year. Employees do not contribute to this Plan. Contributions to the 401 Defined Contribution Plan for the fiscal years ended September 30, 2006, 2007, and 2008 were $142,002, $136,222, and $145,596 respectively, which are equal to 100% of the required contribution for each year. F. Other Post Emulovment Benefits (OPEB Pursuant to Section 112.0801, Florida Statutes, the City is required to permit participation in the health insurance program by retirees and their eligible dependents at a cost to the retiree that is no greater than the cost at which coverage is available for active employees. The City, by policy, has elected to provide qualified retirees with partial subsidy. Employees are eligible to receive benefits from the Retiree Medical Plan upon retirement, if they are enrolled in the active medical plan immediately prior to retiring and achieved at least 20 years of service in a full time capacity. The City pays 50% of the costs of single coverage group health insurance for up to 2 years after retirement. No retirees are currently receiving medical benefits. Based on GASB Statement 43 and 45, which set forth the guidelines and a future implementation timetable (for the City in fiscal year 2008/2009) for treatment of Other Post Employment Benefits. The City had an actuary calculate future funding requirements in 2007. The purpose was to enhance the City's understanding of the OPEB obligation and to revisit potential policy implications associated therewith. The actuary's 2007 estimate, using the Projected Unit Credit Method, produced an unfunded obligation of $281,842 and an annual required contribution of $40,089. The City elected to fund the OPEB obligation on apay-as-you-go basis. The entire unfunded obligation was recognized in the government-wide financial statements. The enterprise fund portion ($33,365) was also recognized in the enterprise fund financial statements. In 2008, the City recorded an additional government-wide obligation of $30,943 based on the annual required contribution reduced by the expected future benefit payments. The additional enterprise fund portion was calculated as $3,592. 49 G. Termination Benefits The City offered its employees an early retirement incentive program in 2006-2007 fiscal year. The eligibility requirements were that the employee was either an exempt management employee or an hourly employee including police officers with at least 15 years of service in a full time capacity and within three years of reaching the age of 65 (the age eligible for Medicare benefit). The benefits include a one time lump sum payment based on the year of service and single coverage group health insurance for up to 3 years after retirement. The lump sum payment was calculated by multiplying $1,000 for each full year of service. The group health insurance will terminate when the retiree reaches the age of 65 and eligible for Medicare benefits. As of September 30, 2008, the total accrued termination benefits for the government-wide financial statements were $35,977. T'he enterprise fund portion ($19,439) was also recognized in the enterprise fund financial statements. H. Insurance The City is exposed to various risks of loss related to torts; theft of or damage to and destruction of assets; errors and omissions; and natural disasters. The City purchases commercial insurance with various deductibles for different types of losses. The cost of this insurance is accounted for in the general fund, golf course fund, airport fund, and building fund. Settled claims have not exceeded this commercial coverage in the past three fiscal years. I. Liti ag tion Various suits and claims are currently pending against the City. It is impossible for the City to accurately quantify the exposure involved given the jury's latitude in assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The City intends to vigorously defend against these lawsuits and believes it has a good chance of prevailing on their merits. The City is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial position of the City. J. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures were disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the City. In the opinion of management, any such adjustments would not be significant. K. Subsequent Event Consistent with the general decline in the financial markets shortly after the end of the fiscal year, the City of Sebastian Police Pension Fund incurred a considerable decline in market values. City management is of the opinion that although these losses may result in a higher required City contribution, there should not be a significant impact on the City of Sebastian Police Pension Fund's financial position or it's operations over the long-term. 50 Required Supplemental Information 51 City of Sebastian, Florida Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual General Fund For the Year Ended September 30, 2008 Actual Variance with Budget Amounts Amounts on Final Budget - a Budgetary Positive Original Final Basis (Negative) REVENUES: Taxes: Property $ 4,580,045 $ 4,580,045 $ 4,645,663 $ 65,618 Public utility 2,263,257 2,263,257 2,250,781 (12,476) Franchise fees 1,159,947 1,159,947 1,199,762 39,815 Licenses and permits 173,000 173,000 163,471 (9,529) Intergovernmental 2,268,000 2,422,329 2,141,810 (280,519) Charges for services 310,969 310,969 319,123 8,154 Fines 59,600 59,600 46,132 (13,468) Investment earnings 356,200 356,200 202,380 (153,820) Contributions and donations 20,000 35,400 300,368 264,968 Other revenue 107,200 123,289 154,044 30,755 Total revenues 11,298,218 11,484,036 11,423,534 (60,502) EXPENDITURES: Current: General government 3,433,515 3,321,668 3,107,643 214,025 Public safety 4,568,056 4,877,041 5,003,432 (126,391) Physical environment 1,538,060 1,557,822 1,431,656 126,166 Transportation 1,357,322 1,405,145 1,345,559 59,586 Culture and recreation 1,083,381 1,091,921 1,100,415 (8,494) Total expenditures 11,980,334 12,253,597 11,988,705 264,892 Excess (deficiency) of revenues over (under) expenditures (682,116) (769,561) (565,171) 204,390 OTHER FINANCING SOURCES Transfers in 538,029 538,029 536,538 (1,491) Total other financing sources 538,029 538,029 536,538 (1,491) Net changes in fund balances (144,087) (231,532) (28,633) 202,899 Fund balances -beginning 6,284,820 6,284,820 6,390,787 105,967 Fund balances -ending $ 6,140,733 $ 6,053,288 6,362,154 $ 308,866 Explanation of differences: Encumbrances for equipment and supplies ordered but not received are reported in the yeaz the orders are placed for budgetazy purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Current year encumbrances 8,473 Prior year encumbrances (62,445) Amount reported as ending fund balance in the statement of revenues, expenditures and changes in fund. balance for the General Fund. $ 6,308,182 The accompanying notes to required supplementary information are an integral part of this schedule. 52 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, 2008 REVENUES: Taxes: Sales Investment earnings Total revenues OTHER FINANCING SOURCES (USES) Transfers out Total other financing sources (uses) Net changes in fund balances Fund balances -beginning Fand balances -ending Actual Variance with Budget Amounts Amounts on Final Budget - a Budgetary Positive Original Final Basis (Negative) $ 2,700,000 $ 2,700,000 $ 2,502,937 $ (197,063) 107,500 107,500 46,721 (60,779) 2,807,500 2,807,500 2,549,658 (257,842) (3,195,183) (3,423,235) (3,556,652) (133,417) (3,195,183) (3,423,235) (3,556,652) (133,417) (387,683) (615,735) (1,006,994) (391,259) 2,411,939 1,279,261 2,411,939 1,132,678 $ 2,024,256 $ 663,526 $ 1,404,945 $ 741,419 The accompanying notes to required supplementary information are an integral part of this schedule. 53 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, 2008 REVENUES: Taxes: Property Investment earnings Other revenue Total revenues EXPENDITURES: Current: Economic environment Capital outlay Total expenditures Excess of revenues over over expenditures OTHER FINANCING USES Transfers out Total other financing (uses) Net changes in fund balances Fund balances -beginning Fund balances -ending Actual Variance with Budget Amounts Amounts on Final Budget - a Budgetary Positive Original Final Basis (Negative) $ 513,023 $ 513,023 $ 503,384 $ (9,639) 24,000 24,000 10,891 (13,109) - - 75 75 537,023 537,023 514,350 (22,673) 211,236 211,236 113,101 98,135 211,236 211,236 113,101 98,135 325,787 325,787 401,249 75,462 (619,561) (634,561) (634,561) - (619,561) (634,561) (634,561) - (293,774) (308,774) (233,312) 75,462 355,965 355,965 355,965 - $ 62,191 $ 47,191 122,653 $ 75,462 Explanation of differences: Encumbrances for professional services contracted but not completed is reported in the year the service is contracted for budgetary purposes, but are reported in the year the services are received for GAAP purposes. Prior year encumbrances (106,249) Amount reported as ending fund balance in the statement of revenues, expenditures and changes in fund balance for the Riverfront Redevelopment Agency Fund. $ i 6,404 The accompanying notes to required supplementary information are an integral part of this schedule. 54 City of Sebastian, Florida Notes to the Required Supplementary Information -Budget Comparisons September 30, 2008 A. Budgetary 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 51 through page 53. All annual appropriations lapse at year-end. B. Budgetary 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 and/or divisions require approval of the City council. The legal level of budgetary control (i.e., 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 ls` quarter budget amendment highlighted a net increase of $103,538 for the general fund, which represents fund balance carried over from prior fiscal year to fund outstanding encumbrances and some appropriations of revenues from insurance and grants. The 2°d quarter budget amendment highlighted a net increase of $21,925 for the general fund, which represents revenues from a grant and from a private contribution. The 3`d quarter budget amendment did not change the general fund but did include appropriations of reserves in the discretionary sales tax, recreation impact fee and building funds. The 4~' quarter budget amendment highlighted a net increase of $147,800 for the general fund. The main reason for this increase is 1) to recognize a pass through police pension contribution from the State, and 2) to fund the costs associated with an employee electing to use the early retirement program. C. Budgeted Expenditures Exceeded Revenues Budgeted expenditures exceeded revenues in the general fund, discretionary sales tax special revenue fund, riverfront redevelopment agency special revenue fund, recreation impact fee special revenue fund and the stormwater utility 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. 55 City of Sebastian, Florida REQUIRED SUPPLEMENTARY INFORMATION Police Officers' Pension Plan Go~~ernmental Accounting Standards Board Statements No. 25 and 27, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and Accounting for Pensions by 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 Annual Fiscal Required City State Percentage Year Contributions Contribution Contribution Contributed 2007 $ 407,011 $ 270,454 $ 117,621 95.35% 2006 360,922 219,898 117,621 93.52% 2005 330,257 240,166 117,621 108.34% 2004 279,741 174,780 106,716 100.63% 2003 233,435 153,111 92,714 105.31% 2002 61,342 8,620 82,877 149.16% 56 Nonmaj or Governmental Funds 57 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. Stormwater 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 school. 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 stormwater utility fees pledged to pay the principal, interest, and fiscal charges on the Stormwater 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-stormwater 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. 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. 58 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. 59 City of Sebastian, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2008 ASSETS Cash and cash equivalents Investments Due from other governments Interest receivable Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Total liabilities Fund balances: Reserved for: Debt service Capital projects Cemetery care Law enforcement Unreserved Total fund balances Total liabilities and fund balances Special Revenue Funds Local Law Option Recreation Stormwater Enforcement G.R.E.A.T. Gas Tax Impact Fee Utility Forfeiture Program $ 181,201 $ 731,897 $ 7,278 $ 28,102 $ - 913 300,548 993,795 23,809 - 47,046 - 10,921 - - 466 948 9 36 - $ 229,626 $ 1,033,393 $ 1,012,003 $ 51,947 $ - $ 2,834 $ - $ - $ - $ 2,834 - - - - - - 51,947 226,792 1,033,393 1,012,003 - 226,792 1,033,393 1,012,003 51,947 $ 229,626 $ 1,033,393 $ 1,012,003 $ 51,947 $ 60 Debt Service Funds Stormwater Discretionary Utility Sales Surtax Revenue Revenue Total Bonds 2003 Bonds 2003 Total $ 948,478 $ 85,765 $ 338,468 $ 424,233 1,319,065 - - - 57,967 - - - 1,459 111 438 549 $ 2,326,969 $ 85,876 $ 338,906 $ 424,782 $ 2,834 $ - $ - $ - 2,834 - - - - 85,876 338,906 424,782 51,947 - - - 2,272,188 - - - 2,324,135 85,876 338,906 424,782 $ 2,326,969 $ 85,876 $ 338,906 $ 424,782 61 City of Sebastian, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2008 (Continued) ASSETS Cash and cash equivalents Investments Due from other governments Interest receivable Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Total liabilities Fund balances: Reserved for: Debt service Capital projects Cemetery care Law enforcement Unreserved Total fund balances Total liabilities and fund balances Capital Projects Funds Permanent Fund General Public Capital Capital Facilities Projects Improvements Improvements Total Cemetery $ 3,070 $ 442,594 $ - $ 445,664 $ 619,970 - - - - 151,135 - - - - 822 $ 3,070 $ 442,594 $ - $ 445,664 $ 771,927 $ 249 $ 6,088 $ - $ 6,337 $ - 249 6,088 - 6,337 - 2,821 436,506 - 439,327 - - - - - 771,927 2,821 436,506 - 439,327 771,927 $ 3,070 $ 442,594 $ - $ 445,664 $ 77],927 62 Total Other Governmental Funds $ 2,438,345 1,470,200 57,967 2,830 $ 3,969,342 $ 9,171 9,171 424,782 439,327 771,927 51,947 2,272,188 3,960,171 $ 3,969,342 63 City of Sebastian, Florida Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2008 REVENUES: Taxes: Motor fuel Intergovernmental Impact fees Charges for services Fines Investment earnings Contributions and donations Other revenue Total revenues EXPENDITURES: Current: Public safety Physical environment Transportation Debt Service: Principal Interest and fiscal charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Net changes in fund balances Fund balances -beginning Residual fund equity transfer Fund balances -ending Special Revenue Funds Local Law Option Recreation Stormwater Enforcement G.R.E.A.T. Gas Tax Impact Fee Utility Forfeiture Program $ 601,390 $ - $ - $ - $ - 18,559 - - - - - 32,825 - - - - - 810,944 - - _ _ 19,114 - 34,746 33,472 45,624 754 - _ _ - 1,885 - _ _ - 5,181 - 654,695 66,297 856,568 26,934 - _ - - 85 - - - 86 - - 205,737 - - - - 233,644 - - - - 66,356 - - - - - 6,897 - - - 505,737 6,897 86 85 - 148,958 59,400 856,482 26,849 - (95,000) (351,096) (1,006,049) - - (95,000) (351,096) (1,006,049) - - 53,958 (291,696) (149,567) 26,849 - 172,834 1,325,089 1,161,570 24,206 892 _ _ - 892 (892) $ 226,792 $ 1,033,393 $ 1,012,003 $ 51,947 $ - 64 Debt service Funds Stormwater Discretionary Utility Sales Surtax Revenue Revenue Total Bonds 2003 Bonds 2003 Total $ 601,390 $ - $ - $ - 18,559 - - - 32,825 - - - 810,944 - - - 19,114 - - - 114,596 1,034 4,811 5,845 1,885 - - - 5,181 - - - 1,604,494 1,034 4,811 5,845 85 - - - 86 - - - 205,737 - - - 233,644 245,000 700,000 945,000 66,350 196,748 341,294 538,042 6,897 - - - 512,805 441,748 1,041,294 1,483,042 1,091,689 (440,714) (1,036,483) (1,477,197) - 506,049 1,164,036 1,670,085 (1,452,145) - - - (1,452,145) 506,049 1,164,036 1,670,085 (360,456) 65,335 127,553 192,888 2,684,591 20,541 211,353 231,894 $ 2,324,135 $ 85,876 $ 338,906 $ 424,782 65 City of Sebastian, Florida Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2008 (Continued) Capital Projects Funds Permanent Fund General Public Capital Capital Facilities Projects Improvements Improvements Total Cemetery REVENUES: Taxes: Motor fuel $ - $ - $ - $ - $ - Intergovernmental - - - - - Impact fees - - - - - Charges for services - - - - 79,550 Fines - - - - - Investment earnings - 17,463 - 17,463 34,409 Contributions and donations - - - - - Otherrevenue - - - - - Total revenues - 17,463 - 17,463 113,959 EXPENDITURES: Current: Public safety - - - - - Physical environment - - - - - Transportation - - - - - Debt Service: Principal 147,538 - - 147,538 - Interest and fiscal charges 7,156 - - 7,156 - Capital outlay 371,014 67,615 25,635 464,264 - Total expenditures 525,708 67,615 25,635 618,958 - Excess (deficiency) of revenues over (under)expenditures (525,708) (50,152) (25,635) (601,495) 113,959 OTHER FINANCING SOURCES (USES) Transfers in 525,708 (170,392) 3,701 359,017 - Transfers out - - - - (36,538) Total other financing sources (uses) 525,708 (170,392) 3,701 359,017 (36,538) Net changes in fund balances - (220,544) (21,934) (242,478) 77,421 Fund balances -beginning 2,821 657,050 21,934 681,805 694,506 Residual fund equity transfer - - - - - Fund balances -ending $ 2,821 $ 436,506 $ - $ 439,327 $ 771,927 66 Total Other Governmental Funds 601,390 18,559 32,825 890,494 19,114 172,313 1,885 5,181 1,741,761 85 86 205,737 1,326,182 611,554 471,161 2,614,805 (873,044) 2,029,102 (1,488,683) 540,419 (332,625) 4,292,796 $ 3,y6U,171 67 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, 2008 REVENUES: Motor fuel taxes Intergovernmental Investment earnings Total revenues EXPENDITURES: Current: Transportation Debt service: Principal Interest and fiscal charges Total expenditures Excess of revenues over expenditures OTHER FINANCING (USES) Transfers out Total other financing (uses) Net changes in fund balances Actual Variance with Amounts on Final Budget - Final a Budgetary Positive Budget Basis (Negative) $ 676,000 $ 601,390 $ (74,610) 18,559 18,559 - 68,000 34,746 (33,254) 762,559 654,695 (107,864) 203,699 205,737 (2,038) 233,595 233,644 (49) 66,405 66,356 49 503,699 505,737 (2,038) 258,860 148,958 (109,902) (245,000) (95,000) (24s,ooo) (9s,ooo) 13,860 53,958 150,000 150,000 40,098 Fund balances -beginning 172,834 172,834 - Fund balances -ending $ 186,694 $ 226,792 $ 40,098 68 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, 2008 REVENUES: Impact fees Investment earnings Total revenues EXPENDITURES: Current: Culture and recreation Total expenditures Excess of revenues over expenditures OTAER FINANCING (USES) Transfers out Total other financing (uses) Net changes in fund balances Fund balances -beginning Fund balances -ending Actual Variance with Amounts on Final Budget - Final a Budgetary Positive Budget Basis (Negative) $ loo,ooo ~ 32,825 ~ (67,17s) 25,000 33,472 8,472 125,000 66,297 (58,703) -_ 6,897 (6,897) 6,897 (6,897) 125,000 59,400 (65,600) (418,285) (351,096) 67,189 (418,285) (351,096) 67,189 (293,285) (291,696) 1,589 1,325,089 1,325,089 - $ 1,031,804 $ 1,033,393 $ 1,589 69 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, 2008 REVENUES: Charges for services Investment earnings Total revenues EXPENDITURES: Current: Physical environment Total expenditures Excess of revenues over expenditures OTHER FINANCING (USES) Transfers out Total other financing (uses) Net changes in fund balances Fund balances -beginning Rind balances -ending Actual Variance with Amounts on Final Budget - Final a Budgetary Positive Budget Basis (Negative) $ 820,000 $ 810,944 $ (9,056) 70,200 45,624 (24,576) 890,200 856,568 (33,632) 3,500 3,500 886,700 856,482 (30,218) (936,873) (1,006,049) (69,176) (936,873) (1,006,049) (69,176) (50,173) (149,567) (99,394) 1,161,570 1,161,570 - $ 1,111,397 $ 1,012,003 $ (99,394) ~~ 86 3,414 86 3,414 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, 2008 REVENUES: Fines Investment earnings Contributions Other revenues Total revenues Final Budget Actual Amounts on a Budgetary Basis $ 11,114 (246) (615) 5,181 15,434 EXPENDITURES: Current: Public safety Total expenditures Excess of revenues over expenditures Fund balances -beginning Residual fund equity transfer Fund balances -ending $ 8,000 $ 19,114 1,000 754 2,500 1,885 - 5,181 11,500 26,934 11,500 11,500 85 8S 26,849 Variance with Final Budget - Positive (Negative) 11,415 11,415 26,849 24,206 24,206 - - 892 892 $ 24,206 $ 51,947 $ 27,741 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, 2008 Fund balances -beginning Residual fund equity transfer Fund balances -ending Actual Variance with Amounts on Final Budget - Final a Budgetary Positive Budget Basis (Negative) 892 892 - - (892) (892) $ 892 $ - $ (892) 71 City of Sebastian, Florida Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual Stormwater Utility Revenue Bonds 2003 Debt Service Fund For the Year Ended September 30, 2008 REVENUES: Investment earnings Total revenues EXPENDITURES: Debt service: Principal Interest and fiscal charges Total expenditures Deficiency of revenues under expenditures OTHER FINANCING SOURCES Transfers in Total other financing sources Net changes in fund balances Fund balances -beginning Fund balances -ending Actual Variance with Amounts on Final Budget - Final a Budgetary Positive Budget Basis (Negative) $ 875 $ 1,034 $ 159 875 1,034 159 245,000 245,000 - 192,748 196,748 (4,000) 437,748 441,748 (4,000) (436,873) (440,714) (3,841) 436,873 506,049 69,176 436,873 506,049 69,176 - 65,335 65,335 20,541 20,541 - $ 20,541 $ 85,876 $ 65,335 72 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, 2008 REVENUES: Investment earnings Total revenues EXPENDITURES: Current: Physical environment Debt service: Principal Interest and fiscal charges Total expenditures Deficiency of revenues under expenditures OTHER FINANCING SOURCES Transfers in Total other financing sources Net changes in fund balances Fund balances -beginning Fund balances -ending Actual Amounts on Final a Budgetary Budget Basis $ 1,975 $ 4,811 1,975 4,811 300 Variance with Final Budget - Positive (Negative) $ 2,836 2,836 300 700,000 700,000 - 335,294 341,294 (6,000) 1,035,594 1,041,294 (5,700) (1,033,619) (1,036,483) (2,864) 1,033,619 1,164,036 130,417 1,033,619 1,164,036 130,417 127,553 127,553 211,353 211,353 - $ 211,353 $ 338,906 $ 127,553 73 City of Sebastian, Florida Statement of Changes in Assets and Liabilities Agency Fund For the Year Ended September 30, 2008 ASSETS Cash and cash equivalents Total assets LIABILITIES Performance deposits held in escrow Total liabilities Balance Balance October 1, September 30, 200'7 Additions Deletions 2008 $ 170,730 $ 238,380 $ 400 $ 408,710 $ 170,730 $ 238,380 $ 400 $ 408,710 170,730 238,380 400 408,710 $ 170,730 $ 238,380 $ 400 $ 408,710 74 City of Sebastian, Florida Capital Assets Used in the Operation of Governmental Funds Comparative Schedule By Source September 30, 2008 Governmental Funds capital assets: FY 2007 FY 2008 Land $ 5,696,946 $ 5,696,946 Buildings and structures 10,996,497 11,158,739 Improvement other than buildings 4,970,638 5,149,267 Machinery and equipment 6,820,051 7,390,752 Infrastructure 18,677,191 22,259,149 Capital projects 2,692,704 1,520,565 Total capital assets $ 49,854,027 $ 53,175,418 Investment in Governmental Funds capital assets by sources: Federal grants $ 2,138,342 $ 2,138,342 State grants 858,210 907,755 County grants 713,359 713,359 General fund 11,650,739 11,605,512 Law enforcement trust fund 42,953 38,953 Recreational impact fee 552,890 688,730 Stormwater utility fee 16,255 387,153 Riverfront Redevelopment 754,056 754,056 Cemetery trust fund 180,963 230,472 Donations 2,858,177 3,145,174 Sales taxes 8,249,499 9,764,073 Motor fuel taxes 5,053,455 5,544,144 Revenue bond debt 14,092,425 15,737,130 Capital projects 2,692,704 1,520,565 Total investment in capital assets $ 49,854,027 $ 53,175,418 75 City of Sebastian, Florida Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity September 30, 2008 Improvements Machinery Other than and Function and Activity Land Buildings Buildings Equipment Infrastructure Totals General government: Legislative $ - $ - $ 1,100 $ 2,886 $ - $ 3,986 City manager - - - 2,826 - 2,826 City clerk - - - 143,134 - 143,134 City attorney - - - 599 - 599 Finance - - - 54,236 - 54,236 ~S - 5,841 9,800 89,715 - 105,356 Human resources - 2,050 - 3,704 - 5,754 Building maintenance - 130,220 15,665 69,200 - 215,085 Growth management - 85,555 - 50,742 - 136,297 Non-departmental 3,634,769 6,100,564 260,202 422,129 212,700 10,630,364 Subtotal 3,634,769 6,324,230 286,767 839,171 212,700 11,297,637 Public safety: Special operations - - - 176,392 - 176,392 Administration 9,560 3,347,151 89,320 271,934 - 3,717,965 School resource - - - 71,469 - 71,469 Road patrol - - - 2,050,330 - 2,050,330 Community policing - - - 95,917 - 95,917 Code enforcement - - - 46,632 - 46,632 Professional Stnd. - - - 19,025 - 19,025 Investigations - - 1,700 157,863 - 159,563 Support services - - - 72,310 - 72,310 Communications - - 11,272 211,582 - 222,854 Building department - - - 55,996 - 55,996 Subtotal 9,560 3,347,151 102,292 3,229,450 - 6,688,453 Transportation: Engineering 78 146,361 163,857 161,998 271,810 744,104 Central garage - 130,489 82,419 130,475 674 344,057 Roads and drainage 47,047 101,269 616,607 966,718 11,353,375 13,085,016 Subtotal 47,125 378,119 862,883 1,259,191 11,625,859 14,173,177 Physical Environment: Stormwater - - - 1,413,257 8,967,035 10,380,292 Cemetery 272,190 82,019 78,354 50,990 22,717 506,270 Subtotal 272,190 82,019 78,354 1,464,247 8,989,752 10,886,562 Culture/Recreation: Parks and recreation 1,733,302 1,027,220 3,818,971 598,693 1,430,838 8,609,024 Subtotal 1,733,302 1,027,220 3,818,971 598,693 1,430,838 8,609,024 Total $ 5,696,946 $ 11,158,739 $ 5,149,267 $ 7,390,752 $ 22,259,149 51,654,853 Construction in progress 1,520,565 Total $ 53,175,418 76 Function and Activit General government: Legislative City manager City clerk City attorney Finance MIS Human resources Building maintenance Growth management Non-departmental Subtotal Public Saftey: Special operations Administration School resource Road patrol Community policing Code enforcement Professional Stnd. Investigations Support services Communications Building department Subtotal Transportation: Engineering Central garage Roads and drainage Subtotal Physical Environment: Stormwater Cemetery Subtotal Culture & Recreation: City of Sebastian, Florida Capital Assets Used in the Operation of Governmental Funds Schedule of Changes By Function and Activity September 30, 2008 Governmental Governmental Funds Funds Capital Assets Transfers Transfers Capital Assets October 1, 2007 Additions Deletions In Out September 30, 2008 $ 3,986 $ - $ - 2,826 - - 143,134 - - 599 - - 55,623 - 1,387 94,107 11,249 - 5,754 - - 204,921 10,739 575 133,872 2,425 - 10,541,012 92,362 3,010 11,185,834 116,775 4,972 178,366 - 1,973 3,711,687 19,123 12,846 71,469 - 1,464,867 669,473 84,010 144,836 - 48,919 30,444 17,427 1,239 21,288 - 2,263 164,711 1,700 6,848 73,426 - 1,116 223,065 1,140 1,351 71,228 - 1,259 6,155,387 708,863 161,824 $ - $ - $ 3,986 - - 2,826 - - 143,134 - - 599 - - 54,236 - - 105,356 - - 5,754 - - 215,085 - - 136,297 - - 10,630,364 - - 11,297,637 - - 176,393 - - 3,717,964 - - 71,469 - - 2,050,330 - - 95,917 - - 46,632 - - 19,025 - - 159,563 - - 72,310 - - 222,854 - 13,973 55,996 13,973 6,688,453 740,218 20,849 16,963 - - 744,104 336,841 19,509 12,292 - - 344,058 11,939,438 1,173,729 42,125 13,973 - 13,085,015 13,016,497 1,214,087 71,380 13,973 - 14,173,177 7,935,394 2,455,583 10,685 - - 10,380,292 458,980 49,509 1,219 - 1,000 506,270 8,394,374 2,505,092 11,904 - 1,000 10,886,562 Parks and recreation 8,409,231 229,382 30,589 1,000 - 8,609,024 Subtotal 8,409,231 229,382 30,589 1,000 - 8,609,024 Total 47,161,323 4,774,199 280,669 14,973 14,973 51,654,853 Construction in progress 2,692,704 784,644 1,956,783 - - 1,520,565 Total $ 49,854,027 $ 5,558,843 $ 2,237,452 $ 14,973 $ 14,973 $ 53,175,418 77 GTY OF .:~ti,,,~ti _ l~~ ` V ~ ,~ a w ,Y„r„ ..;.~. ..~... ~• ~~ ~, ~~~ W„-~, HOME OF PELICAN ISLAND THIS PAGE INTENTIONALLY LEFT BLANK 78 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 Pa e s Financial Trends 80-91 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 92-97 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 98-103 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 104-106 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 107-109 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. 79 City of Sebastian, Florida Net Assets by Component Last Seven Fiscal Years (accrual basis of accounting) ~nnR ~nm ~nn~ Governmental Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 24,133,550 $ 21,469,456 $ 17,579,683 9,215,801 9,419,129 5,068,583 5,035,184 5,249,998 11,293,877 «~ Total Governmental Activities Net Assets Business-Type Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Business-Type Activities Net Assets Primary government Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Primary Government Net Assets $ 38,384,535 $ 36,138,583 $ 33,942,143 9,111,251 $ 8,895,501 $ 8,798,612 570,149 570,890 560,581 753,076 1,303,886 1,896,539 $ 10,434,476 $ 10,770,277 $ 11,255,732 $ 33,244,801 $ 30,364,957 $ 26,378,295 9,785,950 9,990,019 5,629,164 5,788,260 6,553,884 13,190,416 $ 48,819,011 $ 46,908,860 $ 45,197,875 ~~~ The large increases in unrestricted net assets from 2003 to 2004 and from 2004 to 2005 are mainly due to increase in State revenue sharing. sales and use taxes, and tax revenues. c2> The large increase in unrestricted net assets from 2005 to 2006 is mainly due to increase in tax revenues, franchise fees, and interest earnings. 80 2005 2004 2003 2002 $ 17,103,399 $ 16,412,401 $ 16,339,222 $ 14,242,832 5,395,879 4,059,674 3,235,266 3,289,670 9,081,345 ~'~ 7,171,123 (i) 5,461,224 5,865,388 $ 31,580,623 $ 27,643,198 $ 25,035,712 $ 23,397,890 $ 7,459,945 $ 4,264,961 $ 1,545,867 $ 363,827 574,105 506,006 505,435 458,014 738,519 1,712,657 1,471,457 1,120,224 $ 8,772,569 $ 6,483,624 $ 3,522,759 $ 1,942,065 $ 24,563,344 $ 20,677,362 $ 17,885,089 $ 14,606,659 5,969,984 4,565,680 3,740,701 3,747,684 9,819,864 8,883,780 6,932,681 6,985,612 $ 40,353,192 $ 34,126,822 $ 28,558,471 $ 25,339,955 81 City of Sebastian, Florida Changes in Net Assets Last Seven Fiscal Years (accrual basis of accounting) 2008 2007 2006 Program Revenues Governmental Activities: Charges for Services: General Government $ 353,836 $ 422,897 $ 533,482 Public Safety 85,009 92,853 140,545 Physical Environment 903,285 891,021 887,819 Economic Environment - - - CulturallRecreation 83,378 85,945 72,472 Operating Grants and Contributions 786,016 192,676 407,898 Capital Grants and Contributions 835,607 1,014,481 1,301,438 Total Governmental Activities Program Revenues $ 3,047,131 $ 2,699,873 $ 3,343,654 Business-Type Activities: Charges for Services: Golf Course $ 1,438,233 $ 1,652,288 $ 1,580,407 Airport 523,989 344,813 375,768 Building ~'~ 347,189 408,875 1,220,823 Operating Grants and Contributions - - 6,998 Capital Grants and Contributions 494,098 500,428 1,056,562 Total Business-Type Activities Program Revenues $ 2,803,509 $ 2,906,404 $ 4,240,558 Total Primary Government Program Revenues $ 5,850,640 $ 5,606,277 $ 7,584,212 Expenses Governmental Activities: General Government $ 3,375,178 $ 3,083,609 $ 3,129,723 Public Safety 5,226,512 5,377,107 4,191,295 Physical Environment 1,805,755 1,695,066 2,193,589 Transportation 2,111,360 2,276,497 2,173,071 Economic Environment 113,101 605,510 98,661 CulturaURecreation 1,420,734 1,237,398 1,208,288 Interest and Fiscal Charges 634,891 667,950 706,303 Total Governmental Activities Expenses $ 14,687,531 $ 14,943,137 $ 13,700,930 Business-Type Activities: Golf Course $ 1,488,472 $ 1,533,900 $ 1,558,338 Airport 1,099,653 1,046,994 801,967 Building ~'~ 605,422 905,452 936,793 Tctal Business-Type Activities Expenses $ 3,193,547 $ 3,486,346 $ 3,297,098 Total Primary Government Expenses $ 17,881,078 $ 18,429,483 $ 16,998,028 ~'~ The building operation was reclassified from being part of the general fund operation to an enterprise fu nd operation at the beginning of fiscal year 2006. 82 2005 2004 2003 2002 $ 370,609 $ 376,327 $ 247,774 $ 172,135 1,356,385 1,660,032 824,821 625,924 828,907 850,887 799,637 785,683 _ _ _ 24,869 56,199 48,590 46,736 73,013 2,802,511 1,144,528 920,829 958,229 1,781,954 1,353,959 640,894 872,490 $ 7,196,565 $ 5,434,323 $ 3,480,691 $ 3,512,343 $ 1,381,817 $ 1,648,308 $ 1,377,245 $ 1,365,027 434,818 201,890 168,451 179,373 13,582 67,576 - 51,087 2,289,986 2,451,212 1,149,437 214,175 $ 4,120,203 $ 4,368,986 $ 2,695,133 $ 1,809,662 $ 11,316,768 $ 9,803,309 $ 6,175,824 $ 5,322,005 $ 3,262,276 $ 2,414,865 $ 1,620,616 $ 2,010,288 4,816,614 4,502,109 3,391,831 2,945,701 1,283,889 1,279,257 1,920,200 508,616 4,034,900 3,288,532 2,401,037 2,258,181 32,128 86,041 166,024 223,207 1,260,395 823,974 747,910 881,260 740,372 722,007 312,367 168,749 $ 15,430,574 $ 13,116,785 $ 10,559,985 $ 8,996,002 $ 1,464,532 $ 1,527,051 $ 1,363,359 $ 1,393,551 519,235 350,949 315,941 283,726 $ 1,983,767 $ 1,878,000 $ 1,679,300 $ 1,677,277 ~ 17,414,341 $ 14,994,785 $ 12,239,285 $ 10,673,279 83 City of Sebastian, Florida Changes in Net Assets (continued) Last Seven Fiscal Years (accrual basis of accounting) Net (Expense)/Revenue Governmental Activities Business-Type Activities Total Primary Government Net Expense General Revenues and Other Changes in Net Assets Governmental Activities: Property Taxes, Levied for General Purposes Sales and Use Taxes Franchise Fees State Shared Revenues Interest Earnings Miscellaneous Transfers Total Governmental Activities Business-Type Activities: Interest Earnings Miscellaneous Transfers Total Business-Type Activities Total Primary Government Change in Net Assets Governmental Activities Business-Type Activities Total Primary Government Change in Net Assets 2008 2007 2006 $ (11,640,400) $(12,243,264) $(10,357,276) (390,038) (579,942) 943,460 $ (12,030,438) $(12,823,206) $ (9,413,816) $ 5,149,047 $ 5,089,841 $ 4,645,050 4,753,718 4,776,691 4,907,906 1,199,762 1,106,698 1,253,749 1,989,606 2,083,523 2,242,292 634,919 1,147,931 827,224 159,300 192,300 256,780 - 42,720 (1,414,205) ~~~ $ 13,886,352 $ 14,439,704 $ 12,718,796 $ 54,237 $ 137,207 $ 125,498 - (42,720) 1,414,205 $ 54,237 $ 94,487 $ 1,539,703 $ 13,940,589 $ 14,534,191 $ 14,258,499 $ 2,245,952 $ 2,196,440 $ 2,361,520 (335,801) (485,455) 2,483,163 $ 1,910,151 $ 1,710,985 $ 4,844,683 cz) The large increase in transfers from 2005 to 2006 is mainly due to the one time transfer of building reserve to building fund due to the reclassification of fund type for the building operation. 84 2005 2004 2003 2002 $ (8,234,009) $ (7,682,462) $ (7,079,294) $ (5,483,659) 2,136,436 2,490,986 1,015,833 132,385 $ (6,097,573) $ (5,191,476) $ (6,063,461) $ (5,351,274) $ 4,017,555 $ 3,420,971 $ 2,944,456 $ 2,615,939 4,718,691 4,035,545 3,705,922 2,844,825 886,390 770,600 756,194 766,901 2,138,020 1,721,956 1,523,524 2,068,753 398,518 398,158 241,358 118,840 118,760 388,562 79,662 - (106,500) (445,844) (534,000) - $ 12,171,434 $ 10,289,948 $ 8,717,116 $ 8,415,258 $ 45,709 $ 23,774 $ 21,789 $ 32,122 300 261 9,072 - 106,500 445,844 534,000 - $ 152,509 $ 469,879 $ 564,861 $ 32,122 $ 12,323,943 $ 10,759,827 $ 9,281,977 $ 8,447,380 $ 3,937,425 $ 2,607,486 $ 1,637,822 $ 2,931,599 2,288,945 2,960,865 1,580,694 164,507 $ 6,226,370 $ 5,568,351 $ 3,218,516 $ 3,096,106 85 City of Sebastian, Florida Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2008 2007 2006 2005 General Fund Reserved $ 739,873 $ 947,533 $ 1,815,187 $ 2,848,726 Unreserved 5,568,309 5,443,254 4,663,885 3,254,741 Total General Fund $ 6,308,182 $ 6,390,787 $ 6,479,072 $ 6,103,467 All Other Governmental Funds Reserved $ 9,809,650 $ 8,299,903 $10,058,183 ~'~ $ 828,819 Unreserved, Reported in: Special Revenue funds 3,408,537 5,321,148 5,381,276 4,735,396 Capital Projects funds - - - (z) 8,406,953 Total All Other Governmental Funds $ 13,218,187 $ 13,621,051 $15,439,459 $ 13,971,168 Total Governmental Funds $ 19,526,369 $ 20,011,838 $21,918,531 $ 20,074,635 ~~~ The significant change in reserved fund balance from 2005 to 2006 is due to the reclassification of unreserved reported in capital projects funds to reserved. (z) The significant change in unreserved reported in capital projects funds from 2005 to 2006 is due to the reclassification of unreserved reported in capital projects funds to reserved. (3> 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. 86 2004 2003 2002 2001 2000 1999 $ 2,693,710 $ 1,402,398 $ 232,088 $ 121,256 $ 64,341 $ 43,113 2,421,182 2,479,452 3,690,659 3,406,083 2,786,252 2,699,955 $ 5,114,892 $ 3,881,850 $ 3,922,747 $ 3,527,339 $ 2,850,593 $ 2,743,068 $ 4,208,170 $ 1,596,981 $ 1,503,172 $ 1,306,269 $ 2,021,740 $ 605,270 3,355,229 2,211,585 1,808,288 548,174 456,461 217,969 6,795,371 9,993,933 (3) 2,384,557 2,609,201 1,562,299 4,027,673 $14,358,770 $ 13,802,499 $ 5,696,017 $ 4,463,644 $ 4,040,500 $ 4,850,912 $19,473,662 $17,684,349 $ 9,618,764 $ 7,990,983 $ 6,891,093 $ 7,593,980 87 City of Sebastian, Florida Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2008 2007 2006 Revenues Property and Other Local Taxes Franchise Fees Charges for Services Licenses and Permits Fines Intergovernmental Impact Fees Special Assessments Investment Earnings Miscellaneous $ 10,504,155 $ 10,554,617 $ 10,269,451 1,199,762 1,106,698 1,253,749 1,209,617 1,271,102 517,605 163,471 186,875 244,370 65,246 71,314 77,776 2,674,761 2,463,628 2,852,293 32,825 56,875 337,675 - - 819,286 647,312 1,062,043 827,224 461,553 244,629 294,695 Total Revenues Expenditures Current: General Government Public Safety Physical Environment Transportation Economic Environment Cultural and Recreation Debt service: Principal Retirement Interest and Fiscal Charges Capital Outlay Total Expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Debt Proceeds Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures 16,958,702 17,017,781 17,494,124 3,087,789 2,999,652 2,494,863 4,677,618 4,700,447 3,813,908 1,368,593 1,301,719 1,850,642 1,545,045 1,733,697 1,672,983 113,101 80,279 98,661 1,079,379 975,087 926,846 1,326,182 1,284,418 1,248,378 611,554 643,305 678,682 3,634,910 5,242,590 1,451,060 17,444,171 18,961,194 14,236,023 (485,469) (1,943,413) 3,258,101 5,679,896 5,158,296 3,785,981 (5,679,896) (5,115,576) (5,200,186) - 42,720 (1,414,205) $ (485,469) $ (1,900,693) $ 1,843,896 14.0% 14.1% 15.1% 88 2005 2004 2003 2002 2001 2000 1999 $ 9,483,664 $ 8,179,344 $ 7,325,932 $ 6,228,107 $ 6,223,280 $ 6,273,070 $ 5,837,968 886,390 770,600 756,194 766,901 753,024 - - 936,530 962,677 921,119 1,123,670 300,046 159,701 33,097 1,587,675 1,867,920 878,097 578,695 487,618 475,345 448,928 95,699 118,918 119,752 127,027 148,676 140,672 89,697 5,561,695 3,115,520 1,785,237 2,841,315 1,968,416 2,318,091 1,865,375 385,775 557,700 395,850 255,775 - - 11,023 28,424 22,560 31,756 28,528 128,154 44,964 398,518 398,158 241,358 206,567 417,707 689,395 512,407 144,057 378,268 91,078 126,823 196,311 246,774 650 19,491,026 16,377,529 12,537,177 12,286,636 10,523,606 10,431,202 8,833,086 2,974,736 2,231,532 1,977,033 2,230,870 1,647,858 1,946,702 1,837,031 4,349,639 3,950,228 3,427,711 2,588,526 2,482,393 2,129,662 2,122,823 910,794 1,125,727 1,247,452 508,616 452,116 345,844 412,990 3,616,076 2,863,397 1,610,761 1,427,992 1,084,401 1,228,234 1,007,426 32,128 86,041 166,024 327,911 273,927 617 4,830 995,406 747,131 629,835 732,729 612,038 555,584 488,499 1,218,023 985,974 361,024 344,553 222,954 212,860 225,243 711,736 887,564 158,043 174,864 152,093 151,536 160,940 3,975,015 9,021,558 3,859,709 2,322,794 3,402,365 4,713,604 1,915,620 18,783,553 21,899,152 13,437,592 10,658,855 10,330,145 11,284,643 8,175,402 707,473 (5,521,623) (900,415) 1,627,781 193,461 (853,441) 657,684 7,756,780 9,500,000 - 900,000 - - 3,745,265 2,745,754 2,992,908 2,009,173 2,130,744 2,134,510 1,861,364 (3,851,765) (3,191,598) (3,526,908) (2,009,173) (2,130,744) (2,134,510) (1,861,364) (106,500) 7,310,936 8,966,000 - 900,000 - - $ 600,973 $ 1,789,313 $ 8,065,585 $ 1,627,781 $ 1,093,461 $ (853,441) $ 657,684 13.0% 14.5% 5.4% 6.2% 5.4% 5.5% 6.2% 89 City of Sebastian, Florida Program Revenues by Function/Program Last Eight Fiscal Years (accrual basis of accounting) 2008 2007 2006 2005 Function/Program Governmental Activities: General Government Public Safety Physical Environment Transportation Economic Environment CulturaURecreation Total Governmental Activities Business-type activities: Golf Course Airport Building ~ 1~ Total Business-Type Activities Total Primary Government $ 377,305 $ 450,267 $ 579,591 $ 587,527 515,997 249,756 306,702 1,537,557 1,256,277 891,021 890,092 898,821 619,949 721,103 900,365 3,392,883 - - 30,059 - 277,603 387,726 636,845 779,777 $ 3,047,131 $ 2,699,873 $ 3,343,654 $ 7,196,565 $ 1,438,233 $ 1,652,288 $ 1,587,405 $ 1,395,399 1,018,087 845,241 1,432,330 2,724,804 347,189 408,875 1,220,823 - $ 2,803,509 $ 2,906,404 $ 4,240,558 $ 4,120,203 $ 5,850,640 $ 5,606,277 $ 7,584,212 $ 11,316,768 ~~~ The building operation was reclassified from being part of the general fund operation to an enterprise fund operation at the beginning of fiscal year 2006. 90 2004 2003 2002 2001 $ 392,471 $ 1,095,902 $ 172,135 $ 226,786 1,850,710 929,952 785,373 633,230 914,318 1,136,507 785,683 779,837 1,670,534 1,580,076 3,038,913 2,285,809 - - 24,869 18,753 606,290 663,459 566,959 168,335 $ 5,434,323 $ 5,405,896 $ 5,373,932 $ 4,112,750 $ 1,715,884 $ 1,377,245 $ 1,365,517 $ 1,088,104 2,653,102 1,317,888 444,145 616,656 $ 4,368,986 $ 2,695,133 $ 1,809,662 $ 1,704,760 $ 9,803,309 $ 8,101,029 $ 7,183,594 $ 5,817,510 91 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 2008 ~l~ $ 5,149,047 $ 2,250,781 $ 2,502,937 $ 2007 cz~ 5,089,841 2,216,381 2,560,310 2006 ~3~ 4,645,050 2,183,164 2,724,742 2005 4,017,555 2,005,124 2,713,567 2004 3,420,971 1,854,632 2,180,913 2003 2,944,456 1,780,717 1,925,205 2002 c4> 2,717,564 983,236 1,861,589 2001 2,608,989 1,151,685 1,861,608 2000 cs~ 2,323,566 1,044,595 1,704,749 1999 ~~~ 2,734,068 413,045 1,553,672 601,390 $ 10,504,155 688,085 10,554,617 716,495 10,269,451 747,418 9,483,664 722,828 8,179,344 675,554 7,325,932 665,718 6,228,107 600,998 6,223,280 549,800 5,622,710 484,054 5,184,839 ~~~ Fiscal Year 2008 property tax revenue reflects a change in the property tax millage rate from 3.0519 to 2.9917. (2) Fiscal Year 2007 property tax revenue reflects a change in the property tax millage rate from 3.9325 to 3.0519. c3~ Fiscal Year 2006 property tax revenue reflects a change in the property tax millage rate from 4.5904 to 3.9325. (4> Fiscal Year 2002 property tax revenue reflects a change in the property tax millage rate from 5.0000 to 4.5904. ~5~ Fiscal Year 2000 property tax revenue reflects a change in the property tax millage rate from 6.5000 to 5.0000. (s) Fiscal Year 1999 property tax revenue reflects a change in the property tax millage rate from 6.9000 to 6.5000. Millage Rate represents the dollar of tax per one thousand dollars of taxable valuation. Motor Fuel Total 92 City of Sebastian, Florida Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Ci ty of Sebastian Indian River County School Board Debt Total Total Debt Total Fiscal Operating Service City County~l~ Operating Service School Year Millage Millage Millage Millage Millage Millage Millage Other«~ 2008 2.9917 - 2.9917 5.14850 7.26800 0.27000 7.53800 1.38160 2007 3.0519 - 3.0519 5.36610 7.16300 0.28000 7.44300 1.47940 2006 3.9325 - 3.9325 5.69040 7.88000 0.36000 8.24000 1.60850 2005 4.5904 - 4.5904 7.35050 8.01900 0.48000 8.49900 1.43029 2004 4.5904 - 4.5904 7.93960 8.17900 0.53100 8.71000 1.69278 2003 4.5904 - 4.5904 8.03020 8.10200 0.63000 8.73200 1.43875 2002 4.5904 - 4.5904 8.08410 8.40200 0.68000 9.08200 1.14845 2001 5.0000 - 5.0000 8.24860 8.67700 0.88000 9.55700 1.62899 2000 5.0000 - 5.0000 8.24360 8.61400 1.00000 9.61400 1.52091 1999 6.5000 - 6.5000 8.33160 8.61400 1.00000 9.61400 c3> ~`~ Millage includes General Fund, M.S.T.U.s, Emergency Services District and Land Bonds. (z) All Special Taxing Districts. (3> Information not available. Source: Indian River County Property Appraiser's Office 93 City of Sebastian, Florida Assessed Valuation and Estimated True Values of Taxable Property Last Ten Fiscal Years Real Property ~~~ Personal Property Fiscal Assessed Estimated Assessed Year Value Actual Value Value 2008 1,810,818,686 2,263,523,358 59,007,644 2007 2,054,408,055 2,568,010,069 64,899,942 2006 2,124,615,672 2,655,769,590 55,913,696 2005 1,526,923,406 1,908,654,258 51,827,624 2004 1,157,275,164 1,446,593,955 51,330,277 2003 946,293,950 1,182,867,438 48,613,628 2002 829,224,615 1,036,530,769 45,355,170 2001 754,577,150 943,221,438 45,195,579 2000 656,619,860 820,774,825 42,216,162 1999 $ 626,274,970 $ 782,843,713 $ 46,027,721 Source: Indian River County Property Appraiser Exemptions Estimated Real Actual Value Property 59,007,644 506,401,692 64,899,942 334,302,515 55,913,696 322,318,753 51,827,624 271,466,364 51,330,277 228,262,825 48,613,628 217,554,663 45,355,170 205,977,066 45,195,579 198,445,669 41,533,985 190,327,263 $ 46,027,721 $ 187,751,454 (1) Assessed value of Real Property based on approximately 80 percent of estimated actual value. 94 Total Total Assessed Estimated Value Actual Value 1,869,826,330 2,322,531,002 2,119,307,997 2,632,910,011 2,180,529,368 2,711,683,286 1,578,751,030 1,960,481,882 1,208, 605,441 1,497,924,232 994,907,578 1,231,481,066 874,579,785 1,081,885,939 799,772,729 988,417,017 698,836,022 862,308,810 $ 672,302,691 $ 828,871,434 95 City of Sebastian, Florida Principal Taxpayers Year 2008 and Year 1998 Taxpayer Florida Power & Light (Utility /Electric) Wal-Mart Stores Inc. (Retail) Chance Holdings LLC (Development) IPF /Sebastian LLC (Retail) KB Homes Treasure Coast LLC (Construction) 512 Commerce Center LLC Bellsouth Communications (Communication) Park Place Community LLC (Rent /Retail) BW US 1 Inc. (Commerical) Sebastian Crossings LLC (Construction) Lynch, Robert N. (Bishop) Grace's Landing Ltd Falcon Cable Media Winn Dixie Stores Inc. Sebastian Center Ltd Ringhaver Equipment Total Assessed Valuation ~'~ 1999 information not available 2008 Real Percentage Property of Total Assessed Assessed Valuation Rank Valuation $ 15,508,499 14,155,041 9,358,870 8,606,240 8,227,760 8,089,710 7,772,461 7,620,573 7,361,730 6,741,200 $ 93,442,084 $ 128,743,465 Source: Indian River County Property Appraiser's Office 1998 ~'~ Real Percentage Property of Total Assessed Assessed Valuation Rank Valuation 1 12.05% $ 6,448,890 3 2 10.99% 7,843,080 2 3 7.27% - 4 6.68% - 5 6.39% - 6 6.28% - 7 6.04% 7,930,440 1 8 5.92% 2,737,650 5 9 5.72% - 10 5.24% - - 3,665,790 4 - 2,111,580 6 - 1,618,367 7 - 1,586,073 8 - 1,316,420 9 - 780,155 10 72.58% $ 36,038,445 $630,218,290 1.02% 1.24% 1.26% 0.43 0.58% 0.34% 0.26% 0.25% 0.21 0.12% 5.71% 96 City of Sebastian, Florida Property Tax Levies And Collections Last Ten Fiscal Years Percent of Total Current Current Tax Tax Tax Collections Year Levy Collections To Tax Levy 2008 $ 4,919,994 $ 4,634,338 94 2007 4,747,938 4,537,100 96 2006 4,426,281 4,300,217 97 2005 3,888,488 3,723,912 96 2004 3,216,940 3,130,521 97 2003 2,862,650 2,725,515 95 2002 2,635,277 2,489,854 94 2001 2,542,544 2,455,930 97 2000 2,422,756 2,283,898 94 1999 2,869,796 2,726,857 95 Delinquent Total Tax Tax Collections Collections 2,906 9,429 39 1,712 34,247 26,908 36,421 51,690 35,050 2,912 4,637,244 4,546,529 4,300,256 3,725,624 3,164,768 2,752,423 2,526,275 2,507,620 2,318,948 2,729,769 Source: Indian River County Property Appraiser and Tax Collector Percent of Total Tax Collections To Tax Levy 94 96 97 96 98 96 96 99 96 95 97 City of Sebastian, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years Business-type Governmental Activities Activities Water Line Roadway Assessment Improvement Year Bonds Notes 2008 - $1,333,197 2007 - 1,566,839 2006 - 1,790,544 2005 - 2,004,718 2004 - 2,209,745 2003 77,615 2,406,028 2002 134,299 2,593,939 2001 187,901 2,773,847 2000 238,589 2,946,113 1999 286,521 3,111,041 Infrastructure Sales Tax Bonds $ 8,445,000 $ 9,145,000 9,825,000 10,490,000 11,140,000 9,500,000 Heavy Stormwater Golf Course Total Equipment Utility Revenue Revenue Primary Per Lease Bonds Bonds Government Capita - $ 4,570,000 $ 590,000 14,938,197 652 147,538 4,815,000 870,000 16,544,377 738 288,251 5,055,000 1,140,000 18,098,795 835 422,455 5,290,000 1,395,000 19,602,173 978 550,452 5,525,000 1,885,000 21,310,197 1,100 672,528 - 2,115,000 14,771,171 802 788,957 - 2,335,000 5,852,195 341 - - 2,435,000 ~'~ 5,396,748 324 - - 1,500,000 4,684,702 290 - - 1,610,000 5,007,562 319 ~~~ Golf Course Revenue Bonds, Series 1996 was refunded in 2001. 98 City of Sebastian, Florida Computation of Legal Debt Margin September 30, 2008 Assessed Valuation Assessed taxable real property value Add back: exempt real property Total assessed value of real property Legal debt margin: Debt limitation - 5 percent of total assessed real property value ~1~ Debt applicable to limitation Total bonded debt Less: revenue bonds Total applicable to limitation Legal debt margin $ 1,304,416,994 506,401,692 $ 1,810,818,686 $ 14,348,197 (13,015,000) 90,540,934 1,333,197 $ 89,207,737 ~l~ 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, 2008 The City of Sebastian has no overlapping general obligation bonded debt. 99 City of Sebastian, Florida Ratios of General Bonded Debt Outstanding and Legal Debt Margin Last Ten Fiscal Years 2008 Debt Limit (1) Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit 2007 2006 2005 $ 90,540,934 $ 102,720,403 $ 76,346,170 $ 76,346,170 1,333,197 1,714,377 2,078,796 2,427,174 $ 89,207,737 $ 101,006,026 $ 74,267,374 $ 73,918,996 1.47% 1.67% 2.72% 3.18% ~'~ Under the City's adopted financial policies, the City's outstanding general obligation debt should not exceed 5% of the assessed valuation of real property. The percentage was dropped from 10% to 5% in fiscal year 2003. 100 2004 2003 2002 2001 2000 1999 $ 57,863,758 $ 47,314,698 $ 82,922,462 $ 75,457,715 $ 65,661,986 $ 62,627,497 2,760,196 3,078,556 3,382,896 3,673,847 2,946,113 3,111,041 $ 55,103,562 $ 44,236,142 $ 79,539,566 $ 71,783,868 $ 62,715,873 $ 59,516,456 4.77% 6.51% 4.08% 4.87% 4.49% 4.97% 101 City of Sebastian, Florida Pledged-Revenue Coverage Last Ten Fiscal Years Recreational Facilities Improvement and Refundin g Revenue Bonds, Series 2001 Less: Net Fiscal Gross Operating Available Debt Service Year Revenues~~~ Expenses (Z) Revenue Principal Interest Total Coverage 2008 1,455,749 1,174,169 281,580 270,000 41,090 311,090 0.91 2007 1,701,171 1,218,382 482,789 255,000 51,590 306,590 1.57 2006 1,628,015 1,165,411 462,604 250,000 61,690 311,690 ~~~ 1.48 ~'~ 2005 1,395,436 1,023,002 372,434 240,000 71,490 311,490 c6~ 1.20 ~'~ 2004 1,497,053 1,108,770 388,283 230,000 80,890 310,890 c6~ 1.25 ~'~ 2003 1,400,154 968,052 432,102 220,000 89,890 309,890 ~~ 1.39 ~'~ 2002 1,386,424 1,020,640 365,784 100,000 104,481 204,481 (6> 1.79 ~'~ 2001 1,165,091 (s~ 1,043,741 ~s> 121,350 - - - ~~~ - ~'~ 2000 1,450,487 947,145 503,342 110,000 96,980 206,980 c3~ 2.43 ~4~ 1999 $1,414,976 $ 891,914 $ 523,062 $ 105,000 $ 102,650 $ 207,650 ~3~ 2.52 (4~ Note: Detail regarding the City's outstanding debt can be found in the notes to the fmancial statements. ~l~ 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 repair and upgrade. (3) Golf Course Bond, Series 1985 refunded in 1992 with Series 1992. (4) Required coverage is 1.0. (s) Golf Course closed for four months for renovations. ~6> Golf Course Bond, Series 1992 refunded with Recreational Facilities Improvement and Refunding Revenue Bonds, Series 2001. ~~~ Required coverage is 1.25. (8) Total revenues consist of stormwater utility fees and interest. (9) Required coverage is 1.35. 102 Stormwater Utili ty Revenue Bonds, Series 2003 Gross Debt Service Revenues~8~ Principal Interest Total Coverage~9~ 856,568 245,000 191,873 436,873 1.96 932,183 240,000 197,273 437,273 2.13 908,576 235,000 201,973 436,973 2.08 792,886 235,000 206,673 441,673 1.80 $ 779,724 $ 105,000 $ 104,386 $ 209,386 3.72 103 City of Sebastian, Florida Demographic and Economic Statistics Last Ten Years Total Personal Year Population Income ~1~ 2008 22,924 (s) 'L007 22,426 (s) 2006 21,666 $ 7,002,160,000 $ 2005 20,048 6,386,893,000 2004 19,365 5,071,395,000 2003 18,425 4,831,037,000 2002 17,167 4,680,414,000 2001 16,667 4,552,238,000 2000 16,181 4,207,683,000 1999 15,707 3,983,019,000 (5) ~s> 54,045 50,369 $ 40,677 40,162 39,683 39,470 37,110 35,788 44,450 41,522 40,291 39,615 39,359 40,063 37,947 Sources: ~`~ 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 c5~ Information not available (6) The school population appears to have declined due to rezoning. The City of Sebastian has only one (1) middle school, and the overflow students have been rezoned to the county. Per Capita Personal Income (i) Median Household Income ~~~ Median Aee ~~~ (5) ~s> ~s~ (5) ~s> ~s~ ~s~ ~s~ ~s> ~s~ (5) 49.2 ~s~ 104 Educational Attainment: Bachelor's Degree or higher c2) (5) (5) ~s> (5) ~s> ~s> ~s~ ~s> 23.1 ~s> School Enrollment (3) 4,710 5,117 5,604 5,258 4,917 4,340 4,309 1,371 1,342 1,383 Unemployment Rate ~l~ (6) 9.7 6 4.1 4.0 7.6 7.5 7.8 7.4 6.5 7.5 105 Total Assessed Pronertv Value (4) $ 1,869,826,330 2,119,307,997 2,180,529,368 1,578,751,030 1,208,605,441 994,907,578 874,579,785 799,772,729 698,836,022 672,302,691 City of Sebastian, Florida Principal Employers Year 2008 and 1999 2008 Percentage Number of of Total County Employer Employees Employment Indian River Memorial Hospital 1,706 3.28 Publix Supermarket 1,104 2.12 The New Piper Aircraft 1,063 2.04 Sebastian River Medical Center 380 0.73 CVS Warehouse/Distribution 325 0.62 Wal-Mart 404 0.78 ?ohn's Island 475 0.91 Indian River Estates 442 0.85 Visiting Nurse Association 348 0.67 Disney's Vero Beach Resort 301 0.58 Total 6,548 12.58 Total County Employees 52,042 1999 Percentage Number of of Total County Employer Employees Employment The New Piper Aircraft 1249 2.87 Publix Supermarket 792 1.82 Wal-Mart 774 1.78 Sun Ag. Inc. 550 1.26 Winn Dixie Supermarkets 520 1.19 Hale Indian River Groves 505 1.16 Gracewood Fruit Packing 500 1.15 Dodgertown Complex 438 1.00 John's Island 415 0.95 Graves Brothers 400 0.92 Total 6,143 14.09 Total County Employees 43,592 Source: Indian River County Chamber of Commerce * Principal employers information available for Indian River County only. 106 City of Sebastian, Florida Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Function/uroeram General Government 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 City Council 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 City Manager 2.5 2.0 2.0 5.0 4.0 4.0 4.0 4.0 3.0 3.0 City Clerk 3.0 4.0 4.5 4.0 4.0 4.0 5.0 5.0 5.0 5.0 City Attorney 2.0 2.0 2.0 2.0 1.0 1.0 1.0 1.0 1.0 0.0 Finance 5.0 5.0 6.0 5.0 5.0 5.0 6.0 6.0 5.0 5.0 Mgmt Information Svcs 3.0 3.0 3.0 2.0 2.0 2.0 0.0 0.0 0.0 0.0 Human Resources 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 2.0 Building Maintenance 2.0 2.0 2.0 2.0 0.0 4.0 4.0 4.0 4.0 4.0 Growth Management 5.0 5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 6.0 Public Safety: Police Department 60.0 57.0 58.0 (2) 59.0 56.5 54.5 53.0 52.5 50.0 47.0 Building Department 6.0 11.0 11.0 9.0 8.0 7.0 7.0 6.0 6.0 6.0 Code Enforcement 2.5 3.0 3.0 (2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Transportation: Roads & Drainage 10.0 11.5 12.5 12.5 14.5 11.5 ~'~ 23.5 26.5 27.5 24.0 Central Garage 2.5 3.5 3.5 3.0 3.0 3.0 3.0 3.0 3.0 3.5 Airport 3.0 3.0 3.5 3.5 2.5 2.5 1.5 1.0 0.5 0.5 Physical Environment: Engineering 7.0 9.0 8.0 8.0 8.0 7.5 8.0 6.5 6.5 6.0 Stormwater Utility 13.0 13.0 13.0 13.0 12.0 12.0 X11 1.0 0.0 0.0 0.0 Cultural/Recreation: Parks & Recreation 23.5 23.5 24.5 23.5 17.5 16.5 14.0 14.0 10.0 10.0 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 12.5 12.5 12.5 13.5 13.5 14.5 12.5 12.5 11.5 Totals: 170.0 177.5 180.5 175.5 163.0 159.5 157.0 153.5 145.5 138.0 ~1~ Eleven employees were moved from roads & drainage to stormwater starting fiscal year 2003. (2) Code enforcement division was transferred out from the Police Department starting fiscal year 2006 Source: City of Sebastian, Florida 1999-2008 Annual Budgets Method: Using 1.0 for each full-time employee, and 0.50 for each part-time and seasonal employee 107 City of Sebastian, Florida Operating Indicators by Function/Program Last Ten Fiscal Years Function/program 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 General Government Number of Annexation Approved 0 1 1 1 6 3 0 1 1 0 Acres of Annexed Property 0 3.87 3.3 25.55 484 80 0 80 6 0 Purchase Orders Issued 254 284 293 369 408 372 357 411 406 397 Public Safety Police Department Physical Arrest 662 697 744 786 653 557 515 627 738 481 Traffic Violations 4,418 7,221 6,291 5,457 5,431 1,939 2,528 2,781 3,562 2,413 Parking Violations 208 289 880 303 3,801 632 207 198 305 53 Building Department Construction Permits Issued 60 116 506 774 577 544 363 315 317 210 Estimated Value of Construction (in millions) $ 21.0 $ 32.3 $ 88.3 $114.7 $112.3 $82.7 $38.9 $29.0 ~~~ $ 9.8 Transportation Road Maintenance (man hours) 538 888 512 100 878 850 827 ~~~ ~~~ ~~~ Asphalt for road maintenance (tons) 358 210 127 125 88 79 75 ~~~ ~~] ~~~ Concrete for road maintenance (yards) (~) 0 0 300 0 283 277 275 ~~~ ~~~ ~~~ Physical Environment Cemetery Cemetery Internments 68 69 76 79 86 81 73 78 85 52 Grave Deeds Sold 46 49 56 56 69 45 54 67 77 34 Stormwater Mile of Swales Maintained 280 280 280 280 280 280 280 280 ~~~ ~~1 Mile of Ditches Maintained 50 50 50 50 50 50 50 50 X11 ~~~ Road Crossing Maintained 30 30 30 30 30 30 30 30 ~1~ ~~1 Catch Basins/Culverts 275 275 275 275 275 275 250 248 ~~~ ~~~ Recreation Recreation Center attendance 12,910 14,177 8,004 5,504 7,498 ~~~ ~~~ (t) (U ~~~ Number of Discount Cards 950 1,004 2,690 1,000 993 855 890 746 791 ~~~ Number of Golf Course Memberships 97 108 119 85 116 137 169 190 212 ~~~ Average daily golf revenue $4,127 $4,661 $4,209 $3,854 $4,207 $3,693 $3,588 $2,844 $8,348 $4,996 ~~~ Information not available (Z) 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. 108 City of Sebastian, Florida Capital Asset Statistics by Function/Program Last Ten Fiscal Years Function/proeram 2008 General Government Square Footage Occupied 21,500 Departmental Vehicles 3 Public Safety Police Stations 1 Square Footage of Police Department 25,600 Square Footage of Building Department 2,500 Police Vehicles 62 Building Inspector Vehicles 4 Transportation 2007 2006 2005 2004 2003 2002 2001 2000 1999 21,500 21,500 21,500 5,516 5,516 5,516 5,516 5,516 5,516 3 3 5 2 2 2 3 3 3 1 1 1 1 1 1 1 I 1 25,600 25,600 25,600 8,700 8,700 8,700 8,700 8,700 8,700 2,500 2,500 2,500 1,716 1,716 1,716 1,716 1,716 1,716 57 53 52 47 42 40 33 32 24 5 6 5 4 4 5 4 3 2 Streets (miles) 156 156 156 156 156 149.6 140.0 140.0 140.0 140.0 Number of Streetlights 1,223 ~'1 1,309 ~ '~ 3,808 3,555 3,543 3,543 3,531 3,531 3,319 1,156 Airport 1 1 1 1 1 1 1 1 1 I Public Service Vehicles 23 21 19 14 24 18 22 19 16 16 Physical Environment Public Service Vehicles 11 10 12 13 6 7 4 4 4 4 Recreation Number of Parks 15 14 14 12 12 12 10 10 10 9 Recreation Centers 2 2 2 2 2 2 2 2 2 2 Park Acreage 233.79 229.37 229.37 223.37 223.37 223.37 207.85 196.47 196.47 194.38 Recreation Center Square Footage 4,859 4,859 4,859 4,859 4,859 4,859 4,859 4,859 4,859 4,859 Park Maintenance Vehicles 13 12 11 10 8 6 6 5 5 5 Golf Course 1 1 1 1 1 1 1 1 1 1 Sources: City of Sebastian Finance Department and Growth Management Department ~'~ This number represents actual unmetered street lights in the City. (Source: Florida Power & Light) 109 THIS PAGE INTENTIONALLY LEFT BLANK 110 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 Management Letter 111 Q~ ., HOME OF PELICAN ISLAND THIS PAGE INTENTIONALLY LEFT BLANK 112 Harris, Cotherman, Jones, Price & Associates Certified Public Accountants -Chartered 5070 North Highway AIA, Suite 250 Vero Beach, FL 32963 Tel 772-234-8484 Fax 772.234-8488 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 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 (the "City") as of and for the year ended September 30, 2008, which collectively comprise the City's basic financial statements, and have issued our report thereon dated March 10, 2009. 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's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. "Providing Vision and Direction to our Clients" Member AICPA Member AICPA Division For CPA Firms Member FICPA Private Companies Practice Section 113 Harris, Cotherman, Jones, Price & Associates Certified Public Accountants -Chartered Honorable Mayor and Members of City Council City of Sebastian Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the 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, Florida in a separate letter, Independent Auditors' Management Letter, dated March 10, 2009. This report is intended solely for the information and use of the City of Sebastian, Florida and management, 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. fir, L'owcr~m~,'~nw, t ~r~.r ~ ~-eea~~v C,.~~k f~ra- ffcblie Gturx~c~r~s - ~h~i+~~erd Vero Beach, Florida March 10, 2009 114 Harris, Cotherman, Jones, Price ~ Associates Certified Public Accountants -Chartered 5070 North Highway AlA, Suite 250 Vero Beach, FL 32963 Tel 772-234-8484 Fax 772-234-8488 Independent Auditors' Management Letter Honorable Mayor and Members of City Council City of Sebastian Sebastian, Florida We have audited the financial statements of the City of Sebastian, Florida as of and for the fiscal year ended September 30, 2008 and have issued our report thereon dated March 10, 2009. We conducted our audit in accordance with United States generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and the Florida Single Audit Act. We have issued our Independent Auditors' Report on Compliance and Internal Control Over Financial Reporting, Independent Auditors' Report on Compliance and Internal Control over Compliance Applicable to each Major State Project, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 10, 2009, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the state of Florida and require that certain items be addressed in this letter. The Rules of the Auditor General (Section 10.554(1)(1)1) require that we address in the management letter, if not already addressed in the auditors' reports on compliance and internal control or schedule of findings and questioned costs, whether or not recommendations made in the preceding annual financial audit report have been followed. All findings and comments in the prior year have been resolved to our satisfaction. As required by the Rules of the Auditor General (Section 10.554(1)(1)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 Rules of the Auditor General (Section 10.554(1)(1)3.) require that we address in the management letter any findings and recommendations to improve financial management, accounting procedures, and internal controls. Nothing came to our attention that requires disclosure in the current year. "Providing Vision and Direction to our Clients" Member AICPA Member AICPA Division For CPA Firms Member FICPA Private Companies Practice Section 115 Harris, Cotherman, Jones, Price & Associates Certified Public Aceouneants -Chartered Honorable Mayor and Members of City Council City of Sebastian Page two The Rules of the Auditor General (Section 10.554(1)(1)5.) require disclosure in the management letter of the following matters if not already addressed in the auditors' reports on compliance and internal control or schedule of findings and questioned costs: (1) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; and (3) control deficiencies that are not significant deficiencies, including, but not limited to: (a) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financial statements); (b) failures to properly record financial transactions; and (c) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, the auditor. The Rules of the Auditor General (Section 10.554(1)(1)6.) 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 notes to the financial statement. The City of Sebastian, Florida's component unit, the Police Officer's Pension Plan, was established under Section 58-46 through 58-54 Code of Ordinances in October 1989. As required by the Rules of the Auditor General (Section 10.554(1)(i)7.a), the scope of our audit included a review of the provisions of Section 218.503(1), Florida Statutes, regarding financial 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(1)(i)7.b.), we determined that the annual financial report for the City of Sebastian, Florida for the fiscal year ended September 30, 2008, filed with the Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2008. As required by the Rules of the Auditor General (Section 10.554(1)(i)7.c. and 10.556(7)), 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 financial information provided by the same. 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. ~{~is~ati, ~t-~kLt-rt~, Qriw, f ~E.t ~ Qddac~s~u ~.&~~~tsd ~iubl,~ Q~.lw,cs ~ ~ht~VrKtd Vero Beach, Florida March 10, 2009 116