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COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007 - 2006/2007��/iiiiiii ,��'' EALoFrHF_ � ,�,�5 c,�,� ... ,�::� ,Fr�: CIT„� 0� CLE�►RWA`CE , FLORIDA ;''�� :�'�; � ��i:�� ,... . v. _ _ ; .. : ,,; _ ,_ ,_ ,, �, �� _ o� �,��'� . . .;?� � � ��9G' = � �;,'``;� � . ., • , .�.�# �� ' . ' _ . D�i � � � - ` _�, ` ��/ f . , �'",,� �,��.� a = TERj�� , . , :'.. . a �. �� L73t a0. „ . �. . . _ _ c— � . -. t �i�� I. . � . „ i� � _ .. ,a,. . •-� � • . - � , ' ��'- i � I �. .. _ _, � >_ , . �-. .. , ., .'�'. .,`�!- .�.e ��.:� ��. ._ .: �' i�-._,. � . � . Z ..:- �. �, , - � �� . ` ' :: "� � _ .. ... �..., �+xo �•� O _ � �� y�} } J ��* y . ... :..... . ...... , . ,....,.. __ _ ,. .. {. " - � � , ..: _ • - =�f „ �� , . . . � 1�1 Z � � � m � � ' Z z c ,_ - � r a.:� - . .. -. : � _ _.,�. � _ _ .� ., . � _ _. _ _ ., ... . . ..,. . , _ _. :: ,,. � ,, _ ..,. _ .- . , , : .r zz , _- a .� - _ ,.... _ _�.� , .��„�o?.. ..r.. � � � + � ��- o —�i _ `*� 0 � '.. , . '. � f �� : � � w. � ., �, �.��,� . � �� n . �' 4 r �i � -t m �: y � � m z v � � m v � � ,� m , �o ` --i .. , � � � _ � . MEMORIAL CAUSEWAY BRIDGE o0 �P��NED AU"GU�7" f,8, 20b5� � s ��,,. . ._ ., . � � w r ,.�. � � �; p - � . s i , . . �.� � , .,. .i #� ' � r � , Y �� -..._ ... .. , � . �pe � . .� . " �� . � � � ' � ' � , � � � � � �' r � � � � City of Clearwater, Florida Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2007 �� U�' ,��+�. ~�'', � ��1i��;?g' �'�,y�: �� '�� t��t� ��ti��1�0� '� 'r� M�? �m � �_L_-� �' `� '� �4 ��'► µ�� ___ . G�i� �� ;.M��; � �_, � �. � �� ;��y�al� ��,� �� ., TER �� r.��er�y ` Frank V. Hibbard Mayor John P. Doran George N. Cretekos Paul F. Gibson [/ice Mayor Councilmember Councilmember William B. Horne II City Manager Margaret L. Simmons, CPA Finance Director Prepared by: City of Clearzuater Finance Department Carlen A. Petersen Councilmember This Page Intentionally Left Blank �� 1 � � � � � � � � � � J � � � � � � � � � �� '`1 ' � � , l� � City of Clearwater, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2007 TABLE OF CONTENTS INTRODUCTORY SECTION: Title Page and List of Elected and Appointed Officials ........................................................................................i Letterof Transmittal .......................................................................................................................................... vii Certificate of Achievement for Excellence in Financial Reporting .....................................................................xi OrganizationalChart ......................................................................................................................................... xii FINANCIAL SECTION: IndependentAuditors' Report ............................................................................................................................ 1 Management's Discussion and Analysis ........................................................................................................... 3 Basic Financial Statements: Government-wide Financial Statements: Statementof Net Assets .......................................................................................................................18 Statementof Activities ........................................................................................................................... 19 Fund Financial Statements: Balance Sheet - Governmental Funds ................................................................................................ 20 Reconciliation of the Balance Sheet of Governmentai Funds to the Statement of Net Assets........... 21 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds...... 22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ....................................................................... 23 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis) - General Fund .................................................................. 24 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (GAAP Basis) - Special Development Fund ...................................................... 25 Statement of Net Assets - Proprietary Funds ...................................................................................... 26 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds ............. 30 Statement of Cash Flows - Proprietary Funds .................................................................................... 34 Statement of Fiduciary Net Assets - Fiduciary Funds ......................................................................... 38 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds ...................................................... 39 Notes to the Basic Financial Statements ..................................................................................................... 40 Required Supplementary Information - Pension Trust Funds: Schedules of Funding Progress ................................................................................................................. 78 Schedules of Employer Contributions ........................................................................................................ 79 Notes to Schedules of Required Pension Supplementary Information ...................................................... 80 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds ................................................................... 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds ............................................................................................................. 86 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (GAAP Basis) - Community Redevelopment Agency Special Revenue Fund ...... 89 Combining Statement of Net Assets - Nonmajor Enterprise Funds .......................................................... 92 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - NonmajorEnterprise Funds ................................................................................................................... 93 Combining Statement of Cash Flows - Nonmajor Enterprise Funds ......................................................... 94 Combining Statement of Net Assets - Internal Service Funds .................................................................. 98 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - InternalService Funds ........................................................................................................................... 99 Combining Statement of Cash Flows - Internal Service Funds ..............................................................100 iii This Page Intentionally Left B/ank �i � �� J � � � � � � i 1 � 1 � � 1 1 1 iv � � � , � City of Clearwater, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2007 TABLE OF CONTENTS (Continued) � Combining Statement of Fiduciary Net Assets — Fiduciary Funds .......................................................... Combining Statement of Changes in Fiduciary Net Assets — Fiduciary Funds ....................................... Statement of Changes in Assets and Liabilities — Treasurer's Escrow Agency Fund ............................ Supplementary Information: � Continuing Disclosure — Gas System Revenue Bonds, Series 1998, 2004, and 2005 .......................... Continuing Disclosure — Water & Sewer Revenue Bonds, Series 1998, 2002, 2003, and 2006 ........... Continuing Disclosure — Stormwater System Revenue Bonds, Series 1999, 2002, 2004, and 2005 .... � Continuing Disclosure — Infrastructure Sales Tax Revenue Bonds, Series 2001 ................................... Continuing Disclosure — Improvement Revenue Refunding Bonds, Series 2001 ................................... FireServices Program .............................................................................................................................. u� l� � � � ' � � , ' � 'J � STATISTICAL SECTION: Schedule 1 Schedule 2 Schedule 2a Schedule 3 Schedule 4 Schedule 5 Schedule 6 Schedule 7 Schedule 8a Schedule 8b Schedule 9 Schedule 10 Schedule 11 Schedule 12 Schedule 13 Schedule 14 Schedule 15 Schedule 16 Schedule 17 Schedule 18 Introduction.................................................................................................................................... NetAssets by Component ............................................................................................................. Changesin Net Assets .................................................................................................................. Program Revenues by Function/Program ..................................................................................... Fund Balances of Governmental Funds ....................................................................................... Changes in Fund Balances of Governmental Funds ..................................................................... Assessed Value and Estimated Actual Value of Taxable Property ............................................. Direct and Overlapping Property Tax Rates ................................................................................. PropertyTax Levies and Collections ............................................................................................. Principal Real PropertyTaxpayers ................................................................................................ Principal Personal Property Taxpayers ......................................................................................... Ratios of Outstanding Debt by Type .............................................................................................. Ratios of General Bonded Debt Outstanding ................................................................................ Direct and Overlapping Governmental Activities Debt ......................................... LegalDebt Margin Information ...................................................................................................... Pledged-Revenue Coverage ......................................................................................................... Demographic and Economic Statistics ......................................................................................... PrincipalEmployers ....................................................................................................................... Full-time Equivalent City Government Employees by Function/Program ..................................... Operating Indicators by Function/Program ................................................................................... Capital Asset Statistics by Function/Program ............................................................................... SINGLE AUDIT / GRANTS COMPLIANCE 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 W ith Government Auditing Standards ................................................................................................................ Independent Auditors' Report On Compliance W ith Requirements Applicable To Each Major Federal Awards Program And State Financial Assistance Projects And Internal Control Over Compliance In Accordance With OMB Circular A-133 And Chapter 10.550, Rules Of The Auditor General . ..................... Schedule of Expenditures of Federal Awards and State Financial Assistance Projects ..................................... Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance Projects ........................ Schedule of Findings and Questioned Costs ......................................................................................................... Independent Auditors' Management Letter ............................................................................................................ v 104 105 106 108 113 116 117 117 118 119 121 122 124 125 126 127 128 129 130 131 132 133 134 135 136 138 139 140 141 142 145 147 149 152 153 155 This Page /ntentionally Left B/ank � � � � � � ' �J � � i � ! � 1 1 i i vi � � � � � C17Y MANAGI:R � � CITY OF CLEARWATER March 24, 2008 The Honorable Mayor, Councilmembers, and Citizens of the City of Clearwater: POS"1' �FFICF: BOX 4%4g� CI.EARWATER� F�.ok�� 33758-4748 CITY HALL, 112 SOU"C}I �SCI:OIA EiVI:NL'E, CI.IiARWATF:R, FI,ORII)A �j3%5�7 Tri.i:PHONr (727) 562-4040 Fnx (727) 562-4052 ' The City of Clearwater Charter (Section 2.01(c)3), Florida Statutes, and various covenants relating to debt and pension obligations of the City require an annual audit of the City's financial statements of ail funds of the City by a firm of licensed certified public accountants. These statements must be presented in conformity with generally accepted accounting principles (GAAP) and audited in � accordance with generally accepted auditing standards. Pursuant to these requirements we hereby issue the comprehensive annual financial report of the City of Clearwater for the fiscai year ended September 30, 2007. ' i ' � � � ��' , � ' This report consists of managemenYs representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Cherry, Bekaert & Holland L.L.P., a firm of licensed certified public accountants, has audited the City's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended September 30, 2007, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended September 30, 2007, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of the report. The independent audit of the financial statements of the City was part of a broader, federally mandated "Single AudiY' designed to meet the special needs of federal and state grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal and state awards. These reports are in the Single Audit section of this report. i � ��P��uni. EM�>i.��vMi�:N�r nrvn Arruth�n�rivr Acru�ti I:n�ri.o��r:k�� GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management's Discussion and Analysis report (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. Profile of the City of Clearwater, Florida Clearwater is located on the Pinellas Peninsula on Florida's west coast. It is directly located on the Gulf of Mexico, 20 miles west of Tampa and 20 miles north of St. Petersburg. Clearwater is the county seat of Pinellas County and one of the largest cities in the Tampa Bay area. The Clearwater area offers a semitropical climate and 28 miles of beautiful beaches. Consequently, tourism is an important component of the economy. In addition to tourism, Clearwater enjoys a diversity of manufacturing businesses, service industries, high-tech companies, and a large retirement population. The City operates under the council/manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a mayor and four members elected at large on a non-partisan basis. The City Council is responsible for adopting ordinances, adopting the budget, and hiring the City Manager and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the City's departments. The City provides police and fire protection; construction and maintenance of streets, bridges, sidewalks, storm drainage, public parks, and recreation facilities; planning, zoning, subdivision, and building code regulation and enforcement; redevelopment of commercial and residential neighborhoods; supervised recreation programs; public libraries; water supply and distribution; waste water collection, treatment, and disposal; natural gas distribution; solid waste collection and recycling; stormwater management; marina, airpark, convention center, and public fishing pier operations; and operation of the city-wide parking system. The annual budget serves as the foundation for the City's financial planning and control. Per the City Code of Ordinances, the City Manager is required to provide to the City Council an operating budget for the ensuing fiscal year, a capital improvement budget, and a five-year capital improvement program, along with an accompanying budget message no later than 60 days prior to the end of the fiscal year. The Council is required to hold public hearings on the budget and to adopt a final operating budget and capital improvement budget no later than September 30, the last day of the City's fiscal year. The appropriated budget is prepared by fund and by department within fund. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy The local economy for the Tampa Bay metropolitan area experienced an economic slowdown during fiscal 2007, fueled by a significant decline in the housing market. The Tampa Bay metro area average unemployment rate increased from 3.4 percent for the year ended September 2006 to 4.3 percent for the year ended September 2007, versus a national rate of 4.7%. However development interest in the City's beach and downtown areas continues, and is cause for optimism, as the Beach Walk and downtown streetscape projects near completion. viii � � � � , ' r , L__i � � � , � � ' ' ' � � � Long-term Financial Planning Fiscal 2007 saw the completion of $7.5 million of Glen Oaks stormwater improvements, including a lakefront community park and soccer fields, while removing approximately 100 homes from the , Stevenson Creek floodplain. Construction of the City's Beach Walk project continued during fiscal 2007. This $30 million project promises to redefine the face of Clearwater Beach. The project inciudes winding promenades, lush landscaping, and amenities such as whimsical showers, cool places to relax, and distinctive artistic touches that will reinvent the Clearwater tourist experience. The Beach Walk ' project is expected to be compieted during fiscal 2008. Construction also continued during fiscal 2007 on the new downtown streetscape, a$10 million public investment in the infrastructure to spur private investment in the downtown community, as evidenced by several major projects currently underway, ' including 153 residential condominiums in the 25 story Water's Edge project, and 126 condo units in the 15 story Station Square project. Construction of a$4.5 million Fire Training Facility began during fiscal 2007, designed to provide state-of-the-art training opportunities for City firefighters, as well as a Category 5 rated building that will be available for hurricane emergency operations. Finally, during � fiscal 2007 the Clearwater voters approved a referendum authorizing construction of boat slips for the downtown waterfront. The $11 million project will include up to 140 boat slips, over 2,500 feet of "side- tie" moorings for overnight and day visits, and will coordinate with a pedestrian promenade. The project � is an important component of downtown and beach redevelopment efforts and will enhance community access to Clearwater's waterfront. Construction is forecast to begin in fiscal 2009 with project completion expected during fiscal 2010. � � , � � , Cash Management Policies and Practices As more completely described in Note (I)(D)(1) of the notes to the financial statements, the City employs a consolidated cash pool to facilitate short-term investment of liquid assets for all City funds. The City believes that a conservative investment philosophy best serves the residents of Clearwater, and that the return nf the investment principal is more important than the return nn the principal. However, the City attempts to maximize the return, while maintaining a conservative philosophy, via accurate cash flow forecasting and competitive selection of investments. The cash pool earned an average rate of return of 4.92% on its investments during fiscal year 2007. Risk Management The City is self-insured within certain parameters for losses arising from claims for general liability, auto liability, police professional liability, public officials' liability, property damage, and workers' compensation. The transactions relating to the self-insurance program are accounted for in the Central Insurance Fund, and are reported as an Internal Service Fund. The City is not self-insured with respect to major medical coverage. Management believes that the amounts showing as claims payable and the unreserved retained earnings are adequate to cover all reasonable projected losses arising from events occurring on or prior to September 30, 2007. Additional information on the City's risk management activity can be found in Note IV (A) of the notes to the financial statements. Pension � The Employees' Pension Plan and the Firemen's Pension Plan are single-employer defined benefit pension plans that are self-administered by the City. Each year, independent actuaries engaged by the pension plans calculate the amount of the minimum required contributions that the City must make to , each of the plans to ensure that the plans will be able to fully meet their obligations to retired employees on a timely basis. City contributions for the year were in accordance with actuarially determined funding requirements. �! �--� I i_ � L�' � In addition, supplemental pensions exist for certified Police Officers and Firefighters under the provisions of Florida Statutes Sections 175 and 185. These plans are funded solely from excise taxes on certain insurance premiums covering property in Clearwater. The excise taxes are collected by the state and remitted to the City. Both plans require benefits to be adjusted to equal fund assets provided by the defined contributions. Additional information on the City's pension plans can be found in Note IV (D) of the notes to the financial statements. ix Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2006. This was the twenty-eighth consecutive year that the City received this prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR 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. In addition, the City received the GFOA's Distinguished Budget Presentation Award for the fiscal year 2007 Budget document, the twenty-first consecutive year that this award has been received. In order to qualify, the City's Budget document was judged to be proficient in several categories including as a policy document, a financial plan, an operations guide, and a communications device. We wish to thank the many members of the Citywide Annual Financial Reporting (CAFR) team, which is composed of individuals in the Finance Department and other financial staff throughout the City, for their professionalism and dedication in producing this report. In addition, we thank the Graphic Communications Division for the professional printing of this report. Sincere appreciation is also extended to the City's external auditors, Cherry, Bekaert & Holland, L.L.P., for their advice and assistance in the preparation of this report. Finally, we would like to thank the City Council for their interest, continued support, and leadership in planning and conducting the financial operations of the City in a progressive and responsible manner. Sincerely, C�:��-.t�3. ��-�ej 1�. William B. Horne, II City Manager o� -�i�rt�ast,�� Margaret L. Simmons, CPA Finance Director x � � 1 1 � � � , � , � � � � � ' ' � � � ' � Certificate of Achievement 1 for Excellen.ce 1 � in Financial � Rep orting Presented to � 0 � � � � , � � ' , � Clty of Clearwater Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2006 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Govemment Finance O�cers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standazds in government accounting and financial reporting. �� '� ti � � �� ry s ��p� ��»�-•,:�'� �, �� President �y`�Q�� Executive Director � X1 City Audit Citizens of Clearwater Emergency Manager c�ty ca�n��i City Manager Assistant Ciy Manager City Attomey's Office Assistant City Manager Equity Neighborhood Management and Services Services Bud et _ Library Finance Fire Department Police Department Engineering Public Services Public Utilities Parks and Recreation Planning Public Works Adm xii Human Resources Information Technology icia ecor s & Legislative Services Public Communications Customer Service conomic Developmen Housin Servi Gas System Marine and Aviation o i as e General � ' r i 1 � � � , , � t S. � ces ' � � ' ' � � � �� ' ' ' , Independent Auditors' Report Honorable Mayor, City Councilmembers, City Manager and City Management City of Clearwater, 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 Clearwater, Florida (the "City"), as of and for the year ended September 30, 2007, which collectively comprise the City's basic financial statements as listed in the table of contents. We � have also audited the financial statements of each of the City's non-major govemmental, non- major enterprise, internal service and fiduciary funds presented as supplementary information in the .accompanying combining and individual fund financial statements as ofi and for the year , ended September 30, 2007, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. , � � ' [J ' � ' � ' We conducted our audit in accordance with auditing standards generally accepted in the United States of America and 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 basic 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 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 opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of September 30, 2007, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the general fund and the special development fund, for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each of the non-major governmental, non-major enterprise, internal service, and fiduciary funds of the City as of September 30, 2007, and the respective changes in financial position and cash flows, where appficable, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Audifing Standards, we have also issued our report dated March 24, 2008 on our consideration of the City's internal control over financial reporting and 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 on pages 3 through 15 and the pension disclosures on pages 78 through 80 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of ineasurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements and on each of the City's non-major governmental, non-major enterprise, internal service, and fiduciary funds. The accompanying introductory section, supplementary information and statistical section as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. In addition, the accompanying schedule of expenditures of federal awards and state financial assistance projects is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Chapter 10.550, Rules of the Auditor General, and is also not a required part of the basic financial statements. The supplementary information, including the schedule of expenditures of federal awards and state financial assistance projects, 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. The introductory and statistical sections 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. � St. Petersburg, Florida March 24, 2008 . � , t.c..P. 2 ' � � ' ' ' �� , ' i , , ' � ' ' , L_ l LJ ' ' � ' , ' , u , ' , , ' Management's Discussion and Analysis This Managemenf's Discussion and Analysis report provides the reader with a narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2007. Management's Discussion and Analysis (MD & A) should be read in conjunction with the City's Transmittal Letter, which begins on page vii of this report. Financial Highlights The City's assets exceeded its liabilities at the close of fiscal year 2007 by $638.9 million (net assets). Of this amount, $192.3 million (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. The City's total net assets increased by $45.8 million, or 7.7%, during fiscal 2007. Net assets for governmental activities increased by $31.0 million, or 9.6%, while the business-type net assets increased by $14.8 million, or 5.5%. Significant factors contributing to the $31.0 million increase in governmental net assets included: operating and capital grants and contributions totaling $21.4 million; a$2.6 million passback from the internal service funds of governmental activities' share of the current year increase in net assets of the internal service funds; and a$2.6 million General Fund surplus, due to revenues in excess of budget, and expenditures less than budget, as discussed in the General Fund budgetary analysis that follows. The $14.8 million increase in business-type net assets is the result of operating revenues in excess of operating expenses, as well as current year capital grants and contributions of $6.4 million for Water and Sewer system and Stormwater system improvements. At September 30, 2007, the City's governmental funds reported combined ending fund balances of $113.7 million, an increase of $6.5 million (or 6.1%) in comparison with the prior year. Of this amount, $61.5 million (or 54.1%) is available for spending at the governmenYs discretion (unreserved fund balance). The increase of $6.5 million in governmental fund balances is primarily the result of a$2.6 million General Fund surplus for fiscal 2007, due to revenues in excess of budget and expenditures less than budgeted, as discussed in the General Fund budgetary analysis that follows; a$1.1 million increase in the Special Programs special revenue fund balance reserved for grant programs, primarily due to fiscal 2007 low income housing loans; and $0.9 million in local grant monies received from Pinellas County to establish a Local Housing Assistance Trust special revenue fund during fiscal 2007. �At September 30, 2007, unreserved fund balance for the General Fund was $23.6 million, or 20.7% of total current year general fund expenditures. Total actual revenues for the General Fund for fiscal 2007 were $0.9 million, or 0.7%, greater than final budgeted 'revenues. Some of the major factors contributing to this surplus of revenues in excess of final budgeted revenues include: $0.4 million of utility tax revenues and franchise fees in excess of budget, primarily due to increases in electric rates and usages; and $0.4 million of interest income in excess of budget due to market conditions. �Total fiscal 2007 actual expenditures for the General Fund were less than final budgeted expenditures by $2.2 million, or 1.9%. This was due to budget savings across all City departments for fiscal 2007. Finally, actual General Fund interfund transfers in were $58 thousand, or 0.7%, greater than final budgeted interfund 'transfers in, while actual General Fund interfund transfers out were $0.2 million, or 1.6%, less than final budgeted interfund transfers out. The total combined General Fund fiscal 2007 budgetary savings per above was $3.3 million. � ' 3 Overview of the Financial Statements This discussion and analysis (MD&A) is intended to serve as an introduction to the City of Clearwater's basic financial statements. The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial stafements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are the statement of net assets and the statement of activities. These statements report information about the City as a whole using accounting methods similar to those used by private- sector businesses. Emphasis is placed on the net assets of governmental activities and business-type activities, and the change in net assets. Governmentai activities are principally supported by taxes and intergovernmental revenues. Governmental activities include most of the City's basic services, including police, fire, public works, parks and recreation, and general administration. Business-type activities are intended to recover all or a significant portion of their costs through user fees and charges. The City's water and sewer system, stormwater system, gas system, solid waste, recycling, marine, aviation, convention center, and parking system operations are reported as business-type activities. L� � , LJ �� ' ' ' • The sfatement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful , indicator as to whether the financial position of the City is improving or deteriorating. Net assets are reported in three major categories: 1) invested in capital assets, net of related debt; 2) restricted; and 3) unrestricted. • The statement of activities presents information showing how the City's net assets changed as a result of the ' year's activities. All changes in net assets are recorded in the period in which the underlying event takes place, which may differ from the period in which cash is received or disbursed. The Statement of Activities displays the expense of the City's various programs net of related revenues, as well as a separate presentation of revenues ' available for general purposes. The government-wide financial statements include not only the City of Clearwater itself but also the Clearwater Redevelopment Agency (CRA). The CRA, though legally separate, is reported as part of the primary government as a blended component unit due to the City Council serving as the CRA's governing board. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The fund financial statements provide detailed information about the City's major funds — not the City as a whole. Fund accouniing helps to ensure and demonstrate compliance with finance-related legal requirements. Based on restrictions on the use of monies, the City has established many funds that account for the multitude of services provided to residents. These fund financial statements focus on the City's most significant funds: governmental, proprietary, and fiduciary. Governmental funds Governmental funds are used to report most of the City's basic services. These funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. The funds focus on the inflows and outflows of currenf resources and the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 4 ' , ' � ' � ' ' ' �� ,The City maintains twelve individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General, Special Development, and Capital Improvement funds, which are considered to be major funds. Data from the other nine governmental funds are combined into a single aggregated columnar presentation. Individual fund data 'for each of these nonmajor governmental funds is provided in the form of combining statements in the supplementary information section of this report. ,Annual appropriated budgets are adopted for the General Fund, the Special Development Special Revenue Fund, and the Community Redevelopment Agency Special Revenue Fund. Budgetary comparison statements and/or schedules have been provided for these funds to demonstrate budgetary compliance. , Pro rietar funds P Y 'The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the fiscal activities related to water and sewer, gas, solid waste and stormwater utilities, along with recycling, marine, aviation, parking system, and convention center operations. Internal service funds are an accounting device �used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for the City's building maintenance, custodial services, self-insurance program, risk management program, employee group insurance, vehicle acquisition and maintenance, and various support activities including data ,processing, legal, telecommunications, postal, and printing services. All of the City's internal service funds predominantly benefit governmental activities and consequently have been aggregated and included within governmental activities in the government-wide financial statements. �� , , ' , � ' ' ' � �I �_ � Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water and Sewer Utility, Gas Utility, Solid Waste Utility, and Stormwater Utility enterprise funds, which are considered to be majorfunds of the City. The remaining four non-major enterprise funds are combined into a single aggregated presentation in the proprietary fund financial statements. Similarly, governmental activity iniernal service funds are aggregated into a single presentation. Individual fund data for the non-major enterprise funds and the internal service funds is provided in the form of combining statements in the supplementary information section of this report. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of the fiduciary funds are not available to support the City's own programs. The accounting used for fiduciary funds is similar to proprietary funds. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential for a full understanding of the information provided in the government-wide and fund financial statements, including the City's progress in funding its obligation to provide pension benefits to its employees. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary informafion concerning the City's progress in funding its obligation to provide pension benefits to its employees. The combining sfatements referred to earlier in connection with non-major governmental funds, non-major enterprise funds, and internal service funds, are presented immediately following the required supplementary information. 5 Government-Wide Financial Analysis The overall financial position of the City improved in both the fiscal 2007 and fiscal 2006 years. As noted earlier, net assets may serve over time as a useful indicator of a governmenYs financial position. In the case of the City, assets exceeded liabilities by $638.9 million at the close of the fiscal year ended September 30, 2007. This represents an increase of $45.8 million over the September 30, 2006 total net assets of $593.1 million. Net assets of both the governmental and the business-type activities increased primarily due to operating and capital grants and contributions of $27.9 million, along with favorable operating results for business-type activities. Finally, a$3.1 million improvement in interest and investment earnings due to improved market conditions also contributed to the increase. The City reports positive balances in all three categories of net assets, both for the government as a whole as well as for its separate governmental and business-type activities, for both the current year and the prior year, as indicated in the following table: Assets Current and other assets Capital assets Total assets Liabilities Current and other liabilities Long-term debt outstanding: Due within one year Due in more than one year Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets City of Clearwater - Net Assets Primary Government Governmental Activities Business-type Activities Total (as restated) (as restated) (as restated) 2007 2006 2007 2006 2007 2006 , ' � ' ' ' � � $ 181,438,251 $ 165,553,724 $ 144,678,358 $ 152,539,252 $ 326,116,609 $ 318,092,976 257,158,639 241,465,182 357,153,807 342,254,874 614,312,446 583,720,056 � 438,596,890 407,018,906 501,832,165 494,794,126 940,429,055 901,813,032 14,934,059 7,053,406 15,352,425 14,007,056 30,286,484 21,060,462 ' 13,779,719 13,576,757 9,263,876 9,979,774 23,043,595 23,556,531 54,999,045 62,476,423 193,174,332 201,590,438 248,173,377 264,066,861 83,712,823 83,106,586 217,790,633 225,577,268 301,503,456 308,683,854 ' 205,078,530 182,473,813 164,246,170 156,727,363 369,324,700 339,201,176 � 41,543,137 41,204,075 35,774,790 35,054,134 77,317,927 76,258,209 108,262,400 100,234,432 84,020,572 77,435,361 192,282,972 177,669,793 $ 354,884,067 $ 323,912,320 $ 284,041,532 $ 269,216,858 $ 638,925,599 $ 593,129,178 A large portion of the City's net assets (57.8%) reflects its investment in capital assets (e.g., land, infrastructure, land improvements, buildings, and equipment), less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens, and consequently these assets are not available for future spending. Although the City's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves will not be used to liquidate these liabilities. An additional portion of the City's net assets (12.1 %) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($192.3 million or 30.1 %) may be used to meet the governmenYs ongoing obligations to citizens and creditors. There was a$22.6 million increase in invesfed in capifal assets, net of related debt for qovernmental acfivities. This was primarily due to a$15.7 million increase in governmental activities capital assets along with a$6.6 million decrease in related revenue bond debt, due to scheduled principal payments. Major capital asset additions contributing to the $15.7 million net increase in governmental capital assets included $12.1 million in current year construction-in-progress expenditures for the Beach Walk capital project and $5.2 million in construction-in-progress for the Downtown Streetscape project. � ' , LJ ' �� ' 1 ' ' ' ' ' Invested in capital assets, net of related debt for business-type acfivities increased by $7.5 million primarily due to a $14.9 million increase in business-type activities net capital assets along with an $8.6 milllion decrease in related bond debt and a$0.5 million decrease in capital leases payable; offset by a$16.9 million decrease in unspent bond proceeds that are netted against the debt. The increase in net capital assets and related decrease in unspent bond proceeds was primarily due to Water & Sewer Utility and Stormwater Utility system asset additions as detailed in the Capital Assets discussion section of this report. The decrease in bonded debt is due to current year scheduled principal payments, as well as the current year cash payoff of the balance of $3.5 million in Gas Revenue Bonds, Series 1997A & 1997B. Changes in Net Assets The following table reflects the changes in net assets for the years ended September 30, 2007, and September 30, 2006: City of Clearwater, Florida - Changes in Net Assets � Primary Government Govermental Activities Business-type Activities Totals 2007 2006 2007 2006 2007 2006 ' ' , , , ' � , 1 � ' ' Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales taxes Franchise fees and utility taxes Othertaxes Other Total revenues Expenses General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture and Recreation Interest on Long-term Debt Water and Sewer Utility Gas Utility Solid Waste Utility Stormwater Utility Other Total expenses Increase in net assets before transfers Transfers Increase in net assets $ 29,017,217 $ 28,640,081 $ 132,724,743 $ 134,123,445 $ 161,741,960 $ 162,763,526 9,687,083 7,181,060 83,371 59,429 9,770,454 7,240,489 11,747,831 3,405,482 6,381,716 6,638,780 18,129,547 10,044,262 53,716,907 48,076,050 - - 53,716,907 48,076,050 16,078,625 17,154,748 - - 16,078,625 17,154,748 20,915,906 27,552,445 - - 20,915,906 27,552,445 12,562,520 5,523,351 - - 12,562,520 5,523,351 7,533,336 5,748,530 5,372,509 4,341,509 12,905,845 10,090,039 161,259,425 143,281,747 144,562,339 145,163,163 305,821,764 288,444,910 13,169,343 13,203,133 - - 13,169,343 13,203,133 68,635,737 60,178,290 - - 68,635,737 60,178,290 3,026,923 3,097,392 - - 3,026,923 3,097,392 13,693,579 13,898,269 - - 13,693,579 13,898,269 3,141,473 3,320,950 - - 3,141,473 3,320,950 448,495 444,253 - - 448,495 444,253 32,872,241 32,635,470 - - 32,872,241 32,635,470 2,247,560 2,373,282 - - 2,247,560 2,373,282 - - 49,839,529 48,591,560 49,839,529 48,591,560 - - 33,579,403 36,946,956 33,579,403 36,946,956 - - 16,172,339 16,012,769 16,172,339 16,012,769 - - 9,464,921 9,013,014 9,464,921 9,013,014 - - 13,733,800 13,944,762 13,733,800 13,944,762 137,235,351 129,151,039 122,789,992 124,509,061 260,025,343 253,660,100 24,024,074 14,130,708 21,772,347 20,654,102 45,796,421 6,947,673 3,658,035 (6,947,673) (3,658,035) - 30,971,747 17,788,743 14,824,674 16,996,067 45,796,421 34,784,810 34,784,810 Net assets - beginning, as restated 323,912,320 306,123,577 269,216,858 252,220,791 593,129,178 558,344,368 Net assets - ending $ 354,884,067 $ 323,912,320 $ 284,041,532 $ 269,216,858 $ 638,925,599 $ 593,129,178 7 Governmental Activities Governmental activities net assets increased by $31.0 million from $323.9 million as of September 30, 2006, to $354.9 million as of September 30, 2007. This increase, due to governmental activities, accounted for 68% of the total increase in net assets for the City and represented a 9.6% increase in net assets for governmental activities. Key elements of this increase are as follows: • Operating and capital grants and contributions totaling $21.4 million. • A passback from the internal service funds of $2.6 million representing governmental activities' share of the current year increase in net assets of the internal service funds. • A General Fund surplus of $2.6 million as discussed in the General Fund budgetary analysis that follows. The cost of all governmental activities this year was $137.2 million. This reflects an $8.0 million, or 6.2%, increase over the fiscal 2006 total of $129.2 million. However, as shown on the Statement of Activifies, the amount that the City's taxpayers ultimately financed for these activities totaled $86.8 million, because some of the cost was paid for by those who directly benefited from the programs ($29.0 million) or by other governments and organizations that subsidized certain programs with grants and contributions ($21.4 million). This total of $86.8 million is a decrease of $3.1 million, or 3.5%, from the fiscal 2006 total of $89.9 million financed from general revenues. Millions $70 $60 $50 $40 $30 $20 $10 $0 Expenses and Program Revenues - Governmental Activities For the Year Ended September 30, 2007 General Public Safety Physical Transportation Economic Human Culture and Interest on Government Environment Environment Services Recreation Long-term Debt ■ Expenses ■ Revenues � I , ' � I ' 1 ' , ' ' , ' ' ' ' � , , 1 ' ' ' , I� � � , ' � Revenues by Sources - Governmental Activities For the Year Ended September 30, 2007 Propertytaxes 3< Capital grants and contributions 7% Operating grants contributions 6°/a Business-type Activities Charges for services 18% taxes % Franchise fees and utility taxes 13% �ommunications services taxes 4°/a �thertaxes 4% Net assets for 6usiness-type activities increased from $269.2 million to $284.0 million. This increase totaled $14.8 million, reflecting a 5.5% increase in business-type activities net assets and 32% of the total increase in net assets for the City. The current year increase was $2.2 million less than the fiscal year 2006 increase in net assets of $17.0 million. The increase of $14.8 million was the result of operating revenues in excess of operating expenses, along with $6.4 million in current year capital grants and contributions, and current year interest and investment earnings totaling $5.4 million, offset by $10.1 million in interest expense on long term debt. Total revenues for business-type activities decreased by $0.6 million, or 0.4%, to $144.6 million versus the prior year total of $145.2 million, due to a decrease in charges for services revenue of $1.4 million, or 1.0%; and a decrease in capital grants and contributions of $0.3 million, or 3.9%; partially offset by an increase in investment earnings of $1.0 million, or 23.7%, due to favorable market conditions. The decrease in charges for services was primarily due to a decrease in gas system charges of $4.2 million, largely attributable to decreased fuel costs. The decrease in gas system revenues was partially offset by increases in charges for services for the other business-type activities with the exception of a$0.3 million, or 6.6%, decrease in parking system charges for services due to a decrease in beach parking spaces related to Beach Walk construction. Stormwater system and water and sewer increases of $1.2 million and $0.8 million, respectively, were due to scheduled rate increases. Please refer to the discussion of proprietary funds operating results that follows for additional discussion of these revenues. Total expenses for business-type activities decreased by $1.7 million, or 1.4%, from $124.5 million in fiscal 2006 to $122.8 million for fiscal 2007. A significant factor contributing to this $1.7 million decrease was a$3.8 million, or 17.4%, decrease in gas system purchases for resale as a result of decreased fuel costs. This decrease was partially offset by a $1.1 million, or 11.9%, increase in interest expense, primarily due to $0.9 million of additional interest expense from issuance of the Water and Sewer Revenue Bonds, Series 2006. �] $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 Expenses and Program Revenue - Business-type Activities For the Year Ended September 30, 2007 Water and Gas Utility Solid Waste Stormwater Other Sewer Utility Utility Utility Revenues by Source - Business-type Activities For the Year Ended September 30, 2007 Charges for services 92% Other 4% 10 , ' ' , ' i� Expenses � Revenues � , I ' i 'i i ' , � , ' ' Capital grants and ' contributions 4% � I � ' ' ' ' ' , ' ' ' i iJ �� I� ' ' 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. The City reports the General Fund, Special Development Fund, and Capital Improvement Fund as majorgovernmental funds. The City's governmental funds for the year ended September 30, 2007, reflect a combined fund balance of $113.7 million versus $107.2 million for the prior year, an increase of $6.5 million. A total of $61.5 million, or 54%, represents unreserved fund balance available for spending at the governmenYs discretion. The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to liquidate construction contracts and purchase orders of the prior period ($23.2 million); 2) to pay debt service ($6.8 million); 3) for advances due from other funds ($2.0 million); 4) for land held for resale ($2.0 million); and 5) for specific program purposes per grant restrictions and related loan agreements ($18.2 million). The General Fund is the chief operating fund of the City. At September 30, 2007, unreserved fund balance of the General Fund totaled $23.6 million, with the remainder of the $27.1 million in fund balance "reserved" to indicate it has already been committed for purchase orders of the prior period ($1.5 million) and for advances due from other funds ($2.0 million). As a measure of the general fund's liquidity it is useful to compare unreserved fund balance to total fund expenditures. Unreserved fund balance represents 20.7% of total general fund expenditures (GAAP basis before transfers) for the current fiscal year. The fund balance of the City's General Fund increased by $2.6 million during the current fiscal year, versus a final budgeted decrease of $1.2 million. This $3.8 million variance from budgeted was the result of total revenues in excess of budgeted revenues by $0.9 million and total expenditures less than budgeted expenditures by a total of $2.7 million ($22 million on non-GAAP budgetary basis adjusted to GAAP basis). Additionally, transfers out (to other funds) were $0.2 million less than budgeted. The General Fund revenues in excess of budgeted total of $0.9 million was primarily due to: $0.4 million of utility taxes and franchise fees in excess of budget, primarily due to increases in electric rates and usage; and $0.4 million of interest income in excess of budget due to improved market conditions. Additional information on the General Fund revenue surpluses is included in the "General Fund Budgetary Highlights" section on the following pages. General Fund expenditure "savings" of $2.2 million, or 1.9%, was spread across all departments. 'The fund balance of the Special Development Fund decreased from $14.7 million to $13.1 million, for a decrease of $1.6 million or 11.0%, during the current fiscal year versus an increase of $1.1 million for fiscal 2006. The Special Development Fund final amended budget indicated a planned decrease in fund balance of $2.1 million. Consequently the actual results of a$1.6 million decrease versus a budgeted $2.1 million decrease results in a$0.5 million increase in ,fund balance versus the final amended budget. This increase is primarily the result of interest income in excess of budget by $1.4 million due to improved market conditions and higher cash balances, offset by a$0.9 million decrease in actual sales tax revenues versus budget, due to decreased sales tax collections versus the prior year. , ' �; 1 The fund balance for the Capital Improvement Fund decreased from $37.4 million to $36.4 million during the current fiscal year. This decrease of $1.0 million is primarily the result of current year capital project expenditures ($29.8 million) and transfers out to other funds for the return of unspent project funding ($2.4 million), in excess of capital project funding received from other funds ($21.1 million), grant revenues received from federal, state, and local agencies ($7.8 million), and donations from developers and others ($2.1 million). This decrease reflects the normal volatility in the fund balance of the Capital Improvement Fund due to the timing of the funding of capital projects versus project expenditures. 11 The fund balances for Other (non-major) Governmental Funds increased from $30.7 million to $37.2 million during the current fiscal year. This increase of $6.5 million was primarily the result of: $4.5 million transferred from the Capital Improvement major fund to the Community Redevelopment Agency capital improvement fund to segregate and identify project monies owned by the Clearwater Community Redevelopment Agency; a$1.1 million increase in the Special Programs special revenue fund balance reserved for grant programs, primarily due to new low income housing loans; and $0.9 million in local grant monies received from Pinellas County to establish a new Local Housing Assistance Trust special revenue fund. 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 City reports the Water and Sewer Utility Fund, the Gas Utility Fund, the Solid Waste Utility Fund, and the Stormwater Utility Fund as major funds. The Water and Sewer Utility Fund realized a$5.8 million increase in net assets versus a$3.0 million increase for the prior year. Operating revenues increased by $1.2 million, or 2.4%, offset by an increase in operating expenses of $0.7 million, or 1.5%. This resulted in a net increase in operating income from $5.9 million in fiscal 2006 to $6.4 million for 2007, reflecting a$0.5 million, or 8.6% increase. Additionally, capital grants and contributions increased by $2.6 million, or 83.2%, and investment earnings increased by $0.4 million, or 19.4%, offset by an increase in interest expense of $0.6 million, or 11.2%. The increase in operating revenues was primarily the result of scheduled rate increases. The increase in operating expenses was due to increases over a number of categories, including personal services ($0.3 million, or 3.5%), purchases for resale ($0.4 million, or 4.5%), and insurance ($0.4 million, or 122%). The increase in capital grants and contributions was due to grant receipts from the Environmental Protection Agency and the Southwest Water Management District. The increase in investment earnings was due to more favorable market conditions while the increase in interest expense was due to issuance of the 2006 Water & Sewer System Revenue Bonds. The Gas Utility Fund realized a$4.1 million increase in net assets versus a$5.2 million increase for the prior year. Operating revenues decreased by $4.2 million, or 9.9%, over the prior year, primarily due to decreased fuel costs; offset by a$3.8 million decrease in cost of purchases for resale due to decreased cost of natural gas. Contributing to the reduction in the increase in net assets versus the prior year was a$1.2 million increase in the current year dividend paid to the General Fund based on prior year operating results. The Solid Waste Utility Fund realized a$0.6 million increase in net assets versus a$0.2 million increase for the prior year. Operating revenues increased by $0.5 million, or 2.9%; offset by a$0.1 million, or 0.5%, increase in operating expenses. The Stormwater Utility Fund realized an increase in net assets of $2.9 million versus a prior year increase of $5.2 million. Operating revenues increased by $0.8 million, or 6.5%, due to scheduled rate increases. The increase in operating revenues was offset by a$0.4 million, or 4.8% increase in operating expenses, attributable to a$0.2 million, or 16.2%, increase in depreciation expense due to system additions, in addition to minor increases in a number of expense categories. Additionally, the fund realized a$2.5 million decrease in capital grants and contributions, versus the previous year, due to a decrease in grant revenue related to stormwater capitat projects. Unrestricted net assets and changes in net assets of the proprietary funds for fiscal years 2007 and 2006: Unrestricted Net Assets Change in Net Assets Fund 2007 2006 2007 2006 Water and Sewer Utility $ 26,221,468 $ 25,732,341 $ 5,752,905 $ 2,976,775 Gas Utility 14,778,020 15,654,956 4,111,512 5,244,542 Solid Waste Utility 13,506,846 13,352,948 617,417 222,129 Stormwater Utility 10,766,199 8,755,451 2,938,688 5,189,438 Other funds 16,430,029 12,584,892 440,915 2,507,863 Totals $ 81,702,562 $ 76,080,588 $ 13,861,437 $ 16,140,747 12 ' ' ' , ' ' �J ' ' � � � ' ' � ' '� J �� ' � � � � General Fund Budgetary Highlights 'The final amended budget for General Fund expenditures reflected an increase of $2.4 million, or 2.1%, over the original budget. Key elements of this increase were as follows: • $970 thousand increase in Police and $763 thousand increase in Fire budgeted expenditures due to change in ' the accounting for State tax contributions to Police and Fire Supplemental Pension Plans, which are now recorded as General Fund revenues and employer contribution expenditures as recommended by the Governmental Finance Officers Association. ' • $173 thousand increase in Fire Department budgeted expenditures to fund unanticipated retirement payouts. • $245 thousand increase in Fire Department budgeted expenditures to fund unanticipated back pay for employees. , • $452 thousand increase in Marine & Aviation budgeted expenditures due to the transfer of beach lifeguard operations from the Parking System enterprise fund to the General Fund. ' Final budgeted revenues reflect a$4.3 million, or 3.7%, increase over the original budget due to the following: • $1.7 million, or 16%, increase in budgeted intergovernmental revenues from state sources to reflect state insurance tax monies received on behalf of the City's police and fire supplemental pension plans. In previous ' years these were recorded directly in the supplemental pension plans but, as advised by the Governmental Finance Officer's Association, the City is now recording the "on behalf" payment as revenues and pension expenditures of the General Fund. � • $764 thousand, or 18.9%, increase in budgeted licenses, permits and fees due primarily to increased building permit activity as a result of development activity. ' ' • $565 thousand, or 5.2%, increase in budgeted intergovernmental revenues from state sources due to year-to- date collections of communications services taxes and sales taxes in excess of forecasted. • $784 thousand, or 109%, increase in interest income due to improved market interest rates. • Actual property tax collections in excess of original budget by $364 thousand, or 0.7%. Final budgeted "transfers in" from other funds reflect a$1.5 million, or 22.6%, increase over the original budget primarily due to: , • $1.1 million increase in the budgeted dividend payment from the Gas System enterprise fund due to fiscal 2006 operating results in excess of forecast. ' • $452 thousand from the Parking System enterprise fund due to the transfer of beach lifeguard operations from the Parking Fund to the General Fund. ,Final budgeted "transfers ouY' reflect a$4.7 million, or 62%, increase over the original budget primarily due to the following transfers to capital projects and special programs: ' • Transfers to the Capital Improvements capital project fund for new projects including: $1.2 million for fleet maintenance facility expansion; $800 thousand for gas main extensions; $620 thousand for Municipal Services Complex and library hurricane protection; $500 thousand for "backfile conversion of records" project; $483 thousand for beach library and beach recreation center renovations; and $150 thousand for demolition of the , Joe DiMaggio Sports Complex. • $483 thousand of building permits revenue in excess of costs transferred to the Special Programs special revenue fund to be reserved for the funding of future building permitting costs in accordance with State Statute. ' Actual revenues for the General Fund exceeded final budgeted revenues by $0.9 million, or 0.7%. This surplus was primarily due to $382 thousand of utility taxes and franchise fees in excess of budget due to increased electric rates and ' usage, and $413 thousand of investment earnings in excess of budget due to improved market conditions. Actual expenditures for the General Fund were $2.2 million, or 1.9%, less than the final amended budget. This ' expenditure budget savings accumulated across all departments. 13 Capital Asset and Debt Administration Capital Assets Capital assefs include land, buildings and building improvements, improvements other than buildings, machinery and equipment, and infrastructure. Infrastructure assets acquired prior to fiscal 2002 were added when the City retroactively implemented the infrastructure portion of the new financial reporting model, per GASB 34, during fiscal 2006. The infrastructure asset category includes long-lived capital assets, typically stationary in nature, such as roads, sidewalks, and bridges. At September 30, 2007, the City had investments in capital assets totaling $614,312,446 (net of accumulated depreciation). Land Buildings Improvements other than buildings Machinery and equipment Infrastructure City of Clearwater, Florida - Capital Assets� (amounts in thousands) Governmental Activities Business-rype Activities Total Prior period Adjustment Adjusted Adjusted 2007 2006 Garaqe Fund 2006 2007 2006 2007 2006 $ 70,545 $ 70,590 $ - $ 70,590 $ 28,362 $ 28,296 $ 98,907 $ 98,886 83,259 86,333 11,783 11,498 26,210 28,307 35,314 37,461 - 86,333 13,652 - 11,498 268,653 (2,325) 25,982 3,930 - 37,461 - 14,533 96,911 240,603 280,436 4,104 30,140 - 35,314 100,866 252,101 30,086 37,461 Construction in progress 30,048 9,601 - 9,601 42,557 54,719 72,605 64,320 Total $ 257,159 $ 243,790 $ (2,325) $ 241,465 $ 357,154 $ 342,255 $ 614,313 $ 583,720 * Net of accumulated depreciation Net capital assets for the City's governmental acfivities increased from $241.5 million to $257.2 million, reflecting an increase of $15.7 million for the current fiscal year. Capital asset additions of $31.7 millions were offset by depreciation expense of $13.6 million and net capital asset retirements and transfers totaling approximately $2.4 million. Major fiscal 2007 governmental capital asset transactions included: • Fiscal 2007 construction-in-progress expenditures totaling $12.1 million, $5.2 million, and $1.0 million for the Beach Walk, Downtown Streetscapes, and fleet maintenance facility expansion projects, respectively. • Library collection additions of $2.2 million for fisca12007. • $3.6 million in Garage internal service fund fleet vehicle additions during fiscal 2007. Net capital assets for the City's business-type activities increased by $14.9 million from $342.3 million to $357.2 million during the current fiscal year. Significant fiscal 2007 additions contributing to this increase included: • Construction expenditures for major Water and Sewer system projects including: $4.0 million for reclaimed water distribution system additions and improvements; $2.6 million for the Beach Walk project; $1.1 million for ' wastewater treatment plant generator replacements; $1.1 million for water pollution control internal recycle modifications; $1.2 million for water main replacements; $1.0 million for pump station replacements; and $1.0 million for elevated water tank upgrades. • Construction expenditures for new gas mains and service lines totaling $1.3 million for Pinellas County ' customers and $1.0 million for Pasco County customers. • Construction expenditures for major Stormwater system projects including: $2.3 million for the Beach Walk project; $1.5 million for the Downtown Streetscape project; and $0.7 million for Stevenson Creek drainage basin improvements. The prior period adjustment for the Garage fund, as indicated in the Notes to the Financial Statements, was a restatement of vehicle capital assets related to the implementation of a new asset management system, and reflects a correction of the general ledger balance to match the total actual vehicles owned and inventoried. Additional information on the City's capital assets can be found in Note III (C) on pages 55-56 of this report. 14 ' ' 1 � ' Long-term debt The City's total long-term debt decreased from $287.6 million to $271.2 million, a decrease of $16.4 million or 5.7%. Long-term debt for governmental activities decreased by $7.3 million, or 9.6%; while long-term debt for business-type activities decreased by $9.1 million or 4.3%. Key factors contributing to these changes included: � ' ' � ' 1 • The decrease in long-term debt for governmental activities is primarily due to a$6.8 million, or 14.0%, decrease in net revenue bonds payable due to scheduled bond principal payments. • The decrease in long-term debt for business-type activities is primarily due an $8.6 miliion, or 4.2%, decrease in net revenue bonds payable due to the retirement of $3.5 million of gas system revenue bonds during the current fiscal year, and scheduled bond principal payments. The City's bonded debt as of September 30, 2007, consists entirely of revenue bonds (secured solely by specified revenue sources) with no general obligation debt or special assessment debt outstanding. Governmental activities net revenue bonds totaled $41.5 million while business-type activities totaled $198.9 million. All revenue bond issues of the City have received an insured rating of either AAA by Standard & Poor's or Fitch, or Aaa by Moody's. The City's Charter limits indebtedness to twenty percent of the assessed valuation of non-exempt real estate. The current debt limitation is approximately $2.0 billion, which is significantly in excess of the City's applicable indebtedness of approximately $231 million at September 30, 2007. Additional information on the City's long-term debt can be found in Note III (F) on pages 60-64 of this report. � Economic Factors And Year 2008 Budgets and Rates Factors considered in preparing the City of Clearwater's budget for fiscal year 2008 included: , • During fiscal 2007 the Florida Legislature imposed significant restrictions on the ability of municipalities to increase ad valorem millage rates. L� 1 ' ' , • The unemployment rate for the Tampa Bay metropolitan area for September 2007 was 4.3%, an increase from the September 2006 rate of 3.4%. The national rate for September 2007 was 4.7% versus 4.5% for September 2006. • Local and national economic issues including Florida property tax relief efforts, a weakening U.S. housing market, and the cost of fuel and insurance at an all time high. • Total taxable assessed values for the City of Clearwater increased approximateily 5% for fiscal 2007. The City's millage rate was reduced by 10.2%, from 5.2088 to 4.6777 mills for fiscal 2008. The millage rate has decreased by a total of 18.7% over the past two years. • A reduction of 59.7 full-time equivalent positions City-wide, including a reduction in General Fund employees of 66 FTE's, from 1,281.5 to 1,215.5, due to service level reductions and program consolidations. • Service level reductions including: reductions in library and recreation center hours; reduced landscaping and maintenance; reduced programming at Moccasin Lake Nature Park and Bright House Networks Field; elimination of the Officer Friendly program; and a reduction in holiday lighting. � • A reduction in employee medical insurance costs of $742 thousand, or 6%, from fiscal 2007 due to a budgeted 3% reduction in the rate as well as elimination of approximately 60 full time equivalent positions across the City. • Budgeted Water and Sewer utility revenues for 2008 reflect a 6% rate increase effective October 1, 2007, while , fiscal 2008 budgeted Stormwater utility revenues reflect a 6% rate increase effective October 1, 2007 � Contacting the City's Financial Management This financial report is designed to provide a general overview of the City's finances for all those with an interest in our ,government and to show the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to The City of Clearwater, Finance Department, 100 S. Myrtle Avenue, Clearwater, Florida 33756-5520. ' 15 This Page Intentionally Left Blank ' L�' � � ' � ' ' � ' !I �J � � � , � ' 16 , � 1 1 f 1 � r t � Basic Financial Statements 1 1 � � � � � 1 1 ,� ASSETS Cash and cash equivalents Restricted cash and cash equivalents Investments Total receivables (net) Internal balances Due from other governments Prepaid items Inventories Deferred charges Net pension asset Restricted assets: Cash and cash equivalents Due from other governments Capital assets: Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Construction in progress Total assets LIABILITIES Accounts payable and other current liabilities Accrued liabilities Accrued interest payable Due to other governments Deposits Unearned revenue and liens Payable from restricted assets: Construction contracts payable Accrued interest payable Customers deposits Miscellaneous bond escrow Non-current liabilities due within one year: Compensated absences Loans and leases payable Revenue bonds payable Claims payable Long-term debt and liabilities: Compensated absences Loans and leases payable Revenue bonds payable Claims payable Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital projects Debt service Renewal and replacement Grant programs City of Clearwater, Florida Statement of Net Assets September 30, 2007 $ Primary Government Governmental Business-type Activities Activities Total 140,840,103 $ 1,326,194 13,851,702 1,681,990 10,249,923 1,370,240 344,125 268,221 11,505,753 70,544,660 83,258,510 11,783,726 26,209,771 35,314,287 30,047,685 438,596,890 9,432,071 2,639,793 514,151 918,743 2,400 1,426,901 75,042,007 $ 16,588,148 11,573,185 (1,681,990) 1,717,493 32,841 1,629,523 1,757,320 3,541,169 34,473,452 5,210 28,361,612 13,651,798 268,653,727 3,929,822 42,556,848 501,832,165 3,377,218 708,428 237,500 4,804 290,772 1,007,013 215,882,110 16,588,148 1,326,194 25,424,887 11,967,416 1,403,081 1,973,648 2,025,541 15,046,922 34,473,452 5,210 98,906,272 96,910,308 280,437,453 30,139,593 35,314,287 72,604,533 940,429,055 12,809,289 3,348,221 751,651 923,547 293,172 2,433,914 - 1,936,819 1,936,819 - 2,134,628 2,134,628 - 5,611,743 5,611,743 - 43,500 43,500 697,828 3,937,391 6,935,000 2,209,500 6,983,606 6,903,091 34,572,848 6,539,500 83,712,823 205,078,530 13,144,938 6,839,318 21,558,881 166,353 567,523 8,530,000 1,664,793 798,383 190,334,380 376,776 217,790,633 164,246,170 20,321,964 6,631,381 8 821 445 864,181 4,504,914 15,465,000 2,209,500 8,648,399 7,701,474 224,907,228 6,916,276 301,503,456 369,324,700 13,144,938 27,161,282 6,631,381 21,558,881 8 821 445 Impact fees - , , Unrestricted 108,262,400 84,020,572 192,282,972 Total net assets $ 354,884,067 $ 284,041,532 $ 638,925,599 The notes to the financial statements are an integral part of this statement. 18 � �w ■� � � � � � w r� � � � � � �■ r� � r■� cD Functions/Programs Expenses Primary government: Governmental activities: City of Clearwater, Florida Statement of Activities For the Year Ended September 30, 2007 Program Revenues Net (Expense) Revenue and Changes in Net Assets Operating Primary Government Charges for Grants and Capital Grants & Governmental Business-Type Services Contributions Contributions Activities Activities Total General government $ 13,169,343 $ 14,507,482 $ 1,144 $ 5,661 $ 1,344,944 $ Public safety 68,635,737 8,444,183 3,318,345 - (56,873,209) Physical environment 3,026,923 123,056 374,317 206,469 (2,323,081) Transportation 13,693,579 261,085 260,167 9,969,412 (3,202,915) Economic environment 3,141,473 107,090 3,191,576 - 157,193 Human services 448,495 - - - (448,495) Culture and recreation 32,872,241 5,574,321 2,541,534 1,566,289 (23,190,097) Interest on long-term debt 2,247,560 - - - (2,247,560) Total governmental activities 137,235,351 29,017,217 9,687,083 11,747,831 (86,783,220) Business-type activities: $ 1,344,944 (56, 873,209) (2,323,081) (3,202,915) 157,193 (448,495) (23,190,097) (2,247,560) (86,783,220) Water & Sewer Utility 49,839,529 50,381,223 - 5,689,684 - 6,231,378 6,231,378 Gas Utility 33,579,403 38,906,302 - - - 5,326,899 5,326,899 Solid Waste Utility 16,172,339 17,300,517 - - - 1,128,178 1,128,178 Stormwater Utility 9,464,921 11,885,089 - 674,192 - 3,094,360 3,094,360 Recycling 2,894,687 3,203,439 83,371 - - 392,123 392,123 Marine 4,365,802 4,323,350 - - - (42,452) (42,452 Aviation 382,235 223,868 - 17,840 - 140,527 ) ( ) (140,527) Parking System 3,426,930 4,654,771 - - - 1,227,841 1,227,841 Harborview Center 2,664,146 1,846,184 - - - (817,962 ) (817,962) Total business-type activities 122,789,992 132,724,743 83,371 6,381,716 - 16,399,838 16,399,838 Total primary government $ 260,025,343 $ 161,741,960 $ 9,770,454 $ 18,129,547 (86,783,220) 16,399,838 (70,383,382) General revenues: Taxes: Property taxes Sales taxes Franchise taxes Utility taxes Communications services taxes Othertaxes Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets--beginning, as restated Net assets--ending The notes to the financial statements are an integral part of this statement. 53,716,907 - 53,716,907 16,078,625 - 16,078,625 9,505,499 - 9,505,499 11,410,407 - 11,410,407 6,783,503 - 6,783,503 5,779,017 - 5,779,017 7,402,227 5,372,509 12,774,736 131,109 - 131,109 6,947,673 (6,947,673) - 117,754,967 (1,575,164) 116,179,803 30,971,747 14,824,674 45,796,421 323,912,320 269,216,858 593,129,178 $ 354,884,067 $ 284,041,532 $ 638,925,599 ASSETS Cash on hand and in banks Equity in pooled cash and investments Receivables (net where applicable, of allowances for estimated uncollectible amounts): Accounts and contracts Mortgages, notes and other loans Rehabilitation advances Propertytaxes Other Due from other governmental entities Investments Land held for resale Inventories, at cost Advances to other funds Total assets LIABILITIES Accounts and contracts payable Accrued payroll Due to other governmental entities Deposits Construction escrows Deferred revenue Advances from other funds Total liabilities FUND BALANCES Reserved for: Encumbrances Debt service requirements Advances and notes Grant programs Land held for resale Unreserved, reported in: General fund Special revenue funds Debt service funds Capital projects funds Total fund balances Totai liabilities and fund balances City of Clearwater, Florida Balance Sheet Governmental Funds September 30, 2007 Special General Development Fund Fund � ' � Capital Other Totals Improvement Governmental Governmental � Fund Funds Funds $ 21,225 $ - $ - $ 100 $ 21,325 24,012,430 12,392,073 38,244,423 22,269,261 96,918,187 � 154,725 - - - 154,725 - - - 11,407,356 11,407,356 � - - - 16,440 16,440 208,612 14,343 - - 222,955 1,852,540 - - 62,686 1,915,226 � 2,099,563 1,611,474 5,986,052 552,834 10,249,923 - - - 1,326,194 1,326,194 - - - 1,998,751 1,998,751 12,982 - - - 12,982 � 2,000,000 - - 350,000 2,350,000 $ 30,362,077 $ 14,017,890 $ 44,230,475 $ 37,983,622 $ 126,594,064 $ 554,596 $ - $ 7,848,439 $ 103,170 $ 8,506,205 � 2,344,894 - - 27,803 2,372,697 3,203 858,609 - 56,931 918,743 2,400 - - - 2,400 � - - - 225,069 225,069 400,537 14,343 - 54,938 469,818 - - - 350,000 350,000 3,305,630 872,952 7,848,439 817,911 12,844,932 1,476,659 2,000,000 - 21,706,044 3,000 23,185,703 r 6,839,318 6,839,318 11,757,356 13,757,356 6,417,665 6,417,665 , 1,998,751 1,998,751 23,579,788 - - - 23,579,788 - 13,144,938 - 5,511,066 18,656,004 � - - - 89,628 89,628 - - 14,675,992 4,548,927 19,224,919 27,056,447 13,144,938 36,382,036 37,165,711 113,749,132 $ 30,362,077 $ 14,017,890 $ 44,230,475 $ 37,983,622 $ 126,594,064 The notes to the financial statements are an integral part of this statement. 20 � � � ' ! �� 1 J i � ��I n � �I �_� � � � �� , City of Clearwater, Florida Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2007 Total fund balances of governmental funds Capital assets used in governmental activities are not financial resources, therefore, are not reported in the funds. The cost of the assets totaled $403,876,322, and the accumulated depreciation is $146,717,683. Total capital assets for governmental activities Less: Land included in governmental funds as "Land Held for Resale" The net pension asset related to governmental activities does not represent financial resources and is not reported in the funds. Accrued general long-term debt interest expenses are not financial uses and, therefore, are not reported in the funds. The assets and liabilities of the internal service funds (funds used to charge the costs of certain activities to individual funds) are included in the governmental activities in the statement of net assets. Net assets of internal service funds Less: Capital assets included in total governmental capital assets above Less: Net pension asset included in total governmental net pension asset above Add: Capital lease purchases payable included in total governmental below Add: Compensated absences included in total governmental below Less: Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Long-term liabilities, including bonds payable, are not due and payable in the current period and accordingly are not reported in the funds. Long-term liabilities at year-end consist of: Bonds payable Less: Deferred charge on refunding (to be amortized as interest expense) Less: Deferred charge for issuance costs (to be amortized over life of debt) Less: Issuance discount (to be amortized as interest expense) Add: Issuance premium (to be amortized as a reduction of interest expense) Capital lease purchases payable Compensated absences Total net assets of governmental activities The notes to the financial statements are an integral part of this statement. 21 $ 113,749,132 $ 257,158,639 (1,998,751) 255,159,888 11,505,753 (379,151) 44,669,452 (16,882,667) (1,175,207) 9,573,912 742,508 (2,318,010) (41,400,000) 283,617 268,221 32,964 (424,431) (10,840,481) (7,681,433) 34,609,988 (59,761,543) $ 354,884,067 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2007 REVENUES Taxes: Property Sales Franchise Utility Fuel Communications services Total taxes Licenses, permits, and fees Intergovernmental: Federal State Local Total intergovernmental Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Debt service: Principal Interest & fiscal charges Capital outlay Total expenditures Excess (deficiency) of revenues over / (under) expenditures OTHER FINANCING SOURCES (USES) Special Capital General Developme�t Improvement Fund Fund Fund $ 50,661,247 $ 3,055,660 $ - 9,930,812 9,505,499 - 11,410,407 - - 945,662 6,783,503 - 78,360, 656 13,932,134 4, 854,415 1,655,637 - $ Other Total Governmental Governmental Funds Funds - $ 53,716,907 - 9,930,812 - 9,505,499 - 11,410,407 - 945,662 _ 6,783,503 = 92,292,790 - 6,510,052 - - - 3,891,652 3,891,652 12,501,303 - 7,700,760 466,821 20,668,884 7,468,575 - 100,000 2,493,018 10,061,593 19,969,878 - 7,800,760 6,851,491 34,622,129 13,296,375 - - 1,509,525 14,805,900 823,698 - - 577,693 1,401,391 1,916,135 2,381,400 1,280 1,100,982 5,399,797 1,043,350 - 2,094,460 1,035,616 4,173,426 120,264,507 17,969,171 9,896,500 11,075,307 159,205,485 12,942,257 62,913,083 2,543,746 7,478,038 1,566,015 332,340 26,253,215 190,977 154,684 454,717 5,059 3,684,357 1,648,758 69,254 1,730,917 414,847 1,608,598 121,078 2,037,023 13,357,172 65,098,717 2,963,652 11,162,395 3,174,613 453,418 29,938,996 - - - 7,192,343 7,192,343 - - - 1,998,764 1,998,764 - - 23,874,278 252,163 24,126,441 114,028,694 190,977 29,821,853 15,424,987 159,466,511 6,235,813 17,778,194 (19,925,353) (4,349,680) (261,026) Transfers in 8,449,338 898,431 21,106,425 16,879,725 47,333,919 Transfers out (12,048,178) (20,293,038) (2,401,570) (6,035,912 ) (40,778,698) Long term debt issued - - 253,656 - 253,656 Total other financing sources (uses) (3,598,840) (19,394,607) 18,958,511 10,843,813 6,808,877 Net change in fund balances 2,636,973 (1,616,413) (966,842) 6,494,133 6,547,851 Fund balances - beginning 24,419,474 14,761,351 37,348,878 30,671,578 107,201,281 Fund balances - ending � , � � ' 1 � � � � .� � � � � � ' $ 27,056,447 $ 13,144,938 $ 36,382,036 $ 37,165,711 $ 113,749,132 � The notes to the financial statements are an integral part of this statement. 22 � � � �J � i � � u � � � � � � � � � � City of Clearwater, 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, 2007 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those costs over the life of the assets. This is the amount by which capital outlays exceeded depreciation in the current period. Expenditures for capital assets Less current year depreciation In the Statement of Activities, capital assets donated from enterprise funds are reported as transfers in from governmental funds. Governmental funds do not report capital assets. In the Statement of Activities the loss on disposition of capital assets is reported. The loss is not a use of current resources and thus is not reported in ihe funds. Loan proceeds provide current financial resources to governmental funds; however issuing debt increases long-term liabilities in the Statement of Net Assets. In the current year these amounts are: Capital lease proceeds Repayment of long term debt principal is an expenditure in the governmental funds, however the repayment reduces long-term liabilities in the Statement of Net Assets. Current year amounts are: Revenue bond principal payments Capital lease principal payments Net pension asset is not a current financial resources and consequently is not reported in the funds. However it is an asset in the Statement of Net Assets. Current year change in the net pension asset Some expenses reported in the Statement of Activities do not require the use of current financiai resources and therefore are not reported as expenditures in the governmental funds. Current year change in compensated absences Amortization of deferred charge on refunding Amortization of issuance costs Amortization of bond discounts and premiums Current year change in accrued interest expense The net revenues of internal service funds (funds used to charge the costs of certain activities to individual funds) for governmental activities are reported in the Statement of Activities but not in the governmental funds. Total change in net assets of governmental activities The notes to the financial statements are an integral part of this statement. 23 $ 6,547,851 $ 26,751,665 (8,609,078) 18,142,587 73,280 (2,347,650) (253,656) 6,685,000 507,343 7,192,343 (2,604,765) (474,378) (24,520) (55,009) 99, 315 86,087 (368,505) 4,590,262 $ 30,971,747 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Non-GAAP Budgetary Basis) General Fund For the Year Ended September 30, 2007 REVENUES Taxes: Property Franchise Utility taxes Communications services Total taxes Licenses, permits, and fees Intergovernmental: State Local Total intergovernmental Charges for services Fines and forfeitures Investment eamings Miscellaneous Total revenues EXPENDITURES General government Ciry Council City Manager's Office City Attorney's Office Official Records & Legislative Services Public Communications Finance Human Resources Non-Departmental Public Works Administration Planning City Auditor's Office Office of Management & Budget Total general government Public safety City Manager / Emergency Management Police Fire Development & Neighborhood Services Marine / Beach Guards Total public safety Physical environment Public Works Administration Total physical environment Transportation Public Works Administration Total transportation Economic environment Economic Development Development & Neighborhood Services Total economic environment Human services Equity Services Total human services Culture and recreation Parks and Recreation Library Marine Total culture and recreation Total expenditures (budgetary basis) Excess of revenues over expenditures (budgetary basis) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) (budgetary basis) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses (budgetary basis) Encumbered purchase orders, beginning of year Encumbered purchase orders, end of year Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses (GAAP basis) Fund balances - beginning Fund balances - ending ; Budgeted Amounts Variance with Actual Final Budget Original Final Amounts Positive (Negative 50,277,930 $ 50,641,900 $ 50,661,247 $ 19,347 9,050,840 9,197,840 9,505,499 307,659 11,514,320 11,336,120 11,410,407 74,287 6,549,460 6,829,460 6,783,503 (45,957) 77,392,550 78,005,320 78,360,656 355,336 4,046,110 4,810,000 4,854,415 44,415 10,831,040 7,291,520 18,122,560 12,734,910 836,000 719,000 1208,880 115,060,010 285,860 1,062,210 1,616,370 1,359,070 1,055,510 2,200,540 1,333,630 2,762,990 94,590 1,445,380 156,500 333,310 13,705,960 12,776,080 7,365,040 20,141,120 13,030,670 836,000 1,503,000 1,047,780 119,373,890 291,810 947,210 1,609,080 1,354,350 1,106,070 2,185,980 1,267,990 3,263,990 94,184 1,437,270 158,050 316,730 14,032,714 12,501,303 7,468,575 19,969,878 13,296,375 823,698 1,916,135 1,043,350 120,264,507 268,940 882,772 1,507,529 1,193,645 941,423 2,104,822 1,129,421 3,147,736 94,148 1,317,875 158,002 295,476 13,041,789 (274,777) 103,535 (171,242) 265,705 (12,302) 413,135 (4,430) 890,617 22,870 64,438 101,551 160,705 164,647 81,158 138,569 116,254 36 119,395 48 21,254 990,925 107,310 106,740 103,145 3,595 35,316,860 36,199,750 35,991,689 208,061 21,654,230 22,729,370 22,568,106 161,264 3,711,897 3,795.522 3,711,745 83,777 213,300 663,510 606,141 57,369 61,003,597 63,494,892 62,980,826 514,066 2,553,923 2,553,923 7,507,957 7,507,957 1,457,130 284,723 1,741,853 343,110 343,110 2,542,950 2,542,950 7,475,697 7,475,697 1,454,400 291,138 1,745,538 341,430 341,430 2,542,004 2,542,004 7,472,917 7,472,917 1,267,873 284,711 1,552,584 332,340 332,340 946 946 2,780 2,780 186,527 6,427 192,954 9,090 9,090 21,071,280 20,605,300 20,375,937 229,363 5,923,190 5,948,180 5,720,698 227,4g2 493,590 563,150 545,591 17,559 27,488,060 27,116,630 26,642,226 474,404 114,344,460 116,749,851 114,564,686 2,185,165 715,550 2,624,039 5,699,821 3,075,782 6,842,690 8,391,052 8,449,338 58,286 (7,558,240) (12,243,573) (12,048,178) 195,395 (715,550) (3,852,521) (3,598,840) 253,681 - (1,228,482) 2,100,981 3,329,463 - - �sao,ss�� sao,ss�� - - 1,476,659 1,476,659 - (1,228,482) 2,636,973 3,865,455 24,419,474 24,419,474 24,419,474 - 24,419,474 $ 23,190,992 $ 27,056,447 $ 3,865,455 The notes to the financial statements are an integral part of this statement. 24 � � � �� _l � � � l -1 �L � � � � � � � � � � � � � � � City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (GAAP Basis) Special Development Fund For the Year Ended September 30, 2007 REVENUES Taxes: Property Sales Fuel Total taxes Licenses, permits, and fees Investment earnings Total revenues EXPENDITURES Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) � Transfers in Transfers out Total other financing sources (uses) � Deficiency of revenues and other sources over expenditures and other uses � � � � � t Variance with Budgeted Amounts Finai Budget Actual Positive Original Final Amounts (Negative) $ 3,033,030 $ 3,051,440 $ 3,055,660 $ 4,220 10,873,000 10,873,000 9,930,812 (942,188) 945,690 1,035,690 945,662 (90,028) 14,851,720 14,960,130 13,932,134 (1,027,996) 664,710 1,478,710 1,655,637 176,927 390,000 1,000,000 2,381,400 1,381,400 15,906,430 17,438,840 17,969,171 530,331 - - 190,977 (190,977) - - 190,977 (190,977) 15,906,430 17,438,840 17,778,194 339,354 - 898,430 898,431 1 (15,206,700) (20,464,645) (20,293,038) 171,607 (15,206,700) (19,566,215) (19,394,607) 171,608 699,730 (2,127,375) (1,616,413) 510,962 Fund balances - beginning 14,761,351 14,761,351 14,761,351 - Fund balances - ending $ 15,461,081 $ 12,633,976 $ 13,144,938 $ 510,962 � The notes to the financial statements are an integral part of this statement. 25 City of Clearwater, Florida Statement of Net Assets Proprietary Funds September 30, 2007 ASSETS Current assets: Cash on hand and in banks Equity in pooled cash and investments Accounts and contracts receivable: Billed Unbilled charges estimated Less: Allowance for uncollectable accounts Total receivables, net Other receivables Due from other funds Due from other governmental entities Inventories, at cost Prepaid expenses and other assets Total current assets - unrestricted Current assets - restricted: Restricted equity in pooled cash and investments Due from other governmental entities Total current assets - restricted Total current assets Noncurrent assets: Restricted: Equity in pooled cash and investments Deferred charges Advances to other funds Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility � � � � $ 400 $ 550 $ 200 � 19, 868, 896 13,198, 506 12, 046, 380 3,254,170 1,820, 904 1,029,680 1,526,200 1,372,500 622,867 4,780,370 3,193,404 1,652,547 (87,941) (88,273) (24,566) 4,692,429 3,105,131 1,627,981 1,504,976 - - 738,103 848,800 - 6,157 - _ 26, 810, 961 17,152, 987 13, 674, 561 10,438,784 2,387,063 973,726 5,210 - _ 10,443,994 2,387,063 973,726 37,254, 955 19,540,050 14,648,287 28,070,604 300,000 - 996,970 328,291 - 1,402,011 732,528 790,611 38,874,293 327,285 1,041,913 183,662,966 40,926,781 2,237,180 253,006,844 42,614,885 4,069,704 290,261,799 62,154,935 18,717,991 The notes to the financial statements are an integral part of this statement. 26 Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds $ - $ 546,086 $ 547,236 $ 1,800 9,233,509 20,147,480 74,494,771 43,898,791 767,234 157,440 7,029,428 - 1,008,800 232,833 4,763,200 - 1,776,034 390,273 11,792,628 - (16,326) (2,337) (219,443) - 1,759,708 387,936 11,573,185 - - - - 135,000 - - - 91,654 212,517 - 1,717,493 - - 42,620 1,629,523 331,143 - 26,684 32,841 1,370,240 11,205,734 21,150,806 89,995,049 45,828,628 2,788,575 - 16,588,148 - - - 5,210 - 2,788,575 - 16,593,358 - 13,994,309 21,150,806 106,588,407 45,828,628 4,802,848 432,059 248,527 1,300,000 367,492 34,473,452 - 1,757,320 - - 2,824,881 3,541,169 1,175,207 26,784,370 3,890,598 70,918,459 1,204,403 46,762,270 12,646,151 286,235,348 15,678,264 79,030,074 18,204,241 396,925,748 20,882,755 93,024,383 39,355,047 503,514,155 66,711,383 (Continued) 27 City of Clearwater, Florida Statement of Net Assets Proprietary Funds September 30, 2007 LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued interest payable Due to other funds Due to other governmental entities Deposits Unearned revenue and liens Current portion of long-term liabilities: Compensated absences Revenue bonds Notes, loan pool agreement and acquisition contracts Claims payable Total current liabilities (payable from current assets) Current liabilities (payable from restricted assets): Construction contracts payable Accrued interest payable Current portion of long-term liabilities, revenue bonds Miscellaneous bond escrow Customer deposits Total current liabilities payable from restricted assets Total current liabilities Noncurrent liabilities: Compensated absences Revenue bonds (net of unamortized discounts and deferred amount on refunding) Notes, loan pool agreement and acquisition contracts Advances from other funds Claims payable Total non-current liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted for: Revenue bond debt service and sinking fund requirements Revenue bond renewal and replacement requirements Water and sewer impact fees Stormwater system fees Parking improvements Unrestricted Total net assets Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility 1,170,256 1,371,071 333,931 262, 236 152, 933 146, 840 102,275 92,669 42,556 4,804 - - - 982,286 - 41,057 46,198 39,518 1,180,000 398,750 - 158,618 - 129,853 2,919,246 3,043,907 692,698 851,961 - - 1,279,332 81,997 - 5,900,000 36,250 - - 43,500 - 2,412,701 2,225,316 973,726 10,443,994 2,387,063 973,726 13,363,240 5,430,970 1,666,424 410,876 462,338 395,481 127,423,766 21,054,533 - 287,889 - 240,100 128,122,531 21,516,871 635,581 141,485,771 26,947,841 2,302,005 91,995,386 20,092,824 2,909,140 16,884,328 36,250 - 6,331,381 300,000 - 7,343,465 - - 26,221,468 14,778,020 13,506,846 $ 148,776,028 $ 35,207,094 $ 16,415,986 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net assets of business-type activities The notes to the financial statements are an integral part of this statement. 28 � � � � � � ' � � � � 1 � � � � � � � Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds 28,009 67,178 473,951 79,241 290,772 24,727 3,377,218 708,428 237,500 4,804 290,772 1,007,013 700,797 267,096 135,000 91, 654 957,083 19,632 19,948 166,353 67,455 84,583 - 1,663,333 - 95,342 183,710 567,523 3,472,339 - - - 2,209,500 294,744 1,072,349 8,022,944 7,900,924 1,084,858 - 1,936,819 - 773,299 - 2,134, 628 - 930,417 - 6,866,667 - - - 43,500 - - - 5,611,743 - 2,788,574 - 16,593,357 - 3,083,318 1,072,349 24,616,301 7,900,924 196,468 199,630 1,664,793 675,053 41,856,081 - 190,334,380 - 68,089 202,305 798,383 6,101, 573 - 4,000,000 4,000,000 824,881 376,776 - 376,776 6,539,500 42,497,414 4,401,935 197,174,332 14,141,007 45,580,732 5,474,284 221,790,633 22,041,931 33,098,086 16,150,734 164,246,170 7,308, 755 3,401,386 - 20,321,964 - - - 6,631,381 - - - 7,343,465 - 177,980 - 177,980 - - 1,300,000 1,300,000 - 10,766,199 16,430,029 81,702,562 37,360,697 $ 47,443,651 $ 33,880,763 281,723,522 $ 44,669,452 2,318,010 $ 284,041,532 29 City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2007 Operating revenues: Sales to customers Service charges to customers User charges to customers Billings to departments Rentals Total operating revenues Operating expenses: Personal services Purchases for resale Operating materials and supplies Transportation Utility service Dumping charges Depreciation Interfund administrative charges Other current charges: Professionai fees Advertising Communications Printing and binding Insurance Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Provision for estimated uncollectable accounts Total other current charges Total operating expenses Operating income (loss) Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility $ 49,658,014 $ 37,019,942 $ 17,014,349 530,642 1,640,170 84,156 50,188,656 38,660,112 17,098,505 9,362,415 5,507,256 9,225,544 18,200,414 2,712,192 147,926 1,001,468 545,523 2,878,842 103,164 6,693,460 1,651,893 5,359,320 2,046,600 1,740,077 112,834 - 531,720 167,987 118,154 - 2,344 711,080 295,618 3,015,541 126,327 - 58,447 444,435 101,787 400,140 329,130 - 2,175,143 90,348 80,545 6,569,608 3,932,049 43,802,849 32,134,825 6,385,807 6,525,287 The notes to the financial statements are an integral part of this statement. 30 5,891,218 231,137 3,229,208 83,421 4,863,536 297,039 1,134,200 29,856 4,532 75,152 170,490 70,931 2,524 38,966 126,660 17,981 537,092 16,266,851 831,654 � � � � � � ,� � � � � ' � � � � � � � Activities Funds Stormwater Other Utility Funds Total Governmental Activities - Internal Service Funds $ 11,789,455 $ 4,482,808 $ 119,964,568 $ - 60,404 7,883 2,323,255 - - 6,186,978 6,186,978 - - - - 44,097,716 - 3,428,707 3,428,707 - 11,849,859 14,106,376 131,903,508 44,097,716 2,374,038 2,832,156 25,967,083 9,631,959 - 3,554,322 30,980,280 3,521,472 203,596 345,579 3,640,430 505,829 891,242 455,444 6,122,885 252,036 - 425,534 3,490,961 638,061 - - 4,863,536 - 1,501,265 1,444,712 11,588,369 4,966,076 1,848,450 1,536,491 11,925,061 460,380 200,056 1,943,581 4,026,404 576,220 - 49,032 585,284 - 30,367 67,006 458,666 1,426,958 - 4,875 7,219 30,307 66,500 202,393 1,446,081 15,894,321 311,397 181,682 3,705,878 1,707,517 - 322,311 383,282 722,457 69,633 102,363 757,184 207,600 149,220 119,513 1,124,663 390,250 - 35,489 2,210,632 4,963 16,426 4,648 209,948 - 843,599 3,032,893 14,915,241 20,960,593 7,662,190 13,627,131 113,493,846 40,936,406 4,187,669 479,245 18,409,662 3,161,310 31 (Continued) City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2007 Nonoperating revenues (expenses): Investment earnings Interestexpense Amortization of bond issue costs Gain (loss) on exchange of assets Other Total nonoperating revenue (expenses) Income before contributions and transfers Capital grants and contributions Transfers in Transfers out Changes in net assets Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility 2,434,195 850,084 577,336 (6,323,715) (1,605,263) (93,455) (77,647) (41,402) - (16,038) (3,961) - 192,567 246,190 202,012 (3,790,638) (554,352) 685,893 2,595,169 5,970,935 1,517,547 5,689,684 - - - 834,015 - (2,531,948) (2,693,438) (900,130) 3,157,736 (1,859,423) (900,130) 5,752,905 4,111,512 617,417 Total net assets - beginning, as restated 143,023,123 31,095,582 15,798,569 Total net assets - ending $ 148,776,028 $ 35,207,094 $ 16,415,986 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business-type activities (page 19) The notes to the financial statements are an integral part of this statement. 32 � � � � � ,� � � � � ,' � � � � � � � � Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds 572,808 938,086 5,372,509 2,048,279 (1,855,564) (210,463) (10,088,460) (409,678) (31,875) - (150,924) - - - (19,999) 264,753 35,230 228,607 904,606 164,002 (1,279,401) 956,230 (3,982,268) 2,067,356 2,908,268 1,435,475 14,427,394 5,228,666 674,192 17,840 6,381,716 5,661 - 392,240 1,226,255 380,653 (643,772) (1,404,640) (8,173,928) (61,481) 30,420 (994,560) (565,957) 324,833 2,938,688 440,915 13,861,437 5,553,499 44,504,963 33,439,848 39,115,953 $ 47,443,651 $ 33,880,763 $ 44,669,452 963,237 $ 14,824,674 33 City of Clearwater, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2007 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash received from other funds Cash payments to suppliers Cash payments to employees Cash payments to other funds Net cash provided by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Grantrevenue Receipt of cash on loans to/from other funds Payment of cash on loans to/from other funds Other non-operating revenues Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on debt Interest paid Acquisition of capital assets Sale of capital assets Proceeds from issuance of debt Capital contributed by: Other governmental entities Property owners Developers 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 at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents classified as: Cash on hand and in banks Equity in pooled cash and investments Restricted equity in pooled cash and investments Total cash and cash equivalents Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility $ 49,853,811 $ 39,317,410 $ 16,981,390 (18,562,102) (22,891,057) (5,379,887) (9,228,681) (5,571,045) (5,671,873) (8,193,957) (2,164,754) (4,735,710) 13,869,071 8,690,554 1,193,920 (2,531,948) (1,859,423) (900,130) - - 2,480,983 - - (577,316) 192,567 246,190 202,012 (2,339,381) (1,613,233) 1,205,549 (7,315,087) (3,475,575) (125,025) (3,348,954) (1,595,560) (83,712) (18,986,492) (2,893,529) (58,217) 75,912 - - 4,269,599 - - 3,894 - - 1,416,191 - - (23,884,937) (7,964,664) (266,954) 2,434,195 850,084 577,336 2,434,195 850,084 577,336 (9,921,052) (37,259) 2,709,851 68,299,736 15, 923,378 10, 310,455 $ 58,378,684 $ 15,886,119 $ 13,020,306 $ 400 $ 550 $ 200 19,868,896 13,198,506 12,046,380 38,509,388 2,687,063 973,726 $ 58,378,684 $ 15,886,119 $ 13,020,306 The notes to the financial statements are an integral part of this statement. 34 , � � � � � � � � � , , � � � � � � � Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds $ 11,611,643 $ 14,055,914 $ 131,820,168 $ - - - - 44,097,716 (659,404) (7,225,042) (54,717,492) (25,063,547) (2,295,222) (2,748,339) (25,515,160) (9,242,298) (2,993,499) (2,029,378) (20,117,298) (1,735,706) 5,663,518 2,053,155 31,470,218 8,056,165 - 392,240 392,240 380,654 (643,772) (1,404,640) (7,339,913) (61,481) - 83,371 83,371 - - - 2,480,983 2,653,091 - - (577,316) - 35,230 145,237 821,236 100,196 (608,542) (783,792) (4,139,399) 3,072,460 (1,126,071) (232,267) (12,274,025) (3,641,480) (1,881,810) (210,463) (7,120,499) (365,051) (6,491,931) (102,527) (28,532,696) (4,840,961) - 12,085 12,085 320,058 - 82,219 158,131 3,688,694 1,027,691 70,025 5,367,315 - - - 3,894 - 214,750 - 1,630,941 - (8,257,371) (380,928) (40,754,854) (4,838,740) 895,485 938,086 5,695,186 2,048,279 895,485 938,086 5,695,186 2,048,279 (2,306,910) 1,826,521 (7,728,849) 8,338,164 19,131,842 20,167,045 133,832,456 35,562,427 $ 16,824,932 $ 21,993,566 $ 126,103,607 $ 43,900,591 $ - $ 546,086 $ 547,236 $ 1,800 9,233,509 20,147,480 74,494,771 43,898,791 7,591,423 1,300,000 51,061,600 - $ 16,824,932 $ 21,993,566 $ 126,103,607 $ 43,900,591 (Continued) 35 City of Clearwater, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2007 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation Capitalized labor Construction in process reclassified as expense Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in amount due from other governments (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payable Increase (decrease) in deposits payable Increase (decrease) in unearned revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided by operating activities Noncash investing, capital and financing activities: Amortization of bond issue costs Amortization of discount on bond issuance Amortization of deferred loss on defeasance of debt Loss on disposal of capital assets Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility � � � � 1 L� $ 6,385,807 $ 6,525,287 $ 831,654 � � 6,693,460 1,651,893 297,039 (151,002) (351,600) - 823,939 - - (480,588) (451,360) (118,330) 83,021 - - (153,985) (248,250) - 232 - - 271,738 140,310 (54,984) 153,070 206,917 19,196 - 982,286 - 321,637 187,024 184,762 (78,258) 48,047 34,583 7,483,264 2,165,267 362,266 $ 13,869,071 $ 8,690,554 $ 1,193,920 $ (��,s4�� $ (a�,4o2� $ - $ (54,787) $ (42,002) $ - $ (264,770) $ (403,923) $ - $ - $ - $ - The notes to the financial statements are an integral part of this statement. 36 � ' � � � � � � � � � � � i � � � � � Activities Funds Stormwater Utility Governmental Activities - Other Internal Service Funds Total Funds $ 4,187,669 $ 479,245 $ 18,409,662 $ 3,161,310 1,501,265 1,444,712 11,588,369 4,966,076 - - (502,602) - - - 823,939 - (221,790) (118,980) (1,391,048) 233 - - 83,021 - - 6,304 (395,931) (55,812) - (1,343) (1,111) 89,128 117,558 86,236 560,858 (494,431) - 58,368 437,551 - - 14,797 997,083 - 71,265 78,053 842,741 323,145 7,551 5,763 17,686 66,516 1,475,849 1,573,910 13,060,556 4,894,855 $ 5,663,518 $ 2,053,155 $ 31,470,218 $ 8,056,165 $ (31,875) $ - $ (150,924) $ - $ (35,986) $ - $ (132,775) $ - $ (34,751) $ - $ (703,444) $ - $ - $ - $ - $ (55,305) 37 City of Clearwater, Florida Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2007 ASSETS Cash on hand and in banks Equity in pooled cash and investments Managed investment accounts, at fair value: Cash and cash equivalents Government bonds Agency bonds Domestic corporate bonds Domestic stocks Mortgage backed bonds Asset backed securities Commodity exchange-traded funds Domestic equity mutual funds International equity mutual funds Fixed income mutual funds Total managed investment accounts Securities lending collateral Receivables: Interest and dividends receivable Unsettled investment sales Securities lending earnings receivable Accounts receivable Total receivables Total assets LIABILITIES Accounts payable Unsettled investment purchases Obligations under securities lending Other miscellaneous payables: Downtown Development Board Special purpose funds Other Total miscellaneous payables Total liabilities NET ASSETS Held in trust for pension benefits and other purposes Total net assets The notes to the financial statements are an integral part of this statement. �t�: Pension Trust Agency Funds Fund $ 19,441 $ - 4,455,161 567,577 61,099,957 - 31,391,350 - 13,218,774 - 54,102,567 - 261,674,792 - 102,951,490 - 2,307,084 - 738,535 - 51,670,677 - 111,769,980 - 8,554,054 - 699,479,260 - 124,223,509 - 2,094,018 - 21, 876,120 - 33,588 - 23, 411 - 24,027,137 - 852,204,508 567,577 663,019 - 68,006,617 - 124,223,509 - - 351,069 - 7,640 - 208,868 - 567,577 192,893,145 567,577 659,311,363 - $ 659,311,363 $ - � � � � r � � � � � l_J � r � � � � City of Ciearwater, Florida Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2007 ADDITIONS Contributions: Contributions from employer Contributions from employer - state tax Contributions from employees Total contributions Investment income: Net appreciation in fair value of investments I nterest Dividends Less investment expenses: Investment management / custodian fees Net income from investing activities Securities lending income: Gross earnings Rebate paid Bank fee Net income from securities lending Total additions DEDUCTIONS Benefits and withdrawal payments: Benefits Withdrawal payments Total benefits and withdrawal payments Income before administrative expenses Administrative expenses Net increase Net assets held in trust for pension benefits: Beginning of year End of year The notes to the financial statements are an integral part of this statement. 39 Pension Trust Funds $ 11,723,921 2,253,435 6,245,478 20,222,834 65,709,640 11,902,772 2,807,456 80,419,868 3,006,278 77,413,590 8,517,981 (7,960,635) (185,900) 371,446 98,007,870 23,247,418 1,145,266 24,392,684 73,615,186 228,059 73, 387,127 585,924,236 $ 659,311,363 City of Clearwater, Florida Notes to the Basic Financiai Statements For the Year Ended September 30, 2007 Note I— Summary of Significant Accounting Policies L__1 � � The City of Clearwater, Florida (the City) was incorporated in 1923 per Chapter 9710, Special Laws of Florida, as amended. The City is a Florida municipal corporation governed by a five member City Council including a mayor-council- � member. The City has an estimated population of 110,000 and is located in the four-county Tampa-St. Petersburg- Clearwater Metropolitan Statistical Area (MSA), which has an estimated population of 2,735,000. The financial statements of the City of Clearwater, Florida, reporting entity (City) have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. Pronouncements of the Financial Accounting Standards Board (FASB) issued after November 30, 1989, are not applied in the preparation of the financial statements of the enterprise fund types in accordance with GASB Statement Number 20. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The City's more significant accounting policies are described below. A. Financial Reporting Entity In evaluating the City as a reporting entity, management has included in the accompanying financial statements the City of Clearwater (the primary government) and its component units, entities for which the government is considered to be financially accountable. The City has adhered to the standards set forth in GASB Statement No. 14 in reporting the primary government (including blended component units), the reporting entity, and related organizations. Blended Component Unit — Component units that meet the criteria for blended presentation in accordance with GASB Statement Number 14 are reported in a manner similar to that of the primary government itself. Accordingly, throughout this report, data presented for the primary government includes data of the following blended component unit. The Clearwater Community Redevelopment Agency (CRA), created by authority of Florida Statute Chapter 163, Part III, and City of Clearwater Resolution 81-68, although it is legally separate, is reported as if it were part of the City (blended component unit) due to the City Council serving as the governing board of the CRA. Separate financial statements for the CRA are not available. However financial statements for the CRA are included in the City's comprehensive annual financial report as a governmental special revenue fund. B. Basic Financial Statements Under the New Financial Reporting Model The City's Basic Financial Statements contain three components: government-wide financial statements, fund financial statements, and notes to the financial statements. 1. Government-wide financial statements. The government-wide financial statements report information on all of the nonfiduciary activities of the primary government and its component unit using the accrual basis of accounting, which is similar to the accounting used by private-sector businesses. 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. 40 � � � � � � � � � � � � City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2007 IJ �The statement of net assets presents information on all of the assets and liabilities of the City. The difference between assets and liabilities is reported as net assets. Changes in net assets may serve as an indicator of whether the financial position of the City is improving or deteriorating. � � � � � � � ' 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. The operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital- specific grants. Taxes and other items not properly included among program revenues are reported instead as general revenues. All revenues and expenses are reported as soon as the underlying transaction has occurred, regardless of when cash is received or paid. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other quasi-external charges between enterprise funds and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 2. Fund financial statements. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The fund financial statements are, in substance, very similar to the financial statements presented in the previous financial reporting model. An emphasis is on the major funds in either the governmental or business-type categories. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Non-major funds (by category) are summarized into a single column. The City 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 Special Development fund is a special revenue fund used to account for impact fees, properry taxes for road improvements, local option gas taxes, infrastructure taxes, and other revenues which are restricted legally or by City Council policy to be used for specific capital improvement projects. � The Capital Improvement Fund is used to provide combined accounting presentation for all City capital improvement projects except those financed from proprietary funds or bond proceeds where bond ordinance provisions require the segregation of bond proceeds in separate funds. �The City reports the following major proprietary funds: The Water and Sewer Utility enterprise fund is used to account for the financing, construction, operation, and maintenance of the water and sewer services of the City from charges made to users of the service. � � � � The Gas Utiliry enterprise fund is used to account for the financing, construction, operation, and maintenance of the gas service of the City from charges made to the users of the service. The Solid Waste Utility enterprise fund is used to account for the financing, construction, operation, and maintenance of the solid waste service of the City from charges made to the users of the service. The Stormwater Utility enterprise fund is used to account for the financing, construction, operation, and maintenance of the stormwater management system of the City from charges assessed against each developed property. 41 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 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 the proprietary fund's principal ongoing operations. Operating expenses for proprietary funds include the cost of sales and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Additionally, the City reports the following fund types: Internal service funds account for fleet management, information technology, telephone, graphics, employee relations, facilities management, radio communications, insurance, and risk management services provided to other City departments on a cost reimbursement basis. The Garage, Administrative Services, General Services, and Central Insurance funds primarily benefit governmental funds and are consequently included as governmental activities. Pension trust funds account for the financial operation and condition of the Employees' Pension Plan, the Firemen's Relief and Pension Plan, the Police Supplemental Pension Plan, and the Firefighters Supplemental Pension Plan. The Treasurer's Escrow Agency Fund accounts for the receipt, custody, and expenditure of monies held temporarily in an agency capacity for other parties. � j, � r � � �! � � The pension trust funds and the agency fund are fiduciary funds used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not included in the government-wide financial statements because � the resources of these funds are not available to support the Citys own programs. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. The agency fund included within the fiduciary fund financial statements also uses the accrual basis of accounting but does not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers property tax revenues to be available if they are collected within 60 days of the end of the current fiscal year. Other revenues are considered to be available if they are collected within 90 days of fiscal year-end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 42 � � r � � � � �� City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2007 � Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered �susceptible to accrual and so have been recognized as revenues of the current fiscal period for the governmental funds. All other revenue items are considered to be measurable and available only when cash is received by the City. ID. Assets, Liabilities, and Net Assets or Equity 1. Deposits, pooled cash, and investments ,Investments with original maturities of three months or less are considered to meet the definition of cash equivalents. The majority of the investments in which the City's funds have equity are held by the City's consolidated pool of cash and investments. The City utilizes the consolidated cash pool to account for cash and investments of all City funds other than those that are required by ordinance to be physically segregated. The consolidated cash pool concept allows each � participating fund to benefit from the economies of scale and improved yield that are inherent to a larger investment pool. Formal accounting records detail the individual equities of the participating funds. The cash pool utilizes a sing�e checking account for all City receipts and disbursements. �Since fund equities in this cash management pool have the general characteristics of demand deposits in that additional funds may be deposited at any time and also funds may be withdrawn at any time without prior notice or penalty, each fund's equity account is considered a cash equivalent regardless of the maturities of investments held by the pool. � � , � � J All individual fund cash equity in a deficit (overdraft) position with respect to the consolidated cash pool is reclassified at year-end to short-term interfund payables to the Capital Improvement Fund. The Capital Improvement Fund is the fund selected by management to reflect the offsetting interfund receivables in such cases. The City has an agreement with its depository bank to provide that all excess cash is swept daily and automatically into an overnight money market account which pays interest at the federal funds rate, with no requirement for a minimum compensating balance. The fed funds rate was 4.58% at September 30, 2007. This account is collateralized through the State of Florida Public Deposits Program. Under City Charter and the current Investment Policy, adopted by the City Council on September 7, 1995, consolidated cash pool investments are limited to the following: United States Government Securities, Certificates of Deposit in Local Banks, Repurchase Agreements, Savings Accounts in Local Banks, Federal Government Agency Securities, Municipal Bonds issued by governmental entities within the state of Florida (other than City of Clearwater issues), and State of Florida Bonds. The City utilizes a very conservative investment philosophy when it invests its pooled cash funds in that the return of the principal is more important than the return on the principal. The City does not actively trade its portfolio and generally holds investments until maturity. Through the use of a laddered approach to maturities and by timing maturities to cash needs, the City does not anticipate selling investments to meet cash flow requirements. �Under the City's Investment Policy, a performance measurement standard has been established. The performance measure chosen is a weighted average of: the overnight interest rate; and three month, six month, one year, three year, five year, and ten year Treasury rates, respectively. For the fiscal year ended September 30, 2007, the performance measure weighted average was 4.84%. The actual pooled cash earnings performance before bank charges was 4.92%. � � I� � Investments being held outside of the consolidated cash pool include escrowed debt service investments and employee retirement investments. Permissible escrowed debt service investments are specifically defined in each individual debt instrument, but generally follow the same limitations applicable to consolidated cash pool investments. The City maintains four different employee retirement programs, and each one has its own list of permitted investments. Generally, each plan allows the same type of investments as the consolidated cash pool, but additionally allows some portion of its assets to be invested in corporate bonds, notes of corporations, and stocks that are listed on one or more of the recognized national or international stock exchanges. 43 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 2. Receivables and payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e. the current portion of interfund loans) or "advances to/from other funds" (i.e. the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-rype activities are reported in the government-wide financial statements as "internal balances". 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. All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable less than 60 days are included in the trade accounts receivable allowance for uncollectibles at the five-year average loss experience rate of 2.95%. Trade accounts receivable in excess of 60 days are reserved at 40%. The property tax receivable allowance for uncollectibles is 10% of the current year portion of the receivable, and 30%, 50%, 70%, 90%, and 95% for the receivable portions attributable to the prior five years respectively (fiscal 2006 thru 2002), and 100% of the receivable attributable to fiscal years 2001 and prior. Property tax revenue is recognized in the fiscal year for which the taxes are levied, provided the availability test is met, in conformance with NCGA Interpretation No. 3. Properry taxes for the following fiscal year are levied by Council action in September of each year. This levy is apportioned to property owners based on the previous January 1 assessed values. Tax bills are mailed out on or about November 1, and the collection period runs from November 1 through March 31. On April 1, unpaid property taxes are considered delinquent and become a lien. Tax certificates are sold in June for real property with delinquent taxes. Since taxes are not collected prior to November 1, the City does not record revenue for advance collections. Uncollected taxes receivable at year-end are recorded, with an appropriate allowance for estimated uncollectible amounts. The net amount deemed to be collectible but not current (not expected to be collected within sixty days after the close of the fiscal year) is shown as deferred revenue in the appropriate fund. All delinquent property taxes, except those levied specifically for the restricted purposes of financing activities accounted for in the Special Development Fund, are recorded in the General Fund. Property tax revenues are recognized in the General Fund and the required transfers to the appropriate debt service or pension fund are recorded as operating transfers from the General Fund. � � � � �� , � � The City is permitted by State law to levy ten mills without referendum. Additional millage not subject to the ten mill � limitation is authorized if approved by referendum. The tax rate of 5.2088 mills for the year ended September 30, 2007, reflects a 9.5% decrease from the prior year millage rate of 5.7530. 3. Inventories and prepaid items Inventories of proprietary funds are stated at cost and valued on the first-in first-out (FIFO) basis. In governmental funds, the majority of inventory items are accounted for under the purchases method, which provides that expenditures are recognized when the inventory item is purchased. The only governmental fund inventory that is accounted for under the consumption method is the General Fund inventory of items for resale at the City's public fishing pier. Under the consumption method, the expenditure is recognized when the inventory item is sold (or consumed). 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. 44 � � �� I� U City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2007 � LJ �J , � � � � , ' � � � � 4. Restricted assets Certain resources of the City's enterprise funds are classified as restricted assets. Restricted assets include: Water and Sewer improvement charges restricted by the authorizing ordinances to the construction of additions and improvements to the water and sewer systems; Gas Utility and Solid Waste Utility restricted customer deposits; and assets of the Water & Sewer Utility, Gas Utility, Stormwater Utility, and Parking System funds restricted under the provisions of authorizing ordinances for revenue bonds to the payment of future revenue bond debt service, system construction, and renewals and replacements. 5. Capital assets Capital assets, which include properry, plant, equipment, and certain infrastructure assets, (e.g. roads, bridges, etc.) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets, as defined by the City, are assets with an initial individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of five years. Individual assets that cost less than $5,000, but that operate as part of a network system, may be capitalized in the aggregate, using the group method, if the estimated average useful life of the individual asset is five years or more. Additionally, higher thresholds for capitalization apply to the following categories: land improvements, $50,000; buildings, building improvements, and utility systems, $100,000; and infrastructure, $500,000. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense incurred by business-type activities during the current fiscal year was $10,742,150. Of this amount, $476,719, $91,385, and $85,586 were included as part of the cost of capital assets under construction in connection with water & sewer, gas, and stormwater system projects, respectively. These interest expense amounts were netted against related project interest earnings of $468,744, $-0-, and $322,677, respectively, to arrive at net capitalized interest of $7,975, $91,385, and ($237,091) for water & sewer, gas, and stormwater system projects, respectively. Property, plant, and equipment of the primary government are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings & building improvements 10-40 Public domain infrastructure 20-40 Utility systems 25-40 Machinery & equipment 5-15 Vehicles 5-10 6. Compensated absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. Generally � employees may accumulate vacation time not exceeding 360 hours and sick leave not exceeding 1,560 hours. Upon retirement from City service a qualified employee is paid for all vacation time not exceeding 360 hours and one-half of accumulated unused sick leave not exceeding 1,560 hours (i.e. maximum pay-out of 780 hours). The City accrues for all earned but unused vacation pay up to the "cap" of 360 hours, and the portion of unused sick leave estimated to be payable � upon retirement. The current portion of compensated absences is the amount estimated to be used in the following year. For governmental activities, compensated absences are liquidated within the same governmental funds where the employee vacation and/or sick leave was earned. � 45 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 7. Long-term obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net 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 reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 8. 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. Designations of fund balance represent tentative management plans that are subject to change. Note II — Stewardship, Compliance, and Accountability A. Budgets and budgetary accounting Annual budgets are legally adopted for the General Fund, Special Development special revenue fund, and the Community Redevelopment Agency special revenue fund. The budget for the Special Development Fund is adopted on a basis consistent with GAAP, and appropriations lapse at year-end. Appropriations for open encumbered purchase orders at year- end in the General Fund do not lapse, but rather continue until liquidated or otherwise cancelled by City Council action. For the General Fund budgetary comparison statements, actual expenditures have been adjusted to include end-of-year encumbrances and to exclude beginning-of-year encumbrances, in order to provide a meaningful comparison. Except for the treatment of encumbrances and certain transactions relating to interfund loans, the General Fund Budget is adopted on a basis consistent with GAAP, and all non-encumbered appropriations lapse at year-end. The level of budgetary control established by the legislative body, the level on which expenditures may not legally exceed appropriations, is the individual fund. In accordance with provisions of Ordinance 5025-90 and with Section 2.519(4) of the Clearwater Code, the City Manager may transfer part or all of any unencumbered appropriation balance among programs within an operating fund, provided such action does not result in the discontinuance of a program. Such transfers must be included in the next budget review presented to the City Council. Upon detailed written request by the City Manager, the City Council may by ordinance transfer part or all of any unencumbered appropriation balance from one fund to another. As established by administrative policy, department directors may transfer money from one operating code to another within a program without a formal written amendment. Formal requests for budget amendments from department directors are required for transfers in capital expenditures, transfers, and reserves. Thus, certain object classifications within departmental and/or program budget appropriations are subject to administratively imposed controls, in addition to the legal controls imposed by City Council action described above. 46 � , � � � � � � �� , � �� City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2007 � � The Community Redevelopment Agency (CRA) Fund annual budget is adopted by the trustees of that agency in accordance with state law. The level of budgetary control is the total fund. Except for the treatment of encumbrances, the CRA Fund Budget is adopted on a basis consistent with GAAP, and all non-encumbered appropriations lapse at year-end. ! Budget amounts presented in the accompanying financial statements reflect all amendments adopted by the City Council and the governing board of the component unit. All amendments were adopted in conformance with legal ' requirements. Individual amendments, as well as the net effects of all amendments during the fiscal year, were not material in relation to the original appropriations for the governmental funds in the aggregate. Budgets for the Capital Projects Funds, the Special Programs Fund, the Local Housing Assistance Trust Fund, and the 1 Pinellas County Local Housing Assistance Trust Fund are adopted on a multi-year completed program basis, where budgetary appropriations do not lapse at year-end, but may extend across two or more fiscai years. A comparison of annual results with these budgets would not be meaningful and is therefore not included in this report. � � All City Council adopted budgets are integrated into the formal accounting system to allow for monthly comparison of projected and actual results in all funds for which budgets are adopted. B. Re-statement of prior year balances � A reconciliation of the Garage internal service fund capital assets, related to implementation of an asset management system for Citywide vehicles and machinery and equipment owned and maintained by the Garage fund, resulted in the fol►owing adjustment to the prior year balances: L� � '� ' , � Generai government capital assets General government internal balance Governmental activities, net assets Fund/Net Assets Balance 9/30/2006 $243,789,933 ($523,169) $324,972,342 Business-type activities internal balance $523,169 Business-type activities, net assets $270,481,587 Internal service funds capital assets Internal service funds, net assets Note III — Detailed Notes on All Funds A. Deposits and investments Restated Balance Adiustment 9/30/2006 ($2,324,751) $241,465,182 $1,264,729 $741,560 ($1,060,022) $323,912,320 ($1,264,729) ($741,560) ($1,264,729) $269,216,858 $19,382,178 ($2,324,751) $17,057,427 $41,440,704 ($2,324,751) $39,115,953 � Investments with original maturities of three months or less are considered to meet the definition of cash equivalents. The majority of the investments in which the City's proprietary funds have equity are held by the City's consolidated pool of cash and investments. Since fund equities in this cash management pool have the general characteristics of demand deposits, in that additional funds may be deposited at any time and also funds may be withdrawn at any time without prior notice or �penalty, each fund's equity account is considered a cash-equivalent regardless of the maturities of investments held by the pool. Funds with deficit (overdraft) positions within the consolidated pool report the deficits as interfund payables to the City's Capital Improvement Fund. � 47 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Deposits All cash of the City is entirely insured either by federal depository insurance or via banks' participation as qualified public depositories pursuant to Florida Statutes, Chapter 280, "Security for Public Deposits". The City is required to verify that monies are invested in "qualified public depositories" as defined in Florida Statutes section 280.02. Poo/ed Cash and /nvesfinenfs To increase returns and minimize fees, the City follows the practice of pooling available cash and investments of all funds with the exception of retirement plan investments and assets held under Bond Trust Indenture Agreements. Please refer to Note (I)(D)(1) for a discussion of allowable investments under the pooled cash and investments investment policy. All investments at year-end were in compliance with the pooled cash and investments investment policy. � u � � ! � � At year-end, the governmenYs cash and investment balances were as follows, excluding pension plan investments and investments held under Bond Trust Indenture Agreements: � Pooled Cash and Investments Cash and cash eauivalents: Cash on hand Deposits with banks Commercial paper Total cash and cash equivalents Investments: Treasuries Treasury zeroes U.S. Agencies Government National Mortgage Assn (GNMA) Federal Farm Credit Bank (FFCB) Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Assn (FHLMC) Federal National Mortgage Assn (FNMA) Federal National Mortgage Assn (FNMA) Zeroes Federal National Mortgage Assn (FNMA) Zeroes Dept of Housing and Urban Development (HUD) Student Loan Marketing Association (SLMA) Other Government Sponsored Agencies Other Government Sponsored Agencies - Zeroes Municipal bonds Collateralized mortgage obligations Total investments Total pooled cash and investments Carrying Amount $ 570,361 18,265,326 3,993,655 22,829,342 % of Weighted avg Moody's Portfolio maturity (yearsl in � n/a n/a n/a n/a � 0.03 Aaa 8.4% 4,993,750 2 �o�a 0.13 487,710 0.62 379,850 0.1 % 10,065,656 3.7% 65,555,162 24.0% 59,408,461 21.7% 76,822,300 2,371,795 29.5% 1,327,678 6,703,953 2.5% 7,359,639 2.7% 4,947,320 1.8% 5,748,581 2.1 % 1,468,541 0.5% 2,917,990 1.1 % 250,558,386 $ 273,387,728 100.0% 48 1.98 3.59 2.87 2.69 2.58 14.14 12.03 3.52 7.42 8.10 1.64 2.56 2.85 3.05 Aaa ' Aaa Aaa � Aaa Aaa � Aaa Aaa Aaa Aa- �Aaa Baa1 Aaa �Aaa Aaa Aaa � , � � , ' � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Cash and investments as of September 30, 2007 are classified in the accompanying financial statements as follows: � Statement of net assets Primary Government: Cash and cash equivalents � Restricted cash and cash equivalents Restricted assets - Cash and cash equivalents Fiduciary Funds: , Cash on hand and in banks Equity in pooled cash and investments-pension funds Equity in pooled cash and investments-agency fund 1 Total cash and investments per CAFR Less accrued interest on investments Add back outstanding checks at 9/30/07 Total pooled cash and investments per above , Interest Rate Risk — Pooled Cash and Investments: ��1�%7 $ 215,882,110 16, 588,148 34,473,452 19,441 4,455,161 567,577 271,985,889 (2,700,398) 4,102,237 $ 273,387,728 1 As a means of limiting exposure to fair value losses arising from rising interest rates, the city's pooled cash investment policy prohibits investments in securities maturing more than fifteen years from the date of purchase, unless matched to a specific cash flow requirement. Additionally, the policy allows no more than 10% of the portfolio to have maturities in excess of ten years unless specifically matched against a debt or obligation. Finally, the policy requires that the � weighted average maturity be three years or less, except for temporary situations due to market conditions and/or cash needs when the average maturity may exceed three years but shall not exceed four years. Weighted average maturities for the city's pooled cash investments are indicated in the table above. , Credit Risk — Pooled Cash and Investments: The Cit�is pooled cash investment policy, in accordance with Florida Statutes, al�ows investments to direct obligations of the � United States, federal agencies, debt issued by the State of Florida or any pofitical subdivision, and commercial paper of prime quality of the highest letter and numerical rating as provided by at least one nationally recognized rating service. Ratings for the Cit�is pooled cash investments are disclosed in the preceding table. � � L� I , � � , Concentration of Credit Risk— Pooled Cash and Investments: The City's pooled cash investment policy limits the investment in any one issuer to 40% of the portfofio. Concentrations for several issuers exceeded 5% as disclosed in the preceding table, though none exceeded the 40% limit per the policy. Bond Trust Indenture Aqreement/Debt Service lnvestments The City invests in certain prescribed investments per the terms of revenue bond trust indenture agreements. As of September 30, 2007, these consisted of: Bond Trust Indenture Debt Service Investments Cash and cash equivalents: Cash in managed investment accounts Money market mutual fund Total cash and cash equivalents Investments: Commercial paper Total investments Total pooled cash and investments Carrying % of Weighted avg Moody's Amount Portfolio maturity_(vearsl Ratina $ 48,314 403,633 451,947 34.1 % 874,247 65.9°/a 874,247 $ 1,326,194 100.0% 49 n/a n/a n/a n/a 0.32 A1 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Pension P/an Assets , � � The City reports four pension funds in the accompanying financial statements. Each of the plans has a separate � governing board of trustees, a separate investment policy, and differing investment restrictions/risks. Consequently each is disclosed separately below. All investments at year end were in compliance with the respective plan investment policies. Please refer to Note (I)(D)(1) for a discussion of allowable investments under the pension plans. Emplovees Pension P/an At year-end, the Employees' Pension Plan cash and investment balances were as follows: E1I1�2LQyees' Pension Plan Cash and Investments Cash and cash eq�ivalents: Equity in pooled cash Cash in managed investment accounts Total cash and cash equivalents Investments: Treasuries Treasuries - Strips Treasuries - index linked Government bonds U.S. agencies U.S. agencies Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic stocks Mortgage backed bonds Assetbacked bonds Commodity ETF Domestic equity mutual fund International equity fund Fixed income mutual fund Total investments Total managed cash and investments ' See pooled cash note disclosure above Carrying % of Weighted avg Amount Portfolio maturity.�vearsl $ 1,978,729 0.3% See above ' 60,158,318 8.9% n/a 62,137, 047 20,622,020 396,597 3,967,440 1,041,387 6,229,977 976,739 1,998,967 10,487,305 11,336,842 21,807,379 3,972,213 2,792,503 168,552 284, 781 247,774,182 101,538,814 2,300,598 738,535 51,670,677 111,769,980 8,554,054 610,429,542 $ 672,566,589 Interest Rate Risk — Employees' Pension Plan: 3.1 % 0.1 % 0.6% 0.2% 0.9% 0.1% 0.3% 1.6% 1.7% 3.2% 0.6% 0.4% 0.03% 0.04% 36.8% 15.1% 0.3% 0.1 % 7.7% 16.6°/a 1.3% 100.0% 6.0 17.1 13.1 26.3 n/a 25.3 9.1 n/a n/a n/a 7.0 � ... .. �• See above " n/a Aaa Aaa Aaa Baai/Baa2 Aaa Aa2 Aaa Aa 1 /Aa2/Aa3 A 1 /A2/A3 Baa1 /Baa2/Baa3 Ba1 B1 Baa Caa1 n/a Aaa Aaa n/a n/a n/a Aaa � � , , � � i � � � � � As a means of limiting exposure to fair value losses arising from rising interest rates, the Employees' Pension Plan � investment policy limits the investment in fixed income investments to no more than 50% of the portfolio. There are no limits related to weighted average maturities due to the long-term nature of pension plan investing. � � 50 , ' � � �J ' � �r 1 � � � � r � � � � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Credit Risk — Employees' Pension Plan: The Employees' Pension Plan investment policy limits credit risk by restricting equity investments to corporations that are listed on one of the national or international stock exchanges. Additionally, fixed income corporate bonds must carry an "investment grade" rating as established by one of the nationally recognized rating agencies. At September 30, 2007, the Plan had $453,333 invested in domestic corporate bonds that had fallen below investment grade (Ba1, Ba2, and B1) as the result of investment downgrades, as indicated on the table above. The respective money managers notified the Plan administrators of the downgrades and the planned courses of action related to these securities on a timely basis, consistent with the policy individual manager guidelines. Concentration of Credit Risk — Employees' Pension Plan: The Employees' Pension Plan investment policy limits concentration of credit risk by limiting the investment in common stock or capital stock of any one corporation to 3% of the plan equity assets, unless due to a higher percentage included in a nationally recognized market index at least as broad as the Standard and Poor's Composite Index of 500 companies, or upon a specific finding by the investment committee that such higher percentage is in the best interest of the fund. Additionally, the individual manager guidelines associated with the policy provide further diversification of both equity and fixed income investments to minimize concentration of credit risk. Foreign Currency Risk — Employees' Pension Plan: Risk of loss arises from changes in currency exchange rates. The Employees' Pension Plan investment policy does not have a formal policy to limit foreign currency risk, other than a guideline of no more than 20% of the plan assets invested in international equities. The Pension Plan's exposure to foreign currency risk is as follows: Investment Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Total Currencv Euro Japanese Yen British Pound Swiss Franc Australian Dollar Singapore Dollar Swedish Krona Hong Kong Dollar Danish Krone Fair Value $ 39,119,491 23,471,696 24,589,396 7,823,899 6,706,199 1,117,700 3,353,099 2,235,400 1,117,700 Norwegian Krone 2,235,400 $ 111,769,980 51 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Firemen's Relief and Pension P/an At year-end, the Firemen's Relief and Pension Plan cash and investment balances were as follows: Fmnloyees' Pension Plan Cash and Investments Gash and cash e��ivalents: Equiry in pooled cash Total cash and cash equivalents Investments: U.S. agency - Federal Nat'I Mortgage Assn. (FNMA) U.S. agency - Federal Home Loan Mortgage Corp. (FHLM U.S. agency - Federal Home Loan Bank (FHLB) Total investments Total managed cash and investments * See pooled cash note disclosure above � , � � Carrying % of Weighted avg Moody's � Amount Portfolio maturit�(vearsl Ratina $ 2,476,432 30.9% See above " See above * , 2,476,432 2,927,841 C 929,397 1,690,670 5,547,908 $ 8,024,340 Interest Rate Risk — Firemen's Relief and Pension Plan: 36.5% 5.24 Aaa 11.6% 1.50 Aaa 21.1 % 4.51 Aaa 100.0% , � � LJ As a means of limiting exposure to fair value losses arising from rising interest rates, the Firemen's Relief and Pension � Plan investment policy limits the target investment in fixed income investments to no more than 70% of the portfolio. There are no limits related to weighted average maturities due to the long-term nature of pension plan investing. Credit Risk — Firemen's Relief and Pension Plan: The Firemen's Relief and Pension Plan investment policy limits credit risk by restricting the fixed income investments to investment grade securities, per a nationally recognized ranking agency. Concentration of Credit Risk — Firemen's Relief and Pension Plan: r � � The Firemen's Relief and Pension Plan investment policy limits concentration of credit risk by limiting the target allocation of the plan to domestic fixed income to 70% of the portfolio, with the remainder of the portfolio allocated to the � City's well-diversified pooled cash portfolio (see above disclosure). There are no additional limitations on concentrations with individual issuers or agencies due to the relatively small portfolio of this closed pension plan. Foreign Currency Risk — Firemen's Relief and Pension Plan: The Firemen's Relief and Pension Plan investment policy does not permit investment in foreign fixed income or equity securities. 52 � , � � � City of Clearwater, Florida ' Notes to the Basic Financial Statements For the Year Ended September 30, 2007 � � � � ' LJ f� � Police Supp/ementa/ Pension P/an At year-end, the Police Supplemental Pension Plan cash and investment balances were as follows: Cash and cash equivalents: Cash in bank Cash in managed investment accounts Total cash and cash equivalents I nvestments: Treasuries U.S. agencies Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic stocks Mortgage backed bonds Total investments Total managed cash and investments Carrying Amount $ 19,441 375,430 394,871 4, 541, 822 105,183 118,138 232, 345 94,598 8, 862, 464 88, 806 14, 043, 356 $ 14,438,227 Interest Rate Risk — Police Supplemental Pension Plan: % of Weighted avg Moody's Portfolio maturity�vears) Rating n/a n/a n/a n/a 2.7% n/a n/a 31.5% 6.98 Aaa 0.7% 1.44 Aaa 0.8% Aaa 1.6% 6.51 Aa1/Aa2/Aa3 0.7% A 1 /A2/A3 61.4% n/a n/a 0.6% 27.64 Aaa 100.0% ' As a means of limiting exposure to fair value losses arising from rising interest rates, the Police Supplemental Pension Plan investment policy limits the duration of the fixed income portfolio to 125% of the duration of the Lehman Brothers GovernmenUCorporate Bond index. Additionally, no issues, Treasury, or Corporate Bonds may be purchased with maturities in excess of 15 years. , Credit Risk — Police Supplemental Pension Plan: The Police Supplemental Pension Plan investment policy limits credit risk by restricting equity investments to ' corporations that are listed on one of the national or international stock exchanges. Additionally, fixed income security investments are limited to "A" rated or higher corporate bonds, debentures, and preferred stocks; corporate debt provided the corporation meets the standards set forth in section 185.06(1)(b), Florida Statues; and U.S. Government � and agency obligations. Finally, the investment policy requires that investment managers dispose of any issue that has been downgraded below "A" as soon as is economically feasible. Concentration of Credit Risk — Police Supplemental Pension Plan: , The Police Supplemental Pension Plan investment policy limits concentration of credit risk by limiting the investment in common stock or capital stock of any one issuing company to 5% of the outstanding capital stock of the company. Additionally, the policy limits any one-industry position to no more than 25% of the equity portfolio. , Foreign Currency Risk — Police Supplemental Pension Plan: Risk of loss arises from changes in currency exchange rates. The Police Supplemental Pension Plan investment policy � does not have a formal policy to limit foreign currency risk, other than a guideline of no more than 20% of the plan assets invested in international equities. Investment in fixed income foreign investments is not permitted per the investment policy. The Plan has no current exposure to foreign currency risk. � , 53 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Firefiphters Supplementa/ Pension P/an At year-end, the Firefighters Supplemental Pension Plan cash and investment balances were as follows: Gash and cash ep�ivalents• Cash in managed investment accounts Total cash and cash equivalents Investments: Treasuries Treasury inflation index notes U.S. agencies Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic stocks Mortgage/Asset backed bonds Total investments Total managed cash and investments Carrying % of Weighted avg Amount Portfolio maturity._(vears) $ 566,209 566,209 822,084 358,966 12,140 108,267 358,819 325, 820 3,897 5, 038,149 1,330,355 8,358,497 $ 8,924,706 6.3% 9.2% 0.0% 4.0% 0.1% 1.2% 4.0% 3.7% 0.04% 56.6% 14.9% 100.0% n/a 11.29 6.69 3.75 6.84 n/a 18.64 Moody's tin n/a Aaa AAA Aaa Aaa Aa1 /Aa2/Aa3 A 1 /A2/A3 Baa1 /Baa2/Baa3 Ba1 /Ba2/Ba3 n/a Aaa � , , L� � � � �� , �J Interest Rate Risk — Firefighters Supplemental Pension Plan: ' As a means of limiting exposure to fair value losses arising from rising interest rates, the Firefighters Supplemental Pension Plan investment policy limits the duration of the fixed income portfolio to 135% of the duration of the Merrill Lynch Master Bond Index. Credit Risk — Firefighters Supplemental Pension Plan: The Firefighters Supplemental Pension Plan investment policy limits credit risk by restricting equity investments to securities that are fully and easily negotiable. Additionally, investments in corporations whose stock has been publicly traded for less than one year are limited to 15% of the equity portfolio. An additional investment policy restriction is that investment in equity securities whose market capitalization is less than $2 billion dollars shall be limited to 25% of the total equity portfolio. Additionally, fixed income corporate security investments are limited to "Baa" rated (per Moody's) or higher corporate bonds (investment grade). Finally, collateralized mortgage obligations must be backed by a federal agency (i.e. GNMA, FHLMC, or FNMA) or rated Aaa by Moody's, and must pass the FFIEC High Risk Security Test on an annual basis. Concentration of Credit Risk — Firefighters Supplemental Pension Plan: The Firefighters Supplemental Pension Plan investment policy limits concentration of credit risk by limiting the investment in common stock or capital stock of any one issuing company within an investment manager's portfolio to 5% of the portfolio. Similarly, no more than 10% of a fixed income investment manager's portfolio may be invested in the securities of any single corporate issuer per the plan investment policy. Finally, investments in collateralized mortgage obligations are limited to 15% of the investment manager's total portfolio. Foreign Currency Risk — Firefighters Supplemental Pension Plan: Risk of loss arises from changes in currency exchange rates. The Firefighters Supplemental Pension Plan investment policy does not have a formal policy to limit foreign currency risk, other than a guideline of no more than 10% of the plan assets invested in international equities. 54 � , , � l� � � � ' , � B. Receivables City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Receivables as of year-end for the City's governmental, proprietary, internal service, and fiduciary funds, including the � applicable allowances for uncollectible accounts for the proprietary funds, are segregated on the fund financial statements. The Mortgages, Notes, and Other Loans amount of $11,407,356 reported on the Governmental Funds balance sheet includes $11,314,014 of long-term loans receivable that are not expected to be collected within the next fiscal year. � C. Capital assets Capital asset activity for the year ended September 30, 2007: , � Governmental Activities: Non-depreciable capital assets: Land Construction in progress � Total non-depreciablecapital assets Depreciable capital assets: Buildings Improvements other than buildings � Machinery and equipment Infrastructure Total depreciable capital assets Less accumulated depreciation for: � Buildings Improvements other than buildings Machinery and equipment Infrastructure ' Total accumulated depreciation Net depreciable capital assets Net governmental activities capital assets , � � � , � ' � Business-type activities: Non-depreciable capital assets: Land Construction in progress Total non-depreciable capital assets Depreciable capital assets: Buildings Systems and improvements other than building Machinery and equipment Total depreciable capital assets Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Net depreciable capital assets Net business-type activities capital assets Beginning Ending Balance Increases Decreases Balance $ 70,590,260 $ 42,800 $ 88,400 $ 70,544,660 9,601,310 21,297,474 851,099 30,047,685 80,191,570 21,340,274 939,499 100,592,345 107,758,218 469,336 - 108,227,554 19,276,911 1,297,015 793,718 19,780,208 81,390,368 8,570,601 6,359,855 83,601,114 91,675,100 - - 91,675,100 300,100,597 10,336,952 7,153,573 303,283,976 (21,425,865) (3,543,179) - (24,969,044) (7,778,558) (932,141) (714,217) (7,996,482) (55,407,769) (6,959,474) (4,975,900) (57,391,343) (54,214,793) (2,146,020) - (56,360,813) (138,826,985) (13,580,814) (5,690,117) (146,717,682) 161,273,612 (3,243,862) 1,463,456 156,566,294 $241,465,182 $18,096,412 $2,402,955 $257,158,639 Beginning Ending Balance Increases Decreases Balance $ 28,296,493 $ 65,119 $ - $ 28,361,612 54,719,199 19,080,239 31,242,590 42,556,848 83,015,692 19,145,358 31,242,590 70,918,460 23,735,580 - - 23,735,580 s 379,667,710 37,850,493 - 417,518,203 9,001,471 853,435 350,343 9,504,563 412,404,761 38,703,928 350,343 450,758,346 (s,2o2,ss$) (sso,�s4� - �io,oss,�s2> (139,065,165) (9,799,311) - (148,864,476) (4,897,416) (908,274) (230,949) (5,574,741) _ �153,165,579) (11,588,369) (230,949) (164,522,999) 259,239,182 27,115,559 119,394 286,235,347 $342,254,874 $46,260,917 $31,361,984 $357,153,807 55 City of Clearwater, Fiorida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Depreciation expense was charged to functions / programs of the primary government as follows: Governmental activities: General government Public safety Physicai environment Transportation, including depreciation of general infrastructure assets Culture and recreation Capital assets held by the government's governmental internal service funds are charged to the various functions based on their usage of the assets Total depreciation expense - governmental activities Business-type activities: Water and sewer utility Gas utility Solid waste utility Stormwater utility Recycling utility Marine operations Aviation operations Parking system operations Harborview Center operations Total depreciation expense - business-type activities Construction commitments At September 30, 2007, material outstanding construction commitments were as follows: Proiect Beachwalk Project Beachwalk Project Beachwalk Project Fire Training Facility Clearwater Beach West Bridge Connector Downtown Streetscape Downtown Streetscape Pump Station Replacements Reverse Osmosis Plant Expansion Reclaimed Water Distribution System Water Pollution Control Renewal & Replacement Wellfield E�ansion Backfile Conversion of Records Total Construction Commitments $ 733,257 1,660,652 50,726 2,331,555 3,838,548 4,966,076 $ 13,580,814 $ 6,693,460 1,651,893 297,039 1,501,265 276,388 178,075 217,520 228,814 543, 915 $ 11,588,369 Fund Capital Improvement capital projects fund Stormwater Utility enterprise fund Water & Sewer Utility enterprise fund Capital Improvement capital projects fund Capital Improvement capital projects fund Capital Improvement capital projects fund Stormwater Utility enterprise fund Water & Sewer Utility enterprise fund Water & Sewer Utility enterprise fund Water & Sewer Utility enterprise fund Water & Sewer Utility enterprise fund Water & Sewer Utility enterprise fund Capital Improvement capital projects fund 56 Construction Commitments Outstandina $11,734,476 1,021,033 576,520 4,500,549 2,853,161 1,954,392 627,738 2,339,063 1,257,291 1,219,214 541,419 522,191 500.000 �' �' ' ' � � � l_.J � � ' � ' �J � �J � � , ' � � City of Clearwater, Florida , Notes to the Basic Financial Statements For the Year Ended September 30, 2007 � � D. InterFund receivables, payables, and transfers 1. Interfund balances As discussed in Note III-A, individual fund deficits in the consolidated cash pool, if any, have been reclassified as of , September 30, 2007, as interfund loans from the Capital Improvement Fund, which was selected by management for this purpose. This reclassification results in a corresponding reduction in the cash equity in the Capital Improvement Fund, offset by an increase in interfund receivables. , The amounts of the reclassified cash pool deficits, if any, as well as other individual fund interfund payable and receivable balances (current), at September 30, 2007, were as follows: ' � � �II ' ' ' , L� � I� � ' Fund Internal Service Funds: Administrative Services Central Insurance Due from Other Funds $ 91,654 $ 91,654 Individual interfund advances (long-term) at September 30, 2007, follow: Fund General Fund Special Revenue Funds: Special Programs Community Redevelopment Agency Enterprise Fund: Parking System Internal Service Funds: Administrative Services Central Insurance Advancesto Other Funds $ 2,000,000 350, 000 2,824,881 $ 5,174,881 Due to Other Funds $ 91,654 $ 91,654 Advances from Other Funds $ 350,000 4,000,000 824, 881 $ 5,174,881 Descriptions of lon4-term interfund loans as of September 30. 2007: An interfund loan from the Special Programs special revenue fund to the Community Redevelopment Agency special revenue fund in the amount of $350,000 related to the purchase, remediation, and development of a downtown parcel. Internal loans of $2,000,000 each from the General Fund and the Central Insurance Fund, at the cash-pool interest rate, to the Parking Fund to fund a contingency reserve per the terms of a development agreement. The Parking Fund is contributing an additional $2,000,000 to fund a total contingency of $6,000,000 for the repurchase of a land parcel if the proposed development does not occur. The loans commenced September 30, 2002. An internal ten-year loan from the Central Insurance Fund to the Administrative Services Fund for the purchase and installation of fiber optic cable and termination equipment. The loan provides for ten annual payments of $91,654 plus interest at the cash-pool rate, due on September 30 of each year. The loan commenced September 30, 2003 with the first annual principal payment due September 30th of the year that the infrastructure project is completed, currently anticipated to be September 30, 2008. 57 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 2. Interfund transfers Intertund transfers for the year ended September 30, 2007, consisted of the following: Transfers to General Fund from: Capital Improvements Fund Water & Sewer Utility Enterprise Fund Gas Utility Enterprise Fund Solid Waste Utility Enterprise Fund Stormwater Utility Enterprise Fund Nonmajor governmentai funds Nonmajor enterprise funds Total Transfers to Special Development Fund from: Capital Improvements Fund Nonmajor enterprise funds Total Transfers to Capital Improvements Fund from: General Fund Special Development Fund Total $ 42 2,486,080 2,603,630 900,130 566,610 700,291 1,192,555 8,449,338 698,431 200,000 898,431 7,5 t 3,270 13,593,155 21,106,425 Transfers to Nonmajor governmentai funds from: General Fund 3,157,307 Special Development Fund 6,699,883 Capital Improvements Fund 1,686,914 Nonmajor governmental funds 5,335,621 Total 16,879,725 Transfers to Gas Utility Enterprise Fund from: General Fund 834,015 Total 834,015 Transfers to Nonmajor enterprise funds from: General Fund 342,240 Internal service funds 50,000 Total 392,240 Transfers to Internal service funds from: General Fund Capital improvements Fund Water & Sewer Utility Enterprise Fund Gas Utility Enterprise Fund Stormwater Utility Enterprise Fund Internal service funds Total Transfers to general government capital assets from: Stormwater Utility Enterprise Fund Nonmajor enterprise funds Total Total interfund transfers 201,346 16,183 45,868 89,808 15,967 11,481 380,653 61,195 12,085 73,280 $ 49,014,107 , , � fl L� � � ' � ' �J ' , � , � � Transfers are primarily used to 1) transfer revenues that have been collected in the required fund per state law to the funds and activities that state law allows for expenditures; 2) transfer of "payment in lieu of taxes" contributions from the utility � funds to the General Fund; 3) transfer funding from governmental funds to debt service and capital improvements funds; and 4) transfer matching funds from the General Fund to various grant programs. � � �;? �i u City of Clearwater, Fiorida ' Notes to the Basic Financial Statements For the Year Ended September 30, 2007 , , E. Leases , [� , � The City purchases various equipment for governmental and business-type activities under lease purchase financing agreements. The equipment is purchased with cash and subsequently provided as collateral via a"lease purchase" financing arrangement, typically for a five-year term. Obligations under these lease purchase agreements are recorded at the present value of their future minimum lease payments as of date of inception. Purchase of the assets is recorded as a cash outflow and the subsequent receipt of the financing proceeds is recorded as "proceeds from issuance of debt" for Statement of Cash Flows reporting. Capitalized equipment subject to lease purchase financing as of September 30, 2007: Governmental Business-type Activities Activities Equipment $ 19,692,312 $ 3,184,160 � Less: Accumulated Depreciation (7,217,582) (1,617,912) Total $ 12,474,730 $ 1,566,248 ' The future minimum lease payments under capital lease purchase agreements are as follows as of September 30, 2007: . . :. .� 2008 2009 2010 2011 2012 Deduction of the amount of imputed interest necessary to reduce net minimum lease payments to present value Governmental Business-type Activities Activities $ 4,310,093 $ 611,553 3,299,753 474,792 2,272,482 241,933 1,305,983 97,070 440,721 23,720 11,629,032 1,449,068 (788,550) $ 10,840,482 (83,162) $ 1,365,906 The City also leases personal computers under a three-year operating lease that is cancelable on an annual basis. Lease payments for fiscal year ended September 30, 2007, totaled $635,784. 59 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 F. Long-term debt 1. Revenue Bonds $46,445,000 Infrastructure Sales Tax Revenue Bonds, Series� 2001; issued for the acquisition, construction, or reconstruction of certain capital improvements to the City, including, but not limited to, a portion of the costs of constructing various capital improvements relating to road and bridge projects and a new main library; with $6,105,000 of principal due December 1, 2007, to $6,620,000 due December 1, 2009; interest at 4.00% to 5.00%. $19,080,000 $11,470,000 Improvement Revenue Refunding Bonds, Series 2001; issued to provide a portion of the funds necessary to defease the City's Florida Public Service Tax and Bridge Revenue Bonds; serial bonds due in annual installments of $330,000 due February 1, 2008, to $450,000 due February 1, 2016; interest at 3.60% to 4.60%; 5.25% term bonds in the amount of $3,240,000 due February 1, 2022; and 5.00% term bonds in the amount of $2,850,000 due February 1, 2026. $14,810,000 Spring Training Facility Revenue Bonds, Series 2002; issued to provide a portion of the costs of the acquisition, construction, rehabilitation, and equipping of a spring training facility to be used by the Philadelphia Phillies major league baseball team; serial bonds due in annual installments of $500,000 due March 1, 2008, to $295,000 due March 1, 2022, with a maximum principal of $845,000 due March 1, 2021; interest at 3.000% to 5.375%; 5.375% term bonds in the amount of $1,730,000 due March 1, 2027; and 5.375% term bonds in the amount of $1,750,000 due March 1, 2031. Total revenue bonds for governmental activities $43,642,690 Water and Sewer Refunding Revenue Bonds, Series 1998, capital appreciation bonds with total maturity amount of $81,785,000; issued to refund the 1988 Series Water and Sewer Revenue Bonds; due in annual installments from December 1, 2007 to December 1, 2018; ranging from $5,775,000 to $5,875,000; with interest at 4.20% to 5.22%. The balance outstanding as of September 30, 2007, includes capital appreciation bond accreted interest of $21,787,443. $58,680,000 Water and Sewer Revenue Bonds, Series 2002; issued to pay for costs of expansions to the Cit�is water and sewer system; serial bonds due in annual installments of $1,125,000 due December 1, 2007, to $2,420,000 due December 1, 2024, interest at 3.50% to 5.00%; 5.00% term bonds in the amount of $11,050,000 due December 1, 2028; and 5.00% term bonds in the amount of $13,665,000 due December 1, 2032. $8,410,000 Water and Sewer Revenue Refunding Bonds, Series 2003; issued to advance refund the City's Water and Sewer Refunding Revenue Bonds, Series 1993; serial bonds due in annual installments of $175,000 at December 1, 2007, to $260,000 due December 1, 2018, interest at 2.00% to 4.00%. $26,430,000 Water and Sewer Revenue Bonds, Series 2006; issued to pay the costs of the design, acquisition, construction, or reconstruction of capital improvements to the City's water and sewer system; serial bonds due in annual installments of $1,410,000 at December 1, 2019, to $2,070,000 due December 1, 2028, interest at 4.25% to 4.50%; 4.50% term bonds in the amount of $4,410,000 due December 1, 2030; and 4.625% term bonds in the amount of $4,795,000 due December 1, 2032. $8,020,000 Gas System Revenue Refunding Bonds, Series 1998; issued to advance refund the Citys Gas System Revenue Bonds, Series 1994A; serial bonds due in annual installments of $40,000 due September 1, 2008, to $50,000 due September 1, 2012, interest at 4.20% to 4.60%; additional serial bond annual installments ranging from $620,000 to $755,000 from September 1, 2015 to September 1, 2019, interest at 4.75% to 4.90%; 4.70% term bonds in the amount of $645,000 maturing September 1, 2014; and 5.00% term bonds in the amount of $3,410,000 maturing on September 1, 2023. .� 9,565,000 12,755,000 41,400,000 53,320,133 54,645,000 2,560,000 26,430,000 7,710,000 ' � , u , , � � , ' ' LJ , ' ' � � , � , City of Clearwater, Florida ' Notes to the Basic Financial Statements For the Year Ended September 30, 2007 LJ u , ' L� CJ ' ' , ' , � ' , $8,890,000 Gas System Revenue Refunding Bonds, Series 2004; issued to advance refund the Cit�is Gas System Revenue Bonds, Series 1996A; serial bonds due in annual installments of $175,000 due September 1, 2008, to $1,575,000 due September 1, 2026, interest at 2.00% to 4.375%. $7,195,000 Gas System Revenue Refunding Bonds, Series 2005; issued to partially advance refund the City's Gas System Revenue Refunding Bonds, Series 1997A and Series 19976; serial bonds due in annual instaliments of $220,000 due September 1, 2008, to $325,000 due September 1, 2025, interest at 3.00% to 4.375%; and 4.375% term bonds in the amount of $2,400,000 maturing on September 1, 2027. $7,500,000 Stormwater Revenue Bonds, Series 1999; issued to finance the costs of capital improvements to the City's stormwater management system; with $155,000 of principal due November 1, 2007, to $160,000 due November 1, 2008, interest at 4.65% to 4J5%. $24,685,000 Stormwater Revenue Bonds, Series 2002; issued to finance the costs of capital improvements to the Citys stormwater management system; serial bonds due in annual installments of $480,000 due November 1, 2007, to $965,000 due November 1, 2023, interest at 3.00% to 4.75%; and 4.75% term bonds in the amounts of $3,205,000, $5,115,000, and $2,985,000, due November 1, 2026, 2030, and 2032, respectively. $14,430,000 Stormwater System Revenue Bonds, Series 2004; issued to finance the costs of capital improvements to the City's stormwater management system; serial bonds due in annual installments of $330,000 due November 1, 2007, to $865,000 due November 1, 2032, interest at 2.00% to 4.75%. $6,925,000 Stormwater System Revenue Bonds, Series 2005; issued to partially advance refund the Stormwater Revenue Bonds, Series 1999; serial bonds due in annual installments of $50,000 due November 1, 2007, to $470,000 due November 1, 2029, interest at 3.00% to 4.50%. Total revenue bonds for business-type activities Tota'I revenue bonds 2. Restrictive covenants and collateral requirements 8,375,000 6,930,000 315,000 22,875,000 13,785,000 6,870,000 203,815,133 � 245,215133 The Infrastructure Sales Tax Revenue Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of the City's share of the proceeds derived by Pinellas County from the levy and collection of the one- cent discretionary infrastructure sales tax pursuant to Section 212.055(2), Florida Statutes, as amended (the Sales Tax Revenues) and, until applied in accordance with the provisions of the Ordinance, all moneys, including investments thereof, in the funds and accounts established by the Ordinance, other than the Rebate Fund (collectively the "Pledged Revenues"). The pledge of the Sales Tax Revenues does not constitute a lien upon any property of the City. The covenants of the ordinance authorizing the bonds include, among other things, an obligation of the City to do all things necessary on its part to continue the levy and collection of the Sales Tax Revenues at the maximum rate permitted by and in compliance with Chapter 166, Part II, Florida Statutes, as amended, Chapter 212, Part I, Florida Statutes, as amended, and other applicable provisions of law (the "AcY'), and any successor provision of the law. The City further covenants to proceed diligently to perform legally and effectively all steps required on its part in the levy and collection of the Sales Tax Revenues and shall exercise all legally available remedies to enforce such collections now or hereafter available under State law. 'The Improvement Revenue Refunding Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of the Public Service Tax as authorized by Section 166.231, Florida Statutes, as amended. The pledge of the Public Service Tax does not constitute a lien upon any property of the City. The covenants of the ordinance authorizing the bonds include, among other things, an obligation of the City to do all things necessary on its part to 'continue the levy and collection of the Public Service Tax at the rate permitted by and in compliance with Section 166.231, Florida Statutes, and Article III, Chapter 44, Code of Ordinances of the Issuer, and any successor provision of law. The Public Service tax is a revenue of the General Fund. ' 61 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 The Spring Training Facility Revenue Bonds are special, limited obligations of the City, payable solely from and secured by a lien upon and pledge of the (i) payments received by the City from the State of Florida pursuant to Section 212.20, Florida Statutes (State Payments); and (ii) payments received by the City from Pinellas County, Florida pursuant to the Interlocal Agreement dated December 1, 2000 (County payments). The pledge of the State Payments and County Payments does not constitute a lien upon any property of the City. Furthermore, neither the City, Pinellas County, the State of Florida, nor any political subdivision thereof has pledged its faith or credit or taxing power to the payment of the bonds. The Water and Sewer Refunding Revenue Bonds, Series 1998; the Water and Sewer Revenue Bonds, Series 2002; the Water and Sewer Refunding Revenue Bonds, Series 2003, and the Water and Sewer Revenue Bonds, Series 2006 are limited obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's water and sewer system (System). The pledge of the System's net revenues does not constitute a lien upon any property of the City. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix and maintain such rates, and collect such fees, rentals and other charges for the services and facilities of the System and revise the same from time to time whenever necessary, which will provide gross revenues in each fiscal year sufficient to pay the cost of operation and maintenance of the system; one hundred fifteen percent (115%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds; plus one hundred percent (100%) of all reserve and other payments required to be made pursuant to the ordinances authorizing the bonds. The City further covenants that such rates, fees, rentals and other charges will not be reduced so as to render them insufficient to provide gross revenues for such purpose. The Gas System Revenue Refunding Bonds, Series 1998; Gas System Revenue Refunding Bonds, Series 2004; and Gas System Revenue Refunding Bonds, Series 2005 are limited obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the Citys gas system (System). The pledge of the System's net revenues does not constitute a lien upon any property of the City. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix, establish, revise from time to time whenever necessary, maintain and collect always, such fees, rates, rentals and other charges for the use of the product, services and facilities of the System which will always provide revenues in each year sufficient to pay, and out of such funds pay, 100% of the cost of operations and maintenance of the system in such year and all reserve and other payments provided for in the ordinances authorizing the bonds, along with one hundred twenty five percent (125%) of the bond service requirement due in such year on all outstanding bonds. The Stormwater System Revenue Bonds, Series 1999; Stormwater Revenue Bonds, Series 2002; Stormwater Revenue Bonds, Series 2004; and Stormwater Revenue Refunding Bonds, Series 2005 are limited obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's stormwater management system (System). The pledge of the System's net revenues does not constitute a lien upon any properry of the City. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix, revise from time to time whenever necessary, and maintain and collect always such fees, rates, rentals and other charges for use of the products, services, and facilities which will always provide net revenues in each year sufficient to pay one hundred fifteen percent (115%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds. The City further covenants that such rates, fees, rentals and other charges will not be reduced so as to render them insufficient to provide revenues for such purpose. Additionally, the covenants of each of the above issues includes a"Reserve RequiremenY' equal to the lesser of: the Maximum Bond Service Requirement for any given year; 125% of the Average Annual Bond Service Requirement; or the largest amount as shall not adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. A Reserve Fund has been funded for the Series 2002 and Series 2004 Bonds while the Series 1999 and Series 2005 Reserve Requirements have been satisfied with Reserve Fund Surety Bonds. 62 � , , � � �� ' ' CJ LJ , � � ' �J , �J I � , �J ' ' � ' ' 1 � CJ , ' � � ' � � �. , [�� ' ' City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Annual debt service requirements to maturity for revenue bonds are as follows: Revenue Bonds Year Ending Governmental Activities Business-type Activities Seotember 30 Principal Interest Principal Interest 2008 $ 6,935,000 $ 1,668,258 $ 8,530,000 $ 9,060,756 2009 7,210,000 1,391,196 4,004,268 8,829,903 2010 7,505,000 1,101,496 6,635,664 8,580,981 2011 920,000 936,294 6,921,399 8,309,163 2012 950,000 901,504 7,243,502 8,012,494 2013-2017 5,355,000 3,886,657 43,917,497 34,668,077 2018-2022 6,195,000 2,409,505 40,737,803 24,419,877 2023-2027 4,580,000 1,011,994 39,055,000 16,126,848 2028-2032 1,750,000 194,038 38,235,000 6,752,544 2033-2037 - - 8,535,000 205,797 Totals $ 41,400,000 $ 13,500,942 $ 203,815,133 $124,966,440 4. Advance refunding of bonds In prior fiscal years, the City entered into various advance-refunding transactions related to certain of its bonded debt. A portion of the proceeds of the refunding bond issues was placed in trust and used to purchase securities of the United States Government and related agencies at various interest rates and maturities sufficient to meet all debt service requirements of the refunded debt, of which $17,745,000 was outstanding at September 30, 2007. These assets are administered by trustees and are restricted to use for retirement of the refunded debt. The liability for the refunded bonds and the related securities and escrow accounts are not included in the accompanying financial statements as the City defeased its obligation for payment of the refunded bonded debt upon completion of the refunding transactions. The following schedule reflects the outstanding principal on refunded bonds as of September 30: Governmental Activities: Utility Revenue Bonds, Series 1978 Total Governmental Activities Business-type Activities: Stormwater System Revenue Bonds, Series 1999 Total Business-type Activities Total �� $ 11,460,000 11,460,000 6,285,000 6,285,000 $ 17,745,000 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 4. Changes in long-term liabilities Governmental activities: Revenue bonds payable Add (subtract) deferred amounts: For issuance premiums (discounts) On refunding Net revenue bonds payable Lease purchase contracts (a) Compensated absences Claims payable Governmental activity Long-term liabilities Business-type activities: Revenue bonds payable Less deferred amounts: For issuance premiums (discounts) On refunding Net revenue bonds payable Lease purchase contracts Compensated absences Claims payable Business-type activiry Long-term liabilities Beginning Balance $ 48,085,000 $ iti n Reductions ' ' i Ending Due Within , Balance n Y r - $ (6,685,000) $ 41,400,000 $ 6,935,000 , 490,781 - (99,316) 391,465 - (308,137) - 24,520 (283;617) - 48,267,644 - (6,759,796) 41,507,848 6,935,000 11,046,955 3,942,351 (4,148,824) 10,840,482 3,937,391 7,138,581 1,300,236 (757,383) 7,681,434 697,828 9,600,000 55,000 (906,000) 8,749,000 2,209,500 $ 76,053,180 $ 5,297,587 $(12,572,003) $ 68,778,764 $13,779,719 $ 213,283,518 $ 2,546,615 $(12,015,000) $203,815,133 $ 8,530,000 (1,674,572) - 132,775 (1,541,797) - (4,112,400) - 703,444 (3,408,956) - 207,496,546 2,546,615 (11,178,781) 198,864,380 8,530,000 1,906,224 158,130 (698,448) 1,365,906 567,523 1,790,666 216,575 (176,095) 1,831,146 166,353 376,776 - - 376,776 - $ 211,570,212 _� 2,921,320 $(12,053,324) $202,438,208 � 9,263,876 , , ' ' C� ' (a) Governmental activities lease purchase contracts additions of $3,942,351 includes $3,688,694 attributable to internal service , funds and $253,656 attributable to governmental funds. The lease purchase contracts reduction of $4,148,824 includes $3,641,480 for internal service funds and $507,344 for governmental funds. G. Restricted assets 1. Water and Sewer Utility Fund Assets in the Water and Sewer Utility Fund restricted for construction include: Water Improvement charges, the use of which is restricted by the authorizing ordinance to the construction of additions and improvements to the water system; assets remaining at September 30, 2007, are: Equity in Pooled Cash and Investments Sewer Improvement charges, the use of which is restricted by the authorizing ordinance to the construction of additions and improvements to the sewer system; assets remaining at September 30, 2007, are: Equity in Pooled Cash and Investments 64 ' � � $ 1,749,716 , 5 593 749 ' , , ' ' ' ' � ' � ' ' , � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Assets of the Water and Sewer Utility Fund restricted under the provisions of the ordinances authorizing the issuance of Water and Sewer Revenue Bonds consisted of the following at September 30, 2007: Water and Sewer Revenue Bonds Debt Service: Equity in Pooled Cash and Investments Water and Sewer Revenue Bonds Renewals and Replacements: Equity in Pooled Cash and Investments Water and Sewer Revenue Bonds Construction: Equity in Pooled Cash and Investments Assets of the Water and Sewer Utility Fund representing Customers' Deposits and therefore restricted, consisting entirely of Equity in Pooled Cash and Investments at September 30, 2007 Assets of the Water and Sewer Utility Fund representing a receivable from another governmental entity at September 30, 2007 Total restricted assets — Water and Sewer Utility Fund 18,163,660 6,470,852 4,118,710 2,412,701 5,210 �38.514�598 2. Gas Utility Fund � Assets in the Gas Utility Fund restricted under the provisions of the ordinance authorizing the issuance of revenue bonds consisted of the following at September 30, 2007: ' � ' , , , ' C� LJ Gas Svstem Revenue Bonds Debt Service: Equity in Pooled Cash and Investments Renewals and Replacements: Equity in Pooled Cash and Investments Assets of the Gas Utility Fund representing Customers' Deposits at September 30, 2006: Equity in Pooled Cash and Investments Total restricted assets — Gas Utility Fund $ 161,747 300,000 2,225,316 $ 2,687.063 3. Solid Waste Utility Fund Restricted assets in the Solid Waste Utility Fund designated for construction represent customer deposits in the amount of $973,726 at September 30, 2007, and consisted entirely of Equity in Pooled Cash and Investments. 4. Stormwater Utility Fund Assets restricted under the provisions of the ordinances for the issuance of revenue bonds consisted of the following at September 30, 2007: Stormwater Svstem Revenue Bonds — Series 1999 Debt Service: Equity in Pooled Cash and Investments Stormwater Revenue Bonds — Series 2002 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments 65 $ 148,239 2,425,365 700,572 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Stormwater Revenue Bonds — Series 2004 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Stormwater Refundinq Revenue Bonds — Series 2005 Debt Service: Equity in Pooled Cash and Investments Fees received in lieu of on-site drainage retention for new or improved businesses within the Prospect Lake Drainage District, restricted for stormwater improvements, at September 30, 2007: Equity in Pooled Cash and Investments Total restricted assets — Stormwater Utility Fund 5. Parking System Fund Contributions from the Special Development Fund from developer payments in lieu of parking, restricted for downtown parking; assets remaining at September 30, 2007: Equity in Pooled Cash and Investments Total restricted assets — Parking System Fund Note IV - Other Information A. Risk management , , � ' 1,441,760 � 2,538,186 159,321 , 177.980 ' 14 � ' $ 1,300,000 , 1.300.000 ' ' ' The City is self-insured within certain parameters for losses arising from claims for general liability, auto liability, police professional liability, public official's liability, property damage, and workers' compensation. Insurance coverage has been maintained by the City to pay for or indemnify the City for losses in excess of certain specific retentions and up to specified maximum limits in the case of claims for liability, properry damage, and workers' compensation. The liability excess coverage is $7,000,000 per occurrence ($14,000,000 aggregate) with self-insured retention of $500,000. There is workers' compensation coverage to the statutory limit, with self-insured retention of $500,000. The property damage excess coverage is $50,000,000 (Total Insured Value) with a$500,000 (5% named storm) self-insured retention. Settled claims have not exceeded excess coverage in any of the past three years. The transactions relating to the self-insurance program are accounted for in the Central Insurance Fund, an Internal Service Fund. The billings by the Central Insurance Fund to the various operating funds (the interfund premiums) are based on actuarial estimates of the amounts needed to pay prior and current year claims. The claims liability reported at September 30, 2007, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. .. ' 'J � ' �� J � � u � � ' ' ' , City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Changes in the claims liability amounts in fiscal years 2006 and 2007 were: Balance at October 1, 2005 Current year claims and changes in estimates Claim payments Balance at September 30, 2006 Current year claims and changes in estimates Claim payments Balance at September 30, 2007 B. Statements of cash flows Self Insurance $ 10,528,776 1,540,904 (2,092,904) 9,976,776 1,704,636 (2,555,636) $ 9,125,776 For purposes of the statements of cash flows, investments with original maturities of three months or less are considered , to meet the definition of cash equivalents. The majority of the investments in which the City's proprietary funds have equity are held by the City's consolidated pool of cash and investments. Since fund equities in this cash management pool have the general characteristics of demand deposits in that additional funds may be deposited at any time and also funds may ' be withdrawn at any time without prior notice or penalty, each fund's equity account is considered a cash equivalent regardless of the maturities of investments held by the pool. Funds with deficit (overdraft) positions within the consolidated pool report the deficits as interfund payables to the City's Capital Improvement Fund. ' , ' C. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates. D. Employee retirement systems and pension plans 1. Defined benefit pension plans ' The City contributes to two separate single-employer, self-administered defined benefit pension plans covering approximately three-fourths of all City employees. The Employees' Pension Plan covers all permanent, full-time City employees who successfully pass the required physical examination, except for firefighters employed prior to July 1, 1963, and certain nonclassified (primarily managerial) employees. The Firemen's Relief and Pension Plan covered eligible � firefighters hired prior to July 1, 1963, and is closed to new entrants. Neither of these plans issues a stand-alone financial report. As indicated, both plans are self-administered, and the costs of administering the plans are paid from the respective plan assets. ' , CJ ' � The Employees' Pension Plan is authorized by and operates under the provisions of Sections 2.391 through 2.411 of the Municipal Code of the City of Clearwater. Plan provisions have been duly approved as required by the voters in referendums. There were no changes in plan provisions or actuarial assumptions for the current year. The normal retirement benefit is a monthly benefit equal to 2-3/4% of average monthly compensation for the highest five of the final ten years of service multiplied by the number of years of service to date of retirement. The minimum benefit under the plan is $300 per month. Eligibility for normal retirement occurs upon completion of at least 10 years of service and the attainment of age 65, or completion of at least 20 years of service and the attainment of age 55, or completion of 30 years of service, for employees engaged in non-hazardous duty. For those engaged in hazardous duty, eligibility occurs upon completion of 20 years of service. The normal monthly benefits are payable for the life of the participant and continue, after the participanYs death, to be paid at the same amount for 5 years to eligible surviving beneficiaries; after 5 years, the survivor annuity is reduced to fifty percent (50%) of the original amount. The plan provides for an annual cost of living increase of up to one and one-half percent (1-1/2%). The plan also provides for disability and death benefits, vesting after completion of 10 years of service and the refund of employee contributions in case of a non-vested termination. There are seven other 67 City of Ciearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 benefit payment options that are computed to be the actuarial equivalent of the normal benefit. Covered employees contribute 8% of their compensation. It is the City's obligation to provide a sufficient additional contribution to maintain the actuarial soundness of the fund but, in any event, not less than 7% of participating employee's compensation per the ordinance governing the plan. The Firemen's Relief and Pension Plan is authorized and operated under the provisions of Subpart B, Article I(Laws of Florida, Chapter 30658, 1955 and amendments), Sections 1 through 27 of the Municipal Charter and Related Law of the City of Clearwater and Chapter 26, Article III, Sections 26.50 through 26.52 of the Municipal Code of the City of Clearwater. There were no changes in plan provisions or actuarial assumptions for the current year. The normal retirement benefit is a monthly benefit in the amount of 50% of the prevailing wage at the date of retirement of the lowest rank held by the participant during the three years immediately preceding retirement plus 2% of such prevailing wage for each year of service in excess of 20 years up to a maximum of 60%. Participants retiring at the age of 65 years are entitled to a benefit of 60% of the prevailing wage of the lowest rank held by the participant during the three years immediately preceding retirement. The ending rate of pay specified above may not exceed the highest rate of pay for the rank of Captain. Eligibility for normal retirement occurs upon completion of 20 years of service or attainment of age 65. The monthly benefits are payable for the life of the participant and continue, after the participant's death, to be paid to certain eligible surviving beneficiaries at an amount that is one-half of the amount received by the participant. Benefits are also provided for children of the deceased participant who are less than 18 years of age subject to certain limitations as to amount. The plan also provides for disability and death benefits and for vesting upon completion of at least 12 years of service. The plan provides for post retirement cost of living increases equal to the increase in the prevailing wage for the rank at which the participant retired with a limitation for those retiring on or after January 1, 1972, of 100% of the initial pension benefit for total cost of living increases. Participating employees are required to contribute 6% of their salaries up to the equivalent of the salary of a fireman holding the rank of Captain. The City is required to contribute a sufficient additional amount to maintain the actuarial soundness of the plan for a period of 35 years commencing January 1, 1972. This contribution is based upon, but not limited to, the amount of property tax that a levy of 0.6 mills would produce. As of the January 1, 2006, actuary valuation date (upon which the current fiscal year funding is based), the membership of the plans was as follows: Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not yet receiving them Active employees: Fully vested Nonvested Total number of participants Employees' Pension Plan 721 58 1114 557 2,450 Firemen's Relief Pension Plan 46 46 � �' LJ ' , LJ ' � L� ' ' � u ' ' For the fiscal year ended September 30, 2007, the covered payroll for the Employees' Pension Fund was $77,562,532. The City's total payroll for the same period was $88,552,813. Annual pension cost and contributions information for the last � three fiscal years for both the Employees' Pension Plan and the Firemen's Relief Pension Plan follows: Year Ended Sept 30 2005 2006 2007 E_mplovees' Pension Plan Annual (a) Pension Cost $ 6,505,390 $12,665,728 $14,027,313 Employer Percent Contributions Contributed $ 5,128,648 (b) 79% $ 7,400,205 (b) 58% $ 10,256,662 (b) 73% : :� Net Pension Asset $ 24,083,096 $ 18,817,573 $ 15,046,922 � ' , � ' � L �' � � ' ' C � � ��J �J ' LJ ' ' ' ' � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2007, are based on actuarial valuations as of January 1, 2006. Since the City's contributions are made during its fiscal year (which commences nine months after the date of the actuarial valuation), the City, with approvai of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of return on investments for a period of one year. (b) The employer contribution is less than the annual pension cost due to a"drawdown" of the net pension asset. The net pension asset is the result of legally required contributions in excess of actuarially required contributions in prior years. Firemen's Relief Pension Plan Year Ended Sept 30 2005 2006 2007 Annual (a) Pension Cost $ 1,331,045 $ 1,397,390 $ 1,467,259 Employer Percent Contributions Contributed $ 1,331,045 100% $ 1,397,390 100% $ 1,467,259 100% a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2007, are based on actuarial valuations as of January 1, 2006. Since the Cit�s contributions are made during its fiscal year (which commences nine months after the date of the actuarial valuation), the City, with approval of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of return on investments for a period of one year. The Employees' Pension Fund net pension asset at September 30, 2007, totaled $15,046,922. It was comprised of the following components: Annual required contributions (ARC) Interest on the net pension asset Adjustment to annual contribution Annual pension cost Fiscal 2007 employer contributions Decrease in net pension asset Net pension asset beginning of year Net pension asset end of year $ 13,180,855 (1,411,318) 2,257,776 14,027,313 10,256,662 (3,770,651) 18,817,573 $ 15,046,922 The amount of the pension asset at transition (October 1, 1997) was $3,503,365. The net pension asset for the Employees' Pension Plan, representing excess contributions as calculated per GASB 27 requirements, is identical in amount to the plan "credit balance" as disclosed in prior years. A total of $10,330,546 of the current net pension asset balance is attributable to governmental funds and therefore is not reflected in the governmental fund financial statements in accordance with the modified accrual basis of accounting. The remaining $4,716,376 attributable to proprietary funds is reflected in the proprietary fund financial statements on the accrual basis of accounting. Each pension fund is accounted for as a pension trust fund; therefore each is accounted for in substantially the same manner as proprietary funds with a"capital maintenance" measurement focus and the accrual basis of accounting. Fund assets, primarily investments, are valued at fair value for balance sheet purposes, in accordance with GASB No. 25. Investment values are determined using the estimated fair value determined by averaging estimated fair values obtained from three or more nationally recognized brokers. As of September 30, 2007, neither the Employees' Pension Fund nor the Firemen's Relief and Pension fund held investments (other than U.S. Government or U.S. Government guaranteed obligations) in any one organization comprising 5% or more of the net assets available for benefits. � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2006, are as foilows: ' � � Emqlovees' Pension Plan ' (1) Assumed rate of return on investments of 7.5% per annum. (2) Projected salary increase at a rate of 6% per year, including both cost-of-living adjustments of 3% and merit or seniority increases at 3%. ' (3) Mortality based on the 1994 Group Annuity Reserving Table. (4) Pre-retirement withdrawals assumed to occur in accordance with a table of declining withdrawal rates for male, fem and hazardous duty categories. � (5) Pre-retirement incidence of disability is assumed to occur in accordance with a standard scale of moderate disability rates (Class 1, 1952 Inter-Company); rates for females assumed to be twice that for males. Firemen's Relief and Pension Plan (1) Assumed rate of return on investments of 4.5% compounded annually. (2) Assumed benefits grow at an annually compounded rate of 2%. There are no longer any active members in this plan. (3) Mortality based on the 1994 Unisex Mortality Table for retired participants; assumed disabled participants will experience mortality according to PBGC Tables 3 and 4 for males and females, respectively. (4) (5) (6) Assumed no withdrawals will occur. Assumed probability of an active participant becoming disabled is zero (no active participants). Assumed value of one mill of ad valorem tax will increase at rate of 5% per year. The actuarial valuation of the Employees' Pension Fund as of January 1, 2002, reflected several changes in actuarial assumptions, as follows: An investment yield of 7.5% assumed whereas the prior valuation assumed 7.0%. Salaries were projected to increase at 6% versus the prior valuation assumption of 5%. Employee turnover rates were revised for male and female employees and separate rates were adopted for hazardous duty employees. The mortality table was changed from the 1983 Group Annuity Mortality Table to the 1994 Group Annuity Reserving Table. And finally, the retirement age assumption was changed from 100% retirement at first eligibility for unreduced benefits to a table of decrements at different ages. The impact of these changes decreased the unfunded actuarial accrued liability from $72,178,974 to $41,332,472. The actuarial valuation of the Firemen's Relief and Pension Fund as of January 1, 2003, reflected two changes in actuarial assumptions. The report assumed an investment yield of 4.5% versus the prior valuation assumption of 5.5%. Also, the mortality pattern assumption was changed to the 1994 Unisex Mortality Table from the 1983 Group Annuity Mortality Table. The impact of these changes increased the unfunded actuarial accrued liability from $3,222,326 to $4,742,517. It is the City's policy to fund pension costs accrued as determined on an actuarial basis. Annual required contributions (ARC) for the Employees' Pension Fund are calculated using the Entry Age Normal with Frozen Initial Liability method. The initial unfunded actuarial accrued liability determined at July 1, 1963, was amortized over a 40-year period; changes made in 1979 and subsequent years, which have had the effect of either increasing or decreasing the actuarial liability, are being amortized over a 30-year period from their effective dates in accordance with State law. The amortization method is level dollar closed. Annual required contributions (ARC) for the Firemen's Relief and Pension Fund are based on a variation of the aggregate actuarial cost method, under which the unfunded portion of the present value of the projected benefits is allocated over the present value of a 6.0% per year increasing annuity for the remaining years in the 35-year funding period which began January 1, 1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the unfunded actuarial liability is determined after consideration of the available assets at the valuation date. The increasing fixed schedule produced by this method was established in 1988 and will be modified in the future only to the extent that a current valuation indicates a higher required cost level, or if the resulting cost level exceeds 60% of 70 ' � ' LJ , , LJ � ' ' � � � u City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2007 ' ' ' , , � ' ' , ' ' � ' �J � , � a mill in a current year. Under the non-standard cost method used for this plan (due to the fact that there are no longer any active employees), all liabilities are unfunded actuarial liabilities and are being amortized according to the closed cost method. This method does not identify or separately amortize unfunded actuarial accrued liabilities. Governmental Accounting Standards Board Statement Nos. 25 and 27 require the presentation, as supplementary information, of certain 6-year historical trend information. The disclosures follow these Notes to the Financial Statements. 2. Police Supplemental Pension Fund A supplemental defined contribution pension plan exists for all eligible policemen, which is funded by earmarked revenues received from the State and is administered by the Board of the Police Supplemental Pension Plan. The revenues received from the State are allocated among eligible police officers on the basis of days employed as Clearwater Police Officers. These revenues, which comprise the plan contributions, amount to $962,760 in the year ended September 30, 2007, and are obtained from an eighty-five one hundredths of one percent (.85)% excise tax on the gross receipts from premiums collected on casualty insurance policies covering property within the City's corporate limits. The current year contributions represent 5.3% of current year covered payroll. The fair value of investments at September 30, 2007, totaled $14,418,786. The Police Supplemental Pension Fund is authorized by and operates under the provisions of Sections 2.471 through 2.480 of the Municipal Code of the City of Clearwater and Chapter 185 of Florida Statutes. Under the plan provisions, the total monies received during each fiscal year, after payment or provision for all costs and expenses of management and operation of the plan, are allocated to participants on the basis of the total number of shares to which each participant is entitled. Each participant is entitled to one share in the fund for each day of service as a police officer of the City. All police officers, as defined in Section 26.70(g) of the Code of Ordinances of the City of Clearwater, who are elected, appointed, or employed full-time by the City are eligible to participate in the plan. There are no employee contributions to the supplemental plan. Benefits are fully vested for a lump sum distribution after twenty years from the date of hire, with provision for partial vesting after ten or more years under the plan. Accumulated benefits are payable in full in case of death while employed by the City or in case of total and permanent job-related disability. Non-vested participants' account values upon termination of employment during any fiscal year are added to the monies received during that fiscal year for allocation to the remaining participants in the plan on the basis of total days worked. For the fiscal year ended September 30, 2007, the payroll of the covered officers' was $18,312,336; the City's total payroll for the same period was $88,552,813. Since the entitlement to benefits is based entirely upon the allocation of monies received by the plan to the participants' share accounts, there is no actuarial liability on the part of either the State or the City. 3. Firefighters Supplemental Pension Fund A supplemental defined contribution pension plan exists for all eligible firemen, which is funded by earmarked revenues received from the State and is administered by the Board of the Clearwater Firefighters Supplemental Pension Plan. The revenues received from the State are allocated among eligible firemen on the basis of days worked during the previous year. These revenues, which comprise the plan contributions, amounted to $1,273,675 in the year ended September 30, 2007, and are obtained from a one and eighty-five one hundredths percent (1.85%) excise tax on the gross receipts from premiums collected on property insurance policies covering property within the City's corporate limits. The contributions represent 10.28% of current year covered payroll. The fair value of investments at September 30, 2007, totaled $8,924,706. As the plan is described as a money purchase pension plan, whereby contributions are allocated based on the number of days worked during the fiscal year ended September 30, and interest earnings allocated based on the beginning balances in each participant's account, there is no actuarial liability on the part of the State or City. 71 City of Ciearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 The Firefighters Supplemental Pension Fund is authorized by and operates under the provisions of Sections 2.441 through 2.450 of the Municipal Code of the City of Clearwater and Chapter 175 of Florida Statutes. Eligibility requires two years of credited calendar year service as a firefighter with concurrent participation in the Employees' Pension Plan. There is no employee contribution to the supplemental plan, and benefits are vested for a lump sum distribution at ten years unless there is early retirement, disability or death. Non-vested participants' account values upon termination of employment are reallocated among the remaining participants on the basis of days worked during the previous year. For the fiscal year ended September 30, 2007, the covered payroll was $12,436,707; the City's total payroll for the same period was $88,552,813. 4. Pension Plan Financial Statements Separate financial statements are provided in the Notes per the guidance of GASB Statement No. 34 as follows: Statement of Fiduciary Net Assets: ASSETS Cash on hand and in banks Equity in pooled cash and investments Managed investment accounts, at fair value: Cash and cash equivalents Government bonds Agency bonds Domestic corporate bonds Domestic stocks Mortgage backed bonds Asset backed securities Commodity exchange-traded funds Domestic equity mutual funds International equity mutual fund Fixed income mutual fund Total managed investment accounts Securities lending collateral Receivables: Interest and dividends Unsettled investment sales Securities lending earnings Due from others Total receivables Total assets LIABILITIES Accounts payable Unsettled investment purchases Obligations under securities lending Total liabilities NET ASSETS Net assets held in trust for pension benefits Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firemen's Supplemental Supplemental $ - $ - $ 19,441 $ - 1,978,729 2,476,432 - - 60,158,318 - 375,430 26,027,444 - 4,541,822 7,206,717 5,547,908 105,183 52,848,543 - 445,081 247,774,179 - 8,862,464 101,538,815 - 88,806 2,300,598 - - 738,535 - - 51,670,677 - - 111,769,980 - - 8,554,054 - - 670,587,860 5,547,908 14,418,786 124,223,509 - - 1,934,168 65,523 21,876,120 - 33,588 - 23,411 - 23,867,287 65,523 820,657,385 8,089,863 663,019 - 68,006,617 - 124,223,509 - 192,893,145 - 566,209 822,084 358,966 808, 943 5,038,149 1,323,869 6,486 8,924,706 59,761 34,566 59,761 34,566 14,497,988 8,959,272 $ 627,764,240 $ 8,089,863 $ 14,497,988 $ 8,959,272 72 � ' , � ' ' ' � ' ' ' ' , ' , ' � CI ' ' ' � ' City of Ciearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 ' ADDITIONS Contributions: Contributions from employer � Contributions from employer - state tax Contributions from employees Total contributions � Investment income: Net appreciation (depreciation) in fair value of investments , Interest Dividends �J ' , 1 � J ' LJ ' , , , Less investment expenses: Investment management / custodian fees Net income from investing activities Securities lending income: Gross earnings Rebate paid Bankfee Net income from securities lending Total additions DEDUCTIONS Benefits and withdrawal payments: Benefits Withdrawal payments Total benefits and withdrawal payments Income (loss) before administrative expenses Administrative expenses Net increase (decrease) Net assets held in trust for pension benefits: Beginning of year End of year Defined Benefit Pension Trust Funds Employees' Firemen's Defined Contribution Pension Trust Funds Police Firefighters Supplemental Supplementai $ 10,256,662 $ 1,467,259 $ - $ - 17,000 - 962,760 1,273,675 6,245,478 - - - 16,519,140 1,467,259 962,760 1,273,675 63,668,535 11,050 1,223,439 806,616 11,048,343 458,772 243,860 151,797 2,547,228 - 148,190 112,038 77,264,106 469,822 1,615,489 1,070,451 2,847,663 - 82,547 76,068 74,416,443 469,822 1,532,942 994,383 8,517,981 - - - (7,960,635) - - - (185,900) - - - 371,446 - - - 91,307,029 1,937,081 2,495,702 2,268,058 20,387,237 895,362 758,838 1,205,981 1,145,266 - - - 21,532,503 895,362 758,838 1,205,981 69,774,526 1,041,719 1,736,864 1,062,077 162,920 3,950 32,487 28,702 69,611,606 1,037,769 1,704,377 1,033,375 558,152,634 7,052,094 12,793,611 7,925,897 $ 627,764,240 $ 8,089,863 $ 14,497,988 $ 8,959,272 5. 401(a) defined contribution plan For all management employees not covered under either of the defined benefit pension plans, the City provides pension benefits through a 401(a) defined contribution plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Empioyees are participants from the date of employment and are fully vested upon enrollment. The plan is totally contributory on the part of the City in an amount equal to 15% of compensation on behalf of the City Manager and the City Attorney; 14% of compensation on behalf of the Chief of Police; and 8% of compensation on behalf of all other management contract employees and Assistant City Attorneys. The City makes bi-weekly contributions to the Trust throughout the plan year to meet its funding obligations under the plan. 73 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 ' ' The International City Management Association Retirement Corporation (ICMA-RC), the trustee for the defined annuity, � offers participants a variety of investment options. The City's total payroll for the fiscal year ended September 30, 2007 was $88,552,813. The Plan members' payroll for the same period totaled $5,623,578. The City's contribution, per the above contribution rates, totaled $477,634. The , assets of the trust, at market value, totaled $3,907,507 at September 30, 2007. 6. Deferred compensation plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Effective January 1, 1997, Federal legislation converted the Section 457 deferred compensation assets from City assets to employee assets. As a result of these changes, plan assets are no longer subject to the claims of the Cit�s general creditors. The City has previously reported the assets and associated liabilities of the deferred compensation plan in the City's financial statements as an agency fund. Effective with the change in legislation these assets are no longer City assets and the fiduciary responsibility has been transferred to the third parry plan administrator. Consequently, effective with fiscal 1997, these assets are no longer reported in the accompanying financial statements, in compliance with Governmental Accounting Standards Board Statement No. 32. E. Securities lending transactions The City of Clearwater Employees' Pension Plan participates in securities lending transactions via a Securities Lending Authorization Agreement with Northern Trust Company, who is also the pension plan's custodian. Securities are loaned versus collateral that may include cash, U.S government securities, and irrevocable letters of credit. U.S. government securities are loaned versus collateral at 102% of the market value of the securities plus any accrued interest. Non-U.S. securities are loaned versus collateral at 105% of the market value plus any accrued interest. i � � ' , , Non-cash collateral cannot be pledged or sold unless the borrower defaults. All securities loans can be terminated on ' demand by either the lender or the borrower. The average term for the pension plans loans at September 30, 2007 was 59 days. Cash "open" collateral is invested in a short term investment pool, the Core USA Collateral Section, which had an average ' weighted maturity of 39 days as of September 30, 2007. Cash collateral may afso be invested separately in "term loans" in which investments match the loan term. These term loans may be terminated on demand by either the lender or the borrower. There were no significant violations of legal or contractual provisions, nor any borrower or lending agent defaults known to , the securities lending agent. The City did not impose any restrictions on the amount of loans made by Northern Trust during fiscal year 2007. Northern Trust has indemnified the City for losses attributable to violations by the entity of the Standard of Care set out in ' the Agreement. Northern Trust has also indemnified the City for all losses as a result of borrower default and for any losses resulting from insufficient collateral. There were no losses during fiscal year 2007. As of September 30, 2007, the City had no credit risk exposure to borrowers. The following is a summary of securities on �oan and their collateral: Securities Collateralized bv Cash Securities Collateralized bv Non-Cash Securitv Tvpe Fair Value Cash Collateral Fair Value Non-Cash Collateral U.S. Corporate Fixed $ 7,280,546 $ 7,466,657 $ 60,289 $ 61,768 U.S. Equity 87,247,055 89,585,438 1,167,774 1,196,753 U.S. Government Fixed 24,115,243 24,653,677 3,158,236 3,232,360 U.S. Agencies 2,466,159 2,517,737 218,966 224,036 Total $ 121,109,003 $ 124,223,509 $ 4,605,265 $ 4,714,917 74 , ' ' ' ' � ' City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 , F. Contingencies and commitments ' � , � �� , L� � ' ' � Loan Guarantee - PACT. Inc. PACT, Inc. is a nonprofit corporation formed in 1978, for the purpose of financing, constructing, and operating a performing arts center. Per a Guaranty Agreement dated May 18, 2001, the City guaranteed $1,000,0000 on a $5,000,000 mortgage note for PACT, Inc., used to refinance a previous mortgage with a similar City guarantee. City management does not consider it probable that this guarantee will be called, and, accordingly, no amounts have yet been accrued or otherwise recorded in the accompanying financial statements to reflect this possibility. Loan Guarantee — Chi Chi Rodriauez Youth Foundation, Inc. On March 30, 1992, the City Council approved a contingent loan guarantee of $1,000,000 on a$2,500,000 note for the Chi Chi Rodriquez Youth Foundation, Inc. The proceeds of the note were used to refinance existing foundation debt incurred to construct a golf course on a parcel of City-owned land. Subsequently, the note was refinanced with Variable Rate Demand Revenue Bonds (Chi Chi Rodriquez Youth Foundation Project), Series 1998, on August 1, 1998. In the event of default, the City is obligated to contribute $1,000,000 out of legally available non-ad valorem revenues. In addition, the City has the option to retire the entire unpaid balance and assume ownership and operation of the golf course facility. Soil and qroundwater contamination site The City owns a property, currently used by the City Gas Division as its administrative offices and operating facility, that has been identified as having soil and groundwater impacts in a June 1990 report prepared by a United States Environmental Protection Agency contractor. The contamination allegedly resulted from the prior operation of a manufactured gas plant (MGP) from approximately 1929 to 1960. Following the discovery of the impacts, the Florida Department of Environmental Protection (FDEP) directed the City to implement measures to delineate the area and vertical extent of the impacts at the Propery, and, if necessary, implement appropriate remedial action. Field activities to delineate the extent of impacts were performed between 1995-2003. The results of the final field work are presented in a Supplemental Assessment Report dated May 2003, in which the City's consultant concluded that field activities to delineate the extent of soil and groundwater impacts were complete and that a risk assessment should be undertaken to evaluate an appropriate remedy for the reported impacts. By letter dated April 19, 2004, FDEP directed the City to install two additional monitoring wells within the source area on site to delineate the vertical extent of groundwater impacts. The City and FDEP previously discussed the potential harm to the underlying aquifer that may result from the installation of monitoring wells through a source area and the underlying clay confining unit during a meeting with FDEP held on November 29, 2003. Based on the advice of its environmental consultant and other specialists consulted concerning this issue, the City has consistently maintained that the installation of the additional monitoring wells requested by FDEP will likely provide a pathway for the migration of impacts into the aquifer underlying the clay confining unit that is otherwise not presently impacted by the former operations of the MGP based on existing perimeter monitoring well data. The City responded to the FDEP by letter dated April 29, 2004, requesting that FDEP advise the City whether the directive to install the additional vertical extent wells was deemed by FDEP to be final agency action that would otherwise be subject to review in an administrative proceeding. The City's April 29, 2004 response inc�uded a request for an extension of time to file an administrative proceeding in the event that FDEP deemed the April 19, 2004 FDEP communication to be final agency action. On January 17, 2008, FDEP issued a letter to the City stating FDEP was willing to replace the need for additional vertical delineation wells with periodic sampling of the existing deep wells, so long as they remain unaffected by the contaminants of concern on the site. Prior to the resolution of this outstanding matter, we are unable to determine, to an acceptable degree of certainty, whether remediation will, in fact, be required at the Properry and, if so, the estimated cost of such remediation. ' During fiscal 2005, the Myrtle Avenue Utility and Roadway Widening project began, requiring extensive dewatering during construction. Consulting, equipment, laboratory, permitting, and labor costs for dewatering in areas where there was suspected or known contamination from the former MGP plant were charged to the City of Clearwater Gas ' Division. Since 1993, the City has spent $677,426 on the MGP assessment activities, which includes both environmental consultant and outside attorney fees The City has pursued insurance claims under certain insurance policies covering the Property for the period of time ' from June 1961 through July 1986. To date, the City has recovered $487,500.00 in insurance settlement payments. On September 17, 2001, the City agreed to reduce its claim against Southern American Insurance Company ("SAIC"), the sole remaining excess carrier against which the City had a colorable claim. The undiscounted value of the , 75 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2007 settlement is $300,000.00, however, because this carrier is in liquidation, we are unable to determine, to an acceptable degree of certainty, the actual amount of payment that may be received by the City. In December 2007, the liquidator managing the SAIC liquidation made an initial payment to the City's in the amount of $96,000. Final distribution should be issued in 2008; however, the total amount is unknown at this time. Contractual Commitment — Water and Sewer Utilitv Under the terms of a 30-year contract between the City and Pinellas County, which is effective through September 30, 2035, the maximum amount of water available to the City is 15 million gallons per day on an annual average basis with no minimum quantity purchase requirement. Effective October 1, 1995, the rate, which is set by the Pinellas County Board of County Commissioners (BOCC), was $1.7902 per 1,000 gallons, including a$.60 per 1,000 gallon surcharge for funding capital projects. On November 19, 2002, the BOCC approved the following rate increases: $1.9334 effective January 1, 2003; $2.0881 effective October 1, 2003; $2.2969 effective October 1, 2004; $2.5266 effective October 1, 2005; and $2.7792 effective October 1, 2006. The cost of water purchased from the County during fiscal years 2006 and 2007 was $8,827,121 and $9,225,544, respectively. Grant Revenues During the current fiscal year and prior fiscal years, the City received revenues and contributions related to grants from the Southwest Water Management District, the State of Florida, the federal government, and other grantors. These grants are for specific purposes and are subject to review and audit by the grantor agencies. Such audits could result in requests for reimbursement for expenditures disallowed under the terms of the grants. Based upon prior experience, City management believes such disallowances, if any, will not be significant. G. Pending litigation In the normal course of operations the City is a defendant in various legal actions, the ultimate resolution of which is not expected to have a material effect on the financial statements, other than for amounts that have been reserved and recorded as liabilities in the Central Insurance Fund. H. Conduit debt The City has one issue of conduit debt outstanding as follows: � _.. . . ._._. Drew Gardens Refunc�ng Bonds / residerrtial rental facility • . . . . • .. � .. •..0 • ��. • �� $ 3,425,000 $ 2,795,000 $ 2,725,000 The bonds do not constitute a debt, liability, or obligation of the City of Clearwater, the State of Florida, or any political subdivision thereof and accordingly have not been reported in the accompanying financial statements. 1. Jointly governed organization Related Organization — The City of Clearwater is a member of the Florida Gas Utility (FGU), a non-profit municipal public entity created for the sole purpose of reducing the costs of purchased gas for its members. FGU is a public body corporate and politic pursuant to Section 163.01 Florida Statutes (the Florida Interlocal Cooperation Act), as amended, and the Interlocal Agreement, dated September 1, 1989, which was subsequently amended by the Amended Interlocal Agreement on June 1, 1992, amended and restated by the Amended and Restated Interlocal Agreement, dated July 1, 1996, and thereafter amended and restated by the Second Amended and Restated Interlocal Agreement, dated July 27, 1999, (the Interlocal Agreement), executed and delivered among FGU and its members, which include municipalities, municipal utilities, and an interlocal agreement consisting of such entities. Due to the diverse needs of municipal utility systems, FGU established itself as a project-oriented agency. Under this structure, each member has the option whether or not to participate in a project. FGU has the authority to, among other things, plan, finance, acquire, construct, manage, operate, deliver, service, utilize, own, broker, exchange, and distribute natural gas, or other energy and energy services, pursuant to the Interlocal Agreement. As of September 30, 2007, FGU has 23 members. Separate audited financial statements of FGU as of September 30, 2007, are available from FGU. 76 � ' � ' LJ ' � ' � ' ' � , ' , ' ' ' ' � City of Clearwater, Florida ' Notes to the Basic Financial Statements For the Year Ended September 30, 2007 ' � J. Related or anization 9 ' Related Organization — The City of Clearwater serves as administrative agent for the Clearwater powntown Development Board (DDB). The Downtown Development Board is an independent special district of the City of Clearwater with an independent board elected by its members and, with its own one mill levy on downtown properties, ' is not financially dependent upon the City. Consequently it is not a component unit of the City of Clearwater and the DDB's cash balance held by the City as administrative agent is reflected in the City's fiduciary agency fund. Separate audited financial statements of the DDB as of September 30, 2007, are available from the DDB. � ' K. Subsequent Event On October 4, 2007, the City issued Gas System Revenue Refunding Bonds, Series 2007, in the amount of $3.7 million, with an average interest rate of 4.00%, in addition to a cash contribution of $4.155 million, to advance refund $7.71 million of outstanding Gas System Revenue Bonds, Series 1998, with an average interest rate of 4.96%. The bond net proceeds of $3.68 million, including receipt of bond reoffering premium of $79,000 and payment of $102,000 in underwriting fees, insurance, and other issuance costs, plus the cash contribution of $4.155 million, were deposited into an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded bonds. As a result, the advance refunded portion of the Gas System Revenue Bonds, Series 1997A, are considered to be defeased and the liability for the bonds has been removed from the government-wide statement of net assets. � The Ciry completed the advance refunding to reduce its total debt service payments over the next 16 years by $3.457 million and to obtain an economic gain (difference between the present values of the old and new debt service payments, less the cash contribution of $4.155 million) of $730,000. ' ' � ' � 1 1 1 1 �� Page 1 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information - Unaudited Schedules of Funding Progress• u. . -� •� �• Actuarial Actuarial Actuarial Unfunded AAL Valuation Value of Accrued Liability Unfunded Funded Covered as a Percentage Date Assets (AAL) - Entry Age AAL Ratio Payroll * of Covered Payroll (a) (b) (b-a) (a/b) (c) ((b-a) /c) 1/1/2002 $ 491,859,015 $ 533,191,487 $ 41,332,472 92% $ 58,929,582 70% 1/1/2003 $ 477,541,459 $ 517,933,495 $ 40,392,036 92°/a $ 65,150,820 62% 1/1/2004 $ 507,256,663 $ 546,915,627 $ 39,658,964 93°/a $ 69,907,473 57% t/1/2005 $ 510,265,274 $ 549,136,184 $ 38,870,910 93% $ 73,836,304 53% 1/1/2006 $ 525,573,824 $ 563,597,580 $ 38,023,756 93% $ 76,010,269 50% 1/1/2007 $ 559,830,590 $ 582,248,127 $ 22,417,537 96°/a $ 79,385,090 28% - ., - ;- - .�� '-� •� �e Actuarial Actuarial Actuarial Unfunded AAL Valuation Value of Accrued Liability Unfunded Funded Covered as a Percentage Date Assets (AAL) - Entry Age AAL Ratio Payroll * of Covered Payroll (a) (b) (b-a) (a/b) (c) ((b-a)/c) 1/1/2002 $ 5,213,993 $ 8,907,427 $ 3,693,434 59% $ - n/a 1/1/2003 $ 5,741,450 $ 10,483,967 $ 4,742,517 55% $ - n/a 1/1/2004 $ 6,190,744 $ 9,974,824 $ 3,784,080 62% $ - n/a 1/1/2005 $ 6,744,043 $ 8,938,022 $ 2,193,979 75% $ - n/a 1/1/2006 $ 7,445,172 $ 8,773,238 $ 1,328,066 85% $ - n/a 1/1/2007 $ 8,375,505 $ 8,320,672 $ (54,833) 101% $ - n/a " Covered payroll is for the calendar year period used for the actuarial valuation. 78 ' ' City of Clearwater, Florida ' Defined Benefit Pension Plans Required Supplementary Information - Unaudited , � r ' ' � ' � � � r 1 ' LJ Schedules of Em�loyer Contributions: Year Ended Sept. 30, 2002 2003 2004 2005 2006 2007 Em�lqyees' Pension Fund Annual (a) Required Contribution $ - $ - $ 4,156,253 $ 5,415,848 $ 11,614,495 $ 13,180,855 Page 2 of 3 Percent Contributed n/a n/a 116% 95% (b) 64% (b) 78% (b) (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2007, are based on actuarial valuations as of January 1, 2006. Since the City's contributions are made during its fiscal year, which commences nine months after the date of the actuarial valuations, the City, with approval of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of return on investments for a period of one year. (b) The actual contribution is less than the annual required contribution due to a"drawdown" of the net pension asset. Year Ended _ Sept.30, 2002 2003 2004 2005 2006 2007 Firemen's Relief Pension Fund $ $ $ $ $ Annual (a) Required Contribution 1,153,732 1,211,210 1,264,729 1,331,045 1,397,390 1,467,259 Percent Contributed 100% 100% 101% 100% 100% 100% (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2007, are based on actuarial valuations as of January 1, 2006. Since the City's contributions are made during its fiscal year, which commences nine months after the date of the actuarial valuations, the City, with approval of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of return on investments for a period of nine months. 79 Page 3 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information — Unaudited Notes To Schedutes Of Required Pension Supplementary Information Annual required contributions for the Employees' Pension Fund are calculated using the Entry Age Normal with Frozen Initial Liability method. The initial unfunded actuarial accrued liability determined at July 1, 1963 is being amortized over a 40-year period; changes made in 1979 and subsequent years which have had the effect of either increasing or decreasing the actuarial liability are being amortized over a 30-year period from their effective dates in accordance with State law. The amortization method is level dollar closed. Annual required contributions for the Firemen's Relief and Pension Fund are based on the aggregate actuarial cost method, under which the unfunded portion of the present value of the projected benefits is allocated over the present value of a 6.0% per year increasing annuity for the remaining years in the 35-year funding period which begin January 1, 1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the unfunded actuarial liabiliry is determined after consideration of the available assets at the valuation date. The increasing fixed schedule produced by this method was established in 1988 and will be modified in the future only to the extent that a current valuation indicates a higher required cost level, or if the resulting cost level exceeds 60% of a mill in a current year. The amortization method for the Firemen's Relief and Pension Fund is a non-standard (no active employees) closed cost method. The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2007, are based on actuarial valuations as of January 1, 2006. Since the City's contributions are made during its fiscal year, which commences nine months after the date of the actuarial valuations, the City, with approval of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of return on investments for a period of one year in the case of the Employees' Pension Fund and for nine months in the case of the Firemen's Relief and Pension Fund. II ' ' � ' � Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2006, in the determination of the annual required ' contribution are as follows: Employees' Pension Fund (1) Assumed rate of return on investments of 7.5% per annum. (2) Projected salary increase at a rate of 6% per year, including cost-of-living adjustments of 3% and merit or seniority increases at 3%. (3) Mortaliry based on the 1994 Group Annuiry Reserving Table for Males with female ages set back five years. (4) Pre-retirement withdrawals assumed to occur in accordance with a table of declining withdrawal rates for male, female, and hazardous duty categories. (5) Pre-retirement incidence of disability assumed to occur in accordance with a standard scale of moderate disabiliry rates (Class 1, 1952 Inter-Company); rates for females assumed to be twice that for males. (6) Assumed inflation rate of 3°/a Firemen's Relief and Pension Fund (1) Assumed rate of return on investments of 4.5% compounded annually. (2) Assumed benefits grow at annually compounded rate of 2% related to cost of living adjustments only. (3) Mortaliry based on the 1994 Unisex Mortaliry Table projected to 2010 for both active and retired participants. (4) Assumed no withdrawals will occur. (5) Assumed probability of an active participant becoming disabled is zero (no active participants). (6) Assumed value of one mill of ad valorem tax will increase at rate of 5% per year. (7) Assumed inflation rate of 3% Significant changes affecting the presented 6-year trend information include: The actuarial valuation of the Employees' Pension Fund as of January 1, 2007, reflected changes in actuarial assumptions as follows: The mortality assumption was updated from the 1994 Group Annuiry Reserving Table to the RP 2000 Combined Healthy Mortaliry Table; the retirement assumption was updated to reflect the City's experience and expected future retirement rates; and the withdrawal assumption was updated to reflect the Ciry's experience and expected future withdrawal rates. The impact of these changes decreased the unfunded actuarial accrued liability from $37,113,063 to $22,417,537. The actuarial valuation of the Employees' Pension Fund as of January 1, 2002, reflected changes in actuarial assumptions as follows: An investment yield of 7.5% versus the prior valuation assumption of 7.0%. Salaries were projected to increase at 6% versus the prior valuation assumption of 5%. Employee turnover rates were revised for male and female employees and separate rates were adopted for hazardous duty employees. The mortality table was changed from the 1983 Group Annuity Mortaliry Table to the 1994 Group Annuity Reserving Table. And finally, the retirement age assumption was changed from 100% retirement at first eligibility for unreduced benefits to a table of decrements at different ages. The impact of these changes decreased the unfunded actuarial accrued liability from $72,178,974 to $41,332,472. The actuarial valuation of the Firemen's Relief and Pension Fund as of January 1, 2003, reflected two changes in actuarial assumptions. The report assumes an investment yield of 4.5% versus the prior valuation assumption of 5.5%. Also, the current mortality pattern assumption uses the 1994 Unisex Morality Table versus the 1983 Group Annuity Mortality Table used for previous valuations. The impact of these changes increased the unfunded actuarial accrued liability from $2,648,428 to $4,742,517. :� ' � , � � � � � � � ' ' ' ' Nonmajor Governmental Funds l 1 � Special Revenue Funds � � Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. � Special Programs Fund — to account for grants and contributions, the use of which is restricted for certain 1 programs. 1 Community Redevelopment Agency Fund — to account for receipt, custody, and expenditure of properry tax ' increment funds associated with related redevelopment projects. ' Local Housing Assistance SHIP Trust Fund — to account for monies allocated to the City under the State Local Housing Assistance SHIP grant program. � � Pinellas County Local Housing Assistance Trust Fund — to account for monies allocated to the City under the Pinellas County Local Housing Assistance grant program. ' � ' Eil Debt Service Funds Debt service funds provide separate accounting records for all debt interest, principal, and reserve requirements for general government long-term. Debt of proprietary funds is serviced through restricted accounts maintained within the individual enterprise or internal service fund associated with the debt. Improvement Revenue Refunding Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of public service tax and communications services tax revenues from the General Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Infrastructure Sales Tax Revenue Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Notes and Mortgages Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of General Revenues from the General and Special Revenue Funds and the payment of currently maturing installments of principal and interest on the various note and mortgage obligations of the governmental funds during each fiscal year. Spring Training Facility Revenue Bonds Debt Service Fund — to account for the advance monthly accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue Fund and the payment of currently maturing installments of principal and interest during each fiscal year. 82 ' ' � J � �I IJ � r Capital Projects Funds Capital projects funds are used to account for resources to be used for the acquisition or construction of � major capitai improvement projects, other than those financed by proprietary funds. A major capital improvement project is a properry acquisition, a major construction undertaking, or a major improvement to ' an existing facility or properry, with a cost greater than $25,000 and a minimum useful life of at least five years. , Community Redevelopment Agency Capital Projects Fund — to provide separate accounting records for the ' acquisition or construction of capital improvement projects for the Clearwater Community Redevelopment Agency. � � l_J � � ' 83 ASSETS Cash on hand and in banks Equity in pooled cash and investments Receivables: Mortgage notes Rehab advances Other I nvestments Due from other governments - grants Land held for resale Advances to other funds Total assets LIABILITIES Accounts and contracts payable Accrued payroll Due to other governmental entities Construction escrows Advances from other funds Deferred revenue Total liabilities FUND BALANCES Reserved for: Encumbrances Advances and notes Grant programs Land held for resale Debt service: Current requirements - principal Current requirements - interest Future requirements Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds Total fund balances Total liabilities and fund balances City of Clearwater, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2007 � ' � Special Revenue Funds SHIP Pinellas County ' Community Local Housing Local Housing Special Redevelopment Assistance Assistance � Programs Agency Trust Trust Total $ - $ 100 $ - $ - $ 100 � 10,120,966 401,216 777,654 817,746 12,117,582 4,584,822 - 6,522,534 300,000 11,407,356 � 11,751 - 4,689 - 16,440 7,748 54,938 - - 62,686 552,834 - - - 552,834 � 84,701 1,914,050 - - 1,998,751 350,000 - - - 350,000 � $ 15,712,822 $ 2,370,304 $ 7,304,877 $ 1,117,746 $ 26,505,749 $ 64,352 $ 316 $ 38,502 $ $ 103,170 27,803 - - - 27,803 8,931 48,000 - - 56,931 45,591 - 13,824 165,654 225,069 - 350,000 - - 350,000 - 54,938 - - 54,938 146,677 453,254 52,326 165,654 817,911 4,934,822 6,417,665 84,701 3,000 1,914,050 6,522,534 - 3,000 300,000 11,757,356 - 6,417,665 - 1,998,751 � � � � � 4,128,957 - 730,017 652,092 5,511,066 ' 15,566,145 1,917,050 7,252,551 952,092 25,687,838 �� $ 15,712,822 $ 2,370,304 $ 7,304,877 $ 1,117,746 $ 26,505,749 ,� The notes to the financial statements are an integral part of this statement. 84 , ' � ' ' ' � r � � � ' ' � � , � � � � ' Debt Service Funds Capital Spring Project Improvement Infrastructure Training Fund Total Revenue Sales Tax Facility Community Nonmajor Refunding Revenue Revenue Redevelopment Governmental Bonds Bonds Bonds Total Agency Funds $ _$ _$ _$ _$ _$ ,00 234,507 5,341,900 26,345 5,602,752 4,548,927 22,269,261 _ - - - - 11,407,356 _ _ - - - 16,440 _ - - - - 62,686 922,561 - 403,633 1,326,194 - 1,326,194 _ _ _ _ - 552,834 - - - - - 1,998,751 _ _ _ _ - 350,000 $ 1,157,068 $ 5,341,900 $ 429,978 $ 6,928,946 $ 4,548,927 $ 37,983,622 $ - $ - $ - $ - $ - $ 103,170 - - 27,803 - - 56,931 - - 225,069 - - 350,000 - - 54,938 - - 817,911 - 3,000 - 11,757,356 - 6,417,665 - 1,998,751 220,000 5,087,500 291,667 5,599,167 - 5,599,167 76,068 254,400 48,683 379,151 - 379,151 861,000 - - 861,000 - 861,000 - - - - - 5,511,066 - - 89,628 89,628 - 89,628 - - - - 4,548,927 4,548,927 1,157,068 5,341,900 429,978 6,928,946 4,548,927 37,165,711 $ 1,157,068 $ 5,341,900 $ 429,978 $ 6,928,946 $ 4,548,927 $ 37,983,622 85 i City of Clearwater, Florida � Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2007 � Special Revenue Funds , REVENUES Intergovernmental Federal State Local Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues: EXPENDITURES Current: General government Public safety Physical environment Economic environment Human services Culture and recreation Debt service: Principal Interest & 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 change in fund balances Fund balances - beginning Fund balances - ending SHIP Pinellas County Community Local Housing Local Housing � Special Redevelopment Assistance Assistance Programs Agency Trust Trust Total $ 2,803,998 $ - $ - $ - $ 2,803,998 168,117 - 298,704 - 466,821 268,814 1,279,748 - 944,456 2,493,018 1,509,525 - - - 1,509,525 577,693 - - - 577,693 475,705 141,428 124,173 9,098 750,404 974,375 61,241 - - 1,035,616 6,778,227 1,482,417 422,877 953,554 9,637,075 69,254 1,730,917 414,847 763,659 121,078 2,037,023 287,968 513,902 � � � � 69,254 1,730,917 � 414,847 1,565,529 121,078 � 2,037,023 252,163 - - - 252,163 � 5,388,941 287,968 513,902 - 6,190,811 1,389,286 1,194,449 (91,025) 953,554 3,446,264 � 822,317 3,568,784 - 4,391,101 (1,148,891) (4,760,233) (125,326) (1,462) (6,035,912) (326,574) (1,191,449) (125,326) (1,462) (1,644,811) 1,062,712 3,000 (216,351) 952,092 1,801,453 14,503,433 1,914,050 7,468,902 - 23,886,385 $ 15,566,145 $ 1,917,050 $ 7,252,551 $ 952,092 $ 25,687,838 � � � � �� The notes to the financial statements are an integral part of this statement. � 86 � � � � � , � � � ' � � � � 1 � � � , Debt Service Funds Improvement Infrastructure Revenue Sales Tax Notes Refunding Revenue and Bonds Bonds Mortgages Spring Training Facility Revenue Bonds Total Capital Project Fund Community Redevelopment Agency Total Nonmajor Governmental Funds $ - $ - $ - $ 1,087,654 $ 1,087,654 $ - $ 3,891,652 - � - - - - - 466,821 - - - - - - 2,493,018 - - - - - - 1,509,525 - - - - - - 577,693 68,696 172,073 - 24,905 265,674 84,904 1,100,982 - - - - - - 1,035,616 68,696 172,073 - 1,112,559 1,353,328 84,904 11,075,307 - - - - - - 69,254 - - - - - 1,730,917 - - - - - - 414,847 - - - - - 43,069 1,608,598 - - - - - - 121,078 - - - - - - 2,037,023 320,000 5,875,000 507,343 490,000 7,192,343 - 7,192,343 464,280 888,518 53,842 592,124 1,998,764 - 1,998,764 - - - - - - 252,163 784,280 6,763,518 561,185 1,082,124 9,191,107 43,069 15,424,987 (715,584) (6,591,445) (561,185) 30,435 (7,837,779) 41,835 (4,349,680) 720,464 6,699,883 561,185 - 7,981,532 4,507,092 16,879,725 - - - - - - (6,035,912) 720,464 6,699,883 561,185 - 7,981,532 4,507,092 10,843,813 4,880 108,438 - 30,435 143,753 4,548,927 6,494,133 1,152,188 5,233,462 - 399,543 6,785,193 - 30,671,578 $ 1,157,068 $ 5,341,900 $ - $ 429,978 $ 6,928,946 $ 4,548,927 $ 37,165,711 87 This Page /ntentionally Left B/ank E:�:7 � � � � � � � � � � ' � � � � � � � , i � � � � , � � � � � � � � � � ' � ' City of Clearwater, Florida Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (GAAP Basis) Community Redevelopment Agency For the Year Ended September 30, 2007 REVENUES Intergovernmental - Local Investment earnings Miscellaneous Total revenues EXPENDITURES Current - Economic environment Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Capital grants and contributions Transfers in Transfers out Totai other financing sources (uses) Excess (Deficiency) of revenues and other sources over expenditures and other uses Fund balances - beginning Fund balances - ending Budgeted Amounts Original Final Variance with Final Budget Actual Positive Amounts (Negative) $ 1,389,211 $ 1,279,748 $ 1,279,748 $ - 15,000 140,000 141,428 1,428 60,991 60,991 61,241 250 1,465,202 1,480,739 1,482,417 1,678 447,345 448,666 287,968 160,698 447,345 448,666 287,968 160,698 1,017,857 1,032,073 1,194,449 162,376 1,114,721 3,568,784 3,568,784 - (2,132,578) (4,600,857) (4,760,233) (159,376) (1,017,857) (1,032,073) (1,191,449) (159,376) - - 3,000 3,000 1,914,050 1,914,050 1,914,050 - $ 1,914,050 $ 1,914,050 $ 1,917,050 $ 3,000 The notes to the financial statements are an integral part of this statement. :• This Page Intentionally Left B/ank � � � � � 1 �� 1 � � � � J � � � , � [� 90 � , � � ' � Nonmajor Enterprise Funds ' Enter rise funds are used to account for the financin , ac uisition, o eration, and maintenance of P 9 q P � governmental facilities that are supported primarily by user charges. � Recycling Utility Fund — to account for the financing, processing, operation and maintenance of the City's ' recycling service from charges made to users of the services and funds received from the sale of recyclable commodities processed to meet market requirements. The service area extends beyond the City limits , Marine & Aviation Fund - to account for the financing, operation and maintenance of the City marina and 1 associated real property on Clearwater Beach from rents collected from users; and to account for the City's airpark operations. � � Parking System Fund - to account for the financing, construction, operation and maintenance of the City's parking system, including on- and off-street parking on Clearwater Beach and Downtown Clearwater, from � parking charges. � Harborview Center Fund - to account for the operation of the City's convention center and related facilities. � � , ' 91 City of Clearwater, Florida Combining Statement of Net Assets Nonmajor Enterprise Funds September 30, 2007 ASSETS Current assets: Cash on hand and in banks Equity in pooled cash and investments Accounts and contracts receivable: Billed Unbilled charges estimated Less: Allowance for uncollectable accounts Total receivables, net Inventories, at cost Prepaid expenses and other assets Total current assets Noncurrent assets: Restricted equity in pooled cash Net pension asset Capital assets: Land and other nondepreciable assets Capitai assets, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Deposits Unearned revenue and liens Current portion of long-term liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Total current liabilities Noncurrent liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Advances from other funds Total non-current liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted for: Parking improvements Unrestricted Total net assets Recycling Marine & Parking Harborview Utility Aviation System Center Total $ - $ 1,200 $ 19,525 $ 525,361 $ 546,086 4,224,222 241,483 15,371,163 310,612 20,147,480 86,650 - - 70,790 157,440 232,833 - - - 232,833 319,483 - - 70,790 390,273 (2,337) - - - (2,337) 317,146 - - 70,790 387,936 - 18,032 - 24,588 42,620 - - - 26,684 26,684 4,541,368 260,715 15,390,688 958,035 21,150,806 - - 1,300,000 - 1,300,000 169,686 105,777 92,029 - 367,492 i [� i � �_J � � � - 2,080,986 883,612 926,000 3,890,598 � 866,400 2,586,195 2,078,715 7,114,841 12,646,151 1,036,086 4,772,958 4,354,356 8,040,841 18,204,241 5,577,454 5,033,673 19,745,044 8,998,876 39,355,047 50,581 33,832 4,465 385,073 473,951 26,493 31,071 21,677 - 79,241 - 20,850 2,875 267,047 290,772 - - 12,227 12,500 24,727 3,279 10,851 5,818 - 19,948 140,639 - 43,071 - 183,710 220,992 96,604 90,133 664,620 1,072,349 ' ILI � 32,812 108,591 58,227 - 199,630 167,349 - 34,956 - 202,305 � - - 4,000,000 - 4,000,000 200,161 108,591 4,093,183 - 4,401,935 421,153 205,195 4,183,316 664,620 5,474,284 558,412 4,667,181 2,884,300 8,040,841 16,150,734 � - - 1,300,000 - 1,300,000 4,597,889 161,297 11,377,428 293,415 16,430,029 � $ 5,156,301 $ 4,828,478 $ 15,561,728 $ 8,334,256 $ 33,880,763 The notes to the financial statements are an integral part of this statement. 4� � , � � � City of Clearwater, Florida Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended September 30, 2007 � � Operating revenues: Sales to customers Service charges to customers User charges to customers � Rentals Total operating revenues ' � , � � � � Operating expenses: Personal services Purchases for resale Operating materials and supplies Transportation Utility service Depreciation Interfund administrative charges Other current charges: Professional fees Advertising Communications Printing and binding Insurance Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Provision for estimated uncollectable accounts Total other current charges Total operating expenses Operating income (loss) , Nonoperating revenues (expenses): Investment earnings Interest expense Other 1 Total nonoperating revenue (expenses) Income (loss) before transfers Capital grants and contributions , Transfers in Transfers out Changes in net assets � Total net assets - beginning Total net assets - ending L_� � � Recycling Marine & Parking Harborview Utility Aviation System Center Totals $ 1,647,998 $ 2,834,810 $ - $ - $ 4,482,808 7,883 - - - 7,883 1,547,558 113,605 4,525,815 - 6,186,978 - 1,459,276 124,601 1,844,830 3,428,707 3,203,439 4,407,691 4,650,416 1,844,830 14,106,376 1,010,106 1,041,417 780,633 - 2,832,156 564,495 2,527,424 - 462,403 3,554,322 89,975 63,725 89,712 102,167 345,579 384,214 18,957 52,236 37 455,444 11,494 182,031 55,698 176,311 425,534 276,388 395,595 228,814 543,915 1,444,712 465,580 220,691 846,880 3,340 1,536,491 14,000 59,881 756,367 1,113,333 1,943,581 7,884 14,841 1,055 25,252 49,032 5,605 25,907 17,784 17,710 67,006 - - 3,478 1,397 4,875 37,520 82,670 56,570 25,633 202,393 8,187 37,518 31,742 104,235 181,682 972 3,681 305,826 11,832 322,311 10,825 79,114 174 12,250 102,363 26,360 33,080 30,890 29,183 119,513 - 68 - 35,421 35,489 4,648 - - - 4,648 116,001 336,760 1,203,886 1,376,246 3,032,893 2,918,253 4,786,600 3,257,859 2,664,419 13,627,131 285,186 (378,909) 1,392,557 (819,589) 479,245 187,763 7,750 712,883 29,690 938,086 (11,567) - (198,896) - (210,463) 83,371 139,527 4,355 1,354 228,607 259,567 147,277 518,342 31,044 956,230 544,753 (231,632) 1,910,899 (788,545) 1,435,475 - 17,840 - - 17,840 - 50,000 - 342,240 392,240 (153,100) (208,350) (1,043,190) - (1,404,640) 391,653 (372,142) 867,709 (446,305) 440,915 4,764,648 5,200,620 14,694,019 8,780,561 33,439,848 $ 5,156,301 $ 4,828,478 $ 15,561,728 $ 8,334,256 $ 33,880,763 The notes to the financial statements are an integral part of this statement. 93 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments to suppliers Cash payments to employees Cash payments to other funds Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in from other funds Transfers out to other funds Grant revenue Other nonoperating revenues Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on debt Interest paid Acquisition of capital assets Sale of capital assets Proceeds from issuance of debt Capital contributed by other governmental entities 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 in cash and cash equivalents City of Clearwater, Florida Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended September 30, 2007 Recycling Marine & Parking Harborview Utility Aviation System Center Totals $ 3,111,963 $ 4,407,803 $ 4,652,760 $ 1,883,388 $ 14,055,914 (706,774) (3,149,235) (1,279,201) (2,089,832) (7,225,042) (978,624) (995,822) (773,893) - (2,748,339) (892,919) (160,615) (970,963) (4,881) (2,029,378) 533,646 102,131 1,628,703 (211,325) 2,053,155 - 50,000 - 342,240 392,240 (153,100) (208,350) (1,043,190) - (1,404,640) 83,371 - - - 83.371 - 139,527 4,356 1,354 145,237 (69,729) (18,823) (1,038,834) 343,594 (783,792) (128,875) - (103,392) - (232,267) (11,567) - (198,896) - (210,463) (71,613) (21,329) (9,585) - (102,527) - - 12,085 - 12,085 82,219 - - - 82,219 - 70,025 - - 70,025 (129,836) 48,696 (299,788) - (380,928) 187,763 7,750 712,883 29,690 938,086 187,763 7,750 712,883 29,690 938,086 521,844 139,754 1,002,964 161,959 1,826,521 Cash and cash equivalents at beginning of year 3,702,378 102,929 15,687,724 674,014 20,167,045 Cash and cash equivalents at end of year $ 4,224,222 $ 242,683 $ 16,690,688 $ 835,973 $ 21,993,566 Cash and cash equivalents classified as: Cash on hand and in banks $ - $ 1,200 $ 19,525 $ 525,361 $ 546,086 Equity in pooled cash and investments 4,224,222 241,483 15,371,163 310,612 20,147,480 Restricted equity in pooled cash and investments - - 1,300,000 - 1,300,000 Total cash and cash equivalents $ 4,224,222 $ 242,683 $ 16,690,688 $ 835,973 $ 21,993,566 The notes to the financial statements are an integral part of this statement. 94 � ' � � � , � ' � i � , ' � � � � � ' City of Clearwater, Florida Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended September 30, 2007 Recycling Marine & Parking Harborview Utility Aviation System Center Reconciliation of opereting income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Change in assets and liabilities: (Increase) decrease in accounts receivabie (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payable Increase (decrease) in deposits Increase (decrease) in unearned revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided (used) by operating activities Totals $ 285,186 $ (378,909) $ 1,392,557 $ (819,589) $ 479,245 276,388 395,595 228,814 543,915 1,444,712 (86,828) - 25 (32,177) (118,980) - 15,269 - (8,965) 6,304 - - - (1,343) (1,343) 27,418 24,471 (1,752) 36,099 86,236 - 111 22 58,235 58,368 - - 2,297 12,500 14,797 33,182 23,378 21,493 - 78,053 (1,700) 22,216 (14,753) - 5,763 248,460 481,040 236,146 608,264 1,573,910 $ 533,646 $ 102,131 $ 1,628,703 $ (211,325) $ 2,053,155 95 This Page /ntentionally Left Blank ., l� � � � `I , i 1 t �l 1 � � ' � L! � �' LJ, � � , ' ' Internal Service Funds � Internal service funds are used to account for services and commodities furnished by a designated department to other departments within the City or to other governments on a cost reimbursement basis. , ' Garage Fund - to account for the cost of automotive and other motorized equipment of the City. The acquisition cost of new or upgraded equipment is financed through user departments and the asset value is � simultaneously contributed to the Garage Fund. The cost of replacement of existing equipment is financed by the Garage Fund. i � Administrative Services Fund - to account for various support activities including information technology, printing, mailing, and telephone services. The cost for these services is charged to user departments based on the cost of providing units of service. , , General Services Fund - to account for various support activities including building maintenance and custodial services for all City departments and facilities. The cost for these services is charged to user departments ' based on the cost of providing units of service. jCentral Insurance Fund - to account for the City's limited self-insurance program wherein all funds are assessed charges based on damage claims incurred and on managemenYs assessment of individual funds' ! risk exposure. All claims and premiums are paid out of this fund, together with other costs necessary to administer the program. Medical insurance premiums are also paid from this fund. � � i 9� City of Clearwater, Florida Combining Statement of Net Assets Internal Service Funds September 30, 2007 ASSETS Current assets: Cash on hand and in banks Equity in pooled cash and investments Other receivables Due from other funds Inventories, at cost Prepaid expenses and other assets Total current assets Noncurrent assets: Interest receivable Advances to other funds Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued interest payable Due to other funds Unearned revenue Current portion of long-term liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Claims payable Total current liabilities (payable from current assets) Noncurrent liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Advances from other funds Claims payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets Garage Administrative General Central Fund Services Services Insurance Total $ - $ 1,800 $ - $ - $ 1.800 3,673,744 4,876,518 820,240 34,528,289 43,898,791 - - - 135,000 135,000 - - - 91,654 91,654 331,143 - - - 331,143 - - - 1,370,240 1,370,240 4,004,887 4,878,318 820,240 36,125,183 45,828,628 - - - 2,824,881 2,824,881 307,210 615,354 200,804 51,839 1,175,207 1,100,712 - 103,691 - 1,204,403 � 12,178,321 3,350,977 134,689 14,277 15,678,264 13,586,243 3,966,331 439,184 2,890,997 20,882,755 17,591,130 8,844,649 1,259,424 39,016,180 66,711,383 , 285,806 189,702 26,480 198,809 700,797 71,956 123,236 57,140 14,764 267,096 - 135,000 - 135,000 - 91,654 - - 91,654 957,083 - - - 957,083 � , 14,945 32,704 15,207 4,599 67,455 3,191,672 248,175 32,492 - 3,472,339 � - - - 2,209,500 2,209,500 4,521,462 820,471 131,319 2,427,672 7,900,924 149,561 327,286 152,183 46,023 675,053 5,785,264 252,291 64,018 - 6,101,573 - 824,881 - - 824,881 - - - 6,539,500 6,539,500 5,934,825 1,404,458 216,201 6,585,523 14,141,007 10,456,287 2,224,929 347,520 9,013,195 22,041,931 4,302,097 2,850,511 141,870 14,277 7,308,755 2,832,746 3,769,209 770,034 29,988,708 37,360,697 $ 7,134,843 $ 6,619,720 $ 911,904 $ 30,002,985 $ 44,669,452 The notes to the financial statements are an integral part of this statement. .� � � � � � � � City of Clearwater, Florida ' Combining Statement of Revenue, Expenses, and Changes in Fund Net Assets Internal Service Funds For the Year Ended September 30, 2007 � � � � r ' 1 � � � � � �' � ' u ' � i Operating revenues Billings to departments Operating expenses: Personal services Purchases for resale Operating materials and supplies Transportation Utility service Depreciation Interfund administrative charges Other current charges: Professional fees Communications Printing and binding Insurance Premiums Claims incurred Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Total other current charges Total operating expenses Operating income (loss) Nonoperating revenues (expenses) Investment earnings Interest expense Gain (loss) on exchange of assets Other Total nonoperating revenue (expenses) Income (loss) before transfers Capital grants and contributions Transfers in Transfers out Change in net assets Total net assets - beginning, as restated Total net assets - ending Garage Administrative General Central Fund Services Services Insurance ToWI $ 11,305,537 $ 9,150,384 $ 4,168,025 $ 19,473,770 $ 44,097,716 2,472,739 3,521,472 131,881 2,888 124,281 4,223,194 396,500 294,318 19,059 4,456,207 125,545 102,775 5,678 723,335 63,880 195,704 1,347,405 30,307 2,228,003 244,054 140,524 508,102 15,978 48,030 475,010 4,349 5,849 3,569 86,198 12,464 9,631,959 3,521,472 505,829 252,036 638,061 4,966,076 460,380 576,220 1,426,958 30,307 47,210 57,670 18,300 13,556,359 13,679,539 563,074 - - 1,651,708 2,214,782 - 870,286 822,356 14,875 1,707,517 2,767 701,002 17,275 1,413 722,457 27,495 91,055 23,447 65,603 207,600 102,740 199,680 74,700 13,130 390,250 4,963 - - - 4,963 1,061,626 3,493,109 1,004,108 15,401,750 20,960,593 11,934,581 8,970,529 4,140,769 15,890,527 40,936,406 (629,044) 179,855 27,256 3,583,243 3,161,310 170,967 215,534 37,936 1,623,842 2,048,279 (340,494) (64,158) (5,026) - (409,678) 320,058 (55,305) - - 264,753 163,779 - 223 - 164,002 314,310 96,071 33,133 1,623,842 2,067,356 (314,734) 275,926 60,389 5,207,085 5,228,666 - 5,661 - - 5,661 188,870 52,023 - 139,760 380,653 - (11,481) - (50,000) (61,481) 188,870 46,203 - 89,760 324,833 (125,864) 322,129 60,389 5,296,845 5,553,499 7,260,707 6,297,591 851,515 24,706,140 39,115,953 $ 7,134,843 $ 6,619,720 $ 911,904 $ 30,002,985 $ 44,669,452 The notes to the financial statements are an integral part of this statement. �. CASH FLOWS FROM OPERATING ACTIVITIES Cash received from other funds Cash payments to suppliers Cash payments to employees Cash payments to other funds Net cash provided by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in from other funds Transfers out to other funds Receipt of cash on loans to/from other funds Other nonoperating revenues Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on debt Interest paid Acquisition of capital assets Sale of capital assets Proceeds from issuance of debt 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 in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents classified as: Cash on hand and in banks Equity in pooled cash and investments Total cash and cash equivalents City of Clearwater, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2007 � � � Garage Administrative General Central � Fund Services Services Insurance Total $ 11,305,537 $ 9,150,384 $ 4,168,025 $ 19,473,770 $ 44,097,716 � (4,420,139) (2,946,741) (1,601,512) (16,095,155) (25,063,547) (2,366,839) (4,277,814) (2,137,352) (460,293) (9,242,298) � (661,056) (742,438) (290,330) (41,882) (1,735,706) 3,857,503 1,183,391 138,831 2,876,440 8,056,165 188,871 52,023 - (11,481) 99,973 - 288,844 40,542 (3,355,592) (250,816) (340,494) (19,531) (4,174,293) (655,918) 320,058 - 3,408,001 280,693 223 � 139,760 380,654 (50,000) (61,481) � 2,653,091 2,653,091 - 100,196 223 2,742,851 3,072,460 (35,072) - (3,641,480) (5,026) - (365,051) (10,750) - (4,840,961) - - 320,058 - - 3,688,694 � � , (4,142,320) (645,572) (50,848) - (4,838,740) � 170,967 215,534 37,936 1,623,842 2,048,279 170,967 215,534 37,936 1,623,842 2,048,279 174,994 793,895 126,142 7,243,133 8,338,164 3,498,750 4,084,423 694,098 27,285,156 35,562,427 $ 3,673,744 $ 4,878,318 $ 820,240 $ 34,528,289 $ 43,900,591 $ - $ 1,800 $ - $ - $ 1,800 3,673,744 4,876,518 820,240 34,528,289 43,898,791 $ 3,673,744 $ 4,878,318 $ 820,240 $ 34,528,289 $ 43,900,591 The notes to the financial statements are an integral part of this statement. 100 ' � � ' , , � � , � � 1 � � , � � � � ' ' ' ' � � i City of Clearwater, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2007 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payable (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided (used) by operating activities Noncash investing, capital and financing activities: Loss on disposal of capital assets Garage Administrative General Central Fund Services Services Insurance Total $ (629,044) $ 179,855 $ 27,256 $ 3,583,243 $ 3,161,310 4,223,194 723,335 15,978 3,569 4,966,076 - 233 - - 233 (55,812) - - - (55,812) - - - 89,128 89,128 213,265 101,575 4,946 (814,217) (494,431) 91,250 151,203 64,101 16,591 323,145 14,650 27,190 26,550 (1,874) 66,516 4,486,547 1,003,536 111,575 (706,803) 4,894,855 $ 3,857,503 $ 1,183,391 $ 138,831 $ 2,876,440 $ 8,056,165 - $ (55,305) - - (55,305) 101 This Page lntentionally Left Blank � , � � � � ' ' � � � � ' �l � ' � ' 4_ � 102 � i 1 1 ' ' ' � ' � � � � ' , , , ' , � Fiduciary Funds Fiduciary Funds are used to account for resources that are managed in a trustee capacity or as an agent for other parties or funds. Employees' Pension Fund - to account for the financial operation and condition of the major employee retirement system. Firemen's Relief and Pension Fund - to account for the financial operation and condition of the Firemen's Relief and Pension Fund, closed to new members in 1962, containing 48 retired members and no active members. Police Supplemental Pension Fund - to account for the financial operation and condition of a supplemental pension plan funded by the State for sworn police officers. Firefighters Supplemental Pension Fund - to account for the financial operation and condition of a supplemental pension plan funded by the State for firefighters. Treasurer's Escrow Agency Fund - to account for the receipt, custody, and expenditure of funds held temporarily in trust for other parties. 103 City of Clearwater, Florida Combining Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2007 Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firemen's Supplemental Supplemental ASSETS Cash on hand and in banks $ Equity in pooled cash and investments Managed investment accounts, at fair value: Cash and cash equivalents Government bonds Agency bonds Domestic corporate bonds Domestic stocks Mortgage backed bonds Asset backed securities Commodity exchange-traded funds Domestic equity mutual funds Internationai equity mutual funds Fixed income mutual funds Total managed investment accounts Securities lending collateral Receivables: Interest and dividends Unsettled investment sales Securities lending eamings Due from others Total receivables Totals - $ - $ 19,441 $ - $ 19,441 1,978,729 2,476,432 - - 4,455,161 60,158,318 - 375,430 566,209 61,099,957 26,027,444 - 4,541,822 822,084 31,391,350 7,206,717 5,547,908 105,183 358,966 13,218,774 52,848,543 - 445,081 808,943 54,102,567 247,774,179 - 8,862,464 5,038,149 261,674,792 101,538,815 - 88,806 1,323,869 102,951,490 2,300,598 - - 6,486 2,307,084 738,535 - - - 738,535 51,670,677 - - - 51,670,677 111,769,980 - - - 111,769,980 8,554,054 - - 8,554,054 670,587,860 5,547,908 14,418,786 8,924,706 699,479,260 124,223,509 - - - 124,223,509 1,934,168 65,523 59,761 34,566 2,094,018 21,876,120 - - - 21,876,120 33,588 - - - 33,588 23,411 - - - 23,411 23,867,287 65,523 59,761 34,566 24,027,137 Total assets 820,657,385 8,089,863 14,497,988 8,959,272 852,204,508 LIABILITIES Accounts payable 663,019 - - - 663,019 Unsettled investment purchases 68,006,617 - - - 68,006,617 Obligations under securities lending 124,223,509 - - - 124,223,509 Totalliabilities 192,893,145 - - 192,893,145 NET ASSETS , Net assets held in trust for pension benefits $ 627,764,240 $ 8,089,863 $ 14,497,988 $ 8,959,272 $ 659,311,363 The notes to the financial statements are an integral part of this statement. 104 � City of Clearwater, Florida ' Combining Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2007 , , ADDITIONS ' Contributions: Contributions from employer ' Contributions from employer - state tax Contributions from employees Total contributions � Investment income: Net appreciation (depreciation) in fair value of investments , Interest Dividends � Less investment expenses: Investment management / custodian fees Net income from investing activities ' � � Securities lending income: Gross earnings Rebate paid Bank fee Net income from securities lending 7otal additions ' DEDUCTIONS Benefits and withdrawal payments: Benefits ' Withdrawal payments Total benefits and withdrawal payments � ' , � Income (loss) before administrative expenses Administrative expenses Net increase (decrease) Net assets held in trust for pension benefits: Beginning of year End of year Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firemen's Supplemental Supplemental Totals $ 10,256,662 $ 1,467,259 $ - $ - $ 11,723,921 17,000 962,760 1,273,675 2,253,435 6,245,478 - - - 6,245,478 16,519,140 1,467,259 962,760 1,273,675 20,222,834 63,668,535 11,050 1,223,439 806,616 65,709,640 11,048,343 458,772 243,860 151,797 11,902,772 2,547,228 - 148,190 112,038 2,807,456 77,264,106 469,822 1,615,489 1,070,451 80,419,868 2,847,663 - 82,547 76,068 3,006,278 74,416,443 469,822 1,532,942 994,383 77,413,590 8,517,981 - - - 8,517,981 (7,960,635) - - - (7,960,635) (185,900) - - - (185,900) 371,446 - - - 371,446 91,307,029 1,937,081 2,495,702 2,268,058 98,007,870 20,387,237 895,362 758,838 1,205,981 23,247,418 1,145,266 - - - 1,145,266 21,532,503 895,362 758,838 1,205,981 24,392,684 69,774,526 1,041,719 1,736,864 1,062,077 73,615,186 162,920 3,950 32,487 28,702 228,059 69,611,606 1,037,769 1,704,377 1,033,375 73,387,127 558,152,634 7,052,094 12,793,611 7,925,897 585,924,236 $ 627,764,240 $ 8,089,863 $ 14,497,988 $ 8,959,272 $ 659,311,363 , The notes to the financial statements are an integral part of this statement. 105 City of Clearwater, Florida Statement of Changes in Assets and Liabilities Agency Fund For the Year Ended September 30, 2007 :• � .� ASSETS Equity in pooled cash and investments LIABILITIES Other miscellaneous payables: Downtown Development Board Special purpose funds Other Total Liabilities Balance Balance October 1, September 30, 2006 Additions Deductions 2007 $ 543,547 816,582 792,552 $ 567,577 $ 321,660 8,134 213,753 515,820 600 300,162 486,411 $ 1,094 305,047 351,069 7,640 208,868 $ 543,547 816,582 792,552 $ 567,577 The notes to the financial statements are an integral part of this statement. 106 ' 1 , ' , �� , ' ' u ' ' ' , � � � ' , Supplementary Information �o� Page 1 of 5 City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 1998, 2004, and 2005 Supplementary Information The System: Rates, Fees and Charges The City Council has established a schedule of rates and charges by ordinance, which includes a purchased gas cost adjustment provision allowing the City to pass-through to customers any increase or decrease in the purchased price of gas. The City is not subject to regulation by any State agency in establishing or revising its rates. Where competitive fuel sources or transportation service are available to the customer, the City Council has authorized the City Manager to enter into contract gas service rates at special rates and/or conditions as required to obtain/retain the customer load. Such contract service must meet the normal construction feasibility formula to insure profitable payback to the City. As of September 30, 2007, contract rates applied to 704 customer accounts and impacted 30.92% of total revenues. The rates charged by the System through September 30, 1996, were part of the Phase I Gas Rate Case implemented October 1, 1995, which was based on a comprehensive cost of service study performed by the Utiliry Advisory Services Group of the international accounting firm of Coopers & Lybrand, LLP (the "Rate Study"). This Phase I implementation resulted in an extensive overhaul of the Gas System customer rates, providing numerous classes of service and a modernized billing methodology. The new rates, effective October 1, 1996, were designed to be industry-based and responsive to the competitive energy challenges. The goal of the Rate Study was to establish rates which would be fair to all classes of customers, provide funding to implement planned expansion in both existing northern Pinellas County services area and into the newly acquired southwestern Pasco service area, and provide an adequate growth potential in return to the City of Clearwater to further offset the ad valorem tax rates (current impact is about 0.5 mills). As the result of experiences during the first seven months of the Phase I implementation, adjustments made to the Phase II rates were implemented October 1, 1996, and additional adjustments (Phase III) were implemented effective October 1, 1997. The total projected impact of both new phases of the rate case is $1.05 million or less than 7.9% of total gas sales revenues. The rate ordinance containing the Phase II and Phase III rate changes was approved by the City Council on June 6, 1996. Gas rates for customer charges were increased effective April 1, 2005. The total estimated annual impact of this rate increase is $373,352. 108 ,L J � � � � � ' � � , Cl ' � ' � � ' ' ' � � � s a� � � � r � w� � r� r � � � s � CLEARWATER GAS SYSTEM NATURAL GAS RATE BILLING FACTORS FOR SEPTEMBER 1, 2007 - SEPTEMBER 30, 2007 BASED ON APPROVED GAS ADJUSTMENT FACTORS Applicable Annual Therm Range or Other Rate Determinant Monthly Customer Charge (For Central Pasco Territory) Non-Fuel Eneryy Charpe/fherm Non-Fuel Energy Charge Energy Conservation Adj. (ECA) Environmental Imposition Adj. (EIA) Weather Normalization Adj. (WNA) Total Non-Fuel Energy Charge � Purchased Gas Adjustment (PGA) O CO Total Energy Charge/Therm Minimum Monthly Bill (For Central Pasco Territory) Compares to LP/Gallon Rate of wi[h 6.0% Franchise Change from 10/04 Therm Rate % Change from 10/04 Therm Rate �1�ty Ta: Note: Fuel Rate per Therm 10/01l73 Non-Utility Taxable Fuel/rherm Interr. Contract Firm Natural Gas Rate Sched�les _- NS�iB3t@ I1�i.68tC .-HS_ _S�AE_ �EE �.�EE �S'iS_ �dfS._ 1Si� _BAf�_ S�AC� _LAf� �SL SL w/M& S1filL _I1SS_ _IS- CNS 8ellpht NA (1 - NA (4 + NA (4 + NA (4 + 0- 18,000- 100,000 NA (1 - NA (0 - NA (150 NA NA NA NA 100,000 NA 3 Units) Units) Units) Units) 17,999 99,999 & up 3 Units) 149 tons) tons 8+) & up $8.00 $20.00 $30.00 $75.00 $20.00 $30.00 $75.00 $8.00 $20.00 $30.00 $20.00 $20.00 $8 Res✓$20 GS $50.00 $150.00 By ($12.00) ($30.00) ($50.00) ($125.00) ($30.00) ($50.00) ($125.00) ($12.00) ($30.00) ($50.00) ($30.00) ($30.00) ($12 Res/$30 GS) ($75.00) ($250.00) Contract if not prev if not prev if not prev if not prev billed billed billed billed $0.580 $0.580 $0.580 $0.580 $0.470 $0.410 $0.350 $0.200 $0.150 $0.100 $0200 $0.300 $0.100 $0.470 $0.280 By Contract 0.180 0.180 0.180 0.1 BO 0.180 0.180 0.180 0.180 0.180 0.180 0.180 0.180 0.180 0.180 NA NA 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 NA NA o.000 pSl4Q 4.09Il 4.444 4.444 9.9�II 4.44Q 4.OQIl Q444 4.4QII 4.44Il 4.044 4.444 4.44Q 4.O.Q4 4.RQQ Contract + $0.760 $0.760 $0.760 $0.760 $0.650 $0.590 $0.530 $0.380 $0.330 $0.280 $0.380 $0.480 $0280 $0.650 $0.280 $0.000 Plus 1.130 ].I�Q ].].34 ].]3Q L13Q ]_134 ].].3II 1.134 ]_t34 1_]34 ].].3.Q 1.134 ]..134 1.134 1.4,�4 1.OSa $1.890 $1.890 $1.890 $1.890 $1.780 $1.720 $1.660 $1.510 $1.460 $1.410 $1.510 $1.610 $1.410 $1.780 $1.330 $1.Q50 + Non-Fuel $8.00 $20.00 $30.00 $75.00 $20.00 $30.00 $75.00 $8.00 $20.00 $30.00 $20.00 $20.00 $8 Res/$20 GS $50.00 $150.00 Customer ($12.00) ($30.00) ($50.00) ($125.00) ($30.00) ($50.00) ($125.00) ($12.00) ($30.00) ($50.00) ($30.00) ($30.00) ($12 Res✓$30 GS) ($75.00) ($250.00) Charge + �premise �premise �premise + FAC + FAC �premise + FAC + Non-Fuel Non-Fuel Therm + FAC Therm Rate for Rate for Contract 250 therms X # of Therms # Days in Mo. $ 1.729 $ 1.729 $ 1.729 $ 1.729 $ 1.629 $ 1.574 $ 1.519 $ 1.382 $ 1.336 $ 1290 $ 1.382 $ 1.473 $ 1.290 $ 1.629 $ 1.217 $ 1.833 $ 1.833 $ 1.833 $ 1.833 $ 1.726 $ 1.668 $ 1.610 $ 1.465 $ 1.416 $ 1.368 $ 1.465 $ 1.562 $ 1.368 $ 1.726 $ 1.290 $0.180 $0.180 $0.180 $0.180 $0.160 $0.180 $0.180 $0.180 $0.180 $0.180 $0.180 $0.180 $0.180 $0.180 $0.090 $0.090 10.5% 10.5% 10.5% 10.5% 11.3% 11.7% 12.2% 13.5% 14.1% 14.6% 13.5% 12.6% 14.6% 11.3% 7.3% 9.4% $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.069 $0.055 $0.069 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $1.061 $0.995 $0.981 HTII FAGTOR = THERMS�100 CLIBIC FEET (..Fl 10/O6 11/06 12/O6 j[Q2 yjiZ �lQZ g(QZ � Z B[QZ 7/07 �(QZ 9/07 Ann�al Averaa�. Firm Service Rates 1.055 1.054 1.052 1.050 1.050 1.053 1.052 1.050 1.053 1.055 1.055 1.054 1.052750 Interruptible Service Rates 1.035 1.033 1.031 1.030 1.030 1.032 1.031 1.030 1.032 1.034 7.034 1.033 1.032083 n O 3 e-► � C 7 � c�_v,n -a _c. C� r« � � �► N O � � C � fD � � � C1 � �ii � N � � N 7 � N � O � � � � Q- �D °*N� �. 7 C�i� � C1 < fD 3 C �D W O 7 a H 'D p1 iQ � N O -w � Page 3 of 5 City of Clearwater, Florida Continuing Disclosure - Gas System Revenue Bonds Series 1998, 2004, and 2005 Supplementary Information GAS SUPPLY , r � , On August 1, 1990, the Federal Energy Regulatory Commission (FERC) deregulated the natural gas pipeline industry. ' This allows other natural gas suppliers and local distribution companies, like the City of Clearwater, to transport gas over the Florida Gas Transmission (FGT) pipelines as opposed to purchasing natural gas supply from only FGT. The two natural gas transmission companies that serve within the State of Florida are Florida Gas Transmission (FGT) and Gulfstream. Currently FGT is the sole provider of transportation service to the City. FGT is equally owned by Cross Country Energy Corp (owned by Southern Union) AND Southern Natural, an EI Paso Corporation Affiliate. The City joined Florida Gas Utility (FGU) in October 2000 by Resolution 00-35. FGU is responsible for the purchase & management of the City's natural gas supply. An updated All Requirements Gas Service Agreement, which was approved by Resolution 02-02 in January 2002, required the City to purchase 100% of its supply through FGU. FGU was formed through an Interlocal Agreement among its members. The Interlocal Agreement became effective on September 1, 1989 and consisted of five municipal utilities. Over the next several years, additional electric and gas distribution utilities joined FGU, bringing its current membership to 23 entities. In addition, the City has entered into a Gas Supply & Transportation Agreement with Peoples Gas System (PGS), dated 12/02/04, to purchase natural gas to serve customers located in our Central Pasco territory, generally east of the Suncoast Parkway in Pasco County. The City has received a letter from FGU Council, dated 8/31/04, granting the City permission to utilize Teco Peoples Gas as a third party gas supplier since FGU is unable and unwilling to provide gas to the City within the meaning of the provisions of Section 3(a)(i) and (ii) of the ALL Requirements Gas Service Agreement between the City and FGU. The City has two Firm Transportation Service agreements (FTS-1 & FTS-2) with FGT in order to deliver natural gas to the City's four gate stations. FGU is currently managing our Phase II (FTS-1) and Phase III (FTS-2) transportation capacity on a daily basis. Table 1 shows the breakdown of our annual gas supply entitlements with FGT. The total annual entitlement is 3,212,226 decatherms of natural gas transportation. Table 1 Breakdown of Contract Period October Nov-Mar April May-Sept Total Annual Phase I I (FTS-1) MMBtu Per Day 2/01 /07 - 1 /31 /17 170,438 1,543,069 216,570 711, 756 2,641 Phase III (FTS-2) MMBtu Per Day 12/9/91 - 2/28/15 41,788 268,931 53,430 206,244 570,393 110 Total MMBtu Per Day 212,226 1,812,000 270,000 918,000 3.212 ' � �� ' � , ,� �� L� � � LJ ' , , u Page 4 of 5 City of Clearwater, Fiorida Continuing Disclosure — Gas System Revenue Bonds Series 1998, 2004, and 2005 Supplementary Information ' Service Area ' � CJ , � ' , � ' ' , , �� ' �� The Clearwater Gas System (CGS) is owned and operated as an enterprise utility by the City of Clearwater. CGS operates over 816 miles of underground gas main and handles the supply and distribution of both natural and propane (LP) gas throughout northern Pinellas County and western Pasco County. As a"full service" gas utility, CGS provides gas appliance sales, service and repair (both commercial and residential), installation of customer gas piping, construction and maintenance of underground gas mains and service lines, and 24-hour response to any gas emergency call within the service area. CGS is regulated for safety by the Florida Public Service Commission and the Federal Department of Transportation. CGS has been serving customers in the Clearwater area for over 85 years (since 1923) when operations were begun with a manufactured gas plant operation from coal and coke. In 1959, when natural gas transmission lines were finally extended to the Florida peninsula, CGS discontinued manufacturing gas and began receiving piped natural gas from Florida Gas Transmission. Clearwater Gas System serves over 19,470 customers in a 330 square mile service territory, which includes 17 municipalities as well as the unincorporated areas of northern Pinellas County and western Pasco County. The Pinellas County service territory is 181 square miles and extends generally from Ulmerton and Walsingham Roads on the South to the Pasco County line on the North and from the Gulf of Mexico on the West to the Hillsborough County line on the East. This includes all of the Pinellas beach communities south to Redington Beach. The Pasco County service territory is 117 square miles and extends from the Gulf of Mexico on the West inland about 10 miles to just West of State Road 41 and Land O' Lakes (generally along the right-of-way of the Suncoast Parkway) and from the Pinellas and Hillsborough County lines on the South to generally State Road 52 on the North. The CGS service territory extends 42.3 miles from the southernmost to the northernmost points. Clearwater Gas System prides itself in being a competitive and public service-minded utility, providing safe, economical and environmentally-friendly gas, which is made in America, available in our communities for all of the homes and businesses in our service area, with special focus on the residential customers who make up 88.54% of our customer base. 111 Page 5 of 5 City of Clearwater, Fiorida Continuing Disclosure - Gas System Revenue Bonds Series 1998, 2004, and 2005 Supplementary information As of September 30, 2007 the System's active natural gas customers were located as shown in the following table: Location Belleair Belleair Beach Belleair Bluffs Belleair Shores Clearwater Dunedin Indian Rocks Beach Indian Shores Largo New Port Richey North Redington Beach Oldsmar Port Richey Redington Beach Redington Shores Safety Harbor Tarpon Springs Unincorporated Areas Pasco Central Pasco Unincorporated Areas Pinellas Total Meters 390 135 21 19 6,618 1,051 76 62 961 336 13 82 14 26 15 575 1,411 2,530 186 2,739 17,260 Percentage 2.26% 0.78% 0.12% 0.11% 38.34% 6.09% 0.44% 0.36% 5.57% 1.95% 0.08% 0.48% 0.08% 0.15% 0.09% 3.33% 8.17% 14.66% 1.08% 15.87% 100.00% The following table shows the five largest interruptible customers by peak monthly consumption and the percent of the System's revenues derived from such customers during the 12 months ending September 30, 2007: Customer Name Morton Plant Hospital Mease Hospital Angelica Textile Seroice Metal Industries HCA Columbia Hospital Peak Monthly Therms 112,072 106,325 93,392 73,924 25,475 % of Gross Revenues 3.16% 2.72% 2.23% 1.60% 1.06% ' ' , , LJ � ' ' � ' ' CI �,1 J ' The following table shows the breakdown of the System's customers by category as well as the volume ' of gas sold and the sales revenues generated by each category for the year ended September 30, 2007: Interruptible Residential Commercial Interruptible Residential Commercial Totals Average No. Customers 13 15,112 2,135 Therms 5,227,245 3,227,194 12,918,990 21,373,429 112 Gas Gas Volume Sales 24.46% 14.46% 15.10% 22.74% 60.44% 62.80% Revenues $ 4,882,248 7,674,589 21,195,489 $ 33,752,326 ' � ' ' ' ' ' , �I � ' , City of Clearwater, Florida Continuing Disclosure — Water and Sewer Refunding Revenue Bonds Series 1998 and 2003; and Revenue Bonds Series 2002 and 2006 Supplementary Information Water System: FY 2002 2003 2004 2005 2006 2007 Historical Financial Information Source and Volume of Water Pumped (in million gallons per day, averaged over the fiscal year) Ci Wells Countv 2.258 11.739 3.927 8.916 3.601 9.544 3.550 10.630 4.093 9.999 3.570 9.090 ' Historical Growth in Number of Water Customers ' (all figures are as of September of the year indicated) Year Water Customers ' 2002 40,340 2003 40,227 2004 40,235 , 2005 40,178 2006 40,467 2007 40,407 ' -, ' , , ' , � Ten Largest Water Customers Fiscal Year Ending September 30, 2007 Name of User 1. Church of Scientology FSO Inc. 2. Morton Piant Hospital 3. Pinellas County Schools 4. Clearwater Housing Authority 5. City of Clearwater 6. IMT-LB Central FL Portfolio LLC 7. United Dominion Realty Trust 8. Brenntag Mid-South Inc 9. Bre/Clearwater Owner LLC 10. Ultimar Condo Association Total 113 Water Used (n 100 Cubic Feet) 121,703 55,379 43,239 48,297 26,992 40,492 33,486 28,765 35,582 25,244 � Page 1 of 3 Total 13.997 12.843 13.145 14.180 14.092 12.660 Revenues Produced $ 453,178 251,899 233,355 184,418 179,036 158,407 133,119 117,416 113, 640 108,173 1.932.641 Page 2 of 3 City of Clearwater, Florida Continuing Disclosure — Water and Sewer Refunding Revenue Bonds Series 1998 and 2003; and Revenue Bonds Series 2002 and 2006 Suppiementary Information Sewer System: Average Sewage Flow Historical Growth in Number of Sewer Customers (as of September of the year indicated) Fiscal Year 2002 2003 2004 2005 2006 2007 Annual Ave. Daily Flow In MGD 14.3 162 15.0 14.7 13.8 13.6 Fiscal Year 2002 2003 2004 2005 2006 2007 Ten Largest Sewer Customers Fiscal Year Ending September 30, 2007 Name of User 1. Church of Scientology 2. Morton Plant Hospital 3. Pinellas County Schools 4. Clearwater Housing Authority 5. United Dominion Realty Trust 6. IMT-LB Central FL Portfolio LLC 7. Bre/Clearwater Owner LLC 8. Sheraton Sand Key 9. City of Clearwater 10. Regency Oaks LLC Total Sewer Used �in 100 Cubic Feetl 99,407 53,162 40,347 42,931 33,486 40,942 35,582 28,274 14,198 19,330 ,� � . Rates, Fees And Charqes Sewer Customers 33,215 33,215 33,234 33,305 33,279 33,255 Revenues Produced $ 411,941 292,834 291,654 174,939 171,109 167,929 146,058 122,571 105,245 83,093 $ 1 967 373 The City uses a three-tiered rate structure for water and sewer usage. The base rate includes a minimum usage for residential and nonresidential water rates. Any usage over the minimum is billed at one rate per 100 cubic feet up to a designated level and at a second rate for usage over that level. For irrigation, there is a base rate, with no minimum, and a charge per 100 cubic feet of water usage up to a designated level and a higher charge for usage over that amount. The sewer base rate includes a minimum usage and a fixed charge per 100 cubic feet of water usage over the basic allowance. The minimum usage and second tier usage level vary with the size of the meters. For fiscai year 2007 there were no changes to the three-tiered rate structure for water or sewer usage. Effective October 1, 2000 the basis for billing was converted from cubic feet to gallons. 114 , u ' � , ' , ' , , ' ' , ' � li � ' ' , � � , ' City of Clearwater, Florida Continuing Disclosure - Water and Sewer Refunding Revenue Bonds Series 1998 and 2003; and Revenue Bonds Series 2002 and 2006 , Supplementary Information ' , ' ' ' ' ' � l J , � , ' , � Page 3 of 3 Residential and October 1, October 1, October 1, October 1, October 1, Nonresidential Water Rates 2003 2004 2005 2006 2007 Size of Meter Gallons Minimum- Under 1 inch 9.90 10.59 11.34 12.03 12.75 1 inch 23.10 24.71 26.46 28.07 29.75 1.5 inch 330.00 353.00 378.00 401.00 425.00 2 inch 768.90 822.49 880.74 934.33 990.25 3 or 2 inch manifold 1,184.70 1,267.27 1,357.02 1,439.59 1,525.75 4 inch 2,280.30 2,439.23 2,611.98 2,770.91 2,936.75 6 inch 5,857.50 6,265.75 6,709.50 7,117.75 7,543.75 8 inch 9,900.00 10,590.00 11,340.00 12,030.00 12,750.00 Additional charges are assessed for cubic feet of usage in excess of designated minimums. Rates for Irrigation (Lawn) Meters October 1, October 1, October 1, October 1, October 1, 2003 2004 2005 2006 2007 Size of Meter Gallons Minimum- Under 1 inch 3.53 3.78 4.04 4.28 4.54 1 inch 10.59 11.34 12.13 12.86 13.63 1.5 inch 52.95 56.70 60.67 64.31 68.17 2 inch 148.26 158.76 169.87 180.06 190.86 3 or 2 inch manifold 292.99 313.74 335.70 355.84 377.19 4 inch 564.80 604.80 647.14 685.97 727.13 6 inch 1,704.99 1,825.74 1,953.54 2,070.75 2,195.00 Sewer Rates Size of Meter Minimum- Under 1 inch 1 inch 1.5 inch 2 inch 3 or 2 inch manifold 4 inch 6 inch 8 inch Per 100 cubic feet of water used over that allowed in minimum October 1, October 1, October 1, October 1, October 1, 2003 2004 2005 2006 2007 Gallons 13.62 14.58 15.60 31.78 34.02 36.40 454.00 486.00 520.00 1,057.82 1,132.38 1,211.60 1,629.86 1,744.74 1,866.80 3,137.14 3,358.26 3,593.20 8,058.50 8,626.50 9,230.00 13 , 620.00 14, 580.00 15, 600.00 4.54 4.86 5.20 16.53 38.57 551.00 1,283.83 1,978.09 3,807.41 9,780.00 16, 530.00 5.51 Add itiona I I ndebted ness Additional indebtedness incurred totaled $75,912 for the lease purchase of capital equipment. 115 17.52 40.88 584.00 1,360.72 2,096.56 4,035.44 10,366.00 17, 520.00 5.84 City of Clearwater, Fiorida Continuing Disclosure — Stormwater System Revenue Bonds Series 1999, 2002, 2004, and 2005 Supplementary Information Rates. Fees, and Charges The City uses a measurement of one equivalent residential unit or ERU as the basis for the stormwater management utility fee. The rate per ERU was unchanged from the inception of the utility on January 1, 1991 until 1998 when annual increases were adopted for five fiscal years beginning October 1, 1998. In November 2001, additional increases were adopted including a change to the increase previously adopted, to be effective October 1, 2002. Effective August 5, 2004, additional increases were adopted. On July 20, 2006, rate increases were adopted for the five-year period beginning October 1, 2007. The monthly rates are as follows: Effective Date Rate Per ERU January 1, 1991 $3.00 October 1, 1998 $4.00 October 1, 1999 $4.17 October 1, 2000 $4.35 October 1, 2001 $4.54 January 1, 2002 $6.13 October 1, 2002 $7.16 October 1, 2003 $8.01 October 1, 2004 $8.65 October 1, 2005 $9.35 October 1, 2006 $9.71 October 1, 2007 $10.51 October 1, 2008 $11.14 October 1, 2009 $11.80 October 1, 2010 $12•51 October 1, 2011 $13.26 Single-family homes, multifamily units, condominium units, apartments and mobile homes are rated as one ERU per dwelling unit. Nonresidential property is charged at the rate of 1,830 square feet of impervious area per ERU. HISTORICAL NET REVENUES Net Operating Revenues (Excluding Depreciation) Interest Income and other Non- Operating Revenues (Expenses) Total Net Revenues Maximum Annual Debt Service Coverage � ' ' ' �� , ' �� ,; � u � IL_ J � ' i, ,� Fiscal Years Ended Se�tember 30. � 2003 2004 2005 2006 2007 $3,726,983 $3,566,465 $4,548,421 $5,103,551 $5,688,934 206,202 190,579 220,570 465,203 608,038 $3,933,185 $3,757,044 $4,768,991 $5,568,754 $5,296,972 $2,052,538 $2,913,506 $2,889,994 $2,889,994 $2,889,994 1.92 1.29 1.65 1.93 2.19 116 ' ��', U ' � ' ' ' , City of Clearwater, Florida Continuing Disclosure — Infrastructure Sales Tax Revenue Bonds, Series 2001 Supplementary Information Historical Debt Service Coveraqe � 2003 2004 2005 2006 2007 Salestax revenues (1) $ 8,661,615 $ 9,119,913 $ 9,977,529 $ 10,704,390 $ 9,930,812 ' Ma�dmum annual debt service $ 7,049,688 $ 7,028,888 $ 6,955,888 $ 6,887,888 $ 6,884,800 Debt servioe coverage 1.23 1.30 1.43 1.55 1.44 (1) The Infrastructure Sales Tax Revenue Bonds, Series 2001, were issued June 1, 2001 in the amount of $46,445,000. They are secured by a lien upon and a pledge of the City's share of the proceeds derived by Pinellas Counry, Florida from the levy and collection of the one-cent discretionary infrastructure sales tax pursuant to Section 212.055(2), Florida Statutes, as amended (sales tax revenues). City of Clearwater, Florida Continuing Disclosure — Improvement Revenue Refunding Bonds, Series 2001 Supplementary Information Historical Debt Service Coveraqe 2003 2004 2005 2006 2007 Pledged Revenues (1) $ 17,381,418 $ 17,026,827 $ 17,493,450 $ 18,117,728 $ 18,193,910 Ma�dmumannual debt service $ 865,310 $ 865,310 $ 864,060 $ 861,000 $ 861,000 Debt senrice o�verage 20.09 19.68 20.25 21.04 21.13 (1) The Improvement Revenue Refunding Bonds, Series 2001, were issued October 15, 2001 in the amount of $11,470,000. They were secured by a lien upon and a pledge of the Public Service Tax pursuant to Section 166.231, Florida Statutes as amended. Effective October 1, 2001, the Florida Legislature repealed the public service tax on telecommunications created per Section 166.231(9), Florida Statutes, and created a simplified tax structure for communications services pursuant to Chapter 2000-260, Laws of Florida. To the extent that the Public Service Tax receipts derived by the City pursuant to Section 166.231(9), Florida Statutes, is eliminated as a result of this new tax, all of the revenues received by the City pursuant to the new Communications Services Tax shall be deemed to replace the Public Service Tax receipts so eliminated. Consequently the pledged revenues include both public service taxes and communications services taxes effective October 1, 2001. 117 City of Clearwater, Florida Fire Services Program Supplementary Information Pursuant to agreements between the City of Clearwater, the Pinellas County Fire Authority and the Pinellas County Emergency Medical Services Authority, the City has provided fire and emergency medical services to the respective authorities. With respect to fire services, the services are provided for the benefit of properties located outside the corporate limits of the City, but within a designated service area. Emergency medical services are provided for the benefit of persons residing both inside and outside the corporate limits of the City, based on the Authoriry's nearest unit dispatch policy. With respect to the Fire Services Program, a budget was prepared by Fire Department personnel covering proposed expenditures for fiscal year ending September 30, 2007, for the Fire Department as a whole. Since the funding for the Emergency Medical Services Program is based on the level fixed in prior years, the Fire Services Program budget is essentially the residual obtained by deducting the approved level of funding for the Emergency Medical Services Program from the budgeted amounts included in the total Fire Department budget. This budget was submitted to, and duly approved by, the relevant Authority prior to the commencement of the fiscal year. Income received from Pinellas County Fire Protection Authority and valid program expenditures for the Fire Services Program for the fiscal year ended September 30, 2007 are summarized below. Total Revenue Received from Pinellas County Fire Protection Authority Total Fre Service Expenditures for Fiscal Year Ended September 30, 2007 The Fire Services Program does not currently utilize an equipment reserve. 118 $ 2,556,770 $ 20,454,128 , , � C.1 � , ' � � � � ,- , i�l �J , , � � �� ' ' � � ' ' ' � ' ' ' STATISTICAL SECTION This section of the City's CAFR presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. This information has not been audited by the independent auditor. Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being changed over time. Schedule 1 Schedule 2 Schedule 2a Schedule 3 Schedule 4 Revenue Capacity Net Assets by Component Changes in Net Assets Program Revenues by Function/Program Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds ' These schedules contain information to help the reader assess the City's significant local revenue, the property tax. ' ' � ' , ' 1 � Schedule 5 Schedule 6 Schedule 7 Schedule 8a Schedule 8b Debt Capacity Assessed Value and Estimated Actual Value of Taxable Property Direct and Overlapping Property Tax Rates Property Tax Levies and Collections Principal Real Property Taxpayers Principal Personal Property Taxpayers 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. Schedule 9 Schedule 10 Schedule 11 Schedule 12 Schedule 13 Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information Pledged-Revenue Coverage 119 STATISTICAL SECTION (CONTINUED� Economic and Demographic Information These schedules offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. Schedule 14 Schedule 15 Operating Information Demographic and Economic Statistics Principal Employers � , , 1 ' ' � , � These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it , performs. Schedule 16 Schedule 17 Schedule 18 Full-time Equivalent City Government Employees by Function/Program Operating Indicators by Function/Program Capital Assets Statistics by Function/Program ' , � � Sources: Unless otherwise noted, the information in this section is derived from the City's comprehensive annual financial reports for the re/evant year. The City implemented the new reporting ' model, GASB 34, in the fiscal year ending September 30, 2002. ' 120 � ' � ' ' � ' � f• u,r • - ��-i ' Governmental activities Schedule 1 City of Clearwater, Florida Net Assets by Component, Last Six Fiscal Years (accrual basis of accounting) Fiscal Year (amounts in thousands) 2002 294� 24Q4 294.� 24Q� 2007 Invested in capital assets, net of related debt a $ 60,970 $103,015 $133,711 $143,505 $ 182,474 $ 205,079 ' Restricted 63,795 53,939 50,801 34,668 41,204 41,543 Unrestricted 67,099 62,599 61,163 92,739 100,234 108,262 Total governmental activities net assets $191,864 $219,553 $ 245,675 $ 270,912 $ 323,912 $ 354,884 ' Business-type activities Invested in capital assets, net of related debi $ 86,679 $105,824 $136,964 $146,476 $ 156,728 $164,246 ' Restricted 38,382 33,413 37,108 35,354 35,054 35,775 Unrestricted 93,847 90,769 67,723 71,655 77,435 84,021 Total business-type activities net assets $218,908 $230,006 $ 241,795 $ 253,485 $ 269,217 $ 284,042 ' Primary government Invested in capital assets, net of related debt $147,649 $208,839 $ 270,675 $ 289,981 $ 339,202 $ 369,325 ' Restricted 102,177 87,352 87,909 70,022 76,258 77,318 Unrestricted 160,946 153,368 128,886 164,394 177,669 192,283 Total primary government net assets $410,772 $449,559 $ 487,470 $ 524,397 $ 593,129 $ 638,926 ' ' � ' � 1 � ' a Fiscal 2003 and 2004 increases in governmental activities invested in net assets, net of related debt were due to the construction of a spring training communiry sports complex ($28.9 million), a new main library ($17.2 million), donation of a recreation center complex ($5.8 million) and construction of two new fire stations ($3.6 million) over the two-year period. The fiscal 2006 increase was due to the implementation of the retroactive infrastructure component of GASB Statement #34, resulting in the addition of $36.3 million of governmental activities capital assets. Note: The Ciry began to report accrual information when it implemented GASB Statement 34 in fiscal year 2002. 121 Schedule 2 Page 1 of 2 Expenses Governmental activities: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Interest on long-term debt Total governmental activities expenses Business-type activities: Water and sewer utility Gas utility Solid waste utility Stormwater utility Recycling Marine Aviation Parking system Harborview center Total business-type activities expenses Total primary government expenses Program revenues Governmental activities: Charges for services: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business-type activities: Charges for services: Water and sewer utility Gas utility Solid waste utility Stormwater utility Recycling Marine Aviation Parking system Harborview center Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues ' City of Clearwater, Florida � Changes in Net Assets Last Six Fiscal Years (accrual basis of accounting) � Fiscal Year (amounts in thousands) 2002 29.4$ 2SZQ4 29SL� ZQQti T�Z � $ 11,647 $ 11,353 $ 11,772 $ 11,945 $ 13,203 $ 13,169 45,136 47,429 51,454 56,456 60,178 68,636 2,886 2,271 2,684 2,826 3,098 3,027 10,120 8,878 12,510 12,001 13,898 13,694 3,231 4,288 3,225 3,395 3,321 3,142 555 571 555 530 444 448 22,231 22,094 25,402 28,875 32,636 32,872 2,963 3,284 3,013 2,699 2,373 2,248 98,769 100,168 110,615 118,727 129,151 137,236 37,470 40,825 41;995 43,852 48,592 49,840 23,574 26,638 29,152 33,394 36,947 33,579 14,398 14,232 15,096 15,615 16,013 16,172 5,459 7,022 8,250 8,768 9,013 9,465 2,084 2,165 2,388 2,574 2,579 2,895 2,848 3,060 3,249 3,801 4,303 4,366 336 211 299 350 468 382 3,075 3,281 3,617 3,846 3,976 3,427 2,714 2,525 2,418 2,552 2,618 2,664 91,958 99,959 106,464 114,752 124,509 122,790 $ 190,727 $ 200,127 $ 217,079 $ 233,479 $253,660 $260,026 $ 11,741 $ 12,268 $ 12,961 $ 13,585 $ 14,628 $ 14,508 7,747 7,960 7,742 7,500 8,222 8,444 93 180 76 119 150 123 59 126 159 163 235 261 124 91 87 164 110 107 - 6 - - - - 3,070 3,191 4,344 4,753 5,296 5,574 6,224 8,267 6,605 6,273 7,181 9,687 9,787 5,207 3,129 15,058 3,405 11,748 38,845 37,296 35,103 47,615 39,227 50,452 37,739 26,890 16,090 6,767 2,171 2, 735 144 4, 097 1,872 39,207 30,064 15,960 8,485 2,427 2, 949 176 4,003 1,661 43,143 33,001 16,403 9,526 2,649 3, 072 187 4,418 1, 654 - 14 420 4,301 9,406 5,591 102, 806 114, 352 120, 064 $ 141,651 $ 151,648 $ 155,167 122 � � � ' � ' � ' � � 45,306 49,159 50 381 ' , 37,469 43,160 38,906 16,541 16,816 17,301 � 10,319 11,138 11,885 2,784 2,740 3,204 3,721 4,075 4,323 ' 205 213 224 4,752 4,981 4,655 1,646 1,842 1,846 59 59 83 6,138 6,639 6,382 128, 940 140,822 139,190 $ 176,555 $180,049 $189,642 � ' ' ' � ' ' 1 � � , ' �1 I I LJ l__ 1 � � � J ' Schedule 2 (continued) City of Clearwater, Florida Changes in Net Assets Last Six Fiscal Years (accrual basis of accounting) Net (Expenses) / Revenue Governmental activities Business-rype activities Total primary government net (expense) / revenue General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property Sales Franchise Utility Communications services Othertaxes Investment earnings Miscellaneous Special items a Transfers Total governmental activities Business-type activities: Investment earnings Transfers Total business-type activities Total primary government Change in Net Assets Governmental activities Business-type activities Total primary government change in net assets Page 2 of 2 Fiscal Year (amounts in thousands) 2002 ?.QQ� 2Si4_4 244� 2SZQl� 2007 $(59,924) $(62,872) $(75,512) $(71,112) $ (89,924) $(86,784) 10,848 14,393 13,600 14,188 16,313 16,400 $ 49,076 $ 48,479 $ 61,912 $ 56,924 $ (73,611) $ 70,384 $ 30,322 $ 33,927 $ 37,157 $ 41,588 $ 48,076 $ 53,717 14,664 14,529 15,263 16,351 17,155 16,079 7,087 7,140 7,505 8,226 9,435 9,505 10,402 10,363 10,237 10,611 11,264 11,410 7,870 7,019 6,790 6,883 6,854 6,784 4,294 3,974 4,435 5,183 5,523 5,779 4,859 2,188 3,231 2,648 5,352 7,402 213 168 758 151 396 131 - 5,810 10,047 - - _ 376 5,443 4,515 4,707 3,658 6,948 80,087 90,561 99,938 96,348 107,713 117,755 3,083 2,148 1,987 2,210 4,341 5,373 376 5,443 4,515 4,707 (3,658) 6,948 2,707 3,295 2,528 2,497 683 1,575 $ 82,794 $ 87,266 $ 97,410 $ 93,851 $ 108,396 $116,180 $ 20,163 $ 27,689 $ 24,426 $ 25,236 $ 17,789 $ 30,971 13,555 11,098 11,072 11,691 16,996 14,825 $ 33,718 $ 38,787 $ 35,498 $ 36,927 $ 34,785 $ 45,796 a Special items for fiscal 2003 and 2004 consisted of a donated recreation complex and a cash donation for a new Spring Training sports complex, respectively. Note: The Ciry began to report accrual information when it implemented GASB Statement 34 in fiscal year 2002. 123 Schedule 2a FunctioNProgram Governmental activities: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Subtotal governmental activities Business-type activities: Water and sewer utility Gas utility Solid waste utiliry Stormwater utility Recycling Marine Aviation Parking system Harborview center Subtotal business-type activities Total primary government City of Clearwater, Florida Program Revenues by FunctioNProgram Last Six Fiscal Years (accrual basis of accounting) Fiscal Year - (amounts in thousands) 2002 2QQ$ ZQq4 ZQq� �.QQf 2007 ' ' � , ' � � $ 11,843 $ 12,340 $ 13,090 $ 13,605 $ 14,697 $ 14,514 ' 9,046 9,661 9,009 9,207 9,275 11,763 1,052 1,118 796 448 1,274 704 6,261 3,982 2,003 14,056 a 2,300 10,491 2,802 4,028 2,629 2,425 2,708 3,298 � � 6 ' - - 7,841 6,161 7,576 7,874 8,973 9,682 38,845 37,296 35,103 47,615 39,227 50,452 � 40,051 26,890 16,090 8,262 2,171 2,735 638 4,097 1,872 102,806 $ 141,651 43,120 30,064 15,974 13,411 2,427 2,953 739 4,003 1,661 114,352 $ 151,648 46,357 33,001 16,823 11,158 2,649 3,750 253 4,418 1,655 120,064 $ 155,167 47,656 37,469 16,541 14,061 2,843 3,721 251 4,752 1,646 128,940 $ 176,555 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year2002. a In 2005, the City received a$10 million reimbursement grant from the Florida Department of Revenue for construction of the new Clearwater Memorial Causeway Bridge. 124 52,264 56,071 43,160 38, 906 � 16,816 17,301 14,343 12,559 2,799 3,287 4,128 4,323 ' 489 242 4,981 4,655 1,842 1,846 � 140,822 139,190 $ 180,049 $ 189,642 � a � � ' ' � ■�■� � ,� � r � r� ■r [� � ■r � � � � � r � General Fund Reserved Unreserved Total General Fund All Other Governmental Funds �l � Reserved Unreserved, reported in: Special revenue funds Debt service funds Capital project funds Total ail other governmental funds Schedule 3 City of Clearwater, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year (amounts in thousands) 1998 ]� 2QQQ 2SZ41 2StQ2 2SlQ3 2QSL4 2SlQ5 2SIQQf 2007 $ 1,391 $ 843 $ 1,115 $ 1,066 $ 3,019 $ 2,618 $ 2,762 $ 3,064 $ 2,941 $ 3,476 9,072 8,647 8,091 11,806 12,684 12,075 13,077 15,575 21,479 23,580 $ 10,463 $ 9,490 $ 9,206 $ 12,872 $ 15,703 $ 14,693 $ 15,839 $ 18,639 $ 24,420 $ 27,056 $ 10,769 $ 13,974 $ 7,910 $ 9,288 $ 50,531 b$ 35,555 $ 29,421 $ 30,040 $ 35,363 $ 48,722 7,419 10,965 14, 846 14,778 11,336 15,199 15,325 17,340 19,608 18,656 152 1 - 648 1,802 30 28 2,248 64 90 7,881 4,155 10,832 42,560 a 23,481 22,247 17,796 25,462 27,746 19,225 $ 26,221 $ 29,095 $ 33,588 $ 67,274 $ 87,150 $ 73,031 $ 62,570 $ 75,090 $ 82,781 $ 86,693 ' The fiscal 2001 unreserved fund balance increase is primarily due to $46.9 million of bond proceeds from the 2001 Infrastructure Sales Tax Revenue Bonds, partially offset by $24.0 million of related capital outlay expenditures. b The increase in fiscal 2002 reserved fund balance is primarily due to an increase in fund balance reserved for encumbrances from $7.1 million in fiscal 2001 to $35.0 million in fiscal 2002, as a result of major construction projects including the new main library and new Memorial Causeway Bridge. Also contributing was a$10.5 million increase in fund balance reserved for advances and notes, related to interfund loans to the parking fund for a proposed beach parkin garage, along with increased reserves for housing assistance mortgage note receivables. � N � Schedule 4 City of Clearwater, Florida Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year (amounts in thousands) Revenues � � �Q �t � � 24�4 245� 2QQf 2007 Total Governmental Funds: Propertytaxes $22,242 $23,294 $26,087 $27,712 $ 30,323 $ 33,927 $37,157 $41,588 $ 48,076 Franchisefees 7,452 7,498 7,743 8,701 7,087 7,140 7,505 8,226 9,435 Utility taxes 14,630 15,238 15,243 15,486 10,402 10,363 10,237 10,611 11,264 Fueltaxes 856 967 900 904 911 850 975 983 987 Sales taxes 7,427 7,807 8,286 8,385 8,458 8,662 9,120 9,978 10,705 Communications services taxes ° - - - - 7,870 7,019 6,790 6,883 6,854 Licenses, permits, and fees 3,407 4,242 5,433 4,409 3,988 4,838 5,084 5,675 6,809 Charges for services 7,678 8,127 8,476 9,379 10,429 10,471 12,198 12,570 14,669 Fines and forfeitures 1,599 1,990 1,921 2,015 2,264 2,078 1,742 1,263 1,557 Intergovernmental revenues 15,736 17,590 16,804 23,809 26,969 25,070 22,089 36,704 25,407 Investment earnings 2,221 1,479 2,099 4,021 3,810 2,309 2,491 1,756 3,784 Miscellaneous 3,272 1,734 1,849 2,954 4,966 3,097 3,257 2,813 2,089 Total revenues 86,520 89,966 94,841 107,775 117,477 115,824 118,645 139,050 141,636 Expenditures Total Governmental Funds: Current General government 10,149 10,520 9,126 9,486 10,546 10,586 11,189 11,328 12,590 Publicsafety 36,269 38,490 41,362 42,442 45,921 48,162 50,303 55,405 57,265 Physical environment 1,926 2,004 2,245 2,222 2,839 2,289 2,498 2,737 3,035 Transportation 5,018 5,008 5,092 5,402 8,941 6,673 9,702 9,604 10,267 Economic environment 2,825 2,185 2,132 2,182 3,268 4,307 3,239 3,392 3,324 Human services 894 935 634 700 566 576 562 530 442 Culture and recreation 15,060 16,301 16,933 18,302 20,740 22,252 24,228 25,011 28,544 Debt service: Principal 1,568 1,469 1,376 1,468 1,751 6,921 7,483 7,345 7,257 Interest & issuance costs 834 761 765 789 2,820 3,146 2,922 2,610 3,029 ` Capital outlay 12,700 14,784 16,886 42,677 b 19,594 32,272 19,859 10,252 9,834 Total expenditures 87,243 92,457 96,551 125,670 116,986 137,184 131,985 128,214 135,587 Excess (deficiency) of revenues over (under) expenditures (723) (2,491) 1,710 17,895 491 21,360 13,340 10,836 6,049 Other Financing Sources (Uses) Total Govemmental Funds: $53,717 9,505 11,410 946 9,931 6,784 6,510 14,806 1,401 34,622 5,400 4,173 159,205 13,357 65,099 2,964 11,162 3,175 453 29,939 7,192 1,999 24,126 159,466 261 Transfers in 18,329 20,000 22,083 27,636 23,324 29,241 29,854 28,205 35,258 47,334 Transfers out (13,867) (16,594) (18,313) (21,768) (23,180) (24,586) (26,750) (24,160) (29,850) (40,779) Sale of capital assets - - - - - 925 720 - 120 - Land held for resale from general government - - - - - - - - 1,000 - Long term debt issued 50 986 2,149 49,379 15,363 651 201 439 895 254 Proceeds of refunding bonds - - - - 11,345 - - - - - Premium on revenue bonds issued - - - - 481 - - - - - Payment to refunded bond escrow agent - - - - 1( 0,271 j - - - - - Total other financing sources (uses) 4,512 4,392 5,919 55,247 17,062 6,231 4,025 4,484 7,423 6,809 Net Change in Fund Balances $ 3,789 $ 1,901 $ 4,209 $37,352 $ 17,553 $ 1( 5�129) $(9,315) $15,320 $ 13,472 $ 6,548 Debt service as a percentage of noncapital expenditures 3.2% 2.9% 2.9% 2.7% 4.7% 10.5% 14.1°/a 8.7% 8.5% 6.9°/a ' Effective October 1, 2001, the Florida Legislature repealed the public service utilitytax on telecommunications and created a simplified tau structure for communications services. b The increase in fiscal 2001 capital outlay expenditures is primarily due to construction expenditures for the new main library and the new Memorial Causeway bridge. ° The increase in fiscal 2006 interest and issuance costs is due to $742 thousand of arbitrage rebate on the 2001 Infrastructure Sales Tax revenue bonds. � � � � r� � � � r r� � � r � r � � �r � ■� �■ � �r � � r � �r � � � � � � r � �r � � N v City of Clearwater, Florida Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands of dollars) Assessed Value ° Less: Government Homestead Total Estimated and Assessment L4�; Taxable Total Actual Fiscal Residential Commercial Industrial Institutional Personal Other Cap Tax Exempt Assessed Direct Taxable Year Property Property Property Property Property Property Differentiale Property Value Rate` Value 1998 $ 3,297,103 $ 1,200,514 $ 73,378 $ 850,496 $ 582,347 $ 45,733 $ 47,497 $ 1,507,811 $4,494,263 $5.1158 $5,287,368 1999 3,460,437 1,217,489 83,762 903,238 635,190 49,446 84,016 1,573,147 4,692,399 5.1158 5,520,469 2000 3,704,386 1,242,762 86,827 905,924 660,193 55,258 142,958 1,608,913 4,903,479 5.5032 5,768,799 2001 4,038,672 1,319,861 94,341 942,290 662,240 50,706 247,856 1,651,467 5,208,787 5.5032 6,127,985 2002 4,612,494 1,397,947 99,579 995,983 699,503 53,481 435,066 1,735,495 5,688,426 5.5032 6,692,266 2003 5,290,897 1,450,805 109,852 1,018,670 629,591 56,319 722,765 1,728,291 6,105,078 5.7530 7,182,445 2004 6,043,611 1,537,612 116,822 1,083,186 616,883 63,746 966,830 1,801,765 6,693,265 5.7530 7,874,429 2005 6,923,863 1,714,684 131,518 1,201,463 604,747 62,339 1,246,779 1,923,108 7,468,727 5.7530 8,786,738 2006 8,325,134 1,902,627 153,035 1,329,219 605,102 70,665 1,690,208 2,045,343 8,650,231 5.7530 10,176,742 2Q07 10,967,910 2,294,492 178,987 1,499,434 637,308 67,478 2,767,035 2,222,329 10,656,245 5.2088 12,536,759 ' Properties are assessed at approximately 85% of market value to reflect cost of sales, personal property included in market value, etc. b Florida Statutes, 193.155, provides for an annual cap on assessment increases for "Homestead properties" (properties qualifying for Homestead exemption). The cap is the lower of 3% of the assessed value of the property or the percentage change in the Consumer Price Index for All Urban Consumers ° Rate is per $1,000 of assessed value Schedule 5 Assessed Value as a Percentage of Actual Value 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% ' Schedule 6 � City of Clearwater, Florida Direct and Overlapping Property Tax Rates � Last Ten Fiscal Years (rate per $1,000 of assessed value) � _ City Direct Rates Overlapping Rates Pinellas Pinellas Emergency Downtown � Fiscal GOB Debt Total Pinellas County Transit Medical Other Develop. Year Operating Service Direct Coun Schools District Services Districts Board a � 1998 5.0866 0.0292 5.1158 5.5380 9.1330 0.6697 0.7130 1.6561 1.0000 � 1999 5.0861 0.0297 5.1158 5.5380 9.1100 0.6501 0.7130 1.6561 1.0000 2000 5.5032 0.0000 5.5032 5.8540 8.6660 0.6501 0.6470 1.6572 1.0000 � 2001 5.5032 0.0000 5.5032 6.0040 8.4330 0.6501 0.7470 1.6562 1.0000 � 2002 5.5032 0.0000 5.5032 6.1410 8.4870 0.6501 0.6600 1.6562 1.0000 � 2003 5.7530 0.0000 5.7530 6.1410 8.4490 0.6319 0.6600 1.6562 1.0000 , 2004 5.7530 0.0000 5.7530 6.1410 8.2430 0.6319 0.6600 1.6562 1.0000 , 2005 5.7530 0.0000 5.7530 6.1410 8.1220 0.6377 0.6600 1.6557 1.0000 � 2006 5.7530 0.0000 5.7530 6.1410 8.3900 0.6377 0.6600 1.6555 b 1.0000 � 2007 5.2088 0.0000 5.2088 5.4700 8.2100 0.6074 0.6300 1.6378 ° 1.0000 � Source: Pineilas Counry Property Appraiser � a A separate taxing district established by referendum which affects only downtown properties. b"Other" includes Pinellas County Planning Counci10.0195; Juvenile Welfare Board 0.7963; � SW Florida Water Management District 0.4220; Pinellas Anclote River Basin 0.4000. � 128 � ' , Schedule 7 City of Clearwater, Florida Property Tax Levies and Collections � Last Ten Fiscal Years ' Collected within the Fiscal Year of the Levy Total Collections to Date 1 Collections in Fiscal Taxes Levied for Percentage Subsequent Percentage Year the Fiscal Year Amount of Levy Years Amount of Levy , 1998 $ 23,008,214 $ 22,856,951 99.34% $ 129,690 $ 22,986,641 99.91 % ' 1999 23,951,878 23,854,396 99.59 226,812 24,081,208 100.54 � 2000 26,998,318 26,876,461 99.55 106,800 26,983,261 99.94 � 2001 28,664,112 28,567,429 99.66 77,716 28,645,145 99.93 � 2002 31,303,900 31,204,025 99.68 130,632 31,334,657 100.10 2003 35,153,114 35, 038,555 99.67 91,548 35,130,103 99.93 � 2004 38,430,718 38,277,689 99.60 94,574 38,372,263 99.85 ' 2005 43,001,524 42,905,336 99.78 124,999 43,030,335 100.07 ' 2006 49,719,539 49,598,439 99.76 118,601 49,717,040 99.99 ' 2007 55,514,622 55,423,836 99.84 48,222 55,472,058 99.92 � Note 1: Discounts are allowed for early payment: 4% for November, 3% for December, 2% for January, and 1% for February. No discount is allowed for payment in March. Penalties are assessed beginning in April. � Note 2: All delinquent taxes collected are applied to the immediately prior tax year, because the County Tax Collector does not allocate delinquent taxes collected by the original tax year levied. Consequently, the total collections-to-date percentage of the tax levy-to-date may be greater than 100% of the tax levy for a given year. , � , 129 Schedule 8a Tax�yer REAL PROPERTY Beliweather Prop. LP Ltd. Clearwater Mall Park Isle Condo Dev. LL Sand Key Association Ltd. Taylor, John S. III Sunspree Green LLC Weingarten Nostat Inc. United Dominion RLTY Trust ZOM Bayside Arbors Ltd. Countryside Shoppes Holland Westshore Inc Tre Regency Land Partnership Walmart Stores, Inc. Duff, Andrew R. - Trustee HRE Prop. Hancock J. Life Ins. CO Total City of Clearwater, Florida Principal Real Property Taxpayer Current Year and Nine Years Ag 2007 Percentage of Total City Taxable Taxable Assessed Assessed Value Rank Value $ 121,397,300 1 1.20% 45,216,800 2 0.45% 42,916,100 3 0.42% 35,500,000 4 0.35% 35,135,000 5 0.35% 34,466,000 6 0.34% 31,820,000 7 0.31 % 28,150,000 8 028% 25,606,200 9 0.25% 25,250,000 10 0.25% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% $ 425,457,400 4.19% Source: Pinellas County Property Appraiser 130 , � s, � 0 1998 � Percentage of Total City � Taxable Taxable Assessed Assessed Value Rank Value $ 79,587,800 1 1.99% � � 19,678,400 5 0.49% � 30,370,200 3 0.76% � � 18,386,800 6 0.46% � 56,440,500 2 1.41 % , 29,262,300 4 0.73% � 17,743,400 7 0.44% 14,618,700 8 0.37% � 14,516,400 9 0.36% 13,772,300 10 0.34% � $ 294,376,800 7.36% � � � � i � City of Clearwater, Florida Principal Personal Property Taxpayers, � Current Year and Nine Years Ago 2007 � Percentage of Total City Taxable Taxable � Assessed Assessed Taxnaver Value Rank Value PERSONAL ' Progress Energy (1) $ 58,362,900 1 11.42% Verizon Florida Inc (2) 52,343,850 2 10.24°/a � Bright House Networks LLC (3) 17,071,630 3 3.34% Bausch & Lomb Inc 9,173,970 4 1.80% � InstrumentTransformers 6,301,730 5 1.23°/a �Macy's Florida 4,481,450 6 0.88% Lowe's of Clearwater 4,418,860 7 0.86% 1 Siemens Financial Services 4,258,690 8 0.83% General Electric Credit Co 3,684,910 9 0.72% Schedule 8b 1998 Percentage of Total City Taxable Taxabie Assessed Assessed Value Rank Value $ 47,329,760 2 9.59% 90,009,090 1 18.23% 10,371,980 4 2.10% 4,955,050 7 � Sheraton Sand Key 3,509,940 10 0.69°/a 3,353,420 GTE Media Ventures, Inc - - 21,253,130 � GTE Telephone Operations - - 6,095,380 � Clearwater Community Hospital = - 5,095,930 Storz Ophthalmics, Inc. 3,719,930 , Double Tree Resort - - 2,822,400 Total $ 163,607,930 32.01% $ 195,006,070 � Notes: (1) Progress Energy was Florida Power in 1998. (2) Verizon Fiorida, Inc. was GTE in 1998. (3) Bright House Networks was Time Warner Entertainment in 1998. � Source: Pinellas County Property Appraiser � r ' 131 9 3 5 6 8 10 1.00% 0.68% 4.30% 1.23% 1.03% 0.75% 0.57% 39.49% 1 �/% N Schedule 9 City of Clearwater, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years (amounts in thousands, except per capita) Governmental Activities Business-Type Activities Spring Training General Public Service Sales Tax Facility Water/Sewer Gas Stormwater Public Service Total Percentage Fiscal Obligation Tax Revenue Revenue Intergovernmental Loans Capital Revenue Revenue Revenue Tax Revenue Capital Primary of Personal Per Year �Q[1dfl @�Il�S @Qlld� Revenue Bonds �able �� Bonds Bonds Bonds �� Leases Government Income (al C�pita (al 1998 $ 135 $ 1999 - 2000 - 2001 - 2OOC ' 2003 - 2004 - 2005 - 2006 - 2007 - 10,871 $ 10,480 10,264 10,037 11,256 10,925 10,590 10,241 9,885 9,565 - $ 46,445 46,445 41,345 36,075 30,615 24,955 19,080 - $ 35 $ 9,659 $ 79,476 $30,419 $ - - 8,608 79,266 29,907 - - 9,592 76,782 29,374 - - 12,349 74,186 28,822 14,810 - 12,239 130,417 28,630 14,645 - 11,671 127,505 28,000 14,185 - 10,672 123,690 28,040 13,720 - 9,891 119,441 27,755 13,245 - 11,047 141,524 26,930 12,755 - 10,840 136,955 23,015 7,418 7,317 31,960 31,835 45,695 45,755 44,830 43,845 $ 362 $ 631 $ 131,588 180 518 128,959 163 674 134,267 142 1,645 180,943 104 1,792 277,653 80 2,075 268,081 55 2,358 271,360 29 2,330 259,777 - 1,906 274,322 - 1,366 257,421 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (a) See Schedule 14 for personal income and population data. These ratios are caiculated using personal income from two fiscal years prior. 4.51 % $ 1,262 4.52% 1,235 4.28% 1,234 5.59% 1,657 7.96% 2,531 7.48% 2,436 7.37% 2,460 6.98% 2,344 6.87% 2,480 6.12% 2,330 �� r■r �r �� r� r � rr � r r � rr � r�r � � � � � ' � � , � � ' ' � � � � � � City of Clearwater, Florida Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (amounts in thousands, except per capita) General Bonded Debt Outstanding General Public Service Sales Tax Fiscal Obligation Tax Revenue Revenue Year Bonds Bonds Bonds 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 $ 135 $ 11,233 $ - 10,660 - 10,427 - 10,179 - 11,360 - 11,005 - 10,645 - 10,270 - 9,885 - 9,565 46,445 46,445 41,345 36,075 30,615 24,955 19,080 Schedule 10 Percentage of Actual Taxable Value of Per Total Property (a) Ca ita b) $ 11,368 10,660 10,427 56,624 57,805 52,350 46,720 40, 885 34,840 28,645 0.22% $ 109 0.19% 102 0.18% 96 0.92% 518 0.86% 527 0.73% 476 0.59% 423 0.47% 369 0.34% 315 0.23% 259 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (a) See Schedule 5 for property value data. (b) Population data can be found in Schedule 14. 133 Schedule 11 City of Clearwater, Florida Direct and Overlapping Governmental Activities Debt As of September 30, 2007 (amounts in thousands) Governmental Unit Debt repaid with property taxes Other debt Pinellas Counry Capital improvement Revenue Bonds Pinellas County Capitai Leases Pinellas County School District State Bonds b Pinellas County School District Capital Leases Subtotal, overlapping debt City direct debt Total direct and overlapping debt � � � � Estimated Estimated Share of Debt Percentage Overlapping � Outstandina A�olicable a Debt $ - n/a $ _ 64, 385 6,403 36, 665 28,219 14.1% 14.1% 14.1% 14.1% � 9,087 f 904 � 5,175 3,983 � 19,148 52,240 � $ 71,388 � Sources: Assessed value data used to estimate applicable percentages provided by Pinellas County Property Appraiser. � Debt outstanding data provided by each governmental unit. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This , schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Clearwater. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. ' The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable � percentages were estimated by determining the portion of another governmental uniYs taxable assessed value that is within the City's boundaries and dividing it by each unit's total taxable assessed value. � b The School District State Bonds are secured by a pledge of the DistricYs portion of the State-assessed motor vehicle license tax. The State's full faith and credit is also pledged for the bonds. 134 � � � � � � � r � Fiscal Year � � � � � , � 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 $ Debt Limit 783,749 799,897 830,744 870,699 931,415 1,026,014 1,116,032 1,236,804 1,395,730 1,631,179 2,028,832 City of Clearwater, Florida Legal Debt Margin Information Last Ten Fiscal Years (amounts in thousands) $ Total Net Debt Applicable to Limit 112,921 118,042 116,410 121.,644 167,938 254,873 243,518 249,370 236,154 247,706 230,639 � Legal Debt Margin Calculation for Fiscal Year 2006• Assessed valuation of non-exempt real estate � Debt Limit (20% of assessed valuation per City Charter) Debt applicable to limit: � Revenue bonds Capital leases Less: Amount set aside for repayment � of bonded debt Legal debt margin � Legal Debt Margin $ 670,828 681, 855 714,334 749,055 763,477 771,141 872,514 987,434 1,159,576 1,383,473 1,798,193 $ 245,215 12,206 (26,782) $ Schedule 12 Total Net Debt Appiicable to Limit as Percentage of Debt Limit 14.41 % 14.76% 14.01 % 13.97% 18.03% 24.84% 21.82% 20.16% 16.92% 15.19% 11.37% 10,144,160 2,028,832 230,639 $ 1,798,193 Note: Per City Charter, the City's indebtedness, to include revenue, refunding, and improvement bonds, � shall not exceed 20 percent of the current assessed valuation of all real property located in the City. � 135 Schedule 13 Page 1 of 2 Fiscal Y��L 2001 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 City of Clearwater, Florida Pledged-Revenue Coverage Last Ten Fiscal Years �a� (amounts in thousands) Less: Net Gross Operating Available Debt Service Revenues �e� Revenues Princioal Interest Infrastructure Sales Tax Bonds �b� $ 8,340 $ - $ 8,340 $ - 8,458 - 8,458 - 8,662 - 8,662 5,100 9,120 - 9,120 5,270 9,978 - 9,978 5,460 10,704 - 10,704 5,660 9,931 - 9,931 5,875 Spring Training Facility Bonds �0� $ 1,148 $ - $ 1,148 $ - 1,115 - 1,115 165 1, 086 - 1, 086 460 1,098 - 1,098 465 1,107 - 1,107 475 1,112 - 1,112 490 Public Service Tax/Improvement Revenue Bonds �d� $ 14,630 $ - $ 14,630 $ 575 15,238 - 15,238 235 15,243 - 15,243 250 15,486 - 15,486 110 18,273 - 18,273 355 17,381 - 17,381 360 17,027 - 17,027 375 17,493 - 17,493 385 18,118 - 18,118 385 18,194 - 18,194 320 $ - 1, 984 1, 882 1, 674 1,432 1,896 �b� 889 $ - 629 623 614 603 591 $ 656 634 613 408 506 496 485 473 473 464 vr n/a 4.26 1.24 1.31 1.45 1.42 1.47 n/a 1.40 1.00 1.02 1.03 1.03 11.88 17.54 17.66 29.90 21.22 20.30 19.80 20.39 21.12 23.21 �a� Less than ten years of coverage are provided for the Infrastructure Sales Tax Revenue Bonds issued June 2001 and the Spring Training Facility Bonds issued September 2002. �b� Pledged revenues for the Infrastructure Sales Tax Revenue Bonds include the City's share of revenues derived by Pinellas County, Florida, from the levy and collection of a one-cent discretionary infrastructure sales surtax pursuant to Section 212.055(2), Florida Statutes, as amended. Interest for 2006 includes arbitrage rebate of $742,000. �`� Pledged revenues for the Spring Training Facility Revenue Bonds include payments received from the State of Florida pursuant to Section 212.20, Florida Statutes, and payments from Pinellas County, pursuant to an inter-local agreement dated December 1, 2000, along with related interest earnings. �d� Pledged revenues for the Improvement Revenue Refunding Bonds, issued October 2001, were public service taxes. Effective October 1, 2001, the Florida Legislature repealed the public tax on communications and created a replacement communications services tax. Consequently the pledged revenues effective October 1, 2001, include both public service taxes and the new communications services taxes. 136 � ' � � ' � � � � i � � ' � � � � 1 City of Clearwater, Florida Pledged-Revenue Coverage Last Ten Fiscal Years �a� (amounts in thousands) Less: Net Fiscal Gross Operating Available Year Revenues Ex�en,s� Revenues Water & Sewer Utility Revenue Bonds 1998 $ 36,311 $ 24,608 $ 11,703 1999 35,851 24,806 11,045 2000 37,407 25,883 11,524 2001 39,486 27,337 12,149 2002 39,452 28,552 10,900 2003 40,243 29,611 10,632 2004 44,193 31,206 12,987 2005 46,379 32,243 14,136 2006 51,197 36,546 14,651 2007 52,815 37,109 15,706 Gas Utility Revenue Bonds 1998 $ 19,438 $ 14,975 $ 4,463 1999 18,772 14,702 4,070 2000 21,533 16,463 5,070 2001 31,212 24,575 6,637 2002 27,218 20,665 6,553 2003 30,373 23,729 6,644 2004 33,229 26,316 6,913 2005 37,797 30,584 7,213 2006 43,772 34,154 9,618 2007 39,756 30,483 9,273 Stormwater Utility Revenue Bonds 2000 $ 4,938 $ 3,183 $ 1,755 2001 5,323 3,608 1,715 2002 6,846 3,958 2,888 2003 8,660 4,727 3,933 2004 9,680 5,923 3,757 2005 10,523 5,754 4,769 2006 11,589 6,020 5,569 2007 12,458 6,161 6,297 Debt Service Prin i Interest $ 4,305 4,500 4,705 4,920 5,165 5,430 6,575 7,000 7,020 7,115 $ $ 455 540 560 580 610 630 675 770 825 855 105 120 125 570 580 925 985 $ 2,870 2,083 1,581 1,359 1,118 3,334 2,964 2,892 2,711 3,588 $ 1,379 1,565 1,543 1,519 1,495 1,470 1, 370 1,228 1,192 1,148 $ 185 400 395 1,104 1,445 1, 830 1,906 1,874 Schedule 13 (continued) Page 2 of 2 Maximum ov r Coverage �b� 1.63 1.68 1.83 1.93 1.73 1.21 1.36 1.43 1.51 1.47 2.43 1.93 2.41 3.16 3.11 3.16 3.38 3.61 4.77 4.63 9.49 3.40 5.61 3.20 1.86 1.98 1.97 2.20 �a� During November 1999 the City issued $7,500,000 of Stormwater System Revenue Bonds, consequently less than ten years of coverage are provided. �b� Maximum debt service coverage is presented for continuing disclosure on the Gas System Revenue Bonds and is based upon the maximum annuai debt service for outstanding bonds and parity bonds. � 137 2.05 1.87 2.33 3.05 3.01 3.05 3.18 3.35 4.47 4.31 Schedule 14 City of Clearwater, Florida Demographic and Economic Statistics Last Ten Fiscal Years Personal Income Per Capita Annual Average (thousands of Personal Median School Unemployment Year Population (a) dollars) Income (b) Age (c ) Enrollment (d) Rate (e) 1998 104,281 $ 2,918,408 $ 27,986 43.6 13,714 2.9% 1999 104,454 2,852,116 27,305 43.9 14,551 3.0% 2000 108,787 3,134,480 28,813 44.2 15,978 2.7% 2001 109,231 3,238,590 29,649 43.0 16,293 2.7% 2002 109,719 3,487,309 31,784 43.0 17,047 3.9% 2003 110,055 3,586,142 32,585 43.9 16,295 5.4% 2004 110,325 3,680,111 33,357 44.0 16,323 4.7% 2005 110,831 3,724,143 33,602 44.2 15,964 3.4% 2006 110,602 3,993,728 36,109 44.2 15,696 2.9% 2007 110,469 4,207,212 38,085 44.5 15,500 3.6% (a) (b) (c ) (d) (e) Source is the University of Florida, Bureau of Economic and Business Research April 1, 2007 estimate for current year and Florida Statistical Abstract for prior years. Data is from per capita personal income for Pinellas County for two years prior. Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. Data is for Pinellas County for prior year. Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. Source of data is the Pinellas County School District. Source for fiscal years 1998 thru 2006 is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract, Annual Averages of the indicated fiscal year. Source for fiscal 2007 is the US Dept of Labor, Bureau of Labor Statistics, Tampa Metro Area, year ended September 2007. Note: Data is the latest published annual data available for an unspecified point in each year, not specifically September 30. 138 � , � � � , � � � ' � ' ' ' � � � � � Schedule 15 City of Clearwater, Florida Principal Employersa, Current Year and Nine Years Ago 2007 b 1998 � Percentage of Percentage of Total County Total County Employer Employees Rank Employment Employees Rank Employment Pinellas County School District Pinellas County Government d Morton Plant Hospital CRUM Resources & Staffing St Petersburg City Nielsen Media Research Bay Pines VA Medical Center Raymond James All Childrens Hospital Bayfront Medical Center Total Employment b,0 15,980 6,490 4,685 3,640 3, 485 3,480 2,800 2,450 2,370 2,180 468,892 1 2 3 4 5 6 7 8 9 10 3.41 % 1.38% 1.00% 0.78% 0.74% 0.74% 0.60% 0.52% 0.51 % 0.46% a Data is for Pinellas County. City data is not available. b Source: Pinellas County, FY 2006-2007 Annual Operating and Capital Budget, Pinellas County Clerk Annual Budget FY 2006-2007, and Pinellas County Department of Economic Development. ` Data for 1998 is not available. ° Includes part-time personnel budgeted. 139 Schedule 16 � .� •i ' .. ,u � � City of Clearwater, Florida Full-time Equivalent City Government Employees by FunctioNProgram � Last Ten Fiscal Years General government Public safety Fire Police Physical environment Transportation Economic environment Human services Culture and recreation Library Parks & Rec Water & Sewer Utility Gas Utility Solid Waste Utility Stormwater Utility Recycling Marine Aviation Parking System Total Ful I-ti � me Equivalent Employees as of September 30 1998 ]�� 2494 24.Q1 2Q42 2SZQQ� 2.4SZ4 2Q4� 2.4Q� 2QQZ � 293.3 289.9 291.9 293.4 301.9 287.0 286.4 287.3 307.5 321.3 i 170.0 171.5 180.5 186.5 199.7 200.0 202.0 202.0 215.0 221.0 393.8 399.4 411.0 408.4 408.4 397.6 399.9 405.9 407.9 407.9 , 30.0 33.0 33.0 34.0 36.0 36.0 36.0 36.0 38.0 38.0 61.0 65.0 65.0 67.0 72.0 73.0 73.0 71.0 75.0 75.7 +� 29.0 41.0 47.0 52.0 52.3 64.3 67.3 67.1 69.5 66.5 9.0 9.0 1 0.0 4.0 4.0 4.0 4.0 3.0 3.0 3.0 , 84.4 83.3 79.0 80.4 81.4 83.4 95.9 95.9 94.9 93.9 � 191.6 194.9 203.0 207.8 209.6 217.0 241.9 235.4 239.8 240.8 155.0 154.0 154.8 158.0 166.0 170.0 169.0 169.0 175.0 175.0 � 95.0 95.0 95.0 91.0 90.0 90.0 90.0 90.0 90.0 90.0 � 104.0 105.0 108.0 108. 5 109. 5 106.0 107.5 109.5 112.0 112. 0 28.0 32.0 36.2 38.0 38.0 40.0 40.0 46.0 46.0 46.0 , 21.0 23.0 23.0 24.5 24.5 23.5 23.5 23.5 22.5 22.5 29.8 29.8 30.8 30.8 32.8 35.9 35.9 36.4 32.6 18.1 � - - - 2.0 1.0 2.4 2.4 1.9 1.9 1.9 9.9 9.7 9.6 9.6 9.6 14.8 20.8 20.8 20.8 20.7 � 1,704.8 1,735.5 1,777.8 1,795.9 1,836.7 1,844.9 1,895.5 1,900.7 1,951.4 1,954.3 � The increase in General Government FTE's and decrease in Marine FTE's for fiscal 2007 is the result of the transfer of 14.5 FTE's for beach guard operations to the General Fund. � Source: City of Clearwater Office of Management and Budget 140 � � � � � � � � � � � , , ' � ' � � � � � Schedule 17 City of Clearwater, Florida Operating Indicators by FunctioNProgram Last Four Fiscal Years* Fiscal Year Ended Sept 30: 2004 2005 2006 2007 Function/Program General government Planning Commercial building permits issued 1,859 1,804 Residential building permits issued 6,347 7,357 Public safety Police Average officer Training Hours 141 a 150 8 Total VolunteerTraining Hours 1,229 1,017 Fire Percentage of Fire calls under 7.5 minutes 92% 91 % Physical environment Square feet of sidewalks repaired/constructed 53,528 37,039 Transportation Miles of roadway resurfaced 13 12 Economic environment Code enforcement cases brought to compliance 9,439 8,701 Human services City employees that mentor in area schools 28 30 Culture and recreation Library system Library visits 854,004 975,547 Circulation 1,164,424 1,190,577 Parks and recreation Recreation center visitations 1,098,407 1,106,216 Athletic program visitations 266,276 511,620 Water and Sewer Utility Water customers 40,235 40,178 Volume of water pumped (million gallons/day) 13.15 14.18 Sewer customers 33,234 33,305 Miles of sewers cleaned 168 169 Gas Utility Number of customers 18,454 18,548 Solid Waste Utility Solid waste tonnage collected and disposed 130,914 128,080 Stormwater Utility Number of equivalent residential units 98,621 97,669 Recycling Utility Marketable tons recycied 14,443 14,324 * Note: Only four years of data are available. Fiscal 2007 is estimated if not available. No operating indicators are available for marine, aviation, parking, and Harborview Center functions. a Training hours for fiscal 2004 and 2005 included grant-funded training for Homeland Security. 141 2,163 2,104 6,316 5,122 55 60 932 1,010 90% 90% 48,458 49,000 10 14 9,762 8,750 38 34 902,135 1,193,637 623, 500 515,100 40,467 14.09 33,279 166 19, 035 132,741 97,297 14,433 920,000 1,940,000 630,000 521,750 40,407 12.66 33,255 19,470 138,400 98,513 14,180 Schedule 18 City of Clearwater, Florida Capital Asset Statistics by Function/Program Last Ten Fiscal Years Function/Program Public safety Fire Stations Police Stations Transportation Paved streets (miles) Culture and recreation Library system Volumes in collection (thousands) Parks and recreation Parks acreage Recreational paths (miles) Playgrounds Baseball and softball fields Soccer and football fields Recreation centers Water & Sewer Utility Water mains (miles) Sanitary sewer mains (miles) Daily treatment capacity (millions of gallons) Gas Utility Gas mains (miles) Stormwater Utility Stormwater mains (miles) Marine Boat slips Aviation Airpark spaces Parking system Parking spaces � � � As of September 30 � 1998 1� 2QQ4 2441 294.2 � 29Q4 29� 244Si 2007 � 6 6 6 7 7 7 8 8 8 8 8 8 8 8 9 9 9 10 10 10 � 304 304 304 304 304 304 305 305 305 305 � 443 466 497 534 546 557 557 570 565 590 � 1,069 1,069 1,126 1,130 1,130 1,130 1,130 1,134 1,160 1,160 � 6 6 7 7 7 7 7 13 14 16 30 30 30 31 31 31 31 32 33 33 35 37 37 36 36 36 35 35 35 35 17 17 20 17 17 17 17 24 25 25 � 9 9 10 10 11 12 12 7 7 7 519 521 522 523 559 559 567 567 568 571 ' 322 322 323 322 363 363 363 363 365 368 29 29 29 29 29 29 29 29 29 29 606 621 631 653 669 686 729 753 786 816 � 121 123 123 123 147 147 147 147 148 156 � 209 210 209 209 209 209 209 209 209 209 ' 174 174 174 174 177 177 177 177 177 177 � 3,858 3,786 3,773 3,753 3,538 3,615 3,653 3,686 3,636 3,069 The decrease in parking spaces for fiscal 2007 was due to loss of beach parking as the result of Beach Walk construction. � Sources: Various city departments � Note: No capital asset indicators are available for the general government, physical environment, economic environment, human services, solid waste, recycling, and Harborview Center functions. � 142 � _ _ _ _ -- I' � � LJ � i � r � � I� , � ' � � � , � � Single Audit / Grants Compliance 143 This Page /ntentionally Left B/ank 144 � ' , C_f � r � � � � ' � �l ' �� ' , � � , � , � �] ' , , � l _� � � Independent Auditors' Report on Internal Control Over Financial Reporting and on Compiiance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Honorable Mayor, City Councilmembers, City Manager and City Management City of Clearwater: 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 Clearwater (the "City") as of and for the year ended September 30, 2007, which collectively comprise the City's basic financial statements, and have issued our report thereon dated March 24, 2008. We have also audited the financial statements of each of the City's non-major governmental, non-major enterprise, internal service and fiduciary funds presented as supplementary information in the accompanying combining and individual fund financial statements as listed in the table of contents. 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 intemal 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. � � � 145 Our consideration of 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. We noted certain matters that we reported to management of the Ciiy in a separate letter dated March 24, 2008. 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 resutts of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of City Mayor, City Council members, City Manager and City Management, the State of Florida Office of the Auditor General and applicable federal and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. C��°� 3 ��?'��'� �. �. P, , , St. Petersburg, FL March 24, 2008 146 � , , , � ' � � ' , � � � , , i 1 1 1 , � � �I , Independent Auditors' Report on Compliance With Requirements Appiicable to Each Major Federal Awards Program and State Financial Assistance Projects and Internal Control Over Compiiance in Accordance With OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General Honorabie Mayor, City Councilmembers, ' City Manager and City Management City of Clearwater, Florida � � � , � , � � C� Compiiance We have audited the compliance of the City of Clearwater, Florida, "the City", with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) CircularA-133 Compliance Supplement, and the requirements described in the Executive Office of the Govemor's State Projects Compliance Supplement, that are applicable to each of its major federal programs and state financial assistance projects for the year ended September 30, 2007. The City's major federal programs and state financial assistance projects are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regufations, contracts, and grants applicable to each of its major federal programs and state financial assistance projects is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Audrting Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter 10.550, Rules of ihe Auditor General. Those standards, .OMB Circuiar A-133, and Chapter 10.550, Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program and state financial assistance project occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City's compliance with those requirements. � In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs and state financial assistance projects for the year ended September 30, 2007. � ' � 147 Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs and state financial assistance projects. In planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on a major federal program or state financial assistance project in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A control deficiency in the City's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program or state financial assistance project on a timely basis. A significant de�ciency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to administer a federal program or state financial assistance project such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program or state financial assistance project 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 (ikelihood that material noncompliance with a type of compliance requirement of a federal program or state financial assistance project will not be prevented or detected by the City's internal control. Our consideration of internal control over compliance 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 compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the City Mayor, City Council members, City Manager and City Management, the State of Florida Office of the Auditor General and applicable federal and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. `f�� . , � �{ , �,.L.� St. Petersburg, Florida March 24, 2008 148 , �I � L� ' � , � � ' IJ � , � � � ' � � � , ' City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance Projects For the Year Ended September 30, 2007 Federal Grantor / Federal � Pass-through Grantor / CFDA Share of Program Title Number Grant I.D. Number Expenditures , FEDERAL AWARDS Department of Commerce: , National Oceanic & Atmospheric Administration Passed Through Florida Department of Environmental Protection Cooper's Point � Passed Through Pinellas County Environmental Fund Clearvvater Invasive Species Removal Total Department of Commerce ' U.S. Department of Housing and Urban Development: � Community Development Block Grant - Entitlement Home Investment Partnerships Program � Total U.S. Department of Housing and Urban Development , U.S. Department of the Interior: Passed thru Florida Department of Environmental Protection Fish and Wildlife Service , National Park Service Myron Smith Bayview Park Total U.S. Department of the Interior , U.S. Department of Justice: Federal Forfeiture Sharing � Creation of the Clearwater Area Task Force on Human Trafficking ' Offie of Justice Programs Bureau of Justice Assistance Bulletproof Vest 2006 ' Office of Community Oriented Policing Services COPS 2004 Technology COPS 2005 Technology � Edward Byrne Memorial Justice Assistance Grant Program Red Light Running Project � Operacion Apoyo Hispano Total U.S. Department of Justice � � 149 11.419 DEP Agreement CZ611 11.463 (FL) - 11 (2005-003-020) 14.218 B-06-MC-12-0002 14.239 M-06-MC-12-0230 15.916 LW 12-00515 16.000 FL0520300 16.320 2006-VT-BX-0007 16.607 2006BOBX06133388 16.710 2004CKWX032 16.710 2005CKWX0071 16.710 16.738 2007-JAGC-PINE-1-P3-212 16.738 2005-DJ-BX-0950 16.738 $ 30,564 99,835 130,399 942,173 607,048 1,549,221 36,875 36,875 50,602 67,761 1,927 445,219 122,224 567,443 49,993 40,187 90,180 777,913 City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance Projects - Continued For the Year Ended September 30, 2007 Federal Grantor/ Pass-through Grantor/ Program Title FEDERAL AWARDS (continued) U.S. Department of Transportation: Federal Highway Administration Passed thru Florida Department of Transportation: Clearwater Beach West Bridge Connector Druid Trail Design & Construction Beach Walk Passed through Florida Department of Environmental Protection Recreation Trails Program East West Trail Renovations Total U.S. Department of Transportation U.S. Environmental Protection Agency: Seviile/Sunset Point & Del Oro Reclaimed water expansion Brownfield - Federal Brownfields Assessment and Cleanup Cooperative Agreements Passed through FL Department of Environmental Protection: Kapok Wetland & Floodplain Restoration Project Total U.S. Environmental Protection Agency Corporation For National and Community Services: Passed through FL Commission on Community Services Americorps Clearwater Program Americorps Clearwater 2006 Total Corporation for National and Community Services U.S. Department of Homeland Security: Passed thru Florida Department of Law Enforcement FY2005 Buffer Zone Protection Grant Total U.S. Department of Homeland Security Total Federal Financial Assistance 150 CFDA/CSFA Number Grant I.D. Number 20.205 Fed No. 9045-019C,Contract #AI 915 20.205 FPN 41 5277-1-38-01 20.205 FPN 41 6652-1-28-01 20.205 20.219 DEP Agreement T2604 66.202 XP-97495304 66.811 BL984872-99-4 66.818 BF-97493703-0 66.460 C9-9945-1503-0; FDEP G0087 94.006 Contract 05AC051059 94.006 Grant 06AFHFL0010008 97.078 2007-BZPP-PINE-1-N5027 , , Federal Share of � Expenditures ' 165,161 , 27,951 3,793,748 3,986,860 � 200,000 , 4,186,860 � 682,065 , 422,335 � 63,441 12,242 , 1,180,083 � � 37,785 68, 935 106,720 , , 99.9�a i 99,978 , $ 8,068,049 � i LJ , City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance Projects - Continued For the Year Ended September 30, 2007 , State Grantor / Pass-through Grantor / CSFA Program Title Number STATE FINANCIAL ASSISTANCE ' Florida Department of Environmental Protection: Stevenson's Creek Implementation Projects 37.039 ' Total Florida Department of Environmental Protection 37.039 , Florida Department of Community Affairs: Florida Housing Finance Corporation State Housing Initiative Partnership Program (SHIP) 52.901 � Total Fiorida Department of Community Affairs Florida Department of Transportation: , Drew Street & US19 Overpass Landscaping 55.003 Memorial Causeway Landscape Beautification 55.003 SR60 Courtney Campbell Causeway Landscape 55.003 � SR60 (Osceola Ave) to Ft Harrison Avenue Project ' Total Florida Department of Transportation Florida Department of Revenue: Phillies Stadium � Total Florida Department of Revenue Florida Fish and Wildlife Conservation Commission: 'High & Dry Marina Multi-Site Feasibility Study Total Fiorida Fish and Wildlife Conservation Commission � Total State Financial Assistance Total Expenditures of Federal Awards ' and State Financial Assistance Projects (a) Funded with State grants and aids appropriations. (b) State projects only. , �] LJ � CJ 55.003 55.008 73.016 State Share of Transfers to Grant I.D. Number Expenditures (a) Subrecipients (b) WAP050 n/a FO#256957-1-54-01 FP#257093-1-54-01 FPN#418868-1-54-01 FPN:403730 2 54 01 77.006 FWC 05101 151 $ 91,795 $ 91,795 - 1,224,521 64,210 1,224,521 64,210 74,208 374,921 122,115 571,244 280,000 851,244 1,080,624 1,080,624 19,374 19,374 $ 3,267,558 $ 64,210 $ 11,335,607 City of Ciearwater, Florida NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS For the Year Ended September 30, 2007 NOTE 1— BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance Projects presents the activity of all federal financial and state grant activity projects of the City of Clearwater, Florida (the "Cit�i'). Federal and state financial assistance received directly from federal and state agencies, and federal financial assistance passed through other governmental agencies are included on the schedules. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations and Chapter 10.550, Rules of the Auditor General. NOTE 2— BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance Projects is presented using the modified accrual or accrual basis of accounting, which is described in Note 1 to the City's basic financial statements. NOTE 3 — CFDA/CSFA NUMBER CFDA numbers represent Catalog of Federal Domestic Assistance and apply only to federal awards. CSFA numbers represent Catalog of State Financial Assistance and apply only to state financial assistance. 152 CITY OF CLEARWATER, FLORIDA Schedule of Findings and Questioned Costs For the Year Ended September 30, 2007 SECTION I. Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unqualified Internal control over financial reporting: - Material wealrness(es) identified Yes X No - Si�if'icant deficiency(s) identified that are not considered to be material weal�esses Yes X None reported Noncompliance material to financial statements noted Yes X No Federal Awards Internal control over major federal programs: - Material weal�ess(es) identified Yes X No - Significant deficiency(s) identified that are not considered to be material weal�esses Yes X None reported Noncompliance material to federal awards Yes X No Type of auditar's report issued on compliance for major federal pro�ams: Unqualif'ied Any audit findi.ngs disclosed that are required to be reported in accorda.nce with Section 510(a) of Circulaz A-133 Yes X No Identification of major federal programs: CFDA Number(s) Name of Federal Prog�am or Cluster 16.710 COPS Technology Grants 20.205 Fiighway Planning and Construction 20.219 Recreational Trails Program 66.811 Brownfield Revolving Loan Fund Dollar threshold used to distinguish between Type A and Type B Programs 300 000 Auditee qualified as low-risk auditee? X Yes No 153 CITY OF CLEARWATER, FLORdDA Schedule of Findings and Questioned Costs For the Year Ended September 30, 2007 State Proiects Intemal control over major State projects: - Material weal�.ess(es) ident�ed Yes X No - Significant deficiency(s) identified that are not considered to be material weal�esses Yes X None reported Noncompliance material to State awards Yes X No Type of auditor's report issued on compliance for major State projects: Unqualified Any audit fmdings disclosed that are required to be reported in accordance with Chapter 10.550, Rules of the Auditor General Yes X No Ident�cation of major State projects: CSFA Number(s) Name of State Proiect 52.901 State Housing Initiative Partnership Program 55.003 Highway Beautification Council Grant Dollar threshold used to distinb ish between Type A and Type B Programs None reported. None reported. None reported. d SECTION II. Financial Statement Fand'angs SECTION III. Federal Award Findings and Questioned Costs SECTION N. State Award Findings and Questioned Costs 154 $ 300,000 � u � � � I J' �� C' , �� , independent Auditors' Management Letter Honorable Mayor, City Councilmembers, City Manager and City Management City of Clearwater, 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 Clearwater, Florida (the "City"), as of and for the year ended September 30, 2007, and have issued our report thereon dated March 24, 2008. We have also audited the financial statements of each of the City's non-major governmental, non-major enterprise, internal service and fiduciary funds presented as supplementary information in the accompanying combining and individual fund financial statements as listed in the table of contents. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicabie to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, Independent Auditors' Report on Compliance with Requirements Applicable to each Major Federal Awards Program and State Financial Assistance Projects and Internal Control over Compliance in accordance with OMB Circular A- 133 and Chapter 10.550, Rules of the Auditor General, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 24, 2008, should be considered in conjunction with this management letter. � Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General-Local Government Entity Audits. Those rules (Section 10.554(1)(i)1) require that we address in the management letter whether or not corrective actions have been taken to address , significant findings and recommendations made in the preceding annual financial audit report. There were no significant findings or recommendations made in the preceding annual financial audit. � ' , � � The Rules of the Auditor General (Section 10.554(1)(i)2) state that a management letter shall have a statement as to whether or not the City complied with Section 218.415, Florida Statutes, regarding the investment of public funds. tn connection with our audit of the financial statements of the City, the results of our tests did not indicate that the City was in noncompliance with Section 218.415 regarding the investment of public funds. The Rules of the Auditor General (Section 10.554(1)(i)3) require disclosure in the management letter of any recommendations to improve the City's management, accounting procedures, and internal controls. See Appendix A for management letter comments with recommendations in connection with the fiscal 2007 financial statement audit. 155 The Rules of the Auditor General (Section 10.554(1)(i)4) require disclosure in the management letter of any violations of provisions of contracts and grant agreements or abuse that have an effect on the financial statements that is less than material but more than inconsequential. There were no such matters noted. � The Rules of the Auditor General (Section 10.554 (1)(i)5) allow for the following matters that are inconsequential to the financial statements, considering both quantitative and qualitative factors to be reported based on professional judgment: (a) immaterial violations of laws, rules, regulations, and contractual provisions or abuse that have occurred, or are likely to have occurred; (b) immaterial improper or illegal expenditures; (c) control deficiencies that are not significant deficiencies. There were no such matters noted. The Rules of the Auditor General (Section 10.554(1)(i)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 disctosed in the management letter, unless disclosed in the notes to the financial statements. The City of Clearwater, located in Pinellas County,' Florida was incorporated in June 1923. The legal authority by which the City was created and is governed is its charter, which was derived from Chapter 9710 Special Laws of Florida, as amended. The Clearwater Redevelopment Agency (CRA), a blended component unit of the City of Clearwater, Florida, was created by authority of Florida Statute Chapter 163, Part III, and the City of Clearwater Resolution 81.68. 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 of the financial statements of the City, the results of our tests did not indicate that the City met any of the specified conditions of a financial emergency contained in Section 218.503(1), Florida Statutes. However, our audit does not provide a legal determination on the City's compliance with this requirement. The Rules of the Auditor General (Section 10.554(1)(i)7.b.) state that a management letter shall include a statement as to whether or not the financial report filed with the Florida Department of Financial Services, pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the current audit period and, if not, explanations of any significant differences. In connection with our audit of the City, the results of our tests indicate that the financial report, filed with the Department of Financial Services, is in agreement with the annual audited financial statements for the year ended September 30, 2007. As required by the Rules of the Auditor General (Sections 10.554(1)(i)7.c. and 10.556(7), the scope of our audit included financial condition assessment procedures as of September 30, 2007. It is management's responsibility to monitor the City'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 management. The results of our financial condition assessment procedures disclosed no deteriorating financial conditions. The City's response to the findings identified in Appendix A are included in Appendix A. We did not audit the City's response and, accordingly, we express no opinion on it. 156 , , � � � ' ' � ' � � � � , ' ' , , , This management letter is intended solely for the information and use of the City Mayor, City Councilmembers, City Manager, management, the State of Florida Office of the Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than those specified parties. We would like to thank the City for the courtesy and assistance extended to us by the staff during our engagement. Should you have any questions concerning the matters discussed herein, we shall be pleased to discuss them with you at your convenience. �� r'�� , � , �.. �-. P, St. Petersburg, Florida March 24, 2008 157 City of Ciearwater, Florida Appendix A— Management Letter Comments September 30, 2007 In planning and performing our audit of the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Ciiy of Clearwater, Florida (the "City"), as of and for the year ended September 30, 2007, which collectively comprise the City's basic financiaf statements, we considered its internal controls in order to determine our auditing procedures for the purpose of expressing our opinions on the basis financial statements and not to provide assurance on internal control. During our audit we became aware of matters that present opportunities for strengthening internal controls and operating efficiency. We will review the status of these comments during our next engagement. CURRENT YEAR RECOMMENDATIONS General Internal Controls Construction in Process Observation: We noted instances during our testing of capital assets where certain completed projects were not capitalized upon completion. In addition, we noted an instance where it was determined that a project included in construction in process should have been expensed but was not. Recommendation: We recommend that the City monitor the Construction in Process closely to ensure that projects are being capitalized upon completion and to verify the overall accuracy of the balances recorded. Management's Response: Management concurs with the recommendation and has implemented additional procedures to ensure that construction in process is monitored on an accurate and timely basis. Information Technoloav Internal Controls Security Program, SDLC Methodology and Formal Resource Classi�cation Observation: A management-approved security program has not been developed to cover all major information systems, facilities, operations and financial reporting processes, which increases the risk that an end-user will waste or misuse the City's information systems asszts or customer data. In addition, there was no formal documentation for the SDLC methodology and formal resource classifications. Documentation of the SDLC methodology is necessary to ensure procedures are followed when applications are designed and developed. Classifying data as critical and by sensitivity allows the City to ensure consistent protection of information and other criticaf data throughout the system. � 158 ' , � � �J � ��i ' ' �� , , ' ' ' �� ' , City of Clearwater, Florida Appendix A— Management Letter Comments September 30, 2007 Recommendation: We recommend that a security program be formally documented, outlining the security policies of the organization that are in place to restrict both physical and logical access to sensitive data. Network security, back-up and disaster recovery procedures, including testing procedures and security training programs, should be included as part ofi this program and documentation. The program should be reviewed and updated annually to accurately reflect changes in the information systems environment. We also recommend the SDLC methodology and resource classification. Management's Response: Management understands and agrees with the importance of system documentation. The City has operated under a governance structure which addresses many of these concerns and provides a framework for procedures and documentation. Development of a formal plan based upon the SDLC methodology will be evaluated and prioritized based upon available resources and potential benefit. Other Observations and Recommendations Capital Assets Purchased with Grant Funding Observation: We noted during our testing of Federal and State grants that the City's capital asset system does not include procedures to specifically identify assets purchased with Federal or State grant funds. We did not become aware of any issues related to grant related asset disposals but procedures should be established to ensure problems do not arise in the future. Recommendation: Since many times grantors require specific protocol be followed when assets purchased with Federal or State grant funds are later disposed of and/or sold, we recommend that the City implement a procedure to include a specific identifier ir. the City's capital asset record system to track assets purchased with Federal or State grant funds. � Management's Response: Management concurs and will modify the City's capital asset record system to identify and track assets purchased with Federal or State grant funds. STA3'US OF PRIOR Y�AR g�C011!!!�lIENDATIONS There were no recommendations in connection with the prior year audit. 159 This Page Intentionally Left Blank 160 � ' � � n L_J � ' , ' LJ C_l � � , �� , � , � `s � � t � � ,_. . �,�..... wr• �� - �� :� i�: —�. , , _ _ �,�.. ��n �� . µ. ,,�� , , , ,��.-- _ „�. ; W � A�� _ �� _ �;� �~' � . =,. , � :.. . �,.r ` . . n M4:i� . . . 'M's �►S. 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