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CITY OF CLEARWATER FY 2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT�� . � . �� ,,,- -�� '� ew�;� �- O �'" C L L�-. ,.� ��' ;� ' r . _ ; r�'S�,A�i �: � k - : �►�. ' "��- � F� I D �► . �. ,. _ . �-:�; . - _ _ . - ��E1 y � _ y' � . ,� ;� . . - ' � � �� O'w � � . ,a��ti'� - � - _ ;��' - � +� t. y� � ' � ° .''�,; i.r-.- - .. � fi � �;r-* - � — �� . , . _ �a+ �. � .�{ � , � I • � �4 '. i � � .. t.' � . ,+IR • � � ,�„ — ��Y•� , . � � .' ' � I� y -"�""' �. _, � �-��' -� `o a =�x.� , � '�:: ` ��,. a �;� q . , y� 1 . . _ . �- �. 4' � � + ,K .i� . . � .� _ y ' .•� I�/ . S • <r ` � '�' ' . - �% l� �3# : � .��. �� ,� . �,; j �� , � ' �. �` • ; - ;� ' �... r �u,�. � '� � �� _, , ' �, ' '� �' � ��as • ",� e � � .� � ` �„ �. A � ° - � = r� : 1�+� �'�� \ . ��■�� _ _ . . ' � .cxW�'.�rekr..isel� � , ,y��Y� � � , . ._ _ . �'■ �'�' - . ." � . ,� -•- . . � . .. 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G- . . ,, ` . ..... g IR7:�� ' . M ��iS P �.� 'P�� ' �'�p�M�d�� +_f f4 ' _ � . 1 �-.'. . .. - M .. - �� .' � � ' =-. • .. V�/ � � � i fl � e `�;s� �!'� ," �q:w a � � =' �,'�' t' ,,:._�:�� , .,.�#,..:. �_, �. � � � �' � � � � � � ' � � � �' � � � � City of Clearwater, Florida Comprehensive Annual Financial Report for Fiscal Year Ended September 30, 2008 Frank V. Hibbard Mayor George N. Cretekos John P. Doran Paul F. Gibson Vice Mayor Councilmember Councilmember William B. Horne II Cisy Manager Margaret L. Simmons, CPA Finance Director 1'repared by: City of Clearwater Finance Department Carlen A. Petersen Councilmember This Page Intentionally Left Blank �� u �� l �� f t � � � � � •Li � � Z � � O 0 c c� � 0 � � � m c� � 0 z �_ I � � � � � � � � � � � � � � � City of Ciearwater, Fiorida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2008 TABLE OF CONTENTS INTRODUCTORY SECTION: Title Page and List of Elected and Appointed Officials ....................................................................................... i .. Letterof Transmittal .......................................................................................................................................... vn 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 Governmental 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: Schedulesof Funding Progress ..................................................................................................................82 Schedules of Employer Contributions .........................................................................................................83 Notes to Schedules of Required Pension Supplementary Information ......................................................84 Required Supplementary Information — Other Post-Employment Benefits: Scheduleof Funding Progress ....................................................................................................................85 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds ...................................................................90 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — NonmajorGovernmental Funds ..............................................................................................................92 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual (GAAP Basis) — Community Redevelopment Agency Special Revenue Fund.......95 Combining Statement of Net Assets — Nonmajor Enterprise Funds ..........................................................98 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - NonmajorEnterprise Funds ................................................................................................................ 100 Combining Statement of Cash Flows - Nonmajor Enterprise Funds ...................................................... 102 Combining Statement of Net Assets — Internal Service Funds ............................................................... 108 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - InternalService Funds ......................................................................................................................... 109 Combining Statement of Cash Flows — Internal Service Funds .............................................................. 110 iii This Page Intentionally Left Blank �� `J � � � � � � �� =J l__.' � �� City of Clearwater, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2008 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 2004, 2005, and 2007 .......................... 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 Bonds, Series 2001 and 2008 .................................... FireServices Program .............................................................................................................................. 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 ................................................................................. Property Tax Levies and Collections ............................................................................................. Principal Real Property Taxpayers ................................................................................................ Principal Personal Property Taxpayers ......................................................................................... 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 ......................................................................................................... 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 With Govemment Auditing Standards ............................................................................................................... Independent Auditors' Report On Compliance With Requirements Applicable To Each Major Federal Awards Program And State 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 ........................................................................................................... u 114 115 116 118 123 126 127 127 128 129 131 132 134 135 136 137 138 139 140 141 142 143 144 145 146 148 149 150 151 152 155 157 159 162 163 167 This Page Intentionally Left Blank vi � � � L_I � � � � �, � � � � �� CC[Y �'IA.'VAGf:R � March 20 2009 � L_.J � � � � � � CITY OF CLEARWATER POST �FFICEi BOX 4%4g� CI.F.ARWAT'F.R� �'LORIDA 33%5g-4%4cg CITY HAI.I., 112 SOUTH �SCI?OIA I�VENI;E, CLfARVG'AT�R, FI.ORIDA 33%56 Trl.rPxo�vr (727) 562-4040 Fnx (727) 562-4052 . The Honorable Mayor, Counciimembers, and Citizens of the City of Clearwater: The City of Ciearwater Charter (Section 2.01(c)3), Florida Statutes, and various covenants relating to debt and pension obiigations of the City require an annual audit of the City's financiai statements of all funds of the City by a firm of licensed ce�tified 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 fiscal year ended September 30, 2008. This report consists of management's 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 governmenYs 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, 2008, 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 flnancial 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, 2008, 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 Audit" 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 „I;�x�ni. EMi>i.oYMi�:N�r nnr� A��rien�n�rivi: Acrio;� F.n��i.ovi�:R„ GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financi�l statements in the form of the ManagemenYs 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, downtown boat slips, 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 a significant economic slowdown during fiscal 2008, fueled by a decline in the housing market. The Tampa Bay metro area average unemployment rate increased from 4.5 percent for the year ended September 2007 to 7.1 percent for the year ended September 2008, versus a national rate of 6.2%. However, development interest in the City's beach and downtown areas continues, and is cause for future optimism, as the Beach Walk and downtown streetscape projects are expected to spur further redevelopment of the beach and downtown areas. viii � IJ �� LJ � � � � � � � L_J .� � � �� Long-term Financial Planning Fiscal 2008 saw the completion of over $43 million of construction projects including the downtown streetscape project; a new 9,000-square-foot fire training facility; a 4,000-square-foot fire storage facility; North Greenwood and Skycrest neighborhoods traffic calming projects; the new Mandalay Channel Pedestrian Bridge; and the beachwalk grand opening was held in July 2008. A major project in process is the downtown boat slips, with construction expected to begin in mid 2009. 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. The capital projects budget for fiscal year 2008/09 totals $46 million, while the six-year plan includes almost $313 million of capital projects to proactively support the City's water and sewer, stormwater, solid waste, recycling, and gas utility operations, along with other enterprise and general government operations. 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 Qf the investment principal is more important than the return .�n 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 4.84% on its investments during fiscal year 2008. 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, 2008. 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. 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, 2007. This was the twenty-ninth 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 2008 Budget document, the twenty-second 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, . .�6,��-r�uc. --1{.. William B. Horne, II City Manager r[l � � .. � �� „ Margaret L. Simmons, CPA Finance Director X � � O � � � � � � � � � � � � � , Certificate of � • Achlevement � for Excellence � in Financial Reporting � � Presented to � � � � � � � � � � � City of Clearwater Florida For its Comprehensive Annual Financial Report for the �'iscal Year Ended September 30, 2007 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Governmen� Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in govemment accounting and fmancial reporting. �,c� oF,y�, � ��A �� . i� CORPO�TIGEI � . �� President ��di��' � ' �°�' Executive Director xi City Auditor Equiry Servies Fire Department Official Records & Legislative Services Police Department City of Clearwater Organizational Chart City Council City Attorney City Manager I —J Assistant City Manager Assistant City Manager Development & Office of Neighborhood Management & Services Budet Engineering Parks & Recreation _ Financial Services Human Resources Information Technology Planning Public Services Public Utilities Public Solid Waste / Communications Library General Support Seroices xii � � � � � � � � Customer :� Service Economic � Development & Housing � Gas System � Marine & � Aviation , � , � Emergency Management � � � � 1l Z D Z f� D r � m c� � O z � � � � � � � � � � � � � � � � � � 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, 2008, 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 governmental, non-major enterprise, internal service and fiduciary funds presented as supplementary information in the accompanying combining and individual fund financial statements as of and for the year ended September 30, 2008, 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. 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, 2008, 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, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 20, 2009 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 GovemmentAuditing Sfandards 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 and post- employment benefit disclosures on pages 82 through 85 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. 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 projects is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of Sfates, 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 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. � ��F�� r � Tampa, Florida March 20, 2009 2 � � � � LJ � � � �� , �i 'J 1 � � � l.J Management's Discussion and Analysis This Management'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, 2008. ManagemenYs 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 2008 by $665.7 million (net assets). Of this amount, $197.9 million (unrestricted net assets) may be used to meet the governmenYs ongoing obligations to citizens and cred itors. �The City's total net assets increased by $26.3 million, or 4.1 %, during fiscal 2008. Net assets for governmental activities increased by $16.8 million, or 4.7%, while the business-type net assets increased by $9.5 million, or 3.3%. �Significant factors contributing to the $16.8 million increase in governmental net assets included operating and capital grants and contributions totaling $16.8 million, and a$2.3 million passback from the internal service funds of governmental activities' share of the current year increase in net assets of the internal service funds; partially offset by a $6.0 million drawdown of General Fund reserves, as discussed in the General Fund budgetary analysis that follows. � The $9.5 million increase in business-type net assets is primarily the result of operating revenues in excess of operating expenses for Water & Sewer, Gas, Solid Waste, Stormwater, Recycling, Marine, and Parking System operations. i � � � � � At September 30, 2008, the City's governmental funds reported combined ending fund balances of $114.9 million, an increase of $1.2 million (or 1.0%) in comparison with the prior year. Of this amount, $74.8 million (or 65.1%) is available for spending at the government's discretion (unreserved fund balance). The increase of $1.2 million in governmental fund balances is primarily the result of a$7.0 million current year increase in Capital Improvement fund balance due to current year project funding in excess of project expenditures, partially offset by the portion of this funding that was provided via transfers from General Fund reserves: $3.0 million for Carpenter Field clubhouse renovations, $2.0 million for Clearwater Golf Course clubhouse acquisition, and $700 thousand for beach recreation center boat ramp replacement. At September 30, 2008, unreserved fund balance for the General Fund was $17.6 million, or 15.2% of total current year general fund expenditures. Total actual revenues for the General Fund for fiscal 2008 were $1.0 million, or 0.8%, less than final budgeted revenues. Some of the major factors contributing to this deficit of actual revenues versus final budgeted revenues included: $335 thousand deficit of investment earnings versus budgeted due to market conditions; $298 thousand deficit of communications services taxes, $267 thousand deficit of utility taxes, and $173 thousand deficit of franchise fees versus budget due to lack of growth in the economy. Total �scal 2008 actual expenditures for the General Fund were less than final budgeted expenditures by $3.0 million, or 2.5%. This was due to budget savings across all City departments for fiscal 2008. �Finally, actual General Fund interfund transfers in were $0.6 million, or 6.5%, less than final budgeted interfund transfers in, while actual General Fund interfund transfers out were $0.7 million, or 4.1 %, less than final budgeted interfund transfers out. The total combined General Fund fiscal 2008 budgetary savings per above was $2.2 million. � � 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 statements, 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. Governmental 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, downtown boat slips, and parking system operations are reported as business-type activities. �J � � � • The statement 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 accounting 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 current 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 governmenYs 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 befinreen governmental funds and governmental activities. C� � � f� J � � � � 4 i � The City maintains thirteen 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 ten 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. � � � �� Proprietary funds 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, convention center, and downtown boat slip 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. �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 six non-major enterprise funds are combined into a single aggregated presentation in the proprietary fund financial �statements. Similarly, governmental activity internal 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 obligations to provide pension benefits and other post-employment benefits to its employees. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligations to provide pension benefits and other post-employment benefits to its employees. The combining statements 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 2008 and fiscal 2007 years. As noted earlier, net assefs may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities by $665.7 million at the close of the fiscal year ended September 30, 2008. This represents an increase of $26.3 million over the September 30, 2007 total net assets of $639.4 million. Net assets of both the governmental and the business-type activities increased primarily due to operating and capital grants and contributions of $17.9 million, along with favorable operating results for business-type activities. 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) 2008 2007 2008 2007 2008 2007 � � � � � � � $ 180,564,878 $ 181,438,251 $ 153,203,780 $ 144,678,358 $ 333,768,658 $ 326,116,609 � 266,990,980 257,158,639 357,132,952 357,676,884 624,123,932 614,835,523 447,555,858 438,596,890 510,336,732 502,355,242 957,892,590 940,952,132 8,645,410 14,934,059 14,898,178 15,352,425 23,543,588 30,286,484 17,780,463 13,779,719 10,541,317 9,263,876 28,321,780 23,043,595 49,478,629 54,999,045 190,846,612 193,174,332 240,325,241 248,173,377 75,904,502 83,712,823 216,286,107 217,790,633 292,190,609 301,503,456 218,384,354 205,078,530 170,734,916 164,769,247 389,119,270 369,847,777 39,019,943 41,543,137 39,635,185 35,774,790 78,655,128 77,317,927 114,247,059 108,262,400 83,680,524 84,020,572 197,927,583 192,282,972 $ 371,651,356 $ 35.4,884,067 $ 294,050,625 $ 284,564,609 $ 665,701,981 $ 639,448,676 A large portion of the City's net assets (58.5%) 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 (11.8%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($197.9 million or 29.7%) may be used to meet the government's ongoing obligations to citizens and creditors. There was a$13.3 million increase in invested in capital assets, net of related debt for povernmental activities. This was primarily due to a$9.8 million increase in governmental activities capital assets along with a$3.2 million decrease in related revenue bond debt, due to scheduled principal payments. Major capital asset additions contributing to the $9.8 million net increase in governmental capital assets included $7.2 million in current year capitalized expenditures for the Beach Walk capital project; $4.1 million in capital expenditures for a new fire training facility; and $2.6 million in capital expenditures for the Clearwater Beach west bridge connector; partially offset by $4.0 million in library books that are no longer accounted for as capital assets and consequently have been removed from capitalized machinery and equipment effective with fiscal 2008. � � � � � LJ � � LJ 6 � � � Invested in ca ital assets, net of related debt for business-type activities increased by $6.0 million primarily due to a P $6.1 million decrease in related bond debt (net of unspent bond proceeds). The decrease in bonded debt is due to �current year scheduled principal payments, as well as the current year cash contribution of $4.1 million towards redemption of the Gas Revenue Bonds, Series 1997A. ' Changes in Net Assets �The following table reflects the changes in net assets for the years ended September 30, 2008, and September 30, 2007: � City of Clearwater, Florida - Changes in Net Assets Primary Government Govermental Activities Business-type Activities Totals 2008 2007 2008 2007 2008 2007 � u i � � � u � � � � � Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales taxes 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 $ 37,153,216 $ 36,453,717 $ 137,928,582 $ 132,724,743 $ 175,081,798 $ 169,178,460 9,123,267 9,657,083 82,834 83,371 9,206,101 9,770,454 7,632,251 11,747,831 1,085,821 6,381,716 8,718,072 18,129,547 50,347,341 53,716,907 - - 50,347,341 53,716,907 15,674,741 16,078,625 - - 15,674,741 16,078,625 11,532,529 11,410,407 - - 11,532,529 11,410,407 15,469,954 14,631,519 - - 15,469,954 14,631,519 6,273,848 7,533,336 4,313,456 5,372,509 10,587,304 12,905,845 153,207,147 161,259,425 143,410,693 144,562,339 296,617,840 305,821,764 14,342,322 13,169,343 - - 14,342,322 13,169,343 66,582,460 68,635,737 - - 66,582,460 68,635,737 2,729,999 3,026,923 - - 2,729,999 3,026,923 12,321,965 13,693,579 - - 12,321,965 13,693,579 4,534,093 3,141,473 - - 4,534,093 3,141,473 439,555 448,495 - - 439,555 448,495 37,687,902 32,872,241 - - 37,687,902 32,872,241 1,997,817 2,247,560 - - 1,997,817 2,247,560 - - 52,014,934 49,839,529 52,014,934 49,839,529 - - 35,943,600 33,579,403 35,943,600 33,579,403 - - 16,035,672 16,172,339 16,035,672 16,172,339 - - 11,069,529 9,464,921 11,069,529 9,464,921 - - 14,664,687 13,676,105 14,664,687 13,676,105 140,636,113 137,235,351 129,728,422 122,732,297 270,364,535 259,967,648 12,571,034 24,024,074 13,682,271 21,830,042 26,253,305 4,196,255 6,947,673 (4,196,255) (6,947,673) - 16,767,289 30,971,747 9,486,016 14,882,369 26,253,305 45.854.116 45, 854,116 Net assets - beginning, as restated 354,884,067 323,912,320 284,564,609 269,682,240 639,448,676 593,594,560 Net assets - ending $ 371,651,356 $ 354,884,067 $ 294,050,625 $ 284,564,609 $ 665,701,981 $ 639,448,676 � 7 Governmental Activities � CJ Governmental activities net assets increased by $16.8 million from $354.9 million as of September 30, 2007, to $371.7 million as of September 30, 2008. This increase, due to governmental activities, accounted for 61 % of the total increase � in net assets for the City and represented a 4.7% increase in net assets for governmental activities. Key elements of this increase are as follows: • Operating and capital grants and contributions totaling $16.8 million. • A passback from the internal service funds of $2.3 million representing governmental activities' share of the current year increase in net assets of the internal service funds. • A General Fund deficit of $6.0 million due to funding of capital projects and acquisition from General Fund reserves, as discussed in the General Fund budgetary analysis that follows. The cost of all governmental activities this year was $140.6 million. This reflects a$3.4 million, or 2.5%, increase over the fiscal 2007 total of $137.2 million. However, as shown on the Statement of Activities, the amount that the City's taxpayers ultimately financed for these activities totaled $86.7 million, because some of the cost was paid for by those who directly benefited from the programs ($37.2 million) or by other governments and organizations that subsidized certain programs with grants and contributions ($16.7 million). This total of $86.7 million is $55 thousand less than the fiscal 2007 amount 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, 2008 General Public Safety Physical Transportation Economic Human Culture and Interest on Government Environment Environment Services Recreation Long-term Debt � Expenses ■ Revenues : � � � �1 L_., � I i U � C� , � L�I i �� i PropE Capital grants and contributions 5% Operating grants and contributions 6% Business-type Activities Revenues by Sources - Governmental Activities For the Year Ended September 30, 2008 Charges for services T V 24% �les taxes 10% Utility taxes 8% Communications services taxes 5% �thertaxes 5% Net assets for business-type activities increased from $284.6 million to $294.1 million. This increase totaled $9.5 million, reflecting a 3.3% increase in business-type activities net assets and 36% of the total increase in net assets for the City. The current year increase was $5.4 million less than the fiscal year 2007 increase in net assets of $14.9 million. The increase of $9.5 million was the result of operating revenues in excess of operating expenses, along with $1.1 million in current year capital grants and contributions, and current year interest and investment earnings totaling $4.3 million, offset by $9.4 million in interest expense on long term debt. Total revenues for business-type activities decreased by $1.15 million, or 0.8%, to $143.41 million versus the prior year �total of $144.56 million, due to a decrease in capital grants and contributions of $5.3 million, or 83%, and a decrease in investment earnings of $1.1 million, or 19.8%, offset by an increase in charges for services revenue of $5.2 million, or 3.9%. The decrease in capital grants and contributions was the result of grants for recycled water system additions that �were received in fiscal 2007, with the projects completed in fiscal 2008. The decrease in investment earnings was due to the economic downturn and resulting market conditions. The increase in charges for services was primarily due to scheduled rate increases for the water and sewer utility and the stormwater utility, resulting in a$1.7 million, or 3.4%, increase for water and sewer and a$0.9 million, or 7.4%, increase for stormwater. Additionally the gas system realized �a$2.0 million, or 5.1 %, increase in charges for services due to increased fuel prices. Finally, the marine operations realized a$0.5 million, or 11.0% increase in charges for services due to increased slip rental rates and increased fuel sales due to gas prices, while the parking operations realized an offsetting decrease in charges for services of $0.5 �million, or 10.5%, due to Beach Walk construction and the related closing of parking lots/spaces. Please refer to the discussion of proprietary funds operating results that follows for additional discussion of these revenues. � � Total expenses for business-type activities increased by $7.0 million, or 5.7%, from $122.7 million in fiscal 2007 to $129.7 million for fiscal 2008. A significant factor contributing to this $7.0 million increase was a$2.5 million, or 13.7%, increase in gas system purchases for resale as a result of increased fuel costs. Also contributing to the increase: a$1.0 million, or 14.9% increase in water and sewer system depreciation expense, and a$0.8 million, or 54.0°/a, increase in stormwater system depreciation expense due to system additions. 0 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 'i $10,000,000 $0 Expenses and Program Revenue - Business-type Activities For the Year Ended September 30, 2008 Water and Sew�er Utility Gas Utility Solid Waste Stormwater Other Utility Utility Revenues by Source - Business-type Activities For the Year Ended September 30, 2008 Charges for services 96.1 % 0.1 % � Investment earnings 3.0% 10 ❑ E�enses � ■ Revenues Capital grants and contributions 0.8% � , Financial Analysis of the City's Funds iAs noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. �J � � � �,� � � � L� 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 major governmental funds. The City's governmental funds for the year ended September 30, 2008, reflect a combined fund balance of $114.9 million versus $113.7 million for the prior year, an increase of $1.2 million. A total of $74.8 million, or 65%, 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 ($9.6 million); 2) to pay debt service ($7.0 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 ($19.5 million). The General Fund is the chief operating fund of the City. At September 30, 2008, unreserved fund balance of the General Fund totaled $17.6 million, with the remainder of the $21.1 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 15.2% of total general fund expenditures (GAAP basis before transfers) for the current fiscal year. The fund balance of the City's General Fund decreased by $6.0 million during the current fiscal year, versus a final budgeted decrease of $8.2 million. This $2.2 million variance from budgeted was primarily the result of total expenditures less than budgeted expenditures by $3.0 million, partially offset by total revenues less than budgeted revenues of $1.0 million. General Fund expenditure "savings" of $3.0 million, or 1.9%, was spread across all departments. The General Fund �revenues were less than budgeted by $1.0 million primarily due to: $335 thousand deficit of investment earnings versus budgeted due to market conditions; $298 thousand deficit of communications services taxes, $267 thousand deficit of utility taxes, and $173 thousand deficit of franchise fees versus budget due to lack of growth in the economy. � � � The fund balance of the Special Development Fund decreased from $13.1 million to $11.4 million, for a decrease of $1.7 million or 13.1 %, during the current fiscal year versus an increase of $1.6 million for fiscal 2007. The Special Development Fund final amended budget indicated a planned decrease in fund balance of $2.3 million. Consequently the actual results of a$1.7 million decrease versus a budgeted $2.3 million decrease results in a$0.6 million increase in fund balance versus the final amended budget. This increase is primarily the result of infrastructure sales tax revenues in excess of budget by $278 thousand; miscellaneous revenues of $149 thousand representing the unbudgeted return of unspent monies contributed to a Florida Department of Transportation project; and actual transfers out that were $114 thousand less than budgeted. The fund balance for the Capital Improvement Fund increased from $36.4 million to $43.4 million during the current ,fiscal year. This increase of $7.0 million is primarily the result of current year capital project funding received from other funds ($22.9 million), grant revenues received from federal, state, and local agencies ($4.5 million), revenue bond proceeds ($3.8 million) and donations from developers and others ($2.1 million) in excess of current year capital project ,expenditures ($26.0 million) and transfers out to other funds for the return of unspent project funding ($0.7 million). This increase 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 $37.2 million to $39.1 million during the current fiscal year. This increase of $1.9 million was primarily the result of: $875 thousand of transfers from the Community Redevelopment Agency special revenue fund into the Community Redevelopment Agency capital improvement fund in excess of current year capital expenditures; a$582 thousand increase in the SHIP Local Housing Assistance Trust special revenue unreserved fund balance due to current year revenues in excess of expenditures; and a$498 thousand increase in the Pinellas County Local Housing Assistance Trust special revenue unreserved fund balance due to current year revenues in excess of expenditures. 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$0.5 million decrease in net assets versus a$5.8 million increase for the prior year. Operating revenues increased by $1.7 million, or 3.3%, offset by an increase in operating expenses of $2.2 million, or 5.0%. This resulted in a net decrease in operating income from $6.4 million in fiscal 2007 to $5.8 million for 2008, reflecting a$0.6 million, or 8.6% decrease. Additionally, capital grants and contributions decreased by $5.0 million, or 87.8%, and investment earnings decreased by $0.5 million, or 21.8%. 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 depreciation expense related to utility system additions ($1.0 million, or 14.9%), repairs and maintenance ($0.4 million, or 11.9%), interfund administrative charges ($0.4 million, or 7.1 %), and insurance ($0.3 million, or 45.99°/a). The decrease in capital grants and contributions was due to fiscal 2007 grant receipts from the Environmental Protection Agency and the Southwest Water Management District. The decrease in investment earnings was due to the downturn in the economy and related market conditions. The Gas Utility Fund realized a$3.6 million increase in net assets versus a$4.1 million increase for the prior year. Operating revenues increased by $1.5 million, or 3.9°/a, over the prior year, primarily due to increased fuel costs; offset by a$2.5 million increase in cost of purchases for resale due to increased cost of natural gas. Interest expense decreased by $0.7 million, or 41.5% due to revenue bond debt retired in fiscal 2008. This decrease in interest expense was partially offset by a$0.3 million, or 30.0% decrease in investment earnings due to market conditions. The Solid Waste Utility Fund realized a$581 thousand increase in net assets versus a$617 thousand increase for the prior year. Operating revenues increased by $167 thousand, or 1.0%; offset by a$48 thousand, or 0.3%, increase in operating expenses. The $119 thousand increase in operating income was offset by a$104 thousand decrease in investment earnings due to market conditions and a$134 thousand increase in interfund transfers out to the Garage internal service fund for a specialized beach waste collection vehicle. The Stormwater Utility Fund realized an increase in net assets of $1.8 million versus a prior year increase of $2.9 million. Operating revenues increased by $0.7 million, or 3.8%, due to scheduled rate increases. The increase in operating revenues was offset by a$1.7 million, or 22.0°/a increase in operating expenses, attributable to a$0.8 million, or 54.0%, increase in depreciation expense due to system additions; a$0.4 or 196.4% increase in professional fees due to various stormwater capital project expenditures; a$0.2 million, or 6.84% increase in personal services expenses due to filling a vacant position in addition to scheduled salary increase and increased pension costs; and a$0.1 million, or 39.5% increase in repairs and maintenance expense primarily due to Stormwater system infrastructure repairs maintenance. Unrestricted net assets and changes in net assets of the proprietary funds for fiscal years 2008 and 2007: Fund Water and Sewer Utility Gas Utility Solid Waste Utility Stormwater Utility Otherfunds Totals Unrestricted Net Assets 2008 2007 $ 18,766,064 $ 26,221,468 14,104,350 14,778,020 14, 266, 699 13, 506, 846 14,017,572 10,766,199 18,905, 519 16,487,724 $ 80,060,204 $ 81,760,257 12 Change in Net Assets 2008 2007 $ (485,742) $ 5,752,905 3,597,948 4,111,512 581,057 617,417 1,797,533 2,938,688 2,692,910 498,610 $ 8,183,706 $ 13,919,132 � � i � I� LJ � � � LI � � � , CJ � n �_� ' � � � ' General Fund Bud eta Hi hli hts 9 rY 9 9 � The final amended budget for General Fund expenditures reflected an increase of $3.1 million, or 2.7%, over the originai budget. Key elements of this increase were as follows: ' •$1.0 million increase in Police and $1.4 million 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. • $275 thousand increase in non-departmental expenditures to fund a$225 thousand donation to Clearwater Marine Aquarium and a$50 thousand donation to Catholic Charities for Pinellas Hope. , Final budgeted revenues reflect a$3.2 million, or 2.7%, increase over the original budget primarily due to the following: � � �1 u •$1.4 million, or 13%, increase in budgeted intergovernmental revenues from state sources to reflect $2.4 million in state insurance tax monies received on behalf of the City's police and fire supplemental pension plans, per expenditure explanation above; offset by a$0.7 million decrease in sales tax and $0.4 million decrease in state revenue sharing due to the significant downturn in the local and national economy. •$1.1 million, or 14.3%, increase in budgeted intergovernmental revenues from local sources due to a$1.2 million increase in county reimbursements for emergency medical services, and a$256 thousand increase in county library cooperative funding; partially offset by a$418 thousand decrease in county reimbursement for fire services provided to unincorporated county residents. Final budgeted "transfers in" from other funds reflect a$1.1 million, or 14.7°/a, increase over the original budget primarily � due to: • $0.7 million of unspent capital project monies returned due to project completions � • $0.4 million of unspent special program monies returned due to program completions. Final budgeted "transfers out" reflect a$10.5 million, or 154%, increase over the original budget primarily due to the �following transfers to the Capital Improvements capital projects fund: $3.8 million to the Beach Walk project to replace revenue bond funding; $3.0 million for Carpenter Field clubhouse renovations; $2.0 million for Clearwater Golf Course clubhouse acquisition; and $700 thousand for beach recreation center boat ramp replacement. , Total actual revenues for the General Fund for fiscal 2008 were $1.0 million, or 0.8%, less than final budgeted revenues. Contributing to this deficit of actual revenues versus final budgeted revenues included: $335 thousand deficit of investment earnings versus budgeted due to market conditions; along with $298 thousand deficit of communications 1 services taxes, $267 thousand deficit of utility taxes, and $173 thousand deficit of franchise fees versus budget due to downturn in the local and national economy. �Actual fiscal 2008 actual expenditures for the General Fund were less than final budgeted expenditures by $3.0 million, or 2.5%. This was due to budget savings across all City departments for fiscal 2008. � Capital Asset and Debt Administration Capital Assets �Capital assets 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, 2008, the City had investments in capital assets totaling $624,123,932 (net of accumulated depreciation). , 13 Land City of Clearwater, Florida - Capital Assets* (amounts in thousands) Governmental Activities Business-type Activities Prior period adjustment Adjusted 2008 2007 2008 2007 Marine Fund 2007 $ 71,018 $ 70,545 $ 29,187 $ 28,362 $ - $ 28,362 Buildings 81,016 83,259 12,918 13,652 130 Improvements other 11,888 11,783 295,039 268,653 393 than buildings Machinery and 22,659 26,210 3,126 3,930 - equipment Infrastructure 49,355 35,314 - - - Construction in 31,055 30,048 16,863 42,557 - progress Total $266,991 $257,159 $357,133 $357,154 $ 523 ` Net of accumulated depreciation � Total ' Adjusted � 2008 2007 $100,205 $ 98,907 13,782 93,934 97,041 ' 269,046 306,927 280,829 3,930 25,785 - 49,355 42,557 47,918 30,140 , 35,314 � 72,605 $ 357,677 $624,124 $614,836 , Net capital assets for the City's governmental activities increased from $257.2 million to $267.0 million, reflecting an increase of $9.8 million for the current fiscal year. Capital asset additions of $43.5 million were offset by depreciation expense of $13.6 million and net capital asset retirements and transfers totaling approximately $20.0 million. Major fiscal 2008 governmental capital asset transactions included $7.2 million in current year capitalized expenditures for the Beach Walk capital project; $4.1 million in capital expenditures for a new fire training facility; and $2.6 million in capital expenditures for the Clearwater Beach west bridge connector; partially offset by $4.0 million in library books that are no longer accounted for as capital assets and consequently have been removed from capitalized machinery and equipment effective with fiscal 2008. Net capital assets for the City's business-type acfivities decreased by $ 0.6 million from $357.7 million to $357.1 million during the current fiscaf year. This net decrease of $0.6 million was primarily due to: • Construction expenditures for major water and sewer system projects totaling $9.4 million including: $2.5 million for replacement of headworks at wastewater treatment plants; $2.1 million for pump station repairs and replacements; $1.4 million for water pollution control system repairs and replacement; $1.0 million for repair and replacement of water supply facilities; $0.6 million for rehab of anaerobic digesters at wastewater treatment plants; $0.4 million for wellfield expansions; and $0.4 million for reverse osmosis plant expansions. • Other capital asset additions across various business-type activities and capital asset categories totaling approximately $3.9 million. This $3.9 million of additions, along with the $9.4 million of water & sewer system construction additions and improvements described above, were offset by $13.4 million in fiscal 2008 depreciation expense, as well as $0.3 million and $0.1 million of machinery and equipment dispositions for the gas utility and water & sewer utility, respectively. The prior period adjustment for the Marine Operations fund, as indicated in the Notes to the Financial Statements, was a restatement due to an erroneous overstatement of depreciation expense for buildings and improvements other than buildings in prior years. Additional information on the City's capital assets can be found in Note III (C) on the notes to the financial statements. Long-term debt The City's total long-term debt decreased from $271.2 million to $268.6 million, a decrease of $2.6 million or 0.9%. Long-term debt for governmental activities decreased by $1.5 million, or 2.2%; while long-term debt for business-type activities decreased by $1.1 million or 0.5%. Key factors contributing to these decreases included: � � � ' � , LJ � � , • The decrease in long-term debt for governmental activities is primarily due to a$3.2 million, or 7.8%, decrease in net revenue bonds payable due to scheduled bond principal payments, partially offset by a$1.3 million � liability for other post-employment benefits recognized in fiscal 2008 per implementation of Governmental Accounting Standards Board Statement No. 45. 14 � ' ' L J�' , � • The decrease in long-term debt for business-type activities is primarily due a net $1.0 million, or 0.5%, decrease in net revenue bonds payable. This decrease was primarily the result of $6.4 million in regularly scheduled principal payments, plus a$4.1 million cash contribution towards the refunding of gas system revenue bonds; offset by $9.1 million of new revenue bonds issued for construction of downtown boat slips. The City's bonded debt as of September 30, 2008, 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 $38.3 million while business-type activities totaled $197.9 million. The City's Charter limits indebtedness to twenty percent of the assessed valuation of non-exempt real estate. The current debt limitation is approximately $2.1 billion, which is significantly in excess of the City's applicable indebtedness of approximately $224 million at September 30, 2008. Additional information on the City's long-term debt can be found in Note III (F) of the notes to the financial statements. � Economic Factors And Year 2009 Budgets and Rates � ' , � Factors considered in preparing the City of Clearwater's budget for fiscal year 2009 included: • Passage of Amendment 1 to the Florida Constitution on January 29, 2008, providing property tax relief to the citizens of Florida, which ultimately impacts the City's revenues by almost $3 million annually. Related state mandates also limit the level at which the City can set the millage rate. • A declining economy and real estate market resulting in further reductions in property tax values and revenues, along with sales tax, municipal revenue sharing, communications services tax, and building permit revenues. • The unemployment rate for the Tampa Bay metropolitan area for September 2008 was 7.1%, an increase from the September 2007 rate of 4.5%. The national rate for September 2008 was 6.2% versus 4.7°/a for September 2007. • Total taxable assessed values for the City of Clearwater .decreased approximateily 9% for fiscal 2009. The City's millage rate was increased by 1%, from 4.6777 to 4.7254 mills for fiscal 2009, reflecting a 10.48% decrease from the rolled-back rate. The millage rate has decreased by a total of 17.9% over the past three years. , • A reduction of 47.1 full-time equivalent positions City-wide, including a reduction in General Fund employees of 38.2 FTE's, from 1,215.5 to 1,177.3, due to service level reductions and program consolidations. • A reduction in employee medical insurance costs of $124 thousand, or 1%, from fiscal 2008 due to the � decrease in employees from the prior year, while maintaining the same cost per employee as the prior year. • Budgeted Water and Sewer utility revenues for 2009 reflect a 7% rate increase effective October 1, 2008, while fiscal 2009 budgeted Stormwater utility revenues reflect a 6% rate increase effective October 1, 2008 , �J �l LI � L�' � ��i n � 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 IntentionaNy Left Blank � ' , � i �� 1 � i �� J ' � i � ! 16 � i 1 � 1 �� ! t � Basic Financial Statements � � � � � � � � �� ' 17 ASSETS Cash and investments Investments Total receivables (net) Internal balances Due from other governments Prepaid items Inventories Restricted assets: Cash and investments Other receivables Deferred charges Net pension asset 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 �iabilities Accrued interest payable Due to other governments Deposits Unearned revenue and liens Payable from restricted assets: Construction contracts payable Accrued interest payable Customers deposits Non-current liabilities due within one year: Compensated absences Loans and leases payable Revenue bonds payabie Claims payable Long-term debt and liabilities: Compensated absences Other postemployment benefits Loans and leases payable Revenue bonds payable Claims payable Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: City of Clearwater, Florida Statement of Net Assets September 30, 2008 $ Primary Government Governmental Business-type Activities Activities Total 141,574,508 $ 924,143 17,259,723 496,138 7,827,434 1,051,823 475,396 239,635 10,716,078 71, 018,184 81,016,297 11,887,795 22,659,292 49,354,438 31,054,974 447,555,858 3,130,341 3,230,442 321,976 369,795 2,400 1,590,456 4,404,733 3,862,130 7,325,000 2,188,600 3,723,873 1,341,225 6,698,333 30,960,798 6,754,400 75,904,502 218,384,354 75,994,991 12, 388,142 (496,138) 271,153 34,533 1,674,449 58,168,294 160,489 1,692,669 3, 315,198 29,186, 598 12,917,997 295, 039,146 3,126,446 16,862,765 510,336,732 4,775,500 877,969 224,011 4,804 292,084 27,416 868,561 2,108, 907 5,718,926 1,050,050 476,267 9,015,000 887,742 454,875 455,699 188,850,109 198,187 216,286,107 170,734,916 $ 217,569,499 924,143 29,647,865 8,098,587 1,086,356 2,149, 845 � u ' � , ' 58,168,294 160,489 � 1,932,304 14,031,276 100,204,782 93,934,294 306,926,941 25,785,738 49,354,438 47, 917, 739 957,892,590 7,905,841 4,108,411 545,987 374,599 294,484 1,617,872 868,561 2,108, 907 5,718,926 5,454,783 4,338,397 16,340,000 2,188, 600 4,611,615 1,796,100 7,154,032 219,810,907 6,952,587 292,190,609 389,119,270 Capital projects 11,416,706 - 11,416,706 Debt service 6,703,083 21,294,097 27,997,180 Renewal and replacement - 9,088,479 9,088,479 Grant programs 20,900,154 - 20,900,154 Impact fees - 9,252,609 9,252,609 Unrestricted 114,247,059 83,680,524 197,927,583 Total net assets $ 371,651,356 $ 294,050,625 $ 665,701,981 The notes to the financial statements are an integral part of this statement. 18 r � � a ' ' � , � � � �1 � � � w� �r � � � � � � � � � r r� � r� � r City of Clearwater, Florida Statement of Activities For the Year Ended September 30, 2008 � Functions/Programs Expenses Primary government: Governmental activities: 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 $ 14,342,322 $ 21,639,475 $ 1,200 Public safety 66,582,460 9,802,496 2,981,401 Physical environment 2,729,999 90,772 479,176 Transportation 12,321,965 193,838 433,955 Economic environment 4,534,093 108,204 2,735,588 Human services 439,555 - - Culture and recreation 37,687,902 5,318,431 2,491,947 Interest on long-term debt 1,997,817 - - Totai governmental activities 140,636,113 37,153,216 9,123,267 $ - $ 7,298,353 $ - (53,798,563) 125,014 (2,035,037) 6,000,401 (5,693,771) - (1,690,301) - (439,555) 1,506,836 (28,370,688) - (1,997,817) 7,632,251 (86,727,379) $ 7,298,353 (53,798,563) (2,035,037) (5,693,771) (1,690,301) (439,555) (28,370,688) (1,997,817) (86,727,379) Business-type activities: Water & Sewer Utility 52,014,934 52,110,744 - 696,340 - 792,150 792,150 Gas Utility 35,943,600 40,902,048 - - - 4,958,448 4,958,448 Solid Waste Utility 16,035,672 17,512,260 - - - 1,476,588 1,476,588 Stormwater Utility 11,069,529 12,770,404 - 169,983 - 1,870,858 1,870,858 Recycling 3,207,339 3,410,449 82,834 - - 285,944 285,944 Marine 4,695,798 4,797,658 - 12,141 - 114,001 114,001 Aviation 417,449 227,201 - 107,357 - (82,891) (82,891) Parking System 3,521,490 4,165,979 - 100,000 - 744,489 744,489 HarborviewCenter 2,799,977 2,031,839 - - - (768,138) (768,138) Downtown Boat Slips 22,634 - - - - (22,634) (22,634) Total business-type activities 129,728,422 137,928,582 82,834 1,085,821 - 9,368,815 9,368,815 Total primary government $ 270,364,535 $ 175,081,798 $ 9,206,101 $ 8,718,072 (86,727,379) 9,368,815 (77,358,564) General revenues: Taxes: Property taxes Sales 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. 50,347,341 - 50,347,341 15,674,741 - 15,674,741 11,532,529 - 11,532,529 7,316,238 - 7,316,238 8,153,716 - 8,153,716 5, 837,401 4, 313,456 10,150, 857 436,447 - 436,447 4,196,255 (4,196,255) - 103,494,668 117,201 103,611,869 16,767,289 9,486,016 26,253,305 354,884,067 284,564,609 639,448,676 $ 371,651,356 $ 294,050,625 $ 665,701,981 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 Property taxes Other Intertund receivable (deficit in pooled cash) Due from other governmentai entities Investments Land held for resale Inventories, at cost interfund receivables Total assets LIABILITIES Accounts and contracts payable Accrued payroll Due to other governmental entities Deposits Construction escrows Deferred revenue Intertund payables Total liabilities FUND BALANCES Reserved for: Encumbrances Debt service requirements Interfund and notes receivabie Grant programs Land held for resale Unreserved, reported in: Generalfund Special revenue funds Debt service funds Capital projects funds Total fund balances Total liabilities and fund balances City of Clearwater, Fiorida Balance Sheet Governmental Funds September 30, 2008 Special Capital Other General Development Improvement Governmental Fund Fund Fund Funds $ 20,550 $ - $ - $ 100 $ 18,991,396 7,877,799 43,279,923 23,376,998 � u ' Totals � Governmental Funds ' 20,650 93,526,116 ' 234,753 - - - 234,753 - - - 13,021,765 13,021,765 � - - - 13,027 13,027 347,893 22,662 - - 370,555 1�$$2,�49 - 146,958 54,837 2,083,844 - - 15,101 - 15,101 ' 2,558,800 3,842,982 1,213,698 211,954 7,827,434 - - - 924,143 924,143 - - - 1,998,751 1,998,751 ' 30,688 - - - 30,688 2,000,000 - - 700,000 2,700,000 $ 26,066,129 $ 11,743,443 $ 44,655,680 $ 40,301,575 $ 122,766,827 $ 963,280 $ - $ 1,261,553 $ 224,980 $ 2,449,813 � 2,823,215 - - 31,857 2,855,072 17,185 304,076 - 48,534 369,795 � 2,400 - - - 2,400 - - - 194,442 194,442 1,196,205 22,661 - 47,089 1,265,955 ' - - - 700,000 700,000 5,002,285 326,737 1,261,553 1,246,902 7,837,477 1,500,051 - 8,132,976 - 9,633,027 , - - - 7,021,068 7,021,068 2,000,000 - - 13,721,765 15,721,765 � - - - 5,766,825 5,766,825 - - - 1,998,751 1,998,751 17,563,793 - - - 17,563,793 , - 11,416,706 - 5,009,251 16,425,957 - - - 112,812 112,812 - - 35,261,151 5,424,201 40,685,352 21,063,844 11,416,706 43,394,127 39,054,673 114,929,350 � $ 26,066,129 $ 11,743,443 $ 44,655,680 $ 40,301,575 $ 122,766,827 The notes to the financial statements are an integral part of this statement. � � r� � 20 , � , � City of Clearvvater, Florida � Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2008 � �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 $411,387,183, and the ' accumulated depreciation is $144,396,203. 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 financiai 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. , LJ�� ' ' r � Accrued communications services taxes due from state are not financial resources in the current period and, therefore, are reported as deferred revenues 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 Other post-employment benefits Compensated absences ' Total net assets of governmental activities ' � ' The notes to the financial statements are an integral part of this statement. 21 $ 266,990,980 (1, 998, 751) 50,451,611 (17,140,347) (1,080,478) 9,168,289 887,572 (3,620,320) (38,230,000) 259,747 239,635 30,474 (346, 018) (10,560,463) (1,164,198) (8,128,606) $ 114,929,350 264,992,229 10, 716, 078 (321,976) 568, 777 38,666,327 (57,899,429) $ 371,651,356 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2008 REVENUES Taxes: Property Sales Utility Communications services Othertaxes Total taxes Franchise fees 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 Bond issuance costs Capital outlay Total expenditures Excess (deficiency) of revenues over / (under) expenditures OTHER FINANCING SOURCES (USES) Special Capital Other Total General Development tmprovement Governmental Governmental Fund Fund Fund Funds Funds $ 47,512,277 $ 2,835,064 $ - $ - 9,862,977 - 11, 532,529 - - 6,747,461 - _ 2,094,320 1,574,923 - 67,886,587 14,272,964 - 9,254,091 - - 1,894,199 824,965 - $ 50,347,341 9,862,977 11,532,529 6,747,461 3,669,243 82,159,551 9,254,091 2,719,164 - - 843,200 2,189,417 3,032,617 12,000,064 - 3,394,593 1,606,546 17,001,203 8,645,824 - 225,111 2,568,042 11,438,977 20,645,888 - 4,462,904 6,364,005 31,472,797 13,776,848 - - 1,118,037 14,894,885 706,714 - - 591,447 1,298,161 1,513,962 1,650,576 4,486 931,567 4,100,591 1,955,129 149,188 2,094,086 762,949 4,961,352 117,633,418 16,897,693 6,561,476 9,768,005 150,860,592 13,650,582 63,002,775 2,418,912 7,537,588 1,536, 369 320, 344 26,920,921 - 384,102 - 235,923 - 4,110 - 2,412,225 - 1,944,995 135,373 1,397,721 249,609 2,676,988 116,913 1,451,024 14,170, 057 64,636,419 2,672,631 9, 949, 813 4,213,357 437,257 30,316,940 - - - 7,414,050 7,414,050 - - - 1,712,857 1,712,857 - - - 15,000 15,000 - - 21,065,894 904,297 21,970,191 115,387,491 - 26,047,249 16,073,832 157,508,572 2,245,927 16,897,693 (19,485,773) (6,305,827) (6,647,980) Transfers in 8,297,475 - 22,869,087 11,314,556 42,451,118 Transfers out (16,536,005) (18,625,925) (725,877) (3,134,767) (39,022,574) Revenue bonds issued - - 3,750,000 15,000 3,765,000 Otherlongterm debtissued - - 604,654 - 604,654 Total otherfinancing sources (uses) (8,238,530) (18,625,925) 26,497,864 8,194,789 7,828,198 Net change in fund balances (5,992,603) (1,728,232) 7,012,091 1,888,962 1,180,218 Fund balances - beginning 27,056,447 13,144,938 36,382,036 37,165,711 113,749,132 Fund balances-ending $ 21,063,844 $ 11,416,706 $ 43,394,127 $ 39,054,673 $ 114,929,350 The notes to the financial statements are an integral part of this statement. 22 ' ' � 1 � � ' ' 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, 2008 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 aetivities 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 the 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: Revenue bond proceeds Capital lease proceeds ' Some expenditures and other financing sources (uses) of the governmental funds are deferred and amortized in relation to the related debt in the Statement of Activities: Issuance costs for revenue bonds issued 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 Liability for other post-employment benefits (OPEB) does not require the use of current financial resources and consequently is not reported in the funds. However it is a liability in the Statement of Net Assets. Current year change in the liability for other post-employment benefits $ 1,180,218 $ 22,597,194 (8, 570, 094) 14,027,100 14,714 (4,467,152) (3,765,000) (604,654) 15,000 6,935,000 479, 050 7,414,050 (694,946) (1,164,198) ' Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the govemmental funds. Current year change in compensated absences (302,109) Amortization of deferred charge on refunding (23,870) Amortization of issuance costs (43,586) � Amortization of bond discounts and premiums 75,921 Current year change in accrued interest expense 57,175 (236,469) 1 r � i Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Current year accrual - communications services tax refund receivable per State The net revenues of intemai 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 govemmental funds. Total change in net assets of governmental activities The notes to the financial statements are an integral part of this statement. 23 568,777 4,479,849 $ 16,767,289 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, 2008 REVENUES Taxes: Property Utility taxes Communications services Othertaxes Total taxes Franchise fees Licenses, permits, and fees Intergovernmental: State Local Total intergovernmental Charges for services Fines and forFeitures Investment earnings Miscellaneous Total revenues EXPENDITURES General government City 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 Original Final 47,273,940 $ 47,473,000 11,928,390 11,799,940 7,045,750 7,045,750 2,045,080 2,045,080 68,293,160 68,363,770 9,833,640 9,427,000 2,447,500 1,919,460 10,857,360 7,516,230 18,373,590 13,222,060 955,000 1,263,950 1,053,710 115,442,610 292,920 1,055,890 1,676,820 1,255,700 1,098,590 2,265,190 1,231,480 3,026,170 93,460 1,414,750 162,870 305,160 13,879,000 12,245,670 8,590,440 20,836,110 13,354,060 905,000 1,848,950 1, 949,210 118,603,560 292,920 1,055,890 1,750,619 1,255,700 1,100,990 2,254,440 1,231,480 3,301,170 93, 779 1,407,250 173,620 305,160 14,223,018 Variance with Actual Final Budget Amounts Positive (Negative $ 47,512,277 $ 39,277 11,532,529 (267,411) 6,747,461 (298,289) 2,094,320 49,240 67,886,587 (477,183) 9,254,091 (172,909) 1,894,199 (25,261) 12,000,064 8,645, 824 20,645,888 13,776,848 706,714 1,513,962 1,955,129 117,633,418 254,181 945, 927 1,487,909 1,136,794 1,029,660 2,144,719 1,059,919 3,677,013 89, 557 1,277,460 172,440 274,655 13,550,234 (245,606) 55,384 _ (190,222) 422,788 (198,286) (334,988) 5,919 (970,142) 38,739 109,963 262,710 118, 906 71,330 109, 721 171, 561 (375,843) 4,222 129,790 1,180 30,505 672,784 112,810 22,810 18,265 4,545 36,662,470 37,821,980 37,510,366 311,614 20,540,000 21,947,330 20,947,491 999,839 3,933,986 4,028,128 4,015,797 12,331 691,820 691,820 636,991 54,829 61,941,086 64,512,068 63,128,910 1,383,158 2,523,421 2,523,421 7,863,249 7,863,249 1,436,710 244,764 1,681,474 338,200 338,200 2,532,039 2,532,039 7, 890,102 7, 890,102 1,436,710 250,622 1,687, 332 338,200 338,200 2,418,057 2,418,057 7,534,924 7,534,924 1,297,447 249,854 1,547,301 326,844 326,844 20,844,200 20,939,960 20,826,601 5,727,410 5,727,410 5,571,916 509,670 549,670 506,096 27,081,280 27,217,040 26,904,613 115,307,710 118,399,799 115,410,883 134,900 203,761 2,222,535 7,735,020 8,872,634 8,297,475 (6,783,230) (17,236,241) (16,536,005) 951,790 (8,363,607) (8,238,530) 1,086,690 (8,159,846) (6,015,995) - - (1,476,659) 1,500,051 113,982 113,982 355,178 355,178 139,263 768 140,031 11,356 11,356 113,359 155,494 43,574 312,427 2,988,916 2,018,774 (575,159) 700,236 125,077 2,143,851 (1,476,659) 1,500,051 , �� IL � ' ' � ' , � � ' ' ' ' � �l J ' ' � 1,086,690 (8,159,846) (5,992,603) 2,167,243 ' 27,056,447 27,056,447 27,056,447 - 28,143,137 $ 18,896,601 $ 21,063,844 $ 2,167,243 The notes to the financial statements are an integral part of this statement. 24 i , , � , � � ' ' , � ' ' , ' , ' � ' , 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, 2008 REVENUES Taxes: Property Sales Othertaxes Totaltaxes Licenses, permits, and fees Investment earnings Miscellaneous Total revenues EXPENDITURES Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Excess /(Deficiency) of revenues and other sources over expenditures and other uses Fund balances - beginning Fund balances - ending Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 2,820,720 $ 2,827,490 $ 2,835,064 $ 7,574 11,365,000 9,585,000 9,862,977 277,977 1,522,560 1,522,560 1,574,923 52,363 15,708,280 13,935,050 14,272,964 337,914 963,700 762,530 824,965 62,435 600,000 1,700,000 1,650,576 (49,424) - - 149,188 149,188 17,271,980 16,397,580 16,897,693 500,113 17,271,980 16,397,580 16,897,693 500,113 (15,933,750) (18,740,183) (18,625,925) 114,258 (15,933,750) (18,740,183) (18,625,925) 114,258 1,338,230 (2,342,603) (1,728,232) 614,371 13,144,938 13,144,938 13,144,938 - $ 14,483,168 $ 10,802,335 $ 11,416,706 $ 614,371 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, 2008 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 Interfund receivables 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 Other receivables Total current assets - restricted Total current assets Noncurrent assets: Restricted: Equity in pooled cash and investments Deferred charges InterFund receivables 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 $ 250 $ 200 $ 200 15,189,981 11,980,654 13,052,698 2,898,193 1,473,945 923,565 1,840,100 1,532,300 616,872 4,738,293 3,006,245 1,540,437 (79,500) (74,161) (23,416) 4,658,793 2,932,084 1,517,021 267,427 - - 693,746 891,113 - 4,400 - - 20, 814, 597 15, 804, 051 14, 569, 919 9,962,049 2,391,404 977,022 140,964 - - 10,103,013 2,391,404 977,022 30,917,610 18,195,455� 15,546,941 The notes to the financial statements are an integral part of this statement. 26 28,780,558 300,000 - 920,364 328,662 - 1,319,084 683,249 740,377 15,754,995 327,285 1,041,913 208,384,475 40,343,490 2,038,984 255,159,476 41,982,686 3,821,274 286,077,086 60,178,141 19,368,215 1 , , � � � ' ' , , , , � ' , ' � ' , Activities Funds Governmental Activities - Stormwater Other Internai Service Utility Funds Total Funds $ - $ 606,957 $ 607,607 $ 1,700 12,730,240 23,629,385 76,582,958 49,559,074 704,697 100,233 6,100,633 - 1,084,200 215,787 5,289,259 - 1,788,897 316,020 11,389,892 - (18,189) (2,058) (197,324) - 1,770,708 313,962 11,192,568 - - - - 2,747 - - - 111,925 3,726 - 271,153 - - 89,590 1,674,449 444,708 - 30,133 34,533 1,051,823 14,504,674 24,670,027 90,363,268 51,171,977 2,366,346 - 15,696,821 - 19,525 - 160,489 - 2,385,871 - 15,857,310 - 16,890,545 24,670,027 106,220,578 51,171,977 3,223,115 10,167,800 42,471,473 - 401,564 42,079 1,692,669 - - - - 2,814,313 227,351 345,137 3,315,198 1,080,478 24,425,463 4,499,707 46,049,363 729,591 48,184,784 12,131,856 311,083,589 16,410,756 76,462,277 27,186,579 404,612,292 21,035,138 93,352,822 51,856,606 510,832,870 72,207,115 27 (Continued) City of Clearwater, Florida Statement of Net Assets Proprietary Funds September 30, 2008 LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued interest payable Inte�fund payables - deficit in pooled cash 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 Interfund payables 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 Customer deposits Total current liabilities payable from restricted assets Total current liabilities Noncurrent liabilities: Compensated absences Other postemployment benefits Revenue bonds (net of unamortized discounts and deferred amount on refunding) Notes, loan pool agreement and acquisition contracts Interfund payables Claims payable Total non-current liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted for: Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility 2,177,378 1,495,427 367,422 323, 773 177, 374 192, 362 95,236 89,827 38,948 4,804 - = 328,992 289,900 183,511 1,199,167 705, 833 - 150,644 - 139,930 4,279,994 2,758,361 922,173 225,664 - - 1,265,040 60,844 - 5,995,833 64,167 - 2,475,512 2,266,392 977,022 9,962,049 2,391,403 977,022 14,242,043 5,149,764 1,899,195 278,139 245, 089 155,145 159,296 85,334 106,209 122,946,947 15,892,912 - 160,375 - 210,623 123,544,757 16,223,335 471,977 137,786,800 21,373,099 2,371,172 96,293,636 24,336,525 2,730,344 Revenue bond debt service and sinking fund requirements 16,980,161 64,167 - Revenue bond renewai and replacement requirements 8,788,479 300,000 - Water and sewer impact fees 7,461,946 - - Stormwater system fees - - - Parking improvements - - - Unrestricted 18,766,064 14,104,350 14,266,699 Total net assets $ 148,290,286 $ 38,805,042 $ 16,997,043 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. F� , ' ' ' � ' ' ' ' ' � � , ' I ' u � Cl � ' , ' � , � � ' ' ' ' ' ' ' ' ' � ' ' Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds 165,931 569,342 4,775,500 486,086 80,348 104,112 877,969 375,370 - - 224,011 - - 15,101 15,101 - - - 4,804 - - 292,084 292,084 - - 27,416 27,416 893,278 122,665 124,981 1,050,049 480,958 87,500 - 1,992,500 - 63,234 122,460 476,268 3,392,931 - 20,271 20,271 91,654 _ - - 2,188,600 519,678 1,275,767 9,755,973 7,908,877 642,897 - 868,561 - 760,948 22,075 2,108,907 - 962,500 - 7,022,500 - - - 5,718,926 - 2,366,345 22,075 15,718,894 - 2,886,023 1,297,842 25,474,867 7,908,877 103,704 105,665 887,742 406,614 43,619 60,417 454,875 177,028 40,875,250 9,135,000 188,850,109 - 4,855 79,846 455,699 5,775,358 4,081,086 4,081,086 733,227 198,187 - 198,187 6,754,400 41,225,615 13,462,014 194,927,698 13,846,627 44,111,638 14,759,856 220,402,565 21,755,504 31,299,480 16,074,931 170,734,916 7,972,058 3,433,469 816,300 21,294,097 - _ - 9,088,479 - _ - 7,461,946 - 490,663 - 490,663 - - 1,300,000 1,300,000 - 14,017,572 18,905,519 80,060,204 42,479,553 $ 49,241,184 $ 37,096,750 290,430,305 $ 50,451,611 3,620,320 $ 294,050,625 � City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2008 Operating revenues: Sales to customers Service charges to customers User charges to customers Biilings 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: Professional fees Advertising Communications Printing and binding Insurance Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Total other current charges Total operating expenses Operating income (loss) Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility $ 51,322,761 $ 38,868,086 $ 17,179,685 527,708 1,290,652 86,297 51,850,469 40,158,738 17,265,982 9,280,284 5,514,444 5,830,118 9,264,739 20,689,455 - 2,630,873 349,456 338,345 1,108,286 668,598 3,480,180 2,899,279 94,569 86,758 - - 4,648,111 7,688,909 1,742,867 284,717 5,742,110 2,132,650 1,112,140 1,407,858 260,954 25,305 - 435,999 4,037 181,492 118,517 84,081 - 823 - 1,038,080 424,698 176,080 4,059,214 152,000 88,025 - 46,217 2,467 323,980 106,800 41,065 388,480 345,760 112,980 - 2,136,971 - 7,399,104 4,028,739 534,040 46,013,584 35,220,778 16,314,409 5,836,885 4,937,960 951,573 The notes to the financial statements are an integral part of this statement. 30 Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds $ 12,520,619 $ 5,131,657 $ 125,022,808 $ 62,851 8,316 1,975,824 - 5,732,453 5,732,453 - 3,591,696 3,591,696 12,583,470 14,464,122 136,322,781 47,062,930 47.062.930 2,536,537 2,970,021 26,131,404 10,627,051 - 4,080,898 34,035,092 4,564,728 244,954 458,109 4,021,737 706,367 961,462 506,594 6,725,120 328,241 - 394,693 3,475,299 637,529 _ - 4,648,111 - 2,312,550 1,367,030 13,396,073 4,979,408 1,933,310 1,623,680 12,543,890 275,480 592,966 1,821,476 4,108,559 522,239 - 65,458 505,494 - 25,772 65,377 475,239 1,388,355 - 15,550 16,373 44,606 83,100 270,069 1,992,027 16,849,905 434,345 208,534 4,942,118 1,723,862 - 450,052 498,736 650,997 64,416 111,779 648,040 201,166 160, 950 118,360 1,126,530 420,390 - 32,596 2,169,567 4,605 1,361,549 3,159,251 16,482,683 21,506,125 9,350,362 14,560,276 121,459,409 43,924,929 3,233,108 (96,154) 14,863,372 3,138,001 (Continued) 31 City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2008 Nonoperating revenues (expenses): Investment earnings interest expense 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 Total net assets - beginning, as restated Total net assets - ending Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility 1,903,634 595,279 473,466 (6,385,066) (939,825) (56,405) (76,606) (29,017) - (668) - - 260,275 743,310 246,278 (4,298,431) 369,747 663,339 1,538,454 5,307,707 1,614,912 696, 340 - - - 223,830 - (2,720,536) (1,933,589) (1,033,855) (2,024,196) (1,709,759) (1,033,855) (485,742) 3,597,948 581,057 148,776,028 35,207,094 16,415,986 $ 148,290,286 $ 38,805,042 $ 16,997,043 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 � , � �J � , � � lJ ' ' � ' , , C , , , Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds 499,808 841,269 4,313,456 1,777,778 (1,825,699) (226,984) (9,433,979) (394,186) (30,494) (559) (136,676) - - (6,010) (6,678) 364,047 186,934 251,838 1,688,635 144,094 (1,169,451) 859,554 (3,575,242) 1,891,733 2,063,657 763,400 11,288,130 5,029,734 169,983 225,508 1,091,831 14,714 175,683 2,342,240 2,741,753 1,127,422 (611,790) (638,238) (6,938,008) (389,711) (266,124) 1,929,510 (3,104,424) 752,425 1,797,533 2,692,910 8,183,706 5,782,159 47,443,651 34,403,840 44,669,452 $ 49,241,184 $ 37,096,750 $ 50,451,611 1,302,310 $ 9,486,016 33 City of Cleanivater, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2008 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 Otherrevenues Net cash provided by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Receipt of cash on loans to/from other funds Payment of cash on loans tolfrom other funds 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 $ 52,069,390 $ (18,306,173) (8,911, 962) (9,591,069) 260,275 15,520,461 39,390,576 $ (25,706,179) (5,512,659) (2,251,167) 743,310 6,663,881 17,380,238 (5,200,622) (5,724,496) (4,965,461) 246,278 1,735,937 (2,720,536) (1,709,759) (1,033,855) (2,720,536) (1,709,759) (1,033,855) (7,239,874) (4,856,009) (135,850) (3,986,861) (963,820) (60,013) (8,643,396) (943,433) (86,521) 24,386 - 116,450 256,133 - - 3,964 - - 436,243 - - (19,149,405) (6,763,262) (165,934) 1,903,634 595,279 473,466 1,903,634 595,279 473,466 (4,445,846) (1,213,861) 1,009,614 58,378,684 15, 886,119 13,020,306 $ 53,932,838 $ 14,672,258 $ 14,029,920 $ 250 $ 200 $ 200 15,189,981 11,980,654 13,052,698 38,742,607 2,691,404 977,022 $ 53,932,838 $ 14,672,258 $ 14,029,920 The notes to the financial statements are an integral part of this statement. 34 � ' S , � ' ' ' ' � ' � � , ' ' ' ' ' , � ' Activities Funds Governmental Activities - Stormwater Other Internal Service � Utility Funds Total Funds ' , � $ 12,572,470 $ 14,542,097 $ 135,954,771 $ - - - - 47,062,930 (1,618,513) (7,935,299) (58,766,786) (26,359,522) (2,448,304) (2,851,310) (25,448,731) (10,182,080) (3,170,987) (2,242,954) (22,221,638) (1,694,683) 186,934 251,838 1,688,635 77,542 5,521,600 1,764,372 31,206,251 8,904,187 ' 175,683 2,342,240 2,517,923 488,901 (611,790) (638,238) (6,714,178) (78,439) - 116,458 116,458 125,297 � _ - - (91,654) (436,107) 1,820,460 (4,079,797) 444,105 � � (1,110,341) (183,709) (13,525,783) (3,724,971) (1,817,826) (204,909) (7,033,429) (529,186) (1,645,209) (844,776) (12,163,335) (4,939,095) _ - - 408,017 - 9,092,362 9,233,198 3,319,348 � 378,774 125,507 760,414 - 3,964 _ - 436,243 - , (4,194,602) 7,984,475 (22,288,725) (5,465,887) � � ' ' , ' 603,878 841,269 4,417,526 1,777,778 603,878 841,269 4,417,526 1,777,778 1,494,769 12,410,576 9,255,252 5,660,183 16,824,932 21,993,566 126,103,607 43,900,591 $ 18,319,701 $ 34,404,142 $ 135,358,859 $ 49,560,774 $ - $ 606,957 $ 607,607 $ 1,700 12,730,240 23,629,385 76,582,958 49,559,074 5,589,461 10,167,800 58,168,294 - $ 18,319,701 $ 34,404,142 $ 135,358,859 $ 49,560,774 35 (Continued) City of Clearwater, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2008 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: Other nonoperating revenue 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 claims payable Increase (decrease) in deposits payable Increase (decrease) in unearned revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroil Increase (decrease) in other postemployment benefits 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 Capital assets transferred from General Government Capital assets transferred to Administrative Services Fund Decrease in net pension asset Increase in other postemployment benefits liabliity Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility $ 5,836,885 $ 4,937,960 $ 951,573 260,275 743,310 246,278 7,435,921 1,742,867 284,717 (117,392) (216,143) - 1,108,265 - - 131,260 173,047 110,960 24,850 - - 44,357 (42,313) - 1,757 - - 272,514 80,856 33,491 62,811 41,076 3,296 - (982,286) - 82,927 49,279 50,234 216,735 50,894 (50,821) 159,296 85,334 106,209 9,683,576 1,725,921 784,364 $ 15,520,461 $ 6,663,881 $ 1,735,937 $ (76,606) $ (84,242) $ - $ (54,515) $ (99,073) $ - $ (248,534) $ (632,810) $ - $ (668) $ - $ - $ - $ - $ - $ - $ (327,249) $ - $ (82,927) $ (49,279) $ (50,234) $ (159,296) $ (85,334) $ (106,209) The notes to the financial statements are an integral part of this statement. 36 � ' ' � � ' , , � ' ' ' 1 ' , ' ' ' ' Activities Funds Governmental Activities - Stormwater Other Internal Service Utility Funds Total Funds $ 3,233,108 $ (96,154) $ 14,863,372 $ 3,138,001 186,934 251,838 1,688,635 144,094 2,312,550 1,367,030 13,143,085 4,979,408 - - (333,535) - - - 1,108,265 - (11,000) 73,975 478,242 (2,747) _ - 24,850 - - (46,970) (44,926) (113,565) - (3,449) (1,692) 318,417 (109,636) 95,391 372,616 (20,711) (178,589) - (178,589) - - 1,312 108,495 - - 2,689 (979,597) (63,805) 21,176 22,355 225,971 94,729 23,438 35,938 276,184 253,339 43,619 60,417 454,875 177,027 2,288,492 1,860,526 16,342,879 5,766,186 $ 5,521,600 $ 1,764,372 $ 31,206,251 $ 8,904,187 $ (30,412) $ (559) $ (191,819) $ - $ (34,669) $ - $ (188,257) $ - $ (34,500) $ - $ (915,844) $ - $ - $ (6,010) $ (6,678) $ (55,305) $ - $ - $ - $ 14,714 $ - $ - $ (327,249) $ 327,249 $ (21,176) $ (22,355) $ (225,971) $ (94,729) $ (43,619) $ (60,417) $ (454,875) $ (177,027) 37 City of Clearwater, Florida Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2008 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 International corporate bonds International equity securities Domestic stocks Mortgage backed bonds Asset backed securities Commodity exchange-traded funds Domestic equity mutual funds International equity 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 misceilaneous payabies 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. 38 Pension Trust Agency Funds Fund $ 19,407 $ - 6,466,348 443,462 33, 754,419 - 18,299,523 - 16,649,611 - 60,281,976 - 4,667 - 18,782,341 - 247, 503, 739 - 98,641,317 - 2,554,458 - 284,134 - 41,462,942 - 22,227,405 - 560,446,532 - 110,479,658 - 2,351,513 - 11,970,657 - 48,876 - 390,527 - 14, 761, 573 - 692,173,518 443,462 685,185 - 31,067,023 - 112,035,918 - - 312,845 - 7,640 - 122,977 - 443,462 143,788,126 443,462 548,385,392 - $ 548,385,392 $ - ' ' ' i �� 1 � City of Clearwater, Florida Statement of Changes in Fiduciary Net Assets Fiduciary Eunds For the Year Ended September 30, 2008 ADDITIONS Contributions: Contributions from employer Contributions from employer - state tax Contributions from employees Total contributions Investment i�ncome (loss): Net appreciation in fair value of investments Interest Dividends Less investment expenses: � Investment management / custodian fees Net income (loss) from investing activities � Securities lending income: Gross earnings Loss on securities lending collateral Rebate paid ' Bank fee Net income (loss) from securities lending Total additions (losses) � � ' � ' � , 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 The notes to the financial statements are an integral part of this statement. ' 39 Pension Trust Funds $ 10,393,307 2,347,133 6,294,917 19,035,357 (114,829,290) 11, 095, 640 3,513,844 (100,219,806) 3,061,776 (103,281,582) 4,582,384 (1,556,260) (3,395,508) (415,201) (784,585) (85,030,810) 24,846,628 826,605 25,673,233 (110,704,043) 221,928 (110,925,971) 659, 311, 363 $ 548,385,392 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Note I— Summary of Significant Accounting Policies 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 poficies 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 — Clearwater Community Redeveloqment Aqencv: 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 (b�ended 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 non-major special revenue fund and a governmental non-major capital projects fund. Related Organization — Clearwater Housina Authoritv (CHA): CHA is a public housing authority created by City Resolution 69-5 (1969), under Section 421.04 of the Florida Statutes. CHA receives primary funding from the Federal Department of Housing and Urban Development (HUD). The City Council appoints the governing board, however the City Council is not able to impose its will on the CHA, nor does the City have any responsibility for the budget, debt, financing deficits, or fiscal management of CHA. Separate audited financial statements of CHA as of September 30, 2008, are available from CHA. Related Organization — Downtown Development Board: 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, with its own levy (0.9651 mills for fiscal 2008) on downtown properties, and is not financially dependent upon the City. Consequently it is not a component unit of the City of Clearwater. 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, 2008, are available from the DDB. Jointly governed oraanization — Florida Gas Utilitv: 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 40 ' ' � ' � � � lI � � ' r � � � � � � � ' , City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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, 2008, FGU has 23 members. Separate audited financial statements of FGU as of September 30, 2008, are available from FGU. ' � 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 normalfy 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 1 support. 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. � � ' r 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, property 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. 41 City of Clearwater, Fiorida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 Utility 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. 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 Firefighter'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. ' � � � � ' � � � � 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 City's 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. Properiy 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. � � � � ' � 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. 42 O ' , LJ ' City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 D. 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 single 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. �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 2.00% at September 30, 2008. 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, 2008, the performance measure weighted average was 2.78%. The actual pooled cash earnings performance before bank charges was 4.84%. � � � ' ' ' 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. 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 intertund 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 befinreen the governmental activities and business-type 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. 43 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 2.99%. 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 2007 thru 2003), and 100% of the receivable attributable to fiscal years 2002 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. Property 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 co�lected within sixty days after the close of the fiscal year) is shown as deferred revenue in the appropriate fund. LJ � [J � � , � 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 4.6777 mills for the year ended September 30, 2008, reflects a 10.2% decrease from the prior year millage rate of 5.2088. 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. 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 Utiliry, 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 property, 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 nefinrork 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. 44 � �J n �� , � ' ' � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 � 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 $9,778,992. Of this amount, $268,324, $27,743, and $48,946 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 $67,303, $-0-, and $104,070, respectively, to arrive at net capitalized interest of $201,021, $27,743, and ($55,124) for water & sewer, gas, and stormwater system projects, respectively. � � � r � � � 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. Vacation and sick leave "caps" vary depending upon an employee's bargaining unit, hire date, etc, but generally employees may accumulate vacation time not exceeding 320 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 the applicable vacation "cap" and one-half of accumulated unused sick leave not exceeding the sick leave cap (i.e. maximum pay-out of 780 hours for an employee with a 1,560 hour cap). The City accrues for all earned but unused vacation pay up to the applicable cap 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. 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 fnancing 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 resetvations 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. 45 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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. 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. 1 ' � � � � � � LJ � Budget amounts presented in the accompanying financiat 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 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 fiscal 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 Correction of an error in the depreciation schedule for the Marine Operations enterprise fund for buildings, and improvements other than buildings, resulted in the following adjustment to the prior year balances: Business-type activities capital assets Business-type activities, net assets Enterprise funds capital assets Enterprise funds, net assets Fund/Net Assets Balance 9/30/2007 $357,153,807 $284,041,532 $357,153,807 $281,723,522 46 Adiustment $523,077 $523,077 $523,077 $523,077 Restated Balance 9/30/2007 $357,676,884 $284,564,609 $357,676,884 $282,246,599 E� � _1 � � � � i �,I � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Note III - Detailed Notes on All Funds A. Deposits 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 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. � 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. �Pooled Cash and Investments 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. IAt year-end, the government's 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 equivalents: Cash on hand Cash in bank Total cash and cash equivalents Investments: Treasuries 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) Dept of Housing and Urban Development (HUD) Student Loan Marketing Association (SLMA) Student Loan Marketing Association (SLMA) Other Government Sponsored Agencies Other Government Sponsored Agencies - Zeroes Municipal bonds Municipal bonds Collateralized mortgage obligations Total investments Total pooled cash and investments Carrying % of Weighted avg Moody's Amount Portfolio maturity (vears) Ratinq $ 649,364 10,677,424 11,326,788 4.0% 19,100,160 6.8% 13,132,615 15,618,128 59,887,844 47,729,259 65,698,440 12,607,777 4,739,437 5,254,132 6,715,733 4,423,674 6,104,856 1, 966, 809 8,361,358 271,340,222 $ 282,667,010 47 4.6% 5.5% 21.2% 16.9% 23.2% 4.5% 1.7% 1.9% 2.4% 1.6% 2.2% 0.7% 3.0% 100.0% n/a n/a n/a n/a 0.07 Aaa 2.15 4.60 2.63 4.44 5.11 3.38 3.84 6.40 3.43 1.55 3.22 1.91 2.26 3.64 Aaa Aaa Aaa Aaa Aaa Aaa Aaa Baa2 Aaa Aaa Aaa Aa,a1, Baa Aaa City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Cash and investments as of September 30, 2008 are classified in the accompanying financial statements as follows Statement of net assets Primary Government: Cash and investments Restricted cash and investments Fiduciary Funds: Cash on hand and in banks Equity in pooled cash and investments-pension funds Equity in pooled cash and investments-agency fund Total cash and investments per CAFR Interest Rate Risk — Pooled Cash and Investments: 09/30/08 $ 217,569,499 58,168,294 19,407 6,466,348 443,462 $ 282,667,010 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 City's pooled cash investment policy, in accordance with Florida Statutes, allows investments to direct obligations of the United States, federal agencies, debt issued by the State of Florida or any political 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 City's pooled cash investments are disclosed in the preceding table. 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 portfolio. Concentrations for several issuers exceeded 5% as disclosed in the preceding table, though none exceeded the 40% limit per the policy. Bond Trust Indenture A_qreement / Debt Service Investments The City invests in certain prescribed investments per the terms of revenue bond trust indenture agreements. As of September 30, 2008, these consisted of: Carrying % of Weighted avg Moody's Bond Trust Indenture Debt Service Investments Amount Portfolio maturity�vears�, Ratinq Cash and cash equivalents: Cash in managed investment accounts Total cash and cash equivalents Investments: Commercial paper Total investments Total pooled cash and investments Pension Plan Assets $ 48,314 48,314 5.2% 875,829 94.8% 875,829 $ 924,143 100.0% n/a n/a 0.15 A1 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. 48 � � � �� ,� ,� � � , � , City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 � Emp/ovees Pension P/an � At year-end, the Employees' Pension Plan cash and investment balances were as follows: � Emqloyees' Pension Plan Cash and Investments Cash and cash equivalents: 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 - zeroes Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds International equity securities Domestic stocks Mortgage backed bonds Assetbacked bonds Commodity ETF Domestic equity mutual funds International equity mutual funds Total investments Total managed cash and investments * See pooled cash note disclosure above Carrying Amount $ 2,485,304 32,727,043 35,212,347 9,160,037 447,156 3,245,526 936,254 7,003,902 4,998,000 1,575,914 10,798,408 16,260,659 25,133,982 298,250 3,100,979 175,486 1,195,825 18,782,341 238,679,742 97,400,558 2,554,458 284,134 39,485,214 21,489,933 503,006,758 $ 538,219,105 Interest Rate Risk - Employees' Pension Plan: % of Weighted avg Portfolio maturity (years) 0.5% 6.1% 1.7% 0.1 % 0.6% 0.2% 1.3% 0.9% 0.3% 2.0% 3.0% 4.7% 0.1 % 0.6% 0.03% 0.22 % 3.49% 44.3% 18.1% 0.5% 0.1% 7.3% 4.0% 100.0% See above " n/a 4.3 16.1 9.2 23.9 21.1 0.1 11.9 n/a n/a 25.0 7.7 n/a n/a n/a Moody's Ratinq See above * n/a Aaa Aaa Aaa Baa1 Aaa Aaa P� Aa 1 /Aa2/Aa3 A1 /A2/A3 Baa1/Baa2/Baa3 Ba1 61 /63 BBB Caa2/Ca2 n/a n/a Aaa Aaa n/a n/a n/a �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°/a of the portfolio. There are no limits related to weighted average maturities due to the long-term nature of pension plan investing. � 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, 2008, the Plan had $4,770,540 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. I� 49 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Common stock Total Currencv Euro British Pound Japanses Yen Swiss Franc Saudi Arabia Australian Dollar Hong Kong Dollar South Africa Rand Mexico Pesos Swedish Krona South Korea Won Taiwan Dollars Brazil Real Turkey Liras Thailand Bath Chile Peso Hungary Forint Singapore Dollar Malaysia Ringgit Poland Zloty Indonesia Rupiah Czeck Rep Koruna Russian Ruble Norvuegian Krone Israel Shekel Danish Krone Philippines Peso Qatar Rial Morocco Dirham Egypt Pound Various others Fair Value $ 5,523,241 3,486,050 3,303,584 1,081,991 1,029,796 910,541 705,628 455,392 394,893 384,315 364,744 360,015 326,319 228,778 214,590 208,679 198,038 194,516 191,535 190, 944 184,441 183,850 147,789 133,466 121.187 111,818 102,270 101,088 93,994 82,171 436,065 $ 21,451,728 Firefiphter's Relief and Pension Plan At year-end, the Firefighter's Relief and Pension Plan cash and investment balances were as follows: 50 � � � � � � � � � � � � ' � � � � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Cash and cash equivalents: Equity in pooled cash Total cash and cash equivalents Investments: U.S. agency - Federal NaYI Mortgage Assn. (FNMA) U.S. agency - Federal Home Loan Mortgage Corp. (FHLMC) U.S. agency - Federal Home Loan Bank (FHLB) Total investments Total managed cash and investments * See pooled cash note disclosure above Carrying Amount $ 3,981,044 3, 981, 044 3,104,408 283,403 203, 063 3, 590, 874 $ 7,571,918 % of Weighted avg Moody's Portfolio maturitvlvears) Ratinq 52.6% See above " See above' 41.0% 9.87 Aaa 3.7% 0.55 Aaa 2.7% 0.50 Aaa 100.0% Interest Rate Risk — Firefighter's Relief and Pension Plan: As a means of limiting exposure to fair value losses arising from rising interest rates, the Firefighter'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 — Firefighter's Relief and Pension Plan: The Firefighter'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 — Firefighter's Relief and Pension Plan: The Firefighter'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 — Firefighter's Relief and Pension Plan: The Firefighter's Relief and Pension Plan investment policy does not permit investment in foreign fixed income or equity securities. Police Supplemental Pension Plan 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 Investments: Treasuries U.S. agencies Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic stocks Mortgage backed bonds Mortgage backed bonds Total investments Total managed cash and investments Carrying % of Weighted avg Amount Portfolio maturitv (vears) $ 19,407 161,100 180, 507 3,838,088 1, 006, 950 134, 206 396, 738 307, 626 7, 357, 511 48, 345 6, 932 13, 096, 396 $ 13,276,903 51 1.4% 28.9% 7.6% 1.0% 3.0% 2.3% 55.4% 0.4% 0.1 % 100.0% n/a n/a n/a 6.97 3.75 5.43 n/a 28.51 Moody's Ratinq n/a n/a n/a Aaa Aaa Aaa Aa 1 /Aa2/Aa3 A1 /A2/A3 n/a Aaa N/R City of Clearwater, Fiorida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Interest Rate Risk — Police Supplemental Pension Plan: 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 Government/Corporate 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. Firefiqhters Supplemental Pension Plan At year-end, the Firefighters Supplemental Pension Plan cash and investment balances were as follows: Cash and cash equivalents: Cash in managed investment accounts Total cash and cash equivalents Investments: Treasuries Treasury zeroes U.S. agencies Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds Domestic corporate bonds floating rate Domestic corporate bonds floating rate Foreign bonds Domestic stocks Equity mutual funds EAFE mutual funds Mortgage/Asset backed bonds Total investments Total managed cash and investments Carrying % of Weighted avg Moody's Amount Portfolio maturitv (years) Ra, tinq $ 866,276 11.0% 866, 276 641, 728 30, 734 49, 885 63, 512 111,398 357, 066 346,631 4, 913 2, 943 17,440 4,667 1,466, 486 1,977,728 737,472 1,185,482 6,998,085 $ 7,864,361 52 8.2% 0.4% 0.6% 0.8% 1.4% 4.5% 4.4% 0.1% 0.0% 0.2% 0.1% 18.6% 25.2% 9.4% 15.1% 100.0% n/a 12.09 27.39 0.12 8.07 0.22 35.09 9.46 n/a n/a n/a 20.75 n/a Aaa AAA Aaa Aaa Aa 1 /Aa2/Aa3 A1 /A2/A3 Baa1/Baa2/Baa3 Ba1/Ba2/Ba3 A1 /A2/A3 Aa1 /Aa2/Aa3 Baa1lBaa2/Baa3 n/a n/a n/a Aaa � , � � � � ,� � � �, !_ J � �� i � � 'L_J � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 �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. � � � � � � �J � � � �� 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 securiry 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. B. Receivables 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 $13,021,765 reported on the Governmental Funds balance sheet includes $12,913,744 of long-term loans receivable that are not expected to be collected within the next fiscal year. Receivables as of year-end for the primary government's individual major funds, as well as non-major funds and internal service funds in the aggregate, are as follows: Receivables (thousands): Taxes Interest" Accounts Notes Other Total Generalfund $ 347,893 $ 381,940 $ 234,753 $ - $ 1,882,049 $ 2,846,635 Special Development 22,662 460,717 - - - 483,379 Capitallmprovement - 70,700 - - 146,958 217,658 Non-major governmental funds - 138,211 - 13,021,765 67,864 13,227,840 Internal service funds - 481,464 - 2,747 484,211 Total governmental activities $ 370,555 $ 1,533,032 $ 234,753 $ 13,021,765 $ 2,099,618 $ 17,259,723 Water and Sewer Utility $ - $ 547,180 $ 4,658,793 $ - $ - $ 5,205,973 Gas Utility - 132,128 2,932,084 - - 3,064,212 Solid Waste Utility - 136,035 1,517,021 - - 1,653,056 Stormwater Utility - 168,331 1,770,708 - - 1,939,039 Non-major enterprise funds - 211,900 313,962 - - 525,862 Total business-type $ - $ 1,195,574 $ 11,192,568 $ - $ - $ 12,388,142 * Interest receivable is included in equity in pooled cash and investments at the fund level. 53 Cifiy of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 C. Capital assets Capital asset activity for the year ended September 30, 2008: 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 I nfrastructu re 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 Improvements other than buildings 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-rype activities capital assets Beginning Balance Increases Decreases Transfers $ 70,544,660 $ 473,524 $ - $ 30 , 047, 685 16 , 857, 834 15 , 850, 545 100,592,345 17,331,358 15,850,545 _ � � � � Ending Balance $ 71,018,184 31,054,974 � 102,073,158 108,227,554 2,018,556 773,111 - 109,472,999 19,780,208 1,092,333 - - 20,872,541 83,601,114 6,457,931 19,315,803 (28,618) 70,714,624 91,675,100 16,578,761 - - 108,253,861 303,283,976 26,147,581 20,088,914 (28,618) 309,314,025 (24,969,044) (3,564,969) (77,311) - (28,456,702) (7,996,482) (988,264) - - (8,984,746) (57,391,343) (6,527,859) (15,835,252) 28,618 (48,055,332) (56,360,813) (2,538,610) - - (58,899,423) (146,717,682) (13,619,702) (15,912,563) 28,618 (144,396,203) 156,566,294 12,527,879 4,176,351 - 164,917,822 $257,158,639 $29,859,237 $ 20,026,896 $ - $266,990,980 Beginning Balance Increases Decreases $ 28,361,612 $ 824,986 $ - $ 42,556,848 9,907,465 35,601,548 70,918,460 10,732,451 35,601,548 � � � � Ending � Transfers Balance - $ 29,186,598 � - 16,862,765 - 46,049,363 23,735,580 - - - 23,735,580 417,518,203 37,682,462 - - 455,200,665 9,504,563 479,058 588,908 28,618 9,423,331 450,758,346 38,161,520 588,908 28,618 488,359,576 (9,953,345) (864,238) - - (10,817,583) (148,471,836) (11,689,683) - - (160,161,519) (5,574,741) (842,152) (148,626) (28,618) (6,296,885) (163,999,922) (13,396,073) (148,626) (28,618) (177,275,987) 286,758,424 24,765,447 440,282 - 311,083,589 $357,676,884 $35,497,898 $36,041,830 $ - $357,132,952 54 � � � � � � � � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Depreciation expense was charged to functions / programs of the primary government as follows: Governmental activities: General government Public safety Physical environment Transportation, including depreciation of general infrastrudure assets Culture and recreation $ 714,057 1,620,442 50,726 2,729,588 3,455,281 Capital assets held by the governmenYs governmental internal service funds are charged to �!. the various functions based on their usage of the assets 5,049,608 Total depreciation expense - governmental adivities $ 13,619,702 � � � � � � � � � 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 Downtown boat slips Total depreciation expense - business-type activities Construction commitments At September 30, 2008, material outstanding construction commitments were as follows: $ 7,688,909 1,742,867 284,717 2,312,550 276,275 127,798 197,473 228,838 536,646 $ 13,396,073 Proiect Fund Downtown Boat Slips Downtown Boat Slips enterprise fund Wastewater Treatment Plant Headworks Water & Sewer Utility enterprise fund Wastewater Treatment Plant Aeration Improvements Water & Sewer Utility enterprise fund Traffic Calming Capital Improvement capital projects fund Reverse Osmosis Plant Expansion Water & Sewer Utility enterprise fund Beachwalk Capital Improvement capital projects fund Sanitary Sewer Repair & Replacement Water & Sewer Utiliry enterprise fund Bayfront Promenade Capital Improvement capital projects fund Reclaimed Water Distribution System Water & Sewer Utility enterprise fund Alligator Creek Drainage Improvements Stormwater Utility enterprise fund Fire Training Facility Capital Improvement capital projects fund Pump Station Replacements Water & Sewer Utility enterprise fund Station Square Park CRA capital projects fund Water System Maintenance, Repairs, & Replacement Water & Sewer Utility enterprise fund Total Construction Commitments 55 Construction Commitments Outstandinq $10,709,363 3,959,761 3,452,756 3,107,605 1,207,047 1,123,707 1,088,801 1,038,810 1,000,394 902,074 833,765 743,074 693,432 624,055 � �_.�_ City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Totai Construction Commitments D. Interfund receivables, payables, and transfers � � $ 30.484.644 � 1. Intertund balances As discussed in Note III-A, individual fund deficits in the consolidated cash pool, if any, have been reclassified as of September 30, 2008, 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 equiry 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, 2008, were as follows: Due from Other Funds Due to Other Funds Deficit in Other Deficit in Other Fund Pooled Cash Receivables Pooled Cash Payables Capital Project Fund: Capital Improvement Enterprise Funds: Airpark Operations Marine Operations Internal Service Funds: Administrative Services Central Insurance $ 15,101 $ - $ - $ - - 20,271 15,101 - � � � � - - - 91,654 � - 111,925 - - $ 15,101 $ 111,925 $ 15,101 $ 111,925 Individual intertund advances (long-term) at September 30, 2008, follow: Fund General Fund Special Revenue Funds: Special Programs Community Redevelopment Agency Enterprise Funds: Airpark Operations Parking System Internal Service Funds: Administrative Services Central Insurance Advances to Other Funds $ 2,000,000 700,000 2,814,313 $ 5,514,313 Advances from Other Funds $ - 700,000 81,086 4,000,000 733,227 $ 5,514,313 Descriptions of lon4-term interfund loans as of Seqtember 30, 2008: Two interfund loans from the Special Programs special revenue fund to the Community Redevelopment Agency special revenue fund in the amount of $350,000 each, related to the purchase, remediation, and development of downtown parcels. An internal five-year loan from the Central Insurance Fund to the Airpark Operations enterprise fund, for the construction of a new multi plane hangar, in the amount of $101,357. The loan provides for five annual payments of $20,271 plus interest at the cash-pool rate, due on September 30 of each year. The loan commenced April 2, 2008, with the first principal payment due September 30th of the year that construction is completed, currently estimated to be September 30, 2009. 56 �I � � � � � L� � � � I � � � u � � � LJ �� City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Internal loans of $2,000,000 each from the General Fund and the Central Insurance Fund, at the cash-pool rate, to the Parking Fund to fund a contingency for construction of a beach parking garage. The loans commenced September 30, 2002, per contingency conditions of a development agreement. The contingency is no longer required per the terms of the development agreement, but the monies remain in the Parking Fund to potentially fund construction or acquisition of a beach parking garage. 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 30, 2008, the year that the infrastructure project was completed. 2. Interfund transfers Interfund transfers for the year ended September 30, 2008, 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 governmental funds Nonmajor enterprise funds Total Transfers to Capital Improvements Fund from: General Fund Special Development Fund Nonmajor governmental funds Internal service funds Total Transfers to Nonmajor governmental funds from: General Fund Special Development Fund Nonmajor governmental funds Total $ 654,240 2,696,150 1,606,340 914,210 611,790 1,176,507 638,238 , 97,475 13, 069,178 9,691,470 30,000 78,439 22,86 , 7 2,701,122 6,758,772 1,854,662 , 4,55 Transfers to Gas Utility Enterprise Fund from: General Fund 223,830 Total 223,830 Transfers to Stormwater Utility Enterprise Fund from: Special Development Fund 175,683 Total 175,683 Transfers to Nonmajor enterprise funds from: � General Fund 342,240 Special Development Fund 2,000,000 Total , 4 , 4 Transfers to Internal service funds from: � General Fund Capital Improvements Fund Water & Sewer Utility Enterprise Fund Gas Utility Enterprise Fund � Solid Waste Utility Enterprise Fund Nonmajor governmental funds Internal service funds Total � Total interfund transfers 199,635 71,637 24,386 327,249 119,645 73,598 311,272 1,127,422 $ 46,350,293 �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. � 57 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 debY' for Statement of Cash Flows reporting. Capitalized equipment subject to lease purchase financing as of September 30, 2008: Governmental Business-type Activities Activities Equipment $ 20,233,130 $ 2,559,792 Less: Accumulated Depreciation (7,772,861) (1,489,539) Total $ 12,460,269 $ 1,070,253 The future minimum lease payments under capital lease purchase agreements are as follows as of September 30, 2008: Year Ending Sept. 30 2009 2010 2011 2012 2013 Deduction of the amount of imputed interest necessary to reduce net minimum lease payments to present value Governmental Business-type Activities Activities $ 4,215,056 $ 505,462 3,210,728 272,603 2,200,019 127,740 1,163,930 54,391 500,848 23,002 11,290, 581 983,198 (730,118) (51,232) $ 10,560,463 $ 931,966 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, 2008, totaled $571,633. 58 � � � � iF. Long-term debt 1. Revenue Bonds �J �1 � � � � � � � , � � i � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 $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 $6,355,000 of principal due December 1, 2008 and $6,620,000 due December 1, 2009; interest at 4.00%. $ 12,975,000 $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 $340,000 due February 1, 2009, to $450,000 due February 1, 2016; interest at 3.75% 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 $515,000 due March 1, 2009, to $295,000 due March 1, 2022, with a maximum principal of $845,000 due March 1, 2021; interest at 3.125% 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. 9,235,000 12,255,000 $12,900,000 Improvement Revenue Bonds, Series 2008; issued to provide a portion of the funds necessary to construct a downtown boat slip marina and the Beachwalk project; serial bonds due in annual installments of $115,000 due August 1, 2009, to $1,005,000 due August 1, 2028; interest at 4.66. Bonds outstanding as of September 30, 2008, totaling $9,135,000 are reported in the Downtown Boat Slips enterprise fund for financing of the boat slip marina construction. 3,765,000 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, 2008 to December 1, 2018; ranging from $5,775,000 to $5,875,000; with interest at 4.50% to 5.22%. The balance outstanding as of September 30, 2007, includes capital appreciation bond accreted interest of $24,202,574. $58,680,000 Water and Sewer Revenue Bonds, Series 2002; issued to pay for costs of expansions to the City's water and sewer system; serial bonds due in annual installments of $1,160,000 due December 1, 2008, 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, 2008, to $260,000 due December 1, 2018, interest at 2.10% 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. $8,890,000 Gas System Revenue Refunding Bonds, Series 2004; issued to advance refund the City's Gas System Revenue Bonds, Series 1996A; serial bonds due in annual installments of $175,000 due September 1, 2009, to $1,575,000 due September 1, 2026, interest at 2.25% to 4.375%. � 38,230,000 49,955,264 53,520,000 2,385,000 26,430,000 8,200,000 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 $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 1997B; serial bonds due in annual installments of $225,000 due September 1, 2009, 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. $3,700,000 Gas System Revenue Refunding Bonds, Series 2007; issued together with other funds of the City to refund and redeem on December 1, 2007, all of the outstanding principal amount of the City's Gas System Revenue Bonds, Series 1998; serial bonds due in equal annual installments of $370,000 due September 1, 2009, through September 1, 2017; interest at 4.00%. $7,500,000 Stormwater Revenue Bonds, Series 1999; issued to finance the costs of capital improvements to the City's stormwater management system; with $160,000 of principal due November 1, 2008, interest at 4.75%. 6,710,000 3,330,000 160,000 $24,685,000 Stormwater Revenue Bonds, Series 2002; issued to finance the costs of capital improvements to the City's stormwater management system; serial bonds due in annual installments of $495,000 due November 1, 2008, 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. 22,395,000 $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 $345,000 due November 1, 2008, to $865,000 due November 1, 2032, interest at 2.40% to 4.75%. $6,925,000 Stormwater System Revenue Refunding 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, 2008, to $470,000 due November 1, 2029, interest at 3.00% to 4.50%. 13,455,000 6,820,000 $12,900,000 Improvement Revenue Bonds, Series 2008; issued to provide a portion of the funds necessary to construct a downtown boat slip marina and the Beachwalk project; serial bonds due in annual installments of $115,000 due August 1, 2009, to $1,005,000 due August 1, 2028; interest at 4.66. Bonds outstanding as of September 30, 2008, totaling $3,765,000 have been allocated to the general government activities for the Beachwalk project per above. 9,135,000 Total revenue bonds for business-type activities Total revenue bonds 2. Restrictive covenants and collateral requirements 202.495,264 240.725.264 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. .� � � �J L� � � � � � � � � � � � � � � :J � �� City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 The Improvement Revenue Refunding Bonds, Series 2001 and the Improvement Revenue Bonds, Series 2008 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. 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 Counry 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°/a) 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 2004; Gas System Revenue Refunding Bonds, Series 2005; and the Gas System Revenue Refunding Bonds, Series 2007 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 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°/a 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 property 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 Requirement" 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. 61 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Annual debt service requirements to maturity for revenue bonds are as follows: Revenue Bonds Year Ending Governmental Activities Business-type Activities September 30 Principal Interest Principal tnterest 2009 $ 7,325,000 $ 1,561,284 $ 9,015,000 $ 9,000,559 2010 7,630,000 1,271,586 4,690,063 8,751,780 2011 1,050,000 1,100,559 7,576,399 8,467,186 2012 1,085,000 1,059,711 7,913,502 8,142,357 2013 1,130,000 1,016,340 8,257,092 7,794,871 2014-2018 6,400,000 4,293,811 46,883,018 32,931,360 2019-2023 6,950,000 2,544,878 36,265,190 23,214,030 2024-2028 5,315,000 975,080 42,215,000 14,755,196 2029-2033 1,345,000 110,859 39,680,000 4,888,603 Totals $ 38,230,000 $ 13,934,108 $202,495,264 $117,945,942 3. Pledged revenues Sales Tax Pledqed: The City has pledged future revenues derived from 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, to repay $46.4 million in Infrastructure Sales Tax Revenue bonds issued in June 2001. Proceeds from the bonds providing financing 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. The bonds are payable solely from the sales tax revenue and are payable through December 2009. Annual principal and interest payments on the bonds are expected to require less than 85 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $13,499,300. Principal and interest paid for the current year and total sales tax revenue were $6,746,100 and $9,862,976, respectively. State of Florida and Pinellas Countv Pavments Pledqed: The City has pledged future revenues derived from payments received from the State of Florida pursuant to Section 212.20, Florida Statutes, and payments from Pinellas County, Florida pursuant to an Interlocal Agreement, together with any investment income earned on the revenues, to repay $14.8 million in Spring Training Facility Revenue bonds issued in September 2002. Proceeds from the bonds providing financing for 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. The bonds are payable solely from the State of Florida and Pinellas County, Florida payments and are payable through March 2031. Annual principal and interest payments on the bonds are expected to require less than 100 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $18,797,825. Principal and interest paid for the current year and total revenue received were $1,076,693 and $1,107,376, respectively. Public Service Tax and Communications Tax Pledqed: The City has pledged future revenues derived from the collection of Public Service Tax and Communications Tax, to repay $11.7 million in Improvement Revenue Refunding bonds issued in November 2001 and $12.9 million in Improvement Revenue bonds issued in August 2008. Proceeds from the 2001 bonds provided a portion of the funds necessary to defease the City's outstanding Florida Public Service Tax and Bridge Revenue bonds, Series 1985 and Improvement Revenue Bonds, Series 1995. Proceeds from the 2008 bonds provided financing to for the acquisition, construction, or reconstruction of certain capital improvements to the City, including a portion of the costs of constructing various capital improvements relating to the Beach Walk and Downtown Boat Slip Projects. The bonds are payable solely from the Public Service tax revenue and are payable through August 2028. Annual principal and interest payments on the bonds are expected to require less than 20 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $34,402,264. Principal and interest paid for the current year and total Public Service Tax and Communication Tax revenue were $780,465 and $18,279,990, respectively. � � � � � � � � � � � � �l � � � � � ! � � � � � � � II � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Water and Sewer Utilitv Net Revenues Pledqed: The City has pledged future net revenues of the City of Clearwater, Florida, Water & Sewer Utility defined as all income or earnings, including any income from the investment of funds, derived by the City from the operation of the utility after deduction of current expenses for the operation, maintenance and repair of the system, but not including reserves for renewals and replacements, for extraordinary repairs or any allowance for depreciation to repay: $43.6 million in Water & Sewer Revenue Refunding bonds issued in November 1998. Proceeds from the bonds provided financing to refund and redeem the City's then outstanding Water and Sewer Revenue Bonds, Series 1988. The bonds are payable solely from the Water and Sewer Utility net revenues and are payable through December 2018. $58.7 million in Water & Sewer Revenue bonds issued in July 2002. Proceeds from the bonds provided financing to make capital improvements and expansions to the City's water and sewer system. The bonds are payable solely from the Water and Sewer Utility net revenues and are payable through December 2032. $8.4 million in Water & Sewer Revenue Refunding bonds issued in October 2003. Proceeds from the bonds provided financing to refund and redeem the City's then outstanding Water and Sewer Revenue Refunding Bonds, Series 1993. The bonds are payable solely from the Water and Sewer Utility net revenues and are payable through December 2018. $26.4 million in Water & Sewer Revenue bonds issued in August 2006. Proceeds from the bonds provided financing for the costs of design, acquisition, construction or reconstruction of capital improvements to the City's water and sewer system. The bonds are payable solely from the Water and Sewer Utility net revenues and are payable through December 2032. Annual principal and interest payments on the bonds are expected to require less than 85 percent of net revenues. The � total principal and interest remaining to be paid on the bonds is $208,285,943. Principal and interest paid for the current year and total net revenue were $10,897,000 and $15,689,703, respectively. � � � � Stormwater Utilitv Net Revenues Pledqed: The City has pledged future net revenues of the City of Clearwater, Florida, Stormwater Utility defined as all income or earnings, including any income from the investment of funds, derived by the City from the operation of the utility after deduction of current expenses for the operation, maintenance and repair of the system, but not including �eserves for renewals and replacements, for extraordinary repairs or any allowance for depreciation to repay: $7.5 million in Stormwater Revenue bonds issued in December 1999. Proceeds from the bonds provided financing to pay the costs of capital improvements to the City's stormwater management system. The bonds are payable solely from the Stormwater Utility net revenues and are payable through November 2008. $24.7 million in Stormwater Revenue bonds issued in September 2002. Proceeds from the bonds provided financing to make capital improvements to the City's stormwater management system. The bonds are payable solely from the Stormwater Utility net revenues and are payable through November 2032. $14.4 million in Stormwater Revenue bonds issued in September 2004. Proceeds from the bonds provided financing to � make capital improvements to the City's stormwater management system. The bonds are payable solely from the Stormwater Utility net revenues and are payable through November 2032. $6.9 million in Stormwater Revenue Refunding bonds issued in May 2005. Proceeds from the bonds provided sufficient � funds to be available on November 1, 2008 to pay and redeem the City's outstanding Stormwater Revenue Bonds, Series 1999. The bonds are payable solely from the Water and Sewer Utility net revenues and are payable through November 2029. � Annual principal and interest payments on the bonds are expected to require less than 60 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $70,723,665. Principal and interest paid for the current year and total net revenue were $2,860,000 and $6,232,400, respectively. � � 63 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Gas Svstem Utilitv Net Revenues Pledqed: The City has pledged future net revenues of the City of Clearwater, Florida, Gas System Utility defined as all income or earnings, including any income from the investment of funds, derived by the City from the operation of the utility after deduction of current expenses for the operation, maintenance and repair of the system, but not including reserves for renewals and replacements, for extraordinary repairs or any allowance for depreciation to repay: $8.9 million in Gas System Revenue Refunding bonds issued in February 2004. Proceeds from the bonds provided financing to advance refund the outstanding principal of the City of Clearwater Gas System Revenue Bonds, Series 1996A. The bonds are payable solely from the Gas System Utility net revenues and are payable through September 2026. l LJ � L� �! (_J $7.2 million in Gas System Revenue Refunding bonds issued in June 2005. Proceeds from the bonds provided financing to advance refund the outstanding principal of the City of Clearwater Gas System Revenue Bonds, Series � 1997A. The bonds are payable solely from the Gas System Utility net revenues and are payable through September 2027. $3.7 million in Gas System Revenue Refunding bonds issued in October 2007. Proceeds from the bonds provided � financing to refund the outstanding principal of the City of Clearwater Gas System Revenue Bonds, Series 1998. The bonds are payable solely from the Gas System Utility net revenues and are payable through September 2017. Annual principal and interest payments on the bonds are expected to require less than 60 percent of net revenues. The � total principal and interest remaining to be paid on the bonds is $26,896,315. Principal and interest paid for the current year and total net revenue were $9,216,418 (including $7,710,000 of principal on refunded Series 1998 bonds) and $8,019,416, respectively � 4. Advance refunding of bonds 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 1998, are considered to be defeased and the liability for the bonds has been removed from the government-wide statement of net assets. The City 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. 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 $6,445,000 was outstanding at September 30, 2008. 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. 64 � � � � �� II � � ' � � � �� i � iJ � �] � � � � � LJ City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 The following schedule reflects the outstanding principal on refunded bonds as of September 30: Business-type Activities: Stormwater System Revenue Bonds, Series 1999 Total Business-type Activities Total 5. 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 Other postemployment benefits 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 Other postemployment benefits Claims payable Business-type activity Long-term liabilities Beginning Balance $ 6,445,000 6,445,000 $ 6,445,000 Ending Due Within Additions Reductions Balance One Year 41,400,000 $ 3,765,000 $ (6,935,000) $ 38,230,000 $ 7,325,000 391,465 - (75,920) 315,545 - (283,617) - 23,870 (259,747) 41,507,848 3,765,000 (6,987,050) 38,285,798 7,325,000 10,840,482 3,924,001 (4,204,020) 10,560,463 3,862,130 7,681,434 4,973,262 (4,526,090) 8,128,606 4,404,733 1,803,384 (462,159) 1,341,225 8,749,000 1,720,073 (1,526,073) 8,943,000 2,188,600 $ 68,778,764 $ 16,185.720 $ (17,705,392) $ 67,259,092 $ 17,780.463 $ 203,815,133 $ 15,250,131 $ (16,570,000) $ 202,495,264 $ 9,015,000 (1,541,797) 78,521 188,257 (1,275,019) - (3,408,956) (862,025) 915,845 (3,355,136) 198,864,380 14,466,627 (15,465,898) 197,865,109 9,015,000 1,365,906 140,836 (574,776) 931,966 476,267 1,831,146 1,189,682 (1,083,036) 1,937,792 1,050,050 - 611,616 (156,741) 454,875 - 376,776 - (178,589) 198,187 - $ 202.438,208 $ 16,408.761 $ (17.459.040) $ 201,387.929 $ 10.541.317 (a) Governmental activities lease purchase contracts additions of $3,924,001 includes $3,319,348 attributable to internal service funds and $604,653 attributable to governmental funds. The lease purchase contracts reduction of $4,204,020 includes $3,724,971 for internal service funds and $479,049 for governmental funds. G. Segment information Generally accepted accounting principles (GAAP) require segment disclosure for nonmajor enterprise funds with revenue � bonds outstanding. The following condensed statements are presented for the Downtown Boat Slips enterprise fund to satisfy this disclosure requirement. � � C:� City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Condensed Statement of Net Assets Assets: Current assets Restricted assets Deferred charges Capital assets Total assets Liabilities: Current liabilities payable from restricted assets Noncurrent liabilities Revenue bonds Total noncurrent liabilities Total liabilities Net assets: Restricted assets Unrestricted Tota� net assets Downtown Boat Slips $ 1,966,455 8,867,800 42,079 354, 327 11,230,661 22, 075 9,135, 000 9,135,000 9,157,075 816,300 1,257,286 $ 2,073,586 Condensed Statement of Revenues, Downtown Expenses, and Changes in Net Assets Boat Slips Condensed Statement of Cash Flows Operating revenues Operating expenses Operating income Nonoperating revenues (expenses): Earnings on investments Interest expense Other Transfers in from other funds Change in net assets Beginning net assets Ending net assets H. Restricted assets $ - - Net cash provided (used) by: - Operating activities Noncapital financing activities 96,220 Capital and related financing activities (22,075) Investing activities (559) Net increase (decrease) 2,000,000 Beginning cash and cash equivalents 2,073,586 Ending cash and cash equivalents $ 2,073,586 1. Water and Sewer Utility Fund Assets in the Water and Sewer Utility Fund restricted for construction include: Downtown Boat Slips $ - 2,000,000 8,738,035 96,220 10,834,255 $ 10,834,255 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, 2008, are: Equity in Pooled Cash and Investments $ 1,712,503 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, 2008, are: Equity in Pooled Cash and Investments 5,749,443 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, 2008: Water and Sewer Revenue Bonds Debt Service: Equity in Pooled Cash and Investments 18,245,201 .. � J � lJ � � � � u � _1 � � � � � , � � � � L�.� � � � � � � � � � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 Other Receivable 8,909,436 1,650,512 140,964 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, 2008 2,475.512 Total restricted assets — Water and Sewer Utility Fund ::_ 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, 2008: 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, 2008: Equity in Pooled Cash and Investments Total restricted assets — Gas Utility Fund $ 125,013 300, 000 2,266,391 2.691.404 3. Solid Waste Utility Fund Restricted assets in the Solid Waste Utility Fund designated for construction represent customer deposits in the amount of $977,022 at September 30, 2008, 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, 2008: 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 Stormwater Revenue Bonds — Series 2004 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Construction: Other receivable Stormwater Refunding 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, 2008: Equity in Pooled Cash and Investments Total restricted assets — Stormwater Utility Fund 67 $ '149,826 2,433,128 1,452,766 904,381 19, 525 158,697 490.663 5.608.986 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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, 2008: Equity in Pooled Cash and Investments $ 1,300,000 Total restricted assets — Parking System Fund �� 6. Downtown Boat Slips Fund Assets restricted under the provisions of the ordinances for the issuance of revenue bonds consisted of the following at September 30, 2008: Improvement Revenue Bonds — Series 2008 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Total restricted assets — Downtown Boat Slips Fund Note IV - Other Information A. Risk management $ 838,375 8,029,425 8.867.800 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, property 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$300,000 ($500,000 or 5%, whichever is greater, 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, 2008, 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. Changes in the claims liability amounts in fiscal years 2007 and 2008 were: Balance at October 1, 2006 Current year claims and changes in estimates Claim payments Balance at September 30, 2007 Current year claims and changes in estimates Claim payments Balance at September 30, 2008 .: Self Insurance $ 9,976,776 1, 704,636 (2,555,636) 9,125,776 1, 720, 073 (1,704,662) $ 9,141,187 [-� � , � � � � � � � � � � � � � L.', � � � � � � � � � � � � � � � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 B. Statements of cash flows 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 princip►es (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 Firefighter's Refief 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. 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. Current year changes in actuarial assumptions are as follows: the mortality assumption was updated from the 1994 Group Annuity Reserving Table to the RP 2000 Combined Healthy Mortality 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 City'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 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 participant's 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 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 Firefighter'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 � .• City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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°/a. 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 was 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 was based upon, but not limited to, the amount of property tax that a levy of 0.6 mills would produce. Effective with the fiscal year ended September 30, 2007, the Firefighter's Relief and Pension Plan, with no remaining active members (only retirees), is fully funded per the requirements of the governing Ordinance. The City may elect to contribute should future valuations show an actuarial need for such. As of the January 1, 2008, the most recent actuarial valuation date, 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 em ployees: Fully vested Nonvested Total number of participants Em ployees' Pension Plan 802 76 1,081 560 2,519 Firefighter's Relief and Pension Plan 43 43 For the fiscal year ended September 30, 2008, the covered payroll for the Employees' Pension Fund was $78,614,329. � The City's total payroll for the same period was $89,892,829. Annual pension cost and contributions information for the last three fiscal years for both the Employees' Pension Plan and the Firefighter's Relief and Pension Plan follows: Employees' Pension Plan Year Annual (a) Ended Pension Employer Percent Sept 30 Cost Contributions Contributed 2006 $ 12,665,728 $ 7,400,205 (b) 58% 2007 $ 14,027,313 $ 10,256,662 (b) 73% 2008 $ 11,391,880 $ 10,376,234 (b) 91% Net Pension Asset $ 18,817,573 $ 15,046,922 $ 14,031,276 (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2008, are based on actuarial valuations as of January 1, 2007. Since the City's contributions are made during its fiscal year (which commences nine months after the date of the actuarial valuation). (b) 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. (c) 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. 70 � � � , � � LJ r LJ � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Firefiqhter's Relief and Pension Plan Year Annual (a) Ended Pension Employer Sept 30 Cost Contributions 2006 $ 1,397,390 $ 1,397,390 2007 $ 1,467,259 $ 1,467,259 20�$ �b� $ - �P ' Percent Contributed 100% 100% a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2008, are based on actuarial valuations as of January 1, 2007. 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 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) Effective with the fiscal year ended September 30, 2007, the Firefighter's Relief and Pension Plan, with no remaining active members (only retirees), is fully funded per the requirements of the governing Ordinance. The City may elect to contribute should future valuations show an actuarial need for such. � � � i � , � � � � � The Employees' Pension Plan net pension asset at September 30, 2008, totaled $14,031,276. It was comprised of the following components: Annual required contributions (ARC) $ 10,805,681 Interest on the net pension asset (1,128,519) Adjustment to annual contribution 1,714,718 Annual pension cost 11,391,880 Fiscal 2008 employer contributions 10,376,234 Decrease in net pension asset (1,015,646) Net pension asset beginning of year 15,046,922 Net pension asset end of year $ 14,031,276 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 $9,635,600 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 $4,395,676 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, 2008, neither the Employees' Pension Plan nor the Fire�ghter's Relief and Pension Plan 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. Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2008, the most recent actuarial valuation date, are as follows: 71 Employees' Pension Plan (1) �2) (3) (4) (5) City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Assumed rate of return on investments of 7.5%. Projected salary increase at a rate of 6°/a per year, including both cost-of-living adjustments of 3% and merit or seniority increases at 3%. Mortality based on the RP 2000 Combined Healthy Mortality Table. Pre-retirement withdrawals assumed to occur in accordance with a table of declining withdrawal rates for hazardous and non-hazardous duty categories. 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. Firefighter's Relief and Pension Plan (1) Assumed rate of return on investments of 4.5%. (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) Assumed no withdrawals will occur. (5) Assumed probability of an active participant becoming disabled is zero (no active participants). (5) Assumed value of one mill of ad valorem tax will increase at rate of 5% per year. The actuarial valuation of the Employees' Pension Plan as of January 1, 2007, reflected changes in actuarial assumptions as follows: The mortality assumption was updated from the 1994 Group Annuity Reserving Table to the RP 2000 Combined Healthy Mortality 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 City'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 Firefighter's Relief and Pension Plan as of January 1, 2003, reflected two changes in actuarial assumptions. The valuation 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 Plan 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 Firefighter'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 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. 72 � � �� LJ Ll � � � �� LJ � � � � �J � � 'I L� � � lJ � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 As of January 1, 2008, the most recent actuarial valuation date, the Employees' Pension Plan was 96.6 percent funded. The actuarial accrued liability for benefits was $632.6 million, and the actuarial value of assets was $611.0 million, resulting in an unfunded actuarial accrued liability (UAAL) of $21.6 million. The covered payroll (annual payroll of active employees covered by the plan) was $80.4 million, and the ratio of the UAAL to the covered payroll was 27 percent. As of January 1, 2008, the most recent actuarial valuation date, the Firefighter's Relief and Pension Plan was 103 percent funded. The actuarial accrued liability for benefits was $7.8 million, and the actuarial value of assets was $8.1 million, resulting in an unfunded actuarial accrued liability (UAAL) of ($247) thousand. The covered payroll was $-0- with no active employees covered. The Schedules of Funding Progress, presented as required supplementary information following the notes to the financial statements, present multiyear trend information regarding the change in the actuarial value of plan assets versus the actuarial accrued liabilities for benefits over time. Also included as required supplementary information following the notes to the financial statement, per Governmental Accounting Standards Board Statement Nos. 25 and 27, are the Schedules of Employer Contributions, which provide similar multiyear trend information on required employer contributions versus the actual amount contributed. 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 received from the State of Florida "on-behalf' of the City's employees, � which comprise the plan contributions, totaled $953,908 for the year ended September 30, 2008, and are obtained from an eighty-five one hundredths of one percent (0.85%) excise tax on the gross receipts from premiums collected on casualty insurance policies covering property within the City's corporate limits. These monies were recognized as � General Fund revenues and General Fund police department expenditures in the current year. The current year contributions represent 5.0% of current year covered payroll. The fair value of investments at September 30, 2008, totaled $13,257,496. � , 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 offcer of the Ciry. 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. � Plan 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. i � 73 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 For the fiscal year ended September 30, 2008, the payroll of the covered officers' was $19,266,723; the City's total payroll for the same period was $89,892,829. 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 firefighters, 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 firefighters on the basis of days worked during the previous year. These revenues received from the State of Florida "on-behalf" of the City's employees, which comprise the plan contributions, amounted to $1,381,225 in the year ended September 30, 2008, and are obtained from a one and eighry-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. These monies were recognized as General Fund revenues and General Fund fire department expenditures in the current year. The contributions represent 10.76% of current year covered payroll. The fair value of investments at September 30, 2008, totaled $7,864,361. � � LI � � � � � � � 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 participanYs account, there is no actuarial liability on the part of the State or City. 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 finro 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. Plan 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. For the fiscal year ended September 30, 2008, the covered payroll was $12,836,936; the City's total payroll for the same period was $89,892,829. 4. Pension Plan Financial Statements Separate financial statements are provided in the Notes per the guidance of GASB Statement No. 34 as follows: 74 , � � � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 International corporate bonds International equity securities 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 Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firemen's Supplemental Supplemental $ - $ - $ 19,407 $ - 2,485,304 3,981,044 - - 32,727,043 - 161,100 866,276 13,788,973 - 3,838,088 672,462 12,001,902 3,590,874 1,006,950 49,885 58,539,503 - 838,570 903,903 - - 4,667 18,782,341 - - 238,679,742 - 7,357,511 1,466,486 97,400,558 - 55,277 1,185,482 2,554,458 - - - 284,134 - - - 39,485,214 - - 1,977,728 21,489,933 - - 737,472 535,733,801 3,590,874 13,257,496 7,864,361 110,479,658 - - - 2,235,608 22,219 61,389 32,297 11,970,657 - - - 48,876 - - - 21,549 - - 368,978 14,276,690 22,219 61,389 401,275 662,975,453 7,594,137 13,338,292 8,265,636 Accounts payable 668,572 - 16,613 - Unsettled investment purchases 31,067,023 - - - Obligations under securities lending 112,035,918 - - - Totalliabilities 143,771,513 - 16,613 - NET ASSETS Net assets held in trust for pension benefits $ 519,203,940 $ 7,594,137 $ 13,321,679 $ 8,265,636 75 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 ADDITIONS Contributions: Contributions from empioyer Contributions from employer - state tax Contributions from employees Total contributions Investment income (loss): Net appreciation (depreeiation) in fair value of investments Interest Dividends Less investment expenses: Investment management / custodian fees Net income (loss) from investing activities Securities lending income: Gross earnings Loss on securities lending collateral Rebate paid Bank fee Net income (loss) from securities lending Total additions (losses) DEDUCTIONS Benefits and withdrawal payments: Benefits Withdrawal payments Total benefits and withdrawal payments Income (loss) before administrative expenses Administrative expenses Netincrease(decrease) Net assets held in trust for pension benefts: Beginning of year End of year 5. 401(a) defined contribution plan Defined Benefit Defned Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firemen's Supplemental Supplemental $ 10,393,307 $ - $ - $ - 12,000 - 953,908 1,381,225 6,294,917 - - - 16,700,224 - 953,908 1,381,225 (111,580,731) (46,388) (1,696,519) (1,505,652) 10,182,979 430,048 247,310 235,303 3,173,762 - 159,779 180,303 (98,223,990) 383,660 (1,289,430) (1,090,046) 2,908,341 - 83,982 69,453 (101,132,331) 383,660 (1,373,412) (1,159,499) 4,582,384 - (1,556,260) - (3,395,508) - (415,201) - (784,585) - (85,216,692) 383,660 22,352,134 874,632 826,605 - 23,178,739 874,632 (108,395,431) (490,972) 164,869 4,754 (108,560,300) (495,726) (419,504) 221,726 741,192 878,670 741,192 878,670 (1,160,696) (656,944) 15,613 36,692 (1,176,309) (693,636) 627,764,240 8,089,863 14,497,988 8,959,272 � $ 519,203,940 $ 7,594,137 $ 13,321,679 $ 8,265,636 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. Employees 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°/a 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. Plan provisions and contribution requirements are established and may be amended by the City Council. The International City Management Association Retirement Corporation (ICMA-RC), the trustee for the defined annuity, offers participants a variety of investment options. 76 � � � � � � ' City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 � The City's total payroil for the fiscal year ended September 30, 2008 was $89,892,829. The Plan members' payroli for �the same period totaled $5,793,141. The City's contribution, per the above contribution rates, totaled $492,272. The assets, reported at fair value based on quoted market prices, totaled $3,769,434 at September 30, 2008. � � � � � 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 City'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 party 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. Post Employment Benefits Other Than Pension � Plan Description - The City of Clearwater administers a single-employer defined benefit healthcare plan (the "Plan") that provides medical insurance benefits to its employees and their eligible dependents. In accordance with Section 112.0801 of the Florida Statutes, because the City provides a medical plan to active employees of the City and their eligible dependents, the City is also required to provide retirees with the opportunity to participate in this Plan. Benefit �provisions for the Plan are established by the City Council and may be amended by the City Council. The retirees pay the full group premium amount for health insurance with no ex licit subsidy from the City. Additionally the City provides and pays for $1,000 of term life insurance for retirees. The term life insurance benefit provision is also established, and � may be amended, by action of the City Council. The City does not issue stand-alone financial statements for these programs. Funding Policv — Contribution rates for the Plan are established on an annual basis by the City Council. Eligible retirees � and their covered dependents receiving benefits contribute 100% of their premium costs for health insurance and 0% of the cost for the $1,000 term life insurance. For the year ended September 30, 2008, the total retiree contributions for health insurance premiums were $1,502,824. While the City does not directly contribute towards the costs of retiree 1 premiums via an explicit subsidy, the ability of retirees to obtain health insurance coverage at a group rate which includes active employees, constitutes a significant economic benefit to retirees, or an "implicit" subsidy. This implicit subsidy is considered to be an other post employment benefit (OPEB) obligation of the City. The City is currently funding this OPEB obligation on a pay-as-you-go basis. For the year ended September 30, 2008, the City estimated it � subsidized $605,487 of health care costs for it retirees and their covered dependents, and paid $13,428 for life insurance benefits for retirees. Annual OPEB Cost and Net OPEB Obli4ation — The City's annual OPEB cost (expense) is calculated based on the � annual required contribution of the employer (ARC), an amount actuarially determined in accordance with parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize an unfunded liabilities of the plan over a period not to exceed thirty years. � The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation to the City's Plan, including both the implicit rate subsidy for � health insurance and the term life insurance benefit: � 77 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 Annual required contribution $ 2,415,000 Interest on net OPEB obligation - Adjustment to annual required contribution - Annual OPEB cost (expense) 2,415,000 Contributions made (618,900) Increase in net OPEB obligation 1,796,100 Net OPEB obligation - beginning of year - Net OPEB obligation - end of year $ 1,796,100 No trust or agency fund has been established for the plan and there were no adjustments to the annual required contribution or interest earnings. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation (asset) for the fiscal year ending September 30, 2008, are presented below. Data is only presented for the fiscal year ending September 30, 2008, the first year in which GASB Statement 45 implementation is required. Fiscal Year Ended 9/30/2008 Annual OPEB Cost $ 2,415,000 Percentage of Annual OPEB Costs Contributed 25.6 % Net OPEB Obliqation $ 1, 796,100 As of September 30, 2008, the accrued liability for benefits was $23,215,500, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $83.1 million and the ratio of the unfunded actuarial liability (UAL) to covered payroll was 27.9%. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the September 30, 2008 actuarial valuation, the projected unit credit cost method was used. The annual required contribution (ARC) reflects a 30-year, level amortization of the unfunded actuarial accrued liability (AAL). The actuarial assumptions included a 4.0% investment rate of return and 4.0% projected salary increases. Annual medical costs are assumed to increase 8.5% in the first year of valuation, with future annual increases assumed to grade uniformly to 5°/a over a seven year period and remain at 5% thereafter. F. Securities lending transactions The City of Clearwater Employees' Pension Plan participates in securities lending transactions, as authorized by the Pension Trustees on April 14, 2003, 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. The Plan's investment policy places no restrictions on the amount of securities that can be loaned. 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, 2008 was 45 days. If a borrower fails to return the loaned security because of bankruptcy, insolvency, reorganization, liquidations, receivership, conservatorship, or a similar event, Northem Trust Company shall, at its expense, credit the City with the difference between the market value of such loaned securiry and the market value of the related collateral. At September 30, 2008, there was no failure by a borrower to return a loaned security. Cash "open" collateral is invested in a short-term investment pool, the Core USA Collateral Section, which had an average weighted maturity of 43 days as of September 30, 2008. Cash collateral may also be invested separately in "term loans" in 78 �J � �� L� LJ � � � � , � , � � � � , , � � � � � � � � � ' City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 which investments match the loan term. These term loans may be terminated on demand by either the lender or the borrower. Because of the unprecedented turmoil in the financial markets some of the securities held by the Core USA Collateral Fund have suffered an unrealized "paper" loss. The Plan's share of the decline in market value of these securities is $1,556,260, and has been reflected in the pension plan's financial statements. None of these securities are in default and Northern Trust believes that at maturity they will receive par for all securities. There were no significant violations of legal or contractual provisions, nor any borrower or lending agent defaults known to the securities lending agent. The Plan did not impose any restrictions on the amount of loans made by Northern Trust during fiscal year 2008. Northern Trust has indemnified the Plan for losses attributable to violations by the entity of the Standard of Care set out in the Agreement. Northern Trust has also indemnified the Plan for all losses as a result of borrower default and for any losses resulting from related collateral insufficiency. At year-end the Plan has no credit risk exposure to borrowers because the amounts the Plan owes the borrowers equal or exceed the amounts the borrowers owe the Plan and the lending agent indemnifies the Plan if the collateral is inadequate to repay the borrowers. The deficiency of the cash collateral versus fair values of U.S. Equity securities listed below is a temporary situation due to change in market values and time lag in obtaining additional collateral; and does not reflect credit risk exposure due to the fact that the lending agent agreement indemnifies the Plan against loss if the collateral is inadequate to replace the securities lent. The unrealized loss on Core USA collateral pool of $1,556,260 per following table is discussed above. The following is a summary of securities on loan and their collateral: Security Tvpe U.S. Corporate Fixed U.S. Equity U.S. Government Fixed U.S. Agencies Global Equities Core USA unrealized loss Total Securities Collateralized by Cash Fair Value Cash Collateral $ 8,471,433 $ 8,531,373 93,667,087 93,591,559 4,711,881 4,817,015 3,824,024 3,892,406 1,111,462 1,203, 565 Securities Collateralized by Non-Cash Fair Value Non-Cash Collateral - $ - 12,130 11,927 79,349 80,033 - (1,556,260) - - $ 111,785,887 $ 110,479,658 $ 91,479 $ 91,960 On the statement of fiduciary net assets, a securities lending asset of $110,479,658 was reported that represents the fair value of the investments made with cash collateral at September 30, 2008. In addition, a securities lending obligation of $112,035,918 was reported that represents the collateral that the City is required to maintain to cover the market value of the loaned securities. The statement of changes in fiduciary net assets represents the gross loss associated with the securities lending transactions of ($784,585). G. Contingencies and commitments � 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 Rodriquez 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 offces and operating facility, that 79 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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 Property, 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 included 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 Property 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. The City recovered $487,500.00 in various insurance settlement payments thru September 30, 1991. On September 17, 2001, the City agreed to reduce its claim against Southern American Insurance Company ("SAIC"), the sole remaining excess carrier, to an undiscounted value of $300,000. Because this carrier was in liquidation, we were unable to determine, to an acceptable degree of certainty, the actual amount of payment to be received by the City. In December 2007, the liquidator managing the SAIC liquidation made an initial payment to the City in the amount of $96,000. In September 2008, a final distribution payment of $174,000 was issued to the City for a total collection amount of $270,000 on the $300,000 claim settlement. In summary, the City has recovered $757,500 on all of its outstanding insurance claims. Since 1993, the City has spent a total of $745,846 on the manufactured gas plant assessment activities, which includes both environmental consultant and outside attorney fees. 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. On December 18, 2007, the BOCC approved rate increases of $2.8626 effective March 1, 2008, and $2.9485 effective October 1, 2008. The cost of water purchased from the County during fiscal years 2007 and 2008 was $9,225,544 and $9,264,739, respectively. :� � � , � � � � � � � � � � LJ � � LJ � , � J �� City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2008 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. � � � �� J H. Conduit debt The City has one issue of conduit debt outstanding as follows: Description / Purpose Drevv Gardens Refunding Bonds / resideritial rental facility Original Arriour�t Arr�our�t Issue Outstanding Outstanding Arriour�t at 9/30/07 at 9/30/08 $ 3,425,000 $ 2,725,000 $ 2,645,000 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. E:�il Page 1 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information - Unaudited Schedules of Fundina Proqress: Emplovees Pension Plan 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) 1/1/2003 $ 477,541,459 $ 517,933,495 $ 40,392,036 92% $ 65,150,820 62% 1/1/2004 $ 507,256,663 $ 546,915,627 $ 39,658,964 93% $ 69,907,473 57% 1/1/2005 $ 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% $ 79,385,090 28% 1/1/2008 $ 610,979,087 $ 632,559,753 $ 21,580,666 97% $ 80,371,617 27°/a Firefiqhters Relief and Pension Plan 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) 1/1/2003 $ 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 1/1/2008 $ 8,063,338 $ 7,815,729 $ (247,609) 103% $ - n/a ` Covered payroll is for the calendar year period used for the actuarial valuation. 82 , ' City of Clearwater, Florida , Defined Benefit Pension Plans Required Supplementary Information - Unaudited � Schedules of Emplover Contributions: � Year � Ended Sept. 30, 2003 � 2004 2005 � 2006 2007 2008 � U � � � , � � � � � Emplovees' Pension Plan Annual (a) Required Contribution $ - $ 4,156,253 $ 5,415,848 $ 11,614,495 $ 13,180,855 $ 10,805,681 Page 2 of 3 Percent Contributed n/a 116% 95% (b) 64% (b) 78% (b) 96% (b) (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2008, are based on actuarial valuations as of January 1, 2007. 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, 2003 2004 2005 2006 2007 2008 Firefiqhter's Relief and Pension Plan Annual Required Contribution $ 1,211,210 $ 1,264,729 $ 1,331,045 $ 1,397,390 $ 1,467,259 $ - (a) Percent Contributed 100% 101% 100% 100% 100% (a) Effective with the fiscal year ended September 30, 2007, the Firefighter's Relief and Pension Plan, with no remaining active members (only retirees), is fully funded per the requirements of the governing Ordinance. The City may elect to contribute should future valuations show an actuarial need for such. � 83 Page 3 of 3 City of Clearwater, Florida Def ned Benefit Pension Plans Required Supplementary Information — Unaudited Notes To Schedules Of Required Pension Supplementary Information Annual required contributions for the Employees' Pension Plan 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 Firefighters Relief and Pension Plan 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 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 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, 2008, are based on actuarial valuations as of January 1, 2007. 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 Pland and for nine months in the case of the Firefighter's Relief and Pension Plan. Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2007, in the determination of the annual required contribution are as follows: Employees' 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 cost-of-living adjustments of 3% and merit or seniority increases at 3%. (3) Mortaliry based on the RP 2000 Combined Healthy Mortality Tab/e. (4) Pre-retirement withdrawals assumed to occur in accordance with a table of declining withdrawal rates based on hazardous versus non-hazardous duty categories. (5) Pre-retirement incidence of disability assumed to occur in accordance with a standard scale of moderate disability rates (Class 1, 1952 Inter-Company); rates for females assumed to be finrice that for males. (6) Assumed inflation rate of 3% Firefighters Relief and Pension Plan (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) Mortality based on the 1994 Unisex Mortality Table projected to 2010 for 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 Plan as of January 1, 2007, reflected changes in actuarial assumptions as follows: The mortality assumption was updated from the 1994 Group Annuity Reserving Table to the RP 2000 Combined Healthy Mortality 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 City'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 Plan 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 Mortality Table to the 1994 Group Annuity Reserving Table. 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 Firefighter's Relief and Pension Plan as of January 1, 2003, reflected iwo 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 used the 1994 Unisex Morality Table versus the previous 1983 Group Annuity Mortality Table. The impact of these changes increased the unfunded actuarial accrued liability from $2,648,428 to $4,742,517. � � � � � � � , � � � , � � `I LJ � � �' � 84 � �I i City of Clearwater, Florida � Other Post-Employment Benefits Required Supplementary Information - Unaudited � � Schedule of Fundinq Proqress: � Page 1 of 1 � Actuarial Actuarial Accrued Unfunded AAL Actuarial Va►ue of Liability (AAL) - Unfunded Funded Covered as a Percentage Valuation Assets Projected Unit Credit AAL Ratio Payroll of Covered Payroll Date (1) (a) (b) (b-a) a/b (c) ((b-a)/c) � September 30, 2008 $ - $ 23,215,500 $ 23,215,500 0% $83,088,355 27.9% � � (1) Initial year of plan disclosure, no prior data available. � � � � � � � � � �� This Page Intentionally Left Blank :. , � � � , � � � � L LJ � ,�_ l � � r � � � , ' � � . Nonma�or Governmental Funds � � ' 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 � programs. , Community Redevelopment Agency Fund — to account for receipt, custody, and expenditure of property 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 aliocated to the City under the � Pinellas County Local Housing Assistance grant program. � ' � 87 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. Beachwalk Improvement Revenue 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 instaliments 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 received from the State of Florida and Pinellas County, and the payment of currently maturing installments of principal and interest each year. � , � � � � � !I 'L � � � � , � LJ � � � Ll 88 , , � � � � � ' � � � � Capital Projects Funds Capital projects funds are used to account for resources to be used for the acquisition or construction of major capital improvement projects, other than those financed by proprietary funds. A major capital improvement project is a property acquisition, a major construction undertaking, or a major improvement to an existing facility or property, with a cost greater than $25,000 and a minimum useful life of at least five years. � Communi Redevelo ment A enc Ca ital Pro�ects Fund — to rovide se arate accountin records for the �Y P 9 Y P 1 P P 9 ' acquisition or construction of capital improvement projects for the Clearwater Community Redevelopment Agency. � !I � _� ' � ' � 89 ASSETS Cash on hand and in banks Equity in pooled cash and investments Receivables: Mortgage notes Rehab advances Other Investments Oue from other governments - grants Land held for resale Interfund receivables Total assets LIABILITIES Accounts and contracts payable Accrued payroll Due to other governmental entities Construction escrows Interfund payables Deferred revenue Total liabilities FUND BALANCES Reserved for: Interfund and notes receivable 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, 2008 Special Revenue Funds � SHIP Pinellas County � Community Local Housing Local Housing Special Redevelopment Assistance Assistance Programs Agency Trust Trust Total � $ - $ 100 $ - $ - $ 100 � 9,300,386 749,522 810,175 691,645 11,551,728 5,064,306 - 7,036,712 920,747 13,021,765 � 11,751 - 1,276 - 13,027 7,748 47,089 - - 54,837 211,954 - - - 211,954 � 84,701 1,914,050 - - 1,998,751 700,000 - - - 700,000 $ 15,380,846 $ 2,710,761 $ 7,848,163 $ 1,612,392 $ 27,552,162 � $ 32,026 $ 1,622 $ - $ $ 33,648 31,857 - - - 31,857 � 534 48,000 - - 48,534 18,209 - 14,006 162,227 194,442 - 700,000 - - 700,000 , - 47,089 - - 47,089 82,626 796,711 14,006 162,227 1,055,570 ' 5,764,306 - 7,036,712 920,747 13,721,765 5,766,825 - - - 5,766,825 � 84,701 1,914,050 - - 1,998,751 - - - - - � 3,682,388 - 797,445 529,418 5,009,251 ' 15,298,220 1,914,050 7,834,157 1,450,165 26,496,592 � $ 15,380,846 $ 2,710,761 $ 7,848,163 $ 1,612,392 $ 27,552,162 � The notes to the financial statements are an integral part of this statement. ' 90 , , ' � � � � , � � � � , , � � ' � � � Debt Service Funds Spring Improvement Beachwalk Infrastructure Training Revenue Improvement Sales Tax Facility Refundi�g Revenue Revenue Revenue Bonds Bonds Bonds Bonds Total Capital Project Fund Total Community Nonmajor Redevelopment Governmental Agency Funds $ - $ - $ - $ - $ - $ - $ 100 237,612 42,631 5,468,833 460,661 6,209,737 5,615,533 23,376,998 _ _ _ - - - 13,021,765 _ _ _ _ - - 13,027 _ _ _ - - - 54,837 924,143 - - - 924,143 - 924,143 _ _ _ - - - 211,954 - - - - - - 1,998,751 - - - - - - 700,000 $ 1,161,755 $ 42,631 $ 5,468,833 $ 460,661 $ 7,133,880 $ 5,615,533 $ 40,301,575 $ - $ - $ - $ - $ - $ 191,332 $ 224,980 _ _ _ - - - 31,857 _ _ _ _ - - 48,534 - - - - - - 194,442 _ _ _ - - - 700,000 - - - - - - 47,089 _ _ - - - 191,332 1,246,902 _ _ _ - - - 13,721,765 _ _ _ - - - 5,766,825 - - - - - - 1,998,751 226,667 19,167 5,295,833 300,416 5,842,083 - 5,842,083 74,088 23,464 173,000 47,433 317,985 - 317,985 861,000 - - - 861,000 - 861,000 _ _ _ - - - 5,009,251 - - - 112,812 112,812 - 112,812 _ _ - - - 5,424,201 5,424,201 1,161,755 42,631 5,468,833 460,661 7,133,880 5,424,201 39,054,673 $ 1,161,755 $ 42,631 $ 5,468,833 $ 460,661 $ 7,133,880 $ 5,615,533 $ 40,301,575 91 City of Clearwater, Florida Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2008 REVENUES Intergovernmental Federal State Local Charges for seroices Fines and forfeitures Investment earnings Miscellaneous Total revenues: EXPENDITURES Current: General government Public safety Physical environment Economic environment Human services Cuiture and recreation Debt service: Principal Interest & fiscal charges Bond issuance costs Capital outlay Total expenditures Excess (deficiency) of revenues over / (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Revenue bonds issued Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending Special Revenue Funds SHIP Pinellas County Community Local Housing Local Housing Special Redevelopment Assistance Assistance Programs Agency Trust Trust Total $ 2,189,417 $ - $ - $ - $ 2,189,417 254,585 - 851,957 - 1,106,542 292,247 1,215,917 - 472,228 1,980,392 1,118,037 - - - 1,118,037 591,447 - - - 591,447 380,336 33,718 79,554 37,225 530,833 695,713 67,236 - - 762,949 5,521,782 1,316,871 931,511 509,453 8,279,617 135,373 1,397,721 249,609 1,408,509 116,913 1,451,024 193,599 223,712 800 135, 373 1,397,721 249,609 1, 826,620 116,913 1,451,024 599,583 - - - 599,583 5,358,732 193,599 223,712 800 5,776,843 163,050 1,123,272 707,799 508,653 2,502,774 427,413 1,013,334 - - 1,440,747 (858,388) (2,139,606) (126,193) (10,580) (3,134,767) (430,975) (1,126,272) (126,193) (10,580) (1,694,020) (267,925) (3,000) 581,606 498,073 808,754 15,566,145 1,917,050 7,252,551 952,092 25,687,838 $ 15,298,220 $ 1,914,050 $ 7,834,157 $ 1,450,165 $ 26,496,592 The notes to the financial statements are an integral part of this statement. � , � , � � � , ' � � , � � ' � , � ' � Debt Service Funds Spring Improvement Beachwalk Infrastructure Training Revenue Improvement Sales Tax Notes Facility Refunding Revenue Revenue and Revenue Bonds Bonds Bonds Mortgages Bonds Total $ - $ 81,757 81,757 - $ - $ 43 114,736 43 114,736 - $ Capital Project Fund Community Redevelopment Agency Total Nonmajor Governmental Funds - $ - $ - $ 2,189,417 500,004 500,004 - 1,606,546 587,650 587,650 - 2,568,042 _ _ - 1,118,037 - - - 591,447 19,722 216,258 184,476 931,567 _ - - 762,949 1,107,376 1,303,912 184,476 9,768,005 _ _ _ _ _ - - 135,373 - - - - - 1,397,721 - - - - - - - 249,609 _ _ _ - - - 850,368 2,676,988 _ _ _ _ - - - 116,913 _ _ _ _ - - - 1,451,024 330,000 - 6,105,000 479,050 500,000 7,414,050 - 7,414,050 450,465 - 641,575 44,124 576,693 1,712,857 - 1,712,857 - 15,000 - - - 15,000 - 15,000 _ _ _ _ _ - 304,714 904,297 780,465 15,000 6,746,575 523,174 1,076,693 9,141,907 1,155,082 16,073,832 (698,708) (14,957) (6,631,839) (523,174) 30,683 (7,837,995) (970,606) (6,305,827) 703,395 42,588 6,758,772 523,174 - 8,027,929 1,845,880 11,314,556 _ _ _ _ - - - (3,134,767) - 15,000 - - - 15,000 - 15,000 703,395 57,588 6,758,772 523,174 - 8,042,929 1,845,880 8,194,789 4,687 42,631 126,933 - 30,683 204,934 875,274 1,888,962 1,157,068 - 5,341,900 - 429,978 6,928,946 4,548,927 37,165,711 $ 1,161,755 $ 42,631 $ 5,468,833 $ - $ 460,661 $ 7,133,880 $ 5,424,201 $ 39,054,673 � This Page Intentionally Left Blank � � �J � � ' i C� 1 1 � � ' ' , ' � � � 94 � � � � � � � 1 ' ' ' � ' � , ' ' � , , 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, 2008 REVENUES Intergovernmental - Local Investment earnings Miscellaneous Total revenues EXPENDITURES Current - Economic environment Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total 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) $ 1,216,808 $ 1,215,917 $ 1,215,917 $ - 100,000 100,000 33,718 (66,282) 63,117 67,236 67,236 - 1,379,925 1,383,153 1,316,871 (66,282) 295,671 298,815 193,599 105,216 295, 671 298, 815 193, 599 105, 216 1,084,254 1,084,338 1,123,272 38,934 1,014,085 1,363,334 1,013,334 (350,000) (2,098,339) (2,447,672) (2,139,606) 308,066 (1,084,254) (1,084,338) (1,126,272) (41,934) - - (3,000) (3,000) 1,917,050 1,917,050 1,917,050 - $ 1,917,050 $ 1,917,050 $ 1,914,050 $ (3,000) The notes to the financial statements are an integral part of this statement. 95 This Page Intentionally Left Blank • ., � , `J � ' � i � 1 ' ' , � , ' Il �J , ' � , �� ' ' ' ' ' ' � � � L JI ' ' �J ' ' � Nonmajor Enterprise Funds Enterprise funds are used to account for the financing, acquisition, operation, and maintenance of 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 Operations Fund - to account for the financing, operation, and maintenance of the City's marine operations (excluding the downtown boat slips) and associated real property from rents collected from users. Aviation Operations Fund - to account for the financing, operation, and maintenance of the City's airpark operations from rents collected from users. 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. Downtown Boat Slips Fund - to account for the financing, operation, and maintenance of the City's downtown boat slips from boat slip rentals. 97 City of Clearwater, Florida Combining Statement of Net Assets Nonmajor Enterprise Funds September 30, 2008 ASSETS Current assets: Cash on hand and in banks Equity in pooied 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 Deferred charges 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 Due to other funds - deficit in pooled cash Deposits Unearned revenue and liens Current portion of long-term liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Interfund payables Total current liabilities (payable from current assets) Current liabilities (payable from restricted assets): Accrued interest payable Total current liabilities payable from restricted assets Total current liabilities Noncurrent liabilities: Compensated absences Other postemployment benefits Revenue bonds (net of unamortized discounts/premiums) Notes, loan pool agreement and acquisition contracts Interfund payables 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 Parking improvements Unrestricted Total net assets Recycling Marine Utility Operations $ - $ 1,200 4,690,105 - 75,044 - 215,787 - 290,831 - (2,058) - 288,773 - - 62,954 4,978,878 64,154 159,956 94,211 - 670,086 590,124 774,939 750,080 1, 539,236 5,728,958 1,603,390 67,390 46,377 35,070 35,904 - 15,101 - 21,475 25,877 59,968 91,187 - 219,524 178,825 219,524 178,825 21,878 50,699 21,342 17,642 76,162 - 119,382 68,341 338,906 247,166 422,776 1,445,025 4,967,276 (88,801) $ 5,390,052 $ 1,356,224 The notes to the financial statements are an integral part of this statement. .; , � � � , i l__l , �J ' � LJ C� ' ' ' ' 'I U I I � ' ' � ' ' , ' ' , L J' ' ' ' ' CJ ' I�� ' LJ Aviation Parking Harborview Downtown Operations System Center Boat Slips Total $ - $ 19,500 $ 586,257 $ - $ 606,957 292,945 16,277,433 402,447 1,966,455 23,629,385 _ - 25,189 - 100,233 - - - - 215,787 _ - 25,189 1,966,455 316,020 _ - - (2,058) _ - 25,189 1,966,455 313,962 _ - 26,636 - 89,590 _ - 30,133 - 30,133 292,945 16,296,933 1,070,662 1,966,455 24,670,027 - 1,300,000 - 8,867,800 10,167,800 _ - - 42,079 42,079 4,923 86,047 - - 345,137 1,555,746 993,548 926,000 354,327 4,499,707 2,029,289 2,093,600 6,643,904 - 12,131,856 3,589,958 4,473,195 7,569,904 9,264,206 27,186,579 3,882,903 20,770,128 8,640,566 11,230,661 51,856,606 1,347 28,388 425,840 - 569,342 3,507 29,631 - - 104,112 _ _ - - 15,101 - 1,175 269,434 - 292,084 - 14,916 12,500 - 27,416 4,962 34,174 - - 124,981 - 31,273 - - 122,460 20,271 - - - 20,271 30,087 139,557 707,774 - 1,275,767 _ _ - 22,075 22,075 - 22,075 22,075 30,087 139,557 707,774 22,075 1,297,842 4,195 28,893 - - 105,665 1,797 19,636 - - 60,417 _ _ - 9,135,000 9,135,000 - 3,684 - - 79,846 81,086 4,000,000 - - 4,081,086 87,078 4,052,213 - 9,135,000 13,462,014 117,165 4,191,770 707,774 9,157,075 14,759,856 3,585,035 3,052,191 7,569,904 - 16,074,931 _ - - 816,300 816,300 - 1,300,000 - - 1,300,000 180,703 12,226,167 362,888 1,257,286 18,905,519 $ 3,765,738 $ 16,578,358 $ 7,932,792 $ 2,073,586 $ 37,096,750 .. City of Clearwater, Florida Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended September 30, 2008 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: Professionalfees Advertising Communications Printing and binding Insurance 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 Amortization of bond issue costs Gain (loss) on exchange of assets Other Total nonoperating revenue (expenses) Income (loss) before transfers Capital grants and contributions Transfers in Transfers out Changes in net assets Total net assets - beginning, as restated Total net assets - ending Recycling Marine Utility Operations $ 1,945,002 $ 3,176,972 8,316 - 1,457,131 125, 500 - 1,337,130 3,410,449 4,639,602 1,051,289 1, 029, 880 687,803 2,810,573 128,985 66,535 427,956 18,835 13,051 192,716 276,275 127,798 569,660 196,882 4,360 30,489 11,854 21,594 6,185 23,230 37,180 45,670 4,544 31,428 - 2,305 11,423 99,160 24,040 22,710 - 60 99,586 276,646 3,254,605 4,719,865 155,844 (80,263) 155,196 2,584 (9,423) - - (3,610) 82,834 158,056 228,607 157,030 384,451 76,767 - 15,751 (150,700) (216,740) 233,751 (124,222) 5,156,301 1,480,446 $ 5,390,052 $ 1,356,224 The notes to the financial statements are an integral part of this statement. 100 � � , � ' � ' , ' ' ' , ' �J � LJ � , ' Aviation Parking Harborview Downtown Operations System Center Boat Slips Totals $ 9,683 $ - $ - $ - $ 5,131,657 _ _ - - 8,316 - 4,149,822 - - 5,732,453 217,495 6,678 2,030,393 - 3,591,696 227,178 4,156,500 2,030,393 - 14,464,122 88,632 7,216 2,005 197,473 27,938 800,220 171, 774 57,643 56, 055 228,838 810, 060 582, 522 83, 599 155 132, 871 536,646 19,140 2,970,021 4,080,898 458,109 506, 594 394,693 1,367,030 1, 623, 680 5,488 634,618 1,146,521 - 1,821,476 _ - 32,010 - 65,458 296 17,682 17,984 - 65,377 - 12,536 3,014 - 15,550 94,820 74,820 17,579 - 270,069 2,715 25,740 144,107 - 208,534 - 435,311 12,436 - 450,052 994 202 - - 111,779 2,250 29,360 40,000 - 118,360 _ - 32,536 - 32,596 106,563 1,230,269 1,446,187 - 3,159,251 429,827 3,354,859 2,801,120 - 14,560,276 (202,649) 801,641 (770,727) - (96,154) 3,258 558,434 25,577 96,220 841,269 (1,620) (193,866) - (22,075) (226,984) _ _ - (559) (559) (2,400) - - - (6,010) 23 9,479 1,446 - 251,838 (739) 374,047 27,023 73,586 859,554 (203,388) 1,175,688 (743,704) 73,586 763,400 109,757 100,000 - - 225,508 _ - 342,240 2,000,000 2,342,240 (11,740) (259,058) - - (638,238) (105,371) 1,016,630 (401,464) 2,073,586 2,692,910 3,871,109 15,561,728 8,334,256 - 34,403,840 $ 3,765,738 $ 16,578,358 $ 7,932,792 $ 2,073,586 $ 37,096,750 101 City of Clearwater, Florida Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended September 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments to suppliers Cash payments to employees Cash payments to other funds Other revenues Net cash provided (used) 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 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 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 (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 Recycling Marine Utility Operations $ 3,438,822 $ (869,250) (999,976) (1,040,981) 82,834 611,449 4,640,227 (3,484,120) (999,666) (110,445) 158,056 204,052 (150,700) (216,740) - 15,101 (150,700) (201,639) (140,639) - (9,423) - - (21,892) - 15,751 (150,062) (6,141) 155,196 2,584 155,196 2,584 465,883 (1,144) 4,224,222 2,344 $ 4,690,105 $ 1,200 $ - $ 1,200 4,690,105 - $ 4,690,105 $ 1,200 The notes to the financial statements are an integral part of this statement. 102 , ' � ' � � ' , � � , , ' , ' 1 ' ' , Aviation Parking Harborview Downtown Operations System Center Boat Slips Totals $ 227,178 $ 4,157,489 $ 2,078,381 $ - $ (15,066) (1,358,334) (2,208,529) - (84,042) (767,626) - - (127,309) (943,544) (20,675) - 23 9,479 1,446 - 784 1,097,464 (149,377) - _ - 342,240 2,000,000 (11,740) (259,058) - - 101,357 - - - 89,617 (259,058) 342,240 2,000,000 14,542,097 (7,935,299) (2,851,310) (2,242,954) 251,838 1,764,372 2,342,240 (638,238) 116,458 1,820,460 - (43,070) - - (183,709) (1,620) (193,866) - - (204,909) (149,189) (253,659) (65,709) (354,327) (844,776) _ _ - 9,092,362 9,092,362 109,756 - - - 125,507 (41,053) (490,595) (65,709) 8,738,035 7,984,475 3,258 558,434 25,577 96,220 841,269 3,258 558,434 25,577 96,220 841,269 52,606 906,245 152,731 10,834,255 12,410,576 240,339 16,690,688 835,973 - 21,993,566 $ 292,945 $ 17,596,933 $ 988,704 $ 10,834,255 $ 34,404,142 $ - $ 19,500 $ 586,257 $ - $ 606,957 292,945 16,277,433 402,447 1,966,455 23,629,385 - 1,300,000 - 8,867,800 10,167,800 $ 292,945 $ 17,596,933 $ 988,704 $ 10,834,255 $ 34,404,142 103 City of Clearwater, Florida Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended September 30, 2008 Recycling Marine Utility Operations 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: Other nonoperating revenue 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 deposits Increase (decrease) in unearned revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Increase (decrease) in other postemployment benefits Total adjustments Net cash provided (used) by operating activities Noncash investing, capital and financing activities: 104 $ 155,844 $ (80,263) 82,834 158,056 276,275 127,798 28,374 - - (44,922) 16,809 12,545 - 625 9,730 13,344 20,241 (773) 21,342 17,642 455,605 284,315 $ 611,449 $ 204,052 ' , ' � � , , , , � � , � � , , ' ' , Aviation Parking Harborview Downtown Operations System Center Boat Slips Totals $ (202,649) $ 801,641 $ (770,727) $ - $ (96,154) 23 9,479 1,446 - 251, 838 197,473 228,838 536,646 - 1,367,030 _ - 45,601 - 73,975 _ - (2,048) - (46,970) _ - (3,449) - (3,449) 1,347 23,923 40,767 - 95,391 - (1,700) 2,387 - 1,312 - 2,689 - - 2,689 (6,701) 5,982 - - 22,355 9,494 6,976 - - 35,938 1,797 19,636 - - 60,417 203,433 295,823 621,350 - 1,860,526 $ 784 $ 1,097,464 $ (149,377) $ - $ 1,764,372 105 This Page Intentionally Left Blank ' ,'I �1 , � � ' ' , � ' C] �r1 �� i� �l �J � � � ' ' ' 106 � , ' ' � � 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 ' simuitaneously contributed to the Garage Fund. The cost of replacement of existing equipment is financed by the Garage Fund. , 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. , ' Central Insurance Fund - to account for the Ciry's limited self-insurance program wherein all funds are assessed charges based on damage claims incurred and on management's 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. � ' ' 107 City of Clearwater, Florida Combining Statement of Net Assets Internal Service Funds September 30, 2008 ASSETS Current assets: Cash on hand and in banks Equity in pooled cash and investments Other receivables Interfund receivables Inventories, at cost Prepaid expenses and other assets Total current assets Noncurrent assets: Interfund receivables 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 Unearned revenue Current portion of long-term liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Interfund payables Claims payable Total current liabilities (payable from current assets) Noncurrent liabilities: Compensated absences Other postemployment benefits Notes, loan pool agreement and acquisition contracts Interfund payables 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 $ - $ 1,700 $ - $ - $ 1,700 4,109,070 5,329,474 1,051,913 39,068,617 49,559,074 2,747 - - - 2,747 - - - 111,925 111,925 444,708 - - - 444,708 - - - 1,051,823 1,051,823 4,556,525 5,331,174 1,051,913 40,232,365 51,171,977 - - - 2,814,313 2,814,313 281,209 573,713 178,521 47,035 1,080,478 729,591 - - - 729,591 12,013,950 4,261,456 124,642 10,708 16,410,756 13,024,750 4,835,169 303,163 2,872,056 21,035,138 17,581,275 10,166,343 1,355,076 43,104,421 72,207,115 191,590 135,928 72,194 86,374 486,086 91,664 167,790 97,122 18,794 375,370 893,278 - - - 893,278 102,958 231,572 107,105 39,323 480,958 3,123,866 239,521 29,544 - 3,392,931 - 91,654 - - 91,654 - - - 2,188,600 2,188,600 4,403,356 866,465 305,965 2,333,091 7,908,877 87,043 195,777 90,550 33,244 406,614 41,715 80,125 47,607 7,581 177,028 5,377,460 363,424 34,474 - 5,775,358 - 733,227 - - 733,227 - - - 6,754,400 6,754,400 5,506,218 1,372,553 172,631 6,795,225 13,846,627 9,909,574 2,239,018 478,596 9,128,316 21,755,504 �l ' � � � ' � , � � ' � I�J ' � ' � 4,242,215 3,658,511 60,624 10,708 7,972,058 3,429,486 4,268,814 815,856 33,965,397 42,479,553 � $ 7,671,701 $ 7,927,325 $ 876,480 $ 33,976,105 $ 50,451,611 The notes to the financial statements are an integral part of this statement. 108 ' � ' City of Clearwater, Florida � Combining Statement of Revenue, Expenses, and Changes in Fund Net Assets Internal Service Funds For the Year Ended September 30, 2008 � , 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 � ' I�� ' 1 1 ' 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 Total net assets - ending Garage Administrative General Central Fund Services Services Insurance Total $ 13,026,230 $ 9,566,696 $ 5,186,336 $ 19,283,668 $ 47,062,930 2, 501,148 4,564,728 147,126 5,146 128, 822 4,262,572 239,980 328,465 19,394 4,709,627 120,532 116,878 6,100 696,214 35,500 155,442 1,305,679 44,606 2,859,465 429,933 204,571 502,607 17,053 53,907 556,811 8,776 1,646 3, 569 38, 332 9,375 10,627,051 4,564,728 706,367 328,241 637,529 4, 979,408 275,480 522,239 1, 388,355 44,606 62,530 79,910 31,900 14,381,278 14,555,618 574,272 - - 1,720,015 2,294,287 - 791,400 916,546 15,916 1,723,862 13,700 612,972 23,172 1,153 650,997 22,574 108,084 33,633 36,875 201,166 123,530 208,130 75,650 13,080 420,390 4,605 - - - 4,605 1,149,070 3,306,223 1,134,808 16,216,024 21,806,125 12,998,592 8,991,074 5,148,437 16,786,826 43,924,929 27,638 575,622 37,899 2,496,842 3,138,001 129,241 190,667 33,455 1,424,415 1,777,778 (329,584) (60,971) (3,631) - (394,186) 400,778 (36,731) - - 364,047 143,091 497 506 - 144,094 343,526 93,462 30,330 1,424,415 1,891,733 371,164 669,084 68,229 3,921,257 5,029,734 14,714 - - - 14,714 358,599 638,521 - 130,302 1,127,422 (207,619) - (103,653) (78,439) (389,711) 165,694 638,521 (103,653) 51,863 752,425 536,858 1,307,605 (35,424) 3,973,120 5,782,159 7,134,843 6,619,720 911,904 30,002,985 44,669,452 $ 7,671,701 $ 7,927,325 $ 876,480 $ 33,976,105 $ 50,451,611 The notes to the financial statements are an integrai part of this statement. , 109 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from other funds Cash payments to suppliers Cash payments to employees Cash payments to other funds Otherrevenues 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 Payment of cash on loans to/from other funds 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 City of Clearwater, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2008 ! � � Garage Administrative General Central , Fund Services Services Insurance Total $ 13,026,230 $ 9,566,696 $ 5,186,336 $ 19,283,668 $ 47,062,930 (5,916,790) (2,809,398) (1,846,394) (15,786,940) (26,359,522) (2,388,229) (4,556,072) (2,719,328) (518,451) (10,182,080) (525,863) (749,485) (379,811) (39,524) (1,694,683)' 76,539 497 506 - 77,542 4,271,887 1,452,238 241,309 2,938,753 8,904,187 ' 358,599 - - (91,654) 358,599 (91,654) (3,401,496) (290,983) (329,584) (195,971) (3,927,224) (1,004,903) 408,017 - 2,925,886 393,462 - 130,302 488,901 - (78,439) (78,439) , - 125,297 125,297 _ - (91,654) = 177,160 444,105 t (32,492) (3, 631) (6,968) (4,324,401) (1,098,395) (43,091) , - (3,724,971) - (529,186) ' - (4,939,095) - 408,017 - 3,319,348 (5,465,887) ' 129,241 190,667 33,455 1,424,415 1,777,778 ' 129,241 190,667 33,455 1,424,415 1,777,778 435,326 452,856 231,673 4,540,328 5,660,183 ' 3,673,744 4,878,318 820,240 34,528,289 43,900,591 $ 4,109,070 $ 5,331,174 $ 1,051,913 $ 39,068,617 $ 49,560,774 ' Cash and cash equivalents classified as: ' Cash on hand and in banks $ - $ 1,700 $ - $ - $ 1,700 Equity in pooled cash and investments 4,109,070 5,329,474 1,051,913 39,068,617 49,559,074 Total cash and cash equivalents $ 4,109,070 $ 5,331,174 $ 1,051,913 $ 39,068,617 $ 49,560,774 ' The notes to the financial statements are an inte ral part of this statement. ' 9 110 � , City of Clearwater, Florida , Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2008 ' , ' 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: Other nonoperating revenue �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 unearned revenue ,(Increase) decrease in net pension asset Increase (decrease) in accrued payroll Increase (decrease) in other postemployment benefits Total adjustments ' Net cash provided (used) by operating activities ' Noncash investing, capital and financing activities: Loss on disposal of capital assets 'Capital assets transferred from General Government Capital assets transferred to Administrative Services Fund Decrease in net pension asset increase in other postemployment benefits liabliity � � � ' ' Garage Administrative Fund Services $ 27,638 $ 575,622 $ 143,091 497 4,262,572 696,214 Generel Central Services Insurance Total 37,899 $ 2,496,842 $ 3,138,001 506 - 144,094 17,053 3,569 4,979,408 (2,747) - - - (2,747) (113,565) - - - (113,565) _ - - 318,417 318,417 (94,216) (53,774) 45,714 81,565 (20,711) (63,805) - - - (63,805) 26,001 41,641 22,283 4,804 94,729 45,203 111,914 70,247 25,975 253,339 41,715 80,124 47,607 7,581 177,027 4,244,249 876,616 203,410 441,911 5,766,186 $ 4,271,887 $ 1,452,238 $ 241,309 $ 2,938,753 $ 8,904,187 $ - $ $ 14,714 $ $ (207,619) $ $ (26,001) $ $ (41,715) $ , 111 (55,305) $ - � 638,521 $ (41,641) $ (80,124) $ - � - $ (103,653) $ (22,283) $ (47,607) $ - $ (55,305) - $ 14,714 - $ 327,249 (4,804) $ (94,729) (7,581) $ (177,027) This Page Intentionally Left Blank � � , ' � � ' � � ' ' ' ' � � ' , ' 112 ' ' 1 � � � � � � i ' � ' � � � � , � � 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. Firefighter's Relief and Pension Fund - to account for the �nancial operation and condition of the Firefighter's Relief and Pension Plan, closed to new members in 1962, and containing 43 retired members with no active members. The Plan was fully funded effective with fiscal year 2007. Police Suppiemental 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 suppiemental pension plan funded by the State for firefighters. Treasurer's Escrow Agency Fund - to account for the receipt, custody, and expenditure of fiunds held temporarily in trust for other parties. 113 City of Clearwater, Florida Combining Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2008 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 International corporate bonds International equity securities Domestic stocks Mortgage backed bonds Asset backed securities Commodity exchange-traded funds Domestic equity mutual funds International equity mutual funds 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 Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firefighter's Supplemental Supplemental Totals - $ - $ 19,407 $ 2,485,304 3,981,044 - ' � ' � - $ 19,407 - 6,466,348 � 32,727,043 - 161,100 866,276 33,754,419 13,788,973 - 3,838,088 672,462 18,299,523 12,001,902 3,590,874 1,006,950 49,885 16,649,611 58,539,503 - 838,570 903,903 60,281,976 - - - 4,667 4,667 18,782,341 - - - 18,782,341 238,679,742 - 7,357,511 1,466,486 247,503,739 97,400,558 - 55,277 1,185,482 98,641,317 2,554,458 - - - 2,554,458 284,134 - - - 284,134 39,485,214 - - 1,977,728 41,462,942 21,489,933 - - 737,472 22,227,405 535,733,801 3,590,874 13,257,496 7,864,361 560,446,532 110,479,658 - - - 110,479,658 2,235,608 22,219 61,389 32,297 2,351,513 11,970,657 - - - 11,970,657 48,876 - - - 48,876 21,549 - - 368,978 390,527 14,276,690 22,219 61,389 401,275 14,761,573 662,975,453 7,594,137 13,338,292 8,265,636 692,173,518 Accounts payable 668,572 - 16,613 - 685,185 Unsettled investment purchases 31,067,023 - - - 31,067,023 Obligations under securities lending 112,035,918 - - 112,035,918 Total liabilities 143,771,513 16,613 143,788,126 NET ASSETS Net assets held in trust for pension benefits $ 519,203,940 $ 7,594,137 $ 13,321,679 $ 8,265,636 $ 548,385,392 The notes to the financial statements are an integral part of this statement. 114 ' ' ' LJ � , ' � � � � ' ��I J f"' �� ' City of Clearwater, Florida Combining Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2008 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 (loss) from investing activities Securities lending income: Gross earnings Loss on securities Iending coilateral Rebate paid Bank fee Net income (loss) 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 Netincrease(decrease) Net assets held in trust for pension benefits: Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firefighter's Supplemental Supplemental Totals $ 10,393,307 $ 12,000 6,294,917 16,700,224 (111,580,731) 10,182,979 3,173,762 (98,223,990) - $ - $ - $ 10,393,307 - 953,908 1,381,225 2,347,133 - - - 6,294,917 953,908 1,381,225 19,035,357 (46,388) (1,696,519) (1,505,652) (114,829,290) 430,048 247,310 235,303 11,095,640 - 159,779 180,303 3,513,844 383,660 (1,289,430) (1,090,046) (100,219,806) 2,908,341 - 83,982 69,453 3,061,776 (101,132,331) 383,660 (1,373,412) (1,159,499) (103,281,582) 4,582,384 - - - 4,582,384 (1,556,260) - - - (1,556,260) (3,395,508) - - - (3,395,508) (415,201) - - - (415,201) (784,585) - - - (784,585) (85,216,692) 383,660 (419,504) 221,726 (85,030,810) 22,352,134 874,632 741,192 878,670 24,846,628 826,605 - - - 826,605 23,178,739 874,632 741,192 878,670 25,673,233 (108,395,431) (490,972) (1,160,696) (656,944) (110,704,043) 164,869 4,754 15,613 36,692 221,928 (108,560,300) (495,726) (1,176,309) (693,636) (110,925,971) 'Beginning ofyear 627,764,240 8,089,863 14,497,988 8,959,272 659,311,363 End ofyear $ 519,203,940 $ 7,594,137 $ 13,321,679 $ 8,265,636 $ 548,355,392 , The notes to the financial statements are an integral part of this statement. � 115 City of Clearwater, Florida Statement of Changes in Assets and Liabilities Agency Fund For the Year Ended September 30, 2008 TREASURER'S ESCROW FUND 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, 2007 Additions Deductions 2008 $ 567,577 446,819 570,934 $ 443,462 $ 351,069 7,640 208,868 444,428 583 1,808 482,652 $ 583 87,699 312,845 7, 640 122,977 $ 567,577 446,819 570,934 $ 443,462 The notes to the financial statements are an integral part of this statement. 116 ' l.J � ' � , � � ' ' , � ul 1 ' �1 � � � � � Supplementary Information 117 Page 1 of 5 City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 2004, 2005, and 2007 Supplementary Information The Svstem: 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 Ciry. As of September 30, 2008, contract rates applied to 679 customer accounts and impacted 30.40% 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 Utility 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 c►asses 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 was $373,352. 118 , 1I � � ' � LJ ' �' � � � u ' � � � � � � r � � r�r� �■■ �rr r r �r r � � � � � r� � �■i■ Applicable Mnual Thertn Range or Other Rate Detertninant Monthly Customer Charge (For Central Pasco Territory) Non-Fuel Enerpv Chameffherm NorFFuel Energy Charge Energy Conservation Adj. (ECA) Environmental Imposifion Adj. (EIA) Weather Nortnaliza6on Adj. (WNA) Total Non-Fuel Energy Charge � Purchased Gas Adjustment (PGA) CD Total Energy Charge/Therm Minimum Monthy Bill (For CenVal Pasco Tertitory) Compares to LP/Gallon Rate of with 6.0°� Franchise Change from 10/04 Therm Rate °� Change from 10/04 Therm Rate Utilitv Tax Note: Fuel Rate perTherm 10/01/1973 Non-UtllityTaxable FueUTherm CLEARWATER GAS SYSTEM NATURAL GAS RATE BILLING FACTORS FOR AUGUST 1, 2008 - SEPTEMBER 30, 2008 BASED ON APPROVED GAS ADJUSTMENT FACTORS Interc Contract Firm Natural Gas Rate Schedules NG Rate NG Rate RS SMF MMF LMF SGS MGS LGS RAC GAC LAC SL SL w/M8 NGV NSS IS CNS Reliqht 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 &+) & up $8.00 $20.00 $30.00 $75.00 $20.00 $30.00 $75.00 $5.00 $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) Contrad if not prev if not prev if not prev it not prev hilled billed billed hilled $0.580 $0.580 $0.580 $0.580 $0.470 $0.410 $0.350 $0.200 $0.150 $0.100 $0.200 $0.300 $0.100 $0.470 $0.280 By Contract 0.120 0.120 0.120 0.120 0.120 0.120 0.120 0.120 0.120 0.120 0.120 0.120 0.720 0.120 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 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 0.000 0.000 Contract + $0.700 $0.700 $0.700 $0.700 $0.590 $0.530 $0.470 $0.320 $0.270 $0.220 $0.320 $0.420 $0220 $0.590 $0280 $0.000 Plus 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.420 1.340 1.340 $2.120 $2.120 $2.120 $2.120 $2.010 $1.950 $1.890 $1.740 $1.690 $1.640 $1.740 $1.840 $1.640 $2.010 $1.620 $1.340 + Non-Fuei $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 Thertn Rate for Rate for Contract 250 thertns X # of Thertns # Days in Mo. $ 1.940 $ 1.940 $ 1.940 $ 1.940 $ 1.839 $ 1.784 $ 1.729 $ 1.592 $ 1.546 $ 1.501 $ 1.592 $ 1.684 $ 1.501 $ 1.839 $ 1.482 $ 2.056 $ 2.056 $ 2.056 $ 2.056 $ 1.949 $ 1.891 $ 1.633 $ 1.688 $ 1.639 $ 1.591 $ 1.688 $ 1.785 $ 1.591 $ 1.949 $ 1.571 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.380 $0.380 24.0% 24.0% 24.0% 24.0 h 25.6% 26.6 % 27.7 % 30.8% 32.0 % 33.3 % 30.8 % 28.7 k 33.3% 25.6% 30.6% 39.6% $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 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.351 $1.285 $1.271 BTU FACTOR = THERMS/100 CUBIC FEET (CCF) 10/2007 11/2007 12/2007 01/2008 02/2008 03/2008 04/2008 05/2008 06/2008 07/2008 08/2008 09l2008 AnnualAveraqe Firm Service Rates 1.053 1.053 1.049 1.048 1.047 1.049 1.048 1.049 1.049 1.050 1.051 1.051 1.049750 Intertuptible Service Rates 1.033 1.033 1.029 1.027 1.027 1.028 1.027 1.028 1.029 1.030 1.030 1.031 1.029333 n O 7 � � C 7 (C ��v� -8 �, C'! i-► � fD y y �, 3p�(� �D � � � � � N d � O y � O -�i+ � �G � 3 Q '�' �'1 lD � N � O • O Q; � V � � fD � C fD � O 7 Q N � � �Q �D N O � � Page 3 of 5 City of Clearwater, Florida Continuing Disclosure - Gas System Revenue Bonds Series 2004, 2005, and 2007 Supplementary Information GAS SUPPLY , � � 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 Ciearwater, 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 Trans 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 1,543,069 216,570 711,756 641, 833 Phase III (FTS-2) MMBtu Per Day 12/9/91 - 2/28/15 41, 788 268, 931 53,430 206,244 570, 393 120 Total MMBtu Per Day 212,226 1,812,000 270, 000 918.000 212 � � � � � � � � � ' � � � � � �, u � � 1 ' � � , Page 4 of 5 ' City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 2004, 2005, and 2007 Supplementary Information Service Area The Clearwater Gas System (CGS) is owned and operated as an enterprise utility by the City of Clearwater. CGS operates over 814 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 86 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 19,527 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 r �� customers who make up 88.53% of our customer base. ' 121 Page 5 of 5 City of Clearwater, Florida Continuing Disclosure - Gas System Revenue Bonds Series 2004, 2005, and 2007 Supplementary Information As of September 30, 2008 the System's active natural gas customers were located as shown in the following table: Location Meters Belleair 394 Belleair Beach 146 Belleair Bluffs 25 Belleair Shores 22 Clearwater 6,504 Dunedin 1,067 Indian Rocks Beach 85 Indian Shores 65 Largo 938 New Port Richey 299 North Redington Beach 13 Oldsmar 92 Port Richey 15 Redington Beach 40 Redington Shores 21 Safety Harbor 566 Tarpon Springs 1,420 Unincorporated Areas Pasco 2,617 Central Pasco 224 Unincorporated Areas Pinellas 2,751 Total 17, 304 Percentage 2.28% 0.84% 0.14% 0.13% 37.59% 6.17% 0.49% 0.38% 5.42% 1.73% 0.08% 0.53% 0.09% 0.23% 0.12% 3.27% 8.21 % 15.12% 1.29% 15.90% 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, 2008: Customer Name Morton Plant Hospital Mease Hospital Angelica Textile Service Metal I ndustries HCA Columbia Hospital Peak Monthly Therms 104, 286 89, 866 96,276 79,420 25,401 % of Gross Revenues 3.87% 2.95% 2.33% 1.63% 1.11% ' � � � � � �' ' � � � 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, 2008: � Interruptible Residentiai Commercial Interruptible Residential Commercial Totais Average No. Customers 13 15,145 2,146 Therms 5,095,378 3,082,601 12,511,149 20,689,128 122 Gas Gas Volume Sales 24.63% 15.59% 14.90% 22.00% 60.47% 62.41 % Revenues $ 5,207,145 7,345,493 20,837,300 $ 33,389,938 � � � � � 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�I � � � 1 � � Water System: FY 2003 2004 2005 2006 2007 2008 Historical Financial Information Source and Volume of Water Pumped (in million gallons per day, averaged over the fiscal year) Ci Welis Coun 3.927 8.916 3.601 9.544 3.550 10.630 4.093 9.999 3.570 9.090 3.075 8.844 Historical Growth in Number of Water Customers (all figures are as of September of the year indicated) Year 2003 2004 2005 2006 2007 2008 Water Customers 40,227 40,235 40,178 40,467 40,407 40,131 Ten Largest Water Customers Fiscal Year Ending September 30, 2008 Name of User 1. Church of Scientology FSO Inc. 2. Morton Plant Hospital 3. Pinellas County Schools 4. City of Clearwater 5. Clearwater Housing Authority 6. IMT-LB Central FL Portfolio LLC 7. United Dominion Realty Trust 8. Sandpearl Resort LLC 9. Brenntag Mid-South Inc 10. Bre/Clearwater Owner LLC Total � 123 Water Used (in 100 Cubic Feet) 109,013 59,609 42, 358 28,765 47, 867 41,685 37,381 33,169 29,644 32.994 � Page 1 of 3 Total 12.843 13.145 14.180 14.092 12.660 11.919 Revenues Produced $ 440,437 295,652 241,499 199,237 194, 069 171,475 140,883 132,489 128, 539 116,200 2.060.480 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 Supplementary information Sewer System: Averaqe Sewaqe Flow Historical Growth in Number of Sewer Customers (as of September of the year indicated) Fiscal Annual Ave. Daily Fiscal Year Flow In MGD Year Sewer Customers 2003 16.2 2003 33,215 2004 15.0 2004 33,234 2005 14.7 2005 33,305 2006 13.8 2006 33,279 2007 13.6 2007 33,255 2008 14.0 2008 33,146 Ten Largest Sewer Customers Fiscal Year Ending September 30, 2008 Name of User 1. Church of Scientology 2. Morton Plant Hospital 3. Pinellas County Schools 4. Clearwater Housing Authority 5. IMT-LB Central FL Portfolio LLC 6. United Dominion Realty Trust 7. Bre/Clearwater Owner LLC 8. Sandpearl Resort LLC 9. City of Clearwater 10. Sheraton Sand Key Totai Sewer Used (in 100 Cubic Feet) 91,605 57,645 41,030 42,281 41,685 37,381 32,994 33,169 16,490 24,808 Rates, Fees And Charqes • �: Revenues Produced $ 426,900 334,970 312, 724 184,424 181,327 181,098 150,203 132,456 129,190 124,891 F�E'.Z7� 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 fiscal year 2008 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. 124 � � � � � � � � � � � � � � � � � � � � � � � �j � �� Page 3 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 Supplementary Information Residential and October 1, October 1, October 1, October 1, October 1, Nonresidential Water Rates 2004 2005 2006 2007 2008 Size of Meter Gallons Minimum- Under 1 inch 10.59 11.34 12.03 12.75 13.65 1 inch 24.71 26.46 28.07 29.75 31.85 1.5 inch 353.00 378.00 401.00 425.00 455.00 2 inch 822.49 880.74 934.33 990.25 1,060.15 3 or 2 inch manifold 1,267.27 1,357.02 1,439.59 1,525.75 1,633.45 4 inch 2,439.23 2,611.98 2,770.91 2,936.75 3,144.05 6 inch 6,265.75 6,709.50 7,117.75 7,543.75 8,076.25 8 inch 10,590.00 11,340.00 12,030.00 12,750.00 13,650.00 Additional charges are assessed for cubic feet of usage in excess of designated minimums. Rates for Irriqation (Lawn) Meters October 1, October 1, October 1, October 1, October 1, 2004 2005 2006 2007 2008 Size of Meter Gallons Minimum- Under 1 inch 3.78 4.04 4.28 4.54 4.86 1 inch 11.34 12.13 12.86 13.63 14.58 1.5 inch 56.70 60.67 64.31 68.17 72.94 2 inch 158.76 169.87 180.06 190.86 200.22 3 or 2 inch manifold 313.74 335.70 355.84 377.19 403.59 4 inch 604.80 647.14 685.97 727.13 778.03 6 inch 1,825.74 1,953.54 2,070.75 2,195.00 2,348.65 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, 2004 2005 2006 2007 2008 14.58 34.02 486.00 1,132.38 1,744.74 3,358.26 8,626.50 14,580.00 4.86 Gallons 15.60 36.40 520.00 1,211.60 1, 866.80 3,593.20 9,230.00 15,600.00 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 17.52 40.88 584.00 1,360.72 2,096.56 4,035.44 10, 366.00 17,520.00 5.84 Additional Indebtedness Additional indebtedness incurred totaled $24,386 for the lease purchase of capital equipment. 125 18.75 43.75 625.00 1,456.25 2,243.75 4,318.75 11,093.75 18,750.00 6.25 City of Clearwater, Florida Continuing Disclosure — Stormwater System Revenue Bonds Series 1999, 2002, 2004, and 2005 Supplementary Information Rates, Fees, and Charaes 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. An increase was adopted on June 19, 2008, for the one-year period beginning October 1, 2012. 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 October 1, 2012 $13.59 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 Fiscal Years Ended September 30. 2004 2005 2006 2007 2008 Net Operating Revenues (Excluding Depreciation) $3,566,465 $4,548,421 $5,103,551 $5,688,934 $5,681,465 Interest Income and other Non- Operating Revenues (Expenses) 190,579 220,570 465,203 608,038 550,935 Total Net Revenues $3,757,044 $4,768,991 $5,568,754 $6,296,972 $6,232,400 Maximum Annual Debt Service $2,913,506 $2,889,994 $2,889,994 $2,889,994 $2,889,994 Coverage 1.29 1.65 1.93 2.19 2.16 126 �� ,� � � � � � � � � 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 2008 Sales tax revenues (1) $ 8,661,615 $ 9,119,913 $ 9,977,529 $10,704,390 $ 9,930,812 $ 9,862,976 Ma�dmum annual debt senrice $ 7,049,688 $ 7,028,888 $ 6,955,888 $ 6,887,888 $ 6,884,800 $ 6,884,800 Debt senrice coverage 1.23 1.30 1.43 1.55 1.44 1.43 (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 County, 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). � � � � Pledged Revenues (1) � Maximum annual debt senrice Debt service coverage Continuing Disclosure Improvement Revenue Refunding Bonds, Series 2001 Improvement Revenue Bonds, Series 2008 Supplementary Information Historical Debt Service Coveraqe 2003 2004 2005 2006 2007 $17,381,418 $17,026,827 $17,493,450 $18,117,728 $18,193,910 $ 865,310 $ 865,310 $ 864,060 $ 861,000 $ 861,000 20.09 19.68 2025 21.04 21.13 ��I�i3 $18,279,990 $ 1,919,221 9.52 � (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. Improvement Revenue Bonds, Series 2008, were issued August 12, 2008, in the amount of $12,900,000. They were secured by a lien upon and a pledge of the public service tax pursuant to Chapter 166, Part II, Florida Statutes. � � � ` 127 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 Authority'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, 2008, 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, 2008 are summarized below. Total Revenue Received from Pinellas County Fire Protection Authority Total Fire Service Expenditures for Fiscal Year Ended September 30, 2008 The Fire Services Program does not currently utilize an equipment reserve. $ 2,323,261 $ 17,597,245 � � � � � � � � � � �J � � � � � � 128 � � � Cn � C7 D r � m c� � 0 z � � CITY OF CLEARWATER, FLORIDA 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. � Schedule 5 �Schedule 6 ' Schedule 7 Schedule 8a � Schedule 8b � Debt Capacity Assessed Value and Estimated Actual Value of Taxabte 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 129 CITY OF CLEARWATER, FLORIDA 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 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 relevant year. The City implemented the reporting model, GASB 34, in the fiscal year ending September 30, 2002. � � � � � � fJ � � � � L� � new � � 130 � � � � � ! Primarv Government � Governmental activities Invested in capital assets, net of related debt a Restricted �Unrestricted Total governmental activities net assets �_J � City of Clearwater, Florida Net Assets by Component, Last Seven Fiscal Years (accrual basis of accounting) Fiscal Year (amounts in thousands) 2002 2003 2004 2005 2006 2007 Schedule 1 2008 $ 60,970 $103,015 $133,711 $143,505 $182,474 $205,079 $218,384 63,795 53,939 50,801 34,668 41,204 41,543 39,020 67,099 62,599 61,163 92,739 100,234 108,262 114,247 $191,864 $219,553 $245,675 $270,912 $ 323,912 $ 354,884 $ 371,651 Business-type activities Invested in capital assets, net of related debt $ 86,679 $105,824 $136,964 $146,476 $ 156,728 $164,246 $170,735 Restricted 38,382 33,413 37,108 35,354 35,054 35,775 39,635 Unrestricted 93,847 90,769 67,723 71,655 77,435 84,021 83,681 Total business-type activities net assets $218,908 $230,006 $241,795 $253,485 $ 269,217 $284,042 $294,051 � Primary govemment Invested in capital assets, net of related debt $147,649 $208,839 $270,675 $289,981 $ 339,202 $369,325 $389,119 Restricted 102,177 87,352 87,909 70,022 76,258 77,318 78,655 �Unrestricted 160,946 153,368 128,886 164,394 177,669 192,283 197,928 Total primary government net assets $410,772 $449,559 $487,470 $524,397 $ 593,129 $638,926 $665,702 � 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 community 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 City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2002. � 1_ J � , 131 Schedule 2 Page 1 of 2 Expenses Governmental activities: City of Clearwater, Florida Changes in Net Assets Last Seven Fiscal Years (accrual basis of accounting) Fiscal Year (amounts in thousands) 2002 2003 2004 2005 2006 2007 2008 General government $ 11,647 $ 11,353 $ 11,772 $ 11,945 $ 13,203 $ 13,169 $ 14,342 Public safety 45,136 47,429 51,454 56,456 60,178 68,636 66,582 Physical environment 2,886 2,271 2,684 2,826 3,098 3,027 2,730 Transportation 10,120 8,878 12,510 12,001 13,898 13,694 12,322 Economic environment 3,231 4,288 3,225 3,395 3,321 3,142 4,534 Human services 555 571 555 530 444 448 440 Culture and recreation 22,231 22,094 25,402 28,875 32,636 32,872 37,688 Interest on long-term debt 2,963 3,284 3,013 2,699 2,373 2,248 1,998 Total governmental activities expenses 98,769 100,168 110,615 118,727 129,151 137,236 140,636 Business-type activities: Water and sewer utility 37,470 40,825 41,995 43,852 48,592 49,840 52,015 Gas utility 23,574 26,638 29,152 33,394 36,947 33,579 35,944 Solid waste utility 14,398 14,232 15,096 15,615 16,013 16,172 16,036 Stormwater utility 5,459 7,022 8,250 8,768 9,013 9,465 11,070 Recycling 2,084 2,165 2,388 2,574 2,579 2,895 3,207 Marine 2,848 3,060 3,249 3,801 4,303 4,366 4,696 Aviation 336 211 299 350 468 382 417 Parking system 3,075 3,281 3,617 3,846 3,976 3,427 3,521 Harborview center 2,714 2,525 2,418 2,552 2,618 2,664 2,800 Downtown boat slips - - - - _ _ 23 Total business-type activities expense: 91,958 99,959 106,464 114,752 124,509 122,790 129,729 Total primary government expenses $190,727 $200,127 $217,079 $233,479 $253,660 $260,026 $270,365 Program revenues Governmental activities: Charges for services: General government a b 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 Downtown boat slips Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues $ 11,741 $ 12,268 $ 12,961 $ 13,585 $ 14,628 $ 14,508 $ 21,639 7,747 7,960 7,742 7,500 8,222 8,444 9,803 93 180 76 119 150 123 91 59 126 159 163 235 261 194 124 91 87 164 110 107 108 - 6 - - - - - 3,070 3,191 4,344 4,753 5,296 5,574 5,318 6,224 8,267 6,605 6,273 7,181 9,687 9,123 9,787 5,207 3,129 15,058 3,405 11,748 7,632 � � � � � � lJ � u � � � 38,845 37,296 35,103 47,615 39,227 50,452 53,908 � 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 45,306 37,469 16,541 10,319 2,784 3,721 205 4, 752 1,646 49,159 43,160 16,816 11,138 2,740 4,075 213 4,981 1,842 50,381 38, 906 17,301 11,885 3,204 4,323 224 4,655 1,846 52,111 40,902 17,512 12,770 3,411 4,798 227 4,166 2,032 - 14 420 59 59 83 83 4,301 9,406 5,591 6,138 6,639 6,382 1,086 102,806 114,352 120,064 128,940 140,822 139,190 139,098 $141,651 $151,648 $155,167 $176,555 $180,049 $189,642 $193,006 132 � � � � � Schedule 2 (continued) � � � � Net(Expenses)/Revenue Governmental activities � Business-type activities Total primary government net (expense) / revenue City of Clearwater, Florida Changes in Net Assets Last Seven Fiscal Years (accrual basis of accounting) � General Revenues and Other Changes in Net Assets � Governmental activities: Taxes Property Sales � Franchise a Utility Communications services Other taxes b � Investment earnings Miscellaneous Special items ` 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 2003 2004 2005 2006 2007 2008 $(59,924) $(62,872) $(75,512) $(71,112) $ (89,924) $ (86,784) $ (86,728) 10,848 14,393 13,600 14,188 16,313 16,400 9,369 $(49,076) $(48,479) $(61,912) $(56,924) $ (73,611) $ (70,384) $ (77,359) $ 30,322 $ 33,927 $ 37,157 $ 41,588 $ 48,076 $ 53,717 $ 50,347 14, 664 14, 529 15, 263 16, 351 17,155 16, 079 15, 675 7,087 7,140 7,505 8,226 9,435 9,505 - 10,402 10, 363 10, 237 10, 611 11,264 11,410 11, 533 7,870 7,019 6,790 6,883 6,854 6,784 7,316 4,294 3,974 4,435 5,183 5,523 5,779 8,154 4,859 2,188 3,231 2,648 5,352 7,402 5,837 213 168 758 151 396 131 437 - 5,810 10,047 - - - - 376 5,443 4,515 4,707 3,658 6,948 4,196 80,087 90,561 99,938 96,348 107,713 117,755 103,495 3,083 2,148 1,987 2,210 4,341 5,373 4,313 (376) (5,443) (4,515) (4,707) (3,658) 6,948 (4,196) 2,707 3,295 (2,528) (2,497) 683 1,575 117 $ 82,794 $ 87,266 $ 97,410 $ 93,851 $ 108,396 $116,180 $103,612 $ 20,163 $ 27,689 $ 24,426 $ 25,236 $ 17,789 $ 30,971 $ 16,767 13,555 11,098 11,072 11,691 16,996 14,825 9,486 $ 33,718 $ 38,787 $ 35,498 $ 36,927 $ 34,785 $ 45,796 $ 26,253 e Franchise fees reclassified from General Revenues to Charges for Services effective with fiscal 2008, per guidance from State of Florida, Department of Financial Services, Bureau of Local Government. b Occupational licenses reclassifled from Charges for Services to Local Business Tax (Other Taxes) effective with fiscal 2008, per guidance from State of Florida, Department of Financial Services, Bureau of Local Government. � ` 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 City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2002. ! 133 Schedule 2a Function/Program Governmental activities: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Subtotal governmental activities City of Clearwater, Florida Program Revenues by Function/Program Last Seven Fiscal Years (accrual basis of accounting) Fiscal Year (amounts in thousands) 2002 2003 2004 2005 2006 2007 2008 $ 11,843 $ 12,340 $ 13,090 $ 13,605 9,046 9,661 9,009 9,207 1,052 1,118 796 448 6,261 3,982 2,003 14,056 a 2,802 4,028 2,629 2,425 - 6 - - 7,841 6,161 7,576 7,874 38,845 37,296 35,103 47,615 Business-type activities: Water and sewer utility 40,051 43,120 46,357 47,656 Gas utility 26,890 30,064 33,001 37,469 Solid waste utility 16,090 15,974 16,823 16,541 Stormwater utility 8,262 13,411 11,158 14,061 Recycling 2,171 2,427 2,649 2,843 Marine 2,735 2,953 3,750 3,721 Aviation 638 739 253 251 Parking system 4,097 4,003 4,418 4,752 Harborview center 1,872 1,661 1,655 1,646 Downtown boat slips - - - - Subtotal business-type activities 102,806 114,352 120,064 128,940 Total primary government $141,651 $151,648 $155,167 $176,555 $ 14,697 9,275 1, 274 2,300 2,708 $ 14,514 $ 21,640 b 11,763 12,784 704 695 10,491 6,628 3,298 2,844 8,973 9,682 9,317 39,227 50,452 53,908 52,264 43,160 16,816 14,343 2,799 4,128 489 4,981 1, 842 56,071 38,906 17,301 12,559 3,287 4,323 242 4,655 1, 846 52, 807 40,902 17,512 12,941 3,493 4,810 335 4,266 2, 032 140, 822 139,190 139, 098 $180,049 $189,642 $193,006 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2002. 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. b Franchise fees reclassified from General Revenues to Charges fo� Services effective with fiscal 2008, per guidance from State of Florida, Department of Financial Services, Bureau of Local Government. j � � � � � � � � L J � � � � 134 � � � � � � � �' � � � � � � � � ' � � � General Fund Reserved Unreserved Total General Fund All Other Governmental Funds w Reserved U' Unreserved, reported in: Special revenue funds Debt service funds Capital project funds Total all 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) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 $ 843 $ 1,115 $ 1,066 $ 3,019 $ 2,618 $ 2,762 $ 3,064 $ 2,941 $ 3,476 $ 3,500 8,647 8,091 11,806 12,684 12,075 13,077 15,575 21,479 23,580 17,564 $ 9,490 $ 9,206 $ 12,872 $ 15,703 $ 14,693 $ 15,839 $ 18,639 $ 24,420 $ 27,056 $ 21,064 $ 13,974 $ 7,910 $ 9,288 $ 50,531 e$ 35,555 $ 29,421 $ 30,040 $ 35,363 $ 48,722 $ 36,641 10, 965 14, 846 14, 778 11, 336 15,199 15, 325 17, 340 19, 608 18, 656 16,426 1 - 648 1,802 30 28 2,248 64 90 113 4,155 10,832 42,560 a 23,481 22,247 17,796 25,462 27,746 19,225 40,685 ` $ 29,095 $ 33,588 $ 67,274 $ 87,150 $ 73,031 $ 62,570 $ 75,090 $ 82,781 $ 86,693 $ 93,865 ' The fiscal 2001 unreserved fund balance increase for capitai projects 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 mo�tgage note receivables. ` The fiscal 2008 unreserved fund balance increase for capital projects is due to funding of capital projects in advance of project expenditures. � W � Revenues Total Governmental Funds: Property taxes Utility taxes Sales taxes Communications services taxes ° Othertaxes Franchise fees Licenses, permits, and fees Charges for services Fines and forteitures Intergovernmental revenues Investment earnings Miscellaneous Total revenues Expendltures Total Governmental Funds: Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Debt service: Principal Interest & issuance costs Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures Other Financing Sources (Uses) Total Governmental Funds: Transfers in Transfers out Sale of capital assets Land held for resale from general government Long term debt issued Proceeds of refunding bonds Premium on revenue bonds issued Payment to refunded bond escrow agent Total other financing sources (uses) Net Change in Fund Balances Debt service as a percentage of noncapital expenditures 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) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 $ 23,294 $ 26,087 $ 27,712 $ 30,323 15, 238 15, 243 15, 486 10, 402 7,807 8,286 8,385 8,458 - - - 7,870 2,499 2,758 2,709 2,667 7,498 7,743 8,701 7,087 2,710 3,575 2,604 2,232 8,127 8,476 9,379 10,429 1,990 1,921 2,015 2,264 17,590 16,804 23,809 26,969 1,479 2,099 4,021 3,810 1,734 1,849 2,954 4,966 89,966 94,841 107,775 117,477 $ 33,927 $ 37,157 $41,588 $48,076 $ 53,717 10,363 10,237 10,611 11,264 11,410 8,662 9,120 9,978 10,705 9,931 7,019 6,790 6,883 6,854 6,784 2,780 2,891 3,002 3,016 3,015 7,140 7,505 8,226 9,435 9,505 2,908 3,168 3,656 4,780 4,441 10,471 12,198 12, 570 14,669 14,806 2, 078 1,742 1,263 1,557 1,401 25,070 22,089 36,704 25,407 34,622 2,309 2,491 1,756 3,784 5,400 3,097 3,257 2,813 2,089 4,173 115,824 118,645 139,050 141,636 159,205 $50,347 11,533 9,863 6,747 3,669 9,254 2,719 14,895 1,298 31,473 4,101 4,961 150,860 10,520 9,126 9,486 10,546 10,586 11,189 11,328 12,590 13,357 14,170 38,490 41,362 42,442 45,921 48,162 50,303 55,405 57,265 65,099 64,636 2,004 2,245 2,222 2,839 2,289 2,498 2,737 3,035 2,964 2,673 5,008 5,092 5,402 8,941 6,673 9,702 9,604 10,267 11,162 9,950 2,185 2,132 2,182 3,268 4,307 3,239 3,392 3,324 3,175 4,213 935 634 700 566 576 562 530 442 453 437 16,301 16,933 18,302 20,740 22,252 24,228 25,011 28,544 29,939 30,317 1,469 1,376 1,468 1,751 761 765 789 2,820 14,784 16,886 42,677 b 19,594 92,457 96,551 125,670 116,986 (2,491) (1,710) (17,895) 491 20,000 22,083 27,636 23,324 (16,594) (18,313) (21,768) (23,180) 986 2,149 49,379 15,363 - - - 11,345 - - - 481 - - - (10,271) 4,392 5,919 55,247 17,062 $ 1,901 $ 4,209 $ 37,352 $ 17,553 2.9% 2.9% 2.7% 4.7% 6,921 7,483 7,345 7,257 7,192 7,414 3,146 2,922 2,610 3,029 ` 1,999 1,728 32,272 19,859 10,252 9,834 24,126 21,970 137,184 131,985 128,214 135,587 159,466 157, 508 2( 1,360) 13,340 10,836 6,049 (261) (6,648) 29,241 29,854 28,205 35,258 47,334 42,481 (24,586) (26,750) (24,160) (29,850) (40,779) (39,023) 925 720 - 120 - - - - - 1,000 - - 651 201 439 895 254 4,370 6,231 4,025 4,484 7,423 6,809 7,828 $ 15,129 $ 9,315 $15,320 $13,472 $ 6,548 $ 1,180 10.5% 14.1 % 8.7% 8.5% 6.9% 6.8% ° Effective October 1, 2001, the Florida Legislature repealed the public service utility tax on telecommunications and created a simplified tax 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. � ,�■i �r r rrr �rr �r� � � trr r �r r� ,� �r �rr �r �r � � � � � � � � � � � � � � � � � � � � Schedule 5 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 Assessed and Assessment Less: Taxable Total Actual Value as a Fiscal Residential Commercial Industrial Institutional Personal Other Cap Tax Exempt Assessed Direct Taxable Percentage of Year Property Property Property Property Property Property Differentiale Property Value Rate` Value Actual Value 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 85.0% 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 85.0% 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 85.0% 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 85.0% 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 85.0% w 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 85.0% � 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 85.0% 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 85.0% 2007 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 85.0% 2008 11,359,752 2,385,943 187,557 1,500,633 640,387 72,913 2,691,298 2,307,132 11,148,755 4.6777 13,116,182 85.0% ° Properties are assessed at approximately 85% of market value to reflect cost of sales, personal property included in market value, etc. ° 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 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 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 82430 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 1.0000 2007 5.2088 0.0000 5.2088 5.4700 82100 0.6074 0.6300 1.6378 1.0000 2008 4.6777 0.0000 4.6777 4.8730 7.7310 0.5601 0.5832 1.5121 b 0.9651 Source: Pinellas County Property Appraiser a A separate taxing district established by referendum which affects only downtown properties. b"Other" includes Pinellas County Planning Council 0.0170; Juvenile Welfare Board 0.7384; SW Florida Water Management District 0.3866; Pinellas Anclote River Basin 0.3701. 138 � Schedule 7 , City of Clearwater, Florida Property Tax Levies and Collections Last Ten Fiscat Years � � Collected within the Fiscal Year of the Levy Total Collections to Date Coilections in I Fiscal Taxes Levied for Percentage Subsequent Percentage Year the Fiscal Year Amount of Levy Years Amount of Levy � 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 � 2008 52,134,689 51,926,581 99.60 131,471 52,058,052 99.85 � Note 1: Discounts are allowed for early payment: 4°/a for November, 3% for December, 2°/a for January, and 1% for February. No discount is allowed for payment in March. Penalties are assessed beginning in April. � Note 2: The County Tax Collector does not allocate delinquent taxes collected by the original tax year levied. Consequently all collections of delinquent taxes are applied to the immediately prior tax year and, as a result, the total collections-to-date percentage of the tax levy-to-date shown above may be greater than 100% of the tax levy for a given year. � � � 139 Schedule 8a Taxpaver REAL PROPERTY Bellweather Prop. LP Ltd. Clearwater MaU Taylor, John S. III Park Isle Condo Dev. LL Sand Key Association Ltd. Weingarten Nostat Inc. W R I Countryside Centre LLC United Dominion RLTY Trust ZOM Bayside Arbors Ltd. Duff, Andrew R. - Trustee Excel Realty Trust Inc Regency Land Partnership Walmart Stores, Inc. Branch Sunset Assoc., LTD HRE Prop. Totai City of Clearwater, Florida Principal Reat Property Taxpayers, Current Year and Nine Years Ago 2008 Taxable Assessed Value Rank $ 123,725,100 1 45,686,200 2 44,793,000 3 39,850,000 4 38,600,000 5 32,333,000 6 32,000,000 7 30,775,000 8 28,488,600 9 25,200,000 10 $ 441,450,900 Source: Pinellas County Property Appraiser 1999 Percentage of Total City Taxable Taxable Assessed Assessed Value Value Rank 1.16% $ 81,862,900 1 0.43% 0.42% 22,596,600 4 0.37°/a 0.36% 19,300,300 5 0.30% 0.30% 0.29% 0.27% 19,215,400 6 0.24% 14,624,100 10 42,230,200 2 29,994,200 3 17,387,700 7 16,454,700 8 15,273,200 9 4.15% $ 278,939,300 140 � � � Percentage of � Total City Taxabie � Assessed Value 1.97% � 0.54°/a � 0.46% � � � 0.46% 0.35% � 1.02% � 0.72% 0.42% � 0.40% 0.37% � 6.72% � � � � � � ' City of Clearwater, Florida Principal Personal Property Taxpayers, Current Year and Nine Years Ago � 2008 � Percentage of Total City Taxable Taxable �Assessed Assessed Taxpaver Value Rank Value PERSONAL �Progress Energy (1) $ 59,276,860 1 11.80% Verizon Florida Inc (2) 47,061,470 2 9.37% � Bright House Nefinrorks LLC (3) 15,948,930 3 3.17% Bausch & Lomb Inc 9,153,670 4 1.82% � General Electric Credit Co 4,629,900 5 0.92% Instrument Transformers 4,546,240 6 0.90% � Macy's Florida 3,686,380 7 0.73% � Siemens Financial Services 3,607,560 8 0.72% Marriott Suites Clearwater 3,126,200 9 0.62% � Sheraton Sand Key 3,101,290 10 0.62% GTE Media Ventures, Inc � GTE Telephone Operations Clearwater Community Hospital � Double Tree Resort 1 Tota� $ 154,138,500 30.68% Notes: (1) Progress Energy was Florida Power in 1999. � (2) Verizon Florida, Inc. was GTE Florida Incorporated in 1999. (3) Bright House Nefinrorks was Time Warner Entertainment in 1999. � Source: Pinellas County Property Appraiser � � � 141 Taxable Assessed Value $ 47,674,120 90,743,050 11,396,740 2,663,660 1999 Rank 3 1 4 10 5,672,010 5 3,386,720 47,784,950 5,359,390 4,771,760 2,751,130 $ 222,203,530 8 2 6 7 9 Schedule 8b Percentage of Total City Taxable Assessed Value 8.86% 16.87% 2.12% 0.50% 1.05% 0.63% 8.89% 1.00% 0.89% 0.51 % 41.32% � � 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 WatedSewer 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 Bonds Bonds Bonds Revenue Bonds Pavable Leases Bonds Bonds Bonds Bonds Leases Government Income la) Ca ita a 1999 $ - $ 2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 2006 - 2007 - 2008 - 10,480 $ - $ 10,264 - 10,037 46,445 11,256 46,445 10,925 41,345 10,590 36,075 10,241 30,615 9,885 24,955 9,565 19,080 13,000 12,975 - $ - $ 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 12,255 - 10,560 132,290 18,240 - $ 7,418 7,317 31,960 31,835 45,695 45,755 44,830 43,845 42,830 180 $ 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 9,135 932 252,217 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 calculated using personal income from two fiscal years prior. 4.52% $ 1,235 4.28% 1,234 5.59% 1,657 7.96% 2,531 7.48% 2,436 7.37°/a 2,460 6.98% 2,344 6.87% 2,480 6.12°/a 2,330 5.52% 2,288 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 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 1999 $ - $ 10,660 $ - 2000 - 10,427 - 2001 - 10,179 46,445 2002 - 11,360 46,445 2003 - 11,005 41,345 2004 - 10,645 36,075 2005 - 10,270 30,615 2006 - 9,885 24,955 2007 - 9,565 19,080 2008 - 13,000 12,975 Total $ 10,660 10,427 56,624 57,805 52,350 46, 720 40,885 34, 840 28,645 25,975 Schedule 10 Percentage of Actual Taxable Value of Per Property (a) Ca ita b 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 0.20°/a 236 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. 143 Schedule 11 City of Clearwater, Florida Direct and Overlapping Governmental Activities Debt As of September 30, 2008 (amounts in thousands) Governmental Unit Debt repaid with property taxes Other debt Pinellas County Capital Improvement Revenue Bonds Pinellas County Capital 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 Debt Outstandina $ - 44,035 1,839 34,640 19,630 Estimated Percentage Applicable a n/a 13.9% 13.9% 13.9% 13.9% Estimated Share of Overlapping Debt $ - 6,130 256 4,822 2,732 13,940 48,790 $ 62,730 Sources: Assessed value data used to estimate applicable percentages provided by Pinellas County Property Appraiser. Debt outstanding data is provided by each respective 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. a The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's 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. 144 � Schedule 12 � City of Clearwater, Florida Legal Debt Margin Information Last Ten Fiscaf Years � (amounts in thousands) � Total Net Debt Applicable Total Net Debt to Limit � Fiscal Debt Applicable Legal as Percentage Year Limit to Limit Debt Margin of Debt Limit � 1999 $ 830,744 $ 116,410 $ 714,334 14.01% 2000 870,699 121,644 749,055 13.97 � 2001 931,415 167,938 763,477 18.03 � 2002 1,026,014 254,873 771,141 24.84 2003 1,116,032 243,518 872,514 21.82 � 2004 1,236,804 249,370 987,434 20.16 2005 1,395,730 236,154 1,159,576 16.92 � 2006 1,631,179 247,706 1,383,473 15.19 � 2007 2,028,832 230,639 1,798,193 11.37 2008 2,128, 847 224,224 1, 904,623 10.53 � Le al Debt Mar in Calculation for Fiscal Year 2008: N � Assessed valuation of non-exempt real estate $ 10,644,235 Debt Limit (20% of assessed valuation per City Charter) 2,128,847 � Debt applicable to limit: Revenue bonds $ 240,725 Capital leases 11,492 � Less: Amount set aside for repayment of bonded debt (27,993) 224,224 � Legal debt margin $ 1,904,623 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. � , 145 Schedule 13 City of Clearwater, Florida Pledged-Revenue Coverage Last Ten Fiscal Years �a� (amounts in thousands) Page 1 of 2 Less: Net Fiscal Gross Operating Available Year Revenues Expenses Revenues Infrastructure Sales Tax Bonds �b� 2001 $ 8,340 $ - $ 8,340 2002 8,458 - 8,458 2003 8,662 - 8,662 2004 9,120 - 9,120 2005 9,978 - 9,978 2006 10,704 - 10,704 2007 9,931 - 9,931 2008 9,863 - 9,863 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Spring Training Facility Bonds �°� $ 1,148 $ - $ 1,148 1,115 - 1,115 1,086 - 1,086 1,098 - 1,098 1,107 - 1,107 1,112 - 1,112 1,107 - 1,107 Debt Service Principal I nterest � $ 5,100 5,270 5,460 5,660 5,875 6,105 165 460 465 475 490 500 Public Service Tax/lmprovement Revenue Bonds �d� $ 15,238 $ - $ 15,238 $ 575 15,243 - 15,243 235 15,486 - 15,486 250 18,273 - 18,273 110 17,381 - 17,381 355 17,027 - 17,027 360 17,493 - 17,493 375 18,118 - 18,118 385 18,194 - 18,194 320 18,280 - 18,280 330 $ - 1, 984 1,882 1,674 1,432 1, 896 �b� 889 641 $ - 629 623 614 603 591 577 $ 656 634 613 408 506 496 485 473 464 450 Coveraqe n/a 4.26 1.24 1.31 1.45 1.42 1.47 1.46 n/a 1.40 1.00 1.02 1.03 1.03 1.03 12.38 17.54 17.94 35.28 20.19 19.89 20.34 21.12 23.21 23.44 (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. (c) 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. 146 n � � � � � � � � � � � � L� � � � �J � � � � � � � � � �� , l J' � City of Clearwater, Florida Pledged-Revenue Coverage Last Ten Fiscal Years �a� (amounts in thousands) Less: Net Fiscal Gross Operating Available Year Revenues Expenses Revenues Water 8� Sewer Utility Revenue Bonds 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 2008 54,014 38,325 15,689 Gas Utility Revenue Bonds 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 2008 41,582 33,562 8,020 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 2008 13,159 6,927 6,232 Debt Service Princi al Interest $ 4,500 4,705 4,920 5,165 5,430 6,575 7,000 7,020 7,115 7,080 $ $ 540 560 580 610 630 675 770 825 855 765 105 120 125 570 580 925 985 1,015 $ 2,083 1,581 1, 359 1,118 3, 334 2, 964 2,892 2,711 3, 588 3,817 $ 1,565 1, 543 1,519 1,495 1,470 1, 370 1,228 1,195 1,162 741 $ 185 400 395 1,104 1,445 1,830 1, 906 1, 874 1, 845 Schedule 13 (continued) Page 2 of 2 Maximum Covera4e Coverage �b� 1.68 1.83 1.93 1.73 1.21 1.36 1.43 1.51 1.47 1.44 1.93 2.41 3.16 3.11 3.16 3.38 3.61 4.76 4.60 5.33 9.49 3.40 5.61 3.20 1.86 1.98 1.97 220 2.18 �a� During November 1999 the City issued $7,500,000 of Stormwater System Revenue Bonds, � consequently less than ten years of coverage is provided. �b� Maximum debt service coverage is presented for continuing disclosure on the Gas System � Revenue Bonds and is based upon the maximum annual debt service for outstanding bonds and parity bonds. � , 147 1.87 2.33 3.05 3.01 3.05 3.18 3.35 4.47 4.31 3.73 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) 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 3,680,552 33,361 44.0 16,323 4.7 2005 110,831 3,725,473 33,614 44.2 15,964 3.4 2006 110,602 3,980,566 35,990 44.2 15,696 2.9 2007 110,469 4,256,371 38,530 44.5 15,500 3.8 2008 110,251 4,569,683 41,448 44.5 15,482 5.5 (a) (b) (c ) (d) (e) Source is the University of Florida, Bureau of Economic and Business Research: April 1, 2008 estimate for current year and Florida Statisticai Abstract for prior years. Data is from per capifa personal income for Pineilas 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 and 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 1999 thru 2007 is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract, Annual Averages of the indicated fiscal year. Source for fiscal 2008 is the US Dept of Labor, Bureau of Labor Statistics, Tampa Metro Area, average for year ended September 2008. Note: Data is the latest published annual data available for an unspecified point in each year, not specifically September 30. �L•f:3 � Schedule 15 � City of Clearwater, Florida Principal Employersa, � Current Year and Nine Years Ago � 2008 b 1999 ` Percentage of Percentage of �Total County Total County Employer Employees Rank Employment Employees Rank Empioyment � Pinellas County School District 13,905 1 3.17% 1 Pinellas County Government 6,792 2 1.55% Home Shopping Club 4,000 3 0.91 % � City of St. Petersburg 3,500 4 0.80% Times Publishing Corp 3,187 5 0.73% � Raymond James 3,022 6 0.69% Nielsen Media Research 2,669 7 0.61 °/a , Morton PIanUMease Hospital 2,448 8 0.56% Bay Pines VA Medical Center 2,330 9 0.53% , Raytheon 2,200 10 0.50% � Totai Employment b�` 438,807 � a Data is for Pinellas County. City data is not available. b Source: Pinellas County Finance Department � ` Data for 1999 is not available. i 1 � i 1 149 Schedule 16 City of Clearwater, Florida Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Function/Proqram 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 Tota� Full-time Equivalent Employees as of September 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 289.9 291.9 293.4 301.9 287.0 286.4 287.3 307.5 322.0 327.3 171.5 180.5 186.5 199.7 200.0 202.0 202.0 215.0 221.0 212.0 399.4 411.0 408.4 408.4 397.6 399.9 405.9 407.9 407.9 393.9 33.0 33.0 34.0 36.0 36.0 36.0 36.0 38.7 38.7 34.0 65.0 65.0 67.0 72.0 73.0 73.0 71.0 74.3 74.3 69.0 41.0 47.0 52.0 52.3 64.3 67.3 67.1 69.5 66.5 64.5 9.0 10.0 4.0 4.0 4.0 4.0 3.0 3.0 3.0 3.0 83.3 79.0 80.4 81.4 83.4 95.9 95.9 94.9 93.9 88.4 194.9 203.0 207.8 209.6 217.0 241.9 235.4 239.8 240.8 221.8 154.0 154. 8 158.0 166. 0 170.0 169.0 169. 0 175.0 175. 0 168.0 95.0 95.0 91.0 90.0 90.0 90.0 90.0 90.0 90.0 90.0 105. 0 108. 0 108.5 109. 5 106. 0 107. 5 109. 5 112. 0 112.0 112.0 32.0 36.2 38.0 38.0 40.0 40.0 46.0 46.0 46.0 46.0 23.0 23.0 24.5 24.5 23.5 23.5 23.5 22.5 22.5 22.5 29.8 30.8 30.8 32.8 35.9 35.9 36.4 32.6 18.1 18.6 - - 2.0 1.0 2.4 2.4 1.9 1.9 1.9 1.9 9.7 9.6 9.6 9.6 14.8 20.8 20.8 20.8 20.7 20.7 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 1, 893.6 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 OfFce of Management and Budget 150 / City of Clearwater, Florida � Operating Indicators by Function/Program Last Five Fiscal Years* Fiscal Year Ended Sept 30: � 2004 2005 2006 _ Function/Proqram General government Planning � Commercial building permits issued 1,859 1,804 2,158 Residential building permits issued 6,347 7,364 6,321 Public safety Police � Average officer training hours 141 a 150 a 55 Totalvolunteertraininghours 1,229 1,017 932 Fire � Percentage of fire responses under 7.5 minutes 92% 91 % 90% Physical environment Square feet of sidewalks repaired/constructed 53,528 37,039 48,458 1 Transportation Miles of roadway resurfaced 13 12 10 Economic environment � Code enforcement cases brought to compliance 9,439 8,701 9,762 Human services City employees that mentor in area schools 28 30 38 Culture and recreation � Library system Libraryvisits 854,004 975,547 902,135 Circu lation 1,164,424 1,190, 577 1,193, 637 � Parks and recreation Recreation centervisitations 1,098,407 1,106,216 623,500 Athletic program visitations 266,276 511,620 515,100 Water and Sewer Utility , Water customers 40,235 40,178 40,467 Volume of water pumped (million gallons/day) 12.55 12.38 14.81 Sewer customers 33,234 33,305 33,279 � Miles of sewers cleaned 168 169 166 Gas Utility Number of customers 18,454 18,548 19,035 Solid Waste Utility � Solid waste tonnage collected and disposed 130,914 128,080 132,741 Stormwater Utility Number of equivalent residential units 98,621 97,669 97,297 � Recycling Utility Marketable tons recycled 14,443 14,324 14,433 � * Note: Only five years of data are available. Fiscal 2008 is estimated if not available. No operating indicators are available for marine, aviation, parking, downtown boat slips, and Harborview Center functions. aTraining hours for fiscal 2004 and 2005 included grant-funded training for Homeland Security. , � � � 151 Schedule 17 2007 2008 2, 086 1,690 5,120 4,616 60 1,010 90% 49, 000 14 8, 750 34 920, 000 1, 940, 000 630,000 521,750 40,407 13.94 33, 255 19,470 138,400 98, 513 14,180 60 1, 050 90% 49, 000 10 9, 500 34 925, 000 2, 000, 000 635, 000 525,000 40,131 12.16 33,146 19, 527 146,780 97, 986 14,700 Schedule 18 City of Clearwater, Florida Capital Asset Statistics by Function/Program Last Ten Fiscal Years As of September 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Function/Proqram Public safety Fire Stations 6 6 7 7 7 8 8 8 8 8 Police Stations 8 8 8 9 9 9 10 10 10 9 Transportation Paved streets (miles) 304 304 304 304 304 305 305 305 305 305 Culture and recreation Library system Volumes in collection (thousands) 466 497 534 546 557 557 570 565 590 601 Parks and recreation Parks acreage 1,309 1,366 1,370 1,370 1,370 1,370 1,374 1,400 1,400 1,400 Recreational paths (miles) 6 7 7 7 7 7 13 14 16 16 Playgrounds 30 30 31 31 31 31 32 33 33 29 Baseball and softball fields 37 37 36 36 36 35 35 35 35 32 Soccer and football fields 17 20 17 17 17 17 24 25 25 20 Recreation centers 9 10 10 11 12 12 7 7 7 7 Water & Sewer Utility Water mains (miles) 521 522 523 559 559 567 567 568 571 575 Sanitary sewer mains (miles) 322 323 322 363 363 363 363 365 368 362 Daily treatment capacity 29 29 29 29 29 29 29 29 29 29 (millions of gallons) Gas Utility Gas mains (miles) 621 631 653 669 686 729 753 786 816 814 Stormwater Utility Stormwater mains (miles) 123 123 123 147 147 147 147 148 156 146 Marine Boatslips 210 209 209 209 209 209 209 209 209 209 Aviation Airpark spaces 174 174 174 177 177 177 177 177 177 177 Parking system Parking spaces 3,786 3,773 3,753 3,538 3,615 3,653 3,686 3,636 3,322 a 3,633 aThe decrease in parking spaces for fiscal 2007 was loss of beach parking due to 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. 152 T__ � Z � r m D C � � Cn m n � O z � � ' ' , � � 1 i`J � , � � � � � � � 1 Single Audit / Grants Compliance 153 This Page lntentionally Left Blank 154 , � , r � � � � �� , � � � � LJ � �1 � ' � ' , � � � ' ' C� , 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 GovernmerrtAuditingStandards 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, 2008, which collectively comprise the City's basic financial statements, and have issued our report thereon dated March 20, 2009. 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 Govemment Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting , In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the , City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. u ' � , , , � Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency. 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. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2008-01 to be a significant deficiency in internal control over financial reporting. 155 A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City's internal control. Our consideration of 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. However, we believe that the significant deficiency described above is not a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City in a separate letter dated March 20, 2009. The City's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of City Mayor, City Councilmembers, 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. �4��r � � Tampa, FL March 20, 2009 156 , � � �l � � ' ' i � �J 1 � �J � � ' �� ' � r�, u � � �j � L� C� � � L�' �J � ' � 1 ' �� , � 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 Honorable Mayor, City Councilmembers, City Manager and City Management City of Clearwater, Florida Compliance We have audited the compliance of the City of Cleanivater, 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 Governor'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, 2008. 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, regulations, 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 Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Govemments, and Non-Profit Organizations and Chapter 10.550, Rules of the Auditor General. Those standards, OMB Circular A-133, and Chapter 10.550, Rules of the Auditor General, require that we plan and perForm the audit to obtain reasonable assurance about whether 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, 2008. 157 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. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies. A confrol 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. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2008-2 and 2008-3 to be significant deficiencies. We also noted certain other matters involving internal control over compliance and its operation that we have reported to the management of the City in a separate letter dated March 20, 2009. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood 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. However, we believe that the significant deficiencies described above are not material weaknesses. The City's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City's responses and, accordingly, we express no opinion on them. 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. r � Tampa, Florida March 20, 2009 ��j'�� "` �' • � 158 ' LJ ' � � � r , � � � i � � LJ � � ' ' , i City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance Projects For the Year Ended September 30, 2008 Federal Grantor / Federal Pass-through Grantor / CFDA Share of , Program Title Number Grant I.D. Number Expenditures , FEDERALAWARDS ' U.S. Department of Housing and Urban Development: Community Development Block Grant - Entitlement � Home Investment Partnerships Program Beachwalk Streetscape Improvements ' 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 Services Clean Vessel Act Program � 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 Clearnrater Human Trafficking Immersion , � � Office of Community Oriented Policing Services COPS 2004 Technology JAG Equipment Grant - FY2007 Operacion Apoyo Hispano Operacion Apoyo Hispano Passed thru Florida Department of Law Enforcement Edward Byrne Memorial Justice Assistance Grant Program Red Light Running Project ' Total U.S. DepaRment of Justice , , � 159 14.218 B-06-MC-12-0002 14.239 M-06-MC-12-0230 14.246 B-05-SP-FL-0429 15.616 LE644 15.916 LW549 16.000 FL0520300 16.320 2006-VT-BX-0007 16.320 2008-VT-BX-K101 16.320 16.710 2004CKWX0302 16.738 2007-DJ-BX-0139 16.738 2005-DJ-BX-0950 16.738 2006-DJ-BX-0587 16.738 2008-JAGC-PINE-5-Q9-173 16.738 $ 2,272,816 556,599 843,200 3,672,615 10,773 88,571 99,344 38,414 100,596 942 101,538 13,767 103, 586 30,115 13,227 31,992 178,920 332,639 City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance Projects - Continued For the Year Ended September 30, 2008 Federal Grantor / Pass-through Grantor / CFDA/CSFA Program Title Number Grant I.D. Number FEDERAL AWARDS (continued) U.S. Department of Transportation: Federal Highway Administration Passed thru Florida Department of Transportation: Clearwater Beach West Bridge Connector Passed through Florida Department of Environmental Protection Recreation Trails Program Kapok Spur Trail Total U.S. Department of Transportation U.S. Department of Treasury: Federal Forfeiture Sharing Total U.S. Department of Treasu U.S. Environmental Protection Agency: Brownfield - Federal Brownfields Assessment and Brownfields EPA Assessment Passed through FL Department of Environmental Protection: Kapok Wetland & Floodplain Restoration Project Total U.S. Environmental Protection Corporation For National and Community Services: Passed through FL Commission on Community Services Americorps Clearwater 2007 Americorps Clearwater 2008 Total Corporation for National and Community Services Total Federal Financial Assistance 160 20.205 FPN406539-0-58-01,Contract#AI915 20.219 DEP Agreement T2713 21.000 FL0520300 66.811 BL984872-99-4 66.818 BF-96486307-0 66.460 C9-9945-1503-0; FDEP G0087 94.006 Grant 06AFHFL0010008 94.006 Grant 06AFHFL0010008 , i Federal Share of Expenditures � � 2,644,723 � 40,000 , 2,684,723 ' 5,100 � 5,100 � 414,546 � 92,648 ' 15,631 522,825 � � 25,227 � 88,523 113,750 � a 7,430,996 � � ' , , �� City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance Projects - Continued For the Year Ended September 30, 2008 State Grantor / , Pass-through Grantor/ Program Title STATE FINANCIAL ASSISTANCE ,Fiorida Executive Office of the Governor, Office of Tourism, Trade, and Economic Development Brownfield Grant � Total Florida Executive Office of the Governor Florida Department of Environmental Protection: , Florida Recreation Development Assistance Program Countryside Park Improvements East West Trail Renovations ' Total Florida Department of Environmental Protection � Florida Department of Community Affairs: Florida Housing Finance Corporation State Housing Initiative Partnership Program (SHIP) Total Florida Department of Community Affairs , Florida Department of Transportation: SR60 Memorial Causeway Landscape � New FBO Building at Airpark SR60/Cleveland Street from Myrtle Avenue , Total Florida Department of Transportation Florida Department of Elder Affairs: ' Tobacco Settlement Trust Fund Passed through Area Agency On Aging of Pasco-Pinellas Communities for a Lifetime Mini Grant 'Total Florida Department of Elder Affairs Florida Department of Revenue: Phillies Stadium ' Total Florida Department of Revenue � 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. , , CSFA Number Grant I.D. Number 31.011 OT98-097 31.011 37.017 DEP Agreement F8111 37.017 DEP Agreement F7205 37.017 52.901 n/a 55.003 55.004 55.008 FPN:403730-1-54-01;A0058 FPN:41243119401; ANW13 FPN:411336-1-58-01 State Share of Transfers to Expenditures (a) Subrecipients (b) $ 32,890 $ 32,890 - 200,000 200,000 400,000 - 1,081,099 1,081,099 150,000 115,877 1,857,670 2,123,547 65.012 City of Clearwater CFAL 5,445 5,445 73.016 � 161 500,004 500,004 31,640 31,640 $ 4,142,985 S 31,640 5 11,573,981 , City of Clearwater, Florida � NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS For the Year Ended September 30, 2008 ' � 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 "City'). 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 Governmenfs and Non-Profit Organizations and Chapter 10.550, ' Ru/es 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. ' 162 � ' L J�'' � ' i C� �� ' �� ' , , , lJ ' � CJ ' ' 1 i , , � CITY OF CLEARWATER, FLORIDA Schedule of Findings and Questioned Cosfs For the Year Ended S�ptember 30, 2008 SECTION I. Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unqualified Internal control over financial reporting: - Material weakness(es) identified Yes X No - Significant deficiency(s) identified that are not considered to be material weaknesses X Yes _ None reported Noncompliance material to financial statements noted Yes X No Federal Awards Internal control over major federal programs: - Material weakness(es) identified Yes X No - Significant deficiency(s) identified that are not considered to be material weaknesses X Yes None reported Noncompliance material to federal awards Yes X No Type of auditor's report issued on compliance for major federal programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133 Yes X No Identification of major federal programs: CFDA Number Name of Federal Proaram Federal Program: 14.218 Community Development Block Grant Dollar threshold used to distinguish between Type A and Type B Programs $ 300,000 Auditee qualified as low-risk auditee? X Yes No 163 CITY OF CLEARWATER, FLORIDA Schedule of Findings and Questioned Costs (continued) For the Year Ended September 30, 2008 SECTION I. Summary of Auditor's Results (continued) Identification of major state projects: CSFA Number(s) Name of State Proiects State Projects: 55.008 County Incentive Grant Program 73.016 Facilities for New Professional Sports, Retained Professional Sports, or Retained Spring Training Facility Internal control over major State projects: - Material weakness(es) identified Yes X No - Significant deficiency(s) identified that are not considered to be material weaknesses X Yes 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 findings disclosed that are required to be reported in accordance with Chapter 10.550, Rules of the Auditor General X Yes No Dollar threshold used to distinguish between Type A and Type B Programs $ 300,000 164 LJ ' i� ' �I � , � ' CITY OF CLEARWATER, FLORIDA Schedule of Findings and Questioned Costs (continued) For the Year Ended September 30, 2008 SECTION II. Financial Statement Findings This section identifies the significant deficiencies, material weaknesses, fraud, illegal acts, and instances of noncompliance related to the financial statements that are required to be reported in accordance with Govemment Auditing Standards. Significant Deficiency Finding 2008-1 — Capital Assets Criteria: An organization should have sufficient controls and procedures over the tracking, recording and review of capital assets records, to the extent that such controls would be effective in preventing and detecting material misstatements. Condition: We noted instances during our testing of capital assets where certain completed projects were not capitalized upon completion in accordance with generally accepted accounting principles. Cause: The City does not have the proper procedures in place over the tracking, recording and , review of the on-going projects in their construction in progress records. In addition, the City does not have a policy that identifies the percentage of completion at which time a project should be capitalized. , �� Effect: Projects may not be properly capitalized or abandoned, if applicable, in accordance with generally accepted accounting principles. Recommendation: We recommend that a thorough review of on-going projects be performed to ensure that projects are capitalized, or abandoned, if applicable, at the appropriate time. The review should include the involvement of the engineering department, at least on an annual basis. In addition, we recommend that the City establish a policy to determine a percentage of completion threshold at which time projects will be capitalized. Management's Response: Management concurs and will establish a forma ' process, involving engineering department personnel, to properly capitalize activity for ongoing construction projects. Additionally the City will adopt establishing capitalization thresholds as recommended. ' � � �L J , 165 � I annual review and/or expense a formal policy CITY OF CLEARWATER, FLORIDA Schedule of Findings and Questioned Costs (continued) For the Year Ended September 30, 2008 SECTION III. Federal Award Findings and Questioned Costs Significant Deficiency Finding 2008-02 — Schedule of Expenditures of Federal Awards and State Financial Assistance Projects Criteria: OMB Circular A-133 paragraph .205(a) requires "the determination of when an award is expended should be based on when the activity related to the award occurs." Additionally, OMB Circular A-133 requires program income to be reported on the schedule of federal awards. Condition: We noted that the schedule of expenditures of federal awards initially excluded program income expended under the HOME and CDBG grant programs. Also, there were several instances noted whereby expenditures were not reported during the proper year in which the activity related to the award occurred. Questioned Costs: None Cause: The City does not have the proper procedures in place over the preparation and the review of the schedule of expenditures of federal awards. ContexbEffect: The schedule of expenditures of federal awards may not accurately reflect all grant expenditures for the fiscal year. Recommendation: We recommend additional procedures be established to ensure all grant expenditures and related program income are reported in the proper period. Management's Response: Management concurs and will implement additional procedures to ensure that grant expenditures and related program income are reported in the proper period. 166 , � L_ �� ' ' r-, i � � � , � ' ' � , , ' � ' � ' ' , , , ' � �J ' � � , � ' LJ � ' � ' , CITY OF CLEARWATER, FLORIDA Schedule of Findings and Questioned Costs (continued) For the Year Ended September 30, 2008 SECTION IV. State Award Findings and Questioned Costs Significant Deficiency Finding 2008-03 — Schedule of Expenditures of Federal Awards and State Financial Assistance Projects Criteria: The Rules of the Auditor General require that grant expenditures for state projects be reported on the schedule of state projects when the activity related to the grant award occurs. Additionally, the Rules of the Auditor General require program income to be reported on the schedule of state projects. Further, only state funds should be included as an expenditure on the schedule of state projects. Condition: We noted that the schedule of expenditures of state projects initially excluded program income expended under the SHIP grant program. It was also noted that there were several instances where expenditures were not reported during the proper year in which the activity related to the award occurred. Additionally, local expenditures were initially included as part of state projects expended. Questioned Costs: None Cause: The City does not have the proper procedures in place over the preparation and the review of the schedule of expenditure of state projects. Context/Effect: The schedule of expenditures of state projects may not accurately reflect all grant expenditures for the fiscal year. Recommendation: We recommend additional procedures be established to ensure all grant expenditures and related program income are reported in the proper period. Management's Response: Management concurs and will implement additional procedures to ensure that grant expenditures and related program income are reported accurately in the proper period. 167 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, 2008, and have issued our report thereon dated March 20, 2009. 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; the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of Sfates, Loca/ Govemmenfs and Non-Profit Organizafions. We have issued our Independent Auditor's Report on Compliance and Internal Control over Financial Reporting, Independent Auditor's Report on Compliance and Internal Control over Compliance Applicable to each Major Federal Program and State Financial Assistance Project and the Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 20, 2009 should be considered in conjunction with this management letter Additionally, our audit was General, which governs the Florida. This letter include auditor's reports or schedule: � I� � �� , u � �� I JI ' � �I CI conducted in accordance with Chapter 10.550, Rules of the Auditor ' conduct of local governmental entity audits performed in the State of s the following information, which is not included in the aforementioned Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. See Appendix B for an update on the prior year's recommendation. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit of the financial statements of the City, nothing came to our attention that would cause us to believe that the City was in noncompliance with Section 218.415 regarding the investment of public funds. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve the City's financial management. See Appendix A for the current year's recommendations to improve the City's financial management. 168 CJ ' ' � � � �'� V ' � rI �� , � � ' � Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of laws, regulations, contracts or grant agreements or abuse that have occurred, that have occurred, or are likely to have occurred, that have an effect on the determination of financial statement amounts that is less than material but more than inconsequential. In connection with our audit, we did not have any such findings. Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that are inconsequential to the determination of financial statements amounts, considering both quantitative and qualitative factors: (1) violations of laws, regulations, contracts or grant agreements, or abuse that have occurred, or are likely to have occurred and (2) control deficiencies that are not significant deficiencies, including but not limited to: (a) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the annual financial statements); (b) failures to properly record financial transactions; and (c) inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. See Appendix A for management letter comments with recommendations in connection with internal controls. Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. Such disclosure is included in the notes to the financial statements. ' Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement as to whether or not the City has met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes and identification of specific conditions met. 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). However, our audit does not provide a legal determination on the City's compliance with this requirement. , �� J 1 � � L� , � Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether 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 fiscal year ended September 30, 2008. Our comparison of the financial report filed with the Department of Financial Services to the City's 2008 audited financial statements resulted in no material differences. Section 10.554(1)(i)7.c., Rules of the Auditor General, require the scope of our audit include financial condition assessment procedures pursuant to Rule 10.556(7). 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 financial condition assessment procedures described above disclosed no deteriorating financial conditions. Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of management, and the Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties. ¢ �ii��l„iif � �[r • r Y ! Tampa, Florida March 20, 2009 169 City of Clearwater, Florida Appendix A- Management Letter Comments September 30, 2008 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 City of Clearwater, Florida (the "City"), as of and for the year ended September 30, 2008, which collectively comprise the City's basic financial 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 Home Grant Proqram Observation: Revenues should be recognized in accordance with the contract or grant agreement provisions and in accordance with generally accepted accounting principles. Certain grants may not have been thoroughly reviewed under the provisions of GASB 33; as such, revenue may not have been fully recognized in the appropriate fiscal year. Recommendation: We recommend that the City design and implement controls to ensure that revenue is recognized in the appropriate fiscal year based on grant or contract provisions and in accordance with generally accepted accounting principles. Management's Response: Management concurs and will implement additional controls to ensure that revenue is accrued in the proper year in accordance with GASB 33. Depreciation Schedules Observation: The City currently uses excel spreadsheets to calculate and track the depreciation for Buildings and Improvements Other than Buildings instead of using a fixed asset management system to pertorm this function. Recommendation: We recommend that the City use the available fixed asset management system to calculate and track the depreciation for all depreciable assets, to reduce the risk of error and material misstatement. Management's Response: Management concurs and will utilize the fixed asset management system to calculate and track depreciation for all depreciable assets, effective with fiscal 2009 170 , � ' ' l_J � , ' � � � ' ' �J , �l t � ' � � City of Clearwater, Florida � Appendix A- Management Letter Comments September 30, 2008 , Inter Department Communication , Observation: We noted that a non-cash contribution received in a prior year was not recorded in the financial records until the current year due to a lack of communication. Departments need to communicate financial related information to the City's Finance Department timely to ensure that transactions are reflected in the applicable fiscal year in accordance with generally � accepted accounting principles. Recommendation: We recommend that the City reiterate to all departments the importance of ' reporting financial information to the Finance Department on a timely basis to ensure proper recording. ' Management's Response: Management concurs and will reiterate to all departments the importance of reporting financial information to the Finance Department on a timely basis for � proper recording. � � C � � ' , , , � 171 ' City of Clearwater, Florida Appendix B- Management Letter Comments September 30, 2008 STATUS OF PRIOR YEAR RECOMMENDATIONS Prior Year's Comments Construction in Process Projects not capitalized upon completion Information Technology SDLC Methodology and Formal Resource Classification Other Observations and Recommendations Capital assets purchased with grant funding 172 Comment continues to be relevant � Comment has been addressed or is no longer relevant X �