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COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED SEPTEMBER 30, 2002'_. -' ' � , , � , ,L � � _. - - -. . .. _�� .. • �� ,.. _,... . t �� F �� `� � "I-'�, �� 3 � � a t •. �� p` '. � ':�{ Y �. . �;..��i _ . . . .. . . -. . . ' , .. �- . - ,I.,, ._ . ... _. . . . _ _ _"___ I I -_ . .._.. _. .. . ._ -. . ....._, _ I ��....'� ', , ' . - _ -� . -' : _ _'- - - ' .,. "_' " . . . ._ .._ _ , I ). I I . „ '_ ' _ ". '_ _ .. . _-. -.. - . . __ . . �I . � - ' _ ._ .� . .. , .�._, __ _ i- _. � .. . "�r�-, CITY OF CLE;ARWATER, FLORIDA Com�rehensive Annual Financial Re ort for Fiscal Year Ended September 30, 002 SRIAN J. ALINGST Mayor-Commissioner WHTI'NEY GRAY HOYT HAMILTON Vice Mayor-Commissioner Commissioner FRANK HIBBARD BILL JONSON Commissioner Coinmissioner BII.I. HORNE City Manager MARGARET L. SIMMONS, CPA Finance Director Prepared by: City of Clearwater Finance Department INTRODUCTORY SECTION �' � � � ' � � � � � � � � City of Clearwater, Florida Comprehensive Mnual Financial Report For the Fiscal Year Ended September 30, 2002 TABLE OF CONTENTS INTRODUCTORY SECTION: �'� Title Page and List of Elected and Appointed Officials ....................................................................................... i Letterof Transmittal ..........................................................................................................................................vii Certificate of Achievement for Excellence in Financial Reporting .................................................................... xi OrganizationalChart .........................................................................................................................................xii FINANCIAL SECTION: IndependentAuditor's Report ............................................................................................................................1 ManagemenYs 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 Govemmental 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 - Budgetand Actual — General Fund ...................................................................................................24 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — 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 Notesto Financial Statements .....................................................................................................................40 Required Supplementary Information - Pension Trust Funds: Schedulesof Funding Progress ..................................................................................................................73 Schedules of Employer Contributions .........................................................................................................74 Notes to Schedules of Required Pension Supplementary Information ......................................................75 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds ...................................................................80 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — NonmajorGovernmental Funds .............................................................................................................82 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Community Redevelopment Agency Special Revenue Fund ..............................85 Combining Statement of Net Assets — Nonmajor Enterprise Funds .........................................................88 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - NonmajorEnterprise Funds ...................................................................................................................89 Combining Statement of Cash Flows - Nonmajor Enterprise Funds .........................................................90 Combining Statement of Net Assets — Internal Service Funds ..................................................................94 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - IntemalService Funds ...........................................................................................................................95 Combining Statement of Cash Flows — Internal Service Funds ................................................................ 96 ifi � � � Cifiy of Clearwater, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2002 TABLE OF CONTENTS (Continued) Combining Statement of Fiduciary Net Assets .........................................................................................100 � Combining Statement of Changes in Fiduciary Net Assets .....................................................................101 Statement of Changes in Assets and Liabilities — Treasure�'s Escrow Agency Fund .............................102 Capital Assets Used in the Operation of Govemmental Funds: Comparative Schedules by Source ....................................................................................................105 ' Schedule by Function and Activity ......................................................................................................106 Schedule of Changes by Function and Activity ..................................................................................107 Supplementary Information: � Continuing Disclosure - Gas System Rev.enue Bonds, Series 1996A, 1997A&B, and 1998 ..................110 Continuing Disclosure — Water & Sewer Revenue Bonds, Series 1993, 1998, and 2002 ......................114 Continuing Disclosure — Stormwater Revenue Bonds, Series 1999 and 2002 .......................................117 Continuing Disclosure = Infrastructure Sales Tax Revenue Bonds, Series 2001 ...................................118 Continuing Disclosure — Improvement Revenue Refunding Bonds, Series 2001 ................................... FireServices Program ..............................................................................................................................119 STATISTICAL SECTION: Table I General Governmental Expenditures by Function - Last Ten Fiscal Years .........................................122 Table II General Revenues by Source - Last Ten Fiscal Years ........................................................................124 Table I I I Property Tax Levies and Collections - Last Ten Fiscal Years .............................................................126 Table IV Assessed and Estimated Property Valuations Last Ten Fiscal Years .................................................128 Table V Property Tax Rates - All Direct and Overlapping Governments - LastTen Fiscal Years ..................................................................................................................................130 TableVI Principal Taxpayers ..............................................................................................................................132 Table VII Ratio of Net General Bonded Debt to Taxable Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years .......................................................................................133 Table VIII Ratio of Annual General Debt Service to Expenditures - General Bonded Debt, General Revenue Cert'rficates, and Mortgages andNotes - Last Ten Fiscal Years ........................................................................................................134 Table IX Computation of Legal Debt Margin .......................................................................................................135 Table X Computation of Direct and Overlapping Debt .......................................................................................135 Table XI Revenue Bond Coverage: Water and Sewer Revenue Bonds Coverages ...........................................................................................136 GasRevenue Bonds Coverages .................................................................................................................137 Stormwater Revenue Bonds Coverages .....................................................................................................138 Infrastructure Sales Tax Revenue Bonds Coverages .................................................................................138 Spring Training Facility Revenue Bonds Coverages ...................................................................................139 Improvement Revenue Refunding Bonds Coverages .................................................................................139 Table XII Property Values and Construction — Last Ten Fiscal Years .................................................................140 Table XIII Demographic Statistics - Last Ten Fiscal Years ..................................................................................142 TableXIV Miscellaneous Facts ..............................................................................................................................143 SINGLE AUDIT / GRANTS COMPLIANCE SECTION: � Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards ............................147 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 ..................................................................148 `' Schedule of Expenditures of Federal Awards and State Financial Assistance for the Year EndedSeptember 30, 2002 ...............................................................................................................................150 Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance .......................................154 � Schedule of Findings and Questioned Costs for the Year Ended September 30, 2002 .......................................155 Management Letter as Required by Rules of the Auditor General ........................................................................157 ManagementAdvisory Comments .........................................................................................................................159 � v � r�„•"� � � ,JS�pL�� "E�-.: ,, ,,,,,,,...._ ��; �� ;�,, ,�,,,--�= � ' �' �� 9��:,;-,_,,,;,,�,�� -�qTER� ++'�� I <-<iill/) CITY MANAGER C ITY OF C LEARWATER POST OFFICE BOX 4%4H� CLEARWAI'ER� FLOa�DA 33758-4748 CITY F�AI.L, 112 SOUTH OSCEOLA AVENUE, CI.EARWATER, FLORIDA 33756 TELEPHONE �%2%� 5�2-4040 Fnx (727) 562-4052 � March 28, 2003 The Honorable Mayor-Commissioner, City Commissioners, � and Citizens of the City of Clearwater: The City of Clearwater Charter (Section 2.01(c)3), Florida Statutes, and various covenants relating to debt ,� and pension obligations of the Ciry require an annual audit of the Cit�s financial statements of all funds of the Ciry by a firm of licensed certified public accountants. These statements must be presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards. Pursuant to these requirements we hereby issue the � comprehensive annual financial report of the City of Clearwater for the fiscal year ended September 30, 2002. 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 intemal 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 Cit�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. � � � � The City's financial statements have been audited by Grant Thornton, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Ciry for the fiscal year ended September 30, 2002, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Citys financial statements for the fiscal year ended September 30, 2002, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of the report. The independent audit of the financial statements of the City was part of a broader, federally mandated "Single AudiY' designed to meet the special needs of federal and state grantor agencies. The standards goveming Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited governmenYs 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. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of ManagemenYs Discussion and Analysis (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. Bav,n J. AuNCSr, Mnroa-CoMMissionr:a WHITNEY GRAY, VICF, MAYOR-COMMISSIONER HOYT I IAb111.TON, COMb11SSIONER FRANK HIHBARD, COh1MISSIO�ER Bll.L JONSON, C0�IMISSIONER �11 �BQIJAI. EMPLOYMENI' AND AFFIRMATNE ACT[ON EMPLOYER�� Profile of the City of Clearwater, Florida Cleanivater is located on the Pinellas Peninsula midway 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. However, Clearwrater also enjoys a diversity of manufacturing, service industries, high-tech companies, and a significant retirement population. The Ciry provides municipal services of 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 declining commercial and residential neighborhoods; supervised recreation programs; public libraries; water supply and distribution; waste water collection, treatment, and disposal; natural gas distribution; solid waste collection and recycling; stormwater management; marina, airpark, convention center, and public fishing pier operations; and operation of the city-wide parking system. The annual budget serves as the foundation for the City's financial planning and control. Per City Code of Ordinances the City Manager is required to provide to the City Commission 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. 7he Commission is required to hold public hearings on the budget and to adopt a final operating budget and capita� improvement budget no later than September 30, the close to the City's fiscal year. The appropriated budget is prepared by fund and department. 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 Tampa Bay metropolitan area continues to resist national trends, with housing and job markets � stronger than most of the nation. The Tampa Bay region has an employed labor force of approximately 1.2 million, which is anticipated to grow at a rate of between 2 percent and 3 percent each year for the next several years. The unemployment rate for September 2002 was at 4.6 percent versus a national � average of 5.4 percent. The completion of the new "Memorial Causeway Bridge" should draw national attention to our beaches as the project proceeds towards completion, bringing additional tourists to the area. Business development interest in the Cit�s downtown and beach areas has increased significantly in recent years as property valuation increases reflect. We are also beginning to see renewed interest in � the Cit�is markets for multi-family and residential housing. Long-term Financial Planning � Construction of the new main library, the new Memorial Causeway Bridge, and the `Town Lake" project began during fiscal 2002. The new 90,000 square foot main library, overlooking the Intracoastal Waterway in downtown Clearwater, is destined to become a focal point of downtown redevelopment. � Expected completion is fiscal 2004. The new Memorial Causeway Bridge will be a fixed, high span "signature piece" bridge to replace the current drawbridge. Expected completion of the bridge is also fiscal 2004. Finally, the `Town Lake" project is a four acre stormwater treatment pond and park amenity in downtown Clearwater. The project is expected to be completed during fiscal 2003 and the � accompanying residential development should play a key role in downtown redevelopment. � viii � � � � � � �� J �' � r Another major project initiated during the current fiscal year is the construction of a new community sports complex to include a new spring training facility for the Philadephia Phillies major league baseball organization. Construction is scheduled for completion prior to the 2004 spring training season. Several projects also were undertaken in the North Greenwood community during fiscal 2002. These included a new recreation and aquatics center, branch library, and North Greenwood Avenue corridor enhancements. Finally, construction of a new Sand Key fire station was completed during fiscal 2002, with construction of a new "NorthwesY' fire station, along with replacement of a fire station displaced by a major retail mall, expected to commence during fiscal 2003. 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 Ciry 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 Qn 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 4.85% on its investments during fiscal year 2002. Current year investment income includes depreciation in the fair value of investments that will not be realized if the government holds the investments to maturity as intended. 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, properry 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 Ciry 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, 2002. Additional information on the Cit�s risk management activity can be found in Note IV - A of the notes to the financial statements. Pension and Other Postemployment Beneflts 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 Ciry. Both plans require benefits to be adjusted to equal fund assets provided by the defined contributions. Additional information on the Cit�s pension plans can be found in Note IV - E of the notes to the financial statements. �x Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for it's comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2001. This was the twenty-third consecutive year that the City has 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 also received the GFOA's Distinguished Budget Presentation Award for the fiscal year 2002 Budget document, making the sixteenth 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 Cirywide 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 Ciry's external auditors, Grant Thornton, LLP, for their advice and assistance in the preparation of this report. Finally, we would like to thank the City Commission for their interest, continued support, and leadership in planning and conducting the financial operations of the City in a progressive and responsible manner. Sincerely, � ' . i ia . orne, II City Manager �� "' IJ� uZ� Margaret L. Simmons, CPA Finance Director x � � � � � � L__! � � � � � � � � � � Certificate of Achievement for Excellence in Financial Keporting Presented to City of Clearwater, Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2001 A Ceriificate of Achievement for Fxcellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to govemment units and public employee retlrement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 6%� � President �v G� • C� �/ �� Executive Director xi x � b g � �°x � � � ��' � � � � �� Wo o � � � p �C C y p� �n a �, �' � �b a� A � � � �' . o A• A o� p. �. A p. � �, ly � �� . � �� ix o Cy G a � o � � n � � � � � �� E:� � � y � � �� a� � �� z i�° p�y �• ��. ,oyd �'d gb v,� a� � � � �. �°o �o r. � � �� t'�' � � �� a� �� . � �� . 0 � � �o A r,�. � R �i. � O � � �� y � I��I O N � � N � �r o r� �� r� � � y � �d � y FINANCIAL SECTION � � Accountants and Management Consultants � � � � � � Grant Thornton T Report of Independent Certified Putilic Accountants Honorable Mayor-Commissioner, City Commissioners and City Manager 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 Clearvvater, Florida (the City), as of and for the year ended September 30, 2002, 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 nonmajor governmental, nonmajor 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, 2002, as listed in the table of contents. We did not audit the financial statements of the Clearwater powntown Development Board, a component unit. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Clearwater Downtown Development Board, is based solely on the report of the other auditors. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. � We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Sfandards, issued by the Comptroller General of the United States of America. 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 and the report of other auditors provide a reasonable basis for our opinions. �� In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of CleanNater, Florida as of September 30, 2002, 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 addition, in our opinion, the financiat statements referred to above present fairly, in all material respects, the respective financial position of each nonmajor governmental, nonmajor enterprise, internal service, and fiduciary fund of the City of Clearwater, Florida as of September 30, 2002, 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. As discussed in Note 1 to the basic financial statements, effective October 1, 2001, the City adopted Governmental Accounting Standards Board Statement (GASB) No. 34, Basic Financial Statements - and Management's Discussion and Ana/ysis - for State and Local Governments, GASB Statement No. 37, Basic Financial Sfatements - and Management's Discussion and Analysis - for State and Local Governments: Omnibus, and GASB Statement No. 38, Certain Financial Statement Note Disclosures. � Suite 3850 �101 E. Kennedy Blvd Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com �Grant Thornton LLP US Member of Grant Thornton International � � In accordance with Government Auditing Standards, we have also issued a report dated January 10, 2003 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 grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The ManagemenYs Discussion and Analysis and the pension plan required supplementary information � on pages 3 and 73, respectively, are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Boa�d. We have � applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of ineasurement and presentation of the 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 financiat statements. The introductory section and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statement, and accordingly, we express no opinion on them. The accompanying schedule of federal and state financial assistance for the year ended September 30, 2002 is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audifs of States, Local Governments, and Non—Profit Organizafions, Section 215.97, Florida Statutes and Chapter 10.550 rules of the Auditor General, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Tampa, Florida January 10, 2003 /%�� L.C.../ 2 � � � � � � � � � � � � � � � � Management's Discussion and Analysis Management's Discussion and Analysis provides the reader with a narrative overview and analysis of the City's financial activities for the fiscal year ended September 30, 2002. The 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. This is the first year the City of Clean+vater has presented its basic financial sfafements under the new � financial reporting model required by the Governmental Accounting Standards Board (GASB) Statement Number 34. Because this new reporting model changes significantly not only the presentation of financial data, but also the manner in which the information is recorded, prior year � comparative information for this reporting period's MD&A has not been included. This deficiency is a transition issue and prior year comparative information will be provided in the future, effective with the fiscal year 2003 MD&A. � � � � � Financial Highlights The City's assets exceeded its liabilities at the close of fiscal year 2002 by $410.8 million (net assets). Of this amount, $160.9 million (unrestricted net assefs) may be used to meet the governmenYs ongoing obligations to citizens and creditors. The City's total net assets increased by $33.7 million (or 8.9%). The governmental net assets increased by $20.2 million (or 12.6%) while the business-type net assets increased by $13.6 million (or 6.2%). A significant factor in #he increase in governmental net assets was current year grants and donations related to major construction projects of approximately $8.5 million as detailed in the Government- wide Financial Analysis that follows. The increase in business-type net assets is primarily due to rate increases for Stormwater and Water & Sewer utilities, along with contributions and grants from other governments and developers, as discussed in the following analysis of business-type activities. At September 30, 2002, the City's governmental funds reported combined ending fund balances of � $102.9 million, an increase of $17.6 million (or 20.6%) in comparison with the prior year. Of this amount, $49.3 million (or 48.0%) is availab/e for spending at the governmenYs discretion (unreserved fund ba/ance). � �J � LJ � � � At September 30, 2002, unreserved fund balance for the General Fund was $12.7 million, or 15.8% of total general fund expenditures. Total actual revenues for the General Fund exceeded final budgeted revenues by $0.8 million, total actual expenditures were less than budgeted expenditures by $2.1 million, for a combined savings of $2.9 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. 3 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 governmenta/ 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, and parking system operations are reported as business-type activities. • The stafement of net assefs 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 statemenf 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 (known as the primary governmen�, but also the legally separate Downtown Development Board (DDB). The DDB, though legally separate, is included as a component unit because it was created by City ordinance and the City is thereby able to impose its will on the organization. In addition it is the opinion of the City's management that exclusion of the DDB from the City's financial statements would cause the financial statements to be incomplete. The Clearwater Redevelopment Agency (CRA), though also legally separate, is reported as part of the primary government due to the City Commission 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, propriefary, 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 ba/ances 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. 4 � � Because the focus of governmentai 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 govemmental 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 govemmental fund balance sheet and the governmental fund statement � of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and govemmenfal activities. � � � � � ' � � � � The City maintains fourteen individual governmentat 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 eleven governmental funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining stafements in the supplementary information section of this report. The City adopts annual appropriated budgets for the General, Special Development, and Community Redevelopment Agency funds. A budgetary comparison statement has 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, and convention center operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. Internal service funds that predominantly benefit governmental activities are the General Services and Central Insurance funds. These funds account for the City's building maintenance, custodial services, self-insurance program, risk management program, and employee group insurance, and have been aggregated and included within the govemmental activifies in the government-wide financial statements. Internal service funds that predominantly benefit business-type activities (or enterprise funds) are the Garage and Administrative Services funds. These funds account for the City's vehicle acquisition and maintenance, and various support activities including data processing, legal, telecommunications, postal, and printing services. They have been aggregated and included within the business-fype acfivities 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 major funds of the City. The remaining five non-major enterprise funds are combined into a single aggregated presentation in the proprietary fund financial statements. Similarly, governmental activity intemal service funds are aggregated into a single presentation, as are business-type activity internal service funds. 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. � � 5 Notes to the Financial Statements The notes fo fhe financial statemenfs provide additional information that is essential for a full understanding of the information provided in the government-wide and fund financial statements. The notes also present certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplemenfary information concerning the City's progress in funding its obligation to provide pension 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. Government-Wide Financial Analysis Because this is the first year to report under the new standard (GASB Statement 34), comparison to the prior year is not feasible. In subsequent years, this section will discuss and analyze significant differences. As noted earlier, nef assefs may serve over time as a useful indicator of a governmenYs financial position. In the case of the City, assets exceeded liabilities by $410.8 million at the close of the fiscal year ended September 30, 2002. The City is able to report 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. City of Clearwater, Florida Net Assets as of September 30, 2002 Primary Government Governmental Business-type Activities Activities Total Com onent Unit earwa er Downtown Development Board Assets Current and other assets $ 184,778,262 $ 150,759,253 $ 335,537,515 $ 349,061 Capital assets 130 450 254 287 720,791 418 171 045 - Total assets 5, 2, �� , , 0 9, Liabilities Current and other liabilities 52,132,626 10,311,507 62,444,133 206,289 Long-term debt outstanding: Due within one year 7,486,413 10,319,570 17,805,983 - Due in more than one year 75,474 516 187,211,953 262 686,469 94,179 Total liabilities 5, , 5 0, 3, , ,585 Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets 53,954, 081 93,694,326 147,648,407 62,452,451 39,724,619 102,177,070 63,728,429 97,218 069 160 946,498 � � , , , 48,593 � � A large portion of the City's net assets (35.9%) reflects its investment in capital assets (e.g., land, 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 (24.9%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($160.9 million) may be used to meet the governmenYs ongoing obligations to citizens and creditors. Changes in Net Assets The following table reflects the changes in net assets for the year ended September 30, 2002. Since � this is the first year the City has prepared financial statements following the GASB Statement 34 implementation, revenue and expense comparisons to 2001 are not available. In future years, when prior-year information is available, a comparative analysis of government-wide data will be presented. � � � � L_7 L� � � � � � Changes in Net Assets For the Year Ended September 30, 2002 Revenues Program revenues Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales taxes Franchise fees and utility taxes Othertaxes Other Total revenues Expenses General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture and Recreation Interest on Long-term Debt Water and Sewer Utility Gas Utility Solid Waste Utility Stormwater Utility Other Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets - beginning Net assets - ending Component Primary Government Unit eZ�er Downtown Govermental Business-type Development Activites Activities Total Board $ 17,973,384 $ 98,504,808 $ 116,478,192 $ - 6,111,789 - 6,111,789 2,882 9,787,351 4,300,651 14,088,002 - 30,322,411 - 30,322,411 172,045 14,663,969 - 14,663,969 - 25,359,362 - 25,359,362 - 9,153,976 - 9,153,976 - 5,184,077 3,083,160 8,267,237 68,322 118,556,319 105,888,619 224,444,938 243,249 11,646,741 - 11,646,741 - 45,135,649 - 45,135,649 - 2,886,504 - 2,886,504 - 10,120,224 - 10,120,224 - 3,230,524 - 3,230,524 - 555,395 - 555,395 - 22,230,715 - 22,230,715 - 2,962,849 - 2,962,849 - - 37,470,508 37,470,508 - - 23,573,611 23,573,611 - - 14,397,892 14,397,892 - - 5,458,556 5,458,556 - 11,057,400 11,057,400 191,277 98,768,601 91,957,967 190,726,568 191,277 19,787,718 13,930,652 33,718,370 51,972 375,677 (375,677) 20,163,395 13,554,975 33,718,370 51,972 159,971,566 217,082,039 377,053,605 3'379 � 7 Governmental Activities The increase in governmental acfivifies net assets totaled $20.2 million, or 60% of the total increase in net assets for the City. Key elements of this increase are as follows: • Contribution from Pinellas County of $5 million towards construction of the new Memorial Causeway Bridge. • Increase of approximately $3.8 million in the net pension asset due to legally required (per ordinance governing the plan) Employees' Pension Plan contributions in excess of actuarially required contributions. • Donations and grants for construction of the new Main & North Greenwood branch libraries of $2.4 million. • Contributions from Pinellas County and the State of Florida of $0.6 and $0.5 million, respectively, towards the construction of a new community sports complex to include a spring training stadium for the Philadelphia Phillies major league baseball organization. The cost of all Governmental activities this year was $98.7 million. However, as shown on the Statement of Activities, the amount that the City's taxpayers ultimately financed for these activities through taxes was only $64.8 million because some of the cost was paid for by those who directly benefited from the programs ($18.0 million) or by other governments and organizations that subsidized certain programs with grants and contributions ($15.9 million). ■ Expenses Expenses and Program Revenues - Governmental Activities ■ Revenues For the Year Ended September 30, 2002 $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 � � � � 5 � � �`�ec �� `O �� \Ge a�o �e� o,e �o�� c y�� c 0� Q� Gye '�� e � m°�� eJ �� c �`�� c°�\G�� J�� c� � °�o�� J � � Qr �cp GJ �05 �m �� Revenues by Sources - Governmental Activities For the Year Ended September 30, 2002 Property taxes 27% Capital grants ar contributions 8% Sales taxes 12% Operating grants and contributions 5% Business-type Activities Charges for services 15% Franchise fees and utility taxes 21% ther taxes 8% Net assets for business-type activities increased from $217,082,039 to $230,637,014. This increase totaled $13.5 million, reflecting a 6.2% increase in business-type activities net assets and 40% of the total increase in net assets for the Ciry. A major component of this increase was capital grants and contributions received from other governments and developers in the amounts of $2.3 million and $1.5 million for the water and sewer and stormwater utilities, respectively. These contributions must be used for capital purposes. Also contributing to the increase in business-type activities net assets was a$3.2 million increase in operating income over the previous year for the business-type activities of the major proprietary funds. Additional information regarding this increase in operating income is provided in the proprietary fund discussion that follows. � $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Expenses and Program Revenue - Business-type Activities For the Year Ended September 30, 2002 Water and Gas Utility Solid Waste Stormwater Other Sewer Utility, Utiliry Utility Revenues by Source - Business-type Activities For the Year Ended September 30, 2002 Charges for services 93% 10 ■ Expenses 1 ■ RevenuesJ Capital grants and contributions 4% Other 3% � � II u � � � � � � � � � � � � � � Financial Analysis of the City's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the City's govemmental 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 governmenYs net resources available for spend.ing 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, 2002, reflect a combined fund balance of $102.9 million, an increase of $17.6 million in comparison with the prior year. A total of $53.5 million, or 52%, of this represents unreserved fund balance, which is available for spending at the government's 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 ($35.0 million); 2) to pay debt service ($6.1 million); 3) for advances due from other funds ($2.0 million); or 4) for specific program purposes per grant restrictions ($6.2 million). The General Fund is the chief operating fund of the City. At September 30, 2002, unreserved fund balance of the General Fund totaled $12.7 million, with the remainder of the $15.7 million in fund balance reserved to indicate it has already been committed for purchase orders of the prior period ($1.0 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 15.7% of total general fund expenditures (before transfers) for the current fiscal year. The fund balance of the City's General Fund increased by $2.8 million during the current fiscal year. This increase was the composite result of actual revenues for the General Fund exceeding final budgeted revenues by $0.8 million and total actual expenditures less than budgeted expenditures by $2.1 million. The favorable results were spread across numerous revenue and expenditure categories. The fund balance of the Special Development Fund decreased from $8.2 million to $6.9 million during the current fiscal year. A key factor in the decrease was a decrease in interest earnings on investments of approximately $1.2 million. This decrease was a result of a significant decrease in interest rates during the current fiscal year, as well as a decrease in cash balances in the Special Development Fund. The Capital Improvement Fund has a total fund balance of approximately $34.6 million. The fund had a minimal current year increase in fund balance of $0.1 million 11 Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The 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$2.4 million increase in net assets. Operating revenues increased 5.9% over the previous year, partially offset by a 3.8% increase in operating expenses. A rate increase effective October 1, 2001 contributed to the increase in operating revenues. A significant contribution to the increase in net assets was receipt of $2.3 million in capital grants and contributions that must be used for capital purposes. The Gas Utility Fund realized a$2.6 million increase in net assets. Operating revenues actually decreased by 12.2% over the prior year due to depressed gas prices, but a 16.0% decrease in operating expenses resulted in a$0.5 million improvement in operating income over the prior year. The Solid Waste Utility Fund realized a$1.5 million increase in net assets. Operating revenues increased by 2.0% while operating expenses decreased by 0.2%. The Stormwater Utility Fund realized an increase in net assets of approximately $4.1 million. Operating revenues increased by 33.9% as a result of a 4.4% rate increase effective October 1, 2001, and an additional 35.0% rate increase effective January 1, 2002. The increase in operating revenues was partially offset by a 5.4% increase in operating expenses. Unrestricted net assets and changes in net assets of the proprietary funds for the current fiscal year follow: Fund Water and Sewer Utility Gas Utility Solid Waste Utility Stormwater Utility Other funds Totals Unrestricted Net Assets $19,788,491 9,498,817 6,426,639 7,888,733 10,873,333 $54,476,013 General Fund Budgetary Highlights Change in Net Assets $ 2,401,311 2,623,123 1,517,507 4,066,075 2,352,206 $12,960,222 Differences between the original budget for General Fund expenditures and the final amended budget were relatively minor ($149,500 decrease). Key elements of this decrease are as follows: $102,612 increase in general government budgeted expenditures, primarily due to an increase in outside legal counsel fees. $214,830 decrease in public safety budgeted expenditures, primarily due to approximately $200,000 of Fire Department budget that was moved to the interfund transfer out category. This budget transfer was made to provide capital improvement project funding for the purchase of land for a proposed fire station. Total actual revenues for the General Fund exceeded final budgeted revenues by $0.8 milfion and total actual expenditures were less than budgeted expenditures by $2.1 million. The budget savings occurred over numerous revenue and expenditure categories. 12 � � � u r � � � � � � � �� LJ lJ lJ � � LJ � Capital Asset and Debt Administration Capital Assets Capital assets include land, buildings and building improvements, improvements other than buildings, and machinery and equipment. Capital assets also include infrastructure assets added during the current fiscal year only. Infrastructure assets acquired prior to fiscal 2002 will be added when the City retroactively implements the infrastructure portion of the new financial reporting model in fiscal 2006. The infrastructure asset category includes long-lived capital assets, typically stationary in nature, such as roads, sidewalks, and bridges. At September 30, 2002, the City had investments in capital assets totaling $418,171,045 (net of accumulated depreciation). City of Clearvvater, Florida Capital Assets* September 30, 2002 Land Buildings Improvements Other than Buildings Machinery and Equipment Infrastructure Construction in progress Total * Net of accumulated depreciation Governmental Activities $ 40,913,067 27,638,084 37,443,985 11,828,096 1,076,247 11,550,775 130,450,254 Business-type Activities $ 19,878,550 15,967,876 188,580,263 16,088,995 47,205,107 287,720,791 Total $ 60,791,617 43,605,960 226,024,248 27,917,091 1,076,247 58,755,882 418,171,045 Net capital assets for the City's govemmental acfivities increased from $116.7 million to $130.5 million, reflecting an increase of $13.8 million for the current fiscal year. Key components of this increase include: • Acquisition of land in the amount of $3.9 million for a new community sports complex to include a spring training stadium for the Philadelphia Phillies major league baseball organization. • Expenditures of $3.5 million towards construction of a new North Greenwood recreation center and aquatics comptex, currently class'rfied as construction in progress. • Expenditures of $3.7 million towards construction of a new main library, currently classified as construction in progress. • A total of $1.2 million in construction in progress expenditures towards the construction of a � new Sand Key fire station. • A total of $1.0 million in construction in progress expenditures towards completion of a new North Greenwood branch library. � � � � Net capital assets for the City's business-type activities increased by $33.1 million from $254.6 million to $287.7 million during the current fiscal year. A key component was an increase of $21.8 million in water and sewer system construction in progress, primarily due to system improvements funded from the Water and Sewer Revenue Bonds, Series 2002. These improvements include expansion of the reclaimed water program; continued renewal and replacement as needed of the water, wastewater 13 collection, and water pollution control systems; and upgrading of the water pollution control system to meet regulatory requirements. Additional information on the City's capital assets can be found in Note III.0 on pages 51-53 of this report. Long-term debt The City's total long-term debt increased by $98.2 million, from $193.7 million to $291.9 million, or an increase of 51 % for the current fiscal year. Key factors in this increase included: � Current year issuance of $58,680,000 Water and Sewer Revenue Bonds, Series 2002, to pay for the costs of expansion of the City's water and sewer system. • Issuance during the current year of $24,685,000 Stormwater Revenue Bonds, Series 2002, to pay for the costs of capital improvements to the City's stormwater management system. • Current year issuance of $14,810,000 Spring Training Facility Revenue Bonds, Series 2002, to finance a portion of the cost of the acquisition, construction, rehabilitation, and equipping of a community sports complex and spring training facility to be used by the Philadelphia Phillies major league baseball team. The City's bonded debt as of September 30, 2002, consists entirely of revenue bonds (secured solely by specified revenue sources) with no general obligation debt or special assessment debt outstanding. Governmental activities revenue bonds totaled $73.2 million while business-type activities totaled $185.7 million. During the current fiscal year the City issued Improvement Revenue Refunding Bonds, Series 2001, to refinance previously outstanding special revenue bonds that primarily financed governmental activities. The result is expected to be a decrease in future debt service payments of $958,000. All revenue bond issues of the City have been rated either AAA by Standard & Poor's or Fitch, or Aaa by Moody's. The City's Charter limits legal indebtedness to twenty percent of the assessed valuation of non- exempt real estate. The current debt limitation is in excess of $1.0 billion, which is significantly in excess of the City's legal indebtedness at September 30, 2002. Additional information on the City's long-term debt can be found in Note III (F) on pages 57-61 of this report. Economic Factors And Year 2003 Budgets and Rates Factors considered in preparing the City of Clearwater's budget for fiscal year 2003 included: The unemployment rate for the Tampa Bay metropolitan area for September 2002 was 4.4%, an increase of 0.4% from the 4.0% rate for September 2001. The national rate for September 2002 was 5.6% versus 4.9% for September 2001. Total taxable assessed values for the City of Clearwater increased 9.2% for fiscal 2002. • A Florida Power Company rate decrease of 9% effective May 2002 will result in an estimated $1 million decrease in City franchise fee and utility tax revenues for fiscal 2003. 14 � � �� u � �` I �1 � � � � � �L � � � � � � � � � • Health insurance cost increases for City employees are expected to impact the fiscal 2003 � budget by over $1.5 million, of which approximately $741,000 impacts the General Fund. The fiscal 2003 City property tax millage was increased from 5.5032 mills to 5.753 mills, an increase � of 2498 mills or 4.5%. This increase will generate an estimated $1.3 million in additional property tax revenues for fiscal 2003, which will assist in offsetting the anticipated loss in franchise fees and utility tax revenues discussed previously. Budgeted Water and Sewer utility revenues for 2003 reflect a 7% � rate increase effective January 1, 2003, while fiscal 2003 budgeted Stormwater utility revenues reflect a 17% rate increase effective October 1, 2002. � 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 its finances 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 Ciry of Clearwater, Finance Department, 100 S. Myrtle � Avenue, Clearwater, Florida 33756-5520. � � � � � � J I �� J �� 15 � � � � �^� � u This Page Intentionally Left Blank � �� r � � n �� 16 � � �� r � Basic Financial Statements � � � � � � � i � � 17 ASSETS Cash and cash equivalents Restricted cash and investments Investments Total receivables (net) Internal balances Due from other governments Prepaid items Inventories Deferred charges Net pension asset Restricted assets: Cash and cash equivalents Investments Internal balances Other Capital assets: Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Construction in progress Total assets LIABILITIES Accounts payable and other current liabilities Accrued liabilities Accrued interest payable Due to other governments Deposits Deferred 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 payable Long-term debt and liabilities: Compensated absences Loans and leases payable Revenue bonds payable Claims payable Total liabilities NET ASSETS Invested in capital assets (net of related debt) Restricted for: City of Clearwater, Florida Statement of Net Assets September 30, 2002 Primary Government Governmental Business-type Activities Activities $ 137,996,235 $ 864,499 44,709,170 (21,351,074) 5,232,453 1,539,086 17,430 644,901 15,125,562 40,913,067 27,638,084 37,443,985 11,828,096 1,076,247 11,550,775 315,228,516 4,243,455 1,183,801 772,803 526,583 5,342 33,960,364 575,889 1,314,392 5,596,132 5,243,966 2,624,777 67,605,773 11,440,278 135,093,555 53,954,081 32,031,063 $ 6,090,652 8,080,242 8,840,232 535,595 4,891 1,241,106 1,739,727 6,320,420 70,346,294 2,926,200 12,510,842 91,989 19,878,550 15,967,876 188,580,263 16,088,995 47,205,107 438,480,044 3,122,335 507,475 91,383 126,039 15,392 1,394,554 1,232,234 3,822,095 174,684 3,076,018 7,068,868 1,590,647 7,016,060 178,605,246 207,843,030 93,694,326 Total 170,027,298 $ 6,090,652 864,499 52,789,412 (12,510,842) 5,768,048 1,543,977 1,258,536 2,384,628 21,445,982 70,346,294 2,926,200 12,510,842 91,989 60,791,617 43,605,960 226,024,248 27,917,091 1,076,247 58,755,882 753,708,560 7,365,790 1,691,276 864,186 526,583 131,381 33,975,756 1,394,554 1,232,234 3,822,095 750,573 4,390,410 12,665,000 6,834,613 9,640,837 246,211,019 11,440,278 342,936,585 147,648,407 Component Unit Clearwater Downtown Development Board 143,104 205,957 349,061 332 205,957 � 7,848 86,331 300,468 Capital projects 29,706,614 6,137,391 35,844,005 - Debt service 6,074,104 12,748,561 18,822,665 Renewal and replacement - 14,518,247 14,518,247 Employees' pension benefits 15,125,562 6,320,420 21,445,982 - Otherpurposes 11,546,171 - 11,546,171 Unrestricted 63,728,429 97,218,069 160,946,498 48,593 Total net assets $ 180,134,961 $ 230,637,014 $ 410,771,975 $ 48,593 The notes to the financial statements are an integral part of this statement. 18 Z Z � +n N� f� � p� � 7 Ol w S y� 7 y j � Q�iCTlin�� A1 N(A � 0 y� y m� � y� y� � � � � qcomm °c°:�c3—i•c�Dm�my � � 7 w� y C y��(p y X fA ��tyi� A7 y O y t�ii m � !/1 (D 3 y m � ' Z y w � 7 y ' ' � a � N m w y � N y EA 1 � � � N � 1 � w OtOO�P ?cO�IO�lAO tp-+CpW NOO�0oA00� W W�lp� A V iN�I1�lO0D�N ?�W VtJiNOOWONOpp�WN O�iO�icwO��1�OV A V AO�i� iO�CT�O V W NO�NOONtO� (fl O�IWN W � O (T� V W � W00(7i0 V �rop�vcr� � W V O�D �J � � � � � � � � A(O fJ� W V O {� J � � OV Wvp �1tGVOVAO V f�7t-J+fJ� 1A�(� V OOODO�iwN iWOOA N-�WON0ppIWN VOVt�O � �O�iV A�IAO�i� (li(TO W W N�NO�N�O� aA 1 � � w 1 � i �i N (f w(p (%i 1 "'� � 1 1 1 1 1 � �O V V W N W CO N W <O CO on v� w ° � a 3 0 � � � � � � C � C <D C7 '�'C7 � m .�.. W a � a� � � NJ Nv J J � (�9:�9 ww �l 1 T T �� 1 1 � � N N � � � i 6L � � �� w Q��y 3n=m�� vom°aCyw�o��o��v��m� �� G C� N� y m 7 O� (j �� 3� 7 �Q w�w=s� mo�y3oa��°—'mm� ,zy m�'�m��am�m�mf°'�^<� m � o � m � C m � � � 1 �• <. � 1• � � � � � � y `� � C �. m m � � 7 � � M. A � m N y m m '� .f�A R1 �� 7 7 ..7. y w .3.. Ol n m � • Q < � � y y � J O��(JiA W v �ItDOAW(flA N(7� fT l7� <O V V �VV0�VW0 fTCOA(TOD�tT ��O(J�fO� Oo�IOOfN� Gfi �O�D-+Of�� V .P�pTO V 00��I OVOA��O� -+OpD W(flf7iN0 NOD(JJ�Nf�Jt� V (i9 rn N � � 1 1 1 1 1 � � � A A N O�DO(O�O � Oo o w (7� 1 O � � � 1 1 � N � A V O � fA V � � � � � � ' f 1 O O N� W N pppp AOD� W Cn AAfTO<Oi00 vvcr�wirnQo A(p�A10W0� NNfDW W ODfD W Op N� W N W?(�It�pf�O�O�D �NV�W-��p�O Nt�OA�OW 0� W N�O W W Oo t0 �fi� t� O�DNN WONN � �I<ONUIN�OD�WP O�oNO�00�tn0� Of Oo V G.W (Ji N Cn O� V �cAOC7��AAAC�G� !� J i V W N J v � N�T tOO�D? W O AO�NO) O Wpp � N � O�t�OCO� ? 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N A W 1 O OVD O�i Oo t�J� N U�i � A�O W NtOfTODCG�<O(7� �Af�'CN�OOwDOJ cncov��ov�i H3 � � � � � � � f� p� � A N A W 1 O VpptOW�pU�AODp(�D -' W N�DC�TGNDf�OA(�Of�T VODAIV�p�NWOf V fnt�OvOW�O��oW� � 1 1 1 I 1 1 1 1 1 m X m 3 y m y f�D � z' m m y y O � A O 7 �� _ � m 3 C y w � y afC W � C 'O y � �; �� .� O 7 y N � � Z D °< :: C 3 � � y 7 7 w m � m W w � D �'. c 5 N O � < a y � � 3 m m � 7 � .y y 7 _-I Z O m W � _ � v aomo� ° � C� ? 3 � w �.O � � _ � � � � '11 O � `< n � N � � � O a � � a•*� 0 � �a; � M � 3 < � C�T � O -+ y /� O W N O O N � � � I J � � � � � I_n_J � I II 1.J � � � , � � � 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 Improvement liens Rehabilitation advances Property taxes Other Due from other funds (deficit in pooled cash) Due from other govemmental entities Investments Land held for resale Inventories, at cost Advances to other funds Total assets LIABILITIES Accounts and contracts payable Accrued payroll Accrued interest payable Due to other funds Due to other funds (deficit in pooled cash) Due to other governmental entities Deposits Construction escrows Deferred revenue Deferred assessment liens Advances from other funds Total liabilities FUND BALANCES Reserved for: Encumbrances Debt service requirements Advances and notes Grant programs Unreserved, reported in: General fund Special revenue funds Debt service funds Capital projects funds Total fund balances Totai liabilities and fund balances City of Clearwater, Florida Balance Sheet Governmental Funds September 30, 2002 Special General Development Fund Fund � � � Capital Other Totals Improvement GovernmeMal Governmental ' Fund Funds Funds $ 20,680 $ - $ - $ 100 $ 20,780 11,238,047 5,270,645 63,341,349 37,747,027 117,597,068 306,523 - - - 306,523 - 10,000 - 8,905,947 8,915,947 - - 86,801 - 86,801 _ - - 82,626 82,626 31,548,425 2,013,000 - - 33,561,425 1,454,648 - 180,000 109,202 1,743,850 - - 264,514 - 264,514 2,337,360 2,125,137 - 769,956 5,232,453 - - - 864,499 864,499 998,342 998,342 17,430 - - - 17,430 2,000,000 - - - 2,000,000 $ 48,923,113 $ 9,418,782 $ 63,872,664 $ 49,477,699 $ 171,692,258 $ 162,454 $ 1,121,359 24,925 3,663 5,342 31,852,141 49,850 33,219,734 1,019,607 2,000,000 - $ � 522,548 2,013,000 2,535,548 10,000 1,186,483 $ 28,016,807 86,801 29,290,091 14,369,954 1,657,907 $ 26,911 28,032 134,966 264,514 372 1,093,924 95,223 492,524 3,794,373 19,576,986 6,074,104 8,481,986 2,016,840 � � � ' � 3,006,844 ' 1,148,270 28,032 � 28,176,698 264,514 526,583 5,342 � 1,093,924 33,960,364 � 86,801 i 542,374 � '�I 68,839,746 I 34,966,547 6,074,104 10,491,986 2,016,840 � � 12,683,772 - - - 12,683,772 � - 6,873,234 - 4,462,750 11,335,984 - - - 1,802,529 1,802,529 - - 20,212,619 3,268,131 23,480,750 ' 15,703,379 6,883,234 34,582,573 45,683,326 102,852,512 $ 48,923,113 $ 9,418,782 $ 63,872,664 $ 49,477,699 $ 171,692,258 The notes to the financial statements are an integral part of this statement. 20 �� City of Clearwater, Florida ' Reconciliation of the Batance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2002 � i � � ' ' � ' �J � , � u � r 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 is $177,284,898, and the accumulated depreciation is $46,834,644. Total capital assets for governmental activities Less: Land included in governmental funds as "Land Held for Resale' The net pension asset related to governmental activities does not represent financial resources and is not reported in the funds. Accrued general long-term debt interest expenses are not financial uses and, therefore, are not reported in the funds. Special assessment liens receivable are not financial resources in the current period and, therefore, are reported as deferred revenues in the funds. The assets and liabilities of the General Services and Central Insurance 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 General Services and Central Insurance intemal 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 Add: Adjustment to reflect the consolidation of intemal service fund activities related to enterprise funds Interest revenues are not recognized in the current period because the resources are not available, therefore, are not reported in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and accordingly are not reported in the funds. Long-term liabilities at year-end consist of: Bonds payable Less: Deferred charge on refunding (to be amortized as interest expense) Less: Deferred charge for issuance costs (to be amortized over life of debt) Less: Issuance discount (to be amortized as interest expense) Add: Issuance premium (to be amortized as a reduction of interest expense) Capital lease purchases payable Compensated absences Total net assets of governmental activities The notes to the financial statements are an integral part of this statement. 21 $ 130,450,254 (998,342) 15,437,496 (177,618) (394,351) 25,682 97,313 678,453 (72,510,958) 414,182 644,901 46,321 (1,151,450) (3,939,169) (5,819,855) $102,852,512 129,451,912 15,125,562 (744,771) 86,801 15,666,975 11,998 (82,316,028) $180,134,961 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes In Fund Balances Governmental Funds For the Year Ended September 30, 2002 REVENUES Taxes: Property taxes Franchise fees Utility taxes Licenses, permits, and fees Intergovernmental: Sales tax Communications services tax Other intergovernmental Charges for services Fines and forfeitures Interest income 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) Transfers in Transfers out Long term debt issued Proceeds of refunding bonds Premium (discount) on revenue bonds issued Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balances Special Capital Other Total General Development Improvement Governmental Governmental Fund Fund Fund Funds Funds $ 28,420,086 $ 1,902,325 $ 7,086,842 - 10,402,178 - 3,283,304 704,659 - $ $ 30,322,411 7,086,842 10,402,178 3,987,963 6,206,416 8,457,553 - - 14,663,969 7,870,342 - - - 7,870,342 8,380,145 1,426,076 1,008,291 10,859,673 21,674,185 9,852,250 - - 576,714 10,428,964 1,763,054 - - 500,987 2,264,041 763,919 1,297,822 30,796 1,717,476 3,810,013 828,978 - 2,237,727 1,899,228 4,965,933 84,857,514 13,788,435 3,276,814 15,554,078 117,476,841 9,533,157 43,053,544 1,869,546 5,857,424 1,477,983 438,732 18,260,390 - 852,957 - 394,755 - 42,721 - 3,083,324 - 143,475 - 1,027,862 159,515 10,545,629 2,472,483 45,920,782 927,341 2,839,608 - 8,940,748 1,646,730 3,268,188 126,936 565,668 1,451,761 20,740,013 - - - 1,751,269 1,751,269 - - - 2,461,198 2,461,198 - - - 358,996 358,996 - - 11,658,112 7,936,162 19,594,274 80,490,776 - 17,203,206 19,292,391 116,986,373 4,366,738 13,788,435 (13,926,392) (3,738,313) 490,468 4,628,933 100,000 13,905,420 4,689,417 23,323,770 (6,163,998) (15,216,358) (412,340) (1,387,633) (23,180,329) - - 553,417 14,810,000 15,363,417 - - - 11,345,499 11,345,499 . - - 480,884 480,884 - - - (10,270,682) (10,270,682) (1,535,065) (15,116,358) 14,046,497 19,667,485 17,062,559 2,831,673 (1,327,923) 120,105 15,929,172 17,553,027 Fund balances - beginning, as restated (see Note II - C) 12,871,706 8,211,157 34,462,468 29,754,154 85,299,485 � Fund balances - ending $ 15,703,379 $ 6,883,234 $ 34,582,573 $ 45,683,326 $ 102,852,512 � The notes to the financial statements are an integral part of this statement. 22 , � 1 ' � , �� i , , ' � ' � � � LJ City of Clearwater, Florida Reconciliation of the Statement of Revenues, Expenditures, and Changes ln Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended September 30, 2002 Net change in fund balances - total govemmental funds Amounts reported for govemmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures while govemmental activities report depreciation expense to allocate those costs over the life of the assets. This is the amount by which capital outlays exceeded depreciation in the current period. Expenditures for capital assets Less current year depreciation In the Statement of Activities the loss on disposiUon 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 govemmental 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 govemmental funds are deferred and amortized in relation to the related debt in the Statement of Activities: Net discount (premium) on revenue bonds issued during current year Issuance costs for revenue bonds issued during current year Loss on current year refunding 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 Principal portion of payment to escrow agent for refunding of bonds Net pension asset is not a current financial resources and consequentiy is not reported in the funds. However it is an asset in the Statement of Net Assets. Current year change in the net pension asset Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as e�enditures in the govemmental funds. Current year change in compensated absences Amortization of deferred charge on refunding Amortization of issuance costs Amortization of bond discounts and premiums Accrued interest expense Special assessment revenues are deferred until collected in the govemmental funds. The revenues collected in the current year were prior year revenues in the Statement of Activfties. Interest revenues will not be collected for several months after the fiscal year and are not accrued in the govemmental funds. The net revenues of internal service funds (funds used to charge the costs of certain activities to individual funds) for govemmental activities are reported in the Statement of Activities but not in the govemmental funds. Total net assets of govemmental activities The notes to the financial statements are an integral part of thls statement. 23 $ 20,717,080 (5,833,254) $17,553,027 14,883,826 (926,029) (26,155,499) (553,418) (26,708,917) (480,884) 358,996 442,426 320,538 446,768 1,304,501 9,679,761 11,431,030 3,794,596 (270,983) (28,244) (90,494) 169,252 (642,659) (863,128) (18,098) 11,998 684,552 $ 20,163,395 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes (n Fund Balances - Budget and Actual (Non-GAAP Budgetary Basis) General Fund For the Year Ended September 30, 2002 REVENUES Taxes 9 Licenses, permits, and fees Intergovernmental Charges for seroices Fines and forfeitures Interest income Miscellaneous Total revenues EXPENDITURES Current: General government City Commission City Manager Legal City Clerk Public Communications and Marketing Finance Human Resources Non-Departmental Public Works Administration Pianning Internal Audit Office of Management & Budget Total general government Public safety Police Fire Development Services Total public safery Phys(cal environment Public Works Administration Total physicai environment Transportation Public Works Administration Total transportation Economic environment Economic Development Development Services Total economic environment Human services Human relations 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, as restated (see Note II - C) Fund balances - ending Budgeted Amounts Original 45,772,600 3,182,360 21,549,590 9,739,320 1,595,880 882,760 891.340 83,613,850 267,400 683,380 1,259,130 1,155,280 885,600 1,923,780 1,096,250 1,305,280 71,475 1,043,070 122,880 267,020 10,080,545 26,973,660 14,378,900 2,686,287 44,038,847 1,929,817 1,929,817 6,046,257 6,046,257 1,476,470 160,734 1,637,204 488,430 488,430 14,126,020 • 3,891,890 492,390 18,510,300 82,731,400 882,450 4,382,790 (5,578,240) (1,195,450) (313,000) Final $ 46,078,360 3,132,360 21,628,240 9,676,760 1,741,640 882,760 956.470 84,096,590 250,780 683,380 1,437,120 1,125,280 880,850 1,883,780 1,163,530 1,305,200 71,547 998,070 114,600 269,020 10,183,157 26,973,480 14,164,250 2,686,287 43,824,017 1,931,747 1,931,747 6,052,306 6,052,306 1,394,110 160,733 1,554,843 488,430 488,430 Variance with Final Budget Actual Positive Amounts (Negative) $ 45,909,106 $ (169,254) 3,283,304 150,944 22,456,903 828,663 9,852,250 175,490 1,763,054 21,414 763,919 (118,841) 828.978 (127.4921 84,857,514 760,924 217,879 641,122 1,421,575 932,979 752,687 1,787,562 1,114,726 1,293,975 69,341 897,683 101,484 272,114 9,503,127 26,424,346 13,973,671 2,596,272 42,994,289 1,872,179 1,872,179 5,865,674 5,865,674 1,340,806 155,348 1,496,154 448,703 448,703 32,901 42,258 15,545 192,301 128,163 96,218 48,804 11,225 2,206 100,387 13,116 (3,094) 680,030 549,134 190,579 90,015 829,728 59,568 59,568 186,632 186,632 53,304 5,385 58,689 39,727 39,727 14,158,120 13,968,172 189,948 3,891,890 3,809,106 82,784 497,390 500,500 (3,110) 18,547,400 18,277,778 269,622 82,581,900 80,457,904 2,123,996 1,514,690 4,399,610 2,884,920 4,442,390 4,628,931 186,541 (6,335,850) (6,163,998) 171,852 (1,893,460) (1,535,067) 358,393 (378,770) 2,864,543 3,243,313 - (1,052,477) (1,052,477) - 1,019,607 1,019,607 (313,000) (378,770) 2,831,673 3,210,443 � 12,871,706 12,871,706 12,871,706 - $ 12,558,706 $ 12,492,936 $ 15,703,379 $ 3,210,443 The notes to the financial statements are an integral part of this statement. 24 , II II ' ' I � 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, 2002 REVENUES Taxes Licenses, permits, and fees Intergovernmental Interest income Total revenues EXPENDITURES Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Debt proceeds Transfers in Transfers out Total other financing sources (uses) Deficiency of revenues and other sources over expenditures and other uses Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 1,881,620 $ 1,881,620 $ 1,902,325 $ 20,705 698,830 908,830 704,659 (204,171) 10,679,810 10,679,810 9,883,629 (796,181) 300,000 300,000 1,297,822 997,822 13,560,260 13,770,260 13,788,435 18,175 13,560,260 13,770,260 13,788,435 18,175 - - 100,000 100,000 (18,646,110) (20,295,395) (15,216,358) 5,079,037 (18,646,110) (20,295,395) (15,116,358) 5,179,037 (5,085,850) (6,525,135) (1,327,923) 5,197,212 Fund balances - beginning, as restated (see Note II - C) 7,446,380 7,446,380 8,211,157 764,777 Fund balances - ending $ 2,360,530 $ 921,245 $ 6,883,234 $ 5,961,989 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, 2002 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 Due from other funds Due from other govemmental entities Inventories, at cost Prepaid expenses and other assets Total current assets Noncurrent assets: Restricted: Equity in pooled cash and investments Interest receivable Due from other funds Investments Other Deferred charges Advancesto otherfunds 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 Utilfty $ 400 $ 700 $ 200 10,734,957 1,761,901 6,733,830 2,084,139 1,143,782 827,902 1,400,100 1,014,800 648,670 3,484,239 2,158,582 1,476,572 (242,238) (81,759) (39,813) 3,242,001 2,076,823 1,436,759 2,537,004 5,733,792 1,685,872 432,097 - - 533,521 495,601 - 4,891 - - 17,484,871 10,068,817 9,856,661 59,121,612 1,644,280 764,321 3,547,576 - - 2,916,713 - - 86,196 - - 981,123 311,888 - 1,921,307 1,044,652 1,113,370 41,310,216 327,285 1,041,913 138,118,555 33,988,772 2,459,795 248,003,298 37,316,877 5,379,399 265,488,169 47,385,694 15,236,060 The notes to the financial statements are an integral part of this statement. 26 Act�vities Fqnds Governmental Buslness-type Activltles - Activities - Stormwater Other Internal Service Internal Service Utllity Funds Total Funds Funds $ $ 22,967 $ 24,267 $ - $ 1,900 3,607,652 4,361,312 27,199,652 20,378,387 4,805,244 392,898 264,910 4,713,631 - - 557,500 134,325 3,755,395 - - 950,398 399,235 8,469,026 - - (21,194) (3,780) (388,784) - - 929,204 395,455 8,080,242 - - 1,073,346 3,670,911 14,700,925 932,160 474,847 - 103,498 535,595 - - - 26,409 1,055,531 - 185,575 - - 4,891 1,539,086 - 5,610,202 8,580,552 51,601,103 22,849,633 5,467,566 14,890,360 16,373 76,436,946 - - . . _ - 5,793 1,463,266 7,500,000 12,510,842 - - - 9,487 2,926,200 - - - - 86,196 - - 446,716 - 1,739,727 - - - - - 3,757,385 - 387,321 511,415 4,978,065 394,351 1,342,355 21,675,080 2,032,482 66,386,976 - 696,681 15,964,139 15,486,765 206,018,026 177,618 14,619,108 54,826,882 25,556,522 371,082,978 4,329,354 16,663,937 60,437,084 34,137,074 422,684,081 27,178,987 22,131,503 (Continued) 27 City of Clearwater, Florida Statement of Net Assets (Continued) Proprietary Funds September 30, 2002 LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued interest payable Accrued compensated absences Due to other funds Deposits Deferred revenue and liens Current portion of long-term liabilities: Revenue bonds Notes, loan pool agreement and acquisition contracts Total current liabilities (payable from current assets) Current liabilities (payable from restricted assets): Construction contracts payable Accrued interest payable Notes, loan pool agreement and acquisit(on contracts Current portion of long-term liabilities, revenue bonds Customer deposits Total current liabilities payable from restricted assets Total current liabilities Noncurrent liabilities: Revenue bonds (net of unamortized discounts and deferred amount on refunding) Notes, loan pool agreement and acquisition contracts Advances from other funds Claims payable Total non-current liabilities Total liabilities Net assets: Invested in capital assets (net of related debt) Restricted for: Business-type Enterprise Water and Sewer Gas Solld Waste Utillty Utility Utlllty 1,024,376 832,581 354,560 152,440 80,672 89,349 56,703 34,680 - 455,817 298,343 370,647 - - 82,474 905,000 577,500 - 112,468 - 39,371 2,706,804 1,823,776 936,401 918,656 - - 835, 616 122, 661 22, 383 4,525,000 52,500 - 1,888,655 1,169,119 764,321 8,167,927 1,344,280 786,704 10,874,731 3,168,056 1,723,105 121,559,184 26,463,537 - 362,580 - 46,826 - - 824,737 121,921,764 26,463,537 871,563 132,796,495 29,631,593 2,594,668 79,572,957 6,910,632 3,415,511 Revenue bond debt service and sinking fund requirements 12,739,153 - - Revenue bond renewal and replacement requirements 14,218,247 300,000 - Capital projects . - - �,685�5�2 Water and sewer impact fees 4,451,519 - - Employees' pension benefits 1,921,307 1,044,652 1,113,370 Unrestricted 19,788,491 9,498,817 6,426,639 Total net assets $ 132,691,674 $ 17,754,101 $ 12,641,392 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. Net assets of business-type activities The notes to the financial statements are an integral part of this statement. 28 , � ' ' � ' ' , , � � �� Activitles Funds Governmental Business-type Activitles - Activltles - Stormwater Other Internal Servlce Internal Service Utility Funds Total Funds Funds 42,898 32,276 119,395 717,372 47,684 137,853 59,602 126,039 15,392 2,971,787 402,421 91,383 1,382,055 142,076 126,039 15,392 142,687 35,531 97,313 150,548 105,054 383,276 300,000 - 7,956 1,490,456 - - 174,369 152,555 478,763 4,511 2,589,109 368,938 1,264,453 7,100,372 280,042 3,527,987 475,898 - 1,394,554 - - 251,049 525 1,232,234 - - - 3,636 3,636 - - 125,000 15,912 4,718,412 - - - - 3,822,095 - - 851,947 20,073 11,170,931 - - 1,220,885 1,284,526 18,271,303 280,042 3,527,987 31,366,361 76,163 179,465,245 - - � 479,027 421,207 1,309,640 21,171 5,710,931 4,119,204 4,943,941 271,070 - - - 11,440,278 ' 31,845,388 4,616,574 185,718,826 11,461,449 5,982,001 33,066,273 5,901,100 203,990,129 11,741,491 9,509,988 � 19,094,757 16,841,818 125,835,675 151,936 7,015,749 - 9,408 12,748,561 - - , - - 14,518.247 _ - 1,685,872 - - 4,451,519 - - 1 387,321 511,415 4,978,065 394,351 1,342,355 7,888,733 10,873,333 54,476,013 14,891,209 4,263,411 $ 27,370,811 $ 28,235,974 218,693,952 $ 15,437,496 $ 12,621,515 , 11,943,062 $ 230,637,014 � �� 29 City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2002 Operating revenues: Sales to customers Service charges to customers User charges to customers Billings to departments Rentals Total operating revenues Operating expenses: Personal services Purchases for resale Operating materials and supplies Transportation Utility service Dumping charges Depreciation Interfund administrative charges Other current charges: Professional fees Advertising Communications Printing and binding Insurance Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Provision for estimated uncollectable accounts Total other current charges Total operating expenses Operating income (loss) Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utillty Utlllty $ 37,172,766 $ 476,818 37,649,584 6,971,988 7,516,678 1,881,033 673,673 1,581,141 4,935,681 4,923,010 1,180,074 111,940 243,800 2,675,400 268,730 384,900 139,522 5,004,366 33,487,570 4,162,014 The notes to the financial statements are an integral part of this statement. 30 25,028,261 $ 15,818,099 1,495,353 103,825 26,523,614 15,921,924 3,719,794 4,306,332 10,639,840 9,050 170,862 328,626 462,294 2,702,492 70,503 56,768 45 4,691,486 1,277,342 220,499 1,811,020 1,162,770 88,831 14,244 1,112,239 5,093 137,953 54,226 6,007 - 101,780 120,500 228,836 68,171 52,388 1,750 100,800 38,426 297,890 129,580 1,543,544 - 101,037 43,519 3,771,305 475,509 21,923,005 13,953,532 4,600,609 1,968,392 i� � i� i� i� I ' I ' I , ' , f I I � I � I ' ' , , ' � Activities Funds Governmental Business-type Activities - Activltfes - Stormwater Other Internal Service Internal Service Utlllty Funds Total Funds Funds $ 6,719,943 $ 2,267,604 $ 87,006,673 $ - $ - 30,838 185,144 2,291,978 - - - 5,338,519 5,338,519 - - . . - 14,530,532 15,981,253 - 3,050,343 3,050,343 - 6,750,781 10,841,610 97,687,513 14,530,532 15,981,253 1,547,271 130,773 471,197 977,183 1,273,460 2,319,847 2,209,698 429,812 344,628 321,529 1,304,825 1,504,800 18,865,232 20,375266 2,941,106 4,654,284 2,029,941 4,691,531 8,715,530 10,675,060 1,783,774 205,649 97,059 353,016 19,021 5,134,656 1,966,455 276,595 86,854 90,983 3,620,735 257,560 148,473 1,677,653 3,109,275 57,055 362,342 - 35,485 1,152,817 150 525 17,686 74,479 396,284 50,734 1,315,805 - 6,670 12,677 2,016 42,148 48,400 125,780 640,260 12,572,840 923,964 165,772 201,754 3,339,933 587,132 593,841 - 164,377 218,515 6,856 145,843 60,843 67,549 536,348 50,044 135,982 63,350 85,570 961,290 57,160 358,180 - 18,445 1,561,989 - 6,248 30,352 23,549 337,979 - - 534,876 2,481,311 12,267,367 13,383,987 3,884,878 4,934,760 10,916,450 85,215,317 15,842,506 15,318,716 1,816,021 (74,840) 12,472,196 (1,311,974) 662,537 31 (Continued) City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets (Continued) Proprietary Funds For the Year Ended September 30, 2002 Nonoperating revenues (expenses): Eamings on investments Interest expense Amortization of bond discount and 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 previously reported, before adjustment for GASB 34 implementation Adjustment for implementation of GASB 34 - elimination of contributed capital Adjustment for change in accounting principle - change in capitalization thresholds Total net assets - beginning, as restated Total net assets - ending Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility 1,713,005 327,827 (3,576,551) (1,473,183) (282,822) (121,886) (45,669) (19,041) 89,423 366,635 �2,io2,s�a� (sis,648) 2,059,400 3,680,961 2,311,690 - (1,969,779) (1,057,838) 341,911 (1,057,838) 2,401,311 2,623,123 56,135,028 14,800,787 74,424,378 691,537 349,693 (78,621) (229,288) 167,671 209,455 2,�n,aa� (660,340) (660,340) 1,517,507 12,026,840 220,454 (269,043) (361,346) (1,123,409) 130,290,363 15,130,978 11,123,885 $ 132,691,674 $ 17,754,101 $ 12,641,392 Adjustment to reflect the consolidation of intemal 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 Activitles Funds Governmental Business-type Activtties - Activitles - Stormwater Other Internal S�vice Internal Service Utllity Funds Total Funds Funds 79,504 410,002 2,880,031 1,085,578 203,129 (408,995) (43,831) (5,581,181) - (362,075) (7,547) (1,484) (413,739) - - (67,039) 62,316 (298,721) - (134,771) 15,801 552,863 1,192,393 259 182,429 (388,276) 979,866 (2,221,217) 1,085,837 (111,288) 1,427,745 905,026 10,250,979 (226,137) 551,249 1,495,187 - 3,806,877 - - 1,591,060 1,678,670 3,269,730 155,710 904,166 (447,917) (231,490) (4,367,364) (105,683) - 2,638,330 1,447,180 2,709,243 50,027 904,166 4,066,075 2,352,206 12,960,222 (178,110) 1,455,415 256,794 9,625,875 23,117,504 17,053,628 (69,562) (795,736) 23,304,736 25,883,768 $ 27,370,811 $ 28,235,974 594,753 $ 13,554,975 33 14,930,149 7,545,802 734,864 3,804,563 (51,407) (184,265) 15,613,606 11,166,100 $ 15,437,496 $ 12,621,515 City of Clearwater, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2002 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 Operating transfers in Operating transfers out Interest paid 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 fixed assets Sale of fixed assets Proceeds from issuance of debt Payment of bond issue costs Capital contributed by: Other govemmental entities Property owners Developers Net cash provided (used) for 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 Utillty Utility Utility $ 37,568,185 $ 25,863,699 $ 16,071,288 (16,694,239) (13,948,055) (5,211,552) (7,551,374) (4,282,768) (4,564,498) (6,769,751) (2,944,000) (4,169,568) 89,423 366,635 167,671 6,642,244 5,055,511 2,293,341 (2,015,448) (1,057,838) (660,339) (1,004,123) (89,979) (253,850) (3,019,571) (1,147,817) (914,189) (5,224,870) (610,000) (37,295) (1,587,60� (1,497,947) (92,143) (20,847,468) (1,961,295) (146,425) 58,561,536 - - (523,228) - - 2,030,099 - - 270,340 - - 32,678,802 (4,069,242) (275,863) 2,036,106 327,827 349,693 2,036,106 327,827 349,693 38,337,581 166,279 1,452, 982 31,519,388 3,240,602 6,045,369 $ 69,856,969 $ 3,406,881 $ 7,498,351 $ 400 $ 700 $ 200 10,734,957 1,761,901 6,733,830 59,121,612 1,644,280 764,321 $ 69,856,969 $ 3,406,881 $ 7,498,351 The notes to the financial statements are an integral part of this statement. 34 --,I I I �J � � Activities Funds Stormwater Other Utility Funds Governmental Activities - Internal Service Total Funds Business-type ActivRles - Internal Service Funds $ 6,516,774 $ 10,775,203 $ 96,795,149 $ - $ - - - - 14,530,532 15,981,253 (453,927) (5,406,911) (41,714,684) (12,273,025) (6,225,263) (1,636,282) (2,453,476) (20,488,398) (1,900,920) (5,449,457) (1,883,129) (1,817,341) (17,583,789) (203,485) (882,071) 15,801 552,863 1,192,393 - 182,430 2,559,237 1,650,338 18,200,671 153,102 3,606.892 1,591,060 1,747,346 3,338,406 155,710 910,693 (513,847) (233,470) (4,480,942) (105,683) - - (24) (24) - - - 4,679,115 4,679,115 877,065 167,646 (1,567,266) (8,496,758) (11,411,976) (2,239,681) (377,572) (490,053) (2,303,791) (7,875,421) (1,312,589) 700,767 (258,805) (200,258) (6,331,228) - (273,518) (561,756) (48,744) (3,788,197) - (362,075) (15,847,271) (667,878) (39,470,337) (6,649) (4,205,378) - 4,031 4,031 259 269,578 24,472,641 13,442 83,047,619 25,682 889,629 (346,678) - (869,906) - - 1,927,520 - 3,957,619 - - 22,667 - 22,667 - - - - 270.340 - - 9,408,318 (899,407) 36,842,608 19,293 (3,681,764) 164,075 410,002 3,287,703 1,085,579 203,129 164,075 410,002 3,287,703 1,085,579 203,129 11,641,577 (1,142,858) 50,455,561 (54,615) 829,024 6,856,435 5,543,510 53,205,304 20,433,002 3,978,120 $ 18,498,012 $ 4,400,652 $ 103,660,865 $ 20,378,387 $ 4,807,144 $ $ 22.967 $ 24.267 $ - $ 1,900 3,607,652 4,361,312 27,199,652 20,378,387 4,805,244 14,890,360 16,373 76,436,946 - - $ 18,498,012 $ 4,400,652 $ 103,660,865 $ 20,378,387 $ 4,807,144 35 (continued) City of Clearwater, Florida Statement of Cash Flows (Continued) Proprletary Funds For the Year Ended September 30, 2002 Reconciliatlon of operating income to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Business-type Enterprise Water and Sewer Gas Soiid Waste Util(ty Utfllty Utility $ 4,162,014 $ 4,600,609 $ 1,968,392 Other revenue from nonoperating section of income statement Depreciation Non-cash land rental expense Provision for uncollectible accounts Capitalized labor and interest Construction in process reclassified as expense Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) in amount due from other governments (Increase) decrease in inventory (Increase) in prepaid expenses Increase (decrease) in accounts and contracts payable Increase (decrease) in deposits Increase (decrease) in deferred revenue (Increase) in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided by operating activities 89,423 4,935,681 139,522 (120,728) 300 366,635 �,zn,sa2 101,037 (351,433) 167,671 220,499 (23;641) 55,335 42,855 160,002 (156,961) - - (86,616) 11,353 - (227) - - (1,916,883) (38,354) 2,062 20,227 58,947 56,522 - (761,716) - (514,645) (282,804) (297,363) 35,802 31,040 39,197 2,480,230 454,902 324,949 i 6,642,244 $ 5,055,511 $ 2,293,341 Noncash investing, capital and flnancing activities: Gain (loss) on exchange of assets $ (45,669) $ (19,041) $ - Land contribution to general government assets $ - $ - $ 229�2$$ Change in fair value of investments $ (142,028) $ - $ - Contributed utilfties from developers $ - $ - $ - The notes to the financial statements are an integral part of this statement. 36 Activities Funds Governmental Buslness-type Activltles - Activities - Stormwater Other Internal Service Internel Service UHlity Funds Total Funds Funds $ 1,816,021 $ (74,840) $ 12,472,196 $ (1,311,974) $ 662,537 15,801 552,863 1,192,393 - 182,430 977,183 1,304,825 8,715,530 19,021 3,620,735 - 136,499 136,499 - - 30,352 (1,209) 246.061 - - - - (472,161) - - - - 300 - - (234,007) (62,071) (37,886) - 76 - - (156,961) - - - (10,423) (85,686) - (109,810) - - (227) (422,890) - 42,898 (82,848) (1,973,125) 1,986,092 (434,175) - (11,461) 124,235 - - - 12,632 (749,084) - - (112,001) (140,001) (1,346,814) (106,962) (351,683) 22,990 6,372 135,401 (10,185) 36,882 743,216 1,725,178 5,728,475 1,465,076 2,944,355 $ 2.559,237 $ 1,650.338 $ 18,200.671 $ 153,102 $ 3,606,892 $ (67,039) $ $ - $ $ - $ $ 11,250 $ 62,316 $ (69,433) $ - $ 229,288 $ (43) $ (142,071) $ - $ 11,250 $ 37 $ $ $ $ (134,771) City of Clearwater, Florida Statement of Flduclary Net Assets Fiduciary Funds September S0, 2002 ASSETS Cash on hand and in banks Equity in pooled cash and investments Managed investment accounts Interest and dividends receivable Accounts receivable Total assets LI ABI LITIES Accounts payable Deposits: Property owners Developers Total deposits Other miscellaneous payables: Special purpose funds Other Total miscellaneous payables Total liabilitles NET ASSETS Resenred for employee pension benefits Total net assets Penslon Trust Agency Funds Fund $ 17,948 $ - 4,095,119 284,162 396,897,295 - 2,001,094 - 41,643 - 403,053,099 284,162 407,002 - - 21,944 - 115,558 - 137,502 - 7,922 - 138,738 - 146,660 407,002 284,162 402,646,097 - $ 402,646,097 $ - The notes to the financial statements are an integral part of this statement. 38 �I � LJ � � , � � i � II �J � � � r City of Clearwater, Florida Statement Changes in Flduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2002 ADDITIONS Contributlons: Contributions from employer Contributions from employees State of Florida Total contributions Investment Income (loss): Net appreciation (depreciation) in fair value of investments Interest Dividends Less investment expenses: Investment management / custodian fees Net investment income (loss) Total addltions (reducttons) 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 penslon benefits: Beginning of year End of year The notes to the finanaal statements are an integral part of this statement. 39 Penslon Trust Funds $ 5,593,561 5,069,687 1,377,299 12,040,547 (40,705,797) 10,578,980 1 689 384 , � 1,921,382 (30,358,815) (18,318,268) 14,086,011 549,742 14,635,753 (32,954,021) 333,842 (33,287,863) 435,933,960 $ 402,646,097 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 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 Commission including a mayor-commissioner. The City has an estimated population of 109,000 and is located in the four-county Tampa-St. Petersburg-Clearwater Metropolitan Statistical Area (MSA), which has an estimated population of 2,414,900. 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 proprietary fund types in accordance with GASB Statement Number 20. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The City's more significant accounting policies are described below. In June 1999, the GASB unanimously approved "Basic Financial Statements and Management Discussion and Analysis for State and Local Governments" (Statement #34). This statement results in the most significant change in governmental financial reporting in over twenty years and is scheduled for a phased implementation (based on the size of the government) starting with fiscal years ending 2002. As part of this Statement, there are new reporting requirements for governments' infrastructure (roads, bridges, etc). This requirement permits an optional four-year delay for retroactive implementation of the infrastructure reporting requirements to fiscal 2006. The City has elected to implement the basic model for fiscal year 2002 and will defer implementation of the retroactive infrastructure reporting to fiscal year 2006. 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), discretely presented component units, the reporting entity, and related organizations. Blended Component Units — 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 Redevelopment Agency (CRA), created by authority of Florida Statute Chapter 163, Part III, and City of Clearwater Resolution 81-68, although it is legally separate, is reported as if it were part of the City (blended component unit) due to the City Commission serving as the governing board of the CRA. Separate financial statements for the CRA are not available. However financial statements for the CRA are included in the City's comprehensive annual financial report as a governmental special revenue fund. Discretely Presented Component Units — Component units that meet the criteria for discrete presentation in accordance with GASB Statement Number 14 are presented in a separate component units column in the government-wide financial statements in order to clearly distinguish the balances and transactions of the component unit from those of the primary government. The discretely presented component unit listed below is reported separately in the financial statements and in the related notes and required supplementary information. The Clearwater powntown Development Board (DDB) was created by authority of Florida Statutes 70-635 and 77-637, and City Ordinance 5347-93, but is legally separate from the City and governed by a separate board. The DDB was created by City ordinance and the City is thereby able to impose its will on the organization. Additionally the exclusion of the DDB's activities from the City's financial statements would, in the opinion of the City's management, cause the financial statements to be incomplete. Consequently the DDB is reported in a separate column in the government- wide financial statements as a discretely presented component unit of the financial reporting entity, in accordance with GASB Statement No. 14. The DDB's financial statements have been incorporated into the City's comprehensive annual financial report as a governmenta/ discretely presented component unit. Separate financial statements for the DDB can be obtained from the City's Finance Department located at 100 S. Myrtle Avenue, Clearwater, Florida. 40 � � L� � � ��, �' � � � � � � � � ' City of Clearwater, Florida ' Notes to the Financial Statements September 30, 2002 � � � � � � � � � � B. Basic Financial Statements Under the New Financial Reporting Model During the fiscal year ended September 30, 2002 the City implemented the new financial reporting model as of result of the following Statements of the Governmental Accounting Standards Board (GASB): GASB Statement No. 34, Basic Financia/ Sfatemenf-and Managemenf's Discussion and Analysis-for Stafe and Loca/ Govemments; GASB Statement No. 36, Recipient Reporting for Certain Shared Nonexchange Revenues, an amendmenf of GASB Stafemenf No. 33; GASB Statement No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governmenfs: Omnibus, an amendment of GASB Sfafements No. 21 and No. 34; and GASB Statement No. 38, Certain Financial Statement Note Disc/osures. 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 units using the accrual basis of accounting, which is similar to the accounting used by private-sector businesses. For the most part, the effect of intertund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. 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. A new 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 govemmental 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 Commission policy to be used for specific capital improvement projects. 41 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 The Capital Improvement Fund is used to provide combined accounting presentation for all City capital improvement projects except those financed from proprietary funds or bond proceeds where bond ordinance provisions require the segregation of bond proceeds in separate funds. The City reports the following major proprietary funds: The Water and Sewer Utility enterprise fund is used to account for the financing, construction, operation, and maintenance of the water and sewer services of the City from charges made to users of the service. The Gas 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 and Administrative Services internal service funds primarily benefit enterprise funds and are therefore included as business-type activities in the government-wide financial statements. The remaining internal service funds, the General Services and Central Insurance funds, primarily benefit governmental funds and are consequently included as governmental activities. Pension trust funds account for the financial operation and condition of the Employees' Pension Plan, the Firemen's Relief and Pension Plan, the Police Supplemental Pension Plan, and the Firefighters Supplemental Pension Plan. The Treasurer's Escrow Agency Fund accounts for the receipt, custody, and expenditure of monies held temporarily in an agency capacity for other parties. 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. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Properry 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 revenues to be available if they are collected within 90 days of the end of the current fiscal year. Expenditures generally are recorded when a liabiliry is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 42 � ' � � r -� LJ � � � � � � � � � � City of Clearwater, Florida Notes to the Financial Statements � September 30, 2002 � Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are ail 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 government. � � � � �' � I� � 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 Ciry 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 penalry, each fund's equity account is considered a cash equivalent regardless of the maturities of investments held by the pool. All individual fund cash equiry in a deficit (overdraft) position with respect to the consolidated cash pool is reclassified at year-end to short-term intertund payables to the Capital Improvement Fund. The Capital Improvement Fund is the fund selected by management to reflect the offsetting intertund 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 14 basis points (0.14%) less than the daily federal funds rate (1.75% at September 30, 2002), with no requirement for a minimum compensating balance. This account is collateralized through the State of Florida Public Deposits Program. Under City Charter and the current Investment Policy, adopted by the City Commission 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 Account in Local Banks, Federal Government Agency Securities, Municipal Bonds (other than City of Clearwater issues), State of Florida Bonds, and Municipal Bonds issued by counties in Florida. 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 pertormance measure standard has been established. The pertormance measure chosen is a weighted average of: the overnight interest rate; and three month, six month, one year, and three year � Treasury rates respectively. For the fiscal year ended September 30, 2002, the pertormance measure weighted average is 2.20%. The actual pooled cash eamings pertormance, before bank charges, was 4.85%. � 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 which apply 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 stocks, bonds, and notes of corporations listed on one or more of the recognized national stock exchanges. � � 43 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 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 intertund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All trade and properry 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 4.89%. 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 2001 thru 1997), and 100% of the receivable attributable to fiscal years 1996 and prior. Properry 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 commission 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. Uncolleated taxes receivable at year-end are recorded, with an appropriate allowance for estimated uncollectible amounts. The net amount deemed to be collectible but not current (not expected to be collected within sixty days after the close of the fiscal year) is shown as a deferred revenue in the appropriate fund. Additionally, taxes assessed for the following fiscal year are recorded as a receivable and a deferred revenue in accordance with Governmental Accounting Standards Board Statement No. 33. All delinquent property taxes, except those levied specifically for the restricted purposes of financing activities accounted for in the Special Development Fund, are recorded in the General Fund. Property tax revenues are recognized in the General Fund and the required transfers to the appropriate debt service or pension fund are recorded as operating transfers from the General Fund. The City is permitted by State law to levy ten mills without referendum. Additional millage not subject to the ten mill limitation is authorized if approved by referendum. The tax rate of 5.5032 mills for the year ended September 30, 2002 was unchanged from the September 30, 2001 rate. 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 fishing pier. Under the consumption method, the expenditure is recognized when the inventory item is sold (or consumed). Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 44 � � � � � � � � � � � � � City of Clearwater, Florida Notes to the Financial Statements � September 30, 2002 , �9 � r � � � � � 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, and assets of the Water & Sewer Utility, Gas Utility, Stormwater Utility, and Parking System funds restricted under the provisions of authorizing ordinances for revenue bonds to the payment of future revenue bond debt service, system construction, and renewals and replacements. 5. Capital assets Capital assets, which include property, plant, equipment, and certain infrastructure assets, (e.g. roads, bridges, and similar items) are reported in the applicable govemmental or business-type activities columns in the government-wide financial statements. However infrastructure assets are only reported for the current fiscal year. The City has chosen to defer implementation of retroactive infrastructure reporting to fiscal year 2005/2006 per the current year implementation of GASB Statement #34. Capital assets are defined by the City as assets with an initial individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of five years. Individual assets that cost less than $5,000, but that operate as part of a network system, will be capitalized in the aggregate, using the group method, if the estimated average useful life of the individual asset is five years or more. Additionally, higher thresholds for capitalization apply to the following categories: land improvements, $50,000; buildings, building improvements, and utility systems, $100,000; and infrastructure, $500,000. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense incurred by the City during the current fiscal year was $6,448,996. Of this amount, $160,073, $769,723, and $60,471 were included as part of the cost of capital assets under construction in connection with stormwater, water & sewer, and gas system projects, respectively. Properry, plant, and equipment of the primary govemment, as well as the component units, as applicable, 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 system infrastructure 25-40 Land improvements 5-50 Machinery & equipment 5-33 Vehicles 5-10 6. Compensated absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. Generally employees may accumulate vacation time not exceeding 360 hours and sick leave not exceeding 1,560 hours. Upon retirement from City service a qualified employee is paid for all vacation time not exceeding 360 hours and one-half of accumulated unused sick leave not exceeding 1,560 hours (i.e. maximum pay-out of 780 hours). The City accrues for alt earned but unused vacation pay up to the "cap" of 360 hou�s, 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. 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 45 City of Clearwater, Fiorida Notes to the Financial Statements September 30, 2002 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 �eported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 8. Fund equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Note II — Stewardship, Compliance, and Accountability A. Budgets and budgetary accounting Annual budgets are legally adopted for the City's General Fund, the Special Development Special Revenue Fund, and the Community Redevelopment Agency Special Revenue Fund. The City of Clearwater observed the following procedures in establishing the budgetary data for the General Fund and Special Development Fund, as reflected in the financial statements: On June 15, 2001, the City Manager submitted to the Clearwater Ciry Commission proposed budgets for the fiscal year commencing October 1, 2001 and ending September 30, 2002. Public Hearings were held on September 6, 2001, and September 20, 2001, at the Clearwater Commission Chambers to obtain citizen comments. On September 20, 2001, official budgets were legally adopted by Ordinance No. 6842-01. Subsequent quarterly budget amendments were adopted on April 4, 2002, (Ordinance 6956-02) and July 18, 2002 (Ordinance 6995-02). The final amended budget was adopted October 3, 2002 (Ordinance 7009-02). 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 Commission action. On the General Fund budgetary comparison statements, actual expenditures have been adjusted to include end-of-year encumbrances and to exclude beginning-of-year encumbrances to provide for 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 Commission. Upon detailed written request by the City Manager, the City Commission 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 Commission action described above. The annual budget for the Community Redevelopment Agency is adopted by the trustees of that agency in accordance with state law. The current year budget was officially adopted on June 18, 2001. The budget is adopted on a basis consistent with GAAP, the level of budgetary control is the total fund, and appropriations lapse at year-end. :f� � � � � � � � � � � � � l� � � � � City of Clearwater, Florida Notes to the Financial Statements � September 30, 2002 l _� � � � � j Budget amounts presented in the accompanying financial statements reflect all amendments adopted by the City Commission and the governing boards of component units. 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. The Clearwater City Commission also adopts budgets for the Enterprise Funds, all Internal Service Funds, the Capital Projects Funds, the Special Programs Fund, and the Local Housing Assistance Trust Fund. Budgetary comparisons for the Enterprise and Internal Service funds are not required by NCGA Statement No. 1 for the general purpose financial statements and are not included in this report. Budgets for the Capital Projects Funds, the Special Programs Fund, and the 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 Commission adopted budgets are integrated into the formal accounting system to allow for monthly comparison of projected and actual experience in all funds for which budgets are adopted. The annual budget for the Clearwater powntown Development Board (DDB), a discretely presented component unit of the City, is adopted by the members of that board in accordance with state law. The current year budget was officially adopted on September 13, 2001. Separate financial statements for the DDB can be obtained from the City's Finance Department located at 100 S. Myrtle Avenue, Clearwater, Florida. B. Excess of expenditures over appropriations The Communiry Redevelopment Agency Special Revenue Fund had intertund "transfers out° in excess of appropriations in the amount of $210,939 due to unbudgeted transfers to capital projects funds. C. Re-statement of prior year balances The following require restatement of prior year balances. All restatement amounts are detailed in the table below. 1. Elimination of contributed capital category The implementation of Governmental Accounting Standards Board Statement No. 34 (GASB 34) required the elimination of the coniributed capifal equity category and the reclassification of prior contributed capital balances as net assets. 2. Adjustment to fixed asset balances due to new capitalization policy Effective October 1, 2001, the City implemented a new capitalization policy that included increased thresholds for capitalization of fixed assets. This required a prior period restatement to reflect a decrease in general government capital assets and proprietary fund net assets for the previously capitalized assets that do not meet the revised capitalization thresholds. � 3. Adjustments to general fixed asset balances per GASB 34 implementation The City's current year implementation of GASB 34 resulted in a comprehensive reconciliation of fixed asset activity � for prior years. This reconciliation process identified buildings and improvements ofher than buildings that erroneously remained in the fixed asset balances though the assets were previously disposed of. The balances have been adjusted to reflect the deletion of these fixed assets. 4. Eliminatlon of expendable trust fund The implementation of GASB 34 eliminated the fiduciary fund category expendable trusf funds. In prior years the City � reported an expendable trust fund, the Rehabilitation Loan Fund. The City has merged the Rehabilitation Loan Fund net assets with the Special Programs Special Revenue Fund for current year reporting in compliance with the GASB 34 requirements. � 47 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 5. Sales tax revenue correction - Special Development Fund Due to the timing of sales tax receipts, the prior year's Special Development Fund sales tax revenue included revenues for the months of September2000 thru August 2001. The fund balance has been restated to reflect the September 2001 revenues and the current year revenues reflect October 2001 through September 2002 revenues. Restatement of Prior Year Balances Fund / Net Assets Restated Balance Balance 9/30/2001 Adjustment 9/30/2001 Governmental Activities: Special Development Fund: Sales tax revenue correction Other Governmental Funds Elimination of expendable trust fund Internal Service Funds - Governmental Activities Elimination of contributed capital category Implementation of capitalization policy General government capital assets Implementation of capitalization policy Adjustments to fixed asset balances Business-type Activities: Water and Sewer Utility Fund Elimination of contributed capital category Implementation of capitalization policy Gas Utility Fund Elimination of contributed capital category Implementation of capitalization policy Solid Waste Utility Fund Elimination of contributed capital category Implementation of capitalization policy Stormwater Utility Fund Elimination of contributed capital category Implementation of capitalization policy Other Enterprise Funds Elimination of contributed capital category Implementation of capitalization policy Internal Service Funds - Business-type Activities Elimination of contributed capital category Implementation of capitalization policy Fiduciary Funds: Elimination of expendable trust fund 7,446,380 25,365,889 14,930,149 206,486,402 56,135,028 14,800,787 12,026,840 256,794 9,625,875 7,545,802 440,322,225 48 764,777 4,388,265 734,864 (51,407) (40,060,378) (7,849,911) 74,424,378 (269,043) 691,537 (361,346) 220,454 (1,123,409) 23,117,504 (69,562) 17,053,629 (795,736) 3,804,563 (184,265) (4,388,265) 8,211,157 29,754,154 15,613,606 158,576,113 130,290,363 15,130,978 11,123,885 23,304,736 25,883,768 11,166,100 435,933,960 LJ City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � �� 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 equiry 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 which have deficit (overdraft) positions within the consolidated pool report the deficits as intertund payables to the City's Capital Improvement Fund. � Governmental Accounting Standards Board (GASB) Statement Number 3 requires certain disclosures for deposits and investments, including managemenYs determination of custodial credit risk, defined as follows: � LJ � � � �. � For deposits, the bank balance must be categorized as follows: Category 1: Insured or collateralized with securities held by the City or its agent in the City's name. Category 2: Collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. Category 3: Uncollateralized. For investments other than deposits, the following categories apply: Category 1: Insured or registered, or held by the City or its agent in the City's name. Category 2: Uninsured and unregistered, held by the counterparty's (purchasing agent's) trust department or � agent in the City's name. Category 3: Uninsured and unregistered, held by the counterparty, its trust department, or agent, but not in the Ciry's name. As described above, the City's depository banking agreement provides for the investment of all excess cash daily into a collateralized repurchase agreement, whereby all deposits deemed to be collected are automatically deposited. City deposits consist of relatively small cash balances held by Debt Service Trustees and Employee Retirement Custodians. The bank balances equal the carrying amount for these deposits, and managemenYs classification of custodial credit risk is indicated in the table below. Because these amounts are part of the trustee's and custodian's composite account, they are classified along with investments on the balance sheet. Managed mutual funds and guaranteed investment contracts are not susceptible to classification by risk category and are disclosed but not categorized pursuant to GASB Statement 3. Management has classified all other investments into Category 1, with the exception of certain employee retirement investments that are being held by the financial institution also serving as investment manager, and certain escrowed debt service investments that are being held by the financial institution from which they were purchased. The carrying value for all investments is fair value in accordance with GASB Statement 31. 49 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 Summary of deposits and investments, including management's assessment of custodial credit risk, follows: I. Cash On Hand and In Banks II. Consolidated Cash Pool and Component Unit Deposits and Investments: Cash in Banks U.S. Treasury Notes and Bills U.S. Agency Securities Money Market Mutual Fund Accrued Interest on Investments Less Outstanding Checks at 9/30/02 Total Cash Pool and Component Unit Equity " (includes Fiduciary funds cash pool assets) III. Construction and Debt Service Deposits and Investments: U.S. Treasury Notes and Bills Corporate Bonds IV. Employee Retirement Deposits and Investments: Money Market Accounts Domestic Equity Securities U.S. Government Bonds Domestic Corporate Bonds Mortgage Backed Bonds Asset Backed Bonds International Equity Mutual Fund Stock Mutual Fund Total Employee Retirement Investments Total Deposits and Investments, All Funds investment Fair Deposit Credit Credit Value Risk Category Risk Category 48,847 1 3,480,424 25,516,841 203,937,574 20,099,804 2,260,040 (4,355,001) 250,939,682 2,916,713 873,986 3,790,699 17,926,696 136,428,021 119,758,246 40,368,959 11,302,973 9,453,117 29,449,239 32,227,992 396,915,243 �, . .•, 1 1 n/a Na n/a 1 1 1 1 n/a n/a ` At September 30, 2002, the carrying amount of the primary governmenYs deposits totaled ($1,017,681) and the bank balance was $3,328,032. The carrying amount of the component unit's deposits totaled $143,104, while the bank balance was $152,392. B. Receivables Receivables as of year end for the City's individual major funds and nonmajor, internal service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, are segregated on the fund financial statements. The Mortgages, Notes, and Other Loans amount of $8,915,947 reported on the Governmental Funds balance sheet includes $8,491,986 of long-term loans receivable that are not expected to be collected in the next year. 50 � � � � � � � � � ►� � � � � � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 �_ J � � � � IJ � Li �� C. Capital assets Capital asset activity for the year ended September 30, 2002 was as follows: Governmental Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets, being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net Beginning Ending Balance Increases Decreases Balance $ 36,766,859 $ 4,319,194 $ 172,986 $ 40,913,067 759,064 10,791,711 - 11,550,775 37,525,923 15,110,905 172,986 52,463,842 38,519,374 1,751,332 2,154,461 38,116,245 52,055,559 399,827 - 52,455,386 31,925,006 2,385,417 1,137,245 33,173,178 - 1,076,247 - 1,076,247 122,499,939 5,612,823 3,291,706 124,821,056 (10,692,981) (1,244,155) (1,458,975) (10,478,161) (12,402,412) (2,608,989) - (15,011,401) (20,252,653) (1,999,131) (906,702) (21,345,082) 4 ,348,046 5,852,275 2,365,677 46,834,644 79,151,893 (239,452) 926,029 77,986,412 Governmental activities capital assets, net $ 116,677,816 $ 14,871,453 $ 1,099,015 $ 130,450,254 Business-type activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total capital assets, being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Beginning Balance Increases $ 10,982,922 $ 9,124,916 21,800,312 27,703,743 32,783,234 36,828,659 23,047,480 387,760 287,953,866 6,201,491 45,883,274 5,195,676 356,884,620 11,784,927 Ending Decreases Balance $ 229,288 $ 19,878,550 2,298,948 47,205,107 2,528,236 67,083,657 - 23,435,240 10,388 294,144,969 5,844,865 45,234,085 5,855,253 362,814,294 (6,470,739) (996,625) - (7,467,364) (98,191,373) (7,397,062) (23,729) (105,564,706) 30,392,045 4,082,473 5,329,428 29,145,090 5,054,157 12,476,160 5,3 3,157 142,177,160 221,830,463 (691,233) 502,096 220,637,134 Business-type activities capital assets, net $ 254,613,697 $ 36,137,426 $ 3,030,332 $ 287,720,791 51 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 Depreciation expense was charged to functions / programs of the primary govemment as follows: Governmental activities: General government Public safety Physical environment Transportation, including depreciation of general infrastructure assets Culture and recreation Capital assets held by the government's governmental internal service funds are charged to the various functions based on their usage of the assets Total depreciation expense — governmental activities Business-type activities: Water and sewer utility Gas utiliry Solid waste utility Stormwater utility Other � � � � $ 888,286 1,173,888 � 43,645 2,200,955 1,526,479 19,021 � 5,852,274 � $ 4,935,681 1,277,342 220,499 977,183 1,304,825 Capital assets held by the governmenYs business-type internal service funds are charged to the various activities based on their usage of the assets 3,620,735 Total depreciation expense - business-type activities 12,336,265 Construction commitments At September 30, 2002, material outstanding construction commitments were as follows: Project Community sports complex Community sports complex New main library New main library Water treatment facilities Sewer system pump station replacements Town Lake Kapok flood resolution Fire aerial equipment Traffic calming Beach streetscape North Greenwood corridor enhancements Long Center expansion Water system renewal & replacement Total Construction Commitments Fund Capital Improvements Spring Training Faciliry Revenue Bonds Construction Capital Projects 2001 Sales Tax Revenue Bonds Construction 2002 Water and Sewer Revenue Bonds Construction 2002 Water and Sewer Revenue Bonds Construction 2002 Stormwater Revenue Bonds Construction 2002 Stormwater Revenue Bonds Construction Capital I mprovements Capital Improvements Capital Improvements Capital Improvements Capital Improvements Capital Improvements 52 Construction Commitments Outstanding $ 6,290,950 11,209,050 8,209,395 7,527,000 4,813,133 1,663,684 1,635,948 1,596,613 879,011 554,969 990,579 789,877 989,600 744.756 $ 47 894.565 � � L � � � i 1 � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � � � � � � � i � Contributed Propertv: As of September 30, 2002, water lines having an estimated cost of $5,141,044, sanitary sewer lines having an estimated cost of $7,754,629, storm sewers having an estimated cost of $3,919,827, and land (for water quality and habitat restoration) having an estimated cost of $922,900 are reflected in the balances of the proprietary fixed assets. Assets Recorded Under Capital Leases: Assets recorded under capital leases and the accumulated amortization thereon (for proprietary fund assets) have been included under the appropriate categories in the summaries and schedules presented previously in this note in combination with similar information for owned assets. D. Interfund receivables, payables, and transfers 1. Intertund Balances As mentioned in Note (1 C), individual fund deficits in the consolidated cash pool have been reclassified as of September 30, 2002, 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 intertund receivables. The amounts of the reclassified cash pool deficits, as well as other individual fund intertund payable and receivable balances (current), at September 30, 2002, were as follows: Deficit in Other Fund Pooled Cash Receivables eneral Fun Special Revenue Fund: Community Redevelopment Agency Capital Project Fund: Capital Improvement Enterprise Funds: Water and Sewer Utility Gas Utility Solid Waste Utiliry Recycling Utility Stormwater Utility Marine and Aviation Parking System interna� 5ervice runds: Garage Administrative Services General Services Central Insurance 264,514 $ 264,514 6,084,580 5,733,792 1,685,872 1,067,672 2,536,612 989,073 9,114,166 179,526 295,321 304,567 627,593 $ 28,618,774 53 Deficit in Pooled Cash 264,514 Other Pa ables 24,925 134,966 28,016,807 82,474 59,602 300,000 $ 264,514 $ 28,618,774 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 Individual interfund advances (long-term) at September 30, 2002, follow: Fund General Fund Special Revenue Fund: Community Redevelopment Agency Enterprise Funds: Solid Waste Utility Marine and Aviation Parking System Internal Service Funds: Administrative Services Central Insurance Descriptions of long-term intertund loans: Advances to Other Funds $ 2,000,000 Advances from Other Funds $ 49,850 492,524 824,737 119,204 4,000,000 271,070 3,757,385 $ 5,757,385 $ 5,757,385 An interfund loan at the cash pool interest rate from the Central Insurance Fund to the Community Redevelopment Agency Fund for the purchase of a land parcel for resale to a developer. The initial loan amount was $1,171,328 and commenced during the fiscal year ended September 30, 2000. � � � � � ��_ I _; � An internal twenry year loan from the Central Insurance Fund to the Solid Waste Utility Fund for the construction of � administrative, container maintenance, and truck wash facilities, in addition to a paved yard for use by all cost centers of the Solid Waste Fund. The loan provides for 20 annual payments of $82,474 together with interest at the cash-pool rate, due on September 30 of each year, commencing September 30, 1994. The cost of the construction was $1,686,759. � An internal five-year construction loan in the amount of $298,011 from the Central Insurance Fund to the Marine and Aviation Fund for construction of two aircraft T-hangars and one corporate hangar at Clearwater Airpark. The loan � provides for payments due on September 30 of each year, bearing interest at the cash-pool interest rate and commencing September 30, 2001. Internal loans of $2,000,000 each from the General Fund and the Central Insurance Fund, at the cash-pool interest rate, to the Parking Fund to fund a contingency reserve per the terms of a development agreement. The Parking Fund is contributing an additional $2,000,000 to fund a totaf contingency of $6,000,000 for the repurchase of a land parcel if the proposed development does not occur by March 2006. The loans commenced on September 30, 2002. An internal five-yeac loan from the Central Insurance Fund to the Administrative Services Fund for the purchase and installation of a new Utility Customer Service system. The loan provides for five annual payments of $300,000 plus interest at the cash-pool rate, due on September 30 of each year. The loan commenced on September 30, 2000. 54 � � � ,� � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � u 2. Intertund transfers Interfund transfers for the year ended September 30, 2002, consisted of the following: Transfers to General Fund from: Capital Improvements Fund Water & Sewer Utiliry Enterprise Fund Gas Utility Enterprise Fund Solid Waste Utility Enterprise Fund Stormwater Utility Enterprise Fund Nonmajor governmental funds Nonmajor enterprise funds Total Transfers to Special Development Fund from: Capital Improvements Fund Transfers to Capital Improvements Fund from: General Fund Special Development Fund Nonmajor governmental funds Total Transfers to Nonmajor governmental funds from: General Fund Special Development Fund Capital Improvements Fund Gas Utility Enterprise Fund Nonmajor governmental funds Internal service funds Total � Transfers to Stormwater System Enterprise Fund from: Special Development Fund Nonmajor govemmental funds Total � Transfers to Nonmajor enterprise funds from: General Fund Special Development Fund Total � Transfers to intemal service funds from: General Fund Capital Improvements Fund Water & Sewer Utility Enterpnse Fund Gas Utiliry Enterprise Fund � Stormwater Utiliry Enterprise Fund Intemal service funds Total Total intertund transfers � � � � $ 41,199 1,557,250 1,016,354 660,340 216,240 906,060 231,490 � , 100,000 2,618,810 11,071,705 214 905 , � 3,152,117 1,060,593 132,330 4,709 259,668 8�, 1,584,060 7 000 , 178,670 1 500,000 , � 214,401 138,811 412,529 36,775 231,677 25 683 � 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 govemmental funds to debt service and capital improvements funds; and 4) transfer matching funds from the General Fund to various grant programs. 55 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 E. Leases The City purchases various equipment for governmental and business-type activities under lease purchase agreements. Obligations under lease purchase agreements are recorded at the present value of their future minimum lease payments as of date of inception. Leased equipment which has been capitalized as of September 30, 2002: Governmental Business-type Activities A�� Equipment $ 6,218,052 $ 16,246,635 Less: Accumulated Depreciation (1,981,773) (5,428,206) Total $ 4,236,279 $ 10,818,429 The future minimum lease payments under capital lease purchase agreements are as follows as of September 30, 2002: -. �. �. -. �, 2003 2004 2005 2006 2007 Governmental Business-type Activities A�t�lltie� $ 1,473,548 $ 3,428,772 1,371,457 2,901,837 906,510 2,431,294 414,246 1,481,610 69,765 601,116 2008 1,326 31,025 4,236,852 10,875,654 Deduction of the amount of imputed interest necessary to reduce net minimum lease payments to present value (297,683) (783,576) $ 3,939,169 $ 10,092,078 The City also leases personal computers under a three-year operating lease that is cancelable on an annual basis. Total lease payments for fiscal year ended September 30, 2002, totaled $134,109. 56 r City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � u �� F. Long-term debt 1. Revenue Bonds $46,445,000 Infrastructure Sales Tax Revenue Bonds, Series 2001, with $5,100,000 of principal due December 1, 2002, to $6,620,000 due December 1, 2009; interest at 4.00% to 5.00%. $11,470,000 Improvement Revenue Refunding Bonds, Series 2001, due in annual installments of $355,000 due February 1, 2003, to $820,000 due February 1, 2026; interest at 3.00% to 5.25%. $104,042 of the bonds outstanding as of September 30, 2002, are reported in the Parking System Enterprise Fund per the financing of parking system assets. Please reference the revenue bonds for business-type activities below. $14,810,000 Spring Training Facility Revenue Bonds, Series 2002, due in annual installments of $165,000 due March 1, 2003, to $470,000 due March 1, 2031, with a maximum principal of $845,000 due March 1, 2021; interest at 2.00% to 5.38%. Total revenue bonds for governmental activities $53,445,000 Water and Sewer Refunding Revenue Bonds, Series 1993; due in annual installments of $5,430,000 due December 1, 2002, to $295,000 due December 1, 2018, with a maximum principal of $5,715,000 due December 1, 2003; interest at 5.00% to 5.63%. $ 46,445,000 11,255,958 14.810.000 72.510.958 19,435,000 � $43,642,690 Water and Sewer Refunding Revenue Bonds, Series 1998, capital appreciation bonds with total maturiry amount of $81,785,000; $460,000 of capital appreciation serial bonds due December 1, 2004, to $5,780,000 due December 1, 2018, � with a maximum principal of $5,875,000 due December 1, 2011; interest at 4.20% to 5.22%. The balance outstanding as of September 30, 2002, includes capital appreciation bond accreted interest of $8,659,091. 52,301,781 � � � � � � $58,680,000 Water and Sewer Revenue Bonds, Series 2002, due in annual installments of $860,000 due December 1, 2003, to $3,695,000 due December 1, 2032; interest at 3.25% to 5.00%. $8,815,000 Gas System Revenue Bonds, Series 1996A, due in annual installments of $90,000 due September 1, 2003, to $395,000 due September 1, 2021; interest at 4.90% to 5.80°/a. $14,605,000 Gas System Revenue Bonds and Gas System Revenue Refunding Bonds, Series 1997A & Series 19976, due in annual installments of $505,000 due September 1, 2003, to $2,065,000 due September 1, 2027; interest at 4.20% to 5.30%. $8,020,000 Gas System Revenue Refunding Bonds, Series 1998; due in annual installments of $35,000 due September 1, 2003, to $50,000 due September 1, 2013; interest at 3.65% to 4.70%; additional annual installments of $595,000 due September 1, 2014, to $920,000 due September 1, 2023; interest at 4.70% to 5.00%. $7,500,000 Stormwater System Revenue Bonds, Series 1999, with $125,000 of principal due November 1, 2002, to $490,000 due November 1, 2029; interest at 4.00% to 5.75%. $24,685,000 Stormwater Revenue Bonds, Series 2002, due in annual installments of $440,000 due November 1, 2003, to $1,530,000 due November 1, 2032; interest at 3.00% to 5.00%. $11,470,000 Improvement Revenue Refunding Bonds, Series 2001, due in annual installments of $110,000 due February 1, 2002, to $820,000 due February 1, 2026; interest at 3.00% to 5.25%. A total of $11,255,958 of the bonds has been allocated to the general government activities per above. 57 58,680,000 8,360,000 12,375,000 7,895,000 7,275,000 24,685,000 104.042 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 Total revenue bonds for business-type activities Total revenue bonds 2. Restrictive covenants and collateral requirements 191,110.823 _. ._ : The Infrastructure Sales Tax Revenue Bonds are limited obligations of the Ciry payable solely from and secured by a lien upon and a pledge of the City's share of the proceeds derived by Pinellas Counry 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 Ciry 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 "Act"), and any successor provision of the law. The City further covenants to proceed diligently to pertorm legally and effectively all steps required on its part in the levy and collection of the Sales Tax Revenues and shall exercise all legally available remedies to enforce such collections now or hereafter available under State law. The Improvement Revenue Refunding Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of the Public Service Tax as authorized by Section 166.231, Florida Statutes, as amended. The pledge of the Public Service Tax does not constitute a lien upon any property of the City. The covenants of the ordinance authorizing the bonds include, among other things, an obligation of the City to do all things necessary on its part to continue the levy and collection of the Public Service Tax at the rate permitted by and in compliance with Section 166.231, Florida Statutes, and Article III, Chapter 44, Code of Ordinances of the Issuer, and any successor provision of law. The Public Service tax is a revenue of the General Fund. The Spring Training Facility Revenue Bonds are special, limited obligations of the City, payable solely from and secured by a lien upon and pledge of the (i) payments received by the City from the State of Florida pursuant to Section 212.20, Florida Statutes (State Payments); and (ii) payments received by the City from Pinellas County, Florida pursuant to the Interlocal Agreement dated December 1, 2000 (County payments). The pledge of the State Payments and County Payments does not constitute a lien upon any properry 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 1993 and Series 1998, and the Water and Sewer Revenue Bonds, Series 2002, are limited obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's water and sewer system (System). The pledge of the System's net revenues does not constitute a lien upon any property of the City. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix and maintain such rates, and collect such fees, rentals and other charges for the services and facilities of the System and revise the same from time to time whenever necessary which will provide gross revenues in each fiscal year sufficient to pay the cost of operation and maintenance of the system; one hundred fifteen percent (115%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds; plus one hundred percent (100%) of all reserve and other payments required to be made pursuant to the ordinances authorizing the bonds. The City further covenants that such rates, fees, rentals and other charges will not be reduced so as to render them insufficient to provide gross revenues for such purpose. The Gas System Revenue Bonds, Series 1996A; Gas System Revenue Bonds Series 1997A; Gas System Revenue Refunding Bonds, Series 19976; and Gas System Revenue Refunding Bonds, Series 1998; 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% of the cost of operations and maintenance of the system 58 � � � � � � L� � � � � � � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 �� _ ., L� � LJ � L� � � � � � � � � 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; and the Stormwater Revenue Bonds, Series 2002; are limited obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's stormwater management system (System). The pledge of the System's net revenues does not constitute a lien upon any properry of the City. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix, revise from time to time whenever necessary, and maintain and collect always such fees, rates, rentals and other charges for use of the products, services, and facilities which will always provide net revenues in each year sufficient to pay one hundred fifteen percent (115%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds. The City further covenants that such rates, fees, rentals and other charges will not be reduced so as to render them insufficient to provide revenues for such purpose. Annual debt service requirements to maturity for revenue bonds are as follows: Year Ending September 30 2003 2004 2005 2006 2007 2008-2012 2013-2017 2018-2022 2023-2027 2028-2032 2033-2037 Totals Revenue Bonds Governmental Activities Business-tXpe Actiuities Princi�al Interest Princi��l Interest $ 5,596,132 $ 3,019,735 $ 3,690,878 $ 8,430,983 6,065,179 2,796,166 5,185,012 8,798,192 6,273,477 2,534,986 5,400,129 8,546,648 6,491,170 2,235,993 5,661,286 8,242,209 6,685,000 1,945,793 5,908,385 8,019,911 23,520,000 6,033,086 33,329,833 36,197,155 5,355,000 3,936,689 41,952,497 27,589,244 6,195,000 2,482,086 33,642,803 17,656,493 4,580,000 1,083,244 27,365,000 11,161,214 1,750,000 194,038 23,750,000 4,279,460 - - 5,225,000 128,713 72,510,958 26,261,816 191,110,823 139,050,222 3. Advance refunding of bonds On October 15, 2001, the City issued $11.47 million in Improvement Revenue Refunding Bonds, Series 2001 with an average interest rate of 4.9 percent to advance refund $415,000 of outstanding Public Service Tax and Bridge Revenue Bonds, Series 1985, with an average interest rate of 9.1 percent; and to advance refund $9.77 million of outstanding Improvement Revenue Bonds, Series 1995, with an average interest rate of 5.9 percent. The net proceeds of $10.8 million, (after payment of $233,000 in underwriting fees, insurance, and other issuance costs and $867,000 deposited to the Reserve Fund) plus an additional $395,000 of debt service reserve transfers from refunded bonds, were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1985 and 1995 Series bonds. As a result, the Public Service Tax and Bridge Revenue Bonds, Series 1985, and the Improvement Revenue Bonds, Series 1995, are considered to be defeased and the liability for the bonds has been removed from the government-wide statement of net assets. The reacquisition price exceeded the net carrying amount of the old debt by $445,844. This difference, reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2025 using the effective-interest method. The City completed the advance refunding to reduce its total debt service payments over the next 24 years by $958,000 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $460,000. 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 $64,040,000 was outstanding at September 30, 2002. 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. 59 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 The following schedule reflects the outstanding principal on refunded bonds as of September 30: Governmental Activities: Utility Revenue Certificates, 1975 Utilities Tax and Bridge Revenue Bonds, Series 1977 Utilities Tax Bonds, Series 1977 Special Obligation bonds, Series, 1978A Utility Revenue Bonds, 1978 Public Service Tax and Bridge Revenue Bonds, Series 1985 Community Redevelopment Agency Bonds, Series 1986 Improvement Revenue Bonds, Series 1995 Total Governmentai Activities Business-type Activities: Public Service Tax and Bridge Revenue Bonds, Series 1985 Water and Sewer Revenue Bonds, Series 1988A Water and Sewer Revenue Bonds, Series 19886 Gas System Revenue Bonds 1991A Gas System Revenue Bonds 1994A Total Business-type Activities Total 4. New debt issues $ 1,200,000 1,370,000 2,380,000 20,000 13,490,000 521,600 1,030,000 9,580,000 29,591,600 793,400 15,320,000 4,705,000 5,520,000 8,110,000 34,448,400 64,040,000 � � � � � � L � � � New debt issues during the current fiscal year, other than debt refundings described above, are described below. On July 1, 2002, the City issued $58,680,000 Water and Sewer Revenue Bonds, Series 2002, to pay for the costs of � expansion of the City's water and sewer system. These bonds were issued at an average interest rate of 4.67% with a final maturiry of December 1, 2032. On September 1, 2002, the City issued $24,685,000 Stormwater Revenue Bonds, Series 2002, to pay for the costs of capital improvements to the City's stormwater management system. The bonds were issued at an average rate 4.32% with a final maturity of November 1, 2032. On September 1, 2002, the City issued $14,810,000 Spring Training Facility Revenue Bonds, Series 2002, to finance a portion of the cost 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 were issued at an average rate of 4.49% with a final maturity of March 1, 2031. � .� � � � � � � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � �' 5. Changes in long-term liabilities � � � � � � Governmental activities: Revenue bonds payabie Add (subtract) deferred amounts: For issuance premiums (discounts On refunding Net revenue bonds payable Lease purchase contracts Compensated absences Claims payable Governmental activity Long-term liabilities Business-type activities: Revenue bonds payable Less deferred amounts: � For issuance discounts On refunding Net revenue bonds payable � Lease purchase contracts Compensated absences � Business-type activity Long-term liabilities � � � � Beginning Ending Due Within Balance Additions Reductions B.�l�p�� One Year $ 56,481,988 $26,155,499 $(10,126,529) $ 72,510,958 $ 5,596,132 0 ) 793,497 480,884 (169,252) 1,105,129 - - (442,426) 28,244 (414,182) - 57,275,485 26,193,957 (10,267,537) 73,201,905 5,596,132 4,664,570 579,100 (1,304,501) 3,939,169 1,314,392 5,566,807 253,048 - 5,819,855 575,889 9,337,296 6,464,068 (4,361,086) 11,440,278 - $ 76,844,158 $33,490,173 $(15,933,124) $ 94,401,207 $ 7,486,413 $111,283,012 $83,489,501 $ (3,661,690) $191,110,823 $ 7,068,868 (816,452) (850,550) 75,940 (1,591,062) - (4,132,611) (3,418) 290,382 (3,845,647) - 106,333,949 82,635,533 (3,295,368) 185,674,114 7,068,868 9,328,613 3,679,995 (2,916,530) 10,092,078 3,076,018 1,242,907 522,424 - 1,765,331 174,684 $116,905,469 $86,837,952 $ (6,211,898) $197,531,523 $10,319,570 61 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 G. Segment information Generally accepted accounting principles require segment disclosure for nonmajor enterprise funds with revenue bonds outstanding. The following condensed statements are presented for the Parking System enterprise fund to satisfy this disclosure requirement. Condensed Statement of Net Assets Assets: Current assets $ Due from other funds Restricted assets Net pension asset Capital assets Total assets Liabilities: Current liabilities Current liabilities payable from restricted assets Noncurrent liabilities Revenue bonds payable Notes, loan pool agreement and acquisition contracts Advances from other funds Total noncurrent liabilities Total liabilities Net assets: Invested in capital assets (net of related debt) Restricted assets Unrestricted Totaf net assets Condensed Statement of Revenues, Expenses, and Changes in Net Assets Operating revenues Depreciation expense Other 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, as restated Ending net assets Parking System $ 4,052,060 (785,050) (2,241,976) 1,025,034 239,651 (31,597) 41,193 1,500,000 2,774,281 7,770,115 $ 10,544,396 Parking System 2,467,698 1,614,166 7,525,860 143,086 3,552,786 15,303,596 255,199 16,437 76,163 411,401 4,000,000 4,487,564 4,759,200 3,065,222 152,494 7,326,680 $ 10,544,396 � � � � i � � � � � Parking � Condensed Statement of Cash Flows System Net cash provided (used) by: Operating activities Noncapital financing activities Capital and related financing activities Investing activities Net increase (decrease) Beginning cash and cash equivalents Ending cash and cash equivalents 62 $ 1,368,020 (2,155,655) (311,975) 239,651 (859,959) 3,240,532 $ 2,380,573 � ;} � � � � � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � � H. Restricted assets 1. Water and Sewer Utility Fund Assets in the Water and Sewer Utility Fund restricted for construction include: Water Improvement charges, the use of which is restricted by the authorizing ordinance to the construction of additions and improvements to the water system; assets remaining at September 30, 2002, are: Equity in Pooled Cash and Investments Due from Other Funds � 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, 2002, are: � Equity in Pooled Cash and Investments Due from Other Funds 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, 2002: Water and Sewer Revenue Bonds Debt Service: � Equity in Pooled Cash and Investments Investments (U:S. Govemment Securities) Accrued Interest Receivable on Investments � 'J � Water and Sewer Revenue Bonds Renewals and Replacements: Equity in Pooled Cash and Investments Due from Other Funds Water and Sewer Revenue Bonds Construction: Equity in Pooled Cash and Investments Assets of the Water and Sewer Utiliry Fund restricted by agreement with other governmental entities for improvements to the water system: Due from Other Funds $ 931,637 513,135 3,519,883 601,827 15,557,592 2,916,713 86,196 8,224,696 2,428,013 28,999,149 4,601 � Assets of the Water and Sewer Utility Fund representing Customers' Deposits and therefore restricted, consisting entirely of Equity in Pooled Cash and Investments 1.888.655 � � � � � � 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, 2002: Gas System Revenue Bonds . Debt Service: Equity in Pooled Cash and Investments Renewals and Replacements: Equity in Pooled Cash and Investments $175,161 300.000 475•161 Assets of the Gas Utility Fund representing Customers' Deposits and therefore restricted, amounted to $1,169,119 at September 30, 2002, consisting entirely of Equity in Pooled Cash and Investments. 3. Solid Waste Utility Fund Restricted assets in the Solid Waste Utility Fund designated for construction represent customer deposits in the amount of $764,321 at September 30, 2002, and consisted entirely of Equity in Pooled Cash and Investments. 63 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 4. Stormwater Utility Fund Assets in the Stormwater Utility Fund restricted under the provisions of the ordinances for the issuance of revenue bonds consisted of the following at September 30, 2002: Stormwater System Revenue Bonds - Series 1999 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Stormwater Revenue Bonds - Series 2002 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Contributions from the Special Development Fund of proceeds from the Local Option Sales Tax, designated as Penny for Pinellas, restricted by voter referendum and terms of interlocal agreements between Pinellas County and the municipalities receiving tax proceeds to the construction of specific infrastructure capital improvements; assets remaining at September 30, 2002. are: Due From Other Funds Contributions from the Special Development Fund include proceeds restricted by City Commission policy for improvements to the stormwater drainage system within the City; assets remaining at September 30, 2002, are: Due From Other Funds 5. Parking System Assets in the Parking System restricted under the provisions of the ordinance authorizing the issuance of the Public Service Tax and Bridge Revenue Bonds as of September 30, 2002, consists of: Equity in Pooled Cash and Investments Investments Assets in the Parking System restricted under the provisions of a development agreement between Clearwater Seashell Resort LC and the City of Clearwater as of September 30, 2002, consist of: Due From Other Funds Contributions from the Special Development Fund include proceeds restricted by Ciry Commission policy for improvements to the stormwater drainage system within the City; assets remaining at September 30, 2002, are: Due From Other Funds Total restricted assets - Parking System Fund Note IV - Other Information � � � $ 278,205 � 2,576,989 220 294 � , 11,814,872 � � 1,379,206 � 84,060 � �16.353.� $ 16,373 � 9,487 � 6,000,000 � 1.500.000 � $ 7.525.860 A. Risk management 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 liabiliry and workers compensation excess coverage is $7,000,000 per occurrence (no aggregate applicable) with self-insured retention of $500,000. The property damage excess coverage is $240,000,000 at ninety percent of total insurable value with a$500,000 self-insured retention. Settled claims have not exceeded excess coverage in any of the past three years. 64 � � L�1 � � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 , � � � � � � � � � � � � 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 intertund premiums) are based on actuariat estimates of the amounts needed to pay prior and current year claims. The claims liabiliry reported at September 30, 2002, 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 issuanee 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 liabiliry amounts in fiscal years 2001 and 2002 were: Balance at October 1, 2000 Current year claims and changes in estimates Claim payments Balance at September 30, 2001 Current year claims and changes in estimates Claim payments Balance at September 30, 2002 Self Insurance $ 10,883,393 629,391 (2,175,488) 9,337,296 6,464,068 4,361,086 11,440,278 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 Ciry'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. Capitalization of interest Interest costs incurred in enterprise funds during construction are capitalized, net of interest income from the proceeds of related tax-exempt debt if applicable, as part of the cost of the related assets of the respective enterprise funds. Interest costs on long-term debt incurred and capitalized during the year ended September 30, were as follows: Total Interest Interest Costs Net Interest Business-type Activities: Costs Incurred Capitalized Expense Water & Sewer Utility Fund $ 4,346,274 $ 769,723 $ 3,576,551 Gas Utility Fund 1,533,654 60,471 1,473,183 Solid Waste Utility Fund 78,621 - 78,621 Stormwater Utility Fund 569,068 160,073 408,995 Non-major Enterprise Funds 43,831 - 43,831 Total business-type activities 6,571,448 990,267 5,581,181 D. Use of estimates The preparation of financial statements in conformity with generally management to make estimates and assumptions that affect the amounts accompanying notes. Actual results could differ from the estimates. [:�i accepted accounting principles requires reported in the financial statements and City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 E. Employee retirement systems and pension plans 1. Defined benefit pension plans The City contributes to two separate single-employer, self-administered defined benefit pension plans covering approximately three-fourths of all City employees. The Employees' Pension Plan covers all permanent, full-time City employees who successfully pass the required physical examination, except for firefighters employed prior to July 1, 1963, and certain nonclassified (primarily managerial) employees. The Firemen's Relief and Pension Plan covered eligible firefighters hired prior to July 1, 1963, and is closed to new entrants. Neither of these plans issues a stand-alone financial report. As indicated, both plans are self-administered, and the costs of administering the plans are paid from the respective plan assets. 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, the most recent of which was held on March 14, 2000. The plan provisions were changed effective January 1, 2000 to provide a 1.5% cost of living increase, an additional normal retirement age of 65 with 10 years of service, plus additional eligibilities and benefits for police and firefighters. The normal retirement benefit is a monthly benefit equal to 2- 3/4% of average monthly compensation for the final 5 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 Firemen's Relief and Pension Plan is authorized and operated under the provisions of Subpart B, Article I(Laws of Florida, Chapter 30658, 1955 and amendments), Sections 1 through 27 of the Municipal Charter and Related Law of the City of Clearwater and Chapter 26, Article III, Sections 26.50 through 26.52 of the Municipal Code of the City of Clearwater. The normal retirement benefit is a monthly benefit in the amount of 50% of the prevailing wage at the date of retirement of the lowest rank held by the participant during the three years immediately preceding retirement plus 2% of such prevailing wage for each year of service in excess of 20 years up to a maximum of 60%. Participants retiring at the age of 65 years are entitled to a benefit of 60% of the prevailing wage of the lowest rank held by the participant during the three years immediately preceding retirement. The ending rate of pay specified above may not exceed the highest rate of pay for the rank of Captain. Eligibility for normal retirement occurs upon completion of 20 years of service or attainment of age 65. The monthly benefits are payable for the life of the participant and continue, after the participanYs 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 �east 12 years of service. The plan provides for post retirement cost of living increases equal to the increase in the prevailing wage for the rank at which the participant retired with a limitation for those retiring on or after January 1, 1972, of 100% of the initial pension benefit for total cost of living increases. Participating employees are required to contribute 6% of their salaries up to the equivalent of the salary of a fireman holding the rank of Captain. The City is required to contribute a sufficient additional amount to maintain the actuarial soundness of the plan for a period of 35 years commencing January 1, 1972; this contribution is based upon, but not limited to, the amount of property tax that a levy of 0.6 mills would produce. .. � L� � � � � City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 As of the January 1, 2001, actuary valuation date (upon which the current fiscal year funding is based), the membership of the plans is as follows: Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not yet receiving them Active employees: Fully vested Nonvested Total number of participants Employees' Pension Plan 533 40 711 827 2,111 Firemen's Relief Pension Plan 48 48 For the fiscal year ended September 30, 2002, the covered payroll for the Employees' Pension Fund is $61,154,840. The � City's total payroll for the same period is $71,987,553. Annual pension cost and contributions information for the last three fiscal years follows: � � � � � � � � Employees' Pension Fund Year Annual (a) Net Ended Required Employer Percent Pension Sept 30 Contribution Contributions Contributed Asset 2000 $ 0 $ 4,419,723 N/A $ 12,442,354 2001 $ 174,377 $ 4,255,484 2440% $ 15,845,929 2002 $ 0 $ 4,439,829 (b) N/A $ 21,445,982 (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2002, are based on actuarial valuations as of January 1, 2001. Since the City's contributions are made during its fiscal year (which commences nine months after the date of the actuarial valuation), the Ciry, 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) Actual contributions for fiscal 2002 totaled $4,439,829, as required by the ordinance governing the pension plan. See Note E Firemen's Relief Pension Fund Year Annual (a) Ended Required Sept 30 Contribution 2000 $ 1,046,856 2001 $ 1,098,990 2002 $ 1,153,732 Employer Percent Corrtributions Contributed $ 1,046,856 100% $ 1,098,990 100% $ 1,153,732 100% a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2002, are based on actuarial valuations as of January 1, 2001. 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. The net pension asset at transition (October 1, 1997) was determined in accordance with GASB Statement No. 27, "Accounting for Pensions by State and Local Govemmental Employees". The amount of the pension asset at transition was $3,503,365. 67 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 The Employees' Pension Fund net pension asset at September 30, 2002 totaled $21,445,982. It was comprised of the following components: Annual required contributions (ARC) $ (1,932,864) Interest on the net pension asset (1,109,215) Adjustment to annual contribution 1,881,855 Annual pension cost (1,160,224) Fiscal 2002 employer contributions 4,439,829 Increase in net pension asset 5,600,053 Net pension asset beginning of year 15,845,929 Net pension asset end of year $ 21,445,982 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, 2002, neither the Employees' Pension Fund nor the Firemen's Relief and Pension fund held investments (other than U.S. Government or U.S. Government guaranteed obligations) in any one organization comprising 5% or more of the net assets available for benefits. Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2001, are as follows: Employees' Pension Plan i1) �2) (3) (4) Assumed rate of return on investments of 7.0% per annum. Projected salary increase at a rate of 5% per year, including both cost-of-living adjustments of 3% and merit or seniority increases at 2%. Mortality based on the 1983 Group Annuity Mortalify Tab/e for males with females ages set back six (6) years. Pre-retirement withdrawals assumed to occur per standard scales of moderate turnover rates (Scale 255) for males and heavy turnover rates (Scale 355) for females. (5) Pre-retirement incidence of disability is assumed to occur in accordance with a standard scale of moderate disability rates (Class 1, 1952 Inter-Company); rates for females assumed to be twice that for males. Firemen's Relief and Pension Plan (1) Assumed rate of return on investments of 5.5% compounded annually. (2) Assumed benefits grow at an annually compounded rate of 2%. � � � � � � � � � � � � � (3) Mortality based on the 1983 Group Annuity Mortaliry 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). � (6) Assumed value of one mill of ad valorem tax will increase at rate of 5% per year. As a result of a voter referendum on March 14, 2000, the Employees Pension Plan was modified to provide for a 1.5% � cost of living increase, an additional retirement age of 65 with 10 years of service, plus additional eligibility and benefits for police and firefighters effective January 1, 2000. There were no changes in assumptions affecting the January 1, 2001 actuarial valuation for either the Employees' Pension Plan or the Firemen's Relief and Pension Plan. m l__J � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � � � � � � �� It is the City's policy to fund pension costs accrued as determined on an actuarial basis. Annual required contributions (ARC) for the Employees' Pension Fund are calculated using the Entry Age Normal with Frozen Initial Liability method. The initial unfunded actuarial accrued liability determined at July 1, 1963, 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. Annual required contributions (ARC) for the Firemen's Relief and Pension Fund are based on a variation of the aggregate actuarial cost method, under which the unfunded portion of the present value of the projected benefits is allocated over the present value of a 6.0% per year increasing annuity for the remaining years in the 35-year funding period which began January 1, 1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the unfunded actuarial liability is determined after consideration of the available assets at the valuation date. The increasing fixed schedule produced by this method was established in 1988 and will be modified in the future only to the extent that a current valuation indicates a higher required cost level, or if the resulting cost level exceeds 60% of 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 cost method. 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 $14,731,211 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 $6,714,771 attributable to proprietary funds is reflected in the proprietary fund financial statements on the accrual basis of accounting. Governmental Accounting Standards Board Statement Nos. 25 and 27 require the presentation, as supplementary information, of certain 6-year historical trend information. These disclosures are presented on pages 73-75 of this report. 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 Ciry. The revenues received from the State are allocated among eligible police officers on the basis of days employed as Cleanivater Police Officers. These revenues, which comprise the plan contributions, amount to $770,578 in the year ended September 30, 2002, and are obtained from an � eighty-five one hundredths of one percent (.85)% excise tax on the gross receipts from premiums collected on casualty insurance policies covering property within the City's corporate limits. The current year contributions represent 5.2% of current year covered payroll. The fair value of investments at September 30, 2002, totaled $9,329,372. � � � ii � � 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 senrice as a police officer of the City. All police officers, as defined in Section 26.70(g) of the Code of Ordinances of the City of Clearwater, who are elected, appointed, or employed full-time by the City are eligible to participate in the plan. There are no employee contributions to the supplemental plan. Benefits are fully vested for a lump sum distribution after twenty years from the date of hire, with provision for partial vesting after ten or more years under the plan. Accumulated benefits are payable in full in case of death while employed by the City or in case of total and permanent job-related disability. Non-vested participants' account values upon termination of employment during any fiscal year are added to the monies received during that fiscal year for allocation to the remaining participants in the plan on the basis of total days worked. For the fiscal year ended September 30, 2002, the payroll of the covered officers' was $14,850,669; the City's total payroll for the same period was $71,987,553. 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. m City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 3. Firefighters Supplemental Pension Fund A supplemental defined contribution pension plan exists for all eligible firemen, which is funded by earmarked revenues received from the State and is administered by the City. The revenues received from the State are allocated among eligible firemen on the basis of days worked during the previous year. These revenues, which comprise the plan contributions, amounted to $594,442 in the year ended September 30, 2002, and are obtained from a one and eighty-five one hundredths percent (1.85%) excise tax on the gross receipts from premiums collected on property insurance policies covering property within the City's corporate limits. The contributions represent 6.79% of current year covered payroll. The fair value of investments at September 30, 2002, totaled $8,470,023. As the plan is described as a money purchase pension plan, whereby contributions are allocated based on the number of days worked during the fiscal year ended September 30, and interest earnings allocated based on the beginning balances in each participant's account, there is no actuarial liability on the part of the State or City. 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 Cleanivater and Chapter 175 of Florida Statutes. Eligibility requires two years of credited calendar year service as a firefighter with concurrent participation in the Employees' Pension Plan. There is no employee contribution to the supplemental plan, and benefits are vested for a lump sum distribution at ten years unless there is early retirement, disability or death. Non-vested participants' account values upon termination of employment are reallocated among the remaining participants on the basis of days worked during the previous year. For the fiscal year ended September 30, 2002, the covered payroll was $8,757,987 the City's total payroll for the same period was $71,987,553. 4. 401(a) Defined Contribution Plan For all management employees not covered under either of the defined benefit pension plans, the City provides pension benefits through a 401(a) defined contribution plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. 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% of compensation on behalf of the City Manager and the City Attorney; 12% of compensation on behalf of the Chief of Police; and 6% 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. The International Ciry Management Association Retirement Corporation (ICMA-RC), the trustee for the defined annuity, offers participants a variety of investment options. The City's total payroll for the fiscal year ended September 30, 2002, was $71,987,553. The Plan members' payroll for the same period totaled $3,458,985. The City's contribution, using the above referenced formula, totaled $247,410. The assets of the trust, at market value, totaled $1,164,818 at September 30, 2002. 5. 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 Ciry 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. 70 � � � � City of Clearwater, Florida � Notes to the Financial Statements September 30, 2002 � , � � � � � �J � � � � � � � � F. Contingencies and Commitments 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. Ciry management does not consider it probable that this guarantee will be called, and, accordingly, no amounts have yet been accrued or othervvise recorded in the accompanying financial statements to reflect this possibility. Contin�ent Loan Guarantee On March 30, 1992, the City Commission approved a contingent loan guarantee of $1,000,000 on a$2,500,000 note for the Chi Chi Rodriguez 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. At the present time, management expects the foundation to meet all debt service payments and does not consider it likely that the City's guarantee will be invoked. Soil and groundwater contamination site The City owns a property, currently used by the City Gas Division as its administrative offices and operating facility, that has been identified as having soil and groundwater impacts in a June 1990 report prepared by a United States Environmental Protection Agency contractor. The contamination allegedly resulted from the prio� operation of a manufactured gas plant. Contamination assessment activities by the City were initiated during 1995 and a draft Contamination Assessment Report was submitted to the Florida Department of Environmental Protection (FDEP) on December 29,1999. On March 20, 2000, FDEP requested further assessment be undertaken. On July 25, 2000, FDEP approved the City's proposed scope of work for additional on and off-site assessment activities. Additional field activities were initiated in December 2000. As of this date, all additional work has been completed. The supplemental contamination assessment results were submitted to FDEP as part of the May 2001 and July 2001 site status reports. The cost of this additional work, including preparation and submittal of the May and July 2001 site status reports, was approximately $39,462. On May 16, 2002, the City received a letter from FDEP requiring additional fieldwork to better define the soil and groundwater contamination on the site. In September 2002, Clearwater Gas met with FDEP to discuss their May 16'h letter and the future of the gas plant site. In that meeting, it was agreed the City would install seven (7) new monitoring wells and drill twelve (12) soil samples around the perimeter of the site. This additional work will be performed in early 2003, at an estimated cost of $70,000. Approximately $487,500 has been recovered from City insurance policies to be applied to any required remediation. Letter of Credit Guarantee - soil contamination sites The City has provided a standby letter of credit in the amount of $463,040 to the Florida Department of Environmental Protection (FDEP). The Letter of Credit is required by FDEP for the Ciry's approximate 41% share of the remediation costs for three Ciry-owned petroleum contamination sites under FDEP's °Pre-approved Advance Cleanup (PAC) program. The PAC program awards state funds to assist with remediation of petroleum contaminated sites. The City has available funds set aside to fully fund the City's commitment of $463,040 under the PAC agreements. 71 City of Clearwater, Florida Notes to the Financial Statements September 30, 2002 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, 2005, the City is required to purchase a minimum of 4 million gallons of water per day on an annual average basis from the County within each calendar year, with a maximum amount of water available to the City of 10 million gallons per day on an annual average basis. Effective October 1, 1995, the rate, which is set by the Pinellas County Board of County Commissioners (BOCC), was $1.7902 per 1,000 gallons, including a$.60 per 1,000 gallon surcharge for funding capital projects. On November 19, 2002, the BOCC approved the following rate increases: $1.9334 effective January 1, 2003; $2.0881 effective October 1, 2003; $2.2969 effective October 1, 2004; $2.5266 effective October 1, 2005; and $2.7792 effective October 1, 2006. The cost of water purchased from the Counry during fiscal years 2001 and 2002 was $7,305,983 and $7,516,678, respectively. Contractual Commitment - Parking System Under the terms of a development agreement, the City has committed to repurchase a beach land parcel at the appraised amount not to exceed $6,000,000, if the developer is unable to proceed with the development project by March 2006. A contingency reserve has been established in the Parking System fund in the amount of $6,000,000 as of September 30, 2002. Grant Revenues During fiscal year 2002 and prior fiscal years, the City received revenues and contributions related to grants from the Southwest Water Management District, the State of Florida, and the federal government. 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 which have been reserved and recorded as liabilities in the Central Insurance Fund. H. Conduit debt The Ciry has one issue of conduit debt outstanding as follows: �- . .� n. Original Amount Amount Issue Outstanding Outstanding �� at 9/30/01 at 9/30/02 Drew Gardens Refunding Bonds / Residential rental facility $ 3,425,000 $ 3,090,000 $ 3,040,000 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. �2 � � � � � i r � � � � �J � � l_ ' � � � � � �' � � lJ � � 'I L� � Page 1 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information - Unaudited Sched�les of F�nding Progre�s: Em I�oyees Pension Fund 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) (�) (c) ((b-a)/c) 1 /1 /1997 1 /1 /1998 1 /1 /1999 1 /1 /2000 1 h /2001 1 /1 /2002 $ 272,346,200 $ 308,596,133 $ 354,088,751 $ 414,826,422 $ 461,724,610 $ 491,859,015 $ 297,892,502 $ 333,250,492 $ 377,788,731 $ 490,426,940 $ 535,672,208 $ 533,191,487 $ 25,546,302 $ 24,654,359 $ 23,699,980 $ 75,600,518 $ 73,947,598 $ 41,332,472 91% 93% 94% 85% 86% 92% .1 - :- :�� =i �� iiT� $ 44,955,345 $ 47,281,198 $ 49,666,523 $ 50,937,403 $ 54,864,584 $ 58,929,582 57% 52% 48% 148% 135% 70% 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 /1997 1 /1 /1998 1 /1 /1999 1 /1 /2000 1 /1 /2001 1 /1 /2002 $ $ $ $ $ $ 3,407,925 3,626,850 3,963,395 4,092,298 4,668,572 5,213,993 $ $ $ $ $ $ 11,014,979 10,565,127 10,473,888 9,746,671 9,527,303 8,907,427 $ 7,607,054 $ 6,938,277 $ 6,510,493 $ 5,654,373 $ 4,858,731 $ 3,693,434 31 % $ 49,044 15511 % 34% $ 50,573 13719% 38% $ 15,605 41721% 42% $ - N/A 49% $ - N/A 59% $ - N/A ' Covered payroll is for the calendar year period used for the actuarial valuation. 73 Page 2 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information - Unaudited �-. _ - . ��. . - .� . .� Year Ended Sept. 30, 1997 1998 1999 2000 2001 2002 $ $ $ $ $ $ ��. . - -� •i �� Annual (a) Required Contribution 4,398,790 3,080,802 840,558 174,377 Percent Contributed 76% (b) 119% 464% N/A 2440% N/A (c) (a) The actuarially determined contribution requirements for the Ciry's fiscal year ended September 30, 2002 are based on actuarial valuations as of January 1, 2001. 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 contribution is less than the annual required contribution due to contributions in excess of required prior to fiscal 1997. (c) Actual contribution for fiscal 2002 was $4,439,829, as required by City pension ordinance. See Note E(1) . Year Ended Sept. 30, 1997 1998 1999 2000 2001 2002 $ $ $ $ $ $ -ii'� :- - -� •� i• Annual ja) Required Contribution 910,559 955,920 1,003,758 1,046,856 1,098,990 1,153, 732 Percent Contributed 100% 100% 100% 100% 100% 100% (a) The actuarially determined contribution requirements for the Ciry's fiscal year ended September 30, 2002 are based on actuarial valuations as of January 1, 2001. Since the City's contributions are made during its fiscal year, which commences nine months after the date of the actuarial valuations, the City, with approval of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of return on investments for a period of nine months. 74 ' ' � � � � � � � � 1 ' � � � � � � � Page 3 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information — Unaudited Notes To Schedules Of Required Pension Supplementary Information Annual required contributions for the Employees' Pension Fund are calculated using the Entry Age Normal with Frozen Initial Liabiliry 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 liabiliry are being amortized over a 30-year period from their effective dates in accordance with State law. Annual required contributions for the Firemen's Relief and Pension Fund are based on the aggregate actuarial cost method, under which the unfunded portion of the present value of the projected benefits is allocated over the present value of a 6.0% per year increasing annuity for the remaining years in the 35-year funding period which begin January 1, 1972, pursuant to an agreement between the Ciry and the Plan participants. For this purpose, the unfunded actuarial liabiliry is determined after consideration of the availabie 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 actuarially determined contribution requirements for the Citys fiscal year ended September 30, 2002, are based on actuarial valuations as of January 1, 2001. Since the City's contributions are made during its fiscal year, which commences nine months after the date of the actuarial valuations, the Ciry, with approval of State regulatory authorities, is following the practice of adding interest to its required contributions at the assumed rate of retum on investments for a period of one year in the case of the Employees' Pension Fund and for nine months in the case of the Firemen's Relief and Pension Fund. Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2001, in the determination of the annual required contribution are as follows: Employees' Pension Fund i�) �2) (3) (4) (5) (6) Assumed rate of return on investments of 7.0% per annum. Projected salary increase at a rate of 5% per year, including cost-of-living adjustments of 3% and merit or seniority increases at 2%. Mortaliry based on the 1983 Group Annuity Mortaliry Table for Males with female ages set back 6 years. Pre-retirement withdrawals assumed to occur in accordance with standard scales of moderate turnover rates (Scale 255) for males and heavy tumover rates (Scale 355) for females. Pre-retirement incidence of disability assumed to occur in accordance with a standard scale of moderate disabiliry rates (Class 1, 1952 Inter-Company); rates for females assumed to be twice that for males. Assumed inflation rate of 3% Firemen's Relief and Pension Fund (1) Assumed rate of retum on investments of 5.5% compounded annually. (2) Assumed benefits grow at annually compounded rate of 2% related to cost of living adjustments only. (3) Mortaliry based on the 1983 Group Annuity Mortality Table for both active and retired; assumed disabled participants will e�erience mortaliry according to PBGC Tables 3& 4 for males and females, respectively. (4) Assumed no withdrawals will occur. (5) 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: (1) The actuarial valuation of the Firemen's Relief and Pension Fund as of January 1, 1999 reflected several changes in actuarial assumptions. An investment yield of 5.5% for both pre and post retirement was assumed whereas the prior valuation assumed 6.5%. Additionally, beneflt increases of 2.0% were assumed while the previous assumption was 4.0%. The impact of these changes increased the unfunded actuarial accrued liabiliry by $212,878. 75 ' � �' r � � r �� This Page Intentionally Left Blank � i � � � � �� i 76 � , ' � � J � Nonmajor 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 Trust Fund — to account for monies allocated to the City under the Local Housing Assistance grant program. 77 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 Bonds Debt Service Fund — to account for the advance monthly accumulation of resources by transfer of Public Service Tax revenues from the General Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Improvement Revenue Refunding Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of public service tax and communications services tax revenues from the General Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Infrastructure Sales Tax Revenue Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Public Service Tax & Bridge Revenue Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of public service tax revenues from the General Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Notes and Mortgages Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of General Revenues from the General and Special Revenue Funds and the payment of currently maturing installments of principal and interest on the various note and mortgage obligations of the governmental funds during each fiscal year. Spring Training Facility Revenue Bonds Debt Service Fund — to account for the advance monthly accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue Fund and the payment of currently maturing installments of principal and interest during each fiscal year. 78 1 LJ �i �� , 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. ' Sales Tax Revenue Construction Fund — to provide separate accounting records for the financing and construction of the entryway and roundabout at Clearvvater Beach, a new Main Library, and a new Memorial � Causeway Bridge. � Community Sports Complex Construction Fund — to provide separate accounting records for the financing and construction of a new community sports complex including a new spring training facility to be used by the , Philadelphia Phillies major league baseball organization. � � � � LJ � � 79 ASSETS Cash on hand and in banks Equity in pooled cash and investments Receivables: Mortgage notes Rehab advances Other Investments Due from other governments - grants. Land held for resale Total assets LIABILITIES Accounts and contracts payable Accrued interest purchased Accrued payroll Due to other governmental entities Construction escrows Due to other funds Due to other funds (deficit in pooled cash) Advances from other funds Deferred revenue Total liabilities FUND BALANCES Reserved for: Encumbrances Advances and notes Grant programs Debt service: Current requirements - principal Current requirements - interest Future requirements Unreserved, undesignated Total fund batances Total liabilities and fund balances $ City of Clearwater, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2002 Special Revenue Funds Community Local Housing Speclal Redevetopment Asslstance Programs Agency Trust Total - $ 100 $ - $ 100 4,625,208 - 1,691,027 6,316,235 4,682,649 - 4,223,298 8,905,947 48�ggp - 33,744 82,626 15,023 94,179 - 109,202 656,591 - 113,365 769,956 84,701 913,641 - 998,342 $ 10,113,054 $ 1,007,920 $ 6,061,434 $ 17,182,408 $ 81,509 $ - $ 9,152 $ 90,661 26,911 - - 26,911 372 - - 372 312,371 - 781,553 1,093,924 - 134,966 - 134,966 - 264,514 - 264,514 - 492,524 - 492,524 958 94,179 86 95,223 422,121 986,183 790,791 2,199,095 - 21,737 - 21,737 4,258,688 - 4,223,298 8,481,986 2,016,840 - - 2,016,840 3,415,405 - 1,047,345 4,462,750 9,690,933 21,737 5,270,643 14,983,313 $ 10,113,054 $ 1,007,920 $ 6,061,434 $ 17,182,408 The notes to the financial statements are an integral part of this statement. � , �� Debt Service Funds Capital Project Funds � Improvement Infrastructure Revenue Sales Tax Spring Tralning Community Refunding Revenue Facllity Sales Tax Sports Bonds Bonds Revenue Bonds Total Revenue Complex Total � $ � Total NonmaJor Governmental Funds - $ - $ - $ - $ - $ - $ - $ 100 298,376 4,911,229 1,880,248 7,089,853 13,150,686 11,190,253 24,340,939 37,747,027 _ _ _ . _ _ - 8,905,947 - - - - - - - 82,626 � _ _ : - - - - ,09�202 864,499 864,499 864,499 _ . _ _ _ - - 769,956 998,342 �$ 1,162,875 $ 4,911,229 $ 1,880,248 $ 7,954,352 $ 13,150,686 $ 11,190,253 $ 24,340,939 $ 49,477,699 '$ ' $ ' � - I � - $ 49,687 $ 49,687 $ 1,315,348 $ 202,211 $ 1,517,559 $ 1,657,907 - 28,032 28,032 - - - 28,032 - - - - - - 26,911 - - - - - - 372 _ _ _ - - - 1,093,924 _ . . _ . - 134,966 . _ _ _ - - 264,514 _ _ _ - - - 492,524 _ _ _ _ - - 95,223 - 77,719 77,719 1,315,348 202,211 1,517,559 3,794,373 - - - - 8,548,410 11,006,839 19,555,249 19,576,986 � - - - - - - _ 8,481,986 2,016,840 � 220,755 4,250,000 � 4,470,755 � - - 4,470,755 84,768 661,229 745,997 745,997 857,352 - - 857,352 - 857,352 - - 1,802,529 1,802,529 3,286,928 (18,797) 3,268,131 9,533,410 1,162,875 4,911,229 1,802,529 7,876,633 11,835,338 10,988,042 22,823,380 45,683,326 $ 1,162,875 $ 4,911,229 $ 1,880,248 $ 7,954,352 $ 13,150,686 $ 11,190,253 $ 24,340,939 $ 49,477,699 I , , ir 81 , � Clty of Clearwater, Florida � I Combining 5tatement of Revenues, Expenditures, and Changes in Fund Balances � Nonmajor Governmental Funds For the Year Ended September 30, 2002 � I Specfal Revenue Funds � Community Local Housing Improvement Special Redevelopment Assistance Improvement Revenue Programs Agency Trust Totel Revenue Bonds Refunding Bonds REVENUES Intergovemmental Charges for services Fines and forfeitures Interest income Miscellaneous Total revenues: EXPENDITURES Current: General govemment Public safety Physical environment 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) Transfers in Transfers out Long term debt issued Proceeds of refunding bonds Premium (discount) on revenue bonds issued Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balances Fund balances - beginning, as restated Fund balances - ending $ 3,210,310 $ 373,583 $ 1,188,126 $ 4,772,019 $ - $ - 576,714 - - 576,714 - - 500,987 - - 500,987 - - 233,730 50,123 78,176 362,029 1,209 50,672 1,660,880 234,348 - 1,895,228 - 6,182,621 658,054 1,266,302 8,106,977 1,209 50,672 159,515 - - 2,472,483 - - 927,341 - - 1,021,787 309,160 315,783 126,936 - - 1,432,848 - - 159,515 - 2,472.483 - 927,341 - 1,646,730 - 126,936 - 1,432,848 - � $ � ' ' , - - - - 283,487 89,542 - - - - 2,925 382,129 � _ . _ _ - 147,065 417,168 - - 417,168 - - 6,558,078 309,160 315,783 7,183,021 286,412 618,736 (375,457) 348,894 950,519 923,956 (285,203) (568,064) � 1,012,587 334,783 : 1,347,370 64,545 705,251 � (569,643) (664,253) (100,125) (1,334,021) - - - - - - - 11,345.499 - - - - - (49�129) � - - - - - (10.270,682) 442,944 (329,470) (100,125) 13,349 64,545 1,730,939 67,487 19,424 850,394 937,305 (220,658) 1,162,875 9,623,446 2,313 4,420,249 14,046,008 220,658 - $ 9,690,933 $ 21,737 $ 5,270,643 $ 14,983,313 $ $ 1,162,875 $ � The notes to the financial statements are an integral part of this statement. � � , � �I LJ r Debt Servlce Funds Capital Project Funds Total Infrastructure Public Service Notes Spring Treining Community NonmaJor Salea Tax Tax & Bridge and Facility Sales Tax Sports Governmental Revenue Bonds Revenue Bonds Mortgages Revenue Bonds Total Revenue Complex Total Funds 5,000,000 $ - $ • $ 1,087,654 $ 6,087,654 $ - $ - $ - $ 10,859,673 - - - - - - - - 576,714 - - - - - - - - 500,967 176,280 2,010 - 60,271 290,442 1,065,005 - 1,066,005 1,717,476 - - - 4,000 4,000 1,899,228 5,176,280 2,010 1,147,825 6,378,096 1,069,005 1,069,005 15,554,078 _ _ _ _ _ _ . - 159,515 - - - - - - - - 2,472,483 - - - - - - - - 927,341 - - - - - - - - 1,646,730 - - - - - - - - 126,936 - - - - - - 18,913 18,913 1,451,761 • 73,739 1,304,501 - 1,751,269 - - - 1,751,269 1,873,483 1,340 201,321 - 2,461,198 - - - 2,461,198 3,185 - - 208,746 358,996 - - - 358,996 - - 3,401,374 4,117,620 7,518,994 7,936,162 1,876,668 75,079 1,505,822 208,746 4,571,463 3,401,374 4,136,533 7,537,907 19,292,391 3,299,612 (73,069) (1,505,822) 939,179 1,806,633 (2,332,389) (4,136,533) (6,468,902) (3,738,313) 1,060,593 5,836 1,505,822 - 3,342,047 - - - 4,689,417 - (53,612) - - (53,612) - - - (1,387,633) - - - 216,438 215,438 - 14,594,562 14,594,562 14,810,000 - - - - 11,345,499 - - - 11,345,499 - - - - (49,129) - 530,013 530,013 480,884 (10270,682) (10,270,682) 1,060,593 (47,776) 1,505,822 215,438 4,529,561 15,124,575 15,124,575 19,667,485 4,360,205 (720,845) - 1,154,617 6,336,194 (2,332,369) 10,988,042 8,655,673 15,929,172 551,024 120,845 647,912 1,540,439 14,167,707 - 14,167,707 29,754,154 4,911,229 $ $ $ 1,802,529 $ 7,876,633 $ 11,835,338 $ 10,988,042 $ 22,823,380 $ 45,683,326 83 � � r r � � L � � This Page Intentionally Left Blank � � � ,� � 1 � � � � 84 , City of Clearwater, Florida Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (GAAP Basis) Community Redevelopment Agency For the Y�r Ended September 30, 2002 REVENUES Intergovernmental Interest income 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 of revenues and other sources over expenditures and other uses Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 332,520 $ 373,583 $ 373,583 $ - 15,000 15,000 50,123 35,123 112,911 118,362 234,348 115,986 460,431 506,945 658,054 151,109 236,393 388,414 309,160 79,254 236,393 388,414 309,160 79,254 224,038 118,531 348,894 230,363 304,784 334,783 334,783 - (528,822) (453,314) (664,253) (210,939) (224,038) (118,531) (329,470) (210,939) - - 19,424 19,424 Fund balances - beginning, as restated (see Note II - C) 2,313 2,313 2,313 - Fund balances - ending $ 2,313 $ 2,313 $ 21,737 $ 19,424 The notes to the financial statements are an integral part of this statement. 85 ' � I � � CJ L� ' , This Page Intentionally Left Blank , � �� '� � � 1 , � � � � 86 � ' r � � � Nonmajor Enterprise Funds � Enterprise funds are used to account for the financing, acquisition, operation, and maintenance of � governmentai facilities that are supported primarily by user charges. � Rec clin Utili Fund — to account for the financin rocessin o eration and maintenance of the Ci s Y 9 tY 9� P 9, P � ' recycling service from charges made to users of the services and funds received from the sale of recyclable commodities processed to meet market requirements. The service area extends beyond the City limits ' Marine & Aviation Fund - to account for the financing, operation and maintenance of the City marina and , associated real property on Clearwater Beach from rents collected from users; and to account for the City's airpark operations. � , Parking System Fund - to account for the financing, construction, operation and maintenance of the City's parking system, including on- and off-street parking on Clearwater Beach and Downtown Clearwater, from , parking charges. ' Harborview Center Fund - to account for the operation of the City's convention center and related facilities. , , , � 87 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 Due from other funds Due from other govemmental enUties Inventories, at cost Total current assets Noncurrent assets: Restricted: Equity in pooled cash and investments Investments Due from other funds Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Totai noncurrent assets Total assets LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued compensated absences Due to other funds Deposits Deferred revenue and liens Current portion of long-term liabilities: Revenue bonds Notes, loan pool agreement and acquisition contracts Total current liabilities (payable from current assets) Current liabilities (payable from restricted assets): Accrued interest payable Notes, loan pool agreement and acquisition contracts Current portion of long-term liabilities, revenue bonds Total current liabilities payable from restricted assets Total Current liabilities Noncurrent liabilities: Revenue bonds (net of unamortized discounts and deferred amount on refunding) Notes, loan pool agreement and acquisition contracts Advances from other funds Total non-current liabilities Total liabilities Net assets: Invested in capital assets (net of related debt) Restricted for. Revenue bond debt service and sinking fund requirements Employees' pension benefits Unrestricted Total net assets City of Clearwater, Florida Combining Statement of Net Assets Nonmajor Enterprlse Funds September 30, 2002 Recycling Marine & Parking Harborview Utility Aviatlon Sy�tem Center Total ' � � $ - $ 817 $ 22,050 $ 100 $ 22,967 ' 1,439,611 471,487 2,342,150 108,064 4,361,312 68,653 - - 196,257 264,910 134.32b - - 134.325 202,978 - - 196,257 399,235 (3,780) - (3,780) 199,198 - 196,257 395,455 1,067,672 989,073 1,614,166 - 3,670,911 . - 103,498 - 103,498 - 26,409 26�`�09 2,706,481 1,487,786 4,081,864 304,421 8,580,552 221,354 - 16,373 9,487 - 7,500,000 146,975 143,086 A � , 16,373 9,487 � 7,500,000 511,415 I 1,106,482 926,000 2,032,482 1,182,031 1,991,644 2,446,304 9,866,786 15,486,765 1,403,385 2,138,619 11,221,732 10,792,786 25,556,522 4,109,866 3,626,405 15,303,596 11,097,207 34,137,074 18,835 42,266 16,879 15,085 53,797 46,753 - 59,602 - 18,813 36,710 15,720 37,303 2,063 2,892 619,561 717,372 - 47,684 - 137,853 - 59,602 105,163 126,039 12,500 15,392 ' I� � ' � . - 7,956 - ��9F�6 - - 152,555 - 152,555 � 89,511 182,519 255,199 737,224 1,264,453 _ - 525 - 525 3,636 - - - 3,636 ' . - 15,912 15,912 3,636 - 16,437 20,073 93,147 182,519 271,636 737,224 1,284,526 ' - - 76,163 - 76,163 9,806 - 411,401 - 421,207 - 119,204 4,000,000 4,119,204 9,806 119,204 4,487,564 4,616,574 102,953 301,723 4,759,200 737,224 5,901,100 1,168,589 1,991,644 2,888,799 10,792,786 16,841,818 , � _ - 9,408 - 9,408 ' 221,354 146,975 143,086 - 511,415 2,616,970 1,186,063 7,503,103 (432,803) 10,873,333 $ 4,006,913 $ 3,324,682 $ 10,544,396 $ 10,359,983 $ 28,235,974 The notes to the financial statements are an integral paR of this statement. 88 � L_.J City of Clearwater, Florida ' Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended September 30, 2002 � Recycling Marine & Parking Harborview Utillty Aviation System Center Totals Operating revenues: ' Sales to customers $ 743,826 $ 1,523,778 $ - $ � $ 2,267,604 SeNice charges to customers 9,844 175,300 185,144 User charges to customers 1,417,480 55,704 3,865,335 5,338,519 Rentals - 1,167,188 11,425 1,871,730 3,050,343 � Total operating revenues 2,171,150 2,746,670 4,052,060 1,871,730 10,841,610 Operating expenses: Personal services 808,586 745,183 766,078 - 2,319,847 ' Purchases for resale 187,317 1,135,044 - 887,337 2,209,698 Operating materials and supplies 49,595 186,504 163,745 29,968 429,812 Transportation 253,440 6,476 58,665 26,047 344,628 , Utility service 6,882 146,467 39,741 128,439 321,529 Dumping charges � Depreciation 226,158 295,782 229,709 553,176 1,304,825 � Intertund administrative charges 439,860 262,990 785,050 16,900 1,504,800 Other current charges: Professional fees 61,557 740,373 875,723 1,677,653 Advertising 367 18,895 1,290 14,933 35,485 ' Communications 7,059 25,322 14,190 27,908 74,479 Printing and binding 1,799 870 4,001 6,670 Insurance 39,150 43,380 22,380 20,870 125,780 ' Repairs and maintenance 5,701 105,678 16,120 74,255 201,754 Rentals 2,054 1,154 160,097 1,072 164,377 Miscellaneous 10,422 42,120 198 14,809 67,549 Data processing charges 27,980 29,070 28,520 - 85,570 , Taxes - 236 � 18,209 18,445 Provision for estimated uncollectable accounts 4,298 19,251 23,549 Total other current charges 97,031 329,211 984,038 1,071,031 2,481,311 � Total operating expenses 2,068,869 3,107,657 3,027,026 2,712,898 10,916,450 Operating income (loss) 102,281 (360,987) 1,025,034 (841,168) (74,840) ' Nonoperatfng revenues (expenses): Earnings on investrnents 94,786 43,905 239,651 31,660 410,002 Interestexpense (493) (11,717) (31,597) (24) (43,831) Amortization of bond discount and issue costs - - (1,484) - (1,484) � Gain (loss) on exchange of assets (4,380) 68,676 (1,980) - 62,316 Other 508,043 44,657 163 552,863 Total nonoperating revenue (expenses) 89,913 608,907 249,247 31,799 979,866 Income (loss) before transfers 192,194 247,920 1,274,281 (809,369) 905,026 � Transfers in - - 1,500,000 178,670 1,678,670 Transfers out (115,490) (116,000) (231,490) Changes in net assets 76,704 131,920 2,774,281 (630,699) 2,352,206 ' Total net assets - beginning, as previously reported, before adjustment for GASB 34 implementation 3,810,361 2,224,970 6,647,249 (3,056,705) 9,625,875 Adjustment for implementation of GASB 34 - eliminatwn � of contributed capital 251,057 1,533,095 1,135,005 14,134,472 17,053,629 Adjustment for change in accoun6ng principle - change in capitalization thresholds (131,209) (565,303) (12,139) (87,085) (795,736) Total net assets - beginning, as restated 3,930,209 3,192,762 7,770,115 10,990,682 25,883,768 , Total net assets - ending $ 4,006,913 $ 3,324,682 $ 10,544,396 $ 10,359,983 $ 28,235,974 1 The notes to the financial statements are an integral part of this statement. 89 City of Clearwater, Florida Combining Statement of Cash Flows NonmaJor Enterprise Funds For the Year Ended September 30, 2002 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 (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating transfers in Operating transfers out Interest paid 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 CAPRAL AND RELATED FINANCING ACTIVITIES Principal payments on debt Interest paid Acquisition of fixed assets Sale of fixed assets Proceeds from issuance of debt Net cash (used) for capital and related financing acGvities 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 Recycling Marine & Parking Harborview Utility Avlation System Center Totals $ 2,134,982 $ 2,747,082 $ 4,052,311 $ 1,840,828 $ 10,775,203 (326,957) (2,151,644) (1,015,797) (1,912,513) (5,406,911) (864,118) (774.825) (814,533) - (2,453,476) (739,509) (106,047) (898,618) (73,167) (1,817,341) - 508,043 44,657 163 552,863 204,398 222,609 1,368,020 (144,689) 1,650,338 - 68,676 1,500,000 178,670 1,747,346 (115,480) (116,000} (1,980) - (233,470) - - - c24) i24) 357,746 - 4,321,369 - 4,679,115 - (521,714) (7,975,044) - (8,496,758) 242,256 (569,038) (2,155,655) 178,646 (2,303,791) - (1,902) (198,356) - (200,258) (493) (11,718) (36,533) - �48��) (512,587) (68,676) (79,066) (7,549) (667,878) 2,051 - 1,980 - 4,031 13,442 - - - 13,442 (497,587) (82,296) (311,975) (7,549) (899,407) 94,786 43,905 239,651 31,660 410,002 94,786 43,905 239,651 31,660 410,002 43,853 (384,820) (859,959) 58,068 (1,142,858) 1,395,758 857,124 3,240,532 50,096 5,543,510 $ 1,439,611 $ 472,304 $ 2,380,573 $ 108,164 $ 4,400,652 Cash and cash equivalents classified as: Cash on hand and in banks $ - $ 817 $ 22,050 $ 100 $ 22,967 Equity in pooled cash and investments 1,439,611 471,487 2,342,150 108,064 4,361,312 Restricted equity in pooled cash and investments - - 16,373 - 16,373 Total cash and cash equivalents $ 1,439,611 $ 472,304 $ 2,380,573 $ 108,164 $ 4,400,652 The notes to the financial statements are an integral part of this statement. �'Z�� City of Clearwater, Florlda Combining Stetement of Cash Flows Nonma)or Enterprise Funds For the Yeer Ended September 30, 2002 Recycling Marine & Parking Harborvfew Utility Avlation System Center Totals Reconclliatlon of operating income to net cash provided by operating acUWties: Operating income Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities: Other Revenue from Nonoperating Section oi Income Statement Depreciation Non-cash land rental expense Provision for uncollectible accounts Change in assets and liabilities: (Increase) in accounts receivable (Increase) in inventory Increase (decrease) in accounts and contracts payable Increase (decrease) in deposits Increase in deferred revenue (Increase) in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided by operating activities Noncash investing, capital and financing activities: Gain (loss) on exchange of assets Change in fair value of investments $ 102,281 $ (360,987) $ 1,025,034 $ (841,168) $ (74,840) - 508,043 44,657 163 552,863 226,158 295,782 229,709 553,176 1,304,825 - - 136,499 - 136,499 (1.209) - - - (1�209) (ao,ss�) - - (si.a�o� (sz,o��) - (10.423) - - (10,423) (36,639) (180,576) (18,675) 174,042 (62,848) - 412 119 (11,992) (11,461) - - 132 12,500 12,632 (61,041) (38,640) (40,320) - (140,001) 5,509 8,998 (8,135) - 6,372 102,117 583,596 342,986 696,479 1,725,178 $ 204,398 $ 222,609 $ 1,368,020 $ (144,689) $ 1,650,338 g �a,3eo> $ ss,s�s $ (�,sso> $ - $ sz,3�s $ - $ - $ ��) $ - $ ��) The notes to the financial statements are an integral part of this statement 91 � ' 1 � � Cj ' � This Page Intentionally Left Blank ' � � � � � � � � � 92 � � ' � � , 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 govemments on a cost reimbursement basis. � � Garage Fund - to account for the cost of automotive and other motorized equipment of the City. The acquisition cost of new or upgraded equipment is financed through user departments and the asset value is ' simultaneously contributed to the Garage Fund. The cost of repiacement 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. ' � 1 General Services Fund - to account for various support activities including building maintenance and custodial services for all Cit�r 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 Cit�s limited self-insurance program wherein all funds are assessed charges based on damage claims incurred and on managemenYs assessment of individual funds' ' risk exposure. All claims and premiums are paid out of this fund, together with other costs necessary to administer the program. Medical insurance premiums are also paid from this fund. � ' ' 93 ASSETS Current assets: Cash on hand and in banks Equity in pooled cash and investments Due from other funds Inventories, at cost Prepaid expenses and other assets Total current assets Noncurrent assets: Interest receivable Advances to other funds Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued compensated absences Due to other funds Current portion of long-term liabilities: Notes, loan pool agreement and acquisition contracts Total current liabilities (payable from current assets) Noncurrent liabilities: Notes, loan pool agreement and acquisition contracts Advances from other funds Claims payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets (net of related debt) Restricted for employees' pension benefits Unrestricted Total net assets City of Clearwater, Florida Combining Statement of Net Assets Internal Service Funds September 30, 2002 Governmental Business-type General Central Activities Garage Administrative Activitles Services Insurance Total Fund Services Total $ - $ - $ - $ - $ 1,900 $ 1,900 654,513 19,723,874 20,378,387 3,874,374 930,870 4,805,244 304,567 627,593 932,160 179,526 295,321 474,847 - - - 185,575 - 185,575 - 1,539,086 1,539,086 - 959.080 21,890,553 22,849,633 4,239,475 1,228,091 5.467,566 - - - 5,793 - 5,793 - 3,757,385 3,757,385 - - ' 314,758 79,593 394,351 475,308 867,047 1,342,355 - - - 696,681 - 696,681 136,495 41,123 177,618 12,059,915 2,559,193 14,619,108 451,253 3,878,101 4,329,354 13,237,697 3,426,240 16,663,937 1,410,333 25,768,654 27,178,987 17,477,172 4,654,331 22,131,503 339 142,348 26,658 8,873 �2,no 2a,� 142,687 117,446 35,531 35,996 97,313 107,939 33,102 150,548 69,058 105,054 275,337 383,276 300,000 300,000 4,511 - 4,511 2,354,083 235,026 2,589,109 104,278 175,764 280,042 2,615,464 912,523 3,527,987 p�,�7� - 21,171 5,241,315 469,616 5,710,931 - - - - 271.070 271,070 - 11,440,278 11,440.278 - 21,171 11,440,278 11,461,449 5,241,315 740,686 5,982,001 125,449 11,616,042 11,741,491 7,856,779 1,653,209 9,509,988 110,813 41,123 151,936 5,161,198 1,854,551 7,015,749 314,758 79,593 394,351 475,308 867,047 1,342,355 859,313 14,031,896 14,891,209 3,983,887 279,524 4,263,411 $ 1,284,884 $ 14,152,612 $ 15,437,496 $ 9,620,393 $ 3,001,122 $ 12,621,515 The notes to the financial statements are an integral part of this statement. 94 � ' �J , Operating revenues Billings to departments City of Clearwater, Florida Combining Statement of Revenue, Expenses, and Changes In Fund Net Asset: Internal Servlce Funds For the Year Ended September 30, 2002 'Operating expenses: Personal services Purchases for resale 'Operating materials and supplies Transportation Utility service Depreciation �interfund administrative charges Other current charges: Professional fees �Advertising Communications Printing and binding Insurance , Premiums Claims incurred Repairs and maintenance Rentals ' Miscellaneous Data processing charges Taxes ' Total other current charges Total operating expenses Operating income (loss) �Nonoperating revenues (expenses) Earnings on investments Interest expense Gain (loss) on exchange of assets ' Other Total nonoperating revenue (expenses) Income (loss) before transfers 'Transfersin Transfers out Change in net assets Total net assets - beginning, as previously reported, before adjustment for GASB 34 implementation ' Adjustment for implementation of GASB 34 - elimination of contributed capital Adjustment for change in accounting principle - change 'in capitalization thresholds Total net assets - beginning, as restated Total net assets - ending 1 Governmental Business-type General Central ActivRies Ciarege Administrative Activities Services Insurance Total Fund Services Total $ 2,946,166 $ 11,584,366 $ 14,530,532 $ 8,377,343 $ 7,603,910 $ 15,981,253 1,383,785 399,989 1,783,774 202,411 3,238 205,649 90,296 6,763 97,059 353,016 - 353,016 12,452 6,569 19,021 - 57,055 57,055 - 150 150 38,737 11,997 � 50,734 435 1,581 2,016 1,788,597 1,966,455 86,274 6,266 86,058 3,095,639 229,800 174,313 26,059 652 3,346,059 190,321 80,588 4,925 525,096 27,760 188,029 525 1,289.746 41,496 5,134,656 1,966,455 276,595 86,854 90,983 3,620,735 257,560 362,342 525 1,315,805 42,148 23,050 8,188,704 8,211,754 273,990 42,430 316,420 - 4,361,086 4,361,086 607,544 - 607,544 575,933 11,199 587,132 - 593,841 593,841 5,680 1,176 6,856 1,584 144,259 145,843 20,123 29,921 50,044 22,038 113,944 135,982 40,540 16,620 57,160 124,260 233,920 358,180 - - - 6,248 - 6,248 704,498 12,679,489 13,383,987 1,236,688 2,648,190 3,884,878 2,746,458 13,096,048 15,842,506 8,495,777 6,822,839 15,318,716 199,708 (1,511,682) (1,311,974) (118,434) 780,971 662,537 34,332 1,051,246 1,085,578 139,906 63,223 203,129 - - - (290,131) (71,944) (362,075) _ - - i ss,ori (sso,sas� (i sa,n� � 259 - 259 182,426 3 182,429 34,591 1,051,246 1,085,837 228278 (339,566) (111,288) 234,299 (460,436) (226,137) 109,844 441,405 551,249 - 155,710 155,710 881,553 22,613 904,166 (25,683) (50,000) (105,683) - - - (25,683) 75,710 50,027 881,553 22,613 904,166 208,616 (384,726) (176,110) 991,397 464,018 1,455,415 1,110,640 13,819,509 14,930,149 5,278,518 2,267,284 7,545,802 6,415 728,449 734,864 3,754,841 49,722 3,804,563 (40,78� (10,620) (51,40� (404,363) 220,098 (184,265) 1,076,268 14,537,338 15,613,606 8,628,996 2,537,104 11,166,100 $ 1,284,884 $ 14,152,812 $ 15,437,496 $ 9,620,393 $ 3,001,122 $ 12,621,515 , The notes to the financial statements are an integral part of this statement 95 City of Clearwater, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2002 � ' ' Governmentel Business-type General Centrel Actfvitles Garage Administretive Activitles ' Services Insurance Total Fund Services Total CASH FLOWS FROM OPERATING ACTIVITIES ' Cash received from other funds $ 2,946,166 $ 11,584,366 $ 14,530,532 $ 8,377,343 $ 7,603,910 $ 15,981,253 Cash payments to suppliers (1,205,796) (11,067,229) (12273,025) (3,897,565) (2,327,698) (6,225,263) Cash payments to employees (1,460,434) (440,486) (1,900,920) (1,882,671) (3,566,586) (5,449,457) Cash payments to other funds (160,762) (42,723) (203,485) (263,636) (618,435) (882,071) , Other revenues - - - 182,427 3 182,430 Net cash provided by operating activities 119,174 33,928 153,102 2,515,698 1,091,194 3,606,892 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating transfers in Operating transfers out Receipt of cash on loans to/trom 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 fixed assets Sale of fixed assets Proceeds from issuance of debt Net cash provided (used) for 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 Total cash and cash equivalents - 155,710 155,710 888,080 22,613 910,693 (25,683) (80,000) (105,683) - - - - 877,065 877,065 167,646 - 167,646 (239,681) (2,000,000) (2,239,681) (377,572) (377,572) (265,364) (7,047,225) (1,312,589) 1,055,726 (354,959) 700,767 - - - - (273,51 S) (273,518) - - - (290,131) (71,944) (362,075) (6,648) - (6,648) (3,674,464) (530,914) (4,205,378) 259 - 259 269,578 - 269,578 25,682 25,682 671,164 218,465 889,629 19,293 - 19,293 (3,023,853) (657,911) (3,681,764) � � � ' ' 34,332 1,051,247 1,085,579 139,906 63,223 203,129 � 34,332 1,051,247 1,085,579 139,906 63,223 203,129 (92,565) 37,950 (54,615) 687,477 141,547 829,024 , 747,078 19,685,924 20,433,002 3,186,897 791,223 3,978,120 $ 654,513 $ 19,723,874 $ 20,378,387 $ 3,874,374 $ 932,770 $ 4,807,144 I ' $ - $ - $ - $ - $ 1,900 $ 1,900 654,513 19,723,874 20,378,387 3,874,374 930,870 4,805,244 ' $ 654,513 $ 19,723,874 $ 20,378,387 $ 3,874,374 $ 932,770 $ 4,807,144 The notes to the financial statements are an integral part of this statement. .� ' � , ' 1 � � Reconc111ation of operaUng Income�to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activiUes: Other revenue from nonoperating section of income statement Depreciation Change in assets and liabilities: Decrease in accounts receivable (Increase) in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payable (Increase) in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided by operating activities Noncash investing, capltal and financing activities: Gain (loss) on exchange of assets City of Clearwater, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2002 Govemmental Business-type General Central Activities Garage Administrative Activlties Services Insurence Total Fund Services Total $ 189,708 $ (1,511,682) $ (1,311,974) $ (118,434) $ 780,971 $ 662,537 - - - 182,427 3 182,430 12,452 6,569 19,021 3,095,639 525,096 3,620,735 _ . - - 76 76 - - - (109,910) - (109,910) 142 (423,032) (422,890) - - - (18,478) 2,002,570 1,986,092 (439,750) 5,575 (434,175) (81,761) (25,201) (106,962) (117,601) (234,082) (351,683) 5,111 (15,296) (10,185) 23,327 13,555 36,882 (80,534) 1,545,610 1,465,076 2,634,132 310,223 2,944,355 $ 119,174 $ 33,928 $ 153,102 $ 2,515,698 $ 1,091,194 $ 3,606,892 $ - $ - $ - $ 196,077 $ (330.848) $ (134,771) The notes to the financial statements are an integral paR of this statement �� 1 � � � i � � This Page Intentionally Left Blank ' � � � � � � �� 98 � Fiduciary Funds Fiduciary Funds are used to account for resources that are managed in a trustee capacity or as an agent for other parties or funds. Employees' Pension Fund - to account for the financial operation and condition of the major employee retirement system. Firemen's Relief and Pension Fund - to account for the financial operation and condition of the Firemen's Relief and Pension Fund, closed to new members in 1962, containing 48 retired members and no active members. Police Supplemental Pension Fund - to account for the financial operation and condition of a supplemental pension plan funded by the State for sworn police officers. Firefighters Supplemental Pension Fund - to account for the financial operation and condition of a supplemental pension plan funded by the State for firefighters. Treasurer's Escrow Agency Fund - to account for the receipt, custody, and expenditure of funds held temporarily in trust for other parties. ;�7 ASSETS Cash on hand and in banks Equiiy in pooled cash and investments Managed investment accounts, at fair value Receivables: Interest and dividends Due from others Total receivables Total assets LIABILITIES Accounts payable Total liabilities NET ASSETS Net assets held in trust for pension benefits (a schedule of funding progress for each plan is presented on page 73) City of Clearwater, Florida Combining Statement of Ftduclary Net Assets Flduclary Funds September 30, 2002 Defined Benefit Defined Contribution Pension Trust Funds Penslon Trust Funds Police Fireflghters Employees' Flremen's Supplemental Supplemental Totals $ - $ - $ 17,948 $ - $ 17,948 697,627 3,397,492 - - 4,095,119 377,817,757 1,280,143 9,329,372 8,470,023 396,897,295 1,907,068 - 50,761 43,265 2,001,094 - - - 41,643 41,643 1,907,068 - 50,761 84,908 2,042,737 380,422,452 4,677,635 9,398,081 8,554,931 403,053,099 407,002 - - - 407,002 407.002 - - - 407,002 $ 380,016,450 $ 4,677,635 $ 9,398,081 $ 8,554,931 $ 402,646,097 The notes to the finanaal statements are an integral part of this statement. 100 ' � ' � I ADDITIONS � Contributtons: Contributions from employer Contributions from employees State of Florida Total contributions � Investment Income: Net appreciation (depreciation) in fair value of investments I nterest Dividends I � I ' Ctty of Clearweter, Florlda Combining Stetement of Changes in Fiduclary Net Assets Fiduclary Funds For the Year Ended September 30, 2002 Less investment expenses: Investment management / custodian fees Net investment income (loss) Totel additfons (reductions) DEDUCTIONS � Beneflts and withdrewel peyments: Benefits Withdrawal payments � Total benefits and withdrawal payments Income (loss) before administrative expenses Administrative expenses Net increase (decrease) I�, Net assets held in trust for penslon benefits: � Beginning of year End of year � � I � I , Defined Benefft Deflned Contrlbution Penslon Trust Funds Pension Trust Funds o ce re g ters - Employees' Firemen's Supplemental Supplemental Totals $ 4,439,829 $ 1,153,732 $ - $ - $ 5,593,561 5,069,687 - - - 5,069,687 12,279 - 770,578 594,442 1,377,299 9,521,795 1,153,732 770,578 594,442 12,040,547 (38,646,780) 5,110 (814,244) (1,249,883) (40,705,797) 9,950,728 279,213 156,330 192,709 10,578,980 1,604,202 - - 85,182 1,689,384 (27,091,850) 284,323 (657,914) (971,992) (28,437,433) 1,747,215 - 87,589 86,578 1,921,382 (28,839,065) 284,323 (745,503) (1,058,570) (30,358,815) (19,317,270) 1,438,055 25,075 (464,128) (18,318,268) 12,029,344 940,706 623,946 492,015 14,086,011 549,742 - - - 549,742 12,579,086 940,706 623,946 492,015 14,635,753 (31,896,356) 497,349 (598,871) (956,143) (32,954,021) 313,118 3,515 7,143 10,066 333,842 (32,209,474) 493,834 (606,014) (966,209) (33,287,863) 412,224,924 4,183,801 10,004,095 9,521,140 435,933,960 $ 380 015 450 $ 4 677 635 $ 9,398,081 $ 8,554,931 $ 402,646,097 The notes to the financial statements are an integral part of this statement 101 Cfty of Clearwater, Florida Statement of Changes in Assets and Liabilitles Agency Fund For the Year Ended September 30, 2002 : : : :• � ►� ASSETS Equity in pooled cash and investments LIABILITIES Deposits: Property owners Developers Other miscellaneous payables: Special purpose funds Other Total Liabilities Balance Balance October 1, September 30, 2001 Additions Deductions 2002 $ 180 536 278,548 174,922 $ 284,162 $ 21, 944 - - $ 21, 944 15,558 100,000 - 115,558 8,097 1,275 1,450 7,922 134, 937 177 , 273 173, 472 138, 738 $ 180,536 278,548 174,922 $ 284,162 The notes to the financial statements are an integral part of this statement. 102 � � � � � �� '� � � � � Capital Assets Used in the Operation of Governmental Funds 103 � � � �, � LI � This Page Intentionally Left Blank � � �� 104 , � City of Clearvvater, Florida Capital Assets Used In the Operatlon of Governmental Funds Comparative Schedules By Source � September 30, 2002 and 2001 Schedufe of General Fixed Asaets� Land Buildings Improvements Other Than Buildings Equipment Infrastructure Construction in Progress Sources of Investments in General Fixed Assets� General Fund Revenue General Obligation Bonds Revenue Bonds Notes, Mortgages and Other Obligations Special Assesaments Federal and State Grants Gifts Contributions from Developers Undetermined Investrnents Prior to July 1, 1954 2002 2001 as restated Z $ 39,914,725 $ 35,595,531 87,933,961 38,837,080 b2,4b5,386 62,065,569 33,070,403 31,828,879 1,076,247 - 11,b60,775 769,064 $ 176,001,487 $ 168,b76,113 $ 124,200,861 $ 114,631,019 6,297,870 6,297,870 13,111,869 6,685,490 4,910,150 4,496,562 2,012,192 2,012,192 10,436,417 9,530,732 6,414,522 6,308,643 7,539,144 7,539,143 1,079,462 1,079,462 $ 176,001,487 $ ib8,576,113 ' This schedule presenta only the captal asaet balances related to govemmental funds. Accordingly, fhe capital essets repo�ted in intemal service funds are exduded from the above amounts. z Effective October 1, 2001, the City implemented a new capitaliization policy that resulted in e prior pedod adjustment to record a writedown of faed as�ets. See Note I I-0 on page 47. The notes to the finanaal statements are an integral part of thla sffitement 105 City of Clearwater, Florida Capitel Assets Used in the Operation of Governmental Funds Schedule By Function end Activity� September 30, 2002 Functlon Improvements Machinery and OtherThan and Activity Total Land Bulldings Buildings Equipment Infrastructure Fixed Assets Unallocated by Function General Government Legislative Executive Financial & Administrative Legal Planning Comprehensive Planning Other General Govemment Public Safety: Law Enforcement Fire Control Protective Inspecbons Emergency and Disaster Relief Ambulance and Rescue Services $ 18,144222 $ 9,958,088 $ 7,938,114 $ $ 248,020 $ 3,531 - - - 3,531 - 481,500 - 1,528 - 479,972 - 935,649 - 9,679 - 925,970 144,794 - 2,106 - 142;688 - 6,285 - - - 6,285 - 4,165 - - - 4,165 - 25,556,599 6,404,795 16,169,786 131;761 2,850,257 - 27,132,523 6,404,795 16,183,099 131,761 4,412,868 8,565,028 588,945 - 200,257 7,775,826 4,956,823 - 95,448 - 4,861,375 180,565 - 11,432 - 169,133 403,868 - 88,482 - 315,386 1,359,806 12,254 1,347,552 15,466,090 588,945 207,616 200,257 14,469,272 Physical Environment: Solid Waste / Recyling 15,940 Conservation and Resource Management 90,541 Other Physical Environment 394,908 501,389 Transportation: Road and Street Facilities Airports Parking Other Transportation Service Economic Environment Industry Development Housing and Urban Developmenl Other Economic Enviroment Human Services: Other Human Services Culture and Recreation: Libraries Rarks & RecreaUon Cultural Centers Special Recreation Facilities Total General Fixed Assets Allocated to Funcdons Construction in Progress Total General Fixed Assets . _ - 15,940 - - 76,210 14,331 340,686 54,222 416,896 84,493 � � , ��I �J _ � � 57,074,460 9,604,677 4,311,791 41,384,499 697,246 1,076,247 35,988 35,988 - ' " � I 502,091 1,200 171,262 148,000 181,629 - 57,612,539 9,641,865 4,483,053 41,532,499 878,875 1,076,247 1,428,826 1,396,655 16,901 - 15,270 - � 698,747 329,835 293,682 - 75,230 - 33,125 33,125 - - 2,160,698 1,759,615 310,583 90,500 23 377 - 23 377 � 13,556,327 118,053 756,735 133,859 12,547,680 - 24,174,314 7,502,955 7,376,210 9,033,979 261,170 - 28,508 - 993 - 27,515 - 5,650,725 3,940,409 677,548 1,006,135 26,633 43,409,874 11,561,417 8,811,486 10,173,973 12,862,998 146,306,490 29,956,637 29,995.837 52,455,386 32,822,383 1,076,247 164,450,712 $ 39,914,725 $ 37,933,951 $ 52,455,386 $ 33,070,403 $ 1,076,247 11,550,775 $ 176,001,487 ' This schedule presents only the capital asset balances related to governmental tunds. Accordingly, ttie capital assets reported in internal service (unds are excluded from ihe above amounts. The notes to the financial statements are an integral part of this statement. 106 � � � �� u r� � �J � City of Clearwater, Florlda Capftal Assets Used in the Operation of Qovemmental Funds Schedule of Changes By Functlon and AcUvlry' For the Year Ended September 30, 2002 Restated z Qeneral P�lor Oeneral Qenerel Fixed As�ts Period Fbced Assets Flxed Assets Functlon and Activiry 10/01/01 Restatement 10/01/01 Additlons Deductions 9/30/02 Fixed Assets Unallocated By Function General Government Legislative Executive Financial & Administrative Legal Planning Comprehensive Planning Other General Government Public Safety: Law Enforcement Fire Control Protective Inspections Emergency and Disaster Relief Ambulance and Rescue Services Physical Environment: Solid Waste / Recyling Conservation and Resource Management Other Physical Environment Transportation: Road and Street Facilitles Airports Parking Other Transportation Service Economic Environment � Employment Oppo�tuniry and Development Indus6y Development Housing and Urban Development Other Economic Environment Human Services: Other Human Services Culture and Recreatlon: Libraries � Parks & RecresUon Cultural Services Cuttural Centers Special Recreation Faalities Total ConsVuction in Progress i $ 34.325.399 $ (16.181.17� $ 18.144,222 $ $ . $ 18.144,222 25,166 (21,635) 3,531 - - 3,531 640,801 (165,554) 475,247 18,021 (11,768) 481,500 1,179,515 (62,021) 1,117,494 14,474 (196,319) 935,649 256,966 (90,802) 166,164 - (21,370) 144,794 6,285 - 6,285 - - 6,285 22,435 (11,949) 10,486 - (6,321) 4,165 26,812,065 (1,054,237) 25,757,828 175,025 (376,254) 25,556,599 28,943,233 (1,406,198) 27,537,035 207,520 (612,032) 27,132,523 12,960,341 (4,839,360) 8,120,981 529,883 (85,836) 8,565,028 6,652,368 (2,561,534) 4,090,834 880,335 (14,346) 4,956,823 245,265 (57,164) 188,101 9,319 (16,855) 180,565 450,005 (46,13� 403,868 - - 403,868 1,481,635 (144,571) 1,337,064 22,742 1,359,806 21,789,614 (7,648,766) 14,140,848 1,442,279 (117,037) 15,466,090 ss,aas �as,sos� 15,sao - - �s,sao 105,155 (14,614) 90,541 - - 90,541 569,218 (176,861) 392,357 2,551 394,908 733,818 (234,980) 498,838 2,551 501.389 71,604,842 (15,882,604) 55,622,238 1,460,572 (8,350) 57,074,460 ss�,os2 (ss�,sz3) ��s,ass - (��s,ass> - 1,394,945 (1,358,957) 35,988 - - 35,988 792,160 (247,420) 544,740 1,200 (43,849) 502,091 74,323,039 (17,940,604) 56,382,435 1,461,772 (231,668) 57,612,539 14,629 (14,629) 2,089,530 (660,704) 1,428,826 - - 1,428,826 1,322,207 (623,460) 698,747 - - 698,747 34,738 (1,613) 33,125 33,125 3.461,104 (1,300,406) 2,160,698 2,160,698 62,379 (39,002) 23,377 23,377 14,801,054 219,983 15,021,037 861,751 (2,326,461) 13,556,327 25,317,257 (3,147,522) 22,169,735 2,009,087 (4,508) 24,174,314 1,704 (1,704) 56,997 (28,489) 28,508 - - 28,508 1,911,740 (201,424) 1,710,316 3,940,409 5,650,725 42,088.752 (3,159,156) 38,929,596 6,811,247 (2,330,969) 43,409,874 205,727,336 (47,910,289) 157,817,049 9,925,369 (3,291,706) 164,450,712 759,064 759,064 10,791,711 11,550,775 $ 206.486,402 $ (47,910,289) $ 158,576,113 $20,717,080 $ (3,291,706) $ 176,001,487 ' This schedule presents only the capihal asset balances related to govemmental funds. Accordingly, ihe capital assets reported in intemal service funds are excluded from ihe above amounts. a EffecWe October 1, 2001 U�e City implemented a new capiffilization policy that resulted in a prior period resffitement to record a writedown of fixed assets. See Note II-0 on page 47. The notes to the flnancial shatements are an integral part of this statement. � � 107 This Page Intentionally Left Blank ,os � � ' �' � � � � � � Supplementary Information 109 Page 1 of 4 City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 1996A,1997A&B, and 1998 Supplementary Information The System: Rates, Fees and Charges The City Commission 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 Commission has authorized the City Manger to enter into contract gas service rates at special rates and/or conditions as required to obtain/retain the customer load. Such contract service must meet the normal construction feasibility formula to insure profitable payback to the City. As of September 30, 2002, contract rates applied to 664 customer accounts and impacted 27.85% 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 pertormed 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 classes of service and a modernized billing methodology. The new rates, effective October 1, 1996, were designed to be industry-based and responsive to the competitive energy challenges. The goal of the Rate Study was to establish rates which would be fair to all classes of customers, provide funding to implement planned expansion in both existing northern Pinellas County services area and into the newly acquired southwestern Pasco service area, and provide an adequate growth potential in return to the City of Clearwater to further offset the ad valorem tax rates (current impact is about .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 Commission on June 6, 1996. 110 � y � m c g. a m � g N � � m � OI O�i � m OD � � � �N � �� tT 0�1 �j � � � 'PtO' o � �� i � o T ° n � � n� � �� w �� m m � q � � 3 0 �g � , oa �� ,�i � a a � � � ,� s m � �� s m O O � � � � O � � � � � � � � � � � � � � � � � � � �� O O tJN O 1 � O O � � � � � � � � � � ; � � � � o � � � � � $ � � O Oo � p� � fp � � � � �p � j � lll 3 o c o � m � o 0 0� 3 � � � m 'c m T � � v_ = m Z � � � � $� 3 � � � 2 � � � n m fr� � �� m o � � o � � �' � � � � m ��m�.� �� m� __ °� � � g � �, � �� m 0 � �� — � � � D m D m > � �� Z P' N O � � P 52 � O O °o m� $ � 6 � � 25 � o $ �D fA fA fA $� �� $ � � � � � � � o �D � O A H fA d! n�o �� j' � o o � cy � (� p p(QJ�m8{m� �p � O t0 A O O � O � O � O O N+ � �� L n� o � � �n � � o o � o C D � a� m� 8 � � o � $ o o °o Fn + � � � p p � O N A S O G � ID O O O O � O � � � � �� m �o � � � � a o �� 0 m� s�� s�� o �� o o� � �� ;o �� g � ao �� s o � � � � � � � �o �O O�p O m V O Op O o O �� I � D O N� �� O � O � S O O �� y N' � tfl tn fn v ir� c�� Z �(O(O(O,,,��111 0 0�po m • [p� (� ppp � p N� m� O O O � O O O �< � N� tn tn ur a� �� o Z i.�o 00 �.+ �P � c� �y � ,°�o' � � � � � � � 25 � o o � m � w N g � g a g � ,� � � �o �� g � � � � � o � s ' � f» t» t» y + y� y� � Z � r �� "$ � � 8 � � S � $ D � � �� D � � � V �o 0o D�.�m � � o o �� L�� D � �� 8�< �� y� � I N O � O O O Z b } (q � Hf .n 41 �' j:+ D � IJ Cl O A D El �� ro� n�a '� o g � o °o �; tn tn tfl O�' �+ uf t� ��°, '�°i� 9 � �i�$ o � `�p� � D D g o � ° � �o �°0 3�mag $ oX�- � �Z ��o OO � O T�rCU O O �O� O O � c 2 2� W � m Z �o �� o T� �0/ �� D D��e �•c D � �, � � + .�i � � � uoi}ew�o�u� �(ae�uawa�ddng 866 L Pu� `8'8dt66 L`d966 L sai�ag spuo8 anuanaa wa;s�(g se� — aanso�as�a 6u�nu��uo� eplao�� `aa�ennaeal� �o /I3!� b �o Z a6ed � ; � � I 1 D , r i � i >> o a 3' ,^zj O b m � » 9Y 0 � L C � j N � N m � m � Z �a m� �c w �o c� o�a � W�'a� -� mm� v � � Z r N D Z N O � � m-c�i� vo �� aN � a v C � � m � a � 0 � � � � Page 3 of 4 City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 1996A,1997A&B, and 1998 Supplementary Information Service Area The Clearwater Gas System (CGS) is owned and operated as an enterprise utiliry by the City of Clearwater. CGS operates over 630 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 79 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 16,792 customers in a 298 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 i i i square mues ana extends from the Gulf of Mexico on the West inland about 10 miles to just West of State Road 41 and Land O' Lakes (generally along the right-of-way of the Suncoast Parkway) and from the Pinellas and Hillsborough County lines on the South to generally State Road 52 on the North. The CGS service territory extends 42.3 miles from the southernmost to the northernmost points. Clearwater Gas System prides itself in being a competitive and public service-minded utility, providing safe, economical and environmentally-friendly gas, which is made in America, available in our communities for all of the homes and businesses in our service area, with special focus on the residential customers who make up over 87.4% of our customer base. 112 � City of Clearwater, Florida � Continuing Disclosure - Gas System Revenue Bonds Series 1996A, 1997A&B, And 1998 Supplementary Information Page 4 of 4 � As of September 30, 2002 the System's active natural gas customers were located as shown in the following table: � � �' Location Meters Belleair 346 Belleair Beach 106 Belleair Bluffs 20 Belleair Shores 18 Clearwater g�928 Dunedin 992 Indian Rocks Beach 59 Indian Shores 37 Largo 1,052 New Port Richey 146 North Redington Beach 9 Oldsmar 48 Port Richey 12 Redington Beach 4 Redington Shores 10 Safety Harbor 596 Tarpon Springs 1,275 Unincorporated Areas Pasco 879 Unincorporated Areas Pinellas 2,434 Total 14,971 Percentage 2.31 % 0.71 % 0.13% 0.12% 46.28% 6.63% 0.39% 0.25% 7.03% 0.98% 0.06% 0.32% 0.08% 0.03% 0.07% 3.98% 8.52% 5.87% 16.26% 100.00% � The following table shows the five largest interruptible customers by peak monthly consumption anc the percent of the System's revenues derived from such customers during the 12 months endinc September 30, 2002: Li � � Customer Name Morton F. Plant Hospital Metal Industries, Inc. National Linen Services, Inc. Mease Hospital Coca-Cola Foods Peak Monthly Therms 97,312 82,274 87,385 52,322 22,136 % of Gross Revenues 2.66% 1.90% 2.29% 1.67% 0.73% 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 fiscal year ended September 30 2002: � � � Interruptible Residential Commercial Average No. Customers 13 12,925 2,033 113 Gas Gas Volume Sales 21.98% 12.82°/a 14.89% 23.54% 63.13% 63.64% Page 1 of 3 City of Clearwater, Florida Continuing Disclosure — Water and Sewer Refunding Revenue Bonds Series 1993 and 1998; and Revenue Bonds Series 2002 Supplementary Information Water System: FY 1997 1998 1999 2000 2001 2002 Historical Financial Information Source and Volume of Water Pumped (in million gallons per day, averaged over the Fiscal Year) Citv Wells oun 3.448 10.412 3.140 11.540 3.070 12.094 3.047 11.528 3.067 11.260 2.258 11.739 Historical Growth in Number of Water Customers (all figures are as of September of the year indicated) Year Water Customers 1997 38,294 1998 38,440 1999 39,931 2000 39,562 2001 40,167 2002 40,340 Ten Largest Water Customers Fiscal Year Ending September 30, 2002 Water Used Name of User (in 100 Cubic Feet) 1. Church of Scientology 113,261 2. Pinellas County Schools 71,831 3. Morton Plant Mease Hospital 53,959 4. Clearwater Housing Authoriry 51,761 5. United Dominion RealtyTrust 51,365 6. Sheraton Sand Key 41,040 7. AGH Leasing UP 39,385 8. Ultimar II Condo Assoc., Inc. 29,387 9. Lewis Real Estate, Inc. 29,216 10. Lane Clearwater UP 27.650 Total � 114 Total 13.860 14.680 15.164 14.575 14.327 13.997 Revenues Produced $ 318,322 236,754 222,366 134,251 121,877 98,969 95,363 83,282 75,551 71.074 0 � � !.� � � � l� _, � � �J I � Page 2 of 3 City of Clearwater, Florida Continuing Disclosure — Water and Sewer Refunding Revenue Bonds Series 1993 and 1998; and Revenue Bonds Series 2002 Supplementary Information Sewer System: Average Sewage Flow Fiscal Annual Ave. Daily Year Flow In MGD 1996 15.8 1997 14.9 1998 17.9 1999 16.5 2000 15.4 2001 14.4 2002 14.3 Historical Growth in Number of Sewer Customers (as of September of the year indicated) Fiscal Sewer Year Customers 1996 32,868 1997 33,017 1998 1999 2000 2001 2002 Ten Largest Sewer Customers Fiscal Year Ending September 30, 2002 Name of User 1. Church of Scientology 2. Pinellas County Schools 3. Morton Plant Mease Hospital 4. United Dominion Realty Trust 5. Clearwater Housing Authority 6. AGH Leasing UP 7. Sheraton Sand Key 8. Lewis Real Estate, Inc. 9. Lane Clearwater UP 10. Bay Aristocrat Village Total Sewer Used (in 100 Cubic Feetl 89,648 49,291 67,535 51,365 50,332 41,040 32,799 29,387 27,538 24 2 � Rates. Fees Md Charaes 33,174 33,383 33,075 32,933 33,215 Revenues Produced $ 270,190 263,643 241,242 148,558 143,88U 117,400 95,663 83,710 79,054 68.908 $�2 24$ The Ciry 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 2002 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. 115 Page 3 of 3 City of Clearwater, Florida Continuing Disclosure - Water and Sewer Refunding Revenue Bonds Series 1993 and 1998; and Revenue Bonds Series 2002 Supptementary Information Residential and October 1, October 1, October 1, October 1, October 1, Nonresidential Water Rates 1998 1999 � 2001 2002 Size of Meter Cubic Feet Gallons Minimum- Under 1 inch 7.08 7.08 7.53 8.07 8.64 1 inch 15.93 15.93 17.57 18.83 20.16 1.5 inch 237.39 237.39 251.00 269.00 288.00 2 inch 550.47 550.47 584.83 626.77 671.04 3 or 2 inch manifold 849.60 849.60 901.09 965.71 1,033.92 4 inch 1,635.48 1,635.48 1,734.41 1,858.79 1,990.08 6 inch 4,200.21 4,200.21 4,455.25 4,774.75 5,112.00 8 inch 7,080.00 7,080.00 7,530.00 8,070.00 8,640.00 Additional charges are assessed for cubic feet of usage in excess of designated minimums. Rates for Irriaation (Lawnl Meters Size of Meter Minimum- Under 1 inch 1 inch 1.5 inch 2 inch 3 or 2 inch manifold 4 inch 6 inch 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, 1�9� 2.52 7.57 37.85 105.99 209.45 403.76 1,218.85 October 1, 1999 Cubic Feet 2.52 7.57 37.85 105.99 209.45 403.76 1,218.85 October 1, � 2.69 8.07 40.35 112.99 223.27 430.41 1,29929 October 1, October 1, 2001 2002 Gallons 2.88 3.08 8.64 9.24 4320 46.20 120.96 129.36 239.04 255.64 460.80 492.80 1,391.04 1,487.64 October 1, October 1, October 1, October 1, October 1, 1998 1999 2000 � 2002 9.44 21.24 31624 733.96 1,132.80 2,180.64 5,600.28 9,440.00 P�I�3 Cubic Feet 9.72 21.87 325.62 755.73 1,166.40 2,245.32 5,766.39 9,720.00 2.43 10.38 24.22 346.00 806.18 1,242.14 2,239.86 6,141.50 10,380.00 3.46 Gallons 11.10 11.88 25.90 27.72 370.00 396.00 862.10 922.68 1,328.30 1,421.64 2,556.70 2,736.36 6,567.50 7,029.00 11,100.00 11,880.00 3.70 3.96 Additional Indebtedness Additional indebtedness incurred totaled $58,680,000 for capital improvements to the Water and Sewer systems and $311,025 for the lease purchase of capital equipment. 116 � � � � � � ,� City of Clearwater, Florida Continuing Disclosure — Stormwater System Revenue Bonds Series 1999 and 2002 Supplementary Information Rates. Fees. and Charges The City uses a measurement of one equivalent residential unit or ERU as the basis for the stormwater management utility fee. The rate per ERU was unchanged from the inception of the utility on January 1, 1991 until 1998 when annual increases were adopted for five fiscal years beginning October 1, 1998. In November 2001, additional increases were adopted including a change to the increase previously adopted to be effective October 1, 2002. The monthly rates at inception and as adopted in 1998 and 2001 are: Effective Date January 1, 1991 October 1, 1998 October 1, 1999 � October 1, 2000 October 1, 2001 January 1, 2002 � October 1, 2002 October 1, 2003 � October 1, 2004 October 1, 2005 Rate Per ERU $3.00 $4.00 $4.17 $4.35 $4.54 $6.13 $7.16 $8.01 $8.65 $9.35 Single-family homes, multifamily units, condominium units, apartments and mobile homes are � rated as one ERU per dwelling unit. Nonresidential properry is charged at the rate of 1,830 square feet of impervious area per ERU. � HISTORICAL NET REVENUES Fiscal Years Ended Se�tember 30 19 8 1 1999 2000 2001 2002 � Net Operating Revenues (Excluding Depreciation) $325,376 $1,361,656 $1,622,157 $1,433,541 $2,793,204 Interest Income and other Non- Operating Revenues (Expenses) 125,815 46,209 132,921 281,471 96,883 C� � � Total Net Revenues Maximum Annual Debt Service Coverage $451,191 $1,407,865 $1,755,078 $1,715,012 $2,890,087 $520,974 .87 $520,974 $520,974 $520,974 $2,052,538 2.71 3.37 3.29 1.41 (1) From 1994 to 1998 total annual operating revenues have only increased from $3.40 to $3.46 million while total operating expenses (exduding depreciation) have increased from $1.68 to $3.13 million. With little undeveloped property in the City and no rate increase from the Utility's inception in 1991 until 1999, revenues remained flat while expenses such as personnel senrices, professional fees, interfund charges and repairs and maintenance have increased significantly. Rate increases of 33.3% for 1999 and 4.39'o for each subsequent year through 2003 were approved in August 1998. In November 2001, to fund significant increases in the Stormwater System capital improvement program, rate increases to $6.13 effective January 1, 2002; to $7.16 effective October 1, 2002; to $8.01 effective October 1, 2003; to $8.65 effective October 1, 2004; and to $9.35 effective October 1, 2005 were approved. � 117 City of Clearwater, Florida Continuing Disclosure — Infrastructure Sales Tax Revenue Bonds, Series 2001 Supplementary Information Historical Debt Service Coveraae 2001 Sales tax revenues (1) $ 8,339,694 Maximum annual debt service $ 7,083,688 Debt service coverage 1.18 2002 $ 8,457,553 $ 7,083,688 1.19 (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 Ciry'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). City of Clearwater, Florida Continuing Disclosure — Improvement Revenue Refunding Bonds, Series 2001 Supplementary Information Historical Debt Service Coveracte 2001 2002 Pledged Revenues (1) $ 15,486,388 $ 18,272,521 Maximum annual debt service $ Debt service coverage 866,760 $ 866,760 17.87 21.08 (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 Flor.ida. 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. 118 � � � � � � L _, u � � � � � � � � 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, 2002, 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, 2002 are summarized below. Total Revenue Received from Pinellas County Fire Protection Authority Total Fire Service Expenditures for Fiscal Year Ended September 30, 2002 The Fire Services Program does not currently utilize an equipment reserve. iiF:7 $ 1,685,123 $ 14,425,889 This Page Intentionally Left Blank 120 STATISTICAL SECTION L� � � LJ � � � � � � � � (� J � � � � � Statistical Section 121 City of Clearwater, Florida General Governmental Expenditures By Function (a) Last Ten Fiscal Years Fiscal General Public Year Government Safety 1993 $ 7,043,042 $ 28,743,633 1994 6,944,313 30,348,800 1995 7,100,253 32,230,932 1996 8,422,146 32,473,158 1997 9,143,485 35,014,716 1998 10,149,047 36,269,061 1999 10, 457 , 801 38, 489, 701 2000 9,126,217 41,362,225 2001 9,486,088 42,442,045 2002 10,545,629 45,920,782 Physical Economic Environment Transportatlon Environment $ 1,428,177 $ 4,625,720 $ 552,196 1,461,345 4,485,318 944,189 1,368,074 4,727,961 1,827,083 1,448,830 4,935,058 1,931,839 1,593,525 4,950,263 2,305,384 1,926,168 5,017,921 2,918,024 318,590 6,755,168 2,722,985 2,245,047 5,091,703 2,177,534 2,221,979 5,401,902 2,385,926 2,839,608 8,940,748 3,268,188 (a) Includes operating and capital outlay expenditures of all govemmental funds. General Governmental Expenditures By Function (a) Fiscal Year Ending September 30, 2002 Human Services 1% % Transportation 8% Capital Outlay 17% General Debt 4% Culture Human and Services Recreation $ 656,016 $11,941,403 637,739 12,190,549 760,196 13,172,327 693, 940 13,582,796 794,432 14,459,550 893,812 15,059,753 934,791 16,300,735 633,960 16,932,942 699,699 18,301,610 565,668 20,740,013 1; 1� Capttal Outlay $ 7,295,099 9,297,004 14,059,318 23,283,499 15,703,411 12,700,027 14,783,956 16,885,678 42,676,646 19,594,274 Oeneral Debt $ 1,520,301 1,556,939 2,169,809 2,496,111 4,327,382 2,401,704 2,230,312 2,141,246 2,257,198 4,571,463 Miliions Total General Governmental Expenditures Last Ten Fiscal Years (a) TABLEI Reporting Entlty Totals $ 63,805,587 67,866,196 77,415, 953 89,267,377 88,292,148 87,335,517 92,994,039 96,596,552 125,873,093 116,986,373 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Fiscal Years 123 City of Clearwater, Florida General Revenues By Source (a) Last Ten Fiscal Years Fiscal Other Licenses Year Property Taxes (b) and Permits 1993 $ 20,504,089 $ 15,853,984 $ 3,010,049 1994 21,107,231 17,350,297 3,047,814 1995 17,265,880 19,012,336 3,620,891 1996 21,060,994 20,434,460 2,937,586 1997 21,652,492 20,706,412 3,403,879 1998 22,242,072 22,081,683 3,406,987 1999 23,293,933 22,736,582 4,241,747 2000 26,087,648 22,985,603 5,432,799 2001 27,712,010 24,187,094 4,408,637 2002 30,322,411 17,489,020 3,987,963 (a) Revenues are those of all govemmental funds. (b) Includes franchise, utility and communication services taxes. Fines & Forfe 2% Other Taxes 15% Licenses ai Permits 3% General Revenues by Source (a) Fiscal Year Ending September 30, 2002 Fines and Forfeitures $ 1,765,097 1,822,424 1,756,680 1,736,731 1,592,702 1,598,936 1,989,510 1,921,448 2,015,067 2,264,041 Intergovemmental Property Taxes 26% 124 restment arnings 3°k Other cellaneous 4�e for 35 , Inter- governmental Revenue $ 17,533,919 18,118,364 19,814,366 20,617,058 23,744,019 24,615,308 26,551,416 26,073,855 33,105,406 44,208,496 Miscellaneous $ 3,155,696 3,153,097 3,627,036 3,835,839 4,427,296 4,581,291 5,518,920 3,253,487 7,011,060 8,775,946 Charges for Services $ 5,505,849 5,505,849 5,523,544 5,695,288 6,289,164 7,564,833 7,677,873 8,127,038 9,378,667 10,428,964 Total General Revenues L.est Ten Fiscal Years (a) TABLE II Total $ 67,328,683 70,105,076 70,620,733 76,317,956 81,815,964 86,091,110 92,009,981 93,881,878 107,817,941 117,476,841 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Fiscal Years 125 Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 City of Clearwater, Florida Properly Tax Levies and Collections Last Ten Fiscal Years Total Current Tax Levy Collections (a) $ 21,408,489 $ 20,947,194 21,281,744 21,154,946 21,458,160 21,388,692 21,761,730 21,675,311 22,410,181 22,281,502 23,008,214 22,856,951 23,951,878 23,854,396 26,998,318 26,876,461 28,664,112 28,567,429 31,303,900 31,204,025 Percent of Levy Col lected 97.85% 99.40 99.68 99.60 99.43 99.34 99.59 99.55 99.66 99.68 Delinquent Col lections $ 199,638 603,226 159,918 73,731 80,253 129,690 226,812 106,800 77,716 130,632 (a) Collections are reported at the gross amount before any discount allowance 126 Total Collections $ 21,146,832 21,758,172 21,548,610 21,749,042 22,361,755 22,986,640 24,081,208 26,983,261 28,645,145 31,334,657 Percent of Total Collections to Current Levy 98.78% 102.24 100.42 99.94 99.78 99.91 100.54 99.94 99.93 100.10 Outstanding Dellnquent Taxes $ 1,438,116 946,874 856,443 868,209 914,383 935, 957 806,626 821,683 840,651 809,894 127 TABLE III Percent of Delinquent Taxes to Current Levy 6.72% 4.45 3.99 3.99 4.08 4.07 3.37 3.04 2.93 2.59 City of Clearwater, Florida Assessed and Estimated Actual Property Valuations Last Ten Fiscal Years Assessed Valuations (a) Tax Collection Non-Exempt Personal Other Total Year Year Real Estate Property Property(b) Taxable 1992 1993 $ 3,800,740,889 $ 386,831,160 $ 532,486 $ 4,188,104,535 1993 1994 3,789,902,836 390,841,880 569,338 4,181,314,054 1994 1995 3,782,134,930 403,392,150 580,731 4,186,107,811 1995 1996 3,820,217,710 431,622,230 592,909 4,252,432,849 1996 1997 3,918,747,480 457,182,870 628,698 4,376,559,048 1997 1998 3,999,483,300 493,752,640 1,026,819 4,494,262,759 1998 1999 4,153,719,690 537,808,800 870,404 4,692,398,894 1999 2000 4,353,493,520 549,051,160 934,183 4,903,478,863 2000 2001 4,657,074,110 550,845,380 867,947 5,208,787,437 2001 2002 5,130,069,970 557,588,870 767,087 5,688,425,927 (a) Pinellas County Property Appraiser � (b) Railroad and Telegraph Companies (c) Includes governmental, educational, qualified religious, literary, scientific, and health care properties and � special exemptions for individual property owners. Qualified properly owners are entitiled to a$25,000 Homestead Exemption based on residency requirement. 128 ' i� LJ I � � � I � I � ' TABLE IV Percentaaes Assessed Total Total Values to Yearly Increases Exempt(c) All Estlmeted Market Taxable Total $ 1,317,255,941 $ 5,505,360,476 100.0 % 0.2 % 0.5 % 1,391,537,458 5,572,851,512 100.0 (0.2) 1.2 1,455,095,094 5,641,202,905 100.0 0.1 1.2 1,480,760,538 5,733,193,387 100.0 1.6 1.6 1,508,032,959 5,884,592,007 100.0 2.9 2.6 1,555,308,467 6,049,571,226 100.0 2.7 2.8 1,657,162,640 6,349,561,534 100.0 4.4 5.0 1,751,871,312 6,655,350,175 100.0 4.5 4.8 1,899,322,835 7,108,110,272 100.0 6.2 6.8 2,170,560,750 7,858,986,677 100.0 9.2 10.6 129 Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 City of Clearwater, Florida Properly Tax Rates All Direct and Overlapping Governments Last Ten Fiscal Years City 5.1158 5.1158 5.1158 5.1158 5.1158 5.1158 5.1158 5.5032 5.5032 5.5032 Downtown Development (a) 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 School 9.0000 9.0820 9.3590 9.3290 9.1760 9.1330 9.1100 8.6660 8.4330 8.4870 Property Tax Rates: Expressed as mills per $1,000 of taxable value. 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 0.0225; Juvenile Welfare Board 0.8117; SW Fiorida Water Management District 0.4220; Pinellas Anclote River Basin 0.4000. 130 County 5.4170 5.4290 5.5850 5.5140 5.5100 5.5380 5.5380 5.8540 6.0040 6.1410 Transit Distrlct 0.5893 0.6697 0.6697 0.6697 0.6697 0.6697 0.6501 0.6501 0.6501 0.6501 Emergency Medical Servlces 0.7000 0.8500 0.8720 0.8060 0.7520 0.7410 0.7130 0.6470 0.7470 0.6600 Operating Debt Service Road Capital Improvements Comm. Redevelopment Agency Total City Tax 131 2002 4.9638 0.1383 0.3452 0.0559 5.5032 Other 1.1560 1.1820 1.4221 1.6308 1.6561 1.6561 1.6561 1.6572 1.6562 1.6562 (b) 2001 4.9732 0.1505 0.3452 0.0343 5.5032 TABLE V Totel 22.9781 23.3285 24.0236 24.0653 23.8796 23.8536 23.7830 23.9775 23.9935 24.0975 TABLE VI City of Clearwater, Florida Principal Taxpayers September 30, 2002 Type of Taxpayer Business Bellwether Prop. LP Ltd. Shopping Center California State Teachers Apartment Complex Taylor, John S. III Landowner Excel Realty Trust Inc. Shopping Center Branch Sunset Association Ltd Shopping Center Clearwater Land Co. Adult Congregate Faciliry Sand Key Association Ltd. Hotel St. Joe Co Office Building Northwood Plaza Shopping Center ZOM Bayside Arbors Ltd. Apartment Complex Sub-Total AI I Others Total Assessed Value * $ 89,035,400 27,543,800 26, 993,400 25,084,500 24,959,200 23,813,600 23,485,800 23,325,100 22,685,800 19,140,700 306,067,300 4,824,002,670 $ 5,130,069,970 * Based on non-exempt real property assessed taxable values. Source: Pinellas County Property Appraiser, 2001 tax rolls for 2002 collections. 132 Percentage to Total Assessed Value 1.74% 0.54°/a 0.53% 0.49% 0.49% 0.46% 0.46% 0.45°/a 0.44% 0.37°/a 5.97% 94.03% 100.00% � City of Clearwater, Florida Ratio of Net General Bonded Debt to Taxable Assessed Value And Net Bonded Debt Per Capita Last Ten Fiscai Years Taxab le Fiscal Assessed Year Population Value (a) (000) 1992 99,856 $4,179,582 1993 100,768 4,188,105 1994 100,604 4,181,314 1995 101,162 4,186,108 1996 101,867 4,252,433 1997 102,472 4,376,559 1998 102,874 4,494,262 1999 104, 281 4,692,398 2000 104,454 4,903,478 2001 108,787 5,208,787 2002 10 9, 231 5, 6 88, 426 Gross General Bonded Debt $ 725,000 635,000 545,000 450,000 355,000 255,000 135,000 0 (b) 0 0 0 TABLE VII Ratio of Net Net Net Gener�l General Less General Bonded Debt Bonded Sinking Bonded To Assessed Debt Fund Debt Value Per Capita $ 272,221 $ 452,779 0.011% $ 4.53 286,522 348,478 0.008% 3.46 302,300 242,700 0.006% 2.41 316,403 133,597 0.003% 1.32 333,402 21,598 0.001 % 0.21 90,000 165,000 0.004% 1.61 101,250 33,750 0.001 % 0.33 0 0 0.000% 0.00 0 0 0.000°/b 0.00 0 0 0.000% 0.00 0 0 0.000% 0.00 (a) Values listed are for year of collections. (b) Final maturity of General Obligation Bonds, 1978 Series, was January 1, 1999, in the amount of $135,000. 133 TABLE VIII City of Clearwater, Florida Ratio of Annual Debt Service Expenditures For General Obligation Bonded Debt To Total General Governmental Expenditures (a) Last Ten Fiscal Years Total Fiscal Debt Year Principal Interest (b) Service 1993 $ 90,000 $ 38,610 $ 128,610 1994 90,000 33,615 123,615 1995 95,000 28,816 123,816 1996 95,000 23,114 118,114 1997 100, 000 17, 580 117, 580 1998 120,000 11,280 131,280 1999 135,000 3,915 138,915 2000 0 0 0 2001 0 0 0 2002 0 0 0 Ratio of Total Debt Service General to General Governmental Governmental Expenditures Expenditures $ 63,805,587 0.2% 67,866,196 0.2% 77,415,953 0.2% 89,267,377 0.1 % 88,292,148 0.1 °/a 87,335,517 0.2% 92,994,039 0.1 % 96,596,552 0.0% 125,873,093 0.0% 116,986,373 0.0°/a (a) Includes operating and capital outlay expenditures of all govemmental funds and component unit. (b) Excludes bond issuance and other costs. 134 ' ' City of Clearwater, Florida Computation of Legal Debt Margin , September 30, 2002 CJ � � � I ' � LJ Assessed Valuation of Non-Exempt Real Estate (a) Times: Twenty Percent Limitation Per City Charter Equals Legal Indebtedness Limitation TABLE IX $ 5,130,069,970 X 20% 1,026,013,994 Debt Subject to Indebtedness Limitation: Net Debt Gross Less Sinking Subject to Debt Fund Assets Limitation Revenue Bonds: 1996A Gas System Revenue Bonds $ 8,360,000 1997 Gas System Revenue Bonds 12,375,000 1998 Gas Sjrstem Revenue Bonds 7,895,000 1993 Water and Sewer Revenue Bonds 19,435,000 1998 Water and Sewer Revenue Bonds 52,301,781 2002 Water and Sewer Revenue Bonds 58,680,000 1999 Stormwater system Revenue Bonds 7,275,000 2002 Stormwater system Revenue Bonds 24,685,000 2001 Infrastracture Sales Tax Revenue Bor 46,445,000 2001 Improvement Revenue Refunding Bor 11,360,000 2002 Spring Training Revenue Bonds 14,810,000 Notes, Mortgages and Contracts 14,031,247 Totals Legal Indebtedness Margin 7,500 42,083 2,917 9,258,500 4,454,185 3,551,469 110,000 4,250,000 1,103,427 8,352,500 12,332,917 7,892,083 10,176,500 47,847,596 55,128,531 7,165,000 24,685,000 42,195,000 10,256,573 14,810,000 14,031,247 277,653,028 22,780,080 254,872,948 $ 771,141, 046 (a) Valuation listed is from 2001 tax year for 2002 collections. TABLE X City of Clearwater, Florida Computation of Direct and Overlapping Debt September 30, 2002 Net General Obligation Debt Govemmental Unit Outstanding Percent Amount City of Clearwater $ - Pinellas County School Board $ 70,894,996 100% $ 14% $ 9,925,299 (a) Applicable Net Debt Percentage is based on ratio of City to County Taxable values for 2002 collections ($5,130,069,970 / $37,671,431,940=13.62%). 135 TABLE XI Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 Q002 City of Clearwater, Florida Water and Sewer Revenue Bonds Coverage Last Ten Fiscal Years Net Revenues Gross Available for Revenues (a) Expenses (b) Debt Servlce $ 32,961,135 $ 18,963,260 $ 13,997,875 32, 529, 074 17, 8 24, 720 14, 704, 354 33, 058, 297 18, 495, 960 14, 562, 337 34,814,929 22,311,433 12,503,496 35,816,439 23,417,605 12,398,834 36,311,233 24,608,494 11,702,739 35,850,799 24,806,085 11,044,714 37,406,823 25,882,873 11,523,950 39,485,997 27,336,550 12,149,447 39,452,012 28,551,889 10,900,123 Debt Service Requirements PrincipaUSinking Fund Interest Total $ 2,580,000 $ 3,023,838 $ 5,603,838 2,880,000 3,916,263 6,796,263 3,760,000 3,380,470 7,140,470 3,990,000 3,186,295 7,176,295 4,140,000 3,038,845 7,178,845 4,305,000 2,869,738 7,174,738 4,500,000 2,083,179 6,583,179 4,705,000 1,581,403 6,286,403 4,920,000 1,358,690 6,278,690 5,165,000 1,117,880 6,282,880 Debt Service Coverege 2.50 2.16 2.04 1.74 1.73 1.63 1.68 1.83 1.94 1.73 (a) Includes interest eamings and gross revenues of Water and Sewer Divisions of Utility System. Extraordinary Gain and contributed revenues are excluded. �b� Excludes depreciation (and similar noncash expenses), amortization of bond discount and issue costs, bond interest, sinking fund and reserve requirements and extraordinary loss. Note: In April, 1993, the City issued $53,445,000 Refunding Revenue Bonds to finance the cost of refunding entirely the series 1988A and 1988B bonds. In November, 1998, the City issued $43,642,690 Refunding Revenue Bonds to finance the cost of refunding entirely the series 1988 bonds. In July, 2002, the City issued $58,680,000 revenue bonds for the purpose of paying the costs of capital improvements to the City's water, wastewater collection, water pollution control and reclaimed water systems. 136 , ' , � , ' � LI ' � � � � � � � CJ � ' City of Clearwater, Florida Gas Revenue Bonds Coverage Last Ten Fiscal Years Net Revenuea Fiscal Gross Avallable for Year Revenues (a) Expenses (b) Debt Servlce 1993 $ 12,562,105 $ 9,364,981 $ 3,197,124 1994 13,316,619 10,220,164 3,096,455 1995 13,672,905 10,555,346 3,117,559 1996 16, 423,147 13,199, 962 3,223,185 1997 17,779,715 14,124,064 3,655,651 1998 19,438,030 14,975,445 4,462,585 1999 18,772,104 14,701,728 4,070,376 2000 21,533,228 16,462,986 5,070,242 2001 31,211,839 24,575,414 6,636,425 2002 27,218,076 20,664,704 6,553,372 Flscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 TABLE XI Maximum Debt Debt Service Requlrements Service Principal Interest Total Covera e Coverage(c) $ $ 488,020 $ 488,020 6.55 1.80 488,020 488,020 6.34 1.74 150,000 978,195 1,128,195 2.76 1.75 240,000 1,052,923 1,292,923 2.49 1.81 320,000 1,454,765 1,774,765 2.06 2.06 455,000 1,379,358 1,834,358 2.43 2.05 540,000 1,564,891 2,104,891 1.93 1.87 560,000 1,543,494 2,103,494 2.41 2.33 580,000 1,518,713 2,098,713 3.16 3.05 610,000 1,494,887 2,104,887 3.11 3.01 (a) Includes interest eamings and gross revenues from Gas System. (b) F�ccludes depreciation (and aimilar noncash expenses), amortization of bond discount and issue costs, bond interest, and reserve adJuatrnents. (c) Maximum Debt Service coverage is presented for continuing disclosure on the Gas System Revenue Bonds, and is based upon the maximum debt service for the outstanding bonds and parity bonds. For fiscal 2002 the maximum debt service totals $ 2,176,810. Note: In September, 1994, the City issued $8,110,000 Gas System Revenue Bonds, Series 1994A, for additions, extensions, supplements or replacements of the existing gas system in Pinellas County, Florida. Approximately $1,340,000 was to be used to develop new gas markets. In July, 1996, the Ciry issued $8,815,000 Gas System Revenue Bonds, Series 1996A, for additlons and extensions � the gas system in Pinellas Couniy and Pasco County, Florida, as well as supplements and replacements of the existing gas system in Pinellas County, Florida. During October 1997 the City issued $ 7,895,000 Gas System Revenue Bonds, Series 1997A, for additions extensions, supplements, or replacements of the existing gas system within Pinellas and Pasco Counties. Also during October 1997 the City issued $6,710,000 Gas System Revenue Refunding Bonds, Series 1997B, to advance refund the Gas system Revenue Bonds, Series 1991. During January 1998 the City issued $ 8,020,000 Gas System Revenue Bonds, Sedes 1998, to advance refund the Gas System Revenue Bonds, Series 1994A. 137 TABLE XI (a) (b) City of Clearwater, Florida Stormwater Revenue Bonds Coverage Three Fiscal Years Since Issuance Net Reven ues Fiscal Gross Available for Year Revenues (a) Expenses (b) Debt Servlce 2000 $ 4,938,338 $ 3,183,260 $ 1,755,078 2001 $ 5,323,293 $ 3,608,281 $ 1,715,012 2002 $ 6,853,086 $ 3,962,999 $ 2,890,087 Debt Service Requirements Fiscal PrincipaUSinking Debt Service Year Fund Interest Total Coverage 2000 $ - $ 185,225 $ 185,225 9.48 2001 $ 105,000 $ 399,593 $ 504,593 3.40 2002 $ 120,000 $ 395,093 $ 515,093 5.61 Includes interest earnings and gross revenues of the Stormwater Utilfty System Fund. Extraordinary gain and contributed revenues are excluded. Excludes depreciation (and similar noncash expenses), amortization of bond discount and issue costs, bond interest, sinking fund and reserve requirements, and extraordinary loss. Note: In November 1999 the City issued $7,500,000 Stormwater System Revenue Bonds for the purpose of paying the costs of capital improvements to the City's stormwater management system. In September 2002 the City issued $24,685,000 StoRnwater Revenue Bonds for the purpose of paying the costs of capital improvements to the City's stormwater management system. Consequently only three years of data are available as of September 30, 2002. TABLE XI City of Clearwater, Florida Infrastructure Sales Tax Revenue Bonds Coverage Two Fiscal Years Since Issuance Debt Service Requirements Flscal Sales Tax PrincipaVSlnking Year Revenues (a) Fund Interest Total 2001 $ 8,339,694 $ - $ - $ - 2002 $ 8,457,553 $ - $ 1,983,688 $ 1,983,688 Debt Servlce Coverage ia) City's share of the 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. 0 4.26 Note: During June 2001 the Ciiy issued $46,445,000 Infrastructure Sales Tau Revenue Bonds, Series 2001, for the purpose of paying the costs of certain capital improvements to the City, including, but not limited to, costs relating to road and bridge projects and a new main public library. Consequently only two years of data are available as of September 30, 2002. 138 i ��_ ' , r _ � , � , , � ' � � � � � , � , ' , � ' City of Clearwater, Fiorida Spring Training Facility Revenue Bonds Coverage Fiscal Year Since Issuance Debt Servlce Requlrements Fiscal PrincipaVSinking Debt Servlce Year Fund (e) Interest Total Coverage � 2002 $ $ ' (a) First debt service payment due March 1, 2003. $ TABLE XI Note: During September 2002 the City issued $14,810,000 Spring Training Facility Revenue Bonds, Series 2002, ' for the purpose of constructing a spring training facility for the Philadephia Phillies major league baseball organization. ' ' � � � ' � � LJ ' � CJ Fiscal Year City of Clearwater, Florida Improvement Revenue Refunding Bonds Coverage Fiscal Year Since Issuance Debt Service Requirements Pledged Principal/Sinking Debt Servlce Revenues (a) Fund Interest Total Coverage 2002 $ 18,272,521 $346,667 $396,485 $743,151 24.59 (a) 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. Note: During October 2001 the City issued $11,470,000 Improvement Revenue Refunding Bonds, Series 2001, for the purpose of providing 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. 139 Flscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 City of Clearwater, Florida Property Value and Construction Last Ten Fiscal Years Commerciai Construction Number of Permits Value 1,693 $ 42,051,081 1,831 37,164,437 1,775 77,486,099 1,898 42,360,262 1,702 49,385,937 1,455 54,732,371 1,690 48,849,409 2,698 176,010,021 2,267 152,059,409 2,129 106,306,523 Residential Constructton Number of Permits Value 3,885 $ 29,296,168 3,882 49,950,413 3,747 53,614,754 4,224 26,854,040 4,172 75,997,890 4,978 47,045,558 5,544 95,713,246 5,573 30,814,807 5,390 34,084,137 5,418 36,614,757 (a) Includes institutional, church, seawalls, pools, and non-valued building permits. (b) Source: Pinellas County Property Appraiser, values listed are for year of collections. 140 i� ' � ' I � ' ' � � ' � � ' ' � ' �J , � �� Miscellaneous Constuctlon (e) Number of Permfts Value 6,799 $ 20,113,175 6,063 17, 922,023 6,827 28,843,480 6,825 24,898,425 6,739 27,351,853 5,266 17,820,469 307 7,506,580 35 229,870 324 15,763,545 191 4,634,345 141 TABLE XII Total Assessed Property Value (b) $ 5,505,360,476 5,572,851,512 5,641,202,905 5,733,193,387 5,884,592,007 6,049,571,226 6,349,561,534 6,555,350,175 7,108,110,272 7,858,986,677 TABLE XIII City of Clearwater, Florlda Demographic Statistics Last Ten Flscal Years Per Capita Year Populatlon (a) Income (b) 1993 100,768 24,470 1994 100,604 Not Available 1995 101,162 22,789 1996 101,867 24,696 1997 102,472 26,050 1998 102,874 27,311 1999 104,281 28,367 2000 104,454 30,633 2001 108,787 31,658 2002 109,231 27,704 Median School Unemployment Age (c) Enrollment (d) Rate (e) 42.3 11,584 6.1 42.9 10,043 5.5 42.2 10,284 4.8 42.1 11,960 4.2 43.3 15,264 3.7 43.6 13,714 2.9 43.9 14,551 3.0 44.2 15,978 2.7 43.0 16,293 2.7 43.0 17,047 3.9 (a) Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract 2002. (b) Data is for Pinellas County. Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract 2002. (c) Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract 2002. (d) Source of data is the Pinellas County School District. (e) Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract 2002, as of December 31� of the current fiscal year. Note: Data is the latest published annual data available for an unspecified point in each year, not specifically September 30. 142 Date of Incorporation: Town of Clearwater June 2, 1897 Municipal Corporation May 27, 1915 Form of Govemment: Commission - Mayor Fiscal Year: October 1- September 30 Population: U.S. Bureau of the Census 1930 1940 1950 1960 1970 1980 1990 2000 Clearwater 7,607 10,136 15,581 34,653 52,074 85,170 98,784 108,787 Area: Land 25.4 Square Miles Water 8.6 Square Miles Public Works: Streets: Paved 304 Miles Unimproved 10 Miles City of Clearwater, Florida Miscellaneous Facts September 30, 2002 Public Safety: Police Protection: Stations Employees Tamp Bay Metro Area 231,190 291,622 436,365 820,443 1,105,553 1,613,603 2,067,959 2,395,997 Sanitary Sewers: Sanitary Sewer Mains 363 Miles Storrn Sewer Mains 147 Miles Treatment Plants 3 Daily Capacity 29 Million Gallons Water: Mains Accounts Fire Hydrants Gas: Mains Accounts 559 Miles 40,340 4,029 669 Miles 16,792 143 Fire Protection: Stations Employees Total Municipal Employees Libraries: Branches (including main library) Collection Marina Airpark Recreational Facilities: Parks Playgrounds Golf Courses Beach Ballfields Tennis Basketball Horseshoe Soccer and Football Handball Swimming Pools Stadium Recreation Centers Special Recreation Facilities Recreational Paths Boat Ramps Fishing Areas Lawn Bowling Shuffleboard Fitness Courses Disc Golf Courses TABLE XIV 9 399 7 200 1,835 5 545,898 209 Boat Slips 177 Spaces 1,130 Acres 31 3 Courses 42 Acres 36 Diamonds 64 Courts 22 Courts 24 Courts 17 Fields 12 Courts 5 Pools 6,917 Seats 11 32 7.4 Miles 13 21 24 Rinks 62 Courts 8 2 � � , , ' � � � This Page Intentionally Left Blank � � r--, I� � , � � � � � � ,� � SINGLE AUDIT SECTION � � 1 � � � � � � � � i Single Audit / Grants Compliance 145 This Page Intentionally Left Blank 146 1 � ! � J i � i � � � i ' Grant Thornton T ' Accountants and Management Consultants REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH ' GOVERNMENT AUD/TING STANDARDS i � � � ' ' , � � � � Honorable Mayor — Commissioner, City Commissioners and City Manager City of Clearwater, Florida We have audited the financial statements of the City of Clearwater, Florida ("City") as of and for the year ended September 30, 2002, and have issued our repo�t thereon dated January 10, 2003. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We did not audit the financial statements of the Clearwater powntown Development Board. Those financial statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to data included for the Clearwater powntown Development Board, is based on the report of the other auditors. Compliance 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 grants, noncompliance with which could have a direct and material effect on the determination of the City's 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 that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reoortinq In planning and performing our audit, we considered the Cit�s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the City's financial statements and not to provide assurance on the intemal control over financial reporting. Our consideration of the internal control over financial repo�ting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management in a separate letter dated January 10, 2003. This report is intended solely for the information of the Mayor-Commissioner, City Commissioners, City Manager, management, federal awarding agencies, pass-through entities, and State of Florida program officials and is not intended to be, and should not be, used by anyone other than these specified parties. Tampa, Florida � January 10, 2003 Suite 3850 101 E. Kennedy Blvd ,Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com �Grant Thornton LLP US Member of Grant Thornton IMernational G� �� L L� 147 ' Grant Thornton T � Accountants and Management Consultants � REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL � Honorable Ma or – Commissioner Y City Commissioners and City Manager , City of Clearwater, Florida Compliance � We have audited the compliance of the City of Clea►water, Florida (the "City") with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance � Supplement and the requirements described in the Executive Office of the Governor's State Project Compliance Supplement that are applicable to each of its major federal programs and major state projects for the year ended September 30, 2002. The Cit�s major federal programs and major state 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 major state projects is the responsibility of the Citys 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 appticable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local � Governments, and Non-Pcofit 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 or major , state 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 major state projects for the year ended September 30, 2002. The results of our auditing procedures disclosed no instances or noncompliance that are required to be reported in accordance with OMB Circular A-133 or Chapter 10.550, Rules of the Auditor General. Internal Control Over Compliance — The management of the City is responsible for establishing and maintaining effective internal control over � compliance with requirements of laws, regulations, contracts and grants applicable to federal programs and state projects. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program or major state project in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test � and report on internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General. , Suite 3850 101 E. Kennedy Blvd �Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com �Grant Thornton LLP US Member of Grant Thornton IMernational 148 , � Our consideration of the intemal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation � of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program or major state project being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters � involving the intemal control over compliance and its operation that we consider to be material weaknesses. This repo�t is intended solely for the information of the Honorable Mayor-Commissioner, City Commissioners, � City Manager, management, federal awarding agencies, pass-th�ough entities and State of Flo�ida program . officials and is not intended to be, and should not be, used by anyone other than these specified parties. � � Tampa, Florida January 10, 2003 � � � � � � � � �'. �� LL� �� 149 City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the year ended September 30, 2002 � � Federal Grantor / Program Federal Pass-through Grantor / CFDA/CSFA or Award Share of � Program Title Number Grant I.D. Number Amount (a) Expenditures FEDERAL AWARDS U.S. Department of Commerce: Economic Development Adminstration North Greenwood Planning Total U.S. Department of Commerce U.S. Department of Housing and Urban Development (HUD): Passed through Cleannrater Housing Authority: Homer Villas Homer Villas Homer Villas Homer Villas Community Development Block Grant - Entitlement Passed through Pinellas County: Home Investment Partnerships Program Total U.S. Department of HUD U.S. Department of the Interior, National Park Service: Passed through Florida Department of State Division of Historical Resources: Downtown Clearwater Design Guidelines Total U.S. Department of the Interior U.S. Department of Justice: Neighborhood Policing Initiative for the Homeless Local Law Enforcement Block Grant Local Law Enforcement Block Grant'98 Local Law Enforcement Block Grant'99 Locai Law Enforcement Block Grant'00 Local Law Enforcement Block Grant'01 Local Law Enforcement Block Grant'02 Weed & Seed Official Site Recognition Weed & Seed FY '97 Weed & Seed FY'98 Weed & Seed FY'99 Weed & Seed 2000 Weed & Seed 2001 Weed & Seed Enforcement Weed & Seed Asset Forfeiture Weed & Seed Asset Forfeiture'99 Weed & Seed Asset Forfeiture '00 Weed & Seed Asset Forfeiture '01 Federal Forfeiture Sharing Community Oriented Policing Seroices (COPS) Universal Hiring Award COPS More '98 COPS Technology Bullet Proof Vests Bullet Proof Vests Bullet Proof Vests Bullet Proof Vests 11.307 04-69-04764 14.193 FL29DEP0750196 14.193 FL29DEP0750199 14.193 FLI4DEP0750100 14.193 FLI4DEP0750101 14.218 B-01-MC-12-0002 14.239 M-01-MC-12-0230 15.904 FEID #59-60001874 F0216 16.580 16.592 16.592 16.592 16.592 16.592 16.592 16.595 16.595 16.595 16.595 16.595 16.595 16.595 16.595 16.595 16.595 16.595 N/A 16.710 16.710 16.710 16.607 16.607 16.607 16.607 150 2001-DD-BX-0056 96L6-VX-3470 97L6-VX-2739 98L6-VX-2739 1999LB-VX-8125 2000-LB-BX-0698 2001-LB-BX-1821 96-WS-QX-0003 96-WS-QX-0053 97-WS-QX-0028 98-WS-OS-0043 99-WS-QX-0039 2000-WS-QX-0041 97-WS-QX-0013 97-WS-QX-0028 98-WS-�8-0043 99-WS-QX-0039 2000-WS-QX-0041 N/A 96UMWX0784 1999CM WX2879 2001 CKWX0035 99003227 00000868 01004247 02010017 $ 35,000 $ 22,359 35,000 22,359 � 186,237 � 66,160 132,949 95,041 � 142,501 94,832 13,573,000 1,017,159 3,721,914 618,642 � 17,822,761 1,825,674 10,000 � ,o,000 _ r 997,800 252,490 274,031 316,739 308,250 224,497 245,829 35,000 71,092 175,000 175,000 175,000 175,000 43,322 100,000 100,000 50,000 50,000 113,297 1,275,000 1,079,571 748,350 4,016 3,464 2,941 720 469,087 � 111,321 66,092 � 121,423 12,997 � 53,015 10,344 22,860 � 20,607 137,088 � 107,580 � 399 � � � City of Clearwater, Florida � Schedule of Expenditures of Federal Awards and State Financial Assistance - Continued For the year ended September 30, 2002 � Federal Grantor / Pass-through Grantor / CFDA/CSFA Program Title Number Grant I.D. Number � Dept of Justice passed through State of Florida Attorney General's Office: � VOCA Grant VOCA Grant VOCA Grant VOCA Grant � Dept of Justice Passed through Florida Department of Law Enforcement, Byrne Formula Grant Program: Project Next Step � Operacion Apoyo Hispano Total U.S. Department of Justice U.S. Department of Transportation: � Passed thru Florida Dept of Transportation: Clearwater Beach West Bridge Connector McMullen Booth Road Overpass Total U.S. Department of Transportation U.S. Environmental Protection Agency: � Passed thru Florida Dept of Environmental Protection: Alligator's Creek Brownfield - Federal � Brownfield - Federal Brownfield - Federal Brownfield - Federal Vulnerability Assessment � Total U.S. Environmental Protection Agency Total Federal Financial Assistance � � � � 16.575 V9150 16.575 V0164 16.575 V1123 16.575 V2092 Program Federal or Award Share of Amount (a) Expenditures 36,121 34,910 124 34,910 34,910 34,510 16.579 01-CJ-J1-08-62-02-058-01 78,500 38,812 16.579 02-CJ-2H-08-62-02-147 65,000 41,096 7,280,360 1,247,756 20.205 Federal No. 9045-019C,Contract #AI 915 479,000 130,481 20.205 Federal No. 9045-018C,Contract #A916 400,000 166,624 879,000 297,105 66.460 66.811 66.811 66.811 66.811 66.476 151 DEP Contract #WM781 BP-98405396-2 BP984053-96-1 V-984053-96-0 BL984872-99-0 HS-82988401 242,000 220,000 100,000 17,707 100,000 100,000 500,000 17,047 115,000 1,157,000 254,755 27,184,121 $ 3,647,648 State Grantor / Pass-through Grantor / Program Title STATE FINANCIAL ASSISTANCE Florida Executive Office of the Governor, Office of Tourism, Trade, and Economic Development: Brownfield Grant OTfED Brownfield Remediation Total Florida Executive Office of the Governor Florida Department of Environmental Protection: Cliff Stephens Park City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance - Continued For the year ended September 30, 2002 CFDA/CSFA Number Town Pond Stevenson Creek Water Qualiry Passed through Southwest Florida Water Management DisVict: Kapok Wetland & Floodplain Restoration Program Allen Creek Brownfield Remediation Brownfield State Appropriation Funding Total Department of Environmental Protection Florida Department of State, Secretary of State: Division of Library & Information Services North Greenwood Branch Library Total Florida Department of State, Secretary of State Florida Housing Finance Corporation: State Housing Initiative Partnership Program (SHIP) Total Florida Housing Finance Corporation Florida Department of Community Affairs: Kapok WeUand & Floodplain Restoration Historic Bayview Environmental Park Total Department of Community Affairs Florida Department of Transportation (FDO�: T-Hangars Declared Distance Airpark Master Plan Airpark Master Plan Airpark Master Plan Runway Overrun & BERM Runway Overrun & BERM Security Upgrade Bluff to Beach Guideway Total Department of Transportation Grant I.D. Number � I �� Program State or Award Share of Transfers to Amount (a) Expenditures (b) Subrecipients (c) 31.011 V 984053-96-0 $ 600,000 $ 103,606 $ � 31.011 OT-01-123 111,000 110,974 711,000 214,579 - 37.017 FRDAP Grant F-01330 Dep Contract #F1330 37.039 WAP051 37.039 WAP050 37.039 37.039 37.041 37.041 150,000 150,000 � 400,000 � 1,500,000 225,000 � 02CON00065 1,800,000 66,600 � 95CON00097 261,000 6,697 SP530 300,000 23,859 SP589 500,000 431,170 4,911,000 903,326 - 45.030 300,000 180,000 � 300,000 180,000 - 52.901 5,689,086 774,396 52,889 � 5,689,086 774,396 52,889 52.002 FCT#02-CT-2G-01-F1-A1-01: FF1Award �01-015-FF1 52.002 FCT #02-CT-5H-01-Fi-A1-144 FCT#01-144-FFI 55.004 55.004 55.004 55.004 55.004 55.004 55.004 55.004 55.004 55.014 wr�4u�uuoia4ui�onvact A1076 FM40300618401 WP#40299118401 Contract AI WPI#40297918401 Contract#f WP40298619401 Contract AJ� FM#40299319401 FRN408405-1-84-01 Contract AI841 152 3,500,000 3,500,000 1,726,875 5,226,875 3,500,000 - 300,000 250,000 20,745 50,000 59,964 100,000 175,000 280,000 70,000 150,000 47,519 19,457 12,784 69,960 1,455,709 149,720 - �� State Grantor / Pass-through Grantor / Program Title Florida Department of Revenue: Phillies Stadium Total Florida Department of Revenue Total State Financial Assistance Total Expenditures of Federal Awards and State Financial Assistance City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance - Continued For the year ended September 30, 2002 Program State CFDAICSFA or Award Share of Transfers to Number Grant I.D. Number Amount (a) Expenditures (b) Subrecipients (c) 73.016 15,000,000 750,006 15,000,000 750,006 - $33,293,670 $ 6,472,027 $ 52,889 �(a) Includes awards under prior year grants, which remain active. (b) Funded with State grants and sids appropriations. (c) State projects only. � �� 153 $ 10,119,675 � City of Clearwater, Florida NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAI. AWARDS AND STATE FINANCIAL ASSISTANCE � Year ended September 30, 2002 NOTE 1— BASIS OF PRESENTATION � The above schedule of expenditures of federal awards and state financial assistance includes the federal and state grant activity for City of Clearwater, Florida and is presented on the modified accrual basis of accounting. � The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of Sfates, Loca/ Govemments and Non-Profit Organizations and Chapter 10.550, Rules of the Auditor General. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the � preparation of the financial statements. NOTE 2 — CFDA/CSFA NUMBER CFDA numbers rep�esent 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. � � � � � 154 � �i �__i � I � I � I � �� I � � I � L�.� � Ciry of Clearwater, Florida SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended September 30, 2002 SECTION I— SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued (unaualified, qualified, adverse, disclaimer). Intemal Control Over Financial Reportinsa: • Material weaknesses identified Yes X No • Reportable conditions identified that are not conside�ed to be a material weakness Yes X No Noncompliance material to financial statements noted? Federal Awards Intemal control over major programs: • Material weaknesses identified? • Reportable conditions identified that are not considered to be a material weakness Yes X No Yes X No Yes X No Type of audito�'s report issued on compliance for major programs (unQUal�ed, qualified, adverse, disclaimer). Any audit findings disclosed that are required to be repo�ted in accordance with Section 510(a) of Circular A-133? Yes X No Identification of major programs: Federal Proprams CFDA Numbers Name of Federal Pros�ram or Cluster 14.239 U.S. Department of Housing and Urban Development — Home Investment Partnership Programs 16.580 U.S. Department of Justice- Neighborhood Policing Initiative for the Homeless State Proiect CSFA Numbers Name of State Proiect 37.039 Kapok Wetland & Floodplain Restoration Program 37.091 Brownfield Remediation 73.016 Florida Department of Revenue - Phillies Stadium Dollar threshold used to distinguish befinreen type A and type B programs. Auditee qualified as a low �isk auditee for Federal single audit purposes? Auditee qual�ed as a low risk auditee for State si�gle audit purposes? � 155 X Yes X Yes $� No No City of Clearwater, Florida, SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended September 30, 2002 SECTION II — FINANCIAL STATEMENT FINDINGS NONE SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS NONE SECTION IV — OTHER ISSUES • No summary schedule of prior audit findings is required because there were no prior audit findings related to Federal Programs or State Projects. • No corrective action plan is required because there were no findings required to be reported under the Federal or State single audit acts. . 156 � � Accountants and Management Consultants � � � � � � , i MANAGEMENT LETTER REQUIRED BY SECTION 10.554(1)(g) OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA Honorable Mayor-Commissioner, Commissioners and City Manager City of Clearwater, Florida Grant Thornton T We have audited the financial statements of the City of Clearwater, Florida (the "City"), as of and for the fiscal year ended September 30, 2002, and have issued our report thereon dated January 10, 2003. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditor's Report on Compliance and Internal Control Over Financial Reporting. Disclosures in that report, if any, which is dated January 10, 2003, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General. Those rules (Section 10.554(1)(g)1.a.) require that we address in the management letter, if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs, whether or not inaccuracies, shortages, defalcations, fraud and/or violations of laws, rules, regulations and contractual provisions reported in the preceding annual financial audit repo�t have been corrected. There were no inaccuracies, irregularities, shortages, defalcations and/or violations of laws, rules, regulations and contractual provisions disclosed in the preceding annual report. The Rules of the Auditor General (Section 10.554(1)(g)1.b.) require that we address in the management letter, if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs, whether or not recommendations made in the preceding annual financial audit report have been followed. The current status of the recommendations made in the preceding annual financial report are included under the heading "Current Year Status of P�ior Year Comments." As required by the Rules of the Auditor General (Section 10.554(1)(g)2.), the scope of our audit included a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the City complied with Section 218.415, Florida Statutes. The Rules of the Auditor General (Section 10.554 (1) (g) 3.) require disclosure in the management letter of any recommendations to improve financial management, accounting procedures and internal controls. Recommendations for improvement are noted beginning on page 159. The Rules of the Auditor General (Section 10.554 (1) (g) 4.) require disclosure in the management tetter of the following matters if not already addressed in the auditor's reports on the internal control structure or compliance: there were no violations of laws, rules, regulations and contractual provisions which may or may not materially affect the fina�cial statements that were discovered during the audit; there were no illegal or improper expenditures which may or may not materially affect the financial statements that were discovered during the audit; there were no improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financial statements) that were discovered during the audit; there were no failures to properly record financial transactions, or other inaccuracies, irregularities, shortages, or defalcations discovered by the auditor. Suite 3850 101 E. Kennedy Blvd �Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com �Grant Thornton LLP US Member of Grant Thornton International 157 � � The Rules of the Auditor General (Section 10.554 (1) (g) 5.) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in � the management letter, unless disclosed in the notes to the financial statements. The City, located in Pinellas County, Florida, was incorporated in June 1923. The legal authority by which the City was created and is governed is its charter, which was derived from Chapter 9710 Special Laws of Florida, as amended. The Clearwater Redevelopment Agency- (CRA), a blended component unit of the City of Cleanivater, Florida, was created by authority of Florida Statute Chapter 163, Part III, and the City of Cleannrater Resolution 81.68. The Cleannrater powntown Development Board, a discretely presented component unit of the City of Clearwater, Florida, was created by authority of Florida Statutes 70-635 and � 77-637 and City Ordinance 5347-93. As required by the Rules of the Auditor General (Section 10.554 (1) (g) 6a.), the scope of our audit included a review of the provisions of Section 218.503 (1), Florida Statutes, Determinafion of Financial �. Emergency. In connection with our audit, we determined that the City of Clearwater, Florida, is not in a state of financial emergency as a consequence of the conditions described by Section 218.503(1), Florida Statutes. The financial condition assessment procedures pursuant to Rule 10.556 (8) were applied in this � determination. As required by the Rules of the Auditor General Section 10.554 (1)(g) 6b.), we determined that the annual financial report for the City of Clearwater, Florida for the fiscal year ended September 30, 2002, that was filed with the Department of Banking and Finance 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, 2002. As required by the Rules of the Auditor General (Section 10.554(1)(g)6.c.1. and 6.c.2.), the auditor ' applied financial condition assessment procedures pursuant to Rules of the Auditor General 10.566(8). The City of Clearwater, Florida does not have deteriorating conditions as defined in Section 11.45(3)(a) 8, Florida Statutes. � This management letter is intended solely for the information of the City of Clearwater, Florida and management and the State of Florida Office of the Auditor General and is not intended to be, and should � not be, used by anyone other than these specified parties. Tampa, Florida January 10, 2003 �1''�✓� L_L /��:-.�,, d° � � � 158 � � � Accountants and Management Consultants � � � Honorable Mayor — Commissioner, City Commissioners and City Manager City of Clearwater, Florida Grant Thornton T � In connection with our audit of the financial statements of the City of Clearwater, Florida as of September 30, 2002, we noted certain matters that we believe you should consider. Our observations were formed as a by- product of our audit procedures, which did not include a comprehensive review for the purpose of submitting detailed recommendations. �J � � � � The accompanying pages summarize our comments and suggestions. We have previously discussed our comments and suggestions with various City personnel and would be pfeased to discuss them further. �� /,�� l � Tampa, Florida January 10, 2003 �, Suite 3850 101 E. Kennedy Blvd Tampa, FL 33602-5152 T 813.229J201 F 813.223.3015 W www.grantthornton.com �GrantTharnton LLP 'US Member of Grent Thornton International 159 � Cl � � � As the City's independent accountants, we are in a unique position to provide you with constructive ideas and insights. Despite our close working relationship, we are, in fact, outsiders to the City and can therefore be � objective in presenting to you our observations and suggestions. As stated in our accompanying report letter, our comments relate to matters observed as by-products of our audit engagement, and are not based on a detailed study of all aspects of the City's operations. They are offered in the hope that they will lead to a creative exchange of ideas that will result in meaningful actions to benefit and strengthen the City. � � � � � � LJ 160 � � � CURRENT YEAR COMMENTS � MORTGAGE RECEIVABLES Observation: � During our testing of the Local Housing Assistance Trust Fund (SHIP) and the Rehabilitation Loan Fund (HOME Program), we noted a significant amount of deferred payment loans receivable. Based upon the nature of these � loans (repayment is not required for a specified period of time or untii the property is no longer owned or used by � the borrower), there is the risk that the original mortgagee could have sold the property or could be renting the property to another person and therefore repayment of the loan would be required. � Recommendation: � � We recommend that the City consider perfoRning periodic reviews of the deferred payment loans, including site visits, if necessary, to ensure that the original mortagee is still listed as the property owner in the County tax collecto�'s records and still occupies the property in acc:o�dance with the loan documents and provisions of the Cit�s g�ant agreements. This will also help ensure the Federal and State funds are being used for allowable costs and activities. Management Response: � Management concurs that the monitoring of defeRed loans is an important function and believes that it has adequate controts currently in place, inciuding required annual insurance certification of the properties by the mortgagee. Additionally, the State of Florida and U.S. Department of Housing and Urban Development (HUD) � monitor the programs on a bi-annual basis, with both reviewing and issuing satisfactory reports on the Housing Division and related loan programs during fiscal 2002. Management will review, on a cosUbenefit basis, the recommendation to add a procedure for site visits and will implement site visits during fiscal 2003, if warranted. � � �� 161 CURRENT STATUS OF PRIOR YEAR COMMENTS INFORMATION SYSTEMS PeonleSoft Observation: During our review of controls related to the use of PeopleSoft, we observed the following: � � • Security could be strengthened for PeopleSoft user accounts. Currently, the required minimum password length is two characters and the forced password change parameter is not used. Additional PeopleSoft � security parameters have not been invoked. • A segregation of duties issue may exist within the Human Resources and Payroll depa�tments in which one individual can perform all the functions within the PeopleSoft modules. • The PeopleSoft audit t�ail log for changes to the production database (records; tables; database) is not � reviewed. • A backup PeopleSoft administrator does not exist. • A test database does not exist for the PeopleSoft application. Database or application fixes, patches or � modifications are made on the production data base ("on-the-fly"). • Tape backups are inadequate: daily backups are kept off-site for one day and weekly backups are kept for one week. .,, Recommendation: We recommend that the City consider implementing the following procedures: • Establishing PeopleSoft user account parameters as follows: o Minimum of six alphanumeric characters � o Passwords forcibly changed at an interval no greater than 60 days o Password uniqueness set to ten o Lockout invoked after five unsuccessful login attempts and require the system administrator to reset. o Conducting a review of user's access to the PeopleSoft application to ensure the individual's security rights are commensurate with their position. � o Auditing of the PeopleSoft audit trail by management on a consistent basis to ensure only authorized changes are being made to the production environment. o Identifying an individual to act as the secondary PeopleSoft administrator and provide the necessary training so that they can provide the, required support, especially when the primary � cannot be contacted. o Establishing a separate test database for the PeopleSoft application. Implementing database or application modifications directly to the production (live) environment could adversely impact � PeopleSoft's production and potentially corrupt data. All changes to PeopleSoft should be tested on a separate database and approved by management prior to loading the modification to the production environment. o Reviewing the PeopleSoft backup tape retention and rotation cycle. This review should be � performed as part of the overall backup scheme review. � 162 � � � �� LJ � � � � � � INFORMATION SYSTEMS — Continued Management Response: Management concurs �nnth the recommendation. We have already taken steps to address several of the specific issues mentioned, including identifying and training a backup PeopleSoft Administrator, managing the PeopleSoft audit trail, and making changes in the user account parameters to inGude more controls. Other specific issues related to the PeopleSoft system are being addressed as pa�t of the planned upgrade that the City is involved with. This upgrade from PeopleSoft version 7.5 to 8.3 will inGude the addition of a separate Test environment for PeopieSoft, as well as the acquisition and deployment of a Storage Attached Network (SAN) solution. This SAN solution will address the concerns raised related to cu►rent back-up procedures and business continuity planning. It is expected that once we have deployed the SAN solution, the upgrade project will be on track to complete within six months. Current Status: The PeopleSoft upgrade is in progress and will be implemented on schedule. The Storage Area Network (SAN) has been purchased and installed and a full test environment has been created. Backup procedures have been reviewed and improvements are in progress. SECURITY Observation: We observed that network monitoring tools are not currently being used to indicate potential nefin►ork attacks. Recommendation: To reduce the risk of unautho�ized users gaining access to the network and/or applications, we recommend a real-time firewall monitoring application (Intrusion Detection System) be implemented as soon as possible. it is noted that a Cisco Security and Intrusion Detection device has been purchased, which will provide the required network monitoring functionality. Management should ensure the IDS has paging functionality to be able to notify the on-call network administrator of possible network attacks. Until the network intrusion detection system becomes operational, we �ecommend the current practice of reviewing the Pix firewall logs approximately every two weeks be increased to twice a week. Management Response: � Management concurs with the recommendation. While the IT Department was originally planning on purchasing a Cisco Intrusion Detection ha�dware solution, we instead purchased GFT's software-based LanGuard IDS solution. Additionally, we are deploying SNORT, a software-based real-time network intrusion detection system � that can be used to notify an administrator of a potential intrusion attempt. It is expected that both of these solutions will be ready for deployment by tlie end of April 2002. �' � 163 Current Stafus: All network security improvements have been implemented and are operational. DATA PROCESSING POLICIES � LJ � Obsenration: Current network backup and tape retention/off-site policies do not appear to be consistent across operating � platforms, applications or remote o�ces. Recommendation: We recommend a complete review of all network and operating system backup processes and the corresponding backup tape retention/off-site storage policies be conducted to ensure the backup system is satisfactory to prevent a loss of clata. Leading best practices indicate that at a minimum: � • Daily backup tapes be maintained for a period of 14 days in a fire-proof container located away from the " server room (off-site preferred, but optional). • Full weekly backups be kept off-site and be rotated (kept for no less than four weeks). � • Full monthly backups are kept for one year at an off-site location. • Yea�ly backups should also be performed and kept off-site for any indefinite period of time. • Backup tapes be periodically tested to ensure the data is readable. j Management Response: Management concurs with the recommendation. A comprehensive review of all current back-up and tape retention off-site policies is planned and is expected to be completed by the end of the fourth quarter 2002. Current Status: Backup procedures have been reviewed and improvements are in progress. DISASTER RECOVERY PLAN Observation: � City management has acknowledged the importance of a disaster recovery plan (DRP) and is in the process of finalizing and approving a DRP that addresses the recovery of critical operating systems. It is critical for the City to have a complete disaster recovery plan for all critical applications and neiwork connectivity so to ensure a � timely and successful network recovery in case of a disaster. Without an accurate and documented recovery plan, the City is at risk of an untimely and inaccurate system recovery, impacting production and/or the execution of critical financial transactions. � � �, 164 � � � � � � � � � � � � [�J � Recommendation: We encou�age the staff to continue their efForts to ensure the recently documented disaster recovery plan is complete and approved by ezecutive management. Leading best practices state a disaster recovery plan should include (at a minimum) the following: • Risk Assessment phase (identify and prioritize �i applications/functions) • Definition of a"disastep' and who can declare a disaster • Callout trees • Documented hardware/software requirements and specifications • Documented nefinrork and server configuration requirements and recovery process steps to restore critical applications in a timely manner • Responsibilities of individuals during the recovery • Designated recovery site(s) (hot versus cold site) • User and vendor contact numbers • A detailed disaster recovery test plan, ou�ining what is to be tested, the expected test results, who will be involved (IT and/or users) and the process to document and analyze the test results • A process to periodically review the plan to ensure it is current • Copies of the plan should be distributed to participants, stored at the off-site storage facility with the backup tapes, and at the hot site, if used Management Response: Management concurs with the recommendation. The Cit�s IT Department has completed a preliminary draft of the revised Disaster Recovery Plan (DRP). It is expected that this will be finalized, approved by Senior Management and distributed by the end of May 2002. Current Status: The update to the DRP has been completed and implemented. NETWORK CONTROLS Observation: The IT department has implemented controls over their networlc, such as the firewall and the incorporation of NAT to hide intemal IP addresses, as a means to mitigate the risk of unauthorized access from the'outside'. An additional control that can be implemented to reduce the risk of an outside attack is the use of penetration testing. Recommendation: We recommend full penetration tests be performed on the City's entire network at least once a year. Such penetration tests and subsequent reports can indicate vulnerabilities of the firewall and nefinrork, the inherent risk(s) of the wlnerability and the necessary steps to control the risk of the vulnerability. 165 Management Response: Management concurs with the recommendation. However, at this time, budget constraints prevent annual penetration testing. This issue will be addressed as resources allow. Current Status: A full network security audit, including penetration testing, was completed in August of 2002 (work pertormed by Dyntek, inc.). The City received a favorable evaluation, and the few vulnerabilities identified have been addressed. SYSTEM ACCESS Obse►vation: The City does not currently review user access on a regular basis. Recommendation: We encourage a yearly review by data owners' (management) of user access to their applications, libraries and files. A review of user access rights to data owners' �les reduces the risk of unauthorized access to data by former employees or contractors, or individuals that have changed positions. Thus, we recommend that IS review user security groups and security levels with the corresponding data owners for appropriateness on a semi-annual basis. Managemenf Response: Review of user access to departmental applications, libraries and files is conducted on an ongoing as needed basis. The City will evaluate the recommendation to develop bi-annual reviews. Current Status: After some consideration, the City does not plan to implement a bi-annual review of access since ongoing network and system administration by IT and departmental system administrators has produced good to excellent results to date. CISCO ROUTER Observation: There is no redundancy for the MSBWAS Cisco router 3640. If this router fails, remote sites will not be able to access the primary data center or Internet. � Recommendation: We recommend that if this router is deemed critical, management obtain a backup device or contract with a service provider to guarantee the replacement of the router within a specified time period. 166 � � � � �� lJ � � Management Response: Management concurs with the recommendation. This issue will be addressed as resources allow. Current Status: Resources have not been found to address this concem. ESTABLISHMENT OF AN AUDIT COMMITTEE Observation: The City does not have an Audit Committee. Recommendation: Many organizations have formed audit committees of their goveming board and have found that such committees have made a significant contribution. We strongly recommend consideration be given to establishing such an Audit Committee of the City Commissioners. The Commissioners have broad responsibility for the direction of the operational and business affairs of the City. The discharge of this responsibility is accomplished through designation of administrative officers and policy guidance given to such officers. However, the Commissioners likewise have an important responsibility for the quality of the organization's financial reporting. The primary role of an audit committee is to plan for, evaluate and meet with the independent auditors. Management Response: Consideration will be given to establishing an Audit Committee of the City Commissioners during the current fiscal year. Current Stafus: Management has discussed this recommendation and decided that formation of an Audit Committee is not necessary at the current time. The City Commission will be reviewing the status (function, success, appropriateness) of all currently established Commission Advisory Committees at an upcoming Commission meeting. City management will continue to review the need for an Audit Committee of the City Commissioners in the future and will establish, if deemed necessary and appropriate. RECENTLY ISSUED ACCOUNTING STANDARD Observation: Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements And Management's � Discussion and Analysis For State and Local Govemments ("GASB 34") is effective for the City's fiscal year beginning July 1, 2002. GASB 34 will require substantial changes to the City's financial statements and accounting records. � � � 167 Recommendation: The City should begin developing a plan for implementation of GASB 34 so that changes to the City's accounting records and budget process can be made by the required implementation date. Management Response: Planning for the current year implementation of GASB 34 is currently in process. Current Status: Representatives from various City departments have been meeting on a weekiy basis since May of 2002 to address implementation issues and implementation will be completed for fiscal 2002. FUND BALANCES Observation: The City Commission currently requires that the General Fund maintain an unreserved fund balance of a minimum of 8% of the prior year expenditures. Recommendafion: We recommend that consideration be given to establishing minimum fund balance requirements for other types of governmental funds as well. Management Response: The establishment of minimum fund balance requirements for governmental funds other than the General Fund will be taken into consideration during the fiscai 2003 budget process. Current Status: The establishment of minimum fund balance requirements for govemmental funds other than the General Fund was reviewed by Finance staff during the fiscal 2003 budget process and determined to be non-applicable. The purpose of the minimum fund balance threshold in the General Fund is to ensure the financial stability of the general government operations. The other govemmental funds maintained by the City (Special Revenue, Debt Senrice, Capital Projects) are for specific purposes (not general operations) and either have established reserve requirements (i.e. debt covenants for debt service funds) or are used for specific purposes upon appropriation of available funds (i.e. Special Revenue Funds, Capital Projects Funds) that cause "minimum fund balance requirements" to be non-applicable. Additionally, Management is unaware of other City govemments establishing minimum fund balance levels for other than the General Fund, due to the nature of the other governmental funds. 168