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COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED SEPTEMBER 30, 2004! ; �r � ,, .� , ,�=^'c��(�L;��, CITY O�' CL.EA.RWATER, F"LORIDA ��` � �/'.l� �� .r- " �.�,. �� ,.� - t`� q � � r-� � �� t'f, 0 ` � ��''��, �� ' �� '� S � '�" � � C3 . N �� ,� � -� � C'� =� �_ . � ;. V % � ;.�� . . . ...; � � I � � i � ' } �' �" ....� - m'�'" -�..: � � � I � � t �: i � �� : � _ � : _ ,�, �� ` �;�� 4� r� �� . .. ..... . . .. .. _. �,�r a�'� � � ��.sg s �� a �,� � " �d �R� b��y�wk � I � � ' � �i t{�} � �. � �x k{�f �, �;�.: � ;.. � �y ��.. , , � : > ti, 4 r s� > j� :;�� `� o ; �. . 0 >. . �" r,^ '' � � , N ��:; ;, r ... . .. _. . ; ,. �� `.� � � W �. ,:�;�� :w, :.t � � F. , �., � z � ; , , �� : � . " � ��a�' � g, ., �Aiier,�� l w�� ,T 4 � ';f �,,, `� „ � � �;� a�X�s ;, x�� ;�� :� �.�. ,�� `� t„� . x� u� �� t.. , � �, � . ' � �'< 'R'a"�," � *, � '"'3 's . rt' �.� , �� _ � f�y � � a' . , a � �l� . � . . � ��` ;� , ,�" "S� � �� z w � � � . :., � - � k ... _ : .: :. . 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I .1 i ..xs�k',�, . .. .. . . . � � � � Q � "�'°=�*�r�..� — , U ;,r �., 'YA �r..io�a ¢3��`�� t� f ,�. �,., ,.+� } ��$. '��- 9�",�y'": .. , . `1 . i . � � � .. . . .._, .,; t� . . . f' � a t �,� � � � ' :.. �.� . � . .. �� g� � � t� x : 3 . k .�� ✓ ��` � � � "� �;"�r� � ��.. �>�.; �a , City of Clearwater, Florida Comprehensive Annual Financial Report for FiscalYear Ended September 30, 2004 � �� , },, M. ��F�� P'�,, �""�;f,. f�' �ti E '�4oi�:. � i.r-M-..,.. �l�;_ .�"�;�.�.r:, ��° � f � "��a ��° N��ea�vel � � S f� �pM � . ��E4� ` ,r :::i, �.4 �`+. , -A � � y, � __. .�..__ '�� '�4' ," �r„,�„ � i� m.�:�� , y �3�4'P4�y t �: .F�, ' ; � �� y� �II � �, �.��. �� h �t1�q� �„W�� s rr F , ��F � �' ��g�.� f� YN.�f.�ii�'- � r Brian J. Aungst Mayor-Councilmember Frank Hibbard Hoyt Hamilton Bill Jonson Carlen A. Petersen Vice Mayor-Councilmember Councilmember Councilmember Councilmember William B. Horne II City Manager Margaret L. Simmons, CPA Finance Director Prepared by: Ciry of Clearwater Finance Deparnnent INTRODUCTORY SECTION L_7 � I� � � � � � � � � !1 � � � City of Clearwater, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2004 TABLE OF CONTENTS INTRODUCTORY SECTION: �9e 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 ....................................................................................................................... 16 Statementof Activities ........................................................................................................................... 17 Fund Financial Statements: Balance Sheet - Governmental Funds ................................................................................................ 18 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets........... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds...... 20 Reconciliation of the Statement of Revenues, F�cpenditures, and Changes in Fund Balances of Govemmental Funds to the Statement of Activities ....................................................................... 21 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund ................................................................................................... 22 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Special Development Fund ............................................................................. 23 Statement of Net Assets - Proprietary Funds ...................................................................................... 24 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds ............. 28 Statement of Cash Flows - Proprietary Funds .................................................................................... 32 Statement of Fiduciary Net Assets - Fiduciary Funds ......................................................................... 36 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds ...................................................... 37 Notes to Financial Statements ..................................................................................................................... 38 Required Supplementary Information - Pension Trust Funds: Schedules of Funding Progress ................................................................................................................. 72 Schedules of Employer Contributions ........................................................................................................ 73 Notes to Schedules of Required Pension Supplementary Information ...................................................... 74 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Govemmental Funds ................................................................... 78 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds ............................................................................................................. 80 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Redevelopment Agency Special Revenue Fund .............................. 83 Combining Statement of Net Assets - Nonmajor Enterprise Funds .......................................................... 86 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - NonmajorEnterprise Funds ................................................................................................................... 87 Combining Statement of Cash Flows - Nonmajor Enterprise Funds ......................................................... 88 Combining Statement of Net Assets - Internal Service Funds .................................................................. 92 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - InternalService Funds ........................................................................................................................... 93 Combining Statement of Cash Flows - Intemal Service Funds ................................................................ 94 iii This Page Intentionally Left Blank iv � I � � � � � � � 1 �� i� j Clty of Clearwater, Florida Comprehensive Annuai Financial Report For the Fiscal Year �nded September 30, 2004 TABLE OF CONTENTS (Continued) Combining Statement of Fiduciary Net Assets ........................................................................................... 98 Combining Statement of Changes in Fiduciary Net Assets ....................................................................... 99 Statement of Changes in Assets and Liabilities - Treasurer's Escrow Agency Fund .............................100 Capital Assets Used in the Operation of Govemmental Funds: Comparative Schedules by Source ....................................................................................................103 Schedule by Function and Activity ......................................................................................................104 Schedule of Changes by Function and Activity ..................................................................................105 Supplementary Information: Continuing Disclosure - Gas System Revenue Bonds, Series 1997A&B, 1998, and 2004 ....................108 Continuing Disclosure - Water & Sewer Revenue Bonds, Series 1998, 2002, and 2003 ...................... 112 Continuing Disclosure - Stormwater Revenue Bonds, Series 1999, 2002, and 2004 ............................115 Continuing Disclosure - Infrastructure Sales Tax Revenue Bonds, Series 2001 ...................................116 Continuing Disclosure - Improvement Revenue Refunding Bonds, Series 2001 ...................................116 FireServices Program ..............................................................................................................................117 STATISTICAL SECTION: Table I General Govemmental Expenditures by Function - Last Ten Fiscal Years ........................................120 Table II General Revenues by Source - Last Ten Fiscal Years ........................................................................ 122 Table III Property Tax Levies and Collections - Last Ten Fiscal Years .............................................................124 Table IV Assessed and Estimated Property Valuations Last Ten Fiscal Years .................................................126 Table V Property Tax Rates - All Direct and Overlapping Governments - LastTen Fiscal Years ............................................:.....................................................................................128 TableVI Principal Taxpayers .............................................................................................................................130 Table VII Ratio of Net General Bonded Debt to Taxable Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years .......................................................................................131 Table VIII Ratio of Annual General Debt Service to Expenditures - General Bonded Debt, General Revenue Certificates, and Mortgages andNotes - Last Ten Fiscal Years ........................................................................................................132 Table IX Computation of Legal Debt Margin .......................................................................................................133 Table X Computation of Direct and Overlapping Debt ......................................................................................133 Table XI Revenue Bond Coverage: Water and Sewer Revenue Bonds Coverages ...........................................................................................134 GasRevenue Bonds Coverages .................................................................................................................135 Stormwater Revenue Bonds Coverages .....................................................................................................136 Infrastructure Sales Tax Revenue Bonds Coverages .................................................................................136 Spring Training Facility Revenue Bonds Coverages ...................................................................................137 Improvement Revenue Refunding Bonds Coverages ................................................................................137 Table XII Property Values and Construction - Last Ten Fiscal Years ................................................................138 Table XI I I Demographic Statistics - Last Ten Fiscal Years ..................................................................................139 Table XIV Miscellaneous Facts .............................................................................................................................140 SINGLE AUDIT / GRANTS COMPLIANCE SECTION: Report on Compliance and on Intemal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Govemmental Auditing Standards .............................143 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 ..................................................................145 Schedule of Expenditures of Federal Awards and State Financial Assistance for the Year EndedSeptember 30, 2004 ...............................................................................................................................147 Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance ..............:...................:....150 Schedule of Findings and Questioned Costs for the Year Ended September 30, 2004 .......................................151 Management Letter as Required by Rules of the Auditor General ........................................................................155 Management Advisory Comments ..................................................................................................157 � This Page Intentionally Left B/ank vi � � � � � � I� � � � � � e �: F:_ � �.,•y�,,. 4 �C, i`� $ �r .A.. ; '` ' .� -,- CITY OF CLEARWATER ��'?l POST �FFICE BOX 474g� CLEARWATER� FLOa�DA 33758-4748 �� a CITY HAI.L, 112 SOUTH �SCEOIA E�VENUE, CLEARWATER, Fi.o�uDn 33756 ;,b�� TELErxorrs (727) 562-4040 Ftix (72� 562-4052 CITY MANAGER March 30, 2005 The Honorable Mayor, Councilmembers, 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 City require an annual audit of the City's financial statements of all funds of the City by a firm of licensed certified public accountants. These statements must be presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards. Pursuant to these requirements we hereby issue the comprehensive annual financial report of the City of Clearwater for the fiscal year ended September 30, 2004. This report consists of management's representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with GAAP. Because the cost of internal controls should not oufinreigh 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. Grant Thornton LLP, a firm of licensed certified public accountants, has audited the City's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended September 30, 2004, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded that there was a reasonable basis for rendering an unqualified opinion that the City's financial statements for the fiscal year ended September 30, 2004, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of the report. The independent audit of the financial statements of the City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal and state grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited 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. BRIAN J. AUNG51', MAYOR � FRANK HIRRARD, VICP: M.4YOR HOY'f HAMIL'1'ON, COUNCILMGMIiGR � BILL JONSON, COUNCIL�IEMHP.R � CARLEN A. PE'CERSEN, COUNCILbfEMHBR vii ��F.QUAL EMPLOYMGN'f AND EiFFIRI�7A'1'IV@ AC'I'ION F,MPL01'ER�� 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. Profile of the City of Clearwater, Florida Clearwater 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. In addition to tourism, Clearwater enjoys a diversiry of manufacturing, service industries, high-tech companies, and a large retirement population. The City provides police and fire protection; construction and maintenance of streets, bridges, sidewalks, storm drainage, public parks, and recreation facilities; planning, zoning, subdivision, and building code regulation and enforcement; redevelopment of commercial and residential neighborhoods; supervised recreation programs; public libraries; water supply and distribution; waste water collection, treatment, and disposal; natural gas distribution; solid waste collection and recycling; stormwater management; marina, airpark, convention center, and public fishing pier operations; and operation of the city-wide parking system. The annual budget serves as the foundation for the City's financial planning and control. Per the City Code of Ordinances, the City Manager is required to provide to the City Council an operating budget for the ensuing fiscal year, a capital improvement budget, and a five-year capital improvement program, along with an accompanying budget message no later than 60 days prior to the end of the fiscal year. The Council is required to hold public hearings on the budget and to adopt a final operating budget and capital improvement budget no later than September 30, the close to the City's fiscal year. The appropriated budget is prepared by fund and by department within fund. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy The 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 has improved from 4.5 percent for September 2003 to 3.8 percent for September 2004. The national average at September 2004 was 5.4 percent. Business development interest in the City'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 City's markets for multi-family and residential housing. Long-term Financial Planning Major projects completed during fiscal 2004 included a new 90,000 square foot, $20.2 million main library; a$29 million Community Sports Complex, including a new Spring Training facility for the Philadelphia Phillies major league baseball organization; an $8.7 million reverse osmosis water treatment plant; two new fire stations; and a number of road and drainage projects. viii � u L_1 � � � The new Memorial Causeway Bridge, a fixed, high-span "signature piece" bridge to replace the current drawbridge, is expected to be completed in late 2005. Another major project to be completed during fiscal 2005 is the new Ross Norton Complex and Extreme Sports Park, which includes a 21,000 square-foot recreation complex and a 30,000 square-foot playground for in-line skaters, skateboarders, and BMXers. Finally, fiscal 2004 marked the beginning of the design phase of two significant Downtown Plan redevelopment projects: the Cleveland Street streetscaping project and the renovation of Station Square Park. These projects are expected to be comp�eted during calendar year 2007 with a total combined cost of approximately $5 million. Future initiatives include a$15 million Beach Walk project that, combined with several stunning new private beach redevelopment projects, promises to redefine the face of Clearwater Beach. The Beach Walk project includes winding promenades, lush landscaping, and amenities such as whimsical showers, cool places to relax, and distinctive artistic touches that will reinvent the Clearwater tourist experience. Construction of Beach Walk is expected to commence in calendar year 2005 with completion during 2008. Cash Management Policies and Practices � As more completely described in Note I(D)(1) of the notes to the financial statements, the City employs a consolidated cash pool to facilitate short-term investment of liquid assets for all City funds. The City believes that a conservative investment philosophy best serves the residents of Clearwater, and that the return nf the investment principal is more important than the return Qn the principal. However, the � Ciry attempts to maximize the retum, 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 2.81 % on its investments during fiscal year 2004. � � I� � � � :1 Risk Management The City is self-insured within certain parameters for losses arising from claims for general liability, auto liability, police professional liability, public officials' liability, property damage, and workers' compensation. The transactions relating to the self-insurance program are accounted for in the Central Insurance Fund, and are reported as an Internal Service Fund. The City is not self-insured with respect to major medical coverage. Management believes that the amounts showing as claims payable and the unreserved retained earnings are adequate to cover all reasonable projected losses arising from events occurring on or prior to September 30, 2004. Additional information on the City's risk management activity can be found in Note N(A) of the notes to the financial statements. Pension and Other Postemployment Benefits The Employees' Pension Plan and the Firemen's Pension Plan are single-employer defined benefit pension plans that are self-administered by the City. Each year, independent actuaries engaged by the pension plans calculate the amount of the minimum required contributions that the City must make to each of the plans to ensure that the plans will be able to fully meet their obligations to retired employees on a timely basis. City contributions for the year were in accordance with actuarially determined funding requirements. In addition, supplemental pensions exist for certified Police Officers and Firefighters under the provisions of Florida Statutes Sections 175 and 185. These plans are funded solely from excise taxes on certain insurance premiums covering property in Clearwater. The excise taxes are collected by the state and remitted to the City. Both plans require benefits to be adjusted to equal fund assets provided by the defined contributions. Additional information on the City's pension plans can be found in Note N(E) of the notes to the financial statements. ix Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2003. This was the twenty-fifth consecutive year that the City received this prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the City received the GFOA's Distinguished 'Budget Presentation Award for the fiscal year 2004 Budget document, the eighteenth consecutive year that this award has been received. In order to qualify, the City's Budget document was judged to be proficient in several categories including as a policy document, a financial plan, an operations guide, and a communications device. We wish to thank the many members of the Citywide Annual Financial Reporting (CAFR) team, which is composed of individuals in the Finance Department and other financial staff throughout the City, for their professionalism and dedication in producing this report. In addition, we thank the Graphic Communications Division for the professional printing of this report. Sincere appreciation is also extended to the City's external auditors, Grant Thornton, LLP, for their advice and assistance in the preparation of this report. Finally, we would like to thank the City Council for their interest, continued support, and leadership in planning and conducting the financial operations of the City in a progressive and responsible manner: Sincerely, • � BtiuGi � illiam B. Horne, II Ciry Manager �"'I�,�,� v�. ��►'I�r7'l�•�� Margaret L. Simmons, CPA Finance Director x Certificate of Achievement for Excellence in Financial Rep orting Presented to City of Clearwater, Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2003 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Governxnent Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) aclrieve the highest standards in government accounting and financial reporting. �� , � � � � i , i f, , President �� " ' �� Executive Director xi City Audit F��e Department Pollce Department Solid Waste / General Services Citizens of Clearwater city Council CI fi/ Manager Assistant City Manager Customer Seniice Finance Human Resources Library Offlce of Management & Budget Parks & Recreation Public Communications xii City Aitorney's Office qssistant City Manager , CRA Executive Director Development & Neighborhood Services Equity Services Gas System Information Technology Marine & Avlatlon Officlal Records & Legislative Services Planning Public Works Administratlon Development Engineering Public Services Public Utllitles FINANCIAL SECTION � � Accountan� and Business Advisors � Inde�endent Auditor's Re�ort Honorable Mayor-Councilxnember, � City Counciltnembers and City Manager Ciry of Clearwater, Floxida � Grant Thornton T We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remainuig fund information of the City of Clearwater, Florida (the City), as of and for the year ended September 30, 2004, which collectively comprise the City's basic financial statements as listed in the table of contents. We have also audited the financYal statements of each of the City's non-major governmental and non-major enterprise, internal service and fiduciary funds presented as supplementary information in the accompanying combining and individual fund financial statements as of and for the yeax ended September 30, 2004, as listed in the table of contents. These financial statements are the responsibility of the City's management Our responsibility is to egpress opinions on these financial statements based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States of America as established by the Auditing Standards Board of the American Institute of Certified Public Accountants and the standards applicable to finandal audits contained in GovernmentAuditing Standardr, issued by the Comptroller General of the United States. Those standards require that we plan and perfortn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Ciry of Clearwater, Florida, as of September 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the general fund and the special development fund for the year then ended in confornuty with accounting principles genera7ly accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each non-major governmental, non-major enterprise, internal service, and fiduciary fund of the City of Clearwater, Florida as of September 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in confoxmity with accounting principles generally accepted in the United States of America. In accordance with Government�luditing Standardr, we have also issued our report dated March 12, 2005 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. Suite 3850 101 E. Kennedy Blvd �Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com I � Grent Thomton LLP US Member of GraM Thomton hrtemational That report is an integral part of an audit performed in accordance with Government Auditing Standardr and should be considered in assessing the results of our audit. The Management's Discussion and Analysis on pages 3 through 14 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of ineasurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Cit�s basic financial statements and on each of the City's non-major governmental and non- major enterprise, internal service and fiduciary funds. The accompanying supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial sta.tements. The accompanying schedule of expenditures of federal awards and state financial assistance and other schedules are presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Assdi�r of State.r, Locad Governmen�r, and Non-Profit OrganaZation.r, Section 215.97, Florida Statutes and Chapter 10.550 Rules of the Auditor General, and are not a required part of the basic financial statements. The schedule of expenditures of federal awards and state finandal assistance on pages 148 through 152 and other schedules on pages 103 through 117 have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic fmancial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. GRANT THORNTON LLP G�p %�,.,.,,�, L- LIa Tampa, Florida March 12, 2005 2 � , , � � � � f � � I� I� I� ' r� I� I � I� Management's Discussion and Analysis Management's Discussion and Analysis provides the reader with a narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2004. ManagemenYs Discussion and Analysis (MD & A) should be read in conjunction with the City's Transmittal Letfer, which begins on page vii of this report. Financial Highlights The City's assets exceeded its liabilities at the close of fiscal year 2004 by $487.5 million (nef assets). Of this. amount, $128.9 million (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. The City's total net assets increased by $35.5 million, or 7.9%, during fiscal 2004. Net assets for governmental activities increased by $24.4 million, or 11.0%, while the business-type net assets increased by $11.1 million, or 4.8%. Signi�cant factors related to the $24.4 million increase in govemmental net assets included a$10.0 million current year donation from the Philadelphia Phillies for a new spring training community sports complex, along with a 9.6% increase in taxable assessed values as detailed in the Government-wide Financial Analysis that follows: The $11.1 million increase in business-type net assets is primarily the result of operating revenues in excess of operating expenses, partially due to stormwater system and water and sewer rate increases during the current fiscal year, along with improved gas system operating results due to increased sales volume and favorable gas prices. At September 30, 2004, the City's governmental funds reported combined ending fund balances of $78.4 million, a decrease of $9.3 million (or 10.6%) in comparison with the prior year. Of this amount, $46.2 million (or 59.0%) is availab/e for spending at the government's discretion (unreserved fund ba/ance). The decrease of $9.3 million in governmental fund balances is primarily due to eurrent year capital outlay expenditures for major construction projects, including $7.3 million for the community sports complex and $5.1 million for the new main library. At September 30, 2004, unreserved fund balance for the General Fund was $13.1 million, or 14.3% of total general fund expenditures. Total actual revenues for the General Fund for fiscal 2004 were $0.6 million less than final budgeted revenues, or 0.6%. This was partially due to actual fines and forfeitures that were $0.2 million less than budget due to the transfer of parking enforcement activities from the General Fund to the Parking System enterprise fund during fiscal 2004. Additionally, actual revenues for interest income of $536,175 were $76,785 less than budget due to a significant decrease in interest rates. The remainder of the shortfall in General Fund actual revenues versus �nal budgeted revenues was due to a number of minor variances in the other revenue categories. Total fiscal 2004 actual expenditures for the General Fund were less than final budgeted expenditures by $2.1 million, or 2.2%. This was due to relatively minor budget savings across numerous City departments for fiscal 2004. Finally, actual General Fund interfund transfers out were $0.3 million, or 4.1 %, less than final budgeted interfund transfers out, for a combined General Fund fiscal 2004 savings of $1.8 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 sfatements. The City's basic financial statements are comprised of three components: 1) govemment-wide financial stafements, 2) fund financial statements, and 3) notes to the �nancial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are the statement of net assets and the statement of activities. These statements report information about the City as a whole using accounting methods similar to those used by private- sector businesses. Emphasis is placed on the net assets of govemmental 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 3 waste, recycling, marine, aviation, convention center, and parking system operations are reported as business-type activities. • The statement of net assets presents information on all of the City's assets and liabilities, with the difference befinreen the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator as to whether the financial position of the City is improving or deteriorating. Net assets are reported in three major categories: 1) invested in capital assets, net of related debt; 2) restricted; and 3) unrestricted. • The statement of activities presents information showing how the City's net assets changed as a result of the year's activities. All changes in net assets are recorded in the period in which the underlying event takes place, which may differ from the period in which cash is received or disbursed. The Statement of Activities displays the expense of the City's various programs net of related revenues, as well as a separate presentation of revenues available for general purposes. The government-wide financiaf statements include not only the City of Clearwater itself (known as the primary govemment), but also the legally separate Downtown Development Board (DDB). The DDB, though legally separate, is included as a discretely presented 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 pf 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 govemment as a blended component unit due to the City Council serving as the CRA's governing board. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The fund financial statements provide detailed information about the City's major funds — not the City as a whole. Fund accounting helps to ensure and demonstrate compliance with finance-related legal requirements. Based on restrictions on the use of monies, the City has established many funds that account for the multitude of services provided to residents. These fund financial statements focus on the City's most significant funds: governmental, proprietary, and fiduciary. Governmental funds Govemmental 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 spendab/e resources available at the end of the fiscal year. Such information may be useful in evaluating a governmenYs near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmenta/ funds with similar information presented for governmenta/ acfivities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the governmenYs near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between govemmental funds and governmental activities. The City maintains twelve individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General, Special Development, and Capital Improvement funds, which are considered to be major funds: Data from the other nine governmental funds are combined into a single aggregated columnar presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements in the supplementary information section of this report. Annual appropriated budgets are adopted for the General Fund, the Special Development Special Revenue Fund, and the Community Redevelopment Agency Special Revenue Fund. Budgetary comparison statements and/or schedules have been provided for these funds to demonstrate budgetary compliance. 4 � � � � � � � u � i � 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 governmer�t-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 intemally among the City's various functions. The City uses internal service funds to account for the City's building maintenance, custodial services, self-insurance program, risk management program, employee group insurance, vehicle acquisition and maintenance, and various support activities including data processing, legal, telecommunications, postal, and printing services. All of the City's internal service funds predominantly benefit governmental activities and consequently have been aggregated and included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water and Sewer Utility, Gas Utility, Solid Waste Utility, and Stormwater Utility enterprise funds, which are considered to be majorfunds of the City. The remaining four non-major�enterprise funds are combined into a single aggregated presentation in the proprietary fund financial statements. Similarly, governmental activity intemal se►vice 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 stafements in the supplementary information section of this report. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of the fiduciary funds are not available to support the City's own programs. The accounting used for fiduciary funds is similar to proprietary funds. Notes to the Financial Statements The notes to the �nancia/ statements 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 supp/ementary 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 The overall financial position of the City improved in both the fiscal 2004 and fiscal 2003 years. As noted earlier, net assets may serve over time as a useful indicator of a govemmenYs financial position. In the case of the City, assets exceeded liabilities by $487.5 million at the close of the fiscal year ended September 30, 2004. This represents an increase of $35.5 million over the September 30, 2003 total net assets of $452.0 million. Net assets of both the governmental and the business-type activities increased primarily as a result of operations. The City reports positive balances in all three categories of net assets, both for the govemment as a whole as well as for its separate govemmental and business-type activities, for both the cunent year and the prior year, as indicated in the following table: 5 Assets Current and other assets Capital assets Total assets Liabllitles Current and other liabilities Long-term debt outstanding: Due within one year Due in more than one year Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Assets Current and other assets Total assets Liabilities Current and other liabilities Long-term debt outstanding: Due within one year Due in more than one year Total liabilities Net assets: Unrestricted Total net assets City of Clearwater - Net Assets Primary Government Govemmental Activities Business-type Activities Total �f�b��fb�� $ 178,697,641 $ 183,270,579 $ 149,126,954 $ 138,776,782 $ 327,824,595 $ 322,047,361 205,163,022 181,581,235 299,942,144 288,869,651 505,105,166 470,450,886 383,860,663 364,851,814 449,069,098 427,646,433 832,929,761 792,498,247 49,717,785 47,623,005 11,533,555 11,072,082 61,251,340 58,695,087 13,892,273 13,834,565 8,888,510 8,557,403 22,780,783 22,391,968 74,575,061 82,144,376 186,852,232 177,294,521 261,427,293 259,438,897 138,185,119 143,601,946 207,274,297 196,924,006 345,459,416 340,525,952 133,711,161 103,014,874 136,964,219 132,380,309 270,675,380 235,395,183 50,801,096 53,938,944 37,107,325 33,412,704 87,908,421 87,351,648 61,163,287 64,296,050 67,723,257 64,929,414 128,886 544 129 225,464 � 2 ,5�75,544 2 1, ,8 1,794,801 230, 22,427 48 , 0, ,972, 5 Component Unit Clearwater powntown Development Board 2004 2003 $ 507,773 $ 409,479 so�,ns aos,a�s 238,636 207,445 7,848 7,848 70,634 78,483 317,118 293,776 190,655 115,703 5, 03 A large portion of the City's net assets (55.5%) 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 (18.0%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($128.9 million or 26.4%) may be used to meet the government's ongoing obligations to citizens and creditors. There was a$30.7 million increase in invested in capita/ assets, net of related debt for ,qovernmenta/ activities, due to a$23.6 million increase in governmental activities net capita/ assets, along with a decrease in related debt due to scheduled debt service payments. The increase of $23.6 million in governmental activities net capital assets was primarily due to completion of a new spring training community sports complex, including receipt of a current year $10.0 million donation towards completion of the $28.9 million facility. The completion of the new main library during the current fiscal year also contributed to the increase. Invested in capita/ assets, net of re/ated debt for business- type activities increased by $4.6 million due to a$11.1 million increase in business-type activities net capital assets offset by a$6.5 million increase in related debt. The increase in net capital assets was primarily due to Water & Sewer and Stormwater utility system asset additions as detailed in the Capital Assets discussion on page 12 of this report. The increase in debt was due to a new Stormwater revenue bond issue during the current fiscal year, partially offset by scheduled debt service principal payments. 0 Changes in Net Assets The following tables reflect the changes in net assets for the years ended September 30, 2004, and September 30, 2003, for both the City and its discretely presented component unit: 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 special item and transfers Special item - donation Transfers Increase in net assets Net assets - beginning Net assets - ending City of Clearwater, Florida - Changes in Net Assets Primary Government Govermental Activities Business-t e Activities Totals 0 0 $ 25,369,232 $ 23,822,887 $114,053,097 $104,931,876 $139,422,329 $128,754,763 6,604,498 8,266,931 420,745 14,699 7,025,243 8,281,630 3,129,174 5,206,733 5,590,839 9,406,042 8,720,013 14,612,775 37,156,501 33,927,390 - - 37,156,501 33,927,390 15,263,152 14,528,873 - - 15,263,152 14,528,873 24,531,736 24,521,066 - - 24,531,736 24,521,066 4,434,776 3,974,357 - - 4,434,776 3,974,357 3,989,131 2,355,095 1,987,223 2,147,878 5,976,354 4,502,973 120,478,200 116,603,332 122,051,904 116,500,495 242,530,104 233,103,827 11,772,205 11,306,271 - - 11,772,205 11,306,271 51,454,273 47,344,594 - - 51,454,273 47,344,594 2,683,815 2,270,833 - - 2,683,815 2,270,833 12,509,956 8,862,320 - - 12,509,956 8,862,320 3,224,788 4,286,065 - - 3,224,788 4,286,065 555,298 570,344 - - 555,298 570,344 25,401,578 22,058,432 - - 25,401,578 22,058,432 3,013,441 3,283,732 - - 3,013,441 3,283,732 - - 41,995,093 40,798,427 41,995,093 40,798,427 - - 29,152,391 26,623,262 29,152,391 26,623,262 - - 15,095,925 14,212,399 15,095,925 14,212,399 - - 8,249,467 7,015,771 8,249,467 7,015,771 - - 11.971,212 11,231.587 11,971,212 11,231,587 110,615,354 99,982,591 106,464,088 99,881,446 217,079,442 199,864,037 9,862,846 16,620,741 15,587,816 16,619,049 25,450,662 33,239,790 10,047,388 5,810,046 - - 10,047,388 5,810,046 4,515,442 5,443,219 (4,515,442) (5,443,219) - - 24,425,676 27,874,006 11,072,374 11,175,830 35,498,050 39,049,836 221,249,868 193,375,862 230,722,427 219,546,597 451,972,295 412,922,459 245,675,544 221,249,868 241,794,801 230,722,427 487,470,345 451,972,295 Component Unit Clearwater powntown Develo ment Board Revenues Program revenues: Operating grants and contributions $ 73,429 General revenues: Property taxes 203,715 Other 7,593 Total revenues 284,737 Expenses Downtown Development Board 209,785 Total expenses 209,7s5 Increase in net assets 74,952 Net assets - beginning � �5,703 Net assets - ending 190,655 7 $ 65,189 205,218 7,299 2n,�os 210,596 210,596 67,110 48,593 115,703 Governmental Activities Governmental acfivities net assets increased by $24.4 million from $221.3 million as of September 30, 2003, to $245.7 million as of September 30, 2004. This increase due to governmental activities accounted for 69% of the total increase in net assets for the City and represented a 11.0°/a increase in net assets for governmental activities. Key elements of this increase are as follows: • An 9.5% increase in property tax revenues from $33.9 million to $37.2 million, due to a 9.6% increase in taxable assessed values. • A current year contribution of $10 million from the Philadelphia Phillies towards construction of the new spring training community sports complex. • Increases of $1.9 million in charges for services versus the previous fiscal year, primarily due to new Parks & Recreation lease agreements and increased Parks & Recreation admissions and membership revenues. • A$1.6 million decrease in funding for construction projects and grant matching funds versus the previous year. �� The cost of all Governmental activities this year was $110.6 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 $75.5 � million because some of the cost was paid for by those who directly benefited from the programs ($25.4 million) or by other governments and organizations that subsidized certain programs with grants and contributions ($9.7 million). � Expenses and Program Revenues - Governmental Activities For the Year Ended September 30, 2004 Mil"--- `c�ec� ��ye�� ec� �m�\oc c�e�'� �GeS ��\oc Oe,o� �� o yQo ��0 5e ` ��c ��cc �� QJ� �� ac �� ac a� �� C�e��`� 'c�y�Ga � o�o��o �� \ J`ea� �°��o Q �o GJ� �e5 c�e ♦ ■ Expenses ■ Revenues � � � � � 8 � LJI L_J � � � � � � ' 1 I� �� ' � LJ' Revenues by Sources - Governmental Activities For the Year Ended September 30, 2004 Property taxes 29% Capital grants anc contributions 2% Operating grants contributions 5% Business-type Activities Sales taxes 12% Charges for services 19% Franchise fees and utility taxes 19% Other taxes 3% �her �% item Net assefs for business-type activities increased from $230,722,427 to $241,794,801. This increase totaled $11.1 million, reflecting a 4.8% increase in business-type activities net assets and 31 % of the total increase in net assets for the City. The increase was primarily the results of operating revenues in excess of operating expenses. The current year increase was $0.1 million less than the fiscal year 2003 increase in net assets of $11.2 million. Total revenues for business-type activities increased by $5.6 million, or 4.8%, to $122.1 million versus the prior year total of $116.5 million. The increase resulted from a$9.1 million increase in charges for services, primarily due to stormwater system and water and sewer system rate increases and related increases in sales of $3.7 million and $1.0 million for the water and sewer utility and the stormwater systems, respectively. Also contributing to the increase in charges for services was a$3.0 million increase in gas system sales versus the previous year, due to increased sales volume as customers were added, as well as favorable market conditions and related gas prices. Offsetting the $9.1 million increase in charges for services was a$3.8 million current year decrease in capital grants and contributions, due to several large capital grants received during fiscal 2003 for stormwater and water and sewer system improvements. Total expenses for business-type activities increased by $6.6 million from $99.9 million in fiscal 2003 to $106.5 million � for fiscal 2004. A significant factor contributing to this $6.6 million increase was increased personal services expenses of $2.7 million, or 13.3%, for business-type activities primarily due to significantly increased pension and medical insurance costs, in addition to normally scheduled wage increases. Additionally, gas utility purchases for resale increased by $1.5 million over fiscal 2003 partially due to increased sales as well as increases in prices for gas , purchased for resale. Also contributing to the increase in expenses was an increase in water and sewer system repairs and maintenance expense of $0.6 million versus fiscal 2003. � 0 $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 Expenses and Program Revenue - Business-type Activities For the Year Ended September 30, 2004 Water and Gas Utitity Solid Waste Stormwater Other Sewer Utility Utility Utility Revenues by Source - Business-type Activities For the Year Ended September 30, 2004 Charges for services 93% Other 2% 10 Capital grants and contributions 5°/a r� �I �J ' �j u �� r ' ' � � ' ' � Financial Analysis of the City's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendab/e resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund ba/ance may serve as a useful measure of a governmenYs net resources available for spending at the end of the fiscal year. The City reports the General Fund, Special Development Fund, and Capitaf Improvement Fund as major governmental funds. The City's governmental funds for the year ended September 30, 2004, reflect a combined fund balance of $78.4 million versus $87.7 million for the prior year, a decrease of $9.3 million. A total of $46.2 million, or 59%, of this represents unreserved fund ba/ance, which is available for spending at the governmenYs discretion. The remainde� of the fund balance is resenred 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 ($11.0 million); 2) to pay debt service ($6.6 million); 3) for advances due from other funds ($2.0 million); or 4) for specific program purposes per grant restrictions and related loan agreements ($12.6 million). The General Fund is the chief operating fund of the City. At September 30, 2004, unreserved fund balance of the General Fund totaled $13.0 million, with the remainder of the $15.8 million in fund batance reserved to indicate it has already been committed for purchase orders of the prior period ($0.8 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 14.3% of total general fund expenditures (GAAP basis before transfers) for the current �scal year. The fund balance of the City's General Fund increased by $1.1 million during the current fiscal year. This increase was the composite result of total actual expenditures less than budgeted expenditures by a total of $2.1 million, and total actual transfers out to other funds of $0.3 less than budgeted, partially offset by a$0.6 million shortfall in actual revenues versus budgeted revenues. Also offsetting the positive expenditure and transfers variances was a budgeted use of fund balance of $0.7 million. The expenditure "savings" were spread across numerous departments as the revenue shortfalls occurred across numerous revenue categories. The budgeted deficit of $0.7 million included $0.3 million to subsidize the Harborview Center enterprise fund; $0.1 million to fund Police union bargaining agreements; $0.1 million to fund retirement payouts for long-term employees; and $0.1 million to fund contractual assistance for Fire union contract negotiations. The fund balance of the Special Development Fund decreased from $10.5 million to $10.2 million during the current fiscal year, versus an increase of $3.6 million in the previous year. Key factors in the decrease included an increase of $2.0 million in debt service transfers to the Infrastructure Sales Tax debt service fund along with a$0.8 million increase in transfers to the Capital Improvement capital projects fund for infrastructure projects versus the previous fiscal year. Also, interfund transfers-in, representing the retum of excess capital project funds, for the current fiscal year decreased by $1.4 million versus the previous year. These decreases versus the previous year were partially offset by a$0.5 million increase in sales tax revenues. The fund balance for the Capital Improvement Fund decreased from $34.5 million to $27.1 million during the current � fiscal year. This decrease was due to scheduled current year capital outlay expenditures in excess of current year capital project funding. Major current year capital outlay expenditures included $5.4 million for the new spring training community sports complex; $4.3 million for the new main library; and $2.3 million for two new fire stations. � � The fund balances for Other (non-major) Govemmental Funds decreased from $28.1 million to $25.3 million during the current fiscal year. This was primarily due to bond-financed capital outlay expenditures for the spring training community sports complex ($1.9 million) and the new main library ($0.8 million). 11 Proprietary Funds The City's proprietary funds provide the same type of information found in the govemment-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$3.0 million increase in net assets versus a$1.5 million increase for the prior year. Operating revenues increased 9.6% over the previous year, partially offset by a 5.7% increase in operating expenses. The increase in operating revenues was due to a rate increase of approximately 14.6% effective October 1, 2003. The increase in operating expenses was partially due to increased employee pension expenses for the current year along with increases in operating expenses for system repairs and replacements. Operating income of $6.3 million was offset by $5.5 million in interest expense on long term debt: Investment earnings and other revenues of $1.3 million exceeded other expenses of $0.1 million. The net income before contributions and transfers of $2.0 million was increased by $3.2 million in capital grants and contributions. Finally, transfers out of $2.2 million resulted in a net increase in net assets of $3.0 million. The Gas Utility Fund realized a$2.9 million increase in net assets versus a$2.4 million increase for the prior year. Operating revenues increased by $3.0 million, or 10.1 %, over the prior year, primarily due to price increases. However the increase in operating revenues was partially offset by a$2.6 million, or 10.4%, increase in operating expenses versus the prior year, including a 10.9% increase in purchases for resale and a 16.6% increase in personal services. The increase in purchases for resale was due to price increases while the increase in personal services was partially a result of a significant increase in employee pension expense. The Solid Waste Utility Fund realized a$1.2 million increase in net assets versus a$1.2 million increase for the prior year. Operating revenues increased by $0.4 million, or 2.6%, while operating expenses increased by $0.8 million, or 5.9%, versus the prior year. Major components of the increase in operating expenses were a$0.5 million, or 11.2%, increase in personal services primarily due to pension expense and medical insurance increases, and a$0.2 million, or 4.0%, increase in dumping charges related to operating revenue volume increases. The Stormwater Utility Fund realized an increase in net assets of $2.3 million versus a prior year increase of $4.6 million. Operating revenues increased by $1.0 million, or 12.2%, versus the previous year, primarily due to a rate increase of approximately 11.9% effective October 1, 2003. The increase in operating revenues was negated by a $1.3 million, or 22.7% increase in operating expenses over the prior year. Contributing to the increase in operating expenses were a$0.4 million, or 105.7% increase in repairs and maintenance; a$0.3 million, or 17.4% increase in personal services; a$0.3, or 21.1 % increase in interfund administrative charges; and a$0.2 million, or 31.7%, increase in transportation expenses. These operating expense increases were related to growth in the stormwater system, along with some significant repair and replacement projects during the current fiscal year. Unrestricted net assets and changes in net assets of the proprietary funds for fiscal years 2004 and 2003: Fund Water and Sewer Utility Gas Utility Solid Waste Utility Stormwater Utility Otherfunds Totals Unrestricted Net Assets 2004 2003 $ 22,951,445 $ 25,347,874 10,669,870 8,664,372 11,347,302 10,025,860 7,826,215 7,376,541 13,404,298 12,439,195 66,199,130 63,853,842 General Fund Budgetary Highlights Change in Net Assets 2004 2003 $ 3,011,714 $ 1,536,839 2,858,904 2,405,321 1,250,807 1,244,130 2,278,215 4,590,723 1,224,179 1,175,890 10,623,819 10,952,903 Differences between the original budget for General Fund expenditures and the final amended budget were relatively minor ($481,690, or 0.5% increase). Key elements of this increase are as follows: •$466,100 increase in Police budgeted expenditures - due to the cuRent year movement of $300,000, representing six police officers that were previously grant-funded, from the Special Programs special revenue 12 fund to the Police General Fund department budget; along with a$140,000 Police budget increase to fund collective bargaining agreements approved during the current fiscal year. • $100,000 increase in Human Resources ,budgeted expenditures to fund consulting services for Fire union negotiations. •$148,080 decrease in Parks and Recreation department budgeted expenditures, due to a number of operational budget decreases over various departments, partially offset by increases for various recreation programs and financing of capital improvements. Total actual revenues for the General Fund fell short of final budgeted revenues by $569,954 and total actual expenditures were less than final budgeted expenditures by $2.1 million. The revenue shortfall occurred over numerous revenue categories including a$238,477, or 14.7%, shortfall in fines and forFeitures revenues due to the current year transfer of parking enforcement operations to the Parking System enterprise fund. Expenditure budget savings occurred over numerous expenditure categories. Capital Asset and Debt Administration Capital Assets Capita/ assets include land, buildings and building improvements, improvements other than buildings, and machinery and equipment. Capital assets also include infrastructure assets added since October 1, 2001. 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, 2004, the City had investments in capital assets totaling $505,105,167 (net of accumulated depreciation). Land Buildings Improvements Other than Buildings Machinery and Equipment Infrastructure City of Clearvvater, Florida - Capital Assets" Govemmental Activities Business-type Activities Total 2004 2003 2004 2003 2004 2003 $ 44,854,646 $ 45,288,886 $ 26,210,508 $ 26,013,359 $ 71,065,154 $ 71,302,245 85,711,872 39,432,666 36,609,450 36,742,325 28,364,741 27,505,002 4,009,061 2,171,728 16,003,159 16,089,369 101,715,031 55,522,035 222,402,837 198,633,462 259,012,287 235,375,787 3,913,808 3,842,388 32,278,549 31,347,390 - - 4,009,061 2,171,728 Construction in progress 5,613,253 30,440,628 31,411,832 44,291,073 37,025,085 74,731,701 Total $ 205,163,023 $ 181,581,235 $ 299,942,144 $ 288,869,651 $ 505,105,167 $ 470,450,886 ` Net of accumulated depreciation Net capital assets for the City's governmental activities increased from $181.6 million to $205.2 million, reflecting an increase of $23.6 million for the current fiscal year. Key components of this increase include: • Completion of a new spring training community sports complex at a cost of approximately $28.9 million, less related debt of $14.6 million. • Completion of a new $17.2 million main library less related debt of approximately $9.5 million. • Completion of two new fire stations during fiscal 2004 at a combined cost of approximately $3.6 million. • Various infrastructure improvement projects inGuding streetscaping, intersection improvements, pedestrian overpass/underpass construction, and tra�c calming. Net capital assets for the City's business-type activities increased by $11.1 million from $28$.8 million to $299.9 million during the current fiscal year. This increase was due primarily to scheduled utility system improvements for the Water & Sewer and Stormwater utility systems, respectively, funded from revenue bond issues. These improvements included a water treatment facility, sewer treatment improvements, and stormwater system improvements. 13 Additional information on the City's capital assets Gan be found in Note III (C) on pages 47-48 of this report. Long-term debt The City's total long-term debt was unchanged from the prior year at $284.2 million. An increase in long-term debt for business-type activities of $9.9 million was offset by an decrease in long-term debt for governmental activities of $9.9 million. Key factors in these changes included: The increase in long-term debt for business-type activities is primarily due to a$9.4 million increase in net revenue bonds payable as a result of a new $14.4 stormwater bond issue during fiscal 2004, along with a $0.8 net increase due to two current year bond refundings, offset by scheduled bond principal payments. The decrease in long-term debt for governmental activities is largely due to a$6.2 million decrease in net revenue bonds payable as a result of regularly scheduled debt service payments, as well as a$2.5 million decrease in claims payable as a result of a current year correction in the self-insurance actuarial calculation. The City's bonded debt as of September 30, 2004, consists entirely of revenue bonds (secured solely by specified revenue sources) with no general obligation debt or special assessment debt outstanding. Governmental activities net revenue bonds totaled $61.2 million while business-type activities totaled $191.8 million. All revenue bond issues of the City have received an insured rating of either AAA by Standard & Poor's or Fitch, or Aaa by Moody's. The City's Charter limits legal indebtedness to twenty percent of the assessed valuation of non-exempt real estate. The current debt limitation is in excess of $1.2 billion, which is significantly in excess of the City's legal indebtedness at September 30, 2004. Additional information on the City's long-term debt can be found in Note III (F) on pages 53-57 of this report. Economic Factors And Year 2005 Budgets and Rates Factors considered in preparing the City of Clearwater's budget for fiscal year 2005 �included: • The unemployment rate for the Tampa Bay metropolitan area for September 2004 was 3.8%, a decrease of 0.7% from the 4.5% rate for September 2003. The national rate for September 2004 was 5.4% versus 6.1 % for September 2003. • Total taxable assessed values for the City of Clearwater increased 11.6% for fiscal 2005. • Health insurance costs for City employees are budgeted to increase 15% over the fiscal 2004 budget, resulting in a$0.9 million cost increase for the General Fund. • Workers' compensation costs are budgeted to increase by 16%, or $0.4 million Citywide. • Budgeted Water and Sewer utility revenues for 2005 reflect a 7% rate increase effective October 1, 2004, while fiscal 2005 budgeted Stormwater utility revenues reflect an 8% rate increase effective October 1, 2004. Contacting the City's Financial Management This financial report is designed to provide a general overview of the City's finances for all those with an interest in our government and to show the City's accountability for the money it receives. Questions concerning any of the � information provided in this report or requests for additional financial information should be addressed to The City of Clearwater, Finance Department, 100 S. Myrtle Avenue, Clearwater, Florida 33756-5520. r 14 r r � � ,� �� Basic Financial Statements � i � �L J II r � �� r� � 15 City of Cleannrater, Florida Statement of Net Assets September 30, 2004 Primary Government Governmental Business-type Activities Activities Total � Component Unit � I' Clearwater ' Downtown � Development Board ASSETS � Cash and cash equivalents $ 137,527,435 $ 25,507,495 $ 163,034,930 $ 254,582 Restricted cash and investments - 14,322,926 14,322,926 - I nvestments 1,190,238 - 1,190, 238 - Total receivables (net) 53,860,949 9,254,631 63,115,580 205,191 � Intemal balances (40,058,425) 22,860,240 - (a) - Due from other governments 5,116,151 200,814 5,316,965 48,000 Prepaid items 109,368 8,275 117,643 - Inventories 215,295 1,234,240 1,449,535 - � Deferred charges 466,489 1,615,728 2,082,217 - Net pension asset 19,538,693 5,921,145 25,459,838 - Restricted assets: Cash and cash equivalents - 47,906,641 47,906,641 - � Investments - 9,394 9,394 - Internal balances - 17,198,185 - (a) - Due from other governments 731,448 3,087,240 3,818,688 - Capital assets: � Land 44,854,646 26,210,508 71,065,154 - Buildings 85,711,872 16,003,159 101,715,031 - Improvements other than buildings 36,609,449 222,402,837 259,012,286 - Machinery and equipment 28,364,741 3,913,808 32,278,549 - , Infrastructure 4,009,061 - 4,009,061 - Construction in progress 5,613,253 31,411,832 37,025,085 - Total assets 383,860,663 449,069,098 832,929,761 507,773 LIABILITIES � Accounts payable and other current liabilities 2,494,237 2,585,180 5,079,417 33,445 Accrued liabilities 2,149,342 643,567 2,792,909 - Accrued interest payable 681,040 52,388 733,428 - � Due to other governments 1,387,955 4,804 1,392,759 - Deposits 3,920 174,676 178,596 - Uneamed revenue and liens 43,001,291 5,988 43,007,279 205,191 Payable from restricted assets: � ' Construction contracts payable - 1,935,883 1,935,883 - Accrued interest payable - 1,746,258 1,746,258 - Customers deposits - 4,384,811 4,384,811 - Non-current liabilities due within one year: � Compensated absences 683,568 174,059 857,627 - Loans and leases payable 4,149,928 817,928 4,967,856 7,848 Revenue bonds payable 6,273,477 7,896,523 14,170,000 - Claims payable 2,785,300 - 2,785,300 - � Long-term debt and liabilities: Compensated absences 5,405,605 1,376,441 6,782,046 - Loans and leases payable 6,522,311 1,540,282 8,062,593 70,634 Revenue bonds payable 54,972,634 183,935,509 238,908,143 - ' Claims payable 7,674,511 - 7,674,511 - Totalliabilities 138,185,119 207,274,297 345,459,416 317,118 NET ASSETS Invested in capital assets, net of related debt 133,711,161 136,964,219 270,675,380 - ' Restricted for: Capital projects 11,135,590 - 11,135,590 - Debt service 6,565,403 12,281,931 18,847,334 - � Renewal and replacement - 13,741,256 13,741,256 - Employees' pension benefits 19,538,693 5,921,145 25,459,838 - Other purposes 13,561,410 5,162,993 18,724,403 - Unrestricted 61,163,287 67,723,257 128,886,544 190,655 , Total net assets $ 245,675,544 $ 241,794,801 $ 487,470,345 $ 190,655 (a) The total column for restricted and unrestricted internal receivable balances has been adjusted to remove the effect of internal balances. The notes to the financial statements are an integral part of this statement. � 16 � L J 1 '�fi O O N � M 0�.�—.,� � i E L �'a � w Q � ��H O V � � W 0 � L �y � C� y « LL c c,.., m 3 E� C)=V o �m � � � d Q � H Z C .� f�0 N � C N > G1 � a H � yN � C � 'ul Q 7 m � i� i i i�� i EA O I� t0 � CO Op M � O lC� <D a— lC� C'7 � 0.� LC� 00»a0.—NM��7 aO�I�tOCO�cOC�N P a00��N�� C? a0�v�a00� •— N v0 vl� M � � � � � ... � � � � � � � � � � EA C tAt�O��c��CMD�1A N � y 00)�ta�pD�Ne'q�� N N OD C^OO��u�N�aN- W �: M�aD�viAaOO� w �> 'V � vvp �vM ^ Z oa � � � °� � C'7 O � GO ' ' O? �' ' f� ' � �� °o � � � � C'7 � C U� � � � i i � � � OC00p.(O�Mf� �fO��C�D c�aD�OOi�t�CO� �F M .-- N � � O�CO�� NOOI�COC'00p� c��fOtO � M � N M M �� O � � � � � i � N � � � O � C�0 �M .�M- N ' � �.-ODO � � � � N N CO I� �A I� M � tf) CO � �� O M a0 N M� M M f� ' � � i i� i O� � t•�j p�j � CO tC th � N � V�A O M M N � f� .-• p) � v N � � H �N�OD�(O�Otn I�O�In � � O� O M 00 I� N O N O ln � ��p��I�Of�tOOf� � �OppN� � N� N�� N M� O � sf �� I��AI�OtO�Ln O f��A��l�p M� a- a- �C��d' Ki r� cvrnvr�� v��•c�o i � � � � i � � i � �� N MN�I' � � ��Of�� Na��-M�t N N fA � N� CO � CO CO O ln 00 N CO CO ��pp � � ��Oti�O�M��(�OOD� �N�N��NM��Nt^O Ma�-I�O(G'7M Ott�NNV�' N N E9 U ' ' O a y � C C � � � a�i � M�I�NOO ao �n �r� rnrn `� a � C p Nf�Pt� � � � � � � � tt� NN X � ` '0 O» O N aO O� st !� f� N V� � � 7 OOl��lnr � O O�A MM `� C..y. `� N .�� NCON.-� N � N NN f�f� N E N C y C� �N�M N CO et �O V f6 Nn Q 3 � o � c�i �i m i. •Z � w '� � U �a � � v°�i � � v° a�i �3 NN�N � N ��O t01� d X � >� C � N C� ,O MCMO_�M0�0 � � � N �ia�`'�o°n°_n�o� � � � � `�� `�.� � � o �•� � � c c � ��COC1t0 M � NONtAOC'JN C X y X c X� � O� �C �j C �'Z o�°i�~�°° c`� i° �°ov°�rno� > �y cLi� E� ;9'�' �� c� a� `m y c�i� v in e•iviccoi�vrn m �� E m N o— a? o� L Vi `- N �M� ��ch � � �p �• Qt N �•- L�H N N (,) �� dUiLL�V� d•� Vl f0 N � Vyl /NA � v� ea � f- � C9 � a�° V a� a� C� cA I— Z Z �trl�COa0aDa0r- c+�.-tAf�N�p N �� Oi��t[>CO�f�� O�O�NCD.-a0� aOCO � NNaO�1�N�Ci M OC70)stNO f�l� y N M�'sl�Aa-crltn tnN 1n�� C f��COON�AO�� Of��f��f� 00 d f�� tO�N��OfO ��ON��70 NN ��jNNe'� NchO �Nr��O� W � N 69 bq � m � .> > � � �'j U C C � � � C N « a� � � °� o ��:Z' aE E �c.5� Qc> �cE''a�i �� m� a��oEc�'c� �j Co' �a'�c >�'�c' a��v m . w d a� m �� V N f0 ��' N� N lC �c�� C 3 G. � � � c U � �� o � �� a� o a C � c� V � N � t � $ > > :� F- C co m �p $ � !- — � p — ��oC9aaE-wxU� ��C9cncn0 � £p� � a c9 m � c°� H 17 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 Properry taxes Other Due from other iunds (deficit in pooled cash) Due from other governmental entities Investments Land held br resale Inventories, at cost Advances to other funds Total assets LIABILITIES Accounts and contracts payable Accrued payroii Due to other funds Due to other funds (deficit in pooled casFi) Due to other governmental entities Deposits Construction escrows Unearned revenue Uneamed assessment liens Advances from other funds Total liabilities FUND BALANCES Reserved for: Encumbrances Debt service requirements Advances and notes Grant programs Unreserved, reported in: Generalfund Special revenue funds Debt service funds Capital projects funds Total fund balances Total liabilities and fund balances City of Clearwater, Flor(da , Balance Sheet Governmental Funds September 30, 2004 � r � Special Capltal Other Totals General Development Improvement Governmental GovemmeMal ' Fund Fund Fund Funds Funds $ 22,400 $ - $ - $ 100 $ 22,500 13,432,851 8,332,963 70,459,461 14,354,030 106,579,305 252,222 - - - 252,222 - 2,500 - 10,418,035 10,420,535 - - 23,982 - 23,982 - - - 45,839 45,839 39,046,581 2,494,155 - - 41,540,736 1,463,813 - - 88,701 1,552,514 - - 1,218,111 - 1,218,111 2,734,640 2,237,573 416,300 459,086 5,847,599 - - - 1,190,238 1,190,238 - - - 998,342 998,342 13,950 - - 13,950 2,000,000 - - - 2,000,000 $ 58,966,457 $ 13,067,191 $ 72,117,854 $ 27,554,371 $ 171,705,873 $ 1,249,777 $ - $ 523,740 $ 59,838 $ 1,833,355 1,820,418 - - 96,915 1,917,333 24,925 - 44,506,531 120,401 44,651,857 - - - 1,218,111 1,218,111 17,652 385,201 - 48,255 451,108 3,920 - - - 3,920 - - - 371,718 371,718 40,010,644 2,494,155 - 79,440 42,584,239 - - 23,982 - 23,982 - - - 240,803 240,803 43,127,336 2,879,356 45,054,253 2,235,481 93,296,426 761,853 2,000,000 2,500 10,215,540 3,809 10,981,202 6,565,403 6,565,403 9,511,227 11,513,727 3,123,401 3,123,401 i3,o��,2ss - - - �s,on,2s8 - 10,185,335 - 5,139,237 15,324,572 - - - 28,058 28,058 - - 16,848,061 947,755 17,795,816 15,839,121 10,187,835 27,063,601 25,318,890 78,409,447 $ 58,966,457 $ 13,067,191 $ 72,117,854 $ 27,554,371 $ 171,705,873 The notes to the financial statements are an integral part of this statement. 18 � ' ' ' ' � LJ LJ ' '� J City of Clearwater, Florida Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2004 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 was $264,143,147, and the accumulated depreciation is $82,561,912. Total capital assets for governmental activities Less: Land included in govemmental 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. Accrued arbitrage rebate payable expenses are not financial uses and, therefore, are not reported in the funds. Intergovernmental revenues for FEMA hurricane receivable are not financial resources in the current period and, therefore, are reported as unearned revenues in the funds. Special assessment liens receivable are not financial resources in the current period and, therefore, are reported as unearned revenues in the funds. $ 78,409,447 $ 205,163,025 (998,342) 204,164,683 19,538,693 (655,919) (936,847) 731,448 23,982 The assets and liabilities of the internal service funds (funds used to charge the costs of certain activities , to individual funds) are included in the governmental activities in the statement of net assets. Net assets of internal service funds 34,505,146 Less: Capital assets included in total governmental capital assets above (18,201,118) Less: Net pension asset included in total governmental net pension asset above (2,061,065) ' Add: Capital lease purchases payable included in total govemmental below 8,648,698 Add: Compensated absences included in total governmental below 573,560 Add: Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (1,524,127) ' ' , �J � ' � 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 e�ense) 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. 19 21,941,094 (60,849,649) 359,694 466,488 40,797 (796,954) (10,672,238) (6,089,175) (77,541,037) $ 245,675,544 Clty of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2004 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 Capital outlay Total expenditures Excess (deficiency) of revenues over / (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of capital assets Long term debt issued Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund baiances - ending Special Capital Other Total General Development Improvement Governmental Governmental Fund Fund Fund Funds Funds $ 34,929,748 $ 2,226,753 $ - $ - $ 37,156,501 7,504,909 - - - 7,504,909 10,236,738 - - - 10,236,738 4,081,446 1,002,889 - - 5,084,335 6,143,239 9,119,913 - - 15,263,152 6,790,089 - - - 6,790,089 9,488,216 1,077,425 1,281,735 5,073,855 16,921,231 11,682,076 - - 516,324 12,198,400 1,257,043 - - 484,662 1,741,705 536,175 623,302 44,639 1,286,986 2,491,102 1,013,687 - 691,939 1,551,241 3256,867 93,663,366 14,050,282 2,018,313 8,913,068 118,645,029 10,804,633 47,940,641 2,232,974 6,528,937 1,695,347 461,732 21,873,436 91,537,700 - 240,192 143,811 11,188,636 - 335,430 2,027,004 50,303,075 - 60,224 205,170 2,498,368 - 3,173,149 - 9,702,086 - 16,435 1,527,721 3,239,503 - - 100,000 561,732 - 845,241 1,509,514 24,228,191 - - 7,483,061 7,483,061 - - 2,921,768 2,921,768 - 17,071,709 2,786,961 19,858,670 21,742,380 18,705,010 131,985,090 2,125,666 14,050,282 (19,724,067) (9,791,942) (13,340,061) 5,097,203 1,050,321 13,389,448 10,317,300 29,854,272 (6,076,764) (15,375,078) (1,321,103) (3,977,114) (26,750,0.59) - - - 720,000 720,000 - - 201,663 - 201,663 (979,561) (14,324,757) 12,270,008 7,060,186 4,025,876 1,146,105 (274,475) (7,454,059) (2,731,756) (9,314,185) 14,693,016 10,462,310 34,517,660 28,050,646 87,723,632 $ 15,839,121 $ 10,187,835 $ 27,063,601 $ 25,318,890 $ 78,409,447 The notes to the financial statements are an integral part of this statement. 20 �� ' � � ' LJ ' � ' � � , ' � � � il � � ' � City of Cl�rwater, Florida Reconciliation of the Statement of Revenues, Expendltures, and Changes in Fund Balances of Governmental Funds to the Statement of Activitles For the Y�r Ended September 30, 2004 Net change in fund balances - total governmental funds Amounts reported for govemmental activities in the Statement of Activfties are different because: Governmental funds report capital outlays as expenditures while govemmental acavities report depreciation expense to allocate those costs over the I'rfe of the assets. This is the amount by which capital outlays exceeded depreciation in the current period. Expenditures for capital assets Less current year depreciaUon In the Statement of Activfties the loss on disposition of capifal assets is reported. The Ioss is not a use of current resources and thus is not reported in the funds. Loan proceeds provide current finanaal resources to govemmental funds; however issuing debt increases long-term liabilfties in the Statement of Net Assets. In the current year these amounts sre: Cap'dal lease proceeds Repayment of long term debt principal is an expenditure in the governmental funds, however the repayment reduces long-term Ifabilities in the Statement of Net Assets. Current year amounts are: Revenue bond principal payments Capital lease principal payments Net pension asset is not a current financial resources and consequenUy is not repoRed 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 expenditures 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 Current year change in accrued interest expense Revenues in the statemerrt of activities that do not provide current finanaal resources are not reported as revenues in the funds. Current year accrual - FEMA reimbursemeM for hurricane response Special assessment revenues are deferred until colleded in the govemmental funds. The revenues collected in the current year were prior year revenues in the Statement of Ac[ivities. Current year change in interest revenues that will not be colleded for several months after the fiscal year and are not accrued in the govemmental funds. The net revenues of intemal service funds (funds used to charge the costs of certain adivities to individual funds) for govemmeMal activi�es are reported in the StatemeM of Activities but not in the governmental funds. Total change in net assets of governmental activities The notes to the financial statements are an integral part of this statement. 21 $ (9,314,185) $ 58,148,471 (6,861,893) 51,286,578 (28,581,621) (201,663) 6,065,179 1,417,882 7,483,061 (253,547) 299,362 (26,901) (87,465) 164,507 73,114 422;617 731,448 (11,898) (1 �659) 2,866,545 $ 24,425,676 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Non-GAAP Budgetary Basis) General Fund For the Year Ended September 30, 2004 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 Totalrevenues EXPENDITURES Current: General government City Commission City Manager's Office City Attomey's Office Official Records & Legislative Services Public Communications Finance Human Resources Non-Departmental Public Works Administration Planning City Auditor's Office Office of Management & Budget Total general government Public safety Police Fire Development & Neighborhood Services Total public safety Physical environment Public Works Administration Total physical environment Transportation Public Works Administration Total transportation Economic environment Economic Development Development & Neighborhood Services Total economic environment Human services Equity Services Total human services Cuiture and recreatlon Parks and Recreation Library Marine & Aviation Total culture and recreation Total expenditures (budgetary basis) Excess of revenues over expenditures (budgetary basis) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) (budgetary basis) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses (budgetary basis) Encumbered purchase orders, beginning of year Encumbered purchase orders, end of year Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses (GAAP basis) Fund balances - beginning Fund balances - ending Budgeted Amounts Original 34,773,010 $ 7,100,000 10,661,090 3,601,650 6,105,580 8,125,000 8,947,030 12,087,520 1,616,820 749,000 762.780 94,529,480 277,800 700,610 1,402,730 1,134,170 915,010 1,987,480 1,161,610 1,978,280 a2,2aa 1,167, 890 137,070 296,500 11,241,394 Actual Final Amounts 34,889,320 $ 7,449,000 10,459,090 3,972,860 6,425,000 6,909,000 9,314,610 11,776,020 1,495,520 612,960 929.940 94,233,320 2n,aoo 720,610 1,402,730 1,134,170 915,010 1,937,480 1,261,610 1,978,280 82,204 1,203,560 132,870 300,700 11,347,024 34,929,748 $ 7,504,909 10,236,738 4,081,446 6,143,239 6,790,089 9,488,216 11,682,076 1,257,043 536,175 1.013.687 93,663,366 244,406 705,648 1,384,022 1,101,512 827,156 1,861,660 1,127,986 1,960,033 83,279 1,089,782 121,472 296,757 10,803,713 Variance with Final Budget Pos(tive (Negative) 40,428 55,909 (222�352) 108,586 (281,761) (118,911) 173,606 (93,944) i�8.4� (76,785) 83.747 (569,554) 33,394 14,962 18,708 32,658 87,854 75,820 133,624 18,247 (1,075) 113,778 11,398 3,943 543,311 29,054,040 29,520,140 29,094,817 425,323 16,434,660 16,434,660 15,926,402 508,258 3,0J�72,390 3�0� 2,97�6,226 9�6164J 2,,� 2'�219,499� 2� 29,014 6,�492,712� 6� 6 b�74'3�7� 84,836 1,546,940 1,531,940 1,476,934 55,006 256 420 256,420 248 394 8,026 �� 7$��' � �' �� 17,175, 990 17, 027, 910 16, 698, 807 4,890,180 4,910,180 4,725,471 ,4�� 93,276,290 93,757,980 91,681,136 1 �253,190 475,340 1,982,230 4,678,450 5,156,680 (5,931,640) (6,335,170) (1,253,190) (1,178,490) - (703,150) - (703,150) 14,693,016 14,693,016 14,693,016 $ 13,989,866 The notes to the financial statements are an integral part of this statement. 22 329,103 184,709 � 2,076,844 1,506,890 5,097,203 (59,47� (6,076,764) 258,406 (979,561) 198,929 1,002,669 1,705,819 (618,41 � (618,41 � 761,853 761,853 1,146,105 1,849,255 14,693,016 - $ 15,839,121 $ 1,849,255 City of Clearwater, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and �►ctual (GAAP Basis) Special Development Fund For the Year Ended September 30, 2004 REVENUES Taxes Licenses, permits, and fees Intergovernmental Interest income Total revenues EXPENDITURES Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Deficiency of revenues and other sources over expenditures and other uses Fund balances - beginning Fund balances - ending Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) $ 2,219,690 $ 2,219,690 $ 2,226,753 $ 7,063 500,250 530,250 1,002,889 472,639 10,554,180 10,554,180 10,197,338 (356,842) 220,000 220,000 623,302 403,302 13,494,120 13,524,120 14,050,282 526,162 13,494,120 13,524,120 14,050,282 526,162 - 1,050,322 1,050,321 (1) (15,944,310) _ (16,441,470) (15,375,078) 1,066,392 {15,944,310) (15,391,148) (14,324,757) 1,066,391 (2,450,190) (1,867,028) (274,475) 1,592,553 10,462,310 10,462,310 .10,462,310 - $ 8,012,120 $ 8,595,282 $ 10,187,835 $ 1,592,553 The notes to the financial statements are an integral part of this statement. 23 City of Clearwater, Florida Stateme�t of Net Assets Proprietary Funds September 30, 2004 ASSETS Current assets: Cash on hand and in banks Equiry in pooled cash and investrnents Accounts and contracts receivable: Billed Unbilled charges estimated Less: Allowance for uncollectable accounts Total receivables, net Other receivables Due from other funds Due from other governmental entities Inventories, at cost Prepaid expenses and other assets Total current assets - unrestricted Current assets - restricted: Restricted equity in pooled cash and investments Investments Total current assets - restricted Total current assets Noncurrent assets: Restricted: Equiry in pooled cash and investments Due from other funds Investments Due from other govemmental entities Interest receivable Deferred charges Advances to other funds Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Business-type Enterprise Water and Sewer Gas Solid Waste lJtility Utility Utility $ 400 $ 700 $ 200 6,707,886 3,362,389 8,428,388 2,393,828 1,216,324 894,492 1,357,000 1,278,500 590,547 3,750,828 2,494,824 1,485,039 (113,376) (70,186) (41,866) 3,637,452 2,424,638 1,443,173 10,150,541 5,935,653 1,968,800 200,814 - 408,475 684,082 515,123 - 7,076 - - 21,388,251 12,238,503 12,249,036 9,764,498 1,670,701 853,022 9,764,498 1,670,701 853,022 31,152,749 13,909,204 13,102,058 24,045,646 300,000 - 9,697,165 - - 1,515,549 - - 825,001 337,080 - 2,279,791 1,250,199 1,316,947 27,445,598 327,284 1,041,913 166,905,451 36,252,324 2,338,107 232,714,201 38,466,887 4,696,967 263,866,950 52,376,091 17,799,025 The notes to the financial statements are an integral part of this statement. 24 Aativities Funds Stormwater Other Utility Funds Total Govemmental Activities - Intemal Service Funds $ - $ 23,067 $ 24,367 $ 1,900 1,702,113 5;282,352 25,483,128 30,923,730 556,052 254,895 5,315,591 - 823,500 144,030 4,193,577 - 1,379,552 398,925 9,509,168 - (25,687) (3,422) (254,537) - 1,353,865 395,503 9,254,631 - - - - 25,121 3,289,716 4,793,268 26,137,978 1,549,424 - - 609,289 - - 35,035 1,234,240 201,345 80 1,119 8,275 103,574 6,345,774 10,530,344 62,751,908 32,805,094 2,016,742 17,911 14,322,874 - - 52 52 - 2,016,742 17,963 14,322,926 - 8,362,516 10,548,307 77,074,834 32,805,094 23,560,995 - 47,906,641 - 1,020 7,500,000 17,198,185 - - 9,394 9,394 - 1,163,216 - 2,678,765 - - - - 5,793 453,407 240 1,615,728 - - - - 3,725,474 465,694 608,514 5,921,145 2,061,065 26,991,538 1,807,282 57,613,615 696,681 20,798,537 16,034,112 242,328,531 17,504,437 73,434,407 25,959,542 375,272,004 23,993,450 81,796.923 36,507.849 452,346,838 56,798,544 (Continued) 25 City of Clearwater, Florida Statement of Net Assets (Continued) Proprietary Funds September 30, 2004 LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued interest payable Due to other funds Due to other governmental entities Deposits Unearned revenue and liens Current portion of long-term liabilities: Compensated absences Revenue bonds Notes, loan pool agreement and acquisition contracts Claims payable Total current liabilities (payable from current assets) Current liabilities (payable from restricted assets): Construction contracts payable Accrued interest payable Current portion of long-term liabilities, revenue bonds Customer deposits Total current liabilities payable from restricted assets Total current liabilities Noncurrent liabilities: Compensated absences Revenue bonds (net of unamortized discounts and deferred amount on refunding) Notes, loan pool agreement and acquisition contracts Advances from other funds Cisims payable Total non-current liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted for: Revenue bond debt service and sinking fund requirements Revenue bond renewal and replacement requirements Water and sewer impact fees Employees' pension benefits Unrestricted Total net assets Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility Utility 844,673 1,110,937 368,725 236,318 133,299 131,005 30,777 21,611 - - - 82,474 4,804 - - 52,240 41,007 43,587 882,143 687,500 - 135,200 - 43,070 2,186,155 1,994,354 668,861 1,118,129 - - 957, 802 107,122 13, 732 5,657,857 62,500 - 2,030,710 1,501,079 853,022 9,764,498 1,670,701 866,754 11,950,653 3,665,055 1,535,615 413,108 324,279 344,685 114,033,559 25,368,431 - 229,403 - 122,606 - - 659,790 114,676,070 25,692,710 1,127,081 126,626,723 29,357,765 2,662,696 83,603,173 10,798,257 2,472,080 9,801,569 - - 13,441,256 300,000 - 5,162,993 - - 2,279,791 1,250,199 1,316,947 22,951,445 10,669,870 11,347,302 $ 137,240,227 $ 23,018,326 $ 15,136,329 AdjusUnent 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. � Activities � Funds Governmental Activities - Stormwater Other Internal Service Utillty Funds Total Funds 30,874 229,971 2,585,180 289,164 55,227 87,719 643,568 232,009 - - 52,388 25,121 - 58,602 142,076 91,654 - - 4,804 - - 174,676 174,676 - - 5,988 5,988 1,148,500 20,905 16,320 174,059 64,388 48,333 8,841 1,626,817 - 234,853 404,805 817,928 3,105,305 - - - 2,785,300 390,192 987,922 6.227.484 7,741,441 817,754 - 1,935,883 - 667,321 281 1,746,258 - 531,667 17,682 6,269,706 - - - 4,384,811 - 2,016,742 17,963 14,336,658 - 2,406,934 1,005,885 20,564,142 7,741,441 165,315 129,054 1,376,441 509,172 44,505,500 28,019 183,935,509 - 479,425 708,848 1,540,282 5,543,393 - 4,000,000 4,659,790 824,881 - - - 7,674,511 45,150,240 4,865,921 191,512,022 14,551,957 47,557,174 5,871,806 212,076,164 22,293,398 23,476,872 16,613,837 136,964,219 8,552,420 2,470,968 9,394 12,281,931 - - - 13,741,256 - - - 5,162,993 - 465,694 608,514 5,921,145 2,061,065 7,826,215 13,404,298 66,199,130 22,891,661 $ 34,239,749 $ 30,636,043 240,270,674 $ 34,505,146 1,524,127 $ 241,784,801 27 City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2004 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 Utility Utllity $ 42,352,799 $ 31,285,645 $ 16,114,970 520,488 1,472,047 89,152 42,873,287 32,757,692 16,204,122 8,118,982 4,726,344 4,922,860 7,066,334 14,966,969 - 2,012,759 229,093 332,754 672,940 525,217 2,610,691 1,931,796 81,651 70,763 - - 5,090,806 5,364,039 1,464,754 281,475 5,240,910 1,920,880 1,160,500 1,568,336 197,105 9,342 - 558,231 3,097 151,875 147,371 63,858 - 566 - 290,890 145,225 185,740 3,427,051 305,292 127,847 - 58,816 8,109 260,686 83,058 32,445 389,680 310,090 125,850 - 1,968,820 - 73,642 91,074 15,581 6,162,160 3,865,648 571,869 36,569,920 27,780,556 15,041,718 6,303,367 4,977,136 1,162,404 The notes to the financial statements are an integral part of this statement. 28 Activities Funds Governmental Activitles - Stormwater Other Intemal Servlce Utility Funds Total Funds $ 9,440,887 $ 2,961,187 $ 102,155,488 $ 48,343 200,591 2,330,621 - 5,760,907 5,760,907 - 2,899,290 2,899,290 9,489,230 11,821,975 113,146,306 36,223,831 36,223,831 1,971,696 3,018,688 22,758,570 8,267,159 - 2,527,494 24,560,797 2,455,284 121,688 725,474 3,421,768 565,528 648,854 322,330 4,780,032 213,562 - 325,146 2,409,356 496,349 - - 5,090,806 - 1,161,446 1,333,411 9,605,125 4,110,265 1,618,710 1,362,720 11,303,720 345,890 586,251 1,659,869 4,020,903 475,664 - 36,687 598,015 - 14,810 74,893 452,807 1,423,322 - 2,895 3,461 20,006 54,590 174,800 851,245 14,746,082 751,034 142,128 4,753,352 1,215,862 - 154,717 221,642 459,779 37,315 87,478 500,982 146,196 99,710 107,850 1,033,180 414,400 - 17,950 1,986,770 4,377 18,107 2,869 201,273 - 1,561,817 2,462,136 14,623,630 18;905,688 7,084,211 12,077,399 98,553,804 35,359,725 2,405,019 (255,424) 14,592,502 864,106 (Continued) 29 City of Clearwater, Florida Statement of Revenues, Expenses, and Changes In Fund Net Assets (Continued) Proprietary Funds For the Year Ended September 30, 2004 Nonoperating revenues (expenses): Intergovemmental 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 Total net assets - ending Business-type Enterprise Water and Sewer Gas Sol1d Waste Utility Utillty Utility - - 420,745 1,049,818 227,990 227,920 (5,531,514) (1,351,319) (42,430) (94,981) (147,498) - (35,450) (4,679) 269,654 243,147 198,658 (4,342,473) (1,032,359) 804,893 1,960,894 3,944,777 1,967,297 3,214,202 - - (2,163,382) (1,085,873) (716,490) 1,050,820 (1,085,873) (716,490) 3,011,714 2,858,904 1,250,807 134,228,513 20,159,422 13,885,522 $ 137,240,227 $ 23,018,326 $ 15,136,329 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business-type activities (page 17) The notes to the financial statements are an integral part of this statement. 30 Activities Funds Governmental Activitles - Stormwater Other Internal Service Utility Funds Total Funds - - 420,745 - 154,048 327,447 1,987,223 760,280 (1,166,938) (126,648) (8,218,849) (302,393) (ia,3�o) (�,0�2) (zs�,ss�) - 157,506 117,377 358,806 36,531 158,801 906,781 223,072 (994,729) 516,094 (5,048,574) 1,039,765 1,410,290 260,670 9,543,928 1,903,871 1,632,452 748,679 5,595,333 - - 436,130 436,130 1,965,187 (764,527) (221,300) (4,951,572) (553,958) 867,925 963,509 1,079,$91 1,411,229 2,278,215 1,224,179 10,623,819 3,315,100 31,961,534 29,411,864 31,190,046 $ 34,239,749 $ 30,636,043 $ 34,505,146 448,555 $ 11,072,374 31 City of Clearwater, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2004 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 Other revenues Net cash provided by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Receipt of cash on loans toffrom other funds Payment of cash on loans toffrom 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 used by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalen� $ Business-type Enterprise Water and Sewer Gas Solld Waste Utllity Utllity Utility 44,274,057 $ 32,631,204 $ 16,291,639 (14,824,166) (19,342,152) (5,675,720) (8,104,919) (4,821,874) (4,858,885) (7,193,987) (2,068,251) (4,146,639) 269,654 243,147 210,928 14,420,639 6,642,074 1,821,323 (2,163,382) (1,085,873) (716,490) �i2,2s2,sso� �s�s,sss) �»a,oa2� (14,456,272) (1,764,242) (894,532) (14,974,744) (639,782) (50,719) (2,557,755) (1,370,955) (46,966) (14,346,231) (1,612,537) (163,078) 8,149,783 - 66,609 (166,201) - - 2,679,300 - - 30,160 - - 504,742 - - (20,680,946) (3,623,274) (194,154) 919,622 227,990 227,920 919,622 227,990 227,920 (19,796,957) 1,482,548 960,557 Cash and cash equivalents at beginning of year 60,315,387 3,851,242 8,321,053 Cash and cash equivalents at end of year $ 40,518,430 $ 5,333,790 $ 9,281,610 Cash and cash equivalents classified as: Cash on hand and in banks $ 400 $ 700 $ 200 Equity in pooled cash and investments 6,707,886 3,362,389 8,428,388 Restricted equity in pooled cash and investments 33,810,144 1,970,701 853,022 Total cash and cash equivalents $ 40,518,430 $ 5,333,790 $ 9,281,610 The notes to the financial statements are an integral part of this statement 32 � � � � 1 Activlties � Funds Governmental Activitles - Stormwater Other Internal Sarvlce Utitity Funds Total Funds $ 9,338,790 $ 11,917,122 $ 114,452,812 $ - - - - 36,223,831 (1,385,407) (6,000,804) (47,228,249) (21,145,463) (1,899,851) (2,978,335) (22,663,864) (8,107,476) (2,441,451) (1,761,181) (17,611,509) (1,346,973) 36,531 158,801 919,061 159,266 3,648,612 1,335,603 27,868,251 5,783,185 - 436,130 436,130 732,311 (764,52� (221,300) (4,951,572) (553,958) 28,930 683,703 712,633 558,473 (192,086) (198,196) (13,539,583) (197,850) (927,683) 700,337 (17,342,392) 538,976 (768,072) (75,64� (16,508,964) (2,850,619) �i,aa�,2s2� (�2s,ns) (s,sas,�a�� (2n,2�2� �s,o�s,aso) (i ,ass,2ss) (2s,oss,sos) (s,�i s,ss�) - 162,000 162,000 324,250 14,455,704 394,567 23,066,663 3,067,659 (161,839) - (328,040) - 456,152 748,679 3,884,131 - 5,907 - 36,067 - 7,178 - 511,920 - 7,469,258 (763,45� (17,792,573) (3,455,649) 407,235 327,447 2,110,214 760,280 407,235 327,447 2,110,214 760,280 10,597,422 1,599,930 (5,156,500) 3,626,792 16,682,428 3,723,400 92,893,510 27,323,959 $ 27,279,850 $ 5,323,330 $ 87,737,010 $ 30,950,751 $ - $ 23,067 $ 24.367 $ 1,900 1,702,113 5,282,352 25,483,128 30,948,851 25,577,737 17,911 62,229,515 - $ 27,279,850 $ 5,323,330 $ 87,737,010 $ 30,950,751 33 (Continued) City of Clearwater, Florida Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended September 30, 2004 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: $ Other revenue from nonoperating section of income statement Intergovernmental revenue Depreciation 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) decrease in amount due from other govern (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payabl Increase (decrease) in deposits payable Increase (decrease) in unearned revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided by operating activities Business-type Enterprise Water and Sewer Gas Solid Waste Utility Utility lJtility r � , � � 6,303,367 $ 4,977,136 $ 1,162,404 � 269,654 243,147 198,658 420,745 5,364,039 1,464,754 281,475 73,642 91,074 3,388 (113,571) (237,063) - 1,100,993 - _ (451,077) (310,981) 43,702 n 1,761,539 - (408,475) (182,068) (66,330) - (3,077) - - e 97,344 188,016 (557) 90,308 184,494 56,008 32,797 19,045 18,821 76,749 88,782 45,154 8,117,272 1,664,938 658,919 � � � � $ 14,420,639 $ 6,642,074 $ 1,821,323 t Noncash investing, capital and financing activities: Asset contributions from general govemment $ - $ _ $ _ Amortization of bond issue costs $ (94,980) $ (22,304) $ _ Amortization of discount on bond issuance $ (34,382) $ (24,410) $ - Amortization of deferred loss on defeasance of debt $ (337,774) $ (100,784) $ - Decrease in net pension asset $ (32,797) $ (19,045) $ (18,821) The notes to the financial statements are an integral part of this statement. � I � I � I 34 r I Activities Funds Governmental Activlties - Stormwater Other Internal Service Utillty Furtds Total Funds $ 2,405,018 $ (255,424) $ 14,592,502 $ 864,106 36,531 158,801 906,791 223,072 420,745 - 1,161,446 1,333,411 9,605,125 4,110,265 18,107 559 186,770 - - - (350,634) - 97,012 - 1,198,005 - (150,440) 55,518 (813,278) - - - 1,353,064 - - (16,018) (264,416) 19,146 (80) (1,119) (4,276) 514,485 9,172 (23,538) 270,437 (43,765) - 40,144 370,954 - - 1,794 1,794 (63,806) 7,603 9,056 87,322 31,827 64,242 32,419 307,346 127,855 1,243,593 1,591,027 13,275,749 4,919,079 $ 3,648,612 $ 1,335,603 $ 27,868,251 $ 5,783,185 $ - $ - $ - $ 35,430 $ (18,370) $ (243) $ (135,89� $ - $ (25,688) $ (25) $ (84,505) $ - $ - $ (��) $ (�,302) $ - $ (7,603) $ (9,056) $ (87,322) $ (31,828) 35 City of Clearwater, Florida Statemerit of Fiduciary Net Assets Fiduciary Funds September 30, 2004 ASSETS Cash on hand and in banks Equity in pooled cash and investments Managed investment accounts Interest and dividends receivable Securities lending earnings receivable Accounts receivable Total assets LIABILITIES Accounts payable Deposits: Property owners Developers Total deposits Other miscellaneous payables: Special purpose funds Other Total miscellaneous payables Total liabilities NET ASSETS Held in trust for pension benefits and other purposes Total net assets The notes to the financial statements are an integral part of this statement. 36 Pension Trust Agency Funds Fund $ 17,846 $ - 5,856,017 143,099 487,317,332 - 1,242,096 - 8,784 - 127,094 - 494,569,169 143,099 526,792 - - 21,944 - 10,708 - 32,652 - 7,345 - 103,102 - 110,447 526,792 143,099 494,042,377 - $ 494,042,377 $ - City of Clearwater, Florida Statement of Changes in Fiduciary Net Assets fiduCiary Funds For the Year Ended September 30, 2004 ADDITIONS Contributions: Contributions from employer Contributions from employees State of Florida Total contributions Investment income: Net appreciation in fair value of investments I nterest Dividends Less investment expenses: Investment management / custodian fees Net income from investing activities Securities lending income: Gross eamings Rebate paid Bank fee Net income from securities lending Total additfons DEDUCTIONS Benefits and withdrawal paymeMs: Benefits Withdrawal payments Total benefits and withdrawal payments Income before administrative expenses Administrative expenses Net increase Net assets held in trust for pension benefits: Beginning of year End of year The notes to the financial statements are an integral part of this statement. 37 Pension Trust Funds $ 6,090,479 5,546,148 1,638,292 13,274,919 33,999,940 5,872,283 2,260 989 ��,�� 2,457,116 39,676,096 720,495 (579,281) (49,396) 91,818 53,042,833 18,654,540 615,691 19,270,231 33,772,602 194,829 33,577,773 460,464,604 $ 494,042,377 City of Clearwater, Florida Notes to the Basic Financiai Statements For the Year Ended September 30, 2004 Note 1— Summary of Significant Accounting Policies The City of Clearwater, Florida (the City) was incorporated in 1923 per Chapter 9710, Special Laws of Florida, as amended. The City is a Florida municipal corporation governed by a five member City Council including a mayor-council- member. The City has an estimated population of 109,700 and is located in the four-county Tampa-St. Petersburg- Clearwater Metropolitan Statistical Area (MSA), which has an estimated population of 2,535,000. The financial statements of the City of Clearwater, Florida reporting entity (City) have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. Pronouncements of the Financial Accounting Standards Board (FASB) issued after November 30, 1989, are not applied in the preparation of the financial statements of the enterprise fund types in accordance with GASB Statement Number 20. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting standards which, along with subsequent GASB pronouncements (Statements and Interpretations) constitutes GAAP for governmental units. The City's more significant accounting policies are described below. 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). The requirements permit an optional four-year delay for retroactive implementation of the infrastructure reporting requirements to fiscal 2006. The City elected to implement the basic model in fiscal year 2002 and to 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 Council serving as the governing board of the CRA. Separate financial statements for the CRA are not available. However financial statements for the CRA are included in the City's comprehensive annual financial report as a governmental special revenue fund. 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 units from those of the primary government. Consequently, 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 Ciry 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 governmental 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. , 38 � City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � B. Basic Financial Statements Under the New Financial Reporting Model The City's Basic Financial Statements contain three components: government-wide financial statements, fund financial � statements, and notes to the financial statements. 1. Government-wide financfal 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 interfund activiry 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 Ciry. 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 privi�eges 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 concemed. � 2. Fund financial statements. Separate financial statements are provided for governmental funds, proprietary funds, � and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The fund financial statements are, in substance, very similar to the financial statements presented in the previous financial reporting model. An emphasis is on the major funds in either the governmental or business-type categories. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund � financial statements. Non-major funds (by category) are summarized into a single column. The City reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Special Development fund is a special revenue fund used to account for impact fees, property taxes for road � improvements, local option gas taxes, infrastructure taxes, and other revenues which are restricted legally or by City Council policy to be used for specific capital improvement projects. � The Capital Improvement Fund is used to provide combined accounting presentation for all City capital improvement projects except those financed from proprietary funds or bond proceeds where bond ordinance provisions require the segregation of bond proceeds in separate funds. � 39 City of Clearwater, Florida Notes to the Basic Financia! Statements For the Year Ended September 30, 2004 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 senrices 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 properry. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary fund's principal ongoing operations. Operating expenses for proprietary funds include the cost of sales and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Additionally, the City reports the following fund types: Internal service funds account for fleet management, information technology, telephone, graphics, employee relations, facilities management, radio communications, insurance, and risk management services provided to other City departments on a cost reimbursement basis. The Garage, Administrative Services, General Services, and Central Insurance funds primarily benefit governmental funds and are eonsequently 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. The agency fund included within the fiduciary fund financial statements also uses the accrual basis of accounting but does not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers 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 liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period for the governmental funds. All other revenue items are considered to be measurable and available only when cash is received by the City. 40 � � �� City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � � D. Assets, LiabiUties, and Net Assets or Equity 1. Deposits, pooted cash, and investments Investments with original maturities of three months or less are considered to meet the definition of cash equivalents. The majority of the investments in which the City's funds have equity are held by the City's consolidated pool of cash and investments. The City utilizes the consolidated cash pool to account for cash and investments of all City funds other than those that are required by ordinance to be physically segregated. The consolidated cash pool concept allows each participating fund to benefit from the economies of scale and improved yield that are inherent to a larger investment pool. Formal accounting records detail the individual equities of the participating funds. The cash pool utilizes a single checking account for all City receipts and disbursements. � Since fund equities in this cash management pool have the general characteristics of demand deposits in that additional funds may be deposited at any time and also funds may be withdrawn at any time without prior notice or penalty, each fund's equity account is considered a cash equivalent regardless of the maturities of investments held by the pool. � � �� All individual fund cash equity in a deficit (overdraft) position with respect to the consolidated cash pool is reclassified at year-end to short-term interfund payables to the Capital Improvement Fund. The Capital Improvement Fund is the fund selected by management to reflect the offsetting 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, 2004), 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 Council on September 7, 1995, consolidated cash pool investments are limited to the following: United States Government Securities, Certificates of Deposit in Local Banks, Repurchase Agreements, Savings 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 retum on the principal. The City does not actively trade its portfolio and generally holds investments until maturity. Through the use of a laddered approach to maturities and by timing maturities to cash needs, the City does not anticipate selling investments to meet cash flow requirements. Under the City's Investment Policy, a performance 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, 2004, the pertormance measure weighted average was 1.54%. The actual pooled cash earnings pertormance, before bank charges, was 2.81 %. 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. 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". 41 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � � Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in � applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable less � than 60 days are included in the trade accounts receivable allowance for uncollectibles at the five-year average loss experience rate of 4.85%. 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 2003 thru 1999), and 100% of the receivable attributable to fiscal years 1998 and prior. Property tax revenue is recognized in the fiscal year for which the taxes are levied, provided the availability test is met, in conformance with NCGA Interpretation No. 3. Property taxes for the following fiscal year are levied by Council action in September of each year. This levy is apportioned to property owners based on the previous January 1 assessed values. Tax bills are mailed out on or about November 1, and the collection period runs from November 1 through March 31. On April 1, unpaid property taxes are considered delinquent and become a lien. Tax certificates are sold in June for real property with delinquent taxes. � � Since taxes are not collected prior to November 1, the City does not record revenue for advance collections. Uncollected � taxes receivable at year-end are recorded, with an appropriate allowance for estimated uncollectible amounts. The net amount deemed to be collectible but not current (not expected to be collected within sixty days after the close of the fiscal year) is shown as deferred revenue in the appropriate fund. Additionally, taxes assessed for the following fiscal year are recorded as a receivable and as deferred revenue when the millage rate is adopted and the amount of the receivable is � known. 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 appro�ed by referendum. The tax rate of 5.7530 mills for the year ended September 30, 2004, remains unchanged from the prior year. 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. 4. Restricted assets Certain resources of the City's enterprise funds are classified as restricted assets. Restricted assets include: Water and Sewer improvement charges restricted by the authorizing ordinances to the construction of additions and improvements to the water and sewer systems; Gas Utility and Solid Waste Utility restricted customer deposits; and assets of the Water & Sewer Utility, Gas Utility, Stormwater Utility, and Parking System funds restricted under the provisions of authorizing ordinances for revenue bonds to the payment of future revenue bond debt service, system construction, and renewals and replacements. 5. Capital assets � � � � Capital assets, which include property, plant, equipment, and certain infrastructure assets, (e.g. roads, bridges, and similar items) are reported in the applicable governmental 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 implementation � 42 � � City of Clearw�ter, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � 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 t, are not capitalized. � Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense incurred by business-type activities during the current fiscal year was $8,453,531. Of this amount, $75,820, $45,057, and $113,805 were included as part of the cost of capital assets under � construction in connection with water & sewer, gas, and stormwater system projects, respectively. Property, plant, and equipment of the primary government, 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 I� It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. Generally employees may accumulate vacation time not exceeding 360 hours and sick leave not exceeding 1,560 hours. Upon retirement from City service a qualified employee is paid for all vacation time not exceeding 360 hours and one-half of accumulated unused sick leave not exceeding 1,560 hours (i.e. maximum pay-out of 780 hours). The City accrues for all earned but unused vacation pay up to the "cap" of 360 hours, and the portion of unused sick leave estimated to be payable upon retirement. The current portion of compensated absences is the amount estimated to be used in the following year. For governmental activities, compensated absences are liquidated by the govemmental funds where the employee vacation and sick leave are earned. 7. Long-term obligations � In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable govemmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and � amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, govemmental 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. Prerniums 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, govemmental 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. � 43 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 Note II — Stewardship, Compliance, and Accountability A. Budgets and budgetary accounting Annual budgets are legally adopted for the General Fund, Special Development Special Revenue Fund, and the Community Redevelopment Agency Special Revenue fund. The budget for the Special Development Fund is adopted on a basis consistent with GAAP, and appropriations lapse at year-end. Appropriations for open encumbered purchase orders at year- end in the General Fund do not lapse, but rather continue until liquidated or otherwise cancelled by City Council action. 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 intertund loans, the General Fund Budget is adopted on a basis consistent with GAAP, and all non-encumbered appropriations lapse at year-end. The level of budgetary control established by the legislative body, the level on which expenditures may not legally exceed appropriations, is the individual fund. In accordance with provisions of Ordinance 5025-90 and with Section 2.519(4) of the Clearwater Code, the City Manager may transfer part or all of any unencumbered appropriation balance among programs within an operating fund, provided such action does not result in the discontinuance of a program. Such transfers must be included in the next budget review presented to the City Council. Upon detailed written request by the City Manager, the City Council may by ordinance transfer part or all of any unencumbered appropriation balance from one fund to another. As established by administrative policy, department directors may transfer money from one operating code to another within a program without a formal written amendment. Formal requests for budget amendments from department directors are required for transfers in capital expenditures, transfers, and reserves. Thus, certain object classifications within departmental and/or program budget appropriations are subject to administratively imposed controls, in addition to the legal controls imposed by City Council action described above. The Community Redevelopment Agency Fund annual budget is adopted by the trustees of that agency in accordance with � state law. 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. Budget amounts presented in the accompanying financial statements reflect all amendments adopted by the City Council � 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. 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 Council 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 the DDB's board in accordance with state law. Separate financial statements for the DDB can be obtained from the City's Finance Department located at 100 S. Myrtle Avenue, Clearwater, Florida. � � 44 � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � B. Reclassification of prior year balances � � I� � � The City restated prior year balances to reflect the correction of an error in the actuarial calculation of the City's self- insurance reserves. The adjustment was an increase of $2,413,838 in Intemal Service funds net assets, including an allocation of $1,697,245 to governmental activities and $716,593 to business-type activities. Additional disclosure of the prior year restatement is included in Note IV (A). The Statement of Net Assets for the prior year erroneously excluded unspent debt proceeds in the calculation of Invested in Capital Assets, Net of Related Debt for Business-type Activities. This resulted in an understatement of Invested in Capital Assets, Net of Related Debt and a corresponding overstatement of Unrestricted Net Assets in the amount of $26,556,085 for Business-type Activities on the Statement of Net Assets. There was no effect on total Net Assets. Note III — Detailed Notes on All Funds A. Deposits and investments Investments with original maturities of three months or less are considered to meet the definition of cash equivalents. The majority of the investments in which the City's proprietary funds have equity are held by the City's consolidated pool of cash and investments. Since fund equities in this cash management pool have the general characteristics of demand deposits in that additional funds may be deposited at any time and also funds may be withdrawn at any time without prior notice or penalty, each fund's equity account is considered a cash-equivalent regardless of the maturities of investments held by the pool. Funds with deficit (overdraft) positions within the consolidated pool report the deficits as 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 management's determination of custodial credit risk, defined as follows: For deposits, the bank balance must be categorized as follows: � Category 1: Category 2: � Category 3: � Insured or collateralized with securities held by the City or its agent in the City's name. Collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. 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 City'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 cansist 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 securities lending collateral are disclosed but are not susceptible to classification by risk category. Management has classified all other investments into Category 1. The carrying value for all investments is fair value. � 45 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 Summary of deposits and investments, including managemenYs 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 Funds Municipal Securities Accrued Interest on Investments Less Outstanding Checks at 9/30/04 Total Cash Pool and Component Unit Equity * (includes Fiduciary funds cash pool assets) III. Construction and Debt Service Deposits and Investments: Money Market Mutual Funds Corporate Bonds IV. Employee Retirement Deposits and Investments: Cash & Cash Equivalents Domestic Equity Securities Government Bonds Agency Bonds Domestic Corporate Bonds Mortgage Backed Bonds Limited Partnerships International Equity Mutual Funds Stock Mutual Funds Fixed Income Mutual Funds Securities Lending Collateral Total Employee Retirement Investments Total Deposits and Investments, All Funds Fair Value $ 48,767 11,030,756 35,534,545 180,109,060 5,000,000 1,077,430 1,643,735 2,926,150 ,4 , 76 326,826 872,858 1,199, 31,738,264 204,109,323 92,892,107 3,208,654 35,633,320 846,434 14,200 41,848,423 50,643,987 26,400,466 83,092,979 570,42 ,157 $ 803,145,984 Investment Deposit Credit Credit Risk Category Risk Category 1 1 1 n/a n/a n/a n/a n/a 1 1 1 1 1 1 n/a n/a n/a n/a Na '` At September 30, 2004, the carrying amount of the primary governmenYs deposits totaled $7,850,024 and the bank balance was $10,776,096. The carrying amount of the component uniYs deposits totaled $254,582, while the bank � balance was $254,660. Total bank balance for primary government and the discretely presented component unit was $11,030,756. B. Receivables Receivables as of year end for the Cify'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 $10,420,535 reported on the Governmental Funds balance sheet includes $9,513,727 of long-term loans receivable that are not expected to be collected in the next year. 46 � � ��+ �7 � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 C. Capital assets Capital asset activity for the year ended September 30, 2004 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 capitat 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 $ 45,288,886 $ 5,760 $ 440,000 $ 44,854,646 30,440,628 3,215,935 28,043,310 5,613,253 75,729,514 3,221,695 28,483,310 50,467,899 52,691,088 48,022,610 - 100,713,698 55,076,656 2,746,016 - 57,822,672 78,420,350 7,230,805 2,920,828 82,730,327 2,225,540 2,003,583 54,973 4,174,150 188,413,634 60,003,014 2,975,801 245,440,847 (13,258,422) (1,743,404) - (15,001,826) (18,334,331) (2,878,891) - (21,213,222) (50,915,348) (6,242,522) (2,792,284) (54,365,586) 53,812 111,277 - 165,089 , , 0, , , , 9 , 4 , ' 105,851,721 49,026,920 183,517 154,695,124 Governmental activities capital assets, net $ 181,581,235 $ 52,248,615 $ 28,666,827 $ 205,163,023 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 $ 26,013,359 44,291,073 70,304,432 22,715,575 311,412,923 6,653,690 ,7 , (6,626,206) (112,779,461) 2,811,302 , , 218,565,219 Increases $ 237,149 16,979,167 17,216,316 748,438 31,803,239 870,129 � � �8��) (8,028,400) 742,077 , , 5 23,816,681 Decreases $ 40,000 29,858,408 29,898,408 5,464 81,328 , 24,696 ,9 62,096 Ending Balance $ 26,210,508 31,411,832 57,622,340 23,464,013 343,210,698 7,442,491 , 7, 02 (7,460,854) (120,807,861) 3,528,683 1 , 9 , 242,319,804 Business-type activities capital assets, net $ 288,869,651 $ 41,032,997 $29,960,504 $ 299,942,144 47 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 Depreciation expense was charged to functions / programs of the primary government as follows: Governmental activities: General government $ 905,575 Public safety 1,595,459 Physical environment 47,444 Transportation, including depreciation of general infrastructure assets 2,449,806 Culture and recreation 1,863,609 Capital assets held by the government's governmental internal service funds are charged to the various functions based on their usage of the assets 4,110,265 Total depreciation expense - governmental activities 10, 72,158 Business-type activities: Water and sewer utility Gas utility Solid waste utility Stormwater utility Other Total depreciation expense - business-type activities Construction commitments At September 30, 2004, material outstanding construction commitments were as follows: Proiect Myrtle Avenue Drainage Improvements Kapok Flood Resolution McMullen Booth Road Pedestrian Overpass Reclaimed Water Distribution System Pelican Walk Parking Garage Ross Norton Recreation Complex Water Supply and Treatment Sanitary Coll. & Trans. Renewal & Repl. Sewer System Pump Station Replacement Alligator Creek Drainage Improvements Total Construction Commitments Fund 3tormwater Utility enterprise fund Stormwater Utility enterprise fund Capital Improvement construction fund Water & Sewer Utiliry enterprise fund Parking System enterprise fund Capital Improvement construction fund Water & Sewer Utility enterprise fund Water & Sewer Utility enterprise fund Water & Sewer Utility enterprise fund Stormwater Utilify enterprise fund 48 $ 5,364,039 1,464,754 281,475 1,161,446 1,333,411 9,605,1 5 Construction Commitments Outstandina $ 8,907,203 4,596,901 2,464,395 1,594,372 1,400,000 1,349,790 1,320,378 956,139 547,421 533.836 $ 23.670.435 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 D. Interfund receivables, payables, and transfer� 1. Interfund balances As discussed in Note III-A, individual fund deficits in the consolidated cash pool have been reclassified as of September 30, 2004, as intertund loans from the Capital Improvement Fund, which was selected by management for this purpose. This reclassification results in a corresponding reduction in the cash equity in the Capital Improvement Fund, offset by an increase in intertund receivables. The amounts of the reclassified cash pool deficits, as well as other individual fund interfund payable and receivable balances (current), at September 30, 2004, were as follows: Due from Other Funds Deficit in Other Fund Pooled Cash Receivables General Fund $ $ Special Revenue Fund: Community Redevelopment Agency Capital Project Fund: Capital Improvement 1,21 g,111 Enterprise Funds: Water and Sewer Utility 19,847,706 Gas Utility 5,935,653 Solid Waste Utility 1,968,800 Recycling Utility 1,113,579 Stormwater Utility 3,290,736 Marine and Aviation 531,621 Parking System 10,581,688 Harborview Center 66,380 Internal Service Funds: Garage 58,787 Administrative Services 896,854 General Services 2�4,727 Central Insurance 379,056 $ 1,218,111 $ 44,885,587 49 Due to Other Funds Deficit in Other Pooled Cash Payables $ $ 24,925 1,218,111 120,401 44,506,531 82,474 59,602 91,654 $ 1,218,111 $ 44,885,587 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 Individual intertund advances (long-term) at September 30, 2004, follow: Fund General Fund $ Special Revenue Fund: Community Redevelopment Agency Enterprise Funds: Solid Waste Utility Parking System Internal Service Funds: Administrative Services Central Insurance Advances to Advances from Other Funds Other Funds 2,000,000 $ 240,803 659,790 4,000,000 824,881 3,725,474 $ 5,725,474 $ 5,725,474 Descriotions of long-term interfund loans as of September 30. 2004: 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. The loan is to be repaid as the development project is completed. � An internal twenty 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. Internal loans of $2,000,000 each from the General Fund and the Central Insurance Fund, at the cash-pool interest rate, � to the Parking Fund to fund a contingency reserve per the terms of a development agreement. The Parking Fund is contributing an additional $2,000,000 to fund a total contingency of $6,000,000 for the repurchase of a land parcel if the � proposed development does not occur by March 2006. The loans commenced September 30, 2002. An internal ten-year loan from the Central Insurance Fund to the Administrative Services Fund for the purchase and installation of fiber optic cable and termination equipment. The loan provides for ten annual payments of $91,653.50 plus interest at the cash-pool rate, due on September 30 of each year. The loan commenced September 30, 2003 with the first annual principal payment due September 30"' of the year that the infrastructure project is completed, currently anticipated to be September 30, 2005. 50 � � � � �� City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 2. Intertund transfers Interfund transfers for the year ended September 30, 2004, consisted of the following: Transfers to General Fund from: � Capital Improvements Fund Water & Sewer Utility Enterprise Fund Gas Utility Enterprise Fund Solid Waste Utility Enterprise Fund Stormwater Utility Enterprise Fund Nonmajor govemmentai funds Nonmajor enterprise funds Total I� I ' � � Transfers to Special Development Fund from: Capital Improvements Fund Total Transfers to Capital Improvements Fund from: General Fund Special Development Fund Nonmajor govemmentai funds Total Transfers to Nonmajor governmental funds from: General Fund Special Development Fund Capital Improvements Fund Gas Utility Enterprise Fund Nonmajor govemmental funds Total Transfers to Nonmajor enterprise funds from: General Fund Total Transfers to internal service funds from: General Fund Capital Improvements Fund Water & Sewer Utility Enterprise Fund Stormwater Utility Enterprise Fund Nonmajor enterprise funds Internal Service Funds Total Total interfund transfers $ 147,918 1,694,230 1,000,000 716,490 303,790 1,013,475 221,300 1 050,321 2,122,682 9,998,538 1,268 228 � 3,240,763 5,376,540 1,999 2,587 1 695 411 436 130 -�'3�, i�� 277,189 120,865 469,152 460,737 83,286 553,958 1,965,187 $ 32,255,589 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. 51 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 E. Leases The City purchases various equipment for governmental and business-type activities undec lease purchase financing agreements. The equipment is purchased with cash and subsequently provided as collateral via a"lease purchase° financing arrangement, typically for a five-year term. Obligations under these lease purchase agreements are recorded at the present value of their future minimum lease payments as of date of inception. Purchase of the assets is recorded as a cash outflow and the subsequent receipt of the financing proceeds is recorded as "proceeds from issuance of debt" for Statement of Cash Flows reporting. Capitalized equipment subject to lease purchase financing as of September 30, 2004: Governmental Business-type Activities Activities Equipment $ 18,263,766 $ 2,929,508 Less: Accumulated Depreciation (9,779,145) (1,433,644) Total $ 8,484,621 $ 1,495,864 The future minimum lease payments under capital lease purchase agreements are as follows as of September 30, 2004: - __�. . -. l� �� . �� • Governmerrtal Business-type Activities Aetivities $ 4,447,223 $ 884,868 3,163,899 715,667 1,917,881 458,875 1,208,050 287,555 2009 533,590 150,794 11,270,643 2,497,759 Deduction of the amount of imputed interest necessary to reduce net minimum lease paymerrts to present value (598,405) (139,548) $ 10,672,238 $ 2,358,211 The City also leases personal computers under a three-year operating lease that is cancelable on an annual basis. Lease payments for fiscal year ended September 30, 2004, totaled $387,637. 52 � City of Cle�rwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � F. Long-term debt 1. Revenue Bonds $46,445,000 Infrastructure Sales Tax Revenue Bonds, Series 2001; issued for the acquisition, construction, or reconstruction of certain capital improvements to the City, including, but not limited to, a portion of the costs of constructing various capital improvements relating to road and bridge projects and a new main library; with $5,460,000 of principal due December 1, 2004, to $6,620,000 due December 1, 2009; interest at 4.00°/a to 5.00%. $11,470,000 Improvement Revenue Refunding Bonds, Series 2001; issued to provide a portion of the funds necessary to defease the City's Florida Public Service Tax and Bridge Revenue Bonds; serial bonds due in annual installments of $375,000 due February 1, 2005, to $450,000 due February 1, 2016; interest at 3.00% to 4.60%; 5.25% term bonds in the amount of $3,240,000 due February 1, 2022; and 5.00% term bonds in the amount of $2,850,000 due February 1, 2026; $55,353 of the bonds outstanding as of September 30, 2004, 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 Facilit�r Revenue Bonds, Series 2002; issued to provide a portion of the costs of the acquisition, construction, rehabilitation, and equipping of a spring training facility to be used by the Philadelphia Phillies major league baseball team; serial bonds due in annual installments of $465,000 due March 1, 2005, to $295,000 due March 1, 2022, with a maximum principal of $845,000 due March 1, 2021; interest at 2.000% to 5.375%; 5.375% term bonds in the amount of $1,730,000 due March 1, 2027; and 5.375% terrn bonds in the amount of $1,750,000 due March 1, 2031. Total revenue bonds for governmental activities $43,642,690 Water and Sewer Refunding Revenue Bonds, Series 1998, capital appreciation bonds with total maturity amount of $81,785,000; issued to refund the 1988 Series Water and Sewer Revenue Bonds; due in annual installments from December 1, 2004 to December 1, 2018; ranging from $5,775,000 to $5,875,�0; with interest at 420% to 5.22%. The balance outstanding as of September 30, 2004, includes capital appreciation bond accreted interest of $13,816,890. $58,680,000 Water and Sewer Revenue Bonds, Series 2002; issued to pay for costs of i expansions to the City's water and sewer system; serial bonds due in annual installments of $1,030,000 due December 1, 2004, to $2,420,000 due December 1, 2024, interest at �3.25% to 5.00%; 5.00% term bonds in the amount of $11,050,000 due December 1, 2028; and 5.00% term bonds in the amount of $13,665,000 due December 1, 2032. � � $8,410,000 Water and Sewer Revenue Refunding Bonds, Series 2003; issued to advance refund the City's Water and Sewer Refunding Revenue Bonds, Series 1993; serial bonds due in amounts of $5,510,000 due December 1, 2004, and annual installments of $170,000 due December 1, 2005, to $260,000 due December 1, 2018, interest at 2.00% to 4.00%. $14,605,000 Gas System Revenue Bonds and Gas System Revenue Refunding Bonds, Series 1997A & Series 19976; issued to finance oosts of certain additions, extensions, supplements, or replacements of the existing gas system owned and operated by the City within Pinellas and Pasco Counties, and to advance refund the Ciry's Gas System Revenue Bonds, Series 1991; serial bonds due in annual installments of $555,000 due September 1, 2005, to $785,000 due September 1, 2013, interest at 4.375% to 5.00%; 5.25% term bonds in the amount of $790,000 maturing September 1, 2017; and 5.30% 53 $ 36,075,000 10,589,648 14.185.000 60.849.648 57,459,580 57,820,000 8,410,000 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 term bonds in the amount of $4,560,000 maturing September 1, 2027. $8,020,000 Gas System Revenue Refunding Bonds, Series 1998; issued to advance refund the City's Gas System Revenue Bonds, Series 1994A; serial bonds due in annual installmen#s of $35,000 due September 1, 2005, to $50,000 due September 1, 2012, interest at 4.00% to 4.60%; additional serial bond annual installments ranging from $620,000 to $755,000 from September 1, 2015 to September 1, 2019, interest at 4.75% to 4.90%; 4.70% term bonds in the amount of $645,000 maturing September 1, 2014; and 5.00% term bonds in the amount of $3,410,000 maturing on September 1, 2023. $8,890,000 Gas System Revenue Refunding Bonds, Series 2004; issued to advance refund the City's Gas System Revenue Bonds, Series 1996A; serial bonds due in annual installments of $160,000 due September 1, 2005, to $1,575,000 due September 1, 2026, interest at 2.00% to 4.375%. $7,500,000 Stormwater System Revenue Bonds, Series 1999; issued to finance the costs of capital improvements to the Ciry's stormwater management system; with $135,000 of principal due November 1, 2004, to $490,000 due November 1, 2029, interest at 4.35% to 5.75%. $24,685,000 Stormwater Revenue Bonds, Series 2002; issued to finance the costs of capital improvements to the City's stormwater management system; serial bonds due in annual installments of $445,000 due November 1, 2004, to $965,000 due November 1, 2023, interest at 3.00% to 4.75%; and 4.75% term bonds in the amounts of $3,205,000, $5,115,000, and $2,985,000, due November 1, 2026, 2030, and 2032, respectively. $14,430,000 Stormwater Revenue Bonds, Series 2004; issued to finance the costs of capital improvements to the City's stormwater management system; serial bonds due in annual installments of $320,000 due November 1, 2005, to $865,000 due November 1, 2032, interest at 1.35% to 4.75. $11,470,000 Improvement Revenue Refunding Bonds, Series 2001; issued to provide a portion of the funds necessary to defease the City's Florida Public Service Tax and Bridge Revenue Bonds; serial bonds due in annual installments of $375,000 due February 1, 2005, to $450,000 due February 1, 2016; interest at 3.00% to 4.60%; 525% term bonds in the amount of $3,240,000 due February 1, 2022; and 5.00% term bonds in the amount of $2,850,000 due February 1, 2026. A total of $10,589,647 of the bonds has been allocated to the general government activities per above while the following amount has been allocated to the Parking System Enterprise Fund. Total revenue bonds for business-type activities Total revenue bonds 2. Restrictive covenants and collateral requirements 11,345,000 7,825,000 8,870,000 7,020,000 24,245,000 14,430,000 55.352 197.479.932 �258.329.580 The Infrastructure Sales Tax Revenue Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of the City's share of the proceeds derived by Pinellas County from the levy and collection of the one- cent discretionary infrastructure sales tax pursuant to Section 212.055(2), Florida Statutes, as amended (the Sales Tax Revenues) and, until applied in accordance with the provisions of the Ordinance, all moneys, including investments thereof, in the funds and accounts established by the Ordinance, other than the Rebate Fund (collectively the "Pledged 'Revenues"). The pledge of the Sales Tax Revenues does not constitute a lien upon any property of the City. The covenants of the ordinance authorizing the bonds include, among other things, an obligation of the City to do all things necessary on its part to continue the levy and collection of the Sales Tax Revenues at the maximum rate permitted by and in compliance with Chapter 166, Part II, Florida Statutes, as amended, Chapter 212, Part I, Florida Statutes, as amended, and other applicable provisions of law (the "AcY'), and any successor provision of the law. The City further covenants to proceed diligently to. perform legally and effectively all steps required on its part in the levy and collection of 54 �J L� � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 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 Ciry 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 I I I, 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 property of the City. Furthermore, neither the City, Pinellas Counry, the State of Florida, nor any political subdivision thereof has pledged its faith or credit or taxing power to the payment of the bonds. The Water and Sewer Refunding Revenue Bonds, Series 1998; the Water and Sewer Revenue Bonds, Series 2002; and the Water and Sewer Refunding Revenue Bonds, Series 2003 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 Ciry. 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°fo) 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 1997A; Gas System Revenue Refunding Bonds, Series 19976; Gas System Revenue Refunding Bonds, Series 1998; and Gas System Revenue Refunding Bonds, Series 2004; 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 in such year and all reserve and other payments provided for in the ordinances authorizing the bonds, along with one hundred twenty five percent (125%) of the bond service requirement due in such year on all outstanding bonds. The Stormwater System Revenue Bonds, Series 1999; Stormwater Revenue Bonds, Series 2002; and Stormwater Revenue Bonds, Series 2004; are limited obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's stormwater management system (System). The pledge of the System's net revenues does not constitute a lien upon any property of the City. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix, revise from time to time whenever necessary, and maintain and collect always such fees, rates, rentals and other charges for use of the products, services, and facilities which will always provide net revenues in each year sufficient to pay one hundred fifteen percent (115%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds. The City further covenants that such rates, fees, rentals and other charges will not be reduced so as to render them insufficient to provide revenues for such purpose. Additionally the covenants of each of the above issues includes a"Reserve Requirement" equal to the lesser of: the Maximum Bond Service Requirement for any given year; 125% of the Average Annual Bond Service Requirement; or the largest amount as shall not adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. A Reserve Fund has been funded for the Series 2002 and Series 2004 Bonds while the Series 1999 Reserve Requirement has been satisfied with a Reserve Fund Surety Bond. 55 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 Annuai debt service requirements to maturity for revenue bonds are as follows: Revenue Bonds Year Ending Governmental Activities September 30 Principal Interest 2005 $ 6,273,477 2,534,986 2006 6,491,170 2,235,993 2007 6,685,000 1,945,792 2008 6,935,000 1,674,198 2009 7,210,000 1,397,571 2010-2014 11,390,000 4,667,813 2015-2019 5,850,000 3,424,446 2020-2024 5,640,000 1,880,956 2025-2029 3,455,000 634,172 2030-2034 920,000 49,987 Totals 60,849,647 20,445,914 2. Advance refunding of bonds Water and Sewer Revenue Refundinq Bonds. Series 2003 5,605,129 8,669,230 6,076,286 8,614,088 6,323,385 8,393,287 6,474,869 8,161,513 6,809,399 7,909,780 38,587,729 34,936,527 48,488,136 25,010,664 25, 865, 000 16, 418, 852 30,195,000 9,395,439 23,055,000 2,299,487 197,479, 33 129,808,867 On October 1, 2003, the City issued Water and Sewer Revenue Refunding Bonds, Series 2003, in the amount of $8.41 million, with an average interest rate of 3.14%, to advance refund $8.29 million of outstanding Water and Sewer Refunding Revenue Bonds, Series 1993, with an average interest rate of 5.49%. The net proceeds of $8.58 million (after payment of $111,000 in underwriting fees, insurance, and other issuance costs and $7,800 deposited to the Debt Service Fund), including $182,000 of transfers from the refunded issue debt service fund and $44,000 released debt service reserve escrow, were deposited into an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded bonds. Subsequently the debt was called and fully redeemed during the current fiscal year. The City completed the advance refunding to reduce its total debt serviee payments over the next 15 years by $874,000 � and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $528,000. Gas System Revenue Refunding Bonds. Series 2004 On January 15, 2004, the City issued Gas System Revenue Refunding Bonds, Series 2004, in the amount of $8.89 million, with an average interest rate of 4.07%, to advance refund $8.18 million of outstanding Gas System Revenue Bonds, Series 1996A, with an average interest rate of 5.77%. The net proceeds of $8.76 million (after payment of $191,000 in underwriting fees, insurance, and other issuance costs and $24,000 deposited to the Debt Senrice Fund), including $195,000 of transfers from the refunded issue debt service fund, were depos�ed into an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded bonds. Subsequently the debt was called and fully redeemed during the current fiscal year. The City completed the advance refunding to reduce its total debt service payments over the next 23 years by $1.67 million and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $970,000. �� u �� I� � ;__1 I� � � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 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 $2,965,000 was outstanding at September 30, 2004. These assets are administered by trustees and are restricted to use for retirement of the refunded debt. The liability for the refunded bonds and the related securities and escrow accounts are not included in the accompanying financial statements as the City defeased its obligation for payment of the refunded bonded debt upon completion of the refunding transactions. The following schedule reflects the outstanding principal on refunded bonds as of September 30: Governmental Activities: Utilities Tax and Bridge Revenue Bonds, Series 1977 Utilities Tax Bonds, Series 1977 Total Governmental Activities Business-type Activities: Total Business-type Activities Total 4. Changes in long-term liabilities Governmental activities: Revenue bonds payable Add (subtract) deferred amounts: For issuance premiums (discount; 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 premiums (discount On refunding Net revenue bonds payable Lease purchase contracts Compensated absences Business-type activiry Long-term liabilities Component un1t: Loans payable Beginning Balance $ 66,914,826 $ ;.. .� $ 1,330,000 1,635,000 2,965,000 $ 2,965,000 Ending Due Within Reductions Balance One Year $ (6,065,178) $ 60,849,648 $ 6,273,477 � 920,664 - (164,507) 756,157 - (386,595) - 26,901 (359,694) - 67,448,895 - (6,202,784) 61,246,111 6,273,477 11,671,417 3,269,324 (a) (4,268,502) 10,672,239 4,149,928 6,315,983 696,914 (923,724) 6,089,173 683,568 12,956,482 (186,699) (2,309,972) 10,459,811 2,785,300 98.392.777 $ 3.779.539 $187,419,945 $34,369,809 �(13.704.9821 $ 88.467.334 $13.892273 $(24,309,822) $197,479,932 $11,070,129 s (1,485,728) (283,874) 217,135 (1,552,467) - (3,543,807) (864,832) 313,206 (4,095,433) - 182,390,410 33,221,103 (23,779,481) 191,832,032 11,070,129 2,074,843 953,245 (669,878) 2,358,210 817,928 1,386,671 366,632 (202,803) 1,550,500 174,059 $185.851.924 $34.540.980 $ 86.331 $ - $(24.652.1621 $195.740.742 $12.062.116 $ (7.849) $ 78.482 $ 7.848 (a) Lease purchase contracts additions of $3,269,324 includes $3,067,661 attributable to Internal Service funds. 57 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � �I � 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 Deferred charges Net pension asset Capital assets Total assets Liabilities: Current liabilities Current liabilities payable from restricted assets Noncurrent liabilities Compensated absences 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 Total 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 Gain on exchange of assets Other Change in net assets Beginning net assets Ending net assets Parking System $ 4,412,177 (198,935) (3,478,291) 734,951 248,239 (114,797) 162,000 4,700 1,035,093 11,463,738 $ 12,498,831 Parking System $ 2,925,582 3,081,688 7,527,357 240 169,867 3,621,683 17,326,417 367,401 17,963 44,581 28,019 369,622 4,000,000 4,442,222 4,827,586 2,888,006 179,261 9,431,564 $ 12,498,831 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 58 $ 944,149 71,551 (205,121) 248,239 1,058,818 1,883,556 $ 2,942,374 � � � � � City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 H. Restricted assets 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, 2004, are: Equity in Pooled Cash and Investments $ 979,316 Due from Other Funds 491,007 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, 2004, 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, 2004: Water and Sewer Revenue Bonds Debt Service: Equity in Pooled Cash and Investments Water and Sewer Revenue Bonds Renewals and Replacements: Equity in Pooled Cash and Investments Due from Other Funds Water and Sewer Revenue Bonds Construction: Equity in Pooled Cash and Investments Assets of the Water and Sewer Utility Fund restricted by agreement with other governmental entities for improvements to the water and reclaimed water systems and the Northeast Water Pollution Control facility at September 30, 2004: Due from Other Governmental Entities 4,183,677 284,017 16,417,228 144,483 8,922,141 10,054,730 1,515,549 Assets of the Water and Sewer Utility Fund representing Customers' Deposits and therefore restricted, consisting entirely of Equity in Pooled Cash and Investments at September 30, 2004 2.030.710 Total restricted assets — Water and Sewer Utility Fund --0 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, 2004: � �� Gas System Revenue Bonds Debt Service: Equity in Pooled Cash and Investments Renewals and Replacements: Equity in Pooled Cash and Investments Assets of the Gas Utility Fund representing Customers' Deposits at September 30, 2004: Equity in Pooled Cash and Investments Total restricted assets — Gas Utility Fund $ 169,622 300,000 1 501 79 1.970.701 3. Solid Waste Utility Fund Restricted assets in the Solid Waste Utility Fund designated for construction represent customer deposits in the amount of $853,022 at September 30, 2004, and consisted entirely of Equity in Pooled Cash and Investments. 59 City of Clearwater, Fiorida Notes to the Basic Financial Statements For the Ye�r Ended September 30, 2004 4. Stormwater Utility Fund Assets restricted under the provisions of the ordinances for the issuance of revenue bonds consisted of the following at September 30, 2004: 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 Stormwater Revenue Bonds — Series 2004 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Contributions from the Special Development Fund include proceeds restricted by City Council policy for improvements to the stormwater drainage system within the City; assets remaining at September 30, 2004: Due From Other Funds Assets restricted by agreement with other governmental entities for improvements to the stormwater drainage system at September 30, 2004: Due From Other Governmental Entities Total restricted assets — Stormwater Utility Fund 5. Parking System Fund 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, 2004: 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, 2004: Due From Other Funds Contributions from the Special Development Fund include proceeds restricted by City Council policy for improvements to the stormwater drainage system within the City; assets remaining at September 30, 2004: Due From Other Funds Total restricted assets — Parking System Fund Note IV - Other Information $ 294,158 918,289 2,448,402 8,940,008 991,255 11,985,625 1,020 1.163.216 26.741.973 $ 17,911 9,446 6,000,000 1.500.000 $ 7.527.357 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 liability and workers compensation excess coverage is $7,000,000 per occurrence ($14,000,000 aggregate) with self-insured retention of $500,000. The properry damage excess coverage is $344,000,000 (Total Insured Value) with a$500,000 .� � � � � �� City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 self-insured retention. Settled claims have not exceeded excess coverage in any of the past three years. The transactions relating to the self-insurance program are accounted for in the Central Insurance Fund, an Internal Service Fund. The billings by the Central Insurance Fund to the various operating funds (the intertund premiums) are based on actuarial estimates of the amounts needed to pay prior and current year claims. The claims liability reported at September 30, 2004, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liabiliry has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. During the current fiscal year an error in the actuarial calculation of self-insurance reserves for previous years was discovered and corrected. The previous calculation had erroneously overstated the required reserye related to claims in excess of self-insurance levels. As a result of this prior period correction, net assets of the Central Insurance Fund internal service fund were increased by $2,413,838 as of October 1, 2003. Changes in the claims liability amounts in fiscal years 2003 and 2004 were: � Restated balance at October 1, 2002 Adjusted current year claims and changes in estimates Claim payments Restated balance at September 30, 2003 � Current year claims and changes in estimates Claim payments Balance at September 30, 2004 � � Self Insurance 9,289,794 4,815,026 (3,562,176) 10,542,644 2,227,139 2,309,972 10,459,811 B. Statements of cash flows For purposes of the statements of cash flows, investments with original maturities of three months or less are considered to meet the definition of cash equivalents. The majority of the investments in which the City's proprietary funds have equity are held by the City's consolidated pool of cash and investments. Since fund equities in this cash management pool have the general characteristics of demand deposits in that additional funds may be deposited at any time and also funds may be withdrawn at any time without prior notice or penalty, each fund's equity account is considered a cash equivalent regardless of the maturities of investments held by the pool. Funds with deficit (overdraft) positions within the consolidated pool report the deficits as interfund payables to the City's Capital Improvement Fund. C. 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: Business-type activities: Water & Sewer Utifity Fund Gas Utility Fund Solid Waste Utility Fund Stormwater Utility Fund Non-major Enterprise Funds Total business-type activities Total Interest Costs Incurred 5,607,334 1,396,376 42,430 1,280,743 126,648 8,4 ,531 61 Interest Costs Ca italized 75,820 45,057 113,805 234, 8 Net Interest Expense $ 5,531,514 1,351,319 42,430 1,166,938 126,648 8,218,849 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 D. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates. 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 Ciry 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 Ciry of Clearwater. Plan provisions have been duly approved as required by the voters in referendums. There were no changes in plan provisions for the current year. 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 participanYs death, to be paid at the same amount for 5 years to eligible surviving beneficiaries; after 5 years, the survivor annuity is reduced to fifty percent (50%) of the original amount. The plan provides for an annual cost of living increase of up to one and one-half percent (1-1/2%). The plan also provides for disability and death benefits, vesting after completion of 10 years of service and the refund of employee contributions in case of a non-vested termination. There are seven other 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 least 12 years of service. The plan provides for post retirement cost of living increases equal to the increase in the prevailing wage for the rank at which the participant retired with a limitation for those retiring on or after January 1, 1972, of 100% of the initial pension benefit for total cost of living increases. Participating employees are required to contribute 6% of their salaries up to the equivalent of the salary of a fireman holding the rank of Captain. The City is required to contribute a sufficient additional amount to maintain the actuarial soundness of the plan for a period of 35 years commencing January 1, 1972. This contribution is based upon, but not limited to, the amount of property tax that a levy of 0.6 mills would produce. 62 ' 1 � City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � � As of the January 1, 2003, actuary valuation date (upon which the current fiscal year funding is based), the membership of the plans: � � � L� � � � I� � � �� I � � 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 590 53 784 835 2,262 Firemen's Relief Pension Plan 48 48 For the fiscal year ended September 30, 2004, the covered payroll for the Employees' Pension Fund is $69,423,054. The City's total payroll for the same period is $79,191,500. Annual pension cost and contributions information for the last three fiscal years follows: Employees' Pension Fund Year Annual (a) Ended Required Employer Percent Sept 30 Contribution Contributions Contributed 2002 $ 0 $ 4,439,829 n/a 2003 $ 0 $ 4,649,642 n/a 2004 $ 4,156,253 $ 4,818,917 (b) 116% Net Pension Asset $ 21,445,982 $ 25,832,535 $ 25,459,838 (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2004, are based on actuarial valuations as of January 1, 2003. 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 retum on investments for a period of one year. (b) Actual contributions for fiscal 2004 totaled $4,818,917, as required by the ordinance governing the pension plan. Firemen's Relief Pension Fund Year Annual (a) Ended Required Employer Sept 30 Contribution Contributions 2002 1,153,732 1,153,732 2003 $ 1,211,210 $ 1,211,210 2004 $ 1,271,562 $ 1,271,562 Percent Contributed 100% 100% 100% a) The actuarially determined contribution requirements for the Cit�s fiscal year ended September 30, 2004, are based on actuarial valuations as of January 1, 2003. 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. 63 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 The Employees' Pension Fund net pension asset at September 30, 2004 totaled $25,459,838. It was comprised of the following components: Annual required contributions (ARC) Interest on the net pension asset Adjustment to annual contribution Annual pension cost Fiscal 2004 employer contributions Decrease in net pension asset Net pension asset beginning of year Net pension asset end of year $ 4,156,253 (1,961,576) 2,996,937 5,191,614 4,818,917 (372,697) 25,832,535 $ 25,459,838 � �� T � � � 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 Governmental Employees". The amount of the pension asset at transition was $3,503,365. The net pension asset for the Employees' Pension Plan, representing excess contributions as calculated per GASB 27 � requirements, is identical in amount to the plan "credit balance" as disclosed in prior years. A total of $17,477,628 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 � $7,982,210 attributable to proprietary funds is reflected in the proprietary fund financial statements on the accrual basis of accounting. Each pension fund is accounted for as a pension trust fund; therefore each is accounted for in substantially the same manner as proprietary funds with a"capital maintenance" measurement focus and the accrual basis of accounting. Fund assets, primarily investments, are valued at fair value for balance sheet purposes, in accordance with GASB No. 25. Investment values are determined using the estimated fair value determined by averaging estimated fair values obtained from three or more nationally recognized brokers. As of September 30, 2004, 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, 2003, are as follows: Employees' Pension Plan (1) Assumed rate of return on investments of 7.5°/a per annum. (2) Projected salary increase at a rate of 6% per year, including both cost-of-living adjustments of 3% and merit or seniority increases at 3°/a. (3) Mortality based on the 1994 Group Annuity Reserving Tab/e for males with female ages set back five years. (4) Pre-retirement withdrawals assumed to occur in accordance with a table of declining withdrawal rates for male, female, and hazardous duty categories. (5) Pre-retirement incidence of disability 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%. There are no longer any active members in (3) (4) (5) (6) this plan. Mortality based on the 1983 Group Annuity Mortality Tab/e for retired participants; assumed disabled participants will experience mortality according to PBGC Tables 3 and 4 for males and females, respectively. Assumed no withdrawals will occur. Assumed probability of an active participant becoming disabled is zero (no active participants). Assumed value of one mill of ad valorem tax will increase at rate of 5% per year. 64 � � , � � � � � � � � � LJ � � � � � � I � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 The actuarial valuation of the Employees' Pension Fund as of January 1, 2002 reflected several changes in actuarial assumptions, as follows: An investment yield of 7.5% assumed whereas the prior valuation assumed 7.0%. Salaries were projected to increase at 6% versus the prior valuation assumption of 5%. Employee turnover rates were revised for male and female employees and separate rates were adopted for hazardous duty employees. The mortality table was changed from the 1983 Group Annuity Mortality Table to the 1994 Group Annuity Reserving Table. And finally, the retirement age assumption was changed from 100% retirement at first eligibility for unreduced benefits to a table of decrements at different ages. The impact of these changes decreased the unfunded actuarial accrued liability from $72,178,974 to $41,332,472. The actuarial valuation of the Firemen's Relief and Pension Fund as of January 1, 2003, reflected two changes in actuarial assumptions. The report assumes an investment yield of 4.5% versus the prior valuation assumption of 5.5%. Also, the current mortality pattern assumption uses the 1994 Unisex Morality Table versus the 1983 Group Annuity Mortality Table used for previous valuations. The impact of these changes increased the unfunded actuarial accrued liability from $2,648,428 to $4,742,517. 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. The amortization method is level dollar closed. Annual required contributions (ARC) for the Firemen's Relief and Pension Fund are based on a variation of the aggregate actuarial cost method, under which the unfunded portion of the present value of the projected benefits is allocated over the present value of a 6.0% per year increasing annuity for the remaining years in the 35-year funding period which began January 1, 1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the unfunded actuarial liability is determined after consideration of the available assets at the valuation date. The increasing fixed schedule produced by this method was established in 1988 and will be modified in the future only to the extent that a current valuation indicates a higher required cost level, or if the resulting cost level exceeds 60% of a mill in a current year. Under the non-standard cost method used for this plan (due to the fact that there are no longer any active employees), all liabilities are unfunded actuarial liabilities and are being amortized according to the closed cost method. Govemmental Accounting Standards Board Statement Nos. 25 and 27 require the presentation, as supplementary information, of certain 6-year historical trend information. The disclosures follow these Notes to the Financial Statements. 2. Police Supplemental Pension Fund A supplemental defined contribution pension plan exists for all eligible policemen which is funded by earmarked revenues received from the State and is administered by the City. The revenues received from the State are allocated among eligible police officers on the basis of days employed as Clearwater Police Officers. These revenues, which comprise the plan contributions, amount to $891,030 in the year ended September 30, 2004, 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 5.5% of current year covered payroll. The fair value of investments at September 30, 2004, totaled $10,586,908. The Police Supplemental Pension Fund is authorized by and operates under the provisions of Sections 2.471 through 2.480 of the Municipal Code of the City of Clearwater and Chapter 185 of Florida Statutes. Under the plan provisions, the total monies received during each fiscal year, after payment or provision for all costs and expenses of management and operation of the plan, are allocated to participants on the basis of the total number of shares to which each participant is entitled. Each participant is entitled to one share in the fund for each day of service as a police officer of the City. All police officers, as defined in Section 26.70(g) of the Code of Ordinances of the City of Clearwater, who are elected, appointed, or employed full-time by the City are eligible to participate in the plan. There are no employee contributions to the supplemental plan. Benefits are fully vested for a lump sum distribution after twenty years from the date of hire, with provision for partial vesting after ten or more years under the plan. Accumulated benefits are payable in full in case � City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � u 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, 2004, the payroll of the covered officers' was $16,177,768; the City's total payroll for the same period was $79,191,500. Since the entitlement to benefits is based entirely upon the allocation of monies received by the plan to the participants' share accounts, there is no actuarial liability on the part of either the State or the City. 3. Firefighters Supplemental Pension Fund A supplemental defined contribution pension plan exists for all eligible firemen, which is funded by earmarked revenues received from the State and is administered by the 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 $735,262 in the year ended September 30, 2004, and are obtained from a one and eighty-five one hundredths percent (1.85%) excise tax on the gross receipts from premiums collected on properry insurance policies covering property within the City's corporate limits. The contributions represent 7.46% of current year covered payroll. The fair value of investments at September 30, 2004, totaled $7,672,211. 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 Ciry of Clearwater and Chapter 175 of Florida Statutes. Eligibility requires two years of credited calendar year service as a firefighter with concurrent participation in the Employees' Pension Plan. There is no employee contribution to the supplemental plan, and benefits are vested for a lump sum distribution at ten years unless there is early retirement, disability or death. Non-vested participants' account values upon termination of employment are reallocated among the remaining participants on the basis of days worked during the previous year. For the fiscal year ended September 30, 2004, the covered payroll was $9,859,492 the City's total payroll for the same period was $79,191,500. 4. Pension Plan Financial Statements Separate financial statements are provided in the Notes per the guidance of GASB Statement No. 34: Statement of Fiduciary Net Assets: ASSETS Cash on hand and in banks Equity in pooled cash and investments Managed investment accounts, at fair value Receivables: Interest and dividends Securities lending earnings Due from others Total receivables Total assets LIABILITIES Accounts payable Total liabilities Defined Benefit Pension Trust Funds Employees' Firemen's - $ - 1,262,667 4,593,350 468,056,963 1;001,250 1,158,040 3,945 S>784 - Defined Contribution Pension Trust Funds Police Firefighters Supplemental Supplemental 17,846 $ - 10,586,908 47,763 7,672,211 32,348 - - - 127,094 1,166,824 3,945 47,763 159,442 470,486,454 5,598,545 10,652,517 7,831,653 526,792 - - - 526,79,2 - - - NET ASSETS Net assets held in trust for pension benefits $ 469,959,662 $ 5,598,545 $ 10,652,517 $ 7,831,653 � � �J � � � r� I � � LJ � � I� I� � I� I� I� I � I � City of Clearwater, Florida Notes to the Basic Financi�l Statements For the Year Ended September 30, 2004 Statement of Changes in Fiduciary Net Assets: ADDITIONS Contributlons: Contributions from employer Contributions from employees State of Florida Total contributions Investment income: Net appreciation (depreciation) in fair value of investrnents Interest Dividends Less investment expenses: Investment management / custodian fees Net income from Investing activities Securlties lending income: Gross eamings Rebate paid Bankfee Net Income from securities lending Total additions DEDUCTIONS Benefits and withdrawal payments: Benefits Withdrawal payments Total benefits and withdrawal payments Income (loss) before administrative expenses Administrative expenses Net increase (decr�se) Net assets held in trust for pension benefits: Beginning of year End of year Defined Benefit Defined Contributlon Pension Trust Funds Pension Trust Funds Police Fireflghters Employees' Firem�'s Supplemental Supplemental $ 4,818,917 $ 1,271,562 $ - $ - 5,546,148 - - - 12,000 - 891,030 735,262 10,377,065 1,271,562 891,030 735,262 33,270,333 (31,707) 405,630 355,684 5,378,821 166,832 167,632 158,998 2,139,356 - 86,477 35,156 40,788,510 135,125 659,739 549,838 2,292,567 - 74,695 89,854 38,495,943 135,125 585,044 459,984 720,495 - - _ (579,281) - - - (49,396) - - _ 91,818 - - 48,964,826 1,406,687 1,476,074 1,195,246 15,287,687 615,691 15,903,378 33,0B1,448 135,138 32,926,310 916,378 916,378 490,309 3,766 486,543 742,497 1,707,978 742,497 1,707,978 733,577 (512,732) 36,178 19,747 697,399 (532,479) 437,033,352 5,112,002 9,955,118 8,364.132 $ 469,959,662 $ 5,598,545 $ 10,652,517 $ 7,831,653 5. 401(a) defined contribution plan For all management employees not covered under either of the defined benefit pension plans, the City provides pension benefits through a 401(a) defined contribution plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. 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; 14% of compensation on behalf of the Chief of Police; and 8% of compensation on behalf of all other management contract employees and assistant city attorneys. The City makes bi-weekly contributions to the Trust throughout the plan year to meet its funding obligations under the plan. The International City Management Association Retirement Corporation (ICMA-RC), the trustee for the defined annuity, offers participants a variety of investment options. 67 City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � � The City's total payroll for the fiscal year ended September 30, 2004, was $79,191,500. The Plan members' payroll for � the same period totaled $4,651,853. The City's contribution, per the above contribution rates, totaled $397,693. The assets of the trust, at market value, totaled $2,095,675 at September 30, 2004. 6. Deferred compensation plan � The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. � Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Effective January 1, 1997, Federal legislation converted the Section 457 deferred compensation assets from City assets to �' employee assets. As a result of these changes, plan assets are no longer subject to the claims of the City's general creditors. The City has previously reported the assets and associated liabilities of the deferred compensation plan in the City's � financial statements as an agency fund. Effective with the change in legislation these assets are no longer City assets and the fiduciary responsibility has been transferred to the third parry plan administrator. Consequently, effective with fiscal 1997, these assets are no longer reported in the accompanying financial statements, in compliance with Governmental � Accounting Standards Board Statement No. 32. F. Securities lending transactions The City of Clearwater Employees' Pension Plan participates in securities lending transactions via a Securities Lending Authorization Agreement with Northern Trust Company, who is also the pension plan's custodian. Securities are loaned versus collateral that may include cash, U.S government securities, and irrevocable letters of credit. U.S. government securities are loaned versus collateral at 102% of the market value of the securities plus any accrued interest. Non-U.S. securities are loaned versus collateral at 105% of the market value plus any accrued interest. Non-cash collateral cannot be pledged or sold unless the borrower defaults. All securities loans can be terminated on demand by either the lender or the borrower. The average term for the pension plans loans at September 30, 2004 was 64 days. Cash "open" collateral is invested in a short term investment pool, the Core USA Collateral Section, which had an average weighted maturity of 31 days as of September 30, 2004. Cash collateral may also be invested separately in "term loans" in which investments match the loan term. These term loans may be terminated on demand by either the lender or the borrower. � � � � � There were no significant violations of legal or contractual provisions, nor any borrower or lending agent defaults known to � the securities lending agent. The City did not impose any restrictions on the amount of loans made by Northern Trust. during fiscal year 2004. Northern Trust indemnified the City for losses attributable to violations by the entity of the Standard of Care set out in the � Agreement. Northern Trust has also indemnified the City for all losses as a result of borrower default and for any losses resulting from insufficient collateral. There were no losses during fiscal year 2004. As of September 30, 2004, the City had no credit risk exposure to_ borrowers. The following is a summary of securities on loan and their collateral: [:�? � � � � � City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 � � � Sec�rities Gollateralized b,� a h Sec�rities Gollateralized by Non-Gash Securi Tv�e fllJarket Value Cash Collateral Market Value Non-Cash Collateral U.S. Corporate Fixed $ 7,393,391 $ 7,536,713 $ 1,406,586 $ 1,414,311 U.S. Equity 31,815,509 32,536,201 1,766,892 1,809,354 U.S. Government Fixed 37,678,794 38,470,393 1,307,825 1,326,007 Total 76,887,694 78,543,307 4,481,303 4,549,672 G. Contingencies and commitments � Loan Guarantee - PACT. Inc. PAGT, Inc. is a nonprofit corporation formed in 1978, for the purpose of financing, constructing, and operating a pertorming arts center. Per a Guaranty Agreement dated May 18, 2001, the City guaranteed $1,000,0000 on a � $5,000,000 mortgage note for PACT, Inc., used to refinance a previous mortgage with a similar City guarantee. City management does not consider it probable that this guarantee will be called, and, accordingly, no amounts have yet been accrued or othenivise recorded in the accompanying financial statements to reflect this possibility. Loan Guarantee — Chi Chi Rodriquez Youth Foundation Inc On March 30, 1992, the City Council approved a contingent loan guarantee of $1,000,000 on a$2,500,000 note for the Chi Chi Rodriquez Youth Foundation, Inc. The proceeds of the note were used to refinance existing foundation debt incurred to construct a golf course on a parcel of City owned land. Subsequently, the note was refinanced with Variable Rate Demand Revenue Bonds (Chi Chi Rodriquei 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 properry, currently used by the City Gas Division as its administrative offices and operating facility, that has been identified as having soil and groundwater impacts in a June 1990 report prepared by a United States Environmental Protection Agency contractor. The contamination allegedly resulted from the prior operation of a manufactured gas plant (MGP). 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. 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�' 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 MGP site. This additional work was performed in early 2003 and the results were submitted to FDEP in June 2003. In August 2003, FDEP conducted a Hazard Ranking System (HRS) score report for the Clearwater MGP site. The results of the HRS report were then forwarded to the Environmental Protection Agency (EPA) for possible listing as a supertund site. Since this time no further assessments have been conducted under the direction of FDEP. Since this time nor further assessments have been conducted under the direction of FDEP. Since 1993, the Ciry has spent $524,028 on the MGP assessment activities, which includes both environmental consultant and outside attorney fees. Approximately $487,500 has been recovered from City insurance policies to be applied to any required remediation. m City of Clearwater, Florida Notes to the Basic Financial Statements For the Year Ended September 30, 2004 Letter of Credit Guarantee — soil contamination sites The City has provided a standby letter of credit in the amount of $416,232 to the Florida Department of Environmental Protection (FDEP). The Letter of Credit is required by FDEP for the City's approximate 41% share of the remediation costs for three City-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 $416,232 under the PAC agreements. 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 County during fiscal years 2003 and 2004 was $6,103,150 and $7,066,334, respectively. Potential Claim — Gas System As a member of the Florida Gas Utility (FGU), Clearwater Gas System is a party to gas supply contracts that FGU enters into on behalf of the members. In November 2002, FGU received a verbal claim from representatives of Enron North America Corporation, or one of its affiliated companies (Enron), claiming that unspecified amounts were due and owing to FGU to Enron as a result of certain favorable pricing for gas received by FGU in the open market, but for which confirmations had been placed with Enron under an earlier contract. FGU has since received a letter dated December 12, 2003, from Enron asserting a claim, demanding payment, and threatening action in the Bankruptcy Court for the Southern District of New York or other forum. Enron failed to make deliveries of gas in December 2001 and FGU accordingly terminated all confirmations and any existing contract with Enron. FGU disclaims any obligation that may be claimed by Enron pursuant to any gas confirmation or any contract with Enron. FGU plans to vigorously contest the claim by Enron. Due to the early nature of these proceedings, FGU indicates that they are unable to make an informed judgment concerning FGU's ultimate liability, nor Clearwater Gas System's member share of any ultimate liability, and the extent of any unfavorable outcome cannot be ascertained at this time. With such uncertainties, the City is unable to determine the potential impact on the financial statements as of September 30, 2004. 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 was established in the Parking System fund in the amount of $6,000,000 during fiscal year 2002. Grant Revenues During the current fiscal year and prior fiscal years, the City received revenues and contributions related to grants from the Southwest Water Management District, the State of Florida, the federal govemment, and other grantors. These grants are for specific purposes and are subject to review and audit by the grantor agencies. Such audits could result in requests for reimbursement for expenditures disallowed under the terms of the grants. Based upon prior experience, City management believes such disallowances, if any, will not be significant. H. Pending litigation In the normal course of operations the Ciry 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 tha# have been reserved and recorded as liabilities in the Central Insurance Fund. 70 r City of Clearwater, Florida � Notes to the Basic Financial Statements For the Year Ended September 30, 2004 I � I. Conduit debt The City has one issue of conduit debt outstanding as follows: Original Issue Descri�tion / Purpose �p1 Drew Gardens Refunding Bonds / residerrtial rental facility $ 3,425,000 Amount Outstanding �t 9/30/03 $ 2,985,000 Amount Outstanding at 9/30/04 $ 2,925,000 The bonds do not constitute a debt, liabiliry, 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. J. Specialltem The City received a donation of $10,047,388 from the Philadelphia Phillies major league baseball organization towards the fiscal 2004 completion of a spring training community sports complex. The donation has been reported as a special item on the Statement of Activities for the current year. 71 Page 1 of 3 City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary information - Unaudited Schedules of Funding Progress: . . �= � � • 1 • � 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 /1999 1 /1 /2000 1 /1 /2001 1 h /2002 1 /1 /2003 1 /1 /2004 $ 354,088,751 $ 414,826,422 $ 461,724,610 $ 491,859,015 $ 477,541,459 $ 507,256,663 $ 377,788,731 $23,699,980 $ 490,426,940 $75,600,518 $ 535,672,208 $73,947,598 $ 533,191,487 $41,332,472 $ 517,933,495 $40,392,036 $ 546,915,627 $39,658,964 94% 85% 86% 92% 92% 93% Firefighters Relief and Pension Fund $49,666,523 $50,937,403 $54,864,584 $58,929,582 $65,150,820 $69,907,473 48% 148% 135% 70% 62% 57% 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 /1999 1 /1 /2000 t/1 /2001 1 /1 /2002 1 /1 /2003 1 /1 /2004 $ 3,963,395 $ 4,092,298 $ 4,668,572 $ 5,213,993 $ 5,741,450 $ 6,190,744 $ $ $ $ $ $ 10,473,888 9,746,671 9,527,303 8,907,427 10,483,967 9,974,824 $ 6,510,493 $ 5,654,373 $ 4,858,731 $ 3,693,434 $ 4,742,517 $ 3,784,080 38% 42% 49% 59% 55% 62% $ $ $ $ $ $ ' Covered payroll is for the calendar year period used for the actuarial valuation. 72 15,605 41721% n/a n/a n/a n/a n/a � � � � City of Clearwater, Florida Defined Benefit Pension Plans Required Supplementary Information - Unaudited _. -- . _��. . - .� .�_ � Year � Ended Sept. 30, 1999 � 2�� 2001 2002 � 2003 2004 � ii_r _ -� .1 . Annual (a) Required Contribution $ 840,558 $ - $ 174,377 $ - $ - $ 4,156,253 Page 2 of 3 Percent Contributed 464% N/A 2440% n/a n/a 116% (b) (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2004 are based on actuarial valuations as of January 1, 2003. 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) Actual contribution for fiscal 2004 was $4,818,917, as required by City pension ordinance. Year Ended Sept. 30, 1999 2000 2001 2002 2003 2004 -�i-� - :__ - -� •� �_• Annual (a) Required Contribution $ 1,003,758 $ 1,046,856 $ 1,098,990 $ 1,153,732 $ 1,211,210 $ 1,271,562 Percent Contributed 100% 100% 100% 100% 100% 100% (a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2004 are based on actuarial valuations as of January 1, 2003. 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 retum on investments for a period of nine months. 73 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 Liability method. The initial unfunded actuarial accrued liabiliry determined at July 1, 1963 is being amortized over a 40-year period; changes made in 1979 and subsequent years which have had the effect of either increasing or decreasing the actuarial liability are being amortized over a 30-year period from their effective dates in accordance with State law. The amortization method is level dollar dosed. Annual required �ntributions 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 annuiry for the remaining years in the 35-year funding period which begin January 1, 1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the unfunded actuarial liability is determined after consideration of the available assets at the valuation date. The increasing fixed schedule produced by this method was established in 1988 and will be modified in the future only to the extent that a current valuation indicates a higher required cost level, or if the resulting cost level exceeds 60°/a of a mill in a current year. The amortization method for the Firemen's Relief and Pension Fund is a non-standard (no active employees) closed cost method. � � � � The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2004, are based on actuarial valuations as of January 1, 2003. Since the Ciry'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 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, 2003, in the determination of the annual required contribution are as follows: Employees' Pension Fund (1) Assumed rate of return on investments of 7.5% per annum. (2) Projected salary increase at a rate of 6% per year, including cost-of-living adjustments of 3% and merit or senioriry increases at 3%. (3) Mortaliry based on the 1994 Group Annuiiy Reserving Tab/e for Males with female ages set back five years. (4) Pre-retirement withdrawals assumed to occur in accordance with a table of declining withdrawal rates for male, female, and hazardous duty categories. (5) Pre-retirement incidence of disabiliry 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. (6) Assumed inflation rate of 3% Firemen's Relief and Pension Fund (1) Assumed rate of return 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 (no active); assumed disabled participants will experience mortality according to PBGC Tables 3& 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. (7) Assumed inflation rate of 3% Significant changes affecting the presented 6-year trend information include: The actuarial valuation of the Employees' Pension Fund as of January 1, 2002, reflected several changes in actuarial assumptions, as follows: An investment yield of 7.5% assumed whereas the prior valuation assumed 7.0%. Salaries were projected to increase at 6% versus the prior valuation assumption of 5%. Employee tumover rates were revised for male and female employees and separate rates were adopted for hazardous dury employees. The mortality table was changed from the 1983 Group Annuity Mortaliry Table to the 1994 Group Annuity Reserving Table. And finally, the retirement age assumption was changed from 100% retirement at first eligibiliiy for unreduced benefits to a table of decrements at different ages. The impact of these changes decreased the unfunded actuarial accrued liability from $72,178,974 to $41,332,472. The actuarial valuation of the Firemen's Relief and Pension Fund as of January 1, 2003, reflected two changes in actuarial assumptions. The report assumes an investment yield of 4.5% versus the prior valuation assumption of 5.5%. Also, the current mortality pattern assumption uses the 1994 Unisex Morality Table versus the 1983 Group Annuity Mortality Table used for previous valuations. The impact of these changes increased the unfunded actuarial accrued liability from $2,648,428 to $4,742,517. 74 r Nonmajor Governmental Funds Special Revenue Funds Special revenue funds are used to acoount 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 acxount for receipt, custody, and expenditure of property tax increment funds associated with related redevelopment projects. Local Housing Assistance Trust Fund — to acxount for monies allocated to the City under the Local Housing Assistance grant program. 75 Debt Service Funds Debt service funds provide separate accounting records for all debt interest, principal, and reserve requirements for general government long-term. Debt of proprietary funds is serviced through restricted accounts maintained within the individual enterprise or internal service fund associated with the debt. Improvement Revenue Refunding Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of public service tax and communications services tax revenues from the General Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Infrastructure Sales Tax Revenue Bonds Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue Fund and the payment of currently maturing installments of principal and interest during each fiscal year. Notes and Mortgages Debt Service Fund - to account for the advance monthly accumulation of resources by transfer of General Revenues from the General and Special Revenue Funds and the payment of currently maturing installments of principal and interest on the various note and mortgage obligations of the governmental funds during each fiscal year. Spring Training Facility Revenue Bonds Debt Service Fund — to account for the advance monthly accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue Fund and the payment of currently maturing installments of principal and interest during each fiscal year. 76 � 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 Clearwater 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. 77 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 ToffiI assets LIABILITIES Accounts and contracts payable 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 Unearned revenue Total liabitities FUND BALANCES Reserved for: Encumbrances Advances and notes Grant programs Debt service: Current requirements - principal Current requirements - interest Future requirements Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds Total fund balances Total liabilities and fund balances City of Clearwater, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2004 Special Revenue Funds Community Local Housing Special Redevelopment Assistance Programs Agency Trust Total $ - $ 100 $ - $ 100 7,133,025 - 870,027 8,003,052 4,042,633 720,000 5,655,402 10,418,035 29,314 - 16,525 45,839 10,100 78,601 - 88,701 161,016 - 298,070 459,086 84,701 913,641 - 998,342 $ 11,460,789 $ 1,712,342 $ 6,840,024 $ 20,013,155 $ 57,102 $ 2,736 $ $ 59,838 96,915 - - 96,915 255 48,000 - 48,255 113,878 - 257,840 371,718 - 120,401 - 120,401 - 1,218,111 - 1,218,111 - 240,803 - 240,803 958 78,482 - 79,440 269,108 1,708,533 257,840 2,235,481 - 3,809 - 3,809 3,855,825 - 5,655,402 9,511,227 3,123,401 - - 3,123,401 4,212,455 - 926,782 5,139,237 11,191,681 3,809 6,582,184 17,777,674 $ 11,460,789 $ 1,712,342 $ 6,840,024 $ 20,013,155 The notes to the financial statements are an integrat part of this statement. 78 Debt Service Funds Capital Project Funds Spring Improvement Infrastructure Training Total Revenue Sales Tax Facility NonmaJor Refundi�g Revenue Revenue Sales Tax Governmental Bonds Bonds Bonds Total Revenue Total Funds $ - $ - $ - $ - $ - $ - $ 100 306,327 5,072,963 23,933 5,403,223 947,755 947,755 14,354,030 - - - - - - 10,418,035 - - - - - - 45�839 - - - - - - 88,701 863�344 - 326,894 1,190,238 - - 1,190,238 " ' ' - - - 459,086 " " ' 998,342 $ 1,169,671 $ 5,072,863 $ 350,827 $ 6,593,461 $ 947,755 $ 947,755 $ 27,554,371 $ - $ - $ $ - $ - $ - $ 59,838 " " ' - - - 96,915 " " ' - - - 48,255 - - - - - - 371,718 - - - - - - 120,401 - - - - - - 1,218,111 " ' ' - - - 240,803 ' - - - - - 79,440 - - - - - - 2235,481 " " ' - - - 3,809 - - - - - - 9,511,227 " ' ' - - - 3,123,401 232,318 4,550.000 271,250 5,053.568 - - 5,053,568 81,437 522,963 51,519 655,919 - - 655,918 855,916 - - 855,916 - - 855,916 " ' ' - - - 5,139,237 - - 28,058 28,058 - - 28,058 ' - - - 947,755 947,755 947,755 1,169,671 5,072,963 350.827 6,593,461 947,755 947,755 25,318,890 $ 1,169,671 $ 5,072,963 $ 350,827 $ 6,593,461 $ 947,755 $ 947,755 $ 27,554,371 79 City of Clearwater, Florida Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2004 REVENUES Intergovernmental Charges for services Fines and forfeitures Interest income Miscellaneous Total revenues: EXPENDITURES Current: General government Public safety Physical environment Economic environment Human services Culture and recreation Debt service: Principal Interest & fiscal charges Capital outlay Total expenditures Excess (deficiency) of revenues over / (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of capital assets Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending Special Revenue Funds Improvement Community Local Housing Revenue Special Redevelopment Assistance Refunding Programs Agency Trust Total Bonds $ 2,021,739 $ 524,355 $ 1,440,107 $ 3,986,201 $ - 516,324 - - 516,324 - 484,662 - - 484,662 - 191,225 19,990 27,365 238,580 52,236 1,482,724 68,517 - 1,551,241 - 4,696,674 612,862 1,467,472 6,777,008 52,236 143,811 2,027,004 205,170 877,274 100,000 1,509,514 238,458 - 143,811 - - 2,027,004 - - 205,170 - 411,989 1,527,721 - - 100,000 - - 1,509,514 - - - - - 335,179 - - - - 495,967 185,342 - - 185,342 - 5,048,115 238,458 411,989 5,698,562 831,146 (351,441) 374,404 1,055,483 1,078,446 (778,910) 584,896 424,435 - 1,009,331 786,100 (672,228) (1,527,598) (123,876) (2,323,702) - - 720,000 - 720,000 - (87,332) (383,163) (123,876) (594,371) 786,100 (438,773) (8,759) 931,607 484,075 7,190 11,630,454 12,568 5,650,577 17,293,599. 1,162,481 $ 11,191,681 $ 3,809 $ 6,582,184 $ 17,777,674 $ 1,169,671 The notes to the financial statements are an integral part of this statement. � Debt Service Funds Capital Project Funds Infrastructure Spring Total Sales Tax Notes Tralning Community Nonmajor Revenue and Facllity Sales Tax Sports Governmental Bonds Mortgages Revenue Bonds Total Revenue Complex Total Funds $ - $ - $ 1.087,654 $ 1,087,654 $ - $ - $ - $ 5,073,855 - � " ' - - - 516,324 - - - - - - - 484,662 53,476 - (1,475) 104,237 972,238 (28,069) 944,169 1,286,986 - - - - - - - 1,551,241 53,476 - 1,086,179 1,191,891 972,238 (28,069) 944,169 8,913,068 - - 143,811 - - 2,027,004 - - 205,170 - - 1,527,721 - - 100,000 - - 1,509,514 � 5,270,000 1,417,882 460,000 7,483,061 - - - 7,483,061 1,691,277 108,119 626,405 2,921,768 2,921,768 759,660 1,841,959 2,601,619 2,786,961 6,961,277 1,526,001 1,086,405 1� 759,660 1,841,959 2,601,619 18,705,010 � (6,907,801) (1,526,001) (226) (9.212,938) 212,578 (1,870,028) (1,657,450) (9,791,942) � 6,995,868 1,526,001 - 9,307,969 - - - 10,317,300 (1,653,412) (1,653,412) (3,977,114) ' " ' ' - - 720,000 , 6,995,868 1,526.001 - 9,307,969 (1,653.412) - (1,653,412) 7,060,186 88,067 (226) 95,031 (1,440,834) (1,870,028) (3,310,862 ) (2,731,756) 4,984,896 - 351,053 6,498,430 2,388,589 1,870,028 4,258,617 28,050,646 � $ 5,072,963 $ - $ 350,827 $ 6,593,461 $ 947.755 $ - $ 947,755 $ 25.318,890 i � 1 1 8, This Page Intentional/y Left B/ank 82 City of Clearwater, Florida Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (GAAP Basis) Community Redevelopment Agency For the Year Ended September 30, 2004 REVENUES Intergovernmental Interest income Misceilaneous Total revenues EXPENDITURES Current - Economic environment Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of Capital Assets Total other financing sources (uses) Excess (Deficiency) of revenues and other sources over expenditures and other uses Variance with Budgeted Amounts Flnal Budget Actual Positive Original Final Amounts (Negative) $ 520,534 $ 524,355 $ 524,355 $ - 15,000 15,000 19,990 4,890 60,092 65,843 68,517 2,674 595,626 605,198 612,862 7,664 364,834 388,722 238,458 150,264 364,834 388,722 238,458 150,264 230,792 216,476 374,404 157,928 419,357 422,436 424,435 1,999 (650,149) (686,912) (1,527,598) (840,686) - - 720,000 720,000 (230,792) (264,476) (383,163) (118,687) - (48,000) (8,759) 39,241 Fund balances - beginnin9 12,568 12,568 12,568 - Fund balances - ending $ 12,568 $ (35,432) $ 3,809 $ 39,241 The notes to the financial statements are an integral part of this statement 83 This Page Infentional/y Left B/ank E� Nonmajor Enterprise Funds Enterprise funds are used to account for the financing, acquisition, operation, and maintenance of governmental facilities that are supported primarily by user charges. Recycling Utility Fund — to account for the financing, processing, operation and maintenance of the City's recycling service from charges made to users of the services and funds received from the sale of recyclable commodities processed to meet market requirements. The service area extends beyond the City limits Marine & Aviation Fund - to account for the financing, operation and maintenance of the City marina and associated real property on Clearvvater Beach from rents collected from users; and to account for the City's airpark operations. ' Parking System Fund - to acxount 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. ' � �_J � � � Harborview Center Fund - to acxount for the operation of the City's convention center and related facilities. E:�•� ASSETS Current assets: Cash on hand and in banks Equity in pooled cash and investments Accounts and conVac� receivable: Billed Unbilled charges estimated City of Clearwater, Florida Combining Statement of Net Assets Nonmajor Enterprise Funds September 30, 2004 Recycling Marine & Parking Harborview Utllity Aviation System Center Total $ - $ 817 $ 22,050 $ 200 $ 23,067 1,939,462 223,957 2,902,413 216,520 5,282,352 Less: Allowance for uncollectable accounts Total receivables, net Due from other funds Inventories, at cost Prepaid expenses and other assets Total current assets - unrestricted Current assets - restricted: Restricted equity in pooled cash Investrnents Total current assets - restricted Total current assets Noncurrent assets: Restricted: Investments Due from otl�er funds Deferred charges Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts and contracts payable Accrued payroll Due to other funds Deposits Unearned revenue and liens Current portion of long-term liabilities: Compensated absences 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 Current portion of long-term liabifities, revenue bonds Total current liabilities payable from restricted assets Total current liabilities Noncurrent liabilities: Compensated absences Revenue bonds (net of unamortized discounts and deferred amount on refunding) Notes, loan pool agreement and acquisition contracts Advances from other funds 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 73,929 14,750 - 166,216 254,895 144,030 - - - 144,030 217,959 14,750 - 166,216 398,925 (3,422) - - - (3,422) 214,537 14,750 - 166,216 395,503 1,113,579 531,621 3,081,688 66,380 4,793,268 - 35,035 - - 35,035 - - 1,119 - 1,119 3,267,578 806,180 6,007270 449,3]6 10,530,344 - - 17,911 - 17,911 - - 52 - 52 - - 17,963 - 17,963 3,267,578 806,180 6,025,233 449,316 10,548,307 - - 9,394 - 9,394 - - 7,500,000 - 7,500,000 - - 240 - 240 262,445 176,202 169,867 - 608,514 - - 881,282 926,000 1,807,282 1,396,338 3,146,240 2,740,401 8,751,133 16,034,112 1,658,783 3,322,442 11,301,184 9,677,133 25,959,542 4,926,361 4,128,622 17,326,417 10,126,449 36,507,849 25,138 22,185 241 182,407 229,971 24,135 29,382 34,202 - 87,719 - 59,602 - - 59,602 - 20,783 2,738 151,155 174,676 - - 5,988 - 5,988 3,713 6,969 5,638 - 16,320 - - 8,841 - 8,841 95,052 - 309,753 - 404,805 148,038 138,921 367,401 333,562 987,922 - - 281 - 281 - - 17,682 - 17,682 - - 17,963 - 17,963 148,038 138,921 385,364 333,562 1,005,885 29,365 55,108 44,581 - 129,054 - - 28,019 - 28,019 339,226 - 369,622 - 708,848 - - 4,000,000 - 4,000,000 368,591 55,108 4,442,222 - 4,865,921 516,629 194,029 4,827,586 333,562 5,871,806 962,060 3,086,638 2,888,006 9,677,133 16,613,837 - - 9,394 - 9,394 262,445 176,202 169,867 - 608,514 3,185,227 671,753 9,431,564 115,754 13,404,298 $ 4,409,732 $ 3,934,593 $ 12,498,831 $ 9,792,887 $ 30,636,043 The notes to the financial statements are an integral part of this statement. � � City of Clearwater, Florida ' Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended September 30, 2004 � , i �- , ' ' Operating revenues: Sales to customers Service charges to customers User charges to customers Rentals Total operating revenues Operating expenses: Personal services Purchases for resale Operating materials and supplies Transportation UUlity service Depreciation Interfund administrative charges Other current charges: Professional fees Advertising Communications Printing and binding Insurance Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Provision for estimated uncollectable accounts Total other current charges Total operating expenses Operating income (loss) Nonoperating revanues (expenses): Eamings on investrnents Interest expense Amortization of bond discount and issue costs Gain (loss) on exchange of assets Other Total nonoperating revenue (expenses) Income (loss) before transfers Capital grants and contributions Transfers in Transfers out Changes in net assets Total net assets - beginning Total net assets - ending Recycling Marine & Parking Harborview Utllity Aviation System Center Totals $ 1,178,563 $ 1,782,624 $ - $ - $ 2,961,187 8,591 - 192,000 - 200,591 1,462,196 83,134 4,215,577 - 5,760,907 - 1,245,328 4,600 1,649,362 2,899,290 2,649,350 3,111,086 4,412,177 1,649,362 11,821,975 888,538 996.892 1,133,258 - 3,018,688 349,742 1,417,622 - 760,130 2,527,494 78,550 143,954 479,722 23248 725,474 233,410 11,968 61,402 15,550 322,330 6,736 148,732 44,313 125,365 325,146 274,999 307,462 198,935 552,015 1,333,411 453,200 216,000 681,680 11,830 1,362,720 3,750 53,569 810,338 792,212 1,659,869 13,641 16,254 1,062 5,730 36,687 8,751 26,642 19,724 19,776 74,893 - - 1,481 1,414 2,895 48,350 60,830 45,120 20,500 174,800 11,284 80,227 18,601 32.016 142,128 876 2,399 148,874 2,568 154,717 8,829 52,713 186 25,750 87,478 24,860 32,700 32,520 17,770 107,850 - 198 - 17,752 17,950 2,869 - - - 2,869 123,210 325,532 1,077,906 935,488 2,462,136 2,408,385 3,568,162 3,677,226 2,423,626 12,077,399 240,965 457,076 734,951 (774,264) (255,424) 58,391 15,425 248,239 5,392 327,447 (s.ssa� �s,2s� �iia,�s�� - (12s,sas> - - (1,012) - (1,012) - (4,494) 162,000 - 157,506 - 147,659 5,712 5,430 158,801 49,807 155,323 300,142 10,822 516,094 2so,n2 �so�,�� i,o�,oss ��ss,aa2� 2so,s�o - 748,679 (97,700) 123,600 193,072 323,326 - - 748,679 - 436,130 436,130 - - (221,300) 1,035.093 (327,312) 1,224,179 4,216,660 3,611,267 11,463,738 10,120,199 29,411,864 $ 4,409,732 $ 3,934,593 $ 12,498,831 $ 9,792,887 $ 30,636,043 The notes to the financial statements are an integral part of this statement 87 City of Clearwater, Florida Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended September 30, 2004 Recycling Marine & Utility Aviation CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 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 Transfers in from other funds Transfers out to other funds Receipt of cash on loans to/from other funds Payment of cash on loans to/from other funds Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments on debt Interest paid Acquisition of fixed assets Sale of fixed assets Proceeds from issuance of debt Capital contributed by other governmental entities Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Parking Harborview System Center Totals $ 2,621,768 $ 3,111,287 $ 4,414,746 $ 1,769,321 $ 11,917,122 (489,736) (2,145,562) (1,549,169) (1,816,337) (6,000,804) (883,824) (981,840) (1,112,671) - (2,978,335) (743,711) (132,139) (814,469) (70,862) (1,761,181) - 147,659 5,712 5,430 158,801 504,497 (595) 944,149 (112,448) 1,335,603 - - - 436,130 436,130 (97,700) (123,600) - - (221,300) - 612,152 71,551 - 683,703 (26,040) (59,602) - (112,554) (198,196) (123,740) 428,950 71,551 323,576 700,337 (50,910) - (24,737) - (75,647) (8,584) (3,26� (114,922) - (126,773) (is�,soa� �i,2�s,s�� aso,�o2� - (�,8ss,2ss) - - 162,000 - 162,000 141,927 - 252,640 - 394,567 - 748,679 - - 748,679 (85,171) (473,165) (205,121) - (763,457) 58,391 15,425 248,239 5,392 327,447 58,391 15,425 248,239 5,392 327,447 353,977 (29,385) 1,058,818 216,520 1,599,930 Cash and cash equivalents at beginning of year 1,585,485 254,159 1,883,556 200 3,723,400 Cash and cash equivalents at end of year $ 1,939,462 $ 224,774 $ 2,942,374 $ 216,720 $ 5,323,330 Cash and cash equivalents classified as: Cash on hand and in banks $ - $ 817 $ 22,050 $ 200 $ 23,067 Equity in pooled cash and investments 1,939,462 223,957 2,902,413 216,520 5,282,352 Restricted equity in pooled cash and investments - - 17,911 - 17,911 Total cash and cash equivalents $ 1,939,462 $ 224,774 $ 2,942,374 $ 216,720 $ 5,323,330 The notes to the financial statements are an integral part of this statement. 88 City of Clearwater, Florida Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended September 30, 2004 Recycling Marine & Parking Harborvlew Utlllty Aviatlon System Center Totals Reconcfllation of operating Income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustrnents to reconcile operating income (loss) to net cash provided (used) by operating activities: Other revenue from nonoperating section of income statement Depreciation Provision for uncollectible accounts Change in assets and liabilities: (Increase) decrease in acxounts receivable (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payable Increase (decrease) in deposits Increase (decrease) in uneamed revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided (used) by operating activities Noncash investing, capital and financing activiti�: Amortization of bond issue costs Amortization of discount on bond issuance Amortization of deferred loss on defeasance of debt Decrease in net pension asset $ 240,965 $ (457,076) $ 734,951 $ (774,264) $ (255,424) - 147,659 5,712 5,430 158,801 274,999 307,462 198,935 552,015 1,333,411 559 - - - 559 �25�2�2) - - 80,790 55,518 - (16,018) - - (16,018) (1,119) (1,119) 8,532 2,123 (18,605) (15,588) (23,538) - 200 775 39,169 40,144 - - 1,794 - 1,794 3,652 2,795 2,609 - 9,056 1,062 12,260 19,097 - 32,419 263,532 456,481 209,198 661,816 1,591,027 $ 504,497 $ (595) $ 944,149 $ (112,448) $ 1,335,603 $ - $ - $ �2�) $ - $ (243) $ - $ - $ (25) $ - $ (25) $ - $ - $ ��) $ - $ (744) $ (3�652) $ (2,795) $ i2�609) $ - $ (9�056) 89 This Page Intentional/y Left Blank . �, C� 1 1 1 � Internal Service Funds � Internal service funds are used to account for services and commodities fumished by a designated department to other departments within the City or to other govemments on a cost reimbursement basis. �J ' Garage Fund - to account for the cost of automotive and other motorized equipment of the City. The acquisition cost of new or upgraded equipment is financed through user departments and the asset value is � simultaneously contributed to the Garage Fund. The cost of replacement of existing equipment is financed by the Garage Fund. 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. I � ' General Services Fund - to account for various support activities including building maintenance and custodial services for all City departments and facilities. The cost for these services is charged to user departments based on the cost of providing units of service. � ' Central Insurance Fund - to account for the City's limited self-insurance program wherein all funds are assessed charges based on damage claims incurred and on management's assessment of individual funds' � risk exposure. All claims and premiums are paid out of this fund, together with other costs necessary to administer the program. Medical insurance premiums are also paid from this fund. � I ' , 91 City of Clearwater, Florida Combining Statement of Net Assets Internat Service Funds September 30, 2004 ASSETS Current assets: Cash on hand and in banks Equiry in pooled cash and investments Other receivables Due from other funds Inventories, at cost Prepaid expenses and other assets Total current assets Noncurrent assets: Interest receivable Advancesto otherfunds Net pension asset Capital assets: Land and other nondepreciable assets Capital assets, net of accumulated depreciation Total noncurrent assets Total assets LIABIUTIES Current liabilities: Accounts and contracts payable Accrued payroll Accrued interest payable Due to other funds Unearned revenue Current portion of long-term liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Claims payable Total current liabilities (payable from current assets) Noncurrent liabilities: Compensated absences Notes, loan pool agreement and acquisition contracts Advances from other funds Claims payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for employees' pension benefits Unrestricted Total net assets Garage Administrative General Central Fund Services Services Insurance �i ' I � Total ' $ - $ 1,900 $ - $ - $ 1,900 4,226,666 1,811,331 663,919 24,221,814 30,923,730 - - - 25,121 25,121 58,787 896,854 214,727 379,056 1,549,424 201,345 - - - 201,345 - - - 103,574 103,574 4,486,798 2,710,085 878,646 24,729,565 32,805,094 5,793 - - - 5,793 - - - 3,725,474 3,725,474 558,125 1,034,491 370,906 97,543 2,061,065 � � i ' 696,681 - - - 696,681 13,724,088 3,623,844 128,520 27,985 17,504,437 ' 14,984,687 4,658,335 499,426 3,851,002 23,993,450 19,471,485 7,368,420 1,378,072 28,580,567 56,798,544 � 5,598 4,881 34,892 60,643 108,919 50,429 25,121 - 91,654 - 1,148,500 - - 243,793 289,164 12,018 232,009 - 25,121 - 91,654 - 1,148,500 16,356 33,676 10,528 3,828 64,388 2,847,922 242,418 14,965 - 3,105,305 - - - 2,785,300 2,785,300 4,079,019 506,669 110,814 3,044,939 7,741,441 129,339 266,304 83,258 30,271 509,172 5,213,412 277,169 52,812 - 5,543,393 - 824,881 - - 824,881 - - - 7,674,511 7,674,511 5,342;751 1,368,354 136,07d 7,704,782 14,551,957 9,421,770 1,875,023 246,884 10,749,721 22,283,398 I'�� 1 � i ' 6,359,435 3,104,257 60,743 27,985 9,552,420 558,125 1,034,491 370,906 97,543 2,061,065 � 3,132,155 1,354,649 699,539 17,705,318 22,891,661 $ 10,049,715 $ 5,493,397 $ 1,131,188 $ 17,830,846 $ 34,505,146 ' The notes to the financial statements are an integral part of this statement. 92 ' 1 City of Clearwater, Florida � Combining Statement of Revenue, Expenses, and Changes in Fund Net Assets Internal Service Funds For the Y�r Ended September 30, 2004 � EJ � � � ' � Operating revenues Billings to departments Operating expenses: Personal services Purchases for resale Operating materials and supplies Transportation Utiliiy service Depreciation Interfund administrative charges Other curcent charges: Professional fees Communications Printing and binding Insurance Premiums Claims incurred Repairs and maintenance Rentals Miscellaneous Data processing charges Taxes Total other current charges Total operating expenses Operating income (loss) Nonoperating revenues (exp�ses) Earnings on investments Interest expense Gain (loss) on exchange of assets Other Total nonoperating revenue (expenses) Income (loss) before transfers Transfers in Transfers out Change in net assets Total net assets - beginning Total net assets - ending Garage Administrative General Central Fund Serv(ces Services Insurance Total $ 8,979,446 $ 8,272,464 $ 3,415,744 $ 15,556,177 $ 36,223,831 2,091,514 3,972,561 1,797,861 2,455,284 - - 110,644 207,810 240,840 6,212 85,801 116,360 96,312 5,649 394,388 3,511,177 579,351 13,168 302,320 43,570 - 405,223 6,234 5,189 6,569 8,267,159 2,455,284 565,528 213,562 496,349 4,110,265 345,890 268,911 145,449 3,000 58,304 475,664 26,017 1,338,513 47,229 11,563 1,423,322 - 20,006 - - 20,006 296,640 83,750 49,120 11,459,713 11,889,223 662,741 - - 2,194,118 2,856,859 - 604,151 598,171 13,540 1,215,862 2,904 448,597 6,573 1,705 459,779 16,880 79,519 23,231 26,566 146,196 128,590 224,920 42,900 17,990 414,400 4,377 - - - 4,377 1,407,060 2,944,905 770,224 13,783,489 18,905,688 9,980,523 7,839,647 3,332,841 14,206,714 35,358,725 (1,001,07� 432,817 82,903 1,349,463 864,106 86,733 58,998 16,759 597,790 760,280 (252,549) (48,934) (910) - (302,393) 324,250 34,556 - - 358,806 202,254 4,430 16,388 - 223,072 360,688 49,050 32,237 597,790 1,039,765 (640,389) 481,867 115,140 1,947,253 1,903,871 455,122 1,232,876 - 277,189 1,965,187 - - (53,958) (500,000) (553,958) 455,122 1,232,876 (53,958) (222,811) 1,411,229 (185,26� 1,714,743 61,182 1,724,442 3,315,100 10,234,982 3,778,654 1,070,006 16,106,404 31,190,046 $ 10,049,715 $ 5,493,397 $ 1,131,188 $ 17,830,846 $ 34,505,146 The notes to the financial statements are an integral part of this statement 93 City of Clearwater, Florida Combining Statement of Cash Flows Intemal Service Funds For the Year Ended September 30, 2004 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from other funds Cash payments to suppliers Cash payments to employees Cash payments to other funds Otherrevenues Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in from other funds Transfers out to other funds Receipt of cash on loans to/from other funds 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 (used) by capital and related financing activities CASH FLOWS FROM IIdVESTING 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 classi�ed as: Cash on hand and in banks Equity in pooled cash and investments Total cash and cash equivalents Garage Administrative General Central Fund Services Services Insurance Total $ 8,979,446 $ 8,272,464 $ 3,415,744 $ 15,556,177 $ 36,223,831 (4,044,813) (2,574,706) (1,217,419) (13,308,525) (21;145,463) (2,026,535) (3,929,013) (1,756,745) (395,183) (8,107,476) (313,275) (714,398) (274,502) (44,798) (1,346,973) 138,448 4,430 16,388 - 159,266 2,733,271 1,058,777 183,466 1,807,671 5,783,185 455,122 - - 277,189 732,311 - - (53,958) (500,000) (553,958) - - - 558,473 558,473 (60,875) (117,228) (19,747) (197,850) 394,247 (117,228) (73,705) 335,662 538,976 (2,589,372) (253,894) (7,353) - (2,850,619) (252,549) (23,813) (910) - (277,272) (3,367,159) (352,508) - - (3,719,667) 324,250 - - - 324,250 2,815,857 197,844 53,958 - 3,067,659 (3,068,973) (432,371) 45,695 - (3,455,649) 86,733 58,998 16,759 597,790 760,280 86,733 58,998 16,759 597,790 760280 145,278 568,176 172,215 2,741,123 3,626,792 4,081,388 1,245,055 491,704 21,505,812 27,323,959 $ 4,226,666 $ 1,813,231 $ 663,919 $ 24,246,935 $ 30,950,751 $ - $ 1,900 $ - $ - $ 1,900 4,226,666 1,811,331 663,919 24,246,935 30,948,851 $ 4,226,666 $ 1,813,231 $ 663,919 $ 24,246,935 $ 30,950,751 The notes to the financial statements are an integral part of this statement. 94 City of Clearwater, Florida Combining Statement of Cash Flows IMernal Seroice Funds For the Year Ended September 30, 2004 Reconclliatlon of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activiUes: Other revenue from nonoperating section of income statement Depreciation Change in assets and liabilfties: (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts and contracts payabl Increase (decrease) in uneamed revenue (Increase) decrease in net pension asset Increase (decrease) in accrued payroll Total adjustments Net cash provided (used) by operating activities Garage Administrative General Central Fund Services S�vices Insurance Total $ (1,001,077) $ 432,817 $ 82,903 $ 1,349,463 $ 864,106 202,254 4,430 16,388 - 223,072 3,511,177 579,351 13,168 6,569 4,110,265 19,146 - - - 19,146 - - - 514,485 514,485 e sss ��,sss� 2s,ss2 ��2,s8s) �as,�ss� (63,806) - - - (63�806) 8,423 15,914 5,702 1,788 31,827 56,556 27,634 35,413 8,252 127,855 3,734,348 625,960 100,563 458,208 4,919,079 $ 2,733,271 $ 1,058,777 $ 183,466 $ 1,807,671 $ 5,783,185 Noncash Investing, capital and financing activities: Asset contributions from general govemment $ - $ 35,430 $ - $ - $ 35,430 Decrease in net pension asset $ (8,423) $ (15,914) $ (5,702) $ (1,789) $ (31,828) � This Page Intentionally Left B/ank �I: Fiduciary Funds Fiduciary Funds are used to acxount for resources that are managed in a trustee capacity or as an agent for other parties or funds. . Employees' Pension Fund - to acxount 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, ctosed 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 swom 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 acoount for the receipt, custody, and expenditure of funds held temporarily in trust for other parties. 97 City of Clearwater, Florida Combining Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2004 ASSETS Cash on hand and in banks $ Equity in pooled cash and investments Managed investment accounts, at fair value Receivables: Interest and dividends Securities lending earnings Due from others Total receivables Total assets LIABILITIES Defined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Police Firefighters Employees' Firemen's Supplemental Supplemental Totals - $ - $ 17,846 $ 1,262,667 4,593,350 - 468,056,963 1,001,250 10,586,908 - $ 7,672,211 17,846 5,856,017 487,317,332 1,158,040 3,945 47,763 32,348 1,242,096 8,784 - - - 8,784 - - - 127,094 127,094 1,166,824 3,945 47,763 159,442 1,377,974 470,486,454 5,598,545 10,652,517 7,831,653 494,569,169 Accounts payable 526,792 - - - 526,792 Totalliabilities 526,792 - - - 526,792 NET ASSETS , Net assets held in trust for pension benefits $ 469,959,662 $ 5,598,545 $ 10,652,517 $ 7,831,653 $ 494,042,377 The notes to the financial statements are an integral part of this statement. 98 City of Clearwater, Florida Combining Statemerrt of Changes in Fiduciary Net Assets Fiduciary Funds For the Yea'r Ended September 30, 2004 ADDITIONS Contributlons: Contributions from employer Contributions from employees State of Florida Total contributions Investment Income: Net appreciation (depreciation) in fair value of investments Interest Dividends Less investment expenses: Investment management / custodian fees Net income from investing activities Securities lending income: Gross earnings Rebate paid Bankfee Net income from securitles lending Total addltions DEDUCTIONS Benefits and withdrawal payments: Benefits Withdrawal payments Total benefits and withdrawal payments Income (loss) before administrative expenses Administrative expenses Net increase (decrease) Net assets held in trust for pension benefits: Beginning of year End of year Detined Benefit Defined Contribution Pension Trust Funds Pension Trust Funds Pollce Firefighters Empbyees' Firemen's Supplemental Supplem�tal Totals $ 4,818,917 $ 1,271,562 $ - $ - $ 6,090,479 5.546,148 - - - 5,546�148 12,000 - 891,030 735,262 1,638,292 10,377,065 1,271,562 891,030 735,262 13,274,919 33,270,333 (31,707) 405,630 355,684 33,999,940 5,378,821 166,832 167,632 158,998 5,872,283 2,139,356 - 86,477 35,156 2,260,989 40,788,510 135,125 659,739 549,838 42,133,212 2,292,567 - 74,695 89,854 2,457,116 38,495,943 135,125 585,044 459,984 39,676,096 720,495 - - - 720,495 (579,281) - - - (579,281) (49,396) - - - (49,396) 91,818 - - - 91,818 48,964,826 1,406,687 1,476,074 1,195,246 53,042,833 15,287,687 916,378 742,497 1,707,978 18,654,540 615,691 - - - 615,691 15,903,378 916,378 742,497 1,707,978 19,270,231 33,061,448 490,309 733.577 (512.732) 33,772,602 135,138 3,766 36,178 19,747 194.829 32,926,310 486,543 697,399 (532,479) 33,577,773 437,033,352 5,112,002 9,955,118 8,364,132 460,464,604 $ 469,959,662 $ 5,598,545 $ 10,652,517 $ 7,831,653 $ 494,042,377 The notes to the financial statements are an integral part of this statement. � City of Clearwater, Florida Statement of Changes in Assets and Liabilities Agency Fund For the Year Ended September 30, 2004 :•� �� 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, 2003 Additions Deductions 2004 $ 219,776 50,794 127,471 $ 143,099 $ 21,944 - - $ 21,944 10,708 - - 10,708 7,559 1,423 1,637 7,345 179,565 49,371 125,834 103,102 $ 219,776 50,794 127,471 $ 143,099 The notes to the financial statements are an integral part of this statement. 100 ' � ' ' ' � � 1 1 1 1 1 ' � �' 1 ' ' 1 Capital Assets Used in the Operation of Governmental Funds �oi This Page Intentional/y Left B/ank 102 City•of Clearwater, Florida Capltal Assets Used in the Operatfon of Governmental Funds Comparative Schedules by Source' September 30, 2004 and 2003 i � i >, r- - Land Buildings Improvements other than buildings Equipment Infrastructure Construction in progress F-• - � u>�. � -i General fund revenue General obligation bonds Revenue bonds Notes, mortgages, and other obligations Special assessments Federal and state grants Gifts Contributions from developers Undetermined investrnents prior to July 1, 1954 2004 2003 $ 43,159,623 $ 43,583,863 97,521,505 49,498,895 56,778,833 54,078,550 38,032,901 35,917,695 4,174,150 2,225,540 5,613,253 30,440,628 $ 245,280,265 $ 215,755,171 $ 155,277,423 $ 141,237,902 6,297,870 6,297,870 33,889,286 31,705,092 1,782,172 3,057,044 2,012,192 2,012,192 16,879,336 15,639,257 20,523,380 7,187,208 7,539,144 7,539,144 1,079,462 1,079,462 $ 245,280,265 $ 215,755,171 ' This schedule presents only the capital agset balanoes related to govemmental funds. Accordingly the capital assets reported in intemal service funds are exduded from the above amounts. The notes to the financial statements are an integral part of this statement 103 City of Clearwater, Florida Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity' September 30, 2004 Improvements Machinery Other Than and Function and Activity Total Land Buildings Buildings Equipment Infrastructure Fixed Assets Unallocated by Function $ 18,144,222 $ 9,958,088 $ 7,938,114 $ - $ 248,020 $ - 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 / Recycling Conservation and Resource Management Other Physical Environment Transportation: Road and Street Facilities Parking Other Transportation Services Economic Environment: Industry Development Housing and Urban Development Other Economic Environment Human Services: Other Human Services Culture and Recreation: Libraries Parks & Recreation Cultural Centers Special Recreation Facilities Total Allocated to Functions Construction in Progress Total General Fixed Assets 3,531 - 464,296 - 941,388 - 159,010 - 6,285 - 12,417 - 25,892,743 6,404,795 27,479,670 6,404,795 1,527 - 9,679 - 2,106 - 16,169,786 131,762 16,183,098 131,762 3,531 - 462,Z69 - 931,709 - 156,904 - 6,285 - 12,417 - 3,186,400 - 4,760,015 - 9,936,527 639,194 440,831 200,256 8,656,246 - 12,581,650 487,366 5,390,739 66,294 6,637,251 - 213,997 - 11,432 - 202,565 - 403,868 - 88,482 - 315,386 - 1,369,053 - 12,254 - 1,356,799 - 24,505,095 1,126,560 5,943,738 266,550 17,168,247 - 21,565 - 90,541 - 397,763 2,855 509,869 2,855 - - 21,565 - �76,210 14,331 - ' - 340,686 54,222 - - 416,896 90,118 - 61,097,847 9,946,160 4,311,791 41,985,285 710,255 4,144,356 � 35,988 35,988 556,093 1,200 171,262 148,000 205,837 29,794 61,689,928 9,983,348 4,483,053 42,133,285 916,092 4,174,150 1,063,826 1,031,655 16,901 - 15,270 698,747 329,835 293,682 - 75,230 71,093 71,093 - - - 1,833,666 1,432,583 310,583 - 90,500 23,377 - - - 23,377 I e 33,334,201 158,058 19,170,778 133,859 13,871,506 - 37,254;925 10,120,317 15,975,216 10,634,489 524,903 - 28,508 � - 993 - 27,515 - 34,863,551 3,973,019 27,575,932 3,061,992 312,608 - 105,481,185 14,251,394 62,662,919 13,830,340 14,736,532 - 239,667,012 $ 43,159,623 $ 97,521,505 $ 56,778,833 $ 38,032,901 $ 4,174,150 5,613,253 $ 245,280,265 ' This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in intemal service funds are excluded from the above amounts. The notes to the financial statements are an integral part of this statement. 104 i 1 City of Clearwater, Florida ' Capital Assets Used in the OperaUon of Governmental Funds Schedule of Changes by Function and Activity' For the Year Ended September 30, 2004 1 � � � 1 � I� Fixed Assets Unallocated by Function General Government: Legislative Executive Financial & Administrative Legal Planning Comprehensive Planning Other General Government Public Safety: Law Enforcement Fire Control ProtecUvelnspections Emergency and Disaster Relief Ambulance and Rescue Services ' Physical Environment: Solid Waste / Recyding Conservation and Resource Management Other Physical Environment � Transportation: Road and Street Facilities Parking Other Transportation Services , � � , � Economic Environment: Industry Development Housing and Urban Development Otlier Economic Environment Human Services: Other Human Services Culture and Recreatan: Libraries Parks & Recreation Cultural Centers Special Recreation Facilities Total Allocated to Functions Construction in Progress Total General Fixed Asseis General General Fixed Assets Fixed Assets 10/01�3 Additfons Deductions 09/30/04 $ 18,144,222 - - $ 18�144�222 3,531 - - 3,531 457,680 6,617 - 464,297 s�,sas � � ,s22 (s,� �) sa� ,388 159,010 - - 159,010 6�285 - - 6�285 12,417 - - 12,417 25,809,530 83,212 - 25,892,742 27,384,102 101,751 6,183 27,479,670 9,976,074 - (39,546) 9,936,528 8,406,082 4,175,567 - 12,581,649 213,997 - - 213,997 403,868 - - 403,868 �,36g,p53 - - 1,369,053 20,369,074 4,175,567 39,546 24,505,095 21,565 - - 21,565 gp,5q� - - 90,541 430,119 - (32,356) 397,763 542,225 - (32,356) 509,869 58,780,982 2,371,838 (54,973) 61,097,847 35,9gg - - 35,988 528,111 34,992 (7,010) 556,093 58,345,081 2,406,830 (61,983) 61,689,928 1,428,826 - (365,000) 1,U63,826 698,747 - - 698,747 71,093 - - 71,093 2�198,666 - (3�a,000) 1,833�666 23,377 - - 23,377 14,983,680 18,434,852 (84,331) 33,334,201 36,537,273 717,652 - 37,254,925 28,508 - - 28,508 5,758,335 29,180.216 (75,000) 34,863.551 57,307,796 48,332,720 (159,331) 105,481,185 185,314,543 55,016,868 (664,399) 239,667,012 30,440,628 3,215,935 (28,043,310) 5,613,253 $ 215,755,171 58,232,803 (28,707,709) $ 245,280,265 ' This schedule presents only the capital asset balances related to govemmental funds. Accordingly the capital assets reported in intemal service funds are exduded from the above amounts. The notes to the financial statements are an integral part of this statement. � 105 This Page lntentional/y Left B/ank 106 � � ' ' � � � ' ' � � �,J � � � � � � ' Supplementary Information 107 Page 1 of 4 City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 1997A&B,1998, and 2004 Supplementary Information The S sy tem: 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 Council has authorized the Ciry Manager to enter into contract gas service rates at special rates and/or conditions as required to obtain/retain the customer load. Such contract service must meet the normal construction feasibility formula to insure profitable payback to the City. As of September 30, 2004, contract rates applied to 778 customer accounts and impacted 32.74% of total revenues. The rates charged by the System through September 30, 1996, were part of the Phase I Gas Rate Case implemented October 1, 1995, which was based on a comprehensive cost of service study performed by the Utility Advisory Services Group of the international accounting firm of Coopers & Lybrand, LLP (the "Rate Study"). This Phase I implementation resulted in an extensive overhaul of the Gas System customer rates, providing numerous classes of service and a modernized billing methodology. The new rates, effective October 1, 1996, were designed to be industry-based and responsive to the competitive energy challenges. The goal of the Rate Study was to establish rates which would be fair to all classes of customers, provide funding to implement planned expansion in both existing northern Pinellas County services area and into the newly acquired southwestern Pasco service area, and provide an adequate growth potential in return to the City of Clearwater to further offset the ad valorem tax rates (current impact is about 0.5 mills). As the result of experiences during the first seven months of the Phase I implementation, adjustments made to the Phase II rates were implemented October 1, 1996 and additional adjustments (Phase III) were implemented effective October 1, 1997. The total projected impact of both new phases of the rate case is $1.05 million or less than 7.9% of total gas sales revenues. The rate ordinance containing the Phase II and Phase III rate changes was approved by the City Commission on June 6, 1996. 108 City of Clearwater, Florida Continuing Disclosure - Gas System Revenue Bonds Series 1997A&B,1998, and 2004 Supplementary Information Page 2 of 4 � � V � I�- Z W � � � a a � t� c Q � LL }�a � J a NJZ � m 0 �aa a°Cm y QC'3o vaacM � °C Q W Z � � W a W � � 0 N T � J � 7 � � LI. � LJ �� ci : [ �: i : i i J , � c , , c i � + m +�� ri IL � m� C� m �� z mU m��Z z ��$�'� $� °��°� �� $�' + V V p r�p � Z¢ ,� X d � �� g� g � < Q � n $��€S °•� �ui m g,� � � 2 Z � � Fy gZ €£0 Fnv� �� 9 iA+�� o � a g a � g � � � � �a �� Z � � ° ° � �, + �� ^^ e z �CN'3 ��$ � � 2A °c� � N m�—�'a o� $a ��SBc�' o 0 0l � � �� + �� c o $ 0 0 � �aQ Qo Q $ � � v � � � °• $ Q 7 c c�i � Z � � � � � tA iA� �� $� �� t� O �o Z 'o "' � ° � � � �? $ � � �! m � � � � � � �+ �� as g a$ g �° Q � °u� � ° � $ o� gN a � �ii °c a � ° ° � in Q a . . $ � Z � Ul ui u� �a� � �$ � � � � � � � ^� 8� Z� g�= � � N �E �� ' � a � o o � in '� a ea us � �� r O�'O S 1� 8 Py O (d O �� O�i pp N Q j O a m cy O O dl � a c7 S'� � N cj Z m �; g 3 � c c �� c� �r ��i n ui u� $ � � � g � � $ � � � � g �< �$ 8a� � �, ° ° � u> � �� g a � � � � � � 8 �� $� �� ,� s � � � � � � � s � � s N ° � � ° ° $ u, v, � � � � w � aj 8 S $ � � � � $ $ �,,`'�, �o Z � � ° ° � �, � �� S � � � � � � � g �� o Z'� �� ^�� - � �� 8 � � � � � � � g �� c 2 ' in � ° ° � iA ui � � � � �Q� g � ° S � � � � ° �i.� �� Z� i � c o � � � c�'� m �� a a c7 o a W z ¢� � � � � � � �m� ��$g� _ � � W � z ��LLp�� a � � �� U � � � � � �� , E � � � E � � 9 � �� g z° w w 3� a' F� 1 109 � b`d � � � � � � 8 � . � � o a°io, $ $ � � � � � � � � � � � � � $ � � � � � o � $ $ � � $ $ o � �� s. � � � � � � � o � � � �o � f�9 � � °�d, � � � € � € o� � � C m �� t � LL � ~ � 0 �� € LL �s � � � tO o e � s� E.� g � � � � �� c�V m o U U o li Z � � � � � � � � � � � O ��o � � � �� `ma`, o c� � o � � 8 � � � � � �� n � m LL � Page 3 of 4 City of Clearwater, Florida Continuing Disclosure — Gas System Revenue Bonds Series 1997A&B,1998, and 2004 Supplementary Information Service Area The Clearwater Gas System (CGS) is owned and operated as an enterprise utility by the City of Clearwater. CGS operates over 729 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 81 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 18,454 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 117 square miles and extends from the Gulf of Mexico on the West inland about 10 miles to just West of State Road 41 and Land O' Lakes (generally along the right-of-way of the Suncoast Parkway) and from the Pinellas and Hillsborough County lines on the South to generally State Road 52 on the North. The CGS service territory extends 42.3 miles from the southernmost to the northernmost points. Clearwater Gas System prides itself in being a competitive and public service-minded utility, providing safe, economical and environmentally-friendly gas, which is made in America, available in our communities for all of the homes and businesses in our service area, with special focus on the residential customers who make up over 87.9% of our customer base. 110 � City of Cleanivater, Florida � Continuing Disclosure - Gas System Revenue Bonds Series 1997A&B, 1998, and 2004 Supplementary Information Page4of4 � As of September 30, 2004 the System's active natural gas customers were located as shown in the following table: � �� Location Belleair Belleair Beach Beileair Bluffs Belleair Shores Clearwater Dunedin Indian Rocks Beach Indian Shores Largo New Port Richey North Redington Beach Oldsmar Port Richey Redington Beach Redington Shores Safety Harbor Tarpon Springs Unincorporated Areas Pasco Unincorporated Areas Pinellas Total Meters 367 118 20 20 7,165 1,035 67 53 1,022 305 9 54 1� 9 598 1,315 1,650 2,624 16,452 Percentage 2.23% 0.72% 0.12% 0.12% 43.55% 6.29% 0.41 % 0.32°/a 621 % 1.85% 0.05% 0.33% 0.09% 0.04% 0.05% 3.63% 7.99% 10.03% 15.95% 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, 2004: � � � Customer Name Angelica Textile Service Metal Industries, Inc. Morton Plant Hospital Mease Hospital HCA Columbia Hospital Peak Monthly Therms 97,425 84,998 86,720 68,816 24,906 % of Gross Revenues 2.47% 2.09% 1.74% 1.12% 0.96% 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 2004: � � � � Interruptible Residential Commercial Average No. Customers 14 14,324 2,114 111 Gas Gas Volume Sales 21.41 % 11.53% 16.01 % 24.19% 62.58% 64.28% Page 1 of 3 City of Clearwater, Florida Continuing Disclosure — Water and Sewer Refunding Revenue Bonds Series 1998 and 2003; and Revenue Bonds Series 2002 Suppiementary Information Water System: FY 1999 2000 2001 2002 2003 2004 Historical Financial Information Source and Volume of Water Pumped (in million gallons per day, averaged over the Fiscal Year) City Welis Coun 3.070 12.094 3.047 11.528 3.067 11260 2.258 11.739 3.927 8.916 3.609 9.216 Historical Growth in Number of Water Customers (all figures are as of September of the year indicated) Year Water Customers 1999 39,931 2000 39,562 2001 40,167 2002 40,340 2003 40,227 2004 40,235 Ten Largest Water Customers Fiscat Year Ending September 30, 2004 Water Used Name of User (in 100 Cubic Feet� 1. Church of Scientology 107,926 2. Pinellas County Schools 46,433 3. Morton Plant Mease Hospital 74,229 4. Clearwater Housing Authority 51,751 5. United Dominion Realty Trust 47,064 6. City of Clearwater 19,837 7. Sheraton Sand Key 40,700 8. Ultimar Condo Association 29,385 9. AGH Leasing UP 36,657 10. 880 Mandalay 28,562 Total � 112 Total 15.164 14.575 14.327 13.997 12.843 12.826 Revenues Produced $ 334,654 283,486 270,147 167,301 130,837 123,990 120,722 104,356 99,225 87.733 1.722.451 � � City c�f Clearwater, Florida � Continuing Disclosure — Water and Sewer Refunding Revenue Bonds Series 1998 and 2003; and Revenue Bonds Series 2002 Supplementary Informatlon i I� J � Sewer System: Average Sewage Flow Fiscal Year ,999 2000 2001 2002 2003 2004 Annual Ave. Daily Flow In MGD 16.5 15.4 14.4 14.3 162 15.0 Page 2 of 3 Historical Growth in Number of Sewer Customers (as of September of the year indicated) Fiscal Year 1999 2000 2001 2002 2003 2004 Ten L.ergest Sewer Customers Fiscal Year Ending September 30, 2004 Name of User � 1. Church of Scientology 2. Morton Plant Mease Hospital 3. Pinellas County Schools 4. United Dominion Realty Trust � 5. Clearwater Housing Authority 6. AGH Leasing UP 7. Sheraton Sand Key � 8. 880 Mandalay 9. King's Savannah Trace Assoc., UP 10. HBE Florida Corp. �' Total � � � �� Sewer Used (in 100 Cubic Feet) 90,743 71,732 39,691 47,064 42,375 36,657 34,157 28,487 27,247 21.559 � Rates. Fees And Charges Sewer Customers 33,383 33,075 32,933 33,215 33,215 33,234 Revenues Produced $ 318,250, 302,085 301,339 162,729 143,219 125,605 117,333 96,074 92,060 83.867 $ •7� The City uses a three-tiered rate structure for water and sewer usage. The base rate includes a minimum usage for residential and nonresidential water rates. Any usage over the minimum is billed at one rate per 100 cubic feet up to a designated level and at a second rate for usage over that level. For irrigation, there is a base rate, with no minimum, and a charge per 100 cubic feet of water usage up to a designated level and a higher charge for usage over that amount. The sewer base rate includes a minimum usage and a fixed charge per 100 cubic feet of water usage over the basic allowance. The minimum usage and second tier usage level vary with the size of the meters. For fiscal year 2004 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. 113 Page 3 of 3 City of Clearwater, Florida Continuing Disclosure - Water and Sewer Refunding Revenue Bonds Series 1998 and 2003; and Revenue Bonds Series 2002 Supplementary Informatlon Residential and October 1, October 1, October 1, October 1, October 1, Nonresldential Water Rates 2000 2001 2002 2003 2004 Size of Meter Cubic Feet Gallons Minimum- Under 1 inch 7.53 8.07 8.64 9.90 10.59 1 inch 17.57 18.83 20.16 23.10 24.71 1.5 inch 251.00 269.00 288.00 330.00 353.00 2 inch 584.83 626.77 671.04 768.90 822.49 3 or 2 inch manifold 901.09 965.71 1,033.92 1,184.70 1,267.27 4 inch 1,734.41 1,858.79 1,990.08 2,280.30 2,439.23 6 inch 4,455.25 4,774.75 5,112.00 5,857.50 6,265.75 8 inch 7,530.00 8,070.00 8,640.00 9,900.00 10,590.00 Additional charges are assessed for cubic feet of usage in excess of designated minimums. Rates for Irriaation (Lawn) Meters October �, October 1, October 1, October 1, October 1, 2000 2001 2002 2003 2004 Size of Meter Cubic Feet Gallons Minimum- Under 1 inch 2.69 2.88 3.08 3.53 3.78 1 inch 8.07 8.64 9.24 10.59 11.34 1.5 inch 40.35 43.20 46.20 52.95 56.70 2 inch 112.99 120.96 129.36 148.26 158.76 3 or 2 inch manifold 223.27 239.04 255.64 292.99 313.74 4 inch 430.41 460.80 492.80 564.80 604.80 6 inch 1,29929 1,391.04 1,487.64 1,704.99 1,825.74 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 Additional Indebtedness October 1, October 1, October 1, October 1, October 1, 2000 2001 2002 2003 2004 10.38 24.22 346.00 806.18 1,242.14 2,239.86 6,141.50 10,380.00 3.46 Cubic Feet 11.10 25.90 370.00 862.10 1,328.30 2,556.70 6,567.50 11,100.00 ��1�] 11.88 27.72 396.00 922.68 1,421.64 2,736.36 7,029.00 11,880.00 3.96 Gallons 13.62 14.58 31.78 34.02 454.00 486.00 1,057.82 1,132.38 1,629.86 1,744.74 3,137.14 3,358.26 8,058.50 8,626.50 13,620.00 14,580.00 4.54 4.86 Additional indebtedness incurred totaled $120,000 for the partial refunding of the 1993 Water and Sewer Refunding Revenue Bonds (total of 2003 Refunding Revenue Bonds issued during fiscal 2004, $8,410,000, less the principal amount refunded, $8,290,000, of the 1993 Water and Sewer Refunding Revenue Bonds) and $44,980 for the lease purchase of capital equipment. 114 City of Clearwater, Florida Continuing Disclosure — Stormwater System Revenue Bonds Series 19�9, 2002, and 2004 Supplementary Information Rates. Fees, and Charges The City uses a measurement of one equivalent residential unit or ERU as the basis for the stormwater management utility fee. The rate per ERU was unchanged from the inception of the utility on January 1, 1991 until 1998 when annual increases were adopted for five fiscal years beginning October 1, 1998. In November 2001, additional increases were adopted including a change to the increase previously adopted, to be effective October 1, 2002. Effective August 5, 2004, additional increases were adopted. The monthly rates are as follows: Effective Date Rate Per ERU January 1, 1991 $3.00 October 1, 1998 $4.00 October 1, 1999 $4.17 October 1, 2000 $4.35 October 1, 2001 $4.54 January 1, 2002 $6.13 October 1, 2002 $7.16 October 1, 2003 $8.01 October 1, 2004 $8.65 October 1, 2005 $9.35 October 1, 2006 $9.63 October 1, 2007 $9.92 October 1, 2008 $10.22 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 Net Operating Revenues (Excluding Depreciation) Interest Income and other Non- Operating Revenues (Expenses) Total Net Revenues Maximum Annual Debt Service Coverage Fiscal Years Ended Se�tember 30. 2000 2001 2002 2003 2004 $1,622,157 $1,433,541 $2,793,204 $3,726,983 $3,566,465 132,921 281,471 95,305 206,202 175,099 $1,755,078 $1,715,012 $2,888,509 $3,933,185 $3,741,564 $520,974 $520,974 $2,052,538 $2,052,538 $2,913,506 3.37 329 1.41 1.92 1.28 115 City of Clearwater, Florida Continuing Disclosure — Infrastructure Sales Tax Revenr�e Bonds, Series 2001 Supplementary Information Historical Debt Service Coveraae 2001 2002 2003 Sales tax revenues (1) $8,339,694 $8,457,553 $8,661,615 Maximum annual debt service $7,083,688 $7,083,688 $7,049,688 Debt service coverage 1.18 1.19 1.23 (1) The Infrastructure Sales Tax Revenue Bonds, Series 2001, were issued June 1, 2001 in the amount of $46,445,000. They are secured by a lien upon and a pledge of the City's share of the proceeds derived by Pinellas County, Florida from the levy and collection of the one-cent discretionary infrastructure sales tax pursuant to Section 212.055(2), Florida Statutes, as amended (sales tax revenues). City of Clearwater, Florida Continuing Disclosure — Improvement Revenue Refunding Bonds, Series 2001 Supplementary Information Historical Debt Service Covera4e 2001 2002 2003 Pledged Revenues (1) $ 15,486,388 $18,272,521 $ 17,381,418 Maximum annual debt service $ 866,760 $ 866,760 $ 865,310 Debt service coverage 17.87 21.08 20.09 (1) The Improvement Revenue Refunding Bonds, Series 2001, were issued October 15, 2001 in the amount of $11,470,000. They were secured by a lien upon and a pledge of the Public Service Tax pursuant to Section 166.231, Florida Statutes as amended. Effective October 1, 2001, the Florida Legislature repealed the public service tax on telecommunications created per Section 166.231(9), Florida Statutes, and created a simplified tax structure for communications services pursuant to Chapter 2000-260, Laws of Florida. To the extent that the Public Service Tax receipts derived by the City pursuant to Section 166.231(9), Florida Statutes, is eliminated as a result of this new tax, all of the revenues.received by the City pursuant to the new Communications Services Tax shall be deemed to replace the Public Service Tau receipts so eliminated. Consequently the pledged revenues include both public service taxes and communications services taxes effective October 1, 2001. 116 � � J � 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 Senrices Authority, the City has provided fire and emergency medical senrices 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 senrice 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, 2004, for the Fire Department as a whole. Since the funding for the Emergency Medical Senrices Program is based on the level fixed in prior years, the Fire Senrices 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, 2004 are summarized below. Total Revenue Received from Pinellas County Fire Protection Authority Total Fire Service Expenditures for Fiscal Year Ended September 30, 2004 The Fire Services Program does not currently utilize an equipment reserve. 117 $ 2,025,662 $ 15,989,078 This Page Intentional/y Left B/ank 118 � � �� n Statistical Section 119 Fiscal Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 City of Clearwater, Florida General Governmental Expenditures By Function (a) Last Ten Fiscal Years General Public Government Safety $ 7,100,253 $ 32,230,932 8,422,146 32,473,158 9,143,485 35,014,716 10,149,047 36,269,061 10, 457, 801 38,489, 701 9,126,217 41,362,225 9,486,088 42,442,045 10,545,629 45;920,782 10,586,022 48,161,524 11,188,636 50,303,075 Physical Economic Environment Transportation Environment $ 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 2,289,250 6,672,874 4,307,323 2,498,368 9,702,086 3,239,503 (a) Includes operating and capital outlay expenditures of all governmental funds. General Governme 8.5% General Debt 7.9% Ca� General Governmental Expenditures By Function (a) Fiscal Year Ending September 30, 2004 Public Safety Human Services rcecreation 0.4% 18.4% 120 Physical Env. 1.9% Transportation 7.4% Economic Environment 2.4% Human Services $ 760,196 693,940 794,432 893,812 934,791 633,960 699,699 565,668 576,307 561,732 1 1 1 Culture and Recreation $13,172,327 13,582,796 14,459,550 15,059,753 16,300,735 16,932,942 18,301,610 20,740,013 22,251,601 24,228,191 Capital General Outlay Debt $14,059,318 $ 2,169,809 23,283,499 2,496,111 15,703,411 4,327,382 12,700,027 2,401,704 14,783,956 2,230,312 16,885,678 2,141,246 42,676,646 2,257,198 19,594,274 4,571,463 32,271,707 10,067,824 19,858,670 10,404,829 Millions Total General Govemmental Expenditures Laat Ten Fiscal Years (a) TABLEI Reporting Entity Totals $ 77,415,953 89,267,377 88,292,148 87,335,517 92,994,039 96,596,552 125,873,093 116,986,373 137,184,432 131,985,090 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Fiscal Years 121 City of Clearwater, Florida General Revenues By Source (a) Last Ten Fiscal Years Fiscal Other Licenses Fines and Year Property Taxes (b) and Permits ForFeltures 1995 $ 17,265,880 $ 19,012,336 $ 3,620,891 $ 1,756,680 1996 21,060,994 20,434,460 2,937,586 1,736,731 1997 21,652,492 20,706,412 3,403,879 1,592,702 1998 22,242,072 22,081,683 3,406,987 1,598,936 1999 23,293,933 22,736,582 4,241,747 1,989,510 2000 26,087,648 22,985,603 5,432,799 1,921,448 2001 27,712,010 24,187,094 4,408,637 2,015,067 2002 30,322,411 25,359,362 3,987,963 2,264,041 2003 33,927,390 24,521,066 4,838,207 2,077,633 2004 37,156,501 24,531,736 5,084,335 1,741,705 (a) Revenues are those of all governmental funds. (b) Includes franchise, utility, and communication services taxes. General Revenues by Source (a) Fiscal Year Ending September 30, 2004 Intergovemmental Ffnes & Forfeitures Revenue 1.5% 27.1 "/o Other Ta 20.7% Llcenses and Permlts 4.3% Property Taxes 31.3% 122 �r ieous 0 ment ngs yo for :s � Inter- governmental Revenue $ 19,814,366 20,617,058 23,744,019 24,615,308 26,551,416 26,073,855 33,105,406 36,338,154 34,581,884 32,184,383 Miscellaneous $ 3,627,036 3,835,839 4,427,296 4,581,291 5,518,920 3,253,487 7,011,060 8,775,946 5,406,400 5,747,969 Charges for Services $ 5,523,544 5,695,288 6,289,164 7,564,833 7,677,873 8,127,038 9,378,667 10,428,964 10,471,361 12,198,400 Total General Revenues Last Ten Fiscal Years (a) TABLE II Total $ 70,620,733 76,317,956 81,815,964 86,091,110 92,009,981 93,881,878 107,817,941 117,476,841 115,823,941 118,645,029 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Fiscel Years 123 City of Clearwater, Fiorida Property Ta� Levies and Collections Last Ten Fiscal Years Fiscal Total Current Year Tax Levy Collections (a) 1995 $ 21,458,160 $ 21,388,692 1996 21,761,730 21,675,311 1997 22,410,181 22,281,502 1998 23,008,214 22,856,951 1999 23,951,878 23,854,396 2000 26,998,318 26,876,461 2001 28,664,112 28,567,429 2002 31,303,900 31,204,025 2003 35,153,114 35,038,555 2004 38,506,354 38,391,795 PerceM Delinquent of Levy Collections Collected 99.68% $ 159,918 99.60 73,731 99.43 80,253 99.34 129,690 99.59 226,812 99.55 106,800 99.66 77,716 99.68 130,632 99.67 91,548 99.70 94,574 (a) Collections are reported at the gross amount before any discount allowance. 124 � � � � � � � � � � � �' � � � � � � j Percent of Tot�l Total Collections Collections to CurreM Levy $ 21,548,610 100.42% 21,749,042 99.94 22,361,755 99.78 22,986,640 99.91 24,081,208 100.54 26,983,261 99.94 28,645,145 99.93 31,334,657 100.10 35,130,103 99.93 38,486,369 99.95 Outstanding Delinquent Taxes $ 856,443 868,209 914,383 935,957 806,626 821,683 840,651 809,894 824,673 883,128 125 TABLE III Percent of Delinquerrt Taxes to Current Levy 3.99% 3.99 4.08 4.07 3.37 3.04 2.93 2.59 2.35 2.29 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 Properly Property(b) Taxable -_ 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 �99� 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 2002 2003 5,580,157;650 524,125,950 794,789 6,105,078,389 2003 2004 6,184,022,000 507,975,370 1,267,766 6,693,265,136 (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. 126 TABLE IV Percentages Assessed Total Total Values to Yearly Increases Exempt(c) Ail Estimated Market Taxable Total $ 1,455,095,094 $ 5,641,202,905 100.0 % 0.1 °/a 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 2,451,056,137 8,556,134,526 100.0 7.3 8.9 2,768,595,367 9,461,860,503 100.0 9.6 10.6 127 Fiscal Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 City of Clearwater, Florida Property Tax Rates All Direct and Overlapping Governments Last Ten Fiscal Years City 5.1158 5.1158 5.1158 5.1158 5.1158 5.5032 5.5032 5.5032 5.7530 5.7530 Downtown Development (a) 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 School 9.3590 9.3290 9.1760 9.1330 9.1100 8.6660 8.4330 8.4870 8.4490 8.2430 Property Tax Rates: Expressed as mills per $1,000 of taxable value. Source: Pinellas Counry 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 Florida Water Management District 0.4220; Pinellas Anclote River Basin 0.4000. 128 County 5.5850 5.5140 5.5100 5.5380 5.5380 5.8540 6.0040 6.1410 6.1410 6.1410 Transit District 0.6697 0.6697 0.6697 0.6697 0.6501 0.6501 0.6501 0.6501 0.6319 0.6319 Operating Debt Senrice Road Capital Improvements Comm. Redevelopment Agency Total City Tax Emergency Medicc�l Services 0.8720 0.8060 0.7520 0.7410 0.7130 0.6470 0.7470 0.6600 0.6600 0.6600 129 2004 5.2194 0.1232 0.3452 0.0652 5.7530 Other 1.4221 1.6308 1.6561 1.6561 1.6561 1.6572 1.6562 1.6562 1.6562 1.6562 (b) 2003 5.2169 0.1299 0.3452 0.0610 5.7530 TABLE V Total 24.0236 24.0653 23.8796 23.8536 23.7830 23.9775 23.9935 24.0975 24.2911 24.0851 TABLE VI Taxpayer Bellwether Prop. LP Ltd. Taylor, John S. III California State Teachers Grand Venezia Baywatch LP Grand Bellagio Baywatch LTD Clearwater Beach Dev Weingarten Nostat Inc. Sand Key Association Ltd. St. Joe Co Northwood Plaza Sub-Total All Others Total City of Clearwater, Florida Principal Taxpayers Septernber 30, 2004 Type of Business Shopping Center Landowner Apartment Complex Apartment Complex Condominium Complex Condominium Complex Shopping Center Hotel Office Building Shopping Center Percentage Assessed to Total Value * Assessed Value $ 96,895,400 1.57% 31,042,000 9.19% 29,300,000 0.47% 28,400,000 0.46% 27,840,900 0.45% 26,000,000 0.42% 25,875,000 0.42% 25,500,000 0.41 % 24,300,000 0.39% 22,500,000 0.36% 337,653,300 5.46% 5,846,368,700 94.54% $ 6,184,022,000 100.00% * Based on non-exempt real property assessed taxable values. Source: Pinellas County Property Appraiser, 2003 tax rolls for 2004 collections. 130 City of Clearwater, Florida Ratio of Net General Bor�ded Debt to Texable Assessed Value And Net Bonded Debt Per Capita Last Ten Fiscal Years Taxable Gross Fiscal Assessed General Year Population Value (a) Bonded (000) Debt 1994 100,604 $4,181,314 $ 545,000 1995 101,162 4,186,108 450,000 1996 101,867 4,252,433 355,000 1997 102,472 4,376,559 255,000 1998 102,874 4,494,262 135,000 1999 104,281 4,692,398 - (b) 2000 104,454 4,903,478 - 2001 108,787 5,208,787 - 2002 109,231 5,688,426 - 2003 109,719 6,105,078 - 2004 109,719 6,693,265 - TABLE VII Ratio of Net Net Net General General Less General Bonded Debt Bonded Sinking Bonded To Assessed Debt Fund Debt Value Per Capita $ 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 - - Na 0.00 - - Na 0.00 - - n/a 0.00 - - n/a 0.00 - - n/a 0.00 - - n/a 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. 131 TABLE VIII City of Clearwater, Florida Ratio of Annual'DeSt Service Expenditures For General Obligation Bonded Debt To Total General Governmental Expenditures (a) Last Ten Fiscal Years Total Flscal Debt Year Principal Interest (b) Service 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 2003 0 0 0 2004 0 0 0 Ratio of Total Debt Service General to General Governmental Governmental Expendltures (a) Expenditures $ 77,415,953 02% 89,267,377 0.1 % 88,292,148 0.1 % 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% 137,184,432 0.0% 131,985,090 0.0% (a) Includes operating and capital outlay expenditures of all governmental funds. (b) Excludes bond issuance and other costs. 132 � �� City of Cleanroater, Florida Computation of Legal Debt Margin September 30, 2004 Assessed Valuation of Non-Exempt Real Estate (a) Times: Twenty Percent Limitation Per City Charter Equals Legal Indebtedness Limitation Debt Su 'ect to Indebtedness Limitation: Gross Less Sinking Debt Fund Assets Revenue Bonds: 1997 Gas System Revenue Bonds 1998 Gas System Revenue Bonds 2004 Gas System Revenue Refunding Bonds 1998 Water and Sewer Revenue Bonds 2002 Water and Sewer Revenue Bonds 2003 Water and Sewer Revenue Refunding Bonds 1999 Stormwater System Revenue Bonds 2002 Stormwater System Revenue Bonds 2004 Stormwater System Revenue Bonds 2001 Infrastracture Sales Tax Revenue Bonds 2001 Improvement Revenue Refunding Bonds 2002 Spring Training Revenue Bonds Notes, Mortgages and Contracts Totals Legal Indebtedness Margin $ 11,345,000 46,250 7,825,000 2,917 8,870,000 13,333 57,459,580 1,637,712 57,820,000 4,409,802 8,410,000 9,411,912 7,020,000 123,750 24,245,000 407,917 14,430,000 - 36,075,000 4,550,000 10,645,000 1,115,310 14,185,000 271,250 13,030,449 - 271,360,029 21,990,153 (a) Valuation listed is from 2003 tax year for 2004 collections. City of Clearwater, Florida Computatlon of Direct and Overlapping Debt September 30, 2004 TABLE IX $ 6,184,022,000 x 20% 1,236,804,400 Net Debt Subject to Limitation 11,298,750 7,822,083 8,856,667 55,821,868 53,410,198 (1,001,912) 6,896,250 23,837,083 14,430,000 31,525,000 9,529,690 13,913,750 13,030,449 249,369,876 $ 987,434,524 TABLE X Net General Obligation Debt Governmental Unit Outstanding Percent Amount City of Clearwater Pinellas County School Board $ - 100.0% $ - $ 41,041,174 13.62% (a) $ 5,589,808 (a) Applicable Net Debt Percentage is based on ratio of City to County Taxable values for 2004 collections ($6,184,022,000 / $45,407,288,131=13.62%). 133 TABLE XI Fiscal Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Fiscai Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 City of Clearwater, Florida Water and Sewer Revenue Bonds Coverage Last Ten Fiscal Years Net Revenues Gross Available for Revenues (a) Expenses (b) Debt Service $ 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 40,243,263 29,610,534 10,632,729 44,192,759 31,205,881 12,986,878 Debt Service Requirements PrincipaUSinking Fund Interest Total $ 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 5,430,000 3,334,202 8,764,202 6,575,000 2,963,513 9,538,513 Debt Service Coverage 2.04 1.74 1.73 1.63 1.68 1.83 1.94 1.73 121 1.36 (a) Includes interest earnings and gross revenues of Water and Sewer Divisions of Utiliry 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 19886 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 Ciry's water, wastewater collection, water pollution control and reclaimed water systems. In October, 2003, the City issued $8,410,000 Refunding Revenue Bonds to finance the cost of refunding entirely the 1993 bonds maturing after December 1, 2003. 134 �i �I � � � I� I� I � � � I � � � � � � � � � � � I I � Fiscal Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Fiscal Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 City of Cleannrater, Florida Gas Revenue Bonds Coverage Last Ten Fiscal Years Net Revenues Gross Available for Revenues (a) Expenses (b) Debt Service $ 13,672,905 $ 10,555,346 $ 3,117,559 16,423,147 13,199,962 3,223,185 17,779,715 14,124,064 3,655,651 19,438,030 14,975,445 4,462,585 18,772,104 14,701,728 4,070,376 21,533,228 16,462,986 5,070,242 31,211,839 24,575,414 6,636,425 27,218,076 20,664,704 6,553,372 30,372,858 23,729,436 6,643,422 33,228,829 26,315,802 6,913,027 Debt Service Requirements Principal Interest Total $ 150,000 $ 978,195 $ 1,128,195 240,000 1,052,923 1,292,923 320,000 1,454,765 1,774,765 455,000 1,379,358 1,834,358 540,000 1,564,891 2,104,891 560,000 1,543,494 2,103,494 580,000 1,518,713 2,098,713 610,000 1,494,887 2,104,887 630,000 1,469,679 2,099,679 675,000 1,370,491 2,045,491 TABLE XI Maximum Debt Service Coverage Coverage(c) 2.76 1.75 2.49 1.81 2.06 2.06 2.43 2.05 1.93 1.87 2.41 2.33 3.16 3.05 3.11 3.01 3.16 3.05 3.38 3.18 (a) Indudes interest earnings and gross revenues from the Gas System. (b) Excludes depreciation (and similar noncash expenses), amortization of bond discount and issue costs, bond interest, and reserve adjustments. (c) Maximum debt service coverage is presented for continuing disclosure on the Gas System Revenue Bonds, and is based upon the maximum debt senrice for the outstanding bonds and parity bonds. For flscal 2004 the ma�dmum debt servioe totals $ 2,174,445. Note: In July, 1996, the Clty issued $8,815,000 Gas System Revenue Bonds, Series 1996A, for additions and extensions to the gas system in Pinellas Counry and Pasco County, Florida, as well as supplements and replacements of the e�asting 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 Refunding Bonds, Series 1998, to advance refund the Gas System Revenue Bonds, Series 1994A. During January 2004 the City issued $ 8,890,000 Gas System Revenue Refunding Bonds, Series 2004, to advance refund the Gas System Revenue Bonds, Series 1996A. 135 TABLE XI City of Clearwater, Florida Stormwater Revenue Bonds Coverage Five Fiscal-Years Since Issuance Net Revenues Fiscal Gross Available for Year Revenues (a) Expenses (b) Debt Service 2000 $ 4,938,338 $ 3,183,260 $ 1,755,078 2001 5,323,293 3,608,281 1,715,012 2002 6,846,086 3,957,577 2,888,509 2003 8,660,373 4,727,187 3,933,186 2004 9,679,809 5,922,765 3,757,044 Debt Service Requirements Fiscal PrincipaUSinking Year Fund Interest Total 2000 $ - $ 185,225 $ 185,225 2001 105,000 399,593 504,593 2002 120,000 395,093 515,093 2003 125,000 1,104,070 1,229,070 2004 570,000 1,444,699 2,014,699 Debt Service Coverage 9.48 3.40 5.61 3.20 1.86 (a) Includes interest earnings and gross revenues of the Stormwater Utility System Fund. 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 November 1999 the City issued $7,500,000 Stormwater System Revenue Bonds for the purpose of paying the costs of capital improvements to the Ciry's stormwater management system. In September 2002 the City issued $24,685,000 Stormwater Revenue Bonds for the purpose of paying the costs of capital improvements to the City's stormwater management system. In August 2004 the City issued $14,430,000 Stormwater Revenue Bonds for capital improvements to the Ciry's stormwater management system. Only five years of data are available as of September 30, 2004. TABLE XI Fiscal Ye�r 2001 2002 2003 2004 City of Clearwater, Florida Infrastructure Sales Tax Revenue Bonds Coverage Four Fiscal Years Since Issuance Debt Service Requirements Sales Tax PrincipaUSinking Debt Service Revenues (a) Fund Interest Total Coverage $ 8,339,694 $ - $ - $ - n/a 8,457,553 - 1,983,688 1,983,688 4.26 8,661,615 5,100,000 1,881,688 6,981,688 1.24 7,688,868 5,270,000 1,674,288 6,944,288 1.11 (a) 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. Note: During June 2001 the City issued $46,445,000 Infrastructure Sales Tax 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 four years of data are available as of September 30, 2004. iKZ� II � � � � � � � � � � � � � � � � � � � � City of Clearwater, Flortda Spring Training F�cility Revenue Bonds Coverage Four Fiscal Years (a) Debt Service Requirements Fiscal Pledged PrincipaUSinking Debt Service Year Revenues (b) Fund (a) Interest Total Coverage 2001 $ 647,912 $ - $ - $ - n/a 2002 2003 2004 (a) (b) 1,147,925 1,114,681 1,086,179 - Na 165,000 629,080 794,080 1.40 460,000 622,830 1,082,830 1.00 TABLE XI Though fiscal 2002 was the year of issuance, fiscal year 2001 is disclosed as the �rst year that pledged revenues were received for debt service coverage. Includes interest earnings and payments received by the City from the State of Florida pursuant to Section 212.20, Florida Statutes: and from Pinellas County, Florida, pursuant to an inter-local agreement dated December 1, 2000. Note: In September 2002 the City issued $14,810,000 Spring Training Facility Revenue Bonds for the purpose of building a spring training faciliry for the Philadelphia Phillies. The City started receiving the money from both the State of Florida and Pinellas County commencing March 2000; consequently only four years of data are available as of September 30, 2004. City of Clearwater, Florida Improvement Revenue Refunding Bonds Coverage Three Fiscal Years Since Issuance Debt Service Requirements Fiscal Pledged PrincipaUSinking Year Revenues (a) Fund Interest Total 2002 $ 18,272,521 $ 110,000 $ 407,537 $ 517,537 2003 17,381,418 2004 17,026,827 � �� 360,000 506,435 495,710 856,435 855,710 Debt Service Coverage 35.31 20.30 19.90 �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. Effecctive 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 senrices pursuant to Chapter 2000-260, Laws of Florida. To the extent that the Public Service Tax receipts derived by the Ciiy 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. Only three years of data are available since issuance. 137 ��_1-1�� {il City of Clearwater, Florida Property Value and Construction Last Ten Fiscal Years Commercial Construction Residential Construction Fiscal Number of . Number of Total Assessed Year Permits Value Permits Value Property Value (a) 1995 1,391 $ 120,116,220 5,832 $ 27,199,318 $ 5,641,202,905 1996 1,860 43,299,453 6,527 32,039,292 5,733,193,387 1997 1998 1999 2000 2001 2002 2003 2004 1,762 1,392 1,821 2,667 2,312 2,196 1,834 1,880 94,445,784 52,983,592 90,770,055 177,569,812 164,701,145 108,939,096 193,901,304 203,842,491 6,605 36,259,408 5,884,592,007 7,253 50,906,470 6,049,571,226 5,624 37,677,855 6,349,561,534 5,485 5,512 5,448 6,084 6,376 30,376,636 34,182,620 37,498,719 54,304,855 60,925,479 (a) Source: Pinellas County Property Appraiser, values listed are for year of collections. 138 6,555,350,175 7,108,110,272 7,858,986,677 8,556,134,526 9,461,860,503 City of Clearwater, Florida Demogrephic Statistics Last Ten Fiscal Years Per Capita Year Population (a) Income b 1995 101,162 $ 23,412 1996 101,867 23,768 1997 102,472 25,111 1998 102,874 26,287 1999 104,281 27,704 2000 104,454 29,041 2001 108,787 29,818 2002 109,231 31,406 2003 109,719 32,408 2004 Not available Not available TABLE XIII Median School Unemployment Age (c) Enrollment (d) Rate e 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 3.0 442 15,978 2.7 43.0 16,293 2.7 43.0 17,047 3.9 43.9 16,295 4.9 Not available 16,323 3.8 (a) Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (b) Data is for Pinellas County. Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (c) Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (d) Source of data is the Pinellas County School District. (e) Source for fiscal years 1995 thru 2003 is the Universiry of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract, as of December 31 �` of the indicated fiscal year. Source for fiscal 2004 is the US Dept of Labor, Bureau of Labor Statistics, Tampa Metro Area as of September 2004. Note: Data is the latest published annual data available for an unspecified point in each year, not specifically September 30. 139 TABLE XIV Date of Incorporation: Town of Clearwater June 2, 1897 Municipal Corporation May 27, 1915 Form of Government: Commission - Mayor Fiscal Year: October 1- September 30 Population: U.S. Bureau of the Census Clearwater 1930 7,607 1940 10,136 1950 15,581 1960 34,653 1970 52,074 1980 85,170 1990 98,784 2000 108,787 Area: Land 25.45 Square Miles Water 8.6 Square Miles Public Safety: Police Protection: Stations 9 Employees 407 City of Clearw� Miscellanec September Tampa Bay Metro Area 231,190 291,622 436,365 820,443 1,105,553 1,613,603 2,067,959 2,395,997 Fire Protection: Stations 8 Employees 202 Total Municipal Employees 1,901 Libraries: Branches (including main library) 5 Collection 557,060 Marina 209 Boat Slips Airpark 177 Spaces �ter, Florida �us Facts 30, 2004 Public Works: Streets: Paved Unimproved Sanitary Sewers: Sanitary Sewer Mains Treatment Plants Daily Capacity Water: Mains Accounts Fire Hydrants Stormwater: Equivalent Residential Units Stormwater Mains Gas: Mains Accounts 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 Lawn Bowling Shuffleboard Fitness Courses Disc Golf Courses 140 304.5 Miles 10.4 Miles 363 Miles 3 29 Million Gallons 567 Miles 40,235 4,037 98,621 147 Miles 729 Miles 18,454 1,130 Acres 31 3 Courses 42 Acres 35 Diamonds 58 Courts 22 Courts 24 Courts 17 Fields 10 Courts 5 Pools 6,897 Seats 12 32 7.4 Miles 24 Rinks 62 Courts 8 2 � � � �� LJ � � � � � � � � � � � � � Single Audit / Grants Compliance 141 This Page Intentionally Left B/ank � � � � � � i � � � � � L �� u 142 � ' Grant Thornton T ' AccountarHS and Business Advisors i REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS � ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVEB;IJMENTAUDITING ST�IND�IiDS � Honorable Mayor-Councilmember, � City Councilmembers and City Manager City of Clearwater, Florida � We have audited the financial statements of the Ciry of Clearwater, Florida (the "City'� as of and for the year ended September 30, 2004, and have issued our report thereon dated March 12, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States of America as established � by the Auditing Standards Board of the American Institute of Certified Public Accountants and the standards applicable to financial audits contained in GovernmentAudititrg Standardr, issued by the Comptroller Ceneral of the United States. � Internal Control Over Financial Re�ortin� In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of ezpressing our opinion on the financial � statements and not to provide an opinion on the internal control over financial reporting. Accordingly, we express no such opinion. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material � weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected withixi 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. � Comgliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, ' and grant agreements, noncompliance with which could have a direct and material effect on the determiiiation of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not espress such an opinion. The results � of our tests disclosed no instances of noncompliance or other matters that are required to be reported under GovernmentAuditing StandarcLr. We noted certain matters that we have reported to management of the Ciry in a sepazate letter dated March � 12, 2005. � Suite 3850 101 E. Kennedy Blvd �Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com GreM Thomton LLP US Member of Grant Thomton IMernadonal 143 �i This report is intended solely for the information and use of the Mayor-Councilmember, City i Councilmembers, City Manager, management, federal awarding agencies and 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. i GR.ANT THORNTON LLP i�rc..,�4 7��, L U� Tampa, Florida March 12, 2005 144 � Grant Thornton T � Accountan� and Business Advisors � REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON CONIPLIANCE WITH � REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND CHAPTER 10.55Q RULES OF THE AUDITOR GENFRAT" r � ' � LJ � � r � r C � Honorable Mayor-Counalmember, City Councilmembers and City Manager City of Clearwater, Florida. Com�liance We have audited the compliance of the City of Clearwater, Florida (the "Cit�� 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 Eaecutive Office of the Governor's State Project Compliance Supplement that are applicable to each of its major federal programs and major sta,te projects for the year ended September 30, 2004. The city's major federal programs and major state projects axe identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of la.ws, regulations, contracts, and grants applicable to each of its major federal programs and major state projects is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America as established by the Auditing Standards Board of the American Institute of Certified Public Accountants; the standards applicable to financial audits contained in Government Auditing Standarcdr, issued by the Comptrollex General of the United States; OMB Circular A-133, Audit,r of State.r, Loca! Government�, and Non-Profrt Organi�ation., 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 ox major state project occutred. An audit includes eg�mining, 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 Ciry 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, 2004. However, the results of oux auditing procedures disclosed instances of noncompliance with those xequirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items 20041 and 20042. Internal Control Over Com�liance The management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs and state projects. � Suite 3850 101 E. Kennedy Blvd �Tampa, FL 33602-5152 T 813.229.7201 F 813.223.3015 W www.grantthornton.com Gra�rt Thomton LLP US Member of GraM Thomton Irrtematlonal � 4�J In planning and perfortning 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 deternune our auditing procedures for thE purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General, and not to provide an opinion on the internal control over compliance. Accordingly, we express no such opinion. We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiendes in the design or operation of the internal control over compliance that, in our judgment, could adversely affect the Ciry's ability to administer a major federal program or major state project in accordance with the applicable requirements of laws, regulations, contracts, and grants. Reportable conditions are described in the accompanying schedule of findings and questioned costs as items 20041 and 20042. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with the applicable requirements of laws, regulations, contracts, and grants caused by error or fraud that would be material in relation to a major federal program or 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 fiinctions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe that none of the reportable conditions described above is a material weakness. T"his report is intended solely for the information and use of the Honorable Mayor-Councilmember, Ciry Councilmembers, City Manager, management, federal awarding agencies and 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. GRANT THORNTON LLP �� Tampa, Florida March 12, 2005 � � � � � � � � � � � � � � � �� i 146 � � �� City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the year ended September 30, 2004 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 'J � I � � U.S. Department of Commerce: National Oceanic and Atmospheric Administration Passed through FI, Departrnent of Environmental Protection: Clearwater Community Sailing Center pocks National Oceanic and Atmospheric Administration City of Clearwater Invasive Species Control Project Total U.S. Department of Commerce U.S. Department of Housing and Urban Development: Communiry Development Block Grant - EnUtlement Home Investment Partnerships Program Beach by Design Initiative Total U.S. Department of Housing and Urban Development U.S. Department of the Interior: U.S. Geological Survey, Department of the Interior Metadata Creation 8nd Implementation National Park Service, Department of the Interior Passed through Florida Division of Historical Resources: Downtown Clearwater Design Guidelines Total U.S. Department of the Interior 11.419 DEP CZ417 11.463 2003-0092-006 14218 B-01-MG12-0002 14239 M-01-MG12-0230 14.246 B-02-SP-FL-0129 15.809 03HQAG0168 15.904 FEID ii59-60001874 F0216 U.S. Department of Environmental Protection: Passed through Florida Department of Environmental Protection: Crest Lake Park Improvements 15.916 DEP Agreement LWa73 Total U.S. Department of Environmental Protection U.S. Department of Justice: Neighborhood Policing Initiative for the Homeless Local Law Enforcement Block Grant'03 Local Law Enforcement Blodc Grant'04 COPS Homeland Security Overtime Program Dept of Justice passed through State of Florida, Attorney General's Office: VOCA Grant VOCA Grant 16.580 2001-D0.6X-0056 16.592 2002-LB-BX-0113 16.592 2003-LB-BX-0695 16.710 20030MWX0250 16.575 V2092 16.575 V3093 Dept of Justice Passed through Florida Office of Criminal Justice, Law Enforcement Division: Operacion Apoyo Hispano - 2003 16.579 o3-C,1-5A-08-62-02-022 Operacion Apoyo Hispano - 2004 16.579 04-C,1,13-08-62-02-t0.5 Operacion Apoyo Hispano - 2005 16.579 05-C,1-K3-O8-s2-o2-100 Total U.S. Department of Justice 147 $ 50,000 $ 49,934 106,000 - 156,000 49,934 16,680,000 498,152 4,825,593 309,285 490,000 369,804 21,995,593 1,177,241 9,000 9,000 10,000 5,000 19,000 14,000 200,000 200,000 200,000 200,000 997,800 120,644 203,782 180,544 154,707 15,805 358,489 196,349 249,935 141,899 34,510 - 30,822 20,105 65,332 20,105 68,794 21,478 73,474 70,757 73,500 - 215,768 92,235 1,887,324 571,232 City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance - Continued For the year ended September 30, 2004 Federal Grantor/ Pass-through Grantor / CFDA/CSFA Program Title Number Grant I.D. Number U.S. Department of Transportation: Passed thru Florida Department of Transportation: Clearwater Beach West Bridge Connector McMullen Booth Road Overpass - Design McMullen Booth Road Overpass - Construction Ciearwater Bridge Construction Clearwater Pedestrian / Bicycle Coordinator - 2003 Clearwater Pedestrian / Bicycle Coordinator - 2004 Clearwater You� Alcohol Initiative Total U.S. Department of Transportation 20205 Fed No. 9045-019C,Contract #AI 915 20205 Fed No. 9045-01 SC,Contract #A916 20205 FPN 40625915801, Contract #ANJ75 20.205 FPN 257093-1 20.600 Contract AN210 20.600 Contract AND44 20.600 Project #AL-04-05-15/DOT #ANJ43 U.S. Environmental Protection Agency: Passed through FL Department of Environmental Protection: Brownfield - Federal 66.811 V-98405396-0 Brownfield - Federal . 66.811 BL984872-99-0 Brownfields Assessment and Cleanup Cooperative Agreements 66.476 HS-82988401 Total U.S. Environmental Protection Agency U.S. Department of Homeland Security: Federal Emergency Management Agency Passed through Florida Department of Community Affairs Ce�t Grant 2004 Federal Emergency Management Agency Passed through Florida Department of Community Affairs Disaster Relief Hurricane Charley Disaster Relief Hurricane Frances Disaster Relief Hurricane Jeanne Total U.S. Department of Homeland Security Total Federal Financial Assistance 83.565 04-CT-1 L-08-62-02-214 97.036 05-PA-C%-08-62-02-774 97.036 05-PA-G%-OS-62-02-639 97.036 05-PA-E=-OS-62-02-853 148 il � I Program Federal or Award Share of , Amount (a) E�enditures 4,153,762 185,361 400,000 5,331 2,480,471 413,857 10,000,000 10,000,000 17,034,233 10,604,549 39240 - 46,201 37,470 6,350 6,144 91,791 43,614 17,126, 024 10, 648,163 500,000 115,568 500,000 - 1,000,000 115,568 400,000 56,913 1,400,000 172,481 10,000 8,682 - 155,300 - 697,800 - 286,000 - 1,139,100 10,000 1,147,782 $42,793,941 $ 13,980,833 � City of Clearwater, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance - Continued For the year ended September 30, 2004 State Grantor / • Program State Pass-through Grantor / CFDA/CSFA or Award Share of Transfers to Program Title Number Grant I.D. Number Amount (a) Expenditures (b$ubrecipients (c) STATE FINANCIAL ASSISTANCE Florida Executive Office of the Governor, Office of Tourism, Trade, and Economic Development: Brownfield Grant Total Florida Executive Office of the Governor Florida Department of Environmental Protection: Waste Tire Grant Florida Recreation Development Assistance Program Eddie C. Moore Softball Ross Norton Complex Ross Norton Complex Total Florida Department of Environmental Protection Florida Department of Communiry Affairs: Florida Housing Finance Corporation State Housing Initiative Partnership Program (SHIP) Total Florida Department of Communi Affairs 31.011 V 984053-96-0 37.015 WT97-52 37.017 37.017 37.017 $ 500,000 $ 18,459 $ 500,000 18,459 - 12,273 12,270 OEP 0334 200,000 131,830 DEP 5045 200,000 - DEP b046 200,000 - 600,000 131,830 - 612,273 144,100 - 52.901 n/a Florida Department of Transportation (FDO�: T-Hangars 55.004 wPaao3ooe�sao�, nao�s State Road 60 - Osceola Ave to Ft Harrison Ave Resurtacing 55.008 #ANO62 Total Department of Transportation Florida Department of Law Enforcement: Violent Crime Investigative Emergencies Total Florida Department of Law Enforcement Florida Department of Revenue: Phillies Stadium Total Florida Department of Revenue Total State Financial Assistance Total Expenditures of Federal Awards and State Financial Assistance 71.005 109701 73.016 (a) Includes awards under prior year grants, which remain active. � (b) Funded with State grants and aids appropriations. (c) State projects only. I � � 149 6,578,591 943,194 68,7p4 6,578,591 943,194 68,704 1,362,800 713,151 280,000 223,069 1,642,800 936,220 - 45,000 16,980 45,000 16,980 - 15,000,000 1,082,830 15,000,000 1,082,830 - $ 24,� 37� $ 3' 1�41,783 $ 6�8,704 $ 17.122.616 � City of Clearwater, Florida NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE Year ended September 30, 2004 NOTE 1— BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards and state financial assistance includes the federal and state grant activity for the 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 States, Local Governments 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 � �J � � I � r CFDA numbers represent Catalog of Federal Domestic Assistance and apply only to federal awards. , CSFA numbers represent Catalog of State Financial Assistance and apply only to state financial assistance. � NOTE 3 — OTHER MATTERS The City of Clearwater received reimbursement during fiscal 2003 from the U.S. Department of Transportation, passed through the Florida Department of Transportation, for $3,000,000 of design costs on the Clearwater Memorial Bridge project, FPN 257093 1, CFDA 20.205. These design expenditures were incurred during fiscal years 1998 through 2000 and were not reported on the Schedule of Expenditures of Federal Awards and State Financial Assistance for those years. 150 IIL 1 LJ , City of Clearwater, Florida SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended September 30, 2004 Financial Statements SECTION I— SUMMARY OF AUDITOR'S RESULTS � Type of auditor's report issued (unaualified, qualified, adverse, disclaimer). Internal Control Over Financial Reportina: � Material weakness(es) identified? yes Reportable condition(s) identified that are not considered to be a material weakness? _ yes � ' �'I u � , � Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: Material weakness(es) identified? Reportable condition(s) identified that are not considered to be material weakness(es)? State Projects Internal control over major programs: Material weakness(es) identified? Reportable condition(s) identified that are not yes yes X yes _ yes X no X none reported X no X no none reported X no considered to be material weakness(es)? _ yes X none reported Type of auditor's report issued on compliance for major federal programs and state projects (unaualified, qualified, adverse, or disclaimer) Any findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? X yes no � Any findings disclosed that are required to be reported in accordance with 10.550, Rules of the Auditor General? _ yes ' Identi�cation of major programs: Federal Programs CFDA Number(s) Name of Federal Proqram or Cluster , 20.205 Highway Planning and Construction 97.036 Public Assistance Grants I ' I � I � I � State Programs CSFA Number(sl Name of State Proiect 52.901 State Housing Initiatives Partnership Program 55.004 Aviation Development Grants 55.008 County Incentive Grant Program Dollar threshold used to distinguish between type A and type B federal programs. Dollar threshold used to distinguish between type A and type B state projects. I � 151 X no 419 425 300 000 Auditee qualified as low risk auditee? X yes no SECTION II — FINANCIAL STATEMENT FINDINGS No matters were reported. SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2400-1 Information on the federal program: CFDA #20.205, Highway Planning and Construction, U.S. Department of Transportation, Contract numbers AI916 and ANJ75, Passed through the Florida Department of Transportation Criteria: The OMB compliance supplement requires recipients of federal awards (prior to November 2003) to obtain certifications from contractors that the contractor is not suspended or debarred. Condition: The public works department did not have procedures in place to ensure that contractors for this program were not suspended or debarred. Additionally, the public works department did not obtain the required certification from the contractor that they were not suspended or debarred. Questioned costs: We reviewed the EPLS web site noting that the contractors utilized by the City were not listed as suspended or debarred from performing under federal grants; accordingly there are no questioned costs. Context: There was one vendor for which the City was required to test for suspension and debarment. Effect: The public works department did not obtain the required certifications from their contractor. Cause: The City did not have the requisite controls in place in this department to comply with this compliance requirement. Additionally, the department did not perForm the required procedures to adhere with this compliance requirement. Recommendation: The City should implement procedures to ensure that the suspended and debarred list is checked for all applicable vendors. Views of responsible officials and planned corrective actions: The following steps will be taken by the City: o The City will insure that the specification package includes a notice that contracts will not be awarded to suspended or debarred contractors. o The individual responsible for managing the project bid process will be educated as to the requirements of federally funded projects, including the procedures to use to verify status through the federal web site. 152 o Immediately following the bid opening on applicable projects staff will verify the contractor status and document this verification in a form that will be maintained in the project file. o The above processes will be added, to the Public Works Project Manager Handbook. The handbook will also alert project managers of their responsibility to verify the funding sources for all projects in order to determine if the suspension and debarment requirements apply. This handbook is used by all project managers and outlines the processes to be followed on all projects. Finding 2400-2 Information on the federal program: CFDA #20.205, Highway Planning and Construction, U.S. Department of Transportation, Contract numbers AI916 and ANJ75, Passed through the Florida Department of Transportation Criferia: The OMB compliance supplement requires recipients of federal awards to obtain certifications from contractors that the contractor is in compliance with the Davis Bacon Act and requires recipients to obtain certified payroll registers from contractors that indicate compliance with the Act. Condition: The public works department did not have controls in place to ensure that they obtain the required certifications and certified payroll registers from their contractors. Additionally, the public works department did not obtain the required certifications from the contractor utilized during the construction project. Questioned costs: The total of questioned costs, if any, has not been determined. Context: There was one contractor from which certifications and certified payroll registers were required. Payments to this contractor approximated $350,000 during the fiscal year ended 2004. Effect: The public works department did not obtain the required Davis Bacon Act certifications or the required certified payroll registers from their contractor. The amount, if any by which laborers may have been underpaid has not been determined. Cause: The City did not have the requisite controls in place in this department to comply with this compliance requirement. Additionally, the department did not perForm the required procedures to comply with this compliance requirement. Recommendation: We recommend that the City obtain the required certification and certified payroll registers from the contractor to determine compliance with the Davis Bacon Act. Additionally, we recommend that the City implement procedures to ensure that the Davis Bacon Act is complied with for all applicable contractors. Views of responsible officials and planned corrective actions: The following steps will be taken by the City: 153 o The City will insure that the specification package includes a notice to contractors regarding Davis Bacon compliance and reporting requirements. o The Davis Bacon requirements will be added to the Public Works Project Manager Handbook. The handbook will also alert project managers of their responsibility to verify the funding sources for all projects in order to determine if Davis Bacon requirements apply. This handbook is used by all project managers and outlines the processes to be followed on all projects. SECTION IV — STATE ASSISTANCE FINDINGS AND QUESTIONED COSTS No matters were reported. 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 state single audit act. There were no items related to state financial assistance that were required to be reported in the management letter as mandated by the Auditor General of the State of Florida. 154 � � Accournants and Business Advisors � ' � LJ ' , � � ' ' ' ' ' � � MANAGEMENT LETTER REQUIRED BY SECTION 10.554 (1)(g) OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA Honorable Mayor-Councilmember, Councilmembers and City Manager City of Clearwater , Florida Grant Thornton � We have audited the financial statements of the City of Clearwater, Florida (the "Cit�'), as of and for the fiscal year ended September 30, 2004, and have issued our report thereon dated March 12, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. We have issued our Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial statements Performed in Accordance with Govemment Auditing Standards, 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, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 12, 2005, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General. Those rules (Section 10.554(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 report have been corrected. There were no inaccuracies, shortages, defalcations, fraud, and/or violations of laws, rules, regulations, and contractual provisions disclosed in the preceding audit 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 year status of the recommendations made in the preceding annual financial audit report is inGuded under the heading °Cur�ent Year Status of Prior 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 Auditor General (Section 10.554(1)(g�.) require disclosure in the management letter of the following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs: there were no violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred which may or may not materially affect the financial statements that were discovered during the audit; there were no improper or illegal 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 material inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, 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 Thomton LLP 155 US Member of GraM Thomton IMemadonal The Rules of the Auditor General (Section 10.554(1)(g)5.) also require that the name or official title and legai 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 Clearwater, Florida, was created by authority of Florida Statute Chapter 163, Part III, and the City of Clearwater Resolution 81.68. The Clearwater powntown Development Board, a discretely presented component unit of the City of Cleannrater, 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)6.a.), the scope of our audit included a review of the provisions of Section 218.503(1), Florida Statutes, regarding financial emergencies. In connection with our audit, we determined that the City is not in a state of financial emergency as a consequence of the conditions described in Section 218.503(1), Florida Statutes. As required by the Rules of the Auditor General (Section 10.554(1)(g�.b.), we determined that the annual financial report for the City for the fiscal year ended September 30, 2004, filed with the Department of Banking Finance pursuant to Section 218.32, Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2004. As required by the Rules of the Auditor General (Sections 10.554(g)(6)c. and 10.556), we applied financial condition assessment procedures. It is management's responsibility to monitor the entity's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. This management letter is intended solely for the information of the City 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. / � ��p Tampa, Florida March 12, 2005 156 � � � r ' ' CURRENT YEAR COMMENTS GRANT REPORTING Observation: During the testing of expenditures related to the McMullen Booth overpass project, certain expenditures were originally included in the schedule of federal expenditures that were not actually reimbursable expenditures under the program. The public works department reported to the finance department federal expenditure totals that included non-reimbursable project expenditures in addition to the reimbursable federal expenditures. This misstatement resulted in additional work for the finance department, especially as related to the audit of federal expenditures. Recommendation: We recommend that the City implement procedures to ensure that only reimbursable expenditures are � reported for the purpose of federal program audits and reporting purposes. Furthermore we recommend that the department-reported expenditures are verified by someone outside of the department to ensure the highest level of accuracy in reporting. � Management Response: Management concurs and will implement additional procedure in the current fiscal year to verify that all � expenditures reported in the Schedule of Federal Awards and State Financial Assistance are reconciled to grant reimbursement requests by the reporting department, and are further verified by the Finance Grants Accountant. � INFORMATION SECURITY ' Observation: During the review of the Domain Controlier's password policy, we noted that the settings "password must � meet complexity requirements" and "store password using reversible encryption" are disabled. The password controls for key financial applications — ROSS and iRenaissance — rely on the network login settings. Recommendation: Management should consider enabling these settings to ensure that strong password controls are implemented. 157 Management Response: Nearly all users of this system are located within the City's network environment. The encryption setting is most often used for users gaining direct access from remote locations. The few City employees that do access the network remotely do so over a se�ure VPN connection with triple-DES (192-bit) encryption. As to the use of network log-in credentials for access to ROSS/iRenaissance, it is our position that this is not a significant risk since all work processes require the involvement of multiple sequential steps that are distributed among different users within the Finance operation. Hence, to cause any significant disruption to the system or the integrity of its data would require access to multiple user accounts (i.e. hack multiple passwords). Currently, all network and system users are forced to change passwords every 90 days, and the ROSS/iRenaissance system locks accounts after 3 inconect logon attempts. If the Network settings were not used, there would still be no way of ensuring that users were not using the same passwords for their network and system accounts. Management feels that current controls are adequate given the operating environment. PROGRAM CHANGES Observation: The City has established and documented a process for the request of programming services. However, the City has not developed an overall Appiication Change Management Methodology that dictates the process to categorize the type of change management activities the City pertorms (customized vs. purchased applications), the process to handle and categorize changes and the type of planning, testing and migration activities for the type different type of changes. Without clear directives on the procedures and standards to be held during the different phases of the change management process, there is risk that procedures are not appropriately conducted. Recommendation: IT Management should develop and formally document the application change management process for the different applications it currently supports. Formal policies and procedures enable the communication of clear directives and standards on change management procedures. Staff should be held accountable against established standards. Additionally, formal documentation on policies and procedures are part of succession planning in the event of key staff turnover in charge of the change management process. Management Response: All major systems within the City's network environment are vendor developed and supported. Therefore, the City is not directly involved in the modification of code in these systems, and custom configurations are discouraged during all implementations. Procedures for the testing of updated software from vendors are developed in cooperation with the owning departmenYs system administrator and conducted within the respective systems test environment. All major systems within the City have parallel test environments on separate servers. All upgrades are planned and changes are documented and logged. No configuration changes are made outside of the owning department and are coordinated tested prior to implementation. Small applications that are developed "in-house" by programming staff employ an iterative development process in cooperation with the using department. None of the internally developed applications are used for enterprise processes, and therefore have limited potential to disrupt operations. Management does not feel that significant changes are required. 158 � � , 1 , � � � � ,�J LJ � r � � � � � � DISASTER RECOVERY PLANNING Observation: Through the review of the current Disaster Recovery plan provided by IT management, we noted that the current procedure for disaster recovery is to assess the damage after the disaster and rebuilt on an available City site by fixing existing infrastructure or acquiring new infrastructure depending on the assessment of the disaster. However, the City does not currently have any redundancy of key applications. As such, there is a potential rlsk, depending on the severity of the disruption, that key systems may not be available for an extended period of time causing business disruptions. Recommendation: Per discussion with the IT Director, the City is considering some hot site solutions for key applications and infrastructure in the near future. We believe investigating and assessing this possibility is important to ensure that mission critical systems are appropriately and timely recovered in the event of a business disruption. Management Response: Management concurs with this recommendation and will pursue opportunities as finances and other resources permit. 159 CURRENT YEAR STATUS OF PRIOR YEAR COMMENTS WATER/SEWER RATE Observation: During our testing of the utility cash receipts, we noted that the rate charged for water/sewer was less then the City Ordinances established rate on certain sampled items. Upon further review, it was discovered that this was due to inconsistencies in customer account billing codes. Recommendation: We recommend that consideration be given to establishing an information technology control that allows only the established City ordinance rates to be charged. Managemenf Response: Management concurs and has created an exception report that identifies these billing inconsistencies on a monthly basis for review and correction. Current Year Status: As previously indicated, this recommendation has been implemented and an exception report is monitored on a monthly basis to ensure that only the established City ordinance rates are charged. YEAR-END ADJUSTMENTS — GENERAL FIXED ASSET ACCOUNT GROUP Observation: During our testing of the General Capital Assets, we noted that additions related to certain capital improvement funds were not accurately reflected. This was due to year-end adjustments within the capital improvement funds that were not reflected within the General Capital Assets. Recommendation: We recommend that the City put into place procedures to reconcile the expenditures per the "Program/Project Expenditures and Transfers" report to the General Capital Assets Additions/Deletions Totals for each respective capital improvement fund. This would ensure that all adjustments to the capital improvement funds are also adjusted within the General Capital Assets. Management Response: Management concurs and will add the recommended additional control procedure to ensure that all year- end adjustments are included for all capital improvement funds. Current Year Status: Additional procedures have been implemented to reconcile expenditures per the "Program/Project Expenditures and Transfers" report to the General Capital Assets Additions/Deletions Totals for each respective capital improvement fund. This ensures that the General Capital Assets reconcile to the individual capital project activity. 160 � � LJ CAPITAL ASSET INVENTORY Observation: During our testing of the COPS Technology Grant Revenue/expenditures, we noted a piece of equipment purchased, was not tagged and recorded on the City's fixed asset listing. Recommendation: ' We recommend that the City implement procedures that require a fixed asset tag to be issued before an entry to a capital code within the general ledger. This will alleviate the risk of the City purchasing fixed assets that are then not recorded on the City's fixed asset inventory. ' ' Management Response: Management concurs that this additional control would be desirable if practical, and will review in conjunction with the impiementation of a new financial system during fiscai 2004. Current Year Status: ' Management has reviewed and determined that current controls are adequate. The observation was the result of decentralized fixed asset activities that have been centralized under the Finance Department fixed asset accounting function during the current fiscal year. Requiring the issuance of a�xed asset tag � prior recording the expenditures in the financial system was deemed impractical and unnecessary at this time based on adequate fixed asset controls that are in place. CJ ,_ J I 1 MAINTENANCE OF CONTRACT FILES Observation: During our testing of the Community Development Block Grant (CDBG), we noted several instances where the construction contract files for contractors performing work under the program were not complete. In addition, we noted that the contract files of the subrecipients for whom construction work was contracted were not complete. Specifically, contract files were missing contracts, signatures executing contracts, certain certifications required for Federal projects of this type, and other miscellaneous documentation. Recommendation: We recommend that the department consider implementing a procedure, such as a completeness � checklist, to ensure that contract files are complete. Additionally, we recommend that the department consider monitoring the contract files of its subrecipients to ensure that contract files are complete. � [_� 1 J � � �� Management Response: Management concurs that there needs to be tighter administrative controls in place to assure compliance with all federal labor standards, rules, and regulations associated with the Housing Division's use of U.S. Department of Housing and Urban (HUD) funds. Management has implemented new policy whereby all disbursement requests involving public facilities/improvements will need to be approved by both the Assistant Director and the Housing Manager prior to expending federal funds. Additionally, management has developed a checklist that will be placed in all new, and current ongoing, public facilities/improvements files that will be signed by each responsible party. This will ensure that all required documentation is included in each file. Current Year Stafus: Management agrees with the recommendations and has implemented the recommended controls as indicated in our previous management response. 161 This Page Intentionally Left Blank 162