Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2023 — reading text

fiscal year 2023, the City sold a building for $165,400 and received $125,000 from the buyer at closing. The remaining balance of $40,400 is due in January 2030. The promissory note gives the buyer the option to make specified in-kind building improvements to satisfy the note in lieu of repayment. The balance of the note receivable is $40,400, as of September 30, 2023. Since these receivables will be collected outside the periods of availability, they are reflected in the General Fund’s balance sheet as unavailable revenues as of September 30, 2023. 45  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 5. RECEIVABLES – CONTINUED Leases Receivable The City leases real property to various unrelated parties. The real property is used by the lessees for the following purposes: retail business space, office space, parking lots, cellular and radio communications towers, a restaurant, a fitness center, an art gallery, and an elementary school. Under the provisions of GASB Statement No. 87, the City is a lessor under 13 real property leases. The City’s lease receivable is measured at the present value of lease payments expected to be received during the lease term, including options reasonably certain to be exercised. The lease terms range from 2 to 69 years, and the discount rate used to calculate the present value of the lease payments range from 2.50% to 6.50%. In circumstances in which the rate implicit in the lease cannot be determined, the City uses a discount rate of 5.13%, which is the City’s estimated incremental borrowing rate for real property. The total amount of inflows of resources recognized and reflected in the financial statements were as follows: General Utilities Fund Fund Total Lease revenue $ 149,247 $ 16,880 $ 166,127 Interest 190,299 5,759 196,058 Total inflows of resources - leases $ 339,546 $ 22,639 $ 362,185 Due from Other Governments As of September 30, 2023, the City's receivables from other governments for governmental activities were $2,174,091. Amounts due from other governments for governmental activities consists primarily of amounts due from federal and state grant funding agencies for eligible grant expenditures incurred prior to September 30, 2023. As of September 30, 2023, the City’s receivables from other governments for business-type activities were $110,746, which is consists entirely of amounts due from the Florida Department of Environmental Protection for eligible grant expenses incurred prior to September 30, 2023. 46  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 6. CHANGES IN CAPITAL ASSETS Capital asset activity for the year ended September 30, 2023, was as follows: Beginning Adjustments/ Ending Balance Increases Decreases Transfers Balance Governmental activities Capital assets not being depreciated/amortized Land $ 11,131,840 $ 171,298 $ - $ - $ 11,303,138 Construction in progress 231,143 3,105,316 - (379,097) 2,957,362 Total capital assets not being depreciated/amortized 11,362,983 3,276,614 - (379,097) 14,260,500 Capital assets being depreciated/amortized Buildings 36,561,098 130,439 (218,663) - 36,472,874 (1) Improvements other than buildings 36,013,086 611,226 (50,678) 336,449 36,910,083 Software 574,366 - - - 574,366 Machinery and equipment 16,150,984 714,443 (76,111) (60,544) 16,728,772 Financed equipment 1,108,124 304,825 - 51,205 1,464,154 Right-of-use assets 797,949 - - - 797,949 Subscription assets (2) 1,281,392 981,404 - - 2,262,796 Total capital assets being depreciated/amortized 92,486,999 2,742,337 (345,452) 327,110 95,210,994 Less accumulated depreciation/amortization Buildings (15,085,120) (1,083,936) 218,663 - (15,950,393) (1) Improvements other than buildings (25,419,425) (977,240) 50,678 42,648 (26,303,339) Software (571,615) (210) - - (571,825) Machinery and equipment (11,551,491) (1,284,970) 41,001 9,339 (12,786,121) Right-of-use assets (419,900) (195,507) - - (615,407) Subscription assets - (427,805) - - (427,805) Total accumulated depreciation/amortization (53,047,551) (3,969,668) 310,342 51,987 (56,654,890) Total capital assets being depreciated/amortized, net 39,439,448 (1,227,331) (35,110) 379,097 38,556,104 Governmental activities, net $ 50,802,431 $ 2,049,283 $ (35,110) $ - $ 52,816,604 (1) Includes infrastructure assets (2) Beginning balances were the result of implementing GASB Statement No. 96 as of October 1, 2022. These subscription assets were offset by a related subscription liability associated with them. See Note 14 for further details. 47  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 6. CHANGES IN CAPITAL ASSETS – CONTINUED Beginning Adjustments/ Ending Balance Increases Decreases Transfers Balance Business-type activities Capital assets not being depreciated/amortized Land $ 709,678 $ - $ - $ - $ 709,678 Construction in progress 22,113 1,031,797 - - 1,053,910 Easements 39,742 - - - 39,742 Total capital assets not being depreciated/amortized 771,533 1,031,797 - - 1,803,330 Capital assets being depreciated/amortized Buildings 183,322 - - - 183,322 Improvements other than buildings 51,530,151 1,749,855 - - 53,280,006 Software 120,031 - - - 120,031 Machinery and equipment 11,378,277 604,451 (1,200) - 11,981,528 Right-of-use assets 222,484 35,644 - - 258,128 Total capital assets being depreciated/amortized 63,434,265 2,389,950 (1,200) - 65,823,015 Less accumulated depreciation/amortization Buildings (109,835) (4,120) - - (113,955) Improvements other than buildings (25,255,577) (1,701,612) - - (26,957,189) Software (107,799) (8,140) - - (115,939) Machinery and equipment (8,525,792) (762,466) 1,200 - (9,287,058) Right-of-use assets (34,401) (62,654) - - (97,055) Total accumulated depreciation/amortization (34,033,404) (2,538,992) 1,200 - (36,571,196) Total capital assets being depreciated/amortized, net 29,400,861 (149,042) - - 29,251,819 Business-type activities, net $ 30,172,394 $ 882,755 $ - $ - $ 31,055,149 48  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 6. CHANGES IN CAPITAL ASSETS – CONTINUED Amortization of equipment under financing contracts and right-of-use assets is included with depreciation expense in the financial statements. Depreciation and amortization expense was charged to functions/programs of the primary government as follows: Depreciation/Amortization Expense Governmental activities General government $ 831,196 Public safety 1,155,774 Physical environment 57,332 Transportation 443,777 Economic environment 190,341 Culture and recreation 1,291,248 Total depreciation/amortization expense – governmental activities $ 3,969,668 Business-type activities Utilities Fund $ 1,817,841 Sanitation Fund 274,030 Stormwater Fund