Fort Walton Beach — Comprehensive Financial Report September 30, 2021 — reading text

and Deferred Outflows/Inflows of Resources Related to OPEB – Continued Deferred outflows of resources related to pensions of $228,302 resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability in the year ending September 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended September 30: 2022 $ 1,072 2023 128,883 2024 128,883 2025 128,879 2026 158,321 $ 546,038 12. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; employee medical benefits and natural disasters. The City purchases insurance through commercial carriers. Insurance coverage for workers’ compensation, liability, casualty, inland marine, flood, police accidental death, public officials’ bonds, fiduciary and fuel tanks were purchased from several commercial carriers during the year ended September 30, 2021. There has been no significant reduction in insurance coverage from the prior year. Commercial insurance coverage has been sufficient to cover all claims made in the prior three fiscal years. 73  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 13. OPERATING LEASES Lessor The City receives rental income from leasing various parcels of land and buildings under cancelable operating agreements. The lease periods vary from one to forty years. Income for the year ended September 30, 2021, was $391,868 in the General Fund, $51,039 in the CRA Fund, and $21,336 in the Utilities Fund. Future minimum lease payments were as follows: Governmental Business-Type Year Ending September 30 Activities Activities 2022 $ 323,862 $ 20,373 2023 278,785 22,014 Total minimum lease payments $ 602,647 $ 42,387 Lessee The City leases golf carts in the General Fund through an operating lease with Yamaha. The original lease term began September 2020 and expires in August 2024. Monthly payments are $6,954 plus property tax paid by the lessor. Rent expense for the fiscal year ending September 30, 2021 was $87,271. Future minimum lease payments were as follows: Governmental Year Ending September 30 Activities 2022 $ 83,445 2023 83,445 2024 76,491 Total minimum lease payments $ 243,381 74  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 13. OPERATING LEASES – CONTINUED Lessee – Continued The City leases maintenance equipment and utility carts for the golf course and parks department in the General Fund through various operating leases with DLL Finance. The leases have expiration dates ranging from December 2020 to December 2023. Aggregate monthly lease payments for the maintenance equipment and utility carts are $5,727 plus property taxes paid by the lessor. Lease expense for the fiscal year ending September 30, 2021 was $83,090. Future minimum lease payments were as follows: Governmental Year Ending September 30 Activities 2022 $ 82,190 2023 73,948 2024 37,895 2025 16,963 2026 6,182 Total minimum lease payments $ 217,178 14. CAPITAL LEASES The City has entered into a lease agreement for financing the acquisition of fitness equipment for its recreation complex and a ladder fire truck that is in progress at year-end. These lease agreements qualify as capital leases for accounting purposes as a result of the transfer of title or bargain purchase option and therefore has been recorded at the present value of the future minimum lease payments as of the inception date in the General Fund. 75  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 14. CAPITAL LEASES – CONTINUED The assets acquired through capital leases were as follows: Governmental Assets Activities Fitness equipment $ 75,385 Ladder fire truck - construction in progress 999,320 Accumulated depreciation (21,359) Assets acquired by lease, net $ 1,053,346 The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2021, were as follows: Governmental Year Ending September 30 Activities 2022 $ 358,625 2023 358,626 2024 244,804 2025 8,580 Total minimum lease payments 970,635 Less amount representing interest (26,188) Present value of minimum lease payments $ 944,447 76  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 15. LONG-TERM DEBT Changes in Long-Term Debt Liabilities The following is a summary of changes in long-term debt liabilities of the City for the year ended September 30, 2021: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Direct placements: Capital Improvement Revenue Note, Series 2011 $ 62,668 $ - $ (62,668) $ - $ - Capital Improvement Revenue Note, Series 2013 2,957,530 - (238,399) 2,719,131 243,347 Capital Improvement Revenue Note, Series 2013A 6,005,773 - (395,970) 5,609,803 406,621 Capital Improvement Revenue Bonds, Series 2018 12,149,516 - (384,674) 11,764,842 399,407 Direct borrowings: Golf Course Irrigation System Revenue Note, 2021 - 1,500,000 - 1,500,000 266,187 Capital lease - fitness equipment 67,035 - (13,294) 53,741 14,161 Capital lease - ladder fire truck - 999,320 (108,614) 890,706 329,540 Compensated absences 847,339 823,167 (737,219) 933,287 233,322 Total governmental activities $ 22,089,861 $ 3,322,487 $ (1,940,838) $ 23,471,510 $ 1,892,585 Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type activities Direct placements: Utility System Revenue Refunding Note, Series 2015 $ 7,093,000 $ - $ (456,000) $ 6,637,000 $ 470,000 Direct borrowings: State Revolving Fund Loan, 2015 11,907,259 - (720,536) 11,186,723 734,290 Compensated absences 218,066 244,907 (262,198) 200,775 50,194 Total business-type activities $ 19,218,325 $ 244,907 $ (1,438,734) $ 18,024,498 $ 1,254,484 For the governmental activities, compensated absences are generally liquidated by the General Fund. 77  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 15. LONG-TERM DEBT – CONTINUED Description of Long-Term Debt Outstanding Governmental Activities – Direct Placements $819,000 City of Fort Walton Beach, Florida, Capital Improvement Revenue Note, Series 2011, due in quarterly installments of $24,449 through April 2016 then $21,156 from June 2016 through April 2021; interest at 2.55%. Available non ad valorem revenues are pledged for payment of the note. Proceeds were used for purchase of a fire truck and golf equipment. The note was repaid in full as of September 30, 2021. $4,470,610 City of Fort Walton Beach, Florida, Capital Improvement Refunding Revenue Note, Series 2013, 2.30% interest due semiannually and principal due annually ranging from $187,659 to