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

Emergency Management Agency (FEMA) grant documents do not require unspent funds to be held in a separate bank account and since the revenue is not earned, it is not a component of net position at either the fund or government-wide level. The terms of the grant require the funds to be expended by specific dates, and unspent grant funds are not typically considered restricted assets of the governmental unit. Therefore, the City has not reported the unspent proceeds as restricted assets as of September 30, 2021. 18. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2021, was as follows: Due to/from Other Funds Receivable Fund Payable Fund Amount General Community Development Block Grant $ 61,786 General Sanitation $ 243,150 Advance to/from Other Funds Receivable Fund Payable Fund Amount Sanitation General $ 160,528 General Fund receivables from the Community Development Block Grant Fund and the Sanitation Fund are the result of eliminating temporary deficit cash balances. On September 30, 2014, the City’s Sanitation Fund loaned the General Fund $500,000 to purchase a Fire Engine. The loan from the Sanitation Fund will be paid back over a 10-year period at an interest rate of 2.00%. The balance of the advance as of September 30, 2021 is $160,528. 82  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 18. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS – CONTINUED The composition of interfund transfers for the year ended September 30, 2021, was as follows: Transfers In Other Governmental Transfers Out General Fund Funds Total General Fund $ - $ 1,963,506 $ 1,963,506 Utilities Fund 1,238,095 - 1,238,095 Sanitation Fund 325,459 - 325,459 Stormwater Fund 196,228 - 196,228 $ 1,759,782 $ 1,963,506 $ 3,723,288 The transfers out of the General Fund are $1,963,506. These transfers consist of a $1,908,339 transfer to the Debt Service Fund (Other Governmental Fund) for principal and interest payments on debt, and a $55,167 transfer to the Beal Memorial Cemetery Perpetual Care Fund (Other Governmental Fund) for permanent maintenance. Transfers into the General Fund of $1,759,782 consist of franchise fees, compensation for heavy trucks wear and tear on roadways, and a portion of the debt service for the new field office complex from the enterprise funds representing their portion of use of the facility. 19. ENCUMBRANCES The amount of encumbrances outstanding as of September 30, 2021, were as follows: Governmental Funds – General Fund $ 1,331,285 Community Redevelopment Agency Fund 433,317 Other Governmental Funds 29,960 $ 1,794,562 Encumbrances at year end do not constitute expenditures or liabilities; therefore, they are not reflected in the statement of revenues, expenditures, and changes in fund balances. 83  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 20. GOVERNMENTAL FUND BALANCES At September 30, 2021, the City's governmental fund balances were classified as follows: Community Other Total Redevelopment Governmental Governmental General Fund Agency Funds Funds Nonspendable Inventory $ 259,960 $ - $ - $ 259,960 Restricted for Public safety - - 1,060,646 1,060,646 Debt service - - 21,156 21,156 Improvement districts - 4,133,412 - 4,133,412 Library capital projects 104,714 - - 104,714 Field office complex 428,308 - - 428,308 Discretionary sales taxes 3,673,641 - - 3,673,641 Golf course improvements 1,500,000 - - 1,500,000 Other purposes 5,668 - - 5,668 Total restricted 5,712,331 4,133,412 1,081,802 10,927,545 Committed Affordable housing projects 340,000 - - 340,000 Cemetery maintenance - - 4,154,232 4,154,232 Natural disaster recovery 8,309,189 - - 8,309,189 Total committed 8,649,189 - 4,154,232 12,803,421 Assigned for Capital expenditures 939,464 - - 939,464 FY22 appropriations 1,298,209 - - 1,298,209 Long-term debt 850,000 - - 850,000 Other purposes 820,898 - - 820,898 Total assigned 3,908,571 - - 3,908,571 Unassigned 8,845,558 - (19,782) 8,825,776 $ 27,375,609 $ 4,133,412 $ 5,216,252 $ 36,725,273 The Community Development Block Grant special revenue fund had a deficit fund balance at year end. The deficit will be eliminated by future transfers from other funds and by future grant funding. 84  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 21. EXPENDITURES IN EXCESS OF BUDGETED APPROPRIATIONS The Debt Service Fund had an excess of expenditures over final budgeted appropriations for the year ending September 30, 2021 in the amount of $831,760. 22. COMMITMENTS AND CONTINGENCIES Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the City expects such amount, if any, to be immaterial. Joint Project with Florida Department of Transportation (FDOT) The City Council adopted a resolution in fiscal year 2021 to pledge $1,000,000 toward the cost of a project development and environment (PD&E) study for the “Around the Mound” transportation alternative via the City’s Downtown Master Plan. This resolution was adopted in order to accelerate the timeline for completing the study. The total cost of the study is estimated at $2,000,000, which will be split between the City and FDOT. The City has pledged revenues from the Redevelopment Trust Fund and discretionary sales tax proceeds to pay for its share of the cost of the study. As of the date of this report, the study has not been started by FDOT. No fund balances have been assigned for this project in the governmental funds as the pledged revenue sources are restricted by external sources. Fort Walton Beach Housing Authority (FWBHA) Development Project The FWBHA has applied to the Florida Housing Finance Corporation for low-income housing tax credits (LIHTC) for the Bayside Gardens redevelopment of Charlie Hill Terrace. In order to make the application more competitive, the FWBHA requested a commitment of $340,000 from the City as the Local Government Area of Opportunity (LGAO). The City Council adopted a resolution in fiscal year 2021 to commit the funding requested in the form of a 50% grant and 50% loan to the FWBHA. As of the date of this report, the FWBHA is awaiting a final decision on the application filed with the Florida Housing Finance Corporation. Demolition of Field Office Complex and Golf Course Structures In August 2021, the City Council awarded a bid to a local contractor to perform demolition services related to the old field office complex and various golf course structures. The total amount of the contract is $193,554. The portion of the contract allocated to the demolition of the field office complex is $156,277. This amount will be paid from unspent proceeds from the Capital Improvement Revenue Bonds, Series 2018 issue. The portion of the contract allocated to the demolition of golf course structures is $37,277. As of the September 31, 2021, the work on the project has not commenced. The project is expected to be completed in February 2022. 85  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 22. COMMITMENTS AND CONTINGENCIES – CONTINUED Wastewater Service Interlocal Agreement with Okaloosa County In 2009, the City adopted the Wastewater Service Interlocal Agreement with Okaloosa County (Agreement). The Agreement outlines a long–term association with Okaloosa County Water & Sewer for the treatment of the City’s influent wastewater flow at a set percentage of the County’s base sewer rate plus a locked-in annual rate escalator. The agreement provides other ancillary benefits to the City such as the provision of “no cost” tertiary treated effluent for use as irrigation water at the City’s’ 36–hole municipal Golf Club. The Agreement is effective for 30 years and can be automatically extended for up to two additional terms for a period of ten years for each extension term. On a monthly basis, the County bills the City at a rate equal to $2.77 per each 1,000 gallons of wastewater flow. Additionally, the City pays to the County the Sewer Readiness to Serve Fee, which is equal to $4,893 per month. Annually, the rate per thousand and the Readiness to Serve Fee increases by 3%. Fees paid for wastewater treatment to Okaloosa County, Florida during the year ended September 30, 2021, were $3,359,721. The minimum commitment by the City under the Agreement is as follows: Fiscal Year Ending September 30 2022