Fort Walton Beach — Comprehensive Financial Report September 30, 2017 — reading text

expense as follows: Year ended September 30: 2018 $ 140,534 2019 140,534 2020 140,534 2021 140,536 $ 562,138 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, 2017. 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. 70  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 13. OPERATING LEASES Lessor The City receives rental income from leasing various parcels of land under cancelable operating agreements. The lease periods vary from one to forty years. Income for the year ended September 30, 2017, was $308,795 in the General Fund, $12,000 in the Community Redevelopment Agency Fund, and $18,448 in the Utilities Fund. Future minimum lease payments are as follows: Governmental Business-Type Year Ending September 30 Activities Activities 2018 $ 258,317 $ 19,001 2019 299,706 19,571 2020 305,113 20,157 2021 310,907 20,750 2022 291,608 21,373 Total minimum lease payments $ 1,465,651 $ 100,852 Lessee The City leases golf carts in the General Fund through an operating lease with Yamaha. The original lease term began on January 1, 2013 and was terminated on June 30, 2016. A new four-year lease was signed in August 2016 that expires on July 31, 2020. Under the new lease, monthly lease payments are $6,323 plus property tax paid by the lessor. In addition, the City signed another lease with Yamaha in April 2017 for one golf car. The lease calls for monthly payments of $152 and expires on July 31, 2020. Rent expense for the fiscal year ending September 30, 2017 was $76,016. Future minimum lease payments are as follows: Governmental Year Ending September 30 Activities 2018 $ 77,688 2019 77,688 2020 64,740 Total minimum lease payments $ 220,116 The City leases golf course and parks grounds maintenance equipment and utility carts in the General Fund through operating leases with DLL Finance. The grounds maintenance equipment lease is a five-year lease that began on January 1, 2016 and expires on December 31, 2020. The utility cart lease is a four-year lease that began on September 1, 2016 and expires on August 31, 2020. Monthly rent payments under the lease agreements are $2,104 plus property taxes paid by the lessor. Rent expense for the fiscal year ending September 30, 2017 was $16,074. 71  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 13. OPERATING LEASES – CONTINUED Lessee – Continued Future minimum lease payments are as follows: Governmental Year Ending September 30 Activities 2018 $ 25,256 2019 25,256 2020 24,421 2021 3,808 Total minimum lease payments $ 78,741 The City leases copiers in the General, Utilities, and Sanitation Funds through Great American Financial Services. The lease term began October 1, 2015 and expires on September 30, 2019. Monthly lease payments in each fund are as follows: General Fund: $1,500; Utilities Fund: $80; and Sanitation Fund: $41. Rent expense for each fund for the year ending September 30, 2017 was as follows: General Fund: $17,707; Utilities Fund: $935; and Sanitation Fund: $486. Future minimum lease payments are as follows: Business-Type Activities Governmental Year Ending September 30 Activities Utilities Sanitation 2018 $ 17,995 $ 963 $ 494 2019 17,995 963 494 Total minimum lease payments $ 35,990 $ 1,926 $ 988 The City leases a postage machine in the General Fund through an operating lease with MailFinance. The lease term began on March 12, 2015 and expires on June 11, 2020. Quarterly rent payments are $687, and rent expense for the fiscal year ending September 30, 2017 was $2,748. Future minimum lease payments are as follows: Governmental Year Ending September 30 Activities 2018 $ 2,748 2019 2,748 2020 1,374 Total minimum lease payments $ 6,870 72  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 14. CAPITAL LEASES The City has entered into a lease agreement for financing the acquisition of a telephone system and fitness equipment for its recreation complex. The lease agreements qualify as capital leases for accounting purposes as a result of the transfer of title or bargain purchase option and therefore have been recorded at the present value of the future minimum lease payments as of the inception date in the General Fund. The assets acquired through capital leases are as follows: Governmental Assets Activities Telephone system $ 103,784 Fitness equipment 67,774 Accumulated depreciation (63,279) Assets acquired by lease, net $ 108,279 The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2017, are as follows: Governmental Year Ending September 30 Activities 2018 $ 39,993 2019 37,905 2020 6,778 Total minimum lease payments 84,676 Less amount representing interest (8,577) Present value of minimum lease payments $ 76,099 73  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 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, 2017: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities Revenue notes payable $ 11,725,331 $ - $ (651,675) $ 11,073,656 $ 664,711 Capital leases 106,653 - (30,554) 76,099 32,706 Compensated absences 634,145 729,563 (696,954) 666,754 163,123 Total governmental activities $ 12,466,129 $ 729,563 $ (1,379,183) $ 11,816,509 $ 860,540 Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type activities Revenue notes payable $ 8,794,000 $ - $ (407,000) $ 8,387,000 $ 419,000 State revolving loans 14,656,929 - (668,044) 13,988,885 680,796 Compensated absences 172,642 178,553 (175,395) 175,800 43,950 Total business-type activities $ 23,623,571 $ 178,553 $ (1,250,439) $ 22,551,685 $ 1,143,746 74  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2017 15. LONG-TERM DEBT – CONTINUED Description of Long-Term Debt Outstanding Current Long-Term