Fort Walton Beach — Comprehensive Annual Financial Report September 30, 2013 — reading text

(2,745) 785,331 TOTAL FUND BALANCE $ 15,713,565 $ 3,833,430 $ 2,516,011 $ 22,063,006 NOTE 19 - ENCUMBRANCES The amount of encumbrances outstanding as of September 30, 2013, is as follows: Governmental Funds - General Fund $ 543,248 Community Redevelopment Agency 81,362 Total $ 624,610 Encumbrances at year end do not constitute expenditures or liabilities; therefore, they are not reflected in the financial statements. 72  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 20 - 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. Soundside Apartments Planned Unit Development In June 2010, the City entered into a Memorandum of Understanding with the City of Fort Walton Beach Community Redevelopment Agency, the Fort Walton Beach Housing Authority, and Soundside Apartments, LLC for the Soundside Apartments planned unit development (PUD). According to the Memorandum, Germany Terrace, a 50-unit public housing development, will be redeveloped into a 200-unit affordable housing complex. The City also entered into an amended Interlocal Agreement whereby the City approved the use of up to $700K in Community Redevelopment Agency Special Revenue Trust Fund for site demolition, infrastructure improvements, site restoration and other costs for the project. The total amount will be eventually repaid by the property owner, Soundside LLC, to the City’s Community Redevelopment Agency, at no more the $52,142 per year at 1.5% interest, and shall become payable no sooner than three (3) years after the closing date, payable over a 40-year period. The total amount provided from the Community Redevelopment Agency of the City, which remains unpaid as of September 30, 2013, is $294,365. Wastewater Service Interlocal Agreement with Okaloosa County On August 11, 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 will bill the City at a rate equal to $2.46 per each 1,000 gallons of wastewater flow. Additionally, the City will pay to the County the Sewer Readiness to Serve Fee, which is equal to $4,098 per month. Each year in March, the Readiness to Serve Fee will increase by 3%. The minimum commitment by the City under the Agreement is as follows: 73  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 20 - COMMITMENTS AND CONTINGENCIES (CONTINUED) Wastewater Service Interlocal Agreement with Okaloosa County (Continued) Fiscal Year Ending September 30 2014 50,033 2015 51,534 2016 53,080 2017 54,673 2018 56,313 2019 through 2023 307,942 2024 through 2028 356,989 2029 through 2033 413,848 2034 through 2038 479,764 2039 104,758 Total $ 1,928,934 Fees paid for wastewater treatment to Okaloosa County, Florida during the year ended September 30, 2013, were $2,331,977. Interlocal Agreement with Okaloosa County on Force Main Project The City and Okaloosa County entered into an interlocal agreement for the replacement of a thirty inch pre-stressed concrete cylinder pressure force main. According to the agreement, Okaloosa County is to provide funding to the City via a capital contribution for 50% of the common portion of the force main replacement. The asset will be owned and operated by the City's Utility Fund for twenty-years and then possession of the asset will transfer to Okaloosa County. During the year ended September 30, 2013, capital contributions from Okaloosa County to the City related to this project totaled $1,676,418. NOTE 21 - GASB PRONOUNCEMENTS ISSUED BUT NOT YET ADOPTED In June 2012, the GASB issued GASB Statement No. 67, Financial Reporting for Pension Plans - an amendment to Statement No. 25. This Statement enhances the financial reporting by state and local governmental pension plans. This Statement replaces the requirement of Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements that meet certain criteria. This statement enhances note disclosures and required supplemental information (RSI) for both defined benefit and defined contribution pension plans. It also requires the presentation of new information about annual money-weighted rates of return in the notes to the financial statements and in 10 year RSI schedules. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2013, which requires the City to implement this statement in FY 2013-2014. 74  City of Fort Walton Beach, Florida NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 21 - GASB PRONOUNCEMENTS ISSUED BUT NOT YET ADOPTED (CONTINUED) In June 2012, the GASB issued GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment to Statement No. 27. This Statement enhances the financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This statement requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. It also enhances accountability and transparency through revised and new note disclosures and required supplementary information. Management believes GASB Statement No. 68 will have a significant impact on the financial position and changes in net position of the City; however, the amounts are not quantifiable as of the date of this report. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2014, which requires the City to implement this statement in FY 2014-2015. NOTE 22 - SUBSEQUENT EVENTS Landmark Development Agreement The City approved a development agreement for the Landmark Center. The development calls for a parking garage to support the hotel and shopping complex and the agreement requires the City to transfer ownership of a portion of five (5) parcels of property, with a current book value of $293,166. The developer is permitted to participate in various economic incentive programs currently active in the Community Redevelopment Agency. Golf Enterprise Fund Transfer of Operations During the fiscal year 2013-14 budget development, City Council voted to terminate the golf enterprise fund and collapse operations into the City’s general fund. This will take place effective October 1, 2013. International Association of Firefighters’ Union Contract The City’s three-year contract with the International Association of Firefighters’ (both for its firefighters’ and its battalion chiefs) expired September 30, 2013. A Memorandum of Understanding between the parties extended the contracts until negotiations were completed, which occurred in December 2013. The contract was finalized and accepted by City Council for a three-year term in January 2014. The contract term is retroactive to October 1, 2013 and expires September 30, 2016, although all terms continue so long as active negotiations for the new contract continue. 75 (THIS PAGE INTENTIONALLY LEFT BLANK.) REQUIRED SUPPLEMENTARY INFORMATION  Schedule A-1 City of Fort Walton Beach, Florida REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF FUNDING PROGRESS Unaudited Actuarial Accrued Actuarial Liability Unfunded Funded Annual UAAL as Actuarial Valuation Value of (AAL) Entry AAL (UAAL) Ratio Covered % of Date Assets (a) Age (b) (b-a) (a/b) Payroll (c) Payroll General Employees' Retirement Fund September 30, 2013 $ 37,122,638 $ 42,285,695 $ 5,163,057 87.79 % $ 4,259,070 121.22 % September 30, 2012 32,776,563 41,280,063 8,503,500 79.40 % 4,542,537 187.20 % September 30, 2011 33,678,210 40,196,872 6,518,662 83.78 % 5,004,486 130.26 % September 30, 2010 34,352,072 40,510,991 6,158,919 84.80 % 5,595,076 110.08 % September 30, 2009 33,336,278 38,412,778 5,076,500 86.78 % 7,252,396 70.00 % September 30, 2008 33,388,423 37,349,742