Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2022 — reading text

stock 9,637,727 9,637,727 - - Foreign common stock 992,110 992,110 - - Mutual funds and exchange-traded funds 49,105,083 243,868 48,861,215 - Total equity securities 59,734,920 10,873,705 48,861,215 - * External investment pools 5,180,563 - - - * Commingled real estate investment funds 13,660,091 - - - Total investments measured at fair value 119,631,353 $ 30,054,170 $ 70,736,529 $ - Total investments measured at amortized cost 8,190,745 Total investments at September 30, 2022 $ 127,822,098 * In accordance with GASB 72, certain investments that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. Money market funds, debt securities, and equity securities classified in Level 2 are determined by broker quotes that utilize matrix pricing models and other observable market inputs. 46  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 5. RECEIVABLES Receivables at September 30, 2022, were as follows: Governmental Activities Business-Type Activities Community Redevelopment General Fund Utilities Sanitation Stormwater Total Taxes $ 32,738 $ - $ - $ - $ - $ 32,738 Accounts 106,428 2,929 1,013,856 364,005 80,609 1,567,632 Less allowance for doubtful accounts - - (58,522) (14,370) (4,266) (77,158) Assessments 30,943 210,673 2,002 - - 243,618 Notes 494,636 - - - - 494,636 Leases receivble 4,180,400 - 100,501 - - 4,280,901 Other - - 3,875 - - 3,875 Total receivables, net $ 4,845,145 $ 213,602 $ 1,061,712 $ 349,635 $ 76,343 $ 6,546,242 During fiscal year 2015, the City sold a building for $462,000 and will receive $442,000 of the proceeds over twelve years ($2,917 monthly payments started November 2014). This note receivable bears interest at 5% per year and includes a balloon payment of $250,065 due to the City in October 2026. The balance of this note receivable is $330,636 as of September 30, 2022. During fiscal year 2014, the City sold a recreational center for $425,000 and will receive the proceeds over twelve years ($3,000 monthly principal only payments started October 2015). The City has calculated imputed interest on the receivable, but it has not been recorded as the imputed amount was deemed to be immaterial to the financial statements. The balance of this note receivable is $164,000 as of September 30, 2022. 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, 2022. 47  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 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. Effective October 1, 2021, the City implemented the provisions of GASB Statement No. 87, which established a single model for lease accounting based on the principle that leases are financing of the right to use an asset. This eliminated the operating vs. capital lease classifications. Under the new 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 Principal $ 122,811 $ 13,984 $ 136,795 Interest 188,300 6,765 195,065 Total inflows of resources - leases $ 311,111 $ 20,749 $ 331,860 Due from Other Governments As of September 30, 2022, the City's receivables from other governments for governmental activities were $500,462. 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, 2022. As of September 30, 2022, the City’s receivables from other governments for business-type activities were $15,018, which is consists entirely of amounts due from the Florida Department of Environmental Protection for eligible grant expenses incurred prior to September 30, 2022. 48  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 6. CHANGES IN CAPITAL ASSETS Capital asset activity for the year ended September 30, 2022, was as follows: Beginning Adjustments/ Ending Balance Increases Decreases Transfers Balance Governmental activities Capital assets not being depreciated/amortized Land $ 10,935,286 $ 196,554 $ - $ - $ 11,131,840 Construction in progress 1,084,543 166,451 - (1,019,851) 231,143 Total capital assets not being depreciated/amortized 12,019,829 363,005 - (1,019,851) 11,362,983 Capital assets being depreciated/amortized Buildings 36,438,405 101,168 - 21,525 36,561,098 Improvements other than buildings (1) 33,943,521 2,135,417 (88,258) 22,406 36,013,086 Software 573,318 1,048 - - 574,366 Machinery and equipment 15,115,284 1,229,579 (212,358) 18,479 16,150,984 Financed equipment 108,673 - - 999,451 1,108,124 (2) Right-of-use assets 766,005 31,944 - - 797,949 Total capital assets being depreciated/amortized 86,945,206 3,499,156 (300,616) 1,061,861 91,205,607 Less accumulated depreciation/amortization Buildings (13,979,019) (1,084,576) - (21,525) (15,085,120) Improvements other than buildings (1) (24,540,645) (963,861) 88,258 (3,177) (25,419,425) Software (571,546) (69) - - (571,615) Machinery and equipment (10,463,562) (1,282,979) 212,358 (17,308) (11,551,491) (2) Right-of-use assets (231,048) (188,852) - - (419,900) Total accumulated depreciation/amortization (49,785,820) (3,520,337) 300,616 (42,010) (53,047,551) Total capital assets being depreciated/amortized, net 37,159,386 (21,181) - 1,019,851 38,158,056 Governmental activities, net $ 49,179,215 $ 341,824 $ - $ - $ 49,521,039 (1) Includes infrastructure assets (2) Beginning balances were the result of implementing GASB Statement No. 87 as of October 1, 2021. These right-of-use (ROU) assets were offset by a related liability for lease obligations associated with them. See Note 14 for further details. 49  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 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 111,042 22,113 - (111,042) 22,113 Easements 39,742 - - - 39,742 Total capital assets not being depreciated/amortized 860,462 22,113 - (111,042)