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

(19,782) 7,280,571 $ 27,254,378 $ 5,234,216 $ 4,780,723 $ 37,269,317 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. 82  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 19. 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, 2022. 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. 20. 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, 2022, in the amount of $698,519. 21. 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. The project is expected to commence in Spring 2023. 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. 83  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 21. COMMITMENTS AND CONTINGENCIES – CONTINUED Workforce Housing Incentive Fund In May 2022, the City Council adopted a resolution establishing the Workforce Housing Incentive Fund, which shall be managed by the City’s Growth Management Department. The funds will be used in accordance with guidelines established in section 4.10 of the City’s Land Development Code and any requests for funding will be made in the form of development agreements and require City Council approval. Requests for funding may either be approved as up-front payments or as reimbursements once projects are completed. The City Council shall determine the manner of payments to recipients. The resolution sets forth an initial commitment of $1,500,000 from the City’s General Fund resources to the Workforce Housing Incentive Fund. 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, 2022, were $2,987,449. The minimum commitment by the City under the Agreement is as follows: Fiscal Year Ending September 30 2023 $ 65,281 2024 67,239 2025 69,256 2026 71,334 2027 73,474 2028 through 2032 401,783 2033 through 2037 465,776 2038 through 2039 206,459 Total $ 1,420,602 84  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2022 22. SUBSEQUENT EVENTS Water and Sewer System Expansion In November 2022, the City awarded a bid to install a 12” water main and a 6” force main at Freedom Technology Park to a utility contractor in the amount of $1,357,825. The City also approved a cost sharing agreement with the developer, Freedom Beacon, LLC, to relocate the City’s lift station at Freedom Technology Park. The total estimated costs of the wastewater lift station relocation are $599,244. The City’s share of the project costs will be $281,222, or 50%. Purchase of Fire Truck In December 2022, the City accepted a proposal to purchase a Pierce Saber pumper fire truck for a price of $734,564, which includes a prepayment discount of $22,765. The fire truck has not yet been constructed and the manufacturer estimates a lead time of 19-21 months before the truck is delivered to the City. The cost of the new truck will be funded by discretionary sales surtax proceeds. Fort Walton Beach Landing Improvements Phase I In February 2023, the City awarded a bid to a contractor to perform the Fort Walton Beach Landing Phase I improvements for a total price of $2,479,665. The project costs will be funded from several sources including a grant from the Florida Department of Environmental Protection, tourist development tax proceeds, discretionary sales surtax proceeds, and tax increment revenues of the Fort Walton Beach Community Redevelopment Agency. As of September 30, 2022, the City has incurred costs of $145,228 for planning, design, permitting, and other professional services performed prior to the construction phase of project. 85 REQUIRED SUPPLEMENTARY INFORMATION  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS (UNAUDITED) GENERAL EMPLOYEES’ RETIREMENT FUND Reporting Date * 2022 2021 2020 2019 2018 2017 2016 2015 Total Pension Liability Service cost $ 330,178 $ 366,197 $ 372,064 $ 446,214 $ 504,055 $ 557,163 $ 569,712 $ 622,382 Interest 3,677,931 3,723,744 3,888,510 3,827,379 3,771,606 3,317,396 3,314,990 3,222,809 Differences between expected and actual experience 275,286 60,721 (466,270) (265,877) (404,763) 400,221 (1,074,244) - 1 Changes of assumptions 1,521,135 618,633 (768,706) - - 4,485,495 - - Benefit payments, including refunds of employee contributions (3,366,874) (3,327,697) (3,161,812) (3,157,696) (3,056,444) (2,858,889) (2,676,038) (2,575,304) Net change in total pension liability 2,437,656 1,441,598 (136,214) 850,020 814,454 5,901,386 134,420 1,269,887 Total pension liability – beginning 51,735,875 50,294,277 50,430,491 49,580,471 48,766,017 42,864,631 42,730,211 41,460,324 Total pension liability – ending (a) $ 54,173,531 $ 51,735,875 $ 50,294,277 $ 50,430,491 $ 49,580,471 $ 48,766,017 $ 42,864,631 $ 42,730,211 Plan Fiduciary Net Position Contributions – employer $ 1,024,247 $ 1,419,339 $ 1,751,654 $ 2,006,925 $ 1,254,097 $ 1,280,082 $ 1,355,041 $ 1,296,450 Contributions – member 136,164 147,885 150,018 158,138 171,869 202,268 209,567 212,790 Net investment income 10,772,183 4,869,412 1,788,274 4,975,937 4,967,834 4,031,981 (4,390) 3,228,153 Benefit payments, including refunds of employee contributions (3,366,874) (3,327,697) (3,161,812) (3,157,696) (3,056,444) (2,858,889) (2,676,038) (2,575,304) Administrative expenses (48,305) (50,568) (40,421) (49,518) (42,201) (35,704) (39,535) (42,483) Net change in plan