Fort Walton Beach — Comprehensive Financial Report September 30, 2015 — reading text

of approximately $1,300,000. 15. COMMENTS REQUIRED BY THE BOND AND ORDINANCES Capital Improvement Revenue Note, Series 2011 1. The balance sheet and statement of revenues, expenditures, and changes in fund balance of the Debt Service Fund are shown in the financial section of the report. 2. The City is required to establish sinking fund amounts sufficient to pay all principal and interest becoming due on the bonds on the next quarter payment date. Sinking Fund Requirement at Principal/Interest September 30, Payments Due 2015 Principal due at October 1, 2015 $ 22,491 $ 22,491 Interest due at October 1, 2015 2,958 2,958 1 Total $ 25,449 $ 25,449 (1) Amounts are included in restricted cash amounts on the balance sheet of the Debt Service Fund 3. The City is not aware of any noncompliance with the bond ordinances. 75  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 15. COMMENTS REQUIRED BY THE BOND AND ORDINANCES – CONTINUED Capital Improvement Refunding Revenue Note, Series 2013 1. The balance sheet and statement of revenues, expenditures, and changes in fund balance of the Debt Service Fund are shown in the financial section of the report. 2. The City is required to establish sinking fund amounts sufficient to pay all principal and interest becoming due on the notes on the next semi-annual payment date. The sinking fund was not required to be funded at September 30, 2015. 3. The City is not aware of any noncompliance with the covenants. Capital Improvement Revenue Note, Series 2013A 1. The balance sheet and statement of revenues, expenditures, and changes in fund balance of the Debt Service Fund are shown in the financial section of the report. 2. The City is required to establish sinking fund amounts sufficient to pay all principal and interest becoming due on the notes on the next semi-annual payment date. The sinking fund was not required to be funded at September 30, 2015. 3. The City is not aware of any noncompliance with the covenants. Utility System Revenue Refunding Note, Series 2015 1. The Balance Sheet and Statement of Revenues, Expenses, and Changes in Fund Balance of the Utility Fund are shown in the financial section of the report. 2. The City is not aware of any noncompliance with the covenants. 16. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of September 30, 2015, is as follows: Due to/from Other Funds Receivable Fund Payable Fund Amount General Community Development Block Grant $ 5,582 Advance to/from Other Funds Receivable Fund Payable Fund Amount Sanitation General $ 454,337 General Fund receivables from the Community Development Block Grant Fund in the amount of $5,582 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, 2015 is $454,337. 76  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 16. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS – CONTINUED Transfers In Nonmajor Governmental Transfers Out General Fund Fund Total General $ - $ 1,039,074 $ 1,039,074 Nonmajor Governmental Fund 25,000 25,000 Utilities 519,267 - 519,267 Sanitation 138,291 - 138,291 $ 682,558 $ 1,039,074 $ 1,721,632 The transfers out of the General Fund are $1,039,074. These transfers consists of a $1,004,651 transfer to the Debt Service Fund (Nonmajor Governmental Fund) for principal and interest payments on debt, and a $34,423 transfer to the Cemetery Perpetual Care Fund (Nonmajor Governmental Fund) for maintenance. Transfers in to the General Fund of $682,558 consist of franchise fees from the Utility Fund of $519,267 and compensation from the Sanitation Fund for additional roadway wear & tear caused by the heavy trucks in the amount of $138,291. A $25,000 transfer was made during the fiscal year from the Cemetery Perpetual Care Fund to the General Fund which was related to the City’s donation to the Veteran’s Tribute Tower located in the Cemetery. 77  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 17. GOVERNMENTAL FUND BALANCES At September 30, 2015, the City's governmental fund balances were classified as follows: Community Other Total General Redevelopment Governmental Governmental Fund Agency Funds Funds Nonspendable Inventory $ 249,732 $ 848 $ - $ 250,580 Restricted for Improvement districts - 1,873,417 - 1,873,417 Library 182,545 - - 182,545 Public safety - - 507,625 507,625 Debt service - - 25,449 25,449 Other purposes 967 - 4,063 5,030 Total restricted 183,512 1,873,417 537,137 2,594,066 Committed Cemetery maintenance - - 2,259,756 2,259,756 Natural disaster recovery 5,761,221 - - 5,761,221 Total committed 5,761,221 - 2,259,756 8,020,977 Assigned to Capital projects 1,186,449 - - 1,186,449 Self-insurance dental program refund 4,845 - - 4,845 Citizen police academy 3,658 - - 3,658 Other purposes 201,255 - - 201,255 Total assigned 1,396,207 - - 1,396,207 Unassigned 2,225,633 - - 2,225,633 $ 9,816,305 $ 1,874,265 $ 2,796,893 $ 14,487,463 78  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 18. ENCUMBRANCES The amount of encumbrances outstanding as of September 30, 2015, is as follows: Governmental Funds – General Fund $ 776,036 Encumbrances at year end do not constitute expenditures or liabilities; therefore, they are not reflected in the financial statements. 19. 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’s amended Interlocal Agreement authorizes the use of Community Redevelopment Agency Special Revenue Trust Funds in the amount of $380,118. The total amount will be repaid by the property owner, Soundside LLC, to the City’s Community Redevelopment Agency, at a minimum payment of $28,488, which includes interest at a rate of 1.5%. The first payment is due no later than September 1, 2016. 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. 79  CITY OF FORT WALTON BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2015 19. COMMITMENTS AND CONTINGENCIES – CONTINUED Wastewater Service Interlocal Agreement with Okaloosa County – Continued On a monthly basis, the County will bill the City at a rate equal to $2.77 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 $4,347 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: Fiscal Year Ending September 30 2016