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Comprehensive Annual Financial Report - 2010-2011Comprehensive Annual Financial Report Fiscal Year Ended September 30, 2011 Waterfront Pavilion The Waterfront Pavilion on Lake Minneola in Waterfront Park includes a 9,000 square foot open-air stage with covered seating for 400 spectators and additional seating on the lawn. The attached 4,000 square foot Highlander Hut building includes an open indoor space available for use by the public for meetings or social gatherings and an attached courtyard overlooking Lake Minneola. City of Clermont, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT For The Year Ended September 30, 2011 Prepared By Finance Regina M. Frazier Lacy Smith-Castillo Finance Manager Accountant i CITY OF CLERMONT COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Year Ended September 30, 2011 Page I. Introductory Section: Table of Contents i Letter of Transmittal iii GFOA Certificate of Achievement ix List of Principal Officials xi Organizational Chart xii II. Financial Section: Independent Auditor’s Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 13 Statement of Activities 14 Fund Financial Statements: Balance Sheet - Governmental Funds 15 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 16 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 17 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 18 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Community Redevelopment Special Revenue Fund 21 Statement of Net Assets - Proprietary Funds 22 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 25 Statement of Cash Flows – Proprietary Funds 26 Statement of Fiduciary Net Assets - Fiduciary Funds 28 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 29 Notes to Financial Statements 31 Required Supplementary Information 61 Major Governmental Funds: 65 Capital Projects Fund 66 Other Governmental Funds: 67 Combining Balance Sheet – Other Governmental Funds 68 Combining Statement of Revenues, Expenditures and Changes In Fund Balances - Other Governmental Funds 70 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Special Revenue Funds 72 Debt Service Fund 77 ii CITY OF CLERMONT COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS - Continued Year Ended September 30, 2011 Page II. Financial Section - Continued: Fiduciary Funds: 79 Combining Statement of Fiduciary Net Assets 80 Combining Statement of Changes in Fiduciary Net Assets 81 III. Statistical Section: Net Assets by Component 84 Changes in Net Assets 86 Fund Balances of Governmental Funds 90 Changes in Fund Balances of Governmental Funds 92 Governmental Activities Tax Revenues by Source 94 Assessed Value and Estimated Actual Value of Taxable Property 95 Property Tax Rates – Direct and Overlapping Governments 96 Principal Property Taxpayers 97 Property Tax Levies and Collections 98 Ratios of Outstanding Debt by Type 99 Direct and Overlapping Governmental Activities Debt 100 Pledged-Revenue Coverage 101 Demographic and Economic Statistics 104 Principal Employers 105 Principal Water Customers 106 Principal Sewer Customers 107 Full-time Equivalent City Government Employees by Function 108 Operating Indicators by Function 110 Capital Asset Statistics by Function 112 IV. Other Reports: Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 115 Affidavit of Impact Fee Compliance 117 Management Letter 119 Status of Prior Year Comments 121 Communication with those Charged with Governance 123 CITY OF CLERMONT P.O. BOX 120219 · CLERMONT, FLORIDA 34712-0219 · PHONE: 352-241-7360 · FAX: 352-394-4082 www.CityofClermontFL.com March 30, 2012 To the Honorable Mayor and City Council and Citizens of the City of Clermont, Florida: We are pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Clermont, Florida, for the fiscal year ended September 30, 2011. State law requires that every general-purpose local government publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended September 30, 2011. Management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Clermont has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Clermont’s financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Because the cost of internal controls should not outweigh their benefits, the City of Clermont’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Clermont’s financial statements have been audited by McDirmit Davis & Company, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Clermont for the fiscal year ended September 30, 2011, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Clermont’s financial statements for the fiscal year ended September 30, 2011, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides narrative introduction, overview, and analysis of the basic financial statements. The MD&A provides “financial highlights” and interprets the financial reports by analyzing trends and by explaining changes, fluctuations and variances in the financial data. In addition, the MD&A is intended to disclose any known significant events or decisions that affect the financial condition of the City. This letter of iv transmittal is designed to complement the MD&A and should be read in conjunction with it. Profile of the City of Clermont The City was founded in 1884 and incorporated in 1916. The City currently has a land area of 16.11 square miles and population of approximately 29,358. The City is located in south Lake County, approximately twenty-two miles west of the City of Orlando and about twenty-five miles northwest of Walt Disney World. Clermont, known as “The Gem of the Hills”, is truly the crossroads of Florida, at the intersection of State Road 50 that runs east and west across the state and U.S. Highway 27, which runs north and south through the center of the state. Clermont is on a chain of 15 lakes connected by the winding Palatlakaha River in the Ocklawaha Basin of tributaries of the St. Johns River, the only river system in the United States of America that flows north. The lakes offer residents the opportunity for excellent fishing, boating, swimming and other water sports including competitive skiing and wakeboarding offered by world-class instructional schools. The City of Clermont is known for its scenic beauty, relaxed lifestyle, recreational facilities and temperate climate. Residents have a wide variety of housing and property ownership opportunities, including lakefront and lake access property, golf course communities, homes in existing neighborhoods, residential retirement communities and new subdivisions. The City of Clermont Parks and Recreation Department operates 23 parks, 5.7 miles of scenic paved trails, 4 piers measuring a total of 840 feet, 1-612 foot boardwalk, 4 special purpose buildings and a boat ramp. The City of Clermont provides a full range of services as directed by its charter. These include police and fire protection; streets and sidewalk maintenance, planning and development, code enforcement, mosquito control, recreational facilities and programs, cemetery and general administrative functions. The City also provides potable water, wastewater collection and treatment, reclaimed water production and distribution, stormwater treatment, solid waste collection and recycling services. The City operates according to a Council/Manager form of government, with an appointed City Manager, four elected City Council members and an elected Mayor. The governing body has legislative responsibilities including setting policy, passing ordinances, adopting the budget, appointing committees, and hiring the City’s Manager. The City Manager is responsible for carrying out the policies and ordinances of the governing body, for overseeing the day-to-day operations of the government, and for hiring the directors of the various departments. The annual budget serves as the foundation the City of Clermont’s financial planning and control. All departments of the City of Clermont are required to submit requests for appropriations to the City Manager. The City Manager then uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the Council for review. The City Council is required to hold public hearings on the proposed budget and to adopt a final budget by no later than September 30, the close of the City of Clermont’s fiscal year. The appropriated budget is prepared by fund (e.g. general fund), and department (e.g. fire department). The City Manager may make transfers of appropriations within departments; however, any revisions that alter the total appropriations of a department must be approved by City Council. Original v and final amended budget-to-actual comparisons are provided in this report for each individual governmental fund. The General Fund is presented on pages 18-19, the Community Redevelopment Special Revenue fund is presented on page 21 as part of the basic financial statements for the governmental funds. The Capital Projects Fund is presented on page 66, followed by the other governmental funds, which start on page 68. The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Clermont operates. Local economy. The City of Clermont is essentially residential in character and its economy is centered in retail, real estate, personal services and healthcare. At September 30, 2011, Lake County’s unemployment rate was 10.6%. This is a decrease of 1.8% from 2010 and is slightly higher than the state’s average of 10.5% and the national average of 8.9%. Educational institutions in Clermont such as Lake-Sumter Community College and the University of Central Florida assist in supplying a skilled labor force. The cost of living for the region is below the national average. There is no personal income tax, either locally or state-wide. Sales tax, currently at 7%, is not charged on food or medicine. One cent of the sales tax charged within the county is limited to $50 per transaction (1% of $5,000). As discussed in the MD&A, this additional penny sales tax must be used for infrastructure including roads, buildings, land, land improvements and certain equipment. Major initiatives. The following items are capital projects that are currently in the planning/design phase for the City: • The replacement of the existing Police Station – A new 4 acre site is under contract for purchase and construction of the new 26,000 square foot facility is scheduled to begin in late 2012. The project is anticipated to cost $6.3 million and will be funded from police impact fees and infrastructure sales taxes. • The replacement of Jenkins Auditorium – The replacement building will be built on vacant City owned property and will include meeting space, kitchen area and office area. The new facility is anticipated to cost $2,091,500 and is proposed to be funded from infrastructure sales taxes. • The construction of the West Water Treatment Plant – The plant will include a one million gallon ground storage tank, a sodium hypochlorite feed system for disinfection and a bank of high service pumps to deliver potable water to the distribution system. The construction is anticipated to cost $8,000,000 and will be funded from water utility reserves. Long-term financial planning. The City uses an extensive water and sewer master plan to manage growth in the water and sewer utility systems. The plan outlines water and sewer line size requirements for planned development with rough cost estimates. The plan also has benchmarks for plant expansions and additional well requirements. vi Slowed building permits and declining home values are being monitored closely since they are directly impacted by the current recession. The recession also affects the growth of impact fees, ad valorem taxes, utility service taxes and franchise fee revenues in future years. Due to these circumstances, the City is actively monitoring all expansion projects and limiting any costs that will require multi-year funding commitments. The Clermont City Council and management through careful short and long range planning and sound management practices are committed to budgeting and managing all resources in the most cost effective manner. Relevant financial policies. The City regularly reviews revenues and expenditures throughout the fiscal year. During the course of the year, if actual revenues are expected to fall short of the budgeted amount, expenditures are reduced to ensure that a shortage of funds or a significant use of fund balance does not occur. The City administers a cash management and investment program that seeks to maximize, in order of priority, the preservation of funds, liquidity and interest earnings over its cash and investments. Cash resources of the individual funds are combined to form a pool of cash and investments. The average cash and investment pool balance during the year (not including pension funds) was $50,614,590 and the average investment earnings rate was 1.75%. Investment income includes the change in the fair value of investments. During the year monies were invested in accordance with the City’s investment policy. Pension fund assets were invested in accordance with the City’s Investment Policy for Retirement Funds. The total pension fund cash and investments at year end were $17,944,837 and the average investment income was 1.72%. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Clermont for its comprehensive annual financial report for the fiscal year ended September 30, 2010. This was the twenty-third consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the staffs in the City Manager’s office, Planning Department and Administrative Services Department. We would like to express our appreciation to all members of these departments who assisted and contributed to the preparation of this report. A special note of appreciation is due Regina Frazier and Lacy Smith-Castillo in Finance for their hard work and dedicated efforts in the preparation of this report. Credit also must be given to the Mayor and the City Council for their support in maintaining the highest standards of professionalism in the management of the City of Clermont’s finances. 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M S ^ ^ . ^ ^ m s AK B i ae C S W M P r e s i d e n t s w w a m B N ^! y ^ ' ^ s i ^ ^ ft W t f i O .f <t Ex e c u t i v e D i r e c t o r xi CITY OF CLERMONT, FLORIDA LIST OF ELECTED AND APPOINTED OFFICIALS SEPTEMBER 30, 2011 ELECTED OFFICIALS Mayor Harold Turville, Jr. Mayor Pro-Tem Ray Goodgame Council Member Jack Hogan Council Member Keith Mullins Council Member Rick VanWagner APPOINTED OFFICIALS City Manager Wayne Saunders Assistant to the City Manager Barbara Hollerand City Attorney Dan Mantzaris Administrative Services Director Joseph Van Zile City Clerk Tracy Ackroyd Engineering Director Tamara Richardson Fire Chief Carle Bishop Planning Director James Hitt Police Chief Stephen Graham Public Services Director Preston Davis Utilities Director James Kinzler CITY OF CLERMONT, FLORIDA CITIZENS CLERMONT  CITY COUNCIL CITY ATTORNEY COMMITTEES CITY MANAGER SPECIAL OPERATIONS EMERGENCY MEDICAL SERVICES FIRE INSPECTION AND PREVENTION VOLUNTEER AND RESERVE PROGRAM TRANSPORTATION FLEET MAINTENANCE FACILITY MAINTENANCE PARKS UTILITY BILLING HUMAN  RESOURCES RISK MANAGEMENT BUDGETING INFORMATION TECHNOLOGY PURCHASING WATER SYSTEM IMPROVEMENTS WASTEWATER SYSTEM IMPROVEMENTS WATER TREATMENT AND DISTRIBUTION SEWER  COLLECTION AND TREATMENT RECLAIMED WATER STORMWATER DRAINAGE SANITATION CAPITAL IMPROVEMENTS GIS CONSTRUCTION INSPECTIONS STORMWATER MANAGEMENT CITY CLERK PLANNING AND ZONING RECREATION POLICE FIRE PUBLIC SERVICES ADMINISTRATIVE SERVICES UTILITIES ENGINEERING RECORDS MANAGEMENT WEBSITE MANAGEMENT CEMETERY ELECTION QUALIFYING PERMITTING OCCUPATIONAL LICENSES ZONING CODE ENFORCEMENT BUILDING SERVICES RECREATIONAL PROGRAMS FACILITY SCHEDULING CITY EVENTS PLANNING CRIMINAL INVESTIGATIONS TRAFFIC ENFORCEMENT ROAD PATROL COMMUNITY RELATIONS FIRE SUPPRESSION FINANCE 1 Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the pension and other postemployment benefits disclosures on pages 3 through 12 and 61 through 64 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Clermont, Florida’s basic financial statements as a whole. The introductory section, combining and individual fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. March 5, 2012 2 MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Clermont, Florida we offer readers of the City of Clermont’s (the City) financial statements this narrative overview and analysis of the financial activities of the City of Clermont for the fiscal year ended September 30, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii through vii of this report. Financial Highlights • The City of Clermont’s assets exceeded its liabilities at September 30, 2011 by $139,786,687 (net assets). Of this amount, $31,841,355 (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors. • The City’s total net assets increased by $1,048,507 (or 0.75%) over the previous fiscal year. • At September 30, 2011, the City of Clermont’s governmental funds reported combined ending fund balances of $21,529,812 a decrease of $647,913 from the previous fiscal year. Of this amount $10,046,694 (unassigned fund balance) is available for spending at the government’s discretion. • The General Fund, the City’s primary operating fund, reported an unassigned fund balance of $10,047,810, which represents 58% of total General Fund expenditures. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Clermont’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Clermont’s financial position, in a manner similar to a private-sector business. They include a Statement of Net Assets and a Statement of Activities. These statements appear on pages 13 and 14 of the report. The Statement of Net Assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Clermont that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Clermont include general government, public safety, physical environment, transportation, economic environment, and culture and recreation. The business-type activities of the City of Clermont include water, sewer, sanitation, and stormwater utilities. 3 The government-wide financial statements include only the City of Clermont itself (known as the primary government) and one blended component unit (The City of Clermont Community Redevelopment Trust Fund). Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Clermont, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Clermont can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Clermont maintains ten individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund, and the Community Redevelopment Fund, all of which are considered to be major funds. Data from the other seven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Clermont adopts an annual appropriated budget for all of its governmental funds. Budgetary comparison statements have been provided for the General Fund (pages 18-19) and the Community Redevelopment Fund (page 21) to demonstrate compliance with budgets. Other major and nonmajor funds comparisons can be found beginning on page 66. The basic governmental fund financial statements can be found on pages 15 - 21 of this report. Proprietary funds. The City of Clermont maintains two types of proprietary funds: enterprise and internal service, which can be found on pages 22-27 of this report. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Clermont uses enterprise funds to account for water, sewer, sanitation and stormwater utilities. Internal service funds are an accounting tool used to accumulate and allocate costs internally among various functions. The City utilizes an internal service fund for its health insurance. Because services accounted for in the internal service fund predominately benefit governmental rather than business-type functions, it has been included within the governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for water, sewer and sanitation which are all considered to be major funds. Data for the Stormwater Fund is also included since it is the only nonmajor fund. 4 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Clermont’s own programs. The accounting used for fiduciary funds is much like that used for the proprietary funds. The basic fiduciary fund financial statements can be found on pages 28 - 29 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to financial statements can be found on pages 31 - 60 of this report. Other information. The combining statements referred to earlier in connection with other governmental and proprietary funds are presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found on pages 66 - 77 of this report. Government-Wide Financial Analysis The following is a summary of the City’s net assets for governmental and business-type activities for the current year as compared to the prior year. For more detail see the Statement of Net Assets on page 13. 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 Assets: Current and other assets 22,354,843$ 25,017,023$ 30,868,191$ 31,214,772$ 53,223,034$ 56,231,795$ Capital assets 38,463,475 37,856,800 71,578,874 71,173,655 110,042,349 109,030,455 Total assets 60,818,318 62,873,823 102,447,065 102,388,427 163,265,383 165,262,250 Liabilities: Long-term liabilities outstanding5,405,896 5,449,961 16,179,340 16,570,095 21,585,236 22,020,056 Other liabilities 672,352 2,925,470 1,221,108 1,578,544 1,893,460 4,504,014 Total liabilities 6,078,248 8,375,431 17,400,448 18,148,639 23,478,696 26,524,070 Net assets: Invested in capital assets, Net of related debt 34,893,475 33,816,797 56,430,326 55,539,792 91,323,801 89,356,589 Restricted 7,381,124 6,693,736 9,240,407 17,293,091 16,621,531 23,986,827 Unrestricted 12,465,471 13,987,859 19,375,884 11,406,905 31,841,355 25,394,764 Total net assets 54,740,070$ 54,498,392$ 85,046,617$ 84,239,788$ 139,786,687$ 138,738,180$ CITY OF CLERMONT’S Net Assets Governmental Activities Business-type Activities Total The City’s total net assets at September 30, 2011 were $139,786,687. Of the City’s total net assets $91,323,801 (65.3%) reflects its investment in capital assets (e.g., land, buildings, improvements, infrastructure and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Clermont’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s total net assets, $16,621,531 (11.9%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the City’s total net assets, $31,841,355 (22.8%) is unrestricted. These assets may be used at the City’s discretion in meeting its ongoing obligations to citizens and creditors. 5 The City’s net assets increased by $1,048,507 during the current fiscal year. Major components of this increase are discussed in the Governmental and Business-Type Activities sections to follow. Restricted reserves represent the accumulation of impact fee funds for upcoming and ongoing capital projects. The following is a summary of the City’s governmental and business-type activities for fiscal year 2010-11, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 14. 2010-112009-102010-112009-102010-112009-10 Revenues: Program revenues - Charges for services 2,589,177$ 3,393,971$ 13,985,304$ 13,111,848$ 16,574,481$ 16,505,819$ Operating grants and contributions 1,236,588 1,162,255 - - 1,236,588 1,162,255 Capital grants and contributions 128,786 134,200 998,446 1,543,638 1,127,232 1,677,838 General revenues -- - Property Taxes 5,965,731 6,844,084 - - 5,965,731 6,844,084 Franchise Fees 2,284,839 2,373,096 - - 2,284,839 2,373,096 Utility Taxes 2,568,141 2,558,282 - - 2,568,141 2,558,282 Intergovernmental 4,664,393 4,503,416 - - 4,664,393 4,503,416 Investment income and miscellaneous 477,857 525,178 145,153 359,711 623,010 884,889 Total revenues 19,915,512 21,494,482 15,128,903 15,015,197 35,044,415 36,509,679 Expenses: General government 3,643,321 4,286,713 - - 3,643,321 4,286,713 Public safety 12,530,840 12,458,811 - - 12,530,840 12,458,811 Physical environment 279,236 318,878 - - 279,236 318,878 Transportation 1,661,325 1,767,731 - - 1,661,325 1,767,731 Economic environment 101,486 50,328 - - 101,486 50,328 Culture and recreation 1,821,837 2,055,568 - - 1,821,837 2,055,568 Interest on long-term debt156,185 174,858 - - 156,185 174,858 Water - - 4,460,605 4,316,170 4,460,605 4,316,170 Sewer - - 6,021,892 5,927,529 6,021,892 5,927,529 Sanitation - - 2,364,382 2,168,794 2,364,382 2,168,794 Stormwater - - 954,799 847,963 954,799 847,963 Total expenses 20,194,230 21,112,887 13,801,678 13,260,456 33,995,908 34,373,343 Increase (Decrease) in Net Assets Before Transfers (278,718) 381,595 1,327,225 1,754,741 1,048,507 2,136,336 Transfers 520,396 442,782 (520,396) (442,782) - - Increase in Net Assets 241,678 824,377 806,829 1,311,959 1,048,507 2,136,336 Net Assets – Beginning54,498,392 53,674,015 84,239,788 82,927,829 138,738,180 136,601,844 Net Assets – Ending 54,740,070$ 54,498,392$ 85,046,617$ 84,239,788$ 139,786,687$ 138,738,180$ Governmental Activities CITY OF CLERMONT’S Changes in Net Assets Business-type Activities Total 6 Governmental activities - Governmental activities increased the City of Clermont’s net assets by $241,678, which is primarily due to reduced general government expenditures. The following graph is a comparison of program revenues and program expenses for all governmental activities. This chart is intended to give the reader an idea of the degree to which governmental activities are self-supporting. The following pie chart illustrates the composition of governmental activities revenue and its percent in relation to total governmental activities revenues. $0  $2,000,000  $4,000,000  $6,000,000  $8,000,000  $10,000,000  $12,000,000  $14,000,000  General governmentPublic safetyTransportation/public  works  Culture & recreationPhysical environment  and other Interest on long‐term  debt $3,643,321  $12,530,840  $1,661,325 $1,821,837  $380,722 $156,185  $1,695,584 $1,413,879  $306,159 $538,929  $0 $0  Expenses and Program Revenues -Governmental Activities Expenses Program revenues Intergovernmental,  23.4% Charges for services,  13.0% Operating grants and  contributions, 6.2% Investment income &  miscellaneous , 2.4% Other taxes, 24.4% Capital grants and  contributions, 0.6% Property taxes, 30.0% Revenues by Source -Governmental Activities Intergovernmental Charges for services Operating grants and contributions Investment income & miscellaneous Other taxes Capital grants and contributions Property taxes 7 Business-type activities - Business-type activities increased the City of Clermont’s net assets by $806,829. This change was due to capital contributions totaling $998,446. These contributions are water and sewer impact fees paid by developers. The fees were adopted by the City to require new development to pay its proportionate share of the capital costs necessary to accommodate new development impacts on the City’s water and sewer system. The City is using this revenue for large capital projects that are currently under construction such as Lift Station Improvements and the Reclaim Water System Expansion. The following graph is a comparison of program revenues and program expenses for all business- type activities. This chart is intended to give the reader an idea of the degree to which business- type activities are self-supporting. The following pie chart illustrates the composition of business-type activities revenue and its percent in relation to total business-type activities revenues. $0  $1,000,000  $2,000,000  $3,000,000  $4,000,000  $5,000,000  $6,000,000  $7,000,000  $8,000,000  Water SewerSanitationStormwater $4,460,605  $6,021,892  $2,364,382  $954,799  $5,657,264 $5,782,594  $2,688,474  $855,418  Expenses and Program Revenues -Business Type Activities Expenses Program Revenue Investment income &  miscellaneous , 1.0% Charges for Services,  92.4% Capital Grants and  Contributions, 6.6% Revenues by Source -Business Activities Investment income & miscellaneous Charges for Services Capital Grants and Contributions 8 Financial Analysis of the City’s Funds As noted earlier, the City of Clermont uses fund accounting to ensure and demonstrate compliance with finance-related requirements. Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Clermont’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of September 30, 2011, the City of Clermont’s governmental funds reported combined ending fund balances of $21,529,812 a decrease of $647,913 in comparison with the prior year. This decrease is primarily due to the use of accumulated funds for the completion of planned capital projects. Of the governmental funds combined ending fund balances, $10,046,694 (46.7%) represents unassigned fund balance, which is available for spending at the City’s discretion. An additional $3,765,884 (assigned fund balance) has been set aside for FY 2012 capital projects and expenditures. Restricted fund balances totaling over $6.5 million include funds required for debt service, as well as funds collected for specific purposes such as impact fees and community redevelopment. The remainder of fund balance is non spendable ($1,183,370) to indicate that it is not available for spending because it has already been committed for inventories and prepaid expenses, or it is being held in a non-expendable trust fund. The General Fund is the chief operating fund of the City of Clermont. As of September 30, 2011, the fund balance in the General Fund was $11,469,528 a decrease of $134,007 in comparison with the prior year. This decrease is due to current expenditures exceeding current revenues, however, this is nearly $1.4 million less than originally budgeted and over $1.9 million less than the revised budget. Revenues exceeded budget by $613,454 mainly attributable to tax receipts coming in higher than anticipated due to additional collections of delinquent taxes as well as fewer taxpayers taking advantage of the early payment discounts. Departmental expenditures also came in less than anticipated reducing the amount of reserves used. Of the total fund balance in the General Fund, $10,047,810 (87.6%) is unassigned fund balance. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 58.3% of total General Fund expenditures, while total fund balance represents 66.5% of that same amount. The City also has a Capital Projects Fund that is considered a major fund under criteria set forth by GASB Statement No. 34. This fund is used to account for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds. Funds have been accumulated so projects can be completed on a pay-as-you-go basis. During fiscal year 2010- 11, the fund balance of the capital projects fund decreased by $123,875 due to completion of planned capital projects. Additional on-going projects are expected to be completed during FY 2012 utilizing the balance of the accumulated funds. The Community Redevelopment Special Revenue Fund is considered a major fund in order for our external auditors to express an opinion on this fund as required by Florida Statutes chapter 163.387(8). This fund was created in 1997 as a dependent taxing district. The incremental annual increase in tax over the base years is used to fund projects. As of September 30, 2011, the fund balance was $1,658,517 an increase of $185,783 over the prior year. This increase is due to additional delays in the streetscape improvements project. 9 The remainder of the change $575,814 to the governmental fund balance was from the non- major governmental funds. The Infrastructure Fund balance increased by $443,502 mainly due to an increase in state infrastructure tax receipts. Recreation and Fire Impact Fee fund balances combined decreased a total of $1,072,297 due to the planned use of funds for capital projects. The fund balances in the remaining non-major funds increased a total of $52,981. Proprietary Funds. Proprietary funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City’s major proprietary funds are water, sewer and sanitation. The Water Fund accounts for the provision of potable water service to City and non-City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of September 30, 2011, the City of Clermont’s Water Fund reported total net assets of $29,163,622, an increase of $694,600 in comparison with the prior year. This increase in net assets was a result of surplus operating income primarily due to lower than anticipated operating expenses. The Sewer Fund accounts for the provision of sewer services to City and non-City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of September 30, 2011, the City of Clermont’s Sewer Fund reported total net assets of $47,103,846, a decrease of $202,537 in comparison with the prior year. This decrease is primarily due to the completion of capital projects. The Sanitation Fund accounts for the provision of garbage and trash collection, recycling, and composting services to City residents. All activities necessary to the provision of these services are accounted for in this fund. As of September 30, 2011, the City of Clermont’s Sanitation Fund reported total net assets of $4,176,414, an increase of $318,052 in comparison with the prior year, which is primarily due to surplus operating income. General Fund Budgetary Highlights During the year there was a $1,202,822 increase in appropriations between the original and final amended budget. Following are the main components of the increase: • $599,588 for expenditures associated with several public safety grants. These grants had not yet been awarded at the start of the fiscal year. • $412,352 for increases in the City’s contribution to the Group Self Insurance Fund. • $25,000 for a lawsuit settlement. • $27,504 for software maintenance costs for the Police Department. • $14,500 for the cost of mosquito control spraying. • $22,552 for the cost of staffing lifeguards at the Waterfront Park. • $50,616 for the costs of a labor attorney. 10 • $16,952 for the purchase of equipment to provide connectivity to the Fire Department mobile data terminals. • $18,867 to cover the deficit in the Building Services Fund. General Fund revenue increases totaling $618,168 were due to the receipt of several public safety grants, which were awarded after the beginning of the fiscal year. Even considering the above noted increases in General Fund budgeted appropriations, actual expenditures were less than budgeted by $1,247,546. In addition, actual revenues exceeded the budget by $613,454. Capital Assets The following is a summary of the City of Clermont’s capital assets, net of depreciation for governmental and business-type activities for the current year with a comparison to the prior year. Additional information on the City of Clermont’s capital assets can be found in Note 6 on pages 45 - 46 of this report. 2010-112009-102010-112009-102010-112009-10 Land 22,128,032$ 22,128,032$ 1,851,483$ 1,457,973$ 23,979,515$ 23,586,005$ Buildings 8,598,119 7,723,916 - 76 8,598,119 7,723,992 Infrastructure 4,921,173 4,206,113 61,789,590 60,468,734 66,710,763 64,674,847 Machinery and Equipment1,489,583 1,992,930 1,365,717 1,579,181 2,855,300 3,572,111 Intangibles 206,250 324,821 - - 206,250 324,821 Construction in progress 1,120,318 1,480,988 6,572,084 7,667,691 7,692,402 9,148,679 Total 38,463,475$ 37,856,800$ 71,578,874$ 71,173,655$ 110,042,349$ 109,030,455$ CITY OF CLERMONT’S Capital Assets (net of depreciation) Governmental ActivitiesBusiness-type Activities Total The City of Clermont’s investment in capital assets for its governmental and business-type activities as of September 30, 2011, amounts to $110,042,349 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements/infrastructure, machinery and equipment and intangibles. The total change in the City’s investment in capital assets for the current fiscal year was $1,011,894. Major capital asset events during the current fiscal year included the following: • Completion of the Waterfront Pavilion – $1,221,060 was added and prior years Construction in Progress in the amount of $207,295 was moved to Buildings for a total project cost of $1,428,355. • Completion of the West Park Renovations – $718,200 was added and prior years Construction in Progress in the amount of $156,498 was moved to Infrastructure/Improvements for a total project cost of $874,698. • Completion of the Third Street Reconstruction – $248,410 was added and prior years Construction in Progress in the amount of $233,565 was moved to Infrastructure/Improvements for a total project cost of $481,975. • Completion of the Equalization Wastewater Basin – $3,000 was added and prior years Construction in Progress in the amount of $1,189,630 was moved to Infrastructure/Improvements for a total project cost of $1,192,630. • Construction in progress includes construction of the Community Center, Police Headquarters Expansion, Meter Replacement Program, Water and Sewer Security Improvements and Reclaim Water System Expansion. 11 Debt Administration The following is a summary of the City’s long-term debt for governmental and business-type activity for the current year with a comparison to the prior year. Additional information on long- term debt can be found in Note 7 on pages 47 - 49 of this report. 2010-112009-102010-112009-102010-112009-10 Revenue bonds payable3,570,000$ 4,040,000$ 16,105,000$ 16,640,000$ 19,675,000$ 20,680,000$ Total 3,570,000$ 4,040,000$ 16,105,000$ 16,640,000$ 19,675,000$ 20,680,000$ CITY OF CLERMONT’S Outstanding Debt Governmental ActivitiesBusiness-type Activities Total At the end of the current fiscal year, the City of Clermont had total debt outstanding of $19,675,000, which includes revenue bonds payable. Economic Factors and Next Year’s Budgets and Rates • The annual unemployment rate for Lake County in 2011 was 10.6%, which is a decrease of 1.8% from 2010. It is higher than both the state’s average of 10.5% and the national average of 8.9%. • The taxable value of commercial and residential property decreased 15.1% from fiscal year 2009-10 to fiscal year 2010-11 due to declining home values and foreclosures. • Population increased 2.14% from 28,742 in 2010 to 29,358 in 2011. As of September 30, 2011, the General Fund unassigned fund balance was $10,047,810. The City appropriated $912,137 of this amount for spending in the 2011-12 fiscal year budget. The same property tax rate is included for the General Fund for the 2011-12 fiscal year budget. However, property tax revenue is projected to be $685,865 lower in fiscal year 2011-12 due to continued declining home values and foreclosures. No utility rate adjustments were proposed for the 2011-12 fiscal year with the exception of the sewer rate structure. The sewer rates increased 1.18% on October 1, 2011 pursuant to a required adjustment in accordance with the Florida Public Service Commission Annual Deflator Index previously adopted by the Clermont City Council. Requests for Information This financial report is designed to provide a general overview of the City of Clermont’s finances for all those with an interest in the government’s finances. Questions concerning any of the information should be addressed to the office of the Administrative Services Director, City of Clermont, P.O. Box 120219, Clermont, Florida 34712. 12 BASIC FINANCIAL STATEMENTS CITY OF CLERMONT, FLORIDA STATEMENT OF NET ASSETS September 30, 2011 Primary Government Governmental Activities Business-type Activities Total Assets: Cash and cash equivalents 18,173,957$ 11,155,288$ 29,329,245$ Investments 3,080,394 8,049,397 11,129,791 Receivables, net 277,290 1,233,230 1,510,520 Inventories 33,873 327,377 361,250 Due from other governments 455,699 1,231 456,930 Internal balances 28,606 (28,606) - Prepaid costs 302,237 125,194 427,431 Restricted assets: Cash and cash equivalents - 1,427,468 1,427,468 Investments - 8,149,904 8,149,904 Interest receivable 2,787 64,411 67,198 Bond issuance costs - 363,297 363,297 Capital assets not being depreciated 23,248,3508,423,567 31,671,917 Capital assets being depreciated, net of accumulated depreciation 15,215,125 63,155,307 78,370,432 Total assets 60,818,318 102,447,065 163,265,383 Liabilities: Accounts payable and accrued expenses 672,3521,221,1081,893,460 Noncurrent liabilities: Due within one year 552,221 603,118 1,155,339 Due in more than one year 4,853,675 15,576,222 20,429,897 Total liabilities 6,078,248 17,400,448 23,478,696 Net Assets: Invested in capital assets, net of related debt 34,893,475 56,430,326 91,323,801 Restricted for: Capital Improvements - 9,240,407 9,240,407 Community redevelopment 1,658,499 - 1,658,499 Public safety 2,667,477 - 2,667,477 Culture and recreation 312,055 - 312,055 Infrastructure 1,401,692 - 1,401,692 Debt service 494,141 - 494,141 Perpetual care: Nonexpendable 847,260 - 847,260 Unrestricted 12,465,471 19,375,884 31,841,355 Total net assets 54,740,070$ 85,046,617$ 139,786,687$ The accompanying Notes to Financial Statements are an integral part of this statement. 13 CI T Y O F C L E R M O N T , F L O R I D A ST A T E M E N T O F A C T I V I T I E S Fu n c t i o n s / P r o g r a m s : Ex p e n s e s Ch a r g e s f o r Se r v i c e s Op e r a t i n g G r a n t s an d C o n t r i b u t i o n s Ca p i t a l G r a n t s an d Co n t r i b u t i o n s Go v e r n m e n t a l Ac t i v i t i e s Bu s i n e s s - t y p e ActivitiesTotal Go v e r n m e n t a l A c t i v i t i e s : Ge n e r a l g o v e r n m e n t 3, 6 4 3 , 3 2 1 $ 1, 6 9 5 , 5 8 4 $ - $ - $ (1 , 9 4 7 , 7 3 7 ) $ - $ (1,947,737)$ Pu b l i c s a f e t y 12 , 5 3 0 , 8 4 0 35 4 , 6 6 4 93 0 , 4 2 9 12 8 , 7 8 6 (1 1 , 1 1 6 , 9 6 1 ) - (11,116,961) Ph y s i c a l e n v i r o n m e n t 27 9 , 2 3 6 - - - (2 7 9 , 2 3 6 ) - (279,236) Tr a n s p o r t a t i o n / p u b l i c w o r k s 1, 6 6 1 , 3 2 5 - 30 6 , 1 5 9 - (1 , 3 5 5 , 1 6 6 ) - (1,355,166) Ec o n o m i c e n v i r o n m e n t 10 1 , 4 8 6 - - - (1 0 1 , 4 8 6 ) - (101,486) Cu l t u r e a n d r e c r e a t i o n 1, 8 2 1 , 8 3 7 53 8 , 9 2 9 - - (1 , 2 8 2 , 9 0 8 ) - (1,282,908) In t e r e s t o n l o n g - t e r m d e b t 15 6 , 1 8 5 - - - (1 5 6 , 1 8 5 ) - (156,185) To t a l g o v e r n m e n t a l a c t i v i t i e s 20 , 1 9 4 , 2 3 0 2, 5 8 9 , 1 7 7 1, 2 3 6 , 5 8 8 12 8 , 7 8 6 (1 6 , 2 3 9 , 6 7 9 ) - (16,239,679) Bu s i n e s s - t y p e a c t i v i t i e s W a t e r 4, 4 6 0 , 6 0 5 5, 3 7 6 , 8 9 0 - 28 0 , 3 7 4 - 1 , 1 9 6 , 6 5 9 1,196,659 Se w e r 6, 0 2 1 , 8 9 2 5, 0 6 4 , 5 2 2 - 71 8 , 0 7 2 - ( 2 3 9 , 2 9 8 ) (239,298) Sa n i t a t i o n 2, 3 6 4 , 3 8 2 2, 6 8 8 , 4 7 4 - - - 3 2 4 , 0 9 2 324,092 St or m wat e r 95 4 , 7 9 9 85 5 , 4 1 8 - - - ( 9 9 , 3 8 1 ) (99,381) To t a l b u s i n e s s - t y p e a c t i v i t i e s 13 , 8 0 1 , 6 7 8 13 , 9 8 5 , 3 0 4 - 99 8 , 4 4 6 - 1 , 1 8 2 , 0 7 2 1,182,072 To t a l p r i m a r y g o v e r n m e n t 33 , 9 9 5 , 9 0 8 $ 16 , 5 7 4 , 4 8 1 $ 1, 2 3 6 , 5 8 8 $ 1, 1 2 7 , 2 3 2 $ (1 6 , 2 3 9 , 6 7 9 ) 1,182,072 (15,057,607) Ge n e r a l r e v e n u e s : Pr o p e r t y t a x e s 5, 9 6 5 , 7 3 1 - 5,965,731 Fr a n c h i s e f e e s 2, 2 8 4 , 8 3 9 - 2,284,839 U t i l i t y t a x e s 2, 5 6 8 , 1 4 1 - 2,568,141 In t e r g o v e r n m e n t a l - u n r e s t r i c t e d 4, 6 6 4 , 3 9 3 - 4,664,393 Un r e s t r i c t e d i n v e s t m e n t e a r n i n g s 14 8 , 1 9 5 145,153 293,348 Mi s c e l l a n e o u s 32 9 , 6 6 2 - 329,662 Tr a n s f e r s 52 0 , 3 9 6 (520,396) - To t a l g e n e r a l r e v e n u e s a n d t r a n s f e r s 16 , 4 8 1 , 3 5 7 (375,243) 16,106,114 Ch a n g e i n n e t a s s e t s 24 1 , 6 7 8 806,829 1,048,507 Ne t a s s e t s - b e g i n n i n g 54 , 4 9 8 , 3 9 2 84,239,788 138,738,180 Ne t a s s e t s - e n d i n g 54 , 7 4 0 , 0 7 0 $ 85,046,617 $ 139,786,687$ Ye a r E n d e d S e p t e m b e r 3 0 , 2 0 1 1 Pr o g r a m R e v e n u e C h a n g e s i n N e t A s s e t s Pr i m a r y G o v e r n m e n t Ne t ( E x p e n s e ) R e v e n u e a n d Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h i s s t a t e m e n t . 14 GeneralCapital Projects Community Redevelopment Special Revenue Other Governmental Funds Total Governmental Funds Assets: Cash and cash equivalents 7,996,599$ 2,876,268$ 1,658,499$ 5,452,461$ 17,983,827$ Investments 3,080,394 - - - 3,080,394 Receivables, net 277,913 - - - 277,913 Inventories, at cost 33,873 - - - 33,873 Due from other governments 328,946 - - 126,753 455,699 Prepaid costs 301,112 - 18 1,107 302,237 Total assets 12,018,837$ 2,876,268$ 1,658,517$ 5,580,321$ 22,133,943$ Liabilities and Fund Balances: Liabilities: Accounts payable 288,945$ 22,521$ -$ 32,301$ 343,767$ Deferred revenue 96,278 - - - 96,278 Accrued liabilities 164,086 - - - 164,086 Total liabilities 549,309 22,521 - 32,301 604,131 Fund balances: Non spendable 334,985 - 18 848,367 1,183,370 Restricted 174,596 - 1,658,499 4,700,769 6,533,864 Assigned 912,137 2,853,747 - - 3,765,884 Unassigned 10,047,810 - - (1,116) 10,046,694 Total fund balances 11,469,528 2,853,747 1,658,517 5,548,020 21,529,812 Total liabilities and fund balances 12,018,837$ 2,876,268$ 1,658,517$ 5,580,321$ 38,463,475 (50,900) 96,278 107,301 (5,405,896) 54,740,070$ CITY OF CLERMONT, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2011 Amounts reported for governmental activities in the Statement of Net Assets are different because: Other long-term assets are not available to pay for current period expenditures and, therefore are deferred in the funds Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Accrued interest payable is not due in the current period and therefore is not reported in the funds. The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the governmental activities of the Statement of Net Assets. Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Net Assets of Governmental Activities in the Statement of Net Assets The accompanying Notes to Financial Statements are an integral part of this statement. 15 General Capital Projects Community Redevelopment Special Revenue Other Governmental Funds Total Governmental Funds Revenues: Taxes 10,586,864$ -$ 231,847$ -$ 10,818,711$ Licenses and permits 236,659 - - 291,199 527,858 Intergovernmental revenues 4,160,335 - - 1,899,202 6,059,537 Charges for services 975,802 - - 37,514 1,013,316 Fines and forfeitures 185,614 - - - 185,614 Impact fees/special assessments - - - 582,282 582,282 Investment earnings 98,072 7,127 8,632 34,364 148,195 Miscellaneous 561,375 - - 50,400 611,775 Total revenues 16,804,721 7,127 240,479 2,894,961 19,947,288 Expenditures: Current: General government 2,720,658 144,760 - 406,377 3,271,795 Public safety 11,452,451 41,901 - 130,973 11,625,325 Physical environment 274,738 - - - 274,738 Transportation 1,052,759 - - 418,917 1,471,676 Economic environment 47,592 - 54,696 - 102,288 Culture and recreation 1,688,432 58,878 - 44,774 1,792,084 Debt Service: Principal retirement - - - 470,000 470,000 Interest and fiscal charges - - - 162,256 162,256 Capital Outlay: General government - 6,671 - - 6,671 Culture and recreation - 1,916,484 - - 1,916,484 Total expenditures 17,236,630 2,168,694 54,696 1,633,297 21,093,317 Excess (Deficiency) of Revenues Over Expenditures (431,909) (2,161,567) 185,783 1,261,664 (1,146,029) Other Financing Sources (Uses): Transfers in 541,868 2,077,132 - 655,277 3,274,277 Transfers out (243,966) (39,440) - (2,492,755) (2,776,161) Total other financing sources (uses)297,902 2,037,692 - (1,837,478) 498,116 Net Change in Fund Balances (134,007) (123,875) 185,783 (575,814) (647,913) Fund Balances - Beginning 11,603,535 2,977,622 1,472,734 6,123,834 22,177,725 Fund Balances - Ending 11,469,528$ 2,853,747$ 1,658,517$ 5,548,020$ 21,529,812$ Year Ended September 30, 2011 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS The accompanying Notes to Financial Statements are an integral part of this statement. 16 Net change in fund balances - total governmental funds:(647,913)$ Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. In contrast, the Statement of Activities reports only a portion of the outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation expense for the period.599,739 The net effect of sales of capital assets is to decrease net assets.(15,344) Revenue reported in the funds must be eliminated from the statement of activities since revenue was recognized in a prior year (31,776) Governmental funds report bond proceeds as current financial resources. In contrast, the Statement of Activities treats such issuance of debt as a liability. Governmental funds report repayment of bond principal as an expenditure, In contrast, the Statement of Activities treats such repayments as a reduction in long-term liabilities. This is the amount by which repayments exceeded proceeds. 470,000 Some expenses reported in the statement of activities do not require the use of current financial resources and these are not reported as expenditures in governmental funds.(419,864) Contributions of capital assets from proprietary funds 22,280 Internal service funds are used by management to charge the costs of certain activities, such as fleet maintenance and information technology, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities.264,556 Change in net assets of governmental activities 241,678$ RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year Ended September 30, 2011 CITY OF CLERMONT, FLORIDA The accompanying Notes to Financial Statements are an integral part of this statement. 17 Budgeted Amounts Actual Amounts, Budgetary Basis Variance with Final Budget - Positive (Negative) Original Final Revenues: Taxes 9,894,072$ 9,894,072$ 10,586,864$ 692,792$ Licenses and permits 209,800 209,800 236,659 26,859 Intergovernmental revenues 3,568,434 4,186,602 3,774,759 (411,843) Charges for services 987,717 987,717 975,802 (11,915) Fines and forfeitures 145,000 145,000 185,614 40,614 Investment earnings 78,750 78,750 98,072 19,322 Miscellaneous 303,750 303,750 561,375 257,625 Total revenues 15,187,523 15,805,691 16,419,145 613,454 Expenditures: Current: General government: City council 27,233 27,233 24,184 3,049 City clerk 208,829 211,488 198,040 13,448 City manager 403,841 409,223 356,975 52,248 Administrative services 1,153,838 1,171,356 1,142,583 28,773 Legal services 113,000 163,616 160,150 3,466 Planning & zoning 545,676 558,923 455,493 103,430 Engineering 94,413 97,694 94,926 2,768 Other general government 297,535 322,535 288,307 34,228 2,844,365 2,962,068 2,720,658 241,410 Public Safety: Law enforcement 6,127,547 6,562,158 5,965,016 597,142 Fire control 4,755,015 5,277,457 5,101,859 175,598 10,882,562 11,839,615 11,066,875 772,740 Physical environment 292,420297,449274,738 22,711 Transportation 1,187,0271,215,0601,052,759162,301 Economic environment 63,385 63,385 47,592 15,793 Culture and recreation 1,626,019 1,721,023 1,688,432 32,591 Total expenditures 16,895,778 18,098,600 16,851,054 1,247,546 GENERAL FUND Year Ended September 30, 2011 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL The accompanying Notes to Financial Statements are an integral part of this statement. 18 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED) Budgeted Amounts Actual Amounts, Budgetary Basis Variance with Final Budget - Positive (Negative) Original Final Over Expenditures (1,708,255) (2,292,909) (431,909) 1,861,000 Other Financing Sources (Uses): Transfers in 411,000 450,440 541,868 91,428 Transfers out (224,547) (243,966) (243,966) - Total other financing sources (uses)186,453 206,474 297,902 91,428 Net Change in Fund Balance (1,521,802) (2,086,435) (134,007) 1,952,428 Fund Balance - Beginning 11,603,535 11,603,535 11,603,535 - Fund Balance - Ending 10,081,733$ 9,517,100$ 11,469,528$ 1,952,428$ Excess (Deficiency) of Revenues CITY OF CLERMONT, FLORIDA GENERAL FUND Year Ended September 30, 2011 The accompanying Notes to Financial Statements are an integral part of this statement. 19 20 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Taxes231,060$ 231,060$ 231,847$ 787$ Investment earnings 3,750 3,750 8,632 4,882 Total revenues 234,810 234,810 240,479 5,669 Expenditures: Economic environment: Economic development 1,529,5611,529,881 54,696 1,475,185 Total expenditures 1,529,561 1,529,881 54,696 1,475,185 Excess (Deficiency) of Revenues Over Expenditures (1,294,751) (1,295,071) 185,783 1,480,854 Net Change in Fund Balances (1,294,751) (1,295,071) 185,783 1,480,854 Fund Balances - Beginning 1,472,734 1,472,734 1,472,734 - Fund Balances - Ending 177,983$ 177,663$ 1,658,517$ 1,480,854$ CITY OF CLERMONT, FLORIDA COMMUNITY REDEVELOPMENT SPECIAL REVENUE FUND Year Ended September 30, 2011 The accompanying Notes to Financial Statements are an integral part of this statement. 21 Governmental Activities- Water Sewer Sanitation Stormwater Total Internal Service Fund Assets: Current assets: Cash and cash equivalents 2,929,130$ 3,355,040$ 3,205,028$ 1,666,090$ 11,155,288$ 190,130$ Investments 8,049,397 - - - 8,049,397 - Restricted cash and cash equivalents 733,649 693,819 - - 1,427,468 - Accounts receivable, net 452,951 457,741 244,021 78,517 1,233,230 2,164 Receivables from other governments - - 1,231 - 1,231 - Inventories 295,905 31,472 - - 327,377 - Prepaid expenses 46,491 45,814 23,681 9,208 125,194 - Total current assets 12,507,523 4,583,886 3,473,961 1,753,815 22,319,185 192,294 Non-current assets: Restricted investments - 8,149,904 - - 8,149,904 - Interest receivable 32,129 32,282 - - 64,411 - Bond issuance costs 130,787 232,510 - - 363,297 - Capital assets: Land , buildings and equipment 26,876,127 53,443,647 2,494,346 4,058,862 86,872,982 - Construction in progress 3,067,792 3,455,437 - 48,855 6,572,084 - Less accumulated depreciation (6,967,823) (12,236,921) (1,583,811) (1,077,637) (21,866,192) - Total capital assets (net of accumulated depreciation)22,976,096 44,662,163 910,535 3,030,080 71,578,874 - Total non-current assets 23,139,012 53,076,859 910,535 3,030,080 80,156,486 - Total assets 35,646,535 57,660,745 4,384,496 4,783,895 102,475,671 192,294 CITY OF CLERMONT, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS September 30, 2011 Business-type Activities-Enterprise Funds The accompanying Notes to Financial Statements are an integral part of this statement 22 Liabilities: Current liabilities: Accounts payable 150,324 287,126 69,045 92,025 598,520 113,599 Salaries payable 28,046 27,373 13,678 8,024 77,121 - Accrued interest payable 72,753 129,338 - - 202,091 - Compensated absences 11,530 7,013 2,493 2,082 23,118 - Customer deposits payable 343,376 - - - 343,376 - Revenue bonds payable-current 208,800 371,200 - - 580,000 - Total current liabilities 814,829 822,050 85,216 102,131 1,824,226 113,599 Non-current liabilities: Compensated absences 103,772 63,116 22,436 18,741 208,065 - Other post employment benefits 183,181 121,019 100,430 31,682 436,312 - Revenue bonds payable 5,381,131 9,550,714 - - 14,931,845 - Total non-current liabilities 5,668,084 9,734,849 122,866 50,423 15,576,222 - Total liabilities 6,482,913 10,556,899 208,082 152,554 17,400,448 113,599 Net Assets: Invested in capital assets, net of related debt 17,516,952 34,972,759 910,535 3,030,080 56,430,326 - Restricted for capital improvements 383,463 8,856,944 - - 9,240,407 - Unrestricted 11,263,207 3,274,143 3,265,879 1,601,261 19,404,490 78,695 Total net assets 29,163,622$ 47,103,846$ 4,176,414$ 4,631,341$ 85,075,223 78,695$ (28,606) Total net assets per Government-Wide financial statements 85,046,617$ The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the Business Activities of the Statement of Net Assets. The accompanying Notes to Financial Statements are an integral part of this statement 23 24 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS Governmental Activities- Water Sewer Sanitation Stormwater Total Internal Service Fund Operating Revenues: Charges for services 5,045,721$ 5,064,522$ 2,677,531$ 847,371$ 13,635,145$ 3,285,937$ Miscellaneous 331,169 - 10,943 8,047 350,159 1,083 Total operating revenues 5,376,890 5,064,522 2,688,474 855,418 13,985,304 3,287,020 Operating Expenses: Personal services 1,672,238 1,486,320 840,305 465,558 4,464,421 - Utilities 459,731 679,152 1,701 - 1,140,584 - Dump fees - 130,590 537,741 7,982 676,313 - Administrative services 331,133 310,933 146,646 38,360 827,072 - Repairs and maintenance 383,259 302,000 212,962 54,406 952,627 - Depreciation and amortization 787,791 2,032,894 313,732 284,785 3,419,202 - Professional services 237,083 322,628 18,310 50,182 628,203 - Insurance claims and expenses 160,204 167,693 23,625 11,905 363,427 2,928,460 Other supplies and expenses 240,188 197,440 293,009 48,791 779,428 - Total operating expenses 4,271,627 5,629,650 2,388,031 961,969 13,251,277 2,928,460 Operating income (loss)1,105,263 (565,128) 300,443 (106,551) 734,027 358,560 Non-Operating Revenues (Expenses): Investment income 51,601 68,282 16,009 9,261 145,153 - Interest expense (237,478) (423,003) - - (660,481) - Gain (loss) on disposal of capital assets 14,476 - 1,600 - 16,076 - Total non-operating revenue (expenses)(171,401) (354,721) 17,609 9,261 (499,252) - Income (loss) before contributions and transfers 933,862 (919,849) 318,052 (97,290) 234,775 358,560 Capital contributions 280,374 718,072 - - 998,446 - Transfers out (519,636) (760) - - (520,396) - Change in net assets 694,600 (202,537) 318,052 (97,290) 712,825 358,560 Total Net Assets - Beginning 28,469,022 47,306,383 3,858,362 4,728,631 (279,865) Total Net Assets - Ending 29,163,622$ 47,103,846$ 4,176,414$ 4,631,341$ 78,695$ 94,004 Change in Business-Type Activities in Net Assets per Government-Wide Financial Statements 806,829$ Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain internal service funds is reported with Business Activities. Business-type Activities-Enterprise Funds Year Ended September 30, 2011 The accompanying Notes to Financial Statements are an integral part of this statement. 25 Governmental Activities- Internal Service Water Sewer Sanitation Stormwater Total Fund Cash Flows from Operating Activities: Receipts from customers 5,411,406$ 5,052,560$ 2,685,598$ 854,751$ 14,004,315$ -$ Receipts from internal services provided - - - - - 3,284,884 Payments to suppliers (1,944,468) (2,209,180) (1,225,454) (149,117) (5,528,219) (2,922,797) Payments to employees (1,683,966) (1,490,577) (829,417) (484,653) (4,488,613) - Net cash provided (used) by operating activities 1,782,972 1,352,803 630,727 220,981 3,987,483 362,087 Cash Flows from Non-Capital Financing Activities: Decrease due to other funds - - - - - (230,957) Decrease in due from other governments - - 139 - 139 - Transfers out (498,116) - - - (498,116) - Net cash provided (used) by non-capital financing activities (498,116) - 139 - (497,977) (230,957) Cash Flows from Capital and Related Financing Activities: Acquisition of capital assets (2,420,220) (761,797) (238,711) (425,973) (3,846,701) - Sale of capital assets 14,476 - 1,600 16,076 - Interest paid on long-term debt (221,810) (394,335) - - (616,145) - Principal paid on debt (192,600) (342,400) (535,000) - Fees and assessments received 280,374 718,072 - - 998,446 - Net cash provided (used) by capital and related financing activities (2,539,780) (780,460) (237,111) (425,973) (3,983,324) - Business-Type Activities-Enterprise Funds CITY OF CLERMONT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended September 30, 2011 The accompanying Notes to Financial Statements are an integral part of these statements. 26 Ca s h F l o w s f r o m I n v e s t i n g A c t i v i t i e s : S a l e ( P u r c h a s e ) o f i n v e s t m e n t s 2, 8 2 8 , 2 3 6 (5 4 2 , 9 8 3 ) - - 2 , 2 8 5 , 2 5 3 - I n v e s t m e n t i n c o m e 10 9 , 4 9 1 10 5 , 1 5 9 16 , 0 0 9 9, 2 6 1 239,920 - N e t c a s h p r o v i d e d b y i n v e s t i n g a c t i v i t i e s 2, 9 3 7 , 7 2 7 (4 3 7 , 8 2 4 ) 16 , 0 0 9 9, 2 6 1 2, 5 2 5 , 1 7 3 - Ne t I n c r e a s e ( D e c r e a s e ) i n C a s h a n d C a s h E q u i v a l e n t s 1, 6 8 2 , 8 0 3 13 4 , 5 1 9 40 9 , 7 6 4 (1 9 5 , 7 3 1 ) 2, 0 3 1 , 3 5 5 131,130 Ca s h a n d C a s h E q u i v a l e n t s - B e g i n n i n g 1, 9 7 9 , 9 7 6 3, 9 1 4 , 3 4 0 2, 7 9 5 , 2 6 4 1, 8 6 1 , 8 2 1 10 , 5 5 1 , 4 0 1 59,000 Ca s h a n d C a s h E q u i v a l e n t s - E n d 3, 6 6 2 , 7 7 9 $ 4, 0 4 8 , 8 5 9 $ 3, 2 0 5 , 0 2 8 $ 1, 6 6 6 , 0 9 0 $ 12 , 5 8 2 , 7 5 6 $ 190,130$ Cl a s s i f i e d A s : C a s h a n d c a s h e q u i v a l e n t s 2, 9 2 9 , 1 3 0 $ 3, 3 5 5 , 0 4 0 $ 3, 2 0 5 , 0 2 8 $ 1, 6 6 6 , 0 9 0 $ 11 , 1 5 5 , 2 8 8 $ 190,130$ R e s t r i c t e d c a s h a n d c a s h e q u i v a l e n t s 73 3 , 6 4 9 69 3 , 8 1 9 - - 1 , 4 2 7 , 4 6 8 - T o t a l 3, 6 6 2 , 7 7 9 $ 4, 0 4 8 , 8 5 9 $ 3, 2 0 5 , 0 2 8 $ 1, 6 6 6 , 0 9 0 $ 12 , 5 8 2 , 7 5 6 $ 190,130$ Re c o n c i l i a t i o n o f O p e r a t i n g I n c o m e ( L o s s ) t o N e t C a s h P r o v i d e d B y O p e r a t i n g A c t i v i t i e s O p e r a t i n g i n c o m e ( l o s s ) 1, 1 0 5 , 2 6 3 $ (5 6 5 , 1 2 8 ) $ 30 0 , 4 4 3 $ (1 0 6 , 5 5 1 ) $ 734,027 $ 358,560$ Ad j u s t m e n t s N o t A f f e c t i n g C a s h : D e p r e c i a t i o n a n d a m o r t i z a t i o n 78 7 , 7 9 1 2 , 0 3 2 , 8 9 4 31 3 , 7 3 2 28 4 , 7 8 5 3 , 4 1 9 , 2 0 2 - Ch a n g e i n A s s e t s a n d L i a b i l i t i e s : D e c r e a s e ( I n c r e a s e ) i n a c c t s r e c e i v a b l e 12 , 6 5 3 (1 1 , 9 6 2 ) (2 , 8 7 6 ) (6 6 7 ) (2,852) (2,136) D e c r e a s e ( I n c r e a s e ) i n c u s t o m e r d e p o s i t s 21 , 8 6 3 - - - 21,863 - D e c r e a s e ( I n c r e a s e ) i n p r e p a i d c o s t s (4 , 4 9 1 ) 5, 7 1 5 (4 , 6 1 7 ) (3 , 5 7 8 ) (6,971) - D e c r e a s e ( I n c r e a s e ) i n i n v e n t o r y 85 , 6 6 9 (2 , 9 3 6 ) - - 82,733 - I n c r e a s e ( d e c r e a s e ) i n a c c o u n t s p a y a b l e (2 1 4 , 0 4 8 ) (1 0 1 , 5 2 3 ) 13 , 1 5 7 66 , 0 8 7 (2 3 6 , 3 2 7 ) 5,663 I n c r e a s e ( d e c r e a s e ) i n a c c r u e d l i a b i l i t i e s (1 1 , 7 2 8 ) (4 , 2 5 7 ) 10 , 8 8 8 (1 9 , 0 9 5 ) (24,192) - T o t a l a d j u s t m e n t s 67 7 , 7 0 9 1, 9 1 7 , 9 3 1 33 0 , 2 8 4 32 7 , 5 3 2 3, 2 5 3 , 4 5 6 3,527 Ne t C a s h P r o v i d e d ( U s e d ) b y O p e r a t i n g A c t i v i t i e s 1, 7 8 2 , 9 7 2 $ 1, 3 5 2 , 8 0 3 $ 63 0 , 7 2 7 $ 22 0 , 9 8 1 $ 3, 9 8 7 , 4 8 3 $ 362,087$ No n c a s h i n v e s t i n g , c a p i t a l , a n d f i n a n c i n g a c t i v i t i e s : De c r e a s e i n f a i r v a l u e o f i n v e s t m e n t s (2 6 , 5 3 1 ) $ (4 8 , 6 2 5 ) $ - $ - $ ( 7 5 , 1 5 6 ) $ -$ Tr a n s f e r o f c a p i t a l a s s e t s (2 1 , 5 2 0 ) (7 6 0 ) - - ( 2 2 , 2 8 0 ) - Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h e s e s t a t e m e n t s . 27 CITY OF CLERMONT, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS September 30, 2011 Total Employee Pension Funds Assets: Cash and cash equivalents $ 248,149 Receivables: Employer contribution receivable 3,051 Due from other governments 5,998 Total receivables 9,049 Investments: U.S. Government & other debt securities 5,941,821 Equities 11,754,867 Total investments 17,696,688 Total assets 17,953,886 Liabilities: Refunds payable and other 169,874 Total liabilities 169,874 Net Assets Held in Trust for Pension Benefits 17,784,012$ The accompanying Notes to Financial Statements are an integral part of this statement. 28 CITY OF CLERMONT, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS For the Year Ended September 30, 2011 Total Employee Pension Funds Additions: Contributions: Employer 1,821,218$ Plan members 125,040 State 385,576 Total contributions 2,331,834 Investment earnings: Net increase in fair value of investments 54,988 Total net investment earnings 54,988 Total additions 2,386,822 Deductions: Benefits/distributions 656,649 Administrative 66,668 Total deductions 723,317 Change in Net Assets 1,663,505 Net Assets - Beginning 16,120,507 Net Assets - End 17,784,012$ The accompanying Notes to Financial Statements are an integral part of this statement 29 30 NOTES TO FINANCIAL STATEMENTS CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies: A. Reporting Entity The City of Clermont, Florida (the City) is a political subdivision of the State of Florida located in Lake County. The City of Clermont was incorporated under State law in December 1916 and operates under the council-manager form of government under its charter adopted pursuant to H.B. 2223, Ch.67-1217 Special Acts, of the State of Florida. The legislative branch of the City is composed of a Mayor and four (4) members elected Council. The City Council is responsible for the establishment and adoption of policy. The execution of such policy is the responsibility of the Council appointed City Manager. In evaluating how to define the government, for financial reporting purposes, the City has considered all potential component units. The definition of the reporting entity is based primarily on the notion of financial accountability. A primary government is financially accountable for the organizations that make up its legal entity. It is also financially accountable for legally separate organizations if its officials appoint a voting majority of an organization’s governing body, and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the primary government. A primary government may also be financially accountable for governmental organizations that are fiscally dependent on it. A primary government has the ability to impose its will on an organization if it can significantly influence the programs, projects or activities of, or the level of services performed or provided by, the organization. A financial benefit or burden relationship exists if the primary government (a) is entitled to the organizations’ resources; (b) is legally obligated or has otherwise assumed the obligation to finance the deficits of, or provide financial support to, the organization; or (c) is obligated in some manner for the debt of the organization. In applying the above criteria, the City has one blended component unit as follows: The City of Clermont Community Redevelopment Fund The City of Clermont created the Downtown Redevelopment Agency in May of 1997. This is a dependent taxing district established in accordance with Chapter 163, Part III, Florida Statutes. Notification to affected taxing agency was done in compliance with Chapter 163.346, Part III, Florida Statutes. The incremental annual increase in tax over the base years will be used to fund projects designed to enhance and improve the described area. The City Council, being the duly elected governmental body for the designated area, passed Resolution 97-950, which established the City of Clermont as the Redevelopment Agency for the purpose of carrying out the community redevelopment programs and plans within the area. Through Ordinance 359-M the City established the Community Redevelopment Trust Fund to account for all transactions generated by this special revenue fund. The City of Clermont Community Redevelopment Fund is presented as a blended component unit, since the City Council is the governing board. 31 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 32 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The government reports the following funds: Major Governmental Funds The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Capital Projects Fund account for financial resources segregated for the acquisition or construction of major capital facilities. The Community Redevelopment Fund was established as a dependent taxing district. The incremental annual increase in tax over the base years will be used to fund projects designed to enhance and improve the described area. Non-Major Governmental Fund Types Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted or committed to expenditures for specified purposes other than debt service or capital projects. Debt Service Fund is used to account for the accumulation of resources for the payment of principal and interest on certain long-term debt. Cemetery Perpetual Care accounts for activities of the City relative to cemetery maintenance at specified locations. Fund resources are restricted. Only earnings on invested resources may be used to support these activities. Major Proprietary Funds Water Fund is used to account for the operations of the City’s water system, which is financed in a manner similar to private business enterprises, where the costs, including depreciation, of providing services to the general public on an ongoing basis are financed primarily through user charges. 33 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Major Proprietary Funds (Continued) Sewer Fund is used to account for the operations of the City’s sewer system, which is financed in a manner similar to private business enterprises, where the costs, including depreciation, of providing services to the general public on an ongoing basis are financed primarily through user charges. Sanitation Fund is used to account for the fiscal activities of the City’s refuse collection and disposal operation. Non-Major Proprietary Funds Stormwater Fund (Enterprise Fund) is used to account for the fiscal activities of the City’s stormwater drainage operation, as well as the funding and payment of related debt. Internal Service Fund is used to account for the costs of group insurance which are charged to other departments on a cost reimbursement basis. Fiduciary Funds Pension Trust Funds account for activities of police officers, firefighters and general employees retirement plans which accumulate resources for pension benefit payments to qualified employees. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are other charges between the City’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 34 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s water, sewer, sanitation and stormwater utility funds are charges to customers for sales and services. The City also recognizes as operating revenue the meter fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities, and Net Assets or Equity 1. Deposits and Investments The government’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments of the City are reported at fair value. The City’s investments consist of investments authorized per their investment policy adopted in accordance with Section 218.415, Florida Statutes. The City has implemented Government Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosures. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” 35 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, and Net Assets or Equity - (Continued) 2. Receivables and Payables - (Continued) Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Advances between funds, as reported in the fund financial statements, are offset by a non-spendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. All receivables are shown net of an allowance for uncollectables. The County bills and collects property taxes and remits them to the City. City property tax revenues are recognized when levied to the extent that they result in current receivables. All property is reassessed according to its fair value on the lien date, or January 1 of each year. Taxes are levied on October 1 of each year. Discounts are allowed for early payment at the rate of 4% in the month of November, 3% in the month of December, 2% in the month of January, and 1% in the month of February. The taxes paid in March are without discount. All unpaid taxes become delinquent on April 1 following the year in which they are assessed. On or around May 31 following the tax year, certificates are sold for all delinquent taxes on real property. 3. Inventories and Prepaid Items All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. These are recorded as expenditures when consumed rather than when purchased. 4. Restricted Assets Certain proceeds of the City’s enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate accounts and their use is limited by applicable bond covenants. Assets so designated are identified as restricted assets on the balance sheet. 36 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, and Net Assets or Equity - (Continued) 5. Capital Assets Capital assets, which include property, plant, equipment, intangible and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Capital assets of the City are depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings 10-50 Improvements 15-50 Infrastructure 30-50 Equipment & machinery 3-15 Intangible assets 3-15 6. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. A portion of sick pay is accrued for employees with at least ten (10) years of service. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. For governmental activities, compensated absences, net pension obligations, and net other postemployment benefit obligations are generally liquidated by the general fund. 37 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, and Net Assets or Equity - (Continued) 7. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 8. Fund Equity During 2011, the City implemented GASB 54. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of resources reported in governmental funds. Fund balance classifications under GASB 54 are Nonspendable, Restricted, Committed, Assigned and Unassigned. These classifications reflect not only the nature of the funds, but also provide clarity to the level of restriction placed upon fund balance. Fund balance can have different levels of restraint, such as external versus internal compliance requirements. Unassigned fund balance is a residual classification within the General Fund. The General Fund should be the only fund that reports a positive unassigned fund balance. In all other funds, unassigned is limited to negative residual fund balance. For further details of the various fund balance classifications refer to Note 13. 38 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 2 - Reconciliation of Government-Wide and Fund Financial Statements: A. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $599,739 difference are as follows: Capital outlay 2,605,290$ Depreciation expense (2,005,551) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 599,739$ Another element of that reconciliation states that “the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets.” The details of this $470,000 difference are as follows: Principal repayment 470,000$ Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 470,000$ Another element of that reconciliation states that “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this difference are as follows: Compensated absences (19,352)$ Other post employment benefits (406,583) Accrued interest payable 6,071 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities (419,864)$ 39 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 3 - Stewardship, Compliance, and Accountability: A. Budgetary Information - The City follows these procedures in establishing the budgetary data reflected in the financial statements: (1) Prior to the end of the fiscal year, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. (2) Budget workshops are scheduled as needed. (3) The general summary of the budget and notice of public hearing is published in the local newspaper. (4) Public hearings are conducted to obtain taxpayer comments. (5) Prior to October 1, the budgets are legally enacted through passage of a resolution. (6) The City Manager is authorized to transfer budgeted amounts within departments; however, any revisions that alter the total appropriations of any department must be approved by the City Council. (7) The level of classification detail at which expenditures may not legally exceed appropriations is the department level. (8) Appropriations lapse at the close of the fiscal year to the extent they have not been expended. Encumbrance accounting is not used by the City. (9) Budgets are adopted for the general fund, special revenue funds, debt service funds and the capital projects fund on a basis consistent with generally accepted accounting principles, except as described below under Budget Basis of Accounting. Budgets are also adopted for the enterprise funds: however, these data are not presented under generally accepted accounting principles. (10) The City Council, by Ordinance or Resolution, may make supplemental appropriations in excess of those originally estimated for the year up to the amount of available revenues. Budgeted amounts presented in the accompanying financial statements have been adjusted for legally authorized revisions. 40 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 3 - Stewardship, Compliance, and Accountability (Continued): B. Budgetary Basis of Accounting - The city includes a portion of the prior year’s fund balances represented by unappropriated liquid assets remaining in the fund as budgeted revenue in the succeeding year. The results of operations on a GAAP basis do not recognize the fund balance allocation as revenue as it represents prior periods’ excess of revenues over expenditures. The City does not budget for capital outlay expenditures and other financing sources related to the acquisition of assets through notes payable. Also, the City does not budget for the state pension contributions that must be recorded as intergovernmental revenue and public safety expenditures in the General Fund GAAP financial statements. For the fiscal year ended September 30, 2011 the following adjustments are necessary to convert General Fund revenues and expenditures on the GAAP basis to the budgetary basis: Revenues Expenditures General Fund: GAAP Basis 16,804,721$ 17,236,630$ Nonbudgeted state pension amounts (385,576) (385,576) Budgetary basis 16,419,145$ 16,851,054$ 41 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 4 - Cash and Investments: Deposits At year-end, the carrying amount of the City's deposits was $30,756,713 and the bank balance was $31,259,862. Fiduciary fund cash held by the pension fund is not in the City’s bank. All bank deposits were fully covered by federal depository insurance or by collateral held in banks that are members of the State of Florida's Collateral Pool as specified under Florida law. Florida Statutes provide for collateral pooling by banks and savings and loans. This limits local government deposits to "authorized depositories". Investments Investments in all fund types are stated at fair value, which is the amount for which an investment could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Fair value is based on quoted market prices. Changes in the fair value of investments are recognized as revenue and included in investment income. The City’s investment policies are governed by state statute and city ordinance. Authorized investments are: (a) The Local Government Surplus Funds Trust (SBA). (b) SEC registered money market funds. (c) Interest-bearing time deposits or savings accounts in qualified public depositories. (d) Direct obligations of the U.S. Treasury. (e) Federal agencies and instrumentalities. (f) Securities of, or other interests in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940. (g) Repurchase Agreements. (h) Other investments authorized by ordinance. The assets of the City’s police and firefighters pension funds, as well as the general employees defined benefit pension fund, are invested in the pooled investment fund for the Florida Municipal Pension Trust Fund (FMPTF). Investments held in this fund consist of corporate bonds and stocks and cash equivalents. The fund is stated at fair value, and investment earnings are allocated to participants in the fund based on their equity in this pooled investment account as provided by the Florida Municipal Pension Fund. 42 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 4 - Cash and Investments (Continued): Investments - (Continued) Investments made by the City of Clermont at September 30, 2011 are summarized below. Defined benefit pension plan investments, other than $11,754,867 in mutual funds, investing in equity securities, are included below. In accordance with GASB 31, investments are reported at fair value. Investment Type Fair Value Credit Rating Weighted Average Maturity Federal Agency Bond 13,114,942$ AA+1.96 years US Treasury Notes 2,910,268 AA+1.20 years Corporate Note 2,749,805 AA-1.63 years Municipal Bond 504,680 AA+1.84 years Pension fixed income securities 5,941,821 AA/V4 6.74 years 25,221,516$ Credit Risk: The City’s investment policy limits credit risk by restricting authorized investments to those described above. Custodial Credit Risk: In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City’s investment policy requires that bank deposits be secured as provided by Chapter 280, Florida Statutes. This law requires local governments to deposit funds only in financial institutions designated as qualified public depositories by the Chief Financial Officer of the State of Florida, and creates the Public Deposits Trust Fund, a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a default or insolvency has occurred. At September 30, 2011, all of the city’s bank deposits were in qualified public depositories. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At September 30, 2011, none of the investments listed are exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form. Concentration of Credit Risk: The City’s investment policy requires diversification, but does not specify limits on types of investments. 43 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 4 - Cash and Investments (Continued): Investments - (Continued) Interest Rate Risk: The City’s investment policy does not specifically address interest rate risk, however the general investment policy is to apply the prudent-person rule: Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and in general, avoid speculative investments. The City manages its exposure to declines in fair values by investing primarily in pooled investments that have a weighted average maturity of less than three months. Note 5 - Receivables: Receivables as of yearend for the City’s individual major funds and non-major funds, including the applicable allowances for uncollectible accounts, are as follows: Nonmajor Internal General Water Sewer Sanitation Enterprise Service Fund Fund Fund Fund Fund Fund Total Receivables: Accounts 762,358$ 422,396$ 510,660$ 275,353$ 89,248$ 2,164$ 2,062,179$ Taxes 34,870 - - - - - 34,870 Other 202,147 59,366 - 1,113 - - 262,626 Less allowance for uncollectible accounts (721,462) (28,811) (52,919) (32,445) (10,731) - (846,368) 277,913$ 452,951$ 457,741$ 244,021$ 78,517$ 2,164$ 1,513,307$ 44 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 6 - Capital Assets: Capital asset activity for the year ended September 30, 2011 was as follows: Beginning Balance Increases Decreases Ending Balance Governmental Activities: Capital assets, not being depreciated: Land 22,128,032$ -$ -$ 22,128,032$ Construction in progress 1,480,988 2,296,977 (2,657,647) 1,120,318 Total capital assets, not being depreciated 23,609,020 2,296,977 (2,657,647) 23,248,350 Capital assets, being depreciated: Buildings 12,598,720 1,435,981 - 14,034,701 Improvements/infrastructure 11,704,183 1,258,535 - 12,962,718 Machinery and equipment 7,934,983 372,986 (1,272,247) 7,035,722 Intangibles 632,481 12,918 - 645,399 Total capital assets being depreciated 32,870,367 3,080,420 (1,272,247) 34,678,540 Less accumulated depreciation for: Buildings (4,874,804) (561,778) - (5,436,582) Improvements/infrastructure (7,498,070) (543,475) - (8,041,545) Machinery and equipment (5,942,053) (859,572) 1,255,486 (5,546,139) Intangibles (307,660) (131,489) - (439,149) Total accumulated depreication (18,622,587) (2,096,314) 1,255,486 (19,463,415) Total capital assets being depreciated, net 14,247,780 984,106 (16,761) 15,215,125 Governmental activities capital assets, net 37,856,800$ 3,281,083$ (2,674,408)$ 38,463,475$ 45 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 6 - Capital Assets (Continued): Beginning Balance Increases Decreases Ending Balance Business-type activities: Capital assets, not being depreciated: Land 1,457,973$ 393,510$ -$ 1,851,483$ Construction in progress 7,667,691 2,480,761 (3,576,368) 6,572,084 Total capital assets, not being depreciated 9,125,664 2,874,271 (3,576,368) 8,423,567 Capital assets, being depreciated: Buildings 37,178 - - 37,178 Improvements/infrastructure 76,397,292 4,256,194 - 80,653,486 Machinery and equipment 4,042,698 292,604 (110,399) 4,224,903 Intangibles 105,932 - - 105,932 Total capital assets being depreciated 80,583,100 4,548,798 (110,399) 85,021,499 Less accumulated depreciation for: Buildings (37,102) (76) - (37,178) Improvements/infrastructure (15,928,558) (2,935,338) - (18,863,896) Machinery and equipment (2,463,517) (483,788) 88,119 (2,859,186) Intangibles (105,932) - - (105,932) Total accumulated depreication (18,535,109) (3,419,202) 88,119 (21,866,192) Total capital assets being depreciated, net 62,047,991 1,129,596 (22,280) 63,155,307 Business-type activities capital assets, net 71,173,655$ 4,003,867$ (3,598,648)$ 71,578,874$ Increases in accumulated depreciation for governmental activities include depreciation on assets transferred from business-type, as well as reclassifications and adjustments. This difference is $90,763. Depreciation expense was charged to functions/programs as follows: General government 355,157$ Public safety 1,019,891 Physical environment/transportation 382,216 Culture and recreation 248,287 Total depreciation expense - governmental activities 2,005,551$ Water 787,792$ Sewer 2,032,895 Sanitation 313,732 Stormwater 284,785 Total depreciation expense - business-type activities 3,419,204$ Governmental activities: Business-type activities 46 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 7 - Long-Term Debt: Bonds Payable The City issues bonds to provide funds for the acquisition and construction of major capital assets. Bonds have been issued for both governmental and business-type activities. The 2002 Public Improvement Revenue Bonds are secured by Public Service Tax, Communication Service Tax and Half Cent Sales Tax revenue. The total principal and interest remaining to be paid on this series is $4,181,710. For the fiscal year, principal and interest paid on this series was $632,256 and total pledged revenue was $4,902,055. The 2009 Water and Sewer Revenue and Refunding Bonds are secured by net revenue of the water and sewer system. The total principal and interest remaining to be paid on this series is $23,390,438. For the fiscal year, principal and interest paid on this series was $1,193,633 and total pledged revenue was $3,480,703. The original amount of revenue bonds issued in prior years is described below. Revenue bonds outstanding at year end are as follows: Governmental Activities Interest Rates and Dates Maturity Original Amount Balance September 30, 2011 Public Improvement 1.75 - 4.6%12/1/2003 Revenue Bonds,to Series 2002 (6/1 & 12/1)12/1/2017 6,965,000$ 3,570,000$ Business-Type Activities Water and Sewer Revenue 3.0 - 4.6%12/1/2010 Refunding Bonds,to Series 2009 (6/1 & 12/1)12/1/2030 16,640,000$ 16,105,000$ 47 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 7 - Long-Term Debt (Continued): Bonds Payable - (Continued) Annual debt service requirements to maturity for revenue bonds are as follows: Year ending September 30,Principal Interest Principal Interest 2012 490,000$ 152,700$ 580,000$ 597,573$ 2013 510,000 133,100 595,000 579,948 2014 530,000 112,700 615,000 561,798 2015 550,000 90,440 630,000 543,123 2016 575,000 66,790 650,000 523,922 2017-2021 915,000 55,980 3,565,000 2,293,950 2022-2026 - - 4,265,000 1,583,090 2027-2031 - - 5,205,000 602,034 Total 3,570,000$ 611,710$ 16,105,000$ 7,285,438$ Governmental Activities Business - Type Activities 48 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 7 - Long-Term Debt (Continued): Changes in Long-Term Liabilities Long-term liability activity for the year ended September 30, 2011 was as follows: Beginning Balance Additions Deductions Ending Balance Due Within One Year Governmental activities Bonds payable- Revenue Bonds 4,040,000$ -$ (470,000)$ 3,570,000$ 490,000$ Other post employment benefits 807,105 406,583 - 1,213,688 - Compensated Absences 602,856 79,638 (60,286) 622,208 62,221 Governmental activity long- term liabilities 5,449,961$ 486,221$ (530,286)$ 5,405,896$ 552,221$ Business-type activities Bonds payable- Revenue Bonds 16,640,000$ -$ (535,000)$ 16,105,000$ 580,000$ Less deferred amounts:Issuance premium (discount)57,414 - (2,836) 54,578 - Loss on refunding (681,383) - 33,650 (647,733) - Total bonds payable 16,016,031 - (504,186) 15,511,845 580,000 Other post employment benefits 291,895 144,417 - 436,312 - Compensated Absences 262,169 26,218 (57,204) 231,183 23,118 Business-type activity long- term liabilities 16,570,095$ 170,635$ (561,390)$ 16,179,340$ 603,118$ 49 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 8 - Interfund Receivables, Payables and Transfers: Interfund transfers for the year ended September 30, 2011 consisted of the following: General Capital Projects Nonmajor Governmental Capital Assets Transfers Out:Fund Fund Governmental Not a Fund Total General Fund -$ 148,730$ 95,236$ -$ $ 243,966 Capital Projects 39,440 - - 39,440 Nonmajor governmental 4,312 1,928,402 560,041 - 2,492,755 Water fund 498,116 - - 21,520 519,636 Sewer fund - - - 760 760 541,868$ 2,077,132$ 655,277$ 22,280$ 3,296,557$ Transfer In Most of the transfers above are to cover debt service payments for the 2002 Public Improvement Revenue Bonds, and also to cover costs of various capital projects. The transfer out of the Water Fund is to cover their share of general fund expenses. Transfers in the fund statements do not balance due to the transfer of capital assets out of the water and sewer funds into the governmental capital assets. Note 9 - Retirement Plans: The City maintains three separate single-employer, defined benefit plans for general employees, sworn police officers and firefighters, as well as a defined contribution plan for general employees. The investment and administrative agent for the defined benefit plans is the Florida Municipal Pension Trust Fund, an agent of the multiple-employer Public Employee Retirement System. The assets and benefits of the defined contribution plan are administered by the Florida League of Cities. Defined Benefit Pension Plans - Each plan is independently governed by separate boards of trustees. Assets may not be transferred between plans, or used for any purpose other than to benefit each plan’s participants as defined in their authorizing ordinances. Each board contracts with the Florida Municipal Pension Trust Fund (FMPTF), a private, not-for-profit corporation established by the Florida League of Cities (FLC) for FLC members who wish to use its services. The FMPTF acts as a common investment and administrative agent for its members, contracting with a bank custodian, investment manager and actuary to provide a commingled investment fund and plan valuation services. These plans are included as part of the City’s reporting entity in Pension Trust Funds. The Clermont City Council adopted and may amend plan provisions by resolution. Stand-alone audited financial statements of the FMPTF are maintained on file at the FLC offices in Tallahassee, Florida, and are available upon request to the Pension Services Division. 50 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 9 - Retirement Plans (Continued): Summary of Significant Accounting Policies Basis of Accounting - The Plans’ financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each Plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Method Used to Value Investments - Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments that do not have an established market are reported at estimated fair value. There are no investments that exceed 5% of the plan net assets. Publicly available financial reports for each plan, that include detailed actuarial data, can be obtained from the City’s Administrative Services Department. Plan Descriptions and Contribution Information - Membership of each of the defined benefit pension plans consisted of the following at October 1, 2009, the date of the latest actuarial valuation: General Employees Police Officers Firefighters Retirees and beneficiaries currently receiving benefits 10 7 1 Terminated plan members entitled to, but not yet receiving, benefits - 20 48 Active plan members - 50 58 Total 10 77 107 Plan Descriptions- The general employees defined benefit pension plan is for general employees hired prior to September 30, 1985. The police officers’ and firefighters’ defined benefit pension plans are both local law, single employer, defined benefit pension plans as defined under Florida Statutes, Chapters 175 and 185, which covers all sworn police officers and firefighters. Employees are eligible to participate in the plan immediately upon employment with the City, and they are vested in the plan after ten years of service. The normal retirement date for firefighters is the attainment of age 55 and 10 years of service, or earlier attainment of age 52 and 25 years of service. The normal retirement date for police officers is the attainment of age 55 and 10 years of service, or 20 years of service, regardless of age. The normal retirement benefit is the number of years of credited service prior to October 1, 2002 multiplied by 2.25%, and the number of years of credited service after October 1, 2002 multiplied by 3%, and multiplied by the average final monthly compensation. 51 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 9 - Retirement Plans (Continued): Early retirement is available after age 50 and 10 years of service; however, the early retirement benefit is reduced by 2% for each year before the normal retirement date. Contributions - The City’s actuarially determined contribution rate per the October 1, 2009 actuarial valuations is $3,051 for general employees, 28.7% for police officers and 24.16% for firefighters. Police officers make a minimum mandatory contribution of 3% and firefighters make a minimum mandatory contribution of 1%, in order to take advantage of the insurance premium tax rebate provided for in the statutes. Administrative costs are deducted from the net assets of the plan. Annual Pension Cost and Net Pension Obligation - The City’s annual pension cost and net pension obligation for the current year were as follows: General Employees Police Officers Firefighters Annual Required Contribution (ARC)3,051$ 752,413$ 650,663$ Interest on the Net Pension Obligation (Asset)- - - Adjustment to ARC - (3,375) 126 Annual Pension Cost 3,051$ 749,038$ 650,789$ The City has always contributed the ARC and thus has never been required to report a net pension obligation. Below is the required three-year trend information on annual pension cost. Three-Year Trend Information Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed 9/30/2011 3,051$ 100% 9/30/2010 3,051 100% 9/30/2009 - 100% 9/30/2011 749,038$ 100% 9/30/2010 713,188 100% 9/30/2009 570,869 100% 9/30/2011 650,789$ 100% 9/30/2010 617,491 100% 9/30/2009 420,790 100% General Employees Police Officers Firefighters 52 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 9 - Retirement Plans (Continued): Funded Status and Funding Progress – Pension Plans The funded status of each plan as of October 1, 2009, the most recent actuarial valuation date, is as follows: Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) - Entry Age (b) Unfunded AAL (UAAL) (b - a) Funded Ratio (a / b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ((b - a) / c) General Employees 573,379$ 566,885$ -$ 101.2%-$ N/A Police Officers 5,288,822 6,163,934 875,112 85.8%2,485,033 35.2% Firefighters 2,609,047 2,596,659 - 100.5%2,552,427 0.0% The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. The City uses the aggregate actuarial cost method to value its pension plans, which does not identify or separately amortize unfunded actuarial liabilities. Information about the plan’s funded status and funding progress has been prepared using the entry age actuarial cost method for that purpose, and the information presented is intended to serve as a surrogate for the funded status and funding progress of the plan. Additional information as of the latest actuarial valuation follows: General Employees Police Officers Firefighters Valuation date 10/1/2009 10/1/2009 10/1/2009 Actuarial Cost Method Aggregate Cost Aggregate Cost Aggregate Cost Amortization Method N/A Level Percentage, open Level Percentage, open Remaining Amortization Period N/A 30 years 30 years Asset Valuation Method Market Value Market Value Market Value Actuarial Assumptions: Investment rate of return 7.5%7.5%7.5% Projected salary increases (including inflation of 3.5%)0.0%5.5%5.5% Cost of living adjustment 0.0%0.0%0.0% Mortality table RP-2000 Mortality Table RP-2000 Mortality Table RP-2000 Mortality Table 53 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 9 - Retirement Plans (Continued): Plan changes in the October 1, 2009 actuarial valuations of all three plans included changing from the 1983 Group Annuity Mortality Table to the one indicated above. The minimum required contribution increased for Police Officers and Firefighters in the October 1, 2009 actuarial valuation by 5.71% and 4.5% respectively, of covered payroll. This increase was due to investment losses, as well as the previously mentioned assumption change in the mortality table. General Employee Defined Contribution Pension Plan - The defined Contribution Pension Plan for General Employees of the City of Clermont was established October 1, 1985, as defined in Chapter 16, Article IV, of the Clermont Code, and is available to all permanent general employees of the City, once they have completed one year of employment. Employees are fully vested in the plan after ten years of service. In a defined contribution plan, benefits depend solely on amounts contributed to the plan, plus investment earnings. Contributions for, and interest forfeited by, employees who terminate employment before five years of service are used to reduce the City’s current period contributions. Covered payroll for this Plan for fiscal year 2011 was $5,469,214; the City’s total payroll for City employees was $11,290,462. The City contributes annually to the pension account of each active participant an amount equal to ten percent (10%) of the employee’s annual compensation. No contribution is required by employees. The City of Clermont City Council adopted and may amend plan provision by resolution. The actual contribution made by the City for fiscal year 2011 was $427,806. Note 10 - Other Post Employment Benefits: In accordance with Florida Statutes Section 112.0801, the City makes continued group health and dental insurance through the city’s current provider available to retirees and eligible dependents provided certain service requirements and normal age retirement requirements have been met. This plan is a single employer plan. The City is self insured with respect to these benefits and provides an explicit subsidy for coverage to retirees and their spouses based on the coverage selected. The City has nine retirees currently receiving benefits. The City has chosen pay-as-you-go funding, but is recording the liability in the government wide financial statements. This plan does not issue stand-alone financial statements. 54 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 10 - Other Post Employment Benefits (Continued): The most recent actuarial report for the City’s Retiree Continuation Insurance Plan was prepared as of April 1, 2011. The annual required contribution and Net OPEB Obligation for the fiscal year ended September 30, 2011 is as follows: Annual required contribution 649,000$ Interest on net OPEB Obligation 44,000 Adjustment to annual required contribution (95,000) Annual OPEB Cost 598,000 Employer Contributions (46,000) Interest on Employer Contributions (1,000) Increase in Net OPEB Obligation 551,000 Net OPEB Obligation (beginning of year)1,099,000 Net OPEB Obligation (end of year)1,650,000$ Three Year Trend Information- Fiscal Year Ending Annual OPEB Cost Percentage of Cost Contributed Net OPEB Obligation 9/30/2009 571,000$ 5.0%542,000$ 9/30/2010 611,000 5.0%1,099,000 9/30/2011 649,000 7.0%1,650,000 Funded Status and Funding Progress - OPEB The funded status of the plan as of April 1, 2011, the most recent actuarial valuation date, is as follows: Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) - Entry Age (b) Unfunded AAL (UAAL) (b - a) Funded Ratio (a / b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ((b - a) / c) -$ 2,909,000$ 2,909,000$ 0.0%10,342,000$ 28.10% Summary of Actuarial Methods & Assumptions: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. 55 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 10 - Other Post Employment Benefits (Continued): Summary of Actuarial Methods & Assumptions (Continued) The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Actuarial Cost Method- The projected unit credit cost method was used to determine all liabilities, with the liability for each active employee assumed to accrue over his working lifetime based on elapsed time from his date of hire until retirement. Amortization Method- The level-dollar payment with a 15 year open period amortization method was used. Decrements- Mortality- Sex-distinct mortality rates set forth in the RP-2000 mortality table for annuitants and non-annuitants, projected to 2007 by Scale AA, as published by the IRS for purposes of IRC section 430; no deaths were assumed to be service-related. Disability- Sex-distinct disability rates set forth in the Wyatt 1985 Disability Study; Class 4 rates were used for police officers and firefighters, Class 1 rates were used for all other employees. Permanent Withdrawal from Active Status- Sex-distinct withdrawal rates set forth in the Scale 155 table. Retirement- Retirement was assumed to occur as follows: 1.For police officers:Age 55 with at least 10 years of service, or Age 52 with at least 20 years of service 2.For firefighters:Age 55 with at least 10 years of service, or Age 52 with at least 25 years of service 3.For all others:Age 62 with at least 10 years of service Investment Return (Discount Rate)- 4.0% per annum (includes inflation at 2.75% per annum) 56 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 10- Other Post Employment Benefits (Continued): Summary of Actuarial Methods & Assumptions (Continued) Health Care Costs Trend Rates-The cost of covered medical services has been assumed to increase in accordance with the following rates, compounded annually: Year Increase Year Increase Year Increase 2011 10.00%2015 8.00%2019 6.00% 2012 9.50%2016 7.50%2020 5.00% 2013 9.00%2017 7.00%and later 2014 8.50%2018 6.50% Per Capita Annual Claim Cost-The assumed per capita annual claim cost for a 62-year old participant during the period April 1, 2011 through March 31, 2012 is $9,225. Medicare is assumed to cover 80% of the healthcare claim cost after age 65. Retiree Premiums-During the period April 1, 2011 through March 31, 2012, retirees under age 65 have been assumed to make a contribution equal to $293.70 per month for themselves plus $282.70 per month for their spouses. During the same period, retirees over age 65 have been assumed to make a contribution equal to $176.22 per month for themselves plus $169.62 per month for their spouses. All amounts are assumed to increase thereafter in accordance with the healthcare cost trend rates. Dental Subsidy-Dental costs are not assumed to increase with age. Therefore, this valuation only reflects explicit dental subsidy that is provided by the City. For the period April 1, 2011 through March 31, 2012, the dental subsidy is $25.04 per month for retired employees and $61.40 per month for spouses of retirees, with both amounts assumed to increase at the rate of 2.5% per annum thereafter. Age-Related Morbidity-The cost of covered medical services has been assumed to increase with age at the rate of 3.5% per annum. Future Participation Rates-One third of eligible employees are assumed to elect coverage upon retirement or disability and, of those electing coverage for themselves, one-third were assumed to elect coverage for their spouses as well. Coverage for current retirees and their spouses was assumed to continue for life. Marriage & Dependent Assumption-Solely with respect to active employees, husbands are assumed to be three years older than wives. Active employees were not assumed to have any dependent children upon retirement or disability. COBRA Assumption-Future healthcare coverage provided solely pursuant to COBRA was not included in the OPEB valuation; because the COBRA premium is determined periodically based on plan experience and is then loaded for administrative expenses, we assumed that the COBRA premium to be paid by the participant fully covers the cost of providing healthcare coverage during the relevant period. 57 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 10 - Other Post Employment Benefits (Continued): Summary of Benefits Other Post-Employment Benefits (OPEBs)-The City of Clermont provides optional post- employment healthcare and dental coverage to eligible individuals. The City is self-insured with respect to both benefits and provides an explicit subsidy for such coverage to retirees and their spouses. Eligible Individuals-Eligible individuals include all regular employees of the City of Clermont who retire from active service and are eligible for retirement or disability benefits under the general employee, fire, and police pension plans. Under certain conditions, eligible individuals for healthcare coverage also include spouses and dependent children. Required Monthly Premium for Post-Employment Healthcare Coverage-Retirees must pay a monthly premium as determined periodically by the City. The premium varies depending on whether the retiree elects single, single plus spouse, or family coverage and whether the retiree or his spouse is eligible for Medicare. Note 11 - Risk Management: During fiscal year 1990, the City established an internal service fund to account for its uninsured risk of loss for employee medical and dental coverage. Under this program, the fund provides coverage for the first $100,000 per year in medical, dental, or prescription claims for each covered employee. The City purchases commercial insurance for claims in excess of coverage provided by the fund with a total aggregate stop-loss of $2,000,000. There has been no reduction in insurance coverage from that carried in the prior year. Claims provided have not exceeded insurance coverage in any of the past three fiscal years. The general, water, sewer, sanitation and stormwater funds participate in the program and make payments to the internal service fund based on the number of employees budgeted in each fund. The claims liability of $113,599 represents claims processed through October 2011 which were applicable to the current fiscal year and any additional claims are deemed immaterial. Changes to the current claims liability are as follows: 2011 2010 Claims liabilities, beginning of year 107,936$ 165,714$ Incurred Claims 2,928,460 2,865,301 Payments on Claims (2,922,797) (2,923,079) Claims liabilities, end of year 113,599$ 107,936$ 58 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 12 - Commitments and Contingencies: Litigation - The City is engaged in various liability claims incidental to the conduct of its general government operations at September 30, 2011. While the ultimate outcome of the litigation cannot be determined at this time, management believes that any amounts not covered by insurance, if any, resulting from these lawsuits would not materially affect the financial position of the City. 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; and natural disasters for which the City carries commercial insurance. The City has obtained excess insurance coverage with varying retentions and limits to further limit exposure to large losses. There have been no significant reductions in insurance coverage from the prior year and settlements have not exceeded insurance coverage during the past three years. Note 13 - Fund Balances: In fiscal year 2011, the City implemented GASB Statement 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” This standard promotes clarity and consistency to Fund Balance classifications and categories, making the statements more useful by clarifying the presentation of available resources. Due to the implementation of GASB Statement 54, the components of the fund balances of governmental funds now reflect the classifications described below. Nonspendable Nonspendable funds include fund balance amounts that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. Spendable Fund Balance Restricted – includes fund balance amounts that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors, or laws and regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed – includes fund balance amounts that can be used only for the specific purposes determined by formal action of the City Council, the City’s highest level of decision making authority, with formal action occurring prior to the fiscal year end. Commitments may be changed or lifted only by the City Council taking the same formal action (Resolution) that imposed the constraint originally. Assigned – includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. The City Council is authorized to assign amounts for a specific purpose. 59 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2011 Note 13 - Fund Balances (Continued): Spendable Fund Balance (Continued) Unassigned – includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. At September 30, 2011, the City’s governmental fund balances were as follows: General Capital Projects Community Redevelopment Other Governmental Fund Fund Special Revenue Fund Funds Total Fund Balances Non-spendable Inventory/prepaids 334,985$ -$ 18$ 1,107$ $ 336,110 Cemetery - - - 847,260 847,260 Spendable Restricted for: Public safety 174,596 - - 2,492,881 2,667,477 Culture and recreation - - - 312,055 312,055 Community redevelopment - - 1,658,499 - 1,658,499 Infrastructure - - - 1,401,692 1,401,692 Debt service - - - 494,141 494,141 Assigned for: Capital projects - 2,853,747 - - 2,853,747 Subsequent year expenditures 912,137 - - - 912,137 Unassigned 10,047,810 - - (1,116) 10,046,694 11,469,528$ 2,853,747$ 1,658,517$ 5,548,020$ 21,529,812$ Note 14 - Evaluation of Events: The City has evaluated subsequent events through March 5, 2012, the date the financial statements were available to be issued. 60 REQUIRED SUPPLEMENTAL INFORMATION CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2011 Schedules of Funding Progress - Pension Plans Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) - Entry Age (b) Unfunded AAL (UAAL) (b - a) Funded Ratio (a / b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ((b - a) / c) General Employees 10/1/2003 863,029 863,029 - 100.0%- N/A 10/1/2004 863,278 863,278 - 100.0%- N/A 10/1/2005 816,972 816,972 - 100.0%- N/A 10/1/2006 794,277 794,277 - 100.0%- N/A 10/1/2007 822,401 822,401 - 100.0%- N/A 10/1/2009 573,379 566,885 - 101.2%- N/A Police Officers 10/1/2002 3,268,335 2,368,335 - 100.0%1,042,972 0.0% 10/1/2003 2,762,688 2,762,688 - 100.0%1,279,696 0.0% 10/1/2004 3,032,203 3,032,203 - 100.0%1,424,568 0.0% 10/1/2005 3,571,295 3,571,295 - 100.0%1,534,254 0.0% 10/1/2007 4,905,071 4,905,071 - 100.0%2,356,375 0.0% 10/1/2009 5,288,822 6,163,934 875,112 85.8%2,485,033 35.2% Fire Fighters 10/1/2003 814,097 814,097 - 100.0%597,364 0.0% 10/1/2004 974,966 974,966 - 100.0%901,980 0.0% 10/1/2005 1,256,347 1,256,347 - 100.0%1,047,097 0.0% 10/1/2006 1,345,093 1,345,093 - 100.0%1,257,860 0.0% 10/1/2007 1,972,299 1,972,299 - 100.0%2,031,230 0.0% 10/1/2009 2,609,047 2,596,659 - 100.5%2,552,427 0.0% 61 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2011 Schedules of Employer Contributions - Pension Plans Year Ended 9/30 Annual Required Contribution Percentage Contributed Annual Required Contribution Percentage Contributed Annual Required Contribution Percentage Contributed 2006 19,697$ 100%291,677$ 100%189,164$ 100% 2007 19,697 100%376,518 100%199,989 100% 2008 - 100%541,697 100%410,350 100% 2009 - 100%570,869 100%420,790 100% 2010 3,051 100%713,188 100%616,742 100% 2011 3,051 100%749,038 100%650,789 100% General Employees Police Officers Firefighters Employer Contributions 62 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2011 Schedule of Funding Progress - Retiree Continuation Insurance Plan Actuarial Valuation Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a % of Covered Payroll Date (a)(b)(b-a)(a/b)( c)(b-a) / c 5/1/2009 *-$ 2,413,000$ 2,413,000$ 0.0%10,764,000$ 22.4% 4/1/2011 -$ 2,909,000$ 2,909,000$ 0.0%10,342,000$ 28.1% *initial valuation date Schedule of Funding Progress Schedule of Employer Contributions - Retiree Continuation Insurance Plan Annual Required Percentage of ARC Fiscal Year Ending Contribution (ARC)Contributed 9/30/2009 571,000$ 5.0%542,000$ 9/30/2010 611,000 5.0%1,099,000 9/30/2011 649,000 7.0%1,650,000 Net OPEB Obligation 63 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION Notes to Required Supplementary Information September 30, 2011 Note 1 The following plan changes have been implemented in conjunction with the October 1, 2009 actuarial valuation for the General Employees Pension Plan. 1. The mortality basis was changed from the 1983 Group Annuity Mortality Table to the RP-2000 Mortality Table to reflect updated life expectancy. The net effect of the change in mortality rates was to decrease the total projected liability by $70,040 and to decrease the normal cost rate by $855. 2. An administrative expense assumption has been added equal to a 5% loading of plan liabilities. The new expense assumption results in $3,749 of assumed administrative expenses for the 2009-10 plan year. In addition, expenses are assumed to increase in proportion to plan liabilities during later years. Note 2 The following plan changes have been implemented in conjunction with the October 1, 2009 actuarial valuation for the Police Officers Pension Plan. 1. The mortality basis was changed from the 1983 Group Annuity Mortality Table to the RP-2000 Mortality Table to reflect updated life expectancy. The net effect of the change in mortality rates was to increase the total projected liability by $178,387 and to increase the normal cost rate by 0.71% of payroll. 2. The administrative expense assumption has been changed from a flat $10,500 per year to a 1.5% loading of plan liabilities. The new expense assumption results in $20,013 of assumed administrative expenses for the 2009-10 plan year. In addition, expenses are assumed to increase in proportion to plan liabilities during later years. Note 3 The following plan changes have been implemented in conjunction with the October 1, 2009 actuarial valuation for the Firefighters Pension Plan. 1. The mortality basis was changed from the 1983 Group Annuity Mortality Table to the RP-2000 Mortality Table to reflect updated life expectancy. The net effect of the change in mortality rates was to increase the total projected liability by $374,084 and to increase the normal cost rate by 1.17% of payroll. 2. The administrative expense assumption has been changed from a flat $8,000 per year to a 1.75% loading of plan liabilities. The new expense assumption results in $14,437 of assumed administrative expenses for the 2009-10 plan year. In addition, expenses are assumed to increase in proportion to plan liabilities during later years. 64 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS Capital Projects Fund Capital Projects Fund This fund was established to account for financial resources segregated for the acquisition or construction of major capital facilities. 65 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Investment earnings 22,500$ 22,500$ 7,127$ (15,373)$ Total revenues 22,500 22,500 7,127 (15,373) Expenditures: Current: General government 91,500 144,760 144,760 - Culture and recreation 30,00071,997 58,878 13,119 Public safety:- Police 250,000290,838 41,901 248,937 Capital Outlay: General government 2,000,000 2,000,000 6,671 1,993,329 Public safety 500,000 500,000 - 500,000 Culture and recreation 1,248,730 2,631,118 1,916,484 714,634 Total expenditures 4,491,730 6,146,308 2,168,694 3,732,075 Excess (Deficiency) of Revenues Over Expenditures (4,469,230) (6,123,808) (2,161,567) 3,716,702 Other Financing Sources (Uses): Transfers in 3,720,230 2,760,103 2,077,132 (682,971) Transfers out - (39,440) (39,440) - Total other financing sources (uses)3,720,230 2,720,663 2,037,692 (682,971) Net Change in Fund Balance (749,000) (3,403,145) (123,875) 3,279,270 Fund Balances - Beginning 2,977,622 2,977,622 2,977,622 - Fund Balances - Ending 2,228,622$ (425,523)$ 2,853,747$ 3,279,270$ CITY OF CLERMONT, FLORIDA CAPITAL PROJECTS FUND Year Ended September 30, 2011 The accompanying Notes to Financial Statements are an integral part of this statement. 66 OTHER GOVERNMENTAL FUNDS Special Revenue Funds Recreation Impact Fees Fund This fund was established to account for recreation impact fees collected from new developments constructed in the City which are restricted for use in funding capital facilities and equipment directly related to new growth. Police Impact Fees Fund This fund was established to account for police impact fees collected from new developments constructed in the City which are restricted for use in funding capital facilities and equipment directly related to new growth. Fire Impact Fee Fund This fund was established to account for fire impact fees collected from new developments constructed in the City which are restricted for use in funding capital facilities and equipment directly related to new growth. Building Services Fund This fund was established to account for the operations of the City’s building and other permits department which are restricted for use in funding capital facilities and equipment directly related to new growth. Infrastructure Fund This fund was established to account for the proceeds of the Local Government Infrastructure Surtax. The proceeds and interest accrued thereto, by law are only to be used to finance, plan and construct infrastructure. Debt Service Fund Debt Service Fund This fund was established to account for the accumulation of resources and payment of bond principal and interest from governmental resources. Permanent Fund Cemetery Perpetual Care Fund This fund is used to account for monies provided by people buying lots in the City cemetery. The principal must be kept separate and apart from all other funds, but the interest may be transferred to the General Fund to defray the cost of cemetery operation and maintenance. 67 Special Revenue Recreation Impact Fees Police Impact Fees Fire Impact Fees Building Services Infrastructure Special Revenue Assets: Cash and cash equivalents 317,601$ 2,415,113$ 77,768$ 24,331$ 1,275,972$ Due from other governments - - - - 126,753 Prepaid costs - - - 1,107 - Total assets 317,601$ 2,415,113$ 77,768$ 25,438$ 1,402,725$ Liabilities and Fund Balances: Liabilities: Accounts payable 5,546$ -$ -$ 25,447$ 1,033$ Total liabilities 5,546 - - 25,447 1,033 Fund balances: Non spendable - - - 1,107 - Restricted 312,055 2,415,113 77,768 - 1,401,692 Unassigned - - - (1,116) - Total fund balances 312,055 2,415,113 77,768 (9) 1,401,692 Total liabilities and fund balances 317,601$ 2,415,113$ 77,768$ 25,438$ 1,402,725$ CITY OF CLERMONT, FLORIDA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS September 30, 2011 68 Special Revenue TotalDebt Service Permanent Fund - Cemetery Perpetual Care Total Nonmajor Governmental Funds 4,110,785$ 494,141$ 847,535$ 5,452,461$ 126,753 - - 126,753 1,107 - - 1,107 4,238,645$ 494,141$ 847,535$ 5,580,321$ 32,026$ -$ 275$ 32,301$ 32,026 - 275 32,301 1,107 - 847,260 848,367 4,206,628 494,141 - 4,700,769 (1,116) - - (1,116) 4,206,619 494,141 847,260 5,548,020 4,238,645$ 494,141$ 847,535$ 5,580,321$ 69 Special Revenue Recreation Impact Fees Police Impact Fees Fire Impact Fees Building Services Revenues: Licenses and permits -$ -$ -$ 291,199$ Intergovernmental - - - - Charges for services - - - 37,514 Impact fees/special assessments 437,547 84,696 60,039 - Investment earnings 8,348 12,614 498 159 Miscellaneous - - - - Total revenues 445,895 97,310 60,537 328,872 Expenditures: Current: General government - - - 406,377 Public safety - - - - Transportation - - - - Culture and recreation 44,774 - - - Debt Service: Principal - - - - Interest and fiscal charges - - - - Total expenditures 44,774 - - 406,377 Excess (Deficiency) of Revenues Over Expenditures 401,121 97,310 60,537 (77,505) Other Financing Sources (Uses): Transfers in - - - 18,867 Transfers out (1,432,127) (41,902) (101,828) - Total other financing sources (uses)(1,432,127) (41,902) (101,828) 18,867 Net Change in Fund Balances (1,031,006) 55,408 (41,291) (58,638) Fund Balances - Beginning 1,343,061 2,359,705 119,059 58,629 Fund Balances - Ending 312,055$ 2,415,113$ 77,768$ (9)$ CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS Year Ended September 30, 2011 70 Infrastructure Special Revenue Total Debt Service Permanent Fund - Cemetery Perpetual Care Total Nonmajor Governmental Funds -$ 291,199$ -$ -$ 291,199$ 1,899,202 1,899,202 - - 1,899,202 - 37,514 - - 37,514 - 582,282 - - 582,282 6,776 28,395 1,657 4,312 34,364 - - - 50,400 50,400 1,905,978 2,838,592 1,657 54,712 2,894,961 - 406,377 - - 406,377 130,973 130,973 - - 130,973 418,917 418,917 - - 418,917 - 44,774 - - 44,774 - - 470,000 - 470,000 - - 162,256 - 162,256 549,890 1,001,041 632,256 - 1,633,297 1,356,088 1,837,551 (630,599) 54,712 1,261,664 - 18,867 636,410 - 655,277 (912,586) (2,488,443) - (4,312) (2,492,755) (912,586) (2,469,576) 636,410 (4,312) (1,837,478) 443,502 (632,025) 5,811 50,400 (575,814) 958,190 4,838,644 488,330 796,860 6,123,834 1,401,692$ 4,206,619$ 494,141$ 847,260$ 5,548,020$ Special Revenue 71 CITY OF CLERMONT, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Impact fees/special assessments 500,000$ 500,000$ 437,547$ (62,453)$ Investment earnings 3,750 3,750 8,348 4,598 Total revenues 503,750 503,750 445,895 (57,855) Expenditures: Current: Culture and recreation 35,000 50,968 44,774 6,194 Total expenditures 35,000 50,968 44,774 6,194 Excess (Deficiency) of Revenues Over Expenditures 468,750 452,782 401,121 (51,661) Other Financing Sources (Uses) Transfers out (1,130,000) (1,459,657) (1,432,127) 27,530 Total other financing sources (uses)(1,130,000) (1,459,657) (1,432,127) 27,530 Net Change in Fund Balances (661,250) (1,006,875) (1,031,006) (24,131) Fund Balances - Beginning 1,343,061 1,343,061 1,343,061 - Fund Balances - Ending 681,811$ 336,186$ 312,055$ (24,131)$ RECREATION IMPACT FEE SPECIAL REVENUE FUND Year Ended September 30, 2011 72 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: Impact fees/special assessments 130,000$ 130,000$ 84,696$ (45,304)$ Investment earnings 7,500 7,500 12,614 5,114 Total revenues 137,500 137,500 97,310 (40,190) Expenditures: Current: Public Safety: Law enforcement - 150,000 - 150,000 Total expenditures - 150,000 - 150,000 Excess (Deficiency) of Revenues Over Expenditures 137,500 (12,500) 97,310 109,810 Other Financing Sources (Uses) Transfers out (750,000) (632,837) (41,902) 590,935 Total other financing sources (uses)(750,000) (632,837) (41,902) 590,935 Net Change in Fund Balances (612,500) (645,337) 55,408 700,745 Fund Balances - Beginning 2,359,705 2,359,705 2,359,705 - Fund Balances - Ending 1,747,205$ 1,714,368$ 2,415,113$ 700,745$ POLICE IMPACT FEE SPECIAL REVENUE FUND CITY OF CLERMONT, FLORIDA Year Ended September 30, 2011 73 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: Impact fees/special assessments 100,000$ 100,000$ 60,039$ (39,961)$ Investment earnings 750 750 498 (252) Total revenues 100,750 100,750 60,537 (40,213) Expenditures: Current: Public safety: Fire control - - - - Total expenditures - - - - Excess (Deficiency) of Revenues Over Expenditures 100,750 100,750 60,537 (40,213) Other Financing Sources (Uses): Transfers out (101,089) (101,828) (101,828) - Total other financing sources (uses)(101,089) (101,828) (101,828) - Net Change in Fund Balances (339) (1,078) (41,291) (40,213) Fund Balances - Beginning 119,059 119,059 119,059 - Fund Balances - Ending 118,720$ 117,981$ 77,768$ (40,213)$ CITY OF CLERMONT, FLORIDA FIRE IMPACT FEE SPECIAL REVENUE FUND Year Ended September 30, 2011 74 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: Licenses and permits 400,000$ 400,000$ 291,199$ (108,801)$ Charges for services 68,000 68,000 37,514 (30,486) Investment earnings 375 375 159 (216) Total revenues 468,375 468,375 328,872 (139,503) Expenditures: Current: General government 503,659 510,177 406,377 103,800 Total expenditures 503,659 510,177 406,377 103,800 Excess (Deficiency) of Revenues Over Expenditures (35,284) (41,802) (77,505) (35,703) Other Financing Sources (Uses): Transfers in - 18,867 18,867 - Total other financing sources and uses - 18,867 18,867 - Net Change in Fund Balances (35,284) (22,935) (58,638) (35,703) Fund Balances - Beginning 58,629 58,629 58,629 - Fund Balances - Ending 23,345$ 35,694$ (9)$ (35,703)$ CITY OF CLERMONT, FLORIDA BUILDING SERVICES SPECIAL REVENUE FUND Year Ended September 30, 2011 75 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: Intergovernmental revenues 1,730,000$ 1,730,000$ 1,899,202$ 169,202$ Investment earnings 3,750 3,750 6,776 3,026 Total revenues 1,733,750 1,733,750 1,905,978 172,228 Expenditures: Current: Public safety: Police 148,000 148,000 130,973 17,027 Transportation: Roads & streets 295,000 558,748 418,917 139,831 Total expenditures 443,000 706,748 549,890 156,858 Excess (Deficiency) of Revenues Over Expenditures 1,290,750 1,027,002 1,356,088 329,086 Other Financing Sources (Uses): Transfers out (2,146,400) (977,092) (912,586) 64,506 Total other financing sources (uses)(2,146,400) (977,092) (912,586) 64,506 Net Change in Fund Balances (855,650) 49,910 443,502 393,592 Fund Balances - Beginning 958,190 958,190 958,190 - Fund Balances - Ending 102,540$ 1,008,100$ 1,401,692$ 393,592$ CITY OF CLERMONT, FLORIDA INFRASTRUCTURE SPECIAL REVENUE FUND Year Ended September 30, 2011 76 CITY OF CLERMONT, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Investment earnings1,500$ 1,500$ 1,657$ 157$ Total revenues 1,500 1,500 1,657 157 Expenditures: Debt Service: Principal 470,000 470,000 470,000 - Interest and fiscal charges 162,256 162,256 162,256 - Total expenditures 632,256 632,256 632,256 - Excess (Deficiency) of Revenues Over Expenditures (630,756) (630,756) (630,599) 157 Other Financing Sources (Uses): Transfers in 631,806 636,410 636,410 - Total other financing sources (uses)631,806 636,410 636,410 - Net Change in Fund Balances 1,050 5,654 5,811 157 Fund Balances - Beginning 488,330 488,330 488,330 - Fund Balances - Ending 489,380$ 493,984$ 494,141$ 157$ DEBT SERVICE FUND Year Ended September 30, 2011 77 78 FIDUCIARY FUNDS Pension Trust Funds General Employees’ Pension Trust Fund This fund is used to account for the accumulation of resources to be used for retirement annuity payments at the appropriate amounts and times in the future. Resources are contributed at rates in accordance with an actuarial study, whereas, a fixed percentage of employees salaries is used in determining the annual contribution to the defined contribution plan. Police Officers’ Pension Trust Fund This fund is used to account for the accumulation of resources to be used for the retirement annuities of all police officers. The state contributes an amount determined by an actuarial study. Firefighters’ Pension Trust Fund This fund is used to account for the accumulation of resources to be used for the retirement annuities of all firefighters. The state contributes money based upon the number of firefighters and the City contributes an amount determined by an actuarial study. 79 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS September 30, 2011 Police OfficersFirefightersTotal Defined Defined PensionPensionEmployee BenefitContributionTrustTrustPension Funds Assets: Cash and cash equivalents8,733$ $ - 147,360$ 92,056$ $ 248,149 Receivables: Employer contribution receivable 3,051 - - - 3,051 Due from other governments - - - 5,998 5,998 Total receivables 3,051 - - 5,998 9,049 Investments: U.S. Government & other debt securities209,110 - 3,528,4752,204,236 5,941,821 Equities 267,331 4,158,710 4,510,8812,817,945 11,754,867 Total Investments 476,441 4,158,710 8,039,356 5,022,181 17,696,688 Total assets 488,225 4,158,710 8,186,716 5,120,235 17,953,886 Liabilities: Refunds payable and other - - 119,907 49,967 169,874 Total liabilities - - 119,907 49,967 169,874 Net Assets Held in Trust for Pension Benefits 488,225$ 4,158,710$ 8,066,809$ 5,070,268$ 17,784,012$ General Employees 80 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS For the Year Ended September 30, 2011 Police OfficersFirefightersTotal DefinedDefinedPensionPensionEmployee BenefitContributionTrustTrustPension Funds Additions: Contributions: Employer 3,051$ 427,806$ 743,926$ 646,435$ 1,821,218$ Plan members - - 94,705 30,335 125,040 State - - 212,565 173,011 385,576 Total contributions 3,051 427,806 1,051,196 849,781 2,331,834 Investment earnings: Net increase (decrease) in fair value of investments 10,636 36,781 18,538 (10,967) 54,988 Total net investment earnings 10,636 36,781 18,538 (10,967) 54,988 Total additions 13,687 464,587 1,069,734 838,814 2,386,822 Deductions: Benefits/distributions 70,296 424,876 159,965 1,512 656,649 Administrative expenses 2,106 22,049 30,874 11,639 66,668 Total deductions 72,402 446,925 190,839 13,151 723,317 Change in Net Assets (58,715) 17,662 878,895 825,663 1,663,505 Net Assets Held in Trust for Pension Benefits Beginning of Year 546,940 4,141,048 7,187,914 4,244,605 16,120,507 End of Year 488,225$ 4,158,710$ 8,066,809$ 5,070,268$ 17,784,012$ General Employees 81 82 Statistical Section This part of the City of Clermont’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall health. Contents Page Financial Trends 84 These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. Revenue Capacity 94 These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. Debt Capacity 99 These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. There are no limitations placed upon the amount of debt the City of Clermont may issue by either the City Charter or the City’s Code of Ordinances or by Florida Statutes. The City of Clermont has no general obligation bonds outstanding. Demographic and Economic Information 104 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. Operating Information 108 These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual reports for the relevant year. 83 20022003 20042005 Governmental activities Invested in capital assets, net of related debt**10,959$ 12,118$ Restricted **3,1214,800 Unrestricted **5,6198,125 Total governmental activities net assets **19,699$ 25,043$ Business-type activities Invested in capital assets, net of related debt**12,054$ 12,082$ Restricted **22,60127,573 Unrestricted **9,90313,414 Total business-type activities net assets **44,558$ 53,069$ Primary government Invested in capital assets, net of related debt**23,013$ 24,200$ Restricted **25,72232,373 Unrestricted **15,52221,539 Total primary government net assets **64,257$ 78,112$ * Data not available prior to the implementation of GASB Statement 34. Fiscal Year City of Clermont, Florida Net Assets by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 84 2006 2007 2008 2009 2010 2011 15,777$ 15,825$ 27,462$ 33,938$ 33,817$ 34,894$ 5,935 7,830 8,959 6,526 6,693 7,381 8,69314,45911,94613,60813,98812,465 30,405$ 38,114$ 48,367$ 54,072$ 54,498$ 54,740$ 15,864$ 24,837$ 46,569$ 54,834$ 55,540$ 56,430$ 33,73236,93113,89910,43717,293 9,241 13,44710,84118,10317,80111,40719,376 63,043$ 72,609$ 78,571$ 83,072$ 84,240$ 85,047$ 31,641$ 40,662$ 74,031$ 88,772$ 89,357$ 91,324$ 39,66744,76122,85816,96323,98616,622 22,14025,30030,04931,40925,39531,841 93,448$ 110,723$ 126,938$ 137,144$ 138,738$ 139,787$ Fiscal Year 85 Expenses 2002200320042005 Governmental activities: General government **2,337$ 2,617$ Public safety **4,6885,773 Physical environment **421 278 Transportation/public works **1,0561,172 Economic environment **32 13 Human services **132 149 Culture and recreation **1,7421,816 Interest on long-term debt **350 255 Total governmental activities expenses **10,75812,073 Business-type activities: Water **2,7073,015 Sewer **3,4233,572 Sanitation **1,6171,817 Stormwater **266 287 Total business-type activities expenses **8,0138,691 Total primary government expenses **18,771$ 20,764$ Program Revenues Governmental activities: Charges for services: General government **963$ 1,042$ Public safety **807 912 Transportation/public works **250 36 Culture and recreation **1,009 463 Operating grants and contributions **591 512 Capital grants and contributions **- 1,644 Total governmental activities program revenues **3,6204,609 Business-type activities: Charges for services: Water **4,342$ 4,320$ Sewer **2,8323,295 Sanitation **1,8112,088 Stormwater **571 627 Operating grants and contributions **105 138 Capital grants and contributions **7,0956,287 Total business-type activities program revenues **16,75616,755 Total primary government program revenues**20,376$ 21,364$ * Data not available prior to the implementation of GASB Statement 34 in 2004. Fiscal Year City of Clermont, Florida Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 86 200620072008200920102011 3,232$ 3,297$ 4,204$ 4,747$ 4,287$ 3,643$ 7,1098,78310,33010,77512,45912,531 382 470 514 364 319 279 1,3221,2551,5441,1641,7681,661 181 52 48 101 50 102 77 130 107 0 0 0 1,8512,4412,0612,0822,0551,822 285 226 459 326 175 156 14,43916,65419,26719,55921,11320,194 3,4272,9873,7373,9904,3164,461 4,0243,8964,5214,4895,9276,022 1,7311,8162,1232,0862,1692,364 316 427 549 534 848 955 9,4989,12610,93011,09913,26013,802 23,937$ 25,780$ 30,197$ 30,658$ 34,373$ 33,996$ 1,037$ 1,116$ 1,582$ 1,854$ 1,857$ 1,695$ 1,1581,105 975 1,203 665 355 - - - - - - 1,566 882 761 99 872 539 523 9231,047 921 1,162 1,237 1052,5187,330 3,307 134 129 4,3896,54411,6957,3844,6903,955 4,839$ 5,502$ 5,654$ 4,909$ 4,817$ 5,377$ 3,7844,2424,422 4,655 4,852 5,065 2,2362,4022,515 2,560 2,613 2,688 689 729 766 801 829 855 11 38 700 - - - 6,4083,6761,480 2,137 1,544 999 17,96716,58915,53715,06214,65514,984 22,356$ 23,133$ 27,232$ 22,446$ 19,345$ 18,939$ Fiscal Year 87 City of Clermont, Florida Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 20022003 20042005 Net (expense)/revenue Governmental activities **(7,138)$ (7,464)$ Business-type activities **8,7438,064 Total primary government net expense **1,605$ 600$ General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property taxes **3,371$ 4,417$ Franchise fees **1,1281,357 Utility taxes 1,3821,552 Unrestricted intergovernmental revenues **3,2793,923 Unrestricted investment earnings and miscellaneous revenues **1861,181 Transfers **385 377 Total governmental activities **9,73112,807 Business-type activities: Investment earnings **390$ 825$ Transfers **(385)(377) Total business-type activities **5 448 Total primary government **9,736$ 13,255$ Change in Net Assets Governmental activities **2,593$ 5,343$ Business-type activities **8,7488,512 Total primary government **11,341$ 13,855$ * Data not available prior to the implementation of GASB Statement 34 in 2004. Fiscal Year 88 200620072008200920102011 (10,050)$ (10,110)$ (7,572)$ (12,175)$ (16,422)$ (16,240)$ 8,4697,4634,6053,9641,3951,182 (1,581)$ (2,647)$ (2,967)$ (8,211)$ (15,027)$ (15,058)$ 5,665$ 7,452$ 7,749$ 7,601$ 6,844$ 5,966$ 1,7141,8081,9112,1512,3732,285 1,7821,8811,9922,1522,5582,568 4,9534,9524,7764,4584,5034,664 8351,216 9011,050 525 478 464 509 496 469 443 520 15,41317,81817,82517,88117,24616,481 1,968$ 2,612$ 1,853$ 1,005$ 360$ 145$ (464)(509)(496) (469) (443) (520) 1,5042,1031,357 536 (83)(375) 16,917$ 19,921$ 19,182$ 18,417$ 17,163$ 16,106$ 5,363$ 7,708$ 10,253$ 5,706$ 824$ 241$ 9,9739,5665,9614,5001,312 807 15,336$ 17,274$ 16,214$ 10,206$ 2,136$ 1,048$ Fiscal Year 89 2002 2003 2004 2005 General fund Reserved 162$ 167$ 168$ 198$ Unreserved 2,559 3,110 4,207 5,758 Total general fund 2,721$ 3,277$ 4,375$ 5,956$ All other governmental funds Reserved 512$ 760$ 894$ 1,083$ Unreserved, reported in: Special revenue funds 1,003 2,318 3,410 5,028 Capital projects fund 4,423 106 - 926 Total all other governmental funds 5,938$ 3,184$ 4,304$ 7,037$ Post GASB 54 2011 General fund Non spendable 335$ Restricted 175 Assigned 912 Unassigned 10,048 Total general fund 11,470$ All other governmental funds Non spendable 848$ Restricted 6,359 Assigned 2,854 Unassigned (1) Total all other governmental funds 10,060$ Fiscal Year City of Clermont, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 90 2006 2007 2008 2009 2010 233$ 307$ 209$ 214$ 246$ 4,857 9,128 9,57210,86011,358 5,090$ 9,435$ 9,781$ 11,074$ 11,604$ 1,189$ 1,539$ 1,912$ 2,267$ 2,758$ 7,76710,771 5,314 4,147 4,839 780 843 4,496 3,271 2,978 9,736$ 13,153$ 11,722$ 9,685$ 10,575$ Fiscal Year 91 2002 2003 20042005 Revenues Taxes 5,752$ 6,794$ 6,791$ 8,391$ Licenses and permits 253 277 467484 Intergovernmental revenue 1,4081,1522,7585,216 Charges for services 367 378 381389 Fines and forfeitures 112 114 125164 Impact fees/special assessments 1,3141,4241,5921,152 Investment income 141 145 107267 Miscellaneous 177 219 541310 Total revenues 9,52410,50312,76216,373 Expenditures General government 1,117$ 1,338$ 1,432$ 2,053$ Public Safety 3,1183,6064,2745,285 Physical environment 42 35 278318 Transportation 622 8061,055917 Economic environment 44 39 32 33 Human services 58 89 122139 Culture and recreation 1,1621,3161,0091,025 Capital outlay 3,2055,3512,7522,484 Debt service Principal 396 236 507855 Interest 92 257 268258 Other charges 211 - - - Total expenditures 10,06713,07311,72913,367 Excess of revenues over (under) expenditures (543)$ (2,570)$ 1,033$ 3,006$ Other financing sources (uses) Transfers in 1,468$ 1,182$ 1,217$ 1,081$ Transfers out (1,378)(863)(832)(704) Debt issuance 6,965 27 800 - Sale of capital assets - - - 931 Payments to refunded bond escrow agent (2,000)- - - Total other financing sources (uses)5,055 3461,1851,308 Net change in fund balances 4,512$ (2,224)$ 2,218$ 4,314$ Debt service as a percentage of noncapital expenditures 10.2%6.4%8.6%10.2% Fiscal Year City of Clermont, Florida Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 92 2006 2007 2008 2009 2010 2011 10,327$ 11,141$ 11,652$ 11,903$ 11,775$ 10,819$ 456 491 835 674 678 528 4,2118,34011,9778,6665,7336,059 407 462 6431,1031,0361,013 226 175 321 178 189 186 2,4441,7171,209 9031,131 582 7381,101 687 848 379 148 505 3911,683 444 522 612 19,31423,81829,00724,71921,44319,947 2,694$ 3,079$ 3,640$ 3,654$ 4,081$ 3,272$ 6,4529,14110,99910,27511,21211,625 343 461 497 490 309 275 9671,1892,9761,1291,6201,472 38 48 48 102 50 102 75 129 105 - - - 1,2591,55610,0241,8931,8781,792 10,235 941,9091,738 6431,923 868 4498,1766,259 493 470 244 440 465 375 181 162 - - - - - - 23,17516,58638,83925,91520,46721,093 (3,861)$ 7,232$ (9,832)$ (1,196)$ 976$ (1,146)$ 1,676$ 1,265$ 6,468$ 6,684$ 2,088$ 3,274$ (1,212)(756)(5,971)(6,232)(1,645)(2,776) 5,250 - 8,250 - - - - - - - - - - - - - - - 5,714 5098,747 452 443 498 1,853$ 7,741$ (1,085)$ (744)$ 1,419$ (648)$ 9.3%7.1%23.4%28.9%3.6%3.3% Fiscal Year 93 Fiscal PropertyFranchise Utility Year Tax Fees Tax Total 2002 2,038$ 806$ 1,855$ 4,699$ 2003 2,592 922 1,981 5,495 2004 3,305 1,128 2,292 6,725 2005 4,321 1,357 2,617 8,295 2006 5,488 1,714 2,948 10,150 2007 7,155 1,808 3,138 12,101 2008 7,749 1,911 1,992 11,652 2009 7,601 2,151 2,152 11,904 2010 6,844 2,373 2,558 11,775 2011 5,966 2,285 2,568 10,819 Fiscal SalesState RevenueLocal Option Year Tax Sharing Gas Tax Total 2002 464$ 192$ 226$ 882$ 2003 541 207 243 991 2004 781 242 268 1,291 2005 930 328 275 1,533 2006 1,157 368 286 1,811 2007 1,210 388 325 1,923 2008 1,139 356 300 1,795 2009 1,033 302 289 1,624 2010 1,053 299 322 1,674 2011 1,100 328 306 1,734 Taxes Included in Unrestricted Intergovernmental Revenues City of Clermont, Florida Governmental Activities Tax Revenues by Source (amounts expressed in thousands) Last Ten Fiscal Years (accrual basis of accounting) 94 Fiscal TotalEstimatedAssessed Year Less:Total TaxableDirectActualValue as a EndedReal*PersonalTax ExemptAssessedTaxTaxablePercentage of Sep 30PropertyPropertyPropertyValueRateValueActual Value 2002626,84072,610128,222571,2283.729 699,45081.67% 2003793,58392,764166,209720,1383.729 886,34781.25% 20041,041,341112,546238,373915,5143.7291,153,88779.34% 20051,363,931133,687299,1621,198,4563.7291,497,61880.02% 20061,771,503153,086382,8851,541,7043.7291,924,58980.11% 20072,466,549171,470620,7502,017,2693.1422,638,01976.47% 20082,975,139186,835676,3712,485,6033.1423,161,97478.61% 20093,022,925195,808792,9972,425,7363.1423,218,73375.36% 20102,592,111211,950599,8212,204,2403.1422,804,06178.61% 20112,171,815209,726598,1871,783,3543.1422,381,54174.88% Source: Lake County Property Appraisers Office * Information on breakdown of residential and commercial property is not available. City of Clermont, Florida Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) 95 Direct Rate City of LakeSouthLakeSt. JohnsTotal Clermont CountyLakeCountyRiver WaterDirect & FiscalOperatingOperatingVotedAmbulanceSchoolHospitalWaterManagementOverlapping YearMillageMillageDebt ServiceMSTUDistrictDistrictAuthorityDistrictRates 20023.72905.11700.00000.52898.20201.00000.50000.462019.5389 20033.72905.91700.00000.52898.39501.00000.48190.462020.5138 20043.72905.91700.00000.52898.44001.00000.40800.462020.4849 20053.72905.81700.00000.52897.99001.00000.38310.462019.9100 20063.72905.79700.00000.52897.98101.00000.33700.462019.8349 20073.14205.74700.20000.52897.64801.00000.25300.462018.9809 20083.14204.74100.20000.46517.69800.86660.21300.415817.7415 20093.14204.65110.11010.46517.51700.86660.21300.415817.3807 20103.14204.65110.11010.46517.53200.86660.21300.415817.3957 20113.14204.73090.11010.38537.52300.86660.24050.415817.4142 Source: Lake County Property Appraisers Office 1 Overlapping rates are those of local and county governments that apply to property owners within the City of Clermont. 2 Taxes levied for the fiscal year are based on the prior year taxable value. Lake County Overlapping Rates City of Clermont, Florida Property Tax Rates Direct and Overlapping1 Governments Last Ten Fiscal Years 2 (per $1,000 of assessed value) 96 Percentage of Percentage of Taxable Total TaxableTaxable Total Taxable Assessed AssessedAssessed Assessed Taxpayer ValueRankValueValueRankValue John P. Adams & Ann D. 26,014$ 11.46% Adams Family LP Fountains at Clermont LLC17,33220.97% Westdale Sundance LDT 16,38730.92% Citrus Tower Development14,38640.81% Weingarten I-4 Clermont Landing 12,29350.69% South Lake Hospital, Inc.12,01260.67% Village at East Lake 11,65570.65%9,573$ 41.68% Progress Energy Florida Inc.10,73080.60%10,11931.77% Wal-Mart Stores East LP 10,10690.57% Target Corporation 9,236100.52% Clermont Center LTD 11,28911.98% Lennar Land Partners 10,21921.79% Lucas Clermont Ltd Partnership 7,47351.31% Sprint Florida Inc 7,96761.39% HEP-8-Cler LC 6,14571.08% Osprey Ridge Apartments Inc.6,07781.06% Florida Power Corporation 6,52291.14% Mercator Properties, Inc.5,581100.98% TOTAL 140,151$ 6.36%80,965$ 14.17% Source: Lake County Property Appraiser 2011 2002 City of Clermont, Florida Principal Property Taxpayers Current Year and Nine Years Ago (amounts expressed in thousands) 97 Fiscal YearTotal Tax Collections in EndedLevy for PercentageSubsequent Percentage SeptemberFiscal YearAmountof LevyYearsAmountof Levy 2002 2,1302,05496.4%10 2,06496.9% 2003 2,6852,58696.3%9 2,59596.6% 2004 3,4143,29396.5%10 3,30396.8% 2005 4,4694,31096.4%5 4,31596.6% 2006 5,7495,54496.4%- 5,54496.4% 2007 7,5187,15595.2%17 7,17295.4% 2008 7,8107,42595.1%15 7,44095.3% 2009 7,6227,24395.0%22 7,26595.3% 2010 6,8146,53695.9%5 6,54196.0% 2011 5,9145,69896.3%15 5,71396.6% Note: Property taxes become due and payable on November 1st of each year. A four (4) percent discount is allowed if the taxes are paid in November, with the discount declining by one (1) percent each month thereafter. Accordingly, taxes collected will never be 100 percent of the tax levy. Fiscal Year of the Levy City of Clermont, Florida Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) Total Collections to Date Collected within the 98 Business-Type Fiscal Activities Year Water & SewerTotalPercentage EndedRevenueNotesRefundingPrimaryof Personal SeptBondsPayableRevenue BondsGovernmentIncome1 Per Capita1 20026,965$ 459$ 17,935$ 25,359$ *1,849$ 20036,965381 17,93525,281 *1,643 20046,5751,064 17,93525,574 *1,449 20056,180605 17,83524,620 *1,230 20065,7755,392 17,68528,852 5.66%1,312 20075,3605,358 17,45528,173 5.63%1,231 20084,9355,857 17,06527,857 4.00%1,187 20094,495 38 16,65521,188 2.95%876 20104,040 0 16,64020,680 2.84%720 20113,570 0 16,10519,675 2.63%670 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 See the Schedule of Demographic and Economic Statistics on page 104 for personal income and population data. * Information is not available. City of Clermont, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years (amounts expressed in thousands, except per capita amount) Governmental Activities 99 Percentage Amount Total Applicable toApplicable to OutstandingCity of Clermont (1)City of Clermont Direct: City of Clermont 3,570$ 100%3,570$ Overlapping: Lake County 28,500 11%3,135 School District of Lake County 35,725 11%3,930 Total direct and overlapping debt payable from ad valorem taxes 67,795$ 10,635$ Estimated Population 29,358 Total direct and overlapping debt per capita 362.24$ (1) Estimates based on ratio of assessed taxable values. Note: The City of Clermont has no legal debt margin. Sources: Lake County Clerk Finance Office Lake County Property Appraiser's Office (amounts expressed in thousands, except population and per capita amount) City of Clermont, Florida Direct and Overlapping Governmental Activities Debt September 30, 2011 100 PublicCommunications Total Revenue FiscalServiceServiceHalf-CentAvailable for YearTaxesTaxSales TaxDebt ServicePrincipalInterestCoverage 20021,054,652$ 800,177$ 464,290$ 2,319,119$ $ -1 254,188$ 9.12 20031,172,270808,813540,7172,521,800390,000250,7753.94 20041,381,779910,725780,8633,073,367395,000243,1664.82 20051,552,0001,063,454929,7403,545,194405,000233,6535.55 20061,781,6261,163,9711,156,6944,102,291415,000222,3726.44 20071,881,0921,253,4251,209,7484,344,265415,000228,3386.75 20081,992,0181,279,6531,139,3154,410,986425,000209,6066.95 20092,151,3181,257,3441,033,1414,441,803440,000195,1066.99 20102,558,2811,266,6961,053,0734,878,050455,000179,1597.69 20112,568,1411,233,7891,100,1254,902,055470,000161,8067.76 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 No principal payments were scheduled in this the period in which the debt was issued. Public Improvement Revenue Bonds, Series 2002 Debt Service City of Clermont, Florida Pledged-Revenue Coverage Last Ten Fiscal Years 101 StateTotal Revenue FiscalInfrastructureAvailable for Year Tax Debt ServicePrincipalInterestCoverage 2002 752,740$ 752,740$ 225,000$ 24,915$ 3.01 2003 996,162 996,162130,000 9,165 7.16 2004 1,233,5981,233,598 - 1 - 1 - 1 2005 1,538,4981,538,498 - 1 - 1 - 1 2006 1,934,4551,934,455 - 1 - 1 - 1 2007 1,920,4861,920,486 - 1 - 1 - 1 2008 1,900,6401,900,640 - 1 - 1 - 1 2009 1,764,9491,764,949 - 1 - 1 - 1 2010 1,780,1771,780,177 - 1 - 1 - 1 2011 1,899,2021,899,202 - 1 - 1 - 1 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 All outstanding revenue bonds were paid in full as of June 1, 2003. Debt Service Last Ten Fiscal Years Sales Tax Revenue Bonds, Series 1989 City of Clermont, Florida Pledged-Revenue Coverage 102 Water andWater and SewerSewerNet Revenue FiscalOperatingOperatingAvailable for YearRevenues1 Expenses2 Debt ServicePrincipalInterestCoverage 20025,124,778$ 2,952,556$ 2,172,222$ $ -3 932,128$ 2.33 20035,901,9073,461,2162,440,691 -3 932,1282.62 20047,261,2394,339,9592,921,280 -3 932,1283.13 20057,841,8304,773,6393,068,191100,000929,9282.98 20069,421,8345,456,6893,965,145150,000924,3533.69 200712,875,1708,820,9324,054,238230,000915,8023.54 200810,075,7067,192,3142,883,392390,000892,6882.25 200910,561,9496,511,4874,050,462410,000883,2063.13 201010,001,8366,999,0963,002,740430,000744,892 4 2.56 201110,561,2957,080,5923,480,703535,000660,6402.91 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 Operating revenue is computed per bond resolution requirements. Investment earnings are included. 2 Operating expense is computed per bond resolution requirements. Depreciation expense is not included. 3 On November 21, 2000, the City defeased its 1972 and 1988 bond issues and paid off a 1996 Bond Anticipation note that was due December 1, 2000. Principal payments were not due until December 1, 2004. 4 Includes interest paid on the 2000 and 2009 Refunding Bonds Water and Sewer Revenue and Refunding Bonds Debt Service City of Clermont, Florida Pledged-Revenue Coverage Last Ten Fiscal Years 103 Personal Education Income Level in (amountsPer Capita Years of Fiscal expressed inPersonalMedianFormalSchoolUnemploy- YearPopulation1 thousands)Income2 Age2 Schooling2 Enrollment3 ment Rate4 200213,718****4,6165.8% 200315,391****4,6305.4% 200417,654****5,2194.6% 200520,017****5,1654.0% 200621,986509,98723,19635.913.55,6403.3% 200722,882500,33821,86636.813.65,9153.8% 200823,476696,04029,64939.613.25,4367.1% 200924,199717,59729,65439.713.24,90012.3% 201028,742727,00025,29436.813.65,02412.4% 201129,358748,48225,49540.913.65,11610.6% Sources:1 College of Business Administration, University of Florida - Bureau of Economic and Business Research 2 Metro Orlando Economic Development Commission 3 Lake County School Board 4 U.S. Department of Labor, Bureau of Labor Statistics Note: Unemployment rate information is available on a countywide basis only. * Information is not available. City of Clermont, Florida Demographic and Economic Statistics Last Ten Fiscal Years 104 Percentage of Percentage of Total City Total City Employer EmployeesRankEmploymentEmployeesRankEmployment Total City Employment20,6048,114 South Lake Hospital, Inc.1,20015.82%60817.49% Lake County Sheriff's Office 77423.76% Lake County School System 46532.26%43525.36% Publix Supermarkets 35941.74%21532.65% Lowe's 32051.55% Target Corporation 31061.50% Walmart 28271.37% City of Clermont 26181.27%16252.00% Winn Dixie 20791.00%1057 Progressive Plumbing Inc 200100.97%8591.05% Westminister Care of Clermont 20042.46% Kmart 12061.48% CBS Builders Supply Inc.10081.23% Kash-N-Karry 65100.80% TOTAL 3,178 15.42%1,487 18.33% Source: Florida Agency for Workforce Innovation, Labor Market Statistics Center 2011 2002 City of Clermont, Florida Principal Employers Current Year and Nine Years Ago 105 Usage Percentage ofUsage Percentage of (thousands Total City(thousands Total City Employer of gallons)RankMetered Flow1 of gallons)RankMetered Flow Kings Ridge 276,474112.15%* * * City of Clermont 27,05421.19%* * * South Lake Hospital 24,73731.09%* * * Lake County Schools 24,24941.07%* * * Westminster Comm Care Service15,79050.69%* * * Gardens at Citrus Tower 12,30060.54%* * * The Vista at Lost Lake 11,70170.51%* * * Sundance Clermont Apartments8,57480.38%* * * Osprey Ridge Apartments LTD8,13190.36%* * * Emerald Lakes of Clermont 7,817100.34%* * * TOTAL 416,827 18.31%* * 1 The City of Clermont had a total metered water flow of approximately 2,275,936,180 gallons for the 12-month period ending September 30, 2011 * Information is not available. 2011 2002 City of Clermont, Florida Principal Water Customers Current Year and Nine Years Ago 106 Usage Percentage ofUsage Percentage of (thousands Total City(thousands Total City Employer of gallons)RankMetered Flow1 of gallons)RankMetered Flow South Lake Hospital 26,26411.78%* * * Lake County Schools 17,92821.21%* * * The Vista at Lost Lake 14,10230.95%* * * Westminster Comm Care Service13,90140.94%* * * Village at East Lake 11,09650.75%* * * Hwy 27 17156 LLC (BP)3,79560.26%* * * Olive Garden 3,59970.24%* * * Walmart 3,26580.22%* * * Empirian Property Management3,10590.21%* * * Superior Residences of Clermont2,443100.17%* * * TOTAL 99,498 6.73%* * 1 The City of Clermont had a total metered water flow for wastewater billing purposes of approximately 1,477,656,774 gallons for the 12-month period ending September 30, 2011 * Information is not available. 2011 2002 City of Clermont, Florida Principal Sewer Customers Current Year and Nine Years Ago 107 Function 2002 2003 2004 2005 General Government 17.0023.0022.5025.50 Public Safety: Police Sworn personnel 29.0031.0034.0038.00 Non sworn personnel 10.0011.0012.0016.00 Fire Firefighters 12.0013.0019.0022.00 Other personnel 1.00 1.00 1.00 1.00 Physical Environment - 0.50 7.50 7.50 Transportation 11.3513.1613.2513.25 Human Services 1.00 1.75 2.25 2.25 Culture & Recreation 20.7523.5019.4519.45 Water 18.7220.3222.9023.40 Sewer 19.0219.2225.8025.30 Stormwater 2.20 4.49 4.65 4.65 Sanitation 8.96 9.06 8.70 8.70 Total 151.00171.00193.00207.00 Source: City of Clermont Administrative Services Department. Full-time Equivalent Employees as of September 30, City of Clermont, Florida Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years 108 2006 2007 2008 2009 2010 2011 27.5030.5030.5031.0028.0027.00 45.0051.0053.0053.0057.0057.00 16.0016.0017.0017.0016.00 5.00 38.0045.0049.0047.8548.0048.00 2.00 2.00 2.00 2.00 2.00 2.00 10.0010.0010.0011.6510.90 5.40 13.7015.2015.6015.6015.3513.50 2.00 2.00 2.00 0.00 0.00 0.00 22.2026.2026.6025.6021.1022.00 25.4026.9029.4029.4029.1529.15 26.3027.8026.3026.3026.0525.85 7.20 8.70 8.80 8.80 9.15 9.40 8.7014.7016.8016.8016.3016.70 244.00276.00287.00285.00279.00261.00 Full-time Equivalent Employees as of September 30, 109 Function 2002 2003 2004 2005 General Government Municipal boundary (square miles)11.1811.8811.9712.45 Business Tax Receipts issued 1,2901,4681,5511,795 A/P Checks issued 4,8084,9404,9675,415 Commercial construction (units)39 22 24 23 Commercial construction (value in thousands)52,34318,75814,2727,115 Residential construction (units)829 9591,155 673 Residential construction (value in thousands)77,470124,837158,458103,672 Public Safety: Police Auto accidents 390 489 541 671 Physical arrests 465 449 414 500 911 calls received * * 5,5806,262 Evidence processed (pieces)1,1231,0751,0541,127 Parking violations 36 48 87 71 Traffic violations 3,6232,7132,3942,855 Fire Volunteer firefighters 34 34 34 27 Fire inspections completed 494 441 483 457 Emergency calls answered 2,2712,5063,0933,321 Non-emergency calls answered 77 86 143 143 Human Services Animals captured**521 364 562 445 Water Residential customers 8,46110,52912,75114,284 Commercial customers 644 723 817 921 Annual water usage (thousands of gallons)1,299,7011,338,8181,655,2031,788,337 Sewer Residential customers 6,2437,6509,21710,176 Commercial customers 581 673 767 883 Sources: Various government departments. * Data not available. ** Program was discontinued in FY 07-08 Fiscal Year City of Clermont, Florida Operating Indicators by Function Last Ten Fiscal Years 110 2006 2007 2008 2009 2010 2011 14.1314.3714.4214.4314.7616.11 1,9852,1412,2631,7711,8331,843 5,6646,0236,4406,0425,7224,875 38 24 42 19 10 3 17,53424,43318,85913,2238,35718,020 635 324 301 204 305 151 186,189136,47756,57856,09253,20223,558 6251,1921,272 972 9551,121 707 933 842 949 854 699 7,0086,3176,0466,8285,2305,587 1,6101,5851,3001,6521,3491,297 161 140 145 107 137 378 5,2595,1645,1034,5534,9816,312 27 9 8 10 6 6 625 414 880 9792,121 896 3,1323,0483,1773,1553,1123,822 189 198 234 434 352 805 495 652 - - - - 15,73316,39416,95917,37511,37614,174 9931,0691,1561,2011,0331,210 2,121,5882,654,3522,589,6642,312,9622,054,2362,275,936 11,12511,55411,91312,15411,58312,722 9551,0311,1201,158 9441,167 Fiscal Year 111 Function 2002 2003 20042005 General Government Public Safety: Police Police stations 1 1 1 1 Patrol units 29 31 34 38 Fire Fire stations 3 3 3 3 Staffed fire stations 2 2 2 2 Fire hydrants 940 1,064 1,2001,431 Fire apparatus 6 7 7 8 Staffed fire apparatus 2 2 2 3 ALS non-transport units 1 2 3 3 Transportation Streets paved (miles)88.74 92.90 97.00101.39 Streetlights 1,056 1,056 1,1061,131 Culture & Recreation Number of parks 22 22 22 22 Parks acreage 101.5 101.5 101.5101.5 Scenic linear trail (miles)3.5 3.5 3.5 5.7 Tennis courts 6 6 8 8 Fishing piers 4 4 4 4 Boat ramp 1 1 1 1 Libraries 1 1 1 1 Water Miles of water mains 88.74 88.74 92.9497.23 Miles of sanitary sewers 39.05 39.05 41.1544.26 Miles of storm sewers 9.11 9.11 9.5310.27 Sources: Various government departments. Fiscal Year Last Ten Fiscal Years Capital Asset Statistics by Function City of Clermont, Florida 112 2006 2007 2008 2009 2010 2011 111111 45 45 45 45 45 46 333344 233333 1,630 1,896 2,140 2,140 2,012 2,016 999987 455555 333444 109.94122.93126.16131.72133.20191.73 1,231 1,256 1,331 1,331 1,352 1,352 22 22 22 22 22 23 349.5 349.5 349.5 349.5 349.5 349.5 5.7 5.7 5.7 5.7 5.7 5.7 889999 444444 111111 111111 104.52115.02115.98122.83124.11197.40 49.51 56.98 59.40 65.18 66.19182.02 11.13 18.07 20.88 24.61 26.32 89.80 Fiscal Year 113 114 115 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of City of Clermont, Florida, in a separate letter dated March 5, 2012. This report is intended solely for the information and use of management, the City Council and the Auditor General of the State of Florida, and is not intended to be, and should not be used by anyone other than these specified parties. March 5, 2012 116 ^^ C I T T O F C L E R M O N T Af f i d a v i t o f I m p a c t F e e C o m p l i a n c e Im p a c t f e e c o l l e c t i o n s , e x p e n d i t u r e s a n d a c c o u n t i n g a r e p r o v i d e d f o r in s e p a r a t e a c c o u n t i n g f u n d s a n d c o m p l y w i t h F l o r i d a S t a t u t e 1 6 3 . 3 1 8 0 1 . J/ s e p Zi l e A d m i at i v e S e r v i c e s D i r e c t o r . Th e j o r e g o i n g i n s t r u m e n t w a s a c k n o w l e d g e d b e f o r e m e t h i s C ^ h ~ > d a y o f m c ^ - , 2 0 1 2 b y J o s e p h V a n Z i l e . O r - ^ B B O K i e . v e u N Q ^^ ^ - ~ N O T A R Y P U B L I C » S T A T E O F F L O R I D A C o m m # D D 8 1 0 0 7 1 No t a r y S i g n a t u r e & S j i f i m p . < Ex p i r e s 1 0 / 3 1 / 2 0 1 2 Pe r s o n a l l y K n o w n ^ or P r o d u c e d I d e n t i f i c a t i o n Ty p e o f I d e n t i f i c a t i o n P r o d u c e d P. O . B O X 1 2 0 2 1 9 . C L E R M O N T , F L O R I D A 3 4 7 1 2 - 0 2 1 9 P H O N E : 3 5 2 - 2 4 1 - 7 3 6 0 F A X : 3 5 2 - 3 9 4 - 4 0 8 2 . . w w w . C i t v o f C l e r m o n t F L . c o m 11 7 118 119  Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on the financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse, and (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not have any such findings.  Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information has been disclosed in the notes to the financial statements.  Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement be included as to whether or not the local governmental entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the City of Clermont, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes.  Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the annual financial report for the City of Clermont, Florida for the fiscal year ended September 30, 2011 filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2011. We determined that these two reports are in agreement.  Pursuant to Sections 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor the entity’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of management, and the Florida Auditor General, and is not intended to be and should not be used by anyone other than these specific parties. March 5, 2012 120 CITY OF CLERMONT, FLORIDA APPENDIX A - PRIOR YEAR RECOMMENDATIONS Year Ended September 30, 2011 No.Prior Year's Observations Observation is Still Relevant Observation Addressed or No Longer Relevant ML 10-1 Appropriations in excess of funds available X ML 10-2 Deficit Net Assets X 121 122 123 Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated March 5, 2012. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of management, the City Council and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, March 5, 2012 124