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Comprehensive Annual Financial Report - 2011-2012CITYOF CLERMONT FLORIDAFLORIDA Comprehensive Annual Financial Report Fiscal Year Ended September 30 2012September 30, 2012 Citrus Tower The Citrus Tower stands unrivaled as a majestic and monumental tribute to Central Florida’s famed citrus industry and its lush subtropical groves. The glass enclosed observation deck allows visitors to observe the panoramic view of the rolling hills of Florida’s ridge section and hundreds of spring-fed lakes in the surrounding 8 county area. The sign below hangs in the elevator at the Citrus Tower giving all those who visit some fast facts and history of its origin. City of Clermont, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT For The Year Ended September 30, 2012 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, 2012 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 – Infrastructure Special Revenue Fund 20 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 63 Major Governmental Funds: 67 Capital Projects Fund 68 Other Governmental Funds: 69 Combining Balance Sheet – Other Governmental Funds 70 ii CITY OF CLERMONT COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS - Continued Year Ended September 30, 2012 Page II. Financial Section - Continued: Combining Statement of Revenues, Expenditures and Changes In Fund Balances - Other Governmental Funds 72 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Special Revenue Funds 74 Debt Service Fund 78 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 Management Letter 117 Response to Management Comments 120 Communication with those Charged with Governance 121 CITY OF CLERMONT P.O. BOX 120219 · CLERMONT, FLORIDA 34712-0219 · PHONE: 352-241-7360 · FAX: 352-394-4082 www.CityofClermontFL.com March 30, 2013 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, 2012. 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, 2012. 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, 2012, 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, 2012, 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 14.95 square miles and population of approximately 29,827. 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 Infrastructure Fund is presented on page 20 and 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 68, followed by the other governmental funds, which start on page 74. 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, 2012, Lake County’s unemployment rate was 8.9%, which is a decrease of 1% from 2011. Clermont’s unemployment rate was below the County average for the 3rd year in a row at 7% for 2012. This is lower than both the state’s average of 8.4% and the national average of 7.8%. 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 has been purchased and construction of the new 26,000 square foot facility is scheduled to begin in mid 2013. 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 is being built on City owned property and includes meeting space, a kitchen area and office area. The new facility will cost $2,091,500 and is being funded from infrastructure sales taxes. Substantial completion is expected in April 2013. • 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 $51,406,379 and the average investment earnings rate was 1.23%. 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 $22,397,533 and the average investment income was 17.2%. 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, 2011. This was the twenty-fourth 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 Finance 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. xi CITY OF CLERMONT, FLORIDA LIST OF ELECTED AND APPOINTED OFFICIALS SEPTEMBER 30, 2012 ELECTED OFFICIALS Mayor Harold Turville, Jr. Mayor Pro-Tem Ray Goodgame Council Member Keith Mullins Council Member Rick VanWagner Council Member Timothy Bates APPOINTED OFFICIALS City Manager Darren Gray Assistant City Manager Scott Blankenship City Attorney Dan Mantzaris City Clerk Tracy Ackroyd Economic Development Director James Hitt Environmental Services Director James Kinzler Finance Director Joseph Van Zile Fire Chief Carle Bishop Human Resources Director Debbie Porte Information Technology Director Don Dennis Planning Director Barbara Hollerand Police Chief Charles Broadway Public Works Director Tamara Richardson CITY OFCLERMONT CITIZENS CLERMONTCITY COUNCIL COMMITTEESCITYATTORNEY CITYMANAGER POLICE FIRE HUMANRESOURCES INFORMATIONTECHNOLOGY FINANCE ASSISTANTCITY MANAGER ENVIRONMENTALSERVICES ECONOMICDEVELOPMENT PLANNING ANDZONING PARKS ANDRECREATION PUBLICWORKSCITY CLERK - Records Management - Cemetery - Election Qualifying - Agenda Development - Criminal Investigations - Traffic Enforcement - Road Patrol - Community Relations - Fire Suppression - Special Operations - Emergency Medical Services - Fire Inspection and Prevention - Volunteer and Reserve Programs - Recruitment - Benefits - Employee Relations - Safety - GIS - Network Administration - Website management - Application Support - Telecommunication - Security Systems - Finance - Utility Billing - Risk Management - Budget - Purchasing - Water - Sanitation - Sewer - Stormwater - CRA - Economic Development - Program Development - Permitting - Occupational Licenses - Zoning - Code Enforcement - Building Services - Program Development - Program Management - Event Planning - Facility Scheduling - Capital Improvements - Construction - Inspections - Transportation - Fleet - Facilities - Property Maintenance INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Clermont, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Clermont, Florida, as of and for the year ended September 30, 2012, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Clermont, Florida, as of September 30, 2012 and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund, Infrastructure Special Revenue Fund, and Community Redevelopment Special Revenue fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 5, 2013 on our consideration of the City of Clermont, Florida's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. MCDIRMIT DAVIS & COMPANY, LLC 605 E. ROBINSON STREET, SUITE 635 ORLANDO, FLORIDA 32801 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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 63 through 65 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, 2013 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, 2012. 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, 2012 by $142,343,655 (net assets). Of this amount, $30,136,280 (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 $2,556,968 (or 1.83%) over the previous fiscal year. • At September 30, 2012, the City of Clermont’s governmental funds reported combined ending fund balances of $20,523,128 a decrease of $1,006,684 from the previous fiscal year. Of this amount $9,743,739 (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 $9,743,739, which represents 57.6% 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, Infrastructure Fund, Capital Projects Fund, and the Community Redevelopment Fund, all of which are considered to be major funds. Data from the other six 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), the Infrastructure Fund (page 20) and the Community Redevelopment Fund (page 21) to demonstrate compliance with budgets. Other major and nonmajor funds comparisons can be found beginning on page 67. 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 - 61 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 68 - 81 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. 2011‐122010‐112011‐122010‐112011‐122010‐11 Assets: Current and other assets22,237,315$ 22,354,843$ 32,577,071$ 30,868,191$ 54,814,386$ 53,223,034$ Capital assets 39,691,706 38,463,475 71,859,641 71,578,874 111,551,347 110,042,349 Total assets 61,929,021 60,818,318 104,436,712 102,447,065 166,365,733 163,265,383 Liabilities: Long-term liabilities outstanding5,384,288 5,405,896 15,802,194 16,179,340 21,186,482 21,585,236 Other liabilities 1,355,270 672,352 1,480,326 1,221,108 2,835,596 1,893,460 Total liabilities 6,739,558 6,078,248 17,282,520 17,400,448 24,022,078 23,478,696 Invested in capital assets, Net of related debt 36,611,706 34,893,475 57,241,409 56,430,326 93,853,115 91,323,801 Restricted 8,877,028 7,381,124 9,477,232 9,240,407 18,354,260 16,621,531 Unrestricted 9,700,729 12,465,471 20,435,551 19,375,884 30,136,280 31,841,355 Total net assets 55,189,463$ 54,740,070$ 87,154,192$ 85,046,617$ 142,343,655$ 139,786,687$ Net Assets Governmental ActivitiesBusiness‐type Activities Total The City’s total net assets at September 30, 2012 were $142,343,655. Of the City’s total net assets $93,853,115 (65.9%) 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. 5 An additional portion of the City’s total net assets, $18,354,260 (12.9%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the City’s total net assets, $30,136,280 (21.2%) is unrestricted. These assets may be used at the City’s discretion in meeting its ongoing obligations to citizens and creditors. The City’s net assets increased by $2,556,968 during the current fiscal year. Major components of this increase are discussed in the Governmental and Business-Type Activities sections to follow. Restricted reserves represent the accumulation of impact fee funds for upcoming and ongoing capital projects. The following is a summary of the City’s governmental and business-type activities for fiscal year 2011-12, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 14. 2011-122010-112011-122010-112011-122010-11 Revenues: Program revenues - Charges for services2,703,623$ 2,589,177$ 13,829,412$ 13,985,304$ 16,533,035$ 16,574,481$ Operating grants and contributions 1,190,851 1,236,588 - - 1,190,851 1,236,588 Capital grants and contributions 27,477 128,786 1,751,977 998,446 1,779,454 1,127,232 General revenues -- - Property Taxes 5,648,537 5,965,731 - - 5,648,537 5,965,731 Franchise Fees 2,188,928 2,284,839 - - 2,188,928 2,284,839 Utility Taxes 2,430,440 2,568,141 - - 2,430,440 2,568,141 Intergovernmental 5,062,701 4,664,393 - - 5,062,701 4,664,393 Investment income and miscellaneous 388,167 477,857 288,699 145,153 676,866 623,010 Total revenues 19,640,724 19,915,512 15,870,088 15,128,903 35,510,812 35,044,415 Expenses: General government 4,211,118 3,643,321 - - 4,211,118 3,643,321 Public safety 12,167,658 12,530,840 - - 12,167,658 12,530,840 Physical environment 248,457 279,236 - - 248,457 279,236 Transportation 1,718,598 1,661,325 - - 1,718,598 1,661,325 Economic environment 115,692 101,486 - - 115,692 101,486 Culture and recreation 1,045,549 1,821,837 - - 1,045,549 1,821,837 Interest on long-term debt136,817 156,185 - - 136,817 156,185 Water - - 4,051,369 4,460,605 4,051,369 4,460,605 Sewer - - 5,752,342 6,021,892 5,752,342 6,021,892 Sanitation - - 2,567,157 2,364,382 2,567,157 2,364,382 Stormwater - - 939,087 954,799 939,087 954,799 Total expenses 19,643,889 20,194,230 13,309,955 13,801,678 32,953,844 33,995,908 Increase (Decrease) in Net Assets Before Transfers (3,165) (278,718) 2,560,133 1,327,225 2,556,968 1,048,507 Transfers 452,558 520,396 (452,558) (520,396) - - Increase in Net Assets 449,393 241,678 2,107,575 806,829 2,556,968 1,048,507 Net Assets – Beginning54,740,070 54,498,392 85,046,617 84,239,788 139,786,687 138,738,180 Net Assets – Ending 55,189,463$ 54,740,070$ 87,154,192$ 85,046,617$ 142,343,655$ 139,786,687$ Governmental Activities Changes in Net Assets Business-type Activities Total 6 Governmental activities - Governmental activities increased the City of Clermont’s net assets by $449,393, 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 $4,211,118 $12,167,658 $1,718,598 $1,045,549 $364,149 $136,817 $1,649,331 $1,373,148 $295,637 $603,835 $0 $0 Expenses and Program Revenues -Governmental Activities Expenses Program revenues Intergovernmental, 25.8% Charges for services, 13.8% Operating grants and contributions, 6.0%Investment income & miscellaneous , 2.0% Other taxes, 23.5% Capital grants and contributions, 0.1% Property taxes, 28.8% 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 $2,107,575. This change was due to decreased operating expenses totaling $491,723 and capital contributions totaling $1,751,977. 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 $4,051,369 $5,752,342 $2,567,157 $939,087 $5,508,442 $6,276,097 $2,721,025 $1,075,825 Expenses and Program Revenues -Business Type Activities Expenses Program Revenue Investment income & miscellaneous , 2% Charges for Services, 87% Capital Grants and Contributions, 11% 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, 2012, the City of Clermont’s governmental funds reported combined ending fund balances of $20,523,128 a decrease of $1,006,684 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, $9,743,739 (47.5%) represents unassigned fund balance, which is available for spending at the City’s discretion. An additional $1,706,781 (assigned fund balance) has been set aside for FY 2013 capital projects and expenditures. Restricted fund balances totaling over $7.99 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 ($1,085,348) 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, 2012, the fund balance in the General Fund was $11,202,306 a decrease of $267,222 in comparison with the prior year. This decrease is due to current expenditures exceeding current revenues, however, this is $644,915 less than originally budgeted and nearly $1.3 million less than the revised budget. Revenues exceeded budget by $126,336 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, $9,743,739 (87%) 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 57.8% of total General Fund expenditures, while total fund balance represents 66.2% of that same amount. The City 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 2011- 12, the fund balance of the capital projects fund decreased by $2,185,867 due to construction of planned capital projects. Additional projects are expected to be completed during FY 2013 utilizing the balance of the accumulated funds. The City has an Infrastructure Fund that is considered a major fund under criteria set forth by GASB Statement No. 34. 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. The fund balance in this fund increased by $1,148,562 in FY 2012, which is $365,144 more than the revised budget. This increase was due to both higher than anticipated revenues ($167,044) as well as reduced expenditures ($192,147). Planned expenditures for the purchase of a new fire truck are being rolled over to FY 2013 due to the delay in delivery of the vehicle until after the end of the fiscal year. 9 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, 2012, the fund balance was $1,303,470, a decrease of $355,047 over the prior year. This decrease is due to the commencement of the underground utilities project in conjunction with the streetscape improvements project. The remainder of the change $652,890 to the governmental fund balance was from the non- major governmental funds. Recreation and Police Impact Fee fund balances combined increased a total of $610,374 due to both an increase in revenues as well as a delay in the planned use of funds for capital projects. The fund balances in the remaining nonmajor funds increased a total of $42,516. 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, 2012, the City of Clermont’s Water Fund reported total net assets of $30,301,723, an increase of $1,138,101 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, 2012, the City of Clermont’s Sewer Fund reported total net assets of $47,686,630, an increase of $582,784 in comparison with the prior year. This increase is primarily due to capital contributions. 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, 2012, the City of Clermont’s Sanitation Fund reported total net assets of $4,340,294, an increase of $163,880 in comparison with the prior year, which is primarily due to surplus operating income. General Fund Budgetary Highlights During the year there was a $1,049,165 increase in appropriations between the original and final amended budget. Following are the main components of the increase: • $413,824 for expenditures associated with several public safety grants. These grants had not yet been awarded at the start of the fiscal year. • $231,504 for actual costs of salaries and vehicle maintenance in the Fire Department. 10 • $99,107 for the carry forward of unexpended FY 2011 funds for dispatching services performed by the Lake County Sheriff’s Office. • $85,683 for the cost of reclaimed irrigation water charges for Hancock Park due to the well not functioning. • $79,303 for preventative maintenance and repairs to the City Hall Building. • $35,927 for the first payment on a 3 year interlocal agreement with Lake County for the South Lake Business Opportunity Center. • $62,447 for increases in the City’s contribution to the Group Self Insurance Fund. • $17,154 for actuarial and impact fee studies. • $10,000 for a contribution to the Boys and Girls Clubs of Lake and Sumter Counties. General Fund revenue increases totaling $413,535 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 $1,110,543. In addition, actual revenues exceeded the budget by $126,336. 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. The City of Clermont’s investment in capital assets for its governmental and business-type activities as of September 30, 2012, amounts to $111,551,347 (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 $1,508,998. Major capital asset events during the current fiscal year included the following: • Purchase of land for the site of the new Police Headquarters Building for $1,199,319.38. 2011-12 2010-112011-122010-11 2011-12 2010-11 Land 23,327,351 $ 22,128,032$ 1,861,820$ 1,851,483$ 25,189,171$ 23,979,515$ Buildings 8,056,278 8,598,119 - - 8,056,278 8,598,119 Infrastructure 4,415,572 4,921,173 62,527,239 61,789,590 66,942,811 66,710,763 Machinery and Equipment 1,084,064 1,489,583 1,861,528 1,365,717 2,945,592 2,855,300 Intangibles 110,025 206,250 - - 110,025 206,250 Construction in Progress2,698,416 1,120,318 5,609,054 6,572,084 8,307,470 7,692,402 Total 39,691,706 $ 38,463,475$ 71,859,641$ 71,578,874$ 111,551,347$ 110,042,349$ Capital Assets (net of depreciation) Governmental ActivitiesBusiness-Type Activities Total 11 • Purchase of five sanitation vehicles for $1,297,000. • Construction in progress includes construction of the Community Center, Police Headquarters, Meter Replacement Program, Water and Sewer Security Improvements and West Water Treatment Facility, Disston Avenue Stormwater improvements. 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. At the end of the current fiscal year, the City of Clermont had total debt outstanding of $18,605,000, which includes revenue bonds payable. Economic Factors and Next Year’s Budgets and Rates • The annual unemployment rate for Lake County in 2012 was 8.9%, which is a decrease of 2.3% from 2011. Clermont’s unemployment rate was below the County average for the 3rd year in a row at 7% for 2012. This is lower than both the state’s average of 8.4% and the national average of 7.8%. • The taxable value of commercial and residential property decreased 3% from fiscal year 2010-11 to fiscal year 2011-12 due to declining home values and foreclosures. • Population increased 1.6% from 29,358 in 2012 to 29,827 in 2013. As of September 30, 2012, the General Fund unassigned fund balance was $9,743,739. In addition, the City appropriated $1,034,267 for spending in the 2012-13 fiscal year budget. The same property tax rate is included for the General Fund for the 2012-13 fiscal year budget. However, property tax revenue is projected to be $168,135 lower in fiscal year 2012-13 due to continued declining home values and foreclosures. No utility rate adjustments were proposed for the 2012-13 fiscal year with the exception of the sewer rate structure. The sewer rates increased 2.41% on October 1, 2012 pursuant to a required adjustment in accordance with the Florida Public Service Commission Annual Deflator Index previously adopted by the Clermont City Council. Requests for Information This financial report is designed to provide a general overview of the City of Clermont’s finances for all those with an interest in the government’s finances. Questions concerning any of the information should be addressed to the office of the Finance Director, City of Clermont, P.O. Box 120219, Clermont, Florida 34712. 2011-12 2010-112011-122010-112011-12 2010-11 Revenue bonds payable 3,080,000$ 3,570,000$ 15,525,000$ 16,105,000$ 18,605,000 $ 19,675,000$ Total 3,080,000$ 3,570,000$ 15,525,000$ 16,105,000$ 18,605,000 $ 19,675,000$ Outstanding Debt Governmental ActivitiesBusiness-type Activities Total 12 BASIC FINANCIAL STATEMENTS CITY OF CLERMONT, FLORIDA STATEMENT OF NET ASSETS September 30, 2012 Primary Government Governmental Activities Business-type Activities Total Assets: Cash and cash equivalents 18,156,469$ 13,193,978$ 31,350,447$ Investments 3,274,938 7,971,856 11,246,794 Receivables, net 260,715 1,187,837 1,448,552 Inventories 25,935 862,094 888,029 Due from other governments 391,108 569 391,677 Internal balances (47,722) 47,722 - Prepaid costs 169,653 118,878 288,531 Restricted assets: Cash and cash equivalents - 1,445,882 1,445,882 Investments - 7,376,775 7,376,775 Interest receivable 6,219 27,055 33,274 Bond issuance costs - 344,425 344,425 Capital assets not being depreciated 26,025,767 7,470,874 33,496,641 Capital assets being depreciated, net of accumulated depreciation 13,665,939 64,388,767 78,054,706 Total assets 61,929,021 104,436,712 166,365,733 Liabilities: Accounts payable and accrued expenses 1,355,270 1,480,326 2,835,596 Noncurrent liabilities: Due within one year 577,431 620,451 1,197,882 Due in more than one year 4,806,857 15,181,743 19,988,600 Total liabilities 6,739,558 17,282,520 24,022,078 Net Assets: Invested in capital assets, net of related debt 36,611,706 57,241,409 93,853,115 Restricted for: Capital Improvements - 9,477,232 9,477,232 Community redevelopment 1,303,470 - 1,303,470 Public safety 2,824,963 - 2,824,963 Culture and recreation 789,177 - 789,177 Infrastructure 2,550,254 - 2,550,254 Debt service 499,242 - 499,242 Building services 20,162 - 20,162 Perpetual care: Nonexpendable 889,760 - 889,760 Unrestricted 9,700,729 20,435,551 30,136,280 Total net assets 55,189,463$ 87,154,192$ 142,343,655$ The accompanying Notes to Financial Statements are an integral part of this statement. 13 CITY OF CLERMONT, FLORIDA STATEMENT OF ACTIVITIES Functions/Programs:Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business-type Activities Total Governmental Activities: General government 4,211,118$ 1,649,331$ -$ -$ (2,561,787)$ -$ (2,561,787)$ Public safety 12,167,658 450,457 895,214 27,477 (10,794,510) - (10,794,510) Physical environment 248,457 - - - (248,457) - (248,457) Transportation/public works 1,718,598 - 295,637 - (1,422,961) - (1,422,961) Economic environment 115,692 - - - (115,692) - (115,692) Culture and recreation 1,045,549 603,835 - - (441,714) - (441,714) Interest on long-term debt 136,817 - - - (136,817) - (136,817) Total governmental activities 19,643,889 2,703,623 1,190,851 27,477 (15,721,938) - (15,721,938) Business-type activities Water 4,051,369 5,099,499 - 408,943 - 1,457,073 1,457,073 Sewer 5,752,342 5,154,338 - 1,121,759 - 523,755 523,755 Sanitation 2,567,157 2,721,025 - - - 153,868 153,868 Stormwater 939,087 854,550 - 221,275 - 136,738 136,738 Total business-type activities 13,309,955 13,829,412 - 1,751,977 - 2,271,434 2,271,434 Total primary government 32,953,844$ 16,533,035$ 1,190,851$ 1,779,454$ (15,721,938) 2,271,434 (13,450,504) General revenues: Property taxes 5,648,537 - 5,648,537 Franchise fees 2,188,928 - 2,188,928 Utility taxes 2,430,440 - 2,430,440 Intergovernmental - unrestricted 5,062,701 - 5,062,701 Unrestricted investment earnings 245,128 288,699 533,827 Miscellaneous 143,039 - 143,039 Transfers 452,558 (452,558) - Total general revenues and transfers 16,171,331 (163,859) 16,007,472 Change in net assets 449,393 2,107,575 2,556,968 Net assets - beginning 54,740,070 85,046,617 139,786,687 Net assets - ending 55,189,463$ 87,154,192$ 142,343,655$ Year Ended September 30, 2012 Program Revenue Changes in Net Assets Primary Government Net (Expense) Revenue and The accompanying Notes to Financial Statements are an integral part of this statement. 14 General Capital Projects Infrastructure Special Revenue Community Redevelopment Special Revenue Other Governmental Funds Total Governmental Funds Assets: Cash and cash equivalents 7,965,441$ 998,976$ 2,604,594$ 1,303,462$ 4,867,430$ 17,739,903$ Investments 3,274,938 - - - - 3,274,938 Receivables, net 266,934 - - - - 266,934 Inventories, at cost 25,935 - - - - 25,935 Due from other governments 238,219 - 152,889 - - 391,108 Prepaid costs 169,071 - - 8 574 169,653 Total assets 11,940,538$ 998,976$ 2,757,483$ 1,303,470$ 4,868,004$ 21,868,471$ Liabilities and Fund Balances: Liabilities: Accounts payable 445,720$ 331,096$ 207,229$ -$ 68,786$ 1,052,831$ Deferred revenue 80,734 - - - - 80,734 Accrued liabilities 211,778 - - - - 211,778 Total liabilities 738,232 331,096 207,229 - 68,786 1,345,343 Fund balances: Non spendable 195,006 - - 8 890,334 1,085,348 Restricted 224,660 - 2,550,254 1,303,462 3,908,884 7,987,260 Assigned 1,038,901 667,880 - - - 1,706,781 Unassigned 9,743,739 - - - - 9,743,739 Total fund balances 11,202,306 667,880 2,550,254 1,303,470 4,799,218 20,523,128 Total liabilities and fund balances 11,940,538$ 998,976$ 2,757,483$ 1,303,470$ 4,868,004$ 39,691,706 (44,367) 80,734 322,550 (5,384,288) 55,189,463$ 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 CITY OF CLERMONT, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2012 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. The accompanying Notes to Financial Statements are an integral part of this statement. 15 General Capital Projects Infrastructure Special Revenue Community Redevelopment Special Revenue Other Governmental Funds Total Governmental Funds Revenues: Taxes 7,886,656$ -$ -$ 192,321$ -$ 8,078,977$ Franchise fees 2,188,928 - - - - 2,188,928 Licenses and permits 94,425 - - - 359,721 454,146 Intergovernmental revenues 4,328,806 - 1,980,912 - - 6,309,718 Charges for services 961,042 - - - 49,909 1,010,951 Fines and forfeitures 215,266 - - - - 215,266 Impact fees/special assessments - - - - 679,453 679,453 Investment earnings 140,689 22,616 18,482 15,302 46,458 243,547 Miscellaneous 430,423 437 - - 42,841 473,701 Total revenues 16,246,235 23,053 1,999,394 207,623 1,178,382 19,654,687 Expenditures: Current: General government 2,608,462 37,046 44,623 - 389,547 3,079,678 Public safety 11,192,312 51,958 107,682 - - 11,351,952 Physical environment 247,629 - - - - 247,629 Transportation 1,108,234 - 231,406 - - 1,339,640 Economic environment 78,519 - - 562,670 - 641,189 Culture and recreation 1,684,825 47,170 10,042 - 26,991 1,769,028 Debt Service: Principal retirement - - - - 490,000 490,000 Interest and fiscal charges - - - - 143,350 143,350 Capital Outlay: General government - 856,658 - - - 856,658 Public safety - 1,199,525 - - - 1,199,525 Culture and recreation - 16,563 - - - 16,563 Total expenditures 16,919,981 2,208,920 393,753 562,670 1,049,888 21,135,212 Excess (Deficiency) of Revenues Over Expenditures (673,746) (2,185,867) 1,605,641 (355,047) 128,494 (1,480,525) Other Financing Sources (Uses): Transfers in 482,704 - - - 634,832 1,117,536 Transfers out (76,180) - (457,079) - (110,436) (643,695) Total other financing sources (uses)406,524 - (457,079) - 524,396 473,841 Net Change in Fund Balances (267,222) (2,185,867) 1,148,562 (355,047) 652,890 (1,006,684) Fund Balances - Beginning 11,469,528 2,853,747 1,401,692 1,658,517 4,146,328 21,529,812 Fund Balances - Ending 11,202,306$ 667,880$ 2,550,254$ 1,303,470$ 4,799,218$ 20,523,128$ Year Ended September 30, 2012 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:(1,006,684)$ 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.1,252,317 The net effect of sales of capital assets is to decrease net assets.(2,803) Revenue reported in the funds must be eliminated from the statement of activities since revenue was recognized in a prior year (15,544) 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. 490,000 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.(461,859) Transfer of capital assets to proprietary funds (21,283) 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.215,249 Change in net assets of governmental activities 449,393$ RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE Year Ended September 30, 2012 CITY OF CLERMONT, FLORIDA STATEMENT OF ACTIVITIES 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 7,679,366$ 7,679,366$ 7,886,656$ 207,290$ Franchise fees 2,172,500 2,172,500 2,188,928 16,428 Licenses and permits 62,000 62,000 94,425 32,425 Intergovernmental revenues 3,955,852 4,369,387 3,941,033 (428,354) Charges for services 982,023 982,023 961,042 (20,981) Fines and forfeitures 104,400 104,400 215,266 110,866 Investment earnings 78,750 78,750 140,689 61,939 Miscellaneous 283,700 283,700 430,423 146,723 Total revenues 15,318,591 15,732,126 15,858,462 126,336 Expenditures: Current: General government: City council 27,238 27,238 25,529 1,709 City clerk 200,726 201,077 182,725 18,352 City manager 361,777 371,580 351,000 20,580 Administrative services 1,106,392 1,134,108 1,117,000 17,108 Legal services 113,000 114,700 111,796 2,904 Planning & zoning 446,799 452,288 431,106 21,182 Engineering 90,397 90,397 84,539 5,858 Other general government 236,967 326,270 304,767 21,503 2,583,296 2,717,658 2,608,462 109,196 Public Safety: Law enforcement 5,986,167 6,302,579 5,747,480 555,099 Fire control 4,792,522 5,248,814 5,057,059 191,755 10,778,689 11,551,393 10,804,539 746,854 Physical environment 280,741 282,614 247,629 34,985 Transportation 1,184,283 1,186,892 1,108,234 78,658 Economic environment 63,885 99,812 78,519 21,293 Culture and recreation 1,702,692 1,804,382 1,684,825 119,557 Total expenditures 16,593,586 17,642,751 16,532,208 1,110,543 GENERAL FUND Year Ended September 30, 2012 CITY OF CLERMONT, FLORIDA BUDGET AND ACTUAL STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - 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 (1,274,995) (1,910,625) (673,746) 1,236,879 Other Financing Sources (Uses): Transfers in 440,030 440,030 482,704 42,674 Transfers out (77,172) (77,172) (76,180) 992 Total other financing sources (uses)362,858 362,858 406,524 43,666 Net Change in Fund Balance (912,137) (1,547,767) (267,222) 1,280,545 Fund Balance - Beginning 11,469,528 11,469,528 11,469,528 - Fund Balance - Ending 10,557,391$ 9,921,761$ 11,202,306$ 1,280,545$ Excess (Deficiency) of Revenues CITY OF CLERMONT, FLORIDA GENERAL FUND Year Ended September 30, 2012 The accompanying Notes to Financial Statements are an integral part of this statement. 19 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 1,826,600$ 1,826,600$ 1,980,912$ 154,312$ Investment earnings 5,750 5,750 18,482 12,732 Total revenues 1,832,350 1,832,350 1,999,394 167,044 Expenditures: General government 27,000 44,500 44,623 (123) Public safety: Police 118,000 118,000 107,682 10,318 Fire control 70,000 70,000 - 70,000 188,000 188,000 107,682 80,318 Transportation: Roads & streets 295,000 295,000 231,406 63,594 Culture and recreation: Recreation programs 58,400 58,400 10,042 48,358 Total expenditures 568,400 585,900 393,753 192,147 Excess (Deficiency) of Revenues Over Expenditures 1,263,950 1,246,450 1,605,641 359,191 Other Financing Sources (Uses): Transfers out (463,032) (463,032) (457,079) 5,953 Total other financing sources (uses)(463,032) (463,032) (457,079) 5,953 Net Change in Fund Balances 800,918 783,418 1,148,562 365,144 Fund Balances - Beginning 1,401,692 1,401,692 1,401,692 - Fund Balances - Ending 2,202,610$ 2,185,110$ 2,550,254$ 365,144$ CITY OF CLERMONT, FLORIDA INFRASTRUCTURE SPECIAL REVENUE FUND Year Ended September 30, 2012 The accompanying Notes to Financial Statements are an integral part of this statement. 20 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: Taxes 192,660$ 192,660$ 192,321$ (339)$ Investment earnings 8,710 8,710 15,302 6,592 Total revenues 201,370 201,370 207,623 6,253 Expenditures: Economic environment: Economic development 1,575,149 1,575,324 562,670 1,012,654 Total expenditures 1,575,149 1,575,324 562,670 1,012,654 Excess (Deficiency) of Revenues Over Expenditures (1,373,779) (1,373,954) (355,047) 1,018,907 Net Change in Fund Balances (1,373,779) (1,373,954) (355,047) 1,018,907 Fund Balances - Beginning 1,658,517 1,658,517 1,658,517 - Fund Balances - Ending 284,738$ 284,563$ 1,303,470$ 1,018,907$ CITY OF CLERMONT, FLORIDA COMMUNITY REDEVELOPMENT SPECIAL REVENUE FUND Year Ended September 30, 2012 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 3,364,512$ 5,558,707$ 2,827,311$ 1,443,448$ 13,193,978$ 416,566$ Investments 7,971,856 - - - 7,971,856 - Restricted cash and cash equivalents 750,607 695,275 - - 1,445,882 - Accounts receivable, net 401,294 456,718 249,272 80,553 1,187,837 - Receivables from other governments - - 569 - 569 - Inventories 831,541 29,408 - 1,145 862,094 - Prepaid expenses 45,681 45,895 20,253 7,049 118,878 - Total current assets 13,365,491 6,786,003 3,097,405 1,532,195 24,781,094 416,566 Noncurrent assets: Restricted investments - 7,376,775 - - 7,376,775 - Interest receivable 14,346 12,709 - - 27,055 - Bond issuance costs 123,993 220,432 - - 344,425 - Capital assets: Land, buildings and equipment 27,384,736 56,846,562 2,986,097 4,031,602 91,248,997 - Construction in progress 3,900,068 1,045,630 - 663,356 5,609,054 - Less accumulated depreciation (7,824,276) (14,340,295) (1,460,229) (1,373,610) (24,998,410) - Total capital assets (net of accumulated depreciation)23,460,528 43,551,897 1,525,868 3,321,348 71,859,641 - Total non-current assets 23,598,867 51,161,813 1,525,868 3,321,348 79,607,896 - Total assets 36,964,358 57,947,816 4,623,273 4,853,543 104,388,990 416,566 CITY OF CLERMONT, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS September 30, 2012 Business-type Activities-Enterprise Funds The accompanying Notes to Financial Statements are an integral part of this statement 22 Liabilities: Current liabilities: Accounts payable 449,340 294,326 96,713 7,515 847,894 46,294 Salaries payable 29,122 26,122 14,094 6,626 75,964 - Accrued interest payable 70,665 125,626 - - 196,291 - Compensated absences 12,585 7,816 3,377 1,673 25,451 - Customer deposits payable 360,177 - - - 360,177 - Revenue bonds payable-current 214,200 380,800 - - 595,000 - Total current liabilities 1,136,089 834,690 114,184 15,814 2,100,777 46,294 Noncurrent liabilities: Compensated absences 113,261 70,348 30,397 15,059 229,065 - Other post employment benefits 235,557 166,219 138,398 44,847 585,021 - Revenue bonds payable 5,177,728 9,189,929 - - 14,367,657 - Total non-current liabilities 5,526,546 9,426,496 168,795 59,906 15,181,743 - Total liabilities 6,662,635 10,261,186 282,979 75,720 17,282,520 46,294 Net Assets: Invested in capital assets, net of related debt 18,192,593 34,201,600 1,525,868 3,321,348 57,241,409 - Restricted for capital improvements 406,322 9,070,910 - - 9,477,232 - Unrestricted 11,702,808 4,414,120 2,814,426 1,456,475 20,387,829 370,272 Total net assets 30,301,723$ 47,686,630$ 4,340,294$ 4,777,823$ 87,106,470 370,272$ 47,722 Total net assets per Government-Wide financial statements 87,154,192$ 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 4,831,413$ 5,154,338$ 2,716,149$ 853,491$ 13,555,391$ 3,015,944$ Miscellaneous 268,086 - 4,876 1,059 274,021 137,525 Total operating revenues 5,099,499 5,154,338 2,721,025 854,550 13,829,412 3,153,469 Operating Expenses: Personnel services 1,564,289 1,376,918 868,970 359,023 4,169,200 - Utilities 436,494 669,248 3,318 314 1,109,374 - Dump fees - 133,500 503,539 27,539 664,578 - Administrative services 318,667 301,534 150,639 51,930 822,770 - Repairs and maintenance 273,998 223,241 89,132 114,806 701,177 - Depreciation and amortization 788,120 2,091,157 512,859 295,973 3,688,109 - Professional services 42,829 179,297 26,417 27,160 275,703 3,825 Insurance claims and expenses 119,017 136,740 50,636 20,943 327,336 2,859,648 Other supplies and expenses 350,027 251,896 313,891 48,156 963,970 - Total operating expenses 3,893,441 5,363,531 2,519,401 945,844 12,722,217 2,863,473 Operating income (loss)1,206,058 (209,193) 201,624 (91,294) 1,107,195 289,996 Non-Operating Revenues (Expenses): Grant revenue - - - 221,275 221,275 - Investment income 160,915 81,783 29,500 16,501 288,699 1,581 Interest expense (231,296) (412,011) - - (643,307) - Gain (loss) on disposal of capital assets 46,485 - (67,244) - (20,759) - Total non-operating revenue (expenses)(23,896) (330,228) (37,744) 237,776 (154,092) 1,581 Income (loss) before contributions and transfers 1,182,162 (539,421) 163,880 146,482 953,103 291,577 Capital contributions 429,780 1,122,205 - - 1,551,985 - Transfers out (473,841) - - - (473,841) - Change in net assets 1,138,101 582,784 163,880 146,482 2,031,247 291,577 Total Net Assets - Beginning 29,163,622 47,103,846 4,176,414 4,631,341 78,695 Total Net Assets - Ending 30,301,723$ 47,686,630$ 4,340,294$ 4,777,823$ 370,272$ 76,328 Change in Business-Type Activities in Net Assets per Government-Wide Financial Statements 2,107,575$ 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, 2012 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 5,167,957$ 5,155,361$ 2,716,436$ 852,514$ 13,892,268$ -$ Receipts from internal services provided - - - - - 3,155,633 Payments to suppliers (1,776,842) (1,886,273) (1,106,476) (374,344) (5,143,935) (2,930,778) Payments to employees (1,500,293) (1,324,934) (821,741) (351,347) (3,998,315) - Net cash provided (used) by operating activities 1,890,822 1,944,154 788,219 126,823 4,750,018 224,855 Cash Flows from Non-Capital Financing Activities: Grant revenues - - - 221,275 221,275 - Transfers out (473,841) - - - (473,841) - Net cash provided (used) by non-capital financing activities (473,841) - - 221,275 (252,566) - Cash Flows from Capital and Related Financing Activities: Acquisition of capital assets (1,251,715) (980,445) (1,297,001) (587,241) (4,116,402) - Sale of capital assets 46,485 - 101,565 148,050 - Interest paid on long-term debt (215,793) (383,630) - - (599,423) - Principal paid on debt (208,800) (371,200) (580,000) - Fees and assessments received 408,943 1,121,759 - - 1,530,702 - Net cash provided (used) by capital and related financing activities (1,220,880) (613,516) (1,195,436) (587,241) (3,617,073) - Business-Type Activities-Enterprise Funds CITY OF CLERMONT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended September 30, 2012 The accompanying Notes to Financial Statements are an integral part of these statements. 26 Cash Flows from Investing Activities: Sale (Purchase) of investments 116,202 761,543 - - 877,745 - Investment income 140,037 112,942 29,500 16,501 298,980 1,581 Net cash provided by investing activities 256,239 874,485 29,500 16,501 1,176,725 1,581 Net Increase (Decrease) in Cash and Cash Equivalents 452,340 2,205,123 (377,717) (222,642) 2,057,104 226,436 Cash and Cash Equivalents - Beginning 3,662,779 4,048,859 3,205,028 1,666,090 12,582,756 190,130 Cash and Cash Equivalents - End 4,115,119$ 6,253,982$ 2,827,311$ 1,443,448$ 14,639,860$ 416,566$ Classified As: Cash and cash equivalents 3,364,512$ 5,558,707$ 2,827,311$ 1,443,448$ 13,193,978$ 416,566$ Restricted cash and cash equivalents 750,607 695,275 - - 1,445,882 - Total 4,115,119$ 6,253,982$ 2,827,311$ 1,443,448$ 14,639,860$ 416,566$ Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities Operating income (loss)1,206,058$ (209,193)$ 201,624$ (90,980)$ 1,107,509$ 293,821$ Adjustments Not Affecting Cash: Depreciation and amortization 788,120 2,091,157 512,859 295,973 3,688,109 - Change in Assets and Liabilities: Decrease (Increase) in accts receivable 51,657 1,023 (5,251) (2,036) 45,393 2,164 Decrease in due from other governments - - 662 - 662 - Decrease (Increase) in customer deposits 16,801 - - - 16,801 - Decrease (Increase) in prepaid costs 810 (81) 3,428 2,159 6,316 - Decrease (Increase) in inventory (535,636) 2,064 - (1,145) (534,717) - Increase (Decrease) in accounts payable 299,016 7,200 27,668 (84,510) 249,374 (67,305) Increase (Decrease) in accrued liabilities 63,996 51,984 47,229 7,676 170,885 - Total adjustments 684,764 2,153,347 586,595 218,117 3,642,823 (65,141) Net Cash Provided (Used) by Operating Activities 1,890,822$ 1,944,154$ 788,219$ 127,137$ 4,750,332$ 228,680$ Noncash investing, capital, and financing activities: Increase (Decrease) in fair value of investments 38,661$ (11,586)$ -$ -$ 27,075$ -$ Transfer of capital assets 20,837 446 - - 21,283 - The accompanying Notes to Financial Statements are an integral part of these statements. 27 CITY OF CLERMONT, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS September 30, 2012 Total Employee Pension Funds Assets: Cash and cash equivalents $ 419,143 Receivables: Employer contribution receivable 22,929 Due from other governments 5,640 Total receivables 28,569 Investments: U.S. Government & other debt securities 6,758,657 Equities 15,219,733 Total investments 21,978,390 Total assets 22,426,102 Liabilities: Refunds payable and other 5,555 Total liabilities 5,555 Net Assets Held in Trust for Pension Benefits 22,420,547$ 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, 2012 Total Employee Pension Funds Additions: Contributions: Employer 1,548,420$ Plan members 113,760 State 387,773 Total contributions 2,049,953 Investment earnings: Net increase in fair value of investments 3,126,773 Total net investment earnings 3,126,773 Total additions 5,176,726 Deductions: Benefits/distributions 451,748 Administrative 88,443 Total deductions 540,191 Change in Net Assets 4,636,535 Net Assets - Beginning 17,784,012 Net Assets - End 22,420,547$ 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, 2012 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, 2012 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, 2012 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 accounts for financial resources segregated for the acquisition or construction of major capital facilities. Infrastructure Special Revenue Fund accounts 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. 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. Nonmajor 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. 33 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) 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. 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. Nonmajor 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, 2012 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, sanitat ion 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/f rom other funds” (i.e., the noncurrent 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, 2012 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, 2012 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, 2012 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 Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. Fund balance classifications 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, 2012 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 $1,252,317 difference are as follows: Capital outlay 3,002,685$ Depreciation expense (1,750,368) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 1,252,317$ 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 $490,000 difference are as follows: Principal repayment 490,000$ Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 490,000$ 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 (52,101)$ Other post employment benefits (416,291) Accrued interest payable 6,533 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities (461,859)$ 39 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 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 employed in governmental funds. Encumbrances (e.g., purchase orders and contracts) outstanding at year end are reported as assigned fund balances and do not constitute expenditures or liabilities because the commitments will be re-appropriated and honored during the subsequent year. (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, 2012 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, 2012 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 16,246,235 16,919,981$ Nonbudgeted state pension amounts (387,773) (387,773) Budgetary basis 15,858,462$ 16,532,208$ C. Excess of Expenditures Over Appropriations The Infrastructure Special Revenue Fund contained an excess of expenditures over appropriations during the fiscal year ended September 30, 2012. These expenditures were funded with greater than anticipated revenues and available fund balances. D. Appropriations in Excess of Funds Available Appropriations for the Capital Projects Fund were in excess of anticipated revenue and available fund balance. 41 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 4 - Cash and Investments: Deposits At year-end, the carrying amount of the City's deposits was $32,796,329 and the bank balance was $33,234,786. 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, 2012 Note 4 - Cash and Investments (Continued): Investments (Continued) Investments made by the City of Clermont at September 30, 2012 are summarized below. Defined benefit pension plan investments, other than $15,219,733 in mutual funds, investing in equity securities, are included below. In accordance with GASB 31, investments are reported at fair value. Investment Type Fair Value Credit Rating Weighted Average Maturity Federal Agency Bond 8,037,778$ AA+1.86 years US Treasury Notes 7,551,720 AA+2.34 years Corporate Note 2,152,280 AA+/A+.59 years Municipal Bond 881,791 AA+/AA 1.91 years Pension fixed income securities 6,758,657 AA/V4 5.42 years 25,382,226$ 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, 2012, 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, 2012, 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, 2012 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 year end for the City’s individual major funds and nonmajor funds, including the applicable allowances for uncollectible accounts, are as follows: Nonmajor General Water Sewer Sanitation Enterprise Fund Fund Fund Fund Fund Total Receivables: Accounts 658,525$ 375,675$ 522,443$ 288,405$ 93,902$ 1,938,950$ Taxes 51,990 - - - - 51,990 Other 179,203 59,031 - - - 238,234 Less allowance for uncollectible accounts (622,784) (33,412) (65,725) (39,133) (13,349) (774,403) 266,934$ 401,294$ 456,718$ 249,272$ 80,553$ 1,454,771$ 44 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 6 - Capital Assets: Capital asset activity for the year ended September 30, 2012 was as follows: Beginning Balance Increases Decreases Ending Balance Governmental Activities: Capital assets, not being depreciated: Land 22,128,032$ 1,199,319$ -$ 23,327,351$ Construction in progress 1,120,318 1,578,098 - 2,698,416 Total capital assets, not being depreciated 23,248,350 2,777,417 - 26,025,767 Capital assets, being depreciated: Buildings 14,034,701 5,985 - 14,040,686 Improvements/infrastructure 12,962,718 16,413 - 12,979,131 Machinery and equipment 7,035,722 243,172 (209,766) 7,069,128 Intangibles 645,399 17,479 (1,526) 661,352 Total capital assets being depreciated 34,678,540 283,049 (211,292) 34,750,297 Less accumulated depreciation for: Buildings (5,436,582) (547,826) - (5,984,408) Improvements/infrastructure (8,041,545) (522,014) - (8,563,559) Machinery and equipment (5,546,139) (624,605) 185,680 (5,985,064) Intangibles (439,149) (113,704) 1,526 (551,327) Total accumulated depreication (19,463,415) (1,808,149) 187,206 (21,084,358) Total capital assets being depreciated, net 15,215,125 (1,525,100) (24,086) 13,665,939 Governmental activities capital assets, net 38,463,475$ 1,252,317$ (24,086)$ 39,691,706$ 45 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 6 - Capital Assets (Continued): Beginning Balance Increases Decreases Ending Balance Business-type activities: Capital assets, not being depreciated: Land 1,851,483$ 10,337$ -$ 1,861,820$ Construction in progress 6,572,084 2,083,774 (3,046,804) 5,609,054 Total capital assets, not being depreciated 8,423,567 2,094,111 (3,046,804) 7,470,874 Capital assets, being depreciated: Buildings 37,178 - - 37,178 Improvements/infrastructure 80,653,486 3,753,094 - 84,406,580 Machinery and equipment 4,224,903 1,418,334 (805,750) 4,837,487 Intangibles 105,932 - - 105,932 Total capital assets being depreciated 85,021,499 5,171,428 (805,750) 89,387,177 Less accumulated depreciation for: Buildings (37,178) - - (37,178) Improvements/infrastructure (18,863,896) (3,015,445) - (21,879,341) Machinery and equipment (2,859,186) (753,714) 636,941 (2,975,959) Intangibles (105,932) - - (105,932) Total accumulated depreciation (21,866,192) (3,769,159) 636,941 (24,998,410) Total capital assets being depreciated, net 63,155,307 1,402,269 (168,809) 64,388,767 Business-type activities capital assets, net 71,578,874$ 3,496,380$ (3,215,613)$ 71,859,641$ Increases in accumulated depreciation for governmental activities include depreciation on assets transferred from business-type activities. This difference is $57,781. Increases in accumulated depreciation for business activities include depreciation on assets transferred from governmental activities. This difference is $81,050. Depreciation expense was charged to functions/programs as follows: General government 296,034$ Public safety 840,930 Physical environment/transportation 374,389 Culture and recreation 239,015 Total depreciation expense - governmental activities 1,750,368$ Water 788,120$ Sewer 2,091,157 Sanitation 512,859 Stormwater 295,973 Total depreciation expense - business-type activities 3,688,109$ Governmental activities: Business-type activities 46 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 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 $3,539,010. For the fiscal year, principal and interest paid on this series was $633,350 and total pledged revenue was $4,983,344. Subsequent to year end, the City refinanced the 2002 Public Improvement Revenue Bonds. The total principal and accrued interest of $3,146,550 was refunded for a five year Note Payable of $2,612,000 at 1.09% interest. 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 $22,212,866. For the fiscal year, principal and interest paid on this series was $1,223,307 and total pledged revenue was $4,118,840. The original amount of revenue bonds issued in prior years is described below. Revenue bonds outstanding at year end are as follows: Governmental Activities Interest Rates and Dates Maturity Original Amount Balance September 30, 2012 Public Improvement 1.75 - 4.6%12/1/2003 Revenue Bonds,to Series 2002 (6/1 & 12/1)12/1/2017 6,965,000$ 3,080,000$ 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$ 15,525,000$ 47 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 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 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 600,000 41,490 670,000 504,123 2018-2022 315,000 14,490 3,685,000 2,171,213 2023-2027 - - 4,430,000 1,410,353 2028-2031 - - 4,250,000 393,386 Total 3,080,000$ 459,010$ 15,525,000$ 6,687,866$ Governmental Activities Business - Type Activities 48 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 7 - Long-Term Debt (Continued): Changes in Long-Term Liabilities Long-term liability activity for the year ended September 30, 2012 was as follows: Beginning Balance Additions Deductions Ending Balance Due Within One Year Governmental activities Bonds payable- Revenue Bonds 3,570,000$ -$ (490,000)$ 3,080,000$ 510,000$ Other post employment benefits 1,213,688 416,291 - 1,629,979 - Compensated Absences 622,208 114,322 (62,221) 674,309 67,431 Governmental activity long-term liabilities 5,405,896$ 530,613$ (552,221)$ 5,384,288$ 577,431$ Business-type activities Bonds payable- Revenue Bonds 16,105,000$ -$ (580,000)$ 15,525,000$ 595,000$ Less deferred amounts: Discount 54,578 - (2,836) 51,742 - Loss on refunding (647,733) - 33,648 (614,085) - Total bonds payable 15,511,845 - (549,188) 14,962,657 595,000 Other post employment benefits 436,312 148,709 - 585,021 - Compensated Absences 231,183 46,451 (23,118) 254,516 25,451 Business-type activity long-term liabilities 16,179,340$ 195,160$ (572,306)$ 15,802,194$ 620,451$ 49 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 8 - Interfund Receivables, Payables and Transfers: Interfund transfers for the year ended September 30, 2012 consisted of the following: General Nonmajor Transfers Out:Fund Governmental Total General Fund -$ 76,180$ $ 76,180 Infrastructure Fund - 457,079 457,079 Nonmajor governmental 8,863 101,573 110,436 Water fund 473,841 - 473,841 482,704$ 634,832$ 1,117,536$ 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. 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, 2012 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, 2011, the date of the latest actuarial valuation: General Employees Police Officers Firefighters Retirees and beneficiaries currently receiving benefits 9 11 1 Terminated plan members entitled to, but not yet receiving, benefits - 22 61 Active plan members - 53 52 Total 9 86 114 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. 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. 51 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 9 - Retirement Plans (Continued): Contributions - The City’s actuarially determined contribution rate per the October 1, 2011 actuarial valuations is $0 for general employees, 26.21% for police officers and 23.39% for firefighters. The City is no longer obligated to make contributions for general employees. Police officers make a minimum mandatory contribution of 3% and firefighters make a minimum mandatory contribution of 1%, in order to take advantage of the insurance premium tax rebate provided for in the statutes. Administrative costs are deducted from t he net assets of the plan. Annual Pension Cost and Net Pension Obligation - The City’s annual pension cost and net pension obligation for the current year were as follows: General Employees Police Officers Firefighters Annual Required Contribution (ARC)-$ 668,084$ 653,186$ Interest on the Net Pension Obligation (Asset)- (16,699) (6,618) Adjustment to ARC - 9,617 3,811 Annual Pension Cost -$ 661,002$ 650,379$ 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 9/30/2012 -$ N/A 9/30/2011 3,051 100% 9/30/2010 3,051 100% 9/30/2012 661,002$ 100% 9/30/2011 749,038 100% 9/30/2010 713,188 100% 9/30/2012 650,379$ 100% 9/30/2011 650,789 100% 9/30/2010 617,491 100% General Employees Police Officers Firefighters 52 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 9 - Retirement Plans (Continued): Funded Status and Funding Progress - Pension Plans The funded status of each plan as of October 1, 2011, the most recent actuarial valuation dates, 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 488,225$ 412,730$ -$ 118.3%-$ N/A Police Officers 7,341,114 7,908,270 567,156 92.8%2,548,993 22.3% Firefighters 4,284,079 4,224,986 - 101.4%2,792,489 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 10/1/2011 10/1/2011 10/1/2011 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, 2012 Note 9 - Retirement Plans (Continued): 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 2012 was $4,954,015; the City’s total payroll for City employees was $11,489,119. 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 2012 was $288,642. Note 10 - Other Post Employment Benefits: In accordance with Florida Statutes Section 112.0801, the City makes continued group health and dental insurance through the city’s current provider available to retirees and eligible dependents provided certain service requirements and normal age retirement requirements have been met. This plan is a single employer plan. The City is self insured with respect to these benefits and provides an explicit subsidy for coverage to retirees and their spouses based on the coverage selected. The City has nine retirees currently receiving benefits. The City has chosen pay-as-you-go funding, but is recording the liability in the government wide financial statements. This plan does not issue stand-alone financial statements. 54 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 10 - Other Post Employment Benefits (Continued): The most recent actuarial report for the City’s Retiree Continuation Insurance Plan was prepared as of April 1, 2011. The annual required contribution and Net OPEB Obligation for the fiscal year ended September 30, 2012 is as follows: Annual required contribution 691,000$ Interest on net OPEB Obligation 66,000 Adjustment to annual required contribution (143,000) Annual OPEB Cost 614,000 Employer Contributions (48,000) Interest on Employer Contributions (1,000) Increase in Net OPEB Obligation 565,000 Net OPEB Obligation (beginning of year)1,650,000 Net OPEB Obligation (end of year)2,215,000$ Three Year Trend Information- Fiscal Year Ending Annual OPEB Cost Percentage of Cost Contributed Net OPEB Obligation 9/30/2010 586,000$ 5.0%1,099,000$ 9/30/2011 598,000 7.0%1,650,000 9/30/2012 614,000 8.0%2,215,000 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, 2012 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, 2012 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, 2012 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 $46,294 represents claims processed through October 2012 which were applicable to the current fiscal year and any additional claims are deemed immaterial. Changes to the current claims liability are as follows: 2012 2011 Claims liabilities, beginning of year 113,599$ 107,936$ Incurred Claims 2,859,648 2,928,460 Payments on Claims (2,926,953) (2,922,797) Claims liabilities, end of year 46,294$ 113,599$ 58 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 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, 2012. 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. Encumbrance Commitments - At September 30, 2012, the City had encumbrance commitments in the Governmental Funds as follows: General Fund 4,634$ Capital Projects Fund 602,853 Total encumbrances 607,487$ Note 13 - Fund Balances: The City classifies the components of fund balance based on 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. 59 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 13 - Fund Balances (Continued): Spendable Fund Balance (Continued) 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. 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 3, 2012, the City’s governmental fund balances were as follows: General Fund Capital Projects Fund Infrastructure Special Revenue Fund Community Redevelopment Special Revenue Other Governmental Funds Total Fund Balances Nonspendable Inventory/prepaids 195,006$ -$ -$ 8$ 574$ $ 195,588 Cemetery - - - - 889,760 889,760 Spendable Restricted for: Public safety 224,660 - - - 2,600,303 2,824,963 Culture and recreation - - - - 789,177 789,177 Community redevelopment - - - 1,303,462 - 1,303,462 Infrastructure - - 2,550,254 - - 2,550,254 Debt service - - - - 499,242 499,242 Building services 20,162 20,162 Assigned for: General government 4,634 - - - - 4,634 Capital projects - 667,880 - - - 667,880 Subsequent year expenditures 1,034,267 - - - - 1,034,267 Unassigned 9,743,739 - - - - 9,743,739 11,202,306$ 667,880$ 2,550,254$ 1,303,470$ 4,799,218$ 20,523,128$ 60 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2012 Note 14 - Evaluation of Events: The City has evaluated subsequent events through the date of this report, the date the financial statements were available to be issued. As discussed in Note 7, the City refinanced the 2002 Public Improvement Revenue Bonds for a five year Note Payable subsequent to year end. 61 62 REQUIRED SUPPLEMENTAL INFORMATION CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2012 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 10/1/2004 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 10/1/2011 488,225 412,730 - 118.3%- N/A Police Officers 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% 10/1/2011 7,341,114 7,908,270 567,156 92.8%2,548,993 22.3% Fire Fighters 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% 10/1/2011 4,284,079 4,224,986 - 101.4%2,792,489 0.0% 63 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2012 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 2007 19,697$ 100%376,518$ 100%199,989$ 100% 2008 - 100%541,697 100%410,350 100% 2009 - 100%570,869 100%432,919 100% 2010 3,051 100%713,188 100%616,742 100% 2011 3,051 100%752,413 100%650,663 100% 2012 - 100%668,084 100%653,186 100% General Employees Police Officers Firefighters Employer Contributions 64 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2012 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 9/30/2012 691,000 7.0%2,215,000 Net OPEB Obligation 65 66 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS Capital Projects Fund Capital Projects Fund This fund was established to account for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds. 67 STATEMENT 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 132,804$ 132,804$ -$ (132,804)$ Investment earnings 10,200 10,200 22,616 12,416 Miscellaneous - - 437 437 Total revenues 143,004 143,004 23,053 (119,951) Expenditures: Current: General government - - 37,046 (37,046) Culture and recreation - - 47,170 (47,170) Public safety: Police 250,000 250,000 51,958 198,042 Capital Outlay: General government 2,200,000 2,200,000 856,658 1,343,342 Public safety 2,000,000 2,000,000 1,199,525 800,475 Culture and recreation 290,000 290,000 16,563 273,437 Total expenditures 4,740,000 4,740,000 2,208,920 2,531,080 Excess (Deficiency) of Revenues Over Expenditures (4,596,996) (4,596,996) (2,185,867) 2,411,129 Other Financing Sources (Uses): Transfers in 1,740,142 1,740,142 - (1,740,142) Total other financing sources (uses)1,740,142 1,740,142 - (1,740,142) Net Change in Fund Balance (2,856,854) (2,856,854) (2,185,867) 670,987 Fund Balances - Beginning 2,853,747 2,853,747 2,853,747 - Fund Balances - Ending (3,107)$ (3,107)$ 667,880$ 670,987$ CITY OF CLERMONT, FLORIDA CAPITAL PROJECTS FUND Year Ended September 30, 2012 68 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. Police Impact Fees Fund This fund was established to account for police impact fees collected from new developments constructed in the City. Fire Impact Fees Fund This fund was established to account for fire impact fees collected from new developments constructed in the City. Building Services Fund This fund was established to account for the operations of the City’s building and other permits department. 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. 69 Recreation Impact Fees Police Impact Fees Fire Impact Fees Building Services Total Assets: Cash and cash equivalents 801,157$ 2,548,365$ 51,938$ 76,693$ 3,478,153$ Prepaid costs - - - 574 574 Total assets 801,157$ 2,548,365$ 51,938$ 77,267$ 3,478,727$ Liabilities and Fund Balances: Liabilities: Accounts payable 11,980$ -$ -$ 56,531$ 68,511$ Total liabilities 11,980 - - 56,531 68,511 Fund balances: Nonspendable - - - 574 574 Restricted 789,177 2,548,365 51,938 20,162 3,409,642 Total fund balances 789,177 2,548,365 51,938 20,736 3,410,216 Total liabilities and fund balances 801,157$ 2,548,365$ 51,938$ 77,267$ 3,478,727$ Special Revenue CITY OF CLERMONT, FLORIDA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS September 30, 2012 70 Debt Service Permanent Fund - Cemetery Perpetual Care Total Nonmajor Governmental Funds 499,242$ 890,035$ 4,867,430$ - - 574 499,242$ 890,035$ 4,868,004$ -$ 275$ 68,786$ - 275 68,786 - 889,760 890,334 499,242 - 3,908,884 499,242 889,760 4,799,218 499,242$ 890,035$ 4,868,004$ 71 Recreation Impact Fees Police Impact Fees Fire Impact Fees Building Services Total Revenues: Licenses and permits -$ -$ -$ 359,721$ 359,721$ Charges for services - - - 49,909 49,909 Impact fees/special assessments 496,414 107,967 75,072 - 679,453 Investment earnings 7,699 25,285 671 321 33,976 Miscellaneous - - - 341 341 Total revenues 504,113 133,252 75,743 410,292 1,123,400 Expenditures: Current: General government - - - 389,547 389,547 Culture and recreation 26,991 - - - 26,991 Debt Service: Principal - - - - - Interest and fiscal charges - - - - - Total expenditures 26,991 - - 389,547 416,538 Excess (Deficiency) of Revenues Over Expenditures 477,122 133,252 75,743 20,745 706,862 Other Financing Sources (Uses): Transfers in - - - - - Transfers out - - (101,573) - (101,573) Total other financing sources (uses)- - (101,573) - (101,573) Net Change in Fund Balances 477,122 133,252 (25,830) 20,745 605,289 Fund Balances - Beginning 312,055 2,415,113 77,768 (9) 2,804,927 Fund Balances - Ending 789,177$ 2,548,365$ 51,938$ 20,736$ 3,410,216$ Year Ended September 30, 2012 Special Revenue CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS 72 Debt Service Permanent Fund - Cemetery Perpetual Care Total Nonmajor Governmental Funds -$ -$ 359,721$ - - 49,909 - - 679,453 3,619 8,863 46,458 - 42,500 42,841 3,619 51,363 1,178,382 - - 389,547 - - 26,991 490,000 - 490,000 143,350 - 143,350 633,350 - 1,049,888 (629,731) 51,363 128,494 634,832 - 634,832 - (8,863) (110,436) 634,832 (8,863) 524,396 5,101 42,500 652,890 494,141 847,260 4,146,328 499,242$ 889,760$ 4,799,218$ 73 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) Original Final Revenues: Impact fees/special assessments 339,100$ 339,100$ 496,414$ 157,314$ Investment earnings 3,750 3,750 7,699 3,949 Total revenues 342,850 342,850 504,113 161,263 Expenditures: Current: Culture and recreation 26,371 26,721 26,991 (270) Total expenditures 26,371 26,721 26,991 (270) Excess (Deficiency) of Revenues Over Expenditures 316,479 316,129 477,122 160,993 Other Financing Sources (Uses) Transfers out (157,196) (157,196) - 157,196 Total other financing sources (uses)(157,196) (157,196) - 157,196 Net Change in Fund Balances 159,283 158,933 477,122 318,189 Fund Balances - Beginning 312,055 312,055 312,055 - Fund Balances - Ending 471,338$ 470,988$ 789,177$ 318,189$ RECREATION IMPACT FEE SPECIAL REVENUE FUND Year Ended September 30, 2012 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: Impact fees/special assessments 62,100$ 62,100$ 107,967$ 45,867$ Investment earnings 12,700 12,700 25,285 12,585 Total revenues 74,800 74,800 133,252 58,452 Expenditures: Current: Public Safety: Law enforcement - - - - Total expenditures - - - - Excess (Deficiency) of Revenues Over Expenditures 74,800 74,800 133,252 58,452 Other Financing Sources (Uses) Transfers out (1,582,946) (1,582,946) - 1,582,946 Total other financing sources (uses)(1,582,946) (1,582,946) - 1,582,946 Net Change in Fund Balances (1,508,146) (1,508,146) 133,252 1,641,398 Fund Balances - Beginning 2,415,113 2,415,113 2,415,113 - Fund Balances - Ending 906,967$ 906,967$ 2,548,365$ 1,641,398$ POLICE IMPACT FEE SPECIAL REVENUE FUND CITY OF CLERMONT, FLORIDA Year Ended September 30, 2012 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: Impact fees/special assessments 45,100$ 45,100$ 75,072$ 29,972$ Investment earnings 750 750 671 (79) Total revenues 45,850 45,850 75,743 29,893 Expenditures: Current: Public safety: Fire control - - - - Total expenditures - - - - Excess (Deficiency) of Revenues Over Expenditures 45,850 45,850 75,743 29,893 Other Financing Sources (Uses): Transfers out (102,896) (102,896) (101,573) 1,323 Total other financing sources (uses)(102,896) (102,896) (101,573) 1,323 Net Change in Fund Balances (57,046) (57,046) (25,830) 31,216 Fund Balances - Beginning 77,768 77,768 77,768 - Fund Balances - Ending 20,722$ 20,722$ 51,938$ 31,216$ CITY OF CLERMONT, FLORIDA FIRE IMPACT FEE SPECIAL REVENUE FUND Year Ended September 30, 2012 76 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 392,500$ 392,500$ 359,721$ (32,779)$ Charges for services 37,750 37,750 49,909 12,159 Investment earnings 375 375 321 (54) Miscellaneous - - 341 341 Total revenues 430,625 430,625 410,292 (20,333) Expenditures: Current: General government 428,736 428,736 389,547 39,189 Total expenditures 428,736 428,736 389,547 39,189 Excess (Deficiency) of Revenues Over Expenditures 1,889 1,889 20,745 18,856 Net Change in Fund Balances 1,889 1,889 20,745 18,856 Fund Balances - Beginning (9) (9) (9) - Fund Balances - Ending 1,880$ 1,880$ 20,736$ 18,856$ CITY OF CLERMONT, FLORIDA BUILDING SERVICES SPECIAL REVENUE FUND Year Ended September 30, 2012 77 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) Original Final Revenues: Investment earnings 1,500$ 1,500$ 3,619$ 2,119$ Total revenues 1,500 1,500 3,619 2,119 Expenditures: Debt Service: Principal 510,000 510,000 490,000 20,000 Interest and fiscal charges 133,550 133,550 143,350 (9,800) Total expenditures 643,550 643,550 633,350 10,200 Excess (Deficiency) of Revenues Over Expenditures (642,050) (642,050) (629,731) 12,319 Other Financing Sources (Uses): Transfers in 643,100 643,100 634,832 (8,268) Total other financing sources (uses)643,100 643,100 634,832 (8,268) Net Change in Fund Balances 1,050 1,050 5,101 4,051 Fund Balances - Beginning 494,141 494,141 494,141 - Fund Balances - Ending 495,191$ 495,191$ 499,242$ 4,051$ DEBT SERVICE FUND Year Ended September 30, 2012 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, 2012 Police Officers Firefighters Total Defined Defined Pension Pension Employee Benefit Contribution Trust Trust Pension Funds Assets: Cash and cash equivalents 11,998$ $ - 243,801$ 163,344$ $ 419,143 Receivables: Employer contribution receivable - 19,565 - 3,364 22,929 Due from other governments - - - 5,640 5,640 Total receivables - 19,565 - 9,004 28,569 Investments: U.S. Government & other debt securities 193,462 - 3,931,276 2,633,919 6,758,657 Equities 294,442 4,933,302 5,983,260 4,008,729 15,219,733 Total Investments 487,904 4,933,302 9,914,536 6,642,648 21,978,390 Total assets 499,902 4,952,867 10,158,337 6,814,996 22,426,102 Liabilities: Refunds payable and other - - 5,555 - 5,555 Total liabilities - - 5,555 - 5,555 Net Assets Held in Trust for Pension Benefits 499,902$ 4,952,867$ 10,152,782$ 6,814,996$ 22,420,547$ General Employees 80 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS For the Year Ended September 30, 2012 Police Officers Firefighters Total Defined Defined Pension Pension Employee Benefit Contribution Trust Trust Pension Funds Additions: Contributions: Employer -$ 288,642$ 622,673$ 637,105$ 1,548,420$ Plan members - - 84,197 29,563 113,760 State - - 203,523 184,250 387,773 Total contributions - 288,642 910,393 850,918 2,049,953 Investment earnings: Net increase (decrease) in fair value of investments 81,168 677,818 1,446,261 921,526 3,126,773 Total net investment earnings 81,168 677,818 1,446,261 921,526 3,126,773 Total additions 81,168 966,460 2,356,654 1,772,444 5,176,726 Deductions: Benefits/distributions 66,212 150,922 232,402 2,212 451,748 Administrative expenses 3,279 21,381 38,279 25,504 88,443 Total deductions 69,491 172,303 270,681 27,716 540,191 Change in Net Assets 11,677 794,157 2,085,973 1,744,728 4,636,535 Net Assets Held in Trust for Pension Benefits Beginning of Year 488,225 4,158,710 8,066,809 5,070,268 17,784,012 End of Year 499,902$ 4,952,867$ 10,152,782$ 6,814,996$ 22,420,547$ 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 20032004 20052006 Governmental activities Invested in capital assets, net of related debt*10,959$ 12,118$ 15,777$ Restricted *3,1214,8005,935 Unrestricted *5,6198,1258,693 Total governmental activities net assets *19,699$ 25,043$ 30,405$ Business-type activities Invested in capital assets, net of related debt*12,054$ 12,082$ 15,864$ Restricted *22,60127,57333,732 Unrestricted *9,90313,41413,447 Total business-type activities net assets *44,558$ 53,069$ 63,043$ Primary government Invested in capital assets, net of related debt*23,013$ 24,200$ 31,641$ Restricted *25,72232,37339,667 Unrestricted *15,52221,53922,140 Total primary government net assets *64,257$ 78,112$ 93,448$ * 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 2007 2008 2009 2010 2011 2012 15,825$ 27,462$ 33,938$ 33,817$ 34,894$ 36,612$ 7,830 8,959 6,526 6,693 7,381 8,876 14,45911,94613,60813,98812,465 9,701 38,114$ 48,367$ 54,072$ 54,498$ 54,740$ 55,189$ 24,837$ 46,569$ 54,834$ 55,540$ 56,430$ 57,241$ 36,93113,89910,43717,293 9,241 9,477 10,84118,10317,80111,40719,37620,436 72,609$ 78,571$ 83,072$ 84,240$ 85,047$ 87,154$ 40,662$ 74,031$ 88,772$ 89,357$ 91,324$ 93,853$ 44,76122,85816,96323,98616,62218,353 25,30030,04931,40925,39531,84130,137 110,723$ 126,938$ 137,144$ 138,738$ 139,787$ 142,343$ Fiscal Year 85 Expenses 2003200420052006 Governmental activities: General government *2,337$ 2,617$ 3,232$ Public safety *4,6885,7737,109 Physical environment *421 278 382 Transportation/public works *1,0561,1721,322 Economic environment *32 13 181 Human services *132 149 77 Culture and recreation *1,7421,8161,851 Interest on long-term debt *350 255 285 Total governmental activities expenses *10,75812,07314,439 Business-type activities: Water *2,7073,0153,427 Sewer *3,4233,5724,024 Sanitation *1,6171,8171,731 Stormwater *266 287 316 Total business-type activities expenses *8,0138,6919,498 Total primary government expenses *18,771$ 20,764$ 23,937$ Program Revenues Governmental activities: Charges for services: General government *963$ 1,042$ 1,037$ Public safety *807 9121,158 Transportation/public works *250 36 - Culture and recreation *1,009 4631,566 Operating grants and contributions *591 512 523 Capital grants and contributions *- 1,644 105 Total governmental activities program revenues *3,6204,6094,389 Business-type activities: Charges for services: Water *4,342$ 4,320$ 4,839$ Sewer *2,8323,2953,784 Sanitation *1,8112,0882,236 Stormwater *571 627 689 Operating grants and contributions *105 138 11 Capital grants and contributions *7,0956,2876,408 Total business-type activities program revenues *16,75616,75517,967 Total primary government program revenues*20,376$ 21,364$ 22,356$ * 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 200720082009201020112012 3,297$ 4,204$ 4,747$ 4,287$ 3,643$ 4,211$ 8,78310,33010,77512,45912,53112,168 470 514 364 319 279 248 1,2551,5441,1641,7681,6611,719 52 48 101 50 102 116 1301070000 2,4412,0612,0822,0551,8221,045 226 459 326 175 156 137 16,65419,26719,55921,11320,19419,644 2,9873,7373,9904,3164,4614,052 3,8964,5214,4895,9276,0225,752 1,8162,1232,0862,1692,3642,567 427 549 534 848 955 939 9,12610,93011,09913,26013,80213,310 25,780$ 30,197$ 30,658$ 34,373$ 33,996$ 32,954$ 1,116$ 1,582$ 1,854$ 1,857$ 1,695$ 1,649$ 1,105 975 1,203 665 355 450 - - - - - - 882 761 99 872 539 604 9231,047 921 1,162 1,237 1,191 2,5187,330 3,307 134 129 27 6,54411,6957,3844,6903,9553,921 5,502$ 5,654$ 4,909$ 4,817$ 5,377$ 5,099$ 4,2424,422 4,655 4,852 5,065 5,154 2,4022,515 2,560 2,613 2,688 2,721 729 766 801 829 855 855 38 700 - - - 3,6761,480 2,137 1,544 999 1,752 16,589 15,53715,06214,65514,98415,581 23,133$ 27,232$ 22,446$ 19,345$ 18,939$ 19,502$ Fiscal Year 87 City of Clermont, Florida Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2003 200420052006 Net (expense)/revenue Governmental activities *(7,138)$ (7,464)$ (10,050)$ Business-type activities *8,7438,0648,469 Total primary government net expense *1,605$ 600$ (1,581)$ General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property taxes *3,371$ 4,417$ 5,665$ Franchise fees *1,1281,3571,714 Utility taxes 1,3821,5521,782 Unrestricted intergovernmental revenues *3,2793,9234,953 Unrestricted investment earnings and miscellaneous revenues *1861,181 835 Transfers *385 377 464 Total governmental activities *9,73112,80715,413 Business-type activities: Investment earnings *390$ 825$ 1,968$ Transfers *(385)(377)(464) Total business-type activities *5 4481,504 Total primary government *9,736$ 13,255$ 16,917$ Change in Net Assets Governmental activities *2,593$ 5,343$ 5,363$ Business-type activities *8,7488,5129,973 Total primary government *11,341$ 13,855$ 15,336$ * Data not available prior to the implementation of GASB Statement 34 in 2004. Fiscal Year 88 200720082009201020112012 (10,110)$ (7,572)$ (12,175)$ (16,422)$ (16,240)$ (15,721)$ 7,4634,6053,9641,3951,1822,271 (2,647)$ (2,967)$ (8,211)$ (15,027)$ (15,058)$ (13,450)$ 7,452$ 7,749$ 7,601$ 6,844$ 5,966$ 5,648$ 1,8081,9112,1512,3732,2852,189 1,8811,9922,1522,5582,5682,430 4,9524,7764,4584,5034,6645,063 1,216 9011,050 525 478 388 509 496 469 443 520 453 17,81817,82517,88117,24616,48116,171 2,612$ 1,853$ 1,005$ 360$ 145$ 289$ (509)(496) (469) (443) (520) (453) 2,1031,357 536 (83)(375)(164) 19,921$ 19,182$ 18,417$ 17,163$ 16,106$ 16,007$ 7,708$ 10,253$ 5,706$ 824$ 241$ 450$ 9,5665,9614,5001,312 8072,107 17,274$ 16,214$ 10,206$ 2,136$ 1,048$ 2,557$ Fiscal Year 89 2003 2004 2005 2006 General fund Reserved 167$ 168$ 198$ 233$ Unreserved 3,110 4,207 5,758 4,857 Total general fund 3,277$ 4,375$ 5,956$ 5,090$ All other governmental funds Reserved 760$ 894$ 1,083$ 1,189$ Unreserved, reported in: Special revenue funds 2,318 3,410 5,028 7,767 Capital projects fund 106 - 926 780 Total all other governmental funds 3,184$ 4,304$ 7,037$ 9,736$ 2011 2012 General fund Nonspendable 335$ 195$ Restricted 175 224 Assigned 912 1,039 Unassigned 10,048 9,744 Total general fund 11,470$ 11,202$ All other governmental funds Nonspendable 848$ 890$ Restricted 6,359 7,763 Assigned 2,854 668 Unassigned (1)- Total all other governmental funds 10,060$ 9,321$ Post GASB 54 City of Clermont, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 90 2007 2008 2009 2010 307$ 209$ 214$ 246$ 9,128 9,57210,86011,358 9,435$ 9,781$ 11,074$ 11,604$ 1,539$ 1,912$ 2,267$ 2,758$ 10,771 5,314 4,147 4,839 843 4,496 3,271 2,978 13,153$ 11,722$ 9,685$ 10,575$ Fiscal Year 91 2003 20042005 2006 Revenues Taxes 6,794$ 6,791$ 8,391$ 10,327$ Franchise Fees **** Licenses and permits 277 467484 456 Intergovernmental revenue 1,1522,7585,2164,211 Charges for services 378 381389 407 Fines and forfeitures 114 125164 226 Impact fees/special assessments 1,4241,5921,1522,444 Investment income 145 107267 738 Miscellaneous 219 541310 505 Total revenues 10,50312,76216,37319,314 Expenditures General government 1,338$ 1,432$ 2,053$ 2,694$ Public Safety 3,6064,2745,2856,452 Physical environment 35 278318 343 Transportation 8061,055917 967 Economic environment 39 32 33 38 Human services 89 122139 75 Culture and recreation 1,3161,0091,0251,259 Capital outlay 5,3512,7522,48410,235 Debt service Principal 236 507855 868 Interest 257 268258 244 Other charges - - - - Total expenditures 13,07311,72913,36723,175 Excess of revenues over (under) expenditures (2,570)$ 1,033$ 3,006$ (3,861)$ Other financing sources (uses) Transfers in 1,182$ 1,217$ 1,081$ 1,676$ Transfers out (863)(832)(704)(1,212) Debt issuance 27 800 - 5,250 Sale of capital assets - - 931 - Payments to refunded bond escrow agent - - - - Total other financing sources (uses)3461,1851,3085,714 Net change in fund balances (2,224)$ 2,218$ 4,314$ 1,853$ Debt service as a percentage of noncapital expenditures 6.4%8.6%10.2%9.3% * Note: Franchise Fees previously reported as Taxes. 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 2007 2008 2009 2010 2011 2012 11,141$ 11,652$ 11,903$ 11,775$ 10,819$ 8,079$ *****2,188 491 835 674 678 528 455 8,34011,9778,6665,7336,0596,310 462 6431,1031,0361,0131,011 175 321 178 189 186 215 1,7171,209 9031,131 582 679 1,101 687 848 379 148 244 3911,683 444 522 612 474 23,81829,00724,71921,44319,94719,655 3,079$ 3,640$ 3,654$ 4,081$ 3,272$ 3,080$ 9,14110,99910,27511,21211,62511,352 461 497 490 309 275 247 1,1892,9761,1291,6201,4721,340 48 48 102 50 102 641 129 105 - - - 0 1,55610,0241,8931,8781,7921,769 941,9091,738 6431,9232,073 4498,1766,259 493 470 490 440 465 375 181 162 143 - - - - - 16,58638,83925,91520,46721,09321,135 7,232$ (9,832)$ (1,196)$ 976$ (1,146)$ (1,480)$ 1,265$ 6,468$ 6,684$ 2,088$ 3,274$ 1,118$ (756)(5,971)(6,232)(1,645)(2,776)(644) - 8,250 - - - - - - - - - - - - - - - - 5098,747 452 443 498 474 7,741$ (1,085)$ (744)$ 1,419$ (648)$ (1,006)$ 7.1%23.4%28.9%3.6%3.3%3.3% Fiscal Year 93 FiscalPropertyUtilityBusinessFranchise YearTax Tax Tax Fees Total 2003 2,592 1,981 *922 5,495 2004 3,305 2,292 *1,128 6,725 2005 4,321 2,617 *1,357 8,295 2006 5,488 2,948 *1,714 10,150 2007 7,155 3,138 *1,808 12,101 2008 7,749 1,992 *1,911 11,652 2009 7,601 2,152 *2,151 11,904 2010 6,844 2,558 *2,373 11,775 2011 5,966 2,568 *2,285 10,819 2012 5,535 2,430 113 2,189 10,267 FiscalSalesState RevenueLocal Option YearTax SharingGas Tax Total 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 2012 1,296 383 296 1,975 * Business Tax Receipts previously reported under Licenses 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 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% 20122,124,017206,870605,1141,725,7733.1422,330,88774.04% 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 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 20123.14204.73090.11010.38537.39400.80000.24050.331317.1341 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%11,417$ 1 Village at East Lake 11,65570.65%9,56131.67% Progress Energy Florida Inc.10,73080.60%0.00% Wal-Mart Stores East LP 10,10690.57% Target Corporation 9,236100.52% Clermont Center LTD 11,27321.97% Lucas Clermont Ltd Partnership 8,82541.54% Lennar Land Partners 8,81351.54% Lennar Homes Inc.8,20261.44% Sprint Florida Inc 7,96771.39% Florida Power Corporation 6,50081.14% HEP-8-Cler LC 6,34391.11% Mercator Properties, Inc.5,531100.97% TOTAL 140,151$ 6.36%84,432$ 14.78% Source: Lake County Property Appraiser 2012 2003 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 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 6,0015,69895.0%15 5,71395.2% 2012 5,6035,32595.0%5 5,33095.1% 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 20036,965381 17,93525,281 *1,643 20046,5751,06417,93525,574 *1,449 20056,18060517,83524,620 *1,230 20065,7755,39217,68528,852 5.66%1,312 20075,3605,35817,45528,173 5.63%1,231 20084,9355,85717,06527,857 4.00%1,187 20094,4953816,65521,188 2.95%876 20104,040016,64020,680 2.84%720 20113,570016,10519,675 2.63%670 20123,080015,52518,605 2.37%624 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 3,080$ 100%3,080$ Total Direct Debt 3,080$ 3,080$ Overlapping: Lake County 27,130 11%2,984 School District of Lake County 31,315 11%3,445 Total Overlapping Debt 58,445$ 6,429$ Total direct and overlapping debt payable from ad valorem taxes 61,525$ 9,509$ Estimated Population 29,827 Total direct and overlapping debt per capita 318.80$ (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, 2012 100 PublicCommunications Total Revenue FiscalServiceServiceHalf-CentAvailable for YearTaxesTaxSales TaxDebt ServicePrincipalInterestCoverage 20031,172,270$ 808,813$ 540,717$ 2,521,800$ 390,000$ 250,775$ 3.94 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 20122,430,4401,257,2171,295,6874,983,344490,000143,3507.87 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 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 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 2012 1,980,9121,980,912 - 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 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 201210,496,5356,377,6954,118,840580,000643,3073.37 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 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% 201028,742727,00025,29436.813.65,0249.8% 201129,358748,48225,49540.913.65,1169.3% 201229,827784,36126,29746.813.65,1587.0% 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 was only available on a countywide basis through 2009. * 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 Employment22,6808,114 South Lake Hospital, Inc.1,11414.91%71518.81% Publix Supermarkets 64222.83%20042.46% Lake County School System 34031.50%50126.17% Lowe's 32041.41% Target Corporation 31051.37%2303 Walmart 30661.35% City of Clermont 25771.13%18862.32% Winn Dixie 20780.91%1259 Progressive Plumbing Inc 20090.88% Westminister Care of Clermont175100.77%20042.46% Kmart 100101.23% CBS Builders Supply Inc.15881.95% Home Depot 16572.03% TOTAL 3,871 17.07%1,667 20.54% Source: Florida Agency for Workforce Innovation, Labor Market Statistics Center 2012 2003 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 262,412110.97%* * * City of Clermont 51,83022.17%* * * South Lake Hospital 32,48131.36%* * * Lake County Schools 25,85341.08%* * * Westminster Comm Care Service15,31450.64%* * * Gardens at Citrus Tower 12,50560.52%* * * Sundance Clermont Apartments11,48370.48%* * * Village at East Lake Apartments11,08780.46%* * * Osprey Ridge Apartments LTD8,79990.37%* * * The Vista at Lost Lake 8,646100.36%* * * TOTAL 440,410 18.42%* * 1 The City of Clermont had a total metered water flow of approximately 2,391,485,000 gallons for the 12-month period ending September 30, 2012 * Information is not available. 2012 2003 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 32,48112.34%* * * Lake County Schools 17,65121.27%* * * Westminster Comm Care Service14,65431.06%* * * Village at East Lake 11,08740.80%* * * The Vista at Lost Lake 8,64650.62%* * * Emerald Lakes of Clermont 8,45660.61%* * * City of Clermont 7,68870.55%* * * Hwy 27 17156 LLC (BP)5,62480.41%* * * Oak Ridge Apartments**4,60490.33%* * * Lost Lake Apartments 3,996100.29%* * * TOTAL 114,887 8.29%* * 1 The City of Clermont had a total metered water flow for wastewater billing purposes of approximately 1,385,491,526 gallons for the 12-month period ending September 30, 2012 * Information is not available. ** Formerly reported as Empirian Property Management 2012 2003 City of Clermont, Florida Principal Sewer Customers Current Year and Nine Years Ago 107 Function 2003 2004 2005 2006 General Government 23.0022.5025.5027.50 Public Safety: Police Sworn personnel 31.0034.0038.0045.00 Non sworn personnel 11.0012.0016.0016.00 Fire Firefighters 13.0019.0022.0038.00 Other personnel 1.00 1.00 1.00 2.00 Physical Environment 0.50 7.50 7.5010.00 Transportation 13.1613.2513.2513.70 Human Services 1.75 2.25 2.25 2.00 Culture & Recreation 23.5019.4519.4522.20 Water 20.3222.9023.4025.40 Sewer 19.2225.8025.3026.30 Stormwater 4.49 4.65 4.65 7.20 Sanitation 9.06 8.70 8.70 8.70 Total 171.00193.00207.00244.00 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 2007 2008 2009 2010 2011 2012 30.5030.5031.0028.0027.0025.85 51.0053.0053.0057.0057.0057.00 16.0017.0017.0016.00 5.00 5.00 45.0049.0047.8548.0048.0047.80 2.00 2.00 2.00 2.00 2.00 2.00 10.0010.0011.6510.90 5.40 4.60 15.2015.6015.6015.3513.5014.80 2.00 2.00 0.00 0.00 0.00 0.00 26.2026.6025.6021.1022.0021.20 26.9029.4029.4029.1529.1529.45 27.8026.3026.3026.0525.8524.50 8.70 8.80 8.80 9.15 9.40 7.95 14.7016.8016.8016.3016.7016.85 276.00287.00285.00279.00261.00257.00 Full-time Equivalent Employees as of September 30, 109 Function 2003 2004 2005 2006 General Government Municipal boundary (square miles)11.8811.9712.4514.13 Business Tax Receipts issued 1,4681,5511,7951,985 A/P Checks issued 4,9404,9675,4155,664 Commercial construction (units)22 24 23 38 Commercial construction (value in thousands)18,75814,2727,11517,534 Residential construction (units)9591,155 673 635 Residential construction (value in thousands)124,837158,458103,672186,189 Public Safety: Police Auto accidents 489 541 671 625 Physical arrests 449 414 500 707 911 calls received * 5,5806,2627,008 Evidence processed (pieces)1,0751,0541,1271,610 Parking violations 48 87 71 161 Traffic violations 2,7132,3942,8555,259 Fire Volunteer firefighters 34 34 27 27 Fire inspections completed 441 483 457 625 Emergency calls answered 2,5063,0933,3213,132 Non-emergency calls answered 86 143 143 189 Human Services Animals captured**364 562 445 495 Water Residential accounts 10,52912,75114,28415,733 Commercial accounts 723 817 921 993 Annual water usage (thousands of gallons)1,338,8181,655,2031,788,3372,121,588 Sewer Residential accounts 7,6509,21710,17611,125 Commercial accounts 673 767 883 955 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 2007 2008 2009 2010 2011 2012 14.3714.4214.4314.7614.9014.95 2,1412,2631,7711,8331,8432,237 6,0236,4406,0425,7224,8752,336 24 42 19 10 3 8 24,43318,85913,2238,35718,02015,203 324 301 204 305 151 173 136,47756,57856,09253,20223,55825,882 1,1921,272 972 9551,1211,259 933 842 949 854 699 644 6,3176,0466,8285,2305,5875,911 1,5851,3001,6521,3491,2971,413 140 145 107 137 378 201 5,1645,1034,5534,9816,3125,389 9810666 414 880 9792,121 896 662 3,0483,1773,1553,1123,8223,320 198 234 434 352 805 934 652 - - - - - 16,39416,95917,37517,88418,24018,619 1,0691,1561,2011,2061,2101,207 2,654,3522,589,6642,312,9622,054,2362,275,9362,391,485 11,55411,91312,15412,50812,72212,936 1,0311,1201,1581,1581,1671,166 Fiscal Year 111 Function 2003 20042005 2006 General Government Public Safety: Police Police stations 1 1 1 1 Patrol units 31 34 38 45 Fire Fire stations 3 3 3 3 Staffed fire stations 2 2 2 2 Fire hydrants 1,064 1,2001,431 1,630 Fire apparatus 7 7 8 9 Staffed fire apparatus 2 2 3 4 ALS non-transport units 2 3 3 3 Transportation Streets paved (miles)92.90 97.00101.39109.94 Streetlights 1,056 1,1061,131 1,231 Culture & Recreation Number of parks 22 22 22 22 Parks acreage 101.5 101.5101.5 349.5 Scenic linear trail (miles)3.5 3.5 5.7 5.7 Tennis courts 6 8 8 8 Fishing piers 4 4 4 4 Boat ramp 1 1 1 1 Water Miles of water mains 88.74 92.9497.23104.52 Sewer Miles of sanitary sewers 39.05 41.1544.26 49.51 Miles of storm sewers 9.11 9.5310.27 11.13 Sources: Various government departments. Fiscal Year City of Clermont, Florida Capital Asset Statistics by Function Last Ten Fiscal Years 112 2007 2008 2009 2010 2011 2012 111111 45 45 45 45 46 46 333444 333333 1,896 2,140 2,140 2,012 2,016 2,048 999878 555555 334444 122.93126.16131.72133.20133.20133.20 1,256 1,331 1,331 1,352 1,352 3,103 22 22 22 22 23 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 899999 444444 111111 115.02115.98122.83124.11197.40242.36 56.98 59.40 65.18 66.19132.02156.81 18.07 20.88 24.61 26.32 89.80105.38 Fiscal Year 113 114 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council City of Clermont, Florida We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Clermont, Florida, as of and for the year ended September 30, 2012, which collectively comprise the City’s basic financial statements and have issued our report thereon dated March 5, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the City is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management of employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. MCDIRMIT DAVIS & COMPANY, LLC 605 E. ROBINSON STREET, SUITE 635 ORLANDO, FLORIDA 32801 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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, 2013. 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, 2013 116 MANAGEMENT LETTER Honorable Mayor and City Council City of Clermont, Florida We have audited the financial statements of the City of Clermont, Florida, as of and for the fiscal year ended September 30, 2012, and have issued our report thereon dated March 5, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; and standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on and Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 5, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditor’s reports.  Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial audit report. There were no findings in the preceding annual financial report.  Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the City of Clermont, Florida complied with Section 218.415, Florida Statutes.  Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. See Appendix A to this report.  Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not have any such findings. MCDIRMIT DAVIS & COMPANY, LLC 605 E. ROBINSON STREET, SUITE 635 ORLANDO, FLORIDA 32801 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 117  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, 2012 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, 2012. 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. Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representative, the Florida Auditor General and other granting agencies, and applicable management, and is not intended to be and should not be used by anyone other than these specific parties. March 5, 2013 118 CITY OF CLERMONT, FLORIDA APPENDIX A - RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT Year Ended September 30, 2012 ML12-1- Pay Rate Review Criteria – Pay rate information should be reviewed for accuracy prior to processing payroll. Condition - Once pay rates for new hires or rate changes are approved, Human Resources manually inputs them into the system, and only Human Resources reviews the entries to ensure input accuracy. Cause - Due to limited segregation of duties, minimal controls are in place to ensure the accuracy of manual inputs into the payroll system. Effect - Pay rates could be input erroneously, and could result in overpaying an employee. Recommendation - We recommend that the City implement procedures to properly review manually entered information. We noted that during the course of the year, and prior to year end, the City had implemented additional procedures to address these segregation of duties issues. 119 12 0 Honorable Mayor and City Council City of Clermont, Florida We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, of the City of Clermont, Florida as of and for the year ended September 30, 2012. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated January 23, 2013. Professional standards also require that we communicate to you the following information related to the audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Clermont, Florida are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2012. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statement were: Management’s estimate for the allowance for doubtful account is based on historical loss levels, and an analysis of the individual accounts. We evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole. Management’s estimate for the allowance for depreciation is based on the estimated useful lives of the capital assets. We evaluated the reasonableness of the useful lives as well as the depreciation methods in determining that it is reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. MCDIRMIT DAVIS & COMPANY, LLC 605 E. ROBINSON STREET, SUITE 635 ORLANDO, FLORIDA 32801 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 121 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, 2013. 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. Other Matters 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, 2013 122