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Comprehensive Annual Financial Report - 2015-2016k CITY OF CLERMONT FLORIDA Comprehensive Annual Financial Report For Fiscal Year Ended September 30, 2016 r The 2016 Pierce Velocity, a 100 -foot aerial tower truck, is featured on the cover. The new truck is stationed at Clermont Fire Station 3, located on Legends Way across from the National Training Center. It is dedicated to the memory of Assistant Chief April Hoover who worked with the department from 2005 to 2009. This new tower truck, along with the new joint fire station featured below, are the newest additions this fiscal year to the Clermont Fire Department. CITY OF CLERMONT AND LAKE COUNTY September 23, 2016 marked the grand opening of the first city and county joint fire station in Lake County, Florida. The City of Clermont and Lake County split the cost of the $1.2 million station. The station houses a firetruck from each agency, as well as MAKE HISTORY three city firefighters and three county firefighters daily. This new addition will not only result in shorter response times for current residents, but is also a proactive solution for the future anticipated growth in South Lake County. The 2,500 square foot station is located on Hartle Road south of State Road 50. CITY OF (LERMONT FLORIDA Comprehensive Annual Financial Report For The Year Ended September 30, 2016 1 CLEF.......ONT -aa000Cowhoice of Champions Prepared by: Finance Department 04F City of Clermont, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2016 TABLE OF CONTENTS INTRODUCTORY SECTION Letterof Transmittal..................................................................................................................... 3 GFOA Certificate of Achievement for Excellence in Financial Reporting .................................... 9 OrganizationChart..................................................................................................................... 11 List of Elected and Appointed Officials...................................................................................... 12 FINANCIAL SECTION Independent Auditor's Report.................................................................................................... 15 Management's Discussion and Analysis................................................................................... 19 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position................................................................................................. 33 Statement of Activities...................................................................................................... 34 Fund Financial Statements: Balance Sheet — Governmental Funds............................................................................ 35 Statement of Revenues, Expenditures, and Changes in Fund Balance — GovernmentalFunds................................................................................................... 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activates ........................ 37 Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund............................................................................. 38 Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Infrastructure Special Revenue Fund ........................................ 40 Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Community Redevelopment Special Revenue Fund ................. 41 Statement of Net Position — Proprietary Funds................................................................ 42 Statement of Revenues, Expenses, and Changes in Fund Net Position — ProprietaryFunds........................................................................................................ 45 Statement of Cash Flows — Proprietary Funds................................................................. 46 Statement of Fiduciary Net Position — Fiduciary Funds ................................................... 48 Statement of Changes in Fiduciary Net Position — Fiduciary Funds ................................ 49 Notes to the Financial Statements....................................................................................... 53 Required Supplementary Information: Schedule of Funding Progress — Retiree Continuation Insurance Plan ................................ 95 Schedule of Employer Contributions — Retiree Continuation Insurance Plan ....................... 95 Schedule of Changes in Net Pension Liability and Related Ratios — General Employees... 96 Schedule of Changes in Net Pension Liability and Related Ratios — Police ......................... 97 Schedule of Changes in Net Pension Liability and Related Ratios — Fire ............................ 98 Schedule of Contributions and Investment Returns — General Employees .......................... 99 Schedule of Contributions and Investment Returns — Police .............................................. 100 Schedule of Contributions and Investment Returns — Fire ................................................. 101 Combining and Individual Fund Statements and Schedules: Major Governmental Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Capital Projects Fund.................................................................... 106 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Debt Service Fund........................................................................ 107 Nonmajor Governmental Funds: Combining Balance Sheet — Other Governmental Funds ................................................... 110 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance — 126 Other Governmental Funds............................................................................................ 112 Schedule of Revenues, Expenditures, and Changes in Fund Balance — 132 Budget and Actual — Recreation Impact Fee Special Revenue Fund ............................ 114 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Police Impact Fee Special Revenue Fund .................................... 115 Schedule of Revenues, Expenditures, and Changes in Fund Balance — 137 Budget and Actual — Fire Impact Fee Special Revenue Fund ....................................... 116 Schedule of Revenues, Expenditures, and Changes in Fund Balance — 139 Budget and Actual — Building Services Special Revenue Fund ..................................... 117 Schedule of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Fire Inspection Special Revenue Fund ......................................... 118 Fiduciary Funds: 142 Combining Statement of Fiduciary Net Position — Fiduciary Funds .................................... 120 Combining Statement of Changes in Fiduciary Net Position — Fiduciary Funds ................ 121 STATISTICAL SECTION Financial Trends: Net Position by Component.................................................................................................. 126 Changesin Net Position....................................................................................................... 128 Fund Balance — Governmental Funds................................................................................. 132 Changes in Fund Balances — Governmental Funds............................................................ 134 Revenue Capacity: Governmental Activities Tax Revenues by Source.............................................................. 136 Assessed Value and Estimated Actual Value of Taxable Property ...................................... 137 Property Tax Rates — Direct and Overlapping Governments ............................................... 138 Principal Property Taxpayers............................................................................................... 139 Property Tax Levies and Collections.................................................................................... 140 Debt Capacity: Ratios of Outstanding Debt by Type.................................................................................... 141 Direct and Overlapping Governmental Activities Debt ......................................................... 142 Pledged -Revenue Coverage................................................................................................ 143 Demographic and Economic Information: Demographic and Economic Statistics................................................................................. 147 PrincipalEmployers.............................................................................................................. 148 Principal Water Customers................................................................................................... 150 Principal Sewer Customers.................................................................................................. 151 Operating Information: Full-time Equivalent City Government Employees by Function ........................................... 152 Operating Indicators by Function......................................................................................... 154 Capital Asset Statistics by Function..................................................................................... 156 OTHER REPORTS Independent Auditor's 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 ........................................ 161 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with the Uniform Guidance ........................ 163 Schedule of Expenditures of Federal Awards.......................................................................... 165 Notes to Schedule of Expenditures of Federal Awards........................................................... 166 Schedule of Findings and Questioned Costs - Federal Award Programs ............................... 167 ManagementLetter.................................................................................................................. 169 Communication with those Charged with Governance............................................................ 171 Independent Auditor's Report on Compliance with the Requirements of Section 218.415, Florida Statutes.................................................................................................... 175 04F INTRODUCTORY SECTION 04F CLERMONT Choice of Champions April 26, 2017 To the Honorable Mayor, Members of the 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, 2016. State law requires that every general-purpose local government publish within nine 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, 2016. 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 exceed anticipated benefits, the City of Clermont's comprehensive framework of internal controls have 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, 2016, 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 unmodified opinion that the City of Clermont's financial statements for the fiscal year ended September 30, 2016, 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 transmittal is designed to complement the MD&A and should be read in conjunction with it. 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov 3 Profile of the City of Clermont The City was founded in 1884 and incorporated in 1916. The City currently has a land area of 16.78 square miles and population of approximately 34,667. The City is located in south Lake County, approximately 22 miles west of the City of Orlando and about 25 miles northwest of Walt Disney World. Clermont, known as "Choice Of Champions", 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, 7.48 miles of scenic paved trails, 10 piers measuring a total of 1,818 feet, 1-800 foot boardwalk, 7 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, 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 and final amended budget -to -actual comparisons are provided in this report for each individual governmental fund. The General Fund is presented on pages 38-39, the Infrastructure Fund is presented on page 40 and the Community Redevelopment Special Revenue fund is presented on page 41 as part of the basic financial statements for the governmental funds. The Capital Projects Fund is presented on page 106 and the Debt Service Fund is presented on page 107, followed by the other governmental funds, which start on page 110. 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov 4 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, 2016, Lake County's unemployment rate was 4.8%, which is a decrease of 0.4% from 2015. Clermont's unemployment rate was below the County average for the 7th year in a row at 4.4% for 2016. This is lower than both the state's average of 5.0% and the national average of 4.8%. Educational institutions in Clermont such as Lake -Sumter State 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 City Council approved the Master Plan in 2015 which offers an exciting view of the future of Clermont, the Choice of Champions. While much of the focus is on the Downtown -Waterfront Corridor, the Master Plan offers insights on how to keep the growing city connected and how to protect the very charms that have drawn hundreds of thousands to this internationally -recognized city that is one of the nation's top places to live and also a training ground for the world's elite athletes. The following capital projects are included in Phase 1 of the Master Plan and are intended to be funded from grants, reserves and a 15 year loan: • Victory Pointe is a regional stormwater project which incorporates a unique wetland filter marsh system that will channel highly filtered, clean water into Lake Minneola. In addition, there is a park that includes boardwalks, trails, and a new event area, and pavilion and triathlon beach. The project is anticipated to cost approximately $9.6 million. • The Boat Ramp Relocation is a part of the Victory Pointe project, the existing Waterfront Park boat ramp will be relocated and improved. The improved boat ramp will provide for additional parking, safer/reduced trail crossing, improved lighting and improved vehicle -trailer stacking. The new boat ramp will be located on the western bank of Lake Minneola, adjacent to Lake Hiawatha Park. The project is anticipated to cost approximately $1.9 million. The Downtown Waterfront District area includes Montrose Street, Minneola Street and Osceola Street between 7th and 8th Street. The proposed improvements will consist of streetscapes, landscaping, bathrooms, lighting, upgrades for event lighting and music, banners and beautification. A focal point will be created at City Hall Park to anchor downtown visitors, creating a destination and meeting point in the heart of downtown Clermont. In addition, a refurbished park at the 8th Street pier will be the demarcation and celebration of the halfway point of the Coast -to -Coast Trail. The project is anticipated to cost approximately $11 million. • The Legacy Loop Trail Spur and smaller connectivity projects will encourage trail users to travel through downtown from the heavily utilized South Lake Trail. The path of the Loop is proposed to run along Minneola Avenue from 7th Street to West of Victory Pointe. The first leg of the loop 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov is between 7th and 8t" Street on the North side of Minneola. The project is anticipated to cost approximately $1.3 million. • The Public Wi-Fi Network is construction of a public Wi-Fi network along the City of Clermont Limits of the Coast to Coast Trail (South Lake Trail). This project will allow for safer and more accurate navigation of the Coast to Coast Trail. The project is anticipated to cost approximately $750,000. 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. 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 $60,494,963 and the average investment earnings rate was 0.57%. 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 $35,693,659 and fund had a gain on investment of 7.04%. 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, 2015. This was the 28th 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 and Finance Department. We would like to express our appreciation 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov 6 to all members of these departments who assisted and contributed to the preparation of this report. A special note of appreciation is due Lacy Smith -Castillo, Finance Manager for her 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. Respectfully submitted, Darren Gray City Manager Jos ph Vane Finance Di ctor 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov Or r Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Clermont Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2015 */�00 44 -0A*, -,V Executive Director/CEO 9 im City Attorney Citizens of Clermont ity Council City Manager City Clerk Development Services Economic evelopment vironmental Services nance Committees Public Information Officer Human Recourses Information Technology Parks and Recreation Police Public Works re Purchasing Diane Travis Mayor Pro -Tem Keith Mullins Council Member City of Clermont, Florida List of Elected and Appointed Officials For the Fiscal Year Ended September 30, 2016 Elected Officials Gail L. Ash Mayor Appointed Officials Darren Gray City Manager Dan Mantzaris City Attorney Tracy Ackroyd Howe City Clerk James Kinzler Capital Planning, Grants and Projects Director Barbara Hollerand Development Services Director Shannon J. Schmidt Economic Development Director Paul Roy Environmental Services Director Joseph Van Zile Finance Director `A Ray Goodgame Council Member Timothy Bates Council Member Carle Bishop Fire Chief Susan Dauderis Human Recourse Director Don Dennis Information Technology Director Scott Davidoff Parks and Recreation Director Charles Broadway Police Chief Stoney Brunson Public Works Director Freddy Suarez Purchasing Director FINANCIAL SECTION 13 14 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Clermont, Florida Report on the Financial Statements 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, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements City of Clermont's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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 City of Clermont, as of September 30, 2016, and the respective changes in financial position and, where applicable, cash flows 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 accordance with accounting principles generally accepted in the United States of America. MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 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 15 Other Matters Required Supplementary Information 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 page 19 through 30 and 95 through 101 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise City of Clermont's basic financial statements. The introductory section, combining and individual fund financial statements and schedules, statistical section and the Schedule of Expenditures of Federal Awards, as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance,), are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and schedules and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and related directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic 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 basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated April 26, 2017 on our consideration of City of Clermont's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant 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 results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Clermont's internal control over financial reporting and compliance. ��Q,iu,►ut L1 � � G�rnparu� uc Orlando, FL April 26, 2017 lim MANAGEMENT'S DISCUSSION AND ANALYSIS 17 HE 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, 2016. 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 3 through 7 of this report. Financial Highlights • The City of Clermont's assets and deferred outflows of resources exceeded its liabilities and deferred inflows at September 30, 2016 by $169,806,684 (net position). Of this amount, $37,232,009 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net position increased by $5,375,365 (or 3.27%) during fiscal year 2016 primarily due to an increase in capital assets. • At September 30, 2016, the City of Clermont's governmental funds reported combined ending fund balances of $16,150,721 a decrease of $1,839,786 from the previous fiscal year. Of this amount $7,886,139 (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 $7,886,139, which represents 31.9% 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 Position and a Statement of Activities. These statements appear on pages 33 and 34 of the report. The Statement of Net Position presents information on all of the City's assets and liabilities and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position 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 position changed during the most recent fiscal year. All changes in net position 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. 19 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 eleven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund, Infrastructure Fund, Community Redevelopment Fund and Debt Service 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 nonmajor 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 38 - 39), the Infrastructure Fund (page 40) and the Community Redevelopment Fund (page 41) to demonstrate compliance with budgets. Other major and nonmajor funds comparisons can be found beginning on page 105. The basic governmental fund financial statements can be found on pages 35 - 41 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 42 - 47 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, 20 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. 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 48 - 49 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 53 - 92 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 105 - 121 of this report. Government -Wide Financial Analysis The following is a summary of the City's net position for governmental and business -type activities for the current year as compared to the prior year. For more detail see the Statement of Net Position on page 33. Assets: Current and other assets Capital assets Total assets Deferred Outflows of Resources: Deferred outflow of pension earnings Deferred charge ofrefunding Total deferred outflows of resources Liabilities: Long-term liabilities outstanding Other liabilities Total liabilities Deferred Inflow of Resources: Deferred inflow of pension earnings Net investment in capital assets Restricted Unrestricted Total net position Net Position Governmental Activities Business -type Activities Total 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 $20,484,583 63,573,462 $26,304,928 54,901,599 $ 44,627,429 72,745,502 $42,150,163 69,800,664 $ 65,112,012 136,318,964 $ 68,455,091 124,702,263 84,058,045 81,206,527 117,372,931 111,950,827 201,430,976 193,157,354 6,321,091 - 1,682,840 - - 479,490 - 513,138 6,321,091 479,490 1,682,840 513,138 6,321,091 1,682,840 479,490 513,138 6,800,581 2,195,978 16,522,663 3,343,964 11,703,848 2,201,433 14,816,899 2,877,047 1,540,734 15,259,180 31,339,562 6,221,011 13,244,582 17,460,613 19,866,627 13,905,281 17,693,946 16,799,914 37,560,573 30,705,195 864,300 216,818 - - 864,300 216,818 52,064,433 6,402,058 11,181,718 47,718,124 9,399,756 11,649,388 60,149,593 13,958,591 26,050,291 56,585,567 12,135,320 26,943,164 112,214,026 20,360,649 37,232,009 104,303,691 21,535,076 38,592,552 $ 69,648,209 $ 68,767,268 $100,158,475 $ 95,664,051 $169,806,684 $164,431,319 `I The City's total net position at September 30, 2016 was $169,806,684. Of the City's total net position $112,214,026 (66.1%) reflects its investment in capital assets (e.g., land, buildings, improvements, infrastructure and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Clermont's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's total net position, $20,360,649 (12%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the City's total net position, $37,232,009 (21.9%) 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 position increased by $5,375,365 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 2015-16, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 34. Remainder of page intentionally left blank 22 Revenues: Program revenues - Chargesforservices Operatinggrants and contributions Captial grants and contributions General revenues - Property Taxes Business Taxes Franchise Fees Utility Taxes Intergovernmental Investment income and miscellaneous Gain on sale of capital assets Total revenues Expenses: General government Public safety Physical envirommnet Transportation Economic environment Culture and recreation Interest on long-term debt Water Sewer Sanitation Stormwater Total expenses Increase(Decrease)in Net Position Before Transfers Special item -loss on sale of capital asset Transfers Increase in Net Position Net Position - Beginning, as restated Net Position - Ending Changes in Net Position Governmental Activities Business -type Activities 2015-16 2014-15 2015-16 2014-15 Total 2015-16 2014-15 $ 6,040,220 $ 5,357,705 $ 16,284,789 15,356,903 $ 22,325,009 $ 20,714,608 1,822,036 1,597,812 24,250 275,751 1,846,286 1,873,563 162,556 498,253 4,026,329 3,219,208 4,188,885 3,717,461 8,998,107 7,192,996 140,411 129,620 2,711,911 2,502,153 3,405,642 2,952,785 6,923,296 6,644,875 520,957 554,883 121,794 - 30,846,930 27,431,082 4,157,006 3,847,784 17, 380, 524 14, 325, 704 788,197 453,027 2,184,939 2,094,223 208,668 566,746 5,459,828 4,018,441 355,314 193,229 30,534,476 25,499,154 260,247 272,353 119,718 - 20,715,333 19,124, 215 4,719,165 4,822,683 6,866,337 6,570,897 2,924,660 3,132,989 1,142,260 1,079,920 15,652,422 15,606,489 8,998,107 7,192,996 140,411 129,620 2,711,911 2,502,153 3,405,642 2,952,785 6,923,296 6,644,875 781,204 827,236 241,512 - 51,562,263 46,555,297 4,157,006 3,847,784 17, 380, 524 14, 325, 704 788,197 453,027 2,184,939 2,094,223 208,668 566,746 5,459,828 4,018,441 355,314 193,229 4,719,165 4,822,683 6,866,337 6,570,897 2,924,660 3,132,989 1,142,260 1,079,920 46,186,898 41,105,643 312,454 1,931,928 5,062,911 3,517,726 5,375,365 5,449,654 - - - (1,248,017) - (1,248,017) 568,487 556,983 (568,487) (556,983) - - 880,941 2,488,911 4,494,424 1,712,726 5,375,365 4,201,637 68,767,268 66,278,357 95,664,051 93,951,325 164,431,319 160,229,682 $ 69,648,209 $ 68,767,268 $100,158,475 $ 95,664,051 $169,806,684 $164,431,319 23 Governmental activities - Governmental activities increased the City of Clermont's net position by $880,941, which is primarily due to increased general government revenues and operating grants. 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. $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Expenses and Program Revenues - Governmental Activities $17,380,524 Expenses ■ Program revenues 5,459,828 $4,157,006 $2,927,926 $2,924,904 $2,184,939 $1,552,214 $996,865 $481,798 $137,970 $355,314 $0 General government Public safety Transportation/public Culture & recreation Physical environment Interest on long-term works and other debt The following pie chart illustrates the composition of governmental activities revenue and its percent in relation to total governmental activities revenues. Revenues by Source - Governmental Activities ■ Intergovernmental ■ Charges for services ■ Operating grants and contributions ■ Investment income and miscellaneous ■ Other taxes ■ Capital grants and contributions Property taxes Property taxes, 29.2% Capital grants and r contributions, 0.5% Other taxes, 20.3% Investment income ano miscellaneous, 2.1% Operating grants and contributions, 5.9% 24 Intergovernmental, 22.4% -s for services, 19.6% Business -type activities - Business -type activities increased the City of Clermont's net position by $4,494,424. This change was due to increased revenue from services totaling $927,886, and capital contributions totaling $4,026,329. 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 the Reclaim Water System Expansion and the East Water Loop. 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. $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Expenses and Program Revenues - Business Type Activities Water Sewer Sanitation Stormwater The following pie chart illustrates the composition of business -type activities revenue and its percent in relation to total business -type activities revenues. Revenues by Source - Business Activities ■ Investment income and miscellaneous ■ Operating grants and contributions ❑ Charges for Services ■ Capital Grants and Contributions Charges for Services, 78.6% 25 ital Grants and ributions, 19.5% Investment income and miscellaneous , 1.8% Operating grants and contributions, 0.1% 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, 2016, the City of Clermont's governmental funds reported combined ending fund balances of $16,150,721 a decrease of $1,839,786 in comparison with the prior year. This decrease is primarily due to the use of accumulated funds for planned capital projects. Of the governmental funds combined ending fund balances, $7,886,139 (48.8%) represents unassigned fund balance, which is available for spending at the City's discretion. An additional $1,225,880 (assigned fund balance) has been set aside for encumbrances and fiscal year 2017 expenditures. Restricted fund balances totaling over $4.5 million include funds required for debt service, as well as funds collected for specific purposes such as impact fees and community redevelopment. The remainder of fund balance is nonspendable ($2,470,374) 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, 2016, the fund balance in the General Fund was $8,693,470 a decrease of $171,479 in comparison with the prior year due to current expenditures exceeding current revenues. The change in fund balance was higher than the anticipated amount of the original budget by $133,121 and $2.2 million higher than the revised budget. Revenues exceeded budget by $1,509,738 mainly attributable to the increase in utility tax and franchise fee due to realigning our collection periods. Departmental expenditures also came in less than anticipated reducing the amount of reserves used. Of the total fund balance in the General Fund, $7,886,139 (90.7%) 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 31.9% of total General Fund expenditures, while total fund balance represents 35.1 % 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. The fund balance in this fund increased by $1,225,880 in fiscal year 2016 due to increases in transfers exceeding expenditures. The fund balance is assigned to master plan capital projects. 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 decreased by $931,934 in fiscal year 2016 due to various capital projects such as Fire Station No. 4, fiber optic network expansion, Arts and Recreation Facility HVAC, and the purchase of a pumper fire truck. 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 and modified in 2015. The incremental annual increase in tax over the base years is used to fund projects. As of 26 September 30, 2016, the fund balance was $343,524, a decrease of $209,082 over the prior year. This decrease was due to the commencement of the master plan and streetscape projects. The City has a Debt Service Fund that is considered a major fund under criteria set forth by GASB Statement No. 34. This fund was established to account for the accumulation of resources and payment of bond principal and interest from governmental resources. The fund balance as of September 30, 2016, is $948,891, which increased by $76,242 due to the Infrastructure Sales Surtax Revenue Note, Series 2016 issued on March 3, 2016, in the amount of $5,300,000. In addition to the note payable, the City refunded the Public Improvement Revenue Note, Series 2013 which resulted in an economic gain of $261,168 and a reduction of $301,625 in future debt service payments. The remainder of the change of $1,829,413 to the governmental fund balance was from the non - major governmental funds. Police and Fire Impact Fee fund balances combined decreased a total of $2,927,075 due to capital projects such as the Police Headquarters and Fire Station No. 4. The Recreation Impact Fee fund increased $712,116 due both an increase in revenues as well as a delay in the planned use of funds for capital projects. The Building Services fund balance increased $296,043 due to the increase in licenses and permits. The fund balances in the remaining nonmajor funds increased a total of $89,503. 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 and reclaimed irrigation 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, 2016, the City of Clermont's Water Fund reported total net position of $37,018,793, an increase of $2,404,141 in comparison with the prior year. This increase in net position was due to revenues exceeding expenses as well as an increase in capital contributions. 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, 2016, the City of Clermont's Sewer Fund reported total net position of $53,086,451, an increase of $1,641,020 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, 2016, the City of Clermont's Sanitation Fund reported total net position of $5,132,213, an increase of $203,342 in comparison with the prior year, which is primarily due to revenues exceeding expenses as well as gains on disposal of capital assets. General Fund Budgetary Highlights During the year, there was a $3,663,072 increase in appropriations between the original and final amended budget. Following are the main components of the increase: 27 $1,265,300 to recognize the transfer of proceeds received by the Hook Street Property sale to the Capital Projects Fund for master plan projects. $1,092,127 for an Aerial Ladder truck. • $131,372 transfer to the Fire Inspection Fund. • $120,000 for the exterior painting of the Arts and Recreation Center. General Fund revenue increases totaling $256,594 were due to the City assuming the operation of the Clermont Performing Arts Center, an extension of the SAFER grant which was approved after the beginning of the fiscal year as well as the recognizing revenue received from Federal and State confiscation programs. Considering the above noted increases in General Fund budgeted appropriations, actual expenditures were less than budgeted by $504,235. In addition, actual revenues exceeded the budget by $1,509,738. 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 69 - 70 of this report. Capital Assets (net of depreciation) Governmental Activities Business -type Activities Total 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 Land $ 24,528,229 $ 25,727,548 $ 1,074,887 $ 1,022,590 $ 25,603,116 $ 26,750,138 Buildings 14,444,055 14,731,149 - - 14,444,055 14,731,149 Infrastructure 10,447,850 9,942,940 62,633,546 64,140,411 73,081,396 74,083,351 Machineryand Equipment 5,222,651 2,999,130 3,347,868 2,968,262 8,570,519 5,967,392 Intangibles 193,180 261,635 174,073 187,004 367,253 448,639 Construction in Progress 8,737,497 1,239,197 5,515,128 1,482,397 14,252,625 2,721,594 Total $ 63,573,462 $ 54,901,599 $72,745,502 $69,800,664 $136,318,964 $124,702,263 The City of Clermont's investment in capital assets for its governmental and business -type activities as of September 30, 2016, amounts to $136,318,964 (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 $11,616,701. Major capital asset events during the current fiscal year included the following: • Completion of Fire Station No. 4 — $517,498 was added and prior years Construction in Progress in the amount of $44,151 was moved to Buildings for a total project cost of $561,649. • Purchase of an aerial ladder fire truck for $1,092,245. • Purchase of nineteen police vehicles for a total of $685,390. 28 • Completion of the Hartwood Marsh, Lift Station No. 5 and Southern Fields Force Mains — $46,687 was added and prior years Construction in Progress in the amount of $203,415, for the total project cost of $250,102 was moved to Infrastructure/Improvements. • Completion of the Lift Station Improvements — $33,873 was added and prior years Construction in Progress in the amount of $701,055 was moved to Infrastructure/Improvements for a total project cost of $734,928. • Purchase of a sewer camera truck for $250,863. • Completion of the Lake Winana Stormwater Improvements - $525,984 was added and prior years Construction in Progress in the amount of $36,478, for the total project cost of $555,146, was moved Infrastructure/Improvements. • Purchase of 3 sanitation vehicles for a total of $719,860. • Construction in progress includes construction of the Police Headquarters, 12" Water Main Loop, Environmental Services Administration Building, Lower Floridian Aquifer Well, Victory Pointe, Reclaimed System Improvements, and the CDBG Stormwater Project. 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 71 - 74 of this report. Outstanding Debt Governmental Activities Business -type Activities Total 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 Revenue bonds payable $ - $ - $ 13,035,000 $ 13,685,000 $ 13,035,000 $ 13,685,000 Notes payable 11,509,029 7,157,670 - - 11,509,029 7,157,670 Total $ 11,509,029 $ 7,157,670 $ 13,035,000 $ 13,685,000 $ 24,544,029 $ 20,842,670 At the end of the current fiscal year, the City of Clermont had total debt outstanding of $24,544,029, which includes revenue bonds payable and notes payable. Economic Factors and Next Year's Budgets and Rates • The annual unemployment rate for Lake County in 2016 was 4.8%, which is a decrease of 0.4% from 2015. Clermont's unemployment rate was below the County average for the 7th year in a row at 4.4% for 2016. This is lower than both the state's average of 5.0% and the national average of 4.8%. • The taxable value of commercial and residential property increased 8.45% from fiscal year 2014-15 to fiscal year 2015-16 due to increasing home values and new construction. • Population increased 7.2% from 32,348 in 2015 to 34,667 in 2016. As of September 30, 2016, the General Fund unassigned fund balance was $7,886,139. The City did not appropriate funds for spending in the 2016-17 fiscal year budget. The same property tax rate is included for the General Fund for the 2016-17 fiscal year budget. However, property tax revenue is projected to be $318,142 higher in fiscal year 2016-17 due to the slight increase in the 29 assessed values. This increase will help the City continue to meet the level of service required as well as implementing new initiatives. No utility rate adjustments were proposed for the 2016-17 fiscal year with the exception of the sewer rate structure. The sewer rates increased 1.29% on October 1, 2016 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. 30 BASIC FINANCIAL STATEMENTS 31 04F Assets: Cash and cash equivalents Investments Receivables, net Inventories Due from other governments Internal balances Prepaid costs Restricted assets: Cash and cash equivalents Investments Interest receivable Net pension asset Capital assets not being depreciated Capital assets being depreciated, net of accumulated depreciation Total assets Deferred Outflows of Resources: Deferred outflow of pension earnings Deferred charge on refunding Total deferred outflows of resources Liabilities: Accounts payable and accrued expenses Due to other governmental agencies Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Deferred Inflows of Resources: Deferred inflow of pension earnings Net Position: Net investment in capital assets Restricted for: Capital Improvements Community redevelopment Public safety Culture and recreation Infrastructure Debt service Building services Perpetual care: Nonexpendable Unrestricted Total net position CITY OF CLERMONT, FLORIDA STATEMENT OF NET POSITION September 30, 2016 Primary Government Governmental Business -type 1,541,367 Activities Activities Total $ 10,961,752 $ 16,283,017 $ 27,244,769 7,088,251 15,454,684 22,542,935 844,508 1,310,037 2,154,545 15,579 361,895 377,474 691,599 461,346 1,152,945 (970,473) 970,473 - 928,409 97,514 1,025,923 - 1,541,367 1,541,367 - 8,089,694 8,089,694 18,974 57,402 76,376 905,984 - 905,984 33,265,726 6,590,015 39,855,741 30,307,736 66,155,487 96,463,223 84,058,045 117,372,931 201,430,976 397,196 - 6,321,091 - 6,321,091 - 479,490 479,490 6,321,091 479,490 6,800,581 $ 169,806,684 3,248,074 2,877,047 6,125,121 95,890 - 95,890 1,182,477 707,820 1,890,297 15,340,186 14,109,079 29,449,265 19,866,627 17,693,946 37,560,573 864,300 864,300 52,064,433 60,149,593 112,214,026 - 13,958,591 13,958,591 343,524 - 343,524 854,507 - 854,507 945,261 - 945,261 1,832,126 - 1,832,126 872,649 - 872,649 397,196 - 397,196 1,156,795 - 1,156,795 11,181,718 26,050,291 37,232,009 $ 69,648,209 $ 100,158,475 $ 169,806,684 The accompanying Notes to Financial Statements are an integral part of this statement. 33 Functions/Programs: Governmental Activities: General government Public safety Physical environment Transportation/public works Economic environment Culture and recreation Interest on long-term debt Total governmental activities Business -type Activities Water Sewer Sanitation Stormwater Total business -type activities Total primary government Expenses CITY OF CLERMONT, FLORIDA STATEMENT OF ACTIVITIES Year Ended September 30, 2016 Net (Expense) Revenue and Changes in Net Position Program Revenue Primary Government Operating Grants Capital Grants Charges for and and Governmental Business -type Services Contributions Contributions Activities Activities Total $ 4,157,006 $ 2,914,016 $ - $ 13,910 $ (1,229,080) 17,380,524 1,573,990 1,340,238 10,676 (14,455,620) 788,197 - - 137,970 (650,227) 2,184,939 - 481,798 - (1,703,141) 208,668 - - - (208,668) 5,459,828 1,552,214 - - (3,907,614) 355,314 - - - (355,314) 30,534,476 6,040,220 1,822,036 162,556 (22,509,664) 4,719,165 6,162,430 24,250 1,326,847 6,866,337 6,183,457 - 2,160,897 2,924,660 2,984,032 - - 1,142,260 954,870 - 538,585 15,652,422 16,284,789 24,250 4,026,329 $ 46,186,898 $ 22,325,009 $ 1,846,286 $ 4,188,885 General Revenues: Property taxes Business taxes Franchise fees Utility taxes Intergovernmental - unrestricted Unrestricted investment earnings Miscellaneous Gain on Sale of Capital Assets Transfers Total general revenues and transfers Change in net position $ - $ (1,229,080) - (14,455,620) - (650,227) - (1,703,141) - (208,668) - (3,907,614) - (355,314) - (22,509,664) - 2,794,362 2,794,362 - 1,478,017 1,478,017 - 59,372 59,372 - 351,195 351,195 - 4,682,946 4,682,946 (22,509,664) 4,682,946 (17,826,718) 8,998,107 - 8,998,107 140,411 - 140,411 2,711,911 - 2,711,911 3,405,642 - 3,405,642 6,923,296 - 6,923,296 134,416 260,247 394,663 386,541 - 386,541 121,794 119,718 241,512 568,487 (568,487) - 23,390,605 (188,522) 23,202,083 880,941 4,494,424 5,375,365 Net Position - beginning 68,767,268 95,664,051 164,431,319 Net Position - ending $ 69,648,209 $ 100,158,475 $ 169,806,684 The accompanying Notes to Financial Statements are an integral part of this statement. 34 CITY OF CLERMONT. FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2016 Fund Balances: Nonspendable 548,474 748,297 2,570 - 1,171,033 2,470,374 Restricted 258,857 - 1,083,829 340,954 948,891 1,935,797 4,568,328 Community 1,225,880 Other Total Total fund balances 8,693,470 1,225,880 1,832,126 343,524 948,891 3,106,830 16,150,721 Total liabilities, deferred inflows Capital Infrastructure Redevelopment Debt Service Governmental Governmental Accrued interest payable is not due in the current period and therefore is not reported in the funds. (76,716) General 131,708 Projects Special Revenue Special Revenue Fund Funds Funds Assets: Statement of Net Position. 28,922 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. (16,522,663) Net Position of Governmental Activities in the Statement of Net Position $ 69,648,209 Cash and cash equivalents $ 1,688,667 $ 2,952,319 $ 1,212,405 $ 356,446 $ 948,891 $ 3,126,359 $ 10,285,087 Investments 7,088,251 - - - - - 7,088,251 Receivables, net 862,769 862,769 Inventories, at cost 15,579 - - 15,579 Due from other governments 492,211 199,310 - 78 691,599 Advances to other funds 355,522 - 1,676 12,393 369,591 Prepaid costs 177,373 748,297 894 1,845 928,409 Total assets $ 10,680,372 $ 2,952,319 $ 2,160,012 $ 359,016 $ 948,891 $ 3,140,675 $ 20,241,285 Liabilities: Accounts payable $ 792,064 $ 1,655,725 $ 327,886 $ 15,492 $ - $ 33,845 $ 2,825,012 Payable to other governments 25,176 70,714 - - - 95,890 Due to other funds 837,127 - 837,127 Accrued liabilities 200,827 200,827 Total liabilities 1,855,194 1,726,439 327,886 15,492 33,845 3,958,856 Deferred Inflows of Resources: Unavailable revenue - liens, forfeitures and rents 131,708 131,708 Total deferred inflows of resources 131,708 131,708 Fund Balances: Nonspendable 548,474 748,297 2,570 - 1,171,033 2,470,374 Restricted 258,857 - 1,083,829 340,954 948,891 1,935,797 4,568,328 Assigned - 1,225,880 - - - - 1,225,880 Unassigned 7,886,139 7,886,139 Total fund balances 8,693,470 1,225,880 1,832,126 343,524 948,891 3,106,830 16,150,721 Total liabilities, deferred inflows of resources, and fund balances $ 10,680,372 $ 2,952,319 $ 2,160,012 $ 359,016 $ 948,891 $ 3,140,675 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds. 63,573,462 Accrued interest payable is not due in the current period and therefore is not reported in the funds. (76,716) Other long-term assets are not available to pay for current period expenditures and, therefore are deferred in the funds. 131,708 Deferred inflows and outflows of resources related to pension earnings are not recognized in governmental funds, however, they are recorded in net position under full accrual accounting. 5,456,791 Net pension assets are not current financial resources and therefore are not reported in the funds 905,984 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 Position. 28,922 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. (16,522,663) Net Position of Governmental Activities in the Statement of Net Position $ 69,648,209 The accompanying Notes to Financial Statements are an integral part of this statement. 35 CITY OF CLERMONT. FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended September 30, 201E The accompanying Notes to Financial Statements are an integral part of this statement. 36 Community Other Total Infrastructure Redevelopment Debt Service Governmental Governmental General Capital Projects Special Revenue Special Revenue Fund Funds Funds Revenues: Taxes $ 12,335,705 $ $ $ 208,455 $ $ $ 12,544,160 Franchise fees 2,711,911 - 2,711,911 Licenses and permits 219,140 1,078,800 1,297,940 Intergovernmental revenues 5,825,173 2,964,966 - 8,790,139 Charges for services 1,516,632 - 135,588 1,652,220 Fines and forfeitures 702,957 - 702,957 Impact fees/special assessments - - - 1,702,187 1,702,187 Investment earnings 76,850 11,444 11,267 3,081 3,115 25,411 131,168 Miscellaneous 923,097 10,676 73,225 1,006,998 Total revenues 24,311,465 22,120 2,976,233 211,536 3,115 3,015,211 30,539,680 Expenditures: Current: General government 3,832,058 - 237,884 - 4,069,942 Public safety 15,065,939 133,681 1,049,882 1,270,342 17,519,844 Physical environment 689,476 - 87,215 - 776,691 Transportation 1,241,014 - 636,603 1,877,617 Economic environment 168,406 10,469 - 302,915 481,790 Culture and recreation 3,736,809 - 1,150,664 - - 150,283 5,037,756 Debt Service: Principal retirement - - 6,279,837 - 6,279,837 Interest and fiscal charges 5,443 - 336,363 341,806 Capital Outlay: Public safety - 8,369,241 - 8,369,241 Economic environment 145,419 145,419 Total expenditures 24,739,145 8,658,810 3,162,248 302,915 6,616,200 1,420,625 44,899,943 Excess (Deficiency) of Revenues Over Expenditures (427,680) (8,636,690) (186,015) (91,379) (6,613,085) 1,594,586 (14,360,263) Other Financing Sources (Uses): Transfers in 574,641 9,862,570 1,358,131 101,392 11,896,734 Transfers out (1,639,553) - (745,919) (117,703) (5,300,000) (3,525,391) (11,328,566) Revenue notes issued - 10,631,196 10,631,196 Sale of general capital assets 1,321,113 1,321,113 Total other financing sources (uses) 256,201 9,862,570 (745,919) (117,703) 6,689,327 (3,423,999) 12,520,477 Net Change in Fund Balances (171,479) 1,225,880 (931,934) (209,082) 76,242 (1,829,413) (1,839,786) Fund Balances - beginning 8,864,949 2,764,060 552,606 872,649 4,936,243 17,990,507 FundBalances- ending $ 8,693,470 $ 1,225,880 $ 1,832,126 $ 343,524 $ 948,891 $ 3,106,830 $ 16,150,721 The accompanying Notes to Financial Statements are an integral part of this statement. 36 CITY OF CLERMONT, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year Ended September 30, 2016 Net Change in Fund Balances - total governmental funds: $ (1,839,786) 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. 9,732,893 The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins and disposals) is to decrease net position (1,199,319) Governmental funds do not report capital asset contributions. In contrast, the Statement of Activities reports capital asset contributions as revenue. Net transfers of capital assets from proprietary funds 319 Contributions of capital assets are not reported as revenues in the governmental funds 137,970 Governmental funds do not present revenues that are not available to pay current obligations. In contrast, such revenues are reported in the Statement of Activities when earned. 44,466 Revenue reported in the funds must be eliminated from the statement of activities since revenue was recognized in a prior year. (228) Cash pension contributions reported in the funds were more than the calculated pension expense on the statement of activities, and therefore increased net position (746,215) Governmental funds report note proceeds as current financial resources. In contrast, the Statement of Activities treats such issuance of debt as a liability. Governmental funds report repayment of note 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. (4,351,359) 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. (480,964) Internal service funds are used by management to charge the costs of certain activities, such as health insurance, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. (416,836) Change in Net Position of Governmental Activities $ 880,941 The accompanying Notes to Financial Statements are an integral part of this statement. 37 CITY OF CLERMONT, FLORIDA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-_ BUDGET ALANCE- BUDGET AND ACTUAL Revenues: Taxes Franchise fees Licenses and permits Intergovernmental revenues Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues Expenditures: Current: General government: City council City clerk City manager Finance Legal services Planning & zoning Information technology Human resources Purchasing Other general government Public safety: Law enforcement Fire control Physical environment Transportation Economic environment Culture and recreation Culture and recreation Events Arts and rec center Interest and fiscal charges Year Ended September 30, 2016 Budgeted Amounts Original Final $ 11,506,639 $ 11,506,639 2,343,900 2,343,900 125,600 125,600 5,502,028 5,662,171 1,334,018 1,447,150 675,400 711,747 59,735 66,707 997,813 937,813 99 545 1'1� 99 801 797 Actual Amounts, Budgetary Basis Variance with Final Budget - Positive (Negative) $ 12,335,705 $ 829,066 2,711,911 368,011 219,140 93,540 5,825,173 163,002 1,516,632 69,482 702,957 (8,790) 76,850 10,143 923,097 (14,716) 94'111 465 1 50q TIS 25,970 27,236 26,805 431 290,211 290,211 271,462 18,749 453,787 453,787 446,568 7,219 770,528 777,500 777,421 79 101,900 123,522 122,665 857 581,143 605,386 604,584 802 675,241 734,410 714,438 19,972 439,021 439,021 390,024 48,997 178,922 234,167 190,674 43,493 187,292 288,182 287,417 765 3,704,015 3,973,422 3,832,058 141,364 7,286,801 7,682,783 6,168,091 7,504,007 13,454,892 15,186,790 7,596,225 86,558 7,469,714 34,293 15,065,939 120,851 704,184 704,184 689,476 14,708 1,287,553 1,327,053 1,241,014 86,039 171,591 184,980 168,406 16,574 2,336,641 2,339,941 2,131,011 208,930 258,247 258,247 247,667 10,580 1,049,499 1,268,763 1,358,131 (89,368) 3,644,387 3,866,951 3,736,809 130,142 5,443 (5,443) Total expenditures 22,966,622 25,243,380 24,739,145 504,235 The accompanying Notes to Financial Statements are an integral part of this statement. 38 CITY OF CLERMONT, FLORIDA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-_ BUDGET ALANCE- BUDGET AND ACTUAL (CONTINUED) Year Ended September 30, 2016 Actual Variance with Amounts, Final Budget - Budgetary Positive Budgeted Amounts Basis (Negative) Original Final Excess (Deficiency) of Revenues Over Expenditures (421,489) (2,441,653) (427,680) 2,013,973 Other Financing Sources (Uses): Transfers In 504,770 504,770 574,641 69,871 Transfers Out (402,881) (1,789,195) (1,639,553) 149,642 Sale of General Capital Assets 15,000 1,323,000 1,321,113 (1,887) Total other financing sources (uses) 116,889 38,575 256,201 217,626 Net Change in Fund Balance Fund Balance - beginning Fund Balance - ending (304,600) R RRA QAQ (2,403,078) R RRA QAQ (171,479) R RRA QAQ 2,231,599 Zb b,bbU,349 b b,4bl,dII b 6,b93,4W 'b 2,23l,bgg The accompanying Notes to Financial Statements are an integral part of this statement. 39 CITY OF CLERMONT, FLORIDA INFRASTRUCTURE SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2016 Culture and recreation Recreation programs 679,500 679,500 491,540 Variance with Arts and rec center 880,396 816,496 659,124 Final Budget - 1,559,896 1,495,996 1,150,664 Positive Total expenditures Budgeted Amounts Actual Amounts (Negative) 955,539 Original Final Revenues: Over Expenditures (927,621) (1,311,012) Intergovernmental revenues $ 2,790,000 $ 2,790,000 $ 2,964,966 $ 174,966 Investment earnings 16,775 16,775 11,267 (5,508) Total revenues 2,806,775 2,806,775 2,976,233 169,458 (1,203,922) (745,919) Expenditures: Net Change in Fund Balances (1,524,408) (2,514,934) Current: 1,583,000 Fund Balances - beginning 2,764,060 2,764,060 General government 240,000 253,516 237,884 15,632 1,832,126 $ 1,583,000 Public safety: Police 460,000 460,000 470,697 (10,697) Fire control 971,000 971,000 579,185 391,815 1,431,000 1,431,000 1,049,882 381,118 Physical Environment 89,000 89,000 87,215 1,785 Transportation: Roads & streets 414,500 848,275 636,603 211,672 Culture and recreation Recreation programs 679,500 679,500 491,540 187,960 Arts and rec center 880,396 816,496 659,124 157,372 1,559,896 1,495,996 1,150,664 345,332 Total expenditures 3,734,396 4,117,787 3,162,248 955,539 Excess (Deficiency) of Revenues Over Expenditures (927,621) (1,311,012) (186,015) 1,124,997 Other Financing Uses: Transfers out (596,787) (1,203,922) (745,919) 458,003 Total other financing uses (596,787) (1,203,922) (745,919) 458,003 Net Change in Fund Balances (1,524,408) (2,514,934) (931,934) 1,583,000 Fund Balances - beginning 2,764,060 2,764,060 2,764,060 - Fund Balances - ending $ 1,239,652 $ 249,126 $ 1,832,126 $ 1,583,000 The accompanying Notes to Financial Statements are an integral part of this statement. 40 CITY OF CLERMONT, FLORIDA COMMUNITY REDEVELOPMENT SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Revenues: Taxes Investment earnings Total revenues Expenditures: Economic environment: Economic development Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses: Transfers out Total other financing uses Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2016 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 209,040 $ 209,040 $ 208,455 $ (585) 4,660 4,660 3,081 (1,579) 213,700 213,700 211,536 (2,164) 692,844 342,844 302,915 39,929 692,844 342,844 302,915 39,929 (479,144) (129,144) (91,379) 37,765 - (404,000) (117,703) 286,297 (404,000) (117,703) 286,297 (479,144) (533,144) (209,082) 324,062 552,606 552,606 552,606 - $ 73,462 $ 19,462 $ 343,524 $ 324,062 The accompanying Notes to Financial Statements are an integral part of this statement. 41 Assets: Current assets: Cash and cash equivalents Investments Restricted cash and cash equivalents Accounts receivable, net Due from other governments Inventories Prepaid expenses Total current assets Noncurrent assets: Restricted investments Advances to other funds Interest receivable Capital assets: Land, buildings and equipment Construction in progress Less accumulated depreciation Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets Deferred Outflows of Resources: CITY OF CLERMONT, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2016 Business -type Activities -Enterprise Funds Water Sewer Sanitation Stormwater Total Governmental Activities - Internal Service Fund $ 6,193,312 $ 8,115,327 $ 1,579,171 $ 395,207 $ 16,283,017 $ 676,665 9,471,956 4,475,207 1,507,521 - 15,454,684 - 834,220 707,147 - - 1,541,367 - 435,615 532,874 258,380 83,168 1,310,037 713 158,931 - - 302,415 461,346 - 327,741 32,158 - 1,996 361,895 - 43,185 37,272 9,252 7,805 97,514 - 17,464,960 13,899,985 3,354,324 790,591 35,509,860 677,378 - 8,089,694 - - 8,089,694 - 49,851 40,139 862,814 14,732 967,536 - 16,361 37,713 3,328 - 57,402 - 34,278,746 63,416,243 3,806,417 6,328,440 107,829,846 - 4,220,793 379,225 - 915,110 5,515,128 - (11,612,738) (23,867,868) (2,356,272) (2,762,594) (40,599,472) - 26,886,801 39,927,600 1,450,145 4,480,956 72,745,502 - 26,953,013 48,095,146 2,316,287 4,495,688 81,860,134 - 44,417,973 61,995,131 5,670,611 5,286,279 117,369,994 677,378 Deferred charge on refunding 168,421 311,069 - - 479,490 Total deferred outflows of resources 168,421 311,069 - - 479,490 The accompanying Notes to Financial Statements are an integral part of this statement 42 Liabilities: Current liabilities: Accounts payable Salaries payable Accrued interest payable Due to other funds Compensated absences Customer deposits payable Revenue bonds payable -current Total current liabilities Noncurrent liabilities: Compensated absences Other post employment benefits Revenue bonds payable Total noncurrent liabilities Total liabilities Net Position: Net investment in capital assets Restricted for capital improvements Unrestricted Total net position 1,632,096 163,314 143,279 195,074 2,133,763 145,519 46,625 44,797 30,554 13,467 135,443 - 61,701 109,690 - - 171,391 - - - - - - 500,000 15,728 11,970 5,711 4,411 37,820 - 436,450 - - - 436,450 - 241,200 428,800 - - 670,000 - 2,433,800 758,571 179,544 212,952 3,584,867 645,519 141,552 107,728 51,399 39,694 340,373 - 526,306 413,994 307,455 115,552 1,363,307 - 4,465,943 7,939,456 - - 12,405,399 - 5,133,801 8,461,178 358,854 155,246 14,109,079 - 7,567,601 9,219,749 538,398 368,198 17,693,946 645,519 22,348,079 31,870,413 1,450,145 4,480,956 60,149,593 - 2,685,622 11,272,969 - - 13,958,591 - 11,985,092 9,943,069 3,682,068 437,125 26,047,354 31,859 $ 37,018,793 $ 53,086,451 $ 5,132,213 $ 4,918,081 100,155,538 $ 31,859 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 Position. Total Net Position per Government -Wide Financial Statements 2,937 $ 100,158,475 The accompanying Notes to Financial Statements are an integral part of this statement 43 44 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS Operating Revenues: Charges for services Miscellaneous Total operating revenues Operating Expenses: Personnel services Utilities Dump fees Administrative services Repairs and maintenance Depreciation and amortization Professional services Insurance claims and expenses Other supplies and expenses Total operating expenses Operating income (loss) Nonoperating Revenues (Expenses): Investment income Grant Revenue Interest expense Gain (loss) on disposal of capital assets Total nonoperating revenue (expenses) Income (loss) before contributions and transfers Capital contributions Transfers out Change in net position Year Ended September 30, 2016 Business -type Activities -Enterprise Fund Water Sewer Sanitation Stormwater Total Governmental Activities. Internal Service Fund $ 5,934,455 $ 6,170,684 $ 2,982,841 $ 952,712 $ 16,040,692 $ 3,783,957 227,975 12,773 1,191 2,158 244,097 960,133 6,162,430 6,183,457 2,984,032 954,870 16,284,789 4,744,090 1,677,353 1,517,964 1,025,116 453,831 4,674,264 - 409,471 753,893 2,549 1,394 1,167,307 - 165,750 473,730 11,644 651,124 334,892 352,207 288,676 57,933 1,033,708 256,342 419,303 94,228 98,473 868,346 1,136,034 2,544,799 544,293 386,644 4,611,770 - 154,477 133,811 49,892 35,028 373,208 2,400 129,814 183,016 42,810 28,260 383,900 5,288,699 381,912 402,517 377,066 51,738 1,213,233 - 4,480,295 6,473,260 2,898,360 1,124,945 14,976,860 5,291,099 1,682,135 (289,803) 85,672 (170,075) 1,307,929 (547,009) 111,414 121,348 23,149 4,336 260,247 3,248 24,250 - - - 24,250 - (197,215) (351,422) - (548,637) 24,878 94,521 - 119,399 - (36,673) (230,074) 117,670 4,336 (144,741) 3,248 1,645,462 (519,877) 203,342 (165,739) 1,163,188 (543,761) 1,326,847 2,160,897 - 538,585 4,026,329 (568,168) - - - (568,168) 2,404,141 1,641,020 203,342 372,846 4,621,349 (543,761) Total Net Position - Beginning 34,614,652 51,445,431 4,928,871 4,545,235 575,620 Total Net Position - Ending $ 37,018,793 $ 53,086,451 $ 5,132,213 $ 4,918,081 $ 31,859 Change in Net Position, per above 4,621,349 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. (126,925) Change in Business -Type Activities in Net Position per Government -Wide Financial Statements $ 4,494,424 The accompanying Notes to Financial Statements are an integral part of this statement. 45 Cash Flows from Operating Activities: Receipts from customers Receipts from internal services provided Payments to suppliers Payments to employees Net cash provided (used) by operating activities Cash Flows from Non -Capital Financing Activities: Due from other funds Due to other funds Operating grants Transfers out Net cash provided (used) by non -capital financing activities Cash Flows from Capital and Related Financing Activities: Acquisition of capital assets Sale of capital assets Interest paid on long-term debt Principal paid on debt Capital Grants Fees and assessments received Net cash provided (used) by capital and related financing activities CITY OF CLERMONT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended September 30, 2016 (49,851) (40,139) 84,313 (14,732) (20,409) - - - - - - 500,000 (4,875) (4,875) - (568,168) - - - (568,168) - (622,894) (40,139) 84,313 (14,732) (593,452) 500,000 (4,368,234) (1,039,505) (719,860) (1,429,328) (7,556,927) - 25,197 - Governmental (188,757) (335,568) - - (524,325) - (234,000) (416,000) Activities - - Business -Type Activities -Enterprise Funds - 241,845 241,845 - Internal Service Water Sewer Sanitation Stormwater Total Fund $ 6,125,739 $ 6,139,796 $ 2,981,148 $ 951,220 $ 16,197,903 $ - - - - - - 4,744,249 (266,348) (2,380,609) (1,629,892) (109,075) (4,385,924) (5,235,723) (1,611,545) (1,447,297) (977,646) (405,749) (4,442,237) - 4,247,846 2,311,890 373,610 436,396 7,369,742 (491,474) (49,851) (40,139) 84,313 (14,732) (20,409) - - - - - - 500,000 (4,875) (4,875) - (568,168) - - - (568,168) - (622,894) (40,139) 84,313 (14,732) (593,452) 500,000 (4,368,234) (1,039,505) (719,860) (1,429,328) (7,556,927) - 25,197 - 94,521 - 119,718 - (188,757) (335,568) - - (524,325) - (234,000) (416,000) (650,000) - - - - 241,845 241,845 - 1,326,847 2,160,897 - - 3,487,744 - (3,438,947) 369,824 (625,339) (1,187,483) (4,881,945) - The accompanying Notes to Financial Statements are an integral part of these statements. 46 Cash Flows from Investing Activities: Sale (Purchase) of investments Investment income Net cash provided by investing activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents - beginning Cash and Cash Equivalents - end Classified As: Cash and cash equivalents Restricted cash and cash equivalents Total Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities Operating income (loss) Adjustments Not Affecting Cash: Depreciation and amortization Change in Assets and Liabilities: Decrease (Increase) in accts receivable Increase in customer deposits Decrease in prepaid costs Decrease (Increase) in inventory Increase (Decrease) in accounts payable Increase in accrued liabilities Total adjustments Net Cash Provided (Used) by Operating (2,765,968) (5,818,497) (1,506,642) - (10,091,107) - 97,417 102,678 18,942 4,336 223,373 3,248 (2,668,551) (5,715,819) (1,487,700) 4,336 (9,867,734) 3,248 2,315 (2,482,546) (3,074,244) (1,655,116) (761,483) (7,973,389) 11,774 9,510,078 11,896,718 3,234,287 1,156,690 25,797,773 664,891 $ 7,027,532 $ 8,822,474 $ 1,579,171 $ 395,207 $ 17,824,384 $ 676,665 12,091 (303,675) 174,390 1,319,026 55,376 $ 6,193,312 $ 8,115,327 $ 1,579,171 $ 395,207 $ 16,283,017 $ 676,665 834,220 707,147 - - 1,541,367 - $ 7,027,532 $ 8,822,474 $ 1,579,171 $ 395,207 $ 17,824,384 $ 676,665 $ 1,682,135 $ (289,803) $ 85,672 $ (170,075) $ 1,307,929 $ (547,009) 1,136,034 2,544,799 544,293 386,644 4,611,770 - (39,006) (43,661) (2,884) (3,650) (89,201) 159 2,315 - - - 2,315 - 18,300 13,491 2,734 2,241 36,766 - (53,960) 4,306 - (1,236) (50,890) - 1,436,220 12,091 (303,675) 174,390 1,319,026 55,376 65,808 70,667 47,470 48,082 232,027 - 2,565,711 2,601,693 287,938 606,471 6,061,813 55,535 Activities $ 4,247,846 $ 2,311,890 $ 373,610 $ 436,396 $ 7,369,742 $ (491,474) Noncash Investing, Capital, and Financing Activities: Increase (Decrease) in Fair Value of Investments $ 11,952 $ (4,467) $ 879 $ - $ 8,364 $ Net transfers of capital assets $ (319) $ - $ - $ - $ (319) $ - The accompanying Notes to Financial Statements are an integral part of these statements. 47 CITY OF CLERMONT, FLORIDA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30, 2016 Employee Pension Assets: Cash and cash equivalents $ 222,941 Receivables: Due from state - Total receivables - Investments: U.S. Government & other debt securities 10,979,898 Equities 24,490,820 Total investments 35,470,718 Total assets 35,693,659 Liabilities: Refunds payable and other 446,327 Total liabilities 446,327 Net Position Restricted for Pensions $ 35,247,332 The accompanying Notes to Financial Statements are an integral part of this statement. 48 CITY OF CLERMONT, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2016 Investment earnings: Net decrease in fair value of investments 2,817,369 Total net investment earnings 2,817,369 Total additions 5,153,752 Deductions: Benefits/distributions 579,068 Administrative 93,294 Total deductions 672,362 Change in Net Position Total Employee Net Position - beginning Pension Funds Additions: $ 35,247,332 Contributions: Employer $ 1,466,559 Plan members 387,765 State 482,059 Total contributions 2,336,383 Investment earnings: Net decrease in fair value of investments 2,817,369 Total net investment earnings 2,817,369 Total additions 5,153,752 Deductions: Benefits/distributions 579,068 Administrative 93,294 Total deductions 672,362 Change in Net Position 4,481,390 Net Position - beginning 30,765,942 Net Position - ending $ 35,247,332 The accompanying Notes to Financial Statements are an integral part of this statement 49 50 NOTES TO FINANCIAL STATEMENTS 51 52 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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. The CRA is governed by a board of seven - the five members of the Clermont City Council and two individuals appointed by the City Council. On December 8, 2015, Ordinance No. 2015-77 passed and modification of the Community Redevelopment Plan was approved. 53 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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 position and the statement of activities) 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. 54 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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. The Debt Service Fund was established to account for the accumulation of resources and payment of bond principal and interest from governmental resources. Nonmaior 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. 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. 55 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Manor 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. Nonmaior 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. 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. 56 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's water, sewer, sanitation and stormwater utility funds are charges to customers for sales and services. The City also recognizes as operating revenue the meter fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance: 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 and are categorized within the fair value hierarchy established in accordance with GASB Statement No. 72, Fair Value Measurement and Application. The City's investments consist of investments authorized per their investment policy adopted in accordance with Section 218.415, Florida Statutes. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." 57 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (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 uncollectibles. 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. 58 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (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. 59 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (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 position. Bond premiums and discounts 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. In the fund financial statements, governmental fund types recognize bond premiums and discounts 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. 8. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. The deferred charge on refunding and deferred outflows of pension earnings reported in the government -wide statement of net position and the statement of net position - proprietary funds. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from several sources: liens, forfeitures and rental income. These amounts are deferred and recognized as an inflow of sources in the period that the amounts become available. The City also has deferred inflows of pension earnings reported in the government -wide statement of net position. 60 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (Continued): 9. Net Position Flow Assumptions Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government -wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City's policy to consider restricted net position to have been depleted before unrestricted net position is applied. 10. Fund Balance Flow Assumptions Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. 11. Fund Balance Policies 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. The City itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the City's highest level of decision-making authority. The Council is the highest level of decision- making authority for the City that can, by adoption of a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet criteria to be classified as committed. The Council has maintained authority to assign fund balance. 61 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (Continued): 11. Fund Balance Policies - (Continued) The Council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. E. New GASB Statements Implemented: In fiscal year 2016, the City implemented GASB Statement No. 72, Fair Value Measurement and Application. This statement address fair value disclosures for investments. Implementation had no effect on beginning balances of the City. 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 position 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 $9,870,863 difference are as follows: Capital Outlay $ 12,134,943 Depreciation Expense (2,402,050) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ 9,732,893 62 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 2 - Reconciliation of Government -Wide and Fund Financial Statements (Continued): 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 (Continued) 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 position." The details of this $(4,351,359) difference are as follows: Debt Issued or Incurred Principal Repayment Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ (10,631,196) 6,279,837 $ (4,351,359) 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 $ (311,721) Other Post Employment Benefits (514,461) Accrued Interest Payable (13,508) Net Adjustment to Decrease Net Changes in Fund Balances - total governmental funds to arri\fe at changes in net position of governmental activities $ (839,690) 63 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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, budgetary comparisons are not presented since they are not required 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. 64 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 3 - Stewardship, Compliance, and Accountability (Continued): A. 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. B. Expenditures in Excess of Appropriations - Expenditures exceeded appropriations Infrastructure Special Revenue Fund, expenditures were funded by greater balance. Note 4 - Cash and Investments: Deposits in various departments of the General Fund, and Debt Service Fund. Theses excess than anticipated revenues and available fund At year-end, the carrying amount of the City's deposits was $28,786,136 and the bank balance was $29,299,468. 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. 65 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 4 - Cash and Investments (Continued): Investments (Continued) (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. Investments made by the City of Clermont at September 30, 2016 are summarized below. Defined benefit pension plan investments, other than $24,490,820 in mutual funds, investing in equity securities, are included below. In accordance with GASB 31, investments are reported at fair value. Weighted Average Investment Type Fair Value Credit Rating Maturity Federal Agency Bond $ 13,893,056 AA+ 2.14 years Federal Agency Colataralized Mortgage Obligatio 420,675 AA+ 2.56 years US Treasury Notes 5,818,616 TSY 1.31 years Supra -National Agency Bond/Note 1,526,574 AAA 2.76 years Corporate Note 6,286,401 AAA/AA 1.83 years Asset Backed Security 1,378,309 AAA/NR 3.98 years Commercial Paper 999,212 A-11 49 days Municipal Bond 309,786 AA 1.59 years Pension Fixed Income Securities 10,979,898 AAf/S4 5.90 years $ 41,612,527 Credit Risk: The City's investment policy limits credit risk by restricting authorized investments to those described above. 66 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 4 - Cash and Investments (Continued): Investments (Continued) 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, 2016, 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, 2016, 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. 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. Fair Value The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The City uses a market approach in measuring fair value that uses prices and other relevant information generated by market transactions involving identical or similar assets liabilities, or groups of assets and liabilities. 67 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 4 - Cash and Investments (Continued): Investments (Continued) Assets or liabilities are classified into one of three levels. Level 1 is the most reliable and is based on quoted price for identical assets, or liabilities, in an active market. Level 2 uses significant other observable inputs when obtaining quoted prices for identical or similar assets, or liabilities, in markets that are not active. Level 3 is the least reliable, and uses significant unobservable inputs that uses the best information available under the circumstances, which includes the City's own data in measuring unobservable inputs. The City has the following recurring fair value measurements as of September 30, 2016: Quoted Prices in Active Markets for Investments Valued by Fair Value Level Identical Assets (Level 1) Federal Agency Bond $13,893,404 $ Federal Agency Colataralized Mortgage Obligation 420,675 US Treasury Notes 5,818,616 Supra -National Agency Bond/Note 1,526,574 Corporate Note 6,286,401 Asset Backed Security 1,378,309 Commercial Paper 999,212 Municipal Bond 309,786 Pension Fixed Income Securities 10,979,898 Pension Equity Securities 24,490,820 $ 66,103,695 $ Note 5 - Receivables: 5,818,616 Significant Other Observable Inputs (Level 2) $ 13,893,404 420,675 1,526,574 6,286,401 1,378,309 999,212 309,786 10,979,898 24,490,820 5,818,616 $ 60,285,079 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: Less Allowance for Uncollectible Accounts Taxes Other Accounts Total General Fund $2,573,658 $171,725 $ 646,313 $ (2,528,927) $ 862,769 Water Fund 437,585 - 41,257 (43,227) 435,615 Sewer Fund 666,476 - - (133,602) 532,874 Sanitation Fund 309,134 - - (50,754) 258,380 Nonmajor Enterprise Fund 99,327 - - (16,159) 83,168 Internal Service Fund - - 713 - 713 $4,086,180 $171,725 $ 688,283 $ (2,772,669) $2,173,519 68 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 6 - Capital Assets: Capital asset activity for the year ended September 30, 2016 was as follows: Governmental Activities: Capital Assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital Assets, being depreciated: Buildings Improvements/infrastructure Machineryand equipment Intangibles Total capital assets being depreciated Less Accumulated Depreciation for Beginning Ending Balance Increases Decreases Balance $25,727,548 $ - $ (1,199,319) $24,528,229 1,239,197 8,228,303 (730,003) 8,737,497 26,966,745 8,228,303 (1,929,322) 33,265,726 22,712,412 561,650 - 23,274,062 20,224,366 1,025,071 - 21,249,437 10,163,123 3,247,090 (197,767) 13,212,446 986,151 - - 986,151 54,086,052 4,833,811 (197,767) 58,722,096 Buildings (7,981,263) (848,744) - (8,830,007) Improvements/infrastructure (10,281,426) (520,161) - (10,801,587) Machinery and equipment (7,163,993) (1,023,569) 197,767 (7,989,795) Intangibles (724,516) (68,455) - (792,971) Total accumulated depreciation (26,151,198) (2,460,929) 197,767 (28,414,360) Total capital assets being depreciated, net 27,934,854 2,372,882 - 30,307,736 Governmental activities capital assets, net $54,901,599 $10,601,185 $ (1,929,322) $63,573,462 Increases in accumulated depreciation for governmental activities includes accumulated depreciation on assets transferred from business -type activities, therefore total increases in accumulated depreciation is not the same as depreciation expense. This difference is $58,879. 69 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS Note 6 - Capital Assets (Continued): September 30, 2016 Beginning Ending Balance Increases Decreases Balance Business -type Activities: Capital Assets, not being depreciated: Land $ 1,022,590 $ 52,297 $ - $ 1,074,887 Construction in progress 1,482,397 5,653,795 (1,621,064) 5,515,128 Total capital assets, not being depreciated 2,504,987 5,706,092 (1,621,064) 6,590,015 Capital Assets, being depreciated: Buildings Improvements/infrastructure Machinery and equipment Intangibles Total capital assets being depreciated Less Accumulated Depreciation for: Buildings Improvements/infrastructure Machinery and equipment Intangibles Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net 35,962 - - 35,962 96,410,147 2,277,388 - 98,687,535 7,485,012 1,188,932 (947,963) 7,725,981 299,902 5,579 - 305,481 104,231,023 3,471,899 (947,963) 106,754,959 (35,962) - - (35,962) (32,269,736) (3,784,253) - (36,053,989) (4,516,750) (809,007) 947,644 (4,378,113) (112,898) (18,510) - (131,408) (36,935,346) (4,611,770) 947,644 (40,599,472) 67,295,677 (1,139,871) (319) 66,155,487 $69,800,664 $ 4,566,221 $(1,621,383) $72,745,502 Depreciation expense was charged to functions/programs as follows: Governmental Activities General government $ 496,689 Public safety 1,075,115 Physical environment/transportation 254,452 Economic environment 708 Culture and recreation 575,086 Total Depreciation Expense - governmental activities $ 2,402,050 Business -type Activities Water $ 1,136,034 Sewer 2,544,799 Sanitation 544,293 Stormwater 386,644 Total Depreciation Expense - business -type activities $ 4,611,770 70 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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 business -type activities. 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 $17,514,076. For the fiscal year, principal and interest paid on this series was $1,173,922 and total pledged revenue was $5,305,926. The original amount of revenue bonds issued in prior years is described below. Revenue bonds outstanding at year end are as follows: Business -Type Activities Water and Sewer Revenue Refunding Bonds, Series 2009 Interest Business - Type Activities Balance Rates and Interest Original September 30, Dates Maturity Amount 2016 3.0-4.6% 12/1/2010 2019 710,000 to 2020 (6/1 & 12/1) 12/1/2030 $16,640,000 $ 13,035,000 Annual debt service requirements to maturity for revenue bonds are as follows: Notes Payable The Public Improvement Refunding Revenue Note, Series 2012, are secured by public services taxes, communications service tax and half cent sales tax revenue. Total principal and interest remaining to be paid on this series is $885,736. For the fiscal year, principal and interest paid on this series was $598,369 and total pledged revenue was $6,391,968. 71 Business - Type Activities Year Ending September 30, Principal Interest 2017 $ 670,000 $ 504,123 2018 690,000 483,723 2019 710,000 460,948 2020 735,000 435,660 2021 760,000 409,498 2022-2026 4,265,000 1,583,090 2027-2031 5,205,000 602,034 Total $13,035,000 $ 4,479,076 Notes Payable The Public Improvement Refunding Revenue Note, Series 2012, are secured by public services taxes, communications service tax and half cent sales tax revenue. Total principal and interest remaining to be paid on this series is $885,736. For the fiscal year, principal and interest paid on this series was $598,369 and total pledged revenue was $6,391,968. 71 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 7 - Long -Term Debt (Continued): Notes Payable (Continued) The City issued Public Improvement Revenue Note, Series 2013 in the amount of $6,000,000 with interest of 3.05% to finance the purchase of the Arts and Recreation Center. This note is secured by public services taxes and communications service tax. This note was refunded during the year. For the fiscal year, principal and interest paid on this series was $5,862,937 and total pledged revenue was $4,543,674. The City issued Public Improvement Refunding Revenue Note, Series 2016 in the amount of $5,331,196 with interest of 2.03% to refund the Public Improvement Revenue Note, Series 2013. This note is secured by public services taxes and communications service tax. Total principal and interest remaining to be paid on this series is $6,106,220. For the fiscal year, interest paid on this series was $26,455 and total pledged revenue was $4,543,674. The City issued Infrastructure Sales Surtax Revenue Note, Series 2016 in the amount of $5,300,000 with interest of 2.12% to finance the costs of the acquisition and construction of a new municipal police station. This note is secured by the infrastructure sales surtax. Total principal and interest remaining to be paid on this series is $6,226,246. For the fiscal year, interest paid on this series was $27,466 and total pledged revenue was $2,964,966. Current Refund The City issued Public Improvement Refunding Revenue Note, Series 2016 to refund the Public Improvement Revenue Note, Series 2013. The refunding was undertaken to reduce total future debt service payments. The transaction resulted in an economic gain of $261,168 and a reduction of $301,625 in future debt service payments. 72 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 7 - Long -Term Debt (Continued): Notes Payable (Continued) Revenue notes outstanding at year end are as follows: Public Improvement Refunding 2.03% Revenue Note, Series 2016 (6/1 & 12/1) Infrastructure Sales Surtax 2.12% Revenue Note, Series 2016 (6/1 & 12/1) Interest Balance Rates and Governmental Activities Dates Public Improvement Refunding 1.09% Revenue Note, 12/1/2013 Series 2012 (6/1 & 12/1) Public Improvement Revenue 3.05% Note, Series 2013 (6/1 & 12/1) Public Improvement Refunding 2.03% Revenue Note, Series 2016 (6/1 & 12/1) Infrastructure Sales Surtax 2.12% Revenue Note, Series 2016 (6/1 & 12/1) $ 11,509,029 Annual debt service requirements to maturity for revenue notes are as follows Governmental Activities Year Ending September 30, Principal Balance 2017 Original September 30, Maturity Amount 2016 12/1/2013 706,994 196,171 to 721,635 181,530 12/1/2017 $ 2,612,000 $ 877,833 12/1/2014 3,918,133 597,693 to 3,369,488 184,562 12/1/2028 $ 6,000,000 - 12/1 /2016 to 12/1/2028 $ 5,331,196 5,331,196 12/1/2016 to 12/1/2030 $ 5,300,000 5,300,000 $ 11,509,029 Annual debt service requirements to maturity for revenue notes are as follows Governmental Activities Year Ending September 30, Principal Interest 2017 $ 1,077,408 $ 170,556 2018 978,791 212,075 2019 706,994 196,171 2020 721,635 181,530 2021 736,580 166,586 2022-2026 3,918,133 597,693 2027-2031 3,369,488 184,562 Total $11,509,029 $1,709,173 73 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 7 - Long -Term Debt (Continued): Changes in Lonq-Term Liabilities Long-term liability activity for the year ended September 30, 2016 was as follows: Governmental Activities Public improvement revenue notes Infrastructure revenue notes Other post employment benefits Compensated absences Governmental activity long-term liabilities Business -type Activities Bonds payable - Revenue bonds Premium Total bonds payable Other post employment benefits Compensated absences Business -type activity long-term liabilities Beginning General Fund Ending Due Within Balance Additions Deductions Balance One Year $ 1,257,619 $ 280,542 $ 101,392 $ 1,639,553 $ 7,157,670 $ 5,331,196 $(6,279,837) $ 6,209,029 $ 846,692 - 5,300,000 5,300,000 230,716 3,476,326 486,619 3,962,945 - 1,069,852 87,822 (106,985) 1,050,689 105,069 $11,703,848 $11,205,637 $(6,386,822) $16,522,663 $1,182,477 $13,685,000 $ $ (650,000) $13,035,000 $ 670,000 43,235 (2,836) 40,399 - 13,728,235 (652,836) 13,075,399 670,000 1,215,399 147,908 - 1,363,307 - 315,546 94,201 (31,554) 378,193 37,820 $15,259,180 $ 242,109 $ (684,390) $14,816,899 $ 707,820 Note 8 - Interfund Receivables, Payables and Transfers: Interfund transfers for the year ended September 30, 2016 consisted of the following: Transfers Out: General Fund Capital Projects Fund Transfers In Debt Service Nonmajor Govt Total General Fund $ $ 1,257,619 $ 280,542 $ 101,392 $ 1,639,553 Infrastructure Fund 21,848 724,071 - 745,919 Community Redevelopment 117,703 - 117,703 Debt Service 5,300,000 5,300,000 Water Fund 568,168 - - 568,168 Nonmajor Governmental 6,473 3,165,400 353,518 3,525,391 $ 574,641 $ 9,862,570 $ 1,358,131 $ 101,392 $11,896,734 The majority of the transfers above were to fund various capital projects and debt service payments. The transfer out of the Water Fund is for their share of administrative expenses and asset transfers to governmental activities. The transfers out of the Sewer and Stormwater Funds were to recognize the transfer of assets to other funds. 74 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 8 - Interfund Receivables, Payables and Transfers (Continued): The composition of interfund advances as of September 30, 2016 is as follows: Receivable Fund General Fund Payable Fund Internal Service Fund Community Redevelopment Internal Service Fund Other Governmental Internal Service Fund Water Fund Sewer Fund Sanitation Fund Stormwater Fund Sanitation Fund Internal Service Fund Internal Service Fund Internal Service Fund Internal Service Fund General Fund Amount $ 355,522 1,676 12,393 49,851 40,139 25,687 14,732 837,127 $ 1,337,127 The balance due to the Sanitation fund from the General Fund is a result of an interfund loan for the purchase of a fire truck to be repaid over ten years. 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. With recent adoption by the Florida Legislation of Chapter 2015-39, Laws of Florida, a separate Defined Contribution component of the Police and Fire Retirement Plans was established on October 1, 2015 and will provide special benefits in the form of a supplemental retirement, termination, death and disability benefits to be funded solely and entirely by premium tax monies. The Share Plan benefits are additional to the benefits currently provided by the defined benefit component currently provided. Funds will be allocated to eligible members on each valuation date based on an individual's total years of credited service to the sum of all individuals to whom allocations are being made. 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. 75 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): 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. A. General Employees - Contributions - The City's actuarially determined contribution rate per the October 1, 2014 actuarial valuations is $0 for general employees. The City is no longer obligated to make contributions for general employees. Administrative costs are deducted from the net position of the plan. Summary of Significant Accounting Policies Plan Description - The general employees defined benefit pension plan is for general employees hired prior to September 30, 1985. Plan Administration - The General Employees' Pension is administered by a Board of Trustees. Plan Membership - At September 30, 2016 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits Inactive Plan Members Entitled to but Not Yet Receiving Benefits Active Plan Members i Net Pension Liability of the City - The City's net pension liability was measured as of September 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The components of the net pension liability (asset) of the sponsor on September 30, 2016 were as follows: Total Pension Liability Plan Fiduciary Net Position Sponsor's Net Pension Liability (Asset) Plan Fiduciary Net Position as a Percentage of $ 349,050 (358,184) $ (9,134) Total Pension Liability (Asset) 102.62% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2014, updated September 30, 2016 using the following actuarial assumptions: Inflation 3.60% Salary Increases 0.00% Investment Rate of Return 7.00% 76 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): A. General Employees (Continued) - Mortality rates were based on the sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non -annuitants, projected to 2015 by Scale AA, as published by the Internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 430; future generational improvements in mortality have not been reflected. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2016 are summarized in the following table: Long Term Expected Asset Class Target Allocation Real Rate of Return Core Bonds 16% 0.58% Multi -sector 24% 1.08% U.S. Large Cap Equity 39% 6.08% U.S. Small Cap Equity 11% 6.83% Non -U.S. Equity 10% 6.83% Total 100% Discount rate - The discount rate used to measure the total pension liability was 7%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 77 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): A. General Employees (Continued) - Changes in Net Pension Liability Balance at September 30, 2015 Changes Due to: Service Cost Expected interest growth Unexpected investment income Demographic experience Benefit payments and refunds Administrative expenses Assumption changes Balance at September 30, 2016 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 344,982 $ 391,547 $ (46,565) 22,224 25,234 (3,010) - 4,595 (4,595) 12,118 - 12,118 (61,435) (61,435) - - (1,757) 1,757 31,161 - 31,161 $ 349,050 $ 358,184 $ (9,134) Sensitivity of the Net Pension Liability to changes in the Discount Rate Current Discount 1 % Decrease Rate 1% Increase 6.00% 7.00% 8.00% General Pension Plan Net Pension Liability $ 8,180 $ (9,134) $ (24,866) Deferred outflows and inflows of resources For the year ended September 30, 2016 the City will recognize a pension expense of $15,755. On September 30, 2016 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Deferred Inflows Resources of Resources Differences Between Expected and Actual Experience $ 37,938 $ - Changes of Assumptions 26,322 7,185 Net Difference Between Projected and actual Earnings on Pension Plan Investments 21,569 5,254 $ 85,829 $ 12,439 78 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): A. General Employees (Continued) - Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended September 30: 2017 2018 2019 2020 2021 Thereafter B. Police Officers' Retirement - The police officers' defined benefi benefit pension plans as defined covers all sworn police officers. 17,008 17,008 17,796 10,607 8,018 2,953 t pension plan is a local law, single employer, defined under Florida Statutes, Chapters 175 and 185, which 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 plan is administered by a board of Trustees. Contributions - The City's actuarially determined contribution rate per the October 1, 2014 actuarial valuation. Employees must contribute 3% of pensionable earnings. Administrative costs are deducted from the net position of the plan. Contributions from the State received under Florida State Statutes 175 and 185 amounted to $266,584 in 2016 and were recorded as revenue and expenditures in the general fund. Benefits Provided - The plan provides retirement, disability, and pre -retirement death benefits. Normal retirement is defined as 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 defined as attainment of age 50 and 10 years of service; however, the early retirement benefit is reduced by 3% for each year before the normal retirement date. Employees are 50% vested after five years of service, increasing at the rate of 10% per year, up to 100% vesting after 10 years of service. Disability benefits are the larger of the basic pension formula or 42% of average earnings for service connected disabilities. For non -service connected disabilities, benefits are the larger of the basic pension formula or 25% of average earnings, and require 10 years of service. Disability pension is offset as necessary to preclude the total of the participant's worker's compensation, disability pension, and other City -financed disability or salary continuation benefit (excluding social security benefits) from exceeding average earnings. Pre -retirement death benefits for vested members are the vested portion of the basic pension formula, reduced for payment prior to normal retirement age (payable for 10 years certain to the beneficiary of a vested participant). For non -vested participants the benefit is the return of accumulated employee contributions. 79 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Plan Membership - At September 30, 2016 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 15 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 11 Active Plan Members 60 Net Pension Liability of the City - The City's net pension liability was measured as of September 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The components of the net pension liability (asset) of the sponsor on September 30, 2016 were as follows: Total Pension Liability $ 14,313,579 Plan Fiduciary Net Position (14,357,868) Sponsor's Net Pension Liability (Asset) $ (44,289) Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) 100.31% does not include Share Plan balances or excess chapter 175/185 contributions Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2014, updated September 30, 2016 using the following actuarial assumptions: Inflation 3.60% Salary Increases 5.50% Investment Rate of Return 7.00% Mortality rates were based on the sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non -annuitants, projected to 2007 by Scale AA, as published by the Internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 430; future generational improvements in mortality have not been reflected. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. 80 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2016 are summarized in the following table: Long Term Expected Asset Class Target Allocation Real Rate of Return Core Bonds Multi -sector U.S. Large Cap Equity U.S. Small Cap Equity Non -U.S. Equity Total 16% 0.58% 24% 1.08% 39% 6.08% 11% 6.83% 10% 6.83% 100% Discount rate - The discount rate used to measure the total pension liability was 7%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in Net Pension Liability Balance at September 30, 2015 Changes Due to: Service Cost Expected interest growth Unexpected investment income Demographic experience Employer contributions Employee contributions Benefit payments and refunds Administrative expenses Assumption changes Balance at September 30, 2016 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 10,126, 748 $ 12, 874, 567 $ (2,747,819) 836,661 - 836,661 749,652 913,877 (164,225) - 201,555 (201, 555) (211,987) - (211,987) - 632,411 (632,411) - 108,806 (108,806) (342,697) (342,697) - - (30,651) 30,651 3,155,202 - 3,155,202 $ 14, 313, 579 $ 14, 357, 868 $ (44, 289) 81 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Sensitivity of the Net Pension Liability to changes in the Discount Rate Current Discount 1% Decrease Rate 1% Increase 6.00% 7.00% 8.00% Police Pension Net Pension Liability $ 1,982,028 $ (44,289) $ (1,711,729) Deferred outflows and inflows of resources For the year ended September 30, 2016 the City will recognize a pension expense of $1,120,786. On September 30, 2016 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended September 30 2017 Deferred 2018 526,505 Outflows of Deferred Inflows 2020 Resources of Resources Differences between expected and actual experience $ - $ 169,539 Changes of assumptions 2,780,475 145,426 Net difference between projected and actual earnings on pension plan investments 703,610 161,244 $ 3,484,085 $ 476,209 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended September 30 2017 $ 526,505 2018 526,505 2019 526,504 2020 291,968 2021 332,279 Thereafter 804,115 Deferred Retirement Option Program (DROP) - DROP is available to participants who have attained their normal retirement age and individuals may participate in the DROP for up to 60 months; DROP accounts are credited with interest at the rate of 6.50% per annum. The Police DROP balance as of September 30, 2016 is $0. 82 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): C. Firefighters' Retirement - The firefighters' defined benefit pension plan is a local law, single employer, defined benefit pension plans as defined under Florida Statutes, Chapters 175 and 185, which covers all sworn police officers. 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 plan is administered by a board of Trustees. Contributions - The City's actuarially determined contribution rate per the October 1, 2014 actuarial valuation. Employees must contribute 4% of pensionable earnings. Administrative costs are deducted from the net position of the plan. Contributions from the State received under Florida State Statutes 175 and 185 amounted to $215,475 in 2016 and were recorded as revenue and expenditures in the general fund. Benefits Provided - The plan provides retirement, disability, and pre -retirement death benefits. Normal retirement is defined as 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. Volunteer firefighters earn a minimum benefit of $5 for each year of service. Early retirement is defined as attainment of age 50 and 10 years of service; however, the early retirement benefit is reduced by 3% for each year before the normal retirement date. Employees are 50% vested after five years of service, increasing at the rate of 10% per year, up to 100% vesting after 10 years of service. Disability benefits are the larger of the basic pension formula or 42% of average earnings for service connected disabilities. For non -service connected disabilities, benefits are the larger of the basic pension formula or 25% of average earnings, and require 10 years of service. Disability pension is offset as necessary to preclude the total of the participant's worker's compensation, disability pension, and other City -financed disability or salary continuation benefit (excluding social security benefits) from exceeding average earnings. Pre -retirement death benefits for vested members are the vested portion of the basic pension formula, reduced for payment prior to normal retirement age (payable for 10 years certain to the beneficiary of a vested participant). For non -vested participants the benefit is the return of accumulated employee contributions. Plan Membership - At September 30, 2016 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 1 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 62 Active Plan Members 58 121 83 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): C. Firefighters' Retirement (Continued) - Net Pension Liability of the City - The City's net pension liability was measured as of September 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The components of the net pension liability (asset) of the sponsor on September 30, 2016 were as follows: Total Pension Liability $ 10,212,874 Plan Fiduciary Net Position (11,065,435) Sponsor's Net Pension Liability (Asset) $ (852,561) Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) 108.35% * does not include excess chapter 175/185 contributions Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2014, updated September 30, 2016 using the following actuarial assumptions: Inflation 3.60% Salary Increases 5.50% Investment Rate of Return 7.00% Mortality rates were based on the sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non -annuitants, projected to 2007 by Scale AA, as published by the Internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 430; future generational improvements in mortality have not been reflected. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. 84 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): C. Firefighters' Retirement (Continued) - Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2016 are summarized in the following table: Long Term Expected Asset Class Target Allocation Real Rate of Return Core bonds Multi -sector U.S. Large Cap Equity U.S. Small Cap Equity Non -U.S. Equity Total 16% 0.58% 24% 1.08% 39% 6.08% 11% 6.83% 10% 6.83% 100% Discount rate - The discount rate used to measure the total pension liability was 7%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in Net Pension Liability Balance at September 30, 2015 Changes Due to: Service Cost Expected interest growth Unexpected investment income Demographic experience Employer contributions Employee contributions Benefit payments and refunds Administrative expenses Assumption changes Balance at September 30, 2016 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 6,617,503 $ 9,466, 087 $ (2,848,584) 784,710 - 784,710 515,458 688,130 (172,672) - 170,006 (170,006) (208,728) - (208,728) - 491,818 (491,818) - 279,064 (279,064) (1,324) (1,324) - - (28,346) 28,346 2,505,255 - 2,505,255 $ 10,212,874 $ 11,065,435 $ (852,561) 85 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 9 - Retirement Plans (Continued): C. Firefighters' Retirement (Continued) - Sensitivity of the Net Pension Liability to changes in the Discount Rate Fire Pension Net Pension Liability Current Discount 1 % Decrease Rate 1% Increase 6.00% 7.00% 8.00% $ 782,360 $ (852,561) $ (2,183,263) Deferred outflows and inflows of resources For the year ended September 30, 2016 the City will recognize a pension expense of $733,903. On September 30, 2016 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments Deferred Outflows of Deferred Inflows Resources of Resources 2,239,868 511,309 $ 179,489 60,158 136,005 $ 2,751,177 $ 375,652 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended September 30: 2017 $ 372,583 2018 372,583 2019 372,584 2020 202,146 2021 236,148 Thereafter 819,481 Deferred Retirement Option Program (DROP) - DROP is available to participants who have attained their normal retirement age and individuals may participate in the DROP for up to 60 months; DROP accounts are credited with interest at the rate of 6.50% per annum. The Fire DROP balance as of September 30, 2016 is $0. 86 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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 2016 was $6,860,266; the City's total payroll for City employees was $14,830,128. 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 2016 was $645,125. 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 eleven 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. The most recent actuarial report for the City's Retiree Continuation Insurance Plan was prepared as of April 1, 2015. The annual required contribution and Net OPEB Obligation for the fiscal year ended September 30, 2016 is as follows: Annual Required Contribution $ 927,336 Interest on Net OPEB Obligation 187,669 Adjustment to Annual Required Contribution (405,750) Annual OPEB Cost 709,255 Employer Contributions (74,728) Increase in Net OPEB Obligation 634,527 Net OPEB Obligation (beginning of year) 4,691,725 Net OPEB Obligation (end of year) $5,326,252 87 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 10 - Other Post Employment Benefits (Continued): Three Year Trend Information - Fiscal Actuarial Year Annual Ending OPEB Cost 9/30/2014 $ 967,942 9/30/2015 740,704 9/30/2016 709,255 Percentage of Cost Contributed Funded Status and Funding Progress - OPEB 7.5% 9.0% 10.5% Net OPEB Obligation $ 4,015,158 4,691,725 5,326,252 The funded status of the plan as of April 1, 2015, the most recent actuarial valuation date, is as follows: 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. 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. 88 Actuarial Accrued UAAL as a Actuarial Liability Percentage Value of (AAL) - Entry Unfunded Funded Covered of Covered Assets Age AAL (UAAL) Ratio Payroll Payroll (a) (b) (b - a) (a / b) (c) ((b - a) / c) $ - $ 4,835,731 $ 4,835,731 0.0% $14,667,088 33.00% 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. 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. 88 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 10 - Other Post Employment Benefits (Continued): Summary of Actuarial Methods & Assumptions (Continued) Actuarial Cost Method - The projected unit credit cost method. Amortization Method - level dollar open over 15 years. Benefits Not Included - None. Discount Rate - 4.00%. Inflation rate - 3% 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 2016 7.50% 2020 6.39% 2024 5.28% 2017 7.22% 2021 6.11% 2025 5.00% 2018 6.94% 2022 5.83% and later 2019 6.67% 2023 5.56% Retiree Contribution Trend - Same as Health Care Trend. Mortality - RP -2000 Combined Mortality Table for males and females with mortality improvement projected to 2015 using Scale AA. Morbidity: Age Under 65 65-69 70-74 75-85 86 and older Rate Per Age 4.50% 3.00% 2.50% 2.00% 0.00% Election at Retirement - 40% of future retirees will elect medical and dental coverage at retirement. Participation - Active employees are assumed to continue at the current participation and coverage level into retirement. If an employee waived active coverage, they are assumed to elect the OAP Plan. Marital Status - 60% of active employees who elect retiree coverage are assumed to elect coverage for their spouse. Males are assumed to be three years older than females. Actual spouse data was used for current retirees. 89 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 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 $150,000 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 $3,800,000. 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 $145,519 represents claims processed through October 2015 which were applicable to the current fiscal year and any additional claims are deemed immaterial. Changes to the current claims liability are as follows: Claims Liabilities, beginning of year Incurred Claims Payments on Claims Claims Liabilities, end of year Note 12 - Commitments and Contingencies: 2016 $ 90,143 5,288,699 2015 $ 286,698 3,872,477 (5,233,323) (4,069,032) $ 145,519 $ 90,143 Litigation - The City is engaged in various liability claims incidental to the conduct of its general government operations at September 30, 2016. 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. 90 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 13 - Fund Balances: The City classifies the components of fund balance based on the classifications described below: Nonsoendable Nonspendable funds include fund balance amounts that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. Spendable Fund Balance Restricted - includes fund balance amounts that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors, or laws and regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed - includes fund balance amounts that can be used only for the specific purposes determined by formal action of the City Council, the City's highest level of decision making authority, with formal action occurring prior to the fiscal year end. Commitments may be changed or lifted only by the City Council taking the same formal action (Resolution) that imposed the constraint originally. Assigned - includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. The City Council is authorized to assign amounts for a specific purpose. 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. 91 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2016 Note 13 - Fund Balances (Continued): At September 30, 2016, the City's governmental fund balances were as follows: Infrastructure Community Other General Capital Special Redevelopment Debt Service Governmental Fund Projects Revenue Fund Special Revenue Fund Funds Fund Balances Nonspendable Inventorylprepaids Advances Cemetery Spendable Restricted for: Police Fire Building Services Culture and recreation Community redevelopment Infrastructure Debt service Assigned for: Capital projects Subsequent year expenditures Unassigned Total $ 548,155 $ $ 748,297 $ 894 $ $ 1,845 $ 1,299,191 355,522 1,676 12,393 369,591 - 1,156,795 1,156,795 258,857 313,240 572,097 - 289,873 289,873 387,423 387,423 945,261 945,261 - 340,954 - 340,954 1,083,829 - 1,083,829 - - 948,891 948,891 1,225,880 - 1,225,880 7,886,139 7,886,139 $ 9,048,673 $1,225,880 $ 1,832,126 $ 343,524 $ 948,891 $ 3,106,830 $16,505,924 92 REQUIRED SUPPLEMENTAL INFORMATION 93 94 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2016 Schedule of Funding Progress - Retiree Continuation Insurance Plan Schedule of Funding Progress *initial valuation date Schedule of Employer Contributions - Retiree Continuation Insurance Plan Percentage UAAL as a of ARC Actuarial Fiscal Year Ending Contribution (ARC) Contributed %of Actuarial Actuarial Value Accrued Liability Unfunded AAL Funded 9/30/2012 Covered Valuation of Assets (AAL) Entry Age (UAAL) Ratio Covered Payroll 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% 4/1/2013 - 5,563,664 5,563,664 0.0% 10,854,391 51.0% 4/1/2015 - 4,835,731 4,835,731 0.0% 14,667,088 33.0% *initial valuation date Schedule of Employer Contributions - Retiree Continuation Insurance Plan 95 Percentage Annual Required of ARC Net OPEB Fiscal Year Ending Contribution (ARC) Contributed Obligation 9/30/2011 649,000 7.0% 1,650,000 9/30/2012 691,000 7.0% 2,215,000 9/30/2013 1,112, 968 10.0% 3,120, 055 9/30/2014 1,112, 968 6.5% 4,015,158 9/30/2015 927,336 6.9% 4,691,725 9/30/2016 927,336 8.1% 5,326,252 95 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS GENERAL EMPLOYEES Last 10 Fiscal Years* Total Pension Liability Service Cost Interest Changes in Excess State Money Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, including refunds of employee contributions Net Change in Total Pension Liability Total Pension Liability -beginning Total Pension Liability -ending (a) Plan Fiduciary Net Position Contributions -employer Contributions -state Contributions -employee Net Investment Income Benefit Payments, including refunds of employee contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - beginning Plan Fiduciary Net Position - ending (b) Net Pension Liability - ending (a)- (b) Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered -employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll * only three years of data available 9/30/2016 9/30/2015 9/30/2014 22,224 29,060 28,229 12,118 40,676 - 31,161 (10,549) - (61,435) (63,484) (56,412) 4,068 (4,297) (28,183) 344,982 349,279 377,462 $ 349,050 $ 344,982 $ 349,279 29,829 2,613 40,560 (61,435) (63,484) (66,212) (1,757) (6,508) (3,136) $ (9,134) $ (46,565) $ (109,647) 96 102.62% 113.50% 131.39% N/A N/A N/A CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS POLICE Last 10 Fiscal Years* Total Pension Liability Service Cost Interest Changes in Excess State Money Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, including refunds of employee contributions Net Change in Total Pension Liability Total Pension Liability -beginning Total Pension Liability -ending (a) Plan Fiduciary Net Position Contributions -employer Contributions -state Contributions -employee Net Investment Income Benefit Payments, including refunds of employee contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - beginning Plan Fiduciary Net Position - ending (b) Net Pension Liability - ending (a) - (b) Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered -employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll * only three years of data available $ 836,661 $ 560,680 $ 524,531 749,652 860,884 723,246 (211,987) (162,697) - 3,155, 202 - 632,411 281,722 411,953 - 240,486 217,653 108,806 99,188 95,733 1,115,432 (14,779) 1,043,670 (342,697) (298,559) (334,599) (30,651) (54,494) (31,851) $ (44,289) $ (2,747,819) $ (3,454,563) 100.31% 127.13% 137.69% $ 3,366,613 $ 3,108, 552 $ 2,424,191 97 -1.32% -88.40% -142.50% CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS FIRE Last 10 Fiscal Years* Total Pension Liability Service Cost Interest Changes in Excess State Money Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, including refunds of employee contributions Net Change in Total Pension Liability Total Pension Liability -beginning Total Pension Liability -ending (a) Plan Fiduciary Net Position Contributions -employer Contributions -state Contributions -employee Net Investment Income Benefit Payments, including refunds of employee contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - beginning Plan Fiduciary Net Position - ending (b) Net Pension Liability - ending (a) - (b) Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered -employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll * only three years of data available 9/30/2016 9/30/2015 9/30/2014 $ 784,710 $ 524,325 $ 596,543 515,458 553,753 530,089 (208,729) (67,286) 86,520 2,505,255 - - (1,324) (945) (81,466) 3,595,370 1,009,847 1,045,166 6,617,503 5,607,656 4,562,490 $ 10,212,873 $ 6,617,503 $ 5,607,656 491,818 646,065 438,902 - 181,292 175,931 279,064 141,632 86,520 858,136 (32,699) 704,467 (1,324) (945) (756) (28,346) (40,885) (24,109) 1,599,348 894,460 1,380,955 9,466,087 8,571,627 7,190,672 $ 11,065,435 $ 9,466,087 $ 8,571,627 $ (852,562) $ (2,848,584) $ (2,963,971) 108.35% 143.05% 152.86% $ 2,798,049 $ 2,798,049 $ 2,798,049 98 -30.47% -101.81% -105.93% CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS GENERAL EMPLOYEES Last 10 Fiscal Years* 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution Contributions in Relation to the Actuarially Determined Contribution Contribution Deficiency (Excess) Covered Employee Payroll Contributions as a Percentage of Covered employee Payroll Notes to Schedule N/A N/A N/A Valuation Date 10/1/2014 10/1/2014 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, open Remaining Amortization Period 30 years Asset Valuation Method Market Value Inflation 2.92% Salary Increases N/A Interest Rate 7% per year, compounded annually, net of investment expenses Schedule of Investment Returns Annual money -weighted rate of return, net of investment expenses * only three years of data available 9/30/2016 9/30/2015 9/30/2014 4.08% 99 -0.05% 8.55% CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS POLICE Last 10 Fiscal Years* Valuation Date 10/1/2014 10/1/2014 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution $ 640,139 $ 583,559 $ 629,606 Contributions in Relation to the 5.50% per annum Interest Rate 7% per annum (2.92% per annum is attributable to long-term inflation); this rate was used Actuarially Determined Contribution 632,411 522,208 629,606 Contribution Deficiency (Excess) $ 7,728 $ 61,351 $ - Covered Employee Payroll 3,366,613 3,108,552 2,424,191 Contributions as a Percentage of 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non - Covered Employee Payroll 18.78% 16.80% 25.97% Valuation Date 10/1/2014 10/1/2014 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, open Remaining Amortization Period 30 Years Asset Valuation Method Market Value Salary Increases 5.50% per annum Interest Rate 7% per annum (2.92% per annum is attributable to long-term inflation); this rate was used to discount all future benefit payments Retirement 20% of eligible participants are assumed to retire at each of ages 52 through 54 and 100% of eligible participants are assumed to retire at normal retirement age Other Decrements Assumed employment termination is based on age and ranges from 5.00% at age 20 to 0.00% at age 50 Assumed disability is based on age and ranges from 0.03% at age 20 to 0.18% at age 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non - annuitants, projected to 2007 by Scale AA, as published by the Internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 430; future generational improvements in mortality have not been reflected Non -investment Expenses Liabilities have been loaded by 1.50% to account for non -investment expenses Future Contributions Contributions from the employer and employees are assumed to be made as legally required. Schedule of Investment Returns 9/30/2016 9/30/2015 9130/2014 Annual money -weighted rate of return, net of investment expenses 4.08% -0.05% 8.55% * only three years of data available 100 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS FIRE Last 10 Fiscal Years* Notes to Schedule Valuation Date 10/1/2014 10/1/2014 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported Methods and assumptions used to determine contribution rates: Actuarial Cost Method 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution $ 647,476 $ 603,000 $ 614,833 Contributions in Relation to the 5.50% per annum Interest Rate 7% per annum (2.92% per annum is attributable to long-term inflation); this rate was Actuarially Determined Contribution 491,818 827,357 614,833 Contribution Deficiency (Excess) $ 155,658 $ (224,357) $ - Covered Employee Payroll 2,798,049 2,798,049 2,767,580 Contributions as a Percentage of age 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non - Covered Employee Payroll 17.58% 29.57% 22.22% Notes to Schedule Valuation Date 10/1/2014 10/1/2014 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, Open Remaining Amortization Period 30 Years Asset Valuation Method Market Value Salary Increases 5.50% per annum Interest Rate 7% per annum (2.92% per annum is attributable to long-term inflation); this rate was used to discount all future benefit payments Retirement 20% of eligible participants are assumed to retire at each of ages 52 through 54 and 100% of eligible participants are assumed to retire at normal retirement age Other Decrements Assumed employment termination is based on age and ranges from 4.30% at age 20 to 0.00% at age 50 Assumed disability is based on age and ranges from 0.03% at age 20 to 0.18% at age 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP -2000 Mortality Table for annuitants and non - annuitants, projected to 2007 by Scale AA, as published by the Internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 430; future generational improvements in mortality have not been reflected Non -investment Expenses Liabilities have been loaded by 1.75% to account for non -investment expenses Future Contributions Contributions from the employer and employees are assumed to be made as legally required. Schedule of Investment Returns 9/30/2016 9/30/2015 9/30/2014 Annual money -weighted rate of return, net of investment expenses 4.08% -0.05% 8.55% * only three years of data available 101 102 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 103 104 Major Governmental Funds CAPITAL PROJECTS FUNDS Capital projects funds are used to account for financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital Protects Fund — to account for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds. DEBT SERVICE FUNDS Debt service funds are used to account for financial resources that are restricted, committed, or assigned to expenditures for principal and interest. Debt Service Fund — to account for the accumulation of resources and payment of bond principal and interest from governmental resources. 105 CITY OF CLERMONT, FLORIDA CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2016 Revenues: Investment earnings Miscellaneous Total revenues Expenditures: Current: Public safety: Police Fire Control Economic environment Capital Outlay: Public safety: Police Fire Control Economic environment Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources: Transfers in Total other financing sources Net Change in Fund Balance Fund Balances - beginning Fund Balances - ending Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ - $ 11,444 $ 11,444 10,675 10,676 1 10,675 22,120 11,445 73,135 326,454 125,978 200,476 - 13,354 7,703 5,651 - 739,160 10,469 728,691 7,713,235 8,226,329 7,851,743 374,586 300,000 655,000 517,498 137,502 - 462,900 145,419 317,481 8,086,370 10,423,197 8,658,810 1,764,387 (8,086,370) (10,412,522) (8,636,690) 1,775,832 8,086,370 10,929,762 9,862,570 (1,067,192) 8,086,370 10,929,762 9,862,570 (1,067,192) - 517,240 1,225,880 708,640 708,640 $ - $ 517,240 $ 1,225,880 $ 106 CITY OF CLERMONT, FLORIDA DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Revenues: Investment earnings Total revenues Expenditures: Debt Service: Principal Interest and fiscal charges Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources: Transfers in Transfers out Revenue notes issued Total other financing sources Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2016 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 2,575 $ 2,575 $ 3,115 $ 540 2,575 2,575 3,115 540 917,744 6,279,837 6,279,837 - 231,919 414,366 336,363 78,003 1,149,663 6,694,203 6,616,200 78,003 (1,147,088) (6,691,628) (6,613,085) 78,543 1,102,931 1,314,608 1,358,131 43,523 (7,786,370) (5,249,000) (5,300,000) (51,000) 7,786,370 10,580,196 10,631,196 51,000 1,102,931 6,645,804 6,689,327 43,523 (44,157) (45,824) 76,242 122,066 872,649 872,649 872,649 - $ 828,492 $ 826,825 $ 948,891 $ 122,066 107 Or 108 Nonmajor Governmental Funds SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenue sources that are restricted, committed, or assigned to expenditures for particular purposes. Recreation Impact Fees Fund — to account for recreation impact fees collected from new developments constructed in the City. Police Impact Fees Fund — to account for police impact fees collected from new developments constructed in the City. Fire Impact Fees Fund — to account for fire impact fees collected from new developments constructed in the City. Building Services Fund — to account for the operations of the City's building permits and inspection services. Fire Inspection Fund — to account for the operations of the City's fire prevention and inspection services. PERMANENT FUND The permanent fund is used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the government's programs. Cemetery Perpetual Care Fund — 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. 109 CITY OF CLERMONT, FLORIDA Liabilities and Fund Balances: Liabilities: Accounts payable $ - $ 16,100 $ - $ 16,620 $ 85 Total liabilities - 16,100 - 16,620 85 Fund balances: Nonspendable - - - 9,773 4,465 Restricted 945,261 313,240 289,958 375,235 12,103 Total fund balances 945,261 313,240 289,958 385,008 16,568 Total liabilities and fund balances $ 945,261 $ 329,340 $ 289,958 $ 401,628 $ 16,653 lim COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS September 30, 2016 Special Revenue Recreation Police Impact Fire Impact Building Fire Impact Fees Fees Fees Services Inspection Assets: Cash and cash equivalents $ 945,261 $ 329,262 $ 289,958 $ 391,855 $ 12,188 Other receivables - - - - - Due from other governments - 78 - - - Due from other funds - - - 8,661 3,732 Prepaid costs - - - 1,112 733 Total assets $ 945,261 $ 329,340 $ 289,958 $ 401,628 $ 16,653 Liabilities and Fund Balances: Liabilities: Accounts payable $ - $ 16,100 $ - $ 16,620 $ 85 Total liabilities - 16,100 - 16,620 85 Fund balances: Nonspendable - - - 9,773 4,465 Restricted 945,261 313,240 289,958 375,235 12,103 Total fund balances 945,261 313,240 289,958 385,008 16,568 Total liabilities and fund balances $ 945,261 $ 329,340 $ 289,958 $ 401,628 $ 16,653 lim Permanent Fund - Cemetery Total Perpetual Care $ 1,968,524 $ 1,157,835 78 - 12,393 - 1,845 - Total Nonmajor Governmental Funds $ 3,126,359 78 12,393 1,845 $ 1,982,840 $ 1,157,835 $ 3,140,675 $ 32,805 $ 1,040 $ 33,845 32,805 1,040 33,845 14,238 1,156,795 1,171,033 1,935,797 - 1,935,797 1,950,035 1,156,795 3,106,830 $ 1,982,840 $ 1,157,835 $ 3,140,675 fiffl CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS Year Ended September 30, 2016 Other Financing Uses: Transfers in - - Special Revenue 101,392 Transfers out Recreation Police Impact Fire Impact Building Total other financing uses (233,948) Impact Fees Fees Fees Services Fire Inspection Revenues: (342,465) 296,043 16,568 Fund Balances - beginning 233,145 2,897,850 Licenses and permits $ - $ - $ - $ 1,078,800 $ - Charges for services - - - 39,617 95,971 Impact fees/special assessments 1,092,976 266,100 343,111 - - Investment earnings 3,371 11,326 3,071 1,170 - Miscellaneous - - - 290 - Total revenues 1,096,347 277,426 346,182 1,119,877 95,971 Expenditures: Current: Public safety - 175,943 89,770 823,834 180,795 Culture and recreation 150,283 - - - - Debt Service: Principal - - - - - Interest and fiscal charges - - - - - Total expenditures 150,283 175,943 89,770 823,834 180,795 Excess (Deficiency) of Revenues Over Expenditures 946,064 101,483 256,412 296,043 (84,824) Other Financing Uses: Transfers in - - - - 101,392 Transfers out (233,948) (2,686,093) (598,877) - - Total other financing uses (233,948) (2,686,093) (598,877) - 101,392 Net Change in Fund Balances 712,116 (2,584,610) (342,465) 296,043 16,568 Fund Balances - beginning 233,145 2,897,850 632,423 88,965 - Fund Balances - ending $ 945,261 $ 313,240 $ 289,958 $ 385,008 $ 16,568 `sm 1,270,342 Permanent Fund - Total Nonmajor 150,283 Cemetery Governmental Total Perpetual Care Funds $ 1,078,800 $ - $ 1,078,800 135,588 - 135,588 1,702,187 - 1,702,187 18,938 6,473 25,411 290 72,935 73,225 2,935,803 79,408 3,015,211 1,270,342 - 1,270,342 150,283 - 150,283 1,420,625 1,420,625 - 1,515,178 79,408 1,594,586 101,392 - 101,392 (3,518,918) (6,473) (3,525,391) (3,417,526) (6,473) (3,423,999) (1,902,348) 72,935 (1,829,413) 3,852,383 1,083,860 4,936,243 $ 1,950,035 $ 1,156,795 $ 3,106,830 113 CITY OF CLERMONT, FLORIDA RECREATION IMPACT FEE SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2016 Expenditures: Current: Culture and recreation 214,540 227,540 150,283 77,257 Total expenditures 214,540 227,540 150,283 77,257 Excess (Deficiency) of Revenues Variance with Over Expenditures 332,130 Final Budget - 946,064 626,934 Positive Other Financing Uses Budgeted Amounts Actual Amounts (Negative) Original Final (243,561) (285,828) Revenues: 51,880 Total other financing uses (243,561) Impact fees/special assessments $ 541,200 $ 541,200 $ 1,092,976 $ 551,776 Investment earnings 5,470 5,470 3,371 (2,099) Total revenues 546,670 546,670 1,096,347 549,677 Expenditures: Current: Culture and recreation 214,540 227,540 150,283 77,257 Total expenditures 214,540 227,540 150,283 77,257 Excess (Deficiency) of Revenues Over Expenditures 332,130 319,130 946,064 626,934 Other Financing Uses Transfers out (243,561) (285,828) (233,948) 51,880 Total other financing uses (243,561) (285,828) (233,948) 51,880 Net Change in Fund Balances 88,569 33,302 712,116 678,814 Fund Balances - beginning 233,145 233,145 233,145 - Fund Balances - ending $ 321,714 $ 266,447 $ 945,261 $ 678,814 ISEH CITY OF CLERMONT, FLORIDA POLICE IMPACT FEE SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2016 Revenues: Impact fees/special assessments Investment earnings Total revenues Expenditures: Current: Public Safety: Law enforcement Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses) Transfers out Total other financing sources (uses) Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 222,000 $ 245,000 $ 266,100 $ 21,100 15,785 15,785 11,326 (4,459) 237,785 260,785 277,426 16,641 202,600 202,600 175,943 26,657 202,600 202,600 175,943 26,657 35,185 58,185 101,483 (10,016) (38,749) (2,954,490) (2,686,093) 268,397 (38,749) (2,954,490) (2,686,093) 268,397 (3,564) (2,896,305) (2,584,610) 311,695 2,897,850 2,897,850 2,897,850 - $ 2,894,286 $ 1,545 $ 313,240 $ 311,695 115 CITY OF CLERMONT, FLORIDA FIRE IMPACT FEE SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Revenues: Impact fees/special assessments Investment earnings Total revenues Expenditures: Current: Public safety: Fire control Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses: Transfers out Total other financing sources Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2016 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 244,800 $ 244,800 $ 343,111 $ 98,311 2,165 2,165 3,071 906 246,965 246,965 346,182 99,217 131,792 165,691 89,770 75,921 131,792 165,691 89,770 75,921 115,173 81,274 256,412 175,138 (230,953) (599,307) (598,877) (230,953) (599,307) (598,877) 430 430 (115,780) (518,033) (342,465) 175,568 632,423 632,423 632,423 - $ 516,643 $ 114,390 $ 289,958 $ 175,568 116 CITY OF CLERMONT, FLORIDA BUILDING SERVICES SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Revenues: Licenses and permits Charges for services Investment earnings Miscellaneous Total revenues Expenditures: Current: Public safety Total expenditures Excess (Deficiency) of Revenues Over Expenditures Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2016 925,969 841,940 823,834 18,106 925,969 841,940 823,834 18,106 (142,372) (46,000) 296,043 342,043 (142,372) (46,000) 296,043 342,043 88,965 88,965 88,965 $ (53,407) $ 42,965 $ 385,008 Ifin $ 342,043 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 675,000 $ 750,000 $ 1,078,800 $ 328,800 107,557 44,900 39,617 (5,283) 1,040 1,040 1,170 130 - - 290 290 783,597 795,940 1,119,877 323,937 925,969 841,940 823,834 18,106 925,969 841,940 823,834 18,106 (142,372) (46,000) 296,043 342,043 (142,372) (46,000) 296,043 342,043 88,965 88,965 88,965 $ (53,407) $ 42,965 $ 385,008 Ifin $ 342,043 CITY OF CLERMONT, FLORIDA FIRE INSPECTION SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2016 118 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Charges for services $ - $ 62,657 $ 95,971 $ 33,314 Total revenues - 62,657 95,971 33,314 Expenditures: Current: Public safety - 194,029 180,795 13,234 Total expenditures - 194,029 180,795 13,234 Excess (Deficiency) of Revenues Over Expenditures - (131,372) (84,824) 46,548 Other Financing Sources: Transfers in - 131,372 101,392 (29,980) Total other financing sources - 131,372 101,392 (29,980) Net Change in Fund Balances - - 16,568 16,568 Fund Balances - beginning - - - - Fund Balances - ending $ - $ - $ 16,568 $ 16,568 118 Fiduciary Funds Agency funds are used to account for short-term custodial collections on resources on behalf of another individual, entity, or government. PENSION TRUST FUNDS General Employees' Pension Trust Fund — 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 — 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 — 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. IM CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30, 2016 General Employees 120 Police Officers Firefighters Total Defined Defined Pension Pension Employee Benefit Contribution Trust Trust Pension Funds Assets: Cash and cash equivalents $ 2,865 $ - $ 124,256 $ 95,820 $ 222,941 Receivables: Due from state - - - - - Total receivables - - - - - Investments: U.S. Government & other debt securities 141,124 - 6,119,628 4,719,146 10,979,898 Equities 214,195 7,825,895 9,288,168 7,162,562 24,490,820 Total Investments 355,319 7,825,895 15,407,796 11,881,708 35,470,718 Total assets 358,184 7,825,895 15,532,052 11,977,528 35,693,659 Liabilities: Refunds payable and other - - 125,434 320,893 446,327 Total liabilities - - 125,434 320,893 446,327 Net Position Restricted for Pensions $ 358,184 $ 7,825,895 $ 15,406,618 $ 11,656,635 $ 35,247,332 120 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2016 General Employees Deductions: Benefits/distributions 61,435 173,612 Police 1,324 579,068 Administrative expenses 1,757 31,981 Officers Firefighters Total Total deductions Defined Defined Pension Pension Employee Change in Net Position Benefit Contribution Trust Trust Funds Additions: Contributions: 391,547 6,599,382 13,861,636 9,913,377 30,765,942 Employer $ - $ 645,125 $ 401,082 $ 420,352 $ 1,466,559 Plan members - - 108,801 278,964 387,765 State - - 266,584 215,475 482,059 Total contributions - 645,125 776,467 914,791 2,336,383 Investment earnings: Net increase (decrease) in fair value of investments 29,829 786,981 1,142,422 858,137 2,817,369 Total net investment earnings 29,829 786,981 1,142,422 858,137 2,817,369 Total additions 29,829 1,432,106 1,918,889 1,772,928 5,153,752 Deductions: Benefits/distributions 61,435 173,612 342,697 1,324 579,068 Administrative expenses 1,757 31,981 31,210 28,346 93,294 Total deductions 63,192 205,593 373,907 29,670 672,362 Change in Net Position (33,363) 1,226,513 1,544,982 1,743,258 4,481,390 Net Position Restricted for Pensions Beginning of Year 391,547 6,599,382 13,861,636 9,913,377 30,765,942 End of Year $ 358,184 $ 7,825,895 $ 15,406,618 $ 11,656,635 $ 35,247,332 `SAI 122 STATISTICAL SECTION 123 124 City of Clermont, Florida 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 financial health. Contents Page Financial Trends 126 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 136 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 141 These schedules present information to help the reader assess the affordability of the government's current level of outstanding debt and the government's ability to issue additional debt in the future. Note: 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. Note: The City of Clermont has no general obligation bonds outstanding. Demographic and Economic Information 147 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 152 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 are derived from the comprehensive annual reports for the relevant year. 125 City of Clermont, Florida Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Business -type activities Net investment in capital assets 24,837 Fiscal Year 54,834 55,540 Restricted 2007 2008 2009 2010 Governmental activities 10,841 18,103 17,801 11,407 Net investment in capital assets $ 15,825 $ 27,462 $ 33,938 $ 33,817 Restricted 7,830 8,959 6,526 6,693 Unrestricted 14,459 11,946 13,608 13,988 Total governmental activities net position $ 38,114 $ 48,367 $ 54,072 $ 54,498 Business -type activities Net investment in capital assets 24,837 46,569 54,834 55,540 Restricted 36,931 13,899 10,437 17,293 Unrestricted 10,841 18,103 17,801 11,407 Total business -type activities net position $ 72,609 $ 78,571 $ 83,072 $ 84,240 Primary government Net investment in capital assets 40,662 74,031 88,772 89,357 Restricted 44,761 22,858 16,963 23,986 Unrestricted 25,300 30,049 31,409 25,395 Total primary government net position $ 110,723 $ 126,938 $ 137,144 $ 138,738 126 Fiscal Year 2011 2012 2013 2014 2015 2016 $ 34,894 $ 36,612 $ 39,950 $ 44,116 $ 47,718 $ 52,064 7,381 8,876 9,490 9,918 9,400 6,402 12,465 9,701 7,723 5,719 11,649 11,182 $ 54,740 $ 55,189 $ 57,163 $ 59,753 $ 68,767 $ 69,648 56,430 57,241 57,863 56,680 56,586 60,150 9,241 9,477 9,536 10,217 12,135 13,959 19,376 20,436 24,191 27,054 26,943 26,050 $ 85,047 $ 87,154 $ 91,590 $ 93,951 $ 95,664 $ 100,159 91,324 93,853 97,813 100,796 104,304 112,214 16,622 18,353 19,026 20,135 21,535 20,361 31,841 30,137 31,914 32,773 38,592 37,232 $ 139,787 $ 142,343 $ 148,753 $ 153,704 $ 164,431 $ 169,807 `PM City of Clermont, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Expenses Governmental Activities: General government Public safety Physical environment Transportation/public works Economic environment Human services Culture and recreation Interest on long-term debt Total governmental activities expenses Business -type Activities: Water Sewer Sanitation Stormwater Total business -type activities expenses Total primary government expenses Program Revenues Governmental Activities: Charges for services: General government Public safety Transportation/public works Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type Activities: Charges for services: Water Sewer Sanitation Stormwater Operating grants and contributions Capital grants and contributions Total business -type activities program revenues Total primary government program revenues $ 1,116 Fiscal Year $ 1,854 2007 2008 2009 2010 $ 3,297 $ 4,204 $ 4,747 $ 4,287 8,783 10,330 10,775 12,459 470 514 364 319 1,255 1,544 1,164 1,768 52 48 101 50 130 107 - - 2,441 2,061 2,082 2,055 226 459 326 175 16,654 19,267 19,559 21,113 2,987 3,737 3,990 4,316 3,896 4,521 4,489 5,927 1,816 2,123 2,086 2,169 427 549 534 848 9,126 10,930 11,099 13,260 $ 25,780 $ 30,197 $ 30,658 $ 34,373 $ 1,116 $ 1,582 $ 1,854 $ 1,857 1,105 975 1,203 665 882 761 99 872 923 1,047 921 1,162 2,518 7,330 3,307 134 6,544 11,695 7,384 4,690 5,502 5,654 4,909 4,817 4,242 4,422 4,655 4,852 2,402 2,515 2,560 2,613 729 766 801 829 38 700 - - 3,676 1,480 2,137 1,544 16,589 15,537 15,062 14,655 $ 23,133 $ 27,232 $ 22,446 $ 19,345 128 Fiscal Year 2011 2012 2013 2014 2015 2016 $ 3,643 $ 4,211 $ 3,258 $ 3,407 $ 3,848 $ 4,157 12,531 12,168 12,685 14,117 14,326 17,381 279 248 303 350 453 788 1,661 1,719 1,725 2,202 2,094 2,185 102 116 200 363 567 209 1,822 1,045 1,928 3,096 4,018 5,460 4,461 4,052 4,154 4,589 4,823 4,719 6,022 5,752 6,106 6,437 6,571 6,866 2,364 2,567 2,465 2,472 3,133 2,925 955 939 897 1,016 1,080 1,142 13,802 13,310 13,622 14,514 15,607 15,652 $ 33,996 $ 32,954 $ 33,808 $ 38,285 $ 41,106 $ 46,187 $ 1,695 $ 1,649 $ 2,117 $ 2,429 $ 2,356 $ 2,914 355 450 1,040 1,366 1,684 1,574 539 604 1,262 956 1,317 1,552 1,237 1,191 896 939 1,598 1,822 129 27 112 1,718 498 163 3,955 3,921 5,427 7,408 7,453 8,025 5,377 5,099 5,215 5,362 5,726 6,162 5,065 5,154 5,357 5,585 5,809 6,183 2,688 2,721 2,775 2,869 2,917 2,984 855 855 862 881 905 955 - - - - 276 24 999 1,752 3,430 2,417 3,219 4,026 129 City of Clermont, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Net Governmental activities Business -type activities Total primary government net expense General Revenues and Other Changes in Net Position Governmental Activities: Taxes: Property taxes Business taxes Franchise taxes Utility taxes Intergovernmental -unrestricted Unrestricted investment earnings Gain (loss) on sale of capital assets Miscellaneous Transfers in/out Special item Total governmental activities Business -type Activities: Unrestricted investment earnings Gain (loss) on sale of capital assets Miscellaneous Transfers in/out Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government Fiscal Year 2007 2008 2009 2010 $ (10,110) $ (7,572) $ (12,175) $ (16,422) 7,463 4,605 3,964 1,395 $ (2,647) $ (2,967) $ (8,211) $ (15,027) $ 7,452 $ 7,749 $ 7,601 $ 6,844 1,808 1,911 2,151 2,373 1,881 1,992 2,152 2,558 4,952 4,776 4,458 4,503 1,165 703 848 379 51 198 202 146 509 496 469 443 17,818 17,825 17,881 17,246 2,612 1,853 1,005 360 (509) (496) (469) (443) 2,103 1,357 536 (83) $ 19,921 $ 19,182 $ 18,417 $ 17,163 $ 7,708 $ 10,253 $ 5,706 $ 824 9,566 5,961 4,500 1,312 $ 17,274 $ 16,214 $ 10,206 $ 2,136 *Business taxes previously reported as General Government Charges for Services 130 Fiscal Year 2011 2012 2013 2014 2015 2016 $ (16,240) $ (15,721) $ (14,759) $ (16,363) $ (18,045) $ (22,510) 1,182 2,271 4,018 2,600 3,245 4,683 $ (15,058) $ (13,450) $ (10,741) $ (13,763) $ (14,800) $ (17,827) $ 5,966 $ 5,535 $ 5,350 $ 6,533 $ 7,193 $ 8,998 113 111 126 130 140 2,285 2,189 2,123 2,379 2,502 2,712 2,568 2,430 2,490 2,887 2,953 3,406 4,664 5,063 5,802 6,110 6,645 6,923 148 245 114 104 135 134 122 330 143 265 374 420 387 520 453 479 439 557 568 16,481 16,171 16,734 18,952 20,535 23,390 145 289 149 198 272 260 - - 18 2 (1,248) 120 (520) (453) (479) (439) (557) (568) (375) (164) (312) (239) (1,533) (188) $ 16,106 $ 16,007 $ 16,422 $ 18,713 $ 19,002 $ 23,202 $ 241 $ 450 $ 1,975 $ 2,589 $ 2,490 $ 880 807 2,107 3,706 2,361 1,712 4,495 $ 1,048 $ 2,557 $ 5,681 $ 4,950 $ 4,202 $ 5,375 131 City of Clermont, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) General fund Reserved Unreserved Nonspendable Restricted Assigned Unassigned Total general fund All other governmental funds Reserved Unreserved, reported in: Special revenue funds Capital projects fund Nonspendable Restricted Total primary government net position Unassigned Total all other governmental funds Note: Information for fiscal years 2007 to 2010 have not been restated for Governmental Accounting Standards Board (GASB) Statement No. 54 classifications. 132 Fiscal Year 2007 2008 2009 2010 $ 307 $ 209 $ 214 $ 246 9,128 9,572 10,860 11,358 $ 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 Note: Information for fiscal years 2007 to 2010 have not been restated for Governmental Accounting Standards Board (GASB) Statement No. 54 classifications. 132 Fiscal Year 2011 2012 2013 2014 2015 2016 133 335 195 189 53 1,300 548 175 224 257 312 247 259 912 1,039 765 1,202 304 - 10,048 9,744 8,878 7,669 7,014 7,886 $ 11,470 $ 11,202 $ 10,089 $ 9,236 $ 8,865 $ 8,693 848 890 939 1,064 1,466 1,922 6,359 7,763 8,295 8,604 7,659 4,310 2,854 668 - - - 1,226 (1) - - - - - $ 10,060 $ 9,321 $ 9,234 $ 9,668 $ 9,125 $ 7,458 133 City of Clermont, Florida Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Revenues Taxes Franchise fees Licenses and permits Intergovernmental Charges for services Fines and forfeitures Impact fees/special assessments Investment income Miscellaneous Total revenues Expenditures Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Capital outlay Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Refunding and new bonds issued Sale of capital assets Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures Fiscal Year 2007 2008 2009 2010 $ 11,141 $ 11,652 $ 11,903 $ 11,775 491 835 674 678 8,340 11,977 8,666 5,733 462 643 1,103 1,036 175 321 178 189 1,717 1,209 903 1,131 1,101 687 848 379 391 1,683 444 522 23,818 29,007 24,719 21,443 3,079 3,640 3,654 4,081 9,141 10,999 10,275 11,212 461 497 490 309 1,189 2,976 1,129 1,620 48 48 102 50 129 105 - - 1,556 10,024 1,893 1,878 94 1,909 1,738 643 449 8,176 6,259 493 440 465 375 181 16,586 38,839 25,915 20,467 7,232 (9,832) (1,196) 976 1,265 6,468 6,684 2,088 (756) (5,971) (6,232) (1,645) - 8,250 - - 509 8,747 452 443 $ 7,741 $ (1,085) $ (744) $ 1,419 6.1% 34.2% 28.9% 3.6% `Note: Franchise Fees previously reported as Taxes. `*Note: Increase in % due to refunding of 2002 bonds. Without the refunding the % would be 3.4% "'Note: Increase in % due to refunding of 2013 bonds. Without the refunding the % would be 4.9% 134 Fiscal Year 2011 2012 2013 2014 2015 2016 $ 10,819 $ 8,079 $ 7,951 $ 9,546 $ 10,275 $ 12,544 275 2,188 2,123 2,379 2,502 2,712 528 455 884 941 788 1,298 6,059 6,310 6,729 8,796 8,772 8,790 1,013 1,011 1,085 1,212 1,312 1,652 186 215 172 589 757 703 582 679 1,909 1,401 1,858 1,702 148 244 108 99 131 131 612 474 622 915 1,047 1,007 19,947 19,655 21,583 25,878 27,442 30,539 3,272 3,080 3,148 3,776 3,600 4,070 11,625 11,352 12,579 13,571 14,844 17,520 275 247 307 423 744 777 1,472 1,340 1,263 1,635 1,635 1,878 102 641 722 365 564 482 1,792 1,769 2,014 2,948 3,725 5,038 1,923 2,073 2,638 9,381 2,695 8,514 470 490 3,080 571 884 6,280 (1,146) (1,480) (4,290) (6,969) (1,447) (14,362) 3,274 1,118 3,091 9,337 3,857 11,897 (2,776) (644) (2,612) (8,788) (3,323) (11,329) - - 2,612 6,000 - 10,631 - - - - - 1,321 498 474 3,091 6,549 534 12,520 $ (648) $ (1,006) $ (1,199) $ (420) $ (913) $ (1,842) 3.4% 3.5% 14.9% " 3.5% 4.5% 20.2% 135 Taxes Included in Unrestricted Intergovernmental Revenues Fiscal Sales City of Clermont, Florida Local Option Year Governmental Activities Tax Revenues by Source Sharing Gas Tax Total Last Ten Fiscal Years $ 1,210 $ 388 $ 325 $ 1,923 (accrual basis of accounting) 1,139 356 300 1,795 (amounts expressed in thousands) 1,033 302 Fiscal Property Utility Business Franchise 299 Year Tax Tax Tax Fees Total 2007 $ 7,155 $ 1,881 $ 1,808 $ 10,844 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 2013 5,350 2,490 111 2,123 10,074 2014 6,533 2,887 126 2,379 11,925 2015 7,013 2,953 130 2,502 12,598 2016 8,795 3,406 140 2,712 15,053 Taxes Included in Unrestricted Intergovernmental Revenues Fiscal Sales State Revenue Local Option Year Tax Sharing Gas Tax Total 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 2013 1,419 535 280 2,234 2014 1,567 635 290 2,492 2015 1,820 749 378 2,947 2016 1,848 819 482 3,149 * Business Tax Receipts previously reported under Licenses 136 City of Clermont, Florida Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Total Estimated Assessed Year Direct Actual Less: Ended Real* Personal Tax Exempt Sep 30 Property Property Property 2007 $ 2,466,549 $ 171,470 $ 620,750 2008 2,975,139 186,835 676,371 2009 3,022,925 195,808 792,997 2010 2,592,111 211,950 599,821 2011 2,297,568 211,950 599,871 2012 2,171,815 209,726 598,187 2013 2,124,017 206,870 605,114 2014 2,185,702 205,140 611,063 2015 2,336,882 207,024 630,762 2016 2,574,360 215,752 652,769 Source: Lake County Property Appraisers Office * Information on breakdown of residential and commercial property is not available. 137 Total Estimated Assessed Total Taxable Direct Actual Value as a Assessed Tax Taxable Percentage of Value Rate Value Actual Value $ 2,017,269 3.729 $ 2,638,019 76.47% 2,485,603 3.142 3,161,974 78.61% 2,425,736 3.142 3,218,733 75.36% 2,204,240 3.142 2,804,061 78.61% 1,909,647 3.142 2,509,518 76.10% 1,783,354 3.142 2,381,541 74.88% 1,725,773 3.142 2,330,887 74.04% 1,779,779 3.142 2,390,842 74.44% 1,913,144 3.729 2,543,906 75.20% 2,137,343 4.206 2,790,112 76.60% Source: Lake County Property Appraisers Office * Information on breakdown of residential and commercial property is not available. 137 City of Clermont, Florida Property Tax Rates Direct and Overlapping' Governments Last Ten Fiscal Years2 (per $1,000 of assessed value) Source: Lake County Property Appraisers Office 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. 138 Direct Rate Overlapping Rates City of Lake South Lake St. Johns Total Clermont Lake County County Lake County River Water Direct & Fiscal Operating Operating Voted Ambulance School Hospital Water Management Overlapping Year Millage Millage Debt Service MSTU District District Authority District Rates 2007 3.7290 5.7470 0.2000 0.5289 7.6480 1.0000 0.2530 0.4620 19.5679 2008 3.1420 4.7410 0.2000 0.4651 7.6980 0.8666 0.2130 0.4158 17.7415 2009 3.1420 4.6511 0.1101 0.4651 7.5170 0.8666 0.2130 0.4158 17.3807 2010 3.1420 4.6511 0.1101 0.4651 7.5320 0.8666 0.2130 0.4158 17.3957 2011 3.1420 4.7309 0.1101 0.3853 7.5230 0.8666 0.2405 0.4158 17.4142 2012 3.1420 4.7309 0.1101 0.3853 7.3940 0.8000 0.2405 0.3313 17.1341 2013 3.1420 4.7309 0.1900 0.3853 7.3200 0.8000 0.2554 0.3313 17.1549 2014 3.7290 4.7309 0.1900 0.3853 7.1700 0.7900 0.2554 0.3283 17.5789 2015 3.7290 5.3856 0.1600 0.4629 7.2460 0.7633 0.2554 0.3164 18.3186 2016 4.2061 5.3051 0.1600 0.4629 7.1970 0.7633 0.2554 0.3023 18.6521 Source: Lake County Property Appraisers Office 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. 138 Taxpayer South Lake Hospital, Inc. Citrus Tower FL Phase I LLC John P. Adams & Ann D. Adams Family LP US 27 -Clermont LLC Centennial Citrus Tower LLC Westdale Sundance LTD Citrus Tower FL Phase 11 LLC IP9 MF Clermont LLC Taylor Morrison of Florida Inc Weingarten 1-4 Clermont Landing Lennar Homes Inc. Fountains at Clermont LLC Wal-Mart Stores Sundance Clermont LLC Pulte Home Corporation Clermont Center LTD Lost Lake Reserve LC Target Corporation TOTAL Source: Lake County Property Appraiser City of Clermont, Florida Principal Property Taxpayers Current Year and Nine Years Ago (amounts expressed in thousands) 2016 Taxable Percentage of Assessed Total Taxable Value Rank 29,149 1 27,141 2 26,815 3 26,018 4 25,155 5 19,456 6 19,454 7 17,941 8 17,979 9 14,123 10 139 Percentage of Total Taxable Assessed Value 1.26% 1.17% 1.16% 1.12% 1.09% 0.84% 0.84% 0.77% 0.78% 0.61% 9.63% 2007 30,265 1 1.22% 27,019 Percentage of Taxable Total Taxable Assessed Assessed Value Rank Value 20,177 4 0.81% 30,265 1 1.22% 27,019 2 1.09% 21,421 3 0.86% 12,767 5 0.51% 12,054 6 0.48% 11,966 7 0.48% 11,088 8 0.45% 10,776 9 0.43% 10,346 10 0.42% $167,879 6.75% City of Clermont, Florida Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Collected within the Year Total Tax Fiscal Year of the Levy Collections in Total Collections to Date Ended Levy for Percentage Subsequent Percentage September Fiscal Year Amount of Levy Years Amount of Levy 2007 $ 7,518 $ 7,155 95.2% $ 17 $ 7,172 95.4% 2008 7,810 7,425 95.1% 15 7,440 95.3% 2009 7,622 7,243 95.0% 22 7,265 95.3% 2010 6,814 6,536 95.9% 5 6,541 96.0% 2011 6,001 5,698 95.0% 15 5,713 95.2% 2012 5,603 5,325 95.0% 5 5,330 95.1% 2013 5,422 5,153 95.0% 8 5,161 95.2% 2014 6,635 6,325 95.3% 9 6,334 95.5% 2015 7,133 6,793 95.2% 6 6,799 95.3% 2016 8,990 8,570 95.3% 4 8,574 95.4% Note: Property taxes become due and payable on November 1 st 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. 140 Fiscal Year Ended Sept 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 City of Clermont, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years (amounts expressed in thousands, except per capita amount) Total Percentage Outstanding of Personal Debt Income' $ 27,672 27,395 20,765 20,056 19,082 18,043 17,591 22,402 20,885 24,584 5.53% 3.94% 2.89% 2.76% 2.55% 2.30% 2.19% 2.74% 2.45% 2.40% Per Capita' $ 1,209 1,167 858 698 650 604.92 582 706 646 709 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. ' See the Schedule of Demographic and Economic Statistics on page 147 for personal income and population data. ME Business -Type Governmental Activities Activities Water & Sewer Revenue Notes Refunding Bonds Payable Revenue Bonds $ 5,360 $ 5,358 $ 16,954 4,935 5,857 16,603 4,495 38 16,232 4,040 - 16,016 3,570 - 15,512 3,080 - 14,963 - 2,612 14,979 - 8,041 14,361 - 7,157 13,728 - 11,509 13,075 Total Percentage Outstanding of Personal Debt Income' $ 27,672 27,395 20,765 20,056 19,082 18,043 17,591 22,402 20,885 24,584 5.53% 3.94% 2.89% 2.76% 2.55% 2.30% 2.19% 2.74% 2.45% 2.40% Per Capita' $ 1,209 1,167 858 698 650 604.92 582 706 646 709 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. ' See the Schedule of Demographic and Economic Statistics on page 147 for personal income and population data. ME City of Clermont, Florida Direct and Overlapping Governmental Activities Debt September 30, 2016 (amounts expressed in thousands, except population and per capita amount) Sources: Lake County 2015 CAFR, Lake County School Board 2016 CARF, and Lake County Property Appraiser's Office The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of Lake County's taxable assessed value that is within the City of Clermont's boundaries and dividing it by Lake County's total taxable assessed value. Notes: Overlapping governments are those that coincide, at least in part, with geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the property taxpayers of the City of Clermont. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the property taxpayers should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. The City of Clermont has no legal debt margin. `EW Estimated Amount Debt Percentage Applicable to Government Unit: Outstanding Applicable (,) City of Clermont Lake County $ 112,446 13.47% $ 15,146 Lake County School District 249,683 12.03% 30,037 Subtotal, overlapping debt 45,183 City of Clermont, direct debt 11,509 100.00% 11,509 Total direct and overlapping debt $ 56,692 Sources: Lake County 2015 CAFR, Lake County School Board 2016 CARF, and Lake County Property Appraiser's Office The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of Lake County's taxable assessed value that is within the City of Clermont's boundaries and dividing it by Lake County's total taxable assessed value. Notes: Overlapping governments are those that coincide, at least in part, with geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the property taxpayers of the City of Clermont. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the property taxpayers should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. The City of Clermont has no legal debt margin. `EW City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Public Improvement Revenue Refunding Note, Series 2012 Total Revenue Available for Public Communications Principal Fiscal Service Service Half -Cent Year Taxes Tax Sales Tax 2007 $1,881,092 $ 1,253,425 $ 1,209,748 2008 1,992,018 1,279,653 1,139,315 2009 2,151,318 1,257,344 1,033,141 2010 2,558,281 1,266,696 1,053,073 2011 2,568,141 1,233,789 1,100,125 2012 2,430,440 1,257,217 1,295,687 2013 2,490,461 1,349,929 1,418,710 2014 2,887,161 1,216,076 1,567,249 2015 2,952,785 1,161,566 1,819,909 2016 3,405,642 1,138,032 1,848,294 Total Revenue Available for Debt Service Debt Service Principal Interest $ 4,344,265 $ 415,000 $ 228,338 4,410,986 425,000 209,606 4,441,803 440,000 195,106 4,878,050 455,000 179,159 4,902,055 470,000 161,806 4,983,344 490,000 143,350 5,259,100 3,080,000 66,550 5,670,486 570,599 25,361 5,934,260 577,959 19,101 6,391,968 585,609 12,760 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. * Public Improvement Revenue Note, Series 2002 was refunded in 2012, this includes the payoff of the original bonds. 143 Coverage 6.75 6.95 6.99 7.69 7.76 7.87 1.67 9.51 9.94 10.68 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Public Improvement Revenue Refunding Note, Series 2016 Public Fiscal Service Year Taxes Communications Total Revenue Service Available for Debt Service Tax Debt Service Principal 2007 $ - $ - $ - $ - $ 2008 - - - - 2009 - - - - 2010 - - - - 2011 - - - - 2012 - - - - 2013 - - - - 2014 2,887,161 1,216,076 4,103,237 - 2015 2,952,785 1,161,566 4,114,351 305,772 2016 3,405,642 1,138,032 4,543,674 5,694,228 Interest Coverage - N/A - N/A - N/A - N/A - N/A - N/A - N/A 82,350 49.83 178,337 8.50 195,148 0.77 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. * Public Improvement Revenue Note, Series 2013 was refunded in 2016, this includes the payoff of the original bonds. City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Infrastructure Sales Surtax Revenue Note, Series 2016 Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Infrastructure Sales S Debt Service urtax Principal 2,964,966 - Interest Coverage - N/A - N/A - N/A - N/A - N/A - N/A - N/A - N/A - N/A 27,466 107.95 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 145 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Water and Sewer Revenue and Refunding Bonds Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements ' 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 Includes interest paid on the 2000 and 2009 Refunding Bonds 146 Water and Water and Sewer Sewer Net Revenue Fiscal Operating Operating Available for Debt Service Year Revenues' ExpenseS2 Debt Service Principal Interest Coverage 2007 $ 12,875,170 $ 8,820,932 $ 4,054,238 $ 230,000 $ 915,802 3.54 2008 10,075,706 7,192,314 2,883,392 390,000 892,688 2.25 2009 10,561,949 6,511,487 4,050,462 410,000 883,206 3.13 2010 10,001,836 6,999,096 3,002,740 430,000 744,892 3 2.56 2011 10,561,295 7,080,592 3,480,703 535,000 660,640 2.91 2012 10,496,535 6,377,695 4,118,840 580,000 643,307 3.37 2013 10,687,908 6,677,774 4,010,134 595,000 604,811 3.34 2014 11,108,744 7,090,566 4,018,178 615,000 586,461 3.34 2015 11,767,901 7,419,231 4,348,670 630,000 567,636 3.63 2016 12,578,644 7,272,716 5,305,928 650,000 548,236 4.43 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements ' 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 Includes interest paid on the 2000 and 2009 Refunding Bonds 146 City of Clermont, Florida Demographic and Economic Statistics Last Ten Fiscal Years Education Level in Per Capita Personal Income Median Formal (amounts Fiscal Income2 expressed in Year Population' thousands) 2006 21,986 509,987 2007 22,882 $ 500,338 2008 23,476 696,040 2009 24,199 717,597 2010 28,742 727,000 2011 29,358 748,482 2012 29,827 784,361 2013 30,201 802,803 2014 31,745 816,926 2015 32,348 854,020 2016 34,667 1,023,959 Education Level in Per Capita Years of Personal Median Formal School Unemploy- Income2 Agee Schooling2 Enrollment3 ment Rate 23,196 35.9 13.5 5,640 3.3% $ 21,866 36.8 13.6 5,915 3.8% 29,649 39.6 13.2 5,436 7.1% 29,654 39.7 13.2 4,900 12.3% 25,294 36.8 13.6 5,024 9.8% 25,495 40.9 13.6 5,116 9.3% 26,297 46.8 13.6 5,158 7.0% 26,582 41.5 13.8 5,153 5.8% 25,734 41.9 13.7 5,198 5.6% 26,401 42.1 13.7 5,172 4.8% 29,537 42.1 13.4 5,314 4.4% Sources: ' 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. `EW City of Clermont, Florida Principal Employers Current Year and Nine Years Ago Source: Florida Department of Economic Opportunity , Labor Market Statistics Center 148 2016 2007 Number Percentage of Number Percentage of of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Total City Employment 22,466 11,747 South Lake Hospital, Inc. 1,446 1 6.44% 900 3 7.66% Publix Supermarkets 733 2 3.26% 627 4 5.34% Lake County School System 487 3 2.17% 981 2 8.35% Walmart 435 4 1.94% 1,172 1 9.98% City of Clermont 336 5 1.50% 244 8 2.08% Senninger Irrigation 235 6 1.05% Lowe's 171 7 0.76% Vista Clinical 165 8 0.73% Home Depot 161 9 0.72% Target Corporation 140 10 0.62% 460 5 3.92% Progressive Plumbing Inc. 220 9 1.87% Winn Dixie 287 7 2.44% South Lake Ford 300 6 2.55% Westminster Care of Clermont 175 10 1.49% TOTAL 4,309 19.18% 5,366 45.68% Source: Florida Department of Economic Opportunity , Labor Market Statistics Center 148 149 Employer Kings Ridge South Lake Hospital Lake County Schools Taylor Morrison of Florida Living Well Lodges Clermont City of Clermont Citrus Tower FL Phase I&II LLC Lennar Homes Westminster Comm Care Service Meritage Homes Levitt & Sons Inc. KB Homes Inc. Greater Homes Inc. Pulte Homes Inc. US Homes Inc. TOTAL City of Clermont, Florida Principal Water Customers Current Year and Nine Years Ago 2016 2007 Usage Percentage of Usage Percentage of (thousands Total City (thousands Total City of gallons) Rank Metered Flow' of gallons) Rank Metered Flow 175,549 1 6.82% 38,258 2 1.49% 27,077 4 1.02% 35,358 3 1.37% 20,973 6 0.79% 29,958 4 1.16% 26,575 5 1.03% 21,499 6 0.84% 15,966 7 0.60% 20,468 7 0.80% 20,236 8 0.79% 32,283 3 1.22% 17,661 9 0.69% 12,590 10 0.47% 14,467 10 0.56% 41,798 1 1.57% 32,746 2 1.23% 22,097 5 0.83% 15,557 8 0.59% 15,076 9 0.57% TVV,VLJ 15.55% 236,163 The City of Clermont had a total metered water flow of approximately 2,572,852,000 gallons for the 12 -month period ending September 30, 2016 150 8.90% Employer South Lake Hospital Lake County Schools Living Well Lodges Clermont LLC Citrus Tower FL Phase I&II LLC Westminster Comm Care Service Centennial Citrus Tower LLC Sundance Apartments Village at East Lake Osprey Ridge Apartments Oakridge Apartments Greater Homes Inc. US Homes Inc. City of Clermont Lennar Homes Inc. Banyan Homes Inc. Blue Water Express Car Wash TOTAL City of Clermont, Florida Principal Sewer Customers Current Year and Nine Years Ago 2016 2007 Usage 1 Percentage of Usage 14,803 Percentage of (thousands 6 Total City (thousands 7,446 Total City of gallons) Rank Metered Flow' of gallons) Rank Metered Flow 34,778 1 2.32% 27,578 2 1.84% 13,560 4 1.82% 26,575 3 1.77% 20,468 4 1.37% 17,105 5 1.14% 12,437 5 1.67% 13,957 6 0.93% 12,913 7 0.86% 9,370 9 1.26% 11,074 8 0.74% 10,947 9 0.73% 10,287 7 1.38% 9,266 10 0.62% I V`t,VV I 12.32% 23,977 1 15,076 2 14,803 3 11,180 6 9,658 8 7,446 10 127,794 ' The City of Clermont had a total metered water flow for wastewater billing purposes of approximately 1,498,011,000 gallons for the 12 -month period ending September 30, 2016 151 3.23% 2.03% 1.99% 1.50% 1.30% 1.00% 17.19% City of Clermont, Florida Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Full-time Equivalent Employees as of September 30 Function 2007 2008 2009 2010 General Government 30.50 30.50 31.00 28.00 Public Safety: Police Sworn personnel 51.00 53.00 53.00 57.00 Non sworn personnel 16.00 17.00 17.00 16.00 Fire Firefighters 45.00 49.00 47.85 48.00 Other personnel 2.00 2.00 2.00 2.00 Building Services 0.00 0.00 0.00 0.00 Physical Environment 10.00 10.00 11.65 10.90 Transportation 15.20 15.60 15.60 15.35 Human Services 2.00 2.00 0.00 0.00 Culture & Recreation 26.20 26.60 25.60 21.10 Water 26.90 29.40 29.40 29.15 Sewer 27.80 26.30 26.30 26.05 Stormwater 8.70 8.80 8.80 9.15 Sanitation 14.70 16.80 16.80 16.30 Total 276.00 287.00 285.00 279.00 Source: City of Clermont Finance Department 152 Full-time Equivalent Employees as of September 30 2011 2012 2013 2014 2015 2016 27.00 25.85 26.66 31.56 36.00 36.00 57.00 57.00 57.00 61.00 61.00 66.00 5.00 5.00 6.00 6.00 6.00 6.00 48.00 47.80 47.80 56.80 56.80 59.80 2.00 2.00 2.00 2.40 1.90 1.90 0.00 0.00 0.60 8.80 8.30 9.30 5.40 4.60 4.95 4.70 7.45 8.70 13.50 14.80 14.65 12.95 12.85 12.60 0.00 0.00 0.00 0.00 0.00 22.00 21.20 21.10 27.25 33.35 35.35 29.15 29.45 29.66 30.61 29.35 29.65 25.85 24.50 23.78 23.88 24.15 26.45 9.40 7.95 6.72 6.87 6.65 7.75 16.70 16.85 17.08 17.18 18.20 18.50 261.00 257.00 258.00 290.00 302.00 318.00 153 City of Clermont, Florida Operating Indicators by Function Last Ten Fiscal Years Fiscal Year Function 2007 2008 2009 General Government 11,554 11,913 12,154 12,508 Commercial accounts 1,031 1,120 1,158 1,158 Municipal boundary (square miles) 14.37 14.42 14.43 Business Tax Receipts issued 2,141 2,263 1,771 A/P Checks issued 6,023 6,440 6,042 Commercial construction (units) 24 42 19 Commercial construction (value in thousands) 24,433 18,859 13,223 Residential construction (units) 324 301 204 Residential construction (value in thousands) 136,477 56,578 56,092 Public Safety: Police Auto accidents 1,192 1,272 972 Physical arrests 933 842 949 911 calls received 6,317 6,046 6,828 Evidence processed (pieces) 1,585 1,300 1,652 Parking violations 140 145 107 Traffic violations 5,164 5,103 4,553 Fire Volunteer firefighters 9 8 10 Fire inspections completed 414 880 979 Emergency calls answered 3,048 3,177 3,155 Non -emergency calls answered 198 234 434 Human Services Animals captured** 652 - - Water Residential accounts 16,394 16,959 17,375 Commercial accounts 1,069 1,156 1,201 Annual water usage 2010 14.76 1,833 5,722 10 8,357 305 53,202 955 854 5,230 1,349 137 4,981 6 2,121 3,112 352 17,884 1,206 (thousands of gallons) 2,654,352 2,589,664 2,312,962 2,054,236 Sewer Residential accounts 11,554 11,913 12,154 12,508 Commercial accounts 1,031 1,120 1,158 1,158 Sources: Various government departments. • Data not available •• Program was discontinued in FY 07-08 •• Decrease in accounts due to software conversion combining multi -metered services 154 155 Fiscal Year 2011 2012 2013 2014 2015 2016 14.90 14.95 14.95 15.18 16.65 16.78 1,843 2,237 2,483 1,955 1,701 1,584 4,875 2,336 2,288 3,529 2,747 3,276 3 8 20 15 16 20 18,020 15,203 34,268 17,288 8,625 42,241 151 173 327 572 323 740 23,558 25,882 53,055 62,117 55,178 103,423 1,121 1,259 1,402 1,357 1,573 1,909 699 644 886 631 652 589 5,587 5,911 6,352 6,643 7,618 6,397 1,297 1,413 2,930 2,384 989 674 378 201 252 379 144 181 6,312 5,389 7,225 4,623 6,879 7,421 6 6 - - 0 0 896 662 1,240 3,766 3,813 4,468 3,822 3,320 3,414 4,127 4,202 6,001 805 934 447 987 523 806 18,240 18,619 19,399 19,670 13,242 ••• 13,561 1,210 1,207 1,232 1,234 1,211 1,220 2,275,936 2,391,485 2,392,022 2,406,183 2,521,397 2,572,852 12,722 12,936 13,407 13,718 13,578 13,860 1,167 1,166 1,194 1,055 1,074 1,091 155 City of Clermont, Florida Capital Asset Statistics by Function Last Ten Fiscal Years Function General Government Public Safety: Police Police stations Patrol units Fire Fire department facilities Staffed fire stations Fire hydrants Fire apparatus Staffed fire apparatus ALS non -transport units Transportation Streets paved (miles) Streetlights Culture & Recreation Number of parks Parks acreage Scenic linear trail (miles) Tennis courts Piers Boat ramp Water Miles of water mains Sewer Miles of sanitary sewers Miles of storm sewers Sources: Various government departments. Does not include private systems 156 Fiscal Year 2007 2008 2009 2010 1 1 1 1 45 45 45 45 3 3 3 4 3 3 3 3 1,896 2,140 2,140 2,012 9 9 9 8 5 5 5 5 3 3 4 4 122.93 126.16 131.72 133.20 1,256 1,331 1,331 1,352 22 22 22 22 349.5 349.5 349.5 349.5 5.7 5.7 5.7 5.7 8 9 9 9 4 4 4 4 1 1 1 1 115.02 115.98 122.83 124.11 56.98 59.40 65.18 66.19 18.07 20.88 24.61 26.32 156 157 Fiscal Year 2011 2012 2013 2014 2015 2016 1 1 1 1 1 1 46 46 55 57 79 95 4 4 4 4 3 4 3 3 3 3 3 4 2,016 2,048 2,120 2,146 2,200 2,646 7 8 8 8 12 6 5 5 5 5 3 6 4 4 4 4 3 1 133.20 133.20 173.91 191.52 202.38 210.00 1,352 3,103 3,103 3,127 3,158 3,160 23 23 23 23 23 23 349.5 349.5 349.5 349.5 378.0 443.9 5.7 5.7 5.7 5.7 5.7 7.5 9 9 9 9 9 9 4 4 5 5 10 11 1 1 1 1 1 1 197.40 242.36 243.14 222.75 230.28 229.44 132.02 156.81 160.42 161.25 167.60 168.57 89.80 105.38 109.05 133.70 48.22 47.63 157 158 OTHER REPORTS 159 160 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S 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, 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, the financial statements of the governmental activities, 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, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated April 26, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Clermont, Florida's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Clermont's internal control. 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 or 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 a 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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 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 material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 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 161 Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Clermont's financial statements are free from 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 result of our tests disclosed no instances of noncompliance, or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. VaL fmitL1WH4, & 6&tVaV ac, Orlando, FL April 26, 2017 162 MCDIRMIT %/f DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE Honorable Mayor and City Council City of Clermont, Florida, Florida Report on Compliance for Each Major Program We have audited the compliance of City of Clermont, Florida (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on the City's major federal program for the year ended September 30, 2016. The City's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for the City's major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of the City's compliance. MCDIRMIT DAVrS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPAN I ES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLICACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 163 Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended September 30, 2016. Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance 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 compliance that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. �i��!.i�►�ut L � G� LLC Orlando, Florida April 26, 2017 164 CITY OF CLERMONT, FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended September 30, 2016 Award type Grantor Pass-through grantor CFDA Agency or Pass-through Grantor program title Number Entity Grant Number Expenditures Federal Grants United States Department of Justice Bulletproof Vest Partnership Program 16.607 $ 7,916 passed through State of Florida, Department of Law Enforcement Edward Byrne Memorial Justice Assistance Grant (JAG) Program 16.738 2016-JAGC-LAKE-10-1-13-064 7,961 Edward Byrne Memorial Justice Assistance Grant (JAG) Program 16.738 2016-JAGC-LAKE-7-H4-023 5,949 United States Department of Homeland Security FEMA Staffing for Adequate Fire and Emergency Response (SAFER) * 97.083 EMW-2013-FH-00073 525,171 FEMA Assistance to Firefighters/Fire Safety Trailer 97.044 EMW-2014-FP-00438 94,286 United States Department of Housing and Urban Development passed through State of Florida, Department of Economic Opportunity Small Cities Community Development Block Grant 14.228 15DB-OH-06-45-02-N44 405,535 Total federal awards * Denotes a major program 165 $ 1,046,818 CITY OF CLERMONT, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended September 30, 2016 Note 1 - Basis of Presentation: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of the City of Clermont, Florida (the City) under programs of the federal government for the year ended September 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City. Note 2 - Summary of Significant Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Therefore, amounts reported on the Schedule are based on expenditures incurred as of September 30, 2016, even if the grant or loan was received subsequent to that date. Federal expenditures are recognized following the cost principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass- through entity identifying numbers are presented where available. 166 CITY OF CLERMONT, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARD PROGRAMS Year Ended September 30, 2016 Section I - Summary of Independent Auditor's Results: Financial Statements Type of auditors' report issued: Unmodified Internal control over financial reporting: • Material weakness identified? Yes X No • Significant deficiency identified Yes X None reported Noncompliance material to financial Statements noted? Yes X No Federal Awards Type of auditors' report issued on compliance for major federal programs: Unmodified Internal control over major Federal program: • Material weakness identified? Yes X No • Significant deficiency identified Yes X None reported Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Yes X No Identification of major Federal Program Dollar threshold used to distinguish between type A and type B programs Auditee qualified as a low-risk auditee? Section II — Financial Statement Findings Section III — Federal Award Findings and Questioned Costs: CFDA No. 97.083 $750,000 Yes None None FEMA SAFER Grant X No Section IV — Federal Award Summary Schedule of Prior Year Findings: There were no audit findings for the year ended September 30, 2015. 167 168 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS MANAGEMENT LETTER Honorable Mayor and City Council City of Clermont, Florida Report on the Financial Statements We have audited the financial statements of the City of Clermont, Florida, as of and for the fiscal year ended September 30, 2016, and have issued our report thereon dated April 26, 2017. Auditor's Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance); and Chapter 10.550, Rules of the Florida Auditor General. Other Reports and Schedule We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance; Schedule of Findings and Questioned Costs; and Independent Auditor's Report on an examination conducted in accordance with ACIPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated April 26, 2017, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i.)l ., Rules of the Auditor General, require that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no recommendations in the preceding audit report. Official Title and Legal Authority Section 10.554(1)(i)4., 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. MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 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 169 Financial Condition Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not the City of Clermont, Florida 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. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management's responsibility to monitor the City of Clermont, Florida'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. Annual Financial Report Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the City of Clermont, Florida for the fiscal year ended September 30, 2016, 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, 2016. In connection with our audit, we determined that these two reports were in agreement. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, 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 which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of This Letter 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 Representatives, the Florida Auditor General, Federal and other granting agencies, the council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. ,1Va4U7 :t DUMP- a G PS LLC Orlando, Florida April 26, 2017 170 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS Honorable Mayor and City Council City of Clermont, Florida We have audited the financial statements of City of Clermont as of and for the year ended September 30, 2016, and have issued our report thereon dated April 26, 2017. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated July 14, 2011, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of City of Clermont solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence. MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 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 Qualitative Aspects of the Entity's Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by City of Clermont is included in Note 1 to the financial statements. As described in Note 1 to the financial statements, during the year, City of Clermont changed accounting policies related to the adoption of Statement of Governmental Accounting Standards (GASB Statement) No. 72, Fair Value Measurement and Application. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's current judgments. Those judgments are normally based on 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 markedly from management's current judgments. The most sensitive accounting estimates affecting the financial statements are: Management's estimate for the allowance for doubtful accounts 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 estimation 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. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting City of Clermont, Florida's financial statements relate to revenue recognition as described in Note 1. Significant Difficulties Encountered During the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. 172 Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe 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 matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to City of Clermont, Florida's financial statements or the auditor's report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the management representation letter dated April 26, 2017. Management's Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with City of Clermont, Florida , we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as City of Clermont, Florida's auditors. This report 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, �%1��!.iz�►rtct'L1� � G� LLC Orlando, Florida April 26, 2017 173 174 MCDIRMIT /r/ DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES The Honorable Mayor and City Council City of Clermont, Florida We have examined City of Clermont, Florida's (the City) compliance with the requirements of Section 218.415, Florida Statutes, during the year ended September 30, 2016. Management is responsible for the City's compliance with those requirements. Our responsibility is to express an opinion on the City's compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the City's compliance with specified requirements. In our opinion, City of Clermont, Florida complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2016. L td 6&VaruaA LLC Orlando, Florida April 26, 2017 MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 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 175 176