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Comprehensive Annual Financial Report - 2018-20191O NCLER T Choice of Champions COMPREHENSIVE ANNUAL For Fiscal Year Ended September 30, 2019 I" IL y T-I ti+ ti y• ti r' IERM,0 N T HISTORIC DOWNTOWN ESTABLISHED 1884 r 4 CLE WO UWMN N Choice of Champions'' Cheery yellow towers grace bright blue skies at the eastern and western limits of the City of Clermont. Their message proudly "Clermont welcomes proclaims, C w e s you." These gateway entry features greet commuters on one of Central Florida's most trafficked roads, State Road 50. The towers display the city's Choice of Champions logo, anchored by brick and surrounded by beautiful landscaping and architectural walls. At night, you'll find them aglow. More than structures, they are pillars reinforcing the city's brand and mirroring the design of downtown's 8th Street entryway. Their September 2019 completion was another milestone in the city's Downtown -Waterfront Master Plan. CITY OF CLERMONT FLORIDA Comprehensive Annual Financial Report For The Year Ended September 30, 2019 CLEF (ON.09100m, ,�-T Choice of Champions Prepared by: Finance Department 04F City of Clermont, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2019 TABLE OF CONTENTS INTRODUCTORY SECTION Letterof Transmittal..................................................................................................................... 3 GFOA Certificate of Achievement for Excellence in Financial Reporting .................................... 8 OrganizationChart....................................................................................................................... 9 List of Elected and Appointed Officials...................................................................................... 10 FINANCIAL SECTION Independent Auditor's Report.................................................................................................... 13 Management's Discussion and Analysis................................................................................... 17 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position................................................................................................. 31 Statement of Activities...................................................................................................... 32 Fund Financial Statements: Balance Sheet - Governmental Funds............................................................................. 33 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds................................................................................................... 34 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................ 35 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund.............................................................................. 36 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Infrastructure Special Revenue Fund ......................................... 38 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Community Redevelopment Special Revenue Fund .................. 39 Statement of Net Position - Proprietary Funds................................................................. 40 Statement of Revenues, Expenses, and Changes in Fund Net Position - ProprietaryFunds........................................................................................................ 43 Statement of Cash Flows - Proprietary Funds................................................................. 44 Statement of Fiduciary Net Position - Fiduciary Funds .................................................... 46 Statement of Changes in Fiduciary Net Position - Fiduciary Funds ................................. 47 Notes to the Financial Statements....................................................................................... 51 Required Supplementary Information: Schedule of Changes in Net OPEB Liability and Related Ratios .......................................... 99 Schedule of Changes in Net Pension Liability and Related Ratios - General Employees.. 100 Schedule of Changes in Net Pension Liability and Related Ratios - Police ........................ 101 Schedule of Changes in Net Pension Liability and Related Ratios - Fire ........................... 102 Schedule of Contributions and Investment Returns - General Employees ......................... 103 Schedule of Contributions and Investment Returns - Police ............................................... 104 Schedule of Contributions and Investment Returns - Fire .................................................. 105 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.................................................................... 110 Nonmajor Governmental Funds: Combining Balance Sheet - Other Governmental Funds .................................................... 112 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - OtherGovernmental Funds............................................................................................ 114 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Recreation Impact Fee Special Revenue Fund ............................. 116 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Police Impact Fee Special Revenue Fund .................. Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Fire Impact Fee Special Revenue Fund ...................... Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Building Services Special Revenue Fund .................... Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Fire Inspection Special Revenue Fund ........................ Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Cemetery Special Revenue Fund ................................ Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Debt Service Fund ....................................................... Fiduciary Funds: Combining Statement of Fiduciary Net Position - Fiduciary Funds ................... Combining Statement of Changes in Fiduciary Net Position - Fiduciary Funds STATISTICAL SECTION Financial Trends: Net Position by Component............................................................ Changes in Net Position................................................................. Fund Balance - Governmental Funds ............................................ Changes in Fund Balances - Governmental Funds ....................... Revenue Capacity: Governmental Activities Tax Revenues by Source ........................ Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates - Direct and Overlapping Governments ......... Principal Property Taxpayers......................................................... Property Tax Levies and Collections .............................................. Debt Capacity: Ratios of Outstanding Debt by Type .............................................. Direct and Overlapping Governmental Activities Debt ................... Pledged -Revenue Coverage.......................................................... Demographic and Economic Information: Demographic and Economic Statistics ........................................... Principal Employers........................................................................ Principal Water Customers............................................................. Principal Sewer Customers............................................................ Operating Information: Full-time Equivalent City Government Employees by Function ..... Operating Indicators by Function ................................................... Capital Asset Statistics by Function ............................................... 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 .......................... Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with the UniformGuidance.................................................................................................. Schedule of Expenditures of Federal Awards............................................................ Notes to Schedule of Expenditures of Federal Awards ............................................. Schedule of Findings and Questioned Costs............................................................. ManagementLetter.................................................................................................... Independent Auditor's Report on Compliance with the Requirements of Section 218.415, Florida Statutes...................................................................................... 130 132 136 138 145 146 147 152 153 154 155 156 158 160 165 167 169 170 171 172 175 INTRODUCTORY SECTION 04F CLERWO �NT Choice of Champions August 31, 2020 Honorable Mayor Gail Ash, Council Members and Citizens of the City of Clermont, Florida DARREN S. GRAY CITY MANAGER 352-241-7358 dgray@clermontfl.org Dear Mayor Ash, Council Members and the 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, 2019. 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, 2019. 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 Generally Accepted Accounting Principles 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 has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Clermont's financial statements have been audited by McDirmit Davis & Company, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Clermont for the fiscal year ended September 30, 2019 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, 2019 are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. Management 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 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov 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. Profile of the City of Clermont The City was founded in 1884 and incorporated in 1916. The City currently has a land area of 19 square miles and a population of approximately 40,750. 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, which 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 that flows north. The lakes offer residents the opportunity for excellent fishing, boating, swimming and other water sports, including competitive rowing, 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 provides a full range of services as directed by its charter. These include police and fire protection, street 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 Manager. The City Manager is responsible for carrying out the policies and ordinances of the governing body, overseeing the day-to-day operations of the government and hiring the directors of the various departments. The annual budget serves as the foundation for 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. police 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. 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov 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. Clermont's economic factors for FY 2019 indicate a continued growth in the local economy. During the last 5 years, Clermont's population has increased by 8,402 residents or 25.97%. Per capita personal income levels have increased $5,810 or 22.01 %. The City's unemployment rate has decreased from 4.8% to 2.8%, which continues to be below the county, state and national averages. Educational institutions in Clermont, such as Lake -Sumter State College, St. Leo University and the University of Central Florida, assist in supplying a skilled labor force. One of the highlighted areas of change has been the increase in property values; this year had an 11.31 % increase in taxable property values. Primarily due to this increase in property values, Clermont's property tax- millage rate of 4.2061 continues to be among the lowest of other comparable cities in the Central Florida region. The cost of living for the region is below the national average. There is no personal income tax, either locally or statewide. 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. 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. The City adopts a Five -Year Capital Plan as part of the annual budget process. The Capital Plan is a multi -year prioritized schedule that identifies future capital outlay by the year it is intended to be purchased or commenced, the amount to be spent per year, and the funding source. Relevant Financial Policies The City regularly reviews revenues and expenditures throughout the fiscal year. Quarterly budget reports are prepared and presented to the City Council. The reports show budget -to -actual for the city's top 10 revenues, total fund revenues, total fund expenditures, departmental expenditures and various department performance indicators. Through this process, 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. 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov Major Initiatives The completion of several capital projects included in the award -winning Downtown Waterfront Master Plan continues to be the major emphasis of the City. The Master Plan offers an exciting view of the future of Clermont 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, as well as a training ground for the world's elite athletes. The following capital projects are included in the Master Plan and are expected to be completed within the next two years. The listed projects below are being funded primarily from several grants and a loan. It is important to note that no General Fund reserves are being used to fund the construction of these projects. The Clermont Boat Ramp relocation project involved the relocation of the existing boat ramp to the southern bank of Lake Minneola, adjacent to East Avenue. This location has shifted motorized watercraft away from the many events and activities near the existing location. This project included improvements to East Avenue, as well as rerouting portions of the South Lake Trail to improve safety. The project costed approximately $2.4 million, with grant funding from Lake County assisting in the construction costs. Construction to be completed in 2020. The Downtown Waterfront District area includes Montrose Street, Minneola Street and Osceola Street between 7th and 8th streets. 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, the city plans to demarcate the halfway point of the Coast -to -Coast Trail. Phase one of the project is currently under construction and is anticipated to be completed in 2020, with phase two design beginning shortly after. The total project is anticipated to cost approximately $14 million. The Clermont 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 was completed in fiscal year 2018. Phase two is expected to begin in 2020 and created a bypass at 71h St., extending south to Minneola Ave. The total project is anticipated to cost approximately $1.3 million. • The Public Wi-Fi Network project involves the construction of a public Wi-Fi network to allow for safer and more accurate navigation of the Coast -to -Coast Trail. The construction on Wi-Fi network began in fiscal year 2019 and will be completed in phases. In March of 2019, limited locations along the waterfront went live. The total project is anticipated to cost approximately $750,000. • The Public Works Facility Relocation project involves the expansion and relocation of the existing antiquated facility. The new facility is proposed to be relocated to the Hancock Road corridor, an area that will allow for a larger, more centralized Public Works Facility. The land acquisition has been completed and is currently in the design phase. The project is anticipated to cost approximately $12 million. 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov 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, 2018. This was the 31 st 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. Credit 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. The preparation of this report would not have been possible without the efficient and dedicated services of the staff in the City Manager's Office and Finance Department. We would like to express our appreciation to all members of these departments who assisted and contributed to the preparation of this report. Respectfully submitted, Darren S. Gray City Manager Pamela M. Brosonski Finance Director 685 W. Montrose Street * Clermont, FL 34711 www.ClermontFL.gov 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, 2018 Executive Director/CEO 8 City Citizens of Clermont City Council mittees City Man Public Information Officer City Clerk Human Resources welopment Information Services Technology Economic Parks and Development Recreation Environmental maServices lice finance MPublic Works Fire Purchasing City of Clermont, Florida List of Elected and Appointed Officials For the Fiscal Year Ended September 30, 2019 Timothy Bates Mayor Pro-Tem Heidi Brishke Council Member James Kinzler Assistant City Manager Dan Mantzaris City Attorney Tracy Ackroyd Howe City Clerk Kathryn Deen Communications Director Curt Henschel Development Services Director Vacant Environmental Services Director Joseph Van Zile Finance Director Elected Officials Gail L. Ash Mayor Appointed Officials Darren S. Gray City Manager Keith Mullins Council Member (Appointed) Diane Travis Council Member Carle Bishop Fire Chief Susan Dauderis Human Resources 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 `r FINANCIAL SECTION MA McDirmit Davis 934 North Magnolia Avenue, Suite 100 Orlando, Florida 32803 407-843-5406 www.mcdirmitdavis.com 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, 2019, 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, 2019, 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. the trusted partner 13 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, the pension and other postemployment benefits disclosures on page 17 through 28 and 99 through 105 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 ClermonYs basic financial statements. The introductory section, combining and individual fund financial statements and schedules, statistical section and the Schedule of Expenditures of Federal Awards (the Schedule) 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 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. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated August 31, 2020 on our consideration of City of ClermonYs 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 solely 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 ClermonYs internal control over financial reporting and compliance. Orlando, FL August 31, 2020 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 im 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, 2019. 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, 2019 by $189,454,498 (net position). Of this amount, $53,081,617 (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 $7,535,850 (or 4%) during fiscal year 2019 primarily due to an increase in total revenues, specifically, charges for services, property taxes, investment income, as well as an increase in capital assets. • At September 30, 2019, the City of Clermont's governmental funds reported combined ending fund balances of $36,771,526 a decrease of $1,288,919 from the previous fiscal year. Of this amount $8,181,811 (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 $8,181,811, which represents 26.3% 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 31 and 32 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). 17 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) 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. 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, and Community Redevelopment Fund, all of which are considered to be major funds. Data from the other seven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these 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 36 - 37), the Infrastructure Fund (page 38) and the Community Redevelopment Fund (page 39) to demonstrate compliance with budgets. Other major and nonmajor funds comparisons can be found beginning on page 110. The basic governmental fund financial statements can be found on pages 33 - 39 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 40 - 45 of this report. 18 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Clermont uses enterprise funds to account for water, sewer, sanitation and stormwater utilities. Internal service funds are an accounting tool used to accumulate and allocate costs internally among various functions. The City utilizes an internal service fund for its health insurance. Because services accounted for in the internal service fund predominately benefit governmental rather than business -type functions, it has been included within the governmental activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for water, sewer, sanitation, and stormwater which are all considered to be major funds. 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 46 - 47 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 51 - 95 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 110 - 126 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 31. 19 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Net Position Governmental Activities Business -type Activities Total 2018-19 2017-18 2018-19 2017-18 2018-19 2017-18 Assets: Cu rre nt a nd other a ssets $43,859,992 $43,834,336 $ 54,296,455 $ 48,514,271 $ 98,156,447 $ 92,348,607 Capital assets 72,264,370 68,385,716 81,276,454 83,598,348 153,540,824 151,984,064 Total assets 116,124,362 112,220,052 135,572,909 132,112,619 251,697,271 244,332,671 Deferred Outflows of Resources: Deferred outflow of pension and OPEB earnings 7,210,014 6,161,344 643,035 206,453 7,853,049 6,367,797 Deferred charge ofrefunding - - 951,891 1,038,298 951,891 1,038,298 Total deferred outflows ofresources 7,210,014 6,161,344 1,594,926 1,244,751 8,804,940 7,406,095 Liabilities: Long-term liabilities outstanding 42,323,904 41,002,190 20,714,765 21,165,594 63,038,669 62,167,784 Other liabilities 3,777,447 3,148,787 1,586,464 1,871,908 5,363,911 5,020,695 Total liabilities 46,101,351 44,150,977 22,301,229 23,037,502 68,402,580 67,188,479 Deferred Inflow of Resources: Deferred inflow ofpension and OPEB earnings 2,531,261 2,496,618 113,872 135,021 2,645,133 2,631,639 Net investment in capital assets 40,317,634 35,262,327 66,103,888 69,321,935 106,421,522 104,584,262 Restricted 9,588,877 8,546,637 20,362,482 16,904,255 29,951,359 25,450,892 Unrestricted 24,795,253 27,924,837 28,286,364 23,958,657 53,081,617 51,883,494 Total net position $ 74,701,764 $ 71,733,801 $114,752,734 $110,184,847 $189,454,498 $181,918,648 The City's total net position at September 30, 2019 was $189,454,498. Of the City's total net position $106,421,522 (56.2%) 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, $29,951,359 (15.8%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the City's total net position, $53,081,617 (28%) 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 $7,535,850 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 2018-19, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 32. 20 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Revenues: Program revenues - Charges for services Operating grants and contributions Capital 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 environment Transportation Economic environment Culture and recreation Interest on long-term debt Water Sew er Sanitation Stormw ater 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 Net Position - Ending Changes in Net Position Governmental Activities _ Business -type Activities Total 2018-19 2017-18 __�j018-19 2017-18 2018-19 2017-18 $ 6,984,137 6,915,268 $ 18,719,668 17,641,637 $ 25,703,805 $ 24,556,905 2,061,400 2,232,803 47,346 - 2,108,746 2,232,803 625,000 428,000 4,691,099 4,534,918 5,316,099 4,962,918 11,944,977 10,746,758 - - 11,944,977 10,746,758 157,103 160,234 157,103 160,234 3,142,014 2,817,288 3,142,014 2,817,288 3,872,099 3,446,406 3,872,099 3,446,406 8,138,703 7,863,900 8,138,703 7,863,900 1,441,891 799,802 1,294,462 378,575 2,736,353 1,178,377 193,446 289,131 150,266 30,993 343,712 320,124 38,560,770 35,699,590 24,902,841 22,586,123 63,463,611 58,285,713 5,023,225 2,870,011 - - 5,023,225 2,870,011 22,103,605 20,305,907 22,103,605 20,305,907 863,346 2,103,577 - 863,346 2,103,577 2,387,307 2,254,892 - 2,387,307 2,254,892 532,152 385,072 532,152 385,072 5,954,052 5,752,085 5,954,052 5,752,085 835,497 839,158 835,497 839,158 - - 6,215,346 5,633,884 6,215,346 5,633,884 7,372,654 6,849,158 7,372,654 6,849,158 3,026,816 3,072,877 3,026,816 3,072,877 1,613,761 1,360,210 1,613,761 1,360,210 37,699,184 34,510,702 18,228,577 16,916,129 55,927,761 51,426,831 861,586 1,188,888 6,674,264 5,669,994 7,535,850 6,858,882 2,106,377 2,013,216 (2,106,377) (2,013,216) - - 2,967,963 3,202,104 4,567,887 3,656,778 7,535,850 6,858,882 71,733,801 68,531,697 110,184,847 106,528,069 181,918,648 175,059,766 $ 74,701,764 $ 71,733,801 $ 114,752,734 $ 110,184,847 $ 189,454,498 $ 181,918,648 Governmental activities - Governmental activities increased the City of Clermont's net position by $2,967,963. This change is primarily due to increased general government revenues, as well as a decrease in physical environment expenses. 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. 21 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Expenses and Program Revenues - Governmental Activities Expenses $22,103,605 Program revenues $5,023,225 $5,954,052 $3,589,880 3,008,942 $2,387,307 $2,426,524 j $1,395,498 $835,497 $94,282 $0 Generalgovernment Publicsafety Transportation/public cullrkse&recreation Physical environment andrest on longterm debt er 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, 31 Capital grants and contributions, 1.6% Other taxes, 18.7 Investment income and Operating grants and miscellaneous, 3.8% contributions, 5.4% Intergovernmental, 21.2% rges for services, 18.2% Business -type activities - Business -type activities increased the City of Clermont's net position by $4,567,887. This change is primarily due to increased revenue from services, investment income and capital contributions of sewer impact fees paid by developers. `11 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) 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. $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $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 Si 75.6% >ital Grants and ributions, 19.0% Investment income and miscellaneous, 5.2% Operating grants and contributions, 0.2% 23 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) 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, 2019, the City of Clermont's governmental funds reported combined ending fund balances of $36,771,526 a decrease of $1,288,919 in comparison with the prior year. This decrease is primarily due to the spending of funds for capital projects related to the 2017 Master Plan Capital Projects Revenue Note. Of the governmental funds combined ending fund balances, $8,181,811 (22.3%) represents unassigned fund balance, which is available for spending at the City's discretion. An additional $18,718,427 (assigned fund balance) has been set aside for planned master plan project expenditures. Restricted fund balances totaling over $9.5 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 ($289,522) to indicate that it is not available for spending because it has already been committed for prepaids and inventories. The General Fund is the chief operating fund of the City of Clermont. As of September 30, 2019, the fund balance in the General Fund was $8,688,077 an increase of $712,038 primarily from an increase in revenues; franchise fees, intergovernmental, and property taxes all surpassed 2018 amounts. Those transfers were related to the sale of the police station, Graff street, and a transfer to the self-insurance fund. The change in fund balance was more than the anticipated amount of the original budget by $712,038 and $1,818,105 more than the revised budget. Revenues were more than budgeted by $605,014, due to increases in intergovernmental, charges for services, and investment earnings revenues. Departmental expenditures came in less than anticipated resulting in no use of reserves in 2019. Of the total fund balance in the General Fund, $8,181,811 (94.2%) 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 26.3% of total General Fund expenditures, while total fund balance represents 27.9% 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 decreased by $3,019,998 in fiscal year 2019, primarily due to spending of proceeds from the Master Plan Capital Projects Revenue Note. 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 $169,326 in fiscal year 2019 primarily due to the annual debt service payments being made towards the funding of the Master Plan Capital Projects Revenue Note. 24 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) 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. The fund balance in this fund increased by $119,535 primarily due to planned expenditures not occurring in 2019, the grant program for businesses had few applicants and streetscape improvement purchases had budget savings. The remainder of the change of $1,068,832 to the governmental fund balance was from the non - major governmental funds. Recreation, Police and Fire Impact Fee fund balances combined for an increase of $491,181 in fiscal year 2019 primarily due to construction timing on projects in both Recreation and Fire Impact funds. The Building Services fund balance increased $499,733 due to revenues exceeding expenditures. The fund balances in the remaining nonmajor funds increased a total of $77,918 due to an increase in both the cemetery and debt service fund. 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, sanitation and stormwater. 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, 2019, the City of Clermont's Water Fund reported total net position of $42,305,049, an increase of $1,265,662 in comparison with the prior year. This increase in net position was due to operating income and non -operating incomes as well as the capital contributions of water impact fees on new development in the City. 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, 2019, the City of Clermont's Sewer Fund reported total net position of $58,872,958, an increase of $2,305,122 in comparison with the prior year. This increase in net position was primarily due to investment income as well as the capital contributions of sewer impact fees on new development in the City. 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, 2019, the City of Clermont's Sanitation Fund reported total net position of $5,872,192, an increase of $497,528 in comparison with the prior year. This increase in net position is due to both net operating income along with increased investment income and the sale of surplus equipment. The Stormwater Fund accounts for the management of the City's stormwater drainage system. All activities necessary to the provision of these services are accounted for in this fund. As of September 30, 2019, the City of Clermont's Stormwater Fund reported total net position of $7,529,266, an increase of $312,864 in comparison with the prior year. The increase in net position is primarily due to two capital contribution grants pertaining to the Victory Pointe Park and West Lake Wetlands. 25 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) General Fund Budgetary Highlights During the year, there was a $182,152 increase in appropriations between the original and final amended budget. Following are the significant components of the increase: • $30,555 for computer software purchases. • $65,205 for Police Department forfeiture fund appropriations. • $38,040 in flooring costs at the Arts & Recreation Center ordered but not received as of September 30, 2018. • $163,785 for the cost of Fire Department gear and accessories. • $265,379 for Fire Inspection appropriations no longer to be recorded within a special revenue fund. • $75,571 for Police wages, FICA and pension increases according to the collective bargaining agreement. • $15,863 for painting and minor equipment costs for a reserve fire truck. • $309,847 for the purchase and installation of LED lights at Hancock Park (partially Grant funded). • $41,925 to fund a Wellness Coordinator position. • $17,129 for a Purchasing Department administrative assistant position. • $22,964 for Historical Village roof replacement costs. $18,082 to remodel City Hall offices. • $13,463 EOC supplies related to Hurricane Dorian. • $324,914 increase Fire Defined Benefit Pension contributions based on the most recent actuarial valuation study. • $40,963 increase in professional services in Economic Development. • $1,300,000 decrease in Transfer of Sales Proceeds to the Capital Project Fund from the unrealized sale of the Public Works Complex. As of September 30, 2019, the City still owned the complex. In addition, General Fund budgeted revenues decreased by $923,915 between the original and final budget. Significant components of the net decrease are as follows: • Amending the budget for not receiving $1,300,000 in proceeds for the sale of the Public Works Complex. • $65,205 increase in Police forfeiture revenues as related to the above mentioned appropriation increase. • $55,379 increase for Fire Inspection revenues no longer to be recorded within a special revenue fund. • Notification of award of a $250,000 grant for Hancock Park LED lights (related to the appropriations mentioned above). Considering the above noted increases in General Fund budgeted appropriations, actual expenditures were less than budgeted by $977,532. 26 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) 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 68 - 69 of this report. Land Buildings Infrastructure Machineryand Equipment Intangibles Construction in Progress Capital Assets (net of depreciation) Governmental Activities Business -type Activities Total 2018-19 2017-18 2018-19 2017-18 2018-19 2017-18 $ 25,308,076 $ 25,350,984 $ 1,511,807 $ 1,511,807 $ 26,819,883 $ 26,862,791 19,593,711 20,567,271 911,058 259,645 15,556,191 15,300,005 70,741,991 74,234,774 7,318,348 6,331,392 51,557 104,556 4,436,487 731,508 4,245,300 4,156,217 228,334 255,435 3,637,964 3,180,470 20,504,769 20,826,916 86,298,182 11,563,648 279,891 8,074,451 89,534,779 10,487,609 359,991 3,911,978 Total $72,264,370 $68,385,716 $81,276,454 $83,598,348 $153,540,824 $151,984,064 The City of Clermont's investment in capital assets for its governmental and business -type activities as of September 30, 2019, amounts to $153,540,824 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements/infrastructure, machinery and equipment and intangibles. The total change in the City's investment in capital assets for the current fiscal year was $1,556,760. Following are the significant capital asset events that occurred during the current fiscal year: • Completion of the Environmental Services Admin & Warehouse Building total cost of project $668,548.76 • Completion of Six Fire Traffic Control Devices, total cost of project $66,879.00 • Completion of Arts and Recreation Center Outdoor Lighting, total cost of project $38,221 • Completion of the High Service Pump Building Sunburst Lane total cost of project $52,502 • Completion of Compass Way finding Signs, total cost of project $7,560 • Completion of (2) Gateway Towers total cost of project $447,842.53 • Purchase of Fire Radios & Accessories total amount $500,535 • Purchase of Fire Protective Gear total amount $151,158 • Purchase of Police Radios & Accessories total amount $409,436 • Purchase of (2) Crane Carrier Crew Cab and Loadmaster Rear Loader total amount $312,961 • Lift station pump replacements at multiple locations total amount $870,083 • Purchase fences for Pallatlakaha Park, Lake Hiawatha Park & Kaboom Park total amount $63,535 • Resurfacing (basketball courts/splash park) and additions to Various Parks total amount $232,950 • Purchase and Improvements to departmental vehicles total amount $656,625 • Construction in progress includes the following projects: Public Works Complex, Asset Management System Software, CDBG project Disston to School, Wastewater Treatment Facility Expansion, Warehouse Expansion, John's Lake Road Reuse, East Wastewater Plant Expansion, Heritage Hills Force Main modification, Barbados Loop Force Main Replacement, Water Treatment Plant Barrier Wall, John's Lake Road Water Main Replacement, West side Water Loop Phase 2, Kehlor Building Replacement, Promenade (Meet us in the Middle), Boat Ramp Relocation, Downtown Waterfront Revitalization, Montrose Street Improvements, Public WiFi, and Boathouse Improvements. 27 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) 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 8 on pages 70 - 74 of this report. Revenue bonds payable $ Notes payable Capital leases Outstanding Debt Governmental Activities Business -type Activities Total 2018-19 2017-18 2018-19 2017-18 2018-19 2017-18 - $ - $ 11,462,000 $ 12,262,000 $ 11,462,000 $ 12,262,000 31,108,991 33,123,389 5,979,845 6,329,441 37,088,836 39,452,830 837,745 837,745 Total $ 31,946,736 $ 33,123,389 $ 17,441,845 $ 18,591,441 $ 49,388,581 $ 51,714,830 As of September 30, 2019, total outstanding debt was $49,388,581, which includes both revenue bonds payable and notes payable. The outstanding debt amount decreased $2,326,249 over the previous year. Next Year's Budgets and Rates The fiscal year 2020 budget was once again approved without using reserves to balance the General Fund budget while maintaining the same property tax millage rate for the 5t" consecutive year. Clermont's 4.2601 millage continues to be one of the lowest of comparable cities in the region. Property values continued to increase in fiscal year 2020 in the amount of 9.61 % due to commercial and residential growth in the City. Pursuant to a utility rate study performed by a private consulting firm, the Clermont City Council adopted a resolution in December 2017 that provided for an increase to stormwater rates in January 2018. This resolution also provided for inflation based increases to the water, sewer, stormwater, and sanitation rates every October 1st, starting October 1, 2018. The increase is based on the Florida Public Service Commission Annual Deflator Index and are necessary, primarily to provide funding for the future planned capital projects. The 2020 budget includes these rate increases in the Proprietary Funds. 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. 28 BASIC FINANCIAL STATEMENTS 29 30 CITY OF CLERMONT, FLORIDA STATEMENT OF NET POSITION September 30, 2019 Primary Government Governmental Business -type Activities Activities Total Assets: Cash and cash equivalents $ 9,606,881 $ 14,390,706 $ 23,997,587 Investments 18,518,594 19,796,090 38,314,684 Receivables, net 1,209,817 1,013,312 2,223,129 Inventories 20,298 18,653 38,951 Due from other governments 1,410,410 400,000 1,810,410 Internal balances (680,396) 680,396 - Prepaid costs 269,923 124,110 394,033 Restricted assets: Cash and cash equivalents - 1,897,114 1,897,114 Investments 11,682,605 15,901,640 27,584,245 Interest receivable 36,794 74,434 111,228 Net pension asset 1,785,066 - 1,785,066 Capital assets not being depreciated 29,744,563 5,149,771 34,894,334 Capital assets being depreciated, net of accumulated depreciation 42,519,807 76,126,683 118,646,490 Total assets 116,124,362 135,572,909 251,697,271 Deferred Outflows of Resources: Deferred outflow of pension earnings 5,093,944 - 5,093,944 Deferred outflow related to OPEB 2,116,070 643,035 2,759,105 Deferred charge on refunding - 951,891 951,891 Total deferred outflows of resources 7,210,014 1,594,926 8,804,940 Liabilities: Accounts payable and accrued expenses 3,651,810 1,586,464 5,238,274 Unearned revenue 125,637 - 125,637 Noncurrent liabilities: Due within one year 2,292,158 1,227,833 3,519,991 Due in more than one year 40,031,746 19,486,932 59,518,678 Total liabilities 46,101,351 22,301,229 68,402,580 Deferred Inflows of Resources: Deferred inflow of pension earnings 2,163,598 - 2,163,598 Deferred inflow related to OPEB 367,663 113,872 481,535 Total deferred inflows of resources 2,531,261 113,872 2,645,133 Net Position: Net investment in capital assets 40,317,634 66,103,888 106,421,522 Restricted for: Capital Improvements - 20,362,482 20,362,482 Community redevelopment 516,190 - 516,190 Public safety 1,974,321 - 1,974,321 Culture and recreation 1,280,695 - 1,280,695 Infrastructure 793,812 - 793,812 Debt service 1,778,880 - 1,778,880 Building services 1,954,445 - 1,954,445 Cemetery 1,290,534 - 1,290,534 Unrestricted 24,795,253 28,286,364 53,081,617 Total net position $ 74,701,764 $ 114,752,734 $ 189,454,498 The accompanying Notes to Financial Statements are an integral part of this statement. 31 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 $ 5,023,225 22,103, 605 863,346 2,387,307 532,152 5,954,052 RqF AQ7 CITY OF CLERMONT, FLORIDA !3f-A14LTi14Zkt*1;ff_«IV/Iff:K Year Ended September 30, 2019 Net (Expense) Revenue and Changes in Net Position Program Revenue Primary Government Capital Grants Charges for Operating Grants and Governmental Business -type Services and Contributions Contributions Activities Activities Total $ 3,589,880 $ 1,592,733 1,801,524 MMMM.0rcacNMWVA 1,416,209 90,628 550,909 3,654 2,061,400 625,000 ':�4'1�1�1■ 6,215,346 6,867,972 898 1,152,076 7,372,654 6,989,831 892 3,139,023 3,026,816 3,263,966 42,213 - 1,613,761 1,597,899 3,343 400,000 18,228,577 18,719,668 47,346 4,691,099 $ 55,927,761 $ 25,703,805 $ 2,108,746 $ 5,316,099 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 Net Position - beginning Net Position - ending $ (1,433,345) $ (19,094, 663) (772,718) (1,836,398) (528,498) (3,527,528) (835,497) (28,028,647) $ (1,433,345) (19,094, 663) (772,718) (1,836,398) (528,498) (3,527,528) (835,497) (28,028,647) - 1,805,600 1,805,600 - 2,757,092 2,757,092 279,363 279,363 - 387,481 387,481 - 5,229,536 5,229,536 (28,028,647) 5,229,536 (22,799,111) 11,944,977 - 11,944,977 157,103 - 157,103 3,142,014 - 3,142,014 3,872,099 - 3,872,099 8,138,703 - 8,138,703 1,089,259 1,294,462 2,383,721 352,632 - 352,632 193,446 150,266 343,712 2,106,377 (2,106,377) - 30,996,610 (661,649) 30,334,961 2,967,963 4,567,887 7,535,850 71,733,801 110,184,847 181,918,648 $ 74,701,764 $ 114,752,734 $ 189,454,498 The accompanying Notes to Financial Statements are an integral part of this statement. 32 CITY OF CLERMONT, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2019 Community Other Total Infrastructure Redevelopment Governmental Governmental General Capital Projects Special Revenue Special Revenue Funds Funds Assets: Cash and cash equivalents $ 133,069 $ 4,857,520 $ 109,205 $ 191,898 $ 3,148,026 $ 8,439,718 Investments 9,198,657 2,424,607 616,370 326,801 4,995,853 17,562,288 Receivables, net 1,189,747 3,254 1,491 794 49,506 1,244,792 Inventories, at cost 20,298 - - - - 20,298 Due from other governments 791,304 375,000 244,106 - - 1,410,410 Prepaid costs 262,113 - - 3,712 3,399 269,224 Restricted Investments - 11,682,605 - 11,682,605 Total assets $ 11,595,188 $ 19,342,986 $ 971,172 $ 523,205 $ 8,196,784 $ 40,629,335 Liabilities: Accounts payable $ 1,214,199 $ 643,035 $ 177,360 $ 6,903 $ 86,828 $ 2,128,325 Payable to other governments - - - - - - Due to other funds 507,127 - - 507,127 Accrued liabilities 956,151 112 36,460 992,723 Unearned revenue 125,637 - - - - 125,637 Total liabilities 2,803,114 643,035 177,360 7,015 123,288 3,753,812 Deferred Inflows of Resources: Unavailable revenue - liens, forfeitures and rents 103,997 103,997 Total deferred inflows of resources 103,997 - - 103,997 Fund Balances: Nonspendable 282,411 - 3,712 3,399 289,522 Restricted 205,379 - 793,812 512,478 8,070,097 9,581,766 Assigned 18,476 18,699,951 - - - 18,718,427 Unassigned 8,181,811 - - - - 8,181,811 Total fund balances 8,688,077 18,699,951 793,812 516,190 8,073,496 36,771,526 Total liabilities, deferred inflows of resources, and fund balances $ 11,595,188 $ 19,342,986 $ 971,172 $ 523,205 $ 8,196,784 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. Accrued interest payable is not due in the current period and therefore is not reported in the funds. Other long-term assets are not available to pay for current period expenditures and, therefore are deferred in the funds. 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. Net pension assets are not current financial resources and therefore are not reported in the funds The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the governmental activities of the Statement of Net Position. Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Net Position of Governmental Activities in the Statement of Net Position 72,264,370 (279,165) 103,997 4,678,753 1,745,317 1,701,121 (42,284,155) $ 74,701,764 The accompanying Notes to Financial Statements are an integral part of this statement. 33 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Revenues: Taxes Franchise fees Licenses and permits Intergovernmental revenues Charges for services Fines and forfeitures Impact fees/special assessments Investment earnings Miscellaneous Total revenues Expenditures: Current: General government Public safety Physical environment Transportation Economic environment Culture and recreation Debt Service: Principal retirement Interest and fiscal charges Capital Outlay: Physical environment Economic environment Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses): Transfers in Transfers out Capital Leases Sale of general capital assets Total other financing sources (uses) Year Ended September 30, 2019 Community Other Total Infrastructure Redevelopment Governmental Governmental General Capital Projects Special Revenue Special Revenue Funds Funds $ 15,677,583 $ $ $ 296,596 $ $ 15,974,179 3,142,014 - 3,142,014 338,170 1,588,357 1,926,527 7,010,542 375,000 3,474,813 - 10,860,355 2,013,124 - - 174,333 2,187,457 230,388 - 230,388 - - - - 1,958,766 1,958,766 417,227 457,660 23,303 12,446 154,741 1,065,377 961,395 - - 107 3,609 965,111 29,790,443 832,660 3,498,116 309,149 3,879,806 38,310,174 4,405,938 6,434 196,491 91 4,608,954 18,914,672 - 1,131,150 1,572,321 21,618,143 982,390 - - 982,390 1,535,490 629,012 - 2,164,502 182,428 - 189,614 372,042 5,130,522 493,228 - 678,519 6,302,269 - 81,289 2,014,398 2,095,687 10,255 24,798 794,180 829,233 766,299 766,299 - 3,079,925 - - - 3,079,925 31,161,695 3,852,658 2,555,968 189,614 5,059,509 42,819,444 (1,371,252) (3,019,998) 942,148 119,535 (1,179,703) (4,509,270) 2,103,315 - - 2,833,332 4,936,647 (218,472) (2,030,508) (584,865) (2,833,845) - 919,034 - 919,034 198,447 - 68 198,515 2,083,290 (1,111,474) 2,248,535 3,220,351 Net Change in Fund Balances 712,038 (3,019,998) (169,326) 119,535 1,068,832 (1,288,919) Fund Balances - beginning 7,976,039 21,719,949 963,138 396,655 7,004,664 38,060,445 Fund Balances - ending $ 8,688,077 $ 18,699,951 $ 793,812 $ 516,190 $ 8,073,496 $ 36,771,526 The accompanying Notes to Financial Statements are an integral part of this statement. 34 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, 2019 Net Change in Fund Balances - total governmental funds: $ (1,288,919) 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. 3,880,148 The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins and disposals) is to decrease net position (5,069) Net transfers of capital assets from proprietary funds 3,575 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. 33,268 Cash pension contributions reported in the funds were more than the calculated pension expense on the statement of activities, and therefore increased net position (373,121) 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. 1,176,653 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. (967,330) 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. 508,758 Change in Net Position of Governmental Activities $ 2,967,963 The accompanying Notes to Financial Statements are an integral part of this statement. 35 CITY OF CLERMONT, FLORIDA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2019 Actual Variance with Amounts, Final Budget - Budgetary Positive Budgeted Amounts Basis (Negative) Original Final Revenues: Taxes $ 15,932,523 $ 15,932,523 $ 15,677,583 $ (254,940) Franchise fees 3,110,000 3,110,000 3,142,014 32,014 Licenses and permits 375,900 375,900 338,170 (37,730) Intergovernmental revenues 6,548,278 6,798,278 7,010,542 212,264 Charges for services 1,800,059 1,855,438 2,013,124 157,686 Fines and forfeitures 114,000 179,205 230,388 51,183 Investment earnings 110,000 110,001 417,227 307,226 Miscellaneous 818,584 824,084 961,395 137,311 Total revenues 28,809,344 29,185,429 29,790,443 605,014 Expenditures: Current: General government: City council 37,273 37,273 36,525 748 City clerk 337,182 340,182 306,467 33,715 City manager 521,246 526,746 524,569 2,177 Finance 949,399 951,399 941,801 9,598 Legal services 110,000 110,000 116,621 (6,621) Planning & zoning 708,699 763,161 653,397 109,764 Information technology 749,252 765,836 763,059 2,777 Human resources 468,011 524,996 514,059 10,937 Purchasing 272,166 289,295 287,137 2,158 Other general government 195,200 226,745 262,303 (35,558) 4,348,428 4,535,633 4,405,938 129,695 Public safety: Law enforcement 9,098,679 9,271,573 9,050,443 221,130 Fire control 9,289,107 9,773,818 9,649,196 124,622 Fire inspections - 219,368 215,033 4,335 18,387,786 19,264,759 18,914,672 350,087 Physical environment 1,033,635 1,033,635 982,390 51,245 Transportation 1,603,677 1,603,677 1,535,490 68,187 Economic environment 176,586 217,549 182,428 35,121 Culture and recreation Culture and recreation 2,708,264 3,034,918 2,851,947 182,971 Events 665,769 669,269 510,977 158,292 Arts and rec center 1,139,514 1,186,371 1,181,383 4,988 CPAC 593,416 593,416 586,215 7,201 5,106,963 5,483,974 5,130,522 353,452 Interest and fiscal charges - - 10,255 (10,255) Total expenditures 30,657,075 32,139,227 31,161,695 977,532 The accompanying Notes to Financial Statements are an integral part of this statement. 36 CITY OF CLERMONT, FLORIDA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-_ BUDGET AND ACTUAL (CONTINUED) Year Ended September 30, 2019 Actual Variance with Amounts, Final Budget - Budgetary Positive Budgeted Amounts Basis (Negative) Original Final Excess (Deficiency) of Revenues Over Expenditures (1,847,731) (2,953,798) (1,371,252) 1,582,546 Other Financing Sources (Uses): Transfers In 2,051,198 2,051,198 2,103,315 52,117 Transfers Out (1,518,467) (218,467) (218,472) (5) Sale of General Capital Assets 1,315,000 15,000 198,447 183,447 Total other financing sources (uses) 1,847,731 1,847,731 2,083,290 235,559 Net Change in Fund Balance Fund Balance - beginning Fund Balance - ending - (1,106,067) 712,038 1,818,105 7,976,039 7,976,039 7,976,039 - $ 7,976,039 $ 6,869,972 $ 8,688,077 $ 1,818,105 The accompanying Notes to Financial Statements are an integral part of this statement. 37 CITY OF CLERMONT, FLORIDA INFRASTRUCTURE SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Revenues: Intergovernmental revenues Investment earnings Total revenues Expenditures: Current: General government Public safety: Police Fire control Transportation: Roads & streets Culture and recreation: Recreation programs Events Arts and rec center Debt Service: Principal Interest Year Ended September 30, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 3,762,700 $ 3,762,700 $ 3,474,813 $ (287,887) 6,000 6,000 23,303 17,303 3,768,700 3,768,700 3,498,116 (270,584) 221,884 436,878 196,491 240,387 240,336 614,249 440 4nG GCS �An 358,471 1,181,991 718,155 902,439 611,161 3,088 519,989 47,753 1,131,150 50,841 629,012 273,427 305,000 417,031 284,129 132,902 111,697 72,178 72,178 - 49,600 158,915 136,921 21,994 466,297 648,124 493,228 154,896 - 79,526 81,289 (1,763) - 26,561 24,798 1,763 - 106,087 106,087 - Total expenditures 1,764,807 3,275,519 2,555,968 719,551 Excess (Deficiency) of Revenues Over Expenditures 2,003,893 493,181 942,148 448,967 Other Financing Uses: Transfers out (2,030,506) (2,030,506) (2,030,508) (2) Capital leases - 919,034 919,034 - Total other financing uses (2,030,506) (1,111,472) (1,111,474) (2) Net Change in Fund Balances (26,613) (618,291) (169,326) 448,965 Fund Balances - beginning 963,138 963,138 963,138 - Fund Balances - ending $ 936,525 $ 344,847 $ 793,812 $ 448,965 The accompanying Notes to Financial Statements are an integral part of this statement. 38 CITY OF CLERMONT, FLORIDA COMMUNITY REDEVELOPMENT SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Taxes $ 289,735 $ 289,735 $ 296,596 $ 6,861 Investment earnings 4,000 4,000 12,446 8,446 Miscellaneous - - 107 107 Total revenues 293,735 293,735 309,149 15,414 Expenditures: Economic environment: Economic development 345,358 357,828 189,614 168,214 Total expenditures 345,358 357,828 189,614 168,214 Excess (Deficiency) of Revenues Over Expenditures (51,623) (64,093) 119,535 183,628 Other Financing Uses: Transfers out - - - - Total other financing uses - - - - Net Change in Fund Balances (51,623) (64,093) 119,535 183,628 Fund Balances - beginning 396,655 396,655 396,655 - Fund Balances - ending $ 345,032 $ 332,562 $ 516,190 $ 183,628 The accompanying Notes to Financial Statements are an integral part of this statement. 39 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: Deferred charge on refunding Deferred outflows related to OPEB Total deferred outflows of resources CITY OF CLERMONT, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2019 Governmental Business -type Activities -Enterprise Funds Activities - Internal Service Water Sewer Sanitation Stormwater Total Fund $ 5,067,004 $ 7,398,687 $ 1,863,965 $ 61,050 $ 14,390,706 $ 1,167,163 10,475,792 7,057,167 2,263,131 - 19,796,090 956,306 848,621 753,053 69,112 226,328 1,897,114 - 357,912 386,581 163,704 105,115 1,013,312 1,043 - - - 400,000 400,000 - 18,653 - - - 18,653 - 49,461 43,370 19,693 11,586 124,110 699 16,817,443 15,638,858 4,379,605 804,079 37,639,985 2,125,211 2,409,187 12,395,973 1,096,480 - 15,901,640 - - 275,000 507,127 - 782,127 - 27,829 41,625 4,980 - 74,434 776 43,255,393 67,763,573 4,572,728 16,225,557 131,817,251 - 626,435 2,708,738 167,090 135,701 3,637,964 - (15,265,440) (31,864,604) (2,670,246) (4,378,471) (54,178,761) - 28,616,388 38,607,707 2,069,572 11,982,787 81,276,454 - 31,053,404 51,320,305 3,678,159 11,982,787 98,034,655 776 47,870,847 66,959,163 8,057,764 12,786,866 135,674,640 2,125,987 339,379 612,512 - - 951,891 - 215,107 185,111 166,943 75,874 643,035 - 554,486 797,623 166,943 75,874 1,594,926 - The accompanying Notes to Financial Statements are an integral part of this statement. 40 Liabilities: Current liabilities Accounts payable 205,122 401,835 104,290 98,703 809,950 251,597 Salaries payable 70,720 67,973 46,251 20,441 205,385 - Accrued interest payable 33,723 59,953 12,349 40,079 146,104 - Due to other funds - - - 275,000 275,000 - Compensated absences 18,370 14,965 5,979 1,637 40,951 - Customer deposits payable 425,025 - - - 425,025 - Revenue bonds and notes payable -current 298,080 529,920 84,499 274,383 1,186,882 - Total current liabilities 1,051,040 1,074,646 253,368 710,243 3,089,297 251,597 Noncurrent liabilities: Compensated absences 165,326 134,686 53,814 14,732 368,558 - Other post employment benefits 1,033,994 834,226 691,837 297,934 2,857,991 - Notes payable - - 1,323,487 4,297,476 5,620,963 - Revenue bonds payable 3,830,191 6,809,229 - - 10,639,420 - Total noncurrent liabilities 5,029,511 7,778,141 2,069,138 4,610,142 19,486,932 - Totalliabilities 6,080,551 8,852,787 2,322,506 5,320,385 22,576,229 251,597 Deferred Inflows of Resources: Deferred inflows related to OPEB 39,733 31,041 30,009 13,089 113,872 Total deferred inflows of resources 39,733 31,041 30,009 13,089 113,872 - Net Position: Net investment in capital assets 24,827,496 31,881,070 1,758,066 7,637,256 66,103,888 - Restricted for capital improvements 4,219,941 16,142,541 - - 20,362,482 - Unrestricted 13,257,612 10,849,347 4,114,126 (107,990) 28,113,095 1,874,390 Total net position $ 42,305,049 $ 58,872,958 $ 5,872,192 $ 7,529,266 114,579,465 $ 1,874,390 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. 173,269 Total Net Position per Government -Wide Financial Statements $ 114,752,734 The accompanying Notes to Financial Statements are an integral part of this statement. 41 42 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS Year Ended September 30, 2019 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 Interest expense Nonoperating expense Grants Gain (loss) on disposal of capital assets Total nonoperating revenue (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in net position Governmental Business -type Activities -Enterprise Funds Activities - Internal Service Water Sewer Sanitnfinn %fnrmwntPr TntnI Fund $ 6,508,690 $ 6,982,387 $ 3,263,253 $ 1,596,719 $ 18,351,049 $ 5,190,442 359,282 7,444 713 1,180 368,619 30,967 6,867,972 6,989,831 3,263,966 1,597,899 18,719,668 5,221,409 1,849,239 1,807,092 1,313,600 500,254 5,470,185 - 539,760 837,720 2,502 7,462 1,387,444 - 198,926 514,530 17,378 730,834 395,698 386,025 238,356 91,575 1,111,654 953,959 296,813 129,049 39,689 1,419,510 1,633,131 2,945,965 480,262 725,883 5,785,241 - 132,971 143,062 13,981 16,560 306,574 59,962 128,993 174,502 17,500 23,964 344,959 4,489,860 508,750 400,414 329,225 89,829 1,328,218 - 6,142,501 7,190,519 3,039,005 1,512,594 17,884,619 4,549,822 725,471 (200,688) 224,961 85,305 835,049 671,587 472,814 687,004 126,740 7,904 1,294,462 23,882 (133,568) (238,285) (37,408) (121,408) (530,669) - - - (3,575) - (3,575) 898 892 42,213 3,343 47,346 3,895 195 144,597 1,579 150,266 - 344,039 449,806 272,567 (108,582) 957,830 23,882 1,069,510 249,118 497,528 (23,277) 1,792,879 695,469 1,152,076 3,139,023 - 400,000 4,691,099 - 8,336 585 7,617 16,538 (964,260) (1,083,604) - (71,476) (2,119,340) - 1,265,662 2,305,122 497,528 312,864 4,381,176 695,469 Total Net Position - Beginning 41,039,387 56,567,836 5,374,664 7,216,402 1,178,921 Total Net Position - Ending $ 42,305,049 $ 58,872,958 $ 5,872,192 $ 7,529,266 $ 1,874,390 Change in Net Position, per above 4,381,176 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. 186,711 Change in Business -Type Activities in Net Position per Government -Wide Financial Statements $ 4,567,887 The accompanying Notes to Financial Statements are an integral part of this statement. 43 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 in 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, 2019 Governmental Activities - Business -Type Activities -Enterprise Funds Internal Service Water Sewer Sanitation Stormwater Total Fund $ 6,865,918 $ 7,024,598 $ 3,341,971 $ 1,609,824 $ 18,842,311 (2,723,791) (2,341,352) (1,254,724) (595,416) (6,915,283) (1,755,996) (1,738,772) (1,243,567) (475,837) (5,214,172) 2,386,131 2,944,474 5,222,351 (4,522,038) 843,680 538,571 6,712,856 700,313 49,851 2,190,139 135,687 14,732 2,390,409 - - - - (2,150,000) (2,150,000) (500,000) 898 892 42,213 3,343 47,346 - 6,707 585 - - 7,292 - (964,260) (1,074,358) - (71,476) (2,110,094) - (906,804) 1,117,258 177,900 (2,203,401) (1,815,047) (500,000) (724,268) (1,685,908) (881,973) (174,773) (3,466,922) 3,895 195 144,597 1,579 150,266 (106,174) (188,752) (38,130) (123,751) (456,807) (288,000) (512,000) (82,314) (267,282) (1,149,596) - - - 623,490 623,490 1,152,076 3,139,023 - - 4,291,099 37,529 752,558 (857,820) 59,263 (8,470) The accompanying Notes to Financial Statements are an integral part of these statements. 44 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 OPEB Increase in accrued liabilities Total adjustments Net Cash Provided (Used) by Operating Activities (488,630) (1,668,539) 110,337 1,616,691 (430,141) (610,938) 296,803 425,806 156,603 7,904 887,116 23,754 (191,827) (1,242,733) 266,940 1,624,595 456,975 (587,184) 1,325,029 3,571,557 430,700 19,028 5,346,314 (386,871) 4,590,596 4,580,183 1,502,377 268,350 10,941,506 1,554,034 $ 5,915,625 $ 8,151,740 $ 1,933,077 $ 287,378 $ 16,287,820 $ 1,167,163 $ 5,067,004 $ 7,398,687 $ 1,863,965 $ 61,050 $ 14,390,706 $ 1,167,163 848,621 753,053 69,112 226,328 1,897,114 - $ 5,915,625 $ 8,151,740 $ 1,933,077 $ 287,378 $ 16,287,820 $ 1,167,163 $ 725,471 $ (200,688) $ 224,961 $ 85,305 $ 835,049 $ 671,587 1,633,131 2,945,965 480,262 725,883 5,785,241 - 2,269 34,767 78,005 11,925 126,966 942 (4,323) - - - (4,323) - 5,702 4,171 (10,179) (3,520) (3,826) (699) 1,289 - - - 1,289 - (70,651) 91,939 598 (305,439) (283,553) 28,483 84,223 77,914 68,840 28,111 259,088 - 9,020 (9,594) 1,193 (3,694) (3,075) - 1,660,660 3,145,162 618,719 453,266 5,877,807 28,726 $ 2,386,131 $ 2,944,474 $ 843,680 $ 538,571 $ 6,712,856 $ 700,313 Noncash Investing, Capital, and Financing Activities: Increase (Decrease) in Fair Value of Investments $ 171,433 $ 253,576 $ (30,682) $ - $ 394,327 $ - Transfer of Capital Assets $ 1,629 $ (9,246) $ (3,575) $ 7,617 $ (3,575) $ - The accompanying Notes to Financial Statements are an integral part of these statements. 45 CITY OF CLERMONT, FLORIDA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30, 2019 Assets: Cash and cash equivalents Investments: U.S. Government & other debt securities Equities Total investments Accounts receivable Total assets Liabilities: Refunds payable and other Total liabilities Net Position Restricted for Pensions Total Employee Pension Funds $ 611,584 14,513,575 36,889,156 51,402,731 52,014,315 $ 52,014,315 The accompanying Notes to Financial Statements are an integral part of this statement. 46 CITY OF CLERMONT, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2019 Total Employee Pension Funds Additions: Contributions: Employer $ 2,660,900 Plan members 407,461 State 574,795 Total contributions 3,643,156 Investment earnings: Net increase in fair value of investments 3,105,361 Investment expense (46,081) Total net investment earnings 3,059,280 Total additions 6,702,436 Deductions: Benefits/distributions 1,139,178 Administrative 177,937 Total deductions 1,317,115 Change in Net Position 5,385,321 Net Position - beginning 46,628,994 Net Position - ending $ 52,014,315 The accompanying Notes to Financial Statements are an integral part of this statement 47 48 NOTES TO FINANCIAL STATEMENTS 49 50 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2019 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. Because the governing body of the CRA is substantively the same as the City and the City has operational responsibility for the CRA, the CRA is presented as a blended component unit of the City. 51 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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. 52 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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: Manor 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. Nonmanor 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. The Debt Service Fund was established to account for the accumulation of resources and payment of bond principal and interest from governmental resources. 53 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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. 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. Nonmaior Proprietary Funds 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. 54 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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." 55 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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. 56 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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 acquisition 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. 57 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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 three items that qualify for reporting in this category. The deferred charge on refunding, deferred outflows of pension earnings and deferred outflow related to OPEB 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 and OPEB reported in the government -wide statement of net position. 58 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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. 59 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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. New GASB Statements Implemented In fiscal year 2019, the City implemented GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. This Statement requires additional note disclosures for certain debt issues. The City also implemented GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This statement eliminates the requirement to capitalize interest on enterprise fund construction projects. There was no effect on beginning balances of the City for the implementation of either statement. Additionally, the GASB has issued Statement No. 83, Certain Asset Retirement Obligations, that is effective for this fiscal year. The City has reviewed this statement and determined that this pronouncement has no discernable impact on these financial statements. 60 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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 difference are as follows: Capital Outlay $ 7,434,413 Depreciation Expense (3,554,265) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ 3,880,148 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 difference are as follows: Principal Repayment $ 2,095,687 Capital Leases (919,034) Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ 1,176,653 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 $ (113,419) Other Post Employment Benefits (847,647) Accrued Interest Payable (6,264) Net Adjustment to Decrease Net Changes in Fund Balances - total governmental funds to arrive at changes in net position of governmental activities $ (967,330) 61 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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. 62 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 3 - Stewardship, Compliance, and Accountability (Continued): B. Budgetary Basis of Accounting - The City includes a portion of the prior year's fund balances represented by unappropriated liquid assets remaining in the fund as budgeted revenue in the succeeding year. The results of operations on a GAAP basis do not recognize the fund balance allocation as revenue as it represents prior periods' excess of revenues over expenditures. The City does not budget for capital outlay expenditures and other financing sources related to the acquisition of assets through notes payable. C. Expenditures in Excess of Appropriations - Expenditures exceeded appropriations in various departments of the General Fund, Fire Inspection Special Revenue Fund, and Debt Service Fund. Theses excess expenditures were funded by greater than anticipated revenues and available fund balance. Note 4 - Cash and Investments: Deposits 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. 63 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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 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, 2019 are summarized below. Defined benefit pension plan investments, other than $36,889,156 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 $ 1,189,656 AA+ 1.64 years Federal Agency Mortgage -Backed Securities 906,055 AA+ 9.46 years Federal Agency Colataralized Mortgage Obligation 1,818,722 AA+ 3.9 years US TreasuryNotes 8,990,876 AA+ 2.2 years Supra -National Agency Bond/Note 1,843,920 AAA 1.33 years Corporate Note 7,845,234 BBB+/AA 1.38 years Asset Backed Security 4,818,755 AAA/NR 3.53 years Municipal Bonds 142,758 AAA 3.09 years FL Palm 38,342,955 AAAm N/A Pension Fixed Income Securities 14,513,575 AAf/S4 6.40 years $ 80,412,506 C'nwiit Pick- The City's investment policy limits credit risk by restricting authorized investments to those described above. 64 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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, 2019, 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, 2019, 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. 65 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 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, 2019: Investments Valued by Fair Value Level Federal Agency Bond Federal Agency Colataralized Mortgage Obligation Federal Agency Mortgage -Backed Securities US Treasury Notes Supra -National Agency Bond/Note Corporate Note Asset Backed Security Municipal Bonds Pension Fixed Income Securities Pension Equity Securities $ 1,189,656 Quoted Prices in Active Markets for Significant Other Identical Assets Observable Inputs (Level1) (Level2) $ - $ 1,189,656 1,818,722 - 1,818,722 906,055 - 906,055 8,990,876 8,990,876 - 1,843,920 - 1,843,920 7,845,234 - 7,845,234 4,818,755 - 4,818,755 142,758 - 142,758 14,513,575 - 14,513,575 36,889,156 - 36,889,156 $ 78,958,707 $ 8,990,876 $ 69,967,831 66 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 5 - Receivables: Receivables as of year end for the City's individual major funds and nonmajor funds, including the applicable allowances for uncollectible accounts, are as follows: General Fund Capital Projects Fund Infrastructure Special Revenue Fund Community Redevelopment Fund Water Fund Sewer Fund Sanitation Fund Stormwater Fund Nonmajor Governmental Funds Internal Service Fund Accounts Taxes Other $ 3,338,502 $ 308,080 $ 813,092 - - 3,254 Less Allowance for Uncollectible Accounts Total $ (3,269,927) $ 1,189,747 3,254 1,491 1,491 - 794 794 340,534 75,126 (29,919) 385,741 525,359 41,625 (138,778) 428,206 209,284 5,481 (46,081) 168,684 122,954 334 (18,173) 105,115 - 49,506 49,506 1,819 1,819 $ 4,536,633 $ 308,080 $ 992,522 $ (3,502,878) $ 2,334,357 67 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 6 - Capital Assets: Capital asset activity for the year ended September 30, 2019 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 Im provem ents/infrastructure Machineryand equipment Intangibles Total capital assets being depreciated Less Accumulated Depreciation for Beginning Ending Balance Increases Decreases Balance $25,350,984 $ - $ (42,908) $25,308,076 731,508 4,277,063 (572,084) 4,436,487 26,082,492 4,277,063 (614,992) 29,744,563 30,702,934 99,499 - 30,802,433 27,195,810 1,174,478 - 28,370,288 15,879,068 2,574,250 (1,151,092) 17,302,226 1,039,093 22,695 (558,744) 503,044 74,816,905 3,870,922 (1,709,836) 76,977,991 Buildings (10,135,663) (1,073,059) - (11,208,722) Improvements/infrastructure (11,895,805) (918,292) - (12,814,097) Machineryand equipment (9,547,676) (1,575,809) 1,139,607 (9,983,878) Intangibles (934,537) (75,694) 558,744 (451,487) Total accumulated depreciation (32,513,681) (3,642,854) 1,698,351 (34,458,184) Total capital assets being depreciated, net 42,303,224 228,068 (11,485) 42,519,807 Governmental activities capital assets, net $68,385,716 $ 4,505,131 $ (626,477) $72,264,370 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 $88,589. 68 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 6 - Capital Assets (Continued): Beginning Ending Balance Increases Decreases Balance Business -type Activities: Capital Assets, not being depreciated: Land $ 1,511,807 $ - $ - $ 1,511,807 Construction in progress 3,180,470 1,256,899 (799,405) 3,637,964 Total capital assets, not being depreciated 4,692,277 1,256,899 (799,405) 5,149,771 Capital Assets, being depreciated Buildings 321,231 668,549 - 989,780 Improvements/infrastructure 118,540,146 1,279,534 (236,271) 119,583,409 Machineryand equipment 9,305,270 1,150,251 (1,149,508) 9,306,013 Intangibles 433,221 12,387 (19,366) 426,242 Total capital assets being depreciated 128,599,868 3,110,721 (1,405,145) 130,305,444 Less Accumulated Depreciation for: Buildings (61,586) (17,136) - (78,722) Improvements/infrastructure (44,305,372) (4,767,287) 231,241 (48,841,418) Machineryand equipment (5,149,053) (961,330) 1,049,670 (5,060,713) Intangibles (177,786) (39,488) 19,366 (197,908) Total accumulated depreciation (49,693,797) (5,785,241) 1,300,277 (54,178,761) Total capital assets being depreciated, net 78,906,071 (2,674,520) (104,868) 76,126,683 Business -type activities capital assets, net $83,598,348 $ (1,417,621) $ (904,273) $81,276,454 Depreciation expense was charged to functions/programs as follows: Governmental Activities: General government $ 639,592 Public safety 1,600,924 Physical environment/transportation 225,112 Economic environment 139,560 Culture and recreation 949,077 Total Depreciation Expense - governmental activities $ 3,554,265 Business -type Activities Water $ 1,633,131 Sewer 2,945,965 Sanitation 480,262 Stormwater 725,883 Total Depreciation Expense - business -type activities $ 5,785,241 69 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 7 - Capital Leases: The City has entered into lease agreements for financing the acquisition of communications equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Machinery & equipment Less: accumulated depreciation Total Governmental Activities $ 919,125 (80,710) $ 838,415 Amortization of equipment leased and capital leases is included in depreciation expense. The future minimum lease obligations and the net present value of these minimum payments as of September 30, 2019 were as follows: Year Ending September 30 2020 2021 2022 2023 2024 Thereafter Total minimum lease payments Less: amount representing interest Note 8 - Long -Term Debt: Bonds Payable- Public Offering Governmental Activities $ 106,086 106,086 106,086 106,086 106,086 424,344 954,774 (117,029) $ 837,745 The City issues bonds to provide funds for the acquisition and construction of major capital assets. In the event of default, bondholders may take any remedies legally appropriate, and declare all principal and accrued interest is due and payable immediately. 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 $747,863. For the fiscal year, principal and interest paid on this series was $748,150 and total pledged revenue was $6,263,697. 70 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 8 - Long -Term Debt (Continued): In a prior year, the City issued Water and Sewer Revenue and Refunding Bonds, Series 2017 in the amount of $10,817,000 with interest of 2.38% to partially refund the Water and Sewer Revenue and Refunding Bond Series 2009. This bond is secured by the net revenue of the water and sewer system. The total principal and interest remaining to be paid on this series is $12,432,283. For the fiscal year, principal and interest paid on this series was $346,374 and total pledged revenue was $6,263,697. 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 Interest Rates and Dates Maturity Original Amount Balance September 30, 2019 Water and Sewer Revenue 3.0 - 4.6% 12/1/2010 Refunding Bonds, to Series 2009 (6/1 & 12/1) 12/1/2030 $16,640,000 $ 735,000 Water and Sewer Revenue 2.38% 12/1/2018 Refunding Bonds, to Series 2017 (6/1 & 12/1) 12/1/2030 $10,817,000 $ 10,727,000 $ 11,462,000 Annual debt service requirements to maturity for revenue bonds are as follows: Year Ending September 30, 2020 2021 2022 2023 2024 2025-2029 2030-2031 Business -Type Activities Principal Interest $ 828,000 $ 267,059 855,000 242,915 879,000 222,280 900,000 201,110 920,000 179,452 4,939,000 554,124 2,141,000 51,206 Total $11,462,000 $ 1,718,146 71 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 8 - Long -Term Debt (Continued): Notes Payable- Direct Borrowing 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 $4,765,104. For the fiscal year, principal and interest paid on this series was $476,975 and total pledged revenue was $5,003,481. In the event of default, the lender may seek enforcement of all remedies available under the law. Any amounts due on the note that remain unpaid shall bear interest at the default rate until all amounts then due are paid in full. 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 $5,020,338. For the fiscal year, principal and interest paid on this series was $418,870 and total pledged revenue was $3,474,813. In the event of default, the lender may seek enforcement of all remedies available under the law. Any amounts due on the note that remain unpaid shall bear interest at the default rate until all amounts then due are paid in full. The City issued Master Plan Capital Projects Revenue Note, Series 2017 in the amount of $30,000,000 with interest of 2.63% to fund master plan projects, Victory Pointe, Boat Ramp Relocation, Downtown Waterfront District Revitalization, Legacy Loop Trail Spur, Public Wi- Fi Network, Public Works Complex, and City Limits Entryway Signs. This note is secured by a covenant to budget and appropriate. Total principal and interest remaining to be paid on this series is $33,874,573. For the fiscal year, principal and interest paid on this series was $2,424,210. In the event of default, the lender may seek enforcement of all remedies available under the law. Any amounts in the project fund shall be applied to repayment of principal and interest. 72 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 8 - Long -Term Debt (Continued): Notes Payable (Continued) Revenue notes outstanding at year end are as follows: Governmental Activities Interest Rates and Dates Maturity Public Improvement Refunding 2.03% 12/1/2016 Revenue Note, Series 2016 (6/1 & 12/1) to 12/1 /2028 Infrastructure Sales Surtax 2.12% 12/1/2016 Revenue Note, Series 2016 (6/1 & 12/1) to 12/1 /2030 Master Plan Capital Projects 2.63% 12/1/2018 Revenue Note, Series 2017 (6/1 & 12/1) to 12/1 /2032 Balance Original September 30, Amount 2019 $ 5,331,196 4,312,844 $ 5,300,000 4,432,992 $23,670,559 22,363,155 $ 31,108,991 Business -Type Activities Master Plan Capital Projects 2.63% 12/1/2018 Revenue Note, Series 2017 (6/1 & 12/1) to 12/1 /2032 $ 6,329,441 $ 5,979,845 Annual debt service requirements to maturity for revenue notes are as follows: Governmental Activities Business -Type Activities Year Ending September 30, Principal Interest Principal Interest 2020 $ 2,063,756 $ 744,560 $ 358,879 $ 152,550 2021 2,114,207 693,695 368,373 142,987 2022 2,164,966 641,584 377,868 133,174 2023 2,218,409 588,188 387,995 123,103 2024 2,272,175 533,472 398,122 112,765 2025-2029 12,218,584 1,798,257 2,153,065 399,016 2030-2033 8,056,894 404,366 1,935,543 103,462 Total $31,108,991 $5,404,122 $5,979,845 $1,167,057 73 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 8 - Long -Term Debt (Continued): Changes in Long -Term Liabilities Long-term liability activity for the year ended September 30, 2019 was as follows: Governmental Activities Public improvement revenue notes Infrastructure revenue notes Capital Projects revenue notes Capital Leases Other post employment benefits Net pension liability Compensated absences Governmental activity long-term liabilities Business -type Activities Bonds payable - Revenue bonds Premium Total bonds payable Capital Projects revenue notes Other post employment benefits Compensated absences Business -type activity long-term liabilities Beginning Ending Due Within Balance Additions Deductions Balance One Year $ 4,698,355 $ $ (385,511) $ 4,312,844 $ 393,337 4,754,475 (321,483) 4,432,992 328,298 23,670,559 (1,307,404) 22,363,155 1,342,121 - 919,034 (81,289) 837,745 83,482 6,543,018 2,345,199 8,888,217 - 1,830 37,919 39,749 - 1,335,783 246,997 (133,578) 1,449,202 144,920 $41,004,020 $ 3,549,149 $ (2,229,265) $42,323,904 $2,292,158 $12,262,000 $ 5,903 $ (800,000) (483) $11,462,000 5,420 $ 828,000 - 12,267,903 (800,483) 11,467,420 828,000 6,329,441 (349,596) 5,979,845 358,882 2,141,172 716,819 - 2,857,991 - 427,078 25,139 (42,708) 409,509 40,951 $21,165,594 $ 741,958 $ (1,192,787) $20,714,765 $1,227,833 Note 9 - Interfund Receivables, Payables and Transfers: Interfund transfers for the year ended September 30, 2019 consisted of the following: Transfers Out: General Fund Water Fund Transfers In Sewer Stormwater Fund Fund Nonmajor Govt Total General Fund $ $ $ $ $ 218,472 $ 218,472 Infrastructure Fund - 2,030,508 2,030,508 Water Fund 963,675 585 - 964,260 Sewer Fund 1,068,164 7,823 - 7,617 1,083,604 Stormwater Fund 71,476 - - 71,476 Nonmajor Governmental - 513 - - 584,352 584,865 $2,103,315 $ 8,336 $ 585 $ 7,617 $2,833,332 $4,953,185 74 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 9 - Interfund Receivables, Payables and Transfers (Continued): The majority of the transfers were to fund other capital projects and debt service payments. Transfers from the Water Fund and Sewer Fund to the General Fund were based on a percentage of water and sewer sales. The transfers from various funds to the Internal Service Fund were lump sum transfers of city contributions to the Group Medical Self Insurance Fund. The composition of interfund advances as of September 30, 2019 is as follows: Receivable Fund Sewer Fund Sanitation Fund Payable Fund Amount Stormwater Fund $ 275,000 General Fund 507,127 $ 782,127 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. The balance due to the Sewer fund from the Stormwater fund is for the upfront construction costs on the Victory Pointe project that will be funded from various grants upon the completion of the project. Note 10 - 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. Effective April 1, 2019, the plan administration for the police and firefighters pension plans changed to Pension Resource Center. 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. 75 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): 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. During the year, the Police and Firefighters' Pension Plans no longer contract with the FMPTF, and are now administered by a Pension Resource Center. These plans do not issue stand alone audit reports. 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, 2018 actuarial valuations is $11,018 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, 2019 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 7 Inactive Plan Members Entitled to but Not Yet Receiving Benefits - Active Plan Members - i7 76 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): A. General Employees (Continued) - Net Pension Liability of the City - The City's net pension liability was measured as of September 30, 2019, 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, 2019 were as follows: Total Pension Liability $ 333,418 Plan Fiduciary Net Position (293,669) Sponsor's Net Pension Liability (Asset) $ 39,749 Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) 88.08% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2018, updated September 30, 2019 using the following actuarial assumptions: Inflation 2.77% Salary Increases 0.00% Investment Rate of Return 7.00% Mortality rates were based on the sex -distinct rates set forth in the RP-2000 Combined Mortality Table with full generational improvements in mortality using Scale BB. 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. 77 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): A. General Employees (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, 2019 are summarized in the following table: Long Term Expected Asset Class Target Allocation Real Rate of Return Core Bonds 15% 1.60% Core Plus 15% 2.10% U.S. Large Cap Equity 34% 4.60% U.S. Small Cap Equity 11% 5.50% Non-U.S. Equity 15% 6.70% Core real estate 10% 5.00% 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. 78 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): A. General Employees (Continued) - Changes in Net Pension Liability Balance at September 30, 2018 Changes Due to: Service Cost Expected interest growth Unexpected investment income Demographic experience Employer contributions Benefit payments and refunds Administrative expenses Assumption changes Balance at September 30, 2019 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 332,283 $ 323,262 $ 9,021 21,414 21,115 299 - (6,719) 6,719 33,131 - 33,131 - 11,018 (11,018) (53,410) (53,410) - - (1,597) 1,597 $ 333,418 $ 293,669 $ 39,749 Sensitivity of the Net Pension Liability to changes in the Discount Rate Current 1 % Decrease Discount Rate 1 % Increase 6.00% 7.00% 8.00% General Pension Plan Net Pension Liability $ 56,410 $ 39,749 $ 24,589 Deferred outflows and inflows of resources For the year ended September 30, 2019 the City will recognize a pension expense of $37,947. On September 30, 2019 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 $ - $ - Changes of Assumptions - - Net Difference Between Projected and actual Earnings on Pension Plan Investments - 5,374 $ - $ 5,374 79 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - 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: 2020 $ (4,269) 2021 (3,350) 2022 902 2023 1,343 2024 - Thereafter - B. Police Officers' Retirement - The police officers' 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, 2018 actuarial valuation. Employees must contribute 3% of pensionable earnings prior to October 29, 2018, 4% of pensionable earnings for the period October 29, 2018 through September 29, 2019, and 5% of pensionable earnings thereafter. 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 $365,513 in 2019 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. 80 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Plan Membership - At September 30, 2019 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 19 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 16 Active Plan Members 72 107 Net Pension Liability of the City - The City's net pension liability was measured as of September 30, 2019, 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, 2019 were as follows: Total Pension Liability Plan Fiduciary Net Position Sponsor's Net Pension Liability (Asset) Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) * does not include Share Plan balances or excess chapter 175/185 contributions $ 18, 985, 282 (20,217,453) $ (1,232,171) 106.49% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2018, updated September 30, 2019 using the following actuarial assumptions: Inflation 2.77% 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 Blue Collar Mortality Table, with full generational improvements in mortality using Scale BB. 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. 81 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - 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, 2019 are summarized in the following table: Long Term Expected Asset Class Target Allocation Real Rate of Return Core Bonds Core Plus U.S. Large Cap Equity U.S. Small Cap Equity Non-U.S. Equity Core real estate Total 15% 1.60% 15% 2.10% 34% 4.60% 11 % 5.50% 15% 6.70% 10% 5.00% 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, 2018 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, 2019 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 17,658,942 $ 18,326,157 $ (667,215) 1,048,755 - 1,048,755 1,290,431 1,302,143 (11,712) - 27,890 (27,890) (610,614) - (610,614) - 891,380 (891,380) - 175,526 (175,526) (403,441) (403,441) - - (102,202) 102,202 1,209 - 1,209 $ 18,985,282 $ 20,217,453 $ (1,232,171) 82 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Sensitivity of the Net Pension Liability to changes in the Discount Rate Police Pension Net Pension Liability Deferred outflows and inflows of resources Current 1 % Decrease Discount Rate 6.00% 7.00% 1 % Increase 8.00% $ 1,545,483 $ (1,232,171) $ (3,490,866) For the year ended September 30, 2019 the City will recognize a pension expense of $1,208,533. On September 30, 2019 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 $ - Changes of assumptions 1,981,570 Net difference between projected and actual earnings on pension plan investments - $ 898,618 464,640 $ 1,981,570 $ 1,363,258 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: 2020 2021 2022 2023 2024 Thereafter $ 41,838 82,150 261,522 272,024 53,190 (92, 412) 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, 2019 is $87,845. 83 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - 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 full time and volunteer firefighters employed by the City. 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, 2018 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 $209,282 in 2019 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, 2019 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 3 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 62 Active Plan Members 72 137 84 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - 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, 2019, 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, 2019 were as follows: Total Pension Liability Plan Fiduciary Net Position Sponsor's Net Pension Liability (Asset) Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) does not include Share Plan balances or excess chapter 175/185 contributions $ 18, 435, 970 (18,988,865) $ (552,895) 103.00% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2018, updated September 30, 2019 using the following actuarial assumptions: Inflation 2.77% 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 Combined Mortality Table, with full generational improvements in mortality using Scale BB. 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. 85 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - 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, 2019 are summarized in the following table: Long Term Expected Asset Class Target Allocation Real Rate of Return Core Bonds Core Plus U.S. Large Cap Equity U.S. Small Cap Equity Non-U.S. Equity Core real estate Total 15% 1.60% 15% 2.10% 34% 4.60% 11 % 5.50% 15% 6.70% 10% 5.00% 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, 2018 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, 2019 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 15,158,798 $ 16,128,326 $ (969,528) 1,313,842 - 1,313,842 1,141,847 1,184,709 (42,862) - 56,256 (56,256) (158,435) - (158,435) - 1,585,514 (1,585,514) - 231,935 (231,935) (99,705) (99,705) - - (98,170) 98,170 1,079,623 - 1,079,623 $ 18,435,970 $ 18,988,865 $ (552,895) 86 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - Retirement Plans (Continued): C. Firefighters' Retirement (Continued) - Sensitivity of the Net Pension Liability to changes in the Discount Rate Current 1 % Decrease Discount Rate 1 % Increase 6.00% 7.00% 8.00% Fire Pension Net Pension Liability $ 2,287,883 $ (552,895) $ (2,849,320) Deferred outflows and inflows of resources For the year ended September 30, 2019 the City will recognize a pension expense of $1,607,266. On September 30, 2019 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 $ 367,118 $ 364,048 Changes of assumptions 2,745,256 - Net difference between projected and actual earnings on pension plan investments - 430,918 $ 3,112,374 $ 794,966 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: 2020 2021 2022 2023 2024 Thereafter $ 299,613 333,614 491,876 503,671 397,584 291,050 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, 2019 is $0. 87 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 10 - 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 2019 was $7,960,169; the City's total payroll for City employees was $18,917,060. 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 2019 was $671,409. Aggregate Amounts of All Pension Plans The aggregate amounts for all of the City's defined benefit pension plans at September 30, 2019 are as follows: Net Pension Asset (Liability) General Employees Pension Plan $ (39,749) Police Pension Plan 1,232,171 Firefighters Pension Plan 552,895 Governmental Activities Deferred Deferred Inflows Outflows Expense $ (5,374) $ - $ 45,234 (1,363,258) 1,981,570 1,208,533 (794, 966) 3,112, 374 1,607,266 1,745,317 $ (2,163, 598) $ 5,093,944 $ 2, 861, 033 88 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 11 - 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. This plan does not issue stand-alone financial statements. As of October 1, 2018, the valuation date, there were 346 active employees and 11 inactive employees currently receiving benefits. The OPEB liability of $11,746,208 was measured as of September 30, 2019 and was determined by the actuarial valuation. The covered payroll was $18,701,595, and the ratio of Net OPEB liability as a percentage of covered payroll was 62.81 %. Summary of Actuarial Methods & Assumations: 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 Other Postemployment Benefits Liability and Related Ratios Schedule, immediately following the notes to the financial statements as required supplementary information, presents multi -year trend information about whether the actuarial value of the plan assets is increasing or decreasing over time. The schedule includes one year. 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. 89 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 11 - Other Post Employment Benefits (Continued): Summary of Actuarial Methods & Assumptions (Continued) The Total liability was determined using the following actuarial assumptions and other inputs, applied to all periods include in the measurement unless otherwise specified: Initial Health Care Cost Trend Rate Ultimate Health Care Cost Trend Rate Fiscal Yearthe Ultimate Rate is Reached Additional Information Valuation Date Actuarial Cost Method Discount Rate* Inflation Rate Salary Rate Increase Funded Ratio (Fiduciary Net Position as a percentage of Total OPEB Liability) Covered Payroll Net OPEB Liability as a Percentage of Covered Payroll 8.50% 5.00% Fiscal year 2029 October 1, 2018 EntryAge Normal 2.66% 0.00% 2% NA $ 18,701,595 62.81 % The discount rate was based on the index provided by Bond Buyer 20-Bond General Obligation Index based on the 20 year AA municipal bond rate as of October 1, 2018. 90 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 11 - Other Post Employment Benefits (Continued): Below are the details regarding the Total OPEB liability for the measurement period from October 1, 2018, to September 30, 2019. Total OPEB Liability Balance as of 9/30/2018 $ 8,684,190 Changes for the year: Service Cost 721,475 Interest 288,724 Difference Between Expected & Actual Experience 181,592 Changes of Assumptions and Other Inputs 2,106,772 Benefit Payments (236,545) Other Changes - Net Changes $ 3,062,018 Balance as of 9/30/2018 $11,746,208 (1) Includes the Implicit Rate Subsidy. The following table presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage higher than the current discount rate: Decrease Discount Rate Increase 1.66% 2.66% 3.66% Total OPEB Liability $13,992,050 $11,746,208 $ 9,955,927 The following presents the total liability of the city using the 2019 healthcare cost trend rate of 0 percent, as well as what the City's OPEB liability would be if it were calculated using healthcare trend rates that are 1 percentage point lower and 1 percentage point higher than the current healthcare cost trend rates: Decrease Health Care Increase 1 % Trend 1 % Total OPEB Liability $ 9,780,021 $11,746,208 $ 14,220,780 91 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 11 - Other Post Employment Benefits (Continued): For the fiscal year ended September 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Difference between expected and actual experience Changes of assumptions Total Deferred Deferred Outflows of Inflows of Resources Resources $ 912,108 $ - 1,846,997 481,535 $ 2,759,105 $ 481,535 Amounts reported as deferred outflows or resources and deferred inflows of resources related to OPEB will be recognized in OPEB expenses as follows: Fiscal Year Ending September 30, 2020 $ 333,081 2021 333,081 2022 333,081 2023 333,081 2024 333,081 Thereafter 612,165 Postemployment benefits (OPEB's) - The City provides optional postemployment healthcare and dental insurance coverage to eligible individuals. Eligible individuals - Employees of the City who are eligible for retirement or disability retirement under the City's retirement plans may elect to participate in the City -sponsored insurance plans (healthcare and dental) at their cost. Retiree monthly premiums for postemployment insurance coverage - retirees must pay monthly contributions in accordance with City Resolution #2013-06 based upon plan costs as determined by the City in conjunction with insurance carriers. Failure to pay insurance premiums will result in termination of insurance coverage without the ability to reinstate such coverage. 92 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 12 - 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 $165,000 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 $4,613,819. 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 $251,597 represents claims processed through October 2019 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 13 - Commitments and Contingencies: 2019 2018 $ 223,114 $ 221,560 4,489,860 4,223,809 (4,461,377) (4,222,255) $ 251,597 $ 223,114 Litigation - The City is engaged in various liability claims incidental to the conduct of its general government operations at September 30, 2019. 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. 93 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 14 - Fund Balances: The City classifies the components of fund balance based on the classifications described below: Nonspendable Nonspendable funds include fund balance amounts that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. Spendable Fund Balance Restricted - includes fund balance amounts that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors, or laws and regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed - includes fund balance amounts that can be used only for the specific purposes determined by formal action of the City Council, the City's highest level of decision making authority, with formal action occurring prior to the fiscal year end. Commitments may be changed or lifted only by the City Council taking the same formal action (Resolution) that imposed the constraint originally. 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. 94 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2019 Note 14 - Fund Balances (Continued): At September 30, 2019, the City's governmental fund balances were as follows: Community Infrastructure Redevelopment Other General Capital Special Special Revenue Governmental Fund Projects Revenue Fund Fund Funds Total Fund Balances Nonspendable Inventory/prepaids Spendable Restricted for: Police Fire Building Services Culture and recreation Community redevelopment Infrastructure Debt service Cemetery Assigned for: Capital projects Police/fire donations Unassigned $ 282,411 $ $ $ 3,712 $ 3,399 $ 289,522 205,379 - 647,836 853,215 - 1,121,106 1,121,106 1,951,294 1,951,294 1,280,695 1,280,695 512,478 - 512,478 793,812 - - 793,812 - 1,778,880 1,778,880 1,290,286 1,290,286 - 18,699,951 18,699,951 18,476 - 18,476 8,181,811 _ 8,181,811 $ 8,688,077 $18,699,951 $ 793,812 $ 516,190 $ 8,073,496 $36,771,526 Note 15 -Subsequent Events: In response to the COVID-19 pandemic, the City followed the Governor's executive safer at home order. These events are ongoing as of the date of these statements and carry a high level of uncertainty. The outcome and ultimate effect on the City cannot be determined at this time. The City continues to evaluate the effects on revenue and potential financial support from FEMA and the CARES Act. 95 04F KM REQUIRED SUPPLEMENTAL INFORMATION 97 98 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS Last 10 Fiscal Years* Total OPEB Liability Service cost Interest Differences between expected and actual experience Changes of assumptions Benefit Payments (2) Other changes Net change in total OPEB liability Total OPEB liability, beginning (1) Total OPEB liability, ending Plan fiduciary net position as a percentage of total OPEB liability Covered payroll NetOPEB liabilityas a percentage of covered payroll 9/30/2019 9/30/2018 $ 721,475 $ 496,316 288,724 312,754 181,592 - 2,106,772 (662,223) (236,545) (109,600) 3,062,018 37,247 8,684,190 8,646,943 $ 11,746,208 $ 8,684,190 0.00% 0.00% $ 18,701,595 $ 14,293,247 62.81 % 60.76% Notes to Schedule: (1) Fiscal Year 2016 results calculated one year later using a 3.35% Discount Rate indexas of 9/30/2017. (2) Includes the Implicit Rate Subsidy. *only two years of data is available 99 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS GENERAL EMPLOYEES Last 10 Fiscal Years* 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Total Pension Liability Service Cost $ - $ - $ - $ - $ - $ - Interest 21,414 23,435 22,569 22,224 29,060 28,229 Changes in Excess State Money - - - - - - Differences Between Expected and Actual Experience 33,131 17,118 12,118 40,676 Changes of Assumptions - 28,462 31,161 (10,549) Benefit Payments, including refunds of employee contributions (53,410) (51,013) (57,338) (61,435) (63,484) (56,412) Net Change in Total Pension Liability 1,135 (27,578) 10,811 4,068 (4,297) (28,183) Total Pension Liability -beginning 332,283 359,861 349,050 344,982 349,279 377,462 Total Pension Liability -ending (a) $ 333,418 $ 332,283 $ 359,861 $ 349,050 $ 344,982 $ 349,279 Plan Fiduciary Net Position Contributions -employer 11,018 8,767 8,767 Contributions -state - - - Contributions -employee - - - - - - Net Investment Income 14,396 24,889 44,469 29,829 2,613 40,560 Benefit Payments, including refunds of employee contributions (53,410) (57,338) (57,338) (61,435) (63,484) (66,212) Administrative Expense (1,597) (1,681) (5,457) (1,757) (6,508) (3,136) Other Net Change in Plan Fiduciary Net Position (29,593) (25,363) (9,559) (33,363) (67,379) (28,788) Plan Fiduciary Net Position - beginning 323,262 348,625 358,184 391,547 458,926 487,714 Plan Fiduciary Net Position - ending (b) $ 293,669 $ 323,262 $ 348,625 $ 358,184 $ 391,547 $ 458,926 Net Pension Liability - ending (a)- (b) $ 39,749 $ 9,021 $ 11,236 $ (9,134) $ (46,565) $ (109,647) Plan Fiduciary Net Position as a Percentage of Total Pension Liability 88.08% 97.29% 96.88% 102.62% 113.50% 131,39% Covered Payroll $ - $ - $ - $ - $ - $ - Net Pension Liability as a Percentage of Covered Payroll N/A N/A N/A N/A N/A N/A * only six years of data available 100 CITY OF CLERMONT, FLORIDA IRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS POLICE Last 10 Fiscal Years* 9/30/2019 9/30/2018 913012017 9/30/2016 9/30/2015 9/30/2014 Total Pension Liability Service Cost $ 1,048,755 $ 941,659 $ 941,659 $ 836,661 $ 560,680 $ 524,531 Interest 1,290,431 1,170,292 1,049,633 749,652 860,884 723,246 Changes in Excess State Money _ Diferences Between Expected and Actual Experience (610,614) (108,041) (204,387) (211,987) (162,697) Changes of Assumptions 576,133 3,155,202 Benefit Payments, including refunds of employee contributions (403,441) (381,207) (640,378) (342,697) (298,559) (532,943) Assumption changes 1,209 NetChange in Total Pension Liability 1,326,340 1,622,703 1,722,660 4,186,831 960,308 714,834 Total Pension Liability -beginning 17,658,942 16,036,239 14,313,579 10,126,748 9,166,440 8,451,606 Total Pension Liability -ending (a) $ 18,985,282 $ 17,658,942 $ 16,036,239 $ 14,313,579 $ 10,126,748 $ 9,166,440 Plan Fiduciary Net Position Contributions -employer 891,380 944,540 756,302 632,411 281,722 411,953 Contributions -state 240,486 217,653 Contributions -employee 175,526 120,269 116,332 108,806 99,188 95,733 Net Investment Income 1,330,033 1,245,288 1,908,188 1,115,432 (14,779) 1,043,670 Benefit Payments, including refunds of employee contributions (403,441) (381,207) (640,378) (342,697) (298,559) (334,599) Administrative Expense (102,202) (51,400) (49,645) (30,651) (54,494) (31,851) Other _ _ _ NetChange in Plan Fiduciary Net Position 1,891,296 1,877,490 2,090,799 1,483,301 253,564 1,402,559 Plan Fiduciary Net Position - beginning 18,326,157 16,448,667 14,357,868 12,874,567 12,621,003 11,218,444 Plan Fiduciary Net Position - ending (b) $ 20,217,453 $ 18,326,157 $ 16,448,667 $ 14,357,868 $ 12,874,567 $ 12,621,003 Net Pension Liability - ending (a) - (b) $ (1,232,171) $ (667,215) $ (412,428) $ (44,289) $ (2,747,819) $ (3,454,563) Plan Fiduciary Net Position as a Percentage of Total Pension Liability 106.49% 103.78% 102.57% 100.31% 127.13% 137.69% Covered Payroll $ 3,813,876 $ 3,366,613 $ 3,366,613 $ 3,366,613 $ 3,108,552 $ 2,424,191 Net Pension Liability as a Percentage of Covered Payroll-32.31%-19.82%-12.25% -1.32%-88.40%-142.50% * only six years of data available 101 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS FIRE 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 Last 10 Fiscal Years* 9/30/2019 9/30/2018 $ 1,313,842 $ 1,025,516 1,141,847 996,576 (158,435) (121,553) 1,079,623 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 1,025,516 $ 784,710 $ 524,325 $ 596,543 782,004 515,458 553,753 530,089 633,143 (208,729) (67,286) 634,356 2,505,255 (99,705) (25,120) (4,513) (1,324) (945) (81,466) 3,277,172 1,875,419 3,070,506 3,595,370 1,009,847 1,045,166 15,158,798 13,283,379 10,212,873 6,617,503 5,607,656 4,562,490 $18,435,970 $15,158,798 $13,283,379 $10,212,873 $ 6,617,503 $ 5,607,656 1,585,514 1,278,757 797,699 491,818 646,065 438,902 - - - - 181,292 175,931 231,935 200,118 238,785 279,064 141,632 86,520 1,240,965 1,063,078 1,599,687 858,136 (32,699) 704,467 (99,705) (25,120) (4,513) (1,324) (945) (756) (98,170) (35,839) (49,761) (28,346) (40,885) (24,109) Net Change in Plan Fiduciary Net Position 2,860,539 2,480,994 2,581,897 1,599,348 894,460 1,380,955 Plan Fiduciary Net Position - beginning 16,128,326 13,647,332 11,065,435 9,466,087 8,571,627 7,190,672 Plan Fiduciary Net Position - ending (b) $18,988,865 $16,128,326 $13,647,332 $11,065,435 $ 9,466,087 $ 8,571,627 Net Pension Liability - ending (a) - (b) $ (552,895) $ (969,528) $ (363,953) $ (852,562) $ (2,848,584) $ (2,963,971) Plan Fiduciary Net Position as a Percentage of Total Pension Liability 103.00% 106.40% 102.74% 108.35% 143.05% 152.86% Covered Payroll $ 4,438,530 $ 3,602,745 $ 3,602,745 $ 2,798,049 $ 2,798,049 $ 2,798,049 Net Pension Liability as a Percentage of Covered Payroll -12.46% -26.91% -10.10% -30.47% -101.81% -105.93% only six years of data available 102 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS GENERAL EMPLOYEES Last 10 Fiscal Years* Actuarially Determined Contribution Contributions in Relation to the Actuarially Determined Contribution Contribution Deficiency (Excess) Covered Payroll Contributions as a Percentage of Covered Payroll 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 11,018 $ 8,767 $ 8,767 $ - $ - $ - 11,018 8,767 8,767 N/A N/A N/A N/A N/A N/A Valuation Date 10/1/2018 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 2.77% 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 six years of data available 9/30/2019 913012018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 4.23% 7.00% 4.08% 4.08% 5.48% 8.55% 103 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS POLICE Last 10 Fiscal Years* 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution $ 936,834 $ 905,229 $ 875,593 $ 640,139 $ 583,559 $ 629,606 Contributions in Relation to the Actuarially Determined Contribution 891,380 944,540 756,302 632,411 522,208 670,126 Contribution Deficiency (Excess) $ 45,454 $ (39,311) $ 119,291 $ 7,728 $ 61,351 $ (40,520) Covered Payroll $ 3,813,876 $ 3,366,613 $ 3,366,613 $ 3,366,613 $ 3,108,552 $ 3,108,552 Contributions as a Percentage of Covered Payroll 23.37% 28.06% 22.46% 18.78% 16.80% 21.56% Alnfoc fn Qnhntlnla Valuation Date 10/1/2018 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 (2.77% per annum is attributable to long-term inflation); this rate was used to discount all fixture 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 Non -investment Expenses Future Contributions Schedule of Investment Returns Annual money -weighted rate of return, net of investment expenses Sex -distinct rates set forth in the RP-2000 Blue Collar Mortality Table, with full generational improvements in mortality using Scale BB Liabilities have been loaded by 1.50% to account for non -investment expenses Contributions from the employer and employees are assumed to be made as legally required. * only six years of data available 9/3012019 9/3012018 4.23% 7.00% 9/3012017 913012016 4.08% 4.08% 9/30/2015 9/30/2014 5.48% 8.55% 104 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2019 SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS FIRE Actuarially Determined Contribution Contributions in Relation to the Actuarially Determined Contribution Contribution Deficiency (Excess) Covered Payroll Contributions as a Percentage of Covered Payroll Last 10 Fiscal Years* 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 1,585,514 $ 1,284,255 $ 1,113,095 $ 647,476 $ 603,000 $ 614,833 1,585,514 1,278,757 797,699 491,818 827,357 668,800 $ - $ 5,498 $ 315,396 $ 155,658 $ (224,357) $ (53,967) 4,438,530 3,602,745 3,602,745 2,798,049 2,798,049 2,798,049 35.72% 35.49% 22.14% 17.58% 29.57% 23.90% Valuation Date 10/1/2018 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 (2.77% 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% atage 20 to 0.00% atage 50 Assumed disability is based on age and ranges from 0.03% atage 20 to 0.18% atage 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP-2000 Blue Collar Mortality Table, with full generational improvements in mortality using Scale BB Non -investment Expenses Liabilities have been loaded by 1.75% to accountfor non -investment expenses Future Contributions Contributions from the employer and employees are assumed to be made as legally required. Schedule of Investment Returns 9/30/2019 9/30/2018 9/30/2017 9/3012016 9/3012015 9/3012014 Annual money -weighted rate of return, net of investment expenses 4.23% 7.00% 4.08% 4.08% 5.48% 8.55% * only six years of data available 105 106 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 107 108 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 Projects Fund This fund was established to account for financial resources segregated for the acquisition or construction of major capital projects. 109 CITY OF CLERMONT, FLORIDA CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Intergovernmental revenues $ - $ 950,000 $ 375,000 $ (575,000) Investment earnings 100,000 100,000 457,660 357,660 Total revenues 100,000 1,050,000 832,660 (217,340) Expenditures: Current: General government 7,000 7,000 6,434 566 Capital Outlay: Physical environment 8,086,250 8,086,250 766,299 7,319,951 Economic environment 8,894,477 12,212,386 3,079,925 9,132,461 Total expenditures 16,987,727 20,305,636 3,852,658 16,452,978 Excess (Deficiency) of Revenues Over Expenditures (16,887,727) (19,255,636) (3,019,998) 16,235,638 Other Financing Sources: Transfers in 1,300,000 - - - Total other financing sources 1,300,000 - - - Net Change in Fund Balance (15,587,727) (19,255,636) (3,019,998) 16,235,638 Fund Balances - beginning 21,719,949 21,719,949 21,719,949 - Fund Balances - ending $ 6,132,222 $ 2,464,313 $ 18,699,951 $ 16,235,638 110 OTHER 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 Police Impact Fees Fund Fire Impact Fee Fund Building Services Fund Fire Inspection Fund This fund was established to account for recreation impact fees collected from new developments constructed in the City. This fund was established to account for police impact fees collected from new developments constructed in the City. This fund was established to account for fire impact fees collected from new developments constructed in the City. This fund was established to account for the operations of the City's building services department which are restricted for use in providing building permitting and inspection services. This fund was established to account for the operations of the City's fire prevention and inspection services. Cemetery Fund This fund was established to account for the operations and maintenance of the City's cemetery. Debt Service Fund 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 This fund was established to account for the accumulation of resources and payment of bond principal and interest from governmental resources. ME CITY OF CLERMONT, FLORIDA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS September 30, 2019 Special Revenue Recreation Police Impact Fire Impact Building Fire Impact Fees Fees Fees Services Inspection Assets: Cash and cash equivalents $ 359,309 $ 240,121 $ 261,696 $ 831,622 $ 3,890 Investments 919,622 438,148 812,750 1,188,090 - Other receivables 1,854 1,060 1,231 1,765 41,599 Prepaid costs - - - 3,151 - Total assets $ 1,280,785 $ 679,329 $ 1,075,677 $ 2,024,628 $ 45,489 Liabilities and Fund Balances: Liabilities: Accounts payable $ 90 $ 31,493 $ 60 $ 36,682 $ - Accrued liabilities - - - 33,501 Total liabilities 90 31,493 60 70,183 - Fund balances Nonspendable - - - 3,151 - Restricted 1,280,695 647,836 1,075,617 1,951,294 45,489 Total fund balances 1,280,695 647,836 1,075,617 1,954,445 45,489 Total liabilities and fund balances $ 1,280,785 $ 679,329 $ 1,075,677 $ 2,024,628 $ 45,489 112 Total Special Total Nonmajor Revenue Governmental Cemetery Funds Debt Service Funds $ 310,562 $ 2,007,200 $ 1,140,826 $ 3,148,026 999,189 4,357,799 638,054 4,995,853 1,997 49,506 - 49,506 248 3,399 - 3,399 $ 1,311,996 $ 6,417,904 $ 1,778,880 $ 8,196,784 $ 18,503 $ 86,828 $ - $ 86,828 2,959 36,460 - 36,460 21,462 123,288 - 123,288 248 3,399 - 3,399 1,290,286 6,291,217 1,778,880 8,070,097 1,290,534 6,294,616 1,778,880 8,073,496 $ 1,311,996 $ 6,417,904 $ 1,778,880 $ 8,196,784 113 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS Year Ended September 30, 2019 Revenues: Licenses and permits Charges for services Impact fees/special assessments Investment earnings Miscellaneous Total revenues Expenditures: Current: General government Public safety Culture and recreation Debt Service: Principal Interest and fiscal charges Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses: Transfers in Transfers out Sale of general capital assets Total other financing uses Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Special Revenue Recreation Police Impact Fire Impact Building Impact Fees Fees Fees Services Fire Inspection $ - $ - $ - $ 1,588,357 $ - - - - 52,888 - 1,157,840 350,125 450,801 - - 32,346 16,783 23,015 36,639 5 - - - 161 59 1,190,186 366,908 473,816 1,678,045 64 - 303,186 91,238 1,177,867 30 560,953 - - - - 560,953 303,186 91,238 1,177,867 30 629,233 63,722 382,578 500,178 34 (569,592) (14,760) - (513) - - - - 68 - (569,592) (14,760) - (445) - 59,641 48,962 382,578 499,733 34 1,221,054 598,874 693,039 1,454,712 45,455 $ 1,280,695 $ 647,836 $ 1,075,617 $ 1,954,445 $ 45,489 114 Total Special Revenue Cemetery Funds $ - $ 1,588,357 $ 121,445 174,333 - 1,958,766 35,029 143,817 3,389 3,609 _ 159,863 3,868,882 Total Nonmajor Governmental Debt Service Funds $ 1,588,357 - 174,333 - 1,958,766 10,924 154,741 - 3,609 10,924 3,879,806 - - 91 91 - 1,572,321 - 1,572,321 117,566 678,519 - 678,519 - - 2,014,398 2,014,398 - - 794,180 794,180 117,566 2,250,840 2,808,669 5,059,509 42,297 1,618,042 (2,797,745) (1,179,703) - - 2,833,332 2,833,332 - (584,865) - (584,865) - 68 - 68 - (584,797) 2,833,332 2,248,535 42,297 1,033,245 35,587 1,068,832 1,248,237 5,261,371 1,743,293 7,004,664 $ 1,290,534 $ 6,294,616 $ 1,778,880 $ 8,073,496 115 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, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Impact fees/special assessments $ 1,000,000 $ 1,000,000 $ 1,157,840 $ 157,840 Investment earnings 20,000 20,000 32,346 12,346 Total revenues 1,020,000 1,020,000 1,190,186 170,186 Expenditures: Current: Culture and recreation 324,900 742,400 560,953 181,447 Total expenditures 324,900 742,400 560,953 181,447 Excess (Deficiency) of Revenues Over Expenditures 695,100 277,600 629,233 351,633 Other Financing Uses Transfers out (569,597) (569,597) (569,592) 5 Total other financing uses (569,597) (569,597) (569,592) 5 Net Change in Fund Balances 125,503 (291,997) 59,641 351,638 Fund Balances - beginning 1,221,054 1,221,054 1,221,054 - Fund Balances -ending $ 1,346,557 $ 929,057 $ 1,280,695 $ 351,638 116 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, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Impact fees/special assessments $ 339,000 $ 339,000 $ 350,125 $ 11,125 Investment earnings 5,000 5,000 16,783 11,783 Total revenues 344,000 344,000 366,908 22,908 Expenditures: Current: Public Safety: Law enforcement 325,485 435,121 303,186 131,935 Total expenditures 325,485 435,121 303,186 131,935 Excess (Deficiency) of Revenues Over Expenditures 18,515 (91,121) 63,722 154,843 Other Financing Sources (Uses) Transfers out Total other financing sources (uses) Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending (14,763) (14,763) (14,760) (14,763) (14,763) (14,760) 3 3 3,752 (105,884) 48,962 154,846 598,874 598,874 598,874 $ 602,626 $ 492,990 $ 647,836 $ 154,846 `fn CITY OF CLERMONT, FLORIDA FIRE IMPACT FEE SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Impact fees/special assessments $ 385,000 $ 385,000 $ 450,801 $ 65,801 Investment earnings 6,000 6,000 23,015 17,015 Total revenues 391,000 391,000 473,816 82,816 Expenditures: Current: Public safety: Fire control 82,713 339,075 91,238 247,837 Total expenditures 82,713 339,075 91,238 247,837 Excess (Deficiency) of Revenues Over Expenditures 308,287 51,925 382,578 330,653 Other Financing Uses: Transfers out - - - - Total other financing sources - - - - Net Change in Fund Balances 308,287 51,925 382,578 330,653 Fund Balances - beginning 693,039 693,039 693,039 - Fund Balances -ending $ 1,001,326 $ 744,964 $ 1,075,617 $ 330,653 118 CITY OF CLERMONT, FLORIDA BUILDING SERVICES SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2019 Revenues: Licenses and permits Charges for services Investment earnings Miscellaneous Total revenues Expenditures: Current: Public safety Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses: Transfers out Sale of general capital assets Total other financing sources Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 2,300,000 $ 2,300,000 $ 1,588,357 $ (711,643) 139,000 139,000 52,888 (86,112) 7,500 7,500 36,639 29,139 - - 161 161 2,446,500 2,446,500 1,678,045 (768,455) 1,453,634 1,453,634 1,177,867 275,767 1,453,634 1,453,634 1,177,867 275,767 992,866 992,866 500,178 (492,688) - (513) (513) - - 68 68 - - (445) (445) 992,866 992,866 499,733 (493,133) 1,454,712 1,454,712 1,454,712 - $ 2,447,578 $ 2,447,578 $ 1,954,445 $ (493,133) 119 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, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Charges for services $ 316,800 $ - $ - $ - Investment earnings - - 5 5 Miscellaneous - - 59 59 Total revenues 316,800 - 64 64 Expenditures: Current: Public safety 316,800 - 30 (30) Total expenditures 316,800 - 30 (30) Excess (Deficiency) of Revenues Over Expenditures - - 34 34 Other Financing Sources: Transfers in - - - - Transfers out - - - - Total other financing sources - - - - Net Change in Fund Balances - - 34 34 Fund Balances - beginning 45,455 45,455 45,455 - Fund Balances - ending $ 45,455 $ 45,455 $ 45,489 $ 34 120 CITY OF CLERMONT, FLORIDA CEMETERY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Charges for services $ 100,000 $ 100,000 $ 121,445 $ 21,445 Investment earnings 10,000 10,000 35,029 25,029 Miscellaneous - - 3,389 3,389 Total revenues 110,000 110,000 159,863 49,863 Expenditures: Current: Culture and recreation 1,358,960 1,358,237 117,566 1,240,671 Total expenditures 1,358,960 1,358,237 117,566 1,240,671 Excess (Deficiency) of Revenues Over Expenditures (1,248,960) (1,248,237) 42,297 1,290,534 Other Financing Sources: Transfers in - - - - Total other financing sources - - - - Net Change in Fund Balances (1,248,960) (1,248,237) 42,297 1,290,534 Fund Balances - beginning 1,248,237 1,248,237 1,248,237 - Fund Balances -ending $ (723) $ - $ 1,290,534 $ 1,290,534 121 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: Current: General government Debt Service: Principal Interest and fiscal charges Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources: Transfers in Total other financing sources Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2019 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 7,000 $ 7,000 $ 10,924 $ 3,924 7,000 7,000 10,924 3,924 500 500 91 409 2,014,367 2,014,367 2,014,398 (31) 794,178 794,178 794,180 (2) 2,809,045 2,809,045 2,808,669 376 (2,802,045) (2,802,045) (2,797,745) 4,300 2,833,333 2,833,333 2,833,332 (1) 2,833,333 2,833,333 2,833,332 (1) 31,288 31,288 35,587 4,299 1,743,293 1,743,293 1,743,293 $ 1,774,581 $ 1,774,581 $ 1,778,880 $ 4,299 122 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 money based upon the insurance premiums and the City 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 fire insurance premiums and the City contributes an amount determined by an actuarial study. 123 124 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET POSITION Assets: Cash and cash equivalents Investments: U.S. Government & other debt securities Equities Total Investments Accounts receivable Total assets Liabilities: Refunds payable and other Total liabilities Net Position Restricted for Pensions FIDUCIARY FUNDS September 30, 2019 General Employees Defined Defined Police Officers Firefighters Total Pension Pension Employee $ 2,544 $ - $ 156,064 $ 452,976 $ 611,584 81,121 - 7,546,434 6,886,020 14,513,575 198,986 10,047,771 13,936,358 12,706,041 36,889,156 280,107 10,047,771 21,482,792 19,592,061 51,402,731 282,651 10,047,771 21,638,856 20,045,037 52,014,315 $ 282,651 $ 10,047,771 $ 21,638,856 $ 20,045,037 $ 52,014,315 125 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2019 General Employees Police Officers Firefighters Total Defined Defined Pension Pension Employee Benefit Contribution Trust Trust Funds Additions: Contributions: Employer $ - $ 671,409 $ 603,101 $ 1,386,390 $ 2,660,900 Plan members - - 175,526 231,935 407,461 State - - 365,513 209,282 574,795 Total contributions - 671,409 1,144,140 1,827,607 3,643,156 Investment earnings: Net increase (decrease) in fair value of investments 14,396 363,325 1,420,311 1,307,329 3,105,361 Investment expense - - (22,457) (23,624) (46,081) Total net investment earnings 14,396 363,325 1,397,854 1,283,705 3,059,280 Total additions 14,396 1,034,734 2,541,994 3,111,312 6,702,436 Deductions: Benefits/distributions 53,410 468,742 485,363 131,663 1,139,178 Administrative expenses 1,597 19,806 81,988 74,546 177,937 Total deductions 55,007 488,548 567,351 206,209 1,317,115 Change in Net Position (40,611) 546,186 1,974,643 2,905,103 5,385,321 Net Position Restricted for Pensions Beginning of Year 323,262 9,501,585 19,664,213 17,139,934 46,628,994 End of Year $ 282,651 $ 10,047,771 $ 21,638,856 $ 20,045,037 $ 52,014,315 126 STATISTICAL SECTION 127 128 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 130 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 140 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 145 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 either by 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 152 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 156 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. 129 City of Clermont, Florida Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2010 2011 2012 2013 Governmental activities Net investment in capital assets $ 33,817 $ 34,894 $ 36,612 $ 39,950 Restricted 6,693 7,381 8,876 9,490 Unrestricted 13,988 12,465 9,701 7,723 Total governmental activities net position $ 54,498 $ 54,740 $ 55,189 $ 57,163 Business -type activities Net investment in capital assets 55,540 56,430 57,241 57,863 Restricted 17,293 9,241 9,477 9,536 Unrestricted 11,407 19,376 20,436 24,191 Total business -type activities net position $ 84,240 $ 85,047 $ 87,154 $ 91,590 Primary government Net investment in capital assets 89,357 91,324 93,853 97,813 Restricted 23,986 16,622 18,353 19,026 Unrestricted 25,395 31,841 30,137 31,914 Total primary government net position $ 138,738 $ 139,787 $ 142,343 $ 148,753 130 Fiscal Year 2014 2015 2016 2017 2018 2019 $ 44,116 $ 47,718 $ 52,064 $ 31,918 $ 35,262 $ 40,318 9,918 9,400 6,402 7,815 8,547 9,589 5,719 11,649 11,182 30,117 27,925 24,795 $ 59,753 $ 68,767 $ 69,648 $ 69,850 $ 71,734 $ 74,702 56,680 56,586 60,150 63,131 69,322 66,104 10,217 12,135 13,959 17,127 16,904 20,362 27,054 26,943 26,050 26,667 23,959 28,286 $ 93,951 $ 95,664 $ 100,159 $ 106,925 $ 110,185 $ 114,752 100,796 104,304 112,214 95,049 104,584 106,422 20,135 21,535 20,361 24,942 25,451 29,951 32,773 38,592 37,232 56,784 51,884 53,081 $ 153,704 $ 164,431 $ 169,807 $ 176,775 $ 181,919 $ 189,454 131 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 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 Fiscal Year 2010 2011 2012 2013 $ 4,287 $ 3,643 $ 4,211 $ 3,258 12,459 12,531 12,168 12,685 319 279 248 303 1,768 1,661 1,719 1,725 50 102 116 200 2,055 1,822 1,045 1,928 175 156 137 87 21,113 20,194 19,644 20,186 4,316 4,461 4,052 4,154 5,927 6,022 5,752 6,106 2,169 2,364 2,567 2,465 848 955 939 897 13,260 13,802 13,310 13,622 $ 34,373 $ 33,996 $ 32,954 $ 33,808 $ 1,857 $ 1,695 $ 1,649 $ 2,117 665 355 450 1,040 872 539 604 1,262 1,162 1,237 1,191 896 134 129 27 112 4,690 3,955 3,921 5,427 4,817 5,377 5,099 5,215 4,852 5,065 5,154 5,357 2,613 2,688 2,721 2,775 829 855 855 862 1,544 999 1,752 3,430 14,655 14,984 15,581 17,639 $ 19,345 $ 18,939 $ 19,502 $ 23,066 132 Fiscal Year 2014 2015 2016 2017 2018 $ 3,407 $ 3,848 $ 4,157 $ 4,240 $ 2,870 14,117 14,326 17,381 20,297 20,306 350 453 788 805 2,104 2,202 2,094 2,185 2,009 2,255 363 567 209 1,197 385 3,096 4,018 5,460 4,491 5,752 236 193 355 434 839 23,771 25,499 30,535 33,473 34,511 4,589 4,823 4,719 5,199 5,634 6,437 6,571 6,866 6,909 6,849 2,472 3,133 2,925 2,869 3,073 1,016 1,080 1,142 1,190 1,360 14,514 15,607 15,652 16,167 16,916 $ 38,285 $ 41,106 $ 46,187 $ 49,640 $ 51,427 nA,4ek $ 5,023 22,104 863 2,387 532 5,954 OOG J/ ,Vov 6,215 7,373 3,027 1,614 18,229 $ 55,928 $ 2,429 $ 2,356 $ 2,914 $ 3,180 $ 3,874 $ 3,590 1,366 1,684 1,574 1,506 1,344 1,593 956 1,317 1,552 2,003 1,697 1,801 939 1,598 1,822 1,456 2,233 2,061 1,718 498 163 309 428 625 7,408 7,453 8,025 8,454 9,576 9,670 5,362 5,726 6,162 6,516 6,461 6,868 5,585 5,809 6,183 6,507 6,625 6,989 2,869 2,917 2,984 3,089 3,178 3,264 881 905 955 1,004 1,378 1,598 - 276 24 - - 2,109 2,417 3,219 4,026 6,906 4,535 5,316 17,114 18,852 20,334 24,022 22,177 26,144 $ 24,522 $ 26,305 $ 28,359 $ 32,476 $ 31,753 $ 35,814 133 City of Clermont, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands Net (Expense)/Revenue 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 I ntergovernmental-unrestricted Unrestricted investment earnings Gain (loss) on sale of capital assets Miscellaneous Transfers in/out Total governmental activities Business -type Activities: Unrestricted investment earnings Gain (loss) on sale of capital assets Transfers in/out Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government Fiscal Year 2010 2011 2012 2013 $ (16,422) $ (16,240) $ (15,721) $ (14,759) �(]G 1 147 7 771 A 010 $ 6,844 $ 5,966 $ 5,535 $ 5,350 113 111 2,373 2,285 2,189 2,123 2,558 2,568 2,430 2,490 4,503 4,664 5,063 5,802 379 148 245 114 146 330 143 265 443 520 453 479 17,246 16,481 16,171 16,734 360 145 289 149 - - - 18 (443) (520) (453) (479) (83) (375) (164) (312) $ 17,163 $ 16,106 $ 16,007 $ 16,422 $ 824 $ 241 $ 450 $ 1,975 1,312 807 2,107 3,706 $ 2,136 $ 1,048 $ 2,557 $ 5,681 `Business taxes previously reported as General Government Charges for Services 134 Fiscal Year 2014 2015 2016 2017 2018 2019 $ (16,363) $ (18,045) $ (22,510) $ (25,019) $ (24,935) $ (28,029) n lnnn n nAI A nnn I n" r nl ^ L nnn $ 6,533 $ 7,193 $ 8,998 $ 9,748 $ 10,747 $ 11,945 126 130 140 133 160 157 2,379 2,502 2,712 2,619 2,817 3,142 2,887 2,953 3,406 3,328 3,446 3,873 6,110 6,645 6,923 7,257 7,864 8,139 104 135 134 197 458 1,089 - - 122 86 289 193 374 420 387 486 342 352 439 557 568 1,367 2,013 2,106 18,952 20,535 23,390 25,221 28,136 30,996 198 272 260 255 379 1,295 2 (1,248) 120 24 31 150 (439) (557) (568) (1,367) (2,013) (2,106) (239) (1,533) (188) (1,088) (1,603) (661) $ 18,713 $ 19,002 $ 23,202 $ 24,133 $ 26,533 $ 30,335 $ 2,589 $ 2,490 $ 880 $ 202 $ 3,202 $ 2,968 2,361 1,712 4,495 6,767 3,657 4,568 $ 4,950 $ 4,202 $ 5,375 $ 6,969 $ 6,859 $ 7,536 135 City of Clermont, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2010 2011 2012 2013 General Fund Reserved $ 246 $ - $ - $ - Unreserved 11,358 - - - Nonspendable - 335 195 189 Restricted - 175 224 257 Assigned - 912 1,039 765 Unassigned - 10,048 9,744 8,878 Total general fund $ 11,604 $ 11,470 $ 11,202 $ 10,089 All other governmental funds Reserved $ 2,758 $ - $ - $ - Unreserved, reported in: Special revenue funds 4,839 - - - Capital projects fund 2,978 - - - Nonspendable - 848 890 939 Restricted - 6,359 7,763 8,295 Assigned - 2,854 668 - Unassigned - (1) - - Total all other governmental funds $ 10,575 $ 10,060 $ 9,321 $ 9,234 Note: Information for fiscal year 2010 has not been restated for Governmental Accounting Standards Board (GASB) Statement No. 54 classifications. 136 Fiscal Year 2014 2015 2016 2017 2018 2019 53 1,300 548 578 641 283 312 247 259 266 228 205 1,202 304 - 3 3 18 7,669 7,014 7,886 7,137 7,104 8,182 $ 9,236 $ 8,865 $ 8,693 $ 7,984 $ 7,976 $ 8,688 1,064 1,466 1,922 1,683 4 7 8,604 7,659 4,310 5,885 8,361 9,376 - - 1,226 22,621 21,720 18,700 $ 9,668 $ 9,125 $ 7,458 $ 30,189 $ 30,085 $ 28,083 137 City of Clermont, Florida Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2010 2011 2012 2013 2014 Revenues Taxes $ 11,775 $ 10,819 $ 8,079 $ 7,951 $ 9,546 Franchise fees 2,188 2,123 2,379 Licenses and permits 678 528 455 884 941 Intergovernmental 5,733 6,059 6,310 6,729 8,796 Charges for services 1,036 1,013 1,011 1,085 1,212 Fines and forfeitures 189 186 215 172 589 Impact fees/special assessments 1,131 582 679 1,909 1,401 Investment Earnings 379 148 244 108 99 Miscellaneous 522 612 474 622 915 Total revenues 21,443 19,947 19,655 21,583 25,878 Expenditures Current: General government 4,081 3,272 3,080 3,148 3,776 Public safety 11,212 11,625 11,352 12,579 13,571 Physical environment 309 275 247 307 423 Transportation 1,620 1,472 1,340 1,263 1,635 Economic environment 50 102 641 722 365 Human services - - - - - Culture and recreation 1,878 1,792 1,769 2,014 2,948 Capital outlay 643 1,923 2,073 2,638 9,381 Debt service: Principal 493 470 490 3,080 571 Interest 181 162 143 122 177 Total expenditures 20,467 21,093 21,135 25,873 32,847 Excess (deficiency) of revenues over expenditures 976 (1,146) (1,480) (4,290) (6,969) Other financing sources (uses) Transfers in 2,088 3,274 1,118 3,091 9,337 Transfers out (1,645) (2,776) (644) (2,612) (8,788) Refunding and new bonds issued - - 2,612 6,000 Capital Leases - - - Sale of capital assets - - - - - Total other financing sources (uses) 443 498 474 3,091 6,549 Net change in fund balances $ 1,419 $ (648) $ (1,006) $ (1,199) $ (420) Debt service as a percentage of noncapital expenditures 3.6% 3.4% 3.5% 14.9% 3.5% Note: Franchise Fees previously reported as Taxes. **Note: Increase in % due to refunding of 2002 bonds. Without the refunding the % would be 3.4% in 2013 ***Note: Increase in % due to refunding of 2013 bonds. Without the refunding the % would be 4.9% in 2016 138 Fiscal Year 2015 2016 2017 2018 2019 $ 10,275 $ 12,544 $ 13,208 $ 14,353 $ 15,974 2,502 2,712 2,619 2,817 3,142 788 1,298 1,594 2,249 1,927 8,772 8,790 9,054 10,559 10,860 1,312 1,652 1,746 2,103 2,188 757 703 358 204 230 1,858 1,702 2,341 1,738 1,959 131 131 192 446 1,065 1,047 1,007 1,122 971 965 27,442 30,539 32,234 35,440 38,310 3,600 4,070 3,911 3,948 4,609 14,844 17,520 18,488 19,750 21,618 744 777 869 881 982 1,635 1,878 1,687 1,927 2,165 564 482 324 343 372 3,725 5,038 5,996 5,199 6,302 2,695 8,514 2,112 4,085 3,846 884 6,280 1,077 979 2,096 198 342 272 805 829 28,889 44,901 34,736 37,917 42,819 (1,447) (14,362) (2,502) (2,477) (4,509) 3,857 11,897 26,725 7,697 4,937 (3,323) (11,329) (25,957) (6,332) (2,834) - 10,631 23,670 - - - - - 919 - 1,321 86 1,000 198 534 12,520 24,524 2,365 3,220 $ (913) $ (1,842) $ 22,022 $ (112) $ (1,289) 4.5% 20.2% 4.6% 5.7% 8.3% 139 City of Clermont, Florida Governmental Activities Tax Revenues by Source Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Property Utility Business Franchise Year Tax Tax Tax Fees Total 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 2017 9,538 3,328 133 2,619 15,618 2018 10,549 3,446 160 2,817 16,972 2019 11,747 3,872 157 3,142 18,918 Taxes Included in Unrestricted Intergovernmental Revenues Fiscal Sales State Revenue Local Option Year Tax Sharing Gas Tax 2010 1,053 299 322 2011 1,100 328 306 2012 1,296 383 296 2013 1,419 535 280 2014 1,567 635 290 2015 1,820 749 378 2016 1,848 819 482 2017 1,945 911 520 2018 2,172 1,013 548 2019 2,236 1,116 551 * Business Tax Receipts previously reported under Licenses Total 1,674 1,734 1,975 2,234 2,492 2,947 3,149 3,376 3,733 3,903 140 City of Clermont, Florida Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year Less: Ended Real* Personal Tax Exempt Sep 30 Property Property Property 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 2017 2,791,963 215,772 689,683 2018 3,057,114 233,448 724,930 2019 3,406,874 238,430 789,497 Total Estimated Assessed Total Taxable Direct Actual Value as a Assessed Tax Taxable Percentage of Value Rate Value Actual Value 2,204,240 3.1420 2,804,061 78.61 % 1,909,647 3.1420 2,509,518 76.10% 1,783,354 3.1420 2,381,541 74.88% 1,725,773 3.1420 2,330,887 74.04% 1,779,779 3.7290 2,390,842 74.44% 1,913,144 3.7290 2,543,906 75.20% 2,137,343 4.2061 2,790,112 76.60% 2,318,052 4.2061 3,007,735 77.07% 2,565,632 4.2061 3,290,562 77.97% 2,855,807 4.2061 3,645,304 78.34% Source: Lake County Property Appraisers Office * Information on breakdown of residential and commercial property is not available. INI City of Clermont, Florida Property Tax Rates Direct and Overlapping' Governments Last Ten Fiscal YearS2 (per $1,000 of assessed value) 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 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 2017 4.2061 5.1180 0.1524 0.4629 6.8750 0.7332 0.2554 0.2885 18.0915 2018 4.2061 5.1180 0.1524 0.4629 6.6030 0.6898 0.2554 0.2724 17.7600 2019 4.2061 5.1180 0.1324 0.4629 6.3550 0.6432 0.4900 0.2562 17.6638 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. Operating millage is the only component of the City's direct rate `EN Taxpayer Vista at Lost Lake TIC I LLC BR Citrus Tower LLC South Lake Hospital, Inc. John P. Adams & Ann D. Adams Family LP Advenir/Castle Hill LLC US 27-Clermont LLC Westdale Sundance LTD IP9 MF Clermont LLC Weingarten 1-4 Clermont Landing Mattamy Orlando LLC Fountains at Clermont LLC Sundance Clermont LLC Citrus Tower Development Clermont Landing LLC Lennar Homes Inc. Village at East Lake Wal-Mart Stores East LP Lowe's Home Centers Inc. TOTAL Source: Lake County Property Appraiser City of Clermont, Florida Principal Property Taxpayers Current Year and Nine Years Ago (amounts expressed in thousands) 2019 2010 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Value Rank Value Value Rank Value 59,343 1 2.31 % 43,142 2 1.68% 35,687 3 1.39% 14,142 3 0.64% 34,083 4 1.33% 27,458 1 1.25% 33,159 5 1.29% 30,924 6 1.21 % 23,593 7 0.92% 19,898 8 0.78% 18,407 9 0.72% 16,956 10 0.66% 17,448 2 0.79% 13,410 4 0.61 % 13,122 5 0.60% 12,673 6 0.57% 13,820 7 0.63% 11,634 8 0.53% 10,573 9 0.48% 9,773 10 0.44% $315,192 12.29% $144,053 6.54% 143 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 Ended Levy for Percentage Subsequent September Fiscal Year Amount of Levy Years 2010 6,814 6,536 95.9% 5 2011 6,001 5,698 95.0% 15 2012 5,603 5,325 95.0% 5 2013 5,422 5,153 95.0% 8 2014 6,635 6,325 95.3% 9 2015 7,133 6,793 95.2% 6 2016 8,990 8,570 95.3% 4 2017 9,750 9,299 95.4% 9 2018 10,791 10,278 95.2% 6 2019 12,012 11,430 95.2% 5 Total Collections to Date Percentage Amount of Levy 6,541 96.0% 5,713 95.2% 5,330 95.1 % 5,161 95.2% 6,334 95.5% 6,799 95.3% 8,574 95.4% 9,308 95.5% 10,284 95.3% 11,435 95.2% 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. City of Clermont, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years (amounts expressed in thousands, except per capita amount) Fiscal Governmental Activities Year Ended Revenue Notes Sept Bonds Payable 2010 4,040 - 2011 3,570 - 2012 3,080 - 2013 - 2,612 2014 - 8,041 2015 - 7,157 2016 - 11,509 2017 - 34,102 2018 - 33,123 2019 - 31,109 Business -Type Activities Revenue Bonds 16,016 15,512 14,963 14,979 14,361 13,728 13,075 12,403 12,268 11,467 Total Percentage Notes Outstanding of Personal Payable Debt Income' - 20,056 2.76% - 19,082 2.55% - 18,043 2.30% - 17,591 2.19% - 22,402 2.74% - 20,885 2.45% - 24,584 2.40% 6,329 52,834 4.87% 6,329 51,720 4.22% 5,980 48,556 3.70% Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Per Capita' 698 650 605 582 706 646 709 1,476 1,329 1,192 See the Schedule of Demographic and Economic Statistics on page 152 for personal income and population data. 145 City of Clermont, Florida Direct and Overlapping Governmental Activities Debt September 30, 2019 (amounts expressed in thousands, except population and per capita amount) Government Unit: Lake County Lake County School District Subtotal, overlapping debt Estimated Amount Debt Percentage Applicable to Outstanding Applicable (,) City of Clermont $ 109,880 13.84% $ 15,206 186,615 12.33% 23,004 City of Clermont, direct debt 31,109 100.00% Total direct and overlapping debt Sources: Lake County 2019 CAFR, Lake County School Board 2019 CAFR, 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. 38,211 31,109 $ 69,320 146 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Public Improvement Revenue Refunding Note, Series 2012 Public Communications Fiscal Service Service Half -Cent Year Taxes Tax Sales Tax 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 2017 3,328,087 1,122,258 1,945,237 2018 3,446,407 1,112,440 2,172,025 2019 3,872,099 1,131,382 2,235,693 Total Revenue Available for Debt Service Debt Service Principal Interest Coverage 4,878,050 455,000 179,159 7.69 4,902,055 470,000 161,806 7.76 4,983,344 490,000 143,350 7.87 5,259,100 3,080,000 66,550 1.67 5,670,486 570,599 25,361 9.51 5,934,260 577,959 19,101 9.94 6,391,968 585,609 12,760 10.68 6,395,582 591,692 6,345 10.69 6,730,872 286,141 1,559 23.40 7,239,174 ** ** ** 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. This Note was paid off in fiscal year 2018 147 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Public Improvement Revenue Refunding Note, Series 2016 Public Communications Total Revenue Fiscal Service Service Available for Year Taxes Tax Debt Service 2010 - - - 2011 - - - 2012 - - - 2013 - - - 2014 2,887,161 1,216,076 4,103,237 2015 2,952,785 1,161,566 4,114,351 2016 3,405,642 1,138,032 4,543,674 2017 3,328,087 1,122,258 4,450,345 2018 3,446,407 1,112,440 4,558,847 2019 3,872,099 1,131,382 5,003,481 Debt Service Principal Interest Coverage - - N/A - - N/A - - N/A - - N/A - 82,350 49.83 305,772 178,337 8.50 5,694,228 195,148 0.77 255,000 105,635 12.34 377,841 99,212 9.56 385,511 91,464 10.49 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. 148 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Infrastructure Sales Surtax Revenue Note, Series 2016 Infrastructure Fiscal Sales Debt Service Year Surtax Principal Interest Coverage 2010 - - - N/A 2011 - - - N/A 2012 - - - N/A 2013 - - - N/A 2014 - - - N/A 2015 - - - N/A 2016 2,964,966 - 27,466 107.95 2017 3,115,549 230,716 109,914 9.15 2018 3,397,707 314,809 104,132 8.11 2019 3,474,813 321,483 97,387 8.30 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 149 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Master Plan Capital Projects Revenue Note, Series 2017 Infrastructure Recreation Fiscal Sales Impact Year Surtax Fees 2010 - - 2011 - - 2012 - - 2013 - - 2014 - - 2015 - - 2016 - - 2017 3,115,549 1,495,242 2018 3,397,707 1,047,736 2019 3,474,813 1,157,840 Stormwater Sales R e Debt Service venue Principal 1,002,859 - 1,375,516 - 1,596,720 1,657,000 Interest Coverage - N/A - N/A - N/A - N/A - N/A - N/A - N/A - N/A 749,550 1.84 767,210 0.66 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 150 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Water and Sewer Revenue and Refunding Bonds Water and Water and Sewer Sewer Fiscal Operating Operating Year Revenues' ExpenseS2 2010 10,001,836 6,999,096 2011 10,561,295 7,080,592 2012 10,496,535 6,377,695 2013 10,687,908 6,677,774 2014 11,108,744 7,090,566 2015 11,767,901 7,419,231 2016 12,578,644 7,272,716 2017 13,226,994 7,661,085 2018 13,379,152 8,104,464 2019 15,017,621 8,753,924 Net Revenue Available for Debt Service Debt Service Principal Interest Coverage 3,002,740 430,000 744,892 3 2.56 3,480,703 535,000 660,640 2.91 4,118,840 580,000 643,307 3.37 4,010,134 595,000 604,811 3.34 4,018,178 615,000 586,461 3.34 4,348,670 630,000 567,636 3.63 5,305,928 650,000 548,236 4.43 5,565,909 670,000 504,122 4.74 5,274,688 10,920,000 4 211,101 0.47 6,263,697 800,000 294,524 5.72 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. 3Includes interest paid on the 2000 and 2009 Refunding Bonds 4 Water and Sewer Revenue Refunding Bonds, Series 2009 was partially refunded in 2017, this includes the payoff of the original bonds. 151 City of Clermont, Florida Demographic and Economic Statistics Last Ten Fiscal Years Personal Education Income Level in (amounts Per Capita Years of Fiscal expressed in Personal Median Formal School Unemploy- Year Population' thousands) Income Agee Schooling2 Enrollment3 ment Rate 2010 28,742 727,000 25,294 36.8 13.6 5,024 9.8% 2011 29,358 748,482 25,495 40.9 13.6 5,116 9.3% 2012 29,827 784,361 26,297 46.8 13.6 5,158 7.0% 2013 30,201 802,803 26,582 41.5 13.8 5,153 5.8% 2014 31,745 816,926 25,734 41.9 13.7 5,198 5.6% 2015 32,348 854,020 26,401 42.1 13.7 8,436 4.8% 2016 34,667 1,023,959 29,537 42.1 13.4 8,712 4.4% 2017 35,807 1,085,991 30,329 41.6 13.3 8,761 3.1% 2018 38,906 1,226,940 31,536 42.3 13.4 8,841 2.7% 2019 40,750 1,312,598 32,211 42.5 13.9 8,745 2.8% 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 152 Employer Total City Employment South Lake Hospital, Inc. Lake County School System Publix Supermarkets City of Clermont Walmart Lowe's Target Corporation Senningers Chick Fil A Clermont Health & Rehab Lake County Sheriffs Office Department of Corrections Ford of Clermont Winn Dixie Darden Restaurants Inc. TOTAL City of Clermont, Florida Principal Employers Current Year and Nine Years Ago 2019 2010 Number Percentage of Number Percentage of of Total City of Total City Employees Rank Employment Employees Rank Employment 17,716 18,314 1,500 1 8.47% 1,062 2 5.99% 250 10 1.37% 888 3 5.01 % 614 1 3.35% 431 4 2.43% 387 5 2.18% 595 3 3.25% 352 6 1.99% 320 5 1.75% 324 7 1.83% 312 6 1.70% 200 8 1.13% 182 9 1.03% 180 10 1.02% 600 2 3.28% 420 4 2.29% 300 7 1.64% 294 8 1.61 % 288 9 1.57% 5,506 Source: Various employers in city limits 31.08% 3,993 21.80% 153 City of Clermont, Florida Principal Water Customers Current Year and Nine Years Ago 2019 2010 Usage Percentage of Usage Percentage of (thousands Total City (thousands Total City Employer of gallons) Rank Metered Flow' of gallons) Rank Metered Flow Kings Ridge 127,190 1 4.52% 277,700 1 13.52% South Lake Hospital, Inc. 47,818 2 1.70% 25,163 4 1.22% Esplanade at Highland Ranch 37,820 3 1.34% Heritage Hills of Clermont 35,639 4 1.27% Taylor Morrison 28,269 5 1.00% City of Clermont 23,291 6 0.83% 26,255 3 1.28% Vista at Lost Lake 22,256 7 0.79% 11,526 7 0.56% Senninger Irrigation 17,192 8 0.61% BR Citrus Tower LLC 15,283 9 0.54% Mattamy Homes 15,138 10 0.54% Westminster Comm Care Service 15,497 5 0.75% Emerald Lakes of Clermont 7,764 9 0.38% Lake County School System 31,424 2 1.53% Gardens at Citrus Towers 12,165 6 0.59% Sundance Clermont Apartments 9,703 8 0.47% Osprey Ridge Apartments LTD 7,601 10 0.37% TOTAL 369,896 13.14% 424,798 20.68% The City of Clermont had a total metered water flow of approximately 2,816,071,000 gallons for the 12-month period ending September 30, 2019 154 City of Clermont, Florida Principal Sewer Customers Current Year and Nine Years Ago 2019 2010 Usage Percentage of Usage Percentage of (thousands Total City (thousands Total City Employer of gallons) Rank Metered Flow' of gallons) Rank Metered Flow South Lake Hospital, Inc. 45,372 1 4.14% 22,606 1 1.65% Vista at Lost Lake 22,256 2 2.03% 11,526 4 0.84% Senninger Irrigation 17,192 3 1.57% BR Citrus Tower LLC 15,283 4 1.39% Westdale Sundance LTD 11,337 5 1.03% SPT Dolphin Osprey Apts LLC 10,914 6 1.00% Westminster Comm Care Service 10,212 7 0.93% 14,643 3 1.07% Advenir At Castle Hill 9,064 8 0.83% IP9 Clermont LLC 7,516 9 0.69% Emerald Lakes 6,959 10 0.63% 7,764 5 0.57% Lake County School System 16,960 2 1.24% Villages at East Lake 7,139 6 0.52% Empirian Property Management 5,771 7 0.42% John Sandargas 4,208 8 0.31 % Clermont Dialysis LLC 3,426 9 0.25% Red Lobster 3,410 10 0.25% TOTAL 156,105 14.23% 97,453 7.11 % The City of Clermont had a total metered water flow for wastewater billing purposes of approximately 1,096,766,000 gallons for the 12-month period ending September 30, 2019 155 City of Clermont, Florida Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Function General Government Public Safety: Police Sworn personnel Non sworn personnel Fire Firefighters Other personnel Building Services Physical Environment Transportation Human Services Culture & Recreation Water Sewer Stormwater Sanitation Total Source: City of Clermont Finance Department. Full-time Equivalent Employees as of September 30 2010 2011 2012 2013 28.00 27.00 25.85 26.66 57.00 57.00 57.00 57.00 16.00 5.00 5.00 6.00 48.00 48.00 47.80 47.80 2.00 2.00 2.00 2.00 1.40 1.40 0.60 0.60 4.50 4.00 4.00 4.95 15.35 13.50 14.80 14.65 0.00 0.00 0.00 0.00 26.10 22.00 21.20 21.10 29.15 29.15 29.45 29.66 26.05 25.85 24.50 23.78 9.15 9.40 7.95 6.72 16.30 16.70 16.85 17.08 279.00 261.00 257.00 258.00 156 Full-time Equivalent Employees as of September 30 2014 2015 2016 2017 2018 2019 31.56 36.00 36.00 38.70 41.45 45.70 61.00 61.00 66.00 70.00 79.00 81.00 6.00 6.00 6.00 6.00 7.00 7.00 56.80 56.80 59.80 66.50 74.20 81.00 5.20 4.20 4.20 6.50 8.80 8.00 6.00 6.00 7.00 11.30 11.55 12.30 4.70 7.45 8.70 10.70 10.70 10.70 12.95 12.85 12.60 14.60 16.60 16.45 0.00 0.00 0.00 0.00 0.00 0.00 27.25 33.35 35.35 39.35 40.60 36.75 30.61 29.35 29.65 29.15 30.45 30.55 23.88 24.15 26.45 26.95 31.25 31.40 6.87 6.65 7.75 10.25 10.10 13.85 17.18 18.20 18.50 21.00 21.30 21.30 290.00 302.00 318.00 351.00 383.00 396.00 157 City of Clermont, Florida Operating Indicators by Function Last Ten Fiscal Years Fiscal Year Function 2010 2011 2012 2013 General Government Municipal boundary (square miles) 14.76 14.90 14.95 14.95 Business Tax Receipts issued 1,833 1,843 2,237 2,483 A/P Checks issued 5,722 4,875 2,336 2,288 Commercial construction (units) 10 3 8 20 Commercial construction (value in thousands) 8,357 18,020 15,203 34,268 Residential construction (units) 305 151 173 327 Residential construction (value in thousands) 53,202 23,558 25,882 53,055 Public Safety: Police Auto accidents 955 1,121 1,259 1,402 Physical arrests 854 699 644 886 911 calls received 5,230 5,587 5,911 6,352 Evidence processed (pieces) 1,349 1,297 1,413 2,930 Parking violations 137 378 201 252 Traffic violations 4,981 6,312 5,389 7,225 Fire Volunteer firefighters 6 6 6 - Fire inspections completed 2,121 896 662 1,240 Emergency calls answered 3,112 3,822 3,320 3,414 Non -emergency calls answered 352 805 934 447 Water Residential accounts 17,884 18,240 18,619 19,399 Commercial accounts 1,206 1,210 1,207 1,232 Annual water usage (thousands of gallons) 2,054,236 2,275,936 2,391,485 2,392,022 Sewer Residential accounts 12,508 12,722 12,936 13,407 Commercial accounts 1,158 1,167 1,166 1,194 Sources: Various government departments. . Decrease in accounts due to software conversion combining multi -metered services 158 Fiscal Year 2014 2015 2016 2017 2018 2019 15.18 16.65 16.78 16.78 17.12 19 1,955 1,701 1,639 1,633 1,623 1,585 3,529 2,747 3,276 3,651 3,872 3,859 15 16 20 14 20 15 17,288 8,625 42,241 13,302 42,042 30,862 572 323 740 433 387 377 62,117 55,178 103,423 87,873 104,394 87,927 1,357 1,573 1,909 1,909 1,802 2,082 631 652 589 593 569 663 6,643 7,618 6,397 6,809 7,943 9,185 2,384 989 674 1,165 1,040 1,821 379 144 181 385 147 101 4,623 6,879 7,421 6,713 4,676 4,790 3,766 3,813 4,468 2,586 2,203 2,493 4,127 4,202 6,001 6,828 5,689 5,367 987 523 806 925 989 1,493 19,670 13,242 • 13,561 14,339 14,805 15,311 1,234 1,211 1,220 1,235 1,498 1,283 2,406,183 2,521,397 2,572,852 2,743,657 2,687,665 2,816,071 13,718 13,578 13,860 14,619 15,198 15,669 1,055 1,074 1,091 1,106 1,107 1,126 159 City of Clermont, Florida Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 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 2010 2011 2012 2013 1 1 1 1 45 46 46 55 4 4 4 4 3 3 3 3 2,012 2,016 2,048 2,120 8 7 8 8 5 5 5 5 4 4 4 4 133.20 133.20 133.20 173.91 1,352 1,352 3,103 3,103 22 23 23 23 349.5 349.5 349.5 349.5 5.7 5.7 5.7 5.7 9 9 9 9 4 4 4 5 1 1 1 1 124.11 197.40 242.36 243.14 66.19 132.02 156.81 160.42 26.32 89.80 105.38 109.05 160 Fiscal Year 2014 2015 2016 2017 2018 2019 1 1 1 1 1 1 57 79 95 98 104 106 4 3 4 5 5 5 3 3 4 4 4 4 2,146 2,200 2,646 2,646 2,646 2,456 8 12 6 7 9 9 5 3 6 6 7 7 4 3 1 6 6 7 191.52 202.38 210.00 210.60 210.60 210.60 3,127 3,158 3,160 1,309 1,309 1,309 23 23 23 24 24 24 349.5 378.0 443.9 443.9 443.9 443.9 5.7 5.7 7.5 7.5 8.0 8.0 9 9 9 9 9 9 5 10 11 11 9 9 1 1 1 1 1 1 222.75 230.28 229.44 297.00 297.81 331.86 161.25 167.60 168.57 220.00 224.00 236.34 133.70 48.22 47.63 47.56 48.36 50.38 161 162 OTHER REPORTS 163 164 McDirmit Davis 934 North Magnolia Avenue, Suite 100 Orlando, Florida 32803 407-843-5406 www.mcdirmitdavis.com 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, 2019, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated August 31, 2020. 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. the trusted partner 165 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. �ij�Q,urnit kbcHd Orlando, FL August 31, 2020 166 McDirmit Davis 934 North Magnolia Avenue, Suite 100 Orlando, Florida 32803 407-843-5406 www.mcdirmitdavis.com 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 Federal Program We have audited the City of Clermont, Florida's (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended September 30, 2019. The City's major federal programs are 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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs 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. 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 each of its major federal programs for the year ended September 30, 2019. the trusted partner 167 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. MQi4rrritDavid Orlando, Florida August 31, 2020 168 CITY OF CLERMONT, FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended September 30, 2019 Federal Grantor Pass -Through Grantor CFDA Agency or Pass -through Total Grantor program title Number Entity Grant Number Expenditures U.S. Department of Housing and Urban Development (HUD) State of Florida, Department of Economic Opportunity Community Development Block Grant (CDBG) Total U.S. Department of Housing and Urban Development (HUD) U.S. Department of Interior (DOI) State of Florida, Department of Environmental Protection Victory Point Park West Lake Wetlands Perform/ Event Area Total U.S. Department of Interior (DOI) U.S. Department of Justice (DOJ) Equitable Sharing State of Florida, Department of Law Enforcement Water Filled Barricades Polygraph Acquisition Lake County Mobile Crisis Response Officer Total U.S. Department of Justice (DOJ) State of Florida, Department of Agriculture and Consumer Services Hancock Park Lighting " Total Department of Agriculture and Consumer Services Executive Office of the President -Office of National Drug Control Policy Seminole County Sheriff Office High Intensity Drug Trafficking Areas Total Executive Office of the President -Office of National Drug Control Policy U.S. Department of Homeland Security (DHS) State of Florida, Department of Emergency Management Hurricane Irma Staffing for Adequate Fire and Emergency Response (SAFER) " Total U.S. Department of Homeland Security (DHS) Total Expenditures of Federal Awards Denotes a major program 14.228 19DB-ON-06-45-02-N17 $ 97,875 97,875 15.916 LWCF670 200,000 15.916 LWCF651 200,000 400,000 16.922 FL0350300 72,362 16.738 LWCF670 7,804 16.738 LWCF651 5,227 16.745 2018-1390 67,364 152,757 87.041 DE-EE00-241 250,000 250,000 95.001 G18CF0008A 5,011 5,011 97.036 Various 128,724 97.083 EMW-2016-FH-00366 428,618 557,342 $ 1,462,985 See accompanying Notes to Schedule of Expenditures of Federal Awards 169 CITY OF CLERMONT, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended September 30, 2019 Note 1 - Basis of Presentation: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal awards activity of the City of Clermont, Florida (the City) under programs of the federal government for the year ended September 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit 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, 2019, even if grant or loan was received subsequent to that date. Pass -through entity identifying numbers are presented where available. Note 3 - Indirect Cost Rate: The City has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Note 4 - FEMA Expenditures: Expenditures for CFDA No. 97.036, Hurricane Irma include $128,724 of expenditures that were incurred in prior fiscal years. 170 CITY OF CLERMONT, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended September 30, 2019 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 section 200.516 of the Uniform Guidance? Yes X No Identification of major federal awards 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: Section IV - Federal Award Summary Schedule of Prior Year Findings: CFDA No. 87.041 CFDA No. 97.083 $750,000 Yes None None Hancock Park Lighting Staffing for Adequate Fire and Emergency Response X No There were no audit findings for the year ended September 30, 2018. 171 McDirmit Davis MANAGEMENT LETTER Honorable Mayor and City Council City of Clermont, Florida 934 North Magnolia Avenue, Suite 100 Orlando, Florida 32803 407-843-5406 www.mcdirmitdavis.com 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, 2019, and have issued our report thereon dated August 31, 2020. 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 for Federal Awards (Uniform Guidance); and Chapter 10.550, Rules of the Florida Auditor General. Other Reporting Requirements 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 State Project 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, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated August 31, 2020, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i.)1., 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. the trusted partner 172 Financial Condition and Management Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us apply appropriate procedures and communicate 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.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the City. 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. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate 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. �VQiUnitlkuri¢ Orlando, Florida August 31, 2020 173 174 McDirmit Davis 934 North Magnolia Avenue, Suite 100 Orlando, Florida 32803 407-843-5406 www.mcdirmitdavis.com 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, 2019. 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, 2019. Orlando, Florida August 31, 2020 the trusted partner 175 175