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Comprehensive Annual Financial Report - 2017-2018gel '1711% PrPT NOME 011 CLERKNT �- if- FLORIDA Comprehensive Annual Financial Report For Fiscal Year Ended September 30, 2018 If you've enjoyed Clermont's South Trail lately, Victory Pointe may caught your eye. Perhaps you ced added restrooms and water stains. Or maybe you admired the walking bridge, sandy beach and ,sy space. Several events already .essfully relocated to Victory Pointe, :)uraging foot traffic into (ntown's shops and restaurants. The 10-acre site was the first or project completed in the City of mont's award -winning Master Plan, ning July 2018. And there's more to mont's newest park than meets the Victory Pointe is a game changer to revitalize downtown. This $10.4 on stormwater filtration system es as a business incentive for �Iopment while improving Lake neola's water quality. Businesses connect to the system instead of sating their own physical and ietary resources to satisfy state irements. NMI As for water quality, the Clermont Chain of Lakes are "Outstanding Florida :erways," and Victory Pointe ensures Lake Minneola stays pristine. -mwater filters through bioswales, baffle boxes, retention ponds and an )dated marsh -- removing significant amounts of nitrogen and phosphorous )re flowing into Lake Minneola. The state-of-the-art project also features an observation tower, trails and cational signs. Five agencies and 11 grants made it possible. Come explore ory Pointe for yourself. IN MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS Honorable Mayor and City Council City of Clermont, Florida We have audited the financial statements of City of Clermont as of and for the year ended September 30, 2018, and have issued our report thereon dated May 31, 2019. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated June 13, 2017, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of City of Clermont solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, and our firm have complied with all relevant ethical requirements regarding independence. MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 T:407-843-5406 1 F:407-649-9339 1 WWW.MCDIRMITDAVIS.COM N Qualitative Aspects of the Entity's Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by City of Clermont is included in Note 1 to the financial statements. As described in Note 1, the City adopted GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. Due to the implementation of GASB Statement No. 75, during 2018 beginning net position of governmental activities and business -type activities have been reduced by $1,318,250 and $397,328 respectively. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management's current judgments. The most sensitive accounting estimates affecting the financial statements are: Management's estimate for the allowance for doubtful accounts is based on historical loss levels, and an analysis of the individual accounts. We evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimation for the allowance for depreciation is based on the estimated useful lives of the capital assets. We evaluated the reasonableness of the useful lives as well as the depreciation methods in determining that it is reasonable in relation to the financial statements taken as a whole. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting City of Clermont, Florida's financial statements relate to revenue recognition as described in Note 1. Significant Difficulties Encountered During the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Management has corrected all such misstatements. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our procedures. None of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to City of Clermont, Florida's financial statements or the auditor's report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the management representation letter dated May 31, 2019. Management's Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings, or Issues In the normal course of our professional association with City of Clermont, Florida , we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as City of Clermont, Florida's auditors. This report is intended solely for the use of management, the City Council and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, Ma4vl wH4& Cern�oaru� LLC Orlando, Florida May 31, 2019 CITY OF CLERMONT FLORIDA Comprehensive Annual Financial Report For The Year Ended September 30, 2018 CLEF ONT wwwwwwm� "WENNIN.- Choice of Champions`' Prepared by: Finance Department n City of Clermont, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2018 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 .......................................... 97 Schedule of Changes in Net Pension Liability and Related Ratios - General Employees.... 98 Schedule of Changes in Net Pension Liability and Related Ratios - Police .......................... 99 Schedule of Changes in Net Pension Liability and Related Ratios - Fire ........................... 100 Schedule of Contributions and Investment Returns - General Employees ......................... 101 Schedule of Contributions and Investment Returns - Police ............................................... 102 Schedule of Contributions and Investment Returns - Fire .................................................. 103 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.................................................................... 108 Nonmajor Governmental Funds: Combining Balance Sheet - Other Governmental Funds .................................................... 110 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - OtherGovernmental Funds............................................................................................ 112 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Recreation Impact Fee Special Revenue Fund ............................. 114 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Police Impact Fee Special Revenue Fund .................................... 115 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Fire Impact Fee Special Revenue Fund ........................................ 116 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Building Services Special Revenue Fund ...................................... 117 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Fire Inspection Special Revenue Fund .......................................... 118 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Cemetery Special Revenue Fund .................................................. 119 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Debt Service Fund......................................................................... 120 Fiduciary Funds: Combining Statement of Fiduciary Net Position - Fiduciary Funds ..................................... 123 Combining Statement of Changes in Fiduciary Net Position - Fiduciary Funds ................. 124 STATISTICAL SECTION Financial Trends: Net Position by Component.................................................................................................. 128 Changesin Net Position....................................................................................................... 130 Fund Balance - Governmental Funds.................................................................................. 134 Changes in Fund Balances - Governmental Funds............................................................. 136 Revenue Capacity: Governmental Activities Tax Revenues by Source.............................................................. 138 Assessed Value and Estimated Actual Value of Taxable Property ...................................... 139 Property Tax Rates - Direct and Overlapping Governments ............................................... 140 Principal Property Taxpayers............................................................................................... 141 Property Tax Levies and Collections.................................................................................... 142 Debt Capacity: Ratios of Outstanding Debt by Type.................................................................................... 143 Direct and Overlapping Governmental Activities Debt ......................................................... 144 Pledged -Revenue Coverage................................................................................................ 145 Demographic and Economic Information: Demographic and Economic Statistics................................................................................. 150 PrincipalEmployers.............................................................................................................. 151 PrincipalWater Customers................................................................................................... 152 Principal Sewer Customers.................................................................................................. 153 Operating Information: Full-time Equivalent City Government Employees by Function ........................................... 154 Operating Indicators by Function......................................................................................... 156 Capital Asset Statistics by Function..................................................................................... 158 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 ........................................ 163 Independent Auditor's Report on Compliance for Each Major State Project and Report on Internal Control Over Compliance Required by Chapter 10.550, Rules of the Auditor General............................................................................................... 165 Schedule of Expenditures of State Financial Assistance......................................................... 167 Notes to Schedule of Expenditures of State Financial Assistance .......................................... 168 Schedule of Findings and Questioned Costs- State Financial Assistance Projects ................ 169 ManagementLetter.................................................................................................................. 170 Independent Auditor's Report on Compliance with the Requirements of Section 218.415, Florida Statutes.................................................................................................... 173 1 CLE Choice of Champions' May 31, 2019 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, 2018. 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, 2018. 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 have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Clermont's financial statements have been audited by McDirmit Davis & Company, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Clermont for the fiscal year ended September 30, 2018, 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, 2018, 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 17.12 square miles and population of approximately 36,754. The City is located in south Lake County, approximately 22 miles west of the City of Orlando and about 25 miles northwest of Walt Disney World. Clermont, known as "Choice of Champions°", is truly the crossroads of Florida, at the intersection of State Road 50 that runs east and west across the state and U.S. Highway 27, which runs north and south through the center of the state. Clermont is on a chain of 15 lakes connected by the winding Palatlakaha River in the Ocklawaha Basin of tributaries of the St. Johns River, the only river system in the United States of America that flows north. The lakes offer residents the opportunity for excellent fishing, boating, swimming and other water sports including competitive skiing and wakeboarding offered by world -class instructional schools. The City of Clermont is known for its scenic beauty, relaxed lifestyle, recreational facilities and temperate climate. Residents have a wide variety of housing and property -ownership opportunities, including lakefront and lake -access property, golf -course communities, homes in existing neighborhoods, residential retirement communities, and new subdivisions. The City of Clermont provides a full range of services as directed by its charter. These include police and fire protection; streets and sidewalk maintenance, planning and development, code enforcement, recreational facilities and programs, cemetery and general administrative functions. The City also provides potable water, wastewater collection and treatment, reclaimed water production and distribution, stormwater treatment, solid waste collection, and recycling services. The City operates according to a Council/Manager form of government, with an appointed City Manager, four elected City Council members and an elected Mayor. The governing body has legislative responsibilities including setting policy, passing ordinances, adopting the budget, appointing committees, and hiring the City's Manager. The City Manager is responsible for carrying out the policies and ordinances of the governing body, for overseeing the day-to-day operations of the government, and for hiring the directors of the various departments. The annual budget serves as the foundation 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 2018 indicate a continued growth in the local economy. During the last 5 years, Clermont's population has increased by 5,009 residents or 15.80%. Per Capita Personal Income levels have increased $5,802 or 22.55%. The City's unemployment rate has decreased from 5.6% to 2.7%, 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 University of Central Florida, assist in supplying a skilled labor force. The most significant change from the continued growth has been the increase in taxable property values of $785,853,000 or 44.15%. 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 state-wide. Sales tax, currently at 7%, is not charged on food or medicine. One cent of the sales tax charged within the county is limited to $50 per transaction (1% of $5,000). As discussed in the MD&A, this additional penny sales tax must be used for infrastructure including roads, buildings, land, land improvements and certain equipment. 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 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 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 and also 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 Boat Ramp relocation project involves the relocation of the existing boat ramp to the southern bank of Lake Minneola, adjacent to East Avenue. This location will shift motorized watercraft away from the many events and activities near the existing location. This project will include improvements to East Avenue, as well as rerouting portions of the South Lake Trail to improve safety. The project is anticipated to cost approximately $2.4 million with grant funding from Lake County assisting in the construction costs. Construction is expected to commence during the summer of 2019. The Downtown Waterfront District area includes Montrose Street, Minneola Street and Osceola Street between 7th and 81h Street. The proposed improvements will consist of streetscapes, landscaping, bathrooms, lighting, upgrades for event lighting and music, banners and beautification. A focal point will be created at City Hall Park to anchor downtown visitors, creating a destination and meeting point in the heart of downtown Clermont. In addition, a refurbished park at the 8th Street pier will be the demarcation and celebration of the halfway point of the Coast -to -Coast Trail. The project is currently under design and anticipated to cost approximately $11 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 between 7th and 8th Street on the North side of Minneola was completed this fiscal year. Work on the additional phases is forthcoming. 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. 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 $9 million. One of the major projects in the master plan that was completed this past summer was the Victory Pointe stormwater project. This project incorporates a unique wetland filter marsh system that channels highly filtered, clean water into Lake Minneola. In addition, there is a park that includes boardwalks, trails, a new event area, pavilion and a beach. 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, 2017. This was the 30th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the 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. Credit also must be given to the Mayor and the City Council for their support in maintaining the highest standards of professionalism in the management of the City of Clermont's finances. Respectfully submitted, Darren S. Gray City Manager Jos ph E. V4WfiI4 Finance Dir ctor 685 W. Montrose Street Clermont, FL 34711 www.ClermontFL.gov E 0 L 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, 2017 Executive Director/CEO City Attorney Citizens of Clermont City Council City Manager City Clerk Development Services Economic Development Environmental Services Finance Committees Public Information Officer Human Resources Information Technology Parks and Recreation Police Public Works Fire MI Purchasing City of Clermont, Florida List of Elected and Appointed Officials For the Fiscal Year Ended September 30, 2018 Elected Officials Gail L. Ash Mayor Diane Travis Mayor Pro-Tem Heidi Brishke Council Member Appointed Officials Darren S. Gray City Manager Dan Mantzaris City Attorney Tracy Ackroyd Howe City Clerk James Kinzler Capital Planning, Grants and Projects Director Kathryn Deen Communications Director Vacant Development Services Director Shannon J. Schmidt Economic Development Director Dennis Westrick Environmental Services Director Joseph Van Zile Finance Director Ray Goodgame Council Member Timothy Bates 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 10 MCDIRM-IT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Clermont, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Clermont, Florida, as of and for the year ended September 30, 2018, 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, 2018, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund, Infrastructure Special Revenue Fund, and Community Redevelopment Special Revenue Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 T:407-843-5406 I F:407-649-9339 I WWW.MCDIRMITDAVIS.COM 13 Emphasis -of -Matter — Change in Accounting Principle As discussed in Note I to the financial statements, in the year ended September 30, 2018, the City adopted the provisions of Governmental Accounting Standards Board Statement ("GASBS") 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. As a result of the implementation of GASBS 75, the City reported a restatement for the change in accounting principle as of October 1, 2017. Our opinions are not modified with respect to this matter. 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 97 through 103 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise City of Clermont's basic financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical section and the Schedule of State Financial Assistance (the Schedule) as required by the audit requirements of Chapter 10.550, Rules of the Auditor General, 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 May 31, 2019 on our consideration of City of Clermont's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Clermont's internal control over financial reporting and compliance. Daea & CernparuLLC Orlando, FL May 31, 2019 14 MANAGEMENT'S DISCUSSION AND ANALYSIS IN 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, 2018. 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, 2018 by $181,918,648 (net position). Of this amount, $51,883,494 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net position increased by $5,143,304 (or 2.9%) during fiscal year 2018 primarily due to an increase in capital assets. • At September 30, 2018, the City of Clermont's governmental funds reported combined ending fund balances of $38,060,445 a decrease of $112,441 from the previous fiscal year. Of this amount $7,103,578 (unassigned fund balance) is available for spending at the government's discretion. • The General Fund, the City's primary operating fund, reported an unassigned fund balance of $7,103,578, which represents 25.9% of total General Fund expenditures. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Clermont's basic financial statements. The City's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Clermont's financial position, in a manner similar to a private -sector business. They include a Statement of Net Position and a Statement of Activities. These statements appear on pages 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 108. 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 - 93 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 108 - 124 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. MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Net Position Governmental Activities Business -type Activities Total 2017-18 2016-17 2017-18 2016-17 2017-18 2016-17 Assets: Current and other assets $ 46,834,336 $ 41,606,498 $ 48,514,271 $ 53,242,346 $ 95,348,607 $ 94,848,844 Capital assets 68,385,716 66,020,164 83,598,348 76,698,502 151,984,064 142,718,666 Total assets 115,220,052 107,626,662 132,112,619 129,940,848 247,332,671 237,567,510 Deferred Outflows of Resources: Deferred outflow of pension and OPEB earnings 6,161,344 6,817,441 206,453 - 6,367,797 6,817,441 Deferred charge of refunding - - 1,038,298 445,842 1,038,298 445,842 Total deferred outflows of resources 6,161,344 6,817,441 1,244,751 445,842 7,406,095 7,263,283 Liabilities: Long-term liabilities outstanding 41,002,190 39,746,802 21,165,594 20,642,756 62,167,784 60,389,558 Other liabilities 3,148,787 2,763,303 1,871,908 2,818,537 5,020,695 5,581,840 Total liabilities 44,150,977 42,510,105 23,037,502 23,461,293 67,188,479 65,971,398 Deferred Inflow of Resources: Deferred inflowof pension and OPEB earnings 2,496,618 2,084,051 135,021 - 2,631,639 2,084,051 Netinvestment in capital assets 35,262,327 31,917,984 69,321,935 63,130,707 104,584,262 95,048,691 Restricted 8,546,637 7,814,560 16,904,255 17,127,547 25,450,892 24,942,107 Unrestricted 27,924,837 30,117,403 23,958,657 26,667,143 51,883,494 56,784,546 Total net position $ 71,733,801 $ 69,849,947 $ 110,184,847 $ 106,925,397 $ 181,918,648 $ 176,775,344 The City's total net position at September 30, 2018 was $181,918,648. Of the City's total net position $104,584,262 (57.5%) 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, $25,450,892 (14%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the City's total net position, $51,883,494 (58.5%) is unrestricted. These assets may be used at the City's discretion in meeting its ongoing obligations to citizens and creditors. The City's net position increased by $5,143,304 during the current fiscal year ($6,858,882 increase from current year activity and a $1,715,578 decrease for the restatement due to the implementation of a new accounting standard). 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 2017-18, 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 Sewer Sanitation Stormwater Total expenses Increase (Decrease)in Net Position Before Transfers Special item - loss on sale of capital asset Transfers Increase in Net Position Net Position - Beginning, as restated Net Position - Ending Changes in Net Position Governmental Activities Business -type Activities Total 2017-18 2016-17 2017-18 2016-17 2017-18 2016-17 $ 6,915,268 6,688,146 $ 17,641,637 17,115,766 $ 24,556,905 $ 23,803,912 2,232,803 1,456,593 - - 2,232,803 1,456,593 428,000 309,225 4,534,918 6,906,054 4,962,918 7,215,279 10,746,758 9,747,683 - - 10,746,758 9,747,683 160,234 132,541 160,234 132,541 2,817,288 2,619,192 2,817,288 2,619,192 3,446,406 3,328,087 3,446,406 3,328,087 7,863,900 7,256,705 7,863,900 7,256,705 799,802 682,919 378,575 255,250 1,178,377 938,169 289,131 86,211 30,993 24,411 320,124 110,622 35,699,590 32,307,302 22,586,123 24,301,481 58,285,713 56,608,783 2,870,011 4,239,914 - - 2,870,011 4,239,914 20, 305, 907 20, 296, 917 20, 305, 907 20, 296, 917 2,103,577 805,255 2,103,577 805,255 2,254,892 2,009,325 2,254,892 2,009,325 385,072 1,196,693 385,072 1,196,693 5,752,085 4,490,710 5,752,085 4,490,710 839,158 434,473 839,158 434,473 - - 5,633,884 5,198,731 5,633,884 5,198,731 6,849,158 6,909,806 6,849,158 6,909,806 3,072,877 2,868,709 3,072,877 2,868,709 1,360,210 1,189, 590 1,360,210 1,189, 590 34,510,702 33,473,287 16,916,129 16,166,836 51,426,831 49,640,123 1,188,888 (1,165,985) 5,669,994 8,134,645 6,858,882 6,968,660 2,013,216 1,367,723 (2,013,216) (1,367,723) - - 3,202,104 201,738 3.656,778 6,766,922 6,858,882 6,968,660 68,531,697 69,648,209 106,528,069 100,158,475 175,059,766 169,806,684 $ 71,733,801 $ 69,849,947 $ 110,184,847 $ 106,925,397 $ 181,918,648 $ 176,775,344 Governmental activities - Governmental activities increased the City of Clermont's net position by $3,202,104. This change is primarily due to increased general government revenues and operating grants. The following graph is a comparison of program revenues and program expenses for all governmental activities. This chart is intended to give the reader an idea of the degree to which governmental activities are self-supporting. 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 ■ Ex enses $20,305,907 ■ Program revenues $5,752,085 $3,874,098 2,870,0 2,528,900 $2,254,892 $2,116,929$2,488,649 $584,144 $508,000 $839,158 $0 Generalgo"ment public safety T ransportation/PublicWorksure $ recreation Physical environment and Interest on /on other 8-term debt The following pie chart illustrates the composition of governmental activities revenue and its percent in relation to total governmental activities revenues. Revenues by Source - Governmental Activities ■ Intergovernmental ■ Charges for services ■ Operating grants and contributions ■ Investment income and miscellaneous ■ Other taxes ■ Capital grants and contributions ■ Property taxes Property taxes, 3 Capital grants and contributions, 1.2% Other taxes, 18.1% InvestM-L „te a„U miscellaneous, 2.3% Operating grants and contributions, 6.3% Intergovernmental, 22.2% les for services, 19.5% Business -type activities - Business -type activities increased the City of Clermont's net position by $3,656,778. This change is primarily due to increased revenues from services and capital contributions of water and sewer impact fees paid by developers. 22 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. $10, 000, 000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $ 2, 000, 000 $1, 000, 000 $0 Expenses and Program Revenues - Business Type Activities Water Sewer Sanitation Stormwater The following pie chart illustrates the composition of business -type activities revenue and its percent in relation to total business -type activities revenues. Revenues by Source - Business Activities ■ Investment income and miscellaneous ■ Charges for Services 6 Capital Grants and Contributions Charges for Services, 78.1% Capital Grants and Contributions, 20.1% Investment income and miscellaneous, 1.8% 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, 2018, the City of Clermont's governmental funds reported combined ending fund balances of $38,060,445 a decrease of $112,441 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 issued last year. Of the governmental funds combined ending fund balances, $7,103,578 (18.7%) represents unassigned fund balance, which is available for spending at the City's discretion. An additional $21,723,347 (assigned fund balance) has been set aside for planned master plan project expenditures. Restricted fund balances totaling over $8.5 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 ($644,949) to indicate that it is not available for spending because it has already been committed for inventories and prepaid expenses, or it is being held in a non - expendable trust fund. The General Fund is the chief operating fund of the City of Clermont. As of September 30, 2018, the fund balance in the General Fund was $7,976,039 a decrease of $7,896 in comparison with the prior year due to current expenditures exceeding current revenues. The change in fund balance was more than the anticipated amount of the original budget by $7,896 and $725,993 less than the revised budget. Revenues were less than budgeted by $224,921, primarily due to electric utility tax revenues not meeting budget projections. Departmental expenditures came in less than anticipated reducing the amount of reserves used. Of the total fund balance in the General Fund, $7,103,578 (89.1%) 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 25.9% of total General Fund expenditures, while total fund balance represents 29% 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 $916,280 in fiscal year 2018, 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 $180,098 in fiscal year 2018 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 $94,270 as anticipated to accumulate funding for upcoming projects. The remainder of the change of $897,563 to the governmental fund balance was from the non - major governmental funds. Recreation, Police and Fire Impact Fee fund balances combined for a decrease of $674,049 in fiscal year 2018 primarily due to a one time outlay of $1,000,000 from recreation impact funds towards the boat ramp project in the master plan. The Building Services fund balance increased $840,906 due to the increase in building permits. The fund balances in the remaining nonmajor funds increased a total of $730,706 due to an increase in the 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, 2018, the City of Clermont's Water Fund reported total net position of $41,039,387, an increase of $1,191,263 in comparison with the prior year. This increase in net position was due to revenues exceeding expenses 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, 2018, the City of Clermont's Sewer Fund reported total net position of $56,567,836, an increase of $1,501,318 in comparison with the prior year. This increase in net position was primarily due to 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, 2018, the City of Clermont's Sanitation Fund reported total net position of $5,374,664, an increase of $107,449 in comparison with the prior year. This increase in net position is primarily due to revenues exceeding expenses. 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, 2018, the City of Clermont's Stormwater Fund reported total net position of $7,216,402, an increase of $760,167 in comparison with the prior year. The increase in net position is primarily due to grants pertaining to the Victory Pointe Master Plan Project. 25 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 7 on pages 70 - 73 of this report. Outstanding Debt Governmental Activities Business -type Activities Total 2017-18 2016-17 2017-18 2016-17 2017-18 2016-17 Revenue bonds payable $ - $ - $ 12,262,000 $ 12,365,000 $ 12,262,000 $ 12,365,000 Notes payable 33,123,389 34,102,180 6,239,441 6,329,441 39,362,830 40,431,621 Total $ 33,123,389 $ 34,102,180 $ 18,501,441 $ 18,694,441 $ 51,624,830 $ 52,796,621 As of September 30, 2018, total outstanding debt was $51,624,830, which includes both revenue bonds payable and notes payable. The outstanding debt amount decreased $1,171,791 over the previous year. Next Year's Budgets and Rates The fiscal year 2019 budget was once again approved without using reserves to balance the General Fund budget and maintaining the same property tax millage rate which continues to be one of the lowest of comparable cities in the region. Property values continued increasing in fiscal year 2019 in the amount of 11.31 % due to the 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 1, starting on October 1, 2018 based on the Florida Public Service Commission Annual Deflator Index. The rate increases are necessary, primarily to provide funding for future planned capital projects. The 2019 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 o 0 CITY OF CLERMONT, FLORIDA Assets: Cash and cash equivalents Investments Receivables, net Inventories Due from other governments Internal balances Prepaid costs Restricted assets: Cash and cash equivalents Investments Interest receivable Net pension asset Capital assets not being depreciated Capital assets being depreciated, net of accumulated depreciation Total assets Deferred Outflows of Resources: Deferred outflow of pension earnings Deferred outflow related to OPEB Deferred charge on refunding Total deferred outflows of resources Liabilities: Accounts payable and accrued expenses Due to other governmental agencies Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities STATEMENT OF NET POSITION September 30, 2018 Primary Government Governmental Business -type Activities Activities Total $ 6,260,473 $ 9,059,107 $ 15,319,580 21,959,176 18,582,395 40,541,571 1,008,494 1,140,278 2,148,772 27,267 19,942 47,209 2,131,301 623,490 2,754,791 (734,094) 734,094 - 262,160 120,284 382,444 - 1,882,399 1,882,399 11,238,483 16,290,867 27,529,350 46,163 61,415 107,578 1,634,913 - 1,634,913 26,082,492 4,692,277 30,774,769 42,303,224 78,906,071 121,209,295 112,220,052 132,112,619 244,332,671 5,473,631 - 5,473,631 687,713 206,453 894,166 - 1,038,298 1,038,298 6,161,344 1,244,751 7,406,095 3,067,267 16,508 65,012 1,871,908 4,939,175 16,508 65,012 2,147,976 1,192,307 3,340,283 38,854,214 19,973,287 58,827,501 44,150,977 23,037,502 67,188,479 Deferred Inflows of Resources: Deferred inflow of pension earnings 2,059,760 - 2,059,760 Deferred inflow related to OPEB 436,858 135,021 571,879 2,496,618 135,021 2,631,639 Net Position: Net investment in capital assets 35,262,327 69,321,935 104,584,262 Restricted for: Capital Improvements - 16,904,255 16,904,255 Community redevelopment 396,655 - 396,655 Public safety 1,519,548 1,519,548 Culture and recreation 1,221,054 1,221,054 Infrastructure 963,138 963,138 Debt service 1,743,293 1,743,293 Building services 1,454,712 1,454,712 Cemetery 1,248,237 - 1,248,237 Unrestricted 27,924,837 23,958,657 51,883,494 Total net position $ 71,733,801 $ 110,184,847 $ 181,918,648 The accompanying Notes to Financial Statements are an integral part of this statement 31 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: General government Physical environment Economic environment Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses): Transfers in Transfers out Sale of general capital assets Total other financing sources (uses) Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2018 Community Other Total Infrastructure Redevelopment Governmental Governmental General Capital Projects Special Revenue Special Revenue Funds Funds $ 14,105,153 $ $ $ 248,245 $ $ 14,353,398 2,817,288 - 2,817,288 361,550 1,887,177 2,248,727 6,253,385 908,000 3,397,707 - 10,559,092 1,623,120 - - 479,941 2,103,061 204,310 - 204,310 - - - - 1,737,598 1,737,598 87,202 309,435 5,940 2,191 40,855 445,623 970,498 - - - 378 970,876 26,422,506 1,217,435 3,403,647 250,436 4,145,949 35,439,973 3,895,408 9,495 42,288 509 3,947,700 16,859,091 - 832,861 2,058,494 19,750,446 871,995 8,743 - 880,738 1,283,028 643,649 1,926,677 188,799 - 154,766 - 343,565 4,351,317 363,150 - 484,814 5,199,281 - - 978,791 978,791 9,254 796,298 805,552 1,394,151 1,394,151 - 2,690,514 - - - 2,690,514 27,458,892 4,094,160 1,890,691 154,766 4,318,906 37,917,415 (1,036,386) (2,876,725) 1,512,956 95,670 (172,957) (2,477,442) 1,851,714 1,960,445 3,885,167 7,697,326 (1,823,211) - (1,693,054) (1,400) (2,814,647) (6,332,312) 999,987 - - 999,987 1,028,490 1,960,445 (1,693,054) (1,400) 1,070,520 2,365,001 (7,896) (916,280) (180,098) 94,270 897,563 (112,441) 7,983,935 22,636,229 1,143,236 302,385 6,107,101 38,172,886 $ 7,976,039 $ 21,719,949 $ 963,138 $ 396,655 $ 7,004,664 $ 38,060,445 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, 2018 Net Change in Fund Balances - total governmental funds: $ (112,441) 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. 3,027,906 The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins and disposals) is to decrease net position (710,856) Net transfers of capital assets from proprietary funds 48,502 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. (41,678) Cash pension contributions reported in the funds were more than the calculated pension expense on the statement of activities, and therefore increased net position (210,504) 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. 978.791 Some expenses reported in the statement of activities do not require the use of current financial resources and these are not reported as expenditures in governmental funds. (709,916) 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. 932,300 Change in Net Position of Governmental Activities $ 3,202,104 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, 2018 Actual Variance with Amounts, Final Budget - Budgetary Positive Budgeted Amounts Basis (Negative) Original Final Revenues: Taxes $ 14,416,360 $ 14,416,360 $ 14,105,153 $ (311,207) Franchise fees 2,769,136 2,769,136 2,817,288 48,152 Licenses and permits 350,000 350,000 361,550 11,550 Intergovernmental revenues 6,284,363 6,338,080 6,253,385 (84,695) Charges for services 1,642,572 1,642,572 1,623,120 (19,452) Fines and forfeitures 117,500 188,990 204,310 15,320 Investment earnings 80,702 80,702 87,202 6,500 Miscellaneous 849,694 861,587 970,498 108,911 Total revenues 26,510,327 26,647,427 26,422,506 (224,921) Expenditures: Current: General government: City council 24,848 26,348 26,347 1 City clerk 314,386 320,130 303,213 16,917 City manager 470,351 470,351 457,856 12,495 Finance 856,041 867,958 819,412 48,546 Legal services 116,707 116,707 99,353 17,354 Planning & zoning 703,099 727,373 529,744 197,629 Information technology 697,609 712,609 693,422 19,187 Human resources 463,176 463,176 431,850 31,326 Purchasing 258,196 258,196 255,576 2,620 Other general government 198,701 278,637 278,635 2 4,103,114 4,241,485 3,895,408 346,077 Public safety: Law enforcement 8,512,484 8,642,757 8,243,734 399,023 Fire control 8,116,690 8,660,808 8,615,357 45,451 16,629,174 17, 303,565 16,859,091 444,474 Physical environment 919,686 931,821 871,995 59,826 Transportation 1,326,164 1,329,222 1,283,028 46,194 Economic environment 190,175 190,175 188,799 1,376 Culture and recreation Culture and recreation 2,406,207 2,435,469 2,306,461 129,008 Events 603,649 624,396 556,943 67,453 Arts and rec center 1,198,322 1,189,922 976,394 213,528 CPAC 508,538 509,963 511,519 (1,556) 4,716,716 4,759,750 4,351,317 408,433 Interest and fiscal charges - - 9,254 (9,254) Total expenditures 27,885,029 28,756,018 27,458,892 1,297,126 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, 2018 Actual Variance with Amounts, Final Budget - Budgetary Positive Budgeted Amounts Basis (Negative) Original Final Excess (Deficiency) of Revenues Over Expenditures (1,374,702) (2,108,591) (1,036,386) 1,072,205 Other Financing Sources (Uses): Transfers In 1,997,423 1,997,423 1,851,714 (145,709) Transfers Out (2,922,721) (2,922,721) (1,823,211) 1,099,510 Sale of General Capital Assets 2,300,000 2,300,000 999,987 (1,300,013) Total other financing sources (uses) 1,374,702 1,374,702 1,028,490 (346,212) Net Change in Fund Balance Fund Balance - beginning Fund Balance - ending (733,889) (7,896) 725,993 7,983,935 7,983,935 7,983,935 _ $ 7,983,935 $ 7,250,046 $ 7,976,039 $ 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 Year Ended September 30, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Intergovernmental revenues $ 3,218,000 $ 3,218,000 $ 3,397,707 $ 179,707 Investment earnings 4,650 4,650 5,940 1,290 Total revenues 3,222,650 3,222,650 3,403,647 180,997 Expenditures: Current: General government 114,800 295,200 42,288 252,912 Public safety: Police 293,190 319,262 288,021 31,241 Fire control 129,736 554,736 544,840 9,896 422,926 873,998 832,861 41,137 Physical Environment 9,500 34,500 8,743 25,757 Transportation: Roads & streets 670,000 828,223 643,649 184,574 Culture and recreation: Recreation programs 327,920 443,440 325,978 117,462 Arts and rec center 72,500 92,500 37,172 55,328 400,420 535,940 363,150 172,790 Total expenditures 1,617,646 2,567,861 1,890,691 677,170 Excess (Deficiency) of Revenues Over Expenditures 1,605,004 654,789 1,512,956 858,167 Other Financing Uses: Transfers out (1,694,042) (1,694,042) (1,693,054) 988 Total other financing uses (1,694,042) (1,694,042) (1,693,054) 988 Net Change in Fund Balances (89,038) (1,039,253) (180,098) 859,155 Fund Balances - beginning 1,143,236 1,143,236 1,143,236 - Fund Balances -ending $ 1,054,198 $ 103,983 $ 963,138 $ 859,155 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 Revenues: Taxes Investment earnings Total revenues Expenditures: Economic environment: Economic development Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses: Transfers out Total other financing uses Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 245,966 $ 245,966 $ 248,245 $ 2,279 1,989 1,989 2,191 202 247,955 247,955 250,436 2,481 180,813 180,813 154,766 26,047 180,813 180,813 154,766 26,047 67,142 67,142 95,670 28,528 (1,400) (1,400) (1,400) - (1,400) (1,400) (1,400) - 65,742 65,742 94,270 28,528 302,385 302,385 302,385 - $ 368,127 $ 368,127 $ 396,655 $ 28,528 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, 2018 Governmental Business -type Activities -Enterprise Funds Activities - Internal Service Water Sewer Sanitation Stormwater Total Fund $ 3,742,815 $ 3,836,303 $ 1,434,404 $ 45,585 $ 9,059,107 9,816,933 6,708,009 2,057,453 - 18,582,395 847,781 743,880 67,973 222,765 1,882,399 360,181 421,348 241,709 117,040 1,140,278 - - - 623,490 623,490 19,942 - - - 19,942 55,163 47,541 9,514 8,066 120,284 14,842,815 11,757,081 3,811,053 1,016,946 31,427,895 2,407,983 10,823,016 1,443,177 1,616,691 16,290,867 49,851 2,465,139 642,814 14,732 3,172,536 23,251 34,003 4,161 - 61,415 42,428,193 66,879,129 4,729,558 16,074,795 130,111,675 973,220 2,096,381 26,810 84,059 3,180,470 (13,877,791) (29,098,500) (3,084,932) (3,632,574) (49,693,797) 29,523,622 39,877,010 1,671,436 12,526,280 83,598,348 32,004,707 53,199,168 3,761,588 14,157,703 103,123,166 46,847,522 64,956,249 7,572,641 15,174,649 134,551,061 370,186 668,112 - - 1,038,298 73,185 53,819 50,944 28,505 206,453 443,371 721,931 50,944 28,505 1,244,751 The accompanying Notes to Financial Statements are an integral part of this statement. $ 1,554,034 345,368 1,985 1,901,387 648 648 1,902,035 Liabilities: Current liabilities: Accounts payable Salaries payable Accrued interest payable Due to other funds Compensated absences Customer deposits payable Revenue bonds payable -current Total current liabilities Noncurrent liabilities: Compensated absences Other post employment benefits Notes payable Revenue bonds payable Total noncurrent liabilities Total liabilities Deferred Inflows of Resources: Deferred inflows related to OPEB Total deferred inflows of resources Net Position: Net investment in capital assets Restricted for capital improvements Unrestricted Total net position 275,773 309,896 103,692 404,142 65,806 59,987 45,003 20,095 36,962 65,711 13,071 42,422 - - - 2,425,000 17,959 16,723 5,985 2,041 429,348 - - - 288,000 512,000 82,313 267,286 1,113,848 964,317 250,064 3,160,986 161,631 800,974 4,128,445 5,091,050 6,204,898 46,608 AG Ono 150,508 53,863 618,660 501,379 - 1,407,987 7,339,458 - 8,108,626 n n1n nAO 1,963,229 O OAO nl '37 Alll 35,628 OG COO 18,368 220,159 4,571,855 4,810,382 7,971,368 15,384 15,384 25,477,363 32,693,664 1,624,313 9,526,595 3,365,180 13,539,075 - - 12,196,844 10,335,097 3,750,351 (2,310,193) $ 41,039,387 $ 56,567,836 $ 5,374,664 $ 7,216,402 The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the Business Activities of the Statement of Net Position. Total Net Position per Government -Wide Financial Statements The accompanying Notes to Financial Statements are an integral part of this statement. 1,093,503 223,114 190,891 - 158,166 - 2,425,000 500,000 42,708 - 429,348 _ 1,149, 599 - 5,489,215 723,114 384,370 - 2,141,172 - 5,979,842 _ 11,467,903 _ 19,973,287 _ 25,462,502 723,114 135,021 135,021 _ 69,321,935 _ 16,904,255 - 23,972,099 1,178,921 110,198,289 $ 1,178, 921 (13,442) $ 110,184,847 41 00 40 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 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, 2018 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The government reports the following funds: Major Governmental Funds The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Capital Projects Fund accounts for financial resources segregated for the acquisition or construction of major capital facilities. Infrastructure Special Revenue Fund accounts for the proceeds of the Local Government Infrastructure Surtax. The proceeds and interest accrued thereto, by law are only to be used to finance, plan and construct infrastructure. The Community Redevelopment Fund was established as a dependent taxing district. The incremental annual increase in tax over the base years will be used to fund projects designed to enhance and improve the described area. Nonmalor 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. Cemetery Perpetual Care accounts for activities of the City relative to cemetery maintenance at specified locations. Fund resources are restricted. Only earnings on invested resources may be used to support these activities. During the year the City adopted an Ordinance changing the Cemetery fund to a special revenue fund. 53 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 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, 2018 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflowslinflows 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. ,?A CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 U. 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, 2018 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflowslinflows 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, 2018 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, 2018 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, Capital Projects 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, 2018 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, 2018 Quoted Prices in Active Markets for Significant Other Investments Valued by Fair Value Level Identical Assets Observable Inputs (Level 1) (Level 2) Federal Agency Bond $ 8,841,064 $ - $ 8,841,064 Federal Agency Colataralized Wrtgage Obligation 403,382 - 403,382 Federal Agency Wrtgage-Backed Securities 511,327 - 511,327 US Treasury Notes 9,117,205 9,117,205 - Supra -National Agency Bond/Note 3,747,691 - 3,747,691 Corporate Note 7,737,183 - 7,737,183 Asset Backed Security 4,105,791 - 4,105,791 Commercial Paper 1,346,925 - 1,346,925 Pension Fixed Income Securities 11,767,006 - 11,767,006 Pension Equity Securities 34,705,990 - 34,705,990 $ 82,283,564 $ 9,117,205 $ 73,166,359 66 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 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: Less Allowance for Uncollectible Accounts Taxes Other Accounts Total General Fund $ 4,230,708 $ 251,453 $ 678,704 $ (4,179,968) $ 980,897 Capital Projects Fund - - 17,367 17,367 Infrastructure Special Revenue Fund 1,246 1,246 Community Redevelopment Fund - 663 663 Water Fund 354,379 75,560 (46,507) 383,432 Sewer Fund 571,531 34,003 (150,183) 455,351 Sanitation Fund 286,473 4,731 (45,334) 245,870 Stormwater Fund 132,577 380 (15,917) 117,040 Nonmajor Governmental Funds - 51,851 51,851 Internal Service Fund 2,633 2,633 $ 5,575,668 $ 251,453 $ 867,138 $ (4,437,909) $ 2,256,350 67 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 7 - Long -Term Debt: Bonds Payable The City issues bonds to provide funds for the acquisition and construction of major capital assets. Bonds have been issued for business -type activities. The 2009 Water and Sewer Revenue and Refunding Bonds are secured by net revenue of the water and sewer system. The total principal and interest remaining to be paid on this series is $1,496,014. For the fiscal year, principal and interest paid on this series was $10,980,926 and total pledged revenue was $5,274,688. 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 $12,778,656. For the fiscal year, principal and interest paid on this series was $150,176 and total pledged revenue was $5,274,688. The original amount of revenue bonds issued in prior years is described below. Revenue bonds outstanding at year end are as follows: Balance Interest Rates Original September 30, Business -Type Activities and Dates Maturity Amount 2018 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 $ 1,445,000 Water and Sewer Revenue 2.38% 12/1/2018 Refunding Bonds, to Series 2017 (6/1 & 12/1) 12/1/2030 $ 10,817,000 $ 10,817,000 $ 12,262,000 Annual debt service requirements to maturity for revenue bonds are as follows: Business - Type Activities Year Ending September 30, Principal Interest 2019 $ 800,000 $ 294,524 2020 828,000 267,059 2021 855,000 242,915 2022 879,000 222,280 2023 900,000 201,110 2024-2028 4,823,000 670,292 2029-2031 3,177,000 114,490 Total $ 12,262,000 $ 2,012,670 70 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 7 - Long -Term Debt (Continued): Notes Payable The Public Improvement Refunding Revenue Note, Series 2012, are secured by public services taxes, communications service tax and half cent sales tax revenue. This Note was paid in full in the current year. For the fiscal year, principal and interest paid on this series was $287,700 and total pledged revenue was $6,730,871. 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 $5,242,078. For the fiscal year, principal and interest paid on this series was $477,053 and total pledged revenue was $4,558,846. 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 $5,439,208. For the fiscal year, principal and interest paid on this series was $418,941 and total pledged revenue was $3,397,707. 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 $36,298,784. For the fiscal year, principal and interest paid on this series was $749,551. 71 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 7 - Long -Term Debt (Continued): Notes Payable (Continued) Revenue notes outstanding at year end are as follows: Interest Rates Governmental Activities and Dates Public Improvement Refunding Revenue Note, Series 2016 Infrastructure Sales Surtax Revenue Note, Series 2016 Master Plan Capital Projects Revenue Note, Series 2017 Business -Type Activities 2.03% (6/1 & 12/1) 2.12% (6/1 & 12/1) 2.63% (6/1 & 12/1) Original Maturity Amount 12/1 /2016 _ to 12/1/2028 $ 5,331,196 12/1/2016 to 12/1/2030 $ 5,300,000 12/1 /2018 to 12/1/2032 $ 23,670,559 Balance September 30, 2018 4,698,355 4,754,475 23,670, 559 33,123, 389 Master Plan Capital Projects 2.63% 12/1/2018 Revenue Note, Series 2017 (6/1 & 12/1) to 12/1/2032 $ 6,329,441 $ 6,329,441 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 2019 $ 2,014,398 $ 194,194 $ 349,596 $ 161,867 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 2024-2028 11,928,107 2,092,733 2,097,999 454,917 2029-2033 10,619,546 643,362 2,388,731 160,326 Total $ 33,123,389 $ 5,598,316 $ 6,329,441 $ 1,328,924 72 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 7 - Long -Term Debt (Continued): Changes in Long -Term Liabilities Long-term liability activity for the year ended September 30, 2018 was as follows: Governmental Activities Public improvement revenue notes Infrastructure revenue notes Capital Projects revenue notes 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 Balance, as Ending Due Within restated Additions Deductions Balance One Year $ 5,362,337 $ $ (663,982) $ 4,698,355 $ 385,511 5,069,284 (314,809) 4,754,475 321,483 23,670,559 23,670,559 1,307,404 6,514,565 28,453 6,543,018 - 11,236 - (9,406) 1,830 - 1,232,692 226,360 (123,269) 1,335,783 133,578 $ 41,860,673 $ 254,813 $ (1,111,466) $ 41,004,020 $ 2,147,976 $ 12,365,000 $ 10,817,000 $ (10,920,000) $ 12,262,000 $ 800,000 37,563 - (31,660) 5,903 - 12,402,563 10,817,000 (10,951,660) 12,267,903 800,000 6,329,441 - 6,329,441 349,599 2,132,378 8,794 2,141,172 - 415,506 53,123 (41,551) 427,078 42,708 $ 21,279,888 $ 10,878,917 $ (10,993,211) $ 21,165,594 $ 1,192,307 Note 8 - Interfund Receivables, Payables and Transfers: Interfund transfers for the year ended September 30, 2018 consisted of the following: Transfers Out: General Fund Capital Projects Fund Transfers In Stormwater Internal Fund Service Fund Nonmajor Govt Total General Fund $ $ 960,445 $ $ 413,500 $ 449,266 $ 1,823,211 Infrastructure Fund - - 1,693,054 1,693,054 Community Redevelopment 1,400 - 1,400 Water Fund 846,800 9,911 20,800 877,511 Sewer Fund 989,914 - 32,600 1,022,514 Sanitation Fund - 45,200 45,200 Stormwater Fund - - 29,400 29,400 Nonmajor Governmental 15,000 1,000,000 - 56,800 1,742,847 2,814,647 $ 1,851,714 $ 1,960,445 $ 9,911 $ 599,700 $ 3,885,167 $ 8,306,937 73 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - 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, 2018, 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, 2018 were as follows: Total Pension Liability Plan Fiduciary Net Position Sponsor's Net Pension Liability (Asset) Plan Fiduciary Net Position as a Percentage of $ 325,092 (323,262) $ 1,830 Total Pension Liability (Asset) 99.44% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2016, updated September 30, 2018 using the following actuarial assumptions: Inflation Salary Increases Investment Rate of Return 2.92% 0.00% 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. ►FBI CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - 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, 2018 are summarized in the following table: Asset Class Core Bonds Multi -sector U.S. Large Cap Equity U.S. Small Cap Equity Non-U.S. Equity Total Target Allocation 16% 24% 39% 11% 10% 100% Long Term Expected Real Rate of Return 0.58% 1.08% 6.08% 6.83% 6.83% Discount rate - The discount rate used to measure the total pension liability was 7%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 77 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Plan Membership - At September 30, 2018 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 18 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 14 Active Plan Members 65 97 Net Pension Liability of the City - The City's net pension liability was measured as of September 30, 2018, 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, 2018 were as follows: Total Pension Liability $ 17,658,942 Plan Fiduciary Net Position (18,326,157) " Sponsor's Net Pension Liability (Asset) $ (667,215) Plan Fiduciary Net Position as a Percentage of Total Pension Liability (Asset) 103.78% * does not include Share Plan balances or excess chapter 175/185 contributions Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2016, updated September 30, 2018 using the following actuarial assumptions: Inflation 2.92% 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. lE CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - Retirement Plans (Continued): B. Police Officers' Retirement (Continued) - Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2018 are summarized in the following table: Asset Class Core Bonds Multi -sector U.S. Large Cap Equity U.S. Small Cap Equity Non-U.S. Equity Total Target Allocation 16% 24% 39% 11% 10% 100% Long Term Expected Real Rate of Return 0.58% 1.08% 6.08% 6.83% 6.83% 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, 2017 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, 2018 Increase (Decrease Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) $ 16,036,239 $ 16,448,667 $ (412,428) 941,659 - 941,659 1,170, 292 1,173,160 (2,868) - 72,128 (72,128) (108,041) - (108,041) - 944,540 (944,540) - 120,269 (120, 269) (381,207) (381,207) - - (51,400) 51,400 $ 17,658,942 $ 18,326,157 $ (667,215) 81 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - 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 1 % 1 ncrease 6.00% 7.00% 8.00% $ 1,892,919 $ (667,215) $ (2,753,150) For the year ended September 30, 2018 the City will recognize a pension expense of $1,355,597. On September 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ - $ 464,826 Changes of assumptions 2,439,916 - Net difference between projected and actual earnings on pension plan investments 234,536 676,436 $ 2,674,452 $ 1,141,262 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: 2019 2020 2021 2022 2023 Thereafter $ 368,319 133,783 174,095 353,467 363,969 139,557 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, 2018 is $41,894. 82 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - Retirement Plans (Continued): C. Firefighters' Retirement - The firefighters' defined benefit pension plan is a local law, single employer, defined benefit pension plans as defined under Florida Statutes, Chapters 175 and 185, which covers all 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, 2016 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 $193,373 in 2018 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, 2018 plan membership consisted of the following: Inactive Plan Members or Beneficiaries Currently Receiving Benefits 1 Inactive Plan Members Entitled to but Not Yet Receiving Benefits 60 Active Plan Members 57 118 83 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - Retirement Plans (Continued): C. Firefighters' Retirement (Continued) - Sensitivity of the Net Pension Liability to changes in the Discount Rate Current 1 % Decrease Discount Rate 6.00% 7.00% 1% Increase 8.00% Fire Pension Net Pension Liability $ 1,474,164 $ (969,528) $ (2,934,826) Deferred outflows and inflows of resources For the year ended September 30, 2018 the City will recognize a pension expense of $1,210,528. On September 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 455,793 $ 279,492 Changes of assumptions 2,165,760 - Net difference between projected and actual earnings on pension plan investments 170,437 589,971 $ 2,791,990 $ 869,463 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: 2019 2020 2021 2022 2023 Thereafter $ 356,817 186,379 220,380 378,642 390,438 389,871 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, 2018 is $0. 86 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 9 - Retirement Plans (Continued): General Employee Defined Contribution Pension Plan - The defined Contribution Pension Plan for General Employees of the City of Clermont was established October 1, 1985, as defined in Chapter 16, Article IV, of the Clermont Code, and is available to all permanent general employees of the City, once they have completed one year of employment. Employees are fully vested in the plan after ten years of service. In a defined contribution plan, benefits depend solely on amounts contributed to the plan, plus investment earnings. Contributions for, and interest forfeited by, employees who terminate employment before five years of service are used to reduce the City's current period contributions. Covered payroll for this Plan for fiscal year 2018 was $7,615,795; the City's total payroll for City employees was $17,388,580. 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 2018 was $640,469 Note 10 - Other Post Employment Benefits: In accordance with Florida Statutes Section 112.0801, the City makes continued group health and dental insurance through the city's current provider available to retirees and eligible dependents provided certain service requirements and normal age retirement requirements have been met. This plan is a single employer plan. The City is self -insured with respect to these benefits and provides an explicit subsidy for coverage to retirees and their spouses based on the coverage selected. This plan does not issue stand-alone financial statements. As of October 1, 2017, the valuation date, there were 285 active employees and 8 inactive employees currently receiving benefits. The OPEB liability of $8,684,190 was measured as of September 30, 2018 and was determined by the actuarial valuation. The covered payroll was $14,293,247, and the ratio of Net OPEB liability as a percentage of covered payroll was 65.09%. Summary of Actuarial Methods & Assumptions: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. 87 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 10 - Other Post Employment Benefits (Continued): For the fiscal year ended September 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Difference between expected and actual experience $ 894,166 $ - Changes of assumptions - 571,879 Total $ 894,166 $ 571,879 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, 2019 $ 50,915 2020 50,915 2021 50,915 2022 50,915 2023 50,915 Thereafter 67,712 Postemployment benefits (OPEB's) - The City provides optional postemployment healthcare, dental and life 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, dental and life) at their cost. Retired monthly premiums for postemployment insurance coverage - retirees must pay monthly premiums as determined by the insurance carriers. Failure to pay insurance premiums will result in termination of insurance coverage without the ability to reinstate such coverage. 90 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) September 30, 2018 Note 11 -Risk Management: During fiscal year 1990, the City established an internal service fund to account for its uninsured risk of loss for employee medical and dental coverage. Under this program, the fund provides coverage for the first $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 $223,114 represents claims processed through October 2018 which were applicable to the current fiscal year and any additional claims are deemed immaterial. Changes to the current claims liability are as follows: Claims Liabilities, beginning of year Incurred Claims Payments on Claims Claims Liabilities, end of year Note 12 - Commitments and Contingencies: 2018 2017 $ 221,560 $ 145,519 4,223,809 4,696,777 (4,222,255) (4,620,736) $ 223,114 $ 221,560 Litigation - The City is engaged in various liability claims incidental to the conduct of its general government operations at September 30, 2018. 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. 91 Ole 94 REQUIRED SUPPLEMENTAL INFORMATION CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2018 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS GENERAL EMPLOYEES Last 10 Fiscal Years* 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Total Pension Liability Service Cost $ - $ - $ - $ - $ - Interest 22,569 22,569 22,224 29,060 28,229 Changes in Excess State Money - - - - - Differences Between Expected and Actual Experience 17,118 12,118 40,676 Changes of Assumptions 28,462 31,161 (10,549) Benefit Payments, including refunds of employee contributions (57,338) (57,338) (61,435) (63,484) (56,412) Net Change in Total Pension Liability (34,769) 10,811 4,068 (4,297) (28,183) Total Pension Liability -beginning 359,861 349,050 344,982 349,279 377,462 Total Pension Liability -ending (a) $ 325,092 $ 359,861 $ 349,050 $ 344,982 $ 349,279 Plan Fiduciary Net Position Contributions -employer 8,767 8,767 - Contributions -state - - Contributions -employee - - - - - Net Investment Income 24,889 44,469 29,829 2,613 40,560 Benefit Payments, including refunds of employee contributions (57,338) (57,338) (61,435) (63,484) (66,212) Administrative Expense (1,681) (5,457) (1,757) (6,508) (3,136) Other Net Change in Plan Fiduciary Net Position (25,363) (9,559) (33,363) (67,379) (28,788) Plan Fiduciary Net Position - beginning 348,625 358,184 391,547 458,926 487,714 Plan Fiduciary Net Position - ending (b) $ 323,262 $ 348,625 $ 358,184 $ 391,547 $ 458,926 Net Pension Liability - ending (a)- (b) $ 1,830 $ 11,236 $ (9,134) $ (46,565) $(109,647) Plan Fiduciary Net Position as a Percentage of Total Pension Liability 99.44% 96.88% 102.62% 113.50% 131.39% Covered -employee Payroll $ - $ - $ - $ - $ - Net Pension Liability as a Percentage of Covered Employee Payroll N/A N/A N/A N/A N/A * only five years of data available CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2018 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS POLICE Last 10 Fiscal Years* Total Pension Liability Service Cost Interest Changes in Excess State Money Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments, including refunds of employee contributions Net Change in Total Pension Liability Total Pension Liability -beginning Total Pension Liability -ending (a) Plan Fiduciary Net Position 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 $ 941,659 $ 941,659 $ 836,661 $ 560,680 $ 524,531 1,170, 292 11049,633 749,652 860,884 723,246 (108,041) (204,387) (211,987) (162,697) 576,133 3,155, 202 (381,207) (640,378) (342,697) (298,559) (532,943) 1,622,703 1,722,660 4,186,831 960,308 714,834 16,036,239 14,313,579 10,126,748 9,166,440 8,451,606 $ 17,658,942 $ 16,036,239 $ 14,313,579 $ 10,126,748 $ 9,166,440 Contributions -employer 944,540 756,302 632,411 281,722 411,953 Contributions -state - - - 240,486 217,653 Contributions -employee 120,269 116,332 108,806 99,188 95,733 Net Investment Income 1,245,288 1,908,188 1,115,432 (14,779) 1,043,670 Benefit Payments, including refunds of employee contributions (381,207) (640,378) (342,697) (298,559) (334,599) Administrative Expense (51,400) (49,645) (30,651) (54,494) (31,851) Other - - - - - Net Change in Plan Fiduciary Net Position 1,877,490 2,090,799 1,483,301 253,564 1,402,559 Plan Fiduciary Net Position - beginning 16,448,667 14,357,868 12,874,567 12,621,003 11,218,444 Plan Fiduciary Net Position - ending (b) $ 18,326,157 $ 16,448,667 $ 14,357,868 $ 12,874,567 $ 12,621,003 Net Pension Liability - ending (a) - (b) $ (667,215) $ (412,428) $ (44,289) $ (2,747,819) $ (3,454,563) Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered -employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll only five years of data available 103,78% 102.57% 100.31% 127.13% 137.69% $ 3,366,613 $ 3,366,613 $ 3,366,613 $ 3,108,552 $ 2,424,191 -19.82%-12.25% -1.32%-88.40%-142.50% 99 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2018 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS FIRE Last 10 Fiscal Years" 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Total Pension Liability Service Cost $ 1,025,516 $ 1,025,516 $ 784,710 $ 524,325 $ 596,543 Interest 996,576 782,004 515,458 553,753 530,089 Changes in Excess State Money - - - - - Differences Between Expected and Actual Experience (121,553) 633,143 (208,729) (67,286) Changes of Assumptions 634,356 2,505,255 - Benefit Payments, including refunds of employee contributions (25,120) (4,513) (1,324) (945) (81,466) Net Change in Total Pension Liability 1,875,419 3,070,506 3,595,370 1,009,847 1,045,166 Total Pension Liability -beginning 13,283,379 10,212,873 6,617,503 5,607,656 4,562,490 Total Pension Liability -ending (a) $15,158,798 $ 13,283,379 $10,212,873 $ 6,617,503 $ 5,607,656 Plan Fiduciary Net Position Contributions -employer 1,278,757 797,699 491,818 646,065 438,902 Contributions -state - - - 181,292 175,931 Contributions -employee 200,118 238,785 279,064 141,632 86,520 Net Investment Income 1,063,078 1,599,687 858,136 (32,699) 704,467 Benefit Payments, including refunds of employee contributions (25,120) (4,513) (1,324) (945) (756) Administrative Expense (35,839) (49,761) (28,346) (40,885) (24,109) Other - - - - Net Change in Plan Fiduciary Net Position 2,480,994 2,581,897 1,599,348 894,460 1,380,955 Plan Fiduciary Net Position - beginning 13,647,332 11,065,435 9,466,087 8,571,627 7,190,672 Plan Fiduciary Net Position - ending (b) $16,128,326 $ 13,647,332 $11,065,435 $ 9,466,087 $ 8,571,627 Net Pension Liability - ending (a) - (b) $ (969,528) $ (363,953) $ (852,562) $ (2,848,584) $ (2,963,971) Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered -employee Payroll Net Pension Liability as a Percentage of Covered Employee Payroll " only five years of data available 106.40% 102.74% 108.35% 143.05% 152.86% $ 3,602,745 $ 3,602,745 $ 2,798,049 $ 2,798,049 $ 2,798,049 -26.91%-10.10%-30.47%-101.81%-105.93% 100 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2018 SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS GENERAL EMPLOYEES Last 10 Fiscal Years* 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution $ 8,767 $ 8,767 $ - $ - $ - Contributions in Relation to the Actuarially Determined Contribution 8,767 8,767 - - - Contribution Deficiency (Excess) $ - $ - $ - $ - $ - Covered Employee Payroll - - - - - Contributions as a Percentage of Covered employee Payroll N/A N/A N/A N/A N/A Notes to Schedule Valuation Date 10/1/2016 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, open Remaining Amortization Period 30 years Asset Valuation Method Market Value Inflation 2.92% Salary Increases N/A Interest Rate 7% per year, compounded annually, net of investment expenses Schedule of Investment Returns 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Annual money -weighted rate of return, net of investment expenses 7.00% 4.08% 4.08% 5.48% 8.55% * only five years of data available 101 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2018 SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS POLICE Last 10 Fiscal Years* 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution $ 905,229 $ 875,593 $ 640,139 $ 583,559 $ 629,606 Contributions in Relation to the Actuarially Determined Contribution 944,540 756,302 632,411 522,208 670,126 Contribution Deficiency (Excess) $ (39,311) $ 119,291 $ 7,728 $ 61,351 $ (40,520) Covered Employee Payroll 3,366,613 3,366,613 3,366,613 3,108, 552 3,108, 552 Contributions as a Percentage of Covered Employee Payroll 28.06% 22.46% 18.78% 16.80% 21.56% Notes to Schedule Valuation Date 10/1/2016 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, open Remaining Amortization Period 30 Years Asset Valuation Method Market Value Salary Increases 5.50% per annum Interest Rate 7% per annum (2.92% per annum is attributable to long-term inflation); this rate was used to discount all future benefit payments Retirement 20% of eligible participants are assumed to retire at each of ages 52 through 54 and 100% of eligible participants are assumed to retire at normal Other Decrements Assumed employment termination is based on age and ranges from 5.00% at age 20 to 0.00% at age 50 Assumed disability is based on age and ranges from 0.03% at age 20 to 0.18% at age 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP-2000 Blue Collar Mortality Table, with full generational improvements in mortality using Scale BB Non -investment Expenses Liabilities have been loaded by 1.50% to account for non -investment expenses Future Contributions Contributions from the employer and employees are assumed to be made as legally required. Schedule of Investment Returns 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Annual money -weighted rate of return, net of investment expenses 7.00% 4.08% 4.08% 5.48% 8.55% only five years of data available 102 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2018 SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS _ FIRE Last 10 Fiscal Years* 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Actuarially Determined Contribution $1,284,255 $1,113,095 $ 647,476 $ 603,000 $ 614,833 Contributions in Relation to the Actuarially Determined Contribution 1,278,757 797,699 491,818 827,357 668,800 Contribution Deficiency (Excess) $ 5,498 $ 315,396 $ 155,658 $ (224,357) $ (53,967) Covered Employee Payroll 3,602,745 3,602,745 2,798,049 2,798,049 2,798,049 Contributions as a Percentage of Covered Employee Payroll 35.49% 22.14% 17.58% 29.57% 23.90% Notes to Schedule Valuation Date 10/1/2016 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported Methods and assumptions used to determine contribution rates Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, Open Remaining Amortization Period 30 Years Asset Valuation Method Market Value Salary Increases 5.50% per annum Interest Rate 7% per annum (2.92% per annum is attributable to long-term inflation); this rate was used to discount all future benefit payments Retirement 20% of eligible participants are assumed to retire at each of ages 52 through 54 and 100% of eligible participants are assumed to retire at normal Other Decrements Assumed employment termination is based on age and ranges from 4.30% at age 20 to 0.00% at age 50 Assumed disability is based on age and ranges from 0.03% at age 20 to 0.18% at age 50; 75% of disabilities are assumed to be service -connected Mortality Sex -distinct rates set forth in the RP-2000 Blue Collar Mortality Table, with full generational improvements in mortality using Scale BB Non -investment Expenses Liabilities have been loaded by 1.75% to account for non -investment expenses Future Contributions Contributions from the employer and employees are assumed to be made as legally required. Schedule of Investment Returns 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 Annual money -weighted rate of return, net of investment expenses 7.00% 4.08% 4.08% 5.48% 8.55% * only five years of data available 103 le 104 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 105 Ole W ., 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 — to account for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds. 107 Assets: Cash and cash equivalents Investments Other receivables Due from other governments Advance to other funds Prepaid costs Total assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued liabilities Total liabilities Fund balances: Nonspendable Restricted Total fund balances Total liabilities and fund balances CITY OF CLERMONT, FLORIDA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS September 30, 2018 Special Revenue Recreation Police Impact Fire Impact Building Fire Impact Fees Fees Fees Services Inspection $ 457,340 $ 233,938 $ 183,793 $ 620,818 $ 13,526 765,752 437,722 508,731 879,000 - 1,549 885 1,029 1,474 43,696 - - 8,661 3,732 - - - 1,680 800 $ 1,224,641 $ 672,545 $ 693,553 $ 1,511,633 $ 61,754 $ 3,587 $ 73,671 $ 514 $ 32,690 $ 2,773 - - - 24,231 13,526 3,587 73,671 514 56,921 16,299 - - - 1,680 800 1,221,054 598,874 693,039 1,453,032 44,655 1,221,054 598,874 693,039 1,454,712 45,455 1 110 Permanent Fund - Total Nonmajor Cemetery Governmental Cemetery Total Debt Service Perpetual Care Funds $ 422,941 $ 1,932,356 $ 975,393 $ - $ 2,907,749 824,825 3,416,030 766,440 - 4,182,470 1,668 50,301 1,550 - 51,851 - 12,393 - - 12,393 214 2,694 - - 2,694 $ 1,249,648 $ 5,413,774 $ 1,743,383 $ - $ 7,157,157 $ 1,007 $ 114,242 $ 90 $ - $ 114,332 404 38,161 - - 38,161 1,411 152,403 90 152,493 214 2,694 - - 2,694 1,248,023 5,258,677 1,743,293 - 7,001,970 1,248,237 5,261,371 1,743,293 - 7,004,664 $ 1,249,648 $ 5,413,774 $ 1,743,383 $ $ 7,157,157 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS Year Ended September 30, 2018 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 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 $ $ - $ - $ 1,887,177 $ - - - 98,958 258,933 1,047,736 300,132 389,730 - - 11,811 3,796 4,444 5,778 - - - - 276 102 1,059,547 303,928 394,174 1,992,189 259,035 - 201,721 319,889 1,118,583 418,301 377,520 - - - - 682,027 102,207 74,285 873,606 (159,266) - 225,045 (1,510,133) (14,763) (7,672) (32,700) (24,100) (1,510,133) (14,763) (7,672) (32,700) 200,945 (828,106) 87,444 66,613 840,906 41,679 2,049,160 511,430 626,426 613,806 3,776 $ 1,221,054 $ 598,874 $ 693,039 $ 1,454,712 $ 45,455 112 Permanent Fund - Total Nonmajor Cemetery Governmental Cemetery Total Debt Service Perpetual Care Funds $ - $ 1,887,177 $ $ - $ 1,887,177 122,050 479,941 - 479,941 - 1,737,598 - 1,737,598 8,202 34,031 6,824 - 40,855 - 378 - - 378 130,252 4,139,125 6,824 - 4,145,949 - - 509 - 509 - 2,058,494 - - 2,058,494 107,294 484,814 - - 484,814 - - 978,791 - 978,791 - - 796,298 - 796,298 107,294 2,543,308 1,775,598 - 4,318,906 22,958 1,595,817 (1,768,774) - (172,957) 1,225,279 1,450,324 2,434,843 - 3,885,167 - (1,589,368) - (1,225,279) (2,814,647) 1,225,279 (139,044) 2,434,843 (1,225,279) 1,070,520 1,248,237 1,456,773 666,069 (1,225,279) 897,563 - 3,804,598 1,077,224 1,225,279 6,107,101 $ 1,248,237 $ 5,261,371 $ 1,743,293 $ - $ 7,004,664 113 CITY OF CLERMONT, FLORIDA RECREATION IMPACT FEE SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Impact fees/special assessments $ 900,000 $ 900,000 $ 1,047,736 $ 147,736 Investment earnings 9,395 9,395 11,811 2,416 Total revenues 909,395 909,395 1,059,547 150,152 Expenditures: Current: Culture and recreation 618,400 639,400 377,520 261,880 Total expenditures 618,400 639,400 377,520 261,880 Excess (Deficiency) of Revenues Over Expenditures 290,995 269,995 682,027 412,032 Other Financing Uses Transfers out (1,510,133) (1,510,133) (1,510,133) - Total other financing uses (1,510,133) (1,510,133) (1,510,133) - Net Change in Fund Balances (1,219,138) (1,240,138) (828,106) 412,032 Fund Balances - beginning 2,049,160 2,049,160 2,049,160 - Fund Balances - ending $ 830,022 $ 809,022 $ 1,221,054 $ 412,032 114 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, 2018 Revenues: Impact fees/special assessments Investment earnings Total revenues Expenditures: Current: Public Safety: Law enforcement Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses) Transfers out Total other financing sources (uses) Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 280,000 $ 280,000 $ 300,132 $ 20,132 1,145 1,145 3,796 2,651 281,145 281,145 303,928 22,783 247,415 313,486 201,721 111,765 247,415 313,486 201,721 111,765 33,730 (32,341) 102,207 134,548 (14,764) (14,764) (14,763) (14,764) (14,764) (14,763) 1 1 18,966 (47,105) 87,444 134,549 511,430 511,430 511,430 $ 530,396 $ 464,325 $ 598,874 $ 134,549 WN 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, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Impact fees/special assessments $ 350,000 $ 350,000 $ 389,730 $ 39,730 Investment earnings 1,958 1,958 4,444 2,486 Total revenues 351,958 351,958 394,174 42,216 Expenditures: Current: Public safety: Fire control 251,009 401,009 319,889 81,120 Total expenditures 251,009 401,009 319,889 81,120 Excess (Deficiency) of Revenues Over Expenditures 100,949 (49,051) 74,285 123,336 Other Financing Uses: Transfers out (7,672) (7,672) (7,672) - Total other financing sources (7,672) (7,672) (7,672) - Net Change in Fund Balances 93,277 (56,723) 66,613 123,336 Fund Balances - beginning 626,426 626,426 626,426 - Fund Balances - ending $ 719,703 $ 569,703 $ 693,039 $ 123,336 116 CITY OF CLERMONT, FLORIDA BUILDING SERVICES SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Revenues: Licenses and permits Charges for services Investment earnings Miscellaneous Total revenues Expenditures: Current: Public safety Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses: Transfers out Total other financing sources Net Change in Fund Balances Fund Balances - beginning Fund Balances - ending Year Ended September 30, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 1,068,020 $ 1,068,020 $ 1,887,177 $ 819,157 43,000 43,000 98,958 55,958 2,418 2,418 5,778 3,360 - - 276 276 1,113,438 1,113,438 1,992,189 878,751 1,314,620 1,327,177 1,118,583 208,594 1,314,620 1,327,177 1,118,583 208,594 (201,182) (213,739) 873,606 1,087,345 (32,700) (32,700) (32,700) (32,700) (32,700) (32,700) (233,882) (246,439) 840,906 1,087,345 613,806 613,806 613,806 _ $ 379,924 $ 367,367 $ 1,454,712 $ 1,087,345 117 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, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Charges for services $ 501,538 $ 501,538 $ 258,933 $ (242,605) Miscellaneous - - 102 102 Total revenues 501,538 501,538 259,035 (242,503) Expenditures: Current: Public safety 477,438 477,438 418,301 59,137 Total expenditures 477,438 477,438 418,301 59,137 Excess (Deficiency) of Revenues Over Expenditures 24,100 24,100 (159,266) (183,366) Other Financing Sources: Transfers in - - 225,045 225,045 Transfers out (24,100) (24,100) (24,100) - Total other financing sources (24,100) (24,100) 200,945 225,045 Net Change in Fund Balances - - 41,679 41,679 Fund Balances - beginning 3,776 3,776 3,776 - Fund Balances - ending $ 3,776 $ 3,776 $ 45,455 $ 41,679 118 CITY OF CLERMONT, FLORIDA CEMETERY SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended September 30, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final Revenues: Charges for services $ 60,000 $ 60,000 $ 122,050 $ 62,050 Investment earnings 7,517 7,517 8,202 685 Total revenues 67,517 67,517 130,252 62,735 Expenditures: Current: Culture and recreation 112,413 122,393 107,294 15,099 Total expenditures 112,413 122,393 107,294 15,099 Excess (Deficiency) of Revenues Over Expenditures (44,896) (54,876) 22,958 77,834 Other Financing Sources: Transfers in - - 1,225,279 1,225,279 Total other financing sources - - 1,225,279 1,225,279 Net Change in Fund Balances (44,896) (54,876) 1,248,237 1,303,113 Fund Balances - beginning - - - Fund Balances - ending $ (44,896) $ (54,876) $ 1,248,237 $ 1,303,113 119 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, 2018 Variance with Final Budget - Positive Budgeted Amounts Actual Amounts (Negative) Original Final $ 3,020 $ 3,020 $ 6,824 $ 3,804 3,020 3,020 6,824 3,804 - 509 (509) 978,791 978,791 978,791 - 816,948 816,948 796,298 20,650 1,795,739 1,795,739 1,775,598 20,141 (1,792,719) (1,792,719) (1,768,774) 23,945 2,435,832 2,435,832 2,434,843 (989) 2,435,832 2,435,832 2,434,843 (989) 643,113 643,113 666,069 22,956 1,077,224 _ $ 1,720,337 $ 1,077,224 1,077,224 - 1,720,337 $ 1,743,293 $ 22,956 120 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. 121 122 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30, 2018 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 General Employees Police Officers Firefighters Total Defined Defined Pension Pension Employee Benefit Contribution Trust Trust Pension Funds $ 1,293 $ - $ 78,657 $ 68,530 $ 148,480 102,474 - 6,233,556 5,430,976 11,767,006 219,495 9,501,585 13,352,000 11,632,910 34,705,990 321,969 9,501,585 19,585,556 17,063,886 46,472,996 $ 323,262 $ 9,501,585 $ 19,664,213 $ 17,139,934 $ 46,628,994 123 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2018 Additions: Contributions: Employer Plan members State Total contributions Investment earnings: Net increase (decrease) in fair value of investments Total net investment earnings Total additions Deductions: Benefits/distributions Administrative expenses Total deductions Change in Net Position Net Position Restricted for Pensions Beginning of Year End of Year General Employees Police Officers Firefighters Total Defined Defined Pension Pension Employee Benefit Contribution Trust Trust Funds $ 8,767 $ 640,469 $ 685,936 $ 1,093,725 $ 2,428,897 - - 120,274 200,218 320,492 - - 318,560 193,373 511,933 8,767 640,469 1,124,770 1,487,316 3,261,322 24,889 917,974 1,339,967 1,134,431 3,417,261 24,889 917,974 1,339,967 1,134,431 3,417,261 33,656 1,558,443 2,464,737 2,621,747 6,678,583 57,338 645,156 459,962 43,876 1,206,332 1,681 30,030 53,451 37,468 122,630 59,019 675,186 513,413 81,344 1,328,962 (25,363) 883,257 1,951,324 2,540,403 5,349,621 348,625 8,618,328 17,712,889 14,599,531 41,279,373 $ 323,262 $ 9,501,585 $ 19,664,213 $ 17,139,934 $ 46,628,994 124 City of Clermont, Florida Statistical Section This part of the City of Clermont's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 128 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 138 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 143 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 150 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 154 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. 127 City of Clermont, Florida Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2009 2010 2011 2012 Governmental activities Net investment in capital assets $ 33,938 $ 33,817 $ 34,894 $ 36,612 Restricted 6,526 6,693 7,381 8,876 Unrestricted 13,608 13,988 12,465 9,701 Total governmental activities net position $ 54,072 $ 54,498 $ 54,740 $ 55,189 Business -type activities Net investment in capital assets 54,834 55,540 56,430 57,241 Restricted 10,437 17,293 9,241 9,477 Unrestricted 17,801 11,407 19,376 20,436 Total business -type activities net position $ 83,072 $ 84,240 $ 85,047 $ 87,154 Primary government Net investment in capital assets 88,772 89,357 91,324 93,853 Restricted 16,963 23,986 16,622 18,353 Unrestricted 31,409 25,395 31,841 30,137 Total primary government net position $ 137,144 $ 138,738 $ 139,787 $ 142,343 128 Fiscal Year 2013 2014 2015 2016 2017 2018 $ 39,950 $ 44,116 $ 47,718 $ 52,064 $ 31,918 $ 35,262 9,490 9,918 9,400 6,402 7,815 8,547 7,723 5,719 11,649 11,182 30,117 27,925 $ 57,163 $ 59,753 $ 68,767 $ 69,648 $ 69,850 $ 71,734 57,863 56,680 56,586 60,150 63,131 69,322 9,536 10,217 12,135 13,959 17,127 16,904 24,191 27,054 26,943 26,050 26,667 23,959 $ 91,590 $ 93,951 $ 95,664 $ 100,159 $ 106,925 $ 110,185 97,813 100,796 104,304 112,214 95,049 104,584 19,026 20,135 21,535 20,361 24,942 25,451 31,914 32,773 38,592 37,232 56,784 51,884 $ 148,753 $ 153,704 $ 164,431 $ 169,807 $ 176,775 $ 181,919 129 City of Clermont, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) Expenses Governmental Activities: General government Public safety Physical environment Transportation/public works Economic environment Human services Culture and recreation Interest on long-term debt Total governmental activities expenses Business -type Activities: Water Sewer Sanitation Stormwater Total business -type activities expenses Total primary government expenses Program Revenues Governmental Activities: Charges for services: General government Public safety Transportation/public works Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type Activities: Charges for services: Water Sewer Sanitation Stormwater Operating grants and contributions Capital grants and contributions Total business -type activities program revenues Total primary government program revenues Fiscal Year 2009 2010 2011 2012 $ 4,747 $ 4,287 $ 3,643 $ 4,211 10,775 12,459 12,531 12,168 364 319 279 248 1,164 1,768 1,661 1,719 101 50 102 116 2,082 2,055 1,822 1,045 326 175 156 137 19,559 21,113 20,194 19,644 3,990 4,316 4,461 4,052 4,489 5,927 6,022 5,752 2,086 2,169 2,364 2,567 534 848 955 939 11,099 13,260 13,802 13,310 $ 30,658 $ 34,373 $ 33,996 $ 32,954 $ 1,854 $ 1,857 $ 1,695 $ 1,649 1,203 665 355 450 99 872 539 604 921 1,162 1,237 1,191 3,307 134 129 27 7,384 4,690 3,955 3,921 4,909 4,817 5,377 5,099 4,655 4,852 5,065 5,154 2,560 2,613 2,688 2,721 801 829 855 855 2,137 1,544 999 1,752 15,062 14,655 14,984 15,581 $ 224446 $ 19,345 $ 18,939 $ 19,502 130 Fiscal Year 2013 2014 2015 2016 2017 2018 $ 3,258 $ 3,407 $ 3,848 $ 4,157 $ 4,240 $ 2,870 12,685 14,117 14,326 17,381 20,297 20,306 303 350 453 788 805 2,104 1,725 2,202 2,094 2,185 2,009 2,255 200 363 567 209 1,197 385 1,928 3,096 4,018 5,460 4,491 5,752 4,154 4,589 4,823 4,719 5,199 5,634 6,106 6,437 6,571 6,866 6,909 6,849 2,465 2,472 3,133 2,925 2,869 3,073 897 1,016 1,080 1,142 1,190 1,360 13,622 14,514 15,607 15,652 16,167 16,916 $ 33,808 $ 38,285 $ 41,106 $ 46,187 $ 49,640 $ 51,427 $ 2,117 $ 2,429 $ 2,356 $ 2,914 $ 3,180 $ 3,874 1,040 1,366 1,684 1,574 1,506 1,344 1,262 956 1,317 1,552 2,003 1,697 896 939 1,598 1,822 1,456 2,233 112 1,718 498 163 309 428 5,427 7,408 7,453 8,025 8,454 9,576 5,215 5,362 5,726 6,162 6,516 6,461 5,357 5,585 5,809 6,183 6,507 6,625 2,775 2,869 2,917 2,984 3,089 3,178 862 881 905 955 1,004 1,378 - - 276 24 - 3,430 2,417 3,219 4,026 6,906 4,535 17,639 17,114 18,852 20,334 24,022 22,177 $ 23,066 $ 24,522 $ 26,305 $ 28,359 $ 32,476 $ 31,753 131 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 Intergovernmental -unrestricted Unrestricted investment earnings Gain (loss) on sale of capital assets Miscellaneous Transfers in/out Special item Total governmental activities Business -type Activities: Unrestricted investment earnings Gain (loss) on sale of capital assets Miscellaneous Transfers in/out Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government Fiscal Year 2009 2010 2011 2012 $ (12,175) $ (16,422) $ (16,240) $ (15,721) 3,964 1,395 1,182 2,271 $ (8,211) $ (15,027) $ (15,058) $ (13,450) $ 7,601 $ 6,844 $ 5,966 $ 5,535 113 2,151 2,373 2,285 2,189 2,152 2,558 2,568 2,430 4,458 4,503 4,664 5,063 848 379 148 245 202 146 330 143 469 443 520 453 17,881 17,246 16,481 16,171 1,005 360 145 289 (469) (443) (520) (453) 536 (83) (375) (164) $ 18,417 $ 17,163 $ 16,106 $ 16,007 $ 5,706 $ 824 $ 241 $ 450 4,500 1,312 807 2,107 $ 10,206 $ 2,136 $ 1,048 $ 2,557 'Business taxes previously reported as General Government Charges for Services 132 Fiscal Year 2013 2014 2015 2016 2017 2018 $ (14,759) $ (16,363) $ (18,045) $ (22,510) $ (25,019) $ (24,935) 4,018 2,600 3,245 4,683 7,855 5,260 $ (10,741) $ (13,763) $ (14,800) $ (17,827) $ (17,164) $ (19,675) $ 5,350 $ 6,533 $ 7,193 $ 8,998 $ 9,748 $ 10,747 111 126 130 140 133 160 2,123 2,379 2,502 2,712 2,619 2,817 2,490 2,887 2,953 3,406 3,328 3,446 5,802 6,110 6,645 6,923 7,257 7,864 114 104 135 134 197 458 122 86 289 265 374 420 387 486 342 479 439 557 568 1,367 2,013 16,734 18,952 20,535 23,390 25,221 28,136 149 198 272 260 255 379 18 2 (1,248) 120 24 31 (479) (439) (557) (568) (1,367) (2,013) (312) (239) (1,533) (188) (1,088) (1,603) $ 16,422 $ 18,713 $ 19,002 $ 23,202 $ 24,133 $ 26,533 $ 1,975 $ 2,589 $ 2,490 $ 880 $ 202 $ 3,202 3,706 2,361 1,712 4,495 6,767 3,657 $ 5,681 $ 4,950 $ 4,202 $ 5,375 $ 6,969 $ 6,859 133 City of Clermont, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year 2009 2010 2011 2012 General Fund Reserved $ 214 $ 246 $ - $ - Unreserved 10,860 11,358 - - Nonspendable - - 335 195 Restricted - - 175 224 Assigned - - 912 1,039 Unassigned - - 10,048 9,744 Total general fund $ 11,074 $ 11,604 $ 11,470 $ 11,202 All other governmental funds Reserved $ 2,267 $ 2,758 $ - $ - Unreserved, reported in: Special revenue funds 4,147 4,839 - - Capital projects fund 3,271 2,978 - - Nonspendable - - 848 890 Restricted - - 6,359 7,763 Assigned - - 2,854 668 Unassigned - - (1) - Total all other governmental funds $ 9,685 $ 10,575 $ 10,060 $ 9,321 Note: Information for fiscal years 2009 and 2010 have not been restated for Governmental Accounting Standards Board (GASB) Statement No. 54 classifications. 134 Fiscal Year 2013 2014 2015 2016 2017 2018 189 53 1,300 548 578 641 257 312 247 259 266 228 765 1,202 304 - 3 3 8,878 7,669 7,014 7,886 7,137 7,104 $ 10,089 $ 9,236 $ 8,865 $ 8,693 $ 7,984 $ 7,976 939 1,064 1,466 1,922 1,683 4 8,295 8,604 7,659 4,310 5,885 8,361 - - - 1,226 22,621 21,720 $ 9,234 $ 9,668 $ 9,125 $ 7,458 $ 30,189 $ 30,085 135 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 2009 2010 Revenues Taxes $ 11,903 $ 11,775 $ Franchise fees Licenses and permits 674 678 Intergovernmental 8,666 5,733 Charges for services 1,103 1,036 Fines and forfeitures 178 189 Impact fees/special assessments 903 1,131 Investment Earnings 848 379 Miscellaneous 444 522 Total revenues 24,719 21,443 Expenditures Current: General government 3,654 4,081 Public safety 10,275 11,212 Physical environment 490 309 Transportation 1,129 1,620 Economic environment 102 50 Human services - - Culture and recreation 1,893 1,878 Capital outlay 1,738 643 Debt service: Principal 6,259 493 Interest 375 181 Total expenditures 25 915 20 467 Excess (deficiency) of revenues 2011 10,819 528 6,059 1,013 186 582 148 612 2012 $ 8,079 2,188 455 6,310 1,011 215 679 244 2013 $ 7,951 2,123 884 6,729 1,085 172 1,909 108 3,272 3,080 3,148 11,625 11,352 12,579 275 247 307 1,472 1,340 1,263 102 641 722 1,792 1,769 2,014 1,923 2,073 2,638 470 490 3,080 over expenditures (1,196) 976 (1,146) (1,480) (4,290) Other financing sources (uses) Transfers in 6,684 2,088 3,274 1,118 3,091 Transfers out (6,232) (1,645) (2,776) (644) (2,612) Refunding and new bonds issued - - - - 2,612 Sale of capital assets - - - - - Total other financing sources (uses) 452 443 498 474 3,091 Net change in fund balances $ (744) $ 1,419 $ (648) $ (1,006) $ (1,199) Debt service as a percentage of noncapital expenditures 28.9% 3.6% 3.4% 3.5% 14.9% 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 136 Fiscal Year 2014 2015 2016 2017 2018 $ 9,546 $ 10,275 $ 12,544 $ 13,208 $ 14,353 2,379 2,502 2,712 2,619 2,817 941 788 1,298 1,594 2,249 8,796 8,772 8,790 9,054 10,559 1,212 1,312 1,652 1,746 2,103 589 757 703 358 204 1,401 1,858 1,702 2,341 1,738 99 131 131 192 446 915 1,047 1,007 1,122 971 25,878 27,442 30,539 32,234 35,440 3,776 3,600 4,070 3,911 3,948 13,571 14,844 17,520 18,488 19,750 423 744 777 869 881 1,635 1,635 1,878 1,687 1,927 365 564 482 324 343 2,948 3,725 5,038 5,996 5,199 9,381 2,695 8,514 2,112 4,085 571 884 6,280 1,077 979 177 198 342 272 805 32,847 28,889 44,901 34,736 37,917 (6,969) (1,447) (14,362) (2,502) (2,477) 9,337 3,857 11,897 26,725 7,697 (8,788) (3,323) (11,329) (25,957) (6,332) 6,000 - 10,631 23,670 - - - 1,321 86 1,000 6,549 534 12,520 24,524 2,365 $ (420) $ (913) $ (1,842) $ 22,022 $ (112) 3.5% 4.5% 20.2% 4.6% 5.7% 137 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 2009 7,601 2,152 2,151 11,904 2010 6,844 2,558 2,373 11,775 2011 5,966 2,568 2,285 10,819 2012 5,535 2,430 113 2,189 10,267 2013 5,350 2,490 111 2,123 10,074 2014 6,533 2,887 126 2,379 11,925 2015 7,013 2,953 130 2,502 12,598 2016 8,795 3,406 140 2,712 15,053 2017 9,538 3,328 133 2,619 15,618 2018 10,549 3,446 160 2,817 16,972 Taxes Included in Unrestricted Intergovernmental Revenues Fiscal Sales State Revenue Local Option Year Tax Sharing Gas Tax Total 2009 1,033 302 289 1,624 2010 1,053 299 322 1,674 2011 1,100 328 306 1,734 2012 1,296 383 296 1,975 2013 1,419 535 280 2,234 2014 1,567 635 290 2,492 2015 1,820 749 378 2,947 2016 1,848 819 482 3,149 2017 1,945 911 520 3,376 2018 2,172 1,013 548 3,733 * Business Tax Receipts previously reported under Licenses 138 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 2009 3,022,925 195,808 792,997 2010 2,592,111 211,950 599,821 2011 2,297,568 211,950 599,871 2012 2,171,815 209,726 598,187 2013 2,124,017 206,870 605,114 2014 2,185,702 205,140 611,063 2015 2,336,882 207,024 630,762 2016 2,574,360 215,752 652,769 2017 2,791,963 215,772 689,683 2018 3,057,114 233,448 724,930 Total Estimated Assessed Total Taxable Direct Actual Value as a Assessed Tax Taxable Percentage of Value Rate Value Actual Value 2,425,736 3.142 3,218,733 75.36% 2,204,240 3.142 2,804,061 78.61% 1,909,647 3.142 2,509,518 76.10% 1,783,354 3.142 2,381,541 74.88% 1,725,773 3.142 2,330,887 74.04% 1,779,779 3.142 2,390,842 74.44% 1,913,144 3.729 2,543,906 75.20% 2,137,343 4.206 2,790,112 76.60% 2,318,052 4.206 3,007,735 77.07% 2,565,632 4.206 3,290,562 77.97% Source: Lake County Property Appraisers Office Information on breakdown of residential and commercial property is not available. 139 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 2009 3.1420 4.6511 0.1101 0.4651 7.5170 0.8666 0.2130 0.4158 17.3807 2010 3.1420 4.6511 0.1101 0.4651 7.5320 0.8666 0.2130 0.4158 17.3957 2011 3.1420 4.7309 0.1101 0.3853 7.5230 0.8666 0.2405 0.4158 17.4142 2012 3.1420 4.7309 0.1101 0.3853 7.3940 0.8000 0.2405 0.3313 17.1341 2013 3.1420 4.7309 0.1900 0.3853 7.3200 0.8000 0.2554 0.3313 17.1549 2014 3.7290 4.7309 0.1900 0.3853 7.1700 0.7900 0.2554 0.3283 17.5789 2015 3.7290 5.3856 0.1600 0.4629 7.2460 0.7633 0.2554 0.3164 18.3186 2016 4.2061 5.3051 0.1600 0.4629 7.1970 0.7633 0.2554 0.3023 18.6521 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 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 140 Taxpayer Vista at Lost Lake TIC I LLC Centennial 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 Lennar Homes Inc. Village at East Lake Wal-Mart Stores Lowe's Target TOTAL Source: Lake County Property Appraiser City of Clermont, Florida Principal Property Taxpayers Current Year and Nine Years Ago (amounts expressed in thousands) 2018 Taxable Assessed Value Rank 59,343 1 43,142 2 35,687 3 34,083 4 33,159 5 30,924 6 23,593 7 19,898 8 18,407 9 16,956 10 $315,192 Percentage of Total Taxable Assessed Value 2.31 % 1.68% 1.39% 1.33% 1.29% 1.21 % 0.92% 0.78% 0.72% 0.66% 12.29% 2009 Percentage of Taxable Total Taxable Assessed Assessed Value Rank Value 17,192 3 0.71 % 32,621 1 1.34% 21,377 2 0.88% 16,329 4 0.67% 15,535 5 0.64% 15,639 6 0.64% 12,839 7 0.53% 12,469 8 0.51 % 11,986 9 0.49% 11,082 10 0.46% $167,069 6.89% 141 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 2009 7,622 7,243 95.0% 22 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 Total Collections to Date Percentage Amount of Levy 7,265 95.3% 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% 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. 142 City of Clermont, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years (amounts expressed in thousands, except per capita amount) Business -Type Fiscal Governmental Activities Activities Year Total Percentage Ended Revenue Notes Revenue Notes Outstanding of Personal Sept Bonds Payable Bonds Payable Debt Income' Per Capita' 2009 4,495 38 16,232 - 20,765 2.89% 858 2010 4,040 - 16,016 - 20,056 2.76% 698 2011 3,570 - 15,512 - 19,082 2.55% 650 2012 3,080 - 14,963 - 18,043 2.30% 605 2013 - 2,612 14,979 - 17,591 2.19% 582 2014 - 8,041 14,361 - 22,402 2.74% 706 2015 - 7,157 13,728 - 20,885 2.45% 646 2016 - 11,509 13,075 - 24,584 2.40% 709 2017 - 34,102 12,403 6,329 52,834 4.87% 1,476 2018 - 33,123 12,268 6,329 51,720 4.46% 1,407 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. ' See the Schedule of Demographic and Economic Statistics on page 150 for personal income and population data. 143 City of Clermont, Florida Direct and Overlapping Governmental Activities Debt September 30, 2018 (amounts expressed in thousands, except population and per capita amount) Estimated Amount Debt Percentage Applicable to Government Unit: Outstanding Applicable (1) City of Clermont Lake County $ 115,520 13.47% $ 15,561 Lake County School District 199,583 12.03% 24,010 Subtotal, overlapping debt 39,570 City of Clermont, direct debt 33,123 100.00% Total direct and overlapping debt Sources: Lake County 2018 CAFR, Lake County School Board 2018 CAFR, and Lake County Property Appraiser's Office 1 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. 33,123 $ 72,693 144 1 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Public Improvement Revenue Refunding Note, Series 2012 Public Communications Service Service Taxes Tax 2,151,318 2,558,281 2,568,141 2,430,440 2,490,461 2,887,161 2,952,785 3,405,642 3,328,087 3,446,407 1,257,344 1,266,696 1,233,789 1,257,217 1,349,929 1,216,076 1,161,566 1,138,032 1,122,258 1,112,440 Half -Cent Sales Tax 1,033,141 1,053,073 1,100,125 1,295,687 1,418,710 1,567,249 1,819,909 1,848,294 1,945,237 2,172,025 Total Revenue Available for De Debt Service bt Service Principal 4,441,803 440,000 4,878,050 455,000 4,902,055 470,000 4,983,344 490,000 5,259,100 3,080,000 5,670,486 570,599 5,934,260 577,959 6,391,968 585,609 6,395,582 591,692 6,730,872 286,141 Interest Coverage 195,106 6.99 179,159 7.69 161,806 7.76 143,350 7.87 66,550 1.67 25,361 9.51 19,101 9.94 12,760 10.68 6,345 10.69 1,559 23.40 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 145 Interest Coverage 195,106 6.99 179,159 7.69 161,806 7.76 143,350 7.87 66,550 1.67 25,361 9.51 19,101 9.94 12,760 10.68 6,345 10.69 1,559 23.40 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 145 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 145 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 Debt Service Year Taxes Tax Debt Service Principal Interest Coverage 2009 - - - - - N/A 2010 - - - - - N/A 2011 - - - - - N/A 2012 - - - - - N/A 2013 - - - - - N/A 2014 2,887,161 1,216,076 4,103,237 - 82,350 49.83 2015 2,952,785 1,161,566 4,114,351 305,772 178,337 8.50 2016 3,405,642 1,138,032 4,543,674 5,694,228 195,148 0.77 2017 3,328,087 1,122,258 4,450,345 255,000 105,635 12.34 2018 3,446,407 1,112,440 4,558,847 377,841 99,212 9.56 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. C 146 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 2009 - - - N/A 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 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 147 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 2009 - - 2010 - - 2011 - - 2012 - - 2013 - - 2014 - - 2015 - - 2016 2017 3,115,549 1,495,242 2018 3,397,707 1,047,736 Stormwater Sales Revenue Debt Service Principal 1,002,859 - 1,375,516 - Interest Coverage - N/A - N/A - N/A - N/A - N/A - N/A - N/A N/A - N/A 749,550 N/A Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 148 City of Clermont, Florida Pledged -Revenue Coverage Last Ten Fiscal Years Water and Sewer Revenue and Refunding Bonds Water and Sewer Fiscal Operating Year Revenues' 2009 10,561,949 2010 10,001,836 2011 10,561,295 2012 10,496,535 2013 10,687,908 2014 11,108,744 - 2015 11,767,901 2016 12,578,644 2017 13,226,994 2018 13,379,152 Water and Sewer Net Revenue Operating Available for Debt Service ExpensesZ Debt Service Principal Interest Coverage 6,511,487 4,050,462 410,000 883,206 3.13 6,999,096 3,002,740 430,000 744,892 3 2.56 7,080,592 3,480,703 535,000 660,640 2.91 6,377,695 4,118,840 580,000 643,307 3.37 6,677,774 4,010,134 595,000 604,811 3.34 7,090,566 4,018,178 615,000 586,461 3.34 7,419,231 4,348,670 630,000 567,636 3.63 7,272,716 5,305,928 650,000 548,236 4.43 7,661,085 5,565,909 670,000 504,122 4.74 8,104,464 5,274,688 10,920,000 4 211,101 0.47 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements ' Operating revenue is computed per bond resolution requirements. Investment earnings are included. 2 Operating expense is computed per bond resolution requirements. Depreciation expense is not included. 3 Includes interest paid on the 2000 and 2009 Refunding Bonds 4 Water and Sewer Revenue Refunding Bonds, Series 2009 was partially refunded in 2018, this includes the payoff of the original bonds. 149 City of Clermont, Florida Demographic and Economic Statistics Last Ten Fiscal Years Personal Income (amounts Fiscal expressed in Year Population' thousands) 2008 23,476 696,040 2009 24,199 717,597 2010 28,742 727,000 2011 29,358 748,482 2012 29,827 784,361 2013 30,201 802,803 2014 31,745 816,926 2015 32,348 854,020 2016 34,667 1,023,959 2017 35,807 1,085,991 2018 36,754 1,159,074 Education Level in Per Capita Years of Personal Median Formal School Unemploy- Income2 Agee Schooling2 Enrollment3 ment Rate 29,649 39.6 13.2 5,436 7.1 % 29,654 39.7 13.2 4,900 12.3% 25,294 36.8 13.6 5,024 9.8% 25,495 40.9 13.6 5,116 9.3% 26,297 46.8 13.6 5,158 7.0% 26,582 41.5 13.8 5,153 5.8% 25,734 41.9 13.7 5,198 5.6% 26,401 42.1 13.7 5,172 4.8% 29,537 42.1 13.4 5,314 4.4% 30,329 41.6 13.3 5,183 3.1 % 31,536 42.3 13.4 5,080 2.7% Sources: ' College of Business Administration, University of Florida - Bureau of Economic and Business Research 2 Metro Orlando Economic Development Commission 3 Lake County School Board 4 U.S. Department of Labor, Bureau of Labor Statistics Note: Unemployment rate information was only available on a countywide basis through 2009. 150 'Employer Total City Employment :Iublix Supermarkets South Lake Hospital, Inc. _ake County School System ;ity of Clermont Nalmart _owe's target Corporation 3enningers Chick Fil A Clermont Health & Rehab -Department of Corrections word of Clermont Winn Dixie Darden Restaurants Inc. -vIcDonald's TOTAL City of Clermont, Florida Principal Employers Current Year and Nine Years Ago 2018 Number Percentage of Number of Total City of Employees Rank Employment Employees 17,522 17,695 1,701 1 9.71 % 773 1,449 2 8.27% 1,047 3 5.98% 301 417 4 2.38% 384 5 2.19% 1,914 345 6 1.97% 300 324 7 1.85% 312 200 8 1.14% 182 9 1.04% 180 10 1.03% 6,229 Source: InfoGroup Employer Database 2017 ed.1 2009 Percentage of Total City Rank Employment' 2 4.37% 5 1.70% 1 10.82% 6 1.70% 4 1.76% 420 3 2.37% 300 7 1.70% 290 8 1.64% 288 9 1.63% 268 10 1.51% 35.55% 5,166 29.19% 151 Employer Kings Ridge South Lake Hospital Heritage Hills of Clermont Taylor Morrison of Florida City of Clermont Vistas at Lost Lake Esplanade at Highland Ranch Westminster Comm Care Service BR Citrus Tower LLC Living Well Lodges Clermont Lake County Schools Gardens at Citrus towers Sundance Clermont LLC Osprey Ridge Apartments Village at East Lake Apartments Emerald Lakes of Clermont TOTAL City of Clermont, Florida Principal Water Customers Current Year and Nine Years Ago 2018 2009 Usage Percentage of Usage Percentage of (thousands Total City (thousands Total City of gallons) Rank Metered Flow' of gallons) Rank Metered Flow 140,666 1 5.23% 37,614 2 1.40% 24,022 2 1.04% 32,450 3 1.21 % 27,271 4 1.01 % 24,081 5 0.90% 19,783 3 0.86% 22,174 6 0.83% 9,075 8 0.39% 17,050 7 0.63% 15,903 8 0.59% 12,094 5 0.52% 14,889 9 0.55% 14,502 10 0.54% 32,240 1 1.39% 13,274 4 0.57% 10,636 6 0.46% 9,676 7 0.42% 8,081 9 0.35% 6,950 10 0.30% 346,600 12.90% 145,831 6.30% ' The City of Clermont had a total metered water flow of approximately 2,687,665,000 gallons for the 12-month period ending September 30, 2018 152 Employer South Lake Hospital Vista at Lost Lake Westminster Comm Care Service Living Well Lodges Clermont LLC BR Citrus Tower LLC Westdale Sundance LTD Osprey Ridge Apartments Senninger Irrigation IP9 Clermont LLC Eastridge High School Lake County Schools Villages at East Lake Emerald Lakes Blue Water Express Car Wash Empirian Property Management Clermont Dialysis Walmart TOTAL City of Clermont, Florida Principal Sewer Customers Current Year and Nine Years Ago 2018 2009 Usage Percentage of Usage Percentage of (thousands Total City (thousands Total City of gallons) Rank Metered Flow' of gallons) Rank Metered Flow 35,643 1 3.38% 21,596 2 1.55% 22,174 2 2.10% 9,075 4 0.65% 15,291 3 1.45% 11,303 3 0.81 % 14,502 4 1.38% 13,723 5 1.30% 12,006 6 1.14% 10,682 7 1.01 % 10,616 8 1.01% 10,558 9 1.00% 7,246 10 0.69% 15L,441 23,885 1 1.71 % 8,081 5 0.58% 6,950 6 0.50% 6,446 7 0.46% 5,072 8 0.36% 3,428 9 0.25% 3,281 10 0.23% 14.46% 99,117 7.10% ' The City of Clermont had a total metered water flow for wastewater billing purposes of approximately 1,054,394,000 gallons for the 12-month period ending September 30, 2018 153 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 2009 2010 2011 2012 31.00 28.00 27.00 25.85 53.00 57.00 57.00 57.00 17.00 16.00 5.00 5.00 47.85 48.00 48.00 47.80 2.00 2.00 2.00 2.00 1.65 1.40 1.40 0.60 10.00 4.50 4.00 4.00 15.60 15.35 13.50 14.80 0.00 0.00 0.00 0.00 25.60 26.10 22.00 21.20 29.40 29.15 29.15 29.45 26.30 26.05 25.85 24.50 8.80 9.15 9.40 7.95 16.80 16.30 16.70 16.85 285.00 279.00 261.00 257.00 154 Full-time Equivalent Employees as of September 30 2013 2014 2015 2016 2017 2018 26.66 31.56 36.00 36.00 38.70 41.45 57.00 61.00 61.00 66.00 70.00 79.00 6.00 6.00 6.00 6.00 6.00 7.00 47.80 56.80 56.80 59.80 66.50 74.20 2.00 5.20 4.20 4.20 6.50 8.80 0.60 6.00 6.00 7.00 11.30 11.55 4.95 4.70 7.45 8.70 10.70 10.70 14.65 12.95 12.85 12.60 14.60 16.60 0.00 0.00 0.00 0.00 0.00 0.00 21.10 27.25 33.35 35.35 39.35 40.60 29.66 30.61 29.35 29.65 29.15 30.45 23.78 23.88 24.15 26.45 26.95 31.25 6.72 6.87 6.65 7.75 10.25 10.10 17.08 17.18 18.20 18.50 21.00 21.30 258.00 290.00 302.00 318.00 351.00 383.00 155 City of Clermont, Florida Operating Indicators by Function Last Ten Fiscal Years Fiscal Year Function 2009 2010 2011 2012 General Government Municipal boundary (square miles) 14.43 14.76 14.90 14.95 Business Tax Receipts issued 1,771 1,833 1,843 2,237 A/P Checks issued 6,042 5,722 4,875 2,336 Commercial construction (units) 19 10 3 8 Commercial construction (value in thousands) 13,223 8,357 18,020 15,203 Residential construction (units) 204 305 151 173 Residential construction (value in thousands) 56,092 53,202 23,558 25,882 Public Safety: Police Auto accidents 972 955 1,121 1,259 Physical arrests 949 854 699 644 911 calls received 6,828 5,230 5,587 5,911 Evidence processed (pieces) 1,652 1,349 1,297 1,413 Parking violations 107 137 378 201 Traffic violations 4,553 4,981 6,312 5,389 Fire Volunteer firefighters 10 6 6 6 Fire inspections completed 979 2,121 896 662 Emergency calls answered 3,155 3,112 3,822 3,320 Non -emergency calls answered 434 352 805 934 Water Residential accounts 17,375 17,884 18,240 18,619 Commercial accounts 1,201 1,206 1,210 1,207 Annual water usage (thousands of gallons) 2,312,962 2,054,236 2,275,936 2,391,485 Sewer Residential accounts 12,154 12,508 12,722 12,936 Commercial accounts 1,158 1,158 1,167 1,166 Sources: Various government departments. Decrease in accounts due to software conversion combining multi -metered services 156 Fiscal Year 2013 2014 2015 2016 2017 2018 14.95 15.18 16.65 16.78 16.78 17.12 2,483 1,955 1,701 1,584 1,838 1,802 2,288 3,529 2,747 3,276 3,651 3,872 20 15 16 20 14 20 34,268 17,288 8,625 42,241 13,302 42,042 327 572 323 740 433 387 53,055 62,117 55,178 103,423 87,873 104,394 1,402 1,357 1,573 1,909 1,909 1,802 886 631 652 589 593 569 6,352 6,643 7,618 6,397 6,809 7,943 2,930 2,384 989 674 1,165 1,040 252 379 144 181 385 147 7,225 4,623 6,879 7,421 6,713 4,676 1,240 3,766 3,813 4,468 2,586 2,203 3,414 4,127 4,202 6,001 6,828 5,689 447 987 523 806 925 989 19,399 19,670 13,242 • 13,561 14,339 14,805 1,232 1,234 1,211 1,220 1,235 1,498 2,392,022 2,406,183 2,521,397 2,572,852 2,743,657 2,687,665 13,407 13,718 13,578 13,860 14,619 15,198 1,194 1,055 1,074 1,091 1,106 1,107 157 City of Clermont, Florida Capital Asset Statistics by Function Last Ten Fiscal Years Function General Government Public Safety: Police Police stations Patrol units Fire Fire department facilities Staffed fire stations Fire hydrants Fire apparatus Staffed fire apparatus ALS non -transport units Transportation Streets paved (miles) Streetlights Culture & Recreation Number of parks Parks acreage Scenic linear trail (miles) Tennis courts Piers Boat ramp Water Miles of water mains Sewer Miles of sanitary sewers Miles of storm sewers Sources: Various government departments. Does not include private systems Fiscal Year 2009 2010 2011 2012 1 1 1 1 45 45 46 46 3 4 4 4 3 3 3 3 2,140 2,012 2,016 2,048 9 8 7 8 5 5 5 5 4 4 4 4 131.72 133.20 133.20 133.20 1,331 1,352 1,352 3,103 22 22 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 4 1 1 1 1 122.83 124.11 197.40 242.36 65.18 66.19 132.02 156.81 24.61 26.32 89.80 105.38 158 Fiscal Year 2013 2014 2015 2016 2017 2018 1 1 1 1 1 1 55 57 79 95 98 104 4 4 3 4 5 5 3 3 3 4 4 4 2,120 2,146 2,200 2,646 2,646 2,646 8 8 12 6 7 9 5 5 3 6 6 7 4 4 3 1 6 6 173.91 191.52 202.38 210.00 210.60 210.60 3,103 3,127 3,158 3,160 1,309 1,309 23 23 23 23 24 24 349.5 349.5 378.0 443.9 443.9 443.9 5.7 5.7 5.7 7.5 7.5 8.0 9 9 9 9 9 9 5 5 10 11 11 9 1 1 1 1 1 1 243.14 222.75 230.28 229.44 297.00 297.81 160.42 161.25 167.60 168.57 220.00 224.00 109.05 133.70 48.22 47.63 47.56 48.36 159 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council City of Clermont, Florida We have audited, in accordance with auditing standards generally accepted in the United states of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, business -type activities, each major fund, and the aggregate remaining fund information of the City of Clermont, Florida, as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated May 31, 2019. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Clermont, Florida's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Clermont's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 T:407-843-5406 1 F:407-649-9339 1 WWW.MCDIRMITDAVIS.COM 163 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. ��uz,►rttt L & Carn�Daru� LLC Orlando, FL May 31, 2019 164 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR STATE PROJECT AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY CHAPTER 10.550, RULES OF THE AUDITOR GENERAL Honorable Mayor and City Council City of Clermont, Florida, Florida Report on Compliance for Each Major State Project We have audited the City of Clermont, Florida's (the City) compliance with the types of compliance requirements described in the Florida Department of Financial Services State Projects Compliance Supplement that could have a direct and material effect on each of the City's major state projects for the year ended September 30, 2018. The City's major state projects 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 the requirements of laws, regulations, contracts, and grants applicable to its state projects. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major state projects 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; Chapter 10.550, Rules of the Auditor General. Those standards and rules 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 state project 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 state project. However, our audit does not provide a legal determination of the City's compliance. Opinion on Each Major State Project 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 major state project for the year ended September 30, 2018. MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFOrWMCDIRMITDAVIS.COM MEMBERS. PRIVATE COM PAN I I.S PRAC'IICI: SI.CTION AMLR]CAN INS I I'I UTE OE ('IRII FIFD PI IIII.IC A(('OI IN RANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC 165 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 state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major state project and to test and report on internal control over compliance in accordance with Chapter 10.550, Rules of the Auditor General, 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 state project 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 state project 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 state project 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 Chapter 10.550, Rules of the Auditor General. Accordingly, this report is not suitable for any other purpose. Lap" & damparuuC Orlando, Florida May 31, 2019 on CITY OF Clermont, FLORIDA SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE Year Ended September 30, 2018 Award type Grantor Grantor program title State Award State of Florida, Department of Environmental Protection West Lake Wetlands (Victory Point) West Lake Stormwater' Total Department of Environmental Protection State of Florida, Department of State and Secretary of State West Lake Wetlands Perform/ Event Area' Total state awards Denotes a major program CSFA Agency or Pass -through Number Entity Grant Number Expenditures 37.078 16-005-UA17 $ 12,150 37.039 LP35142 500,000 512,150 45.014 18. c. cf. 300.307 500,000 $ 1,012,150 See accompanying Notes to Schedule of Expenditures of State Financial Assistance 167 CITY OF CLERMONT, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE Year Ended September 30, 2018 Note 1 - Basis of Presentation: The accompanying schedule of expenditures of state financial assistance (the Schedule) includes the state grant activity of the City of Clermont, Florida (the City) under projects of the state government for the year ended September 30, 2018. The information in this Schedule is presented in accordance with the requirements of Section 215.97, Florida Statutes. 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, 2018, even if grant or loan was received subsequent to that date. Pass -through entity identifying numbers are presented where available. IBM CITY OF CLERMONT, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - STATE FINANCIAL ASSISTANCE PROJECTS Year Ended September 30, 2018 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 State Projects 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 Chapter 10.550? Yes X No Identification of major state projects 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 - State Award Findings and Questioned Costs: Section IV - State Award Summary Schedule of Prior Year Findings: CFSA No. 37.075 Small Community Wastewater Grant CFSA No. 55.008 County Incentive Grant Program $300,000 Yes X No None None There were no audit findings for the year ended September 30, 2017. i>m MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS MANAGEMENT LETTER Honorable Mayor and City Council City of Clermont, Florida Report on the Financial Statements We have audited the financial statements of the City of Clermont, Florida, as of and for the fiscal year ended September 30, 2018, and have issued our report thereon dated May 31, 2019. 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; 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; 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 May 31, 2019, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i.)l., Rules of the Auditor General, require that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no recommendations in the preceding audit report. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information has been disclosed in the notes to the financial statements. MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 T:407-843-5406 I F:407-649-9339 i WWW.MCDIRMITDAVIS.COM 170 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.c. 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. Da". & 6&mpnru� ae, Orlando, Florida May 31, 2019 171 Of 172 MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES The Honorable Mayor and City Council City of Clermont, Florida We have examined City of Clermont, Florida's (the City) compliance with the requirements of Section 218.415, Florida Statutes, during the year ended September 30, 2018. 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, 2018. Orlando, Florida May 31, 2019 MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 T:407-843-5406 I F:407-649-9339 I WWW.MCDIRMITDAVIS.COM 173 Of 174