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Comprehensive Annual Financial Report - 2013-2014CITY OF CLERMONT FLORIDA Comprehensive Annual Financial Report Fiscal Year Ended September 30, 2014 Clermont Arts & Recreation Center The City unveiled the Clermont Arts & Recreation Center at the grand opening ceremony on June 6, 2014. The 69,000 square foot Center is located at 3700 S Highway 27 and cost $6.3-million. The Arts & Recreation Center has the county's largest performance hall, a 230-seat theater, swimming pools, gymnasium, and meeting rooms of various sizes. The Center will be the new home to the Clermont Performing Arts Center which will host a variety of Broadway shows, concerts, and acrobatics during the 2015-16 inaugural season. CITY OF CLERMONT FLORIDA Comprehensive Annual Financial Report For The Year Ended September 30, 2014 Prepared By Finance Regina M. Frazier Lacy Smith-Castillo Assistant Finance Director Accountant CITY OF CLERMONT COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Year Ended September 30, 2014 Page I. Introductory Section: Table of Contents i Letter of Transmittal iii GFOA Certificate of Achievement vii List of Principal Officials ix Organizational Chart x II. Financial Section: Independent Auditor’s Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements: Balance Sheet - Governmental Funds 17 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 19 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 20 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Infrastructure Special Revenue Fund 22 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Community Redevelopment Special Revenue Fund 23 Statement of Net Position - Proprietary Funds 24 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 27 Statement of Cash Flows – Proprietary Funds 28 Statement of Fiduciary Net Position - Fiduciary Funds 30 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 31 Notes to Financial Statements 33 Required Supplementary Information 67 Major Governmental Funds: 75 Capital Projects Fund 76 Other Governmental Funds: 77 Combining Balance Sheet – Other Governmental Funds 78 i CITY OF CLERMONT COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS - Continued Year Ended September 30, 2014 Page II.Financial Section - Continued: Combining Statement of Revenues, Expenditures and Changes In Fund Balances - Other Governmental Funds 80 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Special Revenue Funds 82 Debt Service Fund 86 Combining Statement of Fiduciary Net Position 88 Combining Statement of Changes in Fiduciary Net Position 89 III.Statistical Section: Net Position by Component 92 Changes in Net Position 94 Fund Balances of Governmental Funds 98 Changes in Fund Balances of Governmental Funds 100 Governmental Activities Tax Revenues by Source 102 Assessed Value and Estimated Actual Value of Taxable Property 103 Property Tax Rates – Direct and Overlapping Governments 104 Principal Property Taxpayers 105 Property Tax Levies and Collections 106 Ratios of Outstanding Debt by Type 107 Direct and Overlapping Governmental Activities Debt 108 Pledged-Revenue Coverage 109 Demographic and Economic Statistics 112 Principal Employers 113 Principal Water Customers 114 Principal Sewer Customers 115 Full-time Equivalent City Government Employees by Function 116 Operating Indicators by Function 118 Capital Asset Statistics by Function 120 IV.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 123 Management Letter 125 Communication with those Charged with Governance 127 Independent Auditor’s Report on Compliance with the Requirements of Section 218.415, Florida Statues 131 ii April 28, 2015 To the Honorable Mayor and City Council and Citizens of the City of Clermont, Florida: We are pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Clermont, Florida, for the fiscal year ended September 30, 2014. State law requires that every general-purpose local government publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended September 30, 2014. Management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Clermont has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Clermont’s financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Because the cost of internal controls should not outweigh their benefits, the City of Clermont’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Clermont’s financial statements have been audited by McDirmit Davis & Company, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Clermont for the fiscal year ended September 30, 2014, 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, 2014, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides narrative introduction, overview, and analysis of the basic financial statements. The MD&A provides “financial highlights” and interprets the financial reports by analyzing trends and by explaining changes, fluctuations and variances in the financial data. In addition, the MD&A is intended to disclose any known significant events or decisions that affect the financial condition of the City. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. 685 W. Montrose Street ● Clermont, FL 34711 ● www.ClermontFL.gov Profile of the City of Clermont The City was founded in 1884 and incorporated in 1916. The City currently has a land area of 15.18 square miles and population of approximately 31,745. The City is located in south Lake County, approximately twenty-two miles west of the City of Orlando and about twenty-five miles northwest of Walt Disney World. Clermont, known as “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 Recreation and Events Department operates 23 parks, 5.7 miles of scenic paved trails, 5 piers measuring a total of 996 feet, 1- 612 foot boardwalk, 7 special purpose buildings and a boat ramp. The City of Clermont provides a full range of services as directed by its charter. These include police and fire protection; streets and sidewalk maintenance, planning and development, code enforcement, recreational facilities and programs, cemetery and general administrative functions. The City also provides potable water, wastewater collection and treatment, reclaimed water production and distribution, stormwater treatment, solid waste collection and recycling services. The City operates according to a Council/Manager form of government, with an appointed City Manager, four elected City Council members and an elected Mayor. The governing body has legislative responsibilities including setting policy, passing ordinances, adopting the budget, appointing committees, and hiring the City’s Manager. The City Manager is responsible for carrying out the policies and ordinances of the governing body, for overseeing the day-to-day operations of the government, and for hiring the directors of the various departments. The annual budget serves as the foundation the City of Clermont’s financial planning and control. All departments of the City of Clermont are required to submit requests for appropriations to the City Manager. The City Manager then uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the Council for review. The City Council is required to hold public hearings on the proposed budget and to adopt a final budget by no later than September 30, the close of the City of Clermont’s fiscal year. The appropriated budget is prepared by fund (e.g. general fund), and department (e.g. fire department). The City Manager may make transfers of appropriations within departments; however, any revisions that alter the total appropriations of a department must be approved by City Council. Original and final amended budget-to- actual comparisons are provided in this report for each individual governmental fund. The General Fund is presented on pages 20-21, the Infrastructure Fund is presented on page 22 and the Community Redevelopment Special Revenue fund is presented on page 23 as part of the basic financial statements for the governmental funds. The Capital Projects Fund is presented on page 76, followed by the other governmental funds, which start on page 82. iv The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Clermont operates. Local economy. The City of Clermont is essentially residential in character and its economy is centered in retail, real estate, personal services and healthcare. At September 30, 2014, Lake County’s unemployment rate was 6.3%, which is a decrease of 1% from 2013. Clermont’s unemployment rate was below the County average for the 5th year in a row at 5.6% for 2014. This is lower than both the state’s average of 6.2% and the national average of 5.9%. Educational institutions in Clermont such as Lake- Sumter State College and the University of Central Florida assist in supplying a skilled labor force. The cost of living for the region is below the national average. There is no personal income tax, either locally or state-wide. Sales tax, currently at 7%, is not charged on food or medicine. One cent of the sales tax charged within the county is limited to $50 per transaction (1% of $5,000). As discussed in the MD&A, this additional penny sales tax must be used for infrastructure including roads, buildings, land, land improvements and certain equipment. Major initiatives. The following items are capital projects that are currently in the planning/design phase for the City: The replacement of the existing Police Station – The new facility which is in the final design stage, will be constructed on the Clermont Community Center property. The new Police Headquarters will be 30,000 square feet and anticipated to cost $10.3 million which will be funded by police impact fees and a debt issuance pledged potentially by infrastructure sales taxes. The replacement of the existing Public Works Operations Complex – A recently completed space needs assessment recommends a new public works operating complex with approximately 45,100 square feet and anticipated to cost $14.03 million. The project is anticipated to be funded by a debt issuance pledged potentially by infrastructure sales taxes. Implementation of the Master Plan – The master plan will enhance the downtown and waterfront community by creating a window to downtown, connecting the parks and neighborhoods, and adding energy and activity to the downtown core as well as re-orient and diversifying the waterfront activities. The first six phases of the plan includes wayfinding signage, streetscapes, entrance feature, and walkways to from the waterfront to the downtown area. The first six phases are estimated to cost $19.26 million and will be potentially funded by the Community Redevelopment Fund, Stormwater Fund, and grants. Construction of Fire Station No. 4 – The City and Lake County entered into a interlocal agreement to build a joint fire station east of the current City boundary. The total cost of the station is anticipated to be approximately $1.80 million, with the City's share at approximately $700,000. The station is anticipated to be funded from infrastructure sales taxes. 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. v Relevant financial policies. The City regularly reviews revenues and expenditures throughout the fiscal year. During the course of the year, if actual revenues are expected to fall short of the budgeted amount, expenditures are reduced to ensure that a shortage of funds or a significant use of fund balance does not occur. The City administers a cash management and investment program that seeks to maximize, in order of priority, the preservation of funds, liquidity and interest earnings over its cash and investments. Cash resources of the individual funds are combined to form a pool of cash and investments. The average cash and investment pool balance during the year (not including pension funds) was $57,644,901 and the average investment earnings rate was 0.55%. Investment income includes the change in the fair value of investments. During the year monies were invested in accordance with the City’s investment policy. Pension fund assets were invested in accordance with the City’s Investment Policy for Retirement Funds. The total pension fund cash and investments at year end were $29,440,378 and the average investment income was 8.63%. 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, 2013. This was the twenty-sixth consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the staffs in the City Manager’s office and Finance Department. We would like to express our appreciation to all members of these departments who assisted and contributed to the preparation of this report. A special note of appreciation is due Regina Frazier and Lacy Smith-Castillo in Finance for their hard work and dedicated efforts in the preparation of this report. Credit also must be given to the Mayor and the City Council for their support in maintaining the highest standards of professionalism in the management of the City of Clermont’s finances. Respectfully submitted, _______________________________ ____________________________________ Darren Gray Joseph Van Zile City Manager Finance Director vi CITY OF CLERMONT, FLORIDA LIST OF ELECTED AND APPOINTED OFFICIALS SEPTEMBER 30, 2014 ELECTED OFFICIALS Mayor Gail L. Ash Mayor Pro-Tem Ray Goodgame Council Member Keith Mullins Council Member Diane Travis Council Member Timothy Bates APPOINTED OFFICIALS City Manager Darren Gray Assistant City Manager James Kinzler City Attorney Dan Mantzaris City Clerk Tracy Ackroyd Economic Development Director James Hitt Environmental Services Director Paul Roy, Interim Finance Director Joseph Van Zile Fire Chief Carle Bishop Human Resources Director Susan Irby Information Technology Director Don Dennis Planning Director Barbara Hollerand Police Chief Charles Broadway Public Works Director Stoney Brunson ix CITIZENS CLERMONTCITY COUNCIL COMMITTEESCITYATTORNEY CITYMANAGER POLICE FIRE HUMANRESOURCES INFORMATIONTECHNOLOGY FINANCE ASSISTANTCITY MANAGER ENVIRONMENTALSERVICES ECONOMICDEVELOPMENT PLANNING ANDZONING PARKS ANDRECREATION PUBLICWORKSCITY CLERK - Records Management - Cemetery - Election Qualifying - Agenda Development - Criminal Investigations - Traffic Enforcement - Road Patrol - Community Relations - Fire Suppression - Special Operations - Emergency Medical Services - Fire Inspection and Prevention - Volunteer and Reserve Programs - Recruitment - Benefits - Employee Relations - Safety - GIS - Network Administration - Website management - Application Support - Telecommunication - Security Systems - Finance - Utility Billing - Risk Management - Budget - Purchasing - Water - Sanitation - Sewer - Stormwater - CRA - Economic Development - Program Development - Permitting - Occupational Licenses - Zoning - Code Enforcement - Building Services - Program Development - Program Management - Event Planning - Facility Scheduling - Capital Improvements - Construction - Inspections - Transportation - Fleet - Facilities - Property Maintenance MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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, 2014, 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. 1 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, 2014, 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. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and the pension and other postemployment benefits disclosures on page 3 through 14 and 67 through 73 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 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 are the responsibility of management and were derived from and related directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated April 28, 2015 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. Orlando, FL April 28, 2015 2 MANAGEMENT’S DISCUSSION AND ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Clermont, Florida we offer readers of the City of Clermont’s (the City) financial statements this narrative overview and analysis of the financial activities of the City of Clermont for the fiscal year ended September 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii through vi of this report. Financial Highlights • The City of Clermont’s assets and deferred outflows of resources exceeded its liabilities at September 30, 2014 by $153,704,657 (net position). Of this amount, $32,773,754 (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 $4,951,578 (or 3%) over the previous fiscal year. • At September 30, 2014, the City of Clermont’s governmental funds reported combined ending fund balances of $18,903,691 a decrease of $419,708 from the previous fiscal year. Of this amount $7,668,799 (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 $7,668,799, which represents 38.7% 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 15 and 16 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 between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Clermont that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Clermont include general government, public safety, physical environment, transportation, economic environment, and culture and recreation. The business-type activities of the City of Clermont include water, sewer, sanitation, and stormwater utilities. 3 The government-wide financial statements include only the City of Clermont itself (known as the primary government) and one blended component unit (The City of Clermont Community Redevelopment Trust Fund). Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Clermont, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Clermont can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Clermont maintains ten individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund, Infrastructure Fund, and Community Redevelopment Fund, all of which are considered to be major funds. Data from the other six governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Clermont adopts an annual appropriated budget for all of its governmental funds. Budgetary comparison statements have been provided for the General Fund (pages 20-21), the Infrastructure Fund (page 22) and the Community Redevelopment Fund (page 23) to demonstrate compliance with budgets. Other major and nonmajor funds comparisons can be found beginning on page 75. The basic governmental fund financial statements can be found on pages 17 - 23 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 24-29 of this report. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Clermont uses enterprise funds to account for water, sewer, sanitation and stormwater utilities. Internal service funds are an accounting tool used to accumulate and allocate costs internally among various functions. The City utilizes an internal service fund for its health insurance. Because services accounted for in the internal service fund predominately benefit governmental rather than business-type functions, it has been included within the governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for water, sewer and sanitation which are all considered to be major funds. Data for the Stormwater Fund is also included since it is the only nonmajor fund. 4 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Clermont’s own programs. The accounting used for fiduciary funds is much like that used for the proprietary funds. The basic fiduciary fund financial statements can be found on pages 30 - 31 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 33 - 66 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 76 - 89 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 15. 2013-142012-132013-142012-132013-142012-13 Assets: Current and other assets 21,816,704$ 20,829,483$ 39,233,918$ 36,020,100$ 61,050,622$ 56,849,583$ Capital assets 52,157,191 42,562,445 71,041,133 72,841,377 123,198,324 115,403,822 Total assets 73,973,895 63,391,928 110,275,051 108,861,477 184,248,946 172,253,405 Deferred Outflows of Resources: Deferred charge of refunding - - 546,787 580,436 546,787 580,436 Total deferred outflows of resources - - 546,787 580,436 546,787 580,436 Liabilities: Long-term liabilities outstanding 11,761,397 5,527,257 15,692,341 16,045,238 27,453,738 21,572,495 Other liabilities 2,459,166 701,362 1,178,172 1,806,905 3,637,338 2,508,267 Total liabilities 14,220,563 6,228,619 16,870,513 17,852,143 31,091,076 24,080,762 Net investment in capital assets 44,115,790 39,950,445 56,680,065 57,862,471 100,795,855 97,812,916 Restricted 9,918,073 9,489,732 10,216,975 9,535,896 20,135,048 19,025,628 Unrestricted 5,719,469 7,723,132 27,054,285 24,191,403 32,773,754 31,914,535 Total net position 59,753,332$ 57,163,309$ 93,951,325$ 91,589,770$ 153,704,657$ 148,753,079$ Net Position Governmental Activities Business-type Activities Total The City’s total net position at September 30, 2014 was $153,704,657. Of the City’s total net position $100,795,855 (65.6%) reflects its investment in capital assets (e.g., land, buildings, improvements, infrastructure and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Clermont’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 5 An additional portion of the City’s total net position, $20,135,048 (13.1%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the City’s total net position, $32,773,754 (21.3%) 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 $4,951,578 during the current fiscal year. Major components of this increase are discussed in the Governmental and Business-Type Activities sections to follow. Restricted reserves represent the accumulation of impact fee funds for upcoming and ongoing capital projects. The following is a summary of the City’s governmental and business-type activities for fiscal year 2013-14, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 16. Remainder of page intentionally left blank 6 2013-142012-132013-142012-132013-142012-13 Revenues: Program revenues - Charges for services 4,751,091$ 4,419,357$ 14,697,489$ 14,209,383$ 19,448,580$ 18,628,740$ Operating grants and contributions 938,861 895,725 - - 938,861 895,725 Captial grants and contributions 1,717,851 112,089 2,416,757 3,429,673 4,134,608 3,541,762 General revenues - Property Taxes 6,532,656 5,349,583 - - 6,532,656 5,349,583 Business Taxes 126,172 111,195 - - 126,172 111,195 Franchise Fees 2,379,312 2,122,797 - - 2,379,312 2,122,797 Utility Taxes 2,887,161 2,490,461 - - 2,887,161 2,490,461 Intergrovernmental 6,110,184 5,801,871 - - 6,110,184 5,801,871 Investment income and miscellaneous 478,577 378,401 198,224 149,251 676,801 527,652 Gain on sale of capital assets - - 1,765 17,815 1,765 17,815 Total revenues 25,921,865 21,681,479 17,314,235 17,806,122 43,236,100 39,487,601 Expenses: General government 3,406,735 3,258,417 - - 3,406,735 3,258,417 Public safety 14,117,124 12,685,206 - - 14,117,124 12,685,206 Physical environmnet 350,243 303,130 - - 350,243 303,130 Transportation 2,201,649 1,724,824 - - 2,201,649 1,724,824 Economic environment 362,766 199,676 - - 362,766 199,676 Culture and recreation 3,095,752 1,927,632 - - 3,095,752 1,927,632 Interest on long-term debt 236,466 87,287 - - 236,466 87,287 Water - - 4,589,022 4,153,922 4,589,022 4,153,922 Sewer - - 6,436,780 6,105,933 6,436,780 6,105,933 Sanitation - - 2,471,861 2,464,867 2,471,861 2,464,867 Stormwater - - 1,016,124 896,835 1,016,124 896,835 Total expenses 23,770,735 20,186,172 14,513,787 13,621,557 38,284,522 33,807,729 Increase (Decrease) in Net Position Before Transfers 2,151,130 1,495,307 2,800,448 4,184,565 4,951,578 5,679,872 Transfers 438,893 478,539 (438,893) (478,539) - - Increase in Net Position 2,590,023 1,973,846 2,361,555 3,706,026 4,951,578 5,679,872 Net Position - Beginning, as restated 57,163,309 55,189,463 91,589,770 87,883,744 148,753,079 143,073,207 Net Position - Ending 59,753,332$ 57,163,309$ 93,951,325$ 91,589,770$ 153,704,657$ 148,753,079$ Changes in Net Position Governmental Activities Business-type Activities Total Governmental activities - Governmental activities increased the City of Clermont’s net position by $2,590,023, which is primarily due to increased general government revenues and capital 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. 7 The following pie chart illustrates the composition of governmental activities revenue and its percent in relation to total governmental activities revenues. Business-type activities - Business-type activities increased the City of Clermont’s net position by $2,361,555. This change was due to increased revenue from services totaling $488,106, and changes in planned projects that resulted in overall savings. Capital contributions totaled $2,416,757. These contributions are water and sewer impact fees paid by developers. The fees were adopted by the City to require new development to pay its proportionate share of the capital costs necessary to accommodate new development impacts on the City’s water and sewer system. $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 General government Public safety Transportation/public works Culture & recreation Physical environment and other Interest on long-term debt $3,406,735 $14,117,124 $2,201,649 $3,095,752 $713,009 $236,466 $2,428,575 $2,016,784 $289,865 $2,672,579 $0 $0 Expenses and Program Revenues - Governmental Activities Expenses Program revenues Intergovernmental, 23.6% Charges for services, 18.3% Operating grants and contributions, 3.6% Investment income & miscellaneous , 1.9% Other taxes, 20.8% Capital grants and contributions, 6.6% Property taxes, 25.2% Revenues by Source - Governmental Activities Intergovernmental Charges for services Operating grants and contributions Investment income & miscellaneous Other taxes Capital grants and contributions Property taxes 8 The City is using this revenue for large capital projects that are currently under construction such as the Reclaim Water System Expansion, Reclaim Water Storage Tank and the Supplemental Well. The following graph is a comparison of program revenues and program expenses for all business- type activities. This chart is intended to give the reader an idea of the degree to which business- type activities are self-supporting. The following pie chart illustrates the composition of business-type activities revenue and its percent in relation to total business-type activities revenues. $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Water Sewer Sanitation Stormwater $4,589,022 $6,436,780 $2,471,861 $1,016,124 $6,201,798 $7,161,755 $2,869,372 $881,321 Expenses and Program Revenues - Business Type Activities Expenses Program Revenue Investment income & miscellaneous , 1% Charges for Services, 85% Capital Grants and Contributions, 14% Revenues by Source - Business Activities Investment income & miscellaneous Charges for Services Capital Grants and Contributions 9 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, 2014, the City of Clermont’s governmental funds reported combined ending fund balances of $18,903,691 a decrease of $419,708 in comparison with the prior year. This decrease is primarily due to the use of accumulated funds for general fund operations including costs of insurance increases, a departmental reorganization and opening of the new Clermont Art and Recreation Center. Of the governmental funds combined ending fund balances, $7,668,799 (40.6%) represents unassigned fund balance, which is available for spending at the City’s discretion. An additional $1,201,989 (assigned fund balance) has been set aside for encumbrances and Fiscal Year 2015 expenditures. Restricted fund balances totaling over $8.9 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 ($1,117,190) 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, 2014, the fund balance in the General Fund was $9,236,410 a decrease of $853,032 in comparison with the prior year. This decrease is due to current expenditures exceeding current revenues and is $93,807 more than originally budgeted, however it is just over $1.6 million less than the revised budget. Revenues exceeded budget by $1,213,853 mainly attributable to tax receipts coming in higher than anticipated due to additional collections of delinquent taxes as well as fewer taxpayers taking advantage of the early payment discounts, franchise fees and miscellaneous revenue and reimbursements such as p-card rebates and rental fees. Departmental expenditures also came in less than anticipated reducing the amount of reserves used. Of the total fund balance in the General Fund, $7,668,799 (83%) 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 38.7% of total General Fund expenditures, while total fund balance represents 46.6% 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 City has an Infrastructure Fund that is considered a major fund under criteria set forth by GASB Statement No. 34. This fund was established to account for the proceeds of the Local Government Infrastructure Surtax. The proceeds and interest accrued thereto, by law are only to be used to finance, plan and construct infrastructure. The fund balance in this fund increased by $326,771 in FY 2014, which is $2,663,714 less than the revised budget. This increase is due to higher than anticipated revenues resulting from the annual distribution calculation. 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 10 163.387(8). This fund was created in 1997 as a dependent taxing district. The incremental annual increase in tax over the base years is used to fund projects. As of September 30, 2014, the fund balance was $773,599, an increase of $65,924 over the prior year. This increase is due to delays in the master plan project. The remainder of the change $40,629 to the governmental fund balance was from the non- major governmental funds. Police and Fire Impact Fee fund balances combined increased a total of $334,971 due to both an increase in revenues as well as a delay in the planned use of funds for capital projects. The Debt Service fund balance increased $362,513 due to the new note funding requirements. The Recreation Impact Fee fund decreased $785,292 due to the purchase of the Arts and Recreation Center. The fund balances in the remaining nonmajor funds increased a total of $128,437. Proprietary Funds. Proprietary funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City’s major proprietary funds are water, sewer and sanitation. The Water Fund accounts for the provision of potable water and reclaimed irrigation services to City and non-City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of September 30, 2014, the City of Clermont’s Water Fund reported total net position of $33,068,918, an increase of $1,246,889 in comparison with the prior year. This increase in net position is primarily due to an increase in capital contributions. The Sewer Fund accounts for the provision of sewer services to City and non-City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of September 30, 2014, the City of Clermont’s Sewer Fund reported total net position of $51,024,415, an increase of $856,423 in comparison with the prior year. This increase is primarily due to capital contributions. The Sanitation Fund accounts for the provision of garbage and trash collection, recycling, and composting services to City residents. All activities necessary to the provision of these services are accounted for in this fund. As of September 30, 2014, the City of Clermont’s Sanitation Fund reported total net position of $5,115,929, an increase of $449,749 in comparison with the prior year, which is due to an increase in operating income along with lower than anticipated operating expenses. General Fund Budgetary Highlights During the year there was a $1,627,766 increase in appropriations between the original and final amended budget. Following are the main components of the increase: • $1,011,362 for staffing, debt issuance costs, operating and capital expenditures associated with the purchase of the Clermont Arts and Recreation Center. • $65,925 for an additional police officer position. • $250,000 to amend the budget for expenditures associated with the new red light camera program. 11 • $125,367 to amend the Fire Department budget for expenditures associated with the award of a SAFER grant. • $149,035 for the reorganization of the Development Services and Fire Departments in order to bring the Building Services function in-house. General Fund revenue increases totaling $359,348 were due to the receipt of several public safety grants, which were awarded after the beginning of the fiscal year as well as the new red light camera program revenue. Considering the above noted increases in General Fund budgeted appropriations, actual expenditures were less than budgeted by $279,999. In addition, actual revenues exceeded the budget by $1,213,853. Capital Assets The following is a summary of the City of Clermont’s capital assets, net of depreciation for governmental and business-type activities for the current year with a comparison to the prior year. Additional information on the City of Clermont’s capital assets can be found in Note 6 on pages 48 - 49 of this report. 2013-142012-132013-142012-132013-142012-13 Land 25,727,548$ 23,502,470$ 1,861,820$ 1,861,820$ 27,589,368$ 25,364,290$ Buildings 14,653,642 11,305,671 - - 14,653,642 11,305,671 Infrastructure 5,590,777 5,351,729 62,476,771 65,574,169 68,067,548 70,925,898 Machinery and Equipment 2,191,359 1,522,646 2,444,267 1,502,411 4,635,626 3,025,057 Intangibles 26,456 25,002 109,620 - 136,076 25,002 Construction in Progress 3,967,409 854,927 4,148,655 3,902,977 8,116,064 4,757,904 Total 52,157,191$ 42,562,445$ 71,041,133$ 72,841,377$ 123,198,324$ 115,403,822$ Capital Assets (net of depreciation) Governmental Activities Business-type Activities Total The City of Clermont’s investment in capital assets for its governmental and business-type activities as of September 30, 2014, amounts to $123,198,324 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements/infrastructure, machinery and equipment and intangibles. The total change in the City’s investment in capital assets for the current fiscal year was $7,794,502. Major capital asset events during the current fiscal year included the following: • Purchase of the Clermont Arts and Recreation Center for a total of $6,357,366, which includes $2,225,078 in land and $4,132,288. • Completion of the Water and Sewer Security Improvements - Construction in Progress was adjusted in the amount of $97,054 and the total project cost of $994,527 was moved to Equipment. • Completion of Fiber Optic Network for City Buildings - $651,611 was added and prior years Construction in Progress in the amount of $28,531 was moved to Infrastructure/Improvements for a total project cost of $680,142. • Purchase of a rescue pumper fire truck for $362,467. • Purchase of a sanitation vehicle for $287,916. 12 • Completion of the Oak Hill Cemetery Expansion - $126,775 was added and prior years Construction in Progress in the amount of $21,287 was moved to Infrastructure/Improvements for a total project cost of $148,062. • Completion of the Utility Billing Software Implementation - $47,570 was added and prior years Construction in Progress in the amount of $62,509 was moved to Intangible for a total project cost of $110,079. • Purchase of vehicle with aerial bucket for $84,500. • Construction in progress includes construction of the Police Headquarters, Lake Hiawatha Preserve, Rowing Facility, Community Development Software, East-West Water System Interconnects, Lift Station Improvement, Reclaimed Supplemental Well, Reclaimed Water Storage Tank and CDBG Stormwater Project. Debt Administration The following is a summary of the City’s long-term debt for governmental and business-type activity for the current year with a comparison to the prior year. Additional information on long- term debt can be found in Note 7 on pages 50 - 52 of this report. 2013-142012-132013-142012-132013-142012-13 Revenue bonds payable -$ -$ 14,315,000$ 14,930,000$ 14,315,000$ 14,930,000$ Note payable 8,041,401 2,612,000 - - 8,041,401 2,612,000 Total 8,041,401$ 2,612,000$ 14,315,000$ 14,930,000$ 22,356,401$ 17,542,000$ Outstanding Debt Governmental Activities Business-type Activities Total At the end of the current fiscal year, the City of Clermont had total debt outstanding of $22,356,401, which includes revenue bonds payable and notes payable. Economic Factors and Next Year’s Budgets and Rates • The annual unemployment rate for Lake County in 2014 was 6.3%, which is a decrease of 1% from 2013. Clermont’s unemployment rate was below the County average for the 5th year in a row at 5.6% for 2014. This is lower than both the state’s average of 6.2% and the national average of 5.9%. • The taxable value of commercial and residential property increased 10.9% from fiscal year 2012-13 to fiscal year 2013-14 due to increasing home values and new construction. • Population increased 5.1% from 30,201 in 2013 to 31745 in 2014. As of September 30, 2014, the General Fund unassigned fund balance was $7,668,799. In addition, the City appropriated $1,201,989 for spending in the 2014-15 fiscal year budget. The same property tax rate is included for the General Fund for the 2014-15 fiscal year budget. However, property tax revenue is projected to be $474,771 higher in fiscal year 2014-15 due to the slight increase in the assessed values. This increase will help the City to continue repairs that have been put off due to the revenue reductions over the previous several years. No utility rate adjustments were proposed for the 2014-15 fiscal year with the exception of the sewer rate structure. The sewer rates increased 1.41% on October 1, 2014 pursuant to a 13 required adjustment in accordance with the Florida Public Service Commission Annual Deflator Index previously adopted by the Clermont City Council. Requests for Information This financial report is designed to provide a general overview of the City of Clermont’s finances for all those with an interest in the government’s finances. Questions concerning any of the information should be addressed to the office of the Finance Director, City of Clermont, P.O. Box 120219, Clermont, Florida 34712. 14 BASIC FINANCIAL STATEMENTS CITY OF CLERMONT, FLORIDA STATEMENT OF NET POSITION September 30, 2014 Primary Government Governmental Activities Business-type Activities Total Assets: Cash and cash equivalents 16,191,538$ 21,581,847$ 37,773,385$ Investments 3,992,749 7,190,702 11,183,451 Receivables, net 371,984 1,439,478 1,811,462 Inventories 31,475 240,768 272,243 Due from other governments 1,255,650 - 1,255,650 Internal balances (122,891) 122,891 - Prepaid costs 83,955 30,244 114,199 Restricted assets: Cash and cash equivalents - 1,530,779 1,530,779 Investments - 7,078,390 7,078,390 Interest receivable 12,244 18,819 31,063 Capital assets not being depreciated 29,694,957 6,010,475 35,705,432 Capital assets being depreciated, net of accumulated depreciation 22,462,234 65,030,658 87,492,892 Total assets 73,973,895 110,275,051 184,248,946 Deferred Outflows of Resources: Deferred charge on refunding - 546,787 546,787 Total deferred outflows of resources - 546,787 546,787 Liabilities: Accounts payable and accrued expenses 2,444,5471,178,1723,622,719 Due to other governmental agencies 14,619 - 14,619 Noncurrent liabilities: Due within one year 959,544 657,798 1,617,342 Due in more than one year 10,801,853 15,034,543 25,836,396 Total liabilities 14,220,563 16,870,513 31,091,076 Net Position: Net investment in capital assets 44,115,790 56,680,065 100,795,855 Restricted for: Capital Improvements - 10,216,975 10,216,975 Community redevelopment 773,599 - 773,599 Public safety 3,478,539 - 3,478,539 Culture and recreation 886,351 - 886,351 Infrastructure 2,672,978 - 2,672,978 Debt service 853,584 - 853,584 Building services 250,662 - 250,662 Perpetual care: Nonexpendable 1,002,360 - 1,002,360 Unrestricted 5,719,469 27,054,285 32,773,754 Total net position 59,753,332$ 93,951,325$ 153,704,657$ The accompanying Notes to Financial Statements are an integral part of this statement. 15 CI T Y O F C L E R M O N T , F L O R I D A ST A T E M E N T O F A C T I V I T I E S Fu n c t i o n s / P r o g r a m s : Ex p e n s e s Ch a r g e s f o r Se r v i c e s Op e r a t i n g G r a n t s an d Co n t r i b u t i o n s Ca p i t a l G r a n t s an d Co n t r i b u t i o n s Go v e r n m e n t a l Ac t i v i t i e s Bu s i n e s s - t y p e ActivitiesTotal Go v e r n m e n t a l A c t i v i t i e s : Ge n e r a l g o v e r n m e n t 3 , 4 0 6 , 7 3 5 $ 2, 4 2 8 , 5 7 5 $ - $ - $ (9 7 8 , 1 6 0 ) $ - $ (978,160)$ Pu b l i c s a f e t y 14 , 1 1 7 , 1 2 4 1, 3 6 5 , 9 8 8 64 8 , 9 9 6 1, 8 0 0 (1 2 , 1 0 0 , 3 4 0 ) - ( 1 2 , 1 0 0 , 3 4 0 ) Ph y s i c a l e n v i r o n m e n t 35 0 , 2 4 3 - - - (3 5 0 , 2 4 3 ) - (350,243) Tr a n s p o r t a t i o n / p u b l i c w o r k s 2, 2 0 1 , 6 4 9 - 28 9 , 8 6 5 - ( 1 , 9 1 1 , 7 8 4 ) - ( 1 , 9 1 1 , 7 8 4 ) Ec o n o m i c e n v i r o n m e n t 36 2 , 7 6 6 - - - (3 6 2 , 7 6 6 ) - (362,766) Cu l t u r e a n d r e c r e a t i o n 3, 0 9 5 , 7 5 2 95 6 , 5 2 8 - 1 , 7 1 6 , 0 5 1 (4 2 3 , 1 7 3 ) - (423,173) In t e r e s t o n l o n g - t e r m d e b t 23 6 , 4 6 6 - - - (2 3 6 , 4 6 6 ) - (236,466) To t a l g o v e r n m e n t a l a c t i v i t i e s 23 , 7 7 0 , 7 3 5 4, 7 5 1 , 0 9 1 93 8 , 8 6 1 1, 7 1 7 , 8 5 1 (1 6 , 3 6 2 , 9 3 2 ) - ( 1 6 , 3 6 2 , 9 3 2 ) Bu s i n e s s - t y p e a c t i v i t i e s W a t e r 4, 5 8 9 , 0 2 2 5, 3 6 1 , 9 6 2 - 8 3 9 , 8 3 6 - 1 , 6 1 2 , 7 7 6 1,612,776 Se w e r 6, 4 3 6 , 7 8 0 5, 5 8 4 , 8 3 4 - 1 , 5 7 6 , 9 2 1 - 7 2 4 , 9 7 5 724,975 Sa n i t a t i o n 2, 4 7 1 , 8 6 1 2, 8 6 9 , 3 7 2 - - - 3 9 7 , 5 1 1 397,511 St or mw a t e r 1, 0 1 6 , 1 2 4 88 1 , 3 2 1 - - - ( 1 3 4 , 8 0 3 ) (134,803) To t a l b u s i n e s s - t y p e a c t i v i t i e s 14 , 5 1 3 , 7 8 7 14 , 6 9 7 , 4 8 9 - 2 , 4 1 6 , 7 5 7 - 2 , 6 0 0 , 4 5 9 2,600,459 To t a l p r i m a r y g o v e r n m e n t 38 , 2 8 4 , 5 2 2 $ 19 , 4 4 8 , 5 8 0 $ 93 8 , 8 6 1 $ 4, 1 3 4 , 6 0 8 $ (1 6 , 3 6 2 , 9 3 2 ) 2,600,459 (13,762,473) Ge n e r a l R e v e n u e s : Pr o p e r t y t a x e s 6, 5 3 2 , 6 5 6 - 6 , 5 3 2 , 6 5 6 Bu s i n e s s t a x e s 12 6 , 1 7 2 - 126,172 Fr a n c h i s e f e e s 2, 3 7 9 , 3 1 2 - 2 , 3 7 9 , 3 1 2 U t i l i t y t a x e s 2, 88 7 , 1 6 1 - 2 , 8 8 7 , 1 6 1 In t e r g o v e r n m e n t a l - u n r e s t r i c t e d 6, 1 1 0 , 1 8 4 - 6 , 1 1 0 , 1 8 4 Un r e s t r i c t e d i n v e s t m e n t e a r n i n g s 10 4 , 4 1 5 198,224 302,639 Mi s c e l l a n e o u s 37 4 , 1 6 2 - 374,162 Ga i n o n s a l e o f c a p i t a l a s s e t s - 1,765 1,765 Tr a n s f e r s 43 8 , 8 9 3 (438,893) - To t a l g e n e r a l r e v e n u e s a n d t r a n s f e r s 18 , 9 5 2 , 9 5 5 (238,904) 18,714,051 Ch a n g e i n n e t p o s i t i o n 2, 5 9 0 , 0 2 3 2,361,555 4,951,578 Ne t P o s i t i o n - b e g i n n i n g 57 , 1 6 3 , 3 0 9 91,589,770 148,753,079 Ne t P o s i t i o n - e n d i n g 59 , 7 5 3 , 3 3 2 $ 93,951,325 $ 153,704,657$ Ye a r E n d e d S e p t e m b e r 3 0 , 2 0 1 4 Pr o g r a m R e v e n u e C h a n g e s i n N e t P o s i t i o n Pr i m a r y G o v e r n m e n t Ne t ( E x p e n s e ) R e v e n u e a n d Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h i s s t a t e m e n t . 16 General Capital Projects Infrastructure Special Revenue Community Redevelopment Special Revenue Other Governmental Funds Total Governmental Funds Assets: Cash and cash equivalents5,311,443$ 407,516$ 2,702,725$ 774,002$ 6,166,808$ 15,362,494$ Investments3,992,749 - - - - 3,992,749 Receivables, net384,163 - - - 65 384,228 Inventories, at cost31,475 - - - - 31,475 Due from other governments232,492 849,293 173,865 - - 1,255,650 Prepaid costs22,026 - - - 61,329 83,355 Total assets9,974,348$ 1,256,809$ 2,876,590$ 774,002$ 6,228,202$ 21,109,951$ Liabilities: Accounts payable440,741$ 1,256,809$ 203,612$ 403$ 7,498$ 1,909,063$ Payable to other governments14,619 - - - - 14,619 Accrued liabilities180,369 - - - - 180,369 Total liabilities635,729 1,256,809 203,612 403 7,498 2,104,051 Deferred Inflows of Resources: Unavailable revenue - liens, forfeitures and rents 102,209 - - - - 102,209 Total deferred inflows of resources 102,209 - - - - 102,209 Fund Balances: Nonspendable 53,501 - - - 1,063,689 1,117,190 Restricted 312,121 - 2,672,978 773,599 5,157,015 8,915,713 Assigned 1,201,989 - - - - 1,201,989 Unassigned 7,668,799 - - - - 7,668,799 Total fund balances 9,236,410 - 2,672,978 773,599 6,220,704 18,903,691 Total liabilities, deferred inflows of resources, and fund balances 9,974,348$ 1,256,809$ 2,876,590$ 774,002$ 6,228,202$ 52,157,191 (68,417) 102,209 420,055 (11,761,397) 59,753,332$ Capital assets used in governmental activities are not financial resources and are not reported in the funds. Accrued interest payable is not due in the current period and therefore is not reported in the funds. The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the governmental activities of the Statement of Net Position. Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Net Position of Governmental Activities in the Statement of Net Position CITY OF CLERMONT, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2014 Amounts reported for governmental activities in the Statement of Net Position are different because: Other long-term assets are not available to pay for current period expenditures and, therefore are deferred in the funds. The accompanying Notes to Financial Statements are an integral part of this statement.17 General Capital Projects Infrastructure Special Revenue Community Redevelopment Special Revenue Other Governmental Funds Total Governmental Funds Revenues: Taxes9,358,347$ -$ -$ 187,642$ -$ 9,545,989$ Franchise fees2,379,312 - - - - 2,379,312 Licenses and permits139,117 - - - 801,912 941,029 Intergovernmental revenues4,534,321 1,716,051 2,545,507 - - 8,795,879 Charges for services1,038,627 - - - 173,118 1,211,745 Fines and forfeitures588,927 - - - - 588,927 Impact fees/special assessments- - - - 1,400,622 1,400,622 Investment earnings38,469 1,830 15,528 4,952 38,674 99,453 Miscellaneous845,813 - 4,600 - 65,087 915,500 Total revenues18,922,933 1,717,881 2,565,635 192,594 2,479,413 25,878,456 Expenditures: Current: General government 3,168,205 - 607,817 - - 3,776,022 Public safety 12,067,755 - 588,945 - 913,970 13,570,670 Physical environment 422,970 - - - - 422,970 Transportation 1,268,763 - 366,265 - - 1,635,028 Economic environment 237,820 - - 126,802 - 364,622 Culture and recreation 2,675,774 10,135 246,378 - 16,013 2,948,300 Debt Service: Principal retirement - - - - 570,599 570,599 Interest and fiscal charges - - - - 177,539 177,539 Capital Outlay: Public safety - 60,687 - - - 60,687 Culture and recreation - 9,320,620 - - - 9,320,620 Total expenditures 19,841,287 9,391,442 1,809,405 126,802 1,678,121 32,847,057 Excess (Deficiency) of Revenues Over Expenditures (918,354) (7,673,561) 756,230 65,792 801,292 (6,968,601) Other Financing Sources (Uses): Notes payable - - - - 6,000,000 6,000,000 Transfers in 554,531 7,673,561 - 132 1,108,622 9,336,846 Transfers out (489,209) - (429,459) - (7,869,285) (8,787,953) Total other financing sources (uses)65,322 7,673,561 (429,459) 132 (760,663) 6,548,893 Net Change in Fund Balances (853,032) - 326,771 65,924 40,629 (419,708) Fund Balances - beginning 10,089,442 - 2,346,207 707,675 6,180,075 19,323,399 Fund Balances - ending 9,236,410$ -$ 2,672,978$ 773,599$ 6,220,704$ 18,903,691$ Year Ended September 30, 2014 CITY OF CLERMONT, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS The accompanying Notes to Financial Statements are an integral part of this statement.18 Net Change in Fund Balances - total governmental funds:(419,708)$ Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. In contrast, the Statement of Activities reports only a portion of the outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation expense for the period.9,594,746 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. 48,046 Revenue reported in the funds must be eliminated from the statement of activities since revenue was recognized in a prior year.(9,599) 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. (5,429,401) 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.(863,666) 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.(330,395) Change in net position of governmental activities 2,590,023$ RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE Year Ended September 30, 2014 CITY OF CLERMONT, FLORIDA STATEMENT OF ACTIVITIES The accompanying Notes to Financial Statements are an integral part of this statement. 19 Budgeted Amounts Actual Amounts, Budgetary Basis Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Taxes8,753,987$ 8,753,987$ 9,358,347$ 604,360$ Franchise fees2,223,900 2,223,900 2,379,312 155,412 Licenses and permits115,200 115,200 139,117 23,917 Intergovernmental revenues4,382,400 4,466,228 4,534,321 68,093 Charges for services1,073,904 1,073,904 1,038,627 (35,277) Fines and forfeitures130,700 392,148 588,927 196,779 Investment earnings138,000 138,000 38,469 (99,531) Miscellaneous531,641 545,713 845,813 300,100 Total revenues17,349,732 17,709,080 18,922,933 1,213,853 Expenditures: Current: General government: City council27,000 27,000 24,185 2,815 City clerk264,744 265,455 263,448 2,007 City manager436,848 437,173 403,512 33,661 Finance761,818 779,619 770,990 8,629 Legal services136,000 136,000 97,322 38,678 Planning & zoning544,494 613,765 552,760 61,005 Information technology389,040 461,974 436,572 25,402 Human resources286,219 290,259 277,596 12,663 Other general government251,442 370,674 341,820 28,854 3,097,605 3,381,919 3,168,205 213,714 Public safety: Law enforcement 6,311,964 6,792,004 6,605,033 186,971 Fire control 5,180,525 5,350,765 5,462,722 (111,957) 11,492,489 12,142,769 12,067,755 75,014 Physical environment 335,781 336,310 422,970 (86,660) Transportation 1,288,9431,277,0631,268,763 8,300 Economic environment 181,409 184,954 237,820 (52,866) Culture and recreation Culture and recreation 2,097,293 2,186,053 2,038,972 147,081 Events - 34,000 54,545 (20,545) Arts and rec center - 578,218 582,257 (4,039) 2,097,293 2,798,271 2,675,774 122,497 Total expenditures 18,493,520 20,121,286 19,841,287 279,999 GENERAL FUND Year Ended September 30, 2014 CITY OF CLERMONT, FLORIDA BUDGET AND ACTUAL STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - The accompanying Notes to Financial Statements are an integral part of this statement. 20 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED) Budgeted Amounts Actual Amounts, Budgetary Basis Variance with Final Budget - Positive (Negative) OriginalFinal Over Expenditures (1,143,788) (2,412,206) (918,354) 1,493,852 Other Financing Sources (Uses): Transfers in456,600 456,600 554,531 97,931 Transfers out(72,037) (505,181) (489,209) 15,972 Total other financing sources (uses)384,563 (48,581) 65,322 113,903 Net Change in Fund Balance (759,225) (2,460,787) (853,032) 1,607,755 Fund Balance - beginning 10,089,442 10,089,442 10,089,442 - Fund Balance - ending 9,330,217$ 7,628,655$ 9,236,410$ 1,607,755$ Excess (Deficiency) of Revenues CITY OF CLERMONT, FLORIDA GENERAL FUND Year Ended September 30, 2014 The accompanying Notes to Financial Statements are an integral part of this statement. 21 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Intergovernmental revenues2,400,000$ 2,400,000$ 2,545,507$ 145,507$ Investment earnings18,000 18,000 15,528 (2,472) Miscellaneous- - 4,600 4,600 Total revenues2,418,000 2,418,000 2,565,635 147,635 Expenditures: Current: General government- 563,817 607,817 (44,000) Public safety: Police166,000 206,000 195,133 10,867 Fire control377,000 393,812 393,812 - 543,000 599,812 588,945 10,867 Transportation: Roads & streets365,000 582,735 366,265 216,470 Physical Environment40,000 40,000 - 40,000 Culture and recreation: Recreation programs150,000 277,574 246,378 31,196 Total expenditures1,098,000 2,063,938 1,809,405 254,533 Excess (Deficiency) of Revenues Over Expenditures 1,320,000 354,062 756,230 402,168 Other Financing Uses: Transfers out(2,841,005) (2,691,005) (429,459) 2,261,546 Total other financing uses(2,841,005) (2,691,005) (429,459) 2,261,546 Net Change in Fund Balances (1,521,005) (2,336,943) 326,771 2,663,714 Fund Balances - beginning 2,346,207 2,346,207 2,346,207 - Fund Balances - ending 825,202$ 9,264$ 2,672,978$ 2,663,714$ CITY OF CLERMONT, FLORIDA INFRASTRUCTURE SPECIAL REVENUE FUND Year Ended September 30, 2014 The accompanying Notes to Financial Statements are an integral part of this statement. 22 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Taxes187,805$ 187,805$ 187,642$ (163)$ Investment earnings9,800 9,800 4,952 (4,848) Total revenues197,605 197,605 192,594 (5,011) Expenditures: Economic environment: Economic development386,182583,019126,802456,217 Total expenditures386,182 583,019 126,802 456,217 Excess (Deficiency) of Revenues Over Expenditures (188,577) (385,414) 65,792 451,206 Other Financing Uses: Transfers in- - 132 132 Total other financing uses- - 132 132 Net Change in Fund Balances (188,577) (385,414) 65,924 451,338 Fund Balances - beginning 707,675 707,675 707,675 - Fund Balances - ending 519,098$ 322,261$ 773,599$ 451,338$ CITY OF CLERMONT, FLORIDA COMMUNITY REDEVELOPMENT SPECIAL REVENUE FUND Year Ended September 30, 2014 The accompanying Notes to Financial Statements are an integral part of this statement. 23 Governmental Activities- Wa t e r Se w e r S a n i t a t i o n S t o r m w a t e r T o t a l Internal Service Fund As s e t s : Cu r r e n t a s s e t s : Ca s h a n d c a s h e q u i v a l e n t s 7, 0 5 9 , 9 1 8 $ 8, 4 4 9 , 6 4 5 $ 4, 2 7 0 , 2 1 4 $ 1, 8 0 2 , 0 7 0 $ 21 , 5 8 1 , 8 4 7 $ 829,044$ In v e s t m e n t s 7, 1 9 0 , 7 0 2 - - - 7 , 1 9 0 , 7 0 2 - Re s t r i c t e d c a s h a n d c a s h e q u i v a l e n t s 83 0 , 5 0 1 70 0 , 2 7 8 - - 1 , 5 3 0 , 7 7 9 - Ac c o u n t s r e c e i v a b l e , n e t 56 5 , 6 3 0 53 5 , 8 6 5 26 1 , 4 0 3 76 , 5 8 0 1, 4 3 9 , 4 7 8 - In v e n t o r i e s 20 8 , 3 8 5 31 , 0 6 2 - 1, 3 2 1 24 0 , 7 6 8 - Pr e p a i d e x p e n s e s 24 , 1 3 6 6, 1 0 8 - - 30,244 600 To t a l c u r r e n t a s s e t s 15 , 8 7 9 , 2 7 2 9, 7 2 2 , 9 5 8 4, 5 3 1 , 6 1 7 1, 8 7 9 , 9 7 1 32 , 0 1 3 , 8 1 8 829,644 No n c u r r e n t a s s e t s : R e s t r i c t e d i n v e s t m e n t s - 7 , 0 7 8 , 3 9 0 - - 7 , 0 7 8 , 3 9 0 - I n t e r e s t r e c e i v a b l e 8, 4 6 1 10 , 3 5 8 - - 18,819 - Ca p i t a l a s s e t s : La n d , b u i l d i n g s a n d e q u i p m e n t 31 , 5 2 5 , 1 1 9 60 , 6 3 8 , 1 3 5 3, 2 7 6 , 2 2 1 4, 8 2 4 , 0 0 6 10 0 , 2 6 3 , 4 8 1 - Co n s t r u c t i o n i n p r o g r e s s 1, 4 7 7 , 9 6 2 2, 5 9 9 , 1 0 3 - 71 , 5 9 0 4, 1 4 8 , 6 5 5 - Le s s a c c u m u l a t e d d e p r e c i a t i o n (9 , 5 7 7 , 3 6 7 ) (1 9 , 4 7 5 , 1 3 0 ) (2 , 2 7 7 , 8 7 3 ) (2 , 0 4 0 , 6 3 3 ) (3 3 , 3 7 1 , 0 0 3 ) - To t a l c a p i t a l a s s e t s ( n e t o f ac c u m u l a t e d d e p r e c i a t i o n ) 23 , 4 2 5 , 7 1 4 43 , 7 6 2 , 1 0 8 99 8 , 3 4 8 2, 8 5 4 , 9 6 3 71 , 0 4 1 , 1 3 3 - To t a l n o n - c u r r e n t a s s e t s 23 , 4 3 4 , 1 7 5 50 , 8 5 0 , 85 6 99 8 , 34 8 2, 8 5 4 , 9 6 3 78 , 1 3 8 , 3 4 2 - To t a l a s s e t s 39 , 3 1 3 , 4 4 7 60 , 5 7 3 , 8 1 4 5, 5 2 9 , 9 6 5 4, 7 3 4 , 9 3 4 11 0 , 1 5 2 , 1 6 0 829,644 De f e r r e d O u t f l o w s o f R e s o u r c e s : De f e r r e d c h a r g e o n r e f u n d i n g 19 2 , 0 6 0 35 4 , 7 2 7 - - 5 4 6 , 7 8 7 - To t a l d e f e r r e d o u t f l o w s o f r e s o u r c e s 19 2 , 0 6 0 35 4 , 7 2 7 - - 5 4 6 , 7 8 7 - CI T Y O F C L E R M O N T , F L O R I D A ST A T E M E N T O F N E T P O S I T I O N PR O P R I E T A R Y F U N D S Se p t e m b e r 3 0 , 2 0 1 4 Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h i s s t a t e m e n t 24 Li a b i l i t i e s : Cu r r e n t l i a b i l i t i e s : Ac c o u n t s p a y a b l e 17 5 , 7 9 6 15 4 , 4 6 9 11 2 , 2 7 4 12 , 9 2 2 45 5 , 4 6 1 286,698 Sa l a r i e s p a y a b l e 40 , 2 8 6 34 , 3 2 7 18 , 4 6 5 8, 8 4 7 10 1 , 9 2 5 - Ac c r u e d i n t e r e s t p a y a b l e 66 , 3 0 9 11 7 , 8 8 2 - - 1 8 4 , 1 9 1 - Co m p e n s a t e d a b s e n c e s 13 , 0 6 8 9, 2 6 0 4, 2 8 2 1, 1 8 8 27,798 - Cu s t o m e r d e p o s i t s p a y a b l e 43 6 , 5 9 5 - - - 4 3 6 , 5 9 5 - Re v e n u e b o n d s p a y a b l e - c u r r e n t 22 6 , 8 0 0 40 3 , 2 0 0 - - 6 3 0 , 0 0 0 - To t a l c u r r e n t l i a b i l i t i e s 95 8 , 8 5 4 71 9 , 1 3 8 13 5 , 0 2 1 22 , 9 5 7 1, 8 3 5 , 9 7 0 286,698 No n c u r r e n t l i a b i l i t i e s : Co m p e n s a t e d a b s e n c e s 11 7 , 6 0 9 83 , 3 4 0 38 , 5 4 0 10 , 6 9 2 25 0 , 1 8 1 - Ot h e r p o s t e m p l o y m e n t b e n e f i t s 41 6 , 9 4 2 31 3 , 7 6 3 24 0 , 4 7 5 82 , 1 1 3 1, 0 5 3 , 2 9 3 - Re v e n u e b o n d s p a y a b l e 4, 9 4 3 , 1 8 4 8, 7 8 7 , 8 8 5 - - 1 3 , 7 3 1 , 0 6 9 - To t a l n o n - c u r r e n t l i a b il i t i e s 5, 47 7 , 7 3 5 9, 1 8 4 , 9 8 8 27 9 , 0 1 5 92 , 8 0 5 15 , 0 3 4 , 5 4 3 - To t a l l i a b i l i t i e s 6, 43 6 , 5 8 9 9, 9 0 4 , 1 2 6 41 4 , 0 3 6 11 5 , 7 6 2 16 , 8 7 0 , 5 1 3 286,698 Ne t P o s i t i o n : Ne t i n v e s t m e n t i n c a p i t a l a s s e t s 18 , 2 5 5 , 7 3 0 34 , 5 7 1 , 0 2 3 99 8 , 3 4 9 2, 8 5 4 , 9 6 3 56 , 6 8 0 , 0 6 5 - Re s t r i c t e d f o r c a p i t a l i m p r o v e m e n t s 1, 5 0 0 , 3 6 8 8, 7 1 6 , 6 0 7 - - 1 0 , 21 6 , 975 - Un r e s t r i c t e d 13 , 3 1 2 , 8 2 0 7, 7 3 6 , 7 8 5 4, 1 1 7 , 5 8 0 1, 7 6 4 , 2 0 9 26 , 9 3 1 , 3 9 4 542,946 To t a l n e t p o s i t i o n 33 , 0 6 8 , 9 1 8 $ 51 , 0 2 4 , 4 1 5 $ 5, 1 1 5 , 9 2 9 $ 4, 6 1 9 , 1 7 2 $ 93 , 8 2 8 , 4 3 4 542,946$ 12 2 , 8 9 1 To t a l N e t P o s i t i o n p e r G o v e r n m e n t - W i d e F i n a n c i a l S t a t e m e n t s 93 , 9 5 1 , 3 2 5 $ Th e a s s e t s a n d l i a b il i t i e s o f c e r t a i n i n t e r n a l s e r v i c e f un d s a r e n o t i n c l u d e d i n t h e f u n d f i n a n c i a l st a t e m e n t , b u t a r e i n c l u d e d i n t h e B u s i n e s s A c t i v i t i e s o f t h e S t a t e m e n t o f N e t P o s i t i o n . Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h i s s t a t e m e n t 25 26 CI T Y O F C L E R M O N T , F L O R I D A ST A T E M E N T O F R E V E N U E S , E X P E N S E S A N D C H A N G E S I N F U N D N E T P O S I T I O N PR O P R I E T A R Y F U N D S Governmental Activities- Wa t e r Se w e r S a n i t a t i o n S t o r m w a t e r T o t a l Internal Service Fund Op e r a t i n g R e v e n u e s : Ch a r g e s f o r s e r v i c e s 5 , 1 4 4 , 9 8 0 $ 5 , 5 7 0 , 5 6 3 $ 2 , 8 5 7 , 0 3 2 $ 8 7 8 , 0 0 7 $ 1 4 , 4 5 0 , 5 8 2 $ 3 , 0 6 5 , 9 6 0 $ Mi s c e l l a n e o u s 2 1 6 , 9 8 2 14 , 2 7 1 12 , 3 4 0 3, 3 1 4 24 6 , 9 0 7 87,457 To t a l o p e r a t i n g r e v e n u e s 5, 3 6 1 , 9 6 2 5, 5 8 4 , 8 3 4 2, 8 6 9 , 3 7 2 88 1 , 3 2 1 14 , 6 9 7 , 4 8 9 3,153,417 Op e r a t i n g E x p e n s e s : Pe r s o n n e l s e r v i c e s 1, 6 9 4 , 1 4 5 1, 4 2 7 , 6 6 6 84 3 , 3 8 8 37 6 , 4 7 4 4, 3 4 1 , 6 7 3 - Ut i l i t i e s 40 3 , 0 7 1 72 5 , 4 9 2 1, 8 0 5 1, 4 2 3 1, 1 3 1 , 7 9 1 - Du m p f e e s - 1 4 2 , 5 0 0 48 9 , 7 0 5 18 , 1 2 8 65 0 , 3 3 3 - Ad m i n i s t r a t i v e s e r v i c e s 31 8 , 1 9 2 36 1 , 4 0 4 18 7 , 8 6 8 63 , 6 5 0 93 1 , 1 1 4 - Re p a i r s a n d m a i n t e n a n c e 22 4 , 4 5 9 21 2 , 2 2 4 12 1 , 3 4 6 43 , 7 5 6 60 1 , 7 8 5 - De p r e c i a t i o n a n d a m o r t i z a t i o n 98 7 , 9 6 4 2, 3 0 4 , 8 6 9 37 2 , 1 3 0 34 6 , 6 5 9 4, 0 1 1 , 6 2 2 - Pr o f e s s i o n a l s e r v i c e s 23 3 , 3 2 9 37 1 , 5 8 1 53 , 8 9 7 58 , 0 6 0 71 6 , 8 6 7 2,400 In s u r a n c e c l a i m s a n d e x p e n s e s 12 1 , 2 6 6 19 6 , 4 1 0 20 , 8 9 8 29 , 1 0 0 36 7 , 6 7 4 3,453,582 Ot h e r s u p p l i e s a n d e x p e n s e s 36 5 , 1 7 8 2 9 3 , 6 4 9 3 6 3 , 9 1 2 7 2 , 6 7 2 1 , 0 9 5 , 4 1 1 - To t a l o p e r a t i n g e x p e n s e s 4, 3 4 7 , 6 0 4 6, 0 3 5 , 7 9 5 2, 4 5 4 , 9 4 9 1, 0 0 9 , 9 2 2 13 , 8 4 8 , 2 7 0 3,455,982 Op e r a t i n g i n c o m e ( l o s s ) 1, 0 1 4 , 3 5 8 (4 5 0 , 9 6 1 ) 41 4 , 4 2 3 (1 2 8 , 6 0 1 ) 84 9 , 2 1 9 (302,565) No n o p e r a t i n g R e v e n u e s ( E x p e n s e s ) : In v e s t m e n t i n c o m e 67 , 6 4 2 94 , 3 0 6 25 , 5 1 2 10 , 7 6 4 19 8 , 2 2 4 4,962 In t e r e s t e x p e n s e (2 1 1 , 4 9 7 ) (3 7 6 , 8 1 2 ) - - ( 5 8 8 , 3 0 9 ) - Ga i n ( l o s s ) o n d i s p o s a l o f c a p i t a l a s s e t s - - 1, 7 6 5 - 1, 7 6 5 - To t a l n o n o p e r a t i n g r e v e n u e ( e x p e n s e s ) (1 4 3 , 8 5 5 ) (2 8 2 , 5 0 6 ) 27 , 2 7 7 10 , 7 6 4 (3 8 8 , 3 2 0 ) 4,962 In c o m e ( l o s s ) b e f o r e c o n t r i b u t i o n s a n d t r a n s f e r s 8 7 0 , 5 0 3 (7 3 3 , 4 6 7 ) 44 1 , 7 0 0 (1 1 7 , 8 3 7 ) 46 0 , 8 9 9 (297,603) Ca p i t a l c o n t r i b u t i o n s 83 9 , 8 3 6 1, 5 7 6 , 9 2 1 - - 2 , 4 1 6 , 7 5 7 - Tr a n s f e r s i n 14 , 9 9 0 12 , 9 6 9 8, 0 4 9 3, 5 3 9 39 , 5 4 7 - Tr a n s f e r s o u t (4 7 8 , 4 4 0 ) - - - ( 4 7 8 , 4 4 0 ) (110,000) Ch a n g e i n n e t p o s i t i o n 1, 2 4 6 , 8 8 9 85 6 , 4 2 3 44 9 , 7 4 9 (1 1 4 , 2 9 8 ) 2, 4 3 8 , 7 6 3 (407,603) To t a l N e t P o s i t i o n - B e g i n n i n g 31 , 8 2 2 , 0 2 9 50 , 1 6 7 , 9 9 2 4, 6 6 6 , 1 8 0 4, 7 3 3 , 4 7 0 950,549 To t a l N e t P o s i t i o n - E n d i n g 33 , 0 6 8 , 9 1 8 $ 51 , 0 2 4 , 4 1 5 $ 5, 1 1 5 , 9 2 9 $ 4, 6 1 9 , 1 7 2 $ 542,946$ Ch a n g e i n n e t p o s i t i o n , p e r a b o v e 2, 4 3 8 , 7 6 3 (7 7 , 2 0 8 ) Ch a n g e i n B u s i n e s s - T y p e A c t i v i t i e s i n N e t P o s i t i o n p e r G o v e r n m e n t - W i d e F i n a n c i a l S t a t e m e n t s 2, 3 6 1 , 5 5 5 $ In t e r n a l s e r v i c e f u n d s a r e u s e d b y m a n a g e m e n t t o c h a r g e t h e c o s t s o f c e r t a i n a c t i v i t i e s t o i n d i v i d u a l f u n d s . Th e n e t r e v e n u e ( e x p e n s e ) o f c e r t a i n i n t e r n a l s e r v i c e f u n d s i s r e p o r t e d w i t h B u s i n e s s A c t i v i t i e s . Bu s i n e s s - t y p e A c t i v i t i e s - E n t e r p r i s e F u n d s Ye a r E n d e d S e p t e m b e r 3 0 , 2 0 1 4 Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h i s s t a t e m e n t . 27 Governmental Activities-Internal Service Wa t e r S e w e r S a n i t a t i o n S t o r m w a t e r T o t a l F u n d Ca s h F l o w s f r o m O p e r a t i n g A c t i v i t i e s : R e c e i p t s f r o m c u s t o m e r s 5 , 2 7 7 , 4 2 0 $ 5 , 5 4 3 , 8 1 4 $ 2 , 8 6 0 , 4 2 2 $ 8 8 4 , 3 8 5 $ 1 4 , 5 6 6 , 0 4 1 $ - $ R e c e i p t s f r o m i n t e r n a l s e r v i c e s p r o v i d e d - - - - - 3,154,841 P a y m e n t s t o s u p p l i e r s (1 , 5 6 1 , 6 4 9 ) (2 , 9 0 2 , 1 7 7 ) (1 , 2 5 7 , 3 4 6 ) (2 7 4 , 3 5 5 ) (5 , 9 9 5 , 5 2 7 ) (3,231,935) P a y m e n t s t o e m p l o y e e s (1 , 5 8 3 , 9 6 9 ) (1 , 3 4 0 , 2 9 1 ) (7 8 3 , 8 9 4 ) (3 5 3 , 2 9 7 ) (4 , 0 6 1 , 4 5 1 ) - N e t c a s h p r o v i d e d ( u s e d ) b y o p e r a t i n g a c t i v i t i e s 2 , 1 3 1 , 8 0 2 1 , 3 0 1 , 3 4 6 8 1 9 , 1 8 2 2 5 6 , 7 3 3 4 , 5 0 9 , 0 6 3 ( 7 7 , 0 9 4 ) Ca s h F l o w s f r o m N o n - C a p i t a l F i n a n c i n g A c t i v i t i e s : T r a n s f e r s i n 1 4 , 9 9 0 1 2 , 9 6 9 8 , 0 4 9 3, 5 3 9 39 , 5 4 7 - T r a n s f e r s o u t (4 7 8 , 4 4 0 ) - - - ( 4 7 8 , 4 4 0 ) (110,000) N e t c a s h p r o v i d e d ( u s e d ) b y n o n - c a p i t a l f i n a n c i n g a c t i v i t i e s (4 6 3 , 4 5 0 ) 12 , 9 6 9 8, 0 4 9 3, 5 3 9 (4 3 8 , 8 9 3 ) (110,000) Ca s h F l o w s f r o m C a p i t a l a n d R e l a t e d F i n a n c i n g A c t i v i t i e s : A c q u i s i t i o n o f c a p i t a l a s s e t s (7 0 9 , 8 5 8 ) (1 , 1 4 7 , 5 8 8 ) (3 1 1 , 7 5 0 ) (4 2 , 1 8 2 ) (2 , 2 1 1 , 3 7 8 ) - S a l e o f c a p i t a l a s s e t s - - 1, 7 6 5 - 1,765 - I n t e r e s t p a i d o n l o n g - t e r m d e b t (2 0 2 , 9 1 3 ) (3 6 0 , 7 3 3 ) - - ( 5 6 3 , 6 4 6 ) - P r i n c i p a l p a i d o n d e b t (2 2 1 , 4 0 0 ) (3 9 3 , 6 0 0 ) (6 1 5 , 0 0 0 ) - F e e s a n d a s s e s s m e n t s r e c e i v e d 83 9 , 8 3 6 1, 5 7 6 , 9 2 1 - - 2 , 4 1 6 , 7 5 7 - N e t c a s h p r o v i d e d ( u s e d ) b y c a p i t a l a n d r e l a t e d f i n a n c i n g a c t i v i t i e s (2 9 4 , 3 3 5 ) (3 2 5 , 0 0 0 ) (3 0 9 , 9 8 5 ) (4 2 , 1 8 2 ) (9 7 1 , 5 0 2 ) - Bu s i n e s s - T y p e A c t i v i t i e s - E n t e r p r i s e F u n d s CI T Y O F C L E R M O N T , F L O R I D A ST A T E M E N T O F C A S H F L O W S PR O P R I E T A R Y F U N D S Ye a r E n d e d S e p t e m b e r 3 0 , 2 0 1 4 Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h e s e s t a t e m e n t s . 28 Ca s h F l o w s f r o m I n v e s t i n g A c t i v i t i e s : S a l e ( P u r c h a s e ) o f i n v e s t m e n t s 1 5 0 , 9 8 3 1 8 , 0 2 5 - - 1 6 9 , 0 0 8 - I n v e s t m e n t i n c o m e 1 1 9 , 2 5 8 1 1 0 , 6 4 7 2 5 , 5 1 2 1 0 , 7 6 4 2 6 6 , 1 8 1 4 , 9 6 2 N e t c a s h p r o v i d e d b y i n v e s t i n g a c t i v i t i e s 2 7 0 , 2 4 1 1 2 8 , 6 7 2 2 5 , 5 1 2 1 0 , 7 6 4 4 3 5 , 1 8 9 4 , 9 6 2 Ne t I n c r e a s e ( D e c r e a s e ) i n C a s h a n d C a s h E q u i v a l e n t s 1, 6 4 4 , 2 5 8 1 , 1 1 7 , 9 8 7 5 4 2 , 7 5 8 2 2 8 , 8 5 4 3 , 5 3 3 , 8 5 7 ( 1 8 2 , 1 3 2 ) Ca s h a n d C a s h E q u i v a l e n t s - b e g i n n i n g 6, 2 4 6 , 1 6 1 8 , 0 3 1 , 9 3 6 3 , 7 2 7 , 4 5 6 1 , 5 7 3 , 2 1 6 1 9 , 5 7 8 , 7 6 9 1 , 0 1 1 , 1 7 6 Ca s h a n d C a s h E q u i v a l e n t s - e n d 7, 8 9 0 , 4 1 9 $ 9 , 1 4 9 , 9 2 3 $ 4 , 2 7 0 , 2 1 4 $ 1 , 8 0 2 , 0 7 0 $ 2 3 , 1 1 2 , 6 2 6 $ 8 2 9 , 0 4 4 $ Cl a s s i f i e d A s : C a s h a n d c a s h e q u i v a l e n t s 7 , 0 5 9 , 9 1 8 $ 8 , 4 4 9 , 6 4 5 $ 4 , 2 7 0 , 2 1 4 $ 1 , 8 0 2 , 0 7 0 $ 2 1 , 5 8 1 , 8 4 7 $ 8 2 9 , 0 4 4 $ R e s t r i c t e d c a s h a n d c a s h e q u i v a l e n t s 8 3 0 , 5 0 1 7 0 0 , 2 7 8 - - 1 , 5 3 0 , 7 7 9 - T o t a l 7 , 8 9 0 , 4 1 9 $ 9 , 1 4 9 , 9 2 3 $ 4 , 2 7 0 , 2 1 4 $ 1 , 8 0 2 , 0 7 0 $ 2 3 , 1 1 2 , 6 2 6 $ 8 2 9 , 0 4 4 $ Re c o n c i l i a t i o n o f O p e r a t i n g I n c o m e ( L o s s ) t o N e t C a s h P r o v i d e d B y O p e r a t i n g A c t i v i t i e s O p e r a t i n g i n c o m e ( l o s s ) 1 , 0 1 4 , 3 5 8 $ ( 4 5 0 , 9 6 1 ) $ 4 1 4 , 4 2 3 $ ( 1 2 8 , 6 0 1 ) $ 8 4 9 , 2 1 9 $ ( 3 0 2 , 5 6 5 ) $ Ad j u s t m e n t s N o t A f f e c t i n g C a s h : D e p r e c i a t i o n a n d a m o r t i z a t i o n 9 8 7 , 9 6 4 2 , 3 0 4 , 8 6 9 3 7 2 , 1 3 0 3 4 6 , 6 5 9 4 , 0 1 1 , 6 2 2 - Ch a n g e i n A s s e t s a n d L i a b i l i t i e s : D e c r e a s e ( I n c r e a s e ) i n a c c t s r e c e i v a b l e ( 1 3 2 , 7 8 2 ) ( 4 1 , 0 2 0 ) ( 8 , 9 5 0 ) 3 , 0 6 4 ( 1 7 9 , 6 8 8 ) 1 , 4 2 4 I n c r e a s e i n c u s t o m e r d e p o s i t s 4 8 , 2 4 0 - - - 4 8 , 2 4 0 - D e c r e a s e i n p r e p a i d c o s t s 2 3 , 5 5 5 4 4 , 9 8 0 1 2 , 5 1 0 9 , 6 9 7 9 0 , 7 4 2 ( 6 0 0 ) D e c r e a s e ( I n c r e a s e ) i n i n v e n t o r y 9 7 , 0 1 6 (1 , 6 4 1 ) - (5 6 3 ) 94 , 8 1 2 - I n c r e a s e ( D e c r e a s e ) i n a c c o u n t s p a y a b l e (1 6 , 7 2 5 ) (6 4 2 , 2 5 6 ) (3 0 , 4 2 5 ) 3, 3 0 0 (6 8 6 , 1 0 6 ) 224,647 I n c r e a s e i n a c c r u e d l i a b i l i t i e s 11 0 , 1 7 6 87 , 3 7 5 59 , 4 9 4 23 , 1 7 7 28 0 , 2 2 2 - T o t a l a d j u s t m e n t s 1, 1 1 7 , 4 4 4 1, 7 5 2 , 3 0 7 40 4 , 7 5 9 38 5 , 3 3 4 3, 6 5 9 , 8 4 4 225,471 Ne t C a s h P r o v i d e d ( U s e d ) b y O p e r a t i n g A c t i v i t i e s 2, 1 3 1 , 8 0 2 $ 1, 3 0 1 , 3 4 6 $ 81 9 , 1 8 2 $ 25 6 , 7 3 3 $ 4, 5 0 9 , 0 6 3 $ (77,094)$ No n c a s h I n v e s t i n g , C a p i t a l , a n d F i n a n c i n g A c t i v i t i e s : In c r e a s e ( D e c r e a s e ) i n F a i r V a l u e o f I n v e s t m e n t s (4 7 , 4 3 6 ) $ (9 , 1 9 3 ) $ - $ - $ ( 5 6 , 6 2 9 ) $ -$ Th e a c c o m p a n y i n g N o t e s t o F i n a n c i a l S t a t e m e n t s a r e a n i n t e g r a l p a r t o f t h e s e s t a t e m e n t s . 29 CITY OF CLERMONT, FLORIDA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30, 2014 Total Employee Pension Funds Assets: Cash and cash equivalents $ 139,054 Receivables: Due from state 393,584 Total receivables 393,584 Investments: U.S. Government & other debt securities 3,708,081 Equities 25,593,243 Total investments 29,301,324 Total assets 29,833,962 Liabilities: Refunds payable and other 199,235 Total liabilities 199,235 Net Position Held in Trust for Pension Benefits 29,634,727$ The accompanying Notes to Financial Statements are an integral part of this statement. 30 CITY OF CLERMONT, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2014 Total Employee Pension Funds Additions: Contributions: Employer1,498,041$ Plan members182,253 State 393,584 Total contributions2,073,878 Investment earnings: Net increase in fair value of investments2,404,423 Total net investment earnings2,404,423 Total additions4,478,301 Deductions: Benefits/distributions570,619 Administrative85,707 Total deductions656,326 Change in Net Position 3,821,975 Net Position - beginning 25,812,752 Net Position - ending 29,634,727$ The accompanying Notes to Financial Statements are an integral part of this statement 31 32 NOTES TO FINANCIAL STATEMENTS CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies: A. Reporting Entity The City of Clermont, Florida (the City) is a political subdivision of the State of Florida located in Lake County. The City of Clermont was incorporated under State law in December 1916 and operates under the council-manager form of government under its charter adopted pursuant to H.B. 2223, Ch.67-1217 Special Acts, of the State of Florida. The legislative branch of the City is composed of a Mayor and four (4) members elected Council. The City Council is responsible for the establishment and adoption of policy. The execution of such policy is the responsibility of the Council appointed City Manager. In evaluating how to define the government, for financial reporting purposes, the City has considered all potential component units. The definition of the reporting entity is based primarily on the notion of financial accountability. A primary government is financially accountable for the organizations that make up its legal entity. It is also financially accountable for legally separate organizations if its officials appoint a voting majority of an organization’s governing body, and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the primary government. A primary government may also be financially accountable for governmental organizations that are fiscally dependent on it. A primary government has the ability to impose its will on an organization if it can significantly influence the programs, projects or activities of, or the level of services performed or provided by, the organization. A financial benefit or burden relationship exists if the primary government (a) is entitled to the organizations’ resources; (b) is legally obligated or has otherwise assumed the obligation to finance the deficits of, or provide financial support to, the organization; or (c) is obligated in some manner for the debt of the organization. In applying the above criteria, the City has one blended component unit as follows: The City of Clermont Community Redevelopment Fund The City of Clermont created the Downtown Redevelopment Agency in May of 1997. This is a dependent taxing district established in accordance with Chapter 163, Part III, Florida Statutes. Notification to affected taxing agency was done in compliance with Chapter 163.346, Part III, Florida Statutes. The incremental annual increase in tax over the base years will be used to fund projects designed to enhance and improve the described area. The City Council, being the duly elected governmental body for the designated area, passed Resolution 97-950, which established the City of Clermont as the Redevelopment Agency for the purpose of carrying out the community redevelopment programs and plans within the area. Through Ordinance 359-M the City established the Community Redevelopment Trust Fund to account for all transactions generated by this special revenue fund. The City of Clermont Community Redevelopment Fund is presented as a blended component unit, since the City Council provides all governing board activities related to the Redevelopment Fund. 33 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 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 changes in net position) 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. 34 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The government reports the following funds: Major Governmental Funds The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Capital Projects Fund accounts for financial resources segregated for the acquisition or construction of major capital facilities. Infrastructure Special Revenue Fund accounts for the proceeds of the Local Government Infrastructure Surtax. The proceeds and interest accrued thereto, by law are only to be used to finance, plan and construct infrastructure. The Community Redevelopment Fund was established as a dependent taxing district. The incremental annual increase in tax over the base years will be used to fund projects designed to enhance and improve the described area. Nonmajor Governmental Fund Types Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted or committed to expenditures for specified purposes other than debt service or capital projects. Debt Service Fund is used to account for the accumulation of resources for the payment of principal and interest on certain long-term debt. Cemetery Perpetual Care accounts for activities of the City relative to cemetery maintenance at specified locations. Fund resources are restricted. Only earnings on invested resources may be used to support these activities. 35 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Major Proprietary Funds Water Fund is used to account for the operations of the City’s water system, which is financed in a manner similar to private business enterprises, where the costs, including depreciation, of providing services to the general public on an ongoing basis are financed primarily through user charges. Sewer Fund is used to account for the operations of the City’s sewer system, which is financed in a manner similar to private business enterprises, where the costs, including depreciation, of providing services to the general public on an ongoing basis are financed primarily through user charges. Sanitation Fund is used to account for the fiscal activities of the City’s refuse collection and disposal operation. Nonmajor Proprietary Funds Stormwater Fund (Enterprise Fund) is used to account for the fiscal activities of the City’s stormwater drainage operation, as well as the funding and payment of related debt. Internal Service Fund is used to account for the costs of group insurance which are charged to other departments on a cost reimbursement basis. Fiduciary Funds Pension Trust Funds account for activities of police officers, firefighters and general employees retirement plans which accumulate resources for pension benefit payments to qualified employees. As a general rule the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are other charges between the City’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 36 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued): Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s water, sewer, sanitation and stormwater utility funds are charges to customers for sales and services. The City also recognizes as operating revenue the meter fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance: 1. Deposits and Investments The government’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments of the City are reported at fair value. The City’s investments consist of investments authorized per their investment policy adopted in accordance with Section 218.415, Florida Statutes. The City has implemented Government Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosures. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” 37 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 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. 38 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (Continued): 5. Capital Assets Capital assets, which include property, plant, equipment, intangible and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Capital assets of the City are depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings 10-50 Improvements 15-50 Infrastructure 30-50 Equipment & Machinery 3-15 Intangible Assets 3-15 6. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. A portion of sick pay is accrued for employees with at least ten (10) years of service. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. For governmental activities, compensated absences, net pension obligations, and net other postemployment benefit obligations are generally liquidated by the general fund. 39 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 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 only has one item that qualifies for reporting in this category. It is the deferred charge on refunding 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. 40 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (Continued): 9. Net Position Flow Assumptions Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted - net position and unrestricted - net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted - net position to have been depleted before unrestricted - net position is applied. 10. Fund Balance Flow Assumptions Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. 11. Fund Balance Policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The City itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the City’s highest level of decision-making authority. The Council is the highest level of decision- making authority for the City that can, by adoption of a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet criteria to be classified as committed. The council has maintained authority to assign fund balance. 41 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 1 - Summary of Significant Accounting Policies (Continued): D. Assets, Liabilities, Deferred Outflows/Inflows and Net Position/Fund Balance (Continued): 11. Fund Balance Policies - (Continued) The council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. E. New GASB Statement Implemented: GASB Statement No. 67, Financial Reporting for Pension Plans. This statement replaces the requirements of GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Pension Plans, and Statement No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements that meet certain criteria. This City has implemented the disclosure requirements in Note 9, and the Required Supplementary Information for the City’s Defined Benefit and Defied Contribution Retirement Plans. Note 2 - Reconciliation of Government-Wide and Fund Financial Statements: A. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $9,594,746 difference are as follows: Capital Outlay 11,484,057$ Depreciation Expense(1,889,311) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities 9,594,746$ 42 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 2 - Reconciliation of Government-Wide and Fund Financial Statements (Continued): A. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities (Continued) Another element of that reconciliation states that “The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position.” The details of this $(5,429,401) difference are as follows: Debt Issued or Incurred (6,000,000)$ Principal Repayment 570,599 Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities (5,429,401)$ Another element of that reconciliation states that “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this difference are as follows: Compensated Absences (138,067)$ Other Post Employment Benefits (666,672) Accrued Interest Payable (58,927) Net Adjustment to Decrease N et Changes in Fund Balances - total governmental funds to arrive at changes in net position of governmental activities (863,666)$ 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. 43 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 3 - Stewardship, Compliance, and Accountability (Continued): A. Budgetary Information (Continued) - (4) Public hearings are conducted to obtain taxpayer comments. (5) Prior to October 1, the budgets are legally enacted through passage of a resolution. (6) The City Manager is authorized to transfer budgeted amounts within departments; however, any revisions that alter the total appropriations of any department must be approved by the City Council. (7) The level of classification detail at which expenditures may not legally exceed appropriations is the department level. (8) Appropriations lapse at the close of the fiscal year to the extent they have not been expended. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders and contracts) outstanding at year end are reported as assigned fund balances and do not constitute expenditures or liabilities because the commitments will be re-appropriated and honored during the subsequent year. (9) Budgets are adopted for the general fund, special revenue funds, debt service funds and the capital projects fund on a basis consistent with generally accepted accounting principles, except as described below under Budget Basis of Accounting. Budgets are also adopted for the enterprise funds: however, these data are not presented under generally accepted accounting principles. (10) The City Council, by Ordinance or Resolution, may make supplemental appropriations in excess of those originally estimated for the year up to the amount of available revenues. Budgeted amounts presented in the accompanying financial statements have been adjusted for legally authorized revisions. 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. 44 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 3 - Stewardship, Compliance, and Accountability (Continued): C. Expenditures in Excess of Appropriations - Expenditures exceeded appropriations in various departments of the General Fund, Infrastructure Special Revenue Fund, Capital Projects Fund, and Fire Impact Fee Fund. Theses excess expenditures were funded by greater than anticipated revenues and available fund balance. Note 4 - Cash and Investments: Deposits At year-end, the carrying amount of the City's deposits was $39,304,164 and the bank balance was $40,275,664. Fiduciary fund cash held by the pension fund is not in the City’s bank. All bank deposits were fully covered by federal depository insurance or by collateral held in banks that are members of the State of Florida's Collateral Pool as specified under Florida law. Florida Statutes provide for collateral pooling by banks and savings and loans. This limits local government deposits to "authorized depositories". Investments Investments in all fund types are stated at fair value, which is the amount for which an investment could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Fair value is based on quoted market prices. Changes in the fair value of investments are recognized as revenue and included in investment income. The City’s investment policies are governed by state statute and city ordinance. Authorized investments are: (a) The Local Government Surplus Funds Trust (SBA). (b) SEC registered money market funds. (c) Interest-bearing time deposits or savings accounts in qualified public depositories. (d) Direct obligations of the U.S. Treasury. (e) Federal agencies and instrumentalities. (f) Securities of, or other interests in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940. (g) Repurchase Agreements. (h) Other investments authorized by ordinance. 45 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 4 - Cash and Investments (Continued): Investments (Continued) The assets of the City’s police and firefighters pension funds, as well as the general employees defined benefit pension fund, are invested in the pooled investment fund for the Florida Municipal Pension Trust Fund (FMPTF). Investments held in this fund consist of corporate bonds and stocks and cash equivalents. The fund is stated at fair value, and investment earnings are allocated to participants in the fund based on their equity in this pooled investment account as provided by the Florida Municipal Pension Fund. Investments made by the City of Clermont at September 30, 2014 are summarized below. Defined benefit pension plan investments, other than $25,593,243 in mutual funds, investing in equity securities, are included below. In accordance with GASB 31, investments are reported at fair value. Investment Type Fair ValueCredit Rating Weighted Average Maturity Federal Agency Bond 2,847,646$ AA+1.98 years US Treasury Notes 12,285,962 TSY 1.89 years Corporate Note 1,504,925 AAA/AA 1.8 years Commercial Paper 1,149,652 A-1 66 days Municipal Bond 473,656 AA+/AA 1.6 years Pension Fixed Income Securities 3,708,081 AA/V4 4.77 years 21,969,922$ Credit Risk: The City’s investment policy limits credit risk by restricting authorized investments to those described above. Custodial Credit Risk: In the case of deposits, this is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City’s investment policy requires that bank deposits be secured as provided by Chapter 280, Florida Statutes. This law requires local governments to deposit funds only in financial institutions designated as qualified public depositories by the Chief Financial Officer of the State of Florida, and creates the Public Deposits Trust Fund, a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a default or insolvency has occurred. At September 30, 2014, all of the city’s bank deposits were in qualified public depositories. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At September 30, 2014, none of the investments listed are exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form. 46 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 4 - Cash and Investments (Continued): Investments (Continued) Concentration of Credit Risk: The City’s investment policy requires diversification, but does not specify limits on types of investments. Interest Rate Risk: The City’s investment policy does not specifically address interest rate risk, however the general investment policy is to apply the prudent-person rule: Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and in general, avoid speculative investments. The City manages its exposure to declines in fair values by investing primarily in pooled investments that have a weighted average maturity of less than three months. 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: InternalNonmajor Nonmajor General Water Sewer Sanitation ServiceEnterpriseGovernmental FundFundFundFundFundFundFundsTotal Receivables: Accounts2,146,740$ 581,718$ 655,857$ 308,674$ -$ 92,696$ -$ 3,785,685$ Taxes106,200 - - - - - - 106,200 Other 226,117 41,591 - 1,804 1,499 - 65 271,076 Less Allowance for Uncollectible Accounts (2,094,894) (57,679) (120,122) (49,075) (1,499) (16,116) - (2,339,385) 384,163$ 565,630$ 535,735$ 261,403$ -$ 76,580$ 65$ 1,823,576$ 47 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 6 - Capital Assets: Capital asset activity for the year ended September 30, 2014 was as follows: Beginning BalanceIncreasesDecreases Ending Balance Governmental Activities: Capital Assets, not being depreciated: Land23,502,470$ 2,225,078$ -$ 25,727,548$ Construction in progress854,927 3,862,251 (749,769) 3,967,409 Total capital assets, not being depreciated 24,357,397 6,087,329 (749,769) 29,694,957 Capital Assets, being depreciated: Buildings 17,607,371 4,132,288 - 21,739,659 Improvements/infrastructure 14,436,811 828,204 - 15,265,015 Machinery and equipment 7,951,423 1,176,645 (317,895) 8,810,173 Intangibles 674,708 9,360 - 684,068 Total capital assets being depreciated 40,670,313 6,146,497 (317,895) 46,498,915 Less Accumulated Depreciation for: Buildings (6,301,700) (784,317) - (7,086,017) Improvements/infrastructure (9,085,082) (589,156) - (9,674,238) Machinery and equipment (6,428,777) (507,932) 317,895 (6,618,814) Intangibles (649,706) (7,906) - (657,612) Total accumulated depreciation (22,465,265) (1,889,311) 317,895 (24,036,681) Total capital assets being depreciated, net 18,205,048 4,257,186 - 22,462,234 Governmental activities capital assets, net 42,562,445$ 10,344,515$ (749,769)$ 52,157,191$ 48 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 6 - Capital Assets (Continued): Beginning BalanceIncreasesDecreases Ending Balance Business-type activities: Capital Assets, not being depreciated: Land1,861,820$ -$ -$ 1,861,820$ Construction in progress3,902,977 1,390,601 (1,144,923) 4,148,655 Total capital assets, not being depreciated 5,764,797 1,390,601 (1,144,923) 6,010,475 Capital Assets, being depreciated: Buildings37,178 - - 37,178 Improvements/infrastructure91,247,735 396,387 - 91,644,122 Machinery and equipment5,046,911 1,459,234 (1,795) 6,504,350 Intangibles105,932 110,079 - 216,011 Total capital assets being depreciated 96,437,756 1,965,700 (1,795) 98,401,661 Less Accumulated Depreciation for: Buildings(37,178) - - (37,178) Improvements/infrastructure(25,673,566) (3,493,785) - (29,167,351) Machinery and equipment(3,544,500) (517,378) 1,795 (4,060,083) Intangibles(105,932) (459) - (106,391) Total accumulated depreciation (29,361,176) (4,011,622) 1,795 (33,371,003) Total capital assets being depreciated, net 67,076,580 (2,045,922) - 65,030,658 Business-type activities capital assets, net72,841,377$ (655,321)$ (1,144,923)$ 71,041,133$ Depreciation expense was charged to functions/programs as follows: General government 352,110$ Public safety 695,317 Physical environment/transportation479,493 Culture and recreation 362,391 Total Depreciation Expense - governmental activities1,889,311$ Water 987,964$ Sewer 2,304,869 Sanitation 372,130 Stormwater 346,659 Total Depreciation Expense - business-type activities4,011,622$ Governmental Activities: Business-type Activities 49 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 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 $19,861,121. For the fiscal year, principal and interest paid on this series was $1,201,460 and total pledged revenue was $4,018,178. The original amount of revenue bonds issued in prior years is described below. Revenue bonds outstanding at year end are as follows: Business-Type Activities Interest Rates and Dates Maturity Original Amount Balance September 30, 2014 Water and Sewer Revenue3.0 - 4.6%12/1/2010 Refunding Bonds,to Series 2009 (6/1 & 12/1)12/1/203016,640,000$ 14,315,000$ Annual debt service requirements to maturity for revenue bonds are as follows: Year Ending September 30,PrincipalInterest 2015630,000$ 543,123$ 2016 650,000 523,922 2017 670,000 504,123 2018 690,000 483,723 2019 710,000 460,948 2020-2024 3,955,000 1,896,563 2025-2029 4,795,000 1,031,336 2030-2031 2,215,000 102,383 Total14,315,000$5,546,121$ Business - Type Activities Notes Payable The Public Improvement Refunding Revenue Note, Series 2012, are secured by public services taxes, communications service tax and half cent sales tax revenue. Total principal and interest remaining to be paid on this series is $2,081,165. For the fiscal year, principal and interest paid on this series was $595,960 and total pledged revenue was $5,670,486. 50 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 7 - Long-Term Debt (Continued): Notes Payable (Continued) The City issued Public Improvement Revenue Note, Series 2013 in the amount of $6,000,000 with interest of 3.05% to finance the purchase of the Arts and Recreation Center. This note is secured by public services taxes and communications service tax. Total principal and interest remaining to be paid on this series is $7,478,596. For the fiscal year, interest paid on this series was $82,350 and total pledged revenue was $4,103,237. Public improvement revenue notes outstanding at year end are as follows: Governmental Activities Interest Rates and Dates Maturity Original Amount Balance September 30, 2014 Public Improvement Refunding1.09%12/1/2013 Revenue Note,to Series 2012 (6/1 & 12/1)12/1/20172,612,000$ 2,041,401$ Public Improvement Revenue3.05%12/1/2014 Note, Series 2013 (6/1 & 12/1)to 12/1/20286,000,000$ 6,000,000 8,041,401$ Annual debt service requirements to maturity for revenue bonds are as follows Year Ending September 30,PrincipalInterest 2015 883,731$ 197,438$ 2016 917,744 181,369 2017 933,957 164,668 2018 638,845 149,285 2019 363,461 136,805 2020-2024 1,990,510 508,179 2025-2029 2,313,153 180,616 Total8,041,401$1,518,360$ Governmental Activities 51 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 7 - Long-Term Debt (Continued): Changes in Long-Term Liabilities Long-term liability activity for the year ended September 30, 2014 was as follows: Beginning BalanceAdditionsDeductions Ending Balance Due Within One Year Governmental Activities Public improvement revenue notes2,612,000$ 6,000,000$ (570,599)$ 8,041,401$ 883,731$ Other post employment benefits2,295,193 666,672 - 2,961,865 - Compensated absences 620,064 200,073 (62,006) 758,131 75,813 Governmental activity long-term liabilities 5,527,257$ 6,866,745$ (632,605)$ 11,761,397$ 959,544$ Business-type Activities Bonds payable- Revenue bonds 14,930,000$ -$ (615,000)$ 14,315,000$ 630,000$ Premium 48,906 - (2,837) 46,069 - Total bonds payable 14,978,906 - (617,837) 14,361,069 630,000 Other post employment benefits824,862 228,431 - 1,053,293 - Compensated absences 241,470 60,656 (24,147) 277,979 27,798 Business-type activity long-term liabilities 16,045,238$ 289,087$ (641,984)$ 15,692,341$ 657,798$ Note 8 - Interfund Receivables, Payables and Transfers: Interfund transfers for the year ended September 30, 2014 consisted of the following: GeneralInfrastructureWaterInternalNonmajor Transfers In:FundFundFundService FundGovtTotal General Fund -$ -$ 478,440$ 70,025$ 6,066$ $ 554,531 Community Redevelopment - - - 132 - 132 Capital Projects Fund 192,826 - - - 7,480,735 7,673,561 Water Fund - - - 14,990 - 14,990 Sewer Fund - - - 12,969 - 12,969 Sanitation Fund - - - 8,049 - 8,049 Stormwater Fund - - - 3,539 - 3,539 Nonmajor Governmental296,383 429,459 - 296 382,484 1,108,622 489,209$ 429,459$ 478,440$ 110,000$ 7,869,285$ 9,376,393$ Transfers Out The majority of the transfers above were to cover various capital projects and debt service payments. The transfer from the Internal Service Fund is to refund a proportionate share to each contributing fund due to a higher than required reserve balance. The transfer out of the Water Fund is to cover their share of general fund expenses. 52 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans: The City maintains three separate single-employer, defined benefit plans for general employees, sworn police officers and firefighters, as well as a defined contribution plan for general employees. The investment and administrative agent for the defined benefit plans is the Florida Municipal Pension Trust Fund, an agent of the multiple-employer Public Employee Retirement System. The assets and benefits of the defined contribution plan are administered by the Florida League of Cities. Defined Benefit Pension Plans - Each plan is independently governed by separate boards of trustees. Assets may not be transferred between plans, or used for any purpose other than to benefit each plan’s participants as defined in their authorizing ordinances. Each board contracts with the Florida Municipal Pension Trust Fund (FMPTF), a private, not-for-profit corporation established by the Florida League of Cities (FLC) for FLC members who wish to use its services. The FMPTF acts as a common investment and administrative agent for its members, contracting with a bank custodian, investment manager and actuary to provide a commingled investment fund and plan valuation services. These plans are included as part of the City’s reporting entity in Pension Trust Funds. The Clermont City Council adopted and may amend plan provisions by resolution. Stand-alone audited financial statements of the FMPTF are maintained on file at the FLC offices in Tallahassee, Florida, and are available upon request to the Pension Services Division. Summary of Significant Accounting Policies Basis of Accounting - The Plans’ financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each Plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Method Used to Value Investments - Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments that do not have an established market are reported at estimated fair value. There are no investments that exceed 5% of the plan net position. Publicly available financial reports for each plan, that include detailed actuarial data, can be obtained from the City’s Finance Department. 53 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): Plan Descriptions and Contribution Information - Membership of each of the defined benefit pension plans consisted of the following at October 1, 2014, the date of the latest actuarial valuations: General EmployeesPolice OfficersFirefighters Retirees and Beneficiaries Currently Receiving Benefits8 15 1 Terminated Plan Members Entitled to, but not yet receiving, benefits- 14 62 Active Plan Members- 60 58 Total8 89 121 Plan Descriptions- The general employees defined benefit pension plan is for general employees hired prior to September 30, 1985. The police officers’ and firefighters’ defined benefit pension plans are both local law, single employer, defined benefit pension plans as defined under Florida Statutes, Chapters 175 and 185, which covers all sworn police officers and firefighters. Employees are eligible to participate in the plan immediately upon employment with the City, and they are vested in the plan after ten years of service. The normal retirement date for firefighters for retirements after February 10, 2014 is the earlier of age 55 with at least 10 years of service, or any age with at least 20 years of service. For retirements prior to February 10, 2014 the normal retirement age was the attainment of age 55 and 10 years of service, or earlier attainment of age 52 and 25 years of service. The normal retirement date for police officers is the attainment of age 55 and 10 years of service, or 20 years of service, regardless of age. The normal retirement benefit is the number of years of credited service prior to October 1, 2002 multiplied by 2.25%, and the number of years of credited service after October 1, 2002 multiplied by 3%, and multiplied by the average final monthly compensation. Early retirement is available after age 50 and 10 years of service; however, the early retirement benefit is reduced by 3% for each year before the normal retirement date. Contributions - The City’s actuarially determined contribution rate per the October 1, 2014 actuarial valuations is $0 for general employees, 17.65% for police officers and 17.03% for firefighters. The City is no longer obligated to make contributions for general employees. Police officers make a minimum mandatory contribution of 3% and firefighters make a minimum mandatory contribution of 4%, in order to take advantage of the insurance premium tax rebate provided for in the statutes. Administrative costs are deducted from the net position of the plan. 54 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): Annual Pension Cost and Net Pension Obligation - The City’s annual pension cost and net pension obligation for the current year were as follows: General EmployeesPolice Officers Firefighters Annual Required Contribution (ARC)-$ 504,727$ 594,272$ Interest on the Net Pension Obligation (Asset)- - - Adjustment to ARC - 1,602 625 Annual Pension Cost -$ 506,329$ 594,897$ The City has always contributed the ARC and thus has never been required to report a net pension obligation. Below is the required three-year trend information on annual pension cost. Three-Year Trend Information Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed 9/30/2014-$ N/A 9/30/2013- N/A 9/30/2012- N/A 9/30/2014506,329$ 100% 9/30/2013468,959 100% 9/30/2012661,002 100% 9/30/2014594,897$ 100% 9/30/2013559,178 100% 9/30/2012650,379 100% General Employees Police Officers Firefighters 55 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): Funded Status and Funding Progress - Pension Plans The funded status of each plan as of October 1, 2014, the most recent actuarial valuation date, is as follows: Actuarial Value of Assets Actuarial Accrued Liability (AAL) - Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll (a)(b)(b - a)(a / b)(c)((b - a) / c) General Employees458,926$ 413,199$ -$ 111.1%-$ N/A Police Officers12,281,709 10,893,088 - 112.8%3,108,552 0.0% Firefighters 8,319,434 6,999,221 - 118.9%2,798,049 0.0% The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. The City uses the aggregate actuarial cost method to value its pension plans, which does not identify or separately amortize unfunded actuarial liabilities. Information about the plan’s funded status and funding progress has been prepared using the entry age actuarial cost method for that purpose, and the information presented is intended to serve as a surrogate for the funded status and funding progress of the plan. Additional information as of the latest actuarial valuation follows: General EmployeesPolice Officers Firefighters Valuation date 10/1/2014 10/1/2014 10/1/2014 Actuarial Cost Method Aggregate CostAggregate CostAggregate Cost Amortization Method Level Percentage, openLevel Percentage, openLevel Percentage, open Remaining Amortization Period30 years 30 years 30 years Asset Valuation Method Market Value Market Value Market Value Actuarial Assumptions: Investment rate of return 7.0%7.5%7.5% Projected salary increases (including inflation of 3.5%)0.0%5.5%5.5% Cost of living adjustment 0.0%0.0%0.0% Mortality table RP-2000 Mortality TableRP-2000 Mortality TableRP-2000 Mortality Table 56 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): The City implemented GASB Statement 67, Financial Reporting for Pension Plans for the year ended September 30, 2014. The required disclosures under GASB Statement 67 are as follows. Summary of Significant Accounting Policies Method used to value investments - Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Plan Description Plan Administration - The General Employees’ Pension, Police Pension and Fire Pension are administered by a Board of Trustees. Plan Membership - At September 30, 2014 plan membership consisted of the following: General Employees Police Officers' Retirement Trust Firefighters' Pension Trust Inactive Plan Members or Beneficiaries Currently Receiving Benefits 8 15 1 Inactive Plan Members Entitled to but Not Yet Receiving Benefits - 14 62 Active Plan Members - 60 58 8 89 121 Benefits Provided - Both plans provide retirement, disability and death benefits. Normal Retirement - General Employees General Employees’ Plan is for employees hired prior to September 30, 1985, and does not include any active employees. Normal Retirement - Police and Fire Date: Earlier of age 55 and 10 years of credited service, or 20 years of credited service, regardless of age. Benefit: 2.25% of average earnings times service earned prior to October 1, 2002, plus 3% of average earnings time service earned after September 30, 2002. Early Retirement - Police and Fire Eligibility: Age 50 and 10 years of credited service. Basic pension formula reduced by 3% for each year by which the early retirement date precedes the normal retirement date. 57 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): Vesting - Police and Fire 50% vesting after five years of service, 60% vesting after six years of service, 70% vesting after seven years of service, 80% vesting after eight years of service, 90% vesting after nine years of service, and 100% vesting after 10 years of service. Disability - Police and Fire Greater of (i) basic pension formula, or (ii) 42% of average earnings (service-connected disabilities) or 25% of average earnings (non-service-connected disabilities); disability pension is offset by other City-provided disability benefits to the extent necessary to keep the total benefit from exceeding average earnings; non-service-connected disability pension requires at least 10 years of service. Pre-Retirement Death Benefits - Police and Fire Basic pension formula (payable to the beneficiary of a vested participant for 10 years certain beginning at the participant’s early or normal retirement age or payable immediately with an actuarial adjustment). Contributions - Employer contributions are actuarially determined. Fire employees must contribute 1% of pensionable earnings prior to February 10, 2014 and 4% of pensionable earnings thereafter; Police employees must contribute 3% of pensionable earnings; employee contribution requirement may be amended by City ordinance, but employer contribution requirement is subject to State minimums. Investments Investment policy - The following was the board’s adopted asset allocation policy as of September 30, 2014: Asset Class General Employees Police Officers' Retirement Trust Firefighters' Pension Trust Core bonds16%16%16% Multi-sector 24%24%24% U.S. large cap equity 39%39%39% U.S. small cap equity 11%11%11% Non-U.S. equity 10%10%10% Total 100%100%100% Target Allocation Concentrations - The Plan did not hold investments in any one organization that represents 5 percent or more of the Pension Plan’s fiduciary net position. 58 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): Rate of return - For the year ended September 30, 2014 the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 8.55 percent for all pension plans. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Deferred Retirement Option Program (DROP) Police and Fire - 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, 2014 is $144,781, and the Fire balance is $0. Net Pension Liability of the City The components of the net pension liability of the sponsor on September 30, 2014 were as follows: General Employees Police Officers' Retirement Trust Firefighters' Pension Trust Total Pension Liability349,279$ 9,416,191$ 7,010,463$ Plan Fiduciary Net Position(458,926) (12,281,709) (8,319,434) Sponsor's Net Pension Liability(109,647)$ (2,865,518)$ (1,308,971)$ Plan Fiduciary Net Position as a Percentage of Total Pension Liability131.39%130.43%118.67% Actuarial Assumptions - The total pension liability was determined by an actuarial valuation as of October 1, 2012 for Police and Fire, and October 1, 2013 for General Employees, updated to September 30, 2014 using the following actuarial assumptions applied to all measurement periods. General Employees Police Officers' Retirement Trust Firefighters' Pension Trust Inflation 3.59%3.59%3.59% Salary Increases 0.00%5.50%5.50% Investment Rate of Return 8.07%8.07%8.07% Mortality rates were based on the sex-distinct rates set forth in the RP-2000 Mortality Table for annuitants and non-annuitants, projected to 2007 by Scale AA, as published by the Internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 430; future generational improvements in mortality have not been reflected. 59 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 9 - Retirement Plans (Continued): The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of September 30, 2014 are summarized in the following table: Asset Class GeneralPolice Fire Core bonds 2.29%2.29%2.29% Multi-sector 2.78%2.78%2.78% U.S. large cap equity 5.68%5.68%5.68% U.S. small cap equity 6.24%6.24%6.24% Non-U.S. equity 5.44%5.44%5.44% Long Term Expected Real Rate of Return Discount rate - The discount rate used to measure the total pension liability was 8.07% for all plans. 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. The following presents the net pension liability of the sponsor, calculated using the discount rate, as well as what the City’s net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: 1% Decrease Current Discount Rate 1% Increase 7.07%8.07%9.07% General Pension Plan Net Pension Liability(92,080)$ (109,647)$ (125,608)$ Police Pension Net Pension Liability (1,542,986)$ (2,865,518)$ (3,961,130)$ Fire Pension Net Pension Liability (224,660)$ (1,308,971)$ (2,199,626)$ 60 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 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 2014 was $5,145,440; the City’s total payroll for City employees was $12,060,654. 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 2014 was $432,003. Note 10 - Other Post Employment Benefits: In accordance with Florida Statutes Section 112.0801, the City makes continued group health and dental insurance through the city’s current provider available to retirees and eligible dependents provided certain service requirements and normal age retirement requirements have been met. This plan is a single employer plan. The City is self insured with respect to these benefits and provides an explicit subsidy for coverage to retirees and their spouses based on the coverage selected. The City has eleven retirees currently receiving benefits. The City has chosen pay-as-you-go funding, but is recording the liability in the government wide financial statements. This plan does not issue stand-alone financial statements. The most recent actuarial report for the City’s Retiree Continuation Insurance Plan was prepared as of April 1, 2013. The annual required contribution and Net OPEB Obligation for the fiscal year ended September 30, 2014 is as follows: Annual required contribution 1,112,968$ Interest on net OPEB Obligation 124,802 Adjustment to annual required contribution(269,828) Annual O PEB Cost 967,942 Employer Contributions (72,839) Increase in Net OPEB Obligation 895,103 Net OPEB Obligation (beginning of year)3,120,055 Net OPEB Obligation (end of year)4,015,158$ 61 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 10 - Other Post Employment Benefits (Continued): Three Year Trend Information- Fiscal Year Ending Annual OPEB Cost Percentage of Cost Contributed Net OPEB Obligation 9/30/2012614,000$ 8.0%2,215,000$ 9/30/20131,010,011 10.0%3,120,055 9/30/2014967,942 7.5%4,015,158 Funded Status and Funding Progress - OPEB The funded status of the plan as of April 1, 2013, the most recent actuarial valuation date, is as follows: Actuarial Value of Assets Actuarial Accrued Liability (AAL) - Entry Age Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll (a)(b)(b - a)(a / b)(c)((b - a) / c) -$ 5,563,664$ 5,563,664$ 0.0%10,854,391$ 51.00% Summary of Actuarial Methods & Assumptions: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 62 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 10 - Other Post Employment Benefits (Continued): Summary of Actuarial Methods & Assumptions (Continued) Actuarial Cost Method - The projected unit credit cost method. Amortization Method - level dollar closed over 15 years. Benefits Not Included - None. Discount Rate - 4.00%. Health Care Costs Trend Rates -The cost of covered medical services has been assumed to increase in accordance with the following rates, compounded annually: YearIncreaseYear IncreaseYear Increase 20148.00%20186.67%20225.33% 20157.67%20196.33%2023 5.00% 20167.33%20206.00%and later 20177.00%20215.67% Retiree Contribution Trend - Same as Health Care Trend. Mortality - RP-2000 Combined Mortality Table for males and females with mortality improvement projected to 2013 using Scale AA. Disability Rates - None. Morbidity: Age Rate Per Age Under 65 3.50% 65 - 69 3.00% 70 - 74 2.50% 75 - 85 1.50% 86 and older0.00% Election at Retirement - One-third of future retirees will elect medical and dental coverage at retirement. Participation - Actual coverage status is used. Active employees are assumed to continue at the current participation and coverage level in the active plan into retirement. If an employee waived active coverage, they are assumed to elect the OAP Plan. Marital Status - One-third of active employees who elect retiree coverage are assumed to elect coverage for their spouse. Males are assumed to be three years older than females. Actual spouse data was used for current retirees. 63 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 11 - Risk Management: During fiscal year 1990, the City established an internal service fund to account for its uninsured risk of loss for employee medical and dental coverage. Under this program, the fund provides coverage for the first $100,000 per year in medical, dental, or prescription claims for each covered employee. The City purchases commercial insurance for claims in excess of coverage provided by the fund with a total aggregate stop-loss of $2,000,000. There has been no reduction in insurance coverage from that carried in the prior year. Claims provided have not exceeded insurance coverage in any of the past three fiscal years. The general, water, sewer, sanitation and stormwater funds participate in the program and make payments to the internal service fund based on the number of employees budgeted in each fund. The claims liability of $286,698 represents claims processed through October 2014 which were applicable to the current fiscal year and any additional claims are deemed immaterial. Changes to the current claims liability are as follows: 2014 2013 Claims Liabilities, beginning of year 62,051$ 113,599$ Incurred Claims 3,453,5822,507,804 Payments on Claims (3,228,935) (2,559,352) Claims Liabilities, end of year 286,698$ 62,051$ Note 12 - Commitments and Contingencies: Litigation - The City is engaged in various liability claims incidental to the conduct of its general government operations at September 30, 2014. 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. 64 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 13 - Fund Balances: The City classifies the components of fund balance based on the classifications described below: Nonspendable Nonspendable funds include fund balance amounts that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. Spendable Fund Balance Restricted - includes fund balance amounts that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors, or laws and regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed - includes fund balance amounts that can be used only for the specific purposes determined by formal action of the City Council, the City’s highest level of decision making authority, with formal action occurring prior to the fiscal year end. Commitments may be changed or lifted only by the City Council taking the same formal action (Resolution) that imposed the constraint originally. Assigned - includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. The City Council is authorized to assign amounts for a specific purpose. Unassigned - includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. 65 CITY OF CLERMONT, FLORIDA NOTES TO FINANCIAL STATEMENTS September 30, 2014 Note 13 - Fund Balances (Continued): At September 30, 2014, the City’s governmental fund balances were as follows: General Fund Infrastructure Special Revenue Fund Community Redevelopment Special Revenue Other Governmental Funds Total Fund Balances Nonspendable Inventory/prepaids 53,501$ -$ -$ 61,329$ $ 114,830 Cemetery - - - 1,002,360 1,002,360 Spendable Restricted for: Police 312,121 - - 2,771,273 3,083,394 Fire - - - 395,145 395,145 Building Services - - - 250,662 250,662 Culture and recreation - - - 886,351 886,351 Community redevelopment - - 773,599 - 773,599 Infrastructure - 2,672,978 - - 2,672,978 Debt service - - - 853,584 853,584 Assigned for: Subsequent year expenditures 1,201,989 - - - 1,201,989 Unassigned 7,668,799 - - - 7,668,799 9,236,410$ 2,672,978$ 773,599$ 6,220,704$ 18,903,691$ Note 14 - Evaluation of Events: The City has evaluated subsequent events through the date of this report, the date the financial statements were available to be issued. 66 REQUIRED SUPPLEMENTAL INFORMATION CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2014 Schedules of Funding Progress - Pension Plans Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) - Entry Age (b) Unfunded AAL (UAAL) (b - a) Funded Ratio (a / b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ((b - a) / c) General Employees 10/1/2005816,972$ 816,972$ -$ 100.0%-$ N/A 10/1/2006794,277 794,277 - 100.0%- N/A 10/1/2007822,401 822,401 - 100.0%- N/A 10/1/2009573,379 566,885 - 101.2%- N/A 10/1/2011488,225 412,730 - 118.3%- N/A 10/1/2014458,926 413,199 - 111.1%- N/A Police Officers 10/1/20053,571,295$ 3,571,295$ -$ 100.0%1,534,254$ 0.0% 10/1/20074,905,071 4,905,071 - 100.0%2,356,375 0.0% 10/1/20095,288,822 6,163,934 875,112 85.8%2,485,033 35.2% 10/1/20117,341,114 7,908,270 567,156 92.8%2,548,993 22.3% 10/1/20129,291,324 8,632,023 - 107.6%2,424,191 0.0% 10/1/201412,281,709 10,893,088 - 112.8%3,108,552 0.0% Fire Fighters 10/1/20061,345,093$ 1,345,093$ -$ 100.0%1,257,860$ 0.0% 10/1/20071,972,299 1,972,299 - 100.0%2,031,230 0.0% 10/1/20092,609,047 2,596,659 - 100.5%2,552,427 0.0% 10/1/20114,284,079 4,224,986 - 101.4%2,792,489 0.0% 10/1/20125,898,932 5,068,853 - 116.4%2,767,580 0.0% 10/1/20148,319,434 6,999,221 - 118.9%2,798,049 0.0% 67 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2014 Schedules of Employer Contributions - Pension Plans Year Ended 9/30 Annual Required Contribution Percentage Contributed Annual Required Contribution Percentage Contributed Annual Required Contribution Percentage Contributed 2009 -$ 100%570,869$ 100%432,919$ 100% 20103,051 100%713,188 100%616,742 100% 20113,051 100%752,413 100%650,663 100% 2012 - 100%668,084 100%653,186 100% 2013 - 100%478,414 100%563,291 100% 2014 - 100%504,727 100%594,272 100% General Employees Police Officers Firefighters Employer Contributions 68 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION September 30, 2014 Schedule of Funding Progress - Retiree Continuation Insurance Plan Actuarial Valuation Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry Age Unfunded AAL (UAAL) Funded RatioCovered Payroll UAAL as a % of Covered Payroll Date (a)(b)(b-a)(a/b)( c)(b-a) / c 5/1/2009*-$ 2,413,000$ 2,413,000$ 0.0%10,764,000$ 22.4% 4/1/2011 - 2,909,000 2,909,000 0.0%10,342,000 28.1% 4/1/2013 - 5,563,664 5,563,664 0.0%10,854,391 51.0% *initial valuation date Schedule of Funding Progress Schedule of Employer Contributions - Retiree Continuation Insurance Plan Annual Required Percenta ge of ARC Fiscal Year EndingContribution (ARC)Contributed 9/30/2009 571,000$ 5.0%542,000$ 9/30/2010 611,000 5.0%1,099,000 9/30/2011 649,000 7.0%1,650,000 9/30/2012 691,000 7.0%2,215,000 9/30/2013 1,112,968 10.0%3,120,055 9/30/2014 1,112,968 6.5%4,015,158 Net OPEB Obligation 69 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS September 30, 2014 General Employees Police Officers' Retirement Trust Firefighters' Pension Trust 9/30/20149/30/20149/30/2014 Total Pension Liability Service Cost -$ 524,531$ 596,543$ Interest 28,229 723,246 530,089 Changes in Excess State Money - - - Differences Between Expected and Actual Experience - - - Changes of Assumptions - - - Benefit Payments, including refunds of employee contributions (56,412) (532,943) (81,466) Net Change in Total Pension Liability (28,183) 714,834 1,045,166 Total Pension Liability-beginning 377,462 8,701,357 5,965,297 Total Pension Liability-ending (a)349,279$ 9,416,191$ 7,010,463$ Plan Fiduciary Net Position Contributions-employer - 507,654 558,384 Contributions-state - 217,653 175,931 Contributions-employee - 95,733 86,520 Net Investment Income 40,560 1,043,669 704,466 Benefit Payments, Including Refunds of Employee Contributions (66,212) (283,179) (2,828) Administrative Expense (3,136) (31,851) (24,109) Other - - - Net Change in Plan Fiduciary Net Position (28,788) 1,549,679 1,498,364 Plan Fiduciary Net Position- beginning 487,714 11,877,631 7,985,259 Plan Fiduciary Net Position- ending (b)458,926$ 13,427,310$ 9,483,623$ Net Pension Liability - ending (a)- (b)(109,647)$ (4,011,119)$ (2,473,160)$ Plan Fiduciary Net Position as a Percentage of Total Pension Liability 131.39%142.60%135.28% Covered-employee Payroll -$ 3,429,102$ 2,767,580$ Net Pension Liability as a Percentage of Covered Employee Payroll N/A -116.97%-89.36% 70 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS GENERAL EMPLOYEES September 30, 2014 9/30/2014 Actuarially Determined Contribution -$ Contributions in Relation to the Actuarially Determined Contribution - Contribution Deficiency (Excess)-$ Covered Employee Payroll - Contributions as a Percentage of Covered employee Payroll N/A Notes to Schedule Valuation Date 10/1/2014 Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, open Remaining Amortization Period30 years Asset Valuation MethodMarket Value Inflation 3.59% Salary Increases N/A Interest Rate 8.07% per year, compounded annually, net of investment expenses Schedule of Investment Returns 9/30/2014 Annual money-weighted rate of return, net of investment expenses 8.55% 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. 71 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS POLICE September 30, 2014 9/30/2014 Actuarially Determined Contribution 629,606$ Contributions in Relation to the Actuarially Determined Contribution 629,606 Contribution Deficiency (Excess)-$ Covered Employee Payroll 2,424,191 Contributions as a Percentage of Covered employee Payroll 25.97% Notes to Schedule Valuation Date 10/1/2014 Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, open Remaining Amortization Period30 Years Asset Valuation MethodMarket Value Salary Increases 5.50% per annum Interest Rate Retirement Other Decrements Mortality Non-investment expenses Future contributions Schedule of Investment Returns 9/30/2014 Annual money-weighted rate of return, net of investment expenses8.55% Liabilitieshavebeenloadedby1.50%toaccountfornon-investment expenses Contributions from the employer and employees are assumed to be made as legally required. 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. 20%ofeligibleparticipantsareassumedtoretireateachofages52 through54and100%ofeligibleparticipantsareassumedtoretireat normal retirement age Assumedemploymentterminationisbasedonageandrangesfrom 5.00% at age 20 to 0.00% at age 50 Sex-distinctratessetforthintheRP-2000MortalityTablefor annuitantsandnon-annuitants,projectedto2007byScaleAA,as publishedbytheInternalRevenueService(IRS)forpurposesof InternalRevenueCode(IRC)section430;futuregenerational improvements in mortality have not been reflected 8.07% per annum (3.59% per annum is attributable to long-term inflation); this rate was used to discount all future benefit payments 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 72 CITY OF CLERMONT, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS AND INVESTMENT RETURNS FIRE September 30, 2014 9/30/2014 Actuarially Determined Contribution 614,833$ Contributions in Relation to the Actuarially Determined Contribution 614,833 Contribution Deficiency (Excess)-$ Covered Employee Payroll 2,767,580 Contributions as a Percentage of Covered employee Payroll 22.22% Notes to Schedule Valuation Date 10/1/2014 Methods and assumptions used to determine contribution rates: Actuarial Cost Method Aggregate Amortization Method Level Percentage of Pay, Open Remaining Amortization Period30 Years Asset Valuation Method Market Value Salary Increases 5.50% per annum Interest Rate Retirement Other Decrements Mortality Non-investment expenses Future contributions Schedule of Investment Returns 9/30/2014 Annual money-weighted rate of return, net of investment expenses8.55% Liabilitieshavebeenloadedby1.75%toaccountfornon- investment expenses Contributions from the employer and employees are assumed to be made as legally required. 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 8.07% per annum (3.59% per annum is attributable to long-term inflation); this rate was used to discount all future benefit payments 20%ofeligibleparticipantsareassumedtoretireateachofages 52through54and100%ofeligibleparticipantsareassumedto retire at normal retirement age Assumedemploymentterminationisbasedonageandranges 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 Sex-distinctratessetforthintheRP-2000MortalityTablefor annuitantsandnon-annuitants,projectedto2007byScaleAA,as publishedbytheInternalRevenueService(IRS)forpurposesof InternalRevenueCode(IRC)section430;futuregenerational improvements in mortality have not been reflected 73 74 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS Capital Projects Fund Capital Projects Fund This fund was established to account for financial resources segregated for the acquisition or construction of major capital facilities. 75 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Intergovernmental revenues2,481,804$ 2,481,804$ 1,716,051$ (765,753)$ Investment earnings12,000 12,000 1,830 (10,170) Total revenues2,493,804 2,493,804 1,717,881 (775,923) Expenditures: Current: Culture and recreation- - 10,135 (10,135) Public safety: Police123,677 136,277 - 136,277 Capital Outlay: Public safety6,635,710 6,508,510 60,687 6,447,823 Culture and recreation3,272,449 10,242,443 9,320,620 921,823 Total expenditures10,031,836 16,887,230 9,391,442 7,495,788 Excess (Deficiency) of Revenues Over Expenditures (7,538,032) (14,393,426) (7,673,561) 6,719,865 Other Financing Sources: Transfers in7,538,032 14,393,426 7,673,561 (6,719,865) Total other financing sources7,538,032 14,393,426 7,673,561 (6,719,865) Net Change in Fund Balance - - - - Fund Balances - beginning - - - - Fund Balances - ending -$ -$ -$ -$ CITY OF CLERMONT, FLORIDA CAPITAL PROJECTS FUND Year Ended September 30, 2014 76 OTHER GOVERNMENTAL FUNDS Special Revenue Funds Recreation Impact Fees Fund This fund was established to account for recreation impact fees collected from new developments constructed in the City which are restricted for use in funding capital facilities and equipment directly related to new growth. Police Impact Fees Fund This fund was established to account for police impact fees collected from new developments constructed in the City which are restricted for use in funding capital facilities and equipment directly related to new growth. Fire Impact Fee Fund This fund was established to account for fire impact fees collected from new developments constructed in the City which are restricted for use in funding capital facilities and equipment directly related to new growth. Building Services Fund This fund was established to account for the operations of the City’s building and other permits department which are restricted for use in funding capital facilities and equipment directly related to new growth. Debt Service Fund Debt Service Fund This fund was established to account for the accumulation of resources and payment of bond principal and interest from governmental resources. Permanent Fund Cemetery Perpetual Care Fund This fund is used to account for monies provided by people buying lots in the City cemetery. The principal must be kept separate and apart from all other funds, but the interest may be transferred to the General Fund to defray the cost of cemetery operation and maintenance. 77 Recreation Impact Fees Police Impact Fees Fire Impact Fees Building ServicesTotal Assets: Cash and cash equivalents886,351$ 2,771,273$ 395,145$ 258,010$ 4,310,779$ Other receivables- - - - - Prepaid costs- - 60,775 554 61,329 Total assets 886,351$ 2,771,273$ 455,920$ 258,564$ 4,372,108$ Liabilities and Fund Balances: Liabilities: Accounts payable -$ -$ -$ 7,348$ 7,348$ Total liabilities - - - 7,348 7,348 Fund balances: Nonspendable - - 60,775 554 61,329 Restricted 886,351 2,771,273 395,145 250,662 4,303,431 Total fund balances 886,351 2,771,273 455,920 251,216 4,364,760 Total liabilities and fund balances 886,351$ 2,771,273$ 455,920$ 258,564$ 4,372,108$ Special Revenue CITY OF CLERMONT, FLORIDA COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS September 30, 2014 78 Debt Service Permanent Fund - Cemetery Perpetual Care Total Nonmajor Governmental Funds 853,584$ 1,002,445$ 6,166,808$ - 65 65 - - 61,329 853,584$ 1,002,510$ 6,228,202$ -$ 150$ 7,498$ - 150 7,498 - 1,002,360 1,063,689 853,584 - 5,157,015 853,584 1,002,360 6,220,704 853,584$ 1,002,510$ 6,228,202$ 79 Recreation Impact Fees Police Impact Fees Fire Impact Fees Building Services Total Revenues: Licenses and permits-$ -$ -$ 801,912$ 801,912$ Charges for services- - - 173,118 173,118 Impact fees/special assessments859,387 278,653 262,582 - 1,400,622 Investment earnings 9,017 17,032 2,240 1,994 30,283 Miscellaneous - - - 287 287 Total revenues 868,404 295,685 264,822 977,311 2,406,222 Expenditures: Current: Public safety - - - 913,970 913,970 Culture and recreation 16,013 - - - 16,013 Debt Service: Principal - - - - - Interest and fiscal charges - - - - - Total expenditures 16,013 - - 913,970 929,983 Excess (Deficiency) of Revenues Over Expenditures 852,391 295,685 264,822 63,341 1,476,239 Other Financing Uses: Notes payable - - - - - Transfers in - - - 296 296 Transfers out (1,637,683) (130,101) (95,435) - (1,863,219) Total other financing uses (1,637,683) (130,101) (95,435) 296 (1,862,923) Net Change in Fund Balances (785,292) 165,584 169,387 63,637 (386,684) Fund Balances - beginning 1,671,643 2,605,689 286,533 187,579 4,751,444 Fund Balances - ending 886,351$ 2,771,273$ 455,920$ 251,216$ 4,364,760$ Year Ended September 30, 2014 Special Revenue CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS 80 Debt Service Permanent Fund - Cemetery Perpetual Care Total Nonmajor Governmental Funds -$ -$ 801,912$ - - 173,118 - - 1,400,622 2,325 6,066 38,674 - 64,800 65,087 2,325 70,866 2,479,413 - - 913,970 - - 16,013 570,599 - 570,599 177,539 - 177,539 748,138 - 1,678,121 (745,813) 70,866 801,292 6,000,000 - 6,000,000 1,108,326 - 1,108,622 (6,000,000) (6,066) (7,869,285) 1,108,326 (6,066) (760,663) 362,513 64,800 40,629 491,071 937,560 6,180,075 853,584$ 1,002,360$ 6,220,704$ 81 CITY OF CLERMONT, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Impact fees/special assessments500,000$ 1,000,000$ 859,387$ (140,613)$ Investment earnings6,700 6,700 9,017 2,317 Total revenues506,700 1,006,700 868,404 (138,296) Expenditures: Current: Culture and recreation400,000 172,492 16,013 156,479 Total expenditures400,000 172,492 16,013 156,479 Excess (Deficiency) of Revenues Over Expenditures 106,700 834,208 852,391 18,183 Other Financing Uses Transfers out(790,645) (1,767,973) (1,637,683) 130,290 Total other financing uses(790,645) (1,767,973) (1,637,683) 130,290 Net Change in Fund Balances (683,945) (933,765) (785,292) 148,473 Fund Balances - beginning 1,671,643 1,671,643 1,671,643 - Fund Balances - ending 987,698$ 737,878$ 886,351$ 148,473$ RECREATION IMPACT FEE SPECIAL REVENUE FUND Year Ended September 30, 2014 82 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Impact fees/special assessments125,000$ 250,000$ 278,653$ 28,653$ Investment earnings13,500 13,500 17,032 3,532 Total revenues138,500 263,500 295,685 32,185 Expenditures: Current: Public Safety: Law enforcement- - - - Total expenditures- - - - Excess (Deficiency) of Revenues Over Expenditures 138,500 263,500 295,685 32,185 Other Financing Sources (Uses) Transfers in1,659,052 1,659,052 - (1,659,052) Transfers out(4,338,603) (4,444,539) (130,101) 4,314,438 Total other financing sources (uses)(2,679,551) (2,785,487) (130,101) 2,655,386 Net Change in Fund Balances (2,541,051) (2,521,987) 165,584 2,687,571 Fund Balances - beginning 2,605,689 2,605,689 2,605,689 - Fund Balances - ending 64,638$ 83,702$ 2,771,273$ 2,687,571$ POLICE IMPACT FEE SPECIAL REVENUE FUND CITY OF CLERMONT, FLORIDA Year Ended September 30, 2014 83 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Impact fees/special assessments95,000$ 145,000$ 262,582$ 117,582$ Investment earnings600 600 2,240 1,640 Total revenues95,600 145,600 264,822 119,222 Expenditures: Current: Public safety: Fire control- - - - Total expenditures- - - - Excess (Deficiency) of Revenues Over Expenditures 95,600 145,600 264,822 119,222 Other Financing Uses: Transfers out(94,049) (94,049) (95,435) (1,386) Total other financing sources(94,049) (94,049) (95,435) (1,386) Net Change in Fund Balances 1,551 51,551 169,387 117,836 Fund Balances - beginning 286,533 286,533 286,533 - Fund Balances - ending 288,084$ 338,084$ 455,920$ 117,836$ CITY OF CLERMONT, FLORIDA FIRE IMPACT FEE SPECIAL REVENUE FUND Year Ended September 30, 2014 84 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Licenses and permits500,000$ 801,987$ 801,912$ (75)$ Charges for services60,700 170,499 173,118 2,619 Investment earnings1,000 1,000 1,994 994 Miscellaneous500 500 287 (213) Total revenues562,200 973,986 977,311 3,325 Expenditures: Current: Public safety583,197 1,139,846 913,970 225,876 Total expenditures583,197 1,139,846 913,970 225,876 Excess (Deficiency) of Revenues Over Expenditures (20,997) (165,860) 63,341 229,201 Other Financing Sources (Uses): Transfers in- - 296 296 Total other financing sources and uses- - 296 296 Net Change in Fund Balances (20,997) (165,860) 63,637 229,497 Fund Balances - beginning 187,579 187,579 187,579 - Fund Balances - ending 166,582$ 21,719$ 251,216$ 229,497$ CITY OF CLERMONT, FLORIDA BUILDING SERVICES SPECIAL REVENUE FUND Year Ended September 30, 2014 85 CITY OF CLERMONT, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Actual Amounts Variance with Final Budget - Positive (Negative) OriginalFinal Revenues: Investment earnings2,000$ 2,000$ 2,325$ 325$ Total revenues2,000 2,000 2,325 325 Expenditures: Debt Service: Principal570,599 825,409 570,599 254,810 Interest and fiscal charges25,811 282,015 177,539 104,476 Total expenditures596,410 1,107,424 748,138 359,286 Excess (Deficiency) of Revenues Over Expenditures (594,410) (1,105,424) (745,813) 359,611 Other Financing Sources: Notes payable- 6,000,000 6,000,000 - Transfers in598,307 1,109,321 1,108,326 (995) Transfers out- (6,000,000) (6,000,000) - Total other financing sources598,307 1,109,321 1,108,326 (995) Net Change in Fund Balances 3,897 3,897 362,513 358,616 Fund Balances - beginning 491,071 491,071 491,071 - Fund Balances - ending 494,968$ 494,968$ 853,584$ 358,616$ DEBT SERVICE FUND Year Ended September 30, 2014 86 FIDUCIARY FUNDS Pension Trust Funds General Employees’ Pension Trust Fund This fund is used to account for the accumulation of resources to be used for retirement annuity payments at the appropriate amounts and times in the future. Resources are contributed at rates in accordance with an actuarial study, whereas, a fixed percentage of employees salaries is used in determining the annual contribution to the defined contribution plan. Police Officers’ Pension Trust Fund This fund is used to account for the accumulation of resources to be used for the retirement annuities of all police officers. The state contributes an amount determined by an actuarial study. Firefighters’ Pension Trust Fund This fund is used to account for the accumulation of resources to be used for the retirement annuities of all firefighters. The state contributes money based upon the number of firefighters and the City contributes an amount determined by an actuarial study. 87 CITY OF CLERMONT, FLORIDA September 30, 2014 Police OfficersFirefightersTotal Defined Defined PensionPensionEmployee BenefitContributionTrust TrustPension Funds Assets: Cash and cash equivalents 2,754$ $ - 80,427$ 55,873$ $ 139,054 Receivables: Due from state - - 217,653 175,931 393,584 Total receivables - - 217,653 175,931 393,584 Investments: U.S. Government & other debt securities73,428 - 2,144,7161,489,937 3,708,081 Equities 382,744 6,264,868 11,179,3337,766,298 25,593,243 Total Investments 456,172 6,264,868 13,324,049 9,256,235 29,301,324 Total assets 458,926 6,264,868 13,622,129 9,488,039 29,833,962 Liabilities: Refunds payable and other - - 194,819 4,416 199,235 Total liabilities - - 194,819 4,416 199,235 Net Position Held in Trust for Pension Benefits 458,926$ 6,264,868$ 13,427,310$ 9,483,623$ 29,634,727$ General Employees FIDUCIARY FUNDS COMBINING STATEMENT OF FIDUCIARY NET POSITION 88 CITY OF CLERMONT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS Year Ended September 30, 2014 Police OfficersFirefightersTotal DefinedDefinedPensionPensionEmployee BenefitContributionTrust TrustFunds Additions: Contributions: Employer -$ 432,003$ 507,654$ 558,384$ 1,498,041$ Plan members - - 95,733 86,520 182,253 State - - 217,653 175,931 393,584 Total contributions - 432,003 821,040 820,835 2,073,878 Investment earnings: Net increase (decrease) in fair value of investments 40,560 615,728 1,043,669 704,466 2,404,423 Total net investment earnings 40,560 615,728 1,043,669 704,466 2,404,423 Total additions 40,560 1,047,731 1,864,709 1,525,301 4,478,301 Deductions: Benefits/distributions 66,212 218,400 283,179 2,828 570,619 Administrative expenses 3,136 26,611 31,851 24,109 85,707 Total deductions 69,348 245,011 315,030 26,937 656,326 Change in Net Position (28,788) 802,720 1,549,679 1,498,364 3,821,975 Net Position Held in Trust for Pension Benefits Beginning of Year 487,714 5,462,148 11,877,631 7,985,259 25,812,752 End of Year 458,926$ 6,264,868$ 13,427,310$ 9,483,623$ 29,634,727$ General Employees 89 90 STATISTICAL SECTION Statistical Section This part of the City of Clermont’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall health. Contents Page Financial Trends 92 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 102 These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. Debt Capacity 107 These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. There are no limitations placed upon the amount of debt the City of Clermont may issue by either the City Charter or the City’s Code of Ordinances or by Florida Statutes. The City of Clermont has no general obligation bonds outstanding. Demographic and Economic Information 112 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 118 These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual reports for the relevant year. 91 2005 2006 2007 2008 Governmental activities Net investment in capital assets 12,118$ 15,777$ 15,825$ 27,462$ Restricted 4,800 5,935 7,830 8,959 Unrestricted 8,125 8,69314,45911,946 Total governmental activities net position 25,043$ 30,405$ 38,114$ 48,367$ Business-type activities Net investment in capital assets 12,082$ 15,864$ 24,837$ 46,569$ Restricted 27,57333,73236,93113,899 Unrestricted 13,41413,44710,84118,103 Total business-type activities net position 53,069$ 63,043$ 72,609$ 78,571$ Primary government Net investment in capital assets 24,200$ 31,641$ 40,662$ 74,031$ Restricted 32,37339,66744,76122,858 Unrestricted 21,53922,14025,30030,049 Total primary government net position 78,112$ 93,448$ 110,723$ 126,938$ Fiscal Year City of Clermont, Florida Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 92 2009 2010 2011 2012 2013 2014 33,938$ 33,817$ 34,894$ 36,612$ 39,950$ 44,116$ 6,526 6,693 7,381 8,876 9,490 9,918 13,60813,98812,465 9,701 7,723 5,719 54,072$ 54,498$ 54,740$ 55,189$ 57,163$ 59,753$ 54,834$ 55,540$ 56,430$ 57,241$ 57,863$ 56,680$ 10,43717,293 9,241 9,477 9,53610,217 17,80111,40719,37620,43624,19127,054 83,072$ 84,240$ 85,047$ 87,154$ 91,590$ 93,951$ 88,772$ 89,357$ 91,324$ 93,853$ 97,813$ 100,796$ 16,96323,98616,62218,35319,02620,135 31,40925,39531,84130,13731,91432,773 137,144$ 138,738$ 139,787$ 142,343$ 148,753$ 153,704$ Fiscal Year 93 Expenses 2005200620072008 Governmental activities: General government 2,617$ 3,232$ 3,297$ 4,204$ Public safety 5,7737,1098,78310,330 Physical environment 278 382 470 514 Transportation/public works 1,1721,3221,2551,544 Economic environment 13 181 52 48 Human services 149 77 130 107 Culture and recreation 1,8161,8512,4412,061 Interest on long-term debt 255 285 226 459 Total governmental activities expenses 12,07314,43916,65419,267 Business-type activities: Water 3,0153,4272,9873,737 Sewer 3,5724,0243,8964,521 Sanitation 1,8171,7311,8162,123 Stormwater 287 316 427 549 Total business-type activities expenses 8,6919,4989,12610,930 Total primary government expenses 20,764$ 23,937$ 25,780$ 30,197$ Program Revenues Governmental activities: Charges for services: General government 1,042$ 1,037$ 1,116$ 1,582$ Public safety 9121,1581,105 975 Transportation/public works 36 - - - Culture and recreation 4631,566 882 761 Operating grants and contributions 512 523 9231,047 Capital grants and contributions 1,644 1052,5187,330 Total governmental activities program revenues 4,6094,3896,54411,695 Business-type activities: Charges for services: Water 4,320$ 4,839$ 5,502$ 5,654$ Sewer 3,2953,7844,2424,422 Sanitation 2,0882,2362,4022,515 Stormwater 627 689 729 766 Operating grants and contributions 138 11 38 700 Capital grants and contributions 6,2876,4083,6761,480 Total business-type activities program revenues 16,75517,96716,58915,537 Total primary government program revenues21,364$ 22,356$ 23,133$ 27,232$ Fiscal Year City of Clermont, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 94 200920102011201220132014 4,747$ 4,287$ 3,643$ 4,211$ 3,258$ 3,407$ 10,77512,45912,53112,16812,68514,117 364 319 279 248 303 350 1,1641,7681,6611,7191,7252,202 101 50 102 116 200 363 - - - - - - 2,0822,0551,8221,0451,9283,096 326 175 156 137 87 236 19,55921,11320,19419,64420,18623,771 3,9904,3164,4614,0524,1544,589 4,4895,9276,0225,7526,1066,437 2,0862,1692,3642,5672,4652,472 534 848 955 939 8971,016 11,09913,26013,80213,31013,62214,514 30,658$ 34,373$ 33,996$ 32,954$ 33,808$ 38,285$ 1,854$ 1,857$ 1,695$ 1,649$ 2,117$ 2,429$ 1,203 665 355 450 1,040 1,366 - - - - - - 99 872 539 604 1,262 956 921 1,162 1,237 1,191 896 939 3,307 134 129 27 112 1,718 7,3844,6903,9553,9215,4277,408 4,909$ 4,817$ 5,377$ 5,099$ 5,215$ 5,362$ 4,655 4,852 5,065 5,154 5,357 5,585 2,560 2,613 2,688 2,721 2,775 2,869 801 829 855 855 862 881 - - - - - - 2,137 1,544 999 1,752 3,430 2,417 15,06214,65514,98415,58117,63917,114 22,446$ 19,345$ 18,939$ 19,502$ 23,066$ 24,522$ Fiscal Year 95 Changes in Net Position - Continued City of Clermont, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (amounts expressed in thousands) 2005200620072008 Net (expense)/revenue Governmental activities (7,464)$ (10,050)$ (10,110)$ (7,572)$ Business-type activities 8,0648,4697,4634,605 Total primary government net expense 600$ (1,581)$ (2,647)$ (2,967)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes 4,417$ 5,665$ 7,452$ 7,749$ Business taxes **** Franchise fees 1,3571,7141,8081,911 Utility taxes 1,5521,7821,8811,992 Unrestricted intergovernmental revenues 3,9234,9534,9524,776 Unrestricted investment earnings and miscellaneous revenues 1,181 8351,216 901 Transfers 377 464 509 496 Total governmental activities 12,80715,41317,81817,825 Business-type activities: Investment earnings 825$ 1,968$ 2,612$ 1,853$ Transfers (377)(464)(509)(496) Total business-type activities 4481,5042,1031,357 Total primary government 13,255$ 16,917$ 19,921$ 19,182$ Change in Net Position Governmental activities 5,343$ 5,363$ 7,708$ 10,253$ Business-type activities 8,5129,9739,5665,961 Total primary government 13,855$ 15,336$ 17,274$ 16,214$ *Business taxes previously reported as General Government Charges for Services Fiscal Year 96 200920102011201220132014 (12,175)$ (16,422)$ (16,240)$ (15,721)$ (14,759)$ (16,363)$ 3,9641,3951,1822,2714,0182,600 (8,211)$ (15,027)$ (15,058)$ (13,450)$ (10,741)$ (13,763)$ 7,601$ 6,844$ 5,966$ 5,535$ 5,350$ 6,533$ ***113 111 126 2,1512,3732,2852,1892,1232,379 2,1522,5582,5682,4302,4902,887 4,4584,5034,6645,0635,8026,110 1,050 525 478 388 378 479 469 443 520 453 479 439 17,88117,24616,48116,17116,73318,953 1,005$ 360$ 145$ 289$ 167$ 200$ (469) (443) (520) (453) (479) (439) 536 (83)(375)(164)(312)(239) 18,417$ 17,163$ 16,106$ 16,007$ 16,421$ 18,714$ 5,706$ 824$ 241$ 450$ 1,974$ 2,590$ 4,5001,312 8072,1073,7062,361 10,206$ 2,136$ 1,048$ 2,557$ 5,680$ 4,951$ Fiscal Year 97 2005 2006 2007 General fund Reserved 198$ 233$ 307$ Unreserved 5,758 4,857 9,128 Total general fund 5,956$ 5,090$ 9,435$ All other governmental funds Reserved 1,083$ 1,189$ 1,539$ Unreserved, reported in: Special revenue funds 5,028 7,76710,771 Capital projects fund 926 780 843 Total all other governmental funds 7,037$ 9,736$ 13,153$ 2011 2012 2013 General fund Nonspendable 335$ 195$ 189$ Restricted 175 224 257 Assigned 912 1,039 765 Unassigned 10,048 9,744 8,878 Total general fund 11,470$ 11,202$ 10,089$ All other governmental funds Nonspendable 848$ 890$ 939$ Restricted 6,359 7,763 8,295 Assigned 2,854 668 - Unassigned (1)-- Total all other governmental funds 10,060$ 9,321$ 9,234$ Post GASB 54 Fiscal Year City of Clermont, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 98 2008 2009 2010 209$ 214$ 246$ 9,57210,86011,358 9,781$ 11,074$ 11,604$ 1,912$ 2,267$ 2,758$ 5,314 4,147 4,839 4,496 3,271 2,978 11,722$ 9,685$ 10,575$ 2014 53$ 312 1,202 7,669 9,236$ 1,064$ 8,604 - - 9,668$ Fiscal Year 99 2005 2006 2007 2008 Revenues Taxes 8,391$ 10,327$ 11,141$ 11,652$ Franchise Fees **** Licenses and permits 484 456 491 835 Intergovernmental revenue 5,2164,2118,34011,977 Charges for services 389 407 462 643 Fines and forfeitures 164 226 175 321 Impact fees/special assessments 1,1522,4441,7171,209 Investment income 267 7381,101 687 Miscellaneous 310 505 3911,683 Total revenues 16,37319,31423,81829,007 Expenditures General government 2,053$ 2,694$ 3,079$ 3,640$ Public Safety 5,2856,4529,14110,999 Physical environment 318 343 461 497 Transportation 917 9671,1892,976 Economic environment 33 38 48 48 Human services 139 75 129 105 Culture and recreation 1,0251,2591,55610,024 Capital outlay 2,48410,235 941,909 Debt service Principal 855 868 4498,176 Interest 258 244 440 465 Other charges - - - - Total expenditures 13,36723,17516,58638,839 Excess of revenues over (under) expenditures 3,006$ (3,861)$ 7,232$ (9,832)$ Other financing sources (uses) Refunding Bonds/Notes Payable -$ -$ -$ -$ Transfers in 1,0811,6761,2656,468 Transfers out (704)(1,212)(756)(5,971) Debt issuance -5,250 -8,250 Sale of capital assets 931 - - - Payments to refunded bond escrow agent - - - - Total other financing sources (uses)1,3085,714 5098,747 Net change in fund balances 4,314$ 1,853$ 7,741$ (1,085)$ Debt service as a percentage of noncapital expenditures10.2%9.3%7.1%23.4% *Note: Franchise Fees previously reported as Taxes. **Note: Increase in % due to refunding of 2002 bonds. Without the refunding the % would be 2.8% (amounts expressed in thousands) Fiscal Year City of Clermont, Florida Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 100 2009 2010 2011 2012 2013 2014 11,903$ 11,775$ 10,819$ 8,079$ 7,951$ 9,546$ ***2,1882,1232,379 674 678 528 455 884 941 8,6665,7336,0596,3106,7298,796 1,1031,0361,0131,0111,0851,212 178 189 186 215 172 589 9031,131 582 6791,9091,401 848 379 148 244 108 99 444 522 612 474 622 915 24,71921,44319,94719,65521,58325,878 3,654$ 4,081$ 3,272$ 3,080$ 3,148$ 3,776$ 10,27511,21211,62511,35212,57913,571 490 309 275 247 307 423 1,1291,6201,4721,3401,2631,635 102 50 102 641 722 365 ------ 1,8931,8781,7921,7692,0142,948 1,738 6431,9232,0732,6389,381 6,259 493 470 4903,080 571 375 181 162 143 122 177 ------ 25,91520,46721,09321,13525,87332,847 (1,196)$ 976$ (1,146)$ (1,480)$ (4,290)$ (6,969)$ -$ -$ -$ -$ 2,612$ 6,000$ 6,6842,0883,2741,1183,0919,337 (6,232)(1,645)(2,776)(644)(2,612)(8,788) ------ ------ ------ 452 443 498 4743,0916,549 (744)$ 1,419$ (648)$ (1,006)$ (1,199)$ (420)$ 28.9%3.6%3.3%3.5%14.9%**3.5% Fiscal Year 101 FiscalPropertyUtilityBusinessFranchise YearTax Tax Tax Fees Total 2005 4,321 2,617 *1,357 8,295 2006 5,488 2,948 *1,714 10,150 2007 7,155 3,138 *1,808 12,101 2008 7,749 1,992 *1,911 11,652 2009 7,601 2,152 *2,151 11,904 2010 6,844 2,558 *2,373 11,775 2011 5,966 2,568 *2,285 10,819 2012 5,535 2,430 113 2,189 10,267 2013 5,350 2,490 111 2,123 10,074 2014 6,533 2,887 126 2,379 11,925 FiscalSalesState RevenueLocal Option YearTax SharingGas Tax Total 2005 930 328 275 1,533 2006 1,157 368 286 1,811 2007 1,210 388 325 1,923 2008 1,139 356 300 1,795 2009 1,033 302 289 1,624 2010 1,053 299 322 1,674 2011 1,100 328 306 1,734 2012 1,296 383 296 1,975 2013 1,419 535 280 2,234 2014 1,567 635 290 2,492 *Business Tax Receipts previously reported under Licenses Taxes Included in Unrestricted Intergovernmental Revenues City of Clermont, Florida Governmental Activities Tax Revenues by Source (amounts expressed in thousands) Last Ten Fiscal Years (accrual basis of accounting) 102 Fiscal TotalEstimatedAssessed Year Less:Total TaxableDirectActualValue as a EndedReal*PersonalTax ExemptAssessedTaxTaxablePercentage of Sep 30PropertyPropertyPropertyValueRateValueActual Value 20051,041,341112,546238,373915,5143.7291,153,88779.34% 20061,363,931133,687299,1621,198,4563.7291,497,61880.02% 20071,771,503153,086382,8851,541,7043.7291,924,58980.11% 20082,466,549171,470620,7502,017,2693.1422,638,01976.47% 20092,975,139186,835676,3712,485,6033.1423,161,97478.61% 20103,022,925195,808792,9972,425,7363.1423,218,73375.36% 20112,592,111211,950599,8212,204,2403.1422,804,06178.61% 20122,171,815209,726598,1871,783,3543.1422,381,54174.88% 20132,124,017206,870605,1141,725,7733.1422,330,88774.04% 20142,336,882207,024630,7621,913,1443.7292,543,90675.20% Source: Lake County Property Appraisers Office *Information on breakdown of residential and commercial property is not available. City of Clermont, Florida Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) 103 Direct Rate City ofLakeSouthLakeSt. JohnsTotal ClermontCountyLakeCountyRiver WaterDirect & FiscalOperatingOperatingVotedAmbulanceSchoolHospitalWaterManagementOverlapping YearMillageMillageDebt ServiceMSTUDistrictDistrictAuthorityDistrictRates 20053.72905.81700.00000.52897.99001.00000.38310.462019.9100 20063.72905.79700.00000.52897.98101.00000.33700.462019.8349 20073.14205.74700.20000.52897.64801.00000.25300.462018.9809 20083.14204.74100.20000.46517.69800.86660.21300.415817.7415 20093.14204.65110.11010.46517.51700.86660.21300.415817.3807 20103.14204.65110.11010.46517.53200.86660.21300.415817.3957 20113.14204.73090.11010.38537.52300.86660.24050.415817.4142 20123.14204.73090.11010.38537.39400.80000.24050.331317.1341 20133.14204.73090.19000.38537.32000.80000.25540.331317.1549 20143.72905.38560.16000.46297.24600.76330.25540.316418.3186 Source: Lake County Property Appraisers Office 1 Overlapping rates are those of local and county governments that apply to property owners within the City of Clermont. 2 Taxes levied for the fiscal year are based on the prior year taxable value. Lake County Overlapping Rates City of Clermont, Florida Property Tax Rates Direct and Overlapping1 Governments Last Ten Fiscal Years 2 (per $1,000 of assessed value) 104 Percentage of Percentage of Taxable Total TaxableTaxable Total Taxable Assessed AssessedAssessed Assessed Taxpayer ValueRankValueValueRankValue John P. Adams & Ann D. 24,602$ 11.43%22,668$ 12.48% Adams Family LP Centennial Citrus Tower LLC22,48721.30% MRP Lost Lake LLC 21,43931.24% Westdale Sundance LTD 16,33640.95% IP9 MF Clermont LLC 13,57250.79% Weingarten I-4 Clermont Landing 13,27960.77% South Lake Hospital, Inc.12,79170.74%20,24122.21% Taylor Morrison of Florida Inc.10,93780.63%0.00% Duke Energy 9,78890.57%0.00% Wal-Mart Stores East LP 9,146100.53%0.00% Lennar Homes Inc.14,63631.60% Sundance Clermont LLC 11,89841.30% Target Corporation 11,76451.28% Clermont Center LTD 10,37361.13% Village at East Lake 9,53871.04% Lost Lake Reserve LC 9,37181.02% KB Home Orlando LLC 9,29191.01% Lucas Clermont Ltd Partnership 9,054100.99% TOTAL 154,377$ 8.95%128,834$ 14.07% Source: Lake County Property Appraiser 2014 2005 City of Clermont, Florida Principal Property Taxpayers Current Year and Nine Years Ago (amounts expressed in thousands) 105 Fiscal YearTotal TaxCollections in EndedLevy forPercentageSubsequentPercentage SeptemberFiscal YearAmountof LevyYearsAmountof Levy 20054,4694,31096.4%54,31596.6% 20065,7495,54496.4%- 5,54496.4% 2007 7,5187,15595.2%17 7,17295.4% 2008 7,8107,42595.1%15 7,44095.3% 2009 7,6227,24395.0%22 7,26595.3% 2010 6,8146,53695.9%5 6,54196.0% 2011 6,0015,69895.0%15 5,71395.2% 2012 5,6035,32595.0%5 5,33095.1% 2013 5,4225,15395.0%8 5,16195.2% 2014 6,6356,32595.3%9 6,33495.5% Note: Property taxes become due and payable on November 1st of each year. A four (4) percent discount is allowed if the taxes are paid in November, with the discount declining by one (1) percent each month thereafter. Accordingly, taxes collected will never be 100 percent of the tax levy. Fiscal Year of the Levy City of Clermont, Florida Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) Total Collections to Date Collected within the 106 Business-Type FiscalActivities YearWater & SewerTotalPercentage EndedRevenueNotesRefundingPrimaryof Personal SeptBondsPayableRevenue BondsGovernmentIncome1 Per Capita1 20056,180605 17,25724,042 *1,201 20065,7755,39217,14628,313 5.55%1,288 20075,3605,35816,95427,672 5.53%1,209 20084,9355,85716,60327,395 3.94%1,167 20094,4953816,23220,765 2.89%858 20104,040- 16,01620,056 2.76%698 20113,570 - 15,51219,082 2.55%650 20123,080 - 14,96318,043 2.41%615 2013 - 2,612 14,97917,591 2.19%582 2014 - 8,041 14,36122,402 2.74%706 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 See the Schedule of Demographic and Economic Statistics on page 104 for personal income and population data. *Information is not available. City of Clermont, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years (amounts expressed in thousands, except per capita amount) Governmental Activities 107 Percentage Amount Total Applicable toApplicable to OutstandingCity of Clermont (1)City of Clermont Direct: City of Clermont8,041$ 100%8,041$ Total Direct Debt8,041$ 8,041$ Overlapping: Lake County 24,220 12%2,906 School District of Lake County - 12%- Total Overlapping Debt 24,220$ 2,906$ Total direct and overlapping debt payable from ad valorem taxes 32,261$ 10,947$ Estimated Population 31,745 Total direct and overlapping debt per capita 344.85$ (1) Estimates based on ratio of assessed taxable values. Note: The City of Clermont has no legal debt margin. Sources: Lake County Clerk Finance Office Lake County Property Appraiser's Office (amounts expressed in thousands, except population and per capita amount) City of Clermont, Florida Direct and Overlapping Governmental Activities Debt September 30, 2014 108 PublicCommunications Total Revenue FiscalServiceServiceHalf-CentAvailable for YearTaxesTaxSales TaxDebt ServicePrincipalInterestCoverage 20051,552,0001,063,454929,7403,545,194405,000233,6535.55 20061,781,6261,163,9711,156,6944,102,291415,000222,3726.44 20071,881,0921,253,4251,209,7484,344,265415,000228,3386.75 20081,992,0181,279,6531,139,3154,410,986425,000209,6066.95 20092,151,3181,257,3441,033,1414,441,803440,000195,1066.99 20102,558,2811,266,6961,053,0734,878,050455,000179,1597.69 20112,568,1411,233,7891,100,1254,902,055470,000161,8067.76 20122,430,4401,257,2171,295,6874,983,344490,000143,3507.87 20132,490,4611,349,9291,418,7105,259,1003,080,000*66,550 1.67 20142,887,161 1,216,076 1,567,249 5,670,486 570,599 25,361 9.51 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. Public Improvement Revenue Refunding Note, Series 2012 Debt Service City of Clermont, Florida Pledged-Revenue Coverage Last Ten Fiscal Years 109 PublicCommunicationsTotal Revenue FiscalServiceServiceAvailable for YearTaxesTaxDebt ServicePrincipalInterestCoverage 2005- - - - - N/A 2006 - - - - - N/A 2007 - - - - - N/A 2008 - - - - - N/A 2009 - - - - - N/A 2010 - - - - - N/A 2011 - - - - - N/A 2012 - - - - - N/A 2013 - - - - - N/A 20142,887,1611,216,0764,103,237 - 82,35049.83 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Debt Service City of Clermont, Florida Pledged-Revenue Coverage Last Ten Fiscal Years Public Improvement Revenue Note, Series 2013 110 Water andWater and SewerSewerNet Revenue FiscalOperatingOperatingAvailable for YearRevenues1 Expenses2 Debt ServicePrincipalInterestCoverage 20057,841,8304,773,6393,068,191100,000929,9282.98 20069,421,8345,456,6893,965,145150,000924,3533.69 200712,875,1708,820,9324,054,238230,000915,8023.54 200810,075,7067,192,3142,883,392390,000892,6882.25 200910,561,9496,511,4874,050,462410,000883,2063.13 201010,001,8366,999,0963,002,740430,000744,892 3 2.56 201110,561,2957,080,5923,480,703535,000660,6402.91 201210,496,5356,377,6954,118,840580,000643,3073.37 201310,687,9086,677,7744,010,134595,000604,8113.34 201411,108,7447,090,5664,018,178615,000586,4613.34 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 Operating revenue is computed per bond resolution requirements. Investment earnings are included. 2 Operating expense is computed per bond resolution requirements. Depreciation expense is not included. 3 Includes interest paid on the 2000 and 2009 Refunding Bonds Water and Sewer Revenue and Refunding Bonds Debt Service City of Clermont, Florida Pledged-Revenue Coverage Last Ten Fiscal Years 111 Personal Education Income Level in (amountsPer Capita Years of Fiscal expressed inPersonalMedianFormalSchoolUnemploy- YearPopulation1 thousands)Income2 Age2 Schooling2 Enrollment3 ment Rate4 200520,017****5,1654.0% 200621,986509,98723,19635.913.55,6403.3% 200722,882500,33821,86636.813.65,9153.8% 200823,476696,04029,64939.613.25,4367.1% 200924,199717,59729,65439.713.24,90012.3% 201028,742727,00025,29436.813.65,0249.8% 201129,358748,48225,49540.913.65,1169.3% 201229,827784,36126,29746.813.65,1587.0% 201330,201802,80326,58241.513.85,1535.8% 201431,745816,92625,73441.913.75,1985.6% Sources:1 College of Business Administration, University of Florida - Bureau of Economic and Business Research 2 Metro Orlando Economic Development Commission 3 Lake County School Board 4 U.S. Department of Labor, Bureau of Labor Statistics Note: Unemployment rate information was only available on a countywide basis through 2009. * Information is not available. City of Clermont, Florida Demographic and Economic Statistics Last Ten Fiscal Years 112 Percentage of Percentage of Total City Total City Employer EmployeesRankEmploymentEmployeesRankEmployment Total City Employment 14,278 8,114 South Lake Hospital, Inc.1,14318.01%929111.45% Publix Supermarkets 62524.38%39434.86% Crotthall Laundry Services 52333.66% Lake County School System 35042.45%55726.86% Walmart 32052.24% Target Corporation 31562.21%3214 City of Clermont 29072.03%22162.72% Winn Dixie 21281.48%1309 Senninger Irrigation 21091.47% Clermont Health & Rehab Ctr 185101.30%0.00% CBS Builders Supply Inc.23052.83% Home Depot 18772.30% Westminster Care of Clermont 16982.08% Kmart 100101.23% TOTAL 4,173 29.23%3,238 39.91% Source: Florida Agency for Workforce Innovation, Labor Market Statistics Center 2014 2005 City of Clermont, Florida Principal Employers Current Year and Nine Years Ago 113 Usage Percentage ofUsage Percentage of (thousands Total City(thousands Total City Employer of gallons)RankMetered Flow1 of gallons)RankMetered Flow Kings Ridge228,20619.48%* * * South Lake Hospital31,72021.32%* * * MRP at Lost Lake24,00931.00%* * * Village at East Lake Property21,42440.89%* * * Westminster Comm Care Service16,06650.67%* * * Heritage Hills of Clermont15,25960.63%* * * City of Clermont11,15870.46%* * * Emerald Lakes of Clermont10,89080.45%* * * Lake County Schools7,86190.33%* * * Mister Car Wash6,068100.25%* * * TOTAL372,66115.49%* * 1 The City of Clermont had a total metered water flow of approximately 2,406,183,000 gallons for the 12-month period ending September 30, 2014 * Information is not available. 2014 2005 City of Clermont, Florida Principal Water Customers Current Year and Nine Years Ago 114 Usage Percentage ofUsage Percentage of (thousands Total City(thousands Total City Employer of gallons)RankMetered Flow1 of gallons)RankMetered Flow Oak Ridge Apartments42,08013.78%* * * South Lake Hospital31,74422.85%* * * MRP at Lost Lake16,06631.44%* * * Lake County Schools15,36741.38%* * * Westminster Comm Care Service14,40051.29%* * * Village at East Lake11,15861.00%* * * Emerald Lakes of Clermont7,86170.71%* * * City of Clermont7,50280.67%* * * Mister Car Wash5,92990.53%* * * BJ Wholesale Club3,835100.34%* * * TOTAL155,94214.00%* * 1 The City of Clermont had a total metered water flow for wastewater billing purposes of approximately 1,113,960,000 gallons for the 12-month period ending September 30, 2014 * Information is not available. 2014 2005 City of Clermont, Florida Principal Sewer Customers Current Year and Nine Years Ago 115 Function 2005 2006 2007 2008 General Government 25.5027.5030.5030.50 Public Safety: Police Sworn personnel 38.0045.0051.0053.00 Non sworn personnel 16.0016.0016.0017.00 Fire Firefighters 22.0038.0045.0049.00 Other personnel 1.00 2.00 2.00 2.00 Building Services 0.00 0.00 0.00 0.00 Physical Environment 7.5010.0010.0010.00 Transportation 13.2513.7015.2015.60 Human Services 2.25 2.00 2.00 2.00 Culture & Recreation 19.4522.2026.2026.60 Water 23.4025.4026.9029.40 Sewer 25.3026.3027.8026.30 Stormwater 4.65 7.20 8.70 8.80 Sanitation 8.70 8.7014.7016.80 Total 207.00244.00276.00287.00 Source: City of Clermont Finance Department. Full-time Equivalent Employees as of September 30, City of Clermont, Florida Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years 116 2009 2010 2011 2012 2013 2014 31.0028.0027.0025.8526.6631.56 53.0057.0057.0057.0057.0061.00 17.0016.00 5.00 5.00 6.00 6.00 47.8548.0048.0047.8047.8056.80 2.00 2.00 2.00 2.00 2.00 2.40 0.00 0.00 0.00 0.00 0.60 8.80 11.6510.90 5.40 4.60 4.95 4.70 15.6015.3513.5014.8014.6512.95 0.00 0.00 0.00 0.00 0.00 0.00 25.6021.1022.0021.2021.1027.25 29.4029.1529.1529.4529.6630.61 26.3026.0525.8524.5023.7823.88 8.80 9.15 9.40 7.95 6.72 6.87 16.8016.3016.7016.8517.0817.18 285.00279.00261.00257.00258.00290.00 Full-time Equivalent Employees as of September 30, 117 Function 2005 2006 2007 2008 General Government Municipal boundary (square miles)12.4514.1314.3714.42 Business Tax Receipts issued 1,7951,9852,1412,263 A/P Checks issued 5,4155,6646,0236,440 Commercial construction (units)23382442 Commercial construction (value in thousands)7,11517,53424,43318,859 Residential construction (units)673635324301 Residential construction (value in thousands)103,672186,189136,47756,578 Public Safety: Police Auto accidents6716251,1921,272 Physical arrests500707933842 911 calls received6,2627,0086,3176,046 Evidence processed (pieces)1,1271,6101,5851,300 Parking violations71161140145 Traffic violations2,8555,2595,1645,103 Fire Volunteer firefighters272798 Fire inspections completed457625414880 Emergency calls answered3,3213,1323,0483,177 Non-emergency calls answered143189198234 Human Services Animals captured**445495652- Water Residential accounts14,28415,73316,39416,959 Commercial accounts9219931,0691,156 Annual water usage (thousands of gallons)1,788,3372,121,5882,654,3522,589,664 Sewer Residential accounts10,17611,12511,55411,913 Commercial accounts8839551,0311,120 Sources: Various government departments. * Data not available. ** Program was discontinued in FY 07-08 Fiscal Year City of Clermont, Florida Operating Indicators by Function Last Ten Fiscal Years 118 2009 2010 2011 2012 2013 2014 14.43 14.76 14.90 14.95 14.95 15.18 1,771 1,833 1,843 2,237 2,483 1,955 6,042 5,722 4,875 2,336 2,288 3,529 19 10 3 8 20 15 13,223 8,357 18,020 15,203 34,268 17,288 204 305 151 173 327 572 56,092 53,202 23,558 25,882 53,055 62,117 972 955 1,121 1,259 1,402 1,357 949 854 699 644 886 631 6,828 5,230 5,587 5,911 6,352 6,643 1,652 1,349 1,297 1,413 2,930 2,384 107 137 378 201 252 379 4,553 4,981 6,312 5,389 7,225 4,623 10 6 6 6 - - 979 2,121 896 662 1,240 3,766 3,155 3,112 3,822 3,320 3,414 4,127 434 352 805 934 447 987 - - - - - - 17,375 17,884 18,240 18,619 19,399 20,904 1,201 1,206 1,210 1,207 1,232 1,234 2,312,962 2,054,236 2,275,936 2,391,485 2,392,022 2,406,183 12,154 12,508 12,722 12,936 13,407 14,773 1,158 1,158 1,167 1,166 1,194 1,055 Fiscal Year 119 Function 2005 2006 2007 2008 General Government Public Safety: Police Police stations 1111 Patrol units 38 45 45 45 Fire Fire department facilities 3333 Staffed fire stations 2233 Fire hydrants 1,431 1,630 1,896 2,140 Fire apparatus 8999 Staffed fire apparatus 3455 ALS non-transport units 3333 Transportation Streets paved (miles)101.39109.94122.93126.16 Streetlights 1,131 1,231 1,256 1,331 Culture & Recreation Number of parks 22 22 22 22 Parks acreage 101.5 349.5 349.5 349.5 Scenic linear trail (miles)5.7 5.7 5.7 5.7 Tennis courts 8889 Fishing piers 4444 Boat ramp 1111 Water Miles of water mains 97.23104.52115.02115.98 Sewer Miles of sanitary sewers 44.26 49.51 56.98 59.40 Miles of storm sewers 10.27 11.13 18.07 20.88 Sources: Various government departments. Capital Asset Statistics by Function City of Clermont, Florida Last Ten Fiscal Years Fiscal Year 120 2009 2010 2011 2012 2013 2014 111111 45 45 46 46 55 57 344444 333333 2,140 2,012 2,016 2,048 2,120 2,146 987888 555555 444444 131.72133.20133.20133.20173.91191.52 1,331 1,352 1,352 3,103 3,103 3,127 22 22 23 23 23 23 349.5 349.5 349.5 349.5 349.5 349.5 5.7 5.7 5.7 5.7 5.7 5.7 999999 444455 111111 122.83124.11197.40242.36243.14222.75 65.18 66.19132.02156.81160.42161.25 24.61 26.32 89.80105.38109.05133.70 Fiscal Year 121 122 Other Reports MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated April 28, 2015. 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. 123 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. Orlando, FL April 28, 2015 124 MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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, 2014, and have issued our report thereon dated April 28, 2015. 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 Reports 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, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated April 28, 2015, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i.)1., Rules of the Auditor General, require that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial 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 noted to the financial statements. 125 Financial Condition Section 10.554(1)(i)5.a., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the City of Clermont, Florida has met one or more of the conditions described in Section 218.503(1), Florida Statues, 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 Statues. Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor the City of Clermont, Florida’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Annual Financial Report Section 10.554(1)(i)5.b., Rules of the Auditor General, requires that we report the results of our determination as to whether the annual financial report for the City of Clermont, Florida for the fiscal year ended September 30, 2014, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statues, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2014. In connection with our audit, we determined that these two reports were in agreement. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of This Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the commissioners, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. Orlando, Florida April 28, 2015 126 MCDIRMIT DAVIS & COMPANY, LLC 934 NORTH MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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, 2014, and have issued our report thereon dated April 28, 2015. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated July 14, 2011, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of City of Clermont solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence. 127 Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by City of Clermont is included in Note 1 to the financial statements. As described in Note 1 to the financial statements, during the year, City of Clermont changed accounting policies related to the adoption of Statement of Governmental Accounting Standards (GASB Statement) No. 67. 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. 128 Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to City of Clermont, Florida’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the management representation letter dated April 28, 2015. 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, Orlando, Florida April 28, 2015 129 130 MCDIRMIT DAVIS & COMPANY, LLC 934 N. MAGNOLIA AVENUE, SUITE 100 ORLANDO, FLORIDA 32803 TELEPHONE: 407-843-5406 FAX: 407-649-9339 EMAIL: INFO@MCDIRMITDAVIS.COM MEMBERS: PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FLORIDA INSTITUTE OF CERTIFIED PUBLIC 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, 2014. 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, 2014. Orlando, Florida April 28, 2015 131 132