CITY ENDED SEPTEMBER FISCAL YEAR 30, 2011 OF NORTH ANNUALNNUAL FINANCIALINANCIAL REPORTEPORT COMPREHENSIVE

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1 CITY OF NORTH PORT,, FLORIDAF COMPREHENSIVE ANNUALNNUAL FINANCIALINANCIAL REPORTEPORT Morgan Family Center Helipad Atwater Park Canine Club Garden of the Five Senses Sumter Blvd Widening Project FISCAL YEAR ENDED SEPTEMBER 30, 2011 City of North Port 4970 City Hall Boulevard North Port, FL 34286

2 Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2011 CITY OF NORTH PORT, FLORIDA Prepared by the Finance Department Peter D. Lear, CPA Finance Director

3 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement List of Principal Officers Organization Chart Page i-iv v vi vii FINANCIAL SECTION Independent Auditors' Report 1-2 Management's Discussion and Analysis 3A-3L Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 6 Statement of Activities 7-8 Fund Financial Statements: Balance Sheet - Governmental Funds 9-10 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 12 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 15 Statement of Net Assets - Proprietary Fund 16 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Fund 17 Statement of Cash Flows - Proprietary Fund Statement of Fiduciary Net Assets - Fiduciary Funds 20

4 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS FINANCIAL SECTION (continued) Page Statement of Changes in Fiduciary Net Assets - Pension Trust Fiduciary Funds 21 Notes to the Financial Statements Required Supplementary Information: Budgetary Comparison Schedules - General Fund and Major Special Revenue Funds: General Fund Road and Drainage District Special Revenue Fund 67 Fire Rescue District Special Revenue Fund 68 Solid Waste District Special Revenue Fund 69 GASB Statements 25 and 27 Pension Trust Information GASB Statement 45 Postemployment Benefits Other Than Pension 74 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Budgetary Comparison Schedules: Inspector Education Special Revenue Fund 85 Special Law Enforcement Special Revenue Fund 86 Police Education Special Revenue Fund 87 Tree Replacement Special Revenue Fund 88 Building Department Special Revenue Fund 89 Escheated Lots - Land and Future Projects Special Revenue Fund 90 Escheated Lots - Roads Special Revenue Fund 91 Escheated Lots - Parks Special Revenue Fund 92 Law Enforcement Impact Fees Special Revenue Fund 93 Fire Impact Fees Special Revenue Fund 94 Parks and Recreation Impact Fees Special Revenue Fund 95 Transportation Impact Fees Special Revenue Fund 96 Solid Waste Impact Fees Special Revenue Fund 97 General Government Impact Fees Special Revenue Fund 98 Environmental Management Special Revenue Fund 99 Loan Guarantee Special Revenue Fund 100 Fleet Maintenance Special Revenue Fund 101 Surtax II Capital Projects Fund 102

5 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS FINANCIAL SECTION (continued) Page Surtax III Capital Projects Fund 103 Maintenance Facility Construction Capital Projects Fund 104 Combining Statement of Plan Net Assets - Fiduciary Funds 107 Combining Statement of Changes in Plan Net Assets - Fiduciary Funds 108 Combining Statement of Changes in Assets and Liabilities - Agency Funds STATISTICAL SECTION Net Assets by Component - Last Nine Fiscal Years 113 Changes in Net Assets - Last Nine Fiscal Years Fund Balances of Governmental Funds - Last Ten Fiscal Years 116 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years Assessed Value and Actual Value of Taxable Property - Last Ten Fiscal Years 119 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 120 Principal Property Tax Payers - Current Year and Nine Years Ago 121 Property Tax Levies and Tax Collections - Last Ten Fiscal Years 122 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 123 Ratios of General Bonded Debt Outstanding - Last Eight Fiscal Years 124 Direct and Overlapping Governmental Activities Debt 125 Legal Debt Margin Information 126 Pledged-Revenue Coverage - Last Ten Fiscal Years 127 Demographic and Economic Statistics - Last Ten Calendar Years 128 Principal Employers - Current Year and Nine Years Ago 129

6 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 TABLE OF CONTENTS STATISTICAL SECTION (continued) Page Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 130 Operating Indicators by Function/Program - Last Ten Fiscal Years 131 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 132 SUPPLEMENTAL INFORMATION SECTION Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards Independent Auditors' Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Federal Awards Program and on Internal Control Over Compliance in Accordance With OMB Circular A Schedule of Findings and Questioned Costs - Federal Awards Programs Summary Schedule of Prior Audit Findings and Corrective Action Plan - Federal Awards Programs 140 Schedule of Expenditures of Federal Awards 141 Notes to Schedule of Expenditures of Federal Awards 142 Independent Auditors' Management Letter

7 City of North Port 4970 City Hall Boulevard North Port, Florida (941) April 16, 2012 To the Members of the City Commission and Citizens of the City of North Port, Florida: We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of the City of North Port, Florida (the City) for the fiscal year ended September 30, The purpose of this report is to provide City Commission, citizens, financial institutions and others with detailed information concerning the financial condition and performance of the City of North Port. This report meets Florida Statute requirements that each local government entity publish within nine months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed independent certified public accountants. In addition, the audit was also designed to meet the requirements of the Federal Single Audit Act. This report consists of management s representations concerning the finances of the City of North Port. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the City s assets from loss, theft, or misuse, and to compile sufficient reliable information for the preparation of the City s financial statements in conformity with GAAP. The City of North Port has designed internal controls to provide reasonable, not absolute, assurance that the financial statements are free from any material misstatement. The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the benefits likely to be derived; and (2) that the evaluation of the costs and benefits requires estimates and judgments by management. We believe the data, as presented, is accurate in all material respects, that it is presented in a manner designed to fairly set forth the financial position and the results of operations of the City, and that all disclosures necessary to enable the reader to obtain a comprehensive understanding of the City s financial activity have been included. The City s financial statements for the fiscal year ended September 30, 2011 have been audited by Cherry, Bekaert & Holland, L.L.P., a firm of licensed certified public accountants. The 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. In addition to meeting the requirements of the state statutes, the audit was also designed to meet the requirements of the Federal Single Audit Act. The independent auditors report on the basic financial statements and combining and individual fund statements and the schedules is presented as the first component i

8 of the financial section. The independent auditors report related specifically to the single audit is included in a separate single audit report. Management s discussion and analysis (MD&A) immediately follows the independent auditors report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements the letter of transmittal and should be read in conjunction with it. Profile of the City The City of North Port was incorporated on June 18, The City is managed under a Commission-City Manager form of government. The legislative and governing body of the City, led by a Commission Chairperson, consists of five elected citizens who are qualified voters in the City. Each commissioner is elected to a four year staggered term. There is a limit of two consecutive terms that any commissioner may serve. The Commission appoints the City Manager, who is the chief administrative officer of the City and directs the business of the City and its various departments. The Commission determines policy, adopts legislation, approves the City s budget, sets taxes and fees, and appoints the City Auditor, City Clerk, Deputy City Clerk and the City Attorney. The City of North Port provides a range of municipal services. The public safety operation includes police and fire protection, as well as building, code enforcement and zoning. Recreational services include neighborhood parks, a skate park facility and a recreational center. Public Works provides essential street and highway maintenance, drainage, traffic signalization, landscape maintenance, as well as solid waste collection. The Public Utilities provides water and sewer service and reuse water for irrigation. Other services provided include planning, engineering, economic development, as well as general administrative services. The annual budget serves as the foundation for the City s financial planning and control. All departments of the City are required to submit requests for appropriation to the City Manager each year. The City Manager uses these requests as the starting point for developing a recommended budget. The City Manager then presents this proposed budget to the Commission for review during the month of July. The Commission is required to hold public hearings on the proposed budget and adopt a final budget no later than September 30, the close of the City of North Port s fiscal year. The appropriated budget is prepared by fund, function and department. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the General Fund and major special revenue funds, the comparisons are presented as part of the required supplementary information. The other governmental budget-to-actual presentations are presented in the combining and individual fund statements and schedules subsection. Local Economy The City of North Port is the southernmost city in Sarasota County, midway between the cities of Sarasota and Fort Myers, near the Gulf of Mexico. The City is comprised of 103 square miles ii

9 and 813 miles of paved road and has 81 miles of freshwater canals. As of the 2010 census data, North Port is Sarasota County s largest municipality in population. The population of North Port has steadily increased from 31,352 in 2003 to 57,893 in Due to the slowdown in the economy and the changes in the housing market, the taxable value on the real property decreased 8% in comparison with fiscal year This trend in property values has significantly affected local governments in the state. For the fiscal year 2011, the City maintained the tax rate at 3.34 mils. Local taxes make up approximately 42% of the General Fund revenues, excluding transfers and fund balance. Long-term Financial Planning The City of North Port s Capital Improvement Program (CIP) consists of capital projects that reflect the City s infrastructure needs over a five-year time frame and includes assets with long term value, such as buildings, roads, bridges and parks. The CIP not only includes on-going capital requirements but also includes capital additions that are necessary to comply with the Growth Management Act of 1985, as amended. The Growth Management Act requires the adoption of the Comprehensive Plan, which details the additional infrastructure necessary to handle projected population increases. The CIP differentiates these capital projects from those of an on-going nature by designating them as level of service projects. The primary objective of the City s investment program is the preservation of capital. Investment transactions are managed so as to avoid loss of principal, whether by security default or by erosion of market value. Generally, a minimum amount of operating capital is kept at the local bank, in an interest bearing checking account. The remainder of the City s funds is invested according to the City s investment policy, which is adopted by the Commission and can only be amended by the Commission. Additionally, the General Fund has a minimum fund balance target of 15% of the ensuing year s budgeted General Fund expenditures. The dependent special district funds have minimum fund balance policies with a 20% - 25% range of the ensuing year s annual budgeted expenditures. The fund balances are designed to be used in the event of a significant financial emergency. Appropriations of fund balances may be set aside for specific purposes, such as capital projects, for known significant future cost items or one-time, non-recurring expenditures and are not to be used for operating purposes. For operating budgets, the fund balance shall be maintained such that emergency needs may be met and sufficient funds are available to operate before tax proceeds are received. Major Initiatives Expansion of Sumter Blvd. in order to maintain the transportation level of service. Construction of several sidewalks (9,900 linear feet) and US41 enhancements. Building of a new fire station. Expansion of waste water treatment plant. Construction of Atwater Community Park and Morgan Family Community Center. iii

10 o City/County joint acquisition ofthe 81 acre property at Warm Mineral Springs. Awards and Adrnowlledlgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate ofachievement for Excellence in Financial Repoliing to the City ofnolih POli for its Comprehensive Annual Financial Repoli for the fiscal year ending September 30, This was the fifteenth consecutive year that the City has received this prestigious award. Weare pleased to continue to achieve this distinction. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Repoli. 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 our current report continues to meet the Celiificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility Jor another certificate. The City also received the GFOA's Award for Distinguished Budget Presentation for its annual financial plan for the fiscal year beginning October 1, 2010, the same period covered by this Comprehensive Annual Financial Report. This was the fourth consecutive year that the City received this award. In order to qualify for the Distinguished Budget Presentation Award, the. City's budget document was judged to be proficient in several categories including policy documentation, financial planning, organization, and as a communications medium. This report represents countless hours of preparation and could not have been accomplished without the dedicated efforts of the Finance Department. A special note of appreciation is extended to these employees for their work to ensure the accuracy ofthis report. The financial responsibility exhibited by the Commission throughout the year is commendable. Your interest in the fiscal matters of the City, combined with a commitment to assure continued sufficient financial capacity, is appreciated. Sincerely, ~I(~ Jonathan R. Lewis, ICMA-CM,/ City Manager Peter D. Lear, CPA Finance Director iv

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12 City of North Port, Florida Principal Officers As of September 30, 2011 City Commission James F. Blucher Tom E. Jones David J. Garofalo, Sr. Michael R. Treubert Linda M. Yates City Manager Jonathan R. Lewis, ICMA-CM Assistant City Manager Daniel P. Schult Department Directors Branford N. Adumuah Public Works Sherry L. Borgsdorf General Services Peter D. Lear, CPA Finance Cindy B. Mick Public Utilities William J. Taaffe Fire Rescue Kevin T. Vespia Police Scott E. Williams Neighborhood Development Services City Clerk Helen M. Raimbeau City Attorney Robert K. Robinson vi

13 CITY OF NORTH PORT, FLORIDA CITIZENS OF NORTH PORT CITY AUDITOR CITY COMMISSION CITY ATTORNEY CITY MANAGER CITY CLERK DEPUTY CITY CLERK ASSISTANT CITY MANAGER COMMUNITY OUTREACH FINANCIAL SERVICES ACCOUNTING BUDGET PAYROLL PURCHASING ECONOMIC DEVELOPMENT FIRE SERVICES ADMINISTRATION OPERATIONS EMERGENCY MANAGEMENT GENERAL SERVICES ADMINISTRATION HUMAN RESOURCES INFORMATION & TECHNOLOGY PARKS & RECREATION SOCIAL SERVICES POLICE SERVICES EXECUTIVE ADMINISTRATION LAW ENFORCEMENT NEIGHBORHOOD DEVELOPMENT SERVICES BUILDING PLANNING PROPERTY MAINTENANCE PROPERTY STANDARDS PUBLIC UTILITIES ADMINISTRATION FIELD OPERATIONS WATER SYSTEMS WASTEWATER SYSTEMS PUBLIC WORKS ADMINISTRATION ENGINEERING FLEET OPERATIONS SOLID WASTE vii

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15 Independent Auditors Report Honorable Chairman and City Commission City of North Port, Florida: We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of North Port, Florida (the "City"), as of and for the year ended September 30, 2011, which collectively comprise the City s basic financial statements as listed in the foregoing table of contents. These financial statements are the responsibility of the City s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the City of North Port, Florida Police Officers Pension-Local Option Trust Fund and the City of North Port, Florida Firefighters Pension-Local Option Trust Fund (collectively, the Plans ), whose statements reflect 99% of the assets and 100% of the changes in fiduciary net assets of the City s fiduciary funds. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Plans, is based solely upon the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of September 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note A 4i to the financial statements, the City adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the year ended September 30, In accordance with Government Auditing Standards, we have also issued our report dated April 13, 2012 on our consideration of the City 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1

16 The management s discussion and analysis section and the required supplementary information as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical section listed in the foregoing table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. In addition, the accompanying schedule of expenditures of federal awards for the year ended September 30, 2011 is presented for the purpose of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. The combining and individual fund statements and schedules, including the schedule of expenditures of federal awards, have been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections of this report have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Orlando, Florida April 13,

17 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Management s Discussion and Analysis As management of the City of North Port (the City), we offer readers of the City s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 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 i-iv of this report and the City s financial statements beginning on page 6. Financial Highlights The assets of the City exceeded its liabilities at the close of the fiscal year 2011 by $387,552,293 (net assets). Of this amount, $41,065,989 (unrestricted net assets) may be used to meet the government s ongoing obligations to citizens and creditors. At the close of fiscal year 2011, the City s governmental funds reported combined ending fund balances of $71,717,246, a decrease of $11,175,541 in comparison with the prior year. Approximately 11% of this total amount, $7,962,682, is available for spending at the City s discretion (unassigned fund balance). At the close of fiscal year 2011, unassigned fund balance for the general fund was $8,359,530 or 27% of total general fund expenditures. Total governmental activities revenues decreased $1,607,044, or 2% in comparison to the prior year. The primary reasons for the decrease include a reduction in ad valorem and Road & Drainage District non-ad valorem revenues collected. Total governmental activities expenses increased $261,773, or 0.4% in comparison to the prior year. A significant portion of this increase is attributable to the rise in the City s contribution to the police officers pension plan and the increase in road rehabilitation expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City 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 s finances, in a manner similar to private-sector financial statements. The Statement of Net Assets presents information on all of the City s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 3-A

18 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 The Statement of Activities presents revenue and expenses and shows how the government s net assets changed during the most recent fiscal year. All changes in net assets are reported in a manner similar to the approach used by private sector business in that revenues are recognized when earned or established criteria are satisfied and expenses are reported when incurred. Accordingly, revenues are reported even when they may not be collected for several months after the end of the accounting period and expenses are recorded even though they may not have used cash during the current period. Both of the government-wide financial statements distinguish functions of the City 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 include general government, public safety, physical environment, transportation, culture and recreation, human services and economic environment. The business-type activities of the City include the water and sewer utilities. The City s government-wide financial statements can be found on pages 6-8 of this report. 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 North Port, 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 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 a government 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 North Port maintains many 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, the Road and Drainage District Special Revenue Fund, the Fire Rescue District Special Revenue Fund, the Solid Waste District Special Revenue Fund and the Surtax II Capital Projects Fund, all of which are considered to be major funds. Data from the remaining governmental funds are combined in a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. 3-B

19 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 The City adopts an annual budget as described in Note B to the financial statements. A budgetary comparison statement has been provided in the Required Supplementary Information for the General Fund and each major special revenue fund with a legally adopted budget in order to demonstrate compliance with this budget. Budgetary comparison schedules for nonmajor governmental funds and major capital projects funds are presented in the combining and individual fund statements and schedules section elsewhere in this report. The basic governmental fund financial statements can be found on pages 9-15 of this report. Proprietary Funds. The City maintains one type of proprietary fund. An enterprise fund is used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its Water and Sewer Utilities. Proprietary funds provide the same type of information as reported as business-type activities in the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for the Water and Sewer Utility System, which is considered to be a major fund of the City. The basic proprietary fund financial statements can be found on pages 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 s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund financial statements can be found on pages 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 the financial statements can be found on pages of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required and other supplementary information. Required and other supplementary information can be found on pages of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government s financial position. Assets exceeded liabilities by $387,552,293 at the close of the most recent fiscal year for the City of North Port. A portion of the City s net assets (74%) reflects its investment in capital assets such as land, buildings, various infrastructure, equipment and construction in progress, less any related outstanding debt used to acquire those assets. The City of North Port uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. 3-C

20 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Although the City 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. Following is a summary chart of the City s net assets for fiscal years ending 2011 and 2010: City of North Port's Net Assets Governmental Activities Business-type Activities Totals Current and other assets $ 78,334,665 $ 93,899,640 $ 33,574,897 $ 33,003,615 $ 111,909,562 $ 126,903,255 Capital assets 231,593, ,095, ,582, ,695, ,175, ,791,124 Total assets 309,927, ,995, ,157, ,699, ,085, ,694,379 Long-term liabilities 17,021,270 18,887,916 40,717,530 44,258,878 57,738,800 63,146,794 Other liabilities 4,375,777 8,544,947 1,418, ,110 5,793,981 9,530,057 Total liabilities 21,397,047 27,432,863 42,135,734 45,243,988 63,532,781 72,676,851 Net assets: Invested in capital assets, net of debt 218,575, ,830,147 66,903,408 65,459, ,479, ,289,337 Restricted 45,826,354 58,643,863 15,180,859 16,947,629 61,007,213 75,591,492 Unrestricted 24,128,719 23,088,158 16,937,270 15,048,541 41,065,989 38,136,699 Total net assets $ 288,530,756 $ 288,562,168 $ 99,021,537 $ 97,455,360 $ 387,552,293 $ 386,017,528 An additional portion of the City s net assets (16%) represents resources that are subject to restrictions on how they may be used. The remaining balance of unrestricted net assets ($41,065,989 or 10%) may be used to meet the government s ongoing obligations to citizens and creditors within the specified purposes of the individual funds. As of September 30, 2011, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and businesstype activities. The same situation held true for the prior fiscal year. There was a decrease of $14,584,279 in restricted net assets reported. The decrease was due to the projects for which the funds were accumulated being completed. There was an increase in total net assets of $1.5 million during the current fiscal year. The increase is due mostly to the funds accumulating (i.e. - revenues exceeding expenses) in the Water & Sewer Utilities Fund for future capital projects. Governmental Activities. Governmental activities were responsible for a small decrease of $31,412 in the total change of net assets as the result of current fiscal year activities. Total general revenues decreased by $2.5 million (9%). The largest category of general revenues, ad valorem taxes, decreased by $1.6 million (16%) during the current fiscal year due to the decline in property values. 3-D

21 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Investment income decreased by $1.5 million (60%) primarily as a result of declining average cash balances available for investing and lower investment rate returns. Charges for services increased by $0.7 million (2%) during the current fiscal year. This increase mostly reflects the seventeen percent increase in the Fire Rescue District s nonad valorem assessment revenues. To a smaller degree, the increase also reflects a rise in the Parks and Recreation department s programs and special events revenues. Net expenses (program revenues less program expenses) in governmental activities decreased by $0.6 million (2%). This net decrease is due mostly to the increase of the Fire Rescue District s non-ad valorem assessment revenues combined with the District s operating expenses remaining constant with the prior year. 3-E

22 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 City of North Port s Changes in Net Assets Governmental Activities Business-type Activities Total Revenues: Program Revenues: Charges for services $ 39,630,854 $ 38,932,396 $ 16,547,772 $ 14,203,042 $ 56,178,626 $ 53,135,438 Operating grants and contributions 474, , , , ,990 Capital grants and contributions 2,411,883 2,483,735 1,465,916 1,926,598 3,877,799 4,410,333 General Revenues: Ad valorem taxes 8,035,010 9,614, ,035,010 9,614,477 Discretionary sales surtaxes 5,801,652 5,554, ,801,652 5,554,577 Other taxes 5,167,586 5,232, ,167,586 5,232,025 Intergovernmental 4,584,561 4,317, ,584,561 4,317,889 Other 1,343,057 2,695, , ,482 1,630,840 3,339,202 Total Revenues 67,449,458 69,056,502 18,301,471 16,783,429 85,750,929 85,839,931 Expenses: Governmental Activities: General government 13,260,162 14,596, ,260,162 14,596,663 Public safety 27,112,638 26,684, ,112,638 26,684,201 Physical environment 11,889,847 11,595, ,889,847 11,595,816 Transportation 11,912,546 11,444, ,912,546 11,444,929 Culture & recreation 1,510,829 1,348, ,510,829 1,348,049 Human services 471, , , ,391 Economic environment 718, , , ,875 Interest on long-term debt 604, , , ,173 Business-type Activities: Water and sewer ,735,294 15,015,613 16,735,294 15,015,613 Total Expenses 67,480,870 67,219,097 16,735,294 15,015,613 84,216,164 82,234,710 Changes in Net Assets (31,412) 1,837,405 1,566,177 1,767,816 1,534,765 3,605,221 Net Assets-beginning 288,562, ,724,763 97,455,360 95,687, ,017, ,412,307 Net Assets-end of year $288,530,756 $288,562,168 $99,021,537 $97,455,360 $387,552,293 $386,017,528 3-F

23 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Expenses and Program Revenues - Governmental Activities $28,000,000 $26,000,000 $24,000,000 $22,000,000 $20,000,000 expenses program revenues $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 General government Public safety Physical environment Transportation Culture and recreation Human services Economic environment Interest on longterm debt Revenues by Source - Governmental Activities Capital Grants and Contributions 3.58% Property Taxes 11.91% Charges for Services 58.76% Investment Income 1.47% Other Taxes 7.66% Intergovernmental 6.80% Sales Surtax 8.60% Other Revenues 1.22% 3-G

24 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Business-type Activities. Business-type activities increased the City s net assets by $1,566,177, accounting for 100% of the total growth in the City s net assets. Key elements causing the increase in the current year are: Developer contributed assets of approximately $0.3 million were capitalized during the fiscal year. Water and sewer impact fees collected for the fiscal year were $306,320. Expenses and Program Revenues - Business-type Activities expenses $25,000,000 program revenues $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Water & Sewer Utilities Revenues by Source - Business-type Activities Charges for Services 90.42% Investment Income 1.57% Capital Grants and Contributions 8.01% 3-H

25 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Financial Analysis of the City s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal 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 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. At the close of fiscal year 2011, the City s governmental funds reported combined ending fund balances of $71,717,246, a decrease of $11,175,541 in comparison with the prior year. Approximately 11% of this total amount ($7,962,682) constitutes unassigned fund balance, which is available for spending at the City s discretion. The remainder of fund balance available for spending is restricted, committed or assigned, these totaled $63,754,564 or 89% of ending fund balance. Of this amount, $46,619,875 is restricted by law or externally imposed requirements, $14,612,081 is committed for specific purposes by the Commission and $2,522,608 is assigned for various purposes by the City Manager or designee. The General Fund is the chief operating fund of the City. The General Fund manages 40% of the total governmental revenues. At the end of the current fiscal year, unassigned fund balance of the General Fund was $8,359,530, while the total fund balance was $12,223,280. 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 27% of total General Fund expenditures, while total fund balance represents 40% of that same amount. The fund balance of the City s General Fund decreased by $3,122,648 during the current fiscal year. One of the key factors for this decrease was the $1,579,467 reduction of ad valorem taxes received in comparison to the prior year; this reduction was a result of lower property values which decreased 8% over the prior fiscal year. Another contributing factor was the $541,009 transfer out towards the deficit fund balance in the Building Fund. The final budget to actual comparison in the General fund had some noteworthy positive variances in City Attorney ($212,693), Planning, Zoning & Engineering ($277,689), Emergency Medical Services ($233,700), and capital outlay ($1,502,858). City Attorney expenditures were lower than budgeted due to the decrease in non-retainer legal fees. Planning, Zoning and Engineering expenditures were below budget because the Strategic Energy Plan Stimulus Package Grant expenditures were not as high as anticipated. The Strategic Energy Plan project is ongoing. Emergency Medical Services expenditures were lower than budgeted; overtime and special pay were lower than expected. Capital outlay was lower than the final budget as a result of projects such as Atwater Community Park and the Morgan Family Community Center that are not yet completed. The fund balance of the Road and Drainage District decreased by $1,470,896 during the current fiscal year. Non ad-valorem revenues decreased approximately $474,000 or 4.4% over the previous fiscal year; tax certificate sales receipts for the current year were approximately $600,000 less than the prior year. Another contributing factor was the reduction in investment income of $186,634 or 58% as a result of declining average cash balances available for investing 3-I

26 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 and lower investment rate returns. Operating expenditures increased approximately $163,000 due to the increase in contractual services for the additional mowing contract for Toledo Blade and rise in water control structure repairs. The Surtax II Fund had a net decrease of $4,231,781 in fund balance as the ten year revenue source expired, and the construction of capital projects continued. The extension of the county one-cent surtax was voted on and passed for another ten year period; therefore, the Surtax III Fund was created and utilized during the fiscal year. Proprietary funds. The fund financial statements for the City s proprietary funds provide essentially the same type of information found in the business-type activities of the governmentwide financial statements, but in a little more detail. Unrestricted net assets of the Water and Sewer Utilities increased by $1,888,729 to $17 million at the end of the current fiscal year. Other factors concerning the finances of the proprietary funds have been addressed in the discussion of the City s business-type activities. General Fund Budgetary Highlights During the current fiscal year there was a $2,656,998 increase in appropriations between the original and final amended budget. Following are the main components of the increase that were adopted using available fund balance: Projects that were started in the prior year had the budgets rolled over to the current fiscal year. These projects account for $2,226,393 of the increase in the original budget. A cost reimbursable Federal Emergency Management Agency grant was awarded in the amount of $335,942. Capital Asset and Debt Administration Capital assets. The City s investment in capital assets for its governmental and business-type activities as of September 30, 2011 amounts to $339,175,512 (net of accumulated depreciation). This investment in capital assets includes land, construction in process, buildings, improvements, intangible assets, various infrastructure, utility systems and equipment. The overall total increase in the City s capital assets for the current fiscal year was 2% (a 4% increase for governmental activities and a 2% decrease for business-type activities). Some of the major capital asset additions during the current fiscal year included the following: Road and intersection improvements. Refuse and recycle trucks. Road and Drainage equipment. Sidewalks and pedestrian bridges. Stormwater system improvements. Community Education Center renovations. Wastewater Treatment Plant Expansion. Water and sewer line improvements. Cisterns for 2 of the fire stations. 3-J

27 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Helipad/pond reconfiguration project. Maintenance storage building. City of North Port s Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total Land $15,384,578 $12,511,870 $ 948,266 $ 948,266 $16,332,844 $13,460,136 Intangibles 450, , , ,000 Buildings 25,992,337 23,936, , ,567 26,393,213 24,356,353 Infrastructure 139,511, ,274, ,727,366 99,749, ,239, ,024,435 Equipment 11,271,972 11,053, , ,740 11,912,545 12,048,508 Construction in progress 38,982,471 36,867,996 2,865,293 7,583,696 41,847,764 44,451,692 Total $231,593,138 $222,095,391 $107,582,374 $109,695,733 $339,175,512 $331,791,124 Additional information on the City s capital assets can be found in Note F - Capital Assets on pages of this report. Long term debt. As of year end, the City had $52,284,710 in total bonded debt outstanding compared to the $56,001,543 last year Governmental: Sales Tax Revenue Bonds, Series 2003 $ 11,055,000 $ 11,765,000 Subtotal 11,055,000 11,765,000 Business-type: State Revolving Loan Funds 22,960,814 20,843,500 Utility System Revenue Bonds, Series ,125,000 Utility System Refunding Revenue Bonds, Series ,087,814 6,107,936 Utility System Refunding Revenue Bonds, Series ,996,356 Utility System Refunding Revenue Bonds, Series ,876,506 Deferred loss on defeasance of debt (1,695,424) (1,836,249) Subtotal 41,229,710 44,236,543 Total $ 52,284,710 $ 56,001,543 3-K

28 City of North Port, Florida Management s Discussion and Analysis September 30, 2011 Additional information on the City s long-term debt can be found in Note I - Long-Term Liabilities found on pages of this report. Economic Factors and Next Year s Budgets and Rates Sarasota County, the county that the City of North Port is located in, had an unemployment rate of 12.0% at fiscal year end. Unemployment rates exclusively for the City of North Port are not available. The Sarasota County unemployment rate is higher compared against unemployment rates for Florida and the nation during the same time period. The General Fund property tax millage was increased by to mills for fiscal year The City s population increased by 3.7% during the fiscal year from 55,828 to 57,893. The taxable value of real estate located in the City fell to $2.28 billion in the current fiscal year, which is a decrease of approximately $187 million or 8% over the prior fiscal year. Single family home starts remain at depressed levels and recovery may be long due to the oversupply of existing homes on the market and the increasing amount of distressed transactions. All of these factors were considered in preparing the City s budget for the 2012 fiscal year. Financial Contact This financial report is designed to provide a general overview of the City s finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional financial information may be addressed to: City of North Port, Florida Finance Department 4970 City Hall Boulevard North Port, FL Or visit our website: 3-L

29 BASIC FINANCIAL STATEMENTS 4

30 5

31 CITY OF NORTH PORT, FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30, 2011 Governmental Business-type Activities Activities Total ASSETS Cash and investments $ 73,802,598 $ 11,677,831 $ 85,480,429 Receivables (net) 2,502,793 4,584,147 7,086,940 Internal balances (945,376) 945,376 - Inventories - 480, ,865 Restricted assets: Cash and investments 1,204,621 14,802,026 16,006,647 Receivables (net) - 533, ,908 Unamortized deferred charges 212, , ,272 Net pension asset 1,557,501-1,557,501 Capital assets: Non-depreciable 54,817,049 3,813,559 58,630,608 Depreciable (net) 176,776, ,768, ,544,904 Total Assets 309,927, ,157, ,085,074 LIABILITIES Accounts payable 3,710, ,507 4,014,710 Accrued liabilities 661, ,033 Payable from restricted assets: Accounts payable - 80,606 80,606 Interest payable - 134, ,526 Unearned revenue 4,541-4,541 Noncurrent liabilities: Due within one year: Compensated absences 451,554 38, ,370 Leases payable 818, ,022 Deposits payable - 28,273 28,273 Loans payable - 898, ,565 Bonds payable 735,000 1,107,051 1,842,051 Due in more than one year: Compensated absences 2,257, ,035 2,451,265 Leases payable 1,144,433-1,144,433 Deposits payable - 46,196 46,196 Loans payable - 22,062,249 22,062,249 Bonds payable 10,320,000 17,161,845 27,481,845 Other postemployment benefits payable 1,295,031 79,065 1,374,096 Total Liabilities 21,397,047 42,135,734 63,532,781 NET ASSETS Invested in capital assets, net of related debt 218,575,683 66,903, ,479,091 Restricted for: Debt service covenants 1,204,621-1,204,621 Renewal and replacement - 796, ,513 Capital projects 20,975,342 14,384,346 35,359,688 Special revenues - See Note A4.h 23,646,391-23,646,391 Unrestricted 24,128,719 16,937,270 41,065,989 Total Net Assets $ 288,530,756 $ 99,021,537 $ 387,552,293 The notes to the financial statements are an integral part of this statement. 6

32 CITY OF NORTH PORT, FLORIDA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011 Program Revenues Charges for Operating Grants Capital Grants Functions/Programs Expenses Services and Contributions and Contributions Governmental activities: General government $ 13,260,162 $ 11,656,173 $ - $ 39,189 Public safety 27,112,638 9,489,908 52, ,928 Physical environment 11,889,847 11,226, ,299 1,249 Transportation 11,912,546 7,031,970-1,782,385 Economic environment 718, Human services 471,217 36, , ,339 Culture and recreation 1,510, , ,793 Interest on long-term debt 604, Total governmental activities 67,480,870 39,630, ,855 2,411,883 Business type activities: Water and sewer utilities 16,735,294 16,547,772-1,465,916 Total business-type activities 16,735,294 16,547,772-1,465,916 Total government 84,216,164 56,178, ,855 3,877,799 General revenues: Taxes: Ad Valorem Service Local business Fuel Discretionary sales surtax Intergovernmental - unrestricted Investment income Miscellaneous Total general revenues Changes in net assets Net assets - beginning Net assets - ending The notes to the financial statements are an integral part of this statement. 7

33 Net (Expense) Revenue and Changes in Assets Governmental Business-type Activities Activities Total $ (1,564,800) $ - $ (1,564,800) (17,242,227) - (17,242,227) (346,244) - (346,244) (3,098,191) - (3,098,191) (718,912) - (718,912) (196,433) - (196,433) (1,191,752) - (1,191,752) (604,719) - (604,719) (24,963,278) - (24,963,278) - 1,278,394 1,278,394-1,278,394 1,278,394 (24,963,278) 1,278,394 (23,684,884) 8,035,010-8,035,010 2,610,742-2,610, , ,573 2,453,271-2,453,271 5,801,652-5,801,652 4,584,561-4,584, , ,783 1,276, , ,602 24,931, ,783 25,219,649 (31,412) 1,566,177 1,534, ,562,168 97,455, ,017,528 $ 288,530,756 $ 99,021,537 $ 387,552,293 8

34 CITY OF NORTH PORT, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2011 ASSETS: Cash and investments Receivables (net of allowance for uncollectibles) Due from other funds Due from other governments Restricted - cash and investments Total assets General Fund Road and Drainage District Fire Rescue District Solid Waste District $ 11,104,131 $ 9,123,519 $ 2,067,398 $ 4,429,905 1,008,528 10, , , , ,428 86,549 11,066 1,204, $ 14,542,053 $ 9,376,748 $ 2,154,031 $ 4,459,037 LIABILITIES: Accounts payable Due to other funds Due to other governments Accrued liabilities Deferred revenue Total liabilities FUND BALANCES: Restricted Committed Assigned Unassigned Total fund balances Total liabilities and fund balances $ 1,342,234 $ 873,827 $ 114,014 $ 159,199-68,266 77,074 25,013 3, , , ,884 7,023 59,641 5,110 2,318, , , ,138 1,204,621 8,427,632 1,903,302 4,192, , ,522, ,359, ,223,280 8,427,632 1,903,302 4,192,899 $ 14,542,053 $ 9,376,748 $ 2,154,031 $ 4,459,037 The notes to the financial statements are an integral part of this statement. 9

35 Surtax II Nonmajor Governmental Funds Total Governmental Funds $ 15,073,063 $ 32,004,582 $ 73,802,598-16,744 1,054, , ,526 1,448, ,204,621 $ 15,073,063 $ 32,553,852 $ 78,158,784 $ 141,221 $ 1,076,270 $ 3,706,765-1,423,795 1,594, , ,033-15, , ,221 2,515,561 6,441,538 14,931,842 15,959,579 46,619,875-14,475,560 14,612, ,522,608 - (396,848) 7,962,682 14,931,842 30,038,291 71,717,246 $ 15,073,063 $ 32,553,852 $ 78,158,784 10

36 11

37 CITY OF NORTH PORT, FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2011 Fund balances - total governmental funds $ 71,717,246 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Non-depreciable capital assets $ 54,817,049 Depreciable capital assets 176,776, ,593,138 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds. Revenue bonds $ (11,055,000) Leases payable (1,962,455) Compensated absences payable (2,708,784) Other postemployment benefits payable (1,295,031) Unamortized bond discount and issue costs 212,528 (16,808,742) Certain deferred revenue in governmental funds is susceptible to full accrual on the entity-wide statements. 471,613 Net pension asset for the excess contributions over the required annual contributions to the Police Officers' and Firefighters' Pension Funds. 1,557,501 Net assets of governmental activities $ 288,530,756 The notes to the financial statements are an integral part of this statement. 12

38 CITY OF NORTH PORT, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 REVENUES: Taxes Permits, fees and special assessments Intergovernmental Charges for services Fines and forfeiture Investment income Miscellaneous Total revenues EXPENDITURES: Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Capital outlay Debt service Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources and (uses) Net change in fund balances Fund balances - beginning Fund balances - ending General Fund Road and Drainage District Fire Rescue District Solid Waste District $ 10,749,325 $ 2,453,271 $ - $ - 2,772,137 32,851 8,305-4,967, ,724 44,321-7,367,149 10,369,314 6,545,630 7,704, , , ,906 40,026 75, ,854 68,848 33,273 23,047 26,780,763 13,315,914 6,671,555 7,803,476 9,791, ,007,647-6,839, ,317,282-5,748,041-8,765, , , , , ,797 93,076 1,288,697 1,204, , ,547 30,764,983 14,786,810 6,932,431 7,892,285 (3,984,220) (1,470,896) (260,876) (88,809) 1,402, (541,009) , (3,122,648) (1,470,896) (260,876) (88,809) 15,345,928 9,898,528 2,164,178 4,281,708 $ 12,223,280 $ 8,427,632 $ 1,903,302 $ 4,192,899 The notes to the financial statements are an integral part of this statement 13

39 Surtax II Nonmajor Governmental Funds Total Governmental Funds $ - $ 5,801,652 $ 19,004,248-1,455,066 4,268,359-1,869,274 7,139,199-3,315,486 35,302,253-39, , , , ,455-16, , ,502 12,870,781 67,631,991-2,829,822 12,621,710 41,919 1,711,955 25,600, ,065, ,520 9,669,911-77, , ,535 4, ,981 1,219,728 3,170,167 9,379,083 15,669, ,852,508 3,216,662 15,214,361 78,807,532 (3,027,160) (2,343,580) (11,175,541) - 691,009 2,093,590 (1,204,621) (347,960) (2,093,590) (1,204,621) 343,049 - (4,231,781) (2,000,531) (11,175,541) 19,163,623 32,038,822 82,892,787 $ 14,931,842 $ 30,038,291 $ 71,717,246 14

40 CITY OF NORTH PORT, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011 Net change in fund balances - total governmental funds $ (11,175,541) Amounts reported for governmental activities in the statement of activities are different because: 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 as depreciation expense. Expenditures for capital assets $ 15,669,821 Less current year depreciation (6,151,400) 9,518,421 The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, disposals, asset transfers to/from enterprise funds). (20,674) The decrease in the net pension asset is reported in the Statement of Activities, but does not require the use of current financial resources and therefore, is not reported as an expenditure in the governmental funds. (19,179) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Also, revenue related to prior periods that became available during the current period are reported in the funds but are eliminated in the Statement of Activities. This amount is the net adjustment. (182,533) The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Lease principal payments $ 1,537,789 Bond principal payments 710,000 Amortization of bond premiums/discounts and issue costs (18,552) 2,229,237 The increase in accrued compensated absences reported in the Statement of Activities does not require the use of current financial resources and therefore is not reported as expenditures in the governmental funds. (102,067) The increase in the other postemployment benefits obligation is reported in the Statement of Activities, but does not require the use of current financial resources and therefore is not reported as expenditures in the governmental funds. (279,076) Change in net assets of governmental activities $ (31,412) The notes to the financial statements are an integral part of this statement. 15

41 CITY OF NORTH PORT, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUND SEPTEMBER 30, 2011 Business-type Activities - Enterprise Fund Water & Sewer Utilities ASSETS Current assets: Cash and investments $ 11,677,831 Accounts receivable (net of allowance for uncollectibles) 4,581,370 Due from other funds 1,000,000 Due from other governments 2,777 Inventories 480,865 Total current assets 17,742,843 Noncurrent assets: Restricted assets: Cash and investments 14,802,026 Accounts receivable 501,708 Due from other governments 32,200 Unamortized deferred charges 550,744 Capital assets: Land 948,266 Buildings 1,448,616 Infrastructure 128,964,654 Equipment 4,952,483 Construction in progress 2,865,293 Less: accumulated depreciation (31,596,938) Total noncurrent assets 123,469,052 Total assets 141,211,895 LIABILITIES Current liabilities: Accounts payable 304,507 Payable from restricted assets: Accounts payable 80,606 Customer deposits payable 28,273 Due to other funds 54,624 Loans payable 898,565 Revenue bonds payable 1,107,051 Interest payable 134,526 Accrued compensated absences 38,816 Total current liabilities 2,646,968 Noncurrent liabilities: Customer deposits payable 46,196 Loans payable 22,062,249 Revenue bonds payable 17,161,845 Accrued compensated absences 194,035 Other postemployment benefits payable 79,065 Total noncurrent liabilities 39,543,390 Total liabilities 42,190,358 NET ASSETS Invested in capital assets, net of related debt 66,903,408 Restricted for renewal and replacement requirements 796,513 Restricted for capital projects 14,384,346 Unrestricted 16,937,270 Total net assets $ 99,021,537 The notes to the financial statements are an integral part of this statement. 16

42 CITY OF NORTH PORT, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Business-type Activities - Enterprise Fund Water & Sewer Utilities OPERATING REVENUES Charges for services: Water charges $ 8,645,158 Sewer charges 7,783,713 Miscellaneous 118,901 Total operating revenues 16,547,772 OPERATING EXPENSES General and administrative 2,984,897 Water treatment and distribution 3,339,633 Sewer collection and treatment 1,341,786 Field operations 3,843,294 Depreciation 3,789,187 Total operating expenses 15,298,797 OPERATING INCOME 1,248,975 NONOPERATING REVENUES (EXPENSES) Investment income 287,783 Interest expense (1,400,777) Bond issue costs / discount amortization (31,799) Loss on asset disposals (3,921) Total nonoperating revenues (expenses) (1,148,714) Income before contributions 100,261 CAPITAL CONTRIBUTIONS 1,465,916 CHANGE IN NET ASSETS 1,566,177 NET ASSETS - BEGINNING OF YEAR 97,455,360 NET ASSETS - END OF YEAR $ 99,021,537 The notes to the financial statements are an integral part of this statement. 17

43 CITY OF NORTH PORT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2011 Business-type Activities - Enterprise Fund Water & Sewer Utilities CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 15,585,794 Payments to vendors for goods and services (7,446,337) Payments to employees and benefit programs (4,219,047) Net cash provided by operating activities 3,920,410 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (1,497,986) Capital grants 924,051 Proceeds from refunding bond 14,932,256 Proceeds from state revolving loan 2,500,000 Principal paid on bonds and loans (1,515,858) Interest paid on bonds and loans (1,016,987) Amount paid to refunded Series 2008 bond owner (16,996,357) Amount paid to refunding bond escrow agent (2,154,984) Costs of issuance of refunding bond (80,915) Special assessments 31,655 Impact fees received 221,210 Net cash used in capital and related financing activities (4,653,915) CASH FLOWS FROM INVESTING ACTIVITIES Investment income received 287,783 Net cash provided by investing activities 287,783 Net decrease in cash and cash equivalents (445,722) Cash and cash equivalents, October 1 26,925,579 Cash and cash equivalents, September 30 $ 26,479,857 Classified as: Current assets $ 11,603,362 Restricted assets 14,876,495 Total $ 26,479,857 (Continued) The notes to the financial statements are an integral part of this statement. 18

44 CITY OF NORTH PORT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2011 Business-type Activities - Enterprise Fund Water & Sewer Utilities Reconciliation of operating income to net cash provided by operating activities: Operating income $ 1,248,975 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 3,789,187 Increase in accounts receivable (945,728) Increase in due from other governments (1,817) Decrease in inventories 43,395 Decrease in accounts payable (48,060) Decrease in due to other funds (129,320) Decrease in customer deposits payable (16,250) Increase in compensated absences 10,796 Decrease in benefits payable (10,004) Decrease in other postemployment benefits payable (20,764) Total adjustments 2,671,435 Net cash provided by operating activities $ 3,920,410 NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Amortization of bond/loan issue costs $ 31,799 Amortization of deferred amount on defeasance of debt 249,263 Capital asset contributions 311,110 The notes to the financial statements are an integral part of this statement. 19

45 CITY OF NORTH PORT, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2011 PENSION TRUST FUNDS AGENCY FUNDS ASSETS Cash and equivalents $ 4,281,125 $ - Receivables: Receivables 4,121 Contributions receivable 999,920 - Interest and dividends receivable 93,517 - Total receivables 1,093,437 4,121 Investments: U.S. Government securities 634,946 - U.S. Government agency securities 6,574,114 - Equities 20,536,491 - Corporate bonds 4,680,386 - Fixed income mutual funds 840,037 - American Core Realty Fund, LLC 1,159,293 - Municipal obligations 392,663 - Total investments 34,817,930 - Total assets 40,192,492 4,121 LIABILITIES Accounts payable 68,629 - Due to other entities - 4,121 Deferred contribution 199,517 - DROP plan payable 121,528 - Total liabilities 389,674 4,121 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $ 39,802,818 $ - The notes to the financial statements are an integral part of this statement. 20

46 CITY OF NORTH PORT, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS PENSION TRUST FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 ADDITIONS Contributions: Plan members $ 1,086,071 State of Florida, from the General Fund 656,851 City of North Port 3,136,510 Total contributions 4,879,432 Investment income Net change in fair value of investments (2,002,927) Interest 541,106 Dividends 345,918 Investment loss (1,115,903) Less investment expenses (309,192) Net investment loss (1,425,095) Total additions 3,454,337 DEDUCTIONS Benefits to participants 1,528,129 DROP plan expenses 112,041 Administrative expenses 147,689 Total deductions 1,787,859 NET INCREASE 1,666,478 NET ASSETS - BEGINNING 38,136,340 NET ASSETS- ENDING $ 39,802,818 The notes to the financial statements are an integral part of this statement. 21

47 CITY OF NORTH PORT, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2011 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of North Port, Florida (the City) have been prepared in conformity with accounting principles generally accepted (GAAP) in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. 1. THE FINANCIAL REPORTING ENTITY The City of North Port, Florida was created, as of June 18, 1959, pursuant to the provisions of the Constitution of the State of Florida, the laws of the State of Florida and the Special Legislative Enactment of Chapter as amended by Chapter The City operates under a form of government that is comprised of five elected City Commissioners and a commission appointed City Manager. The following services are provided: public safety, road improvements, planning and zoning, building permitting and inspections, water and sewer service, refuse collection service, stormwater management, and related general administrative services. As required by GAAP, these financial statements present the activities of the City of North Port, Florida. a) Blended component units The Road and Drainage District, Fire Rescue District and Solid Waste District are blended component units of this reporting entity, because all districts are governed by North Port City Commission. The Road and Drainage District was created and established by Resolution No. 72-R-2 for the purpose of maintaining streets, waterways and right-of-ways. The Fire Rescue District was created and established by Ordinance for the purpose of providing fire services. The Solid Waste District was created and established by Ordinance for the purpose of providing solid waste management services. Funds for the Districts are provided through a non-ad valorem tax that is levied within these districts. Separate financial statements for the blended component units are not prepared. 2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all the nonfiduciary activities of the primary government. 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. 22

48 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 funds are reported as separate columns in the fund financial statements. 3. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements, as well as the proprietary and fiduciary fund financial statements, are reported using the economic resources measurement focus and the accrual basis of accounting. 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. Property taxes, franchise fees, 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. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The general fund is the City s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The road and drainage district special revenue fund is used to account for proceeds of the local option gas taxes and district assessments that are restricted to transportation and/or stormwater drainage services. The fire rescue district special revenue fund is used to account for proceeds of district assessments that are restricted for fire rescue emergency services and public safety. The solid waste district special revenue fund is used to account for proceeds of district assessments that are restricted for solid waste collection and transportation of refuse, yard waste and recyclable material. The surtax II capital projects fund is used to account for resources that are restricted for the acquisition and/or construction of specific capital projects. 23

49 The City reports the following major proprietary fund: The water and sewer utilities fund accounts for the activities associated with providing water and sewer services to the residents of the City. The City operates a sewage treatment plant, sewage pumping stations and collection systems, and a water treatment/distribution plant. Additionally, the City reports the following fiduciary fund types: The pension trust funds account for the activities of the City s firefighters and police officers pension trust funds, which accumulate resources for pension benefit payments to qualified pension participants. The county road impact fees agency fund accounts for the impact fees collected for and disbursed to Sarasota County. The county justice impact fees agency fund accounts for the impact fees collected for and disbursed to Sarasota County. The county general government impact fees agency fund accounts for the impact fees collected for and disbursed to Sarasota County. The education impact fees agency fund accounts for the impact fees collected for and disbursed to Sarasota County School Board. Private-sector standards and financial reporting issued prior to December 1, 1989 are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges for services between the City s various funds. Elimination of these charges would distort the direct costs and program revenues reported for the functions concerned. 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 water and sewer enterprise fund are charges to customers for sales and services. 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 City s policy to use restricted resources first, followed by committed, assigned and unassigned resources as they are needed. 24

50 4. ASSETS, LIABILITIES, AND NET ASSETS OR FUND BALANCE a) Cash and investments The City is authorized by City Ordinance , adopted January 25, 2010, to invest surplus funds in accordance with Florida Statute This investment policy formally established guidelines and authorized the City to invest in the following: 1) The Florida Local Government Surplus Funds Trust Fund under the management of the State Board of Administration (SBA). 2) Negotiable direct obligations, or obligations in which the principal and interest are unconditionally guaranteed by the United States Government. 3) Bonds, debentures, notes or callables issued or guaranteed by the United States Government s agencies, provided such obligations are backed by the full faith and credit of the United States Government. 4) Bonds, debentures, notes or callables issued or guaranteed by United States Government sponsored agencies (Federal Instrumentalities) which are non-full faith and credit agencies limited to the following: Federal Farm Credit Bank (FFCB) Federal Home Loan Bank or its district banks (FHLB) Federal National Mortgage Association (FNMA) Federal Home Loan Mortgage Corporation (Freddie-Mac) including Federal Home Loan Mortgage Corporation participation certificates Student Loan Marketing Association (Sallie-Mae) 5) Non-negotiable interest bearing time certificates of deposit or savings accounts in banks organized under the laws of this state and/or in national banks organized under the laws of the United States and doing business and situated in the State of Florida, provided that any such deposits are secured by the Florida Security for Public Deposits Act, Chapter 280, Florida Statutes. Additionally, the bank shall not be listed with any recognized credit watch information service. 6) Repurchase agreements composed of only those investments based on the requirements set forth by the City s Master Repurchase Agreement. Securities authorized for collateral are negotiable direct obligations of the United States Government, Government Agencies, and Federal Instrumentalities with maturities under five (5) years and must have a market value for the principal and accrued interest of 102 percent of the value and for the term of the repurchase agreement. 7) Commercial paper of any United States company that is rated, at the time of purchase, Prime-1 by Moody s and A-1 by Standard & Poor s (prime commercial paper). If the commercial paper is backed by a letter of credit ( LOC ), the long-term debt of the LOC provider must be rated A or better by at least two nationally recognized rating agencies. 25

51 8) Bankers acceptances issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, at the time of purchase, the short-term paper is rated, at a minimum, P-1 by Moody's Investors Services and A-1 Standard & Poor's. 9) Corporate obligations issued by financial institutions that participate in the FDIC s Temporary Liquidity Guarantee Program and are fully insured by the FDIC and are guaranteed by the full faith and credit of the United States Government. 10) State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least Aa by Moody s and AA by Standard & Poor s for longterm debt, or rated at least MIG-2 by Moody s and SP-2 by Standard & Poor s for shortterm debt. 11) Registered investment companies (mutual funds) shares in open-end, no-load provided such funds are registered under the Federal Investment Company Act of 1940 and operated in accordance with 17 C.F.R a-7. In addition, the Finance Director may invest in other types of mutual funds provided such funds are registered under the Federal Investment Company Act of 1940, invest exclusively in the securities specifically permitted under the investment policy and are similarly diversified. 12) Intergovernmental investment pools that are authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section , Florida Statutes and provided that said funds contain no derivatives. All funds participate in the pooled cash investment program. Investment income and loss is allocated to individual funds based upon their average daily balance in the cash pool. Each fund s individual equity in the City s investment pool is considered to be a cash equivalent, since the funds can deposit or withdraw cash at any time without prior notice or penalty. Investments for the City are reported at fair value based upon quoted market prices, other than the investment in Fund B. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments or values obtained from independent pricing services. The reported value of the City s investment in the Florida Local Government Surplus Funds Trust Fund external investment pool (Fund B) is fluctuating net asset value. b) 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. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. The non-current advances between funds, as reported in the fund financial statements, are offset by a corresponding nonspendable portion of fund balance to indicate that they are not available for appropriation and are not expendable available financial resources. All trade receivables are shown net of an allowance for uncollectibles. 26

52 c) Inventories Inventories are adjusted to annual counts and are valued at cost, using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when purchased. d) Restricted assets The balances of restricted asset accounts in the governmental activities column at September 30, 2011 are as follows: Governmental: General fund debt service reserve requirements $ 1,204,621 $ 1,204,621 The balances of restricted asset accounts in the business-type activities column at September 30, 2011 are as follows: Water and Sewer Enterprise: Renewal and replacement funds $ 796,513 Capital project construction funds $ 14,539,421 15,335,934 e) Capital assets Capital assets, which include property, plant, and equipment, 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 more than $5,000 (amount not rounded) 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. Property, plant, and equipment of the City are depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings 40 Improvements 5-50 Furniture and fixtures 5-10 Equipment 7-30 Vehicles 5 27

53 f) Compensated absences It is the City s policy to permit employees to accumulate earned but unused vacation, sick pay and other employee benefit amounts. These amounts are accrued when incurred in the government-wide and proprietary fund financial statements. In the case of governmental funds, the only portion of the liability reported would be the amount of reimbursable unused leave payable to employees who had terminated their employment as of the end of the fiscal year. g) Long-term obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize debt proceeds, including capital leases, during the current period. The face amount of debt issued is reported as other financing sources. h) Net assets The government-wide and business-type fund financial statements utilize a net asset presentation. Net assets are presented in three components invested in capital assets (net of related debt), restricted, and unrestricted. Invested in Capital Assets, Net of Related Debt this component of net assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, notes or other borrowings attributable to the acquisition, construction or improvement of those assets. This component does not include the portion of debt attributable to the unspent proceeds. Restricted This component consists of net assets that have constraints placed on them either externally by third parties (creditors, grantors, contributors or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Unrestricted This component consists of net assets that do not meet the definition of invested in capital assets (net of related debt) and restricted. When both restricted and unrestricted resources are available for use, it is the City s policy to use restricted resources first, then unrestricted resources as they are needed. Certain proceeds of the City s enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted net assets on the balance sheet because their use is limited by applicable bond covenants. District revenues and impact fee revenues are set aside to be used for their respective purposes in accordance with state statutes, regulations, and City ordinances. Net assets restricted for special revenues in the governmental activities for the year totaled 28

54 $23,646,391. These net assets may only be spent for the specific purpose for which they were collected. The net assets were restricted for the following purposes: Road & Drainage District $ 8,178,094 Transportation Impact Fees 7,007,100 Solid Waste District 4,117,896 Fire Rescue District 1,423,504 Parks & Recreation Impact Fees 1,198,514 Fire Impact Fees 809,095 Various other special revenues 912,188 Total special revenues $ 23,646,391 i) Fund balance During the fiscal year 2011, the City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This pronouncement adds clarity and consistency to fund balance classifications and categories, making the statements more useful by clarifying the presentation of available resources. In the fund financial statements, fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Classifications of fund balance are established as authorized by City Resolution No R-14. Fund balance is reported in up to five components nonspendable, restricted, committed, assigned and unassigned. Nonspendable Fund Balance consists of funds that are (a) not in spendable form or (b) legally or contractually required to be maintained intact. Not in spendable form includes items that are not expected to be converted to cash (such as inventories and prepaid items) and long-term loans and notes receivable. Restricted Fund Balance consists of funds that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. Committed Fund Balance consists of funds that are set aside for a specific purpose by the City s highest level of decision making authority (ordinance). Formal action must be taken prior to the end of the fiscal year, but the amount, which will be subject to the constraint, may be determined in the subsequent period. The same formal action must be taken to remove or change the limitations placed on the funds. Assigned Fund Balance consists of funds that are set aside with the intent to be used for a specific purpose. The intended use can be established by the City Commission, delegated to a group (Management Team) or delegated to an individual City Manager or Finance Director. In governmental funds other than the General Fund, assigned fund balance represents the amount that is not restricted or committed. Assigned funds cannot cause a deficit in unassigned fund balance. 29

55 Unassigned Fund Balance consists of excess funds that have not been classified in the previous four categories. All funds in this category also provide the resources necessary to meet unexpected expenditures and revenue shortfalls. When a governmental fund has multiple classifications of fund balance, fund balance is generally depleted in the order of restricted, committed, assigned and unassigned. The City s formal General Fund fund balance policy establishes a targeted minimum spendable fund balance range between 15% and 25% of the ensuing year s General Fund budgeted expenditures. The unassigned portion of the fund balance is targeted at 5% to 10% of the ensuing year s General Fund budgeted expenditures. The formal fund balance policy also includes the City s three dependent districts (Road & Drainage, Fire Rescue and Solid Waste). The targeted minimum fund balance range of these three districts is 20% - 25% of the ensuing year s annual budgeted expenditures of each respective fund. The composition of restricted, committed and assigned fund balances at September 30, 2011 is provided on pages 31 and

56 Major Funds Governmental Fund Balance Components: General Fund Road and Drainage District Fire Rescue District Solid Waste District Restricted: Debt service $ 1,204,621 $ - $ - $ - Capital projects Enabling legislation - dependent districts - 8,427,632 1,903,302 4,192,899 Law enforcement Impact fees Environmental management Total restricted 1,204,621 8,427,632 1,903,302 4,192,899 Committed: Capital projects Building inspectors' education Tree replacement Economic development Road rehabilitation Parks and recreation Fleet maintenance Other - contractual 136, Total committed 136, Assigned: Capital projects 327, Subsequent year expenditures 2,164, Other purposes 29, Total assigned 2,522, Unassigned 8,359, Total fund balances $ 12,223,280 $ 8,427,632 $ 1,903,302 $ 4,192,899 31

57 Major Fund Surtax II Other Governmental Funds Total Governmental Funds $ - $ - $ 1,204,621 14,931,842 6,043,500 20,975, ,523,833-58,852 58,852-9,168,958 9,168, , ,269 14,931,842 15,959,579 46,619,875-8,073,360 8,073,360-44,815 44, , ,927-4,125,310 4,125, , , , , , , ,521-14,475,560 14,612, , ,164, , ,522,608 - (396,848) 7,962,682 $ 14,931,842 $ 30,038,291 $ 71,717,246 32

58 5. ACCOUNTING ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America as applied to governmental units requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. NOTE B STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY 1. Budgetary information The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. During the month of July, the City Manager submits to the City Commission a proposed operating budget for the fiscal year commencing October 1st for the purpose of determining millage requirements. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted at City Hall to obtain taxpayer comments during September. 3. On or before September 30th, the budget is legally enacted for funds through passage of an ordinance. 4. The City Commission must approve any revisions altering the budgeted amounts of total expenditures of any fund. 5. Budgets have been adopted for the governmental and enterprise funds on a basis consistent with generally accepted accounting principles (GAAP). Expenditures may not legally exceed appropriations plus accumulated fund equity at the fund level. All annual appropriations lapse at year-end. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded as reservations of budget, is employed as an extension of the statutorily required budgetary process. All encumbrances lapse at year-end; however, it is the City s intention to substantially honor these encumbrances under authority provided in the subsequent year s budget. Encumbrances outstanding at year-end were $230,683 for the General Fund, $1,356,535 for the Road and Drainage District, $104,917 for the Fire Rescue District, $15,200 for the Solid Waste District, $18,470 for the Surtax II Fund and $6,483,530 for nonmajor funds. Budgeted amounts are as originally adopted or amended by the City. Supplemental appropriations made during the fiscal year are included in the Final Budgeted Amount columns on the Budgetary Comparison Schedules. Supplemental budgetary appropriations for major funds made during the year included the following: The budgeted fund balance for the General Fund increased $2,722,335, including $100,000 for renovations to the Community Education Center; $60,000 to fund two temporary Social Services positions, one part-time and one full-time, and to fund an existing authorized position from part-time to full-time for fiscal year 2011; $335,942 for the Federal Emergency 33

59 Management Agency (FEMA) grant to purchase cardiac monitors/defibrillators and computer hardware and software for medical response vehicles; and $2,226,393 for reappropriations of various projects that were budgeted in the previous fiscal year. The budget was decreased by $65,337 due to the change in the rates from the Florida Retirement System (FRS) and the elimination of one furlough day. The Road & Drainage District Fund expenditure budget was increased $2,302,176 for reappropriations of various projects that were budgeted in the previous fiscal year. This included US 41 enhancements, road rehabilitation projects and sidewalk construction. The budget was decreased by $44,379 due to the change in the rates from the Florida Retirement System (FRS) and the elimination of one furlough day. The Fire Rescue District Fund expenditure budget was increased $272,728, including $92,940 for reappropriation of the Station 81 and 83 cistern project that was budgeted in the previous fiscal year and $179,788 for the FEMA grant to purchase computer hardware and software, fire apparatus and staff vehicles, and for improvements to the District s mobile data system. The budget was decreased by $2,470 due to the change in the rates from the Florida Retirement System (FRS) and the elimination of one furlough day. The Solid Waste District Fund expenditure budget was decreased by $19,429 due to the change in the rates from the Florida Retirement System (FRS) and the elimination of one furlough day. The Surtax II Fund expenditure budget was increased $5,193,454 for reappropriations for various projects that were budgeted in the previous fiscal year. This primarily included $202,366 for Sumter Boulevard construction, $2,686,215 for fire station construction, $180,000 for the helipad and pond project, and $2,035,749 for the community park. All other supplementary budgetary appropriations in the major funds were not material in relation to the original budget. 2. Deficit fund equity The Building Department Special Revenue Fund had a deficit balance of ($396,848) as of September 30, In the subsequent fiscal year, it is anticipated that revenues will exceed expenditures; therefore, an interfund transfer from the General Fund will not be necessary. NOTE C DEPOSITS AND INVESTMENTS Custodial Credit Risk Custodial credit risk is defined as the risk that, in the event of failure of the counterparty, the City will not be able to recover the value of its securities that are in possession of an outside party. At September 30, 2011, City s book balance of cash was $1,126,669, and the bank balance was $1,549,645. The difference between the book balance and the bank balance is deposits in transit and uncleared checks. The bank balances are insured by the Federal Depository Insurance Corporation (FDIC) in the amount of $250,000 for each banking relationship. The remaining balances are collateralized pursuant to Chapter 280, Florida Statutes. Under this Chapter, in the event of default by a participating financial institution (a qualified public depository), all participating institutions are obligated to reimburse the governmental entity for the loss. The City s investment policy requires that securities be secured through third-party custody in the City s name. 34

60 The City has invested funds in an external investment pool, the Local Government Surplus Funds Trust Fund (State Pool). The State Pool is administered by the Florida State Board of Administration (SBA), who provides regulatory oversight. During fiscal year 2008, the SBA reported that the State Pool was exposed to potential risks due to indirect exposure in the sub-prime mortgage financial market. Consequently, the SBA placed some restrictions on how participants could access portions of their funds and ultimately restructured the State Pool into two separate pools (LGIP and Fund B). The Fund B is accounted for as a NAV pool and reported at fluctuating net asset value, determined by applying a fair value factor (total net asset value of Fund B divided by total participant balances of Fund B) to the City s share of the pool s underlying portfolio. The fair value factor at September 30, 2011 was Interest Rate Risk As of September 30, 2011, the City had the following investments and maturities: Investment Type Fair Value Less than U.S. Treasuries $ 27,396,068 $ 7,560,318 $ 19,835,750 Federal Instrumentalities 62,307,032 14,069,497 48,237,535 Municipal bonds 3,035,780-3,035,780 SBA - Fund B 1,087, , ,849 Money Markets 6,532,038 6,532,038 - $ 100,358,107 $ 28,386,193 $ 71,971,914 Following is a reconciliation of the investment schedule on the previous page to cash and investments reported on the entity-wide statement of net assets: Reconcilement with Statement of Net Assets: Cash and investments $ 85,480,429 Cash and investments - restricted 16,006, ,487,076 Less cash book balance (1,126,669) Less cash on hand (2,300) Fair value total $ 100,358,107 In compliance with the City s investment policy, as of September 30, 2011, the City minimized the interest rate risk by limiting the effective duration of security types not to exceed five years and structuring the investment portfolio so that securities matured to meet cash requirements for ongoing operations. Credit Risk The City s investment policy limits credit risk by restricting the authorized investments to those stated in Note A, Section 4(a). The following table illustrates the credit quality distribution with credit exposure as a percentage of the City s investment securities: 35

61 S&P Credit Percent of Investment Type Rating Portfolio U.S. Treasury Notes AA+ 27% Federal Instrumentalities: Federal National Mortgage Association AA+ 15% Federal Farm Credit Bank AA+ 7% Federal Home Loan Mortgage Corporation AA+ 21% Federal Home Loan Bank AA+ 20% Municipal bonds AA+ 3% SBA Fund B Unrated 1% Money Markets: PFM Prime Series - Institutional Class Shares AAAm 6% The City s investment policy establishes limitations on portfolio composition by investment type in order to control concentration of credit risk. The following maximum limits are guidelines established for diversification by instrument: SBA 25% U.S. Government Securities 95% U.S. Government Agencies 50% Federal Instrumentalities 75% Interest Bearing Time Deposit or Savings Accounts 50% Repurchase Agreements 50% Commercial Paper 25% Bankers Acceptances 25% Corporate Obligations 50% State and/or Local Government Taxable and/or Tax Exempt Debt 20% Registered Investment Companies (Mutual Funds) 35% See the disclosures in Note J for the investments held in the City s Fire and Police pension funds. 36

62 NOTE D RECEIVABLES Receivables as of year end for the City s individual major funds, nonmajor funds in the aggregate and proprietary fund, including the applicable allowances for uncollectible accounts, are as follows: Road & Drainage Fire Rescue Solid Waste General Fund District District District Receivables: Taxes $ 55,949 $ - $ - $ - Franchise fees 534,111 3, Accounts 1,480,148 7, ,066 Intergovernmental 575, ,428 86,549 11,066 Special assessments Gross receivables 2,646, ,229 86,633 29,132 Less: allowance for uncollectibles (1,061,671) Net total receivables $ 1,584,529 $ 253,229 $ 86,633 $ 29,132 Water & Sewer Nonmajor Total (all Utilities Funds columns) Receivables: Taxes $ - $ - $ 55,949 Franchise fees ,886 Accounts 4,884,330 16,744 6,406,398 Intergovernmental 34, ,526 1,483,538 Special assessments 269, ,630 Gross receivables 5,188, ,270 8,753,401 Less: allowance for uncollectibles (70,882) - (1,132,553) Net total receivables $ 5,118,055 $ 549,270 $ 7,620,848 37

63 NOTE E PROPERTY TAX Property taxes are levied on November 1 of each year and are due and payable upon receipt of the notice of levy. The Sarasota County, Florida, Tax Collector's Office bills and collects property taxes on behalf of the City. The tax rate to finance general governmental services for the fiscal year ended September 30, 2011 was $3.34 per $1,000 of assessed taxable property value. Property tax revenues are recognized currently in the fiscal year for which the taxes are levied. On May 1 of each year, unpaid taxes become a lien on the property. The past due tax certificates are later sold at public auction and the proceeds thus collected are remitted to the City. No accrual for the property tax levy becoming due in November 2011 is included in the accompanying financial statements since such taxes do not meet the necessary criteria. The property tax calendar is as follows: July 1 September 30 October 1 November 1 November 1 - March 31 April 1 Assessment roll validated Millage resolution approved Beginning of fiscal year for which tax is to be levied Tax bills rendered and due Property taxes due with various discount rates Taxes delinquent May 31 Tax certificates sold by County 38

64 NOTE F CAPITAL ASSETS Capital asset activity for the year ended September 30, 2011, was as follows: Primary Government Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets not being depreciated: Land $ 12,511,870 $ 2,872,708 $ - $ 15,384,578 Intangible 450, ,000 Construction in progress 36,867,996 10,259,957 8,145,482 38,982,471 Total capital assets not being depreciated 49,829,866 13,132,665 8,145,482 54,817,049 Other capital assets: Buildings 29,021,277 3,244,154-32,265,431 Improvements other than buildings 181,724,051 7,499,268 3,120, ,102,932 Equipment 28,727,541 3,157,611 2,607,108 29,278,044 Total other capital assets 239,472,869 13,901,033 5,727, ,646,407 Less accumulated depreciation for: Buildings 5,084,491 1,188,603-6,273,094 Improvements other than buildings 44,449,080 2,641, ,793 46,591,152 Equipment 17,673,773 2,761,216 2,428,917 18,006,072 Total accumulated depreciation 67,207,344 6,591,684 2,928,710 70,870,318 Governmental activities capital assets $ 222,095,391 $ 20,442,014 $ 10,944,267 $ 231,593,138 Business-type activities: Capital assets not being depreciated: Land $ 948,266 $ - $ - $ 948,266 Construction in progress 7,583,696 1,319,882 6,038,285 2,865,293 Total capital assets not being depreciated 8,531,962 1,319,882 6,038,285 3,813,559 Other capital assets: Buildings 1,448, ,448,616 Improvements other than buildings 122,698,760 6,374, , ,964,654 Equipment 4,948,804 23,845 20,166 4,952,483 Total other capital assets 129,096,180 6,398, , ,365,753 Less accumulated depreciation for: Buildings 1,029,049 18,691-1,047,740 Improvements other than buildings 22,949,296 3,392, ,492 26,237,288 Equipment 3,954, ,012 20,166 4,311,910 Total accumulated depreciation 27,932,409 3,789, ,658 31,596,938 Business-type activities capital assets $ 109,695,733 $ 3,928,847 $ 6,042,206 $ 107,582,374 39

65 Depreciation expense was charged to functions as follows: Governmental activities: General government $ 641,151 Public safety 1,127,747 Physical environment 1,790,227 Transportation 2,217,852 Economic environment 3,083 Human services 75,558 Culture and recreation 295,782 Total governmental activities depreciation expense $ 6,151,400 Business-type activities Water and sewer utility $ 3,789,187 Total business-type activities depreciation expense $ 3,789,187 Commitments Commitments under uncompleted construction projects at September 30, 2011 consist of the following: Remaining Project Spent-to-Date Commitment City-wide facility construction $ 1,308,093 $ 5,094,639 Roads and drainage construction 22,110,933 1,772,559 Parks & recreation construction 12,587, ,078 Water and sewer operations construction 3,360,628 9,676,014 Total $ 39,367,563 $ 16,970,290 NOTE G INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances at September 30, 2011 is as follows: Due to/from other funds: Receivable Fund Payable Fund Amount General Non-major governmental $ 423,795 Road and Drainage District 68,266 Fire Rescue District 77,074 Solid Waste District 25,013 Water and Sewer Utility 54, ,772 Water and Sewer Utility Non-major governmental $ 1,000,000 1,648,772 40

66 Balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Interfund transfers: Transfers out: Other General Governmental Transfers in: Fund Surtax II Funds Total General Fund $ - $ 1,204,621 $ 197,960 $ 1,402,581 Other Governmental Funds 541, , ,009 Total $ 541,009 $ 1,204,621 $ 347,960 $ 2,093,590 Transfers are used to move revenues from the fund that the budget requires to collect them to the fund that the budget requires to expend them. NOTE H CAPITAL LEASES The City has entered into lease agreements as lessee for financing the acquisition of equipment such as refuse vehicles, recycling trucks, fire vehicles, defibrillators/monitors, tractors, mowers, vehicles, loaders, excavators and backhoes. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Governmental Activities Equipment $ 10,530,752 Less: accumulated depreciation (6,370,788) Total $ 4,159,964 The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2011 were as follows: Governmental Activities Year Ended September 30, 2012 $ 877, , , ,098 Total minimum lease payments 2,068,215 Less: amounts representing interest (105,760) Present value of minimum lease payments $ 1,962,455 41

67 NOTE I LONG-TERM LIABILITIES Long-term Liability Activity Long-term liability activity for the year ended September 30, 2011, was as follows: Amounts Beginning Ending Due within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: Revenue bonds $ 11,765,000 $ - $ (710,000) $ 11,055,000 $ 735,000 Capital leases 3,500,244 - (1,537,789) 1,962, ,022 OPEB liability 1,015, ,076-1,295,031 - Compensated absences 2,606,717 3,707,792 (3,605,725) 2,708, ,554 Governmental activities long-term liabilities $ 18,887,916 $ 3,986,868 $ (5,853,514) $ 17,021,270 $ 2,004,576 Business-type activities: Bonds payable: Revenue bonds $ 25,229,292 $ 14,932,256 $ (20,197,228) $ 19,964,320 $ 1,107,051 Less deferred amount: On refunding (1,836,249) (1,383,540) 1,524,365 (1,695,424) - Total bonds payable 23,393,043 13,548,716 (18,672,863) 18,268,896 1,107,051 State revolving loans 20,843,500 2,557,300 (439,986) 22,960, ,565 Compensated absences 222, ,878 (407,082) 232,851 38,816 OPEB liability 99,829 - (20,764) 79,065 - Deposits payable 90,719 18,840 (35,090) 74,469 28,273 Business-type activities long-term liabilities $ 44,649,146 $ 16,542,734 $ (19,575,785) $ 41,616,095 $ 2,072,705 Payments on bonds that pertain to the City s governmental activities are made by the general fund. The compensated absences and OPEB liabilities attributed to the governmental activities will be liquidated by the relevant special revenue and general fund. 42

68 Description of Debt: Governmental Business-type $15,000,000 Series 2003 Sales Tax Revenue Bonds, due in annual $ 11,055,000 $ - installments of $620,000 - $1,150,000 beginning September 30, 2006 through September 30, 2023; interest at 1.65% %; secured by a pledge of half-cent sales tax revenues. Proceeds from the bonds provided financing for construction of the City Hall complex and the police station. The total pledged revenue at 9/30/11, which equals remaining principal and interest, is $14,425,359. Principal and interest paid for the current year and total sales tax revenues were $1,204,621 and $3,620,781, respectively. $6,211,908 Series 2005 Utility System Refunding Revenue Bonds, due in - 6,087,814 annual installments of $17,177 - $592,317 beginning September 30, 2006 through September 30, 2030; interest at 4.02%; secured by a pledge of the net revenues of the system operations and impact fees. Proceeds from the bonds refunded a portion of the 2000 bonds, which provided financing for improvements to the wastewater treatment system. The pledged revenue at 9/30/11, which equals remaining principal and interest, is $9,445,894. Principal and interest paid for the current year and total net revenues were $269,072 and $5,628,344, respectively. $14,932,256 Series 2010 Utility System Refunding Revenue Bonds, due in - 13,876,506 annual installments of $1,055,749 - $1,452,067 beginning September 30, 2011 through September 30, 2022; interest at 2.94%; secured by a pledge of the net revenues of the system operations and impact fees. Proceeds from the bonds refunded the remaining 2000 bonds, which provided financing for improvements to the wastewater treatment system and the 2008 refunding bonds, which were issued to refund the 1998 refunding bonds (issued to refund the 1992 bonds issued to purchase the utility system from GDU). The pledged revenue at 9/30/11, which equals remaining principal and interest, is $16,442,335. Principal and interest paid for the current year and total net revenues were $1,494,758 and $5,628,344, respectively. $23,400,800 State Revolving Fund Loan, due in semi-annual installments - 22,960,814 of $439,986 - $758,329 beginning July 15, 2011 through January 15, 2031; interest between 2.49% and 3.12%; secured by a pledge of the net revenues of the system operations and impact fees. Proceeds from the fund loan provided financing for improvements to the wastewater treatment system. The pledged revenue at 9/30/11, which equals remaining principal and interest, is $29,991,686. Principal and interest paid for the current year and total net revenues were $769,018 and $5,628,344, respectively. TOTAL $ 11,055,000 $ 42,925,134 43

69 Debt Maturity: Debt service requirements at September 30, 2011 were as follows: Governmental Activities - Revenue Bonds Sales Tax Revenue Bonds Year Ended Principal Interest September $ 735,000 $ 467, , , , , , , , , ,845,000 1,168, ,250, ,000 Total $ 11,055,000 $ 3,370,359 Business-type Activities - Revenue Bonds Water and Sewer Utility Year Ended Principal Interest September $ 1,107,051 $ 656, ,140, , ,174, , ,209, , ,244, , ,067,441 1,956, ,789, , ,232, ,267 Total $ 19,964,320 $ 5,923,908 Business-type Activities - State Revolving Loans Water and Sewer Utility Year Ended Principal Interest September $ 898,565 $ 639, , , , , , , ,004, , ,465,163 2,225, ,283,945 1,406, ,457, ,415 Total $ 22,960,814 $ 7,030,872 44

70 Bond Issue Costs and Refunding Losses Bond issuance costs of $333,874 and an original issue discount of $29,255 incurred in conjunction with the issuance of the Sales Tax Revenue Bonds, Series 2003, are being amortized over the life of the bonds (20 years) using the straight-line method for the issuance costs and the bonds outstanding method for the discount. Amortization of issuance costs and discount on the Series 2003 bonds was $18,552 for the year ended September 30, The unamortized balance at September 30, 2011 is $212,528. Bond issuance costs of $65,494 incurred in conjunction with the issuance of the Utility System Refunding Revenue Bonds, Series 2005, are being amortized over the life of the bonds (25 years) using the straight line method. Amortization of issuance costs on the Series 2005 bonds was $2,620 for the year ended September 30, The unamortized balance at September 30, 2011 is $49,775. A refunding loss of $817,039 incurred in conjunction with the issuance of the Utility System Refunding Revenue Bonds, Series 2005, is being amortized over the life of the bonds (25 years) using the bonds outstanding method. Amortization of the refunding loss on the Series 2005 bonds was $47,127 for the year ended September 30, 2011, and is included as a component of interest expense. Unamortized refunding loss of $514,020 is netted against bonds payable on the statements of net assets. Bond issuance costs of $80,147 incurred in conjunction with the issuance of the Utility System Refunding Revenue Bonds, Series 2010, are being amortized over the life of the bonds (12 years) using the straight line method. Amortization of issuance costs on the Series 2010 bonds was $6,679 for the year ended September 30, The unamortized balance at September 30, 2011 is $73,468. A refunding loss of $1,383,540 incurred in conjunction with the issuance of the Utility System Refunding Revenue Bonds, Series 2010, is being amortized over the life of the bonds (12 years) using the bonds outstanding method. Amortization of the refunding loss on the Series 2010 bonds was $202,136 for the year ended September 30, 2011, and is included as a component of interest expense. Unamortized refunding loss of $1,181,404 is netted against bonds payable on the statements of net assets. Loan issuance costs of $450,000 incurred in conjunction with the issuance of the State Revolving Loans are being amortized over the life of the loan (20 years) using the straight line method. Amortization of the issuance costs on the loans was $22,500 for the year ended September 30, The unamortized balance at September 30, 2011 is $427,500. Bond Refunding Together with other legally available moneys equal to $4,300,000, Utility System Refunding Revenue Bonds, Series 2010, dated October 1, 2010 were issued in the amount of $14,932,256 for the purposes of providing funds to currently refund the City s outstanding Utility System Refunding Revenue Bonds, Series 2000 maturing on October 1, 2011 through October 1, 2018 and the outstanding 2008 bank loan maturing on October 1, The Series 2010 proceeds also provided funds to pay the costs related to the issuance. The Series 2010 Bond is expected to be repaid over a period of 12 years. At a true interest cost of 2.94%, total interest paid over the life of the Series 2010 bond will be $3,004,836. The expected source of repayment is the pledged funds (water and sewer revenues). The Series 2010 bond shall be on parity in all respects and shall rank equally as to lien on and source and security form the pledged funds with the outstanding parity bonds. The City currently refunded the Series 2000 bonds and 2008 bank loan to reduce its total debt service payments over the next 12 years by $6,484,023 and to obtain an economic gain (difference between the present value of the debt service payments of the old and new debt) of $1,243,

71 Deposits Payable Before rendering water or wastewater service, the City may require an applicant for service to satisfactorily establish credit by paying a cash deposit. The amount of the initial deposit shall be according to customer class and meter size. After the customer has established continuous utility service for a period of twentyfour months and met the following requirements, the customer s security deposit will be refunded as a credit to their utility account: 1) customer has not been disconnected for nonpayment; 2) customer has not had a returned payment in the last six months; 3) customer has not tampered with the meter; and 4) customer has not used service in a fraudulent or unauthorized manner. Other Long Term Debt Information Total interest paid for the year ended September 30, 2011 was $604,719 in the governmental funds and $1,400,777 in the enterprise fund. Interest costs of $7,300 were capitalized in the enterprise fund. In accordance with bond covenants and Section 148 of the Internal Revenue Code the City is required to rebate to the U.S. Treasury, every five years, earnings on bond proceeds in excess of the bond yield. For the year ended September 30, 2011, no amounts were earned that will have to be rebated to the U.S. Treasury. NOTE J EMPLOYEE RETIREMENT SYSTEMS General Information - The City has three pension plans covering all full-time employees after meeting appropriate age and service requirements. They are the Florida Retirement System, the Municipal Police Officers Pension Trust Fund and the Municipal Firefighters Pension Trust Fund. The Florida Retirement System is a cost-sharing multiple-employer public employee retirement plan administered by the State of Florida and available to the City s non-uniform (general) employees. The Police Officers and Firefighters Pension Plans, which are defined benefit, single-employer pension trust funds, issue financial reports that include financial statements and required supplementary information. The reports may be obtained from the City of North Port Finance Department. The North Port Police Officers and the North Port Firefighters Pension Plans have adopted Governmental Accounting Standards Board (GASB) Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Statement No. 27, Accounting for Pensions by State and Local Governmental Employers. In addition to other disclosures, the GASB requires for the current year and each of the two preceding years, annual pension cost, percentage of annual pension cost contributed and the net pension obligation at the end of the year. This information is presented later in this note. A schedule of funding progress and a schedule of employer contributions that include historical trend information about the annual required contributions of the employer are included as required supplementary information to the financial statements. FLORIDA RETIREMENT SYSTEM Plan Description - All full-time, non-uniform (general) employees are participants in the statewide Florida Retirement System under the authority of Florida Statutes, Chapter 121. The primary system is a defined benefit plan for all state, county, district school board, community college and university employees. 46

72 Effective July 1, 2011, the State of Florida made some changes to the retirement system as outlined below: Initially enrolled Initially enrolled on or after Benefits before July 1, 2011 July 1, 2011 Eligibility for Normal Retirement: Regular Class Eligibility for Normal Retirement: Special Risk Vested with six years of service and age 62; or 30 years of service, regardless of age Vested with eight years of service and age 65; or 33 years of service, regardless of age Vested with six years of special Vested with eight years of risk service and age 55; or 25 special risk service and age 60; years of special risk service and or 30 years of special risk age 52; or 30 years of any service and age 57; or 33 years creditable service, regardless of of any creditable service, age regardless of age Average Final Compensation Average of the five highest paid years preceding retirement Average of the eight highest paid years preceding retirement Vesting Six years of credited service Eight years of credited service Employees are eligible for normal retirement as outlined above. Employees meeting these criteria are entitled to an annual retirement benefit in an amount equal to 1.6% to 3.0% of their average final compensation (AFC) times years of creditable service, depending on the class of employee (regular, special risk, etc.). Vested employees may retire anytime after the required vesting period and receive a 5% benefit reduction for each year prior to normal retirement age or date. Disability and survivor benefits are also offered. Benefits are established by state statute. In 1987, the Legislature passed a bill that provides a constant 3% cost-of-living adjustment (COLA) for retirees. The adjustment was formerly based on the Consumer Price Index with a maximum of 3%. Any retirement service earned on or after July 1, 2011 will not be subject to a COLA. The system publishes an annual financial report that includes financial statements and required supplementary information. The most recent available report is for the plan year ended June 30, That report may be obtained by writing to the Florida Department of Management Services, PO Box 9000, Tallahassee, FL Description of Funding Policy - This is a cost-sharing multi-employer plan available to governmental units within the state. Participating employers are required by statute to pay monthly contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are adequate to accumulate sufficient assets to pay benefits when due. Effective July 1, 2011, Florida law required employees to make pretax retirement contributions of 3% of their gross salaries to the Plan. 47

73 Required Contributions: FY ending 9/30/11 FY ending 9/30/10 FY ending 9/30/09 Payroll for employees covered $ 17,787,067 $ 17,955,580 $ 18,484,347 Total payroll $ 30,675,560 $ 30,303,801 $ 31,085,793 Actuarially determined (actual) contributions $ 1,838,165 $ 1,867,168 $ 1,871,461 As a percentage of covered wages 10.33% 10.40% 10.12% As a percentage of required contributions 100% 100% 100% MUNICIPAL POLICE OFFICERS PENSION - LOCAL OPTION TRUST FUND Plan Description and Reporting Entity All full time police officers of the City of North Port Police Department (the City) are covered by the City of North Port, Florida Police Officers Pension Local Option Trust Fund (the Plan). The Plan is a defined benefit single-employer pension plan that was established December 14, 1979, pursuant to Florida Statutes, Chapter 185 and City Ordinance. The administration and operation of the Plan is vested in a five-member Board of Trustees, comprised of two City residents appointed by the City Commission, two police officers elected by a majority of police officers and a fifth member elected by the Board and appointed by the City Commission. As of October 1, 2011, the date of the latest actuarial valuation, membership consisted of: Retirees and disabled participants currently receiving benefits 17 Terminated employees entitled to benefits, but not yet receiving them 6 Members in DROP 1 Active plan participants: Vested 25 Non-vested 71 Total 120 Benefit provisions are established by the City Ordinances and Florida Statutes. Any participant who has creditable service of ten years and has attained age 55 or has completed 25 years of creditable service regardless of age is eligible for normal retirement benefits. Credited service includes total aggregate period of service, including military leave if reemployed by the City within one year of discharge under honorable conditions. Subject to limitations, such a retiree would receive a monthly retirement benefit of 3.50% of average final compensation, for each year of credited service, plus $165 per month benefit supplement. Average final compensation is the average total W-2 earnings, plus tax deferred and tax-exempt income, during the highest five years of service during the last ten years of credited service. The Plan provides disability benefits for both duty-related and off duty-related disabilities. Subject to limitations, the monthly pension benefit of a duty-related disability is equal to 2% of average final 48

74 compensation multiplied by the total years of credited service with a minimum amount of 60% of earnings at the time of the disablement. The monthly pension benefit of an off duty-related disability, assuming a minimum of ten years of credited service, is 2% of the average final compensation multiplied by the total years of credited service with a minimum amount of 50% of the earnings at the time of the disablement. The Plan provides death benefits for both duty-related and off duty-related deaths. Subject to limitations, the monthly pension benefit of a duty-related death is 60% of the participant s monthly salary at the time of death. The monthly pension benefit of an off duty-related death, assuming a minimum of five years of credited service, is 50% of the participant s monthly salary at the time of death. Both duty-related and off duty-related deaths are paid to the spouse for life or until remarriage for off duty-related deaths. If there is no surviving spouse, the benefit is paid in equal shares to the surviving children who are under 18, or who are under 23 and pursuing a full-time education. If an employee separates from service from the City before achieving ten years of credited service, the employee will receive a refund of his accumulated contributions without interest or the participant has the option to leave the contributions with the Plan. Upon termination, prior credited service will be forfeited if a refund of contributions is elected or if not reemployed within five years and not vested at termination. A deferred retirement option plan (DROP) is provided to members who are age 55 or older and have 10 years of credited service, or who have 25 years of credited service regardless of age. To electing participants, the receipt of their service pension, calculated as of the DROP date, is deferred for up to 36 months. A cash lump sum payment (options available) is made at termination of employment. Early retirement options are available for members who are age 45 and have ten years of credited service. The monthly pension benefit is the accrued benefit reduced 3% per year for each year prior to normal retirement if less than 15 years of service, 2% per year for members with at least 15 years of service but less than 20 years of service, and 1% per year for members with more than 20 years of service. Summary of Significant Accounting Policies BASIS OF ACCOUNTING The City of North Port, Florida Police Officers Pension Local Option Trust Fund financial statements are prepared using the accrual basis of accounting. Plan member and State contributions are recognized in the period in which the contributions are due. Employer contributions 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 the Plan. METHOD USED TO VALUE INVESTMENTS The Plan s investments are reported at the current fair market value as measured by quoted prices at September 30, Funding Policy and Contributions CONTRIBUTIONS Plan members are required to contribute 8% of their annual covered salary. The payments are deducted from the employees wages or salary and remitted by the City to the Plan at the end of each pay period. The City makes quarterly contributions to the Plan based on an actuarially determined employer contribution, as 49

75 adjusted, or the minimum percentage specified by City ordinance, whichever is greater. Administrative costs of the plan are financed through investment earnings. In addition, the Plan receives an annual distribution of casualty insurance premium tax monies from the State of Florida pursuant to Chapter 185, Florida Statutes (the state contribution). The actuarially determined employer contribution may be reduced by the amount that the actual state contribution exceeds a certain amount specified in the actuarial valuation. For the year ended September 30, 2011, that amount was $179,229. The annual required contribution for the year ended September 30, 2011, was determined based on an actuarial valuation conducted as of October 1, 2009, and was adjusted for the actual state contribution as follows: October 1, 2009 Original Valuation Total required contribution $ 2,362,237 Expected member contribution (517,892) Required employer contribution 1,844,345 State contribution (179,229) Required net city contribution $ 1,665,116 The City is required by ordinance to contribute a minimum of 18% of covered payroll. The required City contribution for the year ended September 30, 2011, would be the greater of $1,665,116 or 18% of covered payroll. Covered payroll refers to all compensation paid by the City to active employees covered by the Plan on which contributions to the Plan are based. The actuarial valuation which determined the annual required contribution for the 2011 fiscal year used the entry age normal cost method. The actuarial assumptions in the October 1, 2009, valuation included: (a) 8.0% investment rate of return (net of administrative expenses); (b) projected salary increases of 7.5%; and (c) 3% rate of inflation. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on a closed basis. The remaining amortization period at October 1, 2011, was 29 years. The significant actuarial assumptions used to determine the actuarially determined employer contribution requirement are the same as those used to compute the actuarial accrued liability. See the required supplementary information presented after the notes, which presents multi-year trend information related to the Plan. Cash, Cash Equivalents and Investments The Plan has adopted an investment policy pursuant to Chapter 185, Florida Statutes that establishes permitted investments, asset allocation and issuer limits, credit rating requirements, and maturity limits to protect the Plan s cash and investment assets. 50

76 At September 30, 2011, the Plan had the following investments and maturities: Fair Less Than Years Years More Than Investment Type Market 1 Year Years Cash and cash equivalents $ 1,307,413 $ 1,307,413 $ - $ - $ - U.S. Government securities 235, ,351 55, U.S. Government agency securities 2,736, , , ,749 1,697,271 Equities 8,453,701 8,453, Corporate bonds 2,307, ,976 1,143, ,741 45,969 Fixed income mutual funds 840, , American Core Realty Fund, LLC 1,159,293 1,159, Total fair value $ 17,039,347 $ 12,291,470 $ 1,912,147 $ 1,092,490 $ 1,743,240 The Plan recognizes mutual funds that are invested in money market funds as cash equivalents for financial reporting purposes. Investments are held by a custodian and managed by investment managers. The investment managers provide quarterly reports of the investment portfolio and its performance to the Board of Trustees. Interest rate risk: This is the risk that changes in interest rates will adversely affect the fair value of an investment. The Plan realizes that reasonable consistency of return and protection of assets against the inroads of inflation are paramount. However, the volatility of interest rates and securities markets make it necessary to judge results within the context of several years rather than over short periods of one or two years or less. Credit risk: Credit quality risk results from the potential default of investments that are not financially sound. Investments are limited by Florida Statute Chapter 185 and by an investment policy adopted by the Plan s Board of Trustees. The Plan limits its investments to the following: (1) annuity and life insurance contracts with life insurance companies; (2) time or savings accounts of a national bank, a state bank insured by the Bank Insurance Fund or a savings/building and loan association insured by the Savings Association Insurance Fund which is administered by the Federal Deposit Insurance Corporation or a state or Federal credit union whose share accounts are insured by the National Credit Union Share Insurance Fund; (3) obligations of the United States Government or obligations guaranteed as to principal and interest by the United States Government or by an agency of the United States Government; (4) bonds issued by the State of Israel; (5) stocks, commingled funds administered by national or state banks, mutual funds and bonds or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia; (6) equity securities; (7) fixed income securities; (8) money market funds; and (9) pooled funds such as mutual funds, commingled funds, exchange-traded funds, limited partnerships, and private equities. All equities must be traded on a national exchange or electronic network. All fixed income securities shall hold a rating in one of the three highest classifications by a major credit rating service and the total fixed income portfolio shall have a weighted average quality of AA or better as measured by Standard & Poor s or Moody s. Money market funds or short-term investment funds are limited to those options provided by the Plan s custodian and must have a minimum rating of A1 by Standard and Poor s or P1 by Moody s. 51

77 Of the investments the Plan holds, $1,307,413 of cash and cash equivalents are unrated; $235,548 of U.S. Government securities are rated Aaa by Moody s and AA+ by Standard and Poor s; $1,143,638 of U.S. Government agency securities are rated Aaa by Moody s and AA+ by Standard and Poor s; $2,307,058 of corporate bonds are rated Aaa to Baa by Moody s and AAA to A- by Standard and Poor s; $840,037 of fixed income mutual funds, $8,453,701 of equities and $1,159,293 of American Core Realty Fund, LLC are unrated. Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributable to the quantity of the Plan s investment in a single issuer. No more than 5% of the Plan s assets, at the time of purchase, shall be invested in the common stock, capital stock, or convertible stock of any one issuing company, nor shall the aggregate investment in any one issuing company exceed 5% of the outstanding capital stock of the company. The value of bonds issued by any single corporation shall not exceed 3% of the Plan s assets. Investments in corporate common stock and convertible bonds shall not exceed 60% of the Plan s investments at cost, or 70% of the Plan s investments at market value. Foreign securities shall not exceed 25% of the market value of the Plan s assets. All equity and fixed income securities must be readily marketable. The cost and market value of the investments of the Plan at September 30, 2011, are as provided in the following table. Cost Market Value % of Market Cash and cash equivalents $ 1,307,413 $ 1,307,413 8% U.S. Government securities 235, ,548 1% U.S. Government agency securities 2,605,749 2,736,297 16% Equities 8,678,570 8,453,701 50% Corporate bonds 2,230,079 2,307,058 14% Fixed income mutual funds 920, ,037 5% American Core Realty Fund, LLC 1,140,000 1,159,293 7% Total Investments $ 17,117,988 $ 17,039, % The market value of the American Core Realty Fund, LLC exceeded more than 5% of the Plan s assets. This fund invests in private market real estate investments and real estate investments for which no liquid public market exists. The fair values of such investments can be volatile and may not be readily ascertainable. The recent recession and slow economic recovery may have an adverse impact on the Fund s net asset value, liquidity position, results of operations and financial condition. Custodial credit risk: For an investment, this is the risk that, in the event of the failure of the counterparty, the Plan will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Plan investments are held in the name of Salem Trust Company as Custodian for the City of North Port Police Officers Pension Local Option Trust Fund. Trading Parameters: When feasible and appropriate, all securities shall be competitively bid. Except as otherwise required by law, the most economically advantageous bid shall be selected. Commissions paid for purchase of securities must meet the prevailing best execution rates. The responsibility of monitoring best price and execution of trades placed by each manager on behalf of the Plan is governed by the Portfolio Management Agreement between the Plan and the Investment Managers. 52

78 Other Plan Information This municipal Defined Benefit Plan has been subject to the minimum funding standards since the adoption of the Florida Protection of Public Employee Retirement Benefits Act (Part VII of Chapter 112, Florida Statutes) in Accordingly, the sponsor has funded the actuarially determined required contributions for all years from October 1, 1987, through the transition date, October 1, 1997; thus, the NPO on October 1, 1997, was 0. The development of the Net Pension Obligation (asset) to date is as follows: 9/30/2009 9/30/2010 9/30/2011 Actuarially determined contribution (A) $ 1,167,597 $ 1,472,393 $ 1,844,345 Interest on NPO (46,962) (54,704) (65,533) Adjustment to (A) 53,080 61,975 76,763 Annual pension cost 1,173,715 1,479,664 1,855,575 Contributions made 1,270,491 1,615,027 1,844,345 Increase (decrease) in NPO (96,776) (135,363) 11,230 NPO beginning of year (587,029) (683,805) (819,168) NPO end of year $ (683,805) $ (819,168) $ (807,938) Three-year trend information is as follows: Annual Percentage Year Pension Cost of APC Net Pension Ending (APC) Contributed Obligation 9/30/11 $ 1,855,575 99% $ (807,938) 9/30/10 1,479, % (819,168) 9/30/09 1,173, % (683,805) The funded status of the Plan as of October 1, 2011, is as follows: Actuarial Accrued UAAL as a Actuarial Actuarial Value Liability (AAL) Unfunded Funded Covered Percentage of Valuation of Assets -Entry Age AAL (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 10/1/2011 $ 18,630,319 $ 28,517,286 $ 9,886, % $ 6,201, % ACTUARIAL ASSUMPTION/METHOD CHANGES SINCE PRIOR VALUATION Since the prior valuation, Ordinance was passed which reduced the early retirement reduction from 3% per year to 2% per year for those with between 15 and 20 years of credited service at retirement and to 1% per year for those with 20 or more years of credited service at retirement. The early retirement reduction remains 3% per year for retirees with less than 15 years of service at retirement. 53

79 This ordinance also allowed for a one-time cost of living adjustment for those retirees who were receiving benefits on October 1, 2009 in the amount of 2% per year for each full year of retirement up to a maximum of 10%. There have been no changes in assumptions or methods since the prior valuation. Location of Six Year Historical Trend Information Six year historical trend information related to the pension plan is presented in the required supplementary information following the notes to the financial statements. The information is presented to enable the reader to assess the progress made by the Plan in accumulating sufficient assets to pay pension benefits as they become due. Summary information follows: Valuation date 10/01/09 Actuarial cost method Entry age normal Remaining amortization period 29 years as of 10/1/11 Amortization method Level percentage of pay - closed Asset valuation method 4 year smooth Actuarial assumptions: Investment rate of return 8.0% Projected salary increases 7.5% Inflation rate 3.0% MUNICIPAL FIREFIGHTERS PENSION - LOCAL OPTION TRUST FUND Plan Description and Reporting Entity All full time firefighters of the City of North Port Fire Department are covered by the City of North Port, Florida Firefighters Pension - Local Option Trust Fund (the Plan ). The Plan is a single-employer defined benefit pension plan that was established November 5, 1974, pursuant to Florida Statutes, Chapter 175, and City Ordinance The Plan was amended most recently by Ordinance This Ordinance provided for the reduction in the fixed earnings of DROP accounts from 6.5 to 1.0 percent per annum. The administration and operation of the Plan is vested in a five-member Board of Trustees made up of two City Commission appointees, two members of the Fire Department elected by the membership, and a fifth member elected by the other four trustees and appointed by the City Commission. As of October 1, 2011, the date of the latest actuarial valuation, membership consisted of: Retirees, disabled participants and beneficiaries currently receiving benefits 16 Terminated employees entitled to benefits, but not yet receiving them 7 Member in DROP 0 Active plan participants: Vested 21 Non-Vested 63 Total

80 Benefit provisions are established by the City Ordinances and Florida Statutes. Firefighters are eligible for normal retirement at the earlier of ten years of credited service and attainment of age 55 or 25 years of credited service and attainment of age 52. Firefighters meeting these criteria are entitled to an annual retirement benefit, payable monthly, in an amount equal to 3.5% of their average final monthly compensation (AFC) times years of creditable service. The AFC is defined as the average of the five highest paid years during the last ten years preceding retirement or termination. Ten year certain and life annuity options are available for the payment of retirement benefits. Service retirees, vested terminated members and their beneficiaries receive annual 3% benefit increases beginning at age 55 and ceasing at age 63. The Plan also provides death and disability benefits. Firefighters with ten or more years of credited service are eligible for death benefits equal to their monthly accrued benefit payable to the beneficiary for ten years. Disability benefits provided by the Plan are equal to 3.5% of AFC times years of credited service with no less than 42% of AFC for service incurred disabilities and 3.5% of AFC times years of credited service for non-service incurred disabilities, with a minimum required ten years credited service. If an employee leaves the employment of the City before attaining ten years of service, the accumulated contributions made by the employee are refunded. If an employee leaves the employment of the City after ten years of service, but before reaching retirement age, the employee is entitled to a monthly retirement benefit determined in the same manner as for normal or early retirement provided the employee does not withdraw his contributions. A deferred retirement option plan (DROP) is provided to members who are age 55 and have ten years of credited service, or age 52 with 25 years of credited service. To electing participants, the receipt of their service pension, calculated as of the DROP date, is deposited into a DROP account for up to 60 months. The members can elect a 1% annual rate of return or the actual net rate of investment return credited each fiscal quarter. A cash lump-sum payment or other optional form of payment is made at termination of employment. Summary of Significant Accounting Policies BASIS OF ACCOUNTING The City of North Port, Florida Firefighters Pension Local Option Trust Fund financial statements are prepared using the accrual basis of accounting. Plan member and State contributions are recognized in the period in which the contributions are due. Employer contributions 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 the Plan. METHOD USED TO VALUE INVESTMENTS The Plan s investments are reported at the current fair market value as measured by quoted prices at September 30, Funding Policy and Contributions Plan members are required to contribute 10.3% of their annual covered salary. The payments are deducted from the employees wages or salary and remitted by the City to the Plan at the end of each pay period. 55

81 The City makes quarterly contributions to the Plan based on an actuarially determined employer contribution, as adjusted, or the minimum percentage specified by City ordinance, whichever is greater. In addition, the Plan receives an annual distribution of property insurance premium tax monies from the State of Florida pursuant to Chapter 175, Florida Statutes (the state contribution ). The actuarially determined employer contribution may be reduced by the amount that the actual state contribution exceeds a certain amount specified in the actuarial valuation. For the year ended September 30, 2011, that amount was $170,286. The annual required contribution for the year ended September 30, 2011, was determined based on an actuarial valuation conducted as of October 1, 2009: October 1, 2009 Original Valuation Total required contribution $ 2,248,618 Expected member contribution (606,938) Required employer contribution 1,641,680 State contribution (170,286) Required net City contribution $ 1,471,394 The City is required by ordinance to contribute a minimum of 18% of covered payroll. The required City contribution for the year ended September 30, 2011, therefore, was the greater of $1,471,394 or 18% of covered payroll. Covered payroll refers to all compensation paid by the City to active employees covered by the Plan on which contributions to the Plan are based. The actuarial valuation which determined the annual required contribution for the 2011 fiscal year used the entry age normal cost method. The actuarial assumptions in the October 1, 2009 valuation included: (a) 8.0% investment rate of return (net of administrative expenses); (b) projected salary increases of 7.5%; (c) 3.0% rate of inflation and (d) 3.0% per year postretirement benefit increase for retirees from 55 through 63 years of age. The actuarial value of assets was determined using techniques that smooth the effects of shortterm volatility in the market value of investments over a four-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on a closed basis. The remaining amortization period at October 1, 2009 was 25 years. The significant actuarial assumptions used to determine the actuarially determined employer contribution requirement are the same as those used to compute the actuarial accrued liability. See the required supplementary information presented after the notes, which presents multi-year trend information related to the Plan. The Plan has adopted an investment policy pursuant to Chapter 175, Florida Statutes that establishes permitted investments, asset allocation and issuer limits, credit rating requirements and maturity limits, to protect the Plan s cash and investment assets. 56

82 At September 30, 2011, the Plan had the following investments and maturities: Fair Less Than Years Years Years More Investment Type Market 1 Year Than 10 Cash and cash equivalents $ 2,973,712 $ 2,973,712 $ - $ - $ - U.S. Government securities 399, ,398 - U.S. Government agency securities 3,837, , , ,277 2,654,280 Equities 12,082,790 12,082, Corporate bonds 2,373,328-1,048, , ,237 Municipal obligations 392, , ,960 - Total fair value $ 22,059,708 $ 15,162,985 $ 1,659,484 $ 2,148,722 $ 3,088,517 The Plan recognizes mutual funds that are invested in money market funds as cash equivalents for financial reporting purposes. Investments are held by a custodian and managed by investment managers. The investment managers provide quarterly reports of the investment portfolio and its performance to the Board of Trustees. Performance is monitored and evaluated quarterly. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Plan realizes that reasonable consistency of return and protection of assets against the inroads of inflation are paramount. However, the volatility of interest rates and securities markets make it necessary to judge results within the context of several years rather than over short periods. Credit Risk Credit quality risk results from potential default of investments that are not financially sound. Investments are limited by Florida Statute, Chapter 175, and by an investment policy adopted by the Plan s Board of Trustees. The Plan limits its investments to the following: (1) annuity and life insurance contracts with life insurance companies; (2) time or savings accounts of a national bank, a state bank insured by the Bank Insurance Fund or a savings/building and loan association insured by the Savings Association Insurance Fund which is administered by the Federal Deposit Insurance Corporation or a state or Federal credit union whose share accounts are insured by the National Credit Union Share Insurance Fund; (3) obligations of the United States Government or obligations guaranteed as to principal and interest by the United States Government or by an agency of the United States Government; (4) bonds issued by the State of Israel; (5) stocks, commingled funds administered by national or state banks, mutual funds and bonds or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States or the District of Columbia; (6) equity securities; (7) fixed income securities; (8) money market funds; and (9) pooled funds such as mutual funds, commingled funds, exchange-traded funds, limited partnerships, and private equities. All Bonds issued by U.S. Corporations and other fixed income securities shall hold a rating in one of the three highest classifications by a major rating service and the total fixed income portfolio shall have a weighted average quality of AA or better as measured by Standard & Poor s or Moody s. Money market funds or short-term investment funds are limited to those options provided by the Plan s custodian and must have a minimum rating of A1/P1, or its equivalent, by a major credit rating service. Of the investments, the Plan holds, $2,973,712 of cash and cash equivalents are unrated; $399,398 of U.S. Government securities are rated Aaa by Moody s and AA+ by Standard and Poor s; $1,074,430 of U.S. Government agency securities are rated Aaa by Moody s with the balance of U.S. Government agency 57

83 securities unrated; $2,275,338 of corporate bonds are rated Baa1 to Aaa by Moody s and A- to AAA by Standard and Poor s; $392,663 of municipal obligations are rated A1 to Aa1 by Moody s and A+ to AA+ by Standard and Poor s; and $12,082,790 of equities are unrated. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributable to the quantity of the Plan s investment in a single issuer. No more than 5% of the Plan s assets shall be invested in the common stock of any one issuing company, nor shall the aggregate investment in any one issuing company exceed 5% of the outstanding capital stock of the company. The value of bonds issued by any single corporation shall not exceed 3% of the Plan s assets. Investments in corporate common stock and convertible bonds shall not exceed 60% of the Plan s investments at cost, or 70% of the Plan s investments at market value. Foreign securities shall not exceed 25% of the market value of the Plan s assets. Investments in real estate, including real estate investment trusts, shall not exceed 10% of the total market value of the Plan s assets at the time of purchase. There were no investments that exceeded 5% or more of the Plan s assets. The cost and market value of the investments of the Plan at September 30, 2011, are as follows: Cost Market Value % of Market Cash and cash equivalents $ 2,973,712 $ 2,973,712 13% U.S. Government securities 389, ,398 2% U.S. Government agency securities 3,666,728 3,837,817 17% Equities 12,848,652 12,082,790 55% Corporate bonds 2,323,846 2,373,328 11% Municipal obligations 370, ,663 2% Total Investments $ 22,572,640 $ 22,059, % Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Plan will not be able to recover the value of its investments or collateral securities that are in the possession of an obligated third party. The Plan investments are held in the name of Salem Trust Company as custodian for the City of North Port Firefighters Pension Local Option Trust Fund. Development of Net Pension Obligation (NPO) This municipal Defined Benefit Plan has been subject to the minimum funding standards since the adoption of the Florida Protection of Public Employee Retirement Benefits Act (Part VII of Chapter 112, Florida Statutes) in Accordingly, the sponsor has funded the actuarially determined required contributions for all years from October 1, 1987, through the transition date, October 1, 1997; thus, the NPO on October 1, 1997 was 0. 58

84 The development of the net pension obligation (asset) to date is as follows: 9/30/2009 9/30/2010 9/30/2011 Actuarially determined contribution (A) $ 1,170,281 $ 1,396,967 $ 1,641,680 Interest on NPO (45,124) (52,524) (60,601) Adjustment to (A) 50,087 57,615 68,551 Annual pension cost 1,175,244 1,402,058 1,649,630 Contributions made 1,267,754 1,503,016 1,641,680 Increase in NPO (92,510) (100,958) 7,950 NPO beginning of year (564,045) (656,555) (757,513) NPO end of year $ (656,555) $ (757,513) $ (749,563) Three-year trend information is as follows: Annual Percentage Net Pension Year Pension Cost of APC Obligation Ending (APC) Contributed (Asset) 9/30/11 $ 1,649, % $ (749,563) 9/30/10 1,402, % (757,513) 9/30/09 1,175, % (656,555) The funded status of the Plan as of October 1, 2011, is as follows: Actuarial Accrued UAAL as a Actuarial Actuarial Value Liability (AAL) Unfunded Funded Covered Percentage of Valuation of Assets -Entry Age AAL (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 10/1/2011 $ 24,360,212 $ 29,723,236 $ 5,363, % $ 5,663, % ACTUARIAL ASSUMPTION/METHOD CHANGES SINCE PRIOR VALUATION As of the latest actuarial report dated October 1, 2011, the fixed interest option for DROP has changed from 6.5% to 1%. However, there have been no reported changes in actuarial assumption/methods since the prior valuation. Location of Six-Year Historical Trend Information Six-year historical trend information is designed to provide information regarding the Plan s progress made in accumulating sufficient assets to pay benefits when due. The trend information that is currently available is presented in the required supplementary information following the notes to the financial statements. 59

85 Summary information follows: Valuation date 10/01/09 Actuarial cost method Entry age normal Remaining amortization period 23 years Amortization method Level Percentage of Pay, Closed Asset valuation method 4 year smooth Actuarial assumptions: Investment rate of return 8.0% Projected salary increases 7.5% Payroll growth 5.0% Inflation rate 3.0% Post retirement COLA (age 55-63) 3.0% NOTE K POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description Pursuant to the provision of Section , Florida Statutes, retired Police Officers, Firefighters and General Employees, as well as their dependents, are permitted to remain covered under the City s medical plans as long as they pay the premium not exceeding the rate developed by blending the claims experience of all plan members for the plan and coverage elected. The City subsidizes the premium rates paid by the retirees by allowing them to participate in the plan at the blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. Funding Policy Currently, the City s OPEB benefits are unfunded. There is no separate Trust Fund or equivalent arrangement into which the City would make contributions to advance-fund the obligation, as it does for its pension plans. Therefore, the ultimate subsidies which are provided over time are financed directly by general assets of the City, which are invested in short-term fixed income instruments according to its investment policy. For the fiscal year ended September 30, 2011, the City provided required contributions of $44,617 toward the annual OPEB cost, comprised of benefit payments made on behalf of retirees. Part of the City s periodic contribution to the Florida Retirement System (FRS) on behalf of its general employees is a contribution toward the Health Insurance Subsidy (HIS) managed by FRS. Currently, HIS provides eligible employees with a lifetime benefit equal to $5 per month per year of service (up to a maximum of $150 per month) after they retire, toward the payment of any insurance-related premiums. The State of Florida is treating this program as a Cost-Sharing Multiple-Employer defined benefit pension plan like FRS, rather than being classified as an Agent Multiple-Employer defined benefit OPEB plan. Accordingly, the State considers the HIS program to be reported pursuant to GASB Statement No. 27. Annual OPEB Cost and Net OPEB Obligations The following table shows the City s annual OPEB cost for the fiscal year ended September 30, 2011, the amount actually contributed to the plan, and changes in the City s net OPEB obligation: 60

86 Description Amount Normal Cost (service cost for one year) $ 179,088 Amortization of Unfunded Actuarial Accrued Liability 110,824 Annual Required Contribution (ARC) 289,912 Interest on Net OPEB Obligation (NOO) 50,210 Adjustment to ARC (37,193) Annual OPEB Cost (Expense) 302,929 Employer Contributions (44,617) Increase in NOO 258,312 NOO at Beginning of Year 1,115,784 NOO at End of Year $ 1,374,096 Three-year trend information is as follows: Fiscal Year Ending Annual OPEB Cost Amount Contributed Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 9/30/2011 $ 302,929 $ 44, % $ 1,374,096 9/30/ , , % 1,115,784 9/30/ ,244 82, % 564,415 The funded status and funding progress as of October 1, 2010, the most recent actuarial valuation date, was as follows: Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Liabilities (AAL) (b) Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll UAAL as a % of Covered Payroll 10/1/10 $ - $ 1,805,157 $ 1,805, % N/A N/A Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions and the probability of occurrence of events far into the future. Examples include assumptions about future employment and termination, mortality, and the healthcare cost trends. 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 from the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multiyear trend information in the future. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan provisions, as understood by the employer and participating members, and include the type of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of the short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the October 1, 2010 OPEB actuarial valuation, the unit credit actuarial cost method was used. The actuarial assumptions included a 4.5% discount rate. The annual healthcare cost trend rate was 5% for the fiscal year ending September 30, 2011, with the annual rate increasing to 6% in fiscal year ending September 30, 2012 and then decreasing gradually back to 5% for years after fiscal year The unfunded actuarial accrued liability is being amortized as a level percentage of projected payrolls on a closed basis over a 30 year amortization period. 61

87 NOTE L DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan amendments have been made, so that the plan is in compliance with IRC Section 457, as amended by the 1996 changes to the tax code. The assets are now held in various custodial accounts. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are solely the property and rights of the various participants of the plan. NOTE M - RISK MANAGEMENT The City is a member of the Public Risk Management Association, a local government liability/risk pool. Public Risk Management administers insurance activities relating to property, general, automobile and public officials liability, workers compensation and auto physical damage. Public Risk Management absorbs losses up to a specified amount annually and purchases excess and other specific coverages from third-party carriers. Public Risk Management assesses each member its pro rata share of the estimated amount required to meet current year losses and operating expenses. If total member assessments do not produce sufficient funds to meet its obligations, Public Risk Management can make additional assessments. The City s membership includes all City departments. NOTE N CONTINGENT LIABILITIES Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal and state governments. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City s counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. NOTE O SUBSEQUENT EVENTS On January 30, 2012, the City Commission passed and adopted Ordinance No, , placing a moratorium on the levy of impact fees relating to transportation and solid waste for a two-year period commencing on January 31, 2012 and ending on January 31,

88 63

89 REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information includes financial information and disclosures that are required by the Governmental Accounting Standards Board but are not considered a part of the basic financial statements. 64

90 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 10,918,183 $ 10,918,183 $ 10,749,325 $ (168,858) Permits and special assessments 2,854,830 2,854,830 2,772,137 (82,693) Intergovernmental 4,500,939 4,530,044 4,967, ,836 Charges for services 7,495,895 7,495,895 7,367,149 (128,746) Fines and forfeiture 152, , ,312 (3,428) Investment income 152, , ,106 24,106 Miscellaneous 245, , , ,659 Total revenues 26,319,782 26,449,887 26,780, ,876 EXPENDITURES Current: General government: City Commission 372, , ,380 (3,638) City Attorney 864, , , ,693 City Clerk 659, , ,147 (229) Finance 1,425,251 1,380,418 1,217, ,902 Planning & Zoning & Engineering 842,834 1,211, , ,689 I&T 1,409,153 1,429,717 1,330,102 99,615 Human Resources 412, , ,509 17,455 City Manager 734, ,705 1,092,911 (208,206) Facilities Management 2,734,760 2,711,121 2,515, ,197 General Services Administration 201, , ,028 (5,311) Non-Departmental 487, , , ,129 Total General government 10,144,353 10,764,184 9,791, ,296 Public safety: Building 777, , ,395 23,076 Police 12,779,864 12,689,150 12,548, ,731 Emergency Medical Services 3,875,425 3,923,533 3,689, ,700 Total Public safety 17,432,572 17,405,154 17,007, ,507 Economic environment: Economic Development 503, , ,120 18,856 Human services: Social Services 256, , ,535 61,899 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 65

91 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Culture and recreation: Parks & Recreation 998, , ,171 89,471 Capital outlay 481,625 2,329, ,001 1,502,858 Debt service: 1,204,621 1,204,621 1,204,621 - Total expenditures 31,020,767 33,807,870 30,764,983 3,042,887 Excess (deficiency) of revenues over (under) expenditures (4,700,985) (7,357,983) (3,984,220) 3,373,763 OTHER FINANCING SOURCES (USES) Transfers in 1,204,621 1,404,621 1,402,581 (2,040) Transfers out (541,009) (541,009) (541,009) - Capital Leases 200, Total other financing sources and (uses) 863, , ,572 (2,040) Net change in fund balances (3,837,373) (6,494,371) (3,122,648) 3,371,723 Fund balances - beginning 15,345,928 15,345,928 15,345,928 - Fund balances - ending $ 11,508,555 $ 8,851,557 $ 12,223,280 $ 3,371,723 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 66

92 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ROAD AND DRAINAGE DISTRICT SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Taxes $ 2,526,227 $ 2,526,227 $ 2,453,271 $ (72,956) Permits and special assessments 30,000 30,000 32,851 2,851 Intergovernmental 320, , ,724 (62,784) Charges for services 10,416,742 10,416,742 10,369,314 (47,428) Investment income 173, , ,906 (39,814) Miscellaneous 31,900 31,900 68,848 36,948 Total revenues 13,499,097 13,499,097 13,315,914 (183,183) EXPENDITURES: Current: Physical environment 4,227,881 4,834,672 4,317, ,390 Transportation 8,583,881 9,815,848 8,765,391 1,050,457 Capital outlay 1,223,782 1,642, , ,024 Debt service 792, , ,340 1 Total expenditures 14,827,885 17,085,682 14,786,810 2,298,872 Excess (deficiency) of revenues over (under) expenditures (1,328,788) (3,586,585) (1,470,896) 2,115,689 Net change in fund balances (1,328,788) (3,586,585) (1,470,896) 2,115,689 Fund balances - beginning 9,898,528 9,898,528 9,898,528 - Fund balances - ending $ 8,569,740 $ 6,311,943 $ 8,427,632 $ 2,115,689 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 67

93 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE FIRE RESCUE DISTRICT SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 10,000 $ 10,000 $ 8,305 $ (1,695) Intergovernmental 35,040 35,040 44,321 9,281 Charges for services 6,837,320 6,837,320 6,545,630 (291,690) Investment income 40,000 40,000 40, Miscellaneous 26,058 26,058 33,273 7,215 Total revenues 6,948,418 6,948,418 6,671,555 (276,863) EXPENDITURES: Current: Public safety 6,894,553 6,966,633 6,839, ,278 Capital outlay - 198,178 93, ,102 Total expenditures 6,894,553 7,164,811 6,932, ,380 Excess (deficiency) of revenues over (under) expenditures 53,865 (216,393) (260,876) (44,483) Net change in fund balances 53,865 (216,393) (260,876) (44,483) Fund balances - beginning 2,164,178 2,164,178 2,164,178 - Fund balances - ending $ 2,218,043 $ 1,947,785 $ 1,903,302 $ (44,483) The budget basis is in accordance with accounting standards generally accepted in the United States of America. 68

94 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SOLID WASTE DISTRICT SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Charges for services $ 7,670,988 $ 7,670,988 $ 7,704,674 $ 33,686 Investment income 100, ,000 75,755 (24,245) Miscellaneous 2,000 2,000 23,047 21,047 Total revenues 7,772,988 7,772,988 7,803,476 30,488 EXPENDITURES: Current: Physical environment 5,910,991 5,904,662 5,748, ,621 Capital outlay 1,524,698 1,426,240 1,288, ,543 Debt service 770, , ,547 1 Total expenditures 8,205,879 8,186,450 7,892, ,165 Excess (deficiency) of revenues over (under) expenditures (432,891) (413,462) (88,809) 324,653 Net change in fund balances (432,891) (413,462) (88,809) 324,653 Fund balances - beginning 4,281,708 4,281,708 4,281,708 - Fund balances - ending $ 3,848,817 $ 3,868,246 $ 4,192,899 $ 324,653 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 69

95 CITY OF NORTH PORT, FLORIDA NORTH PORT POLICE OFFICERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS 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 % of Covered Payroll ((b-a)/c) 10/1/11 $ 18,630,319 $ 28,517,286 $ 9,886, % $ 6,201, % 10/1/10 17,561,488 25,885,339 8,323, % 6,079, % 10/1/09 15,807,603 23,706,979 7,899, % 6,052, % 10/1/08 14,362,581 20,570,262 6,207, % 5,695, % 10/1/07 12,998,281 18,428,755 5,430, % 4,840, % 10/1/06 10,933,772 15,165,640 4,231, % 4,066, % Analysis of the dollar amounts of the actuarial value of assets or actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the Plan's funding status on a going-concern basis. Analysis of this percentage over time indicates whether the Plan is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the Plan. Trends in the unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Plan's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Plan. 70

96 CITY OF NORTH PORT, FLORIDA NORTH PORT POLICE OFFICERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND OTHER CONTRIBUTING ENTITIES Actuarial Ended September 30 Required Contribution City Contribution State Contribution Percentage Contributed 2011 $ 1,844,345 $ 1,665,116 $ 179,229 * % ,472,393 1,468, ,546 * % ,167,597 1,123, ,546 * % ,266 1,012, ,546 * % , , ,546 * % , , ,546 * % * "Frozen" pursuant to the provisions of Chapter 185, Florida Statutes, as amended. 71

97 CITY OF NORTH PORT, FLORIDA NORTH PORT FIREFIGHTERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS 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 % of Covered Payroll ((b-a)/c) 10/1/11 $ 24,360,212 $ 29,723,236 $ 5,363, % $ 5,663, % 10/1/10 23,177,547 27,975,235 4,797, % 5,619, % 10/1/09 21,121,683 28,697,960 7,576, % 5,994, % 10/1/08 19,258,324 24,075,558 4,817, % 5,266, % 10/1/07 16,953,039 20,888,154 3,935, % 5,016, % 10/1/06 14,115,149 18,277,153 4,162, % 4,360, % Analysis of the dollar amounts of the actuarial value of assets or actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the Plan's funding status on a going-concern basis. Analysis of this percentage over time indicates whether the Plan is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the Plan. Trends in the unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Plan's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Plan. 72

98 CITY OF NORTH PORT, FLORIDA NORTH PORT FIREFIGHTERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND OTHER CONTRIBUTING ENTITIES Actuarial Ended September 30, Required Contribution City Contribution State Contribution Percentage Contribution 2011 $ 1,641,680 $ 1,471,394 $ 170,286 * % ,396,967 1,332, ,286 * % ,170,281 1,097, ,286 * % ,035, , ,286 * % , , ,286 * % , , ,286 * % * "Frozen" pursuant to the provisions of Chapter 175, Florida Statutes, as amended. 73

99 CITY OF NORTH PORT, FLORIDA POSTEMPLOYMENT BENEFITS OTHER THAN PENSION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS Actuarial Valuation Date Actuarial Value of Assets Actuarial Liabilities (AAL) (1) Unfunded AAL (UAAL) (2) Funded Ratio Covered Payroll UAAL as a % of Covered Payroll 10/1/08 $ - $ 3,234,507 $ 3,234, % N/A N/A 10/1/10-1,805,157 1,805, % N/A N/A (1) Actuarial liability determined under the unit credit cost method. (2) Actuarial liability less actuarial value of assets, if any. As stated in GASB 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, OPEB plans with a total membership of 200 or more must have actuarial valuations at least biennially. September 30, 2009 was the first year that an actuarial valuation was performed on the City's Other Postemployment Benefits Plan. The above information is as of October 1, 2008, the most recent actuarial valuation date. Information is not available for FY08. 74

100 75

101 COMBINING & INDIVIDUAL FUND STATEMENTS AND SCHEDULES This section includes financial statements and schedules which are not part of the basic financial statements, but are presented for purposes of additional analysis. 76

102 CITY OF NORTH PORT, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2011 Special Revenue Inspector Education Special Law Enforcement Police Education Tree Replacement ASSETS: Cash and investments $ 45,153 $ 45,829 $ 14,079 $ 724,080 Receivables (net of allowance for uncollectibles) Due from other governments - - 3,431 6 Total assets $ 45,153 $ 45,918 $ 17,510 $ 724,086 LIABILITIES: Accounts payable $ 338 $ 36 $ - $ 677 Due to other funds ,482 Deferred revenue - 4, Total liabilities 338 4,576-10,159 FUND BALANCES: Restricted - 41,342 17,510 - Committed 44, ,927 Unassigned Total fund balances 44,815 41,342 17, ,927 Total liabilities and fund balances $ 45,153 $ 45,918 $ 17,510 $ 724,086 77

103 Special Revenue Building Department Escheated Lots - Land & Future Projects Escheated Lots - Roads Escheated Lots - Parks Law Enforcement Impact Fees Fire Impact Fees $ 200 $ 6,105,375 $ 472,672 $ 553,777 $ 126,465 $ 814,434 10, $ 11,236 $ 6,105,375 $ 472,672 $ 553,777 $ 126,546 $ 814,674 $ 5,282 $ 34,760 $ 20,502 $ 23,557 $ - $ 5, , ,084 34,760 20,502 23,557-5, , ,095-6,070, , , (396,848) (396,848) 6,070, , , , ,095 $ 11,236 $ 6,105,375 $ 472,672 $ 553,777 $ 126,546 $ 814,674 78

104 CITY OF NORTH PORT, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2011 Special Revenue Parks and Recreation Impact Fees Transportation Impact Fees Solid Waste Impact Fees General Government Impact Fees ASSETS: Cash and investments Receivables (net of allowance for uncollectibles) Due from other governments Total assets $ 1,197,451 $ 7,278,243 $ 1,751 $ 36,698 2,040 2, , $ 1,199,491 $ 7,291,401 $ 1,768 $ 36,753 LIABILITIES: Accounts payable Due to other funds Deferred revenue Total liabilities FUND BALANCES: Restricted Committed Unassigned Total fund balances Total liabilities and fund balances $ 977 $ 284,301 $ - $ , , ,198,514 6,996,282 1,768 36, ,198,514 6,996,282 1,768 36,753 $ 1,199,491 $ 7,291,401 $ 1,768 $ 36,753 79

105 Special Revenue Capital Projects Environmental Management Loan Guarantee Fleet Maintenance Surtax III Maintenance Facility Construction Total Nonmajor Governmental Funds $ 688,269 $ 202,310 $ 590,068 $ 5,823,359 $ 7,284,369 $ 32,004, , , , ,526 $ 688,269 $ 202,310 $ 591,162 $ 6,341,382 $ 7,284,369 $ 32,553,852 $ - $ - $ 43,755 $ 297,882 $ 358,624 $ 1,076, ,601-1,000,000 1,423, , , ,882 1,358,624 2,515, , ,043,500-15,959, , ,758-5,925,745 14,475, (396,848) 688, , ,758 6,043,500 5,925,745 30,038,291 $ 688,269 $ 202,310 $ 591,162 $ 6,341,382 $ 7,284,369 $ 32,553,852 80

106 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Special Revenue Inspector Education Special Law Enforcement Police Education Tree Replacement REVENUES: Taxes $ - $ - $ - $ - Permits, fees and special assessments 19, ,335 Intergovernmental Charges for services Fines and forfeiture - 26,419 11,940 1,250 Investment income 1, ,827 Miscellaneous Total revenues 20,434 26,833 12,093 14,412 EXPENDITURES: Current: General government Public safety 12,586 20,572 10, ,002 Transportation Economic environment Culture and recreation Capital outlay Total expenditures 12,586 20,572 10, ,002 Excess (deficiency) of revenues over (under) expenditures 7,848 6,261 1,150 (113,590) OTHER FINANCING SOURCES (USES): Transfers in Transfers out (150,000) Total other financing sources (150,000) Net change in fund balances (142,152) 6,261 1,150 (113,590) Fund balances - beginning 186,967 35,081 16, ,517 Fund balances - ending $ 44,815 $ 41,342 $ 17,510 $ 713,927 81

107 Special Revenue Building Department Escheated Lots - Land & Future Projects Escheated Lots - Roads Escheated Lots - Parks Law Enforcement Impact Fees Fire Impact Fees $ - $ - $ - $ - $ - $ - 935, ,407 51, , ,236 6,486 15,705 1,374 12,957 11, ,093,137 72,236 6,486 15,705 18,781 64, ,539, , ,783-32, , ,580 1,320, ,135 1,539, , ,580 1,353, ,135 (446,517) (634,517) (347,094) (1,337,391) 18,781 (898,535) 691, , ,492 (634,517) (347,094) (1,337,391) 18,781 (898,535) (641,340) 6,705, ,264 1,867, ,765 1,707,630 $ (396,848) $ 6,070,615 $ 452,170 $ 530,220 $ 126,546 $ 809,095 82

108 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Special Revenue Parks and Recreation Impact Fees Transportation Impact Fees Solid Waste Impact Fees General Government Impact Fees REVENUES: Taxes Permits, fees and special assessments Intergovernmental Charges for services Fines and forfeiture Investment income Miscellaneous Total revenues EXPENDITURES: Current: General government Public safety Transportation Economic environment Culture and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources Net change in fund balances Fund balances - beginning Fund balances - ending $ - $ - $ - $ - 128, ,091 1,249 9,122-1,869, ,350 78, ,143 2,235,376 1,301 9, ,243 1,588,318 22, ,243 1,588,318 22,000 - (47,100) 647,058 (20,699) 9, (47,100) 647,058 (20,699) 9,505 1,245,614 6,349,224 22,467 27,248 $ 1,198,514 $ 6,996,282 $ 1,768 $ 36,753 83

109 Special Revenue Capital Projects Environmental Management Loan Guarantee Fleet Maintenance Surtax III Maintenance Facility Construction Total Nonmajor Governmental Funds $ - $ - $ - $ 5,801,652 $ - $ 5,801, ,455, ,869, ,169, ,315, ,609 7,852 2,308 8,134 50,639 92, , , ,534 7,852 2,308 3,182,112 5,852,291 92,176 12,870, ,829, ,829, ,711, , , , , ,600 3,385,545 1,192,794 9,379, ,842,422 4,290,263 1,192,794 15,214,361 7,852 2, ,690 1,562,028 (1,100,618) (2,343,580) , (197,960) - (347,960) (197,960) - 343,049 7,852 2, ,690 1,364,068 (1,100,618) (2,000,531) 680, , ,068 4,679,432 7,026,363 32,038,822 $ 688,269 $ 202,310 $ 535,758 $ 6,043,500 $ 5,925,745 $ 30,038,291 84

110 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE INSPECTOR EDUCATION SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 10,000 $ 10,000 $ 19,331 $ 9,331 Investment income 2,000 2,000 1,103 (897) Total revenues 12,000 12,000 20,434 8,434 EXPENDITURES: Current: Public safety 18,000 18,000 12,586 5,414 Total expenditures 18,000 18,000 12,586 5,414 Excess (deficiency) of revenues over (under) expenditures (6,000) (6,000) 7,848 13,848 OTHER FINANCING SOURCES (USES) Transfers out (150,000) (150,000) (150,000) - Total other financing sources and (uses) (150,000) (150,000) (150,000) - Net change in fund balances (156,000) (156,000) (142,152) 13,848 Fund balances - beginning 186, , ,967 - Fund balances - ending $ 30,967 $ 30,967 $ 44,815 $ 13,848 85

111 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SPECIAL LAW ENFORCEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Fines and forfeiture $ - $ - $ 26,419 $ 26,419 Investment income Total revenues ,833 26,833 EXPENDITURES: Current: Public safety 21,275 21,275 20, Total expenditures 21,275 21,275 20, Excess (deficiency) of revenues over (under) expenditures (21,275) (21,275) 6,261 27,536 Net change in fund balances (21,275) (21,275) 6,261 27,536 Fund balances - beginning 35,081 35,081 35,081 - Fund balances - ending $ 13,806 $ 13,806 $ 41,342 $ 27,536 86

112 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE POLICE EDUCATION SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Fines and forfeiture $ 13,780 $ 13,780 $ 11,940 $ (1,840) Investment income Total revenues 13,880 13,880 12,093 (1,787) EXPENDITURES: Current: Public safety 13,880 13,880 10,943 2,937 Total expenditures 13,880 13,880 10,943 2,937 Excess (deficiency) of revenues over (under) expenditures - - 1,150 1,150 Net change in fund balances - - 1,150 1,150 Fund balances - beginning 16,360 16,360 16,360 - Fund balances - ending $ 16,360 $ 16,360 $ 17,510 $ 1,150 87

113 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE TREE REPLACEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 15,000 $ 15,000 $ 4,335 $ (10,665) Fines and forfeiture 2,000 2,000 1,250 (750) Investment income 6,000 6,000 8,827 2,827 Total revenues 23,000 23,000 14,412 (8,588) EXPENDITURES: Current: General government 25, Public safety 112, , ,002 8,861 Total expenditures 137, , ,002 8,861 Excess (deficiency) of revenues over (under) expenditures (114,593) (113,863) (113,590) 273 Net change in fund balances (114,593) (113,863) (113,590) 273 Fund balances - beginning 827, , ,517 - Fund balances - ending $ 712,924 $ 713,654 $ 713,927 $

114 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE BUILDING DEPARTMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 746,650 $ 746,650 $ 935,095 $ 188,445 Charges for services 101, , ,338 44,838 Miscellaneous 5,000 5,000 11,704 6,704 Total revenues 853, ,150 1,093, ,987 EXPENDITURES: Current: Public safety 1,544,159 1,539,852 1,539, Total expenditures 1,544,159 1,539,852 1,539, Excess (deficiency) of revenues over (under) expenditures (691,009) (686,702) (446,517) 240,185 OTHER FINANCING SOURCES: Transfers in 691, , ,009 - Total other financing sources 691, , ,009 - Net change in fund balances - 4, , ,185 Fund balances - beginning (641,340) (641,340) (641,340) - Fund balances - ending $ (641,340) $ (637,033) $ (396,848) $ 240,185 89

115 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ESCHEATED LOTS - LAND AND FUTURE PROJECTS SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 8,611 $ 8,611 $ 72,236 $ 63,625 Total revenues 8,611 8,611 72,236 63,625 EXPENDITURES: Current: Economic environment - 4,000,000 77,000 3,923,000 Culture and recreation - 275, ,783 (4,533) Capital outlay 5,047,142 1,874, ,970 1,525,028 Total expenditures 5,047,142 6,150, ,753 5,443,495 Excess (deficiency) of revenues over (under) expenditures (5,038,531) (6,141,637) (634,517) 5,507,120 Net change in fund balances (5,038,531) (6,141,637) (634,517) 5,507,120 Fund balances - beginning 6,705,132 6,705,132 6,705,132 - Fund balances - ending $ 1,666,601 $ 563,495 $ 6,070,615 $ 5,507,120 90

116 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ESCHEATED LOTS - ROADS SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ - $ - $ 6,486 $ 6,486 Total revenues - - 6,486 6,486 EXPENDITURES: Capital outlay - 376, ,580 22,869 Total expenditures - 376, ,580 22,869 Excess (deficiency) of revenues over (under) expenditures - (376,449) (347,094) 29,355 Net change in fund balances - (376,449) (347,094) 29,355 Fund balances - beginning 799, , ,264 - Fund balances - ending $ 799,264 $ 422,815 $ 452,170 $ 29,355 91

117 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ESCHEATED LOTS - PARKS SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 13,276 $ 13,276 $ 15,705 $ 2,429 Total revenues 13,276 13,276 15,705 2,429 EXPENDITURES: Current: Culture and recreation - 38,191 32,198 5,993 Capital outlay 270,000 2,296,118 1,320, ,220 Total expenditures 270,000 2,334,309 1,353, ,213 Excess (deficiency) of revenues over (under) expenditures (256,724) (2,321,033) (1,337,391) 983,642 Net change in fund balances (256,724) (2,321,033) (1,337,391) 983,642 Fund balances - beginning 1,867,611 1,867,611 1,867,611 - Fund balances - ending $ 1,610,887 $ (453,422) $ 530,220 $ 983,642 92

118 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE LAW ENFORCEMENT IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 68,040 $ 68,040 $ 17,407 $ (50,633) Investment income , Total revenues 68,890 68,890 18,781 (50,109) Net change in fund balances 68,890 68,890 18,781 (50,109) Fund balances - beginning 107, , ,765 - Fund balances - ending $ 176,655 $ 176,655 $ 126,546 $ (50,109) 93

119 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE FIRE IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 204,789 $ 204,789 $ 51,643 $ (153,146) Investment income 7,500 7,500 12,957 5,457 Total revenues 212, ,289 64,600 (147,689) EXPENDITURES: Capital Outlay - 1,868, , ,825 Total expenditures - 1,868, , ,825 Excess (deficiency) of revenues over (under) expenditures 212,289 (1,656,671) (898,535) 758,136 Net change in fund balances 212,289 (1,656,671) (898,535) 758,136 Fund balances - beginning 1,707,630 1,707,630 1,707,630 - Fund balances - ending $ 1,919,919 $ 50,959 $ 809,095 $ 758,136 94

120 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE PARKS AND RECREATION IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 72,035 $ 72,035 $ 128,793 $ 56,758 Investment income 12,459 12,459 14,350 1,891 Total revenues 84,494 84, ,143 58,649 EXPENDITURES: Capital outlay 896,000 1,217, ,243 1,026,999 Total expenditures 896,000 1,217, ,243 1,026,999 Excess (deficiency) of revenues over (under) expenditures (811,506) (1,132,748) (47,100) 1,085,648 Net change in fund balances (811,506) (1,132,748) (47,100) 1,085,648 Fund balances - beginning 1,245,614 1,245,614 1,245,614 - Fund balances - ending $ 434,108 $ 112,866 $ 1,198,514 $ 1,085,648 95

121 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE TRANSPORTATION IMPACT FEES SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 1,977,377 $ 1,977,377 $ 288,091 $ (1,689,286) Intergovernmental - - 1,869,274 1,869,274 Investment income 120, ,000 78,011 (41,989) Total revenues 2,097,377 2,097,377 2,235, ,999 EXPENDITURES: Capital outlay 930,000 4,600,279 1,588,318 3,011,961 Total expenditures 930,000 4,600,279 1,588,318 3,011,961 Excess (deficiency) of revenues over (under) expenditures 1,167,377 (2,502,902) 647,058 3,149,960 Net change in fund balances 1,167,377 (2,502,902) 647,058 3,149,960 Fund balances - beginning 6,349,224 6,349,224 6,349,224 - Fund balances - ending $ 7,516,601 $ 3,846,322 $ 6,996,282 $ 3,149,960 96

122 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SOLID WASTE IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 2,100 $ 2,100 $ 1,249 $ (851) Investment income (68) Total revenues 2,220 2,220 1,301 (919) EXPENDITURES: Capital outlay 22,000 22,000 22,000 - Total expenditures 22,000 22,000 22,000 - Excess (deficiency) of revenues over (under) expenditures (19,780) (19,780) (20,699) (919) Net change in fund balances (19,780) (19,780) (20,699) (919) Fund balances - beginning 22,467 22,467 22,467 - Fund balances - ending $ 2,687 $ 2,687 $ 1,768 $ (919) 97

123 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL GOVERNMENT IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ - $ - $ 9,122 $ 9,122 Investment income Total revenues - - 9,505 9,505 Net change in fund balances - - 9,505 9,505 Fund balances - beginning 27,248 27,248 27,248 - Fund balances - ending $ 27,248 $ 27,248 $ 36,753 $ 9,505 98

124 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ENVIRONMENTAL MANAGEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ - $ - $ 7,852 $ 7,852 Total revenues - - 7,852 7,852 EXPENDITURES: Capital outlay - 598, ,187 Total expenditures - 598, ,187 Excess (deficiency) of revenues over (under) expenditures - (598,187) 7, ,039 Net change in fund balances - (598,187) 7, ,039 Fund balances - beginning 680, , ,417 - Fund balances - ending $ 680,417 $ 82,230 $ 688,269 $ 606,039 99

125 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE LOAN GUARANTEE SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ - $ - $ 2,308 $ 2,308 Total revenues - - 2,308 2,308 Net change in fund balances - - 2,308 2,308 Fund balances - beginning , ,002 Fund balances - ending $ - $ - $ 202,310 $ 202,

126 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE FLEET MAINTENANCE SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Charges for services $ 3,177,938 $ 3,177,938 $ 3,169,148 $ (8,790) Investment income - - 8,134 8,134 Miscellaneous 2,500 2,500 4,830 2,330 Total revenues 3,180,438 3,180,438 3,182,112 1,674 EXPENDITURES: Current: General government 2,963,222 2,955,237 2,829, ,415 Capital outlay 13,860 13,860 12,600 1,260 Total expenditures 2,977,082 2,969,097 2,842, ,675 Excess (deficiency) of revenues over (under) expenditures 203, , , ,349 Net change in fund balances 203, , , ,349 Fund balances - beginning 196, , ,068 - Fund balances - ending $ 399,424 $ 407,409 $ 535,758 $ 128,

127 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SURTAX II CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 230,000 $ 230,000 $ 189,502 $ (40,498) Total revenues 230, , ,502 (40,498) EXPENDITURES: Current: Public safety - 43,870 41,919 1,951 Culture and recreation - - 4,576 (4,576) Capital outlay 755,000 5,904,584 3,170,167 2,734,417 Total expenditures 755,000 5,948,454 3,216,662 2,731,792 Excess (deficiency) of revenues over (under) expenditures (525,000) (5,718,454) (3,027,160) 2,691,294 OTHER FINANCING SOURCES (USES): Transfers out (1,204,621) (1,204,621) (1,204,621) - Total other financing sources and (uses) (1,204,621) (1,204,621) (1,204,621) - Net change in fund balances (1,729,621) (6,923,075) (4,231,781) 2,691,294 Fund balances - beginning 19,163,623 19,163,623 19,163,623 - Fund balances - ending $ 17,434,002 $ 12,240,548 $ 14,931,842 $ 2,691,

128 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SURTAX III CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Local option sales taxes $ 5,795,056 $ 5,795,056 $ 5,801,652 $ 6,596 Investment income 60,000 60,000 50,639 (9,361) Total revenues 5,855,056 5,855,056 5,852,291 (2,765) EXPENDITURES: Current: Public safety (198) Culture and recreation 1,020, Transportation 268, , ,520 (35,567) Capital outlay 6,840,204 7,554,184 3,385,545 4,168,639 Total expenditures 8,129,157 8,423,137 4,290,263 4,132,874 Excess (deficiency) of revenues over (under) expenditures (2,274,101) (2,568,081) 1,562,028 4,130,109 OTHER FINANCING SOURCES (USES): Transfers out - (200,000) (197,960) 2,040 Total other financing sources and (uses) - (200,000) (197,960) 2,040 Net change in fund balances (2,274,101) (2,768,081) 1,364,068 4,132,149 Fund balances - beginning 4,679,432 4,679,432 4,679,432 - Fund balances - ending $ 2,405,331 $ 1,911,351 $ 6,043,500 $ 4,132,

129 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE MAINTENANCE FACILITY CONSTRUCTION CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 85,000 $ 85,000 $ 92,176 $ 7,176 Total revenues 85,000 85,000 92,176 7,176 EXPENDITURES: Current: General government - 240, ,737 Capital outlay 4,000,000 6,799,914 1,192,794 5,607,120 Total expenditures 4,000,000 7,040,651 1,192,794 5,847,857 Excess (deficiency) of revenues over (under) expenditures (3,915,000) (6,955,651) (1,100,618) 5,855,033 Net change in fund balances (3,915,000) (6,955,651) (1,100,618) 5,855,033 Fund balances - beginning 7,026,363 7,026,363 7,026,363 - Fund balances - ending $ 3,111,363 $ 70,712 $ 5,925,745 $ 5,855,

130 105

131 TRUST AND AGENCY FUNDS Trust funds are used to administer resources reserved and held by a governmental unit as the trustee or as the agent for others. Use of these trust funds facilitates the discharge of responsibilities placed upon the governmental unit by virtue of law or other authority. Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. PENSION TRUST FUNDS POLICE OFFICERS PENSION TRUST FUND - This fund is used to account for receipts and disbursements, as authorized by the respective pension board. FIREFIGHTERS PENSION TRUST FUND - This fund is used to account for receipts and disbursements, as authorized by the respective pension board. AGENCY FUNDS COUNTY ROAD IMPACT FEES FUND - This fund is used to account for county road impact fees collected for and disbursed to Sarasota County. EDUCATION IMPACT FEES FUND - This fund is used to account for education impact fees collected for and disbursed to the Sarasota County School Board. COUNTY JUSTICE IMPACT FEES FUND - This fund is used to account for county justice impact fees collected for and disbursed to Sarasota County. COUNTY GENERAL GOVERNMENT IMPACT FEES FUND - This fund is used to account for county general government impact fees collected for and disbursed to Sarasota County. 106

132 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF PLAN NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2011 Pension Trust Funds Police Officers' Pension Trust Fund Firefighters' Pension Trust Fund Totals ASSETS Cash and equivalents $ 1,307,413 $ 2,973,712 $ 4,281,125 Receivables: Contributions receivable 508, , ,920 Interest and dividends receivable 40,129 53,388 93,517 Total receivables 548, ,291 1,093,437 Investments: U.S. Government securities 235, , ,946 U.S. Government agency securities 2,736,297 3,837,817 6,574,114 Equities 8,453,701 12,082,790 20,536,491 Corporate bonds 2,307,058 2,373,328 4,680,386 Fixed income mutual funds 840, ,037 American Core Realty Fund, LLC 1,159,293-1,159,293 Municipal obligations - 392, ,663 Total investments 15,731,934 19,085,996 34,817,930 Total assets 17,587,493 22,604,999 40,192,492 LIABILITIES Accounts payable 34,071 34,558 68,629 Deferred contribution 199, ,517 DROP plan payable 121, ,528 Total liabilities 355,116 34, ,674 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $ 17,232,377 $ 22,570,441 $ 39,802,

133 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF CHANGES IN PLAN NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Pension Trust Funds Police Officers' Pension Trust Fund Firefighters' Pension Trust Fund Totals ADDITIONS Contributions: Plan members $ 500,158 $ 585,913 $ 1,086,071 State of Florida, from the General Fund 257, , ,851 City of North Port 1,665,116 1,471,394 3,136,510 Total contributions 2,422,950 2,456,482 4,879,432 Investment income: Net change in fair value of investments (890,031) (1,112,896) (2,002,927) Interest 236, , ,106 Dividends 147, , ,918 Investment loss (506,826) (609,077) (1,115,903) Less investment expenses (145,202) (163,990) (309,192) Net investment loss (652,028) (773,067) (1,425,095) Total additions 1,770,922 1,683,415 3,454,337 DEDUCTIONS Benefits to participants 795, ,735 1,528,129 DROP plan expenses 102,808 9, ,041 Administrative expenses 52,383 95, ,689 Total deductions 950, ,274 1,787,859 NET INCREASE 820, ,141 1,666,478 NET ASSETS - BEGINNING 16,412,040 21,724,300 38,136,340 NET ASSETS- ENDING $ 17,232,377 $ 22,570,441 $ 39,802,

134 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Balance Balance October 1, 2010 Additions Deductions September 30, 2011 COUNTY ROAD IMPACT FEES ASSETS Cash $ 13 $ 129,591 $ 129,604 $ - Receivables - 1,289-1,289 Total assets $ 13 $ 130,880 $ 129,604 $ 1,289 LIABILITIES Due to other entities $ 13 $ 130,880 $ 129,604 $ 1,289 Total liabilities $ 13 $ 130,880 $ 129,604 $ 1,289 EDUCATION IMPACT FEES ASSETS Cash $ 26 $ 129,040 $ 129,066 $ - Receivables - 2,032-2,032 Total assets $ 26 $ 131,072 $ 129,066 $ 2,032 LIABILITIES Due to other entities $ 26 $ 131,072 $ 129,066 $ 2,032 Total liabilities $ 26 $ 131,072 $ 129,066 $ 2,032 COUNTY JUSTICE IMPACT FEES ASSETS Cash $ 6 $ 84,768 $ 84,774 $ - Receivables Total assets $ 6 $ 85,527 $ 84,774 $ 759 LIABILITIES Due to other entities $ 6 $ 85,527 $ 84,774 $ 759 Total liabilities $ 6 $ 85,527 $ 84,774 $

135 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 COUNTY GENERAL GOVERNMENT IMPACT FEES Balance Balance October 1, 2010 Additions Deductions September 30, 2011 ASSETS Cash $ - $ 4,606 $ 4,606 $ - Receivables Total assets $ - $ 4,647 $ 4,606 $ 41 LIABILITIES Due to other entities $ - $ 4,647 $ 4,606 $ 41 Total liabilities $ - $ 4,647 $ 4,606 $ 41 TOTALS - ALL AGENCY FUNDS ASSETS Cash $ 45 $ 348,005 $ 348,050 $ - Receivables - 4,121-4,121 Total assets $ 45 $ 352,126 $ 348,050 $ 4,121 LIABILITIES Due to other entities $ 45 $ 352,126 $ 348,050 $ 4,121 Total liabilities $ 45 $ 352,126 $ 348,050 $ 4,

136 111

137 Statistical Section (Unaudited) This part of the City of North Port, Florida's (the City) 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 City's overall financial health. Contents Pages Financial Trends Information These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity Information These schedules contain information to help the reader assess the City's local revenue source. Debt Capacity Information These schedules present information to help the reader assess the City's debt burden and its ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment in which the City's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Source: Unless otherwise noted, the information in these schedules was obtained from the Comprehensive Annual Financial Reports for the relevant year. The City implemented GASB Statement No. 34 in 2003; schedules presenting government-wide information include information beginning in that year. 112

138 Schedule 1 City of North Port, Florida Net Assets by Component Last Nine Fiscal Years (accrual basis of accounting) Fiscal Year Governmental activities Invested in capital assets, net of related debt $ 20,815,594 $ 10,949,488 $ 21,853,839 $ 29,853,705 $ 153,428,893 $ 175,042,053 $ 190,796,752 $ 206,830,147 $ 218,575,683 Restricted 20,095,133 39,765,421 40,034,103 53,700,997 65,547,548 63,606,573 63,521,632 58,643,863 45,826,354 Unrestricted 9,771,905 12,719,280 18,792,283 59,805,096 56,569,919 40,934,630 32,406,379 23,088,158 24,128,719 Total governmental activities net assets $ 50,682,632 $ 63,434,189 $ 80,680,225 $ 143,359,798 $ 275,546,360 $ 279,583,256 $ 286,724,763 $ 288,562,168 $ 288,530,756 Business-type activities Invested in capital assets, net of related debt $ 4,557,463 $ 23,222,757 $ 24,677,890 $ 42,464,012 $ 49,560,075 $ 67,064,132 $ 72,132,453 $ 65,459,190 $ 66,903,408 Restricted 11,993,980 9,785,727 15,091,003 22,839,326 24,839,466 14,066,118 10,587,316 16,947,629 15,180,859 Unrestricted 7,456,204 12,794,292 13,036,666 12,686,914 12,173,644 12,616,317 12,967,775 15,048,541 16,937,270 Total business-type activities net assets $ 24,007,647 $ 45,802,776 $ 52,805,559 $ 77,990,252 $ 86,573,185 $ 93,746,567 $ 95,687,544 $ 97,455,360 $ 99,021, Primary government Invested in capital assets, net of related debt $ 25,373,057 $ 34,172,245 $ 46,531,729 $ 72,317,717 $ 202,988,968 $ 242,106,185 $ 262,929,205 $ 272,289,337 $ 285,479,091 Restricted 32,089,113 49,551,148 55,125,106 76,540,323 90,387,014 77,672,691 74,108,948 75,591,492 61,007,213 Unrestricted 17,228,109 25,513,572 31,828,949 72,492,010 68,743,563 53,550,947 45,374,154 38,136,699 41,065,989 Total primary government net assets $ 74,690,279 $ 109,236,965 $ 133,485,784 $ 221,350,050 $ 362,119,545 $ 373,329,823 $ 382,412,307 $ 386,017,528 $ 387,552,293 Note: GASB 34 implemented fiscal year ended 9/30/03.

139 Schedule 2 City of North Port, Florida Changes in Net Assets Last Nine Fiscal Years (accrual basis of accounting) Fiscal Year Expenses Governmental activities: General government $ 5,671,302 $ 6,059,818 $ 7,365,992 $ 10,535,192 $ 13,886,162 $ 15,335,406 $ 14,787,075 $ 14,596,663 $ 13,260,162 Public safety 11,580,095 13,451,034 16,488,112 20,367,418 26,400,467 28,458,500 27,594,695 26,684,201 27,112,638 Physical environment 4,628,776 5,238,315 6,594,383 8,128,412 10,344,171 11,134,764 11,418,026 11,595,816 11,889,847 Transportation 3,610,674 4,769,063 5,756,615 8,107,834 17,129,291 18,606,214 11,565,439 11,444,929 11,912,546 Economic environment 111, , , ,471 89, , , , ,912 Human services 103, , , , , , , , ,217 Culture and recreation 383, , , ,570 1,474,754 1,801,912 1,148,358 1,348,049 1,510,829 Interest on long-term debt 80, , , , , , , , ,719 Total governmental activities expenses 26,170,858 30,752,929 37,677,031 48,896,659 70,331,057 76,550,495 67,833,180 67,219,097 67,480,870 Business-type activities: Water and Sewer 7,561,705 8,750,256 9,876,568 13,109,805 14,798,796 14,906,788 15,220,092 15,015,613 16,735,294 Total business-type activities expenses 7,561,705 8,750,256 9,876,568 13,109,805 14,798,796 14,906,788 15,220,092 15,015,613 16,735,294 Total primary government expenses $ 33,732,563 $ 39,503,185 $ 47,553,599 $ 62,006,464 $ 85,129,853 $ 91,457,283 $ 83,053,272 $ 82,234,710 $ 84,216, Program Revenues Governmental activities: Charges for services: General government $ 1,961,422 $ 3,008,583 $ 4,339,900 $ 5,870,434 $ 5,949,533 $ 8,461,224 $ 12,558,960 $ 11,513,907 $ 11,656,173 Public safety 7,931,819 8,110,116 9,619,870 10,779,091 9,244,914 9,426,023 8,679,059 8,532,419 9,489,908 Physical environment 4,400,876 5,150,697 5,827,053 8,977,311 9,721,266 10,768,441 11,835,768 11,358,735 11,226,055 Transportation 3,559,036 2,769,372 3,664,572 6,516,202 8,879,557 7,316,217 8,631,685 7,354,268 7,031,970 Human services ,505 35,671 36,464 Culture and recreation 5,303-8,392 1,350 88, , , , ,284 Operating grants and contributions 114,384 27,879 50,297 98,491 22, , , , ,855 Capital grants and contributions 11, ,400 6,283,470 11,943,751 19,289,206 6,207,235 2,454,715 2,483,735 2,411,883 Total governmental activities program revenues 17,984,029 19,414,047 29,793,554 44,186,630 53,196,017 42,437,971 44,607,193 41,641,814 42,517,592 Business-type activities: Charges for services Water and Sewer 8,382,330 9,347,953 9,782,967 12,525,071 14,182,670 14,401,321 13,215,214 14,203,042 16,547,772 Operating grants and contributions ,945 10,307 - Capital grants and contributions 297, ,532 6,344,187 24,411,619 7,248,028 6,588,075 3,119,889 1,926,598 1,465,916 Total business-type activities program revenues 8,679,396 10,292,485 16,127,154 36,936,690 21,430,698 20,989,396 16,356,048 16,139,947 18,013,688 Total primary government program revenues $ 26,663,425 $ 29,706,532 $ 45,920,708 $ 81,123,320 $ 74,626,715 $ 63,427,367 $ 60,963,241 $ 57,781,761 $ 60,531,280 Net (Expense)/Revenue Government activities $ (8,186,829) $ (11,338,882) $ (7,883,477) $ (4,710,029) $ (17,135,040) $ (34,112,524) $ (23,225,987) $ (25,577,283) $ (24,963,278) Business type activities 1,117,691 1,542,229 6,250,586 23,826,885 6,631,902 6,082,608 1,135,956 1,124,334 1,278,394 Total primary government net expense $ (7,069,138) $ (9,796,653) $ (1,632,891) $ 19,116,856 $ (10,503,138) $ (28,029,916) $ (22,090,031) $ (24,452,949) $ (23,684,884) (continued)

140 Schedule 2 (continued) City of North Port, Florida Changes in Net Assets Last Nine Fiscal Years (accrual basis of accounting) Fiscal Year General Revenues and Other Changes in Net Assets Government activities: Taxes Ad valorem $ 4,880,108 $ 6,404,386 $ 8,452,729 $ 14,054,120 $ 15,919,913 $ 16,216,448 $ 11,078,235 $ 9,614,477 $ 8,035,010 Service 1,338,612 1,534,116 1,945,682 2,224,709 2,282,276 2,513,047 2,761,832 2,627,795 2,610,742 Local business , , ,573 Fuel 1,356,465 1,509,612 1,755,786 1,931,632 2,028,707 2,245,709 2,435,089 2,466,786 2,453,271 Discretionary sales surtax 2,955,096 3,459,594 4,476,532 5,114,733 4,975,793 5,553,659 5,413,033 5,554,577 5,801,652 Franchise fees 1,130,400 1,341,679 1,723,397 2,368,734 2,655,450 2,778, Impact fees 3,413,736 4,364, Intergovernmental 2,666,638 4,985,627 4,255,307 4,597,118 4,740,510 4,426,835 4,211,548 4,317,889 4,584,561 Investment income 404, ,909 1,407,199 4,169,549 7,364,570 4,111,920 4,138,086 2,478, ,455 Miscellaneous 5,368 42, ,911 15, , , , , ,602 Proceeds from sale of land , Extraordinary item - Special item ,970 32,913, , , Total governmental activities 18,151,266 24,278,859 25,129,513 67,389,602 40,554,172 38,149,420 30,367,494 27,414,688 24,931, Business-type activities: Impact fees 2,110,559 2,717, Investment income 325, , ,958 1,357,808 1,951,031 1,090, , , ,783 Miscellaneous , Extraordinary item Terminated participation in FMPTF , Total business-type activities 2,436,100 2,959, ,197 1,357,808 1,951,031 1,090, , , ,783 Total primary government $ 20,587,366 $ 27,238,332 $ 25,881,710 $ 68,747,410 $ 42,505,203 $ 39,240,194 $ 31,172,515 $ 28,058,170 $ 25,219,649 Change in Net Assets Governmental activities $ 9,964,437 $ 12,939,977 $ 17,246,036 $ 62,679,573 $ 23,419,132 $ 4,036,896 $ 7,141,507 $ 1,837,405 $ (31,412) Business-type activities 3,553,791 4,501,702 7,002,783 25,184,693 8,582,933 7,173,382 1,940,977 1,767,816 1,566,177 Total primary government $ 13,518,228 $ 17,441,679 $ 24,248,819 $ 87,864,266 $ 32,002,065 $ 11,210,278 $ 9,082,484 $ 3,605,221 $ 1,534,765 Note: GASB 34 implemented fiscal year ended 9/30/03. Extraordinary item was terminated participation in FMPTF revenue Special item is escheated lots revenue as mentioned in Note Q revenue FY 2009, State of Florida account structure changed Franchise fees to charges for services.

141 Schedule 3 City of North Port, Florida Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year General Fund Reserved $ - $ 720,041 $ 739,856 $ 2,040,049 $ 2,938,126 $ 1,990,049 $ 1,265,049 $ 661,649 $ 1,269,874 $ - Unreserved 8,199,469 10,290,279 12,390,992 18,166,856 25,128,997 24,479,688 20,936,237 17,578,244 14,076,054 - Restricted ,204,621 Committed ,683 Assigned ,428,446 Unassigned ,359,530 Total general fund $ 8,199,469 $ 11,010,320 $ 13,130,848 $ 20,206,905 $ 28,067,123 $ 26,469,737 $ 22,201,286 $ 18,239,893 $ 15,345,928 $ 12,223, All Other Governmental Funds Reserved $ 147,879 $ 117,316 $ 17,570 $ 14,652 $ 26,261 $ 17,084 $ 40,386 $ 866,290 $ 27,906 $ - Unreserved, reported in: Special revenue funds 7,879,719 12,879,843 18,309,831 24,511,187 71,226,711 76,255,577 58,016,320 48,730,355 36,649,535 - Capital projects funds 5,399,967 6,465,937 19,838,328 14,068,850 14,255,201 16,337,235 24,938,066 29,467,109 30,869,418 - Restricted ,415,254 Committed ,475,560 Assigned Unassigned (396,848) Total all other governmental funds $ 13,427,565 $ 19,463,096 $ 38,165,729 $ 38,594,689 $ 85,508,173 $ 92,609,896 $ 82,994,772 $ 79,063,754 $ 67,546,859 $ 59,493,966 Note: Fund balance classifications have been revised due to the implementation of GASB Statement 54 in fiscal year 2011.

142 Schedule 4 City of North Port, Florida Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Revenues Fiscal Year Taxes $ 9,980,866 $ 11,660,681 $ 14,249,387 $ 18,313,126 $ 25,739,928 Permits, fees and special assessments 1,988,043 2,497,067 4,177,401 6,296,887 5,061,424 Intergovernmental 2,665,311 2,792,211 3,538,056 5,623,624 4,953,473 Charges for services 12,530,954 14,971,810 14,091,043 16,227,330 25,948,553 Fines and forfeiture 319, , , , ,336 Investment income 380, , ,909 1,407,199 4,169,549 Impact fees - 3,413,736 4,364,196 5,982,764 11,697,251 Self-insured account proceeds 2,299, Miscellaneous 2,587, , , , ,227 Total revenues 32,751,634 36,135,295 41,662,492 54,963,904 78,955,741 Expenditures General government 7,771,748 5,190,994 6,134,398 6,708,415 9,990,420 Public safety 10,044,079 10,878,609 12,572,110 15,225,710 19,142,465 Physical environment 4,049,509 4,261,553 4,852,054 6,176,146 7,527,747 Transportation 2,964,922 3,391,952 4,484,852 5,405,585 7,615,201 Economic environment 95, , , , ,682 Human services 96,569 96, , , ,719 Culture and recreation 132, , , , ,914 Capital outlay 421,211 4,312,792 7,947,176 13,740,204 12,607,819 Debt service 239, ,589 Principal , ,828 1,646,152 Interest , , ,620 Total expenditures 25,816,174 28,829,475 37,461,872 49,169,011 60,087,739 Excess (deficiency) of revenues over (under) expenditures 6,935,460 7,305,820 4,200,620 5,794,893 18,868,002 Other financing sources (uses) Proceeds from capital leases - 962,825 1,186, ,154 2,992,391 Proceeds from bonds ,000, Proceeds from sale of land Transfers in 101,000 1,561,565 1,161,489 1,662,370 2,466,880 Transfers out (101,000) (1,561,565) (1,161,489) (1,662,370) (2,466,880) Total other financing sources (uses) - 962,825 16,186, ,154 2,992,391 Special item ,970 32,913,309 Net change in fund balances $ 6,935,460 $ 8,268,645 $ 20,386,709 $ 7,505,017 $ 54,773,702 Debt service as a percentage of noncapital expenditures 0.94% 1.61% 3.54% 3.76% 5.01% Note: Includes general, special revenue, capital projects and expendable trust funds. Prior to 9/30/2004, debt service information was only available in total. 117

143 Fiscal Year $ 27,862,139 $ 29,307,181 $ 21,824,040 $ 20,401,079 $ 19,004,248 2,388,983 1,686,884 4,304,020 4,870,703 4,268,359 8,440,813 9,338,652 5,717,048 5,394,013 7,139,199 30,756,074 33,947,904 36,938,417 34,744,416 35,302, , , , , ,921 7,364,570 4,111,920 4,138,086 2,478, ,455 11,773,611 5,348,787 1,318, , , , , ,556 89,386,416 84,863,215 75,006,897 68,661,511 67,631,991 12,640,181 13,975,908 14,059,467 13,802,731 12,621,710 23,455,870 25,110,946 25,569,235 25,292,455 25,600,876 8,634,402 9,649,655 9,675,910 9,715,681 10,065,323 15,071,631 16,753,068 9,374,251 9,142,768 9,669,911 88, , , , , , , , , ,535 1,249,272 1,499, ,450 1,047,683 1,219,728 22,945,732 29,254,707 20,403,841 21,213,361 15,669,821 2,289,418 2,326,090 2,872,297 2,460,756 2,247, , , , , ,719 87,346,982 99,757,312 84,124,858 84,177,371 78,807,532 2,039,434 (14,894,097) (9,117,961) (15,515,860) (11,175,541) 3,011, ,951 1,197,500 1,105, , ,588,009 7,532,214 4,996,504 2,118,007 2,093,590 (30,588,009) (7,532,214) (4,996,504) (2,118,007) (2,093,590) 3,011, ,951 1,225,550 1,105, , , $ 5,504,337 $ (13,883,575) $ (7,892,411) $ (14,410,860) $ (11,175,541) 4.80% 4.42% 5.67% 4.99% 4.52% 118

144 Schedule 5 City of North Port, Florida Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years Fiscal Year Real Property Less: Total Taxable Total Ended Residential Commercial Industrial Personal Tax-Exempt Assessed Direct September 30, a Property Property Property b Property Property Value Tax Rate $ - $ - $ - $ - $ - $ - $ ,421,459, ,782, ,123,085 73,055, ,733,915 1,318,686,987 $ ,995,243, ,640, ,080,926 72,362, ,218,116 1,790,109,211 $ ,288,067, ,819, ,853,528 72,815, ,599,648 2,956,957,289 $ ,584,415, ,285, ,069, ,641,248 1,451,274,746 4,931,137,038 $ ,964,293, ,319, ,345, ,343,082 1,288,064,060 5,627,237,486 $ ,189,652, ,454, ,406, ,161,996 1,299,768,098 3,819,906,684 $ ,130,336, ,552, ,924, ,302,935 1,112,774,502 2,962,341,393 $ ,636,469, ,589, ,136, ,834,087 1,042,389,985 2,486,639,946 $ ,446,786, ,872, ,725, ,852,852 1,015,462,006 2,278,775,371 $3.34 Source: Sarasota County Property Appraiser Note: Property is assessed at market value. The Save Our Homes Amendment caps homesteaded property at a maximum increase in the taxable value of 3% per year. Tax rate is per $1,000 of assessed value. a Data for 2002 was unavailable due to inconsistent run times between recapitulation and property values CD. b Industrial property amount includes railroad properties classified as centrally assessed property.

145 Schedule 6 City of North Port, Florida Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years (Per $1,000 of Assessed Value) Fiscal Year City of North Port Overlapping Rates a Ended Operating Total Sarasota School Board Total Direct and September 30, Miliage City Millage County of Sarasota County Overlapping Rates 2002 $ $ $ $ $ Source: Sarasota County Tax Collector Note: a Overlapping rates are those of county governments that apply to property owners within the City of North Port. 120

146 Schedule 7 City of North Port, Florida Principal Property Tax Payers Current Year and Nine Years Ago Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Marsh Creek Holdings Ltd $ 17,096, % $ 5,007, % Wal-Mart Stores East LP 14,427, Gran Paradiso I & II LLC 12,782, Benderson Property 12,331, DiVosta Homes LP 12,134, Lowes Home Centers Inc. 11,867, Walgreen Co. 11,113, Comcast Cable 10,024, Florida Power & Light Company 5,504, Verizon 516, Vestcor - - 9,364, KEB, Inc./Bobcat Trail - - 8,710, Cargor Partners - - 8,262, North Port Park of Commerce - - 7,251, Dennis J. Fullenkamp Realty - - 6,303, Shoppes of North Port Ltd ,265, Panacea Funding, Inc ,845, Richardson Arms - - 5,739, JSD Limited Partnership - - 5,324, $ 107,798, % $ 68,074, % Source: Sarasota County Property Appraiser 121

147 Schedule 8 City of North Port, Florida Property Tax Levies and Tax Collections Last Ten Fiscal Years Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Taxes Levied Collections Ended for the Percentage in Subsequent Percentage September 30, Fiscal Year Amount a of Levy Years Amount of Levy $ 4,205,584 $ 3,953,196 94% $ 204,902 $ 4,158,098 99% ,815,831 4,675, ,794 4,696, ,607,028 6,383, ,078 6,405, ,935,418 8,430, ,101 8,445, ,490,734 14,039, ,661 14,073, ,443,468 15,885, ,226 16,051, ,750,302 16,050, ,580 16,166, ,373,053 10,961, ,400 11,053, ,907,885 9,523, ,782 9,661, ,306,731 7,896, ,896, Source: Sarasota County Property Appraiser Note: (a) Includes discount taken for early payment of property taxes.

148 Schedule 9 City of North Port, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years 123 Fiscal Year Sales Tax Revenue Bonds Governmental Activities Capital Leases Loans Payable Business-Type Activities Water and Sewer Bonds Loans Payable Total Primary Government Percentage of Personal Income a Per Capita a 2002 $ - $ 1,099,910 $ - $ 33,315,000 $ - $ 34,414, % $ 1, ,747,771-32,390,000-34,137, , ,000,000 2,488,637-31,425,000-48,913, , ,000,000 2,677,963-30,420,000-48,097, , ,380,000 4,644,202-29,720,213-48,744, , ,750,000 5,995,934-28,613,036-48,358, ,105,000 5,190,795-27,839,964-46,135, ,445,000 4,175,998-26,559,321 10,491,900 53,672, ,765,000 3,500,244-25,229,292 20,843,500 61,338, , ,055,000 1,962,455-19,964,321 22,960,814 55,942, Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. a Personal income and population data can be found on page 128.

149 Schedule 10 City of North Port, Florida Ratios of General Bonded Debt Outstanding Last Eight Fiscal Years Fiscal Year Ended September 30, Sales Tax Revenue Bonds Total Percentage of Actual Taxable Value of Property a Per Capita b 2004 $ 15,000,000 $ 15,000, % $ ,000,000 15,000, ,380,000 14,380, ,750,000 13,750, ,105,000 13,105, ,445,000 12,445, ,765,000 11,765, ,055,000 11,055, Note: There was no general bonded debt outstanding for the years Details regarding the City's outstanding debt can be found in the notes to the financial statements. a See Schedule 5 (page 119) for property value data. b Population data can be found in Schedule 14 (page 128). 124

150 Schedule 11 City of North Port, Florida Direct and Overlapping Governmental Activities Debt As of September 30, 2011 Governmental Unit Debt Outstanding Estimated Percentage Applicable a Estimated Share of Overlapping Debt Overlapping debt Sarasota County School Board $ 237,169, % $ 36,007,785 Sarasota County Board of County Commissioners 330,011, % 50,103,390 Subtotal, overlapping debt 86,111,175 City of North Port, direct debt 13,017,455 Total direct and overlapping debt $ 99,128,630 Source: Assessed value data used to estimate applicable percentages provided by Sarasota County Property Appraiser. Note: a The percentage of overlapping debt applicable is estimated using taxable assessed property values. 125

151 Schedule 12 City of North Port, Florida Legal Debt Margin Information No general obligation bonds have been issued on behalf of the City of North Port, Florida. 126

152 Schedule 13 City of North Port, Florida Pledged-Revenue Coverage Last Ten Fiscal Years Water & Sewer Revenue Bonds/SRF Loans Sales Tax Revenue Bonds Fiscal Year Utility Less: Net Half-Cent Ended Gross Operating Available Debt Service Sales Tax Debt Service c September 30, Revenues a Expenses b Revenue Principal Interest Coverage Revenues Principal Interest Coverage 2002 $ 8,570,507 $ 4,032,365 $ 4,538,142 $ 875,000 $ 1,648, $ 1,896,355 $ - $ ,707,871 4,512,638 4,195, ,000 1,603, ,085, ,589,948 5,309,735 4,280, ,000 1,565, ,511, ,351,925 6,308,858 4,043,067 1,005,000 1,524, ,997, , ,882,879 9,207,782 4,675,097 1,071,695 1,429, ,390, , , ,133,701 10,563,774 5,569,927 1,107,177 1,396, ,212, , , ,492,095 10,740,068 4,752, ,017 1,002, ,543, , , ,039,420 11,078,730 2,960,690 1,280,643 1,154, ,367, , , ,846,524 10,337,404 4,509,120 1,330,029 1,101, ,450, , , ,835,555 11,509,610 5,325,945 1,515,858 1,151, ,620, , , Details regarding the City's outstanding debt can be found in the notes to financial statements. Note: a Excludes any government grants, water impact fees, sewer impact fees, and special assessments proceeds. b Excludes depreciation. c No data prior to 2005 because no sales tax revenue bonds were issued until Principal payments did not begin until 2006.

153 Schedule 14 City of North Port, Florida Demographic and Economic Statistics Last Ten Calendar Years Year Population a Personal Income Per Capita Personal Income b Unemployment Rate c ,448 $ 789,431,928 $ 28, % , ,714,872 28, % ,721 1,027,371,681 28, % ,000 1,521,633,000 37, % ,770 2,243,518,050 46, % ,732 2,835,545,104 52, % ,316 2,971,907,952 52, % ,759 3,097,914,281 55, % ,828 3,118,328,768 55, % ,893 3,251,155,094 56, % Source: a b City of North Port Planning & Zoning Department Bureau of Economic and Business Research, University of Florida; County data is used due c to no city data being available. U.S. Bureau of Labor Statistics 128

154 Schedule 15 City of North Port, Florida Principal Employers in Sarasota County Current Year and Nine Years Ago Employer Employees Rank Percentage of Total County Employment Employees Rank Percentage of Total County Employment School Board of Sarasota County 5, % 4, % Sarasota County Government 3, % 3, % Sarasota Memorial Hospital 3, % 3, % Publix Supermarkets 1, % 3, % Venice Regional Medical Center 1, % 1, % PGT Industries 1, % 1, % Sun Hydraulics Corporation % Tervis Tumbler % Doctors Hospital of Sarasota % % Sunset Automotive Group % Wal-Mart % Charter One Hotels % City of Sarasota % , % 21, % Source: Florida Agency for Workforce Innovation, Labor Market Statistics 129

155 Schedule 16 City of North Port, Florida Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Function/Program General Government Commission City Auditor and Clerk Finance Planning and Zoning and Engineering Building Department General Services Support Services City Manager's Office Human Resources Fleet Maintenance Parks and Recreation Public Safety Police - uniform Police - general employees Fire Rescue Physical Environment Facilities Maintenance Solid Waste Management Transportation Road and Drainage Engineering Economic Environment Economic Development Enterprise funds Utilities Total Source: City of North Port Budget Note: Staffing level indicates the number of positions budgeted in each department. Figures include both full-time and part-time positions.

156 Schedule 17 City of North Port, Florida Operating Indicators by Function/Program Last Ten Fiscal Years 131 Function/Program Police Physical arrests 1,926 2,356 2,820 2,821 1,519 1, , Parking violations Traffic violations 6,435 6,225 6,820 8,528 8,108 8,087 5,908 8,837 9,137 8,609 Fire Emergency Responses 3,177 3,368 4,101 4,288 4,936 5,075 5,298 5,476 4,202 4,332 Streets and highways Streets resurfaced (miles) Paved Streets (miles) Water New connections ,027 1, Water mains breaks Average daily consumption (millions of gallons) Peak daily consumption (millions of gallons) Wastewater Average daily sewage treatment (millions of gallons) Solid waste collection Solid waste collected (tons per year) 11,919 15,849 19,216 22,406 24,616 25,609 25,384 23,059 23,096 22,967 Recyclables collected (tons per year) 6,118 7,132 8,500 3,000 5,286 5,576 5,661 5,768 6,264 7,031 Source: Various City Departments Note: Indicators are not available for the general government function.

157 Schedule 18 City of North Port, Florida Capital Asset Statistics by Function/Program Last Ten Fiscal Years 132 Function/Program Police Stations Patrol units Fire Stations Streets and highways Water Streets (miles) Traffic Signals Water mains (miles) Storage capacity (millions of gallons) Fire hydrants 1,001 1,029 1,052 1,092 1,501 1,544 1,699 1, Wastewater Sanitary sewers (miles) Treatment capacity (thousands) Manholes 2,287 2,358 2,400 2,487 3,504 3,537 3,658 3, Lift Stations Solid waste collection Collection trucks Source: Various city departments Note: No capital asset indicators are available for the general government function.

158 133

159 Independent Auditors 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 Chairman and City Commission City of North Port, Florida: We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of North Port, Florida (the City ) as of and for the year ended September 30, 2011, which collectively comprise the City s basic financial statements, and have issued our report thereon dated April 13, Our report includes a reference to other auditors. 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. Other auditors audited the financial statements of the City of North Port, Florida Police Officers Pension- Local Option Trust Fund and the City of North Port, Florida Firefighters Pension-Local Option Trust Fund (collectively, the Plans ), as described in our report on the City s financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those other auditors. Internal Control over Financial Reporting Management of the City is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 134

160 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of the financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain other matters that we have reported to management of the City in a separate management letter dated April 13, This report is intended solely for the information and use of City management, others within the City, the Chairman and City Commission, the State of Florida Office of the Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Orlando, Florida April 13,

161 Independent Auditors Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Federal Awards Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 Honorable Chairman and City Commission City of North Port, Florida: Compliance We have audited the City of North Port, Florida (the City ) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal awards programs for the year ended September 30, The City s major federal awards programs are identified in the summary of auditors results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal awards programs is the responsibility of the City s management. Our responsibility is to express an opinion on the City s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal awards program occurred. An audit includes examining, on a test basis, evidence about the City s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City s compliance with those requirements. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal awards programs for the year ended September 30, Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal awards programs. In planning and performing our audit, we considered the City s internal control over compliance with requirements that could have a direct and material effect on a major federal awards program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City s internal control over compliance. 136

162 A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of City management, others within the City, the Chairman and City Commission, and applicable state and federal agencies, and is not intended to be and should not be used by anyone other than these specified parties. Orlando, Florida April 13,

163 CITY OF NORTH PORT, FLORIDA Schedule of Findings and Questioned Costs Federal Awards Programs For the Year Ended September 30, 2011 Part I - Summary of Auditors' Results Financial Statement Section Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? yes x no Significant deficiency(ies) identified? yes x none reported Noncompliance material to financial statements noted? yes x no Federal Awards Section Internal control over major programs: Material weakness(es) identified? yes x no Significant deficiency(ies) identified? yes x none reported Type of auditors' report on compliance for major federal programs Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) Circular A-133 yes x no 138

164 CITY OF NORTH PORT, FLORIDA Schedule of Findings and Questioned Costs Federal Awards Programs For the Year Ended September 30, 2011 Part I - Summary of Auditors' Results (continued) Federal Awards Section (continued) Identification of major federal programs: Federal Programs: Name of Program or Cluster Department of Transportation - ARRA Highway Planning and Construction, Sumter Blvd Widening Environmental Protection Agency - Capitalization Grants for Clean Water State Revolving Funds CFDA Numbers Dollar threshold used to determine Type A programs: Federal $ 300,000 Auditee qualified as low-risk auditee for federal purposes? x yes no Part II - Schedule of Financial Statement Findings This section identifies the significant deficiencies, material weaknesses, fraud, illegal acts, violations of provisions of contracts and grant agreements, and abuse related to the financial statements that are required to be reported in accordance with Government Auditing Standards. There were no financial statement findings required to be reported in accordance with Government Auditing Standards. Part III - Federal Award Findings and Questioned Costs This section identifies the significant deficiencies, material weaknesses, and material instances of noncompliance, including questioned costs, as well as any material abuse findings, related to the audit of major federal programs, as required to be reported by Section 510(a) of OMB Circular A-133. There were no findings required to be reported by Section 510(a) of OMB Circular A

165 CITY OF NORTH PORT, FLORIDA Summary Schedule of Prior Audit Findings and Corrective Action Plan Federal Awards Programs Year Ended September 30, 2011 Prior Year Audit Findings Finding: Retainage Payable and Journal Entry Review Condition: The City recorded $916,285 of construction retainage payable on the governmentwide statement of net assets, but did not record this amount on the governmental funds financial statements. Corrective Action: The City has recorded construction retainage payable on the governmental funds financial statements in the current year, as applicable. Corrective Action Plan There were no audit findings in the current year independent auditors reports that required corrective action. 140

166 City of North Port, Florida Schedule of Expenditures of Federal Awards For the Year Ended September 30, 2011 Federal/State Agency CFDA Contract/Grant Federal Program Number Number Expenditures FEDERAL AWARDS Department of Justice Passed through Florida Department of Law Enforcement Bullet Proof Vest Grant BVP $ 11,488 Edward Byrne Memorial - Justice Assistance Grant Program DJ-BX ,305 Edward Byrne Memorial - Justice Assistance Grant Program DJ-BX ,818 Total Department of Justice 35,611 Department of Transportation Passed through Florida Department of Transportation ARRA - Highway Planning and Construction Sumter Blvd Widening AP S15 394,294 Total Department of Transportation 394,294 U.S. Environmental Protection Agency Cocoplum Canal Intake Structure Grant XP ,228 Passed through Florida Dept. of Environmental Protection Nonpoint Source Implementation Grants G ,914 Passed through Florida Dept. of Environmental Protection - Capitalization Grants for Clean Water State Revolving Funds CS ,557,300 Total U.S. Environmental Protection Agency 2,621,442 Department of Energy ARRA - Energy, Efficiency & Conservation Community Energy Retrofit Incentive Programs Grant DE-SC ,367 Total Department of Energy 243,367 Department of Housing and Urban Development Passed through Sarasota County Community Development Block Grant B-11-UC ,626 Total Department of Housing and Urban Development 134,626 Department of Homeland Security Assistance to Firefighters Grant EMW-2010-FO ,807 Passed through Florida Division of Emergency Management Homeland Security Grant Program - Issue 44 Community Emergency Response Team CI-A ,678 Passed through United Way ARRA - Emergency Food and Shelter National Board Program ,982 Total Department of Homeland Security 217,467 Total Expenditures of Federal Awards $ 3,646,807 The accompanying notes are an integral part of this statement. 141

167 CITY OF NORTH PORT, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2011 GENERAL The accompanying schedule of expenditures of federal awards presents the activity of all applicable federal awards of the City of North Port (the City). The City s reporting entity is defined in Note A to the City s basic financial statements. Federal financial assistance received directly from federal agencies, as well as through other government agencies, are included on the schedule. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards is presented using the modified accrual basis of accounting, which is described in Note A to the City s basic financial statements. RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS Grant expenditure reports as of September 30, 2011, which have been submitted to grantor agencies will, in some cases, differ from amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of the year-end accruals. The reports will agree at termination of the grant as the discrepancies noted are timing differences. 142

168 Independent Auditors Management Letter Honorable Chairman and City Commission City of North Port, Florida: We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of North Port, Florida (the "City"), as of and for the year ended September 30, 2011, and have issued our report thereon dated April 13, We did not audit the financial statements of the City of North Port, Florida Police Officers Pension-Local Option Trust Fund and the City of North Port, Florida Firefighters Pension- Local Option Trust Fund (collectively, the Plans ), whose statements reflect 99% of the assets and 100% of the change in fiduciary net assets of the City s fiduciary funds. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Plans are based solely upon the reports of the other auditors. 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, Independent Auditors' Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Federal Awards Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated April 13, 2012, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter , Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors reports or schedule. Section (1)(i)1., Rules of the Auditor General, requires that we address in the management letter, if not already addressed in the auditors reports on compliance and internal controls or schedule of findings and questioned costs, whether or not corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the preceding annual financial audit report. Section (1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section , Florida Statutes, regarding the investment of public funds. In connection with our audit of the financial statements of the City, nothing came to our attention that would cause us to believe that the City was in noncompliance with Section regarding the investment of public funds. 143