CITY OF NORTH PORT, FLORIDA

Transcription

1 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2014 City of North Port, 4970 City Hall Boulevard, North Port, FL 34286

2 Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2014 CITY OF NORTH PORT, FLORIDA Prepared by the Finance Department Peter D. Lear, CPA, CGMA Finance Director

3 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement List of Principal Officers Organization Chart Page i-v vi vii viii FINANCIAL SECTION Independent Auditor's Report 1-3 Management's Discussion and Analysis 5A-5M Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 8 Statement of Activities 9-10 Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 14 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 17 Statement of Net Position - Proprietary Fund 18 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Fund 19 Statement of Cash Flows - Proprietary Fund Statement of Fiduciary Net Position - Fiduciary Funds 22

4 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014 TABLE OF CONTENTS FINANCIAL SECTION (continued) Page Statement of Changes in Fiduciary Net Position - Pension Trust Fiduciary Funds 23 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 71 Fire Rescue District Special Revenue Fund 72 Solid Waste District Special Revenue Fund 73 Pension Trusts' Information GASB Statement 45 Postemployment Benefits Other Than Pension 84 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 96 Special Law Enforcement Special Revenue Fund 97 Police Education Special Revenue Fund 98 Tree Replacement Special Revenue Fund 99 Building Department Special Revenue Fund 100 Escheated Lots - Land and Future Projects Special Revenue Fund 101 Escheated Lots - Roads Special Revenue Fund 102 Escheated Lots - Parks Special Revenue Fund 103 Law Enforcement Impact Fees Special Revenue Fund 104 Fire Impact Fees Special Revenue Fund 105 Parks and Recreation Impact Fees Special Revenue Fund 106 Transportation Impact Fees Special Revenue Fund 107 Solid Waste Impact Fees Special Revenue Fund 108 General Government Impact Fees Special Revenue Fund 109 Environmental Management Special Revenue Fund 110 Fleet Maintenance Special Revenue Fund 111 Road Reconstruction Bond Debt Service Fund 112 Surtax II Capital Projects Fund 113

5 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014 TABLE OF CONTENTS FINANCIAL SECTION (continued) Page Surtax III Capital Projects Fund 114 Maintenance Facility Construction Capital Projects Fund 115 Capital Acquisition Capital Projects Fund 116 Road Reconstruction Capital Projects Fund 117 Combining Statement of Fiduciary Net Position - Fiduciary Funds 119 Combining Statement of Changes in Fiduciary Net Position - Fiduciary Funds 120 Combining Statement of Changes in Assets and Liabilities - Agency Funds STATISTICAL SECTION Net Position by Component - Last Ten Fiscal Years 125 Changes in Net Position - Last Ten Fiscal Years Fund Balances of Governmental Funds - Last Ten Fiscal Years 128 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years Assessed Value and Actual Value of Taxable Property - Last Ten Fiscal Years 131 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 132 Principal Property Tax Payers - Current Year and Nine Years Ago 133 Property Tax Levies and Tax Collections - Last Ten Fiscal Years 134 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 135 Ratios of General Bonded Debt Outstanding - Last Nine Fiscal Years 136 Direct and Overlapping Governmental Activities Debt 137 Legal Debt Margin Information 138 Pledged-Revenue Coverage - Last Ten Fiscal Years Demographic and Economic Statistics - Last Ten Calendar Years 141

6 CITY OF NORTH PORT, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2014 TABLE OF CONTENTS STATISTICAL SECTION (continued) Page Principal Employers - Current Year and Nine Years Ago 142 Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years 143 Operating Indicators by Function/Program - Last Ten Fiscal Years 144 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 145 SUPPLEMENTAL INFORMATION SECTION Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards Independent Auditor's Report on Compliance For Each Major Federal Program and State Project and on Internal Control Over Compliance Required by OMB Circular A Schedule of Findings and Questioned Costs Schedule of Expenditures of Federal Awards and State Financial Assistance 152 Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance 153 Independent Auditor's Management Letter Independent Auditor's Report - Compliance with F.S. Section

7 City of North Port 4970 City Hall Boulevard North Port, Florida (941) March 12, 2015 The Honorable Mayor and Vice-Mayor, Members of the City Commission, Citizens of the City of North Port 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, 2014 have been audited by Mauldin & Jenkins LLC, 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 i

8 the requirements of the state statutes, the audit was also designed to meet the requirements of the Federal and State of Florida Single Audit Acts. The independent auditor s report on the basic financial statements and combining and individual fund statements and the schedules is presented as the first component of the financial section. The independent auditor s 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 auditor s 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 consists of five elected citizens who are qualified voters in the City. The five elected commissioners annually select a Mayor. 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 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 recreational centers. Public works provides essential street and road maintenance, drainage, traffic signalization, landscape maintenance, as well as solid waste collection. The public utility 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 recommended 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. ii

9 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 square miles 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 41,000 in 2005 to 60,295 in For the fiscal year 2014, the City adopted the roll-back tax rate of mils. Local taxes make up approximately 41% of the budgeted 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, operating capital is kept at the local bank, in an earnings credit based 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. The most recent amendment was done on January 25, 2010 by City Ordinance On April 20, 2011 the City formally adopted a Fund Balance Policy with Resolution No R-14. This policy established fund balance ranges for several of the operating funds of the City. The General Fund has a fund balance policy with a range of total spendable fund balance of 15% to 25% of the ensuing year s budgeted General Fund expenditures. The dependent special district funds have fund balance policies with a range of total spendable fund balance of 20% to 25% 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. iii

10 Major Initiatives Road Rehabilitation and Reconstruction of 266 miles of roads started City completed purchase of Warm Mineral Springs Neighborhood parks continue to be renovated Expansion of the reclaimed system and sewer system Purchased a new radio communications system and radios for the police and fire departments Improvements to the City s drainage system and installed culverts in key areas of the City Bridge and sidewalk repairs Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of North Port for its Comprehensive Annual Financial Report for the fiscal year ending September 30, This was the eighteenth consecutive year that the City has received this prestigious award. We are 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 Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to meet the Certificate of Achievement Program s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The City also received the GFOA s Award for Distinguished Budget Presentation for its annual financial plan for the fiscal year beginning October 1, 2013, the same period covered by this Comprehensive Annual Financial Report. This was the seventh 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. The Public Works Department became the 91 st accredited agency in North America, earning the American Public Works Association national accreditation. The Fire Department received an Class 1 Rating from the Insurance Services Organization, of which less than 70 departments in the country have received. The Utilities Department received the WateReuse Public Education Program of the Year award. Also, the Utilities Department received the Meritorious Water Conservation Award for Excellence from the American Water Works Association. City was designated as a Playful City USA for the fifth consecutive year. City was awarded the Gold Employer Award in the National Best Workplaces for Commuters Race to Excellence Program. 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 of this report. iv

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13 City of North Port, Florida Principal Officers As of September 30, 2014 City Commission James F. Blucher, Mayor Rhonda Y. DiFranco, Vice-Mayor Tom Jones, Commissioner Linda M. Yates, Commissioner Cheryl Cook, Commissioner City Manager Jonathan R. Lewis, ICMA-CM Assistant City Manager Daniel P. Schult Branford N. Adumuah Robin A. Carmichael Peter D. Lear, CPA, CGMA Richard J. Newkirk William J. Taaffe Kevin T. Vespia Scott E. Williams Department Directors Public Works General Services Finance Public Utilities Fire Rescue/EMS Police Neighborhood Development Services City Clerk Helen M. Raimbeau, MMC Deputy City Clerk Patsy C. Adkins, CMC City Attorney Mark C. Moriarty vii

14 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 viii

15 INDEPENDENT AUDITOR S REPORT Honorable Mayor, City Commission and City Manager City of North Port, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of North Port, Florida (the City ), as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the City of North Port, Florida Police Officers Pension Trust Fund which represents 33%, 33%, and 49% of the assets, fund balances/net position, and revenues of the aggregate remaining fund information. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the aggregate remaining fund information, is based solely on the report of the 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements SIXTH AVE WEST, SUITE 600 BRADENTON, FLORIDA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 1

16 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report 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 of North Port, Florida, as of September 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note J to the financial statements, the City s pension trust funds adopted new accounting guidance and implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB No. 25 as of October 1, This standard modified the reporting requirements for financial statements of defined benefit pension plans. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and required supplementary information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2

17 Other Information 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, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations, and is also not a required part of the basic financial statements. The combining and individual fund statements and schedules and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules and the Schedule of Expenditures of Federal Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 12, 2015, 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City s internal control over financial reporting and compliance. Bradenton, Florida March 12,

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19 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 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-v of this report and the City s financial statements beginning on page 8. Financial Highlights The assets of the City exceeded its liabilities at the close of the fiscal year 2014 by $408,637,927 (net position). Of this amount, $27,471,261 (unrestricted net position) may be used to meet the government s ongoing obligations to citizens and creditors. Of the $27,471,261, the reader of these statements should look at the fund level statements in order to get a better understanding of the requirements of how these funds can be spent. Also, the City has a fund balance policy with minimum amounts of 15% - 25% of the ensuing year s annual budgeted expenditures depending on the operating fund. At the close of fiscal year 2014, the City s governmental funds reported combined ending fund balances of $104,828,880, an increase of $40,505,015 (see page 5-J for analysis) in comparison with the prior year. Approximately 8.5% of this total amount, $8,911,526, is available for spending at the City s discretion (unassigned fund balance). At the close of fiscal year 2014, unassigned fund balance for the general fund was $8,911,526 or 30% of total general fund expenditures. Of this amount, $4,602,130 was needed to be in compliance with the fund balance policy. Total governmental activities revenues increased $9,814,963, or 14.8% in comparison to the prior year. The Fire Rescue District s non-ad valorem revenues collected in fiscal year 2014 increased over $1,000,000 in comparison to fiscal year 2013 due to more timely collections and the receipt of back taxes from the sale of the Thomas Ranch property in June 2014 of over $700,000. Due to the rise in construction activity, permits revenue, particularly residential permits ($440,025), increased over $600,000 in fiscal year New in fiscal year 2014 were capital assessments totaling $3,073,299 collected for repayment of the transportation bonds which were used for the rehabilitation of approximately 266 miles of substandard roads in the City. The Fleet Maintenance Fund s charges for services increased over $1,200,000. An in-house fleet fueling program began in May City departments were incrementally brought into the program with full implementation in November In April 2014, the City and Sarasota County entered into a contract with National and State Park Concessions Inc. to manage Warm Mineral Springs; revenues of over $500,000 were received. Florida Power and Light franchise fees increased over $260,000 in comparison to the previous year due to the rise in electricity usage because of the upturn in construction activity and the decrease in the number of vacant homes. Discretionary sales tax, municipal revenue sharing, and one-half cent local sales tax rose approximately $541,000, $244,000, and $363,000, respectively, due to the recovering economy and continued growth of North Port. Finally, capital grants increased over $2.4 million. Transportation grants of over 5-A

20 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 $2.8 million were received in the current fiscal year for three separate projects: improvements to the Price and Haberland intersection; improvements to the right turn lane on US41at Biscayne Drive; and the widening of Sumter Boulevard from two lanes to four. Total governmental activities expenses increased $1,331,883, or 2.1% in comparison to the prior year. The largest increase ($1.1 million) was attributable to the purchase of Motorola radios for the police department and Fire Rescue District. The replacement radios were needed to continue to utilize Sarasota County s communication system. Police personnel costs (excluding pension costs) rose over $520,000 for several reasons: the department was more fully staffed than in previous years; there were several large benefit payouts due to retirements and terminations; and a staff inspector position was added mid-year. Also, the City s contribution to the police pension, determined by the actuary, increased over $280,000 in this fiscal year; the City s contribution to the fire pension decreased only $46,405. The City s Florida Retirement System (FRS) statutory contributions increased over $391,000. Property and general liability insurance increased over $102,000 and tipping fees rose over $170,000 due to increased solid waste garbage collection with new residential accounts coming on line in fiscal year City attorney expenditures rose approximately $39,000; in September 2014, an in-house City Attorney was hired, because the Commission decided to bring legal services in-house rather than using outside contracted services. Fiscal year 2014 also included professional fees of over $400,000 associated with Warm Mineral Springs; $74,000 for insurance broker professional fees and over $70,000 for the beautification of Biscayne Drive. Finally, bridge rehabilitation increased over $105,000 in fiscal year 2014 and interest on longterm debt increased over $886,000 due to the additional debt assumed by the City. There were many increases, with the major ones listed above, but there was also a large decrease in road rehabilitation of approximately $2.0 million. The road reconstruction bond project that will rehabilitate approximately 266 miles of substandard roads in the next three years began in fiscal year Bond proceeds are initially paying for these expenditures; thus, the Road and Drainage District did not expend funds for rehabilitation in this fiscal year other than for routine maintenance and the completion of the fiscal year 2013 road rehabilitation project. 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 Position presents information on all of the City s assets plus deferred outflows of resources less liabilities, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 5-B

21 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 The Statement of Activities presents revenue and expenses and shows how the government s net position changed during the most recent fiscal year. All changes in net position 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 8-10 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, the Surtax III Capital Projects Fund and the Road Reconstruction 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. 5-C

22 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 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 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 position may serve over time as a useful indicator of a government s financial position. Assets exceeded liabilities by $408,637,927 at the close of the most recent fiscal year for the City of North Port. A major portion of the City s net position (78%) 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 5-D

23 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 provide services to its citizens; consequently, these assets are not available for future spending. 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 position for fiscal years ending 2014 and 2013: City of North Port's Net Position Governmental Activities Business-type Activities Totals Current and other assets $ 116,789,306 $ 70,764,403 $ 21,645,023 $ 21,683,997 $ 138,434,329 $ 92,448,400 Capital assets 245,323, ,813, ,258, ,046, ,582, ,859,447 Total assets 362,112, ,577, ,903, ,730, ,016, ,307,847 Deferred outflows of resources - - 1,043,881-1,043,881 - Long-term liabilities 48,703,816 5,142,712 39,773,503 40,765,068 88,477,319 45,907,780 Other liabilities 10,027,758 3,990, ,328 1,148,474 10,945,086 5,139,030 Total liabilities 58,731,574 9,133,268 40,690,831 41,913,542 99,422,405 51,046,810 Net position: Invested in capital assets, net of debt 234,882, ,333,540 84,974,490 83,727, ,857, ,060,953 Restricted 55,770,974 45,641,773 5,538,481 5,950,232 61,309,455 51,592,005 Unrestricted 12,727,589 16,468,879 14,743,672 14,139,200 27,471,261 30,608,079 Total net position $ 303,381,284 $ 292,444,192 $ 105,256,643 $ 103,816,845 $ 408,637,927 $ 396,261,037 An additional portion of the City s net position (15%) represents resources that are subject to restrictions on how they may be used. The remaining balance of unrestricted net position ($27,471,261 or 7%) 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, 2014, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was an increase of $9.7 million in restricted net position reported for fiscal year This increase was primarily due to the accumulation of funds for multi-year capital projects not yet completed. There was an increase in total net position of $12.4 million during the current fiscal year. The increase is due mostly to the funds accumulating (i.e. revenues exceeding expenses) in the Surtax III Fund and the Water & Sewer Utilities Funds for future capital projects. Governmental Activities. Governmental activities increased the City s net position by $10,937,092 as the result of current fiscal year activities, accounting for 85% of the total growth in the City s net position. 5-E

24 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 Total general revenues increased $692,804 (2.5%). The discretionary sales surtax ($540,960), the one-half cent local sales tax ($363,340) and the state shared revenues ($243,814) increased in the current fiscal year due to the recovering economy. But miscellaneous revenues decreased approximately $549,000 due to the following: insurance recoveries decreased approximately $82,000 compared to the prior year and fiscal year 2013 included a $450,000 reimbursement to the City for a license purchased back in 2009 in conjunction with a sports stadium project that the City decided not to pursue. Charges for services increased $6,707,015 (18.3%) during the current fiscal year. As was mentioned above, the Fire Rescue District s non-ad valorem revenues collected in fiscal year 2014 increased over $1,000,000 in comparison to fiscal year 2013 due to more timely collections and the receipt of back taxes from the sale of the Thomas Ranch property in June 2014 of over $700,000. Due to the rise in construction activity, permits revenue, particularly residential permits ($440,025), increased over $600,000 in fiscal year New in fiscal year 2014 were capital assessments totaling $3,073,299 collected for repayment of the transportation bonds which were used for the rehabilitation of approximately 266 miles of substandard roads in the City. The Fleet Maintenance Fund s charges for services increased over $1,200,000. An in-house fleet fueling program began in May City departments were incrementally brought into the program with full implementation in November In April 2014, the City and Sarasota County entered into a contract with National and State Park Concessions Inc. to manage Warm Mineral Springs; revenues of over $500,000 were received. Florida Power and Light franchise fees increased over $260,000 in comparison to the previous year due to the rise in electricity usage because of the upturn in construction activity and the decrease in the number of vacant homes. Governmental activities expenses increased approximately $1.3 million (2.1%) during the current fiscal year. As was mentioned above, the largest increase ($1.1 million) was attributable to the purchase of Motorola radios for the police department and Fire Rescue District. The replacement radios were needed to continue to utilize Sarasota County s communication system. Police personnel costs (excluding pension costs) rose over $520,000 for several reasons: the department was more fully staffed than in previous years; there were several large benefit payouts due to retirements and terminations; and a staff inspector position was added mid-year. Also, the City s contribution to the police pension, determined by the actuary, increased over $280,000 in this fiscal year; the City s contribution to the fire pension decreased only $46,405. The City s Florida Retirement System (FRS) statutory contributions increased over $391,000. Property and general liability insurance increased over $102,000 and workers compensation costs increased over $56,000 due to higher premiums and tipping fees rose over $170,000 due to increased solid waste garbage collection with new residential accounts coming on line in fiscal year City attorney expenditures rose approximately $39,000; in September 2014, an in-house City Attorney was hired, because the Commission decided to bring legal services in-house rather than using outside contracted services. Fiscal year 2014 also included professional fees of over $400,000 associated with Warm Mineral Springs; $74,000 for insurance broker professional fees and over $70,000 for the beautification of Biscayne Drive. Finally, bridge rehabilitation increased over $105,000 in fiscal year 2014 and interest on long-term debt increased over $886,000 due to the additional debt assumed by the City. There were many increases, with the major ones listed above, but 5-F

25 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 there was also a large decrease in road rehabilitation of approximately $2.0 million. The road reconstruction bond project that will rehabilitate approximately 266 miles of substandard roads in the next three years began in fiscal year Bond proceeds are initially paying for these expenditures; thus, the Road and Drainage District did not expend funds for rehabilitation in this fiscal year other than for routine maintenance and the completion of the fiscal year 2013 road rehabilitation project. City of North Port s Changes in Net Position Governmental Activities Business-type Activities Total Revenues: Program Revenues: Charges for services $43,381,660 $36,674,645 $17,617,220 $16,795,809 $60,998,880 $53,470,454 Operating grants and contributions 142, , , ,456 Capital grants and contributions 3,678,035 1,233,594 1,899,485 3,358,686 5,577,520 4,592,280 General Revenues: Ad valorem taxes 8,102,022 8,071, ,102,022 8,071,414 Discretionary sales surtaxes 7,424,336 6,883, ,424,336 6,883,376 Other taxes 6,078,689 6,029, ,078,689 6,029,476 Intergovernmental 6,310,324 5,689, ,310,324 5,689,363 Other 603,899 1,171,496 59,656 92, ,555 1,264,241 Total Revenues 75,721,124 65,924,820 19,576,361 20,247,240 95,297,485 86,172,060 Expenses: Governmental Activities: General government 9,754,793 8,632, ,754,793 8,632,871 Public safety 28,688,863 27,591, ,688,863 27,591,686 Physical environment 11,890,530 12,308, ,890,530 12,308,823 Transportation 11,035,370 12,094, ,035,370 12,094,208 Culture & recreation 1,697,522 1,762, ,697,522 1,762,877 Human services 372, , , ,326 Economic environment 331, , , ,849 Interest on long-term debt 1,362, , ,362, ,419 Business-type Activities: - Water and sewer ,252,790 16,214,079 17,252,790 16,214,079 Total Expenses 65,133,942 63,802,059 17,252,790 16,214,079 82,386,732 80,016,138 Change in net position before transfers 10,587,182 2,122,761 2,323,571 4,033,161 12,910,753 6,155,922 Transfers 349, ,251 (349,910) (331,251) - - Change in Net Position 10,937,092 2,454,012 1,973,661 3,701,910 12,910,753 6,155,922 Net Position-beginning 292,444, ,990, ,282, ,114, ,727, ,105,115 Net Position-end of year $303,381,284 $292,444,192 $105,256,643 $103,816,845 $408,637,927 $396,261,037 5-G

26 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 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 4.86% Property Taxes 10.70% Charges for Services 57.29% Investment Income 0.45% Other Taxes 8.03% Intergovernmental 8.33% Sales Surtax 9.80% Other Revenues 0.54% *Excludes transfers-in 5-H

27 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 Business-type Activities. Business-type activities were responsible for an increase of $1,973,661 in the total change of net position as the result of current fiscal year activities. The key elements causing the increase in the current fiscal year are: Developer contributed assets of $611,747 were capitalized during the fiscal year. Water and sewer impact fees collected for the fiscal year were $976,806. 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 90.01% Investment Income 0.29% Capital Grants and Contributions 9.70% 5-I

28 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 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 2014, the City s governmental funds reported combined ending fund balances of $104,828,880, an increase of $40,505,015 in comparison with the prior year. Approximately 8.5% of this total amount ($8,911,526) 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 $95,419,892 or 91% of ending fund balance. Of this amount, $82,515,916 is restricted by law or externally imposed requirements, $11,629,865 is committed for specific purposes by the Commission and $1,274,111 is assigned for various purposes. There was also a small amount of non-spendable fund balance totaling $497,462. The General Fund is the chief operating fund of the City. The General Fund manages 35% of the total governmental revenues. At the end of the current fiscal year, unassigned fund balance of the General Fund was $8,911,526, while the total fund balance was $10,286,026. 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 30% of total General Fund expenditures, while total fund balance represents 35% of that same amount. The fund balance of the City s General Fund decreased by $418,387 during the current fiscal year. Fiscal year 2014 included professional fees of over $400,000 associated with Warm Mineral Springs and $74,000 for insurance broker professional fees. City attorney expenditures rose approximately $39,000; in September 2014, an in-house City Attorney was hired, because the Commission decided to bring legal services in-house rather than using outside contracted services. Property and liability insurance increased approximately $17,000 and workers compensation costs increased approximately $33,000 due to higher rates; the City s FRS contributions increased approximately $217,000 due to higher statutory rates; and finally, the first year of debt service for computer equipment totaling $41,465 was paid. In the governmental funds, a final budget to actual comparison is done. A favorable budget variance is referred to as a positive variance or gain, while an unfavorable budget variance is referred to as a negative variance or loss. Budget variances occur because budget forecasting is a plan and the City is unable to predict the future with complete accuracy. The General fund had some noteworthy positive variances in Planning and Zoning ($222,490), Economic Development ($114,359) and Emergency Medical Services ($202,859). Planning and Zoning personnel expenditures were lower than budgeted due mainly to employee turnover; the division was understaffed for several months of the fiscal year. Also, professional services were lower than budgeted because $45,000 budgeted for a Master Plan for Activity Center 5 was not utilized. Economic development expenditures particularly for professional services, promotional activities and advertising, were lower than budgeted. Promotional activities funds totaling $61,400 were 5-J

29 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 budgeted to fund new opportunities to market and promote North Port to businesses looking to relocate; these funds were not utilized. Funds for creating a new marketing video were also not used. The City decided to shift its economic development efforts away from active recruitment, attraction and marketing efforts to business advocacy and retention. Emergency Medical Services personnel expenditures were lower than budgeted due to employee turnover; licenses, communication services and operating supplies were all lower than expected. The fund balances of the Road and Drainage District and the Fire Rescue District increased by $2,092,995 and $1,217,438, respectively, during the current fiscal year. The Road and Drainage District s intergovernmental revenue increased in this fiscal year approximately $900,000 due to various transportation grants received for three separate capital projects. Also, the Road and Drainage District s expenditures decreased in comparison to last fiscal year primarily due to the large decrease in road rehabilitation of approximately $2.0 million. The District did not expend funds for rehabilitation in fiscal year 2014 other than for routine maintenance and the completion of the fiscal year 2013 road rehabilitation project because of the commencing of the road reconstruction bond project this fiscal year. The Fire Rescue District s non-ad valorem revenues collected in fiscal year 2014 increased over $1,000,000 in comparison to fiscal year 2013 due to more timely collections and the receipt of back taxes from the sale of the Thomas Ranch property in June 2014 of over $700,000. The District s personnel expenditures decreased approximately $48,000 due to employee turnover. The fund balance of the Solid Waste District decreased by $1,893,800 during the current fiscal year due to the increase of over $2.1 million in capital outlay compared to fiscal year A new modular building, eight garbage trucks and two claw trucks were purchased by the District in fiscal year The fund balances of the Surtax III Fund and the Road Reconstruction Fund increased $3,714,547 and $35,188,421, respectively, in the current fiscal year. Revenues continue to accumulate in the Surtax III Fund at a rate faster than project expenditures are being made resulting in the increase. The road reconstruction bond project is on-going and expected to last three years, with fiscal year 2014 as the first year of the project. This accounts for the large fund balance in the Road Reconstruction Fund. As the road reconstruction project progresses, the balance will diminish. 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 position of the Water and Sewer Utilities increased by $604,472 to $14.7 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 $281,059 net increase in appropriations between the original and final amended budget. Following are the main components of the net 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 a $343,909 increase in the original budget. A 5-K

30 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 hydrological study of Warm Mineral Springs and a reimbursement for a performance bond also account for increases of $15,000 and $62,995, respectively, in the original budget. Transfers of $25,840 into the General Fund from the Escheated Lots-Roads Fund ($18,975) and the Maintenance Facility Fund ($6,865) account for decreases in the original budget. Also, a reorganization of personnel in the Property Maintenance Division resulted in a $58,505 decrease in the original budget. Finally, the estimated net revenues from the operations of Warm Mineral Springs also caused a $56,500 decrease in the original budget. 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, 2014 amounts to $368,582,122 (net of accumulated depreciation). This investment in capital assets includes land, construction in process, buildings, improvements, various infrastructure, utility systems and equipment. The overall total increase in the City s capital assets for the current fiscal year was 3.87% (a 6.29% increase for governmental activities and a 0.64% decrease for business-type activities). Some of the major capital asset additions during the current fiscal year included the following: Roads and intersection improvements Warm Mineral Springs (purchased Sarasota County s portion) Sidewalks Neighborhood park renovations Water control structure improvements Water and sewer line improvements Reverse osmosis building Force main construction Reclaimed water expansion City of North Port s Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total Land $ 17,743,725 $ 15,698,622 $ 948,266 $ 948,266 $18,691,991 $ 16,646,888 Buildings 39,619,415 40,043,192 2,202, ,408 41,822,136 40,425,600 Infrastructure 173,332, ,152, ,260, ,937, ,592, ,089,725 Equipment 13,288,226 10,634,514 5,676,400 1,462,998 18,964,626 12,097,512 Construction in progress 1,339,330 2,284,434 7,171,125 17,315,288 8,510,455 19,599,722 Total $245,323,552 $230,813,057 $123,258,570 $124,046,390 $368,582,122 $354,859,447 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 $80,977,783 in total bonded debt outstanding compared to the $40,318,977 last year. 5-L

31 City of North Port, Florida Management s Discussion and Analysis September 30, 2014 Outstanding Debt, at Year-end Governmental: Transportation Improvement Assessment Bonds $ 37,850,000 $ - State Revolving Loan Funds 4,843,703 - Subtotal 42,693,703 - Business-type: State Revolving Loan Funds 22,726,833 23,846,934 Utility System Refunding Revenue Bonds, Series ,023,128 6,045,783 Utility System Refunding Revenue Bonds, Series ,578,000 11,670,978 Deferred loss on defeasance of debt (1,043,881) (1,244,718) Subtotal 38,284,080 40,318,977 Total $ 80,977,783 $ 40,318,977 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 The City of North Port had an unemployment rate of 6.2% at fiscal year-end. The City s unemployment rate is higher compared to 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 1.79% during the fiscal year from 59,231 to 60,295. The taxable value of real estate located in the City rose to $2.66 billion in the current fiscal year, which is an increase of approximately $236 million or 9.76% over the prior fiscal year. Single family home starts are continuing to increase. All of these factors were considered in preparing the City s budget for the 2015 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: 5-M

32 5-N

33 BASIC FINANCIAL STATEMENTS 6

34 7

35 CITY OF NORTH PORT, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2014 Governmental Business-type Activities Activities Total ASSETS Cash and investments $ 73,223,664 $ 12,103,233 $ 85,326,897 Receivables (net) 3,245,743 3,502,405 6,748,148 Internal balances 100,214 (100,214) - Inventories 49, , ,705 Prepaid items 131, ,403 Deposits 438, ,999 Restricted assets: Cash and investments 38,125,370 5,585,077 43,710,447 Receivables (net) - 65,556 65,556 Net pension asset 1,474,174-1,474,174 Capital assets: Non-depreciable 19,083,055 8,119,391 27,202,446 Depreciable (net) 226,240, ,139, ,379,676 Total Assets 362,112, ,903, ,016,451 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on debt refundings - 1,043,881 1,043,881 Total Deferred Outflows - 1,043,881 1,043,881 LIABILITIES Accounts payable 5,561, ,212 6,317,807 Accrued liabilities 998, ,284 Payable from restricted assets: Accounts payable 2,936,949 30,110 2,967,059 Interest payable 461, , ,882 Unearned revenue 69,054-69,054 Noncurrent liabilities: Due within one year 3,278,116 2,482,093 5,760,209 Due in more than one year 45,425,700 37,291,410 82,717,110 Total Liabilities 58,731,574 40,690,831 99,422,405 NET POSITION Net investment in capital assets 234,882,721 84,974, ,857,211 Restricted for: Renewal and replacement - 915, ,779 Capital projects 32,758,353 4,622,702 37,381,055 Public safety 4,369,272-4,369,272 Physical environment 5,789,229-5,789,229 Transportation 11,129,561-11,129,561 Culture and recreation 1,654,821-1,654,821 General government 69,738-69,738 Unrestricted 12,727,589 14,743,672 27,471,261 Total Net Position $ 303,381,284 $ 105,256,643 $ 408,637,927 The notes to the financial statements are an integral part of this statement. 8

36 CITY OF NORTH PORT, FLORIDA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2014 Program Revenues Charges for Operating Grants Capital Grants Functions/Programs Expenses Services and Contributions and Contributions Governmental activities: General government $ 9,754,793 $ 7,588,456 $ - $ 59,013 Public safety 28,688,863 12,724,026 33, ,119 Physical environment 11,890,530 11,581, ,848 Transportation 11,035,370 10,641,111-2,858,665 Economic environment 331, Human services 372,461 29, ,533 94,900 Culture and recreation 1,697, , ,490 Interest on long-term debt 1,362, Total governmental activities 65,133,942 43,381, ,159 3,678,035 Business type activities: Water and sewer utilities 17,252,790 17,617,220-1,899,485 Total business-type activities 17,252,790 17,617,220-1,899,485 Total government $ 82,386,732 $ 60,998,880 $ 142,159 $ 5,577,520 General revenues: Taxes: Ad Valorem Insurance premium Service Local business Fuel Discretionary sales surtax Intergovernmental - unrestricted Investment income Miscellaneous Transfers Total general revenues and transfers Changes in net position Net position - beginning (restated) Net position - ending The notes to the financial statements are an integral part of this statement. 9

37 Net (Expense) Revenue and Changes in Net Position Governmental Business-type Activities Activities Total $ (2,107,324) $ - $ (2,107,324) (15,766,092) - (15,766,092) (3,659) - (3,659) 2,464,406-2,464,406 (331,987) - (331,987) (139,957) - (139,957) (685,059) - (685,059) (1,362,416) - (1,362,416) (17,932,088) - (17,932,088) - 2,263,915 2,263,915-2,263,915 2,263,915 (17,932,088) 2,263,915 (15,668,173) 8,102,022-8,102, , ,958 2,602,545-2,602, , ,502 2,648,684-2,648,684 7,424,336-7,424,336 6,310,324-6,310, ,457 56, , ,442 3, , ,910 (349,910) - 28,869,180 (290,254) 28,578,926 10,937,092 1,973,661 12,910, ,444, ,282, ,727,174 $ 303,381,284 $ 105,256,643 $ 408,637,927 10

38 CITY OF NORTH PORT, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2014 General Fund Road and Drainage District Fire Rescue District Solid Waste District ASSETS: Cash and investments $ 11,314,339 $ 11,574,182 $ 2,969,794 $ 2,176,946 Receivables (net of allowance for uncollectibles) 1,288,166 8,100 9,980 43,911 Due from other funds 415, Due from other governments 543, ,927 11, Prepaid items 8,724-14,854 - Deposits Inventories Total assets 13,569,972 12,225,209 3,006,625 2,220,907 LIABILITIES: Accounts payable 1,947,895 1,075,224 50, ,101 Due to other funds - 109, ,020 42,696 Due to other governments 3, Accrued liabilities 876, ,627 Unearned revenue 69, Total liabilities 2,897,487 1,184, , ,424 DEFERRED INFLOWS OF RESOURCES: Unavailable revenue - grants 6, , Unavailable revenue - other receivables 379, Total deferred inflows of resources 386, , FUND BALANCES: Nonspendable 8, Restricted - 10,630,169 2,831,995 1,903,475 Committed 91, Assigned 1,274, Unassigned 8,911, Total fund balances 10,286,026 10,630,169 2,831,995 1,903,475 Total liabilities, deferred inflows of resources and fund balances $ 13,569,972 $ 12,225,209 $ 3,006,625 $ 2,220,907 The notes to the financial statements are an integral part of this statement. 11

39 Surtax III Road Reconstruction Nonmajor Governmental Funds Total Governmental Funds $ 19,314,256 $ 38,125,370 $ 25,874,147 $ 111,349, ,496 1,352, , ,802-17,245 1,893, , , , ,739 49,739 19,992,058 38,125,370 26,382, ,522, ,887 2,936,949 1,828,079 8,494, , , , , , ,887 2,936,949 1,867,503 9,881, , , , , , , ,462 19,489,171 35,188,421 12,472,685 82,515, ,538,200 11,629, ,274, ,911,526 19,489,171 35,188,421 24,499, ,828,880 $ 19,992,058 $ 38,125,370 $ 26,382,626 $ 115,522,767 12

40 13

41 CITY OF NORTH PORT, FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2014 Fund balances - total governmental funds $ 104,828,880 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. Non-depreciable capital assets $ 19,083,055 Depreciable capital assets 226,240, ,323,552 Other assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. Prepaid bond insurance 115,167 Less accumulated amortization (7,342) 107,825 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds. Interest payable (461,876) Loans payable (4,843,703) Assessment bonds payable (38,989,628) Capital leases payable (238,549) Compensated absences payable (2,763,834) Other postemployment benefits payable (1,868,102) (49,165,692) Certain deferred inflows in governmental funds is susceptible to full accrual on the entity-wide statements. 812,545 Net pension asset existed for the excess contributions over the required annual contributions to the Police Officers' and Firefighters' Pension Funds. 1,474,174 Net position of governmental activities $ 303,381,284 The notes to the financial statements are an integral part of this statement. 14

42 CITY OF NORTH PORT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 General Fund Road and Drainage District Fire Rescue District Solid Waste District REVENUES: Taxes $ 11,288,018 $ 2,648,684 $ 244,009 $ - Permits, fees and special assessments 3,018,730-16,330 - Intergovernmental 6,048,613 1,741,243 32,478 - Charges for services 7,370,522 10,862,281 8,496,167 8,132,063 Fines and forfeiture 173, Investment income 57,592 36,702 9,061 20,647 Miscellaneous 366,505 37,194 38,151 10,737 Total revenues 28,323,606 15,326,104 8,836,196 8,163,447 EXPENDITURES: Current: General government 9,129, Public safety 18,288,751-7,171,758 - Physical environment - 3,418,980-6,041,182 Transportation - 6,941, Economic environment 338, Human services 298, Culture and recreation 986, Capital outlay 210,102 2,482,057-2,329,333 Debt service 41, ,916 Total expenditures 29,292,950 12,842,602 7,171,758 8,743,431 Excess (deficiency) of revenues over (under) expenditures (969,344) 2,483,502 1,664,438 (579,984) OTHER FINANCING SOURCES (USES): Proceeds from bonds Proceeds from loans Transfers in 604, Transfers out (67,000) (400,000) (447,000) (1,390,350) Insurance recoveries 13,807 9,493-76,534 Total other financing sources and (uses) 550,957 (390,507) (447,000) (1,313,816) Net change in fund balances (418,387) 2,092,995 1,217,438 (1,893,800) Fund balances - beginning 10,704,413 8,537,174 1,614,557 3,797,275 Fund balances - ending $ 10,286,026 $ 10,630,169 $ 2,831,995 $ 1,903,475 The notes to the financial statements are an integral part of this statement. 15

43 Surtax III Road Reconstruction Nonmajor Governmental Funds Total Governmental Funds $ 7,424,336 $ - $ - $ 21,605, ,438,646 8,473, ,900,000 9,722, ,311,903 39,172, , ,801 55,758 89,933 70, , , ,296 7,480,094 89,933 11,924,197 80,143, ,205,634 13,335,577 1,210,115-1,056,649 27,727, ,062 9,590, , ,195 38,906 8,109, , ,161 5,025-1, ,752 1,291,982 5,358,579 10,568,960 22,241, ,638,924 3,053,305 3,275,747 5,718,774 18,640,535 85,685,797 4,204,347 (5,628,841) (6,716,338) (5,542,220) - 40,742,230-40,742, ,843,703 4,843,703-75,032 3,219,650 3,898,832 (489,800) - (754,772) (3,548,922) , ,392 (489,800) 40,817,262 7,320,139 46,047,235 3,714,547 35,188, ,801 40,505,015 15,774,624-23,895,822 64,323,865 $ 19,489,171 $ 35,188,421 $ 24,499,623 $ 104,828,880 16

44 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, 2014 Net change in fund balances - total governmental funds $ 40,505,015 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 $ 22,241,013 Less current year depreciation (7,516,898) 14,724,115 The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, disposals, asset transfers to/from enterprise funds). (213,620) The decrease in the net pension asset is reported in the statement of activities, but does not provide current financial resources and therefore, is not reported as a revenue in the governmental funds. (51,618) 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. (111,645) The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of insurance 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. Assessment bonds proceeds (40,742,230) Loan proceeds (4,843,703) Lease principal payments 400,163 Bond principal payments 1,675,000 Prepaid bond insurance 115,167 Accrued interest (461,876) Amortization of bond premium 77,602 Amortization of prepaid bond insurance costs (7,342) (43,787,219) The decrease 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. 48,309 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. (176,245) Change in net position of governmental activities $ 10,937,092 The notes to the financial statements are an integral part of this statement. 17

45 CITY OF NORTH PORT, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUND SEPTEMBER 30, 2014 Business-type Activities - Enterprise Fund Water & Sewer Utilities ASSETS Current assets: Cash and investments $ 12,103,233 Accounts receivable (net of allowance for uncollectibles) 3,502,106 Due from other governments 299 Inventories 488,966 Total current assets 16,094,604 Noncurrent assets: Restricted assets: Cash and investments 5,585,077 Accounts receivable (net of allowance for uncollectibles) 56,162 Due from other governments 9,394 Capital assets: Land 948,266 Buildings 3,349,052 Infrastructure 142,026,510 Equipment 10,291,841 Construction in progress 7,171,125 Less: accumulated depreciation (40,528,224) Total noncurrent assets 128,909,203 Total assets 145,003,807 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on debt refundings 1,043,881 Total deferred outflows of resources 1,043,881 LIABILITIES Current liabilities: Accounts payable 756,212 Payable from restricted assets: Accounts payable 30,110 Customer deposits payable 43,388 Due to other funds 100,214 Loans payable 1,148,046 Revenue bonds payable 1,249,579 Interest payable 131,006 Accrued compensated absences 41,080 Total current liabilities 3,499,635 Noncurrent liabilities: Customer deposits payable 38,654 Loans payable 21,578,787 Revenue bonds payable 15,351,549 Accrued compensated absences 205,351 Other postemployment benefits payable 117,069 Total noncurrent liabilities 37,291,410 Total liabilities 40,791,045 NET POSITION Net investment in capital assets 84,974,490 Restricted for renewal and replacement requirements 915,779 Restricted for capital projects 4,622,702 Unrestricted 14,743,672 Total net position $ 105,256,643 The notes to the financial statements are an integral part of this statement. 18

46 CITY OF NORTH PORT, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Business-type Activities - Enterprise Fund Water & Sewer Utilities OPERATING REVENUES Charges for services: Water charges $ 8,840,116 Sewer charges 8,468,356 Miscellaneous 308,748 Total operating revenues 17,617,220 OPERATING EXPENSES General and administrative 3,444,951 Water treatment and distribution 4,271,235 Sewer collection and treatment 1,531,901 Field operations 3,086,147 Depreciation 3,528,524 Total operating expenses 15,862,758 Operating income 1,754,462 NONOPERATING REVENUES (EXPENSES) Investment income 56,352 Interest expense (1,390,032) Gain on asset disposals 3,304 Total nonoperating revenues (expenses) (1,330,376) Income before capital contributions and transfers 424,086 Capital contributions 1,899,485 Transfers out (349,910) Change in net position 1,973,661 NET POSITION - BEGINNING OF YEAR (RESTATED) 103,282,982 NET POSITION - END OF YEAR $ 105,256,643 The notes to the financial statements are an integral part of this statement. 19

47 CITY OF NORTH PORT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2014 Business-type Activities - Enterprise Fund Water & Sewer Utilities CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 17,815,339 Payments to vendors for goods and services (7,787,575) Payments to employees and benefit programs (4,015,145) Net cash provided by operating activities 6,012,619 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Cash transfers to other funds (349,910) Net cash used for noncapital financing activities (349,910) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (2,683,707) Proceeds from sale of capital assets 62,482 Capital grants 672,475 Principal paid on bonds and loans (2,234,757) Interest paid on bonds and loans (1,196,568) Proceeds from refunding bond 11,670,978 Amount paid to refunding bank (11,670,978) Special assessments 26,481 Impact fees received 995,680 Net cash used for capital and related financing activities (4,357,914) CASH FLOWS FROM INVESTING ACTIVITIES Investment income received 56,352 Net cash provided by investing activities 56,352 Net decrease in cash and cash equivalents 1,361,147 Cash and cash equivalents, October 1 16,327,163 Cash and cash equivalents, September 30 $ 17,688,310 Classified as: Current assets $ 12,103,233 Restricted assets 5,585,077 Total $ 17,688,310 The notes to the financial statements are an integral part of this statement. (Continued) 20

48 CITY OF NORTH PORT, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUND YEAR ENDED SEPTEMBER 30, 2014 Business-type Activities - Enterprise Fund Water & Sewer Utilities Reconciliation of operating income to net cash provided by operating activities: Operating income $ 1,754,462 Adjustments to reconcile operating income to net cash provided by operating activities: Prior year capital expense reclassed to operating in current year 127,483 Depreciation expense 3,528,524 Decrease in accounts receivable 207,210 Decrease in due from other governments 823 Decrease in inventories 235,013 Increase in accounts payable 141,732 Increase in due to other funds 16,313 Decrease in customer deposits payable (9,091) Decrease in compensated absences (3,266) Increase in benefits payable 1,608 Increase in other postemployment benefits payable 11,808 Total adjustments 4,258,157 Net cash provided by operating activities $ 6,012,619 NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Amortization of deferred amount on defeasance of debt $ 200,837 Capital asset contributions 611,747 The notes to the financial statements are an integral part of this statement. 21

49 CITY OF NORTH PORT, FLORIDA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS SEPTEMBER 30, 2014 PENSION TRUST FUNDS AGENCY FUNDS ASSETS Cash and equivalents $ 1,128,118 $ 12,398 Receivables: Contributions receivable 894,123 - Interest and dividends receivable 131,304 - Due from brokers 10,335 - Total receivables 1,035,762 - Investments, at fair market value: U.S. Government and agency securities 5,744,447 - Money market funds 947,042 - Mortgage/asset-backed securities 2,543,808 - Equity securities 40,413,700 - Corporate obligations 4,782,389 - Fixed income mutual funds 3,382,914 - Commingled real estate funds 5,248,398 - International equity securities 2,379,136 - International bond obligations 214,567 - Due from broker 15,810 - Municipal obligations 266,121 - Total investments 65,938,332 - Total assets 68,102,212 12,398 LIABILITIES Accounts payable and accrued expenses 139,140 - Due to other entities - 12,398 Total liabilities 139,140 12,398 NET POSITION HELD IN TRUST FOR PENSION BENEFITS $ 67,963,072 $ - The notes to the financial statements are an integral part of this statement. 22

50 CITY OF NORTH PORT, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 PENSION TRUST FUNDS ADDITIONS Contributions: Plan members $ 1,114,390 State of Florida 693,958 City of North Port 3,504,945 Total contributions 5,313,293 Investment income Net change in fair value of investments 4,450,683 Interest and dividends 1,267,604 Investment income 5,718,287 Less investment expenses (509,121) Net investment income 5,209,166 Total additions 10,522,459 DEDUCTIONS Benefits to participants 1,932,571 Share account distributions 34,668 Administrative expenses 134,373 Refund of participant contributions 224,765 Total deductions 2,326,377 NET INCREASE 8,196,082 NET POSITION - BEGINNING 59,766,990 NET POSITION - ENDING $ 67,963,072 The notes to the financial statements are an integral part of this statement. 23

51 CITY OF NORTH PORT, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2014 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. Blended Component Units: The financial statements also include three special districts, which are reported as blended component units. The City Commission is the governing board of the districts and meets regularly to approve the adoption of the annual budget and subsequent amendments, the issuance of debt and the execution of contracts. The financial transactions of these component units are merged in with similar transactions of the City as part of the primary government. Blended component units of the City of North Port include the Road and Drainage District, the Fire Rescue District and the Solid Waste District. 2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all 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. 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. 24

52 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 III capital projects fund is used to account for resources that are restricted for the acquisition and/or construction of specific capital projects. This fund represents the fifteen (15) year extension of the one cent sales surtax program. The road reconstruction capital projects fund is used to account for bond proceeds that are restricted for the reconstruction of various roads throughout the City. 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. 25

53 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. 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. 4. ASSETS, LIABILITIES, AND NET POSITION 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. 26

54 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 fair 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. 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. 27

55 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. 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. 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. c) Inventories Inventories are adjusted to annual counts and are valued at cost, using the first-in/first-out method. d) Restricted assets The balances of restricted asset accounts in the governmental activities column at September 30, 2014 are as follows: Governmental: Bond proceeds restricted for road rehabilitation $ 38,125,370 $ 38,125,370 28

56 The balances of restricted asset accounts in the business-type activities column at September 30, 2014 are as follows: Water and Sewer Enterprise: Customer deposits $ 82,042 Renewal and replacement funds 915,779 Capital project construction funds $ 4,587,256 5,585,077 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 $5,000 or more (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: f) Deferred outflows/inflows of resources Assets Years Buildings 40 Improvements 5-50 Furniture and fixtures 5-10 Equipment 7-30 Vehicles 5 In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that period. The City has one item that qualifies for reporting in this category, which is the deferred charges on debt refundings reported in the government-wide and proprietary fund statements of net position. A deferred charge on debt refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that period. The City has two items, which arises only under the modified accrual basis that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenue from two sources: grants and other receivables. These 29

57 amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. g) 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. h) Long-term obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums, discounts and insurance costs are deferred and amortized over the life of the bonds using the bonds outstanding method. Bonds payable are reported net of the applicable bond premium or discount. 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. i) Net position The government-wide and business-type fund financial statements utilize a net position presentation. Net position is presented in three components net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets this component of net position 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 of net position has 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 position that does not meet the definition of net investment in capital assets 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 position 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. 30

58 j) Fund balance 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. Projects that have been budgeted in prior fiscal years but are not complete are assigned the resources necessary to complete if not committed under contract. This amount would represent the portion of fund balance to be used in the subsequent year s budget or to accumulate resources for a future capital project. 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. 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. 31

59 The composition of restricted, committed and assigned fund balances at September 30, 2014 is following: Road and Drainage District Major Funds Fire Rescue District Solid Waste District Governmental Fund Balance Components: General Fund Nonspendable: Prepaid items $ 8,724 $ - $ - $ - Deposits Inventories Total nonspendable 8, Restricted: Debt service Capital projects Enabling legislation - dependent districts - 10,630,169 2,831,995 1,903,475 Law enforcement Building Department construction standards enforcement Impact fees Environmental management Total restricted - 10,630,169 2,831,995 1,903,475 Committed: Capital projects 18, Building inspectors' education Tree replacement Economic development Parks and recreation General government Fleet maintenance Other - contractual 73, Total committed 91, Assigned: Capital projects 171, Subsequent year expenditures 922, Other purposes 179, Total assigned 1,274, Unassigned 8,911, Total fund balances $ 10,286,026 $ 10,630,169 $ 2,831,995 $ 1,903,475 32

60 Major Funds Road Reconstruction Other Governmental Funds Total Governmental Funds Governmental Fund Balance Components: Surtax III Nonspendable: Prepaid items $ - $ - $ - $ 8,724 Deposits , ,999 Inventories ,739 49,739 Total nonspendable , ,462 Restricted: Debt service , ,255 Capital projects 19,489,171 35,188,421 3,190,262 57,867,854 Enabling legislation - dependent districts ,365,639 Law enforcement ,896 92,896 Building Department construction standards enforcement - - 1,340,888 1,340,888 Impact fees - - 6,966,241 6,966,241 Environmental management , ,143 Total restricted 19,489,171 35,188,421 12,472,685 82,515,916 Committed: Capital projects - - 9,833,142 9,851,182 Building inspectors' education ,964 63,964 Tree replacement , ,466 Economic development ,000 79,000 Parks and recreation , ,260 General government , ,008 Fleet maintenance , ,360 Other - contractual ,625 Total committed ,538,200 11,629,865 Assigned: Capital projects ,714 Subsequent year expenditures ,905 Other purposes ,492 Total assigned ,274,111 Unassigned ,911,526 Total fund balances $ 19,489,171 $ 35,188,421 $ 24,499,623 $ 104,828, 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. 33

61 NOTE B STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY 1. BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: 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. Public hearings are conducted at City Hall to obtain taxpayer comments during September. On or before September 30th, the budget is legally enacted for funds through passage of an ordinance. The City Commission must approve any revisions altering the budgeted amounts of total expenditures of any fund. 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 $190,695 for the General Fund, $3,263,728 for the Road and Drainage District, $949,659 for the Surtax III Fund, $6,626,712 for the Road Reconstruction Fund, $4,439,600 for nonmajor funds, and $1,044,431 for the Water and Sewer Utilities Fund. 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 General Fund expenditure budget increased $277,600 for the short-term operations of Warm Mineral Springs and $343,909 for the reappropriation of various projects. The Road & Drainage District Fund expenditure budget was increased $4,714,827 for reappropriations of various projects that were budgeted in the previous fiscal year. This included land acquisitions, intersection improvements, water control structure and road rehabilitation/maintenance projects and sidewalk construction. The Solid Waste District Fund expenditure budget was increased by $2,278,443 for reappropriations of various trucks and equipment that were budgeted in the previous fiscal year. The Escheated Lots Fund Land/Future Projects expenditure budget was increased $3,000,000 for the purchase of Warm Mineral Springs from Sarasota County, Florida. The Transportation Impact Fee Fund expenditure budget was increased $10,739,740 for reappropriations of various projects that were budgeted in the previous fiscal year. The primary project included was $9,763,963 for the widening of Sumter Boulevard from Heron Creek Boulevard to City Center Boulevard. The Surtax II Fund expenditure budget was increased $2,505,000 for reappropriations of various projects that were budgeted in the previous fiscal year. This primarily included $1,750,000 for fire station construction and $755,000 for a fire and police training tower. 34

62 The Surtax III Fund expenditure budget was increased $6,247,316 for reappropriations of various projects that were budgeted in the previous fiscal year. This included $291,605 for Atwater Park improvements, $480,110 for police vehicles, $855,840 for the communication equipment upgrade, $390,117 for the Blueways project, $350,108 for water transmission service improvements, $213,734 for sidewalk construction, $1,753,064 for the extension of water and sewer to residents throughout the City, $459,618 for the Myakkahatchee Creek Greenway project, $29,064 for Pine Park playground equipment, $216,084 for solid waste trucks and equipment, $135,916 for the beautification of Biscayne Boulevard, $225,260 for bridge repair and rehabilitation, $337,051 for road rehabilitation and $509,745 for land acquisitions. All other supplementary budgetary appropriations in the major funds were not material in relation to the original budget. 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, 2014, City s book balance of cash was $12,779,572 and the bank balance was $12,784,096. 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. Interest Rate Risk As of September 30, 2014, the City had the following investments and maturities: Investment Type Fair Value Less than U.S. Treasuries $ 73,435,834 $ 3,553,910 $ 69,881,924 Federal Instrumentalities 16,458,589 3,322,030 13,136,559 Municipal bonds 4,178, ,002 3,902,824 Commercial paper 10,522,305 6,023,336 4,498,969 SBA - LGIP 452, ,862 - Money Markets 11,215,654 11,215,654 - $ 116,264,070 $ 24,843,794 $ 91,420,276 Following is a reconciliation of the investment schedule above to cash and investments reported on the entitywide statement of net position: 35

63 Reconcilement with Statement of Net Position: Cash and investments $ 85,326,897 Cash and investments - restricted 43,710, ,037,344 Add agency funds' cash 12,398 Less cash book balance (12,779,572) Less cash on hand (6,100) Fair value total $ 116,264,070 In compliance with the City s investment policy, as of September 30, 2014, 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: S&P Credit Percent of Investment Type Rating Portfolio U.S. Treasury Notes AA+ 63% Federal Instrumentalities: Federal National Mortgage Association AA+ 4% Federal Home Loan Mortgage Corporation AA+ 3% Federal Home Loan Bank AA+ 7% Commercial paper A-1 9% Municipal bonds AA 4% Money Markets: PFM Prime Series - Institutional Class Shares AAAm 10% 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

64 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 $ 75,679 $ - $ - $ - Franchise fees 586, Accounts 2,691,238 8,100 9,980 43,911 Intergovernmental 543, ,927 11, Special assessments Gross receivables 3,896, ,027 21,977 43,961 Less: allowance for uncollectibles (2,065,160) Net total receivables $ 1,831,235 $ 651,027 $ 21,977 $ 43,961 Water & Sewer Nonmajor Total (all Surtax III Utilities Funds columns) Receivables: Taxes $ - $ - $ - $ 75,679 Franchise fees ,409 Accounts - 4,115,989 2,496 6,871,714 Intergovernmental 677,802 9,693 17,245 1,902,783 Special assessments - 175, ,666 Gross receivables 677,802 4,301,348 19,741 9,612,251 Less: allowance for uncollectibles - (733,387) - (2,798,547) Net total receivables $ 677,802 $ 3,567,961 $ 19,741 $ 6,813,704 37

65 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, 2014 was $ 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 2014 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

66 NOTE F CAPITAL ASSETS Capital asset activity for the year ended September 30, 2014, was as follows: Primary Government Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets not being depreciated: Land $ 15,698,622 $ 2,062,921 $ 17,818 $ 17,743,725 Construction in progress 2,284,434 1,089,116 2,034,220 1,339,330 Total capital assets not being depreciated 17,983,056 3,152,037 2,052,038 19,083,055 Other capital assets: Buildings 48,536, , ,626 49,343,203 Improvements other than buildings 215,745,609 15,264, ,010,264 Equipment 31,245,360 5,067,820 2,856,241 33,456,939 Total other capital assets 295,527,559 21,294,714 3,011, ,810,406 Less accumulated depreciation for: Buildings 8,493,398 1,328,942 98,552 9,723,788 Improvements other than buildings 53,593,314 4,084,094-57,677,408 Equipment 20,610,846 2,103,861 2,545,994 20,168,713 Total accumulated depreciation 82,697,558 7,516,897 2,644,546 87,569,909 Governmental activities capital assets $ 230,813,057 $ 16,929,854 $ 2,419,359 $ 245,323,552 Business-type activities: Capital assets not being depreciated: Land $ 948,266 $ - $ - $ 948,266 Construction in progress 17,315, ,104 10,967,267 7,171,125 Total capital assets not being depreciated 18,263, ,104 10,967,267 8,119,391 Other capital assets: Buildings 1,500,717 1,865,827 17,492 3,349,052 Improvements other than buildings 135,766,040 6,433, , ,026,510 Equipment 6,057,987 4,644, ,865 10,291,841 Total other capital assets 143,324,744 12,944, , ,667,403 Less accumulated depreciation for: Buildings 1,118,309 42,294 14,272 1,146,331 Improvements other than buildings 31,828,610 3,062, ,284 34,766,452 Equipment 4,594, , ,652 4,615,441 Total accumulated depreciation 37,541,908 3,528, ,208 40,528,224 Business-type activities capital assets $ 124,046,390 $ 10,238,621 $ 11,026,441 $ 123,258,570 39

67 Depreciation expense was charged to functions as follows: Governmental activities: General government $ 808,057 Public safety 816,575 Physical environment 2,213,397 Transportation 2,920,480 Human services 72,838 Culture and recreation 685,551 Total governmental activities depreciation expense $ 7,516,898 Business-type activities Water and sewer utility $ 3,528,524 Total business-type activities depreciation expense $ 3,528,524 Commitments Uncompleted commitments at September 30, 2014 consist of the following: Remaining Project Spent-to-Date Commitment City-wide website design $ 9,018 $ 18,040 Roads and drainage construction 782,435 10,919,755 Fire station construction 85,654 - Parks & recreation construction 337,205 95,874 Public safety - police department replacement vehicles 21,693 - Water and sewer operations construction 7,274, ,576 Total $ 8,510,456 $ 12,019,245 NOTE G INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances at September 30, 2014 is as follows: Due to/from other funds: Receivable Fund Payable Fund Amount General Non-major governmental $ 39,424 Road and Drainage District 109,320 Fire Rescue District 124,020 Solid Waste District 42,696 Water and Sewer Utility $ 100, ,674 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. 40

68 Interfund transfers: Transfers out: Road and General Drainage Fire Rescue Solid Waste Transfers in: Fund District District District General Fund $ - $ - $ - $ - Road Reconstruction Other Governmental Funds 67, , ,000 1,390,350 Total $ 67,000 $ 400,000 $ 447,000 $ 1,390,350 Transfers out: Other Governmental Water & Sewer Transfers in: Surtax III Funds Utilities Total General Fund $ - $ 254,240 $ 349,910 $ 604,150 Road Reconstruction - 75,032 - $ 75,032 Other Governmental Funds 489, ,500-3,219,650 Total $ 489,800 $ 754,772 $ 349,910 $ 3,898,832 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 $ 8,384,076 Less: accumulated depreciation (6,262,020) Total $ 2,122,056 41

69 The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2014 were as follows: Governmental Activities Year Ended September 30, , , ,465 Total minimum lease payments 244,492 Less: amounts representing interest (5,943) Present value of minimum lease payments $ 238,549 NOTE I LONG-TERM LIABILITIES Long-term Liability Activity Long-term liability activity for the year ended September 30, 2014, was as follows: Amounts Beginning Ending Due within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: Transportation improvement assessment bonds $ - $ 39,525,000 $ (1,675,000) $ 37,850,000 $ 855,000 State revolving loans - 4,843,703-4,843,703 1,804,695 Capital leases 638,712 - (400,163) 238, ,690 OPEB liability 1,691, ,123 (73,878) 1,868,102 - Compensated absences 2,812,143 4,056,533 (4,104,842) 2,763, ,731 Governmental activities long-term liabilities $ 5,142,712 $ 48,675,359 $ (6,253,883) $ 47,564,188 $ 3,278,116 Business-type activities: Bonds payable: Revenue bonds $ 17,716,761 $ 11,670,000 $ (12,785,633) $ 16,601,128 $ 1,249,579 Less deferred amount: On refunding (1,244,718) (619,590) 820,427 (1,043,881) - Total bonds payable 16,472,043 11,050,410 (11,965,206) 15,557,247 1,249,579 State revolving loans 23,846,934 - (1,120,101) 22,726,833 1,148,046 OPEB liability 105,261 16,069 (4,261) 117,069 - Compensated absences 249, ,953 (412,219) 246,431 41,080 Deposits payable 91,133 37,777 (46,868) 82,042 43,388 Business-type activities long-term liabilities $ 40,765,068 $ 11,513,209 $ (13,548,655) $ 38,729,622 $ 2,482,093 Payments on capital lease balances that pertain to the City s governmental activities will be liquidated by the following funds: General Fund $120,278; Solid Waste District $118,

70 Payments on OPEB liability balances that pertain to the City s governmental activities will be liquidated by the following funds: General Fund $1,075,540; Road and Drainage District $216,136; Fire Rescue District $455,203; Solid Waste District $57,919; Building $23,521; Fleet Maintenance $39,786. Payments on compensated absences balances that pertain to the City s governmental activities will be liquidated by the following funds: General Fund $1,758,132; Road and Drainage District $297,228; Fire Rescue District $456,790; Solid Waste District $98,218; Building $92,205; Fleet Maintenance $61,261. Unused Loan Commitment In June of 2012, a state-funded state infrastructure bank (SIB) loan agreement between the City of North Port and the State of Florida Department of Transportation was signed for an estimated principal amount of $10,000,000 to construct the widening of Sumter Boulevard from a two lane rural road to a four lane raised divided median urban road for approximately 1 2/3 miles, together with an access road, multi-use trails, lighting, irrigation and landscaping. The roadway is a major evacuation route for the region. The financing rate is 2.5% per annum. The specific revenues pledged as security for repayment of the loan include the Transportation Impact Fee Special Revenue Fund reserve and the Surtax III Capital Projects Fund reserve. As of September 30, 2014 loan disbursements made to the City by the Department of Transportation totaled $4,843,703. Refunding Losses, Prepaid Bond Insurance and Bond Premium 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 $42,450 for the year ended September 30, 2014, and is included as a component of interest expense. Unamortized refunding loss of $381,842 is recorded as deferred outflows on the statements of net position. A refunding loss of $820,427 incurred in conjunction with the issuance of the Utility System Refunding Revenue Bonds, Series 2014, is being amortized over the life of the bonds (9 years) using the bonds outstanding method. Amortization of the refunding loss on the Series 2014 bonds was $158,388 for the year ended September 30, 2014, and is included as a component of interest expense. Unamortized refunding loss of $662,039 is recorded as deferred outflows on the statements of net position. Prepaid bond insurance costs of $115,167 incurred in conjunction with the issuance of the Transportation Improvement Assessment Bonds, Series 2013, are being amortized over the life of the bonds (26 years) using the bonds outstanding method. Amortization of insurance costs on the Series 2013 bonds was $7,342 for the year ended September 30, The unamortized balance at September 30, 2014 is $107,825. A bond premium of $1,217,230 incurred in conjunction with the issuance of the Transportation Improvement Assessment Bonds, Series 2013, is being amortized over the life of the bonds (26 years) using the bonds outstanding method. Amortization of the bond premium on the Series 2013 bonds was $77,602 for the year ended September 30, 2014, and is included as a component of interest expense. The unamortized balance of $1,139,628 is netted against bonds payable on the statements of net position. Refunding Revenue Notes Utility System Refunding Revenue Notes, Series 2014A and Series 2014B, dated April 15, 2014 were issued in the amount of $10,000,000 and $1,670,000, respectively, for the purposes of providing funds to currently refund the City s outstanding Utility System Refunding Revenue Bond, Series 2010 maturing on October 1, 43

71 2014 through October 1, The Series 2014 Notes are expected to be repaid over a period of nine years. At a true interest cost of 2.15% for 2014A and 2.1% for 2014B, total interest paid over the life of the Series 2014 notes will be $1,160,562. The expected source of repayment is the pledged funds (water and sewer revenues). The Series 2014 notes 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 2010 bonds to reduce its total debt service payments over the next nine years by $622,257 and to obtain an economic gain (difference between the present value of the debt service payments of the old and new debt) of $342,541. 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 twenty-four months and meets 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. Debt Maturity: Debt service requirements at September 30, 2014 were as follows: Governmental-type Activities - Assessment Bonds Transportation Improvement Assessment Bonds Year Ended September 30 Principal Interest ,000 1,781, ,000 1,755, ,000 1,720, ,000 1,683, ,000 1,645, ,665,000 7,522, ,165,000 6,024, ,005,000 4,183, ,420,000 1,768,750 Total $ 37,850,000 $ 28,085,038 Governmental-type Activities - State Infrastructure Bank Loan Transportation Year Ended September 30 Principal Interest ,804,695 16, ,711, , ,754,057 67, ,080 23,352 Total $ 6,204,107 $ 217,105 44

72 Business-type Activities - Revenue Bonds Water and Sewer Utility Year Ended September 30 Principal Interest ,249, , ,276, , ,305, , ,492, , ,714, , ,339,243 1,109, ,630, , ,318 24,142 Total $ 16,601,128 $ 3,660,804 Business-type Activities - State Revolving Loans Water and Sewer Utility Year Ended September 30 Principal Interest ,148, , ,179, , ,212, , ,245, , ,280, , ,952,719 1,892, ,432, , ,274,994 64,492 Total $ 22,726,833 $ 5,623,202 45

73 Description of Debt: Governmental Business-type $39,525,000 Series 2013 Transportation Improvement Assessment Bonds, due in annual installments of $855,000 - $2,510,000 beginning July 1, 2014 through July 1, 2039; interest between 1.00% %; secured by a pledge of non-ad valorem capital assessments. Proceeds from the bonds provided financing for the reconstruction and rehabilitation of approximately 266 miles of existing roadways within the City. The total pledged revenue at 9/30/14, which equals remaining principal and interest, is $65,935,038. Principal and interest paid for the current year and total capital assessments were $2,638,924 and $3,073,299, respectively. $ 37,850,000 $ - $4,843,703 State Infrastructure Bank Loan, due in annual installments of $1,821,260 beginning October 1, 2014 until loan is paid in full; interest at 2.5%; secured by transportation impact fees and the discretionary sales surtax revenues. Proceeds from the loan provided financing for the Sumter Boulevard widening: Heron Creek Boulevard to City Center Boulevard. The pledged revenue at 9/30/14, which equals remaining principal and interest, is $4,860,268. Principal and interest paid for the current year and total transportation impact fees and sales surtax revenue were $0 and $7,424,336, respectively. 4,843,703 - $6,211,908 Series 2005 Utility System Refunding Revenue Bonds, due in 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 9/30/14, which equals remaining principal and interest, is $8,638,679. Principal and interest paid for the current year and total net revenues were $269,072 and $5,339,338, respectively. - 6,023,128 $11,670,000 Series 2014A ($10,000,000) and 2014B ($1,670,000) Utility System Refunding Revenue Notes, due in annual installments of $1,092,000 - $1,423,000 beginning September 30, 2014 through September 30, 2022; interest at 2.15% for A and 2.1% for B; secured by a pledge of the net revenues of the system operations and impact fees. Proceeds from the bonds refunded the 2010 bonds, which were issued to refund the remaining 2000 bonds (issued to provide financing for improvements to the wastewater treatment system) and the 2008 refundingbonds, 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 9/30/14, which equals remaining principal and interest, is $11,623,252. Principal and interest paid for the current year and total net revenues were $1,207,310 and $5,339,338, respectively. - 10,578,000 $23,400,800 State Revolving Fund Loan, due in semi-annual installments of $447,888 - $768,979 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 9/30/14, which equals remaining principal and interest, is $25,734,343. Principal and interest paid for the current year and total net revenues were $1,559,657 and $5,339,338, respectively. - 20,467,313 $2,579,567 State Revolving Fund Loan, due in semi-annual installments of $78,212 - $162,860 beginning July 15, 2013 through July 15, 2027; interest at 2.32%; 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 9/30/14, which equals remaining principal and interest, is $2,615,692. Principal and interest paid for the current year and total net revenues were $209,402 and $5,339,338, respectively. - 2,259,520 TOTAL $ 42,693,703 $ 39,327,961 46

74 Other Long Term Debt Information Total interest expense for the year ended September 30, 2014 was $1,362,416 in the governmental activities and $1,390,032 in the business-type activities. 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, 2014, 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. For the fiscal year ended September 30, 2014, the North Port Police Officers and the North Port Firefighters Pension Plans have implemented Governmental Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB Statement No. 25. This Statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures. 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. 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 Average Final Compensation Vested with six years of service and age 62; or 30 years of service, regardless of age. Vested with six years of special risk service and age 55; or 25 years of special risk service and age 52; or 30 years of any creditable service before age 62. Average of the five highest paid years preceding retirement Vested with eight years of service and age 65; or 33 years of service, regardless of age. Vested with eight years of special risk service and age 60; or 30 years of special risk service before age 60; or 33 years of any creditable service before age 65. Average of the eight highest paid years preceding retirement Vesting Six years of credited service Eight years of credited service 47

75 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. Required Contributions: FY ending 9/30/14 FY ending 9/30/13 FY ending 9/30/12 Payroll for employees covered $ 16,516,607 $ 16,790,596 $ 17,004,593 Total payroll $ 29,218,901 $ 29,202,279 $ 29,685,423 Actuarially determined (actual) contributions $ 1,344,799 $ 1,016,872 $ 876,588 As a percentage of covered wages 8.14% 6.06% 5.16% 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 are covered by the City of North Port, Florida Police Officers Pension Local Option Trust Fund (the Plan). The Plan is a single-employer defined benefit pension plan that was established December 14, 1979, pursuant to Florida Statutes, Chapter 185 and the City of North Port (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. 48

76 As of October 1, 2014, the date of the latest actuarial valuation, membership consisted of: Retirees, beneficiaries and disabled participants currently receiving benefits 26 Terminated employees entitled to benefits, but not yet receiving them 17 Active plan participants: Vested 29 Non-vested 68 Total 140 The City s total payroll costs for police officer personnel covered by the Plan for the year ended September 30, 2014 was $6,605,273. 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 hired prior to May 27, 2014 would receive a monthly retirement benefit of 3.50% of average final compensation, for each year of credited service, plus a $165 per month benefit supplement. Employees hired after May 27, 2014 would receive a monthly retirement benefit of 3.15% of average final compensation, for each year of credited service, plus a $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 compensation multiplied by the total years of credited service with a minimum amount of 60% of his salary at the time of the disablement. Additionally, if determined by the board that the duty-related disability was caused by an intended act of violence towards an officer, then the minimum compensation is 80% of his salary at the time of the disablement. The monthly pension benefit of an off duty-related disability, with 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 their salary 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, with 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 member 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. 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. Members electing the 49

77 DROP receive their normal retirement calculated as of the DROP date for a period equal to at least 12 but no more than 36 months. A lump sum payment, subject to rollover provisions, is made at the termination of employment. Members have the option to elect interest to be credited to their DROP account balance at 6.5% per annum or receive the same rate of return experienced by the Plan s investments at each quarter during the year. Each member has the opportunity to switch his option only once. There were no members in the DROP at September 30, Early retirement options are available for members who are age 45 and have ten years of credited service. For members hired prior to May 12, 2014, the monthly pension benefit calculated as of the date of early retirement is reduced by 3% per year for each year prior to normal retirement and the member has 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. For members hired after May 12, 2014, the monthly pension benefit calculated as of the date of early retirement is reduced by 3% per year by which the commencement of benefits proceeds the normal retirement date. 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. FINANCIAL STATEMENT PRESENTATION Effective in 2014, the Plan is subject to GASB Statement No. 67 and requires additional supplemental information and changes to the presentation of the financial statements. In accordance with this statement, the Plan s statements reflect only liabilities that are currently due while those not currently due are taken as a component of net position. This statement also requires a schedule of changes in net pension liability and related ratios, a schedule of actuarially determined contributions and a schedule of investment returns included in the required supplemental information to the financial statements. CASH AND CASH EQUIVALENTS The Plan recognizes mutual funds that are invested in money market funds as cash equivalents for financial reporting purposes. METHOD USED TO VALUE INVESTMENTS Investments are reported at fair value in accordance with GASB Statement No. 50. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national exchange are valued at the last reported sales price at current exchanges rates. Fair value of other securities is determined by the mean of the most recent bid and asked prices as obtained from dealers that make markets in such securities. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan s Board of Trustees, with the assistance of a valuation service. 50

78 NEW ACCOUNTING PRONOUNCEMENTS In June 2012, the Governmental Accounting Standards Board (GASB) approved GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This GASB statement significantly changes current pension accounting and reporting standards, especially the accounting and reporting standards for defined benefit plans. GASB Statement 68 is effective for fiscal years beginning after June 15, These financial statements have not been affected by the GASB Statement 68 for the year ended September 30, Under existing guidance, the measure of pension liability is calculated as the accumulated difference between the employer s annual pension costs and the employer s actual contributions to the Plan. The new standard expands the focus on the total pension liability rather than the current year cost of funding and requires net pension liability to be measured as the portion of the present value of benefit payments less the plan s fiduciary net position. Under the new standard, the financial statement liability is measured as the unfunded pension obligation, which is calculated as the total pension liability minus the fair value of the assets available for benefits measured at a specific date. The pension expense will be calculated as the change in the pension liability, with deferred recognition provided for certain items. Additionally, the new standard requires additional information to be provided on the face of the financial statements, in the footnotes and in the required supplementary schedules. The impact to the Plan resulting from this new standard is undeterminable as of the date of these financial statements. Funding Policy and Contributions CONTRIBUTIONS AND CONTRIBUTIONS RECEIVABLE Plan members are required to contribute 8% of their annual covered salary. The payments are deducted from the members 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 the greater of an actuarially determined employer contribution based on a percentage of covered payroll or the minimum percentage of 18% as specified by City ordinance. Administrative costs of the Plan are financed through investment earnings. In addition, the Plan receives an annual contribution of casualty insurance premium tax monies from the State of Florida pursuant to Chapter 185, Florida Statutes (the state contribution). The City recognizes these on-behalf payments from the State as revenue and personnel expenditures in the City s General Fund before they are recorded as contributions in the Police Officers Pension Fund. The actuarially determined employer contribution may be reduced by the amount of the State contribution determined to be frozen, as specified in the actuarial valuation. For the year ended September 30, 2014, that amount was $179,229. The annual required contribution for the year ended September 30, 2014, was based on an actuarial valuation conducted as of October 1, 2013, and was adjusted for the frozen state contribution as follows: October 1, 2013 Original Valuation Total required contribution $ 2,979,671 Expected member contributions (546,581) Required employer and state contributions 2,433,090 State contribution (179,229) Required net city contributions 2,253,861 Actual city contributions (2,254,752) Excess* $ (891) 51

79 *The total amount contributed to the Plan from the City and State for the year ended September 30, 2014 was $2,433,981, made up of City and State contributions of $2,254,752 and $179,229, respectively. The total required contribution for the year ended September 30, 2014 was $2,433,090. The percentage contributed to the Plan from the City and State was 100% of the annual required contribution. The total required contributions for the year ended September 30, 2014, as determined by the actuarial valuation as of October 1, 2014, was 37.00% 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 City contributed $2,254,752 (34.14% of covered payroll); the State of Florida contributed $179,229 (2.71% of covered payroll); and the employees contributed $528,422 (8.00% of covered payroll). In addition, $18,159 (0.27% of covered payroll) was received for service buy-backs from members. City contributions receivable as of September 30, 2014 totaled $564,664. The contributions receivable was collected in full by the Plan in October, Therefore, Plan management has determined that no allowance for doubtful accounts is necessary as of September 30, Actual State contributions received during 2014 totaled $306,642. Based on Chapter 185 of the Florida Statutes, the actuary has determined that only the frozen amount of $179,229 is allowed to be credited against required contributions for the year ended September 30, The actual State contributions received in excess of the frozen amount must be reserved by the Plan to provide extra benefits to the members. For September 30, 2014, this amount to be used to provide future benefits totaled $127,413. The actuarially determined contributions from the City and the State totaled $2,433,981 for the year ended September 30, The schedule of employer contributions, presented as required supplemental information following the notes to the financial statements, presents multiyear trend information of contributions received. Investments The Plan has adopted an investment policy pursuant to Chapter 185, Florida Statutes that establishes permitted investments, asset allocations, issuer limits, credit rating requirements, and maturity limits to protect the Plan s cash and investment assets. 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. As of September 30, 2014, the Plan had the following investments and maturities: Fair Less Than Years Years More Than Investment Type Market 1 Year Years U.S. Government securities $ 3,325,052 $ 350,001 $ 2,583,963 $ 391,088 $ - U.S. Government agency securities 897, , ,407 Equities 18,080,324 18,080, Corporate and foreign bonds 2,633, , ,249 1,575,940 - Fixed income mutual funds 1,366,786 1,366, Due from broker 15,810 15, Commingled real estate funds 2,267,260 2,267, Total fair value $ 28,586,041 $ 22,192,349 $ 3,529,212 $ 2,004,073 $ 860,407 52

80 The net realized and unrealized gains (losses) on investments by class for the year ended September 30, 2014 are as follows: U.S. Government securities $ (24,601) U.S. Government agency securities 7,549 Equities 118,493 Corporate and foreign bonds 1,596,145 Fixed income mutual funds 30,085 Commingled real estate funds 141,854 Net realized and unrealized gain on investments $ 1,869,525 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. 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 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. Management invests with custodians it determines to have an acceptable custodial credit risk. Credit risk: Credit 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; and (6) 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. Of the investments the Plan holds, $3,344,720 of U.S. Government securities are rated Aaa by Moody s and AA+ by Standard and Poor s; $2,615,598 of corporate and foreign bonds are rated Aaa to Baa2 by Moody s and AAA to A- by Standard and Poor s; $863,474 of U.S. government agency, $1,402,308 of fixed income mutual funds, $14,940,188 of equities and $1,835,757 of commingled real estate funds 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 53

81 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, 2014, are as follows: Cost Market Value % of Market U.S. Government securities $ 3,344,720 $ 3,325, % U.S. Government agency securities 863, , % Equities 14,940,188 18,080, % Corporate and foreign bonds 2,615,598 2,633, % Fixed income mutual funds 1,402,308 1,366, % Due from broker 15,810 15, % Commingled real estate funds* 1,835,757 2,267, % Total Investments $ 25,017,855 $ 28,586, % *The market value of the commingled real estate funds is the only investment that exceeds 5% or more of net position held in trust for pension benefits from a single issuer at September 30, 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 position value, liquidity position, results of operations and financial condition. 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. Foreign Currency Risk: The Board of Trustees retains outside investment managers to manage investment portfolios. The Board approves and provides investment managers with the Plan s written investment policy. The Plan s investment policy states that investments in securities issued by foreign governments or corporations domiciled outside of the United States shall not exceed 25% of the market value of Plan assets. The investment policy specifically prohibits certain investments including interest rate swaps, limited partnerships of any kind, venture capital and futures contracts. The investment policy also prohibits trading on margin and short selling. Funding Status and Progress The amounts shown below as the Actuarial Accrued Liability (AAL) are a measure intended to help users assess a pension fund s funded status on a going-concern basis and the progress being made toward accumulating the assets needed to pay benefits as due. Allocation of the actuarial present value of projected benefits between past and future service was based on service using the individual entry-age actuarial cost method. Assumptions, including projected pay increases, were the same as used to determine the Plan s level percent of payroll annual required contribution between entry-age and assumed exit age. Entry-age was established by subtracting credited service from current age on the valuation date. 54

82 The funded status as of September 30, 2014 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) 10/1/2014 $ 28,318,540 $ 33,939,241 $ 5,620, % $ 6,605, % The schedule of funding progress, presented as required supplemental information following the notes to the financial statements, presents multiyear trend information about whether the actuarial values of Plan assets are increasing or decreasing over time relative to the AALs for benefits. As of September 30, 2014, the total actuarial present value of accrued benefits consisted of the following: Vested accrued benefits: Inactive $ 12,854,343 Active 8,729,394 Member contributions 3,890,449 Total vested accrued benefits 25,474,186 Non-vested accrued benefits 3,377,238 Total actuarial present value of accrued benefits $ 28,851,424 During the year ended September 30, 2014, the Plan experienced a net change of $5,419,761 in the present value of accrued benefits, which included an increase of $4,920,482 attributable to new accrued benefits and a net increase of $499,279 attributable to benefits paid and interest earned. The change in the present value of accrued benefits was not impacted by changes in actuarial assumptions or Plan amendments. 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 City of North Port has funded the actuarially determined required contributions for all years from October 1, 1987, through the transition date, October 1, 1997; thus, the net pension obligation (NPO) on October 1, 1997, was $0. The development of the NPO (asset) to date is as follows: 9/30/2012 9/30/2013 9/30/2014 Actuarially determined contribution (A) $ 2,131,475 $ 2,384,178 $ 2,429,885 Interest on NPO (64,635) (62,493) (58,533) Adjustment to (A) 91,414 88,384 84,612 Annual pension cost 2,158,254 2,410,069 2,455,964 Contributions made 2,131,475 2,384,178 2,429,885 Increase (decrease) in NPO 26,779 25,891 26,079 NPO beginning of year (807,939) (781,160) (755,269) NPO end of year $ (781,160) $ (755,269) $ (729,190) 55

83 Three-year trend information is as follows: Tax Status Annual Percentage Year Pension Cost of APC Net Pension Ending (APC) Contributed Obligation 9/30/14 $ 2,455,964 99% $ (729,190) 9/30/13 2,410,069 99% (755,269) 9/30/12 2,158,254 99% (781,160) The Plan is administered by a Board of Trustees that act as the named fiduciary and administrator of the Plan as defined by Florida law. The Board of Trustees believes that the Plan is currently being operated in compliance with the applicable requirements of a qualified plan under Internal Revenue Code and as a result no income tax expense has been recorded. Risk and Uncertainties The Plan invests in various investment securities which are exposed to various risks such as interest rate, market, credit and foreign currency risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and those changes could materially affect the amounts reported in the statements of plan net position. Plan contributions are made and the actuarial present value of accumulated Plan benefits are reported based on certain assumptions pertaining to interest rates, inflation rates and employee demographics, all of which are subject to change. Due to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that changes in these estimates and assumptions in the near term would be material to the financial statements. Subsequent Events Management of the Plan has evaluated all subsequent events through March 10, 2015, the date the financial statements were available to be issued. No material subsequent events occurred which would have a material impact on the Plan s financial statements. Location of Six Years of Historical Trend Information Six years of 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. 56

84 Significant actuarial assumptions used in the actuarial valuation as of October 1, 2013 are as follows: Valuation date October 1, 2013 Actuarial cost method Entry age normal Remaining amortization period 28 years as of 10/1/13 Amortization method Level percentage of payroll - closed Asset valuation method 4 year smooth Actuarial assumptions: Investment rate of return 7.75% Post retirement COLA 0.0% Projected salary increases 2.0%-17.0% Inflation rate 3.0% MUNICIPAL FIREFIGHTERS PENSION - LOCAL OPTION TRUST FUND Plan Description and Contribution Information PLAN DESCRIPTION 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 Benefit provisions are established and may be amended by the City Commission. The Plan provides retirement, death and disability benefits for its members. A member may retire with normal benefits after the earlier of age 55 with 10 years of credited service or age 52 with 25 years of credited service. Reduced early retirement benefits are available once a member reaches age 50 and accumulates 10 years of credited service. Normal retirement benefits are 3.5% (3.0% for members hired on or after October 12, 2012) of the member s average final compensation times credited service years. Early retirement benefits are the same as normal retirement benefits, reduced by 3.0% for each year by which the commencement of benefits precedes the normal retirement date. Average final compensation for purposes of calculating benefits is the average annual salary for the highest five years of the last ten years of credited service. Salary means the total compensation for services rendered to the City as a firefighter reportable on the member s W-2 form plus all tax deferred or tax-sheltered items of income derived from elective employee payroll deduction or salary reduction. Effective July 5, 2012, salary shall include payment for up to 300 hours of overtime per fiscal year and exclude payments for accrued sick and annual leave accumulated after said date; however, salary for members who are employed on July 5, 2012, shall include payment for accrued sick and annual leave at termination of employment up to the dollar value of sick and annual leave accrued as of July 5, Any member hired before October 1, 2012 who is eligible for normal retirement may elect to participate in a deferred retirement option plan (DROP) while continuing his or her active employment as a firefighter. Upon participation in the DROP, the member becomes a retiree for all Plan purposes so that he or she ceases to accrue any further benefits under the Plan. Normal retirement payments that would have been payable to the member as a result are accumulated and invested in the DROP plan to be distributed to the member upon his or her termination of employment. Participation in the DROP plan ceases for a member at termination of employment or 5 years of participation, whichever comes first. Members hired on or after October 1, 2012 are not eligible to participate in the DROP. The DROP balance as of September 30, 2014 is $259,

85 Eligibility for disability benefits begins from the member s date of hire, if the disability is service connected, or after 10 years of credited service if non-service incurred. Disability benefits are 3.5% of the member s average final compensation, and not less than 42.0% of the member s average final compensation times his or her credited service years. The death benefits for a member who is vested is a payment of the member s accrued pension benefit to the member s beneficiary for 10 years, beginning on the date that the deceased member would have been eligible for early or normal retirement, at the option of the beneficiary. The death benefit for a member who is not vested is a return of the member s contributions to the member s beneficiary. Termination benefits for unvested members are the return of the member s contributions. For members who are vested when they terminate, their vested accrued pension benefit is payable at the early or normal retirement date. Full vesting occurs at the completion of 10 years of credited service. Beginning retroactively on October 1, 1999, and on each October 1 thereafter, the monthly benefit amount of each retiree (except disability retirees) and each terminated vested person who has been retired or who has been receiving benefit payments at least one year and who has attained age 55 shall be increased by 3 percent. Cost of living allowances shall cease once the retiree reaches age 63. This increase shall also be applicable to the benefit payments of the beneficiaries and joint pensioners of deceased members of retirees, and eligibility for the allowance shall be based on the date that the deceased retiree or member would have been eligible. At October 1, 2014, the date of the latest actuarial valuation, membership in the Fund consisted of: Retirees and beneficiaries receiving benefits 17 Terminated employees entitled to benefits, but not yet receiving them 9 DROP participants 5 Active members 78 Total 109 Effective September 1, 2012, a supplemental retirement benefit in the form of individual share accounts was created for each active firefighter, living retiree (including DROP participants) and disability benefit recipients and beneficiary survivors receiving a survivor retirement benefit. The total initial amount allocated to the share accounts was based on years of service of all active firefighters (including DROP participants) and retiree participants (including disability benefit recipients and beneficiary survivors) who were employees and members of the Plan between December 1, 2005, and September 30, 2012, which included the accumulated excess premium tax revenues in the pension fund as of the October 1, 2011 actuarial valuation report, plus premium tax revenues received in excess of $250,000 during For plan years beginning October 1, 2012 and later, all premium tax revenues received by the City in excess of $250,000 will be allocated to the share accounts based on years of credited service. Effective December 31, 2013, and each December 31 thereafter, each share account will be credited or debited with earnings or losses based upon the amount in the share account at the close of the immediately preceding plan year at a rate equal to the pension plan s actual net rate of investment return for the preceding plan year. An active firefighter (including DROP participants) with ten or more years of credited service upon termination of employment shall be eligible to receive a distribution of 100% of the balance in their respective share account, together with all earnings and losses and interest credited to the share account through the date of termination of employment. Retiree participants (including disability benefit recipients and beneficiary 58

86 survivors) shall receive distribution of the annual share allocation in the form of a thirteenth monthly check equal to the annual crediting described above. Vested terminated members shall be entitled to participate in this supplemental retirement benefit upon commencing receipt of retirement benefits from the Plan. No benefit shall be payable to an active firefighter who terminates covered employment with less than ten years of credited service. The share account balances of such non-vested terminated members shall be redistributed among all eligible participants share accounts in the same manner as premium tax revenues in the following fiscal year. The designated beneficiary of a share plan member who dies shall receive the accumulated total of the share account balance at date of death, regardless of the member s length of service. A share plan member awarded a disability pension from the Plan shall receive the accumulated total of the member s share account balance. As of October 1, 2014, the date of the latest actuarial valuation, the balance of member share accounts was $1,600,029. CONTRIBUTIONS Contribution requirements are established and may be amended by the City of North Port Commission and are based on the benefit structure established by the City. Members are required to contribute 10.3% of their salary. Pursuant to Chapter 175 of Florida Statutes, a premium tax on certain casualty insurance contracts written on North Port properties is collected by the state and remitted to the Fund for the state s annual contribution amount. The City recognizes these on-behalf payments from the State as revenue and personnel expenditures in the City s General Fund before they are recorded as contributions in the Firefighters Pension Fund. The City is required to contribute the remaining amounts necessary to finance the benefits through periodic contributions at actuarially determined rates. Administrative costs are financed through investment earnings. A rehired member may buy back years of past service by paying into the Fund the amount of contributions the employee would otherwise have paid for such service. The maximum credit for service other than with the City of North Port shall be five years of credited service and shall count for all purposes, except vesting and eligibility for non-service incurred disability benefits. There shall be no maximum purchase of credit for prior service with the City of North Port and such credit shall count for all purposes, including vesting. Summary of Significant Accounting Policies REPORTING ENTITY The City of North Port, Florida, Firefighters Pension Local Option Trust Fund (the Fund ) was established to account for the financial activity of the City of North Port, Florida, Firefighters Pension Fund. The Fund is managed by a five member Board of Trustees comprised of two members appointed by the Commission of the City of North Port, Florida (the City ), two members elected by the plan membership and one member elected by the other four members and subsequently appointed, as a ministerial duty, by the City Commission. BASIS OF ACCOUNTING The Fund s financial statements are prepared using the accrual basis of accounting. Contributions from the Fund s members are recognized as additions in the period in which the contributions are due. Contributions from the City are recognized as additions when due and the City has made a formal commitment to provide the contributions. State contributions are recognized when received. Expenses are recognized in the accounting period incurred, if measurable. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. 59

87 METHOD USED TO VALUE INVESTMENTS Investments are reported at fair value. Money market mutual funds are reported at cost which approximates fair value. Securities traded on national or international exchanges are valued at the last reported sales price at current exchange rates. Real estate assets are reported at fair value utilizing an income approach to valuation. By contract, an independent appraisal is obtained once every year to determine the fair market value of the real estate assets. Interest and dividend income are recognized on the accrual basis when earned. Purchases and sales of investments are recorded on a trade date basis. RECLASSIFICATIONS Certain amounts in the prior year financial statements have been reclassified to conform to the current year s presentation. Cash and Investments Authorized investments - Florida Statutes and the Fund s investment policy limit investments to annuity and life insurance contracts; time or savings accounts; obligations issued by the United States Government or by an agency of the United States Government; bonds issued by the State of Israel; corporate stocks and bonds; and pooled funds, including mutual funds, commingled funds, exchange-traded funds, limited partnerships and private equity. Investments in illiquid investments, as described by Florida Statutes, are prohibited. Investments in companies identified as scrutinized companies by the Florida State Board of Administration (SBA) are prohibited, with the exception of investments in scrutinized companies that are held within commingled funds (if the commingled fund sponsor does not offer a similar fund that does not hold investments in scrutinized companies). At September 30, 2014, the Plan had the following investments and maturities: Investment maturity (in years) Credit rating Credit rating Fair Less Than Years Years Years More Investment Type (Moody's) (S & P's) Value 1 Year Than 10 Money market funds Aaa-mf AAAm $ 947,042 $ 947,042 $ - $ - $ - U.S. Gov't & agency securities Aaa AA+ 1,521, ,801 1,123,141 - Mortgage/asset-backed securities Aaa Aa1 AAA...AA 2,543, , ,171 1,509,814 Corporate obligations Aaa Baa3 AAA BBB+ 2,149,032 40,082 1,139, ,335 49,443 Municipal obligations Aaa Aa3 AAA A 266, , ,443 - International bond obligations A1 A3 AA A- 214, , Fixed income mutal funds N/R N/R 2,016,128 Equity securities N/R N/R 22,333,376 Int'l equity mutual funds N/R N/R 2,379,136 Commingled real estate funds N/R N/R 2,981,138 Total investments $ 37,352,291 $ 987,124 $ 2,593,041 $ 2,503,090 $ 1,559,257 There was $1,426,308 in mortgage/asset-backed securities that were unrated at September 30, Custodial credit risk This is the risk that in the event of the failure of the counterparty, the Fund will not be able to recover the value of its investments that are held by the counterparty. The Fund s policy is to maintain investments in custodial accounts that identify securities held as assets of the Fund by registering securities in the name of the Fund. 60

88 Interest rate risk - This is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. Although the Fund s investment policy does not provide limitations as to maturities, the Fund minimizes risk of fair value losses in its fixed income portfolio due to rising interest rates by structuring its investment portfolio so that securities mature to meet ongoing cash requirements, thereby avoiding the need to sell securities in the open market prior to maturity; and by investing operating funds primarily in shorter-term securities; or by cash flow projections. Credit Risk This is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. This risk is generally measured by the assignment of a rating by a nationally recognized statistical rating organization (NSRO), such as Moody s or Standard & Poor s. The Fund s investment policy states that the Fund s fixed income portfolio must have a weighted average quality of AA or better as measured by Standard & Poor s or Moody s and all bonds shall hold a rating in one of the three highest classifications by a major rating service. Equity investments must be traded on one or more of the recognized national exchanges. Money market deposits must have a rating of A1/P1 or its equivalent by a major credit rating service. Foreign Currency Risk At September 30, 2014, $2,593,703 or 7% of the Plan s total assets had exposure of foreign currency risk through investments in foreign companies. These investments consisted of $214,567 of international bonds and $2,379,136 of international equity securities. Rate of Return For the year ended September 30, 2014, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 8.84%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentration of Credit Risk This is the risk of loss attributable to the quantity of the Fund s investment in a single issuer. The Fund s investment policy limits investments in the stock of any one issuing company to 5% of the Fund s assets and to 5% of the outstanding capital stock of any issuing company. The Fund s investment policy limits investments in the bonds of any one issuing company to 3% of the Fund s assets. Furthermore, investments in corporate common stock and convertible bonds shall not exceed 60% of the Fund s investments at cost or 70% of the Fund s investment at market value; foreign securities shall not exceed 25% of the market value of the Fund s assets; and real estate investments shall not exceed 10% of the market value of the Fund s assets. Plan Disclosures Effective October 1, 2013, the Plan implemented the provisions of GASB Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB Statement No. 25, which significantly changed the disclosures required related to the Plan. The information disclosed below is presented in accordance with this new standard. 61

89 NET PENSION LIABILITY OF THE CITY The components of the net pension liability of the City at September 30, 2014, were as follows: Total pension liability $ 37,034,691 Plan fiduciary net position (37,671,804) City's net pension liability $ (637,113) Plan fiduciary net position as a % % of the total pension liability The required schedule of changes in the City s net pension liability and related ratios located in the Required Supplementary Section presents multi-year trend information about whether the value of plan assets is increasing or decreasing over time relative to the total pension liability. Actuarial assumptions. The total pension liability was determined by an actuarial valuation as of October 1, 2013 updated to September 30, 2014, using the following actuarial assumptions applied to all measurement periods: Inflation 3.00% Salary increases 7.50% Investment rate of return 8.00% RP-2000 table with no projection-based on a study of over 650 public safety funds, reflects a 10% margin for future mortality improvements (Disabled lives set forward 5 years). The actuarial assumptions used in the October 2013 valuation were based on the results of an actuarial experience study for the period The long-term expected rate of return on pension plan investments was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan s target asset allocation as of September 30, 2014, are summarized in the following table: Long Term Expected Asset Class Real Rate of Return Domestic Equity 7.5% International Equity 8.5% Domestic Core Fixed Income 2.5% Global Fixed Income 3.5% Real Estate 4.5% GTAA 3.5% Discount rate. The discount rate used to measure the total pension liability was 8.00%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan s fiduciary net position was projected to be available to make all projected future benefit payments of 62

90 current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Current 1% Decrease Discount Rate 1% Increase 7.00% 8.00% 9.00% City's net pension liability $ 4,067,773 $ (637,113) $ (4,740,116) Related Party Transactions A retired member of the Fund currently receiving benefits serves as the Administrator. The Administrator is paid quarterly administrative fees. Management believes that these transactions were consummated on terms equivalent to those that prevail in arm s-length transactions. Administrative services expense in the amount of $14,400 was reported for each of the years ended September 30, 2014 and September 30, 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 single-employer defined benefit medical plan 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 plan does not issue a stand-alone financial report. 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, 2014, the City provided required contributions of $78,138 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

91 Annual OPEB Cost and Net OPEB Obligations The following table shows the City s annual OPEB cost for the fiscal year ended September 30, 2014, the amount actually contributed to the plan, and changes in the City s net OPEB obligation: Description Amount Normal Cost (service cost for one year) $ 167,156 Amortization of Unfunded Actuarial Accrued Liability 123,745 Annual Required Contribution (ARC) 290,901 Interest on Net OPEB Obligation (NOO) 80,870 Adjustment to ARC (105,577) Annual OPEB Cost (Expense) 266,194 Employer Contributions (78,138) Increase in NOO 188,056 NOO at Beginning of Year 1,797,118 NOO at End of Year $ 1,985,174 Three-year trend information is as follows: Fiscal Year Ending Annual OPEB Cost Amount Contributed Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 9/30/2014 $ 266,194 $ 78, % $ 1,985,174 9/30/ ,029 62, % 1,797,118 9/30/ ,021 54, % 1,590,531 The funded status and funding progress as of October 1, 2012, 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 10/1/12 $ - $ 2,015,669 $ 2,015, % $ 26,861,641 8% 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 presents multiyear trend information. 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, 2012 OPEB actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.5% discount rate. The annual healthcare cost trend rate was 5.5% for the fiscal year ending September 30, 2014, with the annual rate increasing to 6% in fiscal year ending September 30, 2015 and then decreasing gradually back to 5% for years after fiscal year Both rates included a 3% 64

92 inflation assumption. 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. 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. For the past three fiscal years, the City s insurance settlements have not exceeded the insurance coverage and there were no significant reductions in insurance coverage from the previous year. 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 City 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 RESTATEMENT OF NET POSITION For the current year, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources (expenses or expenditures) or inflows of resources (revenues), certain items that were previously reported as assets and liabilities. 65

93 Beginning net position for the Business-type Activities (Water and Sewer Utilities Enterprise Fund), as previously reported, was reduced by $533,863 for debt issuance costs that had been reported as an asset and amortized over the life of the debt. With the exception of prepaid insurance costs, costs related to the issuance of debt will no longer be recorded as an asset and amortized over the life of the debt. These amounts will instead be recognized as an expense in the period incurred. NOTE P SUBSEQUENT EVENTS Additional scheduled draws on the State of Florida Department of Transportation State Infrastructure Bank (SIB) Loan totaling $2,481,909 have been made after fiscal year ending September 30, 2014 and as of March 12, 2015, bringing the total cumulative amount borrowed under this agreement to $7,325,

94 67

95 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. 68

96 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 11,498,540 $ 11,498,540 $ 11,288,018 $ (210,522) Permits and special assessments 2,808,860 2,808,860 3,018, ,870 Intergovernmental 5,545,020 5,629,921 6,048, ,692 Charges for services 6,999,660 7,318,160 7,370,522 52,362 Fines and forfeiture 126, , ,626 47,126 Investment income 117, ,000 57,592 (59,408) Miscellaneous 343, , ,505 (28,305) Total revenues 27,439,190 27,893,791 28,323, ,815 EXPENDITURES Current: General government: City Commission 357, , ,832 16,868 City Attorney 676, , ,669 71,331 City Clerk 492, , ,771 (1,921) Finance 1,127,950 1,189,950 1,122,612 67,338 Planning & Zoning 663, , , ,490 I&T 1,356,840 1,335,835 1,261,472 74,363 Human Resources 502, , ,689 69,141 City Manager 759, , ,229 38,041 Property Maintenance 2,616,450 2,497,145 2,455,225 41,920 General Services Administration 227, , ,938 (3,278) Non-Departmental 520, ,182 1,003,926 (98,744) Total General government 9,300,860 9,627,492 9,129, ,549 Public safety: Building 621, , ,476 59,944 Police 13,705,350 13,787,721 13,818,734 (31,013) Emergency Medical Services 4,111,400 4,111,400 3,908, ,859 Total Public safety 18,438,170 18,520,541 18,288, ,790 Economic environment: Economic Development 452, , , ,359 Human services: Social Services $ 215,660 $ 382,705 $ 298,161 $ 84,544 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 69

97 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Culture and recreation: Parks & Recreation $ 994,590 $ 994,590 $ 986,327 $ 8,263 Capital outlay 197, , , ,830 Debt service 41,460 41,460 41,465 (5) Total expenditures 29,640,780 30,412,280 29,292,950 1,119,330 Excess (deficiency) of revenues over (under) expenditures (2,201,590) (2,518,489) (969,344) 1,549,145 OTHER FINANCING SOURCES (USES) Transfers in 568, , ,150 - Transfers out (67,000) (67,000) (67,000) - Insurance recoveries 3,500 3,500 13,807 10,307 Total other financing sources (uses) 504, , ,957 10,307 Net change in fund balances (1,696,780) (1,977,839) (418,387) 1,559,452 Fund balances - beginning 10,704,413 10,704,413 10,704,413 - Fund balances - ending $ 9,007,633 $ 8,726,574 $ 10,286,026 $ 1,559,452 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 70

98 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ROAD AND DRAINAGE DISTRICT SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Taxes $ 2,534,510 $ 2,534,510 $ 2,648,684 $ 114,174 Intergovernmental 387, ,485 1,741,243 1,207,758 Charges for services 10,665,600 10,665,600 10,862, ,681 Investment income 65,000 65,000 36,702 (28,298) Miscellaneous 34,010 42,010 37,194 (4,816) Total revenues 13,686,780 13,840,605 15,326,104 1,485,499 EXPENDITURES: Current: Physical environment 3,941,345 4,663,882 3,418,980 1,244,902 Transportation 8,002,125 9,469,093 6,941,565 2,527,528 Capital outlay 1,720,970 5,257,798 2,482,057 2,775,741 Total expenditures 13,664,440 19,390,773 12,842,602 6,548,171 Excess (deficiency) of revenues over (under) expenditures 22,340 (5,550,168) 2,483,502 8,033,670 OTHER FINANCING SOURCES (USES): Transfers out (400,000) (400,000) (400,000) - Insurance recoveries 4,950 4,950 9,493 4,543 Total other financing sources (uses) (395,050) (395,050) (390,507) 4,543 Net change in fund balances (372,710) (5,945,218) 2,092,995 8,038,213 Fund balances - beginning 8,537,174 8,537,174 8,537,174 - Fund balances - ending $ 8,164,464 $ 2,591,956 $ 10,630,169 $ 8,038,213 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 71

99 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE FIRE RESCUE DISTRICT SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Taxes $ 302,850 $ 302,850 $ 244,009 $ (58,841) Permits, fees and special assessments 10,800 10,800 16,330 5,530 Intergovernmental 36,240 36,240 32,478 (3,762) Charges for services 7,702,830 7,702,830 8,496, ,337 Investment income 7,680 7,680 9,061 1,381 Miscellaneous 26,290 31,521 38,151 6,630 Total revenues 8,086,690 8,091,921 8,836, ,275 EXPENDITURES: Current: Public safety 7,514,970 7,520,201 7,171, ,443 Total expenditures 7,514,970 7,520,201 7,171, ,443 Excess (deficiency) of revenues over (under) expenditures 571, ,720 1,664,438 1,092,718 OTHER FINANCING USES: Transfers out (447,000) (447,000) (447,000) - Total other financing uses (447,000) (447,000) (447,000) - Net change in fund balances 124, ,720 1,217,438 1,092,718 Fund balances - beginning 1,614,557 1,614,557 1,614,557 - Fund balances - ending $ 1,739,277 $ 1,739,277 $ 2,831,995 $ 1,092,718 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 72

100 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SOLID WASTE DISTRICT SPECIAL REVENUE FUND - GAAP BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Charges for services $ 7,868,170 $ 7,868,170 $ 8,132,063 $ 263,893 Investment income 25,000 25,000 20,647 (4,353) Miscellaneous 3,000 3,000 10,737 7,737 Total revenues 7,896,170 7,896,170 8,163, ,277 EXPENDITURES: Current: Physical environment 6,127,290 6,140,417 6,041,182 99,235 Capital outlay - 2,265,316 2,329,333 (64,017) Debt service 372, , , Total expenditures 6,500,220 8,778,663 8,743,431 35,232 Excess (deficiency) of revenues over (under) expenditures 1,395,950 (882,493) (579,984) 302,509 OTHER FINANCING SOURCES (USES): Transfers out (1,390,350) (1,390,350) (1,390,350) - Insurance recoveries ,534 76,534 Total other financing sources (uses) (1,390,350) (1,390,350) (1,313,816) 76,534 Net change in fund balances 5,600 (2,272,843) (1,893,800) 379,043 Fund balances - beginning 3,797,275 3,797,275 3,797,275 - Fund balances - ending $ 3,802,875 $ 1,524,432 $ 1,903,475 $ 379,043 The budget basis is in accordance with accounting standards generally accepted in the United States of America. 73

101 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) 10/1/14 $ 28,318,540 $ 33,939,241 $ 5,620, % $ 6,605, % 10/1/13 24,410,069 31,636,004 7,225, % 6,963, % 10/1/12 20,712,234 30,107,281 9,395, % 6,103, % 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, % Analysis of the dollar amounts of the actuarial value of assets, actuarial accrued liability, or unfunded 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. 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. 74

102 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 2014 $ 2,429,885 $ 2,250,656 $ 179,229 * % ,384,178 2,204, ,229 * % ,131,475 1,952, ,229 * % ,844,345 1,665, ,229 * % ,472,393 1,468, ,546 * % ,167,597 1,123, ,546 * % * The State Contribution column does not include the state contributions in excess of the frozen amount which are reserved for future benefits and may not be used to offset the actuarially required contribution. 75

103 CITY OF NORTH PORT, FLORIDA NORTH PORT POLICE OFFICERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS 2014 Total pension liability Service cost $ 1,967,848 Interest on total pension liability 2,485,396 Change in excess state money 127,413 Share plan allocation - Changes of benefit terms - Benefit payments, including refunds of employee contributions (1,267,557) Net change in total pension liability 3,313,100 Total pension liability - beginning 31,036,272 Total pension liability - ending (a) $ 34,349,372 Plan fiduciary net position Contributions - employer $ 2,254,752 Contributions - state 306,642 Contributions - employee 528,422 Net investment income 2,200,982 Benefit payments, including refunds of employee contributions (1,267,557) Administrative expenses (70,301) Net change in plan fiduciary net position 3,952,940 Plan fiduciary net position - beginning 26,338,328 Plan fiduciary net position - ending (b) 30,291,268 Net pension liability - ending (a) - (b) $ 4,058,104 Plan fiduciary net position as a percentage of the total pension liability 88.19% Covered employee payroll $ 6,605,273 City's net pension liability as a percentage of covered employee payroll 61.44% Notes to the Schedule The schedule will present 10 years of information once it is accumulated. 76

104 CITY OF NORTH PORT, FLORIDA NORTH PORT POLICE OFFICERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS 2014 Notes to the Schedule Actuarially determined contributions $ 2,429,885 Contributions in relation to the actuarially determined contributions $ 2,429,885 - Covered employee payroll 6,605,273 Contributions as a percentage of covered employee payroll 36.79% The schedule will present 10 years of information once it is accumulated. 77

105 CITY OF NORTH PORT, FLORIDA NORTH PORT POLICE OFFICERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION INVESTMENT RETURN 2014 Annual money-weighted rate of return, net of investment expenses for the City's pension plan 8.12% Notes to the Schedule The schedule will present 10 years of information once it is accumulated 78

106 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) 10/1/14 $ 35,034,578 $ 37,300,235 $ 2,265, % $ 5,689, % 10/1/13 30,968,314 33,823,852 2,855, % 5,943, % 10/1/12 27,237,526 31,447,123 4,209, % 6,274, % 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, % 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. 79

107 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 2014 $ 1,500,193 $ 1,250,193 $ 250,000 * % ,541,204 1,291, ,000 * % ,463,932 1,286, ,000 * % ,641,680 1,471, ,286 * % ,396,967 1,332, ,286 * % ,170,281 1,097, ,286 * % * "Frozen" pursuant to the provisions of Chapter 175, Florida Statutes, as amended. 80

108 CITY OF NORTH PORT, FLORIDA NORTH PORT FIREFIGHTERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS 2014 Total pension liability Service cost $ 1,686,083 Interest on total pension liability 2,767,378 Change in excess state money - Share plan allocation 137,316 Changes of benefit terms - Benefit payments, including refunds of employee contributions (924,447) Net change in total pension liability 3,666,330 Total pension liability - beginning 33,368,361 Total pension liability - ending (a) $ 37,034,691 Plan fiduciary net position Contributions - employer $ 1,250,193 Contributions - state 387,316 Contributions - employee 585,968 Net investment income 3,008,184 Benefit payments, including refunds of employee contributions (924,447) Administrative expenses (64,072) Net change in plan fiduciary net position 4,243,142 Plan fiduciary net position - beginning 33,428,662 Plan fiduciary net position - ending (b) $ 37,671,804 Net pension liability - ending (a) - (b) $ (637,113) Plan fiduciary net position as a percentage of the total pension liability % Covered employee payroll $ 5,689,014 City's net pension liability as a percentage of covered employee payroll % Notes to the Schedule The schedule will present 10 years of information once it is accumulated. 81

109 CITY OF NORTH PORT, FLORIDA NORTH PORT FIREFIGHTERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS 2014 Notes to the Schedule Actuarially determined contributions $ 1,500,193 Contributions in relation to the actuarially determined contributions $ 1,500,193 - Covered employee payroll 5,689,014 Contributions as a percentage of covered employee payroll 26.37% Valuation Date 10/1/12 Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which contributions are reported. Funding method Entry age normal actuarial cost method Amortization method Level percentage of pay, closed Remaining amortization period 29 years (as of 10/01/2012) Asset valuation method Historial geometic 4-year average market value return Inflation 3.00% per year Salary increases 7.50% Interest rate 8.00% per year compounded annually Payroll growth 5.00% per year Post retirement COLA 3.00% from age 55 until 63 Retirement age Earlier of age 55 with 10 years credited service or age 52 with 25 years of credited service Early retirement Commencing with the earliest early retirement age (50) The schedule will present 10 years of information once it is accumulated. 82

110 CITY OF NORTH PORT, FLORIDA NORTH PORT FIREFIGHTERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION INVESTMENT RETURN 2014 Annual money-weighted rate of return, net of investment expenses for the City's pension plan 8.84% Notes to the Schedule The schedule will present 10 years of information once it is accumulated 83

111 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 10/1/12 $ - $ 2,015,669 $ 2,015, % $ 26,861,641 8% 10/1/10-1,805,157 1,805, % 27,618,020 7% 10/1/08-3,234,507 3,234, % 31,044,518 10% (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. The City implemented the provisions of GASB 45 for fiscal year ending September 30, The first actuarial valuation was performed October 1,

112 85

113 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. 86

114 CITY OF NORTH PORT, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2014 Special Revenue Inspector Education Special Law Enforcement Police Education Tree Replacement ASSETS: Cash and investments $ 77,754 $ 89,672 $ 17,508 $ 490,477 Receivables (net of allowance for uncollectibles) - 1, Due from other governments Deposits Inventories Total assets $ 77,754 $ 91,490 $ 18,409 $ 490,477 LIABILITIES: Accounts payable $ 13,790 $ 16,008 $ 995 $ 16,658 Due to other funds ,353 Total liabilities 13,790 16, ,011 DEFERRED INFLOWS OF RESOURCES: Unavailable revenue - other receivables Total deferred inflows of resources FUND BALANCES: Nonspendable Restricted - 75,482 17,414 - Committed 63, ,466 Total fund balances 63,964 75,482 17, ,466 Total liabilities, deferred inflows of resources and fund balances $ 77,754 $ 91,490 $ 18,409 $ 490,477 87

115 Special Revenue Building Department Escheated Lots - Land & Future Projects Escheated Lots - Parks Law Enforcement Impact Fees Fire Impact Fees Parks and Recreation Impact Fees $ 1,370,935 $ 2,296,817 $ 179,260 $ 213,190 $ 918,427 $ 1,654, $ 1,371,384 $ 2,296,817 $ 179,260 $ 213,190 $ 918,427 $ 1,654,821 $ 10,525 $ 11,391 $ - $ 500 $ - $ - 19, ,483 11, ,340, , ,427 1,654,821-2,285, , ,340,888 2,285, , , ,427 1,654,821 $ 1,371,384 $ 2,296,817 $ 179,260 $ 213,190 $ 918,427 $ 1,654,821 (continued) 88

116 CITY OF NORTH PORT, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2014 Special Revenue Transportation Impact Fees Solid Waste Impact Fees General Government Impact Fees Environmental Management ASSETS: Cash and investments Receivables (net of allowance for uncollectibles) Due from other governments Deposits Inventories Total assets $ 5,407,870 $ 17,731 $ 81,354 $ 550, $ 5,407,870 $ 17,731 $ 81,354 $ 550,143 LIABILITIES: Accounts payable Due to other funds Total liabilities DEFERRED INFLOWS OF RESOURCES: Unavailable revenue - other receivables Total deferred inflows of resources FUND BALANCES: Nonspendable Restricted Committed Total fund balances Total liabilities, deferred inflows of resources and fund balances $ 1,315,036 $ - $ 11,616 $ ,315,036-11, ,092,834 17,731 69, , ,092,834 17,731 69, ,143 $ 5,407,870 $ 17,731 $ 81,354 $ 550,143 89

117 Special Revenue Debt Service Capital Projects Fleet Maintenance Road Reconstruction Bond Debt Service Surtax II Capital Acquisition Total Nonmajor Governmental Funds $ 706,626 $ 331,423 $ 3,190,262 $ 8,279,877 $ 25,874, ,496 15, , , ,999 49, ,739 $ 772,106 $ 332,255 $ 3,190,262 $ 8,718,876 $ 26,382,626 $ 126,407 $ - $ - $ 305,153 $ 1,828,079 18, , , ,153 1,867,503 15, ,500 15, ,500 49, , , ,255 3,190,262-12,472, , ,974,724 11,538, , ,255 3,190,262 8,413,723 24,499,623 $ 772,106 $ 332,255 $ 3,190,262 $ 8,718,876 $ 26,382,626 90

118 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Special Revenue Inspector Education Special Law Enforcement Police Education Tree Replacement REVENUES: Permits, fees and special assessments $ 37,149 $ - $ - $ 19,600 Intergovernmental Charges for services - 2, Fines and forfeiture - 90,172 12,503 81,500 Investment income ,613 Miscellaneous Total revenues 37,313 92,431 12, ,713 EXPENDITURES: Current: General government Public safety 15,320 75,646 12,804 - Physical environment ,060 Transportation Culture and recreation Capital outlay - 7, Debt service Total expenditures 15,320 83,146 12, ,060 Excess (deficiency) of revenues over (under) expenditures 21,993 9,285 (253) (27,347) OTHER FINANCING SOURCES (USES): Proceeds from loans Transfers in Transfers out - (10,000) - - Insurance recoveries Total other financing sources (uses) - (10,000) Net change in fund balances 21,993 (715) (253) (27,177) Fund balances - beginning 41,971 76,197 17, ,643 Fund balances - ending $ 63,964 $ 75,482 $ 17,414 $ 472,466 91

119 Special Revenue Building Department Escheated Lots - Land & Future Projects Escheated Lots - Roads Escheated Lots - Parks Law Enforcement Impact Fees Fire Impact Fees $ 1,874,577 $ - $ - $ - $ 80,041 $ 85, , , ,931 7, ,913, ,575 88,009-1, , , , ,009 2,760, ,297 6,909 16, ,720 2,762, ,697 19,921 16, ,710 (2,762,387) - (102,697) 60,654 71, (76,000) - (140,175) (76,000) - (140,175) ,710 (2,762,387) (140,175) (102,697) 60,654 71, ,178 5,047, , , , ,695 $ 1,340,888 $ 2,285,426 $ - $ 179,260 $ 212,690 $ 918,427 (continued) 92

120 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (continued) NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Special Revenue Parks and Recreation Impact Fees Transportation Impact Fees Solid Waste Impact Fees General Government Impact Fees REVENUES: 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 Culture and recreation Capital outlay Debt service Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Proceeds from loans Transfers in Transfers out Insurance recoveries Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending $ 194,490 $ - $ 15,399 $ 59,013-1,900, ,062 16, ,552 1,916,068 15,399 59, , ,676,717-40, ,682, , ,552 (4,766,849) 15,397 19,241-4,843, ,843, ,552 76,854 15,397 19,241 1,455,269 4,015,980 2,334 50,497 $ 1,654,821 $ 4,092,834 $ 17,731 $ 69,738 93

121 Environmental Management Special Revenue Fleet Maintenance Debt Service Road Reconstruction Bond Debt Service Surtax II Capital Projects Maintenance Facility Construction $ - $ - $ 3,073,299 $ - $ ,280, ,874 1,087 5,618 10, , ,180 1,874 4,288,479 3,078,917 10,868 4,180-4,203, , ,638, ,203,642 2,671, ,874 84, ,287 10,868 4, (349,500) (75,032) - (104,065) - 11, (338,112) (75,032) - (104,065) 1,874 (253,275) 332,255 10,868 (99,885) 548, ,374-3,179,394 99,885 $ 550,143 $ 612,099 $ 332,255 $ 3,190,262 $ - (continued) 94

122 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (continued) NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Capital Projects Capital Acquisition Total Nonmajor Governmental Funds REVENUES: 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 Culture and recreation Capital outlay Debt service Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Proceeds from loans Transfers in Transfers out Insurance recoveries Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending $ - $ 5,438,646-1,900,000-4,311, ,175 22,597 70,764-18,709 22,597 11,924,197-4,205,634-1,056, ,062-38,906-1, ,012 10,568,960-2,638, ,012 18,640,535 (936,415) (6,716,338) - 4,843,703 3,219,650 3,219,650 - (754,772) - 11,558 3,219,650 7,320,139 2,283, ,801 6,130,488 23,895,822 $ 8,413,723 $ 24,499,623 95

123 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE INSPECTOR EDUCATION SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 21,000 $ 21,000 $ 37,149 $ 16,149 Investment income (136) Total revenues 21,300 21,300 37,313 16,013 EXPENDITURES: Current: Public safety 27,000 27,000 15,320 11,680 Total expenditures 27,000 27,000 15,320 11,680 Excess (deficiency) of revenues over (under) expenditures (5,700) (5,700) 21,993 27,693 Net change in fund balances (5,700) (5,700) 21,993 27,693 Fund balances - beginning 41,971 41,971 41,971 - Fund balances - ending $ 36,271 $ 36,271 $ 63,964 $ 27,693 96

124 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SPECIAL LAW ENFORCEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Charges for service $ - $ - $ 2,000 $ 2,000 Fines and forfeitures 14,000 14,000 90,172 76,172 Investment income (291) Total revenues 14,550 14,550 92,431 75,881 EXPENDITURES: Current: Public safety 13,080 78,980 75,646 3,334 Capital 8,500 8,500 7,500 1,000 Total expenditures 21,580 87,480 83,146 4,334 Excess (deficiency) of revenues over (under) expenditures (7,030) (72,930) 9,285 82,215 OTHER FINANCING USES: Transfers out - (10,000) (10,000) - Total other financing uses - (10,000) (10,000) - Net change in fund balances (7,030) (82,930) (715) 82,215 Fund balances - beginning 76,197 76,197 76,197 - Fund balances - ending $ 69,167 $ (6,733) $ 75,482 $ 82,215 97

125 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE POLICE EDUCATION SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Fines and forfeitures $ 10,380 $ 10,380 $ 12,503 $ 2,123 Investment income (42) Total revenues 10,470 10,470 12,551 2,081 EXPENDITURES: Current: Public safety 17,070 17,070 12,804 4,266 Total expenditures 17,070 17,070 12,804 4,266 Excess (deficiency) of revenues over (under) expenditures (6,600) (6,600) (253) 6,347 Net change in fund balances (6,600) (6,600) (253) 6,347 Fund balances - beginning 17,667 17,667 17,667 - Fund balances - ending $ 11,067 $ 11,067 $ 17,414 $ 6,347 98

126 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE TREE REPLACEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 5,000 $ 5,000 $ 19,600 $ 14,600 Fines and forfeiture 12,000 12,000 81,500 69,500 Investment income 8,500 8,500 1,613 (6,887) Total revenues 25,500 25, ,713 77,213 EXPENDITURES: Current: Physical environment 166, , ,060 36,085 Total expenditures 166, , ,060 36,085 Excess (deficiency) of revenues over (under) expenditures (140,645) (140,645) (27,347) 113,298 OTHER FINANCING SOURCES: Insurance recoveries Total other financing sources Net change in fund balances (140,645) (140,645) (27,177) 113,468 Fund balances - beginning 499, , ,643 - Fund balances - ending $ 358,998 $ 358,998 $ 472,466 $ 113,468 99

127 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE BUILDING DEPARTMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 1,137,000 $ 1,137,000 $ 1,874,577 $ 737,577 Charges for services 20,200 20,200 29,145 8,945 Investment income ,813 1,613 Miscellaneous 8,000 8,000 7,895 (105) Total revenues 1,165,400 1,165,400 1,913, ,030 EXPENDITURES: Current: Public safety 905, , ,711 (34,531) Capital outlay - - 1,009 (1,009) Total expenditures 905, , ,720 (35,540) Excess (deficiency) of revenues over (under) expenditures 260, , , ,490 OTHER FINANCING USES: Transfers out (76,000) (76,000) (76,000) - Total other financing uses (76,000) (76,000) (76,000) - Net change in fund balances 184, , , ,490 Fund balances - beginning 444, , ,178 - Fund balances - ending $ 628,398 $ 628,398 $ 1,340,888 $ 712,

128 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ESCHEATED LOTS - LAND AND FUTURE PROJECTS SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) EXPENDITURES: Current: General government $ - $ 200,000 $ 1,992 $ 198,008 Economic environment 200,000 79,000-79,000 Culture and recreation 150, , ,000 Capital outlay 50,000 3,050,000 2,760, ,605 Total expenditures 400,000 3,479,000 2,762, ,613 Excess (deficiency) of revenues over (under) expenditures (400,000) (3,479,000) (2,762,387) 716,613 Net change in fund balances (400,000) (3,479,000) (2,762,387) 716,613 Fund balances - beginning 5,047,813 5,047,813 5,047,813 - Fund balances - ending $ 4,647,813 $ 1,568,813 $ 2,285,426 $ 716,

129 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ESCHEATED LOTS - ROADS SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) OTHER FINANCING USES: Transfers out $ (121,200) $ (140,175) $ (140,175) $ - Total other financing uses (121,200) (140,175) (140,175) - Net change in fund balances (121,200) (140,175) (140,175) - Fund balances - beginning 140, , ,175 - Fund balances - ending $ 18,975 $ - $ - $ - 102

130 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ESCHEATED LOTS - PARKS SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 500 $ 500 $ - $ (500) Total revenues (500) EXPENDITURES: Current: Culture and recreation - - 1,400 (1,400) Capital outlay - 102, ,297 1,400 Total expenditures - 102, ,697 - Excess (deficiency) of revenues over (under) expenditures 500 (102,197) (102,697) (500) Net change in fund balances 500 (102,197) (102,697) (500) Fund balances - beginning 281, , ,957 - Fund balances - ending $ 282,457 $ 179,760 $ 179,260 $ (500) 103

131 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE LAW ENFORCEMENT IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 41,770 $ 41,770 $ 80,041 $ 38,271 Investment income Total revenues 41,870 41,870 80,575 38,705 EXPENDITURES: Current: Public safety - 13,013 13,012 1 Capital outlay - 15,085 6,909 8,176 Total expenditures - 28,098 19,921 8,177 Excess (deficiency) of revenues over (under) expenditures 41,870 13,772 60,654 46,882 Net change in fund balances 41,870 13,772 60,654 46,882 Fund balances - beginning 152, , ,036 - Fund balances - ending $ 193,906 $ 165,808 $ 212,690 $ 46,

132 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE FIRE IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 46,430 $ 46,430 $ 85,078 $ 38,648 Investment income ,931 2,831 Total revenues 46,530 46,530 88,009 41,479 EXPENDITURES: Current: Public Safety Capital outlay - 556,396 16, ,275 Total expenditures - 556,553 16, ,276 Excess (deficiency) of revenues over (under) expenditures 46,530 (510,023) 71, ,755 Net change in fund balances 46,530 (510,023) 71, ,755 Fund balances - beginning 846, , ,695 - Fund balances - ending $ 893,225 $ 336,672 $ 918,427 $ 581,

133 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE PARKS AND RECREATION IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 73,160 $ 73,160 $ 194,490 $ 121,330 Investment income ,062 4,882 Total revenues 73,340 73, , ,212 EXPENDITURES: Capital outlay - 200, ,000 Total expenditures - 200, ,000 Excess (deficiency) of revenues over (under) expenditures 73,340 (126,660) 199, ,212 Net change in fund balances 73,340 (126,660) 199, ,212 Fund balances - beginning 1,455,269 1,455,269 1,455,269 - Fund balances - ending $ 1,528,609 $ 1,328,609 $ 1,654,821 $ 326,

134 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE TRANSPORTATION IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 327,060 $ 327,060 $ - $ (327,060) Intergovernmental - - 1,900,000 1,900,000 Investment income 15,000 15,000 16,068 1,068 Total revenues 342, ,060 1,916,068 1,574,008 EXPENDITURES: Current: Transportation - - 6,200 (6,200) Capital outlay - 10,739,740 6,676,717 4,063,023 Total expenditures - 10,739,740 6,682,917 4,056,823 Excess (deficiency) of revenues over (under) expenditures 342,060 (10,397,680) (4,766,849) 5,630,831 OTHER FINANCING SOURCES: Proceeds from loans - - 4,843,703 4,843,703 Total other financing sources - - 4,843,703 4,843,703 Net change in fund balances 342,060 (10,397,680) 76,854 10,474,534 Fund balances - beginning 4,015,980 4,015,980 4,015,980 - Fund balances - ending $ 4,358,040 $ (6,381,700) $ 4,092,834 $ 10,474,

135 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SOLID WASTE IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ - $ - $ 15,399 $ 15,399 Total revenues ,399 15,399 EXPENDITURES: Current: Physical environment (2) Total expenditures (2) Excess (deficiency) of revenues over (under) expenditures ,397 15,397 Net change in fund balances ,397 15,397 Fund balances - beginning 2,334 2,334 2,334 - Fund balances - ending $ 2,334 $ 2,334 $ 17,731 $ 15,

136 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE GENERAL GOVERNMENT IMPACT FEES SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits, fees and special assessments $ 32,280 $ 32,280 $ 59,013 $ 26,733 Investment income Total revenues 32,360 32,360 59,241 26,881 EXPENDITURES: Capital outlay - 40,000 40,000 - Total expenditures - 40,000 40,000 - Excess (deficiency) of revenues over (under) expenditures 32,360 (7,640) 19,241 26,881 Net change in fund balances 32,360 (7,640) 19,241 26,881 Fund balances - beginning 50,497 50,497 50,497 - Fund balances - ending $ 82,857 $ 42,857 $ 69,738 $ 26,

137 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ENVIRONMENTAL MANAGEMENT SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ - $ - $ 1,874 $ 1,874 Total revenues - - 1,874 1,874 EXPENDITURES: Capital outlay - 434, ,416 Total expenditures - 434, ,416 Excess (deficiency) of revenues over (under) expenditures - (434,416) 1, ,290 Net change in fund balances - (434,416) 1, ,290 Fund balances - beginning 548, , ,269 - Fund balances - ending $ 548,269 $ 113,853 $ 550,143 $ 436,

138 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE FLEET MAINTENANCE SPECIAL REVENUE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Charges for services $ 4,349,370 $ 4,349,370 $ 4,280,758 $ (68,612) Investment income 5,000 5,000 1,087 (3,913) Miscellaneous 3,000 3,000 6,634 3,634 Total revenues 4,357,370 4,357,370 4,288,479 (68,891) EXPENDITURES: Current: General government 4,349,530 4,349,530 4,203, ,888 Total expenditures 4,349,530 4,349,530 4,203, ,888 Excess (deficiency) of revenues over (under) expenditures 7,840 7,840 84,837 76,997 OTHER FINANCING SOURCES (USES): Transfer out (349,500) (349,500) (349,500) - Insurance recoveries ,388 11,388 Total other financing sources (uses) (349,500) (349,500) (338,112) 11,388 Net change in fund balances (341,660) (341,660) (253,275) 88,385 Fund balances - beginning 865, , ,374 - Fund balances - ending $ 523,714 $ 523,714 $ 612,099 $ 88,

139 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ROAD RECONSTRUCTION BOND DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Permits and special assessments $ 3,000,000 $ 3,000,000 $ 3,073,299 $ 73,299 Investment income - - 5,618 5,618 Total revenues 3,000,000 3,000,000 3,078,917 78,917 EXPENDITURES: Current: Transportation 76,880 76,880 32,706 44,174 Debt service 2,923,120 2,923,120 2,638, ,196 Total expenditures 3,000,000 3,000,000 2,671, ,370 Excess (deficiency) of revenues over (under) expenditures , ,287 OTHER FINANCING USES: Transfers out - - (75,032) (75,032) Total other financing uses - - (75,032) (75,032) Net change in fund balances , ,255 Fund balances - beginning Fund balances - ending $ - $ - $ 332,255 $ 332,

140 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SURTAX II CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 5,000 $ 5,000 $ 10,868 $ 5,868 Total revenues 5,000 5,000 10,868 5,868 EXPENDITURES: Current: Capital outlay - 2,505,000-2,505,000 Total expenditures - 2,505,000-2,505,000 Excess (deficiency) of revenues over (under) expenditures 5,000 (2,500,000) 10,868 2,510,868 Net change in fund balances 5,000 (2,500,000) 10,868 2,510,868 Fund balances - beginning 3,179,394 3,179,394 3,179,394 - Fund balances - ending $ 3,184,394 $ 679,394 $ 3,190,262 $ 2,510,

141 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE SURTAX III CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Local option sales taxes $ 6,868,530 $ 6,868,530 $ 7,424,336 $ 555,806 Investment income 50,000 50,000 55,758 5,758 Total revenues 6,918,530 6,918,530 7,480, ,564 EXPENDITURES: Current: Public safety - 1,217,000 1,210,115 6,885 Transportation 874,000 1,565, , ,702 Culture and recreation - 5,026 5,025 1 Capital outlay 2,179,025 6,512,988 1,291,982 5,221,006 Total expenditures 3,053,025 9,300,341 3,275,747 6,024,594 Excess (deficiency) of revenues over (under) expenditures 3,865,505 (2,381,811) 4,204,347 6,586,158 OTHER FINANCING USES: Transfers out (489,800) (489,800) (489,800) - Total other financing uses (489,800) (489,800) (489,800) - Net change in fund balances 3,375,705 (2,871,611) 3,714,547 6,586,158 Fund balances - beginning 15,774,624 15,774,624 15,774,624 - Fund balances - ending $ 19,150,329 $ 12,903,013 $ 19,489,171 $ 6,586,

142 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE MAINTENANCE FACILITY CONSTRUCTION CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Miscellaneous $ - $ - $ 4,180 $ 4,180 Total revenues - - 4,180 4,180 Excess (deficiency) of revenues over (under) expenditures - - 4,180 4,180 OTHER FINANCING USES: Transfers out (97,200) (104,065) (104,065) - Total other financing uses (97,200) (104,065) (104,065) - Net change in fund balances (97,200) (104,065) (99,885) 4,180 Fund balances - beginning 99,885 99,885 99,885 - Fund balances - ending $ 2,685 $ (4,180) $ - $ 4,

143 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE CAPITAL ACQUISITION CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 15,000 $ 15,000 $ 22,597 $ 7,597 Total revenues 15,000 15,000 22,597 7,597 EXPENDITURES: Capital outlay 3,427,390 3,427, ,012 2,468,378 Debt service 76,900 76,900-76,900 Total expenditures 3,504,290 3,504, ,012 2,545,278 Excess (deficiency) of revenues over (under) expenditures (3,489,290) (3,489,290) (936,415) 2,552,875 OTHER FINANCING SOURCES: Lease proceeds 500, ,000 - (500,000) Transfers in 3,062,390 3,062,390 3,219, ,260 Total other financing sources 3,562,390 3,562,390 3,219,650 (342,740) Net change in fund balances 73,100 73,100 2,283,235 2,210,135 Fund balances - beginning 6,130,488 6,130,488 6,130,488 - Fund balances - ending $ 6,203,588 $ 6,203,588 $ 8,413,723 $ 2,210,

144 CITY OF NORTH PORT, FLORIDA BUDGETARY COMPARISON SCHEDULE ROAD RECONSTRUCTION CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2014 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ - $ - $ 89,933 $ 89,933 Total revenues ,933 89,933 EXPENDITURES: Current: Transportation - 356, ,195 (3,845) Capital outlay 41,000,000 40,643,650 5,358,579 35,285,071 Total expenditures 41,000,000 41,000,000 5,718,774 35,281,226 Excess (deficiency) of revenues over (under) expenditures (41,000,000) (41,000,000) (5,628,841) 35,371,159 OTHER FINANCING SOURCES: Bond proceeds 41,000,000 41,000,000 40,742,230 (257,770) Transfers in ,032 75,032 Total other financing sources 41,000,000 41,000,000 40,817,262 (182,738) Net change in fund balances ,188,421 35,188,421 Fund balances - beginning Fund balances - ending $ - $ - $ 35,188,421 $ 35,188,

145 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. 118

146 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS SEPTEMBER 30, 2014 Pension Trust Funds Police Officers' Pension Trust Fund Firefighters' Pension Trust Fund Totals ASSETS Cash and equivalents $ 1,119,536 $ 8,582 $ 1,128,118 Receivables: Contributions receivable 564, , ,123 Interest and dividends receivable 73,959 57, ,304 Due from brokers - 10,335 10,335 Total receivables 638, ,139 1,035,762 Investments, at fair market value: U.S. Government and agency securities 4,222,504 1,521,943 5,744,447 Money market funds - 947, ,042 Mortgage/asset-backed securities - 2,543,808 2,543,808 Equity securities 18,080,324 22,333,376 40,413,700 Corporate obligations 2,633,357 2,149,032 4,782,389 Fixed income mutual funds 1,366,786 2,016,128 3,382,914 Commingled real estate funds 2,267,260 2,981,138 5,248,398 International equity securities - 2,379,136 2,379,136 International bond obligations - 214, ,567 Due from broker 15,810-15,810 Municipal obligations - 266, ,121 Total investments, at fair value 28,586,041 37,352,291 65,938,332 Total assets 30,344,200 37,758,012 68,102,212 LIABILITIES Accounts payable and accrued expenses 52,932 86, ,140 Total liabilities 52,932 86, ,140 NET POSITION HELD IN TRUST FOR PENSION BENEFITS $ 30,291,268 $ 37,671,804 $ 67,963,

147 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Pension Trust Funds Police Officers' Pension Trust Fund Firefighters' Pension Trust Fund Totals ADDITIONS Contributions: Plan members $ 528,422 $ 585,968 $ 1,114,390 State of Florida 306, , ,958 City of North Port 2,254,752 1,250,193 3,504,945 Total contributions 3,089,816 2,223,477 5,313,293 Investment income: Net change in fair value of investments 1,869,525 2,581,158 4,450,683 Interest and dividends 574, ,424 1,267,604 Investment income 2,443,705 3,274,582 5,718,287 Less investment expenses (242,723) (266,398) (509,121) Net investment income 2,200,982 3,008,184 5,209,166 Total additions 5,290,798 5,231,661 10,522,459 DEDUCTIONS Benefits to participants 1,267, ,014 1,932,571 Share account distributions - 34,668 34,668 Administrative expenses 70,301 64, ,373 Refunds of participant contributions - 224, ,765 Total deductions 1,337, ,519 2,326,377 NET INCREASE 3,952,940 4,243,142 8,196,082 NET POSITION - BEGINNING 26,338,328 33,428,662 59,766,990 NET POSITION - ENDING $ 30,291,268 $ 37,671,804 $ 67,963,

148 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 COUNTY ROAD IMPACT FEES ASSETS Balance Balance October 1, 2013 Additions Deductions September 30, 2014 Cash $ 1,251 $ 154,972 $ 152,308 $ 3,915 Total assets $ 1,251 $ 154,972 $ 152,308 $ 3,915 LIABILITIES Due to other entities $ 1,251 $ 154,972 $ 152,308 $ 3,915 Total liabilities $ 1,251 $ 154,972 $ 152,308 $ 3,915 EDUCATION IMPACT FEES ASSETS Cash $ 1 $ 18,296 $ 18,294 $ 3 Total assets $ 1 $ 18,296 $ 18,294 $ 3 LIABILITIES Due to other entities $ 1 $ 18,296 $ 18,294 $ 3 Total liabilities $ 1 $ 18,296 $ 18,294 $ 3 COUNTY JUSTICE IMPACT FEES ASSETS Cash $ 2,688 $ 258,144 $ 252,787 $ 8,045 Total assets $ 2,688 $ 258,144 $ 252,787 $ 8,045 LIABILITIES Due to other entities $ 2,688 $ 258,144 $ 252,787 $ 8,045 Total liabilities $ 2,688 $ 258,144 $ 252,787 $ 8,

149 CITY OF NORTH PORT, FLORIDA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 COUNTY GENERAL GOVERNMENT IMPACT FEES Balance Balance October 1, 2013 Additions Deductions September 30, 2014 ASSETS Cash $ 146 $ 13,998 $ 13,709 $ 435 Total assets $ 146 $ 13,998 $ 13,709 $ 435 LIABILITIES Due to other entities $ 146 $ 13,998 $ 13,709 $ 435 Total liabilities $ 146 $ 13,998 $ 13,709 $ 435 TOTALS - ALL AGENCY FUNDS ASSETS Cash $ 4,086 $ 445,410 $ 437,098 $ 12,398 Total assets $ 4,086 $ 445,410 $ 437,098 $ 12,398 LIABILITIES Due to other entities $ 4,086 $ 445,410 $ 437,098 $ 12,398 Total liabilities $ 4,086 $ 445,410 $ 437,098 $ 12,

150 123

151 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. 124

152 Schedule 1 City of North Port, Florida Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Governmental activities Net investment in capital assets $ 21,853,839 $ 29,853,705 $ 153,428,893 $ 175,042,053 $ 190,796,752 $ 206,830,147 $ 218,575,683 $ 223,775,300 $ 230,333,540 $ 234,882,721 Restricted 40,034,103 53,700,997 65,547,548 63,606,573 63,521,632 58,643,863 45,826,354 49,259,616 45,641,773 55,770,974 Unrestricted 18,792,283 59,805,096 56,569,919 40,934,630 32,406,379 23,088,158 24,128,719 16,955,264 16,468,879 12,727,589 Total governmental activities net position 80,680, ,359, ,546, ,583, ,724, ,562, ,530, ,990, ,444, ,381,284 Business-type activities Net investment in capital assets 24,677,890 42,464,012 49,560,075 67,064,132 72,132,453 65,459,190 66,903,408 79,479,072 83,727,413 84,974,490 Restricted 15,091,003 22,839,326 24,839,466 14,066,118 10,587,316 16,947,629 15,180,859 6,623,346 5,950,232 5,538,481 Unrestricted 13,036,666 12,686,914 12,173,644 12,616,317 12,967,775 15,048,541 16,937,270 14,012,517 14,139,200 14,743,672 Total business-type activities net position 52,805,559 77,990,252 86,573,185 93,746,567 95,687,544 97,455,360 99,021, ,114, ,816, ,256, Primary government Net investment in capital assets 46,531,729 72,317, ,988, ,106, ,929, ,289, ,479, ,254, ,060, ,857,211 Restricted 55,125,106 76,540,323 90,387,014 77,672,691 74,108,948 75,591,492 61,007,213 55,882,962 51,592,005 61,309,455 Unrestricted 31,828,949 72,492,010 68,743,563 53,550,947 45,374,154 38,136,699 41,065,989 30,967,781 30,608,079 27,471,261 Total primary government net position $ 133,485,784 $ 221,350,050 $ 362,119,545 $ 373,329,823 $ 382,412,307 $ 386,017,528 $ 387,552,293 $ 390,105,115 $ 396,261,037 $ 408,637,927

153 Schedule 2 City of North Port, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Expenses Governmental activities: General government $ 5,342,695 $ 8,511,895 $ 10,659,706 $ 9,857,738 $ 9,289,078 $ 9,098,666 $ 7,737,411 $ 8,319,577 $ 8,632,871 $ 9,754,793 Public safety 16,488,112 20,367,418 26,400,467 28,458,500 27,594,695 26,684,201 27,112,638 27,432,173 27,591,686 28,688,863 Physical environment 6,594,383 8,128,412 10,344,171 11,134,764 11,418,026 11,595,816 11,889,847 11,121,362 12,308,823 11,890,530 Transportation 5,756,615 8,107,834 17,129,291 18,606,214 11,565,439 11,444,929 11,912,546 10,064,929 12,094,208 11,035,370 Economic environment 143, ,471 89, , , , , , , ,987 Human services 135, , , , , , , , , ,461 Culture and recreation 506, ,570 1,474,754 1,801,912 1,148,358 1,348,049 1,510,829 1,481,053 1,762,877 1,697,522 Interest on long-term debt 686, , , , , , , , ,419 1,362,416 Total governmental activities expenses 35,653,734 46,873,362 67,104,601 71,072,827 62,335,183 61,721,100 61,958,119 59,919,682 63,802,059 65,133,942 Business-type activities: Water and Sewer 9,876,568 13,109,805 14,798,796 14,906,788 15,220,092 15,015,613 16,735,294 16,374,879 16,214,079 17,252,790 Total business-type activities expenses 9,876,568 13,109,805 14,798,796 14,906,788 15,220,092 15,015,613 16,735,294 16,374,879 16,214,079 17,252,790 Total primary government expenses 45,530,302 59,983,167 81,903,397 85,979,615 77,555,275 76,736,713 78,693,413 76,294,561 80,016,138 82,386, Program Revenues Governmental activities: Charges for services: General government 2,316,603 3,847,137 2,723,077 2,983,556 7,060,963 6,015,910 6,133,422 5,791,610 6,077,812 7,588,456 Public safety 9,619,870 10,779,091 9,244,914 9,426,023 8,679,059 8,532,419 9,489,908 9,701,924 10,959,122 12,724,026 Physical environment 5,827,053 8,977,311 9,721,266 10,768,441 11,835,768 11,358,735 11,226,055 11,146,751 11,662,983 11,581,023 Transportation 3,664,572 6,516,202 8,879,557 7,316,217 8,631,685 7,354,268 7,031,970 6,981,639 7,602,325 10,641,111 Economic environment , Human services ,505 35,671 36,464 31,153 35,745 29,071 Culture and recreation 8,392 1,350 88, , , , , , , ,973 Operating grants and contributions 50,297 98,491 22, , , , , , , ,159 Capital grants and contributions 6,283,470 11,943,751 19,289,206 6,207,235 2,454,715 2,483,735 2,411, ,286 1,233,594 3,678,035 Total governmental activities program revenues 27,770,257 42,163,333 49,969,561 36,960,303 39,109,196 36,143,817 36,994,841 35,271,203 38,079,695 47,201,854 Business-type activities: Charges for services Water and Sewer 9,782,967 12,525,071 14,182,670 14,401,321 13,215,214 14,203,042 16,547,772 14,943,875 16,795,809 17,617,220 Operating grants and contributions ,945 10, Capital grants and contributions 6,344,187 24,411,619 7,248,028 6,588,075 3,119,889 1,926,598 1,465,916 2,271,112 3,358,686 1,899,485 Total business-type activities program revenues 16,127,154 36,936,690 21,430,698 20,989,396 16,356,048 16,139,947 18,013,688 17,214,987 20,154,495 19,516,705 Total primary government program revenues 43,897,411 79,100,023 71,400,259 57,949,699 55,465,244 52,283,764 55,008,529 52,486,190 58,234,190 66,718,559 Net (Expense)/Revenue Government activities (7,883,477) (4,710,029) (17,135,040) (34,112,524) (23,225,987) (25,577,283) (24,963,278) (24,648,479) (25,722,364) (17,932,088) Business type activities 6,250,586 23,826,885 6,631,902 6,082,608 1,135,956 1,124,334 1,278, ,108 3,940,416 2,263,915 Total primary government net expense $ (1,632,891) $ 19,116,856 $ (10,503,138) $ (28,029,916) $ (22,090,031) $ (24,452,949) $ (23,684,884) $ (23,808,371) $ (21,781,948) $ (15,668,173) (continued)

154 Schedule 2 (continued) City of North Port, Florida Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) 127 Fiscal Year General Revenues and Other Changes in Net Position Government activities: Taxes Ad valorem $ 8,452,729 $ 14,054,120 $ 15,919,913 $ 16,216,448 $ 11,078,235 $ 9,614,477 $ 8,035,010 $ 7,850,463 $ 8,071,414 $ 8,102,022 Insurance premium , , ,958 Service 1,945,682 2,224,709 2,282,276 2,513,047 2,761,832 2,627,795 2,610,742 2,621,537 2,597,548 2,602,545 Local business , , , , , ,502 Fuel 1,755,786 1,931,632 2,028,707 2,245,709 2,435,089 2,466,786 2,453,271 2,519,605 2,575,867 2,648,684 Discretionary sales surtax 4,476,532 5,114,733 4,975,793 5,553,659 5,413,033 5,554,577 5,801,652 6,097,183 6,883,376 7,424,336 Franchise fees 1,723,397 2,368,734 2,655,450 2,778, Impact fees Intergovernmental 4,255,307 4,597,118 4,740,510 4,426,835 4,211,548 4,317,889 4,584,561 4,982,968 5,689,363 6,310,324 Investment income 1,407,199 4,169,549 7,364,570 4,111,920 4,138,086 2,478, , , , ,457 Miscellaneous 235,911 15, , , , , , , , ,442 Transfers in , ,910 Proceeds from sale of land , Extraordinary item - Special item 876,970 32,913, , , Total governmental activities 25,129,513 67,389,602 40,554,172 38,149,420 30,367,494 27,414,688 24,931,866 26,107,903 28,176,376 28,869,180 Business-type activities: Impact fees Investment income 568,958 1,357,808 1,951,031 1,090, , , , ,290 92,745 56,352 Miscellaneous , ,304 Extraordinary item Transfers out (331,251) (349,910) Terminated participation in FMPTF 183, Total business-type activities 752,197 1,357,808 1,951,031 1,090, , , , ,290 (238,506) (290,254) Total primary government 25,881,710 68,747,410 42,505,203 39,240,194 31,172,515 28,058,170 25,219,649 26,361,193 27,937,870 28,578,926 Change in Net Position Governmental activities 17,246,036 62,679,573 23,419,132 4,036,896 7,141,507 1,837,405 (31,412) 1,459,424 2,454,012 10,937,092 Business-type activities 7,002,783 25,184,693 8,582,933 7,173,382 1,940,977 1,767,816 1,566,177 1,093,398 3,701,910 1,973,661 Total primary government $ 24,248,819 $ 87,864,266 $ 32,002,065 $ 11,210,278 $ 9,082,484 $ 3,605,221 $ 1,534,765 $ 2,552,822 $ 6,155,922 $ 12,910,753 Note: 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.

155 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 $ 2,040,049 $ 2,938,126 $ 1,990,049 $ 1,265,049 $ 661,649 $ 1,269,874 $ - $ - $ - $ - Unreserved 18,166,856 25,128,997 24,479,688 20,936,237 17,578,244 14,076, Nonspendable ,720 8,724 Restricted ,204,621 1,204, ,195 - Committed ,521 65,942 62,000 91,665 Assigned ,522,608 2,607,519 1,920,189 1,274,111 Unassigned ,359,530 7,048,977 8,515,309 8,911,526 Total general fund 20,206,905 28,067,123 26,469,737 22,201,286 18,239,893 15,345,928 12,223,280 10,927,059 10,704,413 10,286, All Other Governmental Funds Reserved 14,652 26,261 17,084 40, ,290 27, Unreserved, reported in: Special revenue funds 24,511,187 71,226,711 76,255,577 58,016,320 48,730,355 36,649, Capital projects funds 14,068,850 14,255,201 16,337,235 24,938,066 29,467,109 30,869, Nonspendable , , ,738 Restricted ,415,254 44,754,105 40,512,146 82,515,916 Committed ,475,560 12,253,091 13,005,335 11,538,200 Assigned Unassigned (396,848) (37,429) - - Total all other governmental funds $ 38,594,689 $ 85,508,173 $ 92,609,896 $ 82,994,772 $ 79,063,754 $ 67,546,859 $ 59,493,966 $ 57,055,680 $ 53,619,452 $ 94,542,854 Note: Fund balance classifications have been revised due to the implementation of GASB Statement 54 in fiscal year 2011.

156 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 $ 18,313,126 $ 25,739,928 $ 27,862,139 $ 29,307,181 $ 21,824,040 Permits, fees and special assessments 6,296,887 5,061,424 2,388,983 1,686,884 4,304,020 Intergovernmental 5,623,624 4,953,473 8,440,813 9,338,652 5,717,048 Charges for services 16,227,330 25,948,553 30,756,074 33,947,904 36,938,417 Fines and forfeiture 435, , , , ,937 Investment income 1,407,199 4,169,549 7,364,570 4,111,920 4,138,086 Impact fees 5,982,764 11,697,251 11,773,611 5,348,787 1,318,757 Miscellaneous 677, , , , ,592 Total revenues 54,963,904 78,955,741 89,386,416 84,863,215 75,006,897 Expenditures General government 6,708,415 9,990,420 12,640,181 13,975,908 14,059,467 Public safety 15,225,710 19,142,465 23,455,870 25,110,946 25,569,235 Physical environment 6,176,146 7,527,747 8,634,402 9,649,655 9,675,910 Transportation 5,405,585 7,615,201 15,071,631 16,753,068 9,374,251 Economic environment 143, ,682 88, , ,834 Human services 130, , , , ,494 Culture and recreation 308, ,914 1,249,272 1,499, ,450 Capital outlay 13,740,204 12,607,819 22,945,732 29,254,707 20,403,841 Debt service Principal 643,828 1,646,152 2,289,418 2,326,090 2,872,297 Interest 686, , , , ,079 Total expenditures 49,169,011 60,087,739 87,346,982 99,757,312 84,124,858 Excess (deficiency) of revenues over (under) expenditures 5,794,893 18,868,002 2,039,434 (14,894,097) (9,117,961) Other financing sources (uses) Proceeds from capital leases 833,154 2,992,391 3,011, ,951 1,197,500 Proceeds from bonds Proceeds from loans Proceeds from sale of land ,050 Transfers in 1,662,370 2,466,880 30,588,009 7,532,214 4,996,504 Transfers out (1,662,370) (2,466,880) (30,588,009) (7,532,214) (4,996,504) Insurance recoveries Total other financing sources (uses) 833,154 2,992,391 3,011, ,951 1,225,550 Special item 876,970 32,913, , ,571 - Net change in fund balances $ 7,505,017 $ 54,773,702 $ 5,504,337 $ (13,883,575) $ (7,892,411) Debt service as a percentage of noncapital expenditures 3.76% 5.01% 4.80% 4.42% 5.67% Note: Includes general, special revenue, capital projects and expendable trust funds 129

157 Fiscal Year $ 20,401,079 $ 19,004,248 $ 19,947,859 $ 20,984,266 $ 21,605,047 4,870,703 4,268,359 4,301,775 4,329,926 8,473,706 5,394,013 7,139,199 5,489,049 6,319,650 9,722,334 34,744,416 35,302,253 34,164,683 36,446,062 39,172, , , , , ,801 2,478, , , , , , , , , ,296 68,661,511 67,631,991 65,530,745 69,702,703 80,143,577 13,802,731 12,621,710 11,915,962 11,875,470 13,335,577 25,292,455 25,600,876 26,343,281 26,204,602 27,727,273 9,715,681 10,065,323 9,017,469 9,954,925 9,590,224 9,142,768 9,669,911 7,265,774 8,870,383 8,109, , , , , , , , , , ,161 1,047,683 1,219, , , ,752 21,213,361 15,669,821 10,871,277 3,856,905 22,241,013 2,460,756 2,247,789 1,553,021 10,984,758 2,075, , , , , ,142 84,177,371 78,807,532 69,334,840 74,045,347 85,685,797 (15,515,860) (11,175,541) (3,804,095) (4,342,644) (5,542,220) 1,105, , ,742,230 4,843, ,118,007 2,093,590 6,539,495 2,190,908 3,898,832 (2,118,007) (2,093,590) (6,539,495) (1,859,657) (3,548,922) , , ,392 1,105,000-69, ,770 46,047, $ (14,410,860) $ (11,175,541) $ (3,734,507) $ (3,658,874) $ 40,505, % 4.52% 3.56% 16.33% 4.81% 130

158 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, Property Property Property a Property Property Value Tax Rate $ 1,995,243,394 $ 124,640,500 $ 223,080,926 $ 72,362,507 $ 625,218,116 $ 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 $ ,463,603, ,782, ,901, ,729,184 1,009,966,953 2,266,049,616 $ b ,015,443 1,009,895,744 2,421,145,761 $3.45 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 Industrial property amount includes railroad properties classified as centrally assessed property. b Information for the breakdown of the real property not available from the County for 2014.

159 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 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. 132

160 Schedule 7 City of North Port, Florida Principal Property Taxpayers 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 Benderson Properties $ 29,447, % $ - - North Port Woodspring LLC 16,854, Lennar Homes LLC 16,339, Walgreen Co. 14,056, DiVosta Homes LP 14,030, ,550, % Wal-Mart Stores East LP 13,784, Marsh Creek Holdings Ltd 12,192, ,435, Lowes Home Centers Inc. 10,945, Pacolet Milliken Enterprises Inc. 9,915, Home Depot USA Inc. 8,128, Dennis J. Fullenkamp Realty ,841, North Port Park of Commerce ,366, Vestcor ,366, Heron Creek Associates Ltd ,991, North Port Parkway LLC - - 7,341, Shoppes of North Port Ltd ,900, Toledo Club Apartments LLC - - 6,781, Heron Creek 3S LLC - - 6,775, $ 145,695, % $ 103,349, % Source: Sarasota County Property Appraiser 133

161 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 $ 8,935,418 $ 8,430,651 94% $ 15,101 $ 8,445,752 95% ,490,734 14,039,019 97% 34,661 14,073,680 97% ,443,468 15,885,252 97% 166,226 16,051,478 98% ,750,302 16,050,223 96% 116,580 16,166,803 97% ,373,053 10,961,655 96% 91,400 11,053,055 97% ,907,885 9,523,076 96% 138,782 9,661,858 98% ,306,731 7,896,228 95% 89,609 7,985,837 96% ,150,499 7,760,853 95% 130,625 7,891,478 97% ,201,835 7,939,111 97% 28,949 7,968,060 97% ,339,025 8,073,073 97% - 8,073,073 97% Source: Sarasota County Property Appraiser Note: (a) Includes discount taken for early payment of property taxes.

162 Schedule 9 City of North Port, Florida Ratios of Outstanding Debt by Type Last Ten Fiscal Years 135 Fiscal Year Sales Tax Revenue Bonds Governmental Activities Transportation Improvement Capital Leases Assessment Bonds $ - Loans Payable Business-Type Activities Water and Sewer Bonds Loans Payable Total Primary Government Percentage of Personal Income a Per Capita a 2005 $ 15,000,000 2,677,963 $ $ - $ 30,420,000 $ - $ 48,097, $ 1, ,380,000 4,644, ,720,213-48,744, , ,750,000 5,995, ,613,036-48,358, ,105,000 5,190, ,839,964-46,135, ,445,000 4,175, ,559,321 10,491,900 53,672, ,765,000 3,500, ,229,292 20,843,500 61,338, , ,055,000 1,962, ,964,321 22,960,814 55,942, ,320,000 1,144, ,857,269 22,367,183 52,688, b - 638, ,716,761 23,846,934 42,202, ,550 37,850,000 4,843,703 16,601,127 22,726,833 82,260, ,364 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 in Schedule 14. b Sales Tax Revenue Bonds were defeased July, 2013.

163 Schedule 10 City of North Port, Florida Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Year Ended September 30, Sales Tax Revenue Bonds Transportation Improvement Assessment Bonds Total Percentage of Actual Taxable Value of Property a Per Capita b 2005 $ 15,000,000 $ - $ 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, % ,320,000-10,320, % c % ,850,000 37,850, % 628 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. a See Schedule 5 for property value data. b Population data can be found in Schedule 14. c Sales Tax Revenue Bonds were defeased July,

164 Schedule 11 City of North Port, Florida Direct and Overlapping Governmental Activities Debt As of September 30, 2014 Governmental Unit Debt Outstanding Estimated Percentage Applicable a Estimated Share of Overlapping Debt Overlapping debt Sarasota County School Board $ 197,617, % $ 30,777,852 Sarasota County Board of County Commissioners 323,141, % 50,327,590 Subtotal, overlapping debt 81,105,442 City of North Port, direct debt 42,932,253 Total direct and overlapping debt $ 124,037,695 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. 137

165 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. 138

166 Schedule 13 City of North Port, Florida Pledged-Revenue Coverage Last Ten Fiscal Years Water & Sewer Revenue Bonds/SRF Loans Fiscal Year Utility Less: Net Ended Gross Operating Available Debt Service September 30, Revenues a Expenses b Revenue Principal Interest Coverage 2005 $ 10,351,925 $ 6,308,858 $ 4,043,067 $ 1,005,000 $ 1,524, ,882,879 9,207,782 4,675,097 1,071,695 1,429, ,133,701 10,563,774 5,569,927 1,107,177 1,396, ,492,095 10,740,068 4,752, ,017 1,002, ,039,420 11,078,730 2,960,690 1,280,643 1,154, ,846,524 10,337,404 4,509,120 1,330,029 1,101, ,835,555 11,509,610 5,325,945 1,515,858 1,016, ,197,165 10,884,361 4,312,804 1,700,682 1,601, ,888,554 11,325,211 5,563,343 2,240,324 1,254, ,673,572 12,334,234 5,339,338 2,234,757 1,196, 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 d The sales tax revenue bonds were currently refunded with available funds. e The sales tax revenue bonds were defeased July, f A two-year moratorium on transporation impact fees was approved by the City Commission on January 30, The moratorium was extended until January 31, 2015 at the January 27, 2014 Commission meeting. g No principal or interest payments due on the SIB loan until FY

167 Sales Tax Revenue Bonds State Infrastructure Bank Loan Half-Cent Transportation Discretionary Sales Tax Debt Service c Impact Sales Debt Service c Revenues Principal Interest Coverage Fees Surtax Principal Interest Coverage $ 2,997,055 $ - $ 581, $ - $ - $ - $ - - 3,390, , , ,212, , , ,543, , , ,367, , , ,450, , , ,620, , , ,908, , , ,235,193 10,320, , d e - 7,424, f, g 140

168 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 ,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, % ,674 3,154,842,306 53, % ,231 3,282,700,482 55, % ,295 3,416,374,995 56, % Source: a City of North Port Neighborhood Development Services Department b c Bureau of Economic and Business Research, University of Florida; County data is used due to no city data being available. U.S. Bureau of Labor Statistics 141

169 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, % 5, % Sarasota County Government 3, % 3, % Sarasota Memorial Hospital 3, % 3, % PGT Industries 1, % 1, % Publix Super Markets 1, % 3, % Venice Regional Medical Center 1, % 1, % Sun Hydraulics Corporation % Sunset Automotive Group % Tervis Tumbler % Goodwill Industries % Wal-Mart , % Charter One Hotels % Nielsen Media Research % Doctors Hospital of Sarasota % Total 18, % 21, % Total Sarasota County Employment 162, ,295 Source: Florida Agency for Workforce Innovation, Labor Market Statistics Statistics are for Sarasota County; not available for City of North Port 142

170 Schedule 16 City of North Port, Florida Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 143 Fiscal Year Function/Program General Government Commission City Auditor and Clerk Finance Planning and Zoning Building Department General 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.

171 Schedule 17 City of North Port, Florida Operating Indicators by Function/Program Last Ten Fiscal Years Fiscal Year Function/Program Police Physical arrests 2,821 1,519 1, ,039 1,611 1,840 1,827 1,439 Parking violations Traffic violations 8,528 8,108 8,087 5,908 8,837 9,137 9,204 10,677 11,272 10,008 Fire Emergency Responses 4,288 4,936 5,075 5,298 5,476 4,202 5,683 5,849 6,018 6,100 Streets and highways Streets resurfaced (miles) Paved Streets (miles) Water New connections 1,027 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) 22,406 24,616 25,609 25,384 23,059 23,096 22,967 23,058 24,547 28,107 Recyclables collected (tons per year) 3,000 5,286 5,576 5,661 5,768 6,264 7,031 7,895 8,188 8,502 Source: Various City Departments Note: Indicators are not available for the general government function.

172 Schedule 18 City of North Port, Florida Capital Asset Statistics by Function/Program Last Ten Fiscal Years 145 Fiscal Year Function/Program Police Stations Patrol units Fire Stations Streets and highways Streets (miles) Traffic Signals Water Water mains (miles) Storage capacity (millions of gallons) Fire hydrants 1,092 1,501 1,544 1,699 1, Wastewater Sanitary sewers (miles) Treatment capacity (thousands) Manholes 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.

173 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor, City Commission and City Manager City of North Port, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, 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, 2014, and the related notes to the financial statements, which collectively comprise the City s basic financial statements, and have issued our report thereon dated March 12, Our report includes a reference to other auditors who audited the financial statements of the City of North Port, Florida Police Officers Pension Trust Fund, 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 auditors. Also, as referenced in our report, the City s pension trust funds adopted new accounting guidance and implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans an amendment to GASB No. 25 as of October 1, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control. Accordingly, we do not express an opinion on the effectiveness of the City s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance SIXTH AVE WEST, SUITE 600 BRADENTON, FLORIDA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 146

174 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Bradenton, Florida March 12,

175 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Honorable Mayor, City Commission and City Manager City of North Port, Florida Report on Compliance for Each Major Federal Program We have audited the City of North Port, Florida s (the City) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement and the requirements described in the Department of Financial Services State Projects Compliance Supplement, that could have a direct and material effect on each of the City s major federal programs and state projects for the year ended September 30, The City's major federal programs and state financial assistance projects are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs and state projects. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the City s major federal programs and state projects based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter , Rules of the Auditor General. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program and state project occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program and state project. However, our audit does not provide a legal determination of the City's compliance SIXTH AVE WEST, SUITE 600 BRADENTON, FLORIDA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 148

176 Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and state projects for the year ended September 30, Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program and state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and state project and to test and report on internal control over compliance in accordance with OMB Circular A-133 and Chapter , Rules of the Auditor General, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program and state project on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133 and Chapter , Rules of the Auditor General. Accordingly, this report is not suitable for any other purpose. Bradenton, Florida March 12,

177 CITY OF NORTH PORT, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended September 30, 2014 SECTION I - SUMMARY OF AUDIT RESULTS Financial Statements Type of auditor s report issued Unmodified Internal control over financial reporting: Material weaknesses identified? yes X no Significant deficiencies identified not considered to be material weaknesses? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Programs and State Financial Assistance Projects Internal Control over major federal or state programs: Material weaknesses identified? yes X no Significant deficiencies identified not considered to be material weaknesses? yes X none reported Type of auditor s report issued on compliance for major Federal programs and state financial assistance projects: Unmodified Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)? yes X no Identification of major federal program: CFDA Number Name of Federal Program or Cluster Highway Planning and Construction Identification of major state financial assistance projects: SCFA Number Name of State Project or Cluster Transportation Systems Operations Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? yes X no 150

178 CITY OF NORTH PORT, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended September 30, 2014 SECTION II - FINANCIAL STATEMENT FINDINGS AND RESPONSES This section identifies the significant deficiencies, material weaknesses, fraud, illegal acts, violations of provisions of contracts and grant agreements, and abuse related to the basic financial statements that are required to be reported in accordance with Government Auditing Standards. There were no current year audit findings reported. SECTION III - FEDERAL AWARD AND STATE FINANCIAL ASSISTANCE PROJECT FINDINGS AND QUESTIONED COSTS This section identifies the significant deficiencies, material weaknesses and material instances of noncompliance, including questioned costs as well as any abuse findings involving Federal awards that are material to a major program, as required by Circular A-133 Section 510(a). There were no current year audit findings reported. SECTION IV - SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS There were no prior year audit findings reported. 151

179 CITY OF NORTH PORT, FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE FOR THE YEAR ENDED SEPTEMBER 30, 2014 Federal Grantor/State Agency/Pass-Through Grantor Program or Cluster Title CFDA/CSFA Number Grant/Contract Number Federal/State Expenditures US Department of Homeland Security Passed through the United Way Suncoast Emergency Food and Shelter Program Phase 30 $ 6,620 Total US Department of Homeland Security 6,620 US Department of Justice Bureau of Justice Assistance Bulletproof Vest Partnership BVP 676 Bureau of Justice Assistance Bulletproof Vest Partnership BVP 2,710 Bureau of Justice Assistance Bulletproof Vest Partnership BVP 1,150 Bureau of Justice Assistance Edward Byrne Memorial JAG DJ-BX ,249 Bureau of Justice Assistance Edward Byrne Memorial JAG DJ-BX-0102 V 12,232 Total US Department of Justice 29,016 US Environmental Protection Agency Passed through Florida Department of Environmental Protection Clean Water State Revolving Fund Loan WW ,739 Passed through Charlotte Harbor Estuary Program National Estuary Program Total US Environmental Protection Agency 28,989 Federal Highway Administration Passed through Florida Department of Transportation Highway Planning and Construction AQT75/ / ,743 Passed through Florida Department of Transportation Highway Planning and Construction ARA27/ / ,473 Passed through Florida Department of Transportation Highway Planning and Construction ARA28/ / ,338 Passed through Florida Department of Transportation Highway Planning and Construction AR079/ / Total Federal Highway Administration 958,665 US Department of Housing and Urban Development Passed through Sarasota County Community Development Block Grant B-11-UC ,011 Passed through Sarasota County Community Development Block Grant B-12-UC ,993 Department of Housing and Urban Development EDI Special Project B-10-SP-FL ,900 Total US Department of Housing and Urban Development 154,904 TOTAL EXPENDITURES OF FEDERAL AWARDS 1,178,194 FL Department of Health Pass through Sarasota County County Grant Awards C2056 4,185 Total FL Department of Health 4,185 FL Department of Transportation State Infrastructure Bank Transportation Systems Operations AQO58/ ,532,659 Total FL Department of Transportation 6,532,659 TOTAL EXPENDITURES OF STATE FINANCIAL ASSISTANCE 6,536,844 TOTAL EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE $ 7,715,038 See accompanying notes. 152

180 CITY OF NORTH PORT, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE FOR THE YEAR ENDED SEPTEMBER 30, 2014 GENERAL The accompanying schedule of expenditures of federal awards and state financial assistance presents the activity of all applicable federal and state 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 awards and state financial assistance received directly from federal and state agencies, as well as through other government agencies, are included on the schedule. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards and state financial assistance 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, 2014, 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. LOANS The City received loans during the year that are included in the federal and state expenditures presented in the schedule. The balance of loans outstanding at September 30, 2014 consists of the following: CFDA $ 22,726,833 CSFA ,843,703 TOTAL $ 27,570,

181 INDEPENDENT AUDITOR S MANAGEMENT LETTER Honorable Mayor, City Commission, and City Manager City of North Port, Florida Report on the Financial Statements We have audited the financial statements of the City of North Port, Florida (the City ), as of and for the fiscal year ended September 30, 2014, and have issued our report thereon dated March 12, Auditor s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter , Rules of the Auditor General. Other Reports and Schedule We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 and Independent Accountant s Report on an examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter , Rules of the Auditor General. Disclosures in those reports and schedule, which are dated March 12, 2015, should be considered in conjunction with this management letter. Prior Audit Findings Section (1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial report SIXTH AVE WEST, SUITE 600 BRADENTON, FLORIDA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 154

182 Official Title and Legal Authority Section (1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The information has been disclosed in the notes to the financial statements. Financial Condition 1Section (1)(i)5.a., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the City has met one or more of the conditions described in Section (1), Florida Statutes, and identification of the specific conditions(s) met. In connection with our audit, we determined that the City did not meet any of the conditions described in Section (1), Florida Statutes. Pursuant to Sections (1)(i)5.c. and (8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management s responsibility to monitor the City s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by the same. Annual Financial Report Section (1)(i)5.b., Rules of the Auditor General, requires that we report the results of our determination as to whether the annual financial report for the City for the fiscal year ended September 30, 2014, filed with the Florida Department of Financial Services pursuant to Section (1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, In connection with our audit, we determined that these two reports were in agreement. Special District Component Units Section (1)(i)5.d., Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of a county, municipality, or special district, provided the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section (3)(b), Florida Statutes. In connection with our audit, we determined that all special district component units provided the necessary information for proper reporting in accordance with Section (3)(b), Florida Statutes. Other Matters Section (1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. 155

183 Section (1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contract or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. Bradenton, Florida March 12,

184 INDEPENDENT AUDITOR S REPORT Honorable Mayor, City Commission, and City Manager City of North Port, Florida We have examined the City of North Port, Florida s (the City ) compliance with Section , Florida Statutes, regarding the investment of public funds during the year ended September 30, Management is responsible for the City s compliance with those requirements. Our responsibility is to express an opinion on the City s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the City s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the City s compliance with specified requirements. In our opinion, the City complied, in all material respects, with the aforementioned requirements for the year ended September 30, This report is intended solely for the information and use of the City and the Auditor General, State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. Bradenton, Florida March 12, SIXTH AVE WEST, SUITE 600 BRADENTON, FLORIDA FAX MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 157