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CAFR_FY Ending_09-30-2011VILLAGE OF TEQUESTA, FLORIDA TEQUESTA FEST, 2011 ComprehensiveAnnualFinancialReport FiscalYearEndingSeptember30,2011 VILLAGEOFTEQUESTACOUNCILMEMBERS2011 Fromlefttoright:CouncilMemberCalvinTurnquest,ViceMayorVinceArena, CouncilMemberAbbyBrennan,CouncilMemberJamesHumpage,MayorThomasPaterno VILLAGE OF TEQUESTA, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Prepared By Finance Department The Village of Tequesta, Florida VILLAGE OF TEQUESTA, FLORIDA TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal .............................................................................................................. i-v Certificate of Achievement for Excellence in Financial Reporting ....................................... vi Organization Chart ................................................................................................................ vii List of Principal Officials ..................................................................................................... viii II. FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT ........................................................................... 1-2 MANAGEMENT’S DISCUSSION AND ANALYSIS ..................................................... 3-15 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets ...................................................................................................16 Statement of Activities .....................................................................................................17 Fund Financial Statements Balance Sheet – Governmental Funds ..............................................................................18 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds .....................................................................................................19 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..................................20 Statement of Net Assets – Proprietary Funds ...................................................................21 Statement of Revenues, Expenses and Changes in Net Assets – Proprietary Funds .......22 Statement of Cash Flows – Proprietary Funds .................................................................23 Statement of Fiduciary Net Assets – Fiduciary Funds .....................................................24 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds ..................................25 Notes to Financial Statements ....................................................................................... 26-66 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule – General Fund ..............................................................67 Note to the Budgetary Comparison Schedule .....................................................................68 Schedule of Employer Contributions - Pensions .................................................................69 Schedule of Funding Progress - Pensions ...........................................................................70 Schedule of Funding Progress - Other Post Employment Benefits .....................................71 VILLAGE OF TEQUESTA, FLORIDA TABLE OF CONTENTS COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Combining Balance Sheet – Nonmajor Governmental Funds ............................................72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds .......................................................................................73 Budgetary Comparison Schedule – Special Law Enforcement Trust Fund ........................74 Budgetary Comparison Schedule – Capital Improvement Fund .........................................75 Budgetary Comparison Schedule – Capital Projects Fund .................................................76 Combining Statement of Net Assets – Nonmajor Enterprise Funds ...................................77 Combining Statement of Revenues, Expenses and Changes in Net Assets – Nonmajor Enterprise Funds ..............................................................................................78 Combining Statement of Cash Flows – Nonmajor Enterprise Funds .................................79 Combining Statement of Fiduciary Net Assets ...................................................................80 Combining Statement of Changes in Fiduciary Assets .......................................................81 III. STATISTICAL SECTION Net Assets by Component ......................................................................................................82 Changes in Net Assets ...................................................................................................... 83-84 Fund Balances, Governmental Funds .....................................................................................85 Changes in Fund Balances, Governmental Funds ..................................................................86 Assessed and Estimated Actual Value of Taxable Property ..................................................87 Property Tax Rates – All Direct and Overlapping Governments ...........................................88 Principal Property Taxpayers .................................................................................................89 Property Tax Levies and Collections .....................................................................................90 Ratios of Outstanding Debt by Type ......................................................................................91 Ratio of Net Outstanding Debt to Assessed Value and Net Bonded Debt Per Capita ............................................................................................................................92 Computation of Legal Debt Margin .......................................................................................93 Direct and Overlapping Governmental Activities Debt .........................................................94 Pledged-Revenue Coverage – Revenue Bonds - 1994 ...........................................................95 Demographic and Economic Statistics ...................................................................................96 Principal Employers – Palm Beach County ...........................................................................97 Full-time-Equivalent Village Government Employees by Function/Program .......................98 Operating Indicators by Function/Program ............................................................................99 Capital Asset Statistics by Function/Program ......................................................................100 VILLAGE OF TEQUESTA, FLORIDA TABLE OF CONTENTS IV. COMPLIANCE SECTION Independent Auditors’ Report on Compliance and 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 .......... 101-102 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida .......................................................................................................... 103-104 Page Intentionally Left Blank INTRODUCTORY SECTION Village of Tequesta 345 Tequesta Drive Tequesta, Florida 33469-0273 (561) 768-0424 www.Tequesta.org March 27, 2012 To the Honorable Mayor, Members of the Village Council And Citizens of the Village of Tequesta, Florida We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of the Village of Tequesta (the Village) for the fiscal year ended September 30, 2011. Publication of the CAFR meet the requirement of Chapter 11.45 of the Florida Statues, Chapter 10.550 of the rules of the Auditor General of the State of Florida which requires the Village to publish, within nine months of the close of each fiscal year, a complete set of audited financial statements. The Village of Tequesta’s Comprehensive Annual Financial Report (CAFR), for the fiscal year ended September 30, 2011 is published not only to meet legal requirements, but to demonstrate the Village philosophy of transparency by presenting all disclosures necessary for the reader to gain an understanding of the Village’s financial activities and condition. The CAFR’s role is to assist in making economic, social and political decisions and to assist in assessing accountability to the citizenry. To this end the CAFR compares actual financial results with legally adopted budgets where appropriate, assesses financial condition and results of operations, assists in determining compliance with finance related laws, rules and regulations and assists in evaluating the efficiency and effectiveness of Tequesta’s operations. Additionally, The financial statements included in this report conform to generally accepted accounting principles (GAAP) in the United States of America as promulgated by the Governmental Accounting Standards Board (GASB). Management provides a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis. The MDA complements this letter of transmittal and should be read in conjunction with it. This report consists of management’s representations concerning the finances of the Village of Tequesta. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentation is with the management of Tequesta. To provide a reasonable basis for making these representations, management established a comprehensive internal control framework that is designed for this purpose. Because the cost of internal controls should not outweigh their benefits, the Village’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. i The Village’s financial statements have been audited by Marcum LLP, independent auditors, who rendered an unqualified opinion that the Village’s financial statements for the fiscal year ended September 30, 2011 are fairly presented in accordance with GAAP. The independent auditors’ report is located at the front of the financial section of this report. PROFILE OF THE VILLAGE OF TEQUESTA The Village of Tequesta, Florida is a municipal corporation organized June 4, 1957 pursuant to Special Act 57-1915, Laws of Florida. The Village has a Council-Manager form of government. All powers of the Village are vested in an elected governing body of the Village consisting of a five member Village Council responsible for enacting ordinances, resolutions and regulations governing the Village, adopting budgets, determining policies, as well as appointing the members of various advisory boards and the Village Manager. The Village Manager executes the laws and administers the government as well as attends to the day-to-day affairs of the Village. The Village of Tequesta provides a full range of services, including police and fire protection; the construction and maintenance of streets and other infrastructure; recreational and cultural activities; water and stormwater utilities and contracts for sanitation services. The Village’s basic operating unit is a department. Departments concentrate their activities on various functions: general government, public safety, transportation and leisure services. For fiscal year 2011 the gross taxable value of real, personal and centrally assessed property was $780 million. The majority of the Village is made up of residential properties. Commercial properties represent approximately 10% of property values. The Village has no discernable level of industry. THE BUDGET FOR PLANNING AND CONTROL The annual budget serves as the foundation for the Village of Tequesta’s financial planning and control. The budget is a policy document which incorporates and reflects the values, goals and priorities identified by the Village Council and residents. It is also the Village’s proposed business plan for the fiscal year, outlining the priorities and financial resources to carry out the Council’s mission of maintaining and enhancing the highest possible level of public service delivery and quality of life for the Village of Tequesta residents. Operating budgets, as well as a 5 year capital improvement plan, are adopted on an annual basis by our governing body. The legal level of budgetary control is at the fund level; st however, the Village manages at the department level. Prior to October 1, the Village Council adopts the approved budget along with a resolution establishing the property tax rate (millage) required to fund the budget. Department heads recommend transfers of budgeted amounts within their department. Supplemental appropriations require the special approval of the governing council. All annual appropriations lapse at the end of the fiscal year. The Village department’s submits their budgets to the Village Manager, who after review submits the proposed budget to the Village Council. The Village Council reviews the budget, holds workshops and two public hearings to obtain citizen before approving the st budget.. Prior to October 1, the Village Council adopts the approved budget along with a resolution establishing the property tax rate (millage) required to fund the budget. Department heads recommend transfers of budgeted amounts within their department. The ii Village Council established procedures by which the designated budget officer may authorize certain budget amendments within a department provided that the total of the appropriations of the department is not changed, all other transfers and supplemental appropriations require the approval of the governing council. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Village of Tequesta operates. LOCAL ECONOMY AND ECONOMIC CONDITION AND OUTLOOK The Village of Tequesta is an affluent residential community in Palm Beach County, Florida. Tequesta’s growth potential is restricted by the natural boundaries of the Atlantic Ocean to the east, the Loxahatchee River to the west, the Town of Jupiter to the south and Martin County to the north. The Village is approximately 2 square miles and almost completely built-out/developed. Property value assessments for tax year 2011 decreased approximately 7%, which is the third year the Village has experienced a reduction in property values. According to the National Bureau of Economic Research, the economic recession officially began December 2007 and ended June 2009. The Village of Tequesta and many other governments are still feeling the effect of the longest recession since WWII. By the end of 2011, according to the U.S. Commerce Department, gross domestic product, the broadest measure of the nations’ economic health, grew at a 2.8% annual rate in the last three months of the year. However much of the growth came from businesses building up their stock of goods, and according the Bruce Yandle, an economics professor at Mercatus Center at George Mason University, this may be something to be worried about if consumers don’t end up buying as much as firms hoped. At the same time, cuts in state and local government dragged on economic growth for the sixth quarter in a row. The Federal Reserve expects the economy to grow between 2.2% and 2.7% in 2012 and recently announced it plans to keep the federal funds rate near zero until late 2014 because the economy remains too weak to warrant higher interest rates any time soon. Although the glut of foreclosed properties has put downward pressure on home prices in South Florida, with Palm Beach County (the County) faring the worst, there are indications that Tequesta has experienced less of an exposure to the housing foreclosures than reported for the County. In 2010, one indicator, the Village of Tequesta’s utility billing data, identified that less than one-half of a percent (½ %) of the utility billing accounts had been transferred from individuals to banks or other lending institutions (foreclosed). And we saw a shrinking of that list in 2011, as banks began to sell these properties. The downside of these sales are that many of them were distressed and will put a downward pressure on prices - which will impact Tequesta’s revenue from ad valorem taxes. Additionally, as noted above in the discussion of national and state trends, the current economic conditions may be slow to improve.As with other municipalities across the nation, the Village is iii challenged with balancing the high expectations and demand for top quality municipal services with the ability to raise revenue to pay for them. The Village noticed that revenue from sales taxes were flat, and according to the State of Florida’s budget report, the expectation is that the sluggish economic recovery is expected to keep tax dollars from growing significantly. The biggest indicators of an upswing in this economy are lower unemployment and job growth and there have not been significant changes in either. OUR FUTURE The Village of Tequesta is experiencing the same negative economic environment that is covering the country and affecting many municipalities. The Village was prudent over the past few years when it was apparent that the continued increase in credit and property values could not be sustained by using additional income to pay down debt, to purchase, construct and repair capital assets with existing cash and to build reserves. In better economic times these would have been good choices for the Village, in these uncertain economic times, they give the Village an opportunity to adjust to downward trends without having to take extreme measures. However, it is important to note that it is not an easy task for the Village to maintain a consistent and high level of quality services to the residents in these times, even though the Village Council, administration and working staff may make it appear that way. It is hard work, long hours, pay and benefit concessions and the making of fiscally sound, responsible and sometimes painful decisions by the administration, working staff and Village Council that prevented the Village from having to increase rates. The Village is very fortunate to have a citizenry that is active on many boards and committees, a working staff that has shown its willingness to take on additional responsibilities and an expanded workload and very importantly, a Village Council that is very responsive to the needs of the residents and staff. LONG-TERM FINANCIAL PLANNING Due to the state of the economy, the main focus/challenge of long-term financial planning for the Village of Tequesta continues to be maintaining a high level of services supported by a stagnant economy. The Village of Tequesta’s primary focus is to identify additional revenue sources and cost savings. Some of the new revenue sources the Village has identified include new lease contracts, the contracting of existing services to other governments. Additionally, Tequesta is looking at contiguous unincorporated pockets, where annexation would be mutually beneficial. As with so many governments, the Village will be researching ways to control the growing cost of health care and post retirement benefits. To this end, a health benefits committee was formed, which includes employees and representatives from all collective bargaining units, to meet and explore ways to control and manage these costs while affording employees health care. Tequesta continues to discuss options with the three collective bargaining units to control the cost of post retirement benefits. MAJOR INITIATIVES Review the Village’s investment policies and strategies to protect the Village’s assets in the current economical environment. iv Continue to explore alternative revenue sources, at both the state and federal level, with the assistance of a professional lobbyist. Continue to explore annexation of contiguous properties in unincorporated Palm Beach County. Seek out new ways to reduce the cost of health care and post retirement benefits. Complete construction of a new reverse osmosis train reducing demand on surficial wells and increasing natural water supply. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Tequesta for its comprehensive annual financial report for the fiscal year ended September 30, 2010. This was the twenty- seventh consecutive year that Tequesta has received this prestigious award. In order to be awarded a Certificate of Achievement, Tequesta had to publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. We believe that our current comprehensive annual financial report will continue to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Tequesta’s finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. In closing, we must also acknowledge the Mayor and Council for their unfailing support for maintaining the highest standards of professionalism in the management of the Village of Tequesta’s finances. Respectfully submitted, Michael R. Couzzo, Jr. JoAnn Forsythe, CPA Village Manager Finance Director v vi VILLAGE OF TEQUESTA, FLORIDA ORGANIZATION CHART SEPTEMBER 30, 2011 vii VILLAGE OF TEQUESTA, FLORIDA LIST OF PRINCIPAL OFFICIALS SEPTEMBER 30, 2011 VILLAGE COUNCIL Thomas Paterno Mayor Vince Arena Vice-Mayor Abby Brennan Councilmember James Humpage Councilmember Calvin Turnquest Councilmember VILLAGE OFFICIALS Michael R. Couzzo, Jr. Village Manager Trela White (Corbett & White, PA) Village Attorney Lori McWilliams, MMC Village Clerk JoAnn Forsythe, CPA Finance Director James M. Weinand Fire Chief Gerald Pitocchelli Police Chief James M. Weinand Community Development Director Russell White Public Services Manager Michael R. Couzzo, Jr. Utilities Director Greg Corbitt Parks and Recreation Director Merlene Reid Human Resources Director VILLAGE INDEPENDENT AUDITORS Marcum LLP viii FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida 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 Village of Tequesta, Florida (the Village), as of and for the year ended September 30, 2011, which collectively comprise the Village’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Village's management. Our responsibility is to express opinions on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Village’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village as of September 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As more fully described in Note 1 to the financial statements, the Village implemented the requirements of Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, which significantly changed the classifications of fund balance of governmental funds. 1 In accordance with Government Auditing Standards, we have also issued our report dated March 27, 2012 on our consideration of the Village’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the budgetary comparison schedule, and the schedules of funding progress and employer contributions on pages 3 to 15 and pages 68 and 71, respectively, 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, which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted principally of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village’s basic financial statements as a whole. The introductory section, combining and individual fund statements and schedules, and the statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules have been subjected to the auditing procedures applied by us 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit, the information is fairly stated, in all material respects in relation to the basic financial statements taken as a whole. The information included in the introductory and statistical sections have not been subjected to auditing procedures applied by us in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. West Palm Beach, FL March 27, 2012 2 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) As management of the Village of Tequesta (The Village), we offer readers of the Village’s financial statement this narrative overview and analysis of the financial activities of the Village for the fiscal year ended September 30, 2011 to provide information that will help in making decisions or drawing conclusions about the Village. We encourage readers to consider the information presented here in conjunction with the additional information that we have furnished in the letter of transmittal found on pages i to v of this report. Financial Highlights The assets of the Village of Tequesta exceeded its liabilities at the close of fiscal year 2011 by $34 million (net assets). Of this amount, $9 million (unrestricted net assets) may be used to meet the ongoing obligations to the citizens and creditors. The Village’s total net assets increased by $3.3 million (10.8%) during the current fiscal year. This increase is largely attributable to the donation of $2.7 million in capital assets (Tequesta Bridge). General revenues decreased $480 thousand (6.4%). This decrease is mainly due to a decrease in property values resulting in lower revenues from ad valorem (property) taxes. Total government-wide expenses decreased $485 thousand or 3.4% over the prior year. This was mainly attributable to the reduced cost of keeping a balanced level of services to all residents, related to the closing of the “old” Tequesta Bridge and the building of the “new” Tequesta Bridge, as the bridge was completed and opened. As of the close of the 2011 fiscal year, the Village’s governmental funds reported combined ending fund balances of $4.7 million, a decrease of $759 thousand (13.9%) from fiscal year 2010. Approximately $600 thousand was attributable to the Village’s portion of the construction Tequesta Bridge in FY 2011. At the end of the current fiscal year, fund balance for the General Fund was $4.0 million, an increase of $53 thousand (1.3%) from the prior year. Of this balance, $31 thousand in inventory and $196 thousand in prepaid items were nonspendable; $287 thousand for debt service and $133 thousand of building permit fees were restricted; $372 of the subsequent year’s budget and $1 million for Hurricane/disaster were assigned and $2.0 million was unassigned and available for new spending. The Village’s total non-current liabilities decreased by $426 thousand (4.1%) during the current fiscal year. Please see, Notes to Basic Financial Statements, Note 7 on page 49. The Village did not expend $500,000 or more in Federal and/or State financial assistance in the fiscal year ended September 30, 2011 and for that reason did not meet the threshold for a single audit according to the Florida Single Audit Act (section 215.97 F.S.) and OMB Circular A-133. 3 Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Village of Tequesta’s basic financial statements. The Village’s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. In addition to these basic financial statements, this report contains other supplementary information. Government-wide financial statements: Thegovernment-wide financial statements are designed to provide readers with a broad overview of the Village’s financial position and activities, in a manner similar to a private-sector business. These statements do not include the Village’s fiduciary funds because resources of these funds cannot be used to finance the Village’s activities. However, the financial statements of the fiduciary funds are included in the Village’s fund financial statements because the Village is financially accountable for those resources, even though they belong to other parties. TheStatement of Net Assets presents information on the total assets held and total liabilities owed by the Village, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The Statement of Activities presents information showing how the Village’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods. Both of the government-wide financial statements distinguish functions of the Village 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 Village include general government, public safety, transportation and leisure services. The business-type activities of the Village include water, stormwater and refuse and recycling. The government-wide financial statements can be found on pages 16-17 of this report. Fund financial statements: Unlike government-wide financial statements, the focus of fund financial statements is directed to specific activities of the Village rather than the Village as a whole. Except for the General Fund, separate funds are established to maintain control over resources that have been segregated for specific activities or objectives. The Village, 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 Village can be divided into three categories: governmental funds, proprietary funds, and fiduciary (pension) funds. Governmental Funds Governmental fund financial statements consist of a balance sheet and statement of revenues, expenditures, and change in fund balances. These statements are prepared on an accounting basis that is significantly different from that used to prepare the government-wide financial statement. 4 In general, these financial statements have a short-term emphasis and, for the most part, measure and account for cash and other assets that can easily be converted to cash. For this reason, amounts reported on the balance sheet include items such as cash and receivables collectible within a short period of time, but do not include capital assets such as land and buildings. Fund liabilities include amounts that are to be paid within a short period of time after the end of the fiscal year and for that reason do not include long term debt. The difference between a fund’s total assets and total liabilities is labeled ‘fund balance’. The operating statement for governmental funds reports only those revenues and expenditures that were collected or paid during the current period or very shortly after the end of the year. The balances and activities accounted for in governmental funds are, for the most part, also reported in the governmental activities columns of the government-wide financial statements. However, because a different accounting basis is used to prepare the fund financial statements and the government-wide financial statements, there are often significant differences between the totals presented. The Village maintains four 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 balance for the General Fund which is considered a major fund. Data from the other three governmental funds is combined into a single, “Non-Major Funds” column.Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The Village of Tequesta’s governmental fund financial statements can be found on pages 18-20 of this report. Proprietary Funds Proprietary fund financial statements consist of a statement of net assets, a statement of revenues, expenses and changes in fund net assets, and a statement of cash flows. The statements are prepared on an accounting basis similar to the basis used to prepare the government-wide financial statements. The Village maintains one type of proprietary fund,Enterprise funds. The Village uses enterprise funds to account for business type activities that charge fees to customers for the use of specific goods or services. The Village has three enterprise funds; water, storm-water and refuse and recycling. The information reported in these funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Fund which is a major fund. Data from Storm water and Refuse & Recycling funds are combined into a single, “Non-Major Funds” column. The basic proprietary fund financial statements can be found on pages 21-23 of this report. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the Village. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Village’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The Village’s fiduciary fund financial statements can be found on pages 24-25 of this report. 5 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 basic financial statements can be found on pages 26-66 of this report. Other information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Village of Tequesta’s progress in funding its obligation to provide pension benefits and other post employment benefits to its employees. This section includes a comparison between the Village’s adopted and final budget and actual financial results. The Village adopts an annual appropriated budget for its governmental funds and a budgetary comparison schedule is provided for the general fund to demonstrate compliance. Required supplementary information can be found on pages 67-71 of this report. The combining statements referred to earlier in connection with non-major governmental funds, as well as, non-major enterprise funds and fiduciary funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 77-81 of this report. Government-wide Financial Analysis The schedule below is a summary of the FY2011 Statement of Net Assets found on pages 16-17 with FY2010 comparative information . Village of Tequesta's Net Assets Governmental Activities Business-type Activities Total Assets 2011 2010 2011 2010 2011 2010 Current and other assets $ 5,593,964 $ 6,478,993 $ 4,734,813 $ 5,297,975 $10,328,77 $11,776,968 Capital assets, net 14,038,862 11,105,211 20,435,897 19,050,305 34,474,79 30,155,516 Total assets $19,632,826 $17,584,204 $25,170,710 $24,348,280 $44,803,56 $41,932,484 Liabilities Long-term liabilities $4,020,525 $4,213,699 $5,928,201 $6,160,706 $9,948,726 $10,374,405 Other liabilities 439,635 538,274 254,407 175,244 694,042 713,518 Total liabilities $4,460,160 $4,751,973 $6,182,608 $6,335,950 $10,642,78 $11,087,923 Net assets: Invested in capital assets, net of related debt $10,730,256 $7,525,570 $14,673,046 $13,037,012 $25,403,32 $20,562,582 Unrestricted 4,442,410 5,306,661 4,315,056 4,975,318 8,757,466 10,281,979 Total net assets $15,172,666 $12,832,231 $18,988,102 $18,012,330 $34,160,768 $30,844,561 As noted earlier, net assets may serve, over time, as a useful indicator of the Village’s financial position. The Village of Tequesta’s total assets exceeded total liabilities by approximately $34 million at the close of the 2011 fiscal year. The increase from the prior year, of approximately $4.8million (10.8%), is mainly attributable to a capital asset donation of $2.7 million (related to Tequesta Bridge) and a temporary18% water rate surcharge that brought in additional revenue for part of fiscal year 2011. 6 The largest portion of the Village’s net assets (74%) represents investments in capital assets (e.g., land, buildings, machinery and equipment), less any related outstanding debt used to acquire those assets.The Village uses these capital assets to provide services to citizens; consequently, they are not available for future spending. Although the Village’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 Village’s investment in the capital assets themselves cannot be used to liquidate these liabilities capital assets increased $4.8 million due to the donation mentioned above, the Village’s portion of the construction of Tequesta Bridge and the expansion of the water treatment plant. The remaining unrestricted net assets of $8.7 million (26 %) may be used to meet the Village’s ongoing obligations to citizens and creditors. The unrestricted portion of net assets decreased from the prior period as current assets were used to acquire the capital items mentioned above. At the end of the current fiscal year, the Village of Tequesta is able to report positive balances in all categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. Governmental activities: Governmental activities increased the Village of Tequesta’s net assets by $2.3 million, accounting for 71% of the total increase in net assets of the Village. Key elements of the decrease are as follows: Village of Tequesta Changes in Net Assets Governmental Business-type Activities Total Activities Activities 2011 2010 2011 2010 2011 2010 Revenues: Program Revenues: Charges for Services 1,930,135 1,308,458 5,335,693 4,803,915 7,265,828 6,112,373 Operating Grants & Contributions 58,746 24,354 - 51,511 58,746 75,865 Capital Grants & Contributions 2,689,626 100,000 - - 2,689,626 100,000 General Revenues: - - Ad valorem Taxes 4,341,668 4,643,816 - - 4,341,668 4,643,816 Other Taxes 1,266,681 1,315,006 - - 1,266,681 1,315,006 Franchise fees on gross receipts 412,441 435,766 - - 412,441 435,766 Unrestricted intergovernmental 724,400 717,673 - - 724,400 717,673 Unrestricted investment earnings 32,775 71,067 28,074 49,973 60,849 121,040 Other Miscellaneous 116,707 208,754 79,968 40,229 196,674 248,983 Total Revenue 11,573,179 8,824,894 5,443,735 4,945,628 17,016,913 13,770,522 Expenses: General government 1,591,575 1,503,750 - - 1,591,575 1,503,750 Public safety 5,989,357 6,313,835 - - 5,989,357 6,313,835 Transportation 857,456 843,960 - - 857,456 843,960 Leisure Services 635,671 710,685 - - 635,671 710,685 Interest on long-term debt 158,685 169,792 - - 158,685 169,792 Water utility services 3,829,330 3,989,517 3,829,330 3,989,517 Storm water services 194,331 223,421 194,331 223,421 Refuse & recycling services - - 444,302 431,156 444,302 431,156 Total Expenses 9,232,744 9,542,022 4,467,963 4,644,094 13,700,707 14,186,116 Increase (decrease) in net assets 2,340,435 (717,128) 975,772 301,534 3,316,206 (415,594) Net assets - beginning 10/01 $ 12,832,231 $13,549,359 $ 18,012,330 $17,710,796 $ 30,844,561 $ 31,260,155 Net assets - ending 9/30 $ 15,172,666 $12,832,231 $ 18,988,102 $18,012,330 $ 34,160,767 $ 30,844,561 7 Governmental activities continued: Property taxes decreased $302 thousand (6.5%) due to decreasing property values and the Village Council’s decision to keep the current millage rate unchanged. Revenues from other taxes decreased $48 thousand (3.7%). The largest decrease was attributable to revenues from electric utility taxes, which was offset by an increase in water utility taxes. Investment earnings decreased $38 thousand reflecting lower interest rates offered by banks. $286 thousand of the increase in charges for services was related to a settlement of code enforcement fines and increased building permit fees. Revenue from Charges for Services related to the function of General Government, increased as the Planning department was separated from building for budgeting purposes and was reported in the general government function in fiscal year 2011. Revenue from Capital Grants and Contributions increased $2.7 million, as the Village recognized a donation of capital assets (Tequesta Bridge). This revenue is reported within the Transportation function resulting in revenues exceeding expenses in that function. Expenses decreased $300 thousand from the prior period. This 3% decrease is due primarily to a reduction in the cost of public safety. In the prior year the Village incurred a higher cost in supplying public safety services due to the closing of Tequesta Bridge. The Village’s programs/functions include General Government, Public Safety, Transportation and Leisure Services. The net cost shows the extent to which the Village’s general revenues support each of the Village’s programs. The cost of all governmental activities this year was $4.5 million – a reduction of 44%. As noted above this change is due to a large donation of $2.7 related to Tequesta Bridge. As shown 8 on the Statement of Activities, the functions directly benefiting from the programs generated revenue of $4.7 million towards this cost and the remaining $4.6 million was financed through general revenues ($6.9 million). The following is a comparative chart of revenues by source for governmental activities for fiscal year 2011 and 2010. Business-type activities: The net assets of business-type activities increased $975 thousand (5.4%) from the prior year. Key elements of this increase are as follows. Charges for services increased by $525 thousand (10.9%) due mainly to the implementation of an 18% water conservation surcharge for a portion of the fiscal year. The surcharge was removed within the fiscal year. Net assets in the Refuse and Recycling Fund decreased $7 thousand (6.8%). The Stormwater Fund recorded an increase in net assets of $122 thousand, as revenues remained constant but budgeted drainage improvements were rescheduled for the following fiscal year. 9 Operating income for all business type activities improved from $442 thousand in 2010 to $1.1million in 2011. Operating expenses in the nonmajor funds remained basically unchanged from the prior year, while the major fund, Water Utility, decreased its operating expenses by $113 thousand. As noted earlier, the most significant change in the results in operations overall is attributable to a temporary increase in the water utility charges for services. 10 Financial Analysis of the Village’s Funds As noted earlier, the Village of Tequesta uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. For fiscal year 2011 the Village of Tequesta implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund type Definitions. Governmental funds: The focus of the Village’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Village’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, The Village of Tequesta’s governmental funds reported combined ending fund balances of $4,721,693, a decrease of $759,148 (13.9%) from the prior year.$2.0 million (42.6%) of the total amount of fund balance constitutes Unassigned Fund Balance, which is available for spending at the government’s discretion. Additionally, the Village has Non-Spendable Fund Balance of $228 thousand (4.8%) representing inventories and prepaiditems; Restricted Fund Balance of $465 thousand (9.9%), Assigned Fund Balance of $2.0 million (42.6%) which includes $1 million for Disaster Relief and $573 thousand for subsequent year’s expenditures. The General Fund is the chief operating fund of the Village. At September 30, 2011, unassigned fund balance of the General Fund was $2.0 million while total fund balance was $4.0 million.As ameasure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures and other financing uses. Unassigned fund balance represents 22% of fiscal year 2011 General Fund expenditures and total fund balance represents 53% of the total expenditures. The ratio of total fund balance to expenditures has decreased from the prior year when total fund balance represented 54% of total expenditures. This is the third year that these ratios have decreased representing a growing gap between revenues and expenditures. Total General Fund revenues decreased by $45 thousand (0.5%) compared with the prior year. The most significant reason for the decrease in revenues is the continued reduction in property values. Increases in other revenue sources (specifically the collection of code enforcement fines from one property totaling $186 thousand and an increase in building permit fees) were able to reduce, but not completely offset the effect of the reduction in this major revenue source. Some specific key factors and how they have affected the Village’s revenues are as follows; The Village continued to suffer the effect of lower property values which resulted in reduced proceeds from ad-valorem taxes of $302 thousand. The Village reviewed and corrected its fee schedule for licenses and permits to better reflect fees charged by other communities. Revenue from licenses and permits increased $53 thousand. Charges for services increased $201 thousand (29%). In the prior year this revenue was offset by a write-off of EMS transportation fees of $89 thousand. Investment earnings decreased $38 thousand as interest rates continued to decline and banks offered rates averaging 0.25%. Revenue from utility taxes, communication services taxes and other taxes decreased only (4.7%) due to the continued slow-down in the economy. 11 The amount of General Fund revenue by type, their percent of the total and the amount of change compared to last fiscal year are shown in the following schedule: GENERAL FUND REVENUES Change Revenue Sources 2011% of Total$%2010 - Taxes $ 4,341,668 49.5%$(302,148)6.5% $ 4,643,816 - Other taxes 1,266,681 14.4%(48,325)3.7% 1,315,006 Intergovernmental 750,801 8.6%11,691 2% 739,110 Franchise fees 412,441 4.7%(23,325)-5% 435,766 Charges for services 888,639 10.1%201,307 29% 687,332 Intragovernmental 323,110 3.7%15,370 5% 307,740 Licenses and permits 332,913 3.8%53,078 19% 279,835 Investment earnings 32,775 0.4%(38,292)-54% 71,067 Fines and forfeitures 204,273 2.3%182,552 840% 21,721 Miscellaneous 53,902 0.6%(8,072)-13% 61,974 Rents and Royalties 162,651 1.9%1,159 1% 161,492 Total Revenue $ 8,771,865 100.0%44,995 0.5% $ 8,726,869 General Fund Revenues –by Source 12 Expenditures in the General Fund are shown in the following schedule: Change General Fund - Expenditures by Function 20112010 GENERAL FUND % of Total$% Expenditures Public Safety 5,565,091 62%(265,643)-5% 5,830,734 General government 1,409,417 16% 68,942 5% 1,340,475 Transportation 714,934 8%(23,389)-3% 738,323 Leisure services 548,729 6% (5,720) -1% 554,449 Debt service 429,720 5%(24,905)-5% 454,625 Capital outlay 298,830 3% (53,246) -15% 352,076 Total expenditures 8,966,721 100% (303,961)-3% 9,270,682 In fiscal year 2011, total General fund expenditures decreased by $304 thousand (6.8%) compared to the prior year. As noted earlier, the largest portion of this increase (5%) was in the public safety function and is related to a reduction in to cost related to the closing of Tequesta Bridge in FY 2010. The change in Capital Outlay is related to the purchase of a fire rescue vehicle in 2010. Ending fund balances for the Capital Projects Fund is $213 thousand and the Capital Improvement fund is $434 thousand. These funds are designated for capital projects/improvements. These funds receive revenue from capital grants and transfers in from other funds. Proprietary funds: The Village’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The table below summarizes the operating income (loss) and the change in net assets for each of the Village’s proprietary funds. At the end of the year, total net assets of the proprietary funds were $18,988,102 a 5.4% increase from the prior year ($976 thousand). As explained above in the discussion 13 in the government-wide financial statements, the majority of the increase is due mainly to a temporary increase in fees related to water restrictions. Other factors concerning the finances of this major fund have already been addressed in the discussion of the Village’s business-type activities. PROPRIETARY FUNDS Operating Income (Loss)Change in Net Assets 2011201020112010 Water $ 992,244 $ 369,468 $ 860,616 $ 221,772 Storm-water 119,933 89,705 122,423 93,889 Refuse and Recycling (8,160) (16,499) (7,267) (14,127) $ 1,104,017 $ 442,674 $ 975,772 $ 301,534 General Fund Budgetary Highlights The difference between the original and final amended General fund budget for 2011 was an increase of $534 thousand. Approximately $300 thousand (56%) of the increase was for capital assets. The most significant increase was due to the purchase of a property ($231 thousand). Capital Assets and Debt Administration Capital assets: The Village’s capital assets for its governmental and business-type activities total $34,474,758 (net accumulated depreciation) as of September 30, 2011. These assets include land, construction in progress, buildings, improvements-other-than-buildings, infrastructure and machinery and equipment. As noted earlier major addition in the government wide capital assets was the addition of Tequesta Bridge (donation).. The following is a detail of capital assets at September 30, 2011. Additional information on the Village’s capital assets can be found in Note 6, Capital Assets, starting on page 45 of this report. Governmental Business 2011 Capital AssetsActivities Activities Total Land $ 634,017 $ 83,335 $ 717,352 Construction in progress - 2,484,766 2,484,766 Buildings 8,043,522 979,512 9,023,034 Improvements 2,509,255 58,720 2,567,975 Infrastructure 4,544,085 29,608,204 34,152,289 Machinery and Equipment 4,546,583 1,321,508 5,868,091 Total capital assets $20,277,462 $34,536,045 $54,813,507 Less accumulated depreciation -6,238,600 -14,100,149 -20,338,749 Total capital assets, net $14,038,862 $20,435,896 $34,474,758 14 Long-term Debt: At the end of the current fiscal year, the Village had no general obligation bonded debt. All of the Village’s outstanding debt is secured by general revenue sources. The table below summarizes the Village’s debt position. A more detailed explanation can be found in Note 7 – Long-Term Debt on pages 46 -49. Economic Factor and Next Year’s Budgets and Rates The Village Council’s decision to hold the millage rate at 5.7671 mills will result in a reduction in tax revenues as property values continue to decline. Interest rates remain low which will continue to affect investment earnings. Revenues from sales taxes continue to be flat and current trends are not predicting any immediate change unless consumer confidence increases. The Village is working on the annexation of surrounding properties. The unemployment rate for the Village of Tequesta at December, 2011 is 9.9% - this rate peaked in December 2010 at 12%. The Village of Tequesta’s water rates increased 3.77% on October 1, 2011. All of these factors were considered in preparing the Village of Tequesta’s budget for the 2011-2012 fiscal year. Requests for Information This financial report is designed to provide a general overview of the Village of Tequesta’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Village of Tequesta, Finance Department, 345 Tequesta Drive, Tequesta, Florida 33469. 15 Page Intentionally Left Blank BASIC FINANCIAL STATEMENTS VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30, 2011 Business- Governmentaltype ActivitiesActivitiesTotal Assets Cash and cash equivalents4,291,782$ 4,283,105$ 8,574,887$ Investments144,215 100,671 244,886 Receivables, net497,282 258,976 756,258 Inventories31,806 29,307 61,113 Prepaid items196,243 36,980 233,223 Other assets-- 25,775 25,775 Net pension asset432,636 -- 432,636 Capital assets not being depreciated634,017 2,568,101 3,202,118 Capital being depreciated, net13,404,84517,867,79531,272,640 Total Assets 25,170,71019,632,826 44,803,536 Liabilities Accounts payable99,937 207,940 307,877 Accrued liabilities175,452 24,796 200,248 Customer deposits-- 21,671 21,671 Due to other governments3,674 -- 3,674 Unearned revenue105,112 -- 105,112 Other current liabilities55,460 -- 55,460 Non-current liabilities Due within one year342,937 295,030 637,967 Due in more than one year3,677,5885,633,1719,310,759 Total Liabilities 6,182,6084,460,160 10,642,768 Net Assets Invested in capital assets, net of related debt10,730,256 14,673,046 25,403,302 Unrestricted4,442,4104,315,0568,757,466 Total Net Assets $ 18,988,10215,172,666$ 34,160,768$ an integral part of these financial statements. The accompanying notes are 16 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 The accompanying notes are an integral part of these financial statements. 17 Net (Expense) Revenue and Prop,ram Revenues Changes in Net Assets Charges Operating Capital Business - for Grants and Grants and Governmental type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities General government $ 1,591,575 $ 568,452 $ -- $ -- $ (1,023,123) $ -- $ (1,023,123) Public safety 5,989,357 1,283,728 52,476 -- (4,653,153) -- (4,653,153) Transportation 857,456 -- -- 2,689,626 1,832,170 -- 1,832,170 Leisure services 635,671 77,955 6,270 -- (551,446) -- (551,446) Interest on long-term debt 158,685 -- -- -- (158,685) -- (158,685) Total Governmental Activities 9,232,744 1,930,135 58,746 2,689,626 (4,554,237) -- (4,554,237) Business -type Activities Water 3,829,330 4,585,287 -- -- -- 755,957 755,957 Stormwater utility 194,331 314,264 -- -- -- 119,933 119,933 Refuse and recycling 444,302 436,142 -- -- -- (8,160) (8,160) Total Business -type Activities 4,467,963 5,335,693 -- -- -- 867,730 867,730 Total Primary Government $ 13,700,707 $ 7,265,828 $ 58,746 $ 2,689,626 (4,554,237) 867,730 (3,686,507) General Revenues Ad valorem taxes 4,341,668 -- 4,341,668 Utility taxes 632,354 -- 632,354 Communication services tax 364,673 -- 364,673 Insurance premium taxes 183,321 -- 183,321 Business taxes 86,333 -- 86,333 Franchise fees based on gross receipts 412,441 -- 412,441 Unrestricted intergovernmental revenues 724,400 -- 724,400 Unrestricted investment earnings 32,775 28,074 60,849 Miscellaneous revenues 116,707 79,968 196,675 Total general revenues 6,894,672 108,042 7,002,714 Change in Net Assets 2,340,435 975,772 3,316,207 Net Assets - Beginning 12,832,231 18,012,330 30,844,561 Net Assets - Ending $ 15,172,666 $ 18,988,102 $ 34,160,768 The accompanying notes are an integral part of these financial statements. 17 VILLAGE OF TEQUESTA, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2011 OtherTotal GeneralGovernmentalGovernmental FundFundsFunds Assets Cash and cash equivalents3,790,373$ 501,409$ 4,291,782$ Investments144,215 -- 144,215 Receivables, net305,943 191,339 497,282 Inventories31,806 -- 31,806 Prepaid items196,243 -- 196,243 Total Assets 692,7484,468,580 5,161,328 Liabilities and Fund Balances Liabilities Accounts payable99,937 -- 99,937 Accrued liabilities175,452 -- 175,452 Due to other governments3,674 -- 3,674 Unearned revenue105,112 -- 105,112 Other current liabilities55,460 -- 55,460 Total Liabilities --439,635 439,635 Fund Balances Nonspendable: Inventories31,806 -- 31,806 Prepaid items196,243 -- 196,243 Restricted: Debt Service286,791 -- 286,791 Building132,800 -- 132,800 Law Enforcement-- 45,771 45,771 Assigned to: Subsequent year's budget372,125201,300 573,425 Hurricane/disaster emergency1,000,000 -- 1,000,000 Capital Projects-- 445,677 445,677 Unassigned: General Fund2,009,180 -- 2,009,180 Total Fund Balances 692,7484,028,945 4,721,693 Total Liabilities and Fund Balances$ 692,7484,468,580$ Amounts Reported for Governmental Activities in the Statement of Net Assets are Different Because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.14,038,862 Net pension assets are not considered to represent a financial asset in the governmental funds432,636 Long-term liabilities, including notes payable, are not due and payable in the current period and therefore are not reported in the governmental funds: Note payable(3,263,514) Capital leases(45,092) Compensated absences(553,919) Net OPEB obligation (158,000) Net Assets of Governmental Activities$15,172,666 an integral part of these financial statements. The accompanying notes are 18 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 NonmajorTotal GeneralGovernmentalGovernmental FundFundsFunds Revenues Ad valorem taxes4,341,668$ --$ 4,341,668$ Other taxes1,266,681 -- 1,266,681 Intergovernmental750,801 25,699 776,500 Franchise fees412,441 -- 412,441 Charges for services888,639 -- 888,639 Intragovernmental323,110 -- 323,110 Licenses and permits332,913 -- 332,913 Investment earnings32,775 -- 32,775 Fines and forfeitures204,273 -- 204,273 Miscellaneous53,902 88,000 141,902 -- 162,651 Rents and royalties162,651 Total Revenues 113,6998,769,854 8,883,553 Expenditures Current: General government1,409,417 1,000 1,410,417 Public safety5,565,091 -- 5,565,091 Transportation714,934 -- 714,934 Leisure services548,729 -- 548,729 Capital outlay298,830 674,980 973,810 Debt service: Principal271,035 -- 271,035 Interest148,186 -- 148,186 Fiscal charges10,499 -- 10,499 Total Expenditures 675,9808,966,721 9,642,701 Excess (Deficiency) of Revenues over Expenditures (562,281)(196,867) (759,148) Other Financing Sources (Uses) Transfers in250,000 -- 250,000 (250,000) (250,000) Transfers out-- Total Other Financin Sources (Uses) g (250,000)250,000 -- Net Change in Fund Balances (812,281)53,133 (759,148) 1,505,0293,975,812 5,480,841 Fund Balances - Beginning Fund Balances - Ending $ 692,7484,028,945$ 4,721,693$ The accompanying notes are an integral part of these financial statements. 19 VILLAGE OF TEQUESTA, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 . Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds (Page 19)(759,148)$ Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. The details of the differences are as follows: Capital outlay973,810 Depreciation expense(729,786) Net adjustment244,024 Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. 2,689,627 The issuance of long-term debt 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. The detail of the differences are as follows: Principal payments: Notes payable227,514 Capital leases43,521 Net adjustment271,035 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: The details of the differences are as follows: Compensated absences139 Net OPEB obligation(78,000) Net pension asset(27,242) Change in net assets of governmental activities2,340,435$ an integral part of these financial statements. The accompanying notes are 20 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2011 Business-type Activities WateNonmajo rr FundFundsTotals Assets Current Assets Cash and cash equivalents3,411,093$ 872,012$ 4,283,105$ Investments90,296 10,375 100,671 Receivables,, net247,770 11,206 258,976 Inventories28,705 602 29,307 Prepaid items36,699 281 36,980 Other assets25,775 -- 25,775 Total Current Assets 894,4763,840,338 4,734,814 Non-Current Assets Capital assets not being depreciated2,555,151 12,950 2,568,101 Capital assets being depreciated, net16,400,154 1,467,641 17,867,795 Total Non-Current Assets 1,480,59118,955,305 20,435,896 Total Assets 2,375,06722,795,643 25,170,710 Liabilities Current Liabilities Accounts payable168,595 39,345 207,940 Accrued liabilities24,796 -- 24,796 Customer deposits21,671 -- 21,671 Other current liabilities-- -- -- Current portion of compensated absences12,200-- 12,200 Current maturities of notes payable282,830 -- 282,830 Total Current Liabilities 39,345510,092 549,437 Non-Current Liabilities Net OPEB obligation18,000 -- 18,000 Compensated absences134,1081,043 135,151 Notes payable5,480,020 -- 5,480,020 Total Non-Current Liabilities 1,0435,632,128 5,633,171 Total Liabilities 40,3886,142,220 6,182,608 Net Assets Invested in capital assets, net of related debt13,192,455 1,480,591 14,673,046 Unrestricted3,460,968 854,088 4,315,056 Total Net Assets $ 2,334,67916,653,423$ 18,988,102$ an integral part of these financial statements. The accompanying notes are 21 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Business-type Activities WaterNonmajor FundFundsTotals Operating Revenues Charges for services4,585,287$$750,406$5,335,693 Operating Expenses Cost of sales and services: Plant production1,334,687 -- 1,334,687 Distribution701,769 -- 701,769 Stormwater 82,031-- 82,031 Purchased services-- 437,852 437,852 Management services305,700 17,410 323,110 Administration337,921 -- 337,921 Depreciation912,966101,3401,014,306 Total Operating Expenses 638,6333,593,043 4,231,676 Operating Income 992,244111,7731,104,017 Non-Operating Revenues (Expenses) Miscellaneous revenue79,639 329 79,968 Investment earnings 25,020 3,054 28,074 Interest expense --(225,986) (225,986) Other fiscal charges(10,301) (10,301)-- Total Non-Operating Revenues (Expenses) 3,383(131,628) (128,245) Change in Net Assets 115,156860,616 975,772 15,792,8072,219,52318,012,330 Net Assets - Beginning $16,653,423$2,334,679$18,988,102 Net Assets - Ending The accompanying notes are an integral part of these financial statements. 22 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Business-type Activities WaterNonmajor FundFundsTotals Cash Flows from Operating Activities Cash received from customers, governments and other funds4,512,255$ 744,806$ 5,257,061$ Cash paid to suppliers(1,306,184) (487,223) (1,793,407) (49,867) (1,337,986) Cash paid to employees(1,288,119) Net Cash Provided by Operating Activities 207,7161,917,952 2,125,668 Cash Flows from Capital and Related Financing Activities Acquisition and construction of capital assets(2,386,947) (12,950) (2,399,897) Principal payments on long-term debt(272,910) -- (272,910) Interest and fiscal charges paid(203,519) (203,519)-- Net Cash Used in Capital and Related Financing Activities (12,950)(2,863,376) (2,876,326) Cash Flows from Investing Activities Interest received on investments84,251 86,4892,238 Net Cash Provided b Investin Activities84,251 86,4892,238 yg Net Increase in Cash and Cash Equivalents 197,004(861,173) (664,169) 4,272,266 4,947,274675,008 Cash and Cash Equivalents - Beginning $3,411,093$ 4,283,105872,012$ Cash and Cash Equivalents - Ending Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Operating income992,244$ 111,773$ 1,104,017$ Depreciation 912,967 101,340 1,014,307 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable(73,032) (5,600) (78,632) Inventories(8,030) (121) (8,151) Prepaid items(2,965) (8) (2,973) Increase (decrease) in: Accounts payable136,000 (231) 135,769 Accrued liabilities (58,552) -- (58,552) Customer deposits1,945 -- 1,945 Net OPEB obligation 9,000 -- 9,000 Compensated absences8,375 8,938563 Net Cash Provided b Oeratin Activities$1,917,952$ 2,125,668207,716$ ypg Noncash Investing Activities Change in fair value of investments10,054$$ 11,1921,138$ an integral part of these financial statements. The accompanying notes are 23 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2011 Pension Trust Funds Assets Cash and cash equivalents409,904$ Investments, at fair value: Corporate stocks3,721,164 Corporate bonds1,253,535 Government backed securities2,289,536 Mutual funds721,040 Municipal obligations30,154 Prepaid items4,373 Due to broker3,778 Contributions receivable4,748 Accrued interest receivable26,300 Total Assets 8,464,532 Liabilities Accounts payable30,801 Unearned contributions 63,538 Total Liabilities 94,339 Net Assets Held in Trust for Pension Benefits $8,370,193 The accompanying notes are an integral part of these financial statements. 24 VILLAGE OF TEQUESTA, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Pension Trust Funds Additions Contributions: Employer (including State)$707,443 Employee194,075 Total contributions901,518 Investment income (loss) Net depreciation in fair value of investments(349,229) Interest earnings336,631 (12,598) Less investment expenses(78,997) Net investment loss(91,595) Total Additions 809,923 Deductions Refunds of contributions36,399 Operating expenses74,136 Total Deductions 110,535 Net Increase 699,388 Net Assets Held in Trust for Pension Benefits Net assets - beginning7,670,805 Net assets - ending$8,370,193 The accompanying notes are an integral part of these financial statements. 25 NOTES TO BASIC FINANCIAL STATEMENTS VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES The Village of Tequesta, Florida is a municipal corporation organized in 1957 pursuant to Special Act 57-1915, Laws of Florida. The Village has a Council-Manager form of government. The Village’s major operations include public safety (police, fire rescue/EMS), streets and roads, culture and recreation, public improvements, planning and zoning, water, stormwater, recycling services and general and administrative. The financial statements of the Village have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental and financial reporting principles. The more significant of the Village’s accounting policies are described below: The financial statements were prepared in accordance with governmental accounting standards, which establishes standards for defining and reporting on the financial reporting entity. The definition of the financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions. One of the objectives of financial reporting is to provide users of financial statements with a basis for assessing the accountability of the elected officials. The financial reporting entity consists of the Village, organizations for which the Village is financially accountable and other organizations for which the nature and significance of their relationship with the Village are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The Village is financially accountable for a component unit if it appoints a voting majority of the organization’s governing board and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the Village. The Village has no component units to report for the fiscal year ending September 30, 2011. The government-wide financial statements distinguish between the governmental and business-type activities of the Village. Governmental activities are those supported by taxes and intergovernmental revenues. Business-type activities rely to a significant extent on fees and charges for support. Government-wide financial statements include a Statement of Net Assets and a Statement of Activities. These statements report on the government as a whole and provide a consolidated financial picture of the government. Fiduciary funds (the Village’s pension trust funds) are excluded from this presentation as the assets are held for the benefit of a third party (members and beneficiaries) and cannot be used to address activities or obligations of the Village. 26 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All remaining nonmajor governmental funds or proprietary funds are aggregated and reported as other governmental or nonmajor funds. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide statements, a reconciliation is provided which briefly explains the adjustments necessary to reconcile the results of governmental fund accounting to the government-wide presentations. The Village’s fiduciary funds are presented in the fund financial statements. Since by definition these assets are being held for the benefit of a third party (pension participants) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 27 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED 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 Village considers revenues to be available if they are collected within 45 days of the end of the fiscal year. Expenditures are recorded when a liability is incurred. 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, sales taxes, franchise taxes, grant revenues and investment earnings associated with the current fiscal period are all considered to be susceptible to accrual and are recorded as earned as they are measurable and available. All other revenues are considered measurable and available only when cash is received by the Village. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for using a separate set of self-balancing accounts, which comprise its assets, liabilities, fund equities, revenues and expenditures or expenses. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. Accounting principles generally accepted in the United States of America set forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined), for the determination of major funds. The nonmajor funds are presented in one column in the fund financial statements. The Village reports the following major governmental fund: TheGeneral Fund is the Village’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 28 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED The Village reports the following major proprietary fund: The Water Fund is used to account for the activities of the water utility, which includes the processing and distribution of potable water to Village residents and some surrounding communities. Additionally, the Village reports the following fiduciary funds: Thepension trust funds account for the activities of the Firefighters’ Pension Trust Fund, the Police Officers’ Pension Trust Fund and the General Employees’ Pension Trust Fund. These funds accumulate resources for pension benefits to qualified employees. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The Village has the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Village has elected not to follow subsequent private- sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the Village utility functions and various other functions of the Village. Elimination of these charges would distort the direct costs and program revenues reported for the various 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. 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 non-operating 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 Village’s water utility, stormwater utility and refuse and recycling funds are charges to customers for services. Operating expenses for proprietary funds include the costs of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 29 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED When both restricted and unrestricted resources are available for use, it is the Village’s policy to use restricted resources first, then unrestricted resources as they are needed. 1. Deposits and Investments The Village’s cash and cash equivalents are considered to be cash on hand, demand and time deposits and short-term investments with original maturities of three months or less from the date of acquisition. State statutes authorize the Village to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, commercial paper, corporate bonds, repurchase agreements, the State Board Investment Pool and the Florida Municipal Investment Trust. The Village maintains a cash and investment pool that is available for use by all funds with the exception of the Water Utility which has separate accounts with the State Board of Administration (SBA). Pooled cash is classified as “Cash and Cash Equivalents” in the Statement of Net Assets and pooled investments are combined with other separate investments and classified as “Investments.” Interest income earned as a result of pooling is distributed to the appropriate funds based on the month end equity balance in each fund. All investments, except the State Board Investment Pool, are reported at fair value, which is based on quoted market prices. The Investment Pool is segregated into the Florida PRIME which is recorded at its value of the pool shares (2a7-like fund) which is fair value and Fund B which is accounted for as a fluctuating NAV pool and is reported based on the fair value factor. 2. Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to 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.” All trade and other receivables are shown net of an allowance for uncollectibles. Allowances for uncollectible receivables are based upon historical trends and the periodic aging of receivables. Water charges to customers are based on actual water consumption. Consumption is based upon a monthly cycle. The Village recognizes revenue and a related receivable for th unbilled consumption as of September 30 of each year. 30 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED 3. Inventories Inventories of the general fund are valued at cost on a first-in, first-out (FIFO) method. Inventories consist of expendable supplies held for consumption. The cost is recorded as an expenditure when the individual inventory items are used. Inventories of the Water Fund are valued at lower of cost (determined using the weighted average) or market and consist of pipes, valves, fittings and meters. The cost is recorded as an expense when the individual inventory items are put into service. 4. Capital Assets Capital assets, which include property, plant and equipment, intangibles, and certain infrastructure assets (e.g., utility plant, roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the Village chose to include all such items regardless of their acquisition date. Capital assets are defined by the Village as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year and $25,000 for intangibles with an estimated useful life in excess of one year. Purchased or constructed assets are recorded at actual cost or estimated historical cost if actual cost is unavailable. 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 the asset’s life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the asset constructed. Capital assets of the Village are depreciated using the straight line method over the following estimated useful lives: Buildings 20 –40 years Improvements other than buildings20 –50 years Infrastructure 20 –50 years Machinery and equipment 2 –15 years 31 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED 5. Compensated Absences It is the Village’s policy to permit employees to accumulate within certain limits, earned but unused vacation time, sick leave and compensatory time which will be paid to employees upon separation from Village service. All vacation, sick leave pay and compensatory time is accrued when incurred in the government-wide and proprietary fund financial statements. In the governmental funds, a liability is recorded only for unused vacation and sick leave payouts for employees who have separated, for example, as a result of employee resignations and retirements. 6. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs and refunding gains/losses, are deferred and amortized over the life of the bonds using the straight-line amortization method. Bonds payable are reported net of the applicable bond premium or discount and refunding gains/losses. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 7. Nature and Purpose of Classifications of Fund Equity In the fund financial statements, governmental funds report fund classifications that comprise a hierarchy based primarily on the extent to which the Village is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Amounts that are restricted to specific purposes either by a) constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulations of other governments or b) imposed by law through constitutional provisions or enabling legislation are classified as restricted fund balances. Amounts that can only be used for specific purposes pursuant to constraints imposed by the Village Council through an ordinance or resolution are classified as committed fund balances. Amounts that are 32 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–SSAP() OTEUMMARY OF IGNIFICANT CCOUNTING OLICIES CONTINUED 7. Nature and Purpose of Classifications of Fund Equity (continued) constrained by the Village’s intent to be used for specific purposes but are neither restricted nor committed are classified as assigned fund balances. Assignments are made by Village management based on Council direction. Non-spendable fund balances include amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. Restricted fund balance will be spent before unrestricted fund balance when an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned and unassigned) amounts are available. Additionally, the Village would first use committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. The Village’s policy is to maintain an adequate General Fund fund balance to provide liquidity in the event of an economic downturn or natural disaster. The Village Council has adopted a financial standard to maintain a General Fund minimum unassigned fund balance of two months of General Fund operating expenditures. 8. Net Assets Net assets of the government-wide and proprietary funds are categorized as invested in capital assets, net of related debt; restricted or unrestricted. Invested in capital assets, net of related debt, is that portion of net assets that relates to the Village’s capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct or improve those assets, excluding unexpended proceeds. Restricted net assets is that portion of net assets that has been restricted for general use by external parties (creditors, grantors, contributors, or laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted net assets consist of all net assets that do not meet the definition of either of the other two components. 33 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N2–PT OTEROPERTY AXES January 1, 2010 – Property taxes are based on assessed property value at this date as determined by the Palm Beach County Property Appraiser. May 31, 2010 - Property assessment roll and certificates of value by the Palm Beach County Property Appraiser are provided to the Village. July 20, 2010 – Proposed tax millage rate approved by the Village Council and provided to the Palm Beach County Property Appraiser, who mails notices to the taxpayers. September 23, 2010 – Property tax millage rate ordinance approved by the Village Council. October 1, 2010 – Beginning of fiscal year for which taxes are levied. December 31, 2010 – The Palm Beach County Property Appraiser notifies the Village of the taxable value on the final property tax assessment roll. April 1, 2011 – Unpaid property taxes become delinquent and become a lien. June 1, 2011 – Tax certificates are sold by the Palm Beach County Tax Collector . Property tax collections are governed by Chapter 197, Florida Statutes. The Palm Beach County Tax Collector (Tax Collector) bills and collects all property taxes levied within the County. Discounts are allowed for early payment of 4% in November, 3% in December, 2% in January and1% in February. If property taxes are not paid by April 1, the County adds a 3% penalty on real estate and a 1 ½% penalty on personal property. The Tax Collector advertises and sells tax certificates on all real property for delinquent taxes. Certificates not sold revert back to the County. The Tax Collector must receive payment before the certificates are issued. Any person owning land on which a tax certificate has been sold may redeem the land by paying the Tax Collector the face amount of the tax certificate plus interest and other costs. The owner of a tax certificate may at any time after taxes have been delinquent (April 1), for two years, file an application for a tax deed sale. The County, as a certificate owner, may exercise similar procedures two years after taxes have been delinquent. Tax deeds are issued to the highest bidder for the property which is sold at public auction. The Tax Collector remits current taxes collected through four distributions to the Village in the first two months of the tax year and at least one distribution each month thereafter. The Village recognizes property tax revenue in the period in which they are levied. The Tax Collector pays the Village interest on monies held from day of collection to day of distribution. The Village has no control over the investment program of the Tax Collector as this program is governed by State statutes . 34 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N2–PT() OTEROPERTY AXES CONTINUED Assessed values are established by the Palm Beach County Property Appraiser at approximately fair market value. The assessed value for operating purposes of property at January 1, 2010, upon which the 2010-2011 levy was based, was $774,368,282. The Village is permitted by Article 7, Section 8 of the Florida Constitution to levy taxes up to $10 (10 mills) per $1,000 of assessed valuation for general governmental services. The millage rate to finance general governmental services for the year ended September 30, 2011 was 5.7671 mills per $1,000 of assessed valuation. N3–DI OTEEPOSITS AND NVESTMENTS All of the Village’s deposits are held in qualified public depositories pursuant to State of Florida Statutes, Chapter 280, Florida Security for Public Deposits Act. Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral of the depository to be held subject to his or her order. The Treasurer, by rule, shall determine the collateral requirements and collateral pledging level for each qualified public depository. The pledging level may range from 25% to 200% of the average monthly balance of public deposits depending upon the depository’s financial condition and establishment period. All collateral must be deposited with an approved financial institution. Any potential losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. At September 30, 2011, none of the Village’s primary bank balances were exposed to custodial credit risk. The Village has adopted an investment policy in accordance with Florida Statutes to establish guidelines for the efficient management of its cash reserves. The Village is authorized to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, certificates of deposit, the State Board of Administration Investment Pool, any intergovernmental investment pools authorized pursuant to Chapter 163 of the Florida Statutes, SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency, and securities of any interest in any open-end or closed-end management type investment company or investment trust registered under the 35 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED Investment Company Act of 1940, provided that the portfolio is limited to obligations of the U.S. government, its agencies and instrumentalities and to repurchase agreements fully collateralized by such U.S. government obligations and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian. The State Board of Administration (SBA) administers the Florida PRIME and the Fund B Surplus Funds Trust Fund (Fund B), both of which are governed by Chapter 19-7 of the Florida Administrative Code and Chapters 218 and 215 of the Florida Statutes. These rules provide guidance and establish the policies and general operating procedures for the administration of the Florida PRIME and Fund B. GASB 31 applies to Florida PRIME and Fund B. The Florida PRIME is not a registrant with the Securities and Exchange Commission (SEC); however, the Board has adopted operating procedures consistent with the requirements for a 2a-7-like fund, which permits money market funds to use amortized cost to maintain a constant net asset value (NAV) of $1 per share. The fair value of the position in the Florida PRIME is equal to the value of the pool shares. Fund B does not meet the requirement of an SEC a-7-like fund and therefore is accounted for as a fluctuating NAV pool. As of September 30, 2011, the fair value factor for Fund B was $.7568386 per share. Fund B is not subject to participant withdrawal requests. Distributions from Fund B, as determined by the SBA, are effected by transferring eligible cash or securities to the Florida PRIME, consistent with the pro rata allocation of pool shareholders of record at the creation of Fund B. One hundred percent of such distributions from Fund B are available as a liquid balance within the Florida PRIME. The investments in the Florida PRIME and Fund B are not insured by FDIC or any other governmental agency. 36 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED At September 30, 2011, the Village of Tequesta had the following deposits and investments: Weighte d Deposits anAverageCredit Percent d InvestmentsFair ValueMaturityRatingDistribution Demand deposits8,573,036$ 97.22% SBA-Florida PRIME80,519 38 daysAAAm S&P0.91% SBA - Fund B164,367 4.82 yearsNot rated1.86% Total Investments244,886 Total Deposits and Investments 100.00% $8,817,922 IRR NTEREST ATE ISK Interest rate risk exists when there is a possibility that changes in interest rates could adversely affect an investment’s fair value. Generally, the longer the time to maturity, the greater the exposure to interest rate risk. The Village’s investment policy disallows the purchase of securities that have a maturity, at the time of purchase of greater than five years. In addition, on any given date, at least 80% of the portfolio shall mature within one year. R C REDITISK Credit risk is the risk that a debt issuer will not fulfill its obligations. The investment policy limits credit risk by requiring that investments be limited to investments in specific securities and that short-term obligations of U.S. corporations are rated at the time of purchase at one of the three highest classifications established by a nationally recognized statistical rating organizations. CCR ONCENTRATION OF REDITISK The Village’s investment policy states that assets shall be diversified to control the risk of loss resulting from concentration of assets to a specific maturity, instrument, issue, dealer, or bank through which these securities are bought and sold. As of September 30, 2011, the value of each position held in the Village’s investment portfolio is less than 2% of total deposits and investments. 37 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED At September 30, 2011, the General Employees’ Pension Trust Fund had the following deposits and investments: Weighted AverageCredit Percent Fair ValueMaturityRatingDistribution Cash1,026$ 0.06% Money Market25,328 1.44% Corporate Bonds:2.34 years Bonds24,477 A11.39% Bonds79,751 A24.52% Bonds54,377 A33.08% Bonds27,777 Aa21.57% Bonds50,422 Baa12.86% Bonds25,660 Baa21.45% Bonds51,944 Baa32.94% Municipal Obligations30,154 A11.71% U.S. Agencies76,726 0.18 yearsAaa4.35% U.S. Treasuries290,434 1.86 yearsAaa16.46% Mutual Funds89,840 5.09% 53.09% Corporate Stocks936,876 Total $ 100.00%1,764,792 IRR NTEREST ATE ISK Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally, the longer the time to maturity, the greater the exposure to interest rate risks. The established performance objectives require investment maturities to provide sufficient liquidity to pay obligations as they become due. The Plan does not have a formal policy relating to interest rate risk. At September 30, 2011, the weighted average maturity does not exceed 2.34 years. CR REDITISK Credit risk is the risk that a debt issuer will not fulfill its obligations. The investment policy limits credit risk by requiring that investments made or held in the fund shall be limited to: Obligations issued by the U.S. Government or obligations guaranteed as to principal and interest by the U.S. government or by an agency of the U.S. Government; 38 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED R() C REDITISKCONTINUED Bonds, stocks, or commingled funds administered by national or state banks, or other evidences or 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 District of Columbia provided that the securities meet the following ranking criteria: Fixed Income: Holds a rating in one of the four highest classifications by a major rating service Equities: Traded on a National Exchange Money Market: The money market fund or STIF provided by the Plan’s custodian. At September 30, 2011, the investments of the General Employees’ Pension Trust Fund were in compliance with the policies. CR C ONCENTRATION OF REDITISK Concentration of credit risk is defined as the risk of loss attributed to the magnitude of an investment in a single issuer. The Plan utilizes limitations on securities of a single issuer to manage this risk. The Plan’s investment policy limits investments in common stock or capital stock of any one issuing company or aggregate of any one issuing company to 5% of the outstanding capital stock of the company. The investment policy requires that the value of bonds issued by any single corporation shall not exceed 10% of the total fund. Investments in corporate common stock and convertible bonds shall not exceed 70% of the fund assets at market value. Foreign securities shall not exceed 25% of the market value of the fund. If the Plan owns investments at the end of a calendar quarter which no longer satisfy the applicable investment standard, then such investment is disposed of at the earliest economically feasible opportunity. CR C USTODIAL REDITISK Custodial credit risk is defined as the risk that the Plan may not recover cash and investments held by another party in the event of a financial failure. The Plan requires all securities to be held by a third party custodian in the name of the Plan. Securities transactions between a broker-dealer and the custodian involving purchase or sale of securities by the transfer of money or securities must be made on a “delivery vs. payment” basis to ensure that the custodian will have the security or money in hand at the conclusion of the transaction. 39 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED FCR OREIGN URRENCY ISK Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment. Exposure to foreign currency risk is low as foreign investments are through ADR’s (shares listed in the US), Mutual funds (registered in the US), or Yankee bonds (traded in US dollars). The investment policy permits a maximum of 25% of the market value of the fund securities to be invested in foreign securities. At September 30, 2011, 16.6% of the market value of the fund was invested in foreign securities, which met the limitations of the policy. At September 30, 2011, the Police and Firefighters’ Pension Trust Fund had the following deposits and investments: Weighted AverageCredit Percent Fair ValueMaturityRatingDistribution Cash298$ 0.00% Money Market383,252 5.75% Corporate Bonds:4.67 years Bonds122,553 A11.84% Bonds86,650 A21.30% Bonds74,445 A31.12% Bonds28,700 Aa20.43% Bonds62,302 Aa30.94% Bonds63,981 Baa10.96% Bonds286,060 Baa24.29% Bonds142,965 Baa32.15% ABS/CMBS Securities71,471 .68 yearsAaa1.07% U.S. Agencies854,557 4.12 yearsAaa+12.83% U.S. Treasuries1,067,820 4.86 yearsAaa+16.03% Mutual Funds631,200 9.48% Corporate Stocks2,784,287 41.80% Total $ 100.00%6,660,541 40 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED IRR NTEREST ATE ISK Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally, the longer the time to maturity, the greater the exposure to interest rate risk. The Plan does not have a formal policy relating to interest rate risk. The established performance objectives require investment maturities to provide sufficient liquidity to pay obligations as they become due. At September 30, 2011, the weighted average maturity in years for each investment type is included in the preceding table and ranges from 0.68 to 4.86. CR REDITISK Credit risk is the risk that a debt issuer will not fulfill its obligations. The investment policy limits credit risk by requiring that: Fixed income investments must hold a rating in one of the four highest classifications by a major rating service. Equities must be traded on a national exchange. Money market investments must hold a minimum rating of Standard & Poor’s A1 or Moody’s P1. At September 30, 2011, the investments of the Police and Firefighters’ Pension Trust Fund were in compliance with the policies. CCR ONCENTRATION OF REDITISK Concentration of credit risk is defined as the risk of loss attributed to the magnitude of an investment in a single issuer. The Plan utilizes limitations on securities of a single issuer to manage this risk. The Plan’s investment policy limits investments in common stock, capital stock or convertible stock of any one issuing company or aggregate of any one issuing company to 5% of the outstanding capital stock of the company. The investment policy requires that the value of corporate bonds issued by any single corporation cannot represent more than 5% of the total fund. Investments in corporate common stock and convertible bonds shall not exceed 70% of the fund assets at market value. Mortgage-backed securities issued by non-government entities are limited to 15% of the fixed income portfolio. Foreign securities shall not exceed 15% of the value at cost of the fund. If the Plan owns investments that complied with the limitations at the time of purchase, which subsequently exceed these limits or do not satisfy the applicable standards, the non-compliant investment may be held until it is economically feasible to dispose of the investment. 41 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N3–DI() OTEEPOSITS AND NVESTMENTS CONTINUED CCR USTODIAL REDITISK Custodial credit risk is identified as the risk that the Plan may not recover cash and investments held by another party in the event of a financial failure. The Plan requires all securities to be held by a third party custodian in the name of the Plan. Securities transactions between a broker-dealer and the custodian involving purchase or sale of securities by the transfer of money or securities must be made on a “delivery vs. payment” basis to ensure that the custodian will have the security or money in hand at the conclusion of the transaction. CR F OREIGN URRENCY ISK Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment. Exposure to foreign currency risk is low as foreign investments are through ADR’s (shares listed in the US), Mutual funds (registered in the US), or Yankee bonds (traded in US dollars). The investment policy permits a maximum of 15% of the market value of the fund to be invested in foreign securities. At September 30, 2011, approximately 11.7% of the market value of the fund was invested in foreign securities, which met the limitations of the policy. RU–PP ISKS AND NCERTAINTIES ENSIONLANS The Plans invest in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit 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, that such changes could materially affect the amounts reported in the statement of plan net assets for each Plan. The Plans, through their investment advisors, monitor Plan investments and the risks associated therewith on a regular basis which each Plan believes minimizes these risks. Contributions to the Plans 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. 42 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N4-R OTEECEIVABLES Receivables at September 30, 2011 for the government’s individual major funds, non-major and fiduciary funds in the aggregate, including the applicable allowance for uncollectible accounts, are as follows: Nonmajor GeneralWaterFundsTotal $ 580250,649$ Customers billed $125,060$376,289 -- Other taxes 43,258 43--,258 Miscellaneous --,531 5 15,766,297 9 Employees ---- -- -- 196,199 Intergovernmental --104,762300,961 Franchise fees40,612 -- -- 40,612 Gross receivables323,223 250,649 202,545 776,417 Less allowance for uncollectibles(17,280) (2,879) -- (20,159) Net Total Receivables $ 247,770305,943$ 202,545$ 756,258$ Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, various components of unearned revenue reported in the governmental funds were as follows: GF ENERAL UND Prepaid cell tower leases54,718$ Prepaid business taxes35,756 Prepaid licenses and registrations not yet due14,638 Total $105,112 43 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N5–IT OTENTERFUNDRANSFERS Interfund transfers during the year ended September 30, 2011 were as follows: Transfers In Nonmajor General Governmental Transfers OutFundFundsTotal Nonmajor governmental funds250,000$$ 250,000--$ Total $ --250,000$ 250,000$ Transfers were used to (1) move funds from the operating fund to funds performing capital projects and (2) move excess funds from one capital projects fund to another capital projects fund. There were no interfund receivables or payables at September 30, 2011. IAF NTERFUND DMINISTRATIVE EE During the year ended September 30, 2011, the Enterprise Funds remitted $323,110 to the General Fund for administrative management fees. This amount is reflected as Intragovernmental Services revenue in the General fund and as management fees, an operating expense in the Enterprise Funds. 44 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N6–CA OTEAPITALSSETS Capital asset activity for the year ended September 30, 2011 was as follows: BeginningEnding BalanceAdditionsDeductionsBalance Governmental Activities Capital assets not being depreciated: Land402,935$ 231,082$ --$ 634,017$ Construction-in-progress400,040 -- --(400,040) Total Capital Assets Not Being Depreciated 231,082802,975 (400,040) 634,017 Capital assets being depreciated: Buildings8,043,522 -- -- 8,043,522 Improvements other than buildings2,503,853 5,402 -- 2,509,255 Infrastructure779,438 3,764,647 -- 4,544,085 Machinery and equipment4,484,237 62,346 4,546,583-- Total Capital Assets Being Depreciated 3,832,39515,811,050 -- 19,643,445 Less accumulated depreciation for: Buildings(1,318,653) (201,088) -- (1,519,741) Improvements other than buildings(680,833) (118,628) -- (799,461) Infrastructure(115,242) (69,387) -- (184,629) Machinery and equipment(3,394,086) (340,683) (3,734,769)-- Total Accumulated Depreciation (729,786)(5,508,814) -- (6,238,600) Total Capital Assets Being Depreciated 3,102,60910,302,236 -- 13,404,845 Governmental Activities Capital Assets, Net$ 3,333,69111,105,211$ (400,040)$ 14,038,862$ Business-Type Activities Capital assets not being depreciated: Land83,335$ --$ --$ 83,335$ Construction-in-progress115,065 2,369,701 2,484,766-- Total Capital Assets Not Being Depreciated 2,369,701198,400 -- 2,568,101 Capital assets being depreciated: Buildings979,512 -- -- 979,512 Improvements other than buildings58,720 -- -- 58,720 Infrastructure29,608,204 -- -- 29,608,204 Machinery and equipment1,291,311 30,197 -- 1,321,508 30,197 31,967,944-- Total capital assets being depreciated31,937,747 Less accumulated depreciation for: Buildings(549,009) (20,429) -- (569,438) Improvements other than buildings(8,221) (2,349) -- (10,570) Infrastructure(11,562,806) (913,677) -- (12,476,483) Machinery and equipment(965,806) (77,852) -- (1,043,658) Total Accumulated Depreciation (1,014,307)(13,085,842) -- (14,100,149) Total Capital Assets Being Depreciated, Net (984,110)18,851,905 -- 17,867,795 Business-Type Activities Capital Assets, Net $ 1,385,59119,050,305$ --$ 20,435,896$ 45 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N6–CA() OTEAPITALSSETS CONTINUED Depreciation expense was charged to functions/programs of the Village as follows: Governmental Activities: General government149,056$ Public safety364,266 Transportation131,522 Leisure services84,942 Total Depreciation Expense - Governmental Activities $729,786 Business-Tpe Activities: y Water$912,967 Nonmajor funds101,340 Total Depreciation Expense - Business-Type Activities $1,014,307 N7–L-TD OTEONGERMEBT GA OVERNMENTAL CTIVITIES Note Payable On September 13, 2002, the Village signed a $5,000,000 promissory note with the Bank of America, with an interest rate of 4.28%, payable monthly in arrears and maturing September 13, 2022. Proceeds from the note were used to finance the final construction of the public safety facility, to repay existing debt obligations and to reimburse the Village for prior capital expenditures incurred in connection with the construction of the public safety facility. Debt service requirements to maturity are as follows: For The Year Ending September 30,PrincipalInterestTotal 2012237,445$ 135,057$ 372,502$ 2013247,809 124,692 372,501 2014258,626 113,875 372,501 2015269,915 102,586 372,501 2016281,697 90,805 372,502 2017-20211,604,015 258,492 1,862,507 2022364,007 372,5018,494 Total $ 834,0013,263,514$ 4,097,515$ 46 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N7–L-TD() OTEONGERMEBT CONTINUED GA() OVERNMENTAL CTIVITIES CONTINUED Capital Leases The Village entered into a capital lease with Bank of America in the amount of $397,922 on February 13, 2003 for the financing of a fire pumper. The applicable interest rate is 3.61% th with principal and interest payments totaling $46,720 due annually on April 15. The lease was assigned to SunTrust on February 13, 2003 and matures April 15, 2012. The following is a schedule of the future minimum lease payments under this capital lease arrangement at September 30, 2011: Fiscal Year Ending September 30,Amount 201246,720$ Total minimum lease payments46,720 Less amount representing interest(1,628) Present Value of Future Minimum Lease Payments $45,092 The assets acquired through capital leases are as follows: Machinery and equipment397,922$ Accumulated depreciation(373,418) Total $24,504 B-A USINESSTYPE CTIVITIES Note Payable - 2004 On June 30, 2004, the Village signed a $645,170 promissory note with the Bank of America, with an interest rate of 4.96% per annum, maturing May 1, 2024. Proceeds from the note were used to finance the expansion of the Village water system. Interest on the outstanding principal balance is paid in arrears, on the first day of each and every May and November. The final payment of the entire unpaid principal balance and all accrued and unpaid interest was originally due on May 1, 2024. However, $146,275 was prepaid on the note and the note is currently expected to mature on May 1, 2021. 47 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N7–L-TD() OTEONGERMEBT CONTINUED B-A() USINESSTYPE CTIVITIES CONTINUED Note Payable – 2004 (continued) Debt service requirements to maturity are as follows: For the Year Ending September 30:PrincipalInterestTotal 201227,000$ 16,189$ 43,189$ 201329,000 14,800 43,800 201430,000 13,337 43,337 201532,000 11,800 43,800 201633,000 10,188 43,188 2017-2021188,895 220,43231,537 Total $ 97,851339,895$ 437,746$ On July 14, 2008, the Village signed a $6,554,935 promissory note with the Bank of America, with an interest rate of 3.6852% per annum, maturing on March 1, 2028. The proceeds of the note were used to advance refund the 1998 Water Revenue Bonds. Principal and interest are paid monthly and payments commenced on August 1, 2008 with interest paid in arrears. Debt service requirements to maturity are as follows: For the Year Ending September 30:PrincipalInterestTotal 2012255,830$ 212,671$ 468,501$ 2013267,218 202,353 469,571 2014277,867 192,160 470,027 2015287,885 181,626 469,511 2016300,398 181,626 482,024 2017-20211,682,410 673,129 2,355,539 2022-20262,033,260 327,653 2,360,913 2027-2028687,855 708,34920,494 Total $ 1,991,7125,792,723$ 7,784,435$ 48 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N7–L-TD() OTEONGERMEBT CONTINUED CL-TD HANGES IN ONGERM EBT The following is a summary of changes in long-term liabilities of the Village for the year ended September 30, 2011: BeginningEndingDue Within BalanceAdditionsDeletionsBalanceOne Yea r Governmental Activities: Note payable - 2002$3,491,028--$ 227,5143,263,514$ 237,445 -- Capital leases88,61343,52145,092$ 45,092 Compensated absences554,058397,742397,881553,919$ 60,400 Net OPEB obligation80,000 78,000 --$ --158,000 Total Governmental Activities $ 475,7424,213,699$ 668,916$ 4,020,525$ 342,937$ Business-Type Activities: Note payable - 2004365,895 --$ 26,000 339,895 27,000$ Note payable - 20086,039,633 -- 246,910 5,792,723 255,830 Unamortized deferred loss on refunding of debt(392,235) -- (22,468) (369,767) -- Compensated absences138,413 105,867 96,930 147,350 12,200 Net OPEB obligation9,000 9,000 -- --18,000 Total Business-Type Activities $ 114,8676,160,706$ 347,372$ 5,928,201$ 295,030$ All governmental obligations are liquidated by the general fund. N8–FRS OTELORIDA ETIREMENT YSTEM PD LAN ESCRIPTION All full time employees hired before January 1, 1996 are eligible to participate in the Florida Retirement System (FRS), a cost sharing, multiple-employer, public retirement system controlled by the State Legislature and administered by the State of Florida Department of Administration, Division of Retirement. The FRS provides retirement and disability benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries. A post-employment health insurance subsidy is also provided to eligible employees. Benefits are established by Chapter 121, Florida Statutes and Chapter 22B, Florida Administrative Code. Amendments to the law can only be made by an act of the Florida Legislature. 49 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N8–FRS() OTELORIDA ETIREMENT YSTEMCONTINUED PD() LAN ESCRIPTION CONTINUED The State of Florida issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report was for the fiscal year ended June 30, 2011. That report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida 32315-9000 or visiting the website at http://dms.myflorida.com. FP UNDING OLICY The FRS funding policy provides for monthly employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll along with a required 3% employee contribution, are adequate to accumulate sufficient assets to pay benefits when due. Level percentages of payroll employer contribution rates, established by State law, are determined using the entry-age actuarial cost method. The level percentages of payroll method is also used to amortize the unfunded liability over a period of 30 years, and to amortize each change in actuarial assumptions. The employer contribution rates by job class for the Village’s employees at September 30, 2011 were as follows: regular employees – 4.91%, special risk employees – 14.10% and employees participating in the DROP – 4.42%. The regular and special risk employees’ rates include 1.11% for the employer Health Insurance Subsidy contribution and 0.03% for an administrative fee. The DROP rate includes the 1.11 percent Health Insurance Subsidy contribution but the 0.03% administrative fee does not apply to DROP participants. The Village’s contributions to the FRS for the fiscal years ended September 30, 2009, 2010 and 2011 were $165,716, $155,540 and $131,421 respectively, which were equal to the required contributions for each fiscal year. N9–PP OTEENSION LANS The Village maintains two single employer defined benefit pension plans, the Public Safety Officers’ Pension Trust Fund and the General Employees’ Pension Trust Fund (GPTF). Since the Public Safety Officers’ Plan receives contributions that may not be used to pay benefits of all employee classes, two separate pension trust funds, the Firefighters’ Pension Trust Fund (FPTF) and the Police Officers’ Pension Trust Fund (PPTF) are reflected in the financial statements. The General Employee’s Plan is also reflected as a pension trust fund in the financial statements. 50 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED Basis of Accounting The pension trust funds are reported on the accrual basis of accounting. Plan member and state contributions are recognized as revenues in the period that the contributions are due. Employer contributions to each Plan, as calculated by each Plan’s actuary, 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. Expenses are recognized in the accounting period incurred. Method Used to Value Investments Investments are reported at fair value, which is determined as follows: securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the fiscal year; securities traded in the over-the-counter market and listed securities for which no sales was reported on that date are valued at the last reported bid price. Purchases and sales of securities are recorded on a trade-date basis. Net appreciation (depreciation) in the fair value of investments includes the difference between the cost and the fair value of investments held, as well as the net realized gains or losses from securities sold. Gains or losses on sales of securities are based on average cost. Dividend and interest income is recorded as earned. Membership in each Plan consisted of the following at September 30, 2011: FPTFPPTFGPTF Covered Group Active members17 13 35 Vested terminated members11 3 Total 1418 38 Actuarial evaluation as of October 1, 2010 for the General Employees’ Pension Trust Fund has one retiree receiving benefits. 51 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED A. PSO’TF UBLICAFETYFFICERSRUSTUND Plan Description The Public Safety Officers’ Trust Fund is a single-employer defined benefit plan administered by a five-member Board of Trustees that covers all Village police officers and firefighters hired after 1996 (prior to 1996, the Village participated in the Florida Retirement System). The Plan is also governed by Chapters 112, 175 and 185, Florida Statutes. Any firefighter or police officer who completes six or more years of credited service and attains age 55, or completes 25 years of credited service and attains age 52, is eligible for normal retirement benefits. The monthly retirement benefit shall be equal to 3% for the first six (6) years of service, 3.5% for the next four (4) years of service, 4% for the next five (5) years of service, 3% for the next six (6) years of service, 2% for the next four (4) years of service and 3% for all years after twenty-five years of service. Early retirement may be taken after a firefighter or police office attained the age of 50 and has six (6) years of credited service. In the event of early retirement, benefits are actuarially reduced to take into account the firefighter or police officer’s younger age and earlier commencement of retirement benefits. Such reduction shall not exceed 3% per year. Disability benefits can be received for total and permanent disabilities as determined by the Board of Trustees. If the pension is granted, the benefit amount shall be as follows: If the injury or disease is service connected, the firefighter or police officer shall be entitled to the greater of (a) or (b): (a)A monthly pension equal to 42% of his/her average monthly compensation as of his/her disability retirement date, or (b)The accrued normal retirement benefit. If the injury or disease is not service connected, the firefighter or police officer shall be entitled to the greater of (a) or (b): (a)A monthly pension equal to 25% of his/her average monthly compensation as of his/her disability retirement date, or (b)The accrued normal retirement benefit. 52 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED A. PSO’TF() UBLICAFETYFFICERSRUSTUNDCONTINUED Plan Description (continued) If the firefighter or police officer dies prior to retirement from the Village, his beneficiary shall receive the following benefit: (a)Line-of-Duty-Death-Benefit – a pension to the spouse (or children) of 50% of Average Final Compensation for life. (b)Non-Line-of- Duty-Death – the spouse of a member with six years of credited service will receive the actuarial equivalent of the accrued early or normal retirement benefit. If the firefighter or police officer dies or terminates employment with less than six years of credited service, he/she is entitled to a refund of the money he/she contributed. All retirees and beneficiaries receiving pension benefits will be paid a monthly supplemental benefit equal to $20 per month for each year of the member’s Credited Service up to a maximum of $600. The supplemental benefit ceases upon the later of the death of the retired member or beneficiary. Funding Policy Contribution requirements of Plan members and the Village are established, by and may be amended only by the Village Council. Firefighters and police officers are required to contribute 5% of their compensation to the Plan. Pursuant to Chapters 175 and 185 of the Florida Statutes, premium taxes on certain property and casualty insurance contracts written on Village properties is collected by the State and is remitted to the Plan. The amount of insurance premium taxes collected by the Village totaled $183,321 for the year ended September 30, 2011, $128,337 for property insurance contracts for firefighters under Chapter 175 and $54,983 for casualty insurance contracts for police officers under Chapter 185. This amount was recognized as a revenue and an expenditure in the General Fund. Employer contributions for the fiscal year ended September 30, 2011 determined using the actuarial valuation dated October 1, 2009 were 17.45% of covered payroll for police officers and 23.87% of covered payroll for firefighters. The Village is required to contribute the remaining amounts necessary to finance the benefits based on actuarially determined amounts. Unearned contributions as of September 30, 2011 were $33,781 and $29,757 for firefighters and police officers accordingly. However, the Village prepaid contributions were $70,455 for firefighters and $33,130 for police officers, that will be recognized in the subsequent period. This amount was netted against contributions receivable for financial statements presentation. 53 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED A. PSO’TF() UBLICAFETYFFICERSRUSTUNDCONTINUED Funding Policy (continued) The Firefighters’ Pension Trust Fund (part of the Public Safety Officers’ Trust Fund) does not issue separate stand alone financial statements. Included below are the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets as of and for the year ended September 30, 2011. FIREFIGHTERS' PENSION TRUST FUND STATEMENT OF FIDUCIARY NET ASSETS SEPTEMBER 30, 2011 Assets Cash and cash equivalents276,984$ Investments4,534,564 Accounts receivable12,293 Due from Broker4,394 Prepaid items1,612 Total Assets $4,829,847 Liabilities Accounts payable11,240$ Unearned contributions33,781 Total Liabilities 45,021 Net Assets Held in Trust for Pension Benefits $4,784,826 54 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED A. PSO’TF() UBLICAFETYFFICERSRUSTUNDCONTINUED FIREFIGHTERS' PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 ADDITIONS Contributions451,304$ Investment income , net(39,627) Total Additions 411,677 DEDUCTIONS Refund of contributions16,690 Operating expenses22,623 Total Deductions 39,313 Net Increase 372,364 Net Assets Held in Trust for Pension Benefits: 4,412,462 Net Assets - Beginning Net Assets - Ending $4,784,826 The Police Officers’ Pension Trust Fund (part of the Public Safety Officers’ Trust Fund) does not issue separate stand alone financial statements. Included below are the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets as of and for the year ended September 30, 2011. 55 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED A. PSO’TF() UBLICAFETYFFICERSRUSTUNDCONTINUED POLICE OFFICERS' PENSION TRUST FUND STATEMENT OF FIDUCIARY NET ASSETS SEPTEMBER 30, 2011 Assets Cash and cash equivalents106,566$ Investments1,742,427 Accounts receivable4,729 Due from Broker1,691 Prepaid items1,612 Total Assets 1,857,025 Liabilities Accounts payable10,301 Unearned contributions29,757 Total Liabilities 40,058 Net Assets Held in Trust for Pension Benefits $1,816,967 POLICE OFFICERS' PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 ADDITIONS Contributions198,234$ Investment income, net(43,892) Total Additions 154,342 DEDUCTIONS Operating expenses21,086 Total Deductions 21,086 Net Increase 133,256 Net assets held in trust for pension benefits: 1,683,711 Net Assets - Beginning Net Assets - Ending $1,816,967 56 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED B.GE’PTF ENERAL MPLOYEESENSION RUST UND Plan Description The General Employees’ Pension Trust Fund is a single employer defined benefit plan administered by a five member Board of Trustees that covers all Village general employees hired after 1996 (prior to 1996, the Village participated in the Florida Retirement System). Any general employee who attains age 62, or completes 30 years of credited service regardless of age, is eligible for normal retirement benefits. The monthly amount of normal retirement income for a general employee is equal to the number of years of credited service multiplied by 2% of his average highest compensation. Early retirement may be taken after a general employee has attained the age of 50 and has six (6) years of credited service. In the event of early retirement, benefits are actuarially reduced to take into account the general employee younger age and earlier commencement of retirement benefits. Such reduction shall not exceed 5% per year. Disability benefits can be received for total and permanent disabilities as determined by the Board of Trustees. If the pension is granted, the benefit amount shall be as follows: If the injury or disease is service connected, the general employee shall be entitled to the greater of (a) or (b): (a)A monthly pension equal to 42% of his/her average monthly compensation as of his disability retirement date, or (b)An amount equal to the number of years of his/her credited service multiplied by 2% of his average monthly salary based upon his final five years of service. If the injury or disease is not service connected, the general employee shall be entitled to the greater of (a) or (b): (a)A monthly pension equal to 25% of his/her average monthly compensation based on his final five (5) years of service, or (b)An amount equal to the number of years of his/her credited service multiplied by 2% of his average monthly salary based upon his final five years of service. If the general employee dies prior to retirement from the Village, the beneficiary shall receive an amount equal to the vested pension benefit. A survivor benefit is payable to the beneficiary starting when the member would have reached retirement age. If the general employee dies or terminates employment with less than six years of credited service, he is entitled to a refund of the money contributed. 57 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED B.GE’PTF() ENERAL MPLOYEESENSION RUST UND CONTINUED Funding Policy Contribution requirements of Plan members and the Village are established, and may be amended only by the Village Council. General employees are required to contribute 5% of their compensation to the Plan. Employer contributions for the fiscal year ended September 30, 2011 determined using the actuarial valuation dated October 1, 2010 were 9.40% of covered payroll. The Village is required to contribute the remaining amount necessary to finance the benefits based on an actuarially determined amount. The General Employees’ Pension Trust Fund does not issue separate stand alone financial statements. Included below are the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets as of and for the year ended September 30, 2011. GENERAL EMPLOYEES' PENSION TRUST FUND STATEMENT OF FIDUCIARY NET ASSETS SEPTEMBER 30, 2011 Assets Cash and cash equivalents26,354$ Investments1,738,438 Contributions receivable4,748 Accounts receivable9,278 Prepaid Items1,149 Total Assets 1,779,966 Liabilities Accounts payable9,260 2,307 Due to broker Total Liabilities 11,567 Net Assets Held in Trust for Pension Benefits $1,768,400 58 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED B.GE’PTF() ENERAL MPLOYEESENSION RUST UND CONTINUED Funding Policy (continued) GENERAL EMPLOYEES' PENSION TRUST FUND STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 ADDITIONS Contributions251,980$ Investment income, net(8,076) Total Additions 243,904 DEDUCTIONS Refunds of contributions19,709 Operating expenses30,426 Total Deductions 50,135 Net Increase 193,768 Net assets held in trust for pension benefits: Net Assets - Beginning 1,574,631 Net Assets - Ending $1,768,399 The Village’s current contributions were determined using the latest actuarial valuations performed as of October 1, 2010 for the General Employees’ Pension Trust Fund and October 1, 2009 for the Public Safety Officers’ Pension Trust Fund. Significant actuarial assumptions as of the latest actuarial valuations are as follows: Public Safety Officers' Pension Fund PoliceGeneral Employees' Firefighters'Officers'Pension Fund Valuation date10/1/200910/1/200910/1/2010 Actuarial cost methodEntry Age NormalEntry Age NormalAggregate Amortization methodN/AN/AN/A Remaining amortization periodN/AN/AN/A Asset valuation methodFive year smoothingFive year smoothingFive year smoothing Actuarial assumptions: Investment rate of return8%8%7.5% Projected salary increase6%6%6% Includes inflation at4%4%4% Cost of living adjustmentsN/AN/AN/A 59 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED The aggregate actuarial cost method was used to determine the annual required contribution of the employer for the General Employees Pension Fund for the 2011 fiscal year. Because this method does not identify or separately amortize unfunded actuarial liabilities, information about the Plan’s funded status and funding progress has been prepared using the entry age actuarial cost method for that purpose, and the information presented is intended to serve as a surrogate for the funded status and funding progress of the Plans. The Police and Firefighters’ Pension Plan has a twenty (20) year amortization period that is closed. The Village’s 2011 annual pension cost and net pension asset for each Plan are shown below. PoliceGeneral Firefighters’Officers’Employees' Annual required contribution (ARC)322,793$ 135,996$ 164,487$ Interest on net pension asset (NPA)(12,105) (11,368) (11,571) (16,090) (17,430) Adjustment to ARC(16,920) Annual pension cost 327,608 140,718 170,346 Contributions made323,016 *136,101 *164,487 (Increase) decrease in NPA4,592 4,617 5,859 et Pension Asset - Beginning(151,314)(142,105) (154,285) N Net Pension Asset - Ending (137,488)$ (148,426)$ $(146,722) * Includes interest for 2010 funding deficiency (Firefighters $223;Police $105) Three-Year Trend Information AnnualPercentageet Pension N Pensionof APCObligation Fiscal Year EndingCost (APC)Contributed(Asset) Firefihters’ Retirement Sstem gy September 30, 2009215,545$ 99.1%(156,287)$ September 30, 2010358,129 98.6%151,314 September 30, 2011327,608 98.6%(146,722) Police Officers’ Retirement Sstem y September 30, 200993,177 123.1%(146,776) September 30, 2010141,183 96.7%(142,105) September 30, 2011140,718 96.7%(137,488) General Emploees’ Retirement Sstem yy September 30, 200996,179 147.0%(158,284) September 30, 2010152,166 97.4%(154,285) September 30, 2011170,346 96.60%(148,426) 60 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N9–PP() OTEENSION LANSCONTINUED The funded status of the Plans as of October 1, 2010 for the General Employees Plan and October 1, 2009 for the Fire and Police Plans, the most recent actuarial valuation date, are as follows: Actuarial UAAL as Accrued yUnfundeda % of ActuarialLiabilit Value(AAL) -AALFundedCoveredCovered AssetsEntry Age(UAAL) RatioPayrollPayroll (a)(b)(b) - (a)(a) / (b)( c)((b - a) / c) Public Safety Pension Fund: Fire3,965,053$ 4,471,106$ 506,053$ 88.7%1,434,855$ 35.3% Police1,333,906 987,399 (346,507)135.1%749,835 -46.2% General Employees' Pension Fund* 1,625,2881,716,448 (91,220) 105.6%1,858,451 -4.9% *For purposes of this schedule, the AAL for the General Employees’ Plan was determined using the entry age actuarial cost method. Note that the ARC for the Plan was calculated using the aggregate actuarial cost method. The schedule of funding progress, presented as required supplementary information (RSI) 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. N10–OPEB THER OST MPLOYMENT ENEFITS OTE The Village provides an optional single employer defined benefit post-employment healthcare plan to eligible individuals. The plan allows its employees and their beneficiaries, at their own cost, to continue to obtain health, dental and other insurance benefits upon retirement. The benefits of the plan conform to Florida Statutes, which are the legal authority for the plan. The plan has no assets and does not issue a separate financial report. 61 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N10–OPEB() THER OST MPLOYMENT ENEFITS CONTINUED OTE The Village does not directly make a contribution to the plan on behalf of retirees. Retirees and their beneficiaries pay the same group rates as are charged to the Village for active employees by its healthcare provider. However, the Village’s actuaries, in their actuarial valuation, calculate an offset to the cost of these benefits as an Employer Contribution, based upon an implicit rate subsidy. This offset equals the total age-adjusted costs paid by the Village or its active employees for coverage of the retirees and their dependents for the year net of the retiree’s own payments for the year. The annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The annual OPEB cost for the Village for the current year and the related information is as follows: Required Contribution Rates EmployerPay-as-you-go Plan membersN/A FY 2011 Annual Required Contribution (ARC)111,000$ Interest on Net OPEB Obligation4,000 Adjustment to ARC(8,000) Annual OPEB Cost107,000 Employer Contributions(20,000) Increase in the Net OPEB Obligation87,000 Net OPEB Obligation - October 1, 201089,000 Net OPEB Obligation - September 30, 2011 $ 176,000 The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2010 and 2011 was: Two-Year Trend Information FiscalAnnualPercentage of AnnualNet OPEB Year EndOPEB CostOPEB Cost ContributedObligation 2010*106,000$ 16%89,000$ 2011107,000 19%176,000 * First year of OPEB 62 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N10–OPEB() THER OST MPLOYMENT ENEFITS CONTINUED OTE The funded status of the plan as of the latest actuarial valuation was as follows: Actuarial valuation date October 1, 2009 Actuarial accrued liability (AAL)484,000$ Actuarial value of plan assets-- Unfunded actuarial liability (UAAL)484,000 Funded ratio-- Covered payroll4,111,000 UAAL as a percentage of covered payroll11.80% The actuarial valuation for the calculation of OPEB involves estimates of the value of reported amounts and assumptions about the probability of events in the future. 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 to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information is designed to provide multi-year trend information to show whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. However, the Village has not contributed assets to the plan at this time. Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the Village and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Actuarial valuation dateOctober 1, 2009 Projected unit credit Actuarial cost method Amortization method15-year open period; level-dollar payment Asset valuation methodUnfunded Actuarial assumptions investment return4% per annum (includes inflation at 2.75% per annum) Healthcare cost trend rate(s): Select rates10.00% for 2009/2010 graded to 6% for 2017/18 Ultimate rate5.00% per annu m 63 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N11–CC OTEOMMITMENTS AND ONTINGENCIES LA EASE GREEMENTS On December 20, 1994, the Village entered into an Interlocal agreement with Palm Beach County. Per the agreement, Palm Beach County provided for partial funding, land acquisition and design and construction of a branch library within Tequesta. Upon completion of the project, the library was leased to Palm Beach County for 50 years for an annual rent of one dollar. In the event the Village terminates the lease before the end of 50 years, the Village must reimburse Palm Beach County a depreciated value using a useful life of 25 years based on an initial value of $405,000 calculated on a straight-line basis. CS–RRC ONTRACTEDERVICES EFUSE AND ECYCLING OLLECTION The Village entered into a solid waste and recyclable collection agreement with Waste Management Inc. of Florida on September 13, 2007 for a period of five years beginning October 1, 2007 and expiring September 30, 2012. With this agreement the Village granted Waste Management the exclusive franchise for solid waste collection of residential, commercial, industrial and roll-off refuse, recycling and vegetative waste. The Village, on August 5, 2010, entered into the first amendment to the agreement separating the diesel fuel and collection components of the rate allowing for separate calculation of an annual increase. The annual change in the collection component is determined using the CPI (June to June) while the annual change in the fuel component is determined using the change in the cost of diesel fuel determined by reference to EIA/DOE website that reports average prices. Effective September 30, 2010 the Village entered into a second amendment to the agreement extending the term of the current agreement and additional five (5) years from October 1, 2012 and expiring September 30, 2017. CS–F/EMS ONTRACTEDERVICES IREMERGENCY EDICAL ERVICE Effective October 1, 1993, the Village entered into an Interlocal agreement with Jupiter Inlet Colony for the Village to provide fire protection/emergency medical services for a fee. For the year ended September 30, 2011, fire protection fees received from Jupiter Inlet Colony were $210,725. 64 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N11–CC() OTEOMMITMENTS AND ONTINGENCIES CONTINUED CC ONSTRUCTION OMMITMENTS Significant construction commitments as of September 30, 2011 are as following: EstimatedEstimated ExpendedCost toCompletion Descriptionto DateCompleteDate $ January, 2012179,378 Water Plant Expansion -- N12–RM OTEISKANAGEMENT The Village is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees and natural disasters. While the Village cannot anticipate the areas in which potential claims may arise, the Village purchases commercial insurance to protect against areas of possible exposure germane to municipal entities such as property, liability, automobile, workers’ compensation, crime, storage tank, inland marine and railroad coverage. Deductibles and limits vary by coverage and are secured based upon the Village’s tolerance of risk retention in each area. At the Village Council’s direction, the property deductible of $100,000 is applicable for all perils excluding hurricane/windstorm damage. The Florida Municipal Insurance Trust (FMIT) applies a named storm deductible of 5% of the 100% value of real and personal property, personal property of others and business income values at the time of loss or damage at the locations where the damage occurred, subject to the policy deductible, whichever is greater. The Village continues to self insure all properties valued under $100,000. FMIT issued members in good standing a return of premium credit; the Village of Tequesta received a total credit of $20,422 in fiscal year 2011 related to policy year 2008/2009. The Village remains fully insured with the FMIT for workers’ compensation coverage with statutory limits. Premiums are based upon risk class and remuneration of covered employees adjusted by an experience modification factor which includes three prior years of claims history. At the end of each fiscal year, the plan is audited and the Village can either receive a return of premium or be required to pay additional premium base upon actual versus estimated payroll. The final audit by the FMIT for fiscal year 2010/2011 resulted in the Village being refunded a total of $5,493, due mostly to a decrease in the workers’ compensation audited payroll numbers. 65 VILLAGE OF TEQUESTA, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N12–RM() OTEISKANAGEMENT CONTINUED There were no significant changes in insurance coverage from coverage in prior years. Settled claims have not exceeded the commercial coverage in any of the past three fiscal years. N13–JV OTEOINT ENTURE The Village, in conjunction with six other municipalities, organized a consortium to provide mutual fire and emergency aid. The consortium is known as the Northern Area Mutual Aid Consortium (NAMAC). During 1999, the consortium purchased equipment and supplies as well as collected contributions. The consortium does not issue separate financial statements. The Village has not been obligated to contribute any funds to the consortium since its inception in 1999. 66 REQUIRED SUPPLEMENTARY INFORMATION VILLAGE OF TEQUESTA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATIO N BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues Ad valorem taxes4,355,960$ 4,355,960$ 4,341,668$ (14,292)$ Other taxes1,226,760 1,226,760 1,266,681 39,921 Intergovernmental752,230 752,230 750,801 (1,429) Franchise fees385,000 385,000 412,441 27,441 Charges for services823,100 895,551 888,639 (6,912) Intragovernmental323,110 323,110 323,110 -- Licenses and permits242,400 242,400 332,913 90,513 Investment earnings32,000 32,000 32,775 775 Fines and forfeitures23,900 23,900 204,273 180,373 Miscellaneous46,60049,01453,9024,888 Rents and royalties158,770158,770 3,881162,651 Total Revenues 8,444,6958,369,830 8,769,854 325,159 Exenditures p Current: General government1,332,900 1,507,601 1,409,417 98,184 Public safety5,696,485 5,748,376 5,565,091 183,285 Transportation729,660 737,649 714,934 22,715 Leisure services557,560 557,780 548,729 9,051 Capital outlay6,000 305,777 298,830 6,947 Debt service: Principal271,200 271,200 271,035 165 Interest148,200 148,200 148,186 14 Fiscal charges12,00012,00010,499 1,501 Total Expenditures 9,288,5838,754,005 8,966,721 321,862 Excess (Deficienc) of Revenues y over Exenditures p (843,888)(384,175) (196,867) 647,021 Sources Other Financing Transfers In250,000250,000 --250,000 Net Chane in Fund Balance g (593,888)(134,175) 53,133 647,021 Fund Balance - Beginning of Year 593,888134,175 3,975,812 3,381,924 Fund Balance - End of Year $--$--$4,028,945$4,028,945 See note to the budgetary comparison schedule. 67 VILLAGE OF TEQUESTA, FLORIDA NOTE TO THE BUDGETARY COMPARISON SCHEDULE FISCAL YEAR ENDED SEPTEMBER 30, 2011 N1–BBA OTEUDGETS AND UDGETARY CCOUNTING Formal budgetary integration is employed as a management control device during the year for the General Fund, Special Revenue Fund and Capital Projects Funds. All budgets are legally enacted through passage of a resolution. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. For budgeting purposes, current year encumbrances are not treated as expenditures. The Village follows these procedures in establishing the budgetary data reflected in the financial statements: st 1)Prior to September 1, the Village Manager submits to the Village Council a st proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2)Public hearings are conducted to obtain taxpayer comments. st 3)Prior to October 1, the budget is legally enacted through adoption of a resolution. As the original budgeted appropriations were adopted by resolution, all changes to the total appropriations of a fund must be adopted by resolution. Budget amendments for items in excess of $5,000, capital items or amendments transferring funds between unrelated departments are presented to the Village Council for approval. Budget amendments not requiring Village Council approval are submitted by departments to the Finance Department and the Village Manager for approval. During the year, total supplemental appropriations of $534,578 were approved and adopted for the General Fund. Appropriations are legally controlled at the fund level and expenditures may not legally exceed budgeted appropriations at that level. Appropriations lapse at year end. 68 VILLAGE OF TEQUESTA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATIO N SCHEDULE OF EMPLOYER CONTRIBUTIONS - PENSIONS AnnualVillage Contribution FiscalRequiredVillagePremium TaxPercentage YearContributionContributionContributionContributed Firefighters' Pension Fund 2006165,394$ 102,194$ 70,455$ 104.4% 2007171,986 116,915 70,455 108.9% 2008201,074 127,844 70,455 98.6% 2009211,458 143,079 70,455 101.0% 2010342,571 279,911 70,455 102.3% 2011322,793 252,561 70,455 100.1% Police Officers' Pension Fund 2006106,969$ 70,169$ 33,130$ 96.6% 2007111,243 87,635 33,130 108.6% 200885,371 87,240 33,130 141.0% 200988,769 81,539 33,130 129.2% 2010130,820 102,069 33,130 103.3% 2011135,996 136,101 33,130 124.4% General Employees' Pension Fund 200688,512$ 108,015$ N/A122.0% 200792,042 122,449 N/A133.0% 200888,790 130,665 N/A147.2% 200992,364 141,407 N/A153.1% 2010146,458 148,167 N/A101.2% 2011164,487 164,487 N/A100.0% 69 VILLAGE OF TEQUESTA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - PENSIONS Actuarial Accrued ActuarialLiabilityUnfundedUAAL as a % ActuarialValue of(AAL) - AALFundedCoveredof Covered ValuationAssetsEntry Age*(UAAL)Ratio PayrollPayroll Date(a)(b)(b) - (a)(a) / (b)(c) ((b - a) / c) (1) Public Safety 10/01/031,966,148$ 1,610,963$ (355,185)$ 122.0%1,339,667$ 26.5% 10/01/052,782,953 2,598,331 (184,622) 107.1%1,650,403 11.2% 10/01/074,080,609 3,730,247 (350,362) 109.4%1,931,871 18.1% 10/01/09 Fire3,965,053 4,471,106 506,053 88.7%1,434,855 35.3% Police1,333,909 987,399 (346,507) 135.1%749,835 (46.2%) Note: Separate information for fire and police was not available prior to the 10/1/09 valuation. (1) Through10/1/07,theannualrequiredcontribution(ARC)wascalculatedusingtheaggregateactuarial costmethod.Informationinthisscheduleforthoseyearswascalculatedusingtheentryageactuarialcost method as a surrogate for the funding progress of the Plan. (2) General Employees' 10/01/05602,280$ 429,242$ (173,038)$ 126.3%1,056,797$ 15.8% 10/01/071,026,897 764,571 (262,326) 134.3%1,500,201 17.5% 10/01/081,235,850 1,034,855 (200,995) 119.4%1,790,280 (11.2%) 10/01/091,465,279 1,341,518 (123,761) 109.2%1,890,529 (6.5%) 10/01/101,716,448 1,625,288 (91,220) 105.6%1,858,451 (4.9%) (2) Theannualrequiredcontribution(ARC)wascalculatedusingtheaggregateactuarialcostmethod. Informationinthisscheduleiscalculatedusingtheentryageactuarialcostmethodasasurrogateforthe funding progress of the Plan. 70 VILLAGE OF TEQUESTA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS Unfunded (a)Actuarial ActuarialActuarialUnfundedAccrued ActuarialValue ofAccruedActuarialFundedCoveredLiability as of Valuation DateAssetsLiability (AAL)LiabilityRatioPayroll% of Covered October 1, 2009--$ 484,000$ (484,000)$ 0.00%4,111,000$ 11.80% TheaboveschedulereflectsdataforoneyearduetotheyearendedSeptember30,2010beingthefirstyear of implementation of GASB Statement No. 45. 71 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Page Intentionally Left Blank NONMAJOR GOVERNMENTAL FUNDS NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Special Law Enforcement Trust Fund – This fund accounts for forfeitures received by the Police Department. The forfeitures must be expended for certain law enforcement purposes as prescribed by Florida Statute Chapter 932.704. Capital Projects Funds Capital Improvement Fund – This fund is used to account for the maintenance and upkeep of the Village’s general infrastructure (such as roads, bridges, sidewalks and storm water drainage systems) and streetscape beautification projects. Capital Projects Fund – This fund accounts for the acquisition or construction of major capital projects, other than those financed by proprietary fund types. VILLAGE OF TEQUESTA, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2011 Special RevenueTotal Capital Projects CapitalCapitalonmajo Special LawNr EnforcementImprovementProjectsGovernmental FunFunFunFunds ddd Assets Cash and cash equivalent45,671243,215$ 212,523$ 501,409$ s Other Receivables100191,239-- 191,339 Total Assets $45,771$434,454$212,523$692,748 Liabilities and Fund Balances Liabilities$--$-- --$ $-- Fund Balances Restricted for: Law Enforcemen 45,77145,771 t Assigned to: Subsequent year's budge 201,300-- -- 201,300 t Capital Projects--233,154212,523445,677 Total Fund Balances 45,771434,454212,523692,748 Total Liabilities and Fund Balances$434,454$212,523$692,748 $45,771 72 VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND NONMAJOR GOVERNMENTAL FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2011 Special RevenueTotal Capital Projects Special LawCapitalCapitalNonmajor EnforcementImprovementProjectsGovernmental FundFundFundFunds Revenues Forfeitures/Confiscations25,699--$ --$ 25,699$ Miscellaneous-- 88,000 -- 88,000 Total Revenues 88,00025,699 -- 113,699 Exenditures p Current: Public Safety1,000 -- -- 1,000 Capital outlay-- 618,730 56,250 674,980 Total Exenditures p 618,7301,000 56,250 675,980 Excess (Deficienc) of Revenues Over y Exenditures p (530,730)24,699 (56,250) (562,281) Other Financin Sources (Uses) g Transfers out-- (250,000) -- (250,000) Total Other Financin Sources (Uses) g (250,000)-- -- (250,000) Net Chane in Fund Balances g (780,730)24,699 (56,250) (812,281) 1,215,184 268,773 1,505,029 21,072 Fund Balances - Beginning of Year $ 434,45445,771$ 212,523$ 692,748$ Fund Balances - End of Year 73 VILLAGE OF TEQUESTA, FLORIDA BUDGETARY COMPARISON SCHEDULE SPECIAL LAW ENFORCEMENT TRUST FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues Forfeitures/Confiscations--$ --$ 25,699$ 25,699$ Expenditures Current: Public Safety1,000 1,000 1,000 -- Excess (Deficiency) of Revenues (1,000)(1,000) 24,699 25,699 over Expenditures 1,0001,000 21,072 20,072 Fund Balance - Beginning of Year $ ----$ 45,771$ 45,771$ Fund Balance - End of Year 74 VILLAGE OF TEQUESTA, FLORIDA BUDGETARY COMPARISON SCHEDULE CAPITAL IMPROVEMENT FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues $ ----$ 88,000$ 88,000$ Expenditures Current: Leisure services-- -- -- -- 811,362 618,730 192,632 Capital outlay-- Total Expenditures 811,362-- 618,730 192,632 Excess (Deficiency) of Revenues over Expenditures (811,362)-- (530,730) 280,632 Sources Other Financing Transfers Out(250,000)$ (250,000)$ (250,000) -- Net Change in Fund Balance (1,061,362)(250,000) (780,730) 280,632 250,000 1,061,362 1,215,184 153,822 Fund Balance - Beginning of Year Fund Balance - End of Yea r$ ----$ 434,454$ 434,454$ 75 VILLAGE OF TEQUESTA, FLORIDA BUDGETARY COMPARISON SCHEDULE CAPITAL PROJECTS FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Variance with Final Budget Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues Intergovernmental$ ----$ --$ --$ Expenditures Capital outlay--56,250 --56,250 Excess (Deficiency) of Revenues Over Expenditures (56,250)-- (56,250) -- --56,250268,773212,523 Fund Balance - Beginning of Year $--$--$212,523$212,523 Fund Balance - End of Year 76 NONMAJOR ENTERPRISE FUNDS NONMAJOR ENTERPRISE FUNDS Stormwater Fund – This fund is used to account for the construction and maintenance of the Village’s stormwater system. Refuse and Recycling Fund – This fund is used to account for revenues received from non-ad valorem assessments charged to residents for residential curbside pick-up of solid waste and recyclable material. VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS SEPTEMBER 30, 2011 Total Nonmajor StormwaterRefuse &Enterprise UtilityRecyclingFunds Assets Current Assets Cash and cash equivalents747,333$ 124,679$ 872,012$ Investments5,181 5,194 10,375 t 8,8582,348 11,206 Receivables, ne Inventories602 -- 602 Prepaid items281 281-- Total Current Assets 755,745138,731894,476 Noncurrent Assets Capital assets not being depreciated12,950-- 12,950 Capital assets being depreciated, net1,467,641 1,467,641-- Total Noncurrent Assets 1,480,591 1,480,591-- Total Assets 2,236,336138,7312,375,067 Liabilities Current Liabilities Accounts payable2,89936,44639,345 Non-Current Liabilities Compensated absences1,043 1,043-- Total Liabilities 3,94236,44640,388 Net Assets Invested in capital assets, net of related debt --1,480,591 1,480,591 Unrestricted751,803102,285854,088 Total Net Assets $2,232,394$102,285$2,334,679 77 VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND AND CHANGES IN NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Total Nonmajor StormwaterRefuse & Enterprise UtilityRecyclingFunds Operating Revenues Charges for services314,264$$436,142$750,406 Operating Expenses r --82,031 82,031 Stormwate Purchased services-- 437,852 437,852 Management services10,960 6,450 17,410 Depreciation101,340 101,340-- Total Operating Expenses 194,331444,302638,633 Operating Income (Loss) 119,933(8,160) 111,773 Non-Operating Revenues Miscellaneous revenue329 -- 329 Investment earnings 2,161 3,054893 Total Non-Operating Revenues 2,490 3,383893 Change in Net Assets (7,267)122,423 115,156 2,109,971109,5522,219,523 Net Assets - Beginning $2,232,394$102,285$2,334,679 Net Assets - Ending 78 VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 Total Nonmajor StormwaterRefuse &Enterprise UtilityRecycling Funds Cash Flows from Operating Activities Cash received from customers, governments and other funds314,366$ 430,440$ 744,806$ Cash paid to suppliers(43,977) (443,246) (487,223) Cash paid to employees(49,867) -- (49,867) Net Cash Provided by (Used in) Operating Activities 220,522 207,716(12,806) Cash Flows from Capital and Related Financing Activities (12,950)-- Acquisition and construction of capital assets (12,950) Net Cash Used in Capital and Related Financing Activities (12,950) (12,950)-- Cash Flows from Investing Activities Interest received on investments1,911 2,238327 Net Cash Provided by Investing Activities 1,911 2,238327 Net Increase in Cash and Cash Equivalents (12,479)209,483 197,003 537,850 675,008137,158 Cash and Cash Equivalents - Beginning $747,333$ 872,012124,679$ Cash and Cash Equivalents - Ending Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating income (loss)119,933$ (8,160)$ 111,773$ Depreciation101,340 -- 101,340 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable102 (5,702) (5,600) Inventories(121) -- (121) Prepaid items(8) -- (8) Increase (decrease) in: Accounts payable(1,287) 1,056 (231) Compensated absences563 563-- Net Cash Provided by (Used in) Operating Activities $220,522$ 207,716(12,806)$ Noncash Investing Activities Change in fair value of investments576$$ 1,138562$ 79 Page Intentionally Left Blank FIDUCIARY FUNDS FIDUCIARY FUNDS Firefighters’ Pension Trust Fund – This fund accounts for the accumulation of resources and for contributions and benefits of the firefighter employees. Police Officers’ Pension Trust Fund – This fund accounts for the accumulation of resources and for contributions and benefits of the police employees. General Employees’ Pension Trust Fund – This fund accounts for the accumulation of resources and for contributions and benefits for the general employees of the Village. VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2011 PoliceGeneral Firefighters'Officers'Employees' PensionPensionPension Trust FundTrust FundTrust FundTotal Assets Cash and cash equivalents276,984$ 106,566$ 26,354$ 409,904$ Investments, at fair value: Corporate stocks2,010,703 773,585 936,876 3,721,164 Corporate bonds678,201 260,926 314,408 1,253,535 Government backed assets1,388,265 534,111 367,160 2,289,536 Mutual funds457,395 173,805 89,840721,040 Municipal obligations-- -- 30,154 30,154 Prepaid items1,612 1,612 1,1494,373 r 1,6914,394 (2,307) 3,778 Due from (to) broke Contributions receivable-- -- 4,748 4,748 Accrued interest receivable12,2934,7299,27826,300 Total Assets 4,829,8471,857,0251,777,6608,464,532 Liabilities Accounts payable 10,30111,240 9,26030,801 Unearned contributions33,78129,757 63,538-- Total Liabilities 45,02140,0589,260 Net Assets Held in Trust for Pension Benefits $4,784,826$1,816,967$1,768,400$8,370,193 80 VILLAGE OF TEQUESTA, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 PoliceGeneral Firefighters'Officers'Employees' PensionPensionPension Trust FundTrust FundTrust FundTotal Additions Contributions: )$ 159,267164,487707,443383,689$ Employer (including State Employee67,61538,96787,493194,075 Total contributions451,304198,234251,980901,518 Investment income Net (loss) depreciation in fair value of investments(205,027) (91,436) (52,766) (349,229) Investment earnings194,66874,17667,787336,631 (17,260)(10,359) 15,021 (12,598) Less investment expenses(29,268)(26,632)(23,097)(78,997) Net investment income (loss)(39,627)(43,892) (91,595)(8,076) Total Additions 411,677154,342243,904809,923 Deductions Refunds of contributions16,690-- 19,709 36,399 Operating expenses22,62421,08630,42674,136 Total Deductions 39,31421,08650,135110,535 Net Increase 133,256372,363 193,769 699,388 Net Assets Held in Trust for Pension Benefits Net assets - beginning4,412,4631,683,7111,574,6317,670,805 Net assets - ending$4,784,826$1,816,967$1,768,400$8,370,193 81 STATISTICAL SECTION Page Intentionally Left Blank STATISTICAL SECTION This part of the Village of Tequesta's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Village overall financial health. ContentsPage Financial Trends Theseschedulescontaintrendinformationtohelpthereaderunderstandhowthe 82-86 Village's financial performance and well-being have changed over time. Revenue Capacity TheseschedulescontaininformationtohelpthereaderassesstheVillagemost 87-90 significant local revenue source, the property tax. Debt Capacity Theseschedulespresentinformationtohelpthereaderassesstheaffordabilityofthe VillagecurrentlevelsofoutstandingdebtandtheTown'sabilitytoissueadditional 91-95 debt in the future. Demographic and Economic Information Theseschedulesofferdemographicandeconomicindicatorstohelpthereader 96-97 understand the environment within which the Village's financial activities take place. Operating Information Theseschedulescontainserviceandinfrastructuredatatohelpthereaderunderstand howtheinformationintheVillage'sfinancialreportrelatestotheservicestheVillage 98-100 provides and the activities it performs. Sources: Unlessotherwisenoted,theinformationintheseschedulesisderivedfrom the Comprehensive Annual Financial Reports for the relevant year. VILLAGE OF TEQUESTA, FLORIDA NET ASSETS BY COMPONENT LAST NINE FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 2007 2008 2009 2010 2011 Governmental Activities Invested in capital assets, net of related debt $ 2,209,191 $ 921,889 $ 1,788,749 $ 4,515,096 $ 6,679,855 $ 6,959,332 $ 7,330,897 $ 7,525,570 $10,730,256 Restricted -- - -- 143,370 140,990 - -- - -- Unrestricted 4,423,513 4,947,838 6,926,208 5,570,447 5,402,774 6,459,522 6,218,462 5,306,661 4,442,410 Total Governmental Activities Net Assets $ 6,632,704 $ 5,869,727 $ 8,714,957 $10,228,913 $12,223,619 $13,418,854 $13,549,359 $12,832,231 $15,172,666 Business -Type Activities: Invested in capital assets, net of related debt $10,561,209 $ 9,602,911 $10,815,151 $11,722,188 $14,513,500 $14,082,989 $13,713,525 $13,037,012 $14,673,046 Restricted 317,193 322,818 317,102 396,369 328,544 - -- - -- Unrestricted 4,843,781 5,901,624 4,604,463 4,867,905 3,046,229 3,581,512 3,997,271 4,975,318 4,315,056 Total Business -Type Activities Net Assets $15,722,183 $15,827,353 $15,736,716 $16,986,462 $17,888,273 $17,664,501 $17,710,796 $18,012,330 $18,988,102 Primary Government: Invested in capital assets, net of related debt $12,770,400 $10,524,800 $12,603,900 $16,237,284 $21,193,355 $21,042,321 $21,044,422 $20,562,582 $25,403,302 Restricted 317,193 322,818 317,102 539,739 469,534 - -- - -- Unrestricted 9,267,294 10,849,462 11,530,671 10,438,352 8,449,003 10,041,034 10,215,733 10,281,979 8,757,466 Total Governmental Activities Net Assets $22,354,887 $21,697,080 $24,451,673 $27,215,375 $30,111,892 $31,083,355 $31,260,155 $30,844,561 $34,160,768 Note: The Village began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. 82 Expenses Governmental activities: General government Public safety Transportation Leisure services Interest on long-term debt Total Governmental Activities Expenses Business -type activities: Water Stormwater Refuse and recycling Community development Total Business -Type Activities Expenses Total Primary Government Program Expenses Program Revenues Governmental activities: Charges for services: General government Public safety Transportation Leisure services Operating grants and contributions Capital grants and contributions Total Governmental Activities Program Revenues Business -Type Activities Charges for services: Water Stormwater Refuse and recycling Community development Operating grants and contributions Capital grants and contributions Total Business -Type Activities Program Revenues Total Primary Government Program Revenues Net (Expense) Revenue Governmental activities Business -type activities Total Primary Government Net Expense VILLAGE OF TEQUESTA, FLORIDA CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ 1,299,812 $ 1,105,741 $ 1,361,013 $ 1,402,535 $ 1,391,654 $ 1,344,038 $ 1,501,344 $ 1,503,750 $ 1,591,575 3,649,803 4,138,374 4,691,063 5,577,243 5,634,834 5,784,245 5,807,477 6,313,835 5,989,357 474,134 804,523 656,158 837,441 766,226 736,844 774,966 843,960 857,456 385,192 458,659 605,745 756,224 559,583 539,450 639,590 710,685 635,671 277,855 262,479 248,728 243,871 229,074 206,126 180,770 169,792 158,685 6,086,796 6,769,776 7,562,707 8,817,314 8,581,371 8,610,703 8,904,147 9,542,022 9,232,744 3,881,752 3,975,766 4,026,027 4,187,257 4,139,784 3,760,426 3,907,950 3,989,517 3,829,330 278,442 155,537 142,788 198,993 188,709 215,163 226,498 223,421 194,331 229,460 252,933 260,715 270,887 306,347 420,081 444,449 431,156 444,302 593,105 513,101 -- -- -- -- -- -- -- 4,982,759 4,897,337 4,429,530 4,657,137 4,634,840 4,395,670 4,578,897 4,644,094 4,467,963 $ 11,069,555 $ 11,667,113 $ 11,992,237 $ 13,474,451 $ 13,216,211 $ 13,006,373 $ 13,483,044 $ 14,186,116 $ 13,700,707 $ 352,901 $ 439,646 $ 260,647 $ 270,137 $ 278,215 $ 475,244 $ 302,182 $ 316,816 $ 568,452 477,041 538,056 1,040,427 1,121,642 1,006,947 863,391 783,774 899,639 1,283,728 -- -- -- -- -- 12 -- -- -- 63,438 42,430 4,410 57,261 54,364 50,219 72,487 92,003 77,955 56,517 43,945 515,438 365,183 20,350 18,711 67,842 24,354 58,746 535,000 54,764 57,736 100,000 2,689,626 949,897 1,064,077 1,820,922 2,349,223 1,414,640 1,465,313 1,226,285 1,432,812 4,678,507 4,082,459 3,931,562 4,037,674 4,090,268 3,850,508 3,463,564 3,863,439 4,076,132 4,585,287 297,843 303,450 298,188 301,993 303,273 299,729 314,569 313,126 314,264 242,901 248,252 277,589 283,821 285,917 402,439 414,312. 414,657 436,142 628,068 348,511 -- -- -- -- -- -- -- -- -- -- 42,471 7,827 -- -- 51,511 -- -- -- 119,944 484,000 430,000 -- -- -- -- 5,251,271 4,831,775 4,733,395 5,202,553 4,877,525 4,165,732 4,592,320 4,855,426 5,335,693 $ 6,201,168 $ 5,895,852 $ 6,554,317 $ 7,551,776 $ 6,292,165 $ 5,631,045 $ 5,818,605 $ 6,288,238 $ 10,014,200 $ (5,136,899) $ (5,705,699) $ (5,741,785) $ (6,468,091) $ (7,166,731) $ (7,145,390) $ (7,677,862) $ (8,109,210) $ (4,554,237) 268,512 (65,562) 303,865 545,416 242,685 (229,938) 13,423 211,332 867,730 $ (4,868,387) $ 5,771,261 $ 5,437,920 $ 5,922,675 $ 6,924,0 $ 7,375,328 $ 7,664,439 $ 7,897,878 $ 3,686,507 Note: The Village began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. 83 General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes Othertaxes Franchise fees based on gross receipts Unrestricted intergovernmental Unrestricted investment earnings Miscellaneous revenues Gain (loss) on sale of capital assets Transfers Total Governmental Activities Business -Type Activities Unrestricted Investment earnings Miscellaneous revenues Gain (loss) on sale of capital assets Transfers Total Business -Type Activities Total Primary Government Change in net assets: Governmental activities Business -type activities Total Primary Government VILLAGE OF TEQUESTA, FLORIDA CHANGES IN NET ASSETS (CONTINUED) LAST NINE FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ 3,392,623 $ 3,781,095 $ 4,494,713 $ 5,166,754 $ 6,139,007 $ 5,661,200 $ 5,173,808 $ 4,643,816 $ 4,341,668 1,093,877 1,089,781 1,084,827 1,087,759 1,157,128 1,123,272 1,285,063 1,315,006 1,266,681 350,423 372,212 367,778 419,929 477,711 462,296 466,541 435,766 412,441 520,921 558,069 622,457 679,001 815,828 783,034 702,616 717,673 724,400 89,532 79,483 214,588 392,961 404,816 152,602 8,725 71,067 32,775 123,740 83,126 641,901 173,362 106,647 37,621 171,614 208,754 116,707 6,400 (1,012,584) 1,981 (7,847) (8,460) 710,151 60,300 60,300 120,600 5,569,669 4,942,722 8,136,415 7,982,047 9,161,437 8,340,625 7,808,367 7,392,082 6,894,672 70,706 75,846 164,163 280,665 321,718 86,811 (9,208) 49,973 28,074 10,917 82,576 151,487 479,145 397,708 39,955 42,080 40,229 79,968 681,912 3,850 (710,151) 4,820 7,847 8,460 (60,300) (60,300) (120,600) 771,382 170,732 (394,501) 704,330 659,126 6,166 32,872 90,202 108,042 6,341,051 5,113,454 7,741,914 8,686,377 9,820,563 8,346,791 7,841,239 7,482,284 7,002,714 432,770 (762,977) 2,394,630 1,513,956 1,994,706 1,195,235 130,505 (717,128) 2,340,435 1,039,894 105,170 (90,636) 1,249,746 901,811 (223,772) 46,295 301,534 975,772 $ 1,472,664 $ (657,807) $ 2,303,994 $ 2,763,702 2.896.517 971.463 $ 176,800 $ (415,594) $ 3,316,207 84 General Fund Reserved Unreserved Nonspendable Restricted Assigned Unassigned Total General Fund All Other Governmental Funds Reserved Unreserved, reported in: Special revenue fund Capital Projects funds Restricted Assigned Total Other Governmental Funds VILLAGE OF TEQUESTA, FLORIDA FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ 146,557 $ 43,745 $ 50,509 $ 56,759 $ 176,410 $ 47,493 $ 82,197 $ 383,766 $ 129,394 $ -- 2,943,229 3,170,436 3,718,380 3,424,408 3,221,390 4,456,247 5,180,611 4,296,418 3,846,418 -- -- -- -- -- -- -- -- -- -- 228,049 -- - -- - -- - -- - -- 419,591 -- - -- - -- - -- - -- 1,372,125 2,009,180 3,089,786 3,214,181 3,768,889 3,481,167 3,397,800 4,503,740 5,262,808 4,680,184 3,975,812 4,028,945 1,030,617 155,645 341,722 823,675 143,370 196,426 12,752 29,508 117,838 -- 175,980 237,858 15,692 17,901 255,179 362,582 391,527 22,037 21,072 -- 1,557,927 1,069,670 889,395 2,519,033 1,599,416 457,885 803,511 1,502,939 1,366,119 -- -- -- -- -- -- -- -- -- -- 45,771 -- -- -- -- -- -- -- -- -- 646,977 2 764 524 $1,463,173 $1,246,809 $ 3,360,609 $1,997,965 $1,016,893 $1,207,790 $1,554,484 $1,505,029 $ 692,748 Note: In fiscal year 2007, started a breakdown of unreserved of other governmental funds. The Village implemented GASB Statement No. 54 for the fiscal year ended September 30, 2011 85 Revenues Taxes Intergovernmental Franchise fees Charges for services Intragovernmental Grants Licenses and permits Interest Fines and forfeitures Miscellaneous Rents and royalties Impact fees Total Revenues Expenditures Current: General government Public safety Transportation Leisure services Capital outlay Debt service: Principal Interest Fiscal charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses) Transfers in Transfers -out Other proceeds Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures VILLAGE OF TEQUESTA, FLORIDA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ 4,502,446 $ 4,836,923 $5,243,088 $ 5,579,540 $ 6,254,513 $ 7,296,135 $ 6,871,639 $ 6,458,871 $ 5,958,822 $5,608,349 638,106 575,986 596,947 622,457 679,001 815,828 783,034 724,375 839,110 776,500 - - - 367,778 419,929 477,711 462,296 466,541 435,766 412,441 382,650 362,663 477,513 490,995 507,702 526,922 574,937 597,269 687,332 888,639 327,270 337,490 341,700 254,898 262,700 273,150 280,100 292,990 307,740 323,110 142,207 56,517 43,945 515,438 900,183 90,398 76,448 37,583 108,429 103,564 93,601 549,884 631,521 401,704 299,059 211,371 279,835 332,913 84,693 83,166 79,483 214,588 392,961 404,816 152,602 8,725 71,067 32,775 68,758 58,467 57,413 352,254 34,825 111,080 40,779 34,877 21,721 204,273 46,423 80,494 83,126 289,647 175,343 52,899 38,242 80,603 62,009 141,902 - - - - - 108,628 103,627 120,596 161,492 162,651 44,320 32,143 11,028 9,707 12,292 3,858 2,575 851 6,345,302 6,527,413 7,027,844 9,247,186 10,270,970 10,563,129 9,685,338 9,034,652 8,824,894 8,883,553 1,139,653 1,289, 050 1,225,550 1,314,270 1,391,612 1,371,148 1,220,238 1,373,158 1,341,475 1,410,417 3,229,968 3,443,961 3,918,798 4,351,936 5,233,807 5,291,398 5,439,202 5,411,745 5,830,734 5,565,091 403,363 440,263 776,273 625,014 807,651 736,436 692,552 710,384 738,323 714,934 325,326 347,975 384,980 523,439 692,408 495,767 467,740 562,714 619,340 548,729 4,048,126 1,439,607 368,303 870,453 3,162,034 1,892,075 257,373 752,980 594,224 973,810 1,997,263 470,221 319,280 336,101 382,687 482,665 572,742 278,831 284,833 271,035 133,998 277,855 262,479 255,672 243,871 222,938 200,236 171,297 159,506 148,186 -- -- -- -- -- 6,136 5,890 9,473 10,286 10,499 11,277,697 7,708,932 7,255,663 8,276,885 11,914,070 10,498,563 8,855,973 9,270,582 9,578,721 9,642,701 (4,932,395) (1,181,519) (227,819) 970,301 (1,643,100) 64,568 829,364 (235,930) (753,827) (759,148) 5,358,147 464,954 326,010 3,771,617 2,023,368 685,644 924,300 1,642,813 273,549 250,000 (4,038,447) (472,801) (334,470) (3,068,840) (1,963,068) (625,344) (803,700) (1,642,813) (273,549) (250,000) 5,252,000 574,624 152,999 136,789 6,571,700 (7,847) 566,164 855,776 197,089 60,300 120,600 $ 1,639,305 .$(1,189,366) $ 338,345 $ 1,826,077 $(1,446,011 ) $ 124,868 $ 949,964 $(235,930) $(753,827) $(759,148) 29.48% 11.93% 8.45% 7.99% 7.16% 8.20% 8.99% 5.28% 4.95% 4.84% 86 VILLAGE OF TEQUESTA, FLORIDA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 2002 $ 468,569,608 Centrally $18,641,610 $ 21,621,054 $ 279,734 $ Real Property Personal Property Assessed Property Total 78% 2003 Estimated Estimated Estimated 22,202,297 Estimated Assessed Actual "Just" Actual "Just" Actual "Just" 75% Actual "Just" Value as a Taxable Value of Taxable Value of Taxable Value of Taxable Direct Value of Percentage of Fiscal Year Ending Assessed Taxable Assessed Taxable Assessed Taxable Assessed Tax Taxable Actual September 30 Value Property Value Property Value Property Value Rate Property Value 2002 $ 468,569,608 $ 601,222,227 $18,641,610 $ 21,621,054 $ 279,734 $ 279,734 $ 487,490,952 6.7305 $ 623,123,015 78% 2003 503,562,346 672,688,887 19,211,494 22,202,297 287,762 287,762 523,061,602 6.7305 695,178,946 75% 2004 583,470,308 789,428,369 19,488,528 22,409,087 326,474 326,474 603,285,310 6.4980 812,163,930 74% 2005 695,900,596 950,969,798 19,752,631 22,669,061 340,485 340,485 715,993,712 6.4980 973,979,344 74% 2006 804,692,586 1,159,686,579 20,372,762 23,286,106 340,839 340,839 825,406,187 6.4980 1,183,313,524 70% 2007 959,650,125 1,369,028,275 21,925,090 21,925,090 385,284 385,284 981,960,499 6.4980 1,391,338,649 71% 2008 992,309,662 1,410,466,330 24,589,752 27,733,698 489,214 489,214 1,017,388,628 5.7671 1,438,689,242 71% 2009 905,243,765 1,263,380,924 20,238,412 26,800,875 724,859 730,883 926,207,036 5.7671 1,290,912,682 72% 2010 813,253,151 1,087,782,592 19,867,770 25,872,707 713,541 718,791 833,906,426 5.7671 1,114,374,270 75% 2011 759,663,152 990,741,690 20,087,425 26,205,842 471,680 476,546 780,222,257 5.7671 1,017,424,078 77% Source: Palm Beach County Property Appraiser's office: Form DR -403V Revised Recapitulation of the Ad Valorem Rolls of Tequesta, Palm Beach County Florida 87 VILLAGE OF TEQUESTA, FLORIDA PROPERTY TAX RATES - ALL DIRECT AND OVERLAPPING GOVERNMENTS (Per $1,000 of Assessed Value) LAST TEN FISCAL YEARS Direct Rates Overlapping Rates (1) S. Florida Jupiter Fl. Island Children's County Fiscal Year Ending Village County Everglades School County Water Mgmt. Inlet Nay. District Services Health Care September 30 Rate County Debt Construction District Library District District (FIND) Council District 2002 6.7305 4.9351 0.3851 0.1000 8.9480 0.5403 0.6970 0.1012 0.0385 0.5703 1.1500 2003 6.7305 4.5000 0.3084 0.1000 8.7790 0.5403 0.5970 0.0916 0.0385 0.6228 1.1300 2004 6.4980 4.5000 0.2910 0.1000 8.5710 0.5833 0.5970 0.0916 0.0385 0.6902 1.1300 2005 6.4980 4.5000 0.2677 0.1000 8.4320 0.5807 0.5970 0.0916 0.0385 0.6902 1.1000 2006 6.4980 4.4500 0.2692 0.1000 8.1060 0.6250 0.5970 0.0916 0.1000 0.6887 1.0800 2007 6.4980 4.2800 0.1975 0.1000 7.8720 0.5989 0.5970 0.0916 0.0385 0.6199 0.9700 2008 5.7671 3.7811 0.2002 0.0894 7.3560 0.5441 0.5346 0.0909 0.0345 0.5823 0.8900 2009 5.7671 3.7811 0.1845 0.0894 7.2510 0.5427 0.5346 0.1000 0.0345 0.6009 0.9975 2010 5.7671 4.3440 0.2174 0.0894 7.9830 0.5518 0.5346 0.1253 0.0345 0.6898 1.1451 2011 5.7671 4.7500 0.2460 0.0894 8.1540 0.6069 0.5346 0.1364 0.0345 0.7513 1.1451 (1) Overlapping rates are those of local and county governments that apply to property owners within the Village of Tequesta. Sources: Palm Beach County Property Appraiser's office M. VILLAGE OF TEQUESTA, FLORIDA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2011 2002 Percentage of Percentage of Taxable Total Village Taxable Total Village Assessed Taxable Assessed Taxable Taxpayer Value Rank Value Value Rank Value Tamwest Realty, Inc (County Line Plaza) DDR S.E. Tequesta, LLC (Teq. Shoppes) Florida Power & Light Co. Tequesta Investors LP Terrace Communities Tequesta LLC SLO ML LLC ALS North America, Inc. Tracy Thomas J. Elliott Edward W. Jr Hersey Marta Lighthouse Cove Apartments, Ltd. H & J Tequesta Assoc. AHC Purchaser Inc Tequesta Country Club Leslie J. Gelber JMZ Tequesta Properties, Inc. Total $ 13,848,742 1 1.77% $ 12,687,234 2 2.60% 8,047,394 2 1.03% 7,720,000 3 1.58% 6,962,557 3 0.89% 6,296,211 4 0.81% 6,121,737 5 0.78% 7,390,772 4 1.52% 3,797,129 6 0.49% 3,400,000 7 0.44% 4,094,311 7 0.84% 3,195,299 8 0.41% 2,915,675 9 0.37% 2,906,568 10 0.37% 13,850,954 1 2.84% 5,450,000 5 1.12% 4,428,161 6 0.91% 3,521,835 8 0.72% 2,520,463 9 0.52% 2,428,148 10 0.50% $ 61,663,730 $ 57,491,312 7.37% 12.65% Source: Palm Beach County Tax Collector's System, tax year 2011 o. VILLAGE OF TEQUESTA, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected within the Fiscal Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date (2) Ended for the Percentage in Subsequent Percentage September 30 Fiscal Year (1) Amount of Levy Years Amount of Levy 2002 $ 3,271,160 $ 3,147,730 96.2% $ 5,816 $ 3,153,546 2003 3,520,466 3,388,176 96.2% 13,983 3,402,160 2004 3,912,003 3,776,782 96.5% 4,125 3,780,907 2005 4,650,578 4,486,224 96.5% 5,857 4,492,081 2006 5,363,489 5,164,292 96.3% 5,543 5,169,835 2007 6,355,149 6,134,038 96.5% 9,000 6,143,039 2008 5,863,796 5,663,439 96.6% 4,401 5,667,839 2009 5,341,529 5,162,044 96.6% 14,446 5,176,491 2010 4,809,222 4,627,732 96.2% 375 4,628,107 2011 4,513,447 4,338,395 96.1% -- 4,338,395 (1) The tax levied in a fiscal year is based on the taxable value of the prior year (2) Includes discounts taken by property taxpayers. Source: Palm Beach County Tax Collector's office. 96.4% 96.6% 96.6% 96.6% 96.4% 96.7% 96.7% 96.9% 96.2% 96.1% VILLAGE OF TEQUESTA, FLORIDA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Note: Details regarding the Village's outstanding debt can be found in the notes to the financial statements. 91 Governmental Activities Business -type Activities Total Percentage Fiscal Year Ending Revenue Notes Capital Revenue Notes Primary of Personal Per September 30 Bonds Payable Leases Bonds Payable Government Income Capita 2002 $ 790,000 $ 5,000,000 $ 162,856 $ 7,495,000 $ 36,723 $ 13,484,579 7.24% $ 2,531 2003 695,000 4,838,352 353,636 7,345,000 13,827 13,245,815 7.10% 2,484 2004 595,000 4,669,648 363,065 7,185,000 645,170 13,457,883 6.81% 2,383 2005 490,000 4,493,579 461,032 7,020,000 524,852 12,989,463 6.53% 2,284 2006 380,000 4,309,827 508,886 6,850,000 504,852 12,553,565 6.29% 2,202 2007 259,846 4,118,053 338,150 6,670,000 437,952 11,824,001 4.61% 1,990 2008 -- 3,917,908 225,398 -- 6,929,640 11,072,946 3.39% 1,877 2009 -- 3,709,027 155,448 -- 6,668,462 10,532,937 3.03% 1,794 2010 -- 3,491,028 88,613 -- 6,405,528 9,985,171 3.04% 1,774 2011 -- 3,263,515 45,092 -- 6,132,618 9,441,225 2.92% 1,677 Note: Details regarding the Village's outstanding debt can be found in the notes to the financial statements. 91 VILLAGE OF TEQUESTA, FLORIDA RATIO OF NET OUTSTANDING DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS (2) 5,327 $ 487,490,952 $ 13,484,579 $ 141,913 $ 13,342,666 Assessed (A) (B) (A - B) Ratio of Net Net Value of Gross Debt Service Net O/S Debt to Outstanding Fiscal Year Ending (1) Taxable Outstanding Funds Outstanding Value of Debt September 30, Population Property Debt Available (O/S) Debt Taxable Property Per Capita 2002 5,327 $ 487,490,952 $ 13,484,579 $ 141,913 $ 13,342,666 2.74% $ 2,505 2003 5,333 523,061,602 13,245,815 225,676 13,020,139 2.49% 2,441 2004 5,648 603,285,310 13,457,883 272,801 13,185,082 2.19% 2,334 2005 5,686 715,993,712 12,989,463 294,444 12,695,019 1.77% 2,233 2006 5,702 825,406,187 12,553,565 378,680 12,174,885 1.48% 2,135 2007 5,942 981,960,499 11,824,001 482,726 11,341,275 1.15% 1,909 2008 5,898 1,017,388,628 11,072,946 369,490 10,703,456 1.05% 1,815 2009 5,872 926,207,036 10,532,937 -- 10,532,937 1.14% 1,794 2010 5,629 833,906,426 9,985,171 -- 9,985,171 1.20% 1,774 2011 5,629 780,222,257 9,441,225 -- 9,441,225 1.21% 1,677 (1) U.S. Census Bureau, 2010 Census (2) Form DR -422 "Certificate of Final Taxable Value" rya Debt Limit Total Net Debt Applicable to Limit Legal Debt Margin Total Net debt Applicable to Limit as a Percentage of Debt Limit VILLAGE OF TEQUESTA, FLORIDA LEGAL DEBT MARGIN INFORMATION LAST NINE FISCAL YEARS SEPTEMBER 30, 2011 Total Assessed Value (1) $ 780,222,257 Legal Debt Margin Debt limitation - 10% of total assessed value (2) 78,022,226 Total bonded debt outstanding -- -- Less amount in debt service fund -- Total Debt Applicable to Limitation -- Legal Debt Margin $ 78,022,226 (1) Form DR -422 "Certificate of Final Taxable Value" (2) Village of Tequesta Charter Section 5.02 Limitations Note: The Village began to report this information in fiscal year 2003. 93 Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 $59,606,928 $71,463,973 $82,565,448 $98,162,738 $ 101,695,653 $93,130,772 $83,442,520 $ 83,390,643 $ 78,022,226 470,324 322,199 195,556 1,023 -- -- -- -- -- $59,136,604 $71,141,774 $82,369,892 $98,161,715 $ 101,695,653 $93,130,772 $83,442,520 $ 83,390,643 $ 78,022,226 0.79% 0.45% 0.24% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% (1) Form DR -422 "Certificate of Final Taxable Value" (2) Village of Tequesta Charter Section 5.02 Limitations Note: The Village began to report this information in fiscal year 2003. 93 VILLAGE OF TEQUESTA, FLORIDA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT SEPTEMBER 30, 2011 Estimate Estimate Share of Net Percentage Direct and Debt Applicable to Overlapping Governmental Unit Outstanding Tequesta Debt (a) (b) Debt repaid with property taxes Palm Beach County P.B.C. School Board Subtotal, overlapping debt Village of Tequesta direct debt Total direct and overlapping debt (a) Sources: Palm Beach County and PBC School Board 226,545,000 0.62% $ 1,404,579 37,215,000 0.62% 230,733 1,635,312 3,308,607 $ 4,943,919 Note: For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the Village taxable assessed value and dividing it by the PBC taxable assessed value. (Data provided by the PBC Property Appraiser's Office) Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Village of Tequesta. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Village of Tequesta. This process recognizes that, when considering the Village's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident and therefore responsible for repaying the debt of each overlapping government. 94 VILLAGE OF TEQUESTA, FLORIDA PLEDGED- REVENUE COVERAGE LAST TEN FISCAL YEARS Net Fiscal Pledged Less: Available Debt Service (2) Year Revenues (1) Expenditures Revenue Principal Interest Coverage 2002 $ 441,409 $ 144,461 $ 296,948 $ 90,000 $ 54,461 2.06 2003 448,946 143,585 305,361 95,000 48,585 2.13 2004 464,973 142,678 322,295 100,000 42,678 2.26 2005 459,873 141,490 318,383 105,000 36,490 2.25 2006 524,468 140,135 384,333 110,000 30,135 2.74 2007 593,649 143,370 450,279 120,154 23,216 3.14 2008 515,700 275,836 239,864 259,846 15,990 0.87 2009 -- -- -- -- -- - 2010 -- -- -- -- -- - 2011 -- -- -- -- -- - Note: Details regarding the Village's outstanding debt can be found in the notes to the financial statements. (1) Pledged revenues include franchise fees, licenses and permits from Fund 101. Fund 101 closed in fiscal year 2009. (2) Debt paid in full in fiscal year 2008. 95 VILLAGE OF TEQUESTA, FLORIDA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Per Capita Fiscal Population Personal Personal Median Unemployment Year (1) Income (2) Income (2) Age (3) Rate (4) 2002 $ 5,327 $ 186,306,498 $ 34,974 47.5 5.1% 2003 5,333 186,516,342 34,974 47.5 6.2% 2004 5,648 197,533,152 34,974 47.5 5.7% 2005 5,686 198, 862,164 34,974 47.5 3.1% 2006 5,702 199,421,748 34,974 47.5 3.7% 2007 5,942 256,397,300 43,150 47.5 3.3% 2008 5,898 326,224,278 55,311 47.5 7.3% 2009 5,872 347,311,184 59,147 47.5 9.7% 2010 5,629 328,497,182 58,358 47.5 11.4% 2011 5,629 323,447,969 57,461 49.9 11.0% Sources: (1) U.S. Census Bureau, 2010 Census (2) US Department of Commerce, Bureau of Economic Analysis, Regional Economic Information System, April 2011 (3) U.S. Census Bureau, 2010 Census (4) Florida Agency for Workforce Innovation, Labor Market Statistics Center, Local Area Unemployment Statistics Program .6 VILLAGE OF TEQUESTA, FLORIDA PRINCIPAL EMPLOYERS - PALM BEACH COUNTY (1) CURRENT YEAR AND NINE YEARS AGO 20112002 Percentage of Percentage of Total County Palm Beach Total County EmployerEmployeesRankEmploymentEmployeesRankEmployment School Board of Palm Beach County21,495 13.88%18,677 13.40% Palm Beach County11,381 22.06%9,000 21.64% Tenet Healthcare Corporation6,100 31.10%3,040 60.55% Florida Power & Light3,632 40.66%2,800 70.51% Intercoastal Health Systems, Inc.3,100 50.56% G4S3,000 60.54% HCA (Hospital Corporation of America)2,714 70.49% Florida Atlantic University2,706 80.49% Bethesda Memorial Hospital2,391 90.43%1,800 100.33% Office Depot2,250 100.41% Boca Raton Resort & Club2,380 80.43% State of Florida 31.58%8,705 Federal Government5,660 41.03% Columbia PB Healthcare System, Inc.4,000 50.73% Applied Card Systems1,800 90.33% 10.62%57,86258,769 10.53% (1) Source:Business Development Board of Palm Beach County. Data is for Palm Beach County, Florida. Employment information for the Town is not available. 97 VILLAGE OF TEQUESTA, FLORIDA FULL-TIME EQUIVALENT VILLAGE GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Business -Type Activities Water 14.0 12.5 Full-time Equivalent Employees as of September 30, 14.0 15.0 15.5 Function/Program 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1.0 1.0 1.0 Community development (1) 3.5 3.0 2.5 - - - - - Governmental Activities - Total Business -Type Activities 18.0 15.5 17.0 14.0 16.0 16.5 16.0 17.0 16.0 General government 8.0 8.5 12.0 11.5 10.5 9.5 15.0 15.0 10.0 10.5 Public safety 45.5 51.0 45.0 45.0 46.0 51.0 50.0 49.0 50.0 49.0 Transportation 2.0 2.5 - - 3.0 4.0 4.0 4.0 4.0 4.0 Leisure services 1.5 2.5 2.0 2.0 3.0 3.0 3.0 3.0 3.0 3.0 Total Governmental Activities 57.0 64.5 59.0 58.5 62.5 67.5 72.0 71.0 67.0 66.5 Business -Type Activities Water 14.0 12.5 14.5 14.0 15.0 15.5 15.0 16.0 15.0 14.5 Stormwater 0.5 - - - 1.0 1.0 1.0 1.0 1.0 1.0 Community development (1) 3.5 3.0 2.5 - - - - - - - Total Business -Type Activities 18.0 15.5 17.0 14.0 16.0 16.5 16.0 17.0 16.0 15.5 Total Primary Government 75.0 80.0 76.0 72.5 78.5 84.0 88.0 88.0 83.0 82.0 Note: The Village was able to access this data from 2002. Source: Village of Tequesta Human Resource Dept Notes: A full-time employee is scheduled to work 2,088 hours per year (including vacation and sick leave). Full -time -equivalent employment is calculated by dividing total labor hours by 2,088. (1) Community Development activities (planning, building and code enforcement) were accounted for in an enterprise (business -type activity) fund until fiscal year 2005 when the fund was closed. Planning and building activities are currently accounted for in the General Fund, and code enforcement as part of the function of Public Safety. 98 VILLAGE OF TEQUESTA, FLORIDA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST SIX FISCAL YEARS 200620072008200920102011 Governmental Activities General government Registered voters4,007 4,007 4,439 4,612 4,505 4,543 Public safety: No. of full-time certified police officers16 19 17 18 17 19 No. of calls received3,300 3,500 3,535 3,533 3,178 3,266 No. of arrests199 238 224 251 296 204 No. of parking violations 148162 171 131 124 82 No. of incident numbers issued817 853 965 887 881 595 Fire department: No. of full-time certified firefighters16 19 20 21 21 22 No. of emergency responses 1,1221,254 1,143 1,189 1,043 1,096 No. of transports622 521 621 651 562 622 No. of fires extinguished632 601 522 538 481 474 No. of inspections326 412 435 476 480 462 Building, zoning: No. of building permits issued1,049 998 906 784 812 800 No. of building inspections conducted2,214 2,581 2,039 1,771 1,579 1,728 Leisure services: No. of Spring Classes-- -- 8 8 10 10 No. of Summer Classes-- -- 4 5 4 4 No. of Movies-- -- 4 4 3 3 Business-Type Activities Water: No. of customers4,612 4,722 4,968 4,983 4,982 5,019 Average daily consumption2.782 mg2.349 mg2.351 mg2.175 mg2.175 mg2.698 mg Note: The Village began to report this information in fiscal year 2006, as prior information is not available. 99 VILLAGE OF TEQUESTA, FLORIDA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST SIX FISCAL YEARS Function/Program200620072008200920102011 Governmental Activities General government: Municipal center0011 1 1 Public safety Police: No. of stations1111 1 1 No. of patrol units121279 15 15 Fire: No. of stations1111 1 1 No. of ambulances2222 3 3 No. of pumpers3322 3 3 Transportation: Miles of street lane miles484343*2424 24 o. of bridges11 1 111 N Leisure services No. of parks3334 4 5 No. of park acreage48484850 53 54 No. of playgrounds3322 2 2 No. of baseball/softball diamonds 3333 3 3 No. of skate-parks1111 1 1 Business-type activities: Water: Miles of water mains50757272 73 72 No. of fire hydrants550430430430 430 430 Storage capacity (thousands of gallons)3,250 3,250 3,250 3,250 3,250 3,250 Note: The Village began to report this information in fiscal year 2006, as prior information is not available. * This report is presenting the revised method in calculating the miles of street lane 100 COMPLIANCE SECTION INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Tequesta, Florida (the Village) as of and for the year ended September 30, 2011, which collectively comprise the Village’s basic financial statements and have issued our report thereon dated March 27, 2012. 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. Internal Control over Financial Reporting In planning and performing our audit, we considered the Village’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Village’s internal control over financial reporting. Adeficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Village’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 101 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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. This report is intended solely for the information and use of the Mayor, Village Council, management, and regulatory agencies and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach, FL March 27, 2012 102 MANAGEMENT LETTER IN ACCORDANCE WITH THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA Honorable Mayor, Village Council and Village Manager Village of Tequesta, Florida We have audited the accompanying financial statements of the governmental activities, business–type activities, each major fund, and the aggregate remaining fund information of the Village of Tequesta, Florida (the Village) as of and for the year ended September 30, 2011, and have issued our report thereon dated March 27, 2012. 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. We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters. Disclosures in that report, which is dated March 27, 2012, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors’ report; Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations reported in the preceding annual financial report. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Village complied with Section 218.415, Florida Statutes. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of contracts or grant agreements, or abuses that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not have any such findings. 103 Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on the financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse, and (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not have any such findings. Section 10.554(1)(i)6., 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 Village was incorporated in 1957 By Laws of Florida 57-1915. There are no component units related to the Village. Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement be included as to whether or not the local governmental entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the Village did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the annual financial report for the Village for the fiscal year ended September 30, 2011, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2011. In connection with our audit, we determined that these two reports were in agreement. Section 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor the Village’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. The assessment was done as of the fiscal year end. Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information of the Mayor, Village Council, management, and the Florida Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach, FL March 27, 2012 104