Comprehensive Annual Financial Report for the Year Ending Sept. 30, 2018

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“The Capital City of the Palm Beaches”
CITY OF WEST PALM BEACH, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE

FISCAL YEAR ENDED SEPTEMBER 30, 2018

 

Prepared by The Finance Department

Mark A. Parks, Jr., CPA, MBA Chief Financial Officer

Karen Malcolm Accounting Manager

 

 

CITY OF WEST PALM BEACH, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

Tax Increment Revenue Bonds (CCCRA)

 

INTRODUCTORY SECTION

 

“The Capital City of the Palm Beaches”

 

April 3, 2019

 

The Honorable Mayor Jeri Muoio, City Commissioners and Citizens

Of the City of West Palm Beach, Florida Ladies and Gentlemen:

It is our pleasure to submit this Comprehensive Annual Financial Report for the City of West Palm Beach, Florida, (the “City”) for the fiscal year ended September 30, 2018. The organization, form and contents of this report plus the accompanying financial statements and statistical tables are formulated in accordance with the principles prescribed by the Governmental Accounting Standards Board, the American Institute of Certified Public Accountants, the State of Florida, the City Code of Ordinances and the Government Finance Officers Association. This document also includes the City's continuing disclosure information as required by Securities and Exchange Commission rule 15c2‐12.

 

Generally accepted accounting principles (“GAAP”) require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (“MD&A”). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found in this report immediately following the Independent Auditors’ Report.

 

The staff of the Finance Department prepared this report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with City management.

 

To the best of our knowledge and belief, the data as presented is accurate in all material aspects; the information is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to

gain an understanding of the City’s financial affairs are included.

 

REPORTING ENTITY AND ORGANIZATION

 

The City of West Palm Beach was incorporated in 1894 and has operated under a strong Mayor form of government since 1991. The City Commission consists of five elected officials who are responsible for enacting the ordinances and resolutions that govern the City. The Mayor is the elected Chief Executive Officer of the City and appoints the City Administrator, Deputy and Assistant Administrators, City Attorney and Department Directors.

 

The City of West Palm Beach provides its constituents with a full complement of public services including, but not limited to public safety, public works, parks and recreation, construction services, housing and community development, library, and community events.

 

All transactions required to support City services are reflected in this report. This report includes all funds that are controlled by or are dependent on the City Commission.

 

Additionally, the activities of certain entities for which the City exercises oversight responsibility or financial accountability have been included in this report. The City Commission and Mayor sit as the Board of the West Palm Beach Community Redevelopment Agency (CRA) and the West Palm Beach Golf Commission; accordingly, these activities are included in the reporting entity and reflected in this report. The West Palm Beach Housing Authority and the West Palm Beach Downtown Development Authority have not been included in this report.

Note A in the Notes to the Financial Statements lists the specific criteria used for establishing oversight responsibility.

ECONOMIC CONDITIONS AND OUTLOOK

Since fiscal year 2012 the City’s tax base has grown. In 2018, it increased from $11.8 billion to $12.7 billion. The pace of growth is somewhat slower than in 2017, but the tax base is now the same as it was in 2012 when it was at the highest level ever. The continued gains are a strong signal the City’s economic future is improving. As a backstop to the city’s economic improvement, the State of Florida’s economy is expected to expand at an average annual rate of 3.5% this year and 4.3% in 2019 before easing to 2.9% in 2020 and then 2.4% in 2021. Personal

incomes are expected to rise 2.5% in 2018, 3.6% in 2019, before easing again in 2020 at 3.2%. real disposable average growth will be 3.1% until 2021, according to the University of Central Florida’s Institute for Economic Competiveness (IEC).

 

Housing prices continued to rise in 2018, albeit at a more moderate pace compared to the double‐digit gains of 2015 and 2016. The median price of a single‐family home rose 6.7% on a year‐over‐year basis in 2018 with townhouse and condominium gains not far behind.

The fundamental underpinnings of the housing market in Florida continue to strengthen as demographic drivers bode well for continued population growth via the in‐ migration of baby boomer retirees and job seekers to Florida. Recent tax legislation, at the personal taxpayer level, has made Florida increasingly attractive as a low‐ cost place to live relative to the more highly taxed northeastern United States. In addition to domestic considerations, international immigration is also a significant factor as both the economic and hurricane crisis in Puerto Rico feed into these population inflows.

 

Given these favorable growth prospects, the IEC is predicting Florida’s real gross state product (RGSP) to grow an average of 3.5% annually in 2018 and 4.3% in 2019. During the 2018 to 2021 period Florida’s RGSP is expected to grow an average of 3.3% annually. This compares with an average of 2.8% during the prior four‐ year period and significantly faster than the 3.0% anticipated growth of the US economy over the same time frame. Similarly, personal income growth in Florida is expected to accelerate to an average of 4.1% during the 2017 to 2021 period compared with 3.0% in 2016. These trends will outpace the nation in real personal income growth, averaging 0.6 percentage points higher than the national average for 2017 through 2021.

With Florida’s strong labor market recovery maintaining its momentum, wage and salary growth is materializing, home equity is on the rise and retail spending is expected to remain strong through 2021; with growth averaging 3.1 during the 2018‐2021 period. The unemployment rate has continued to fall from its recession‐driven peak level of 11.2% in January 2010 and stands at 3.4% as of October 2018.

 

The labor force growth is expected to average 1.5% until 2021 and housing starts will accelerate going forward. Home equity in Florida has not yet recovered as completely as financial wealth, which has benefited from the year‐long run up in the stock market. However, steadily rising home prices since 2011 have created significant wealth gains for Floridians who invest either directly or indirectly (through retirement funds) in the stock market, which should largely mitigate the negative effects of the lost home equity wealth during the recession upon consumer spending after 2018.

At the City level, improvements in the economy have had an impact on the City’s revenues. For the sixth year in a row, ad valorem tax revenues continue to climb from the depths of the recession. In FY 2017 and FY 2018, taxes revenues rose $6.5 million (9.4%) and $2.7 million (3.6%) respectively.

 

To remain financially sustainable, the City has remained diligent in providing the residents with the services they need in the most cost‐efficient manner possible. The City continues to strive to meet the goal of maintaining services without raising the millage rate. The 2018/2019 budget was achieved by a series of revenue enhancements including maintaining the current millage rate, generating new user fees and improving collections on outstanding amounts owed to the City.

The result was a balanced General Fund budget generating $184.6 million in revenues offset by $184.6 million in expenditures and transfers. This is a net 4.0% increase over the prior year budget, but still slightly below the City’s peak budget of $189 million in 2007. The fiscal year 2018 General Fund Balance remains strong at $46.7 million or 25.2% of expenditures.

 

The City has also been very careful to not overextend itself with long term debt. Financial prudence has been rewarded by the credit rating agencies that provided the City with an overall bond rating of AA. The Utilities rating was upgraded to AA+ by S&P.

 

Based on current growth projections, West Palm Beach is expected to remain Palm Beach County’s largest city. While having a positive impact in terms of potential economic development, it also presents significant

challenges to the City. In order to maintain the present level of services, particularly in the areas of public safety and downtown revitalization, the City must continue to explore alternative revenue sources and user fees, seek ways to maximize its current revenue sources, improve its operational efficiency, develop public/private partnerships, and look to eliminate or reduce non‐ essential services to the community.

 

MAJOR INITIATIVES

 

The City’s Mission is “to partner with the community to deliver exceptional customer service that enhances quality of life”. To aid in the achievement of the stated Mission, the City has established a Vision Statement along with six guiding values. The City’s priorities guide activities and decision making with the ultimate goal being the continued achievement of the stated Vision and Mission statements.

Strategic Planning:

The City is currently in the sixth year of implementing a comprehensive strategic plan. This process involves identifying each of the most critical short and long term needs the City has and implementing specific plans to accomplish those goals. As part of this process, the City has developed a long term financial and capital planning process which helps identify funding to ensure these plans can not only be achieved, but also paid for.

 

The City has continued to focus on the City’s future over the next eighteen years. Defining 2018 – 2035 will provide an opportunity for in‐depth public involvement. The existing Strategic Plan will be enhanced creating more transparency on the City’s goals and strategic priorities.

 

Economic Development:

 

Economic Development must play a key role in the growth of our City. Finding ways to encourage growth, attract new industries to the City, and retain and expand our existing businesses is critical for us to maintain the existing service levels we provide to the community. In FY 2014/15 the City unveiled a new Economic Development Plan. It includes several economic incentives designed to encourage business investment and job growth across the City. In FY 2015/16 the City placed on the ballot the opportunity for the City Commission to have the authority to offer additional tax incentives to entrepreneurs who bring new businesses to the City. The measure passed, and choice businesses have been granted the incentives. West Palm Beach's economy is the strongest it's been since emerging from the economic downturn. In fact, West Palm Beach's unemployment rate is 3.2% down from the almost 10% in 2011. As a sign even more businesses are

moving to West Palm Beach, our business tax receipts have gone up five years in a row. Right now, with over $2‐ billion of projects in our pipeline, we can safely say that our tax base should continue to grow over the next few years.

Broadstone Condominiums and Brightline high speed rail are injecting new energy into an area of the city that, for years, was called the "doughnut hole," the underdeveloped area sandwiched between Clematis and CityPlace. City Place is embarking on a bold new redesign they are calling City Place 2.0. In the last year, we also saw the opening of the Alexander, the beginning of the new Canopy Hotel, and the demolition of the old City Hall making way for a new destination waterfront hotel and residence. We are currently negotiating with developers to redesign our municipal golf course. Meanwhile, the new Warehouse District, a complex of vintage buildings, located off Old Okeechobee Road, has become the new area to watch. As one magazine described it as "abuzz with boutiques, beer and booze, as well as fun food finds". It is the kind of quality of life revival that will fuel our city's continued growth.

 

A primary campaign promises in 2011 was to create a business district to spur economic development. In 2014, we announced plans to create the Flagler Financial District and, in 2016, officially inaugurated it. Today, the Flagler Financial District has become one of the most powerful recruitingtools for business investment that this City has ever seen. To date, 232 firms call the Flagler Financial District their business home. In addition, we are committed to incubating new businesses. This year we received a grant of $180 thousand from the Knight Foundation to grow 12 businesses in 12 months. We are calling it the "Thoroughfare", located at 314 Clematis Street. But, to convince CEOs that West Palm Beach is their best business move, we need more Class‐A office space. Given the strong desire by many to relocate their businesses to West Palm Beach, there will be an increased demand for this highly sought‐after space. We are hopeful there will be future opportunities for the Commission to consider the development of Class‐A office space. Our leaders must work together to bring Class‐A office space to our city, because to truly reach our potential as a city, where people can work where they live, we must bringmore businesses to our urban core.

 

While West Palm Beach undergoes an economic revival, the City is also investing. No world class city would be complete without superior infrastructure. So, over the next few years, we are undertaking 157 capital improvement projects totaling $230 million. Our involvement in Bloomberg's What Works Cities has resulted in a new performance dashboard "West Palm

Working". You can now go to our website, wpb.org, and track our progress on key performance indicators from our strategic plan, providingtransparency bysharingdata about where we. The number of requests for emergency services continues to grow. During calendar year 2018, the Department responded to 24,642 emergency incidents and the estimate for 2019 is over 27,700. Additionally, the demand for, and complexity of, mandated fire‐safety inspections continues to increase.

 

The City has seen a decrease in violent crimes and property crimes in the last ten years. To combat crime and to better protect our neighborhoods, our Chief of Police has continued a number of new Intelligence Led Policing initiatives including expansion of the Community Response and Gang/Juvenile units. The goal of these initiatives is to address quality of life issues and build relationships and trust

within the community. The City has completed the installation of a new state of the art radio system and improvements to the surveillance system that will help deter and assist with investigations. The Department is also working to improve its recruiting and retention efforts by the creation of a Professional Standards Unit. The fruits of our efforts are a Citizen Survey that states 93% of our residents feel safe in their neighborhoods and 82% say the feel safe at night.

 

While these services are vital to ensure the safety of our city, it is worth pointing out that the police and fire/EMS budgets account for 54% of the entire General Fund budget. More importantly the $106.0 million we spend on public safety is approximately $28.7 million more than the City generates in total property taxes. Given the continued growth in the City’s population and the tremendous demand that growth creates for parks, transportation, recreation, and other services, it is becoming extremely difficult to continue spending at this level for public safety. Going forward, we must find ways to be more efficient in providing public safety to our community. This will include looking at more jointly funded projects with the Sheriff’s office and other neighboring law enforcement agencies, increased community involvement, such as fire prevention seminars and more resident participation programs and the better use of technology driven solutions.

Information Technology:

In Fiscal Year 2015/16, the City entered into a lease purchase agreement in the amount of $5 million to replace most of the City’s computer infrastructure. This will bring the City IT infrastructure up to current standards and prevent disruptions in service. In addition to the aforementioned lease, the City also received bond funds

in the amounts of $40.0 million dollars for infrastructure,

$6.0 million of which will be utilized for IT to continue to upgrade systems for efficiency. In FY 2017, a city‐wide budget system was implemented. The new system will make the budgeting processes more efficient for the City and offer better reporting opportunities.

 

FINANCIAL INFORMATION

 

Accounting and Administrative Controls:

 

City management is responsible for establishing and maintaining an internal control structure which is designed to ensure that the assets of the City are protected from loss, theft, or misuse. Furthermore, management ensures that accounting data is adequate for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. Internal accounting controls are designed to provide reasonable but not absolute assurance regarding the safeguarding of assets against loss from unauthorized use or disposition. The controls are also intended to provide assurance as to the reliability of financial records as related to the preparation of financial statements and accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and that the evaluation of costs and benefits requires estimates and judgments by management.

 

In addition to the examination of controls performed by members of the Finance Department, the City's internal auditors continually review and assess the soundness and adequacy of all the accounting and budgetary aspects of the City's financial system. Financial transactions and related data are examined for accuracy, completeness and authorization. Furthermore, data processing applications and systems are analyzed to ensure that necessary controls are in effect.

 

All internal control evaluations occur within the above framework. We believe the current internal accounting controls existing for the City of West Palm Beach adequately safeguard assets. In addition to these internal controls, annual financial audits are performed by independent certified public accountants.

 

Budgetary Controls:

 

To ensure compliance with legal provisions contained in the annual appropriated budget which is approved by the City Commission, the City also maintains budgetary controls. Annual budgets are legally adopted for activities of the general fund, certain special revenue funds, capital

projects funds and debt service funds. Without Commission approval, expenditures may not legally exceed appropriations at the department level. Administrative controls are exercised at the category level for current expenditures and at the line item level for capital outlay. Encumbrance accounting is utilized in governmental funds in order to reserve the encumbered portion of the appropriation.

 

Cash Management:

 

The City’s short‐term liquid cash during the year was invested in U.S. Government Securities and Federal agency securities, U.S. Government securities held under repurchase agreements, corporate bonds, mortgage backed securities, municipal bonds, and cash. Although one of the City’s investment objectives is to earn interest income on short‐term cash, the investment policy specifically requires that safety and liquidity are the most important standards of the policy and funds must be available when needed. Accordingly, deposits are either insured by federal depository insurance or collateralized in a pool as defined by Florida Statute 280.

 

Other Information:

 

Independent Audit Florida Statutes and City Code of Ordinances require that an annual financial audit be performed by independent certified public accountants. This year the audit was performed by RSM US, LLP.

 

In addition to meeting the requirements set forth in State statutes and City ordinances, the audit was designed to meet the federal requirements of the Single Audit Act of 1984 as amended, and the related OMB Uniform Guidance. Additionally, the audit was designed to meet the requirements of Chapter 10.550 of the Rules of the Florida Auditor General. The independent auditors’ report is included in the financial section of the report.

 

Awards

 

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of West Palm Beach for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2017. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents

conform to program standards. As such, the CAFR must satisfy both generally accepted accounting principles and applicable legal requirements.

 

A Certificate of Achievement is valid for a period of one year only. The City of West Palm Beach has received a Certificate of Achievement for the last thirty‐eight consecutive years.

 

We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to the GFOA.

 

ACKNOWLEDGEMENTS

 

This report represents countless hours of preparation. Many individuals are responsible for its completion. The utmost appreciation is extended to the many City employees throughout the organization who maintain the daily financial records upon which this report is based. Special recognition is given to the Accounting Division and other Finance Department employees (Karen Malcolm, Rick Weaver, Steve Hoffmann, Jeanette Haynes, Tanra‐ Lee Milson, Olga Hernandez, Brenda Keating, Carol Bishop, and Dathan Griffiths) who worked diligently to ensure the timeliness and accuracy of the report.

 

Mark A. Parks, Jr., CPA, MBA

Chief Financial Officer

 

Certificate of Achievement for Excellence in Financial Reporting

Presented to

City of West Palm Beach Florida

For its Comprehensive Annual Financial Report

for the Fiscal Year Ended

 

September 30, 2017

 

Christopher P. Morrill
Executive Director/CEO

 

CITY OF WEST PALM BEACH, FLORIDA ORGANIZATIONAL CHART

City Organizational Chart

Christina Lambert Commissioner, District 5

Kelly Shoaf Commissioner, District 1

Jeri Muoio Mayor

Paula Ryan Commissioner, District 3 Commission President

Keith James Commissioner, District 4

Cory Neering Commissioner, District 2

CITY OF WEST PALM BEACH, FLORIDA ELECTED OFFICIALS

 

 

CITY OF WEST PALM BEACH, FLORIDA

Mayor‐Commission Form of Government

September 30, 2018 Mayor

Jeri Muoio, PhD

City Administrator Jeffery L. Green, CPA

Deputy City Administrator Dorritt M. Miller, CPA

Assistant City Administrator Scott D. Kelly, PE

City Attorney Kimberly L. Rothenburg

Development Services Director Richard E. Greene

Engineering Director Kevin Volbrecht

Chief Human Resources Officer Jose Luis Rodriguez

Chief Financial Officer Mark A. Parks, Jr.

Chief Technology Officer Christine Brevik

Fire Chief Diana J. Matty

Housing and Community Development Director Armando Fana

Internal Auditor Beverly Masaho

Library Director Christopher T. Murray

Parks & Recreation Director Leah Rockwell

Parking System Administrator Edward Lynn Davis

Police Chief Sarah J. Mooney

Procurement Director Festus F. Hayden

Public Utilities Director Poonam K. Kalkat

Public Works Director Peter A. Bieniek

FINANCIAL SECTION

 

Independent Auditor’s Report

 

To the Honorable Mayor and Members of the City Commission City of West Palm Beach, Florida

 

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of West Palm Beach, Florida (the City), as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Firefighters’ Pension Fund, the Police Pension Fund and the Restated Employees’ Defined Benefit Retirement System, which represent 78% of the assets/deferred outflows, 82% of the fund balance/net position and 45% of the revenues/additions of the aggregate remaining fund information. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Firefighters’ Pension Fund, the Police Pension Fund, and the Restated Employees’ Defined Benefit Retirement System are based upon the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of the Firefighters' Pension Fund and the Police Pension Fund were not audited in accordance with Government Auditing Standards.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

 

Opinions

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of September 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

 

Emphasis of Matter

As discussed in Note Q to the financial statements, the City adopted the recognition and disclosure requirements of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective October 1, 2017. The net position of the proprietary funds, governmental activities and business-type activities of the City as of October 1, 2017 have been restated. Our opinion was not modified with respect to this matter.

 

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison schedules, and other post-employment benefits and pension schedules as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

 

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and schedules and the introductory, statistical, and continuing debt disclosure sections 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 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and the other auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports of the other auditors, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

 

The introductory, statistical, and continuing debt disclosure sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated April 3, 2019, on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is solely 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 effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

 

(Signed)

West Palm Beach, Florida

April 3, 2019

 

MANAGEMENT DISCUSSION

AND ANALYSIS (Unaudited)

CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

(UNAUDITED)

As management of the City of West Palm Beach (the “City”), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2018.

 

Financial Highlights

 

  • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows at the close of fiscal 2018 by approximately $682.6 million (net position). Of this amount, $102.5 million represents unrestricted net position, which may be used to meet the City’s ongoing obligations to citizens and creditors.

     

  • The City’s total net position increased by $17.4 million or 2.6% from the prior year after considering a restatement of the opening net position due to the implementation of GASB Statement No. 75. The overall increase can be attributed to the net change in current and long‐term liabilities of $31 million and net deferred inflows and outflows related to pensions and the swap. of ($20.9) million offset by an overall increase in assets of the primary government by $7.6 million.

     

  • The City's total of bonds, notes and capital leases decreased by $15.1 million, from $559.8 million to $544.7 million, or approximately 3%, reflecting repayments accompanied by no new bond issuances.

     

  • Total spending for City’s primary government was approximately $335.2 million, up $16.2 million or 5.1% over the prior year. Expenditures for the governmental activities were $226.9 million while expenditures for business‐type activities were $108.2 million.

     

  • At the end of fiscal 2018, the total of the restricted, assigned, and unassigned components of fund balance for the General Fund was $26.3 million, or approximately 16.0% of General Fund expenditures. The General Fund balance also included $15.2 million committed for emergencies (10% of adjusted operating revenues as required by City ordinance) and another $4.7 million of non‐spendable balances.

 

Overview of the Financial Statements

 

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. These financial statements are comprised of four components: 1) government‐wide financial statements, 2) fund financial statements, 3) notes to the financial statements, and 4) required supplementary information. In addition to the basic financial statements, this report contains other supplementary information.

 

Government‐Wide Financial Statements.

 

The government‐wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private‐sector business.

CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

(UNAUDITED)

The Statement of Net Position presents financial information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

 

The Statement of Activities presents information about how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

 

The Statement of Net Position and the Statement of Activities divide the City into the following two classes of activities:

 

Governmental activities – City services principally supported by taxes and intergovernmental revenues are reported here, including general government, community events, community and economic development, planning and zoning, code enforcement, building permits, police, fire, public works, federal housing programs, engineering services, health and sanitation, library, parks and recreation, downtown redevelopment and Northwood redevelopment.

 

Business‐type activities – City services for which fees are collected from the public are reported here. These services include water and sewer, storm water, parking and golf course.

 

Fund Financial Statements.

 

The City uses fund accounting to track the sources and uses of resources for specific purposes. The funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.

 

Governmental Funds:

 

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government‐wide financial statements. Reporting for these funds focuses on how inflows and outflows of spendable resources and the balances left at year‐end that are available for spending. The modified accrual basis of accounting is used to report these funds and generally measures only current financial resources (essentially cash and other assets that can readily be converted to cash). The governmental fund statements provide a detailed short‐term view of the City’s operations and the services it provides.

 

Governmental fund statements report changes in the quantity of resources available for spending in the near future. To facilitate comparison between the two presentations, both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances are accompanied by reconciliations to the government‐wide statements. This comparison highlights the long‐term impact of the City’s near‐term financial decisions.

 

The City adopts an annual appropriated budget for most governmental funds. To demonstrate compliance with this budget, a budgetary comparison statement has been provided in the basic financial statements for the General Fund, the Community Redevelopment Agency Fund, the Northwood/Pleasant City CRA Fund, and the 2016 Capital Bond Fund.

CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

(UNAUDITED)

 

Proprietary Funds:

 

The City maintains two types of proprietary funds:

 

  • Enterprise Funds: The City uses enterprise funds to report the same functions presented as business‐type activities in the government‐wide financial statements, and these funds primarily serve the public. The City uses enterprise funds to account for its water and sewer utility system, storm water utility system, parking facilities, and the golf course.

     

  • Internal Service Funds: The City uses internal service funds to accumulate and allocate costs internally among the City’s various functions. These funds primarily serve the City’s departments and account for the City’s information systems, fleet management, self‐insurance program and employee health and life insurance benefits programs. Because all of these services predominantly benefit governmental rather than business‐type functions, the assets and liabilities of these funds have been included within the governmental activities’ column of the government‐wide Statement of Net Position.

    Proprietary fund financial statements provide the same type of information as the government‐wide financial statements, but in more detail. The financial statements provide separate information for the water and sewer system and the storm water system, both of which are considered major funds of the City. The parking system and the golf course are aggregated as non‐major enterprise funds. All internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements.

     

    Fiduciary Funds:

     

    Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reported in the government‐wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City reports pension trust funds for its three defined benefit pension plans and one Other Post Employment Benefit (OPEB) trust fund for annuity payments to certain pensioners and employees/retirees.

     

    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 and is required by accounting principles generally accepted in the United States of America.

     

    Other Information:

     

    In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information containing pension, OPEB, and individual fund budget and actual comparison schedules of the major funds. The combining statements for the non‐major funds, internal service funds, as well as their related individual fund budget and actual comparison schedules are found in the Combining and Individual Fund Statements and Schedules section of this report.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

     

    Government‐Wide Financial Analysis:

    The City as a Whole

     

    The overall net position may serve over time as a useful indicator of a government's financial position. Assets and deferred outflows exceeded liabilities and deferred inflows by $682.6 million at the close of the most recent fiscal year. The City restated its beginning net position after adopting the provisions of Governmental Accounting Standards Board (GASB) Statement No. 75 which resulted a reduction of $6.3 million to the previously reported net position of $202 million (Note Q). At the end of the fiscal year, the City’s net position of the primary government increased by $17.4 million. The City’s total net position increased by $17.4 million or 2.6% from the prior year after considering a restatement of the opening net position due to the implementation of GASB Statement No. 75. The overall increase can be attributed to the net change in current and long‐term liabilities of $31 million and net deferred inflows and outflows related to pensions and the swap. of ($20.9) million offset by an overall increase in assets of the primary government by $7.6 million.

     

    Total assets of the City as of the end of the current fiscal year increased by $7.6 million or 0.6%. The increase is attributed to an increase in the addition of capital assets, net of retirements and depreciation.

     

    The City reported an increase in deferred outflows of resources by $1.6 million or 2.9%. The increase is attributed to the reduction in between the projected and actual earnings on investment and assumption changes in the calculation of the interest rate swap and the net pension liability (asset) for the Pension plans.

     

    Long‐term liabilities decreased by $32.4 million or 4.66% primarily due to the repayment of bonds, notes and capital leases during the current fiscal year by $16.6 million and the reduction in the net pension liability by 13.4 million.

     

    Deferred inflows of resources increased by $22.6 million or 312%. The increase is attributed to the reduction in between the projected and actual earnings on investment and assumption changes in the calculation of the interest rate swap and the net pension liability (asset) for the Pension plans.

     

    The City’s net investment in capital assets such as land, roads, parks, buildings, machinery and equipment, as a percentage of net position, amounts to $429.6 million and $412.3 million or 63% and 62% as of September 30, 2018 and 2017, respectively. These asset values are presented less any outstanding debt related to the acquisition and accumulated depreciation of those assets. The City uses capital assets to provide services to the citizens and consequently, these assets are not available for future spending. Although the investment in capital assets is reported net of related debt, the capital assets themselves cannot be used to liquidate that liability, and other resources will be needed to repay any associated debt.

     

    Another portion of the City’s net position is restricted net position, totaling $150.5 million or 25%, represents resources that are subject to constraints such as debt covenants, grantors, laws or regulations. Unrestricted net position of approximately $102.5 million or 12%, is that portion of the City’s resources that are available to meet the ongoing obligations to residents, creditors, and enterprise fund customers.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

    Governmental Activities – Net Position

     

    As previously stated, the City implemented GASB Statement No. 75 during the current fiscal year. The implementation required a restatement of the previous year’s reported net position which resulted in a reduction of $6.3 million. At the end of fiscal year 2018, net position of $202 million is comprised of $163.7 million net investment in capital assets, $56 million in restricted net position and $(17.7) million unrestricted deficit.

     

    The investment in capital assets decreased sightly from the previous year by $1 million largely due to new additions, net of retirements and depreciation of $4.1 million and the net reduction of outstanding long‐term debt which was used to acquire the assets of $3.1 million.

     

    Restricted net position of $56 million decreased by $5.5 million or 9% to comply with the requirements of the special revenue funds and other legal requirements while the unrestricted deficit decreased by $8 million or 31.2%. The decrease in the deficit was largely related to reduction in pension and other non‐current liabilities during fiscal year 2018.

     

    Business‐Type Activities – Net Position

     

    The 2018 net position of $480.5 million is comprised of $265.9 million net investment in capital assets, $94.4 million in restricted net position and $120.2 million unrestricted net position.

     

    The net investment in capital assets increased from the previous year by $18.3 million, largely due to new additions, net of depreciation of $16.4 million and the reduction of outstanding long‐term debt which was used to acquire the assets of

    $1.9 million.

     

    Restricted net position of $94.4 million increased by $1.7 million or 1.8% to comply with the City’s debt service requirements while the unrestricted net position decreased by $4.1 million or 3.4%. The decrease in the unrestricted net position is primarily attributed to the negative change in activities of the proprietary funds overall.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

    The following table provides a comparative analysis of the City’s net position for the fiscal years ended September 30, 2018 and 2017.

    Condensed Statement of Net Position (in thousands)

     

    Governmental Business‐Type Activities Activities

    Total Primary Government

     

     

    2018

    2017

    2018

    2017

    2018

    2017

    Current and other assets

    $ 232,567

    $ 234,153

    $ 296,195

    $ 304,291

    $ 528,762

    $ 538,444

    Internal balances

    620

    1,180

    (620)

    (1,180)

    Capital assets, net

    350,791

    346,730

    486,320

    473,097

    837,111

    819,827

    Total assets

    583,977

    582,063

    781,895

    776,207

    1,365,872

    1,358,270

    Total deferred outflows

     

     

     

     

     

     

    of resources

    40,183

    32,689

    17,701

    23,583

    57,884

    56,272

     

    27,288

    21,179

    22,049

    26,606

    49,337

    47,785

     

    365,358

     

    386,003

     

    296,688

     

    308,401

     

    662,046

     

    694,404

    392,646

     

    407,183

     

    318,737

     

    335,007

     

    711,383

     

    742,190

     

    29,483

     

     

    7,107

     

     

    341

     

     

    138

     

     

    29,824

     

     

    7,245

     

    Current liabilities Long‐term debt and

    other non‐current liabilities

    Total liabilities

    Total deferred inflows of resources

     

    Net investment in capital

     

    assets

    163,730

    164,702

    265,866

    247,569

    429,596

    412,271

    Restricted

    56,027

    61,539

    94,436

    92,697

    150,463

    154,236

    Unrestricted (deficits)

    (17,726)

    (25,779)

    120,216

    124,380

    102,490

    98,601

    Total net position

    $ 202,031 $

     

    200,462

     

    $ 480,518

     

    $ 464,646

     

    $ 682,549

     

    $ 665,108

     

     

     

    700,000,000

     

    600,000,000

     

     

     

    500,000,000

     

     

     

    400,000,000

     

     

     

    300,000,000

     

     

     

    200,000,000

     

     

     

    100,000,000

     

     

     

    0

     

    2009 2010 2011 2012 2013 2014 2015

     

    2016

     

    2017 2018

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

    The City reported total revenues of $358.9 million which in part represents $175.8 million in charges for services and

    $144.6 million in property and other taxes. Total expenses were $335.2 million. As shown below, both revenues and expenses increased during the current fiscal year by $15.3 million and $16.2 million, respectively.

     

    The majority of the increase in revenues is attributed to the increase in property and other taxes taxes by $8.9 million and

    $6.5 million in operating grants and contributions. The overall increase in expenses was attributed to the increase costs to provide quality police and fire protection and the general annual increases associated with a diverse municipal government.

     

    Governmental Activities – Change in Net Position

     

    Revenues for the City’s governmental activities of $225.2 million which includes $ 48.6 million in charges for services, as well as, $151.1 million in property, state shared and local taxes.

     

    For the year, the City’s governmental activities revenues increased $15.9 million or 7.61%. Charges for services and other revenues, except for capital grants and contributions, increased from the prior year. During the current fiscal year, capital grants and contributions decreased by $2.1 million while operating grants increased by $6.5 million.

     

    The cost of all governmental activities during the current fiscal year was $226.9 million. However, as shown in the Statement of Activities, the amount that our taxpayers ultimately financed for these activities, through City ad valorem taxes, was $96.8 million. This is because $48.6 million of the cost was paid for by those who directly benefited from the programs as well as other governments and organizations that subsidized certain programs with grants and contributions, providing $25.2 million. The City paid for the remaining “public benefit” portion of governmental activities with taxes (some of which could only be used for certain programs) and with other revenues such as interest and general entitlements.

     

    Business‐Type Activities – Changes

     

    Revenues of the City's business‐type activities of $133.7 million decreased by less than 1%.

     

    The business‐type activities reported expenses totaling $108.2 million, up by $9.0 million or 9.1% over the previous year. The increase is substantially due to a reduction of the City’s investment in the ECR joint venture by $5.9 million and an increase cost for employees salaries and related benefits.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

    The following table provides a comparative analysis of the City’s changes in net position for the fiscal years ended September 30, 2018 and 2017:

    Combined Schedule of Changes in Net Position For the Fiscal Years Ended

    September 30, 2018 and 2017

    (in thousands)

     

    Governmental Business‐Type Total Primary

    Activities Activities Government

    2018 2017 2018 2017 2018 2017

    Revenues:

    Program revenues:

    Charges for services

    $ 48,648

    $ 47,865

    $ 127,140

    $ 131,402

    $ 175,787

    $ 179,267

    Operating grants and contributions

    12,517

    6,059

    12,517

    6,059

    Capital grants and contributions

    9,432

    11,499

    3,259

    980

    12,691

    12,479

    General revenues:

     

     

     

     

     

    Property taxes

    96,783

    90,266

    96,783

    90,266

    Other taxes

    47,834

    45,440

    47,834

    45,440

    Grants and contributions

    834

    834

    Interest income

    2,160

    1,189

    2,313

    1,139

    4,473

    2,328

    State and local shared revenues

    6,448

    4,011

    6,448

    4,011

    Miscellaneous

    1,417

    2,139

    1,037

    900

    2,454

    3,039

    Total Revenues

    225,240

    209,302

    133,749

    134,421

    358,988

    343,724

    Expenses:

     

     

     

     

     

     

    Govermental Actitivities:

     

     

     

     

     

     

    General government

    27,681

    19,392

    27,681

    19,392

    Public safety

    115,721

    126,120

    115,721

    126,120

    Public works

    6,335

    5,016

    6,335

    5,016

    Engineering services

    3,137

    2,841

    3,137

    2,841

    Economic environment

    28,105

    22,704

    28,105

    22,704

    Health and sanitation

    11,335

    10,930

    11,335

    10,930

    Leisure services

    25,932

    23,916

    25,932

    23,916

    Interest on long‐term debt

    8,747

    8,892

    8,747

    8,892

    Business‐Type Activities:

     

     

     

     

     

     

    Water and sewer

    90,033

    82,294

    90,033

    82,294

    Stormwater

    10,342

    9,978

    10,342

    9,978

    Parking system

    6,463

    5,339

    6,463

    5,339

    Golf course

    1,407

    1,590

    1,407

    1,590

    Total Expenses

    226,993

    219,811

    108,245

    99,201

    335,239

    319,012

    Increase (decrease) in net position

     

     

     

     

     

     

     

    before transfers

    (1,753)

    (10,509)

    25,503

    35,220

    23,750

    24,712

    Transfers

    9,632

    10,261

    (9,632)

    (10,261)

    Increase (decrease) in net position

    7,878

    (247)

    15,872

    24,959

    23,750

    24,712

    Net position ‐ beginning of year,

     

     

     

     

     

     

    as previously reported

    200,462

    200,709

    464,646

    439,687

    665,108

    640,396

    Restatement for Implementation of

    GASB Statement No. 75 (Note Q)

     

    (6,310)

     

     

     

     

    (6,310)

     

    Net position at beginning of year,

    as restated

     

    194,153

     

    200,709

     

    464,646

     

    439,687

     

    658,799

     

    640,396

    Net position ‐ ending

    $ 202,031 $

     

    200,462 $

     

    480,518 $

     

    464,646 $

     

    682,549 $

     

    665,108

     

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

    The City implemented GASB Statement No. 75 as of October 1, 2017. Information was not available to implement GASB Statement No. 75 for the prior period presented in the management discussion and analysis.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

    Financial Analysis of Funds

     

    As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance‐related legal requirements.

     

    Governmental Funds: The focus of the City’s governmental funds is to provide information on near‐term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. The unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

     

    General Fund: The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the General Fund reported fund balance of $46.2 million; $15.2 million was committed for the emergency reserve, $4.0 million was assigned to the 2018‐2019 budget, and $4.7 million was nonspendable and the remaining $22.3 million was unassigned. General Fund expenditures increased by $15.6 million primarily due to increased public safety and leisure services expenses. As a measure of the General Fund's liquidity, it may be useful to compare the total fund balance to total expenditures. At year end, the total fund balance represented 28.4% of total General Fund expenditures.

     

    The increase in revenue can be attributed to higher property taxes of and grants and contributions. Charges for services in governmental activities remained comparable to 2017 levels. Governmental expenses increased by

    $15.6 million primarily due an increase in general government spending and public safety. These increases were in part, due to lingering Hurricane Irma related costs and other charges incurred to provide quality police and fire protection. Economic environment expense also rose $5.4 million, reflecting in part enhancements to the City’s downtown area through streetscape improvements.

     

    Significant changes in General Fund revenues include an increase in property tax revenue of $6.5 million or 7.2%, which is attributable to an increase in and total taxable property values. The general fund also realized increased revenues in its charges for services and operating grants Other increase in general fund revenues

     

    Community Redevelopment Agency Funds (CRA): The CRA is an independent agency within the City

    with defined boundaries. Projects utilizing CRA funds must have executed interlocal agreements from both the CRA and the City. The City maintains two CRA funds: The City Community and the Northwood/Pleasant City district. The revenues from both funds are based on a percentage of total revenues collected at the county level and supplemented by inter‐governmental transfers and bond proceeds. Their mandates are similar: to improve the economic health and vitality of the facilities within their district borders.

     

    The Downtown/City Center CRA had revenues of $32.9 million in fiscal year 2018 and expenditures of $34 million. The main improvement project that increased expenditures in fiscal 2018 was the Clematis streetscape initiative. The Northwood/Pleasant City District had revenues of $3.8 million and expenses of $3.3 million with spending focused on the revitalization of the highway corridors within its boundaries.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

    The total net positions of the major governmental funds for the fiscal years ended September 30, 2018 and 2017 are as follows:

     

    Net Position

     

    2018 2017

    General Fund $ 46,174 $ 45,985

    Downtown/City Center CRA 23,788 27,504

    Northwood/Pleasant City CRA 5,131 4,609

    Total $ 75,093 $ 78,098

     

    Proprietary Funds: The City’s two main proprietary funds are the water and sewer system fund and the storm water management system fund. The water and sewage systems fund accounts for the administration operation, debt management, maintenance and payment processing of the city’s water and sewer utility systems. The storm water management system fund provides for the collection of and disposal of storm water and for the regulation of groundwater. The fund accounts for the cost of operating and maintaining the system and financing necessary repairs, replacements, improvements and extensions.

     

    The non‐major enterprise funds include the Parking and Golf Funds. The Parking fund is used to account for revenues and expenses related to providing covered garage, metered parking spaces and surface lot parking in the City. The Golf Course Fund was established to account for the operation and maintenance of the West Palm Beach Municipal Golf Course.

     

    The total net positions of the proprietary funds at year‐end are as follows:

     

    Water and Sewer System Fund $ 410,731 $ 398,926 Stormwater Utility Fund 54,232 50,391 Non‐major Enterprise Funds (Parking & Golf) 15,555 15,329 Total $ 480,518 $ 464,646

     

    General Operating Budgetary Highlights

     

    The City’s Budget staff, within the Finance Department, helps to ensure that General Fund revenues are estimated each year using a comprehensive process involving multiple stakeholders to yield the most reasonable and accurate revenue estimates. It includes an in depth review of past, current and projected financial conditions. The forecast is an integral part of the annual budget process and allows for informed decision‐making, with the goal of maintaining financial integrity while delivering essential quality community services to its citizens. The result was a balanced budget generating $167 million in General Fund revenues to offset $194.6 million in expenditures and the use of a portion of the prior year’s fund balance and proceeds of sale of capital assets.

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

     

    The General Fund recorded a $1.4 million negative variance in revenue, primarily due to a shortfall in intergovernmental revenues relative to the budget. Intergovernmental revenues were impacted by the timing of expected FEMA reimbursements related to Hurricane Irma that had been budgeted for fiscal year 2018, but not yet received.

     

    Total General Fund expenditures of $182.3 million (including encumbrances of $4 million and $13.5 million in administrative costs) were lower than the final fiscal year 2018 budget by about $12.9 million. All expenditure categories were lower than budgeted, although general government expenditures had the largest positive variance of $3.8 million as hurricane related expenses incurred during fiscal year 2018 were less than anticipated.

     

    Total revenues of the City’s Community Redevelopment Agencies (The Community Redevelopment Agency fund and the Northwood/Pleasant City CRA Fund) were underestimated by approximately $1 million. The variance is primarily attributed to lower than expected grant revenue during the year. Expenditures during 2018 were also less than budgeted due to the delays incurred in major capital projects ongoing within the CRA communities. Nevertheless, the City continues to promote and provide relocation assistance to its citizens through the residential rehabilitation projects and the home buying program. The city also provided $40,000 to small businesses and non‐provide comprehensive loan programs, training and management and technical assistance to businesses within the City in an effort to support the growth and prosperity of both newly emerging and mature businesses.

     

    Capital Assets and Debt Administration

    Capital Assets: The City’s capital assets for its governmental and business‐type activities as of September 30, 2018 totaled

    $837.1 million (net of accumulated depreciation). The net investment in capital assets was $429.6 million, an increase of

    $17.3 million from the 2017 balances. The increase reflects the delivery of police, fire and sanitation vehicles and equipment purchased through capital leases combined with utility system upgrades, net of depreciation and retirement.

     

    Governmental Business‐Type

    Activities Activities

    Total

    Primary Government

    2018 2017 2018 2017 2018 2017

     

    Land

    $ 82,403

    $ 84,199

    $ 10,399

    $ 10,399

    $ 92,803

    $ 94,598

    Buildings

    133,822

    138,503

    24,880

    26,773

    158,702

    165,276

    Improvements other

    80,481

    72,952

    80,481

    72,952

    than buildings

     

     

     

     

     

     

    Equipment

    29,445

    13,125

    5,097

    4,926

    34,542

    18,051

    Intangible Assets

    558

    647

    558

    647

    Infrastructure

    473

    11,465

    388,558

    363,225

    389,031

    374,690

    Construction in progress

    23,608

    25,838

    57,385

    67,774

    80,993

    93,613

    Total

    $ 350,790

     

    $ 346,730

     

    $ 486,319

     

    $ 473,097

     

    $ 837,109

     

    $ 819,827

     

    CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

    (UNAUDITED)

    Major capital asset events during the current fiscal year included the following:

     

    Governmental Activities:

     

    • Fire Stations #4 and #8, $10.8 million

    • Clematis Streetscape improvements, $2.5 million

       

      Business‐type Activities:

       

    • Water treatment plan improvement, $10.9 million

    • 42” and 48” PCCP Force Main improvement, $6.6 million

    • Storm water rehab, Pinewood Avenue, $4.1 million

    • Pineapple Park Storm water improvement, $3.2 million

    • Sanitary Sewer and Force Main improvement, $2.8 million

    • Water Main improvements on 31st, 32nd, 33rd, 34th and 35th Streets, $2.6 million

    • Reinstate settled water flume bypass, $2.3 million

    • Storm Sewer Rehab for Florida Avenue and Claremore Drive, $2.0 million Additional information on the City’s capital assets can be found in Note G of this report.

      Long‐term debt: Of the $662.0 million in noncurrent liabilities, $505.5 million is in the form of bonded debt. Of this, $3 million consists of debt backed by the full faith and credit of the government. The remainder of the City’s bonded debt represents bonds secured solely by specified revenue sources. $283.1 million is secured by water, sewer and storm water fees, and $128.5 million is secured by covenants to budget and appropriate from legally available non‐ad valorem revenues. The CRA’s $90.9 million of bonded debt is secured by a stand‐alone pledge of tax increment revenue.

      CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

      (UNAUDITED)

       

       

      The City's total of bonds, notes payable and leases decreased by $7 million, or approximately 1%, during the current fiscal year. The decline represents principal payoffs without any new issuances of debt.

       

      The general obligation bonds of the City maintain an underlying rating of "AA" from Standard and Poor’s Rating Services, “AA+” from Fitch Ratings, Inc., and an "Aa3" from Moody’s Investors Service, Inc. The special obligation bonds of the City maintain an underlying rating of “AA” from Fitch Ratings Inc. and an "Aa3" from Moody’s Investors Service, Inc. The Utility System revenue bonds (water, sewer and storm water) have an underlying rating of "AA+" from Standard and Poor’s Rating Services, “AA “ from Fitch Ratings, Inc., and an "Aa2" from Moody’s Investors Service, Inc.

       

      CITY OF WEST PALM BEACH

      Schedule of Bonded Debt, Notes and Leases

      (in thousands)

      Total Primary

      Governmental Activities Business‐Type Activities Government

       

       

      2018

      2017

      2018

      2017

      2018

      2017

      General obligation bonds

      $ 2,985

      $ 4,385

      $ ‐

      $ ‐

      $ 2,985

      $ 4,385

      General obligation bond premiums

      8

      15

      8

      15

      Revenue bonds

      205,339

      211,372

      264,185

      269,920

      469,524

      481,292

      Revenue bonds premiums

      14,142

      15,479

      18,866

      19,978

      33,008

      35,457

      Total bonds

      222,473

      231,251

      283,051

      289,898

      505,525

      521,149

      Notes and leases

      39,144

      38,489

      155

      39,144

      38,644

      Total bonds, notes and leases

      $ 261,617

      image

      $ 269,740

      image

      $ 283,051

      image

      $ 290,053

      image

      $ 544,669

      image

      $ 559,793

      image

       

      image

      Governmental Activities

      Millions

      250,000 219,481 226,851

      200,000

      150,000

      Business‐Type Activities

      Millions 283,051 289,898

      300,000

      250,000

      200,000

      150,000

      100,000

      39,144 38,489

      100,000

       

      50,000

      2,993

      4,400

      50,000

      − ‐

       

      2018

      2017

       

      2018

      2017

       

      155

       

      General obligation bonds $ Revenue bonds Notes and leases

      General obligation bonds Revenue bonds Notes and leases

      CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

      (UNAUDITED)

       

       

      Economic Factors and Next Year’s Budgets and Rates

      The City’s next year’s budget is consistent with maintaining services to its citizens without raising the millage rate. The City’s tax base has continued the upward trend in property values as it experiences positive economic growth. The financial planning strategy includes restructuring debt and prefunding information technology and the Citys fleet which began in fiscal year 2016 with a major overall of its capital assets. The projected benefits of the capital improvements will be lower repair and maintenance costs, aestically improved public areas and an information technology system which will allow the City to take advantage of big data analysis and technological improvements that are congruent with a world class city.

      Two key measures of employment are job growth and the unemployment rate. The job market in Florida continues to grow at steady rates, with a 3.4% growth rate for non‐farm employment for the third quarter of 2018 compared to the same period last year. As a result the Citizens of the City have largely benefited from the overall positive environment of the State. The City’s budget remains below the pre‐recession high, but has benefited from the state trend of low unemployment rates and continuing job growth.

       

      Overall the housing market continues to trudge forward, although somewhat slower from the strong growth enjoyed over the past few years. Florida’s unemployment rate continues to drift downward and is now below the “full employment” unemployment rate (assumed to be about 4%). The state’s actual unemployment rate in October 2018 was lower than the nation at 3.4 % compare to 3.7% for the U.S. For the third quarter of 2018, single‐family building permits were 13.3% higher than the same period last year, while multi‐family building permits were 1.8% higher.

       

      Tourism is a major component of the City’s economy and continues to show its strength. The forecast for fiscal year 2019 expects this trend to continue with a projected overall growth of 5.4%, with domestic and international visitors contributing to the growth and compensating for the slight decline expected in Canadian visitors.

       

      There is also the phenomenon, not unique to West Palm Beach, that a rising population is not translating into gains in property tax revenues suggesting a greater proportion of new households are opting to rent rather than buy a home. In 2008, City revenues reached $196.1 million with a population of 103,663. In 2019, the population is estimated at 110,222, an increase of 6.3%, while tax revenues for that year are estimated to $184.6 million, representing a 5.9% decline from the 2008 level.

      Utility rates are expected to rise as previously approved rate increases for water, wastewater and storm water services are effective October 1, 2018.

       

      The city anticipates some increase in the employer contribution to health insurance premiums as well as pension and other employee benefit costs. Other significant expenses relate to major capital projects as they are constructed or purchased. The City’s vision includes just over a dozen capital projects that will transform the City by redesigning key areas while putting people and quality of life at the forefront.

       

    • The “Banyan Street Transformation” will bridge the currently divided downtown and the northwest neighborhood

    • in a safer, more pedestrian and bike friendly mannor.

    • The “Waterfront Promenade Project” involves the redesign of the City’s waterfront to make it more people

    • friendly.

    • The Datura‐Evernia Plaza Project will reconfigure the roadway to create a public plaza, an open space that will accommodate outdoor dining, recreation and a tree canopy.

CITY OF WEST PALM BEACH, FLORIDA MANAGEMENT DISCUSSION AND ANALYSIS SEPTEMBER 30, 2018

(UNAUDITED)

 

 

The projects identified above, among others will usher in an urban renaissance within the City, bringing about positive residual effects in areas of economic development, public health, sustainability and other benefits.

 

Requests for information

This financial report is designed to provide a general overview of the City’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Office of the Finance Director, 401 Clematis Street, West Palm Beach, Florida, 33401

image

image

 

BASIC FINANCIAL STATEMENTS

CITY OF WEST PALM BEACH, FLORIDA BASIC FINANCIAL STATEMENTS STATEMENT OF NET POSITION

SEPTEMBER 30, 2018

 

Governmental

Activities

Business‐Type

Activities

 

Total

ASSETS:

 

 

Cash and cash equivalents

$ 44,399,169

$ 26,338,855

$ 70,738,024

Investments

113,830,642

32,586,677

146,417,319

Receivables, net

 

 

 

Accounts

14,223,692

14,386,211

28,609,903

Interest

508,707

327,342

836,049

Notes

2,435,869

2,435,869

Leins and assessments

390,267

1,639,933

2,030,200

Internal balances

619,535

(619,535)

Due from other governments

4,608,729

532,156

5,140,885

Inventory

530,398

714,181

1,244,579

Land held for resale

5,443,575

5,443,575

Prepaid items

992,140

51,583

1,043,723

Advances to defined benefit pension plan

3,624,747

3,624,747

Investment in direct financing leases

4,453,855

4,453,855

Restricted assets:

 

 

 

Cash, cash equivalents

18,005,747

66,897,055

84,902,802

Investments

12,183,372

113,000,653

125,184,025

Interest on restricted cash and investments

38,107

373,572

411,679

Net pension asset

5,225,240

316,189

5,541,429

Investment in joint venture

1,450,718

38,879,987

40,330,705

Bond insurance costs, net

222,385

150,749

373,134

Capital assets:

 

 

 

Nondepreciable

106,011,665

67,784,195

173,795,860

Depreciable, net of accumulated depreciation

244,778,903

418,535,439

663,314,342

Total assets

$ 583,977,462

$ 781,895,242

image

$ 1,365,872,704

image

 

DEFERRED OUTFLOW OF RESOURCES

 

 

 

Interest rate swap

$ ‐

$ 10,755,074

$ 10,755,074

Deferred loss on refunding

1,122,773

6,760,858

7,883,631

image

image

image

Deferred outflows related to pension 39,060,544 185,008 39,245,552 Total deferred outflow of resources $ 40,183,317 $ 17,700,940 $ 57,884,257

Continued

CITY OF WEST PALM BEACH, FLORIDA BASIC FINANCIAL STATEMENTS STATEMENT OF NET POSITION

SEPTEMBER 30, 2018

 

Governmental

Activities

Business‐Type

Activities

 

Total

LIABILITIES:

Accounts payable and accrued liabilities

 

$ 22,105,303

 

$ 7,496,975

 

$ 29,602,278

Due to other governments

888,561

15,938

904,499

Unearned revenues

2,635,879

2,635,879

Deposits payable

1,142,307

9,858,029

11,000,336

Accrued interest payable

516,302

4,678,124

5,194,426

Due within one year:

 

 

 

Compensated absences payable

652,171

1,350,154

2,002,325

Capital leases payable

4,505,047

4,505,047

Notes payable

3,670,952

3,670,952

Bonds payable

7,713,496

6,440,000

14,153,496

Insurance claims payable

4,128,239

4,128,239

Due in more than one year:

 

 

 

Unearned revenues

 

312,714

 

312,714

Compensated absences payable

16,645,604

 

1,218,701

 

17,864,305

Capital leases payable

15,486,876

 

 

15,486,876

Notes payable

15,481,040

 

 

15,481,040

Bonds payable

214,783,458

 

276,611,374

 

491,394,832

Interest rate swap

 

10,755,074

 

10,755,074

Insurance claims payable

8,542,366

 

 

8,542,366

Net pension liability

73,676,035

 

 

73,676,035

Net OPEB liability

72,817

 

 

72,817

Total liabilities

$ 392,646,453

$

318,737,083

image

$

711,383,536

image

DEFERRED INFLOW OF RESOURCES

 

 

 

 

 

Deferred inflows related to pension

$ 29,041,964

$ 341,274

$ 29,383,238

Deferred inflows related to OPEB

440,874

440,874

 

Total deferred inflow of resources

 

$ 29,482,838

 

$

 

341,274

 

$

 

29,824,112

image

NET POSITION:

image

image

 

Net Investment in capital assets

163,729,682

265,865,782

429,595,464

Restricted for:

 

 

 

Operation and maintenance

 

12,477,834

 

12,477,834

Debt service

 

18,828,530

 

18,828,530

Capital improvements

24,630,745

 

 

24,630,745

Renewal and replacement

 

55,377,789

 

55,377,789

Developer impact fund

 

7,436,050

 

7,436,050

Grants

8,591,217

 

 

8,591,217

Pension

5,225,240

 

316,189

 

5,541,429

Community development

2,772,931

 

 

2,772,931

Building code enforcement

14,807,105

 

 

14,807,105

Unrestricted (deficit)

(17,725,432)

 

120,215,651

 

102,490,219

Total net position

$ 202,031,488

 

image

$

480,517,825

image

$

682,549,313

image

CITY OF WEST PALM BEACH, FLORIDA

STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED SEPTEMBER 30, 2018

 

Operating Capital Charges for Grants and Grants and

UNCTIONS/PROGRAMS: Expenses Services Contributions Contributions

Governmental activities:

 

 

 

 

General government

$ 27,681,437

$ 11,843,366

$ 9,585,341

$ 7,971,155

Public safety

115,720,542

9,562,540

1,426,149

Public works

6,334,984

Economic environment

28,104,578

9,610,743

974,616

1,460,822

Engineering services

3,137,218

767,670

Health and sanitation

11,335,087

14,703,110

Leisure services

25,932,163

2,160,205

531,234

Interest and fiscal charges

8,746,544

Total governmental activities

226,992,553

48,647,634

12,517,340

9,431,977

 

Business‐type activities:

 

 

 

 

 

Water and sewer system fund

90,032,732

105,901,761

3,258,952

Stormwater utility fund

10,342,076

13,806,039

Parking facilities fund

6,463,060

6,657,465

West palm beach golf course fund

1,407,394

775,444

Total business‐type activities

108,245,262

127,140,709

3,258,952

Total

$ 335,237,815

$ 175,788,343

$ 12,517,340

$ 12,690,929

 

Program Revenues

 

F

 

image image image image

 

General revenue:

Taxes:

Ad valorem taxes Insurance premium taxes Licenses and permits

Business Franchise fees

Utility service taxes Sales tax

State and local shared revenues Interest income

Miscellaneous

Transfers

Total general revenues and transfers Change in net position

Net position at beginning of year, as previously reported Restatement for implementation of GASB Statement No. 75 Net position at beginning of year, as restated (Note Q)

Net position at end of year

 

Continued

 

image

 

image

Net Revenue (Expense) and Change in Net Position

 

Governmental

Activities

 

Business‐Type

Activities

 

Total

$ 1,718,425

$

$ 1,718,425

(104,731,853)

 

(104,731,853)

(6,334,984)

 

(6,334,984)

(16,058,397)

 

(16,058,397)

(2,369,548)

 

(2,369,548)

3,368,023

 

3,368,023

(23,240,724)

 

(23,240,724)

(8,746,544)

 

(8,746,544)

(156,395,602)

 

(156,395,602)

 

 

 

19,127,981

 

19,127,981

 

3,463,963

3,463,963

 

194,405

194,405

 

(631,950)

(631,950)

 

22,154,399

22,154,399

(156,395,602)

 

22,154,399

(134,241,203)

 

96,783,498

 

 

 

96,783,498

2,797,362

 

2,797,362

1,229,003

 

1,229,003

3,823,282

 

3,823,282

9,462,625

 

9,462,625

21,685,074

 

21,685,074

8,836,682

 

8,836,682

6,447,943

 

6,447,943

2,160,064

 

2,312,530

4,472,594

1,417,429

 

1,036,938

2,454,367

9,631,741

 

(9,631,741)

164,274,703

 

(6,282,273)

157,992,430

7,879,101

 

15,872,126

23,751,227

200,461,943

 

464,645,699

665,107,642

(6,309,556)

 

(6,309,556)

194,152,387

 

464,645,699

658,798,086

$ 202,031,488

 

image

$

480,517,825

image

$ 682,549,313

image

CITY OF WEST PALM BEACH, FLORIDA

BALANCE SHEET ‐ GOVERNMENTAL FUNDS

image

image

image

image

SEPTEMBER 30, 2018

 

 

Northwood/

 

 

City Center

Pleasant City

 

Community

Community

 

Redevelopment

Redevelopment

 

Total

General

Agency

Agency

Non‐major

Governmental

Fund

Fund

Fund

Governmental

Funds

ASSETS:

Cash and cash equivalents

 

$ 12,207,266

 

$ 6,843,781

 

$ 1,417,188

 

$ 17,350,458

 

$ 37,818,693

Investments

32,701,160

18,346,231

3,799,078

41,812,009

96,658,478

Receivable, net

 

 

 

 

 

Accounts

11,774,266

164,439

3,850

1,797,942

13,740,497

Interest

154,366

80,150

16,563

176,247

427,326

Notes

547,418

246,822

1,641,629

2,435,869

Liens & assessments

264,018

126,249

390,267

Due from other funds

2,558,663

10,474,787

13,033,450

Advances to other funds

617,000

617,000

Due from other governments

1,080,218

58,366

89,405

2,423,501

3,651,490

Inventory

378,338

60,967

439,305

Land held for resale

1,269

5,442,306

5,443,575

Prepaid items

36,043

5,000

15,028

56,071

Advances to defined benefit

 

 

 

 

 

pension plan

3,624,747

3,624,747

Investment in direct financing

 

 

 

 

 

leases

4,453,855

4,453,855

Restricted assets:

 

 

 

 

 

Cash and cash equivalents

13,798,039

13,798,039

Investments

12,183,372

12,183,372

Interest on restricted cash and investments

 

 

 

 

38,107

 

38,107

Total assets

65,943,503

image

25,746,058

image

5,326,084

image

111,794,496

image

208,810,141

image

LIABILITIES:

 

 

 

 

 

Accounts payable and

 

 

 

 

 

accrued liabilities

10,291,252

1,642,963

64,119

6,751,713

18,750,047

Deposits payable

834,641

41,447

127,450

20,731

1,024,269

Unearned revenue

2,588,415

47,464

2,635,879

Due to other governments

721,924

20,002

146,635

888,561

Due to other funds

12,813,401

12,813,401

Total liabilities

14,436,232

1,704,412

191,569

19,779,944

36,112,157

DEFERRED INFLOW OF RESOURCES:

 

 

 

 

 

Unavailable revenue

5,332,983

 

image

253,169

image

3,850

image

802,699

image

6,392,701

image

FUND BALANCES:

 

 

 

 

 

Nonspendable

4,656,128

5,000

75,995

4,737,123

Restricted

23,783,477

5,130,665

77,922,496

106,836,638

Committed

15,223,562

13,213,362

28,436,924

Assigned

4,005,265

4,005,265

Unassigned 22,289,333

22,289,333

Total fund balances 46,174,288

23,788,477

5,130,665

91,211,853

166,305,283

Total liabilities, deferred inflows

and fund balances $ 65,943,503

 

image

 

$ 25,746,058

 

$ 5,326,084

 

$ 111,794,496

 

$ 208,810,141

CITY OF WEST PALM BEACH, FLORIDA

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION

SEPTEMBER 30, 2018

TOTAL FUND BALANCES ‐ GOVERNMENTAL FUNDS $ 166,305,283

Amounts reported for governmental activities in the statement of net position are different because:

 

Capital assets used in governmental activities are not financial

 

resources and therefore, are not reported in the funds

 

336,565,900

Contractual agreements which were due from other governments

 

 

are not current financial resources and therefore are not reported in the

 

 

governmental funds. These contractual obligations were settled in the

 

 

current fiscal year.

 

 

City park pledged by Palm Beach County

 

(2,002,500)

Capital asset

 

2,002,500

Intergovernmental revenue is not available to pay for current

 

 

period expenditures and, therefore, is deferred in the funds.

 

6,392,701

Other Assets and deferred outflows of resources used in governmental

 

 

activities are not current financial resources and are not reported in the

 

 

governmental funds.

 

 

Unamortized bond insurance costs

222,385

 

Net pension assets

5,225,240

 

Deferred Loss on debt refunding

1,122,773

6,570,398

Long‐term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds:

 

Accrued interest payable

(516,302)

 

Compensated absences

(16,695,398)

 

Capital leases payable

(17,882,548)

 

Notes payable

(12,551,748)

 

Bonds payable

(222,473,412)

 

Arbitrage payable

(23,542)

 

Net OPEB liability

(72,817)

 

Net pension liability

(73,676,035)

(343,891,802)

Certain deferred inflows/outflows related to pension and OPEB are not reported on the modified accrual basis of accounting.:

 

Deferred outflows of resources related to pensions

39,060,544

 

Deferred inflows of resources related to pensions

(29,041,964)

 

Deferred inflows of resources related to OPEB

(440,874)

9,577,706

 

Net position of internal service funds are reported with governmental

activities 20,511,302

 

Net position of governmental activities $ 202,031,488

image

CITY OF WEST PALM BEACH, FLORIDA

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

 

 

Northwood/

 

City Center

Pleasant City

Community

Community

Redevelopment

Redevelpment

Non‐major

Total

General Agency

Agency

Governmental

Governmental

Fund Fund

Fund

Funds

Funds

REVENUES:

 

 

 

 

 

Taxes

$ 107,357,984

$ 19,418,289

$ 2,263,248

$ 1,689,039

$ 130,728,560

Licenses and permits

3,823,282

10,697,549

14,520,831

Intergovernmental

14,170,339

12,844,773

1,401,457

18,644,812

47,061,381

Charges for services

24,763,965

3,742,988

28,506,953

Fines and forfeitures

238,638

13,255

251,893

Rents and royalties

211,804

253,497

511,810

977,111

Interest income

729,963

332,316

51,461

803,710

1,917,450

Miscellaneous

939,640

16,122

60,100

709,573

1,725,435

Total revenues

152,235,615

32,864,997

3,776,266

36,812,736

225,689,614

 

EXPENDITURES:

Current:

General government

20,486,522

26,850

20,513,372

Public safety

95,343,458

10,973,101

106,316,559

Public works

3,332,658

1,407,148

4,739,806

Economic environment

250,294

18,410,040

1,408,121

7,143,253

27,211,708

Engineering services

3,111,327

25,891

3,137,218

Health and sanitation

10,698,145

10,698,145

Leisure services

20,557,309

5,080,515

25,637,824

Capital outlay

1,292,901

9,209,858

116,344

25,340,299

35,959,402

Debt service:

 

 

 

 

 

Principal

4,706,805

3,052,516

896,165

1,964,141

10,619,627

Interest charges

5,191,832

3,283,558

833,490

431,526

9,740,406

Total expenditures

164,971,251

33,955,972

3,254,120

52,392,724

254,574,067

Excess (deficiency) of revenues over expenditures

 

(12,735,636)

 

(1,090,975)

 

522,146

 

(15,579,988)

 

(28,884,453)

 

OTHER FINANCING SOURCES (USES):

Capital leases ‐

5,927,953

5,927,953

Proceeds from sale of capital assets 13,300,760

351,807

13,652,567

Transfers in 11,785,442

75,684

19

12,998,322

24,859,467

Transfers out (12,160,946)

(2,700,631)

(5,299,864)

(20,161,441)

Total other financing

 

 

 

 

sources (uses) 12,925,256

(2,624,947)

19

13,978,218

24,278,546

Net change in fund

 

 

 

 

balances 189,620

(3,715,922)

522,165

(1,601,770)

(4,605,907)

Fund balances ‐ beginning 45,984,668

27,504,399

4,608,500

92,813,623

170,911,190

Fund balances ‐ ending $ 46,174,288

 

image

$ 23,788,477

image

$ 5,130,665

image

$ 91,211,853

image

$ 166,305,283

image

CITY OF WEST PALM BEACH, 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, 2018

 

NET CHANGE IN FUND BALANCES ‐ TOTAL GOVERNMENTAL FUNDS $ (4,605,907)

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlay 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 depreciation expense exceeded capital outlay in the current period:

 

Capital outlay

35,959,402

 

Depreciation expense

(21,166,157)

14,793,245

The net effect of various transactions involving capital assets

 

(5,244,181)

Sale of property

 

(8,828,069)

Some revenues reported in the statement of activities do not provide current financial resources and therefore are not reported as revenues in governmental funds

 

 

Intergovernmental revenues

974,616

 

Charges for services

(1,390,333)

(415,717)

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. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts (except for issuance costs) are capitalized and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long‐term debt and related items:

 

Issuance of capital leases

(5,927,953)

 

Principal repayment on notes payable

889,003

 

Principal repayment on capital leases

2,298,108

 

Principal repayment on bonds payable

7,432,516

4,691,674

 

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:

 

Change in net pension asset (liability)

17,254,704

 

Change in deferred inflows/outflows related to pension

(14,313,589)

 

Change in deferred inflows/outflows related to other post‐employment liability

(440,874)

 

Change in other post‐employment benefits

(460,106)

 

Change in accrued Interest Payable

16,990

 

Change in deferred loss on refunding

(126,643)

 

Amortization of bond issurance costs

(15,075)

 

Amortization of bond premiums

1,347,547

 

Compensated absences

(997,552)

2,265,402

The internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain activities of

the internal service funds is reported with governmental activities. 5,222,654

 

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 7,879,101

image

CITY OF WEST PALM BEACH, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS

SEPTEMBER 30, 2018

 

 

Water

 

image

Business‐Type Enterprise Funds

Governmental Activities

and Sewer Stormwater Non‐Major Internal

System Utility Enterprise Service

Fund Fund Funds Totals Funds

 

ASSETS:

 

Current unrestricted assets:

 

Cash and cash equivalents

$ 10,304,965

$ 9,164,426

$ 6,869,464

$ 26,338,855

$ 6,580,476

Investments

27,626,132

3,418,469

1,542,076

32,586,677

17,172,164

Receivables (net):

 

 

 

 

 

Accounts

12,666,523

1,618,591

101,097

14,386,211

483,195

Interest

243,570

57,357

26,415

327,342

81,381

Leins and assessments

1,270,257

369,676

1,639,933

Due from other funds

113,537

113,537

36,277

Due from other governments

400,574

62,326

69,256

532,156

957,239

Inventory

684,055

30,126

714,181

91,093

Prepaid items

40,744

10,839

51,583

936,069

Current restricted assets:

 

 

 

 

 

Cash and cash equivalents

6,523,824

1,108,175

18,339

7,650,339

4,207,708

Investments

14,520,771

1,808,076

6,114

16,334,960

Total current assets

74,281,415

17,607,096

8,787,263

100,675,774

30,545,602

 

Noncurrent assets:

 

 

 

 

 

Restricted Cash and cash equivalents

46,106,728

 

13,139,988

 

 

59,246,716

 

Restricted investments

75,226,765

 

21,438,928

 

 

96,665,693

 

Interest receivable

300,509

 

73,063

 

 

373,572

 

Net pension asset

316,189

 

 

 

316,189

 

Investment in joint venture

38,879,987

 

 

 

38,879,987

 

1,450,718

Unamortized bond insurance costs

129,922

 

20,827

 

 

150,749

 

Capital assets:

 

 

 

 

 

 

 

 

 

Non‐depreciable

57,164,387

 

6,392,236

 

4,227,572

 

67,784,195

 

Depreciable, net

354,457,822

 

60,051,871

 

4,025,746

 

418,535,439

 

14,224,667

Total noncurrent assets

572,582,309

 

101,116,913

 

8,253,318

 

681,952,540

 

15,675,385

Total assets

646,863,724

 

118,724,009

image

 

17,040,581

image

 

782,628,314

image

 

46,220,987

image

 

DEFERRED OUTFLOWS OF RESOURCES

 

 

 

 

 

 

 

 

 

Deferred outflow‐interest rate swap

9,378,425

 

1,376,649

 

 

10,755,074

 

Deferred outflow‐loss on defeased debt

4,673,364

 

2,087,494

 

 

6,760,858

 

Deferred outflow‐pension

185,008

 

 

 

185,008

 

Total deferred outflows of resources

14,236,797

 

3,464,143

image

 

image

 

17,700,940

image

 

image

 

 

 

 

 

 

 

 

 

 

Continued

CITY OF WEST PALM BEACH, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS

SEPTEMBER 30, 2018

Governmental

 

image

Water

Business‐Type Enterprise Funds

Activities

 

LIABILITIES:

Current liabilities:

and Sewer Stormwater Non‐Major Internal

System Utility Enterprise Service

Fund Fund Funds Totals Funds

 

Accounts payable and accrued liabilities

3,667,141

177,888

484,843

4,329,872

3,355,256

Due to other governments

15,938

15,938

Due to other funds

116,072

116,072

253,791

Compensated absences payable

1,112,274

157,567

80,313

1,350,154

322,833

Capital lease obligations ‐ current

1,041,491

Notes payable, current

1,092,582

Insurance claims payable

4,128,239

Current liabilities payable from

 

 

 

 

 

restricted assets:

 

 

 

 

 

Accounts payable and accrued liabilities

2,868,933

298,170

3,167,103

Accrued interest payable

3,524,253

1,153,871

4,678,124

Deposits payable

9,833,576

24,453

9,858,029

118,038

Bonds payable current

4,975,790

1,464,210

6,440,000

 

Total current liabilities

 

25,981,967

 

3,251,706

 

721,619

 

29,955,292

 

10,312,230

Noncurrent liabilities:

 

 

 

 

 

Advance payable to General Fund

617,000

617,000

Unearned revenue

195,505

49,994

67,215

312,714

Compensated absences payable

975,958

163,029

79,713

1,218,700

279,544

Capital lease obligation ‐ long term

1,067,883

Notes payable, long term

5,507,662

Bonds payable, net

213,496,846

63,114,529

276,611,375

Interest rate swap

9,378,425

1,376,649

10,755,074

Insurance claims payable, long term

8,542,366

Total noncurrent liabilities

224,046,734

64,704,201

763,928

289,514,863

15,397,455

 

Total liabilities 250,028,701 67,955,907 1,485,547 319,470,155 25,709,685

image image image image image

DEFERRED INFLOWS OF RESOURCES

Pension related items 341,274 ‐ ‐ 341,274 ‐

image image image image image

NET POSITION

Net investment in capital assets

229,104,007

28,508,457

8,253,318

265,865,782

6,310,079

Restricted for:

 

 

 

 

 

Operation and maintenance

11,265,915

1,211,919

12,477,834

Debt service

15,367,953

3,460,577

18,828,530

Renewal and replacement

50,668,362

4,709,427

55,377,789

Developer impact fund

7,436,050

7,436,050

Restated employees pension

316,189

316,189

Unrestricted

96,572,070

16,341,865

7,301,716

120,215,651

14,201,223

Total net position

$ 410,730,546 $

 

image

54,232,245 $

image

15,555,034 $ 480,517,825 $

image image

20,511,302

image

image

CITY OF WEST PALM BEACH, FLORIDA

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS

FOR THE YEAR ENDED SEPTEMBER 30, 2018

 

 

Business‐Type Enterprise Funds Water

Governmental

Activities

 

 

and Sewer

System

Fund

Stormwater

Utility

Fund

Non‐Major

Enterprise

Funds

 

Totals

Internal

Service

Funds

OPERATING REVENUES:

 

 

 

 

 

Charges for services

$ 104,764,484

$ 13,785,784

$ 6,413,158

$ 124,963,426

$ 55,594,427

Fines

1,137,277

1,019,751

2,157,028

Equity in gain of joint ventures

490,404

Miscellaneous and other

558,546

6,596

287,176

852,318

271,459

Total operating revenues

106,460,307

13,792,380

7,720,085

127,972,772

56,356,290

 

OPERATING EXPENSES:

 

 

 

 

 

Personnel services

23,200,071

2,197,798

1,311,948

26,709,817

7,413,159

Contractual services

11,337,979

1,533,583

2,594,271

15,465,833

11,605,894

Utilities

2,673,290

154,392

375,890

3,203,572

388,039

Repair and maintenance

6,187,598

832,816

1,112,333

8,132,747

907,250

Other supplies and expenses

11,250,597

706,938

990,234

12,947,769

4,047,713

Depreciation

12,962,910

2,318,043

1,133,011

16,413,964

561,512

Insurance claims and expenses

475,481

104,583

306,452

886,516

30,997,655

Equity in loss of joint ventures

5,908,551

5,908,551

Wastewater treatment and disposal

7,567,368

7,567,368

Total operating expenses

81,563,845

7,848,153

7,824,139

97,236,137

55,921,222

Operating income (loss)

24,896,462

image

5,944,227

image

(104,054)

image

30,736,635

image

435,068

image

 

NONOPERATING REVENUES (EXPENSES):

Interest income

1,824,744

418,795

68,991

2,312,530

242,614

Interest expense

(8,468,887)

(2,493,923)

(46,315)

(11,009,125)

(228,961)

Gain (loss) on disposal of capital assets 184,620

20,255

204,875

(159,782)

Total non‐operating revenues

(expenses) (6,459,523)

(2,054,873)

22,676

(8,491,720)

(146,129)

Income (loss) before contributions

and transfers 18,436,939

 

3,889,354

 

(81,378)

 

22,244,915

 

288,939

 

TRANSFERS, CONTRIBUTIONS AND OTHER:

Capital contributions ‐ impact fees

1,146,670

1,146,670

Capital contributions ‐ grants

2,112,282

2,112,282

Transfers in

477,116

863,570

1,340,686

5,058,981

Transfers out

(10,368,321)

(48,400)

(555,706)

(10,972,427)

(125,266)

Change in net position

11,804,686

3,840,954

226,486

15,872,126

5,222,654

 

Net position ‐ beginning 398,925,860 50,391,291 15,328,548 464,645,699 15,288,648

 

Net position ‐ ending $ 410,730,546 $ 54,232,245 $ 15,555,034 $ 480,517,825 $ 20,511,302

image image image image image

CITY OF WEST PALM BEACH, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

 

Business‐Type Activities

Enterprise Funds

Governmental

Activities

 

 

Water and

S ewer System Fund

Stormwater

S ystem Fund

Non‐Major

E nterprise Funds

 

Totals

Internal

S ervice Funds

Cash Flows From Operating Activities:

 

 

 

 

 

Cash received from customers

$ 103,981,515 $

13,861,007

$ 6,411,673 $

124,254,195 $

55,837,322

Cash payments to suppliers/contractors

(39,829,360)

(3,634,961)

(5,284,490)

(48,748,811)

(15,926,311)

Cash payments to employees

(23,064,029)

(2,169,132)

(1,286,519)

(26,519,680)

(7,414,265)

Other operating receipts

1,420,931

6,596

1,203,389

2,630,916

271,457

Cash payments for insurance

‐ ‐

(31,541,486)

Net cash provided by

 

 

 

 

operating activities

42,509,057

8,063,510

1,044,053 51,616,620

1,226,717

Cash Flows From Noncapital

 

 

 

 

Financing Activities:

 

 

 

 

Transfers in

477,116

863,570

1,340,686

5,058,981

Transfers out

(10,368,321)

(48,400)

(555,706)

(10,972,427)

(125,266)

Receipts due from other funds

(49,994)

(49,994)

Net cash provided by (used for)

 

 

 

 

 

non‐capital financing activities

(9,891,205)

(98,394)

307,864

(9,681,735)

4,933,715

Cash Flows From Capital and Related Financing Activities:

Acquisition/construction of capital assets

(31,926,271)

 

(2,488,298)

 

(322,150)

 

(34,736,719)

 

(2,775,060)

Principal paid on bonds

(5,238,228)

 

(1,607,956)

 

 

(6,846,184)

 

Principal paid on notes and leases

 

 

 

 

(2,086,111)

Payments to fiscal agent on refunded debt

 

 

(271,270)

 

(271,270)

 

Bond issuance costs

 

158,757

 

 

158,757

 

Interest and fees paid on long term debt

(7,231,641)

 

(2,297,890)

 

(46,315)

 

(9,575,846)

 

(228,961)

Capital contributions from impact fees

1,146,670

 

 

 

1,146,670

 

Capital grants

2,112,282

 

 

 

2,112,282

 

Proceeds from sale of capital assets

184,620

 

20,255

 

 

204,875

 

716,824

Net cash used for capital and

 

 

 

 

 

 

 

 

 

related financing activities

(40,952,568)

 

(6,215,132)

 

(639,735)

 

(47,807,435)

 

(4,373,308)

Cash Flows From Investing Activities:

 

 

 

 

 

 

 

 

 

Purchases of investments

(2,586,036)

 

 

 

(2,586,036)

 

(1,232,798)

Sales of investments, net

 

2,775,467

 

3,157,196

 

5,932,663

 

Interest on investments

1,784,659

 

402,081

 

64,058

 

2,250,798

 

226,022

Net cash provided by (used for) investing

 

 

 

 

 

 

 

 

 

activities

(801,377)

 

3,177,548

 

3,221,254

 

5,597,426

 

(1,006,776)

Net increase (decrease) in cash and

 

 

 

 

 

 

 

 

 

cash equivalents

(9,136,093)

4,927,532

3,933,436

(275,124)

780,348

Cash and cash equivalents beginning of year

72,071,610

18,485,057

2,954,367

93,511,034

10,007,836

Cash and cash equivalents end of year

$ 62,935,517

$ 23,412,589

image

$ 6,887,803 $

image

93,235,910

image

$ 10,788,184

image

Displayed as:

 

 

 

 

 

Unrestricted cash and cash equivalents

10,304,965

9,164,426

6,869,464

26,338,855

6,580,476

Restricted cash and cash equivalents

52,630,552

14,248,163

18,339

image

66,897,055

4,207,708

Total cash and cash equivalents

$ 62,935,517

 

image

$ 23,412,589

 

image

$ 6,887,803 $

 

image

93,235,910

 

image

$ 10,788,184

 

image

Continued

CITY OF WEST PALM BEACH, FLORIDA STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

 

Business‐Type Activities

Enterprise Funds

Governmental

Activities

image

 

Water and Stormwater Non‐Major Internal

S ewer System System Enterprise Service

Fund Fund Funds Totals Funds

image image image image

 

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH AND CASH EQUIVALENTS PROVIDED BY OPERATING ACTIVITIES:

Operating income (loss) $ 24,896,462 $ 5,944,227 $ (104,054) $ 30,736,635 $ 435,068

 

image

image

Adjustments to reconcile operating income (loss)

to net cash provided by operating activities:

 

Depreciation

12,962,910

2,318,043

1,133,011

16,413,964

561,512

Changes in assets and liabilities:

 

 

 

 

 

(Increase) decrease in accounts receivable

(1,193,626)

(4,402)

(14,220)

(1,212,248)

(451,889)

(Increase) decrease in (gain) loss in joint

 

 

 

 

 

venture

5,908,551

5,908,551

(490,403)

(Increase) decrease in liens receivable

236,444

53,037

289,481

(Increase) decrease in due from other funds

(113,537)

(113,537)

248,871

(Increase) decrease in due from other

 

 

 

 

 

governments

(274,892)

22,735

(252,157)

(Increase) decrease in inventory

(71,804)

3,043

(68,761)

Decrease in prepaid expenses

(5,492)

(5,492)

36,787

Decrease in net pension asset

(111,012)

(111,012)

Increase (decrease) in accounts payable and

 

 

 

 

 

accrued liabilities

(259,751)

(302,649)

95,221

(467,179)

835,889

Increase in due to other governments

903

903

Increase in due to other funds

(303,339)

(23,406)

(4,478)

(331,223)

239,964

Increase in compensated absences payable

43,359

28,666

25,429

97,454

(1,106)

Increase in unearned revenue

195,505

49,994

245,499

Increase in deferred inflow‐pension

203,695

203,695

Increase in deposits payable

282,047

282,047

(182,755)

Decrease in insurance claims payable

(5,221)

Total adjustments

17,612,595

2,119,283

1,148,107

20,879,985

791,649

Net cash and cash equivalents provided

 

 

 

 

by operating activities

$ 42,509,057 $

8,063,510 $ 1,044,053

$ 51,616,620 $

1,226,717

image

Schedule of non‐cash capital and related

 

 

image

image image

 

financing and investing activities:

 

 

 

 

 

Change in fair value of investments

$

(908,201) $

(222,053) $

image

(50,179) $ (1,180,433) $

image image

(82,304)

image

CITY OF WEST PALM BEACH, FLORIDA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS

SEPTEMBER 30, 2018

image

 

ASSETS:

 

Cash and cash equivalents

Receivables:

$ 5,668,129

Plan members

98,458

Drop loans

1,795,179

Interest and dividends

660,228

Other

519,025

Total receivables

3,072,890

Investments:

 

Money market

7,735,250

U.S. Government obligations

57,978,902

U.S. Government agencies

14,905,451

Corporate obligations

28,741,669

Equity securities

30,723,501

Domestic stocks

149,778,257

Domestic equity investment funds

177,278,830

Domestic fixed income investment funds

21,483,218

Domestic private equity investment funds

3,720,959

Fixed income mutual fund

4,175,562

International equity investment funds

75,218,003

International fixed income investment funds

10,421,715

Real estate investment trust funds

81,807,658

Total investments

663,968,975

Prepaid expenses

1,275,462

Total assets

673,985,456

 

LIABILITIES:

Accounts payable and accrued liabilities 1,256,582

Advanced contribution from the City 3,624,747

image

 

Total liabilities 4,881,329

 

NET POSITION:

Net position restricted for pensions and OPEB $ 669,104,127

image

CITY OF WEST PALM BEACH, FLORIDA

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

image

 

Additions

Contributions:

Plan members $ 7,381,251

Insurance premium taxes collected by the State of Florida

on behalf of the City of West Palm Beach 2,797,362

City of West Palm Beach 13,655,365

image

Total contributions 23,833,978

 

Investment income:

Net appreciation in fair value

 

of investments

49,946,912

Interest and dividends

12,877,215

Class action revenue

56,749

Rebates and other revenue

24,932

 

62,905,808

Less investment expense

2,055,899

Net investment income

60,849,909

Total additions

84,683,887

 

Deductions

 

Participant benefit payments

38,922,394

Refunds of participant contributions

328,073

Administrative expenses

610,940

Total deductions

39,861,407

 

Net increase in net position

 

44,822,480

Net position restricted for pensions and OPEB:

 

Beginning of year

624,281,647

End of year

$ 669,104,127

 

image

image

CITY OF WEST PALM BEACH, FLORIDA

 

NOTES TO THE BASIC FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

TABLE OF CONTENTS

 

 

NOTE

 

Page

A – Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

B – Deposits and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28

C – Receivables and Unearned Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36

D – Restricted Cash and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

E – Investment in Joint Ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

F – Investment in Direct Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40

G – Capital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

H – Long Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44

I – Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56

J – Interfund Receivables, Payables and Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58

K – Interfund Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59

L – Stewardship, Compliance and Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60

M – Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61

N – Commitments and Contingencies . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63

O – Employee Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64

P – Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72

Q – Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73

R – Other Post Employment Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73

S – Fund Balance Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

79

T – Subsequent Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

79

 

Comprehensive Annual Financial Report ‐ FYE 2018

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES

The City of West Palm Beach (the “City”) was incorporated under the General Law of the State of Florida on November 5, 1894. The first Charter was granted by Chapter 5367, Laws of Florida, in 1903 and became effective September 18 of that year. The City is governed by a mayor and a five‐member board of commissioners (the “City Commission”), all of which are elected City‐wide by vote of City residents. The City operates under a strong mayor form of government. The City provides services as listed in the Statement of Activities.

  1. Financial Reporting Entity

    The basic financial statements of the City have been prepared in accordance with generally accepted accounting principles (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board (“GASB”) is the standard setting body for governmental accounting and financial reporting. The following is a summary of the City’s significant accounting policies. As required by accounting principles generally accepted in the United States of America, the accompanying financial statements present the City and its component units.

  2. Blended Component Units

    The criteria for including component units consist of the identification of legally separate organizations for which the elected officials of the City are financially accountable. This criteria also includes identification of organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Blended component units, although legally separate entities, are in substance, part of the government’s operations and so data from these units are combined with information of the primary government. The City has no discretely presented component units.

    The Community Redevelopment Agency of West Palm Beach (“CRA”) was established on September 10, 1984 by the City under Ordinance No 1805‐84 (Redevelopment Act) pursuant to the “Community Redevelopment Act of 1969” and Chapter 163, Part III of the Florida Statutes. The five member board, comprised of the elected City commissioners, governs the CRA. Although it is legally separate from the City, the CRA is reported as part of the primary government because it shares a common governing body with the city and its sole purpose is to finance and redevelop the City's designated redevelopment areas.

    The CRA has two redevelopment areas, each of which is presented as a major governmental fund. The two funds are the City Center Community Redevelopment Agency Fund ("City Center CRA Fund") and the Northwood/Pleasant City Community Redevelopment Agency Fund ("Northwood/Pleasant City CRA Fund").

    The West Palm Beach Municipal Golf Course (the “Golf Course”) is a legally separate dependent special City created in February 1993 by City of West Palm Beach Ordinance 2609‐93. The Golf Course was formerly governed by the West Palm Beach Golf Commission, whose members were appointed by the City Commission from a slate of candidates supplied by the Golf Commission. On November 3, 2003, the City Commission passed Emergency Ordinance E01‐03 (the “Ordinance”) which suspended the West Palm Beach Golf Commission as of November 24, 2003. The Ordinance established the City Commission as the interim governing body of the Golf Course. Because the Golf Course shares a common governing body with the City and the City’s management has operational responsibility for the Golf Course, it is reported in these financial statements as a blended component unit, specifically a non‐major enterprise fund.

  3. Pension Trust Funds

    The West Palm Beach Restated Employees’ Defined Benefit Retirement System (“Restated Employees’ Retirement System”), the West Palm Beach Firefighters’ Pension Fund (“Firefighters’ Pension”), and the West Palm Beach Police Pension Fund (“Police Pension”) (collectively, the “Pension Trust Funds”) are each separate entities established to account for the financial activity of the separate pension plans. A board of trustees governs each plan.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

    The board of the Restated Employees’ Retirement System is comprised of the Mayor, or designee, City Administrator, or designee, Chief Financial Officer, or designee, a citizen appointed by the Mayor and approved by the Commission, two members elected by the plan participants, and one retiree elected by the retirees. The Firefighters’ Pension and Police Pension boards are each comprised of five members, two are elected by and from the plan membership, two are citizens of the City.

    The City is obligated to fund liabilities of each pension plan based upon actuarial valuations. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

    The Pension Trust Funds and the OPEB Trust Fund are accounted for as pension trust (fiduciary) funds and are not incorporated into the government‐wide statements except as described below. Actuarial data for these funds is disclosed in the notes to the financial statements and in the Required Supplementary Information section. The net pension liability and the annual pension expense for the Pension Trust Funds (excluding the OPEB Trust Fund) are reported in the Government‐ Wide financial statements and in the fund level Enterprise Fund statements, as appropriate. The Pension Trust Funds and the OPEB Trust Fund constitute all funds included in the accompanying statements of fiduciary net position and changes in fiduciary net position under the Pension Trust Funds caption.

  4. Joint Venture

    The City is a participant with the East Central Regional Wastewater Treatment Facilities (ECR) in a joint venture to receive, treat and dispose of sewage generated within each member municipality. The City has an ongoing financial interest in this joint venture, which is discussed in Note E.

  5. Other Related Organizations

    The West Palm Beach Downtown Development Authority ("DDA") is a separate legal entity. DDA members are appointed by the Mayor and ratified by the City Commission and may be removed for cause by a four‐fifths majority. There is no financial benefit or burden to the City and the City has no authority over the day‐to‐day operations. The West Palm Beach Housing Authority ("Housing Authority") is also a separate legal entity. Housing Authority commissioners are appointed by the Mayor and approved by the City Commission. There is no financial benefit or burden to the City and the City has no authority over day‐to‐day operations. As such, neither of these organizations is included in the accompanying financial statements.

  6. Government‐wide and fund financial statements

    The government‐wide financial statements (the statement of net position and the statement of activities) report information on all of the non‐fiduciary activities of the primary government and its component units. As part of the consolidation process, inter‐fund activities are eliminated to avoid distorted financial results. Governmental activities, which are primarily supported by taxes and intergovernmental revenues, are reported separately from business‐type activities, which rely extensively on fees and charges for support.

    The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other than for depreciation, indirect expenses are not allocated to specific functions. Taxes and other items program revenues are reported as general revenues.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

    Separate fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Fiduciary funds and component units that are fiduciary in nature (i.e. the Pension and OPEB Trust Funds) 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.

    Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government‐wide statements’ governmental activities column, a reconciliation is presented on the Internal Service Funds of a government (which traditionally provide services primarily to other funds of the government) in summary form as part of the proprietary fund financial statements.

    Since the principal users of the internal services are the City’s governmental activities, financial statements of internal service funds are consolidated into the governmental activities column when presented at the governmental‐wide level. To the extent possible, the costs of these services are reflected in the appropriate governmental activities.

  7. Measurement focus, basis of accounting, and financial statement presentation

    The government‐wide, proprietary fund and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flow. 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 have been met.

    Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when earned, measurable, and available to finance expenditures of the current period. Revenues are considered to be available for the current period when they are collected within the fiscal year being reported on or soon enough thereafter to pay liabilities of that fiscal year. The City considers revenues, other than those related to state and federal expenditure driven grants, to be available if they are collected within 60 days of the end of the fiscal year being reported on.

    Revenues related to expenditure driven grants are considered to be available when collected within one year of the end of the fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Expenditures related to pension and other postemployment benefits are recognized when the City has made a decision to fund those obligations with current available resources.

    Property taxes when levied for the fiscal year, public service taxes, franchise taxes, intergovernmental revenues for which eligibility requirements have been met, charges for services such as licenses, refuse, and recycling and interest income associated with the current fiscal period are all considered to be measurable and have been recognized as revenues of the period, if available. Special assessments are recorded as revenues only to the extent that individual installments are measurable and available.

    In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended for the specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures incurred. In the other, monies are virtually unrestricted as to purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if susceptible to accrual.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

    The financial transactions of the City are recorded in individual funds. Each fund is accounted for by providing a separate set of self‐balancing accounts comprised of assets, deferred outflows, liabilities, deferred inflows, fund balance or net position, revenues, and expenditures or expenses. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations.

    Accounting principles generally accepted in the United States of America set forth minimum criteria (percentage of the assets plus deferred outflows, liabilities plus deferred inflows, revenues or expenditures/expenses of either fund category and the governmental and enterprise combined), for the determination of major funds. The City electively added funds, as major funds, which either have significant outstanding debt proceeds or a specific community focus. The aggregated non‐major funds are presented in one column in the fund financial statements.

    The City reports the following major governmental funds:

    The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those accounted for in a separate fund.

    The City Center Community Redevelopment Agency Fund accounts for revenue received from tax increment financing. The fund is restricted for carrying out redevelopment activity in the designated downtown redevelopment area.

    The Northwood/Pleasant City CRA Fund accounts for revenue received from tax increment financing. These funds are restricted for carrying out redevelopment activity in the Northwood/Pleasant City designated area. While not required to be a major fund, this Northwood/Pleasant City CRA Fund is deemed a major fund and is reported separately due to its high level of public interest.

    The City reports the following major proprietary funds:

    The Water and Sewer System Fund accounts for the activities related to providing water and sewer services to the public. The Stormwater Utility Fund was established to maintain the City’s canals, basins and storm sewers.

    In addition, the City reports the following other funds:

    Internal Service Funds account for services provided to other departments of the City on a cost reimbursement basis. These services include information technology, fleet management, risk management and insurance (employee life/health insurance, workers’ compensation, general liability insurance, and property insurance), vehicle fleet replacement, and technology replacement.

    Pension and OPEB trust funds account for the activities of the OPEB Trust, General Employees’ Retirement System and the Police and Firefighters' Retirement System, which accumulate resources for pension and benefit payments to qualifying City employees.

    As a general rule, the effect of inter‐fund 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 City’s enterprise funds and the General Fund as well as cost reimbursement transactions between the enterprise funds and various other functions of City government. Elimination of these charges would distort the direct costs and program revenues reported for those sectors.

    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 enterprise funds and the internal service funds are charges to customers for sales and services. The Water and Sewer System Fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

    Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non‐ operating revenues and expenses.

  8. Assets, liabilities, deferred outflows/inflows of resources and net position/fund balance Cash and Cash Equivalents

The City maintains a cash and investment pool available for use by all funds. The City’s cash and investment pool allows individual funds, at any time, to deposit additional cash or make withdrawals without prior notice or penalty. Cash and cash equivalents reported in the government‐wide financial statements include cash on hand, all highly liquid deposits, and investments with maturities of three months or less as of the date of purchase. Interest earned on pooled cash and investments is allocated to funds based on average weekly balances. The City's banking contract requires that a compensating balance be maintained. This balance is adjusted quarterly based on charges for services utilized by the City in the prior quarter and the City's earnings credit rate (an interest factor on collected funds.

Investments

Primary Government:

Investments are stated at fair value. Income from investments held by the individual funds is recorded in the respective fund as it is earned. All other investments owned by the City are accounted for in the City's investment pool. Income earned from this pool is allocated to the respective funds based upon average monthly equity balances.

Pension and Other Pension Employment Obligation Benefit (OPEB) Plans:

The Pension Plans are authorized to invest in obligations of the U.S. Treasuries and US Agencies, high capitalization common and preferred domestic and international equities, fixed income investments, money market and mutual funds. The Police Plan may also invest in mortgage‐related securities or asset‐backed securities not issued by the U.S. government or agency. The General Employees’ Restated Defined Retirement System has adopted an investment policy to allocate fund assets to US Treasuries, US Agencies, corporate bonds, fixed income mutual funds. The investments of the plans are managed by independent investment managers in accordance with the plan provisions as established by each pension board. In all cases, the general investment objective is to obtain a reasonable total return as defined as interest and dividend income plus realized and unrealized capital gains or losses commensurate with the prudent investor rule and Chapters 175 and 185 of the Florida Statute.

 

The City does not have a formal investment policy for the OPEB Plan and follows the policy established by the primary government.

 

Interfund Receivables and Payables

Activity between funds that are representative of lending or borrowing arrangements outstanding at the end of the fiscal year of a short‐term nature and any other outstanding balances between funds are reported as due to and due from other funds. The long‐term portion of any borrowings between funds is reported as advances to and from other funds. Long‐term advances of the governmental funds are recorded by the advancing fund as a receivable and non‐spendable fund balance. Any residual outstanding balances between the governmental activities and business‐type activities at year‐end are reported in the government‐wide financial statements as internal balances.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Receivables

Receivables include amounts due from other governments, and other services provided by the City are recorded when the revenue is earned. All accounts and notes receivable are reported net of any allowances for uncollectible. Allowances for uncollectible receivables are based upon a review of accounts and the knowledge of the creditor's ability to pay. Notes receivables are analyzed for collectability based on terms and conditions of the agreements and are included in the allowance for uncollectible if deemed appropriate.

Inventories

 

Inventories consist of materials and supplies held for consumption, are stated at the lower of cost or market value on a first‐ in, first‐out basis. Perpetual inventory records are maintained and adjusted periodically to physical inventory amounts. The consumption method is used to account for inventories. Under the consumption method, inventories are recorded as expenditures at the time inventory items are used, rather than purchased.

Prepaid Items

Prepaid items represent payments made to vendors for services that will benefit the period beyond September 30, 2018. These services are recorded as expenditures/expenses when consumed.

Restricted Assets

Proceeds of the City’s enterprise fund revenue bonds, as well as other resources set aside in accordance with bond covenants, as well as resources set aside for their repayment, are classified as restricted on the fund level Statement of Net Position of the enterprise funds. Restricted long‐term assets are not required to be presented on the balance sheets of the governmental funds under the modified accrual basis of accounting; however, certain assets of these funds are restricted as to use.

Investment in Joint Ventures

The City accounts for its investments in joint ventures using the equity method in accordance with GAAP and the respective agreements creating the venture.

Capital Assets

Capital assets are stated at historical cost or, if donated, the acquisition value at the date of donation and are reported in the applicable governmental or business‐type activities columns in the government‐wide and proprietary fund financial statements.

The City capitalizes all acquisitions of tangible and intangible property expected to be held for more than one year and which have a minimum cost of $25,000 for buildings and infrastructure or a minimum cost of $10,000 for all other assets. Interest incurred during the construction phase of capital assets of the business‐type activities, net of related interest revenue, is included as part of the capitalized value of the assets constructed.

Expenditures that materially extend the useful life of existing properties are capitalized. The cost of property sold or retired, together with the related accumulated depreciation, is removed from the appropriate accounts, and any resulting gain or loss is included in change in net position.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Depreciation on property, plant and equipment is recorded in the Proprietary Fund statements and in the Government‐Wide Statement of Activities. Depreciation is computed using the straight‐line method over the estimated useful lives of the related assets which are:

Buildings 20 – 40 years

Improvements 15 – 40 years

Infrastructure 30 – 40 years

Equipment 5 – 10 years

Intangibles (primarily software) 5 years

In governmental funds, the acquisition or construction costs of capitalized assets are reported as expenditures and no depreciation is recorded.

Compensated Absences

Employees earn vacation and sick leave in varying amounts based on length of service. Upon termination, employees are paid 100% of accumulated vacation (and similar leave types) at current base hourly rates. Vacation accumulation is capped at a maximum number of hours depending on employee category and bargaining unit. Employees who are categorized as confidential and those who are in the Service Employees International Union and National Conference of Firemen and Oilers bargaining units are compensated for accumulated sick leave, not to exceed 960 hours, upon termination of employment as follows: after 15 or more years of service compensation is at 75% of the employee’s current hourly rate of pay and after 10 years but less than 15 years of service, compensation is at 50% of employee’s current hourly rate of pay. All other City employees are compensated for accumulated sick leave, not to exceed 960 hours, upon termination after at least 10 years of service at a rate of 50% of the employee’s current hourly rate of pay.

The current portion of compensated absences payable is the amount estimated to be used or paid in the following fiscal year. The liability for earned compensated absences is reported at the government‐wide level and in the proprietary fund financial statements. In governmental funds, a liability is only recorded for amounts due as a result of employee resignations or retirement.

Estimated Claims Payable

The City is self‐insured for general liability, automobile liability, police professional liability, workers' compensation, employee relations and certain death benefits and medical plans. The operating funds are charged premiums by the Insurance internal service fund. The accrued liability for estimated claims represents an estimate of the eventual loss on claims arising prior to year‐end, including claims incurred and not yet reported.

Long‐Term Obligations

Long‐term debt and other long‐term obligations are reported as liabilities in the applicable governmental activities, business‐ type activities or proprietary fund financial statement of net position. Bond premiums and discounts are recorded as direct additions to or deductions from the related debt and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable premiums and discounts.

In the governmental fund financial statements, bond premiums and discounts are recognized during the current period. The face amount of debt issued and any premiums received are reported as other financing sources while discounts are reported as other financing uses.

Bond premiums or discounts are amortized over the life of the bonds using the effective interest method. Deferred amounts on refunding are amortized over the shorter of the remaining life of the old debt or the life of the new debt using the effective interest method and reported as deferred outflows of resources. Issuance costs are expensed in the year of issuance, except for prepaid bond insurance costs.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Pensions

For the purposes of measuring the net pension liability, net pension asset, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s General Employees’ Retirement Plan, Police Officers’ Retirement Plan and the Firefighters’ Retirement Plan (the Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Investments in real estate are recorded at market using valuation techniques such as the market approach or the income approach for which sufficient and reliable data is available.

Other Post‐Employment Benefits (OPEB)

For the purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Other Post‐Employment Trust and additions to/deductions from OPEB fiduciary net position have been determined on the same basis as they are reported by the OPEB plan.

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City reports deferred loss on refunding, accumulated decrease in fair value of derivative instruments, change in pension assumptions and difference between projected and actual earnings on pension investments.

The deferred loss on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

The accumulated decrease in fair value of hedging derivative instruments is reported in the government‐wide statement of net position. Changes in pension plan assumptions are deferred and amortized over the average of the expected remaining service lives of employees that are provided with benefits through the pension plan. Difference between projected and actual earnings on pension investments are deferred and amortized over five years.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This represents an acquisition of net position that applies to a future period(s) and will not be recognized as in inflow of resources (revenue) until that period.

The City has two items that qualify for reporting in this category: (1) Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes, assessments, and grant revenues. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. (2) Certain amounts related to pensions must be deferred.

Differences between expected and actual experience and change in pension assumptions are deferred and amortized over the average of the expected remaining service lives of all employees that are provided with benefits through the pension plan.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Fund Balance and Net Position

In the fund financial statements, governmental funds report fund balance classifications based on the level of constraint on the resources. Amounts which 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 which can only be appropriated, modified, or rescinded for specific purposes pursuant to constraints imposed by the City Commission through an ordinance are classified as committed fund balances.

 

The City Commission may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. 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. The general fund is the only fund that reports a positive unassigned balance. In all other funds, unassigned is limited to negative residual fund balance.

 

When both restricted and unrestricted resources are available for use for a given purpose, it is the City’s policy to use restricted resources first, and then unrestricted resources as they are needed. When unrestricted resources are available for use for a given purpose, it is the City’s policy to use committed resources first, then assigned, and then unassigned, as they are needed.

 

An ordinance is the highest level of decision making authority and requires two City Commission “readings” (votes) to effect or rescind. Amounts which are constrained by the City’s intent to be used for specific purposes but are neither restricted nor committed are classified as assigned fund balances. Assigned fund balances include the appropriation of fund balances to eliminate projected deficits in the subsequent fiscal year’s budget.

Non‐spendable fund balances include amounts which cannot be spent because they are either (a) not in spendable form, or

(b) legally or contractually required to be maintained intact.

Encumbrance accounting, under which purchase orders and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Encumbered amounts for specific purposes are reported within the applicable restricted, committed or assigned fund balance classifications.

Unassigned fund balance represents fund balance which has not been assigned to other funds and which has not been restricted, committed, or assigned to specific purposes within the general fund.

Net position of the government‐wide and proprietary funds is categorized as net investment in capital assets; restricted or unrestricted. Net investment in capital assets consists of capital assets reduced by the outstanding debt issued to acquire, construct or improve those assets, less any unspent debt proceeds and deferred gains and losses on refundings. Restricted net position has regulatory or third party limitations on its use.

Minimum Fund Balance

In accordance with Ordinance No. 3761‐04, the City established and maintains an emergency reserve equivalent to 10% of total general fund revenue. The purpose of the Ordinance was to establish policy to maintain an adequate General Fund fund balance to provide a “rainy day” fund for use in unforeseen, unbudgeted emergency situations, such as sustained declines in real estate values and/or property tax collections or increase in spending requirements imposed by the state or federal government; unreimbursable natural disaster expenditures or emergency infrastructure failures.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

The Chief Financial Officer is authorized and shall transfer the calculated amount from unassigned fund balance to the emergency reserve, to the extent available, to satisfy the requirement and shall report such balances as part of the annual audited financial statement.

If upon completion of any fiscal year the ending balance in such emergency reserve is less than the requirement and sufficient monies do not exist in the unassigned fund balance, then the Chief Financial Officer shall recommend an amendment to the current year budget and include in succeeding fiscal year budgets reserved appropriations sufficient to cover the deficiency over a period not to exceed three fiscal years (deficiency requirement).

The emergency reserve shall be used exclusively for emergencies declared by the City Commission, and the appropriation therefrom shall be made by resolution adopted by four‐fifths vote of the commission. Any monies available in the unassigned fund balance shall be used prior to using the emergency reserve to fund authorized emergencies.

The duties, responsibilities, and powers of the City Chief Financial Officer also include the establishment of an unassigned general fund balance equivalent to a minimum of 3% of total general fund revenue. If upon completion of any fiscal year, the ending balance in the unassigned fund balance is less than the minimum requirement, then the Chief Financial Officer shall recommend an amendment to the current year budget and include in succeeding fiscal year budgets reserve appropriations sufficient to cover the deficiency over a period not to exceed five fiscal years (deficiency requirement).

 

Appropriation from the minimum balance shall require City Commission approval and shall generally be for one‐time expenditures such as capital purchases and not for ongoing expenditures unless a viable revenue plan designed to sustain the expenditures is approved.

Estimates

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows, liabilities and deferred inflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Budgets and Budgetary Accounting

The City adopts an operating budget for governmental and proprietary funds except. Annual budgets for all the major and nonmajor governmental funds are prepared on the modified accrual basis of accounting, except for the General Fund. The General Fund budget is prepared on the modified accrual basis of accounting except that current year encumbrances are treated as expenditures for budgetary purposes and administrative charges from other funds are budgeted as revenue in the General Fund. All unencumbered and unexpended appropriations lapse at the fiscal year end, except those for ongoing capital projects and special revenue funds which are brought forward and become part of the subsequent year’s original budget.

The City is not legally required to, and does not adopt budgets for the Pension or OPEB Trust Funds.

The legal level of control is at the major category level; i.e., general government, public safety, public works, economic environment, engineering services, health and sanitation, leisure services, capital outlay, debt service and transfers.

Florida Statutes require that all city governments prepare, adopt and execute an annual budget for such funds as may be required by law or by sound financial practices and generally accepted accounting principles. Accordingly, the City has established budgetary procedures.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Property Tax Calendar

The City levies property taxes each October 1. During the month of November, the Palm Beach County Tax Collector’s Office prepares and delivers a Notice of Property Taxes and Non‐Ad Valorem Assessments to each taxpayer listed on the current year’s assessment roll.

All taxes are due from property owners by March 31. Taxes become delinquent on April 1 and are subject to the issuance of tax sale certificates if unpaid by June 1. Property tax revenue is subject to accrual when levied. At September 30, unpaid delinquent taxes are reflected as a receivable on the balance sheet.

  1. Pronouncements issued and adopted by the City

    GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, is effective for fiscal years beginning after June 15, 2017. This Statement outlines reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other governments. This standard requires the immediate recognition of the entire net OPEB liability and a more comprehensive measurement of OPEB expense. The implementation of this statement resulted in the recognition of a liability. The adoption of this statement resulted in the restatement of the beginning net position of the governmental activities statements (Note Q).

    GASB Statement No. 85, Omnibus 2017, is effective for fiscal years beginning after June 15, 2017. The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]. The adoption of this statement did not significantly impact the City’s financial statements.

     

    GASB Statement No. 86, Certain Debt Extinguishment Issues, is effective for fiscal years beginning after June 15, 2017. The objective of this Statement is to improve consistency in accounting and financial reporting for in‐substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources— resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The adoption of this statement did not significantly impact the City’s financial statements.

     

    GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, is effective for fiscal years beginning after December 15, 2019. The objectives of this Statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a construction period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business‐type activity or enterprise fund. This Statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The adoption of this statement did not significantly impact the City’s financial statements.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE A ‐ SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

  2. Recently Issued Accounting Pronouncements

    GASB Statement No. 83, Certain Asset Retirement Obligations, is effective for fiscal years beginning after June 15, 2018. The objective of this Statement is to set guidance for determining the timing and pattern of recognition for liabilities and corresponding deferred outflow of resources related to asset retirement obligations. Management is currently evaluating the impact of the adoption of this statement on the City’s financial statements.

     

    GASB Statement No. 84, Fiduciary Activities, will be effective for fiscal years beginning after December 15, 2018. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported and establishes criteria for identifying fiduciary activities of all state and local governments. Management is currently evaluating the impact of the adoption of this statement on the City’s financial statements.

     

    GASB Statement No.87, Leases, will be effective for fiscal years beginning after December 15, 2019. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right‐to‐use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. Management expects this statement to have a significant impact on the financial statements.

     

    GASB Statement No. 88, "Certain disclosures related to debt, including direct borrowings and direct placements" This will be effective for the fiscal years beginning after June 15, 2018. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. Management is currently evaluating the impact of the adoption of this statement on the City’s financial statements.

     

    GASB Statement No.90, Majority Equity Interests – An amendment of GASB Statements No. 14 and No. 61, will be effective for fiscal years beginning after December 15, 2018. The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. A majority equity interest that meets the definition of an investment should be measured using the equity method, unless it is held by a special‐purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund. Those governments and funds should measure the majority equity interest at fair value. This Statement also requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition. . Management is currently evaluating the impact of the adoption of this statement on the City’s financial statements.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE B – DEPOSITS AND INVESTMENTS

    The City maintains a cash and investment pool that is used by all funds except the Pension and OPEB Trust Funds. Certain of the City's Governmental and Enterprise funds also hold separate cash and investment accounts. Deposits and investments of the Pension and OPEB Trust Funds are held separately from those of other City funds and follow different investment policies.

    Cash

    The City’s cash deposits are held by banks that qualify as public depositories under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. As such, the City’s cash deposits are fully insured by the Public Deposits Trust Fund. At September 30, 2018, the city was required to maintain a compensating balance of $6,040,108 at the City’s primary banking institution. Maintaining this minimum balance allows the city to avoid bank fees and to earn higher rates of interest on deposits.

     

    Authorized Investments and Credit Risk

     

    The City adheres to an investment policy that conforms to state statutes. The City has no formal policy relating to foreign currency risk. For the year ended September 30, 2018 the City had no investment exposure to foreign currency. The City’s policy regarding derivative products specifically states that City Commission approval is required prior to the use of derivatives. For the year ended September 30, 2018, the City had no investment exposure to derivative products.

     

    The City’s Investment Policy permits the following investments, which are limited to credit quality ratings from Nationally Recognized Statistical Ratings Organizations (“NRSRO”) as follows:

     

    • U.S. Treasury obligations which are guaranteed by the full faith and credit of the United States with maturities not to exceed ten years from the date of purchase.

    • Money Market Mutual Fund shares in open‐end, no‐load funds that are registered under the Federal Investment Company Act of 1940 and operated in accordance with 17 C.F.R. § 270.2a‐7. The prospectus of such funds must indicate that the share value shall not fluctuate.

    • Intergovernmental Investment Pools that are authorized pursuant to the Florida Inter‐local Cooperation Act, as provided in Section 163.01, Florida Statutes and provided that said funds contain no derivatives.

    • Corporate obligations or notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a minimum long term debt rating, at the time of purchase, of A or better by any Nationally Recognized Statistical Ratings Organization (“NRSRO”). Maximum term for corporate notes and obligations shall be seven years.

    • In addition, under the Investment Policy, the Short Term and Long Term Portfolios may invest in the following investments: U.S. Government Agencies, State and Local Government Debt, Commercial Paper rated “Prime‐1” by Moody’s and “A‐1” by Standard & Poor’s or equivalent by another NRSRO, Banker’s Acceptances rated Prime‐1 by Moody’s and A‐1 by Standard and Poor’s, Registered Investment Companies (Mutual Funds) rated AAA or better by Standard & Poor’s.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE B – DEPOSITS AND INVESTMENTS – CONTINUED

The City’s investment portfolio is designed to reduce the concentration of credit risk within the City’s investment portfolio. A maximum of 20% of available funds may be invested in the Florida PRIME Fund, 100% of available funds may be invested in United States Treasury Securities, 50% of available funds may be invested in United States Government Agencies with a 25% limit on individual issuers, 80% of available funds may be invested in Federal Instrumentalities with a 50% limit on individual issuers, 25% of available funds may be invested in non‐negotiable interest bearing time certificates of deposit with a 15% limit on individual issuers, 50% of available funds may be invested in repurchase agreements excluding one (1) business day agreements and overnight sweep agreements with a 25% limit on any one institution, 25% of available funds may be directly invested in prime commercial paper with a 5% limit on individual issuers, 25% of available funds may be directly invested in Bankers’ acceptances with a 5% limit on individual issuers, 20% of available funds may be invested in taxable and tax‐exempt debts with a limit of 20% on individual issuers, 40% of available funds may be invested in mutual funds with a limit of 20% invested in mutual funds with a limit of 20% with any one non‐SEC Rule 2a‐7 investment mutual fund, 25% of available funds may be invested in intergovernmental investment pools, 25% of available funds may be invested in corporate obligations or corporate notes of US corporations with a limit of 5% with any one corporate note, and 30% of available funds may be invested in mortgage‐backed securities with a limit of 20% invested with any one MBS.

The City has investments in two investment pools, Florida Prime (previously known as the Local Government Surplus Funds Trust Fund ‐ Pool A), and the Florida Local Government Investment Trust (Trust Fund). Florida Prime is managed by the State Board of Administration. The Florida Local Government Investment Trust is a member‐owned, member‐governed investment fund. Under the guidelines of GASB Codification Section I50, Florida Prime is a “2a‐7 like” pool. Accordingly, investments in Florida Prime are reported at amortized cost. The Trust Fund is accounted for as net asset value (NAV) pools. As such, its investments have been valued based on their respective fair value factor as of the financial statement date.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE B – DEPOSITS AND INVESTMENTS – CONTINUED

As of September 30, 2018, the primary government and the OPEB Trust Fund had the following cash and investment types and effective duration presented in terms of years:

 

Credit and Interest Rate Risk

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As as of September 30, 2018 (in thousands)

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% of Duration Total Cash

Investment Vehicle Rating Portfolio Years Portfolio Equivalents Investments

Cash Deposits

NR

10%

0.00

$ 45,123 $

45,123

$ -

Money Market Funds

AAAm

5%

0.26

23,924

23,924

-

Florida Prime

AAAm

14%

0.20

61,969

61,969

-

Florida Coop. Liquid Assets Securities System

AAAm

2%

0.21

9,010

9,010

-

Certificates of Deposits

NR

7%

0.49

29,840

-

29,840

U.S. Treasuries

NR

17%

2.39

75,513

-

75,513

Federal Instrumentalities

NR

32%

1.29

142,506

-

142,506

Municipal Bonds

AA+

4%

1.37

16,456

-

16,456

Corporate Notes

AA‐

3%

1.07

13,556

-

13,556

Commercial Paper

AA‐

3%

0.30

13,053

-

13,053

Exchange Trade Funds (ETF)

NR

3%

0.00

12,350

-

12,350

 

 

100%

 

$ 443,300 $

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140,026

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$ 303,274

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Reconciliation to Statement of net Position:

 

 

 

 

 

 

Portfolio Value

 

 

 

$ 443,300

 

 

Petty Cash

 

 

 

33

 

 

Less:OPEB Cash & Investments

 

 

 

(16,091)

 

 

 

Total cash and investments on Statement of Net Position

$ 427,242

Amounts from Statement Net Position:

 

Unrestricted cash and cash equivalents

$ 70,738

Unrestricted investments

146,417

Restricted cash and cash equivalents

84,903

Restricted investments

125,184

Total cash and investment on Statement of Net Position

$ 427,242

 

The Custodial Credit Risk

Investments: Custodial credit risk is defined as the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investment or collateral security that are in the possession of an outside party. The City’s investment portfolio is held in safekeeping by the custodians in the name of the City of West Palm Beach, thereby eliminating exposure to custodial credit risk.

Interest Rate Risk: The City’s Investment Policy sets limits for investment maturities to match known cash needs and cash flow requirements. Investments of current operating funds shall have maturities of no longer than twenty‐four (24) months. Investments of bond reserves, construction funds, and other non‐operating funds, “core funds”, shall have a term appropriate to the need for funds and in accordance with debt covenants, not to exceed a maturity of five (7) years with an average duration of the portfolio as a whole not to exceed three (3) years. As of September 30, 2018, the City has no investments that have embedded options, allowing the issuer to call the obligation or demand a stated increase in the interest rate.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE B – DEPOSITS AND INVESTMENTS – CONTINUED

Effective Duration: Short Term Portfolio: As a means of limiting its exposure to fair value losses arising from rising interest rates, the Investment Policy requires that 100% of the short term portfolio be invested in maturities of less than one year.

Long Term Portfolio: As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s Investment Policy requires that the duration of the long term portfolio not exceed three years.

Concentration of Credit Risk

The Investment Policy permits up to 50% of the portfolio to be invested in any single Federal Instrumentality. As of September 30, 2018 investments in the following Federal Instrumentalities exceed 5% of the portfolio:

 

 

Investment Vehicle

% of

Portfolio

Amount

(in thousands)

Federal Home Loan Banks

17%

$ 75,831

United States Treasury Notes

17%

75,513

Federal Farm Credit Banks Funding Corporation

5%

20,358

Total

39%

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$ 171,702

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As of September 30, 2018, the City had the following issuer concentrations in the investment portfolio based on fair value:

 

 

Issuer

% of

Portfolio

Amount

(in thousands)

Federal Home Loan Banks

17%

$ 75,831

United States Treasury Notes

17%

75,513

Florida Prime

14%

61,969

Federal Farm Credit Banks Funding Corp

5%

20,358

Federal National Mortgage Association

5%

20,101

Other

43%

189,528

Total

100%

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$ 443,300

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As of September 30, 2018, the City categorized its investment portfolio using the fair value measurements in accordance with GASB Statement No. 72. GASB 72 which uses a hierarchy based on the valuation inputs used to measure the fair value of the asset. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are based on other significant observable inputs such as indices for fixed income bonds and quoted prices for similar assets in markets that are active and not active; Level 3 inputs are significant unobservable inputs.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE B – DEPOSITS AND INVESTMENTS – CONTINUED

As of September 30, 2018, the City had the following investment types portfolio based on fair value:

 

Fair Value (in thousands) Prices in

 

Investment

Active

Markets For Identical Assets

Significant

Other Observable Inputs

 

Significant Unobservable Inputs

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Level 1 Level 2 Level 3 Total

Municipal Obligation

$ - $ 16,456

$ - $ 16,456

Agency Bonds

- 142,506

- 142,506

US Treasuries

- 75,513

- 75,513

Corporate Notes

- 13,556

- 13,556

Commercial Paper

- 13,053

- 13,053

Exchange Traded Funds

- 12,350

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- 12,350

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Total Investments by Fair Value Level

$ - $ 273,434

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$ - 273,434

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Money Market Funds

 

23,924

Florida Prime

 

61,969

 

Florida Coop. Liquid Assets Securities System

9,010

Certificates of Deposits

29,840

Cash Deposits

45,123

 

$ 443,300

As of September 30, 2018, the pension funds had the following cash and investment types:

 

 

As as of September 30, 2018 (in thousands)

 

 

Investment Type

Total

Portfolio

Cash

Equivalents

 

Investments

Cash deposits

$ 4,768

$ 4,768

$ ‐

U.S. Government obligations

56,850

-

56,850

U.S. Government agency obligations

16,034

-

16,034

Corporate bonds

28,742

-

28,742

Mutual funds

12,959

-

12,959

Money market funds

623

-

623

Domestic fixed investment fund

21,442

-

21,442

Domestic stocks

162,136

-

162,136

Domestic equity investment funds

171,033

-

171,033

International fixed income investment funds

66,025

-

66,025

International equity investment funds

26,855

-

26,855

Real estate investment funds

81,808

-

81,808

Temporary investments

7,114

-

7,114

 

$ 656,389

$ 4,768

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$ 651,621

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE B – DEPOSITS AND INVESTMENTS – CONTINUED

The pension plans held the following fixed investments at September 30, 2018:

Firefighters Pension Fund

 

Police Pension Fund

Average Average

Fair

Value

Effective

Duration

Overall

Credit

Fair

Value

Effective

Duration

Overall

Credit

Investment Type

(in thousands)

(Years)

Rating

(in thousands)

(Years) Rating

U.S. Agencies $

10,264

7.8

A‐AA

$ 42,318

8.3 AA

U.S. Treasuries

1,328

6.7

A‐AA

13,577

5.9 AA

Corporate bonds

8,342

5.9

A‐AA

16,883

6.3 A‐AAA

Dodge and Cox Income Fund

10,560

N/A

N/A

-

N/A N/A

Blackrock Multi‐Asset Income Fund

8,968

N/A

N/A

-

N/A N/A

Templeton Global Bond Fund

10,422

N/A

N/A

-

N/A N/A

 

Temporary Investments

-

 

 

3,385

 

N/A

 

N/A

Total

49,884

 

76,163

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Restated Employees Defined Benefit System

Average

Fair

Value

Effective

Duration

Overall

Credit

Investment Type (in thousands) (Years) Rating

U.S. Agencies

$ 1,129

$ 8.9

AA+ or unrated

U.S. Treasuries

4,268

11.4

AAA or unrated

Corporate bonds

3,517

5.7

AA+‐BBB+

Fixed income mutual funds

3,748

8.0

AAA ‐CCC

Total

$ 12,662

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE B – DEPOSITS AND INVESTMENTS – CONTINUED

The following table presents the pension funds fair value hierarchy for investments at fair value as of September 30, 2018:

 

 

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Fair Value (in thousands)

 

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Investment

Prices in Active Markets For Identical Assets

Significant Other Observable Inputs

 

Significant Unobservable Inputs

 

Amounts (in thousands)

Level 1 Level 2 Level 3 Total

U.S. Government obligations

$ 14,532

$ 42,318

$

- $ 56,850

U.S. Government agency obligations

-

16,034

 

- 16,034

Corporate bonds

-

28,742

 

- 28,742

Mutual funds

12,959

-

 

- 12,959

Domestic fixed investment fund

21,442

-

 

- 21,442

Domestic stocks

162,136

-

 

- 162,136

Domestic equity investment funds

171,033

-

 

- 171,033

International fixed income investment funds

66,025

-

 

- 66,025

International equity investment funds

26,855

-

 

- 26,855

Temporary Investments

7,114

-

-

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7,114

$ 482,096

$ 87,094

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$ - $ 569,190

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Cash Deposits

 

4,768

Investments measured at the net asset value (NAV)**

 

 

Real Estate investment funds

 

81,808

Money market mutual funds

 

623

$ 656,389

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**As required by GAAP, certain investments that are measured at net asset value (NAV) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total investment line items in the statement of fiduciary net position.

The real estate investment for the Firefighters and Police Pension Plans funds are open end, commingled private real estate portfolios. These REIT‐ based funds are structured as Limited partnerships. Their primary focus is to invest in well‐based income producing properties within major U.S. markets. The fair values of the investments in these funds have been determined using the NAV per unit of the Trusts ownership interest in partners’ capital. The investments of the fund are valued quarterly. Withdrawal requests must be made 60 days in advance and may be paid in one or more installments.

Real estate fund for the Restated General Employees Pension Plan is an open‐end diversified core real estate commingled fund that invests primarily in core institutional office, retail, industrial, and multi‐family properties located throughout the United States. The investm edemptions must be received by the fund 10 days prior to quarter end.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE C – RECEIVABLES AND UNEARNED REVENUE

 

Receivables

 

Receivables as of year‐end for the City’s governmental activities and the aggregate and applicable allowances for uncollectible accounts are as follows:

Northwood/ City Center Pleasant City

Community Community Nonmajor Internal General Redevelopment Redevelopment Governmental Service

Fund Agency Fund Agency Fund Funds Funds Total

Receivables:

Accounts (gross) $ 22,951,736 $ 164,439 $ 3,850 $ 1,797,942 $ 483,195 $ 25,401,162

Allowance for

uncollectibles (11,177,470) ‐ ‐ ‐ ‐ (11,177,470) Accounts (net) 11,774,266 164,439 3,850 1,797,942 483,195 14,223,692

 

Interest

154,366

80,150

16,563

176,247

81,381

508,707

Notes (gross)

547,418

246,822

-

15,941,691

-

16,735,931

Allowance for

uncollectibles

 

 

 

 

(14,300,062)

 

 

(14,300,062)

Notes (net)

547,418

246,822

1,641,629

2,435,869

Liens (gross)

 

 

 

 

 

 

Allowance for

264,018

501,850

765,868

uncollectibles

 

image

(375,601)

(375,601)

Liens (net)

264,018

126,249

390,267

Total receivables

$ 12,740,068 $

 

image

491,411 $

image

20,413 $

image

3,742,067 $

image

564,576 $

17,558,535

image

 

image

Significant Uncollectibles

The allowance for accounts receivable in the General Fund includes $8.1 million for Emergency Medical Services (“EMS”) receivables. This type of receivable typically experiences a low level of collectability beyond one year since service cannot be denied based on nonpayment. The General Fund allowance also includes $1.25 million for delinquent property taxes (this represents 50% of the delinquent taxes receivable). In addition, an allowance of $1.2 million is included for other miscellaneous billed receivables. The notes receivable of $15.9 million in the Non‐major Governmental Funds is composed of mortgages containing covenants exempting mortgages from repayment if certain conditions are met. In issuing these notes receivable, the primary emphasis is on community development and repayment is a secondary consideration. Notes receivable deemed uncollectible is estimated at approximately $14.3 million.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE C – RECEIVABLES AND UNEARNED REVENUE

 

Receivables at year end for the City’s business‐type activities are as follows:

 

Receivables:

Water and Sewer Systems Fund

image

Stormwater System Fund

image

Nonmajor Enterprise

Funds Total

image image

 

Accounts (gross)

$ 15,218,742

$ 3,492,914

$ 101,097

$ 18,812,753

Allowance for uncollectibles

(2,552,219)

(1,874,323)

(4,426,542)

Accounts (net)

12,666,523

1,618,591

101,097

14,386,211

Interest ‐ Unrestricted

243,570

57,357

26,415

327,342

Liens

1,270,257

369,676

1,639,933

Subtotal, Receivables ‐ Unrestricted

1,513,827

427,033

26,415

1,967,275

Interest ‐ Restricted

300,509

73,063

373,572

 

Total Receivables

$ 14,480,859

 

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$

 

2,118,687

 

$

 

127,512

 

$

 

16,727,058

 

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image

image

Unearned/unavailable revenue

Unearned revenue from resources that have been received but not yet earned is reported on both the government‐wide Statement of Net Position and on the fund financial statements. The governmental fund financial statements also report unavailable revenue from receivables for revenues that are not considered to be available to liquidate liabilities of the current period.

The components of unearned/unavailable revenues as of September 30, 2018 are as follows:

 

Northwood/ City Center Pleasant City

Community Community Non‐major General Redevelopment Redevelopment Governmental

 

Revenues earned but not available:

Fund

Agency Fund

 

Agency Fund

Funds

Total

Liens and mortgages receivable

$ 559,282 $

41,532

$

$ 802,699 $

1,403,513

EMS receivables

1,502,244

 

1,502,244

Other receivables

3,271,457

211,637

 

3,850

3,486,944

Total Unavailable

5,332,983

253,169

 

3,850

802,699

6,392,701

 

Unearned revenues:

 

 

 

 

 

 

Prepaid Occupational Licenses

2,588,415

2,588,415

Prepaid Lease Payments

47,464

47,464

Total Unearned

2,588,415

47,464

2,635,879

Total Unearned/Unavailable

Revenue

 

$ 7,921,398 $

 

image

 

253,169 $

image

 

3,850 $

image

 

850,163 $

image

 

9,028,580

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE D – RESTRICTED CASH AND INVESTMENTS

 

Certain cash and investments are restricted by external third parties for the following purposes:

 

GOVERNMENTAL ACTIVITIES

image

 

Non‐Major Internal

Governmental Service

Purpose Funds Funds Totals

 

Revenue bond construction accounts

$ 25,981,411 $

− $

25,981,411

Self insurance claims

795,030

795,030

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image

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Equipment purchases ‐ 3,412,678 3,412,678 Total restricted assets $ 25,981,411 $ 4,207,708 $ 30,189,119

 

 

BUSINESS‐TYPE ACTIVITIES

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Water

and Sewer Stormwater Non‐Major System System Enterprise

Purpose Fund Fund Funds Totals

 

Deposits payable

Operations and maintenance restricted

$ 9,833,576

$

$ 24,453

$ 9,858,029

by revenue bond covenant

11,265,915

 

1,211,919

12,477,834

Revenue bond construction accounts

38,823,366

 

26,941,259

65,764,625

Revenue bond debt service accounts

18,734,248

 

4,614,448

23,348,696

Revenue bond renewal and replacement

 

 

 

 

 

accounts

51,468,849

 

4,727,541

56,196,390

Town of Palm Beach renewal and

 

 

 

 

 

replacement accounts

3,808,509

3,808,509

Developer's hazard mitigation accounts

1,030,789

1,030,789

Impact fee capital contributions account

 

7,412,836

 

 

 

7,412,836

Total restricted assets

$ 142,378,088 $

 

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37,495,167 $

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24,453 $

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179,897,708

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE E – INVESTMENT IN JOINT VENTURES

East Central Regional Wastewater Treatment Facilities (“ECR”): In September 1992, the City entered into a joint interlocal agreement (“Agreement”) with Palm Beach County (the “County”) and three municipalities (City of Riviera Beach, City of Lake Worth, and Town of Palm Beach – the “Entities”) whereby prior separate agreements were consolidated into a single unified agreement to establish rules and procedures for the operation and management of the existing ECR in which each participating Entity has an equity interest. ECR was created to receive, treat, and dispose of sewage generated within each entity and the County. The term of the Agreement is for an initial period of thirty years with an option to renew for an additional thirty years upon the mutual consent of the Entities.

In the event ECR is sold or disposed of, proceeds of the sale or disposition shall be prorated among the Entities, based on their reserve capacity as of the date of disposition.

The Agreement also provides for the establishment of a Board (the “Board”) comprised of one representative from each Entity participating in the Agreement to administer ECR. Under the Agreement, the Board has the power to enter into contracts, employ personnel and enter into debt in accordance with Section 163.01(7) of the Florida statutes. In accordance with the Agreement, the City operates and manages ECR on behalf of the Board. All costs of operating ECR, excluding non‐cash expenditures, are shared by each of the Entities based on actual flows of wastewater. Costs associated with capital projects, renewal and replacement and debt service are shared among the participating governments based on their pro‐rata share of reserve capacity except as noted below.

The City recorded its initial investment at cost and records its ongoing financial interest as a proportion of ECR’s net position as reported in the ECR’s most recent audited financial statements. The proportion is the City’s reserve capacity share.

The City does not believe that the joint venture is accumulating significant financial resources or experiencing financial stress that may cause a future benefit or burden to the City. The most recent unaudited financial statements, for the fiscal year ended September 30, 2018, reported total ECR assets of $272,939,038 and total net position of $132,760,996 including a $90,844,137 net investment in capital assets and $5,152,650 of unrestricted net position. Complete financial statements for the ECR may be obtained at the City of West Palm Beach Finance Department, 401 Clematis Street, West Palm Beach, Florida 33401.

The ECR Entities’ ownership interests at September 30, 2018 were:

 

 

Participant Percentages:

Reserve

Capacity

City of West Palm Beach

29.29%

Palm Beach County

34.29%

City of Lake Worth

16.43%

City of Riviera Beach

11.43%

Town of Palm Beach

8.57%

Total

100.00%

 

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During fiscal year 2000, the City entered into an agreement with ECR concerning the construction, operation and maintenance of a reclaimed water production facility. This equipment and structures are known as the Advanced Water Treatment (“AWT”) facility. This facility was completed at the end of fiscal year 2006 and treated ECR effluent in order to provide reusable water for the benefit of the City. Since it is constructed on ECR land, the facility is considered ECR property with 100% of its capacity and beneficial interest allocated to the City. During the fiscal year ended September 30, 2018, the ECR management determined that certain assets related to the AWT and belt filter dewatering facility were impaired due to discontinued use. Consequently an impairment charge of $5.38 million was recorded in the ECR’s financial statements during fiscal year 2018.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE E – INVESTMENT IN JOINT VENTURES – CONTINUED

At September 30, 2018, the city’s investments in ECR and AWT were reported at a combined net book value of $38,879,987 in the water and sewer systems proprietary fund.

 

Municipal Public Safety Communications Consortium of Palm Beach County (MPSCC) ‐ In December 1999, the City entered into an interlocal agreement with other cities and towns in Palm Beach County to purchase and operate a county‐wide public safety communications system. The interlocal agreement established the MPSCC whose purpose is to provide its members with expanded radio communications services (via the 800MHz trunked radio system) to aid in public safety over a larger geographical region. The MPSCC is a cost sharing organization. Its annual budget is prepared by the Executive Director and approved by the Board of Directors. The member municipalities of the MPSCC are obligated for the debt incurred by the consortium and each municipality is responsible for their respective portion of costs incurred by the MPSCC. The City’s 2006 initial investment in this joint venture was $3,577,000 which represents 73% of the total consortium investment.

 

During fiscal year 2018, member costs for the City were $136,500 and the year‐end value of the City's investment was $1,450,718. The City’s investment and related member costs are recorded in the MIS Processing Fund which is an Internal Service Fund.

 

NOTE F – INVESTMENT IN DIRECT FINANCING LEASES

 

The City entered into several lease purchase agreements with various third party lenders for the acquisition of vehicles within the Fire, Police and Sanitation departments. In accordance with the agreements, the respective lenders advanced the City the funds totaling $12,814,173 to acquire the vehicles. As of September 30, 2018, unspent proceeds from the totaled $4,453,895 and is reported in the Balance sheet – Governmental Funds and the Statement of Net Position Proprietary Funds.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE G – CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2018 was as follows:

 

Beginning Ending

Governmental Activities: Balance Additions Retirements Transfers Balance

image image image image image

Capital assets not being depreciated:

Land

$ 84,199,026

$ 6,754,613

$ (8,828,069) $

277,768 $

82,403,338

Construction in progress

25,983,529

18,558,685

(5,263,273)

(15,670,614)

23,608,327

Total capital assets not

 

 

 

 

 

being depreciated

110,182,555

25,313,298

(14,091,342)

(15,392,846)

106,011,665

 

Capital assets being depreciated:

Buildings

196,265,653

205,887

24,596

196,496,136

Improvements other than buildings

180,770,898

1,083,124

32,151,725

214,005,747

Infrastructure

138,871,107

(24,647,910)

114,223,197

Equipment

47,744,385

13,417,830

(2,581,031)

7,638,498

64,904,077

Intangible Assets

2,668,677

2,668,677

Total capital assets being

 

 

 

 

 

depreciated

566,320,720

14,706,841

(2,581,031)

15,166,909

592,297,834

Total capital assets

676,503,275

40,020,139

(16,672,373)

(225,937)

698,309,499

 

Less accumulated depreciation

 

 

 

 

 

and amortization:

 

 

 

 

 

Buildings

57,762,163

4,907,177

4,935

62,674,275

Improvements other than buildings

107,818,548

11,344,371

14,361,483

133,524,402

Infrastructure

127,551,348

560,091

(14,361,488)

113,749,951

Equipment

34,619,110

4,827,258

(2,440,339)

(230,867)

35,459,557

Intangible Assets

2,021,974

88,772

2,110,746

Total accumulated depreciation

 

 

 

 

 

and amortization

329,773,143

21,727,669

(2,440,339)

(225,937)

347,518,931

Total capital assets being

 

 

 

 

 

depreciated, net

236,547,577

(7,020,828)

(140,692)

15,392,846

244,778,903

Governmental Activities

 

 

 

 

 

Capital Assets, Net $ 346,730,132 $ 18,292,470 $ (14,232,034) $ ‐ $ 350,790,568

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE G – CAPITAL ASSETS – CONTINUED

Beginning Ending

 

Business‐Type Activities:

Balance Additions Retirements Transfers Balance

Capital assets not being depreciated: Land:

Water and Sewer Systems Fund $

6,268,750 $

− $

− $

− $

6,268,750

Nonmajor Funds

4,130,556

4,130,556

Total Land

10,399,306

10,399,306

Construction in Progress:

 

 

 

 

 

Water and Sewer Systems Fund

62,032,831

24,570,039

(35,707,124)

50,895,746

Stormwater System Fund

5,650,540

1,891,928

(1,150,232)

6,392,236

Nonmajor Funds

90,918

1,334

4,764

97,016

Total Construction in Progress

67,774,289

26,463,301

(36,852,592)

57,384,998

Total capital assets not being

 

 

 

 

 

depreciated, net

78,173,595

26,463,301

(36,852,592)

67,784,304

Capital assets being depreciated:

 

 

 

 

 

Buildings:

 

 

 

 

 

 

 

 

 

Water and Sewer System Fund

89,612,312

 

 

 

 

89,612,312

Nonmajor Funds

9,565,093

 

 

 

 

9,565,093

Total Buildings

99,177,405

 

 

 

 

99,177,405

Infrastructure:

 

 

 

 

 

 

 

 

 

Water and Sewer System Fund

419,443,294

 

536,775

 

(26,985)

 

35,442,230

 

455,395,314

Stormwater System Fund

77,544,252

 

423,309

 

 

1,159,722

 

79,127,283

Nonmajor Funds

7,344,974

 

 

 

 

7,344,974

Total Infrastructure

504,332,520

 

960,084

 

(26,985)

 

36,601,952

 

541,867,571

Equipment:

 

 

 

 

 

 

 

 

 

Water and Sewer System Fund

13,920,108

 

1,821,612

 

(378,318)

 

(702,950)

 

14,660,454

Stormwater System Fund

4,061,197

 

93,580

 

 

(302,921)

 

3,851,858

Nonmajor Funds

2,957,394

 

320,812

 

 

(19,051)

 

3,259,155

Total Equipment

20,938,699

 

2,236,004

 

(378,318)

 

(1,024,922)

 

21,771,467

Total capital assets

 

 

 

 

 

 

 

 

 

being depreciated

624,448,624

 

3,196,088

 

(405,303)

 

35,577,030

 

662,816,443

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE G – CAPITAL ASSETS – CONTINUED

 

 

Business‐Type Activities: Continued:

Less accumulated depreciation and amortization:

Buildings:

Beginning Ending

Balance Additions Retirements Transfers Balance

 

Water and Sewer System Fund

63,554,156

 

1,670,964

 

 

 

65,225,120

Nonmajor Funds

8,850,603

 

221,545

 

 

 

9,072,148

Total Buildings

72,404,759

 

1,892,509

 

 

 

74,297,268

Infrastructure:

 

 

 

 

 

 

 

 

 

Water and Sewer System Fund

118,572,968

 

10,163,211

 

(4,892)

 

(288,839)

 

128,442,448

Stormwater System Fund

18,193,509

 

1,900,680

 

 

 

20,094,189

Nonmajor Funds

4,341,222

 

431,515

 

 

 

4,772,737

Total Infrastructure

141,107,699

 

12,495,406

 

(4,892)

 

(288,839)

 

153,309,374

Equipment:

 

 

 

 

 

 

 

 

 

Water and Sewer System Fund

11,471,159

 

1,128,850

 

(378,318)

 

(679,001)

 

11,542,690

Stormwater System Fund

2,709,149

 

417,362

 

 

(293,430)

 

2,833,081

Nonmajor Funds

1,832,931

 

479,952

 

 

(14,292)

 

2,298,591

Total Equipment

16,013,239

 

2,026,164

 

(378,318)

 

(986,723)

 

16,674,362

Total accumulated depreciation

 

 

 

 

 

 

 

 

 

and amortization

229,525,697

 

16,414,079

 

(383,210)

 

(1,275,562)

 

244,281,004

Total capital assets being

 

 

 

 

 

 

 

 

 

depreciated, net 394,922,927 (13,217,991) (22,093) 36,852,592 418,535,439

Business‐type activities

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capital assets, net $ 473,096,522 $ 13,245,310 $ (22,093) $ $ 486,319,743

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE G – CAPITAL ASSETS – CONTINUED

 

Depreciation and Amortization additions (expense) by program:

 

Governmental activities:

 

General government

$ 5,034,514

Public Safety

12,889,336

Economic Development

1,512,594

Public works

846,646

Health and sanitation

603,967

Leisure Services

279,100

Sub Total

21,166,157

Depreciation of the capital assets held by the government's Internal Service Funds are charged to various functions based on their usage of assets:

General government

561,512

Total depreciation expense ‐ governmental activities

$ 21,727,669

Business‐type activities:

 

Water and Sewage Disposal System

$ 12,962,910

Stormwater System Fund

2,318,043

Nonmajor Funds

1,133,011

Total depreciation expense ‐ business‐type activities

$ 16,413,964

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE H – LONG‐TERM DEBT

 

The following is a summary of changes in long‐term debt and liabilities for governmental activities:

 

Total Total

Beginning Ending Current Noncurrent

Balances Additions Reductions Balances Liabilities Liabilities

 

Governmental Activities:

Bonds:

General obligation

 

bonds

$

4,385,000

$

$

1,400,000

$

2,985,000

$

1,460,000

$

1,525,000

General obligation

 

 

 

 

 

 

 

 

 

 

 

 

premiums

15,097

7,442

7,655

7,655

Revenue bonds

211,371,552

6,032,516

205,339,036

6,253,496

199,085,540

Revenue premiums

15,479,318

1,337,597

14,141,721

14,141,721

Total bonds

231,250,967

8,777,555

222,473,412

7,713,496

214,759,916

Notes

21,111,355

1,959,363

19,151,992

3,670,952

15,481,040

Arbitrage rebate liability

26,050

2,508

23,542

23,542

Capital leases

17,377,829

5,927,953

3,313,860

19,991,922

4,505,047

15,486,875

Compensated absences

16,301,329

1,848,014

851,568

17,297,775

652,171

16,645,604

Self insurance claims

12,857,113

27,861,991

28,048,499

12,670,605

4,128,239

8,542,366

Net pension liability

87,078,606

13,402,571

73,676,035

73,676,035

Net OPEB (asset) liability,

as restated **

 

(387,289)

 

460,106

 

 

72,817

 

 

72,817

Total Governmental

 

 

 

 

 

 

Activities

$ 385,615,960 $ 36,098,064 $ 56,355,924 $

image image image

365,358,100 $ 20,669,905 $

image image

344,688,195

image

 

** Beginning balance was restated in accordance with GASB Statement No. 75 (Note Q)

 

For the governmental activities, compensated absences pension liabilities and other post‐employment benefits are generally liquidated by the General Fund. Historically, about 89% has been charged to governmental funds and about 11% to enterprise funds.

Internal service funds predominantly serve the governmental funds. Accordingly, their long‐term liabilities totaling $22.2 million are included as part of the above totals for governmental activities.

Bonds outstanding at September 30, 2018 payable from governmental activities are comprised of general obligation, special obligation and tax increment revenue bonds. These bonds mature in varying amounts during succeeding fiscal years through 2036. Interest rates on these long‐term obligation ranges from 4.00% to 5.00% on general obligation bonds, 1.10% to 5.00% on special obligation bonds and 2.25% to 5.68% on tax increment revenue bonds.

General Obligation Bonds:

The $14,975,000 General Obligation Refunding Bonds, Series 2005, were issued on July 7, 2005 to advance refund a portion of the 2000 Series General Obligation Bonds. Interest rates on remaining annual principal amounts payable vary between 4.00 and 5.00%. The bonds mature March 1, 2020 and are pledged by the full faith, credit and taxing power of the City. The principal balance at September 30, 2018 is $2,985,000.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

Tax Increment Revenue Bonds:

 

On June 3, 2005 and December 14, 2005, the City issued $17,530,000 and $7,280,000 of Northwood/Pleasant City Community Redevelopment Area (NPCCRA) Subordinate Tax Increment Revenue Bonds, Series 2005A and 2005B, respectively. The proceeds were used to fund the NPCCRA redevelopment project. The Series 2005A was refunded by the Tax Increment Revenue Bond, Series 2015. The interest rate on remaining annual principal amounts payable is fixed at 5.68% and matures on March 1, 2021. The Series 2010 Bond is secured by an irrevocable subordinate lien on Pledged Funds derived by the CRA from (i) CCCRA Tax Increment Revenues and (ii) all moneys securities and instruments held in the accounts and subaccounts created under the Bond Resolution, except the CCCRA Rebate Account. At September 30, 2018 the principal balance was $2,185,000.

The $77,175,000 City Center Community Redevelopment Area (CCCRA) Tax Increment Revenue Bonds, Series 2006A, were issued on November 30, 2006. Interest rates on remaining annual principal amounts payable vary from 4.00% to 5.00%. Proceeds of the bond are used to finance the costs of the CCCRA Redevelopment Project and mature on March 1, 2036. The Bonds will be payable solely from and are secured by Pledged Funds derived by the CRA from: (i) CCRA Tax Increment Revenues; and (ii) all moneys, securities and instruments held in the accounts and subaccounts created under the Bond Resolution, except the CCCRA Rebate Account. On August 11, 2015, $46,925,000 of the outstanding principal was refunded through the issuance of 2015 CCRA Refunding Bond. The outstanding balance of Series 2006A CCRA Tax Increment Revenue Bonds after this refunding was

$26,365,000 and the maturity date was unchanged and principal payments resume on March 1, 2032. At September 30, 2018 the principal balance was $24,270,000.

The $9,829,000 CCCRA Revenue Refunding Bonds, Series 2010A, were issued on May 12, 2010, partially refunding the outstanding Series 2006 Capital Improvement Revenue Refunding Note. Interest rates on remaining annual principal amounts payable are fixed at 5.06% and mature on August 1, 2021. The Series 2010 Bond is secured by an irrevocable subordinate lien on Pledged Funds derived by the CRA from (i) CCCRA Tax Increment Revenues and (ii) all moneys securities and instruments held in the accounts and subaccounts created under the Bond Resolution, except the CCCRA Rebate Account. At September 30, 2018 the principal balance was $3,024,036.

The $18,870,000 NPCCRA Tax Increment Revenue Refunding Bonds, Series 2015, were issued on June 11, 2015 and advance refunded all of the outstanding Series 2005A bonds of like title. Interest rates on remaining annual principal amounts payable, vary from 2.25% to 4.00% and matures March 1, 2035. The Series 2015 Bonds are solely payable from and secured by a pledge of and first lien on the Pledged Funds derived by the Agency from (i) NPCCRA Tax Increment Revenues and (ii) all moneys, securities and instrument held in the accounts and subaccounts created under the Bond Resolution, except the NPCCRA Rebate Account. At September 30, 2018 the principal balance was $18,405,000.

 

The $44,060,000 CCCRA Tax Increment Revenue Refunding Bonds, Series 2015 were issued September 10, 2015 and advance refunded a portion of the outstanding Series 2006A bonds of like title. Interest rates on remaining annual principal amounts payable, vary from 3.25% to 5.25% and matures March 1, 2031. The bond is solely payable from and secured by a pledge of and first lien on the Pledged Funds derived by the Agency from (i) CCCRA Tax Increment Revenues and (ii) all moneys securities and instruments held in the accounts and subaccounts created under the Bond Resolution, except the CCCRA Rebate Account. At September 30, 2018 the principal balance was $39,890,000.

Special Obligation Revenue Bonds:

On July 5, 2016 the City issued the Special Obligation Bonds, Series 2016A, 2016B and 2016C. The proceeds of $50,400,000 related to Series 2016A were used to fund $50,000,000 of the unfunded actuarial accrued liability of the City’s Police Pension Fund. Interest rates on the remaining annual principal amounts payable vary from 1.10% to 3.52% and matures on October 1, 2035.

The proceeds of $33,795,000 of Special Obligation Refunding Bonds Series 2016B bond were used to finance various capital projects. Interest rates on the remaining annual principal amounts payable are fixed at 5.00% and matures on October 1, 2040.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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The proceeds of $35,990,000 Special Obligation Refunding Bonds, Series 2016C, were used to refund all of the City’s Special Obligations Bonds (City Hall Project) outstanding immediately prior to issuance of the Series 2016C Bonds. Interest rates on the remaining annual principal amounts payable vary from 3.00% to 5.00% and matures on October 1, 2036. As of September 30, 2018, the principal balances of the Special Obligation Bonds, Series 2016A, 2016B and 2016C were $47,780,000, $33,795,000 and

$35,990,000 respectively.

The annual requirements to pay Governmental Activities principal and interest on the bonds outstanding at September 30, 2018 are as follows:

 

GOVERNMENTAL ACTIVITIES

image

 

 

image

Fiscal Years ending

General Obligation Bonds Revenue Bonds

image

 

Total

September 30 Principal Interest Total Required Principal Interest Required

 

2019

$ 1,460,000

$ 90,200

$ 1,550,200

$ 6,253,496

$ 8,663,483

$ 14,916,979

2020

1,525,000

30,500

1,555,500

6,493,012

8,408,844

14,901,856

2021

6,742,528

8,140,786

14,883,314

2022

7,375,000

7,832,488

15,207,488

2023

7,680,000

7,544,742

15,224,742

2024 ‐ 2028

43,350,000

32,697,669

76,047,669

2029 ‐ 2033

53,735,000

22,629,662

76,364,662

2034 ‐ 2038

50,570,000

10,615,025

61,185,025

2039 ‐2043

23,140,000

1,773,250

24,913,250

Total

$ 2,985,000

120,700

 

image

3,105,700

image

$ 205,339,036

$ 108,305,949

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$ 313,644,985

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Current portion

(1,460,000)

 

 

(6,253,496)

 

 

Premium

7,655

 

 

14,141,721

 

 

Long‐term portion

$ 1,532,655

 

 

$ 213,227,261

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

Pledged Revenue:

The City has pledged legally available non‐ad valorem revenues to pay the Special Obligation Bonds, Series 2016A, 2016B and 2016C. The non‐ad valorem revenue used for the bonds consists of utility taxes, franchise taxes, licenses and permits, fines and forfeitures, intergovernmental charges for services and other. For the current year, principal and interest of $6,440,712 was paid. Four promissory notes; the 2004 Palm Beach County Note, the 2006 Capital Improvement Refunding Note, the 2014 Vehicle Acquisition Note and the 2014 Florida Communications System Note are also secured by non‐ad valorem revenues. For the current year, principal and interest of $2,196,677 was paid on these four notes. Non‐ad valorem revenues were $88,806297.

Tax Increment Revenue Bonds are those secured by a pledge of and first lien on the Pledged Funds derived from the CRA. The City has two types of Tax Increment Revenue Bonds: the Northwood/Pleasant City Community Redevelopment Area (NPCCRA), 2005B and 2015 and the City Center Community Redevelopment Area (CCRA) Tax increment Revenue Bonds, 2006A, 2010A and 2015. Revenue received from the NPCCRA and CCRA in fiscal year 2018 was $2,263,248 and $19,418,289 respectively.

 

Promissory Notes:

On April 2, 2004, the City entered into an agreement with Palm Beach County to pay $5,000,000 in 20 equal annual instalments of $250,000. The note was used to fund the City’s portion of the cost of a convention center and matures April 2023. The note is payable from and secured solely by the covenant of the City to budget and appropriate legally available non‐ad valorem revenues. As of September 30, 2018, the principal balance of the note was $1,250,000.

On July 19, 2006, the City issued $16,250,000 Capital Improvement Refunding Note, to refund the Series 2003 Capital Improvement note. The interest rates on the annual principal amounts payable, are fixed at 5.06% and matures on August 1, 2021. The note is payable from and secured solely by the covenant of the City to budget and appropriate legally available non‐ad valorem revenues. As of September 30, 2018, the principal balance was $1,250,964.

The $2,375,000 Series 2014 Vehicle Acquisition Note was issued on April 30, 2014, to finance the acquisition of certain vehicles and related equipment. The interest rates on the annual principal amounts payable are fixed at 2.28% and the note matures April 30, 2024. This Note and the interest hereon and any other amount due hereunder are secured by City’s covenant to budget and appropriate in each Fiscal Year from its Legally Available Non‐Ad Valorem Revenues. At September 30, 2018, the principal balance was $1,431,158.

On June 11, 2014, the City issued $10,000,000 Series 2014 Communication Systems Note to refund the Series 2006 Communications System Note in full. The interest rate is fixed at 2.06% and matures on June 11, 2024. As of September 30, 2018, the principal balance was $6,600,244.

On January 1, 2017, the City issued $350,000 Note to Palm Beach County (Brownfield Note) to repay the County for funds extended for the environmental remediation of specific City properties. The interest rate was fixed at 3% with a ten year payment term. Upon certain conditions being met, $50,000 of this Note will be forgiven. The note represents an obligation of the NPCCRA. At September 30, 2018 the principal balance was $296,067.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE H – LONG‐TERM DEBT – CONTINUED

The annual requirements to pay governmental activities principal and interest on the promissory notes outstanding at September 30, 2018 were as follows:

 

image

 

Fiscal Years Principal Interest Total Required

 

2019

$ 3,670,952

$ 544,303

$ 4,215,255

2020

3,720,447

426,418

4,146,865

2021

3,771,782

305,429

4,077,211

2022

3,365,864

182,070

3,547,934

2023

3,392,109

85,782

3,477,891

2024 ‐ 2028

1,230,838

18,488

1,249,326

$

19,151,992 $ 1,562,490 $ 20,714,482

image image

image

Current portion (3,670,952) Long‐term portion $ 15,481,040

 

Capital Leases:

On December 14, 2011, the City entered into a $6,900,000 15‐year capital leasing arrangement to finance energy efficiency/conservation improvements throughout the City. The lease carries an interest rate of 2.41% with annual payments of

$568,144 including principal and interest. At September 30, 2018, value of the asset net of related accumulated depreciation and the principal outstanding balance totaled $4,340,473 and $5,023,114 respectively.

 

On July 12, 2012, the City entered into a $2,700,000 ten‐year capital leasing arrangement to acquire vehicles for the Fire Department. The lease carries an interest rate of 2.41% with annual payments of $297,262 including principal and interest. At September 30, 2018, value of the asset net of related accumulated depreciation and the principal outstanding balance totaled

$1,224,473 and $1,140,583, respectively.

 

On October 26, 2015, the City entered into a $5,177,645 five‐year capital lease to fund financial system software upgrades. The lease carries an interest rate of 2.53% with annual payments of $1,094,945 including principal and interest. At September 30, 2018, value of the asset net of related accumulated depreciation and the principal outstanding balance totaled $4,932,798 and

$2,109,274, respectively.

 

On May, 12, 2016, the City entered into a two‐year capital lease to fund the purchase of a scrubber/sweeper machine for $52,537. The lease carries an interest rate of 5.86% with annual payments of $27,903 including principal and interest. This lease was fully repaid by September 30, 2018.

 

On June 1, 2016, the City entered into a five‐year capital lease to fund the purchase of 39 police vehicles for $1,183,803. The lease carries an interest rate of 3.20% with annual payments of $254,593 including principal and interest. At September 30, 2018, value of the asset, net of related accumulated depreciation and the principal outstanding balance totaled $468,977 and $717,384, respectively.

 

On October 1, 2016, the City entered into a five‐year capital lease to fund the purchase of 20 vehicles for the police, fire and sanitation departments for $2,028,798. The lease carries an interest rate of 1.25% with annual payments of $555,657 including principal and interest. At September 30, 2018, the value of the asset net of related accumulated depreciation and the principal outstanding balance totaled $2,101,030 and $1,629,789, respectively.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE H – LONG‐TERM DEBT – CONTINUED

On April 1, 2017, the City entered into a five‐year capital lease to fund the purchase of 29 vehicles for the police, fire and sanitation departments for $4,203,060. The lease carries an interest rate of 1.61% with annual payments of $881,646 including principal and interest. At September 30, 2018, the value of the asset net of related accumulated depreciation and the principal outstanding balance totaled $3,389,083 and $2,647,116, respectively.

 

On November 7, 2017, the City entered into a five‐year capital lease to fund the purchase of 82 vehicles for the police, fire and sanitation departments for $5,927,953. The lease carries an interest rate of 1.68% with annual payments of $1,247,467 including principal and interest. At September 30, 2018, the principal outstanding balance totaled as the first annual payment was not due until fiscal year 2018. At September 30, 2018, the value of the asset net of related accumulated depreciation and the principal outstanding balance totaled $2,780,585 and $5,927,953, respectively.

 

The annual requirements to pay governmental activities principal and interest on the capital leases outstanding at September 30, 2018 were as follows:

 

Fiscal years ending September 30:

 

2019

$ 4,900,914

2020

4,900,915

2021

3,805,969

2022

2,994,520

2023

1,870,253

2024 ‐ 2028

2,840,595

Total

21,313,166

Less: Amounts representing interest

(1,321,243)

Present value of principal payments

$ 19,991,923

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

 

The City’s long‐term debt for governmental activities is summarized as follows:

 

Principal Stated Maximum Purpose of Amount Amount Interest Annual

Issue Issued Outstanding Rate Debt Service

GOVERNMENTAL ACTIVITIES:

Bonds:

General Obligation Bonds

 

Series 2005

Revenue Bonds

Refunding $

$14,975,000

$ 2,985,000

4.00% $

1,555,500

Series 2016A Special Obligation

Police Pension

50,400,000

47,780,000

1.640 ‐ 3.521%

3,595,103

Series 2016B Special Obligation

Capital Improvemen

33,795,000

33,795,000

5.00%

8,321,750

Series 2016C Special Obligation

Refunding

35,990,000

35,990,000

3.00 ‐ 5.00%

3,103,350

Series 2015, CCCRA

Refunding

44,060,000

39,890,000

3.250 – 5.250%

4,119,150

Series 2015, NPCCRA

Refunding

18,870,000

18,405,000

2.250 – 4.125%

1,654,731

Series 2010A, CCCRA

Refunding

9,829,000

3,024,036

5.06%

1,144,616

Series 2006A, CCCRA

Redevelopment

77,175,000

24,270,000

4.00 ‐ 5.00%

5,414,751

Series 2005B, NPCCRA

Redevelopment

7,280,000

2,185,000

5.68%

847,776

 

 

277,399,000

205,339,036

 

28,201,227

Total Bonds

 

292,374,000

208,324,036

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29,756,727

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Notes Payable:

 

 

 

 

 

Governmental Funds

 

 

 

 

 

Series 2006 Note

City Hall Land

4,066,000

1,250,964

5.06%

473,497

Promissory Note

Convention Center

5,000,000

1,250,000

0.00%

250,000

Series 2014 Revenue Note

Vehicles

2,375,000

1,431,158

2.28%

270,892

LOC Rollover Loan

Fire Stations

8,323,559

8,323,559

3.87%

1,971,920

Promissory Note

Brownfield Note

350,000

296,067

3.00%

40,555

 

 

20,114,559

12,551,748

 

3,006,864

Internal Service Funds Series 2014 Revenue Note

 

Communications

 

10,000,000

 

6,600,244

 

2.06%

 

1,220,143

Total Promissory Notes

 

30,114,559

19,151,992

 

4,227,007

 

Total Bonds and Notes for Governmental Activities $ 322,488,559 $ 227,476,028 $ 33,983,734

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

The City had the following pledged debt as of September 30, 2018 in its governmental activities:

 

 

Description of Issue Purpose Pledged Revenue

 

Revenue Received in FY 2018

(1)

Principal and Interest Paid

in FY 2018

Debt Service as a Percentage of Revenues Pledged

 

Outstanding Principal and Interest

(1)

 

Pledged Through

Special Obligation Bonds 2016A, B and C

A ‐ to fund Police Pension

B ‐ To finance new capital projects

C ‐ To refund 2006

Non‐Ad Valorem Tax Revenue (3)

$ 88,806,297

$ 6,893,892

7.8%

$ 187,478,523

Fiscal years 2035

through 2040

 

Special Obligation Bonds.

 

 

 

 

 

 

Northwood/Pleasant City CRA Tax Increment Revenue Bonds Series: 2005B and 2015A

To pay for the cost of acquiring and clearing real property for redevelopment

purposes and loan

Northwood/Pleasant City CRA Tax Increment Revenue

2,263,248

1,685,875

74.5%

28,154,264

Fiscal years 2021 and

2035,

respectively

 

repayment made to the City.

 

 

 

 

 

 

City Center CRA Tax Increment Revenue Bonds Series 2006A, 2010A and 2015B

To finance certain public improvements, refund Sunshine State

Loans and a portion of

City Center CRA Tax Increment Revenue

19,418,289

6,337,401

32.6%

98,012,198

Fiscal years 2021

through

2036

 

the Agency's Tax Increment Revenue Bonds Series 2006A.

 

 

 

 

 

 

 

(1) FY 2018 Revenue Utility Service Tax

$ 21,685,074

Franchise Taxes

9,462,626

Charges for Services

24,763,965

Inter‐governmental Revenue

14,170,339

Licenses and Permits

3,823,282

Fines and Forfeitures

238,638

Interest

729,962

Insurance Premium Taxes

2,797,362

Rents and Royalties

211,804

Payment in Lieu of Taxes

9,983,605

Miscellaneous

939,640

Total non‐ad valorem revenue

$ 88,806,297

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

The following is a summary of changes in long‐term debt and liabilities for business‐type activities:

Total Total

Beginning Ending Current Noncurrent

Balances Additions Reductions Balances Liabilities Liabilities

Business‐Type Activities:

Water and Sewer Systems Fund

Revenue bonds $ 209,586,586 $ ‐ $ 4,372,805 $ 205,213,781 $ 4,975,790 $ 200,237,991

Unamortized premium 14,124,278

865,423

13,258,855

13,258,855

Net bonds payable 223,710,864

5,238,228

218,472,636

4,975,790

213,496,846

Compensated absences 2,044,873

194,906

151,547

2,088,232

1,112,274

975,958

Fund totals 225,755,737

194,906

5,389,775

220,560,868

6,088,064

214,472,804

Stormwater System Fund

 

 

 

 

 

Revenue bonds

60,333,415

1,362,196

58,971,219

1,464,210

57,507,009

Unamortized premium

5,853,280

245,760

5,607,520

5,607,520

Net bonds payable

66,186,695

1,607,956

64,578,739

1,464,210

63,114,529

Compensated absences

291,930

59,180

30,514

320,596

157,567

163,029

Fund totals

66,478,625

59,180

1,638,470

64,899,335

1,621,777

63,277,558

Nonmajor Business

 

 

 

 

 

 

‐Type Funds

 

 

 

 

 

Compensated absences

134,597 47,997

22,568

160,026

80,313

79,713

Capital leases

155,198 ‐

155,198

Funds total

289,795 47,997

177,766

160,026

80,313

79,713

Total Business‐Type

Activities $ 292,524,157 $ 302,083 $ 7,206,011 $ 285,620,229 $ 7,790,154 $ 277,830,075

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The City has pledged future customer revenues, net of specified operating expenses, to repay $269,320,000 in various Water System and Stormwater System revenue and revenue refunding bonds which were issued for the fiscal years 2008 through 2017. Proceeds from these bonds provided financing for various utilities system infrastructure improvements including the modernization of the City’s water filtration plant. The bonds are payable solely from utility customer net revenues and are payable through 2047. The total principal and interest remaining to be paid on the bonds is $434,366,838. Principal and interest paid for the current year and total customer net revenues were $14,362,232 and $56,212,538, respectively.

Revenue Bonds

On July 1, 2008, the City issued $53,975,000 Utility System Revenue Refunding Bonds, Series 2008A, to refund all of the outstanding Series 2005 Utility System Revenue Refunding bonds. The Series 2008A bond was in turn largely refunded by the Utility System Revenue Refunding Bonds, Taxable Series 2017B on February 1, 2017. As of September 30, 2018, the principal balance of $2,060,000 remains.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

 

On July 1, 2008, the City issued $14,835,000 Utility System Revenue Bonds, Series 2008B, to pay for a portion of the cost of the improvements to the utility system as defined in the Series 2008B Series Resolution. Interest rates on the remaining annual principal amounts payable vary between 4 and 4 ¼ % and the bond matures October 1, 2020. As of September 30, 2018, the principal balance of $3,700,000 remains.

On July 1, 2008, the City issued $99,990,000 Utility System Variable Rate Revenue Bonds, Series 2008C to pay for a portion of the cost of the improvements to the utility system as defined in the Series 2008C Series Resolution. Interest is calculated weekly as determined by the Remarketing Agent and the bond matures October 1, 2038. The 2017C Utility bonds partially refunded the 2008C series. As of September 30, 2018, the principal balance of $58,145,000 remains.

 

On February 24, 2010, the City issued $15,140,000 Utility System Revenue Refunding Bonds, Series 2010, to extinguish all outstanding Series 1998 Utility System Revenue Refunding Bonds. Interest rates on the remaining annual principal amounts payable vary between 3¼ and 4½ %. The bonds mature October 1, 2027. As of September 30, 2018, the principal balance of

$12,770,000 remains.

On June 29, 2011, the City issued $19,200,000 Utility System Revenue Refunding bonds, Series 2011A, to extinguish all outstanding Series 2002 Utility System Revenue Refunding Bonds. The interest rates on the remaining annual remaining principal amounts payable is 5% and the bonds mature October 1, 2023. As of September 30, 2018, the principal balance of $9,895,000 remains.

On September 19, 2012, the City issued $43,040,000 Utility System Revenue Refunding bonds, Series 2012A to partially advance refund the Series 2004 Utility System Revenue Refunding Bonds. The remaining Series 2004 bonds were retired on October 1, 2014. The interest rates on annual remaining principal amounts payable vary between 2 and 5% and the bonds mature October 1, 2030. As of September 30, 2018, the principal balance of $40,805,000 remains.

On February 1, 2017 the City issued $60,755,000 Utility System Revenue bonds, Series 2017A to finance a portion of the cost of acquiring, constructing and equipping improvement to the utility system. The interest rates on annual principal amounts payable is fixed at 5% and the bonds mature October 1, 2042. As of September 30, 2018, the principal balance of $60,755,000 remains.

On February 1, 2017 the City issued $40,955,000 Utility System Revenue Refunding bonds, Series 2017B, to refund the Series 2008A Bonds outstanding immediately prior to issuance of the Series 2017B Bonds. The interest rates on annual principal amounts payable vary between 1.489 and 3.391% and the bonds mature October 1, 2029. As of September 30, 2018, the principal balance of $40,955,000 remains.

On February 1, 2017 the City issued $35,100,000 Utility System Revenue Refunding bonds, Series 2017C, to provide for the current refunding of the unhedged principal amount outstanding of the City’s Utility System Variable Rate Revenue Bonds, Series 2008C. The interest rates on annual principal amounts payable vary between 3 and 5% and the bonds mature October 1, 2034. As of September 30, 2018, the principal balance of $35,100,000 remains.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

The annual requirements to pay Business Type Activities principal and interest on the bonds outstanding at September 30 are as follows:

 

BUSINESS‐TYPE ACTIVITIES

image

 

Fiscal Years ending

Water and Sewer System Bonds Stormwater Utility Bonds

image

Principal Interest Total Principal Interest Total

September 30

 

2019

$ 4,975,790

$ 8,647,811

$ 13,623,601

$ 1,464,210

$ 2,573,359

$ 4,037,569

2020

5,462,070

8,461,725

13,923,795

1,567,930

2,514,146

4,082,076

2021

6,317,295

8,275,956

14,593,251

1,742,705

2,461,360

4,204,065

2022

4,164,640

8,124,858

12,289,498

1,500,360

2,411,239

3,911,599

2023

5,201,930

7,960,338

13,162,268

1,693,070

2,348,698

4,041,768

2024 ‐ 2028

31,864,730

36,497,558

68,362,288

8,050,270

10,688,956

18,739,226

2029 ‐ 2033

39,790,060

29,555,556

69,345,616

9,834,940

8,977,008

18,811,948

2034 ‐ 2038

55,344,080

17,756,988

73,101,068

9,505,920

6,650,263

16,156,183

2039 ‐2043

52,093,186

5,977,688

58,070,874

23,611,814

3,320,937

26,932,751

Total

$ 205,213,781

$ 131,258,478

 

image

$ 336,472,259

image

$ 58,971,219

$ 41,945,966

image

$ 100,917,185

image

Current portion

(4,975,790)

(1,464,210)

Premium

13,258,854

5,607,520

Long‐term

 

 

portion

$ 213,496,845

 

image

$ 63,114,529

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Capital Lease:

On February 22, 2016, the City entered into a five‐year capital lease to fund the acquisition of golf carts for the City’s golf course machine for $220,822. The lease was fully repaid during fiscal year 2018.

Lines of Credit:

During fiscal year, 2013, the City entered into a financing arrangement for a $15 million line of credit. The initial usage is to finance the construction of Fire Station No. 5, the Emergency Operations Center, Fire Station No. 4, and Fire Station No. 8. The initial line of credit had a renewable term of 36 months and was scheduled to be drawn upon during the construction phase of the projects. The City subsequentyly signed an agreement to add an additional $5 million line of credit under terms identical to the initial line.

During the fiscal year ended September 30, 2018, the existing balances on the lines of credit totaling $8,323,559 were converted to a note payable and matures on July 1, 2023 bearing interest at a fixed rate of 3.87%. At September 30, 2018, the principal balance of the converted line of credit was $8,323,559.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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H – LONG‐TERM DEBT – CONTINUED

 

The following is a summary of changes in long‐term debt and liabilities for business‐type activities:

 

 

BUSINESS‐TYPE ACTIVITIES:

Principal Stated Maximum Purpose of Amount Amount Interest Annual

Issue Issued Outstanding Rate Debt Service

Utility System Revenue Bonds:

Series 2008B

Water/Sewer

$ 12,372,390

$ 3,396,600

4.125– 4.250% $

1,346,970

Series 2008C

Water/Sewer

83,591,640

50,702,440

See swap information

13,604,543

Series 2017A

Water/Sewer

39,056,786

39,056,786

5.00%

10,787,384

 

Utility System Revenue Refunding Bonds:

Series 2008A

Water/Sewer

47,605,950

1,816,920

4.125%

1,853,258

Series 2010

Water/Sewer

15,140,000

12,770,000

3.75 ‐ 4.500%

2,891,488

Series 2011A

Water/Sewer

15,264,000

7,866,526

5.00%

1,552,635

Series 2012A

Water/Sewer

22,935,000

22,875,000

2.00 – 5.00%

5,116,408

Series 2017B

Water/Sewer

36,122,310

36,122,310

1.639 ‐ 3.391

5,814,946

Series 2017C

Water/Sewer

30,607,200

30,607,200

3.00% ‐ 5.00%

5,091,826

Premium

Water/Sewer

16,809,393

13,258,854

 

Total Water and Sewer System Fund

319,504,669

image

 

218,472,636

image

 

48,059,458

image

Utility System Revenue Bonds:

 

 

 

 

 

Series 2008B Storm Water

2,462,610

 

303,400

4.125 – 4.250%

120,318

Series 2008C Storm Water

16,398,360

 

7,442,560

See swap information

1,996,997

Series 2017A Storm Water

21,698,214

 

21,698,214

5.00%

5,992,991

 

Utility System Revenue Refunding Bonds:

Series 2008A

Storm Water

6,369,050

243,080

4.125%

247,942

Series 2011A

Storm Water

3,936,000

2,028,474

5.00%

400,365

Series 2012A

Storm Water

20,105,000

17,930,000

2.00 – 5.00%

1,486,873

Series 2017B

Storm Water

4,832,690

4,832,690

1.639 ‐ 3.391

777,963

Series 2017C

Storm Water

4,492,800

4,492,800

3.00% ‐ 5.00%

747,424

Premium

Storm Water

6,922,964

5,607,520

 

Total Storm Water Fund

 

87,217,688

64,578,738

 

11,770,873

Total Business‐Type Activities

 

$ 406,722,357

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$ 283,051,374

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$ 59,830,331

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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Note I – INTEREST RATE SWAP

On August 20, 2008, following the issuance of the City’s $99,990,000 Series 2008C Utility System Variable Rate Revenue Bonds, the City entered into a synthetic fixed rate bond swap agreement with a notional value of $56,335,000, the hedged portion related to the Series 2008C Utility System Variable Rate Revenue Bonds. The objective of this transaction was to lower borrowing costs when compared with fixed rate bonds at the time of issuance. The maturity date of the swap is October 1, 2038.

Under the terms of the swap agreement, the City pays the counterparty a fixed payment of 3.539% on the notional value of

$56,335,000, while receiving a variable amount computed as 72% of the monthly London Inter‐Bank Offered Rate (LIBOR) on the same notional value. The variable rate on the bonds is reset weekly by auction. Starting in fiscal year 2035, the notional value of the swap and the principal amount of the associated debt decline annually until the debt is completely retired on October 1, 2038, and the related swap agreement matures. The Utility System Revenue Refunding Bonds, Series 2017C, refunded

$41,845,000 of the total $43,655,000 unhedged portion of outstanding Series 2008C Utility System Variable Rate Revenue Bonds. At September 30, 2018 the total hedged and unhedged swap liability outstanding was $56,335,000 and $1,810,000, respectively.

As of September 30, 2018, bond and swap rates were as follows:

 

Interest Rate Swap:

 

Terms

Rates

 

Fixed Payment to Counterparty

 

 

Fixed

 

3.539%

Variable Payment from Counterparty

(1)

72% of Monthly LIBOR rate

(1.559%)

Net Interest Rate Swap Payments

 

 

1.980%

Variable Rate Bond Coupon Payments

(2)

7 Day Market Rate

1.600%

 

Synthetic Interest Rate on Bonds

 

 

3.580%

 

  1. 1.55944% rate based on the rate received from the swap counterparty for the period 9/5/2018

  2. 1.60% rate based on the rate paid to the corporate trustee for the week ending 10/2/2018.

     

    Fair Value:

    As of September 30, 2018, the swap had a negative fair value of $10,755,074. The swap’s negative fair value is due to the interest rate of the counterparty (at September 30, 2018) being less than the original counterparty rates. However, because the coupons on the City’s variable rate bonds adjust to changing interest rates, the swap still functions effectively as a hedge against interest rate volatility on those bonds. The swap’s fair value estimate is derived from an independent market evaluation which uses the zero coupon method based on proprietary assumptions. The valuation model calculates future cash flows by projecting forward swap rates and then discounts those cash flows to their present value as follows:

     

     

    Cash flow hedge: Classification Amount Classification Amount

    Change in

    Fair Value

     

    Pay‐fixed, receive‐variable

    interest rate swap Deferred Outflow

     

    $10,755,074

     

    Liability

     

    $(10,755,074)

     

    $ 5,054,623

     

    (Notional amount: $56,335,000)

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

    image

     

    Note I – INTEREST RATE SWAP– CONTINUED

    The interest rate swap agreements do not affect the City’s obligation (under the bond indenture) to repay the principal and variable interest on the Series 2008C bonds. As interest rates vary, the variable rate interest payments and swap payments will vary.

    The following table, which estimates debt service requirements of the variable rate bond and the swap payments, assumes that LIBOR rates will rise from .96% on September 30, 2018 to 1.5% in 2018, 2.0% in 2019 and then remain constant at 2.5% from 2020 to the duration of those instruments.

     

    Variable Rate Bonds ‐ Hedged

    image

    Liquidity Remarketing

    Interest Rate Swap

    image

     

    Fiscal Years ending

    September 30

    Notional

    Value

    Interest

    (1)

    Fees

    (2)

    Fees

    (3)

    Net Amount

    (4) Total

     

    2019

    $ 56,335,000

    $ 811,224

    $ 281,675

    $ 70,419 $

    1,182,472

    $ 2,345,790

    2020

    56,335,000

    1,014,030

    281,675

    70,419

    979,666

    2,345,790

    2021

    56,335,000

    1,014,030

    281,675

    70,419

    979,666

    2,345,790

    2022

    56,335,000

    1,014,030

    281,675

    70,419

    979,666

    2,345,790

    2023

    56,335,000

    1,014,030

    281,675

    70,419

    979,666

    2,345,790

    2024 ‐ 2028

    56,335,000

    5,070,150

    1,408,375

    352,094

    5,461,680

    12,292,299

    2029 ‐ 2033

    56,335,000

    5,070,150

    1,408,375

    352,094

    5,461,680

    12,292,299

    2034 ‐2038

    14,950,000

    2,586,510

    925,400

    231,348

    1,372,150

    5,115,408

    Total

     

    $ 17,594,154

    image

    $ 5,150,525

    image

    $ 1,287,631 $

    image

    17,396,646

    image

    $ 41,428,956

    image

     

    Variable Rate Bonds ‐ Unhedged

    Fiscal Years ending

    September 30

     

    Principal

    Interest

    (1)

     

    Total

     

    2019

    $ ‐

    $ 28,960

    $ 28,960

     

    2020

    28,960

    28,960

     

    2021

    335,000

    28,960

    363,960

     

    2022

    1,475,000

    11,800

    1,486,800

     

    Total

    $ 1,810,000 $

    image

    98,680

    $ 1,908,680

    image

     

    image

    1. Interest rates over the period are calculated 1.60% which was the rate in effect during the week ended October 2, 2018.

    2. Liquidity fees are 48 basis points or 0.48% of the outstanding bond principal amount and provide for a ready buyer in the event that no other bond buyers can be found when these bonds are remarketed weekly.

    3. The remarketing fees are 12.5 basis points or 0.125% of the outstanding bond principal amount.

    4. Computed: (3.539% ‐1.55944%) multiplied by the notional amount outstanding (see Interest Rate Swap Rate Table).

 

Notional Amounts in Future Years

image

 

From and Including

To but excluding

Notional Amount

6/5/2013

10/1/2035

$ 56,335,000

10/1/2035

10/1/2036

43,100,000

10/1/2036

10/1/2037

29,310,000

10/1/2037

10/1/2038

14,950,000

10/1/2038

10/1/2039

 

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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Note I – INTEREST RATE SWAP– CONTINUED

Credit Risk – Credit risk is the risk that the counterparty to the swap agreement will not fulfill its obligations when the swap has a positive fair value to the City. In any period when the swap has a positive fair value, the City is exposed to actual credit risk in the amount of the swap’s fair value. The swap counterparty has guaranteed all payments due under the swap agreement. On June 26, 2013, Citibank, the swap counterparty, novated the Citibank Interest Rate Swap to the Bank of New York Mellon. A novation is a substitution of the counterparty in a swap agreement. Upon novation, the swap is referred to as the Bank of New York Mellon Interest Rate Swap. All swap terms and conditions remain the same. The City had no costs associated with the novation. As of September 30, 2018, the long‐term debt of the swap counterparty – The Bank of New York Mellon Corporation – was rated AA‐ by Fitch, A by Standard & Poor’s, and A1 by Moody’s. To mitigate the potential for credit risk, if the counterparties’ credit ratings fall below A‐/A3, the counterparties will fully collateralize the fair value of the swap (with U.S. Government Securities).

Basis Risk – Instead of the actual variable debt interest payment, the City’s interest rate swap is based on a fixed payment and an indexed variable receipt. Any difference between the indexed variable receipt and the actual market‐determined variable rate paid on the bonds is called “basis risk”. Whereas the underlying swap agreement pays the City at 72% of the 1 month LIBOR rate, the Series 2008 C Utility System Variable Rate Revenue Bonds bear interest at the seven day market rate. From August 19, 2008 to the termination date, the swap exposes the City to basis risk should the relationship between LIBOR and the seven day market rate converge (thereby changing the synthetic rate on the bonds). If a change occurs that results in the rates moving to convergence, the City’s payments out may be in excess of its payments received from the counterparty and the City’s expected cost savings may not be realized.

Termination Risk – The City’s derivative contract uses the International Swaps and Derivatives Association’s Master Agreement (ISDA). The ISDA Master Agreement includes standard termination events, such as failure to pay and bankruptcy. The Schedule to the ISDA Master Agreement also includes “additional termination events”. Accordingly, if the counterparty’s credit quality rating falls below “BBB‐“ as issued by Standard & Poor’s or “Baa3” as issued by Moody’s Investors Service, the City may terminate the swap. The City or the counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If the swap is terminated, the variable rate bonds would no longer carry a synthetic interest rate and the City would no longer be insulated from the possibility of increasing interest rate payments. A termination of the swap agreement may also result in the City making or receiving a termination payment (equal to the swap’s fair value at the termination date).

Rollover Risk – Because the maturity dates for the hedged Series 2008 C Utility System Variable Rate Bonds and the interest rate swap agreement are the same (October 1, 2038), the City is not exposed to rollover risk.

 

Interest Rate Risk – The hedging derivative is a pay‐fixed, receive variable cash flow hedge that is hedging interest rates on a portion of the 2008C bonds outstanding. The City believes that it has significantly reduced interest rate risk attributable to the principal amount being hedged by entering into the interest rate swap.

 

Foreign Currency Risk – Foreign currency risk is the risk that changes in exchange rates would adversely affect the fair value of the derivative or cash flows of the City. With respect to the City’s derivative and the related cash flows, the City has no exposure to foreign currency risk.

 

NOTE J – INTERFUND RECEIVABLES, PAYABLES AND ADVANCES

The composition of interfund balances as of September 30, 2018 is as follows:

Advances to/from other funds:

 

 

Receivable Fund

 

Payable Fund

Amount

General Fund

 

Nonmajor Enterprise Fund

$ 617,000

$ 617,000

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CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

image

 

NOTE J – INTERFUND RECEIVABLES, PAYABLES AND ADVANCES– CONTINUED

An advance in the amount of $1.5 million was made in 2009 to finance renovation of the City's golf course. This advance was made in accordance with an interlocal agreement between the City and the Golf Commission. Repayment will be made over a period of up to 15 years based on a schedule included in the agreement. One of the advances was for the golf course renovation and the other the for lawn mowers agreement.

 

The General fund had receivables totaling $2,558,663 which were for short term cash borrowings. The Special Revenue Funds had payables to a Capital Projects Fund totaling $10,474,787 for capital outlay expenditures incurred.

 

Due to/from other funds:

 

Receivable Fund Payable Fund

image

Amount

 

General Fund Nonmajor Governmental Funds

$ 2,338,614

 

Internal Service Funds

103,977

 

Nonmajor Enterprise Fund

116,072

 

Nonmajor Enterprise Funds Internal Service Fund

113,537

 

Internal Service Fund Fleet Internal Service Fund

36,277

 

Nonmajor Governmental Funds Nonmajor Governmental Funds

10,474,787

 

 

$ 13,183,264

 

 

NOTE K – INTERFUND TRANSFERS

 

 

The following is a summary of interfund transfer activity:

 

 

Transfer‐In Funds:

 

 

 

Northwood/

City Center Pleasant City Water

Community Community Non‐Major and Sewer Non‐Major Internal General Redevelopment Redevelopment Governmental System Enterprise Service

Transfer‐Out Funds: Fund Agency Fund Agency Fund Funds Fund Funds Funds Total

 

General

$ ‐

$ ‐

$ ‐

 

7,948,806

$ ‐

$ 575,000

$ 3,637,140

$ 12,160,946

CRA

250,000

 

2,180,631

270,000

2,700,631

Non‐major

 

 

 

 

 

 

 

 

 

governmental

1,469,644

19

 

2,868,885

477,116

18,570

465,630

5,299,864

Non‐major

 

 

 

 

 

 

 

 

 

enterprise

529,703

 

26,003

555,706

Water & Sewer

9,536,095

 

832,226

10,368,321

Stormwater

 

48,400

48,400

Internal service

75,684

 

49,582

125,266

Total transfers

$ 11,785,442

image

$ 75,684

image

$ 19

image

 

12,998,322

image

$ 477,116

image

$ 863,570

image

$ 5,058,981

image

$ 31,259,134

image

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

image

 

NOTE K – INTERFUND TRANSFERS– CONTINUED

 

Transfers‐out from the General Fund to Nonmajor Governmental Funds funded debt service requirements, capital improvements, technology replacement, and grant matching. Transfers‐out from the City Center CRA Fund to the General Fund represent funding for debt service obligations. Transfers‐out from the Water and Sewer Systems Fund to the General Fund represent Payments‐In‐Lieu‐Of‐Taxes (i.e., “PILOT”). Transfers within the Internal Service Funds were primarily caused by the consolidation of two similar funds into one combined fund. Transfers from the Internal Service Funds to the General Fund was to consolidate the activities of the Fleet Replacement

 

NOTE L – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Budget

 

Annual budgets are adopted for major and nonmajor governmental funds. Except for the General Fund, these budgets are prepared on the modified accrual basis of accounting. In the General Fund, budgets are prepared on the modified accrual basis of accounting except that current year encumbrances are treated as expenditures for budgetary purposes and administrative charges to other funds are budgeted as revenue in the General Fund.

All unencumbered and unexpended appropriations lapse at the fiscal year‐end except those for ongoing capital projects and special revenue funds which are brought forward and become part of the subsequent year’s original budget.

Appropriations at year end that are encumbered but unexpended are also brought forward and become part of the subsequent year’s original budget. Supplemental appropriations made during the fiscal year are included in the ‘Final Budget’ columns on the statements of revenues, expenditures and changes in fund balances – budget and actual.

 

During the fiscal year ended September 30, 2018, certain funds were inactive or are being utilized on an as needed basis when the City pays or receives a non‐recurring charge. The source and use of revenues are approved by the City Commission on an as needed basis for the following funds:

Impact Fee Fund

The Red Light Camera Fund

The City Commons and Waterfront Fund Land Acquisition Fund

Mandel Library SR Fund

Budgetary Control

Expenditures may not legally exceed appropriations at the fund and department level without Commission approval. Budget changes within a fund and department which do not affect the departmental total may be approved on the administrative level. The City Administrator and Chief Financial Officer have the authority to approve such administrative changes.

For the fiscal year ended September 30, 2018, the Fleet Management Fund had a deficit fund balance which will be corrected in fiscal year 2019 with additional assessments from operating charges..

 

NOTE M – RISK MANAGEMENT

The City maintains two risk retention funds, the Self Insurance Fund and the Employee Benefits Fund. These funds combine risk retention (“self‐insurance”) with purchased insurance policies and are categorized as internal service funds. The Self Insurance Fund is used to account for the City's workers' compensation, general, and automotive liability claims. The Employee Benefits Fund is used to account for the health and life benefits for eligible City employees and certain retirees.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE M – RISK MANAGEMENT – CONTINUED

Insurance claims liabilities and expenses are recognized when it is probable a loss has occurred and the amount of the loss can be reasonably estimated.

Risk has been retained by the City in the amount of $500,000 for workers’ compensation, $350,000 for general and auto liability, 100% for employee health (beginning July 1, 2018), and $100,000 for property loss. Excess insurance has been purchased for general liability coverage up to $10,000,000.

Property loss is covered by purchased insurance policies up to $327 million (total insured value).

During the past three years, claims settlement amounts have not exceeded insurance coverages. The claims liability amounts shown below represent the present value of estimated future payments to be made for claims that occurred prior to September 30, 2018. The discount rate used in calculating the Self Insurance Fund’s liability is 3%. No discounting was done in calculating the Employee Benefits Fund’s liability. No non‐incremental claims adjustments have been made.

The following is a summary of the changes in claims liability for the Self Insurance Fund for the fiscal years ended September 30:

 

 

Fiscal Year

Fiscal Year

2018

2017

Unpaid claims as of October 1

$ 11,572,526

$ 12,970,002

Incurred claims (including claims incurred but not

 

 

reported as of September 30):

 

 

Provision for current year events where the City

 

 

retained risk of loss

5,385,856

5,597,711

Increases (decrease) in provision for prior years'

events where the City has retained risk of loss

 

162,113

 

(1,321,492)

Total incurred claims

5,547,969

4,276,219

 

Payments:

Claims attributable to current year events where

the City has retained risk of loss 1,939,795 1,640,674 Claims attributable to prior years' events where

the City has retained risk of loss

3,613,395

4,033,021

Total payments

5,553,190

5,673,695

 

Unpaid claims as of September 30

$ 11,567,305

$ 11,572,526

image image

 

Reconciliation to Internal Service Funds Statement of Net Position:

 

Insurance claims payable, current portion

3,024,939

3,340,329

Insurance claims payable, long term portion

8,542,366

8,232,197

 

$ 11,567,305

 

image

$ 11,572,526

image

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE M – RISK MANAGEMENT – CONTINUED

The following is a summary of the changes in claims liability for the Employee Benefits Fund for the fiscal years ended September 30:

 

 

Fiscal Year

Fiscal Year

2018

2017

Unpaid claims as of October 1

$ 1,284,587

$ 680,308

Incurred claims (including claims incurred but not

 

 

reported as of September 30):

 

 

Provision for current year events where the City

 

 

retained risk of loss

32,299,813

17,340,068

Increases (decrease) in provision for prior years'

events where the City has retained risk of loss

 

(9,985,791)

 

272,797

Total incurred claims

22,314,022

17,612,865

 

Payments:

Claims attributable to current year events where

the City has retained risk of loss 19,800,539 17,008,586 Claims attributable to prior years' events where

the City has retained risk of loss

2,694,770

 

Total payments

22,495,309

 

17,008,586

 

Unpaid claims as of September 30

$ 1,103,300

 

 

$ 1,284,587

image

 

Reconciliation to Internal Service Funds Statement of Net Position:

 

 

 

Insurance claims payable, current portion Insurance claims payable, long term portion

1,103,300

$ 1,103,300

 

1,284,587

$ 1,284,587

image

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

image

 

NOTE N – COMMITMENTS AND CONTINGENCIES

Construction and Equipment Contracts

At year end, the City had the following significant commitments related to uncompleted contracts for construction and equipment:

 

Governmental Funds:

 

2016 Capital Bond Fund

$ 4,804,679

All Other Governmental Funds

25,301,758

 

$ 30,106,437

Business‐Type Activities:

 

Water and Sewer System Fund

$ 15,134,563

Stormwater Fund

1,637,668

 

$ 16,772,231

 

Litigation, Claims and Assessments

The City is engaged in routine litigation, claims and assessments incidental to the conduct of its business. In the opinion of the City Attorney, the ultimate outcome of any pending litigation, claims and assessments which represent potential liability to the City in excess of either amounts already provided for in the accompanying financial statements, or covered by insurance, will not have a material or adverse effect on its financial position.

State and Federal Grants

Grant funds received and disbursed by the City are for specific purposes and are subject to audit by the grantor agencies. Amounts received or receivable from the agencies are subject to audit and adjustment. Any disallowed claims, including the amounts already collected, may constitute a liability of the applicable funds. Future disallowances, if any, cannot be determined at this time although in the opinion of management, any disallowed expenditures would not have a material adverse effect on the financial condition of the City.

City Place Community Development City Debt

On April 20, 2012, the Community Development City (CDD) issued the $39,890,000 Special Assessment and Refunding Bonds, Series 2012, primarily pledged by special assessments to the properties within the CDD. Additionally, the CRA pledged certain tax increment revenue for properties within the CDD and up to $2 million of the existing tax increment revenues generated outside the CDD. The CRA payments, together with the special assessments required to be levied by the CDD, are anticipated to fully fund the debt service requirements. As of September 30, 2018, neither the City nor the CRA has an outstanding liability to the CDD.

Sale of Property

During the current fiscal year, the City sold property valued at approximately $11.5 million. In conjunction with the sale, the City and the CCRA entered into a ground lease and development agreement (the “Agreement”) with the buyer to lease other property located adjacent to the sold property. The value of the leased property was $6 million at the time of the Agreeement. In accordance with the Agreement, the buyer/lessee will construct and develop commercial and residential buildings for the benefit of the public. The initial term of the lease is 50 years with an option to renew for an additional 25 years. No rent is payable by the buyer within the initial term. If the buyer elects to exercise the renewal option, the annual rent shall be the fair rental value of the leased property at renewal. Upon expiration of the lease, the ownership of improvements to the leased property will automatically revert to the City or the CCRA.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE O – EMPLOYEE RETIREMENT PLANS

During the fiscal year ended September 30, 2018, the City participated in four single‐employer pension plans covering substantially all full‐time employees. Three of the plans are defined benefit pension plans and one is a defined contribution pension plan. Each defined benefit pension plan is administered by an independent board of trustees and each is audited annually by an independent certified public accountant. The City also participated in three Voluntary Employees’ Beneficiary Association (VEBA) plans.

For this report dated September 30, 2018, the actuarial valuation date for all plans is September 30, 2016, and the measurement date is September 30, 2017. The Required Supplementary Information section of this report provides additional detailed information about actuarial methods and assumptions used to determine the contribution rates for each plan. That section also provides schedules of employer contributions, total pension asset/liability, plan fiduciary net position, and changes in net pension asset/liability for each plan. The schedules of employer contributions and pension liabilities will be expanded each year until a total of ten years is presented.

 

  1. Defined benefit plans

     

    Police Pension Plan: The Police Pension Fund (“the plan”) was created in 1947 by a special act of the Florida legislature, Chapter 24981, Section 16, Laws of Florida, as amended. The plan provides retirement benefits for noncivilian police department employees and is maintained through contributions from employee members, actuarially determined contributions from the City, and from investment earnings. In addition, the State of Florida, pursuant to Chapter 185 of the Florida Statutes, pays to the plan all casualty insurance premium surcharges collected from within the city limits. These surcharges are distributed annually provided the local government has met its actuarial funding requirement for the most recently completed fiscal year. Employee members of the Plan make regular contributions. For fiscal year 2018, the City withheld 11% of earnings from employee members. 7% was remitted to the pension plan and 4% was paid to the Police VEBA.

     

    Benefit provisions and contribution requirements are established and may be amended by the City of West Palm Beach in c onjunction with the Palm Beach County Police Benevolent Association. Any such amendments take effect upon passage by the Florida State Legislature. The City’s recommended and actual contribution for fiscal year 2018, as discounted for payment at the beginning of the fiscal year, was $3,556,968. This contribution represented approximately 17% of covered payroll. Chapter 185 funds, as mentioned above, amounted to $1,455,967 for fiscal year 2018. The plan annually produces a separately audited annual report including financial statements and required supplementary information. This report may be obtained by writing to City of West Palm Beach, Finance Department, 401 Clematis Street, West Palm Beach, Florida 33401 or by calling 1‐561‐822‐1310 or accessible at wpbppf.com.

     

    Firefighters pension plan: The Firefighters Pension Fund (“the plan”) was created in 1947 by a special act of the Florida legislature, Chapter 24981, Section 17, Laws of Florida, as amended. The plan provides retirement benefits for firefighters and fire department officers and is maintained through contributions from employee members, actuarially determined contributions from the City, and from investment earnings. In addition, the State of Florida, pursuant to Chapter 175 of the Florida Statutes, pays to the plan all property insurance premium surcharges collected from within the city limits.

    These surcharges are distributed annually provided the local government has met its actuarial funding requirement for the most recently completed fiscal year. Employee members of the Plan make regular contributions. For fiscal year 2018, the City withheld 13.1% of earnings from employee members. 11.1% was remitted to the pension plan and 2% was paid to the Firefighters’ VEBA. Benefit provisions and contribution requirements are established and may be amended by the City of West Palm Beach in conjunction with the West Palm Beach Association of Fire Fighters, I.A.F.F. Local

    727. The City’s recommended and actual contribution for fiscal year 2018, as discounted for payment at the beginning of the fiscal year, was $8,057,319.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS – CONTINUED

    Chapter 175 funds, as mentioned above, amounted to $1, 578,112 for fiscal year 2018. In accordance with the union contract, 85% of the Chapter 175 monies, or $1,341,395, was remitted to the pension plan. These combined contributions, amounting to $9,398,714, represented 53.6% of covered payroll. The plan annually produces a separately audited annual report including financial statements and required supplementary information. This report may be obtained by writing to City of West Palm Beach, Finance Department, 401 Clematis Street, West Palm Beach, Florida 33401 or by calling 1‐561‐822‐1310 or accessible at resourcecenters.com.

    Restated pension plan: The West Palm Beach Restated Employees’ Defined Benefit Retirement System (“the plan”) was established under Ordinance No 3059‐97 on August 11, 1997. The plan, a successor plan to the City of West Palm Beach Employees’ Retirement System, provides retirement benefits for employees who were active members of the predecessor plan as of September 10, 1997. All members are fully vested and the plan is closed to new members. Active members make regular contributions to the plan in the amount of 5.5% of employee earnings.

    Benefit provisions and contribution requirements for the plan are established and may be amended by the City of West Palm Beach in conjunction with the State Employees International Union and the Professional Managers and Supervisors Association. The City made an advance payment of $7,445,067 in fiscal year 2013.

    Actuarially determined contributions made after that date are subtracted from that advance. At September 30, 2018, the remaining advance was $3,624,747 and is included in the City’s General Fund total assets of the Balance Sheet – Governmental Funds.

    The plans’ administrative costs are financed through investment earnings. The plan annually produces a separately audited annual report including financial statements and required supplementary information. This report may be obtained by writing to City of West Palm Beach, Finance Department, 401 Clematis Street, West Palm Beach, Florida 33401 or by calling 561‐822‐1310 or accessible at resourcecenters.com.

    Selected actuarial data for the defined benefit pension plans is presented below:

     

     

     

    Police Pension

     

    Firefighters Pension

    Restated

    Employees

    Pension

    September 30, 2016

    September 30, 2016

    September 30, 2016

    Membership as of valuation date:

     

     

     

    Number of:

     

     

     

    Retirees and beneficiaries

    255

    209

    161

    Inactive, nonretired members

    10

    1

    9

    Active members

    250

    202

    23

    Total

    515

    image

    412

    image

    193

    image

     

    Covered payroll $ 21,679,436 $ 17,540,397 $ 1,500,533

    image image image

    Net pension asset (liability):

    Total pension liability $ (358,140,046) $ (280,949,431) $ (43,973,012) Fiduciary net position 361,249,258 207,273,396 46,405,229

    Net pension asset (liability) $ 3,109,212 $ (73,676,035) $ 2,432,217

    image image image

    Fiduciary net position as a 100.87% 73.78% 105.53%

    % of total pension liability

    Net pension asset (liability) as a

    % of covered payroll 14.34% ‐420.04% 162.09%

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS – CONTINUED

     

     

    Total Pension Liability

     

    Police Firefighters Restated

    Increase (Decrease)

    Balance at September 30, 2017 $ 337,548,681 $ 265,476,719 $ 41,693,629

     

     

    Changes for the year:

     

    Service cost

    4,465,713

    3,997,127

    86,849

    Interest on the total Pension Liability

    26,458,916

    13,652,932

    3,225,757

    Difference between expected and actual

     

     

     

    experience of the total Pension Liability

    335,340

    (944,506)

    (374,998)

    Changes of Assumptions

    5,183,638

    5,482,333

    2,171,968

    Benefit Payments including refunds

     

     

     

    of employee contributions

    (18,090,180)

    (18,122,355)

    (2,830,193)

    Other (DROP and Share plan Adjustments)

    2,237,938

    11,407,181

    Net Change in Total Pension Liability

    20,591,365

    15,472,712

    2,279,383

    (a)

    Total Pension Liability ‐ Ending

    $ 358,140,046

    image

    $ 280,949,431

    image

    $ 43,973,012

    image

     

    Plan Fiduciary Net Position

     

    Balance at September 30, 2017

    $ 327,203,710 $

    188,743,084 $ 43,271,913

     

    Contributions ‐ Employer

    4,618,111

    13,226,176 ‐

     

    Contributions ‐ Employee

    2,427,068

    − 78,838

     

    Net Investment Income

    44,494,434

    23,590,017 5,968,401

     

    Benefit Payments including refunds

     

     

     

    of employee contributions

    (18,090,180)

    (18,122,355) (2,830,193)

     

    Pension Plan Administrative Expense

    (308,777)

    (183,315) (87,504)

     

    Other

    904,892

    19,789 3,774

     

    Net change in Plan Fiduciary Net Position

    34,045,548

    18,530,312 3,133,316

    (b)

    Plan Fiduciary Net Position ‐ Ending

    $ 361,249,258 $

     

    image

    207,273,396 $ 46,405,229

     

    image image

     

    (a) ‐ (b) Net Pension Liability

     

    $

     

    (3,109,212) $

     

    image

     

    73,676,035 $ (2,432,217)

     

    image image

     

    Plan Fiduciary Net Position as a Percentge

    of the Total Pension Liability

    100.87%

    73.78%

    105.53%

    Covered Payroll

    $ 21,679,436 $

    17,540,397 $

    1,500,533

    Net Pension Liability as a Percentage of Covered Payroll

     

    ‐14.34%

     

    420.04%

     

    ‐162.09%

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS – CONTINUED

    The schedule of changes in the net pension liability and related ratios and the schedule of contributions are presented as Required Suppliementary Information (RSI) following the notes to the financial statements and provides additional information about the net pension liability, asset and contributions.

    The following table summarizes the net pension asset, net pension liability, deferred inflow and outflow of resources and pension expense as disclosed above for each defined benefit pension plan:

     

    image

    Governmental Activities

    Deferred

     

    Deferred

     

    Pension Plan

    Net Pension

    Asset

    Net Pension

    Liability

    Inflows of

    Resources

    Outflows of

    Resources

    Pension

    Expense

     

    Restated

    $ 2,116,028 $

    $ 2,283,917

    $ 1,238,126

    $ 1,209,962

    Police

    3,109,112

    15,559,345

    15,243,457

    1,339,458

    Firefighters

    image

    73,676,035

    11,198,702

    9,039,433

    8,366,063

    Total

    $ 5,225,140 $

     

    image

    73,676,035

    image

    $ 29,041,964

    image

    $ 25,521,016

    image

    $ 10,915,483

    image

     

    Business‐Type Activities

    image

     

     

    Plan

     

    Net Pension

    Asset

     

    Net Pension

    Libility

    Deferred Inflows of

    Resources

    Deferred Outflows of

    Resources

     

    Pension

    Expense

     

    Restated $ 316,189 $ ‐ $ 341,274 $ 185,008 $ 180,798

    image image image image

    Total $ 316,189 $ ‐ $ 341,274 $ 185,008 $ 180,798

    image image image image image

     

    Net pension liabilities attributable to governmental activities are generally liquidated by the General Fund or the appropriate proprietary fund for business–type activities.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS ‐ CONTINUED

    The following assumptions were used to produce the actuarial reports:

     

     

    Police

    Firefighters

    Restated Employees

    Valuation Date:

    September 30, 2016

    September 30, 2016

    September 30, 2016

    Measurement Date:

    September 30, 2017

    September 30, 2017

    September 30, 2017

    Reporting Date:

    September 30, 2018

    September 30, 2018

    September 30, 2018

    Methods and Assumptions Used to Determine Net Pension Liability:

     

    Actuarial Cost Method: Entry Age Normal Entry Age Normal Entry Age Normal Inflation: 2.50% 5.00% 5.00%

    Salary Increases: 5.00%, including inflation 5.00% to 5.50%, including

    inflation

    5.00% to 8.80% per year

    Investment Rate of Return: 7.875% 7.50% 7.50%

    Long‐Term Municipal

    Bond Rate: 3.50% 3.50% 3.50%

    Retirement Age: Experience‐based table of rates that

    are specific to the type of eligibility condition.

    Age and experience‐based table of rates specific to the type of eligibility condition. Last updated for the 2012 valuation.

    Age‐based table of rates that are specific to the type of eligibility condition.

    Mortality: The Florida Retirement System (FRS) mortality tables for Special Risk Class members, based on the RP‐2000 fully generational Mortality Table with projection scale BB.

    The Florida Retirement System (FRS) mortality tables, based on the RP‐200 fully generational Mortality Table with projection scale BB.

    The Florida Retirement System (FRS) mortality tables, based on the RP‐200 fully generational Mortality Table with projection scale BB.

     

    Other Information: Effective for the Actuarial Valuation

    as of September 03, 2016, the investment return assumption was lowered from 8% to 7.875% and the mortality assumption was changed from the RP‐2000 Combined table to the mortality assumption used by the Florida Retirement System for Special Risk Class members. These changes were not yet reflected as of the measurement date. The combined impact of these assumption changes increased the Net Pension Liability by approximately $3.9 million and the impact of the plan change increased the Net pension Liability by approximately $2.0 million as measured in the September 30, 2017 actuarial report.

    No benefit changes changes reflected in the TPL as of September 30, 2015. Cost of living adjustments were 5.50% per year for Plan A recipients. 0.7% per year was used for Plan B recipients.

    Cost of living adjustments were 2.00% simple.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS ‐ CONTINUED

    The City is reporting deferred outflows of resources and deferred inflows of resources from the following sources at September 30, 2018:

    Deferred Outflows (Inflows)

    image

    City and State contribution subsequent to

     

    measurement date

    $

    5,012,935

    $

    8,526,593 $

    − 13,539,528

    Differences between expected and actual

     

     

     

     

     

    experience

    667,796

    (2,371,361)

    (1,703,565)

    Change of assumptions

    6,477,588

    4,702,884

    11,180,472

    Net difference between projected and

     

     

     

     

    actual

    8,098,073

    4,336,548

    1,423,134

    13,857,755

    Actual earnings on pension plan

    investments

     

    (15,559,345)

     

    (8,827,341)

     

    (2,625,191)

     

    (27,011,877)

    $ 4,697,047 $ 6,367,323

     

    (1,202,057)

    $

    9,862,313

     

    Description Police Firefighters Restated Total

    image image image image image

     

    $

    image image image image

     

    Amounts from Statement of Net Position: Deferred outflows ‐ pension $ 39,245,551

    Deferred inflows ‐ pensions (29,383,238)

    $ 9,862,313

    image

     

  2. Pension plan assets

    Discount rate: The discount rates illustrated in the table below were used to measure the total pension liability for all three plans. This rates were based on the expected rate of return on each pension plan investments. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the total actuarially determined contribution rates and the member rate. Based on these assumptions, the fiduciary net position of all funds was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long‐term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

    Discount

    1% Decrease Rate Assumption 1% Increase

     

     

    6.50%

    7.50%

    8.50%

    Restated Employees Pension

    $2,514,812

    ($2,432,217)

    ($6,580,831)

    Discount

    1% Decrease Rate Assumption 1% Increase

     

     

    7.00%

    8.00%

    9.00%

    Firefighters Pension

    $96,053,875

    $73,676,035

    $55,124,492

    Discount

    1% Decrease Rate Assumption 1% Increase

     

     

    6.875%

    7.875%

    8.875%

    Police Pension

    $30,382,623

    ($3,109,212)

    ($30,299,112)

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS – CONTINUED

    Sensitivity of the discount rate: Regarding the sensitivity of the net pension liability (asset) to changes in the single discount rate, the following presents each plan’s net pension liability (asset), calculated using a single discount rate of 8.00%, as well as what each plan’s net pension liability (asset) would be if it were calculated using a single discount rate that is one percentage point lower or one percentage point higher than the current rate assumption.

    The deferred outflows of resources resulting from City contributions to the pension plans subsequent to the measurement date will be recognized as a reduction of the net pension liability in the following fiscal year. Subsequent the measurement date of September 30, 2017, the City contributed $5,012,935 and $8,526,593 to the Police and Firefighters pension plans, respectively. The amount reported as a deferred outflow (inflow) of resources related to the pensions will be recognized in pension expense in future years as follows:

     

    Fiscal Year Ending

    September 30 Police Firefighters Restated

     

    2019

    $ 1,707,928

    $ (326,276)

    $ (375,358)

    2020

    2,324,711

    221,488

    153,479

    2021

    (2,031,114)

    (1,946,786)

    (456,479)

    2022

    (2,629,806)

    (1,411,172)

    (524,011)

    2023

    312,393

    636,633

    Thereafter

    ‐ 666,843

     

    $ (315,888) $ (2,159,270) $

    image image

    (1,202,369)

    image

     

    Long‐Term Expected Rate of Return The long‐term expected rate of return on pension plan investments was determined using a building‐block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long‐term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of September 30, 2018 are summarized in the following table.

     

     

    Asset Class

    Police Pension:

     

    Target Allocation

     

    Long‐Term Expected Real Rate of Return

    Large cap equity

    52%

    5.51%

    International equity

    13%

    8.53%

    Domestic bonds

    22%

    2.52%

    Real estate

    13%

    4.50%

     

    100%

     

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    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS – CONTINUED

    Firefighters Pension:

     

     

     

    Asset Class

    Target

    Allocation

    Long‐Term Expected

    Real Rate of Return

    Domestic equity

    50%

    4.2%

    International equity

    10%

    8.5%

    Domestic bonds

    20%

    2.5%

    International bonds

    5%

    3.5%

    Real estate

    10%

    4.5%

    Alternative assets

    5%

    6.2%

     

    100%

     

    image

     

     

    Restated Pension:

     

     

     

    Asset Class

    Target

    Allocation

    Long‐Term Expected

    Real Rate of Return

    Domestic equity

    50%

    7.5%

    International equity

    10%

    8.5%

    Domestic bonds

    20%

    2.5%

    Real Return

    10%

    3.5%

    Real estate

    5%

    4.5%

    Alternative assets

    5%

    6.0%

     

    100%

     

    image

     

     

  3. Defined contribution plan

     

    The Public Employee Defined Contribution Plan ("PEDCP") covers all full‐time employees except those covered by the Restated, Police, and Firefighters pension plans. The PEDCP is administered by the City through a third party administrator. Benefit provisions, contribution requirements and all other requirements of the PEDCP are established by West Palm Beach Code of Ordinances Sections 62‐131 through 62‐141.

     

    New employees are enrolled in the PEDCP upon successful completion of six months of employment. Vesting is immediate. Required and actual contributions represent 7.5% for employees and from 6.5% to 9.5% by the City, depending upon employee group and length of employment. Employer contribution expense for fiscal year 2018 was

    $3.6 million. The assets of the PEDCP are held in trust and are the sole property of the participants. No balances or financial information relative to the PEDCP are reported in the basic financial statements.

    CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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    NOTE O – EMPLOYEE RETIREMENT PLANS – CONTINUED

  4. Voluntary employees’ beneficiary association plans

 

The City participates in Voluntary Employees’ Beneficiary Association Plans (VEBA Plans) for the Firefighters, Police, General Employees, and Management Employees groups. Each of the VEBA plans is administered by a separate Board of Trustees. The assets of the VEBA Plans are held in trust and are the sole property of the participants. No balances or financial information related to the VEBA Plans are reported in the Basic Financial Statements.

 

Voluntary Employees' Beneficiary Association Plan for Firefighters (FF VEBA): The FF VEBA plan is authorized in the collective bargaining contract between the City and the West Palm Beach Association of Firefighters, Local 727 (the Contract). The Contract, effective January 9, 2012, requires the City to contribute 2% of pensionable earnings of members of the bargaining unit to the FF VEBA plan. In exchange, the members of the bargaining unit agreed to voluntary concessions of an equal value, resulting in no additional cost to the City.

 

The FF VEBA is administered by a Board of Trustees appointed by the bargaining unit with approval from the City. The Board of Trustees has approved and may amend the Agreement and Declaration of Trust, which sets out provisions for payment of benefits to the VEBA members. Liability of the City is limited to periodic contributions as required by the Contract.

 

Voluntary Employees' Beneficiary Association Plan for Police (Police VEBA): The Police VEBA is authorized in the collective bargaining unit between the City and the Palm Beach County Police Benevolent Association (the Contract). The Contract provides for a Voluntary Employees’ Beneficiary Association for members of the bargaining unit. The Contract requires the City to contribute 4% of pensionable earnings of members of the bargaining unit to the Police VEBA plan. In exchange, members of the bargaining unit agreed to voluntary concessions of an equal value, resulting in no additional cost to the City.

 

The Police VEBA is administered by a Board of Trustees appointed by the bargaining unit with approval from the City. The Board of Trustees has approved and may amend the Agreement and Declaration of Trust, which sets out provisions for payment of benefits to the Police VEBA members. Liability of the City is limited to periodic contributions as required by the Contract.

 

Voluntary Employees' Beneficiary Association Plans for General Employees (General Employees VEBA) and Management Employees (Management VEBA: In January 2007, the City Commission passed ordinance no. 4017‐07 establishing the Management Employees VEBA and the General Employees VEBA. The two plans cover elected officials of the City of West Palm Beach and all full time employees who are not covered by either the FF VEBA plan or the Police VEBA plan. The City Commission further authorized City contributions beginning January 1, 2007 in the amount of 1.65% of the salary of participating management employees and 2.15% of the salary of other eligible employees. The plans are administered by their respective Boards of Trustees, appointed partly by the City and partly by the membership of each plan. Each plan has a Declaration of Trust which has been approved and may be amended by the respective Board of Trustees and which sets out provisions for payment of benefits to the members. Effective October 1, 2010, employer contributions to the General Employees VEBA and the Management Employees VEBA were suspended. Liability of the City is limited to periodic contributions as required by Ordinance.

 

NOTE P – DEFERRED COMPENSATION PLANS

 

The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Service (“IRS”) Code Section 457 (“457 Plan”). The 457 Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or the hardship distribution criteria as defined in IRS Code Section 457. The assets of the plans are held in trust and are the sole property of the participants. No balances or financial information relative to the 457 Plan are reported in the basic financial statements.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE Q – RESTATEMENT

In accordance with GASB Statement No. 75, the City restated its balances related to other post employment (OPEB) liability Below are the details regarding the net liability for the measurement period from October 1, 2017 to September 30, 2018:

 

Governmental

Activities

 

Net position at beginning of year, as previously reported

$ 200,461,943

Restatement for implementation of GASB Statement No. 75

(6,309,556)

Net position at beginning of year, as restated

$ 194,152,387

image

 

NOTE R – OTHER POSTEMPLOYMENT BENEFITS

 

General Information about the OPEB Plan

 

The City is accounting for OPEB benefits through the Other Post‐Employment Benefits Trust Fund ("The OPEB Trust") established by the City Commission on September 23, 2008. No employee or retiree contributions to the Trust are required. Future contributions to the trust will be budgeted by the City Commission based on actuarially determined amounts. The OPEB Trust is a single employer fund administered by a Board of Trustees as designated in the Declaration of Trust. The OPEB Trust provides for the payment of implicit rate subsidies and other non‐pension post‐employment benefits for eligible retirees and their families. Amendments to the OPEB Trust must be in accordance with governing Ordinance No. 4106‐08, unless such Ordinance is subsequently amended by the City.

 

The City's OPEB plan is reported in accordance with Governmental Accounting Standards Board Statement No. 74, Financial Reporting for Post‐employment Benefits other than Pensions. Pursuant to Section 112.081, Florida Statutes, the City is required to permit eligible retirees and their eligible dependents to participate in the City's health insurance program at a cost to the retiree that is no greater than the cost to active employees. These retirees pay 100% of the blended rate for active and retired employees. Because the blended rate is greater than that of a plan including active employees only and less than that of a plan including retirees only, the amount the City expends for active employees includes an implicit subsidy for participating retirees and dependents.

 

OPEB calculations are based on the OPEB benefits provided under the terms of the substantive plan in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. Actuarial calculations for the OPEB plan reflect a long‐term perspective. The actuarial valuation involves estimates of the values of reported amounts and assumptions about the probability of events far into the future.

 

The Investment Policy of the City, as amended from time to time, shall serve as the investment policy for the Trustees and the Trusts Fund, subject to all applicable laws.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE R – OTHER POSTEMPLOYMENT BENEFITS– CONTINUED

 

GASB 75 Disclosures:

 

Employer Reporting Plan Membership: As of October 1, 2017, employee membership data related to the Plan is as follows:

 

Number of

Current retirees: Employees

Under age 65 17

Over age 65 206

Total current retirees 223

 

Active employees:

Active employees fully eligible for benefits

1312

Active employees not yet fully eligible for benefits

102

Total active employees

1414

Toal number of participants

1637

image

 

Investments:

 

The Plan does not have a formal investment policy and follows the investment policy of the primary government. The City’s target asset allocation for the OPEB investments is as follows:

 

 

 

Asset Class

Target

Allocation

Domestic Equity

50%

Domestic Bonds

10%

International Equity

20%

International Bonds

10%

Real Estate

5%

Alternative Assets

5%

Total

100%

 

image

 

Rate of return: For the year ended September 30, 2018, the annual money‐weighted rate of return on investments, net of investment expense, was 6%. The money‐weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE R – OTHER POSTEMPLOYMENT BENEFITS– CONTINUED

The long‐term expected rate of return on OPEB plan investments was determined using a building‐block method in which best – estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long‐term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of real rates of return for each major asset class included in the OPEB plan’s target asset allocation as of September 30, 2018, are summarized in the following table:

 

 

Asset Class

Long‐Term Expected Real Rate

of Return

 

Domestic Equity 7.50%

Domestic Bonds 8.50%

International Equity 2.50%

International Bonds 3.50%

Real Estate 4.50%

Alternative Assets 6.00%

 

Net OPEB Liability of the City:

 

The components of the net OPEB liability of the City at September 30, 2018, were as follows:

 

Net OPEB

 

 

Balance recognized at October 1, 2017, as restated

(Asset) Liability

 

$ (387,289)

Changes for the fiscal year:

 

Service cost

389,985

Interest on the total OPEB Liability

1,004,278

Changes in assumptions and other inputs

(514,353)

Contributions ‐ employer

(1,094,540)

Net investment income

674,736

Net change in net OPEB

460,106

Net OPEB liability at September 30, 2018

$ 72,817

Plan fiduciary net position as % of total OPEB liability

99.5%

Covered payroll

91,507,955

Net OPEB liability as % of covered payroll

15.3%

Measurement date

9/30/2018

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE R – OTHER POSTEMPLOYMENT BENEFITS– CONTINUED

At September 30, 2018, the City reported deferred outflows of resources related to the OPEB plan as follows:

 

Deferred Inflows

Description of Resources

 

Differences between expected and actual

experience $ (440,874)

$ (440,874)

image

 

The total OPEB liability was determined by an actuarial valuation as of September 30, 2018, using the following assumptions included in the measurement as follows:

 

Measurement date: For fiscal year ending September 30, 2018, September 30, 2018 measurement date was used

 

Actuarial Valuation date: October 1, 2017 with results actuarially projected on a "no gain/no loss" basis to get to the September 30, 2018 measurement date. Liabilitities as of October 1, 2017 are based on an actuarial valuation date of October 1, 2017.

 

Inflation: 3.0% per annum is included in the payroll growth rates.

 

Discount rate: 7.50%

 

Investment rate of return 7.50%

 

Payroll growth: The salary scale is based on the City's pension valuations as of September 30, 2016. Sample annual increases are shown below.

 

Police / Years of Service Fire General

0‐10

5.50%

5.00%

11‐12

5.25%

5.00%

23+

5.00%

5.00%

 

Healthcare cost trends: An initial rate of 9.00% decreasing to an ultimate rate of 5.00% fy FY 2027.

 

Mortality Rates: Based on RP‐2017 combined Mortality Table for general employees or the RP‐2017 Blue Col Mortality Table for public safety employees both full generational improvement in mortality using Scale AA.

CITY OF WEST PALM BEACH, FLORIDA

 

NOTES TO THE BASIC FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

 

NOTE R – OTHER POSTEMPLOYMENT BENEFITS – CONTINUED

 

 

The OPEB Trust Fund had the following changes in the net OPEB liability:

 

 

Total OPEB liability:

 

 

Service cost

$ 389,985

 

Interest

1,004,278

 

Difference between expected and actual experience

(514,353)

 

Benefit payments

(1,094,540)

 

Net change in total OPEB liability

(214,630)

 

Total OPEB liability ‐ beginning of year

13,537,760

 

Total OPEB liability ‐ end of year (a)

13,323,130

 

 

Plan Fiduciary Net Position:

 

 

Contributions ‐ employer

1,094,540

 

Contributions ‐active employees

 

 

Net investment income

(674,736)

 

Benefit payments

(1,094,540)

 

Trust administrative expenses

Net change in plan fiduciary net position

(674,736)

 

Plan Fiduciary Net Position ‐ beginning of year

13,925,049

 

Plan fiduciary net position ‐ end of year (b)

13,250,313

 

 

Net OPEB Liability ‐ end of year (a‐b)

 

$ 72,817

 

 

Discount rate: The discount rate used to measure the total OPEB liability was 7.50%. The projection of cash flows used to determine the discount rate assumes that City contributions will be made at rates equal to the actuarially determined contribution rates. The long‐term expected rate of return on OPEB plan investments are based on a blend of the expected long‐term rate of return on assets of 7.50% for benefit payments during the first seven years after the valuation date and a yield on 20‐year grade AA/Aa or higher municipal bonds of 7.50% per year for benefit payments beyond the first seven years after the valuation date.

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

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NOTE R – OTHER POSTEMPLOYMENT BENEFITS – CONTINUED

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate: The following table illustrates the impact of interest rate sensitivity on the net OPEB liability of the City as of September 30, 2018:

 

 

1% Decrease

Current

Discount Rate

 

1% Increase

6.50%

7.50%

8.50%

Net OPEB (Asset) LIability

$ (774,398)

$

72,817

$ 1,011,259

Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates: The following table illustrates the impact of healthcare cost trend rate sensitivity on the net OPEB liability of the City as of September 30, 2018:

 

 

1% Decrease

Current

Trend Rate

 

1% Increase

4.00%

5.00%

6.00%

Net OPEB (Asset) LIability

$ (986,229)

$

72,817

$ 1,277,244

OPEB Trust Fund financial statements for the fiscal year ended September 30, 2018, which are included in the Fiduciary Fund Financial Statements of this report, are as follows:

 

Accounting for the OPEB Trust Fund is done by City of West Palm Beach staff and separately issued audited statements are not available.

 

STATEMENT OF FIDUCIARY NET POSITION

September 30, 2018

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

For the Fiscal Year Ended September 30, 2018

 

Cash and Cash Equivalents

Interest receivable

$ 899,941

Additions:

Employer contributions

 

$ 1,094,540

Investments:

 

Change in FMV

(674,736)

Fixed Income

1,955,695

Total additions

419,804

Equities

9,966,670

 

 

Mutual Funds

428,007

Deductions:

 

Total Investments

12,350,372

Participant Payments

1,094,540

 

Total Assets

 

13,250,313

Total deductions

1,094,540

 

 

Net decrease

(674,736)

 

 

Net Position Restricted

 

 

 

 

for OPEB:

Beginning of year

 

13,925,049

 

Net position $ 13,250,313 End of year $ 13,250,313

image image

CITY OF WEST PALM BEACH, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2018

image

 

NOTE S – FUND BALANCE CONSTRAINTS

Fund balances are separated into five categories of constraints as shown in the following table:

 

 

General Fund

City Center Community Redevelopment Agency

Fund

Northwood/ Pleasant City Community Redevelopment

Agency Fund

 

Other Governmental

Funds

 

Total Governmental

Funds

 

Fund balances:

Nonspendable:

 

Advances to other funds

$ 617,000

$ ‐

$

$ ‐

$ 617,000

Inventories

378,338

 

60,967

439,305

Prepaid items

36,043

5,000

 

15,028

56,071

Advance to defined benefit

 

 

 

 

 

 

pension plan

3,624,747

 

 

 

3,624,747

Restricted:

 

 

 

 

 

 

Forfeiture

 

837,001

837,001

Cemetery trust

 

1,090,723

1,090,723

Transportation

 

15,660,518

15,660,518

Public safety

 

18,784,948

18,784,948

Economic environment

23,783,477

 

5,130,665

9,366,320

38,280,462

Capital outlay

 

31,838,929

31,838,929

Committed:

 

 

 

 

 

 

Emergency reserve

15,223,562

15,223,562

Land held for resale

 

2,862,290

2,862,290

Public safety

1,604,343

1,604,343

Leisure services

344,057

344,057

Capital outlay

8,746,729

8,746,729

Assigned:

 

 

 

 

 

For subsequent year's

 

 

 

 

 

expenditures

4,005,265

4,005,265

Unassigned

22,289,333

22,289,333

 

Total fund balances $ 46,174,288 $ 23,788,477 $ 5,130,665 $ 91,211,853 $ 166,305,283

image image image image image

 

The amounts above assigned for subsequent year’s expenditures represents outstanding encumbrances at year end.

 

T – SUBSEQUENT EVENT

Subsequent to fiscal year 2018, the City terminated all activities related to the golf course. As a result, the fund was closed.

image

image

 

REQUIRED SUPLEMENTARY INFORMATION

CITY OF WEST PALM BEACH, FLORIDA

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ‐ BUDGET AND ACTUAL ‐ BUDGETARY BASIS

GENERAL FUND

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

(UNAUDITED)

Variance with Final Budget ‐

 

Revenues:

Original

Budget Final Budget Actual

Positive

(Negative)

Taxes

$ 107,874,545

$ 107,874,545

$ 107,357,984

$ (516,561)

Licenses and permits

3,876,500

3,876,500

3,823,281

(53,219)

Intergovernmental

15,332,655

15,413,458

14,170,339

(1,243,119)

Charges for services

37,571,388

37,905,388

38,112,221

206,833

Fines and forfeitures

341,250

301,250

238,638

(62,612)

Rents and royalties

265,000

265,000

211,804

(53,196)

Interest

645,000

645,000

729,963

84,963

Miscellaneous

563,653

684,126

939,640

255,514

Total Revenues

166,469,991

166,965,267

165,583,870

(1,381,397)

Expenditures:

Current:

General government

33,637,665

38,066,428

34,349,711

3,716,717

Police ‐ public safety

56,898,436

59,702,978

58,861,591

841,387

Fire ‐ public safety

39,646,702

39,659,459

39,295,811

363,648

Public works

3,110,478

3,410,854

3,340,731

70,123

Economic environment

561,476

561,476

250,294

311,182

Engineering services

3,343,166

3,420,966

3,111,327

309,639

Health and sanitation

11,309,687

11,952,489

10,660,255

1,292,234

Leisure services

22,561,361

23,579,098

20,819,185

2,759,913

Capital outlay

1,161,112

4,303,002

1,737,229

2,565,773

Principal retirement

4,706,808

4,706,808

4,706,805

3

Interest charges

5,115,245

5,197,607

5,191,832

5,775

Total Expenditures

182,052,136

194,561,165

182,324,771

12,236,394

Excess (Deficiency) of Revenues

Over Expenditures (15,582,145) (27,595,898) (16,740,901) 10,854,997

Other Financing Sources (Uses):

 

Proceeds of a sale of capital assets

300,000

13,376,518

13,300,760

(75,758)

Transfers in

9,905,984

12,993,860

11,785,442

(1,208,418)

Transfers out

(3,433,850)

(11,054,739)

(12,160,946)

(1,106,207)

Total Other Financing Sources (Uses)

6,772,134

15,315,639

12,925,256

(2,390,383)

Net Changes in Fund Balances

$ (8,810,011) $

 

image

(12,280,259) $

image

(3,815,645) $

image

8,464,614

image

Fund Balances (Deficit) ‐ Beginning

 

 

45,984,668

 

 

Reconciliation of budgetary revenues to GAAP basis revenues:

Revenues reported in this statement

 

$ 165,583,870

Deduct administrative charges

(13,348,255)

Revenues GAAP basis

$ 152,235,615

image

 

Reconciliation of budgetary expenditures to GAAP basis expenditures:

Expenditures reported in this statement

$ 182,324,771

Deduct year‐end encumbrances

(4,005,265)

Deduct administrative expenditures

(13,348,255)

Expenditures GAAP basis

$ 164,971,251

image

CITY OF WEST PALM BEACH, FLORIDA

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ‐ BUDGET AND ACTUAL ‐ BUDGETARY BASIS

CITY CENTER COMMUNITY REDEVELOPMENT AGENCY FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

(UNAUDITED)

 

 

Original

Budget Final Budget Actual

Variance with Final Budget ‐ Positive

(Negative)

 

Revenues:

Taxes

$ 19,254,006

$ 19,254,006

$ 19,418,289

$ 164,283

Intergovernmental

13,611,927

14,111,927

12,844,773

(1,267,154)

Rents and royalties

329,509

329,509

253,497

(76,012)

Interest

120,000

120,000

332,316

212,316

Miscellaneous

16,122

16,122

Total Revenues

33,315,442

33,815,442

32,864,997

(950,445)

Expenditures:

Current:

Economic environment

22,777,846

26,172,768

18,410,040

7,762,728

Capital outlay

18,362,290

18,798,172

9,209,858

9,588,314

Debt service

 

 

 

 

Principal retirement

3,052,516

3,052,516

3,052,516

Interest charges

3,258,512

3,288,512

3,283,558

4,954

Total Expenditures

47,451,164

51,311,968

33,955,972

17,355,996

Excess (deficiency) of revenues over expenditures

 

(14,135,722)

 

(17,496,526)

 

(1,090,975)

 

16,405,551

Other financing sources (uses):

 

 

 

 

Transfers in

75,684

75,684

75,684

Transfers out

(2,438,131)

(2,700,631)

(2,700,631)

Total other financing sources (uses)

(2,362,447)

(2,624,947)

(2,624,947)

Net changes in fund balances

$ (16,498,169) $

 

image

(20,121,473) $

image

(3,715,922) $

16,405,551

image

 

Fund balances (deficit) ‐ beginning 27,504,399

 

Fund balances ‐ ending $ 23,788,479

image

CITY OF WEST PALM BEACH, FLORIDA

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ‐ BUDGET AND ACTUAL ‐ BUDGETARY BASIS

NORTHWOOD/PLEASANT CITY COMMUNITY REDEVELOPMENT AGENCY FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

(UNAUDITED)

 

 

Variance with

Final Budget ‐

 

Original

 

 

Positive

 

Budget

Final Budget

Actual

(Negative)

Revenues:

 

 

 

 

Taxes

$ 2,249,151

$ 2,249,151

$ 2,263,248

$ 14,097

Intergovernmental

1,462,681

1,507,661

1,401,457

(106,204)

Interest

20,000

20,000

51,461

31,461

Miscellaneous

25,000

25,000

60,100

35,100

Total revenues

3,756,832

3,801,812

3,776,266

(25,546)

Expenditures: Current:

Economic environment

1,778,457

4,073,437

1,408,121

2,665,316

Capital outlay

693,400

453,400

116,344

337,056

Debt service

 

 

 

Principal retirement

896,165

896,165

896,165

Interest charges

833,201

833,201

833,201

Insurance costs and other

1,500

1,500

289

1,211

Total expenditures

4,202,723

6,257,703

3,254,120

3,003,583

Excess (deficiency) of revenues over expenditures

 

(445,891)

 

(2,455,891)

 

522,146

 

2,978,037

Other financing sources (uses):

 

 

 

 

Transfers in

19

19

Total other financing sources (uses)

19

19

Net changes in fund balances

$ (445,891) $

 

image

(2,455,891) $

image

522,165 $

2,978,056

image

Fund balances (deficit) ‐ beginning

 

 

4,608,500

 

Fund balances (deficit) ‐ ending

 

 

$ 5,130,665

 

image

 

CITY OF WEST PALM BEACH, FLORIDA

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS POLICE PENSION FUND

LAST TEN FISCAL YEARS

(UNAUDITED)

 

 

Measurement

Year 2017

Measurement

Year 2016

Measurement

Year 2015

Measurement

Year 2014

Total Pension Liability ("TPL")

 

 

 

 

Changes for the Year:

 

 

 

 

Service Cost

$ 4,465,713 $

4,119,566

$ 3,720,389

$ 3,553,404

Interest on the TPL

26,458,916

25,142,553

23,790,608

22,792,357

Difference‐expected vs. actual

 

 

 

 

experience of TPL

335,340

264,885

439,779

294,048

Changes in assumptions

5,183,638

2,275,600

2,221,969

Benefit payments

(18,064,650)

(16,224,666)

(14,788,140)

(13,557,996)

Refunds

(25,530)

(93,453)

(60,567)

(168,503)

Other

2,237,938

1,683,012

2,110,393

84,844

Net Change in TPL

20,591,365

17,167,497

17,434,431

12,998,154

TPL balance ‐ beginning of year

337,548,681

320,381,184

302,946,753

289,948,599

TPL balance ‐ end of year

$ 358,140,046 $

image

337,548,681

image

$ 320,381,184

image

$ 302,946,753

image

 

Plan Fiduciary Net Position ("FNP") Changes for the year:

Contributions ‐ employer and state

4,618,111

60,986,435

9,857,010

10,041,651

Contributions ‐ employees

2,427,068

2,336,635

2,154,131

1,927,618

Net investment income

44,494,434

21,229,525

1,873,520

22,389,189

Benefit payments

(18,064,650)

(16,224,666)

(14,788,140)

(13,557,996)

Refunds

(25,530)

(93,453)

(60,567)

(168,503)

Pension plus administrative expense

(308,777)

(288,017)

(266,916)

(337,907)

Other

904,892

423,031

898,188

370,252

Net change in FNP

34,045,548

68,369,490

(332,774)

20,664,304

FNP balance ‐ beginning of the year

327,203,710

258,834,220

259,166,994

238,502,690

FNP balance ‐ end of the year $

361,249,258 $

image

327,203,710 $

image

258,834,220 $

image

259,166,994

image

 

Net Pension Liability

 

(3,109,212)

image

 

10,344,971

image

 

61,546,964

image

 

43,779,759

image

 

Plan FNP as a percentage of TPL

 

100.87%

image

 

96.94%

image

 

80.79%

image

 

85.55%

image

Covered payroll $

21,679,436 $

image

20,603,955 $

image

18,805,018 $

image

17,446,782

image

NPL as a percentage of covered payroll

‐14.34%

 

image

50.21%

image

327.29%

image

250.93%

image

CITY OF WEST PALM BEACH, FLORIDA

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS FIREFIGHTERS PENSION FUND

LAST TEN FISCAL YEARS

(UNAUDITED)

 

 

Total Pension Liability ("TPL") changes for the Year:

Measurement

Year 2017

Measurement

Year 2016

Measurement

Year 2015

Measurement

Year 2014

 

Service Cost

$ 3,997,127 $

3,934,074 $

3,764,066 $

3,648,784

Interest on the TPL

13,652,932

13,153,854

12,846,010

12,333,803

Difference‐expected vs. actual

 

 

 

 

experience of TPL

(944,506)

(75,341)

(2,709,527)

Changes in assumptions

5,482,333

Benefit payments

(17,896,859)

(14,902,198)

(14,063,173)

(15,745,308)

Refunds

(225,496)

(19,093)

(246,947)

(202,153)

Other

11,407,181

13,603,677

7,613,395

14,700,037

Net Change in TPL

15,472,712

15,694,973

7,203,824

14,735,163

TPL balance ‐ beginning of year

265,476,719

249,781,746

242,577,922

227,842,759

 

TPL balance ‐ end of year

 

$ 280,949,431 $

image

 

265,476,719

image

 

$

 

249,781,746

image

 

$

 

242,577,922

image

 

Plan Fiduciary Net Position ("FNP") Changes for the year:

Contributions ‐ employer and state 7,594,810

7,665,074

7,530,174

7,370,114

Contributions ‐ employees 5,631,366

3,778,776

2,963,279

5,254,738

Net investment income 23,590,017

16,158,856

3,085,047

15,770,182

Benefit payments (17,896,859)

(14,902,198)

(14,063,173)

(15,745,308)

Refunds (225,496)

(19,093)

(246,947)

(202,153)

Pension plus administrative expense (183,315)

(164,821)

(204,066)

(160,459)

Other 19,789

56,439

58,204

107,826

Net change in FNP 18,530,312

12,573,033

(877,482)

12,394,940

FNP balance ‐ beginning of the year 188,743,084

176,170,051

176,974,492

164,579,552

Adjustment ‐

73,041

FNP balance ‐ end of the year $ 207,273,396 $

 

image

188,743,084 $

image

176,170,051 $

image

176,974,492

image

 

Net Pension Liability 73,676,035

 

image

 

76,733,635

image

 

73,611,695

image

 

65,603,430

image

 

Plan FNP as a percentage of TPL 73.78%

 

image

 

71.10%

image

 

70.53%

image

 

72.96%

image

Covered payroll $ 17,540,397 $

 

image

16,634,526 $

image

16,144,923 $

image

15,363,247

image

NPL as a percentage of covered payroll 420.04%

 

image

461.29%

image

455.94%

image

427.02%

image

CITY OF WEST PALM BEACH, FLORIDA

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS RESTATED EMPLOYEES PENSION FUND

LAST TEN FISCAL YEARS

(UNAUDITED)

 

 

Total Pension Liability ("TPL") changes for the Year:

Measurement

Year 2017

Measurement

Year 2016

Measurement

Year 2015

Measurement

Year 2014

 

Service Cost

$ 86,849

$ 97,056

$ 44,894

$ 54,631

Interest on the TPL

3,225,757

2,998,902

3,005,049

2,971,240

Difference‐expected vs. actual

 

 

 

 

experience of TPL

(374,998)

(273,566)

(467,954)

Changes in assumptions

2,171,968

2,790,291

Benefit payments

(2,830,193)

(2,713,596)

(2,656,230)

(2,507,730)

Refunds

(32,817)

Net Change in TPL

2,279,383

2,899,087

(74,241)

485,324

 

TPL balance ‐ beginning of year

 

41,693,629 38,794,542

 

38,868,783

 

38,383,459

 

TPL balance ‐ end of year

 

$ 43,973,012

image

 

$

 

41,693,629

 

$

 

38,794,542

 

$

 

38,868,783

 

image

image

image

Plan Fiduciary Net Position ("FNP") Changes for the year:

Contributions ‐ employer and state

 

Contributions ‐ employees 78,838

85,170

93,620

106,999

Net investment income 5,968,401

2,992,915

456,643

5,888,760

Benefit payments (2,830,193)

(2,713,596)

(2,656,230)

(2,507,730)

Refunds ‐

(32,817)

Pension plus administrative expense (87,504)

(84,157)

(83,101)

(78,375)

Other 3,774

6,518

2,380

2,139

Net change in FNP 3,133,316

286,850

(2,186,688)

3,378,976

FNP balance ‐ beginning of the year 43,271,913

42,985,063

45,171,494

41,792,518

Adjustment ‐

257

FNP balance ‐ end of the year

$ 46,405,229

image

$ 43,271,913

image

$ 42,985,063

image

$ 45,171,494

image

 

Net Pension Liability

 

(2,432,217)

 

(1,578,284)

 

(4,190,521)

 

(6,302,711)

 

Plan FNP as a percentage of TPL

 

105.53%

image

 

103.79%

image

 

110.80%

image

 

116.22%

image

Covered payroll

$ 1,500,533

image

$ 1,672,545

image

$ 1,814,346

image

$ 2,019,761

image

NPL as a percentage of covered pa

yroll ‐162.09%

image

‐94.36%

image

‐230.97%

image

‐312.05%

image

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF METHODS AND ASSUMPTIONS MEASUREMENT DATE SEPTEMBER 30, 2018

(UNAUDITED)

 

METHODS AND ASSUMPTIONS USED TO DETERMINE THE PENSION CONTRIBUTION RATES:

Police Pension Fund:

Actuarial cost method Entry age normal

Amortization method Level percentage of payroll, closed Remaining amortization period 30 years

Asset valuation method 4‐year smoothed market

Inflation 2.50%

Salary increases 5.00%, including inflation

Investment rate of return 7.75%

Retirement Age Experience‐based table of rates that are specific to the type of eligibility condition

 

 

Mortality

The Florida Retirement System (FRS) mortality tables for Special Risk Class members, based on the RP‐2000 fully generational Mortality Table with projection scale BB.

 

Cost‐of‐living adjustment

 

Benefits increase by an amount equal to the increase in the Consumer Price Index following the attainment of age 65 by each retiree.

 

Firefighters Pension Fund:

Actuarial cost method Entry age normal

Amortization method Level percent of payroll, closed Remaining amortization period 1‐30 years

Asset valuation method 4‐year smoothed market

Inflation 5%

Salary increases 5.00 to 5.50%, including inflation Long‐term expected investment

rate of return 8.00%

Long‐term municipal bond rate 3.83%

 

Retirement Age Age and experience‐based table of rates that are specific to the type of eligibility condition. Last updated for the 2012 valuation.

The Florida Retirement System (FRS) mortality tables which use

Mortality

variations of the RP‐2000 fully generational Mortality Tables projection scale BB.

 

 

Cost‐of‐living adjustment

 

5.5% a year for Plan A pension recipients (hired prior to May 1, 1959). Implied 0.7% a year for prior Plan B pension recipients as of September 30, 1998, if aggregate gains from all sources do not limit it.

 

Continued

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF METHODS AND ASSUMPTIONS MEASUREMENT DATE SEPTEMBER 30, 2018

(UNAUDITED)

 

METHODS AND ASSUMPTIONS USED TO DETERMINE THE PENSION CONTRIBUTION RATES

Restated Employees Pension Fund:

Actuarial cost method Aggregate

Amortization method Level percent of payroll, closed Remaining amortization period 10 years

Asset valuation method Market value

Invlation 5.00%

Salary increases 5.00% to 8.80 % per year

Investment rate of return 7.50%

Long‐term municipal bond rate 3.50%

Retirement Age Age‐based tables that are specific to the type of eligibility condition.

 

 

Mortality

The Florida Retirement System (FRS) mortality tables which use variations of the fully generational RP‐2000 Mortality Tables with projection scale BB.

 

 

Cost‐of‐living adjustment Benefits increase by 2% per year, assuming the CPI has increased by at

least that amount, after being eligible employees retired for a year.

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY CONTRIBUTIONS

FOR THE LAST FIVE FISCAL YEARS

(UNAUDITED)

 

 

Fiscal Year Ended September 30:

Police

Pension Fund

Firefighters

Pension Fund

Restated Employees

Pension Fund

 

2014 Actuarially determined employer contributions

 

$ 8,941,538

 

$ 7,341,139

 

$ 1,350,431

Actual contributions

10,041,651

7,623,161

1,350,431

Contribution deficiency (excess)

(1,100,113)

(282,022)

Covered payroll

$ 17,446,782

$ 15,363,247

$ 2,019,761

Actual contribution as % of covered payroll

57.6%

49.6%

66.9%

 

2015 Actuarially determined employer contributions

 

$ 9,744,918

 

$ 7,194,839

 

$ 728,137

Actual contributions

8,644,805

7,530,174

728,137

Contribution deficiency (excess)

1,100,113

(335,335)

Covered payroll

$ 18,805,018

$ 16,144,923

1,814,346

Actual contribution as % of covered payroll

46.0%

46.6%

40.1%

 

2016 Actuarially determined employer contributions

 

$ 9,726,454

 

$ 7,130,564

 

Actual contributions

59,726,454

7,665,074

Contribution deficiency (excess)

(50,000,000)

(534,510)

Covered payroll

$ 20,603,955

$ 16,634,526

1,672,545

Actual contribution as % of covered payroll

289.9%

46.1%

0.0%

 

2017 Actuarially determined employer contributions

 

$ 3,285,065

 

$ 7,277,740

 

$ 795,214

Actual contributions

3,285,065

7,594,810

795,214

Contribution deficiency (excess)

(317,070)

$ ‐

Covered payroll

$ 21,679,436

$ 17,540,397

1,500,533

Actual contribution as % of covered payroll

15.2%

43.3%

53.0%

 

2018 Actuarially determined employer contributions

 

$ 3,131,968

 

$ 8,526,593

 

$ 946,538

Actual contributions

3,556,968

9,398,714

946,538

Contribution deficiency (excess)

(425,000)

(872,121)

Covered payroll

$ 23,929,891

$ 19,303,606

1,407,812

Actual contribution as % of covered payroll

14.9%

48.7%

67.2%

 

Notes: (1)

 

In 2013, the City contributed the full amount of the outstanding pension liability to the Restated Pension Plan. The payment was booked as a prepayment and each year the city recognizes contribution expenditures based on the actuarially determined contribution amount.

 

(2) This schedule is presented to illustrate the requirement to show information for 10 years. However, until a

full 10‐year trend is compiled, only information for those years for which data are available will be presented.

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS POLICE PENSION FUND

FOR THE LAST FIVE FISCAL YEARS

(UNAUDITED)

 

 

Annual money‐weighted rate of return,

September 30, September 30, September 30, September 30, September 30,

2018 2017 2016 2015 2014

net of investment expenses 10.04% 13.29% 8.35% 0.35% 8.98%

 

Note:

This Schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10‐year trend is compiled, only information for those years for which data are available will be presented.

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS FIREFIGHTERS PENSION FUND

FOR THE LAST FIVE FISCAL YEARS

(UNAUDITED)

 

 

Annual money‐weighted rate of return,

September 30, September 30, September 30, September 30, September 30,

2018 2017 2016 2015 2014

net of investment expenses 11.67% 12.64% 9.40% 2.07% 10.17%

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS RESTATED EMPLOYEES PENSION FUND

FOR THE LAST FIVE FISCAL YEARS

(UNAUDITED)

 

 

Annual money‐weighted rate of return,

September 30, September 30, September 30, September 30, September 30,

2018 2017 2016 2015 2014

net of investment expenses 8.88% 14.48% 7.33% 1.13% 14.75%

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY CONTRIBUTIONS

AS REQUIRED BY GASB 74

OTHER POST‐EMPLOYMENT BENEFITS FOR THE LAST TWO FISCAL YEARS

(UNAUDITED)

 

 

September 30,

 

September 30,

2018

 

2017

Actuarially Determined Contribution (ADC)

$

1,094,540

$

945,053

Contributions made in relation to the ADC

 

1,094,540

 

945,053

Contribution ‐ deficiency (excess)

$

$

image

 

Covered payroll

 

$

 

91,507,955

 

$

 

88,842,675

image

Contribution as a % of covered employee payroll

 

1.20%

 

1.06%

image

 

Notes to Schedule:

 

 

 

 

Valuation date

 

September 30, 2018

 

September 30, 2017

 

The following actuarial methods and assumptions were used in 2017 to determine contribution rates reported in this schedule:

 

Actuarial cost method

Entry age normal

Entry age normal

Amortization method

Level % of salary

Level % of salary

Amortization period

15 Years

15 Years

Asset valuation method

 

 

Actuarial assumptions:

 

 

Inflation rate

3%

3%

Investment rate of return

7.5%

7.5%

Discount rate

7.5%

7.5%

 

Healthcare cost trend rates Medical

Select rates 9% for 2017/2018 graded 9% for 2016/2017 graded to 6.0% 2023/2024 to 6.5% 2022/2023

Ultimate rates 5% 5%

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS

AS REQUIRED BY GASB 74

OTHER POST‐EMPLOYMENT BENEFITS FOR THE LAST TWO FISCAL YEARS

(UNAUDITED)

 

 

September 30,

September 30,

2018

2017

Total OPEB liability

 

 

Service cost

$ 389,985

$ 434,206

Interest

1,004,278

928,592

Changes in assumptions

194,768

Difference between expected and actual experience

(514,353)

80,037

Benefit payments

(1,094,540)

(945,053)

Net change in total OPEB liability

(214,630)

692,550

Total OPEB liability ‐ beginning of year

13,537,760

12,845,210

Total OPEB liability ‐ end of year (a)

13,323,130

image

13,537,760

image

 

Plan Fiduciary Net Position

 

 

Contributions ‐ employer

1,094,540

1,890,106

Net investment income

(674,736)

1,403,589

Benefit payments

(1,094,540)

(945,053)

Trust administrative expenses

(27,359)

Net change in plan fiduciary net position

(674,736)

2,321,283

Plan Fiduciary Net Position ‐ beginning of year

13,925,049

11,603,766

Plan fiduciary net position ‐ end of year (b)

13,250,313

13,925,049

Net OPEB Liability ‐ end of year (a) ‐ (b)

$ 72,817

image

$ (387,289)

image

 

Plan fiduciary net position as % of total OPEB liability

 

99.5%

 

102.9%

Covered payroll

91,507,955

88,842,675

Net OPEB liability as % of covered payroll

0.1%

‐0.4%

Measurement date

9/30/2018

9/30/2017

CITY OF WEST PALM BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS

AS REQUIRED BY GASB 74

OTHER POST‐EMPLOYMENT BENEFITS FOR THE LAST TWO FISCAL YEARS

(UNAUDITED)

 

 

Annual money‐weighted rate of return, net of investment expenses

September 30, September 30,

2018 2017

 

6.00% 6.00%

 

Note:

This Schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10‐year trend is compiled, only information for those years for which data are available will be presented

CITY OF WEST PALM BEACH, FLORIDA

NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2018

image

 

Budgetary Data

 

The City Commission follows these procedures in establishing the budgetary data reflected in the financial statements:

  1. Prior to August 1, the City Administration submits to the City Commission a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and the means of financing them.

  2. Public hearings are conducted.

  3. Prior to October 1, the budget is legally enacted.

  4. The level of control (level at which expenditures may not exceed budget) is the department. The City Administrator is authorized to transfer budgeted amounts within departments of any fund. The City Commission must approve any revisions that alter the total expenditures of any department.

  5. Annual budgets are adopted for all actively utilized governmental and proprietary funds. The original and final budgets, as presented, include re‐appropriated encumbrances of the prior year. The budgets have been adopted on a basis consistent with GAAP with the following exceptions:

Annual budgets for all the major and nonmajor governmental funds are prepared on the modified accrual basis of accounting, except for the General Fund. The General Fund budget is prepared on the modified accrual basis of accounting except that current year encumbrances are treated as expenditures for budgetary purposes and administrative charges from other funds are budgeted as revenue in the General Fund. All unencumbered and unexpended appropriations lapse at the fiscal year end, except those for ongoing capital projects and special revenue funds which are brought forward and become part of the subsequent year’s original budget.

 

The reported budgetary data represents the final approved budget after amendments adopted by the City Commission with one exception. Budgets for grants and shared revenues from other governmental units which do not lapse at yearend are only reported to the extent of revenues recognized and expenditures incurred for the current year.

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image

 

COMBINING AND INDIVIDUAL FUND

STATEMENTS AND SCHEDULES

image

image

 

NON–MAJOR GOVERNMENTAL FUNDS

CITY OF WEST PALM BEACH, FLORIDA NON‐MAJOR GOVERNMENTAL FUNDS

image

 

SPECIAL REVENUE FUNDS

 

Special revenue funds are used to account for the proceeds of specific revenue sources (other than debt service or major capital projects) requiring separate accounting because of legal or regulatory provisions or administrative action.

 

Local Gas Tax Fund ‐ This fund accounts for revenue received from the State of Florida, which collects and remits to the City a portion, based on City population, of the Local Option Sixth Cent Fuel Tax from the sale of gasoline in Palm Beach County. The revenue is restricted to use for road and street improvements.

 

Mandel Library Grant Fund ‐ This fund accounts for grant revenues received from the Mandel Foundation. The Library’s uses of the foundations’ grant proceeds are restricted to specific programs as proposed by the grantor in conjunction with City administration.

 

Impact Fees Western Expansion Fee Fund ‐ This fund accounts for impact fees restricted for three programs: Affordable Housing Trust Fund; the wetlands mitigation program for Roebuck/Jog Road; and/or the construction of the City’s public safety facility in the area.

 

Community Development Fund ‐ This fund accounts for revenue received from the Department of Housing and Urban Development. The revenue is restricted to accomplishing the various objectives of the Community Development Block Grant Program.

 

Neighborhood Stabilization Fund ‐ This fund accounts for revenue received from a federal grant. The revenues of the fund are restricted for the purpose of the acquisition, rehabilitation, and retention of low, moderate and medium income housing.

 

Home Program Fund ‐ This fund accounts for grant revenues received from the Department of Housing and Urban Development for the HOME Investment Partnership Program. The revenue is restricted for activities related to new construction, rehabilitation, acquisition, and allowable operating and administrative expenses.

 

HOPWA Fund ‐ This fund accounts for grant revenues received from the Department of Housing and Urban Development for the “Housing Opportunities for Persons with AIDS Program”. The revenue is restricted for housing opportunities and support services to individuals with AIDS and related diseases.

 

SHIP Program Fund ‐ This fund accounts for grant revenues received from the State of Florida Department of Community Affairs for the State Housing Initiatives Partnership program. The revenue is restricted for activities relating to new construction, rehabilitation, land acquisition, down‐payment assistance and allowable operating and administrative costs.

 

Housing Trust Fund ‐ This fund accounts for revenues used for the development of affordable housing. Primary funding sources include proceeds from the sale of City‐owned properties designated for affordable housing, and proceeds from the sale of City‐owned Transfer of Development Rights (TDRs).

 

Permits Fund ‐ This fund accounts for all building permit fees. State statute restricts the use of these fees for building permitting and inspection activities.

 

Fire Assessment Fund ‐ This fund accounts for special assessment revenue assessed and received from taxpayers for the purpose of funding the operations, improvements, or replacement of fire equipment and machinery.

 

Red Light Camera Fund ‐ This fund accounts for special assessment revenue assessed and received from traffic citations for the purpose of funding the operations, improvements, or replacement of Police equipment and machinery.

CITY OF WEST PALM BEACH, FLORIDA NON‐MAJOR GOVERNMENTAL FUNDS (CONTINUED)

image

 

Waterfront District Fund ‐ This fund accounts for expenditures associated with promotional activities at the City’s waterfront park.

 

Special Revenue Grant Programs Fund ‐ This fund is used to account for the proceeds and expenditures from federal, state and local grant awards that do not have a requirement to be accounted for in a separate governmental fund.

 

Cemetery Sinking Fund ‐ This fund is used to account for the proceeds from the sale of cemetery lots to be used for care and maintenance of the cemetery.

 

Miscellaneous Trust Fund ‐ This fund is used to account for assets seized and forfeited in the course of law enforcement activities.

 

DEBT SERVICE FUND

 

The debt service fund is used to account for resources that are restricted, committed or assigned to payment of principal, interest and other expenditures on general long‐term debt, other than bonds payable from the operations of the enterprise funds.

 

2005 General Obligation Bonds Fund – This fund accounts for principal and interest payments of the 2005 General Obligation Bonds.

 

CAPITAL PROJECT FUNDS

 

Capital projects funds are used to account for financial resources segregated for the acquisition or construction of major capital facilities other than those financed by enterprise operations.

 

Other Capital Projects Fund ‐ This fund accounts for various capital projects not accounted for in a separate fund. Projects include improvements to various parks, renovations to City Buildings, and various landscaping through out the City.

 

Art in Public Places Fund ‐ By local ordinance, 1% of most City construction projects, up to a maximum of $150,000 per fiscal year, must be set aside for the selection, commission, acquisition and maintenance of art in public places. This fund was created to account for the expenditure of such funds, other than projects funded by bonds.

 

City Commons & Waterfront Park Construction Fund – This fund was specifically created to account for the construction of the City Commons and the Waterfront Park.

 

Infrastructure Surtax Fund ‐ This fund accounts for revenues derived from the voter approved one‐cent sales surtax program which are earmarked for various infrastructure capital projects such as roads, bridges, schools and government buildings, not accounted for in a separate fund.

 

2016 Capital Bond Fund ‐ This fund accounts for the acquisition and construction of various improvements through out the City, funded by this bond series.

 

Vehicle Replacement Fund ‐ This fund is used to account for the replacement of all City owned vehicles used by governmental activities.

CITY OF WEST PALM BEACH, FLORIDA NON‐MAJOR GOVERNMENTAL FUNDS (CONTINUED)

image

 

Technology Replacement Fund ‐ This fund is used to account for replacement of equipment used in providing data processing and telecommunications services used by governmental activities.

 

NPCCRA Series 2005A Construction Fund ‐ This fund accounts for the taxable portion of the Northwood / Pleasant City Bond for land acquisition and development costs.

 

NPCCRA Series 2005B Construction Fund ‐ This fund accounts for the non‐taxable portion of the Northwood / Pleasant City Bond for renewal and development costs.

 

Capital Grants Fund ‐ This fund is used to account for the proceeds and expenditures from federal, state and local grant awards used in the construction of capital assets that do not have a requirement to be accounted for in a separate governmental fund.

 

Land Acquisition Fund ‐ This fund accounts for land holdings purchased by the City for future development.

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image

CITY OF WEST PALM BEACH, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS

image

SEPTEMBER 30, 2018

 

 

Special Revenue

Funds

 

Debt Service

Funds

 

Capital Project

Funds

Total

Non‐major Governmental

Funds

 

image

ASSETS:

 

 

 

Cash and cash equivalents $ 10,493,458

$ 93,181

$ 6,763,819

$ 17,350,458

image

Investments

23,430,340

249,793

18,131,876

41,812,009

image

Receivables, net

 

 

 

 

Accounts

541,589

1,256,353

1,797,942

image

Interest

107,878

1,083

67,286

176,247

image

Notes

1,641,629

1,641,629

image

Liens & assessments

126,249

126,249

Due from other funds

10,474,787

10,474,787

Due from other governments

1,460,429

963,072

2,423,501

image

Inventory

60,967

60,967

image

Land held for resale

2,585,734

2,856,572

5,442,306

Prepaid items

15,028

 

15,028

Investment in direct financing leases

4,453,855

4,453,855

image

Restricted assets:

 

 

 

 

Cash and cash equivalents

13,798,039

13,798,039

Investments

12,183,372

12,183,372

image

Interest

38,107

38,107

image

Total assets

50,938,088

image

344,057

image

60,512,351

image

111,794,496

image

image

LIABILITIES:

Accounts payable and

 

 

 

 

image

accrued liabilities

4,367,140

2,384,573

6,751,713

image

Deposits payable

20,731

20,731

image

Unearned revenue

47,464

47,464

Due to other governments

146,635

146,635

Due to other funds

1,608,263

11,205,138

12,813,401

image

Total liabilities

6,190,233

13,589,711

19,779,944

DEFERRED INFLOW OF RESOURCES:

 

 

 

 

image

Unavailable revenue

802,699

image

image

image

802,699

image

FUND BALANCES:

 

 

 

 

 

 

 

image

Nonspendable

75,995

 

 

 

75,995

image

Restricted

42,264,818

 

344,057

 

35,313,621

 

77,922,496

image

Committed 1,604,343

11,609,019

13,213,362

Total fund balances 43,945,156

344,057

46,922,640

 

image

91,211,853

image

 

image

Total liabilities, deferred inflows

image

and fund balances $ 50,938,088 $ 344,057 $ 60,512,351 $ 111,794,496

image image image image

 

image

CITY OF WEST PALM BEACH, FLORIDA

image

image

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS

image

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018

 

 

 

Special Revenue

Funds

 

Debt Service

Funds

 

Capital Project

Funds

Total

image

Non‐major Governmental

Funds

REVENUES:

 

 

 

 

image

Taxes

$ ‐

$ 1,689,039

$ ‐

$ 1,689,039

image

Licenses and permits

10,697,549

10,697,549

image

Intergovernmental

10,210,467

8,434,345

18,644,812

image

Charges for services

3,323,774

419,214

3,742,988

Fines and forfeitures

13,255

13,255

image

Rents and royalties

511,810

511,810

Interest

287,356

8,560

507,794

803,710

Miscellaneous

709,573

709,573

Total revenues

25,753,784

1,697,599

9,361,353

 

image

36,812,736

image

EXPENDITURES:

 

 

 

 

image

Current:

 

 

 

 

image

General government

26,850

26,850

image

Public safety

9,696,608

1,276,493

10,973,101

image

Public works

1,106,419

300,729

1,407,148

image

Economic environment

6,325,714

817,539

7,143,253

image

Engineering services

25,891

25,891

image

Leisure services

4,156,981

923,534

5,080,515

Capital outlay

265,171

25,075,128

25,340,299

image

Debt service:

 

 

 

 

Principal

564,141

1,400,000

1,964,141

Interest

284,126

147,400

431,526

image

Total expenditures

22,399,160

1,547,400

28,446,164

 

image

52,392,724

image

 

image

Excess (deficiency) of revenues over expenditures

 

3,354,624

 

150,199

 

(19,084,811)

 

(15,579,988)

OTHER FINANCING

 

 

 

 

SOURCES (USES):

 

 

 

 

Capital leases

5,927,953

5,927,953

image

Proceeds from sale of capital assets

351,807

351,807

image

Transfers in

3,173,200

9,825,122

12,998,322

image

Transfers out

(3,330,603)

(1,969,261)

(5,299,864)

image

Total other financing

 

 

 

 

sources (uses)

194,404

13,783,814

13,978,218

 

image

Net change in

 

 

 

 

image

fund balances 3,549,028

150,199

(5,300,997)

(1,601,770)

image

FUND BALANCES, beginning 40,396,128

193,858

52,223,637

92,813,623

FUND BALANCES , ending

$ 43,945,156

image

$ 344,057

image

$ 46,922,640

image

image

$ 91,211,853

image

 

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CITY OF WEST PALM BEACH, FLORIDA COMBINING BALANCE SHEET NON‐MAJOR SPECIAL REVENUE FUNDS

SEPTEMBER 30, 2018

 

 

Impact

 

Fees

 

Neighborhood

 

 

Local

Mandel

Western

Community

Stabilization

HOME

 

SHIP

Gas Tax

Library SR

Expansion

Development

Program

Program

HOPWA

Program

Fund

Fund

Fee Fund

Fund

Fund

Fund

Fund

Fund

 

ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$ 2,433,010

$

$ 207,628

$ 18,872

$ 136,926

$ 1,484,218

$ 8,363

$ 396,005

Investments

6,522,207

 

556,593

50,591

367,060

46,251

22,417

294,454

Receivables, net

 

 

 

 

 

 

 

 

 

Accounts

398,140

 

Interest

35,037

 

2,403

1,243

Notes

 

517,666

40

1,123,363

560

Liens & assessments

 

Due from other funds

3,474,692

 

Due from other governments

 

388,663

368,628

Inventory

 

Prepaid items

 

Investment in direct financing leases

 

Land held for resale

 

2,487,196

98,538

Total assets

12,863,086

image

 

image

1,284,290

image

458,166

image

4,114,545

image

1,629,567

image

399,408

image

691,702

image

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Accounts payable and

 

 

 

 

 

 

 

 

accrued liabilities

677,260

119,826

21,169

1,797

144,639

99,726

Deposits payable

Unearned revenue

 

Due to other governments

Due to other funds

338,301

480,880

254,769

Total liabilities

677,260

image

image

image

458,127

image

21,169

image

482,677

image

399,408

image

99,726

image

DEFERRED INFLOW OF RESOURCES:

 

 

 

 

 

 

 

 

 

Unavailable revenue

 

image

 

510,586

image

 

image

 

169,707

image

 

image

 

image

 

image

FUND BALANCES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonspendable

 

 

 

 

 

 

 

Restricted

12,185,826

 

 

773,704

 

39

 

3,923,669

 

1,146,890

 

 

591,976

Commi tted

 

 

 

 

 

 

 

Total fund balances (deficit)

12,185,826

 

 

773,704

 

39

 

3,923,669

 

1,146,890

 

 

591,976

 

Total liabilities, deferred inflows

 

 

 

 

 

 

 

 

 

 

 

and fund balances (deficit) $ 12,863,086

$

image

$ 1,284,290

image

$

458,166

$ 4,114,545

$ 1,629,567

$

399,408

$

691,702

image

image

image

image

image

image

Continued

CITY OF WEST PALM BEACH, FLORIDA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS

SEPTEMBER 30, 2018

 

 

 

 

Special

 

 

Total

Red

 

Revenue

 

 

Nonmajor

 

Housing

 

 

Fire

Light

Waterfront

Grant

Cemetery

Miscellaneous

Special

 

Trust

Permi ts

 

Assessment

Camera

District

Programs

Sinking

Trust

Revenue

 

Fund

Fund

 

Fee Fund

Fund

Fund

Fund

Fund

Fund

Funds

ASSETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$ 497,799

$ 4,157,598

$

$ 13,728

$ 493,354

$ 135,924

$ 266,834

$ 243,199

$ 10,493,458

Investments

1,334,459

11,145,338

 

36,800

1,322,542

364,375

715,306

651,947

23,430,340

Receivables, net

 

 

 

 

 

 

 

 

 

 

Accounts

 

16,041

19,418

107,990

541,589

Interest

5,662

45,607

 

5,805

158

5,960

3,090

2,913

107,878

Notes

 

1,641,629

Liens & assessments

126,249

 

126,249

Due from other funds

 

6,853,542

146,553

10,474,787

Due from other governments

3,023

 

1,650

698,465

1,460,429

Inventories

 

60,967

60,967

Prepaid items

 

15,028

15,028

Investment in direct financing leases

 

Land held for resale

 

2,585,734

Total assets

1,837,920

image

15,477,815

image

 

6,890,416

image

70,104

image

1,931,496

image

1,198,764

image

1,192,750

image

898,059

image

50,938,088

image

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Accounts payable and

 

 

 

 

 

 

 

 

 

accrued liabilities

404,248

2,433,336

277,110

106,642

41,060

40,327

4,367,140

Deposits payable

20,731

20,731

Unearned revenue

47,464

47,464

Due to other governments

144,056

2,579

146,635

Due to other funds

534,313

1,608,263

 

548,304

 

2,967,649

 

 

327,153

 

106,642

 

41,060

 

61,058