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05-12-15 Workshop Meeting Agenda
CITY COMMISSION fkklN.:X1 BE;1(H CITY OF DELRAY BEACH, FLORIDA WORKSHOP MEETING- TUESDAY, MAY 129 2015 6:00 P.M.DELRAY BEACH CITY HALL The City will furnish appropriate auxiliary aids and services where necessary to afford an individual with a disability an equal opportunity to participate in and enjoy the benefits of a service, program, or activity conducted by the City. Contact the City Manager at 243-7010, 24 hours prior to the program or activity in order for the City to reasonably accommodate your request.Adaptive listening devices are available for meetings in the Commission Chambers. WORKSHOP AGENDA 1. Public Comments 2. Presentation of FY 2014 Comprehensive Annual Financial Report - Caler, Donten, Levine, Porter &Veil, P.A. 3. Discussion regarding Comprehensive Parking Management Plan 4. Commission Comments Please be advised that if a person decides to appeal any decision made by the City Commission with respect to any matter considered at this meeting, such person will need to ensure that a verbatim record includes the testimony and evidence upon which the appeal is based.The City neither provides nor prepares such record. i MEMORANDUM r TO: Mayor and City Commissioners FROM: Donald B. Cooper, City Manager DATE: May 5, 2015 SUBJECT: AGENDA ITEM WS.2 -WORKSHOP MEETING OF MAY 12,2015 PRESENTATION OF FISCAL YEAR(FY)2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) BACKGROUND Presentation of FY 2014 Comprehensive Annual Financial Report - Caler, Donten, Levine, Porter & Veil, P.A. it of DeIr Bea(h Florida I pf ehensive Annual I I Report for Yedr I ' I September ' lop w • w .J � f �Y Photo by Emiliano B�aoks Photograph Comprehensive Annual Financial Report (CAF-R) • Introductory Section • Financial Section • Statistical Section • Compliance Section Financial Section • Unmodified Opinion on City Page Police &Firefighters Pension and DDA are audited by other firms • Management's Discussion and Analysis (MD&A) Page 4 • Financial Statements Page 17 • Notes to Financial Statements Page 28 • Required Supplementary Information — Budgetary Comparison Page 74 Pension Funding Schedules Page 76 • Combining Financial Statements and Other Information Page 84 Compliance Section • Report on Internal Control and Compliance — Three Significant Deficiencies in Internal Control Page 747 • Schedule of Expenditures of Federal Awards — Total Awards $4,045,850 Page 749 • Report on Single Audit Compliance and Internal Control — No Findings Page 757 • Schedule of Findings and Questioned Costs — Three Significant Deficiencies in Internal Control Page 754 • Management Letter — Six Recommendations Page 753 • Response to Management Letter Page 768 CITY OF DELRAY BEACH, FLORIDA • 2014 FINANCIAL .HIGHLIGHTS REVENUE AND EXPENSES REVENUE The following graph presents General Fund revenues of the City by source for the last five (5) years. ■Taxes ■Licenses and Permits E3 Intergovernmental ■Charges for Services E3 Fines and forfeitures ■Miscellaneous 100,000,000 80,000,000 60,000,000 - 40,000,000 20,000,000 AL 0 2010 2011 2012 2013 2014 • Total General Fund revenues for the year ended September 30, 2014 were approximately $96.8 million. This represents an increase of $3.2 million, or 3.4%, compared with the prior year. • Total General Fund revenues have increased approximately $2.6 million, or 2.7%, from 2010. Decreases in taxes ($4,532,000) and fines and forfeitures ($46,000), combined with increases in licenses and permits ($2,583,000), intergovernmental revenues ($1,274,000), charges for services ($2,229,000), and miscellaneous ($1,066,000); account for the majority of the net increase in total revenues. • The assessed value of real and personal property was $8.70 billion for 2014, a decrease of$579 million, or 6.2%, from 2010. • The General Fund millage rate adopted for the 2013/2014 fiscal year (7.1611) has decreased .4% from 2010 (7.1900). The debt service millage rate decreased from .5316 in 2010 to .3453 in 2014. EXPENDITURES The following graph presents General Fund expenditures of the City by function for the last five (5) years. 60,000,000 +General Government 50,000,000 Public Safety 40,000,000 f Physical Environment 30,000,000 Parks and Recreation 20,000,000 w Capital Outlay 10,000,000 +Debt Service 0 2010 2011 2012 2013 2014 • Total General Fund expenditures for the year ended September 30, 2014 were approximately $96.2 million. This represents an increase of approximately$675,000, or.7%,compared with 2013. • Expenditures over the last five years increased $2.4 million or 2.5% in total and the City's population increased 6.7%. The most significant increases from 2010 were $2.2 million in General Government (13.0 0/o), $1.4 million in Public Safety (2.6 11/6), and $383,000 in Parks and Recreation (3.2 0/o), while Physical Environment decreased $120,000 (2.7%) and Capital Outlay decreased $109,000 (45.4%). • Public Safety expenditures represent 58.6% of the City's total expenditures for 2014 as compared to 58.5%in 2010. • Expenditures committed to debt service principal and interest represented 6.9% of total governmental expenditures for all funds in 2014 as compared to 8.2% in 2013 and 5.8% in 2010. FUND BALANCE The following graph presents the trend in assigned and unassigned fund balance of the General Fund for the last five (5) years. 25,000,000 20,000,000 15,000,000 10,000,000 r 5,000,000 0 2010 2011 2012 2013 ]2014 • Assigned and unassigned fund balance at September 30, 2014 was $24,073,895,including$373,543 assigned to encumbrances. • Unassigned fund balance was $23,700,352 and represents 24.6% of the 2014 General Fund expenditures (23.9% in 2013), or approximately 90 days of working capital (87 days in 2013). • Assigned and unassigned fund balance increased $3.7 million (18.4%) from 2010 and$1.0 million (4.3%) from 2013. WATER SYSTEM OPERATIONS Operations of the water system are financed primarily by revenue from customer charges. The graph provided below compares water revenue, operating expenses, and debt service over the last five (5) years. 35,000,000 30,000,000 25,000,000 ❑Revenue 20,000,000 ■Operating Expenses 15,000,000 13 Debt Service 10,000,000 - 5,000,000 0 2010 2011 2012 2013 2014 • The operating revenue of the utility system for 2014 increased $553,000 (1.8%) while operating expenses decreased $125,000 (.6%). • The net revenue (excluding depreciation) of the utility system was 1.15 for 2014, compared to the required debt service coverage of 1.10 times. Coverage has typically exceeded the required debt service by 2 times, but declined due to the payment of the Capital Appreciation Bonds in 2014. • The net cash provided by operations was approximately $11.2 million for 2014, an increase of approximately$952,000. • The water system received cash of approximately $878,000 for new connections in 2014. • Cash invested in capital facilities was approximately $3.6 million in 2014 which was financed primarily from the existing assets and revenue of the water and sewer system. • The investment in capital assets at September 30, 2014 was approximately$83.2 million,a decrease of$477,000, (.6 0/o), since 2010. We appreciate the opportunity to serve the City of Delray Beach, Florida. Should you have a question on the City's Audited Financial Statements or any other matters, please feel free to call me directly at 832-9292. Scott Porter Audit Partner The information presented has been derived from the City's Financial Statements and infortation provided by the City. It is not intended to be a complete financial report under U.S.generally accepted accounting principles. ALE D NTEN LE VINE, C R, O V , COHEN, PORTER & VEIL, P.A. City Beach, II� ti �I } c: t; w Comprehensive AnnugFindffidl Report for Yedr Ended September 30, 2014 Vk y + � Photo by Emiliano Brooks Phologrdph COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Delray Beach,Florida Year Ended September 30,2014 with Report of Independent Certified Public Accountants Comprehensive Annual Financial Report City of Delray Beach, Florida Year Ended September 30, 2014 with Report of Independent Certified Public Accountants Prepared by the Finance Department City of Delray Beach, Florida Comprehensive Annual Financial Report Year Ended September 30, 2014 Contents I. INTRODUCTORY SECTION TransmittalLetter...........................................................................................................................................................i Certificateof Achievement..........................................................................................................................................vi Listof Principal Officials............................................................................................................................................vii City of Delray Beach Organizational Chart...............................................................................................................viii IL FINANCIAL SECTION IndependentAuditor's Report....................................................................................................................................... 1 Management's Discussion and Analysis........................................................................................................................4 Basic Financial Statements Government-Wide Financial Statements Statementof Net Position........................................................................................................................................ 17 Statementof Activities............................................................................................................................................. 18 Fund Financial Statements BalanceSheet—Governmental Funds..................................................................................................................... 19 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position..................................20 Statement of Revenues,Expenditures,and Changes in Fund Balances— GovernmentalFunds............................................................................................................................................21 Reconciliation of the Governmental Funds Statement of Revenues,Expenditures, and Changes in Fund Balances to the Statement of Activities.............................................................................22 Statement of Net Position—Proprietary Funds........................................................................................................23 Statement of Revenues,Expenses,and Changes in Net Position—Proprietary Funds............................................24 Statement of Cash Flows—Proprietary Funds.........................................................................................................25 Statement of Fiduciary Net Position—Fiduciary Funds..........................................................................................26 Statement of Changes in Fiduciary Net Position—Fiduciary Funds.......................................................................27 Notesto Financial Statements..................................................................................................................................28 Required Supplementary Information Budgetary Comparison Schedule—General Fund...................................................................................................74 Notes to Budgetary Comparison Schedule..............................................................................................................75 Pension Funds Schedules of Changes in the Net Pension Liability and Related Ratios...............................................................76 Schedules of Net Pension Liability......................................................................................................................78 Schedulesof City Contributions..........................................................................................................................79 Schedules of Employer and State Pension Contributions ....................................................................................80 Schedulesof Investment Returns.........................................................................................................................81 Schedules of Pension Funding Progress...............................................................................................................82 Schedules of Other Postemployment Benefits(OPEB)Funding Progress..............................................................83 City of Delray Beach, Florida Comprehensive Annual Financial Report Year Ended September 30, 2014 Contents IL FINANCIAL SECTION(Continued) Combining And Individual Fund Statements And Schedules Non-Major Governmental Funds Descriptions.............................................................................................................................................................84 CombiningBalance Sheet........................................................................................................................................85 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances................................................86 Non-Major Enterprise Funds Descriptions.............................................................................................................................................................87 Combining Statement of Net Position.....................................................................................................................88 Combining Statement of Revenues,Expenses,and Changes in Net Position.........................................................89 CombiningStatement of Cash Flows......................................................................................................................90 Internal Service Funds Descriptions.............................................................................................................................................................91 Combining Statement of Net Position.....................................................................................................................92 Combining Statement of Revenues,Expenses,and Changes in Net Position.........................................................93 CombiningStatement of Cash Flows......................................................................................................................94 Fiduciary Funds Descriptions.............................................................................................................................................................95 Combining Statement of Plan Net Position—Pension Trust Funds.........................................................................96 Combining Statement of Changes in Plan Net Position—Pension Trust Funds......................................................97 Other Supplementary Information General Fund Schedule of Revenue and Other Financing Sources—Budget and Actual..............................................................98 Schedule of Expenditures,Encumbrances and Other Financing Uses—Compared with Appropriations................................................................................................................................................... 100 Debt Service Requirements Summary Schedule of Debt Service Requirements(Principal and Interest)to Maturity.......................................102 Combined Schedule of General Obligation Bond Debt Service Requirements..................................................... 103 Schedule of General Obligation Bonds(Series 2005)........................................................................................ 104 Schedule of General Obligation Bonds(Series 2013)........................................................................................ 105 Combined Schedule of Revenue Bond and Note Debt Service Requirements(Principal and Interest)................. 106 Schedule of Revenue Bonds(Series 2000)............................................................................................................ 107 Schedule of Utility Tax Revenue Bonds(Series 2002)......................................................................................... 108 Schedule of Revenue Refunding and Improvement Bonds(Series 2003)............................................................. 109 Schedule of Utility Tax Revenue Bonds(Series 2007)......................................................................................... 110 Schedule of Revenue Refunding Bonds(Series 2013) (Taxable)..........................................................................111 Schedule of Bond Anticipation Revenue Improvement Notes—LOC(Series 2013)............................................112 City of Delray Beach, Florida Comprehensive Annual Financial Report Year Ended September 30, 2014 Contents IL FINANCIAL SECTION(Continued) Other Suuolementary Information(Continued) Debt Service Requirements(Continued) Combined Schedule of Water and Sewer Revenue Bonds.................................................................................... 113 Schedule of Water and Sewer Revenue Bonds(Series 2006B)............................................................................. 114 Schedule of Water and Sewer Refunding Revenue Bond(Series 2011A)............................................................. 115 Schedule of Water and Sewer Revenue Refunding Bonds(Series 201113)........................................................... 116 Schedule of Installment Agreements(Capital Leases).......................................................................................... 117 Combined Schedule of Community Redevelopment Agency Tax Increment Redevelopment Revenue Bonds(Series 2004 and Series 1999)........................................................................ 118 III. STATISTICAL SECTION Descriptions.............................................................................................................................................................. 119 Financial Trends NetPosition by Component................................................................................................................................... 120 Changesin Net Position......................................................................................................................................... 122 Governmental Activities Tax Revenues by Source............................................................................................... 126 Fund Balances of Governmental Funds................................................................................................................. 127 Changes in Fund Balances of Governmental Funds.............................................................................................. 129 General Governmental Tax Revenues by Source.................................................................................................. 131 Assessed Value and Estimated Actual Value of Taxable Property........................................................................ 132 Revenue Capacity Property Tax Rates-Direct and Overlapping Governments................................................................................. 134 PrincipalProperty Taxpayers................................................................................................................................. 135 PropertyTax Levies and Collections..................................................................................................................... 136 Debt Capacity Ratiosof Outstanding Debt by Type..................................................................................................................... 137 Ratios of General Bonded Debt Outstanding......................................................................................................... 138 Direct and Overlapping Governmental Activities Debt......................................................................................... 139 Water and Sewer Pledged Revenue Coverage....................................................................................................... 140 Demographic and Economic Information PrincipalEmployers............................................................................................................................................... 141 Demographic and Economic Statistics.................................................................................................................. 142 Operating Information Full-time Equivalent Government Employees by Function................................................................................... 143 Capital Asset Statistics by Function...................................................................................................................... 144 OperatingIndicators by Function.......................................................................................................................... 145 Scheduleof Insurance in Force.............................................................................................................................. 146 City of Delray Beach, Florida Comprehensive Annual Financial Report Year Ended September 30, 2014 Contents IV. COMPLIANCE SECTION Compliance With the Single Audit Act and the Rules of the Auditor General for the State of Florida Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................... 147 Schedule of Expenditures of Federal Awards........................................................................................................ 149 Notes to Schedule of Expenditures of Federal Awards......................................................................................... 150 Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133..................................................151 Schedule of Findings and Questioned Costs-Federal Award Programs............................................................... 153 CityCorrective Action Plan................................................................................................................................... 157 Summary Schedule of Prior Audit Findings.......................................................................................................... 160 ManagementLetter................................................................................................................................................ 161 CityResponse to Management Letter.................................................................................................................... 168 Independent Accountant's Report on Investment Compliance.............................................................................. 171 Introductory Section EITY OF DELRAY BEREW DELRAY BEACH 100 N.W. 1st AVENUE • DELRAY BEACH, FLORIDA 33444 • 561/243-7000 ftfta All-America City IU 1993 March 25,2015 Honorable Mayor City Commission City Manager City Staff Citizens and Friends of Delray Beach, Florida Ladies and Gentlemen: State law requires that every local government entity publish a complete set of audited financial statements within nine months of the close of each fiscal year. This Comprehensive Annual Financial Report("CAFR")is published to fulfill that requirement for the fiscal year ended September 30, 2014. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Caler, Donten, Levine, Cohen, Porter & Veil, P.A., Certified Public Accountants, have issued an unmodified opinion on the financial statements of the City of Delray Beach for the year ended September 30, 2014. The independent auditor's report is located at the front of the financial section of this CAFR. Management Discussion and Analysis ("MD&A") immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. THE CITY OF DELRAY BEACH Profile The City of Delray Beach is a political subdivision of the State of Florida and is located in the southeastern part of the state in Palm Beach County on the Atlantic shoreline. Delray Beach was first settled as an agricultural community in 1895 and first incorporated in 1911. It was later incorporated as the City of Delray Beach on May 11, 1927. The City has a current estimated permanent population of 64,600 with another estimated 12,600 seasonal residents. The City of Delray Beach is a full service city with a Commission-Manager form of local government. The citizens elect a Mayor at large on a non-partisan basis every three (3) years who presides over four (4) Commissioners who are elected at large on a non-partisan basis for three (3) year terms in alternating years. The City Commission sets policy, approves legislation, adopts the Annual Budget, and sets rates i SERVICE ' PERFORMANCE • INTEGRITY • RESPONSIBLE INNOVATIVE• INNOVATIVE - TEAMWORK and fees. The City Commission appoints the City Manager, who is the chief administrative officer of the City, and the City Attorney, who acts on all legal matters pertaining to the City. The City Manager is charged with overseeing the daily business of the City and is responsible for the supervision of the City departments and employees. Department Heads serve at the pleasure of the City Manager and other employees are covered by either Civil Service regulations or union agreements. Services Provided The City of Delray Beach provides a full range of community services including public safety (police,fire protection and rescue services); parks and recreation (beaches, pools, marina, boat ramps, parks and multiple recreation centers); and public works (essential traffic, street maintenance and parking). Other recreational amenities of the City include golf courses,tennis courts and the tennis stadium. The Environmental Services Department provides water and sewer, stormwater, engineering and construction services. The Community Improvement Department provides building permits, inspections, code enforcement,garbage and trash services, and administers the City's Community Development Block Grants. The City also provides general administrative services and financial support services. The City provides water, fire protection, emergency medical services, police dispatch services, building inspection and permitting, and limited sewer services to the Town of Gulfstream. Fire protection and emergency medical services, and limited water services are provided to the Town of Highland Beach. Both towns are serviced on a contractual basis. The Delray Beach Municipal Marina is designated as a "Clean Marina" by the Florida Department of Environmental Protection's Clean Marina Program and the Clean Boating Partnership. This prestigious honor recognizes the City's utilization of innovative solutions to protect the environment during daily marine operations as well as in emergency situations. Delray Beach is one of 283 designated Clean Marinas in the state. Delray Beach is known nationally and internationally for its trendy downtown, scenic vistas and vibrant arts district. Hundreds of thousands of visitors flock to this Village by the Sea each year to enjoy spectacular events such as the 100-foot Christmas Tree Lighting, First Night New Year's Eve celebration, St. Patrick's Day parade and Fourth of July festivities. Home to major tennis events, the City is also a popular venue for outdoor arts & crafts festivals, musical and theatre performances, unique street fairs and holiday parades. The City of Delray Beach is the recipient of the National Civic League's All-America City Award, the only municipality in Florida to receive this distinguished honor twice (1993, 2001). In 2014, the Florida Chapter of the Congress for the New Urbanism acknowledged the City's outstanding achievements in urban growth and development with the prestigious John Nolen Award. Delray Beach is also proud that its Marina Historic District has been listed on the National Register of Historic Places. The City continues to be a desirable community to live,work and play while preserving its rich history, cultural diversity and unique small town charm. The City of Delray Beach celebrated its 35 year Sister City Program relationship with Miyazu, Japan, and its 15 year relationship with Moshi, Tanzania, Africa. The Sister City Program promotes friendship and understanding by encouraging cultural,youth, athletic and economic exchanges. Reporting Entity This report includes all funds of the primary government(City of Delray Beach) and all organizations and component units for which the City is financially accountable, including the Community Redevelopment Agency ("CRA"), Downtown Development Authority ("DDA"), and South Central Regional Wastewater Treatment and Disposal Board ("SCRWTDB"), which was established as a joint venture with equity interests between the cities of Delray Beach and Boynton Beach. ii Budgetary Control The City maintains a system of budgetary controls within its accounting and financial management systems. The objective of these budgetary controls is to monitor compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. Appropriated budgets are legally required to be adopted for the general fund. Nonappropriated budgets, which are not legally required to be adopted, are also prepared for special revenue funds, enterprise funds and internal service funds. The level of budgetary control is at the departmental level. As part of the budgetary control system, an encumbrance system is utilized. An encumbrance is a commitment (purchase order) to acquire goods or services which have not been paid for at a particular point in time. For operating purposes, outstanding encumbrances lapse at fiscal year-end and are then reappropriated as part of the new year budget. Blanket purchase orders are closed at fiscal year-end and are not reappropriated. For fiscal year 2016, the City is instituting a planning and budgeting process based on a three-year City business plan, in response to City Commission established goals. The fiscal year 2016 business plan and budget will be developed consistent with the multi-year plan. Economic Conditions and Outlook The City maintained a good financial condition based on planning and fiscal controls during the recent national economic downturn. The decrease in taxable assessed values has reversed, with significant growth beginning in 2012. The current year tax roll (2014) had an increase of 12%, which reflects stabilization in the real estate market. Building permit activity in 2014 was up compared to last year. We expect these positive economic trends to continue, as discussed below. CURRENT MAJOR INITIATIVES World Class Beach In 2009,the City of Delray Beach, in cooperation with Delray Beach Community Redevelopment Agency and the Beach Property Owners Association, conducted a citywide charrette to develop a Beach Area Master Plan. At the end of 2013, phase I of the Master Plan was completed. The pavilion was rebuilt to the exact replica of the original 1929 pavilion that was destroyed by a hurricane in 1947. The rebuilt pavilion includes new landscaping,updated showers, signage and trash containers. Phase II, tentatively scheduled for 2015, will include the replacement of existing parking meters, dual paths for walkers and ocean viewing, and welcoming pergolas at each end of the public beach. Economic Development During the past year, the City of Delray Beach's Economic Development team focused on the attraction, expansion, and retention of companies while promoting Delray Beach for private sector investment. Additionally,numerous small businesses were assisted through business grants and incentives. Currently, there are more than ten new private development projects planned and underway for a total of 2.1 million sq. ft. of new residential/office/retail/hotel space in the Downtown area, while larger companies continue to choose a Congress Avenue location. Two special project teams were formed in 2014 — one focused on the beautification, redevelopment and new development opportunities along Congress Avenue; and the other studying the City's downtown public assets (Library, Tennis Center, Tennis Stadium, Community Center and City Hall)and how they might be reimagined to drive innovative learning, entrepreneurship and recreation for the next 20-25 years. iii Education Initiatives One of the keys to economic development is quality schools. The City has a long term relationship with the School District of Palm Beach County to improve schools located within the City. The City was recognized as a 2013 Community Pacesetter by the Campaign for Grade-Level Reading, an honor that reflects the energy, mobilization and creativity that the local community has brought to this important work. FINANCIAL INFORMATION Internal Accounting Controls In the development and evaluation of the City's accounting and financial reporting systems, consideration is given to the adequacy and accuracy of the internal accounting controls. These controls are designed to provide reasonable, but not absolute, assurance that the assets of the City are safeguarded against loss from unauthorized use or disposition and that there are reliable financial records for the preparation of financial statements and for the accountability of those assets. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management. All internal control evaluations utilize these criteria. Management believes that the City's system of internal accounting controls adequately safeguards the assets of the City and provides reasonable assurance of the proper recording of financial transactions. Single Audit As a recipient of Federal, State and County financial assistance, the City is also responsible for ensuring that an adequate system of internal controls is in place to maintain compliance with applicable laws, regulations and guidelines related to those programs. This internal control system is subject to periodic evaluation by management. As a part of the single audit process, tests are made to determine the adequacy of the internal control structure, including the portion related to federal financial assistance programs, and to determine compliance with applicable laws and regulations. The results of the City's single audit for the fiscal year ended September 30, 2014 disclosed no instances of material weaknesses in the internal control structure and disclosed no significant violation of applicable laws and regulations. AWARDS AND ACKNOWLEDGMENTS Financial Statement 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 Delray Beach, Florida, for its CAFR for the fiscal year ended September 30, 2013. This was the 31st consecutive year the City received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only.We believe our current report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. iv Acknowledgments A Comprehensive Annual Financial Report of this type and depth, illustrating the results of operations of the entire City and its various diversified funds and activities, could not have been prepared so completely and professionally without the dedication and commitment of the entire Finance Department, coordinated by the City's Chief Accounting Officer. Their technical expertise and concerted efforts were truly evident in the audit process. Their assistance and cooperation have allowed us to prepare, on a timely basis, a report which gives its readers a comprehensive view of the City's financial and economic position. We believe this report clearly illustrates that the City of Delray Beach has developed and continues to maintain a strong financial condition and we wish to thank the City Commission, City Manager and the citizens of the City of Delray Beach for their continued support for fiscal responsibility. Respectfully submitted, a�4rl�� Jack Whmer Chief Financial Officer v Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Delray Beach Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2013 Executive Director/CEO Vi CITY OF DELRAY BEACH,FLORIDA LIST OF PRINCIPAL OFFICIALS September 30,2014 CITY COMMISSION Mayor..................................................................................................................................Cary Glickstein Vice-Mayor...........................................................................................................................Shelly Petrolia Deputy Vice-Mayor......................................................................................................Jordana L. Jarjura Commissioner............................................................................................................................. Al Jacquet Commissioner.......................................................................................................................Adam Frankel CITY STAFF Interim City Manager.....................................................................................................Terrance Stewart Assistant City Manager...............................................................................................Francine Ramaglia CityAttorney.............................................................................................................................Noel Pfeffer CityClerk........................................................................................................................Chevelle D. Nubin Community Improvement Director....................................................................................Lula C.Butler Environmental Services Director..............................................................................Randal L. Krejcarek Chief Financial Officer...........................................................................................................Jack Warner FireChief...........................................................................................................................Danielle Connor Human Resources Director..........................................................................................Shirley McKennon Parks and Recreation Director.......................................................................................Suzanne F. Davis Planning and Zoning Director..................................................................................................Dana Little PoliceChief....................................................................................................................Anthony Strianese Vii City Organizational Chart CITIZENS Advisory Mayor City Boards Commission Attorney City Manager Assistant City Manager Human Resources Communications Information Technology Finance Police Fire Community Planning and Parks and Environmental City Clerk Improvement Zoning Recreation Services Support Commission Current Public Accounting Bureau Administration Administration Planning Administration Utilities Secretariat Operations Records Building Long Range Parks Treasury Bureau Operations Inspection Planning Maintenance Engineering Management Budget Emergency Code Recreation Public Works Management Enforcement Fire Neighborhood Fleet Maintenance Purchasing Safety Services Cemetery Utilities Stormwater Highland Sanitation Customer Marina Administration Service Beach and Capital Stormwater Ocean Rescue Golf Courses Systems Maintenance Tennis Stadium& Beach Restoration Faalities Viii Financial Section ICALER,DONTEN,LEVINE, II COHEN,PORTER&VEIL,P.A. CERTIFIED PUBLIC ACCOUNTANTS WILLIAM K CALER,JR,CPA 505 SOUTH FLAGLER DRIVE,SATE 900 MEMBERS LOUIS M COHEN,CPA WEST PALM BEACH,FL 33901-59:18 AMERICAN INSTITUTE OF JOHN C COURTNEY,CPA,JD CERTIFIED PUBLIC ACCOUNTANTS DAVID S DONTEN,CPA TELEPHONE(561)832-9292 JAMES B HUTCHLSON,CPA FAX(561)832-9955 FLORIDA INSET TUTE OF JOEL H LEVINE,CPA CERTIFIED PUBLIC ACCOUNTANTS JAMES MULLEN,IV,CPA infoCkdlcpa coin THOMAS A PENCE,JR,CPA SCOTT L PORTER,CPA MARK =,CPA Independent Auditor's Report To the Honorable Mayor and City Commission City of Delray Beach,Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Delray Beach,Florida(the "City"), as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles;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 Police and Firefighters' Retirement System Fund, a fiduciary fund of the City, which represents 51%, 53% and 41%, respectively, of the assets, net position/fund balances and revenues/additions of the aggregate remaining fund information of the City, and the Delray Beach Downtown Development Authority, a discretely presented component unit of the City, which represents .2%, .4% and 5.3%,respectively, of the assets,net position and revenues of the City's discretely presented component units. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as they relate to the amounts included for the Police and Firefighters' Retirement System Fund and Delray Beach Downtown Development Authority, are based solely on the reports of the other auditors. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1 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,the aggregate discretely presented component units,each major fund and the aggregate remaining fund information of the City of Delray Beach,Florida, as of September 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with U.S. generally accepted accounting principles. Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the management's discussion and analysis on pages 4 through 16 and the budgetary comparison schedule,pension information and other postemployment benefits information on pages 74 through 83 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, the combining and individual fund financial statements and schedules, the other supplementary information and the statistical section listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations. The combining and individual fund financial statements and schedules, the other supplementary information, and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards by us and 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 financial statements and schedules, the other supplementary information, and the Schedule of Expenditures of Federal Awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section and statistical section 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. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 25, 2015, on our consideration of the internal control over financial reporting of the City of Delray Beach, Florida, and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the internal control over financial reporting and compliance of the City of Delray Beach,Florida. /U- , R A, West Palm Beach,Florida March 25,2015 3 Management's Discussion and Analysis This section of the comprehensive annual financial report provides a narrative overview and analysis of the financial activities of the City of Delray Beach, Florida ("City") for the fiscal year ended September 30, 2014. This information is to be considered alongside that in the letter of transmittal and the City's basic financial statements and notes to the financial statements. The financial analysis within the Management's Discussion and Analysis includes the City's primary government operations and joint venture for the South Central Regional Wastewater Treatment and Disposal Board. The operations of the City's two discretely presented component units; the Community Redevelopment Agency (CRA) and Downtown Development Authority (DDA), are excluded. The joint venture and component units issue separate audit reports that are available from each entity. Financial Highlights • The City's single largest source of revenue is from property taxes derived from the taxable assessed value of properties within the City, as summarized below. TAXABLE ASSESSED VALUE (in billions) 10.0 9.0 8.4 8.7 8.1 8.0 - 7.0 7.0 6.5 6.6 b-2 6.1 6.0 5.4 5.0 4.7 4.0 3.0 2.0 1.0 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 • The overall financial condition of the City's General Fund operations is influenced by the real estate market, the current state of the economy and State tax reform legislation. The decline in real estate values has stopped and the trend is now reversing. Fiscal year 2014 increased from $6.2 billion to $6.6 billion, or 6.5%, in taxable assessed value. • The assets of the City (Primary Government) exceeded its liabilities at September 30, 2014, by $259,914,182 (Total Net Position). Of this amount, $100,889,284 (Unrestricted Net Position) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets, excluding the City's discretely presented component units, increased by $13,836,703. Of this amount, governmental activities increased by $7,657,361 and business-type activities increased by $6,179,342. The 4 increase in the governmental activities is attributable to both an increase in revenues and a reduction in expenses. The increase in the business-type activities is approximately the same as the prior year due to generally stable revenues and expenses. • The total net position of the City (Primary Government) increased by $13,836,703 comprised of an increase of $7,657,361 in the governmental activities and an increase of $6,179,342 in the business-type activities. The change in net position is shown on the table entitled Statement of Activities. • At September 30, 2014, the City's governmental funds reported combined ending fund balances of $53,405,235 which increased $9,396,328 from the prior year. The increase is due primarily to increased revenues from improved economic activity and a beach renourishment grant. A total of $46,136,885 or 86% of the combined ending fund balance is available for spending (Unassigned Fund Balance and Assigned Fund Balance). Of this amount, $24,073,895 is in the General Fund, $17,765,390 is in Capital Projects Funds and $4,297,600 is in Special Revenue Funds. • At September 30, 2014, Unassigned Fund Balance for the General Fund was $23,700,352 or 24.6% of total General Fund expenditures of $96,249,387. This is an increase of $835,665 from the prior year or 3.7%. The General Fund had a good year, with revenue increasing by 3.4% and expenditures increasing by .1%. The City's financial policy is to strive to maintain an Unassigned Fund Balance of between 15% to 25% of the expenditure budget as an acceptable reserve for first quarter cash flow (there are no tax remittances during the first two to three months of each fiscal year) and for unanticipated expenses such as storm damage costs, uninsured legal claims and other unforeseen expenses. Overview of the Financial Statements This management discussion and analysis report is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements consist of three parts: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information that explains in more detail some of the information in the financial statements. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City's finances and to report information about the City in a manner similar to those reports issued and used by private sector companies. The Statement of Net Position presents information on all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the differences presented as net position. Over time, increases or decreases in net position may help to serve as a useful indicator of whether the overall financial position of the City is improving or deteriorating. 5 The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected revenues and earned but unused leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include such areas as General Government, Public Safety, Physical Environment and Parks and Recreation. The business-type activities of the City that rely on user fees and charges include areas such as Water and Sewer, Municipal Golf Course, Lakeview Golf Course, City Marina, Sanitation and Stormwater Utility operations. Both of the government-wide financial statements include not only the City itself (known as the Primary Government), but also the legally separate CRA and DDA for which the City is financially accountable (known as component units). Financial information for these component units are reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 17 and 18 of this report. Fund Financial Statements Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. As a result of this difference in focus, reconciliations are provided between the fund financial statements and government-wide financial statements to understand the long-term impact of short-term financing decisions. The City maintains 13 individual governmental funds. Information is presented separately for the General Fund. Data for the other governmental funds are aggregated into a single presentation. Individual fund data for each of these non- major governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental fund financial statements can be found on pages 19 through 22 of this report. Proprietary Funds The City maintains two different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report business-type activities that charge fees to customers for the use of specific goods or services. These statements are prepared on an accounting basis that is similar to the basis used to prepare the government- 6 wide financial statements. The City uses enterprise funds to account for its water and sewer utility, the municipal golf course, the Lakeview golf course, the marina, sanitation operations and stormwater utility. Internal service funds are used to account for the financing of insurance services and central garage services provided to other departments of the City on a cost- reimbursement basis. Because these services predominantly support governmental rather than business-type functions, they have been included within the governmental activities in the government-wide financial statements. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer utility system which is considered to be a major fund of the City. Conversely, the remaining enterprise funds are considered non-major funds and the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the non-major enterprise funds and the individual internal service funds are provided in the form of combining statements elsewhere in this report. The City's proprietary fund financial statements can be found on pages 23 to 25 of this report. Fiduciary Funds Fiduciary funds are used to account for resources held in trust for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's operations. The accounting methods used for fiduciary funds are similar to that used for proprietary funds. Individual fund data for each of the fiduciary funds is provided in the form of combining statements elsewhere in this report. The City's fiduciary fund financial statements can be found on pages 26 to 27 of this report. Notes to the Financial Statements The notes to the financial statements provide additional information and clarification that are essential to a full understanding of the data presented in the government-wide and fund financial statements. The notes to the financial statements can be found beginning on page 28 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits and other postemployment benefits to its employees. Additionally, the City adopts an annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided as required supplementary information for the General Fund to demonstrate compliance with its budget. Required supplementary information can be found on pages 74 through 83 of this report. The combining statements for non-major governmental, non-major proprietary and the fiduciary funds are presented immediately following the required supplementary 7 information. Combining and individual fund statements and schedules can be found beginning on page 84 of this report. Government-Wide Financial Analysis The net position of the City is presented in detail on page 17 and summarized in Table A-1 below. Table A-1 Condensed Statement of Net Position (S in millions) Governmental Business-type Activities Activities Totals 2014 2013 2014 2013 2014 2013 Assets: Current and other assets $ 79.0 $ 69.4 $ 56.1 $ 61.6 $ 135.1 $ 131 .0 Capital assets 136.1 135.5 100.4 99.8 236.5 235.3 Total Assets 215.1 204.9 156.5 161.4 371.6 366.3 Deferred outflows 0.2 0.1 0.0 0.1 0.2 0.2 Liabilities: Current liabilities 9.2 8.1 2.5 5.9 11.7 14.2 Noncurrent liabilities 82.9 81.3 17.3 25.1 100.2 106.2 Total Liabilities 92.1 89.4 19.8 31.0 111.9 120.4 Net Position: Net investment in capita I assets 70.0 70.1 85.1 79.2 155.1 149.3 Restricted 1.7 1.6 2.2 4.5 3.9 6.1 U nrestricted 51.5 43.9 49.4 46.8 100.9 90.7 Total Net Position $ 123.2 $ 115.6 $ 136.7 $ 130.5 $259.9 $ 246.1 Net position over time may serve as a useful indicator of the City's financial position. During the current year, the total net position of the City increased by $13.8 million or approximately 5.6% from $246.1 million to $259.9 million. The increase in net position was a result of operations in both the governmental activities ($7.6 million) and the business- type activities ($6.2 million). Accordingly, based on this measure, the overall financial condition of the City improved in 2014. A significant portion of the City's net position ($155.1 million or 60% of the Total Net Position) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment) net of any related debt that is still outstanding. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position (1 .5%) represents resources that are subject to restrictions on how they may be used. The balance in restricted position reflects a decrease of $2,200,000 from the prior year. The decrease is primarily due to a reduction in debt service in business-type activities. 8 The unrestricted portion of net position represents resources that may be used to meet the City's ongoing obligations to its citizens and creditors. The 2014 balance increased $10.2 million primarily due to results of operations in the governmental activities. The changes in net position of the City are reported in the Statement of Activities on page 18 and are summarized in Table A-2 below. Table A-2 Changes in Net Position Condensed Statement of Activities (S in millions) Governmental Business-type Activities Activities Totals 2014 2013 2014 2013 2014 2013 Revenues Program Revenues: Charges for services $ 17.9 $ 17.1 $42.6 $ 41.9 $ 60.5 $ 59.0 Operating rants, contributions 13.5 7.2 0.6 0.9 14.1 8.1 Capital grants, contributions 0.6 4.1 0.9 1.9 1.5 6.0 General Revenues: Property Taxes 47.7 47.0 0.0 0.0 47.7 47.0 Other taxes 16.5 15.7 0.0 0.0 16.5 15.7 Intergovernmental 6.8 6.3 0.0 0.0 6.8 6.3 Other 7.8 10.3 0.1 0.1 7.9 10.4 Total Revenues 110.8 107.7 44.2 44.8 155.0 152.5 Expenses General government 23.0 18.5 0.0 0.0 23.0 18.5 Public safety 58.4 57.2 0.0 0.0 58.4 57.2 Physical environment 8.0 8.1 0.0 0.0 8.0 8.1 Parks and recreation 15.4 24.4 0.0 0.0 15.4 24.4 Interest on long-term debt 2.1 2.4 0.0 0.0 2.1 2.4 Water and sewer 0.0 0.0 24.4 24.8 24.4 24.8 Municipal golf course 0.0 0.0 3.1 3.0 3.1 3.0 Lakeview golf course 0.0 0.0 0.6 0.6 0.6 0.6 City marina 0.0 0.0 0.1 0.1 0.1 0.1 Sanitation 0.0 0.0 4.7 4.7 4.7 4.7 Stormwater utility 0.0 1 0.0 1.4 1.7 1.4 1 1 .7 Total Expenses 106.9 110.6 34.3 34.9 141.2 145.5 Change in Net Position Before Transfers 3.9 2.9 9.9 9.9 13.8 7.0 Transfers 3.7 3.7 3.7 3.7 0.0 0.0 Increase in Net Position 7.6 0.8 6.2 6.2 13.8 7.0 Beginning Net Position, as Originally Reported 115.6 115.2 130.5 124.4 246.1 239.6 Restatement for implementation of GASB Statements 0.0 0.4 0.0 0.1 0.0 0.5 Beginning Net Position, as Restated 115.6 114.8 1 130.5 124.3 246.1 239.1 Ending Net Position 1$ 123.2 $ 115.6 1$ 136.7 1 $ 130.5 $ 259.9 $ 246.1 9 Governmental activities increased the City's net position by $7.6 million, which was primarily due to the Beach Renourishment grant. Parks and Recreation expenses decreased by $9.0 million primarily as a result of the completion of the beach restoration project. Business-type activities net position had an increase of $6.2 million which was due primarily to water and sewer activities. Revenues by sources for 2014 are summarized as follows: Revenues by Sources - Governmental Activities Intergovernmental 6% Operating Grants/Contributions Other 12% ■Charges for Services Charges for 7% Services ■Operating Grants/Contributions 16% Capital Grants/Contributions Other Taxes ■Property Taxes 15% Other Taxes Intergovernmental Property Taxes 43% Other Capital Grants/Contributions 1% Expenditures by function for 2014 are summarized as follows: Expenditures by Function - Governmental Activities Interest on debt 2°% Parks and General Recreation Government 14% Interest on debt 22°% Physical Environment Parks and Recreation 7% Physical Environment Public Safety Public Safety General Government 55% L 10 Financial Analysis of the City of Delray Beach Major Fund Governmental Funds The fund financial statements for the governmental funds are provided on pages 19-22. Major Fund Information ($ in Millions) General Fund 2014 2013 Revenues $ 96.7 $ 93.6 Expenditures 96.2 95.6 Other financing sources 0.5 3.5 Increase in Fund Balance $ 1.0 $ 1.5 General Fund The General Fund, which is the primary operating fund of the City and is not supported by user fees, recognized $96,780,437 in total revenues offset with $96,249,387 in expenditures and $466,563 in net other financing sources. This resulted in an increase in fund balance of $997,613. The Fund Balance increased from $28,048,174 in 2013 to $29,045,787 in 2014. Of this amount, $23,700,352 is in Unassigned Fund Balance which represents 24.6% of our present expenditure levels. Our internal financial policy is to maintain 15% to 25% of our expenditures in Unassigned Fund Balance for first quarter cash flow, uninsured legal claims and other emergency purposes. Proprietary Funds Operating Income Change in Net LaHl Position $ in Millions 2014 2013 2014 2013 Enterprise Funds Water/Sewer $ 9.9 $ 9.2 $ 5.6 $ 5.6 Municipal Golf Course 0.0 0.0 0.0 0.0 Lakeview Golf Course 0.1 0.0 0.1 0.0 City Marina 0.2 0.1 0.1 0.1 Sanitation 0.4 0.6 0.2 0.5 Stormwater Utility 0.7 0.6 0.4 0.2 Internal Service Funds Insurance 0.5 1.2 0.5 1 .2 Central Garage 0.0 0.1 0.1 0.9 11 Water and Sewer Fund Operating revenues were approximately $550,000 more than 2013 and operating expenses were approximately $150,000 less than 2013. However, lower capital contributions resulted in virtually similar changes in net position in 2014 and 2013. Other Enterprise Funds The City has five (5) other non-major enterprise funds consisting of the Municipal Golf Course, Lakeview Golf Course, City Marina, Sanitation and the Stormwater Utility. The Municipal Golf Course has an operating income this year of $41,029 compared to $40,520 last year. The Lakeview Golf Course has an operating income of $80,597 versus $40,525 last fiscal year. This is an executive golf course, which is not as sensitive to the economy as the municipal golf course. The City Marina Fund has an operating income this year of $151,647 compared to $130,913 last year. The Sanitation Fund generated an operating income of $365,387 this year compared to $594,638 last year. The decrease is due to an ordinance amendment that eliminated cart fees and reduced franchise fees for residential customers effective October 1, 2013. The Stormwater Utility Fund has an operating income this year of $739,041 compared to $585,970 last fiscal year. Stormwater fees are billed and received on the property tax bills. Internal Service Funds Internal service funds are used to account for the financing of goods or services provided by one department to other departments within the City on a cost reimbursement basis. The City has two internal service funds; the Insurance Fund is used to account for all personnel insurances (health, life, disability) and property and casualty insurance, and the Central Garage Fund handles all the fueling, maintenance and replacement of city vehicles. The Insurance Fund recorded an increase in our required self-insured "Incurred but Not Reported" (IBNR) claims liability from $5,163,785 to $5,350,412 for property, health and worker's compensation claims. All required reserves are determined by outside actuaries. The Insurance Fund has $2,096,964 in Unrestricted Net Assets. The Central Garage Fund has an operating loss of ($25,720) compared to income of $126,278 last year. The increase in operating expenses is due primarily to an increase in depreciation expense for the current year. 12 General Fund Budgetary Highlights The difference between the original and final amended budget for 2014 was an increase of $8,947,719. There was a positive variance between the final adopted budget and actual results of operations of $833,742. Actual revenues and other financing sources exceeded the final budget by approximately $489,000 and actual expenditures and other financing uses were less than final budget by approximately $345,000. Primarily the increase in current year revenues was attributable to an increase in building permits and fees. All revenue categories exceeded their budget except for shared revenue from local units. Most expenditure categories were under budget except for the City Attorney department, miscellaneous and contingency, Catherine Strong Park, bond issue costs, payment to bond escrow agent, and an unbudgeted transfer to close the ARRA economic stimulus fund. Capital Asset and Debt Administration Capital Assets As of September 30, 2014, the City had $236.5 million invested in a variety of capital assets, as reflected in Table A-3 below, which represents a net increase of $1.2 million from the previous fiscal year. Additional information can be found in Note 9 Capital Assets on page 44. Capital asset activity for 2014 is summarized below: Table A-3 Capital Assets (S In Millions) Beginning Ending Balance Balance 10/01/2013 Increases Decreases 9/30/2014 Governmental Activities: Land $ 38.7 $ 0.4 $ .0 $ 39.1 Construction in Progress 3.3 5.3 0.2 8.4 Non-Depreciable Assets 42.0 5.7 0.2 47.5 Buildings 39.6 0.0 0.1 39.5 Improvements Other 120.6 1.5 0.3 121 .8 Equipment 43.2 2.1 (1 .7) 43.6 Less: Accumulated Depreciation 109.9 8.4 2.0 (116.3) Depreciable Assets- Net 93.5 4.8 0.1 88.6 Capital Assets- Governmental 135.5 0.9 0.3 136.1 Business-Type Activities: Land 5.7 0.0 0.0 5.7 Construction in Progress 3.1 1.8 (2.8) 2.1 Non-Depreciable Assets 8.8 1.8 2.8 7.8 Buildings 13.8 0.0 0.0 13.8 Improvements Other 164.3 5.2 0.0 169.5 Equipment 14.6 0.2 (0.2) 14.6 Less: Accumulated Depreciation 101.7 3.8 0.2 105.3 Depreciable Assets- Net 91.0 1.6 0.0 92.6 Capital Assets- Business-Type $ 99.8 $ 3.4 $ (2.8) $ 100.4 13 Infrastructure assets have been included in the category "Improvements Other". Major capital assets changes during the fiscal year 2014 were primarily for Construction in Progress in the General Construction Fund for federal highway and other beautification projects, as well as improvements in the Water and Sewer Fund for reclaimed water distribution lines. Debt Administration As of September 30, 2014, the City had total debt outstanding of $95,088,467 compared to $105,570,115 as of September 30, 2013. Of this $95.1 million amount, and gross of any related unamortized premium or discounts: • $32.1 million is revenue bond debt which is secured by other specified revenue sources or the promise to budget and appropriate sufficient revenues to pay for the debt service, • $15.2 million is a bond anticipation note that is expected to be refinanced with revenue bonds secured by other governmental revenue sources, • $18.0 million is general obligation bond debt which is debt backed by the full faith and credit of the City, • $15.4 million is revenue bonds that are backed by a pledge of the water and sewer system net revenues, • $8.0 million is for compensated absences, • $5.4 million is for insurance claims reserves, and • $.5 million is for installment agreements that are secured by the promise to budget and appropriate sufficient revenues to pay the debt. 14 Noncurrent liabilities activity for 2014 is summarized below: Table A-4 Noncurrent Liabilities (S in Millions) Beginning Ending Balance Balance 10/01/2013 Increases Decreases 9/30/2014 Governmental Activities: Revenue Bonds $ 33.2 $ 0.0 $ 1 .1 $ 32.1 Bond Anticipation Note 11.8 6.2 2.8 15.2 General Obligation Bonds 19.3 8.8 (10.1) 18.0 Unamortized Premium .6 0.0 0.1 0.5 Total Bonds Payable 64.9 15.0 14.1 65.8 Installment Agreements .6 0.0 (0.1) 0.5 Compensated Absences 7.2 0.7 1 .0 6.9 Insurance Claims Payable 5.2 8.2 8.0 5.4 Governmental Activities $ 77.9 $ 23.9 $ 23.2 $ 78.6 Business-Type Activities: Revenue Bonds $ 20.6 $ 0.0 $ 5.2 $ 15.4 Accrued interest on capital appreciation bonds 6.0 0.2 (6.2) 0.0 Compensated Absences 1.0 0.1 0.0 1.1 Business Type Activities 27.6 0.3 11.4 16.5 Total Debt Outstanding $ 105.5 $ 24.2 $ (34.6) $ 95.1 The City issued $8,810,000 General Obligation Bonds on November 21, 2013, (Series 2013) to redeem/retire and defease General Obligation Bonds, Series 2004. All other long-term debt activity for 2014 was related to repayments of bonds, installment agreements and amortization of bond premiums. In October 2013, the general obligation bonds of the City were upgraded to a rating of AAA from Standard & Poor's, which is their highest available rating. For more detailed information regarding the City's debt and debt financing activity, refer to Note 12 - Noncurrent Liabilities beginning on page 48. 15 Economic Factors and FY 2014-15 Budget and Rates ❖ The Florida legislature is considering various proposals which could have a significant impact on local government's revenue and expenditures, as well as the government's ability to maintain or improve services to the residents. The City is monitoring these initiatives and their future impact to the City. ❖ Current millage has decreased from 7.8033 mills to 7.5064 mills. The operations portion remained unchanged at 7.1611 mills and the debt service portion decreased 42.8% to 0.3453 mills. ❖ The governmental funds budget decreased slightly from the prior year, primarily due to the near completion of the Beach Restoration project. The Capital Improvement budget decreased by 44% to $21,756,160. Requests for Information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the: Office of the Chief Financial Officer 100 N. W. 1St Avenue Delray Beach, FL 33444 Phone: (561) 243-7117 16 Basic Financial Statements CITY OF DELRAY BEACH,FLORIDA STATEMENT OF NET POSITION September 30,2014 Primary Government Component Units Community Downtown Redevelopment Development Governmental Business-Type Agency Authority Activities Activities Total (CRA) (DDA) ASSETS Cash and cash equivalents $ 36,639,104 $ 107,578 $ 36,746,682 $ 10,412,286 $ 58,280 Investments 28,374,970 18,573,215 46,948,185 - - Receivables: Accounts,net 1,593,013 3,153,733 4,746,746 14,288 21,770 Unbilled accounts - 777,950 777,950 - - Notes receivable 2,378,990 - 2,378,990 1,138,607 Notes receivable from component unit 5,686,971 - 5,686,971 - Interest receivable 44,532 32,275 76,807 Due from component unit 721,546 - 721,546 - Due from primary government - - 310,775 Due from other governments 9,327,803 - 9,327,803 - Intemal balances (7,551,699) 7,551,699 - Inventories 133,811 366,624 500,435 - - Prepaid expenses 1,186,149 60,180 1,246,329 22,833 21,107 Assets acquired for sale 460,316 - 460,316 - - Deposits - - - 19,491 Restricted assets 2,258,155 2,258,155 - Investment in regional plant(joint venture) 23,186,009 23,186,009 - Capital assets: Non-depreciable capital assets 47,588,636 7,868,463 55,457,099 28,663,731 Depreciable capital assets,net 88,560,014 92,555,286 181,115,300 2,879,081 - Total Assets 215,144,156 156,491,167 371,635,323 43,461,092 101,157 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refundings 170,971 59,232 230,203 - - LIABILITIES Accounts payable and accrued expenses 4,238,052 1,262,066 5,500,118 913,489 3,076 Contracts payable and retainages - 17,084 17,084 37,963 - Deposits payable 1,210,105 1,208,027 2,418,132 5,723 Unearned revenue 3,294,348 45,810 3,340,158 7,438 Accrued interest on long-term debt 194,267 45,013 239,280 - Due to component unit 310,775 - 310,775 - Due to primary government - - - 721,546 Noncurrent liabilities: Due within one year Bonds and note payable 2,682,000 638,000 3,320,000 1,874,032 Installment agreements 117,232 - 117,232 - Compensated absences 769,498 39,512 809,010 Insurance claims payable 1,569,412 - 1,569,412 - Due in more than one year Bonds and note payable 63,163,872 14,758,205 77,922,077 12,522,164 Installment agreements 386,674 - 386,674 - Compensated absences 6,096,120 1,086,942 7,183,062 Insurance claims payable 3,781,000 - 3,781,000 Net pension obligation 95,843 82,055 177,898 Net OPEB obligation 4,193,974 665,458 4,859,432 - - Total Liabilities 92,103,172 19,848,172 111,951,344 16,082,355 3,076 NET POSITION Net investment in capital assets 69,969,843 85,086,776 155,056,619 20,760,806 - Restricted for: Debt service 519,593 580,000 1,099,593 - Law enforcement 946,004 - 946,004 Capital improvements 280,288 1,642,394 1,922,682 - - Unrestricted 51,496,227 49,393,057 100,889,284 6,617,931 98,081 Total Net Position $ 123,211,955 $ 136,702,227 $ 259,914,182 $ 27,378,737 $ 98,081 The notes to the financial statements are an integral part of this statement. 17 ' ' ' ' ' ' ' ' ' ' ' ' 00 00 O ' ' ' ' ' ,--� ' 00 C7, C, O ow ow Qy � y 00 00 N l� O N M U Ff3 a Z O M N M oc o0 to M_ M U\ N N l� M vl l� O l� �--i M --i N N l�\O M O �n 00 O l� 00 M U\ 00 O U\ �--i M O W N �--i O �n M N N l� 00 U\ M 1, l� --i Z .y M N OC Vl O z5 M l� Vl \O M M o l- v, l3 00 l� U\ —\o F- �/l �--i O�M O M O� O� �--i M �/l M r-- 5 � CL F.I N o0 v\O N W o0 M �o U\ � FA Ff3 y O M N M Vl W O M N oc l� OO N o0 N ' �o O �o ,--i ..•i M N oc Vl O ~ Vl Vl W M W r-- 00 l� l� U\ l� l� M O 7 M U\ �n M N 00 �--i O W W \O --i M M l� l: N n \O N N 00 �o l� vl M N CJ FA �..i oc O W O oc Q O rn M oc oc ct i w 18 O � oc vMi vii � m 0 w a a ct _ oc ,� C r-- py i.i O W M ,--i 10 00 0 W M r-- ,O z N U\ O ` U\ ll N l� �n �n cn oc L O l� o0 Io N l� O M pp '0 � \ � U ` y N N O M 10 to t M M g M W \O M O \O N o oc Vl U O � �o �o � N ,--i � Vl \O �--i M �o 00 Vl 00 � �y OW O ` - O M O O O n N t B O O N M Vl M Ic r r-, W OW O M O W ` O \O ` M N \O WN W N O N M CQ Ff3 Ff3 FA FA O � a bA ow U � W � Q � W cOC iU • � � Q� yam_, U � � � � ct N cn Do Z U U O O it ° ° ai o ZZ .� '> o o O o CG o o °an ° o 0,4 "4 a > F ° q > C7r� aaa� CITY OF DELRAY BEACH,FLORIDA BALANCESHEET GOVERNMENTAL FUNDS September 30,2014 Major Fund Non-Major Total General Governmental Governmental Fund Funds Funds ASSETS Cash and cash equivalents $ 35,823,813 $ 611,810 $ 36,435,623 Investments 14,405,188 6,175,858 20,581,046 Accounts receivable,net 1,490,701 84,460 1,575,161 Notes receivable 40,500 2,338,490 2,378,990 Notes receivable from component unit 5,686,971 - 5,686,971 Interest receivable 22,360 9,745 32,105 Due from other governments 883,023 8,444,780 9,327,803 Due from other funds - 11,118,873 11,118,873 Due from component unit 571,117 150,429 721,546 Inventories 22,270 - 22,270 Prepaid items 803,979 - 803,979 Assets acquired for sale - 460,316 460,316 Total Assets $ 59,749,922 $ 29,394,761 $ 89,144,683 LIABILITIES,DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable and accrued items $ 1,915,353 $ 1,944,467 $ 3,859,820 Deposits payable 1,206,455 3,650 1,210,105 Due to other funds 20,903,754 163,106 21,066,860 Due to component unit 23,474 287,301 310,775 Total Liabilities 24,049,036 2,398,524 26,447,560 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 6,655,099 2,636,789 9,291,888 FUND BALANCES Nonspendable: Inventories 22,270 - 22,270 Prepaid items 803,979 803,979 Long-term notes receivable 3,139,659 - 3,139,659 Restricted for: Debt service - 519,593 519,593 Law enforcement - 946,004 946,004 Capital improvements 5,984 274,304 280,288 Community development - 556,557 556,557 Committed for: Economic development 1,000,000 - 1,000,000 Assigned to: General government 14,965 - 14,965 Public safety 277,200 127,523 404,723 Physical environment 58,734 - 58,734 Parks and recreation 22,644 1,404,962 1,427,606 Capital improvements - 20,530,505 20,530,505 Unassigned 23,700,352 - 23,700,352 Total Fund Balances 29,045,787 24,359,448 53,405,235 Total Liabilities,Deferred Inflows of Resources and Fund Balances $ 59,749,922 $ 29,394,761 $ 89,144,683 The notes to the financial statements are an integral part of this statement. 19 CITY OF DELRAY BEACH,FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION September 30,2014 Total Fund Balances-Governmental Funds $ 53,405,235 Amounts reported for govermnental 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. Capital assets $ 229,834,348 Less accumulated depreciation (100,730,136) 129,104,212 Other long-term assets are not available to pay for current period expenditures and,therefore, are reported as unavailable revenues in the funds. Rent receivable 100,000 Long-term receivables 210,569 Notes receivable from component unit 5,686,971 5,997,540 Premiums,discounts,gains and losses on refundings are reported as"Other Financing Sources and Uses" in the governmental funds. These items,however,are deferred and amortized over the life of the bonds in the government-wide statements. Loss on refunding 170,971 Bond premium (557,130) (386,159) Long-term liabilities,including bonds payable,are not due and payable in the current period and therefore,are not reported in the funds. Accrued interest payable (194,267) Bonds and installment agreements payable (65,792,648) Compensated absences (6,739,464) Net pension obligation (84,548) Net OPEB obligation (4,110,792) (76,921,719) Internal service funds are used by management to charge the costs of fleet management and insurance to individual funds. The net position of the internal service funds is included in governmental activities in the statement of net position. Net position 12,981,343 Less amount allocated to business-type activities (968,497) 12,012,846 Total Net Position-Governmental Activities $ 123,211,955 The notes to the financial statements are an integral part of this statement. 20 CITY OF DELRAY BEACH,FLORIDA STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Fiscal Year Ended September 30,2014 Major Fund Non-Major Total General Governmental Governmental Fund Funds Funds REVENUES Taxes $ 59,081,293 S - $ 59,081,293 Licenses and permits 10,431,335 10,431,335 Intergovernmental 9,072,999 11,251,229 20,324,228 Charges for services 10,841,897 515,954 11,357,851 Fines and forfeitures 1,028,905 238,147 1,267,052 Miscellaneous 6,324,008 1,576,370 7,900,378 Total Revenues 96,780,437 13,581,700 110,362,137 EXPENDITURES Current: General government 19,404,118 1,777,462 21,181,580 Public safety 56,370,438 108,845 56,479,283 Physical environment 4,415,970 1,058,312 5,474,282 Parks and recreation 12,359,467 583,509 12,942,976 Capital outlay 130,920 7,053,299 7,184,219 Debt service: Principal retirement 2,667,085 2,822,763 5,489,848 Interest and fiscal charges 859,359 1,269,048 2,128,407 Bond issuance costs 42,030 - 42,030 Total Expenditures 96,249,387 14,673,238 110,922,625 Excess of revenues over(under)expenditures 531,050 (1,091,538) (560,488) OTHER FINANCING SOURCES(USES) Refunding revenue bond proceeds 8,810,000 - 8,810,000 Bond anticipation note proceeds - 6,190,036 6,190,036 Payment to refunded bond escrow agent (8,767,970) - (8,767,970) Transfers in 3,733,317 3,362,864 7,096,181 Transfers out (3,308,784) (62,647) (3,371,431) Total Other Financing Sources(Uses) 466,563 9,490,253 9,956,816 Net change in fund balances 997,613 8,398,715 9,396,328 Fund balances-October 1,2013 28,048,174 15,960,733 44,008,907 Fund balances-September 30,2014 $ 29,045,787 $ 24,359,448 $ 53,405,235 The notes to the financial statements are an integral part of this statement. 21 CITY OF DELRAY BEACH,FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES For the Fiscal Year Ended September 30,2014 Net Change in Fund Balances-Total Governmental Funds S 9,396,328 Amounts reported for goveirmzental 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 as depreciation expense. Depreciation expense and capital outlays in the current period were as follows. Capital outlay S 7,184,219 Depreciation expense (6,464,906) 719,313 In the statement of activities,only the gain or loss on the sale of capital assets is reported,whereas in the governmental funds the proceeds from the sale increases financial resources. The change in net position differs from the change in fund balance by the net book value of the assets retired. (103,373) Some revenues reported in the statement of activities do not generate current financial resources and are therefore not reported as revenue by the funds. Donations of capital assets 546,753 Change in note receivable from component unit (198,089) Change in long-term receivables (1,022,777) (674,113) Some expenses reported in the statement of activities are not reported in the funds because they have no effect on current financial resources Change in net pension obligation (108,175) Change in net OPEB obligation (943,334) Compensated absences 374,771 Change in accrued interest payable 78,434 (598,304) Debt issued provides current financial resources to governmental funds,but issuing debt increases long-term liabilities in the statement of net position. Governmental funds report the effect of premium,discount and similar items when debt is issued,whereas these amounts are deferred and amortized in the statement of activities. Debt Issuance Revenue bonds (6,190,036) General obligation bonds (8,810,000) (15,000,036) Debt Retirement Principal paid 5,489,848 Payment to escrow agent 8,767,970 Amortization of debt premiums and deferred charges on refundings 1,056 14,258,874 Internal service funds are used by management to charge the costs of fleet maintenance and insurance to individual funds. The net revenue of internal service funds is reported with governmental activities. Fund statement net income (435,192) Less allocation to business type activities 93,864 (341,328) Change in Net Position of Governmental Activities S 7,657,361 The notes to the financial statements are an integral part of this statement. 22 CITY OF DELRAY BEACH,FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30,2014 Governmental Business-Type Activities Activities Major Fund Non-Major Total Internal Water and Enterprise Enterprise Service ASSETS Sewer Fund Funds Funds Funds Current Assets Cash and cash equivalents $ 87,822 $ 19,756 $ 107,578 $ 203,481 Investments 11,515,959 7,057,256 18,573,215 7,793,924 Accounts receivable,net 2,399,512 754,221 3,153,733 17,852 Unbilled accounts receivable 777,950 - 777,950 - Interest receivable 20,765 11,510 32,275 12,427 Due from other funds 7,311,549 2,164,797 9,476,346 3,364,785 Inventories 292,604 74,020 366,624 111,541 Prepaid expenses - 60,180 60,180 382,170 Restricted assets: Cash and cash equivalents - 615,761 615,761 - Investments 1,642,394 - 1,642,394 - Total Current Assets 24,048,555 10,757,501 34,806,056 11,886,180 Noncurrent Assets Property,land and equipment: Land 974,755 4,694,069 5,668,824 - Buildings 9,419,364 4,354,984 13,774,348 88,185 Improvements other than buildings 152,856,377 16,667,913 169,524,290 - Equipment 11,977,160 2,669,361 14,646,521 22,541,907 Construction in progress 1,497,103 702,536 2,199,639 - Accumulated depreciation (93,554,653) (11,835,220) (105,389,873) (15,585,654) Other assets: Investment in regional plantjoint venture 23,186,009 - 23,186,009 - Total Noncurrent Assets 106,356,115 17,253,643 123,609,758 7,044,438 Total Assets 130,404,670 28,011,144 158,415,814 18,930,618 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refundings - 59,232 59,232 - LIABILITIES Current Liabilities Accounts payable and accrued expenses 801,968 460,098 1,262,066 378,232 Contracts payable and retainages 17,084 - 17,084 - Unearned revenue 15,435 30,375 45,810 Compensated absences payable 39,512 - 39,512 - Insurance claims payable - - - 1,569,412 Due to other funds - 2,893,144 2,893,144 - Refundable deposits payable 1,052,938 155,089 1,208,027 - 1,926,937 3,538,706 5,465,643 1,947,644 Current Liabilities Payable from Restricted Assets Accrued interest on long-term debt 9,252 35,761 45,013 - Current maturities of revenue bonds 110,000 528,000 638,000 119,252 563,761 683,013 - Total Current Liabilities 2,046,189 4,102,467 6,148,656 1,947,644 Noncurrent Liabilities Net pension obligation 75,712 6,343 82,055 11,295 Net other postemployment benefits obligation 610,003 55,455 665,458 83,182 Long-term portion of compensated absences payable 1,024,404 62,538 1,086,942 126,154 Long-term portion of insurance claims payable - - - 3,781,000 Revenue bonds payable,net 12,919,000 1,839,205 14,758,205 - Total Noncurrent Li abilities 14,629,119 1,963,541 16,592,660 4,001,631 Total Liabilities 16,675,308 6,066,008 22,741,316 5,949,275 NET POSITION Net investment in capital assets 70,141,106 14,945,670 85,086,776 7,044,438 Restricted for: Debt service - 580,000 580,000 - Renewal and replacement 1,642,394 - 1,642,394 - Umestricted 41,945,862 6,478,698 48,424,560 5,936,905 Total Net Position $ 113,729,362 $ 22,004,368 135,733,730 $ 12,981,343 Adjustment for the cumulative internal balance for the net effect of the activity between the internal service funds and the enterpri se funds Cummulative prior year adjustments 1,062,361 Current year adjustment (93,864) Net Assets of Business-Type Activities,Statement of Net Position $ 136,702,227 The notes to the financial statements are an integral part of this statement 23 CITY OF DELRAY BEACH,FLORIDA STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Fiscal Year Ended September 30,2014 Governmental Business-Type Activities Activities Major Fund Water Non-Major Total Internal and Sewer Enterprise Enterprise Service Fund Funds Funds Funds OPERATING REVENUES Charges for services Water sales S 13,863,722 S - $ 13,863,722 $ Sewer and stormwater fees 17,708,246 2,128,772 19,837,018 Golf fees - 3,641,300 3,641,300 Marina fees 243,234 243,234 Sanitation fees 4,969,127 4,969,127 Risk management - - 12,558,514 Fleet management - - - 3,061,748 Other operating revenue 343,532 128,140 471,672 2,237,711 Total Operating Revenues 31,915,500 11,110,573 43,026,073 17,857,973 OPERATING EXPENSES Personal services 7,615,371 662,410 8,277,781 1,207,929 Other operating expenses 11,216,354 8,479,167 19,695,521 15,263,658 Depreciation 3,244,332 591,295 3,835,627 1,938,529 Total Operating Expenses 22,076,057 9,732,872 31,808,929 18,410,116 Operating Income(Loss) 9,839,443 1,377,701 11,217,144 (552,143) NONOPERATING REVENUES(EXPENSES) Investment earnings 87,073 45,926 132,999 48,193 Rent revenue - 159,994 159,994 - Share of regional plant joint venture net loss (1,688,447) - (1,688,447) Interest expense (605,814) (151,729) (757,543) - Gain on disposal of equipment 16,958 16,958 60,225 Investment expense (9,179) - (9,179) Total Nonoperating Revenues(Expenses) (2,216,367) 71,149 (2,145,218) 108,418 Income(Loss)Before Capital Contributions and Transfers 7,623,076 1,448,850 9,071,926 (443,725) Capital contributions 877,588 48,442 926,030 8,533 Transfers in 112,000 - 112,000 - Transfers out (3,031,090) (805,660) (3,836,750) Change In Net Position 5,581,574 691,632 6,273,206 (435,192) Net Position-October 1,2013 108,147,788 21,312,736 13,416,535 Net Position-September 30,2014 S 113,729,362 S 22,004,368 S 12,981,343 Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds (93,864) Change In Net Position as reported on the Statement of Activities for Business-type Activities S 6,179,342 The notes to the financial statements are an integral part of this statement. 24 CITY OF DELRAY BEACH,FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Fiscal Year Ended September 30,2014 Governmental Business-Type Activities Activities Major Fund Water Non-Major Total Internal and Sewer Enterprise Enterprise Service Fund Funds Funds Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 29,172,482 $ 11,273,809 $ 40,446,291 $ 18,553,713 Receipts from others 549,477 159,994 709,471 - Paymentstosuppliers (11,133,741) (8,239,395) (19,373,136) (16,043,790) Payments to employees (7,360,212) (641,332) (8,001,544) (1,183,931) Net cash provided by operating activities 11,228,006 2,553,076 13,781,082 1,325,992 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 112,000 - 112,000 - Transfers to other funds (3,031,090) (805,660) (3,836,750) Net cash used in noncapital financing activities (2,919,090) (805,660) (3,724,750) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (3,574,580) (923,641) (4,498,221) (1,454,039) Proceeds from the sale of capital assets - 16,958 16,958 113,190 Capital contributions 877,588 - 877,588 - Principal paid on capital debt (4,704,585) (512,183) (5,216,768) Interest paid on capital debt (6,775,537) (134,700) (6,910,237) Net cash used in capital and related financing activities (14,177,114) (1,553,566) (15,730,680) (1,340,849) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments (167,739) (451,697) (619,436) (94,071) Sale of investments - 186,875 186,875 - Interest oninvestments 165,875 89,583 255,458 94,870 Net cash provided by(used in)investing activities (1,864) (175,239) (177,103) 799 Net increase(decrease)in cash and cash equivalents (5,870,062) 18,611 (5,851,451) (14,058) Cash and cash equivalents-October 1,2013 5,957,884 616,906 6,574,790 217,539 Cash and cash equivalents-September 30,2014 $ 87,822 $ 635,517 $ 723,339 $ 203,481 Reconciliation of cash and cash equivalents to statement of net position: Unrestricted cash and cash equivalents $ 87,822 $ 19,756 $ 107,578 $ 203,481 Restricted cash and cash equivalents - 615,761 615,761 - Cash and cash equivalents-September 30,2014 $ 87,822 $ 635,517 $ 723,339 $ 203,481 Reconciliation of operating income(loss)to net cash provided by operating activities: Operating income(loss) $ 9,839,443 1,377,701 $ 11,217,144 $ (552,143) Adjustments to reconcile operating income(loss)to net cash provided by operating activities: Depreciation expense 3,244,332 591,295 3,835,627 1,938,529 Provision for doubtful accounts 124,149 - 124,149 - Miscellaneous revenue - 159,994 159,994 - Change in assets and liabilities: Accounts receivable 222,628 164,223 386,851 121,726 Due from other governments 205,945 - 205,945 - Due from other funds (2,761,923) - (2,761,923) 574,014 Inventories 30,257 16,637 46,894 (63,621) Prepaid expenses - (1,308) (1,308) 53,978 Accounts payable and accrued expenses 52,356 (42,958) 9,398 (957,116) Unearned revenue - (36,860) (36,860) - Compensated absences payable 80,282 6,569 86,851 4,977 Net pension obligation 36,743 2,746 39,489 5,746 Net OPEB obligation 138,134 11,763 149,897 13,275 Insurance claims payable - - - 186,627 Due to other funds - 284,038 284,038 - Refundable deposits payable 15,660 19,236 34,896 - Total adjustments 1,388,563 1,175,375 2,563,938 1,878,135 Net cash provided by operating activities $ 11,228,006 $ 2,553,076 $ 13,781,082 $ 1,325,992 NON-CASH CAPITAL AND RELATED FINANCING ACTIVITIES Amortization of bond premiums $ - $ (9,834) $ (9,834) $ - Amortization of deferred charges on refundings $ $ 33,849 $ 33,849 $ Contributions of capital assets $ - $ 48,442 $ 48,442 $ 8,533 Realized and unrealized losses on investments $ (50,132) $ (27,788) $ (77,920) $ (29,695) The notes to the financial statements are an integral part of this statement 25 CITY OF DELRAY BEACH,FLORIDA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30,2014 Pension Trust Funds ASSETS Cash and cash equivalents S 6,394,246 Investments: U.S.Government securities 12,600,928 U.S.Government Agency securities 12,512,610 Municipal obligations 250,406 Domestic and international fixed income investment funds 14,048,720 Domestic and international corporate bonds 34,566,138 Domestic and international equity securities 85,342,114 Domestic and international equity investment funds 31,692,698 Alternative investments 67,152,556 DROP participant directed mutual funds 18,904,334 Interest and dividends receivable 559,198 Due from broker for securities sold 167,002 Employee contributions receivable 57,423 State contributions receivable 39,180 Prepaid expenses 10,035 Total Assets 284,297,588 LIABILITIES Accounts payable 195,506 Due to broker for securities purchased 610,158 Total Liabilities 805,664 NET POSITION Restricted for pension benefits S 283,491,924 The notes to the financial statements are an integral part of this statement. 26 CITY OF DELRAY BEACH,FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Fiscal Year Ended September 30,2014 Pension Trust Funds ADDITIONS Contributions Employer S 11,141,085 State 1,951,084 Plan members 2,720,766 Total contributions 15,812,935 Investment earnings Net appreciation in fair value of investments 23,526,129 Interest and dividends 4,382,041 27,908,170 Less investment expenses-custodian fees 978,206 Net investment earnings 26,929,964 Other income 197,385 Total additions 42,940,284 DEDUCTIONS Benefits 16,488,030 Refunds of contributions 223,865 Administrative expenses 311,386 Total deductions 17,023,281 Change In Plan Net Position 25,917,003 Net Position Restricted for Pension Benefits-October 1,2013 257,574,921 Net Position Restricted for Pension Benefits-September 30,2014 S 283,491,924 The notes to the financial statements are an integral part of this statement. 27 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 1.Financial Reporting Entity In conformance with the pronouncements of the Governmental Accounting Standards Board ("GASB"), the financial reporting entity of the City of Delray Beach,Florida(the"City"),includes the primary government and all organizations for which the primary government is financially accountable. The City was established pursuant to Section 12677,Laws of Florida, 1927.Financial accountability was determined based on the City's ability to impose its will on an organization or the potential of the organization to provide specific financial benefits to or impose specific financial burdens on the City. Discretely Presented Component Units As defined by U.S. generally accepted accounting principles, the financial reporting entity consists of (a) the primary government, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but 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. Two dependent special districts of the City,created pursuant to Florida Statutes,have been included in the reporting entity as discretely presented component units. The districts are the Delray Beach Community Redevelopment Agency (the "CRA") and the Delray Beach Downtown Development Authority (the "DDA"). Both of these entities are considered component units, as the City appoints the governing board of each, and has the ability to remove members of the board at will. The CRA is a dependent special district established by the City under authority granted by Florida Statute 163, Section 111. The purpose of the CRA is to promote and guide the physical and economic redevelopment of approximately 1,900 acres in the center of the City. The CRA is a legally separate entity established by Ordinance number 46-85 of the Delray Beach City Commission on June 18, 1985. The CRA is governed by a seven member Board of Commissioners appointed by the Delray Beach City Commission. The DDA was created after the City petitioned the State of Florida. An Act allowing the DDA became law on March 22, 1971. The original boundary of the DDA was established by Section 3, Chapter 71-604 Laws of Florida, 1971. The expanded boundary was established by Chapter 94-476 Laws of Florida effective May 13, 1994. The purpose of the DDA is to promote and guide the economic development and improvement of the downtown area of the City. The governing body of the DDA is appointed by the Delray Beach City Commission. In addition,the City approves the DDA's budget. Except as otherwise indicated, the notes to the financial statements pertain only to the primary government of the City. The separate financial statements of the CRA and the DDA can be obtained directly from the respective entities. Joint Venture The South Central Regional Wastewater Treatment and Disposal Board (the`Board") is reported as a joint venture accounted for using the equity method as discussed in Note 10. The Board is an independent special district created by the Cities of Delray Beach and Boynton Beach,whose City Commissions comprise the Board's governing body. Control and oversight are exercised equally by both cities represented on the Board. The separate financial statements of the Board can be obtained directly from the finance department of the Board. 2. Significant Accounting Policies The City maintains its accounting records in accordance with the principles and policies applicable to governmental units set forth by the Government Accounting Standards Board(GASB). 28 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) 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 City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues.Direct expenses are those that are clearly identifiable with a specific function.Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and(2)grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. The City does not allocate indirect costs; however, an administrative service fee is charged by the General Fund to other operating funds that is eliminated like a reimbursement (reducing revenue and expense in the General Fund) to recover the direct costs of General Fund services provided(such as finance,legal,human resources,information systems,etc.). Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus,Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary fund financial statements. Revenues are recognized when earned and expenses are recognized when incurred, regardless of the timing of cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The proprietary fund financial statements distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering services. The principal operating revenues are charges to customers for sales and services. Operating expenses include the cost of sales and services, administration, and depreciation. Other revenues and expenses are considered nonoperating revenues and expenses. Water and sewer and other proprietary fund revenues are recognized as earned when the services are provided. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.Ad valorem taxes and charges for services are susceptible to accrual when collected in the current year or within 60 days subsequent to year end,provided that amounts received pertain to billings through the fiscal year just ended. Intergovernmental revenue and utility service taxes are recorded in accordance with their legal or contractual requirements if collected in the current period or within 60 days after year end,except for grant revenue,which is recorded when the related expenditures/expenses are incurred and the eligibility requirements have been met. Interest is recorded when earned. Licenses and permits, fines and forfeitures and miscellaneous revenue are recorded as revenue when received in cash,because they are generally not measurable until actually received. Other Revenues - Emergency medical transport services provided by the City are billed and recorded at the time services are rendered. Other material revenues which are susceptible to accrual include franchise taxes, state revenue sharing and other state shared revenue. Revenues which are not both available and measurable and are thus not susceptible to accrual include utility taxes,permits and occupational licenses.Business taxes collected in advance of 29 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) periods to which they relate are recorded as unavailable revenues, a deferred inflow of resources. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable, except that principal and interest on long-term obligations are reported only when due in conformity with GAAP. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. The City reports the following major governmental fund: General Fund— This fund is the general operating fund of the City. All general tax revenue and other receipts that are not allocated by law or contractual agreement to another fund are accounted for in this fund. The general operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. The City reports the following major proprietary fund: Water and Sewer Fund-This fund is used to account for water and sewer services provided by the City to residents and other users. Additionally,the City reports the following fund types: Internal Service Funds-These funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City,or to other governmental units,on a cost reimbursement basis,including insurance services and the operation of the central garage. Pension Trust Funds-These funds account for the accumulation of resources to be used for the retirement annuities of employees,police officers and firefighters. Cash,Cash Equivalents and Investments Cash, cash equivalents and investments consist of restricted and unrestricted cash deposits, time deposits, money market mutual funds and permitted securities. Investments are stated at fair value. Investment purchases and sales are recorded on the trade date. Cash balances from all funds are combined, and the requirements of all funds are considered in determining the amount to be invested.Earnings are allocated to each fund based on respective month- end balances.For purposes of the statement of cash flows,the City considers all highly liquid investments(including restricted assets)with a maturity of three months or less when purchased to be cash equivalents. Accounts Receivable Accounts receivable represent amounts due for various City services and utilities, provided primarily to local businesses and residents. Accounts receivable are reported net of an allowance for doubtful accounts determined based on the age of the individual receivable and historical collection trends. Accounts receivable are written off on an individual basis in the year the City deems them uncollectible. An allowance for doubtful accounts has been provided for those accounts where collectability appears to be doubtful. The City does not require collateral from its customers, except for the Water and Sewer Fund, which requires deposits for services. The City maintains an allowance for doubtful accounts at a level which management believes is sufficient to cover potential credit losses. Unbilled Service Receivables Within the enterprise funds,the Water and Sewer Fund recognizes revenue on the basis of monthly cycle billings to customers for services provided. As a result of this cycle billing method,there are unbilled receivables at the end of each fiscal year with respect to services provided, but not billed at such date. It is the policy of the City to accrue these amounts at year-end. The other enterprise funds do not have unbilled receivables at year-end. 30 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) Inventories Inventories consist of materials, supplies and goods held for sale and are carried at cost on the average cost basis. General Fund inventories are accounted for using the consumption method whereby inventories are recorded as expenditures in the period when used. Prepaid Items/Expenses Payments for insurance premiums and other administrative expenditures/expenses extending over more than one accounting period are accounted for as prepaid items/expenses and allocated between accounting periods. Intra-Entity Transactions Intra-entity transactions consist of transactions and balances between the primary government and its discretely presented component units and are separately reported from interfund balances. Current maturities of long-term intra-entity transactions are reported separately as due to and due from the respective entities. Interlund Transactions Transactions among funds during the year are described as follows: Interfund services provided and used - Transactions which are revenues to the recipient fund and expenditures/expenses to the disbursing fund. These are transactions which would otherwise be recorded as revenues or expenditures/expenses if they were conducted with organizations external to the City. Reimbursements-These transactions are reimbursements of a fund for the disbursement of monies initially made from it, which are properly applicable to another fund. Such reimbursements are recorded as an expenditure or expense in the reimbursing fund and as reductions of the interfund receivable in the fund that is reimbursed. Transfers - Transfers which, because of budgetary or legal restrictions, must be expended by funds other than the fund initially receiving the revenue. These transfers are recorded as transfers in(out). Internal balances - Amounts reported in the fund financial statements as interfund receivables and payables are eliminated in the government-wide governmental and business-type activities columns of the statement of net position,except for the residual amounts,which are presented as internal balances. Assets Acquired for Sale Assets acquired for sale consist of residential properties purchased by the City through its Neighborhood Stabilization Program("NSP"). The NSP rehabilitates and resells properties in the City to low income residents.The properties are reported at the lower of cost or estimated net realizable value. Capital Assets Capital asset acquisitions are recorded as expenditures in the governmental fund financial statements. Such assets are capitalized at historical cost in the government-wide financial statements for both governmental activities and business-type activities. In the case of gifts or contributions, such assets are recorded at fair value at the date of receipt. Capital costs which materially extend the useful life of existing properties are capitalized. Capital assets are defined as assets with an initial,individual cost of more than$750 and an estimated useful life in excess of one year. 31 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) Interest is capitalized on projects during the construction period based upon average accumulated project expenditures. Infrastructure assets (such as roads, bridges, curbs and gutters, streets and sidewalks, lighting and drainage systems and similar assets that are immovable and of value only to the City)are capitalized and reported in the Improvements Other Than Buildings category. Depreciation of capital assets is provided on the straight-line basis over the assets' estimated useful lives. Amortization of assets recorded under capital leases is recorded with depreciation expense. Estimated useful lives assigned to various categories of assets are as follows: Buildings 20—40 years Improvements other than buildings 10—30 years Machinery and equipment 4— 15 years Automotive equipment 4—8 years Office equipment 5 years Water meters 30 years Pumping equipment 15—20 years Wells and springs 10 years Sewer system 60 years Water distribution system 50 years Unavailable/Unearned Revenue Unearned revenue in the Governmental Activities and unavailable revenue in the Governmental Funds includes amounts received in advance for business licenses, grants and long-term receivables for various housing assistance programs provided by the City. Unearned revenue in the Business-type Activities and Proprietary Funds is composed of advance utility payments from customers and other amounts received in advance of the related services being provided by the City. Compensated Absences The City accrues compensated absences in accordance with GASB Statement No. 16,Accounting for Compensated Absences, and has elected the termination payment method of accounting for sick leave. Compensated absences are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental fund financial statements only if they have matured,for example,as a result of employee resignations and retirements. The City's policy regarding the accumulation of compensated absences is summarized as follows: Vacation Leave -Employees become eligible to use accrued vacation after one year of continuous service and may then use vacation as it is earned. The maximum vacation days allowed to be accumulated is 18, 24-hour days for fire department personnel and 36, 8-hour days for all other full-time personnel. Upon termination in good standing,employees are compensated for all accrued vacation leave at their pay rate on the date of termination. Sick Leave -Employees earn hours of sick leave per month based on their scheduled work hours; 8 hours per month for 40-hour work week employees and 9.6 hours per month for 48-hour work week employees. If an employee retires with 20 years or more of service, sick leave is paid up to a maximum of 1,120 hours for general employees and police or 1,344 hours for 48-hour work week firefighter employees. Upon retirement with less than 20 years of service or resignation, employees are compensated for unused sick leave at their pay rate on the date of termination, up to 560 hours (70 days) for general employees and police and 672 hours(84 days)for firefighters according to the following vesting schedule: 32 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) Percent Years of Continuous Service Vested 0—5 years 0% 5—10 years 25 10—15 years 50 15—20 years 75 Noncurrent Obligations In the government-wide financial statements and proprietary funds financial statements, long-term debt and other noncurrent obligations are reported as liabilities in the applicable governmental activities,business-type activities,or proprietary fund statement of net position. Debt discounts, premiums and deferred charges on refunding, are deferred and amortized over the term of the related financing using a method that approximates the effective interest method. Long-term debt is reported net of applicable premium or discount. Issuance costs are reported as a period expense. In the fund financial statements, governmental fund types recognize debt premiums and discounts, as well as debt issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses.Issuance costs are reported as debt service expenditures. Deferred Outflows/Inflows of Resources In addition to assets and liabilities, the government-wide statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows or deferred inflows of resources. The separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s)and so will not be recognized as an outflow of resources(expense/expenditure)until that time. The City has one item, deferred charges on refundings, which qualifies for reporting as deferred outflows of resources on the government-wide statement of net position. The deferred charges on refundings were losses resulting from the difference in the carrying value of refunded debt and its reacquisition price. These amounts are deferred and amortized over the shorter of the life of the refunded or refunding debt. The separate financial statement element,deferred inflows of resources,represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenues)until that time. The City has one item, unavailable revenues, which arises only under the modified accrual basis of accounting and is reported as a deferred inflow of resources on the governmental funds balance sheet. The unavailable revenues include amounts received in advance for business licenses, grants and long-term receivables for various housing assistance programs provided by the City. These amounts are deferred and recognized as an inflow of resources in the year that the amounts become available. Fund Balance/Net Position Fund Balance Nature and Purpose of Fund Equity Classifications - In the fund financial statements, governmental funds report fund equity classifications that comprise a hierarchy based primarily on the extent to which the City is legally bound to honor the specific purposes for which amounts in fund balance may be spent. The fund balance classifications are summarized as follows: Nonspendable -Nonspendable fund balances include amounts that cannot be spent because they are either 1)not in spendable form;or,2)legally or contractually required to be maintained intact. 33 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) Restricted- Restricted fund balances include amounts that are restricted to specific purposes either by 1) constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulations of other governments;or,2)imposed by law through constitutional provisions or enabling legislation. Committed - Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by the City Commission through an ordinance and remains in place until action is taken by the City Commission to remove or revise the limitation. Assigned- Assigned fund balances include amounts that are constrained by the City's intent to be used for specific purposes but are neither restricted nor committed. The City Commission assigns fund balance by adopting a resolution giving direction to the City Manager. Assignments are generally temporary and do not require action by the City Commission for removal. Unassigned-Unassigned fund balances include amounts that are not assigned to other funds and have not been restricted,committed,or assigned to specific purposes within the General Fund. The City considers restricted fund balances to be spent when an expenditure is incurred for the restricted purpose. The City considers committed, assigned or unassigned fund balances to be spent when an expenditure is incurred for purposes for which amounts in any of those fund balance classifications could be used. Minimum Fund Balance Policy - The City Commission established a policy for a minimum unassigned fund balance of 19%of budgeted General Fund expenditures to provide for cash flow and emergency purposes. Net Position — The government-wide and proprietary fund utilize a net position presentation. Net position is categorized as follows: Net Investment in Capital Assets—This component of net position consists of capital assets,including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balance of any bonds, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of Net Investment in Capital Assets. Rather,that portion of the debt is included in the same net position component as the unspent proceeds. Restricted—This component of net position consists of constraints placed on the use of net position by external restrictions imposed by creditors(such as through debt covenants),grantors,contributors,or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. The government-wide statement of net position reports governmental activities net position of $1,745,885 restricted for debt service, law enforcement and capital improvements and business-type activities net position of$2,222,394 restricted for debt service and capital improvements. Unrestricted—This component of net position consists of net position that does not meet the definition of Net Investment in Capital Assets or Restricted Net Position. Property Taxes Ad valorem property taxes are assessed on property valuations as of January 1 and levied the following October. Property taxes are due March 31 and become delinquent April 1. These taxes are collected by Palm Beach County and remitted to the City. Revenue is recognized at the time monies are received from Palm Beach County. At September 30, unpaid delinquent taxes are reflected as a receivable and are offset in full by an allowance for estimated uncollectible accounts. Delinquent property taxes must be advertised within 45 days after delinquency, and after May 1 the property is subject to levy, seizure and sale. Delinquent tax certificates are sold on June 1 and become a lien on the property. State Statutes permit municipalities to levy property taxes at a rate of up to 10 mills ($10.00 for each$1,000 of assessed valuation). 34 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) During 2007, the Florida Legislature passed property tax reform legislation limiting the property tax levies of local governments in the State of Florida. Local governments that adopt a property tax levy in excess of the limit under State law will lose their Half-Cent Sales Tax distribution from the State for the succeeding twelve months. For the fiscal year ended September 30, 2014, the maximum tax levy allowed by a majority vote of the governing body is generally based on a percentage change applied to the prior year(2012/2013)property tax revenue. The percentage change is calculated based on the compound annual growth rate in the per capita property taxes levied for five preceding fiscal years. The State law allows local governments to adopt a higher millage rate based on the following approval of the governing body: 1) a majority vote to adopt a rate equal to the adjusted current year rolled-back millage rate plus an adjustment for growth in per capita Florida personal income; 2)a two-thirds vote to adopt a rate equal to the adjusted current year roll back millage rate plus 10%; or, 3) any millage rate approved by unanimous vote or voter referendum. For the fiscal year ended September 30, 2014,the City adopted an operating millage rate of 7.1611 and a debt service millage of 0.3453. This millage rate resulted in a gross tax levy of$54,077,708 for 2014, representing an increase of approximately 13.58% from the property tax levy for 2013, net of discounts. Future property tax growth is generally limited to the annual growth rate of per capita personal income plus the value of new construction. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation,is employed as an extension of formal budgetary control in the General Fund. Encumbrances outstanding at year-end of$373,543 are reported as fund balances assigned to encumbrances in the General Fund. For budgetary purposes, current year encumbrances are treated as expenditures and any unencumbered balances lapse at year-end. On-behalf Payments The City receives on-behalf payments from the State of Florida to be used for Police and Firefighters pension benefits. Such payments are recorded as intergovernmental revenue and public safety expenditures in the GAAP basis government-wide and General Fund financial statements, but are not budgeted and therefore are not included in the General Fund budgetary basis financial statements. On-behalf payments to the City totaled$1,951,084 for the fiscal year ended September 30,2014. Implementation of GASB Statements The City implemented the following GASB Statements during the fiscal year ended September 30,2014: • GASB Statement No. 66, Technical Corrections 2012—An Amendment of GASB Statements No. 10 and No. 62. This statement removed the provision that limited fund-based reporting of an entity's risk financing activities to the general fund and the internal service fund type. This Statement also modified the specific guidance on accounting for(1) operating lease payments that vary from a straight-line basis, (2) the amount of a purchased loan or group of loans, and(3) servicing fees related to mortgage loans that are sold when the stated service fee rate differs significantly from a current(normal)servicing fee rate. The requirements of this statement had no impact on the City's financial statements. • GASB Statement No. 67, Financial Reporting for Pension Plans—An Amendment of GASB Statement No. 25. This statement provides accounting and financial reporting requirements related to pensions for governments whose employees are provided with pensions through pension plans. The Statement establishes a definition for pension arrangements and determining pension obligations and requirements for accumulating and managing assets dedicated for pensions,and paying benefits to plan members as they come due. 35 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 2. Significant Accounting Policies(Continued) • GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. Statement No. 70 provides accounting and financial reporting standards related to nonexchange financial guarantees. The Statement establishes guidance on when a nonexchange financial guarantee is required to be recognized as a liability by the government. The City has no financial guarantees, and accordingly, this statement has no effect on the City. New GASB Statements: The Governmental Accounting Standards Board has also issued new Statements effective in future years. Management has not completed its analysis of the effects, if any, of these GASB statements on the financial statements of the City: • GASB Statement No. 68, Accounting and Financial Reporting for Pensions An Amendment of GASB Statement No. 27, provides accounting and financial reporting requirements related to pensions for governments whose employees are provided with pensions through pension plans. The Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources,and expenses/expenditures. For defined benefit pensions,this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. The requirements of this statement will be effective for the City for the fiscal year ending September 30,2015. • GASB Statement No. 69, Government Combinations and Disposals of Government Operations, establishes accounting and financial reporting standards related to government combinations and disposals of government operations. This Statement distinguishes between a government merger and a government acquisition and also provides guidance for transfers of operations that do not constitute entire legally separate entities and in which no significant consideration is exchanged. The requirements of this statement will be effective for the City for the fiscal year ending September 30,2015. • GASB Statement No. 71,Pension Transition for Contributions Made Subsequent to the Measurement Date, amends Statement No. 68 regarding the reporting of contributions as deferred outflows upon adoption of Statement No. 68. The requirements of this statement will be effective for the City upon adoption of Statement No. 68 for the fiscal year ending September 30,2015. Estimates Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses/expenditures. Actual results could vary from the estimates that were used. 3. Cash,Cash Equivalents and Investments Cash, cash equivalents and investments of the primary government at September 30, 2014, including unrestricted and restricted assets,are summarized as follows: Primary Fiduciary Funds Government Pension Trust Total Deposits with financial institutions and cash on hand $ 37,362,443 $ 317,218 $ 37,679,661 Money market mutual funds and investments 48,590,579 283,147,532 331,738,111 Total cash,cash equivalents and investments $ 85,953,022 $ 283,464,750 $ 369,417,772 36 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 3. Cash,Cash Equivalents and Investments(Continued) Primary Fiduciary Funds Government Pension Trust Total Cash and cash equivalents $ 36,746,682 $ 6,394,246 $ 43,140,928 Investments 46,948,185 277,070,504 324,018,689 Restricted cash and cash equivalents 615,761 - 615,761 Restricted investments 1,642,394 - 1,642,394 Total cash,cash equivalents and investments $ 85,953,022 $ 283,464,750 $ 369,417,772 Cash and cash equivalents included deposits with financial institutions of$37,344,343 and petty cash of$18,100. At September 30, 2014, the City's deposits with financial institutions were entirely covered by federal deposit insurance and a collateral pool pledged to the State Treasurer of Florida by financial institutions that comply with the requirements of Florida Statutes and have been designated as qualified public depositories by the State Treasurer of Florida. Qualified public depositories are required to pledge collateral to the State Treasurer with a market value equal to a percentage of the average daily balance of all government deposits in excess of any federal deposit insurance. In the event of a default by a qualified public depository, all claims for government deposits would be satisfied by the State Treasurer from the proceeds of federal deposit insurance, pledged collateral of the public depository in default and, if necessary, a pro rata assessment to the other qualified public depositories participating in the collateral pool. Florida Statutes and City policy authorize the City and its pension trust funds to invest in Florida PRIME (a State investment pool); negotiable direct obligations of or obligations unconditionally guaranteed by the U.S. Government; interest-bearing time deposits or savings accounts in financial institutions located in Florida and organized under federal or Florida laws; money market mutual funds limited to U.S. Government securities; obligations of the Federal Farm Credit Banks, Freddie Mac, the Federal Home Loan Bank or its district banks; obligations guaranteed by the Government National Mortgage Association; obligations of Fannie Mae; and any additional investments specifically authorized by City Ordinance. Pension trust funds may also invest in tax sale certificates of the State of Florida or any of its political subdivisions, preferred and common stocks of certain domestic and international corporations, debt securities of certain domestic and international corporations, mutual funds(including exchange traded funds),and alternative investments,including those that are not publicly traded. The carrying value(fair value)of the City's investments consists of the following at September 30,2014: Primary Fiduciary Funds Government Pension Trust Total Cash equivalents-money market mutual funds $ 145,423 $ 6,077,028 $ 6,222,451 Investments U.S. Government securities 30,895,080 12,600,928 43,496,008 U.S. Government Agency securities 5,784,430 12,512,610 18,297,040 Municipal obligations 1,196,604 250,406 1,447,010 Domestic and international fixed income investment funds - 14,048,720 14,048,720 Domestic and international corporate bonds 7,822,010 34,566,138 42,388,148 Commercial paper 2,747,032 - 2,747,032 Domestic and international equity securities - 85,342,114 85,342,114 Domestic and international equity investment funds 31,692,698 31,692,698 Alternative investments - 67,152,556 67,152,556 DROP participant directed mutual funds - 18,904,334 18,904,334 Total investments 48,445,156 277,070,504 325,515,660 Total money market mutual funds and investments $ 48,590,579 $ 283,147,532 $ 331,738,111 37 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 3. Cash,Cash Equivalents and Investments(Continued) At September 30, 2014, approximately 24% of City pension fund investments were invested in alternative investments. These alternative investments consist of pooled funds and investments that are not publicly traded and invest in fixed income securities, equity securities, timberlands and real estate. These alternative investments are generally valued at fair value as determined by the management of the fund by reference to the value of the underlying fund's assets, if available, or by valuations of a fund's underlying assets as provided by the general partner or investment manager, since the assets are not publicly traded. The funds may also hold certain investments which may be valued by a single market maker. While the fund managers use their best judgment in estimating the fair values of underlying funds, there are inherent limitations in any estimation technique. Accordingly, the fair values of alternative investment funds have been estimated by the management of the pension funds and their investment advisors in the absence of readily ascertainable market values. Therefore, the values of such funds may not necessarily be indicative of the amount that could be realized in a current transaction. The fair values may differ significantly from the values that would have been used had a ready market for the underlying funds existed,and the differences could be material. The alternative investments may also have restrictions for liquidating positions in the funds and future funding commitments. Future confirming events will affect the estimates of fair value, and the effect of such events on the estimates of fair value could be material. The alternative investment funds expose the pension funds to additional investment risks, including liquidity risks; counterparty and custody risks; foreign political,economic and governmental risks;and,market risk. Credit Risk: Credit risk is the risk that a debt issuer will not fulfill its obligations. The City's investment policy addresses credit risk by limiting investments to the safest types of securities,which are generally those receiving the highest credit ratings from a Nationally Recognized Statistical Rating Organization (NRSRO). The City utilizes ratings from Standard & Poor's and Moody's Investor Services for its investments. At September 30, 2014, the rating for the City's investment portfolio ranged from A to AAA. Pension investments in debt securities must be rated investment grade by a NRSRO. The NRSRO ratings for the fixed income investments of the primary government and pension funds are summarized as follows at September 30,2014. NRSRO Rating Fair Value Primary Government Money market mutual funds Unrated $ 145,423 U.S. Government and Agency securities AAA 36,679,510 Municipal obligations AAA 1,196,604 Corporate bonds AA—A 7,822,010 Commercial paper A 2,747,032 Pension Trust Funds Money market mutual funds Unrated 6,077,028 U.S. Government and Agency securities AAA—AA 25,113,538 Municipal obligations AAA—BBB 250,406 Domestic and international fixed income investment funds Unrated 14,048,720 Domestic and international corporate bonds AA—BB 34,566,138 Alternative investment fixed income fund Unrated 54,402,540 Custodial Credit Risk: Custodial credit risk is defined as the risk that the City may not recover cash and investments held by another party in the event of financial failure. The City's investment policy requires cash and investments to be fully insured or collateralized, or held in independent custodial safekeeping accounts in the name of the City. At September 30, 2014 all investments were held in independent custodial safekeeping accounts, except money market mutual funds,mutual funds and alternative investments,which are unclassified pursuant to GASB Statement No. 3. 38 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 3. Cash,Cash Equivalents and Investments(Continued) Concentration of Credit Risk: Concentration of credit risk is defined as the risk of loss attributed to the magnitude of an investment in a single issuer. The City's investment policy requires diversification of investments to minimize potential losses on individual securities. In the City pension funds, securities of a single issuer are limited to no more than 5% of the plan's net position invested in common stocks and debt securities. Investments in mutual funds or pools are excluded from the concentration of credit risk disclosure requirement. Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally,the longer the time to maturity,the greater the exposure to interest rate risk. The City's investment policy requires the investment of operating funds in shorter term securities and structuring of the investment portfolio so that securities mature to meet cash requirements. The policy further limits investments to securities maturing in five years or less, except in certain limited situations requiring approval by the City Commission. Time deposits include certificates of deposit maturing one year from the date of purchase. The table below summarizes the average effective duration in years of the fixed income investments. Average Duration (in years) Fair Value Primary Government U.S. Government securities 2.1 $ 30,895,080 U.S. Government Agency securities 2.3 5,784,430 Municipal obligations 1.8 1,196,604 Corporate bonds 1.6 7,822,010 Commercial paper 0.1 2,747,032 Pension Trust Funds U.S. Government securities 3.2 12,600,928 U.S. Government Agency securities 15.2 12,512,610 Municipal obligations 6.1 250,406 Domestic and international fixed income investment funds Not Available 14,048,720 Domestic and international corporate bonds 10.9 34,566,138 Alternative investment fixed income fund Not Available 54,402,540 Market Risk: The value,liquidity,and related income of certain securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations, commercial mortgage backed securities and alternative investments or mutual and investment funds investing in these securities or entities, are particularly sensitive to changes in financial markets and economic conditions, including real estate values, delinquencies or defaults, or both,and may be adversely affected by shifts in the market's perception of the issuers and changes in interest rates. Foreign Currency Risk Foreign currency risk includes the risk of revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and future adverse political, social, and economic developments. Moreover, securities of foreign governments may be less liquid, subject to delayed settlements,taxation on realized and unrealized gains,and their price may be more volatile than those of comparable securities in U.S. companies. Risks and Uncertainties: Due to the various risks associated with certain investments, it is at least reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported in the accompanying financial statements. The value, liquidity, and related income of certain securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations, commercial mortgage backed securities and real estate funds or pooled funds investing in these securities or entities, are particularly sensitive to changes in economic conditions,including real estate value,delinquencies or defaults,or both,and may be adversely affected by shifts in the market's perception of the issuers and changes in interest rates. 39 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 3. Cash,Cash Equivalents and Investments(Continued) Discretely Presented Component Units Cash: The CRA's cash at September 30, 2014, includes deposits with financial institutions with a bank balance of $10,413,435, a book balance of$10,412,036 and $250 of petty cash The CRA's deposits with financial institutions were entirely covered by federal depository insurance and a collateral pool pledged to the State Treasurer of Florida by financial institutions that comply with the requirements of Florida Statutes and have been designated as a qualified public depository by the State Treasurer. The DDA's cash balance at September 30, 2014, includes deposits with financial institutions that were fully covered by federal depository insurance. 4.Receivables Current receivables and the allowance for doubtful accounts were as follows at September 30,2014: Governmental Business-Type Activities Activities Property taxes receivable: General Fund $ 1,462,980 $ - Stormwater Utility Fund - 25,693 Accounts receivable: General Fund 1,841,799 - Water and Sewer Fund - 4,195,466 Non-Major Funds 84,460 752,341 Internal Service Funds 17,852 - Allowance for doubtful accounts (1,814,078) (1,041,817) $ 1,593,013 $ 3,931,683 5.Notes Receivable Notes receivable consist of the following at September 30,2014: General Fund: Non-interest-bearing note receivable from EPOCH, a local not-for-profit organization, to assist in funding of a museum project. Payments of$3,500 are due on December 31 of each year,with full payment by December 31,2017. $ 10,500 Non-interest-bearing note receivable from CRC Recovery Foundation, Inc. for the sale of land,payable in annual installments of$30,000 through 2015. 30,000 Total General Fund 40,500 Non-Major Governmental Funds: Non-interest-bearing notes receivable from individual property owners for rehabilitation, enhancement and preservation of affordable housing properties. Principal payments are amortized over 5-20 years. Repayment of the loans is contingent upon the sale of real estate prior to the required time frame or release date. Loan repayments are restricted under terms of federal and state grant programs to reinvestment in affordable housing properties. 2,338,490 Total Governmental Activities $ 2,378,990 40 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 5.Notes Receivable(Continued) In 1990 the City received a grant of approximately $4 million through the Urban Development Action Grant Program(UDAG) for the purpose of constructing a low-income housing project within the City. In connection with this grant,the City approved three loans to the developer. As part of the first loan,the City sold 36 acres of property to the developer for$730,000 and held a non-interest bearing, five year promissory note for$720,000 secured by a lien on the property. The second loan to the developer was for$3,840,000 from the UDAG monies and was payable annually over a 50 year term with 3% interest that was deferred until maturity in accordance with the repayment provisions of the UDAG funding. The third loan to the developer was for$768,000 from City funds and was payable annually over a 25 year term with zero interest. The loans for $720,000 and $768,000 were paid in full in fiscal years 2006 and 2010, respectively. The City's lien on an 11 acre parcel was released in connection with the payoff of the $720,000 note in 2010. The remaining note receivable from the developer has an outstanding balance of $4,139,683 at September 30,2014,including principal of$3,042,891 and deferred interest of$1,096,792. On January 7, 2015, the developer filed for voluntary Chapter 11 bankruptcy. In March 2015,the City paid a$25,000 deposit for an option to purchase the largest creditor's loan. While the ultimate outcome of the bankruptcy proceeding cannot be determined at this time,the City's management, in consultation with legal counsel,believes the collectability of the outstanding balance of$4,139,683 of the note receivable from the developer may be doubtful and has recorded an allowance for the full amount of the note and interest as of September 30,2014. Component Unit Notes Receivable The City's outstanding notes receivable from the CRA at September 30,2014,consisted of the following: US Highway 1 Improvements: The CRA entered into an interlocal agreement with the City in October 2011 to provide a portion of the funding for the US Highway 1 Improvements planned by the City. The agreement was subsequently amended in January 2013 based on a final project cost of approximately$14.0 million, of which the CRA agreed to fund $3,614,190, plus financing costs. The City initially financed the project with a line of credit and planned to obtain permanent financing after the project was completed. (See Note 12—Noncurrent Liabilities for further detail). The CRA agreed to pay the City interest only on the CRA share of the amount financed by the City through May 31,2014. Thereafter,the CRA will pay the City an amount equal to the principal and interest on the CRA's share of the funding for a period of twelve years. Principal on the loan is payable by the CRA annually on June I't in amounts ranging from$250,000 to $374,190, commencing June 1, 2015. Interest is payable semi-annually on April I't and December I't at 3.25%on the outstanding principal balance, commencing December 1, 2014. The note receivable balance was$3,614,190 as of September 30,2014. Library Property Acquisition: In connection with the planned redevelopment by the CRA of the former site of the Delray Beach Public Library, the City entered into a tri-party interlocal agreement in March 2013, with the CRA and the Chamber to relocate the Chamber's offices and purchase the City's reversionary rights in the property. The CRA agreed to purchase the City's property rights for a total of $2,270,870, payable to the City in equal annual installments of $266,215, including interest at 3.0%, commencing March 8, 2014. In the event the CRA sells or conveys any portion of the property during the term of the loan,the CRA agreed to pay the City a lump sum principal payment on the loan equal to 50%of the sales proceeds received by the CRA,in addition to the annual installment payments due on the loan,but not in excess of the total loan amount(See Note 12—Noncurrent Liabilities for further detail). The CRA granted a reservation of rights to the City to maintain 50 public parking spaces on the property in perpetuity. The note receivable balance was$2,072,781 as of September 30,2014. Discretely Presented Component Units The CRA's outstanding notes receivable at September 30,2014 consist of the following: 41 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 5.Notes Receivable(Continued) Notes Receivable from Delray Beach Community Land Trust Construction Mortgages: The CRA provides advances to the Delray Beach Community Land Trust, Inc. (CLT) to finance the construction of affordable housing units by the CLT. The construction advances are to be repaid by the CLT from the proceeds of the sale of the home. These advances are non-interest bearing mortgages on the property and have no fixed repayment date, although the advances are generally not expected to be repaid within one year. In the event that the proceeds from the sale of a home are not sufficient to repay the CRA's mortgage for the construction advance, the balance of the unpaid mortgage is forgiven by the CRA and the uncollectible amount is charged to expenditures. At September 30,2014,the total advances receivable from the CLT were$325,249,all of which is considered collectible by the CRA. Land Acquisition Mortgage: In April 2013, the CRA loaned $116,000 to the CLT for the purchase of suitable building lots in the City for the CLT's affordable housing program. Interest only payments are due quarterly on the loan at 2.1% commencing April 1, 2014 and continuing through maturity of the loan on April 12, 2018, at which time the outstanding principal is due and payable to the CRA. In the event the CLT's interest in the property is sold or otherwise transferred prior to the maturity date of the loan, all outstanding principal and accrued interest is immediately due. The loan is collateralized by a first purchase money mortgage on the property acquired by the CLT. The note receivable balance was$116,000 as of September 30,2014. Land Acquisition Grants: The CRA also advanced funds to the CLT for land acquisition for the development of affordable housing units in the City of Delray Beach. The funds provided by the CRA for land acquisition are recorded as non-interest bearing mortgages on the properties and are to be repaid by the CLT if the property is sold, but only to the extent that the value of the land sold in conjunction with the single-family residence constructed on the property and related closing costs are less than the funds provided by the CRA to purchase the land. The land acquisition mortgage is forgiven by the CRA when the property is sold by the CLT. Generally, the CRA considers the land acquisition loans to be grants to the CLT and records the amounts as grant expenditures in the year payment is made to the CLT because repayment is not expected and the amount of repayment cannot be determined at the time of the loan. Note Receivable from Delray Beach Chamber of Commerce In February 2013, the CRA entered into an agreement with The Greater Delray Beach Chamber of Commerce, Inc. (the "Chamber") to provide funding for the relocation of the Chamber's offices to the Old School Square Parking Garage retail office space in order to facilitate redevelopment by the CRA of the property then occupied by the Chamber (the "Chamber property"). The agreement provides that the CRA will fund up to $459,675 of the cost to build out the Chamber's new office space, of which the Chamber agreed to repay $250,000 to the CRA over 15 years. The Chamber executed a promissory note to the CRA for$250,000 payable in 180 equal monthly installments of $1,849, including interest at 4.0%, beginning April 1, 2014, through maturity. Within 30 days following occupancy of the new office space by the Chamber,the Chamber agreed to execute a release and termination of its existing lease on the Chamber property, thereby allowing the CRA to redevelop the property. The note receivable balance was$243,854 as of September 30,2014. Second Mortgage Loans Receivable The CRA provided home mortgage loan assistance to eligible low income individuals who qualified under the CLT or CRA home subsidy program for the purchase of a home or the rehabilitation of an existing home within the City. The home purchase or rehabilitation subsidy provided by the CRA is secured by a second mortgage on the property. The second mortgage is non-interest bearing and requires no principal payments to the CRA until the occurrence of a specified event, generally related to the sale of the property, a default on the first mortgage on the property or a default on the obligations of the second mortgage to maintain the property, provide 42 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 5.Notes Receivable(Continued) insurance, pay all taxes and generally not permit any impairment or deterioration of the property. The CRA expects the full amount of the mortgage to be recoverable at some future,undetermined date when the property is sold or transferred to a new owner. At September 30, 2014, the amount of the individual second mortgages originated in 2008 through 2014, ranged from $15,000 to $85,000 and all borrowers were in compliance with the terms of the second mortgage. The loans receivable totaled$453,504 as of September 30,2014. 6.Due from Other Governments The total amount due from other governments of$9,327,803 at September 30,2014,represents the amount due from federal and state sources for intergovernmental revenues and grant reimbursements within various funds. 7.Due from/Due to Component Units The amounts due from / due to component units consist of the following amounts due from the Delray Beach Community Redevelopment Agency at September 30,2014: Due from Component Units General Fund Clean and Safe Program $ 356,592 Project management 22,541 Parking management 27,500 Parking garage rent 100,000 Trolley service 58,748 Physical environment improvements 5,736 Developers Land Contribution Fund Neighborhood planner 23,300 Neighborhood Services Fund Housing rehabilitation 9,642 Neighborhood planner 9,898 Capital Improvement Fund Atlantic Avenue Gateway project 41,964 Other projects 65,625 Total Due from Component Units $ 721,546 Due to Component Units General Fund Shared employees $ 23,474 Special Projects Fund Eagle Nest project 95,841 Capital Improvement Fund MOT Grant project 191,460 Total Due to Component Units $ 310,775 43 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 8.Restricted Assets Restricted assets in the Enterprise Funds result from revenue bond requirements to fund the current portions of principal and interest and a renewal and replacement reserve. The required cash balances and reserve requirements at September 30, 2014, have been met for outstanding bond issues. The City's policy is to first apply restricted resources when expenses are incurred for purposes for which both restricted and unrestricted net position is available. Net position of the Enterprise Funds is restricted to the extent that restricted assets exceed liabilities payable from restricted assets at September 30, 2014. Restricted assets, liabilities payable from restricted assets and restricted net position of the Enterprise Funds are summarized as follows at September 30,2014: Restricted for Renewal Debt and Restricted Assets Service Replacement Total Water and Sewer Fund: Investments $ - $ 1,642,394 $ 1,642,394 Non-Major Enterprise Funds: Cash and cash equivalents 615,761 - 615,761 Total Restricted Assets 615,761 1,642,394 2,258,155 Liabilities Payable from Restricted Assets Non-Major Enterprise Funds 35,761 - 35,761 Total Liabilities Payable from Restricted Assets 35,761 - 35,761 Restricted Net Position $ 580,000 $ 1,642,394 $ 2,222,394 9. Capital Assets The major components of capital assets for the City are summarized as follows at September 30,2014: Beginning Ending Governmental Activities: Balance Increases Decreases Balance Non-depreciable Assets: Land $ 38,729,388 $ 426,506 $ - $ 39,155,894 Construction in Progress 3,302,955 5,303,882 (174,095) 8,432,742 Total Non-depreciable Assets 42,032,343 5,730,388 (174,095) 47,588,636 Depreciable Assets: Buildings 39,564,012 7,824 (119,387) 39,452,449 Improvements Other Than Buildings 120,575,328 1,506,260 (320,641) 121,760,947 Equipment 43,218,506 2,123,170 (1,679,268) 43,662,408 Total Depreciable Assets 203,357,846 3,637,254 (2,119,296) 204,875,804 Less Accumulated Depreciation for Buildings (17,509,905) (1,248,317) 63,090 (18,695,132) Improvements Other Than Buildings (61,876,393) (4,040,758) 320,641 (65,596,510) Equipment (30,489,013) (3,114,360) 1,579,225 (32,024,148) Total Accumulated Depreciation (109,875,311) (8,403,435) 1,962,956 (116,315,790) Total Depreciable Assets,net 93,482,535 (4,766,181) (156,340) 88,560,014 Governmental Activities Capital Assets,net $ 135,514,878 $ 964,207 $ (330,435) $ 136,148,650 44 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 9. Capital Assets(Continued) Beginning Ending Business-Type Activities: Balance Increases Decreases Balance Non-depreciable Assets: Land $ 5,668,824 $ - $ - $ 5,668,824 Construction in Progress 3,151,211 1,835,186 (2,786,758) 2,199,639 Total Non-depreciable Assets 8,820,035 1,835,186 (2,786,758) 7,868,463 Depreciable Assets: Buildings 13,774,348 - - 13,774,348 Improvements Other Than Buildings 164,358,941 5,165,349 - 169,524,290 Equipment 14,626,295 270,597 (250,371) 14,646,521 Total Depreciable Assets 192,759,584 5,435,946 (250,371) 197,945,159 Less Accumulated Depreciation for: Buildings (8,752,355) (263,590) - (9,015,945) Improvements Other Than Buildings (80,867,339) (3,070,882) - (83,938,221) Equipment (12,184,923) (501,155) 250,371 (12,435,707) Total Accumulated Depreciation (101,804,617) (3,835,627) 250,371 (105,389,873) Total Depreciable Assets,net 90,954,967 1,600,319 - 92,555,286 Business-Type Activities Capital Assets,net $ 99,775,002 $ 3,435,505 $ (2,786,758) $ 100,423,749 Depreciation expense for the fiscal year ended September 30, 2014, was charged to functions/programs of the primary government as follows: Governmental Activities: General Government $ 634,779 Public Safety 1,204,050 Physical Environment 2,481,464 Parks and Recreation 2,144,613 Internal Service Funds 1,938,529 Total depreciation expense-Governmental Activities $ 8,403,435 Business-Type Activities: Water and Sewer $ 3,244,332 Municipal Golf Course 156,481 Lakeview Golf Course 43,674 City Marina 9,179 Sanitation 381 Stormwater Utility 381,580 Total depreciation expense-Business-Type Activities $ 3,835,627 Discretely Presented Component Unit—Delray Beach Community Redevelopment Agency(CRA) Changes in capital assets of the Delray Beach Community Redevelopment Agency are summarized as follows for the fiscal year ended September 30,2014: 45 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 9. Capital Assets(Continued) Beginning Ending Balance Increases Decreases Balance Non-depreciable Assets: Land and Land Improvements $ 26,774,624 $ 2,487,723 $ (598,616) $ 28,663,731 Total Non-depreciable Assets 26,774,624 2,487,723 (598,616) 28,663,731 Depreciable Assets: Buildings and Improvements 3,808,566 - - 3,808,566 Equipment,Furniture,and Fixtures 122,754 3,055 - 125,809 Total Depreciable Assets 3,931,320 3,055 - 3,934,375 Less Accumulated Depreciation for Buildings and Improvements (803,362) (132,899) - (936,261) Equipment,Furniture,and Fixtures (114,981) (4,052) - (119,033) Total Accumulated Depreciation (918,343) (136,951) - (1,055,294) Total Depreciable Assets,net 3,012,977 (133,896) - 2,879,081 Capital Assets,net $ 29,787,601 $ 2,353,827 $ (598,616) $ 31,542,812 10.Investment in Regional Plant Joint Venture In 1974, the City of Delray Beach joined with the City of Boynton Beach(Boynton Beach)to form a separate legal entity, the South Central Regional Wastewater Treatment and Disposal Board, (the `Board"). The Board, which is governed by a body composed of the commission members from each city, oversees the operation of the regional wastewater treatment and disposal plant which services both cities and surrounding areas. The interlocal agreement between the City and Boynton Beach specifies that the Board has the authority to accept and disburse funds,transact business and enter into contracts for budgeted items. In addition,the Board has the authority, subject to approval by a majority vote of each city commission before becoming effective, to adopt an annual budget, establish rates and charges for operations, maintenance, expansions and construction, enter into contracts for non-budgeted items and authorize the return of any surplus funds or levy additional charges for deficits of the Board to the respective cities. Ownership of the regional wastewater treatment and disposal plant is vested proportionately with the cities in accordance with the capital investments of each city,which to date are approximately 50%each. The Board charges each city for its share of the Board's operating expenses based on the percentage of flow of wastewater from each city. At September 30, 2014,accounts receivable of the Water and Sewer Fund and business-type activities included $234,307 due from the Board and accounts payable of the Water and Sewer Fund and business-type activities included$280,064 due to the Board. For the year ended September 30, 2014,the City paid$3,243,855 to the Board for operating expenses,repair and replacement and capital charges.Each individual city is responsible for setting the rates and collecting charges for wastewater disposal from customers within its jurisdiction. The City accounts for its investment in the Board as a joint venture recorded on the equity method of accounting. At September 30,2014,the City's 50%equity interest in the net position of the Board totaled$23,186,009 and has been reported as"Investment in regional plant joint venture"in the City's financial statements. The Board enters into contracts for capital projects as an agent for the cities. All costs associated with such contracts are reimbursed by the cities. At September 30,2014,commitments totaling approximately$140,000 were remaining on such contracts. The Board issues separate financial statements audited by other accountants. Those financial statements may be obtained from the Board at 1801 N. Congress Avenue, Delray Beach,FL 33445. Financial information summarized from the financial statements of the Board as of and for the year ended September 30,2014,is as follows: 46 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 10.Investment in Regional Plant Joint Venture(Continued) Net Position Current and other assets $ 4,363,114 Capital assets,net 43,328,021 Total assets 47,691,135 Current liabilities 1,164,924 Noncurrent liabilities 129,791 Total liabilities 1,294,715 Deferred inflows of resources 24,401 Net position $ 46,372,019 Change in Net Position Charges for services $ 8,872,451 Capital grants and contributions 86,224 Total program revenues 8,958,675 Program expenses 11,855,353 Net program expenses (2,896,678) Investment income 986 Miscellaneous 112,559 Loss on disposal of capital assets (22,419) Transfers to joint venture participants (571,341) Change in net position $ (3,376,893) 11.Interfund Transactions and Balances Total interfund receivables/payables and transfers were as follows as of and for the year ended September 30,2014: Due From Due To Other Funds Other Funds Transfers In Transfers Out Major Governmental Fund General Fund $ - $ 20,903,754 $ 3,733,317 $ 3,308,784 Non-Major Governmental Funds Special Revenue Funds: Law Enforcement Trust 387,029 - - - Developers Land Contribution 661,273 - - 2,850 ARRA Economic Stimulus - - 11,483 - Neighborhood Services 82,030 - 149,430 - Beautification 646,785 - 936,773 - Special Projects - 70,889 67,738 12,000 Cemetery Perpetual Care 515,022 - - - Debt Service Fund: Utilities Tax - 92,217 1,241,440 1,757 Capital Projects Funds: Capital Improvement 6,099,957 - 500,000 46,040 2004 GO Bond 274,304 - - - Beach Restoration 2,452,473 - 456,000 - Total Governmental Funds 11,118,873 21,066,860 7,096,181 3,371,431 47 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 11.Interfund Transactions and Balances(Continued) Due From Due To Other Funds Other Funds Transfers In Transfers Out Major Proprietary Fund Water and Sewer Fund $ 7,311,549 $ - $ 112,000 $ 3,031,090 Non-Major Proprietary Funds Municipal Golf Course - 1,682,064 - 34,000 Lakeview Golf Course - 1,211,080 - 6,000 City Marina 352,437 - - 49,200 Sanitation 1,812,360 - - 332,690 Stormwater Utility - - - 383,770 Internal Service Funds: Insurance 2,198,474 - - - Central Garage 1,166,311 - - - Total Proprietary Funds 12,841,131 2,893,144 112,000 3,836,750 Total Primary Government $ 23,960,004 $ 23,960,004 $ 7,208,181 $ 7,208,181 The outstanding balances among funds result mainly from the time lag between the dates that(1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and(3)payments between funds are made. These balances also include the amount of working capital loans made to various funds that the General Fund expects to collect in the subsequent year. Transfers are used to (1) move revenues from the fund with collection authorization to the debt service fund as debt service principal and interest payments become due, (2) move restricted amounts from borrowings to the debt service fund to establish mandatory reserve accounts, (3) move unrestricted General Fund revenues to finance various programs that the City must account for in another fund in accordance with budgetary authorizations, including amounts for capital projects and amounts provided as contributions or matching funds for beautification, community development and other grant programs. 12.Noncurrent Liabilities The changes in noncurrent liabilities of the City for the fiscal year ended September 30,2014 were as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities: Revenue bonds $ 33,173,683 $ - $ (1,088,683) $ 32,085,000 $ 1,147,000 Bond anticipation note 11,799,612 6,190,036 (2,755,906) 15,233,742 - General obligation bonds 19,285,000 8,810,000 (10,125,000) 17,970,000 1,535,000 Unamortized bond premium 636,267 - (79,137) 557,130 - Total bonds payable,net 64,894,562 15,000,036 (14,048,726) 65,845,872 2,682,000 Installment agreements 619,165 - (115,259) 503,906 117,232 Compensated absences 7,235,412 673,535 (1,043,329) 6,865,618 769,498 Insurance claims payable 5,163,785 8,204,000 (8,017,373) 5,350,412 1,569,412 Total Governmental Activities $ 77,912,924 $ 23,877,571 $ (23,224,687) $ 78,565,808 $ 5,138,142 48 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-Type Activities: Revenue bonds $ 20,595,768 $ - $ (5,216,768) $ 15,379,000 $ 638,000 Unamortized bond premium 27,039 - (9,834) 17,205 - Total bonds payable,net 20,622,807 - (5,226,602) 15,396,205 638,000 Accrued interest on capital appreciation bonds 5,994,781 249,769 (6,244,550) - - Compensated absences 1,039,603 99,836 (12,985) 1,126,454 39,512 Total Business-Type Activities $ 27,657,191 $ 349,605 $(11,484,137) $ 16,522,659 $ 677,512 Debt service on revenue bonds, notes and installment agreements is payable from available non-ad valorem revenues. Debt service on utility tax obligations is payable from utilities tax revenues. General obligation bonds are payable from ad valorem taxes. Compensated absences are generally liquidated by the General Fund for governmental activities and by net revenues of the applicable proprietary fund for business-type activities. Noncurrent liabilities,including current maturities,at September 30,2014,consisted of the following: Governmental Business-Type Revenue Bonds and Note: Activities Activities $10,000,000 Revenue Bonds issued February 25, 2000 (Series 2000), due in principal amounts of $580,000 to $600,000 through June 1, 2019, with semi-annual interest payments at 5.245%, due June 1 and December 1, through June 1, 2019. The bonds were issued to finance the costs of certain roadway improvements including water, sewer and drainage work,and a portion of the costs of a tri-parry radio system. $ 2,044,000 $ 756,000 $15,020,000 Utility Tax Revenue Bonds issued December 19, 2002 (Series 2002), due in principal amounts of $440,000 to $460,000 through June 1, 2016, with semi-annual interest payments at 4.10% to 4.20%, due June 1 and December 1, through June 1, 2016. The bonds were issued to currently refund the Utility Tax Revenue Bonds, Series 1992, advance refund the Utility Tax Revenue Bonds, Series 1994, advance refund the Utility Tax Revenue Bonds, Series 1995, currently refund the Utility Tax Revenue Bonds, Subordinate Series 1996 and currently refund the Utility Tax Revenue Bonds, Subordinate Series - 900,000 1998. $9,685,000 Revenue Refunding and Improvement Bonds issued December 2,2003 (Series 2003)due in principal amounts of$695,000 to$920,000 through June 1, 2019,with semi-annual interest payments at 3.66%, due June 1 and December 1,through June 1, 2019. The bonds were issued to currently refund Series 1999 and Series 2002 Tax Exempt Bonds, in whole,and Series 2002 Taxable Bonds in part. 3,935,000 230,000 49 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) Governmental Business-Type Revenue Bonds and Note(Continued): Activities Activities $2,350,000 Water and Sewer Revenue Bonds issued November 17, 2006 (Series 2006B), with principal amounts of $165,000 to $205,000 due through October 1, 2021, with semi-annual interest payments at 3.98%, due October 1 and April 1, through October 1, 2021. The bonds were issued to finance the City's share of the Reclaimed Water Treatment Project at the South Central Regional Wastewater Treatment Facility. $ - $ 1,300,000 $24,635,000 Utility Tax Revenue Bonds issued September 26, 2007 (Series 2007) due in principal amounts of $70,000 to $2,465,000 through June 1, 2032 with semi-annual interest payments at 4% to 5%, due June 1 and December 1, through June 1, 2032. The bonds were issued to finance various parks and recreation projects, Fire Station#4, Environmental Services Building(in part),and to refund the City's 2005 Line of Credit(which was used to fund the Old School Square Parking Garage Project). 23,477,000 993,000 $5,430,000 Water and Sewer Refunding Revenue Bonds issued September 29, 2011 (Series 2011A), with principal amounts of $515,000 to $600,000 due through October 1, 2021, with semi-annual interest payments at 2.21%, due October 1 and April 1, through October 1, 2021. The bonds were issued to currently refund the Series 2006A Water and Sewer Revenue Bonds. - 3,890,000 $8,160,000 Water and Sewer Refunding Revenue Bonds issued October 18, 2011 (Series 2011B), with principal amounts of $980,000 to $1,120,000 due through October 1, 2021, with semi-annual interest payments at 2.21%, due October 1 and April 1, through October 1, 2021. The bonds were issued to currently refund the Series 2007 Water and Sewer Revenue Bonds. - 7,310,000 $22,500,000 Bond Anticipation Revenue Improvement Note issued April 30, 2013 (Series 2013) is a closed-end line of credit and note for purposes of financing all or a portion of a beach renourishment project and a highway beautification project up to $22,500,000. Interest is due in semi-annual interest payments on June 1 and December 1, commencing June 1, 2013. Interest is at a variable rate equal to 75% of the LIBOR rate plus 64 basis points (0.78% at September 30, 2014). Principal is due at maturity on June 1, 2016. The note is collateralized by a pledge of certain revenues as defined in the agreement. 15,233,742 - 50 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) Governmental Business-Type Revenue Bonds and Note(Continued): Activities Activities $2,629,000 Revenue Refunding Bonds, issued August 27, 2013 (Series 2013) (Taxable), with interest due in semi-annual payments on June 1 and December 1 commencing on December 1, 2013. Interest is at a variable rate equal to 75%of LIBOR rate plus 64 basis points(0.78%at September 30, 2014). Principal is due at maturity on April 15, 2016. The Bonds were issued to repay the Revenue Improvement Bonds, Series 2008 at maturity on September 1,2013. $ 2,629,000 $ - Total Revenue Bonds and Note 47,318,742 15,379,000 Unamortized bond premium 557,130 17,205 Total Revenue Bonds and Note,Net 47,875,872 15,396,205 General Obligation Bonds: $10,000,000 General Obligation Bonds issued August 26, 2005 (Series 2005), due in annual principal installments of$720,000 to $1,135,000 starting February 1, 2014 through February 1, 2024, with semi-annual interest payments at 4.15%, due February 1 and August 1 through February 1, 2024. The bonds were issued for the acquisition of land, equipping of new parks,recreation centers,parking garage and library. 9,280,000 - $8,810,000 General Obligation Bonds issued November 21, 2013 (Series 2013), due in annual principal installments of $785,000 to $960,000 starting February 1, 2014 through February 1, 2024, with semi-annual interest payments at 2.17%, due February 1 and August 1 through February 1, 2024. The bonds were issued for the purpose of defeasing the Series 2004 GO Bonds which were used for the acquisition of land, equipping of new parks and recreation centers. 8,690,000 - Total General Obligation Bonds 17,970,000 - Other Noncurrent Liabilities: Installment agreement for equipment,2.85%interest maturing in 2019 503,906 - Compensated absences payable 6,865,618 1,126,454 Insurance claims payable(see Note 15) 5,350,412 - Total Noncurrent Liabilities,including current portion $ 78,565,808 $ 16,522,659 Governmental Activities The provisions of the various bond resolutions differ in some respects,but generally provide for: 1. Establishment and maintenance of certain cash reserves for the revenue bonds. The maximum deposit requirement is usually set at the highest future annual principal and interest payment. In lieu of establishing the reserve,the City has purchased surety bonds for this amount. 2. Annual debt service funding by monthly transfers to a cash reserve account for the revenue bonds. 3. Early redemption of outstanding bonds at call rates varying between 101% and 103% of the instrument's face value,depending on the bonds and call date. 4. Investing of cash reserves in time deposits or direct obligations of the U.S.Government. 51 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) The installment agreement financed the purchase of equipment used in governmental activities. At September 30, 2014, the amount of the equipment held under these agreements was $825,000 and the accumulated amortization totaled$321,094.Amortization expense related to equipment purchased under the installment agreement is included in depreciation in the accompanying financial statements. The agreement calls for termination of the agreement and forfeiture of the equipment in the event the payments are not budgeted or made. Future payments through final maturity for the governmental activities installment agreement as of September 30,2014,are as follows: Fiscal year ending September 30: 2015 $ 125,764 2016 125,764 2017 125,763 2018 125,764 2019 21,754 Total minimum payments 524,809 Less amount representing interest (20,903) Outstanding balance at September 30,2014 $ 503,906 Pledged Governmental Revenues: The City has pledged the future utilities service tax revenues of the City to repay the outstanding Utility Tax Revenue Bonds, Series 2002 and 2007 issued to finance various capital improvements. The utility tax bonds are payable solely from the utilities service tax revenues received by the City and are payable through 2032. Annual principal and interest payments on the bonds are expected to require less than 30 percent of utilities service tax revenues. Total principal and interest remaining to be paid on the utility tax revenue bonds, which is allocated to both governmental activities/funds and business-type activities/funds at September 30,2014,is $40,857,580.Principal and 'interest paid during the current year was$490,000 and$1,279,060,respectively. The City has also pledged the future non ad-valorem revenues of the City to repay the outstanding Series 2000 and 2008 Revenue Bonds and the Series 2003 Revenue Refunding and Improvement Bonds issued to finance various capital improvements.The revenue bonds are payable solely from the non ad-valorem revenues received by the City and are payable through 2019.Annual principal and interest payments on the bonds are expected to require less than 5 percent of non ad-valorem revenues.Total principal and interest remaining to be paid on the Series 2000 and 2003 bonds,which is allocated to both the governmental activities/funds and business-type activities/funds at September 30, 2014, is $7,886,678.Non-ad valorem revenues received for the current year were approximately $60.4 million. Principal and interest paid for the current year was$1,220,000 and$352,542,respectively. Debt Extinguishment: On November 21, 2013,the City issued$8,810,000 of General Obligation Refunding Bonds, Series 2013 to advance refund the outstanding balance of the $14,000,000 General Obligation Bonds, Series 2004. The net proceeds of$8,767,970 were deposited in an irrevocable trust with an escrow agent to provide for all future payments on the Series 2004 Bonds.Accordingly,the Series 2004 Bonds were considered defeased and the liability for the outstanding bonds of$8,595,000 at September 30, 2014 was removed from the City's financial statements. The refunding reduced the City's debt service payments by $908,228 and resulted in an economic gain of$811,110. The difference between the reacquisition price and net carrying amount of the Series 2004 Bonds of$137,520 is reported as deferred outflow of resources on the statement of net position and amortized to operations over 10 years. Legal Debt Margin: The City has no legal debt margin limit but has established policy guidelines for the management of debt. The City strives to maintain gross, bonded general obligation principal debt at a level not to exceed 2% of the assessed value of taxable property within the City. The City also strives to ensure that its net bonded debt per capita does not exceed$700 and that the combined total of its direct net bonded debt and its share of overlapping debt issued by Palm Beach County does not exceed$2,000 per capita. 52 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) Interest Expense: Total interest costs incurred and paid on governmental activities debt for the year ended September 30,2014 were$2,090,947 and$2,128,407,respectively,all of which was expensed. Debt Maturities: The annual requirements to pay principal and interest to maturity on the governmental activities bonds outstanding are as follows as of September 30,2014: Fiscal Year Revenue Bonds and Note General Obligation Bonds Ending September 30 Principal Interest Principal Interest Total 2015 $ 1,147,000 $ 1,563,397 $ 1,535,000 $ 549,614 $ 4,795,011 2016 19,076,742 1,511,885 1,590,000 500,511 22,679,138 2017 1,197,000 1,324,460 1,640,000 449,576 4,611,036 2018 1,247,000 1,274,548 1,700,000 396,705 4,618,253 2019 1,308,000 1,222,456 1,750,000 341,898 4,622,354 2020-2024 7,282,000 5,146,080 9,755,000 809,593 22,992,673 2025-2029 9,297,000 3,132,480 - - 12,429,480 2030-2033 6,764,000 687,840 - - 7,451,840 Total $ 47,318,742 $ 15,863,146 $ 17,970,000 $ 3,047,897 $ 84,199,785 Business-Type Activities The provisions of the bond resolutions for the debt of the Water and Sewer Fund, Municipal Golf Course Fund, Lakeview Golf Course Fund and the Stormwater Utility Fund differ in some respects,but generally provide for: 1. Annual debt service funding by monthly transfers of cash to a reserve account. 2. Maintenance of a renewal and replacement cash reserve set at 5%of the previous year's gross revenue. 3. Establishment of certain cash reserves for the Water and Sewer and Utility Tax Revenue Bonds. The maximum deposit required is usually set at the highest future annual principal and interest payment. The City purchased sureties equal to the requirements. 4. Early redemption of outstanding bonds at call rates ranging from 101% to 102% of the instrument's face value depending on the bonds and call date.Bonds are subject to a penalty for early redemption. 5. Investing cash reserves in time deposits, direct obligations of the U.S. Government and other authorized investments with varying maturity restrictions. 6. The use of cash is generally restricted to the following priority: operation and maintenance, debt service,reserves,renewal and replacement,and any other lawful purpose. Pledged Utility Revenues: The City has pledged the future net revenues (generally customer revenues, net of operating expenses other than depreciation) of the water and sewer utility to repay the outstanding water and sewer revenue bonds issued from 1993 through 2011 to finance improvements to the system. The water and sewer revenue bonds are payable solely from the utility net revenues and are payable through 2022. Annual principal and interest payments on the bonds are expected to require less than 50 percent of utility net revenues. Total principal and interest remaining to be paid on the water and sewer utility revenue bonds is$17,429,629.Principal and interest paid and utility net revenues for the current year were$4,704,585 and$6,775,537,respectively. Debt Extinguishment: On October 18, 2011, the City issued $8,160,000 of Water and Sewer Refunding Revenue Bonds, Series 201113, the proceeds of which, together with $47,056 from the City's debt service accounts, was deposited with an escrow agent to currently refund the outstanding balance of the $9,000,000 Water and Sewer Revenue Bonds, Series 2007. Accordingly, the Series 2007 Bonds were fully paid at September 30, 2012. The refunding reduced the City's debt service payments by $1,290,485 and resulted in an economic gain of$1,105,443. There was no accounting gain or loss on the refunding. 53 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) Segment-Information: A portion of the City's Series 2002 and Series 2007 Utility Tax Revenue Bonds, Series 2000 Revenue Bonds and Series 2003 Revenue Refunding and Improvement Bonds, were used to finance improvements to the City's two golf courses and stormwater utility. The City's golf courses and the stormwater utility are accounted for in three separate non-major enterprise funds; however, the revenue streams of those funds are not specifically pledged for the repayment of those bonds,which are secured by the City's utility tax revenues and non- ad valorem revenues. Accordingly, segment information is not required or presented for the operations of the golf courses and stormwater utility. Debt Maturities: The annual requirements to pay principal and interest to maturity on the business-type activities bonds outstanding as of September 30,2014,are as follows: Fiscal Year Revenue Bonds Ending September 30 Principal Interest Total 2015 $ 638,000 $ 284,670 $ 922,670 2016 2,306,000 386,605 2,692,605 2017 1,893,000 318,059 2,211,059 2018 1,943,000 267,436 2,210,436 2019 1,987,000 215,360 2,202,360 2020-2024 5,933,000 419,319 6,352,319 2025-2029 393,000 130,520 523,520 2030-2034 286,000 28,660 314,660 Total $ 15,379,000 $ 2,050,629 $ 17,429,629 Interest Expense: Total interest costs incurred and paid on business-type activities debt for the year ended September 30,2014,were$757,543 and$6,910,237,respectively,all of which was expensed. Discretely Presented Component Unit—Delray Beach Community Redevelopment Agency(CRA) Changes in the noncurrent liabilities of the Delray Beach Community Redevelopment Agency for the year ended September 30,2014,were as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental Activities: Revenue bonds $ 10,459,225 $ - $ (1,750,000) $ 8,709,225 $ 1,420,000 Loans Payable to the City 5,885,060 - (198,089) 5,686,971 454,032 Total Noncurrent Liabilities $ 16,344,285 $ - $ (1,948,089) $ 14,396,196 $ 1,874,032 The CRA's outstanding revenue bonds at September 30,2014,consist of the following: 4.80% Delray Beach Community Redevelopment Agency Tax Increment Redevelopment Revenue Bond(Series 1999A),maturity date September 1,2019. $ 1,640,000 4.2982%Delray Beach Community Redevelopment Agency Tax Increment Redevelopment Revenue Bond(Series 2004A Tax Exempt),maturity date September 1,2019. 390,000 5.9095%Delray Beach Community Redevelopment Agency Tax Increment Redevelopment Bonds(Series 2004B Taxable),maturity date September 1,2016. 4,060,000 54 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) 2.10% Delray Beach Community Redevelopment Agency Tax Increment Redevelopment Bond (Series 2012), issued as a draw-down bond to a financial institution with a maximum aggregate principal amount of$4,000,000 available through March 30, 2015. Principal will be payable in equal installments on April I't and October I't, commencing April 1,2015 and continuing through maturity on October 1,2017 $ 2,619,225 Total Revenue Bonds $ 8,709,225 Loans Payable to the City of Delray Beach: The outstanding loans payable to the City by the CRA at September 30,2014,consisted of the following(also see Note 5—Component Unit Notes Receivable): US Highway 1 Improvements: The CRA entered into an interlocal agreement with the City in October 2011 to provide a portion of the funding for the US Highway 1 Improvements planned by the City. The agreement was subsequently amended in January 2013 based on a final project cost of approximately $14.0 million, of which the CRA agreed to fund$3,614,190,plus financing costs. The City initially financed the project with a line of credit and plans to obtain permanent financing after the project is completed. The CRA agreed to pay the City interest only on the CRA share of the amount financed by the City through May 31, 2014. Thereafter, the CRA will pay the City an amount equal to the principal and interest on the CRA's share of the funding for a period of twelve years. Principal on the loan is payable by the CRA annually on June I't in amounts ranging from$250,000 to $374,190, commencing June 1, 2015. Interest is payable semi-annually on April I't and December I't at 3.25% on the outstanding principal balance, commencing December 1,2014. Library Property Acquisition: In connection with the planned redevelopment by the CRA of the former site of the Delray Beach Public Library, the CRA entered into a triparty interlocal agreement in March 2013, with the City and the Chamber to relocate the Chamber's offices and purchase the City's reversionary rights in the property. The CRA agreed to purchase the City's property rights for a total of $2,270,870, payable to the City in equal annual installments of $266,215, including interest at 3.0%, commencing March 8, 2014. In the event the CRA sells or conveys any portion of the property during the term of the loan,the CRA agreed to pay the City a lump sum principal payment on the loan equal to 50%of the sales proceeds received by the CRA,in addition to the annual installment payments due on the loan,but not in excess of the total loan amount. In addition, the CRA granted a reservation of rights to the City to maintain 50 public parking spaces on the property in perpetuity. The annual debt service requirements on the loans payable to the City are summarized as follows: Fiscal Year Ending September 30, Principal Interest Total 2015 $ 454,032 $ 177,471 $ 631,503 2016 460,153 162,787 622,940 2017 486,457 147,914 634,371 2018 492,951 132,524 625,475 2019 509,640 116,773 626,413 2020-2024 2,559,548 328,175 2,887,723 2025-2026 724,190 24,328 748,518 $ 5,686,971 $ 1,089,972 $ 6,776,943 55 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 12.Noncurrent Liabilities(Continued) Pledged Revenues: The CRA has pledged a portion of its future tax increment revenues to repay the outstanding revenue bonds issued in 1999, 2004, and 2012 to finance various redevelopment projects. The revenue bonds are payable solely from the tax increment revenues generated by increased property values in the redevelopment district. Tax increment revenues were projected to produce more than 500 percent of the debt service requirements over the life of the revenue bonds. Total principal and interest remaining on the bonds at September 30, 2014, was $9,502,573,payable through September 1, 2019. For the current year, principal and interest paid and the total tax increment revenues were$2,155,824 and$11,575,821,respectively. Interest Expense: Total interest costs incurred and paid on all CRA debt for the year ended September 30, 2014, were $507,414 and $482,950, respectively. All interest costs were expensed as a direct expense of redevelopment projects. Annual Debt Service: The aggregate, annual debt service requirements at September 30, 2014, for the CRA's outstanding noncurrent liabilities with scheduled maturities(excluding the Series 2012 Bonds on which the principal repayment schedule will not be determined until after the final draw date),are as follows: Fiscal Year Ending September 30, Principal Interest Total 2015 $ 1,874,032 $ 453,745 $ 2,327,777 2016 1,710,153 372,533 2,082,686 2017 1,576,457 299,354 1,875,811 2018 1,632,951 235,708 1,868,659 2019 1,699,640 169,477 1,869,117 2020-2024 2,559,548 328,175 2,887,723 2025-2026 724,190 24,328 748,518 $ 11,776,971 $ 1,883,320 $ 13,660,291 13.Pension Plans Description of the Plans The City contributes to two single-employer defined benefit pension plans covering substantially all full-time City employees. The General Employees' Pension Plan is for employees who have completed one year of credited service, excluding the City Commission, City Manager (and assistants), City Attorney (and assistants) and department heads if they elect not to participate, and firefighters and police officers covered under the Police and Firefighters' Retirement System Fund. The Police and Firefighters' Retirement System covers all non-civilian police and fire employees. Each plan is administered by an independent Board of Trustees and is accounted for by the City as a separate fund. The costs of administering the plans are financed by the plans' respective investment earnings. An actuarial report is prepared annually for each plan. General Employees'Pension Plan - The benefit provisions and all other requirements of the General Employees' Pension Plan are established by City Ordinance and are summarized as follows: The City's Code of Ordinances provides, in general, that funds are to be accumulated from employee contributions, City contributions and income from investment of accumulated funds. The operations of the fund are administered and managed by the General Employees' Pension Fund Board of Trustees, which consists of a chairperson and four additional members;all of whom are appointed by the City Commission. 56 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Vesting—Benefits vest 50%after five years of service plus 10%each additional year. Eligibility for Retirement—Ordinance No. 33-10 effective October 5,2010, changed the normal retirement eligibility from the earlier of age 60 with ten years of service or 30 years of service regardless of age to the earlier of age 62 with ten years of service or 30 years of service regardless of age. This change does not apply to members who were within ten years of normal retirement eligibility as of October 5, 2010. Normal retirement eligibility for members hired after October 5,2010,is age 65 with ten years of service. Annual Retirement Benefit-2.5% of the average monthly compensation times years of service with a maximum benefit of 75% of average monthly compensation. Ordinance No. 33-10 effective October 5, 2010, changed the normal form of benefit from a 60%joint and survivor annuity to a life annuity. This change does not apply to members who were within ten years of normal retirement eligibility as of October 5, 2010. Effective July 2005, participants have the option of a 3% multiplier with a maximum benefit of 90%. Employees selecting this option will contribute an additional 3.45% of earnings. There was also an option of purchasing all or a portion of prior service at the increased multiplier. Other Benefits—The system also provides for optional retirement benefits, early retirement, extended retirement,disability retirement and death benefits. Deferred Retirement Option Plan (DROP) Employees with 10 years of credited service and eligible for normal retirement have the option of entering DROP. When entering DROP, the employee continues employment with the City, but will cease accruing a pension benefit, and the monthly benefit under the plan as of the election date will be directed to a self-administered 401(a) Plan. After a maximum of 60 months,the employee must terminate employment with the City. The balance of amounts held pursuant to DROP was$4,736,415 at September 30,2014. Employee Contributions—Ordinance No. 33-10 effective October 5, 2010, changed the contribution amount from 2.5%of the employee's basic annual compensation to 3.05%. If the employee chooses the 3% multiplier, there is an additional contribution of 3.45% for a total of 6.5%. If an employee leaves covered employment or dies before five years of credited service,accumulated employee contributions are refunded to the employee or the designated beneficiary. City Contributions—City contributions are based upon actuarially determined amounts, which together with earnings and employee contributions,are sufficient to fund the plan. Police and Firefighters'Retirement System - The benefit provisions and all other requirements of the Police and Firefighters' Retirement System are established by City Ordinance and are summarized as follows: The City's Code of Ordinances provides, in general, that funds are to be accumulated from employee contributions, City contributions, state appropriations and income from investment of accumulated funds. Florida Statutes provide that, should the accumulated funds at any time be insufficient to meet and pay the benefits due, the City shall supplement the fund by an appropriation from current funds, or from any revenues which may lawfully be used for said purposes in an amount sufficient to make up the deficiency. The operations of the System are administered and managed by the Police and Firefighters' Retirement System Board of Trustees, consisting of two outside members appointed by the City Commission, the police/fire chief(s)or their designees,two members of each department elected by the membership and the Mayor of the City or the Mayor's designee. Vesting—Benefits fully vest after 10 years of service. Eligibility for Normal Retirement—Normal retirement eligibility is the earlier of age 55 and 10 years of service or upon completion of 20 years of service regardless of age. 57 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Annual Retirement Benefit—Normal retirement benefits are based upon 2.5%of average monthly earnings times years of service up to 20 years, with a maximum benefit of 75% of average monthly compensation. After 20 years of service, a 3% multiplier is used for each year of service. Employees who were actively employed as of March 15, 2004 may elect a normal retirement benefit using a 3.5% multiplier for each year of service once 20 years of service is attained with a maximum benefit of 87.5%of average monthly compensation. Employees selecting this option will contribute an additional 3% of earnings. The normal retirement benefit is payable over the remaining life of the member, and upon death 100%of the benefit is payable to the spouse for one year and 60%thereafter until death or remarriage. Other Benefits—The plan also provides for disability retirement and death benefits. Deferred Retirement Option Plan (`DROP) Employees with 20 years of credited service have the option of entering the DROP plan. When entering the DROP plan, the employee will not terminate employment with the City, but will cease accruing a pension benefit under the plan, and the monthly benefit as of the election date will be directed to a self-administered 401(a)plan. After a maximum of 60 months,the employee must terminate employment with the City. The balance of amounts held pursuant to DROP was$18,904,334 at September 30,2014. Employee Contributions—Ordinance 42-11 effective October 4, 2011, increased the contribution amount for police officers to 6%of annual compensation. Ordinance No. 15-11 effective May 3, 2011, changed the contribution amount for firefighters to 6%of annual compensation. Members who select a 3.5%multiplier will contribute 9%. If an employee leaves covered employment prior to vesting, contributions are refunded to the employee with interest. State of Florida Contributions—Pursuant to Chapters 175 and 185 of the Florida Statutes, a premium tax on certain casualty insurance contracts written on properties within the City is collected by the State and remitted to the City annually for the Police and Firefighters' Retirement System Fund. City Contributions—City contributions are based upon actuarially determined amounts which, together with earnings,employee and State contributions,are sufficient to fund the plan. Membership Membership data of the City's pension plans as of October 1, 2013,the date of the most recent actuarial valuations, is summarized as follows: Police and General Firefighters' Employees' Retirement Pension Plan System Retirees and beneficiaries receiving benefits 234 233 Terminated employees entitled to benefits but not receiving them 49 3 Active members 359 246 Summary of Significant Accounting Policies The financial statements of each Plan are prepared using the economic resources measurement focus and the accrual basis of accounting. Employee and employer contributions are recognized in the period in which employee services are performed. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Other expenses are recognized when the corresponding liabilities are incurred. Investment income is recognized as revenue when earned. Investments are reported at fair value and are managed by third party money managers. The 58 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) City's independent custodians and money managers determine the fair value of securities, which is generally based upon quoted prices on a national or international stock exchange or for securities not listed, the mean of the most recent bid and ask prices of each instrument using various third parry pricing sources. The net appreciation/ (depreciation) in fair value of investments is recorded as an increase/(decrease) to investment income based on the valuation of investments. Investment earnings are reduced for investment related expenses, such as management fees,portfolio evaluation and custodial services. Investments Investment Policy: The policy in regard to the allocation of invested assets is established and may be amended by a majority vote of the Board of each pension plan. It is the policy of each pension plan Board to pursue an investment strategy that reduces risk through the prudent diversification of the investment portfolio across a broad selection of distinct asset classes. The investment policy of each pension plan discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from dramatically shifting asset class allocations over short time spans. The asset allocation policy adopted by each pension plans'Board at September 30,2014 was as follows: Police and General Firefighters' Employees' Retirement Pension Plan System Asset Class Fixed income 40.0% 27.5% Domestic equity 55.0 35.0 International equity 5.0 15.0 Real estate - 10.0 Alternatives - 7.5 Timber - 5.0 Total 100.0% 100.0% Rate of Return: The annual money-weighted rate of return on pension investments, net of pension investment expense, for the General Employees' Pension Plan and the Police and Firefighters' Retirement System, was 12.26% and 9.32%, respectively. The money-weighted rate of return expresses investment performance, net of investment expense,adjusted for the changing amounts invested. Net Pension Liability The components of the net pension liability for the City's pension plans as of October 1, 2013,the date of the most recent actuarial valuations,were as follows: Police and General Firefighters' Employees' Retirement Pension Plan System Total pension liability $ 113,002,682 $ 249,508,093 Plan fiduciary net position 110,281,605 173,210,319 Net pension liability $ 2,721,077 $ 76,297,774 Plan fiduciary net position as a percentage of the total pension liability 97.6% 69.4% 59 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Actuarial Assumptions: The total pension liability for the City's pension plans was determined by actuarial valuations,using the following actuarial assumptions: General Employees' Police and Firefighters' Pension Plan Retirement System Valuation date October 1,2013 October 1,2013 Actuarial cost method Entry Age Normal Entry Age Normal Post-retirement benefit increases None Annual increase of 1%plus what can be funded by State revenue Amortization method Level Dollar—Closed Level Percent of Payroll—Closed Remaining amortization period 25 years 29 years Asset valuation method 5 year Smoothed Market 4 year Smoothed Market Actuarial assumptions: Investment rate of return* 7.25% 8.00% Projected salary increases* 4.4%-7.2%based on service 6.25% (2%for the next year) Cost of living increases None 1.00% * Includes inflation rate 3.00% 3.00% The long-term expected rate of return on investments of the pension plans was determined using a building block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation)are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plans' target allocation as of September 30, 2014 (see the discussion of each pension plan's investment policy)are summarized in the following table: Long-Term Expected Rate of Return Police and General Firefighters' Employees' Retirement Pension Plan System Asset Class Fixed income 2.5% 2.5% Domestic equity 7.0 7.0 International equity 7.5 7.5 Real estate - 4.5 Alternatives - 2.5 Timber - 2.5 60 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Discount Rate: The discount rates used to measure the total pension liability of the General Employees Pension Plan and the Police and Firefighters'Retirement System were 7.25%and 8.0%,respectively. The discount rate was based on the expected rate of return on investments of each pension plan. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rates and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions,the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on investments of the pension plans was applied to all periods of projected benefit payments to determine the projected total pension liability. Sensitivity of the Net Pension Liability to Changes in the Discount Rate: The following table presents the net pension liability of the General Employees Pension Plan and the Police and Firefighters' Retirement System, calculated using the current discount rates of 7.25%and 8.0%,respectively, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate: Police and General Firefighters' Employees' Retirement Pension Plan System One percentage point lower than current discount rate $ 10,562,871 $ 102,404,105 Current discount rate 2,721,077 76,297,774 One percentage point higher than current discount rate (12,661,990) 54,668,350 Annual Pension Cost and Net Pension Obligation The changes in the City's net pension obligation(asset)related to the General Employees'Pension Fund and Police and Firefighters'Retirement System Fund for the current year were as follows: Police and General Firefighters' Employees' Retirement Pension Fund System Fund Total Annual required contribution $ 2,294,953 $ 7,558,079 $ 9,853,032 Interest on net pension obligation(asset) 11,347 (10,561) 786 Adjustment to annual required contribution (20,878) 7,215 (13,663) Annual pension cost 2,285,422 7,554,733 9,840,155 Contributions made (2,128,666) (7,558,079) (9,686,745) Change in net pension obligation(asset) 156,756 (3,346) 153,410 Net pension obligation(asset)at October 1,2013 156,506 (132,018) 24,488 Net pension obligation(asset)at September 30,2014 $ 313,262 $ (135,364) $ 177,898 61 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Trend Information Annual pension cost and contribution information for the last three fiscal years are as follows: Annual Net Pension Pension Percentage Obligation Year Ended September 30 Cost Contributed (Asset) General Employees'Pension Fund 2014 $ 2,285,422 93.1% $ 313,262 2013 2,522,126 93.8 156,506 2012 2,365,620 100.0 - Police and Firefighters'Retirement System Fund 2014 $ 7,554,733 100.0% $ (135,364) 2013 6,599,523 100.0 (132,018) 2012 7,968,408 100.0 (128,704) Funded Status and Funding Progress Actuarial valuations of defined benefit pension plans involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Although the valuation results are based on values the actuarial consultant believes are reasonable assumptions, the valuation result is only an estimate of what future costs may actually be and reflect a long-term perspective. Deviations in any of several factors, such as future investment earnings, salary increases, inflation rates and cost of living adjustments, could result in actual costs being greater or less than estimated. The funded status of the plans as of October 1,2013,the most recent actuarial valuation date,is as follows: Actuarial Unfunded Accrued Actuarial UAAL as a Liability Accrued Percentage Actuarial Value of (AAL) Liability Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Plan Date (a) (b) (b-a) (a/b) (c) [(b-a)/c] General Employees' 10/1/2013 $ 99,910,051 $103,950,532 $ 4,040,481 96.1% $ 16,527,919 24.4% Police and Firefighters' 10/1/2013 132,741,368 221,897,687 89,156,319 59.8% $ 17,577,480 507.2% The schedules of funding progress presented as required supplementary information(RSI)following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. 62 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Pension Plan Financial Statements The Police and Firefighters' Retirement System Fund issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the City of Delray Beach, 100 NW I't Avenue,Delray Beach,FL 33444 or by calling(561)243-7012. The General Employees' Pension Fund does not issue a publicly available financial report. The financial statements for the General Employees'Pension Fund as of and for the year ended September 30,2014,are as follows: Statement of Fiduciary Net Position ASSETS Cash and cash equivalents $ 1,245,817 Investments U.S. Government securities 5,478,961 U.S. Government Agency securities 2,006,374 Domestic and international corporate bonds 16,242,427 Domestic and international equity securities 30,935,592 Alternative investments 54,402,540 Interest and dividends receivable 204,253 Employee contributions receivable 14,038 Total assets 110,530,002 LIABILITIES Accounts payable 47,961 Due to broker 200,436 Total liabilities 248,397 NET POSITION restricted for pension benefits $ 110,281,605 Statement of Changes in Fiduciary Net Position ADDITIONS Contributions: Employer $ 2,084,010 Plan members 1,126,054 Total contributions 3,210,064 Investment earnings Net appreciation in fair value of investments 11,200,447 Interest and dividends 1,255,456 12,455,903 Less investment expenses—custodian fees 264,842 Net investment earnings 12,191,061 Other income 5,387 Total additions 15,406,512 DEDUCTIONS Benefits 5,355,711 Refunds of contributions 80,592 Administrative expenses 79,024 Total deductions 5,515,327 Net increase in fiduciary net position 9,891,185 Net position restricted for pension benefits at October 1,2013 100,390,420 Net position restricted for pension benefits at September 30,2014 $ 110,281,605 63 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 13.Pension Plans(Continued) Other Employee Benefit Plans For employees not covered by one of the City's pension plans,the City contributed 9.5%of base salary to the ICMA 457 Deferred Compensation Plan up to allowable limits. In 1996 the City instituted a 401(a) plan for department heads with a 3% match (Resolution 17-97). In 2000, this program was opened to certain eligible management and key employees to contribute up to 3% of their base salary to the ICMA Deferred Compensation Plan or 3%of their base salary to the ICMA 401(a) Plan with the City matching the contribution (Administrative Policy EB-15). Employees who were eligible to participate in the 401(a) Plan could exceed the 3% contribution with after tax dollars. All contributions are in accordance with Internal Revenue Service regulations. Activity in the 401(a) Plan for the year ended September 30,2014,is summarized as follows: Balance at October 1,2013 $ 774,748 Employer contributions 23,117 Employee contributions 23,117 Investment gain 64,747 Distributions (36,686) Balance at September 30,2014 $ 849,043 The City has also implemented a VantageCare Retirement Health Savings Plan(the "VantageCare Plan") effective August 2002, which allows employees in the calendar year prior to retirement, to make an election to deposit tax free part or all of their accumulated sick and vacation pay into the Plan. The Plan provides for tax free withdrawals if the funds are used for qualified medical expenses. Other Employee Benefit Plans In March 2007, the City was notified by ICMA, the administrator of the VantageCare Plan that voluntary contributions were no longer allowed,except that employees in the plan prior to December 31,2006 were allowed to contribute until December 31, 2007. Activity in the VantageCare Plan for the year ended September 30, 2014, is summarized as follows: Balance at October 1,2013 $ 451,137 Net investment gains 37,832 Service fees (1,722) Distributions (12,410) Balance at September 30,2014 $ 474,837 14. Other Postemployment Benefits(OPEB) Description of the Plans The City administers two other postemployment benefit(OPEB)plans as follows: OPEB Plan-The City administers a single-employer defined benefit plan(the"OPEB Plan")that provides medical and life insurance benefits to eligible retired employees and their beneficiaries. The City Commission has the authority to establish and amend premiums for and the benefit provisions of the OPEB Plan. The OPEB Plan is financed on a"pay-as-you-go" basis and is not administered as a formal qualifying trust. The OPEB Plan does not issue a publicly available financial report. 64 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 14. Other Postemployment Benefits(OPEB)(Continued) Florida Statute 112.0801 requires the City to allow retirees to buy healthcare coverage at the same group insurance rates that current employees are charged resulting in an implicit healthcare benefit. The State of Florida prohibits the OPEB Plan from separately rating retirees and active employees. Therefore, both groups (active and retired) are charged an equal,blended rate premium. Although both groups are charged the same blended rate premium, GAAP requires actuarial calculations of OPEB liabilities using age adjusted premiums approximating claim costs for retirees separate from active employees. The use of age adjusted premiums results in the addition of an implicit rate subsidy into the actuarial accrued liability. OPEB Plan members receiving benefits contribute 100%of the monthly premiums ranging from a minimum of$543 to a maximum of$1,142 for medical/prescription coverage and at a rate of$.18 per$1,000 of the face value for life insurance coverage. Delray Beach Police, Firefighters & Paramedics Retiree Benefit Fund-The Delray Beach Police, Firefighters & Paramedics Retiree Benefit Fund(the "Retiree Benefit Fund")is a single-employer defined benefit plan established for the purpose of providing full or partial reimbursement for health insurance premiums or other qualified benefits permitted under Section 501(c)(9)of the Internal Revenue Code. The Retiree Benefit Fund was established pursuant to collective bargaining agreements between the City and the Professional Firefighters & Paramedics of Delray Beach, Local 1842, IAFF and the Police Benevolent Association(PBA). A Trust was created on May 14, 2002 and is administered by a separate Board of Trustees consisting of seven individuals,including the President of the Local 1842, IAFF, five union representatives (three PBA, two Local 1842, IAFF) and a non-bargaining unit active firefighter elected by non-bargaining unit participants. The City is neither the trustee nor the administrator of the Retiree Benefit Fund. Accordingly, since the City does not control,have access to or hold any assets of the Trust and has no reversionary rights in the assets of the Trust, the Retiree Benefit Fund is not reported as a fiduciary fund of the City. The Retiree Benefit Fund does not issue a publicly available financial report. Participants in the Retiree Benefit Fund include persons employed by the City of Delray Beach Fire Rescue Department as certified firefighters or paramedics on or after October 1, 2001; persons employed by the City of Delray Beach Police Department as certified law enforcement officers on or after October 1, 2004; and, certain Police and Fire Rescue department employees for whom contributions were made for each year since October 1, 2001, regardless of the employee's certification as a firefighter, paramedic or law enforcement officer. Participants are eligible for benefits on or after the first day of the month following the date of their retirement from the City. The Retiree Benefit Fund currently does not require contributions from participants. The obligation of the City to fund the Retiree Benefit Fund is established by the applicable collective bargaining agreements in effect between the City and the unions. The Retiree Benefit Fund provides for a minimum annual benefit of $3,900 for covered employees that are not certified as firefighters, paramedics or law enforcement officers. For certified firefighters, paramedics and law enforcement officers,the Retiree Benefit Fund provides for an annual benefit of$5,200 reduced 3%per year for service less than 25 years,and increased 3%per year for service greater than 25 years. Actuarial Methods and Significant Assumptions The actuarial methods and significant assumptions used to determine the annual required contributions for the current year and the plans'funded status are summarized as follows: OPEB Plan Retiree Benefit Fund Valuation date October 1,2012 October 1,2011 Actuarial cost method Entry Age Normal Entry Age Normal Post-retirement benefit increases None None Health care cost trend rates 9%per year initially, reduced annually N/A—Benefits are for fixed amounts by .5%to an ultimate rate of 5%in and do not adjust for changes in health 2019 care costs 65 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 14. Other Postemployment Benefits(OPEB) (Continued) OPEB Plan Retiree Benefit Fund Amortization method Level Percent of Payroll—Closed Level Percent of Payroll—Closed Remaining amortization period 28 years 25 years Asset valuation method N/A(') Market Value of Assets Actuarial assumptions: Investment rate of return 4.5%(') 8.0%net of investment related expenses Projected salary increases* 2.0-7.2% 6.25% *Includes inflation rate 3.0% 4.00% (1) The plan is funded on a pay-as-you-go basis and is not administered as a formal qualifying trust. There were no plan assets as of October 1,2012,the date of the most recent valuation. (2) Since there are currently no invested plan assets held in trust to finance the OPEB obligations, the investment rate of return is the long-term expectation of investment return on assets held in City funds pursuant to its investment policy. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future.Projections of benefits are based on the types of benefits provided under the substantive plan at the time of each valuation and on the pattern of sharing of benefit costs between the employer and plan members to that point. In addition,projections of benefits for financial reporting purposes do not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective and accordingly,actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Contribution Requirements and Contributions Made The annual OPEB cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that,if paid on an ongoing basis,is projected to cover the normal cost each year and the amortization on any unfunded actuarial liabilities(or funding excess)over a period not to exceed thirty years. Annual OPEB costs and contribution information for the last three fiscal years are as follows: Annual Net OPEB OPEB Percentage Obligation Year Ended September 30 Cost Contributed (Asset) OPEB Plan 2014 $ 1,447,355 32% $ 4,508,479 2013 1,383,330 30 3,569,827 2012 1,283,914 47 2,605,995 Retiree Benefit Fund 2014 $ 684,128 49% $ 350,953 2013 684,128 67 183,098 2012 684,128 115 (42,626) 66 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 14. Other Postemployment Benefits(OPEB)(Continued) The changes in the City's net OPEB obligation (asset) related to the OPEB Plan and Retiree Benefit Fund for the year ended September 30,2014 were as follows: Retiree Benefit OPEB Plan Fund Total Annual required contribution $ 1,432,403 $ 689,143 $ 2,121,546 Interest on net OPEB obligation 160,642 (21,468) 139,174 Adjustment to annual required contribution (145,690) 16,453 (129,237) Annual OPEB cost 1,447,355 684,128 2,131,483 Contributions made (508,703) (516,273) (1,024,976) Change in net OPEB obligation 938,652 167,855 1,106,507 Net OPEB obligation(asset)at October 1,2013 3,569,827 183,098 3,752,925 Net OPEB obligation at September 30,2014 $ 4,508,479 $ 350,953 $ 4,859,432 Funded Status and Funding Progress The funded status of the OPEB Plan and Retiree Benefit Fund as of the most recent actuarial valuation date is as follows: Actuarial Accrued UAAL as a Liability Percentage Actuarial Value of (AAL) Unfunded Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Plan Date (a) (b) (b-a) (alb) (c) [(b-a)/c] OPEB Plan 10/1/2012 $ - $15,636,209 $15,636,209 0.0% $ 39,412,194 39.67% Retiree Benefit Fund 10/1/2011 3,155,585 9,974,714 6,819,129 31.6% 20,647,352 33.0% The schedules of funding progress presented as required supplementary information(RSI)following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. 15.Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The City is also subject to risk of loss arising in the ordinary course of business, including, but not limited to, claims for damages for personal injuries, employment-related claims, and breach of contract. Commercial insurance is purchased for certain specialized insurance coverages, including,but not limited to, flood insurance, railroad crossing liability, skate park liability and environmental liabilities. The City uses the Insurance Internal Service Fund to account for and finance all commercial insurance and retained risks of loss. The City has a Managed Retention,Protected Self-Insurance Program whereby the City is substantially self-insured for general and auto liability coverage. Workers' compensation, fidelity and property coverage are insured with large deductible self-insured retentions. There were no significant changes in insurance coverage from the prior year and the amounts of settlements did not exceed insurance coverage for any of the past three years. A loss fund of 67 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 15.Risk Management(Continued) $1,950,000 maximum applies per year over which an aggregate coverage of$1,000,000 of commercial insurance would apply should the loss fund be exhausted in a given year. The City also maintains a self-insured health plan with Cigna as the third-parry administrator. The City is self-insured up to a stop loss of$200,000 per claim and has purchased excess insurance for claims exceeding the stop loss for individual and aggregate claims. The City's internal service Insurance Fund is funded by charges to the City's other funds based on the contributing funds' claims experience and as needed to meet the estimated payments resulting from purchased and self-insurance programs, and operating expenses. For the year ended September 30, 2014, charges of$12,558,514 were made by the Insurance Fund to other funds and are reflected as interfund charges for services in the accompanying financial statements. The City has recorded a claims liability of$5,350,412 ($1,569,412 current and $3,781,000 noncurrent) at September 30, 2014, which is an increase of approximately $186,000 from the prior year. The increase reflects claims development for all lines of insurance and an accrual for legal claims. The liability falls within the actuarially determined range,from an actuarial valuation for all claims based upon the date the loss was incurred and includes a provision for claims incurred but not yet reported(IBNR). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated annually to consider the effects of inflation, recent claim settlement trends (including frequency and amount of payouts), and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, such as those from salvage or subrogation, are also considered in the claims liability estimate. The following summarizes the claims liability activity for the current and prior year: Balance at September 30,2012 $ 4,159,088 Claims incurred 9,083,574 Claims paid (8,078,877) Balance at September 30,2013 5,163,785 Claims incurred 8,204,000 Claims paid (8,017,373) Balance at September 30,2014 $ 5,350,412 The claims liability at September 30,2014 and 2013,is summarized as follows: 2014 2013 Current $ 1,569,412 $ 1,451,785 Noncurrent 3,781,000 3,712,000 $ 5,350,412 $ 5,163,785 As a political subdivision of the State of Florida,the City has sovereign immunity under the Florida Constitution for tort actions. Therefore, in accordance with Chapter 768.28 Laws of Florida, the City is not liable to pay a claim or judgment, or any portions thereof, which when totaled with all other claims or judgments paid by the State or its agencies or subdivisions arising out of the same incident or occurrence, exceeds the aggregate sum of$300,000. Chapter 768.28 also provides that judgments may be claimed or rendered in excess of these limits; however, these amounts must be reported to and approved by the Florida Legislature. In April 2010,the Governor approved Chapter 2010-26, Laws of Florida, which raised the limits of sovereign immunity from$100,000 to $200,000 per claim and from $200,000 to $300,000 in the aggregate, effective for claims arising on or after October 1, 2011. Sovereign immunity limits were considered in the actuarial development of claims liabilities. 68 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 16.Related Party Transactions The CRA is a component unit of the City of Delray Beach, Florida. For the year ended September 30, 2014, the CRA's tax increment revenues include $6,946,429 received from the City. CRA expenditures for the year ended September 30, 2014, include charges of $1,969,601 for contractual services provided by the City to the CRA in connection with various administrative and redevelopment activities, $856,209 for construction services related to redevelopment projects, $193,347 for the downtown shuttle, and $550,000 for sponsorship of City tennis tournaments. The CRA also received approximately$135,000 in reimbursements from the City for various projects. At September 30, 2014, the City had a payable to the CRA of$310,775 and the City had a receivable of$721,546 for reimbursement of certain administrative and redevelopment expenditures, and notes receivable from the CRA of $5,686,971 (see Note 5 -Notes Receivable). The CRA contracts with the City for various administrative services each fiscal year and budgeted approximately $274,000 for those services for the year ending September 30,2014. 17. Commitments and Contingencies Contract Commitments The City has various long-term contractual obligations for construction projects on which work has not been completed.The remaining commitments on these obligations at September 30,2014,were as follows: Capital Projects Funds $ 8,433,579 Water and Sewer Fund 2,487,294 Stormwater Utility Fund 2,030,204 $ 12,951,077 Payments from the Water and Sewer Fund and Stormwater Utility Fund for work in progress have been capitalized as construction in progress in the respective fund. The projects financed by the capital projects funds have been capitalized in the government-wide financial statements as construction in progress. Lease Commitment as Lessor The City entered into a lease agreement with the Delray Beach Community Redevelopment Agency on January 11,2010, for 10,600 square feet of commercial space on the first floor of the City's Old School Square parking garage.The term of the lease is 5 years from February 1,2010,through January 31,2015,and rent is$150,000 payable annually in an-cars on each January 11th. The CRA is subletting the space to not-for-profit organizations for arts related uses. Debt Service Reserve Surety Bond The City's Utility Tax Revenue Bonds (Series 2002 and 2007), collectively the "Bonds", require the City to maintain a debt service reserve equivalent to the maximum principal and interest due on the Bonds in any year through maturity. The Bonds' resolutions provide that the City may purchase a credit facility for the debt service reserve requirement from an institution with the highest credit rating for municipal bonds insured or guaranteed by that institution. The City purchased surety bonds from MBIA Assurance Corp. (MBIA) and Financial Security Assurance Holdings Ltd. (FSA)to satisfy the debt service reserve requirement for the Bonds at the date of issue. At September 30,2014,MBIA and FSA had credit ratings that were less than the highest rating from Moody's Investor Service, Inc. (Moody's) and Standard & Poor's (S&P) or had their ratings withdrawn by these agencies. City management, in consultation with bond counsel, has determined that the City is not required to obtain surety bonds or provide cash and investments to replace the sureties on hand at September 30, 2014. The Bonds outstanding at September 30,2014,have a credit rating no lower than the City's underlying rating of AA-from S&P. 69 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 17. Commitments and Contingencies(Continued) Grants The grant revenues received by the City are subject to audit and adjustment by the grantor agencies,principally the Federal government and the State of Florida. If expenditures are disallowed by the grantor agencies as a result of such an audit,any claim for reimbursement would be a liability of the City. In the opinion of management, all grant expenditures are in compliance with the terms of the grant and applicable federal and state laws and regulations. Litigation,Claims and Assessments The City is involved in certain lawsuits and other legal matters occurring in the normal course of operations. Although the ultimate outcome of the lawsuits and other matters cannot be determined at the present time, the management of the City in consultation with legal counsel, believes that all significant claims are fully accrued, covered by insurance or limited under sovereign immunity and does not expect the outcome of any pending lawsuits or claims to material affect the City's financial condition. Discretely Presented Component Unit—Delray Beach Community Redevelopment Agency(CRA) CRA Contract Commitments: At September 30, 2014, the CRA had outstanding construction commitments consisting of the following: Expended Retainage Remaining Total Through Payable at Commitment at Project September 30, September 30, September 30, Authorization 2014 2014 2014 Arts Warehouse Project $ 232,500 $ - $ - $ 232,500 SW 9t'Avenue,Pocket Park 148,354 - - 148,354 Total contract commitment 380.854 $ - $ - 380.854 The CRA also entered into an interlocal agreement with the City to provide funding for certain construction projects and related professional services totaling approximately$6,100,000 for the year ending September 30,2015. CRA Lease Commitments: The CRA had the following lease commitments as lessor at September 30,2014: Puppetry Arts Center - On August 26, 2010, the CRA entered into an agreement to sublease approximately 5,000 square feet of commercial space at the Old School Square parking garage to the Puppetry Arts Center of the Palm Beaches, Inc. for$400 per month. In April 2013, the sublease was extended for a one year period through May 4,2014,and in March 2014,the sublease was extended through January 31,2015. Creative City Collaborative - On June 28, 2012, the CRA entered into an agreement to sublease approximately 5,600 square feet of commercial space at the Old School Square parking garage to the Creative City Collaborative of Delray Beach, Inc. for $467 per month for a period of 31 months commencing on July 1,2012,and expiring on January 31,2015. Factual Multi Services, LLC-The CRA entered into an agreement to lease the property located at 135 NW 5t' Avenue, Unit C6 to Factual Multi Services, LLC for $1,094 monthly base rent plus $402 monthly condominium assessment per month for a three year period commencing January 10, 2014, with an option to extend the lease for additional one year terms. The amount of the monthly condominium assessment may be adjusted during the term of the lease. The carrying value of the leased property was $98,125 at September 30,2014. 70 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 17.Commitments and Contingencies(Continued) Schuler's Memorial Chapel-The CRA entered into an agreement to lease the property located at 606 West Atlantic Avenue to Schuler's Memorial Chapel for$500 per month for a two year period ending December 15, 2014. In January 2015 the lease was extended through December 15, 2015. The carrying value of the leased property was$1,895,000 at September 30,2014. La Bon Gout - The CRA was assigned the rights to a lease with La Bon Gout in conjunction with the purchase of the property at 700 West Atlantic Avenue. The original terms of the lease commenced January 1,2012 for a five year term with a one year renewal option. The lease was assigned to the CRA on October 29, 2013. Under the lease agreement, La Bon Gout, Inc. leases the space for $1,600 per month. The carrying value of the leased property was$1,968,409 at September 30,2014. Delray Beach Housing Group-On September 11,2011,the CRA entered into a ground lease and property management agreement with the Delray Beach Housing Group,Inc. (a Florida not-for-profit organization) to lease, manage, maintain and operate the existing rental units owned by the CRA known as the Carolyn Quince Court and La France Apartments. The CRA also entered into a similar ground lease and property management agreement with the CLT for the Palm Manor apartments and the SW 12th Avenue Duplexes. The agreements provide for an annual rental payment to the CRA of$1 and that the lessors will pay all taxes, fees, assessments, utilities, insurance and other charges incurred by the CRA for the leased apartments.The term of each agreement is for five years with one renewal option for an additional five year period. The apartments were purchased by the CRA to provide affordable housing for City residents and had a total carrying value of approximately$5,580,000 at September 30,2014. Prime Delray Hotel - On April 2, 2012, the CRA entered into a Ground Lease Agreement with Prime Delray Hotel,LLC(the "Company")for a 40 year term. The Company will develop, construct and operate a 4-story business class hotel on the property. The lease agreement provides for the Company to pay the CRA an annual base rent of$1 for years 1 through 5 and thereafter a contingent rental of 2%of gross room sales for years 6 through 10 and increasing by 1%for each five year period thereafter until reaching 5%for years 21 to 40.For years 5 through 25,the Company has the right to purchase the property from the CRA at a price based on the average of two independent appraisals;one obtained by the CRA and the second by the Company.The carrying value of the leased property at September 30,2014 was approximately $2,418,000. The carrying value of leased property listed above totaled $11,959,534 at September 30, 2014. No depreciation expense was recorded on these redevelopment properties,as they are currently held for sale.Rental income for 2014 totaled$154,439.Future annual minimum rental income is as follows: 2015 - $62,129; 2016- $37,153;and,2017 - $12,488. CRA Funding Commitments: The CRA entered into grant agreements to provide future funding for various economic redevelopment purposes. The grant funding commitments of the CRA at September 30, 2014, are summarized as follows: Prime Delray Hotel,LLC-Development Infrastructure Grant for the development and construction of a 4- story business class hotel on Atlantic Avenue. The grant is for an amount not to exceed$332,349 and will be paid in five equal annual payments, not to exceed fifty percent of the actual tax increment revenues attributed to the project for any such year. KCMCL Pineapple Grove, LLC -Development Infrastructure Grant for the development and construction of a 134-room limited service Hyatt Place Hotel in the Pineapple Grove Arts District. The grant is for eligible project costs up to $431,619. The CRA will reimburse the developer in equal annual installments over a ten year period,provided that the annual payment shall not exceed 50%of the actual tax increment revenues attributable to the project for that year. Payments will be made by the CRA on February l't of each year. The first payment of$43,162 was made during the fiscal year ended September 30,2014. 71 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 17. Commitments and Contingencies(Continued) Law Offices of Kanner and Pintaluga, P.A. - Job Creation Bonus Program grant awarded in an amount equal to five percent of all certifiable annual wages for the establishment of between five and sixteen qualifying jobs, up to a maximum annual grant of $13,236 and $66,180 over a five year period commencing November 9,2012. Cloud Computing Concepts, LLC- Job Creation Bonus Program grant awarded in an amount equal to five percent of all certifiable annual wages for the establishment of between five and thirteen qualifying jobs,up to a maximum annual grant of $7,605 and $38,024 over a five year period commencing no later than December 9,2015. CRA Loan Commitments: The CRA entered into three loan commitments to provide future financing for economic redevelopment projects in the CRA district. The loan commitments of the CRA at September 30, 2014, are summarized as follows: Village Square Elderly, Ltd. - On November 8, 2011 the CRA issued a Loan Commitment to Village Square Elderly, Ltd. (Village Square) for a $2.7 million, 20 year term loan for the redevelopment of the former Carver Estates public housing project and construction of an 84-unit low income senior apartment complex, a 144-unit low income housing rental apartment complex, approximately 40 single family homes and a clubhouse (the "Property"). A promissory note was executed on July 17, 2014 and is non-interest bearing for the first ten years and for years eleven through twenty, the loan will accrue interest at 3.0%. Payments of principal only shall commence on the first anniversary date of the loan and are due annually thereafter until the tenth anniversary date of the loan. Commencing on the tenth anniversary date of the loan and annually thereafter, principal and interest will be payable to the CRA in an amount equal to the remaining cash flow from the Property after the required payments on the Property's first mortgage and payment of the deferred developer fee, but not less than $25,000 per year. The loan will mature twenty years from the loan closing date,at which time all outstanding principal and accrued interest will be due to the CRA. The loan will be collateralized by a second mortgage lien and security interest in the Property and all improvements, fixtures and appurtenances thereto. The CRA will not disburse any funds under the promissory note until Village Square has received all moneys from the Tax-Exempt Bonds and Equity Account of the Project Fund for the acquisition and construction of the project. There were no draws on the promissory note through September 30,2014. Prime Delray Hotel, LLC-On April 2, 2012,the CRA issued a Loan Commitment to Prime Delray Hotel, LLC for a $1.5 million term loan for development and construction of a 4-story business class hotel on Atlantic Avenue (the "Hotel Property"). The loan will accrue interest at a rate of 3.0% per annum. Payments of interest only on the outstanding loan balance are payable to the CRA for 60 months after the loan closing date, at which time all outstanding principal and accrued interest will be due to the CRA. The loan will be collateralized by a second mortgage lien and security interest in the Hotel Property and all improvements,fixtures,and appurtenances thereto. Eagle Nest Project 3 - The CRA entered into an interlocal agreement and multiparty agreement with the City of Delray Beach and the School Board of Palm Beach County on January 15, 2014 to loan an amount not to exceed $150,000 to the City of Delray Beach to be disbursed by the City of Delray Beach to the School District for the Eagle Nest program. At the time of the closing on the sale of the Eagle Nest house, the CRA will be repaid without interest. At September 30,2014,there were no amounts drawn on the loan. CRA Property Purchase and Sale Commitments: The CRA had entered into two contracts for the sale of property at September 30,2014 as follows: 72 City of Delray Beach, Florida Notes to Financial Statements September 30, 2014 17. Commitments and Contingencies(Continued) Delray Beach Holdings, LLC - During 2014, the CRA entered into a purchase and sale agreement with Delray Beach Holdings, LLC for the sale of certain property for $3,600,000 in accordance with their redevelopment proposal for a 5-story mixed use facility that will include an iPic Theater, Class A office space, retail space and a multi-level parking garage. The agreement is subject to certain conditions precedent to closing, including the documentation of financial commitment and a letter of credit or performance bond by the purchaser. The CRA also has the right to approve the architectural design and site plan for the project. Closing shall occur no later than thirty days after the permit date. The CRA has a right to repurchase the property for the same purchase price in the event the purchaser fails to commence construction of the project within sixty days of the closing or permit date or fails to commence the installation of the concrete foundation within one hundred eighty days following the later of the commencement of construction or the issuance of the building permits. The carrying value of the property under contract at September 30,2014 is$3,364,258. Equity Enterprises USA, Inc. - During 2014, the CRA entered into a purchase and sale agreement with Equity Enterprises USA, Inc. for the sale of certain property for $1,000,000 in accordance with their redevelopment proposal for three mixed use buildings fronting West Atlantic Avenue with retail space, Class A office space and multifamily residential units. Earnest money of$100,000 was paid upon approval of the agreement. At closing, an additional$100,000 will be paid to the CRA,and the$800,000 balance of the purchase price will be a purchase money mortgage to the CRA, secured by a lien on the property. The mortgage will be for a term of 5 years with interest accruing at a fixed rate of four percent per annum with a maturity date of five years from the closing date. Interest will not accrue for the first twenty-four months subsequent to the closing date.Payments of principal and interest will commence on the twenty-fifth month anniversary of the closing date and will be payable every month thereafter through maturity. The carrying value of the property under the contract at September 30,2014 is$7,052,962. The CRA also contracted to purchase redevelopment property for$84,000 at September 30,2014. CRA Operating Grant Commitments: The CRA entered into agreements with the following organizations to provide funding for their operations during the year ending September 30,2015: City of Delray Beach—International Tennis Championships $ 550,000 City of Delray Beach—Downtown Roundabout Trolleys 300,000 City of Delray Beach—Irrigation and Landscape Maintenance 36,000 Delray Beach Community Land Trust,Inc. 175,000 Delray Beach Public Library Association,Inc. 308,000 Creative City Collaborative 275,000 Delray Beach Center for the Arts,Inc. 285,000 EPOCH,Inc. 59,640 Total Grant Commitments 1,988,640 18. Subsequent Events The City has authorized the issuance of not more than $44,000,000 in Delray Beach Utilities Tax Revenue Refunding and Improvement Bonds, Series 2015 (the "Series 2015 Bonds"), for the purpose of refunding certain outstanding bonds and financing certain capital projects within the City. Approximately $27 million of the proceeds will be used to advance refund $24.33 million of the City's Utilities Tax Revenue Bonds, Series 2007; approximately$6.1 million will be used to refund the City's Bond Anticipation Revenue Improvement Notes, Series 2013; approximately $6 million will be used to finance construction of a replacement facility for the City's existing Fire Station No. 3;and,approximately$3 million will be used to finance projects identified in the City's Beach Area Master Plan. The City expects to issue the Series 2015 Bonds in late March or early April 2015. 73 Required Supplementary Information CITY OF DELRAY BEACH,FLORIDA BUDGETARY COMPARISON SCHEDULE GENERALFUND For the Fiscal Year Ended September 30,2014 Variance with Final Budget- Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES 'faxes $ 58,674,690 $ 58,974,690 $ 59,081,293 $ 106,603 Fees and permits 8,991,630 9,224,580 10,431,335 1,206,755 Intergovernmental 6,599,600 6,820,006 7,121,915 301,909 Charges for services 10,517,540 10,639,900 10,841,897 201,997 Fines and forfeitures 998,500 958,000 1,028,905 70,905 Miscellaneous 5,916,510 6,231,555 6,324,008 92,453 Transfers in 4,553,240 3,718,360 3,733,317 14,957 Debt proceeds - 8,810,000 8,810,000 - Prior year surplus 1,684,190 1,506,528 - (1,506,528) Total Revenues 97,935,900 106,883,619 107,372,670 489,051 EXPENDITURES General government City commission 227,650 262,802 203,378 59,424 City manager 494,200 474,882 451,220 23,662 Economic development 250,000 265,315 109,854 155,461 Human resources 534,270 499,270 458,527 40,743 Public information office 73,360 71,482 71,220 262 City clerk 566,570 574,619 548,227 26,392 Finance 1,672,040 1,725,130 1,724,553 577 Information technology 1,676,200 1,689,610 1,567,577 122,033 City attorney 867,630 1,106,060 1,146,421 (40,361) Administrative services administration 644,890 748,610 672,518 76,092 Clean and Safe 203,580 202,740 185,480 17,260 Cemetery 361,180 365,240 347,429 17,811 Nondepartmental 1,938,460 2,154,602 4,935,246 (2,780,644) Transfers to component units 6,957,610 6,946,429 6,946,429 - Public safety Law enforcement 29,201,050 28,852,927 27,639,095 1,213,832 Fire control 23,328,070 23,279,542 22,885,744 393,798 Community improvement administration 525,270 524,770 474,002 50,768 Planning and zoning 1,262,520 1,238,324 1,155,729 82,595 Building inspection 1,334,090 1,445,652 1,445,421 231 Code compliance 1,112,850 1,110,350 1,042,620 67,730 Physical environment Engineering 718,470 693,145 644,552 48,593 Parking facilities 1,301,360 1,321,190 1,047,828 273,362 Public works 2,875,010 2,899,711 2,789,803 109,908 Parks and recreation 12,595,710 12,650,725 12,400,827 249,898 Debt service 3,996,990 3,888,190 3,568,474 319,716 Payment to bond escrow agent - 8,595,000 8,767,970 (172,970) Transfers out 3,216,870 3,297,302 3,308,784 (11,482) Total Expenditures 97,935,900 106,883,619 106,538,928 344,691 Excess of Revenues Over Expenditures $ $ 833,742 $ 833,742 Fund balance-October 1,2013 28,048,174 Difference between GAAP and budgetary basis 163,871 Fund balance-September 30,2014 $ 29,045,787 The notes to budgetary comparison schedule are an integral part of this schedule. 74 City of Delray Beach, Florida Notes to Budgetary Comparison Schedule September 30, 2014 1.Budgetary Accounting State of Florida Statutes require that all municipal governments establish budgetary systems and approve an annual operating budget. The City Commission annually adopts an operating budget and appropriates funds for the General Fund. Other funds are not legally required to adopt a budget.The budget procedures are generally as follows: Prior to September 1, the City Manager submits to the City Commission a proposed operating budget prepared for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted to obtain taxpayer comments. The City advises the County Property Appraiser of the proposed millage rate and the date, time and place of the public hearing for budget acceptance. The budget and related millage rate are legally enacted by resolution. Changes or amendments to the budget of the City or a department must be approved by the City Commission; however, changes within a department which do not affect the total departmental expenditures may be approved at the administrative level by the City Manager. Accordingly,the legal level of control is at the department level. The appropriated budget legally adopted for the General Fund is on the same modified-accrual basis used to reflect revenues and expenditures, except that for budgetary purposes, current year encumbrances are treated as expenditures, on-behalf payments from the state for police and firefighters' pension benefits are not budgeted and capital outlays are reflected as current expenditures within each governmental function. The City Commission approved budget amendments totaling$8,947,719 during the year ended September 30, 2014, which increased the original General Fund appropriations (expenditures and transfers out) from $97,935,900 to a revised total of $106,883,619. 2.Budget and Actual Comparisons The budgetary comparison schedule for the General Fund is prepared on the basis of accounting used in preparing the appropriated budget. As indicated in Note 1, current year encumbrances are treated as expenditures for budgetary purposes and on-behalf payments are not budgeted. In addition,transfers and the proceeds from debt and the sale of capital assets are included in budgeted revenues,but are considered"other financing sources" for GAAP. As a result,the General Fund revenues and expenditures reported in the budgetary comparison schedule differ from the revenues and expenditures reported on the basis of GAAP. These differences can be reconciled as follows: Revenues Expenditures Current year encumbrances outstanding at year end $ - $ 373,543 Prior year encumbrances paid in the current year - (209,672) Net encumbered expenditures - 163,871 Transfers 3,733,317 3,308,784 On-behalf payments for pension benefits (1,951,084) (1,951,084) Revenue bond proceeds 8,810,000 - Payment to bond escrow agent - 8,767,970 Net differences-GAAP and budgetary basis 10,592,233 10,289,541 GAAP basis 96,780,437 96,249,387 Budgetary basis $ 107,372,670 $ 106,538,928 75 City of Delray Beach, Florida Required Supplementary Information—General Employees' Pension Plan Schedule of Changes in the Net Pension Liability and Related Ratios September 30, 2014 Fiscal Year 2014 Total Pension Liability Service cost $ 2,249,595 Interest 7,820,828 Changes of benefit terms - Differences between expected and actual experience (163,785) Changes of assumptions - Benefit payments,including refunds (5,055,720) Net change in total pension liability 4,850,918 Total pension liability,beginning of fiscal year 108,151,764 Total pension liability,end of fiscal year(a) $ 113,002,682 Plan Fiduciary Net Position Contributions Employer $ 2,084,010 Plan members 1,126,054 Net investment income 12,191,061 Other income 5,387 Benefit payments,including refunds (5,436,303) Administration expense (79,024) Net change in plan fiduciary net position 9,891,185 Plan fiduciary net position,beginning of fiscal year 100,390,420 Plan fiduciary net position,end of fiscal year(b) $ 110,281,605 Net Pension Liability,end of fiscal year[(a)-(b)] $ 2,721,077 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 97.6% Covered Employee Payroll $ 16,527,919 Net Pension Liability as a Percentage of Covered Employee Payroll 16.5% Notes to Schedule: Information prior to adoption of GASB Statement No. 67 in fiscal year 2014 is not avalable. 76 City of Delray Beach, Florida Required Supplementary Information Police and Firefighters' Retirement System Schedule of Changes in the Net Pension Liability and Related Ratios September 30, 2014 Fiscal Year 2014 Total Pension Liability Service cost $ 4,215,639 Interest 18,144,343 Changes of benefit terms 1,406,983 Differences between expected and actual experience - Changes of assumptions - Benefit payments,including refunds (11,258,891) Net change in total pension liability 12,508,074 Total pension liability,beginning of fiscal year 237,000,019 Total pension liability,end of fiscal year(a) $ 249,508,093 Plan Fiduciary Net Position Contributions Employer $ 9,057,075 State 1,951,084 Plan members 1,594,712 Net investment income 14,738,903 Other income 191,998 Benefit payments,including refunds (11,275,592) Administration expense (232,362) Net change in plan fiduciary net position 16,025,818 Plan fiduciary net position,beginning of fiscal year 157,184,501 Plan fiduciary net position,end of fiscal year(b) S 173,210,319 Net Pension Liability,end of fiscal year[(a)-(b)] S 76,297,774 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 69.4% Covered Employee Payroll $ 16,474,658 Net Pension Liability as a Percentage of Covered Employee Payroll 463.1% Notes to Schedule: Information prior to adoption of GASB Statement No. 67 in fiscal year 2014 is not avalable. 77 City of Delray Beach,Florida Required Supplementary Information—Pension Funds Schedules of Net Pension Liability September 30,2014 General Employees'Pension Plan Plan Net Position Net Pension Fiscal Year Total Plan Net as a Percentage of Liability as a Ended Pension Net Pension Total Pension Covered Percentage of September 30, Liability Position Liability Liability Payroll Covered Payroll 2014 $ 113,002,682 $ 110,281,605 $ 2,721,077 97.6% $ 16,527,919 16.5% Police and Firefighters'Retirement System Plan Net Position Net Pension Fiscal Year Total Plan Net as a Percentage of Liability as a Ended Pension Net Pension Total Pension Covered Percentage of September 30, Liability Position Liability Liability Payroll Covered Payroll 2014 $ 249,508,093 $ 173,210,319 $ 76,297,774 69.4% $ 16,474,658 463.1% Notes to Schedule: Information prior to adoption of GASB Statement No.67 in fiscal year 2014 is not avalable. 78 City of Delray Beach,Florida Required Supplementary Information—Pension Funds Schedules of City Contributions September 30, 2014 Fiscal Year 2014 General Employees Pension Plan Actuarially determined contribution $ 2,093,769 Contributions in relation to actuarially determined contribution 2,084,010 Contribution deficiency(excess) $ 9,759 Covered employee payroll $ 16,527,919 Contributions as a percentage of covered employee payroll 12.6% Police and Firefighters'Retirement System Actuarially determined contribution $ 9,395,497 Contributions in relation to actuarially determined contribution 9,517,297 Contribution deficiency(excess) $ (121,800) Covered employee payroll $ 16,474,658 Contributions as a percentage of covered employee payroll 57.8% General Police and Notes to Schedule Employees Firefighters Asset valuation date 10/1/2013 10/1/2013 Actuarially determined contribution rates are calculated at October 1,one year prior to the end of the fiscal year in which the contributions are reported. Methods and asumptions used to determine contribution rates: Actuarial cost method Entry Age Normal Entry Age Normal Amortization method Level Dollar, Level Percent, Closed Closed Remaining amortization period 25 years 29 years Asset valuation method 5-Year Smoothed 4-Year Smoothed Inflation 3.0%o/year 3.0%/year Salary increases(with inflation) 4.4%-7.2%/year 6.25%/year for first 10 years,5.0% thereafter Investment rate of return(net of expenses,with inflation) 7.25%/year 8.%/year Cost of living adjustments None 1.0% Retirement age Experienced-based 25%retire on table of rates normal retirement date,10%each next two years Mortality RP-2000 Combined RP-2000 Combined Healthy Participant Healthy Participant Mortality Table Mortality Table using Scale AA using with no projection Information prior to adoption of GASB Statement No.67 in fiscal year 2014 is not avalable. 79 City of Delray Beach,Florida Required Supplementary Information— Schedules of Employer and State Pension Contributions For the Fiscal Year Ended September 30,2014 General Employees'Pension Fund Annual Required Fiscal Year Ended Employer Percentage September 30, Contribution Contribution 2009 $ 2,398,379 100.0 % 2010 2,502,936 100.0 2011 2,996,262 100.0 2012 2,305,292 100.0 2013 2,522,126 93.8 2014 2,294,953 92.8 Police and Firefighters'Retirement System Fund Annual Required Total Annual Fiscal Year Ended Annual State Employer Required Percentage September 30, Contribution Contribution Contribution Contribution 2009 $ 504,922 $ 5,608,475 $ 6,113,397 100.0 % 2010 504,922 5,381,809 6,900,364 100.0 2011 504,922 7,061,730 7,566,652 101.1 2012 504,922 7,963,318 8,468,240 100.0 2013 504,922 6,602,837 7,107,759 100.0 2014 504,922 7,558,079 8,063,001 100.0 80 City of Delray Beach, Florida Required Supplementary Information Pension Funds Schedules of Investment Returns September 30, 2014 Fiscal Year 2014 Annual money-weighted rate of return, net of investment expenses General Employees Pension Plan 12.26% Police and Firefighters'Retirement System 9.32% Notes to Schedule: Information prior to adoption of GASB Statement No.67 in fiscal year 2014 is not avalable. 81 City of Delray Beach,Florida Required Supplementary Information— Schedules of Pension Funding Progress September 30, 2014 General Employees'Pension Plan Unfunded Actuarial Actuarial Unfunded AAL as Accrued Liability Accrued Liability a Percentage of Actuarial Actuarial Value (AAL) (UAAL) Funded Ratio Covered Payroll Covered Payroll Valuation Date of Assets (a) (b) (b-a) (a/b) (c) [(b-a)/cl 10/1/2008 $ 80,987,834 $ 84,913,592 $ 3,925,758 95.4 % $ 18,990,051 20.7 % 10/1/2009 84,476,640 87,232,667 2,756,027 96.8 19,359,146 14.2 10/1/2010 87,826,931 91,096,027 3,269,096 96.4 18,988,947 17.2 10/1/2011 90,513,860 93,546,778 3,032,918 96.8 17,817,131 17.0 10/1/2012 94,643,819 98,323,171 3,679,352 96.3 16,937,526 21.7 10/1/2013 99,910,051 103,950,532 4,040,481 96.1 16,527,919 24.4 Note: Effective October 1, 2009, the actuarial cost method was changed from the Aggregate Actuarial Cost method to the Entry Age Normal Cost method using the Level Dollar—Closed amortization method over a period of 25 years. Police and Firefighters'Retirement System Fund Unfunded Actuarial Actuarial Unfunded AAL as Accrued Liability Accrued Liability a Percentage of Actuarial Actuarial Value (AAL) (UAAL) Funded Ratio Covered Payroll Covered Payroll Valuation Date of Assets (a) (b) (b-a) (a/b) (c) [(b-a)/cl 10/1/2008 $ 119,979,020 $ 169,034,580 $ 49,055,560 71.0 % $ 17,564,005 279.3 % 10/1/2009 117,804,614 182,523,094 64,718,480 64.5 17,901,995 361.5 10/1/2010 121,589,339 196,961,908 75,372,569 61.7 19,165,228 393.3 10/1/2011 118,807,990 210,308,202 91,500,212 56.5 17,789,167 514.4 10/1/2012 123,483,089 212,151,586 88,668,497 58.2 16,936,295 523.5 10/1/2013 132,741,368 221,897,687 89,156,319 59.8 17,577,480 507.2 82 City of Delray Beach,Florida Required Supplementary Information— Schedules of Other Postemployment Benefits (OPEB)Funding Progress September 30, 2014 OPEB Plan Actuarial Accrued Liability Unfunded AAL as Actuarial Value (AAL)— a Percentage of Actuarial of Assets Entry Age Unfunded AAL Funded Ratio Covered Payroll Covered Payroll Valuation Date (a) (b) (b-a) (a/b) (c) [(b-a)/cl 10/1/2008 $ - $ 11,436,441 $ 11,436,441 0.0 % $ 42,430,788 27.0 % 10/1/2010 - 15,472,507 15,472,507 0.0 43,370,206 35.7 10/1/2012 - 15,636,209 15,636,209 0.0 39,412,194 39.7 Retiree Benefit Fund Actuarial Accrued Liability Unfunded AAL as Actuarial Value (AAL)— a Percentage of Actuarial of Assets Entry Age Unfunded AAL Funded Ratio Covered Payroll Covered Payroll Valuation Date (a) (b) (b-a) (a/b) (c) [(b-a)/cl 10/1/2008 $ 2,056,798 $ 7,969,855 $ 5,913,057 25.8 % $ 20,256,898 29.2 % 10/1/2011 3,155,585 9,581,135 6,425,550 32.9 20,647,352 31.1 Note: The information for October 1,2008 is from the first actuarial valuation performed for each plan. 83 Combining and Individual Fund Statements and Schedules Non-Major Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than major capital projects)requiring separate accounting because of legal or regulatory provisions or administrative action. Law Enforcement Trust Fund This fund accounts for revenue received from confiscated and forfeited properties from cases involving the City's Police department. Expenditures from this fund are generally for police education and training programs and equipment. Developers Land Contribution Fund—This fund accounts for revenue received from developers operating within the City for projects other than those financed by proprietary funds. The City uses the developer contributions to purchase land or capital improvements for recreation facilities. ARRA Economic Stimulus Fund—This fund accounts for revenue received from the federal government for various programs under the American Recovery and Reinvestment Act. Neighborhood Services Fund This fund accounts for revenue received from federal, state and local governments under numerous grant programs which are used for various community development and improvement projects within the City. SHIP Fund— This fund accounts for revenue received from the Florida Housing Finance Agency for the State Housing Initiatives Partnership (SHIP)Program to provide for renovation of buildings to be used for affordable multi-family housing within the City. Beautification Fund—This fund accounts for revenue received from public service taxes, which is used for capital improvements to beautify the City. Special Projects Fund— This fund is used to account for assets held in trust by the City for a variety of earmarked purposes. Cemetery Perpetual Care Fund This fund is used to account for assets held by the City to provide maintenance for the cemetery grounds. Debt Service Fund Utilities Tax Fund This fund is used to account for assets held for the repayment of principal and interest on debt reported in the government-wide financial statements. Capital Projects Fund Capital Projects Funds are used to account for financial resources for the acquisition or construction of major capital facilities(other than those financed by proprietary funds and similar trust funds). The capital projects funds used by the City are as follows: Capital Improvement Fund—This fund is used to account for the construction of major capital facilities not accounted for in the 2004 GO Bond Fund or Beach Restoration Fund. 2004 GO Bond Fund—This fund is used to account for the construction of major capital facilities financed by the City's 2004 general obligation bond issue and subsequent financing. The 2004 GO bonds were redeemed and retired in November 2013. Beach Restoration Fund This fund is used to account for improvements to the municipal beach area of the City. 84 � ocoo O �nomo� � � � o v ov mvv � mN �n •R .fl �vi�co O\V co 0 o V V M M h �O O\�O V�O h V O O\ V R O\N N N +p V V FG Vi N l l l l a EA EA EA EA 9 O O O O O L � _ R H3 H3 H3 H3 U -F 2 0v N o� �n v ov v v cv v •ac 0 moo ,— ,— o � � C,j L m cS r7 cS r. Cy Cy If cv cv �n �n co �n ov ov v m co v �n N o v O R � ^ Q M po O0 � a v3 v3 v3 v3 •p�s' � � v m �n �n m z w � N M Vl Vl Vl Vl R •L �O �O �O �O �O 7 � _ q O U H3 H3 H3 H3 V N h h h h Y Vl O Vl Vl Vl Vl C W H3 H3 H3 H3 w o v ovv � oo Nan NOvov m co � � v � m �n m N �nv � o � � r. 00v � vm m m � v �n my c ,-:vi co�,-. i" "comet cS o;m ocS cSo oo; ,� C L 7 '. '•M h N r.V � � M O\ co Vl N c � � o Nv�i co i o 0 o i cow 0 a R N O R H3 H3 U R E o,— O. H EA H3 � � co ova o v � � m ova ri a U Fa Um � m o � ov � � oovco �n mom co o�co o O� ov �n � co co con o� � non m �o � F � W O N FG H3 H3 M W r. ~ N � Vii Vii Vii O w � a U0zw a v3 � �S F s G r .. C7 ' ' ' ' ' ' ' m m m m u ' U � � 7 � _ Q O U � � C W v3 F» G O WN� U A t Ir lu O O O r�. v 20 N N pzW > vi F' N Q ...... y p N F ^Fsl N N N bA N N pe PQ fx W w O z w w Non-Major Enterprise Funds Enterprise funds are used to account for operations that provide a service to citizens, financed primarily by a user charge, and where the periodic measurement of net income is deemed appropriate for capital maintenance,public policy,management control,accountability or other purposes. Delray Beach Municipal Golf Course Fund— This fund is used to account for the services and activities of the City's municipal golf course. Lakeview Golf Course Fund This fund is used to account for the services and activities of the City's executive municipal golf course. City Marina Fund— This fund is used to account for the services and activities of the City's municipal marina. Sanitation Fund— This fund is used to account for solid waste removal services for the City's residents and commercial customers. Stormwater Utility Fund This fund is used to account for the levy of drainage assessments and construction of drainage projects. 87 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF NET POSITION NON-MAJOR ENTERPRISE FUNDS September 30,2014 Total Municipal Lakeview Non-Major Golf Golf City Stormwater Enterprise Course Course Marina Sanitation Utility Funds ASSETS Current Assets: Cash and cash equivalents $ 17,952 $ 1,804 $ - $ - $ - $ 19,756 Investments - - 913,502 2,026,226 4,117,528 7,057,256 Accounts receivable,net 2,852 210 - 749,279 1,880 754,221 Interest receivable - - 1,442 3,198 6,870 11,510 Due from other funds - - 352,437 1,812,360 - 2,164,797 Inventories 61,753 12,267 - - 74,020 Prepaid expenses 47,731 12,449 - 60,180 Restricted assets Cash and cash equivalents 459,135 86,366 - - 70,260 615,761 Total Current Assets 589,423 113,096 1,267,381 4,591,063 4,196,538 10,757,501 Noncurrent Assets: Property,land and equipment Land 1,415,482 1,963,894 42,840 - 1,271,853 4,694,069 Buildings 2,309,544 140,718 - - 1,904,722 4,354,984 Improvements other than buildings 1,200,973 899,663 1,134,822 11,958 13,420,497 16,667,913 Equipment 1,453,375 336,919 84,453 22,125 772,489 2,669,361 Construction in progress - - - - 702,536 702,536 Accumulated depreciation (3,281,786) (812,467) (1,134,425) (32,676) (6,573,866) (11,835,220) Total Noncurrent Assets 3,097,588 2,528,727 127,690 1,407 11,498,231 17,253,643 Total Assets 3,687,011 2,641,823 1,395,071 4,592,470 15,694,769 28,011,144 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refundings 43,488 15,744 - - - 59,232 LIABILITIES Current Liabilities: Accounts payable and accrued expenses 64,080 4,680 733 333,634 56,971 460,098 Unearned revenue - - 30,375 - - 30,375 Due to other funds 1,682,064 1,211,080 - 2,893,144 Refundable deposits payable 137,017 - 18,072 155,089 1,883,161 1,215,760 49,180 333,634 56,971 3,538,706 Current Liabilities Payable from Restricted Assets: Accrued interest on long-term debt 13,135 2,366 - - 20,260 35,761 Current maturities of revenue bonds 394,000 84,000 50,000 528,000 407,135 86,366 - - 70,260 563,761 Total Current Liabilities 2,290,296 1,302,126 49,180 333,634 127,231 4,102,467 Noncurrent Liabilities: Net pension obligation - - - 3,028 3,315 6,343 Net OPEB obligation 22,182 33,273 55,455 Compensated absences payable - - 32,328 30,210 62,538 Revenue bonds payable,net 575,674 93,531 - - 1,170,000 1,839,205 Total Noncurrent Liabilities 575,674 93,531 - 57,538 1,236,798 1,963,541 Total Liabilities 2,865,970 1,395,657 49,180 391,172 1,364,029 6,066,008 NET POSITION Net investment in capital assets 2,171,402 2,366,940 127,690 1,407 10,278,231 14,945,670 Restricted for debt service 446,000 84,000 - - 50,000 580,000 Unrestricted(deficit) (1,752,873) (1,189,030) 1,218,201 4,199,891 4,002,509 6,478,698 Total Net Position $ 864,529 $ 1,261,910 $ 1,345,891 $ 4,201,298 $ 14,330,740 $ 22,004,368 88 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET POSITION NON-MAJOR ENTERPRISE FUNDS For the Fiscal Year Ended September 30,2014 Total Municipal Lakeview Non-Major Golf Golf City Stormwater Enterprise Course Course Marina Sanitation Utility Funds OPERATING REVENUES Charges for services $ 3,005,811 $ 635,489 $ 243,234 $ 4,969,127 $ 2,128,772 $ 10,982,433 Other operating revenue 35,048 4,612 2,376 73,770 12,334 128,140 Total Operating Revenues 3,040,859 640,101 245,610 5,042,897 2,141,106 11,110,573 OPERATING EXPENSES Personal services - - - 259,290 403,120 662,410 Other operating expenses 2,843,349 515,830 84,784 4,417,839 617,365 8,479,167 Depreciation 156,481 43,674 9,179 381 381,580 591,295 Total Operating Expenses 2,999,830 559,504 93,963 4,677,510 1,402,065 9,732,872 Operating Income 41,029 80,597 151,647 365,387 739,041 1,377,701 NONOPERATING REVENUES(EXPENSES) Investment earnings - - 5,659 12,536 27,731 45,926 Rent revenue 25,914 194 133,886 - 159,994 Interest expense (73,246) (15,555) - - (62,928) (151,729) Gain on disposal of equipment 16,958 - - 16,958 Total Nonoperating Revenues(Expenses) (30,374) (15,555) 5,853 146,422 (35,197) 71,149 Income Before Capital Contributions and Transfers 10,655 65,042 157,500 511,809 703,844 1,448,850 Capital contributions - - - - 48,442 48,442 Transfers out (34,000) (6,000) (49,200) (332,690) (383,770) (805,660) Change In Net Position (23,345) 59,042 108,300 179,119 368,516 691,632 Net Position-October 1,2013 887,874 1,202,868 1,237,591 4,022,179 13,962,224 21,312,736 Net Position-September 30,2014 $ 864,529 $ 1,261,910 $ 1,345,891 $ 4,201,298 $ 14,330,740 $ 22,004,368 89 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF CASH FLOWS NON-MAJOR ENTERPRISE FUNDS For the Fiscal Year Ended September 30,2014 Total Municipal Lakeview Non-Major Golf Golf City Stormwater Enterprise Course Course Marina Sanitation Utility Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 3,088,701 $ 639,631 $ 207,253 $ 5,198,998 $ 2,139,226 $ 11,273,809 Receipts from others 25,914 - 194 133,886 - 159,994 Payments to suppliers (2,742,026) (401,439) (84,273) (4,410,716) (600,941) (8,239,395) Payments to employees - - - (247,537) (393,795) (641,332) Net cash provided by operating activities 372,589 238,192 123,174 674,631 1,144,490 2,553,076 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITY Transfers to other funds (34,000) (6,000) (49,200) (332,690) (383,770) (805,660) Net cash used in noncapital financing activity (34,000) (6,000) (49,200) (332,690) (383,770) (805,660) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (42,734) (1,973) (878,934) (923,641) Proceeds from the sale of capital assets 16,958 16,958 Principal paid on capital debt (177,145) (282,855) (52,183) (512,183) Interest paid on capital debt (56,481) (14,151) (64,068) (134,700) Net cash used in capital and related financing activities (259,402) (298,979) (995,185) (1,553,566) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments (85,093) (366,604) - (451,697) Sale of investments - - 186,875 186,875 Interest on investments 11,119 24,663 53,801 89,583 Net cash provided by(used in)investing activities (73,974) (341,941) 240,676 (175,239) Net change in cash and cash equivalents 79,187 (66,787) 6,211 18,611 Cash and cash equivalents-October 1,2013 397,900 154,957 64,049 616,906 Cash and cash equivalents-September 30,2014 $ 477,087 $ 88,170 $ - $ - $ 70,260 $ 635,517 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 41,029 $ 80,597 $ 151,647 $ 365,387 $ 739,041 $ 1,377,701 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 156,481 43,674 9,179 381 381,580 591,295 Rentrevenue 25,914 - 194 133,886 - 159,994 Change in assets and liabilities: Accounts receivable 8,828 (170) 1,344 156,101 (1,880) 164,223 Inventories 16,937 (300) - - 16,637 Prepaid expenses (1,571) 263 - - - (1,308) Accounts payable and accrued expenses (64,290) (2,726) 511 7,123 16,424 (42,958) Unearned revenue (36,860) - - (36,860) Compensated absences payable 5,632 937 6,569 Net pension obligation 1,416 1,330 2,746 Net OPEB obligation 4,705 7,058 11,763 Due to other funds 167,184 116,854 - - 284,038 Refundable deposits payable 22,077 - (2,841) - - 19,236 Total adjustments 331,560 157,595 (28,473) 309,244 405,449 1,175,375 Net cash provided by operating activities $ 372,589 $ 238,192 $ 123,174 $ 674,631 $ 1,144,490 $ 2,553,076 Non-cash capital and related financing and investing activities Amortization of bond premiums $ (6,099) $ (3,735) $ - $ - $ - $ (9,834) Amortization of deferred charges on refundings $ 24,849 $ 9,000 $ $ $ - $ 33,849 Contributions of capital assets $ - $ - $ $ - $ 48,442 $ 48,442 Realized and unrealized losses on investments $ $ - $ (3,480) $ (7,720) $ (16,588) $ (27,788) 90 Internal Service Funds Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City,or to other governmental units,on a cost reimbursement basis. Insurance Fund This fund is used to account for the payment of insurance claims against the City for certain self-insured coverages and for the payment of health insurance premiums. In addition,expenses related to reinsurance and claims administration are paid from this fund. Central Garage Fund This fund is used to account for the central garage operation of the City. 91 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS September 30,2014 Total Central Internal Insurance Garage Service Funds ASSETS Current Assets: Cash and cash equivalents S 203,381 $ 100 S 203,481 Investments 4,961,095 2,832,829 7,793,924 Accounts receivable,net 17,852 - 17,852 Interest receivable 7,957 4,470 12,427 Due from other funds 2,198,474 1,166,311 3,364,785 Inventories - 111,541 111,541 Prepaid expenses 382,170 - 382,170 Total Current Assets 7,770,929 4,115,251 11,886,180 Noncurrent Assets: Property,land and equipment Buildings - 88,185 88,185 Equipment 134,993 22,406,914 22,541,907 Accumulated depreciation (81,372) (15,504,282) (15,585,654) Total Noncurrent Assets 53,621 6,990,817 7,044,438 Total Assets 7,824,550 11,106,068 18,930,618 LIABILITIES Current Liabilities: Accounts payable and accrued expenses 267,049 111,183 378,232 Insurance claims payable 1,569,412 - 1,569,412 Total Current Liabilities 1,836,461 111,183 1,947,644 Noncurrent Liabilities: Net pension obligation 3,011 8,284 11,295 Net OPEB obligation 22,182 61,000 83,182 Long-term portion of compensated absences payable 31,311 94,843 126,154 Long-term portion of insurance claims payable 3,781,000 - 3,781,000 Total Noncurrent Liabilities 3,837,504 164,127 4,001,631 Total Liabilities 5,673,965 275,310 5,949,275 NET POSITION Net investment in capital assets 53,621 6,990,817 7,044,438 Unrestricted 2,096,964 3,839,941 5,936,905 Total Net Position S 2,150,585 S 10,830,758 S 12,981,343 92 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Fiscal Year Ended September 30,2014 Total Central Internal Insurance Garage Service Funds OPERATING REVENUES Charges for services $ 12,558,514 $ 3,061,748 $ 15,620,262 Other operating revenue 252,465 1,985,246 2,237,711 Total Operating Revenues 12,810,979 5,046,994 17,857,973 OPERATING EXPENSES Personal services 336,218 871,711 1,207,929 Other operating expenses 12,985,427 2,278,231 15,263,658 Depreciation 15,757 1,922,772 1,938,529 Total Operating Expenses 13,337,402 5,072,714 18,410,116 Operating Loss (526,423) (25,720) (552,143) NONOPERATING REVENUES Interest revenue 30,681 17,512 48,193 Gain on disposal of equipment - 60,225 60,225 Total Nonoperating Revenues 30,681 77,737 108,418 Income(Loss)Before Capital Contributions and Transfers (495,742) 52,017 (443,725) Capital contributions 8,533 8,533 Change In Net Position (495,742) 60,550 (435,192) Net Position-October 1,2013 2,646,327 10,770,208 13,416,535 Net Position-September 30,2014 $ 2,150,585 $ 10,830,758 $ 12,981,343 93 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Fiscal Year Ended September 30,2014 Total Central Internal Insurance Garage Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 13,949,889 $ 4,603,824 $ 18,553,713 Payments to suppliers (13,639,368) (2,404,422) (16,043,790) Payments to employees (323,773) (860,158) (1,183,931) Net cash provided by(used in)operating activities (13,252) 1,339,244 1,325,992 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (1,454,039) (1,454,039) Proceeds from the sale of capital assets 113,190 113,190 Net cash used in capital and related financing activities (1,340,849) (1,340,849) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments (61,193) (32,878) (94,071) Interest on investments 60,387 34,483 94,870 Net cash provided by(used in)investing activities (806) 1,605 799 Net change in cash and cash equivalents (14,058) - (14,058) Cash and cash equivalents-October 1,2013 217,439 100 217,539 Cash and cash equivalents-September 30,2014 $ 203,381 $ 100 $ 203,481 Reconciliation of operating loss to net cash provided by(used in)operating activities: Operating loss $ (526,423) $ (25,720) $ (552,143) Adjustments to reconcile operating loss to net cash provided by(used in)operating activities: Depreciation expense 15,757 1,922,772 1,938,529 Change in assets and liabilities: Accounts receivable 121,726 - 121,726 Due from other funds 1,017,184 (443,170) 574,014 Inventories - (63,621) (63,621) Prepaid expenses 53,978 53,978 Accounts payable and accrued expenses (894,546) (62,570) (957,116) Compensated absences payable 6,080 (1,103) 4,977 Net pension obligation 1,660 4,086 5,746 Net OPEB obligation 4,705 8,570 13,275 Insurance claims payable 186,627 - 186,627 Total adjustments 513,171 1,364,964 1,878,135 Net cash provided by(used in)operating activities $ (13,252) $ 1,339,244 $ 1,325,992 NON-CASH CAPITAL AND RELATED FINANCING ACTIVITY Equipment contributed from governmental capital asset; $ - $ 8,533 $ 8,533 Realized and unrealized losses on investments $ (18,902) $ (10,793) $ (29,695) 94 Fiduciary Funds Fiduciary Funds are used to account for assets held in trust or as an agent by the City for others and include pension trust funds. General Employees' Pension Fund This fund is used to account for assets held in a trustee capacity for the retirement pensions of all permanent, full-time City employees except those covered by the Police and Firefighters'Retirement System Fund. Police and Firefighters'Retirement System Fund This fund is used to account for assets held in a trustee capacity for the retirement pensions of all noncivilian police and fire department employees. 95 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF PLAN NET POSITION PENSION TRUST FUNDS September 30,2014 Police and General Firefighters' Total Employees' Retirement Pension Trust Pension System Funds ASSETS Cash and cash equivalents $ 1,245,817 $ 5,148,429 $ 6,394,246 Investments: U.S.Government securities 5,478,961 7,121,967 12,600,928 U.S.Government Agency securities 2,006,374 10,506,236 12,512,610 Municipal obligations - 250,406 250,406 Domestic and international fixed income investment funds - 14,048,720 14,048,720 Domestic and international corporate bonds 16,242,427 18,323,711 34,566,138 Domestic and international equity securities 30,935,592 54,406,522 85,342,114 Domestic and international equity investment funds - 31,692,698 31,692,698 Alternative investments 54,402,540 12,750,016 67,152,556 DROP participant directed mutual funds - 18,904,334 18,904,334 Interest and dividends receivable 204,253 354,945 559,198 Due from broker for securities sold - 167,002 167,002 Employee contributions receivable 14,038 43,385 57,423 State contributions receivable - 39,180 39,180 Prepaid expenses - 10,035 10,035 Total Assets 110,530,002 173,767,586 284,297,588 LIABILITIES Accounts payable 47,961 147,545 195,506 Due to broker for securities purchased 200,436 409,722 610,158 Total Liabilities 248,397 557,267 805,664 NET POSITION Restricted for pension benefits $ 110,281,605 $ 173,210,319 $ 283,491,924 96 CITY OF DELRAY BEACH,FLORIDA COMBINING STATEMENT OF CHANGES IN PLAN NET POSITION PENSION TRUST FUNDS For the Fiscal Year Ended September 30,2014 Police and General Firefighters' Total Employees' Retirement Pension Trust Pension System Funds ADDITIONS Contributions Employer $ 2,084,010 $ 9,057,075 $ 11,141,085 State - 1,951,084 1,951,084 Plan members 1,126,054 1,594,712 2,720,766 Total contributions 3,210,064 12,602,871 15,812,935 Investment earnings Net appreciation in fair value of investments 11,200,447 12,325,682 23,526,129 Interest and dividends 1,255,456 3,126,585 4,382,041 12,455,903 15,452,267 27,908,170 Less investment expenses-custodian fees 264,842 713,364 978,206 Net investment earnings 12,191,061 14,738,903 26,929,964 Other income 5,387 191,998 197,385 Total additions 15,406,512 27,533,772 42,940,284 DEDUCTIONS Benefits 5,355,711 11,132,319 16,488,030 Refunds of contributions 80,592 143,273 223,865 Administrative expenses 79,024 232,362 311,386 Total deductions 5,515,327 11,507,954 17,023,281 Change In Plan Net Position 9,891,185 16,025,818 25,917,003 Net Position Restricted for Pension Benefits-October 1,2013 100,390,420 157,184,501 257,574,921 Net Position Restricted for Pension Benefits-September 30,2014 $ 110,281,605 $ 173,210,319 $ 283,491,924 97 Other Supplementary Information City of Delray Beach,Florida Schedule of Revenue and Other Financing Sources- Budget and Actual-General Fund For the Fiscal Year Ended September 30,2014 Final Variance Amended Positive Budget Actual (Negative) Revenue: Taxes: Ad valorem $ 47,960,690 $ 47,695,425 $ (265,265) Sales and use 1,315,000 1,341,267 26,267 Utility 5,635,000 6,016,563 381,563 Communications Services Tax 3,325,000 3,290,807 (34,193) Business tax receipts 739,000 737,231 (1,769) Total taxes 58,974,690 59,081,293 106,603 Fees and permits: Building permits 3,075,000 3,623,715 548,715 Franchise tees 4,764,180 5,134,527 370,347 Miscellaneous 1,270,400 1,532,512 262,112 License tees 115,000 140,581 25,581 Total fees and permits 9,224,580 10,431,335 1,206,755 Intergovernmental: Federal shared revenue: HazmatSustainment 26,770 18,585 (8,185) Highway Safety Grant 57,808 58,085 277 SAFER Grant - 30,323 30,323 Bulletproof Vest Grant 20,000 - (20,000) Justice Assistance Grants 39,868 39,868 - Total federal shared revenue 144,446 146,861 2,415 State shared revenue: State revenue sharing 1,640,000 1,816,787 176,787 Local government sales tax 4,425,000 4,498,108 73,108 Alcoholic beverage licenses tax 75,000 84,041 9,041 Municipal fuel tax refund 45,000 54,425 9,425 Mobile home licenses tax 400 277 (123) Fire incentive 60,000 66,204 6,204 State grants 240,160 275,906 35,746 Total state shared revenue 6,485,560 6,795,748 310,188 Shared revenue from local units: County occupational licenses 115,000 104,306 (10,694) PBC Grants 75,000 75,000 Total shared revenue from local units 190,000 179,306 (10,694) Total intergovernmental 6,820,006 7,121,915 301,909 Continued on next page. 98 City of Delray Beach,Florida Schedule of Revenue and Other Financing Sources- Budget and Actual-General Fund(Continued) For the Fiscal Year Ended September 30,2014 Final Variance Amended Positive Budget Actual (Negative) Revenue(continued): Charges for services: General government $ 790,480 $ 807,394 $ 16,914 Public safety 6,754,820 6,704,944 (49,876) Physical environment 102,000 153,173 51,173 Parking 1,759,600 1,830,858 71,258 Culture and recreation 1,233,000 1,345,528 112,528 Total charges for services 10,639,900 10,841,897 201,997 Fines and forfeitures: Court 715,000 775,755 60,755 Penalties on licenses and permits 98,000 77,125 (20,875) Violations of local ordinances 145,000 176,025 31,025 Total fines and forfeitures 958,000 1,028,905 70,905 Miscellaneous: Interest 107,900 263,289 155,389 Rents and special assessments 285,850 269,353 (16,497) Sale of capital assets 2,000 - (2,000) Contributions and donations 3,026,225 2,849,305 (176,920) Recovery of administrative costs 2,748,000 2,459,000 (289,000) Other 61,580 483,061 421,481 Total miscellaneous 6,231,555 6,324,008 92,453 Total revenue 92,848,731 94,829,353 1,980,622 Other financing sources: Prior year surplus 1,506,528 - (1,506,528) Debt proceeds 8,810,000 8,810,000 - Transfers in: Water and Sewer Fund 1,705,900 3,025,900 1,320,000 Delray Beach Municipal and Lakeview Golf Course Funds 25,000 40,000 15,000 City Marina Fund 49,200 49,200 - Utilities Tax Fund 1,321,800 1,757 (1,320,043) Sanitation Fund 220,690 220,690 Stormwater Utility Fund 383,770 383,770 Special Projects Fund 12,000 12,000 - Total transfers in 3,718,360 3,733,317 14,957 Total other financing sources 14,034,888 12,543,317 (1,491,571) Total revenue and other financing sources $ 106,883,619 107,372,670 $ 489,051 Reconciliation to GAAP basis statements: On-behalf payments 1,951,084 Revenue and other financing sources-GAAP basis $ 109,323,754 99 City of Delray Beach,Florida Schedule of Expenditures,Encumbrances and Other Financing Uses-Compared with Appropriations-General Fund For the Fiscal Year Ended September 30,2014 Final Current Year Total Original Amended Current Year Encumbrances Expenditures and Unencumbered Budget Budget Expenditures Outstanding Encumbrances Balance Lapsed General government: City commission $ 227,650 $ 262,802 $ 203,378 $ $ 203,378 $ 59,424 City manager 494,200 474,882 451,220 451,220 23,662 Economic development 250,000 265,315 109,854 109,854 155,461 Human resources 534,270 499,270 458,527 458,527 40,743 Public information office 73,360 71,482 71,220 71,220 262 City clerk 566,570 574,619 537,014 11,213 548,227 26,392 Finance 1,672,040 1,725,130 1,721,859 2,694 1,724,553 577 Information technology 1,676,200 1,689,610 1,566,519 1,058 1,567,577 122,033 City attorney 867,630 1,106,060 1,146,421 - 1,146,421 (40,361) Administrative services 644,890 748,610 672,518 672,518 76,092 Clean and Safe 203,580 202,740 185,480 185,480 17,260 Cemetery 361,180 365,240 347,429 347,429 17,811 Grants and Aids: Old School Square 194,750 194,750 194,750 194,750 - Library 1,453,500 1,453,500 1,453,500 1,453,500 - Other grants and aids 209,950 209,950 197,950 197,950 12,000 Miscellaneous and contingency 80,260 296,402 3,089,046 3,089,046 (2,792,644) Transfers to component units 6,957,610 6,946,429 6,946,429 - 6,946,429 Total general government 16,467,640 17,086,791 19,353,114 14,965 19,368,079 (2,281,288) Public safety: Law enforcement 29,201,050 28,852,927 27,466,013 173,082 27,639,095 1,213,832 Fire control 23,328,070 23,279,542 22,781,626 104,118 22,885,744 393,798 Community improvement administration 525,270 524,770 474,002 - 474,002 50,768 Planning and zoning 1,262,520 1,238,324 1,155,729 1,155,729 82,595 Building inspection 1,334,090 1,445,652 1,445,421 1,445,421 231 Code compliance 1,112,850 1,110,350 1,042,620 - 1,042,620 67,730 Total public safety 56,763,850 56,451,565 54,365,411 277,200 54,642,611 1,808,954 Physical environment: Engineering 718,470 693,145 585,971 58,581 644,552 48,593 Parking facilities 1,301,360 1,321,190 1,047,828 - 1,047,828 273,362 Public works: Tratlic operations 449,350 439,337 437,658 437,658 1,679 Administration 192,270 192,270 188,984 188,984 3,286 Street lighting 801,050 819,248 818,284 818,284 964 Street maintenance 810,430 818,720 777,240 - 777,240 41,480 Building maintenance 621,910 630,136 567,484 153 567,637 62,499 Total physical environment 4,894,840 4,914,046 4,423,449 58,734 4,482,183 431,863 Continued on next page. 100 City of Delray Beach,Florida Schedule of Expenditures,Encumbrances and Other Financing Uses-Compared with Appropriations-General Fund(Continued) For the Fiscal Year Ended September 30,2014 Final Current Year Total Original Amended Current Year Encumbrances Expenditures and Unencumbered Budget Budget Expenditures Outstanding Encumbrances Balance Lapsed Parks and recreation: Administration $ 535,030 $ 536,326 $ 528,941 $ $ 528,941 $ 7,385 Out of school program 474,630 466,730 449,305 449,305 17,425 Teen center 236,850 253,550 242,676 242,676 10,874 Ocean rescue 1,443,220 1,436,144 1,375,247 1,375,247 60,897 Catherine Strong Park 222,550 233,796 227,090 7,227 234,317 (521) Community center 309,320 312,690 305,558 - 305,558 7,132 Veteran's park recreation facility 146,510 146,910 140,321 140,321 6,589 Pompey Park recreation facility 827,000 838,330 811,840 - 811,840 26,490 Parks maintenance 3,874,270 3,873,754 3,840,606 4,921 3,845,527 28,227 Special events 135,360 136,360 132,289 - 132,289 4,071 Tennis centers 1,201,030 1,208,117 1,193,560 - 1,193,560 14,557 Tennis stadium 2,362,290 2,352,790 2,310,472 972 2,311,444 41,346 Aquatics 357,150 365,310 342,309 - 342,309 23,001 Athletics 470,500 489,918 477,969 9,524 487,493 2,425 Total parks and recreation 12,595,710 12,650,725 12,378,183 22,644 12,400,827 249,898 Debt service: Principal retirement 2,898,240 2,793,240 2,667,085 - 2,667,085 126,155 Interest and fiscal charges 1,098,750 1,059,620 859,359 859,359 200,261 Bond issuance costs - 35,330 42,030 42,030 (6,700) Total debt service 3,996,990 3,888,190 3,568,474 - 3,568,474 319,716 Total expenditures and encumbrances 94,719,030 94,991,317 94,088,631 373,543 94,462,174 529,143 Other financing uses: Payment to bond escrow agent - 8,595,000 8,767,970 - 8,767,970 (172,970) Transfers out to other funds: ARRA Economic Stimulus Fund - - 11,483 11,483 (11,483) Neighborhood Services Fund 149,430 149,430 149,430 149,430 - Beautification Fund 870,000 931,584 931,583 - 931,583 1 Special Projects Fund - 18,848 18,848 18,848 - Utilities Tax Fund 1,241,440 1,241,440 1,241,440 1,241,440 Capital Improvement Fund 500,000 500,000 500,000 500,000 Beach Restoration Fund 456,000 456,000 456,000 456,000 Total other financing uses 3,216,870 11,892,302 12,076,754 - 12,076,754 (184,452) Total expenditures,encumbrances and other financing uses $ 97,935,900 $ 106,883,619 $ 106,165,385 $ 373,543 106,538,928 344,691 Reconciliation to GAAP basis statements: Current year encumbrances outstanding (373,543) Prior year encumbrances paid in current year 209,672 On-behalf payments 1,951,084 Expenditures and other financing uses-GAAP basis $ 108,326,141 101 Schedules of Debt Service Requirements City of Delray Beach, Florida Summary Schedule of Debt Service Requirements (Principal and Interest)to Maturity Fiscal Year Ending General Water and Sewer Installment Total September 30 Obligation Bonds Revenue Bonds Revenue Bonds Agreements Requirements 2015 $ 2,084,614 $ 2,710,397 $ 922,670 $ 125,764 $ 5,843,445 2016 2,090,511 20,588,627 2,692,605 125,764 25,497,507 2017 2,089,576 2,521,460 2,211,059 125,763 6,947,858 2018 2,096,705 2,521,548 2,210,436 125,764 6,954,453 2019 2,091,898 2,530,456 2,202,360 21,754 6,846,468 2020 2,104,997 2,486,840 2,037,757 - 6,629,594 2021 2,105,795 2,483,840 2,052,626 - 6,642,261 2022 2,109,345 2,486,720 2,052,116 - 6,648,181 2023 2,115,489 2,485,000 105,000 - 4,705,489 2024 2,128,967 2,485,680 104,820 - 4,719,467 2025 - 2,487,520 104,480 - 2,592,000 2026 - 2,484,280 104,970 - 2,589,250 2027 - 2,486,960 105,290 - 2,592,250 2028 - 2,486,080 104,420 - 2,590,500 2029 - 2,484,640 104,360 - 2,589,000 2030 - 2,482,400 105,100 - 2,587,500 2031 - 2,486,120 104,630 - 2,590,750 2032 - 2,483,320 104,930 - 2,588,250 $ 21,017,897 $ 63,181,888 $ 17,429,629 $ 524,809 $ 102,154,223 102 City of Delray Beach, Florida Combined Schedule of General Obligation Bond Debt Service Requirements Balance Outstanding at Fiscal Year Ending End of Fiscal September 30 Principal Interest Total Year 2015 $ 1,535,000 $ 549,614 $ 2,084,614 $ 18,933,283 2016 1,590,000 500,511 2,090,511 16,842,772 2017 1,640,000 449,576 2,089,576 14,753,196 2018 1,700,000 396,705 2,096,705 12,656,491 2019 1,750,000 341,898 2,091,898 10,564,593 2020 1,820,000 284,997 2,104,997 8,459,596 2021 1,880,000 225,795 2,105,795 6,353,801 2022 1,945,000 164,345 2,109,345 4,244,456 2023 2,015,000 100,489 2,115,489 2,128,967 2024 2,095,000 33,967 2,128,967 - $ 17,970,000 $ 3,047,897 $ 21,017,897 103 City of Delray Beach,Florida Schedule of General Obligation Bonds (Series 2005) Balance Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 February 1 February 1 August 1 Total Year Rate 2015 $ 750,000 $ 192,560 $ 176,998 $ 1,119,558 $ 10,231,296 4.15% 2016 785,000 176,998 160,709 1,122,707 9,108,589 4.15 2017 820,000 160,709 143,694 1,124,403 7,984,186 4.15 2018 860,000 143,694 125,849 1,129,543 6,854,643 4.15 2019 895,000 125,849 107,278 1,128,127 5,726,516 4.15 2020 940,000 107,278 87,773 1,135,051 4,591,465 4.15 2021 985,000 87,773 67,334 1,140,107 3,451,358 4.15 2022 1,030,000 67,334 45,961 1,143,295 2,308,063 4.15 2023 1,080,000 45,961 23,551 1,149,512 1,158,551 4.15 2024 1,135,000 23,551 - 1,158,551 - 4.15 $ 9,280,000 $ 1,131,707 $ 939,147 $ 11,350,854 Original Authorization — $24,000,000 Issued — $10,000,000 Date of Issue — August 26,2005 Maturity Range — Serially February 1,2014 through February 1,2024 Principal Payment Date — February 1 of each year Interest Payment Dates — February 1 and August 1 Denomination — $5,000 Call Features — Penalty with early prepayment Paying Agent — SunTrust Bank,NA Ratings — N/A Projects: The bonds were issued for the purpose of acquiring land and constructing and developing parks and recreation facilities in the City. 104 City of Delray Beach,Florida Schedule of General Obligation Bonds (Series 2013) Balance Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 February 1 February 1 August 1 Total Year Rate 2015 $ 785,000 $ 94,287 $ 85,769 $ 965,056 $ 8,701,987 2.17% 2016 805,000 85,769 77,035 967,804 7,734,183 2.17 2017 820,000 77,035 68,138 965,173 6,769,010 2.17 2018 840,000 68,138 59,024 967,162 5,801,848 2.17 2019 855,000 59,024 49,747 963,771 4,838,077 2.17 2020 880,000 49,747 40,199 969,946 3,868,131 2.17 2021 895,000 40,199 30,489 965,688 2,902,443 2.17 2022 915,000 30,489 20,561 966,050 1,936,393 2.17 2023 935,000 20,561 10,416 965,977 970,416 2.17 2024 960,000 10,416 - 970,416 - 2.17 $ 8,690,000 $ 535,665 $ 441,378 $ 9,667,043 Original Authorization - $9,000,000 Issued - $8,810,000 Date of Issue - November 21,2013 Maturity Range - Serially February 1,2013 through February 1,2024 Principal Payment Date - February 1 of each year Interest Payment Dates - February 1 and August 1 Denomination - $5,000 Call Features - No optional or mandatory redemption Paying Agent/Registrar - Compas Mortgage Corporation Leander,Texas Ratings - N/A Projects: The bonds were issued for the purpose of acquiring land and constructing and developing parks and recreation facilities in the City. 105 City of Delray Beach, Florida Combined Schedule of Revenue Bond and Note Debt Service Requirements (Principal and Interest) Balance Outstanding at Fiscal Year Ending End of Fiscal September 30 Principal Interest Total Year 2015 $ 1,147,000 $ 1,563,397 $ 2,710,397 $ 60,471,491 2016 19,076,742 1,511,885 20,588,627 39,882,864 2017 1,197,000 1,324,460 2,521,460 37,361,404 2018 1,247,000 1,274,548 2,521,548 34,839,856 2019 1,308,000 1,222,456 2,530,456 32,309,400 2020 1,319,000 1,167,840 2,486,840 29,822,560 2021 1,382,000 1,101,840 2,483,840 27,338,720 2022 1,454,000 1,032,720 2,486,720 24,852,000 2023 1,525,000 960,000 2,485,000 22,367,000 2024 1,602,000 883,680 2,485,680 19,881,320 2025 1,684,000 803,520 2,487,520 17,393,800 2026 1,765,000 719,280 2,484,280 14,909,520 2027 1,856,000 630,960 2,486,960 12,422,560 2028 1,948,000 538,080 2,486,080 9,936,480 2029 2,044,000 440,640 2,484,640 7,451,840 2030 2,144,000 338,400 2,482,400 4,969,440 2031 2,255,000 231,120 2,486,120 2,483,320 2032 2,365,000 118,320 2,483,320 - $ 47,318,742 $ 15,863,146 $ 63,181,888 Note: Excludes allocable portion of business-type debt from the Revenue Bonds(Series 2000),Utility Tax Revenue Bonds(Series 2002),Revenue Refunding and Improvement Bonds(Series 2003)and Utility Tax Revenue Bonds(Series 2007). 106 City of Delray Beach,Florida Schedule of Revenue Bonds (Series 2000) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 June 1 December 1 June 1 Total Year Rate 2015 $ 580,000 $ 73,430 $ 73,430 $ 726,860 $ 2,518,964 5.245% 2016 510,000 58,219 58,219 626,438 1,892,526 5.245 2017 540,000 44,845 44,845 629,690 1,262,836 5.245 2018 570,000 30,683 30,683 631,366 631,470 5.245 2019 600,000 15,735 15,735 631,470 - 5.245 $ 2,800,000 $ 222,912 $ 222,912 $ 3,245,824 Original Authorization — $10,000,000 Issued — $10,000,000 Date of Issue — February 25,2000 Maturity Range — Serial Bonds: June 1,1999 through June 1,2019 Principal Payment Date — June 1 of each year Interest Payment Dates — June 1 and December 1 of each year Pledged Revenue — Non-ad valorem tax revenues Denomination — N/A Call Features — Penalty for early payment Paying Agent — Bank of America Ratings — N/A Projects: The bonds were issued to finance all or a portion of the costs of certain roadway improvements including water,sewer and drainage work,and a portion of the costs of a tri-party radio system. Approximately 73%of the bonds are governmental activities debt and 27%is business-type activities debt. 107 City of Delray Beach,Florida Schedule of Utility Tax Revenue Bonds (Series 2002) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 June I December I June I Total Year Rate 2015 $ 440,000 $ 18,680 $ 18,680 $ 477,360 $ 479,320 4.10% 2016 460,000 9,660 9,660 479,320 - 4.20 $ 900,000 $ 28,340 $ 28,340 $ 956,680 Original Authorization — $16,500,000 Issued — $15,020,000 Serial Bonds Date of Issue — December 19,2002 Maturity Range — Serial Bonds: June 1,2003 through June 1,2016 Principal Payment Date — June 1 of each year Interest Payment Dates — June 1 and December 1 of each year for both serial and term bonds Pledged Revenue — Utilities service tax revenues Denomination — $5,000 Call Features — Serial Bonds: June 1,2003 through May 31,2014--No redemption June 1,2014 through May 31,2016 at 100% Paying Agent/Registrar — Wells Fargo,Coral Springs,Florida Ratings — Moody's Aaa(FSA insured) Standard&Poor's AAA(FSA insured) Projects: The bonds were issued to refund the City's outstanding Utility Tax Revenue Bonds,Series 1992,Series 1994,Series 1995,Series 1996,and Series 1998. All the remaining outstanding bonds are business-type activities debt. 108 City of Delray Beach,Florida Schedule of Revenue Refunding and Improvement Bonds (Series 2003) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 June 1 December 1 June 1 Total Year Rate 2015 $ 695,000 $ 76,199 $ 76,199 $ 847,398 $ 3,793,456 3.66% 2016 820,000 63,484 63,484 946,968 2,846,488 3.66 2017 850,000 48,482 48,482 946,964 1,899,524 3.66 2018 880,000 32,931 32,931 945,862 953,662 3.66 2019 920,000 16,831 16,831 953,662 - 3.66 $ 4,165,000 $ 237,927 $ 237,927 $ 4,640,854 Original Authorization — $9,685,000 Issued — $9,685,000 Serial Bonds Date of Issue — December 2,2003 Maturity Range — Serial Bonds: June 1,2003 through June 1,2019 Principal Payment Date — June 1 of each year Interest Payment Dates — June 1 and December 1 of each year for both serial and term bonds Pledged Revenue — Non-ad valorem tax revenues Denomination — N/A Call Features — Penalty for early payment Paying Agent — SunTrust Bank Ratings — N/A Projects: The bonds were issued to current refund Series 1999 and Series 2002 Tax Exempt Bonds,in whole,and Series 2002 Taxable Bonds in part. Approximately 95%of the bonds are governmental activities debt and approximately 5%of the bonds are business-type activities debt. 109 City of Delray Beach,Florida Schedule of Utility Tax Revenue Bonds (Series 2007) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 June 1 December 1 June 1 Total Year Rate 2015 $ 70,000 $ 611,050 $ 611,050 $ 1,292,100 $ 38,608,800 4.00% 2016 70,000 609,650 609,650 1,289,300 37,319,500 4.00 2017 - 608,250 608,250 1,216,500 36,103,000 _ 2018 - 608,250 608,250 1,216,500 34,886,500 _ 2019 - 608,250 608,250 1,216,500 33,670,000 _ 2020 1,375,000 608,250 608,250 2,591,500 31,078,500 5.00 2021 1,440,000 573,875 573,875 2,587,750 28,490,750 5.00 2022 1,515,000 537,875 537,875 2,590,750 25,900,000 5.00 2023 1,590,000 500,000 500,000 2,590,000 23,310,000 5.00 2024 1,670,000 460,250 460,250 2,590,500 20,719,500 5.00 2025 1,755,000 418,500 418,500 2,592,000 18,127,500 5.00 2026 1,840,000 374,625 374,625 2,589,250 15,538,250 5.00 2027 1,935,000 328,625 328,625 2,592,250 12,946,000 5.00 2028 2,030,000 280,250 280,250 2,590,500 10,355,500 5.00 2029 2,130,000 229,500 229,500 2,589,000 7,766,500 5.00 2030 2,235,000 176,250 176,250 2,587,500 5,179,000 5.00 2031 2,350,000 120,375 120,375 2,590,750 2,588,250 5.00 2032 2,465,000 61,625 61,625 2,588,250 - 5.00 $ 24,470,000 $ 7,715,450 $ 7,715,450 $ 39,900,900 Original Authorization - $27,000,000 Issued - $24,635,000 Serial Bonds Date of Issue - September 26,2007 Maturity Range - Serial Bonds: June 1,2010 through June 1,2027;Term Bonds: June 1,2028 through June 1,2032 Principal Payment Date - June 1 of each year Interest Payment Dates - June 1 and December 1 of each year for both serial and term bonds Pledged Revenue - Utilities service tax revenues Denomination - N/A Call Features - Optional redemption for bonds maturing on June 1,2020-callable after June 1,2017 at 100% Paying Agent - Commerce Bank Ratings - S&P:AAA,Moody's Aaa Underlying Ratings - S&P:A,Moody's A2 Projects: The bonds were issued to finance various parks and recreation projects, Fire Station#4,Environmental Services Building(in part),and to refund the City's 2005 Line of Credit(which was used to fund the Old School Square Parking Garage Project). Approximately 96% of the bonds are governmental activities debt and approximately 4%of the bonds are business-type activities debt. 110 City of Delray Beach, Florida Schedule of Revenue Refunding Bonds(Series 2013) (Taxable) Balance Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 June 1 December 1 June 1 Total Year Rate(1) 2015 $ $ 10,792 $ 10,733 $ 21,525 $ 2,647,813 0.81% 2016 2,629,000 10,792 8,021 2,647,813 - $ 2,629,000 $ 21,584 $ 18,754 $ 2,669,338 Original Authorization — $2,629,000 Issued — $2,629,000 Date of Issue — August 27,2013 Maturity — April 15,2016 Principal Payment Date — Required upon maturity Interest Payment Dates — June 1 and December 1 of each year Pledged Revenue — Non-ad valorem tax revenues Denomination — N/A Call Features — No prepayment penalty Paying Agent — TD Bank,N.A. Ratings — N/A Interest — Variable rate equal to 75%of the LIBOR rate(London Inter Bank Offered Rate)plus sixty four basis points(.64).Rate at September 30,2014 was.78%. Projects: The bonds were issued to refund the Revenue Improvement Bonds,Series 2008. (1)Rate at year end. 111 City of Delray Beach, Florida Schedule of Bond Anticipation Revenue Improvement Note -LOC(Series 2013) Balance Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 June 1 December 1 June 1 Total Year Rate(1) 2015 $ $ 59,097 $ 59,097 $ 118,194 $ 15,351,936 0.78% 2016 15,233,742 59,097 59,097 15,351,936 - $ 15,233,742 $ 118,194 $ 118,194 $ 15,470,130 Original Authorization — $22,250,000 Issued — $15,233,742 Date of Issue — April 30,2013 Maturity — June 1,2016 Principal Payment Date — Required upon maturity Interest Payment Dates — June 1 and December 1 of each year Pledged Revenue — Non-ad valorem tax revenues Denomination — N/A Call Features — No prepayment penalty Paying Agent — TD Bank,N.A. Ratings — N/A Interest — Variable rate based on 75%of the LIBOR rate(London Inter Bank Offered Rate)plus sixty four(.64) basis points.Rate at September 30,2014 was.78%. Projects: The note was issued to finance a beach renourishment project and a highway beautification project up to $22,500,000.The note is expected to be refinanced with long-term bonds on or before its final maturity. (1)Rate at year end. 112 City of Delray Beach, Florida Combined Schedule of Water and Sewer Revenue Bonds Balance Outstanding at Fiscal Year Ending End of Fiscal September 30 Principal Interest Total Year 2015 $ 638,000 $ 284,670 $ 922,670 $ 16,506,959 2016 2,306,000 386,605 2,692,605 13,814,354 2017 1,893,000 318,059 2,211,059 11,603,295 2018 1,943,000 267,436 2,210,436 9,392,859 2019 1,987,000 215,360 2,202,360 7,190,499 2020 1,876,000 161,757 2,037,757 5,152,742 2021 1,938,000 114,626 2,052,626 3,100,116 2022 1,986,000 66,116 2,052,116 1,048,000 2023 65,000 40,000 105,000 943,000 2024 68,000 36,820 104,820 838,180 2025 71,000 33,480 104,480 733,700 2026 75,000 29,970 104,970 628,730 2027 79,000 26,290 105,290 523,440 2028 82,000 22,420 104,420 419,020 2029 86,000 18,360 104,360 314,660 2030 91,000 14,100 105,100 209,560 2031 95,000 9,630 104,630 104,930 2032 100,000 4,930 104,930 - $ 15,379,000 $ 2,050,629 $ 17,429,629 Note: Includes allocable portion of business-type debt from the Revenue Bonds(Series 2000),Utility Tax Revenue Bonds(Series 2002),Revenue Refunding and Improvement Bonds(Series 2003)and Utility Tax Revenue Bonds(Series 2007). 113 City of Delray Beach,Florida Schedule of Water and Sewer Revenue Bonds (Series 2006B) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 October 1 October 1 April 1 Total Year Rate 2015(-) $ - $ - $ 25,870 $ 25,870 $ 1,488,856 3.98% 2016 165,000 25,870 22,587 213,457 1,275,399 3.98 2017 170,000 22,587 19,204 211,791 1,063,608 3.98 2018 180,000 19,204 15,622 214,826 848,782 3.98 2019 185,000 15,622 11,940 212,562 636,220 3.98 2020 195,000 11,940 8,060 215,000 421,220 3.98 2021 200,000 8,060 4,080 212,140 209,080 3.98 2022 205,000 4,080 - 209,080 - 3.98 $ 1,300,000 $ 107,363 $ 107,363 $ 1,514,726 (*)Payment was made in September 2014 for principal and interest due on October 1,2014. Original Authorization - $2,350,000 Issued - $2,350,000 Date of Issue - November 17,2006 Maturity Range - Serial Bonds: October 1,2007 through October 1,2021 Principal Payment Date - October 1 of each year Interest Payment Dates - October 1 and April 1 of each year Pledged Revenue - Utility system net revenues Denomination - N/A Call Features - Penalty for early payment Paying Agent - SunTrust Bank Ratings - N/A Projects: The bonds were issued to finance the City's share of the Reclaimed Water Treatment Project at the South Central Regional Wastewater Treatment Facility. 114 City of Delray Beach,Florida Schedule of Water and Sewer Refunding Revenue Bonds(Series 2011A) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 October 1 October 1 April 1 Total Year Rate 2015(-) $ - $ - $ 42,984 $ 42,984 $ 4,199,511 2.21% 2016 515,000 42,984 37,294 595,278 3,604,233 2.21 2017 530,000 37,294 31,437 598,731 3,005,502 2.21 2018 540,000 31,437 25,471 596,908 2,408,594 2.21 2019 555,000 25,471 19,337 599,808 1,808,786 2.21 2020 565,000 19,338 13,094 597,432 1,211,354 2.21 2021 585,000 13,094 6,630 604,724 606,630 2.21 2022 600,000 6,630 - 606,630 - 2.21 $ 3,890,000 $ 176,248 $ 176,247 $ 4,242,495 (*)Payment was made in September 2014 for principal and interest due on October 1,2014. Original Authorization - $5,430,000 Issued - $5,430,000 Date of Issue - September 29,2011 Maturity Range - Serial Bonds: October 1,2012 through October 1,2021 Principal Payment Date - October 1 of each year Interest Payment Dates - October 1 and April 1 of each year Pledged Revenue - Utility system net revenues Denomination - None Call Features - I%penalty for early payment Paying Agent - Branch Banking and Trust Company Ratings - N/A Projects: The bonds were issued to finance the cost of refunding the Series 2006A Water and Sewer Revenue Bonds. 115 City of Delray Beach,Florida Schedule of Water and Sewer Revenue Refunding Bonds (Series 2011B) Balance Serial Bond Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 October 1 October 1 April 1 Total Year Rate 2015(-) $ - $ - $ 80,776 $ 80,776 $ 7,889,794 2.21% 2016 980,000 80,775 69,947 1,130,722 6,759,072 2.21 2017 1,000,000 69,946 58,897 1,128,843 5,630,229 2.21 2018 1,020,000 58,896 47,626 1,126,522 4,503,707 2.21 2019 1,035,000 47,625 36,189 1,118,814 3,384,893 2.21 2020 1,060,000 36,189 24,476 1,120,665 2,264,228 2.21 2021 1,095,000 24,476 12,376 1,131,852 1,132,376 2.21 2022 1,120,000 12,376 - 1,132,376 - 2.21 $ 7,310,000 $ 330,283 $ 330,287 $ 7,970,570 (*)Payment was made in September 2014 for principal and interest due on October 1,2014. Original Authorization — $8,160,000 Issued — $8,160,000 Date of Issue — October 18,2011 Maturity Range — Serial Bonds: October 1,2012 through October 1,2021 Principal Payment Date — October 1 of each year Interest Payment Dates — October 1 and April 1 of each year Pledged Revenue — Utility system net revenues Denomination — N/A Call Features — I%penalty for early payment Paying Agent — Branch Banking and Trust Company Ratings — N/A Projects: The bonds were issued to refund the 2007 Water and Sewer Bond Issue. The 2007 Water and Sewer Bonds were issued for the purpose of funding the City's share of the Reclaimed Water Treatment Project and the Deepwell Project at the South Central Regional Wastewater Treatment Facility. 116 City of Delray Beach, Florida Schedule of Installment Agreements (Capital Leases) Balance Fiscal Year Ending Outstanding at September 30 Principal Interest Total End of Fiscal Year 2015 $ 117,232 $ 8,532 $ 125,764 $ 399,045 2016 119,425 6,339 125,764 273,281 2017 121,658 4,105 125,763 147,518 2018 123,934 1,830 125,764 21,754 2019 21,657 97 21,754 - $ 503,906 $ 20,903 $ 524,809 Schedule of installment agreements consists of the following: SunTrust Leasing – Original amount of principal—$825,000, 84-month term, 2.8546% interest, dates December 6, 2012 through December 6, 2018—public safety hardware and software. 117 City of Delray Beach,Florida Combined Schedule of Community Redevelopment Agency Tax Increment Redevelopment Revenue Bonds (Series 2004 and Series 1999) Balance Outstanding at Fiscal Year Ending Principal Interest End of Fiscal Interest September 30 September I Sept.I/Mar.I Total Year Rate $ 1,420,000 $ 276,274 $ 1,696,274 $ 5,187,074 4.2982-5.9095 2015 % 1,250,000 209,746 1,459,746 3,727,328 4.2982-5.9095 2016 1,090,000 151,440 1,241,440 2,485,888 4.2982-4.8000 2017 1,140,000 103,184 1,243,184 1,242,704 4.2982-4.8000 2018 1,190,000 52,704 1,242,704 - 4.2982-4.8000 2019 6,090,000 $ 793,348 $ 6,883,348 Series 2012 draw down bond no fixed maturity 2,619,225 $ 8,709,225 Original Authorization — $10,000,000(Series 2004A-Tax-exempt) — $1,925,000(Series 2004B-Taxable) — $9,715,000(Series 1999A-Tax-exempt) — $4,000,000(Series 2012-Tax-exempt draw down bond) Issued — $10,000,000($5,000,000 issued before September 30,2004 and$5,000,000 issued from October 1,2004 to December 31,2004-Series 2004A-Tax-exempt) — $1,925,000(Series 2004B-Taxable) — $9,715,000(Series 1999A-Tax-exempt) — $2,619,225 draws to September 30,2014(Series 2012-Tax-exempt) Date of Issue — May 19,2004(2004 Series),and June 25,1999(1999 Series) Maturity Range — Serially September 1,2001 through September 1,2019(Series 2004A&B,&1999A) Principal Payment Date — Series 2004A: September 1 of each year,commencing September 1,2005 — Series 200413: September 1 of each year,commencing September 1,2005 — Series 1999A: September 1 of each year,commencing September 1,2001 — Series 2012: September 1 and April 1 of each year,commencing the first September 1 or April l after final draw Interest Rate — Series 2004A:4.2982%until September 1,2019 — Series 200413: 5.9095%until September 1,2016 — Series 1999A:4.80%until September 1,2019 — Series 2012:2.10%on outstanding balance commencing October 1,2012 Pledged Revenue — Tax increment revenues Denomination — N/A Call Features — No penalty for early payment for taxable debt only Paying Agent/Registrar — Bank of America(Series 2004A&B,&1999A) — City National Bank of Florida(Series 2012) Ratings — Not rated Project: The Series 2012,2004A and 1999A proceeds were issued for the purpose of financing the costs of acquisition and construction of certain redevelopment projects. Proceeds of the Series 2004B Bonds were used to refund the 1999B Series Bonds. 118 Statistical Section STATISTICAL SECTION This part of the City of Delray Beach comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Page FinancialTrends.........................................................................................................................................120 These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. RevenueCapacity.......................................................................................................................................134 These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. DebtCapacity.............................................................................................................................................137 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information..................................................................................................141 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. OperatingInformation................................................................................................................................143 These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City of Delray Beach provides and the activities it performs. Sources:Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 119 CITY OF DELRAY BEACH,FLORIDA Net Position by Component Last Ten Fiscal Years Accrual Basis ofAccounting Fiscal Year 2005 2006 2007 2008 Governmental activities Net investment in capital assets $ 24,817,964 $ 55;464,989 $ 51,049,876 $ 70,521,186 Restricted 22,855,797 8,014,482 20,850,170 12,644,718 Unrestricted 20,185,194 22,245,386 23,371,450 23,694,418 Total governmental activities net assets $ 67,858,955 $ 85,724,857 $ 95,271,496 $ 106,860,322 Business-type activities Net investment in capital assets $ 59,315,335 $ 59,024,376 $ 54,782,750 $ 65,505,859 Restricted 4,469,621 1,338,263 7,038,221 6,658,262 Unrestricted 23,565,069 34,032,926 40,529,960 38,161,102 Total business-type activities net assets $ 87,350,025 $ 94,395,565 $ 102,350,931 $ 110,325,223 Primary government Net investment in capital assets $ 84,133,299 $ 114,489,365 $ 105,832,626 $ 136,027,045 Restricted 27,325,418 9,352,745 27,888,391 19,302,980 Unrestricted 43,750,263 56,278,312 63,901,410 61,855,520 Total primary government net assets $155,208,980 $ 180,120,422 $ 197,622,427 $ 217,185,545 120 Fiscal Year 2009 2010 2011 2012 2013 2014 $ 76,546,448 $ 77,727,858 $ 78,779,535 $ 78,326,444 $ 70,077,233 $ 69,969,843 10,728,740 13,592,226 6,520,365 1,801,017 1,618,934 1,745,885 23,962,095 21,879,827 26,242,684 35,072,705 43,858,427 51,496,227 $ 111,237,283 $ 113,199,911 $ 111,542,584 $ 115,200,166 $ 115,554,594 $ 123,211,955 $ 66,198,545 $ 69,465,739 $ 69,465,739 $ 76,043,338 $ 79,245,276 $ 85,086,776 1,592,060 7,116,700 7,116,700 4,620,831 4,428,595 2,222,394 43,117,847 39,543,220 39,543,220 43,705,842 46,849,014 49,393,057 $ 110,908,452 $ 116,125,659 $ 116,125,659 $ 124,370,011 $ 130,522,885 $ 136,702,227 $ 142,744,993 $ 147,193,597 $ 148,245,274 $ 154,369,782 $ 149,322,509 $ 155,056,619 12,320,800 20,708,926 13,637,065 6,421,848 6,047,529 3,968,279 67,079,942 61,423,047 65,785,904 78,778,547 90,707,441 100,889,284 $ 222,145,735 $ 229,325,570 $ 227,668,243 $ 239,570,177 $ 246,077,479 $ 259,914,182 121 CITY OF DELRAY BEACH,FLORIDA Changes in Net Position Last Ten Fiscal Years Accrual Basis ofAccounting Fiscal Year 2005 2006 2007 2008 Expenses Governmental activities: General government $ 16,634,186 $ 20,944,239 $ 25,304,576 $ 25,137,520 Public safety 44,818,400 49,389,129 55,930,194 56,742,719 Physical environment 4,569,904 5,931,521 7,194,134 8,130,445 Parks and recreation 11,164,817 12,428,343 14,723,853 14,457,336 Interest on long-term debt 2,078,244 2,755,249 1,389,786 2,832,011 Total governmental activities expenses 79,265,551 91,448,481 104,542,543 107,300,031 Business-type activities: Water and Sewer 19,975,077 20,432,143 22,407,194 23,932,410 Municipal Golf Course 3,382,942 3,467,334 3,440,617 3,265,478 Lakeview Golf Course 709,142 653,116 748,549 704,782 City Marina 109,026 114,222 120,146 121,004 Sanitation 3,788,232 9,053,052 2,897,768 3,476,663 Stormwater Utility 1,111,291 1,050,275 1,331,003 1,506,764 Total business-type activities expenses 29,075,710 34,770,142 30,945,277 33,007,101 Total primary government expenses $ 108,341,261 $ 126,218,623 $ 135,487,820 $ 140,307,132 Program Revenues Governmental activities: Charges for services: General government $ 4,367,332 $ 4,986,337 $ 4,521,285 $ 4,622,167 Public safety 5,823,023 5,310,373 6,033,201 6,543,112 Physical environment 598,019 641,251 626,974 649,216 Parks and recreation 1,157,013 1,143,867 1,236,660 1,282,353 Operating grants and contributions: General government 1,829,154 3,260,394 3,165,420 3,945,992 Public safety 2,006,827 1,825,883 2,033,988 2,292,523 Physical environment 427,188 1,226,975 547,284 103,357 Parks and recreation 398,307 3,137,386 1,345,900 997,425 Capital grants and contributions: General government 1,184,058 342,025 1,383,440 622,993 Public safety - - - 749,250 Physical environment 470,063 8,250,000 Parks and recreation 479,116 - - - Total governmental activities program revenues 18,740,100 21,874,491 20,894,152 30,058,388 Business-type activities: Charges for services: Water and Sewer 24,426,939 25,748,645 29,162,001 29,245,949 Municipal Golf Course 3,300,439 3,437,934 3,467,778 3,459,044 Lakeview Golf Course 823,777 768,299 853,654 681,561 City Marina 155,200 149,294 160,605 208,598 Sanitation 2,538,402 2,615,981 3,094,658 3,383,499 Stormwater Utility 1,672,635 1,702,322 2,097,527 2,090,146 Operating Capital grants and contributions: Water and Sewer 786,217 1,913,869 951,487 2,595,258 Municipal Golf Course 130,408 131,171 182,796 43,969 Lakeview Golf Course 35,502 55,415 6,171 5,410 City Marina 2,177 273 491 884 Sanitation 1,237,680 5,663,671 115,040 417,250 Stormwater Utility 20,552 45,157 362,325 17,509 Capital grants and contributions: Water and Sewer 1,290,786 967,462 1,424,878 996,447 Municipal Golf Course - - - - Stormwater Utility - 146,026 - - Total business-type activities program revenues 36,420,714 43,345,519 41,879,411 43,145,524 Total primary government program revenues $ 55,160,814 $ 65,220,010 $ 62,773,563 $ 73,203,912 Net(expense)/revenue Governmental activities $ (60,525,451) $ (69,573,990) $ (83,648,391) $ (77,241,643) Business-type activities 7,345,004 8,575,377 10,934,134 10,138,423 Total primary government net expense $ (53,180,447) $ (60,998,613) $ (72,714,257) $ (67,103,220) Note:Pg 1 of 2 122 Fiscal Year 2009 2010 2011 2012 2013 2014 $ 22,331,793 $ 22,451,901 $ 18,350,964 $ 19,076,155 $ 18,456,193 $ 23,014,006 54,234,648 56,042,835 56,586,070 54,742,173 57,249,952 58,417,444 9,859,520 8,378,489 7,559,512 7,638,881 8,110,979 7,984,163 14,790,100 15,334,070 15,647,602 15,241,008 24,399,517 15,370,063 3,278,142 2,863,293 2,701,776 2,551,029 2,414,349 2,090,947 104,494,203 105,070,588 100,845,924 99,249,246 110,630,990 106,876,623 25,636,462 26,196,959 29,558,007 25,957,121 24,799,536 24,462,318 2,952,315 3,006,373 2,976,846 2,932,249 3,060,771 3,073,076 744,544 669,681 676,158 614,895 605,393 575,059 131,235 137,095 136,955 122,499 80,426 93,963 4,443,701 4,391,569 4,293,784 4,640,061 4,686,520 4,677,510 1,390,004 1,490,446 1,677,612 1,694,769 1,660,899 1,476,036 35,298,261 35,892,123 39,319,362 35,961,594 34,893,545 34,357,962 139,792,464 140,962,711 140,165,286 135,210,8470- 145,524,53 5 141,234,5 85 $ 3,216,555 $ 3,279,505 $ 3,623,718 $ 5,651,807 $ 5,566,254 $ 6,104,202 6,739,002 7,346,627 7,022,063 7,842,116 8,046,157 7,971,996 971,381 1,371,036 1,419,279 1,605,704 1,753,619 1,985,081 1,465,722 1,578,023 1,726,011 2,011,941 1,766,249 1,860,432 4,645,288 4,930,159 2,529,998 3,432,599 3,035,452 4,031,439 1,986,484 1,921,898 1,844,661 2,362,428 2,280,986 2,162,469 24,979 92,887 - - 10,000 - 143,090 89,883 466,706 281,651 1,864,383 7,334,572 848,436 598,366 414,403 119,652 136,689 435,039 200,900 - - - - - 40,977 160,346 18,424 37,408 3,963,421 120,248 20,282,814 21,368,730 19,065,263 23,345,306 28,423,210 32,005,478 33,445,652 31,861,348 31,962,663 30,855,031 30,771,956 31,571,968 3,303,511 2,995,351 2,820,197 2,807,593 2,998,040 3,005,811 749,367 666,964 666,591 655,175 610,313 635,489 204,467 185,435 209,145 195,627 209,625 243,234 4,942,922 4,770,585 4,739,150 5,046,386 5,183,866 4,969,127 2,095,636 2,105,069 2,112,375 2,135,445 2,158,887 2,128,772 1,092,926 386,822 511,829 351,852 590,080 343,532 37,040 43,671 51,769 53,799 57,160 60,962 5,985 5,643 5,855 5,443 5,118 4,612 35,653 9,997 1,628 4,682 1,914 2,570 130,030 780,500 322,010 305,901 229,518 207,656 17,366 13,260 12,757 12,859 388 12,334 1,102,611 872,684 713,526 913,308 1,808,752 877,588 - - 2,762 545 - - - - 72,644 - 60,101 48,442 47,163,166 44,697,329 44,204,901 43,343,646 44,685,718 44,112,097 67,445,980 66,066,059 63,270,164 66,688,952 73,108,928 76,117,575 $ (84,211,389) $ (83,701,858) $ (81,780,661) $ (75,903,940) $ (82,207,780) $ (74,871,145) 11,864,905 8,805,206 4,885,539 7,382,052 9,792,173 9,754,135 $ (72,346,484) $ (74,896,652) $ (76,895,122) $ (68,521,888) $ (72,415,607) $ (65,117,010) Note:Pg 2 of 2 123 CITY OF DELRAY BEACH,FLORIDA Changes in Net Position Last Ten Fiscal Years Accrual Basis ofAccounting Fiscal Year 2005 2006 2007 2008 General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ 41,581,718 $ 49,825,341 $ 59,091,002 $ 55,302,837 Franchise fees 3,989,989 4,879,168 5,257,560 5,247,442 Utility service taxes 8,088,142 8,678,710 8,222,944 8,338,282 Sales taxes 1,895,507 1,488,936 1,438,613 1,365,552 Local business tax - - - - Intergovernmental,unrestricted 6,928,194 7,393,652 6,927,534 6,532,854 Investment earnings 1,543,167 2,561,044 2,816,429 2,064,705 Gain on disposal of capital assets 1,112,107 19,532 - - Miscellaneous 7,612,229 10,616,990 5,724,228 7,320,429 Transfers 2,575,410 1,976,519 3,716,720 2,659,368 Total governmental activities 75,326,463 87,439,892 93,195,030 88,831,469 Business-type activities Investment earnings 190,858 446,682 737,952 495,237 Gain on disposal of capital assets - - - - Transfers (2,575,410) (1,976,519) (3,716,720) (2,659,368) Total business-type activities (2,384,552) (1,529,837) (2,978,768) (2,164,131) Total primary government S 72,941,911 $ 85,910,055 $ 90,216,262 $ 86,667,338 Changes in Net Position Governmental activities $ 14,804,012 $ 17,865,902 $ 9,546,639 $ 11,589,826 Business-type activities 4,960,452 7,045,540 7,955,366 7,974,292 Total primary government S 19,764,464 $ 24,911,442 $ 17,502,005 $ 19,564,118 Note:Pg 1 of 2 124 Fiscal Year 2009 2010 2011 2012 2013 2014 $ 53,984,307 $ 56,656,596 $ 47,467,480 $ 46,224,759 $ 47,036,144 $ 47,695,425 5,333,561 4,986,589 4,857,533 4,758,027 4,640,568 5,134,527 8,958,175 9,038,143 8,777,975 8,805,643 8,958,647 9,307,370 1,308,213 1,301,502 1,293,963 1,307,897 1,310,488 1,341,267 789,705 616,861 702,394 700,100 748,768 737,231 5,917,818 5,763,694 5,983,120 5,864,142 6,261,001 6,795,748 322,165 227,535 306,887 275,451 363,285 258,802 - - - - 2,240,888 - 8,425,515 7,479,767 7,022,162 8,307,853 7,725,615 7,533,386 3,547,891 3,593,799 3,711,820 3,317,650 3,685,290 3,724,750 88,587,350 89,664,486 80,123,334 79,561,522 82,970,694 82,528,506 6,897 5,800 29,609 77,359 90,795 132,999 - - - - - 16,958 (3,547,891) (3,593,799) (3,711,820) (3,317,650) (3,685,290) (3,724,750) (3,540,994) (3,587,999) (3,682,211) (3,240,291) (3,594,495) (3,574,793) $ 85,046,356 $ 86,076,487 $ 76,441,123 $ 76,321,231 $ 79,376,199 $ 78,953,713 $ 11,833,506 $ 1,962,628 $ (1,657,327) $ 3,657,582 $ 762,914 $ 7,657,361 8,323,911 5,217,207 1,203,328 4,141,761 6,197,678 6,179,342 $ 20,157,417 $ 7,179,835 $ (453,999) $ 7,799,343 $ 6,960,592 $ 13,836,703 Note:Pg 2 of 2 125 CITY OF DELRAY BEACH,FLORIDA Governmental Activities Tax Revenues by Source Last Ten Fiscal Years Accrual Basis ofAccounting Utility Sales Local Fiscal Property Franchise Service and Use Business Year Taxes Fees Tag Tag Tag(1) Total 2005 $ 41,584,718 $ 3,989,989 $ 8,088,142 $ 1,895,507 $ - $ 55,558,356 2006 49,825,341 4,879,168 8,678,710 1,488,936 - 64,872,155 2007 59,091,002 5,257,560 8,222,944 1,438,613 - 74,010,119 2008 55,302,837 5,247,442 8,338,282 1,365,552 - 70,254,113 2009 53,984,307 5,333,561 8,958,175 1,308,213 789,705 70,373,961 2010 52,656,596 1,986,589 9,038,143 1,301,502 616,861 65,599,691 2011 47,467,480 4,857,533 8,777,975 1,293,963 702,394 63,099,345 2012 46,224,759 4,758,027 8,805,643 1,307,897 700,100 61,796,426 2013 47,036,144 4,640,568 8,958,647 1,310,488 748,768 62,694,615 2014 47,695,425 5,134,527 9,307,370 1,341,267 737,231 64,215,820 (1) Effective with the 2009 fiscal year,local business tax receipts(formerly occupational licenses)are no longer categorized as revenue from Fees and Permits. 126 CITY OF DELRAY BEACH,FLORIDA Fund Balances of Governmental Funds Last Ten Fiscal Years Modified Accrual Basis ofAccounting 2005 2006 2007 2008 General fund Reserved $ 4,966,646 $ 4,678,873 $ 4,557,940 $ 4,328,761 Unreserved 12,760,913 15,897,538 18,828,235 18,593,915 Nonspendable: Inventories - - - - Prepaid items - - - - Long-term notes receivable - - - - Restricted for: Capital improvements - - - - Committed for: Economic development - - - - Assigned to: Encumbrances - - - - Subsequent year's budget - - - - Unassigned - - - - Total General Fund $ 17,727,559 $ 20,576,411 $ 23,386,175 $ 22,922,676 All other governmental funds Reserved $ 685,255 $ 686,909 $ 744,096 $ 2,563,856 Unreserved,reported in: Capital Project Funds 22,170,982 7,327,573 20,161,989 11,584,321 Fiduciary Funds - - - - Special revenue funds 5,027,645 3,764,814 3,488,365 3,389,886 Nonspendable: Prepaid items - - - - Long-term notes receivable - - - - Restricted for: Debt service - - - - Law enforcement - - - - Capital improvements - - - - Community development - - - - Assigned to: Public safety - - - - Parks and recreation - - - - Capital improvements - - - - Unassigned Special Revenue Funds(deficit) - - - - Total all other governmental funds $ 27,883,882 $ 11,779,296 $ 24,394,450 $ 17,538,063 Note: GASB Statement No. 54 was adopted for 2011 resulting in the reclassification of the Governmental Funds fund balances. 127 2009 2010 2011 2012 2013 2014 $ 3,992,760 $ 3,723,755 $ - $ - $ - $ - 19,747,589 20,337,823 - - - - - - 27,178 27,688 31,810 22,270 - - 719,973 828,555 796,362 803,979 - - 3,165,084 3,173,159 3,139,659 3,139,659 - - 5,984 5,984 5,984 5,984 - 1,000,000 1,000,000 1,000,000 151,013 151,304 209,672 373,543 - 1,600,000 - - - - 18,682,823 19,741,367 22,864,687 23,700,352 $ 23,740,349 $ 24,061,578 $ 22,752,055 $ 26,528,057 $ 28,048,174 $ 29,045,787 $ 767,398 $ 789,940 $ - $ - $ - $ - 9,962,213 7,421,960 - - - - 3,500,989 5,377,312 - - - - - - 289 - - - - - 1,726,988 - - - - - 505,430 505,178 520,914 519,593 - - 1,066,733 1,000,591 815,232 946,004 - 289,264 276,804 274,304 - 322,144 985,816 733,533 556,557 - - 130,456 121,420 126,383 127,523 - - 1,230,965 1,385,951 1,328,551 1,404,962 - - 7,629,593 8,155,302 12,170,799 20,530,505 - - (640,364) - (11,483) - $ 14,230,600 $ 13,589,212 $ 11,972,234 $ 12,443,522 $ 15,960,733 $ 24,359,448 128 CITY OF DELRAY BEACH,FLORIDA Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years Modified Accrual Basis ofAccounting 2005 2006 2007 2008 Revenues Taxes $ 55,558,356 $ 64,872,155 $ 74,010,119 $ 65,006,671 Licenses and permits 4,089,257 4,716,040 4,325,079 9,693,973 Intergovernmental 12,538,849 16,844,290 14,020,126 13,872,151 Charges for services 6,788,919 6,578,078 7,020,582 7,985,973 Fines and forfeitures 1,067,211 787,710 1,072,459 664,344 Miscellaneous 9,608,131 13,246,356 8,132,308 9,171,109 Total revenues 89,650,723 107,044,629 108,580,673 106,394,221 Expenditures Current General government 15,298,763 19,346,064 22,952,680 22,856,837 Public safety 45,841,687 49,739,465 53,662,961 55,274,605 Physical environment 3,158,099 4,550,030 5,355,092 5,981,177 Parks and recreation 10,197,131 11,208,994 12,460,242 12,302,491 Capital Outlay 20,826,381 31,840,070 21,042,901 15,406,527 Debt service Principal retirement 4,159,139 4,102,788 11,345,356 4,543,545 Interest and other fiscal charges 2,011,900 2,360,879 2,373,627 2,987,110 Bond issue costs 22,000 - 353,104 25,365 Total expenditures 101,515,100 123,148,290 129,545,963 119,377,657 Excess of revenues over(under)expenditures (11,864,377) (16,103,661) (20,965,290) (12,983,436) Other financing sources(uses) Installment agreement issued - - - - Bonds issued 10,050,000 575,000 30,770,787 3,000,000 Bond anticipation note issued - - - - Proceeds from sale of capital assets 1,133,170 96,835 62,471 2,590 Proceeds of refunding note 487,977 199,573 - - Redemption of bonds - - - - Transfers in 9,580,467 10,337,375 13,086,133 9,707,274 Transfers out (7,105,404) (8,360,856) (7,381,327) (7,046,314) Total other financing sources(uses) 14,146,210 2,847,927 36,538,064 5,663,550 Net change in fund balances $ 2,281,833 $ (13,255,734) $ 15,572,774 $ (7,319,886) Debt service as a percentage of non-capital expenditures 7.68% 7.08% 12.97% 7.27% 129 2009 2010 2011 2012 2013 2014 $ 65,040,400 $ 63,613,102 $ 58,241,812 $ 57,038,399 $ 58,054,047 $ 59,081,293 8,393,462 7,848,364 7,957,960 9,534,404 9,281,304 10,431,335 12,717,659 12,798,521 10,824,485 11,940,820 13,451,822 20,324,228 8,579,286 9,122,062 9,418,571 11,132,277 11,300,477 11,357,851 753,473 1,591,354 1,272,073 1,202,914 1,191,070 1,267,052 8,683,421 7,624,308 7,285,098 8,550,807 8,130,876 7,900,378 104,167,701 102,597,711 94,999,999 99,399,621 101,409,596 110,362,137 21,001,014 20,223,169 17,848,375 17,900,248 17,639,897 21,181,580 54,034,021 55,750,747 55,095,307 53,017,993 54,885,089 56,479,283 7,253,871 5,695,353 4,849,851 4,950,217 5,427,738 5,474,282 12,491,281 13,044,535 12,874,379 12,759,647 21,758,749 12,942,976 8,021,386 6,056,493 4,758,088 4,360,188 5,367,587 7,184,219 4,553,835 3,357,533 3,490,360 3,734,924 6,932,904 5,489,848 3,134,074 2,873,815 2,723,863 2,574,191 2,423,784 2,128,407 - - - - 18,574 42,030 110,489,482 107,001,645 101,640,223 99,297,408 114,454,322 110,922,625 (6,321,781) (4,403,934) (6,640,224) 102,213 (13,044,726) (560,488) 260,600 - - 825,000 - - - - - - 2,629,000 8,810,000 - - - - 11,799,612 6,190,036 49,802 22,161 1,903 1,727 889 - - - - - - (8,767,970) 9,214,199 7,548,409 7,983,124 6,723,835 8,049,046 7,096,181 (5,692,610) (3,486,795) (4,271,304) (3,405,485) (4,396,496) (3,371,431) 3,831,991 4,083,775 3,713,723 4,145,077 18,082,051 9,956,816 $ (2,489,790) $ (320,159) $ (2,926,501) $ 4,247,290 $ 5,037,325 $ 9,396,328 7.50% 6.17% 6.41% 6.65% 8.59% 7.38% 130 CITY OF DELRAY BEACH,FLORIDA General Governmental Tax Revenues By Source Last Ten Fiscal Years Modified Accrual Basis ofAccounting Utility Local Fiscal Property Franchise Service Sales Business Year Taxes Fees(1) Tag Tag Tag(Z) Total 2005 $ 41,581,058 $ 3,817,080 $ 7,704,692 $ 1,806,689 $ - $ 54,909,519 2006 49,827,320 3,989,989 8,088,142 1,895,507 - 63,800,958 2007 59,021,614 4,879,168 8,678,710 1,488,936 - 74,068,428 2008 55,302,837 5,257,560 8,222,944 1,438,613 - 70,221,954 2009 53,984,307 - 8,338,282 1,365,552 - 63,688,141 2010 52,656,596 - 8,958,175 1,308,213 789,705 63,712,689 2011 47,467,480 - 9,038,143 1,301,502 616,861 58,423,986 2012 46,224,759 - 8,777,975 1,293,963 702,394 56,999,091 2013 47,036,144 - 8,805,643 1,307,897 700,100 57,849,784 2014 47,695,425 - 9,307,370 1,341,267 737,231 59,081,293 (1) Effective with the 2008 fiscal year,franchise fees are categorized as revenue from Fees and Permits in the governmental funds. (2) Effective with the 2009 fiscal year,local business tax receipts(formerly occupational licenses)are no longer categorized as revenue from Fees and Permits. 131 CITY OF DELRAY BEACH,FLORIDA Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Fiscal Year Tax Just Value Ending Roll Real Personal Assessed 30, Year Property Property Property Total 2005 2004 $ 6,954,954,190 $ 291,470,970 $ 2,159,862 $ 7,248,585,022 2006 2005 8,530,762,079 292,523,818 1,929,130 8,825,215,027 2007 2006 11,615,147,721 319,788,615 2,135,457 11,937,071,793 2008 2007 11,599,199,337 333,985,825 2,755,227 11,935,940,389 2009 2008 10,881,842,880 339,398,773 2,954,529 11,224,196,182 2010 2009 8,948,585,352 328,007,736 3,991,739 9,280,584,827 2011 2010 7,780,872,856 334,936,255 3,739,563 8,119,548,674 2012 2011 7,629,495,267 309,196,114 3,817,341 7,942,508,722 2013 2012 7,694,442,624 300,188,574 3,534,871 7,998,166,069 2014 2013 8,394,493,799 303,495,744 3,999,617 8,701,989,160 Note: The basis of just value is approximately one hundred percent(100%)of actual value. For each fiscal year ending September 30,property is valued as of January 1st of the preceding calendar year. Source: Palm Beach County Property Appraiser-Form DR-403F(Revised Recapitulation of the Ad Valorem Assessment Rolls of Delray Beach,Palm Beach County,Florida). 132 Less Estimated Total Taxable Assessed Tax Exempt Total Taxable Total Direct Actual Value as a%of Property Assessed Value Tax Rate Value Estimated Actual Value $ 1,870,893,294 $ 5,377,691,728 8.0000 $ 6,884,493,821 78.11% 2,373,715,664 6,451,499,363 8.0000 8,411,930,488 76.69% 3,574,481,397 8,362,590,396 7.3000 11,380,589,015 73.48% 3,243,881,789 8,692,058,600 6.5783 11,374,426,933 76.42% 3,074,589,654 8,149,606,528 6.8504 10,634,938,238 76.63% 2,270,466,355 7,010,118,472 7.7216 8,714,452,876 80.44% 1,869,880,655 6,249,668,019 7.7902 7,541,945,805 82.87% 1,793,453,521 6,149,055,201 7.8033 7,400,391,321 83.09% 1,791,146,696 6,207,019,373 7.8033 7,432,751,782 83.51% 2,107,124,944 6,594,864,216 7.5064 7,834,736,483 84.17% 133 CITY OF DELRAY BEACH,FLORIDA Property Tax Rates-Direct and Overlapping Governments Last Ten Fiscal Years Total Fiscal Year City of Palm Special Ending General Debt Delray School Beach Taxing Total September 30, Fund Service Beach District County Districts All 2005 7.4500 0.5500 8.0000 8.4320 4.7677 1.7970 22.9967 2006 7.4500 0.5500 8.0000 8.1060 5.4464 1.7770 23.3294 2007 6.8600 0.4400 7.3000 7.8720 4.2800 1.6670 21.1190 2008 6.1449 0.4334 6.5783 7.3560 3.9813 1.5140 19.4296 2009 6.3900 0.4604 6.8504 7.2510 3.9656 1.6215 19.6885 2010 7.1900 0.5316 7.7216 7.9830 4.5614 1.7691 22.0351 2011 7.1900 0.6002 7.7902 8.1539 4.9960 2.5552 23.4953 2012 7.1900 0.6133 7.8033 8.1800 4.9928 2.3436 23.3197 2013 7.1992 0.6041 7.8033 7.7780 4.9902 2.3154 22.8869 2014 7.1611 0.3453 7.5064 7.5860 4.9902 2.2800 22.3626 Tax rate limits - Ten mills per Florida Statute 200.81 (one mill equals $1 per$1,000 of assessed valuation). Scope of tax rate limit - No municipality shall levy ad valorem taxes for real and tangible personal property in excess of ten mills of the assessed value,except for special benefits and debt service on obligations issued with the approval of those taxpayers subject to ad valorem taxes. Taxes assessed - January 1 Taxes due - March 31 Taxes delinquent - April 1 Discount allowed - 4%November; 3%December;2%January; 1%February Penalties for delinquent - 3%plus advertising costs after April 1 Tax collector - Palm Beach County Tax collector's commission - None 134 o W Fy a N 69 69 O O 01 00 00 O 00 M N �O l� 69 69 O � Y W 69 69 69 69 � � O cti N N N N cz cz cz cz A cz U U U U cz cz cz cz cz w y ti > cz E-� U cz O Y Y boo a �i ¢ cz cz a�ifx CZ Q a N x o a Q cz 171. r\ ct 0. U � wwC'7C) H � O � 0 � CITY OF DELRAY BEACH,FLORIDA Property Tax Levies and Collections Last Ten Fiscal Years Total Collections Fiscal Year Current Percent Delinquent Property as a Percent Ending Net Tax Tax of Levy Tax Tax of Current September 30, Levy* Collections Collected Collections Collections Levy 2005 $41,606,999 $41,514,649 99.78% $ 66,409 $41,581,058 99.94% 2006 49,828,444 49,758,932 99.86% 68,388 49,827,320 100.00% 2007 59,150,165 59,021,614 99.78% - 59,021,614 99.78% 2008 55,452,218 55,213,846 99.57% 88,991 55,302,837 99.73% 2009 54,234,643 53,745,390 99.10% 238,917 53,984,307 99.54% 2010 52,477,859 52,183,869 99.44% 472,727 52,656,596 100.34% 2011 46,416,830 46,950,920 101.15% 516,560 47,467,480 102.26% 2012 46,543,434 46,080,286 99.00% 144,473 46,224,759 99.32% 2013 47,610,690 46,571,308 97.82% 464,836 47,036,144 98.79% 2014 54,077,708 47,556,686 87.94% 138,739 47,695,425 88.20% Note: All property taxes are assessed and collected by Palm Beach County without charge to the City. Collections are distributed in full as collected. *Total Tax Levy for fiscal year are shown net of allowance for discounts for years 2005-2013,and gross for 2014. Source: Palm Beach County Tax Collector 136 y a V 69 O � U y 6) ~ A a o 69 69 � 69 � M 69 O � V� CO CO N CO M 01 M � 69 O O 0 0 0 0 0 0 0 CO O O N N N N N N N N N N v � N CITY OF DELRAY BEACH,FLORIDA Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Less: Debt as a Amounts Percentage Available Assessed of Assessed General General in Debt Value Value of Bonded Fiscal Obligation Service of Taxable Taxable Debt Per Year Bonds Fund Total Property Property Population Capita 2005 $ 37,925,000 $ - $ 37,925,000 $5,377,691,728 0.71% 63,888 $ 593.62 2006 36,045,000 - 36,045,000 6,451,499,363 0.56% 64,095 562.37 2007 33,980,000 - 33,980,000 8,362,590,396 0.41% 64,360 527.97 2008 31,760,000 - 31,760,000 8,692,058,600 0.37% 64,220 494.55 2009 29,465,000 - 29,465,000 8,149,606,528 0.36% 63,789 461.91 2010 27,090,000 - 27,090,000 7,010,118,472 0.39% 60,522 447.61 2011 24,605,000 - 24,605,000 6,249,668,019 0.39% 60,831 404.48 2012 22,005,000 - 22,005,000 6,149,055,201 0.36% 61,495 357.83 2013 19,285,000 - 19,285,000 6,207,019,373 0.31% 61,801 312.05 2014 17,970,000 - 17,970,000 6,594,864,216 0.27% 64,582 278.25 Note: The basis of assessed value is approximately one hundred percent(100%)of actual value.For each fiscal year ending September 30,property is valued as of January 1st of the preceding calendar year. 138 CITY OF DELRAY BEACH,FLORIDA Direct and Overlapping Governmental Activities Debt September 30, 2014 Percentage Amount Applicable to Applicable to City of City of Total Outstanding Delray Beach(') Delray Beach Direct: City of Delray Beach $ 65,792,648 100.00% $ 65,792,648 Overlapping: Palm Beach County 163,630,000 5.07% 8,296,041 Palm Beach County School District Capital Outlay Bond 21,885,000 4.77% 1,043,915 Certificates of Participation 1,711,223,000 4.77% 81,625,337 Total overlapping debt 1,896,738,000 90,965,293 Total direct and overlapping debt $ 1,962,530,648 $ 156,757,941 Population 64,582 Total direct and overlapping debt per capita $ 2,427.27 (1)Estimates based on 2013 ratio of assessed taxable values. Note: The City of Delray Beach has no legal debt margin. Source: Finance Department, City of Delray Beach,Florida Palm Beach County Property Appraiser School Board of Palm Beach County 139 CITY OF DELRAY BEACH,FLORIDA Water and Sewer Pledged Revenue Coverage Last Ten Fiscal Years Revenue Available for Fiscal Gross Operating Debt Current Debt Current Year Revenue(l) Expenses(Z) Coverage Service Coverage 2005 $ 25,365,483 $ 15,553,998 $ 9,811,485 $ 4,742,560 2.07 2006 (3) 28,040,630 19,288,632 8,751,998 4,845,913 1.81 2007 (3) 30,747,711 20,432,772 10,314,939 5,338,475 1.93 2008 (3) 30,315,366 17,953,965 12,361,401 5,584,116 2.21 2009 (3) 34,538,578 18,981,078 15,557,500 5,945,074 2.62 2010 32,248,170 19,324,309 12,923,861 5,936,276 2.18 2011 32,495,880 19,213,153 13,282,727 5,950,563 2.23 2012 31,259,498 19,706,178 11,553,320 5,351,049 2.16 2013 31,418,727 18,806,440 12,612,287 5,882,394 2.14 2014 32,002,573 18,831,725 13,170,848 11,480,122 1.15 (1) Includes interest revenue and rents(does not include capital contributions). (2) Excludes depreciation expense,interest expense and amortization expense. (3) Excludes expenses totaling$3,316,740, $3,437,756, $8,053,985 and$3,085,995 in Fiscal Years 2006 through 2009,respectively. These amounts reflect expenses for the South Central Regional Wastewater Treatment and Disposal Board(SCRWTBD), a joint venture between the City and Boynton Beach,which relate to projects funded by bond proceeds. 140 CITY OF DELRAY BEACH,FLORIDA Principal Employers September 30, 2014 Fiscal Year 2014 Percentage of Total City Employer Employees Rank Employment Delray Medical Center 1,540 1 4.7% Palm Beach County School District 1,034 2 3.2% Lifespace Communities 873 3 2.7% City of Delray Beach 809 4 2.5% Publix Supermarkets 720 5 2.2% Palm Beach County 520 6 1.6% Ed Morse Delray Toyota&Scion 450 7 1.4% South County Mental Health Center 313 8 1.0% Annco Services 300 9 0.9% Marriott Hotels 230 10 0.7% Totals 6,789 Note: Total Employment,Delray Beach 2014 - 32,689 Data is not available for 2005. Source: Palm Beach County Business Development Board&Economic Development 141 CITY OF DELRAY BEACH,FLORIDA Demographic and Economic Statistics Last Ten Fiscal Years Estimated Per Capita Total Unemploy- Fiscal City County Personal Personal Median School ment Year Population(i) Population(i) Income(2) Income(3) Age(i) Enrollment(4) Rate(i) 2005 63,888 1,265,900 $ 44,050 $2,814,266,400 41.8 8,652 3.8% 2006 64,095 1,287,967 44,518 2,853,381,210 41.7 8,100 3.1% 2007 64,360 1,295,033 46,630 3,001,106,800 38.1 7,839 3.6% 2008 64,220 1,294,654 55,311 3,552,072,420 42.5 7,807 5.8% 2009 63,789 1,287,344 59,147 3,772,927,983 43.2 7,945 11.5% 2010 60,522 1,286,461 58,358 3,531,942,876 43.5 7,945 12.3% 2011 60,831 1,325,743 33,610 2,044,529,910 45.4 7,893 10.9% 2012 61,495 1,335,415 55,628 3,420,843,860 45.5 7,745 8.7% 2013 61,801 1,372,171 57,985 3,583,530,985 45.5 7,745 7.0% 2014 64,582 1,405,643 58,565 3,782,235,143 45.7 8,059 6.4% Data Sources: (1) Business Development Board of Palm Beach County. Median Age for 2011 to current is for the City of Delray Beach,Florida.Prior years data is for Palm Beach County. (2) Bureau of Economic Analaysis Per Capita Personal Income for the current fiscal year is estimated at a 1%growth rate from the previous year. (3) Estimated based on County per capita personal income and City population. (4) The School Enrollment is from the Palm Beach County School Board. 142 CITY OF DELRAY BEACH,FLORIDA Full-time Equivalent Government Employees by Function Last Ten Fiscal Years Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Government 66 69 71 71 69 68 68 67 67 59 Public Safety Community Improvement 4 5 5 4.5 5 5 5 5 5 5 Planning&Zoning 15 15 17 16 16 16 16 16 16 12.5 Building Inspection 21 21 23 21 20 20 20 20 20 16 Code Compliance 17 17 17 17 18 17 17 17 17 15 Law Enforcement 234 236 238 238 236 242 242 239 229 225 Fire Control 149 154 154 154 154 154 156 155 160 157 Community Development Block Grant 6 5 7 7.5 7 7 7 7 7 6 Insurance 4 4 4 4 4 4 4 4 4 4 City Garage 12 12 12 12 12 12 12 12 12 12 Physical Environment Public Works 25 25 25 25.5 25.5 25.5 25.5 25.5 25.5 27 Engineering 7 8 8 7 7 7 7 7 7 7 Sanitation 4 4 4 4 4 4 4 4 4 4 Stormwater Utility 6 6 6 6 6 6 6 6.5 6.5 6 Parks and Recreation 108 108 114 115 113 113 112 110 105 136 Water& Sewer Utility 114 115 117 117.5 117.5 116.5 117 118 118 117 Total 792 804 822 820 814 817 818 813 803 808.5 143 CITY OF DELRAY BEACH,FLORIDA Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Public Safety Police Stations 3 3 3 2 3 3 3 3 3 3 Patrol units 144 151 159 163 219 219 217 208 181 201 Fire Fire stations��� 6 6 6 6 6 6 6 6 6 6 Fire trucks 15 15 16 16 16 15 16 12 10 10 ALS rescue vehicles 8 8 9 9 9 9 9 9 9 9 Leisure Services Ballfields-lighted 22 22 15 15 15 16 16 16 15 15 Basketball courts 4 4 5 5 5 5 5 5 5 5 Football/Soccer fields(2) - - 7 7 7 7 7 7 7 7 Tennis courts 47 47 47 47 47 48 48 48 48 48 Parks 17 17 17 17 17 17 22 22 22 22 Roads and Streets Lane miles(3) 299 299 299 305 305 305 314 314 321 321 Sources: City of Delray Beach departments The following data is not available: Sanitation -Garbage/Trash Trucks Roads& Streets -Street lights Water/Sewer Utility -Water Mains/Sanitary sewers/Storm Sewers(all by miles) -Fire hydrants (1) The total number of Fire Stations includes Highland Beach where the City provides Fire and EMS Service. (2) Soccer is played on the footbal fields.There are no separate soccer fields. (3) The number of lane miles was provided by the City's Engineering Department for 2007 and later years based on the newly installed GIS system which provides a more accurate figure for reporting purposes. Prior years have been restated. 144 CITY OF DELRAY BEACH,FLORIDA Operating Indicators by Function Last Ten Fiscal Years Fiscal Year Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Public Safety Police Physical arrests 2,444 2,875 3,108 3,161 2,534 2,331 2,620 2,342 2,068 2,012 Traffic violations 12,040 13,928 10,962 10,882 11,249 11,443 11,314 12,393 10,135 10,913 Fire Number of calls 11,591 12,024 11,772 12,410 11,905 11,960 12,008 12,282 13,171 13,406 Parks and Recreation Library Circulation 227,820 228,871 257,656 270,590 274,611 257,950 252,179 237,755 234,029 226,938 Programs offered 650 910 1,112 1,287 1,224 1,284 1,145 1,194 975 808 Program attendance 20,056 32,873 32,852 35,116 33,770 29,237 24,021 25,905 25,052 23,055 Leisure Services Youth athletic participants 2,343 2,655 10,597 19,537 20,965 18,125 17,837 24,389 20,238 38,220 Camp program participants 358 322 625 561 699 395 352 384 525 382 Class participants 11,090 10,634 15,093 19,662 24,700 22,756 28,328 36,556 54,839 59,342 Water/Sewer Utility Water customers 20,135 20,437 20,963 21,056 21,156 21,320 21,407 21,596 21,795 22,010 Water main breaks None None None 434 442 476 408 442 401 374 Sewer customers 20,000 20,400 20,900 21,006 21,088 21,225 21,093 20,935 20,950 20,505 Sewer main breaks N/A N/A N/A 4 3 2 - 3 - - Avg daily water consumption (thousands of gallons) 12,746 12,348 11,602 10,040 10,944 11,643 11,356 10,953 11,029 10,925 Sources: City departments/Delray Beach Public Library The following data is not available: Public Safety -Parking violations Sanitation -Refuse&Recyclables collected(tons) Roads&Streets -Street Resurfacing(miles)/Pot holes Repairs N/A Information is not available 145 CITY OF DELRAY BEACH,FLORIDA Schedule oflnsurancein Force September 30, 2014 Amount of Company Type of Coverage Property/Risk Covered Coverage Fla Municipal Insurance Workers'Compensation On-the-job injury Statutory/$1,000,000 Trust General/Auto Liability Legal Liabilities $3 million/occurrence Property Damage/Auto Physical All Risk,includes Wind(hurricane) Building-$145 million/ Damage,Crime Contents-$38 million Pollution Pollution(non Storage Tanks) $1 million/loss AIG(National Union) Fiduciary Liability General Employee Pension $1 million/aggregate Illinois Union Pollution(Storage Tanks) Pollution(Storage Tanks) $1 million occurrence/ $2 million aggregate Burlington Insurance Skate Park Liability-Primary Primary Liability $1 million occurrence/ $2 million aggregate James River Skate Park Liability-Excess Excess Liability $4 million/occurrence Travelers Fiduciary Liability Police&Fire Pension $1 million/claim/aggregate Hartford Life Life Insurance Fire&Police Department Statutory Colony Insurance Women's Club Liability Legal Liabilities $1 million/occurrence/ $2 million/aggregate American Bankers Flood Insurance-Fire Station 4 2 Flood Insurance $500,000 Flood Insurance-Delray Swim &Tennis Club Flood Insurance $500,000 Flood Insurance-City Marina Flood Insurance $500,000 Aspen Specialty RR Crossing& Sidetrack RR Crossing& Sidetrack $2 million/occurrence/ $4 million aggregate Essex Insurance General Liability FPL Banners&Parking Lots $1 million/occurrence/ $2 million/aggregate Admiral Insurance Company EMS Director Liability(FD contract) Director Liability $1 million/$3 million Essex General Liability City flags on FPL poles& $1 million/occurrence parking lot use(as required) $2 million/aggregate Aspen Specialty Railroad Liability Railroad crossings and easement $2 million/occurrence legal liability $4 million/aggregate American Bankers Flood(2 specific locations) Flood $500,000 Ace American Property Liability Water Treatment Plant/Environmental $25 million Services&Utilities 146 Compliance Section ICALER,DONTEN,LEVINE, II COHEN,PORTER&VEIL,P.A. CERTIFIED PUBLIC ACCOUNTANTS WILLIAM K CALER,JR,CPA 505 SOUTH FLAGLER DRIVE,SATE 900 MEMBERS LOUIS M COHEN,CPA WEST PALM BEACH,FL 33901-59:18 AMERICAN INSTITUTE OF JOHN C COURTNEY,CPA,JD CERTIFIED PUBLIC ACCOUNTANTS DAVID S DONTEN,CPA TELEPHONE(561)832-9292 JAMES B HUTCHLSON,CPA FAX(561)832-9955 FLORIDA INSET TUTE OF JOEL H LEVINE,CPA CERTIFIED PUBLIC ACCOUNTANTS JAMES MULLEN,IV,CPA infoCkdlcpa coin THOMAS A PENCE,JR,CPA SCOTT L PORTER,CPA MARK D vEfT,CPA Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditinjz Standards To the Honorable Mayor and City Commission City of Delray Beach,Florida We have audited,in accordance with U.S.generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units,each major fund and the aggregate remaining fund information of the City of Delray Beach,Florida(the"City"), as of and for the year ended September 30,2014, and the related notes to the financial statements,which collectively comprise the basic financial statements of the City,and have issued our report thereon dated March 25,2015.Our report includes a reference to other auditors who audited the financial statements of the Police and Firefighters'Retirement System Fund,a fiduciary fund of the City,and the Delray Beach Downtown Development Authority,a discretely presented component unit of the City,as described in our report on the financial statements of the City. This report does not include the results of the other auditor's testing of internal control over financial reporting or compliance and other matters for the Delray Beach Downtown Development Authority that are reported on separately by the other auditor.The financial statements of the Police and Firefighters'Retirement System Fund were not audited in accordance with Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements,we considered the internal control over financial reporting(internal control)of the City,to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of expressing an opinion on the effectiveness of the internal control of the City. Accordingly,we do not express an opinion on the effectiveness of the internal control of the City. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,or a combination of deficiencies,in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations,during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.However,material weaknesses may exist that have not been identified.We did identify certain deficiencies in internal control,described in the accompanying schedule of findings and questioned costs as items 2014-001 Debt Payments Not Made Timely;2014-002 Debt Transactions Not Accurately Recorded;and, 2014-003 Purchase Order Approvals that we consider to be significant deficiencies. 147 Compliance and Other Matters As part of obtaining reasonable assurance about whether the financial statements of the City are free from material misstatement,we performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However,providing an opinion on compliance with those provisions was not an objective of our audit,and accordingly,we do not express such an opinion.The results of our tests disclosed no instances of noncompliance or other matter that are required to be reported under Government Auditing Standards. We also noted certain additional matters that we reported to those charged with governance in a separate management letter dated March 25,2015. City's Responses to Findings The responses by the City to the findings identified in our audit are described in the Management's Response in the accompanying schedule of fmdings and questioned costs and management letter. The responses by the City were not subjected to the auditing procedures applied in the audit of the financial statements and,accordingly,we express no opinion on those responses. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,this communication is not suitable for any other purpose. RA, West Palm Beach,Florida March 25,2015 148 CITY OF DELRAY BEACH,FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended September 30,2014 Grantor/ CFDA Contract/Grant 2014 Program Transfers to Program Title Number Number Expenditures Subrecipients Federal Awards U.S.Department of Housing and Urban Development Direct Awards Community Development Block Grants/Entitlement Grants 14.218 B-11-MC-12-0033 S 66,544 S 62,033 Community Development Block Grants/Entitlement Grants 14.218 B-12-MC-12-0033 413,140 - Community Development Block Grants/Entitlement Grants 14.218 B-13-MC-12-0033 2,187 Total U.S.Department of Housing and Urban Development 481,871 62,033 U.S.Department of Justice Bureau of Justice Assistance Direct Award Edward Byrne Memorial Justice Assistance Grant Program 16.738 2013-DJ-BX-0337 39,868 Total U.S.Department of Justice 39,868 U.S.Department of Transportation Pass-through Award from the State of Florida Department of Transportation Highway Planning and Construction 20.205 AQM-22 3,435,980 State and Community Highway Safety Program 20.600 SC-14-13-08 57,808 Total U.S.Department of Transportation 3,493,788 U.S.Department of Homeland Security Federal Emergency Management Agency Direct Award Staffing for Adequate Fire and Emergency Response(SAFER) 97.083 EMW-2013-FH-00146 30,323 Total U.S.Department of Homeland Security 30,323 - Total Federal Awards $ 4,045,850 $ 62,033 See notes to schedule of expenditures of expenditures of federal awards. 149 City of Delray Beach, Florida Notes to Schedule of Expenditures of Federal Awards September 30, 2014 1.Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards(the"Schedule")includes the Federal grant activity of the City of Delray Beach, Florida (the "City"), under programs of the Federal government for the year ended September 30, 2014. The information in the Schedule is presented in accordance with the requirements of OMB Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of the City,it is not intended to and does not present the financial position or changes in net position, or cash flows of the City. Expenditures of State financial assistance for the year ended September 30,2014 did not exceed the$500,000 threshold for a State Single Audit. 2. Summary of Significant Accounting Policies (a) Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (b) The City made subrecipient payments totaling $62,033 from Federal awards to a local non-profit organization. (c) Pass-through entity identifying numbers were not available for pass-through awards listed in the Schedule for the year ended September 30,2014. 3. Contingency Amounts received or receivable from grantor agencies are subject to audit and adjustment by those agencies. Any disallowed claims,including amounts already received,might constitute a liability of the City for the return of those funds. In the opinion of management, all grant expenditures were in substantial compliance with the terms of the grant agreements and applicable Federal and State laws and regulations. 150 ICALER,DONTEN,LEVINE, II COHEN,PORTER&VEIL,P.A. CERTIFIED PUBLIC ACCOUNTANTS WILLIAM K CALER,JR,CPA 505 SOUTH FLAGLER DRIVE,SATE 900 MEMBERS LOUIS M COHEN,CPA WEST PALM BEACH,FL 33901-59:18 AMERICAN INSTITUTE OF JOHN C COURTNEY,CPA,JD CERTIFIED PUBLIC ACCOUNTANTS DAVID S DONTEN,CPA TELEPHONE(561)832-9292 JAMES B HUTCHLSON,CPA FAX(561)832-9955 FLORIDA INSET TUTE OF JOEL H LEVINE,CPA CERTIFIED PUBLIC ACCOUNTANTS JAMES MULLEN,IV,CPA infoCkdlcpa coin THOMAS A PENCE,JR,CPA SCOTT L PORTER,CPA MARK =,CPA Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 To the Honorable Mayor and City Commission City of Delray Beach,Florida Report on Compliance for Each Major Federal Program We have audited the compliance of the City of Delray Beach, Florida (the "City"), with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City's major Federal programs for the year ended September 30,2014. The City's major Federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with U.S. generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However,our audit does not provide a legal determination of the City's compliance. Opinion on Each Major Federal Program In our opinion, the City of Delray Beach, Florida, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended September 30,2014. 151 Report on Internal Control Over Compliance Management of the City of Delray Beach, Florida, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133,but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct,noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance,yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However,material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A- 133. Accordingly,this report is not suitable for any other purpose. West Palm Beach,Florida March 25,2015 152 CITY OF DELRAY BEACH,FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARD PROGRAMS For the Fiscal Year Ended September 30,2014 SECTION I-SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued: Unmodified Opinion Internal control over financial reporting: Material weakness(es)identified? Yes X No Significant deficiency(ies)identified that are not considered to be material weaknesses'? X Yes None reported Noncompliance material to financial statements noted? Yes X No Federal Award Prozrams Internal control over major Federal Award Programs: Material weakness(es)identified? Yes X No Significant deficiency(ies)identified that are not considered to be material weaknesses'? Yes X None reported Type of auditor's report issued on compliance for major Federal Award Programs: Unmodified Opinion Any audit findings disclosed that are required to be reported in accordance with Section 510(a)of OMB Circular A-133? Yes X No Identification of Major Programs: Major Federal Award Programs CFDA No. U.S.Department of Housing and Urban Development Direct Award Community Development Block Grants/Entitlement Grants 14.218 U.S.Department of Transportation Pass-through Award from the State of Florida, Department of Transportation Highway Planning and Construction 20.205 Dollar threshold used to distinguish between Type A and Type B Federal award programs: 300 000 Auditee qualified as low-risk auditee? X Yes No 153 CITY OF DELRAY BEACH,FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARD PROGRAMS (Continued) For the Fiscal Year Ended September 30,2014 SECTION II- FINANCIAL STATEMENT FINDINGS Finding Number Finding SIGNIFICANT DEFICIENCIES 2014-001 Debt Payments Not Made Timely Criteria: Debt payments should be made timely in accordance with the terms of the debt agreements. Condition: We noted that the interest payment of$192,560 due on August 1,2014 for the City's General Obligation Bonds, Series 2005, was not paid when due. During our audit inquiries in December 2014,the City determined that the payment had not been made and thereafter made the payment to the appropriate financial institution. We also noted that the interest payment due December 1, 2014 for the City's Revenue Refunding and Improvement Bonds, Series 2003,was paid after the due date. Cause: The City's long time Treasurer retired in 2014 and other City personnel were not familiar with the payment dates for the City's outstanding debt. In one instance the due date of the debt payment was on a weekend and the City's payment was made on the next business day. Effect: Additional interest charges were incurred on the late payments, but more significantly, late payments could negatively affect the City's standing with creditors and/or the City's credit rating,thereby increasing future borrowing costs. Recommendation: We recommend that all future debt payments be calendared with the related payment instructions to avoid any future payment delays that may be caused by employee oversight or their absence at the time payments are due. In addition,payments should be calendared at least one day in advance of the due date to ensure the funds are received by the lender on the payment due date. 2014-002 Debt Transactions Not Accurately Recorded Criteria: Debt transactions should be correctly recorded as to account, amount and period. Condition: Certain of the City's bonds are allocated to more than one fund reflecting how the proceeds from the original debt were spent and the source of funds for repayment. We noted that certain debt payments during the current year were not recorded in the correct fund or for the correct amount based on the City's historical allocation of the payments. We also noted that some debt payments were misallocated between principal and interest. Cause: The City's long time Treasurer retired in 2014 and other City personnel were not familiar with the payment allocations for the City's outstanding debt. 154 CITY OF DELRAY BEACH,FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARD PROGRAMS (Continued) For the Fiscal Year Ended September 30,2014 SECTION II- FINANCIAL STATEMENT FINDINGS (Continued) Finding Number Finding SIGNIFICANT DEFICIENCIES (Continued) 2014-002 Debt Transactions Not Accurately Recorded(Continued) (Continued) Effect: The City's financial records did not accurately reflect the principal and interest payments made from each fund during the year. Recommendation: We recommend that the City reconcile the adjusting entries and debt transactions posted to the general ledger with the corresponding amortization schedules for each debt issue to ensure that the principal and interest allocations are correctly recorded during the year. 2014-003 Purchase Order Approvals Criteria: The City's purchasing policy in effect prior to November 19, 2013, required three quotes (verbal, electronic or written) for purchases of $1,000 to $5,999 and three written quotes for purchases of $6,000 to $14,999. Purchases of $15,000 and above required a formal competitive bid process and approval of the City Commission. The City amended its purchasing policy effective November 19, 2013, to require three written quotes for purchases of$2,500 to $25,000. Purchases over$25,000 require a formal bid or request for proposal. Condition: Our audit sample of 60 purchases identified two instances where the purchase did not comply with the purchasing policy. One of the purchases was split into two purchase orders that together met the purchasing policy threshold for a formal competitive bid process. • The first purchase was for fertilizer/chemicals totaling $15,000. The purchase was split on two purchase orders; one for $5,000 (P.O. No. 693996 dated October 11, 2013) and one for$10,000 (P.O.No. 694021 dated October 11,2013). The combined total of$15,000 met the threshold for a formal competitive bid process, although no bids were obtained. There also was no documentation that written quotes were obtained for either of the two separate purchase orders. The actual amount purchased for the year was approximately$10,100. • The second purchase was for janitorial supplies totaling $4,823 (P.O. No. 693622). The purchase order was initially opened for $3,500 on October 4, 2013 with a subsequent change order increase for $1,323 issued on June 25, 2014. There was no documentation that quotes were obtained for the purchases. 155 CITY OF DELRAY BEACH,FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARD PROGRAMS (Continued) For the Fiscal Year Ended September 30,2014 SECTION II- FINANCIAL STATEMENT FINDINGS (Continued) Finding Number Finding SIGNIFICANT DEFICIENCIES (Continued) 2014-003 Purchase Order Approvals(Continued) (Continued) We also noted purchases from one vendor for computer supplies that exceeded $25,000 for the year and required a formal competitive bid and City Commission approval under the purchasing policy, but the purchases were split among a number of purchase orders that individually did not exceed the bid threshold and a formal competitive bid was not obtained. We noted the City Commission did approve the purchases retroactively in September 2014. Cause: There was no discernable reason why the required written quotes were not obtained for the purchases under $15,000. For the purchase of computer supplies, it appears that a number of City departments were each purchasing from the same vendor and there was not a single purchase authorization. Effect: The purchases did not comply with the City's purchasing policy documentation and approval thresholds. Recommendation: We recommend that the City review the internal controls in place to ensure that purchasing policy approval limits and documentation are monitored and enforced prior to making the purchase or issuing a purchase order. The City should also consider the cost benefit of centralizing the purchasing function to enhance purchasing controls and maximize potential discounts from larger purchase quantities. SECTION III- FEDERAL AWARD PROGRAMS FINDINGS AND QUESTIONED COSTS None 156 EITY OF OIELRRY BEREH DELRAY BEACH 100 N.W.1st AVENUE . DELRAY BEACH, FLORIDA 33444 . 5611243-7000 All-America City I1CR ► 111 2001 CORRECTIVE ACTION PLAN The City of Delray Beach,Florida,respectfully submits the following corrective action plan for the fiscal year ended September 30, 2014. The findings from the Schedule of Findings and Questioned Costs for the year ended September 30, 2014, are discussed below. The findings are numbered consistently with the number assigned in the schedule of findings and questioned costs. A.FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENT FINDINGS Finding Number Finding SIGNIFICANT DEFICIENCIES 2014-001 Debt Payments Not Made Timely Criteria: Debt payments should be made timely in accordance with the terms of the debt agreements. Condition: We noted that the interest payment of $192,560 due on August 1, 2014 for the City's General Obligation Bonds, Series 2005, was not paid when due. During our audit inquiries in December 2014, the City determined that the payment had not been made and thereafter made the payment to the appropriate financial institution. We also noted that the interest payment due December 1, 2014 for the City's Revenue Refunding and Improvement Bonds, Series 2003,was paid after the due date. Cause: The City's long time Treasurer retired in 2014 and other City personnel were not familiar with the payment dates for the City's outstanding debt. In one instance the due date of the debt payment was on a weekend and the City's payment was made on the next business day. Effect: Additional interest charges were incurred on the late payments,but more significantly, late payments could negatively affect the City's standing with creditors and/or the City's credit rating,thereby increasing future borrowing costs. Recommendation: We recommend that all future debt payments be calendared with the related payment instructions to avoid any future payment delays that may be caused by employee oversight or their absence at the time payments are due. In addition, payments should be calendared at least one day in advance of the due date to ensure the funds are received by the lender on the payment due date. Action Taken:A calendar for all City debt payments will be maintained by the City's Treasurer and shared with the individual in Finance who is designated as the back-up for processing wire payments. 157 A.FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENT FINDINGS (Continued) Finding Number Finding SIGNIFICANT DEFICIENCIES (Continued) 2014-002 Debt Transactions Not Accurately Recorded Criteria: Debt transactions should be correctly recorded as to account, amount and period. Condition: Certain of the City's bonds are allocated to more than one fund reflecting how the proceeds from the original debt were spent and the source of funds for repayment. We noted that certain debt payments during the current year were not recorded in the correct fund or for the correct amount based on the City's historical allocation of the payments. We also noted that some debt payments were misallocated between principal and interest. Cause: The City's long time Treasurer retired in 2014 and other City personnel were not familiar with the payment allocations for the City's outstanding debt. Effect: The City's financial records did not accurately reflect the principal and interest payments made from each fund during the year. Recommendation: We recommend that the City reconcile the adjusting entries and debt transactions posted to the general ledger with the corresponding amortization schedules for each debt issue to ensure that the principal and interest allocations are correctly recorded during the year. Action Taken: On a monthly basis, the Treasurer will reconcile the general ledger balances to the corresponding debt amortization schedules to ensure accuracy. 2014-003 Purchase Order Approvals Criteria: The City's purchasing policy in effect prior to November 19, 2013, required three quotes (verbal, electronic or written) for purchases of $1,000 to $5,999 and three written quotes for purchases of$6,000 to $14,999. Purchases of$15,000 and above required a formal competitive bid process and approval of the City Commission. The City amended its purchasing policy effective November 19, 2013, to require three written quotes for purchases of$2,500 to $25,000. Purchases over$25,000 require a formal bid or request for proposal. Condition: Our audit sample of 60 purchases identified two instances where the purchase did not comply with the purchasing policy. One of the purchases was split into two purchase orders that together met the purchasing policy threshold for a formal competitive bid process. • The first purchase was for fertilizer/chemicals totaling $15,000. The purchase was split on two purchase orders; one for $5,000 (P.O. No. 693996 dated October 11, 2013) and one for $10,000 (P.O. No. 694021 dated October 11, 2013). The combined total of $15,000 met the threshold for a formal competitive bid process, although no bids were obtained. There also was no documentation that written quotes were obtained for either of the two separate purchase orders. The actual amount purchased for the year was approximately$10,100. 158 A.FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENT FINDINGS (Continued) Finding Number Finding SIGNIFICANT DEFICIENCIES (Continued) 2014-003 Purchase Order Approvals (Continued) (Continued) • The second purchase was for janitorial supplies totaling $4,823 (P.O. No. 693622). The purchase order was initially opened for $3,500 on October 4, 2013 with a subsequent change order increase for$1,323 issued on June 25, 2014. There was no documentation that quotes were obtained for the purchases. We also noted purchases from one vendor for computer supplies that exceeded $25,000 for the year and required a formal competitive bid and City Commission approval under the purchasing policy, but the purchases were split among a number of purchase orders that individually did not exceed the bid threshold and a formal competitive bid was not obtained. We noted the City Commission did approve the purchases retroactively in September 2014. Cause: There was no discernable reason why the required written quotes were not obtained for the purchases under $15,000. For the purchase of computer supplies, it appears that a number of City departments were each purchasing from the same vendor and there was not a single purchase authorization. Effect: The purchases did not comply with the City's purchasing policy documentation and approval thresholds. Recommendation: We recommend that the City review the internal controls in place to ensure that purchasing policy approval limits and documentation are monitored and enforced prior to making the purchase or issuing a purchase order. The City should also consider the cost benefit of centralizing the purchasing function to enhance purchasing controls and maximize potential discounts from larger purchase quantities. Action Taken: The City recognizes the need for additional internal controls within purchasing. The City will be reorganizing the purchasing function and expects a full implementation to ensure compliance by September 30,2015. If you have any additional questions concerning this corrective action plan adopted by the City,please call me at(561)243-7117. Sincerely, Jack arner Chief Financial Officer 159 CITY OF DELRAY BEACH,FLORIDA SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS— STATE FINANCIAL ASSISTANCE PROJECTS For the Fiscal Year Ended September 30,2014 SECTION IV- STATE FINANCIAL ASSISTANCE PROJECTS FINDINGS AND QUESTIONED COSTS Finding Questioned Number Finding Costs FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION 2013-001 Beach Management Funding Assistance Program None CSFA#37.003 (Reporting) Grant No. 12PBI Condition: The City was not able to provide copies of the Quarterly Project Progress or Quarterly Financial Reports for this program or provide documentation that the reports were filed as required. Recommendation: We recommend that staff prepare Quarterly Project Progress and Quarterly Financial Reports and retain copies of these reports as required by the grant agreement and Compliance Supplement. Current Status: This finding is resolved or no longer applicable. 160 ICALER,DONTEN,LEVINE, II COHEN,PORTER&VEIL,P.A. CERTIFIED PUBLIC ACCOUNTANTS WILLIAM K CALER,JR,CPA 505 SOUTH FLAGLER DRIVE,SATE 900 MEMBERS LOUIS M COHEN,CPA WEST PALM BEACH,FL 33901-59:18 AMERICAN INSTITUTE OF JOHN C COURTNEY,CPA,JD CERTIFIED PUBLIC ACCOUNTANTS DAVID S DONTEN,CPA TELEPHONE(561)832-9292 JAMES B HUTCHLSON,CPA FAX(561)832-9955 FLORIDA INSET TUTE OF JOEL H LEVINE,CPA CERTIFIED PUBLIC ACCOUNTANTS JAMES MULLEN,IV,CPA infoCkdlcpa coin THOMAS A PENCE,JR,CPA SCOTT L PORTER,CPA MARK VELL,CPA Management Letter To the Honorable Mayor and City Commission City of Delray Beach,Florida Report on the Financial Statements We have audited the financial statements of the City of Delray Beach, Florida (the "City"), as of and for the year ended September 30,2014,and have issued our report thereon dated March 25,2015. Our report includes a reference to other auditors who audited the financial statements of the Police and Firefighters' Retirement System Fund, a fiduciary fund of the City, and the Delray Beach Downtown Development Authority, a discretely presented component unit of the City, as described in our report on the financial statements of the City. Auditor's Responsibility We conducted our audit in accordance with U.S. generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter 10.550,Rules of the Florida Auditor General. Other Reports and Schedule We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards; Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance Required by OMB Circular A-133; Schedule of Findings and Questioned Costs; and Independent Accountant's Report on Investment Compliance on our examination conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated March 25, 2015, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(1)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address the following findings and recommendations reported in the prior year management letter dated April 15, 2014: 2013-002 Pension Liabilities; 2013-003 Grant Revenues-, 2013-004 Parking Ticket Revenue, 2013-005 Payroll; and 2012-2 Information Technology Systems. The uncorrected audit findings and recommendations reported in the preceding annual financial audit report are summarized in the table below: 161 Tabulation of Uncorrected Audit Findings Current Year 2012-13 FY 2011-12 FY 2010-11 FY Finding No. Finding No. Finding No. Finding No. 2013-006 2013-006 None None Finding 2013-006 Policies and Procedures requires further attention by management as noted below. 2013-006 Policies and Procedures Criteria: Policies and procedures should be documented and updated on a regular basis to ensure City operations are administered in a proper and consistent manner. Condition: We noted various City policy manuals that have not been updated for several years. The City updated the Purchasing Policy in fiscal year 2014, but other policies are still outdated. For instance, the Grant Administration Policy is dated 2006 and the Accounting Policy Manual is dated 2011. The current policy manuals appear to have changes in personnel, assigned positions and duties that are not accurately reflected in the manuals. Recommendation: We recommend the City review and update all policies and procedures to reflect current operations. Each manual should document the approved policies and procedures to be followed by employees and serve as an aid in training new employees, monitoring performance and improving internal communications. Management Response: Management agrees that the City's current policy manuals should be updated on a regular basis and will review and prioritize the policies for updating in the future. As noted in the Summary Schedule of Prior Audit Findings,the item reported as finding 2013-001 in the prior year Schedule of Findings and Questioned Costs dated April 15,2014,no longer applies. Official Title and Legal Authority Section 10.554(1)(i)4.,Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in Note 1 to the financial statements. Also, as discussed in Note 1, the City included the Delray Beach Community Redevelopment Agency and the Delray Beach Downtown Development Authority as component units of the City. Financial Condition Section 10.554(1)(1)5.a., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the City met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the City did not meet any of the conditions described in Section 218.503(1),Florida Statutes, as of and for the year ended September 30,2014. Pursuant to Sections 10.554(l)(1)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures as of September 30, 2014. It is management's responsibility to monitor the City's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. 162 Annual Financial Report Section 10.554(1)(1)5.b., Rules of the Auditor General, requires that we report the results of our determination as to whether the annual financial report for the City for the fiscal year ended September 30, 2014, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2014. In connection with our audit,we determined that these two reports were in agreement. Other Matters Section 10.554(1)(1)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. The following items were noted: 2014-004 Investment Policy The City's investment policy requires that investments have a minimum credit quality rating from Moody's or Standard & Poor's to be considered for inclusion in the City's investment portfolio. We noted that the City's investment in a corporate note security had an "A-" (minus) rating at September 30, 2014, which is below the allowable credit rating of"A" established by the investment policy. We also noted that the City's General Employees' Pension investments currently include SAIC Callable bonds with a rating of"BB"which is below the allowable credit rating of"BBB" established by the investment policy. In reviewing the investment policy of the City and the General Employees' Pension Plan, it is not clear whether the minimum investment rating includes the credit enhancements of"+" and "-", or whether only the letter should be considered. The investment policy also did not address the policy for handling securities that were in compliance when purchased but are subsequently downgraded below the minimum required credit quality rating. We recommend that the City review the securities that are below the required credit quality rating and consider modifying the investment policy to address the process for handling securities that are downgraded after they are purchased. Management Response: The City will review the Investment Policies for both the City and the Pension Fund to ensure no ambiguities exist and that the credit ratings for the investments are clearly defined. The City also plans to address the process of reporting issue downgrades after the purchase dates of the issue. 2014-005 General Employees'Pension Investment Custodian The City engages an independent trust company to act as custodian for the investments of the General Employees' Pension Plan. In connection with our annual audit of the City and the General Employees' Pension Plan, we review an independent auditor's report on the internal controls of the investment custodian. For the year ended September 30, 2014, the investment custodian received an adverse opinion on their system of internal control from the independent auditor. The adverse opinion indicates in general, that the custodian's internal controls were not suitably designed and were not operating effectively. We also noted that the City's custodian uses another"sub-custodian"to actually maintain custody of the investments. We recommend that the City and the General Employees' Pension Plan Board of Trustees review the adverse opinion on internal controls of the investment custodian and evaluate the risks to the General Employees' Pension Plan investments. Consideration should also be given to the use of another sub- custodian that is not contracted with the City or the General Employees' Pension Plan for safekeeping of the General Employees' Pension Plan investments. 163 Management Response: The City and the General Employees' Pension Plan Board of Trustees have reviewed and discussed the adverse opinion on internal controls of the investment custodian,and have evaluated the risks to the General Employees' Pension Plan investments. Although the City believes that the situation at the custodian that led to the adverse opinion has been rectified,the City and Board of Trustees are actively considering initiating a formal procurement that could lead to the selection of a new custodian,which would include a change in the existing sub-custodian relationship- 2014-006 Information Technology Our review of the City's Information Technology (IT) systems identified certain areas where the existing practices could be improved, as follows: a) A list of all active user accounts should be provided to each department head on a periodic basis (at least annually) for their review and approval. Each department head should note any changes on the list, initial and return it to the IT department. This process will help to ensure that all terminated employees are properly removed as users and that employees have the appropriate access to the City's data systems. b) IT staff should utilize non-network administrator accounts when they are working on systems that do not require administrator level access. Utilizing a non-network administrator account will help to ensure that any issues such as mistakes,viruses or spyware are contained. c) All users can currently access personal web email accounts through the City's IT systems. Allowing this type of non-business access to web mail allows a much greater opportunity for viruses and malware to penetrate the City's IT systems because the web mail skips many levels of virus protection. Personal email access would still be available through employees' mobile devices but eliminating such access from the City's IT system will help to ensure that the City's network is protected. We recommend that the City consider the foregoing changes to further enhance the security over network access and data protection. Management Response: a) We have recently made a change to our Active Directory accounts, which requires all passwords to be changed to Microsoft Complexity passwords every 60 days. Accounts which are not accessed in a 30 day period are locked out and disabled. These accounts are then verified through the HR department if the user is an active employee with the City of Delray Beach. We have also implemented all user changes, additions and terminations Service Desk work orders must be submitted to IT through our HR department. b) IT Staff is in the process of moving to separate network accounts for administrator functions. We are testing with one user now and have created a Management server with the needed toolsets to complete the administration functions. This will be rolled out to all IT administrators in the next few weeks. c) The current City of Delray Beach IT Policies, IT-5 (Electronic Systems and Communication Tools) and IT-6 (Accessing the City's Internet Account) specifically state the use of City systems and City Internet account for personal use is unacceptable and unauthorized. The City will adapt its practices and procedures to insure that this policy is enforced and monitored. 164 2014-007 Parking Meters As part of our audit we observed the City's procedures and internal controls over the parking meter collection process. Our observation identified the following areas where the City could improve its current procedures: a) The City does not have formal written procedures or a schedule for the collections from any of the parking meters. In addition, there is no documentation of which employee performed the collection on a particular day. These situations make it difficult to maintain accountability in the event of errors or inaccuracies in the collection process. We recommend that formal written procedures be developed for each step of the parking meter collection process and that a written schedule be established for the collections to improve accountability and internal controls over the collection process. b) Currently,the collection process may be performed by one employee. On the day we observed the collection of lollipop meters, the parking meter technician had to clear out overflowed change by hand from a meter that had jammed. With only one employee present, it would be possible to divert coin collections from the locked cart. We recommend that two employees be assigned to participate in all parking meter collections. We also recommend that the two employees assigned to the collection team be periodically rotated,perhaps every three to six months, to minimize the opportunity for collusion and enhance cross training of the parking technicians. c) The parking technicians use a Personal Digital Assistance ("PDA") device to read the activity from each parking meter. The PDA device is inserted into the parking meter to obtain a reading of the coin collections. It appears that not inserting the PDA properly can cause a misread of the meter and erroneous readings of the coin collections. On the day of our observation,we noted that there were no misreads of any of the meters and the coin counts from the PDA appeared to be accurate. However, on a date we selected prior to our observation, we noted that 28 out of 32 parking meters had readings indicating that the number of coins reported were in excess of the capacity of the meters, indicating the likelihood that the meter was misread by the PDA and the coin count was inaccurate.As noted previously, one employee is allowed to collect coins from the parking meters,which provides the opportunity for potential misreads of the parking meters to be undocumented.We recommend that two employees be required to participate in all parking meter collections and that one of the employees document any meter misreads or other problems encountered, such as jammed or inoperable meters. d) The PDA device used to read each meter prints an "Audit Report" at the completion of the meter reading process for each day. However, we noted that the Building Maintenance Superintendent responsible for overseeing the parking meter technicians and meter collections, does not reconcile, review or approve the Audit Reports generated from the PDA's. We recommend that the Superintendent review and approve the Audit Report by initialing the report or noting approval in an email before submitting them to Finance. e) After the coins are collected from the parking meters in the locked cart, the parking technician delivers the cart to the City's Utility Department where the carts are unlocked and the coins placed in a counting machine. The key to unlock the cart is maintained in a locked location under the control of a Utility Department employee. The cart is unlocked by the Utility Department employee and the coins are counted by machine in the presence of the parking technician. The coin counts are recorded and the coins bagged for later deposit. On weekends, the parking technician has access to the Utility Department and will lock the cart in the coin counting room until the next business day when the coins are counted. The key control in this process is maintaining the integrity of the locked collection cart, which is secured with a padlock. The padlocks for the carts have not been changed in a number of years and we recommend that new high security locks be purchased for each cart and the keys strictly controlled. One key should be assigned to a Utility Department employee and all remaining keys stored in the Finance Department vault for backup. 165 f) While the parking meter collections do not represent a material part of the City's overall finances, the collection process for the coin receipts can be improved as noted above. In addition,based on our observation of the parking meter collection process,the City's multi-space parking meters did not have any of the issues noted with the single space lollipop meters. However, the single space lollipop meters are generally located in the City's highest traffic areas along Atlantic Avenue and AIA at the beach. We recommend that the City consider replacing all the single space lollipop parking meters in these high traffic areas with modern versions of the multi-space parking meters to improve the efficiency,accountability and collections of the parking system. Management Response: a) The City recognizes that the formal written procedures on-file dates back to 2003 and needs to be updated. A written collection schedule is in place and followed by the employees who will perform the collection process. b) The City is unable to periodically rotate assignments due to resource constraints, but adheres to the policy of two employees who jointly perform the collection task. The employees have signed/dated an acknowledgement form to indicate their awareness of the policy. c) The City maintains a log of Parking Meter issues that contains information pertaining to inoperable meters which have been reported by both the employees who collect the coin, as well as the general public who use the meters. d) The City's Building Maintenance Superintendent currently downloads the audit reports and emails them the following day to Finance. He will review the reports prior to forwarding to Finance and investigate all major discrepancies. e) New padlocks for the coin collection carts have been purchased. These padlocks are high security, laser cut keys, which are marked DO NOT DUPLICATE. There are only two keys, one maintained in a locked drawer within the Utilities Department and one maintained in the locked Finance Vault. I) The City recognizes that the single space lollipop parking meters are labor-intensive and plans to stream-line the collection process. The City's Treasurer is benchmarking other local municipalities to determine best practices related to types of parking meters, areas responsible for collection, counting, internal controls, as well as procedures used to prepare the coin for delivery to the bank vault. Multi-space meters also have their deficiencies, such as breakage, downstream affect to multiple users (as opposed to a single user) and increased cost of maintenance. The City plans to complete an overall evaluation before finalizing a plan of action to upgrade the current single space lollipop parking meters. 2014-008 Interfund Accounts The Municipal Golf Course Fund and Lakeview Golf Course Fund owed the General Fund approximately $2.1 and $1.3 million, respectively, at September 30, 2014. The amount that the two golf course funds owe to the General Fund has continued to increase over the past several years and now appears to be taking the form of a long-term, interest free loan. We recommend that the City review the interfund liability balances of the two golf course funds, as well as all other interfund accounts in other funds, and develop a policy to periodically clear the outstanding interfund balances and address any long-term financing needs of individual funds. Developing a policy will help ensure that routine interfund transactions are regularly settled between the funds and any long-term financing needs of individual funds or projects are identified and addressed. 166 Management Response: The City will review the interfund liability balances of the two golf course and other funds, and develop a policy to periodically clear the outstanding interfund balances. It will also develop a policy to ensure that routine interfund transactions are regularly settled and that long- term financing needs are identified and addressed during the City's FY 2016—2018 planning process. 2014-009 Capital Assets Capital assets are required by U.S. generally accepted accounting principles to be recorded and depreciated based on the acquisition cost. During our audit,we noted a number of capital assets which were recorded at the gross selling price rather than at net acquisition cost, primarily as a result of discounts received on the purchases. The total of the discounts given on the asset purchases amounted to approximately $18,000,which were included in the cost of the asset that was capitalized. While the amount is not material to the City's capital assets, we recommend that the procedures utilized for determining the capitalizable cost of assets be reviewed to ensure that capital assets are being recorded in accordance with U.S.generally accepted accounting principles. Management Response: We agree that capital assets should be recorded at acquisition cost, net of discounts. Management will review the procedure for recording asset costs and make any necessary changes to be in compliance with GAAP. Section 10.554(1)(1)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit,we did not have any such findings. City's Responses to Findings The responses by the City to the findings identified in our audit are described in the Management's Response in the accompanying schedule of findings and questioned costs and this management letter. The responses by the City were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly,we express no opinion on those responses. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives,the Florida Auditor General, and the City Commission and management of the City of Delray Beach, Florida, and is not intended to be and should not be used by anyone other than these specified parties. ID" �/�. PA, West Palm Beach,Florida March 25,2015 167 EITY OF OIELRRY BEACH DELRAY BEACH 100 N.W.1st AVENUE . DELRAY BEACH, FLORIDA 33444 • 5611243-7000 blftd All-America City ' I W 1993 2001 March 25,2015 Auditor General's Office Local Government Audits/342 Claude Pepper Building,Room 401 111 West Madison Street Tallahassee,FL 32399-1450 Subject:Responses to the Management Letter Comments Comprehensive Annual Financial Report—September 30,2014 Our responses to current year management letter comments and recommendations are listed below: 2013-006 Policies and Procedures — Management agrees that the City's current policy manuals should be updated on a regular basis and will review and prioritize the policies for updating in the future. 2014-001 Debt Paymcnts Not Made Timcly A calendar for all City debt payments will be maintained by the City's Treasurer and shared with the individual in Finance who is designated as the back-up for processing wire payments. 2014-002 Debt Transactions Not Accuratclv Recorded—On a monthly basis, the Treasurer will reconcile the general ledger balances to the corresponding debt amortization schedules to ensure accuracy. 2014-003 Purchase Order Approvals —The City recognizes the need for additional internal controls within purchasing. The City will be reorganizing the purchasing function and expects a full implementation to ensure compliance by September 30,2015. 2014-004 Invcstmcnt Policy The City will review the Investment Policies for both the City and the Pension Fund to ensure no ambiguities exist and that the credit ratings for the investments are clearly defined. The City also plans to address the process of reporting issue downgrades after the purchase dates of the issue. 2014-005 General Emplovccs' Pcnsion Invcstmcnt Custodian — The City and the General Employees' Pension Plan Board of Trustees have reviewed and discussed the adverse opinion on internal controls of the investment custodian, and have evaluated the risks to the General Employees' Pension Plan investments. Although the City believes that the situation at the custodian that led to the adverse opinion has been rectified, the City and Board of Trustees are actively considering initiating a formal procurement that could lead to the selection of a new custodian,which would include a change in the existing sub-custodian relationship. SERVICE - PERFORMANCE - INTEGRITY • RESPONSIBLE ` INNOVATIVE - TEAMWORK 168 2014-006 Information Tcchnolou— a) We have recently made a change to our Active Directory accounts, which requires all passwords to be changed to Microsoft Complexity passwords every 60 days. Accounts which are not accessed in a 30 day period are locked out and disabled. These accounts are then verified through the HR department if the user is an active employee with the City of Delray Beach. We have also implemented all user changes, additions and terminations Service Desk work orders must be submitted to IT through our HR department. b) IT Staff is in the process of moving to separate network accounts for administrator functions. We are testing with one user now and have created a Management server with the needed toolsets to complete the administration functions. This will be rolled out to all IT administrators in the next few weeks. c) The current City of Delray Beach IT Policies, 1T-5 (Electronic Systems and Communication Tools) and IT-6 (Accessing the City's Internet Account) specifically state the use of City systems and City Internet account for personal use is unacceptable and unauthorized. The City will adapt its practices and procedures to insure that this policy is enforced and monitored. 2014-007 Parking Meters- a) The City recognizes that the formal written procedures on-file dates back to 2003 and needs to be updated. A written collection schedule is in place and followed by the employees who will perform the collection process. b) The City is unable to periodically rotate assignments due to resource constraints,but adheres to the policy of two employees who jointly perform the collection task. The employees have signed/dated an acknowledgement form to indicate their awareness of the policy. c) The City maintains a log of Parking Meter issues that contains information pertaining to inoperable meters which have been reported by both the employees who collect the coin, as well as the general public who use the meters. d) The City's Building Maintenance Superintendent currently downloads the audit reports and emails them the following day to Finance. He will review the reports prior to forwarding to Finance and investigate all major discrepancies. e) New padlocks for the coin collection carts have been purchased. These padlocks are high security, laser cut keys,which are marked DO NOT DUPLICATE. There are only two keys, one maintained in a locked drawer within the Utilities Department and one maintained in the locked Finance Vault. I) The City recognizes that the single space lollipop parking meters are labor-intensive and plans to stream- line the collection process. The City's Treasurer is benchmarking other local municipalities to determine best practices related to types of parking meters, areas responsible for collection, counting, internal controls, as well as procedures used to prepare the coin for delivery to the bank vault. Multi-space meters also have their deficiencies, such as breakage, downstream affect to multiple users (as opposed to a single user) and increased cost of maintenance. The City plans to complete an overall evaluation before finalizing a plan of action to upgrade the current single space lollipop parking meters. 2014-008 Intcrfund Accounts —The City will review the interfund liability balances of the two golf course and other funds, and develop a policy to periodically clear the outstanding interfund balances. It will also develop a policy to ensure that routine interfund transactions are regularly settled and that long-term financing needs are identified and addressed during the City's FY 2016—2018 planning process. 169 2014-009 Capital Assets — We agree that capital assets should be recorded at acquisition cost, net of discounts. Management will review the procedure for recording asset costs and make any necessary changes to be in compliance with GAAP. Sincerely, Jack Warner Chief Financial Officer 170 ICALER,DONTEN,LEVINE, II COHEN,PORTER&VEIL,P.A. CERTIFIED PUBLIC ACCOUNTANTS WILLIAM K CALER,JR,CPA 505 SOUTH FLAGLER DRIVE,SATE 900 MEMBERS LOUIS M COHEN,CPA WEST PALM BEACH,FL 33901-59:18 AMERICAN INSTITUTE OF JOHN C COURTNEY,CPA,JD CERTIFIED PUBLIC ACCOUNTANTS DAVID S DONTEN,CPA TELEPHONE(561)832-9292 JAMES B HUTCHLSON,CPA FAX(561)832-9955 FLORIDA INSET TUTE OF JOEL H LEVINE,CPA CERTIFIED PUBLIC ACCOUNTANTS JAMES MULLEN,IV,CPA infoCkdlcpa coin THOMAS A PENCE,JR,CPA SCOTT L PORTER,CPA MARK =,CPA Independent Accountant's Report on Investment Compliance To the Honorable Mayor and City Commission City of Delray Beach,Florida We have examined the City of Delray Beach's compliance with Section 218.415,Florida Statutes for the year ended September 30, 2014. Management is responsible for the City of Delray Beach's compliance with those requirements. Our responsibility is to express an opinion on the City of Delray Beach's compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the City of Delray Beach's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the City of Delray Beach's compliance with specified requirements. In our opinion, the City of Delray Beach complied, in all material respects, with the aforementioned requirements for the year ended September 30,2014. This report is intended solely for the information and use of the City Commission and management of the City of Delray Beach, Florida, the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, and Federal and other granting agencies, and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach,Florida March 25,2015 171 Village By the Sea 10,0 NW V'Ave Delray Beach, Fl. 33444 (5f 1) 243-7000 MyDelrayBeach.com i V U � `i u � W Nx A C o ° t o.: a � �b U w a 9 Sr CC O ° v 'r, W 0 a N _ w ~ � III o V V W V O p U a s Z B n LU o o ti N p � o > N 9 U bIO uu rV p ctl N O 0 . `i N U � ID ti O w v O O o N .G Go W B ° � o f a 0 A a N U d H ° o t -d ° ° ti o lu -C cn W cd O U 'd a 'd O N a bCA G ct p' 0 X :b N X A a bCA �' ViNl .b o '� U ^?' 0. '0 0 M ° w b.0 a a a' '� 0. C, �n .b cCa b-O Q N .+7 > O bA o ° by o 0 0 0 0 0 0 0 > • • • O U O M M N N • • • • • • O O T N N U C � � (6 C (n (6 C (C6 O O U p Y6 (n Arr C N CCNC b U v, O C > 9 T> Y U Q 9 G C O O G.ti G N N O L C (6 N (6 N cd .� W (D(7 aI_ alyl w aI*I a C) 0I`T a 5 , a 2 o H fR 'd tl B tl a H o o ao U c w o o U o N � U a' 0 N ON ° ctl a O '° E o Z " W 2 W O O ti W 6 C a G O .. O u ' ° 14 O G 0 bC9 0 0 0 0 0 0 o C7 'b u S a u V O ° O O O O O O N CO � V M N o o .N '0 w bA A lzi ID �+, > U W N > N -C+ rU `Un cUd N ° m WD a O U O O ctl ti'b tU' WO G' ~ Ni O N N 13 0 N 'O P'',� N N O N pW > Y aCi ti a O O o C a 7 H E a W 'O 75✓S m a u a .o C '� G u h yr O O J° Ey CZ' a ° u W G � d o o ° Z N W , E '° >O U o b co F4 u x O �s "N7S b o o 0 0 0 0 0 0 0.a O a Oo ° p'�' b�A g L o o o o o � i MEMORANDUM W TO: Mayor and City Commissioners FROM: Environmental Service Department THROUGH: Donald B. Cooper, City Manager DATE: May 6, 2015 SUBJECT: AGENDA ITEM WS.3 -WORKSHOP MEETING OF MAY 12,2015 DISCUSSION REGARDING COMPREHENSIVE PARKING MANAGEMENT PLAN BACKGROUND Attached for you review is a supplemental memorandum that accompanies the power point presentation that will be presented at the meeting. DISCUSSION Staff is seeking direction on the implementation of a Comprehensive Parking Management Plan. RECOMMENDATION Staff is seeking the City Commissions direction City of Delray Beach Parking Program Recommendations The following outline accompanies a presentation in where staff is seeking direction for establishing the policies of a comprehensive parking management program, including, but not limited to, where, when and what fees are charged; whether managed in-house or through contracted services; technology options; employee parking; valet stands; taxi stands;trolley service; signage; residential parking programs and potential project funding. Why A Parking Management Plan Is Necessary: Program Benefits To be discussed in greater length throughout this report, the highlights of the "WHY", in no particular order or preference are: • Increase turnover for on-street parking spaces creating increased pedestrian traffic; • Reinvestment in the parking assets through a dedicated funding source; • Fund construction of new facilities as needed; • Streamlined/enhanced enforcement; • Relief to the general fund by contributing excess revenue to area projects; • Increased safety and security in garages Program Summary: Industry Standards The proposal incorporates parking industry best practices with the ideologies that prime spaces, in this case Atlantic Avenue, are limited to the shortest duration of stay and priced at a premium due to their convenience. Fees are slightly lower for other on-street parking spaces. Surface parking lot fees are also lower with the parking garages having no time limits and the lowest rates. This results in increased utilization of the parking garages by employees, people needing more time to accomplish multiple tasks in one visit and cost conscious customers seeking the best value. This multi-tiered approach, used globally, allows for the optimal management of the parking system by providing incentives for the use of what may be considered less convenient spaces which, through careful monitoring, and periodic adjustments, helps achieve and maintain the ever coveted 85th percentile. A significant advantage to metering is the immediate commencement of time when parking, eliminating the "grace period" which naturally occurs between parking a vehicle and tires being chalked by Parking Enforcement, thereby increasing turnover throughout the day. Enforcement is streamlined as illegally parked vehicles are immediately identified and cited. Operational Model: If approved by the City Commission, and with its direction, a comprehensive comparison of the merits managing operations in house versus having contracted service provided in accordance with Ordinance 36-14. Please note, the estimates for operational expenses are calculated by operating the program in-house as staff is unable to calculate the cost of contracting the services out to a parking operator. Schedule:Standardizes Beach Area parking hours The beach area currently requires fees between 9:30 AM and 8:00 PM Monday through Thursday and between 7:00 AM and 8:00 PM on Friday, Saturday and Sunday. the PMAB recommends hours of 9 AM to 8 PM. In the core area, Staff and the board recommend fees to be required between 9:00 AM and 1:00 AM daily. Furthermore, the recommended fee schedule provides for the first hour free for all on- street parking in the core area, limited to a 2-hour initial purchase of time, (first hour free, second hour paid). In an effort to allow customers to complete transactions a 30-minute buy-up (extending time parked by adding money, a/k/a meter feeding) is recommended. Customers providing a cellular phone number with their initial transaction will receive an alert within 15 minutes of a parking meter expiring and will allow remote buy-up. To enable buy-up, customers must input a credit card number or use a telephone app for remote buy-up. Cash transactions are not available for remote buy-up, but may be extended at the meter. Revenue: Dedicated funding source for facility maintenance and area program contributions The proposed hours & fees provide a revenue stream capable of sustaining parking operations and maintenance activities, meter replacement in the beach area, meters in the Core Area, and periodic replacement of equipment, while providing reserves for long term capital maintenance programs necessary to ensure useful longevity of the parking facilities. The proposed program estimates gross meter revenue in the Core Area at approximately $2,500,000. Beach area parking is estimated at $1,750,000 with the conversion of single space meters on SR A1A to multi-space meters and upgrading of existing multi-space meters in the beach area parking lots. Other revenue sources, such as Beach Parking permits are estimated at $90,000 per year. In addition, industry standards assume citation revenue is 16%of gross revenue, resulting in estimated $680,000. In addition to maintaining the parking assets, meter revenue may also contribute to area programs, included but not limited to, Clean & Safe, improved walkability, trolley services, beach maintenance, dune restoration, Beach Master Plan Implementation, parking enforcement, future construction of parking structures and a stipend to the general fund for administrative support services. Total revenue, estimated at $5,220,000 is offset by $1,600,000, in annual expenses, resulting in annual net revenue of$3,620,000, (30% operating cost), excluding any stipend to the general fund or additional trolley services. Furthermore, gross revenue may be reduced contingent upon additional residential or other discount programs that may be implemented. Technology: Provides numerous options for optimal program oversight Meter technology has drastically improved over the years. The three, (3), major components, used with Multi-Space meters are, Pay-By-Space, Pay & Display, and Pay-By- Plate, (a/k/a License Plate Recognition or LPR). For your information, Pay & Display and Pay-By-Plate eliminate the capture of unused time by subsequent customers. Pay-By-Space: Requires all spaces to be numbered. Customer must input the parking space number in the meter, select the amount of time wanting to park, up to any maximum time permitted, and pay accordingly. Enforcement is done at the machine through printing an audit of paid spaces. Pay & Displav: This option, currently used in the beach area parking lots, does not require space numbering. However, customers must return to the vehicle to place the receipt on the dashboard of the car. Enforcement is completed by examining each vehicle for a paid receipt in the car or appropriate parking permit. Pay-By- Plate: Customer must input license plate number in the meter and pay for the amount of time wanting to park, up to any maximum imposed. Enforcement is achieved with cameras mounted to a golf cart or other vehicle. Enforcement personnel drive through parking areas as the cameras scan tags. If a scanned tag number is not in the system, enforcement personnel is alerted and a citation issued, unless a permit is affixed to the vehicles windshield or a valid hang tag is displayed. Access Equipment: Many facilities throughout the world operate parking facilities with ticket dispensers at entrances and gate arms at both entrances and exits. Equipment typically has an access card system for customers leasing space by the month to either swipe a card at entry, or other means for opening the gate such as transponders. While this method of operation is advocated by some as controlling "slippage" (people parking without paying), the extra equipment requires additional capital expenditure and maintenance costs. Furthermore, additional staffing, required to assist patrons in case of malfunction or user issues, etc., significantly increases costs, negatively impacting the gross revenue, potentially making this method of operation cost prohibitive. It is also noted, this type of system eliminates the need for enforcement (assuming everyone either swiped a card or took a ticket upon entry)further impacting gross revenue. General Technological Items: Available features are contingent on meter manufacturer. Multi space meters provide an integrated expiration warning program, where meters are capable of sending a message to user smart phones, advising of the pending meter expiration. Patrons, who've initially paid via cellular phone or credit card when parked, will have the option of adding time to the meter, without pre-registering with a third party provider, 1. Parking space sensor technology is an available option which can identify expired meters allowing remote enforcement and resets meters to "0" time remaining once vehicles leave eliminating the capture of unused time by subsequent vehicles. While such systems optimize revenue and provide increased analytical data installation costs and monthly fees make the program cost prohibitive given the moderate size of our parking system ; 2. Real time reporting allows for the careful monitoring to measure program effectiveness. Multi space meter programing allows system wide modifications to almost all programs from any remote location with internet access. This affords the opportunity to change rates, hours of use, identify malfunctions, etc. 3. Systems are capable of sending notifications alerting staff of malfunctions, such as low paper, machine tampering, coin jams, etc. 4. Meters can accommodate several rate schedules providing the flexibility for discounted rate for promotional programs, or varying rates,flat fee after a certain time, event parking, or varied by day of the week to improve traffic during off-peak periods 5. Coupons, which may be created in-house with our current system, can be provided to allow for discounted parking in any denomination deemed appropriate ranging from $1.00 off to free parking. A code is issued and may be used at the meter by following on screen prompts. Codes can be programmed for one-time use or may be issued for longer periods, potentially addressing some of the challenges faced for the employee parking program. 6. Pay-by-Phone programs, allowing payment by cellular phone, are historically administered through third party vendors and can be utilized with any parking system. Patrons must register with their credit card information and are subject to "convenience fees" charged by the service provider for the use of the service. All transient transactions should be processed through a meter providing accountability and the ability to track vehicles parked within the system for proper compliance, whether using the first hour free, or paying for parking. Employee Parking: Offers a reasonably priced parking option for local employees In an attempt to maintain reasonably priced parking for small,family type businesses in the area, Staff is considering the sale of permits to local businesses allowing parking in select areas in the garages and surface lots at a cost of$20 per month. Of examples in the rate survey, Hollywood, FL has an employee parking rate, charging $31.20 per month, for on-street parking spaces located in their long term parking areas along the periphery of the business district and portions of two parking garages. Clearwater also has a program charging $40 per month for hang tags permitting parking for extended lengths of stay in select facilities without paying the meter.The program is a first come first served, requiring employees to get to work in time to find a parking space. Alternatively, Cities such as Miami Beach, Miami, Fort Lauderdale and West Palm Beach do not have "employee parking programs" but rather allow the sale of monthly permits to anyone, up to a predetermined number of spaces,throughout their parking systems, based on the premise that employees will gravitate to the cheapest parking available. While there are some issues in need of refinement, staff continues to seek additional information and will report new findings, if any, at the meeting. Valet Parking: Increases municipal parking capacities providing a valuable amenity In 2012 the valet program was discussed in great length with the stakeholders. The City Commission, at the time, determined the$10 base fee was working well in keeping parking fees reasonably priced. However, with the metering of the downtown core area the monetary value of each space is in excess of $500 per month, considerably higher than the current $113.56 per queuing space being charged today. While the City has a fiduciary responsibility to recoup meter revenue, consideration must be made for the additional capacity the program creates by using private lots, (441 spaces). It is also noted, a cap was imposed on the valets limiting the base fee they are able to charge to $10 per car, (a $5 overstay fee was instituted but rarely if ever used). Increasing the monthly fee per space to market rate could result in removal of the cap resulting in valet fees of $20 or more, especially during busy times. It is also counterintuitive to the caveat that valets must take all customers as the restaurant associated with the valet can provide validated parking fees to its customers. While existing valet queues would be vested, it is recommended that future valet queues be allotted no more than 3 spaces and would be equal or less than 20% of the available spaces on Atlantic Avenue, or the street the valet occupies. The PMAB adamantly opposed any changes to the valet parking program. Taxi Stands: Reduce impact to traffic on Atlantic Avenue Taxis have been a challenge in the core area as trolling, (driving at slow speeds looking for fares) along Atlantic Avenue slows traffic, bringing it to a standstill to accept passengers. Taxi stands, intended for picking up passengers, are being proposed on select blocks throughout the core and beach areas. Trollies: Promotes a Park Once philosophy eliminating trips within the core and beach areas A dedicated source of funding is needed to maintain or expand operations as FDOT grant funding expires in May of this year. In an attempt to alleviate beach parking and increase daytime utilization of the garages it is suggested adding a circulator route to provide service between the parking garages and the beach area is instituted. In 2008 the service ran a third vehicle between the Library and Beach during midday hours reducing headways in the core area to approximately 8 minutes, allowing local employees to lunch at the opposite end of town within their 1-hour break. As noted in previous presentations, taking the service in-house can reduce operating costs by over 50%, (Current service$34 per hour. A driver at$11 plus burden is half the cost) Signage: Directs customers to the appropriate parking area A critical part of any parking program is getting people to the proper parking areas. In addition to wayfinding signage starting at West Atlantic Avenue at 10th Avenue, northbound and southbound Federal Highways and Swinton Avenue will have intermittent signs directing people to the core area parking facilities. Once in the core area, additional signage will lead people to the garages and parking lots to reduce endless circling looking for a place to park. Signage will be color coded to the time limits available at a particular facility to assist motorists in easily locating an appropriate paring area. Beach Neighborhood Residential Permit Program: Given the challenges of parking in the beach area a beach resident parking program, similar to the Marina Historic District program, is being considered to reduce overcrowding of neighborhood streets and alleviate safety concerns from people parking in sight visibility triangles at intersections and or blocking residential driveways. Staff will be working with the BPOA and beach area residents to create a viable program. Other resident programs will be considered after commencement of the fee based program, if approved by City Commission. Potential Program Funding In closing, the creation of an enterprise fund will allow for dedicated funding for programs within the areas, in no particular order or priority including but not limited to: • Clean & Safe • Meter Replacement • Facility Upkeep • Beach Maintenance • Dune Restoration • Trolley Expansion • Enforcement • Beach Master Plan • Construction of new facilities • General Fund Contribution • Walkability CITY OF DELRAY BEACH DELRAY REACH 100 N.W. ist AVENUE DELRAY BEACH, FLORIDA 33441 • 56V243-7000 All-America City ° MEMORANDUM 1993 2001 TO: Mayor and Commissioners 1 FROM: Donald B. Cooper, City Manager 1 DATE: May 6, 2015 SUBJECT: PROPOSED PARKING MANAGEMENT PLAN MAY 2015 Per direction of City Commission staff is presenting a Parking Management Plan, which has I attempted to address the following: j 1. Increase availability of parking 2. Provide a means to maintain existing facilities. 3. Improve traffic conditions on Atlantic Avenue 4. Increase security in parking facilities i 5. Better parking enforcement 6. Provide additional revenue 7. Improve parking facilities S. Provide for community investment This proposal may be implemented in components or in its entirety based on the direction of the City Commission. It is expected to be controversial especially the implementation of meters along Atlantic Avenue as well as other components of the proposal. The timetable to implement the entire plan will take 18 months due to the recommendation of not implementing during the "season". It also contemplates that the program be managed by an outside party with City Staff managing the contractor and the public safety components. This will require the City to prepare an RFP for the program, and may require a consultant to prepare the RFP. It could also be implemented by City staff per Commission direction. I would like to point out that we have developed this proposal as a guideline for multiple issues that can be addressed collectively or in their individual components,but each component does SERVICE - PERFORMANCE - INTEGRITY - RESPONSIBLE - INNOVATIVE TEAMWORK RE, PROPOSED PARKING MANAGEMENT PLAN MAY 2015 Page 2 of 2 have an impact on the other components. The proposal, if adopted, will change as operational requirements change and as conditions change and the Commission should be prepared for flexibility and modifications while requiring periodic updates and progress reports as well as citizen feedback in the two proposed areas as a program requirement. The program should not be implemented if there is insufficient return-on-investment. Our goal should be to provide for 50% of total revenues to be re-invested back into the community. The proposal has been developed on the basis of public safety, feasibility, flexibility, comprehensiveness and the ability to provide a return on investment. There will be issues not addressed or not anticipated and there will be opposition. The City of Delray Beach has struggled with the "parking issue" for some time and most likely will continue to for the foreseeable future. This proposal should be looked as a major step to hopefi►lly addressing those issues, (within the confines of our present resources), but not as a perfect solution. We will be happy to address any question the Commission may have. 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