ML20206E946

Utilities Commission City of New Smyrna Beach,Fl Comprehensive Annual Financial Rept Sept 30,1998 & 1997

ML20206E946
Person / Time
Site:	Crystal River
Issue date:	09/30/1998
From:	Bosiger C, Custer R, Feger W AFFILIATION NOT ASSIGNED
To:
Shared Package
ML20206E890	List: 3F0499-09, Forwards FPC Annual Financial Rept & Annual Financial Repts for Eight of Ten Participating co-owners of Crystal River Unit 3 Nuclear Station.Outstanding Annual Financial Rept Will Be Submitted by 990730 ML20206E902 ML20206E910 ML20206E926 ML20206E946 ML20206E956 ML20206E970 ML20206E981 ML20206E989
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Utilities Commission, City of New Smyrna Beach, Florida x

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I Comprehensive Annual Financial Report (A Component Unit of the City of New Smyrna Beach, Florida)

September 30,1998 and 1997 E

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Utilities Commission, City of New Smyrna Beach, Florida x

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_w A m Comprehensive Annual Financial Report (A Component Unit of the City of New Smyrna Beach, Florida)

September 30,1998 and 1997

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Utilities Commission, City of New Smyrna Beach, Florida (A Component Unit of the City of New Smyrna Beach, Florida)

Comprehensive Annual Financial Report For the Fiscal Years Ended September 30,1998 and 1997 UTILITIES COMMISSIONERS Carolyn F. Bosiger, Chairman William F. Feger, III, CPA, Vice Chairman Raymond E. Custer, Secretary-Treasurer Peter E. Mallory, Assistant Secretary-Treasurer James U. Martin, Commissioner UTILITIES DIRECTOR Ronald L. Vaden CIIIEF FINANCIAL OFFICER Roberto O. Montalvo, CPA LEGAL COUNSEL INDEPENDENT AUDITORS IIal Spence, P.A.

Brent Millikan & Company, P.A.

{l TAILE OF CONTENTS COMPREIIENSIVE ANNUAL FINANCIAL REPORT September 30,1998 and 1997 LTTILTTIES COMMISSION, CffY OF NEW SMYRNA BEACll, FLORIDA NIM SMYRNA BEACll, FLORIDA Reference Eggg Introductory Section Title Page..

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Organization Chart............

iii Certificate of Achievement........

iv Letter of Transmittal..

v-xi Financial Section Independent Auditors' Report....

I Financial Statements:

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Comparativc Balance Sheets.

Statement i 2-3 Statements of Revenue, Expenses, and Changes in Retained Earnings...

Statement 2 4

Statements of Cash Flows........

Statement 3 5

Notes to the Financial Statements..

6-17 Supplemental Detail Information of the Utility Systems:

Schedule of Revenue, Expenses and Changen in Retained Earnings Schedule i 18 Schedule of Revenue, Receipts, Expenses and Disbursements - Budget and Actual - Electric System (Non-GAAP Budgetary Basis)

Schedule 2 19 Schedule of Revenue, Receipts, Expenses and Disbursements Budget and Actual - Water System (Non-GAAP Budgetary Basis)....

Schedule 3 20 Schedule of Revenue, Receipts, Expenses and Disbursements - Budget and Actual - Pollution Control System (Non-GAAP Budgetary Basis)

Schedule 4 21 Schedule of Revenue, Receipts, Expenses and Disbursements Budget and Actual - Water Reuse System (Non-GAAP Budgetary Basis)..

Schedule 5 22 Schedule of Operating Expenses Electric System..........

Schedule 6 23 Schedule of Operating Expenses - Water System Schedule 7 24 Schedule of Operating Expenses Pollution Control System...

Schedule 8 25 Schedule of Operating Expenses - Water Reuse System.............

Schedule 9 26 Schedulc ofInterest Earnings........

Schedule 10 27 Schedule of Debt Service Requirements to Maturity.....

Schedule 11 28 Statistical Section Schedule of Expenses by Function - Last Ten Fiscal Years.

Table I 29-30 Schedule of Revenues by Source - Last Ten Fiscal Years.

Table 11 31-32 Demographic Statistics...

Table III 33 Property Value, Construction, and Bank Deposits Last Ten Fiscal Years Table IV 34 Schedulc ofInsurance in Force..

Table V 35 Ten Largest Electric Customers...

Table VI 35 Ten Largest Water Customers.

Table VII 37 Schedule of Revenue Certificate Coverage.

Table VIII 38 IIistorical Peak Demand and Electric System Net Energy Requirements, Water Demand, and Sewage Flows Table IX 39 Utility Rate Schedule - Electric Service...

Table X 40 Utility Rate Schedule - Water Service...

Table XI 41 Utility Rate Schedule - Pollution Control and Water Reuse Service Table XU 42 i

Supplemental Audit Reports Independent Auditors' Repoit on Compliance...

43 Independent Auditors' Report on Internal Control Structure 44-45 Management Comments....

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ORGANIZATION CffART r

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ORGANIZATION CllART IIDLITIES COMMISSION, CITY OF NEW SMYRNA BEACll. FLORIDA NEW SMYRNA 13EACll, FLORIDA

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Utilities

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Commissioners

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Professional Director Commission

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Consultants ofUtilities Attorney

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Water System Personnel /

Engineering Finance Electric Pollution Control Operations /

Public Relations Operations Water Reuse Generation Risk

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Management Water Environmental Accounting Transmission /

Production /

System Engineering Distribution Treatment Operations Operations Customer Pollution Electrical Service /

Fleet Contr$1 Generation Engineering Meter Maintenance Treatment Reading Operations Management Substation Water Information and Reuse Systems Relay Treatment Maintenance Oper ations Water Materials Distribution Management Field Operations

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Sewer

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Collection Field Operations

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CERTIFICATE OFACHIEVEMENT For the year ended September 30,1997

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The Government Finance Officers Association of the UnitedStates and Canada (GFOA) awarded a Certificate of Achievementfor Excellencein FinancialReporting to the Utilities Commission, City ofNew Smyrna Beach, Florida, for its Component Unit Financial Reportfor thefiscalyear endedSeptember 30,1997.

In order to be awardeda Certificate ofAchievement, a governmental I

unit must publish an easily readable and efficiently organized comprehensive anmaalfinancialreport, whose contents conform to program standards.

Such reports must satisfy both generally accepted accountingprinciples and applicable legal requirements.

A Certificate ofAchievement is validfor aperiod ofone year only.

Management believes that this report continues to conform to Certificate ofAchievement Program standards.

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CERTIFICATE OF ACIIIEVEMENT For the Year Eruled September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA 13EACil, FLORIDA NEW SMYRNA BEACil, FLORIDA I

Certi:!icate 0::

I Achievement I

!or Excelence I

in Financia:

Reporting I

Presented to I

Utilities Commission, City l

of New Smyrna Beach, Floric a I

For its Comprehensive Annual I

Financial Report for the Fiscal Year Ended September 30,1997 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to I

government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest I

standards in government accounting and financial reporting.

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{ p"j y President

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Executive Director I

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LETTER OF TRANSMITTAL i

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UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA ELECTRIC, WATER, Pollt.TTION CONTROL Phet Office Box 100 200 Canal St.

New Ssnyrna Beach, Florida 32170-0100 (904)427 1361 November 6,1998 To the Chairman and Members

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of the Utilities Commission t

City of New Smyrna Beach, Florida The Comprehensive Annual Financial Report of the Utilities Commission, City of New Smyrna Beach, Florida, for the fiscal years ended September 30,1998 and 1997, is hereby submitted. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Utilities Commission. To the best of our knowledge and belief, the enclosed data are accurate in all material aspects and are reported in a manner designed to present fairly the finantial position and results of operations of the Utilities Commission. All disclosures necessary to enable the reader to gain the maximum understanding of the Utilities Commission's financial affairs have been included.

This financial repon is presented in four sa:tions: introductory, financial, statistical, and compliance (Auditor General of the State of Florida). The introductory section includes this transmittal letter, the Utilities Commission's

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organization chart, a list of principal ofIicials, the table of contents and a reproduction of the Certificate of Achievement for Excellence in Financial Reporting for 1997. The financial section includes the basic f'mancial statements and the independent auditors' report on the financial statements. The statistical section includes selected

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financial and demographic information, generally presented on a mMd-year basis, and selected ten-year historical financialinformation.

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The Utilities Commission ic :tquired to be audited in accordance with Chapter 10-500, Rules of the Auditor General

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of the State of Florida. Infowiation related to this audit, findings and recommendations, and auditors' reports on the internal control structure and compliance with applicable laws and regulations, are included in the compliance section of this report.

REPORTING ENTITY AND SERVICES PROVIDED The Utilities Commission, City of New Smyrna Beach, Florida, provides a full range of electric, water, pollution control and water reuse services to its customers both inside and outside the city limits. These activities are fully accounted for in this financial report, f

The funds and entities related to the operation of the Utilities Commission which are included in these financial statements are a component unit of the City of New Smyrna Beach, Florida, and an integral part of the City's reporting entity. The Comprehensive Annual Financial Report of the utilities Commission is issued separately to provide a

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comprehensive financial reporting summary and presentation to the Utilities Commission and its revenue certificate holders. Audited financial statements of the Commission's oversight unit (City of New Smyrna Beach, Florida), are available upon request from the City of New Smyrna Beach,210 Sams Avenue, New Smyrna Beach, Florida, 32168.

ECONOMIC CONDITION AND OUTLOOK The economic condition and outlook of the Utilities Commission have continually improved during the past several years due in large part to the controlled development of residential and commercial properties which in turn has increased the Commission's quality customer base. In addition, substantial increases in the local tourism, light manufacturing, and service related business industries have had a positive effect on the area's employment statistics.

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I To the Chairman and Members of the Utilities Commission City of New Smyrna Beach, Florida November 6,1998 Page 2 MAJORINITIATIVES The Commission has established a Capital Improvements Plan (Plan) through 2003. The capital expenditures of this Plan are scheduled to be funded through a combination of connection fees, Renewal and Replacement Fund proceeds, proceeds of the State Revolving Fund Wastewater Construction Loan Program, and other funding. These capital l

improvement plans are in addition to the annual capital requirements for routine extensions of existing utility facilities 5

to serve new customers.

Significant system improvements contemplated in the Plan consist of the following:

New power plant and substation modifications to accommodate 500 MW power plant New 115kV electric transmission line, double circuiting of approximately 13 miles ofline North Causeway intracoastal Waterway underwater electric cable crossing; Western area expansion of the water system plant in the Interstate 95-State Road 44 area; e

Complete the construction of a western 6 MGD wastewater pollution control facility; Expansion of force mains and lift stations to link with the western pollution control facility; and Development and construction of additions to the water reuse system which consists of high service pumping facilities, extension of the transmission system to connect to the western pollution control facility, and transmission lines to provide irrigation service to prospective customers.

On December 10,1997, the Comnussion approved entering into a Joint Participation Agreement with Duke Energy Corporation for constructing a 500 MW natural gas fired electric utility plant. Under this agreement, the Commission will receive an entitlement to 30 MW of electric capacity at a significant savings in cost to produce this power. The anticipated savings would be passed on by the Comnussion by lowering customer rates by up to 15% The Agreement, which must be approved by the Florida Public Service Commission, is expected to be a landmark project" since its outcome will undoubtedly have a significant effect on the electric utility industry in the State of Florida.

The ongoing construction of the 6 MGD wastewater pollution control facility will be a significant addition to the Commission's pollution control system and is expected to be completed by June 1999. It will provide advanced g

wastewater treatment capabilities, additional capacity for future growth and the means to meet and/or exceed current gI environmental regulatory requirements. The financing of this facility will be through the State Revohing Fund Wastewater Construction Loan Program.

Comnussion forecasts for the electric, water, pollution control, and water reuse systems indicate that the existing and planned major facilities will be adequate to accommodate the expected growth during the five year period of the Plan.

With regar? - 1 4000 issues the Commission has concluded its assessment of the Year 2000 problem relating to its Manac

,n ;.Jormation Systems and critical Systems Operations for the utility systems to make certain uninterruptea up.tions of the Commission. The Commission expects to incur costs of approximately $30,000 to specifically address the SCADA System operating system upgrade and Primary Outage Response System upgrades for hardware and software. The expected completion date for validation of these system changes is March 1999.

Continued testing of workstation PCs will be conducted throughout the next fiscal year with the plan to replace those i

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To the Chairman and Members of the Utilities Commission

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City of New Smyrna Beach, Florida

. November 6,1998 Page 3

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not in comphance with Y2K. The Managenent Information Systems hardware and software has been fully inventoried and a report rendered on the compliancy of each item. Further investigation of compliancy with certain equipment

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will be conducted and corrections expected to be made on or before the fiscal year ending September 30,1999.

FINANCIAL INFORMATION M---aa'aeat of the Commission is resWW for establishing and maintaining an internal control structure designed to ensure that the assets of the Commission are protected from loss, thcA or misuse and to ensure that adequate

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accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The intemal mntrol structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. 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 judgements

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by management.

Budgeting Controls

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L The Utilities Commission maintains an integrated system of budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the approved annual budget. The operating activities of the electric, water, pollution control and water reuse systems are included in the annual budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established by function and activity within each individual operating system. The Commission also maintains a separate enwoa,.uce wanadag system as one technique of accomplishing budgetary control. This system is used exclusively to maintam budgetary control and is not utilized for purposes of presenting financial statements prepared in accordance with generally accepted accounting principles.

As is demonstrated by the financial statements and achedules in the financial section of this report, the Utilities Commission continues to meet its responsibility for sound financial management.

Utility Operations in compliance with Resolution No.16-75, the electric, water and pollution control systems are accounted for as a single enterprise fund. As of September 30,1998, the Utilities Commission served 20,644 electric customers,16,988 water

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customers,14,355 pollution control customers, and 248 reclaimed water customers. Service totals for the last five years are summarized below:

Pollution Reclaimed Fiscal Electric Water Control Water h

Acca.unts Accounts Accountc Accoiinte 1994 19,907 10,618 8,188 20 1995 (*).........

20,055 16,148 13,762 105 1996 20,139 16,275 14,017 165

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1997 20,501 16,727 14,356 188 L'

.1998 20,644 16,988 14,355 248

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The increase in customers experienced in 1995 was the result of a change in the method of billing water and f

pollution control services for multi-family customers, which were previously billed as a single utility customer.

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of the Utilities Commission E

City of New Smyrna Beach,- Florida November 6,1998 Page 4 The current year's operating revenue from the combined utilities systems totaled $32.91 million, an increase of 0.2%

g above last year's $32.85 million. This slight increase is primarily the result of an increase in consumption. The g

Conunission continued reduction in electric utility rates, implemented in conjunction with the Commission's planned expense reduction program in an effort to become more competitive in providing electric services. The amount of revenue from various sources and the increases and decreases over/under last year are shown in the following tabulation:

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Amount Percent 1997 Source of Operating Revenue (000's) ofTotal (000's)

Electric system..

24,699 75.04 % $

(202)

Water system......

4,366 13.26 %

178 Pollution control system 3,403 10.34 %

77 Water reuse system 446 1.36 %

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Totals

$ _ 12 913 100.00 % $

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The current year's operating expenses from the combined utilities system totaled $29.09 million, an increase of 1.30%

l above last year's amount of $28.71 million. This increase is primarily attributed to an increase in costs for operating, maintenance and production expenses in connection with the Commission's share of Crystal River Nuclear Plant No.

3, that was brought back on-line during the fiscal year. The plant was not in service in the prior year. Also, as a sesult of the increase in gross revenue, the required 6*A payment to the City of New Smyrna Beach, Florida increased.

Deprecation expense has increased from the continued capital investment in utility plant in senice. Increases and l

(decreases) in the levels of expenses for the individual systems over the preceding year are showTi in the following 5

tabulation:

Over 1998 (Under)

Amount Percent 1997 Operating Exnense by Function (000's) of. Intal (000's)

Electric system 22,510 77.39 %

(52)

Water system......

3,364 11.56 %

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Pollution control system 3,023 10.39 %

265 E

Water reuse system 191 0.66 %

14 Totals 29.088 100.00 %

$__371 DebtAdministration The revenue certificate debt coverage ratio is a useful indicator of the Utilities Commission's debt position. The revenue certificate coverage has continued to remain strong over the past three years even in years of debt issuance as is summarized in the follcwing in the following three year tabulation:

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To the Chainnan and Members of the Utilities Commission l

C"y of New Smyrna Beach, Florida i a Noamber 6,1998 lg Page 5 1998.

1997 1996 Operating revenues

$ 32,913,781 32,847,472 33,763,090 Interest and other income..

1,436,271 1,097,587 1,076,766 Capacity and other fees 1,755,040 1,785,424 1,383,945 Assessment collections 40.878 559 1.331 Revenues per certificate resolution......

36,145,970 35,731,042 36,225,132 Cost of Operation and Maintenance, net of depreciation and required payments to City...

23.578.729 23.314.340 23.853.373 Net revenues per certificate resolution 12.567.241 12.416.702 12.371.759 Annual debt service requirement 5.309.404 5.083.443 5.542.574 l

Coverage ratio,,............

_2.37 Times _2ALTimes _l33_ Times As of September 30,1998 the Utilities Commission had outstanding $59.44 million of revenue certificates payable.

lg All of these obligations are secured by a first lien on and a pledge of the net revenues of the system.

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The Commission's outstanding revenue certificates ratings from Moody's, Standard & Poor's, and Fitch's as follows:

Moody's Standard & Poor's Fitch's Utilities System Revenue Certificates, j

Series 1992 Aaa AAA (FGIC Insured)

Utilities System Refunding Revenue Certificates, Series 1993 Aaa AAA (FGIC Insured)

Utilities System Refunding Revenue Certificates, Series 1996 AAA (AMB AC Insured) AAA The debt service requirements on these obligations are detailed in the notes to the financial statements and in Schedule 11 of the supplementary section of the financial statements.

Cash Management Cash temporarily idle during the year was invested through the use of a competitive bid procedure in short-term time deposits and -

.o short-term investments. Shorter investment periods were utilized by the Utilities Commission due to the rap mges and uncertainties ofinterest rates expenenced during the fiscal year. The amount ofinterest earned during the year was $1,082,325, none of which was credited to reduce capitalized interest expense for the year.

The Commission's cash and investments on hand at September 30,1998 and 1997, totaled $21.6 million and $20.1 million, respectively. The individual components are as follows; ix

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To the Chairman and Members i

. of the Utilities Commission City of New Smyrna Beach, Florida Novernber 6,1998 Page 6 1998

.1997 Current assets:

Operating cash and cash equivalents 1.915.706 1.856.949 Restricted assets:

Debt service funds..

6,942,225 8,377,546 Renewal and replacement funds 7,888,954 5,426,009 Construction funds....

1,078,165 Customer deposits 1,122,372 1,041,558 CR-3 decormnissioning fund 1,629,090 1,427,542 Rate stabilization fund 1.021.510 1.982.120 19.682.316 18.254.775 Total cash and investments

$ lLMM21

_2fL11L7M The Commission's investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Acmrdingly, deposits were either insured by federal depository insurance or collateralized in accordance with the Florida Security for Public Deposits Act (the "Act"). All collateral on deposits was held either by the Commission, or by the State of Florida in accordance with the applicable provisions of the Act. All of the Commission's investments held at year-end are classified in the category oflowest credit risk (backed exclusively by the full faith and credit of the U. S. government) as defined by the Governmental Accounting Standard:: Board.

OTHER INFORMATION IndependentAudit Resolution Number 28-78 and other local and state statutes require an annual audit of the books of account, financial g j records and transactions of all administrative departments of the Utilities Commission by an independent certified gI public accountant selected by the Utilities Commission. The certified public accounting finn of Brent Millikan &

Company, P.A. was selected by the Commission to satisfy this requirement. Their independent auditors' report on the financial statements and schedules of the Commission has been included in the financial section of this report.

Awards - Certificate ofAchievement The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Utilities Commission, City of New Smyrna Beach, Florida, for its component unit financial report for the fiscal year ended September 30,1997. We are also quite proud of the fact that we have been awarded with this Certificate for the nineteenth consecutive year.

In order to be awarded a Certificate of Achievement, the Commission must publish an easily readable and efliciently organized component unit armual financial report, whose contents conform to program standards. Such reports must E

satisfy both generally accepted accounting principles and applicable legal requirements.

E A Certificate of Achievement is valid for a period ofone year only. We believe our current report continues to conform a

to Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for g

another certificate.

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To the Chairman and Members 1

of the Utilities Commission t

City of New Smyrna Beach, Florida November 6,1998 I

Page 7 Acknowledgments The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the entire staff of the Finance Department. Each member of the department has our sincere appreciation I

for the contributions made in the preparation of this report.

We would also like to thank the individual members of the Utilities Commission for their interest, support, and leadership in planning and conducting the financial operations of the Utilities Commission in a most responsible and progressive manner.

Respectfully submitted,

&a Ronald L. Vaden Roberto O. Montalvo, CPA Director of Utilities Chief Financial Officer I

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FINANCIAL SECTION This section is composed of thefollowing:

Independent Auditors' Report FinancialStatements i

Supplemental Financial Information I

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9 INDEPENDENTAUDITORS' REPORT 8

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BRENT MILLIKAN & COMPANY, P.A.

CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Honorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida New Smyrna Beach, Florida We have audited the accompanying balance sheets of Utilities Commission, City of New Smyrna Beach, Florida, as of September 30,1998 and 1997, and the related statements of revenues, expenses and changes in retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of Utilities Commission, City of New Smyrna Beach, Florida's m==aamaat Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonabic assurance about whether the financial statements are free of material misstatement. An audit include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Utilities Commission, City of New Smyrna Beach, Florida, as of September 30,1998 and 1997, and the results ofits operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated November 6,1998, on our consideration of Utilities Comnussion, City of New Smyrna Beach, Florida's internal control structure and a report dated November 6,1998 on its compihnce with laws and regulations.

Our atv wre conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of Utilities Commission, City of New Smpna Beach, Florida. Such information, except for the statistical data, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical data has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it.

In connection with our audit, nothing came to our attention that caused us to believe that Utilities Commission, City of New Smyrna Beach, Florida, was not in compliance with any of the terms, covenants, provisions, or conditions of section 16 of Resolution No. 28 78, dated June 30,1978, as amended However, it should be noted that our audit was not directed primarily toward obtaining knowledge of such noncompliance.

New Smyrna Beach, Florida Nov:mber 6,1998 1

205 MAGNOLIA ST. + NEW SMYRNA BEACll, FL 32168 + (904) 4271333 + FAX (904) 427 5823 MEMBER: Americam inmHtute of Certified Public Accountants and AICFA Private Companies Practice Section

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f FINANCIAL STATEMENTS 7

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I COMPARATIVE BALANCE SIIEETS September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA l

NEW SMYRNA BEACH, FLORIDA 5

ASSETS I

1998 1997 UtilityPlant:

Electric plant.

60,146,228 59,107,426 Water plant.

30,275,976 29,795,520 Pollution control plant.

25,576,222 25,481,299 E

Water reuse plant.

5,244,970 5,230,530 E

General plant.

6,596,982 6,523,555 77,MD,37F 126,13E3W Less: accumulated depreciation and amortization.

(50,385,221)

(47,097,682) 77,455,157 79,040,64T Construction work in progress.

17,693,274 4,973,836 Utility plant, net of accumulated depreciation and amortization.

95,148,431 84,014,484 Restricted Asets:

Cash and cash equivalents.

19,398,016 17,922,575 Investments, at cost 284,300 332,200 Total restricted assets.

19,682,316 18,254,775 Current Assets:

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l Cash and cash equivalents 1,915,706 1,856,949

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Accrued inte. rest receivable -

120,875 158,253 Accounts receivable (net).

1,798,076 1,769,124 g

Unbilled accounts receivable.

1,328,664 2,138,304 g

Inventories.

1,578,577 1,623,986 Prepaid expenses and other assets 90,708 76,227 Assessments receivable.

34,252 75,130 Total current assets.

6,866,858 7,697,973 Deferred Charges and Other Assets:

Unamortized debt expense.

985,131 640,885 Total assets.

122,682,736 110,608,117 I

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The accompanying notes are an integral part of the financial statements.

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Lu Statement 1 LIABILITIESAND UTILITYEQUITY l998 1997-

. UtilityEquity:

Contributed capital.

36,435,011 34,679,972 Retained Earnings:

Reserved for restricted debt service funda -

3,020,699 4,618,055 Unreserved.

7,437,818 4,199,% 4 10,458,517 8,81K0T9~

1 Total utility equity -

46,893,528 43,497,991 Long-Term Debt:

Revenue certificates payable (net).-_ _

54,983,300 57,013,155 Note Payable-State Revolving Fund Loan (net).=

8,921,581 0

- Total long-tenn debt.

63,904,881 57,013,155

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- Restricted Fund Liabilities:

Revenue certificates payable (current portion).

2,285,000 2,195,000 i

Accrued interest payable.....

1,636,526 1,564,491 Accounts payable; 89,584 101,335 l

Construction retainage payable.

1,942,841 0

Cuskxners' deposits. --

1,122,372 1,041,558

- Deferred allowance for d~=missioning costs -

1,629,090 1,427,541 Totalrestrictedfundliabilities.....

8,705,413 6,3?^,925 Current Liabilities:

Accounts payable -

1,391,845 1,750,517 Accrued liabilities -

664,634 680,358 Due to other governments -

564,432 799,728 Totalcurrentliabilities...

2,620,911 3,230,603

. Other NoncuTent Liabilities:

Deferred compensated absences :

432,854 439,262 Deferred credits - other ;

125,149 97,181 Total other noncurrent liabilities.,

558,003 536,443 Totalliabilities,

75,789,208 67,110,126 Total liabilities and utility equity.

122,682,736 110.608,117 3

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r-1 STATEMENTS CF REVENUE, EXPENSES AND St:t:m:nt 2 CHANGES IN RETAINED EARNINGS l

For the Fiscal Years Ended September 30,1998 and 1997 E

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACH, FLORIDA e

I 1998 1997 3

Operatmg Revenue:

Sales.

32,570,727 32,525,896 Other revenue.

343,054 321,576 Total operating revenue 32,913,781 32,847,472 Operating Expenses:

Production expenses.

16,652,829 16,469,270 Transmission, distribution, and sewage collection and treatment.

2,657,672 2,624,394 Customer accounting.

660,678 726,214 Administrative and general.

3,406,001 3,312,462 E

Required payments to the City of New Smyma Beach.

2,018,552 1,949,594 E

Depreciation and decommissioning.

3,692.111 3,632,710 Total operating expenses.

29,087,843 28,714,644 Operating income,

3,825,938 4,132,828 Nonoperating Revenue (Expense):

Interest camings.

1,082,325 898,260 Otherincome -

353,946 199,327 Interest and debt expense =

(3,422,072)

(3,462,756) g Other expenses.... ---

(40,092)

(39,840) g Loss on disposal of assets.

(159,547)

(101,788)

Total nonoperating (expense)--

(2,185,440)

(2,506,797)-

Net income..

1,640,498 1,626,031 Retained earnings, beginning of year.

8,818,019 7,191.988 Retained earnings, end ofyear.

10,458,517 8,818,019 I

I

~

I I

I The accompanying notes are an integral part of the fmancial statements.

I 4

l STATEMENTSCFCASif FLOWS Statement 3 For the Fiscal Years Ended September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACil, FLORIDA NEW SMYRNA BEACll, FLORIDA 1998 1997 Cash Flows From Operating Activities:

Operating income....

3,825,938 4,132,828 Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation, decommissioning, and nuclear fuel amortization.

3,782,949 3,632,710 Provision for losses on receivables.

60,127 51,328 Decrease (increase) in operating assets:

Accounts receivable.

(89,079)

(159,211)

Unbilled accounts receivable....

809,640 (265,134)

Assessments and interest receivable.

40,878 559 Inventories.

45,409 (991)

Prepaid expenses.

(14,481) 73,857 Increase (decrease) in operating liabilities:

Accounts payable.

1,572,419 99,762 I

Due to other governments.

(235,296) 125,338 Customer deposits.

80,814 17,638 Accrued liabilities..

(15,724)

(64,811)

Deferred liabilities.

21,560 98,938 Net cash provided by operating activities.

9,885,154 7,742,811 Cash Flows From Noncapital and Related Financing Activities:

I Nonoperating revenue..

"1,94 6 199,327 Nonoperating expenses..

( 6,092)

(39,840)

Net cash provided by (used in) nonctpital and I

related financing activities.-

313,854 159,487 Cash Flows From Capital and Related Financing Activities:

I Debt reduction outlays.

(2,195,000)

(1,680,000)-

Amount paid in bond consent.--

(406,038)

O contributed capital.

1,755,039 1,875,616 Proceeds from issuance of debt..

8,921,581 0

I Proceeds from sale of pmperty and equipment..

0 12,448 Acquisition and construction ofcapital assets.

(14,758,277)

(4,499,112)

Interest paid.

(3,149,718)

(2,966,600)

I Net cash provided by (used in) capital and related financing activities..

(9,832,413)

(7,257,648)

Cash Flows From Investing Activities:

I Proceeds from sale and maturities ofinvestment securities.

47,900 3,045,500 Interest received.

1,119,703 879,618 Net cash provided by (used in) investing activities.

1,167,603 3,925,118 I

Net increase (decrease) in cash and cash equivalents.

1,534,198 4,569,768 Cash and cash equivalents, beginning of year.

19,779,524 15,209,756 Cash and cash equivalents, end of year.

21,313,722 19,779,524 The accompanying notes are an integral part of the financial statements.

L 5

5 '

NOTES TO THE FINANCIAL STATEMENTS

1 1

NOTES TO THE FINANCIAL STATEMENTS September 30,1998 and 1997 -

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA.

Note 1:

General Summary The accounting policies of tin Utilities Commission, City of New Smyrna Beach, Florida, (the " Utilities of Commission") conform to the pnerally accepted accounting principles as promulgated by the American Significant Institute of Certified Public Ac:otmtants, the Financial Accounting Standards Board, the Governmental Accounting Accounting Standards Board, and the Federal Energy Regulatory Commission.

Polices Reporting Entity The Utilities Commission, was created in 1967 through the passage of Chapter 67-1754, Laws of Florida, Special Acts of 1%7 (House Bill 1669) which amended the Charter of the City of New Sm>Tna Beach, Florida, to create the Utilities Commission. In a referendum held October 2,1984, City voters approved amendments to the City Charter establishing criteria requiring the funds and entities related to the operation of the Utilities Commission be included as a component unit of the City of New SmyTna Beach, Florida, and an integral part of the City's reporting entity. The basic financial statements are incorporated in the City's Comprehensive Annual Firencial Report as an enterprise fund activity.

In 1983, the Utilities Commission entered into a participation agreement with Florida Municipal Power Agency (FMPA) for an entitlement share of electric capacity and electric energy from FMPA's undivided ownership interer in Florida Power and Light Company's St. Lucie Unit No. 2, a nuclear generating unit.

]

The Utilities Commission's role in the agreement is limited to that of a participant contractually obligated i

to purchase electric capacity and electric energy. The agreement between the Utilities Commission and FMPA does not meet the criteria for inclusion within the reporting entity of the Utilities Commission. The agreement owmny provides that the arrangement is not a joint venture and neither FMPA nor the other utilities which entered into participation agreements with FMPA for entitlement shares from FMPA's undivided ownership interest in St. Lucie Unit No. 2 are accounting for the agreement as a joint venture.

Accordingly, the Utilities Commission is not accounting for the agreement as a joint venture.

Basis ofAccounting Basis of =" M refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. it relates to the. timing of the measurements made, regardless of the measurement focus applied. The Utilities Commission utilizes the accrual basis of accounting. By utilizing tids method, revenues are remgnized when they are carned, and expenses are recognized as they are incurred Unbilled utility service receivables are recorded so as to provide a better matching of service revenues and the costs of providing the service. Based ort the accounting and reporting standards set forth in Government Accounting Standards Board (GASB) Statement No. 20, " Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entitles that use Proprietary FundAccounting," the Utilities Commission has opted to apply only those accounting and reporting proriouncements issued by the GASB subsequent to November 30,1989,

[

Budget andBudgetary Accounting An annual budget was adopted for the electnc, water, pollution control and water reuse utility systems. The budget was adopted on a basis consistent with generally accepted accounting principles (GAAP) except that certain other cash receipts and payments are treated as budgetary items to maintain effective fiscal and budgetary control over the collection and disposition of all commission resources. Specific budgetary control is exercised over internal operating transfers to restricted funds, payments of principal on long-term debt obligations, and collections of contributed capital which are recognized in the budget as additions and/or deductions to reconcile budgeted net cash receipts to reported net income (loss) for each system. Budget appropriations are prepared by the administrative staff and approved as provided by law by the Utilities Commission. Budgetary contrcl is exercised at the departmental level. Budget amendments, if any, can be requested by the Director of Utilities. However, all budget amendments must be approved by the Utilities Commission. Unexpended appropriations for operations lapse at year end. No supplemental appropriations were required for the current year.

6 i

L

NOTES TO TIIE FINANCIAL STATEMENTS (Continued)

September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA DEACI1, FLORIDA NEW SMYRNA BEACll, FLORIDA Note 1:

Cash and Cash Equivalents Summary The Utilities Commission invests all cash balances in interest bearing accounts. Earnings from these of imestments are appropriately allocated to the investing fund accounts based upon the investment equity and Significant are used, where applicable, to finance general Utilities Commission operations. For purposes of the E

Accounting statement of cash flows, the Utilities Conunission considers all highly liquid debt instruments purchased with E

Polices original maturity dates of three months or less to be cash equivalents.

(Continued)

Investments Imtstments are recorded at cost or amortized cost, which approximates market. Adjustments are made to cost, for any premium or discount, which is amortized over the maturity of the investment.

Receivables Accounts receivable have been reported net of an allowance for uncollectible accounts which has been provided based upon management's analysis of historical trends. Utility operating revenues are recognized on the basis ofcycle billings rendered monthly. Unbilled accounts receivable are accrued at September 30th, to recognize the sales revenues earned between the last meter reading date made through the end of the year.

Inventories Imentones are priced at cost by the use of the "first-in, first-out" method of accounting. The effect of tids method is to flow the costs of the materials and supplies in the order in which they are purchased and to assign a balance sheet inventory valuation more nearly at current replacement value. Electric line g

transformers, electric meters, and replacement units for the generating plants are classified as utility plant 3

in accordance with accepted industry practices set forth by the National Association of Regulatory Utilities Commissioners (NARUC).

Unamortized Debt Discount, Issuance Expenses, and Deferred Amountfrom Refunding Original issue discounts, issuance expenses, and deferred amounts from refundings of utilities certificates are appropriately deferred and amortized over the remauung terms of the applicable revenue certificate issues (or life of the old debt, whichever is shorter, for deferred amounts from refundings) using the bonds l

ontending method which approxunates the interest method. Unamortized revenue certificate discounts are presented in aggregate in the financial statements as a reduction of the carrying cost of the related long-term 3

debt. Unamortized debt issuance costs and deferred amounts from refundings are presented as other assets.

g, RestrictedAssets Proceeds from debt, funds required to be set aside for the payrnent of revenue bonds debt sersice and contingencies, and other specific assets set aside for restricted purposes which cannot be used for routine operations are classified as restricted assets since their exclusive use is limited by applicable bond covenants and other legalindentures.

Utility Plant Utility plant is stated at historical or estimated historical cost. The costs of additions, replacements, and L

renewals of units of property are added to utility plant. The cost (estimated, if not known) of units of I

property retired, less net salvage, is charged to accumulated depreciation and the appropriate asset account.

Donated utility plant is stated at its estimated fair market value on the date donated.

1 Maintenance and repairs of property and replacements and renewals ofitems determined to be less than units of property, are charged to operating expense as incurred. Construction period interest is capitalized net of j

interest earned on unexpended construction funds in accordance with the applicable provisions of Financial Accounting Standard Number 62 and, therefore, depreciated over the mmaining useful lives of the related assets.

Il 7

f L

N LTES TO THE FINANCIAL STATEMENTS (Contirued) l September 30,1998 and 1997 l UTILITIES COMMISSION, CrrY OF NEW SMYRNA BEAcil. FLORIDA NEW SMYRNA BEACil, FLORIDA

)

Note 1:

Depreciation is provided for by utilization of the straight line method (half-year convention in year of l

Summary acquisition) calculated on a service life basis to amortize the cost of the assets over their economic estimated l

of usefullives which are as follows:

Significant Accounting

.Ymars l

Polices Electric System:

(Continued)

Production plant:

Nuclear production.......

27 l

Diesci production..............

20-40 Transmission plant.......

30-55 Distribution plant 28-45 General plant:

Structures and improvements.,

40 Other general plant.

5-20 Water System:

Source of supply plant....

25 50 Pumping plant 35 Water treatment plant.

40-50 Transmission and distribution plant.,

25 50 General plant:

Structures and improvements...........................

35 Other general plant.......

10-35 Pollution Control System:

Collection plant.........................

35-50 Pumping plant:

Structures and improveraents.............................

50 Pumping equipment.....................................

25 Treatment and disposal plant..............................

25-40 General plant..........

10-50 Common Plant:

Structures and improvements............................

35 Other general plant.........

5-15 Water Reuse System:

Structures and improvements........................

50 Transmission and distribution plant......

50 CompensatedAbsences The portion of employee payroll costs paid subsequent to year-end attributable to senices performed prior to year-end is recorded and recognized as a current liability. Employees earn annual vacation leave at the rate of 80 hours9.259259e-4 days <br />0.0222 hours <br />1.322751e-4 weeks <br />3.044e-5 months <br /> per year for one through five years of senice and 80 hours9.259259e-4 days <br />0.0222 hours <br />1.322751e-4 weeks <br />3.044e-5 months <br /> plus eight hours for each two years senice over the first five years to a maximum of 160 hours0.00185 days <br />0.0444 hours <br />2.645503e-4 weeks <br />6.088e-5 months <br /> per year. All outstanding vacation leave is payable upon tennination. Employees accumulate ten hours of sick leavt credit for each month on regular pay status. Employees make an irrevocable election regarding the accumulation of credits and the amounts of credits which can be received upon termination. One option provides for the payment of 75 percent of unused sick leave at the existing pay rate at termination. The second option requires the " banking" of at least 240 accumulated hours. Hours accumulated in excess of 240 hours0.00278 days <br />0.0667 hours <br />3.968254e-4 weeks <br />9.132e-5 months <br /> will be paid annually at 75 percent of the preceding July 1st pay rate.

l l

8

NOTES TO TIIE FINANCIAL STATEMENTS (Contitued)

September 30,1998 and 1997 UTILfflES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACli, FLORIDA l

Note 1:

Deferred Credits and Operating Reserves (for Nuclear Re-Fueling and Decommissioning Costs)

Summary The reserve for nuclear re-fueling and maintenance outage is an operating reserve established to account for of the estimated charges to be incurred for the removal and installation of nuclear fuel assemblies. Charges are Significant made against the reserve at the time the actual re-fueling takes place. The reserve for nuclear plant Accounting deconunissioning costs was established to account for the estimated costs of nuclear plant decommissioning.

Polices Amounts cinrged to expense annually (and appropriately credited to deferred allowance for decommissioning (Continued) costs) are based on estimated future decommissioning costs in accordance with Federal Energy Regulatory Commission requirements. Charges against the reserve will be made at the actual time of decommissioning.

Contributed Capital Contributions of capital to a proprietary fund from any source received are recorded in an appropriately l'

captioned contributed capital account.

W Equity Reserves g

Funded reserves are used to record a portion of retained earnings which must be segregated for some future g

use and which are, therefore, not available for further appropriation or expenditure.

Use ofEstimates Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Actual results could vary froin the estimates assumed in preparing the financial statements.

Rates, Revenues and FuelErpense g

Revenues are recogmzed based on monthly cycle billings to customers. The rate schedules are approved by g

the Utilities Comnussion. 'Ihe electric rate schedule contains an energy cost adjustment clause which reflects the cost of fuel as well as the energy and fuel components of purchased power. Generally, the effect of the increases and/or decreases in the cost of energy is recovered over a twelve month period and is determined y the difference between actual applicable fuel costs and the costs actually billed during the same period.

N eost of.-Jear fuel is amortized to fuel expense based on the quantity of heat produced for generation tf electric energy h relation to the quantity of heat expected to be produced over the life of the nuclear fuel core.

Note 2:

Pursuant to the applicable provisions of Chapter 280, Florida Statutes, The Florida Securityfor Public Cash DepositsAct ("the Act"), the State of Florida, Department ofInsurance, Bureau of Collateral Securities, and Deposits the Department of Treasury have established specific requirements relative to the security and and collateralization for public deposits. Accordingly, banks qualifying as a public depository in the State of g

Investments Florida must adopt the necessary procedures outlined in these statutes and meet all of the requirements of 3

this chapter to be designated by the State Treasurer as eligible to receive deposits from municipal depositors.

Collateral having a market value equal to 50% of the average daily balance for each month of all public E

deposits in excess of any applicable depository insurance is required to be pledged or deposited with the State g

Treasurer to secure such deposits. Additional collateral, up to a maximum of 125% may be required if deemed necessary under the conditions set forth in the Act. Securities eligible to be pledged as collateral are generally limited to obligations of the United States govermnent and any state thereof and are held in the name of the State Treasurer's ofIice. Compliance with the provisions of Chapter 280, Florida Statutes, is monitored by the Department ofInsurance.

I 9

.v

[

NOTES TO 'ITIE FINANCIAL STATEMENTS (Cortimd)

Sep' ember 30,1998 and 1997 UTILinES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACil, FLORIDA

[

Note 2:

Deposits Cash At September 30,1998 and 1997, the carrying amounts of the Utilitie:; Commission's deposits, including Deposits certificates of deposit, were $14,655,797 and $11,675,937, respectively. The September 30,1998, bank and balances totaled $15,929,224 of which $100,000 was covered by federal depository insurance and Investments

$15,829,224 was secured in accordance with the statutory provisions of the Act. Included in the carrying

(

(Continued) amount of Commission deposits is $10,718 in petty cash and change funds.

Investments

[

The Utilities Commission's imestment policies are governed by state statutes and local resolution. Allowable

. investment instruments include: bonds, notes, certificates ofindebtedness, treasury bills, or other securities which are guaranteed by the full faith and credit of the United States of America, interest bearing savings accounts, interest bearing certificates of deposit and interest bearing time deposits. At September 30,1996,

(

the Commission's imestments included United States Treasury State and Local Government (SLGS) Bonds and overnight investments in money market funds which were secured by U. S. Treasury obligations. The imestments are categorized to give an indication of the level of risk assumed by the Conunission at year-end.

Category 1 includes investments that are insured, registered, or collateralized under the applicable sections of the Act, or for which the securities are held by the Commission or its agent in the Commission's name.

Category 2 includes uninsured and unregistered investments for which the securities are held by the banks' trust departments or agents in the Commission's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the banks, or by their trust departments or agents but not in the Conunission's name.

(

At September 30,1998, the Commission's cash and investments are categorized as follows:

Carrying Market Tyne of Investment Onteanry 1 Cateenev 2 Cateanrv 3 yg[gg yghg; U.S. Treasury State and Local Government Series (SLGS) Bonds............

$ 284,300 284,300 284,300 Repurchase agreements.............

6.657.925 6.657.925 6.657.925 Totals

$ 284.300

- 6.657.925 g 6.942 225 Note 3:

A summary of net accounts receivable at September 30, is as follows:

Accounts Receivable 1998 1997 Billed customer accounts receivable..

$ 1,855,114 1,826,162 Less: allowance for doubtful accounts (57 038)

(57.038)

Totals..............

$ 1.798.076 1.769.124

[

[

{

r m

10

NOTES TO TIIE FINANCIAL STATEMENTS (Cetirued)

September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACll, FLORIDA NEW SMYRNA 13EACil. FLORIDA Note 4:

A summary of restricted assets at September 30, is as follows:

Restricted Assets Deposits /

Accrued 1998 1997 Cash investment Interest Totals Total Debt service funds:

1992 Sinking Fund......... $

632,977 632,977 622,526 1992 Reserve Fund........

1,074,200 1993 Sinking Fund.........

1,126,949 1,126,949 1,117,874 1993 Reserve Fund........

1,655,129 1996 Sinking Fund.........

1,299,983 1,299,983 1,304,091 1996 Reserve Fund 2.603.727 3.059.909 3.059.909 8.377.547 Renewal and replacement funds:

Res. No. 28-78........

3,522,843 3,522,843 3,169,351 Contingency Reserve funds...

3,882,316 3,882,316 Capacity fee fund.........

4.366.111

- 4.366.111 2.256.658 7.888.954 3.882.316

- 11.771.270 S.426.009 Construction funds:

Wastewater Treatment Plant 1,078,165 1,078,n >

Customer deposits...........,

1,122,372 1,122,372 1,041,558 CR-3 decommissioning fund....

1,629,090 1,629,090 1,427,54i Rate stabilization fund........

LO_2M0 1.021.510 1.982.120 Totals................. $g 6.942.225

-gg I

Note 5:

A summary of utility plant at September 30, is as follows:

Utility

{

Plant Pollution Water Electric Water Control Reuse Common

,1,09,,8 j992 i

$91,906 2,972,212 2,972,212 Land and land rights.

$ 1,672.728 487,145 220,433 Structures and improvements.

2,602,007 5,110,831 4,851,456 1,685,684 2,348,679 16,598,657 16,594,581 Production plant, nuclear fuel and treatment plant.

11,410,930 6,164,121 4,297,323

- 21,872,374 21,774,437 Transmission, distribution, and collection and treatment plant 43,276,351 17,767,157 15,161,808 3,514,762

- 79,720,078 78,319,886 Other general plant and equipment 1,184 2 L2, 746 722 1.045.202 44.524 3.656.397 6.677.057 6.477.214 60,146J28 30,275,976 25,576,222 5,244,970 6,596,982 127,840,378 126,138,330 Accumulated depreciation,

(27.670.411) (8.636302)(10.382.666) (472.059) (3.223.783) (50.385.221) (47.097.682) 32,475,817 21,639,674 15,193,556 4,772,911 3,373,199 77,455,157 79,040,648 Construction in progress 1.362.485 1.160.431 13.749.172 1.146.229 274.957 17.693.274 4.973.836 Utility plant, net.

$ 33.838302 22.*00.105 28.942.728 5.919.140 3.648.156 95.148.431 84.014.484 Depreciation expense totaled $3,490,562 and $3,450,710 for 1998 and 1997, respectively. Capitalized interest on outstanding tax-exempt borrowings charged (credited) to projects during construction was $116,617 and

$50,830, for 1998 and 1997, respectively (net of interest earned on unexpended long-term debt proceeds g

totaling $ and $25,670, respectively). There was no interest earned on unexpended loan proceeds relating g

to the State Revolving Fund Loan.

I I1 L'

NOTES TD THE FINANCIAL STATEMENTS (Contitued)

September 30,1998 and 1997 1

ITf!LITIES COMMISSION, CirY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA

{

l 1

Note 6:

A summary oflong-term debt outstanding at September 30, is as follows:

I l-Long-Term Debt

.1223

.1222

~ Utilities System Revenue Certificates, Series 1992--4.10% to 5.60%

l due serially to 2004, with $515,000 (5.35%), $1,020,000 (5.80%)

$1,230,000 (6.00%) and $ 10,160,000 (6.00%) term bonds due in 2002,2007,2010,' and 2013, respectively.........,,......

$ 14,180,000 14,380,000 Utilities System Refunding Revenue Certificates, Series 1993-3.20% to 5.25% due serially to 2011, with $3,685,000 (5.00%) and $6,245,000 (5.00%) term bonds due in 2014 and 2019, respectively.........

21,395,000 21,970,000 Utilities System Refunding Revenue Certificates, Series 19%--4.10% to 5.30% due serially to 2011............................

23 860.000 25 280.000 Total utilities certificates outstanding....................

59.435.000 61.630.000 Less: current maturities:

Series 1992 Certificates..............................

215,000 200,000 Series 1993 Certificates...........................

'595,000 575,000

)

Series 19% Certificates................................

1.475.000 1.420.000 1

2.285.000 2.195.000 Long-term certificate debt............................

57,150,000 59,435,000 Less: deferred amount on advance refunding....................

(1,154,872) (1,321,782) unamortized debt discount (1.011.828) (1.100.063)

Net long-term certificate debt...........................

54.983.300 57.013.155

' Note Payable-State Revolving Loan Fund-construction loan consisting of $9,086,000 at an interest rate of 3.22% per annum; payable in 40 semi-annual payments of $639,603, commencing in February, 2000 through 2020.................................

8.921 581 Total long-term debt, net.......................

$ M.12&l113.1 The authorization for the above described revenue certificates outstanding (collectively referred to as the "Centificates") provides that the Commission will not issue additional obligations except for the construction and acquisition of additions, extensions and improvements to the system or for refunding purposes and except upon the parity conditions provided in the authorizing resolution. The Certificates are payable from and secured by a first lien upon and pledge of the net rewnues derived from the operation of the system. The Certificates do not constitute general indebtedness of the Commission or the City of New Smyrna Beach, Florida (City), and the City is not obligated to levy any taxes for the payment thereof.

Under the terms ofits long-tenn debt agreements, the Commission has agreed to maintain certain restricted funds and to comply with the covenants contained in such agreements which require specific actions to be taken by the Commission. Certain of these agreements contain the following provision relating to the right of the obligation holder:

I' 12

I NOTES TO TIIE FINANCIAL STATEMENTS (Co ti u;d) l September 30,1998 and 1997 UTILfrIES COMMISSION, CITY OF NEW SMYRNA BEACil, FLORIDA NEW SMYRNA DEACil, FLORIDA 1

l Note 6:

"Any holder of certificates or any coupons appertaining thereto issued under the prosision hereof Long-Term or any tmstee acting for the holders of such certificates may by suit, action, mandamus or other Debt proceedings in any court of competent jurisdiction, protect and enforce any and all rights, (Continued) including the right to the appointment of a receiver, existing under the laws of the State of Florida, or granted and contained herein, and may enforce and compel the performance of all duties herein required or by any applicable statutes to be performed by the Commission or by any officer thereof. Nothing herein, however, shall be constmed to grant to any holder of the certificates any lien on any real property of the Commission or the City."

On November 17,1997 the Commission executed a construction loan agreement with the State of Florida, Department of Envirotunental Protection, through the State Revolving Fund Loan program, for the purpose of constructing the 6.0 MGD Advanced Wastewater Treatment Plant. Funds to be disbursed from this loan will amount to $17,994,608. The amount borrowed under this agreement has been approved in total of

$18,840,200. The total loan has been arranged as follows: $9,086,000 at the rate of 3.22%, $1,924,500 at 3

the rate of 3.18%, and $7,829,700 at the rate of 3.11% Repayment of the loan will be in the form of 40 g'

semi annual payments of principal and interest of $639,603, commencing February 15, 2000. During the fiscal year ended September 30,1998 the Commission received loan advances totaling $8,921,581.

The aggregate annual long-term debt service requirements in each of the next five years are as follows:

$5,292,369 - 1999; $6,573,050 - 2000; $6,571,956 - 2001; $6,563,192 - 2002; $6,575,853 - 2003; and

$85,877,937 - thereafter.

Note 7:

In prior years, the Utilities Commission defeased certain of its outstanding utilities revenue certificates (and Prior certam general obligationbonds of the City of New Smyrna Beach, Florida), originally issued for the System Years' and payable from tevenues derived fmm the operation of the utilities systems by placing the proceeds of new Defeasance certificates in irrevocable trusts to provide for all future debt service payments on the defeased of Debt certificates / bonds. Accordingly, the trust account assets and the liabilities for the defeased bonds are not included in the accompanying financial statements. They include the following at September 30, 1228 1222 1978 Refunding:

Series 1962 refunding-3.5% due through 1999 35,000 35,000 Series 1962-3.9% to 4.2% due through 2000 290,000 540,000 Series 1965--4.2% to 4.25% due through 2004 1,520,000 1,565,000 Series S-1963-3.9% due through 2002 100,000 125,000 Series T-1963--4.0% due through 2003 323,000 383,000 Series B-1965-3.7% to 4.1% due through 2003 200,000 230,000 Series 1975-3.75% to 6.2% due through 2004 1,220,000 1,350,000 Series 1975A-5.0% to 6.6% due through 2005 1,850,000 2,000,000 Series 1976--4.5% to 6.2% due through 2001 1,330,000 1,800,000 1993 Refunding:

Series 1990--6.10% to 7.10% due through 10/98 call date 13,600,000 13,840,000

(

1

\\II

NOTES T3 THE FINANCIAL STATEMENTS (Conthued)

September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACII, FLORIDA -

Note 8: _ The following is a summary of changes in contributed capital:

Contributed Capital Customer Federal Customer Contrihntinn" fERA13 Assessments IDlala Balances, September 30,19%

$ '23,779,716 7,306,904 1,717,736 32,804,356 Additions................

1.875.616 1.875.616 Balances, September 30,1997 25,655,332 7,306,904 1,717,736 34,679,972 Additions...............

1.755.039 1.755.039 Balances, September 30,1998

$ 27.410.371 7.306.904 1.717.736 36.435 011 Note 9:

The legislation that created the Utilities Commission requires it to pay to the general fund of the City of New Required Smyrna Beach a sum equal to six percent (6%) of the gross revenues from utilities under Commission Payment control. This payment is subordinate to the debt service requirement of all utilities revenue certificates and To City is recorded as a quasi extemal transaction for financial reporting purposes Amounts paid to the City for the years ended September 30,1998 and 1997 totaled $2,073,499 and $2,004,159, respectively.- Of these payment amounts, $2,01R,552 and $1,949,594 were charged to operations for the years ended September 30, 1998 and 1997, respectively. The remaimng amounts totahng $54,947 and $54,565, respectively, attributable to contributed capital collections from the Mandate Pollution Control Plant cost surcharge, were appropriately recognized as reductions of contributed capital by the Commission. The balances due to the City at September 30,1998 and 1997, totaled $198,558 and $417,870, respectively.

Note 10:

Defined Benefit Pension Plan Employee Plan Dexription. The Comnussion contributes to the Florida (public employee) Retirement System of the Pension State of Florida, a cost-sharing, multiple-employer defined benefit pension plan created in December,1970, Plans that acts as a common investment and administrative agent for municipalities and other qualifying political subdivisions in the State of Florida. The pension plan, which is administered by the State of Florida, Department of Administration, Division of Retirement, provides retirement and disability benefits and death benefits to plan members and beneficiaries. All retirement legislation must comply with Article X, Section 14 of the State Constitution and with Part VII, Chapter 112, Florida Statutes. Both of these provisions require that any increase in retirement benefits must be funded concurrently on an actuarially sound basis.

The Florida Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for the plan. That report may be obtained by writing to Florida Retirement System, Department of Administration, Division of Retirement, Cedars Executive Center, Building C,2639 North Monroe Street, Tallahassee, FL 32399 1560.

Funding Policy. The funding methods and determination of benefits payr.ble are provided in the various acts of the Florida Legislature, which created the fund, including subsequent amendments thereto. In presious years, these acts provided, in general, that funds were to be accumulated from employee contributions, employer contributions, State appropriations and income from investments of accumulated funds. The act also provides that, should the accumulated funds in the fund at any time be insufficient ti meet and pay the benefits due, the employer shall supplement the funds by an appropriation from current funds, or from any revenues which may lawfully be used for said purposes, in an amount suflicient to make up the deficiency.

14

?

NOTES TO Tile FINANCIAL STATEMENTS (Centinued)

September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA IlEACil, FLORIDA NEW SMYRNA BEACll, FLORIDA Note 10:

The Commission's contributions to the plan for the fiscal years ended September 30,1998,1997, and 1996 Employee were $759,808, $782,675 and $919,453, respectively. The contribution percentages for qualifying Pension compensation were 16.45%,17.43% and 17.00% for the 1998,1997, and 1996 calendar years, respectively.

Plan There were no employee contributions made during these years. The contribution percentage for the Director (Continued) was reduced to 10.61%, effective October 1,1997 with a change in classification from the Standard Florida Retirement System Class to the Senior Management Class.

Dellned Contribution Plan The Commission contributes to the Utilities Commission of New Smyrna Beach Retirement Plan, a defined contribution plan which is administered by the Principal Mutual Life Insurance Company, P. O. Box 9396, Des Moines, IA 50306-9396. Under Resolution No. 54-95, the Commission established this plan for all regular full time and regular part time employees hired on or after January 1,1996 by revoking its participation in the Florida Retirement System pursuant to Chapter 95-338, Laws of Florida with respect to such employees. All qualifying employees at least 18 years of age participate in the plan on the date of employment. Normal retirement and disability benefits are available after 5 years ofservice and attaining age

62. Early retirement and disability benefits are available after 5 years of service and attaining age 55.

Employer contributions to the plan are 8% of the gross employee wages. Employees may make supplemental contributions to the extent permitted by law. Employer contributions to the plan were $8,923, $3.244, and g

$-0, respectively, for the years ended September 30,1998,1997, and 1996, respectively. There were no 3

employee contributions made during these years.

Note 11:

Effective October 1,1997 the Commission has offered its Director participation in a Prototype 401(k) Plan, Deferred created in accordance with Sections 401(a) and 401(k) of the Internal Revenue Code. The assets of the Employee prototype deferred compensation plan are administered by the International City Managers Association Benefits Retirement Corporation. Upon separation from service for reasons of death, disability or attainment of age 55 (normal retirement age) the participant may elect to commence receiving benefits which equal accumulated employer's and employee's contributions plus earnings thereon. All benefits vest with the employee at the date of contribution. For the year ended September 30,1998, the Commission's covered payroll was $82,160 and contributions were $7,759. Employee contributions for the fiscal year ended September 30,1998 amounted to $9,785.

The Commission also provides its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The assets of this plan are administered by the International Commission Managers Association Retirement Corporation. Annual contributions, determined by the participant, may not exceed the lesser of $8,000 ($7,500 prior to Januay 1,1998) or 25% of gross annual compensation (33 1/3% of the participants includible compensation). Deferred compensation withheld from a participating employee's pay is not taxable as current income until withdrawn from the plan. Such compensation is not available to the employees until employment termination, retirement, or death. All assets and income of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries.

1 I

15

p l

NOTES TO TIIE FINANCIAL STATEMENTS (CutlIued)

I September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACil. FLORIDA NEW SMYRNA BEAC11. FLORIDA Note 12:

The following is a summary of the segment information for the Commission's individual utility systems:

l Segment

{

Ixformation Pollution Water Electric Water Control Reuse System System System System Total Operating revenue..

$ 24,699,025 4,365,734 3,402,639 446,383 32,913,781 Depreciation / decommissioning 2,072,103 741,129 771,641 107,238 3,692,111 Operating income.........

2,189,033 1,001,570 379,659 255,676 3,825,938 Required payments to City.

1,529,710 271,315 213,796 3,731 2,018,552 Net income (loss)...........

1,209,632 307,848 163,365 (40,347) I,640,498 Contributed capital.

1,314,206 12,582,884 22,522,921 15,000 36,435,011 Utility plant acquisitions.

395,175 480,208 1,221,181 58,892 2,155,456 Utility plant retirements 446,729 4,534 2,145 0

453,408 Revenue certificates payable 30,248,156 17,420,437 5,783,213 5,983,195 59,435,000

' State Revolving Loan payable 0

0 8,921,581 0

8,921,581 Utility equity.

13,390,841 14,260,568 20,022,931 (780,812) 46,893,528 Total assets.

52,340,352 29,938,099 33,800,151 6,604,134 122,682,736 Note 13:

The Commission is engaged in routine litigation incidental to the conduct ofits utilities affairs. In the opinion Legal oflegal counsel to the Commission, no legal proceedings are pending or threatened against the Commission Matters which are not covered by applicable insurance which would inhibit the Commission's ability to perform its operations or materially affect its financial condition.

Note 14:

The Commission, acting through the Florida Municipal Power Agency (FMPA), the Utilities Commission is Ccmmitments a participant in a portion of Florida Power and Light Company's (FPL) St. Lucie Unit No. 2, a nuclear generating unit. FMPA originally acquired an 8.806% undivided ownership interest of St. Lucie No. 2 together with rights to receive electric capacity and electric energy under a reliability exchange agreement.

The Commission's participation provides for a 9.884% entitlement share of FMPA's ownership interest. A reliability exchange agreement provides for FMPA's exchanging 50% ofits share of the output from St. Lucie No. 2 for a like amount from FPL's exclusively owned St. Lucie No. I to mitigate the potential for economic loss resulting from the extended or permanent outage or early retirement of St. Lucie No. 2. The Commission, f

as a participant, has also entered into a power sales contract which requires payment on a "take-and pay" basis for the Commission's entitlement share of the project capability for the St. Lucie Project for each month during any portion of wuch electric capacity and electric energy are available to the Commission from the St. Lucie Project, including electric capacity and electric energy under the reliability exchange agreement with FPL. In the event payment is not required for any month under the Commission's power sales contract, it is required to make payment for such month under its project support contract on a "take-or-pay" basis. The payment under the project support contract would be the amount the Utilities Commission would have been required to pay under its power sales contract for such month if any electric capacity and electric energy from the St.

Lucie Project had been made available to them. As a result of these agreements, the Commission is obligated to provide payments of approximately $3.7 million annually.

Based on an updated engineering report dated February 20,1995, the Commission's anticipated share of decommissioning costs applicable to its participation in Florida Power Corporation's (FPC) Crystal River Unit No. 3, a nuclear generating unit, is expected to be approximately $10.9 million at its expected date of decommissioning in 2016. An operating reserve was established to provide advanced funding for these estimated future costs. Funding of the reserve began in 1985. The balance in the fund, plus the interest Note 14:

16

1 i

i NOTES TO TIIE FINANCIAL STATEMENTS (Contitu:d)

September 30,1998 rnd 1997 i

ITITLfflES COMMISSION, CITY OF NEW SMYRNA BEACll, FLORIDA NEW SMYRNA BEACli, FLORIDA Note 14:

earned thereon, are expected to be sufficient to meet the Conunission's portion of the estimated future Commitments decommissioning costs. The provision for decommissioning expense recognized during the years ended (Continued)

September 30,1998 and 1997, totaled $201,548 and $182,000, respectively.

During 1998, the Commission had additional unrecognized construction contract commitments of approximately $5.1 million for utility plant expansion and upgrading.

On September 10,1997 the Commission entered into a tri-party agreement by and between the Utilities Commission, City of New Smyrna Beach, Florida, The City of New Smyrna Beach, Florida, and Micro Products, Incorporated to provide Internet senices to customers of the Commission. Pursuant to the agreement the Commission is obligated to pay to The City of New Smyrna Beach, Florida 6% of the Internet senice gross revenue and is required to pay to Micro Products, Incorporated for technical support, training, and for use of provided equipment, including all hardware, lines, maintenance, licenses, etc. During the fiscal year ended September 30,1998 the Commission paid $75,090 to Micro Products, incorporated for the ability to provide this senice. The balance due Micro Products, Incorporated as of September 30,1998 was

$11,011. The 6% paid to the City is included in the required payment amount reported in Note 9 above.

l The Commission is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of Ij assets; errors and omissions; injuries to employees; and natural disasters, all of which is satisfactorily insured

)

by general liability insurance. Commercial insurance policies are also obtained for all other risks ofloss, including workers' compensation and employee health and accident insurance. Settled claims resulting from g

these risks have not exceeded commercial insurance coverage in any of the past three years.

3 Note 15:

Pursuant to Governmental Accounting Standards Board [GASB) Technical Bulletin No. 981, the Year 2000 Commission makes the following disclosures relating to the Year 2000 issues. As of September 30,1998 Issues the Conunission has concluded its assessment of the Year 2000 problem relating to its Management j

information Systems and critical Systems Operations for the utility systems to make certain uninterrupted operations of the Commission. The Commission expects to incur costs of approximately $30,000 to specifically address the SCADA System operating system upgrade and Primary Outage Response System upgrades for hardware and software. The expected completion date for validation of these system changes J

is March 1999. Continued testing of workstation PCs will be conducted throughout the next fiscal year with the plan to replace those not in compliance with Y2K. The Management Information Systems hardware and software used to process billings, purchasing, accounting, data-base management, and all transactions ar '

data processed in the LAN network server emironment has been fully inventoried and a report rendered on the compliancy of each item. Further investigation of compliancy with certain equipment will be conducted and corrections expected to be made on or before the fiscal year ending September 30,1999.

I, I

17 I

j s

SUPPLEMENTALINFORMATION TMs section is composed of the following:

l Supplemental Detail Financial Information ofthe Electric System, Water System, Pollution ControlSystem and Water Reuse System StatisticalSection I

These schedules provide a more detailed view of the l

. BasicFinancialStatements"presentedinIhepreceding subsection.

l Resolution Numbers 16-75 and 28-78, as amended, established the electric, water, pollution control, and water reuse systems as a single enterprisefund These i

schedules arepresented toprovide detailedinformation

.on the individual utility systems and to present the budgetary comparisons that are not necessaryfor afair l

presentation in conformity with generally accepted accountingprinciples.

1

[

w

SCllEDULE OF REVENUES, EXPENSES AND Schedule 1 CliANGES IN RETAINED EARNINGS

' For the Fiscal Year Ended September 30,1998 With Comparative Actual Amounts for the Fiscal Year Ended September 30,1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACII, FLORIDA Pollution Water Totets Electric Water Control Reuse 1998 1997 Operating Revenue:

Sales.

$ '24,508,133 4,244,450 3,371,761 446,383 32,570,727 32,525,896 Other revenues.

190,892 121,284 30,878 0

343,054 321,576 Total operating revenue.

24,699,025 4,365,734 3,402,639 446,383 32,913,781 32,847,472 Operating Expenses:

Production expenses.

15,770,212 882,617 0

0 16,652,829 16,469,270 1

Transmission, distribution, and sewage collection and treatment.

1,098,201 407,097 1,073,578 78,796 2,657,672 2,624,394 Customer accounting.

350,154 162,871 147,653 0

660,678 726,214 Administrative and general.

1,689,612 899.135 816,312 942 3,406,001 3,312,462 i

Required payments to the City of New Smyma Beach.

1,529,710 271,315 213,796 3,731 2,018,552 1,949,594 Depreciation and decommissioning.

2,072,103 741,129 771,641 107,238 3,692,111 3,632,710 Total operating expenses.

22,509,992 3,364,164 3,022,980 190,707 29,087,843 28,714,644 Operating income..

2,189,033 1,001,570 379,659 255,676 3,825,938 4,132,828 Nonoperating Revenue (Expenses):

Interest earnings.

556,271 271,229 245,948 8,877 1,082,325 898,260 Other income..........

321,558 22,076 10,308 4

353,946 199,327 I

Interestanddebtexpense (1,700,033)

(980,798)

(436,409)

(304,832) (3,422,072) (3,462,756)

Other expenses -.-

0 (4,623)

(35,397)

(72)

(40,092)

(39,840)

Gain (Loss) on disposal of assets...

(157,197)

(1,606)

(744) 0 (159,547)

(101,788)

Tota! nonoperating revenue.

(979,401)

(693,722)

(216,294)

(2%,023) (2,185,440) (2,506,797)

Net income (loss).

1,209,632 307,848 163,365 (40,347) 1,640,498 1,626,031 Retained earnings, beginning of year.

10,867,003 1,369,836 (2,663,355)

(755,465) 8,818,019 7,191,988 Retained earnings, end of year.

. $ 12,076,635 1,677,684 (2,499 9_90j (795,812) 10,458,517 8,818,019 1

I I

.I I

L 18

SCIIE!ULE CF REVENUE, RECEIPTS, EXPENSES AND DISBURSEMENTS -

Sch;dule 2 BUDGET AND ACTUAL-ELECTRIC SYSTEM (NON-GAAP BUDGETARY BASIS)

For the Fiscal Year Ended September 30,1998 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA A BEACH, FLORIDA Variance Favorable Revenue and Receipts:

Direct Sales:

Electric sales.

$ 23,889,897 25,329,143 1,439,246 Other revenues.

192,000 190,892 (1,108)

Nonoperating revenue:

Interest earnings..

320,000 556,271 236,271 Meter deposit interest expense..

. I89,000 321,558 132,558 0

(40,584)

(40,584)

Other revenues (expenses).

Total revenue and receipts..

24,590,897 26,357,280 1,766,383 Operating Expenses:

Power production and fuel.

15,231,200 15,770,212 (539,012)

Transmission and distribution.

1,278,505 1,098,201 180,304 Customer accounting.

Administrative and general......

750,503 350,154 400,349 1,156,496 1,689,612 (533,116)

Required payments to the Cit 1,442,934 1,529,710 (86,776)

Decommissioning expense.. y of New Smyrna Beach.

128,284 201,548 (73,264)

Total operating expenses 19,987,922 20,639,437 (651,515)

Net revenue and receipts.

4,602,975 5,717,843 1,114,868 Operating Transfers in (Out):

Sinking Funds:

1992 Certificates -

(490,976)

(490,976) 0 1993 Certificates.

(884,026)

(884,026) 0 1996 Certificates.

(1,231,959)

(1,231,959) 0 (2,606,961)

(2,606,96TJ 0

Renewal and Replacement Funds:

Required contribution...

(1,546,458)

(1,546,458) 0 Restricted fund contribution.

(200,000)

(200,000) 0 (1,746,458)

(1,746,458) 0 Restricted fund contribution to Rate Stabilization Fund.

(249,556)

(502,620)

(253,064)

Total operating transfers (out)..

(4,602,975)

(4,856,039)

(253,064)

Budgeted net cash receipts.

D-861,804 861,804 Additions (Deductions) Required to Reconcile Net Cash Receipts to Net income (GAAP Basis):

Unbilled revenue..

(821,010)

Principal portion of required Sinking Fund transfers.

1,102,309 Net transfers to Renewal and Replacement Fund.

1,746,458 Net transfers to Rate Stabilization Fund..

502,620 Gain (loss) on disposal of propedy and equipment.

(157,197)

Depreciation._.. _.

(1,870,555)

Amortization of debt expense and loss on refunding..

(154,797) 347,828 Net income.

1,209,632 19 I

E 1

i-l i

. SCHEDULE OF REVENUE, RECEIPTS, EXPENSES AND DISBURSEMENTS -

Schedule 3 i.

l BUDGET AND ACTUAL-WATER SYSTEM (NON-GAAP BUDGETARY BASIS)

For the Fiscal Year Ended September 30,1998 UTIIJHES COMMISSION, CITY OF NEW SMYRNA BEACH, FIDRIDA A BEACH, FLORIDA Variance Favorable Budget Actual (Unfavorable)

Revenue and Receipts:

Direct Sales:

Water sales.

$ 4,397,064 4,435,331 38,267 Other revenues..

I12,000 121,284 9,284 Nonoperating revenue:

Interest earmngs.

233,000 271,229 38,229 Meter deposit Interest expense..

0 (7,610)

(7,610)

+

Other revenues (expenses).

15,000 17,453 2,453 Capacity and other fees 457,881 433,816 (24,065)

. Total revenue and receipts..

5,214,945 5,271,503 56,558 Operating Expenses:

Water production..

872,845 882,617 (9,772)

Transmission and distribution.

377,449 407,097 (29,648)

Customer accounting......

174,042.

162,871 11,171 Adnunistrative and general.

925,933 899,135 26,798 Required payments to the City of New Smyrna Beach...

268,024 271,315 (3,291)

Total operating expenses.

2,618.293 2,623,035 (4,742)

Net revenue and receipts.

2,5 %,652 2,648,468 51,816 OperatingTransfers In(Out):

Sinking Funds:

1992 Certificates -

(166,040)

(166,040) 0 1993 Certificates.

(571,656)

(571,656) 0 1996 Cedificates.

(843,056)

(843,056) 0 (1,580,752) (1,580,752) 0 i

Renewal and Replacement Funds:

Required contribution -

(461,031)

(461,031) 0 Restricted fund contribution -

(457,881)

(336,895) 120,986 (918,912)

(797,923) 120,9E Proceeds of transfer from Rate Stabilization Finvf-.

102,050 35,340 (66,710)

Reuse Subsidy Surcharge..

(199,038)

(198,849) 189 Total operating transfers (out)..

(2,5%,652) (2,542,187) 54,465 Budgeted net cash receipts.

0 106,281 106,281 Additions (Deductions) Required to Reconcile Net Cash Receipts to Net Income (GAAP Basis):

Unbilled revenue.._.

(190,877)

Capacity and other fees (433,816)

Principal portion of required Sinking Furxi transfers.

707,616 Net transfers to Renewal and Replacement Fund 797,926 Net transfers from Rate Stabilization Furvi (35,340)

Net transfers of Reuse Subsidy Surcharge.

198,849 Gain (loss) on disposal of propedy and equipment.

(1,606)

Depreciation --

(741,129)

Amortization of debt expense and loss on refunding.

(100,056) 201,567 Net (loss)..

307,848 20

SCIIEDULE OF REVENUE, RECEIPTS, EXPENSES AND DISBURSEMENTS -

Scledute 4 BUDGET AND ACTUAL-POLLUTION CONTROL SYSTEM (NON-CAAP BUDGETARY BASIS) l For the Fiscal Year Ended September 30,1998 g

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACil, FLORIDA A BEACH, FLORIDA Variance Favorable Budget Actual (Unfavorable)

Revenue and Receipts:

Direct Sales:

Pollution control charges.

$ 3,600,305 3,553,706 (46,599)

Other revenues.

20,000 30,878 10,878 Nonoperating revenue:

Interest earnings.

122,000 245,948 123,948 Meter deposit interest expense..

0 (2,537)

(2,537)

Other revenues (expenses).

5,000 (25,089)

(30,089)

Mandate PCP Fund fees.

851,028 858,550 7,522 Capacity and other fees 346,600 177,043 (169,557)

Total revenue and receipts.

4,944,933 4,838,499 (106,434)

Operating Expenses:

Collection and treatment system.

1,066,857 1,073,578 (6,721)

Customer accounting.....

161,092 147,653 13,439 Administrative and general........... _...

753,338 816,312 (62,974)

Required payments to the City of New Smyrna Beach.

267,081 213,795 53,285 Total operating expenses.

2,248,368 2,251,339 (2,971)

E Net revenue and receipts.

2,696,565 _2,587,160 (109,405)

Operating Transfers In (Out):

Sinking Funds:

1992 Certificates.

(147,334)

(147,334) 0 1993 Certificates.

(53,416)

(53,416) 0 1996 Certificates.

(524,603)

(524,603) 0 (725,353)

(725,353) 0 Renewal and Replacement Funds:

Required contribution...

(413,761)

(413,761) 0 Restricted fund contribution.

(346,600)

(177,(M3) 169,557 (760,361)

(590,804) 169,557 Mandate PCP Fund contribution.

(851,028)

(858,550)

(7,522)

Water Reuse System.....

(52,872)

(61,063)

(8,191)

Reuse Subsidy Surcharge.

(184,515)

(185,347)

(832 Rate Stabilization Fund.

(122,436)

(122 156)

W)

Total operating transfers (out)..

(2,696,565) (2,543,273) 153,292 Budgeted net cash receipts.

0 43,887 43,887 Additions (Deductions) Required to Reconcile Net Cash e

Receipts to Net Income (GAAP Basis):

Unbilled revenue......

(181,945)

Capacity and other fees.............

(177,043) 1 Principal portion of required Sinking Fund transfers.

340,902 2

Net transfers to Renewal and Replacement Fund.

590,804 Net transfers to Rate Stabilization Fund.

122,156 Net transfers to Water Reuse System...

61,063 l

Net transfen of Reuse Subsidy Surcharge.

I85,347 E

l Gain (loss) on disposal of property and equipment.

(744)

Depreciation.....

(771,641)

Amortization of debt expense.

(49,421) 119,478-1 Net income..

163 365, I.

21

U l

I SCHEDULE OF REVENUE, RECEIPTS, EXPENSES AND DISBURSEMENTS -

Schedule 5 BUDGET AND ACI'UAL-WATER REUSE SYSTEM (NON-GAAP BUDGETARY BASIS)

For the Fiscal Year Ended September 30,1998 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA A BEA_CH, FLORIDA Variance Favorable Budget Actual (Unfavorable)

Revenue and Receipts:

Direct Sales:

Reuse water sales.

60,870 62,186 1,316 Reuse subsidy surcharge.

383,553 384,197 644 Nonoperating revenue:

Interest earnings..

22,000 8,877 (13,123) f Other Revenues (expenses) 0 (68)

(68)

Total revenue and receipts.

466,423 455,192 (11,231)

Operating Expenses:

Transmission and distribution system.

80,775 78,796 1,979 Administrative and general.

330 942 (612)

Required payments to the City of New Smyma Beach.

3,652 3,731 (79)

Total operating expenses.

84,757 83,469 1,288

~

Net revenuc and receipts.

381,666 371,723 (9,943)

Operating Transfers In (Out):

Sinking Funds:

1992 Certificates.

~ (246,539)

(246,539) 0 1993 Certificates (149,799)

(149.799) 0 (3%,338)

(396,338) 0 Renewal and Replacement Funds:

{

Required Contribution.;

(38,200)

(38,200) 0 Proceeds of transfer from Pollut on Control System -

52,872 61,063 8,191 i

Total operating transfers (out)..

(381,666)

(373,475) 8,191 Budgeted net cash receipts 0

(1,752)'

(1,752)

Additions (Deductions) Required to Reconcile Net Cash Receipts to NetIncome(OAAP Basis):

Principal portion of required Sinking Fund transfers -

104,169 i

Net transfers to Renewal and Replacement Fund.

38,200 Proceeds of transfer from Pollution Control System..

(61,063)

Depreciation, -------...

(107,238)

Amortization ofdebt expense...

(12,663)

(38,595)

Net (loss).

(40,347) 22

r --

SCllEDULE OF OPERATING EXPENSES-Schedule 6 ELECTRIC SYSTEM For the Fiscal Years Ended September 30,1998 and 1997 r

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACll, FLORIDA

__ 1998 1997

)

Power Production and Fuel:

Nuclear Power Generation:

Fuel..

S 391,009 0

Operation.

3,971,521 543,852 Maintenance :

531,254 536,045 Diesel Power Generation:

Fuel.

92,129 39,729 Operation.....

147,456 86,013 Maintenance..

20,382 135,065 Other Power Supply:

Purchased power..........,.......

10,281,201 13,954,907 l

System control and load dispatching.

335,260 328,738 m

- I5~,770312' f5 674,349' Transmission and Distribution:

Operation.

752,445 768,723 Maintenance.

345,756 323,647 I 098,201-7 0923 71-Customer Accounting:

Operation.

350,154 442,180 Administrative and General:

Operation :

1,609,164 1,794,568

)

Transportation :

80,448 77,281 1,689 6T2-1,871,84T Required Payments to the City of New Smyrna Beach.

1,529,710 1,479,852 Depreciation and decommissioning...

2,072,103 2,051,502 Total operating expenses.

22J09_J92_,_22 S62,103 t

I 23

SCIIEDULE OF OPERATING EXPENSES.

Schedule 7 WATER SYSTEM For the Fiscal Years Ended September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACil, FLORIDA 1998 1997 Water Production:

Source of Supply:

Operation.

62,120 60,680 Maintenance..

I2,425 5,860 Pumping:

Operation.

165,487 148,031 Maintenance.

7,217 13,252 Water Treatment:

Operation.

623,717 602,277 Maintenance.

11,651 14,821 8823IT 844,92T Transmission and Distribution:

Operation.

371,211 357,429 Maintenance.

35,886 52,911 407,097 410,340~

Customer Accounting:

Operation.

162,871 174,080 Administrative and General:

Operation.

840,730 754,357 Transportation.

58,405 45,627 899,135 799,984 Required Payments to the City of New Smyrna Beach 271,315 258,520 Depreciation.

741,129 730,188 Total operating expenses.

3,364,164 3,218,033

(

i 24

[.

E I

1 SCIIEDULE OF OPERATING EXPENSES.

Schedule 8 POLLUTION. CONTROL SYSTEM For the Fiscal Years Ended September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA DEACil, FLORIDA NEW SMYRNA BEACll, FLORIDA l

1998 1997 Collection and Treatment System:

Collection and Pumping:

Operation......

123,198 304,435 g

Maintenance.

53,142 43,880 g

Treatment and Disposal:

Operation....

844,911 676,734 Maintenance..

52,327 25,818 1,073,578~~ ~~~~I,'050,86T Customer Accounting:

Operation.

147,653 109,954 Administrative and General:

Operation...

786,401 612,504 Transportation...

29,911 27,196 8IE312~ __

639~,700~

Required Payments to the City of New Smyrna Beach..

213,796 207,918 Depreciation.

771,641 749,715 Total operating expenses.

3,0222 80 2,758,154 I

I l

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[

SCHEDULE OF OPERATING EXPENSES.

Schedule 9 REUSE SYSTEM For the Fiscal Years Ended September 30,1998 and 1997 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA NEW SMYRNA BEACH, FLORIDA

[-

1998 1997'

[.

Transmission and Distribution System:

Operation =

69,687 65,475 Maintenance...

9,109 5,341 78,796 7N Administrative and General:

Operation..

942 929 Transportation 0

0

-942' 929-Rrquired Payments to the City of New Smyrna Beach.

3,731 3,304 Depreciation.

~

107,238 101,305 Total operating expenses 190.707 176,354

[

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26 r

I SCIIErGLE OFINTEREST EARNINGS Schedule 10 l

For the Fiscal Years Ended September 30,1998 and 1997 l,

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACH, FLORIDA E '

NEW SMYRNA BEACII, FLORIDA 1998 1997 Interest Earnmgs By Source:

From Investments:

Sinking funds.....

383,469 415,166 Renewal and replacement funds.

353,624 236,403 3

Customers' deposits.

58,481 50,939 g,

Other.

256,486 168,674 1,052,060 871,182 From Assessments 30,265 27,078 Totalinterest earnings.

1,082,325 898,260 I

Interest Earnings By System:

Electric system.

556,271 472,879 Water system.....

271,229 219,890 l

Pollution control system.

245,948 183,359 5

Water reuse system.

8,877 22,132 Totalinterest earnings.

1,082,325 898,260 I

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Statistical tables differ from financial statements

-because they usually cover more than onefiscalyear and maypresent non-accounting data. These tables reflect social and economic data andfinancial trends of the Utilities' Commission, City of New Smyrna

[i Beach, Florida.

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SCllEDULE OF EXPENSES BY FUNCTION LAST TEN FISCAL YEARS September 30, UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACll, FLORIDA NEW SMYRNA BEACI1,110RIDA Operating Required Transmission, Payments Distribution Administrative to City of g

Fiscal Total Production and Customer and New Smyrna g

Year Spenses Expenses Collection Accounting General Beach 1989 27,368,501 13,793,020 2,795,429 660,210 3,025,338 1,589,082 1990 29,666,505 14,971,670 2,856,957 721,935 3,541,852 1,781,241 1991 30,650,259 15,718,072 2.989,885 753,860 3,856,593 1,785,889 1992 30,884,894 15,831,890 2,750,121 790,405 3,967,885 1,818,257 1993 32,046,964 16,033,390 2,930,222 811,560 4,088,053 1,878,058 1994 31,988,494 15,514,926 2,937,195 811,963 4,015,134 1,922,423 1995 33,634,761 15,736,225 3,433,468 808,391 4,300,729 1,945,294 1996 33,068,120 16,004,020 3,053,810 819,986 3,778,385 2,076,104 1997 32,217,240 16,469,270 2,624,394 726,214 3,312,462 1,949,594 19 %

32,550,007 16,652,829 2,657,672 660,678 3,406,001 2,018,552 I

I 29

li Table I

- Espenses Nonoperating Expenses i

interest

? State Depreciation'.

Total and Other Total

, Utilities and Operating

. Debt '

, Nonoperating Nonoperating.

Tax' Decommissioning Expense Expense Expense Expenses 308.843 2,322,753 24,494,675 2,737,217 136,609 2,873,826 321,159 2,447,565 26,642,379 2,781,553 242,573 3,024,126 2,616,987.

' 27,721,286 2,840,798 88,175 2,928,973

- 2,788,649 27,947,207 2.876,926 60,761 2,937,687 2,988,477 28,729,760 3,250,343 66,861 3,317,204

' 3,210,370 28,412,011 3,458,792

.1I7,691 3,576,483 3,540,923 29,765,030 3,791,166 78,565 3,869,731 3,583,478 29,315,783 3,731,690 20,647 3,752,337

. 3,632,710 28,714,644 3,462,756 39,840 3,502,596 3,692,111 29,087,843 3,422,072 40,092 3,462,164 30

+

SCIIEDULE OF REVENUES BY SOURCE LAST TEN FISCAL YEARS September 30, UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACil, FLORIDA NEW SMYRNA BEACil, FLORIDA

~ ~..

.. ~. - -

Pollution Water Total Fiscal Total Electric Water Control Reuse Operating

____yeaE_

_ _, Revenues

_ System System _

System __._

System Revenue

)

l I;

1989 27,431,708 20,841,500 3,184,987 2,390,120 26,416,607 1990 29,103,071 22,362,293 3,305,107 2,444,813 28,112,213 1991 30,989,578 24,261,715 3,414,240 2,437,303 30,113.258 30,310,614 I992 31,I I 5,463 24,i16,658 3,6I8,061 2,575,895 1993 32,292,107 24.880,055 3,938,507 2,826,245 6,405 31,651,212 i

1994 32,222,023 24,352,192 3,923,279 3,165,162 7,650 31,448,283

)

1995 34,253,351 25,612,207 3,972,005 3,168,544 382,696 33,135,452 l

1996 34,839,856 25,872,665 4,145,975 3,332,543 411,907 33,763,090 1997 33,945,059 24,901,225 4,187,748 3,326,421 432,078 32,847,472 1998 34,350,052 24,699,025 4,365,734 3,402,639 446,383 32,913,781 Il I

31

Ttble il

[

[

Nonoperating Revenues Total Interest Other Nonoperating Earnings Income Revenue 818,148 196,953 1,015,101 801,086 189,772 990,858 696,413 179,907 876,320 595,302 209,547 804,849 370,830 270,065 640,895 495,971 277,769 773,740 762.206 355,693 1,117,899 824,645 252,121 1,076,766 898,260 199,327 1,097,587 1,082 )25 353,946 1,436271 32

l..

I DEMOGRAP1IIC STATISTICS Table Ill LAST TEN FISCAL YEARS September 30, UTILITIES COMMISSION, CI f Y OF NEW SMYRNA BEACil, FLORIDA NEW SMYRNA BEACil, FLORIDA New g

Smyrna County g

Beach's Per County School Estimated Capita Unemployment School Percent Fiscal Population Income Rate Enrollment Attendance Year (1)

(2)

(3)

(4)

(4) 1989 17,266 515,266 4.5%

4,445 95.0 %

1990 18,600

$15,760 5.6%

4,488 96.0 %

1991 16,543

$15,925 7.3%

4,663 95.0 %

1992 17,084 S16,386 8.3%

4,852 96.0 %

1993 17,231 S17,227 6.6%

5,009 96.0 %

1994 17,989

$17,842 6.4%

5,053 96.0 %

1995 17,853

$18,951 4.9%

5,348 96.0 %

1996 18,239 N/A 4.5%

4,978 96.0 %

1997 18,327 N/A 3.9%

5,008 95.9'A 1998 18,503 N/A 3.3%

6,767 95.4 %

Ii (1) Obtained from University of Florida, Bureau of Economics and Business Research.

(2) Obtained ftom Volusia County Business Development Corporation.

(3) Obtained from State of Florida, Department of Labor and Employment Security.

(4) Obtained from Volusia County School Board - includes grades K-12.

I 33

PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS (4)

- Table IV LAST TEN FISCAL YEARS September 30,.

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACil, FLORIDA NEW SMYRNA BEACII, FLORIDA Savings Dollar and Property Number Value Bank Loan Assessed of of Deposits -

Deposits Value Fiscal -

Permits Construction

.(2)

(2)

(3)

_. _] fear __ _ (1)

($000's)

($0_00's)

($000's)

($000's) 1989 2,502

$23,382

$244,312

$228,568

$894,694 1990 2,416

$27,492

$310,746

$285,541

$975,234 1991 2,333

$22,310

$379,110 '

$300,960

$1,030,656 1992 2,391

$18,909

$426,878

$317,964

$1,094,024 1993 2,421

$28,848

$531,036

$331,636

$1,117,205 1994 2,266

$18,103

$397,165 (5)

$303,670 (5)

$1,149,931 1995 2,177

$33,581.

$304,421 (6)

$233,412 (6)

$1,199,523 1996 2,561

$23,785

$321,772 (6)

$228,108 (6)

$1,231,515 1997 2,301

$28,975

$311,807 (6)

$230,986 (6)

$1,275,232 1998 3,779

$39,327

$528,268 (6)

$26,179 (6)

$1,285,442 (1) Obtained from City of New Smyrna Beach Building Department.

(2) Obtained from inquiry of officials of banks and savings and loan associations.

(3) Obtained from Volusia County Finance Department.

(4) The above data is related exclusiveiy to area within the municipal limits of the City of New Smyrna Beach.

(5) Deposit information after 1993 does not include deposits from bank and savings and loan branches which are located outside the municipal boundaries of the City of New Smyrne Beach. Prior to 1994, branch deposits were based on regional banking / savings and loan center totals which included branches located outside of the City, Prior year data cannot be easily segregated due to the large number of banking changes / mergers that have occured during the last ten years.

(6) Deposit infonnation obtained from Florida Bankers Association.

34

SCIIEDULE OF INSURANCE IN FORCE Ttble V September 30,1998 l

UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACil, FLORIDA E

NEW SMYRNA BEACil, FLORIDA Coserage and Policy Policy Insuring Company Number Period Details of Coverage Liability Limits Comprehensive General Liabiity:

g Titan Indemnity Co.

90llP01879 01/01/1998 Combined bodily injury

$3,000,000 with $5,000 g

12/31/1999 and property damage deductible Business Auto:

Titan Indemnity Co.

90llP 01879 01/01/1998 Liability

$1,000,000 bodily injury and l

12/31/1999 property combined 3

Comprehensive Actual cash value less

$250 deductible Collision Actual cash value less

$500 deductible No fault Statutory Business Property:

Florida League of CitiedFlorida Self-FMIT 400 10/01/1998 Buildings and contents

$16,838,918 with $10,000 Insurers Fund 09/30/1999 deductible (agreed value)

Valuable papers / records

$100,000 with $100 deductible Contractors equipment

$544,274 with $2,500 deductible 3

Computer equipment

$150,000 with $500 deductible g

Crime:

Florida League of CiticWActna 23S101004044 12/01/1997 Employee crime

$100,000 aggregate, $1,000 Casualty and Surety Co.

12/01/1998 deductible Money and securities

$60,000 Counterfeit currency (Includerl)

Depositors' forgery

$100,000 Boiler and Machinery:

Great Northern Insviance Co.

7827-44 32 01/01/1998 Breakdown due to accidert $5,000,000 with $10,000 Chubb Group Insurance Co.

01/01/1999 deductible Flood Insurance:

ll Capital Assurance Company,Inc.

366-2016744 09/02/1998 Building

$798,800 g

366-2016745 09/02/1999 Contents

$1,000,000 Deductible

$10,000 Nuclear Energy Damage:

American Nuclear Insurance and 98-147 10/09/1997 Primary property

$500 million Mutual Atomic Energy Liability 10/09/1998 Underwriters and Nuclear X98015 11/15/1997 Excess property

$1.600 billion Insurance Ltd.

I1/15/1998 (Excess of $500 million)

(These amounts represent the NF195 01/01/1998 Primary liability

$200 million totalinsurance coverage for 01/01/1999 Florida Power Corporation's Crystal NS347 01/01/1998 Suppliers and transporters $200 million g

River nuclear plant, of which the 01/01/1999 liability g

Commission owns a 0.05608%

N35 01/01/1998 Secondary financial

$30 million per occurrence undivided ownership interest) 01/01/1999 protection NW579 01/01/1998 Master Workers Torts

$200 million aggregate 01/01/1999 j

Public Ofliciallmployee Liabiity:

Corregis Insurance Organizations

-001171-1524-4409 07/28/1998 Liability SI,000,000 Retentions-$10,000 j

07/28/1999 per loss Workers' Compensation:

Government Risk Insurance 130058 10/01/1998 Statutory coserage Statutory Trust 10/01/1999 Employer's liability

$ 100,000 i

Pollution Liability-Florida Petroleum Liability insurance FPL - 8072724 07/10 1998 Liability - fuel spillage

$2,000,000 aggregate 07/10/1999 S500 deductible Il 35 I'

TEN LARGEST ELECI'RIC CUSTOMEPS Table VI September 30,1998 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACI1 FLORIDA Kilowatt IIour Sales Revenues Billed Percent Percent (kWh) of of (000's)

Total Amount Total 1.

Bert Fish Medical Center...

8,087 2.42 %

$557,859 2.20%

2.

Winn I)ixie (#2304)...

3,178 0.95%

219,043 0.86 %

3.

Publix Food Store (#2019100)...

3,000 0.90 %

206,933 0.82 %

4.

Utilities Commission (Pollution plant)...

2,910 0.87 %

203,024 0 80 %

I 5.

Publix Food Store (#2033500)..

2,783 0.83 %

192,271 0.76 %

6.

Reddy lce..

2,488 0.75%

173,216 0.68%

7.

Wal-Mart Stores..

2,430 0.73 %

168,631 0 67 %

8.

Board of Public Instruction (New Smyrna Beach Middle School)..

2,287 0.69%

185,942 0.73* h 9.

Food Lion (#829)...

2,276 0.68%

156,281 0.62.

10. K-Mart (#7447)...

2,228 0.67 %

157,624 0.62 %

Totals.,

..__31667_

9.49 %

$2)2_0J24_

8.76 %

I I

36

TEN LARGEST WATER CUSTOMERS Tcble Yll September 30,1998 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACII, FLORIDA NEW SMYRNA BEACI1. FLORIDA Consumption Revenues Billed Percent Percent Gallons of of (000's)

Total Amcant Total 1.

Iloard of Public Instruction..

24,297 1.69 %

$47,276 1.07 %

2.

Sea Woods llomeowners Association..

18,744 1.31%

34,000 0.77 %

3.

Oceanview Nursing Ilome..

18,495 1.29 %

31,744 0.72 %

4.

Bert Fish Medical Centei..

16,929 1.18%

30,062 0.68 %

5.

FederalItousing Authority...

15,319 1.07 %

37,378 0.85 %

6.

Errol by the Sea Condominium Association..

12,984 0.90%

23,749 0.54 %

7.

Islander Beach Lodge...

10,417 0.73 %

19,634 0.45%

8.

Pelican Condominium Association...

10,033 0.70 %

13,819 0.31%

9.

The Inlet Condominium Associaiton..

9,206 0.64 %

13,048 0.30's

10. Sandpiper Owners Association..

7,898 0.55%

13,760 0.31 %

Totals.

144,322 10.06 %

$264,470 6.00 %

i i

l I

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• I Ij 0

V 37 l

l l

.u

Pn SCIIEDULE OF i EVENUE CERTIFICATE COVERAGE Table Vill LAST TEN RWLYEARS i

September 30, UTILITIES COMMISSION, CITY OF NEW SMYRNA 13EACll, FLORIDA NEW SM /RNA BEACil, FLORIDA 1998 1997 1996 1995 1994 Orces Revenue Per Certificate Resolution:

Operating revenues................

32,913,781 32,847,472 33,763,090

. 33,135,452 31,448,283 Interest and other income (excludino construction fund interest earnin gs) 1,436,271 1,097,587 1,076,766 1,117,899 773,740 Capacity and other fees..

1,755,040-1,785,424 1,383,945 798,090 727,054 Assessment collections,,

40,878 559 1,331 3,106 (301) l Oross revenue per certificate resolution,

36,145,970 35,731,042 36,225,132 35,054,547 32,948,776 l

1 Expenses Per Certificate Resolution:

Operating expenses,

29,087,843 28,714,644 29,315,783 29,765,030 28,412,011 Less: Depreciation expense........,

(3,490,562)

(3,450,710)

(3,386,306)

(3,337,%6)

(3,179,382)

Required payments to the City -

(2,018,552)

(1,949,594)

(2,076,104)

(1,945,294)

(1,922,423)

Expenses per certificate resolution 23,578,729 23,314,340 23,853,373 24,481,770 23,310,206 Income available for debt service :

12,567,241 12,416,702 12,371,759 10,572R 9,638,570 Annual Debt Service Requirements:

Principal.

2,255,000 1,945,000 1,855,000 1,680,000 1,595,000 Interest (less accrued interest)(1) :

3,054,404 3,138,448 3,687,574 3,841,252 3,923,144 Annual debt service requirements,.

5,309,404 5,083,448 5,542,574_

5,521,252 5,518,144 Coverage ratio (Times),.

2.37 2.44 2.23 l.91 _

l 75 1993 1992 1991 1990 1989

]

Oro~s Revenue Per Certificate Resolution:

Operating revenues -_

31,651,212 30,310,614 30,113,258 28,112,213 26,416,607 Interest and other income (excluding construction Amd interest camings)-

640,895 804,849 876,320 990.858 1,008,728 Capacity and other fees 1,521,443 761,039 756,866 1,001,968 806,571 Assessment collections -

5,576 13,152 36,239 45,828 69,750 Oross revenue per certificate resolution 33,819,126 31,889,654 31,782,683 30,150,867 28,301,656 Expenses Per Certificate Resolution:

Operating expenses.

28,729,760 27,947,207 27,721,286 26,642,379 24,494,675 Less: Depreciation expense (2,889,647)

(2,675,521)

(2,495,369)

(2,328,833)

(2,212,241)

Required payments to the City -.

(1,878,058)

(1,818,257)

(1,785,889)

(1,781,241)

(1,589,082)

Expenses per certificate resolution..

23,962,055 23.453,429 23,440.028 22,532,305 20,693,352 Income available for debt service.

9,857,071 8,436,225_

8,342,655 7,618,562 7,608,304 Annual Debt Service Requirements:

Principal..,

1,015,000 1,080,000 1,020,000 805,000 765,000 Interest (less accrued interest) (1),.

3,780, % 2 3,266,873 3,550,972 2,553,281 2,597.110 Annual debt service requirements,

S 4,795, % 2 4.346,873 4,570,972 3,358,281 3,362,110 Coverage ratio (Times) _

2.06 1.94 1.83 2.27 2.26 (1) Interest expense for the fiscal years ended September 30,1993,1992, and 1990, is stated net of $613,763, $222,792 and $733,778, respectively, in interest expense which was funded from the proceeds of the issuance of revenue certificates.

(2) Irxludes actual amouts funded throughout the year for subsequent April I and October 1 debt service payments.

38

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q

UTILITY RATE SCIIEDULE -

Table X ELECTRIC SERVICE S:pt mber 30,1998 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACll, FLORIDA j

4 NEW SMYRNA BEACII,ILORIDA 4

I EfTective: October 1,1998 I

I Electric System Rate Schedule:

t Residential Service Monthly Rate Customer Charge:

Single Phase Service

$5.65 Three Phase Senice

$7.85

-)

Energy Charge:

All kWh per month at:

S0.06917 per kWh l

(plus fuel and purchased i

power cost adjustment)

General Senice - Non-Demand - Monthly Rate Customer Charge:

Single Phase Service

$6.05 Three Phase Senice

$8.85 Energy Charge:

All kWh per month at:

$0.07067 per kWh (plus fuel and purchased power cost adjustment)

General Senice Demand Monthly Rate Customer Charge:

$33.50 Demand Charge:

All kWofbilling demand

$5.50 per kW Energy Charge:

All kWh per month at:

$0.05393 per kWh (plus fueland purchased power cost adjustment)

Curtailable General Service Demand - Monthly Rate Customer Charge:

$235.00 Demand Charge:

All kW ofbilling demand

$5.50 per kW Energy Charge:

All kWh per month at:

$0.05393 per kWh (plus fuel and purchased power cost adjustmer t)

Fuel and Purchased Power Cost Adjustment Clause:

The Fuel and Purchased Power Cost Adjustment Clause (FPPCAC)is an integral component of the monthly charges, and is designed to allow for accurate billing of fluctuating applicable fuel and purchased power costs.

In order to minimize changes in customer billings, the FPPCAC is developed on a twelve month projected basis, with provision to "true-up" any over or under recovery of any applicable fuel and purchased power cost in each subsequent twelve month period. A provision is provided in the chuse for the FPPCAC to be modified if significant circumstances arise during the twelve month billing cycle. The adjustment for the twelve month period ending October 1,1998 is S per 1,000 kWh.

l (1)

The above information is provided pursuant to the requirements of Section ::(B) of the Commission's Continuing Disclosure Certificate w hich was issued on August 15,1996 in conjunction with the sale of $26,210,000 Utihties Refundmg Revenue Certificates,' Series 1996.

40 I

{

1 UTILITY RATE SCllEDULE.

Table XI WATER SERVICE September 30,1998 UTILITIES COMMISSION, CITY OF NEW SMYRNA BEACll, FLORIDA NEW SMYRNA BEACH, FLORIDA Meter Base Reuse Billing Total Size Facility Subsidy Charge Monthly

)

(Inches)

Charge Charge Monthly Billmg l

Residential Service (2):

5/8" S

8.85 5 0.90 $

l.90

$ 11.65 + Gallonage Charge Single Family 1"

2.2.15 2.25 1.90

$ 26.30 + Gallonage Charge 11/2" 44.25 4.50 1.90

$ 50.65 + Gallonage Charge 2"

70.80 7.20 1.90 S 79.90 + Gallonage Charge 3"

141.60 14.40 1.90

$ 157.90 + Gallonage Charge 4"

221.25 22.50 1.90

$ 245.65 + Gallonage Charge 6"

442.50 45.00 1.90 S 489.40 + Gallonage Charge 8"

708.00 72.00 1.90

$ 781.90 + Gallonage Charge Gallonage Chargell,000 Gallons Block 1 Illock 2 Block 3 3

S1.05

$1.25 S t.70 Monthly Rate 131ocks (Gallons)

W Block I Block 2 Block 3 All Meter Sizes 0-7000 7001 14000 001 and over Base Reuse Billing Total Billing Facility Subsidy Charge Monthly Account Charge Charge Monthly Billing Mulit-Family Each Unit S

8.85 $

0.90 S 0.00

$ 9.75 Master Mete:

0.00 0.00 1.90

$ 1.90 + Gallonage Charge @

$1.05 per KG all usage Irrigation and Non-Residential (2):

" (Same Minimum and Gallonage Charges as Residential) "

Meter Site Block.1 Block 2

_kl 5/8" 0 - 7,000 7,001 -

14,000 14,001 and above 1"

0 15,000 15,001 - 40,000 40,00I and above 11/2" 0-30,000 30.001 - 75,000 75,001 and above 2"

0 50,n00 50,001-100,000 100,001 and above 3"

0 -100,000 100,001 - 200,000 200,001 and above 4"

0 200,000 200,001 - 400,000 400,001 and above 6"

0 -300,000 300,001-600,000 600,001 and above 8"

0 600,000 600,001 - 1,000,000 1,000,001 and above (1) The above information is provided pursuant to the requirements of Section 2(B) of the Commission's Continuing Disclosure Certificate which was issued on August 15,1996 in conjunction with the sale of $26,210,000 Utilities Refunding Revenue Certificates, Series 1996, t

(2) A surcharge of twenty-five percent (25)is added to bills of users outside the City limits.

I 41 l

1 lo

W RATE SCIIEDULE.

Table Xil POLLUTION CONTROL AND WATER REUSE SERVICE j-September.10,1998

{.

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACll, FLORIDA NEW SMYRNA BEACII, FLORIDA

. Pollution Control Rate Schedule

- Residential,(Single-Family)and Non-Residential (2):

Gallonage Meter Base Reuse.

Billing Charge Total Size Facility Subsidy Charge Per Monthly f-(Inches)

Charge.

Charge Monthly KG Billing 5/8" 9.35 $

1.05 S 1.50 $

1.55

$ 11.90 + Gallonage Charge -

1" 23.40 2.65 1.50 1.55 S 27.55 + Gallonage Charge 1 I/2" 46.75 5.25 1.50 1.55

$ 53.50 + Gallonage Charge 2"

74.80 8.40 1.50 1.55

$ 84.70 + Gallonage Charge 3"

149.60 16.80 1.50 1.55 S 167.90 + Ga!!onage Charge 4"

233.75 26.25 1.50 1.55 S 261.50 + Gallonage Charge 6".

467.50 52.50 1.50 1.55 S 521.50 + Gallonage Charge 8"

748.00 84 00 1.50 1,55 S 833.50 + Gallonage Charge Multi-Family (2):

Each Unit S

9.35 1.05 0.00 0.00

$ 10.40 Master Meter 0.00 0.00 1.50 1.55 S 1.50 + Gallonage Charge Reclaimed Water Rate Schedule:

Meter Minimum Flow Size Monthly Cherge (Inches)

Charge per KG Primary Tier Rate: Service:

5/8" X 3/4" 10.00 N/A 1"

25.00 N/A i 1/2" 50.00 N/A Metered:

2" 0.00 0.10 3"

0.00 0.10 4"

0.00 0.10 6"

0.00 0.10 Secondary Tier Rate:

$10.80/ acre / month for metered users whose anticipated capacity exceeds 100,000 gallons per day and which must provide a minimum of three (3) days of wet weather storage for the minimum flow rate of 1,900 gallons' acre / day on an annual average (1) The above information is provided pursuant to the requirements of Section 2(B) of the Commission's Continuing Disclosure Certificate which was issued on August 15,1996 in conjunction with the sa!c of $26,210,000 Utilities Refunding Revenue Certificates, Series 1996.

(2) A surcharge of twenty-five percent (25%)is added to bills of users outside the City limits.

42

WN h

SUPPLEMENTAL AUDIT REPORTS

e

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i BRENT MILLIKAN & COMPANY, P.A.

CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITINGSTANDARDS To the lionorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida New Smyrna Beach, Florida

)

We have audited the financial statements of Utilities Commission, City of New Smyrna Beach, Florida, as of and for the year ended September 30,1998, and have issued our report thereon dated November 6,1998.

We conducted our audit in ccordance with generally accepted auditing standards and Government Auditing Standards, issuedby the Comptrolle

ncral of the United States. Those standards require that we plan and perform the audit to obtain reasonabic as ice about whether the financial statements are free of material misstatement.

Compliance with laws,. gulations, contracts, and grants applicable to Utilities Commission, City of New Smyrna Beach, Florida, is the responsibility of Utilities Commission, City of New Smyrna Beach, Florida's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Commission's compliance with such provisions oflaws, regulations, contracts, and grants.

However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.

The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards.

This report is intended for the information of the Utilities Commission, management, and applicable federal and state regulatory bodies. This restriction is not intended to limit the distribution of this report, which is a matter of public

recorf,

%.A New Smyrna Beach, Florida November 6,1998 l

43 205 MAGNOLIA ST.

• NEW SMYRNA BEACH, FL 32168 * (904) 4271333

• FAX (904) 427-5823 MLMBER: Amerkan Institute of Certified Pubhc Accountants and AKTA Private Companies Practice Section

i i

BRENT MILLIKAN & COMPANY, P.A.

CERTIFIED PUBLIC ACCOUNTANTS j

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITII GOVERNMENTAUDITINGSTANDARDS To the Honorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida New Smyrna Beach, Florida We have audited the financial statements of Utilities Commission, City of New Smyrna Beach, Flirida, as of and for I

the year ended September 30,1998, and have issued our report thereon dated November 6,1998.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standardr, I

issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

I The management of Utilities Commission, City of New Smyrna Beach, Florida, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgements by management

- an: required to assess the expected benefits and related costs ofinternal control structure policies and procedures. The objectives of an intemal control structure are to provide management with reasonable, but not absolute, assurance that I

assets are safeguarded against loss from unauthonzed use or disposition and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because ofinherent limitations in any internal control I

structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

In planning and performing our audit of the financial statements of Utilities Commission, City of New Smyrna Beach, Florida, for the year ended September 30,1998, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures I

and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the pmpose ofexpressing our opinion on the financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion.

Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters invohing the internal control structure and its operation that we consider to be a material weakness as defined above.

I 44 205 MAGNOLIA ST.

• NEW SMYRNA IIEACil, FL 32168 * (904) 427-1333

• FAX (904) 427 5823 MEMBLR: American institute of Certihed PuMm Accountants and AICPA Private Companies Practwe %,t%n

To the Honorable Chairman and Commissioners Utilities Commission, City of New Smyrna Beach, Florida l

Page 2 of 2 j

However, we noted other matters involving the internal control structure and its operation that we have re W

management of Utilities Commission, City of New Smyma Beach, Florida, in a separate letter dated November 6,1 Tids report is intended for the infonnation of the Utilities Commission, management, and applicable federal an regulatory bodies. This restriction is not intended to limit the distribution of this report, which is a matter record.

I New Smyrna Beach, Florida November 6,1998 i

I i

lI h

n I

f e

(

k

- b a

~

BRENT MILLIKAN & COMPANY, P.A.

CERTIFIED PUBLIC ACCOUNTANTS MANAGEMENT COMMENTS To the Honorable Chairman and Cormnissioners Utilities Commission, City of New Smyrna Beach, Florida New Smyrna Beach, Florida We have audited the financial statements of Utilities Commission, City of New Smyrna Beach, Florida, as of and for the year ended September 30,1998, and have issued our report thereon dated November 6,1998.

We conducted our audit in accordance with generally accepted auditing standards and Government A uditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

In planning and performing our audit of the financial statements of Utilities Commission, City of New Sm>Tna Beach, Florida, for the year ended September 30,1998, we considered the Commission's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal contml structure. As a result, no weaknesses in procedures and controls came to our attention which are required to be reported.

In addition to testing your financial operations for compliance with applicable laws, we are required to comment on those items required to be included in this report by reason of the Rules of the Auditor General of the State of Florida.

Those items are included in Exhibit A attached.

This n: port is intended for the information of the Utilities Commission, management, and applicable federal and state regulatory bodies. This restriction is not intended to limit the distribution of this report, which is a matter of public record.

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!N.k New Smyrna Beach, Florida 1

November 6,1998 L

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205 MAGNOLIA ST.

• NEW SMYRNA BEACll, FL 32168 + (904) 4271333

• FAX (904) 427-5823

' MEMBER: American Instnute of Certified Putilic Accountants and AICPA Private Companies Practice Section I

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Exhibit A Management Comments Page 1 of 2 Prior Year Findines and Recommendationn All findings and resultant recommendations made in the preceding year were appropriately implemented and/or resolved to our satisfaction. No irregularities were reported in the preceding year.

Current Year Findinen and Recommendations Year 2000 Issue The Year 2000 Issue sesults from a computer's inability to process year-date data accurately beyond the year

'1999. Except in recent years, computer programmers consistently have abbreviated dates by eliminating the first two digits of the year, with the assumption that these two digits would always be 19. Thus January 1, 1965, became 01/01/65. Unless corrected, this shortcut is expected to create widespread problems when the clock strikes 12:00:01 A.M. on January 1,2000. On that date, some computer programs may recognize the date as Janua'y 1,1900, and process data inaccurately or stop processing altogether. Additionally, the use of abbreviated dates may cause failures when systems currently attempt to perform calculations into the year 2000.

The Year 2000 Issue presents another cha!!cnge-the algorithm used in some computers for calculating leap years is unable to detect that the year 2000 is a leap year. Therefore, systems that are not year 2000 ready may not register the additional day, and date calculations may be incorrect.

Although the Commission has taken precautionary steps to address this issue, we carmot stress enough the importance of this matter. The Year 2000 Issue is complex enough to warrant additional efforts to mitigate the risks of non-compliance.

Acmrdingly we recommend that the Commission continue its efforts to further test hardware, software, and all systems that may be negatively affected by the Year 2000 Issue, particularly mission-critical systems. We also recommend that the Commission implement additional verification procedures to test the accuracy of information received from its vendors, service providers, bankers, customers, and other third-party organizations with whom it exchanges date-dependent information, because these organizations also must become year 2000 ready. The Commission also should satisfy itself that vendors, service providers, bankers, customers, and other third-party organizations will not experience problems relating to the Year 2000 Issue that could aIIect the Commission's operations or cash flows.

We also recommend that the Commission review all correspondence on this matter to insure conformity with the " Year 20001nformation andReadiness Disclosure Act" that was passed into law on October 19,1998 by President Clinton.

Oversicht Unit The Utilities Cormnission, was created in 1%7 through the passage of Chapter 67-1754, Laws of Florida, Special Acts of 1%7 (House Bill 1669) which amended the Charter of the City of New Smyrna Beach, Florida, to create the Utilities Commission. In a referendum held October 2,1984, City voters approved amendments to the City Charter establishing criteria requiring the funds and entities related to the operation of the Utilities Commission be included as a component unit of the City of New Smyma Beach, Florida, and an integral part of the City's reporting entity. The Commission's basic financial statements are incorporated in the City's Comprehensive Annual Financial Report as an enterprise ftmd activity.

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Exhibit A Management Comments Page 2 of 2 Florida Denartment of Banleine and Finance Financial Renort

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The financial report required to be filed with the Florida Department of Banking and Finance pursuant to Section 218.32 (1)(b), Florida Statutes, has not yet been completed by the Commission's oversight unit (City of New Smyrna Beach, Florida, Unit ID#251) at the time of submitting this report. Upon completion of the financial report, we will f

compare the report with the financial audit report and state our findings, if any, in an amended or supplemental management letter.

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We compared the Commission's financial data for the fiscal year ended September 30,1997, as included in the Armual i

Financial Report filed with the Florida Department of Banking and Finance pursuant to Section 218.32 (1)(b), Florida Statutes, with the Conunission's Comprehensive Annual Financial Report and found all items to be in substantial agreement.

Determination of Financial Emervency - Section 218.503(It F.S.

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Nothing came to ourattention which indicated that the Utilities Commission, City of New Smyrna Beach, Florida, is, or during the year ended September 30,1998, was in a state of financial emergency as a consequence of conditions I

described in Section 218.503(1), F.S.

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