ML20138H209

City of Leesburg Comprehensive Annual Financial Rept Fy Ended 960930

ML20138H209
Person / Time
Site:	Crystal River
Issue date:	09/30/1996
From:	Carter S, Otte A LEESBURG, FL
To:
Shared Package
ML20138H133	List: 3F0497-13, Forwards Annual Financial Rept for 1996 & Annual Financial Repts for Gainesville Regional Utils,Fl Progress Corp, Orlando Utils Commission,City of New Smyrna Beach,City of Leesburg,City of Tallahasee & City of Ocala ML20138H143 ML20138H150 ML20138H165 ML20138H193 ML20138H209 ML20138H219 ML20138H227
References
NUDOCS 9705070112
Download: ML20138H209 (135)

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'r Scal br Ended September 30,1996 9705070112 970430 PDR ADOCK 05000302 r.

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COMPREHENSIVE ANNUAL FINANCIAL REPORT  ;

CITY OF LEESBURG, FLORIDA FISCAL YEAR ENDED SEPTEMBER 30,1996 1

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l Prepared By:

Stan Carter Acting Finance Director r- -

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INTRODUCTORY SECTION t

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I CITE )F LEESBURG, FLORIDA COMPRE!L VE ANNUAL FINANCIAL REPORT FOR THE FISC iL YEAR ENDED SEPTEMBER 30,1996 4

d MAYOR David L. Connelly MAYOR-PRO-TEM William L. Polk l

! COMMISSION 1

C. Robert Lovell i Ed Schlein  ;

Chris Floyd CITY MANAGER ACTING FINANCE DIRECTOR Anthony G. Otte Stan Carter CITY ATTORNEY CITY AUDITORS McLin, Burnsed, Morrison Purvis, Gray and Company Johnson, Newman & Roy, P.A.

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CITY OF LEESBURG, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30,1996 Table of Contents Introductory Section  !

l Principal City Officials . . . . . . . . . . . . . . ...... .................... i J Table o f Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . n-v I Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6 Organizational Chart .............. ...................... ........ 7 Certificate of Achievement .. ................. ... ..... ....... .. 8-9 Financial Section Independent Auditors' Report ................ . . . . . . . . . . . . . . . . . . . 10- 1 1 General Purpose Financial Statements: )

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Combined Balance Sheet - All Fund Types and Account Groups .............. 12-15 l Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types ........ ............ 16-17 Combined Statement of Revenues, Expenditures and Changes ,

in Fund Balances - Budget and Actual - All Governmental Fund Types ......................... .......... .... . 18-19 Combined Statement of Revenues, Expenses and Changes in Retained Earnings / Fund Balances - All Proprietary Fund Types and Pension Trust Funds . . . . . . . . . . . . . . .......... .. . . . . . 20 Combined Statement of Cash Flows - All Proprietary Fund Types . . . . . . . . .... 21-22 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-54 Required Supplementary Information:

Revenues By Source - Expenses By Type - Pension Trust Funds .... ... . . 55-56 Pension Benefit Obligation Information - Pension Trust Funds . . . . . . . . . . . . . . . . 57 Combining and Individual Fund and Account Group Statements and Schedules:

General Fund Balance Sheet . . . . . . . . . . . . . . . . . . . . . .......................58 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual . . . . . . . . . . . . ............ ... .....59 Schedule of Revenues - Budget and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Schedule of Expenditures - Budget and Actual - By Department . . . . . . . . . . . . . . . 61 ii

l CITY OF LEESBURG, FLORIDA l COMPREIIENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30,1996 Table of Contents (Continued)

Financial Section (Concluded)

Combining and Individual Fund and Account Group Statements and Schedules: (Concluded) 4 Special Revenue Funds Combining Balance Sheet . . . . . . . . . . . . ...... .. ..... ... . . . . . 62 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . ...... . .. .............. . . . 63 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual:

Community Development Fund . ...... ......... . .... . 64 Housing Assistance Fund . . . . . . . . . . . . . . .... .... ..... .. . 65 Stormwater Fund . . . . . . . . . . ..... ............... ....... 66 i Affordable Housing Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 67  ;

Enterprise Funds i Combining Balance Sheet . ...... ....... . ......... .... . . 68-71 l Combining Statement of Revenues, Expenses and Changes in l Retained Earnings ......... ....... ................... 72-73 1 Combining Statement of Cash Flows . . . . . . . . . . . . . . . . . .... ... . . . 74-77 I Internal Service Funds Combining Balance Sheet . . . . . . . . . . ... ............. .........78 Combining Statement of Revenues, Expenses and Changes in Retained Earnings ........ .. .......... ...... ...... . . . 79 Combining Statement of Cash Flows . .. .... ........... . . . . . . 80 Fiduciary Fund Types Combining Balance Sheet . . . . . . . ... ............. .. . .... . . . 81 Combining Statement of Revenues, Expenses and Changes in Fund Balances - Pension Trust Funds ....... ............. ... ... 82 l Statement of Changes in Assets and Liabilities - Agency Fund . . . . . . . .. .. . . 83 Account Groups Schedules of General Fixed Assets By Source . . .......... . . . . . . . . . . 84 Schedule of General Fixed Assets - By Function ar d Activity . . . . . . . . . . . . . . 85 Schedule of Changes in General Fixed Assets - Gy Function and Activity . . . . . . . . . . . . . . . .. ...... .. ........ . . . . . . .. 86 Schedules of General Long-Term Debt . .... ... .... .. ... . . 87 iii

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i CITY OF LEESBURG, FLORIDA i COMPREHENSIVE ANNUAL FINANCIAL REPORT l FOR THE FISCAL YEAR ENDED SEPTEMBER 30,1996 Table of Contents (Continued) l Statistical Section Table 1 General Governmental Expenditures By Function and Other Uses ......................................88-89 2 General Revenues By Source and Other Financing Sources ............ .... . .......... .. ... .... 90-91 3 Property Tax Levies and Collections . ....... .. ...... ..... 92-93 4 Assessed Value of Exempt and Taxable Property . ...... ... .. . . . . . 94 5 Property Tax Rates - All Direct and Overlapping Governments . ............... ... .. ....... . .... . 95 6 Computation of Overlapping General Obligation Debt . . . . . . . . . . . . . . . . . 96 7 Ratio of Annual Debt Service Expenditures For General and Special Revenue Bonded Debt to Total General Expenditures . . . . . . . ............ . ....... ...... . . . 97 8 Combined Utility Funds - Schedule of Revenue Bond Coverage ....... ............................ .... 98-99 9 Demographic Statistics . . . . . .. ..... ... .... ....... . 10n 10 Construction Permits and Values ........... .. .. ......... 101 11 Principal Taxpayers . . . . . . . . . . . ... .. .. ..... ........ 102 12 Miscellanecus Statistics .... .............. . ..... ... 103 13 Corporate Limits and Annexations . . . . . . . . ..... .... .. ..... 104 Other Reports Section Independent Auditors' Report on Schedule of Federal and State Financial Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... .. 105 Schedule of Federal and State Financial Assistance . . . . . . . . . . . . . . . . . . ... 106-107 Independent Auditors' Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards . . . . . . . ...... 108-116 Independent Auditors' Report on Compliance With Laws and Regulations Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards . . . . . . . ......... I17 Independent Auditors' Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs ................ .......... ...... ...... . 118-120 iv

CITY OF LEESBURG, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30,1996 .

l Table of Contents '

(Concluded) l Other Reports Section (Concluded)

Independent Auditors' Report on Compliance With the General Requirements Applicable to Federal Financial Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Independent Auditors' Report on Compliance With Specific Requirements Applicable to Major Federal Financial Assistance Programs . . . . . . . . . . . . .. .. .. . .... ........ 122-123 Management Letter . . . . . . . . . . . . . . . . .......................... 124-125 Management Response . . . . . . . . . . . . . . ....... ...... ....... ... 126-129 y

1 March 10,1997 n ,

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To the Citizens of the CITY OF LEESBURG:

! The comprehensive annual financial report of the CITY OF LEESBURG for the fiscal year ended September 30,1996, is hereby submitted. Responsibility for both the ,

accuracy of the data, and the completeness and fairness of the presentation, including l

! l jL all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed information is accurate in all material respects and reported in a manner designed to presentfairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included.

The comprehensive annual financial report is presented in four sections: introductory, financial, statistical and other reports. The introductory section includes this transmittal j letter, the City's organizational chart and a list of principal officials.. The financial section l I

includes the general purpose financial statements and the combining and individual fund and account group financial statements and schedules, as well as the auditofs report on the financial statements and schedules. The statistical section includes l selected financial and demographic information, generally presented on a multiyear basis.

l. The Cityis required to undergo an annual single audit in conformity with the provisions

. of the Single Audit Actof 1984 and U.S. Office of Management and Budget Circular A-128, Audits of State and Local Governments. Information related to this single audit, L including the schedule d federal financial assistance, findings and recommendations, and auditor's reports on the internal control structure and compliance with applicable laws and regulations, are included in the other reports section.

This report includes all funds and account groups of the City of Leesburg. The City provides a full range of services, which include police and fire protection; sanitation

. services;' storm water drainage; the construction and maintenance of streets and infrastructure; recreational activities and cultural events. In addition to general ,

i govemment activibes, the City provides a full range of utility services, including electric, natural gas, water and wastewater treatment. -

qg LEESBURG llic Lakefront City Ibst Offke &x .190630

• Lccel,ury Florida 347494630 352/728-9700

• Fax 352/728-9734 ' TDD 352/728-4138

- AN EQUALOPPORTUNnY/AFFIRMAT'VE ACTION EMPIDYER- )

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I l To the Citizens of the City of Leesburg ECONOMIC CONDITION AND OUTLOOK The City of Leesburg is located in the central part of the state, and is part of the Greater Orlando Metropolitan Statistical Area (MSA). The economic condition and outlook of the City has brightened with significant increases in industrial leasing, employment generating activity, and new commercial building activity. New construction continues i to show economic growth over previous years. Commercial development provided over 485 full and part time jobs; industrial leasing / expansion created over 210 full time jobs in the past three years, effectively bringing the areas' industrial vacancy rate below one percent.

MAJORINITIATIVES With the adoption of the 1996 fiscal year budget, the City Commission made a commitment to continue city-wide economic development activities to create more and betterjobs for our citizens, stability for their families, and develop balance within the local economy.

Since March 1993, when the City initiated its first formal economic development office, efforts to attract new industry and assist the expansion of existing business in Leesburg has been significant. The City has developed strategies to diversify its service basedjob economy by creating more semi-skilled and skilled positions at higher wages. By doing '

so, the City also hopes to enhance proputy values and to stabilize taxes.

FINANCIAL INFORMATION Management of the City is responsible for establishing and maintaining an intemal i control structure designed to insure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting material is compiled to allow for preparation of financial statements in conformity with generally accepted accounting principles. The internal control 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 controls should not exceed the benefits likely to be derived; ad (2) the valuation of costs and benefits requires estimates and judgments by i manages.cnt.

Budgeting controls. In addition, the City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the  ;

annual appropriated budget approved by the City Commission. The resolution adopting the annual budget sets forth control of appropriations on a fund total level and prescribes methods for budget amendment.

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To th3 Citinns of the City of Leasburg As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management.

General Government Functions. The following schedule presents a summary of general fund, special revenue funds, debt service fund and capital project fund financing sources for the fiscal year ended September 30,1996, and the amount and percentage ofincreases l

and decreases in relation to prior year financing sources, i

i Increase Percent of Percent (Decrease) Increase Financina Sources Amount ofTotal from 1995 (Decreasel Revenues:

Taxes 3,380,526 22.86 93,526 2.85 Licenses and Permits 264,121 1.79 13,121 5.23 Intergovernmental Revenues:

Shared revenue 1,639,149 11.08 88,149 5.68 Operating grants 1,103,826 7.46 36,826 3.45 Capital grants 118,898 0.80 (14,102) (10.60)

Charges for services 912,676 6.17 341,676 59.84 Fines and Forfeitures 206,897 1.40 17,897 9.47 Other revenues 663.182 _432 (152.818) (18.73)

Total Revenues 8.289.275 56.05 424.275 5.39 Other Financing Sources:

Operating Transfers 6.500.932 43.95 (4.068) (0.06)

Total Other Financing Sources 6.500.932 43.95 (4.068) (0.06)

Total Revenues and Other  !'

Financing Sources 14,790,207 100.00 420,207- 2.92 The largest dollar.value increase in revenue came from charges for services. This was due  ;

to increased user fees in the Stormwater Fund and revenues from the first full year of manna  !

operations in the General Fund. l Although Other Revenues appear to have decreased significantly, in the previous year this figure was higher than usual as a result ofincreased interest earnings on surplus cash, sale l

of city property, and private contributions for special projects.

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To th3 Citiz:ns of ths City of Leesburg l

The following schedule presents a summary of general fund, special revenue funds, debt service fund and capital project fund expenditures and other financing uses for the fiscal l l

year ended September 30,1996, and the percentage ofincreases and decreases in relation

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to prior year amounts; Increase Percent of Expenditures and Percent (Decrease) Increase Other Financino Uses Amount ofTotal from 1995 (Decrease) i Expenditures by function: '

General Government 1,029,400 7.10 (23,600) (2.24)

Public Safety 5,035,207 34.74 313,207 6.63 Public Works 1,518,185 10.47 209,185 15.98 j Community Development 211,471 1.46 3,471 (3.10)

Human Services 1,037,758 7.16 (33,242) (3.10) l 399,300 2.76 (57,700) (12.63)  !

Physical Environment Culture and Recreation 2,459,102 16.96 234,102 10.52 Capital Projects Fund 848,387 5.85 (1,210,613) (58.80)

Debt Service 520.980 3.59 (18.020) (3.34)

Total Expenditures by Function 13.059.790 90.09 (583.210) (4.27)

Other Financing Uses:

Operating Transfers 1.436.589 Sal 18.589 1.31 Total Other Financing Uses 1.436.589 331 18.589 1.31 Total Expenditures and Other Financing Uses 14,496,379 100.00 (564,621) (3.75)

The largest increase in expenditures occurred within Public Safety in the General Fund.

This was a result ofincreased personal services and capital outlay.

Expenditures in Public Works also increased significantly due to increased street  :

maintenance costs and capital outlay.

Culture and Recreation expenditures were also significantly increased due to marina operating costs during its first full year of operations.

General Fund Balance. The fund balance of the general fund decreased by $238,598 or 5.15 per cent of the fund balance at the beginning of the year.

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i, To ths Citiz:ns of ths City of Leesburg i Enterprise Operations. The City's enterprise operations are comprised of six separate and distinct activities: Electric utility, Gas utility, Water utility, Sanitary Sewer and Wastewater Treatment utility, Sanitation Services, and Communication Services.

l The utilities are still experiencing modest growth. Operating revenues increased by 6.06 i percent and operating expenses increased by 4.77 percent. Operating income increased by 10.29 percent. Operating income is 24.31 percent of operating revenues.

Sanitation services experienced a .55 percent decrease in operating revenues for the year.

Operating expenses decreased by .88 percent. This resulted in operating income of $86,685 l which is relatively consistent with the previous fiscal year.

! Conununication services is a fiber optics communication system. Operating revenues were

$33,403 for this fiscal year. Operating expenses were $13,126.This is also consistent with l

the previous year.

! Pension Trust Funds Operations. The City operates three defmed benefit pension plans: the General Employees' Pension Fund, the Municipal Police Retirement Trust Fund and the Municipal Firemen's Retirement Tmst Fund. Allinvestments are managed by outside fund managers. The operations of the three pension plans continued to improve in 1996, due to substantial gains on the sale of investments and increased revenues from interest and dividends during the year.

Debt Administration. In 1987, the City issued $6,145,000,in refunding and capital improvement revenue bonds. Of this amount, S4,825,000 remained outstanding at September 30,1996.

In 1989, the City issued $21,810,000 of Refunding Utilities Revenue Bonds, Series 1989 to refund $18,140,000 of the $20,000,000 Refunding Utilities Revenue Bonds, Series 1984.

At year end, there was $19,395,000 outstanding on the 1989 series and $619,999 on the 1984 series, plus $1,566,476 in accrued interest on the 1984 Series Capital Appreciation Bonds.

The City had no general obligation bonds outstanding as of September 30,1996.

During fiscal years 1992 and 1996, the City entered into equipment lease purchase agreements for $439,968. The total minimum lease payments remaining outstanding as of September 30,1996 is $272,269.

Cash Management. Cash temporarily idle during the year was invested in obligations of the U.S. Treasury, the State Board of Adminisvation Local Govemment Investment Pool, and repurchase agreements. Interest camed by the City this year, excluding pension tmst fimds, totaled $2,921,429, which is $192,304 more than the previous year.

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To th3 Citiz:ns of ths City of Lessburg Risk Management. The City maintains two risk management programs for employee health 4 insurance and workers' compensation. These two separate internal service funds are

supported by employer contributions. The employee health insurance program is also

supponed by employee contributions. Third-party coverage is currently maintained for workers' compensation claims greater than $400,000 and for employee health insurance claims greater than $45,000.

Independent Audit. The City charter and State statutes require an annual audit by independent certified public accountants. The fum of Purvis Gray & Company was selected ,

by the City Commission. The auditor's report on the general purpose financial statements l and combini::g and individual fund statements and schedules is included in the financial section of this report.

Awards. 'Ihe Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended September 30, 1995. This was the sixth consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized ,

comprehensive annual financial report. This report satisfied both generally accepted i '

accounting principles and applicable legal requirements.

f A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual report continues to meet the Certificate of Achievement '

Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

Acknowledgments. The preparation of the comprehensive annual financial report on a timely basis was made possible by the dedicated service of the entire staff of the Finance department. Each member of the department has our sincere appreciation for the contribution made in the preparation of this report.

Also without the interest and support of the members of the City Commission, preparation of this report would not have been possible.

Sincerely,

1. . W Anthony . tte City Manage j7 SWA^

Stan Carter Acting Finance Director RLB/dr City cf Leesburg, F12rida Organizati:nal Chart  ;

Segwember 30,1996 l CITY COMMISSION CITY CLERK CITY MANAGER & FINANCE DIRECTOR ECONOMIC BUDGET DEVEIDPMENT SPECIAL M RT PROJECTS i FIRE POLICE RECREATION DEPARTMENT DEPARTMENT LIBRARY & PARES I I I I I i HUMAN ELECTRIC & PLANNING.

WATER & GAS WASTEWATER ENG DEPARTMENT TREATMENT PUBLIC WORKS RESOURCES PURCHASING

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I The Government Financial Officers Association of the United States and Canada (GFOA) awarded a -

Certificate of Achievement for Excellence in Financial Reporting to the City of Leesburg, Florida for its

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Comprehensive Annual Financial Report for the fiscal year ended September 30,1995. The Certificate l of Achievement is the highest form of recognition for excellence in state and local government financial l reporting. l In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement Program requirements, and we are submitting it to GFOA.

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Cel"~1::1Cate 0:~

! Achievement for Exce. .ence In Financia.. '

Reporting Presented to  !

l City of Leesaurg, i

Eorida For its Comprehensive Annual ,

Financial Report for the Fiscal Year Ended September 30,1995 A Certificate of Achievement for Excellence in Financial i Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting.

g ,,.s,d.

wmExecutive Director 9

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l FINANCIAL SECTION l Independent Auditors' Report

! General Purpose Financial Statements i Required Supplementary Information Combining, Individual Fund and Account Group Statements and Schedules i

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Purvis Gray &

Company INDEPENDENT AUDITORS' REPORT Honorable City Commission  !

City of Leesburg j Leesburg, Florida l We have audited the accompanying general purpose financial statements of the City of Leesburg, Florida, as of and for the year ended September 30, 1996, as listed in the table of contents. These general purpose financial statements are the responsibility of the City of I,eesburg, Florida's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.

The financial statements of the City of Leesburg, Florida as of September 30,1995, were audited by other auditors whose report dated December 27, 1995, expressed an unqualified opinion on those statements.

Our audit was made in accordance with generally accepted auditing standards; Government Auditing I Standards, issued by the Comptroller General of the United States; and provisions of Office of Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable l assurance about whether the general purpose financial statements are free of material misstatement. An '

audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Leesburg, Florida at September 30,1996, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report dated January 10,1997, on our consideration of the City of Leesburg, Florida's internal control structure and a report dated January 10,1997, on its compliance with laws and regulations.

Certified Public Accountants P.O. Box 23999

• 222 N.E. Ist Street

• Gainesville, Florida 32602 * (352)378-2461 Laurel Ridge Professional Center

• 2347 5.E.17th Street

• Ocala, Florida 34471 * (352) 732 3872 1415 Piedmont Drive, East, Suite 2

• Tallahassee, Florida 32312 * (904) 385 0554

• FAX (904) 385-9801 MtM8tR$ OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFitD PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIF110 PUsuC ACCOUNTANTS PRIVATE COMPANIES AND $ E.C. PRACTICE SECTIONS 10

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Honorable City Commission City of Leesburg Leesburg, Florida INDEPENDENT AUDITORS' REPORT (Concluded)

Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining and individual fund and account group statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. The statistical section has not been audited and we express no opinion on it. I Ocala F o ida f 11 l

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GENERAL PURPOSE FINANCIAL STATEMENTS

i COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Governmental Fund Types Special Debt Capital General Revenue Service Projects Assets and Other Debits Equity in Pooled Cash and Cash Equivalents $ 5,317,051 $ 526,343 $ 895,770 $ 205,361 Cash and Investments With Trustees i: Receivables:

Customer Accounts:

Unbilled 41,094 Billed 34,100 Allowance For Doubtful Accounts (801)

Accrued Interest 215.261 Other 47,784 22,825 Prepaid Expense 49,501 Advances to Other Funds Duc From Other Funds 50,100 Due Frcm Other Governments 272,357 56,000 19,017 Inventory 7,288 Restricted Assets:

Equity in Pooled Cash and Cash Equivalents 1,239,312 Investments Property, Plant and Equipment General Fixed Assets

- (Accumulated Depreciation)

Construction in Progress Unamortized Bond Issue Costs Amount .Available in Debt Service Funds Amount to Be Provided For Retirement of General Long-Term Debt Total Assets and Other Debits $ 5.959,342 $ 679,561 $ 895,770 $ 1,463.690 See accompanying nctes.

12

.. .-. - . . _ _ ~.. .- . . - = . _ . . . . . . . . . -_.

(Page 1 of 2 Pages) 1 Fiduciary Totals '

Proprietary Fund Types Fund Type Account Groups (Memorandum Only)

General General Internal Trust and Fixed Long-Te (in nousands)

Enterprisc Service Agency Assets Debt 1996 1995

$ 29,929,092 $ 3,184,582 $ 40,058,199 $ 36,684

$ 30,400,810 30,400,810 27,963 2,929,567 2,970,661 2,829 3,812,085 3,846,185 3,510 (555,234) (556,035) (482) 117,717 213,324 546,302 483 5,318 75,927 36 49,501 0 0 50 50,100 19 l 347,374 226 l

1,208,699 47,581 1,263,568 1,285 j 1 \

7,401,135 8,640,447 8,012 l 5.096,083 5,096,083 4,940

, 90,814,357 165,552 90,979,909 86,951 l $ 23,605,973 23,605,973 22,316 (34,0'7,488) (127,422) (34,154,910) (31,860) 4,314,653 4,314,653 2,828 l

199,73) 199,731 229 l $ 730,880 730,880 721 l

5,424,311 5.424,311 5,611

$ 111,240,397 $ 3.275,611 $ 30,614,134 $ 23,605,973 $ 6,155,191 $ 183,889,669 $ 172,351 l

l l

I

! l i

! l

l See accompanying notes, 4

13 3

s

COMBINED BALANCE SIIEET l ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA (Concluded)

Governmental Fund Types Special Debt Capital General Revenue Service Projects Liabilities, Fund Equity and Other Credits Liabilities Accounts Payable $ 789,482 $ 21,447 Accrued Expenses 619,713 Customer Advances For Construction Due to Other Governments $ 92,309 Due to Other Funds 50,100 Deferred Compensatie i Payable Payable From Restricted Assets:

Customer Deposits  ;

Accrued Interest on Revenue Bonds Current Portion . Revenue Bonds Claims Payable Notes Payable Capital Lease Payable Matured Interest Payable $ 164,890 Revenue Bonds Payable Net Compensated Absences Unearned Revenues 157,415 Landfill Postclosure Costs Payable i Decommissioning Costs Payable ,

Advance From Other Funds Total Liabilities 1.566,610 142,409 164,890 21,447 i;bnd Equity and Other Credits Contributed Capital Investment in General Fixed Assets Retained Earnings:

Reserved Unreserved Fund Balances:

Reserved 143,366 93,863 730,880 1,442,243 Unreserved 4.249,366 443,289 Total Fund Equity and Other Credits 4,392,732 537,152 730,880 1,442,243 Total Liabilities, Fund Equity and Other Credits $ 5,959,342 $ 679,561 $ 895,770 $ 1,463,690 l

See accompanying notes, l 1

14 j

(Page 2 of 2 Pages) i Fiduciary Totals Proprietary Fund Types Fund Type Account Groups (Memorandum Only) >

General General  !

Internal Trust and Fixed Long-Term (In nousands)

Enterprise Service Agency Assets Debt 1996 1995

$ ',,942,454 $ 2.753,383 $ 3.119 1,240,100 $ 24,646 1,884,459 2,218 172,988 172,958 100 92,309 84 50,100 19

$ 1,724,666 1,724,666 1,748 1,560,138 1.560,138 1,460 712,061 712,061 743 1,020,000 1,020,000 955 [

458,173 458,173 445 1,805,000 1,805,000 2,095 255,899 255,899 105 i 164,890 170 20,408,686 5 4,825,000 25,233,686 26,205 i 1,330,191 1,330,191 1,317 l 157,415 170 1 863,436 863,436 1,000 l 2,036,050 2,036,050 1,745 I l

O 50 32,016,812 482,819 1,724,666 $ 0 6,155,191 42,274,844 43,748 l

l 20,190,216 15,979 20,206,195 19,061 23,605,973 23,605,973 22,316 7,423,055 7,423,055 9,788 51,610,314 51,610,314 44,228 2,666,464 28,889,468 33,966,284 28,404 110.349 4,803.004 4,806 79,223,585 2,792.792 28,889,468 23,605,973 0 141,614,825 128,603

$ 111.240,397 5 3,275,611 $ 30,614,134 $ 23,605.973 $ 6,155,191 $ 183,889,669 5 172,351 i

See accompanying notes.

[ 15 l

l

I COMBINED STATEMF50 OF REVFNUES, EXPENDITURES AND  !

CHANGES IN FUND BALANCES l ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Revenues Taxes Licensca and Permits Intergov rnmental Charges For Services Fines and Forfeitures Miscellaneous:

laterest Other Total Revenues Expenditures Current: '

General Government Public Safety Public Works Community Development Human Services Physical Environment Culture and Recreation Capital Projects Debt Service:

Principal p '

i Interest l (Total Expenditures)

(Deficiency) Excess of Revenues (Under) Over Expenditures Before Other Financing Sources (Uses)

Other Financing Sources (Uses)

Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses)

(Deficiency) Excess of Revenues and Other Financing ,

Sources (Under) Over Expenditures and Other Financing Uses j Fund Balances, Beginning of Year Fund Balances, End of Year l

See accompanying notes, 16 i

- _ . _ . _ - . . _ .. _ . _ _ _ . . _ _ . . . _ - - _ =____ _ _ _ _ _ _ _ _

j Totals

~

Governmental Fund Types (Men'orandum Only)

! Special Debt Capital un nousands)  ;

{ General Revenue Service Projects 1996 1995

! $ 3,380,526 $ 3,380,526 $ 3,287 -

264,121 '

264,121 251

! 1,690,617 $ 1,052,358 $ 118,898 2,861,873 2,751 l 338,574 574,102 912,676 571 206,897 206,897 189 a

i 318,821 31,901 $ 28,926 72,727 452,375 440 187,457 23,350 210,807 376

{-

6,387,013 1,658,361 28,926 214,975 _ 8,289,275 7,865 >

2 1,029,400 1,029,400 1,053 5,035,207 5,035,207 4,722 1,518,185 1,518,185 1,309 211,471 211,471 208 1,037,758 1,037,758 1,071 399,300 399,300 457 2,459,102 2,459,102 2,225 848,387 848,387 2,059 190 'J00 190,000 197 ,

530,980 330,980 342  :

(10,253,365) (1,437,058) _ 520,980)

( (848,387) (13,059,790) (13,643) )

i (3,866,352) 221,303 (492,054) (633,412) (4,770,515) (5,778) 5,064,343 502,054 934,535 6,500,932 6,505 (1,436,589) (1,436,589) (1,418) 3,627,754 0 502,054 934,535 5,064,343 5,087 (238,598) 221,303 10,000 301,123 293,828 (691) 4,631,330 315,849 720,880 1,141,120 6,809,179 7,502

$ 4.392,732 $ 537,152 $__ 730,880 $ 1,442,243 $ 7,103,007 5 6,811 See accorr7anying notes.

17 l

b l

1 COMBINED STATEMENT OF REVENUES, EXPENDITURES AhT )

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL i ALL GOVERNMENTAL ITND TYPES FOR THE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA ,

General Variance Favorable Budget Actual (Unfavorable)

Revenues Taxes $ 3,288,600 $ 3,380,526 $ 91,926 Licenses and Permits 249,700 264,121 14,421 Intergovernmental 1,618,100 1,690,617 72,517 Charges For Services 320,100 338,574 18,474 Fines and Forfeitures 188,700 206,897 18,197 Miscellaneous:

Interest 321,400 318,821 (2,579)

Other 148,000 187,457 39,457 Total Revenues 6.134,600 6,387,013 252,413 Expenditures Current:

General Government 1,172,100 1,029,400 142,700 Public Safety 4,967,900 5,035,207 (67,307)

Public Works 1,608,300 1,518,185 90,115 Community Development 223,600 211,471 12,129 Iluman Services Physical Environment Culture / Recreation 2,535,000 2,459,102 75,898 Capital Projects Debt Service:

Principal Interest (Total Expenditures) (10,506,900) (10,253,365) 253,535 (Deficiency) Excess of Revenues (Under) Over Expenditures (4,372,300) (3,866.352) 505,948 Other Financing Sources (Uses) ,

Operating Transfers in 5,725,400 5,064,343 (661,057)

Operating Transfers Out (1,353,100) (1,436,589) (83,489)

Total Other Financing Sources (Uses) 4,372.300 3,627,754 (744,546)

(Deficiency) Excess of Revenues and Other Financing Sources (Under) Over Expenditures and Other Financing Us,es 0 (238,598) (23E.598)

Fund Balances, Beginning of Year 4.631,330 4.631,330 0 Fund Balances, End of Year $ 4.631,330 $ 4.392,732 $ (238,598)

See accompanying notes, 18 i

, i a

l J l 5

h Special Revenue Debt Service Capital Projects Variance Variance Variance 4

Favorable Favorable Favorable i Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable)

$1,121,800 $1,052,358 $ (69,442) $ 320,100 $ 118,898 $ (201,202) 554,000 574,102 20,102 17,200 31,901 14,701 $ 29,200 $ 28,927 $ (273) 68,100 72,727 4,627 23,350 23,350 1,693,000 1,658,361 (34,639) 29,200 28,927 (273) ~388,200 214,975 (173,225) 1,126,800 1,037,758 89,042 557,200 399,300 157,900 2,402,#)0 848,387 1,554,013 190,000 190,003 342,300 330,980 11,320 (1,684,000) (1,437,058) 246,942 022,300) (520,980) 11,320 (2,402,400) (848,387) 1,554,013 9,000 221,303 212,303 (503,100) (492,053) 11.047 (2,014.200) (633,412) 1,380,788 503,100 502,053 (1,047) 924,200 934,535 10,335 0 0 0 503.100 502.053 (1,047) 924,200 934,535 10,335 l 9,000 221,303 212,303 0 10,000 10,000 (1,090,000) 301.123 1,391,123 237,000 315,849 78,849 720,880 720,880 0 1,090,000 1,141,120 51.120

$ 246,000 $ 537,152 $ 291,152 $ 720,880 $ 730,880 $ 10,000 $ 0 $1,442,243 $ 1,442,243 See accompanying notes, i 19 1

COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS / FUND BALANCES ALL PROPRIETARY FUND TYPES AND PENSION TRUST FUNDS FOR THE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Proprietary Fiduciary Totals Fund Types Fund Type (Memorandum Only)

Internal Penslon (In musands)

Enterprise Service Trust 1996 1995 Operating Revenues Charges For Services $ 46,709,772 $ 2,624,266 $ 49,334,038 $ 46,471 Other Operating 628,478 628,478 790 Investment Income $ 3,027,186 3,027,186 1,214 Unrealized (Decrease) Increase in Fair Value of Investments (694,742) (694,742) 2,808 Contributions 1.100,386 1,100,386 1,047 Other Income 16,838 16,838 0 Total Operating Revenues 47,338,250 2,624,266 3,449,668 53,412,184 $2,330 Operating Expenses Power Generation and Transmission 1,008,735 1,008,735 920 Purchased Energy 21,736,179 21,736,179 20,393 Operating and Maintenance 8,253,881 535,634 8,789,515 8,258 Generaland Administrative 2,078,718 131,296 228,237 2,438,251 2,687 Depreciation and Amortization 3,317,587 9,906 3,327,493 3,884 Claims Expense 1,417,524 1,417,524 1,302 Benefit Payments 731,949 731,949 575 Change in Postclosure Estimate (93,859) (93,859) (502)

(Total Operating Expenses) (36,301,241) (2,094.360) (960,186) (39,355,787) (37,517)

Operating Income 11,037,009 529,906 2,489,482 14.056,397 14,813 Nonoperating Revenues (Expenses)

Interest Earnings 2,319,065 162,856 2,481,921 2,281 Interest Expense (1,868,350) (1,868,350) (1,857)

Other Income and Expenses 678,219 678,219 (61)

Total Nonoperating Revenues (Expenses) 1,128,934 162,856 0 1,291,790 363 Income Before Operating Transfers 12,165,943 692,762 2,489,482 15,348,187 15,176 Operating Transfers Out (4,610,268) (454,075) 0 (5,064,343) (5,086)

Net Income 7,555,675 238,687 2,489,482 10,283,844 10,090 Retained Earnings / Fund Balances, Beginning of Year $1,477,694 2,538,126 26,399,986 80,415,806 70,326 Retained Earnings / Fund Balances, End of Year $ 59,033,369 $ 2,776,813 $ 28,889,468 $ 90,699,650 $ 80,416 See accompanying notes, 20

k i

i COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES I

FOR THE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Totals Proprietary Fund Types (Memorandum Only)

Internal (In Thousands)

Enterprise Service 1996 1995 Net Cash Provided By Operating Activities $ 13,847,074 $ 547,076 $ 14,394,150 $ 12,354 Cash Flows From Noncapital Financing Activities Operating Transfers to Other Funds (4,610,268) (454,075) (5,064,343) (5,086)

Cash Flows From Capital and Related Financing Activities Interest Paid on Capital Leases (7.320) (7,320) (9)

Interest Paid on Revenue Bonds (1,623,509) (1,623,509) (1,636)

Acquisition and Construction of Capital Asseis (6,253,995) (2,198) (6,256,193) (3,021)

Capital Lease Receipts 223,375 223,375 Principal Paid on Capital Lease (72,066) (72,066) (113)

Principal Paid on Bond Maturities (955,000) (955,000) (885)

Principal Paid on Note Payable (290,000) (290,000) (270)

Capital Contributed 1,144,149 1,144,149 855 Net Cash (Used In) Capital and Related Financing Activities (7,834,366) (2,198) (7,836,564) (5,079)

Cash Flows From Investing Activities Interest on Investments 2,238,915 162,856 2,401,771 2,287 Purchase of Crystal River Decommissioning Investments (74,615) (74,615) (127)

Net Cash Provided By Investing Activities 2,164,300 162,856 2,327,156 2,160 Net increase in Cash and Cash Equivalents 3,566,740 253,659 3,820,399 4,349 Cash and Cash Equivalents, Beginning of Year 33,763,487 2,930,923 36,694,410 32,346 Cash and Cash Equivalents, End of Year $ 37,330,227 $ 3,184,582 5 40,514,809 $ 36.695 Shown in the Accompanying Financial Statements As:

Current Assets Equity in Pooled Cash and Cash Equivalents $ 29,929,092 $ 3,184,582 $ 33,113,674 $ 28,683 Restricted Assets Equity in Pooled Cash and Cash Equivalents 7,401,135 0 7,401,135 8,012 Total Cash and Cash Equivalents, End of Year $ 37,330,227 $ 3.1M,552 $ 40,514,809 $ 36,695 See accompanying notes,

, 21

COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES .

FOR THE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA (Concluded)

Totals Proprietary Fund Types Glemorandum Only)

Internal (In nousands)

Enterprise Service 1996 1995 Reconciliation of Operating income to Net Cash Provided 1 By Operating Activities Operating Income $ 11,037,009 $ 529,906 $ 11,566,915 $ 10,527 Adjustments to Reconcile Operating income to Net Cash Provided By Operating Activities:

Depreciation and Amortization 3.317,587 9,906 3,327,493 3,885 Bad Debt Expense 158,463 158,463 168 Nonoperating income 202,921 202,921 201 Nonoperating Expense (166,454) (166,454) (257)

Change in Postclosure Estimate (93,859) (93,859) (502)

(Increase)in Customer Accounts (574,431) (574,431) (1,505) ,

(Decrease) Increase in Advances From Other Funds (50,230) (50,230) 50 l' Decrease in Due From Other Funds 0 15 Decrease (Increase)in Inventory 26,485 (5,830) 20,655 (196)  ;

1 Decrease in Miscellaneous Receivables 882 882 243 l Increase in Accounts Payable 244,328 244,328 237 (Decrease) in Due to Other Funds 0 (15)

(Decrease) in Estimated Landfill Closure Costs Payable (41,975) (41,975) (785)

Increase (Decrease)in Claims Payable 12,540 12,540 (44)

(Decrease) Increase in Accrued Expenses (386,422) (328) (386,750) 280 Increase (Decrease) in Customer Advances For Construction 72,816 72,816 (23)

Increase in Customer Deposits 100,836 100,836 75 Net Cash Provided By Operating Activities $ 13,847,074 $ $47,076 $ 14,394,150 $ 12,354 Significant Transactions Not Affecting Cash Water and Sewer Lines Contributed By Developers $ 9,63 $ 0$ 0 $ 46 See accompanying notes, 22

l NOTES TO FINANCIAL STATEMENTS i i SEl'TEMBER 30,1>96 l

CITY OF LEESBURG, FLORIDA I I

Note 1 - Summary of Significant Accounting Policies  !

The City of Leesburg, Florida (the City) is a Florida municipality governed by an elected five-I member City Conunission. The City was established by the adoption of its Charter in the i

Laws of Florida, Chapter 9820,1923. The City provides services to its citizens including fire and police protection, electric, gas, water, wastewater, sanitation, parks and recreation, streets l

! and other general governmental activities. The City Commission is governed by the City I l Charter and by state and local laws and regulations. The City Commission is responsible for l

the establishment and adoption of policy. The execution of such policy is the responsibility 4

of the Commission-appointed City Manager.

The accounting policies of the City conform to generally accepted accounting principles for j

governmental entities. The following is a summary of significant accounting policies. '

1 Reporting Entity

The accompanying financial statements present the financial position, results of operations and cash flows of the applicable fund types and account groups governed by the City Commission of the City in accordance with governmental accounting standards. The reporting entity for the City (the primary govenunent) contains no separate legal entities (component units) for which the City Commission has financial accountability. Financial accountability is present i

if the City Conunission appoints a voting majority of a component unit's governing body and has the ability to impose its will on that organizatica or if there is a potential for the

, organization to provide specific financial benefits to, or impose specific financial burdens on, the City.

{ During 1996, the City established the City of Leesburg Redevelopment Agency. The City of Leesburg Redevelopment Agency did not have any financial activity in 1996 and will be accounted for as a special revenue fund when it begins operations in 1997.

Basis of Presentation The City maintains its accounting records in accordance with the principles and policies I

4 applicable to governmental units set forth by the Governmental Accounting Standards Board (GASB), as well as generally accepted accounting principles (GAAP) as promulgated by the American Institute of Certified Public Accountants and the Financial Accounting Standards j

Board (FASB). The proprietary funds do not apply all FASB statements and interpretations issued after November 30,1989.

Fund Accountmg 4 The accounting system and financial reports of the City are organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein which are segregated for the purpose of carrying on ,

specific activities or attaining certain objectives in accordance with special regulations, l restrictions, or limitations. l 23

l, NOTES TO F3NANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note I - Summary of Significant Accounting Policies (Continued)

Fund and Account Group Categories The categories of funds and account groups of the City are summarized as follows:

Governmental fund types are those through which most government functions typically are financed. The acquisition, use, and balances of expendable fmancial resources and the related current liabilities (except those accounted for in the proprietary funds) are accounted for through governmental type funds. Governmental funds used by the City are as follows:

a General Fund - To account for all financial resources which are not required to be accounted for in another fund.

m Special Revenue Funds - To account for the proceeds of specific revenue sources that are restricted to expenditures for specified purposes, a Debt Service Fund - To account for the accumulation of resources for, and the payment of, principal and interest for general long-term debt.

m Capital Projects Funds - To account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds).

Proprietary funds types are used to account for *he City's ongoing activities which are similar to those found in the private sector.  ;

e Enterprise Funds - To account for activities that are operated in a manner similar to j private businesses where the costs of providing goods and services are primarily recovered through user charges, a Internal Service Funds - To account for the financing of goods and services provided by one department to other departments of the City on a cost-reimbursement basis.

Fiduciary fund types are used to account for assets held in a trustee capacity for others.

m Pension Trust Funds - To account for the accumulation of resources to be used for retirement payrnents to employees.

m Agency Fund - To account for assets held for the benefit of third parties.

1 I

I l

l 24 l l

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 1 - Summary of Significant Accounting Policies (Continued)

Fund and Account Group Categories (Concluded)

Account groups record and control the City's general fixed assets and general long-term debt.

The account groups are not funds and do not reflect available financial resources and related liabilities. The following account groups are maintained by the City:

a General Fixed Assets - To account for property and equipment not used in proprietary fund operations, a General Long-Term Debt - To account for unmatured principal of long-term special obligation indebtedness, notes and capital leases payable, and compensated absences which are not the specific liability of a proprietary fund.

Measurement Focus Governmental fund types (general, special revenue, debt service and capital projects funds) are accounted for on a " spending" or "finarcial flow" measurement focus. This means that only current assets and current liabilities are guterally included on the balance sheets.

Reported fund balance (net current assets) is considered a measure of "available, spendable, or appropriable resources." Governmental fund type operating statements present increases (revenues and other unancing tources) and decreases (expenditures and other financing uses) in net current assets.

Proprietary fund types are accounted for on a " cost of services" or " capital maintenance" measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with its activity are included on its balance sheet to provide an indication of the economic net worth of the funds. The reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. The proprietary funo types operating statement presents increases (revenues) and decreases (expenses) in net total assets.

Pension trust funds are accounted for like proprietary funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve a measurement of results of operations.

Basis of Accounting Governmental fund type revenues and expenditures are recognized on the modified accrual basis. This method recognizes re. venues in the accounting period in which they become available and measurable. Expenditures are recognized in the period in which the fund liability is incurred (except unmatured interest on general long-term debt, which is recognized when due).

Governmental fund type revenues that are susceptible to accrual include property taxes, franchise fees, federal and state revenue sharing revenues, and reimbursements from grants for authorized expenditures through September 30.

25

i NOTES TO FINANCIAL STATEMENTS J CITY OF LEESBURG, FLORIDA (Continued)

Note 1 - Summary of Significant Accounting Policies (Continued)

Basis of Accounting (Concluded)

Proprietary fund revenues and expenses are recognized on the accrual basis. Revenues are recorded when earned, and expenses are recorded when incurred.

1 Fiduciary funds of the City consist of pension trust funds which are accounted for on the accrual basis, and the deferred compensation agency fund which is accounted for on the l modified accrual basis.

Transfers ,

Transfers are recognized in the accounting period in which the interfund receivable and I payable arise. Transfers are made from the utility funds to finance operations of the general fund, and the general fund makes transfers to the spe:ial revenue, debt service and capital projects funds.

Grants-ProprJetary Funds Unrestricted giants, entitlements or shared revenues received are reported as nonoperating revenues. Such resources externally restricted for capital acquisitions or construction are reported as contributed capital.

Cash Equivalents i For purposes of the statement of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents.

Investments In all funds, except the pension trust funds and the deferred compensation agency fund, investments are stated at amortized cost. The investments of the pension trust funds and the deferred compensation agency fund are stated at market value.

Receivables Utility operating revenues are generally recognized on the basis of cycle billings rendered monthly. The amount of services delivered after the last billing data and up to September 30 is estimated and accmed at year end.

Inventories Inventories held by the utility, sanitation services and motor pool funds are priced by the weighted average cost method at the lower of cost or market. Inventory shown in the general ,

fund consists of fuel held for consumption. General fund inventories are valued at cost as l determined on the first-in, first-out (FIFO) method. Inventory is accounted for by use of the consumption method.

26

1 NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 1 - Summary of Significant Accounting Policies (Continued) t i

i Amortization Bond issue costs and discounts are amortized over the life of the bonds using the effective interest method.

4 Cost Reimbursements Certain personal services and operating expenses recorded in various funds and departments are a result of services performed and expenses / expenditures incurred for the benefit of other funds and departments. In ordct to better reflect various funds' and departments' actual costs, a cost reimbursement is recorded as a reduction in expenditures or expenses. The funds and I

departments that benefit from the services and expenses / expenditures record a cost

reimbursement as an increase in expenditures or expenses. -

i Proprietary Fund Fixed Assets Proprietary fund fixed assets are recorded at historical cost. Donated fixed assets are recorded at fair market value on the date received. Depreciation is computed by the straight-line method over the estimated useful lives of the assets as follows:

Useful Lives Utility Funds i Buildings 10 to 50 Years Improvements Other Than Buildings 20 to 50 Years i Machinery, Equipment and Vehicles 4 to 20 Years Nuclear Fuel 5 Years I l Sanitation Services Fund Equipment 5 to 10 Years

! Vehicles 5 to 7 Years Motor Pool Service Fund 4

Equipment 3 to 10 Years

] Vehicles 6 Years General Fixed Assets General fixed assets purchased are recorded as expenditures in the governmental fund types at the time of purchase. Such assets are capitalized at cost in the genera! fixed assets group of accounts. The City's policy is not to capitalize public domain fixed assets such as streets, right-of-ways, sidewalks, drainage systems and similar assets. Donated fixed assets are valued

at their estimated fair market value at the time of acquisition. Depreciation is not provided i on general fixed assets.

27

-A.+d+ me.-. 4-ae 4 .m, M 4 si ,

9 NOTES TO FINANCIAL STATEMENTS  !

CITY OF LEESBURG, FLORIDA  !

(Continued)

Note 1 - Summary of Significant Accounting Policies (Continued) i Compensated Absences The City accrues accumulated compensated absences for governmental and proprietary funds. .

Compensated absences are recorded in the governmental fund types as an expenditure for the amount accrued during the year that would normally be liquidated with expendable available  ;

financial resources. The remainder of the liability is reported in the general long-term debt  ;

account group. The proprietary funds accrue compensated absences in the period they are earned. . Personnel policies allow employees to accumulate a maximum of 90 days vacation i leave and 90 days sick leave. Upon termination, employees are paid for their accrued -

vacation leave and 25% of their accrued sick leave brJance.

r Encumbrances Encumbrances represent contractual commitments in the form of purchase orders and contracts. Such encumbrances are not recorded as current year expenditures. They will  :

become expenditures upon vendor performance and will be charged against the ensuing year's budget. Encumbrances outstanding at year end are deemed canceled and amounts sufficient to re-establish the commitment are included in the appropriations for the subsequent year.

Reserves >

Fund balances are reserved as follows:

General Fund Reserved For Police Education and Other Expenditures $ 141,771 Reserved For Citizens Utility Relief Effect (C.U.R.E.) 1,595 Total General Fund $ 143,366 ,

Special Revenue Funds >

Reserved For Capital Improvements $ 14,561 Reserved For Housing Assistance 79,302 ,

Total Special Revenue Funds $ 93,863 Debt Service Fund ,

Reserved For Retirement of Debt $ 730,880  ;

Capital Projects Funds Reserved For Construction $ 1,442,243 Enterprise Funds Retained earnings are reserved as follows:

Debt Service $ 3,942,492  :

Renewal and Replacement 3,480.563 Total Enterprise Funds S 7,423,055 28 l

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NOTES TO FINANCIAL STATEMENTS

?

CITY OF LEESBURG, FLORIDA (Continued)

Note 1 - Summary of Significant Accounting Policies (Continued)

Budgeting i The City's procedures in preparing and adopting the annual budget are as follows:

l u The City Manager is responsible for preparing a proposed operating budget for all l governmental funds for the upcoming year prior to September 30, that includes estimated revenues, proposed expenditures, and other financing sources and uses.

m Public hearings are held to obtain taxpayer conunents and suggestions. The budget is enacted through passage of a resolution.

4 e The City Manager is authorized to transfer budgeted amounts within any fund, but may i not revise total fund expenditures without the approval of the City Commission. The 4

budgetary data presented is in agreement with the originally adopted budget as amended by the City Commission.

a Formal budgetary integration is employed as a management control device during the year for substantially all funds. Budgets are adopted on a basis consistent with generally

} accepted accounting principles. Total budgeted appropriations within a governmental fund 3

type may not be exceeded legally. Appropriations lapse at the end of the year. Budget i

data, when presented in the financial statements, is prepared on the same basis of accounting as that prescribed for the fund.

, During the year, the City made supplemental budget appropriations which increased or

, decreased the budgets as indicated below:

j Original Final Increase Adopted Amended (Decrease)

, General Fund $ 11,642,400 $ 11,860,000 $ 217,600 Special Revenue Funds 1,381,800 1,930,000 548,200 Debt Service Fund 532,300 532,300 0 Capital Projects Funds 2,060.800 2,402,400 341,600 Total Governmental Funds $ 15,617,300 $ 16,724,700 $ 1,107,400 Total Colunms on Combined Statements Total columns on the combined statements are captioned " Memorandum Only" to indicate that they are presend Only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.

29

4 NOTES TO FINANCIAL STATEMENTS 2

CITY OF LEESBURG, FLORIDA (Continued)

Note 1 - Summary of Significant Accounting Policies (Concluded)

Property Taxes Under Florida law, the assessment of all properties and the collection of allcounty, municipal e

and school board property taxes are consolidated in the offices of the County Property

Appraiser and County Tax Collector. The laws of the state regulating tax assessment are also designed to assure a consistent property valuation method statewide. Florida Statutes permit municipalities to levy property taxes at a rate of up to 10 mills.

The tax levy of the City is established by the City Commission prior to October 1 of each year and the Lake County Property Appraiser incorporates the City millages into the total tax 1 levy, which includes the County and the County School Board tax requirements.

All propert/ is reassessed according to its fair market value January 1 of each year. Each assessment roll is submitted to the Executive Director of the Florida Department of Revenue for review to determine if it meets all of the appropriate requirements of the Florida Statutes.

Taxes are assessed on November 1 of each year or as soon thereafter as the assessment roll is certified and delivered to the County Tax Collector. Unpaid taxes become delinquent on April 1 follcwing the year in which they are assessed. Discounts are allowed for early payment at the rate of 4% in the month of November, 3% in the month of December,2% in the month of January, and 1% in the month of February. The taxes paid in March are without discount.

On or prior to June 1 following the tax year, certificates are sold for all delinquent taxes on real property. After sale, tax certificates bear interest of 18% per year or any lower rate bid by the buyer. Application for a tax deed on any unredeemed tax ceitificates may be made by the certificate holder after a period of two years. Unsold certificates are held by the County.

Delinquent taxes on personal property bear interest of 18% per year until the tax is satisfied either by seizure and sale of property or by the five-year statute of limitations.

The City does not accrue its portion of the County held tax sales certificates or personal property tax warrants because such amounts are not measurable and available as of the balance sheet date.

Note 2 - Deposits and Investments Pooled Cash and Investments The City maintains a cash and investment pool which carries substantially all cash and investments of the City, and is used by all funds except the pension trust funds and agency fund. Each fund's portion of the pool is displayed in the accompanying financial statements 30

d NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 2 - Deposits and Investments (Continued)

Pooled Cash and Investments

as " Cash and Investments " The cash and investments of the pension trust funds and agency ,

fund are held separately from those other funds of the City. All cash and investments of the l' pool are considered cash equivalents for the statement of cash flows.

Deposits All of the City's deposits are maintained in banks and financial institutions which are covered by the Florida Security for Public Deposits Act (the Act); Chapter 280 of the Florida Statutes,

! The Act established a multiple financial institution collateral pool with the ability to assess member institutions to satisfy the claims of governmental entities if any member financial  ;

institution fails. This ability to assess provides protection which is similar to depository  !

insurance. At September 30,1996, the carrying amount of the City's deposits was $458,959, I

. and the bank balance was $462,746.

Investments Florida Statutes, the City Charter and investment policies authorize the investment of funds in time deposits or savings accounts of financial institutions approved by the State Treasurer, and obligations of the United States Government and its agencies. Investments may also include repurchase agreements and deposits with the State Board of Administration pool.

Revenue bond covenants also restrict the type and maturities of investments in bond-related funds.

Investments of the municipal police officers' retirement trust fund may be held in bond;,

stocks, or other evidence of indebtedness issued or guaranteed by a corporation under the laws of the United States provided the corporation meets certain rating and profitability criteria.

Investments of the municipal firemen's retirement trust fund and the general employees' pension fund may be invested in accordance with Florida Statutes as previously described.

A summary of the carrying amount and market value of all City investments classified by category of credit risk follows:

Category of Risk Carrying Market 1 2 3 Amount Value Pooled Investments SunTrust Repurchase Agreement $ 13,805,000 $ 13,805,000 $ 13,805,000 U.S. Treasury Bills, Notes and Bonds 18,805,000 18,805,000 18,893,801 Pension Trust and Agency Fund Investmeras Corporate Stocks 7,184,801 7,184,801 7,184,801 Corporate Bonds 4,817,084 4,817,084 4,817,084 U.S. Treasury Notes and Municipal Bonds 6,926.537 6,926,537 6,926,537 Total $ 0$ 0 $ 51.538,422 31

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 2 - Deposits and Investments (Continued)

Investments (Continued)

Carrying Market Amount Value FMPA Crystal River Decommissioning Trust $ 1,244,119 $ 1,217,194 State Board of Administration of Florida, Local Government Pooled Investment Account 18,406,032 18,406,032 Money Market Fund - Pension Investment 1,212,913 1,212,913 Mutual Fund Investments 1,075,619 1,075,619 Mutual Fund Invesurents - Deferred Compensation 1,724,666 1,724,666 Mutual Fund Investments - Pension Investment 2,224,292 2,224,292 Collective Trust Funds - Pension Investment 6,310,517 6.310,517 Total Investments S 83,736,580 $ 83,798,456 l

Carrying Amount i Carrying Amount of Deposits $ 458,959 Carrying Amount of Investments (Above) 83.736,580 Total $ 84,195,539 l

Shown in the Accompanying Combined Balance Sheets As:

Equity in Pooled Cash and Investments $ 40,058,199 Cash and Investments at Market Value 30,400,810 Restricted Assets:

Equity in Pooled Cash, Ca.sh Equivalents and Investments 13,736,530 Total 3 84,195,539 Levels of credit risk assigned to the above investments are based on an evaluation in accordance with GASB Statement No. 3 to give an indication of the level of risk assumed at year end. Category 1 includes investments that are insured or registered or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments with securities held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or agent, but not in the City's name.

The State Board of Administration deposits in Tallahassee, Florida are maintained in an investment pool which invests primarily in commercial paper, repurchtse agreements, bankers' acceptance notes and U.S. Government obligations.

32

1

~

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 2 - Deposits and Investments (Concluded)

Investments (Concluded)

The following pension investments, including U.S. Government and U.S. Government

guaranteed obligations, exceed 5% of the net assets available for pension benefits

4 l 1 Market Percent Police I KeyTrust Money Market $ 814,544 14.63 % ,

KeyTrust Government Securities 1,880,670 33.78 % j KeyTrust Mutual Funds 2,206,332 39.63 %

i KeyTrust Collective Trust 524,392 9.60 %

Firemen NationsBank Public Employee Equity Fund 3,947,234 66.48 %

NationsBank Public Employee Fixed Income Fund 1,838,890 30.97 %

General SunTrust High-Grade Bond Fund 1,444,272 8.41 %

NationsBank Corporate Bonds 3,372,811 19.64 %

NationsBank Common Stock - Domestic 5,861,270 34.13 %

NationsBank Government Securities 5,045,866 29.39 %

Note 3 - Fixed Assets i l

A summary of changes in general fixed assets follows:

Balance Balance l October 1, September 30, 1995 Additions (Deletions) 1996 l Land $ 2,376,733 $ 25,627 5 2,402,360 l Buildings 8,299,161 1,372,225 $ (15,515) 9,655,871 Improvements Other Than Buildings 4,253,833 1,078,316 5,332,149 Equipment and Vehicles 4,504,949 959,705 (234,647) 5,230,007 Constmetion in Progress 2,880,875 551,204 (2,446,493) 985.586 Total $ 22,315,551 $ 3,987.077 $ (2,696,653) 3 23,605.973 33

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 3 - Fixed Assets (Concluded)

A summary of proprietary fund type property, plant and equipment at September 30,1996, follows:

Internal Enterprise Service Funds Funds Land $ 4,234,263 Buildings 4,728,815 $ 27,755 Improvements Other Than Buildings 71,523,107 Equipment 10,328,172 137,797 Total $ 90,814,357 $ 165,552 Note 4 - Sterfund Account l

Individual fund interfund receivable and payable balances at year end are as follows: l Interfund Interfund Receivable Payable General Fund $ 50,100 Special Revenue Fund Affordable Housing $ 50,100 l

Total $ 50,100 $ 50,100 l l

l Note 5 - Long-Term Liabilities  !

l The following is a summary of all long-term liabilities of the proprietary funds at I September 30,1996:

Utility Funds Refunding Utilities Revenue Bonds, Series 1984; Dated September 1,1984; Issued September 27,1984 $ 609,999 Accrued Interest on Series 1984 Capital Appreciation Bonds Through September 30,1996 1,566,476 Refunding Utilities Revenue Bonds, Series 1989; Dated December 1,1988; IssuM January 11,1989 19,395,000 Total Bonds Payable 21,571,475 (Unamonized Discount) (142,789)

(Current Maturities) (1,020,000)

Total Bonds Payable - Net 20,408,686 Initial Pooled Iran Project With Florida Municipal Power Agency 1,805,000 Total Utility Funds Debt $ 22,213,686 34

I NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA

) (Continued) l l

Note 5 - Long-Term Liabilities (Continued) i The 1984 and IP? bonds are fully registered bonds in denominations of $5,000 and are i collateralized by a pledge of the net revenues of the utilities system. Bond maturity dates and l

debt service requirements for the combined 1984 and 1989 issues are as follows

i (Sinking Total Bond

Total Fund Maturities and Duc Debt Service Securities Debt Sen' ice

! October 1, Principal Interest Bonds Income) Requirements i 1996 $ 1,020,000 $ 1,424,123 $ 2,444,123 $ (313,913) $ 2,130,210 1997 1,090,000 1,355,273 2,445,273 (313,913) 2,131,360 3

1998 1,160,000 1,280,062 2,440,062 (313,913) 2,126,149

)

i 1999 1,245,000 1,198,863 2,443,863 (313,913) 2,129,950 1 2000 1,330,000 1,110,468 2,440,468 (313,913) 2,126,555 Thereafter 19,195,000 5,341,790 24,536,790 (5,374,560) 19,162,230 Total $ 25,040,000 $ 11,710,579 $ 36,750,F9 $ (6,944,125) $ 29,806,454 I' I Total Principal Above $ 25,040,000 i (Unearned Interest (Discount) on Capital Appreciation

Bonds From October 1,1996 Through October 1,2005) (3,468,525) 4 4

Total $ 21,571,475 i

l i

} Capital Appreciation Bonds i The 1984 bond issue contains $609,999 of capital appreciation bonds that will mature on l October 1,2005, at $5,645,000. The carrying value of the capital appreciation bonds as of September 30,1996, is $2,176/75, which is composed of the maturity value of $5,645,000 less the unearned discount of ,468,525. This is displayed in the accompanying general purpose financial statements as tollows:

Bond Payable (Part of 1984 Series) $ 609,999 Accrued Interest on Capital Appreciation Bonds 1,566,476 Total $ 2,176,475 Utilities Revenue Bonds The Refunding Utilities Revenue Bonds, Series 1984 and 1989 resolutions provide for:

1. Establishment and maintenance of various accounts within the utilities enterprise fund:

a. Construction account records the cost of the project financed by the bonds; 35

i l

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 5 - Long-Term Liabilities (Continued)

Utilities Revenue Bonds (Continued)

1. (Concluded)

b. general revenue account records all i. ame or earnings derived from the system;

c. operations and maintenance account records the cost of operations and maintenance;

d. debt service account and 2005 term bonds debt service subaccount records all the debt service requirements of the issues, which includes the principal, interest and reserve  !

requirements;  !

l

e. reserve account records the amounts needed to cure deficiencies in the debt service account; and i

f. renewal and replacement account records the cost of extensions, improvements or l additions to, or the replacement of capital assets.

2. Restrictions on the use of cash from operations in order of priority:

a. Deposits are made to the operations and maintenance account monthly and equal one-twelfth (1/12) of the annual amount budgeted for the payment of such cost of operations and maintenance.

b. Deposits to the debt semce account and the 2005 term bonds debt service subaccounts are to be made monthly and equal to one-sixth (1/6) of the interest coming due on the next semiannual interest payment date, one-twelfth (1/12) or one-sixth (1/6) of the principal coming due on the next principal payment date for those bonds maturing annually or semiannually, respectively, one-twelfth (1/12) of the amortization installments and the unamortized principal balances of the terms bonds coming due during the current bond year, and one-sixth (1/6) of the sinking fund deposit due on the next purchase date under the Securities Purchase Agreement.

c. Deposits to the reserve account are required each month until an amount equal to the maximum bond service requirement is accumulated.

d. Deposits to the renewal and replacement account are required in each month equal to one-twelfth (1/12) of 5% of the gross revenues for the preceding fiscal year except that, for the electric and gas funds, energy supply costs may be deducted from gross revenues before the deposit requirement is calculated.

I 36 l

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 5 - Long-Term Liabilities (Continued)

Utilities Revenue Bonds (Concluded)

3. Early redemption:

The bond resolutions provide for early redemption of outstand:cg bonds at cal! rates varying from 100% to 105% of the instruments' face value, dependc.t upon the call date.

4. Investment restrictions:

a. Funds are required to be con:inuously secured 'a 6e same manner as state and municipal deposits of funds are required to be sentret by the Laws of the State of Florida; and

b. all moniec deposited shall be continuously invested in direct obligations of, or obligations vrhich are guarantced by, the United States of America, obligations of its several agencica, the Local Government Surplus Funds Trust Fund, obligations guaranteed by the Government National Mortgage Association, or time deposits in banks, trust companies or savings and loan associations represented by certificates of deposit.

Notes Payable In November 1990, the City entered into a loan agreement with Florida Municipal Power Agency (FMPA) as agent for the Initial Pooled Loan Project to borrow $3,075,000 to purchase land for wastewater disposal and future expansion of wastewater facilities. Principal is being repaid annually commencing on November 1,1991, with the last installment due November 1, 2000. Intert.st is variable and is payable to FMPA on a monthly basis. The following is a schedule of principal payments:

Year (Due November) Principal 1997 5 315,000 1998 335,000 l 1999 360,000 l 2000 385,000 2001 410,000 Total 5 1,805,000 l

l 37

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 5 - Long-Term Liabilities (Continued)

Capital Leases The City is obligated under certain leases accounted for as capital leases, The leased assets and related obligations are accounted for in the sanitation services fund. Assets under the capital leases totalled $439,968 at September 30,1996, and accumulated amortization on those assets totalled $173,921. The following is a schedule of future minimum lease payments under capital leases for the remainder of the lease terms:

Year Principal Interest Total 1997 $ 119,176 $ 10,460 $ 129,636 1998 87,552 4,830 92,382 1999 49,171 1,080 50,251 Total $ 255,899 $ 16,370 $ 272,269 General Long-Term Debt A summary of all general long-term debt of the City as of September 30,1996, follows:

Refunding and Capital Improvement Revenue Bonds Payable, Issued in April 1987, Interest From 4% to 7% $ 4,825,000 Employee Compensated Absences Payable 1,330,191 Total T 6,155,191 Debt service requirements for general long-term debt other than compensated absences for years ending September 30, are as follows:

Year Principal Interest Total 1997 $ 200,000 $ 317,780 $ 517,780 1998 210,000 304,760 514,760 1999 225,000 290,585 515,585 2000 240,000 275,225 515,225 2001 255,000 258,650 513,650 Thereafter 3,695,000 1,295,700 4,990,700 Total $ 4,825,000 _$ 2,742,700 $ 7,567,700 38

.. -. _ . . . _ . . - - - . - . ~ . - - . - - - . - - - . . - - . . - . - -

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued) l Note 5 - Long-Term Liabilities (Continued)

General Long-Tenn Debt (Concluded) l The following is a sumrrary of changes in general long-term debt for the year ended September 30,1996:

Balance Balance October 1, September 30, l 1995 Additions (Deductions) 1996 Refunding and Capital ,

Improvement Bonds S 5,015,000 $ (190,000) $ 4,825,000 Employee Compensated i Absences Payable 1.316,809 $ 13.382 1,330,191 Totals $ 6,331,809 $ 13.382 $ (190.000) $ 6,155,191 l Refunding and Capital Improvement Bonds l In 1987, the City issued $6,145,000 of Refunding and Capital Improvement Revenue Bonds to provide funds for certain improvement projects, and the refunding and payment of the City's Refunding and Capital Improvement Revenue Bonds, Series 1984.

The 1987 bonds are fully registered without coupons in denominations of $5,000 each and are collateralized by a pledge of Local Government Half-Cent Sales Tax Revenue, the guaranteed l

i entitlement portion of state revenue sharing, and income of certain investments.

The Refunding and Capital Improvement Revenue Bonds, Series 1987 resolution provides for:

1. Establishment and maintenance of various accounts within the Refunding and Capital Improvement Revenue Bonds Improvement Fund:

a. Construction account records the cost of the project financed by the bonds;

b. revenue account records all income or earnings derived from the local government half-cent sales tax;

c. sinking fund account records all debt service requirements which include the interest account and principal account;

d. reserve account records the amount needed to cure deficiencies, if any, in the sinking fund account; and

c. guaranteed entitlement account records all income or earnings derived from guaranteed state revenue sharing and the amounts needed to cure deficiencies, if any, in the smking fund account.

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (C.ontinued)

Note 5 - Long-Terin Liabilities (Continued)

Refunding and Capital Improvement Bonds (Continued)

2. Restrictions on the use of cash from operations in order or priority:

a. Deposits to the sinking fund account are to be made monthly and equal one-sixth (1/6) of the interest coming due on the next semiannual interest payment date, one-twelfth (1/12) or one-sixth (1/6) of the principal coming due on the next principal payment date for those bonds maturing annually or semiannually, respectively, one-twelfth (1/12) of the sinking fund deposit and redemption premiums of one-sixth (1/6) of the amount sufficient to pay the next fees of the paying agents, registrar and trustee attributable to the bonds.

b. Deposits to the reserve account are required each month until an amount equal to the maximum bond service requirement has been accumulated.

c, Thereafter, funds in the revenue account may be paid to the City and used for any lawful purpose. The proceeds of the guaranteed entitlement shall be deposited in the guaranteed entitlement account and used as pro, hied for in the resolution.

3. Early redemption:

The bond resolutions provide for early redemption of outstanding bonds at call rates varying from 100% to 102% of the instruments' face value, dependent upon the call date.

4. Investment restrictions:

a. Funds are required to be continuously secured in the same manner as state and muniopal deposits of funds are required to be secured by the Laws of the State of Florida; and

b. all monies shall be continuously invested in direct obligations of, or obligations which are guaranteed by, the United States of America, obligations of certain of its agencies, time deposits in banks, trust companies or savings and loan associations represented by certificates of deposits or commercial paper, money market funds, bankers' acceptance of commercial banks and investment agreements meeting certain rating criteria.

A sununary of all long-term debt previously defeased and no longer a liability of the City as of September 30,1996, follows:

40

l NOTES TO FINANCIAL STATEMENTS '

CITY OF LEESBURG, FLORIDA (Continued) ,

Note 5 - Long-Term Liabilities (Concluded)

Refunding and Capital Improvement Bonds (Concluded) l l Proprietary Fund Types - Utility Funds l Utilities Revenue Certificates, Series 1977 $ 10,040,000 Utilities Refunding Revenue Bonds, Series 1984 17,435,000 Total Proprietary Fund Types - Utility Funds 27,475,000 l

Ceneral Long Term Debt Group of Accounts Refunding and Capital Improvement Bonds, Series 1984 1,500,000 1

Total Defeased Debt - All Funds and Account Groups S 28,975,000 Note 6 - Operating Leases The City is lessor on various leases of facilities located at the airport. The leased facilities ,

are included in the $3,425,000 of airport assets recorded in the City's general fixed assets {

account group. The following is a schedule of minimum future lease income on noncancelable 1 operating leases:

September 30, Amount 1997 $ 31,751 1998 31,751 1999 31,751 2000 31,751 l 2001 31,751 )

Thereafter 240,346 l Total Minimum Lease Pa3ments S 399,101 J

Note 7 - Estimated Landfill Closure and Postclosure Care Costs The City closed its present landfill site on September 1,1995, at a total cost of $3,326,000.

An asset and related liability had previously been recorded in the balance sheet of the City's sanitation services fund to reflect this cost and related liability. The cost of the closure was i

financed by user fees. The deferred closure cost was previously amortized over the useful life l of the landfill, except for any current year adjustments to the estimated cost which were amortized in fiscal year 1995.

i l

( 41 1

NOTES TO FINANCIAL STATEMENTS j CITY OF LEESBURG, FLORIDA l (Continued)

Note 7 - Estimated Landfill Closure and Postclosure Care Costs (Concluded)

A sununary of the activity in the postclosure cost liability account is as folews:

Balance, September 30,1995

$ 999,270 Adjustment of Estimate (93,859)

Total Annual Costs Paid (41,975)

Balance, September 30,1996 $ 863,436 In 1994, the City implemented Governmental Accounting Standards Board (GASB) Statement No.18 entitled Accountingfor Municipal Solid Waste Landfill Closure and Postclosure Care Costs. This statement requires accounting recognition be given to all closure and postclosure care costs during the operating life of the landfill.

i The $863,436 liability recorded represents the estimated costs of postclosure care for nineteen years after closure as required by state and federal laws and regulations. This amount was calculated based on costs in 1996. The actual costs may be higher due to inflation, changes in technology, or changes in regulations.

The City is required to deposit adequate funds into an escrow account before year end to meet postclosure care costs for the following year. The City officially closed the landfill on September 1,1995, at which time postclosure care began.

During the year ended September 30,1992, the City established an escrow subaccount within [

the City's pooled cash system. The following is a schedule of the transactions in this account during fiscal year 1996:

Transaction Date Amount Balance, September 30,1995 $ 49,553 Interest Earned 5,610 Balance, September 30,1996 $ 55,163 The above schedule was prepared in accordance with the requirements of Rule 17-701.630(5)(c) of the Florida Administrative Code.

42 l

l

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA '

(Continued)

Note 8 - Electric Power Agreements Crystal River Unit No. 3 Participation Agreement The City is a participant in an agreement with Florida Power Corporation. Under terms of the agreement, the City acquired a 0.8244% ownership interest and generation entitlement share in the nuclear steam electric generating unit. Participants are entitled to energy output of the unit based upon their respective generation entitlement share.  ;

Florida Power Corporation has been appointed by the participants to act as their agent and has sole authority to manage, control, maintain and operate the unit. Operating costs of the unit,  !

in general, are shared in proportion to each generation entitlement share on a monthly basis.

Common and external facilities of the generating unit are solely owned by Florida Power j Corporation, and I:articipants share in the operating and maintenance expenses of such  !

s facilities. Nuclear fuel payments are required of participants in advance. In 2015, when the l plant is decommissioned, costs of decommissioning will be paid by the participants. The City

. is amortizing the expense and recognizing a liability for these costs on a straight-line basis j over the life of the plant. Florida Municipal Power Agency (FMPA) maintains a trust fund J for the plant to which the City is required to contribute annually to pay the future decommissioning costs. At September 30, 1996, the City's portion of the trust fund has a balance of $1,244,119, and the liability for decommissioning costs had a balance of

$2,036,050.

3 The participation agreement provides for reversion of the ownership interest of the unit to Florida Power Corporation upon retirement from service. The book value of the investment l included in utility plant in service on September 30,1996, was $3,810,767. ,

Florida Municipal Power Agency i The City is a member of FMPA. FMPA was created pursuant to Chapter 163, Parts I and ,

II ("The Interlocal Act" and "The Joint Power Act") to, among other things, provide a means for the Florida municipal corporations to cooperate with each other to provide for their present ,

and projected energy needs. The City has limited oversight authority over the operation of l FMPA. This oversight is manifested in the appointment of one menber to the 28-member Board of Directors of FMPA. Furthermore, the City, by agreement, has no equity interest in any of the assets owned by FMPA. The City participates in the following FMPA projects: ,

a St. Lucie No. 2 Power Purchase Agreement The City, through FMPA, has negotiated an agreement with Florida Power and Light Corporation guaranteeing the City the right to purchase up to 2.326 megcwatts of generating capacity from the St. Lucie No. 2 nuclear generating plant. This plant became operational in 1984. The cost of this agreement has been capitalized and is being amortized over the plant's expected useful life.

43 i

l ,

NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Conthiued)

Note 3 - Electric Power Agreements (Cosicluded)

Florida Municipal Power Agency (Concluded) ,

a All Requirement Power Supply Agreement The City has an agreement with FMPA whereby the City is purchasing its electric power from FMPA on an all-requirement basis, The agreement will remain in effect until October 1, 2020, with two optional successive ten-year renewal periods. Power rates charged to the City by FMPA are subject to a majority vote of the Board of Directors of FMPA, 1

Note 9 - Segment Information For Enterprise Funds 1

The City operates sia enterprise funds. Segment information as of September 30,1996, is as follows: 1

(

Sanitation I I

Sewer Communi-Electric Gas Water Wastewater Sanitation cation Utility Utility Utility Treatment Services Services Totals Operating Revenues $31,667,450 '5 6,794.683 53,171,932 5 3,336.141 5 2,334,639 5 33,403 5 47,338,250 Depreciation and Amortization 2,100,555 203,481 393,347 392,123 215.5 % 12,575 3,317.587 Operating Income 7,075,027 1,502,856 1,277,519 1,074,645 86,685 20,277 11,037,009 ,

Operating Transfers )

Out (3,558,300) (68$,872) (232,296) (133,800) (4,610,268)

Net Income 3,750,115 853,137 1,020,127 1,080.662 831,357 20,277 7,555,675 Contributed Capital 3,046,308 522,140 3,235,432 12,803,679 440, % 7 141,690 20,190,216 Cash and Cash Equivalents 15.5 %,227 3,499,922 3,710,752 6,660,244 430,953 30,994 29,929,092 Property and Equipment Additions 2.862,867 534,218 1,232,447 1,342,180 281,774 509 6,253,995 Net working Capital 18,138,772 3,788,298 4,127,301 7,308.273 519,927 39,194 33,921,765 Long-Term Liabilities Payable 14,613,760 1,539,754 3,680,337 4,415,885 954,716 25,204,452 Total Fund Equiry 43,018,255 7,497,158 9,453,01' 1E,998,834 60,784 195.537 79,223,585 Total Assets 62.s21,190 9,572,297 13,612 23,797,000 1,241,849 195,537 111,240,397 Note 10 - Pension Plans By ordinance, the City has established three single-employer defined benefit pension plans for City employees. The following is a brief description of the plans:

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 10 - Pension Plans (Continued)

Municipal Police Retirement Plan Total payroll for employees covered by the plan for the year ended September 30,1996, was

$1,620,152; the City's total payroll was $10,445,205. All full-time police officers are eligible to participate in the plan. As of October 1,1995, the date of the most recent actuarial report, the plan had the following number of participants:

Active Vested 8 Active Nonvested 40 Retired, Disabled, Vested Terminations and Beneficiaries 9 Total Number of Participants 57

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Participants who have completed ten years of credited services are 100% vested in their plan 5

benefits at age 45 or later, reduced 5% per year before normal retirement date. Participants whose service is terminated prior to completing ten years of credit service are entitled to the return of their employee contributions without interest. Normal retirement benefits are payable to participants who have reached the earlier of age 50 and twenty-five years of credited service, or age 60 and ten years of credit service. Such benefits are payable at a rate of 2.75% of average fm' al monthly compensation times the number of years of credited service. The benefits under this plan provide an offset for benefits paid by the general employee retirement plan, under which the police officers are also covered. The plan also provides for early retirement, disability retirement and death benefifs at rates defined in the plan document.

Funding of the police pension fund is provided from employee contributions (7.65 % of their annual compensation) and a 1% excise tax. The excise tax is levied on gross premiums

, collected on casualty insurance policies covering property within the corporate limits of the l City. The State of Florida collects and contributes the tax to the fund pursuant to Florida

Statute 185. The City is not obligated to contribute to the fund. Normally, employee contributions and excise tax monies are sufficient to fund the plan.

The actuarially required contribution for the year ended September 30, 1996, consisted entirely of normal cost is $263,109, which represents 16.24% of covered payroll. Actual contributions to the plan for the year ended September 30,1996, are as follows:

Percentage of Covered

Amount Payroll Employee S 125,165 7.73 %

State of Florida (Insurance Tax) 103,247 6.37 %

, Total Actual Contributions S 228,412 14.10 %

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 10 - Pension Plans (Continued)

Municipal Police Retirement Plan (Concluded)

The significant actuarial assumptions used to compute funding rer,uirements are essentially the same as those used to compute the pension benefit obligation. The actuarial cost method l used to compute the funding requirement is the frozen entry age n'ethod.

Municipal Firemen's Retirement Plan Total payroll for employees covered by the plan for the year ended September 30,1996, was

$947,375; the City's total payroll was $10,445,205. All firemen who have attained age 18 and completed one year of credited service are eligible to participate in the plan. As of October 1,1995, the date of the most recent actuarial report, the plan had the following number of participants:

Active Vested 15 Active !<onvested 14 Retired and Beneficiaries 10 Vested Terminations 1 Total Number of Participants

]

Participants who have completed ten years of credited service are 100% vested in their retirement benefits. Participants whose service is terminated prior to completing ten years of credit service are entitled to the return of their employee contributions plus interest at the rate of 5% compounded annually. Normal retirement benefits are payable to participants who have attained age 55 years and completed ten years of credited service. Such benefits are payable at a rate of 2.75% of average final monthly compensation times the number of years of credited service. The plan also provides for early retirement, deferred retirement, disability retirement and death benefits at rates defined in the plan document.

Firemen contribute 6.5% of their annual compensation to the plan. A 1% excise tax on fire insurance premiums sold within the corporate limits is remitted to the fund by the State of Florida. The City accrues and contributes an additional amount, as determined by an actuary, to fund annual normal cost and prior service cost amortized over forty years. The iequired City contribution for the year ended September 30,1996, is as follows:

Percentage of Covered Amount Payroll Total Required Contribution Normal Cost $ 140,251 14.80 %

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Ccntinued)

Note 10 - Pension Plans (Continued)

J Municipal Firemen's Retirement Plan (Concluded)

, Actual contributions to the plan for the year ended September 30,1996, are as follows:

i Percentage I of Covered l Amount Payroll j Employee $ 61,579 3.8 %

j Employer 71,053 4.4 %

j State of Florida (Insurance Tax) 65,179 4.0%

Total Actual Contributions $ 197,811 12.2 %

The significant actuarial assumptions used to compute the actual contribution requirements are essentially the same as those used to compute the pension benefit obligation. The actuarial cost method used to compute the funding requirement is the aggregate actual cost method.

General Employees' Retirement Fund Total payroll for employees covered by the plan for the year ended September 30,1996, was

$8,083,498; the City's total payroll was $10,445,205. All employees of the City, excluding commissioners and firemen covered in another plan, are eligible to participate in the plan after reaching age 18 and completing one year of credited service. As of October 1,1995, the date of the most recent actuarial report, the plan had the following number of l participants:

Active Vested 231 Active Nonvested 67 Terminated - Vested Benefits 47 l Retirees and Beneficiaries 79 Total Number of Participants g Participants who have completed five years of credited service are 25% vested in their plan j benefits with 5% increases per year until year ten, and then 10% increases per year until fifteen years of service have been reached, whereby the participant will be 100% vested.

Normal retirement benefits are paid to participants who have reached age 65. Such benefits are payable at a rate of 2% of final monthly compensation times the number of years of credited service. The plan also provides for early retirement, late retirement, disability retirement and death benefits at rates defined in the plan document.

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j j NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA i (Continued)  :

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! Note 10 - Pension Plans (Continued) j General Employees' Retirement Fund (Concluded) ,

l The general employees' plan is noncontributory. The City accrues and contributes an amount, as determined by an actuary, to fund annual normal cost and prior service cost  ;

amortized over forty years. The required City contribution for the year ended September 30, l 1996, is as follows: i i

Percentage  !

of Covered .

Amount Payroll j Normal Cost $ 278,300 3.5% '

Amortization of Prior Service Cost 208,000 2.6 %

Actuarial Adjustment For Interest Plus Administrative Expenses Less Interest on Accumulated Excess Contributions (29,100) (0.4)%

Total Required Contribution $ 457,200 $5.7 %  !

Actual contributions to the plan for the year ended September 30, 1996, consisting exclusively of employer contributions is $674,163. This represents 8.3 % of covered payroll.

The significant actuarial assumptions used to compute the actual contribution requirements are essentially the same as those used to compute the pension benefit obligation. The actuuial cost method used to compute the required funding is the frozen entry age actuarial i cost method.

Police officer's are eligible to participate in the general employees' retirement fund, as well  ;

as the police pension fund. The eligible wages of those police officers who participate in both plans are included in the covered payroll associated with each fund.  !

Pension Benefit Obligation The amount shown below as the " pension benefit obligation" is a standardized disclosure l measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help financial statement users assess the funding status of the system on a going concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine contributions to the system.

The pension benefit obligation was computed as part of actuarial valuations performed as of October 1,1995.

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA f (Continued) i Note 10 - Pension Plans (Continued) l Pension Benefit Obligation (Continued) hfunicipal General i Police hfunicipal Employees' Retirement Firemen's Retirement 1 Trust Fund Trust Fund Fund Total l Pension Benefit Obligation

Retirces and Beneficiaries:

Currently Receiving Benefits

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j and Terminated Employees

• Not Yet Receiving Benefits 5 911,294 $ 1,140,451 $ 3,384,900 $ 5,436,645 i Current Employees:

{ Accumulated Employee ,

j Contributions including  ;

i Allocated Investment Eunings 621,998 578,890 49,900 1,250,788 i

Employer-Financed - Vested 1,841,6?' 2,370,747 4,346,300 8,558,663 s Employer-Financed - Nonvested 242,076 336,624 4,537,700 5,116,400

} Total Pension Benefit Obligation 3,616,584 4,426,712 12,318,800 20,362,496 l Net Assets Available For Benefits, At hlarket 4,986,749 5,308,315 16,104,922 26,399,986 i

Assets in Excess of Pension Benefit Obligations $ 1,369,765 5 881,603 $ 3,786,122 $ 6,307,490 1

Three-year historical information about the plans is as follows:

l h!unicipal General i Police hiunicipal Employees' i Retirement Firemen's Retirement Trust Fund Trust Fund Fund q Net Assets Available For Benefits as a 1

Percentage of the Pension Benefit Obligation j 1996 137,7 % 119.9 % 129.6 %

j 1995 154.3 % 104.4 % 127.0 %

1994 131.3 % 120.4 % 136.4 %

l Assets in Excess of the Penshn Benefit Obligation as a Percentage of Annual t Covered Payroll I 1996 84.2 % 93.0 % 46,8 %

i 1995 94.5 % 20.5 % 37.6 %

1994 70.9 % 84.1% 50.I %

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note 10 - Pension Plans (Concluded)

Pension Benefit Obligation (Concluded)

Municipal General Police Municipal Employees' Retirement Firemen's Retirement Trust Fund Trust Fund Fund Employer Contributions as a Percentage of Annual Covered Payroli 1996 N/A 7.5% 8.3 %

1995 N/A 7.5 % 8.3 %

1994 N/A 7.5% 8.3 %

Emple ::: contributions were made in accordance with actuarially detennined requirements

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in each of the years presented above.

Municipal General Police Municipal Employees' Retirement Firemen's Retirement Trust Fund Trust Fund Fund Significant Actuarial Assumptions Used Rate of Return on Investment of Present and Future Assets 8.0 % 8.0% 8.0 %

Projected Salary increases:

From Inflation 3.0 % 3.0% 4.5 %

From Merit and Seniority 3.5 % 4.0 % 1.0 %

Ten-year historical trend information, which can be used to evaluate the plans' progress in accumulating assets to pay pension benefits as they become due, is included in the required supplementary information section of the City's comprehensive annual financial report.

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The plans were amended, effective October 1,1995, as follows:

a General Pension Amendment-Final monthly cornpensation shall mean the average highest three consecutive calendar years, out of the ten calendar years preceding actual j date of retirement or termination. l e Firemen's Pension Amendment-Effective April 1,1996, the benefit formula percentage ,

was increased from 2.75% to 3.00%, and the supplemental retirement income payment l was increased to $200.00 from $166.67. In addition, a 9% one-time cost of living adjustment was to be provided to participants who have been retired for one year or more.

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J NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued)

Note II - Self-Insurance Funds j Employee IIealth Insurance Fund

The City maintains a self-insurance program for the payment of employee health and medical claims. The program provides for the payment of City and employee contributions into a i self-insurance fund, which is managed by the City and its administrative agent. Employee claims up to $45,000 per person are paid from the assets of the self-insurance fund; claims j in excess of $45,000, up to a maximum of $955,000 per employee per year, are paid from a reinsurance policy purchased by the City.

l l Workers' Compensation Insurance Fund

] The City maintains a self-insurance program for the payment of employee workers' compensation claims. The program provides for City contributions into a self-insurance fund 1 j which is managed by the City and its administrative agent. Employee claims up to $400,000

per occurrence are paid from the assets of the self-insurance fund with amounts in excess of

! $400,000 per occurrence being paid from a reinsurance policy purchased by the City.

Liabilities for known claims and incurred but not reported claims:

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Current Year Balance Claims and Balance

] October 1, Changes in (Claims September 30, 4 1995 Estimates Paid) 1996 j Employee Health Insurance Fund $ 223,229 $ 1,259,959 $ (1,240,244) $ 242,944 Workers' Compensation Insurance Fund 222,404 157,565 (164,740) 215,229 Total $ 445,633 $ 1,417.524 $ (1,404.984) $ 458,173 Current Year Balance Claims and Balance October I, Changes in (Claims September 30, 1994 Estimates Paid) 1995 (in Thousands)

Employee Health hisurance Fund $ 195 $ 1,240 $ (1,212) $ 223 Workers' Compensation Insurance Fund 294 62 (134) 222 Total $ 489 $ 1,302 $ (1,346) $ 445 51

. -- - - . _ - - . --. -- _ - - - - .._- - - - - . - ~ _ _ - .

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NOTES TO FINANCIAL STATEMENTS CITY OF LEESBURG, FLORIDA (Continued) l Note 12 - Contributed Capital The following is a summary of changes in contributed capital during the current year:

8talance Balance October 1 September 30, 1995 Additions (Deletions) 1996 Enterprise Funds Electric Utility $ 2,794,869 $ 251,439 $ 3,046,308 Gas Utility 447,240 74,900 522,140 Water Utility 2,986,205 249,227 3,235,432 Sanitary Sewer and Wastewater 12,235,095 568,584 12,803,679 Sanitation Services 440,967 440,967 Communication Services 141,690 141,690 Total Enterprise Funds $ 19,046,066 $ 1,144,150 $ 0 $ 20,190,216 Internal Service Fund Motor Pool Service $ 15,979 $ 0 $ 0 $ 15,979 l

Note 13 - Deferred Compensation Ftmd The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation plan is not ,

available to employees until termination, retirement, death, or unforeseeable emergency.  !

l All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid i or made available to the employee or other beneficiary) solely the property and rights of the l City (without being restricted to the provision of benefits under the plan), subject only to the claims of the City's general creditors. Participant's rights under the plan are equal to those of general creditors of the City in an amount equal to the fair market value of the deferred amount for each participant.

It is the opinion of the City that the City has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The City believes that it is unlikely that it will use the assets to satisfy the claims of general creditors I in the future.

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NOTES TO FINANCIAL STATEMENTS >

CITY OF LEESBURG, FLORIDA (Continued)

Note 14 - Contingencies and Commitments i

, a The City participates in a number of state and federal grant programs, including the j following:

i HUD Section 8 - Housing Assistance Payment Programs These programs are subject to program compliance audits by the grantors or their representatives. The audits of these programs as of and including the year ended l September 30,1996, have not yet been accepted / approved by the grantors. Accordingly, the final determination of the City's compliance with applicable grant requirements will be established at a future date. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined, although the City expects such amounts, if any, to be immaterial.

l e The City has been identified by the NAACP of Lake County, Florida and various other l plaintiffs as a codefendant in a civil rights suit. Maximum aggregate claims for damages in this suit have been made in the amount of $2,000,000. The City currently carries general liability insurance of $1,500,000. At this time, the ultimate outcome of this matter nor a reasonable estimate of the City's exposure can be determined.

Note 15 - Deficit Retained Earnings The sanitation services enterprise fund recorded a deficit in retained earnings at September 30, 1996, of $380,183. This was the result of the recording of estimated landfill postclosure care costs in 1995, accordance with GASB Statement No.18 entitled Accountingfor Municipal Solid Waste Landfil Closure and Postclosure Care Costs (see note 7 for further disclosure related to this liability).

Note 15 - Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and l I

destruction of assets; errors and omissions; and natural disasters for which the City carries commercial insurance. Insurance against losses are provided for the following types of risk:

a General and Automobile Liability a Commercial Property Damage a Contractors Equipment a Crime The City is self-insured for workers' compensation and employee health as explained in note 11. Amounts of settlements, if any, have not exceeded insurance coverage for each of the past three years.

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NOTES TO FINANCIAL STATEMENTS  !

CITY OF LEESBURG, FLORIDA (Concluded)

Note 17 - Postemployment Benefits In addition to the pension benefits described in note 10, the City provides postretirement health care benefits, in accordance with City ordinance, to all employees who retire from the City on or after attaining age 58 with at least 15 years of service. In addition, employees that ,

retire on or after age 50, with 15 years of service may continue to participate in the plan. The i City pays 80% of covered charges up to $1,000 per covered person (excluding a $250  ;

Jeductible) and 100% of the remainder of covered charges per covered person per calendar  ;

year. Currently,55 retirees meet these eligibility requirements. l The City also provides a Medicare supplement for each retiree eligible for Medicare.

Expenses for postretirement health care benefits are recognized as retirees report claims and l include a provision for estimated claims incurred, but not reported. During the year, expenses )

of approximately $229,000 were recognized for postretirement health care.

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REQUIRED SUPPLEMENTARY INFORMATION 5  !

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Trend information gives an indication of the progress made in accumulating sufficient assets to pay )

l benefits when due. Ten-year trend information may be found on the following pages.

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REVENUES BY SOURCE - EXPENSES BY TYPE j PENSION TRUST FUNDS <

I LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA Revenues By Source (in Thousands) l j Employer Employee State Investment Contributions Contributions Contributions Income Municipal l l Police Retirement  !

1996 $ 125 $ 103 $ 221 l 1995 115 94 (3) 1994 102 91 55 1993 119 84 137 l 1992 78 78 24 1991 73 87 26 1990 66 87 51 !

1989 49 87 295 I i

1988 39 77 162 l 1987 35 72 53 Municipal Firemen's Retirement 1996 $ 71 62 65 14 ,

1995 67 58 63 15 l

. 1994 68 52 64 76 l 1993 69 46 57 125 1992 64 43 51 31 4

1991 64 43 52 40 1990 59 39 48 33 1989 53 35 48 341 1988 49 32 44 233 1987 67 32 40 84 1

General Employees' Retirement 1996 $ 674 720 1995 650 688 1994 602 635 1993 585 632 1992 592 671 1991 646 647 1990 565 363 1989 529 836 i 1988 583 253 1987 512 499 )

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Expenses By Type (la Thousands) Employer Contribution Benefit as a Percentage Payments Other of Covered Payroll

$ 108 $ 52 N/A 81 48 N/A 101 30 N/A 68 32 N/A 19 40 N/A 9 44 N/A 14 N/A 16 25 N/A 20 10 N/A 19 4 N/A

$ 159 $ 25 7.5 %

127 21 7.5 %

379 24 7.5 %

186 22 7.5 %

100 24 7.5 %

153 22 7.5 %

83 22 7.5 %

75 20 7.5 %

62 12 7.5 %

45 6 7.5 %

$ 465 151 367 147 8.3%

356 131 8.3 %

277 116 8.3 %

258 96 8.3 %

179 98 10.1 %

158 82 10.1 %

130 72 10.1 %

116 64 12.3 %

99 49 12.3 %

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l PENSION BENEFIT OBLIGATION INFORMATION  :

PENSION TRUST FUhTS ALL AVAILABLE YEARS CITY OF LEESBURG, FLORIDA (in Thousands)

Assets in Net Assets Pension Benefit (1) As a Excess of (3) As a Available For Obligation Percentage (Unfunded) Covered Percentage Benefits (1) (PBO) (2) of (2) PRO (3) Payroll (4) of (4)

Municipal Police Retirement 1996 $ 4,986 $ 3,617 137.8 % $ 1,369 $ 1,620 84.5 %

1995 4,002 2,593 154.3 % 1,409 1,491 94.5 %

1994 3,900 2.969 131.3 % 931 1,312 70.9 %

1993 3,395 2,580 131.6 % 815 1,234 66.0 %

1992 2,949 2,277 129.5 % 672 993 67.6 %

Municipal l Firemen's I Retirement 1996 $ 5,308 $ 4,427 119.9 % $ 881 $ 947 93.1%

1995 4,315 4,131 104.4 % 184 896 20.5 %

1994 4,509 3,744 120.4 % 765 910 84.1 %

1993 4,093 3,594 113.9 % 499 916 54.5 %

1992 3,630 3.122 117.2 % 508 855 59.5 %

General Employee's Retirement 1996 $ 16,105 12,319 130.7 % $ 3,786 $ 8,083 46.9 %

1995 13,804 10,871 127.0 % 2,933 7,796 37.6 %

1994 13,551 9,933 136.4 % 3,618 7,217 50.1 %

1993 11,566 8,826 131.0 % 2,740 7,012 39.1%  !

1992 9,854 8,225 119.8 % 1,629 7,100 23.0 %

i Looking at the pension benefit obligation, or the unfunded portion (or assets in excess) of the pension benefit obligation, in isolation can be misleading. Expressing net assets available for benefits as a percentage of the pension benefit obligation provides one indication of the extent to which a pension fund is funded. Analysis of this percentage over time indicates whether the pension fund is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the pension fund.

Expressing the unfunded pension benefit obligation (or assets in excess of the pension benefit obligation) as a percentage of the annual covered payroll approximately adjusts for the effects of inflation and aids analysis of funding progress. Generally, the smaller the unfunded percentage, the stronger the pension fund. ,

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f GENERAL FUND The general fund accounts for all revenues and expenses of the City which are not required to be accounted for in other funds, it receives a greater variety and number of taxes and other general revenues than any other fund.

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BALANCE SHEET GENERAL FUND

SEPTEMBER 30,1996, WITII l COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA

(in Musands)

! 1996 1995 Assets Equity in pooled cash and cash equivalents $5,317,051 $ 5,591 1

Due From Other Governments 272,357 219 Due From Other Funds 50,100 19 .

Assessments Receivable 3,938 4 I Other Accounts Receivable 43,846 5

Interest Receivable 215,261 181 Prepaid Expenses 49,501 0 1 Inventories 7,288 8 l Total Assets 5,959,342 6.027 J

l Liabilities and Fund Balance l

Liabilities Accounts Payable 789,482 680 ;

i Accrued Wages and Payroll Tax 619,713 568 Unearned License Revenue 157,415 147 4 Total Liabilities 1,566,610 1,395 l Fund Balance i Reserved:

For Police Education 8,702 7 For Police Expenditures 122,669 95 For Police Communication Tower 10,400 8 For C.U.R.E. Program 1,595 2

! Unreserved 4,249,366 4,520 i Total Fund Balance 4,392,732 4,632 Total Liabilities and Fund Balance $5,959,342 $ 6,027 a

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d STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND

FOR TIIE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ,

! ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA s

1996 1995 Variance

Favorable (in nossand#

Budget Actual (Unfavorable) Actual Revenues Taxes $ 3,288,600 $ 3,380,526 $ 91,926 $ 3,287 Licenses and Permits 249,700 264,121 14,421 - 251 i Intergovemmental 1,618,100 1,690,617 72,517 1,551 Charges For Services 320,100 338,574 18,474 172 Fines and Forfeitures 188,700 206,897 18,197 189 Miscellaneous

Interest 321,400 318,821 (2,579) 321 Other 148,000 187,457 39,457 276 Total Revenues 6,134,600 6,387,013 252,413 6,047 Expenditures Current:

General Government 1,172,100 1,029,400 142,700 1,053 i Public Safety 4,967,900 5,035,207 (67,307) 4,722 Public Works 1,608,300 1,518,185 90,115 1,309 Community Development 223,600 211,471 12,129 208

, Culture and Recreation 2,535,000 2,459,102 75,898 2,225 (Total Expenditures) ' (10,506,900) (10,253,365) 253,535 (9,517)

(Deficiency) of Revenues (Under)  :

Expenditures (4,372,300) (3,866,352) 505,948 (3,470)

Other Financing Sources (Uses)  !

Operating Transfers In 5,725,400 5,064,343 (661,057) 5,086 Operating Transfers Out (1,353,100) (1,436,589) (83,489) (1,418)

Total Other Financing Sources (Uses) 4,372,300 3,627,754 (744,546) 3,668 (Deficiency) Excess of Revenues and Other Financing Sources (Under) Over Expenditures and Other Financing Uses 0 (238,598) (238,598) 198 Fund Balance, Beginning of Year 4,631,330 4,631,330 0 4,434 Fund Balance, End of Year S 4,631,330 $ 4,392,732 $ (238,598) $ 4,632 59

4 STATEMENT OF REVENUES - BUDGET AND ACTUAL GENERAL FUND

FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE

ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA 1

1996 1995 Variance Favorable (In nousands) i Budget Actual (Unfavorable) Actual Revenues

] Taxes Ad Valorem $ 2,325,900 $ 2,322,364 $ (3,536) $ 2,301 Local Option Sales 850,000 922,183 72,183 897 Franchise Fees 112,700 135,979 23,279 89 ,

Total Taxes 3,288,600 3,380.526 91,926 3,287 I Licenses and Permits ,

Licenses 169,100 168,841 (259) 147 l Building Permits 52,000 61,609 9,609 63 Otner Permits 28,600 33,671 5,071 41 Total Licenses and Permits 249,700 264.121 14.421 251 Intergovernmental Federal Grants 21,200 22,553 1,353 0 State Grants 50,300 28,915 (21.385) 6 State-Shared Revenues 947,300 992,635 45,335 967 1 Grants From Other Local Units 5,600 5,548 (52) O County-Shared Revenues 30,000 26,530 (3,470) 32 Fuel Rebate 20,000 16,600 (3,400) 15 Local Option Taxes $43,700 597,836 54.136 531 Total Intergovernmental 1,618,100 1,690,617 72,517 1,551 Charges For Services General Government Charges 12,800 16,434 3,634 14 Other Public Safety Charges 22,500 38,227 15,727 4 Other Physical Environment Charges 5,000 4,642 (358) 1 Culture and Recreation 279,800 279,271 (529) 153 Total Charges For Services 320,100 338,574 18,474 172 Fines and Forfeitures Court Fines  !$0,000 162,937 12,937 150 Library Fines 19,800 22,091 2,291 16 Other Fines and Forfeitures 18,900 21,869 2.969 23 Total Fines and Forfeitures 188,700 206,897 18,197 189 Miscellaneous Sales - Forfeituted Property 35,812 35,812 22 Interest 321,400 318,821 (2,579) 321 Rents and Royalties 79,100 71,934 (7,166) 79 Sale of City Property and Insurance Compensation 21,000 27,410 6,410 112 Other 33,600 34,227 627 50 Contributions 14,300 18.074 3,774 13 Total Miscellaneous 469,400 506,278 36,878 597 Total Revenues 5 6.134,600 $ 6,387,013 $ 252,413 $ 6,047 60 l

STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL -

BY DEPARTMENT GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA i

1996 1995 Variance Favorable Un musands)

Budget Actual (Unfavorable) Actual Expenditures General Government City Commission $ 76,000 $ 73,046 $ 2,954 $ 64 Executive Offices 477,100 446,552 30,548 565 Finance Department 409,300 312,014 97,286 269 Personnel Service Offices 161,800 145,608 16,192 108 Purchasing Department 47,900 52,180 (4,280) 47 Total General Government 1,172,100 1,029,400 142,700 1,053 Public Safety Police Department 3,285,900 3,350,428 (64,528) 3,063 Fire Department 1,682,000 1,684,779 (2,779) 1,659 Total Public Safety 4.967,900 5.035,207 (67,307) 4,722 Public Works 1,608,300 1,518,185 90,115 1,309 Community Development 223,600 211,471 12.129 208 Culture and Recreation Library Services 741,900 707,141 34,759 669 Recreation 1,793,100 1,751,961 41,139 1,556 Total Culture and Recreation 2,535,000 2,459,102 75,898 2,225 Total Expenditures $ 10,506, @ $ 10,253,365 $ 253,535 $ 9,517 61

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i SPECIAL REVENUE FUNDS ,

Community Development Fund - To account for the collection of housing assistance loans previously made. Proceeds accumulated from such collections may be reloaned to new program participants in the future.

Housing Assistance Fund - To account for federal monies designated for housing cost assistance to low and moderate income families and the related administrative costs of the program.

Stonnwater Fund - To account for revenues and expenditures related to stormwater management (i.e.,

the collection, storage and dispersal of rainwater).

Affordable Housing Fund - To account for federal, state, and local monies designated for construction and rehabilitation of housing for low and moderate income families and the related administrative costs ,

of the program.

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COMBINING BALANCE SHEET l SPECIAL REVENUE FUNDS I

SEPTEMBER 30,1996, M1TH COMPARATIVL' TOTALS FOR SEPTEMBER 30,1995 l CITY OF LEESBURG, FLORIDA l

Totals Community Housing Affordable (la Thousands)

Development Assistance Stormwater Housing 1996 1995 j Equity in Pooled l Cash and Cash l Equivalents $ 14,561 $ 160,465 5 351,317 5 526,343 $ 404 Housing Assistance Loans 0 21  !

Accounts Receivable 20,301 2,524 74,393 97,218 86 Due From Other Governments $ 56,000 56,000 5 i Total Assets 34,862 162,989 425.710 56,000 679,561 516 Liabilities and Fund Balances l

Liabilities Accounts Payable 0 97 Due to Other j Governments 20,301 72,008 92,037 84 1 Due to Other Funds 50,100 50,100 19 l

! Total Liabilities 20,301 72,008 0 50,100 142,409 200  !

I Frnd Balances I Reserved:

For Capital Improvements 14,561 14,561 12 For Housing Assistance 79,302 79,302 18 Unrewrved 11,679 425,710 5,900 443,289 286 Total Fund Balances 14,561 90,981 425,710 5,900 537,152 316 Total Liabilities and Fund Balnnees S 34,862 $ 162,989 $ 425,710 $ 56,000 $ 679,561 5 516 1

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l COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CilANGES IN FUND BAIANCES SPECIAL REVENUE FUNDS SEPTEMBER 30,1996, WITII COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA Totals Community Housing Affordable (In Thousands)

Development Assistance Stormwater Housing 1996 1995 Revenues Intergovernmental $ 322,931 $ 677,193 $ 52,234 $ 1,052,358 $ 1,067 Charges For Services $ 574,102 574,102 399 Interest 17,993 13,908 31,901 20 Total Revenues 322,931 695,186 588.010 52,234 1,658,361 1,486 Expenditures Physical Environment 399,300 399.300 457 Iluman Services 321,168 66 ..i90 48,000 1,037,758 1,071 Debt Service 0 17 (rotal Expenditures) (321.168) (668,590) (399,300) (48,000) (1,437,058) (1,545)

Excess (Deficiency) of Revenues Over (Under)

Expenditures 1,763 26,596 188,710 4,234 221,303 (59)

Fund Balances, Beginning of Year 12,798 64,385 237,000 1,666 315,849 375 Fund Balances, End of Year $ 14,561 $ 90,981 $ 425,710 $ 5,900 $ 537,152 $ 316 63

STATEMENT OF REVENUES, EXPFEDITURES AND CHANGES IN FUND BALANCE BUDGET AG ACTUAL COMMUNITY DEVELOPMENT FUND FOR THE YEAR ENDED SEITEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEITEMBER 30,1995 CITY OF LEESBURG, FLORIDA 1996 1995 Variance Favorable tin nousands)

Budget Actual -(Unfavorable) Actual Revenues l Intergovernmental $ 321.300 $ 322,931 $ 1,631 $ 330 l

Expenditures Human Services (321.300) (321.168) 132 (329) '

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! Excess of Revenues Over Expenditures 0 1,763 1,763 1 j Fund Balance, Beginning of Year 0 12,798 12,798 11 l

l Fund Balance, End of Year $ 0$ 14,561 S 14,561 $ 12 l

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STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOUSING ASSISTANCE FUND FOR THE YEAR ENDED SEITEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA 1996 1995 Variance favorable an m usands)

Budget Actual (Unfavorable) Actual Revenues Intergovernmental:

HUD Contributions $ 726,800 $ 677,193 $ (49,607) $ 711 Interest 5,000 17,993 12,993 5 Total Revenues 731,800 695,186 (36,614) 716 Expenditures Human Services:

Welfare:

Personal Services 77,300 82,243 (4,943) 78 Operating Expenditures 651,900 583,863 68,037 636 Capital Outlay 2,600 2,484 116 0 (Total Expenditures) (731,800) (668,590) 63,210 (714)

Excess of Revenues Over Expenditures 0 26,596 26,596 2 Fund Balance, Beginning of Year 0 64,385 64,385 63 Fund Balance, End of Year S 0$ 90,981 $ 90,981 $ 65 65

I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUht BALANCE BUDGET AND ACTUAL STORMWATER FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEITEMBER 30,1995 CITY OF LEESBURG, FLORIDA 1996 1995 i

Variance

? Favorable un nousands)

Budget Actual (Unfavorable) Actual Revenues Physical Environment:

Utility Fees $ 554,000 $ 574,102 $ 20,102 $ 399 Interest 12,200 13,908 1,708 15 Total Revenues , 566,200 588,010 21,810 414 Expenditures Physical Environment:

Stormwater:

Personal Services 178,900 166,358 12,542 73 Operating Expenditures 276,200 210,237 65,963 377 Capital Outlay 102,100 22,705 79,395 7 Debt Service 17 ,

(Total Expenditures) (557,200) (399,300) 157,900 (474)

Excess (Deficiency) of Revenues Over (Under) Expenditures 9,000 188,710 179,710 (60) l 237,000 237,000 0 l Fund Balance, Beginning of Year 297 Fund Balance, End of Year $ 246,000 $ 425,710 $ 179,710 $ 237 66

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AFFORDABLE HOUSING FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 ,

CITY OF LEESBURG, FLORIDA i 1996 1995 l Variance Favorable un m usands>

Budget Actual (Unfavorable) Actual Revenues Intergovernmental $ 73,700 $ 52,234 $ (21,466) $ 26  !

l Expenditures i

Human Services: I Operating Expenditures (73,700) (48,000) 25,700 (28)

Excess (Deficiency) of Revenues Over (Under) Expenditures 0 4,234 4,234 (2) l Fund Balance, Beginning of Year 0 1,666 1,666 4 5 Fund Balance, End of Year $ 0$ 5,900 $ 5,900 $ 2 l l

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l ENTERPRISE FUNDS I

Utility Funds - The electric, gas, water, and sanitary sewer and wastewater treatment funds account for the provision of these utility services to customers within the City's service area. All activities necessary to provide such services are accounted for in these funds, including, but not limited to, administration, -

operations, maintenance, financing and related debt service, and billing and collection. l l

Sanitation Services Fund - To account for the collection, transport and disposal of solid waste for .

residential and commercial customers in the City. 1 Communication Services Fund - To account fry the provision of communication services to customers in the City.

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COMBINING BALANCE SHEET i ENTERPRISE FUEDS SEPTEMBER 30,1996, M1TH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA Electric Gas Water Utility Utility Utility .

Assets  !

Current Assets Equity in Pooled Cash and Cash Equivalents $15,596,227 $ N,499,922 $ 3,710,752 i Receivables:

Customer Accounts - Unbilled 2,098,826 199,668 235,177 Customer Accounts - Billed 2,414,371 443,003 256,063 Allowance For Doubtful Accounts (514,681) (21,552) (2,717)

Accrued Interest 72,549 8,888 21,224 Inventory 1,204.116 50 Total Current Assets 20,871,408 4,129,929 4.220,549 Restricted Assets -

Equity in Pooled Cash and Cash Equivalents:

Debt Service Account 1,123,275 137,521 328,627 Renewal and Replacement Account 2,191,290 277,337 528,658 Impact Fees Account 138,892 Customer Deposits Account 1,389,056 63,068 73,618 Investments:

Debt Service Account 2,373,966 290,823 694,509 Crystal River Decommissioning Trust Account 1,244,119 Total Restricted Assets 8,321,706 768,749 1,764,304 Property, Plant and Equipment Property, Plant and Equipment 49,924,335 6,916,943 12,937,520 (Accumulated Depreciation and Amortization) (18,902,932) (2,477,772) (5,340,317) i Construction in Progress 2,500,140 221,289 ,

Total Pimperty, Plant and Equipment - Cost Less Depreciation and Amortization 33,521,543 4.660,460 7,597,203 .

Other Assets Unamortized Bond Issue Costs 106,533 13.159 30,468  !

I Total Assets $62,821,190 $ 9,572,297 $13,612,524 I

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(Page 1 of 2 Pages) l Other l Sanitary Enterprise l Sewer and Total Fund Totals Wastewater Combined Sanitation Conununication un nosunds)

Treatment Utility Services Services 1996 1995 5 6,660,244 $ 29,467,145 $ 430,953 $ 30,994 $ 29,929,092 $ 25,752 227,387 2,761,058 168,509 2,929,567 2,793 540,368 3,653,805 150,080 8,200 3,812.085 3,460 (12,403) (551,353) (3,881) (555,234) (482) 15,056 117,717 117,717 118 4,533 1,208,699 1,208,699 1,235 7,435,185 36,657,071 745,661 39,194 37,441,926 32,876 233,166 1,822,589 1,822,589 1,783 483,279 3,480,564 3,480,564 3,428 398,952 537,844 537,844 1,341 33,781 1,559,523 615 1,560,138 1,460 492,666 3,851,964 3,851,964 3,856 1,244,119 1,244,119 1,084 1,641,844 12,496,603 615 0 12,497,218 12,952 19,226,369 89,005,167 1,620,315 188,875 90,814,357 86,787 (6,149,193) (32,870,214) (1,124,742) (32,532) (34,027.488) (31,742) 1.593,224 4,314,653 4,314.653 2,828 14,670,400 60,449,606 495,573 156,343 61,101,522 57,873 49,571 199,731 0 0 199,731 229

$ 23,797,000 $ 109,803,011 $ 1,241,849 $ 195,537 $ 111,240,397 $ 103,930 l

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COMBINING BALANCE SHEET i ENTERPRISE FUhTeS SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA Electric Gas Water j Utility Utility Utility '

Liabilities and Fund Equity Current Liabilities Accounts Payable $ 1,668,379 $ 274,075 l Accrued Expenses 909,369 67,556 $ 84,048 i Due to Other Funds 154,888 9,200  !

Current Portion of Capital Lease Obligation Estimated Landfill Closure Cost Payable i Total Cterrent Liabilities 2.732,636 341,631 93,248 Current Liabilities Payable From Restricted Assets l Customer Deposits 1,389,056 63,068 73,618 l Accrued Interest on Revenue Bonds 438,849 53,726 128,390  :

Curr:r.t Portion of Bonds Payable 628,634 76,960 183,914  !

Total Current Liabilities Payable From Restricted Assets 2,456,539 193,754 385,922 Long-Term Liabilities Notes Payable  !

Capital lease Obligation - Long-Term Portion  ;

Refunding Revenue Bonds Payable 11,700,607 1,432,437 3,423,147 i Accrued Interest on Capital Appreciation Revenue Bonds 965,432 118,192 282,448 (Unamortized Discount) (88,329) (10,875) (25,258)

Landfill Postclosure Costs Payable Decommissioning Costs Payable 2,036,050 Advance From Other Fund Total Long-Term Liabilities 14,613,760 1,539,754 3,680,337 Total Liabilities 19,802,935 2,075,139 4,159.507 Fund Equity Contributed Capital:

Other Governments 17,987 6,512 77,284 Customers and Developers 3,028,321 515,628 3,158,148 Other Funds Total Contributed Capital 3.046,308 522,140 3,235,432 Retained Earnings:

Reserved:

Debt Service 2,429,758 297,658 710,831 Renewal and Replacement 2,191,290 277,337 528,658 Unreserved (Deficit) 35,350,899 _ 6,400,023 4,978,096 ,

Total Retained Earnings (Deficit) 39,971,947 6,975,018 6,217,585  !

Total Fund Equity (Deficit) 43,018,255 7,497,158 9,453,017 Total Liabilities and Fund Equity $62,821,190 $ 9,572,297 $13,612,524 1

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3 Other Sanitary Enterprise j Sewer and Total Fund Totals Wastewater Combined Sanitation Communication un neummes) l Treatment Utility Services Services 1996 1995 l

$ 1,942,454 $ 1,942,454 $ 2,340

$ 118,012 1,178,985 $ 61,115 1,240,100 1,625

' 8,900 172,988 172,988 100 4

0 119,175 119,175 50 0 45,444 45,444 0

126,912 3,294,427 225,734 $ 0 3,520,161 4,115 33,781 1,559,523 615 1,560,138 1,460 j 91,096 712,061 712,061 743  !

130,492 1,020,000 1,020,000 955 i 255,369 3,291.584 615 0 3,292,199 3,158 l j 1,805,000 1,805,000 1,805,000 2,095 i 136,724 136,724 55 2,428,808 18,984,999 18,984,999 20,005 .

200,404 1,566,476 1,566,476 1,348 (18,327) (142,789) (142,789) (163) f 0 817,992 817,992 1,000 l

j 2,036,050 2,036,050 1,745 0 0 50 4.415,885 24,249,736 954,716 0 25,204,452 26,135 l

4,798,166 30,835,747 1,181,065 0 32,016,812 33,408 1

't 8,011,471 8,113,254 8,113,254 8,113 i 4,777,758 11,479,855 11,479,855 10,336 14,450 14,450 440,967 141,690 597,107 596 12,803,679 19,607,559 440,967 141,690 20,190,216 19,045 504,245 3,942,492 3,942,492 3,942 483,278 3,480,563 3,480,563 3,428 5,207,632 51,936,650 (380,183) 53,847 51,610,314 44,107 6,195,155 59,359,705 (380,183) 53,847 59,033,369 51,477 18,998,834 78,% 7,264 60,784 195,537 79,223,585 70,522

$ 23,797,000 $ 109,803,011 $ 1,241,849 $ 195,537 $ 111,240,397 $ 103,930 71 I

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COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA Electric Gas Water Utility Utility Utility Operating Revenues User Charges $31,253,617 $ 6,707,554 $ 3,123,193 Other Operating Revenue 413,833 87,131 48,739 Total Operating Revenues 31,667,450 6,794,685 3,171,932 Operating Expenses Power Generation and Transmission 1,008,735 i Purchased Energy 17,623,788 4,112,391 Supply and Pumping 116,853 Treatment 423,304 Distribution and Collection 1,821,749 272,401 247,844 Customer Accounts 894.116 302,424 399,900 General and Administrative 1,143,480 401,132 313,165 Operating Expenses Depreciation and Amonization 2,100,555 203,481 393,347 Change in Postclosure Estimate (Total Operating Expenses) (24,592,423) (5,291,829) (1,894,413)

Operating Income 7,075,027 1,502,856 1,277,519 Nonoperating Revenues (Expenses)

Interest income 1,305,985 220,364 297,219 Other Nonoperating income 92,401 4.721 12,351 Interest Expenses (1,124,059) (131.035) (308,225)

Other Nonoperating Expense (40,939) (57,897) (26,441)

Total Nonoperating Revenues (Expenses) 233,388 36,153 (25,096)

Income Before Operating Transfers 7,308,415 1,539,009 1,252,423 Operating Transfers Transfers Out (3,558,300) (685,872) (232,296)

Net Income 3,750,115 853,137 1,020,127 Retained Earrings (Deficit), Beginning of Year 36,221,832 6,121,881 5,197.458 Retained Earnings (Deficit), End of Year $39,971,947 $ 6,975,018 $ 6,217,585 72

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Other Sanitary Enterprise Sewer and Total Fund Totals

, Wastewater Combined Sanitation Conununication un nossands)

Treatment Utility Services Services 1996 1995

$ 3,257,366 $ 44,341,730 $ 2,334,639 $ 33,403 $ 46,709,772 $ 43,991 I 78,775 628,478 628,478 790 3,336,141 44,970,208 2,334,639 33,403 47,338,250 44,781 i

I 1,008,735 1,008,735 920 j 21,736,179 21,736,179 20,393

. 257,005 373,858 373,858 315 928,572 1,351,876 1,351,876 1,212 172,906 2,514,900 2,514,900 2,515 290,500 1,886,940 1,886,940 1,574 220,390 2,078,167 551 2,078,718 2,404 0 2,126,307 2,126,307 2,066 392,123 3,089,506 215,506 12,575 3,317,587 3,874 l 0 (93,859) (93,859) (502)

(2,261,496) (34,040,161) (2,247,954) (13,126) (36,301,241) (34,771) 1,074,645 10,930,047 86,685 20,277 11,037,009 10,010 l

i 471,477 2,295,045 24,020 2,319,065 2,135 l

7,229 116,702 727,971 844,673 201 (297,712) (1,861,031) (7,319) (1,868,350) (1,857)

(41,177) (166,454) (166,454) (262) 139,817 384,262 744,672 0 1.128,934 217 i

I 1,214,462 11.314,309 831,357 20,277 12,165,943 10,227 (133,800) (4,610,268) 0 0 (4,610.268) (4,636) 1,080,662 6,704 ,041 831,357 20,277 7,555,675 5,591 5,114,493 52,655,664 (1,211,540) 33,570 51,477,694 45,887

)

$ 6,195.155 $ 59,359,705 $ (380,183) $ 53,847 $ 59,033,369 $ 51,478 1

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COMBINING STATEMENT OF CASH FLOWS ENTERPRISE FUNT)S FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEITEMBER 30,1995 CITY OF LEESBURG, FLORIDA t

i Electric Gas Water Utility Utility Utility Net Cash Hows Provided By Operating Activities $ 9,148,993 $ 1,684,327 $ 1,575.136 Cash Hows From Noncapital Financing Activities Operating Transfers Out to Other Funds (3,558,300) (685,872) (232,296)

Cash Hows From Capital and Related Financing Activities ,

Interest Paid on Capital Lease I Interest Paid on Revenue Bonds (981,707) (113,643) (266,750)

Acquisition and Construd!on of Capital Assets (2,862,867) (534,218) (1,232,447)

Receipts on Capital I use Principal Paid c Capital Lease Principal Paid on Bond Mattrities (588,579) (72,026) (172,199)

Principal Paid on Note Payrole  ;

Capital Contributed 251,439 74,900 249,226  !

Net Cash (Used In) Capit il and Related Financing Activities (4,181,714) (644,987) (1,422,170)

Cash Hows From Investir.g Activities Interest on Investments 1,223,745 220,775 298,201 Purchase of Crystal P.iver Decommissioning Investments (74.615)

Net C*:!. Provided By Investing Activities 1,149,130 220,775 298,201 Net Increase in Cash and Cash Equivalents 2,558,109 574,243 218,871 Cash and Cash Equivalents, Beginning of Year 17,741,739 3,403,605 _4.561,676 Cash and Cash Equivalents, End of Year $20,299,848 $ 3,977,848 $ 4,780,547 Shown in the Accompanying Financial Statements As:

Current Assets .

Equity in Pooled Cash and Cash Equivalents $15,596,227 $ 3,499,922 $ 3,710,752 Restricted Assets Equity in Pooled Cash and Cash Equivalents 4,703,621 477,926 1,069,795 Total Cash and Cash Equivalents, End of Year $20,299,848 5 1,977,848 $ 4,780,547 74

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Other Sanitary Enterprise Sewer and Total Fund Totals Wastewater Combined Sanitation Conununication un mus..es)

Treatme-+ ,

Utility Services Services 1996 1995

$ 1,213,846 5 13,622.302 $ 200,120 $ 24,652 $ 13,847,074 5 11,594 (133,800) (4,610,268) 0 0 (4,610,268) (4,636) 0 (7,320) (7.320) (9)

(261,409) (1,623,509) (1,623,509) (1,636)

(1,342,180) (5,971,712) (281,774) (509) (6,253,995) (3,002) 0 223,375 223,375 0 (72,066) (72,066) (113)

(122,196) (955,000) (955,000) (885)

(290,000) (290,000) (290,000) (270) 568,584 1,144,149 1,144,149 855 (1,447,201) (7,696,072) (137,785) (509) (7,834,366) (5,060) 472,174 2,214,895 24,020 2,238,915 2,142 (74,615) (74,615) (127) 472,174 2.140,280 24,020 0 2,164,300 2,015 105,019 3,456,242 86,355 24,143 3,566,740 3,913 7,704,403 33,411,423 345,213 6,851 33,763,487 29,851

$ 7,809,422 $ 36,867,665 $ 431,568 $ 30,994 $ 37,330,227 $ 33,764

$ 6,660,244 29,467,145 430,953 30,994 29,929,092 25,752 1,149,178 7,400,520 615 6 7,401,135 8,012

$ 7,809,422 5 36,867,665 $ 431,568 $ 30,994 $ 37,330,227 $ 33,764 75

COMBINING STATEMENT OF CASII FLOWS ENTERPRISE FUNDS FOR T"IE YEAR ENDED SEPTEMBER 30,1996, WITII COMinRATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA Electric Gas Water Utility Utility Utility Reconciliation of Operating income to Net Cash Provided By Operating Activities Operating Income $ 7,075,027 $ 1,502,856 $ 1,277,519 Adjustments to Reconcile Operating income to Net Cash Provided By Operating Activities: ,

Depreciation and Amortization 2,100,555 203,481 393,347 Bad Debt Expense 104,739 12,024 11,700 Nonoperating income 92,401 4,721 12,351 Nonoperating Expense (40,939) (57,897) (26,441)

Change in Postclosure Estimate (Increase) in Customer Accounts (117,374) (128,836) (97,533)

(Decrease) Increase in Advances From Other Funds Decrease in Due From Other Funds Decrease (Increase) in Inventory 28,652 Increase in Accounts Payable 116,160 128,168 (Decrease) in Due to Other Funds (Decrease) in Estimated Landfill Closure Costs Payable (Decrease) Increase in Accrued Expenses (376,136) 14,451 3,003 Increase (Decrease) in Customer Advances For Construction 72,816 Increase in Customer Deposits 93,092 5.359 1,190 Net Cash Provided By Operating Activities $ 9,148,993 $ 1,684,327 $ 1,575,136 Significant Transactions Not Affecting Cash Water and Sewer Lines Contributed By Developers $ 0$ 0$ 4.668 l

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Sanitary Enterprise 3

Sewer and Total Fund Totals Wastewater Combined Sanitation Conununication un nossaads)

Treatment Utility Services Services 1996 1995 L

$ 1,074,645 $ 10,930,047 $ 86,685 $ 20,277 $ 11,037,009 $ 10,010 392,123 3,089,506 215,506 12,575 3,317,587 3,874 15,600 144,063 14,400 158,463 168 7,229 116,702 86,219 202,921 201 (41,177) (166,454) (166,454) (262) 0 (93,859) (93,859) (502)

(212,787) ($56,530) (9,701) (8,200) (574,431) (1,509) 0 (50,230) (50,230) 50 0 0 15 (2,167) 26,485 26,485 (208) 244,328 244,328 237 0 0 (15) 0 (41,975) (41,975) (785) '

(20,740) (379,422) (7,000) (386,422) 268 72,816 72,816 (23) 1.120 100,761 75 100,836 75

$ 1,213,846 $ 13,622,302 $ 200,120 $ 24,652 $ 13,847,074 $ 11,594 5 5.017 $ 9,685 $ 0 $ 0 $ 9,685 $ 46 77

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INTERNAL SERVICE FUNDS l

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Motor Pool Service Fund - To account for the costs of operating a maintenance facility for automotive equipment used by other City departments.

General Employees' Health Insurance Fund - To account for the costs of providing health insurance to all covered City employees, i

Workers' Compensation Insurance Fund - To account for the costs of providing workers' compensation insurance to all covered City employees.

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l l COMBINING BALANCE SHEET INTERNAL SERVICE FUNDS l SEFFEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA l

l General Motor Employees' Workers' Totals Pool Health Compensation un nossands) l Service Insurance Insurance 1996 1995 Assets i Current Assets Equity in Pooled Cash and Cash Equivalents $ 65,263 $ 1,274,990 $ 1,844,329 $ 3,184,582 $ 2,931 Miscellaneous Accounts Receivable 5,318 5,318 6 Inventory 47,581 47,581 42 Total Current Assets 112,844 1,280,308 1,844,329 3,237,481 2,979 Propedy, Plant and Equipment Buildings 27,755 27,755 28 Machinery and Equipment 137,797 137,797 136 (Accumulated Depreciation) (127,422) (127,422) (118)

Total Propedy, Plant and Equipment - Cost Less Depreciation 38,130 0 0 38,130 46 Total Assets 150,974 1,280,308 1,844,329 3,275,611 3,025 Liabilities and Fund Equity Liabilities Accrued Expenses 24,646 24,646 25 Claims Payable 242,944 215,229 458,173 445 Total Liabilities 24,646 242,944 215,229 482,819 470 Fund Equity Contributed Capital General Fund 15,979 0 0 15,979 16 Retained Earnings:

Reserved For Insurance 1,037,364 1,629,100 2,666,464 2,418 Unreserved 110,349 110,349 121 Total Retained Earnings 110,349 1,037,364 1,629,100 2,776,813 2,539 Total Fund Equity 126,328 1,037,364 1,629.100 2,792.792 2,555 Total Liabilities and Fund Equity $ 150,974 $ 1,280,308 $ 1,844,329 5 3,275,611 $ 3,025 l  !

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COMBINING STATEMENT OF REVENUES, EXPENSES AND CIIANGES IN RETAINED EARNINGS I INTERNAL SERVICE FUNDS l FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF LEESBURG, FLORIDA i

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General Motor Employees' Workers' Totals Pool Health Compensation (in musands)

Service Insurance Insurance 1996 1995 ,

Operating Revenues Charges For Services $ 246,107 $ 1,670,238 $ 707,921 $ 2,624,266 $ 2,480 Operating Expenses Personal Services 151,812 151,812 148 Other Services and Charges 15,341 15,341 22 Materials and Supplies 79,266 79,266 107  ;

Depreciation 9,906 9,906 10  ;

Claims Expense 1,259,959 157,565 1,417,524 1,302 ,

Administrative Expenses 52,366 78,930 131,296 67 Insurance Premiums 257,921 31,294 289,215 299 (Total Operating Expenses) (256,325) (1,570,246) (267,789) (2,094,360) (1,955)

Operating (Loss) Income (10,218) 99,992 440,132 529,906 525 Nonoperating Income Investment income 0 65,779 97,077 162.856 146 Income Before Operating Transfers (10,218) 165,771 537,209 692,762 671 Operating Transfers Out 0 0 (454,075) (454,075) (450) f Net (Loss) Income (10,218) 165,771 83,134 238,687 221 Retained Earnings, Beginning of Year 120,567 871,593 1,545,966 2.538,126 2,318 Retained Earnings, End of Year $ 110,349 $ 1,037,364 $ 1,629,100 $ 2,776,813 $ 2,539 l

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COMBINING STATEMENT OF CASH FLOWS l INTERNAL SERVICE FUhTS ,

! FOR THE YEAR ENDED SEITEMBER 30,1996, WITH '

l COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 i l CITY OF LEESBURG, FLORIDA I

General l l Motor Employees' Workers' Totals l Pool Health Compensation (In Thousands)

Service Insurance Insurance 1996 1995 Net Cash (Used In) Provided By Operating Activities $ (6,470) $ 120,589 $ 432,957 $ 547,076 $ 758 Cash Flows From Capital and Related Financing Activkies Acquisition and Construction of Capital Assets (2,198) 0 0 (2,198) (18)

Cash Flows From Noncapital and Related Financing Activities Gprating Transfers to Other Funds 0 0 (454,075) (454.075) (450)

Cash Flows From Investing Activities .

Interest on Investments 0 65,779 97,077 162,856 146 Net (Decrease) Increase in Cash and Cash Equivalents (8,668) 186,368 75,959 253,659 436 Cash and Cash Equivalents, Beginning of Year 73,931 1.088,622 1,768,370 2.930,923 2,495 Cash and Cash Equivalents, .

End of Year $ 65,263 $ 1,274,990 $ 1,844,329 $ 3,184,582 $ 2,931 Reconcillation of Operating (Loss)

Income to Net Cash (Used In)

Provided By Operating Activities Operating (Loss) Income $ (10,218) $ 99,992 $ 440,132 $ 529,906 $ 525 Adjustments to Reconcile Operating (Loss) Income to t Net Cash (Used In) Provided By Operating Activities:

Depreciation 9,906 9,906 10 i Decrease in Miscellaneous Receivables 882 882 243 (Increase) Decrease in Inventory (5,830) (5,830) 12 Increase (Decrease)in Claims Payable 19,715 (7,175) 12,540 (44)

(Decrease) Increase in Accrued Expenses (328) (328) 12 Net Cash (Used In) Provided By ,

Operating Activities $ (6.470) $ 120,589 $ 432,957 $ 547,076 $ 758 l

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3 FIDUCIARY FUND TYPES l I

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Pension Trust Funds - To account for the accumulation of resources to be used for retirement payments

! to employees. Resources are contributed by the City, participating employees and the State of Florida.

l Agency Fund - To account for the assets and liabilities of the deferred compensation plan. Assets represent amounts earned by employees who have elected to defer a portion of their compensation to a

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COMBINING BALANCE SIIEET l FIDUCIARY FUND TYPES l SEI'fEMBER 30,1996, WITII COMPARATIVE TOTALS FOR SEPTEMBER 30,1995

, CITY OF LEESBURG, FLORIDA 1

Pension Trust Funds i Municipal Municipal l Pt "ce Firemen's General Agency Fund Totals Retis onent Retirement Employees' Deferred (In Thomsends) l Trust Trust Retirement Lompensation 1996 1995

( Assets Cash and Investments With Trustees $ 5,567.741 5 5,937,192 $ 17,171,211 $ 1,724,666 $ 30,400,810 $ 27,963 l Accrued Interest Receivable 37,016 838 175,470 213,324 184 Total Assets 5,604,757 5,938,030 17,346,681 1,724,666 30,614,134 28,147 s

Liabilities and Fund Equity Liabilities Deferred Compensation Payable 0 0 0 1,724,666 1,724,666 1,748 Fund Equity Fund Balances Reserved For Employee Benefits 5,604,757 5,938,030 17,346,681 0 28,889.468 26,399 l

Total Liabilities and Fund Equity $ 5,604,757 5 5,938,030 $ 17,346,681 $ 1,724,666 5 30,614,134 $ 28,147 I

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l COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES PENSION TRUST FUNDS FOR THE YEAR ENDED SEITEMBER 30,1996, WITII COMPARATIVE TOTALS FOR SEITEMBER 30,1995 CITY OF LEESBURG, FLORIDA Pension Trust Funds Municipal Municipal Police Firemen's General Totals Retirement Retirement Employees' (la musands)

Trust Trust Retirement 1996 1995 Revenues investment Income:

Gaia on Sale of Investment -

Net $ 1,637,655 $ 8,423 $ 425,772 $ 2,071,850 $ 514 Unrealized (Decrease) Increase in Fair Value of Investments (1,309,786) 578,556 36,488 (694,742) 2,808 Interest and Dividend Income 221,168 14,403 719,765 955,336 700 Other Income 931 14,743 1,164 16,838 0 Total Investment income 549,968 616,125 1,183,189 2,349,282 4,022 Contributions:

Employer 71,053 674,163 745,216 717 Employee 125,165 61,579 186,744 173 State of Florida 103,247 65,179 168,426 157 Total Contributions 228,412 197,811 674,163 1,100,386 1,047 Total Revenues 778,380 813,936 1,857.352 3.449,668 5,069 Expenses Benefit Payments 108,226 158,757 464,966 731,949 575 Administrative Expenses $2,146 25.464 150,627 228,237 216 (Total Expenses) (160,372) (184,221) (615,593) (960,186) (791)

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Net Income 618,008 629,715 1,241.759 2,489,482 4,278 Fund Balances, Beginning of Year 4,986,749 5.308,315 16,104,922 26.399,986 22.121 Fund Balances End of Year $ 5,604,757 $ 5,938,030 $ 17,346,681 $ 28,889,468 $ 26,399 I

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STATEMENT OF CHANGES IN ASSETS AND LIABILITIES i FIDUCIARY FUND TYPES AGENCY FUhD FOR TIIE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Balance Balance October 1, September 30, 1995 Additions (Deductions) 1996 Assets Investments $ 1,747,684 $ 355.725 $ (378,743) $ 1,724,666 i

Liabilities Deferred Compensation Payable $ 1,747,684 $ 355,725 $ (378,743) $ 1,724,666 i

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Account groups are used to establish accounting control and accountability for the City's general fixed assets and the unmatured principal of its general long-term debt. These account groups are not funds; l they do not reflect available financial resources and related liabilities.

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1 SCHEDULES OF GENERAL FIXED ASSETS BY SOURCE l l SEPTEMBER 30,1996 AND 1995 l l CITY OF LEESBURG, FLORIDA i l i l

l (in Thousands) -

l 1996 1995 l l General Fixed Assets Imd $ 2,402,360 $ 2,377 Buildings 9,655,870 8,299 Improvement Other Than Buildings 5,332,150 4,254 Equipment and Vehicles 5,230,008 4,505 Construction Work in Progress 985,585 2,881 l Total General Fixed Assets 23,605,973 22.316

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Investments in General Fixed Assets i General Obligation Bonds and Revenue

Certificates 4,208,449 4,211 l Capitalized Bond Interest 721,790 722 l Capital Projects Funds:

Economic Development Administration Grants 430,079 430 Hospital Construction Fund 1,893,857 1,894 ,

Federal, State and Local Grants 3,237,717 J,084 )

General Fund Revenues 11,494,263 10,401

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Special Revenue Fund Revenues 860,868 838 Utility Revenue Fund Revenues 26,740 30 l

l Gifts and Other 732,210 706 Total Investment in General Fixed Assets S 23,605.973 $ 22,316 j l

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SCHEDULE OF GENERAL FIXED ASSETS - BY FUNCTION AND ACTIVITY SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Improvements Equipment Other Than and Function and Activity Land Buildings Buildings Vehicles Total General and Government Legislative $ 113,095 $ 33,200 $ 10,081 $ 156,376 Executive 36,530 36,530 Financial and Administrative 3,480 $ 102,477 660,667 766,624 Other General Government 15,000 2,024,308 68,858 165,741 2,273,907 Total General and Government 128,095 2.060,988 171.335 873,019 3,233,437 Public Safety i Law Enforcement 110,825 421,975 90,520 784,585 1,407,905 '

Fire Control 64,325 285,217 8,942 742,977 1,101,461 Protective Inspection 50,270 50,270 Total Public Safety 175,150 707,192 99,462 1,577,832 2,559,636 Physical Environment 54,741 99,423 233,431 580,752 968.347 Transportation Roads and Streets 57,238 5,231 112,336 486,782 661,587 i Airport 537,770 59,472 2,788,300 67,895 3,453,437

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Parking Facilities 297,341 297,341  ;

Total Transportation 892,349 64,703 2,900,636 554,677 4,412,365 Economic Environment 245,194 0 0 0 245,194 Human Services 31,430 1,862,427 0 9,776 1,903,633 Culture and Recreation 1 Community Building 1,910,561 1,910,561 Libraries 59,500 898,658 216,701 956,255 2,131,114 Parks and Recreation 705,334 919,561 663,153 502,838 2,790,886 Cultural Services 271,867 25,826 297,693 Special Recreational Facilities 444,580 2,400 4,180 451,160 Mote-Morris llouse 110,567 415,910 54,109 10,500 591,086 Other Culture and Recreation 965,097 160,179 1,125,276 Total Culture and Recreation 875,401 4,861.137 1,927,286 1,633,952 9,297,776 Total By Function and Activity $ 2,402,360 $ 9,655,870 $ 5,332,150 $ 5,230,008 22,620,388 Construction Work in Progress 985,585 Total General Fixed Assets $ 23,605.973 l '

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i SCIIEDULE OF CilANGES IN GENERAL FIXED ASSETS - BY FUNCTION AND ACTIVITY FOR TIIE YEAR ENDED SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA 1

Balance Balance October 1, September 30, Fgnetion and Activity 1995 Additions (Deductions) 1996 General and Government Legislative $ 158,123 $ (1,747) $ 156,376 i Executive 36,151 $ 1,264 (885) 36,530 i Financial and Administrative 512,345 295,861 (41,582) 766,624

. Other General Government 2,301,446 2,939 (30,478) 2,273,907 Total General and Government 3,008.065 300,064 (74,692) 3,233,437 Public Safety Law Enforcement 1,251,277 208,968 (52,340) 1,407,905 Fire Control 1,073,081 34,733 (6,353) 1,101,461 .

Protective inspection 41,437 15,459 (6,626) 50,270 i Total Public Safety 2,365,795 259,160 (65,319) L ,559,636 Physical Enviennment 884,872 94,420 (10,945) 968,347 i

Transportation Roads and Streets 656,230 67,764 (62,407) 661,587

Airport 3,425,097 31,340 (3,000) 3,453,437 Parking Facilities 297,341 297,341

Total Transportation 4,378,668 99,104 (65,407) 4,412,365 Economic Environment 245,194 0 0 245,194 i

lluman Services 1,904,647 2,484 (3,498) 1,903,633 Culture and Recreation Community Building 690,051 1,233,025 (12,515) 1,910,561 Libraries 1,971,472 160,599 (957) 2,131,114 Parks and Recreation 2,693 380 111,334 (13,828) 2,790,886 Cultural Services 297,693 3,000 (3,000) 297,693 Special Recreational Facilities 449,392 1,768 451,160 l Mote-Morris 11ouse 477,678 113,408 591,086 )

Other Culture and Recreation 67,769 1,057,507 1,125,276 Total Culture and Recreation 6,647,435 2,680,641 (30,300' 9,297,776 Total By Function and Activity 19,434,676 3,435,873 (250,161) 22,620,388 l Construction Work in Progress 2,880,875 551,204 (2,446,494) 985,585 Total General Fixed Assets $ 22,315,551 $ 3,987,077 $ (2,696,655) $ 23,605.973  ;

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SCHEDULES OF GENERAL LONG-TERM DEBT SEPTEMBER 30.1996 AND 1995 CITY OF LEESBURG, FLORIDA (in Thousands) 1996 1995 Amount Available and to Be Provided For the Payment of General Long-Tenn Debt Serial and Term Bonds - Public Improvement Revenue Bonds and Certificates:

Amount Available in Debt Service Fund $ 730,880 $ 721 Amount to Be Provided 4,094,120 4,294 Total Serial and Term Bonds 4,825,000 5,015 Other Long-Term Liabilities Amount to Be Provided 1,330,191 1,317 Total Available and to Be Provided For the Payment of General Long-Term Debt 6,155,191 6.332 General Long-Term Debt Payable Refunding and Capital Improvement Revenue Bonds, Series 1987 4,825,000 5,015 Employee Compensation Absences Payable 1,330,191 1,317 Total General Long-Tenn Debt Payable $6,155,191 $ 6,332 l

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STATISTICAL DATA Statistical data are presented to provide greater detailed information than reported in the preceding financial statements. This information in many cases has been spread throughout the report and is brought together here for greater clarity. Statistical data are not necessary for fair presentation in conformity 'with generally accepted accounting principles.

The City has had no general obligation debt outstanding during the past ten years.

GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION AND OTHER USES (1)

LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA (in Thousands)

Fiscal General Public Physical Public Community Year Government Safety Environment Works Development 1986 $ 641 $ 2,491 $ 336 $ 710 $ 56 1987 681 2,616 280 661 323 1988 923 2,794 322 731 28 1989 806 2,932 303 918 85 1990 600 3,392 441 887 131 1991 679 3,725 105 1,528 169 1992 708 4,102 281 1,403 174 1993 756 4,187 241 1,519 180 1994 924 4,446 219 1,321 196 1995 1,053 4,722 457 1,309 208 1996 1,029 5,035 399 1,518 211 (1) Includes general, special revenue and debt service funds; excludes capital projects fund expenditures.

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Human Culture and Debt Miscellaneous  ;

Services Recreation Service and Other Total

$ 222 $ 1,300 $ 316 $ 346 $ 6,418

258 1,390 776 385 7,370 i

. 332 1,383 447 924 7,884 '

428 1,538 557 1,222 8,789 i I

! 441 1,688 524- 1,770 9,874 l 1

531 1,821 533 1,228 10,319 l 620 1,877 542 1,168 10,875 619 1,947 562 1,227 11,238 675 2,085 569 1,245 11,680 1,071 2,225 539 1,418 13,002 1,038 2,459 521 1,437 13,647 1

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GENERAL REVENUES BY SOURCE AND ,

OTIIER FINANCING SOURCES (1)

LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA (In Thousands)

Fiscal Licenses and Charges For Year Taxes Pennits Intergovernmental Services 1986 $ 1,176 $ 127 $ 1,572 $ 142 1987 1,309 128 1,973 158 1988 1,937 134 1,893 141 1989 2,132 181 1,591 157 1990 2,635 175 1,917 152 i 1991 2,503 149 2,014 311 1992 2,930 168 2,121 466 1993 2,924 197 2,129 487 1994 3,114 218 2,292 453 1995 3,287 251 2,618 571 1996 3,381 264 2,743 913 (1) includes general, special revenue and debt service funds; excludes capital projects funds.

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Fines and Miscellaneous Forfeitures and Other Transfers Total l

$ 157 $ 379 $ 3,164 $ 6,717 160 408 2,917 7,053 l 158 604 3,366 8,233 166 668 4,014 8,909 ;

214 717 3,994 9,804 j 207 800 4,386 10,370 187 753 4,857 11,482 !

146 653 4,896 11,432 l

172 420 5,341 12,010 189 646 5,586 13,148 207 567 5,566 13,641 91

PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA -

(In Thousands)

Fised Total Tax Current Tax Percent of Delinquent Year Levy Collections Levy Collected Tax Collections 1986 $ 1,183 $ 1,142 96.5 % $ 2 1987 1,318 1,268 96.2 % 4 1988 1,453 1,402 96.5 % 3 1989 1,514 1,461 96.5 % 3 1990 1,883 1,802 95.7 % -

1991 1,890 1,776 93.9 % 14 1992 2,175 2,029 93.3 % 87 1993 2,177 2,077 95.4 % 56 1994 2,292 2,150 93.8 % 65 1995 2,368 2,274 96.0 % 27 1996 2,423 2,306 95.2 % 16 l

(1) Property tax assessments and collections are performed for the City by Lake County. This information was not available from Lake County.

j Section 197.012, Florida Statutes, allows a discount for early payment of 4% in November, 3% in December,2% in January and 1% in February.

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Total Tax Percent of Total Tax Outstanding Delinquent i Collections Collections to Tax Levy Taxes (1) i i

. $ 1,144  %.7% -

I 1,272  %.5 % - l i  !

1,405  %.7 % -

i 1,464  %.7% -

l 1,802 95.7 % -

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! 1,790 94.7 % -

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i 2,116 97.3 % -

2,133 98.0 % -

2,215 96.6 % -

2,301 97.1 % -

2,322 95.8 % -

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ASSESSED VALUE OF EXEMPT AND TABLE 4 TAXABLE PROPERTY  !

LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA l (in Thousands)

Fiscal Exempt Assessed Centrally Taxable Assessed i Year Valuation Real Personal Assessed Total Valuation 1986 $  !!8,761 $ 224,234 $ 73,561 $ 433 5 298,288 $ 416,989 '

1987 118,421 247,101 84,595 652 332,348 450,769 f 1988 121,598 271,482 94,174 716 366,372 487,970 1989 124,250 282,164 98,959 408 381,531 505,781 1990 137,851 301,844 115,838 652 418,334 556,185 1991 140,970 307,735 111.582 675 419,992 560,962 1992 146,940 355,401 127,311 674 483,386 630,326 i 1993 171,067 352.537 130,832 298 483,667 654,734 1994 174,959 358,898 150,270 199 509,367 684,326 i

1995 181,575 370,400 155,590 251 526,241 707,816 1996 202,478 383,701  !$4,390 284 538,375 740,853 Notes-(1) Chapter 193, Florida Statutes, requires that all property shall be assessed at just or fair market value i as of January 1 of each year, All taxes are due and payable on November I and become delinquent  !

on April 1 of the subsequent year, Discounts are allowed at the rate of 4% in the month of November,3% in December,2% in January and 1% in February,  ;

(2) Chapter 193, Florida Statutes, provides that all items of inventory (in personal property) shall be assessed at 10% ofjust valuation, except goods-in-process and raw materials, which shall be assessed at 1%, Furthermore, agricultural properties are assessed at agricultural value as opposed to fair market value for nonagricultural property.

(3) Estimated actual value is not available, i i

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PROPERTY TAX RATES TABLE 5 ALL DIRECT AND OVERLAPPING GOVERNMENTS (PER $1,000 OF ASSESSED VALUE)

LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA Northwest Water Water Fiscal School Ambulance Ilospital Conservation Management Year C.+, District County D'. strict District Authority District Total 1986 3.967 6.415 3.492 0.226 0.706 0.040 0.318 15.164 1987 3.967 6.608 3.400 0.190 1.000 0.300 0.319  !$.784 1988 3.967 7.477 3.400 0.188 1.000 0.350 0.517 16.899 j 1989 3.967 7.742 3.800 0.223 0.964 0.838 0.281 17.815 1990 4.500 8.451 4.938 0.223 0.887 0.621 0.346 19.966 1991 4.500 8.749 4.938 0.223 1.000 0.771 0.358 20.539 1992 4.500 8.880 4.938 0.223 1.000 0.751 0.358 20.650 1993 4.500 9.005 4.864 0.222 1.000 0.740 0.358 20.689 1994 4.500 8.938 5.135 0.222 1.000 0.517 -

0.470 20.782 1995 4.500 8.515 5.135 0.222 1.000 0.400 0.482 20.254 1996 4.500 9.678 4.927 0.222 1.000 0.384 0.482 21.193 95

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COMPUTATION OF OVERLAPPING TABLE 6 GENERAL OBLIGATION DEBT (1)

SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA (In Thousands)

Applicable to the City of Leesburg, Florida Goverrunent Unit Outstanding Percent (2) Amount ~ l l

Lake County School District Education Bonds $ 7,930 10.26 % $ 814 Lake County School District Certificates of Participant 24,325 10.26 % 2,496 l

(1) The City did not have any general obligation debt outstanding during the fiscal year ended September 30,1996.

(2) Represents the fraction of assessed valuation of taxable property in the City over assessed valuation of taxable property in Lake County.

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RATIO OF ANNUAL DEBT SERVICE TABLE 7 EXPENDITURES FOR GENERAL AND SPECIAL REVENUE BONDED DEBT TO TOTAL GENERAL EXPENDITURES LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA (In Thousands) i Ratio of Debt Service to Fiscal Total Debt Total General Total General Year Principal (1) Interest (1) Service (1) Expenditures (2) Expenditures 1986 $ 87 $ 229 $ 316 5 5,756 5.48 1987 476 300 776 6,208 12.50 l

1988 75 403 478 5,613 7.33 1989 159 398 557 7,009 7.95 1990 140 384 524 7,708 6.80 1991 145 378 523 8,568 6.11 1992 150 371 521 9,707 5.36 1993 160 367 527 10,011 5.26 1994 170 353 523 10,435 5.01 1995 180 342 539 11,584 4.65 1996 190 331 521 12,211 4.27 (1) Includes Refunding and Capital Improvement Revenue Bonds, Series 1987, which are special obligation bonds.

(2) Excludes operating transfers out.

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COMBINED UTILITY FUNDS SCIIEDULE OF REVENUE BOND COVERAGE LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA (In Thousands)

Operation and Fiscal Gross Maintenance Net Year Revenues Costs (l) Revenue 1986 $ 28,960 $ 21,105 $ 7,855 1987 28,429 21,218 7,211 1988 31,677 20,712 10,965 1989 33,523 21,912 11,611 i

1990 35,524 22,420 13,104 1991 36,915 24,571 12,344 1992 36,530 24,851 11,679 1993 38,477 26,635 11,842 1994 39,722 27,399 12,323 1995 44,490 29,337 15,153 1996 47,265 30,951 16,314 (1) Excludes interest expense and depreciation.

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Sinking Principal Interest Fund ___

Total Coverage

$ 1,953 $ 327 $ 2,280 3.45 l

- 1,953 323 2,276 3.17

- 1,953 318 2,271 4.83 l

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185 1,664 511 2,360 5.55  !

i 195 1,653 553 2,401 5.14 l r

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820 1,628 - 2,448 4.84 I

l 885 1,561 - 2,446 5.04 l i

955 1,487 - 2,442 6.21 i l

i 1,020 1,424 - 2,444 6.68 i l

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DEMOGRAPIHC STATISTICS TABLE 9 LAST TEN FISCAL YEARS l CITY OF LEESBURG, FLORIDA 1

Fiscal Per Capita School Unemployment ,

Year Population (1) Income (2) Enrollment (3) Rate (4) l l

1986 14,457 13,889 N/A 7.70 %

1987 14,659 14,297 N/A 6.40 %

1988 14,743 14,635 N/A 5.60 % i 1989 14,939 15,975 4,763 6.20 %

1990 14,783 16,433 4,795 7.90 %

1991 15,174 16,603 4,932 8.90 % ,

l 1992 15,063 17,085 4,930 10.0 %

1993 14,963 17,377 4,975 6.90 %

1994 15,005 N/A 4,997 6.60 %

1995 15,014 N/A 5,157 5.40 %

1996 15,352 N/A 5,403 N/A N/A = Not Available.

Data Source (1) U.S. Census Bureau, Bureau of Business and Economic Research.

(2) Data for Lake County was obtained from the U.S. Department of Commerce, Economic Analysis as published in the Florida Statistical Abstract.

(3) Annual school census by Board of Education. Figures represent elementary and secondary public schools. Students in community colleges are not included.

(4) U.S. Department of Labor - These estimated figures are based on Lake County as a whole. No I individual figures are available for the City. j l

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, CONSTRUCTION PERMITS AND VALUES TABLE 10 LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA (In Thousands *)

Commercial Construction (1) Residential Construction (1)

Fiscal Number of Number of Year Permits Value* Units Value*

1986 25 $ 4,376 135 $ 4,357 1987 34 11,742 119 4,801 1988 20 6,875 144 5,166 1989 22 13,566 420 15,751 1990 8 3,461 65 2,324 1991 6 2,303 43 2,490 1992 14 4,267 22 1,934 1993 20 9,866 31 2,776 1994 13 7,741 56 3,007 1995 11 2,474 46 2,642 1996 17 7,766 30 2,125 i

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(1) Based on building permits issued by the City's Department of Building and Zoning Codes. Property values are estimated construction costs. Commercial construction includes all nonresidential construction. I I

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PRINCIPAL TAXPAYERS TABLE 11 SEPTEMBER 30,1996 CITY OF LEESBURG, FLORIDA Percentage of Assessed Total Assessed Taxpayers Type of Business Valuation Valuation Coca-Cola (Foods Division) Citrus Processing $ 58,669,604 10.90 %

United Telephone of Florida Telephone 43,193,069 8.02 %

Lake Port Properties Retirement Community 32,775,345 6,09 % i l

Citizens National Bank Banking 8,217,820 1.59 %

Wal Mart Stores Department Store 6,448,075 1.20 % l Scripps Howard Cable Service Cable Television 6,096,780 1.13 %

Walling Enterprises Shopping Center 3,631,265 0.67 %

SunTrust Bank, N.A. Banking 3,619,928 0.67 %

Smith Kline Beechum Laboratories Medical Laboratory 3,272,960 0.61 %

Horne Properties Shopping Center 3,121,808 0.58 %

Leesburg Associates Shopping Center 2,866,830 0.53 % >

Leesburg Vanguard, Ltd. Shopping Center 2,692,710 0.50 %

Leesburg Daily Commercial Newspaper Publisher 2,581,029 0.48 %

Totals $ 177,187,223 32.97 %

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, MISCELLANEOUS STATISTICS TABLE 12 SEITEMBER 30,1996 CITY OF LEESBURG, FLORIDA Miles of Paved Streets 80.1 Number of Street Lights 1,804 i Fire Protection

Number of Stations 2 Number of Firemen and Officers 33 Police Protection Number of Stations 2 Number of Policemen and Officers 53 l Education (Elementary Only): (1)

Attendance Centers (Public Schools Only) 4 Number of Classrooms 111

. Number of Teachers 142 Number of Students 2,190 1

Municipt.I Water Department Number of Consumers - Residential 7,697 Average Daily Consumption 301 Gallons Miles of Water Mains 332 Municipal Gas Department Number of Consumers - Residential 7,134 1

Average Daily Consumption .781 therms  !

Miles of Gas Mains 225 Municipal Electric Department

. Number of Consumers - Residential 14,299 l Average Monthly Consumption 997 kwh Miles of Primary Electric Lines Within the City 365 Wastewater and Sanitary Sewen Sanitary Sewers 161 Miles j Storm Sewer 17.8 Miles Building Permits Issued 222 4

Recreation and Culture I Number of Parks 10 With 226 Acres

, Number of Libraries 1 Number of Volumes 112.577 Total Employees For the City Overall Full-Time Employees 367

Part-Time Employees 16  ;

(1) Elementary includes grades K through 5 103 1

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CORPORATE LIMITS AND ANNEXATIONS TABLE 13 LAST TEN FISCAL YEARS CITY OF LEESBURG, FLORIDA j Fiscal Annexation Corporate Limits l Year Acres Acres Square Miles 1986 288.43 6,949.78 10.94 1987 230.25 7,180.03 11.30 ,

1988 62.00 7,242.03 11.32 1989 4.70 7,246.73 11.41 1990 310.42 7,557.15 11.89 1991 3,823.00 11,380.15 17.78 1992 522.02 11,902.17 18.60 1993 658.21 12,560.38 19.62 1994 13.86 12,574.24 19.65 i

1995 157.68 12,731.92 19.89 1996 42.74 12,774.66 19.96 .

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Source I

City of Leesburg Department of Planning and Zoning Development.

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l Purvis Gray &

Company l INDEPENDENT AUDITORS' REPORT ON l SCIIEDULE OF FEDERAL AND STATE FINANCIAL ASSISTANCE

! Honorable City Commission l City of Leesburg

! Leesburg, Florida i

i We have audited the general purpose financial statements of the City of Leesburg, Florida as of and for l the year ended September 30,1996, and have issued our report thereon dated January 10,1997. These l general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of l Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those

( standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable l assurance about whether the general purpose financial statements are free of material misstatement. An l audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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 audit provides a reasonable basis for our opinion.

l l Our audit was conducted for the purpose of forming an opinion on the general purpose financial l statements of the City of Leesburg, Florida, taken as a whole. The accompanying schedule of federal and state financial assistance is presented for purposes of additional analysis and is not a required part

! of the general purpose financial statements. The information in that schedule has been subjected to the l auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as l a whole.

l l Ocala F orida # / f Certified Public Accountants 4

P.O. Box 23999

• 222 N.E.15t Street

• Caine 5ville, Florida 32602 * (352) 378-2461 Laurel Ridge Profe55ional Center

• 2347 5.E.17th Street

• Ocala, Florida 34471 * (352)732 3872 1415 Piedmont Drive, Ea$t, Suite 2

• Tallaha55ee, Florida 32312 * (904) 385 0554

• FAX (904) 385 9801 MEMBER 5 CW AMIRtCAN AND FLORIDA IN57tfUT(5 0F CERilFIED PUsuC ACCOUNIANTS MEM8ER OF AMERICAN INSTITUit of CERTIFitD PUSUC ACCOUNTANTS PRNATE COMPANi[5 AND $ 1 C. PRACTICE SECTIONS 105 l

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SCIIEDULE OF FEDERAL AND STATE FINANCIAL ASSISTANCE FOR TIIE YEAR ENDED SEIrrEMBER 30,19" CITY OF LEESBURG, FLORIDA Program CFDA Program or or Award Balance Receipts / (Disbursement / Balance Federal and State Grantor /

Number Grantor Number Amount 10/1/95 Revenues Expenditures) 9/30/96 Program Title M:jor Programs t

U.S. Department of Ilousing and  !

Urban Development Section 8 Existmg flousing 14.156 FLil5CE $ 631,144 $ 0$ 350,094 $ (350,094) $ 0 Certificate Program Section 8 Existing Ilousing 14.156 FL115VO 669,489 0 323,607 (323,607) 0 Certificate Prograrc U.S. Department of Ilousing and ,

Urban Eevelopment Passed Through the Florida Department of Community  !

Affairs 0 14.219 95DB-65-06-454)2-Ill3 650,000 0 321.168 (321.168)

Community Development Block Grant 1,950,633 0 994,869 (994,869) 0 Total Major Pagrams Nonmajor Programs U.S. Department of Justice Passed nrough the Florida Department of Community Affairs Drug Control and System Improvement 96-CJ-35-06-45-02-131 33,334 0 28,915 (28,915) O (DARE)

Community-Oriented Policing Services 95-CF-WX-0121 75,000 0 22,553 (22,553) O (COPS FAST)

Community-Oriented Policing Services 96-CM-WX-0616 168.750 0 0 0 0 (COPS MORE)

U.S. Department of Ilousing and Urban Development

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Passed Hrough the Florida Department of Community AITairs 0 0 53,336 (53,336) 0 llome Grant 106

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SCIIEDULE OF FEDERAL AND STATE FINANCIAL ASSISTANCE-FOR TIIE YEAR ENDED SEITEMBER 30,1996 CITY OF LEESBURG, FLORIDA (Concluded)

Program Federal and State Grantor / CFDA Program or or Award Balance Receipts / (Disbursement / Balance Program Title Number Grantor Number Amount 10/1/95 Revenues Expenditures) 9/30/96  !

Nonmajor Programs (Concluded) i U.S. Department of Energy Passed Through the Horida Department of Community Affairs Energy Office Alterrative Fuel Grant 95-SE-20-06-45-02-182 $ 148,250 $ 0$ 17,203 $ (17,203) $ 0 U.S. General Services Administration, Department e of Management Services ** 0 0 2.058 (1,21I) 847 Total Nonmajor Programs iz5,334 0 124.065 (123.218) 847 Total Federal Financial Assistance 2,375.967 0 1,118.934 (1.118.087) 847 State Programs i t

Horida Department of Community Affairs Division  ;

of Emergency Management  !

Emergency Management Grant

• 95-EO-4V-06-45-02-010 50.000 0 20,845 (20,845) 0 Florida Department of Environmental Protection Passed Through Lake County, Florida

! Recycling and Education Grant RE-96-33 18,472 0 18,472 (18.472) 0 Department of State, Division of Ilistorical Resources  !

IIistorical Restoration of the Mote-Mo ris llouse SC625 80,850 0 80,850 (80,850) 0 llistorical Restoration of the Mote-h4.m flouse SC53 0 14.898 0 (14,898) 0 t

Total State Financial Assistance 149,322 14,898 120.167 (135.065) 0 Total Federal and State Financial Assistance $ 2.525,289 $ 14,898 $ 1.239,101 $ (1.253,152) $ 847

• State of Florida grants and aids appropriations.

• • The Departnient of Management Services Bureau of Surplus Property requires revenues of 23.3% of the acquisition cost to be reported on the schedule of federal financial assistance. Reported expenditures indicate the actual purchase price of the property. No cash was received by the City.

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Purvis l Gray & I i Company l l l l INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITII GOVERNMENT AUDITING STANDARDS l Honorable City Commission City of Leesburg Leesburg, Florida l

We have audited the general purpose financial statements of the City of Leesburg, Florida as of and for the year ended September 30,1996, and have issued our report thereon dated January 10,1997. l l

We conducted our audit in accordance with generally accepted auditing standards; Government Auditing l Standards, issued by the Comptroller General of the United States; and the provisions of Office of l Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those l standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. l l The management of the City is responsible for establishing and maintaining an internal control structure.

l In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives l

of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are exec'. ted in accordance with management's authorization and recorded properly to permit the preparation l of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control 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 l design and operation of policies and procedures may deteriorate.

In planning and performing our audit of the general purpose financial statements of the City of Leesburg, Florida for the year ended September 30, 1996, 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 and whether they have been placed in operation, and we assessed control i risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opmion on the internal control structure.

Accordingly, we do not express such an opinion.

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Certified Public Accountants P.O. Box 23999

• 222 N.E.1st Street

• Cainesville, Florida 32602 * (352) 378 2461 Laurel Ridge Professional Center

• 2347 5.E.17th Street

• OCala, Florida 34471 * (352) 732-3872 1415 Piedmont Drive, East, Suite 2

• Tallahassee, Florida 32312 * (904) 385-0554

• FAX (904) 385-9801 l MEMBER $ OF AMERIC AN AND FLORIDA INSTITUTt5 OF CERTIFIED PUBLIC ACCOUNT ANTS MEMBER OF AWRICAN N5TITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVAT! COMPANIES AND 5 t C. PRACTICE SECTIONS 108 l

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Ilonorable City Commission City of Leesburg  ;

Leesburg, Florida l l

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL l STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEh1ENTS PERFORh1ED IN ACCORDANCE WITH l GOVERNMENT AUDITING STANDARDS l (Continued)

I We noted certain matters involving the internal control structure and its operation that we consider to be  ;

reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the City's ability to record, process, summarize, and report financial dae consisteni with the ass rtions of management in the general purpose financial statements.

Contract hianagement Contract Inventory and Indexing The City has numerous contracts, agreements, leases, interlocal agreements and other similar documents which effect various departments of the City. Currently, there is no system of contract management that provides centralized information on these documents to provide for proper management of the various agreements. We believe that this condition could contribute to administrative and operational problems if not carefully managed. We recommend that the City review this area for improvements that might include a centralized index of all key contracts that would indicate the key information concerning the ,

contract such as initiation and termination dates, department effected, contract nature, responsible official,  !

key change dates, contract amounts and rates, and other similar information. To begin this process, the  ;

City will need to take a comprehensive inventory of all such documents on hand and identify the key l provisions of each. The City's Records Department appears to be a logical area to maintain the contract index and copies of all such documents. The City should review the possibility of using scanner technology to help automate this function and make the information available electronically to key users throughout the City.

Wastewater Contract Billings We have reviewed the City attorney's special report on wastewater contract billings and concur with the recommendations in that report, especially those regarding transferring of the management and billing of these contracts from the Wastewater Department to the Customer Service Department and renegotiation of the contracts where applicable, hiiscellaneous Billings it appears that most miscellaneous billings are initiated by the various City departments and then flow to the Billing Department for actual preparation and mailing of the bill. Procedures performed by the l Billing Department to determine if the billing information is accurate are very limited or nonexistent.

l We recommend that the flow of information from the various departrnents to miscellaneous billings be l documented and that accounting controls in this area be reviewed.

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l l Honorable City Commission l

City of Leesburg 1 Leesburg, Florida I t

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE I FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Continued) i i

Contract Management (Concluded)

Airport Leases During our audit, we noted that some airport lease payments to the City may not have beca increased for increases in the CPI as permitted by the lease. We recommend that all leases be reviewed to determine if they are being billed the proper amount.

Utility Billing Issues Utility Billing Detenninates The City's utility billing system handles billing and collections for electric, gas, water, wastewater, sanitation and stormwater services, as well as various state and local taxes and fees. Each utility has several rate classes, different rate structures and a multitude of billing determinates that effect the ultimate bill that the customer receives, such as impervious surface square footage, meter multipliers (KWH and KW), sales tax exemptions, gas factors, sprinkler pipe size, dumpster size and pickup frequency, power factors, yard light quantity and size, and other related items. Because of the importance of these items in computing the customer's bill, and the fact that they change over time, we recommend that the City j implement a program whereby the responsible utility within the City verifies all key billing determinates by physical inspect;on of commercial customer premises on a rotating basis.

P wer Cost Recoveries Several years ago, the City passed an ordinance to exclude from the BPCA, all FMP.A power cost true-up credits. The effect of this ordinance is to increase the amount of power costs that are recovered from consumers through the monthly BPCA billing factor and increase profit of the electric fund. For the 1996 year, the electric fund had net income of just over S3.7 million, of which $3.4 million came from power cost credits not passed on to customers. The net income figure of the fund is not out of line with industry averages; however, most other electric systems pass on all such power cost credits through the BPCA l and adjust their base rates accordingly so that an appropriate net income is achieved. We recommend that the City review this area at the time of its next rate study and determine if any changes are desirable.

Gross Receipts Tax The State of Florida levies a 2.5% gross receipts tax on the sale of electricity to both residential and conunercial users. The tax is allowed to be separately stated on the customer's utility bill similar to sales tax on commercial use so that the utility system that bills and collects the tax can separate the tax from what they charge for electricity. The City currently includes the tax within it tax base rates and does not l separately state the tax on its bill. We recommend that the City review this area at the time of its next j rate study nnd determine if separately stating the tax is desirable.

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Honorable City Commission l City of Leesburg Leesburg, Florida INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE 1 FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Continued) \

Utility Billing Issues (Continued) i i

Gar Rates l The City's current policy is to increase retail gas rates for each wholesale price increase incurred. Given the many factors affecting gas purchases, there have been constant price changes. We recommend that the City consider a billing approach similar to electric billings and institute a BPCA to recover wholesale

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I price increases.

Water / Wastewater Front Footage Fees We are unable to locate an ordinance or resolution authorizing the levy of water front footage fees to new customers connecting to existing water lines. Also, identification of which line segments require a fee is not well documented or generally accessible. There is authority for the wastewater fee; however, as noted for water fees, the records identifying which segments require a fee and at what rate are weak.

Accordingly, we recommend that the City review this area to clarify and circulate an index identifying all line segments and rates affecting this area.

Customer Deposits Our audit indicates that the City currently has numerous commercial utility accounts that have no customer deposit or surety bond. This leaves the City vulnerable to loss in the event of nonpayment, which for certain large commercial accounts could be significant. Accordingly, we recommend the City l review its commercial accounts for deposit collateral adequacy. The prior payment history of the account  !

should be considered as a part of this review. j l

Also, due to the recent change in ownership, the lack of credit history of the new owner and the large consumption volume, we recommend the City review the adequacy of the deposit and bond of the former Minute Maid-Coca-Cola account.

Crystal River #3 Costs The City owns .8244% of the FPC CR #3 nuclear generating plant and receives a monthly invoice for ,

its share of the cost of operating the plant, which the City records in various expense and asset accounts; i some of which are recovered through the BPCA computation and some of which (primarily plant additions) are not. Because the City's ownership is less than 1 % and they exercise little control over the operation and management of the plant, the City's ownership interest is more along the lines of a right-to-purchase power (similar to the City's St. Lucie arrangement). Accordingly, we recommend that i the City consider recording the entire CR #3 monthly operation and management billing in a single power j cost account that is completely recovered through the BPCA, and discontinue the recording of plant and nuclear assets.

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l Honorable City Commission City of Leesburg Leesburg, Florida 1

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Continued) i i Utility Billing Issues (Concluded)

Communication Fund Billings The communication fund's contract with A.C.N., an alternative access vendor for fiber optic cable installation and billings, calls for A.C.N. to bill users of the City's fiber optic cable utility and remit 100% of the collections back to the City until the City's initial capital expenditure has been recouped and 50% thereafter. The City has not received any distributions from A.C.N. since March 1996. We recommend that the City aggressively pursue collections and evaluate if the vendor should be retained for future services.

1 Lake County Tipping Fees The City has been negotiating a reduced rate for tipping fees with Lake County for the past several years. ,

i To-date, no written agreement has been reached and the City is still negotiating the amount due to/from l l Lake County for fiscal years ended 1994,1995 and 1996. We recommend that this matter be resolved l as soon as possible so that the sanitation fund budget can be reviewed in light of the new cost structure, j and so hat final adjustments can be recorded to the sanitation fund's books.

Grant Billings Our analysis of the affordable housing fund, indicates that the fund has not billed the Florida Finance

Housing Agency for grant costs in over a year. As a result, the fund has expended in excess of $50,000 i of City money leaving the fund with negative cash and the City with out-of-pocket costs for the grant, j We recommend that all grant costs be billed as soon as possible and that controls be established to ensure more timely future billings.

Also, because the majority of the City's gra:: programs are administered from the City annex building, ,

there appears to be limited oversight and participation over the financial management of the grant programs. We recommend that the City's Finance and Accounting Department become more involved in managing all such grants with specific attention to the Section 8 Housing and CDBG programs.

Investments l The City has approximately $50 million of cash and investments (excluding the pension funds) that it manages on a day-to-day basis. Currently, the daily management of this cash and ' investments is vested in a single employee, supervised directly by the Finance Director position. Given the significance of this area and the fact that the City is currently without its former Finance Director, we recommend that this 112 i

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Honorable City Commission  ;

City of Leesburg i Leesburg, F1-orida  !

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE 1 FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH I GOVERNMENT AUDITING STANDARDS l

(Continued) l I

Investments (Concluded) l area be given extra supervision and review. Additionally, the City should consider cross-training other l employees in the daily cash management function to eliminate total reliance on one individual for this vital function. Mandatory two week vacations for individuals in this position should also be considered.  !

l Documentation of City Policies, Procedures and Transaction Flows  :

l The City currently has little or no written documentation of its internal control structure and transaction flows for its key finance functions, such as cash disbursements, payroll processing, cash collections, j utility billings, miscellaneous billings, and other related areas. We also noted that most key City policies i governing finance related areas are not centrally located and organized. This makes it difficult to determine what areas are governed by official policies, which ones have been superseded, and who is responsible for monitoring compliance. Accordingly, we recommend that the City inventory and index nil official policies in a central area. Policies unique to a single department should at least be indexed centrally.

Information Systems Department We have reviewed the City's Information Systems Department and find that it is generally well run and efficient, providing a good economic value for the City. We would, however, like to point out that the system is run in what we refer to as a "small shop" environment with limited staff and, therefore, limited duty segregation. We mention this, not to suggest that more staff be hired, but to point out that continued independent review of the department's activities are desirable.

Ongoing, but unfinished activities of the department include a disaster recovery plan and implementation of various already acquired software programs. These activities will require cooperative efforts from other departments.

Recent key personnel changes within the City have temporarily deactivated the Information Systems Steering Committee's activities which oversee the department and help prioritized work projects. We recommend that this committee be activated and expanded to include more key department heads.

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Honorable City Commission City of Leesburg l Leesburg, Florida l INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL l STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE i FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITII I GOVERNMENT AUDITING STANDARDS 1 (Continued)

Vehicle Maintenance The City's maintenance system is somewhat fragmented in that most departments provide for their own vehicle maintenance through individual department workshops and private garages. This approach provides the greatest control and flexibility to the individual departments, but requires duplication of shop space, tools, equipment and qualified mechanics, which is costly to the City. The City also has established a motor pool fund that services sanitation, stormwater and a few general fund vehicles. We recommend that the City review this area and consider either expanding the motor pool function to l include substantially all department vehicles or consider eliminating the motor pool fund as a separate l fund and relocate this function within the general fund. l Police Evidence Inventory ,

l An inventory of the police evidence room indicated that all evidence appears to be properly recorded and ,

accounted for. However, the volume of evidence presently stored at the Police Department CID facility l exceeds the amount that can be stored in an orderly manner, based upon space constraints. To facilitate optimum use of available space, we recommend that all items of evidence be reviewed to determine what items can be properly disposed of under state law. After evidence disposal procedures have been completed, if the present facilities are still inadequate, new storage facilities shculd be considered.

Recreation Department Because the Recreation Department bills team sponsors and collects cash from several sources, we recommend that the flow of transactions within the department be documented and reviewed. We also recommend that the Finance Department review the department's general control procedures to determine if improvements are needed.

Workers' Compensation Self Insurance Fund The City's transfers into the workers' compensation fund from all other funds of the City have been significantly higher than necessary, based upon actual claims and expenses, with a large portion of the excess ($450,000) being transferred into the general fund each year. Because all funds of the City contributed to the excess, it is not equitable to transfer the entire excess back to the general fund alone, rather it should be transferred back pro rata to the various funds participating in the program.

Alternatively, the City could simply reduce the annual premiums charged by the fund each year to an amount equal to average prior year claims and expenses and not have to transfer a large excess back.

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Honorable City Commission City of Leesburg Leesburg, Florida INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GEhWML PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Continued)

Worken' Compensation Self-Insurance Fund (Concluded)

The workers' compensation fund currently has a fund balance in excess of $1.6 million and averages approximately $200,000 per year in claims and expenses. If claims and expenses did not increase, the fund would be self-supporting for over eight years without any additional contributions at its present state.

We recommend that the City review the contribution levels and reserves of this fund to determine if any changes are desirable.

Pension Funding The City's contributions to the general employee and firemen's pension funds have been in excess of the amounts required by the actuarial valuations for the past several years. Additionally, these funds and the police pension fund have accumulated net assets well in excess of their pension benefit obligations. We recommend that the City review these areas to determine if reductions in the amount contributed by the City or changes to the plan benefits would be desirable.

Purchasing-Warehousing - Electric Department The City's organizational structure currently provides for the inventory warehousing function (asset custody) to be supervised by the Purchasing Department (asset procurement). This structure does not provide for an adequate separation of these two functions which is preferable from an internal control perspective. Further, both the Warehousing Department and the Purchasing Department are now under control of the Electric Department which is the largest single user of materials and supplies that are purchased and kept at the warehouse. This structure vests virtual total control of the purchasing and custody of materials in a single department which is also the largest user. We recommend that the City review the organizational structure of these areas to determine if any changes are desirable.

1 A material weakness is a reportable 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 general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course j of performing their assigned functions.

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Honorable City Commissi.on City of Leesburg Leesburg, Florida INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Concluded)

Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe none of the reportable conditions described above is a material weakness.

This report is intended for the information of the City Commission, management, and the State of Florida. However, this report is a matter of public record and its distribution is not limited.

Ocala F o ida D>

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Purvis Gray &

Company INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable City Commission City of Leesburg Leesburg, Florida We have audited the general purpose financial statements of the City of Leesburg, Florida as of and for the year ended September 30,1996, and have issued our report thereon dated January 10,1997.

We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptre!!er General of the United States; and the provisions of Office of Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement.

Compliance with laws, regulations, contracts, and grants applicable to the City of Leesburg, Florida is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express an opinion.

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

This report is intended for the information of the City Commission, management, and the State of Florida. However, this report is a matter of public record and its distribution is not limited.

Ocala F orida y Certified PubliC Accountants P.O. Box 23999

• 222 N.E.1st Street

• Gainesville, Florida 32602 * (352) 378-2461 Laurel Ridge Professional Center

• 2347 5 E.17th Street

• OCala, Florida 34471 * (352) 732-3872 1415 Piedmont Drive, East, Suite 2

• Ta'lahassee, Florida 32312 * (904) 385-0554

• FAX (904) 385-9801 MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBUC ACCOUNTANT 5 Mf M8ER OF AutRICAN INSTITUTE OF CERTIFitD PU9UC ACCOUNTANT 5 PRIVATE COMPANIES AND $ E C. PRACTICE SECTIONS 117

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! INDEPENDENT AUDITORS' REPORT ON

INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING l FEDERAL FINANCIAL ASSISTANCE PROGRAMS Iloncrable City Commission City of Leesburg Leesburg, Florida We have audited the general purpose financial statements of the City of Leesburg, Florida for the year i ended September 30,1996, and have issued our report thereon dated January 10, 1997. We have also 1 audited the City's compliance with requirements applicable to major federal financial assistance programs and have issued our report thereon dated January 10, 1997.

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We conducted our audits in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those standards and OMB Circular i A-128 require that we plan and perform the audits to obtain reasonable assurance about whether the )

l general purpose financial statements are free of material misstatement and about whether the City i complied with laws and regulations, noncompliance with which would be material to a major federal l financial assistance program.

In planning and performing our audits for the year ended September 30,1996, we considered the City's internal control structure in order to determine our auditing procedures for the purpose of expressing our  !

opinions on the City's general purpose financial statements and on its compliance with requirements applicable to major programs and to report on the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs.

We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated January 10, 1997.

The management of the City of Leesburg, Florida is responsible for establishing and maintaining an l internal control structure, in fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and reiated costs of internal control structure policies and l procedures. The objectives of an internal control structure are to provide management with reasonable, i but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted l accounting principles, and that federal financial assistance programs are managed in compliance with l applicab'.e laws and regulations. Because of inherent limitations in any internal control structure, errors l

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Certified Public Accountants P.O. Box 23999

• 222 N.E.1st Street

• Caine $ville, Florida 32602 * (352)378-2461 Laurel Ridge Profe55ional Center = 2347 5.E.17th Street

• OCala, Florida 34471 * (352)732 3872 1415 Piedmont Drive. Ea5t, Suite 2 = klahassee, Florida 32312 * (904) 385-0554

• FAX (904) 385-9801 Mf ustR$ Of AMIRICAN AND FLORIDAINSTITUtt$ Of CIR11FitD PUBLIC ACCOUNT ANT 5 Mtu'IER Of AMERICAN IN5fifvit C4 Ciaf tfIf D PutLIC ACCOUNTANil Plub ATt COMPANill AND 5 i C PR ACTICI 5tCTION5 118

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l Honorable City Commission l City of Leesburg Leesburg, Florida INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS (Continued) irregularities or instances of noncompliance 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 l inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

l For the purpose of this report, we have classified the significant internal control structure policies and l procedures used in administering federal financial assistance programs in the following categories:

General Requirements Specific Requirements Other l Political Activity Types of Services Cash Receipts l Davis-Bacon Act Eligibility of Participants Cash Disbursements l Civil Rights Reporting Payroll i Cash Management Special Tests and Provisions Federal Financial Reports Claims For Advances and Allowable Costs Reimbursements l Drug-Free Workplace Act l

Administrative Requirements l t

! For all of the internal control structure categories listed above, we obtained an understanding of the  ;

design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk.  :

l During the year ended September 30, 1996, the City of Leesburg, Florida expended the following l

percentages of its federal financial assistance under two major programs:

l l 0 Section 8 Housing, CFDA Number 14.156 60.3 %

0 Community Development Block Grant, CFDA Number 14.219 28.7 %

l 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 i of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of the internal control structure elements does not reduce to a relatively low level the risk that I noncompliance with laws and regulations that would be material to a federal financial assistance program j 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 involving the internal control structure and its operation that we consider to be material weaknesses as defined above.

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, lionorable City Commission City of Leesburg i Leesburg, Florida 1

INDEPENDENT AUDITORS' REPORT ON I INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS (Concluded)

However, we noted certain matters involving the internal control structure and its operations that we have l reported to the management of the City of Leesburg, Florida in a separate internal control structure report dated January 10,1997.

This report is intended for the information of the City Commission, management, the State of Florida, and applicable federal agencies. However, this report is a matter of public record and its distribution is not limited.

Ocala F orida  ;

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Purvis l Gray &

! Company INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH TIIE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS Honorable City Commission l City of Leesburg Leesburg, Florida We have audited the financial statements of the City of Leesburg, Florida as of and for the year ended l

September 30,1996, and have issued our report thereon dated January 10, 1997.

We have applied procedures to test the City's compliance with the following requirements applicable to each of its major federal financial assistance programs, which are identified in the schedule of federal and l 1

state financial assistance, for the year ended September 30,1996:

0 Political Activity a Federal Financial Reports o Davis-Bactm Act e Allowable Costs C Civil Rights a Drug-Free Workplace Act l

a Cash Management e Administrative Requirements i I l

Our procedures were limited to the applicable procedures described in the Office of Management and l l

Budget's Compliance Supplementfor Single Audits of State and Local Governments. Our procedures \

I l were substantially less in scope than an audit, the objective of which is the expression of an opinion on l the City of Leesburg, Florida's compliance with the requirements listed in the preceding paragraph.

Accordingly, we do not express such an opinion.

l With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Leesburg, Florida had l

i not complied, in all material respects, with those requirements. Also, the results of our procedures did ,

l not disclose any immaterial instances of noncompliance with those requirements.

This report is intended for the information of the City Commission, management, the State of Florida, and applicable federal agencies. However, this report is a matter of public record and its distribution is not limited.

l l January 10, 1997 Ocala, Florida j

Certified Public Accountants P.O. Box 23999

• 222 N.E.1st Street

• Cainesville, Florida 32602 * (352) 378 2461 l.aurel Ridge Professional Center

• 2347 5.E.17th Street

• Ocala, Florida 34471 * (352)732-3872 1415 Piedmont Drive, East, Suite 2

• Tallahassee, Florida 32312 * (904) 385-0554

• FAX (904) 385-9801 MEM8ERS OF AMIRICAN AND FLOR!DAIN5fiTUTE5 OF CIRTIFIED PUBLIC ACCOUNTANTS MEu8tR OF AMtRICAN INSTITUTE OF CERTIFifD PUBLIC ACCOUNTANTS PRIVATE COMPANtti AND 5 E.C PRACTICE SECTIONS 121 I

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Purvis l Gray &

Company INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITII SPECIFIC REQUIREMENTS APPLICABLE TO l MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS '

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Honorable City Commission l City of Leesburg i Leesburg, Florida l We have audited the financial statements of the City of Leesburg, Florida as of and for the year ended l September 30,1996, and have issued our report thereon dated January 10, 1997.

We have also audited the City's compliance with the requirements governing types of tervices allowed I or unallowed, cligibility, reporting, special tests and provisions, and claims for advances and l reimbursements that are applicable to each of its major federal financial assistance programs, which are identified in the accompanying schedule of federal and state financial assistance, for the year ended September 30, 1996. The management of the City of Leesburg, Florida is responsible for the City's compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit, i l

l l We conducted our audit of compliance with those requirements in accordance with generally accepted l auditing standards; Government Auditing Standards, issued by the Comptroller General of the United i States; and Office of Management and Budget (OMB) Circular A-128, Audits of State and Local )

l Governments. Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to l above occurred. An audit includes examining, on a test basis, evidence about the City of Leesburg, Florida's compliance with those requirements. We believe that our audit provides a reasonable basis for i our opinion.

l The results of our audit procedures disclosed an immaterial instances of noncompliance with the

requirements referred to above, which is described below. We considered this instance of noncompliance in forming our opinion on compliance, which is expressed below

l 1 0 As noted in the 1994-95 fiscal year audit report, the City drew down $157,668 of Community l Development Block Grant funds on September 25,1995, and did not disburse all of these funds until l October 31,1995. The Community Development Block Grant guidelines stipulate that the City may j maintain a $5,000 cash balance; however, all other funds must be expended within three working I days.

l Certified Public Accountants

{

P.O. Box 23999 e 222 N.E.1st Street

• Caine 5ville, Florida 32602 * (352)378-2461 i

t.aurel Ridge Profe;5ional Center

• 2347 S.E.17th Street

• OCala, Florida 34471 * (352) 732-3872 l 1415 Piedmont Drive. East, Suite 2

• Tallahalsee, Florida 32312 * (904) 385-0554

• FAX (904) 385-9801 l MtM8ERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTirIED PUBLIC ACCOUNTANY5 MEMBER Of AMERICAN INSTITUTE OF CERTiflED PUBLIC ACCOUNT ANTS PRTv ATI COMPANlt5 AND 5 t C. PRACTICE SECTIONS 122 l

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l Honorable City Commission City of Leesburg Leesburg, Florida INDEPENDENT AUDITORS' REPORT ON l COMPLIANCE WITII SPECIFIC REQUIREMENTS APPLICABLE TO l MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS (Concluded)

In our opinion, the City of Leesburg, Florida complied, in all material respects, with the requirements governing types of services allowed or unallowed, eligibility, reporting, special tests and provisions, and l claims for advances and reimbursements that are applicable to its major federal financial assistance ,

programs for the year ended September 30,1996.

l This report is intended for the information of the City Commission, management, the State of Florida, and applicable federal agencies. However, this report is a meaer of public record and its distribution is not limited.

January 10,1997 Ocala, Florida M) '

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l MANAGEMENT LETTER l lionorable City Commission City of Leesburg Leesburg, Florida l

We have audited the financial statements of the City of Leesburg, Florida, as of and for the fiscal year i ended September 30,1996, and have issued our report thereon dated January 10, 1997. l We have issued our independent auditors' report on internal control structure and our independent auditors' report on compliance v6ith laws and regulations both dated January 10, 1997. Disclosures in those reports, if any, should be considered in conjunction with this management letter.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the state of Florida and require that certain items be addressed in this letter.

The Rules of the Auditor General (Section 10.554(1)(f)1.) require that we comment as to whether or not irregularities reported in the preceding annual financial audit report have been corrected. There were no irregularities disclosed in the preceding annual financial audit report.

The Rules of the Auditor General (Section 10.554(1)(f)2.) require that we comment as to whether or not recommendations made in the preceding annual financial audit report have been followed. The recommendations made in the preceding annual financial audit report have been addressed by the City of Leesburg, Florida.

As required by the Rules of the Auditor General (Section 10.554(1)(03.), the scope of our audit included a review of the provisions of Section 218.503(1), Florida Statutes, " Determination of Financial Emergency." In connection with our audit, we determined that the City of Leesburg, Florida, is not in a state of financial emergency as a consequence of the conditions described by Section 218.503(1),

Florida Statutes.

As required by the Rules of the Auditor General (Section 10.554(1)(f)4.), we determined that the annual financial report for the City of Leesburg, Florida, for the fiscal year ended September 30,1996, was filed with the Department of Banking and Finance pursuant to Section 218.32, Florida Statutes, and is in agreement with the annual financial audit report for the fiscal year ended September 30,1996.

j Certified PubliC Accountants

P.O. Box 23999 + 222 N.E.1st Street

• Cainesville, Florida 32602 * (352)378 2461 Laurel Ridge Professional Center

• 2347 5.E.17th Street

• OCala, Florida 34471 * (352) 732 3872 l 1415 Piedmont Drive, East. Suite 2

• Tallahassee, Florida 32312 * (904) 385-0554

• FAX (904) 385-9801 MEM8ER5 0f AMERICAN AND FLORIDA INSTITUTE 5 Of CERilfif D PUBLIC ACCOUNTANT 5 MIMBfR Of AutRICAN IN5flTUTE Of CERTititD PUBLIC ACCOUNTANT 5 PRIVATE COMPANiil AND $! C PRACTICE SECTIONS 124

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1 Honorable City Commission City of Leesburg Leesburg, Florida MANAGEMENT LETTER (Concluded) \

l The Rules of the Auditor General (Sections 10.544(1)(f)6., 7., 8., and 9.) require disclosure in the management letter for the following matters if not already addressed in the auditors' reports on the internal control structure or compliance: recommendations to improve financial management, accounting p.rocedures, and internal controls; violations of laws, rules, and regulations which may or may not matai.hy affect the financial statements; illegal or improper expenditures which may or may not materiaHy affect the financial statements; improper or inadequate accounting procedures (e.g., the omissica of required disclosures from the fmancial statements); failures to properly record financial transactions; and other inaccuracies, irregularities, shortages, and defalcations discovered by the auditor.

Our audit disclosed reportable conditions, which are included in our independent auditors' report on internal control structure.

The Rules of the Auditor General (Section 10.554(1)(f)l0.) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. Please see note 1 of the accompanying financial statements.

This management letter is intended solely for the information of the City Commission, management, the State of Florida, and other governmental agencies. However, this report is a matter of public record and its distribution is not limited.

Ocala F orida

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ESBLRG The Lakefront City MEMORANDUM TO: City Commission and City Manager l FROM: Stan Carter, Interim City ClerFJFinance Director DATE: March 24,1997 l

SUBJECT:

Management Letter Comments l

The City offers the following response to the management comments by Purvis Gray &

Company in the September 30,1996, City of Leesburg audit:

Contract Manaoement Contract Inventory and indexing The City is currently reviewing various methods for establishing a centralized contract management system.

Wastwater Contract Billings The management and billing of the contracts has been transferred to the Customer Service Division of the Finance Department. The City is reviewng :he contracts to determine which are subject to possible renegotiation.

Miscellaneous Billing The area of Miscellaneous Billings will be reviewed for proper documentation of information flow and accounting controls.

Airport leases I

All leases have been reviewed for compliance with the terms of the individual leases.

post office box 490630 e leesburg. florido 34749M0 on equal opportunity / offirmotive oction employer phone (352) 728-9700 fox (352) 728-9734

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Man:g:m:nt Letter Comm:nts  !

March 24,1997 j Page 2  ;

Utility Billina issues i

i Utility Billing Determinates l The City is currently reviewing the methods by which all Utility Billing is prepared. All of l these factors will be considered as a part of the review process.

Power Cost Recovenes

! The BPCA billing factor will be considered as a part of the electric rate review to be

! completed in the near future.

Gross Receipts Tax This matter will be given further consideration at the time of the rate review to be completed

! in the near future.

, Gas Rates The City currently recovers wholesale price increases as they occur. This has become necessary due to the volatility of price swings in the open market.

3 The rate designs of other cities are being reviewed for the possibility of incorporating some ,

of their features into our rate structure.

Water / Wastewater Front Footage Fees

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i The City Staff is currently reviewing the entire area of front footage fees to establish j uniform policies and procedures and is also considering the possibility of combining the j front footage fees with impact fees.

I Customer Deposits The City will review its current policy for commercial utility customer deposits.

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Crystal River #3 Costs l The City has contacted other cities who also own a share of the Florida Power CR #3 plant end found that they are recording the monthly O&M billing in the same manner as the City

of Leesburg. Further consideration may be given to this matter in the future.

i Communication Fund Billings

) The City has referred this matter to the City Attorney for evaluation.

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Manag:m:nt Letter Comm:nts March 24,1997 Page 3 Lake County Tiocina Fees The City and Lake County have agreed on a tipping fee rate for prior years. The City ,

Attorney is reviewing the new interlocal agreement formalizing these rates. l Grant Billingt l The City is in the process of bringing the grant billings current and will establish procedures l l to ensure that they are maintained on a current basis.

I investments As pointed out by the auditors, the City is without its former Finance Director. Once a new Finance Director'is in place on a permanent basis, additional control procedures and cross  !

1 training will be implemented. The City has an investment and cash management policy in place which is followed very carefully.

Documentation of City Policies. Procedures and Transaction Flows The City is considering a review of all official policies and supporting resolutions or ordinances upon which they are based. We agree that written documentation of internal control and operating procedures are necessary and should be centrally located.

Information Systems Deoartment The Information Systems Department was subjected to an independent review at the direction of the City Manager in the recent past.

Implementation of the disaster recovery plan is ongoing, and the implementation of various software programs has been established as the top priority project for the Department.

The I/S steering committee has been reactivated and consideration will be given to expanding its members.

Vehicle Maintenance The City will review our vehicle maintenance policies to determine if more efficient methods can be implemented.

Police Evidence inventorv The police CID department is in the process of acquiring additional storage space for the evidence inventory. Additional evidence disposal procedures will also be evaluated.

Recreation Department The Finance Department will review the control procedures of the Recreation Department to make recommendations on any needed improvements.

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k Management Letter Comments March 24,1997 Page 4 Workers Comoensation Self Insurance Fund 1

The City is reviewing the current premiums charges to the departments and will implement l

any necessary changes in the next fiscal year, 1

Eension Fundina -

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. The City will review the pension funds for the possibility of making changes in the plan  ;

I j benefits or contributions.  !

Purchasing-Warehousing-Electric Deot.

The City will review the organizational structure of the referenced area to determine if any changes should be made.

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