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Item VI (A) FY93 Water and Sewer Funds Financial Audits - Elden McDirmit, McDirmit, Davis, Lauteria & Company, P.A. AGENDA 1-18-94 Item VI A "CENTER OF GOOD LIVING-PRIDE OF WEST ORANGE" Ip Ocoee ' S.SCOTT VANDERGRIFT ' CITY OF OCOEERUSIYJOHNSON COMMISSIONERS C. ° 150 N.LAKESHORE DRIVE PAUL W.FOSTER OCOEE FLORIDA 34761-2258 VERN COMBS `'may!' :;;:.' �`?V (407)656-2322 JIM GLEASON 4P* Of GOOD CITY MANAGER MEMORANDUM ELLIS SHAPIRO DATE: January 13, 1994 TO: The Honorable Mayor and Board of City Commissioners FROM: Montye E. Beamer, Director 7)1 Administrative Services SUBJECT: Fiscal Year 1993 Water and Wastewater Funds Financial Audits Prepared By McDirmit, Davis, Lauteria & Company, P.A. The attached audits have been prepared for submittal to the City Commission and for the annual reporting requirements for the water/wastewater bonds. As in the past, the Independent Auditors Comments (i.e., management comments) will be included in the audit of all City of Ocoee funds to be presented at a later date. Action Requested The Mayor and Board of City Commissions accept the Fiscal Year 1993 Water and Wastewater Funds Financial Audits as prepared by McDirmit, Davis, Lauteria & Company, P.A. MEB/jbw Attachments AGENDA 1-18-94 Item VI A "CENTER OF GOOD LIVING-1 RIDE OF WEST ORANGE" _ O� Ocoee S.SCOTT VANDERGRIFr (�'' 0141 .`-' CO S&ONEs Z. a CITY OF OCOEE RUSTY JOHNSON v O 150 N.LANESHORE DRIVE PAUL W.FOSTER OCOEE FLORIDA 34761-2258 (407)656-2322 VERN COMBS C4. Z5Y4t JIM GLEASON LEASON Op 6000 CITY MANAGER MEMORANDUM ELLIS SHAPIRO DATE: January 13, 1994 TO: The Honorable Mayor and Board of City Commissioners FROM: Montye E. Beamer, Director Administrative Services SUBJECT: Fiscal Year 1993 Water and Wastewater Funds Financial Audits Prepared By McDirmit, Davis, Lauteria & Company, P.A. The attached audits have been prepared for submittal to the City Commission and for the annual reporting requirements for the water/wastewater bonds. As in the past, the Independent Auditors Comments (i.e., management comments) will be included in the audit of all City of Ocoee funds to be presented at a later date. Action Requested The Mayor and Board of City Commissions accept the Fiscal Year 1993 Water and Wastewater Funds Financial Audits as prepared by McDirmit, Davis, Lauteria & Company, P.A. MEB/jbw Attachments CITY OF OCOEE, FLORIDA Ocoee 4 .477/ sk 0 - 4 • O r s WATER FUND FINANCIAL AUDIT for the FISCAL YEAR ENDED SEPTEMBER 30, 1993 I FINANCIAL STATEMENTS OF THE WATER FUND OF THE CITY OF OCOEE, FLORIDA FOR THE YEAR ENDED SEPTEMBER 30, 1993 I 1 ThisP 9 a e intentionallyleft blank. 1 Ocoee �► # O !• 0 vO (I) 0/ GOO, `` WATER FUND OF THE CITY OF OCOEE, FLORIDA FOR THE YEAR ENDED SEPTEMBER 30, 1993 TABLE OF CONTENTS PAGE NO. INDEPENDENT AUDITOR'S REPORT 1 BALANCE SHEET 2-3 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS 4 STATEMENT OF CASH FLOWS 5-6 NOTES TO FINANCIAL STATEMENTS 7-18 1 1 1 1 1 . 1 This page intentionally left blank. Ocoee o '� r:ti o OP G 009 rIR m n T DAVIS AUTERIA & COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Commission City of Ocoee, Florida We have audited the accompanying financial statements of the Water Fund of the City of Ocoee, Florida as of September 30, 1993, and for the year then ended. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement pre- sentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the financial statements present only the Water Fund and are not intended to present fairly the financial position of the City of Ocoee, Florida, and the results of its operations and the cash flows of its proprietary and similar trust fund types in con- formity with generally accepted accounting principles. In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the Water Fund of the City of Ocoee, Florida as of September 30, 1993, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Auctava• • GmyJan,PIL. McDIRMIT, DAVIS, LAUTERIA & COMPANY, P.A. November 17, 1993 612 E.COLONIAL DRIVE•SUITE 350.ORLANDO,FLORIDA 32803-4603•(407)648-0713•FAX(407)839-3975 PRIVATE COMPANIES PRACTICE SECTION•AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS•FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 1 WATER FUND OF 1 THE CITY OF OCOEE, FLORIDA BALANCE SHEET SEPTEMBER 30, 1993 1 1 ASSETS Current Assets Cash and Cash Equivalents $ 244,082 Investments 529,406 Receivables (Net of Allowance for Uncollectibles) 132.148 Total Current Assets 905.636 1 Restricted Assets Cash and Cash Equivalents 383,433 Cash with Paying Agent 98,196 Investments 2,885,531 Total Restricted Assets 3.367.160 Fixed Assets Property, Plant and Equipment 10,470,599 Less: Accumulated Depreciation (2,943,107) Construction in Progress 55,073 Total Fixed Assets - Net 7.582,565 Other Assets Unamortized Bond Issuance Costs 84.120 TOTALASSETS $ 11,939,481 i 1 1 The accompanying notes are an integral part of the financial statements. , -2- 1 LIABILITIES AND FUND EQUITY Current Liabilities (Payable from Current Assets) Accounts Payable $ 8,721 Accrued Expenses 33,984 Due to Other Funds 19,438 Obligations under Capital Leases 10,436 Developer Agreements Payable 37,913 Total Current Liabilities (Payable from Current Assets) 110.492 Current Liabilities (Payable from Restricted Assets) Customer Deposits 387,020 Accrued Interest Payable 72,996 1 Current Portion of Revenue Bonds Payable 25,200 Total Current Liabilities (Payable from Restricted Assets) 485,216 Long-Term Liabilities Revenue Bonds Payable 1,999,848 Obligations Under Capital Leases 17,749 Total Long-Term Liabilities 2,017.597 Total Liabilities 2.613.305 Fund Equity Contributed Capital 6,706,005 Retained Earnings: Reserved for Renewal and Replacement 379,264 Reserved for Debt Service 155,970 Unreserved 2.084.937 Total Retained Earnings 2.620.171 Total Fund Equity 9.326.176 TOTAL LIABILRIES AND FUND EQUITY $ 11,939.481, -3- I I I I I I This page intentionally left blank. I 1 . Ocoee , cit, le 0,:a Li p i V 1i ��1 f� OP GOOD `` t I 1 1 . 1 1 1 1 WATER FUND OF THE CITY OF OCOEE, FLORIDA STATEMENT OF REVENUES, EXPENSES IAND CHANGES IN RETAINED EARNINGS FOR THE YEAR ENDED SEPTEMBER 30, 1993 Operating Revenues User Charges $ 1,294,207 1 Operating Expenses Pe ng Personal Services 542,187 I Materials and Supplies 126,893 Heat, Light and Power 106,991 Depreciation and Amortization 527,908 IWrite-Off of Canceled Project 71,538 Other Expenses 125,316 Total Operating Expenses 1,500,833 Operating Income (Loss) (206,626) Nonoperating Revenues (Expenses) Interest Revenue 190,086 Interest Expense (118,927) Total Nonoperating Revenues (Expenses) 71,159 Income (Loss) Before Operating Transfers and Extraordinary Item (135,467) I Operating Transfers Operating Transfers In 5,255 Operating Transfers Out (242.106) Net Operating Transfers (236,851) Income (Loss) Before Extraordinary Item (372,318) IExtraordinary Item Loss on Extinguishment of Debt (31,959) Net Income (Loss) $ (404,277) Disposition of Net Income (Loss) Net Income (Loss) $ (404,277) Depreciation on Contributed Assets 171,262 Net Decrease in Retained Earnings (233,015) Retained Earnings - Beginning of Year 2,853.186 Retained Earnings - End ng of Year $ 2,620,171, The accompanying notes are an integral part of the financial statements. -4- WATER FUND OF I THE CITY OF OCOEE, FLORIDA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 1993 1 Increase (Decrease) in Cash and Cash Equivalents: Cash Flows from Operating Activities: ' Receipts from Customers $ 1,279,630 Payments to Suppliers (425,738) Payments to Employees (542,207) I Net Cash Provided by Operating Activities 311.685 Cash Flows from Noncapital Financing Activities: I Net Operating Transfers In (Out) (236,851) Decrease In Due From Other Funds 37,843 Increase In Due to Other Funds 16,906 Net Cash Used In Noncapital Financing Activities (182,102) Cash Flows from Capital and Related Financing Activities: I Additions to Property, Plant and Equipment (80,966) Additions to Construction in Progress (15,703) Additions to Bond Issuance Costs (86,455) Proceeds from Bonds Issued 2,024,270 Pay-off of Bonds (1,840,000) Principal Paid on Obligations under Capital Leases (9,418) Decrease in Developer Agreements Payable (78,974) Interest Paid on Bonds and Leases (88,330) Capital Contributions from Developers and Customers 612.700 Net Cash Provided By Capital and Related Financing Activities 437,124 Cash Flows from Investing Activities: I Purchases of Investments (407,249) Interest on Investments 190,0861 Net Cash Used In Investing Activities (217,163) Net Increase in Cash and Cash Equivalents 349,544 1 Cash and Cash Equivalents at Beginning of Year 376,167 Cash and Cash Equivalents at End of Year 725,711 Classified As: 1 Current Assets $ 244,082 Restricted Assets 481.629 I Total $ 725,711 The accompanying notes are an integral part of the financial statements. I -5- Reconciliation of Operating Loss to Net Cash Provided by Operating Activities: Operating Loss $ (206,626) Adjustments Not Affecting Cash: Depreciation 525,573 Amortization 2,335 Provision for Uncollectible Accounts 700 Write-Off of Canceled Project 71,538 Other 206 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (14,577) Increase (Decrease) in Accounts Payable (107,396) Increase (Decrease) in Accrued Expenses (20) Increase (Decrease) in Retainage Payable (27,356) Increase (Decrease) in Customer Deposits 67,308 Total Adjustments 518,311 Net Cash Provided by Operating Activities $ 311,685, Noncash Investing, Capital, and Financing Activities: Contributed Property, Plant, and Equipment $ 94,171, I -6- 1 1 1 1 1 1 This page intentionally left blank. i 1 O` Ocoee v � O 1 rf `` Oi 0000 1 1 1 1 1 1 1 . 1 i I 1 1 1 1 3 1 i I 1 1 I i I 1 1 1 1 1 This page intentionally left blank. 1 Ocoee icr v O f. Or 600° ` 1 1 WATER FUND OF NE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES The accounting policies of the Water Fund of the City of Ocoee, Florida, conform to generally accepted accounting principles as applicable to proprietary funds. The following is a summary of the more significant policies: Reporting Entity The accompanying financial statements include only the Water Fund and are not intended to present fairly the financial position of the City of Ocoee, Florida, and the results of its operations and the cash flows of its proprietary and similar trust fund types in conformity with generally accepted accounting principles. The Water Fund is an enterprise fund, which is a proprietary fund type. Measurement Focus The Water Fund is operated in a manner similar to private business; therefore, operations are accounted for as an enterprise fund where costs (expenses, including depreciation) of providing services to customers on a continuing basis are recovered through user charges. Basis of Accounting The financial statements are prepared on an accrual basis of accounting with revenues being recognized when earned and expenses recognized when incurred. Budgets An operating budget for the Water Fund is legally adopted on an annual basis in accordance with the Water Fund's bond indentures and submitted to the bond- holders. The budget is prepared on a modified accrual basis of accounting,which is not the same basis of accounting as that used to account for the actual results of operations. The actual results of operations are accounted for on an accrual basis. The following items indicate the primary differences between the budgetary basis and the GAAP basis used to account for the results of operations for the operating accounts: a. Interest income earned on restricted assets is included in the results of operations. Such amounts are not budgeted in the operating accounts. This portion of interest income is restricted for a specific purpose (debt, capital projects, renewal and replacement, etc.) and is not normally available for operations. -7- 1 WATER FUND OF CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 1 , NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Budgets (Continued) b. Intrafund transfers to the restricted accounts are budgeted and transferred on a budgetary basis, but are eliminated on a GAAP basis. c. Depredation expense is not budgeted; however, expenditures for capital outlays are budgeted. These outlays have been capitalized into fixed assets and eliminated from the results of operations on a GAAP basis. Tap and Impact Fees The Water Fund collects water tap fees which are recorded as operating revenue only to the extent that the amount equals the cost of physical connection to the system. Amounts that substantially exceed the cost to connect are recorded as an addition to contributed capital. Deposits received which reserve capacity in the City's water facilities are recorded as contributed capital. Other deposits received from customers are recorded as a liability until all legal requirements, as stipulated by the City's water ordinances, are fulfilled. I Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, cash with payment agent, cash with SBA, and all highly liquid investments (including restricted assets) with a maturity of ninety days or less when purchased. The Water Fund's equity in the City of Ocoee's pooled cash (checking) account is included in cash and cash equivalents. Investments t Investments are stated at cost or amortized cost. Amortization of Bond Discount and Issuance Costs Bond discount and issuance costs are amortized on a straight-line basis, which approximates the interest method, over the life of the bonds. Amortization of bond issuance costs amounted to$2,335 for the 1993 fiscal year. Amortization of bond discount, included in interest expense, amount to $778 for the 1993 fiscal year. I -8- WATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POlJCIES - CONTINUED Restricted Assets The use of certain assets of the Water Fund is restricted by specific provisions of bond resolutions and agreements with various parties. Assets so designated are identified as restricted assets on the balance sheet. Property, Plant and Equipment Property, plant, and equipment owned by the Water Fund is stated at historical cost or estimated historical cost. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Deprecia- tion of plant and equipment is provided on the straight line basis over the fol- lowing estimated useful lives: Buildings, 10-30 years Improvements, 20-40 years Equipment, 5 years Contributions of property, plant, and equipment are recorded at cost provided by the developer which approximates fair market value at the date of contribution. Depreciation on contributed property, plant, and equipment is recorded as a re- duction of contributed capital. Postretirement Benefits The Water Fund does not provide any postretirement health care and life insurance benefits for employees. Capitalization of Interest Net interest cost relating to construction is capitalized. Compensated Absences The Water Fund accrues the expense for unpaid vacation and sick leave in the period it is earned, and a corresponding current liability is recorded. Fund Equity Contributed capital consists of funds from developers, federal and state (capital) grants and a portion of connection fees charged to customers as previously discussed. Grants received for operating assistance are recorded as non- operating revenue. -9- 1 WATER FUND OF THE CRY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Fund Equity - Continued Reservations of retained earnings are created by increases in assets restricted for debt service, renewal and replacement and other contractual obligations. These increases result from earnings on restricted assets and other intrafund transfers to (from) restricted accounts. Earnings on restricted assets are included in net income of the Water Fund. Reserves are not established for bond proceeds deposited into construction accounts. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY The City has no material violations of finance-related legal and contractual provisions. I NOTE 3 - CASH AND INVESTMENTS ! Following are the components of the Water Fund's cash and investments at September 30, 1993: 1 Unrestricted Restricted Total Cash and Cash Equivalents $ 244,082 $ 383,433 $ 627,515 1 Cash with Paying Agent --- 98,196 98,196 Investments 529.406 2.885.531 3.414.937 $ 773.488 $ 3.367.160 $4,1421641,3 Deposits At year end, the carrying amount of the Water Fund's deposits was $627,515. All bank deposits were fully covered by federal depository insurance and by deposits held in banks that are members of the State of Florida's Collateral Pool as specified under Florida law. Florida Statutes provided for collateral pooling by banks and savings and loans. This limits local government deposits to"authorized depositories". I Investments The City's investment policies are governed by State statutes and City ordinances. City ordinance allows investments in any financial institution that is formally authorized as a State approved depository for public funds, as identified on the list prepared by the State Treasurer of the State of Florida. The basic allowable investment instruments include the following: 1) The State Board of Administration Local Government Surplus Funds Trust Fund (SBA); -10- WATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 3 - CASH AND INVESTMENTS (Continued) Investments (Continued) 2) Negotiable direct obligations of, or obligations the principal and interest of which are unconditionally guaranteed by the United States Government; 3) Interest-bearing time deposits or savings accounts in banks organized under the laws of this state, in national banks organized under the laws of the United States and doing business and situated in this state, in savings and loan associations which are under state supervision, or in federal savings and loan associations located in this state and organized under federal law and federal supervision; 4) Obligations of the federal farm credit banks, the Federal Home Loan Mortgage Corporation, including Federal Home Loan Mortgage Corporation participation certificates, or the Federal Home Loan Bank or its district banks or obligations guaranteed by the Government National Mortgage Association; or 5) Obligations of the Federal National Mortgage Association, including Federal National Mortgage Association participation certificates and mortgage pass- through certificates guaranteed by the Federal National Mortgage Association. Investments made by the Water Fund of the City of Ocoee at September 30, 1993 are summarized below. During the 1993 fiscal year, investments were made in SBA Local Government Surplus Funds Trust Fund; however, none of this type of investment is owned by the City of Ocoee at September 30, 1993. The City had no investments which were required to be classified as to credit risk at September 30, 1993. Investments in mutual funds are not required to be categorized since the investments are not evidenced by securities that exist in physical or book entry form. Carrying Market Amount Value Mutual Funds Investing in U.S. Government Securities $ 3,414.937 $ 3,362,878 -11- 1 . WATER FUND OF 1 THE CRY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 1 NOTE 4 - ACCOUNTS RECEIVABLE 1 The following is an analysis of Accounts Receivable at September 30, 1993: Water Fees Receivable $ 155,968 Other Receivables 380 Total 156,348 1 Less: Allowance for Uncollectible Accounts (24.200) 1 $ 132.148 NOTE 5 - PROPERTY, PLANT AND EQUIPMENT The components of property, plant and equipment at September 30, 1993, are as follows: Land and Land Improvements $ 1,286,422 Buildings 202,322 Improvements 8,447,186 Equipment 534.669 10,470,599 Less: Accumulated Depreciation (2.943.107) 7,527`492 Construction in progress at September 30, 1993, consisted primarily of improvements I to water lines and the water plant. During the year, the Water Fund capitalized interest expense on construction in 3 progress in the following amounts: Total Interest Expense Incurred $ 122.017 Interest Associated with Construction Projects 91,890 1 Interest Earned in Construction Accounts 88.800 Net Interest Capitalized 3.090 Interest Expense $ 118,927 1 -12- 1 WATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 6 - RETIREMENT PLAN Defined Benefit Pension Plan and Trust The City of Ocoee contributes to a single employer defined benefit pension plan and trust. The contribution made by the City of Ocoee is allocated to the Water Fund based on covered payroll of employees whose salaries are charged to the Water Fund. The Water Fund's payroll for employees covered by the plan for the year ended September 30, 1993 was approximately $375,000. The Water Fund's total payroll for the year ended September 30, 1993 was $398,756. All general employees shall become members of this plan as a condition of employment; however, certain employees may elect not to be a member of the plan. Benefits fully vest on reaching five years of service. The plan provides death, but not disability benefits. These benefit provisions and all other require- ments are established by City ordinance. Members of the plan are required to make regular contributions to the plan in the amount of five percent (5%) of their salary. The City is required to make quarterly contributions to the plan equal to the difference in each year, between the total aggregate member contributions and the total cost as shown by the most recent actuarial valuation of the plan. Information regarding plan asset matters, funding status and progress and contri- butions required and made for the year ended September 30, 1993 by the City of Ocoee is presented in the Comprehensive Annual Financial Report of the City of Ocoee, Florida for the year ended September 30, 1993. Defined Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is voluntary and any employee may elect to participate. The plan permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Information regarding the deferred compensation plan for the year ending Sep- tember 30, 1993 is presented in the Comprehensive Annual Financial Report of the City of Ocoee, Florida. -13- WATER FUND OF THE CRY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 1 NOTE 7 - OVER 65 ASSISTANCE PROGRAM 1 The City of Ocoee, Florida began this program March 1, 1975. The program provides that persons over 65 who qualify are entitled to receive free water services. Approx- imately 440 residents of the City participated in this program during the fiscal year ended September 30, 1993. In accordance with the bond indenture, all expenditures under this program are shown as expenditures of the general fund of the City of Ocoee, Florida. NOTE 8 - BONDS PAYABLE Summarized below are the Water Fund's bonds payable outstanding at September 30, 1993: Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1993 - payable in annual installments of $105,000 to $610,000 through 2017, plus semi-annual interest at 2.60% to 5.75%. $ 8,555,000 Less: Amount Allocated to Wastewater Fund (6.501.800) Water Fund Portion of Bonds 2,053,200 Less: Current Portion (25,200) Unamortized Discounts (28.152) $ 1.999,848 Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1993 In February 1993, the City issued Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1993 to finance the refunding of prior out- standing bonds and improvements to the City's water and wastewater systems. These bonds are secured by the combined Water and Wastewater Fund operat- ing revenues, interest earnings, impact fees and a first priority pledge of cash payments due from developers. The major provisions of the ordinances authorizing the revenue bonds are as follows: 1) The City shall make monthly deposits in a sinking fund of 1/12 and 1/6 of the next maturing principal and interest payment, respectively. -14- WATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 8 - BONDS PAYABLE - CONTINUED 2) Each month, provisions shall be made of the gross revenues sufficient to pay, in order of preference, cost of operation and maintenance of the systems,then debt service/sinking fund requirements. 3) The City shall establish rates which will provide for necessary operating expenses and 110% of the bond service requirement due that year. 4) The City shall establish a Reserve Fund and maintain the Reserve Fund require- ment of $649,875. The Reserve Fund requirement has been allocated to the Water Fund and Wastewater Fund in the amounts of $155,970 and $493,905, respectively. During the fiscal year ended September 30, 1993, the City was in compliance with the above provisions. Following is a maturity schedule of outstanding bonds and notes payable: Year Ended Sept. 30: Principal Interest Total 1994 $ 25,200 $ 72,996 $ 98,196 1995 46,800 108,839 155,639 1996 48,000 107,341 155,341 1997 49,200 105,613 154,813 1998 51,600 103,645 155,245 1999-2003 295,200 481,009 776,209 2004-2008 379,200 397,935 777,135 2009-2013 499,200 278,829 778,029 2014-2018 658.800 117.783 776.583 $ 2,053200 $ 1,773,990 $ 3,827,190 NOTE 9 - CAPITAL LEASE OBLIGATIONS The Water Fund has entered into lease agreements as lessee for financing the acquisition of equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. The following is an f analysis of equipment leased under capital leases as of September 30, 1993: -15- WATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONT1NUED SEPTEMBER 30, 1993 1 NOTE 9 - CAPITAL LEASE OBLIGATIONS - CONTINUED Equipment $ 47,164 Less Accumulated Amortization (20,311) Net Book Value $ 26,853 ■ Amortization of equipment leased under capital leases is included in depreciation expense. The following is a schedule by years of future minimum lease payments under these capital leases, together with the present value of the net minimum lease payments as of September 30: Year Ending September 30, 1994 12,807 1995 12,807 1996 6,371 Total Minimum Lease Payments 31,985 Less, Amount Representing Interest (3.800) Present Value of Net Minimum Lease Payments $ 28,18 The current and long-term obligation under these capital leases are $10,436 and $17,749, respectively. NOTE 10 - DEVELOPER AGREEMENTS PAYABLE The City of Ocoee's Water Fund has entered into several agreements with private developers whereby the developer constructs and installs treatment plants,distribution systems, etc., and then conveys these projects to the Water Fund. The Water Fund reimburses the developer for the project over a period of time based on specified percentages of connection fees and/or service charges collected. The assets acquired under these agreements are recorded at the estimated develop- er's cost of the projects and depreciated over their estimated useful economic lives. The following is a summary of the liability as of September 30, 1993: -16- 1 WATER FUND OF THE CRY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 10 - DEVELOPER AGREEMENTS PAYABLE - CONTINUED Total reimbursable costs of developers p $ 37,913 Less current portion (37,913) Long-term Portion $ --- NOTE 11 - DUE TO/FROM OTHER FUNDS The following schedule as of September 30, 1993, represents receivables and payables from other funds of the City of Ocoee: Interfund Interfund Fund Type Receivables Payables General Fund $ --- $ 1,959 Capital Projects --- 17,479 $ --- $ 19,438 NOTE 12 - CONTRIBUTED CAPITAL The following is a summary of changes in contributed capital during the year ended September 30, 1993: Contributed Capital - Beginning of Year $ 6,170,396 Additions (Reductions) Connection Fees 612,700 Assets Contributed by Developers 94,171 Depreciation on Contributed Assets (171,262) Contributed Capital - End of Year $ 6,706.005 NOTE 13 - SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES Litigation During the ordinary course of its operations,the City of Ocoee is a party to various claims, legal actions, and complaints. In the opinion of the City's management and legal counsel, these matters are not anticipated to have a material financial impact on the Water Fund of the City of Ocoee. -17- 1 WATER FUND OF i THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 1 . NOTE 14 - EXTRAORDINARY ITEM On February 25, 1993, the City extinguished $10,160,000 of the Water and Sewer System Revenue Bonds, Series 1989A and 1989B. The maturity date of these bonds was January 1995 and interest was payable quarterly at 7.05%. This was accomplished with a current refunding whereby the proceeds from the issuance of new debt, together with excess funds from the 1989 Construction Fund, were used immediately to repay the previously issued debt. Of the total extinguished, $8,320,000 was the Wastewater Fund portion of the bonds and$1,840,000 was the Water Fund portion of the bonds. The transaction resulted in an accounting loss of $61,454 for the Wastewater Fund and $31,959 for the Water Fund. 1 -18- i •r CITY OF OCOEE, FLORIDA vov Ago do Ocoee LLI is \-- (1:3V 99 ®f G©G® � WASTEWATER FUND FINANCIAL AUDIT for the FISCAL YEAR ENDED SEPTEMBER 30, 1993 I FINANCIAL STATEMENTS OF THE WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA FOR THE YEAR ENDED SEPTEMBER 30, 1993 1 1 1 1 1 This page intentionally left blank. 1 O\ Ocoee ► ,� a i_)4o tier 01 0000 1 , 111 1 1 1 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA FOR THE YEAR ENDED SEPTEMBER 30, 1993 TABLE OF CONTENTS PAGE NO. INDEPENDENT AUDITOR'S REPORT 1 BALANCE SHEET 2-3 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS 4 STATEMENT OF CASH FLOWS 5-6 NOTES TO FINANCIAL STATEMENTS 7-18 1 1 1 I 1 1 This page intentionally left blank. Ocoee o Ejo o ti 0 7- o ti� J�1 r. 0i GOO° `` CDIRNIIT AVIS AUTERIA & COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Commission City of Ocoee, Florida We have audited the accompanying financial statements of the Wastewater Fund of the City of Ocoee, Florida as of September 30, 1993, and for the year then ended. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examin- ing, on a test basis, evidence supporting the amounts and disclosures in the financial state- ments. An audit also includes assessing the accounting principles used and significant esti- mates made by management, as well as evaluating the overall financial statement presenta- tion. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the financial statements present only the Wastewater Fund and are not intended to present fairly the financial position of the City of Ocoee, Florida, and the results of its operations and the cash flows of its proprietary and similar trust fund types in conformity with generally accepted accounting principles. In our opinion, the financial statements referred to in the firstparagraph fairly, in all p � presentY material respects, the financial position of the Wastewater Fund of the City of Ocoee, Florida as of September 30, 1993, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. ineDifirmit . Daiut ,P.Q • Cin McDIRMIT, DAVIS, LAUTERIA & COMPANY, P.A. November 17, 1993 612 E.COLONIAL DRIVE•SUITE 350.ORLANDO,FLORIDA 32803-4603•(407)648-0713•FAX(407)839-3975 PRIVATE COMPANIES PRACTICE SECTION•AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS•FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 1 WASTEWATER FUND OF 1 THE CffY OF OCOEE, FLORIDA BALANCE SHEET SEPTEMBER 30, 1993 1 1 ASSETS Current Assets Cash and Cash Equivalents $ 94,895 Receivables (Net of Allowance for Uncollectibles) 464,060 Inventory - Materials 22,152 1 Total Current Assets 581.107 Restricted Assets Cash and Cash Equivalents 321,828 Cash with Paying Agent 310,953 Investments 3.650.828 Total Restricted Assets 4.283.609 Food Assets Property, Plant and Equipment 13,362,047 Less: Accumulated Depreciation (1,606,934) Construction in Progress 2.783,598 Total Fixed Assets - Net 14,538.711 Other Assets Assessments Receivable 474,396 Unamortized Bond Issuance Costs 266,376 Total Other Assets 740 772 . TOTAL ASSETS $ 20,144.199 The accompanying notes are an integral part of the financial statements. ■ -2- 1 1 LIABILITIES AND FUND EQUITY Current Liabilities (Payable from Current Assets) Accounts Payable $ 35,611 Accrued Expenses 33,674 Due to Other Funds 15,500 Deferred Revenue 69,353 Obligations under Capital Leases 9.296 Total Current Liabilities (Payable from Current Assets) 163.434 Current Liabilities (Payable from Restricted Assets) Retainage Payable 215,847 Accrued Interest Payable 231,153 Current Portion of Revenue Bonds Payable 79.800 Total Current Liabilities (Payable from Restricted Assets) 526.800 Long-Term Liabilities Revenue Bonds Payable 6,332.864 Total Liabilities 7.023.098 Fund Equity Contributed Capital 12.341.699 Retained Earnings (Deficit): Reserved for Renewal and Replacement 414,259 Reserved for Debt Service 493,905 Unreserved (128.762) Total Retained Earnings 779.402 Total Fund Equity 13.121.101 TOTAL LIABILITIES AND FUND EQUITY $ 20,144.199 -3- i 1 1 1 1 1 This page intentionally left blank. I I Ocoee odim S� •% I:4 a vO (1-5 1 OP 0000 1 1 1 1 If 1 1 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA STATEMENT OF REVENUES, EXPENSES C AND CHANGES IN RETAINED EARNINGS FOR THE YEAR ENDED SEPTEMBER 30, 1993 IOperating Revenues User Charges $ 1,476.462 IOperating Expenses Personal Services 372,190 IMaterials and Supplies 55,426 Heat, Light and Power 89,232 Depreciation and Amortization 390,771 IOther Expenses 147.679 Total Operating Expenses 1.055,298 Operating pe g Income 421,164 INonoperating Revenues (Expenses) Interest Revenue 443,688 Interest Expense (390.510) Total Nonoperating Revenues (Expenses) 53.178 Income Before Operating Transfers and Extraordinary Item 474.342 IOperating Transfers Operating Transfers Out (121,500) Income Before Extraordinary Item 352,842 Extraordinary Item Loss on Extinguishment of Debt (61.454) Net Income $ 291.388 Disposition of Net Income I Net Income $ 291,388 Depreciation on Contributed Assets 71.254 Net Increase in Retained Earnings 362,642 Retained Earnings - Beginning of Year 416.760 Retained Earnings - End of Year $ 779.402 IThe accompanying notes are an integral part of the financial statements. -4- WASTEWATER FUND OF I THE CITY OF OCOEE, FLORIDA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 1993 I Increase (Decrease) in Cash and Cash Equivalents: I Cash Flows from Operating Activities: Receipts from Customers $ 1,151,307 1 Payments to Suppliers (85,533) Payments to Employees (363,389) Net Cash Provided by Operating Activities 702,385 1 Cash Flows from Noncapital Financing Activities: Net Operating Transfers In (Out) (121,500) 1 Decrease In Due From Other Funds 35,801 Decrease In Due to Other Funds (9,949) Net Cash Used In Noncapital Financing Activities (95,648) 1 Cash Flows from Capital and Related Financing Activities: Proceeds from Bonds Issued 6,410,188 Additions to Bond Issuance Costs (273,774) Purchase of Property, Plant and Equipment (654,400) Additions to Construction in Progress (1,692,002) Principal Paid on Leases (14,699) Interest Paid on Bonds and Leases (395,764) Capital Contributions from Developers and Customers 759,444 Cash Received on Assessments Receivable 63,001 Pay-off of Bonds (8,320,000) Decrease in Developer Agreements Payable (118,644) Net Cash Used In Capital and Related Financing Activities (4.236.650) Cash Flows from Investing Activities: I Sale of Investments 3,421,483 Interest on Investments 443.688 Net Cash Provided by Investing Activities 3.865.171 Net Increase in Cash and Cash Equivalents 235,258 1 Cash and Cash Equivalents at Beginning of Year 492,418 Cash and Cash Equivalents at End of Year 727 676 Classified As: 1 Current Assets $ 94,895 Restricted Assets 632,781 e . Total $ 727,676 The accompanying notes are an integral part of the financial statements. I -5- Reconciliation of Operating Income to Net Cash Pe n9 Provided by Operating Activities: Operating Income $ 421,164 Adjustments Not Affecting Cash: Depreciation 383,373 Amortization 7,398 Provision for Uncollectible Accounts 12,900 Loss on Disposition of Equipment 1,034 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (325,155) Increase (Decrease) in Accounts Payable 12,446 Increase (Decrease) in Accrued Expenses 8,801 Increase (Decrease) in Retainage Payable 179,659 Increase (Decrease) in Deferred Revenue 765 Total Adjustments 281,221 Net Cash Provided by Operating Activities $ 702,385 Noncash Investing, Capital, and Financing Activities: Contributed Property, Plant and Equipment $ 123,297 -6- 1 1 1 1 1 1 This page intentionally left blank. 1 Ocoee ►o a � o rj O tiPt. OP GOOD `` 1 1 I 1 i 1 1 1 i E i t 1 1 1 1 7 1 1 1 i I t I i 1 I This page intentionally left blank. 1 Ocoee o� % x, „Tit, a n o (1_3 u 1 a, ,.r ♦. OP GOOD O 1 I i I I 1 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES The accounting policies of the Wastewater Fund of the City of Ocoee, Florida, conform to generally accepted accounting principles as applicable to proprietary funds. The following is a summary of the more significant policies: Reporting Entity The accompanying financial statements include only the Wastewater Fund and are not intended to present fairly the financial position of the City of Ocoee, Florida, and the results of its operations and the cash flows of its proprietary and similar trust fund types in conformity with generally accepted accounting principles. The Wastewater Fund is an enterprise fund, which is a proprietary fund type. Measurement Focus The Wastewater Fund is operated in a manner similar to private business; there- fore, operations are accounted for as an enterprise fund where costs (expenses, including depreciation) of providing services to customers on a continuing basis are recovered through user charges. Basis of Accounting The financial statements are prepared on an accrual basis of accounting with revenues being recognized when earned and expenses recognized when incurred. Budgets An operating budget for the Wastewater Fund is legally adopted on an annual basis in accordance with the Wastewater Fund's bond indentures and submitted to the bondholders. The budget is prepared on a modified accrual basis of accounting, which is not the same basis of accounting as that used to account for the actual results of operations. The actual results of operations are accounted for on an accrual basis. The following items indicate the primary differences between the budgetary basis and the GAAP basis used to account for the results of opera- tions for the operating accounts: a. Interest income earned on restricted assets is included in the results of operations. Such amounts are not budgeted in the operating accounts. This portion of interest income is restricted for a specific purpose (debt, capital projects, renewal and replacement, etc.) and is not normally available for operations. -7- 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED I SEPTEMBER 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Budgets (Continued) b. Intrafund transfers to the restricted accounts are budgeted and transferred on a budgetary basis, but are eliminated on a GAAP basis. I c. Depredation expense is not budgeted; however, expenditures for capital outlays are budgeted. These outlays have been capitalized into fixed assets I and eliminated from the results of operations on a GAAP basis. Tap and Impact Fees I The Wastewater Fund collects sewer tap fees which are recorded as operating revenue only to the extent that the amount equals the cost of physical connection to the system. Amounts that substantially exceed the cost to connect are recorded as an addition to contributed capital. Deposits received which reserve capacity in the City's sewer facilities are recorded 1 as contributed capital. Other deposits received from customers are recorded as liability until all legal requirements, as stipulated by the City's wastewater ordi- nances, are fulfilled. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, cash with payment agent, cash with SBA, and all highly liquid investments (including restricted assets) with a maturity of ninety days or less when purchased. The I Wastewater Fund's equity in the City of Ocoee's pooled cash (checking) account is included in cash and cash equivalents. Investments 1 Investments are stated at cost or amortized cost. Inventories I Inventories are stated at cost, using the FIFO method. 1 l -8- 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLJCIES - CONTINUED Amortization of Bond Discount and Issuance Costs Bond discount and issuance costs are amortized on a straight-line basis, which approximates the interest method, over the life of the bonds. Amortization of bond issuance costs amounted to $7,398 for the 1993 fiscal year. Amortization of bond discount, included in interest expense, amounted to$2,476 for the 1993 fiscal year. Restricted Assets The use of certain assets of the Wastewater Fund is restricted by specific provi- sions of bond resolutions and agreements with various parties. Assets so desig- nated are identified as restricted assets on the balance sheet. e Pro , Plant and Equipment Property, Property, plant, and equipment owned by the Wastewater Fund is stated at histori- cal cost or estimated historical cost. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Deprecia- tion of plant and equipment is provided on the straight line basis over the following estimated useful lives: Buildings, .10-30 years Improvements, 20-40 years Equipment, 5 years Contributions of property, plant, and equipment are recorded at cost provided by the developer which approximates fair market value at the date of contribution. Depreciation on contributed property, plant, and equipment is recorded as a re- duction of contributed capital. Postretirement Benefits The Wastewater Fund does not provide any postretirement health care and life insurance benefits for employees. Capitalization of Interest Net interest cost relating to construction is capitalized. Compensated Absences The Wastewater Fund accrues the expense for unpaid vacation and sick leave in the period it is earned, and a corresponding current liability is recorded. -9- 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED I SEPTEMBER 30, 1993 I NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTINGP LI IE - CONTINUED Fund Equity I Contributed capital consists of funds from developers, federal and state (capital) grants and a portion of connection fees charged to customers as previously dis- cussed. Grants received for operating assistance are recorded as non-operating I revenue. Reservations of retained earnings are created by increases in assets restricted for debt service, renewal and replacement and other contractual obligations. These increases result from earnings on restricted assets and other intrafund transfers to (from) restricted accounts. Earnings on restricted assets are included in net income of the Wastewater Fund. Reserves are not established for bond proceeds deposited into construction accounts. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY The City has no material violations of finance-related legal and contractual provisions. NOTE 3 - CASH AND INVESTMENTS Following are the components of the Wastewater Fund's cash and investments at Sep- I ternber 30, 1993: Unrestricted Restricted Total t Cash and Cash Equivalents $ 94,895 $ 321,828 $ 416,723 Cash with Paying Agent --- 310,953 310,953 Investments --- 3,650,828 3,650,828 194,19.5. $_21,..a13_,___3 609 $ 4,378,504 I 1 t -10- WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 3 - CASH AND INVESTMENTS - CONTINUED Deposits At year end,the carrying amount of the Wastewater Fund's deposits was$416,723. All bank deposits were fully covered by federal depository insurance and by deposits held in banks that are members of the State of Florida's Collateral Pool as specified under Florida law. Florida Statutes provide for collateral pooling by banks and savings and loans. This limits local government deposits to"authorized depositories". Investments The City's investment policies are governed by State statutes and City ordinances. City ordinance allows investments in any financial institution that is formally author- ized as a State approved depository for public funds, as identified on the list pre- pared by the State Treasurer of the State of Florida. The basic allowable invest- ment instruments include the following: 1) The State Board of Administration Local Government Surplus Funds Trust Fund (SBA); 2) Negotiable direct obligations of, or obligations the principal and interest of which are unconditionally guaranteed by the United States Government; 3) Interest-bearing time deposits or savings accounts in banks organized under the laws of this state, in national banks organized under the laws of the United States and doing business and situated in this state, in savings and loan associations which are under state supervision, or in federal savings and loan associations located in this state and organized under federal law and federal • supervision; 4) Obligations of the federal farm credit banks, the Federal Home Loan Mortgage Corporation, including Federal Home Loan Mortgage Corporation participation certificates, or the Federal Home Loan Bank or its district banks or obligations guaranteed by the Government National Mortgage Association; or 5) Obligations of the Federal National Mortgage Association, including Federal National Mortgage Association participation certificates and mortgage pass- through certificates guaranteed by the Federal National Mortgage Association. 1 -11- I WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED 1 SEPTEMBER 30, 1993 NOTE 3 - CASH AND INVESTMENTS - CONTINUED Investments (Continued) Investments made by the Wastewater Fund of the City of Ocoee at September 30, 1993 are summarized below. During the 1993 fiscal year, investments were made in SBA Local Government Surplus Funds Trust Fund securities; however, none of this type of security is owned by the City at September 30, 1993. The City had no investments which were required to be classified as to credit risk at September 30, 1993. Investments in mutual funds are not required to be categorized since the 1 investments are not evidenced by securities that exist in physical or book entry form. Carrying Market Amount Value Mutual Funds Investing in U.S. Government Securities $ 3,650,828 $ 3,590,336 NOTE 4 - ACCOUNTS RECEIVABLE The following is an analysis of Accounts Receivable at September 30, 1993: Wastewater Fees Receivable $ 124,542 Assessments Receivable - Current Portion 63,774 Guaranteed Revenue Receivable 304.644 1 Total 492,960 Less: Allowance for Uncollectible Accounts (28,900) $ 464,060, I -12- e WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 4 - ACCOUNTS RECEIVABLE - CONTINUED 1 Wastewater Assessments Receivable During 1992, the City acquired a wastewater treatment facility serving approximately 250 customers. In accordance with the acquisition settlement, the City made certain wastewater improvements, connected the customers to its present system and imposed a connection charge through a special assessment. This special assess- ment is due from the customers annually over ten years plus interest at 8%. At Sep- tember 30, 1993, the current and noncurrent assessments receivable are $63,774 and $474,396, respectively. NOTE 5 - PROPERTY, PLANT AND EQUIPMENT The components of property, plant and equipment at September 30, 1993, are as follows: Land $ 3,394,736 Buildings 183,867 Improvements 9,513,268 Equipment 270.176 13,362,047 Less: Accumulated Depreciation (1,606.934) $11,755,113 Construction in progress at September 30, 1993, consisted primarily of improvements to wastewater distribution systems and the wastewater treatment plant. During the year, the Wastewater Fund capitalized interest expense on construction in progress in the following amounts: Total Interest Expense Incurred $ 448.130 Interest Associated with Construction Projects 282,484 Interest Earned in Construction Accounts 224.864 Net Interest Capitalized 57.620 Interest Expense $ 390.510 -13- 1 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 6 - RETIREMENT PLAN Defined Benefit Pension Plan and Trust The City of Ocoee contributes to a single employer defined benefit pension plan and trust. The contribution made by the City of Ocoee is allocated to the Waste- water Fund based on covered payroll of employees whose salaries are charged to the Wastewater Fund. The Wastewater Fund's payroll for employees covered by the plan for the year ended September 30, 1993 was approximately $262,000. The Wastewater Fund's total payroll for the year ended September 30, 1993 was $278,613. All general employees shall become members of this plan as a condition of employment; however, certain employees may elect not to be a member of the plan. Benefits fully vest on reaching five years of service. The plan provides death, but not disability benefits. These benefit provisions and all other require- ments are established by City ordinance. Members of the plan are required to make regular contributions to the plan in the amount of five percent (5%) of their salary. The City is required to make quarterly contributions to the plan equal to the difference in each year, between the total aggregate member contributions and the total cost as shown by the most recent actuarial valuation of the plan. Information regarding plan asset matters, funding status and progress and contri- butions required and made for the year ended September 30, 1993 by the City of Ocoee is presented in the Comprehensive Annual Financial Report of the City of Ocoee, Florida for the year ended September 30, 1993. 1 Deferred Compensation Plan The Cityoffers its employees a single employer deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is volun- tary and any employee may elect to participate. The plan permits them to defer a portion of their salary until future years. The deferred compensation is not avail- able to employees until termination, retirement, death, or an unforeseeable emer- gency. I -14- Itp 111 WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 6 - RETIREMENT PLAN - CONTINUED Information regarding the deferred compensation plan for the year ending Sep- tember 30, 1993 is presented in the Comprehensive Annual Financial Report of the City of Ocoee, Florida. NOTE 7 - BONDS PAYABLE Summarized below are the Wastewater Fund's bonds payable outstanding at Sep- tember 30, 1993: Wastewater and Sewer System Refunding and Im- provement Revenue Bonds, Series 1993 - payable in annual installments of $105,000 to $610,000 through 2017, plus semi-annual interest at 2.60% to 5.75%. $ 8,555,000 Less: Amount Allocated to Water Fund 2.053200 Wastewater Fund Portion of Bonds 6,501,800 Less: Current Portion (79,800) Unamortized Discounts (89,136) $ 6,332,864 Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1993 In February 1993, the City issued Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1993 to finance the refunding of prior out- standing bonds and improvements to the City's water and wastewater systems. These bonds are secured by the combined Water and Wastewater Fund operat- ing revenues, interest earnings, impact fees and a first priority pledge of cash pay- ments due from developers. The major provisions of the ordinances authorizing the revenue bonds are as follows: 1) The City shall make monthly deposits in a sinking fund of 1/12 and 1/6 of the 1 next maturing principal and interest payment, respectively. -15- I WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 I NOTE 7 - BONDS PAYABLE - CONTINUED I 2) Each month, provisions shall be made of the gross revenues sufficient to pay, I in order of preference, cost of operation and maintenance of the systems,then debt service/sinking fund requirements. 3) The City shall establish rates which will provide for necessary operating expenses and 110% of the bond service requirement due that year. 4) The Cityshall establish a Reserve Fund and maintain the Reserve Fund require- ment q ment of $649,876. The Reserve Fund requirement has been allocated to the Water Fund and Wastewater Fund in the amounts of $155,970 and $493,905, respectively. During the fiscal year ended September 30, 1993, the City was in compliance with the above provisions. Following is a maturity schedule of outstanding bonds and notes payable: Year Ended Sept. 30: Principal Interest Total 1994 $ 79,800 $ 231,153 $ 310,953 1995 148,200 344,655 492,855 1996 152,000 339,913 491,913 1997 155,800 334,441 490,2411 1998 163,400 328,209 491,609 1999-2003 934,800 1,523,196 2,457,996 2004-2008 1,200,800 1,260,127 2,460,927 2009-2013 1,580,800 882,958 2,463,758 2014-2018 2,086,200 372,980 2,459,180 $ 6,501,800 $ 5,617,632 $ 12,119,432 NOTE 8 - CAPITAL LEASE OBLIGATION The Wastewater Fund has entered into a lease agreement as lessee for financing the acquisition of equipment. This lease agreement qualifies as a capital lease for account- ing purposes and,therefore, has been recorded at the present value of the future mini- mum lease payments as of the date of inception. The following is an analysis of equip- 1 ment leased under capital leases as of September 30, 1993: -16- WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 NOTE 8 - CAPITAL LEASE OBLIGATION - CONTINUED Equipment $ 64,782 Less Accumulated Amortization (57224) Net Book Value 7 558 Amortization of equipment leased under capital leases is included in depreciation expense. The following is a schedule by years of future minimum lease payments under the above capital lease, together with the present value of the net minimum lease pay- ments as of September 30: Year Ending September 30, 3 1994 $ 9,618 Less Amount Representing Interest 322) Present Value of Net Minimum Lease Payments $ 9296, The current and long-term obligation under this capital lease is $9,296 and $-0-, respectively. NOTE 9 - DUE TO/FROM OTHER FUNDS The following schedule as of September 30, 1993, represents receivables and pay- ables from other funds of the City of Ocoee: Interfund Interfund Receivables Payables General Fund $ --- $ 3,451 Capital Projects Funds --- 12,049 $ --- , $ 15.500 -17- I WASTEWATER FUND OF THE CITY OF OCOEE, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED SEPTEMBER 30, 1993 1 NOTE 10 - CONTRIBUTED CAPITAL The following is a summary of changes in contributed capital during the year ended September 30, 1993: Contributed Capital - Beginning of Year $ 11,530,212 Additions (Reductions) Connection Fees 759,444 Assets Contributed by Developers 123,297 Depreciation on Contributed Assets (71.254) Contributed Capital - End of Year $ 12,341.699 NOTE 11 - SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES Litigation During the ordinary course of its operations,the City of Ocoee is a party to various claims, legal actions, and complaints. In the opinion of the City's management and legal counsel,these matters are not anticipated to have a material financial impact on the Wastewater Fund of the City of Ocoee. Commitments Construction Contracts - At September 30, 1993, the Wastewater Fund had out- standing construction contracts for various projects totaling approximately $2,090,000. NOTE 12 - EXTRAORDINARY OEM On February 25, 1993, the City extinguished $10,160,000 of the Water and Sewer System Revenue Bonds, Series 1989A and 1989B. The maturity date of these bonds was January 1995, and interest was payable quarterly at 7.05%. This was accom- plished with a current refunding whereby the proceeds from the issuance of new debt, together with excess funds from the 1989 Construction Fund, were used immediately to repay the previously issued debt. Of the total extinguished, $8,320,000 was the Wastewater Fund portion of the bonds and $1,840,000 was the Water Fund portion of the bonds. The transaction resulted in an accounting loss of $61,454 for the Waste- water Fund and $31,959 for the Water Fund. -18- 1 1 1 1 1 1 1 1 1 1 1 1 1 A 1 1 1 1 1 1