HomeMy WebLinkAbout2012
CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012
PREPARED BY:
THE OFFICE OF THE FINANCE DIRECTOR
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2012
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal iv
Certificate of Achievement for Excellence in Financial Reporting ix
Organization Chart x
City Elected and Appointed Officials xi
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Assets 14
Statement of Activities 15
Fund Financial Statements
Governmental Fund Financial Statements
Fund Balance Sheets - Governmental Funds 16
Reconciliation of Governmental Fund Balance to Net Assets
of Governmental Activities 17
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 18
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 19
Proprietary Fund Financial Statements
Fund Balance Sheets - Proprietary Funds 20
Statement of Revenues, Expenses and Changes in Net Assets -
Proprietary Funds 21
Statement of Cash Flows - Proprietary Funds 22
Discretely Presented Component Units
Combining Statement of Net Assets - Discretely Presented
Component Units 23
Combining Statement of Activities - Discretely Presented
Component Units 24
Notes to the Financial Statements 25
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2012
TABLE OF CONTENTS (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule - General Fund 51
Notes to Required Supplementary Information 52
OTHER SUPPLEMENTARY INFORMATION
Combining Balance Sheets – Nonmajor Governmental Funds 54
Combining Statement of Revenues, Expenditures and Fund Balances - 55
Nonmajor Governmental Funds
Fund Balance Sheet - Fairhope Public Library Board 56
Reconciliation of Governmental Fund Balance to Net Assets
of Governmental Activities - Fairhope Public Library Board 57
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fairhope Public Library Board 58
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Fairhope Public Library Board 59
Fund Balance Sheet - Fairhope Airport Authority 60
Reconciliation of Governmental Fund Balance to Net Assets
of Governmental Activities - Fairhope Airport Authority 61
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fairhope Airport Authority 62
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Fairhope Airport Authority 63
Schedule of Capital Projects Expenditures 64
Schedule of Information Required By Bond Indentures 65
Summary of Deposits, Withdrawals and Balances of Selected Trust Accounts as
Required Under Certain Trust Indentures 66
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2012
TABLE OF CONTENTS (continued)
Page
STATISTICAL SECTION
Net Assets by Component 68
Changes in Net Assets 69
Governmental Activities Tax Revenues by Source 71
Fund Balances of Governmental Funds 72
Changes in Fund Balances of Governmental Funds 73
Assessed and Estimated Actual Value of Taxable Property 74
Property Tax Rates - Direct and Overlapping Governments 75
Principal Property Taxpayers 76
Property Tax Levies and Collections 77
Direct and Overlapping Sales Tax Rates 78
Principal Sales Tax Remitters 79
Ratios of Outstanding Debt by Type 80
Ratios of General Bonded Debt Outstanding 81
Computation of Overlapping Debt 82
Legal Debt Margin Information 83
Demographic and Economic Statistics 84
Principal Employers 85
Full-time Equivalent City Government Employees by Function 86
Operating Indicators by Function 87
Capital Asset Statistics by Function 88
COMPLIANCE SECTION
Independent Auditors’ Report on Compliance and on Internal Control
Over Financial Reporting Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 89
INTRODUCTORY SECTION
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center, a public golf course, indoor and outdoor swimming pools, a tennis
complex, a skate park, a pet park, and many cultural events.
ECONOMIC CONDITION AND OUTLOOK
The City of Fairhope showed significant economic growth during the year.
The revenue from new construction and building permits, inspection and
impact fees increased over 45% from the prior year. Total revenue from these
key economic indicators was $931,385 for the year, an increase of $291,436.
Fairhope enjoys a strong sense of community ownership and responsibility
among City officials and local citizens, resulting in active community
participation and involvement in all current City projects and issues. Clean
industry within the City supports health services and higher education. In
addition, Fairhope gains strong economic stability from the significant
industrial and commercial development in surrounding Baldwin County cities
and in neighboring Mobile County. Austal Shipbuilding and the newly-
acquired Airbus aircraft manufacturer, both located within 30 miles of
Fairhope, promise to positively impact commercial growth and property
values in our area. These factors, along with citizen involvement in planning,
and strong city management provide strength and promise for continued
economic good health for the City of Fairhope.
MAJOR INITIATIVES
For the Year:
Sales tax receipts for the fiscal year totaled over $4.89 million, exceeding the
budgeted projection by approximately $148,000. As part of the sales tax
ordinance, one half of each month’s sales tax receipts must go into reserves,
to be used for debt prepayment and capital improvements, as authorized by
the City Council. The sales tax reserve account balance at fiscal year-end
totaled $7 million.
Fairhope and surrounding Eastern Shore and Gulf coast cities continue to
enjoy increasing revenues from tourism and corporate functions. Lodging tax
and sales tax receipts, major indicators of tourism, remained strong during
2012, increasing 14.8% and 6.7%, respectively, over the prior year. The
Mayor, City Council, and City department heads continue to strive to adhere
to the City’s established goals in planning for continuing growth, and in
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maintaining the quality of life and the highest level of governmental services
to all residents in the City.
Fairhope and other small cities in Baldwin County were somewhat buffered
from the national economic downturn due to high percentages of resident
retirees and by the majority of service, health, and education employers. At
fiscal year end, the unemployment rate for Baldwin County was 6.3%, while
the rate for the State as a whole was 7.5%, which closely followed the
national unemployment rate in September, 2012. Both Mobile and
Pensacola, neighboring cities to the west and to the east, matched the State
rate of 7.5%.
The Finance Department was once again awarded the Certificate of
Achievement for Excellence in Financial Reporting for its CAFR for the fiscal
year 2011, by the Government Finance Officers Association (GFOA) of the
United States and Canada. We believe that our current CAFR continues to
meet the Certificate of Achievement Program’s requirements and we are
submitting it to the GFOA to be considered for another certificate.
For The Future:
The City continues its focus on improvements to existing infrastructure for
drainage, streets and the utilities, along with dependable excellent government
services, with maximum efficiency and fiduciary responsibility. The budget
for the fiscal year 2013 contains over $5.8 million in the General, Capital
Projects, Gas Tax, and Utility Funds for capital purchases, infrastructure
improvements, and special projects throughout the City, as well as a decrease
in transfers to 50% of operating income from the Enterprise funds into the
General fund. Other improvements being completed in the next year include
implementation of the new computer software program for the City. A
portion of the sales tax reserve fund will be used to prepay $2.4 million in
General fund debt in the upcoming fiscal year. The Fairhope Airport
Authority has plans for a $2 million Aviation Training Center to be
constructed at the Fairhope Airport to provide local flight training through
cooperation between the Authority and local colleges. This endeavor goes
hand-in-hand with the significant growth in the aircraft manufacturing and
aerospace industries in neighboring Mobile county.
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ENTERPRISE FUNDS HIGHLIGHTS
The City’s Enterprise funds, made up of Natural Gas, Electric, Water and
Waste Water, recorded a combined increase in net assets of $2,320,001 for
the year, after transfers of $4.17 million to support the General fund.
Transfers to support the General fund represented 56% of the enterprise
funds’ operating income before transfers. The Enterprise funds expended
over $2.3 million in capital purchases, funded by operating income and
reserves designated for capital purchases. Cash and cash equivalents in the
Enterprise funds totaled $11,849,294 at year-end, a decrease of 2% from the
prior year. A ten-year old Utility Revenue Warrant was refunded at the
beginning of the fiscal year to take advantage of lower interest rates, and this
resulted in a reduction of $1,436,163 in total debt service requirements for the
Enterprise Funds. As part of this refunding, the Water/Waste Water Fund
incurred $8.6 million in new debt for up-grades and increased capacity for the
Waste Water Treatment Plant. Total long-term debt at year-end for the
Enterprise Funds was $23,351,260, an increase of $8,184,267. The City
historically has used a short-term line of credit each year for use in funding
the seasonally high electric power costs during the summer months, however
this has not been necessary for the past four fiscal years. Gas line
infrastructure was extended into growing areas and major electrical upgrades
and improvements were completed. There are currently no plans for
additional new debt for the Enterprise Funds.
GOVERNMENTAL FUNDS HIGHLIGHTS
The Governmental funds are comprised of General, Capital Projects, Debt
Service, and Special Revenue funds. The General Fund supports the General
Administration, Police and Fire, Adult and Youth Recreation, Quail Creek
Golf Course, Streets, Sanitation, and other department budgets providing City
services. The Governmental Funds experienced a net surplus of $2,226,652
for the fiscal year, including receipt of $4.17 million in transfers from the
utilities during the year. Total revenues in the General Fund, before utility
transfers, increased by $1,515,769 from the prior year. Operating expenses
in the Governmental fund during the 2012 fiscal year increased by
$5,454,442, mainly due to the pay-off of a General Obligation Warrant.
Capital purchases and improvements in the Governmental Fund totaled
$664,526.
The Governmental Fund Balance was $10,580,412 at year-end, representing
an increase of $2.23 million over the prior year. Total General Fund cash was
xCITY OF FAIRHOPE, ALABAMACITY ELECTED AND APPOINTED OFFICIALSSEPTEMBER 30. 2012MayorCity CouncilCity JudgeExecutive SecretaryCity AdministratorCourt MagistratesCity AttorneyHumanResourcesInformation TechnologyGeneralSuperintendentPlanning & Building MapsCityClerkPoliceChiefCity TreasurerPurchasingPublic SafetyPolice OfficersCorrectionsli / iPurchasingPublicSafetyPolice OfficersCorrectionsPolice/FireDispatchAnimal ControlOfficerFire Dept/CustodiansPublic UtilitiesGas Dept.Electric Dept.Water/Sewer DeptPublic WorksLandscapingSanitationRecyclingEquip MechanicsTrashOther PWAdministrationFinanceRevenue & BillingMagistratesMeterRecreationOutside FacilitiesPublic PoolRec CenterAdult RecreationSenior ServicesCivic CenterStreet/MaintStreetConstructionBuilding MaintQuail CreekGolf
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CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2012
Timothy M. Kant, ACMO Mayor
Michael A. Ford , ACMO Councilmember
Rick Kingrea Councilmember
Lonnie L. Mixon Councilmember
Debbie W. Quinn, ACMO Councilmember
Daniel R. Stankoski, CMO Councilmember
Lisa Hanks City Clerk
Nancy K. Wilson, CPA City Treasurer
Bill D. Press Police Chief
Marion E. Wynne, Jr. City Attorney
Honorable Haymes Snedeker City Judge
FINANCIAL SECTION
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Our discussion and analysis of the City of Fairhope’s (the “City”) financial performance provides a narrative overview
of the City’s financial activities for the fiscal year ended September 30, 2012. The intent of this Management
Discussion and Analysis (MD&A) is to review the City’s financial performance as a whole. Please read it in
conjunction with the City’s financial reports, which follow this section and the additional information furnished in the
letter of transmittal, which can be found in the introductory section of this comprehensive annual financial report
(CAFR).
FINANCIAL HIGHLIGHTS
Assets of the City exceeded its liabilities at the close of the fiscal year by $114,464,317, a current year
increase in net assets of $3,304,451 (pages 14 and 15).
At the close of the fiscal year, the City’s combined governmental funds, including General, Capital
Projects and Other Governmental Funds, reported ending fund balances totaling $10,580,412, an increase
of $2,226,652 from the prior year. The General Fund closed with a fund balance of $10,295,547, an
increase of $3,135,392. The Capital Projects Fund had a decrease in fund balance of $1,745,223 after
capital expenditures of $2,045,667 and transfers from the General Fund of $84,504 (page 18). A detailed
explanation of these increases can be viewed on page six of this Management’s Discussion and Analysis
(MD&A).
City-wide, governmental and business type funds cash (including restricted cash) totaled $36,137,595, an
increase of $13,885,708 over the previous year. Governmental Funds cash totaled $11,951,254 at
September 30, 2012 (page 14). This is an increase of $3,495,145 over the prior year. Most of the
increase, approximately $2 million, was from sales tax receipts. The business type funds cash totaled
$24,186,341 at year end (page 20), an increase of $10,390,563 over last year. This increase was mainly
due to unspent proceeds from the $8.6 million of additional borrowings received when issuing the Utilities
Revenue Warrant Series 2011. See additional information discussed under the debt administration section
on page eight of this MD&A. Revenues in the governmental funds increased $1.5 million from the
previous year. Expenses increased $5.5 million. However $4.2 million of that amount was the refunding
of the 2002 General Obligation Warrants, resulting in a net increase of operating expenses of $1.3 million
(Figure 3, page 11).
During fiscal 2012, revenues from the City’s 2% sales tax totaled $4,898,362, an increase of
approximately $308,000 over the previous year. In November 2011, the City Council amended the
ordinance allocating sales tax revenues. Fifty percent of sales tax revenues in excess of $7 million have
been designated for debt payment. These funds are stipulated for debt prepayment and are to be used only
for prepayment of existing debt of the General fund. The remaining fifty percent in excess of $7 million
has been designated for infrastructure improvement. These funds are to be used only for improvements to
City streets, sidewalks, and parks and buildings. The amount of these reserved funds at September 30,
2012 was $7,000,000 (pages 14 and 16).
The combined governmental funds expended $664,526 for capital projects and purchases, including
$84,881 for special projects, $81,377 of impact fee revenues for recreation projects and $498,268 for
vehicles, equipment and other infrastructure additions.
The business-type activities, Gas, Electric, Water and Waste Water activities, ended the year with income
before transfers of $6,493,803, compared to $9,839,682 for fiscal 2011. Although revenues decreased
approximately $3.4 million, costs of energy and operating expenses also decreased about $285,000. The
utilities made transfers to the General Fund of $4,173,802 from income. The business-type activities
recorded an increase in net assets, after transfers, of $2,320,001 (page 21). Details pertaining to these
increases can be seen on pages six and seven of this MD&A.
The City’s business-type activities made additions to property, plant and equipment of $2,393,623.
Funding for these additions was prior debt issues, current income and money set aside for this purpose.
The business-type activities increased long-term debt by $7.4 million for future capital additions and
upgrades (pages 22 and 34).
As noted above, the City’s total debt increased by $7,418,956 during fiscal year 2012, yielding total
outstanding debt of $37,551,741 compared to the previous year’s $30,132,785. These borrowed funds are
to be used for improvements to the water and wastewater systems. Governmental activities total debt was
$14,200,481. Business-type activities total debt was $23,351,260 (pages 35 and 36).
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OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s
basic financial statements are comprised of four components: 1) government-wide financial statements, 2) fund
financial statements, 3) notes to financial statements, and 4) required supplementary information.
The Statement of Net Assets and the Statement of Activities provide information about the activities of the City as a
whole and present a longer-term view of the City’s finances.
For governmental activities, the fund financial statements tell how these services were financed in the short term as well
as what remains for future spending. Fund financial statements also report the City’s operations in more detail than the
government-wide statements by providing information about the City’s most significant funds. The notes to financial
statements provide additional information that is essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to financial statements start on page 25.
In addition to the basic financial statements and accompanying notes, this report also presents certain required
supplementary information concerning the City’s General Fund budget. A budgetary comparison schedule has been
provided for the General Fund to demonstrate compliance with the budget on page 51.
The Statement of Net Assets and the Statement of Activities
The Fund Balance Sheets and the Statements of Revenues, Expenditures, and Changes in Fund Balances report
information about the City as a whole and about its activities. These statements include all assets and liabilities using
the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the
current year’s revenues and expenses are taken into account regardless of when cash is received or paid.
These two statements report the City’s net assets and any changes in them. Consideration of the City’s net assets, i.e., -
the difference between assets and liabilities, is one tool to measure the City’s financial health, or financial position.
Over time, increases or decreases in the City’s net assets are indicators of whether its financial health is improving or
deteriorating. Consideration of other non-financial factors, however, such as changes in the City’s revenue sources and
the condition of the City’s infrastructure, utility systems and roads, is also necessary for a valid assessment of the
overall health of the City.
In the Statement of Net Assets and the Statement of Activities, we divide the City into three kinds of activities:
• Governmental activities — Most of the City’s basic services are reported here, including the police, fire, public
works, youth and senior recreation departments, and general administration. Gross receipts, business license
fees, property and sales taxes, franchise fees, and state and federal grants finance most of these activities.
Funds for Capital Projects, Debt Service, Gas Tax, and Impact Fees are also reported with Governmental
activities.
• Business-type activities — The City charges a fee to customers to help it cover all or most of the cost of certain
services provided. Financial information for the Electric Fund, Natural Gas Fund and the Water and Waste
Water Fund is reported in this section.
• Component units — The City has two entities classified as component units, the Fairhope Public Library and
the Airport Authority. Although legally separate and managed by City appointed boards, the Library and
Airport Authority receive significant support from the City and the City is responsible for any deficits.
Net assets may serve over time as a useful indicator of a government’s financial position. The City’s assets exceeded
liabilities by $114,464,317 at the close of the most recent fiscal year, as shown in Figure 1, page 9 and page 14. This is
an increase of $3,304,451.
The largest portion of the City’s net assets, approximately 73.4 percent, reflects its investment in capital assets (e.g.
land, streets, sidewalks, buildings, infrastructure, equipment, etc.), less any related debt still outstanding used to acquire
those assets. The City uses these capital assets to provide services and utilities to citizens; therefore, these assets are not
available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should
be noted that the resources needed to repay debt must be provided from other sources, since capital assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the City’s net assets, approximately 17.8 percent, represents resources that are subject to
restrictions as to how they may be used. Funds restricted for debt service were $12,715,534; for capital projects,
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$420,909; for road maintenance and construction, $216,196; for City Council determined emergencies, $7,000,000.
Restricted funds increased approximately $12.5 million over the previous year.
The unrestricted net assets, approximately 8.8 percent, may be used to meet the City’s ongoing obligations to citizens
and creditors. Unrestricted net assets, $10,104,720, decreased $556,043 during fiscal 2012 (pages 9 and 14).
The City has implemented Government Accounting Standards Statement 45, Accounting and Financial Reporting by
Employers for Post Employment Benefits Other Than Pensions (GASB 45). The City’s Annual Required Contribution
(ARC) was actuarially determined to be $908,803. The current year retirement premium was $274,479. The liability for
OPEB obligation at year end was $1,985,035. This amount is reported on the Statement of Net Assets, page 14, as Net
OPEB Obligation and on page 47, Note 18.
Figure 2, page 10, is a condensed Statement of Activities for the City as a whole for all activity types. This condensed
statement includes comparative information from the prior year for the governmental and business-type activities, as
well as the Library and Airport Authority component units.
Fund Financial Statements
The fund financial statements provide detailed information about the most significant funds — not the City as a whole.
Some funds are required to be established by State Law and by bond covenants. However, the City Council established
many other funds to help control and manage money for particular purposes or to show that it is meeting legal
responsibilities for using certain taxes, grants, and other money. The City’s two kinds of funds —governmental and
proprietary — use different accounting approaches.
• Governmental funds — Most of the City’s basic services are reported in governmental funds, which focus on
how money flows into and out of those funds and the balances left at year-end that are available for spending.
These funds are reported using an accounting method called modified accrual accounting, which measures cash
and all other financial assets that can be readily converted to cash. The governmental fund statements provide a
detailed short-term view of the City’s general government operations and the basic services it provides.
Government fund information helps determine whether there are more or fewer resources that can be spent in
the near future to finance the City’s programs.
• Proprietary funds — When the City charges customers for the services it provides, whether to outside
customers or to other units of the City, these services are reported as proprietary, or enterprise, funds.
Proprietary funds are reported separately, on an accrual basis of accounting, in the Proprietary Fund Balance
Sheet and the Statement of Revenues, Expenses, and Changes in Net Assets. The City’s enterprise funds are the
same as the business-type activities we report in the government-wide statements but provide more detail and
additional information, such as cash flows. The City’s proprietary funds include the Electric Fund, Natural
Gas Fund and Water and Waste Water Fund, which are used to account for the operations of the utilities.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of
spendable resources. Such information is useful in assessing the City’s financing requirements. In particular,
unrestricted fund balances may serve as a useful measure of a government’s net resources available for spending at the
end of the fiscal year.
Figure 3, page 11, presents summaries of the governmental funds (General Fund, Capital Projects, Debt Service, Gas
Tax, and Impact Fees) revenues and expenditures, by function, for the fiscal year ended September 30, 2012, and the
amounts of increases and decreases in relation to prior year revenues and expenditures.
Governmental fund revenues increased $1,515,769 from the previous fiscal year. Expenditures of Governmental funds
increased $5,454,442 for the same period. Included in this increase is the issuance of general obligation warrants in the
amount of $4.2 million for the purpose of refunding the 2002 General Obligation Warrants. In addition to this
refunding, approximately $765,000 was used to pay down existing debt.
The following significant events, related to revenues and expense, occurred during fiscal 2012 (the figures are rounded):
Related to revenue:
Taxes, property and local, were up $420,000, with the majority of the increase from sales tax.
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Licenses and permits as well as fines and forfeitures increased by $365,000. This was primarily due to an
increase in building permits of 28% over last year. The total construction value in the City increased 63%
compared to last year, indicating a significant upturn in the housing market.
State of Alabama and United States Government tax and grant income increased by $320,000.
The Fairhope Library Board made a payment of $1,000 for the “bridge loan” provided by the City for
uncollected donations for the construction of the new Library (page 37, Note 6). This compared to a payment
last year of $185,000, a decrease of $184,000.
Charges for services were up $617,000 over last year due to an increase in utility collection and administrative
services fees.
Income from the City’s golf course, approximately $1,000,000 was down $20,000 from the previous year.
Related to expenditure:
Capital outlay expenditures were approximately $665,000, down $810,000 from the prior year. Expenditures
of $1.5 million for fiscal 2011 included $450,000 for fire department equipment; $70,000 for capital
improvements at the James P. Nix Center; $170,000 for street department equipment, including a new street
sweeper; $430,000 for sanitation collection equipment; and $280,000 for vehicles and equipment. Major
capital expenditures for fiscal 2012 were: $85,000 for special projects, $80,000 for impact fees recreation
projects and $500,000 for vehicles and equipment.
The City’s General Department had increases in expenditures of $1.7 million. The major increase for 2012
was the shift of all General Fund departmental medical insurance costs into the general department. This
amount was $1 million. This was a result of the disproportionate insurance costs among the individual General
fund departments. It should be noted that although this shift increased expenditures in the General
Department, medical insurance costs among all General fund departments totaled $1.5 million for the year
compared to $1.9 million last year, a decrease of approximately $400,000. The remaining increase related to
the following: $270,000 for sidewalk expenditures, an increase in employee costs of $292,000, and other
increases relating to professional services, computer expenses, and grant expenditures totaling $160,000.
The Police Department had decreases of $270,000. Major decreases for 2012 included computer expense
($78,000) and a shift in medical insurance to the General department ($530,000). Employee costs, however,
increased $330,000.
The Street Department’s expenses were up $1.2 from the previous year, primarily because of paving projects
of $1.7 million. In contrast, employee costs were down $230,000 and medical insurance decreased by
$320,000 due to the move into the General department.
Debt service payments, $5.4 million, increased $3.9 million from the previous year’s $1.5 million total. This
was due to the refunding of the 2002 General Obligation Warrants in the amount of $4.2 million. Funds for
this refunding were provided by a new general obligation issue, at favorable interest rates.
Golf activities expenses were down $250,000. This was primarily from the move of employee medical
insurance to the general department of $135,000 and reductions in employee costs of $75,000.
Fund Balances and Net Assets
When reviewing the City’s finances, it is important to ask if the City as a whole is in better financial condition when
compared with the prior year. An indicator of the City’s financial health is whether the fund balances of the
governmental and net assets of the proprietary funds increased or decreased as a result of operating activities. Fund
balances for all governmental funds, including General Fund, Capital Projects Fund, and Other Governmental Funds
totaled $10,580,412, an increase of $2,226,652. This follows an increase in fund balances of $2,803,470 the previous
year. The General Fund had a fund balance of $10,295,547, an increase of $3,135,392. The Capital Projects Fund had a
decrease in fund balance of $1,745,223 after expenditures of $1,690,107 for street repaving, $270,679 for sidewalk
renovations, capital outlay of $84,881 and a transfer from the General Fund of $84,504. The Other Governmental Funds
had fund balances of $1,354,289 at year end, including restrictions for Debt Service of $325,214, a decrease of $24,806
and assigned funds reported in special revenue funds (Gas Tax and Impact Fees) of $1,029,075, an increase of
$861,289, after expenditures of $39,862 for road repair and maintenance and a transfer from the General fund of
$857,807. (see pages 16, 18 and 54).
Increases and decreases in revenues and expenses are discussed in the Governmental Funds section of this MD&A,
pages 5 and 6 above.
The governmental activities’ net assets at year end were $74,088,588, an increase of $984,450. This increase is directly
related to transfers from the utilities in the amount of $4,173,802. The Gas, Electric and Water and Waste Water Funds
had net assets of $40,375,729 at year end, an increase of $2,320,001 (see pages 15 and 21). The increase in the previous
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year was $5,012,535. The significant change of $3,307,774 from last year to this year is due to a decrease in the change
of net assets before transfers and investment earnings.
Capital Project and Other Governmental Funds increases in fund balance are discussed above. Following are major
factors effecting increases in fund balance and net assets in the General Fund and business-type operations.
General Fund Balance: The General Fund had an increase in revenues of $1,258,026. Expenditures for the General
Fund were down $540,321 from the prior year. Transfers from the proprietary funds (Gas, Electric, Water and Waste
Water Funds) were $4,173,802 for the current year, a decrease of $653,345 from the prior year. After transfers, the
fund balance of the General Fund increased by $3,135,392 during fiscal 2012. The most significant revenue increase
was related to charges for services, an increase of $616,844 over the prior year, due to an increase in utility collection
and administrative services fees. Other major increases in revenue during the year were: an increase of $418,864 in
taxes, property and local, with the majority from sales tax. Although licenses and permits as well as fines and
forfeitures were up $365,326, the Library Board’s contribution toward the loan for the construction of the library was
$182,285 less than last year. The most significant decrease related to General Fund expenditures was in capital outlay.
This was due to an overall departmental cutback in capital spending throughout the year. This decrease totaled
$848,335. The remainder of the difference, approximately $308,000, relates to increases and decreases in employee
costs within the various General Fund departments.
Enterprise Operations: The City’s enterprise operations consist of the Electric Fund, Natural Gas Fund and Water and
Waste Water Fund. The enterprise funds’ operating revenues decreased by $3,423,449 over the prior fiscal year. This
represented an 8.93% decrease. Operating expenses decreased by $285,251, a 1% decrease. The decrease in expenses
was due to decreases in energy purchases for resale of $1,160,103, a decrease of 7.5%. Combined, other expenses were
up from the prior year, $874,852. Of this, $265,589 was from the increase in community development projects,
$491,068 was from other operating expenses and $106,862 was from salaries. Utility rate calculations are based on
costs of energy, expenditures for operations, debt service costs, infrastructure upgrades, capacity increases and transfers
to the General Fund to fund public safety, recreational and environmental activities of the City. The City employs a
consultant to assist in the rate setting process. Income for the enterprise funds, before transfers to the General Fund, was
$6,493,803, a decrease of $3,345,879. Transfers to the General Fund were $4,173,802, or 64% of income. For fiscal
2011, the transfers to the General Fund were $4,827,147, or 49% of income. For fiscal 2010, the transfers were
$4,897,104 or 60%. The reduced transfers, as a percent of income, have enabled the utilities to fund capital additions
and reserves for emergencies. The change in net assets of the three utilities was an increase of $2,320,001.
General Fund Budgetary Highlights
Although there is no legal requirement to establish a budget, the City of Fairhope prepares an annual budget. The
preparation process involves input from the Mayor, City managers, Council members and the City’s Financial Advisory
and Budget committees. Page 52 of this report lists the procedure for preparing the annual budgets. No adjustments to
the budget were made during the year.
On page 51, in the Required Supplementary Information section of this report, there is a budgetary comparison schedule
for the General Fund.
For the purposes of this discussion, variance amounts in excess of $50,000 in each category or department will be
discussed. All amounts are rounded.
The total revenue variance was $297,000 for fiscal 2012. Local taxes were $104,000 over budget. Licenses and permits
were $280,000 over budget. Of that amount, $220,000 was from business licenses, building permits and inspection fees
due to heightened collection efforts and new businesses. Charges for services were $200,000 over budget. Subdivision
fees and impact fees, both related to an improved construction outlook in Fairhope. Intergovernmental revenues were
down $150,000 from budgeted state grants that were not awarded in fiscal 2012. Golf revenue was $80,000 under
budget due to decreased memberships. Other revenue was down $53,000.
The total expenditure variance was $1,615,000. The favorable variance in the general government was $1,390,000. A
little over half of this variance was from less than anticipated employee medical insurance costs, totaling $735,000. The
remaining $655,000 was due to reductions in employee costs relating to reduced overtime and unfunded OPEB
contributions as well as decreased grant expenditures. Budgeted grants that were not awarded during the year
contributed to this decrease. Adult recreation was $102,000 under budget due to employee cost reductions as well as
decreases in maintenance and supplies. Golf was under budget $52,000 due to modest decreases in supplies, advertising
and promotion, and pro shop sales expenses. The favorable variance in capital outlay of $414,000 was due to an overall
- 8 -
departmental cutback in capital spending throughout the year. In contrast, the police department had an unfavorable
variance of $286,000 due mainly to unbudgeted employee costs. Streets also had an unfavorable variance of $55,000
due primarily to higher than anticipated gas and oil costs as well as an increase in equipment and vehicle repair
expenditures.
Capital Assets
As of September 30, 2012, the City’s governmental activities had $80,181,945 invested in capital assets, net of
depreciation. This is a decrease of $1,617,674 from the prior year. The business-type activities had invested capital
assets, net of depreciation of $40,948,423, an increase of $551,704 (see Note 3, Fixed Assets, pages 33 and 34).
The City’s governmental activities capital assets, at cost, were $125,894,483 at September 30, 2012, an increase of $1.4
million from the prior year. The business-type activities, the Gas, Electric and Water and Waste Water Funds, had
capital assets, at cost, of $75,074,671, an increase of $2.4 million. Figure 4, page 12, summarizes capital assets by asset
type, at cost, and changes in fixed assets during the year.
Debt Administration
As of September 30, 2012, the City had long-term debt of $37,551,741 (excluding premiums and discounts), including
bonds and warrants payable, notes payable, and obligations under capital leases. This is a net increase, city wide, of
$7,394,507 from the prior year. Governmental activities’ decrease in long-term debt was $789,760. Business-type
activities’ increase in long-term debt was $8,184,267. The General Obligation Warrant Series 2011, in the amount of
$4.2 million, was issued for the purpose of refunding the City’s General Obligation Warrant Series dated September 1,
2002. The Utilities Revenue Warrant Series 2011, in the amount of $16,140,000 was issued for the purpose of
refunding the Utilities Revenue Warrant Series 2002 dated September 1, 2002. A portion of this issuance, $8.6 million,
will be used for upgrades to the wastewater treatment plant. See Notes 5 through 10 in the financial statements for more
detail. Figure 5, page 13, summarizes the City’s long-term debt, including compensated absences.
ECONOMIC FACTORS
The City’s management has set a budget decrease in revenue for fiscal 2013 of $1.2 million. Of this decrease,
$1 million is from the reduction of transfers from the utility funds, based on transferring 50% of utility profits.
Similarly, the General Fund budget has a $1.2 million decrease in expenses for fiscal 2013, compared to fiscal 2012.
Most departments are relatively flat, or have seen cuts in their budgets. The two major decreases are: a $708,000
decrease in the General Department due to reductions in employee costs, legal fees, computer projects, and grant
expenditures and the Police department’s $379,000 decrease due mainly to a reduction in employee costs.
Gas Fund, Electric Fund and Water and Waste Water Fund operations budgeted revenues are expected to increase 10%
over actual amounts for 2012. Likewise, costs of energy and operating expenses in the three utilities are projected to
increase by approximately 10% over actual amounts for 2012.
For the business-type activities, reported as Gas Fund, Electric Fund and Water and Waste Water Fund, a projected
excess of revenues over expenditures, before transfers, is $7,922,022 for fiscal 2013, compared to actual $6,493,803 for
fiscal 2012. This represents a projected increase of 22%. Transfers to the General Fund for fiscal 2013 are budgeted to
be $3,910,214, compared to $4,173,802 for 2012. This represents a decrease of 6.3%. Earnings from operations in the
utilities are monitored during the year to insure that excessive amounts are not transferred.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general
overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions
about this report or need any additional financial information, please contact Jill Cabaniss, Finance Director, or Nancy
Wilson, City Treasurer, at 161 N. Section Street, Fairhope, Alabama, (251) 928-2136.
Figure 1 9/30/2012 9/30/2011 9/30/2012 9/30/2011 9/30/2012 9/30/2011 9/30/2012 9/30/2011 9/30/2012 9/30/2011Current & Other Assets 12,908,889$ 9,365,227$ 27,582,275$ 17,098,616$ 40,491,164$ 26,463,843$ 125,316$ 96,306$ 715,140$ 701,050$ Capital Assets, net 80,181,945 81,799,619 40,948,423 40,396,719 121,130,368 122,196,338 60,710 78,267 22,381,758 22,022,916 Total Assets93,090,834$ 91,164,846$ 68,530,698$ 57,495,335$ 161,621,532$ 148,660,181$ 186,026$ 174,573$ 23,096,898$ 22,723,966$ Long-Term Debt 13,802,816$ 14,700,965$ 22,242,224$ 14,362,872$ 36,045,040$ 29,063,837$ -$ -$ 8,935,000$ 8,935,000$ Other Liabilities 5,199,430 3,359,743 5,912,745 5,076,735 11,112,175 8,436,478 3,698 3,822 - - Total Liabilities19,002,246 18,060,708 28,154,969 19,439,607 47,157,215 37,500,315 3,698 3,822 8,935,000 8,935,000 Net Assets: Invested in Capital Assets, net of related debt 66,016,012 66,845,689 17,990,946 25,786,974 84,006,958 92,632,663 60,710 78,267 13,446,758 13,087,916 Restricted 8,015,592 6,207,809 12,337,047 1,658,631 20,352,639 7,866,440 - - - 112,57356,984 50,640 10,047,736 10,610,123 10,104,720 10,660,763 121,618 92,484 715,140 588,477 Total Net Assets 74,088,588 73,104,138 40,375,729 38,055,728 114,464,317 111,159,866 182,328 170,751 14,161,898 13,788,966 Total Liabilities & Net Assets93,090,834$ 91,164,846$ 68,530,698$ 57,495,335$ 161,621,532$ 148,660,181$ 186,026$ 174,573$ 23,096,898$ 22,723,966$ GOVERNMENT-9-CITY OF FAIRHOPE CONDENSED STATEMENT OF NET ASSETS FOR THE YEAR ENDED 9/30/2012GOVERNMENTALCOMPONENT UNITS BUSINESS - TYPE TOTAL PRIMARYACTIVITIESACTIVITIES UnrestrictedLIBRARYAIRPORT AUTHORITY
Figure 2AIRPORT AUTHORITY9/30/2012 9/30/2011 9/30/2012 9/30/2011 9/30/2012 9/30/2011 9/30/2012 9/30/2011 9/30/2012 9/30/2011Program Revenues Charges for Services 9,409,956$ 8,376,902$ 34,921,900$ 38,345,349$ 44,331,856$ 46,722,251$ 37,396$ 43,040$ 145,792$ 129,358$ Operating Grants & Contributions - 24,402 - - - 24,402 670,950 569,597 788,671 438,107 Capital Grants & Contributions 1,317,475 302,963 - - 1,317,475 302,963 - - - - General Revenues Taxes 10,609,365 10,190,500 - - 10,609,365 10,190,500 - - - - Intergovernmental 314,525 248,011 - - 314,525 248,011 - - - - Investment Earnings 226,642 249,489 20,417 58,522 247,059 308,011 - - 3,406 4,746 Other 143,319 124,161 - - 143,319 124,161 - - - - Total Revenues 22,021,282 19,516,428 34,942,317 38,403,871 56,963,599 57,920,299 708,346 612,637 937,869 572,211 Expenses General Government 8,103,118 6,176,077 - - 8,103,118 6,176,077 - - - - Sanitation 1,814,947 1,868,364 - - 1,814,947 1,868,364 - - - - Police 4,925,437 5,213,031 - - 4,925,437 5,213,031 - - - - Fire 461,865 483,670 - - 461,865 483,670 - - - - Airport 281,124 225,843 - - 281,124 225,843 - - - - Street 5,502,244 4,251,404 - - 5,502,244 4,251,404 - - - - Adult Recreation 613,614 654,736 - - 613,614 654,736 - - - - Recreation 1,176,191 1,138,079 - - 1,176,191 1,138,079 - - - - Golf 932,284 1,106,624 - - 932,284 1,106,624 - - - - Public Library Board 810,636 798,997 - - 810,636 798,997 - - - - Interest on Long Term Debt 589,174 633,161 - - 589,174 633,161 - - - - Electric - - 16,912,834 16,909,931 16,912,834 16,909,931 - - - - Natural Gas - - 4,484,683 5,037,587 4,484,683 5,037,587 - - - - Water and Wastewater - - 7,050,997 6,616,671 7,050,997 6,616,671 - - - - Golf - - - - - - - - - Airport Authority - - - - - - - - 564,937 499,410 Fairhope Public Library - - - - - - 696,769 686,573 - - Total Expenses 25,210,634 22,549,986 28,448,514 28,564,189 53,659,148 51,114,175 696,769 686,573 564,937 499,410 Change in net assets before transfers (3,189,352) (3,033,558) 6,493,803 9,839,682 3,304,451 6,806,124 11,577 (73,936) 372,932 72,801Transfers 4,173,802 4,827,147 (4,173,802) (4,827,147) - - - - - - Change in net assets 984,450 1,793,589 2,320,001 5,012,535 3,304,451 6,806,124 11,577 (73,936) 372,932 72,801Net Assets, beginning 73,104,138 71,310,549 38,055,728 33,043,193 111,159,866 104,353,742 170,751 244,687 13,788,966 13,716,165Net Assets, ending 74,088,588$ 73,104,138$ 40,375,729$ 38,055,728$ 114,464,317$ 111,159,866$ 182,328$ 170,751$ 14,161,898$ 13,788,966$ GOVERNMENTACTIVITIESGOVERNMENTAL ACTIVITIES-10-CITY OF FAIRHOPEBUSINESS - TYPECOMPONENT UNITS LIBRARYTOTAL PRIMARYCONDENSED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED 9/30/2012
Figure 39/30/2012 9/30/2011 IncreaseRevenues Total Total (Decrease)Local taxes $ 10,609,364 $ 10,190,500 $ 418,864 Licenses & Permits 2,612,793 2,295,795 316,998 Fines & Forfeitures 289,432 241,104 48,328 State of Alabama 206,254 223,511 (17,257) U. S. Government 461,090 122,455 338,635 Contribution from Public Library Board 1,000 183,285 (182,285) Interests and Rents 226,748 249,489 (22,741) Charges for Service 5,096,593 4,479,749 616,844 Golf Course Revenue 1,001,627 1,020,250 (18,623) Assessments 3,659 - 3,659 Other 552,904 539,557 13,347 Totals $ 21,061,464 $ 19,545,695 $ 1,515,769 IncreaseExpenditures Total Total (Decrease)General $ 7,026,721 $ 5,335,143 $ 1,691,578 Sanitation 1,607,918 1,745,785 (137,867) Police 4,671,591 4,941,051 (269,460) Fire 339,080 395,224 (56,144) Airport 281,124 225,843 55,281 Street Department 3,872,517 2,639,416 1,233,101 Adult Recreation 525,212 577,015 (51,803) Debt Service Principal 4,804,960 831,483 3,973,477 Interest 616,221 666,652 (50,431) Recreation Department 989,463 969,025 20,438 Golf 863,593 1,113,178 (249,585) Public Library Board 600,000 565,000 35,000 Other 160,888 89,620 71,268 Capital Outlay 664,526 1,474,937 (810,411) Totals $ 27,023,814 $ 21,569,372 $ 5,454,442 Statement of Revenues and Expeditures Governmental Funds For the Year Ended September 30, 2012-11-
Figure 4 Balance Reclassifications/ Balance Governmental Activities @ 10/1/11 Additions Retirements @ 9/30/12Land $ 19,827,727 $ - $ - $ 19,827,727Buildings & Structures 32,455,192 1,310,101 - 33,765,293Vehicles and Equipment 12,972,069 354,425 (297,024) 13,029,470Infrastructure 59,271,993 - - 59,271,993Total Capital Assets $ 124,526,981 $ 1,664,526 $ (297,024) $ 125,894,483Business-type activitiesElectric Fund Natural Gas Fund Water/WastewaterFundBalance @ 10/01/11 $ 22,020,892 $ 12,153,214 $ 38,506,942Additions to Plant 624,114 295,298 742,636Addition to Land, Buildings, Vehicles and Equipment 423,772 150,885 142,428Completed Construction in Progress - - 14,490Disposals - - - Total Capital Assets @ 9/30/2012 $ 23,068,778 $ 12,599,397 $ 39,406,496-12-City of FairhopeCapital Assets
Figure 5GOVERNMENTAL BUSINESS-TYPELONG TERM DEBT FUNDS ACTIVITIESGeneral Obligation Warrants, 2011 $ 3,828,780 $ - General Obligation Warrants, 2008 721,741 - General Obligation Warrants, 2007 6,920,000 - General Obligation Refunding Warrant, 2009 2,729,960 - Utilities Revenue Warrants, 2011 - 15,625,000Utilities Revenue Warrants, 2005 - 6,530,000Utilities Revenue Warrants, 2009 - 970,000General Obligation Refunding Warrant, 2009 - 50,040General Obligation Warrants, 2011 - 176,220Obligations under capital leases - - Compensated absences 1,061,968 527,422TOTALS $ 15,262,449 $ 23,878,682See Notes 5 through 10 beginning on page 35 for additional detail.-13-City of FairhopeDebt Administration
BASIC FINANCIAL STATEMENTS
-14-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash $ 11,659,784 $ 11,849,294 $ 23,509,078 $ 813,610
Restricted cash 291,470 12,337,047 12,628,517 -
Receivables, net 765,782 2,223,186 2,988,968 -
Internal balances 14,459 (14,459) - -
Inventories - 745,341 745,341 -
Other assets 177,394 441,866 619,260 26,846
Land and construction in progress 19,827,727 383,770 20,211,497 11,886,328
Capital assets, net 60,354,218 40,564,653 100,918,871 10,556,140
Total assets $ 93,090,834 $ 68,530,698 $ 161,621,532 $ 23,282,924
LIABILITIES
Accounts payable and
accrued expenses $ 557,934 $ 2,054,800 $ 2,612,734 $ 3,698
Deferred revenue 3,936 - 3,936 -
Customer deposits - 2,228,579 2,228,579 -
Line of credit payable 1,705,225 - 1,705,225 -
Long-term liabilities
Due within one year 1,425,085 1,151,581 2,576,666 240,000
Due in more than one year 13,802,816 22,242,224 36,045,040 8,695,000
Net OPEB obligation 1,507,250 477,785 1,985,035 -
Total liabilities 19,002,246 28,154,969 47,157,215 8,938,698
NET ASSETS
Invested in capital assets,
net of related debt 66,016,012 17,990,946 84,006,958 13,507,468
Restricted for:
Debt service 378,487 12,337,047 12,715,534 -
Capital projects 420,909 - 420,909 -
Road maintenance and construction 216,196 - 216,196 -
Council approved emergencies 7,000,000 - 7,000,000 -
Unrestricted 56,984 10,047,736 10,104,720 836,758
Total net assets 74,088,588 40,375,729 114,464,317 14,344,226
Total liabilities and net assets $ 93,090,834 $ 68,530,698 $ 161,621,532 $ 23,282,924
-15- CITY OF FAIRHOPE, ALABAMA STATEMENT OF ACTIVITIES SEPTEMBER 30, 2012 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Governmental Business-type ComponentFunctions/Programs Expenses Services Contributions Contributions Activities Activities Total UnitsPrimary GovernmentGovernmental activities:General $ 8,103,118 $ 6,301,207 $ - $ - $ (1,801,911) $ (1,801,911) Sanitation 1,814,947 1,408,179 - - (406,768) (406,768) Police 4,925,437 289,432 - 71,582 (4,564,423) (4,564,423) Fire 461,865 - - - (461,865) (461,865) Airport Authority 281,124 - - - (281,124) (281,124) Street 5,502,244 - - 1,244,893 (4,257,351) (4,257,351) Adult Recreation 613,614 41,018 - - (572,596) (572,596) Recreation 1,176,191 368,493 - - (807,698) (807,698) Golf 932,284 1,001,627 - - 69,343 69,343 Public Library Board 810,636 - - 1,000 (809,636) (809,636) Interest on long term debt 589,174 - - - (589,174) (589,174) Total governmental activities 25,210,634 9,409,956 - 1,317,475 (14,483,203) (14,483,203) Business-type activitiesElectric 16,912,834 18,891,334 - - - $ 1,978,500 1,978,500 Natural gas 4,484,683 6,191,986 - - - 1,707,303 1,707,303 Water and Wastewater 7,050,997 9,838,580 - - - 2,787,583 2,787,583 Total business-type activities 28,448,514 34,921,900 - - - 6,473,386 6,473,386 Total primary government $ 53,659,148 $ 44,331,856 $ - $ 1,317,475 (14,483,203) 6,473,386 (8,009,817) Component Units $ 1,261,706 $ 183,188 $ 1,459,621 $ - $ 381,103 General revenues:Property taxes 4,591,739 - 4,591,739 - Sales tax 4,898,362 - 4,898,362 - Liquor taxes 425,888 - 425,888 - Lodging taxes 569,142 - 569,142 - Other taxes 124,234 - 124,234 - Intergovernmental 314,525 - 314,525 - Investment earnings 226,642 20,417 247,059 3,406 Other 143,319 - 143,319 - Transfers 4,173,802 (4,173,802) - - Total general revenues and transfers 15,467,653 (4,153,385) 11,314,268 3,406 Change in net assets 984,450 2,320,001 3,304,451 384,509 Net assets, beginning, as previously reported 73,104,138 38,055,728 111,159,866 13,959,717 Net assets, ending $ 74,088,588 $ 40,375,729 $ 114,464,317 $ 14,344,226 Primary GovernmentProgram RevenuesNet (Expense) Revenue andChanges in Net Assets
-16-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
ASSETS
Cash $ 10,142,189 $ 444,128 $ 1,073,468 $ 11,659,785
Investments - - 291,470 291,470
Receivables, net 525,270 214,892 25,617 765,779
Due from other funds 47,169 - - 47,169
Other assets 34,925 - - 34,925
Total assets $10,749,553 $659,020 $1,390,555 $12,799,128
LIABILITIES
Accounts payable $ 236,534 $ - $ 1,159 $ 237,693
Accrued expenses and taxes 193,536 - - 193,536
Line of credit payable - 1,705,225 - 1,705,225
Due to other funds - 23,219 9,490 32,709
Deferred revenue 23,936 - 25,617 49,553
Total liabilities 454,006 1,728,444 36,266 2,218,716
FUND BALANCES
Restricted for:
Debt service - - 325,214 325,214
Council approved emergencies 7,000,000 - - 7,000,000
Assigned to:
Construction and road maintenance - - 1,029,075 1,029,075
Unassigned 3,295,547 (1,069,424) - 2,226,123
Total fund balances 10,295,547 (1,069,424) 1,354,289 10,580,412
Total liabilities and fund balances $ 10,749,553 $ 659,020 $ 1,390,555 $ 12,799,128
-17-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCE TO
NET ASSETS OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Fund balance as reported on page 16 $ 10,580,412
Net Assets reported for governmental activities in the Statement of Net Assets
are different from Fund Balance for governmental activities because:
Capital assets used in governmental activities are financial resources and
therefore are not reported in fund financial statements. 125,894,483
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (45,712,538)
Other long-term assets are not available to pay for current-period
expenditures and therefore are deferred revenue in fund financial statements. 188,082
Long-term liabilities, including warrants, notes, capital lease obligations
and OPEB obligations are not due and payable in the current period and
therefore are not reported in fund financial statements:
Warrants and notes payable (net of warrant discount of $34,548) (14,165,933)
OPEB obligations (1,507,250)
Accrued interest on long-term debt is not due and payable in the
current-period and therefore not included in fund financial statements. (179,070)
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements. (1,009,598)
Net Assets of Governmental Activities as reported on page 14 $ 74,088,588
-18-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
REVENUES
Local taxes $ 10,609,364 $- $ - $ 10,609,364
Licenses and permits 2,612,793 - - 2,612,793
Fines and forfeitures 289,432 - - 289,432
Intergovernmental 327,836 214,893 88,271 631,000
Contribution from Public
Library Board 1,000 - - 1,000
Interest and rents 223,969 1,047 1,732 226,748
Charges for services 5,096,593 - - 5,096,593
Golf course revenue 1,001,627 - - 1,001,627
Assessments - - 3,659 3,659
Other 552,904 - - 552,904
Total revenues 20,715,518 215,940 93,662 21,025,120
EXPENDITURES
General 6,756,042 270,679 - 7,026,721
Sanitation 1,607,918 - - 1,607,918
Police 4,671,591 - - 4,671,591
Fire 339,080 - - 339,080
Airport 281,124 - - 281,124
Street 2,142,548 1,690,107 39,862 3,872,517
Adult Recreation 525,212 - - 525,212
Recreation 989,463 - - 989,463
Golf 863,593 - - 863,593
Public Library Board 600,000 - - 600,000
Other 108,976 - 51,912 160,888
Debt service payments
Principal 148,490 - 4,656,470 4,804,960
Interest 30,807 - 585,414 616,221
Capital Outlay 498,268 84,881 81,377 664,526
Total expenditures 19,563,112 2,045,667 5,415,035 27,023,814
Excess of Revenues
over (under) Expenditures 1,152,406 (1,829,727) (5,321,373) (5,998,694)
OTHER FINANCING
SOURCES (USES)
Proceeds from issuance of debt 4,015,200 - - 4,015,200
Transfers in 4,173,802 84,504 6,121,512 10,379,818
Transfers out (6,206,016) - - (6,206,016)
Total other financing
sources (uses) 1,982,986 84,504 6,121,512 8,189,002
Net change in fund balances 3,135,392 (1,745,223) 800,139 2,190,308
Fund balances - beginning of year 7,160,155 675,799 517,806 8,353,760
FUND BALANCES - END OF YEAR $ 10,295,547 $ (1,069,424) $ 1,317,945 $ 10,544,068
-19-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Net change in fund balances - total governmental funds, page 18 $ 2,190,308
Amounts reported for governmental activities in the Statement of Activities
are different from the Statements of Revenues, Expenditures and Changes in
Fund balances - Governmental Funds because:
Amortization of bond costs and discounts is not recorded in fund level statements. 27,962
Governmental funds report capital outlays as expenditures while governmental
activities report depreciation expense to allocate those expenditures over
the life of the assets.
Capital outlays for the year 664,526
Depreciation expense for the year (3,109,091)
Loss on assets disposed (173,109)
Bond and other debt proceeds provide current financial resources to governmental
funds, but issuing debt increases long-term liabilities in the statement of net assets.
Repayment of long-term liabilities is an expenditure in governmental funds, but
the repayment reduces long-term liabilities in the statement of net assets.
Principal payments on long term debt 4,804,960
Proceeds from issuance of long term debt (4,015,200)
Some capital assets were acquired through capital contributions and reported as
such in the statement of activities and therefore are not reported as a capital
outlay in the governmental funds.
Capital contributions for the year 1,000,000
Some expenses reported in the statement of activities do not require the use
of current resources and therefore are not reported as expenditures in
governmental funds.
Decrease in compensated absences liability 5,025
Decrease in accrued interest payable 37,022
Increase in OPEB liability (484,297)
Change in Net Assets of Governmental Activities, page 15 $ 948,106
-20-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Water and
Electric Natural Gas Waste Water
Fund Fund Fund Total
ASSETS
Current assets
Cash and cash equivalents $ 4,438,977 $ 3,944,259 $ 3,466,058 $ 11,849,294
Restricted cash for debt service 324,456 147,515 11,865,076 12,337,047
Receivables, net 2,204,961 1,548 16,677 2,223,186
Inventories 278,534 178,876 287,931 745,341
Prepaid expenses 16,016 8,652 11,254 35,922
Total current assets 7,262,944 4,280,850 15,646,996 27,190,790
Noncurrent assets
Unamortized expense 25,585 12,845 331,424 369,854
Due from other funds 162,834 - 206,236 369,070
Other assets 12,030 12,030 12,030 36,090
Capital assets
Distribution and collection systems 17,872,654 9,692,862 36,171,935 63,737,451
Buildings, vehicles and equipment 5,065,878 2,831,043 3,056,529 10,953,450
Land and construction in progress 130,246 75,492 178,032 383,770
Less accumulated depreciation (10,934,591) (5,804,917) (17,386,740) (34,126,248)
Total noncurrent assets 12,334,636 6,819,355 22,569,446 41,723,437
Total assets $ 19,597,580 $ 11,100,205 $ 38,216,442 $ 68,914,227
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 1,443,080 $ 242,428 $ 369,292 $ 2,054,800
Customer deposits 2,133,675 - 94,904 2,228,579
Warrants, notes and
capital leases payable 127,123 52,435 972,023 1,151,581
Total current liabilities 3,703,878 294,863 1,436,219 5,434,960
Noncurrent liabilities
Compensated absences 129,654 157,821 148,853 436,328
Warrants, notes and
capital leases payable 1,392,274 740,989 19,672,633 21,805,896
Net OPEB Obligation 139,647 145,229 192,909 477,785
Due to other funds 219,624 162,834 1,071 383,529
Total noncurrent liabilities 1,881,199 1,206,873 20,015,466 23,103,538
Total liabilities 5,585,077 1,501,736 21,451,685 28,538,498
NET ASSETS
Invested in capital assets,
net of related debt 10,614,790 6,001,056 1,375,100 17,990,946
Restricted for debt service 324,456 147,515 11,865,076 12,337,047
Unrestricted 3,073,257 3,449,898 3,524,581 10,047,736
Total net assets 14,012,503 9,598,469 16,764,757 40,375,729
Total liabilities and net assets $ 19,597,580 $ 11,100,205 $ 38,216,442 $ 68,914,227
Major Funds
-21-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Water and
Electric Natural Gas Waste Water
Fund Fund Fund Total
OPERATING REVENUES
Sales and services $ 18,547,156 $ 6,190,435 $ 8,992,228 $ 33,729,819
Other charges, sales and receipts 344,178 1,551 846,352 1,192,081
Total operating revenues 18,891,334 6,191,986 9,838,580 34,921,900
OPERATING EXPENSES
Energy purchases and
cost of goods sold 12,102,716 1,538,747 740,345 14,381,808
Salaries 591,320 568,845 908,331 2,068,496
Depreciation 642,043 282,866 917,010 1,841,919
Insurance 327,353 236,566 263,427 827,346
Electric energy furnished
to other departments 1,050,924 - - 1,050,924
Maintenance 484,669 192,090 1,375,464 2,052,223
Community development projects 145,309 145,309 147,099 437,717
Other operating expense 1,497,964 1,431,741 1,911,084 4,840,789
Total operating expenses 16,842,298 4,396,164 6,262,760 27,501,222
OPERATING INCOME 2,049,036 1,795,822 3,575,820 7,420,678
NONOPERATING
REVENUES (EXPENSES)
Interest expense (70,536) (34,519) (788,237) (893,292)
Interest income 6,211 7,840 6,366 20,417
Distribution of joint
revenue (expense) – net - (54,000) - (54,000)
Total nonoperating
revenues (expenses) (64,325) (80,679) (781,871) (926,875)
INCOME BEFORE TRANSFERS
AND OTHER ITEMS 1,984,711 1,715,143 2,793,949 6,493,803
TRANSFERS AND OTHER ITEMS
Transfers out (1,564,847) (1,248,609) (1,360,346) (4,173,802)
Total transfers (out) (1,564,847) (1,248,609) (1,360,346) (4,173,802)
Change in net assets 419,864 466,534 1,433,603 2,320,001
NET ASSETS – BEGINNING
OF YEAR 13,592,639 9,131,935 15,331,154 38,055,728
NET ASSETS – END OF YEAR $ 14,012,503 $ 9,598,469 $ 16,764,757 $ 40,375,729
Major Funds
-22-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Water and
Electric Natural Gas Waste Water
Fund Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers $ 19,274,794 $ 6,195,732 $ 9,838,892 $ 35,309,418
Paid to suppliers for goods and services (15,248,762) (3,556,396) (4,678,300) (23,483,458)
Paid to personnel for services (591,320) (568,845) (908,331) (2,068,496)
Net cash provided (used) by operating activities 3,434,712 2,070,491 4,252,261 9,757,464
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income and joint revenue (expense) 6,211 (46,160) 6,366 (33,583)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from borrowings 385,746 385,746 15,553,308 16,324,800
Repayment of debt (495,142) (432,036) (7,044,661) (7,971,839)
Interest paid (77,361) (36,696) (751,446) (865,503)
Purchase of property, plant and equipment (1,047,885) (446,184) (899,552) (2,393,621)
Net cash provided (used) by capital and
related financing activities (1,234,642) (529,170) 6,857,649 5,093,837
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable/payable (311,421) (41,413) 99,481 (253,353)
Transfers in (out) (1,564,847) (1,248,609) (1,360,346) (4,173,802)
Net cash provided (used)
by noncapital financing activities (1,876,268) (1,290,022) (1,260,865) (4,427,155)
INCREASE (DECREASE) IN CASH 330,013 205,139 9,855,411 10,390,563
Cash – beginning of year 4,433,420 3,886,635 5,475,723 13,795,778
CASH – END OF YEAR $ 4,763,433 $ 4,091,774 $ 15,331,134 $ 24,186,341
Reconciliation of operating income to net cash
provided (used) by operating activities
Income (loss) from operations $ 2,049,036 $ 1,795,822 $ 3,575,820 $ 7,420,678
Adjustments to reconcile income from operations to
net cash provided (used) by operating activities
Depreciation 642,043 282,866 917,010 1,841,919
Amortization (2,197) (3,665) (182,986) (188,848)
Change in assets and liabilities
Decrease (increase) in accounts receivable 383,460 3,746 314 387,520
Decrease (increase) in inventories (19,966) (21,680) (15,966) (57,612)
Decrease (increase) in prepaid expenses 11,993 5,130 2,073 19,196
Increase (decrease) in accounts payable 154,907 (47,340) (93,851) 13,716
Increase (decrease) in customer deposits 157,460 - 50,800 208,260
Increase (decrease) in compensated absences 13,231 10,867 (61,490) (37,392)
Increase (decrease) in net OPEB obligation 44,745 44,745 60,537 150,027
Net cash provided (used) by operating activities $ 3,434,712 $ 2,070,491 $ 4,252,261 $ 9,757,464
Major Funds
THIS PAGE INTENTIONALLY LEFT BLANK
-23-
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF NET ASSETS
DISCRETELY PRESENTED COMPONENT UNITS
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report and notes to the financial statements.
Public Library Airport
Board Authority Total
ASSETS
Cash $ 125,316 $ 688,294 $ 813,610
Other assets - 26,846 26,846
Land and construction in progress - 11,886,328 11,886,328
Capital assets, net 60,710 10,495,430 10,556,140
Total assets $ 186,026 $ 23,096,898 $ 23,282,924
LIABILITIES
Accounts payable and accrued expenses $ 3,698 $ - $ 3,698
Long-term liabilities
Due within one year - 240,000 240,000
Due in more than one year - 8,695,000 8,695,000
Total liabilities 3,698 8,935,000 8,938,698
NET ASSETS
Invested in capital assets, net of related debt 60,710 13,446,758 13,507,468
Restricted for:
Capital projects - - -
Unrestricted 121,618 715,140 836,758
Total net assets 182,328 14,161,898 14,344,226
Total liabilities and net assets $ 186,026 $ 23,096,898 $ 23,282,924
Governmental Activities
-24- CITY OF FAIRHOPE, ALABAMA COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS SEPTEMBER 30, 2012 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Public Library AirportFunctions/Programs Expenses Services Contributions Contributions Board Authority TotalAirport Authority $ 564,937 $ 145,792 $ 788,671 $ - $ $ 369,526 $ 369,526 Public Library Board 696,769 37,396 670,950 - 11,577 11,577 $ 1,261,706 $ 183,188 $ 1,459,621 $ - 11,577 369,526 381,103 General revenues:Investment earnings - 3,406 3,406 Total general revenues - 3,406 3,406 Change in net assets 11,577 372,932 384,509 Net assets, beginning 170,751 13,788,966 13,959,717Net assets, ending $ 182,328 $ 14,161,898 $ 14,344,226Governmental Activities Net (Expense) Revenue and Changes in Net Program Revenues
THIS PAGE INTENTIONALLY LEFT BLANK
NOTES TO THE FINANCIAL STATEMENTS
-25-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Fairhope, Alabama (the City) was incorporated in April, 1908. The City operates under a
Mayor – Council form of government chosen at large every four years.
The accounting policies of the City conform to accounting principles generally accepted in the United
States of America as applicable to municipal governments. The following is a summary of the more
significant policies.
A. REPORTING ENTITY
The financial statements of the City have been prepared in conformity with the accounting
principles generally accepted in the United States of America as specified by the Governmental
Accounting Standards Board (GASB).
These financial statements present the primary government (the City) and its discretely presented
component units, entities for which the government is considered financially accountable. The
units are governmental fund type component units and are reported in a separate column of the
government-wide statements to emphasize they are legally separate from the primary government.
The discretely presented component units have a September 30 fiscal year-end.
Component Units
Fairhope Public Library - The Library has its own governing body which operates the City public
library and is appointed by the City Council. The City provides significantly all the annual
operating financial support to the Library. The Library's other sources of revenue come from State
financial assistance, gifts, bequests and user fees. The Library Board does not issue separate
financial statements.
Fairhope Airport Authority - The Authority operates the City Airport and has its own governing
body which is appointed by the City Council. The City provides a significant portion of the annual
operating funds support to the Airport. The Airport's other sources of revenue come from Hanger
and Office rentals, and fuel sales. The Airport Authority does not issue separate financial
statements.
These financial statements do not include the following:
Bay Medical Clinic Board
Industrial Board of the City of Fairhope
Medical Clinic Board – East, West or North
Downtown Redevelopment Authority
Parking Authority
City management does not exert significant influence or control and does not guarantee any of their
outstanding debts.
-26-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. BASIS OF PRESENTATION – GOVERNMENT-WIDE AND FUND LEVEL
Government-wide
The basic financial statements include government-wide and fund financial statements. The
reporting model focuses on the City, as a whole, and major funds. Government-wide and fund
financial statements categorize primary activities as governmental or business-type. In the
Statement of Net Assets, governmental and business-type activities (a) are presented on a
consolidated basis, (b) reflect, full accrual accounting, which incorporates long-term assets and
receivables as well as long-term debt and obligations, and (c) are reported using the economic
resources measurement focus. Receivables and payables between activities are eliminated in the
government-wide presentation through the caption “Internal Balances” on the Statement of Net
Assets.
The Statement of Activities reflects both the gross and net cost per functional category (street,
police, fire, etc.) which are otherwise being supported by general government revenues (taxes,
licenses, and permits, etc.). The Statement of Activities reduces gross expenses, including
depreciation, by related program revenues. The program revenues must be directly associated with
a function or a business-type activity. Operating grants include operating-specific and
discretionary (either operating or capital) grants while the capital grants column reflects capital-
specific grants.
Fund Level
The governmental fund level financial statements are presented on a current financial resource and
modified accrual basis of accounting. Since governmental fund level financial statements are
presented on a different basis of accounting and measurement focus than governmental activities in
the government-wide presentation, a summary is presented to explain adjustments necessary to
reconcile fund level statements to the government-wide presentation.
The accounts of the City are organized on the basis of funds which are each considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-
balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, as
appropriate. Government resources are allocated to and accounted for in individual funds based
upon the purposes for which they are to be spent and the means by which spending activities are
controlled. The various funds are grouped into broad fund categories as follows:
General Fund – The General Fund is used to account for all revenues and expenditures applicable
to the general operations of City government which are not properly accounted for in another fund.
All general operating revenues which are not restricted or designated as to use by outside sources
are recorded in the General Fund.
Special Revenue Fund – Special revenue funds are operating funds for which the use of revenues
(usually from taxes) is restricted or designated by outside sources. They are usually required by
State or local laws to finance certain activities or functions.
-27-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Debt Service Fund – Debt service funds are used to account for the payment of interest and
principal on general long term warrants and notes not accounted for in the proprietary funds.
Capital Project Fund – Capital project funds are used to account for the financial resources used to
construct or acquire major capital items (other than those financed by proprietary funds).
Enterprise Funds:
The Electric Fund, Natural Gas Fund, and Water and Waste Water Fund are Enterprise Funds,
which are used to account for the operations of the utilities. Utilities are provided to residents in
and around the City of Fairhope. Enterprise Funds are used to account for operations which are
financed or operated in a manner similar to private business enterprises – where the intent of the
governing body is that the costs of providing goods or services to the general public on a
continuing basis be financed or recovered through user charges and fees. Operating revenues,
shown for proprietary operations, generally result from producing or providing goods and services.
Operating expenses include all costs related to providing services or products. All other revenues
or expenses not meeting these criteria are reported as nonoperating income or expenses.
C. CAPITAL ASSETS
The accounting treatment for capital assets depends on whether the assets are used by
governmental funds or proprietary funds and fund level or government-wide reporting.
In government-wide reporting, all capital assets are reported as capital assets for both
governmental-type and business-type activities. The City has not established a minimum
capitalization threshold at this time. Depreciation is provided on all capital assets at the
government-wide level.
In fund level reporting, capital assets are reported as expenditures by governmental funds, while
they remain capital assets in proprietary funds. Depreciation is provided, only, in proprietary funds
at the fund level.
Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Donated capital assets are valued at estimated fair value on the date donated.
Depreciation is allocated as an expense in the Statement of Activities (government-wide level) and
accumulated depreciation is reflected in the Statement of Net Assets (government-wide level).
Depreciation has been provided over the estimated useful lives using the straight line rates as
follows:
Plant and distribution systems 30 - 40 years
Buildings 25 - 50 years
Golf course improvements 10 - 40 years
Vehicles and equipment 3 - 10 years
Infrastructure (roads, bridges, drainage) 25 - 50 years
Runways and taxiways 75 years
-28-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. BASIS OF ACCOUNTING
Basis of accounting refers to when revenues and expenditures/expenses are recognized in the
accounts and reported in the financial statements. Basis of accounting relates to the timing of the
measurements made, regardless of the measurement focus applied.
All governmental funds are accounted for using the modified accrual basis of accounting. Under
the modified accrual basis, revenues are recognized when they become susceptible to accrual, that
is when they become both “measurable” and “available” to finance expenditures of the current
period. Ad valorem and other taxes collected by an intermediary are considered “measurable”
when in the hand of the intermediary collecting governments and may be recognized as revenue at
that time. Expenditures, generally, are recorded at the time liabilities are incurred. Revenues
susceptible to accrual are: lodging tax, property taxes, and federal financial assistance programs,
which are measurable and available to finance expenditures of the current period. The City uses a
60-day availability period except for FEMA disaster recovery grants which are recognized using a
12-month availability period. Revenue which is not both measurable and available includes
licenses, rents, permits and fines.
The proprietary fund financial statements are presented on the accrual basis of accounting in
accordance with Governmental Accounting Standards Board (GASB) Statement No. 20,
Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That
Use Proprietary Fund Accounting. The City has elected to apply all applicable GASB
pronouncements as well as any statements and interpretations issued by the Financial Accounting
Standards Board (FASB) on or before November 30, 1989, unless those pronouncements conflict
or contradict GASB pronouncements. The City also elected to apply all statements and
interpretations issued by the FASB after November 30, 1989, that do not conflict with or contradict
GASB pronouncements.
E. CASH
The City maintains a system in which some excess cash is placed in interest bearing accounts. Cash
applicable to a particular fund is readily identifiable. Interest earned is allocated to each fund based
upon the proportionate balances of each fund’s cash in the account.
F. RECEIVABLES FROM UTILITY CUSTOMERS
The Electric Fund purchases at face value, the utility receivables of the Natural Gas Fund and the
Water and Waste Water Fund as well as the garbage receivable of the General Fund. Purchase is
made at the time customers are billed. Customer payments for all are then deposited to the Utility
Account in the Electric Fund.
-29-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. INVENTORIES
Governmental fund inventories are maintained on a purchase method of accounting where items
are purchased and charged to the budgetary accounts upon receipt. Year-end balances are not
significant in governmental funds. Proprietary fund inventories are maintained on a consumption
basis and consist of supplies for the utility plant.
H. PROPERTY TAX
All ad valorem taxes levied by the state, county and any municipality in Baldwin County are
assessed and collected by the Revenue Commissioner of Baldwin County. The Baldwin County
property tax calendar requires the Revenue Commissioner to assess and attach taxes as enforceable
liens on property as of September 30, and taxes are due October 1 through December 31. Property
taxes not paid by January 1 are considered as delinquent. Tax collections received by the County
Revenue Commissioner are remitted to the City monthly. In accordance with the implementation
of Governmental Accounting Standard (GASB) No. 33, revenue is recorded based upon taxes
assessed and considered available. Any taxes not considered available are recorded as deferred
revenue.
I. DEBT ISSUE COST
Issuance expenses on long term debt of proprietary funds are deferred and amortized, on the bonds
outstanding method, over the terms of the related issues. In the fund financial statements, bond
discounts, premiums, and issuance costs are treated as period costs in the year of issue. In the
government-wide financial statements, bond discounts, premiums, and issuance costs are deferred
and amortized over the term of the bonds using the bonds outstanding method. Bond
discounts/premiums are presented as a reduction/addition to the face amount of the bonds payable
whereas issuance costs are recorded as other assets.
J. DEFERRED REVENUE
The City reports deferred revenue on its fund balance sheet. Deferred revenues arise when potential
revenue does not meet both the measurable and available criteria for recognition in the current period.
Revenues derived from Street Assessments are deferred and included in revenue when the receivables
become available (collected). Proprietary funds defer revenue recognition when monies are collected
for goods and services prior to the provision of services.
K. CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the proprietary funds consider all highly liquid
investments, with an original maturity of three months or less, to be cash equivalents. Investments
consist of U. S. Treasury money market accounts which are presented at cost which equals fair market
value.
-30-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
L. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.
M. NET ASSET AND EQUITY CLASSIFICATIONS
Government-wide Financial Statements
Equity is classified as net assets and displayed in three components:
Invested in capital assets, net of related debt - Consists of capital assets including restricted
capital assets, net of accumulated depreciation, and reduced by the outstanding balances of
any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition,
construction, or improvement of those assets.
Restricted net assets - Consists of net assets with constraints placed on the use either by (1)
external groups such as creditors, grantors, contributors, or laws or regulations of other
governments; or (2) the City's own laws through its enabling legislation and other
provisions of its laws and regulations.
Unrestricted net assets - All other net assets that do not meet the definition of "restricted"
or "invested in capital assets, net of related debt.”
Fund Financial Statements
The fund equity of the governmental fund financial statements is classified as fund balance. In
March 2009, the City adopted a GASB standard that establishes a hierarchy based on the extent to
which a government is bound to observe constraints imposed on the use of the resources reported
in governmental funds.
Fund balance is classified into one of the following four components:
Restricted fund balance – Consists of fund balances with constraints placed on the use
either by (1) external groups such as creditors, grantors, contributors, or laws or
regulations of other governments; (2) or the City’s own laws through its enabling
legislation and other provisions of its laws and regulations.
Committed fund balance – Consists of fund balances that are useable only for specific
purposes by formal action of the government’s highest level of decision making authority.
The City’s highest level of decision making lies with the Mayor of the City and the City
Council. In order to establish, modify or rescind a fund balance commitment, the Mayor
and City Council must pass a law by formal action committing the funds.
Assigned fund balance – Consists of fund balances that are intended to be used for specific
purposes but are neither restricted nor committed. Intent should be expressed by (1) the
governing body itself, or (2) a subordinate high-level body or official who the governing
body has delegated the authority to assign amounts to be used for specific purposes. The
Mayor and the City Council have the power to assign fund balance amounts to specific
purposes. The governing body must vote to grant authorization of assigned fund balances
to specific purposes.
-31-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Unassigned fund balances – All other fund balances that do not meet the definition of
“restricted, committed or assigned fund balances.”
The City considers restricted fund balances to have been spent when both restricted and
unrestricted fund balances are available. Also, the City considers assigned and committed fund
balances to have been spent when unassigned or unrestricted amounts are available.
N. MAJOR FUNDS
The City reports the following major Governmental funds:
General Fund
Capital Projects Fund
The City reports the following enterprise funds as major funds:
Electric Fund
Natural Gas Fund
Water and Waste Water Fund
NOTE 2 INTERFUND TRANSACTIONS
The selling price of electric energy delivered without charge by the Electric Fund to various other funds,
boards, and offices of the City of Fairhope is charged to the Electric Fund’s operations as electric energy
furnished to other divisions of the City of Fairhope. The Water and Waste Water Fund and Golf
Department purchase electric energy they receive, at cost.
In fiscal year 2012, the General Fund transferred to the Debt Service Fund $5,263,705 in support of long
term debt service.
In August 2012, the General Fund transferred to the Special Revenue Fund-Impact Fees the revenue and
expenditures related to Impact Fees including the prior year cash balance. The current year Impact Fee
revenue totals $439,254. Revenue is reflected in the Governmental Funds and the Special Revenue
Fund-Impact Fees as Charges for Services.
The utility operations transfer a portion of their earnings to the General Fund each year to support
general government operations. In fiscal year 2012, the following amounts were transferred from the
utility funds noted to the General Fund.
Electric Fund $ 1,564,847
Natural Gas Fund 1,248,609
Water and Waste Water Fund 1,360,346
Total $ 4,173,802
In fiscal year 2012, the City transferred $281,124 to the Airport Authority and $600,000 to the Public
Library Board, both discretely presented component units.
-32-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 2 INTERFUND TRANSACTIONS (continued)
Interfund receivables and payables at September 30, 2012 are:
Due from Due to
General Fund
Electric $ 13,389 $ -
Water and Waste Water 1,071 -
Gas Tax 760 -
Capital Projects 23,219 -
Special Revenue - Impact Fees 8,730 -
Electric Fund
General - 13,389
Water and Waste Water - 206,236
Natural Gas 162,834 -
Natural Gas Fund
Electric - 162,834
Water and Wastewater Fund
General - 1,071
Electric 206,236 -
Gas Tax Fund
General - 760
Capital Projects Fund
General - 23,219
Special Revenue Fund - Impact Fees
General - 8,730
$ 416,239 $ 416,239
During the course of normal operations, the City has numerous transactions between funds to provide
services, construct assets, service debt, etc. These transactions are generally reflected as interfund
receivables and liabilities. Transactions reimbursing a fund for expenditures are recorded as expenditures
in the disbursing fund as revenues in the receiving fund.
-33-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 2 CAPITAL ASSETS
Changes in capital assets, during the fiscal year, were as follows:
Balance Balance
10/01/11 Increases Decreases 09/30/12
Governmental Activities
Capital assets not subject
to depreciation
Land $ 19,827,727 $ - $ - $ 19,827,727
Total 19,827,727 - - 19,827,727
Other capital assets
Buildings and structures 32,455,192 1,310,101 - 33,765,293
Vehicles and equipment 12,972,069 354,425 (297,024) 13,029,470
Infrastructure 59,271,993 - - 59,271,993
Total 104,699,254 1,664,526 (297,024) 106,066,756
Less accumulated depreciation for
Buildings and structures (6,859,692) (792,881) - (7,652,573)
Vehicles and equipment (10,794,400) (738,310) 123,915 (11,408,795)
Infrastructure (25,073,270) (1,577,900) - (26,651,170)
Total accumulated depreciation (42,727,362) (3,109,091) 123,915 (45,712,538)
Other capital assets, net 61,971,892 (1,444,565) (173,109) 60,354,218
Governmental capital assets, net $ 81,799,619 $ (1,444,565) $ (173,109) $ 80,181,945
Depreciation was charged to governmental activities as follows:
General $ 334,084
Sanitation 207,860
Police 257,498
Fire 122,907
Public Library 210,635
Street 1,630,748
Adult Recreation 88,804
Recreation 187,372
Golf 69,183
Total $ 3,109,091
-34-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 2 CAPITAL ASSETS – CONTINUED
Balance Balance
10/01/11 Increases Decreases 09/30/12
Business Type Activities
Capital assets not subject to depreciation
Land $ 369,280 $ - $ - $ 369,280
Construction in progress - 14,490 - 14,490
Total 369,280 14,490 - 383,770
Other capital assets
Distribution and collection system 62,075,403 1,662,048 - 63,737,451
Buildings, vehicles and equipment 10,236,365 717,085 - 10,953,450
Total 72,311,768 2,379,133 - 74,690,901
Less accumulated depreciation for
Distribution and collection system (24,389,673) (1,506,888) - (25,896,561)
Buildings, vehicles and equipment (7,894,656) (335,031) - (8,229,687)
Total accumulated depreciation (32,284,329) (1,841,919) - (34,126,248)
Other capital assets, net 40,027,439 537,214 - 40,564,653
Capital assets, net $ 40,396,719 $ 551,704 $ - $ 40,948,423
Component Unit - Public Library
Equipment $ 332,938 $ 10,663 $ - $ 343,601
Less accumulated depreciation (254,671) (28,220) - (282,891)
Capital assets, net $ 78,267 $ (17,557) $ - $ 60,710
Component Unit - Airport Authority
Capital assets not subject to depreciation
Land $ 10,934,228 $ - $ - $ 10,934,228
Construction in progress 366,483 585,617 - 952,100
Total 11,300,711 585,617 - 11,886,328
Other capital assets
Runways 9,309,815 - - 9,309,815
Buildings and improvements 3,968,008 - - 3,968,008
Equipment 98,885 - - 98,885
Total 13,376,708 - - 13,376,708
Less accumulated depreciation for
Runways (910,426) (124,130) - (1,034,556)
Buildings and improvements (1,659,518) (99,505) - (1,759,023)
Equipment (84,559) (3,140) - (87,699)
Total accumulated depreciation (2,654,503) (226,775) - (2,881,278)
Other capital assets, net 10,722,205 (226,775) - 10,495,430
Capital assets, net $ 22,022,916 $ 358,842 $ - $ 22,381,758
-35-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 4 SINKING FUNDS – PROPRIETARY FUNDS
The cash and investments in these sinking funds (bond, reserve, and replacement funds) are restricted as
to their use in accordance with their respective bond indentures. Amounts in bond funds are included in
current assets, while amounts in reserve funds are separately listed as restricted assets.
NOTE 5 NOTES AND WARRANTS PAYABLE – BUSINESS-TYPE ACTIVITIES
The following is a summary of revenue bonds, notes and warrants payable from the proprietary funds as
of September 30, 2012:
Utilities Revenue Warrants, Series 2011 dated October 13, 2011,
original debt obligation of $16,140,000, interest rate 3.15%, payable
semi-annually, principal payable December 1, 2011 through
December 1, 2030. $15,625,000
General Obligation Warrant, Series 2011, dated October 13, 2011,
original debt obligation of $195,000, Interest at 2.55% payable
semi-annually, principal payments due December 1, 2012 through
June 1, 2025. 176,220
Utilities Revenue Warrants, Series 2005 dated March 1, 2005,
original debt obligation of $8,455,000, interest rate 2.20% to
4.25%, payable semi-annually, principal payable December 1, 2005
through December 1, 2020. 6,530,000
Utilities Revenue Warrants, Series 2009 dated April 2, 2009,
original debt obligation of $1,250,000, interest rate 3.85%, payable
semi-annually, principal payable 2009 through 2019. 970,000
General Obligation Refunding Warrant, Series 2009, dated April 2, 2009,
original debt obligation of $61,740, interest rate 3.62%, payable
semi-annually, principal payable 2010 through 2020. 50,040
TOTAL $23,351,260
-36-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 5 NOTES AND WARRANTS PAYABLE – BUSINESS-TYPE ACTIVITIES (CONTINUED)
On October 13, 2011, the City issued utilities revenue warrants at par in the amount of $16,140,000 at a
3.15% interest rate. A portion of this issue together with the sum of $823,453 on deposit in escrow was
used to refund the City’s Utilities Revenue Warrants, Series 2002, dated September 1, 2002, with an
outstanding value of $6,720,000. The Utilities Revenue Warrants, Series 2011 mature on December 1,
2030. The sum of $6,885,825 was deposited into an irrevocable trust with an escrow agent to provide debt
service payments until the warrants were called on December 1, 2011.
As a result of the refunding, the City reduced its total debt service requirements by $1,436,163, which
resulted in an economic gain (difference between the present value of the debt service payments on the old
debt and the new debt) of $354,680.
Revenue bonds, notes, and warrants payable from the proprietary funds 2011 and prior were for the
purpose of financing, or re-financing, new water tanks, new water wells, UV Sewer System, new booster
pump, radio system, support tower, phone system, construction of warehouse building and mechanics shop,
and extensions to the City’s water and sewer lines.
NOTE 6 NOTE AND WARRANTS PAYABLE – GOVERNMENTAL ACTIVITIES
The following is a governmental fund summary of long term debt at September 30, 2012:
General Obligation Warrant, Series 2011, dated October 13, 2011,
original debt obligation of $4,005,000, interest at 2.55%,
payable semi-annually, principal payments due December 1, 2012
through June 1, 2025. $ 3,828,780
General Obligation Warrant, Series 2008, dated March 6, 2008,
original debt obligation of $1,300,000, interest at 2.91%, payable
semi-annually, $130,000 annual principal payments are due on
April 1 from 2009 to 2018. 721,741
General Obligation Warrants, Series 2007 dated June 1, 2007,
original debt obligation of $7,900,000, interest rate 4.00% to
5.00%, payable semi-annually, principal payable June 1, 2008
through June 1, 2032. 6,920,000
General Obligation Refunding Warrant, Series 2009, dated April 2, 2009,
original debt obligation of $3,368,260, interest rate 3.62%, payable
semi-annually, principal payable 2010 through 2020. 2,729,960
TOTAL $14,200,481
-37-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 6 NOTE AND WARRANTS PAYABLE – GOVERNMENTAL ACTIVITIES (CONTINUED)
On October 13, 2011, The City issued general obligation warrants at par in the amount of $4,200,000 at a
2.55% interest rate. The issue together with the sum of $151,431 on deposit in escrow was used to refund
the City’s General Obligation Warrants, Series 2002, dated September 1, 2002, with an outstanding value
of $4,225,325. The General Obligation Warrants, Series 2011 mature on June 1, 2025. The sum of
$4,313,491 was deposited in an irrevocable trust with an escrow agent to provide debt service payments
until the warrants were called on November 15, 2011.
As a result of the refunding, the City reduced its total debt service requirements by $894,885, which
resulted in an economic gain (difference between the present value of the debt service payments on the old
debt and the new debt) of $622,430.
The General Obligation Warrant Series 2009 were issued for the purpose of refunding the City’s General
Obligation Warrants Series 1999.
The General Obligation Warrant Series 2008 related to construction costs on the new Library. The Public
Library Board requested the City secure a warrant as a “bridge loan” until pledges from outside donors are
collected and remitted to the City. In 2008, the City refunded the original short term note with a general
obligation warrant to be paid over 10 years. The Library Board committed to pay costs of the Library
project in excess of $3,000,000. Excluding interest on related long-term debt, the Library project costs, to
date, are $8,070,288. As of September 30, 2012, the Library Board has provided funding of $3,263,461
from donations and grants.
General Obligation Warrants and notes payable from the governmental funds issued prior to 2008 were for
the purpose of financing, or re-financing, automated garbage equipment, fire truck pumper, city drainage
projects, hurricane damage repairs and upgrade to Municipal pier, construction of new facilities, including
justice center, public library, tennis complex, recreation center, outdoor swimming pool, baseball facility,
and renovation of Fairhope historic museum.
-38-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 7 CHANGES IN LONG TERM DEBT
Amounts
Balance Balance due within
10/01/11 Additions Reductions 09/30/12 one year
GOVERNMENTAL ACTIVITIES
Warrants and notes payable
General obligation warrants $ 14,965,792 $ 4,015,200 $ (4,780,511) $ 14,200,481 $ 893,420
Total warrants and notes payable 14,965,792 4,015,200 (4,780,511) 14,200,481 893,420
Warrant discount (36,311) - 1,763 (34,548) -
14,929,481 4,015,200 (4,778,748) 14,165,933 893,420
Other liabilities
Obligations under capital leases 24,449 - (24,449) - -
Compensated absences 1,069,676 692,820 (700,528) 1,061,968 531,665
Governmental activities
long-term liabilities $ 16,023,606 $ 4,708,020 $ (5,503,725) $ 15,227,901 $ 1,425,085
The City's general obligation warrants are paid through the Debt Service Fund while notes and capital leases are paid directl
by the General Fund. The compensated absences liability will be liquidated by the General Fund.
Amounts
Balance Balance due within
10/01/11 Additions Reductions 09/30/12 one year
BUSINESS-TYPE ACTIVITIES
Warrants and notes payable
General obligation warrants $ 241,993 $ 184,800 $ (200,533) $ 226,260 $ 16,581
Utilities revenue warrants 14,925,000 16,140,000 (7,940,000) 23,125,000 1,135,000
Total warrants and notes payable 15,166,993 16,324,800 (8,140,533) 23,351,260 1,151,581
Deferred amount on refunding (359,350) (58,808) 176,404 (241,754) -
Warrant discounts (197,898) - 45,869 (152,029) -
14,609,745 16,265,992 (7,918,260) 22,957,477 1,151,581
Other liabilities
Compensated absences 560,563 53,702 (86,843) 527,422 -
Business-type activities
long-term liabilities $ 15,170,308 $ 16,319,694 $ (8,005,103) $ 23,484,899 $ 1,151,581
Compensated absences due within one year included in accrued liabilities $ 91,094
Compensated absences due in more than one year included in noncurrent liabilities 436,328
Total compensated absences liability $ 527,422
-39-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 8 SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY
The following is a summary of debt service requirements to maturity of long term debt of
the Governmental Funds as of September 30, 2012, including interest payments:
Year
Ending
September 30, Principal Interest Total
2013 $ 893,420 $ 528,728 $ 1,422,148
2014 908,330 499,032 1,407,362
2015 932,930 466,455 1,399,385
2016 967,440 432,902 1,400,342
2017 987,260 397,945 1,385,205
2018 - 2022 4,188,021 1,485,661 5,673,682
2023 - 2027 2,998,080 838,307 3,836,387
2028 - 2032 2,325,000 322,875 2,647,875
TOTALS $ 14,200,481 $ 4,971,905 $ 19,172,386
GOVERNMENTAL ACTIVITIES
The following is a summary of debt service requirements to maturity of long term debt
of the Proprietary Funds as of September 30, 2012, including interest payments and
Year
Ending
September 30, Principal Interest Total
2013 $ 1,151,581 $ 775,965 $ 1,927,546
2014 1,196,670 735,223 1,931,893
2015 1,237,070 692,187 1,929,257
2016 1,282,560 646,768 1,929,328
2017 1,327,740 598,866 1,926,606
2018 - 2022 7,433,720 2,204,805 9,638,525
2023 - 2027 7,416,920 879,878 8,296,798
2028 - 2030 2,304,999 148,129 2,453,128
$23,351,260 $6,681,821 $30,033,081
excluding discounts and premiums related to warrant issuance:
BUSINESS-TYPE ACTIVITES
-40-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 9 BONDS PAYABLE – COMPONENT UNITS
On August 26, 2010, the Airport Authority issued Airport Improvement Refunding Bonds in the amount
of $8,935,000 at a variable interest rate. The bonds are repriced monthly by the remarketing agent at a
rate to maintain market value of 100% principal. This issue was used to refund the Series 2007 Airport
Improvement Bonds with an outstanding balance of $8,845,000. The 2010 Airport Improvement
Refunding Bonds mature March 1, 2020, but have mandatory redemption requirements as presented
below. The bonds are limited obligations of the Airport Authority, payable solely out of appropriations
received from the City of Fairhope, Alabama. The Appropriation Agreement between the Airport
Authority and the City expires annually on September 30 and is renewable at the City’s option. The
bond rate at September 30, 2012, was 1.56%.
The following is a summary of debt service requirements to maturity of long term debt of the Airport
Authority as of September 30, 2012, including estimated interest payments at 1.56% and excluding
discounts related to bonds:
Year
Ending
Sept. 30, Principal Interest Total
2013 240,000$ 138,202$ 378,202$
2014 255,000 134,149 389,149
2015 270,000 129,857 399,857
2016 285,000 125,327 410,327
2017 305,000 124,294 429,294
2018 - 2020 7,580,000 52,220 7,632,220
$8,935,000 $704,049 $9,639,049
-41-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 10 LINE OF CREDIT PAYABLE
On November 28, 2011, the City established a revolving line of credit with a $2,000,000 limit through
the issuance of a general obligation warrant. The line of credit, dated November 28, 2011, bears interest
at a variable rate of 80% of the One Month LIBOR Rate plus 100 basis points, and matures November
28, 2012. The interest rate at September 30, 2012 is 1.1844%. This line of credit is available to enable
the City to acquire, construct and provide various public street improvements in the City.
Following is the summary of activity for fiscal year 2012:
General Fund
Beginning Balance -$
Advances 1,705,225
Payments -
Balance at September 30, 2012 1,705,225$
NOTE 11 SALARIES – PROPRIETARY FUNDS
The following is a summary of employees’ salaries by Utility Fund for the year ended September 30,
2012:
Water and
Electric Natural Gas Waste Water
Fund Fund Fund
Total salaries $ 879,009 $ 738,417 $ 966,845
Less:
Salaries capitalized for plant
additions 287,690 169,572 58,514
Amount of salaries charged to
operations $ 591,319 $ 568,845 $ 908,331
NOTE 12 RISK MANAGEMENT AND CONTINGENICES
The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City obtains coverage
from commercial insurance companies and effectively manages risk through various employee
education and prevention programs. There were no instances where settlements exceeded insurance
coverage in the last three years.
-42-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 12 RISK MANAGEMENT AND CONTINGENICES (continued)
Various lawsuits are pending against the City. City management believes that the potential adverse
impact of these claims is mitigated by insurance and will not be material to the financial statements of
the City.
The City receives Federal and State grants for specific purposes that are subject to review and audit by
the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for
expenditures disallowed under the terms of the grant. City management believes such disallowances, if
any, will be immaterial.
NOTE 13 COMPENSATED ABSENCES
The City accrues vacation earned by employees as well as other compensated absences with similar
characteristics. Sick leave, which can be paid at termination, if certain conditions are met, is accrued
based on the probability that a portion of the current employees will meet required criteria. A liability for
sick leave to be paid at termination has been accrued based on estimated probability factors to years of
service. The liability to employees who currently meet the criteria to receive sick leave pay has been
accrued at 100% of the current hours sick leave earned at current pay rates. Accumulated unpaid
vacation and sick pay are accrued when incurred in the Proprietary Funds. Amounts normally paid with
expendable available financial resources are recorded in the General Fund when the obligation has
matured.
Employees may accumulate vacation leave without limitation, however, the maximum accumulation of
sick leave is limited to 960 hours. Employees are paid 100% of their accumulated vacation upon
termination. Accumulated sick leave is paid only upon retirement to employees with 25 years or more
of service, at any age, and to employees with 10 years of service who have attained age sixty (60).
-43-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 14 PENSION PLAN
Plan Description
The City’s defined benefit pension plan provides retirement and disability benefits, cost-of-living
adjustments, and death benefits to plan members and beneficiaries. The plan is affiliated with the
Employees Retirement System of Alabama (RSA), an agent multiple-employer pension plan. At
September 30, 2011, RSA had a total of 1,145 participating units.
RSA issues a publicly available financial report that includes financial statements and required
supplementary information for the plan. RSA prepares its financial statements using the accrual basis
of accounting and recognizes contributions as revenues when earned. Benefits and refunds are
recognized when due and payable. The report may be obtained by writing the Retirement Systems of
Alabama, P. O. Box 302150, Montgomery, Alabama 36130-2150.
Substantially all employees are members of RSA. Membership is mandatory for covered or eligible
employees. Vested employees may retire with full benefits at age 60 (with 10 years of service) or after
25 years of service. Retirement benefits are calculated by two methods with the retiree receiving
payment under the method producing the highest benefit. The methods are: (1) Minimum Guaranteed,
and (2) Formula. The Formula method usually produces the highest benefit. Under this method, the
retiree receives an amount equal to 2.0125% of their average final salary (best three of last ten years)
for each year of service. Disability retirement benefits are calculated in the same manner. Pre-
retirement benefits in the amount of the annual salary for the fiscal year preceding death are provided
to plan members.
The RSA was established as of October 1, 1945, under the provisions of Act 515, Acts of Alabama
1945, for the purpose of providing retirement allowances and other specified benefits for state
employees, State police, and on an elective basis to all cities, counties, towns and quasi public
organizations. The responsibility for general administration and operation of the RSA is vested in the
Board of Control. Benefit provisions are established by the Code of Alabama 1975, Sections 36-27-1
through 36-27-103, as amended, Sections 36-27-120 through 36-27-139, as amended, and Sections 36-
27B-1 through 36-27B-6. Authority to amend the plan rests with the Legislature of Alabama.
However, the Legislature has granted the City authority to accept or reject various cost-of-living
adjustments granted to retirees.
Funding Policy
During its 2012 session, the Alabama Legislature passed and the Governor signed into law changes in
the pension plan effective January 1, 2013. Employees hired prior to January 1, 2013 (Tier 1
employees) must contribute 5% of his or her gross earnings, except law enforcement who must
contribute 6%, to the pension plan. Employees hired on or after that date (Tier 2 employees) will
contribute on gross earnings at a rate of 6%, except law enforcement who must contribute 7%. The
City is required to contribute at an actuarially determined rate. At September 30, 2012, the rate is
9.81% of covered payroll. At September 30, 2012, RSA decreased the City’s contribution rate to
9.38% for Tier 1 employees and established at rated of 7.08% for Tier 2 employees. The contribution
requirements of plan members and the City are established and may be amended by RSA.
-44-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 14 PENSION PLAN (continued)
A Tier 1 employee may retire after 25 years of credited service and receive pension benefits equal to
2.0125% of the employee’s average final salary multiplied times years of credited service. A Tier 2
employee may retire after attainment of age 62 and ten years of service years and with benefits equal to
1.65% of the employee’s average final salary multiplied by years of credited service. Average final
salary is defined as the average of the three highest years’ salary out of the last ten years of service.
The pension plan also provides death benefits and disability benefits as determined by state statutes.
The following is the Schedule of Funding Progress – Employee Retirement System which provides
trend information about whether the actuarial value of plan assets is increasing or decreasing relative to
the actuarial accrued liability for benefits over time.
The Schedule of Funding Progress – Employee Retirement System
Actuarial Value
of Assets (a)
Actuarial Accrued
Liability (AAL)
Entry Age
(b)1
Unfunded AAL
(UAAL) b-a
Funded
Ratio
(a/b)
Covered Payroll
( c )
UAAL as a
Percentage of
Covered Payroll
(b-a)/c)
9/30/20115,6 23,552,946$ 33,999,408$ 10,446,462$ 69.3% 11,028,263$ 94.7%
9/30/20106 23,618,878$ 33,649,326$ 10,030,448$ 70.2% 11,212,324$ 89.5%
9/30/2009 23,297,926$ 32,295,205$ 8,997,279$ 72.1% 11,396,085$ 79.0%
9/30/2008 22,906,152$ 30,483,488$ 7,577,336$ 75.1% 11,367,443$ 66.7%
9/30/2007 21,712,337$ 28,365,980$ 6,653,643$ 76.5% 10,431,006$ 63.8%
9/30/20065 19,895,139$ 26,367,319$ 6,472,180$ 75.5% 9,530,701$ 67.9%
9/30/2005 18,565,922$ 23,773,976$ 5,208,054$ 78.1% 9,706,576$ 53.7%
9/30/20044 17,075,176$ 19,888,433$ 2,813,257$ 85.9% 7,537,837$ 37.3%
9/30/20033 16,083,240$ 18,576,805$ 2,493,565$ 86.6% 7,555,473$ 33.0%
9/30/20022 15,177,087$ 16,920,564$ 1,743,477$ 89.7% 7,190,278$ 24.2%
9/30/20011 14,577,706$ 15,046,428$ 468,722$ 96.9% 6,617,043$ 7.1%
Actuarial
Valuation
Date
1 Reflects changes in actuarial assumptions (as of September 30, 2001).
2 Reflects effect of DROP if unit elected to enroll prior to June 20, 2003.
3 Reflects effect of DROP if unit elected to enroll prior to May 18, 2004. 4 Reflects effect of DROP if unit elected to enroll prior to August 4, 2005. 5 Reflects changes in actuarial assumptions.
6 Reflects impact of Act 2011-27, as well as Act 2011-676, which increases the member contribution rates by 2.25% beginning
October 1, 2011 and by an additional 0.25% beginning October 1, 2012.
Annual Pension Cost
For 2012, the City’s annual pension cost of $949,822 was equal to the City’s required and actual
contributions. The required contribution was determined as part of an actuarial valuation (dated
September 30, 2011) using the entry age actuarial cost method. Amortization is determined using the
level open percent method over a remaining amortization period of 30 years. The actuarial
assumptions included (a) 8.0% investment rate of return, (b) projected salary increases ranging from
3.75-7.25% per year, and (c) no cost-of-living adjustments. Both (a) and (b) included an inflation
component of 3.0%. The actuarial value of the City of Fairhope’s assets was determined using
techniques that smooth the effects of short-term volatility in the market value of investments over a 5-
year period.
-45-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 14 PENSION PLAN (continued)
Trend Information
Fiscal Annual Percentage Net
Year Pension of APC Pension
Funding Cost (APC) Contributed Obligation
9/30/12 $ 949,822 100% -
9/30/11 $ 1,056,337 100% -
9/30/10 $ 1,086,667 100% -
9/30/09 $ 1,091,972 100% -
9/30/08 $ 985,276 100% -
9/30/07 $ 804,930 100% -
Funded status and Funding Progress
The funded status of the plan as of October 1, 2011 was as follows:
Actuarial accrued liability (AAL) 33,999,408$
Actuarial value of plan assets 23,552,946
10,446,462$
69.3%
11,028,263$
94.7%
Unfunded actuarial accrued liability (UAAL)
Funded ratio
Covered payroll
UAAL as a percentage of covered payroll
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and new estimates
are made about the future. The Schedule of Funding Progress is presented in these notes to the
financial statements. This schedule presents multi-year trend information about whether the actuarial
value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits
over time.
-46-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 15 DEPOSIT AND INVESTMENT RISK
At September 30, 2012, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $1,979,594 ($320,963 in
governmental activities and $1,658,631 in business-type activities). The average maturity of the
portfolio was 50 days.
Investment Risk – The City does not have a formal investment policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk - State statutes authorize the City’s investments. The City is authorized to invest in U.S.
Government obligations and its agencies or instrumentalities, direct obligations of the state, or SEC
registered mutual funds holding like securities. The City has no investment policy that further limits
investment choices. As of September 30, 2012, the City’s mutual fund investments principal stability
rating was AAAm as reported by Standard & Poor’s.
Custodial Credit Risk - The City is a participant in the Security for Alabama Funds Enhancement
(SAFE) Program, a multiple financial institution collateral pool, administered by the State of Alabama.
The program, by law, provides administration of pledged collateral coverage for all governments and
agencies in the state and requires qualified financial institutions to provide collateral to the
administrator adequate to secure all deposits of public funds in that financial institution. The State
guarantees deposits identified as “public funds” will be adequately secured by insurance or collateral.
Any collateral shortages of one financial institution are assessed to other member financial institutions.
NOTE 16 COMMITMENTS
The City has various contractual commitments outstanding at year-end. The commitments under these
contracts totaled $1,346,043. The commitments funded from governmental activities will be $1,676
and from business-type activities will be $1,344,367.
-47-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 17 DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan permits employees to defer a portion of their salary until future
years. The plan was established by and is administered by the Retirement Systems of Alabama. Any
plan changes are at the discretion of the administrator. The deferred compensation is not available to
employees until termination, retirement, death, or unforeseeable emergency. The City makes no
contributions to the plan.
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 or made
available to the employee or other beneficiary) solely the property and rights of the individuals who
participate in the deferred compensation plan and are not subject to the claims of the City's general
creditors.
NOTE 18 POST EMPLOYMENT HEALTH BENEFITS
Plan Description – The City provides a comprehensive medical plan to eligible retirees and their spouses
through the City’s group health insurance plan (the Plan), which covers both active and retired members.
The Plan is a single-employer defined benefit healthcare plan administered and governed solely by the
City and does not issue a publicly available financial report.
Effective with the Fiscal Year beginning October 1, 2008, the City implemented Government Accounting
Standards City Statement No. 45, Accounting and Financial Reporting by Employers for Post
Employment Benefits Other Than Pensions (GASB 45), for its financial disclosure and reporting purposes.
The City intends to fund the OPEB Obligation pursuant to GASB 45 to the extent the funding requirement
is not met by the retiree health care premiums paid outright. During the year ended September 30, 2012,
the City’s portion of health care funding cost for retired employees (retiree premiums) totaled $274,479.
Contribution Rates – Eligible retirees are subject to employer contributions for medical benefits equal to
90% of the premium. At September 30, 2010, the valuation date, 29 participants were receiving benefits
under various provisions of the Plan. Complete plan provisions are included in the official plan
documents.
Employees do not contribute to their post employment benefits costs until they become retirees and begin
receiving those benefits. The plan provisions and contribution rates are contained in the official plan
documents.
Annual Required Contribution – The City’s Annual Required Contribution (ARC) is an amount actuarially
determined using the Projected Unit Credit Method in accordance with GASB 45. The ARC represents a
level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize
any unfunded actuarial liabilities over a level percentage of pay, open amortization period of thirty years.
The remaining amortization period at September 30, 2012, was 30 years.
-48-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
(continued)
NOTE 18 POST EMPLOYMENT HEALTH BENEFITS (continued)
The following table shows the components of the City’s annual OPEB cost for the year, the amount
actually contributed to the plan using operating funds, and changes in the City’s net OPEB obligation to
the Plan:
Annual required contribution $ 665,895
Interest on net OPEB obligation -
Adjustment to ARC 242,908
Annual OPEB cost (expense) 908,803
Current year retiree premium (274,479)
Change in net OPEB obligation 634,324
Net OPEB obligation – beginning of year 1,350,711
Net OPEB obligation – end of year $ 1,985,035
Interest expense on the net OPEB contribution in the amount of $54,028 was considered not significant
and was not recorded in 2012.
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net
OPEB obligation is as follows:
Fiscal Percentage of Net OPEB
Year Annual Annual OPEB Obligation
Ended OPEB Cost Cost Contributed (Asset)
9/30/12 $ 908,803 30.2% $ 1,985,035
9/30/11 908,803 37.0% 1,350,711
9/30/10 611,853 39.3% 778,165
9/30/09 611,853 33.5% 406,645
Funded Status and Funding Progress – The first actuarial valuation under GASB 45 was as of September
30, 2008, and the most recent actuarial valuation was as of September 30, 2010. There were no assets
accumulated in the Plan, however, market value will be used to value such assets. At September 30, 2010,
the Actuarial Accrued Liability (AAL) was $8,093,303, which is defined as that portion, as determined by
a particular actuarial cost method (the City uses the Projected Unit Credit Method), of the actuarial present
value of post employment plan benefits and expenses which is not provided by normal cost. The funded
ratio is developed below.
Schedule of Funding Progress
Actuarial
Valuation Dated
Actuarial Value of
Assets
Actuarial Accrued
Liability (AAL)* -
Entry Age
Unfunded (AAL)
(UAAL) Funded Ratio Covered Payroll
UAAL as a
Percentage of
Covered Payroll
(a)(b) (b-a)(a/b) (c) (b-a)/c
9/29/2011 -$ 8,093,303$ (8,093,303)$ 0.0% 11,028,263$ 73.4%
9/30/2010 -$ 8,093,303$ (8,093,303)$ 0.0% 11,212,324$ 72.2%
9/30/2009 -$ 6,740,895$ (6,740,895)$ 0.0% 11,396,085$ 59.2%
9/30/2008 -$ 6,740,895$ (6,740,895)$ 0.0% 11,189,043$ 60.2%
*GASB 45 permits the AAL determined at September 30, 2010 to be used for two consecutive years
-49-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 18 POST EMPLOYMENT HEALTH BENEFITS (continued)
Actuarial Methods and Assumptions - The actuarial calculations are based on the types of benefits
provided under the terms of the substantive plan (the plan as understood by the employer and the plan
members) at the time of the valuation and on the pattern of sharing costs between the City and its plan
members to that point. The projection of benefits for financial reporting purposes does not explicitly
incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing
between the City and plan members in the future. Consistent with the long-term perspective of actuarial
calculations, the actuarial methods and assumptions used include techniques that are designed to reduce
short-term volatility in actuarial liabilities and the actuarial value of assets.
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of events far into the future. Actuarially determined amounts are subject to continual revision
as actual results are compared to past expectations and new estimates are made about the future. The
following assumptions were made:
Turnover Rate - An age-related turnover scale based on actual experience has been used.
Retirement Rate - Based on past experience, it has been assumed that entitlement to benefits will
commence at the earlier of: first, completion of 25 years of service, regardless of age; and, second,
attainment of age 60 and completion of 10 years of service.
Health Care Cost Trend Rate - The expected rate of increase in medical cost is based on a 10.5%
projected increase for 2011 graduated down to an ultimate annual rate of 5% for 2018 and beyond.
Mortality Rate - Life expectancies were based accordingly to the 1994 Group Annuity Mortality Table
set forward three years for males and set forward two years for females. Special tables are used for the
period after disability retirement.
Investment Return Assumption (Discount Rate) - Based on the assumption that the ARC will be
funded, a 4% annual investment return has been used in this valuation.
Inflation Rate and Projected Salary Increase - A rate of 4.5% has been used for both inflation and
projected salary increases.
Method of Determining Value of Benefits - The "value of benefits" has been assumed to be the portion
of the premium after retirement date expected to be paid by the City for each retiree and has been used
as the basis for calculating the actuarial present value of OPEB benefits to be paid.
NOTE 19 OPERATING LEASES
The City holds various leases with entities for use of City property. Most of these leases are monthly and
insignificant. In addition, the City rents certain facilities to groups for events and activities on a per use
basis.
-50-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2012
NOTE 20 LEASE EXPENSE
The City rents equipment, primarily, on monthly arrangements. The leases are not significant to the
operations of the City.
NOTE 21 SUBSEQUENT EVENTS
The City has evaluated subsequent events through January 18, 2013, the date which the financial
statements were available to be issued.
In fiscal year 2013, the City paid off General Obligation Warrant, Series 2008 totaling approximately
$721,000.
In fiscal year 2013, the City paid off the line of credit totaling approximately $1,700,000.
There were no other material subsequent events which require disclosure at September 30, 2012.
THIS PAGE INTENTIONALLY LEFT BLANK
REQUIRED SUPPLEMENTARY INFORMATION
OTHER THAN MANAGEMENT’S DISCUSSION AND ANALYSIS
-51-
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF FAIRHOPE, ALABAMA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2012
Variance
Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes $ 10,505,090 $ 10,505,090 $ 10,609,364 $ 104,274
Licenses and permits 2,331,700 2,331,700 2,612,793 281,093
Fine and forfeitures 275,000 275,000 289,432 14,432
Intergovernmental 477,500 477,500 327,836 (149,664)
Interest and rents 238,500 238,500 223,969 (14,531)
Charges for services 4,894,250 4,894,250 5,096,593 202,343
Golf course revenue 1,091,028 1,091,028 1,001,627 (89,401)
Contributions from Public Library Board - - 1,000 1,000
Other revenue 605,794 605,794 552,904 (52,890)
Total revenues 20,418,862 20,418,862 20,715,518 296,656
EXPENDITURES
General government 8,147,893 8,147,893 6,756,042 1,391,851
Sanitation 1,577,221 1,577,221 1,607,918 (30,697)
Police 4,385,825 4,385,825 4,671,591 (285,766)
Fire 363,676 363,676 339,080 24,596
Airport Authority 281,124 281,124 281,124 -
Streets 2,087,252 2,087,252 2,142,548 (55,296)
Adult recreation 627,436 627,436 525,212 102,224
Recreation 1,012,712 1,012,712 989,463 23,249
Golf 915,636 915,636 863,593 52,043
Public Library Board 600,000 600,000 600,000 -
Other 89,000 89,000 108,976 (19,976)
Debt service 179,297 179,297 179,297 -
Capital outlay 911,920 911,920 498,268 413,652
Total expenditures 21,178,992 21,178,992 19,563,112 1,615,880
Excess of Revenues over (under) Expenditures (760,130) (760,130) 1,152,406 1,912,536
Other financing sources (uses)
Proceeds from issuance of debt - - 4,015,200 4,015,200
Transfers in 4,902,949 4,902,949 4,173,802 (729,147)
Transfers out (1,717,441) (1,717,441) (6,206,016) (4,488,575)
Total other financing sources (uses) 3,185,508 3,185,508 1,982,986 (1,202,522)
NET CHANGE IN FUND BALANCE $ 2,425,378 $ 2,425,378 3,135,392 $ 710,014
FUND BALANCE - BEGINNING OF YEAR 7,160,155
FUND BALANCE - END OF YEAR $ 10,295,547
Budgeted Amounts
-52-
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2012
NOTE 1 BUDGETS AND BUDGETARY ACCOUNTING
Although no legal requirement to establish a budget exists, the City Council follows these
procedures in establishing the budgets:
(1) The City Council has appointed a Budget Committee to work with City Management to
prepare a proposed working budget for the fiscal year commencing the following October 1.
The budget includes proposed expenditures and the means of financing them for the
upcoming year. Line item budgets are used for administrative control. The level of control
for the detailed budgets is at the department head/function level.
(2) Council budget meetings are conducted to obtain manager and taxpayer input.
(3) The budget is enacted through council action.
(4) Reports are submitted to the City Council, showing approved budget and actual operations.
(5) The Mayor is authorized to transfer budgeted amounts within departments within any fund;
however, any revisions that alter the total expenditures of any fund or transfer of funds
between departments must be approved by the City Council.
(6) Formal budgetary integration is employed as a management control device during the year
for the General Fund.
(7) Budgets are adopted on a basis consistent with accounting principles generally accepted in
the United States of America (GAAP).
(8) Budgetary data, if any, for Capital Project Funds are budgeted over the life of the respective
project and not on an annual basis.
(9) All appropriations lapse at year-end.
-53-
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2012
NOTE 2 EXCESS EXPENDITURES
The following are General Fund expenditures in excess of final budget amounts:
Excess Excess
Expenditures Expenditures
General Government Recreation Department
Salaries-Judge & Court Clerk 16,967$ Casualty and Workers Comp Insurance 967$
Salaries-Mechanics 19,563 General Supplies 139,527
Salaries-Building & Zoning 6,201 Gneral Maintenance 50,753
Employee Payroll Taxes 849 Gasoline and Oil 2,182
Casualty and Workers Comp Insurance 15,138 Equipment and Vehicle Repair 9,943
Services - Excluding Accounting & Legal 62,748
Office Supplies 4,587 Adult Recreation Department
General Supplies 11,733 Casualty and Workers Comp Insurance 732
General Maintenance 10,403 Office Expense 1,376
Dues/Memberships/Subscriptions 11,990
Equipment and Vehicle Repair 6,060 Street Department
Printing 2,796 Employee Payroll Taxes 4,531
Lease on Terminals 67 Casualty and Workers Comp Insurance 10,740
Recording Fees Paid 27 Gasoline and Oil 83,456
Book and Sidewalk Brick 19 Equipment and Vehicle Repair 67,928
Historical District Expense 431 Equipment Rental 32,299
County Prisoner Expense 2,770 Material and Landscaping 21,531
City Hall Maintenance 2,963
ALDOT Spring Run 235 Sanitation Department
Sales Tax Collection Fees 24,980 Casualty and Workers Comp Insurance 1,919
Hurricane Isaac Costs 786 General Supplies 11,100
PCP Fees 76,065 Gasoline and Oil 14,126
Equipment and Vehicle Repair 97,485
Police Department Uniforms 3,508
Salaries 210,969
Employee Payroll Taxes 16,472 Golf Department
Services - Excluding Accounting & Legal 9,646 Salaries - Club House 6,351
City Computer Expense 1,972 Supplies - Club House 1,276
General Supplies 14,082 Gasoline and Oil 4,493
Gasoline and Oil 26,891 Equipment and Vehicle Repair 625
Equipment and Vehicle Repair 13,139 Pro Shop - Custom Orders 17,712
NCIC Data System 540
Court Supplies and Expense 2,050 Capital Outlay
DEA Funds Purchases 57,451 Vehicles and Equipment 3,476
Corrections Operation Expenses 7,159
Staff Agencies
Fire Department Impact Fee Expense 19,976
General Supplies 1,324
Gasoline and Oil 3,789
Uniforms 539
THIS PAGE INTENTIONALLY LEFT BLANK
OTHER SUPPLEMENTARY INFORMATION
COMBINING FINANCIAL STATEMENTS
NONMAJOR GOVERNMENTAL FUNDS
-54-
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2012
Total
Special Special Nonmajor
Revenue Fund Revenue Fund Governmental
Impact Fees Gas Tax Debt Service Funds
ASSETS
Cash $ 821,610 $ 216,955 $ 34,903 $ 1,073,468
Investments - - 291,470 291,470
Receivables - - 25,617 25,617
TOTAL ASSETS $ 821,610 $ 216,955 $ 351,990 $ 1,390,555
LIABILITIES
Accounts payable – trade $ - $ - $ 1,159 $ 1,159
Due to other funds 8,730 760 - 9,490
Deferred assessment revenue - - 25,617 25,617
TOTAL LIABILITIES 8,730 760 26,776 36,266
FUND BALANCES
Restricted for:
Debt service - - 325,214 325,214
Assigned to:
Construction and road maintenance 812,880 216,195 - 1,029,075
TOTAL FUND BALANCES 812,880 216,195 325,214 1,354,289
TOTAL LIABILITIES AND
FUND BALANCES $ 821,610 $ 216,955 $ 351,990 $ 1,390,555
-55-
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2012
Total
Special Special Nonmajor
Revenue Fund Revenue Fund Debt Governmental
Impact Fees Gas Tax Service Funds
REVENUES
Intergovernmental $ - $ 88,271 $ - $ 88,271
Charges for services 36,344 - - 36,344
Interest and rents 106 - 1,626 1,732
Assessments - - 3,659 3,659
Total 36,450 88,271 5,285 130,006
EXPENDITURES
Street department - 39,862 - 39,862
Recreation - - - -
Other - - 51,912 51,912
Debt service
Principal - - 4,656,470 4,656,470
Interest - - 585,414 585,414
Capital outlay 81,377 - - 81,377
Total 81,377 39,862 5,293,796 5,415,035
Excess of revenues over (44,927) 48,409 (5,288,511) (5,285,029)
(under) expenditures
OTHER FINANCING
SOURCES (USES)
Transfers in 857,807 - 5,263,705 6,121,512
Total other financing
sources (uses) 857,807 - 5,263,705 6,121,512
Net change in fund balances 812,880 48,409 (24,806) 836,483
Fund balances – beginning of year - 167,786 350,020 517,806
FUND BALANCES –
END OF YEAR $812,880 $216,195 $325,214 $1,354,289
THIS PAGE INTENTIONALLY LEFT BLANK
INDIVIDUAL FUND FINANCIAL STATEMENTS
DISCRETELY PRESENTED COMPONENT UNITS
-56-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2012
See independent auditors’ report.
ASSETS
Cash and cash equivalents $ 125,316
TOTAL ASSETS $125,316
LIABILITIES
Accounts payable and accrued expenses $ 3,698
FUND BALANCES
Restricted for:
Capital projects 66,197
Unassigned 55,421
Total fund balances 121,618
TOTAL LIABILITIES AND FUND BALANCES $ 125,316
-57-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCE TO
NET ASSETS OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2012
See independent auditors’ report.
Fund balance as reported on page 56 $ 121,618
Net Assets reported for governmental activities in the Statement of Net Assets
are different from Fund Balance for governmental activities because:
Capital assets used in governmental activities are financial resources and
therefore are not reported in fund financial statements. 343,601
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (282,891)
Net Assets of Governmental Activities as reported on page 23 $182,328
-58-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report.
REVENUES
Fines and lost books $ 20,444
Donations, gifts, memorials and bequests 58,606
State aid 15,011
Lease income 1,500
Payments from City of Fairhope 597,333
Miscellaneous 15,452
Total revenues 708,346
EXPENDITURES
Salaries 423,867
Payroll taxes 32,086
Employees’ retirement 19,813
Books, periodicals, audio visual 87,474
Supplies 11,073
Janitorial service 16,450
Professional fees 9,065
Telecommunications 4,575
Payments to City of Fairhope for Library Debt 1,000
Capital outlay 10,663
Maintenance 41,628
Friends expenses 5,349
Miscellaneous 16,169
Total expenditures 679,212
Net change in fund balance 29,134
Fund balance – beginning of year 92,484
Fund balance – end of year $ 121,618
-59-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHNAGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report.
Net change in fund balances - total governmental funds, page 58 $ 29,134
Amounts reported for governmental activities in the Statement of Activities
are different from the Statements of Revenues, Expenditures and Changes in
Fund balances - Governmental Funds because:
Governmental funds report capital outlays as expenditures while governmental
activities report depreciation expense to allocate those expenditures over
the life of the assets.
Capital outlays for the year 10,663
Depreciation expense for the year (28,220)
Change in Net Assets of Governmental Activities, page 24 $ 11,577
-60-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2012
See independent auditors’ report.
ASSETS
Cash and cash equivalents $ 688,294
TOTAL ASSETS $ 688,294
FUND BALANCES
Restricted for:
Capital projects $ 231,790
Unassigned 456,504
Total fund balances 688,294
TOTAL FUND BALANCES $ 688,294
-61-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCE TO
NET ASSETS OF GOVERNMENTAL ACTIVITIES
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2012
See independent auditors’ report.
Fund balance as reported on page 60 $ 688,294
Net Assets reported for governmental activities in the Statement of Net Assets
are different from Fund Balance for governmental activities because:
Capital assets used in governmental activities are financial resources and
therefore are not reported in fund financial statements 25,263,036
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (2,881,278)
Cost associated with warrant issuance are expensed in the current period in
Fund Financial Statements
Warrant Issuance costs, net 26,846
Long-term liabilities, including warrants payable, capital lease obligations
and notes payable are not due and payable in the current period and
therefore are not reported in fund financial statements (8,935,000)
Net Assets of Governmental Activities as reported on page 23 $ 14,161,898
-62-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report.
REVENUES
Fuel sales and rentals $ 145,791
Interest income 3,406
Federal grant revenue 507,547
Payments from City of Fairhope 281,124
Total revenues 937,868
EXPENDITURES
Insurance 28,968
Legal and professional 18,120
Maintenance 125,228
Capital outlay 585,617
Debt service interest 142,913
Other 19,313
Total expenditures 920,159
Net change in fund balance 17,709
Fund balance – beginning of year 670,585
Fund balance – end of year $ 688,294
-63-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report.
Net change in fund balances - total governmental funds, page 62 $ 17,709
Amounts reported for governmental activities in the Statement of Activities
are different from the Statements of Revenues, Expenditures and Changes in
Fund balances - Governmental Funds because:
Amortization of bond costs and discounts is not recorded in fund level statements (3,619)
Governmental funds report capital outlays as expenditures while governmental
activities report depreciation expense to allocate those expenditures over
the life of the assets.
Capital outlays for the year 585,617
Depreciation expense for the year (226,775)
Change in Net Assets of Governmental Activities, page 24 $ 372,932
-64-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2012
See independent auditors’ report.
Special Projects $84,881
Sidewalks 270,679
Fairhope Paving Projects 1,690,107
Total capital projects expenditures $2,045,667
-65-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2012
Natural Water and
Electric Gas Waste Water
Fund Fund Fund
A. Utility customers at September 30, 2012 were as follows:
Number of customers 6,485 9,240 16,016
Number of metered customers 6,485 9,240 16,016
Number of unmetered customers - - -
Number of waste water customers - - 9,051
B. Annual Net Income of Utility Operations Natural Water and
Electric Gas Waste Water
Fund Fund Fund Total
Income from operations 2,049,036$ 1,795,822$ 3,575,820$ 7,420,678$
Add:
Depreciation and amortization 639,846 279,201 734,024 1,653,071
Interest income 6,211 7,840 6,366 20,417
Annual net income as prescribed by debt covenants 2,695,093$ 2,082,863$ 4,316,210$ 9,094,166$
C. Utility fund casualty insurance coverage on electrical sub stations, natural gas facilities, water and waste-
water facilities is included in a blanket policy with the Governmental Funds general capital assets building
and facilities. The City of Fairhope, Alabama is the named insured on all policies.
Comprehensive general liability – expires January 2013 $3,000,000
Buildings and facilities – expires January 2013 67,570,834
Automobile – expires January 2013
Liability 1,000,000
Uninsured motorist 50,000
Inland Marine – expires January 2013 44,112
Public officials errors and omissions liability – expires January 2012 3,000,000
Police liabilty – expires January 2013 3,000,000
Aggregate 2,000,000
Per occurrence
Excess liability policy for general liabilty, police and public official – expires January 2013 5,000,000
D. The City has complied with all requirements of the respective bond indentures.
-66- CITY OF FAIRHOPE, ALABAMA SUMMARY OF DEPOSITS, WITHDRAWALS AND BALANCES OF SELECTED TRUST ACCOUNTS AS REQUIRED UNDER CERTAIN TRUST INDENTURES SEPTEMBER 30, 2012 1996 2002 2002 2002 2005 2005 2007 2009 2009 2011 2011 2011Warrant Fund Warrant Fund Reserve Fund Warrant Fund Reserve Fund Warrant Fund Warrant Fund Reserve Fund Reserve FundBalance 10/01/11 $ 50,000 $ 110,558 $ 151,432 $ 672,023 $ 597,501 $ 874,692 $ 176,007 $ 97,070 $ 125,003 $ - $ - $ - Deposits 5 40,866 4,162,086 6 884,549 874,770 528,506 146,321 13 8,662,753 1,326,299 1,415,769 Disbursements (5) (151,424) (4,313,518) (672,029) (874,692) (874,692) (527,971) (139,270) (13) - (828,882) (90) Balance 9/30/12 $ 50,000 $ - $ - $ - $ 607,358 $ 874,770 $ 176,542 $ 104,121 $ 125,003 $ 8,662,753 $ 497,417 $ 1,415,679 Capital ImprovementConstruction Fund Warrant Fund
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STATISTICAL SECTION
This part of the City of Fairhope, Alabama's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says
about the government's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.68-73
Revenue Capacity
These schedules contain information to help the reader assess the government's
most significant local revenue sources, the sales tax and the property tax.74-79
Debt Capacity
These schedules present information to help the reader assess the affordability of
the government's current levels of outstanding debt and the government's ability
to issue additional debt in the future.80-83
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities 84-85
take place.
Operating Information
These schedules contain service and infrastructure data to help the reader
understand how the information in the government's financial report relates
to the services the government provides and the activities it performs.86-88
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports
for the relevant year.
-67-
STATISTICAL SECTION
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Governmental activities Invested in capital assets, net of related debt 54,678,761$ 57,031,298$ 60,149,769$ 67,742,360$ 61,450,916$ 67,338,065$ 66,295,379$ 65,963,325$ 66,845,689$ 66,016,012$ Restricted 1,695,559 1,788,014 1,908,452 787,538 1,073,262 847,580 1,462,430 3,564,376 6,207,809 8,015,592 Unrestricted (12,322) 273,964 88,053 (1,195) 54,300 (84,709) 165,029 1,782,848 50,640 56,984 Total governmental activities net assets 56,361,998$ 59,093,276$ 62,146,274$ 68,528,703$ 62,578,478$ 68,100,936$ 67,922,838$ 71,310,549$ 73,104,138$ 74,088,588$ Business-type activities Invested in capital assets, net of related debt 11,617,954$ 17,337,442$ 15,801,139$ 19,307,068$ 23,076,992$ 24,573,181$ 24,210,082$ 24,697,607$ 25,786,974$ 17,990,946$ Restricted 1,652,831 1,991,871 2,058,968 2,089,642 2,106,516 2,092,174 1,883,768 1,649,106 1,658,631 12,337,047 Unrestricted 8,962,015 2,949,282 5,082,800 3,334,264 2,105,886 1,422,972 3,691,056 6,696,480 10,610,123 10,047,736 Total business-type activities net assets 22,232,800$ 22,278,595$ 22,942,907$ 24,730,974$ 27,289,394$ 28,088,327$ 29,784,906$ 33,043,193$ 38,055,728$ 40,375,729$ Primary government Invested in capital assets, net of related debt 66,296,715$ 74,368,740$ 75,950,908$ 87,049,428$ 84,527,908$ 91,911,246$ 90,505,461$ 90,660,932$ 92,632,663$ 84,006,958$ Restricted 3,348,390 3,779,885 3,967,420 2,877,180 3,179,778 2,939,754 3,346,198 5,213,482 7,866,440 20,352,639 Unrestricted 8,949,693 3,223,246 5,170,853 3,333,069 2,160,186 1,338,263 3,856,085 8,479,328 10,660,763 10,104,720 Total primary government net assets 78,594,798$ 81,371,871$ 85,089,181$ 93,259,677$ 89,867,872$ 96,189,263$ 97,707,744$ 104,353,742$ 111,159,866$ 114,464,317$ -68-Fiscal YearCITY OF FAIRHOPE, ALABAMANET ASSETS BY COMPONENTLAST TEN FISCAL YEARS(accrual basis of accounting)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012ExpensesGovernmental activities: General 2,493,723$ 3,674,382$ 2,679,665$ 3,873,823$ 5,540,860$ 6,392,335$ 6,536,802$ 6,929,734$ 6,176,077$ 8,103,118$ Public safety Police 2,316,492 2,683,124 3,202,753 3,482,683 3,789,666 4,011,091 4,090,851 4,740,344 5,213,031 4,925,437 Fire 572,709 559,002 550,602 692,972 781,696 843,469 878,148 1,017,184 483,670 461,865 Public works Sanitation 826,924 922,013 990,511 1,123,517 1,479,374 1,564,126 1,657,615 1,973,942 1,868,364 1,814,947 Street 5,208,843 3,488,870 6,767,426 4,653,792 3,757,204 3,671,572 4,308,575 4,452,370 4,251,404 5,502,244 Public Library Board 300,451 341,789 355,908 336,823 594,378 771,373 760,174 772,539 798,997 810,636 Airport 166,760 98,890 95,272 149,179 397,183 545,000 242,090 249,856 225,843 281,124 Recreation 448,782 518,126 596,686 645,154 819,051 900,759 1,031,886 1,269,393 1,138,079 1,176,191 Adult Recreation 274,802 281,383 305,018 321,557 390,125 459,961 438,442 601,232 654,736 613,614 Golf - - - - - - 1,292,200 1,102,861 1,106,624 932,284 Interest on long-term debt 673,220 526,835 503,428 475,699 624,883 743,451 878,534 694,083 633,161 589,174 Total governmental activities expenses 13,282,706 13,094,414 16,047,269 15,755,199 18,174,420 19,903,137 22,115,317 23,803,538 22,549,986 25,210,634 Business-type activities: Natural gas 4,714,305 4,891,447 5,345,092 6,329,438 5,948,144 6,709,491 5,349,209 5,757,648 5,037,587 4,484,683 Electric 10,406,720 10,428,908 11,213,904 12,842,542 14,029,975 16,006,139 15,540,148 15,664,835 16,909,931 16,912,834 Water and wastewater 4,521,100 4,756,900 5,255,779 5,682,694 6,387,739 6,502,942 6,803,566 6,533,138 6,616,671 7,050,997 Golf 1,154,390 1,278,737 1,320,403 1,476,373 1,544,528 1,713,486 - - - - Total business-type activities expenses 20,796,515 21,355,992 23,135,178 26,331,047 27,910,386 30,932,058 27,692,923 27,955,621 28,564,189 28,448,514 Total primary government expenses 34,079,221$ 34,450,406$ 39,182,447$ 42,086,246$ 46,084,806$ 50,835,195$ 49,808,240$ 51,759,159$ 51,114,175$ 53,659,148$ Program RevenuesGovernmental activities: Charges for services: General 1,396,101$ 1,637,995$ 2,098,805$ 3,726,334$ 5,862,118$ 5,952,299$ 5,140,160$ 5,249,279$ 5,383,822$ 6,301,207$ Police 267,834 249,181 325,728 354,504 362,441 252,838 224,022 261,070 241,104 289,432 Sanitation 824,893 772,645 749,301 1,252,282 1,294,033 1,331,617 1,368,656 1,380,238 1,391,722 1,408,179 Recreation 28,736 90,954 70,665 73,975 75,592 83,919 130,740 366,683 369,135 368,493 Adult Recreation 43,677 44,608 40,019 41,590 34,534 32,791 36,316 45,889 46,261 41,018 Golf847,016 776,173 944,858 1,001,627 Operating grants and contributions 130,119 1,453,233 3,472,502 3,065,387 631,133 206,012 87,416 22,267 24,402 - Capital grants and contributions 2,392,663 2,325,885 3,792,402 4,861,100 8,526,591 7,310,387 384,358 1,389,592 302,963 1,317,475 Total governmental activities program revenues 5,084,023 6,574,501 10,549,422 13,375,172 16,786,442 15,169,863 8,218,684 9,491,191 8,704,267 10,727,431 Business-type activities: Charges for services: Gas 5,995,994 6,330,451 6,606,396 7,112,944 7,388,531 7,841,853 8,341,855 8,631,935 8,219,447 6,191,986 Electric 12,196,246 11,918,793 12,497,288 14,683,254 16,658,326 17,777,703 18,800,459 18,496,651 19,838,004 18,891,334 Water and wastewater 5,603,119 7,119,904 7,330,152 8,348,064 8,669,895 8,166,344 8,194,949 8,959,041 10,287,898 9,838,580 Golf course 1,250,380 1,259,510 1,233,703 1,527,311 1,505,211 1,487,811 - - - - Total business-type activities program revenues 25,045,739 26,628,658 27,667,539 31,671,573 34,221,963 35,273,711 35,337,263 36,087,627 38,345,349 34,921,900 Total primary government program revenues 30,129,762$ 33,203,159$ 38,216,961$ 45,046,745$ 51,008,405$ 50,443,574$ 43,555,947$ 45,578,818$ 47,049,616$ 45,649,331$ -69-(continued)(accrual basis of accounting)Fiscal YearCITY OF FAIRHOPE, ALABAMACHANGES IN NET ASSETSLAST TEN FISCAL YEARS
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Net (expense)/revenueGovernmental activities (8,198,683)$ (6,519,913)$ (5,497,847)$ (2,380,027)$ (1,387,978)$ (4,733,274)$ ########## ########## (13,845,719)$ ##########Business-type activities 4,249,224 5,272,666 4,532,361 5,340,526 6,311,577 4,341,653 7,644,340 8,132,006 9,781,160 6,473,386 Total primary government net expense (3,949,459)$ (1,247,247)$ (965,486)$ 2,960,499$ 4,923,599$ (391,621)$ (6,252,293)$ (6,180,341)$ (4,064,559)$ (8,009,817)$ General Revenues and Other Changes in Net AssetsGovernmental activities: Taxes Property taxes 2,278,650$ 2,674,204$ 2,710,256$ 3,159,187$ 3,589,489$ 4,631,476$ 4,939,840$ 4,842,366$ 4,590,840$ 4,591,739$ Sales taxes - - - - - - 1,003,864 4,443,325 4,590,149 4,898,362 Liquor taxes 299,681 317,899 352,827 347,415 373,794 396,196 385,411 392,255 393,123 425,888 Lodging taxes - 362,860 449,079 196,224 420,024 495,850 474,852 483,271 495,870 569,142 Other 27,152 100,554 130,305 124,738 138,857 145,836 134,413 131,135 120,518 124,234 Intergovernmental 288,487 243,469 325,557 522,196 472,667 293,007 436,472 424,359 248,011 314,525 Investment earnings 328,868 290,659 327,687 394,006 508,558 340,530 225,860 239,256 249,489 226,642 Other 4,613 107,685 205,060 230,691 251,476 294,469 109,958 1,293,419 124,161 143,319 Transfer of Golf Fund to Governmental Activities - - - - - - 913,729 - - - Transfers in/(out) 4,360,675 5,330,481 4,058,380 3,787,999 (10,317,112) 3,658,368 5,094,136 4,897,104 4,827,147 4,173,802 Total government activities 7,588,126 9,427,811 8,559,151 8,762,456 (4,562,247) 10,255,732 13,718,535 17,146,490 15,639,308 15,467,653 Business-type activities: Investment earnings 176,061 103,610 190,330 235,538 266,888 115,648 60,104 23,385 58,522 20,417 Transfer of Golf Fund to Governmental Activities - - - - - - (913,729) - - - Transfers in/(out) (4,360,675) (5,330,481) (4,058,380) (3,787,999) (4,020,046) (3,658,368) (5,094,136) (4,897,104) (4,827,147) (4,173,802) Total business-type activities (4,184,614) (5,226,871) (3,868,050) (3,552,461) (3,753,158) (3,542,720) (5,947,761) (4,873,719) (4,768,625) (4,153,385) Total primary government 3,403,512$ 4,200,940$ 4,691,101$ 5,209,995$ (8,315,405)$ 6,713,012$ 7,770,774$ 12,272,771$ 10,870,683$ 11,314,268$ Change in Net AssetsGovernmental activities (610,557)$ 2,907,898$ 3,061,304$ 6,382,429$ (5,950,225)$ 5,522,458$ (178,098)$ 2,834,143$ 1,793,589$ 984,450$ Business-type activities 64,610 45,795 664,311 1,788,065 2,558,419 798,933 1,696,579 3,258,287 5,012,535 2,320,001 Total primary government (545,947)$ 2,953,693$ 3,725,615$ 8,170,494$ (3,391,806)$ 6,321,391$ 1,518,481$ 6,092,430$ 6,806,124$ 3,304,451$ -70-Fiscal YearLAST TEN FISCAL YEARS(accrual basis of accounting)CITY OF FAIRHOPE, ALABAMACHANGES IN NET ASSETS
Beer, WineBurglarFiscal Sales Ad Valorem Automobile and Liquor Cigarette Lodging Dog AlarmYear Tax Tax Tax Tax Tax Tax Tax Tax Total2003 $ - $ 1,953,186 $ 325,464 $ 299,681 $ 26,941 $ - $ 211 $ - $ 2,605,483 2004 - 2,328,984 345,220 317,899 100,379 362,860 175 - 3,455,517 2005 - 2,268,195 442,061 352,827 130,168 449,079 137 - 3,642,467 2006 - 2,639,610 519,577 347,415 124,606 196,224 107 25 3,827,539 2007 - 3,103,284 486,205 373,794 138,754 420,024 103 - 4,522,164 2008 - 4,143,286 488,190 396,080 145,836 495,852 114 - 5,669,358 2009 1,003,864 4,424,103 515,737 385,411 134,297 474,852 116 - 6,938,380 2010 4,443,325 4,421,646 420,720 392,255 131,063 483,271 73 - 10,292,352 2011 4,590,149 4,102,942 487,897 393,123 120,458 495,870 60 - 10,190,500 2012 4,898,362 4,065,822 525,917 425,888 124,183 569,142 50 - 10,609,364 (accrual basis of accounting)-71-CITY OF FAIRHOPE, ALABAMAGOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCELAST TEN FISCAL YEARS
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012General fund Restricted -$ -$ -$ -$ -$ -$ 501,932$ 2,723,595$ 5,014,205$ 7,000,000$ Unassigned382,274 421,331 1,033,668 1,087,642 1,703,619 1,083,383 1,574,743 1,985,914 2,145,950 3,295,547Total general fund382,274$ 421,331$ 1,033,668$ 1,087,642$ 1,703,619$ 1,083,383$ 2,076,675$ 4,709,509$ 7,160,155$ 10,295,547$ All other governmental funds Restricted-Debt Service 558,630$ 377,983$ 272,950$ 235,348$ 456,957$ 470,671$ 350,987$ 351,008$ 350,020$ 325,214$ Assigned, reported in: Special revenue funds 92,201 143,257 227,109 257,881 311,553 66,907 59,142 127,419 167,786 1,029,075 Capital projects funds 876,358 1,219,106 1,602,259 263,202 3,892,524 2,070,337 550,369 362,354 675,799 - Unassigned Capital projects funds(1,069,424) Total all other governmental funds1,527,189$ 1,740,346$ 2,102,318$ 756,431$ 4,661,034$ 2,607,915$ 960,498$ 840,781$ 1,193,605$ 284,865$ The City implemented GASB Statement number 54 fiscal year 2011. This statement replaces the previous classifications of reserved, unreserved, designated and undesignated fund balances.CITY OF FAIRHOPE, ALABAMAFUND BALANCES OF GOVERNMENTAL FUNDS(modified accrual basis of accounting)-72-Fiscal Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012REVENUES Local taxes 2,605,483$ 3,455,517$ 3,642,467$ 3,827,564$ 4,522,164$ 5,669,358$ 6,938,380$ 10,292,352$ 10,190,500$ 10,609,364$ Licenses and permits 1,363,785 1,527,160 2,055,861 3,401,207 2,996,213 2,729,209 2,058,105 2,178,982 2,295,795 2,612,793 Fines and forfeitures 267,834 249,181 325,728 354,504 362,441 252,838 224,022 261,070 241,104 289,432 Intergovernmental 2,336,195 3,598,224 6,514,824 7,319,833 3,167,141 1,826,517 837,246 547,556 345,966 667,344 Contribution from Public Library Bd - - 1,500,000 1,128,850 685,003 208,931 71,000 65,000 183,285 1,000 Interest and rents 328,868 290,659 327,686 394,009 377,743 340,530 225,861 239,256 249,489 226,748 Charges for services 704,228 735,311 792,245 1,577,409 4,149,905 4,610,307 4,450,711 4,450,535 4,479,749 5,096,593 Assessments 182,764 122,170 124,582 39,199 1,831 - - - - 3,659 Golf course revenue - - - - - - 959,730 858,237 1,020,250 1,001,627 Other 258,351 391,478 315,745 343,588 492,419 411,179 277,015 1,705,991 539,557 552,904 Total revenues 8,047,508 10,369,700 15,599,138 18,386,163 16,754,860 16,048,869 16,042,070 20,598,979 19,545,695 21,061,464 EXPENDITURES General government 2,353,659 3,595,220 2,412,693 2,731,819 5,090,777 6,318,322 5,948,479 6,279,197 5,335,143 7,026,721 Sanitation 745,802 861,317 929,815 960,328 1,254,694 1,405,774 1,475,035 1,758,543 1,745,785 1,607,918 Police 2,124,786 2,476,353 2,881,293 3,110,086 3,405,687 3,913,015 3,922,163 4,404,803 4,941,051 4,671,591 Fire 372,263 366,421 492,552 576,191 619,434 707,513 765,645 837,597 395,224 339,080 Airport 6,895 12,742 9,124 63,031 397,183 545,000 242,090 249,856 225,843 281,124 Street 4,159,154 2,453,144 5,636,288 3,580,189 2,552,328 2,554,959 2,704,242 2,797,566 2,639,416 3,872,517 Recreation 366,531 396,660 472,129 513,503 658,837 785,425 867,174 1,050,957 969,025 989,463 Adult recreation 231,615 238,007 261,569 277,808 328,744 431,481 400,494 553,125 577,015 525,212 Golf - - - - - - 1,303,135 1,094,604 1,113,178 863,593 Capital outlay 4,146,979 2,544,947 4,131,361 14,308,234 6,054,830 3,227,604 1,775,834 1,565,192 1,474,937 664,526 Debt service: Principal 891,680 712,321 1,288,488 835,627 4,412,690 2,424,796 863,329 1,047,483 831,483 4,804,960 Interest 666,600 532,508 512,025 482,436 532,687 802,140 809,715 704,043 666,652 616,221 Bond issuance costs - - - - 138,476 - - - - - Public Library Board 300,450 288,400 330,806 336,823 396,000 504,560 530,000 565,000 565,000 600,000 Other - - 60,000 60,000 60,000 60,000 60,000 75,000 89,620 160,888 Total expenditures 16,366,414 14,478,040 19,418,143 27,836,075 25,902,367 23,680,589 21,667,335 22,982,966 21,569,372 27,023,814 Excess (deficiency) of revenues over expenditures (8,318,906) (4,108,340) (3,819,005) (9,449,912) (9,147,507) (7,631,720) (5,625,265) (2,383,987) (2,023,677) (5,962,350) OTHER FINANCING SOURCES (USES) Transfers in 5,293,525 5,561,528 4,876,111 5,325,589 4,897,503 5,228,182 9,542,134 6,541,730 6,557,708 10,379,818 Proceeds from issuance of debt 126,903 - 734,934 4,370,000 9,692,000 1,300,000 3,368,260 - - 4,015,200 Cost from issuance of debt - - - - - - (78,364) - - - Payment to Defeased Warrants Escrow Agent - - - - - - (3,412,892) - - - Transfer to Debt Service to defease warrants - - - - - - (3,289,896) - - - Warrant discount - - - - (43,956) - - - - - Transfers out (932,851) (1,200,974) (817,731) (1,537,590) (877,457) (1,569,814) (1,158,102) (1,644,626) (1,730,561) (6,206,016) Total other financing sources (uses) 4,487,577 4,360,554 4,793,314 8,157,999 13,668,090 4,958,368 4,971,140 4,897,104 4,827,147 8,189,002 Net change in fund balance (3,831,329)$ 252,214$ 974,309$ (1,291,913)$ 4,520,583$ (2,673,352)$ (654,125)$ 2,513,117$ 2,803,470$ 2,226,652$ Debt service as a percentage of noncapital expenditures 12.8% 10.4% 11.8% 9.7% 24.9% 15.8% 8.4% 8.2% 7.5% 20.6%(modified accrual basis of accounting)CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSCITY OF FAIRHOPE, ALABAMA-73-Fiscal Year
FiscalTotal EstimatedYearLess: Total Taxable Direct ActualEnded Residential Commercial Industrial Tax Exempt Assessed Tax TaxableSeptember 30 Property Property Property Real Property Value Rate Value2003 66,037,480$ 1,446,470$ 99,099,267$ 25,446,440$ 141,136,777$ 15 2,117,051,655$ 2004 76,237,460 1,512,340 109,796,799 28,481,560 159,065,039 15 2,385,975,585 2005 81,947,620 1,615,900 110,912,740 29,677,300 164,798,960 15 2,471,984,400 2006 96,692,100 1,715,620 127,556,120 32,829,960 193,133,880 15 2,897,008,200 2007 111,365,480 1,842,120 147,264,040 36,224,280 224,247,360 15 3,363,710,400 2008 167,784,240 1,268,220 217,340,040 58,488,560 327,903,940 15 4,918,559,100 2009 166,205,000 1,412,140 224,300,620 61,340,580 330,577,180 15 4,958,657,700 2010 166,238,280 1,362,280 212,323,800 61,797,320 318,127,040 15 4,771,905,600 2011 152,409,500 1,293,000 199,340,360 61,323,460 291,719,400 15 4,375,791,000 2012 151,955,400 1,165,600 205,976,380 69,676,780 289,420,600 15 4,341,309,000 Source: Baldwin County Revenue CommissionerCITY OF FAIRHOPE, ALABAMAASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARS-74-
TotalTotal Road/ Health Care Total Total Direct &Fiscal General School Bond Tax City General Bridge Fire School Authority County General School Soldier State OverlappingYear Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Rates2003 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02004 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02005 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02006 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02007 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02008 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02009 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02010 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02011 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02012 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0Source: Baldwin County Commission-75-County StateOverlapping RatesCITY OF FAIRHOPE, ALABAMAPROPERTY TAX RATESDIRECT AND OVERLAPPING GOVERNMENTSLAST TEN FISCAL YEARS
Taxable TaxableAssessed AssessedTaxpayer Value Rank Value RankBayview II Developer LLC 7,646,500$ 1 2.6%Arbor Gates LLC 2,007,700 2 0.7% 2,421,680$ 1 1.7%Point Clear Partners LLC 1,809,000 3 0.6%FST Mississippi Baldwin Square 1,808,800 4 0.6%Fairhope LLC 1,568,720 5 0.5%AI Corte Jr Family Limited Partnership 1,425,640 6 0.5% 1,690,540 4 1.2%CHS Properties, Inc. 1,125,440 7 0.4% 2,198,940 2 1.6%Fairhope Yacht Club 1,088,300 8 0.4%Bones & Babies, LLC 1,053,380 9 0.4%Fairhope Commercial Investments, LLC 1,022,020 10 0.4%Bellsouth Tele, Inc. dba AT&T1,316,100 5 0.9%FST Eastern Shores Shopping Center977,640 7 0.7%FST E&A Southeast Limited Partnership2,046,560 3 1.5%Fairhope Mob, LLC876,240 8 0.6%Rock Creek Partners LLC1,074,060 6 0.8%Poser Business Forms Inc.659,240 9 0.5%FST Greeno Properties North II LTD653,040 10 0.5%20,555,500$ 7.1% 13,914,040$ 9.9%Source: Baldwin County Revenue Commissioner-76-CITY OF FAIRHOPE, ALABAMAPRINCIPAL PROPERTY TAXPAYERSCURRENT YEAR AND NINE YEARS AGOAssessed Value2012Percentage ofTotal TaxableAssessed ValuePercentage ofTotal Taxable2003
Fiscal Year Total Tax Collections Ended Levy for in SubsequentSeptember 30 Fiscal Year Amount Years Amount2003 2,117,052$ 1,936,184$ 109,150$ 2,045,334$ 96.61%2004 2,385,976 2,233,532 119,877 2,353,409 98.64%2005 2,471,984 2,240,259 140,397 2,380,656 96.31%2006 2,897,008 2,650,741 138,659 2,789,400 96.29%2007 3,363,710 3,053,904 185,405 3,239,309 96.30%2008 4,918,559 4,087,005 344,238 4,431,243 90.09%2009 4,958,658 4,378,939 338,819 4,717,758 95.14%2010 4,771,906 4,293,008 347,908 4,640,916 97.25%2011 4,375,791 3,336,261 971,558 4,307,819 98.45%2012 4,341,309 3,327,041 458,193 * 3,785,234 87.19%Source: Baldwin County Revenue Commissioner.* Report only included 17 days of late payments.Percentage of Levy-77-CITY OF FAIRHOPE, ALABAMAPROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARSCollected within the Total Collections to DateFiscal Year of the LevyPercentage of Levy90.63%91.46%93.61%76.64%83.09%90.79%91.50%88.31%76.24%89.96%
City
Fiscal Direct Baldwin State of
Year Rate County Alabama
2009 2.00% 2.00% 4.00%
2010 2.00% 2.00% 4.00%
2011 2.00% 3.00% 4.00%
2012 2.00% 3.00% 4.00%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009
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CITY OF FAIRHOPE, ALABAMA
DIRECT AND OVERLAPPING SALES TAX RATES
CURRENT & LAST THREE FISCAL YEARS
Top 25 Taxpayers
(approximate) Total Tax % of Total Tax
2009 (partial year)632,797$ 1,003,864$ 63%
2010 2,124,169 4,443,325 48%
2011 2,502,259 4,591,088 55%
2012 2,525,722 4,855,972 52%
* The City implemented its first sales tax effective July 1, 2009. Fiscal year 2009 is partial year.
Source: City Treasurer's Office, AL Dept of Revenue and AlaTax Revenue Discovery Systems
Note: State law prohibits the disclosure of tax information for specific taxpayers.
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CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAXPAYERS
* LAST FOUR YEARS
General General Utilities Total PercentageFiscal Obligation Notes Capital Obligation Revenue Notes Capital Primary of Personal PerYear Debt Payable Leases Debt Debt Payable Leases Government Income Capita2003 9,988,410$ 285,104$ 979,700$ 471,590$ 18,470,000$ 177,395$ 1,076,351$ 31,448,550$ 8.30% 2,249 2004 9,522,129 246,607 772,224 462,871 18,340,000 158,761 993,213 30,495,805 7.46% 2,168 2005 9,046,405 650,780 290,221 453,595 18,615,000 593,077 448,007 30,097,085 7.29% 2,134 2006 11,437,202 1,943,967 140,632 442,820 18,045,000 446,267 284,572 32,740,460 7.46% 2,203 2007 18,430,349 230,130 111,245 431,688 17,465,000 293,764 122,438 37,084,614 8.28% 2,465 2008 17,474,232 81,604 91,092 413,404 16,865,000 170,145 7,387 35,102,864 7.26% 2,204 2009 16,768,901 30,364 69,942 271,397 16,235,000 86,035 - 33,461,639 6.65% 2,067 2010 15,773,979 - 47,745 256,962 15,610,000 24,681 - 31,713,367 6.43% 1,933 2011 14,965,792 - 24,449 241,993 14,925,000 - - 30,157,234 6.47% 1,818 2012 14,200,481 - - 226,260 23,125,000 - - 37,551,741 9.37% 2,647 -80-Governmental Activities Business-Type ActivitiesCITY OF FAIRHOPE, ALABAMARATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS
Percentage of
Estimated
General Less: Amounts Actual Taxable
Fiscal Obligation Available in Debt Value of Per
Year Debt Service Fund Total Property Capita
2003 10,460,000$ 558,630$ 9,901,370$ 2.61% 708
2004 9,985,000 377,983 9,607,017 2.35% 683
2005 9,500,000 272,950 9,227,050 2.23% 654
2006 11,880,022 235,347 11,644,675 2.65% 783
2007 18,862,037 456,957 18,405,080 4.11% 1,223
2008 17,887,636 470,671 17,416,965 3.60% 1,094
2009 17,040,298 350,987 16,689,311 3.32% 1,031
2010 16,030,941 351,008 15,679,933 3.18% 956
2011 15,207,785 350,020 14,857,765 3.19% 896
2012 14,426,741 325,214 14,101,527 3.52% 994
CITY OF FAIRHOPE, ALABAMA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
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Percentage Amount
of debt of debt
Applicable Applicable
Outstanding to the City to City of
Debt Fairhope (1) Fairhope
Direct debt of the City 14,200,481$ 100.00% 14,200,481$
Overlapping Debt (Supported by ad valorem tax)
Baldwin County 127,144,314 8.51%(1)10,819,981
25,020,462$
(1) Percentage of net assessed value of property in City ($289,420,600) to net assessed value of property in
Baldwin County ($3,399,511,400) on 10/1/2012.
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CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30, 2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Debt limit 28,227,355$ 31,813,008$ 32,959,792$ 38,626,776$ 44,849,472$ 65,580,788$ 66,115,436$ 63,625,408$ 58,343,880$ 57,884,120$ Total net debt applicable to limit 11,724,805 11,003,831 9,987,406 13,381,169 18,660,479 17,555,836 17,070,662 16,030,941 15,207,785 14,426,741 Legal debt margin 16,502,550$ 20,809,177$ 22,972,386$ 25,245,607$ 26,188,993$ 48,024,952$ 49,044,774$ 47,594,467$ 43,136,095$ 43,457,379$ Total net debt applicable to limit as a percentage of debt limit 41.54% 34.59% 30.30% 34.64% 41.61% 26.77% 25.82% 25.20% 26.07% 24.92%Legal Debt Margin Calculation for Fiscal Year 2012Total assessed value $ 289,420,600 Debt limit (20% of total assessed value) 57,884,120 Debt applicable to limit:General obligation warrants 14,426,741 Notes payable - Total net debt applicable to limit 14,426,741 Legal debt margin $ 43,457,379 Fiscal Year-83-CITY OF FAIRHOPE, ALABAMALEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARS
Per
Capita
Fiscal Personal Personal School Unemployment
Year Population Income Income Enrollment Rate
2003 13,985 378,923,575$ 27,095$ 3,701 4.5%
2004 14,067 408,899,556 29,068 3,965 4.6%
2005 14,106 413,136,528 29,288 3,906 3.4%
2006 14,863 438,948,979 29,533 4,305 2.8%
2007 15,046 447,693,730 29,755 4,050 2.7%
2008 15,927 483,400,377 30,351 4,307 4.1%
2009 16,185 503,418,240 31,104 4,320 8.6%
2010 16,409 492,959,178 30,042 4,385 8.9%
2011 16,588 466,189,152 28,104 4,477 8.7%
2012 14,184 400,712,184 28,251 4,487 7.1%
Sources: U.S. Census Bureau
State of Alabama Department of Industrial Relations
Eastern Shore Chamber of Commerce
www.schooldigger.com
CITY OF FAIRHOPE, ALABAMA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
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Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Thomas Hospital 1,000 1 15.8% 812 1 13.7%
Grand Hotel 650 2 10.3% 400 2 6.8%
City of Fairhope 326 3 5.1% 196 3 3.3%
Wal-Mart 325 4 5.1%
Publix 100 5 1.6%
Segers Aero Corporation 96 6 1.5%
Winn-Dixie 75 7 1.2% 75 7 1.3%
Print Xcel (formerly Poser Business Forms) 63 8 1.0% 170 4 2.9%
Balloons Everywhere 65 9 1.0% 60 9 1.0%
Piggly Wiggly 60 10 0.9%
Bruno's 100 5 1.7%
BF Goodrich Aerospace
Rock Creek 80 6 1.4%
Food World 70 8 1.2%
Seton Home Health 58 10 1.0%
2,760 43.6% 2,021 34.1%
Sources: Eastern Shore Chamber of Commerce
State Department of Industrial Relations
NOTE: Total city employment number represents people residing in COF that are employed
(place of residence) rather than employment for COF businesses
2003: 5,921 2012: 6,332
2012 2003
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CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012FunctionGeneral Government 46 48 49 58 61 62 54 55 53 53Public Safety Police 35 37 39 40 41 42 51 48 48 44 Fire Firefighters and Dispatch4579914 13 13 17 18Highways and Streets Public Works 26 28 28 27 29 28 37 37 35 36Sanitation 19 21 19 25 22 20 21 20 20 19Culture and Recreation Recreation688889 18 18 19 19 Adult Recreation111136 10 13 14 14Gas Department 16 17 17 16 16 19 18 18 18 18Electric Department 17 17 17 17 20 19 17 17 17 18Water/Waste Water Department 21 23 23 24 24 25 23 23 24 26Golf Department 13 13 12 12 13 13 19 19 16 14Total 204 218 220 237 246 257 281 281 281 279Source: City of Fairhope human resources departmentCITY OF FAIRHOPE, ALABAMAFULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONLAST TEN FISCAL YEARSFull-time Equivalent Employees as of September 30,-86-
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012FunctionPolice Physical arrests 539 840 949 1,255 1,710 1,131 993 833 1,134 603 Parking violations 65 65 27 56 13 71 285 201 163 128 Traffic violations 1,566 2,116 2,381 2,589 1,516 996 1,004 1,245 1,419 2,215 Fire Number of calls answered 332 364 429 381 339 432 427 658 801 657 Inspections 429 505 585 463 282 196 382 291 143 101 Highways and streets Street resurfacing (miles) 7.80 0.25 0.25 2.30 - - 1.5 - - 8.1 Potholes repaired 416 416 312 312 312 414 384 400 425 450 Sanitation Garbage collected (tons/year) 6,010 6,566 7,000 7,200 8,246 7,520 7,782 8,627 9,100 8,711 Trash collected (tons/year) 5,227 4,953 6,411 4,845 5,213 5,915 5,744 7,385 6,487 5,767 Recyclables collected (tons/year) 1,660 1,699 2,112 1,959 2,131 1,989 1,297 1,281 1,495 1,508 Culture and recreation Golf course rounds @ 9 hole rounds 70,948 82,695 80,603 93,082 92,702 88,475 53,755 62,720 61,283 65,500 Pavilion/park parties 9 87 59 74 88 84 80 64 56 Waste water Average daily sewage treatment 1.7 1.8 1.8 1.6 1.7 1.7 1.7 1.8 1.8 1.8 (millions of gallons)Sources: Various government departments*** Ordinance was passed in June 2004 - no rent collected prior to this time***CITY OF FAIRHOPE, ALABAMAOPERATING INDICATORS BY FUNCTIONLAST TEN FISCAL YEARS-87-Fiscal Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012FunctionPublic safety Police Stations1111111 1 1 1 Patrol units 26 29 32 33 35 36 40 45 45 45 Fire stations3333333 3 3 3Highways and streets Streets (miles) 75.2 82.2 84.2 89.7 89.7 98.1 98.1 98.1 98.1 99.1Culture and recreation Parks acreage 168 168 168 168 208 208 208 248 248 248 Parks 46 46 46 46 50 50 50 51 51 51 Swimming pools2222333 3 3 3 Tennis courts4444666 6 6 6 Community center2222213 3 3 3Sewer Sanitary sewers (miles) 114 115 117 119 120 121 121 125 125 125 Storm sewers (miles) 6.55 9.45 12.45 14.05 15.55 16.75 16.75 16.75 16.75 17.25 Maximum daily treatment capacity4444444 4 4 4 (millions of gallons)Sources: Various government departmentsCITY OF FAIRHOPE, ALABAMA-88- CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARSFiscal Year
COMPLIANCE SECTION