HomeMy WebLinkAbout2015CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
PREPARED BY:
THE OFFICE OF THE FINANCE DIRECTOR
CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2015
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal
Certificate of Achievement for Excellence in Financial Reporting
Organization Chart
City Elected and Appointed Officials
FINANCIAL SECTION
INDEPENDENT AUDITORS' REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement ofNet Position
Statement of Activities
Fund Financial Statements
Governmental Fund Financial Statements
Fund Balance Sheets -Governmental Funds
Reconciliation of Governmental Fund Balances to Net Position
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of Governmental Activities 18
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 19
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 20
Proprietary Fund Financial Statements
Fund Balance Sheets -Proprietary Funds 21
Statement of Revenues, Expenses and Changes in Net Position-
Proprietary Funds 22
Statement of Cash Flows -Proprietary Funds 23
Discretely Presented Component Units
Combining Statement ofNet Position-Discretely Presented
Component Units 24
Combining Statement of Activities -Discretely Presented
Component Units 25
Notes to the Financial Statements 26
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2015
TABLE OF CONTENTS (continued)
REQUIRED SUPPLEMENTARY INFORMATION
Schedules of Employer Contributions
Schedules of Changes in the Net Pension Liability
Budgetary Comparison Schedule -General Fund
Notes to Required Supplementary Information
OTHER SUPPLEMENTARY INFORMATION
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60
61
Combining Balance Sheets-Nonmajor Governmental Funds 63
Combining Statement of Revenues, Expenditures and Fund Balances -64
Nonmajor Governmental Funds
Fund Balance Sheet-Fairhope Public Library Board 65
Reconciliation of Governmental Fund Balances to Net Positon
of Governmental Activities -Fairhope Public Library Board 66
Statement of Revenues, Expenditures and Changes in Fund Balances
Fairhope Public Library Board 67
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities -Fairhope Public Library Board 68
Fund Balance Sheet-Fairhope Airport Authority 69
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities -Fairhope Airport Authority 70
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fair hope Airport Authority 71
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities-Fairhope Airport Authority 72
Schedule of Capital Projects Expenditures 73
Schedule of Information Required By Bond Indentures 7 4
Summary of Deposits, Withdrawals and Balances of Selected Trust Accounts as
Required Under Certain Trust Indentures 75
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2015
TABLE OF CONTENTS (continued)
STATISTICAL SECTION
Net Position by Component
Changes in Net Position
Governmental Activities Tax Revenues by Source
Fund Balances of Governmental Funds
Changes in Fund Balances of Governmental Funds
Assessed Value and Estimated Actual Value of Taxable Property
Property Tax Rates -Direct and Overlapping Governments
Principal Property Taxpayers
Property Tax Levies and Collections
Direct and Overlapping Sales Tax Rates
Principal Sales Tax Remitters
Ratios of Outstanding Debt by Type
Ratios of General Bonded Debt Outstanding
Computation of Overlapping Debt
Legal Debt Margin fuformation
Demographic and Economic Statistics
Principal Employers
Full-time Equivalent City Government Employees by Function
Operating fudicators by Function
Capital Asset Statistics by Function
COMPLIANCE SECTION
fudependent Auditors' Report on Compliance and on futernal Control
Over Financial Reporting Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Report on Compliance with Requirements that Could Have a Direct and
Material Effect on Each Major Program and on Compliance in
Accordance with OMB Circular A-133
Schedule of Expenditures ofF ederal A wards
Schedule of Findings and Questioned Costs
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NOI.L3:1S XliO.L3il<IOllLNI
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official elected on an at-large basis for a four-year term. The council is
presided over by a president who is chosen by the council members and is
also a voting member of the council.
The City provides a full range of services including natural gas, electricity,
water and waste water services for its citizens, as well as police and fire
protection, sanitation and recycling services, maintenance of streets and
infrastructure, numerous parks, recreational activities for all ages, a
recreation center, a museum, a welcome center, a public golf course, indoor
and outdoor swimming pools, a tennis complex, a skate park, a pet park, and
sponsorship of many cultural events. The City evaluated various other entities
within the vicinity of the City, which could possibly be subject to inclusion
within the City's financial statements under criteria established to define the
reporting entity. The Fairhope Public Library and the Fairhope Airport
Authority are discretely presented component units of the City and are
reported in the City's financial statements. The following entities are related
entities, but do not meet the established criteria for inclusion in the reporting
entity: Bay Medical Clinic Board, the Industrial Development Board,
Medical Clinic Board, Downtown Redevelopment Authority, and the Parking
Authority. Additional information on the reporting entity can be found in the
notes to the financial statement (see note l.A).
The Council adopts an initial budget for each fiscal year, which serves as the
City's guide to financial planning and control. Budgetary control is
maintained at the departmental level and revisions to budgeted amounts that
alter the total expenditures of any fund, or transfer of funds between
departments, must be approved by the Council. Departmental capital
purchases included in the budget are subject to further justification and
approval by Council prior to starting the requisition process. With the
exception of capital project appropriations that generally span multiple years,
budgets for all funds lapse at the end of each fiscal year.
Local economy
The City of Fairhope continued to show economic growth during the year.
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.
Fairhope and other small cities in Baldwin County remain somewhat buffered
from national economic downturns due to high percentages of resident
retirees and by the majority of stable service, health, and education
employers. At fiscal year-end, according to the Alabama Department of
Labor, the unemployment rate for Baldwin County was 5.4%, while the rate
for the state as a whole was 6.0%.
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Median household income within the City is significantly higher than for the
state as a whole. According to the U.S. Census Bureau, as of2014, the City's
median family income was $58,767, while the state's was $43,511.
According to the U.S. Census Bureau, as of 2014, the median value of the
City's owner-occupied housing units was $232,500.
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 Airbus aircraft
manufacturer, both located within 30 miles of Fairhope, promise to positively
impact commercial growth and property values in our area. Construction is
underway on the $600 million Airbus facility in the Mobile Aeroplex at
Brookley in Mobile and first deliveries are expected in 2016. Austal
Shipbuilding is Mobile's largest manufacturing employer, and now employs
over 4,200 people, working on military contracts of up to $5.1 billion. The
Fairhope Airport Authority's new $2.7 million 15,000-square-foot Aviation
Academy was completed in 2015, and began enrolling students from high
schools in Baldwin County in August, 2014, for flight and mechanical
training.
On May 28, 2014, Standard & Poors upgraded by two notches the City of
Fairhope's long-term bond rating on General Obligation Warrants, to AA+.
The upgrade was credited by S & P to the City's strong management with
good financial practices, budgetary flexibility, strong liquidity, very favorable
debt to governmental funds revenue ratio, and Fairhope's strong local
economy and per capita market value.
Researcher NewGeography named Fairhope as one of the four Alabama
cities in the Top 100 of 'America's Smartest Cities,' based on a high quality
of life and a high percentage of citizens with college degrees.
(http://www .newgeography.com/content/004 77 4-americas-smartest -cities). The Alabama
Policy Institute listed Fairhope in the Top 10 Business-Friendly Cities for
2014. (The Alabama Policy Institute, Birmingham, Alabama, March, 2014, page 7;
www.alabamapolicy.org). Baldwin County was described by Forbes magazine as
a top place to grow a business. (Baldwin Insider Quarterly, Vol. IV, 2014). Alabama
ranked 4th in the Top 10 states for doing business. (Baldwin Insider Quarterly, Vol.
IV, 2014).
Relevant financial policies
The City strives to maintain an up-to-date set of comprehensive financial
policies. New Governmental Accounting Standards Board (GASB)
pronouncements are closely analyzed to determine any impact to the City's
financial reporting requirements and proactive steps are taken to ensure
implementation guidelines are followed and deadlines are met.
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The internal control structure is designed to provide reasonable, but not
absolute, assurance that these objectives are met. The concept of reasonable
assurance recognizes that the cost of a control should not exceed the benefits
and the valuation of the costs and benefits requires estimates and judgments
by management. We believe the City's internal accounting controls
adequately safeguard assets and provide reasonable assurance of proper
recording of financial transactions and will continue to implement policies
and procedures that improve and strengthen internal controls.
Long-term financial planning and major initiatives
Unrestricted fund balance (the total of committed, assigned, and unassigned
components of fund balance) in the General Fund at year-end was $3,992,803
which represents 16% of total general fund revenues. The Council has
restricted, by City Ordinance, $7 million in the General Fund for use in times
of emergency. This restricted amount is periodically reviewed to ensure the
City is able to endure periods of economic stress.
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 maintaining the quality of life and the highest level of governmental
services to all residents in the City. In 2015, the City earned the "Alabama
Communities of Excellence" designation after a year-long process aimed at
shaping the future of cities through guidance from planning experts and input
from residents. The process included three phases: assessment from the
University of Alabama Center for Economic Development; leadership
development and strategic planning; and implementation and comprehensive
planning focused on commercial business development, education
enhancement, infrastructure, health and human services, retiree attraction,
tourism, economic development, and quality of life.
The City of Fairhope was the winner in the 16,000-20,000 population
category in the prestigious 2015 "America in Bloom" national awards
program held annually in Holland, Michigan. All participants were evaluated
on six criteria: overall impression, environmental awareness, heritage
preservation, urban forestry, landscape, and floral displays. Additionally,
participants were judged on their community involvement across municipal,
residential, and commercial sectors. America in Bloom is the only national
awards program that sends specially trained judges to personally visit
participants. In addition, each participant receives a detailed written
evaluation that can be used as a guide to future improvements. The City
received a special mention and an outstanding achievement award for its
efforts in urban forestry in recognition of the preservation and restoration
work done on historic Knoll Park, the City's old growth, longleaf pine urban
forest. In addition, in 2015 the City achieved the rank of "Circle of
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Champions," which is for cities that have a combination of three population
wins and I or outstanding achievement awards.
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 2016 contains over $13 million in the General,
Capital Projects, Gas Tax, Impact, and Utility Funds for capital purchases,
infrastructure improvements, and special projects throughout the City.
Improvements expected to be completed in the next year include major street
projects for resurfacing, and new sidewalks, drainage improvements,
completion of a new soccer complex, and additional tennis courts.
Awards and acknowledgements
The Government Finance Officers Association of the United States and
Canada (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to the City of Fairhope, Alabama, for its comprehensive
annual financial report for the fiscal year ended September 30, 2014. In order
to be awarded a Certificate of Achievement, a government must publish an
easily readable and efficiently organized comprehensive annual financial
report. This report must satisfy both generally accepted accounting principles
and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We
believe that our current comprehensive annual financial report continues to
meet the Certificate of Achievement Program's requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
The preparation of this comprehensive annual financial report could not be
accomplished without the dedicated services of the Finance Division staff.
We express appreciation to each member of the Department and to the
member of other City departments for their contributions made in the
preparation of this report.
The commitment of maintaining the highest standards of accountability . in
financial reporting speaks to the leadership and dedication to public service
of the Mayor and City Council. Their support for a policy of financial
integrity has been instrumental in the preparation of this report.
Respectfully submitted,
~~~
Deborah A. Smith, CPA
City Treasurer
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Fairhope
Alabama
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2014
Executive Director/CEO
I CITY COUNCIL
I
City Clerk I
I
I
I
City Attorney
I
I Super~~:ndent II Water/Sewer II Electric I I Superintendent Superintendent Chief of Police I I
X
City ofFairhope, Alabama
Organizational Chart
September 30, 2015
MAYOR
Executive
Assistant
l
II General City
Superintendent Treasurer
CITY JUDGE
I
I Court Clerk
I
I Court Magistrates
11 Di~ector of I Information
Fmance Technology
I Planning I I Purchasing I
I Building I
I Public Works I
r Golf
I Revenue/Meter
I Human Resources
I
l
Director of Community
Affairs & Recreation
-r
~
Adult Recreation-Nix Center
I Civic :Center l
I Museum I I
I Recreation Center I
I
I Youth Recreation
I
I Special Services I I I Communications I
Timothy M. Kant, ACMO
Michael A. Ford, ACMO
Kevin Boone
Diana J. Brewer
Jack Burrell, CMO
Rich Mueller
Lisa Hanks
Deborah A. Smith, CPA
Joseph Petties
Marion E. Wynne, Jr.
Honorable Haymes Snedeker
xi
CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2015
Mayor
Councilmember
Councilmember
Councilmember
Councilmember
Councilmember
City Clerk
City Treasurer
Police Chief
City Attorney
City Judge
FINANCIAL SECTION
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information in accordance with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowle~ge we obtained during our audit of
the basic financial statements. We do not express an opinion or provide any assurance on ·the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
City's basic fmancial statements. The introductory section, other supplementary information, and statistical information listed
in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial
statements. The Schedule of Expenditures of Federal Awards, as required by Office of Management and Budget Circular A-
133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and
is not a required part of the basic fmancial statements. ·
The other supplementary information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the basic fmancial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standatds generally accepted in the United States of America. In our opinion, the other supplementary information is
fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory section and the statistical section are the responsibility of management and have not been subjected to the
auditing procedures applied in the audit of the basic fmancial statements, and accordingly, we do not express an opinion or
provide any assurance on it.
Restatement of Prior Periods
The financial statements ofthe City as of September 30,2014, dated January 15, 2015, expressed an unmodified opinion on
the financials statements. As discussed in Note 23 to the financial statements, the City has adjusted its September 30, 2014,
frnancial statements to retrospectively apply the implementation of Governmental Accounting Standards Board Statement
No. 68, Accounting and Financial Reporting for Pensions.
As part of our audit, we also audited the adjustments to the September 30, 2014, financials statements to retroactively apply
the change in accounting principle as described in Note 23. In our opinion, such adjustments are appropriate and have been
properly applied.
Other Reporting Required by Governmental Auditing Standatds
In accordance with Government Auditing Standards, we have also issued our report dated January 21, 2016, on our
consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.
January 21, 2016
Fairhope, Alabama
~·~f]~~;~1 (L,
Certified Public Accountants
THIS PAGE INTENTIONALLY LEFT BLANK
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 fmancial activities for the fiscal year ended September 30, 2015. The intent of this Management's
Discussion and Analysis (MD&A) is to review the City's fmancial 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 fmancial report
(CAFR).
FINANCIAL HIGHLIGHTS
• Assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of
resources at the close ofthe fiscal year by $135,481,963, a current year increase in adjusted net position of
$11,052,270 (pages 15 and 16).
• 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 $17,826,311, an increase
of $3,011,191 from the prior year. The General Fund closed with a fund balance of $10,992,803, an
increase of $543,280. The reason for the smaller than anticipated increase is from transfers into Capital
Projects for projects scheduled for the first part of fiscal year 2016. The Capital Projects Fund had an
increase in fund balance of $2,441,420 after capital expenditures of $2,459,578 and transfers from the
General and Impact Fee Funds of$4,595,908 (page 19). A detailed explanation of these increases can be
viewed on page six and seven of this MD&A.
• City wide, governmental and business type funds, cash (including restricted cash) totaled $29,777,706, a
decrease of $1,350,422 from the previous year. Governmental Funds cash totaled $17,629,506 at
September 30, 2015 (page 15). This is an increase of $2,703,779 over the prior year. Most of the
increase, approximately $1.4 million was from a settlement related to the BP oil spill. Another $600,000
of the increase related to settlement for past litigation. The business type funds cash totaled $12,148,200
at year end (page 21 ), a decrease of $4,054,201 from last year. This decrease is primarily a result of
payments made on sewer plant upgrades totaling $4,565,515 and an additional principal debt payment in
the amount of $2,000,000. Revenues in the governmental funds increased approximately $2.8 million
from the previous year. Expenses decreased approximately $928,000.
• During fiscal 2015, revenues from the sales tax totaled $6,797,757, an increase of approximately
$280,000 over the previous year. At year end, the General Fund's sales tax reserve totaled $7 million
with an additional $4 million in unreserved.
• The combined governmental funds expended $3,840,803 for capital projects and purchases, including
$2,459,578 for special projects, such as the Manley Road Soccer Complex as well as the Golf Course
irrigation system, $86,000 for a new fire station from impact fees and $1,295,225 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 $8,389,791, compared to $8,047,842 for fiscal 2014. Revenues decreased
approximately $350,000. Costs of energy and operating expenses also decreased about $685,000. The
utilities made transfers to the General Fund of $1,826,575 from income, which is $1,785,907 less than
transfers last year. This significant reduction in transfers allowed the utilities to make an extra principal
debt payment in the amount of $2,000,000. The business-type activities recorded an increase in net
position, after transfers, of $6,563,216 (page 22). Details pertaining to these increases can be seen on page
seven and eight of this MD&A.
• The City's business-type activities made additions to property, plant and equipment of $7,631,504, while
also reducing debt. The main factor contributing to this increase was payment of $4.6 million for sewer
plant upgrades. The remaining increase was due to routine system improvements totaling $2.4 million and
vehicles and equipment of $620,000. Funding for these additions was prior debt issues, current income
and money set aside for this purpose (pages 23 and 3 7).
• The City of Fairhope's long term debt decreased by $5,675,000 during fiscal year 2015, yielding total
outstanding debt of $30,859,616 compared to the previous year's $36,534,616. In fiscal year 2015, $2
million was used for retiring and refunding of the 2005 Utilities Revenue Warrants. Governmental
activities total debt was $9,336,616. Business-type activities total debt was $21,523,000 (pages 38 and
39).
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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 fmancial statements. The City's
basic fmancial statements are comprised of four components: 1) government-wide fmancial statements, 2) fund
financial statements, 3) notes to fmancial statements, and 4) required supplementary information.
The Statement of Net Position 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 fmancial statements tell how these services were financed in the short term as well
as what remains for future spending. Fund fmancial 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 fmancial
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 fmancial statements start on page 26.
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 60.
The Statement of Net Position and the Statement of Activities
The Statement of Net Position and the Statement of Activities 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 position and any changes in them. Consideration of the City's net position,
i.e., the difference between assets and liabilities plus deferred, is one tool to measure the City's fmancial health, or
financial condition. Over time, increases or decreases in the City's net position are indicators of whether its fmancial
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 Position 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 fmance 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 position may serve over time as a useful indicator of a government's financial condition. The City's assets and
deferred outflows of resources exceeded liabilities and deferred inflows of resources by $135,481,963 at the close of the
most recent fiscal year, as shown in Figure 1, page 10 and page 15. This is an increase of$11,052,270.
The major factors contributing to this increase are as follows: revenues among the governmental funds increased
$2,761,328 from last year due mainly to a $1.4 million settlement related to the BP oil spill as well as a settlement of
$600,000 for past litigation. In addition, property and sales taxes increased $574,000 from the prior year.
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The largest portion of the City's net position, approximately 89 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 position, approximately 8.3 percent, represents resources that are subject to
restrictions as to how they may be used. Funds restricted for debt service were $2,967,971; for capital projects,
$1,154,000; for road maintenance and construction, $105,947; for City Council determined emergencies, $7,000,000.
Restricted funds decreased approximately $1,048,000 from the previous year due to an additional principal payment in
the amount of $2 million paid by the business-type activities.
The unrestricted net position, approximately 2.6 percent, may be used to meet the City's ongoing obligations to citizens
and creditors. Unrestricted net position, $3,557,475, decreased $1,229,138 during fiscal2015 due to the implementation
ofGASB 68 and 71(pages 10 and 15). As a result ofthe implementation of these new standards, a net pension liability
was retrospectively accounted for resulting in a prior period adjustment of $9,462,600. Due to the fact that the City had
a current year change in net position of $11,052,270, there was a positive trend in net position despite the large prior
period adjustment.
Effective for year ended September 30, 2015, the City implemented Government Accounting Standards Statement 68,
Accounting and Financial Reporting for Pensions (GASB 68) and Government Accounting Standards Statement 71,
Pension Transition for Contributions Made Subsequent to the Measurement Date (GASB 71) and is discussed in Note
1, page 30.
Under 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 $862,809. The current year retirement premium was $599,019. The liability for OPEB obligation at
year end was $3,320,014. This amount is reported on the Statement ofNet Position, page 15, as Net OPEB Obligation
and on page 52, Note 18.
Under Government Accounting Standards Statement 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position (GASB 63), service concession arrangements exist between the Airport
Authority and the Baldwin County Board of Education (BCBOE) and a private company. See Note 21, page 55 for
detailed explanation ofthis agreement. At year end, the balance of this deferred inflow of resources is $3,612,604.
Under Government Accounting Standards Statement 65, Items Previously Reported as Assets and Liabilities (GASB
65), implemented in the prior fiscal year, certain items that were previously reported as assets and liabilities were
reclassified as deferred outflows of resources, deferred inflows of resources or current period outflows (expenses) and
inflows (revenues). At year end, deferred outflows of resources included employer retirement contributions of
$1,033,161. Conversely, deferred inflows of resources consisted of the net difference between projected and actual
earnings on plan investments and had a balance of$830,621 at year end. These amounts are reported on the Statement
ofNet Position, page 15 and on page 30, Note 1.
Figure 2, page 11, 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.
- 6 -
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 fmance 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 Position.
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 12, 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, 2015, and the
amounts of increases and decreases in relation to prior year revenues and expenditures.
Governmental activities revenues increased $2,761,328 from the previous fiscal year. However, expenditures of
Governmental funds decreased $928,077 for the same period. The following significant events, related to revenues and
expense, occurred during fiscal 2015 (the figures are rounded):
Related to revenue:
• Taxes, property and local, were up $574,000, with the majority of the increase from property taxes and sales
tax.
• Licenses and permits increased by $306,000. This was primarily due to an increase in building permits of24%
over last year, signifying continual growth in the City.
• Charges for services were up $230,000 due mainly to an increase in impact fee revenue.
• A settlement in the amount of $1.4 million was received as a result of the BP oil spill.
• Another settlement related to past litigation was received. This amount totaled $600,000.
• Intergovernmental revenues decreased $352,000 from the prior year due to a federal payment that was received
in the prior year as a result of a flood event in the area.
Related to expenditure:
• Capital outlay expenditures were approximately $3,841,000, up $1,933,000 from the prior year. Expenditures
of$1,908,000 for fiscal2014 included $1,189,000 for special projects, including the Community Park and the
widening of Fairhope Avenue, $30,000 for impact fees transportation projects and $689,000 for vehicles and
equipment. Major capital expenditures for fiscal 2015 were: $2,460,000 for special projects, including the
Manley Road Soccer Complex and the Golf Course irrigation system, $86,000 for a new fire station from
impact fees and $1,295,000 for vehicles, equipment and other infrastructure additions.
• The Police Department had decreases of$124,000. This decrease was from a reduction in salaries of$126,000
due to vacancies and the elimination of two positions.
• The Street Department's expenses were down $323,000. Unforeseen emergency repairs were made in the
previous year as a result of the April2014 flood event. These costs totaled $337,000.
• Debt service payments, $858,000, decreased $2.5 million from the previous year's $3.4 million total. This was
due to the payoff of the 2009 General Obligation Warrant in the amount of $2.4 million in the previous year.
-7-
Fund Balances and Net Position
When reviewing the City's finances it is important to ask if the City as a whole is in better fmancial 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 position 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 $17,826,311, an increase of$3,011,191. This follows an increase in fund balances of$1,107,692 the previous
year. The General Fund had a fund balance of$10,992,803, an increase of$543,280. The Capital Projects Fund had an
increase in fund balance of $2,441,420 after $982,058 for park, soccer, and recreation projects, $414,319 for NRCS
projects, an irrigation system for the Golf Course of$765,817, capital outlay of$297,383 and transfers from the General
and Impact Fee Funds of $4,595,908.
The Other Governmental Funds had fund balances of $1,281,102 at year end, including restrictions for Debt Service of
$348,720, a decrease of $8,436 and assigned funds reported in special revenue fund (Gas Tax and Impact Fees) of
$826,435, a decrease of $25,013, after expenditures of $86,000 for capital outlay and $30,327 for road repair and
maintenance. (see pages 17, 19, 63 and 64). Increases and decreases in revenues and expenses are discussed in the
Governmental Funds section of this MD&A, page 6 above.
The governmental activities' net position at year end was $83,135,930, a decrease of $2,738,708. The Gas, Electric and
Water and Waste Water Funds had a net position of $52,346,033 at year end, an increase of $4,328,378 (see pages 16
and 22). The increase in the previous year was $4,435,360. The total increase of $1,589,670 from last year to this year
is directly related to the prior period adjustment of$9,462,600 as a result of the implementation ofGASB 68, mentioned
above in The Statement ofNet Position and the Statement of Activities section of this MD&A, page 5.
Capital Project and Other Governmental Funds increases in fund balance are discussed above. Following are major
factors affecting increases in fund balance and net position in the General Fund and business-type operations.
General Fund Balance: The General Fund had an increase in revenues of $2,862,865. Expenditures for the General
Fund were up $617,308 from the prior year. Transfers from the proprietary funds (Gas, Electric, Water and Waste
Water Funds) were $1,826,575 for the current year, a decrease of $1,785,907 from the prior year. After transfers, the
fund balance of the General Fund increased by $543,280 during fiscal 2015. The most significant revenue increase was
related to litigation settlements totaling $2 million. In addition, local taxes increased $574,000, with the majority from
sales tax. Another factor affecting fund balance of the General Fund was an increase in licenses and permits of
$306,000. The most significant increase related to General Fund expenditures was in capital outlay. This increase
totaled $606,442, constituting 98% of the change from last year. The remaining difference was due to modest increases
and decreases among all 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 $349,735 from the prior fiscal year. This
represented a .89% decrease. Operating expenses also decreased by $685,144, a 2.3% decrease. The decrease in
expenses was due to mainly to decreases in energy purchases for resale of $707,561, a decrease of 4.3%. Combined,
other expenses were up from the prior year, $22,417. 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 $8,389,791, an increase of
$341,949. Transfers to the General Fund were $1,826,575, or 22% of income. For fiscal 2014 the transfers to the
General Fund were $3,612,482, or 45% of income. For fiscal2013 the transfers were $3,236,251 or 48%. The reduced
transfers, as a percent of income, have enabled the utilities to fund capital additions, reserves for emergencies, and the
early payoff of debt. The change in net position of the three utilities was an increase of$6,563,216.
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, and the City Council budget committee. Page 61 of
this report lists the procedure for preparing the annual budgets. No adjustments to the budget were made during the
-8 -
year.
On page 60, 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 $2,725,000 for fiscal2015. Local taxes were $329,000 over budget due primarily to
greater than expected sales tax revenue. Licenses and permits were $292,000 over budget. Of that amount, $247,000
was from business licenses and building permits. Charges for services were $62,000 over budget. Subdivision fees
related to an improved construction outlook in Fairhope, and sanitation collections exceeded budgeted amounts.
Recreation department revenue was $52,000 over budget due primarily to an increase in memberships. Settlements
related to the BP oil spill and past litigation were received during the year. These totaled $2 million.
At year end, expenditures were $408,000 under budget. General government was $196,000 under budget due mainly to
less than anticipated medical insurance costs of$184,000. The favorable variances in police and golf totaled $195,000
due primarily to employee cost reductions. The favorable variance in capital outlay was $60,000 due to an overall
departmental cutback in capital spending throughout the year. In contrast, the sanitation department had an unfavorable
variance of $84,000 due primarily to an increase in equipment and vehicle repairs.
Capital Assets
As of September 30, 2015, the City's governmental activities had $85,515,608 invested in capital assets, net of
depreciation. This is an increase of $921,765 from the prior year. The business-type activities had invested capital
assets, net of depreciation of$65,805,991, an increase of$5,420,661 (see Note 3, Capital Assets, pages 36 and 37).
The City's governmental activities capital assets, at cost, were $137,361,991 at September 30, 2015, an increase of
$4,008,100 from the prior year. The business-type activities, the Gas, Electric and Water and Waste Water Funds, had
capital assets, at cost, of $106,177,132, an increase of $7.6 million. Figure 4, page 13, summarizes capital assets by
asset type, at cost, and changes in fixed assets during the year.
Debt Administration
As of September 30, 2015, the City had long-term debt of $30,859,616 (excluding premiums and discounts), including
bonds and warrants payable, notes payable, and obligations under capital leases. This is a net decrease, city wide, of
$5,675,000 from the prior year. Governmental activities' decrease in long-term debt was $483,780. In addition,
business-type activities' decrease in long-term debt was $5,191,220.
In May 2015, the City issued, at a favorable interest rate, the Utilities Revenue Warrants Series 2015 in the amount of
$1,780,000. The proceeds were used to advance refund the Utilities Revenue Warrants Series 2005, dated March 1,
2005 in the amount of $4,590,000. This advanced refunding, along with the net proceeds from issuance and normal
debt service payments contributed to the significant decrease for the year. Due to the favorable interest rate change of
this new issuance, the City's total debt service requirements decreased approximately $920,000. See Notes 5 through 8
in the fmancial statements for more detail. Figure 5, page 14, summarizes the City's long-term debt, including
compensated absences.
ECONOMIC FACTORS
The City's management has set a budget increase in revenue for fiscal 2016 of $3.3 million. Property taxes, local taxes,
licenses and permits, and charges and services are expected to increase $1,653,000. Transfers from the utilities are
budgeted to increase $1,600,000.
In addition, the General Fund budget has a $625,000 increase in expenses for fiscal 2016, compared to fiscal 2015.
Most departments are relatively flat, or have seen small· increases in their budgets. The majority of this increase,
$487,000, relates to police department expenses. The two major increases are employee costs of $223,000 as well as
vehicle and equipment purchases of $132,000. The remaining increase of $132,000 in the police department is due to
modest increases in general supplies, maintenance, corrections capital improvements and jail expenses. The remaining
- 9 -
difference is due to increases in employee costs for recreation and golf grounds, totaling $143,000.
Gas Fund, Electric Fund and Water and Waste Water Fund operations budgeted revenues are expected to decrease less
than 1% from actual amounts for 2015. Costs of energy and operating expenses in the three utilities are projected to
increase by approximately 3% from actual amounts for 20 15.
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 $7,949,195 for fiscal2016, compared to actual $8,389,791 for
fiscal2015. This represents a projected decrease of 5%. Transfers to the General Fund for fiscal2016 are budgeted to be
$3,417,969, compared to $1,826,575 for 2015. This represents an 87% increase. By significantly increasing transfers,
the City's General Fund will be able to make an extra principal debt payment in the amount of $2,000,000 in fiscal year
2016 contrasted to the utilities extra principal debt payment of this same amount in fiscal year 2015. 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 Deborah
A. Smith, City Treasurer, at 161 N. Section Street, Fairhope, Alabama, (251) 928-2136.
~10..
Figure 1
CITY OF FAIRHOPE
CONDENSED STATEMENT OF NET POSITION FOR THE YEAR ENDED 913012015
COMPONENT lJNITS
GOVERNMENTAL BUSINESS· TYPE TOTAL PRIMARY
ACTIVITIES ACTIVITIES GOVERNMENT LmRARY AIRPORT AllTHORITY
9730/2015 973072014 9/30/2015 9/30/2014 9130/2015 9130iiOI4 9/30/2015 9i3iiliot4 9/30/2015 973072014
Current & Other Assets $ 18,828,818 $ 15,708,701 $ 15,925,388 $ 19;973,176 $ 34,754,206 s 35,681,877 $ 352,791 $ 155,642 $ 685,835 $ 1,327,960
Capital Assets, net 85,515,608 84,593,843 65,805,991 60,385,330 151,321,599 144,979,173 90,103 69,032 26,304,653 24,212,839
Total Assets 104,344,426 100,302,544 81,731,379 80,358,506 186,075,805 180,661,050 442,894 224,674 26,990,488 25,540,799
Total Deferred Outflows of Resources 789,153 -244,008 -1,033,161 ___ 43_,472
Total Assets a.nd Deferred
Outnows of Resources $ 105,133,579 $ 100,302,544 $ 81,975,387 $ 80,358,506 $ 187,108,966 $ 180,661,050 $ 486,366 $ 224,674 $ 26,990,488 $ 25,540,799
Long-Term Debt $ 9,509,538 $ 10,048,834 $ 20,052,497 $ 24,529,566 $ 29,562,035 $ 34,578,400 $ -$ -s 7,730,629 $ 8,440,000
Other Liabilities 11,853,663 4,379,072 9,380,684 7,811,285 21,234,347 12,190,357 333,671 4,306 2,968
Total Liabilities 21.363,201 14,427,906 29,433,181 32,340,851 50,796,382 46,768,757 333,671 4,306 7,733,597 ____M.40,000
Total Deferred Inflows of Resources 634,448 196,173 830,621 ___ 2_1,582 3,612,604 2,632,500
Net Position:
Invested in Capital Assets,
net of related debt 76,208,248 74,804,467 44,488,322 42,025,762 120,696,570 116,830,229 90;103 69,032 18,574,024 15,772,839
Restricted 8,608,667 8,557,163 2,619,251 3,718,288 11,227,918 12,275,451 . -364,946
Unrestricted ~1.680,985) 2,513,008 5,238,460 2,273,605 3,557,475 4,786,613 41,010 151,336 ~3,294,6832 (1,304,540)
Total Net Position 83,135,930 85,874,638 52,346,033 48,017,655 135,481,963 133,892,293 131,113 220,368 15,644,287 14,468,299
Total Liabilities, Deferred Inflows
of Resources & Net Position $ 105,133,579 $ 100,302,544 $ 81,975,387 $ 80,358,506 $ 187,108,966 $ 180,661,050 $ 486,366 $ 224,674 $ 26,990,488 $ 25,540,799
-11-
Figure2
CITY OF FAIRHOPE
CONDENSED STATEMENT OF ACTIVITIES FOR mE YEAR ENDED 9130/2015
COMPONENT UNITS
GOVERNMENTAL BllSINESS -TYPE TOTAL PRIMARY LIBRARY AIRPORT AUfHORITY
ACTIVITIES A(.'TIVITIES GOVERNMENT
9/30/2015 9130/2.014 9/30/2.015 9/30/2014 9/30/2015 9/30/2014 9/30/2015 9/30/2014 9/30/2015 9130/2014
Program Revenues
Charges for Services $ 9,939,084 $ 9,526,574 $ 38,741,246 $ 39,090,981 $ 48,680,330 $ 48,617,555 232,715 32,527 274,163 163,065
Operating Grants & Contributions 9,144 ~ --724,355 730,811 1,554,730 516,715
Capital Grants & Contributions 1,319,753 8,416,283 --1,319,753 8,416,283
General Revenues
Taxes 12,620,043 12,046,400 -. 12,620,043 12,046,400
Intergovernmental 334,433 389,561 . . 334,433 389,561
BP settlement proceeds 1,361,255 -. 1,361,255
Legal settlement 598,640 ---598,640
Investment Earnings 228,670 239,205 18,440 30,815 247,110 270,020 --353 9,224
Gain (loss) on sale of Assets (261,340)
Other 106,502 147,672 --106,502 147,672
Total Revenues $ 26,508,380 s 30,513,499 $ 38,759,686 $ 39,121,796 $ 65,268,066 $ 69,887,491 $ 957,070 $ 763,338 $ 1,829,246 $ 689,004
Expenses
General Government $ 8,890,052 $ 9,067,340 $ -$ -$ 8,890,052 $ 9,067,340 $ -$ -$ -$
Sanitation 1,790,554 1,873,508 --1,190,554 1,813,508
Police 3,945,496 4,220,003 --3,945,496 4,220,003
Fire 424,789 431,955 . 424,789 431,955
Airport 412,632 443,000 --412,632 443,000
Street 4,057,713 4,095,487 --4,057,713 4,095,487
Adult Recreation 665,804 663,982 -665,804 663,982
Recreation 1,328,674 1,250,689 --1,328,674 1,250,689
Golf 1,060,643 978,819 . -1,060,643 978,819
Public Library Board 924,736 886,028 -. 924.736 886,028
Interest on Long Term Debt 344,808 472,222 . -344,808 472,222
Electric -. 18,227,563 18,379,231 18,227,563 18,379,231
Natural Gas --5,056,618 5,529,610 5,056,618 5,529,610
Water and Wastewater --7,085,714 7,165,113 7,085,714 7,165,ll3
Golf
Airport Authority -------653,258 612,581
Fairhope Public Library . . --. 737,178 749,508
Total Expenses $ 23,845,901 $ 24,383,033 $ 30,369,895 $ 31,073,954 $ 54,215,796 $ 55,456,981 $ 737,178 $ 749,508 $ 653,258 $ 612,581
Change in Net Position before transfers 2,662,479 6,130,466 8,389,791 8,047,842 11,052,270 14,178,308 219,892 13,830 1,175,988 76,423
Special Item-Trans of Golf to
Governmental Activities
Transfers 1,826,575 3,612,482 (1,826,575~ (3,612,482)
Change in Net Position 4,489,054 9,742,948 6,563,216 4,435,360 11,052,270 14,178,308 219,892 13,830 1,175,988 76,423
Net Position. beginning, as adjusted 78,646,876 76,131,690 45,782,817 43,582,295 124,429,693 119,713,985 (88,779) 206,538 14,468,299 14,391,876
Net Position. ending $ 83,135,930 $ 85,874,638 s 52,346,033 $ 48,017,655 $ 135,481,963 $ 133,892,293 $ 131,113 $ 220,368 $ 15,644,287 $ 14,468,299
-12-
Figure 3
Statement ofRevenues and Expeditures
Governmental Funds
For the Year Ended September 30, 2015
9/30/2015 9/30/2014 Increase
Revenues Total Total (Decrease)
Local taxes $ 12,620,043 $ 12,046,399 $ 573,644
Licenses & Permits 3,306,620 3,000,673 305,947
Fines & Forfeitures 278,837 285,573 (6,736)
State of Alabama 254,608 320,432 (65,824)
U. S. Government 384,915 671,182 (286,267)
Contribution from Public Library Board
Interests and Rents 228,669 239,205 (10,536)
Charges for Service 5,395,287 5,165,291 229,996
Golf Course Revenue 1,137,114 1,067,593 69,521
Recreation Department 444,410 436,453 7,957
BP Settlement Proceeds 1,361,255 -1,361,255
Legal Settlement 598,640 -598,640
Other 180,644 196,913 (16,269)
Totals $ 26,191,042 $ 23,429,714 $ 2,761,328
Increase
Expenditures Total Total __ (Decrease)
General $ 8,289,346 $ 8,311,150 $ (21,804)
Sanitation 1,598,404 1,673,938 (75,534)
Police 3,813,581 3,937,151 (123,570)
Fire 338,547 339,623 (1,076)
Airport 412,632 443,000 (30,368)
Street Department 2,382,418 2,705,732 (323,314)
Adult Recreation 581,338 566,000 15,338
Debt Service
Principal 483,780 2,894,540 (2,410,760)
Interest 374,479 465,409 (90,930)
Recreation Department 1,095,605 1,024,526 71,079
Golf 987,957 901,085 86,872
Public Library Board 714,100 674,100 40,000
Other 93,436 89,785 3,651
Capital Outlay 3,840,803 1,908,464 1,932,339
Totals $ 25,006,426 $ 25,934,503 $ (928,077)
Figure 4
Governmental Activities
Land $
Buildings & Structures
Vehicles and equipment
Infrastructure
Total Capital Assets $
Business-type activities
Balance@ 10/01/14 $
Additions to Plant
Addition to land, buildings,
vehicles and equipment
Completed Construction in Progress
Disposals
Total Capital Assets@ 9/30/2015 $
-13-
City of Fairhope
Capital Assets
Balance
@ 10/1114 Additions
21,961,802 $ 350,022
35,288,110 1,913,598
11,131,986 1,239,059
64,971,993 688,146
133,353,891 $ 4,190,825
Electric Fund Natural Gas Fund
33,758,487 $ 15,495,338
993,063 510,328
346,050 217,957
--
-(21,273)
35,097,600 $ 16,202,350
Reclassifications/ Balance
Retirements @ 9/30/15
$ -$ 22,311,824
(182,725) 37,018,983
-12,371,045
-65,660,139
$ (182,725) $ 137,361,991
Water/Wastewater
Fund
$ 49,313,077
867,514
131,077
4,565,515
$ 54,877,183
Figure 5
LONG TERM DEBT
General Obligation Warrants, 2011
General Obligation Warrants, 2007
Utilities Revenue Warrants, 2011
Utilities Revenue Warrants, 2015
Utilities Revenue Warrants, 2009
General Obligation Warrant, 2013
Compensated absences
TOTALS
-14-
City of Fairhope
Debt Administration
GOVERNMENTAL
FUNDS
$ 3,106,616
6,230,000
-
-
-
-
1,164,827
$ 10,501,443
See Notes 5 through 8 beginning on page 38 for additional detail.
BUSINESS-TYPE
ACTIVITIES --
$ 143,000
14,370,000
1,780,000
630,000
4,600,000
569,041
$ 22,092,041
THIS PAGE INTENTIONALLY LEFT BLANK
BASIC FINANCIAL STATEMENTS
-15-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2015
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash $ 17,280,786 $ 9,528,949 $ 26,809,735 $ 990,148
Restricted cash 348,720 2,619,251 2,967,971
Receivables, net 1,078,126 2,516,770 3,594,896 48,478
Internal balances 86,261 (86,261)
Inventories 675,835 675,835
Other assets 34,925 670,844 705,769
Land and construction in progress 22,311,824 21,568,184 43,880,008 11,463,429
Capital assets, net 63,203,784 44,237,807 107,441,591 14,931,327
Total assets 104,344,426 81,731,379 186,075,805 27,433,382
DEFERRED OUTFLOWS OF
RESOURCES
Employer retirement contributions 789,153 244,008 1,033,161 43,472
Total deferred inflows of
resources 789,153 244,008 1,033,161 43,472
Total assets and deferred
outflows of resources $ 105,133,579 $ 81,975,387 $ 187,108,966 $ 27,476,854
LIABILITIES
Accounts payable and
accrued expenses $ 1,044,980 $ 2,611,592 $ 3,656,572 $ 9,258
Customer deposits 1,978,288 1,978,288
Long-term liabilities
Due within one year 962,649 1,736,441 2,699,090 285,000
Due in more than one year 9,509,538 20,052,497 29,562,035 7,445,629
Net pension liability 7,317,727 2,262,656 9,580,383 327,381
Net OPEB obligation 2,528,307 791,707 3,320,014
Total liabilities 21,363,201 29,433,181 50,796,382 8,067,268
DEFERRED INFLOWS OF
RESOURCES
Net difference between projected and
actual earnings on plan investments 634,448 196,173 830,621 21,582
Service concession arrangement
revenue applicable to future years 3,612,604
Total deferred inflows of
resources 634,448 196,173 830,621 3,634,186
NET POSITION
Net investment in capital assets 76,208,248 44,488,322 120,696,570 18,664,127
Restricted for:
Debt service 348,720 2,619,251 2,967,971
Capital projects I, 154,000 1,154,000 364,946
Road maintenance and construction 105,947 105,947
Council approved emergencies 7,000,000 7,000,000
Unrestricted ( 1 ,680,985) 5,238,460 3,557,475 (3,253,673)
Total net position 83,135,930 52,346,033 135,481,963 15,775,400
Total liabilities, deferred inflows
of resources, and net position $ 105,133,579 $ 81,975,387 $ 187,108,966 $ 27,476,854
See independent auditors' report and notes to the financial statements.
-16-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Net (Expense) Revenue and
Functions/Programs
Primary Government
Governmental activities:
General
Sanitation
Police
Fire
Airport Authority
Street
Adult Recreation
Recreation
Golf
Public Library Board
Interest on long term debt
Total governmental activities
Business-type activities
Electric
Natural gas
Water and Waste water
Total business-type activities
Total primary government
Component Units
$
$
$
Program Revenues
Operating
Charges for Grants and
Expenses Services Contributions
8,890,052 $ 6,816,431 $ - $
1,790,554 1,499,670
3,945,496
424,789
412,632
4,057,713
665,804 41,459
1,328,674 444,410
1,060,643 1,137,114
924,736
344,808
23,845,901 9,939,084
18,227,563 20,527,031
5,056,618 7,354,080
7,085,714 10,860,135
30,369,895 38,741,246
54,215,796 $ 48,680,330 $ - $
1,390,436 $ 506,878 $ 2,279,085 $
General revenues:
Property taxes
Sales tax
Liquor taxes
Lodging taxes
Other taxes
Intergovernmental
BP settlement proceeds
Legal settlement
Investment earnings
Other
Transfers
Total general revenues and transfers
Change in net position
Net position, beginning, as previously reported
Prior period adjustment
Net position, ending
See independent auditors' report and notes to the financial statements.
Changes in Net Position
Capital Primary Government
Grants and Governmental Business-type
Contributions Activities Activities Total
-$ (2,073,621) $ (2,073,621)
(290,884) (290,884)
23,262 (3,922,234) (3,922,234)
128,276 (296,513) (296,513)
(412,632) (412,632)
804,656 (3,253,057) (3,253,057)
(624,345) (624,345)
363,559 (520,705) (520,705)
76,471 76,471
(924,736) (924,736)
(344,808) (344,808)
1,319,753 (12,587,0642.. (12,587,064)
-$ 2,299,468 2,299,468
2,297,462 2,297,462
3,774,421 3,774,421
8,371,351 8,371,351
1,319,753 (12,587,064) 8,371,351 (4,215,713)
$
4,550,766 4,550,766
6,797,757 6,797,757
451,719 451,719
681,419 681,419
138,382 138,382
334,433 334,433
1,361,255 1,361,255
598,640 598,640
228,670 18,440 247,110
106,502 106,502
1,826,575 (1,826,575)
17,076,118 (1,808,135) 15,267,983
4,489,054 6,563,216 11,052,270
85,874,638 48,017,655 133,892,293
(7,227,762) (2,234,838) (9,462,600)
$ 83,135,930 $ 52,346,033 $ 135,481,963 $
Component
Units
1,395,527
353
353
1,395,880
14,688,667
(309,147)
15,775,400
-17-
CITY OF FAIRHOPE
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2015
Other Total
Capital Governmental Governmental
General Projects Funds Funds
ASSETS
Cash $ 10,486,895 $ 5,860,608 $ 1,282,003 $ 17,629,506
Receivables, net 645,134 407,375 25,617 1,078,126
Due from other funds 86,261 86,261
Other assets 34,925 34,925
Total assets $ 11,253,215 $ 6,267,983 $ 1,307,620 $ 18,828,818
LIABILITIES
Accounts payable $ 44,631 $ 715,577 $ 25,617 $ 785,825
Accrued expenses and taxes 194,529 194,529
Deferred revenue 21,252 21,252
Due to other funds 901 901
Total liabilities 260,412 715,577 26,518 1,002,507
FUND BALANCES
Restricted for:
Debt service 348,720 348,720
Council approved emergencies 7,000,000 7,000,000
Construction 1,154,000 1,154,000
Road maintenance and construction 105,947 105,947
Assigned to:
Construction and road maintenance 4,398,406 826,435 5,224,841
Unassigned 3,992,803 3,992,803
Total fund balances 10,992,803 5,552,406 1,281,102 17,826,311
Total liabilities and fund balances $ 11,253,215 $ 6,267,983 $ 1,307,620 $ 18,828,818
See independent auditors' report and notes to the financial statements.
-18-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2015
Fund balances as reported on page 17
Net position reported for governmental activities in the statement of net position
are different from Fund Balances for governmental activities because:
Capital assets used in governmental activities are financial resources and
therefore are not reported in fund financial statements.
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.
Other long-term assets are not available to pay for current-period
expenditures and therefore are unearned revenue in fund financial statements.
Other assets used in governmental activities are not financial resources and
therefore are not reported in the governmental funds.
Employement retirement contributions
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 $29,256)
Net Pension Liability
OPEB obligations
Deferred inflows of resources
Accrued interest on long-term debt is not due and payable in the
current-period and therefore not included in fund financial statements.
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements.
$ 17,826,311
137,361,990
(51,846,382)
75,709
789,153
(9,307 ,360)
(7,317,727)
(2,528,307)
(634,448)
(118,182)
(1, 164,827)
Net position of governmental activities as reported on page 15 $ 83,135,930 =========
See independent auditors' report and notes to the financial statements.
-19-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Other Total
Capital Governmental Governmental
General Projects Funds Funds
REVENUES
Local taxes $ 12,620,043 $ $ $ 12,620,043
Licenses and permits 3,306,620 3,306,620
Fines and forfeitures 278,837 278,837
Intergovernmental 244,166 305,090 90,267 639,523
Interest and rents 228,317 352 228,669
Charges for services 4,730,645 664,642 5,395,287
Golf course revenue 1,137,114 1,137,114
Recreation department 444,410 444,410
BP settlement proceeds 1,361,255 1,361,255
Legal settlement 598,640 598,640
Other 180,644 180,644
Total revenues 25,130,691 305,090 755,261 26,191,042
EXPENDITURES
General 8,289,346 8,289,346
Sanitation 1,598,404 1,598,404
Police 3,813,581 3,813,581
Fire 338,547 338,547
Airport 412,632 412,632
Street 2,352,091 30,327 2,382,418
Adult recreation 581,338 581,338
Recreation 1,095,605 1,095,605
Golf 987,957 987,957
Public Library Board 714,100 714,100
Other 89,000 4,436 93,436
Debt service payments
Principal 483,780 483,780
Interest 374,479 374,479
Capital outlay 1,295,225 2,459,578 86,000 3,840,803
Total expenditures 21,567,826 2,459,578 979,022 25,006,426
Excess of Revenues
over (under) Expenditures 3,562,865 (2, 154,488) (223,761) 1,184,616
OTHER FINANCING
SOURCES (USES)
Transfers in 1,826,575 4,595,908 850,252 7,272,735
Transfers out ( 4,846, 160) (600,000) (5,446,160)
Total other financing
sources (uses) (3,019,585) 4,595,908 250,252 1,826,575
Net change in fund balances 543,280 2,441,420 26,491 3,011,191
Fund balances -beginning of year 10,449,523 3,110,986 1,254,611 14,815,120
FUND BALANCES-END OF YEAR $ 10,992,803 $ 5,552,406 $ 1,281,102 $ 17,826,311
See independent auditors' report and notes to the financial statements.
-20-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGESINFUNDBALANCESOFGOVERNMENTALFUNDSTO
THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Net change in fund balances-total governmental funds, page 19
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.
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
Depreciation expense for the year
Loss on assets disposed
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
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
Some expenditures reported in governmental funds are to be paid on a long term
basis and therefore are not reported as expenses in the statement of activities
Change in deferred outflows -employer retirement contributions
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
Decrease in accrued interest payable
Change in net pension liability and deferred inflows of resources
Increase in OPEB liability
Change in net position of governmental activities, page 16
See independent auditors' report and notes to the financial statements.
$ 3,011,191
(4,266)
3,840,803
(3,236,681)
(32,379)
483,780
350,022
47,989
103,241
31,435
16,748
(122,829)
$ 4,489,054 ==========
-21-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2015
Major Funds
Water and
Electric Natural Gas Waste Water
Fund Fund Fund Total
ASSETS
Current assets
Cash and cash equivalents $ 4,079,420 $ 3,842,562 $ 1,606,967 $ 9,528,949
Restricted cash for debt service 120,234 73,581 2,425,436 2,619,251
Receivables, net 2,400,285 1,115 115,370 2,516,770
Inventories 345,485 166,289 164,061 675,835
Prepaid expenses 35,441 3,833 7,706 46,980
Total current assets 6,980,865 4,087,380 4,319,540 15,387,785
Noncurrent assets
Unamortized expense 587,774 587,774
Due from other funds 293,003 834,098 1,127,101
Other assets 12,030 12,030 12,030 36,090
Capital assets
Distribution and collection systems 21,535,188 10,862,907 39,364,331 71 ,762,426
Buildings, vehicles and equipment 5,676,397 3,763,951 3,406,174 12,846,522
Land and construction in progress 7,886,014 1,575,492 12,106,678 21 ,568,184
Less accumulated depreciation (13,051,980) ( 6,926,815) (20,392,346) ( 40,371, 141)
Total noncurrent assets 22,057,649 9,580,568 35,918,739 67,556,956
Total assets 29,038,514 13,667,948 40,238,279 82,944,741
DEFERRED OUTFLOWS OF
RESOURCES
Employer retirement contributions 97,823 57,839 88,346 244,008
Total deferred inflows of
resources 97,823 57,839 88,346 244,008
Total assets and deferred outflows of
outflows of resources $ 29,136,337 $ 13,725,787 $ 40,326,625 $ 83,188,749
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 1,664,366 $ 445,286 $ 501,940 $ 2,611,592
Customer deposits 1,820,738 157,550 1,978,288
Warrants, notes and
capital leases payable 1,160,875 10,875 564,691 1,736,441
Total current liabilities 4,645,979 456,161 1,224,181 6,326,321
Noncurrent liabilities
Compensated absences 176,523 130,217 164,529 471,269
Warrants, notes and
capital leases payable 4,071,865 439,240 15,070,123 19,581,228
Net pension liability 907,099 536,334 819,223 2,262,656
Net OPEB obligation 244,274 229,288 318,145 791,707
Due to other funds 1,201,159 1,794 10,409 1,213,362
Total noncurrent liabilities 6,600,920 1,336,873 16,382,429 24,320,222
Total liabilities 11,246,899 1,793,034 17,606,610 30,646,543
DEFERRED INFLOWS OF
RESOURCES
Net difference between projected and
actual earnings on plan investments 78,646 46,500 71,027 196,173
Total deferred inflows of
resources 78,646 46,500 71 ,027 196,173
NET POSITION
Net investment in capital assets 16,812,879 8,825,420 18,850,023 44,488,322
net of related debt
Restricted for debt service 120,234 73,581 2,425,436 2,619,251
Unrestricted 877,679 2,987,252 1,373,529 5,238,460
Total net position 17,810,792 11,886,253 22,648,988 52,346,033
Total liabilities and net position $ 29,136,337 $ 13,725,787 $ 40,326,625 $ 83,188,749
See independent auditors' report and notes to the financial statements.
-22-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Business Type Activities
Major Funds
Water and
Electric Natural Gas Waste Water
Fund Fund Fund Total
OPERATING REVENUES
Sales and services $ 20, I 00,698 $ 7,347,472 $ 9,3I3,557 $ 36,76I,727
Other charges, sales and receipts 426,333 6,608 I,546,578 I,979,5I9
Total operating revenues 20,527,03I 7,354,080 I0,860,I35 38,74I,246
OPERATING EXPENSES
Energy purchases and
cost of goods sold I3,098,448 I,999,793 787,352 I5,885,593
Salaries 760,606 459,347 984,426 2,204,379
Depreciation 743,663 404,740 I ,04I, I67 2,I89,570
Insurance I53,626 42,5I3 II3,876 3I0,015
Electric energy furnished
to other departments 1,091,317 1,09I,317
Maintenance 571,747 117,709 I,373,6I2 2,063,068
Community development projects 130,174 436,086 274,952 841,212
Other operating expense 1,557,782 1,542,662 1,90I,709 5,002,153
Total operating expenses I8,107,363 5,002,850 6,477,094 29,587,307
OPERATING INCOME 2,4I9,668 2,35I,230 4,383,04I 9,153,939
NONOPERATING
REVENUES (EXPENSES)
Interest expense (120,200) (25,268) (608,620) (754,088)
Interest income 5,670 9,724 3,046 18,440
Distribution of joint
revenue (expense) -net (28,500) (28,500)
Total nonoperating
revenues (expenses) (II4,530) (44,044) (605,574) (764,I48)
INCOME BEFORE TRANSFERS
AND OTHER ITEMS 2,305,138 2,307,186 3,777,467 8,389,79I
TRANSFERS AND OTHER ITEMS
Transfers out (500,000) ( 1,3 26,57 5) (I ,826,575)
Total transfers (out) (500,000) (1,326,575) (I ,826,575)
Change in net position I,805,138 980,61I 3,777,467 6,563,216
NET POSITION-BEGINNING
OF YEAR 16,90I,60I II,435,382 19,680,672 48,017,655
Prior period adjustment (895,947) (529,740) (809,I51) (2,234,838)
NET POSITION-END OF YEAR $ 17,8I0,792 $ 11,886,253 $ 22,648,988 $ 52,346,033
See independent auditors' report and notes to the financial statements.
-23-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Business Type Activities
Major Funds
Water and
Electric Natural Gas Waste Water
Fund Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers $ 20,474,418 $ 7,354,665 $ 10,756,132 $ 38,585,215
Paid to suppliers for goods and services (16,711,645) (3,955,239) ( 4,362,562) (25,029,446)
Paid to personnel for services (760,606) (459,347) (984,426) (2,204,379)
Net cash provided (used) by operating activities 3,002,167 2,940,079 5,409,144 11,351,390
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income and joint revenue (expense) 5,670 (18,776) 3,046 (10,060)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from borrowings 1,780,000 1,780,000
Repayment of debt (1 ,846,209) (269,103) ( 4,946,446) (7,061,758)
Interest paid (128,378) (28,302) (622,890) (779,570)
Proceeds from disposal of capital assets 22,743 22,743
Acquisition of capital assets (1,339,113) (728,516) (5,564,104) (7,631,733)
Net cash provided (used) by capital and
related financing activities (3,313, 700) (1,003,178) (9,353,440) (13,670,318)
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable 18,657 (175,872) (59,531) (216,746)
Change in interfund payable 316,314 1,794 318,108
Transfers out (500,000) (1,326,575) (1,826,575)
Net cash provided (used)
by noncapital financing activities (165,029) (1,500,653) (59,531) (1,725,213)
INCREASE (DECREASE) IN CASH (470,892) 417,472 (4,000,781) (4,054,201)
Cash -beginning of year 4,670,546 3,498,671 8,033,184 16,202,401
CASH-END OF YEAR $ 4,199,654 $ 3,916,143 $ 4,032,403 $ 12,148,200
Reconciliation of operating income to net cash
provided (used) by operating activities
Income (loss) from operations $ 2,419,668 $ 2,351,230 $ 4,383,041 $ 9,153,939
Adjustments to reconcile income from operations to
net cash provided (used) by operating activities
Depreciation 743,663 404,740 1,041,167 2,189,570
Amortization 561,167 561,167
Change in pension expense as related to GASB 68 (8,026) (4,745) (7,246) (20,017)
Loss on disposal of property, plant and equipment
Change in assets and liabilities
Decrease (increase) in accounts receivable (52,613) 585 (104,001) (156,029)
Decrease (increase) in inventories (36,869) 2,709 89,317 55,157
Decrease (increase) in prepaid expenses (8,381) 2,234 1,041 (5,106)
Decrease (increase) in unamortized expense (561,169) (561,169)
Increase (decrease) in accounts payable (154,979) 170,534 (110,336) (94,781)
Increase (decrease) in customer deposits 74,306 83,950 158,256
Increase (decrease) in compensated absences 14,060 3,974 17,726 35,760
Increase (decrease) in net OPEB obligation 11,338 8,818 14,487 34,643
Net cash provided (used) by operating activities $ 3,002,167 $ 2,940,079 $ 5,409,144 $ 11,351,390
See independent auditors' report and notes to the financial statements.
THIS PAGE INTENTIONALLY LEFT BLANK
-24-
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF NET POSITION
DISCRETELY PRESENTED COMPONENT UNITS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Governmental Activities
Public Library Airport
Board Authority Total
ASSETS
Cash $ 352,791 $ 637,357 $ 990,148
Grants receivable 48,478 48,478
Land and construction in progress 11,463,429 11,463,429
Capital assets, net 90,103 14,841,224 14,931,327
Total assets 442,894 26,990,488 27,433,382
DEFERRED OUTFLOWS OF
RESOURCES
Employer retirement contributions 43,472 43,472
Total deferred inflows of
resources 43,472 43,472
Total assets and deferred
outflows of resources $ 486,366 $ 26,990,488 $ 27,476,854
LIABILITIES
Accounts payable and accrued expenses $ 6,290 $ 2,968 $ 9,258
Long-term liabilities
Due within one year 285,000 285,000
Due in more than one year 7,445,629 7,445,629
Net pension liability 327,381 327,381
Total liabilities 333,671 7,733,597 8,067,268
DEFERRED INFLOWS OF
RESOURCES
Net difference between projected and
actual earnings on plan investments 21,582 21,582
Service concession arrangement revenue
applicable to future years 3,612,604 3,612,604
Total deferred inflows of resources 21,582 3,612,604 3,634,186
NET POSITION
Net investment in capital assets 90,103 18,574,024 18,664,127
Restricted for:
Capital projects 364,946 364,946
Unrestricted 41,010 (3,294,683) (3,253,673)
Total net position 131,113 15,644,287 15,775,400
Total liabilities, deferred inflows of
resources, and net position $ 486,366 $ 26,990,488 $ 27,476,854
See independent auditors' report and notes to the financial statements.
-25-
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF ACTIVITIES
DISCRETELY PRESENTED COMPONENT UNITS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Program Revenues
Operating Capital
Net (Expense) Revenue and
Changes in Net Position
Governmental Activities
Charges for Grants and Grants and Public Library Airport
Functions/Programs
Airport Authority
Public Library Board
$
$
Expenses Services Contributions Contributions
653,258 $
737,178
1,390,436 $
General revenues:
Investment earnings
274,163 $
232,715
506,878 $
Total general revenues
Change in net position
Net position, beginning
Prior period adjustment
Net position, ending
1,554,730 $
724,355
2,279,085 $ =====
See independent auditors' report and notes to the financial statements.
$
$
Board Authority Total
$
219,892
219,892
-
-
219,892
220,368
(309,147)
131,113 $
1,175,635 $
1,175,635
353
353
1,175,988
14,468,299
-
15,644,287 $
1 '175,635
219,892
1,395,527
353
353
1,395,880
14,688,667
(309,147)
15,775,400
THIS PAGE INTENTIONALLY LEFT BLANK
NOTES TO THE FINANCIAL STATEMENTS
-26-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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.
Fair hope 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.
(continued)
-27-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 Position, 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
Position.
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.
(continued)
-28-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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. City 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 non-operating income or expenses.
C. CAPITALASSETS
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 Position (government-wide level).
Depreciation has been provided over the estimated useful lives using the straight line rates as
follows:
Plant and distribution systems
Buildings
Golf course improvements
Vehicles and equipment
Infrastructure (roads, bridges, drainage)
Runways and taxiways
(continued)
30-40 years
25-50 years
10-40 years
3-10 years
25-50 years
75year
-29-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTlNUED)
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.
E. IMPACT OF RECENTLY ISSUED ACCOUNTING PRINCIPLES
Recently Issued and Adopted Accounting Principles
On October 1, 20 12, the City adopted the provisions of Governmental Accounting Standards Board
(GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained
in Pre-November 30, 1989 FASB and AICPA Pronouncements. The adoption of GASB Statement
No. 62 did not have any impact on the City's consolidated financial statements for the year ended
September 30, 2015.
On October 1, 2012, the City implemented GASB Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB Statement No. 63
provides financial reporting guidance for deferred outflows of resources and deferred inflows of
resources. The Balance Sheet is renamed the Statement of Net Position and includes four components:
assets, deferred outflows of resources, liabilities and deferred inflows of resources. The City has
determined they have no deferred outflows of resources at September 30, 2014, under the
requirements of GASB Statement No. 63. The City's component unit, the Airport Authority, has
determined they have a deferred inflow of resources related to a service concession arrangement as
discussed in Note 21 to the financial statements at September 30, 2015.
(continued)
-30-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
During the year ended September 30, 2014, the City implemented GASB Statement No. 65, Items
Previously Reported as Assets and Liabilities. GASB Statement No. 65 requires certain items that
are currently reported as assets and liabilities to be reclassified as deferred outflows of resources,
deferred inflows of resources or current-period outflows (expenses) and inflows (revenues). These
determinations are based on the definitions of those elements in Concepts Statement No. 4,
Elements of Financial Statements.
Deferred outflows of resources are consumptions of net assets by the City that are applicable to a
future reporting period.
Deferred inflows of resources are acquisitions of net assets by the City that are applicable to a
future reporting period.
Outflows of resources are consumptions of net assets by the City that are applicable to the
reporting period.
Inflows of resources are acquisitions of net assets by the City that are applicable to the reporting
period.
During the year ended September 30, 2015, the City implemented GASB Statement No. 68,
Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension
Transition for Contributions Made Subsequent to the Measurement Date. These statements create
disclosure and reporting requirements that may or may not be consistent with the basis used for
funding the plan. As a result, a net position liability equal to the difference between the actuarial
present value of projected benefit payments to be provided through the pension plan to current
active and inactive employees that is attributed to those employees' past periods of service, less the
amount of the pension plan's fiduciary net position was recognized. Additionally, pension expense
and deferred outflows of resources and deferred inflows of resources were recognized from
changes in the components of the net pension liability. See note 14 and 23 for more information.
Recentlv Issued Accounting Principles
GASB Statement No. 72, Fair Value Measurement and Application, was issued to provide
guidance for determining a fair value measurement for financial reporting purposes. The
requirements for GASB Statement No. 72 are effective for fiscal year 2016. The City is currently
evaluating the impact this standard may have on its financial statements.
GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets
that are not Within the Scope of GASB Statement No. 68 was issued to establish requirements for
assets that are not within the scope of GASB Statement No. 68. The requirements of GASB
Statement No. 73 are effective for fiscal year 2016. The City is currently evaluating the impact this
standard may have on its financial statements.
(continued)
-31-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans other than
Pension Plans (OP EB), was issued to establish new accounting and financial reporting
requirements for governments whose employees are provided with OPEB. The requirements of
GASB Statement No. 74 are effective for fiscal year 2017. The City is currently evaluating the
impact that this statement may have on its financial statements.
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits other
than Pension Plans, was issued to address new accounting and financial reporting for OPEB that is
provided to the employees of the state and local government employers. The requirements of
GASB Statement No. 75 are effective for fiscal year 2018. The City is currently evaluating the
impact that this statement may have on its financial statements.
GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State
and Local Governments, was issued to identify the hierarchy of generally accepted accounting
principles. The requirements of GASB Statement No. 76 are effective immediately and were
applied retroactively resulting in no significant impact to the financial statements.
GASB Statement No. 77, Tax Abatement Disclosures, was issued to improve financial reporting
by giving users of the financial statements essential information that is not consistently or
comprehensively reported to the public at the present. The requirements of GASB Statement No.
77 are effective for fiscal year 2017. The City is currently evaluating the impact that this statement
may have on its financial statements.
F. 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.
G. 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.
H. 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.
(continued)
-32-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
I. 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) Statement No. 33, revenue is recorded based upon
taxes assessed and considered available. Any taxes not considered available are recorded as
deferred revenue.
J. DEBT ISSUE COST
Issuance expenses on long term debt of proprietary funds are expensed as incurred in accordance
with GASB Statement No. 65. 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 and premiums are deferred and amortized over the term of the bonds
using the bonds outstanding method. Bond discounts and premiums are presented as a reduction or
addition to the face amount of the bonds payable whereas issuance costs are expensed as incurred.
Deferred losses associated with the issuance of long-term debt are presented as Deferred Outflows
of Resources and are amortized on the straight-line method over the term of the bond.
K. UNEARNED REVENUE
The City reports unearned 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.
L. 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 ofU. S. Treasury money market accounts which are presented at cost which equals fair market
value.
M. 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.
(continued)
-33-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
N. NET POSITION AND EQUITY CLASSIFICATIONS
Government-wide Financial Statements
The City applies GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources,
Deferred Inflows of Resources, and Net Position, that superseded GASB Statement No. 34, Basic
Financial Statements -and Management's Discussion and Analysis -for State and Local
Government. Equity is classified as net position and displayed in three components:
• Net investment in capital assets -Consists of 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. Deferred outflows of resources and deferred inflows of resources that are
attributable to the acquisition, construction, or improvement of those assets or related debt
also should be included in this component of net position. If there are significant unspent
related debt proceeds or deferred inflows of resources at year-end, the portion of the debt
of deferred inflows of resources attributable to the unspent proceeds is not included in the
calculation of invested in capital assets, net of the related debt. Rather, that portion of the
debt or deferred inflows of resources is included in the same net position as the unspent
proceeds.
• Restricted net position -Consists of restricted assets reduced by liabilities and deferred
inflows of resources related to those assets.
• Unrestricted net position -The net amount of the assets, deferred outflows of resources,
liabilities, and deferred inflows of resources that are not included in the determination of
net investment in capital assets or the restricted component of net position.
Fund Financial Statements
The Fund equity of the governmental fund financial statements is classified as fund balance. The
City adopted a GASB standard establishing 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, by passage of a
resolution.
• 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
(continued)
-34-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
• Unassigned fund balances -All other fund balances that do not meet the definition of
"restricted, committed or assigned fund balances." The general fund is the only fund that
reports a positive unassigned fund balance amount.
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.
0. 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 2015, the General Fund transferred to the Debt Service Fund $850,252 in support of long
term debt service.
The utility operations transfer a portion of their earnings to the General Fund each year to support
general government operations. In fiscal year 2015, the following amounts were transferred from the
utility funds noted to the General Fund.
Electric Fund
Natural Gas Fund
Total
$ 500,000
1,326,575
$ 1.826.575
In fiscal year 2015, the City transferred $421,632 to the Airport Authority and $714,100 to the Public
Library Board, both discretely presented component units.
(continued)
NOTE2
-35-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
INTERFUND TRANSACTIONS (CONTINUED)
Interfund receivables and payables at September 30, 2015 are:
Due from Due to
General Fund
Electric $ 74,058 $
Water and Waste Water 10,409
Natural Gas 1,794
Electric Fund
General 74,058
Water and Waste Water 834,098
Natural Gas 293,003
Natural Gas Fund
General 1,794
Electric 293,003
Water and Waste Water Fund
Electric 834,098
General 10,409
$ 1,213,362 $ 1,213,362
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.
-36-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 3 CAPITAL ASSETS
Changes in capital assets, during the fiscal year, were as follows:
Balance
10/01/14 Increases
Governmental Activities
Capital assets not subject
to depreciation
Land $ 21,961,802 $ 350,022 $
Total 21,961,802 350,022
Other capital assets
Buildings and structures 35,288,110 1,913,598
Vehicles and equipment 11,131,986 1,239,059
Infrastructure 64,971,993 688,146
Total 111,392,089 3,840,803
Less accumulated depreciation for
Buildings and structures (8,941 ,205) (652,335)
Vehicles and equipment (9,944,609) (854,507)
Infrastructure (29,874,234) (1,729,839)
Total accumulated depreciation (48,760,048) (3,236,681)
Other capital assets, net 62,632,041 604,122
Governmental capital assets, net $ 84,593,843 $ 954,144 $
Depreciation was charged to governmental activities as follows:
General Government $
Police Department
Fire Department
Recreation Department
Adult Recreaction Department
Street Department
Sanitation Department
Golf Department
Total $
(continued)
Balance
Decreases 09/30/15
$ 22,311,824
22,311,824
(182,725) 37,018,983
12,371,045
65,660,139
(182,725) 115,050,167
(9,593,540)
150,346 (1 0,648, 770)
(31,604,073)
150,346 (51 ,846,383)
(32,379) 63,203,784
(32,379) $ 85,515,608
693,042
160,764
87,564
240,408
97,074
1,683,006
197,456
77,367
3,236,681
-37-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 3 CAPITAL ASSETS (CONTINUED)
Balance
10/01/14 Increases
Business Ty}2e Activities
Capital assets not subject to depreciation
Land $ 9,612,038 $ 53,690 $
Construction in progress 7,336,941 4,565,515
Total 16,948,979 4,619,205
Other capital assets
Distribution and collection system 69,391,521 2,370,905
Buildings, vehicles and equipment 12,226,401 641,394
Total 81,617,922 3,012,299
Less accumulated depreciation for
Distribution and collection system (29,101,272) (1 ,676,494)
Buildings, vehicles and equipment (9,080,299) (516,660)
Total accumulated depreciation (38,181,571) (2, 193, 154)
Other capital assets, net 43,436,351 819,145
Capital assets, net $ 60,385,330 $ 5,438,350 $
Com12onent Unit -Public Library
Equipment $ 396,937 $ 40,081 $
Less accumulated depreciation (327,905) (19,010)
Capital assets, net $ 69,032 $ 21,071 $
Com12onent Unit -Aimort Authority
Capital assets not subject to depreciation
Land $ 10,934,228 $ $
Construction in progress 2,191,692 789,201
Total 13,125,920 789,201
Other capital assets
Runways 10,373,708 268,103
Buildings and improvements 3,968,008 3,791,254
Equipment 98,885
Total 14,440,601 4,059,357
Less accumulated depreciation for
Runways (1,271,633) (141,146)
Buildings and improvements (1 ,988,069) (160,766)
Equipment (93,980) (3,140)
Total accumulated depreciation (3,353,682) (305,052)
Other capital assets, net 11,086,919 3,754,305
Capital assets, net $ 24,212,839 $ 4,543,506 $
Balance
Decreases 09/30/15
$ 9,665,728
11,902,456
21,568,184
71,762,426
(21,273) 12,846,522
(21,273) 84,608,948
(30, 777' 7 66)
3,584 (9,593,375)
3,584 (40,371,141)
(17,689) 44,237,807
(17,689) $ 65,805,991
$ 437,018
(346,915)
$ 90,103
(260,000) $ 10,674,228
(2, 191 ,692) 789,201
(2,451 ,692) 11,463,429
10,641,811
7,759,262
98,885
18,499,958
(1 ,412, 779)
(2, 148,83 5)
(97,120)
(3,658, 734)
14,841,224
(2,451 ,692) $ 26,304,653
-38-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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 PAY ABLE-BUSINESS-TYPE ACTIVITIES
The following is a summary of revenue bonds, notes and warrants payable from the proprietary funds as
of September 30, 2015:
Utilities Revenue Warrants, Series 20 11 dated October 13, 20 11,
original debt obligation of $16,140,000, interest rate 3 .15%, payable
semi-annually, principal payable December 1, 2011 through
December 1, 2030.
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.
Utilities Revenue Warrants, Series 2015 dated May 14, 2015,
original debt obligation of $1,780,000, interest rate 2.11 %,
payable semi-annually, principal payable December 1, 2015
through December 1, 2020.
General Obligation Warrant, Series 2013, dated December 30, 2013,
original debt obligation of$5,750,000, interest rate equal to 65%
times the LIBOR rate+ 1.23%, 1.34% at September 30,2015,
payable semi-annually, principle payments are due December 1, 2015
through December 1, 2018.
Utilities Revenue Warrants, Series 2009 dated April2, 2009,
original debt obligation of $1,250,000, interest rate 3 .85%, payable
semi-annually, principal payable 2009 through 2019.
TOTAL
$14,370,000
143,000
1,780,000
4,600,000
630,000
$21.523.000
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.
-39-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 6 NOTE AND WARRANTS PAY ABLE-GOVERNMENTAL ACTIVITIES
The following is a governmental fund summary of long term debt at September 30,2015:
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.
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.
TOTAL
$ 3,106,616
6,230,000
$ 9 336.616
The General Obligation Warrant Series 2011 was issued for the purpose of refunding the City's General
Obligation Warrants Series 2002.
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.
NOTE 7 BOND DEFEASANCE
Business-type activities defeasance
On May 14,2015, the City ofFairhope issued 2015 general obligation bonds in the amount of$1,780,000.
The proceeds were used to advance refund the 2005 revenue bonds. The refunded bond had a balance of
$4,590,000. The net proceeds from the issuance of the revenue bonds of $1,219,702 were deposited into
an irrevocable trust with an escrow agent to provide debt service payments on the 2005 revenue bonds until
they are called. The advance refunding met the requirements of an in-substance debt defeasance and the
2005 revenue bonds were removed from the City's proprietary fund financial statements.
As a result of the advanced refunding, the City's total debt service requirements decreased by $922,173,
which resulted in an economic gain of $536,462. The decrease in the cash flow requirement is attributable
to a decrease in the interest rates on the new revenue bonds compared to the old bonds.
NOTES
-40-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
CHANGES IN LONG TERM DEBT
Balance
1011/2014 Additions Reductions
GOVERNMENTAL ACTIVITIES
Warrants and notes payable
General obligation warrants $ 9,820,396 $ - $ (483,780) $
Total warrants and notes payable 9,820,396 ( 483, 780)
Warrant discount (31,020) 1,764
9,789,376 (482,016)
Other liabilities
Compensated absences 1,268,068 541,870 (645, 111)
Governmental activities
long-term liabilities $ 11,057,444 $ 541,870 $ (1, 127, 127) $
Balance
9/30/2015
9,336,616
9,336,616
(29,256)
9,307,360
1,164,827
10,472,187
$
$
Amounts
due within
one year
503,560
503,560
503,560
459,089
962,649
The City's general obligation warrants are paid through the Debt Service Fund while notes and capital leases
are paid directly by the General Fund. The Compensated absences liability will be liquidated by the General
Fund.
Amounts
Balance Balance due within
10/1/2014 Additions Reductions 9/30/2015 one year
BUSINESS-TYPE ACTIVITIES
Warrants and notes payable
General obligation warrants $ 5,904,220 $ - $ (1,161,220) $ 4,743,000 $ 1,161,441
Utilities revenue warrants 20,810,000 1,780,000 (5,810,000) 16,780,000 575,000
Total warrants and notes payable 26,714,220 1,780,000 (6,971,220) 21,523,000 1,736,441
Deferred amount on refunding (174,005) 29,807 (144,198)
Warrant discounts (64,938) 3,805 (61 ,133)
26,475,277 1,780,000 ( 6,93 7,608) 21,317,669 1,736,441
Other liabilities
Compensated absences 537,099 251,378 (219,436) 569,041 97,772
Business-type activities
long-term liabilities $ 27,012,376 $ 2,031,378 $ (7,157,044) $ 21,886,710 $ 1,834,213
Compensated absences due within one year included in accrued liabilities $ 97,772
Compensated absences due in more than one year included in noncurrent liabilities 471,269
Total compensated absences liability $ 569,041
-41-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 9 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, 2015, including interest payments:
Year
Ending
September 30, Principal Interest Total
2016 $ 503,560 $ 356,500 $ 860,060
2017 513,560 337,411 850,971
2018 533,340 317,823 851,163
2019 552,900 299,813 852,713
2020 567,680 281,147 848,827
2021-2025 3,545,960 1,076,035 4,621,995
2026-2030 2,130,000 518,850 2,648,850
2031-2032 989,616 67,275 1,056,891
TOTALS $ 9,336,616 $ 3,254,854 $ 12,591,470
The following is a summary of debt service requirements to maturity of long term debt
of the Proprietary Funds as of September 30, 2015, including interest payments and
excluding discounts and premiums related to warrant issuance:
Year
Ending
September 30, Principal Interest Total
2016 $ 1,736,441 $ 543,795 $ 2,280,236
2017 2,091,440 524,096 2,615,536
2018 2,121,660 481,358 2,603,018
2019 2,152,100 437,711 2,589,811
2020 1,032,320 400,857 1,433,177
2021-2025 7,764,040 1,383,869 9,147,909
2026-2030 4,020,000 337,050 4,357,050
2031 604,999 9,529 614,528
$ 21,523,000 $ 4,118,265 $ 25,641,265
-42-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 10 BONDS PAY ABLE-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 1 00% 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, 2015, was 1.55%.
The following is a summary of debt service requirements to maturity of long term debt of the Airport
Authority as of September 30, 2015, including estimated interest payments at 1.55% and excluding
discounts related to bonds:
Year
Ending
Sept. 30, Principal Interest Total
2016 $ 285,000 $ 119,910 $ 404,910
2017 305,000 115,489 420,489
2018 320,000 110,758 430,758
2019 340,000 105,795 445,795
2020 6,480,629 17,889 6,498,518
$ 7,730,629 $ 469,841 $ 8,200,470
NOTE11 SALARIES-PROPRIETARYFUNDS
The following is a summary of employees' salaries by Utility Fund for the year ended September 30,
2015:
Water and
Electric Natural Gas Waste Water
Fund Fund Fund
Total salaries $ 1,084,085 $ 645,046 $ 1,030,587
Less:
Salaries capitalized for plant
additions 323,479 185,699 46,161
Amount of salaries charged to
operations $ 760~606 $ 459~347 $ 984A26
-43-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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.
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 must use all vacation time annually, and the maximum accumulation of sick leave is limited
to 960 hours. 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).
NOTE 14 PENSION PLAN
General Information about Retirement Plan
Plan Description-The City of Fairhope, Alabama and its component unit, the Fairhope Public Library
(herein collectively referred to as 'the City') participate in the Retirement System of the State of
Alabama (RSA) which is an agent multiple-employer pension plan. The two entities are considered
separate agents under the Plan. It is the responsibility of the retirement system to act on behalf of the
City as an investment and administrative agent with respect to the pension plan.
The RSA was established on 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,
-44-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
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.
RSA issues a publicly available financial report that includes financial statements and required
supplementary information for the plan. The report may be obtained at www.rsa-al.gov.
As established by state statue, all full-time employees of the City must participate in the pension plan
from the date they are hired. Contributions made by an employee vest immediately and contributions
made by the City vest after 10 years of full-time employment. An employee who leaves the
employment of the City is entitled to his or her contributions and the City's contributions if vesting
requirements are satisfied. During its 2012 session, the Alabama Legislature passed and the Governor
signed into law changes in the pension plan creating a Tier 2 employee. Employees hired prior to
January 1, 2013 (Tier 1 employees) must contribute 5% of his or her gross earnings to the pension plan.
Employees hired on or after that date (Tier 2 employees) will contribute on gross earnings at rate of 6%.
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. Average final salary for Tier 1 employees is defined as
the average of the three highest years' salary out of the last ten years of service. Average final salary for
Tier 2 employees is defined as the average of the five 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 Fairhope Public Library's 's contractually required contribution rate for the year ended September
30, 2015, was 11.38% for Tier 1 employees, and 9.88% for Tier 2 employees. The contribution
requirements of plan members and the City are established and may be amended by RSA. These
required contribution rates are based upon the actuarial valuation dated September 30, 2014, a percent of
annual pensionable payroll, and actuarially determined as an amount that, when combined with member
contributions, is expected to finance the costs of benefits earned by members during the year, with an
additional amount to finance any unfunded accrued liability. Total employer contributions to the pension
plan were $1,076,161 paid by the City and $40,747 paid by the Fairhope Public Library for the year
ended September 30, 2015.
-45-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
Net Pension Liability
The City's and Fairhope Public Library's net pension liabilities were measured as of September 30,
2014, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of September 30, 2013 rolled forward to September 30, 2014 using standard roll-
forward techniques as shown in the following table:
City of Fairhope
(a) Total Pension Liabiltiy for September 30, 2013
(b) Entry Age Normal Cost for the period
Octover 1, 2013 to September 30, 2014
( c) Actual Benefit Payments & Refunds for
October 1, 2013 to September 30, 2014
(d) Total Pension Liability as of September 20, 2014
[(a) x 1.08] +(b)-[(c) x (1.04)]
Fairhope Public Library
(a) Total Pension Liabiltiy for September 30, 2013
(b) Entry Age Normal Cost for the period
Octover 1, 2013 to September 30, 2014
( c) Actual Benefit Payments & Refunds for
October 1, 2013 to September 30,2014
(d) Total Pension Liability as of September 20, 2014
[(a) x 1.08] +(b)-[(c) x (1.04)]
$ 36,758,207
944,066
(2,21 0, 7 48)
$ 38,343,752
$ 1,022,630
38,648
(48,791)
$ 1,092,346
Actuarial Assumptions -The total pension liability in the September 30, 2013, actuarial valuation was
determined as part of actuarial valuations using the entry age actuarial cost method. The actuarial
assumptions included (a) 8.0% investment rate of return (net of pension plan investment expense), (b)
projected salary increases ranging from 3.75% to 7.25% per year, and an inflation component of 3%.
Mortality rates for RSA were based on the RP-2000 Combined Mortality Table Projected with Scale
-46-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
AA to 2015 set forward three years for males and two years for females. The rates of mortality for the
period after disability retirement are according to the sex distinct RP-2000 Disability Mortality Table.
The actuarial assumptions used in the September 30, 2013, valuation were based on the results of an
investigation of the economic and demographic experience for the RSA based upon participant data as
of September 30, 2010. The Board of Control accepted and approved these changes on January 27,
2012, which became effective at the beginning of fiscal year 2012.
The long-term expected rate of return on pension plan investments was determined using a log-normal
distribution analysis in which best-estimate ranges of expected future real rates of return (expected
returns, net of pension plan investment expense and inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting the expected
future real rates of return by the target asset allocation percentage and by adding expected inflation. The
target asset allocation and best estimates of geometric real rates of return for each major asset class are
as follows:
Fixed Income
U.S. Large Stocks
U.S. Mid Stocks
U.S. Small Stocks
International Developed Market Stocks
International Developed Market Stocks
Real Estate
Cash
Target
Allocation
25.0%
34.0%
8.0%
3.0%
15.0%
3.0%
10.0%
2.0%
*Includes assumed rate of inflation of 2.5%
Long Term
Expected Rate
ofReturn *
5.0%
9.0%
12.0%
15.0%
11.0%
16.0%
7.5%
1.5%
Discount Rate -The discount rate used to measure the total pension liability was the long term rate of
return, 8%. The projection of cash flows used to determine the discount rate assumed that plan member
contributions will be made at the current contribution rate and that the employer contributions will be
made in accordance with the funding policy adopted by the RSA Board of Control. Based on those
assumptions, components of the pension plan's fiduciary net position were projected to be available to
make all projected future benefit payments of current pan members. Therefore, the long-term expected
rate of return on pension plan investments was applied to all periods of projected benefit payments to
determine the total pension liability.
-47-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
Changes in Net Pension Liability
Citt of Fairhol!e
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
Balanc.es at September 30, 2013 $ 36,758,207 $ 26,284,372 $ 10,473,835
Changes for the year:
Service cost 944,066 944,066
Interest 2,852,227 2,852,227
Differences between expected
and actual experience
Contributions -employer 1,011,234 (1,011,234)
Contributions -employee 599,215 (599,215)
Net investment income 3,115,563 (3, 115,563)
Benefit payments, including refunds
of employee contributions (2,21 0, 748) (2,210,748)
Administrative expense
Transfers among employers (36,267) 36,267
Net Changes 1,585,545 2,478,997 (893,452)
Balances at September 30, 2014 $ 38,343,752 $ 28,763,369 $ 9,580,383
-48-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
Changes in Net Pension Liability
Balances at September 30, 2013
Changes for the year:
Service cost
Interest
Differences between expected
and actual experience
Contributions -employer
Contributions -employee
Net investment income
Benefit payments, including refunds
of employee contributions
Administrative expense
Transfers among employers
Net Changes
Balances at September 30, 2014
Fairhope Public Library
Total Pension
Liability
$
$
1,022,630
38,648
79,859
(48,791)
69,716
1,092,346
Plan Fiduciary
Net Position
$
$
669,681
43,802
19,155
81,118
(48,791)
95,284
764,965
$
$
Net Pension
Liability
352,949
38,648
79,859
(43,802)
(19,155)
(81,118)
(25,568)
327,381
Sensitivity of the net pension liability to changes in the discount rate -The following table presents the
Board's net pension liability calculated using the discount rate of 8%, as well as what the City's
proportionate share of the net pension liability would be if it were calculated using a discount rate that is
!-percentage point lower (7%) or !-percentage-point higher (9%) than the current rate:
1% Decrease Current Rate 1% Increase
(7%) (8.0%) (9%)
Net pension liability, City $ 14,090,810 $ 9,580,384 $ 5,774,636
Net pension liability, Fairhope Public Library $ 430,775 $ 327,381 $ 237,872
Pension plan fiduciary net position-Detailed information about the pension plan's fiduciary net position
is available in the separately issued RSA Comprehensive Annual Report for the fiscal year ended
September 30, 2014. The supporting actuarial information is included in the GASB Statement No. 68
Report for the RSA prepared as of September 30, 2014. The auditor's report dated June 3, 2015 on the
Schedule of Changes in Fiduciary Net Position by Employer and accompanying notes is also available.
The additional financial and actuarial information is available at www.rsa-al.gov.
-49-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended September 30, 2015, the City recognized pension expense of $1,159,894 while the
Fairhope Public Library recognized pension expense of $37,091. At September 30, 2015, the City and
Fairhope Public Library reported deferred outflows of resources and deferred inflows of resources,
respectively, related to pensions of the following sources:
City of Fairhope
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience $ $
Changes of assumption
Net difference between projected and actual earnings
on plan investments 830,621
Employer contributions subsequent to measurement date 1,033,161
Total $ 1 ,033,161 $ 830,621
Amounts reported as deferred outflows of resources and deferred inflows of resources to pensions will be
recognized as an increase (decrease) in pension expense as follows:
Year Ending
September 30,
2016 $ (825,506)
2017 207,655
2018 207,655
2019 207,655
$ (202,541)
-50-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
Fairhope Public Library
Deferred
Outflows of
Differences between expected and actual experience
Changes of assumption
Net difference between projected and actual earnings
on plan investments
Employer contributions subsequent to measurement date
Total
Year Ending
September 30,
2016 $
2017
2018
2019
$
Resources
$
43,472
$ 43,472
(38,076)
5,396
5,396
5,396
(21,888)
Schedule ofFundin~ Progress2 Ci,tt of Fairhope
Actuarial
Accrued
Actuarial Liability (AAL)
Valuation Actuarial Value Entry Age Unfunded AAL
Date of Assets (a) (b)! (UAAL) b-a
9/30/20143 $ 27,027,655 $ 37,524,238 $ 10,496,583
9/30/20132 $ 25,073,787 $ 35,442,562 $ 10,368,775
9/30/20121 $ 23,502,551 $ 32,809,270 $ 9,306,719
1 Reflects changes to interest smoothing methodology.
2 Reflects implementation of Board Funding Policy
Funded
Ratio Covered Payroll
(alb) (c)
72.0% $ 11,394,370
70.7% $ 11,752,353
71.6% $ 11,752,353
Deferred
Inflows of
Resources
$
21,582
$ 21,582
UAAL as a
Percentage of
Covered Payroll
(b-a)/c)
92.1%
88.2%
79.2%
3 Reflects the impact of 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.
-51-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 14 PENSION PLAN (CONTINUED)
Schedule ofFundin~ Pro~ress~ Fairhol!e Public Libran:
Actuarial
Accrued
Actuarial Liability (AAL)
Valuation Actuarial Value Entry Age Unfunded AAL
Date of Assets (a) (b)! (UAAL) b-a
9/30/20143 $ 720,707 $ 1,062,427 $ 341,720
9/30/20132 $ 634,725 $ 988,328 $ 353,603
9/30/20121 $ 579,908 $ 906,261 $ 326,353
1 Reflects changes to interest smoothing methodology.
2 Reflects implementation of Board Funding Policy
Funded
Ratio Covered Payroll
(alb) (c)
67.8% $ 383,102
64.2% $ 405,343
64.0% $ 303,564
UAAL as a
Percentage of
Covered Payroll
(b-a)/c)
89.2%
87.2%
107.5%
3 Reflects the impact of 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.
NOTE 15 DEPOSIT AND INVESTMENT RISK
At September 30, 2015, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $2,782,989 ($177,443 in
governmental activities and $2,619,248 in business-type activities). The average maturity of the
portfolio was 6 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, 2015, 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 fmancial 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 institutionsl
NOTE 16 COMMITMENTS
The City has various contractual commitments outstanding at year-end. The commitments under these
contracts totaled $13 7,969. The commitments funded from governmental activities will be $118,24 7
and from business-type activities will be $19,722.
-52-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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.
The City implemented Government Accounting Standards Statement No. 45, Accounting and Financial
Reporting by Employers for Post Employment Benefits Other Than Pensions (GASB Statement No. 45),
for its financial disclosure and reporting purposes. The City intends to fund the OPEB Obligation pursuant
to GASB Statement No. 45 to the extent the funding requirement is not met by the retiree health care
premiums paid outright. During the year ended September 30, 2015, the City's portion of health care
funding cost for retired employees (retiree premiums) totaled $599,019.
Contribution Rates-Eligible retirees are subject to employer contributions for medical benefits equal to
90% of the premium. At September 30, 2015, the valuation date, 27 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 Statement No. 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, 2015, was 30 years.
NOTE 18
-53-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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
Interest on net OPEB obligation
Adjustment to ARC
Annual OPEB cost (expense)
Current year retiree premium
Change in net OPEB obligation
Net OPEB obligation -beginning of year
Net OPEB obligation -end of year
$ 862,809
124,187
(172,638)
814,358
(599,019)
215,339
3,104,675
$ 3.320 014
The OPEB obligation is primarily funded using the operating funds of the General Fund.
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 · NetOPEB
Year Annual Annual OPEB Obligation
Ended OPEB Cost Cost Contributed (Asset)
9/30115 $ 814,358 73.5% $ 3,320,014
9/30114 960,415 33.2% 3,104,675
9/30/13 951,222 32.7% 2,624,374
Funded Status and Funding Progress-The first actuarial valuation under GASB Statement No. 45 was as
of September 30, 2008, and the most recent actuarial valuation was as of September 30, 2014. There
were no assets accumulated in the Plan, however, market value will be used to value such assets. At
September 30, 2014, the Actuarial Accrued Liability (AAL) was $8,408,943, 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 Actuarial Accrued UAAL as a
Valuation Actuarial Value Liability (AAL)*-Unfunded (AAL) Percentage of
Dated of Assets Entry Age (UAAL) Funded Ratio Covered Payroll Covered Payroll
(a) (b) (b-a) (alb) (c) (b-a)/c
9/30/2014 $ $ 8,408,943 $ (8,408,943) 0.0% $ 8,343,375 100.8%
9/30/2013 $ $ 9,379,777 $ (9,379,777) 0.0% $ 11 ,394,370 82.3%
9/30/2012 $ $ 9,379,777 $ (9,379,777) 0.0% $ 11 ,752,353 79.8%
*GASB 45 permits the AAL determined at September 30, 2014 to be used for two consecutive years
Actuarial Methods and Assumptions -The actuarial calculations are based on the types of benefits
NOTE 18
-54-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
POST EMPLOYMENT HEALTH BENEFITS (CONTINUED)
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 of5% 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 ofOPEB benefits to be paid.
-55-
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
NOTE 21 SERVICE CONCESSION ARRANGEMENT
The Airport Authority, entered into an agreement with the Baldwin County Board of Education
(BCBOE), under which the BCBOE will operate and collect tuition from aviation training facility at the
airport for the next 40 years with an automatic extension of 5 years unless written notice is received six
months prior to the expiration of the initial term. BCBOE paid the City $2,700,000 upon execution of the
arrangement. The initial payment was used in the construction of the aviation training facility. The initial
payment was considered a deferred inflow of resources and rental revenue will be recognized over the life
of the initial term of the lease. The City will report the aviation training facility as a capital asset upon
completion of the facility and will depreciate the capital asset in accordance with the City's depreciation
policy. Upon receipt, the City reported a cash balance in the construction fund of $2,700,000 with a
corresponding balance of $2,700,000 as a deferred inflow of resources pursuant to the service concession
arrangement. The construction fund balance at September 30, 2015, totaled $18,484. The balance of the
deferred inflow of resources is $2,565,000 at September 30, 2015.
The Airport Authority, entered into an agreement with a private company, under which the private
company will operate and collect fees from third parties from a leased space at the airport for the next 25
years. The private company's lease agreement with the City is such that the company remits monthly rent
in the amount of $12,750 to the Airport Authority and required to invest at least $850,000 in capital
improvements on the premises during the first year of the lease. The total value of the capital
improvements, $1,091,254 was considered a deferred inflow of resources and rent revenue will be
recognized over the life of the term of the lease. The City will report the capital improvements as a capital
asset and will depreciate in accordance with the City's depreciation policy. Upon completion in fiscal year
2015, the City reported a capital improvement in the amount of$1,091,254 with a corresponding balance
of $1,091,254 as a deferred inflow of resources pursuant to the service concession arrangement. The
balance of the deferred inflow of resources is $1,047,603 at September 30, 2015.
NOTE 22 SUBSEQUENT EVENTS
The City has evaluated subsequent events through January 21, 2016, the date which the financial
statements were available to be issued. There were no material subsequent events which require
disclosure at September 30, 2015.
NOTE 23 PRIOR PERIOD ADJUSTMENT
Effective October 1, 2014, the Board implemented GASB Statement No. 68, Accounting and Financial
Reporting for Pension and GASB Statement No. 71, Pension Transition for Contributions Made
Subsequent to the Measurement Date effective by recording a prior period adjustment in the amount of
$9,462,600. The prior period adjustment increased deferred outflow of resources by $1,011,234 for the
employer pension plan contributions made from the measurement date (September 30, 2014) through
September 30, 2015, and established a net pension liability in the amount of$10,473,835.
A prior period adjustment was also recorded for the City's component unit, Fairhope Public Library in the
amount of $309,147 as related to GASB Statement Nos. 68 and 71 as described above. The prior period
adjustment increased deferred outflow of resources by $43,802 for the employer pension plan
contributions made from the measurement date (September 30, 2014) through September 30, 2015, and
established a net pension liability in the amount of$352,949.
THIS PAGE INTENTIONALLY LEFT BLANK
REQUIRED SUPPLEMENTARY INFORMATION
OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS
-56-
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
City of Fairhope
Actuarially determined contribution
Contributions in relations to the actuarially
determined contribution
Contribution deficiency (excess)
Covered employee payroll
Contributions as a percentage of covered-employee
payroll
Notes to Schedule
2015
$ 1,033,161
1,033,161
$
$ 11,740,415
9%
Actuarially determined contribution rates were calculated as of September 30, 2013, two years prior to the end of the
fiscal year in which contributions were reported. Contributions for fiscal year 2015 were based on the September 30,
20 13 actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Inflation
Salary increases
Investment rate of return
Entry Age
Level percent closed
26 years
Five year smoothed
Market
3.00%
3.75-7.25%
8.00%, net of pension
plan investment
expense, including
inflation
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015
-57-
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
Fairhope Public Library
Actuarially determined contribution
Contributions in relations to the actuarially
determined contribution
Contribution deficiency (excess)
Covered employee payroll
Contributions as a percentage of covered-employee
payroll
Notes to Schedule
2015
$ 43,472
43,472
$
$ 397,846
11%
Actuarially determined contribution rates were calculated as of September 30, 2013, two years prior to the end of the
fiscal year in which contributions were reported. Contributions for fiscal year 2015 were based on the September 30,
2013 actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Inflation
Salary increases
Investment rate of return
Entry Age
Level percent closed
26 years
Five year smoothed
market
3.00%
3.75-7.25%
8.00%, net of pension
plan investment
expense, including
inflation
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015
-58-
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN THE NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
Total pension liability
Service Cost
Interest
Chages in benefit terms
City of Fairhope
Differences between expected and actual
experience
Changes in assumptions
Benefit payments, including refunds of
employee contributions
Net change in total pension liability
Total pension liabilty-beginning
Total pension liability-ending (a)
Plan fiduciary net position
Contributions -employer
Contributions-member
Net investment income
Benefit payments, including refunds of
employee contributions
Transfers among employers
Net change in plan fiduciary net position
Plan net position -beginning
Plan net posistion -ending (b)
Net pension liability (asset)-ening (a)-(b)
Plan fiduciary net position as a percentage
of the total pension liabilty
Covered-employee payroll
Net pension liability (asset) as a percentage of
covered-employee payroll
$
2015
944,066
2,852,227
(2,21 0, 7 48)
1,585,545
36,758,207
$ 38,343,752
$ 1,011,234
599,215
3,115,563
(2,21 0,748)
(36,268)
2,478,996
26,284,372
$ 28,763,368
$ 9,580,384
75.01%
$ 11,740,415
82%
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015
-59-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
Total pension liability
Service Cost
Interest
Chages in benefit terms
Fairhope Public Library
Differences between expected and actual
experience
Changes in assumptions
Benefit payments, including refunds of
employee contributions
Net change in total pension liability
Total pension liabilty -beginning
Total pension liability-ending (a)
Plan fiduciary net position
Contributions -employer
Contributions -member
Net investment income
Benefit payments, including refunds of
employee contributions
Transfers among employers
Net change in plan fiduciary net position
Plan net position -beginning
Plan net posistion -ending (b)
Net pension liability (asset)-ening (a)-(b)
Plan fiduciary net position as a percentage
of the total pension liabilty
Covered-employee payroll
Net pension liability (asset) as a percentage of
covered-employee payroll
$
$
$
$
$
$
2015
38,648
79,859
(48,791)
69,716
1,022,630
1,092,346
43,802
19,155
81,118
(48,791)
95,284
669,681
764,965
327,381
70.03%
397,846
82.29%
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015
-60-
CITY OF FAIRHOPE, ALABAMA
BUDGETARYCOMWAJUSONSCHEDULE-GENERALFUND
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Variance
Budgeted Amounts Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes $ 12,291,100 $ 12,291,100 $ 12,620,043 $ 328,943
Licenses and permits 3,014,500 3,014,500 3,306,620 292,120
Fine and forfeitures 320,000 320,000 278,837 ( 41, 163)
Intergovernmental 202,200 202,200 244,166 41,966
Interest and rents 223,500 223,500 228,317 4,817
Charges for services 4,669,000 4,669,000 4,730,645 61,645
Golf course revenue 1,140,540 1,140,540 1,137,114 (3,426)
Recreation department 392,000 392,000 444,410 52,410
BP settlement proceeds 1,361,255 1,361,255
Legal settlement 598,640 598,640
Other revenue 153,300 153,300 180,644 27,344
Total revenues 22,406,140 22,406,140 25,130,691 2,724,551
EXPENDITURES
General government 8,485,269 8,485,269 8,289,346 195,923
Sanitation 1,514,237 1,514,237 1,598,404 (84,167)
Police 3,954,345 3,954,345 3,813,581 140,764
Fire 353,426 353,426 338,547 14,879
Airport Authority 412,632 412,632 412,632
Streets 2,311,183 2,311,183 2,352,091 (40,908)
Adult recreation 621,432 621,432 581,338 40,094
Recreation 1,121,934 1,121,934 1,095,605 26,329
Golf 1,042,330 1,042,330 987,957 54,373
Public Library Board 714,100 714,100 714,100
Other 89,000 89,000 89,000
Capital outlay 1,355,710 1,355,710 1,295,225 60,485
Total expenditures 21,975,598 21,975,598 21,567,826 407,772
Excess of Revenues over (under) Expenditures 430,542 430,542 3,562,865 3,132,323
Other financing sources (uses)
Transfers in 1,826,575 1,826,575 1,826,575
Transfers out (2, 159,071) (2,159,071) (4,846,160) (2,687,089)
Total other financing sources (uses) (332,496) (332,496) (3,019,585) (2,687,089)
NET CHANGE IN FUND BALANCES $ 98,046 $ 98,046 543,280 $ 445,234
FUND BALANCES -BEGINNING OF YEAR 10,449,523
FUND BALANCES -END OF YEAR $ 10,992,803
-61-
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2015
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 Budget Committee works 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.
-62-
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2015
NOTE 2 EXCESS EXPENDITURES
The following are General Fund expenditures in excess of final budget amounts:
Excess
Expenditures
General Government Recreation Department
Salaries -administrative $ 46,967 General supplies
Salaries-judge and court clerk 2,424 Equipment and vehicle repair
Salaries-mechanics and janitors 10,819
Salaries -building and zoning 3,420 Adult Recreation Department
Employee payroll taxes 25,256 Special programs
Training, school and travel 16,166 Shuttle bus expense
Professional services 73,377
City computer expense 17,335 Street Department
Office supplies 7,051 General supplies
Postage 3,855 Equipment and vehicle repair
General supplies 8,527 Equipment rental
Dues, membership and subscriptions 4,027 Street material and landscaping
Credit card processing fees 651
Recording fees paid 14 Sanitation Department
Colony rent 239 Equipment and vehicle repair
Publications newspapers 8,071 Landfill charges
Election expense 366 Landfill maintenance
COF book and sidewalk brick 1,205 Purchases of recycle bins and garbage
Fishermans Wharf Maintenance 228
Required OPEB contribution 246,208 Golf Department
General supplies
Police Department General maintenance
Overtime -special events 289 Purchases-beer, wine
Professional services 6,310 Purchases -food
General supplies 18,653 Supplies -grill
General maintenance 8,262 Cost -Pro Shop Sales
Jail expense 36,986 Pro Shop custom orders
DEA Funds purchases 22,555
Fire Department
Fire call payments 6,150
Equipment and vehicle repair 12,701
Excess
Expenditures
$ 35,478
10,271
42
235
5,382
61,664
7,426
132,093
106,735
27,252
11,505
16,880
5,054
3,527
3,787
1,960
1,128
8,531
21,632
THIS PAGE INTENTIONALLY LEFT BLANK
OTHER SUPPLEMENTARY INFORMATION
COMBINING FINANCIAL STATEMENTS
NONMAJORGOVERNMENTALFUNDS
-63-
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2015
Total
Special Special Nonmajor
Revenue Fund Revenue Fund Governmental
Impact Fees Gas Tax Debt Service Funds
ASSETS
Cash $ 826,435 $ 106,848 $ 348,720 $ 1,282,003
Receivables 25,617 25,617
Total assets $ 826,435 $ 106,848 $ 374,337 $ 1,307,620
LIABILITIES
Accounts payable -trade $ $ $ 25,617 $ 25,617
Due to other funds 901 901
Total liabilities 901 25,617 26,518
FUND BALANCES
Restricted for:
Debt service 348,720 348,720
Road maintenance and construction 105,947 105,947
Assigned to:
Construction and road maintenance 826,435 826,435
Total fund balances 826,435 105,947 348,720 1,281,102
Total liabilities and fund balances $ 826,435 $ 106,848 $ 374,337 $ 1,307,620
-64-
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Total
Special Special Nonmajor
Revenue Fund Revenue Fund Debt Governmental
Impact Fees Gas Tax Service Funds
REVENUES
Intergovernmental $ $ 90,267 $ $ 90,267
Charges for services 664,642 664,642
Interest and rents 265 87 352
Total revenues 664,907 90,267 87 755,261
EXPENDITURES
Street department 30,327 30,327
Recreation
Other 3,920 516 4,436
Debt service
Principal 483,780 483,780
Interest 374,479 374,479
Capital outlay 86,000 86,000
Total expenditures 89,920 30,327 858,775 979,022
Excess of revenues over 574,987 59,940 (858,688) (223,761)
(under) expenditures
OTHER FINANCING
SOURCES (USES)
Transfers in 850,252 850,252
Transfers out (600,000) (600,000)
Total other financing
sources (uses) (600,000) 850,252 250,252
Net change in fund balances (25,013) 59,940 (8,436) 26,491
Fund balances -beginning of year 851,448 46,007 357,156 1,254,611
FUND BALANCES -
END OF YEAR $ 826,435 $ 105,947 $ 348,720 $ 1,281,102
TIDS PAGE INTENTIONALLY LEFT BLANK
INDIVIDUAL FUND FINANCIAL STATEMENTS
DISCRETELY PRESENTED COMPONENT UNITS
ASSETS
Cash and cash equivalents
Total assets
LIABILITIES
-65-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE PUBLIC LffiRARY BOARD
SEPTEMBER 30, 2015
Accounts payable and accrued expenses
FUND BALANCES
Restricted for:
Capital projects
Unassigned
Total fund balances
Total liabilities and fund balances
See independent auditors' report.
$ 352,791 ____ .;.....__
$ 352,791 ========
$ 6,290 ____ .;.....__
346,501
346,501
$ 352,791 ========
-66-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LffiRARY BOARD
SEPTEMBER 30, 2015
Fund balances as reported on page 65 $
Net position reported for governmental activities in the statement of net position
are different from fund balances for governmental activities because:
Capital assets used in governmental activities are financial resources and
therefore are not reported in fund financial statements.
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.
Other assets used in governmental activities are not financial resources and
therefore are not reported in the governmental funds.
Employement retirement contributions
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:
Net Pension Liability
Deferred inflows of resources
Net position of governmental activities as reported on page 24 $
See independent auditors' report.
346,501
437,018
(346,915)
43,472
(327,381)
(21,582)
131,113
-67-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE PUBLIC LffiRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2015
REVENUES
Fines and lost books $ 18,471
Donations, gifts, memorials and bequests 196,582
State aid 13,588
Lease income 1,500
Payments from City of Fairhope 710,767
Miscellaneous 16,162
Total revenues 957,070
EXPENDITURES
Salaries 468,829
Payroll taxes 36,137
Employees' retirement 40,747
Books, periodicals, audio visual 75,560
Supplies 9,261
J ani to rial service 24,789
Professional fees 7,640
Telecommunications 468
Capital outlay 40,081
Maintenance 22,896
Miscellaneous 35,497
Total expenditures 761,905
Net change in fund balances 195,165
Fund balances -beginning of year 151,336
FUND BALANCES -END OF YEAR $ 346,501
See independent auditors' report.
-68-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGESINFUNDBALANCESOFGOVERNMENTALFUNDSTO
THESTATEMENTOFACTnnTffiS
FAIRHOPE PUBLIC LffiRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Net change in fund balances-total governmental funds, page 67 $ 195,165
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 ofthe assets.
Capital outlays for the year 40,081
Depreciation expense for the year (19,010)
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.
Change in net pension liability and deferred inflows of resources 3,656
Change in net position of governmental activities, page 25 $ 219,892
See independent auditors' report.
ASSETS
Cash and cash equivalents
Grants receivable
Total assets
LIABILITIES
Unearned rent
Accounts payable
Total liabilities
FUND BALANCES
Restricted for:
Capital projects
Unassigned
Total fund balances
-69-
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2015
Total liabilities and fund balances
See independent auditors' report.
$ 637,357
48,477
$ 685,834 ===:::::::::::::==
$ 2,565,000
2,968
2,567,968
364,946
(2,247,080)
(1 ,882,134)
$ 685,834 ===:::::::::::::==
-70-
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2015
Fund balances as reported on page 69
Net position reported for governmental activities in the statement of net position
are different from fund balances for governmental activities because:
Capital assets used in governmental activities are financial resources and
therefore are not reported in fund financial statements
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.
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
Revenue received from service concession arrangement will be
recognized in future periods and is derived from capital assets and
therefore is not reorted in fund finacial statements
$ (1,882,134)
29,963,388
(3,658, 735)
(7, 730,629)
(1,047,603)
Net position of governmental activities as reported on page 24 $ 15,644,287 ===========
See independent auditors' report.
-71-
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2015
REVENUES
Fuel sales and rentals $ 230,513
Interest income 353
Federal grant revenue 1,020,169
Revenue from service concession arrangement 67,500
Payments from City of Fairhope 467,061
Sale of assets 260,000
Total revenues 2,045,596
EXPENDITURES
Insurance 38,617
Legal and professional 85,554
Maintenance 83,754
Capital outlay 1,565,613
Debt service payments
Principal 709,371
Interest 122,798
Other 17,483
Total expenditures 2,623,190
Net change in fund balances (577,594)
Fund balances -beginning of year (1,304,540)
FUND BALANCES -END OF YEAR $ (1,882,134)
See independent auditors' report.
-72-
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, 2015
Net change in fund balances-total governmental funds, page 71
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:
Bond proceeds provide current financial resources to governmental funds, but
issuing debt increases long-term liabiities in the statement of net position.
Repayment of long-term liabilities is an expenditure in governmental funds, but
the repayment reduces long-term liabilities in the statement of net position.
Proceeds from the issuance of debt
Principal payments on long-term debt
Governmental funds report capital outlays as expenditures while governmental
activities report depreciation expense to allocate those expenditures over
the life of the assets.
Proceeds from the sale of assets
Capital outlays for the year
Depreciation expense for the year
Unearned revenue as related to service concession arrangement derived from
the acquisition of capital assets
Change in net position of governmental activities, page 25
See independent auditors' report.
$ (577,594)
709,371
(260,000)
1,565,613
(305,052)
43,650
$ 1,175,988 ==:=::::::::::::======
-73-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2015
N CRS Grant Expenditures
NCRS Grant Expenditures Waste Water Treatment Plant
Flood Event
Troyer Booth Extension Project
Community Park Project
A TRIP Fairhope Avenue 181 to Bancroft
Fairhope Avenue Widening
Manley Road Soccer
Pier Restrooms
Emergency Repairs
Tennis Courts
Golf Course Irrigation System
Boys and Girls Club
Quail Creek Sidewalks
Total capital projects expenditures
See independent auditors' report.
$ 251,951
162,368
44,666
43,164
13,613
14,690
19,808
953,971
27,410
303
14,474
765,817
17,658
129,684
$ 2,459,577
-74-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2015
A. Utility customers at September 30, 2015 were as follows:
Number of customers
Number of metered customers
Number of unmetered customers
Number of waste water customers
B. Annual Net Income of Utility Operations
Income from operations
Add:
Depreciation and amortization
Interest income
Electric
Fund
6,721
6,721
Electric
Fund
$2,419,668
743,663
5,670
Natural
Gas
Fund
10,039
10,039
Natural
Gas
Fund
$2,351,230
404,740
9,724
Water and
Waste Water
Fund
17,372
17,372
9,960
Water and
Waste Water
Fund
$ 4,383,041
1,041,167
3,046
Total
$ 9,153,939
2,189,570
18,440
Annual net income as prescribed by debt covenants $3,169,001 $2,765,694 $ 5,427,254 $11,361,949
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 20 16 $ 5,000,000
Buildings and facilities-expires January 2016
Automobile-expires January 2016
Liability
Uninsured motorist
Public officials errors and omissions liability-expires January 2015
Police liabilty-expires January 2015
Aggregate
Per occurrence
Excess liability policy for generalliabilty, police and public official-expires January 2016
D. The City has complied with all requirements of the respective bond indentures.
76,815,702
1,000,000
50,000
5,000,000
5,000,000
2,000,000
5,000,000
-75-
CITY OF FAIRHOPE, ALABAMA
SUMMARY OF DEPOSITS, WITHDRAWALS AND BALANCES OF SELECTED TRUST ACCOUNTS AS
REQUIRED UNDER CERTAIN TRUST INDENTURES
SEPTEMBER 30, 2015
1996
Capital 2005 2005 2007 2009 2009
Improvement Warrant Fund Reserve Fund Warrant Fund Warrant Fund Reserve Fund
Balance 10/01114 $ 50,000 $ 629,503 $ 874,715 $ 176,443 $ 109,630 $ 125,003
Deposits 5 3,968,342 -530,271 145,024 13
Disbursements (5) ( 4,597,845) (874,715) (529,271) (146,565) (13)
Balance 9/3 0/15 $ 50,000 $ -$ - $ 177,443 $ 108,089 $ 125,003
2011
Construction 2011 2011 2015 2015
Fund Warrant Fund Reserve Fund Reserve Fund Warrant Fund
Balance 10/01/14 $ 2,278,602 $ 513,758 $ 1,415,679 $ -$
Deposits -905,745 142 376,702 13,702
Disbursements (2,278,602) (889,428) (142) (2)
Balance 9/30/15 $ -$ 530,075 $ 1,415,679 $ 376,700 $ 13,702
THIS PAGE INTENTIONALLY LEFT BLANK
STATISTICAL SECTION
-76-
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
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.
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.
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.
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
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.
Page
77-82
83-87
88-91
92-93
94-97
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports
for the relevant year.
2006 2007
Governmental activities
Invested in capital assets, net of related debt $67,742,360 $61,450,916
Restricted 787,538 1,073,262
Unrestricted ~1,1952 54,300
Total governmental activities net positions $68,528,703 $62,578,478
Business-type activities
Invested in capital assets, net of related debt $19,307,068 $23,076,992
Restricted 2,089,642 2,106,516
Unrestricted 3,334,264 2,105,886
Total business-type activities net positions $24,730,974 $27,289,394
Primary government
Invested in capital assets, net of related debt $87,049,428 $84,527,908
Restricted 2,877,180 3,179,778
Unrestricted 3,333,069 2,160,186
Total primary government net position $93,259,677 $89,867,872
-77-
CITY OF FAIRHOPE, ALABAMA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2008 2009 2010 2011 2012
$67,338,065 $66,295,379 $ 65,963,325 $ 66,845,689 $ 66,016,012
847,580 1,462,430 3,564,376 6,207,809 8,015,592
~84,7092 165,029 1,782,848 50,640 56,984
$68,100,936 $67,922,838 $ 71,310,549 _$_Z1lQ4,138 __ $ 74,088,588
$24,573,181 $24,210,082 $ 24,697,607 $ 25,786,974 $ 17,990,946
2,092,174 1,883,768 1,649,106 1,658,631 12,337,047
1,422,972 3,691,056 6,696,480 10,610,123 10,047,736
$28,088,327 $29,784,906 $ 33,043,193 $ 38,055,728 $ 40,375,729
$91,911,246 $90,505,461 $ 90,660,932 $ 92,632,663 $ 84,006,958
2,939,754 3,346,198 5,213,482 7,866,440 20,352,639
1,338,263 3,856,085 8,479,328 10,660,763 10,104,720
$96,189,263 $97,707,744 $ 104,353,742 $ 111,159,866 $ 114,464,317
2013 2014 2015
$ 65,671,272 $ 74,804,467 $ 76,208,248
9,007,967 8,557,163 2,308,667
1,586,709 2,513,008 4,619,015
$ 76,265,948 $ 85,874,638 $ 83,135,930
$ 29,971,506 $ 42,025,762 $ 44,488,322
3,698,889 3,718,288 2,619,251
10,197,284 2,273,605 5,238,460
$ 43,867,679 $ 48,017,655 $ 52,346,033
$ 95,642,778 $ 116,830,229 $ 120,696,570
12,706,856 12,275,451 4,927,918
11,783,993 4,786,613 9,857,475
$ 120,133,627 $ 133,892,293 $ 135,481,963
-78-
CITY OFF AIRHOPE, ALABAMA
CHANGES IN NET POSITIONS
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Expenses
Governmental activities:
General $ 3,873,823 $ 5,540,860 $ 6,392,335 $ 6,536,802 $ 6,929,734 $ 6,176,077 $ 8,103,118 $ 7,451,793 $ 9,067,340 $ 8,890,052
Public safety
Police 3,482,683 3,789,666 4,011,091 4,090,851 4,740,344 5,213,031 4,925,437 4,441,429 4,220,003 3,945,496
Fire 692,972 781,696 843,469 878,148 1,017,184 483,670 461,865 407,361 431,955 424,789
Public works
Sanitation 1,123,517 1,479,374 1,564,126 1,657,615 1,973,942 1,868,364 1,814,947 1,824,259 1,873,508 1,790,554
Street 4,653,792 3,757,204 3,671,572 4,308,575 4,452,370 4,251,404 5,502,244 3,996,599 4,095,487 4,057,713
Public Library Board 336,823 594,378 771,373 760,174 772,539 798,997 810,636 840,636 886,028 924,736
Airport 149,179 397,183 545,000 242,090 249,856 225,843 281,124 443,000 443,000 412,632
Recreation 645,154 819,051 900,759 1,031,886 1,269,393 1,138,079 1,176,191 1,281,865 1,250,689 1,328,674
Adult Recreation 321,557 390,125 459,961 438,442 601,232 654,736 613,614 640,917 663,982 665,804
Golf 1,292,200 1,102,861 1,106,624 932,284 987,869 978,819 1,060,643
Interest on long-term debt 475,699 624,883 743,451 878,534 694,083 633,161 589,174 507,982 472,222 344,808
Total governmental activities expenses 15,755,199 18,174,420 19,903,137 22,115,317 23,803,538 22,549,986 25,210,634 22,823,710 24,383,033 23,845,901
Business-type activities:
Natural gas 6,329,438 5,948,144 6,709,491 5,349,209 5,757,648 5,037,587 4,484,683 5,234,887 5,529,610 5,056,618
Electric 12,842,542 14,029,975 16,006,139 15,540,148 15,664,835 16,909,931 16,912,834 17,164,781 18,379,231 18,227,563
Water and wastewater 5,682,694 6,387,739 6,502,942 6,803,566 6,533,138 6,616,671 7,050,997 7,294,799 7,165,113 7,085,714
Golf 1,476,373 1,544,528 1,713,486
Total business-type activities expenses 26,331,047 27,910,386 30,932,058 27,692,923 27,955,621 28,564,189 28,448,514 29,694,467 31,073,954 30,369,895
Total primary government expenses $ 42,086,246 $ 46,084,806 $50,835,195 $ 49,808,240 $ 51,759,159 $ 51,114,175 $ 53,659,148 $ 52,518,177 $ 55,456,987 $ 54,215,796
Program Revenues
Governmental activities:
Charges for services:
General $ 3,726,334 $ 5,862,118 $ 5,952,299 $ 5,140,160 $ 5,249,279 $ 5,383,822 $ 6,301,207 $ 6,052,493 $ 6,225,471 $ 3,585,456
Police 354,504 362,441 252,838 224,022 261,070 241,104 289,432 291,749 285,573
Sanitation 1,252,282 1,294,033 1,331,617 1,368,656 1,380,238 1,391,722 1,408,179 1,431,883 1,462,243 4,730,645
Recreation 73,975 75,592 83,919 130,740 366,683 369,135 368,493 391,024 436,453 444,410
Adult Recreation 41,590 34,534 32,791 36,316 45,889 46,261 41,018 39,977 49,241 41,459
Golf 847,016 776,173 944,858 1,001,627 1,113,277 1,067,593 1,137,114
Operating grants and contributions 3,065,387 631,133 206,012 87,416 22,267 24,402 9,144
Capital grants and contributions 4,861,100 8,526,591 7,310,387 384,358 1,389,592 302,963 1,317,475 438,033 8,416,283 1,319,753
Total governmental activities program revenues 13,375,172 16,786,442 15,169,863 8,218,684 9,491,191 8,704,267 10,727,431 9,758,436 17,952,001 11,258,837
Business-type activities:
Charges for services:
Gas 7,112,944 7,388,531 7,841,853 8,341,855 8,631,935 8,219,447 6,191,986 6,769,649 8,023,473 7,354,080
Electric 14,683,254 16,658,326 17,777,703 18,800,459 18,496,651 19,838,004 18,891,334 19,647,662 21,049,277 20,527,031
Water and wastewater 8,348,064 8,669,895 8,166,344 8,194,949 8,959,041 10,287,898 9,838,580 9,980,089 10,018,231 10,860,135
Golf course 1,527,311 1,505,211 1,487,811
Total business-type activities program revenues 31,671,573 34,221,963 35,273,711 35,337,263 36,087,627 38,345,349 34,921,900 36,397,400 39,090,981 38,741,246
Total primary government program revenues $45,046,745 $51,008,405 $ 50,443,574 $ 43,555,947 $ 45,578,818 $ 47,049,616 $ 45,649,331 $ 46,155,836 $ 57,042,982 $ 50,000,083
Net (expense)/revenue
Governmental activities
Business-type activities
Total primary government net expense
General Revenues and Other Changes in
Net Positions
Governmental activities:
Taxes
Property taxes
Sales tax
Liquor taxes
Lodging taxes
Other
Intergovernmental
BP settlement proceeds
Legal settlement
Investment earnings
Gain (loss) on sale of assets
Other
Transfer of Golf Fund to Governmental Activities
Transfers in/( out)
Total government activities
Business-type activities:
Investment earnings
Transfer of Golf Fund to Governmental Activities
Transfers in/( out)
Total business-type activities
Total primary government
Change in Net Positions
Governmental activities
Business-type activities
Total primary government
2006 2007
-79-
CITY OF FAIRHOPE, ALABAMA
CHANGES IN NET POSITIONS
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2008 2009 2010 2011 ---
$ (2,380,027) $ (1,387,978) $ (4,733,274) $ (13,896,633) $ (14,312,347) $ (13,845,719)
5,340,526 6,311,577 4,341,653 7,644,340 8,132,006 9,781,160
$ 2,960,499 $ 4,923,599 $ (391,621) $ (6,252,293) $ (6,180,341) $ (4,064,559)
$ 3,159,187 $ 3,589,489 $ 4,631,476 $ 4,939,840 $ 4,842,366 $ 4,590,840
1,003,864 4,443,325 4,590,149
347,415 373,794 396,196 385,411 392,255 393,123
196,224 420,024 495,850 474,852 483,271 495,870
124,738 138,857 145,836 134,413 131,135 120,518
522,196 472,667 293,007 436,472 424,359 248,011
394,006 508,558 340,530 225,860 239,256 249,489
230,691 251,476 294,469 109,958 1,293,419 124,161
913,729
3,787,999 {10,317,112} 3,658,368 5,094,136 4,897,104 4,827,147
8,762,456 {4,562,247} 10,255,732 13,718,535 17,146,490 15,639,308
235,538 266,888 115,648 60,104 23,385 58,522
(913,729)
{3,787,999} {4,020,046} {3,658,368} {5,094,136} {4,897,104} {4,827,147}
{3,552,461} {3,753,158} {3,542,720} {5,947,761} {4,873,719} { 4,768,625}
$ 5,209,995 $ (8,315,405) $ 6,713,012 $ 7,770,774 $ 12,272,771 $ 10,870,683
$ 6,382,429 $ (5,950,225) $ 5,522,458 $ (178,098) $ 2,834,143 $ 1,793,589
1,788,065 2,558,419 798,933 1,696,579 3,258,287 5,012,535
$ 8,170,494 $ (3,391,806) $ 6,321,391 $ 1,518,481 $ 6,092,430 $ 6,806,124
2012
$ (14,483,203)
6,473,386
$ (8,009,817)
$ 4,591,739
4,898,362
425,888
569,142
124,234
314,525
226,642
143,319
4,173,802
15,467,653
20,417
{4,173,802}
{ 4,153,385}
$ 11,314,268
$ 984,450
2,320,001
$ 3,304,451
2013
$ (13,065,274)
6,702,933
$ (6,362,341)
$ 4,298,046
5,437,863
425,816
643,495
139,666
596,816
251,512
213,169
3,236,251
15,242,634
25,268
{3,236,251}
{3,210,983}
$ 12,031,651
$ 2,177,360
3,491,950
$ 5,669,310
2014
$ (6,431,032)
8,017,027
$ 1,585,995
$ 4,330,537
6,518,249
445,132
614,278
138,204
389,561
239,205
(261,340)
147,672
3,612,482
16,173,980
30,815
{3,612,482}
{3,581 ,667}
$ 12,592,313
$ 9,742,948
4,435,360
$ 14,178,308
2015
$ (12,587,064)
8,371,351
$ (4,215,713)
$ 4,550,766
6,797,757
451,719
681,419
138,382
334,433
1,361,255
598,640
228,670
106,502
1,826,575
17,076,118
18,440
{1 ,826,57 5}
{1,808,135) J. 15,267,983
$ 4,489,054
6,563,216
$ 11,052,270
-80-
CITY OF FAIRHOPE, ALABAMA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Beer, Wine Burglar
Fiscal Sales Ad Valorem Automobile and Liquor Cigarette Lodging Dog Alarm
Year Tax Tax Tax Tax Tax Tax Tax Tax Total -
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 -5,934,516
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
2013 5,437,863 3,738,511 559,534 425,816 139,526 643,495 140 -10,944,885
2014 6,518,249 3,759,584 570,954 445,132 138,204 614,278 75 -12,046,475
2015 6,797,757 3,950,750 600,015 451,719 138,298 681,419 84 -12,620,043
-81-
CITY OF FAIRHOPE, ALABAMA
FUNDBALANCESOFGOVERNMENTALFUNDS
(modified accrual basis of accounting)
Fiscal Year
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
General fund
Restricted $ -$ -$ -$ 501,932 $ 2,723,595 $ 5,014,205 $ 7,000,000 $ 7,000,000 $ 7,000,000 $ 7,000,000
Unassigned 1,087,642 1,703,619 1,083,383 1,574,743 1,985,914 2,145,950 3,295,547 3,447,451 3,449,523 3,992,803
Total general fund $ 1,087,642 $ 1,703,619 $ 1,083,383 $ 2,076,675 $ 4,709,509 $ 7,160,155 $ 10,295,547 $ 10,447,451 $ 10,449,523 $ 10,992,803
All other governmental funds
Restricted
Debt Service -Other Gov. Funds $ 235,348 $ 456,957 $ 470,671 $ 350,987 $ 351,008 $ 350,020 $ 325,214 $ 339,308 $ 357,156 $ 348,720
Road Maint & Const.-Other Gov. Funds - - - - - --274,746 46,007 105,947
Construction -Capital Projects - ------1,154,000 1,154,000 1,154,000
Assigned, reported in:
Other Governmental Funds 257,881 311,553 66,907 59,142 127,419 167,786 1,029,075 1,252,213 851,448 826,435
Capital Projects Funds 263,202 3,892,524 2,070,337 550,369 362,354 675,799 -58,625 1,956,986 4,398,406
Unassigned
Capital projects funds - -----{1,069,4242 181,085
Total all other governmental funds $ 756,431 $ 4,661,034 $ 2,607,915 $ 960,498 $ 840,781 $ 1,193,605 $ 284,865 $ 3,259,977 $ 4,365,597 $ 6,833,508
The City implemented GASB Statement number 54 fiscal year 2011. This statement replaces the previous classifications of reserved, unreserved, designated and undesignated fund balances.
REVENUES
Local taxes
Licenses and permits
Fines and forfeitures
Intergovernmental
Contribution from Public Library Bd
Interest and rents
Charges for services
Assessments
Golf course revenue
Recreation Department
BP settlement proceeds
Legal settlement
Other
Total revenues
EXPENDITURES
General government
Sanitation
Police
Fire
Airport
Street
Recreation
Adult recreation
Golf
Capital outlay
Debt service:
Principal
Interest
Bond issuance costs
Public Library Board
Other
Total expenditures
Excess (deficiency) of revenues
over expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Proceeds from issuance of debt
Cost from issuance of debt
Payment to Defeased Warrants Escrow Agent
Transfer to Debt Service to defease warrants
Warrant discount
Transfers out
Total other financing sources (uses)
Net change in fund balance
Debt service as a percentage of
noncapital expenditures
2006
3,827,564 $
3,401,207
354,504
7,319,833
1,128,850
394,009
1,577,409
39,199
343,588
18,386,163
2,731,819
960,328
3,110,086
576,191
63,031
3,580,189
513,503
277,808
14,308,234
835,627
482,436
336,823
60,000
27,836,075
(9,449,912)
5,325,589
4,370,000
~1,537,590~
8,157,999
(I ,2 91.2lll. $
9.7%
-82-
CITY OF FAIRHOPE, ALABAMA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
(modified accrual basis of accounting)
Fiscal Year
2007 2008 2009 2010 2011
4,522,164 $ 5,669,358 $ 6,938,380 $10,292,352 $10,190,500
2,996,213 2,729,209 2,058,105 2,178,982 2,295,795
362,441 252,838 224,022 261 ,070 241,104
3,167,141 1,826,517 837,246 547,556 345,966
685,003 208,931 71,000 65,000 183,285
377,743 340,530 225,861 239,256 249,489
4,149,905 4,610,307 4,450,711 4,450,535 4,479,749
1,831
959,730 858,237 1,020,250
369,135
492,419 411,179 277,015 1,705,991 170,422
16,754,860 16,048,869 16 042,070 20,598,979 19,545,695
5,090,777 6,318,322 5,948,479 6,279,197 5,335,143
1,254,694 1,405,774 1,475,035 1,758,543 1,745,785
3,405,687 3,913,015 3,922,163 4,404,803 4,941,051
619,434 707,513 765,645 837,597 395,224
397,183 545,000 242,090 249,856 225,843
2,552,328 2,554,959 2,704,242 2,797,566 2,639,416
658,837 785,425 867,174 1,050,957 969,025
328,744 431,481 400,494 553,1 25 577,015
1,303,135 1,094,604 1,113,178
6,054,830 3,227,604 1,775,834 1,565,192 1,474,937
4,412,690 2,424,796 863,329 1,047,483 831,483
532,687 802,140 809,715 704,043 666,652
138,476
396,000 504,560 530,000 565,000 565,000
60 000 60 000 60 000 75,000 89 620
25,902,367 23,680,589 21,667,335 22,982,966 21,569,372
(9,147,507) (7,631,720) (5,625,265) (2,383,987) (2,023,677)
4,897,503 5,228,182 9,542,134 6,541,730 6,557,708
9,692,000 1,300,000 3,368,260
(78,364)
(3,412,892)
(3,289,896)
(43,956)
~877,457~ ~1,569,814~ ~1,158,102~ ~1,644,626~ ~1,730,561~
13,668,090 4,958,368 4,971,140 4,897,104 4,827,147
4,520,583 $ (2,673,352) $ (654,125) $ 2,513,117 $ 2,803,470
24.9% 15.8% 8.4% 8.2% 7.5%
2012 2013 2014 ~5
$ 10,609,364 $ I 0,944,885 $ 12,046,399 $ 12,620,043
2,612,793 2,731,766 3,000,673 3,306,620
289,432 291,749 285,573 278,837
667,344 1,022,649 991,614 639,523
1,000 1,500
226,748 253,003 239,205 228,669
5,096,593 5,317,255 5,165,291 5,395,287
3,659
1,001,627 1,113,277 1,067,593 1,137,114
368,493 391,024 436,453 444,410
1,361,255
598,640
184,411 253,146 196,913 180,644
21,061,464 22,320,254 23 429 714 ~042
7,026,721 6,862,394 8,311,150 8,289,346
1,607,918 1,643,715 1,673,938 1,598,404
4,671,591 4,164,674 3,937,151 3,813,581
339,080 312,647 339,623 338,547
281,124 443,000 443,000 412,632
3,872,517 2,358,383 2,705,732 2,382,418
989,463 1,062,174 1,024,526 1,095,605
525,212 543,109 566,000 581 ,338
863,593 907,216 901,085 987,957
664,526 1,418,813 1,908,464 3,840,803
4,804,960 1,485,545 2,894,540 483,780
616,221 508,483 465,409 374,479
600,000 630,000 674,100 714,100
160 888 89,133 89,785 93,436
27,023,814 22,429,286 25,934,503 25,006,426
(5,962,350) (109,032) (2,504,789) __ 1,184,616
10,379,818 7,236,241 9,640,199 7,272,735
4,015,200
~6,206,0 16~ {3,999,990~ ~6,027, 718~ ~5,446,160)
8,189,002 3,236,251 3,612,481 ~575
$ 2,226,652 $ 3,127,219 $ 1,107,692 $ 3,011,191
20.6% 9.5% 14.0% 4.1%
-83-
CITY OF FAIRHOPE, ALABAMA
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OFT AXABLE PROPERTY
LAST TEN FISCAL YEARS
Fiscal Total Estimated
Year Less: Total Taxable Direct Actual
Ended Residential Commercial Industrial Tax Exempt Assessed Tax Taxable
September 30 Property Property Property Real Property Value Rate Value -
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
2013 142,695,840 1,188,460 189,033,860 64,091,460 268,826,700 15 4,032,400,500
2014 146,270,400 1,188,460 195,105,420 67,346,480 275,217,800 15 4,128,267,000
2015 173,467,000 1,448,760 185,206,880 56,434,980 303,687,660 15 4,555,314,900
Source: Baldwin County Revenue Commissioner
-84-
CITY OF FAIRHOPE, ALABAMA
PROPERTY TAX RATES
DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
Overla~~ing Rates
Cit Coun~ State Total
Total Road/ Health Care Total Total Direct &
Fiscal General School Bond Tax City General Bridge Fire School Authority County General School Soldier State Overlapping
Year Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Rates
2006 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 43.0
2007 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 43.0
2008 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 43.0
2009 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 43.0
2010 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 43.0
2011 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 43.0
2012 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 43.0
2013 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 43.0
2014 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 43.0
2015 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 43.0
Source: Baldwin County Commission
Taxpayer -
FST Wal-mart Stores East L P $
Arbor Gates LLC
Fairhope LLC
FST Mississippi Baldwin Square
Truland Homes LLC
FST Fairhope Hospitality Group LLC
Fairhope Ridge LLC
Bones Set Too LLC
CHS Properties Inc
Health Care Reit Inc
FST E&A Southeast Limited Partnership
AI Corte Jr Family Limited Partnership
Adams Homes LLC
Bellsouth Telecommunications Inc
CHS Properties Inc
Duck Duck Goose Inc
Fairhope Mob, LLC
FST Greeno Properties North II LTD
$
Source: Baldwin County Revenue Commissioner
-85-
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND TEN YEARS AGO
2015
Taxable Percentage of
Assessed Total Taxable
Value Rank Assessed Value
2,979,840 1 1.0%
2,098,340 2 0.7%
1,802,480 3 0.6%
1,542,540 4 0.5%
1,385,300 5 0.5%
1,375,540 6 0.5%
1,318,720 7 0.4%
1,184,240 8 0.4%
1,115,140 9 0.4%
1,102,240 10 0.4%
15,904,380 5.2%
2006
Taxable Percentage of
Assessed Total Taxable
Value Rank Assessed Value
$ 2,843,440 1 1.5%
1,291,980 6 0.7%
2,526,220 2 1.3%
1,566,120 3 0.8%
1,412,820 4 0.7%
1,300,400 5 0.7%
1,067,360 7 0.6%
915,000 8 0.5%
876,240 9 0.5%
813,760 10 0.4%
$ 14,613,340 7.6%
Fiscal Year Total Tax
Ended Levy for
September 30 Fiscal Year
2006 $ 2,897,008 $
2007 3,363,710
2008 4,918,559
2009 4,958,658
2010 4,771,906
2011 4,375,791
2012 4,341,309
2013 4,032,401
2014 4,128,267
2015 4,556,121
-86-
CITY OF FAIRHOPE, ALABAMA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Collected within the Collections
Fiscal Year of the Le~ in Subsequent
Amount Percentage of Levy Years
2,650,741 91.50% $ 138,659
3,053,904 90.79% 185,405
4,087,005 83.09% 344,238
4,378,939 88.31% 338,819
4,293,008 89.96% 347,908
3,336,261 76.24% 971,558
3,327,041 76.64% 673,667
3,590,944 89.05% 414,166
3,834,734 92.89% 175,177
4,123,187 90.50% 74,801
Source: Baldwin County Revenue Commissioner.
Total Collections to Date
Amount Percentage of Levy -
$ 2,789,400 96.29%
3,239,309 96.30%
4,431,243 90.09%
4,717,758 95.14%
4,640,916 97.25%
4,307,819 98.45%
4,000,708 92.15%
4,005,110 99.32%
4,009,911 97.13%
4,197,988 92.14%
-87-
CITY OF FAIRHOPE, ALABAMA
DIRECT AND OVERLAPPING SALES TAX RATES
CURRENT & LAST THREE FISCAL YEARS
City
Fiscal Direct Baldwin State of
Year Rate County Alabama
2012 2.00% 3.00% 4.00%
2013 2.00% 3.00% 4.00%
2014 2.00% 3.00% 4.00%
2015 2.00% 3.00% 4.00%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009
2010
2011
2012
2013
2014
2015
-88-
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAX REMITTERS
LAST SIX YEARS
Top 25 Taxpayers
(approximate) Total Tax
$ 2,124,169 $ 4,443,325
2,502,259 4,591,088
2,525,722 4,855,972
2,641,175 5,437,863
3,673,425 6,518,249
3,624,562 6,733,115
Source: City Treasurer's Office and AL Dept of Revenue
o/o of Total Tax
48%
55%
52%
49%
56%
54%
Note: State law prohibits the disclosure of tax information for specific taxpayers.
Governmental Activities
General
Fiscal Obligation Notes Capital
Year Debt Pa~able Leases
2006 $ 11,437,202 $ 1,943,967 $ 140,632
2007 18,430,349 230,130 111,245
2008 17,474,232 81,604 91,092
2009 16,768,901 30,364 69,942
2010 15,773,979 -47,745
2011 14,965,792 -24,449
2012 14,200,481 - -
2013 12,682,152 --
2014 9,789,376 - -
2015 9,307,360 --
-89-
CITY OF FAIRHOPE, ALABAMA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Business-T~~e Activities
General Utilities
Obligation Revenue Notes
Debt Debt Pa~able
$ 442,820 $ 18,045,000 $ 446,267
431,688 17,465,000 293,764
413,404 16,865,000 170,145
271,397 16,235,000 86,035
256,962 15,610,000 24,681
241,993 14,925,000 -
226,260 23,125,000 -
209,680 21,636,094 -
5,904,220 20,571,057 -
4,743,000 16,574,669 -
Total Percentage
Capital Primary of Personal Per
Leases Government Income ~ita
$ 284,572 $ 32,740,460 7.46% 2,203
122,438 37,084,614 8.28% 2,465
7,387 35,102,864 7.26% 2,204
-33,461,639 6.65% 2,067
-31,713,367 6.43% 1,933
-30,157,234 6.47% 1,818
-37,551,741 8.07% 2,279
-34,527,926 6.93% 2,107
-36,264,653 6.23% 2,159
-30,625,029 4.87% 1,693
Fiscal
Year
2006 $
2007
2008
2009
2010
2011
2012
2013
2014
2015
-90-
CITY OF FAIRHOPE, ALABAMA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
Percentage of
Estimated
General Less: Amounts Actual Taxable
Obligation Available in Debt Value of
Debt Service Fund Total Property
11,880,022 $ 235,347 $ 11,644,675 2.65%
18,862,037 456,957 18,405,080 4.11%
17,887,636 470,671 17,416,965 3.60%
17,040,298 350,987 16,689,311 3.32%
16,030,941 351,008 15,679,933 3.18%
15,207,785 350,020 14,857,765 3.19%
14,426,741 325,214 14,101,527 3.03%
12,891,832 339,308 12,552,524 2.52%
15,693,596 357,156 15,336,440 2.64%
14,050,360 348,720 13,701,640 2.18%
Per
Capita
783
1,223
1,094
1,031
956
896
856
766
913
757
Direct debt of the City
-91-
CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30,2015
$
Outstanding
Debt
9,307,360
Percentage
of debt
Applicable
to the City
Fairhope (1)
100.00%
Overlapping Debt (Supported by ad valorem tax)
Baldwin County $ 99,255,236 8.04% (!)
Amount
of debt
Applicable
to City of
Fairhope
$ 9,307,360
7,980,121
$ 17,287,481
(1) Percentage of net assessed value of property in City ($303,687,660) to net assessed value of property in
Baldwin County ($3,778,576,700) on 10/112014.
Debt limit
Total net debt applicable to limit
Legal debt margin
Total net debt applicable to limit
as a percentage of debt limit
2006 2007
$38,626,776 $44,849,472
13,381,169 18,660,479 -
$25,245,607 $26,188,993
34.64% 41.61%
-92-
CITY OFF AIRHOPE, ALABAMA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
Fiscal Year
2008 2009 2010 2011 ------
$65,580,788 $66,115,436 $63,625,408 $58,343,880
17,555,836 17,070,662 16,030,941 15,207,785
$48,024,952 $49,044,774 $47,594,467 $43,136,095
26.77% 25.82% 25 .20% 26.07%
Legal Debt Margin Calculation for Fiscal Year 2014
Total assessed value $ 303,687,660
Debt limit (20% of total assessed value) 60,737,532
Debt applicable to limit:
General obligation warrants 14,079,616
Notes payable
Total net debt applicable to limit 14,079,616
Legal debt margin $ 46,657,916
2012 2013 2014 2015
$57,884,120 $ 53,765,340 $ 55,043,560 $60,737,532
14,426,741 12,924,616 15,724,616 14,079,616
$43,457,379 $ 40,840,724 $39,318,944 $ 46,657,916
24.92% 24.04% 28.57% 23.18%
Fiscal
Year
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
-93-
CITY OF FAIRHOPE, ALABAMA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per
Capita
Personal Personal School
Population Income Income Enrollment
14,863 $438,948,979 $ 29,533 4,305
15,046 447,693,730 29,755 4,050
15,927 483,400,377 30,351 4,307
16,185 503,418,240 31,104 4,320
16,409 492,959,178 30,042 4,385
16,588 466,189,152 28,104 4,477
16,479 465,548,229 28,251 4,487
16,385 497,890,995 30,387 4,526
16,794 581,996,070 34,655 4,734
18,089 628,773,640 34,760 4,995
Sources: U.S. Census Bureau
Sperling's Best Places Website
State of Alabama Department of Industrial Relations
Eastern Shore Chamber of Commerce
Baldwin County Board of Education
www .schooldigger.com
Unemployment
Rate
2.8%
2.7%
4.1%
8.6%
8.9%
8.7%
7.1%
6.1%
5.8%
5.4%
-94-
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND TEN YEARS AGO
2015
Percentage of
Total City
Employer Employees Rank Employment Employees
Thomas Hospital
Grand Hotel
City of Fairhope
Wal-Mart
Publix
Winn-Dixie
Segers Aero Corporation
Piggly Wiggly
Balloons Everywhere
Print Xcel (formerly Poser Business Forms)
Bruno's
Rock Creek
Food World
Seton Home Health
Sources: Eastern Shore Chamber of Commerce
State Department of Industrial Relations
Additional 2006 employment data is not available.
1,000 1 14.6%
500 2 7.3%
418 3 6.1%
320 4 4.7%
165 5 2.4%
155 7 2.3%
130 6 1.9%
65 8 0.9%
60 9 0.9%
50 10 0.7%
2,863 41.7%
NOTE: Total city employment number represents people residing in COF that are employed
(place of residence) rather than employment for COF businesses
2006: 6,431 2015: 7,450
1,210
650
366
80
60
83
70
63
55
2,637
2006
Percentage of
Total City
Rank Employment
19.4%
2 10.4%
3 5.9%
5 1.3%
7 1.0%
4 1.3%
6 1.1%
8 1.0%
9 0.9%
42.4%
Function
General Government
Public Safety
Police
Fire
Firefighters and Dispatch
Highways and Streets
Public Works
Sanitation
Culture and Recreation
Recreation
Adult Recreation
Gas Department
Electric Department
Water/Waste Water Department
Golf Department
Total
-95-
CITY OF FAIRHOPE, ALABAMA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
Full-time Eguivalent EmJ:!lo~ees as of Se(!tember 30,
2006 2007 2008 2009 2010 2011 2012
58 61 62 54 55 53 53
40 41 42 51 48 48 44
9 9 14 13 13 17 18
27 29 28 37 37 35 36
25 22 20 21 20 20 19
8 8 9 18 18 19 19
1 3 6 10 13 14 14
16 16 19 18 18 18 18
17 20 19 17 17 17 18
24 24 25 23 23 24 26
12 13 13 19 19 16 14
237 246 257 281 281 281 279
Source: City of Fairhope Human Resources Department
2013 2014 2015
48 48 49
48 46 46
17 18 17
39 39 41
17 21 22
24 23 25
9 10 11
17 15 15
17 22 21
24 23 23
15 16 18
275 281 288
-96-
CITY OF FAIRHOPE, ALABAMA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function
Police
Physical arrests 1,255 1,710 1,131 993 833 1,134 603 759 750 1,423
Parking violations 56 13 71 285 201 163 128 22 49 121
Traffic violations 2,589 1,516 996 1,004 1,245 1,419 2,215 1,379 887 633
Fire
Number of calls answered 381 339 432 427 658 801 657 690 853 836
Inspections 463 282 196 382 291 143 101 85 35 161
Highways and streets
Street resurfacing (miles) 2.30 -1.5 -8.1
Potholes repaired 312 312 414 384 400 425 450 1,345 1,480 1,620
Sanitation
Garbage collected (tons/year) 7,200 8,246 7,520 7,782 8,627 9,100 8,711 7,564 8,509 8,236
Trash collected (tons/year) 4,845 5,213 5,915 5,744 7,385 6,487 5,767 5,513 6,292 5,545
Recyclables collected (tons/year) 1,959 2,131 1,989 1,297 1,281 1,495 1,508 1,512 1,714 1,779
Culture and recreation
Golf course rounds @ 9 hole rounds 93,082 92,702 88,475 53,755 62,720 61,283 65,500 62,266 59,261 57,405
Pavilion/park parties 59 74 88 84 80 64 56 58 61 59
Waste water
Average daily sewage treatment 1.6 1.7 1.7 1.7 1.8 1.8 1.8 1.8 1.8 2.0
(millions of gallons)
Sources: Various government departments
-97-
CITY OF FAIRHOPE, ALABAMA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function
Public safety
Police
Stations 1
Patrol units 33 35 36 40 45 45 45 43 37 38
Fire stations 3 3 3 3 3 3 3 3 4
Highways and streets
Streets (miles) 89.7 89.7 98.1 98.1 98.1 98.1 99.1 99.1 103.84 106.54
Culture and recreation
Parks acreage 168 208 208 208 248 248 248 248 356 504
Parks 46 50 50 50 51 51 51 51 52 54
Swimming pools 2 3 3 3 3 3 3 3 3 3
Tennis courts 4 6 6 6 6 6 6 6 6 6
Community center 2 2 1 3 3 3 3 3 3 3
Sewer
Sanitary sewers (miles) 119 120 121 121 125 125 125 126 126 130
Storm sewers (miles) 14.05 15.55 16.75 16.75 16.75 16.75 17.25 17.25 19.17 20.57
Maximum daily treatment capacity 4 4 4 4 4 4 4 4 4 4
(millions of gallons)
Sources: Various government departments
COMPLIANCE SECTION
-99-
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over fmancial reporting
that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not
identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our
audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
January 21, 2016
Fairhope, Alabama
U ~, !f~k. i;~1;fL,
Certified Public Accountants
-101-
Opinion
In our opinion, the City of Fairhope, Alabama complied, in all material respects, with the compliance
requirements referred to above that could have a direct and material effect on each of its major federal
programs for the year ended September 30, 2013.
Internal Control over Compliance
The management of the City is responsible for establishing and maintaining effective internal control over
compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In
planning and performing our compliance audit, we considered The City's internal control over compliance
with requirements that could have a direct and material effect on a major federal program as a basis for
designing our compliance auditing procedures for the purpose of expressing our opinion on compliance and to
test and report on internal control over compliance in accordance with Circular A-133, but not for the purpose
of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal
program on a timely basis. A material weakness in internal control over compliance is a deficiency, or
combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that
material noncompliance with a type of compliance requirement of a federal program will not be prevented, or
detected and corrected on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identity all deficiencies in internal control over compliance
that might be deficiencies, significant deficiencies, or material weaknesses. We did not identity any
deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
ltestricted lise
The purpose of this report is solely to describe the scope of our testing of internal control over financial
reporting and compliance, and the result of that testing, and to provide an opinion on the effectiveness of the
entity's internal control over financial reporting or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's internal control over
financial reporting and compliance. Accordingly, this report is not suitable for any other purpose.
January 15, 2016
Fairhope, Alabama
/U'WWV<-, ~ t~ ~ Kf,-/P L "
Certified Public Accountants
-102-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
CFDA
Identification
Federal Grantor/
Pass-Through Grantor/
Program Title Number Expenditures
Department of Homeland Security
Distaster Grants -Public Assistance (Presidentially Declared
Disasters)
Department of Agriculture
Emergency Watershed Protection Program
Department of Transportation
Airport Improvement Program
NOTE 1 BASIS OF PRESENTATION
97.036 $ 341,546
10.923 295,748
20.106 877,725
$ 1,515,019
The accompanying schedule of expenditures and federal awards includes the federal grant activity of the
City ofF airhope, Alabama and is presented on the modified accrual basis of accounting. The information in
this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States,
Local Governments and Non-Profit Organizations, therefore, some amounts presented in this schedule may
differ from amounts presented in, or used in the presentation of the general purpose financial statements.
-103-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Section 1: Summary of Auditors' Results
Financial Statements
Type of auditors' report issued: unqualified
Internal control over financial reporting:
Are any material weaknesses identified? Yes X No
Are any significant deficiencies identified not considered to be material weaknesses? __ Yes X None Reported
Is any noncompliance material to financial statements noted? Yes X No
Federal Awards
Type of auditors' report issued on compliance for major programs: unqualified
Internal control over major program compliance:
Are any material weaknesses identified?
Are any significant deficiencies identified not considered to be
material weaknesses?
Are any audit findings disclosed that are required to be
reported in accordance with U.S. Office of Management and Budget
Circular A-133, Audits of State, Local Governments, and Non-Profit
Organizations, Section .510(a)?
Identification of major programs:
Yes
Yes
Yes
Environmental Protection Agency
Airport Improvement Program CFDA Number 20.106
X No
X None Reported
X No
-104-
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Section I: Summary of Auditor's Results (continued)
Enter the dollar threshold used to distinguish between Type A
and Type B programs:
Is the auditee qualified as a low risk auditee?
Section II: Financial Statement Findings
There are no such findings in the current year.
Section III: Federal Awards Findings
There are no such findings or questioned costs in the current year.
$300,000
Yes X No