HomeMy WebLinkAbout2020
City of Fairhope, Alabama
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020
CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020
PREPARED BY:
THE OFFICE OF THE FINANCE DIRECTOR
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2020
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal iv
Certificate of Achievement for Excellence in Financial Reporting ix
Organizational Chart x
City Elected and Appointed Officials xi
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 17
Statement of Activities 18
Fund Financial Statements
Governmental Fund Financial Statements
Fund Balance Sheets - Governmental Funds 19
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities 20
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 21
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 22
Proprietary Fund Financial Statements
Statement of Net Position - Proprietary Funds 23
Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 24
Statement of Cash Flows - Proprietary Funds 25
Discretely Presented Component Units
Combining Statement of Net Position - Discretely Presented
Component Units 26
Combining Statement of Activities - Discretely Presented
Component Units 27
Notes to the Financial Statements 28
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2020
TABLE OF CONTENTS (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION
Schedules of Employer Contributions 69
Schedules of Changes in Net Pension Liability 71
Schedules of Changes in Total OPEB Liability 73
Budgetary Comparison Schedule - General Fund 74
Notes to Required Supplementary Information 75
OTHER SUPPLEMENTARY INFORMATION
Combining Balance Sheets - Nonmajor Governmental Funds 76
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Nonmajor Governmental Funds 77
Fund Balance Sheet - Fairhope Public Library Board 78
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities - Fairhope Public Library Board 79
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fairhope Public Library Board 80
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Fairhope Public Library Board 81
Statement of Net Position - Fairhope Airport Authority 82
Statement of Revenues, Expenses and Changes in Net Position -
Fairhope Airport Authority 83
Statement of Cash Flows - Fairhope Airport Authority 84
Schedule of Capital Projects Expenditures 85
Schedule of Information Required by Bond Indentures 86
Summary of Deposits, Withdrawals and Balances of Selected Trust Accounts as
Required Under Certain Trust Indentures 87
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CITY OF FAIRHOPE, ALABAMA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2020
TABLE OF CONTENTS (continued)
Page
STATISTICAL SECTION
Net Position by Component 88
Changes in Net Position 89
Governmental Activities Tax Revenues by Source 91
Fund Balances of Governmental Funds 92
Changes in Fund Balances of Governmental Funds 93
Assessed Value and Estimated Actual Value of Taxable Property 94
Property Tax Rates - Direct and Overlapping Governments 95
Principal Property Taxpayers 96
Property Tax Levies and Collections 97
Direct and Overlapping Sales Tax Rates 98
Principal Sales Taxpayers 99
Ratios of Outstanding Debt by Type 100
Ratios of General Bonded Debt Outstanding 101
Computation of Overlapping Debt 102
Legal Debt Margin Information 103
Demographic and Economic Statistics 104
Principal Employers 105
Full-time Equivalent City Government Employees by Function 106
Operating Indicators by Function 107
Capital Asset Statistics by Function 108
INTRODUCTORY SECTION
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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: Medical Clinic Board East, the
Industrial Development Board, Downtown Redevelopment Authority, and the Parking
Authority. Additional information on the reporting entity can be found in the notes to the
financial statements (see Note 1.A. beginning on page 28 of this report).
Budgetary Control
The annual budget serves as the foundation for the City’s financial planning and control.
Annually, the Mayor prepares a proposed budget and submits the proposal to the City Council
for consideration. 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 the
Council prior to starting the requisition process. Except for capital project appropriations that
generally span multiple years, budgets for all funds lapse at the end of each fiscal year.
Local Economy
As one of the fastest growing City’s by population in Baldwin County and in the State of
Alabama, the City continued to show economic growth during the year with unprecedented
residential and commercial development. 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 growing health services and higher education.
The City continues to benefit from corporate growth in both Baldwin and Mobile counties.
Unprecedented residential development has brought young professional families and related
retirees to our community because of our proximity to good paying jobs. Our excellent school
system and our growing medical facilities make the City a desirable place to live for both these
demographics.
Median household income within the City is significantly higher than for the State as a whole.
According to the U.S. Census Bureau, as of 2019, the City's median family income was $75,197
(up from $66,074 in 2017), while the State median family income was $50,536 (up from
$46,472 in 2017). According to the U.S. Census Bureau, the City's owner-occupied housing
unit’s rate was 78.1%.
Fairhope’s economy is heavily sustained by local businesses and entrepreneurship in industries
such as aerospace, agricultural technology, medical equipment information and financial
services. Over 62% of all businesses in the City have between 1-4 employees. To further
support the health of these businesses and the creatives who lead them, the City launched an
entrepreneurship program with the University of Alabama and the Baldwin County Economic
Development Authority called Hatch. This initiative provides resident technology entrepreneurs
with expertise and coaching, as well as, planning and funding advice for their companies and
ideas.
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For the third straight year, EMSI ranked Baldwin County as “Alabama’s Leader for Workforce
Talent Attraction.” As a nearby neighbor of Mobile County, the City gains strong economic
stability from the companies that continue to locate and expand operations with Airbus FAL,
Austal USA, Walmart Distribution Center, Amazon and Port of Mobile facilities.
Regional aviation and aerospace employment opportunities are numerous with Continental
Motors, Inc. and Segers Aerospace located in Fairhope and eight additional companies located
in Mobile. Training opportunities in aerospace and aviation are now available at The Academy
located at the Fairhope Airport. This $2.5 million facility is a partnership between Coastal
Alabama Community College, Enterprise State, the Fairhope Airport Authority and the Baldwin
County Board of Education that will open the door for preparatory and college students to
pursue aerospace and aviation careers. Adult and high school courses are offered in A&P
mechanics, welding, and industrial maintenance at the Academy to prepare students for careers
in the industry.
Fairhope has a strong tourism industry that continues to grow. In March 2019, the City was
featured on the cover of the New York Times Travel section as well as the South’s Best for the
cover of Southern Living Magazine. In November 2019, TripAdvisor named City of Fairhope
as one of the 12 Charming Small Towns in The South with Warm Hospitality & Abundant
Natural Beauty Tourism. Tourism has also been boosted by a newly growing film industry in
the City. In spring a feature film “The Map of Tiny Perfect Things” was shot in the City and
was released early 2021 by Amazon Studios. In spring of 2019, another feature film “Our
Friend” was also shot in the City and was released in January of 2021. Filming boosts the
economy by creating local jobs, providing meals to film crews and actors from local restaurants,
collecting lodging taxes for properties rented in association with these productions, and
increased sales tax revenues as a result of local purchases.
In response to the COVID-19 pandemic, the management team used the Pandemic Continuity of
Operations Plan (COOP). The Mayor instructed directors to engage in the active reduction of
non-essential operational expenses, freezing capital equipment purchases and new personnel
positions, and deferring capital projects not currently under construction or funded by grants or
other funding sources. Working with departmental directors, the City identified what was
believed to be the worst-case scenario of potential revenue losses as well as a significant
amount of non-essential expenses that could be reduced or delayed.
Due to its strong and healthy local economy, the City has maintained a credit rating of AA+
from Standard & Poor’s since 2014. The rating 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.
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 $6,013,275 which represents 18.8% of total
general fund revenues. The Council has committed, by City Ordinance, $7 million in the
General Fund for use in times of emergency. This committed amount is periodically reviewed to
ensure the City maintains the financial resources to endure periods of economic stress.
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The Mayor, City Council, and City department heads continue to strive to adhere to the City's
established goals for continuing growth and maintaining the quality of life and the highest level
of governmental services to all residents.
Due to a citywide focus on resilience practices, Fairhope was chosen to host the National
Oceanic and Atmospheric Administration’s (NOAA) Mississippi-Alabama Sea Grant
Community of Practice Conference in April 2019. This conference draws attendees from Texas,
Louisiana, Mississippi, Alabama, and Florida. Resilience efforts include work that will protect
the waterfront from erosion, keep toxins out of streams and Mobile Bay, reduce sedimentation
and stimulate habitat restoration and protection. In 2019, the City began a waterfront project
along the shoreline and bluffs at the Municipal Pier funded by a $6.2 million Restore Act award.
This funding was applied for in 2017 and will be overseen by the Department of Treasury.
Additional applications were awarded for a new Comprehensive Land Use plan that will focus
on protecting the environment and enhancing the quality of life for citizens as the City
continues to rapidly grow. Two of these projects are focused on preventing sewer overflows and
upgrading the sewer system and capacity. These projects will be funded at $650,000 (land-use),
and $10 million (sewer).
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.
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 judgements. Management believes the City’s internal accounting controls
adequately safeguard assets and provide reasonable assurance of proper recording of financial
transactions and the City will continue to implement policies and procedures that improve and
strengthen internal controls as needed.
Awards
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financia1 Reporting to the City for its
comprehensive annual financial report for the fiscal year ended September 30, 2019. 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
accounting principles generally accepted in the United States of America and applicable legal
requirements. The Certificate of Achievement is an award presented annually based on a
submitted financial document for each fiscal year. We believe that this presentation of the
City’s current comprehensive annual financial report continues to meet the Certificate of
Achievement Program's requirements and are submitting it to the GFOA for consideration of a
Certificate of Achievement for this report.
Acknowledgements
The preparation of this report would not have been possible without the expertise and
commitment of the staff of the Finance and Treasury Departments, as well as all City
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CITY OF FAIRHOPE, ALABAMA
ORGANIZATIONAL CHART
SEPTEMBER 30, 2020
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CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2020
Karin Wilson Mayor
Kevin Boone Councilmember
Jay Robinson Councilmember
Jack Burrell, CMO Councilmember
Robert Brown Councilmember
Jimmy Conyers Councilmember
Lisa Hanks City Clerk
Kimberly Creech City Treasurer
Stephanie Hollinghead Police Chief
Marcus McDowell City Attorney
Honorable Haymes Snedeker City Judge
The elected and appointed officials were those in office at September 30, 2020.
FINANCIAL SECTION
Independent Auditors’ Report
Honorable Mayor and Members of
The City Council
City of Fairhope, Alabama
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
the discretely presented component units, each major fund, and the aggregate remaining fund information of the City
of Fairhope, Alabama (the City) as of and for the year ended September 30, 2020, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements as listed in the table of
contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable
to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
financial statement presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, the discretely presented component
units, each major fund, and the aggregate remaining fund information of the City as of September 30, 2020, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
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Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, on pages 3 through 16, the schedules of employer contributions, schedules of changes in
net pension liability, schedules of changes in total OPEB liability, and budgetary comparison information on
pages 69 through 75 be presented to supplement the basic financial statements. Such information, although not a
part of the basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary 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 knowledge 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 financial statements. The introductory section, combining and individual nonmajor
fund financial statements, other supplementary information, and statistical section are presented for purposes of
additional analysis and are not a required part of the basic financial statements.
The other supplementary information, on pages 76 through 87, is the responsibility of management and was
derived from and relate 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
financial 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 standards
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 and statistical sections have not been subjected to the auditing procedures applied in the audit of
the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 5, 2021, 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
solely 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 the effectiveness of the City’s 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.
Montgomery, Alabama
March 5, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Our discussion and analysis of the City of Fairhope, Alabama’s (the City) financial performance provides a
narrative overview of the City’s financial activities for the fiscal year ended September 30, 2020. The intent
of this Management’s Discussion and Analysis (MD&A) is to review the City’s financial performance as a
whole. Please read it in conjunction with the City’s financial reports, which follow this section and the
additional information furnished in the letter of transmittal, which can be found in the introductory section
of this comprehensive annual financial report (CAFR).
FINANCIAL HIGHLIGHTS
Assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of
resources at the close of the fiscal year by $185,067,814, a current year increase in net position of
$15,280,780 (page 17).
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
$18,917,341, a decrease of $221,652 from the prior year. The General Fund closed with a fund
balance of $13,883,906, an increase of $640,813. The reason for the increase is from the payoff
of the remaining general obligation warrants in the prior year freeing up cash in the current year.
The Capital Projects Fund had a decrease in fund balance of $1,080,423 after capital expenditures
of $2,213,742 and transfers from the General and Impact Fee Funds of $524,564 (page 21). A
detailed explanation of this decrease can be viewed on page 8 of this report.
Citywide, governmental, and business-type funds cash (including restricted cash) totaled
$61,643,976, an increase of $15,835,689 from the previous year. Governmental Funds cash totaled
$18,907,253 at September 30, 2020 (page 17). This is an increase of $1,262,632 from the prior
year. In addition, cash in the Capital Projects Fund decreased by $1,272,384 due to City-wide
projects including street and sidewalk improvements, the Marina seawall, and drainage
improvements. In the other Governmental Funds, the increase of $385,773 was primarily from the
creation of the Municipal Capital Improvement Fund as well as the Rebuild Gas Tax Fund. Cash
for both funds totaled $900,573. However, Impact Fee cash decreased $563,497 due to a decline in
commercial development. The business-type funds cash totaled $42,736,723 at year end (page 23),
an increase of $14,573,057 from last year. This is a result of the current year change in net position
of $11,527,455. This increase is due to the issuance of the Series 2020 Utility Revenue Warrants in
the amount of $11,565,000. The purpose of the Series 2020 Utility Revenue Warrants was to
refund the Series 2011 Utility Revenue Warrants. As of September 30, 2020, the proceeds of the
Series 2020 Utility Revenue Warrants were held in escrow and reported as restricted cash on the
Statement of Net Position. The amounts held in escrow were used to refund the Series 2011 Utility
Revenue Warrants on November 2, 2020.
Revenues in the governmental funds increased approximately $2,700,000 from the previous year.
Expenses decreased approximately $800,000. During fiscal 2020, revenues from the sales tax
totaled $9,930,150, an increase of approximately $660,000 over the previous year. At year end, the
General Fund’s sales tax reserve totaled $7 million with an additional $6 million in unreserved.
The combined governmental funds expended $8,425,744 for capital projects and purchases,
including $781,666 for special projects such as construction of the marina seawall, drainage
improvements, and electrical upgrades to the municipal pier. Transportation and pedestrian
infrastructure including upgrades to streets and sidewalks totaled $1,432,076. $240,420 was for a
working waterfront phase I project and $5,971,582 was for vehicles, equipment, and other
infrastructure additions.
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The business-type activities, (Electric, Gas, Water and Waste Water), ended the year with income
before transfers of $12,263,363, compared to $10,168,593 for fiscal 2019. Revenues increased
approximately $262,000. Costs of energy and operating expenses increased $749,000. The
utilities made net transfers to the General Fund of $804,101 from income, which is $833,899
more than transfers last year. The business-type activities recorded an increase in net position,
after transfers, of $11,527,455 (page 24). Details pertaining to these increases can be seen on
page 9 of this report.
The City’s business-type activities made additions to property, plant and equipment of $10,993,336.
The majority of this increase was due to utility system improvements totaling $10 million. Funding
for these additions was prior debt issues, current income and money set aside for this purpose
(pages 25 and 42).
The City’s long-term debt increased by $11,695,000 during fiscal year 2020, yielding total
outstanding debt of approximately $26,074,000 compared to the previous year’s $14,379,000. This
increase was due primarily to the issuance of Utility Revenue Warrants of $11,565,000 in
September 2020 for the purpose of refunding the 2011 Utility Revenue Warrants. Business-type
activities total debt was $23,870,000 (pages 43 and 45).
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements are comprised of four components: 1) government-wide financial
statements, 2) fund financial statements, 3) notes to the financial 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 financial statements tell how these services were financed in the short
term as well as what remains for future spending. Fund financial statements also report the City’s operations
in more detail than the government-wide statements by providing information about the City’s most
significant funds. The notes to the financial statements provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements start on page 28 of this report.
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 74 of
this report.
Government-Wide Financial Statements
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 method 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.
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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 deferred outflows of resources and liabilities and deferred
inflows of resources, is one tool to measure the City’s financial health, or financial condition. Over time,
increases or decreases in the City’s net position are indicators of whether its financial health is improving or
deteriorating. Consideration of other non-financial factors, however, such as changes in the City’s revenue
sources and the condition of the City’s infrastructure, utility systems and roads, is also necessary for a valid
assessment of the overall health of the City.
In the Statement of Net 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
finance most of these activities. Funds for Capital Projects, Debt Service, Gas Tax, and Impact
Fees are also reported with Governmental activities.
Business-type activities — The City charges a fee to customers to help it cover all or most of the
cost of certain services provided. Financial information for the Electric Fund, Natural Gas Fund
and the Water and Waste Water Fund is reported in this section.
Component units — The City has two entities classified as component units, the Fairhope Public
Library and the Airport Authority. Although legally separate and managed by City appointed
boards, the Library and Airport Authority receive significant support from the City and the City is
responsible for any deficits.
Net 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
$185,067,814 at the close of the most recent fiscal year, as shown in Figure 1, page 12 as well as page 17 of
this report. This is an increase of $15,280,780.
The largest portion of the City’s net position, approximately 86% ($159,380,410), 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% ($15,426,457), represents resources that
are subject to restrictions as to how they may be used. Funds restricted for debt service were $14,240,799
and $318,704 for road maintenance and construction and $866,954 for capital improvements. Restricted
funds increased approximately $12,000,000 from the previous year.
The unrestricted net position, approximately 6% ($10,260,947), may be used to meet the City’s ongoing
obligations to citizens and creditors. Unrestricted net position decreased $8,769,262 during fiscal 2020
(pages 12 and 17).
Under GASB Statement 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other
Than Pensions, the City’s total OPEB liability at year end was $9,600,936. This amount is reported on the
Statement of Net Position, page 17, as Postemployment Benefits Other Than Pensions and in Note 13 on
page 59 of this report.
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Under GASB 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources,
and Net Position, a service concession arrangement exists between the Airport Authority and the Baldwin
County Board of Education (BCBOE) and three private companies. See Note 16, beginning on page 63 of
this report, for detailed explanation of these agreements. At year end, the balance of this deferred inflow of
resources is $5,678,460. At year end, deferred outflows of resources included deferred charge on refunding
of $77,447, pension related items of $2,962,017, and OPEB related items of $1,329,737. Deferred inflows
of resources at year end included pension related items of $986,077 and OPEB related items of $3,416,751.
These amounts are reported on the Statement of Net Position on page 17, Note 10 beginning on page 48 of
this report, and Note 13 beginning on page 59. Figure 2 on page 13 of this report is a condensed Statement
of Activities for the City as a whole for all activity types. This condensed statement includes comparative
information from the prior year for the governmental and business-type activities, as well as the Library and
Airport Authority component units.
Fund Financial Statements
The fund financial statements provide detailed information about the most significant funds, not the City as
a whole. Some funds are required to be established by State Law and by bond covenants. However, the City
Council established many other funds to help control and manage money for particular purposes or to show
that it is meeting legal responsibilities for using certain taxes, grants, and other money.
The City’s two kinds of funds, governmental and proprietary, use different accounting approaches.
Governmental funds — Most of the City’s basic services are reported in governmental funds, which
focus on how money flows into and out of those funds and the balances left at year end that are
available for spending. These funds are reported using an accounting method called modified
accrual accounting, which measures cash and all other financial assets that can be readily converted
to cash. The governmental fund statements provide a detailed short-term view of the City’s general
government operations and the basic services it provides. Government fund information helps
determine whether there are more or fewer resources that can be spent in the near future to finance
the City’s programs.
Proprietary funds — The City maintains two (2) types of proprietary funds: enterprise funds and an
internal service fund. The City’s enterprise funds are the same as the business-type activities
reported in the government-wide statements but provide more detail and additional information,
such as cash flows. The City’s enterprise funds include the Electric Fund, Natural Gas Fund and
Water and Wastewater Fund, which are used to account for the operations of the utilities. The
internal service fund was created in fiscal year 2020 and is an accounting device used to accumulate
and allocate costs internally among the City’s various functions. The City uses an internal service
fund to account for its employee’ medical insurance. The internal service fund is presented in the
fund financial statements.
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.
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.
- 7 -
Figure 3 on page 14 of this report, presents summaries of the governmental funds (General Fund, Capital
Projects, Impact Fees, Gas Tax, Rebuild Gas Tax, Municipal Capital Improvements, Federal Grants,
Municipal Court, and Debt Service) revenues and expenditures, by function, for the fiscal year ended
September 30, 2020, and the amounts of increases and decreases in relation to prior year revenues and
expenditures.
Governmental activities revenues increased $2,664,700 from the previous fiscal year. Expenditures of
Governmental funds decreased $792,677 for the same period. The following significant events, related to
revenues and expense, occurred during fiscal 2020 (the figures are rounded):
Related to revenue:
Intergovernmental revenue increased $1,400,000 due mainly to an increase in FEMA grant
revenues, as well as federal and state grants received.
Local taxes increased $946,000 due mainly to an increase of $660,000 in sales tax collections and
$407,000 in property taxes.
Other revenue increased $559,000 due mainly to a $263,000 donation to the City and an increase in
sale of fixed assets and surplus items of $208,000.
Licenses and permits decreased by $256,000. This was due to a decline in commercial building
activities.
Related to expenditures:
Capital outlay expenditures were approximately $8,426,000, up $679,000 from the prior year.
Major capital expenditures for fiscal 2020 included $2,214,000 for special projects such as
construction of the marina seawall, drainage improvements, electrical upgrades to the municipal
pier and approximately $1,400,000 for transportation and pedestrian infrastructure including
upgrades to streets and sidewalks. $5,972,000 was for vehicles, equipment and other infrastructure
additions.
Other expenditures increased $694,000 due to preparation and recovery supplies as a result of
Hurricane Sally that affected the area on September 16, 2020.
Expenditures in General Administrative increased $691,000 from the prior year. Salaries increased
$171,000 among the General Administrative department due to two new positions as well as a full
year’s salary for two other employees that were hired during the latter part of 2019. Also, property
was purchased for approximately $513,000.
Expenditures in Public Works and Public Safety increased $453,000 and $298,000 from the prior
year, respectively. This was a direct result of an increase in personnel costs, $447,000 for Public
Works and $184,000 for Public Safety, due to the additional hours worked as a result of Hurricane
Sally.
Debt Service decreased $3,100,000 from the prior year due to the City’s payoff of General Fund
debt in the prior year.
Cultural and Recreational expenditures decreased $455,000 from the prior year due primarily to a
three-year $350,000 charitable contribution in Economic and Community Development that ended
in fiscal year 2019. This contribution was an agreement between the City and the Baldwin County
Board of Education for classroom upgrades and improvements for each of the five schools in
Fairhope’s feeder pattern.
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 financial
condition when compared with the prior year. An indicator of the City’s financial health is whether the fund
balances of the governmental and net position of the proprietary funds increased or decreased as a result of
operating activities.
- 8 -
Fund balances for all governmental funds totaled $18,917,341, a decrease of $221,652. This follows a
decrease in fund balances of $3,510,200 the previous year. Approximately 32% ($6,012,115) constitutes
unassigned fund balance, which is available for spending at the City’s discretion. Approximately 1%
($136,037) is not in spendable format. Approximately 6% is restricted for road maintenance and capital
improvements ($1,135,047). Approximately 61% ($11,634,142) is committed for items such as Council
approved emergencies ($7,000,000), construction and road maintenance ($3,036,724), debt service
($699,594) and capital projects ($897,824). The General Fund had a fund balance of $13,883,906, an
increase of $640,813. The Capital Projects Fund had a decrease in fund balance of $1,080,423 after
$628,455 for special projects such as construction of the marina seawall, drainage improvements, and
electrical upgrades to the municipal pier. $1,432,076 was for transportation and pedestrian infrastructure
including upgrades to streets and sidewalks. Additional capital outlay totaled $153,211 and transfers from
the General and Impact Fee Funds were $524,564.
Debt Service and the Other Governmental Funds had fund balances of $4,170,611 at year end, including
restrictions for road maintenance and capital improvements of $1,135,047, an increase of $907,955 and
committed funds reported in special revenue fund (Gas Tax and Impact Fees) of $3,036,724, a decrease of
$689,997 (see pages 19 and 21). Increases and decreases in revenues and expenses are discussed in the
Governmental Funds section on pages 6 and 7 of this report.
The governmental activities’ net position at year end was $99,604,152, an increase of $3,753,325. The
Electric, Gas, and Water and Waste Water Funds had a net position of $85,463,662 at year end, an increase
of $11,527,455 (see pages 18 and 24).
Capital Projects decrease and Other Governmental Funds increase 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 $2,330,270. Expenditures for the
General Fund were up $5,627,873 from the prior year. Transfers from the proprietary funds (Electric, Gas,
and Water and Waste Water Funds) were $1,917,795 for the current year, an increase of $279,795 from the
prior year. After transfers, the fund balance of the General Fund increased by $640,813 during fiscal 2020.
The most significant revenue increase of $1,380,016 was from federal and state grant revenue due to the
completion of large projects throughout the City. Local taxes increased $946,413 from sales and property
taxes. The most significant increase related to General Fund expenditures was in capital outlay. This
increase totaled $3,531,098 and was a result of a land purchase. Other expenditures increased $769,921 and
were primarily from the purchase of supplies due to Hurricane Sally. General government expenditures
increased $691,000 from the prior year due to salary increases and purchased property. Due to additional
hours worked as a result of the hurricane, Public Works personnel costs increased $452,643 from the
previous year. Some of these increases are discussed on pages 6 and 7 of this report.
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 increased by $261,899 from the
prior fiscal year. This represented a .6% increase. Operating expenses increased by $749,001, a 2% increase.
The increase in revenues was due mainly to water and natural gas sales which was a result of colder weather
as well as the addition of water customers. The increase in operating expenses is primarily due to an
increase in salaries which comprises 96% of the total increase. 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.
Income for the enterprise funds, before transfers to the General Fund, was $12,263,363, an increase of
$2,094,770. Transfers to the General Fund were $1,917,795, or 16% of income. For fiscal 2020 the
transfers to the General Fund were $1,638,000, or 16% of income.
- 9 -
General Fund Budgetary Highlights
Although there is no legal requirement to establish a budget, the City prepares an annual budget. The
preparation process involves input from the Mayor, City managers, and the City Council budget committee.
The procedure for preparing the annual budget is listed in Note 2, pages 37 and 38 of this report.
The budgetary comparison schedule for the General Fund is included in the Required Supplementary
Information section on page 74 of this report.
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.
For the year ended September 30, 2020, actual revenues were more than budgeted revenues by $1,651,000.
The primary reasons for the variance are as follows:
Local taxes exceeded budget by $790,000 or 5% due to greater than anticipated revenue from
sales tax.
Licenses and permits revenue was less than budget by $267,000 or 6%. $278,000 was from a
decrease in building permits and inspection fees due to the decline in commercial building
activity.
Fines and forfeitures were less than budget by $76,000 or 28% due to a decrease in tickets issued.
Intergovernmental revenue exceeded budgeted revenue by $970,000 or 231%. This was due to
unbudgeted FEMA and federal grant revenues totaling $752,000. Unbudgeted financial institute
excise tax revenue from the State of Alabama of $223,000 also contributed to the excess revenue.
Recreation department as well as golf course revenue fell below budget $213,000 or 47% and
$96,000 or 9% respectively due to the closing of facilities as a result of COVID-19.
Other revenue exceeded budgeted revenue by $536,000 or 78%. This increase was a result of
donations received by the City totaling $316,000, greater than anticipated fuel sales at the Marina
in the amount of $151,000 and sale of fixed assets of $59,000.
For the year ended September 30, 2020, actual expenditures were more than budgeted expenditures by
$3,276,000. The primary reasons for the variance are as follows:
General department expenditures were less than budget by $184,000 or 4% due to decreases in
training and travel, professional services, and maintenance.
Expenditures for the Planning department were greater than budget by $94,000 or 12% due to the
reallocation of legal fees that in past years had been expensed out of the General Fund.
Building department expenditures were less than budget by $110,000 or 12% due primarily to the
decrease in professional services as well as building fees. Professional services budgeted did not
materialize until fiscal year 2021 and building fees decrease was due to a decline in commercial
building activity as a result of COVID-19.
Police expenditures were less than budgeted expenditures by $324,000 or 5%. This was due
primarily to a decrease in employee costs as a result of several vacancies throughout the year.
Fire department expenditures were less than budget by $59,000 or 9% due to a decrease in
equipment and vehicle repair and general supplies.
Street department expenditures fell below budget by $249,000 or 7% due to a decrease in salaries.
Economic and Community Development expenditures were less than budget by $147,000 or 17%
due primarily to the cancellation of several community events as a result of COVID-19.
- 10 -
Expenditures in both Golf and Recreation fell below budget by $142,000 or 9% and $101,000 or
4% respectively. This decrease was due to less than anticipated employee costs from closing City
facilities as a result of COVID-19.
Marina expenditures were below budget by $63,000 or 12% due to decreases in general supplies
and maintenance.
Other expenditures were $769,000 or 831% more than budget due to the purchase of supplies for
Hurricane Sally.
Principal debt service payments exceeded budget by $300,000 or 100% due to a note payable
entered into with the Baldwin County Board of Education for the purchase of land.
Capital outlay exceeded budget by $3,554,000 or 147% due primarily to a large land purchase.
Capital Assets
As of September 30, 2020, the City’s governmental activities had $99,853,435 invested in capital assets, net
of accumulated depreciation. This is an increase of $3,869,240 from the prior year. The business-type
activities had $74,027,037 invested in capital assets, net of accumulated depreciation. This is an increase of
$7,939,377 from the prior year. (see Note 6, Capital Assets, pages 41 and 42).
The City’s governmental activities capital assets, at cost, were $165,875,955 at September 30, 2020, an
increase of $7,795,937 from the prior year. The business-type activities, the Electric, Gas, and Water and
Waste Water Funds, had capital assets, at cost, of $128,189,527, an increase of $10,785,650. Figure 4 on
page 15 of this report summarizes the current year changes in capital assets by type, at cost, and changes in
fixed assets during the year.
Debt Administration
As of September 30, 2020, the City had long-term debt of $26,073,573 (excluding premiums and discounts),
including bonds and warrants payable, notes payable, and obligations under capital leases. This is a net
increase, Citywide, of $11,694,633 from the prior year. Governmental activities’ increase in long-term debt
was $1,014,633. Business-type activities’ increase in long-term debt was $8,329,442. This increase was
due to the issuance of Utility Revenue Warrants in September 2020 for the purpose of refunding the 2011
Utility Revenue Warrants.
Figure 5 on page 16 of this report summarizes the City’s long-term debt, including compensated absences.
Additional information on the City’s long-term debt can be found in Note 7 beginning on page 43 of this
report.
Economic Factors and Next Year’s Budgets and Rates
Due to the uncertainty of the global pandemic that has affected the economy, the 2020-2021 budget is
conservatively written with most of Governmental activities’ revenues and expenditures remaining flat. The
business-type activities’ budget reflects a moderate rise in both revenues and expenses signifying growth in
utility operations amidst the pandemic. The following are factors considered in next year’s budget.
Property tax revenue is expected to increase 7% while a 2% rise from administrative services is
projected.
Revenues in Civic and Adult Recreation are projected to decrease by 15% due to the reduction in
rentals and events.
Marina revenues are expected to decrease by 26% due to a decline in occupancy and fuel sales.
- 11 -
Building and permitting revenue is projected to decrease by 4% due to the anticipation of fewer
permitting projects.
In the business-type activities, Water and Waste Water and Electric revenues are expected to
increase 11% and 6%, respectively.
On the expenditure side, Police and Fire are expected to increase due to the rise in employee costs
as well as large capital purchases in Fire. Also expected to increase due to travel and training are
Revenue, Planning, Building and Recreation. Computer expenditures are projected to increase
significantly due to the ever-changing technology needs of the City. Although operating
expenditures across all General Fund departments are expected to increase, overall expenditures are
projected to decrease 3%. This is due to the unexpected land purchase made by the City during the
year.
In the utilities, costs of energy and operating expenses in the utilities are projected to increase by
approximately 11% from actual amounts for 2021.
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, at 161 N. Section Street, Fairhope, Alabama, (251) 928-2136.
- 12 - CITY OF FAIRHOPE, ALABAMA CONDENSED STATEMENT OF NET POSITION SEPTEMBER 30, 2020 Figure 1 9/30/2020 9/30/2019 9/30/2020 9/30/2019 9/30/20209/30/2019 9/30/2020 9/30/2019 9/30/2020 9/30/2019Current and Other Assets 21,741,060$ 20,261,240$ 47,210,493$ 31,243,886$ 68,951,553$ 51,505,126$ 775,535$ 639,931$ 432,757$ 666,113$ Capital Assets, Net 99,853,435 95,984,195 74,027,037 66,087,660 173,880,472 162,071,855 45,988 70,933 35,258,999 34,992,621 Total Assets121,594,495 116,245,435 121,237,530 97,331,546 242,832,025 213,576,981 821,523 710,864 35,691,756 35,658,734 Deferred loss on advance refunding - - 77,447 84,487 77,447 84,487 - - - - Pension related items 2,313,103 1,766,102 648,914 473,420 2,962,017 2,239,522 102,592 112,195 - - OPEB related items 1,006,801 441,273 322,936 109,642 1,329,737 550,915 - - - - Total Deferred Outflows of Resources3,319,904 2,207,375 1,049,297 667,549 4,369,201 2,874,924 102,592 112,195 - - Total Assets and Deferred Outflows of Resources124,914,399$ 118,452,810$ 122,286,827$ 97,999,095$ 247,201,226$ 216,451,905$ 924,115$ 823,059$ 35,691,756$ 35,658,734$ Long-Term Liabilities 19,416,826$ 16,060,657$ 29,536,219$ 17,626,701$ 48,953,045$ 33,687,358$ -$ -$ 6,695,629$ 6,895,629$ Other Liabilities 2,464,040 1,105,094 6,313,499 5,073,811 8,777,539 6,178,905 453,656 414,183 90,023 437,285 Total Liabilities21,880,866 17,165,751 35,849,718 22,700,512 57,730,584 39,866,263 453,656 414,183 6,785,652 7,332,914 Pension related items 842,412 1,910,664 143,665 486,392 986,077 2,397,056 30,093 60,519 - - OPEB related items 2,586,969 3,525,568 829,782 875,984 3,416,751 4,401,552 - - - - Service concession arrangement revenue applicable in future years - - - - - - - - 5,678,460 5,442,075 Total Deferred Inflows of Resources3,429,381 5,436,232 973,447 1,362,376 4,402,828 6,798,608 30,093 60,519 5,678,460 5,442,075 Net Position: Net investment in capital assets 97,649,862 94,795,255 61,730,548 53,004,032 159,380,410 147,799,287 45,988 70,933 28,563,370 28,096,992 Restricted 1,135,047 227,092 14,291,410 2,730,446 15,426,457 2,957,538 365,076 303,790 - - 819,243 828,480 9,441,704 18,201,729 10,260,947 19,030,209 29,302 (26,366) (5,335,726) (5,213,247) Total Net Position 99,604,152 95,850,827 85,463,662 73,936,207 185,067,814 169,787,034 440,366 348,357 23,227,644 22,883,745Total Liabilities and Net Position124,914,399$ 118,452,810$ 122,286,827$ 97,999,095$ 247,201,226$ 216,451,905$ 924,115$ 823,059$ 35,691,756$ 35,658,734$ UnrestrictedGOVERNMENTAL BUSINESS - TYPE TOTAL PRIMARY COMPONENT UNITS ACTIVITIES ACTIVITIES GOVERNMENT LIBRARY AIRPORT AUTHORITY
- 13 - CITY OF FAIRHOPE, ALABAMA CONDENSED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2020 Figure 2 AIRPORT AUTHORITY9/30/2020 9/30/2019 9/30/2020 9/30/2019 9/30/20209/30/2019 9/30/2020 9/30/2019 9/30/2020 9/30/2019Program Revenues Charges for Services 12,075,196$ 12,018,370$ 41,352,145$ 41,090,246$ 53,427,341$ 53,108,616$ 163,701$ 130,471$ 238,957$ 237,443$ Operating Grants and Contributions 542,126 127,978 24,299 - 566,425 127,978 883,929 844,768 533,614 518,614 Capital Grants and Contributions 2,846,663 1,777,375 2,304,665 253,028 5,151,328 2,030,403 - - 381,948 3,444,085 General Revenues Taxes 17,945,395 17,062,385 - - 17,945,395 17,062,385 - - - - Investment Earnings 274,246 126,115 519,544 136,797 793,790 262,912 - - 2,848 790 Other 341,897 292,339 37,608 16,167 379,505 308,506 - - 3,500 - Total Revenues 34,025,523 31,404,562 44,238,261 41,496,238 78,263,784 72,900,800 1,047,630 975,239 1,160,867 4,200,932 Expenses General Government 7,278,497 5,859,684 - - 7,278,497 5,859,684 - - - - Public Safety7,125,224 6,747,159 - - 7,125,224 6,747,159 - - - - Public Works 8,763,332 8,273,373 - - 8,763,332 8,273,373 - - - - Cultural and Recreational 6,491,954 6,921,431 - - 6,491,954 6,921,431 - - - - Airport Authority320,000 320,000 - - 320,000 320,000 - - - - Public Library Board 1,069,323 1,029,124 - - 1,069,323 1,029,124 - - - - Interest on Long-term Debt27,969 71,726 - - 27,969 71,726 - - - - Electric - - 17,022,979 17,063,612 17,022,979 17,063,612 - - - - Natural Gas - - 5,670,355 5,777,998 5,670,355 5,777,998 - - - - Water and Waste Water - - 9,213,371 8,486,035 9,213,371 8,486,035 - - - - Airport Authority- - - - - - - - 816,968 796,354 Fairhope Public Library- - - - - - 955,621 924,389 - - Total Expenses 31,076,299 29,222,497 31,906,705 31,327,645 62,983,004 60,550,142 955,621 924,389 816,968 796,354 Change in Net Position Before Transfers 2,949,224 2,182,065 12,331,556 10,168,593 15,280,780 12,350,658 92,009 50,850 343,899 3,404,578 Transfers 804,101 1,778,690 (804,101) (1,778,690) - - - - - - Change in Net Position 3,753,325 3,960,755 11,527,455 8,389,903 15,280,780 12,350,658 92,009 50,850 343,899 3,404,578 Net Position, Beginning 95,850,827 91,890,072 73,936,207 65,546,304 169,787,034 157,436,376 348,357 297,507 22,883,745 19,479,167 Net Position, Ending 99,604,152$ 95,850,827$ 85,463,662$ 73,936,207$ 185,067,814$ 169,787,034$ 440,366$ 348,357$ 23,227,644$ 22,883,745$ ACTIVITIES ACTIVITIES GOVERNMENT LIBRARYGOVERNMENTAL BUSINESS-TYPE TOTAL PRIMARY COMPONENT UNITS
- 14 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES AND EXPENDITURES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2020
Figure 3
9/30/2020 9/30/2019 Increase
Revenues Total Total (Decrease)
Local taxes 17,948,978$ 17,002,565$ 946,413$
Licenses and permits 4,315,235 4,570,915 (255,680)
Fines and forfeitures 199,228 237,812 (38,584)
Intergovernmental 2,470,197 1,090,181 1,380,016
Interest and rents 576,479 470,753 105,726
Charges for services 6,098,090 5,852,747 245,343
Golf course revenue 1,000,949 1,060,650 (59,701)
Recreation department 238,811 456,362 (217,551)
Other 1,219,633 660,915 558,718
Totals 34,067,600$ 31,402,900$ 2,664,700$
9/30/2020 9/30/2019 Increase
Expenditures Total Total (Decrease)
General government 5,994,284$ 5,303,050$ 691,234$
Public safety 6,869,403 6,571,647 297,756
Public works 6,963,031 6,510,388 452,643
Cultural and recreational 5,783,450 6,238,487 (455,037)
Airport Authority 320,000 320,000 -
Public Library Board 859,401 818,477 40,924
Other 863,699 170,203 693,496
Debt Service:
Principal 641,366 3,775,470 (3,134,104)
Interest 28,974 87,534 (58,560)
Capital Outlay 8,425,744 7,746,773 678,971
Totals 36,749,352$ 37,542,029$ (792,677)$
- 15 - CITY OF FAIRHOPE, ALABAMA CAPITAL ASSETS Figure 4 Governmental Activities Balance Transfers/ Balance 10/1/2019 Additions Disposals Reclassifications 9/30/2020Land 23,056,496$ 4,671,162$ -$ -$ 27,727,658$ Construction in progress 818,457 1,458,234 - (721,091) 1,555,600 Buildings and structures 41,819,295 562,045 - 465,810 42,847,150 Vehicles and equipment 19,280,548 975,009 (653,337) 160,406 19,762,626 Infrastructure 73,105,222 672,013 - 205,686 73,982,921 Total Capital Assets 158,080,018$ 8,338,463$ (653,337)$ 110,811$ 165,875,955$ Business-type ActivitiesWater andElectric Natural Gas Waste WaterFund Fund FundBalance at 10/1/2019 38,274,388$ 18,774,065$ 60,355,424$ Additions to plant 4,286,738 460,346 4,847,695 Addition to land, buildings, vehicles and equipment 500,078 301,156 597,323 Disposals - - (96,875) Transfers (116,830) - 6,019 Total Capital Assets at 9/30/2020 42,944,374$ 19,535,567$ 65,709,586$
- 16 -
CITY OF FAIRHOPE, ALABAMA
DEBT ADMINISTRATION
Figure 5
GOVERNMENTAL BUSINESS-TYPE
LONG-TERM DEBT FUNDS ACTIVITIES
Utilities Revenue Warrants, 2011 -$ 11,935,000$
Utilities Revenue Warrants, 2015 - 370,000
Utilities Revenue Warrants, 2020 - 11,565,000
Note Payable 1,200,000 -
Capital leases 1,003,573 -
Compensated absences 1,297,480 551,983
Totals 3,501,053$ 24,421,983$
BASIC FINANCIAL STATEMENTS
- 17 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash 18,907,253$ 28,445,313$ 47,352,566$ 1,127,646$
Restricted cash - 14,291,410 14,291,410 -
Receivables, net 2,621,405 3,709,668 6,331,073 55,329
Internal balances 41,440 (41,440) - -
Inventories 112,931 762,081 875,012 -
Prepaid items 23,106 7,371 30,477 25,317
Other assets 34,925 36,090 71,015 -
Capital assets not being depreciated:
Land 27,727,658 9,260,517 36,988,175 10,674,228
Construction in progress 1,555,600 - 1,555,600 50,191
Capital assets net of accumulated
depreciation:
Buildings and improvements 27,809,933 1,193,696 29,003,629 7,727,321
Vehicles and equipment 5,229,324 2,789,102 8,018,426 45,988 Infrastructure 37,530,920 - 37,530,920 -
Distribution and collection systems - 60,783,722 60,783,722 -
Runways - - - 16,807,259
Total assets 121,594,495 121,237,530 242,832,025 36,513,279
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - 77,447 77,447 -
Pension related items 2,313,103 648,914 2,962,017 102,592
OPEB related items 1,006,801 322,936 1,329,737 -
Total deferred outflows of
resources 3,319,904 1,049,297 4,369,201 102,592
Total assets and deferred
outflows of resources 124,914,399$ 122,286,827$ 247,201,226$ 36,615,871$
LIABILITIES
Accounts payable and
accrued expenses 2,433,862$ 3,534,912$ 5,968,774$ 106,154$
Unearned revenue - 584,046 584,046 -
Customer deposits 30,178 2,194,541 2,224,719 -
Noncurrent liabilities:
Due within one year 1,017,849 1,449,799 2,467,648 200,000
Due in more than one year:
Net pension liability 8,646,492 2,794,170 11,440,662 437,525 Total OPEB liability 7,269,281 2,331,655 9,600,936 -
Other 2,483,204 22,960,595 25,443,799 6,495,629
Total liabilities 21,880,866 35,849,718 57,730,584 7,239,308
DEFERRED INFLOWS OF
RESOURCES
Pension related items 842,412 143,665 986,077 30,093
OPEB related items 2,586,969 829,782 3,416,751 -
Service concession arrangement
revenue applicable to future years - - - 5,678,460
Total deferred inflows of
resources 3,429,381 973,447 4,402,828 5,708,553
NET POSITION
Net investment in capital assets 97,649,862 61,730,548 159,380,410 28,609,358
Restricted for:
Debt service - 14,240,799 14,240,799 -
Road maintenance 318,704 - 318,704 -
Capital improvements 816,343 50,611 866,954 -
Library improvements - - - 365,076 Unrestricted 819,243 9,441,704 10,260,947 (5,306,424)
Total net position 99,604,152 85,463,662 185,067,814 23,668,010
Total liabilities, deferred inflows of resources, and net position 124,914,399$ 122,286,827$ 247,201,226$ 36,615,871$
- 18 - CITY OF FAIRHOPE, ALABAMA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2020 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Governmental Business-type ComponentFunctions/Programs Expenses Services Contributions Contributions Activities Activities Total UnitsPrimary GovernmentGovernmental activities:General government 7,278,497$ 8,006,104$ -$ 282,500$ 1,010,107$ -$ 1,010,107$ -$ Public safety 7,125,224 - 289,265 273,433 (6,562,526) - (6,562,526) - Public works 8,763,332 2,073,829 222,811 1,708,001 (4,758,691) - (4,758,691) - Cultural and recreational 6,491,954 1,995,263 30,050 582,729 (3,883,912) - (3,883,912) - Airport Authority 320,000 - - - (320,000) - (320,000) - Public Library Board 1,069,323 - - - (1,069,323) - (1,069,323) - Interest on long-term debt 27,969 - - - (27,969) - (27,969) - Total governmental activities 31,076,299 12,075,196 542,126 2,846,663 (15,612,314) - (15,612,314) - Business-type activities:Electric 17,022,979 20,298,577 17,194 2,034,699 - 5,327,491 5,327,491 - Natural gas 5,670,355 7,428,215 1,241 27,737 - 1,786,838 1,786,838 - Water and Waste Water 9,213,371 13,625,353 5,864 242,229 - 4,660,075 4,660,075 - Total business-type activities 31,906,705 41,352,145 24,299 2,304,665 - 11,774,404 11,774,404 - Total primary government 62,983,004$ 53,427,341$ 566,425$ 5,151,328$ (15,612,314) 11,774,404 (3,837,910) - Component Units 1,772,589$ 402,658$ 1,417,543$ 381,948$ 429,560 General revenues:Property taxes 6,354,890 - 6,354,890 - Sales tax 9,930,150 - 9,930,150 - Liquor taxes 632,363 - 632,363 - Lodging taxes 911,537 - 911,537 - Other taxes 116,455 - 116,455 - Investment earnings 274,246 519,544 793,790 2,848 Other341,897 37,608 379,505 3,500 Transfers 804,101 (804,101) - - Total general revenues and transfers 19,365,639 (246,949) 19,118,690 6,348 Change in net position 3,753,325 11,527,455 15,280,780 435,908 Net position - beginning 95,850,827 73,936,207 169,787,034 23,232,102 Net position - ending 99,604,152$ 85,463,662$ 185,067,814$ 23,668,010$ Changes in Net PositionPrimary GovernmentProgram RevenuesNet (Expense) Revenue and
- 19 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
ASSETSCash 13,726,065$ 426,846$ 4,203,982$ 18,356,893$
Receivables, net 1,912,401 527,759 86,988 2,527,148
Inventory 112,931 - - 112,931
Prepaid items 23,106 - - 23,106
Due from other funds 197,772 - - 197,772
Other assets 34,925 - - 34,925
Total assets 16,007,200$ 954,605$ 4,290,970$ 21,252,775$
LIABILITIES
Accounts payable 1,512,363$ 91,781$ 57,334$ 1,661,478$
Accrued expenditures and taxes 523,990 - - 523,990
Customer deposits 30,178 - - 30,178
Unearned revenue 31,649 - - 31,649
Due to other funds 25,114 - 63,025 88,139
Total liabilities 2,123,294 91,781 120,359 2,335,434
FUND BALANCES
Nonspendable:
Prepaid items 23,106 - - 23,106
Inventory 112,931 - - 112,931
Restricted:
Road maintenance - - 318,704 318,704
Capital improvements - - 816,343 816,343
Committed:
Council approved emergencies 7,000,000 - - 7,000,000
Construction and road maintenance - - 3,036,724 3,036,724
Debt service 699,594 - - 699,594
Capital projects 35,000 862,824 - 897,824
Unassigned 6,013,275 - (1,160) 6,012,115
Total fund balances 13,883,906 862,824 4,170,611 18,917,341
Total liabilities and fund balances 16,007,200$ 954,605$ 4,290,970$ 21,252,775$
- 20 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Fund balances as reported on page 19 18,917,341$
Net position reported for governmental activities in the statement of net position
is 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. 165,875,955
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (66,022,520)
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unearned revenue in fund financial statements. 31,649
Deferred outflows of resources are applicable to future periods, and therefore,
are not reported in the governmental funds.
Deferred outflows of resources related to net pension liability. 2,313,103
Deferred outflows of resources related to OPEB obligations. 1,006,801
Deferred inflows are not financial resources and, therefore, are not reported
in fund financial statements.
Deferred inflows of resources related to net pension liability. (842,412)
Deferred inflows of resources related to OPEB obligations. (2,586,969)
The Internal Service Fund is used by management to charge the costs of
employee medical insurance to the individual funds. The assets and liabilities
of the Internal Service Fund are included in the governmental activities in the
statement of net position. 334,367
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:
Obligations under capital leases (2,203,573)
Net pension liability (8,646,492)
OPEB obligations (7,269,281)
Accrued interest on long-term debt is not due and payable in the
current period and, therefore, not included in fund financial statements. (6,337)
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements. (1,297,480)
Net position of governmental activities as reported on page 17 99,604,152$
- 21 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
REVENUES
Local taxes 17,864,703$ -$ 84,275$ 17,948,978$
Licenses and permits 4,315,235 - - 4,315,235
Fines and forfeitures 199,228 - - 199,228
Intergovernmental 1,390,457 599,056 480,684 2,470,197
Interest and rents 522,875 9,699 43,905 576,479
Charges for services 5,125,445 - 972,645 6,098,090
Golf course revenue 1,000,949 - - 1,000,949
Recreation department 238,811 - - 238,811
Other 1,219,633 - - 1,219,633
Total revenues 31,877,336 608,755 1,581,509 34,067,600
EXPENDITURES
General government 5,994,284 - - 5,994,284
Public safety 6,869,403 - - 6,869,403
Public works 6,963,031 - - 6,963,031
Cultural and recreational 5,783,450 - - 5,783,450
Airport Authority 320,000 - - 320,000
Public Library Board 859,401 - - 859,401
Other 861,855 - 1,844 863,699
Debt service payments:
Principal 300,000 - 341,366 641,366
Interest - - 28,974 28,974
Capital outlay 5,971,582 2,213,742 240,420 8,425,744
Total expenditures 33,923,006 2,213,742 612,604 36,749,352
Excess of revenues over
(under) expenditures (2,045,670) (1,604,987) 968,905 (2,681,752)
OTHER FINANCING
SOURCES (USES)
Issuance of note payable 1,500,000 - - 1,500,000
Issuance of capital lease 155,999 - - 155,999
Transfers in 2,425,268 524,564 1,276,447 4,226,279
Transfers out (1,394,784) - (2,027,394) (3,422,178)
Total other financing
sources (uses) 2,686,483 524,564 (750,947) 2,460,100
Net change in fund balances 640,813 (1,080,423) 217,958 (221,652)
Fund balances – beginning of year 13,243,093 1,943,247 3,952,653 19,138,993
FUND BALANCES – END OF YEAR 13,883,906$ 862,824$ 4,170,611$ 18,917,341$
- 22 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Net change in fund balances – total governmental funds, page 21 (221,652)$
Amounts reported for governmental activities in the statement of activities
are different from the statement of revenues, expenditures and changes in
fund balances - governmental funds because:
Capital outlay, reported as expenditures in governmental funds, is shown as
capital assets in the statement of net position. 8,338,463
Depreciation expense on governmental capital assets included in the
capital assets in the statement of net position. (4,419,992)
The net effect of transactions involving the sale, disposal and transfer of
capital assets is to decrease net position in the statement of net position. (49,232)
Bond and other debt proceeds provide current financial resources to governmental
funds, but issuing debt increases long-term liabilities 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.
Principal payments on long-term debt 641,366
Proceeds from issuance of capital leases (155,999)
Proceeds from issuance of note payable (1,500,000)
Revenues are reported in the funds when there is an established claim
to the resources and the resources are available to finance current
expenditures. Revenues are reported in the statement of activities
when there is an established claim with no availability criterion. The
funds report revenue unavailable in prior periods as current year revenue. 7,154
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.
Compensated absences (135,862)
Accrued interest 1,007
Pensions (48,288)
Postemployment benefit plans other than pensions 961,993
The Internal Service Fund is used by management to charge the costs of
employee medical insurance to the individual funds. The net income (expense)
of certain activities of the Internal Service Fund is reported with governmental
activities.334,367
Change in net position of governmental activities, page 18 3,753,325$
- 23 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Governmental
Water and Activities -
Electric Natural Gas Waste Water Internal
Fund Fund Fund Total Service Fund
ASSETSCurrent assets:
Cash and cash equivalents 8,598,618$ 9,461,420$ 10,385,275$ 28,445,313$ 550,360$
Restricted cash held by fiscal agent 453,401 371,232 13,466,777 14,291,410 -
Receivables, net 2,076,790 361,120 1,271,758 3,709,668 94,257
Inventories 381,029 217,199 163,853 762,081 -
Prepaid items 2,382 1,962 3,027 7,371 -
Due from other funds 42,101 398 - 42,499 -
Total current assets 11,554,321 10,413,331 25,290,690 47,258,342 644,617
Noncurrent assets:Other assets 12,030 12,030 12,030 36,090 -
Capital assets:
Land 7,455,163 1,616,172 189,182 9,260,517 -
Buildings and improvements 1,379,968 775,356 572,344 2,727,668 -
Vehicles and equipment 5,391,178 3,902,092 4,324,736 13,618,006 -
Distribution and collection systems 28,718,065 13,241,947 60,623,324 102,583,336 -
Less accumulated depreciation (16,967,687) (9,373,448) (27,821,355) (54,162,490) -
Total noncurrent assets 25,988,717 10,174,149 37,900,261 74,063,127 -
Total assets 37,543,038 20,587,480 63,190,951 121,321,469 644,617
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - - 77,447 77,447 -
Pension related items 238,953 162,696 247,265 648,914 -
OPEB related items 129,174 83,584 110,178 322,936 -
Total deferred outflows of
resources 368,127 246,280 434,890 1,049,297 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 2,204,369 377,600 952,943 3,534,912 242,057 Unearned revenue 23,188 - 560,858 584,046 -
Customer deposits 1,124,266 637,248 433,027 2,194,541 -
Warrants, notes and capital leases payable 92,302 48,087 1,179,611 1,320,000 -
Compensated absences 39,176 34,147 56,476 129,799 -
Due to other funds - 56,850 95,282 152,132 -
Total current liabilities 3,483,301 1,153,932 3,278,197 7,915,430 242,057
Noncurrent liabilities:
Compensated absences 163,720 131,086 127,378 422,184 - Warrants, notes and
capital leases payable 530,981 535,536 21,471,894 22,538,411 -
Net pension liability 1,116,272 679,331 998,567 2,794,170 - Total OPEB liability 932,662 603,487 795,506 2,331,655 -
Total noncurrent liabilities 2,743,635 1,949,440 23,393,345 28,086,420 -
Total liabilities 6,226,936 3,103,372 26,671,542 36,001,850 242,057
DEFERRED INFLOWS OF RESOURCES
Pension related items 38,063 30,417 75,185 143,665 -
OPEB related items 331,913 214,767 283,102 829,782 -
Total deferred inflows of
resources 369,976 245,184 358,287 973,447 -
NET POSITION
Net investment in capital assets 26,249,690 9,852,975 25,627,883 61,730,548 -
Restricted:Debt service 453,401 371,232 13,416,166 14,240,799 -
Capital improvements - - 50,611 50,611 -
Unrestricted 4,611,162 7,260,997 (2,498,648) 9,373,511 402,560
Total net position 31,314,253$ 17,485,204$ 36,596,012$ 85,395,469 402,560$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 68,193
Change in net position of business-type activities 85,463,662$
Business-type Activities - Enterprise Funds
- 24 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
GovernmentalWater and Activities -
Electric Natural Gas Waste Water Internal
Fund Fund Fund Total Service Fund
OPERATING REVENUES
Sales and services 20,021,755$ 7,418,054$ 12,071,623$ 39,511,432$ 4,771,445$
Other charges, sales and receipts 276,822 10,161 1,553,730 1,840,713 -
Total operating revenues 20,298,577 7,428,215 13,625,353 41,352,145 4,771,445
OPERATING EXPENSES
Energy purchases and
cost of goods sold 11,330,913 1,545,490 591,229 13,467,632 -
Salaries 1,358,606 1,037,430 1,818,378 4,214,414 -
Depreciation 851,630 510,799 1,691,530 3,053,959 -
Insurance 453,962 379,444 676,050 1,509,456 -
Electric energy furnished
to other departments 229,612 34,665 233,278 497,555 -
Maintenance 1,006,206 293,216 1,894,904 3,194,326 -
Benefit payments - - - - 4,372,591
Other operating expense 1,793,263 1,797,950 1,956,207 5,547,420 -
Total operating expenses 17,024,192 5,598,994 8,861,576 31,484,762 4,372,591
OPERATING INCOME 3,274,385 1,829,221 4,763,777 9,867,383 398,854
NONOPERATING
REVENUES (EXPENSES)
Interest expense (19,720) (12,391) (387,703) (419,814) -
Interest income 127,938 181,535 210,071 519,544 3,706
Gain on sale of capital assets 3,102 2,312 32,194 37,608 -
Intergovernmental revenue 17,194 1,241 5,864 24,299 -
Distribution of joint
revenue (expense) – net - (70,322) - (70,322) -
Total nonoperating
revenues (expenses) 128,514 102,375 (139,574) 91,315 3,706
INCOME BEFORE TRANSFERS
AND OTHER ITEMS 3,402,899 1,931,596 4,624,203 9,958,698 402,560
TRANSFERS AND OTHER ITEMS
Capital grants 2,034,699 27,737 242,229 2,304,665 -
Transfers in 1,113,694 - - 1,113,694 -
Transfers out (312,367) (1,223,214) (382,214) (1,917,795) -
Total transfers and other items 2,836,026 (1,195,477) (139,985) 1,500,564 -
Change in net position 6,238,925 736,119 4,484,218 11,459,262 402,560
Net position – beginning of year 25,075,328 16,749,085 32,111,794 73,936,207 -
NET POSITION – END OF YEAR 31,314,253$ 17,485,204$ 36,596,012$ 402,560$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 68,193
Change in net position of business-type activities 11,527,455$
Business-type Activities - Enterprise Funds
- 25 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Governmental
Water and Activities -
Electric Natural Gas Waste Water Internal
Fund Fund Fund Total Service Fund
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 19,409,508$ 7,448,832$ 13,296,290$ 40,154,630$ -$
Receipt from interfund services provided - - - - 4,677,188
Paid to suppliers for goods and services (14,163,807) (4,078,578) (4,744,794) (22,987,179) (4,130,534)
Paid to personnel for services (1,105,084) (868,164) (1,799,661) (3,772,909) -
Net cash provided by operating activities 4,140,617 2,502,090 6,751,835 13,394,542 546,654
CASH FLOWS FROM INVESTING ACTIVITIES
Distribution of joint expense - (70,322) - (70,322) -
Interest income 127,938 181,535 210,071 519,544 3,706
Net cash provided by investing activities 127,938 111,213 210,071 449,222 3,706
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from borrowings 276,402 276,404 11,012,193 11,564,999 -
Repayment of debt (81,085) (37,453) (766,460) (884,998) -
Interest paid (6,777) (9,981) (374,446) (391,204) -
Capital grants received 2,034,699 27,737 242,229 2,304,665 -
Proceeds from disposal of capital assets - - 23,933 23,933 -
Acquisition of capital assets (4,786,816) (761,502) (5,445,018) (10,993,336) -
Net cash provided by (used in) capital and related
financing activities (2,563,577) (504,795) 4,692,431 1,624,059 -
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable 68,799 26,215 4,787 99,801 -
Change in interfund payable (266,127) (2,507) 40,194 (228,440) -
Government grants 17,194 1,241 5,864 24,299 -
Proceeds from disposal of noncapital assets 3,102 2,312 8,261 13,675 -
Transfers (to) from other funds 801,327 (1,223,214) (382,214) (804,101) -
Net cash provided by (used in) noncapital and
related financing activities 624,295 (1,195,953) (323,108) (894,766) -
INCREASE IN CASH 2,329,273 912,555 11,331,229 14,573,057 550,360
CASH – BEGINNING OF YEAR 6,722,746 8,920,097 12,520,823 28,163,666 -
CASH – END OF YEAR 9,052,019$ 9,832,652$ 23,852,052$ 42,736,723$ 550,360$
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 3,274,385$ 1,829,221$ 4,763,777$ 9,867,383$ 398,854$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation 851,630 510,799 1,691,530 3,053,959 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable (868,632) (8,329) (421,497) (1,298,458) (94,257)
Decrease (increase) in inventories 18,038 (8,260) (25,833) (16,055) -
Decrease (increase) in prepaid expenses 45,440 14,047 58,307 117,794 -
Decrease (increase) in deferred outflow of resources (157,367) (103,310) (128,111) (388,788) -
Increase (decrease) in accounts payable 586,671 (33,600) 574,400 1,127,471 242,057
Increase (decrease) in customer deposits 29,855 28,946 19,623 78,424 -
Increase (decrease) in net unearned revenue (50,292) - 72,811 22,519 -
Increase (decrease) in deferred inflow of resources (140,346) (79,461) (169,122) (388,929) -
Increase (decrease) in net pension liability 213,353 138,208 182,152 533,713 -
Increase (decrease) in compensated absences 44,918 2,415 (22,010) 25,323 -
Increase (decrease) in net OPEB obligation 292,964 211,414 155,808 660,186 -
Net cash provided by operating activities 4,140,617$ 2,502,090$ 6,751,835$ 13,394,542$ 546,654$
Business-type Activities - Enterprise Funds
- 26 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF NET POSITION
DISCRETELY PRESENTED COMPONENT UNITS
SEPTEMBER 30, 2020
See independent auditors’ report and notes to the financial statements.
Public Library Airport
Board Authority Total
ASSETS
Cash 768,366$ 359,280$ 1,127,646$
Receivables, net - 55,329 55,329
Prepaid items 7,169 18,148 25,317
Capital assets not being depreciated:
Land - 10,674,228 10,674,228
Construction in progress - 50,191 50,191
Capital assets net of accumulated
depreciation:
Buildings and improvements - 7,727,321 7,727,321
Vehicles and equipment 45,988 - 45,988
Runways - 16,807,259 16,807,259
Total assets 821,523 35,691,756 36,513,279
DEFERRED OUTFLOWS OF
RESOURCES
Pension related items 102,592 - 102,592
Total assets and deferred
outflows of resources 924,115$ 35,691,756$ 36,615,871$
LIABILITIES
Accounts payable and accrued liabilities 16,131$ 43,423$ 59,554$
Customer deposits - 46,600 46,600
Long-term liabilities:
Due within one year - 200,000 200,000
Due in more than one year - 6,495,629 6,495,629
Net pension liability 437,525 - 437,525
Total liabilities 453,656 6,785,652 7,239,308
DEFERRED INFLOWS OF
RESOURCES
Pension related items 30,093 - 30,093
Service concession arrangement revenue
applicable to future years - 5,678,460 5,678,460
Total deferred inflows of resources 30,093 5,678,460 5,708,553
NET POSITION
Net investment in capital assets 45,988 28,563,370 28,609,358
Restricted:
Library improvements 365,076 - 365,076
Unrestricted 29,302 (5,335,726) (5,306,424)
Total net position 440,366 23,227,644 23,668,010
Total liabilities, deferred inflows of
resources, and net position 924,115$ 35,691,756$ 36,615,871$
- 27 - CITY OF FAIRHOPE, ALABAMA COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2020 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Governmental Business-typeFunctions/Programs Expenses Services Contributions Contributions Activities Activities TotalGovernmental activities:Public Library Board 955,621$ 163,701$ 883,929$ -$ 92,009$ -$ 92,009$ Business-type activities:Airport Authority 816,968 238,957 533,614 381,948 - 337,551 337,551 1,772,589$ 402,658$ 1,417,543$ 381,948$ 92,009 337,551 429,560 General revenues:Investment earnings - 2,848 2,848 Other - 3,500 3,500 Total general revenues - 6,348 6,348 Change in net position 92,009 343,899 435,908 Net position – beginning 348,357 22,883,745 23,232,102 Net position – ending 440,366$ 23,227,644$ 23,668,010$ Changes in Net PositionProgram RevenuesNet (Expense) Revenue and
NOTES TO THE FINANCIAL STATEMENTS
- 28 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Fairhope, Alabama (the City) was incorporated in 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 component units 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 is reported as a
governmental component unit. The Library Board does not issue separate financial statements.
Fairhope Airport Authority - The Authority operates the City Airport and has its own governing
body which is appointed by the City Council. The City provides a significant portion of the annual
operating funds support to the Airport. The Airport's other sources of revenue come from Hangar
and Office rentals, and fuel sales. The Airport Authority is reported as a business-type
component unit. 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.
- 29 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
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. For the most part, the effect of interfund activity has been removed from these statements.
The exception to this is interfund services provided and used which are not eliminated in the
process of consolidation.
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.
- 30 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. BASIS OF PRESENTATION – GOVERNMENT-WIDE AND FUND LEVEL (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 utilities are provided to residents
in and around the City of Fairhope. Enterprise Funds are used to account for operations which are
financed or operated in a manner similar to private business enterprises – where the intent of the
governing body is that the costs of providing goods or services to the general public on a
continuing basis be financed or recovered through user charges and fees. Operating revenues,
shown for proprietary operations, generally result from producing or providing goods and services.
Operating expenses include all costs related to providing services or products. All other revenues
or expenses not meeting these criteria are reported as nonoperating income or expenses.
Internal Service Funds:
Accounts for the operations of the medical insurance plan provided to other departments of the
City on a cost reimbursement basis.
C. 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 which
recognizes revenues when earned and expenses when incurred.
- 31 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. 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
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term
investments with original maturities of three months or less from the date of acquisition.
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.
For purposes of the statements of cash flows, the proprietary funds consider all highly liquid
investments, purchased within three months of maturity, to be cash equivalents. Investments
consist of U. S. Treasury money market accounts which are presented at cost which equals fair
value.
F. RECEIVABLES AND PAYABLES
Activity between funds that are representative of lending/borrowing arrangements outstanding at
the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion
of inter-fund loans) or “advances to/from other funds” (i.e., the noncurrent portion of inter-fund
loans). Any residual balances outstanding between the governmental activities and business-type
activities are reported in the government-wide financial statements as “internal balances.”
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.
- 32 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. RECEIVABLES AND PAYABLES (CONTINUED)
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 GASB Statement
No. 33, revenue is recorded based upon taxes assessed and considered available.
G. INVENTORIES AND PREPAID ITEMS
Inventories are stated at cost using the average cost method. Inventories of governmental funds are
recorded as expenditures when consumed rather than when purchased.
Inventories are summarized as follows:
Governmental Business-type
Activities Activities Total
Fuel 8,793$ 11,428$ 20,221$
Materials and supplies 104,138 750,653 854,791
Totals 112,931$ 762,081$ 875,012$
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded
as prepaid items in both government-wide and fund financial statements using the consumption
method.
H. CAPITAL ASSETS
The accounting treatment for capital assets depends on whether the assets are used by
governmental funds or proprietary funds and fund level or government-wide reporting.
In government-wide reporting, all capital assets are reported as capital assets for both
governmental 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.
- 33 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. CAPITAL ASSETS (CONTINUED)
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 acquisition 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 30 – 40 years
Buildings 25 – 50 years
Golf course improvements 10 – 40 years
Vehicles and equipment 3 – 10 years
Infrastructure (roads, bridges, drainage) 25 – 50 years
Runways and taxiways 75 years
I. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element represents a
consumption of net position that applies to a future period(s) and so will not be recognized as an
outflow of resources (expense/expenditure) until then. The City has several items that qualify for
reporting in this category. First is the deferred charge on refunding reported in the government-
wide statement of net position. A deferred charge on refunding results from the difference in the
carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized
over the shorter of the life of the refunded or refunding debt. In addition, the City also reports
deferred outflow items related to the City’s pension plan which are described further in Note 10,
and deferred outflow items related to the City’s postemployment benefits other than pensions
which are described further in Note 13.
In addition to liabilities, the statement of financial position will sometimes report a separate section
for deferred inflows of resources. This separate financial statement element represents an
acquisition of net position that applies to a future period(s) and so will not be recognized as an
inflow of resources (revenue) until that time. The City has several items that qualify for reporting
in this category. The first, of which arises only under a modified accrual basis of accounting, is
unavailable revenue, and is reported only in the governmental funds balance sheet. These amounts
are deferred and recognized as an inflow of resources in the period that the amounts become
available.
In addition, the City also reports deferred inflow items related to the City’s pension plan which are
described further in Note 10, and deferred inflow items related to the City’s postemployment
benefits other than pensions which are described further in Note 13.
- 34 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J. 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 and 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).
K. POSTEMPLOYMENT BENEFITS
The City records a liability in the government-wide financial statements and the proprietary fund
type financial statements for future healthcare benefits for eligible retirees and their spouses. The
postemployment benefits other than pension liability at September 30, 2020 totaled $9,600,936. The
postemployment benefits other than pension liability is typically liquidated by the General Fund.
L. PENSIONS
The Employees' Retirement System of Alabama (the Plan) financial statements are prepared
using the economic resources measurement focus and accrual basis of accounting. Contributions
are recognized as revenues when earned, pursuant to the Plan requirements. Benefits and refunds
are recognized when due and payable in accordance with the terms of the Plan. Expenses are
recognized when the corresponding liability is incurred, regardless of when the payment is made.
Investments are reported at fair value. Financial statements are prepared in accordance with
requirements of GASB. Under these requirements, the Plan is considered a component unit of the
State of Alabama and is included in the State's Comprehensive Annual Financial Report. The
pension liability is typically liquidated by the General Fund.
- 35 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
M. LONG-TERM OBLIGATIONS
In the government-wide financial statements, and proprietary fund type financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable governmental
activities, business-type activities, or proprietary fund type statement of net position. Bond
premiums and discounts are deferred and amortized over the life of the bonds using the effective
interest method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of the debt issued is
reported as other financing sources. Premiums received on debt issuances are reported as other
financing sources while discounts on debt issuances are reported as other financing uses. Issuance
costs, whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
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 supersedes 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
are also 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 net investment in capital assets. 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.
- 36 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
N. NET POSITION AND EQUITY CLASSIFICATIONS (CONTINUED)
Fund Financial Statements
The Fund equity of the governmental fund financial statements is classified as fund balance.
GASB standards establish 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 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.
- 37 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
O. 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.
P. UNEARNED REVENUE
The City reports unearned revenue on its fund balance sheet. 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.
Q. 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.
R. SUBSEQUENT EVENTS
The City has evaluated subsequent events through March 5, 2021, the date which the financial
statements were available to be issued. There were no material subsequent events which require
disclosure at September 30, 2020.
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Budgetary Information
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.
- 38 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED)
Budgetary Information (Continued)
(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.
Deficit Fund Equity
Funds with deficit fund balance or net position are as follows:
Deficit
Amount
Debt Service Fund 1,160$
NOTE 3 DEPOSIT AND INVESTMENT RISK
At September 30, 2020, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $14,291,410. The average
maturity of the portfolio was 48 days.
Investment Risk – The City does not have a formal investment policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk – State statutes authorize the City’s investments. The City is authorized to invest in U.S.
Government obligations and its agencies or instrumentalities, direct obligations of the state, or SEC
registered mutual funds. The City has no investment policy that further limits investment choices. As
of September 30, 2020, the City’s mutual fund investments principal stability rating was AAAm as
reported by Standard & Poor’s.
- 39 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 3 DEPOSIT AND INVESTMENT RISK (CONTINUED)
Custodial Credit Risk – The City is a participant in the Security for Alabama Funds Enhancement
(SAFE) Program, a multiple financial institution collateral pool, administered by the State of Alabama.
The program, by law, provides administration of pledged collateral coverage for all governments and
agencies in the State and requires qualified financial institutions to provide collateral to the
administrator adequate to secure all deposits of public funds in that financial institution. The State
guarantees deposits identified as “public funds” will be adequately secured by insurance or collateral.
Any collateral shortages of one financial institution are assessed to other member financial institutions.
NOTE 4 RECEIVABLES
Receivables as of September 30, 2020, for the government’s individual major and nonmajor funds, and
the discretely presented components units, including the applicable allowances for uncollectable
accounts, are as follows:
Nonmajor
Capital Governmental Natural
General Projects Funds Electric Gas
Taxes 1,497,762$ -$ 8,649$ -$ -$
Accounts 190,601 - 24,912 2,271,578 378,585
Intergovernmental 804,084 527,759 53,427 737,134 19,528
2,492,447 527,759 86,988 3,008,712 398,113
Less allowance for uncollectable
accounts (580,046) - - (931,922) (36,993)
Total receivables 1,912,401$ 527,759$ 86,988$ 2,076,790$ 361,120$
Water and Internal
Waste Water Airport Service
Fund Authority Fund Total
Taxes -$ -$ -$ 1,506,411$
Accounts 1,214,833 3,289 94,257 4,178,055
Intergovernmental 243,438 52,040 - 2,437,410
1,458,271 55,329 94,257 8,121,876
Less allowance for uncollectable
accounts (186,513) - - (1,735,474)
Total receivables 1,271,758$ 55,329$ 94,257$ 6,386,402$
- 40 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 5 INTERFUND TRANSACTIONS
Interfund balances are generally used to meet cash demands necessary to pay operating expenditures. The
amounts reported as due to/from other funds should be repaid during the next fiscal year.
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 composition of interfund balances as of September 30, 2020 is shown below.
Due to/from other funds
Receivable Fund Payable Fund Amount
General Water and Waste Water 89,633$
Natural Gas 45,114
Nonmajor Governmental 63,025
Electric General 25,114
Water and Waste Water 5,251
Natural Gas 11,736
Natural Gas Water and Waste Water 398
Total 240,271$
Interfund Transfers
Capital Nonmajor
General Projects Governmental Electric Total
General -$ 118,337$ 1,276,447$ -$ 1,394,784$
Nonmajor Governmental 1,621,167 406,227 - - 2,027,394
Electric 312,367 - - - 312,367
Natural Gas 166,367 - - 1,056,847 1,223,214
Water and Waste Water 325,367 - - 56,847 382,214
Totals 2,425,268$ 524,564$ 1,276,447$ 1,113,694$ 5,339,973$
Transfer In
Transfer Out
- 41 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 6 CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2020 was as follows:
Beginning Ending
Balance Increases Decreases Transfers Balance
Governmental Activities
Capital assets not subject
to depreciation:
Land 23,056,496$ 4,671,162$ -$ -$ 27,727,658$
Construction in progress 818,457 1,458,234 - (721,091) 1,555,600
Total 23,874,953 6,129,396 - (721,091) 29,283,258
Other capital assets:
Buildings and improvements 41,819,295 562,045 - 465,810 42,847,150
Vehicles and equipment 19,280,548 975,009 (653,337) 160,406 19,762,626
Infrastructure 73,105,222 672,013 - 205,686 73,982,921
Total 134,205,065 2,209,067 (653,337) 831,902 136,592,697
Less accumulated depreciation for:
Buildings and improvements (13,867,326) (1,169,891) - - (15,037,217)
Vehicles and equipment (13,245,815) (1,780,782) 604,106 (110,811) (14,533,302)
Infrastructure (34,982,682) (1,469,319) - - (36,452,001)
Total accumulated depreciation (62,095,823) (4,419,992) 604,106 (110,811) (66,022,520)
Other capital assets, net 72,109,242 (2,210,925) (49,231) 721,091 70,570,177
Governmental capital assets, net 95,984,195$ 3,918,471$ (49,231)$ -$ 99,853,435$
Depreciation was charged to governmental activities as follows:
General government 703,118$
Public safety 468,735
Public works 2,131,721
Cultural and recreational 906,496
Library 209,922
Total 4,419,992$
- 42 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 6 CAPITAL ASSETS (CONTINUED)
Beginning Ending
Balance Increases Decreases Transfers Balance
Business-type Activities
Capital assets not subject to depreciation:
Land 9,260,517$ -$ -$ -$ 9,260,517$
Other capital assets:
Buildings and improvements 2,708,624 19,044 - - 2,727,668
Vehicles and equipment 12,446,179 1,379,513 (96,875) (110,811) 13,618,006
Distribution and collection system 92,988,557 9,594,779 - - 102,583,336
Total 108,143,360 10,993,336 (96,875) (110,811) 118,929,010
Less accumulated depreciation for:
Buildings and improvements (1,474,498) (59,474) - - (1,533,972)
Vehicles and equipment (10,336,022) (700,568) 96,875 110,811 (10,828,904)
Distribution and collection system (39,505,697) (2,293,917) - - (41,799,614)
Total accumulated depreciation (51,316,217) (3,053,959) 96,875 110,811 (54,162,490)
Other capital assets, net 56,827,143 7,939,377 - - 64,766,520
Capital assets, net 66,087,660$ 7,939,377$ -$ -$ 74,027,037$
Component Unit – Public Library
Vehicles and equipment 507,562$ -$ -$ -$ 507,562$
Less accumulated depreciation (436,629) (24,945) - - (461,574)
Capital assets, net 70,933$ (24,945)$ -$ -$ 45,988$
Component Unit – Airport Authority
Capital assets not subject to depreciation:
Land 10,674,228$ -$ -$ -$ 10,674,228$
Construction in progress 28,534 324,832 - (303,175) 50,191
Total 10,702,762 324,832 - (303,175) 10,724,419
Other capital assets:
Buildings and improvements 10,201,765 450,000 - 303,175 10,954,940
Vehicles and equipment 98,885 - - - 98,885
Runways 19,148,990 - - - 19,148,990
Total 29,449,640 450,000 - 303,175 30,202,815
Less accumulated depreciation for:
Buildings and improvements (2,974,485) (253,134) - - (3,227,619)
Vehicles and equipment (98,885) - - - (98,885)
Runways (2,086,411) (255,320) - - (2,341,731)
Total accumulated depreciation (5,159,781) (508,454) - - (5,668,235)
Other capital assets, net 24,289,859 (58,454) - 303,175 24,534,580
Capital assets, net 34,992,621$ 266,378$ -$ -$ 35,258,999$
- 43 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 7 LONG-TERM DEBT
Long-term debt activity for the year ended September 30, 2020:
Amounts
Beginning Ending due within
Balance Additions Reductions Balance one year
GOVERNMENTAL ACTIVITIES
Notes payable -$ 1,500,000$ (300,000)$ 1,200,000$ 300,000$
Capital leases 1,188,940 155,999 (341,366) 1,003,573 341,365
Compensated absences 1,161,618 816,031 (680,169) 1,297,480 376,484
Governmental activities
long-term liabilities 2,350,558 2,472,030 (1,321,535) 3,501,053 1,017,849
BUSINESS-TYPE ACTIVITIES
Direct placements 13,190,000 11,565,000 (885,000) 23,870,000 1,320,000
Less issuance discounts (21,885) - 10,296 (11,589) -
Total direct placements 13,168,115 11,565,000 (874,704) 23,858,411 1,320,000
Compensated absences 526,660 362,910 (337,587) 551,983 129,799
Business-type activities
long-term liabilities 13,694,775 11,927,910 (1,212,291) 24,410,394 1,449,799
Total long-term debt 16,045,333$ 14,399,940$ (2,533,826)$ 27,911,447$ 2,467,648$
Notes Payable – Governmental Activities
The City entered into a note payable with the Baldwin County Board of Education on December 12,
2019, for the purchase of land located in Baldwin County. The original note balance of $1,500,000 is
interest free, with annual principal payments payable July 1, 2020 through July 1, 2024. Any imputed
interest would not be material and therefore the City has elected to not impute interest on this note.
The following schedule illustrates debt service to maturity for the note payable at September 30, 2020:
Year
Ending
September 30, Principal Interest Total
2021 300,000$ -$ 300,000$
2022 300,000 - 300,000
2023 300,000 - 300,000
2024 300,000 - 300,000
1,200,000$ -$ 1,200,000$
- 44 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Capital Leases – Governmental Activities
The City has entered into lease agreements as lessee for financing the acquisition of equipment. These
lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the
present value of their future minimum lease payments as of the inception date. The capital leases are
secured by the underlying equipment.
The assets acquired through capital leases are as follows:
Governmental
Assets Activities
Vehicles and equipment 1,439,251$
Less accumulated depreciation 385,725
Totals 1,053,526$
The future minimum lease obligations and the net present value of these minimum lease payments as of
September 30, 2020, were as follows:
Year ended September 30:
2021 508,960$
2022 405,058
2023 138,525
1,052,543
Less amount representing interest 48,970
Present value of minimum lease payments 1,003,573$
- 45 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Warrants from Direct Placements – Business-type Activities
The following is a summary of warrants from direct placement in proprietary funds as of September 30,
2020:
11,935,000$
370,000
11,565,000
Total warrants from direct placements – Business-type Activities 23,870,000$
Utilities Revenue Warrants, Series 2011 dated October 13, 2011,
original debt obligation of $16,140,000, interest rate 3.15%,
payable semi-annually, principal payable December 1, 2011
through December 1, 2030.
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.
Utilities Revenue Warrants, Series 2020 dated September 30,
2020, original debt obligation of $11,565,000, interest rate 1.28%,
payable semi-annually, principal payable December 1, 2020
through December 1, 2030.
Revenue warrants from the proprietary funds were for the purpose of financing, or refinancing, 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. The revenue warrants are secured by a pledge of future utility revenues.
The Series 2020 Utility Revenue Warrants were issued on September 30, 2020, for the purpose of a
current refunding of the Series 2011 Utility Revenue Warrants. As of September 30, 2020, the proceeds
of the Series 2020 Utility Revenue Warrants were held in escrow and reported as restricted cash on the
Statement of Net Position. The amounts held in the escrow account were used to refund the Series 2011
Utility Revenue Warrants on November 2, 2020. The City will see a decrease in cash flows required to
service debt of $853,288 over the life of the new bonds, resulting in an economic gain (difference
between present value of the debt service payments on the old and new debt) of $791,155.
The City’s outstanding warrants from direct placement related to business-type activities of $23,870,000
contain a provision that in event of default, outstanding amounts become due immediately if the City is
unable to make payment.
- 46 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Warrants from Direct Placements – Business-type Activities (Continued)
The following schedule illustrates debt service to maturity for warrants from direct placement in
proprietary funds at September 30, 2020:
Year
Ending
September 30, Principal Interest Total
2021 1,320,000$ 466,471$ 1,786,471$
2022 3,280,000 464,250 3,744,250
2023 3,350,000 390,805 3,740,805
2024 3,420,000 316,528 3,736,528
2025 3,500,000 240,310 3,740,310
2026–2030 7,860,000 423,563 8,283,563
2031 1,140,000 51,432 1,191,432
23,870,000$ 2,353,359$ 26,223,359$
Direct Placements
Business-type Activities
Sinking 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.
Bond from Direct Placements – Component Units
The following is a summary of the long-term debt of the Airport Authority as of September 30, 2020:
6,695,629$
Airport Improvement Refunding Bond, Series 2017, dated March
22, 2017, original debt obligation of $7,445,629, interest rate
2.18%, principal payable annually through September 1, 2023.
The Airport Improvement Refunding Bond, Series 2017, is secured by a pledge of payments received
from the City pursuant to the 2017 Funding Agreement, dated March 1, 2017. The 2017 Funding
Agreement states the City shall appropriate to the Airport Authority the amount needed to satisfy the
annual debt service of the Airport Improvement Refunding Bond, Series 2017.
- 47 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Bond from Direct Placements – Component Units (Continued)
The following is a summary of debt service requirements to maturity of long-term debt of the Airport
Authority as of September 30, 2020:
Year
Ending
September 30, Principal Interest Total
2021 200,000$ 147,432$ 347,432$
2022 225,000 143,028 368,028
2023 6,270,629 138,074 6,408,703
6,695,629$ 428,534$ 7,124,163$
Direct Placements
Component Units
The Airport Authority’s outstanding bond from direct placement of $6,695,629 contains a provision that
in event of default, outstanding amounts become due immediately if the Airport Authority is unable to
make payment.
NOTE 8 SALARIES – PROPRIETARY FUNDS
The following is a summary of employees’ salaries for the business-type activities for the year ended
September 30, 2020:
Water and
Electric Natural Gas Waste Water
Fund Fund Fund
Total salaries 1,429,713$ 1,187,915$ 1,839,418$
Less:
Salaries capitalized for plant additions 71,107 150,485 21,040
Salaries charged to operations 1,358,606$ 1,037,430$ 1,818,378$
- 48 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 9 RISK MANAGEMENT AND CONTINGENCIES
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 10 PENSION PLAN
Plan Description
The Employees’ Retirement System (ERS), an agent multiple-employer public employee retirement plan,
was established as of October 1, 1945, pursuant to the Code of Alabama 1975, Title 36, Chapter 27 (Act
515 of the Legislature of 1945). The purpose of the ERS is to provide 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 the general administration and operation of ERS is
vested in its Board of Control which consists of 13 trustees. The Plan is administered by the Retirement
Systems of Alabama (RSA). The Code of Alabama 1975, Title 36, Chapter 27 grants the authority to
establish and amend the benefit terms to the ERS Board of Control. The Plan issues a publicly available
financial report that can be obtained at www.rsa-al.gov.
The ERS Board of Control consists of 13 trustees as follows:
1) The Governor, ex officio.
2) The State Treasurer, ex officio.
3) The State Personnel Director, ex officio.
4) The State Director of Finance, ex officio.
5) Three vested members of ERS appointed by the Governor for a term of four years, no two of
whom are from the same department of state government nor from any department of which
an ex officio trustee is the head.
6) Six members of ERS who are elected by members from the same category of ERS for a term
of four years as follows:
a. Two retired members with one from the ranks of retired state employees and one from
the ranks of retired employees of a city, county, or a public agency each of whom is an
active beneficiary of ERS.
b. Two vested active state employees.
c. Two vested active employees of an employer participating in ERS pursuant to § 36-
27-6.
- 49 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Benefits Provided
State law establishes retirement benefits as well as death and disability benefits and any ad hoc increase
in postretirement benefits for the ERS. Benefits for ERS members vest after 10 years of creditable
service. State employees who retire after age 60 (52 for State Police) with 10 years or more of creditable
service or with 25 years of service (regardless of age) are entitled to an annual retirement benefit, payable
monthly for life. Local employees who retire after age 60 with 10 years or more of creditable service or
with 25 or 30 years of service (regardless of age), depending on the particular entity’s election, are
entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement
benefits are based on a guaranteed minimum or a formula method, with the member receiving payment
under the method that yields the highest monthly benefit. Under the formula method, members of the
ERS (except State Police) are allowed 2.0125% of their average final compensation (highest 3 of the last
10 years) for each year of service. State Police are allowed 2.875% for each year of State Police service
in computing the formula method.
Act 377 of the Legislature of 2012 established a new tier of benefits (Tier 2) for members hired on or
after January 1, 2013. Tier 2 ERS members are eligible for retirement after age 62 (56 for State Police)
with 10 years or more of creditable service and are entitled to an annual retirement benefit, payable
monthly for life. Service and disability retirement benefits are based on a guaranteed minimum or a
formula method, with the member receiving payment under the method that yields the highest monthly
benefit. Under the formula method, Tier 2 members of the ERS (except State Police) are allowed 1.65%
of their average final compensation (highest 5 of the last 10 years) for each year of service. State Police
are allowed 2.375% for each year of state police service in computing the formula method.
Members are eligible for disability retirement if they have 10 years of credible service, are currently in-
service, and determined by the RSA Medical Board to be permanently incapacitated from further
performance of duty. Preretirement death benefits equal to the annual earnable compensation of the
member as reported to the Plan for the preceding year ending September 30 are paid to the beneficiary.
The ERS serves approximately 907 local participating employers. The ERS membership includes
approximately 93,986 participants. As of September 30, 2019, membership consisted of:
ERS City Library
Retirements and beneficiaries currently receiving benefits 25,871 110 6
Terminated employees entitled to but not yet receiving benefits 1,794 10 -
Terminated employees not entitled to a benefit 11,001 26 7
Active Members 55,222 330 15
Post-DROP participants who are still in active service 98 - -
Totals 93,986 476 28
- 50 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Contributions
Covered members of the ERS contributed 5% of earnable compensation to the ERS as required by statute
until September 30, 2011. From October 1, 2011, to September 30, 2012, covered members of the ERS
were required by statute to contribute 7.25% of earnable compensation. Effective October 1, 2012,
covered members of the ERS are required by statute to contribute 7.50% of earnable compensation.
Certified law enforcement, correctional officers, and firefighters of the ERS contributed 6% of earnable
compensation as required by statute until September 30, 2011. From October 1, 2011, to September 30,
2012, certified law enforcement, correctional officers, and firefighters of the ERS were required by
statute to contribute 8.25% of earnable compensation. Effective October 1, 2012, certified law
enforcement, correctional officers, and firefighters of the ERS are required by statute to contribute 8.50%
of earnable compensation. State Police of the ERS contribute 10% of earnable compensation. ERS local
participating employers are not required by statute to increase contribution rates for their members.
Tier 2 covered members of the ERS contribute 6% of earnable compensation to the ERS as required by
statute. Tier 2 certified law enforcement, correctional officers, and firefighters of the ERS are required by
statute to contribute 7% of earnable compensation. Tier 2 State Police members of the ERS contribute
10% of earnable compensation. These contribution rates are the same for Tier 2 covered members of
ERS local participating employers.
The ERS establishes rates based upon an actuarially determined rate recommended by an independent
actuary. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits
earned by employees during the year with additional amounts to finance any unfunded accrued liability,
the preretirement death benefit, and administrative expenses of the Plan. For the year ended September
30, 2020, the City’s active employee contribution rate was 8.00% of covered employee payroll. The
Fairhope Public Library’s active employee contribution rate was 7.00% of covered employee payroll.
The City’s contractually required contribution rate for the year ended September 30, 2020, was 8.89% of
pensionable pay for Tier 1 employees, and 6.46% of pensionable pay for Tier 2 employees. The Fairhope
Public Library’s contractually required contribution rate for the year ended September 30, 2020, was
8.65% of pensionable pay for Tier 1 employees, and 6.03% of pensionable pay for Tier 2 employees.
These required contribution rates are based upon the actuarial valuation as of September 30, 2017, 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 from the City were $1,259,337 and $33,956 from the Fairhope Public Library for the
year ended September 30, 2020.
- 51 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Contributions (Continued)
The City’s and Fairhope Public Library’s net pension liabilities were measured as of September 30,
2019, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of September 30, 2018 rolled forward to September 30, 2019 using standard roll-
forward techniques as shown in the following table:
City of Fairhope
Expected Actual
(a) Total pension liability for September 30, 2018 46,035,072$ 46,553,032$
(b) Discount rate 7.00% 7.00%
(c) Entry age normal cost for the period
October 1, 2018 to September 30, 2019 1,106,681 1,106,681
(d) Transfer among employers - 40,780
(e) Actual benefit payments and refunds for
October 1, 2018 to September 30, 2019 (2,876,661) (2,876,661)
(f) Total Pension Liability as of September 20, 2019
[(a) x (1+(b))] + (c) + (d ) + [(e) x (1 + 0.5 x (b))] 47,699,041$ 48,297,664$
(g) Difference between expected and actual 598,623$
(h) Less liability transferred for immediate recognition 40,780
(i) Experience (gain)/loss 557,843$
- 52 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Contributions (Continued)
Fairhope Public Library
Expected Actual
(a) Total pension liability for September 30, 2018 1,370,489$ 1,360,087$
(b) Discount rate 7.00% 7.00%
(c) Entry age normal cost for the period
October 1, 2018 to September 30, 2019 29,287 29,287
(d) Transfers among employers: - (12,994)
(e) Actual benefit payments and refunds for
October 1, 2018 to September 30, 2019 (56,829) (56,829)
(f) Total Pension Liability as of September 20, 2019
[(a) x (1+(b))] + (c) + (d ) + [(e) x (1 + 0.5 x (b))] 1,446,287$ 1,422,090$
(g) Difference between expected and actual (24,197)$
(h) Less liability transferred for immediate recognition (12,994)
(i) Experience (gain)/loss (11,203)$
Actuarial Assumptions
The total pension liability as of September 30, 2019, was determined based on the annual actuarial
funding valuation report prepared as of September 30, 2018. The key actuarial assumptions are
summarized below:
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return * 7.70%
* Net of pension plan investment expense
- 53 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Actuarial Assumptions (Continued)
Mortality rates were based on the sex distinct RP-2000 Blue Collar Mortality Table Projected with
Scale BB to 2020 with an adjustment of 125% at all ages for males and 120% for females at ages on
and after age 78. The rates of mortality for the period after disability retirement are according to the
sex distinct RP-2000 Disabled Retiree Mortality Table Projected with Scale BB to 2020 with an
adjustment of 130% at all ages for females.
The actuarial assumptions used in the actuarial valuation as of September 30, 2017, were based on the
results of an investigation of the economic and demographic experience for the ERS based upon
participant data as of September 30, 2015. The Board of Control accepted and approved these changes
in September 2016, which became effective at the beginning of fiscal year 2016.
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:
Long-term
Target Expected Rate
Allocation of Return *
Fixed Income 17.0% 4.4%
U.S. Large Stocks 32.0% 8.0%
U.S. Mid Stocks 9.0% 10.0%
U.S. Small Stocks 4.0% 11.0%
International Developed Market Stocks 12.0% 9.5%
International Emerging Market Stocks 3.0% 11.0%
Cash Equivalents 10.0% 10.1%
Real Estate 10.0% 7.5%
Cash 3.0% 1.5%
100.0%
*Includes assumed rate of inflation of 2.50%
- 54 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Discount Rate
The discount rate used to measure the total pension liability was the long-term rate of return, 7.70%. 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 plan 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.
Changes in Net Pension Liability
City of Fairhope
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
Balances at September 30, 2018 46,035,072$ 36,791,663$ 9,243,409$
Changes for the year:
Service cost 1,106,681 - 1,106,681
Interest 3,433,949 - 3,433,949
Differences between expected
and actual experience 557,843 - 557,843
Contributions – employer - 1,160,273 (1,160,273)
Contributions – employee - 807,355 (807,355)
Net investment income - 933,592 (933,592)
Benefit payments, including refunds
of employee contributions (2,876,661) (2,876,661) -
Transfers among employers 40,780 40,780 -
Net Changes 2,262,592 65,339 2,197,253
Balances at September 30, 2019 48,297,664$ 36,857,002$ 11,440,662$
- 55 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Changes in Net Pension Liability (Continued)
Fairhope Public Library
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
Balances at September 30, 2018 1,370,489$ 972,578$ 397,911$
Changes for the year:
Service cost 29,287 - 29,287
Interest 103,340 - 103,340
Differences between expected
and actual experience (11,203) - (11,203)
Contributions – employer - 33,178 (33,178)
Contributions – employee - 23,823 (23,823)
Net investment income - 24,809 (24,809)
Benefit payments, including refunds
of employee contributions (56,829) (56,829) -
Transfers among employers (12,994) (12,994) -
Net Changes 51,601 11,987 39,614
Balances at September 30, 2019 1,422,090$ 984,565$ 437,525$
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 7.70%,
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 1% lower (6.70%) or 1% higher (8.70%) than the current rate:
1% Decrease Current Rate 1% Increase
(6.70%) (7.70%) (8.70%)
Net pension liability, City 17,169,076$ 11,440,662$ 6,612,995$
Net pension liability, Fairhope Public Library 551,007$ 437,525$ 339,109$
- 56 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
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, 2019. The supporting
actuarial information is included in the GASB Statement No. 68 Report for the RSA prepared as of
September 30, 2019. The auditor’s report on the Schedule of Changes in Fiduciary Net Position by
Employer and accompanying notes detail by employer and in aggregate additional information needed to
comply with GASB 68. The additional financial and actuarial information is available at http://www.rsa-
al.gov/index.php/employers/financial-reports/gasb-68-reports/.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended September 30, 2020, the City recognized pension expense of $1,274,688 while the
Fairhope Public Library recognized pension expense of $33,956. The fund in which the related payroll
costs are expended will be used to liquidate the net pension liability. At September 30, 2020, the City and
Fairhope Public Library reported deferred outflows of resources and deferred inflows of resources,
respectively, related to pensions of the following sources:
City of Fairhope
Deferred Deferred
Outflows of Inflows of
Resources Resources
Governmental Activities:
Differences between expected and actual experience 376,221$ 842,412$
Changes of assumption 580,411 -
Net difference between projected and actual earnings
on plan investments 332,466 -
Employer contributions subsequent to measurement date 1,024,005 -
Governmental activities pension related items 2,313,103 842,412
Business-type Activities:
Differences between expected and actual experience 120,703 143,665
Changes of assumption 186,213 -
Net difference between projected and actual earnings
on plan investments 106,666 -
Employer contributions subsequent to measurement date 235,332 -
Business-type activities pension related items 648,914 143,665
2,962,017$ 986,077$
- 57 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions (Continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources to pensions will be
recognized as a decrease in pension expense as follows:
Year Ending
September 30,
2021 (52,263)$
2022 68,039
2023 370,652
2024 309,196
2025 (44,647)
Thereafter 65,626
716,603$
Fairhope Public Library
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience 2,694$ 30,093$
Changes of assumption 53,309 -
Net difference between projected and actual earnings
on plan investments 12,633 -
Employer contributions subsequent to measurement date 33,956 -
Total 102,592$ 30,093$
- 58 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions (Continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions
will be recognized as an increase (decrease) in pension expense as follows:
Year Ending
September 30,
2021 8,639$
2022 11,738
2023 11,005
2024 7,224
2025 (63)
Thereafter -
38,543$
NOTE 11 COMMITMENTS
The City has various contractual commitments outstanding at year end. The commitments under these
contracts totaled $14,282,381. The commitments funded from governmental activities will be
$1,619,218 and from business-type activities will be $12,663,163.
NOTE 12 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.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
GASB Statement No. 75, Accounting and Financial Reporting by Employers for Post-Employment
Benefits Other Than Pensions, requires governments to account for other post-employment benefits
(OPEB) on an accrual basis, rather than on a pay-as-you-go basis. The effect is the recognition of an
actuarially determined expense when a future retiree earns their post-employment benefits, rather than
when they use their post-employment benefit. The total OPEB liability is recorded at the fund level for
proprietary activities and the allocated amount for governmental activities is presented at the
government-wide level. The annual OPEB cost is included in the line item of salaries for proprietary
fund statements and is allocated by function for governmental activities on the government-wide
financial statements.
General Information About the OPEB Plan
Plan Description. The Plan is a single-employer defined benefit healthcare plan administered and
governed solely by the City. The City has the authority to establish and amend benefit provisions. No
assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 and a
separate report was not issued for the plan.
Benefits Provided. The City provides a comprehensive medical plan to eligible retirees and their spouses
through the City’s group health insurance plan, which covers both active and retired members.
Employees covered by benefit terms. At September 30, 2020, the following employees were covered by
the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 29
Active Members 118
Totals 147
Total OPEB Liability
The City’s total OPEB liability of $9,600,936 was measured as of September 30, 2019 and was
determined by an actuarial valuation as of September 30, 2018.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Total OPEB Liability (Continued)
Actuarial assumptions and other inputs. The total OPEB liability in the September 30, 2019 actuarial
valuation was determined using the following actuarial assumptions and other inputs, applied to all periods
included in the measurement, unless otherwise specified:
Inflation 2.75%
Real wage growth 0.25%
Wage inflation 3.00%
Salary increases 3.25% – 5.00%
Municipal bond index rate
Prior measurement date 4.18%
Measurement date 2.66%
Healthcare cost trend rates
Pre-Medicare 7.25% for 2018 decreasing to an ultimate
rate of 4.75% by 2028
The discount rate was based on the September average of the Bond Buyer General Obligation 20 year
Municipal Bond Index published weekly by The Bond Buyer. The discount rate used to calculate the
OPEB expense for the September 30, 2019 reporting date was 4.18%. The discount rate used to compute
the total OPEB liability for the reporting date of September 30, 2020 was 2.66%.
Mortality rates were based on the sex distinct RP-2000 Employee Mortality Table projected with Scale
BB to 2020 with an adjustment factor of 70% for males and 50% for females. Post-retirement mortality
rates on the sex distinct RP-2000 Blue Collar Mortality Table projected with Scale BB to 2020. An
adjustment of 125% at all ages for males and 120% for females beginning at age 78 was made for service
retirements and beneficiaries. An adjustment of 130% for females at all ages was made for disability
retirements.
The demographic actuarial assumptions for retirement, disability incidence, withdrawal, and salary
increases used in the September 30, 2018 valuation were based on the results of an actuarial experience
study for the period October 1, 2010 through September 30, 2016.
The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan
participation, rates of plan election, etc.) used in the September 30, 2018 valuation were based on a review
of recent plan experience done concurrently with the September 30, 2018 valuation.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Changes in Total OPEB Liability
Total OPEB
Liability
Balance at September 30, 2019 8,398,617$
Changes for the year:
Service cost 203,973
Interest 340,720
Differences between expected
and actual experience 85,836
Changes of assumptions or other inputs 1,071,768
Benefit payments (499,978)
Net Changes 1,202,319
Balance at September 30, 2020 9,600,936$
Changes in assumptions and other inputs reflect a change in the discount rate from 4.18% used in the
September 30, 2019 valuation to 2.66% used in the September 30, 2020 valuation.
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using a discount rate that is 1-percentage-point lower (1.66%) or 1-
percentage-point higher (3.66%) than the current discount rate:
1% Decrease Current Rate 1% Increase
(1.66%) (2.66%) (3.66%)
Net OPEB liability 10,374,330$ 9,600,936$ 8,881,468$
- 62 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (6.25%)
or 1-percentage-point higher (8.25%) than the current healthcare cost trend rates:
1% Decrease Current Rate 1% Increase
(6.25%) (7.25%) (8.25%)
Net OPEB liability 8,604,541$ 9,600,936$ 10,751,659$
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB
For the year ended September 30, 2020, the City recognized OPEB expense of $206,778. The fund in
which the related payroll costs are expended will be used to liquidate the total OPEB liability. At
September 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Governmental Activities:
Differences between expected and actual experience 54,083$ 2,251,774$
Changes of assumption 682,161 335,195
Employer contributions subsequent to measurement date 270,557 -
Governmental activities OPEB related items 1,006,801 2,586,969
Business-type Activities:
Differences between expected and actual experience 17,347 722,267
Changes of assumption 218,806 107,515
Employer contributions subsequent to measurement date 86,783 -
Business-type activities OPEB related items 322,936 829,782
1,329,737$ 3,416,751$
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB (Continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB
will be recognized in OPEB expense as follows:
Year Ending
September 30,
2020 (760,859)$
2021 (760,859)
2022 (760,859)
2023 (220,540)
2024 58,763
Thereafter -
(2,444,354)$
NOTE 14 OPERATING LEASES
The City holds various leases with entities for use of City property. Most of these leases are monthly and
insignificant. In addition, the City rents certain facilities to groups for events and activities on a per use
basis.
NOTE 15 LEASE EXPENSE
The City rents equipment, primarily, on monthly arrangements. The leases are not significant to the
operations of the City.
NOTE 16 SERVICE CONCESSION ARRANGEMENT
In fiscal year 2014, 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 the 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. 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 balance of the deferred inflow of resources
is $2,227,500 at September 30, 2020.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 16 SERVICE CONCESSION ARRANGEMENT (CONTINUED)
In fiscal year 2015, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 25 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $12,750 to the Airport
Authority and also required them 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 Airport Authority reports the capital improvements as a capital asset and it is depreciated in
accordance with the Airport Authority's depreciation policy. Upon completion in fiscal year 2015, the
Airport Authority 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 $829,353 at September 30, 2020.
In fiscal year 2016, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 30 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $6,150 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 15
months of the lease. The total value of the capital improvements, $876,000 was considered a deferred
inflow of resources and rent revenue will be recognized over the life of the term of the lease. The Airport
Authority reports the capital improvements as a capital asset and it is depreciated in accordance with the
Airport Authority's depreciation policy. Upon completion in fiscal year 2018, the Airport Authority
reported a capital improvement in the amount of $876,000 with a corresponding balance of $876,000 as a
deferred inflow of resources pursuant to the service concession arrangement. The balance of the deferred
inflow of resources is $782,143 at September 30, 2020.
In fiscal year 2016, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 30 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $5,412 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 18
months of the lease. The total value of the capital improvements, $1,573,000 was considered a deferred
inflow of resources and rent revenue will be recognized over the life of the term of the lease. The Airport
Authority reports the capital improvements as a capital asset and it is depreciated in accordance with the
Airport Authority's depreciation policy. Upon completion in fiscal year 2018, the Airport Authority
reported a capital improvement in the amount of $1,573,000 with a corresponding balance of $1,573,000
as a deferred inflow of resources pursuant to the service concession arrangement. The balance of the
deferred inflow of resources is $1,404,464 at September 30, 2020.
- 65 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 16 SERVICE CONCESSION ARRANGEMENT (CONTINUED)
In fiscal year 2020, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 30 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $3,362 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 18
months of the lease. The total value of the capital improvements, $450,000 was considered a deferred
inflow of resources and rent revenue will be recognized over the life of the term of the lease. The Airport
Authority reports the capital improvements as a capital asset and it is depreciated in accordance with the
Airport Authority's depreciation policy. Upon completion in fiscal year 2020, the Airport Authority
reported a capital improvement in the amount of $450,000 with a corresponding balance of $450,000 as a
deferred inflow of resources pursuant to the service concession arrangement. The balance of the deferred
inflow of resources is $435,000 at September 30, 2020.
In fiscal year 2020, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 40 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $9,613 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 18
months of the lease. The total value of the capital improvements is expected to be $700,000, which will be
considered a deferred inflow of resources and rent revenue will be recognized over the life of the term of
the lease beginning at the completion date. The Airport Authority will report the capital improvements as
a capital asset and it will be depreciated in accordance with the Airport Authority's depreciation policy
upon completion.
In fiscal year 2020, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 30 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $5,126 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 18
months of the lease. The total value of the capital improvements is expected to be $512,000, which will be
considered a deferred inflow of resources and rent revenue will be recognized over the life of the term of
the lease beginning at the completion date. The Airport Authority will report the capital improvements as
a capital asset and it will be depreciated in accordance with the Airport Authority's depreciation policy
upon completion.
- 66 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 17 FAIR VALUE DISCLOSURES
Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those
that GASB Statements require or permit in the statement of net position at the end of each reporting
period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s
fair value.
Level 1 inputs are quoted prices in active markets for identical assets.
Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Investments’ fair value measurements are as follows at September 30, 2020:
Level 1 Level 2 Level 3 Total
Treasury portfolio 14,291,410$ -$ -$ 14,291,410$
AMIC Insurance - - 36,090 36,090
Total 14,291,410$ -$ 36,090$ 14,327,500$
Debt securities categorized as Level 1 are based on prices quoted in active markets for those securities.
Debt securities categorized as Level 2 are valued using a matrix pricing technique that values securities
based on their relationship to benchmark quoted prices. The investment in AMIC is quoted as a Level 3
input. There is no active market for this investment but an initial investment was required to participate in
AMIC. Fair value of the investment approximates cost.
NOTE 18 ECONOMIC DEVELOPMENT INCENTIVE OBLIGATIONS – TAX ABATEMENTS
The City, in conjunction with the Industrial Development Board of the City of Fairhope and Baldwin
County, enters into economic development incentive agreements with entities that propose to locate
businesses within the City, or expand businesses within the City, which are expected to provide stimulus
to the City's economy. These agreements provide for full or partial abatement of sales, use and/or property
taxes. Property taxes are abated through reductions of assessed values. Sales and use taxes are abated
through exemptions granted on purchases for specified construction or equipment-purchase purposes. The
agreements have limited terms, typically ad-valorem taxes are abated for ten years.
The total property tax abated for the year ended September 30, 2020 totaled $14,851.
The City does not collect property taxes. The Revenue Commissioner of Baldwin County is responsible
for such collection.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 19 EFFECT OF NEW PRONOUNCEMENTS
Management has not currently determined what, if any, impact implementation of the following
statements may have on the financial statements of the City.
GASB 84, Fiduciary Activities. This Statement establishes criteria for identifying fiduciary activities of all
state and local governments and clarifies whether and how business-type activities should report their
fiduciary activities. Requirements for this Statement are effective for financial statements whose fiscal
year begins after December 15, 2019.
GASB 87, Leases. This Statement increases the usefulness of governments' financial statements by
requiring recognition of certain lease assets and liabilities for leases that previously were classified as
operating leases and recognized as inflows of resources or outflows of resources based on the payment
provisions of the contract. Requirements for this Statement are effective for financial statements whose
fiscal year begins after June 15, 2021.
GASB 89, Accounting for Interest Cost Incurred before the End of a Construction Period. This
Statement establishes accounting requirements for interest cost incurred before the end of a construction
period. Such interest cost includes all interest that previously was accounted for in accordance with the
requirements of paragraphs 5-22 of Statement No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, which
are superseded by this Statement. Requirements for this Statement will take effect for financial
statements whose fiscal year begins after December 15, 2020.
GASB 91, Conduit Debt Obligations. This Statement provides a single method for government issuers
to report conduit debt obligations and related commitments. The enhanced guidance is designed to
eliminate diversity in practice associated with these issues. The Statement clarifies how government
issuers should account for and report 1) commitments they extend or voluntarily provide and 2)
arrangements associated with conduit debt obligations, which often are characterized in practice as
leases, but are not leases for financial reporting purposes; and 3) enhances note disclosures.
Requirements for this Statement will take effect for financial statements whose fiscal year begins after
December 15, 2021.
GASB 92, Omnibus 2020. This Statement establishes accounting and financial reporting requirements
for specific issues related to leases, inter-equity transfers or assets, postemployment benefits,
government acquisitions, risk financing and related insurance-related activities of public entity risk
pools, fair value instruments and derivative instruments. Requirements for this Statement will take
effect for financial statements whose fiscal year begins after June 15, 2020.
GASB 93, Replacement of Interbank Offered Rate. This Statement establishes accounting and financial
reporting requirements related to the replacement of interbank offered rates (IBORs) in hedging
derivatives and leases. It also identifies appropriate benchmark interest rates for hedging derivative
instruments. Requirements for this Statement will take effect for financial statements whose fiscal year
begins after December 31, 2021.
- 68 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(continued)
NOTE 19 EFFECT OF NEW PRONOUNCEMENTS (CONTINUED)
GASB 95, Postponement of the Effective Dates of Certain Authoritative Guidance. This Statement
provides temporary relief to governments and other stakeholders in light of the COVID-19 pandemic.
The objective is accomplished by postponing the effective dates of certain provisions in Statements and
Implementation Guides that first became effective or are scheduled to become effective for periods
beginning after June 15, 2018 or later.
GASB 96, Subscription-Based Information Technology Arrangements. This Statement provides
accounting and financial reporting guidance for subscription-based information technology
arrangements (SBITAs). This Statement 1) defines a SBITA; 2) establishes that a SBITA results in a
right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; 3)
provides the capitalization criteria for outlays other than subscription payments, including implementation
costs of a SBITA; and 4) requires note disclosures regarding a SBITA. To the extent relevant, the
standards for SBITAs are based on the standards established in GASB 87, Leases, as amended.
Requirements for this Statement will take effect for financial statements whose fiscal year begins after
June 15, 2022.
NOTE 20 SUBSEQUENT EVENTS
On March 11, 2020, the World Health Organization (WHO) declared the novel strain of the coronavirus
(COVID-19) a pandemic. The COVID-19 outbreak is disrupting supply chains and affecting production
of services across a range of industries, including but not limited to, tourism and travel. The extent of
the impact of COVID-19 on the City’s operational and financial performance will depend on certain
developments, including the duration and spread of the outbreak, impact on citizens, employees,
vendors, and economical mitigation measures to be taken by federal and state government, all of which
are uncertain and cannot be predicted. As of the date of this report, the extent to which COVID-19 may
impact the City’s financial condition or results of operations is uncertain and cannot be estimated.
On November 19, 2020 the City issued a General Obligation Warrant in the amount of $5,000,000. The
proceeds of the warrant were used to finance the storm damage caused by Hurricane Sally. The warrant
bears an interest rate of 0.78%, with monthly interest payments. The principal amount of the warrant is
due November 19, 2022.
REQUIRED SUPPLEMENTARY INFORMATION
OTHER THAN MANAGEMENT’S DISCUSSION AND ANALYSIS
- 69 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
City of Fairhope
2020 2019 2018 2017 2016 2015
Actuarially determined contribution 1,259,337$ 1,214,082$ 1,156,988$ 1,128,689$ 1,161,190$ 1,033,161$
Contributions in relation to the actuarially
determined contribution 1,259,337 1,214,082 1,156,988 1,128,689 1,161,190 1,033,161
Contribution deficiency (excess) -$ -$ -$ -$ -$ -$
Covered payroll 16,920,969$ 15,117,600$ 14,145,534$ 14,442,516$ 12,686,870$ 11,740,415$
Contributions as a percentage of covered
payroll 7%8%8%8%9%9%
Notes to Schedule
Actuarially determined contribution rates are calculated as of September 30, three years prior to the end of the fiscal
year in which contributions are reported. Contributions for fiscal year 2020 were based on the September 30, 2017
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 24.9 years
Asset valuation method Five year smoothed market
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return 7.75%, 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 through 2020.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
Fairhope Public Library
2020 2019 2018 2017 2016 2015
Actuarially determined contribution 33,956$ 33,677$ 34,636$ 41,630$ 39,481$ 43,472$
Contributions in relation to the actuarially
determined contribution 33,956 33,677 34,636 41,630 39,481 43,472
Contribution deficiency (excess) -$ -$ -$ -$ -$ -$
Covered payroll 473,525$ 501,964$ 489,687$ 486,684$ 426,252$ 426,252$
Contributions as a percentage of covered
payroll 7% 7% 7% 9% 9% 10%
Notes to Schedule
Actuarially determined contribution rates are calculated as of September 30, three years prior to the end of the fiscal
year in which contributions are reported. Contributions for fiscal year 2020 were based on the September 30, 2017
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 28.9 years
Asset valuation method Five year smoothed market
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return 7.75%, 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 through 2020.
- 71 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 1,106,681$ 1,072,514$ 1,075,003$ 997,552$ 975,740$ 944,066$
Interest 3,433,949 3,393,813 3,286,149 3,131,860 2,977,603 2,852,227
Differences between expected and actual
experience 557,843 (1,109,067) (296,197) (52,317) 83,217 -
Changes in assumptions - 251,496 - 1,344,385 - -
Benefit payments, including refunds of
employee contributions (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfer among employers 40,780 (113,767) (317,929) (76,441) - -
Net change in total pension liability 2,262,592 992,885 1,533,495 3,375,812 1,789,128 1,585,545
Total pension liability – beginning 46,035,072 45,042,187 43,508,692 40,132,880 38,343,752 36,758,207
Total pension liability – ending (a)48,297,664$ 46,035,072$ 45,042,187$ 43,508,692$ 40,132,880$ 38,343,752$
Plan fiduciary net position
Contributions – employer 1,160,273$ 1,107,892$ 1,082,206$ 1,163,477$ 1,035,070$ 1,011,234$
Contributions – member 807,355 796,436 679,081 680,391 621,817 599,215
Net investment income 933,591 3,146,677 3,943,420 2,891,544 337,639 3,115,563
Benefit payments, including refunds of
employee contributions (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfers among employers 40,780 (113,767) (317,929) (76,441) (16,923) (36,268)
Net change in plan fiduciary net position 65,338 2,435,134 3,173,247 2,689,744 (269,829) 2,478,996
Plan net position – beginning 36,791,664 34,356,530 31,183,283 28,493,539 28,763,368 26,284,372
Plan net position – ending (b)36,857,002$ 36,791,664$ 34,356,530$ 31,183,283$ 28,493,539$ 28,763,368$
Net pension liability (asset) – ending (a)-(b)11,440,662$ 9,243,408$ 10,685,657$ 12,325,409$ 11,639,341$ 9,580,384$
Plan fiduciary net position as a percentage
of the total pension liability 76.31% 79.92% 76.28% 71.67% 71.00% 75.01%
Covered payroll 14,606,719$ 13,360,562$ 12,944,171$ 13,010,034$ 11,659,254$ 11,394,370$
Net pension liability (asset) as a percentage of
covered payroll 78% 69% 83% 95% 100% 84%
City of Fairhope
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2014 through 2019.
- 72 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 29,287$ 28,941$ 31,457$ 37,134$ 37,305$ 36,648$
Interest 103,340 98,796 93,059 83,555 82,203 79,859
Differences between expected and actual
experience (11,203) (9,007) 5,392 (40,331) (8,514) -
Changes in assumptions - 5,140 - 132,947 - -
Benefit payments, including refunds of
employee contributions (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers (12,994) - - - - -
Net change in total pension liability 51,601 67,530 74,491 154,750 (18,628) 67,716
Total pension liability – beginning 1,370,489 1,302,959 1,228,468 1,073,718 1,092,346 1,022,630
Total pension liability – ending (a)1,422,090$ 1,370,489$ 1,302,959$ 1,228,468$ 1,073,718$ 1,090,346$
Plan fiduciary net position
Contributions – employer 33,178$ 33,039$ 40,040$ 39,583$ 43,472$ 43,802$
Contributions – member 23,823 22,728 22,527 21,976 20,166 19,155
Net investment income 24,809 82,409 100,700 72,223 8,684 81,118
Benefit payments, including refunds of
employee contributions (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers (12,994) - - - - -
Net change in plan fiduciary net position 11,987 81,836 107,850 75,227 (57,300) 95,284
Plan net position – beginning 972,578 890,742 782,892 707,665 764,965 669,681
Plan net position – ending (b)984,565$ 972,578$ 890,742$ 782,892$ 707,665$ 764,965$
Net pension liability (asset) – ending (a)-(b)437,525$ 397,911$ 412,217$ 445,576$ 366,053$ 327,381$
Plan fiduciary net position as a percentage
of the total pension liability 69.23% 70.97% 68.36% 63.73% 65.91% 70.03%
Covered payroll 442,352$ 461,619$ 433,005$ 455,696$ 412,627$ 383,102$
Net pension liability (asset) as a percentage of
covered payroll 99% 86% 95% 98% 89% 85%
Fairhope Public Library
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2014 through 2019.
- 73 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN TOTAL OPEB LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2019 2018 2017
Total OPEB liability
Service cost 203,973$ 401,209$ 441,966$
Interest 340,720 442,731 371,696
Differences between expected and actual
experience 85,836 (4,733,827) 2,650
Changes in assumptions 1,071,768 45,224 (757,435)
Benefit payments (499,978) (313,549) (373,128)
Net change in total OPEB liability 1,202,319 (4,158,212) (314,251)
Total OPEB liability – beginning 8,398,617 12,556,829 12,871,080
Total OPEB liability – ending 9,600,936$ 8,398,617$ 12,556,829$
Covered payroll 6,190,702$ 6,190,702$ 8,226,573$
Net OPEB liability as a percentage of
covered payroll 155.09% 135.67% 152.64%
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2017 through 2019.
No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
The City does not have a special funding situation.
The reported Covered Employee Payroll during the measurement period is the payroll upon which contributions were
based.
There were no changes of benefit terms during 2020.
Changes of assumptions and other inputs reflect a change in the discount rate from 4.18% to 2.66% due to a change in
the municipal bond rate.
- 74 -
CITY OF FAIRHOPE, ALABAMA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
Variance
Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes 17,074,505$ 17,074,505$ 17,864,703$ 790,198$
Licenses and permits 4,582,350 4,582,350 4,315,235 (267,115)
Fines and forfeitures 275,000 275,000 199,228 (75,772)
Intergovernmental 420,000 420,000 1,390,457 970,457
Interest and rents 532,501 532,501 522,875 (9,626)
Charges for services 5,109,200 5,109,200 5,125,445 16,245
Golf course revenue 1,097,000 1,097,000 1,000,949 (96,051)
Recreation Department 452,000 452,000 238,811 (213,189)
Other 683,500 683,500 1,219,633 536,133
Total revenues 30,226,056 30,226,056 31,877,336 1,651,280
EXPENDITURES
General government
General 4,171,107 4,174,251 3,990,507 183,744
Planning 792,600 793,804 887,841 (94,037)
Building 930,026 930,870 821,009 109,861
Judicial 316,711 316,169 294,927 21,242
Public safety
Police 6,610,863 6,610,893 6,287,005 323,888
Fire 640,671 641,273 582,398 58,875
Public works
Sanitation 2,350,182 2,346,643 2,340,249 6,394
Street 3,674,965 3,713,760 3,464,680 249,080
Fleet maintenance 629,524 628,445 636,003 (7,558)
Construction and facilities maintenance 479,829 479,888 522,099 (42,211)
Cultural and recreational
Economic and community development 885,161 884,801 737,949 146,852
Adult recreation 407,955 407,236 378,492 28,744
Recreation 2,372,460 2,377,327 2,276,774 100,553
Golf 1,638,587 1,644,997 1,502,656 142,341
Marina 540,072 539,713 476,879 62,834
Civic Center 271,464 272,425 254,260 18,165
Museum and Welcome Center 195,752 195,034 156,440 38,594
Airport Authority 320,000 320,000 320,000 -
Public Library 859,401 859,401 859,401 -
Other 92,600 92,600 861,855 (769,255)
Debt service payments:
Principal - - 300,000 (300,000)
Capital outlay 2,418,256 2,417,678 5,971,582 (3,553,904)
Total expenditures 30,598,186 30,647,208 33,923,006 (3,275,798)
Excess of revenues over (under) expenditures (372,130) (421,152) (2,045,670) (1,624,518)
OTHER FINANCING SOURCES (USES)
Proceeds from note payable - - 1,500,000 1,500,000
Proceeds from capital lease - - 155,999 155,999
Transfers in 1,163,838 1,163,838 2,425,268 1,261,430
Transfers out (826,001) (826,001) (1,394,784) (568,783)
Total other financing sources (uses) 337,837 337,837 2,686,483 2,348,646
Net change in fund balances (34,293)$ (83,315)$ 640,813 724,128$
Fund balances – beginning of year 13,243,093
FUND BALANCES – END OF YEAR 13,883,906$
Budgeted Amounts
- 75 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2020
See independent auditors’ report.
NOTE 1 EXCESS EXPENDITURES
The following are General Fund expenditures in excess of final budget amounts:
Excess Excess Excess
Expenditures Expenditures Expenditures
General Government Sanitation Department Recreation Department
Overtime – General 6,819$ Casualty/workers comp insurance 5,668$ Overtime 11,125$
Overtime – Revenue 807 Utilities 223 Employee retirement expense 381
Health insurance 22,129 Overtime 12,706 Professional services 14,210
Sales tax collection fees 12,807 Required contributions – OPEB 8,268 Printers and copiers 1,454
Grant expenditures 20,000 Insurance 7,906 Required contributions – OPEB 5,821
Professional services 17,958 Bad debt 8,091 General maintenance 4,505
Bank fees 12,328 Equipment and vehicle repair 14,483 Tennis expense 7,404
Haven maintenance 9,633 Landfill charges 65,949 Costs – Tennis shop sales 419
Haven utilities 11,171 Landfill maintenance 204 Equipment rental 4,104
Casualty/workers comp insurance 26,593 Capital outlay 149,589 Utilities 83,057
Office supplies 575 Pool supplies 2,652
Communications 81 Street Department
Utilities 1,673 Overtime 54,403 Golf Department
Library utilities 31,239 Training 165 Overtime 2,180
Publications and newspapers 950 Professional services 12,556 Casualty/workers comp insurance 4,809
Dues 5,388 General supplies 917 Required contributions – OPEB 5,858
Boys and Girls Club utilities 1,211 Equipment and vehicle repair 13,871 Utilities 4,995
Printers and copiers 7,212 Safety wear 1,085 Computer expense 3,134
Equipment and vehicle repair 10 Equipment rental 2,519 Supplies – Grill 3,931
Capital outlay 4,738,136 Utilities 46,373 Employee retirement expense 1,379
Credit card processing fee 4,830
Planning Department Fleet Maintenance Department Casualty/workers comp insurance 2,336
Health insurance 6,637 Overtime 10,289 Equipment rental 69,819
Professional services 141,700 Employee retirement expense 150 Utilities 7,797
Computer expense 3,689 Casualty/workers comp insurance 7,366 Overtime 4,596
General maintenance 1,511 Gasoline and oil 7,584
Communications 582 Equipment and vehicle repair 2,679 Marina
Casualty/workers comp insurance 9,977 Utilities 2,553 Health insurance 5,046
Required contributions – OPEB 5,821 Computer expense 2,392 Casualty/workers comp insurance 5,690
Publications and newspapers 6,405 Salaries 6,635 Professional services 463
Payroll taxes 298 Printers and copiers 104
Building Department Capital outlay 3,174 Equipment and vehicle repair 2,362
Overtime 5,250 Gasoline and oil 44,138
Casualty/workers comp insurance 7,113 Construction and Facilities Maintenance Overtime 2,406
Printers and copiers 707 Overtime 45,189 Training 26
Uniforms 255 Payroll taxes 2,347 Credit card processing fee 5,538
Credit card processing fees 5,096 Employee retirement expense 1,885 Utilities 4,171
Salaries 3,059 Insurance 17,205 Capital outlay 80,873
Casualty/workers comp insurance 9,414
Judicial Department Gasoline and oil 2,881 Civic Center
Overtime 15,937 Capital outlay 6,238 Overtime 3,577
Employee retirement expense 1,784 Casualty/workers comp insurance 2,719
Health insurance 9,239 Adult Recreation Department Training 52
Payroll taxes 776 Employee retirement expense 7 Safety wear 1,065
Casualty/workers comp insurance 2,959 Training/School/Travel 52 Computer expense 793
Printers and copiers 335 Computer expense 3,622 Printers and copiers 463
Salaries 3,627 Printers and copiers 338 Utilities 3,747
Communications 10 Utilities 51,979 General maintenance 3,884
Capital outlay 4,038
Police Department Museum and Welcome Center
Overtime 23,290 Economic and Community Development Communications 704
Health insurance 22,950 Overtime 3,602 Insurance 1,723
Casualty/workers comp insurance 11,165 Casualty/workers comp insurance 5,234 Professional services 156
Printers and copiers 246 Computer expense 188 Printers and copiers 373
Communications 27,934 Capital outlay 645 General maintenance 11,342
Dues 790 197
Equipment and vehicle repair 24,099 Other Transfers
Utilities 26,292 General supplies Transfers – Debt Service Fund 1,024,444
Hurricane Sally 84,830
Fire Department 685,345 Debt Service
Overtime 1,954 Principal payments 300,000
Fire call payments 27,118
Uniforms 15
Utilities 10,564
OTHER SUPPLEMENTARY INFORMATION
COMBINING FINANCIAL STATEMENTS
NONMAJOR GOVERNMENTAL FUNDS
- 76 -
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2020
See independent auditors’ report.
Total
Municipal Nonmajor Rebuild Capital Federal Municipal Governmental
Impact Fees Gas Tax Gas Tax Imporvements Grants Court Debt Service FundsASSETS
Cash 3,036,269$ 225,825$ 84,230$ 816,343$ 100$ 41,215$ -$ 4,203,982$
Receivables 455 8,649 - - 53,427 - 24,457 86,988
Due from other funds - - - - - - - -
Total assets 3,036,724$ 234,474$ 84,230$ 816,343$ 53,527$ 41,215$ 24,457$ 4,290,970$
LIABILITIES Accounts payable -$ -$ -$ -$ -$ 31,717$ 25,617$ 57,334$
Due to other funds - - - - 53,527 9,498 - 63,025
Total liabilities - - - - 53,527 41,215 25,617 120,359
FUND BALANCESRestricted:
Road maintenance - 234,474 84,230 - - - - 318,704
Capital improvements - - - 816,343 - - - 816,343
Committed:
Construction and road maintenance 3,036,724 - - - - - - 3,036,724
Unassigned - - - - - - (1,160) (1,160)
Total fund balances 3,036,724 234,474 84,230 816,343 - - (1,160) 4,170,611
Total liabilities and fund balances 3,036,724$ 234,474$ 84,230$ 816,343$ 53,527$ 41,215$ 24,457$ 4,290,970$
Special Revenue Funds
- 77 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
Total
Municipal Nonmajor
Rebuild Capital Federal Municipal Debt GovernmentalImpact Fees Gas Tax Gas Tax Imporvements Grants Court Service Funds
REVENUES
Taxes -$ -$ 84,275$ -$ -$ -$ -$ 84,275$ Intergovernmental - 90,408 - 149,856 240,420 - - 480,684 Charges for services 972,645 - - - - - - 972,645
Interest and rents 34,331 - - 9,574 - - - 43,905
Total revenues 1,006,976 90,408 84,275 159,430 240,420 - - 1,581,509
EXPENDITURES Other - 1,799 45 - - - - 1,844
Debt service
Principal - - - - - - 341,366 341,366 Interest - - - - - - 28,974 28,974
Capital outlay - - - - 240,420 - - 240,420
Total expenditures - 1,799 45 - 240,420 - 370,340 612,604
Excess of revenues over
(under) expenditures 1,006,976 88,609 84,230 159,430 - - (370,340) 968,905
OTHER FINANCING
SOURCES (USES)
Transfers in - - - 906,107 - - 370,340 1,276,447 Transfers out (1,696,973) (81,227) - (249,194) - - - (2,027,394)
Total other financing
sources (uses) (1,696,973) (81,227) - 656,913 - - 370,340 (750,947)
Net change in fund balances (689,997) 7,382 84,230 816,343 - - - 217,958
Fund balances – beginning of year 3,726,721 227,092 - - - - (1,160) 3,952,653
FUND BALANCES –
END OF YEAR 3,036,724$ 234,474$ 84,230$ 816,343$ -$ -$ (1,160)$ 4,170,611$
Special Revenue Funds
INDIVIDUAL FUND FINANCIAL STATEMENTS
DISCRETELY PRESENTED COMPONENT UNITS
- 78 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2020
See independent auditors’ report.
ASSETS
Cash and cash equivalents 768,366$
Prepaid items 7,169
Total assets 775,535$
LIABILITIES
Accounts payable and accrued liabilities 16,131$
FUND BALANCES
Nonspendable:
Prepaid items 7,169
Restricted:
Library improvements 365,076
Unassigned 387,159
Total fund balances 759,404
Total liabilities and fund balances 775,535$
- 79 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2020
See independent auditors’ report.
Fund balances as reported on page 78 759,404$
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. 507,562
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (461,574)
Other assets used in governmental activities are not financial resources and,
therefore, are not reported in the governmental funds.
Employment retirement contributions 102,592
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 (437,525)
Deferred inflows of resources (30,093)
Net position of governmental activities as reported on page 26 440,366$
- 80 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
REVENUES
Fines and lost books 8,938$
Donations, gifts, memorials and bequests 142,871
State aid 24,528
Payments from City of Fairhope 859,401
Miscellaneous 11,892
Total revenues 1,047,630
EXPENDITURES
Salaries 491,652
Payroll taxes 36,601
Insurance 11,861
Employees’ retirement 33,956
Books, periodicals, audio visual 117,176
Supplies 18,823
Janitorial service 21,197
Professional fees 8,435
Telecommunications 1,238
Capital outlay 6,201
Maintenance 96,884
Miscellaneous 67,861
Total expenditures 911,885
Net change in fund balances 135,745
Fund balances – beginning of year 623,659
FUND BALANCES – END OF YEAR 759,404$
- 81 -
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 PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
Net change in fund balances – total governmental funds, page 80 135,745$
Amounts reported for governmental activities in the statement of activities
are different from the statements of revenues, expenditures and changes in
fund balances – governmental funds because:
Governmental funds report capital outlays as expenditures while governmental
activities report depreciation expense to allocate those expenditures over
the life of the assets.
Depreciation expense for the year (24,945)
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 (18,791)
Change in net position of governmental activities, page 27 92,009$
- 82 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2020
See independent auditors’ report.
ASSETS
Cash and cash equivalents 359,280$
Receivables, net 55,329
Prepaid items 18,148
Capital assets not being depreciated:
Land 10,674,228
Construction in progress 50,191
Capital assets net of accumulated depreciation:
Buildings and improvements 7,727,321
Runways 16,807,259
Total assets 35,691,756$
LIABILITIES
Accounts payable and accrued liabilities 43,423$
Customer deposits 46,600
Long-term liabilities:
Due within one year 200,000
Due in more than one year 6,495,629
Total liabilities 6,785,652
DEFERRED INFLOWS OF RESOURCES
Service concession arrangement revenue
applicable to future years 5,678,460
NET POSITION
Net investment in capital assets 28,563,370
Unassigned (5,335,726)
Total net position 23,227,644
Total liabilities and fund balances 35,691,756$
- 83 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
OPERATING REVENUES
Fuel sales and rentals 238,957$
Total operating revenues 238,957
OPERATING EXPENSES
Insurance 41,552
Legal and professional 41,350
Maintenance 63,995
Depreciation 508,454
Other 11,389
Total operating expenses 666,740
OPERATING LOSS (427,783)
NONOPERATING REVENUES (EXPENSES)
Revenue from service concession arrangement 213,614
Intergovernmental revenue 381,948
Payments from City of Fairhope 320,000
Interest expense (150,228)
Miscellaneous 3,500
Interest income 2,848
Total nonoperating revenues (expenses) 771,682
Change in net position 343,899
Net position – beginning of year 22,883,745
NET POSITION – END OF YEAR 23,227,644$
- 84 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 289,057$
Paid to suppliers for goods and services (160,680)
Net cash provided by operating activities 128,377
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Amounts received from City of Fairhope 320,000
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Repayment of debt (200,000)
Interest paid (150,228)
Capital grants received 688,605
Acquisition of capital assets (718,695)
Net cash used in capital and related
financing activities (380,318)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 2,848
NET INCREASE IN CASH 70,907
CASH – BEGINNING OF YEAR 288,373
CASH – END OF YEAR 359,280$
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss (427,783)$
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Other nonoperating revenues 3,500
Depreciation 508,454
Change in operating assets and operating liabilities:
Increase in prepaid items (2,394)
Increase in customer deposits 46,600
Net cash provided by operating activities 128,377$
- 85 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2020
See independent auditors’ report.
CR 13 Sedge to Manley sidewalk 469,257$
City street upgrades 407,225
Fly Creek Marina seawall 343,863
US 98 and CR 13 sidewalks 238,344
Drainage improvements 181,699
Transporation and pedestrian infrastrucutre 176,289
Main pier electrical upgrades 102,893
AL trans rehab US 98 102,610
K-1 Center upgrades 51,600
Improvements Farihope Ave to Bancroft 38,351
Other projects 32,724
BRATS Hub transit shelter 30,300
Stadium ADA platforms and ramps 21,457
North beach restrooms 17,130
Total 2,213,742$
The above items are only from the capital projects fund.
- 86 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2020
See independent auditors’ report.
Natural Water and
Electric Gas Waste Water
Fund Fund Fund
A. Utility customers at September 30, 2020 were as follows:
Number of customers 6,890 12,102 19,608
Number of metered customers 6,890 12,102 19,608
Number of unmetered customers - - -
Number of waste water customers - - 11,886
B. Annual net income of utility operations Natural Water and
Electric Gas Waste Water
Fund Fund Fund Total
Income from operations 3,274,385$ 1,829,221$ 4,763,777$ 9,867,383$
Add:
Depreciation and amortization 851,630 510,799 1,691,530 3,053,959
Interest income 127,938 181,535 210,071 519,544
Annual net income as prescribed by debt covenants 4,253,953$ 2,521,555$ 6,665,378$ 13,440,886$
C. Utility fund casualty insurance coverage on electrical substations, natural gas facilities, water and waste
water facilities is included in a blanket policy with the Governmental Funds general capital assets, buildings
and facilities. The City of Fairhope, Alabama is the named insured on all policies.
Comprehensive general liability – expires January 2021 $ 1,000,000
Buildings and facilities – expires January 2021 108,522,359
Equipment – expires January 2021 6,183,918
Automobile – expires January 2021
Liability 1,000,000
Uninsured motorist 50,000
Public officials errors and omissions liability – expires January 2021
Aggregate 2,000,000
Per occurrence 1,000,000
Police liability – expires January 2021
Aggregate 2,000,000
Per occurrence 1,000,000
Excess liability policy for general liability, police and public official – expires January 2021 6,000,000
D. The City has complied with all requirements of the respective bond indentures.
- 87 - CITY OF FAIRHOPE, ALABAMA SUMMARY OF DEPOSITS, WITHDRAWALS AND BALANCES OF SELECTED TRUST ACCOUNTS AS REQUIRED UNDER CERTAIN TRUST INDENTURES SEPTEMBER 30, 2020 See independent auditors’ report. 1996Capital 2011 2011 2015ImprovementWarrant FundReserve Fund Reserve FundBalance October 1, 2019 50,000$ 568,106$ 1,422,497$ 378,483$ Deposits 611 1,032,664 10,403 2,768 Disbursements - (992,555) (17,221) (4,582) Balance September 30, 2020 50,611$ 608,215$ 1,415,679$ 376,669$ 2015 2020 2020 2020Warrant Fund Reserve Fund Warrant Fund Trust FundBalance October 1, 2019 311,360$ -$ -$ -$ Deposits 407,893 41,413 3,236 11,484,476 Disbursements (408,142) - - - Balance September 30, 2020 311,111$ 41,413$ 3,236$ 11,484,476$
STATISTICAL SECTION
This part of the City of Fairhope, Alabama's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says
about the government's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.88-93
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.94-99
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.100-103
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.104-105
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.106-108
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports
for the relevant year.
STATISTICAL SECTION
- 88 - CITY OF FAIRHOPE, ALABAMA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Governmental activities Net investment in capital assets 66,845,689$ 66,016,012$ 65,671,272$ 74,804,467$ 76,208,248$ 83,545,906$ 86,900,546$ 88,279,810$ 94,795,255$ 97,649,862$ Restricted 1,193,604 1,015,592 2,007,967 1,557,163 2,308,667 1,706,056 650,031 750,122 227,092 1,135,047 Unrestricted 5,064,845 7,056,984 8,586,709 9,513,008 4,619,015 2,124,391 8,284,540 2,860,140 828,480 819,243 Total governmental activities net position 73,104,138$ 74,088,588$ 76,265,948$ 85,874,638$ 83,135,930$ 87,376,353$ 95,835,117$ 91,890,072$ 95,850,827$ 99,604,152$ Business-type activities Net investment in capital assets 25,786,974$ 17,990,946$ 29,971,506$ 42,025,762$ 44,488,322$ 45,962,724$ 48,750,251$ 50,268,633$ 53,004,032$ 61,730,548$ Restricted 1,658,631 12,337,047 3,698,889 3,718,288 2,619,251 2,907,634 2,693,371 2,713,478 2,730,446 14,291,410 Unrestricted 10,610,123 10,047,736 10,197,284 2,273,605 5,238,460 7,587,850 8,586,317 12,564,193 18,201,729 9,441,704 Total business-type activities net position 38,055,728$ 40,375,729$ 43,867,679$ 48,017,655$ 52,346,033$ 56,458,208$ 60,029,939$ 65,546,304$ 73,936,207$ 85,463,662$ Primary government Net investment in capital assets 92,632,663$ 84,006,958$ 95,642,778$ 116,830,229$ 120,696,570$ 129,508,630$ 135,650,797$ 138,548,443$ 147,799,287$ 159,380,410$ Restricted 2,852,235 13,352,639 5,706,856 5,275,451 4,927,918 4,613,690 3,343,402 3,463,600 2,957,538 15,426,457 Unrestricted 15,674,968 17,104,720 18,783,993 11,786,613 9,857,475 9,712,241 16,870,857 15,424,333 19,030,209 10,260,947 Total primary government net position 111,159,866$ 114,464,317$ 120,133,627$ 133,892,293$ 135,481,963$ 143,834,561$ 155,865,056$ 157,436,376$ 169,787,034$ 185,067,814$ Fiscal Year
- 89 - CITY OF FAIRHOPE, ALABAMA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020ExpensesGovernmental activities: General government6,176,077$ 8,103,118$ 7,451,793$ 9,067,340$ 8,890,052$ 9,828,668$ 7,232,746$ 5,580,501$ 5,859,684$ 7,278,497$ Public safety5,696,701 5,387,302 4,848,790 4,651,958 4,370,285 4,873,102 6,051,285 6,744,158 6,747,159 7,125,224 Public works 6,119,768 7,317,191 5,820,858 5,968,995 5,848,267 5,777,295 6,323,212 8,041,071 8,273,373 8,763,332 Cultural and recreational 2,899,439 2,722,089 2,910,651 2,893,490 3,055,121 3,564,948 4,896,744 6,899,557 6,921,431 6,491,954 Airport Authority225,843 281,124 443,000 443,000 412,632 428,000 342,000 320,000 320,000 320,000 Public Library Board 798,997 810,636 840,636 886,028 924,736 1,025,236 1,025,887 1,024,522 1,029,124 1,069,323 Interest on long-term debt 633,161 589,174 507,982 472,222 344,808 339,051 53,853 94,506 71,726 27,969 Total governmental activities expenses 22,549,986 25,210,634 22,823,710 24,383,033 23,845,901 25,836,300 25,925,727 28,704,315 29,222,497 31,076,299 Business-type activities: Natural gas 5,037,587 4,484,683 5,234,887 5,529,610 5,056,618 4,886,415 4,949,991 4,930,235 5,777,998 5,670,355 Electric 16,909,931 16,912,834 17,164,781 18,379,231 18,227,563 17,683,205 17,622,258 16,966,013 17,063,612 17,022,979 Water and waste water 6,616,671 7,050,997 7,294,799 7,165,113 7,085,714 8,042,137 8,413,111 7,631,278 8,486,035 9,213,371 Total business-type activities expenses 28,564,189 28,448,514 29,694,467 31,073,954 30,369,895 30,611,757 30,985,360 29,527,526 31,327,645 31,906,705 Total primary government expenses 51,114,175$ 53,659,148$ 52,518,177$ 55,456,987$ 54,215,796$ 56,448,057$ 56,911,087$ 58,231,841$ 60,550,142$ 62,983,004$ Program RevenuesGovernmental activities: Charges for services: General government 5,383,822$ 6,301,207$ 6,052,493$ 6,225,471$ 3,585,456$ 7,837,796$ 8,676,864$ 7,523,386$ 7,953,532$ 8,006,104$ Public safety241,104 289,432 291,749 285,573 - - - - - - Public works 1,391,722 1,408,179 1,431,883 1,462,243 4,730,645 1,547,682 1,594,839 1,769,059 1,916,788 2,073,829 Cultural and recreational 1,360,254 1,411,138 1,544,278 1,553,287 1,622,983 1,649,815 1,664,643 1,926,828 2,148,050 1,995,263 Operating grants and contributions 24,402 - - 9,144 - - 102,507 94,494 127,978 542,126 Capital grants and contributions 302,963 1,317,475 438,033 8,416,283 1,319,753 1,467,355 1,642,474 1,319,678 1,777,375 2,846,663 Total governmental activities program revenues 8,704,267 10,727,431 9,758,436 17,952,001 11,258,837 12,502,648 13,681,327 12,633,445 13,923,723 15,463,985 Business-type activities: Charges for services: Natural gas 8,219,447 6,191,986 6,769,649 8,023,473 7,354,080 6,276,414 6,382,976 7,410,880 7,771,857 7,428,215 Electric 19,838,004 18,891,334 19,647,662 21,049,277 20,527,031 20,218,941 19,244,121 20,767,707 20,779,858 20,298,577 Water and waste water 10,287,898 9,838,580 9,980,089 10,018,231 10,860,135 11,164,497 11,870,652 11,529,979 12,538,531 13,625,353 Operating grants and contributions - - - - - - - - - 24,299 Capital grants and contributions - - - - - - - - 253,028 2,304,665 Total business-type activities program revenues 38,345,349 34,921,900 36,397,400 39,090,981 38,741,246 37,659,852 37,497,749 39,708,566 41,343,274 43,681,109 Total primary government program revenues 47,049,616$ 45,649,331$ 46,155,836$ 57,042,982$ 50,000,083$ 50,162,500$ 51,179,076$ 52,342,011$ 55,266,997$ 59,145,094$ Fiscal Year
- 90 - CITY OF FAIRHOPE, ALABAMA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Net (expense)/revenueGovernmental activities (13,845,719)$ (14,483,203)$ (13,065,274)$ (6,431,032)$ (12,587,064)$ (13,333,652)$ (12,244,400)$ (16,070,870)$ (15,298,774)$ (15,612,314)$ Business-type activities 9,781,160 6,473,386 6,702,933 8,017,027 8,371,351 7,048,095 6,512,389 10,181,040 10,015,629 11,774,404 Total primary government net expense (4,064,559)$ (8,009,817)$ (6,362,341)$ 1,585,995$ (4,215,713)$ (6,285,557)$ (5,732,011)$ (5,889,830)$ (5,283,145)$ (3,837,910)$ General Revenues and Other Changes in Net PositionGovernmental activities: Taxes Property taxes 4,590,840$ 4,591,739$ 4,298,046$ 4,330,537$ 4,550,766$ 4,869,877$ 5,050,643$ 5,535,117$ 5,947,563$ 6,354,890$ Sales tax 4,590,149 4,898,362 5,437,863 6,518,249 6,797,757 7,422,726 8,069,350 8,444,241 9,269,702 9,930,150 Liquor taxes 393,123 425,888 425,816 445,132 451,719 482,755 536,643 498,044 606,819 632,363 Lodging taxes 495,870 569,142 643,495 614,278 681,419 696,379 762,562 653,697 1,116,242 911,537 Other taxes 120,518 124,234 139,666 138,204 138,382 133,057 139,444 127,513 122,059 116,455 Intergovernmental 248,011 314,525 596,816 389,561 1,695,688 568,566 - - - - Investment earnings 249,489 226,642 251,512 239,205 228,670 302,181 335,106 59,157 126,115 274,246 Loss on sale of assets - - - (261,340) - - - - - - Other124,161 143,319 213,169 147,672 705,142 147,452 283,385 262,849 292,339 341,897 Transfer of Golf Fund to Governmental Activities - - - - - - - - - - Transfers in/(out) 4,827,147 4,173,802 3,236,251 3,612,482 1,826,575 2,951,082 2,753,244 3,181,000 1,778,690 804,101 Total governmental activities 15,639,308 15,467,653 15,242,634 16,173,980 17,076,118 17,574,075 17,930,377 18,761,618 19,259,529 19,365,639 Business-type activities: Investment earnings 58,522 20,417 25,268 30,815 18,440 15,162 23,552 53,651 136,797 519,544 Other- - - - - - 19,276 14,775 16,167 37,608 Transfers in/(out) (4,827,147) (4,173,802) (3,236,251) (3,612,482) (1,826,575) (2,951,082) (2,753,244) (3,181,000) (1,778,690) (804,101) Total business-type activities (4,768,625) (4,153,385) (3,210,983) (3,581,667) (1,808,135) (2,935,920) (2,710,416) (3,112,574) (1,625,726) (246,949) Total primary government 10,870,683$ 11,314,268$ 12,031,651$ 12,592,313$ 15,267,983$ 14,638,155$ 15,219,961$ 15,649,044$ 17,633,803$ 19,118,690$ Change in Net PositionGovernmental activities 1,793,589$ 984,450$ 2,177,360$ 9,742,948$ 4,489,054$ 4,240,423$ 5,685,977$ 2,690,748$ 3,960,755$ 3,753,325$ Business-type activities 5,012,535 2,320,001 3,491,950 4,435,360 6,563,216 4,112,175 3,801,973 7,068,466 8,389,903 11,527,455 Total primary government 6,806,124$ 3,304,451$ 5,669,310$ 14,178,308$ 11,052,270$ 8,352,598$ 9,487,950$ 9,759,214$ 12,350,658$ 15,280,780$ Fiscal Year
- 91 - CITY OF FAIRHOPE, ALABAMA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (accrual basis of accounting) Beer, WineFiscal Sales Ad Valorem Automobile and Liquor Cigarette Lodging DogYear Tax Tax Tax Tax Tax Tax Tax Total2011 4,590,149$ 4,102,942$ 487,897$ 393,123$ 120,458$ 495,870$ 61$ 10,190,500$ 2012 4,898,362 4,065,822 525,917 425,888 124,183 569,142 51 10,609,365 2013 5,437,863 3,738,511 559,534 425,816 139,526 643,495 141 10,944,886 2014 6,518,174 3,759,584 570,954 445,132 138,203 614,278 75 12,046,400 2015 6,797,757 3,950,750 600,015 451,719 138,298 681,419 85 12,620,043 2016 7,422,726 4,218,538 651,339 482,755 132,957 696,379 100 13,604,794 2017 8,069,350 4,310,029 740,614 536,643 139,380 762,562 64 14,558,642 2018 8,444,241 4,874,223 660,894 498,044 127,427 653,697 86 15,258,612 2019 9,269,702 5,270,773 676,789 606,819 122,006 1,116,242 54 17,062,385 2020 9,930,150 5,638,511 716,379 632,363 116,396 911,537 59 17,945,395
- 92 - CITY OF FAIRHOPE, ALABAMA FUND BALANCES OF GOVERNMENTAL FUNDS (modified accrual basis of accounting) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020General fund Nonspendable -$ -$ -$ -$ -$ -$ 85,490$ 303,387$ 323,647$ 136,037$ Committed 5,014,205 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 7,062,075 8,343,666 8,343,666 7,734,594 Unassigned 2,145,950 3,295,547 3,447,451 3,449,523 3,992,803 3,629,943 6,819,862 5,061,071 4,575,780 6,013,275 Total general fund 7,160,155$ 10,295,547$ 10,447,451$ 10,449,523$ 10,992,803$ 10,629,943$ 13,967,427$ 13,708,124$ 13,243,093$ 13,883,906$ All other governmental fundsRestricted: Debt service – other governmental funds 350,020$ 325,214$ 339,308$ 357,156$ 348,720$ 516,120$ 527,858$ 541,587$ -$ -$ Road maintenance – other governmental funds - - 274,746 46,007 105,947 35,936 122,173 208,535 227,092 318,704 Capital improvements - - - - - - - - - 816,343 Committed, reported in: Other governmental funds 167,786 1,029,075 1,252,213 851,448 826,435 1,478,912 2,255,722 5,403,308 3,726,721 3,036,724 Capital projects fund 675,799 - 58,625 1,956,986 4,398,406 1,364,704 4,147,827 2,787,639 1,943,247 862,824 Unassigned: Capital projects fund - (1,069,424) 181,085 - - - - - - - Other governmental funds - - - - - - - - (1,160) (1,160) Total all other governmental funds 1,193,605$ 284,865$ 2,105,977$ 3,211,597$ 5,679,508$ 3,395,672$ 7,053,580$ 8,941,069$ 5,895,900$ 5,033,435$ The City implemented GASB Statement number 54 fiscal year 2011. This statement replaces the previous classifications of reserved, unreserved, designated and undesignated fund balances.Fiscal Year
- 93 - CITY OF FAIRHOPE, ALABAMA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020REVENUES Local taxes 10,190,500$ 10,609,364$ 10,944,885$ 12,046,399$ 12,620,043$ 13,604,795$ 14,681,633$ 15,259,245$ 17,002,565$ 17,948,978$ Licenses and permits 2,295,795 2,612,793 2,731,766 3,000,673 3,306,620 3,596,049 3,945,641 4,364,902 4,570,915 4,315,235 Fines and forfeitures 241,104 289,432 291,749 285,573 278,837 236,724 284,893 273,887 237,812 199,228 Intergovernmental345,966 667,344 1,022,649 991,614 639,523 693,761 876,086 954,086 1,090,181 2,470,197 Contribution from Public Library Board183,285 1,000 1,500 - - - - - - - Interest and rents 249,489 226,748 253,003 239,205 228,669 302,181 335,106 401,705 470,753 576,479 Charges for services 4,479,749 5,096,593 5,317,255 5,165,291 5,395,287 6,504,860 6,910,066 5,075,950 5,852,747 6,098,090 Assessments - 3,659 - - - - - - - - Golf course revenue 1,020,250 1,001,627 1,113,277 1,067,593 1,137,114 1,127,306 1,190,281 1,062,204 1,060,650 1,000,949 Recreation Department 369,135 368,493 391,024 436,453 444,410 476,772 466,437 442,324 456,362 238,811 BP settlement proceeds - - - - 1,361,255 - - - - - Legal settlement - - - - 598,640 - - - - - Other 170,422 184,411 253,146 196,913 180,644 223,293 338,058 368,387 660,915 1,219,633 Total revenues 19,545,695 21,061,464 22,320,254 23,429,714 26,191,042 26,765,741 29,028,201 28,202,690 31,402,900 34,067,600 EXPENDITURES General government 5,335,143 7,026,721 6,862,394 8,311,150 8,289,346 8,738,427 6,451,497 4,912,047 5,303,050 5,994,284 Public safety5,336,275 5,010,671 4,477,321 4,276,774 4,152,128 4,518,908 5,469,039 6,202,161 6,571,647 6,869,403 Public works 4,385,201 5,480,435 4,002,098 4,379,670 3,980,822 4,118,350 4,651,125 6,386,662 6,510,388 6,963,031 Cultural and recreational 2,659,218 2,378,268 2,512,499 2,491,611 2,664,900 2,989,627 4,017,963 6,028,022 6,238,487 5,783,450 Airport Authority225,843 281,124 443,000 443,000 412,632 428,000 342,000 320,000 320,000 320,000 Public Library Board565,000 600,000 630,000 674,100 714,100 814,600 814,600 814,600 818,477 859,401 Other 89,620 160,888 89,133 89,785 93,436 162,736 115,753 100,732 170,203 863,699 Debt service: Principal 831,483 4,804,960 1,485,545 2,894,540 483,780 6,478,558 1,573,560 1,578,340 3,775,470 641,366 Interest 666,652 616,221 508,483 465,409 374,479 390,971 111,633 94,751 87,534 28,974 Capital outlay1,474,937 664,526 1,418,813 1,908,464 3,840,803 7,698,341 2,359,222 3,610,512 7,746,773 8,425,744 Total expenditures 21,569,372 27,023,814 22,429,286 25,934,503 25,006,426 36,338,518 25,906,392 30,047,827 37,542,029 36,749,352 Excess (deficiency) of revenues over expenditures (2,023,677) (5,962,350) (109,032) (2,504,789) 1,184,616 (9,572,777) 3,121,809 (1,845,137) (6,139,129) (2,681,752) OTHER FINANCING SOURCES (USES) Proceeds from issuance of debt - 4,015,200 - - - 3,975,000 - - - 1,500,000 Proceeds from capital lease - - - - - - - 292,323 990,929 155,999 Transfers in 6,557,708 10,379,818 7,236,241 9,640,199 7,272,735 8,568,025 6,817,864 7,400,003 6,466,679 4,226,279 Transfers out (1,730,561) (6,206,016) (3,999,990) (6,027,718) (5,446,160) (5,616,944) (4,098,281) (4,219,003) (4,828,679) (3,422,178) Total other financing sources (uses) 4,827,147 8,189,002 3,236,251 3,612,481 1,826,575 6,926,081 2,719,583 3,473,323 2,628,929 2,460,100 Net change in fund balances 2,803,470$ 2,226,652$ 3,127,219$ 1,107,692$ 3,011,191$ (2,646,696)$ 5,841,392$ 1,628,186$ (3,510,200)$ (221,652)$ Debt service as a percentage of noncapital expenditures 7.5% 20.6% 9.5% 14.0% 4.1% 24.0% 7.2% 6.3% 13.0% 2.4%Fiscal Year
- 94 - CITY OF FAIRHOPE, ALABAMA ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS FiscalTotal EstimatedYearLess: Total Taxable Direct ActualEnded Residential Commercial Industrial Tax Exempt Assessed Tax TaxableSeptember 30 Property Property Property Real Property Value Rate Value2011 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 2016 188,693,940 1,246,280 201,141,240 64,329,960 326,751,500 15 4,901,272,500 2017 204,961,080 379,420 207,388,960 65,103,500 347,625,960 15 5,214,389,400 2018 227,170,100 1,190,460 217,138,040 69,413,140 376,085,460 15 5,641,281,900 2019 252,096,200 1,136,540 221,101,860 70,209,480 404,125,120 15 6,061,876,800 2020 268,746,300 1,136,540 237,638,580 77,087,260 430,434,160 15 6,456,512,400 Source: Baldwin County Revenue Commissioner
- 95 - CITY OF FAIRHOPE, ALABAMA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TotalTotal Road/ Health Care Total Total Direct andFiscal General School Bond Tax City General Bridge Fire School Authority County General School Soldier State OverlappingYear Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Rates2011 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02012 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02013 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 43.02014 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 43.02015 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 43.02016 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 43.02017 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 43.02018 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 43.02019 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 43.02020 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0Source: Baldwin County CommissionCountyStateOverlapping RatesCity
- 96 - CITY OF FAIRHOPE, ALABAMA PRINCIPAL PROPERTY TAXPAYERS YEARS ENDED SEPTEMBER 30, 2020 AND 2011 Taxable TaxableAssessed AssessedTaxpayer Value Rank Value RankBattles Road LLC 3,275,200$ 1 0.8% -$ - 0.0%FST Wal-mart Stores East L P 3,169,840 2 0.7% - - 0.0%Arbor Gates Holdings LLC 2,607,280 3 0.6% 2,279,380 2 0.8%FST Mississippi Baldwin Square LLC 2,111,180 4 0.5% 1,800,520 4 0.6%PSM Alabama Holdings LLC 2,088,020 5 0.5% - - 0.0%Fairhope Ridge LLC 1,592,360 6 0.4% - - 0.0%FST Fairhope Hospitality Group LLC 1,590,100 7 0.4% - - 0.0%A 1 Corte Jr Family Limited Partnership 1,586,220 8 0.4% 1,481,240 6 0.5%Mediacom Communicaions Corporation 1,438,800 9 0.3% - - 0.0%Truland Homes LLC 1,403,580 10 0.3% - - 0.0%Bones Set Too LLC - - 0.0% - - 0.0%Fairhope LLC - - 0.0% - - 0.0%Bellsouth Tele, Inc dba AT&T - - 0.0% - - 0.0%CHS Properties Inc - - 0.0% 1,162,540 7 0.4%Fairhope Yacht Club - - 0.0% 1,133,740 8 0.4%Pelican Properties, Inc - - 0.0% - - 0.0%Bones & Babies, LLC - - 0.0% 1,115,100 9 0.4%Fairhope Commercial Investments - - 0.0% 1,093,900 10 0.4%Fairhope LLC - - 0.0% 1,671,700 5 0.6%Point Clear Partners LLC - - 0.0% 1,813,460 3 0.6%Bayview II Developer LLC - - 0.0% 8,042,720 1 2.8%20,862,580$ 4.9% 21,594,300$ 7.5%Source: Baldwin County Revenue CommissionerAssessed Value2020Percentage ofTotal TaxableAssessed ValuePercentage ofTotal Taxable2011
- 97 - CITY OF FAIRHOPE, ALABAMA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISAL YEARS Fiscal Year Total Tax Collections Ended Levy for in SubsequentSeptember 30 Fiscal Year Amount Years Amount2011 4,375,791$ 3,336,261$ 76.24% 971,558$ 4,307,819$ 98.45%2012 4,341,309 3,327,041 76.64% 673,667 4,000,708 92.15%2013 4,032,401 3,590,944 89.05% 414,166 4,005,110 99.32%2014 4,128,267 3,834,734 92.89% 175,177 4,009,911 97.13%2015 4,556,121 4,123,187 90.50% 74,801 4,197,988 92.14%2016 4,911,340 4,751,476 96.75% 4,727 4,756,203 96.84%2017 4,908,058 4,540,127 92.50% 7,296 4,547,423 92.65%2018 5,612,862 5,401,624 96.24% 5,662 5,407,286 96.34%2019 6,019,599 5,950,335 98.85% 3,919 5,954,254 98.91%2020 6,413,545 6,225,062 97.06% 2,510 6,227,572 97.10%Source: Baldwin County Revenue Commissioner Percentage of LevyCollected within the Total Collections to DateFiscal Year of the LevyPercentage of Levy
- 98 -
CITY OF FAIRHOPE, ALABAMA
DIRECT AND OVERLAPPING SALES TAX RATES
CURRENT AND LAST FOUR FISCAL YEARS
City
Fiscal Direct Baldwin State of
Year Rate County Alabama
2016 2.00% 3.00% 4.00%
2017 2.00% 3.00% 4.00%
2018 2.00% 3.00% 4.00%
2019 2.00% 3.00% 4.00%
2020 2.00% 3.00% 4.00%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009
- 99 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAXPAYERS
LAST TEN YEARS
Fiscal Top 25 Taxpayers
Year (approximate) Total Tax % of Total Tax
2011 2,502,259$ 4,591,088$ 55%
2012 2,525,722 4,855,972 52%
2013 2,641,175 5,437,863 49%
2014 3,673,425 6,518,249 56%
2015 3,624,562 6,733,115 54%
2016 3,788,930 7,232,073 52%
2017 4,059,864 7,865,989 52%
2018 4,871,492 8,249,479 59%
2019 4,450,078 8,723,465 51%
2020 4,727,284 9,166,330 52%
Source: City Treasurer's Office and Alabama Department of Revenue
Note: State law prohibits the disclosure of tax information for specific taxpayers.
- 100 - CITY OF FAIRHOPE, ALABAMA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS General General Utilities Total Percentage LiabilityFiscal Obligation Notes Capital Obligation Revenue Primary of Personal PerYear Debt Payable Leases Debt Debt Government Income Capita2011 14,965,792$ -$ 24,449$ 241,993$ 14,925,000$ 30,157,234$ 6.47% 1,818$ 2012 14,200,481 - - 226,260 23,125,000 37,551,741 8.07% 2,279 2013 12,682,152 - - 209,680 21,636,094 34,527,926 6.93% 2,107 2014 9,789,376 - - 5,904,220 20,571,057 36,264,653 6.23% 2,159 2015 9,307,360 - - 4,743,000 16,574,669 30,625,029 4.87% 1,693 2016 6,833,058 - - 3,581,942 16,152,226 26,567,226 3.92% 1,418 2017 5,259,498 - - 2,420,502 14,842,522 22,522,522 3.18% 1,160 2018 3,681,158 - 292,323 1,258,842 14,017,818 19,250,141 2.38% 920 2019 - - 1,188,940 - 13,168,115 14,357,055 1.57% 650 2020 - 1,200,000 1,003,573 - 23,858,411 26,061,984 2.76% 1,149 Governmental Activities Business-Type Activities
- 101 -
CITY OF FAIRHOPE, ALABAMA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
General Less: Amounts Percentage of Liability
Fiscal Obligation Available in Debt Net Taxable Per
Year Debt Service Fund Total Sales Capita
2011 15,207,785$ 350,020$ 14,857,765$ 3.19% 896$
2012 14,426,741 325,214 14,101,527 3.03% 856
2013 12,891,832 339,308 12,552,524 2.52% 766
2014 15,693,596 357,156 15,336,440 2.64% 913
2015 14,050,360 348,720 13,701,640 2.18% 757
2016 10,415,000 516,120 9,898,880 1.46% 529
2017 7,680,000 527,858 7,152,142 1.01% 368
2018 4,940,000 541,587 4,398,413 0.54% 210
2019 - - - 0.00% -
2020 - - - 0.00% -
- 102 -
CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30, 2020
Percentage Amount
of debt of debt
Applicable Applicable
Outstanding to the City of to the City of
Debt Fairhope (1) Fairhope
Direct debt of the City 2,203,573$ 100.00% 2,203,573$
Overlapping Debt (Supported by ad valorem tax)
Baldwin County 83,652,086 8.32%(1)6,959,854
9,163,427$
(1) Percentage of net assessed value of property in City ($430,513,620) to net assessed value of property in Baldwin
County ($5,172,599,200) on October 1, 2020.
- 103 - CITY OF FAIRHOPE, ALABAMA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Debt limit 58,343,880$ 57,884,120$ 53,765,340$ 55,043,560$ 60,737,532$ 65,350,300$ 69,525,192$ 75,223,856$ 80,826,248$ 86,102,724$ Total net debt applicable to limit 15,207,785 14,426,741 12,924,616 15,724,616 14,079,616 10,415,000 7,680,000 4,265,804 1,188,940 2,203,573 Legal debt margin 43,136,095$ 43,457,379$ 40,840,724$ 39,318,944$ 46,657,916$ 54,935,300$ 61,845,192$ 70,958,052$ 79,637,308$ 83,899,151$ Total net debt applicable to limitas a percentage of debt limit 26.07% 24.92% 24.04% 28.57% 23.18% 15.94% 11.05% 5.67% 1.47% 2.56%Legal Debt Margin Calculation for Fiscal Year 2020Total assessed value 430,513,620$ Debt limit (20% of total assessed value) 86,102,724$ Debt applicable to limit:General obligation warrants (including capital leases) 2,203,573 Legal debt margin 83,899,151$ Fiscal Year
- 104 -
CITY OF FAIRHOPE, ALABAMA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per
Capita
Fiscal Personal Personal School Unemployment
Year Population Income Income Enrollment Rate
2011 16,588 466,189,152$ 28,104$ 4,477 8.7%
2012 16,479 465,548,229 28,251 4,487 7.1%
2013 16,385 497,890,995 30,387 4,526 6.1%
2014 16,794 581,996,070 34,655 4,734 5.8%
2015 18,089 628,773,640 34,760 4,995 5.4%
2016 18,730 677,183,150 36,155 5,333 5.3%
2017 19,421 708,905,342 36,502 5,416 4.7%
2018 20,935 809,116,815 38,649 5,473 4.3%
2019 22,085 911,690,885 41,281 5,528 3.8%
2020 22,677 943,650,001 41,613 5,403 5.5%
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
- 105 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
YEARS ENDED SEPTEMBER 30, 2020 AND 2011
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Thomas Hospital 1,000 1 10.9% 1,150 1 19.3%
Grand Hotel 725 2 7.9% 750 2 12.6%
Board of Education - Fairhope 560 3 6.1% - - 0.0%
City of Fairhope 446 4 4.8% 320 4 5.4%
Wal-Mart 325 5 3.5% 400 3 6.7%
Publix 150 6 1.6%75 6 1.3%
Segers Aero 130 7 1.4% - - 0.0%
Winn-Dixie 85 8 0.9%90 5 1.5%
Piggly Wiggly 75 9 0.8%- - 0.0%
CPSI 75 10 0.8%- - 0.0%
Bayside Orthopedics - - 0.0% - - 0.0%
Print Xcel - - 0.0% 64 8 1.1%
Bruno's - - 0.0% 60 9 1.0%
Fokkert AIR, Inc.- - 0.0% - - 0.0%
Balloons Everywhere - - 0.0% 65 7 1.1%
3,571 38.7% 2,974 50.0%
Sources: Eastern Shore Chamber of Commerce and State Department of Industrial Relations
Note: Total city employment number represents people residing in City of Fairhope that are employed
(place of residence) rather than employment for City of Fairhope businesses
2011: 5,971 2020: 9,208
2020 2011
- 106 - CITY OF FAIRHOPE, ALABAMA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020FunctionGeneral Government 53 53 48 48 49 49 49 53 62 64 Public Safety: Police 48 44 48 46 46 45 49 52 59 59 Fire: Firefighters and Dispatch 17 18 17 18 17 14 15 16 14 17 Highways and Streets: Public Works 35 36 39 39 41 46 42 49 57 53 Sanitation 20 19 17 21 22 20 19 18 18 28 Cultural and Recreational: Recreation 19 19 24 23 25 26 29 32 31 34 Adult Recreation 14 14 9 10 11 12 11 11 13 12 Gas Department 18 18 17 15 15 15 16 18 21 22 Electric Department 17 18 17 22 21 19 19 22 20 26 Water/Waste Water Department 24 26 24 23 23 22 26 29 31 34 Golf Department 16 14 15 16 18 20 19 18 22 21 Total 281 279 275 281 288 288 294 318 348 370 Source: City of Fairhope Human Resources DepartmentFull-time Equivalent Employees as of September 30,
- 107 - CITY OF FAIRHOPE, ALABAMA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020FunctionPolice: Physical arrests 1,134 603 759 750 1,423 983 1,350 1,542 1,538 1,462 Parking violations 163 128 22 49 121 240 359 89 22 52 Traffic violations 1,419 2,215 1,379 887 633 1,726 2,490 1,684 1,656 1,613 Fire: Number of calls answered 801 657 690 853 836 865 1,025 1,058 1,023 1,236 Inspections 143 101 85 35 161 147 73 823 669 648 Highways and streets: Street resurfacing (miles) - 8.1 - - - 13.2 - 1.2 2.2 3.3 Potholes repaired* 425 450 1,345 1,480 1,620 2,933 2,300 4,928 5,466 1,152 Sanitation: Garbage collected (tons/year) 9,100 8,711 7,564 8,509 8,236 8,654 9,222 9,554 10,108 11,949 Trash collected (tons/year) 6,487 5,767 5,513 6,292 5,545 5,902 8,228 7,189 7,741 6,907 Recyclables collected (tons/year) 1,495 1,508 1,512 1,714 1,779 1,855 1,843 1,835 1,803 947 Cultural and recreational: Golf course rounds @ 9 hole rounds 61,283 65,500 62,266 59,261 57,405 56,613 58,416 53,995 55,971 53,740 Pavilion/park parties 64 56 58 61 59 44 28 32 22 19 Waste water: Average daily sewage treatment (millions of gallons) 1.8 1.8 1.8 1.8 2.0 2.2 2.4 2.4 2.3 2.6 Sources: Various government departments* The City changed the calculation method for potholes for fiscal year 2016 resulting in an increase.Fiscal Year
- 108 - CITY OF FAIRHOPE, ALABAMA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020FunctionPublic safety: Police: Stations 1 1 1 1 1 1 1 1 1 1 Patrol units 45 45 43 37 38 39 44 45 47 50 Fire stations 3333444444Highways and streets: Streets (miles) 98.1 99.1 99.1 103.84 106.54 108.64 111.14 112.64 114.76 116.56Cultural and recreational: Parks acreage 248 248 248 356 504 504 504 504 657 657 Parks 51 51 51 52 54 54 54 54 56 56 Swimming pools 3 3 3 3 3 3 3 3 3 3 Tennis courts 6 6 6 6 6 12 12 12 16 16 Community center 3 3 3 3 3 3 3 3 3 3Sewer: Sanitary sewers (miles) 125 125 126 126 130 135 175 175 180 185 Storm sewers (miles) 16.75 17.25 17.25 19.17 20.57 22.77 25.77 27.29 29.5 30.73 Maximum daily treatment capacity (millions of gallons) 4 4 4 4 4 4.2 4 4 4 4Sources: Various government departmentsFiscal Year