HomeMy WebLinkAbout2021City of Fairhope, Alabama
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021
PREPARED BY:
THE OFFICE OF THE CITY TREASURER
i
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2021
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal iv
Certificate of Achievement for Excellence in Financial Reporting viii
Organizational Chart ix
City Elected and Appointed Officials x
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 12
Statement of Activities 13
Fund Financial Statements
Governmental Fund Financial Statements
Fund Balance Sheets - Governmental Funds 14
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities 15
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 16
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 17
Proprietary Fund Financial Statements
Statement of Net Position - Proprietary Funds 18
Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 19
Statement of Cash Flows - Proprietary Funds 20
Discretely Presented Component Units
Combining Statement of Net Position - Discretely Presented
Component Units 21
Combining Statement of Activities - Discretely Presented
Component Units 22
Notes to the Financial Statements 23
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CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2021
TABLE OF CONTENTS (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION
Schedules of Employer Contributions 65
Schedules of Changes in Net Pension Liability 67
Schedules of Changes in Total OPEB Liability 69
Budgetary Comparison Schedule - General Fund 70
Notes to Required Supplementary Information 71
OTHER SUPPLEMENTARY INFORMATION
Combining Balance Sheets - Nonmajor Governmental Funds 72
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Nonmajor Governmental Funds 73
Fund Balance Sheet - Fairhope Public Library Board 74
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities - Fairhope Public Library Board 75
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fairhope Public Library Board 76
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Fairhope Public Library Board 77
Statement of Net Position - Fairhope Airport Authority 78
Statement of Revenues, Expenses and Changes in Net Position -
Fairhope Airport Authority 79
Statement of Cash Flows - Fairhope Airport Authority 80
Schedule of Capital Projects Expenditures 81
Schedule of Information Required by Bond Indentures 82
Summary of Deposits, Withdrawals and Balances of Selected Trust Accounts as
Required Under Certain Trust Indentures 83
iii
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2021
TABLE OF CONTENTS (continued)
Page
STATISTICAL SECTION
Net Position by Component 84
Changes in Net Position 85
Governmental Activities Tax Revenues by Source 87
Fund Balances of Governmental Funds 88
Changes in Fund Balances of Governmental Funds 89
Assessed Value and Estimated Actual Value of Taxable Property 90
Property Tax Rates - Direct and Overlapping Governments 91
Principal Property Taxpayers 92
Property Tax Levies and Collections 93
Direct and Overlapping Sales Tax Rates 94
Principal Sales Taxpayers 95
Ratios of Outstanding Debt by Type 96
Ratios of General Bonded Debt Outstanding 97
Computation of Overlapping Debt 98
Legal Debt Margin Information 99
Demographic and Economic Statistics 100
Principal Employers 101
Full-time Equivalent City Government Employees by Function 102
Operating Indicators by Function 103
Capital Asset Statistics by Function 104
INTRODUCTORY SECTION
viii
ix
CITY OF FAIRHOPE, ALABAMA
ORGANIZATIONAL CHART
SEPTEMBER 30, 2021
x
CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2021
Sherry Sullivan Mayor
Kevin Boone Councilmember
Jay Robinson Councilmember
Jack Burrell, CMO Councilmember
Corey Martin 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, 2021.
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 aggregate 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, 2021, 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 from 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
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 aggregate discretely presented
component units, each major fund, and the aggregate remaining fund information of the City as of September 30,
2021, 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 11, 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 65 through 71 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 72 through 83, 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 25, 2022, 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 25, 2022
THIS PAGE INTENTIONALLY LEFT BLANK
MANAGEMENT’S DISCUSSION AND ANALYSIS
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Fairhope, Alabama (the City), we present this narrative overview and
analysis designed to assist readers of the City’s financial statements for the fiscal year ended September 30,
2021. The intent of the Management’s Discussion and Analysis (MD&A) is to provide a brief, objective,
and easily readable analysis of the City’s financial performance for the year and its financial position at
fiscal year ended September 30, 2021.
Readers are encouraged to read the MD&A in conjunction with additional information furnished in the letter
of transmittal and the City’s financial statements included in this report.
Financial Highlights
The assets and deferred outflows of resources of the City of Fairhope exceeded its liabilities and
deferred inflows of resources by $202,693,940 at the close of the fiscal year ended September 30,
2021. An unrestricted surplus exists in the amount of $31,596,819, which may be used to meet
the government’s ongoing obligations.
The City’s total net position increased by $17,626,126, or 9.5% in comparison to the net position
at the beginning of the year. Net position of governmental activities increased $6,982,435, or
7.0% and net position of business-type activities increased $10,643,691, or 12.5%.
At the close of the current fiscal year, the City’s governmental funds reported a combined fund
balance of $24,280,466. This was an increase of $5,363,125 or 28.4% from the prior year.
At the end of the current fiscal year, total fund balance for the General Fund was $19,266,445, an
increase of $5,382,539 or 38.8% from the prior year. This is due to unbudgeted growth in tax
revenue along with cost savings across departments.
Sales and use tax, the City’s single largest revenue source, increased $1,797,749 or $18.1% from
the prior year primarily due to economic growth over the prior year.
In September 2020, the City issued the Series 2020 Utility Revenue Warrants in the amount of
$11,565,000, which refunded the Series 2011 Utility Revenue Warrants in November 2020.
The following schedule presents a comparison of revenues for all Governmental Funds for the
fiscal year ended September 30, 2021, to fiscal year ended September 30, 2020. Revenues
increased $13,527,500 or 39.7%, as compared to the previous year. The majority of this increase
was FEMA Reimbursement for Hurricane Sally.
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Increase % Increase
Revenues 2021 % of Total 2020 (Decrease)(Decrease)
Local taxes 20,810,059$ 43.72% 17,948,978$ 2,861,081$ 15.94%
Licenses and permits 4,544,325 9.55%4,315,235 229,090 5.31%
Fines and forfeitures 194,677 0.41%199,228 (4,551) -2.28%
Intergovernmental 11,205,009 23.54%2,470,197 8,734,812 353.61%
Interest and rents 465,462 0.98%576,479 (111,017) -19.26%
Charges for services 6,749,966 14.18%6,098,090 651,876 10.69%
Golf course revenue 1,272,891 2.67%1,000,949 271,942 27.17%
Recreation department 393,744 0.83%238,811 154,933 64.88%
Other 1,958,967 4.12%1,219,633 739,334 60.62%
47,595,100$ 100.00% 34,067,600$ 13,527,500$ 39.71%
All Governmental Funds
OVERVIEW OF THE FINANCIAL STATEMENTS
Management’s Discussion and Analysis is intended to serve as an introduction to the City’s financial
statements which include: government-wide financial statements, fund financial statements, and notes to the
financial statements. In addition to the basic financial statements, this report contains supplementary
information which may be of interest to the reader.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide the reader with a broad overview of the
financial position of the City and are similar to private-sector financial statements. The statements include a
statement of net position and a statement of activities.
The statement of net position presents information on all of the City’s assets, liabilities, and deferred
inflows/outflows of resources, with the difference reported as net position. This statement combines and
consolidates governmental funds’ current financial resources (short-term expendable resources) with capital
assets and long-term debt. Over time, increases or decreases may serve as a useful indicator of whether the
financial position of the City is improving or deteriorating.
The statement of activities follows the statement of net position and presents information on how the City’s
net position changed during the fiscal year. The statement presents all underlying events, which give rise to
the change in net position, regardless of the timing of the related cash flows. Items such as accounts payable,
or vacation leave (earned, but unused) will produce changes in cash in a future fiscal period.
Both of the government-wide financial statements distinguish functions that are supported by taxes and
intergovernmental revenues (governmental activities) from other functions that are intended to recover all or
a significant portion of their costs through user fees and charges (business-type activities).
Governmental activities reported in the statements include general government, public works, public safety,
cultural and recreational, and debt service. The business-type activities include the Electric Fund, Natural
Gas Fund and Water and Waste Water Fund.
The government-wide financial statements not only include the City (the primary government), but also the
legally separate component units, the Fairhope Public Library and the Fairhope Airport Authority, for which
the City is financially accountable. Financial information for these component units is reported separately
from the information presented for the primary government.
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Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Like most state and local governments, the City uses fund
accounting to ensure and demonstrate compliance with finance-related legal matters. All funds of the City
can be divided into two categories: governmental and proprietary funds.
Governmental Funds
Governmental funds are used to account for the same functions as those reported under the government-
wide statement of net position and statement of activities. However, unlike the government-wide financial
statements, governmental fund financial statements focus on events that produce near-term inflows and
outflows of expendable resources as well as the balances of expendable resources available at the end of the
year. Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of government-wide financial statements, it
is useful to compare information presented in the governmental funds with similar information presented in
the governmental activities in the government-wide financial statements. By doing so, the reader may better
understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities.
The City of Fairhope maintains ten (10) individual governmental funds. Information is presented separately
in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures,
and changes in fund balance of the major funds. Data from eight (8) non-major governmental funds are
combined into a single aggregated presentation. Individual fund data for each of these non-major
governmental funds is provided in the form of combining statements in the supplementary information
section of this report.
The City of Fairhope adopts an annual appropriated budget for its General Fund. Budgetary comparison
statements have been provided for the General Fund. The General Fund budgetary comparison schedule is
provided as part of the required supplementary information on page 70.
Proprietary Funds
When the City charges customers for the services it provides, whether to outside customers or to other units
of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the
same way that all activities are reported in the statement of net position and the statement of activities. The
City uses enterprise funds to account for Natural Gas Fund, Electric Fund and Water and Waste Water
Fund, which are used to account for the operations of the utilities. The City uses an internal service fund to
account for its employees’ medical insurance. The internal service fund is presented in the fund financial
statements.
Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to the full
understanding of the data presented in the government-wide and fund financial statements. The notes to the
financial statements start on page 23.
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Other Information
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 70.
Combining and individual statements and schedules referred to earlier, which present more detailed views of
nonmajor funds used in governmental and enterprise activities, can be found beginning on page 72 of this
report.
Government-Wide Financial Analysis
As year-to-year financial information is accumulated on a consistent basis, changes in net position may be
observed and used to discuss the changing financial position of the City as whole. The City’s net position at
fiscal year-end is $202,693,940. This is a $17,626,126 increase over last year’s adjusted net position. The
following table provides a summary of the City’s net position.
2021 2020 2021 2020 2021 2020
Current and other assets
(net of internal balances)29,089,992$ 21,699,620$ 39,206,817$ 47,251,933$ 68,296,809$ 68,951,553$
Internal balances (441,797) 41,440 441,797 (41,440) - -
Capital assets 100,341,725 99,853,435 79,119,256 74,027,037 179,460,981 173,880,472
Total Assets 128,989,920 121,594,495 118,767,870 121,237,530 247,757,790 242,832,025
Deferred charge on refunding - - 70,406 77,447 70,406 77,447
Pension related items 2,876,917 2,313,103 851,047 322,936 3,727,964 2,636,039
OPEB related items 1,306,903 1,006,801 468,513 648,914 1,775,416 1,655,715
Total Deferred Outflows
of Resources 4,183,820 3,319,904 1,389,966 1,049,297 5,573,786 4,369,201
Long-term liabilities 19,423,994 18,398,977 17,919,664 28,086,420 37,343,658 46,485,397
Other liabilities 4,683,320 3,481,889 5,400,156 7,763,298 10,083,476 11,245,187
Total Liabilities 24,107,314 21,880,866 23,319,820 35,849,718 47,427,134 57,730,584
Pension related items 689,653 842,412 88,898 143,665 778,551 986,077
OPEB related items 1,790,186 2,586,969 641,765 829,782 2,431,951 3,416,751
Total Deferred Inflows
of Resources 2,479,839 3,429,381 730,663 973,447 3,210,502 4,402,828
Net position
Net Investment in Capital
Assets 98,917,172 97,649,862 67,819,256 61,730,548 166,736,428 159,380,410
Restricted 1,011,343 1,135,047 3,349,350 14,291,410 4,360,693 15,426,457
Unrestricted 6,658,072 819,243 24,938,747 9,441,704 31,596,819 10,260,947
Total Net Position 106,586,587$ 99,604,152$ 96,107,353$ 85,463,662$ 202,693,940$ 185,067,814$
Governmental
Activities
Business-type
Activities Total
Total assets increased $4,925,765 or 2.0% from the previous fiscal year. This was primarily due to an
increase in capital assets of $5,580,509. Current year additions totaled $13,179,031 and consisted of
equipment, building and street improvements, and upgrades to the utility system. Current year depreciation
totaled $7,545,184.
Total liabilities decreased $10,303,450 or 17.8% from the previous fiscal year. This was due primarily to a
decrease in long-term debt of $9,141,739. In November 2020, the City refunded the Series 2011 Utility
Revenue Warrants in the amount of $12,570,000. The refunding was financed by the September 2020
issuance of the Series 2020 Utility Revenue Warrants, in the amount of $11,565,000.
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The largest portion of the City’s net position (82.3%) reflects its investment in capital assets (e.g., land,
buildings, infrastructure, equipment, etc.) less any related debt used to acquire those assets that is still
outstanding, excluding any unspent proceeds of the debt issued. The City uses these capital assets to provide
services 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
theses liabilities.
An additional position of the City’s net position (2.1%) represents resources that are subject to restriction as
to how they may be used. The remaining unrestricted balance may be used to meet the government’s
ongoing obligations to citizens and creditors.
The unrestricted net position for business-type activities has a balance of $24,938,747 which is a
$15,497,043 increase from the prior year. The increase is due to current year operations as well as the
growth of the City and an increase in utility customers.
2021 2020 2021 2020 2021 2020
Revenues
Program revenues
Charges for services 13,663,268$ 12,075,196$ 45,334,709$ 41,352,145$ 58,997,977$ 53,427,341$ Operating Grants and
contributions 9,157,959 542,126 125,743 24,299 9,283,702 566,425 Capital grants and
contributions 2,408,124 2,846,663 - 2,304,665 2,408,124 5,151,328
General revenues
Property taxes 6,847,201 6,354,890 - - 6,847,201 6,354,890
Sales taxes 11,727,899 9,930,150 - - 11,727,899 9,930,150
Other taxes 2,192,514 1,660,355 - - 2,192,514 1,660,355
Other 1,579,187 616,143 311,221 557,152 1,890,408 1,173,295
Total revenues 47,576,152 34,025,523 45,771,673 44,238,261 93,347,825 78,263,784
Expenses
General government 16,825,075 7,278,497 - - 16,825,075 7,278,497
Public safety 7,699,709 8,763,332 - - 7,699,709 8,763,332
Public works 9,536,641 7,125,224 - - 9,536,641 7,125,224
Cultural and recreational 6,680,606 6,491,954 - - 6,680,606 6,491,954
Airport Authority 335,000 320,000 - - 335,000 320,000
Public Library Board 1,021,772 1,069,323 - - 1,021,772 1,069,323
Interest on long-term debt 31,431 27,969 - - 31,431 27,969
Electric - - 17,605,905 17,022,979 17,605,905 17,022,979
Natural gas - - 6,172,162 5,670,355 6,172,162 5,670,355
Water and Waste Water - - 9,813,398 9,213,371 9,813,398 9,213,371
Total expenses 42,130,234 31,076,299 33,591,465 31,906,705 75,721,699 62,983,004
Increase in net position
before transfers 5,445,918 2,949,224 12,180,208 12,331,556 17,626,126 15,280,780
Transfers in (out) 1,536,517 804,101 (1,536,517) (804,101) - -
Increase in net assets 6,982,435 3,753,325 10,643,691 11,527,455 17,626,126 15,280,780
Net position - beginning 99,604,152 95,850,827 85,463,662 73,936,207 185,067,814 169,787,034
Net position - ending 106,586,587$ 99,604,152$ 96,107,353$ 85,463,662$ 202,693,940$ 185,067,814$
Governmental
Activities
Business-type
Activities Total
Graphic presentations of selected data from the summary tables follow to assist in the analysis of the City’s
activities.
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Governmental Activities
Governmental activities for the current year increased the City’s net position by $6,982,435. Key elements
of this change are as follows:
Sales and use tax increased by approximately $1,797,749, or 18.1%.
Lodging tax increased by approximately $455,188, or 49.9%.
Insurance claims revenue increased by $1,167,703 due to Hurricane Sally damage.
Operational grants increased by $7,682,153 as a result of FEMA reimbursement from Hurricane
Sally.
Business-type Activities
Business-type activities increased the City’s net position by $10,643,691. The increase is due to current year
operations as well as the growth of the City and an increase in utility customers. Business-type activities are
shown comparing costs to revenues generated by related services. The Electric, Natural Gas, Water and
Waste Water business-type activities are self-supporting with user charges and other revenues designed to
recover costs.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City of Fairhope uses fund accounting to ensure and demonstrate compliance with
finance related legal requirements.
Governmental Funds
The focus of governmental funds is to provide information on near-term inflows, outflows, and balances of
spendable resources. Such information is useful in comparing the City’s resources at the end of the year
with upcoming financing requirements. Governmental funds reported ending fund balances of $24,280,466,
of which $11,328,115 is unassigned. The nonspendable fund balance is $203,736 and stems from inventory
and prepaid expenses. Restricted fund balance is $1,011,343 and comprises funds with restrictions imposed
by outside parties or constitutional provisions. Committed fund balance is $11,737,272 and comprises funds
with constraints imposed by formal action of the City Council. In particular, unassigned fund balance may
serve as a useful measure of the City’s net resources available for discretionary use as it represents the
portion of fund balance that is not limited for a particular use. The table below illustrates the breakdown of
governmental funds for fiscal year 2021.
Capital Other Total
General Projects Governmental Governmental
Total revenues 45,093,259$ 127,084$ 2,374,757$ 47,595,100$
Total expenditures 40,030,704 2,373,999 1,363,789 43,768,492
Total other financing sources (uses) 319,984 2,812,666 (1,596,133) 1,536,517
Net change in fund balance 5,382,539 565,751 (585,165) 5,363,125
Fund balances, beginning of year 13,883,906 862,824 4,170,611 18,917,341
Fund balances, end of year 19,266,445$ 1,428,575$ 3,585,446$ 24,280,466$
Percent of fund balance to expenditures 48%60%263%55%
All Governmental Funds
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General Fund
The General Fund is the City’s primary operating fund and the largest source of day-to-day service delivery.
As of September 30, 2021, the total fund balance of the general fund was $19,266,445, an increase of
$5,382,539. The increase in the General Fund is primarily due to increased tax revenues related to economic
growth and cost savings in departments.
Total revenue of the General Fund increased by $13,215,923 or 41.5% in 2021 compared to the previous
year. This was due to an increase in taxes collected, licenses and permits, and intergovernmental revenues.
Capital Project Fund
Capital Project Fund is used to account for the acquisition and construction of major capital facilities and
infrastructure. The fund balance of the Capital Project Fund increased $565,751 from the previous year. The
increase is due to the City transferring $750,000 from General Fund for future capital projects.
Other Governmental Funds
Other governmental funds include various special revenue funds. Anything that has a legal requirement to
be accounted for separately and general grants the City received are segregated in various special revenue
funds because the funds are intended for specific uses. Capital project grants are also included in other
governmental funds.
Proprietary Funds
Proprietary fund statements provide the same information as in the business-type activities column of the
government-wide statements, but in greater detail and on a fund basis for enterprise funds and the City’s
internal service fund.
Enterprise Funds – Net position of the Electric Fund, Natural Gas Fund and Water and Waste Water Fund at
the end of the year was $95,949,459. Total net position increased for enterprise funds by $10,553,990 or
12.4% in 2021 from the previous year. Total operating revenue increased $3,982,564 or 9.6% and total
operating expenses increased $1,916,121 or 6.1% for enterprise funds. Both increased revenue and
expenditures were attributed to growth.
Internal Service Fund – Internal service fund is used by management to charge the cost of employee medical
insurance to the individual funds. On September 30, 2021, the internal service fund reported $876,171 for its
net position balance.
Capital Assets and Debt Administration
Capital Assets
The City’s investment in capital assets for governmental and business-type activities as of September 30,
2021, was $179,460,981 (net of accumulated depreciation). Capital asset investments include land,
buildings, construction in progress, infrastructure, improvements other than buildings, and machinery and
equipment, net of depreciation.
- 10 -
2021 2020 2021 2020 2021 2020
Land 27,727,658$ 27,727,658$ 9,511,594$ 9,260,517$ 37,239,252$ 36,988,175$
Buildings and improvements 28,201,280 27,809,933 1,293,247 1,193,696 29,494,527 29,003,629
Vehicles and equipment 4,916,970 5,229,324 2,851,258 2,789,102 7,768,228 8,018,426
Infrastructure 36,937,676 37,530,920 - - 36,937,676 37,530,920
Distribution and collection systems - - 60,897,438 60,783,722 60,897,438 60,783,722
Construction in progress 2,558,141 1,555,600 4,565,719 - 7,123,860 1,555,600
100,341,725$ 99,853,435$ 79,119,256$ 74,027,037$ 179,460,981$ 173,880,472$
Activities Activities
Governmental Business-type
Total
Additional information on the City’s capital assets can be found in Note 6 beginning on page 36 of this
report.
Long-term Debt
At the fiscal year end, the City of Fairhope had $524,553 of governmental debt and $11,300,000 of
business-type debt outstanding for the Utilities enterprise funds. In September 2020, the City issued the
Series 2020 Utility Revenue Warrants in the amount of $11,565,000, which refunded the Series 2011
Utility Revenue Warrants in November 2020.
State statutes limit the amount of general obligation debt a governmental entity may issue. The City can
issue up to twenty (20) percent of its total assessed property valuation. The City’s total valuation for the
current fiscal year is $473,674,340 with a current debt limit for the City of $94,734,868. Current debt
applied to the debt limit total is $524,553, leaving the City with a legal debt margin of $94,210,315.
2021 2020
Increase
(Decrease)
Utility Revenue Warrants 11,300,000$ 23,870,000$ (12,570,000)$
Capital Leases 524,553 1,003,573 (479,020)
11,824,553$ 24,873,573$ (13,049,020)$
See Note 8, beginning on page 38, for a detailed description of the City’s total outstanding obligations.
General Fund Budgetary Highlights
Budget to actual statements and schedules are provided in the financial statements for the General Fund.
Columns are provided for both the original adopted budget as well as the final budget. These budgets are
followed by columns for actual expenditures and for variances between the final budget and actual
expenditures.
The operations of the City are a dynamic business that require strict budget control throughout the year. An
adequate budget balance must be available for the particular line item for which a payment request has been
submitted. If the budget balance is not adequate, the payment will be rejected. A payment will be approved
after a budget adjustment for that cost center has been processed.
General Fund
For the year ended September 30, 2021, actual revenues were more than budgeted revenues by $14,406,359
or 46.9%. The primary reason for the variance was FEMA reimbursement related to Hurricane Sally.
Detailed variances are as follows:
Actual taxes were more than budgeted by $2,430,259 or 13.3%.
Actual Intergovernmental were more than budgeted by $9,475,820 or 1900.1%
- 11 -
Actual charges for services were more than budgeted by $489,830 or 9.5%
Actual other revenues were than budgeted by $1,380,557 or 239.2%
For the year ended September 30, 2021, actual total expenditures were more than budgeted expenditures by
$8,851,597 or 28.3%. The primary reason for the variance was the Hurricane Sally clean up expenditures.
Detailed variances are in the following functions:
General Government actual expenditures were more than budgeted expenditures by $9,308,224 or
134.9%.
Public Works actual expenditures were more than budgeted expenditures by $164,659 or 2.3%.
Public Safety actual expenditures were less than budgeted expenditures by $505,814 or 6.6%.
Cultural and Recreational actual expenditures were less than budgeted expenditures by $577,693
or 9.0%.
Economic Factors and Year 2021
The City relies on taxes (property, sales, lodging, etc.), and fee (license, permits, etc.) for their governmental
activities. The analysis of a few of these taxes contained in the Statistical Section serves as good indicator
of economic trends. Certain governmental activities (sanitation, recreational activities, etc.) require the user
pay a related fee or charge associated with the service.
The following factors were considered in preparing the City’s Budget for Fiscal Year 2022:
The unemployment rate for the City of Fairhope for 2021 was 3.3%.
The City’s financial condition remains strong, even with the national pandemic, due to reduction
in expenditures and continued oversight by management and the City Council.
Property tax revenue is expected to increase 10.0% due to growth.
Continued sales tax revenue growth in 2021 over the previous year due to steady economic
growth.
Revenues in Civic and Adult Recreation are projected to increase 2.5%.
Infrastructure and growth continue to be a concern and the primary focus in Utilities investment
of $23,000,000 and resurfacing of $404,000.
Protecting our natural environment for the enjoyment of all investment in Parks of $2,900,000.
Investment in capital equipment $3,668,500.
We continue to explore grant opportunities throughout the year.
On September 30, 2021, fund balance in the General Fund was $19,266,445. The City did not appropriate
any fund balance from the 2021 fund balance for spending in the 2022 fiscal year budget. The City will
continue to provide services to its citizens, keep a level of essential staff to provide services to the
community, and pay for one-time expenditures for capital needs from the funds appropriated in the 2022
budget.
Requests for Information
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a
general overview of the City of Fairhope’s finances. Questions concerning any of the information provided
in this report or requests for additional financial information should be addressed to: The Office of the
Treasurer, P.O. Drawer 429, Fairhope, Alabama 36533. This report is also available online at
www.fairhopeal.gov.
BASIC FINANCIAL STATEMENTS
- 12 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETSCash 25,116,970$ 29,445,716$ 54,562,686$ 1,011,930$
Restricted cash - 3,349,350 3,349,350 -
Receivables, net 3,734,361 5,474,178 9,208,539 208,124
Internal balances (441,797) 441,797 - -
Inventories 178,223 890,457 1,068,680 - Prepaid items 25,513 11,026 36,539 49,042
Other assets 34,925 36,090 71,015 -
Capital assets not being depreciated:
Land 27,727,658 9,511,594 37,239,252 10,674,228
Construction in progress 2,558,141 4,565,719 7,123,860 249,497 Capital assets net of accumulated depreciation:
Buildings and improvements 28,201,280 1,293,247 29,494,527 8,238,208
Vehicles and equipment 4,916,970 2,851,258 7,768,228 86,078
Infrastructure 36,937,676 - 36,937,676 -
Distribution and collection systems - 60,897,438 60,897,438 - Runways - - - 16,787,721
Total assets 128,989,920 118,767,870 247,757,790 37,304,828
DEFERRED OUTFLOWS OF
RESOURCESDeferred charge on refunding - 70,406 70,406 - Pension related items 2,876,917 851,047 3,727,964 122,391
OPEB related items 1,306,903 468,513 1,775,416 -
Total deferred outflows of resources 4,183,820 1,389,966 5,573,786 122,391
Total assets and deferred outflows of resources 133,173,740$ 120,157,836$ 253,331,576$ 37,427,219$
LIABILITIES
Accounts payable and
accrued expenses 2,668,826$ 2,755,459$ 5,424,285$ 165,276$
Unearned revenue 919,977 343,541 1,263,518 - Customer deposits 31,226 2,301,156 2,332,382 - Noncurrent liabilities:
Due within one year 1,063,291 1,844,904 2,908,195 250,000
Due in more than one year:
Net pension liability 9,814,097 3,212,769 13,026,866 486,893
Total OPEB liability 7,827,555 2,806,105 10,633,660 - Other 1,782,342 10,055,886 11,838,228 6,220,629
Total liabilities 24,107,314 23,319,820 47,427,134 7,122,798
DEFERRED INFLOWS OF
RESOURCES
Pension related items 689,653 88,898 778,551 20,028
OPEB related items 1,790,186 641,765 2,431,951 -
Service concession arrangementrevenue applicable to future years - - - 5,959,779
Total deferred inflows of
resources 2,479,839 730,663 3,210,502 5,979,807
NET POSITIONNet investment in capital assets 98,917,172 67,819,256 166,736,428 29,565,103 Restricted for:
Debt service - 3,298,734 3,298,734 -
Road maintenance 340,666 - 340,666 -
Capital improvements 670,653 50,616 721,269 -
Municipal Court 20 - 20 - American Rescue 4 - 4 - Library improvements - - - 379,036
Unrestricted 6,658,072 24,938,747 31,596,819 (5,625,532)
Total net position 106,586,587 96,107,353 202,693,940 24,318,607
Total liabilities, deferred inflows of resources, and net position 133,173,740$ 120,157,836$ 253,331,576$ 37,421,212$
- 13 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Operating Capital
Charges for Grants and Grants and Governmental Business-type Component
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Units
Primary Government
Governmental activities:
General government 16,825,075$ 8,802,363$ -$ 196,000$ (7,826,712)$ -$ (7,826,712)$ -$
Public safety 7,699,709 - 302,455 321,588 (7,075,666) - (7,075,666) -
Public works 9,536,641 2,440,059 8,855,494 1,186,067 2,944,979 - 2,944,979 -
Cultural and recreational 6,680,606 2,420,846 10 704,469 (3,555,281) - (3,555,281) -
Airport Authority 335,000 - - - (335,000) - (335,000) -
Public Library Board 1,021,772 - - - (1,021,772) - (1,021,772) -
Interest on long-term debt 31,431 - - - (31,431) - (31,431) -
Total governmental activities 42,130,234 13,663,268 9,157,959 2,408,124 (16,900,883) - (16,900,883) -
Business-type activities:
Electric 17,605,905 21,910,226 122,031 - - 4,426,352 4,426,352 -
Natural gas 6,172,162 8,744,718 3,712 - - 2,576,268 2,576,268 -
Water and Waste Water 9,813,398 14,679,765 - - - 4,866,367 4,866,367 -
Total business-type activities 33,591,465 45,334,709 125,743 - - 11,868,987 11,868,987 -
Total primary government 75,721,699$ 58,997,977$ 9,283,702$ 2,408,124$ (16,900,883) 11,868,987 (5,031,896) -
Component Units 2,086,831$ 325,648$ 1,399,941$ 748,765$ 387,523
General revenues:
Property taxes 6,847,201 - 6,847,201 -
Sales tax 11,727,899 - 11,727,899 -
Liquor taxes 714,140 - 714,140 -
Lodging taxes 1,366,725 - 1,366,725 -
Other taxes 111,649 - 111,649 -
Investment earnings 174,777 307,434 482,211 302
Other 1,404,410 3,787 1,408,197 262,772
Transfers 1,536,517 (1,536,517) - -
Total general revenues and transfers 23,883,318 (1,225,296) 22,658,022 263,074
Change in net position 6,982,435 10,643,691 17,626,126 650,597
Net position - beginning 99,604,152 85,463,662 185,067,814 23,668,010
Net position - ending 106,586,587$ 96,107,353$ 202,693,940$ 24,318,607$
Changes in Net Position
Primary Government
Program Revenues
Net (Expense) Revenue and
- 14 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
ASSETSCash 18,101,861$ 1,568,032$ 4,381,371$ 24,051,264$
Receivables, net 3,191,148 54,444 488,769 3,734,361
Inventory 178,223 - - 178,223
Prepaid items 25,513 - - 25,513
Due from other funds 57,325 10,418 - 67,743
Other assets 34,925 - - 34,925
Total assets 21,588,995$ 1,632,894$ 4,870,140$ 28,092,029$
LIABILITIES
Accounts payable 1,451,803$ 197,041$ 344,848$ 1,993,692$
Accrued expenditures and taxes 477,678 - - 477,678
Customer deposits 31,226 - - 31,226
Unearned revenue 284,266 - 673,055 957,321
Due to other funds 77,577 7,278 266,791 351,646
Total liabilities 2,322,550 204,319 1,284,694 3,811,563
FUND BALANCES
Nonspendable:
Prepaid items 25,513 - - 25,513
Inventory 178,223 - - 178,223
Restricted:
Road maintenance - - 340,666 340,666
Capital improvements - - 670,653 670,653
Municipal Court - - 20 20
American Rescue - - 4 4
Committed:
Council approved emergencies 7,000,000 - - 7,000,000
Construction and road maintenance - - 2,574,103 2,574,103
Debt service 699,594 - - 699,594 Capital projects 35,000 1,428,575 - 1,463,575
Unassigned 11,328,115 - - 11,328,115
Total fund balances 19,266,445 1,428,575 3,585,446 24,280,466
Total liabilities and fund balances 21,588,995$ 1,632,894$ 4,870,140$ 28,092,029$
- 15 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Fund balances as reported on page 14 24,280,466$
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.170,296,968
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.(69,955,243)
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unearned revenue in fund financial statements.37,344
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. 2,876,917
Deferred outflows of resources related to OPEB obligations.1,306,903
Deferred inflows are not financial resources and, therefore, are not reported
in fund financial statements.
Deferred inflows of resources related to net pension liability.(689,653)
Deferred inflows of resources related to OPEB obligations.(1,790,186)
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. 718,277
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 (1,424,553)
Net pension liability (9,814,097)
OPEB obligations (7,827,555)
Accrued interest on long-term debt is not due and payable in the
current period and, therefore, not included in fund financial statements.(7,921)
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements.(1,421,080)
Net position of governmental activities as reported on page 12 106,586,587$
- 16 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
REVENUES
Local taxes 20,673,433$ -$ 136,626$ 20,810,059$
Licenses and permits 4,544,325 - - 4,544,325
Fines and forfeitures 194,677 - - 194,677
Intergovernmental 9,972,820 126,799 1,105,390 11,205,009
Interest and rents 461,632 285 3,545 465,462
Charges for services 5,621,930 - 1,128,036 6,749,966
Golf course revenue 1,272,891 - - 1,272,891
Recreation department 393,744 - - 393,744
Other 1,957,807 - 1,160 1,958,967
Total revenues 45,093,259 127,084 2,374,757 47,595,100
EXPENDITURES
General government 16,208,857 - 297,674 16,506,531
Public safety 7,164,116 - - 7,164,116
Public works 7,484,450 - - 7,484,450
Cultural and recreational 5,827,670 - - 5,827,670
Airport Authority 335,000 - - 335,000
Public Library Board 816,431 - - 816,431 Debt service payments:
Principal 300,000 - 479,020 779,020
Interest - - 29,847 29,847
Capital outlay 1,894,180 2,373,999 557,248 4,825,427
Total expenditures 40,030,704 2,373,999 1,363,789 43,768,492
Excess of revenues over
(under) expenditures 5,062,555 (2,246,915) 1,010,968 3,826,608
OTHER FINANCING
SOURCES (USES)
Transfers in 1,917,549 2,812,666 508,867 5,239,082
Transfers out (1,597,565) - (2,105,000) (3,702,565)
Total other financing
sources (uses)319,984 2,812,666 (1,596,133) 1,536,517
Net change in fund balances 5,382,539 565,751 (585,165) 5,363,125
Fund balances – beginning of year 13,883,906 862,824 4,170,611 18,917,341
FUND BALANCES – END OF YEAR 19,266,445$ 1,428,575$ 3,585,446$ 24,280,466$
- 17 -
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, 2021
See independent auditors’ report and notes to the financial statements.
Net change in fund balances – total governmental funds, page 16 5,363,125$
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. 4,780,974
Depreciation expense on governmental capital assets included in the
capital assets in the statement of net position. (4,268,041)
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. (24,642)
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 779,020
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.5,695
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 (123,600)
Accrued interest (1,585)
Pensions (451,032)
Postemployment benefit plans other than pensions 538,611
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.383,910
Change in net position of governmental activities, page 13 6,982,435$
- 18 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2021
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
ASSETS
Current assets:
Cash and cash equivalents 6,861,954$ 10,638,724$ 11,945,038$ 29,445,716$ 1,065,706$
Restricted cash held by fiscal agent 78,851 78,851 3,191,648 3,349,350 - Receivables, net 3,965,641 386,368 1,122,169 5,474,178 - Inventories 379,980 296,285 214,192 890,457 - Prepaid items 5,199 1,750 4,077 11,026 - Due from other funds 22,498 - 325,361 347,859 -
Total current assets 11,314,123 11,401,978 16,802,485 39,518,586 1,065,706
Noncurrent assets:Other assets 12,030 12,030 12,030 36,090 - Capital assets: Land 7,706,240 1,616,172 189,182 9,511,594 -
Construciton in progress 3,630,109 216,552 719,058 4,565,719 -
Buildings and improvements 1,418,468 894,523 572,344 2,885,335 -
Vehicles and equipment 5,674,132 4,076,360 4,619,472 14,369,964 -
Distribution and collection systems 28,931,828 14,319,231 61,865,124 105,116,183 - Less accumulated depreciation (17,947,576) (9,849,343) (29,532,620) (57,329,539) -
Total noncurrent assets 29,425,231 11,285,525 38,444,590 79,155,346 -
Total assets 40,739,354 22,687,503 55,247,075 118,673,932 1,065,706
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - - 70,406 70,406 -
Pension related items 315,547 211,641 323,859 851,047 -
OPEB related items 177,542 113,429 177,542 468,513 -
Total deferred outflows of resources 493,089 325,070 571,807 1,389,966 -
LIABILITIES Current liabilities: Accounts payable and accrued liabilities 1,697,177 393,967 664,315 2,755,459 189,535 Unearned revenue 41,217 16,800 285,524 343,541 - Customer deposits 1,129,373 719,866 451,917 2,301,156 -
Warrants, notes and
capital leases payable 40,630 40,630 1,618,740 1,700,000 -
Compensated absences 45,860 30,407 68,637 144,904 -
Due to other funds 9,592 32,935 21,429 63,956 -
Total current liabilities 2,963,849 1,234,605 3,110,562 7,309,016 189,535
Noncurrent liabilities: Compensated absences 193,219 96,830 165,837 455,886 - Warrants, notes and capital leases payable 229,440 229,440 9,141,120 9,600,000 -
Net pension liability 1,274,892 780,689 1,157,188 3,212,769 -
Total OPEB liability 1,063,366 679,373 1,063,366 2,806,105 -
Total noncurrent liabilities 2,760,917 1,786,332 11,527,511 16,074,760 -
Total liabilities 5,724,766 3,020,937 14,638,073 23,383,776 189,535
DEFERRED INFLOWS OF
RESOURCESPension related items 17,310 17,155 54,433 88,898 - OPEB related items 243,195 155,375 243,195 641,765 -
Total deferred inflows of resources 260,505 172,530 297,628 730,663 -
NET POSITION Net investment in capital assets 29,143,131 11,003,425 27,672,700 67,819,256 - Restricted:
Debt service 78,851 78,851 3,141,032 3,298,734 -
Capital improvements - - 50,616 50,616 -
Unrestricted 6,025,190 8,736,830 10,018,833 24,780,853 876,171
Total net position 35,247,172$ 19,819,106$ 40,883,181$ 95,949,459 876,171$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 157,894
Change in net position of business-type activities 96,107,353$
Business-type Activities - Enterprise Funds
- 19 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
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
OPERATING REVENUES
Sales and services 21,446,433$ 8,668,174$ 12,659,718$ 42,774,325$ 4,343,291$
Other charges, sales and receipts 463,793 76,544 2,020,047 2,560,384 -
Total operating revenues 21,910,226 8,744,718 14,679,765 45,334,709 4,343,291
OPERATING EXPENSES
Energy purchases and
cost of goods sold 12,488,709 2,216,197 592,438 15,297,344 -
Salaries 1,356,999 1,059,035 1,873,234 4,289,268 -
Depreciation 979,889 475,895 1,821,360 3,277,144 -
Insurance 481,811 374,650 697,052 1,553,513 -
Electric energy furnished
to other departments 65,271 33,232 239,802 338,305 -
Maintenance 657,874 396,268 2,145,581 3,199,723 -
Benefit payments - - - - 3,870,087
Other operating expense 1,581,677 1,564,935 2,298,974 5,445,586 -
Total operating expenses 17,612,230 6,120,212 9,668,441 33,400,883 3,870,087
OPERATING INCOME 4,297,996 2,624,506 5,011,324 11,933,826 473,204
NONOPERATING
REVENUES (EXPENSES)
Interest expense (8,072) (7,910) (187,061) (203,043) -
Interest income 98,559 92,211 116,664 307,434 407
Gain on sale of capital assets 3,575 212 - 3,787 -
Intergovernmental revenue 122,031 3,712 - 125,743 -
Distribution of joint
revenue (expense) – net - (77,240) - (77,240) -
Total nonoperating
revenues (expenses) 216,093 10,985 (70,397) 156,681 407
INCOME BEFORE TRANSFERS
AND OTHER ITEMS 4,514,089 2,635,491 4,940,927 12,090,507 473,611
TRANSFERS AND OTHER ITEMS
Transfers in 38,379 - - 38,379 -
Transfers out (619,549) (301,589) (653,758) (1,574,896) -
Total transfers and other items (581,170) (301,589) (653,758) (1,536,517) -
Change in net position 3,932,919 2,333,902 4,287,169 10,553,990 473,611
Net position – beginning of year 31,314,253 17,485,204 36,596,012 85,395,469 402,560
NET POSITION – END OF YEAR 35,247,172$ 19,819,106$ 40,883,181$ 876,171$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 157,894
Change in net position of business-type activities 10,711,884$
Business-type Activities - Enterprise Funds
- 20 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
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 20,044,511$ 8,818,888$ 14,572,910$ 43,436,309$ -$
Receipt from interfund services provided - - - - 4,437,548
Paid to suppliers for goods and services (15,755,330) (4,636,105) (6,234,928) (26,626,363) (3,922,609)
Paid to personnel for services (1,288,071) (1,080,930) (1,613,912) (3,982,913) -
Net cash provided by operating activities 3,001,110 3,101,853 6,724,070 12,827,033 514,939
CASH FLOWS FROM INVESTING ACTIVITIES
Distribution of joint expense - (77,240) - (77,240) -
Interest income 98,559 92,211 116,664 307,434 407
Net cash provided by investing activities 98,559 14,971 116,664 230,194 407
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Repayment of debt (361,253) (317,102) (11,891,645) (12,570,000) -
Interest paid (6,858) (6,346) (245,794) (258,998) -
Acquisition of capital assets (4,416,403) (1,587,271) (2,394,382) (8,398,056) -
Net cash used in capital and related
financing activities (4,784,514) (1,910,719) (14,531,821) (21,227,054) -
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable 19,603 398 (325,361) (305,360) -
Change in interfund payable 9,592 (23,915) (73,853) (88,176) -
Government grants 122,031 3,712 - 125,743 -
Proceeds from disposal of noncapital assets 3,575 212 28,693 32,480 -
Transfers from other funds 38,379 - - 38,379 -
Transfers to other funds (619,549) (301,589) (653,758) (1,574,896) -
Net cash used in noncapital and related
financing activities (426,369) (321,182) (1,024,279) (1,771,830) -
INCREASE (DECREASE) IN CASH (2,111,214) 884,923 (8,715,366) (9,941,657) 515,346
CASH – BEGINNING OF YEAR 9,052,019 9,832,652 23,852,052 42,736,723 550,360
CASH – END OF YEAR 6,940,805$ 10,717,575$ 15,136,686$ 32,795,066$ 1,065,706$
Cash and cash equivalents 6,861,954$ 10,638,724$ 11,945,038$ 29,445,716$ 1,065,706$
Restricted cash held by fiscal agent 78,851 78,851 3,191,648 3,349,350 -
6,940,805$ 10,717,575$ 15,136,686$ 32,795,066$ 1,065,706$
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 4,297,996$ 2,624,506$ 5,011,324$ 11,933,826$ 473,204$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation 979,889 475,895 1,821,360 3,277,144 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable (1,888,851) (25,248) 149,589 (1,764,510) 94,257
Decrease (increase) in inventories 1,049 (79,086) (50,339) (128,376) -
Decrease (increase) in prepaid expenses (2,817) 212 (1,050) (3,655) -
Decrease (increase) in deferred outflow of resources (124,962) (78,790) (143,958) (347,710) -
Increase (decrease) in accounts payable (500,366) 18,352 (222,854) (704,868) (52,522)
Increase (decrease) in customer deposits 5,107 82,618 18,890 106,615 -
Increase (decrease) in net unearned revenue 18,029 16,800 (275,334) (240,505) -
Increase (decrease) in deferred inflow of resources (109,471) (72,654) (60,659) (242,784) -
Increase (decrease) in net pension liability 158,620 101,358 158,621 418,599 -
Increase (decrease) in compensated absences 36,183 (37,996) 50,620 48,807 -
Increase (decrease) in net OPEB obligation 130,704 75,886 267,860 474,450 -
Net cash provided by operating activities 3,001,110$ 3,101,853$ 6,724,070$ 12,827,033$ 514,939$
Business-type Activities - Enterprise Funds
THIS PAGE INTENTIONALLY LEFT BLANK
- 21 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF NET POSITION
DISCRETELY PRESENTED COMPONENT UNITS
SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Public Library Airport
Board Authority Total
ASSETS
Cash 825,725$ 186,205$ 1,011,930$
Receivables, net - 208,124 208,124
Prepaid items 7,169 41,873 49,042
Capital assets not being depreciated:
Land - 10,674,228 10,674,228
Construction in progress - 249,497 249,497
Capital assets net of accumulated
depreciation:
Buildings and improvements - 8,238,208 8,238,208
Vehicles and equipment 58,698 27,380 86,078
Runways - 16,787,721 16,787,721
Total assets 891,592 36,413,236 37,304,828
DEFERRED OUTFLOWS OF
RESOURCES
Pension related items 122,391 - 122,391
Total assets and deferred outflows of resources 1,013,983$ 36,413,236$ 37,427,219$
LIABILITIES
Accounts payable and accrued liabilities 20,111$ 79,765$ 99,876$
Unearned revenue - 6,007 6,007
Customer deposits - 65,400 65,400
Long-term liabilities:
Due within one year - 250,000 250,000
Due in more than one year - 6,220,629 6,220,629
Net pension liability 486,893 - 486,893
Total liabilities 507,004 6,621,801 7,128,805
DEFERRED INFLOWS OF
RESOURCES
Pension related items 20,028 - 20,028
Service concession arrangement revenue
applicable to future years - 5,959,779 5,959,779
Total deferred inflows of resources 20,028 5,959,779 5,979,807
NET POSITION
Net investment in capital assets 58,698 29,506,405 29,565,103
Restricted:
Library improvements 379,036 - 379,036
Unrestricted 49,217 (5,674,749) (5,625,532)
Total net position 486,951 23,831,656 24,318,607
Total liabilities, deferred inflows of
resources, and net position 1,013,983$ 36,413,236$ 37,427,219$
- 22 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF ACTIVITIES
DISCRETELY PRESENTED COMPONENT UNITS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report and notes to the financial statements.
Operating Capital
Charges for Grants and Grants and Governmental Business-type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental activities:
Public Library Board 878,469$ 75,794$ 849,260$ -$ 46,585$ -$ 46,585$
Business-type activities:
Airport Authority 1,208,362 249,854 550,681 748,765 - 340,938 340,938
2,086,831$ 325,648$ 1,399,941$ 748,765$ 46,585 340,938 387,523
General revenues:
Investment earnings - 302 302
Other - 262,772 262,772
Total general revenues - 263,074 263,074
Change in net position 46,585 604,012 650,597
Net position – beginning 440,366 23,227,644 23,668,010
Net position – ending 486,951$ 23,831,656$ 24,318,607$
Changes in Net PositionProgram Revenues
Net (Expense) Revenue and
THIS PAGE INTENTIONALLY LEFT BLANK
NOTES TO THE FINANCIAL STATEMENTS
- 23 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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 (GAAP) 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.
- 24 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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.
- 25 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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.
- 26 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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.
- 27 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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 61,770$ 5,940$ 67,710$
Materials and supplies 116,453 884,517 1,000,970
Totals 178,223$ 890,457$ 1,068,680$
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.
- 28 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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 method 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 11,
and deferred outflow items related to the City’s postemployment benefits other than pensions
which are described further in Note 14.
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, 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 reports deferred inflow items related to the City’s pension plan which are
described further in Note 11, and deferred inflow items related to the City’s postemployment
benefits other than pensions which are described further in Note 14.
- 29 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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, 2021 totaled $10,633,660.
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.
- 30 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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
Net position is 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.
- 31 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
N. NET POSITION AND EQUITY CLASSIFICATIONS (CONTINUED)
Fund Financial Statements
In accordance with Governmental Accounting Standards Board Statement 54, Fund Balance
Reporting and Governmental Fund Type Definitions, the City classifies governmental fund
balances as follows:
Nonspendable – Includes fund balance amounts that cannot be spent either because
they are not in spendable form, or for legal or contractual requirements.
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.
- 32 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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 25, 2022, the date which the financial
statements were available to be issued. There were no material subsequent events which require
disclosure at September 30, 2021.
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.
- 33 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED)
Budgetary Information (Continued)
(3) The budget is enacted through City 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.
(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.
NOTE 3 DEPOSIT AND INVESTMENT RISK
At September 30, 2021, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $3,349,350. The average
maturity of the portfolio was 31 days.
Investment Risk – The City does not have a formal investment policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk – State statutes authorize the City’s investments. The City is authorized to invest in U.S.
Government obligations and its agencies or instrumentalities, direct obligations of the state, or SEC
registered mutual funds. The City has no investment policy that further limits investment choices. As
of September 30, 2021, the City’s mutual fund investments principal stability rating was AAAm as
reported by Standard & Poor’s.
- 34 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 3 DEPOSIT AND INVESTMENT RISK (CONTINUED)
Custodial Credit Risk – The City is a participant in the Security for Alabama Funds Enhancement
(SAFE) Program, a multiple financial institution collateral pool, administered by the State of Alabama.
The program, by law, provides administration of pledged collateral coverage for all governments and
agencies in the State and requires qualified financial institutions to provide collateral to the
administrator adequate to secure all deposits of public funds in that financial institution. The State
guarantees deposits identified as “public funds” will be adequately secured by insurance or collateral.
Any collateral shortages of one financial institution are assessed to other member financial institutions.
NOTE 4 RECEIVABLES
Receivables as of September 30, 2021, for the government’s individual major and nonmajor funds, and
the discretely presented components units, including the applicable allowances for uncollectable
accounts, are as follows:
Nonmajor
Capital Governmental
General Projects Funds Electric
Taxes 1,961,372$ -$ 20,513$ -$
Accounts 205,056 - 455 3,442,032
Intergovernmental 1,711,696 54,444 467,801 808,562
3,878,124 54,444 488,769 4,250,594
Less allowance for uncollectable
accounts (686,976) - - (284,953)
Total receivables 3,191,148$ 54,444$ 488,769$ 3,965,641$
Water and
Natural Waste Water Airport
Gas Fund Authority Total
Taxes -$ -$ -$ 1,981,885$
Accounts 419,766 1,289,999 6,952 5,364,260
Intergovernmental 13,103 42,637 201,172 3,299,415
432,869 1,332,636 208,124 10,645,560
Less allowance for uncollectable
accounts (46,501) (210,467) - (1,228,897)
Total receivables 386,368$ 1,122,169$ 208,124$ 9,416,663$
- 35 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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, 2021 is shown below.
Due to/from other funds
Receivable Fund Payable Fund Amount
General Natural Gas 30,612$
Electric 9,592
Nonmajor Governmental 17,121
Electric Natural Gas 1,069
Water and Waste Water 21,429
Water and Waste Water General 67,159
Natural Gas 1,254
Capital Projects 7,278
Nonmajor Governmental 249,670
Capital Projects General 10,418
Total 415,602$
Interfund Transfers
Capital Nonmajor
General Projects Governmental Electric Total
General -$ 1,088,698$ 508,867$ -$ 1,597,565$
Nonmajor Governmental 417,157 1,687,843 - - 2,105,000
Electric 619,549 - - - 619,549
Natural Gas 256,798 36,125 - 8,666 301,589
Water and Waste Water 624,045 - - 29,713 653,758
Totals 1,917,549$ 2,812,666$ 508,867$ 38,379$ 5,277,461$
Transfer In
Transfer Out
- 36 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 6 CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2021 was as follows:
Beginning Ending
Balance Increases Decreases Transfers Balance
Governmental Activities
Capital assets not subject
to depreciation:
Land 27,727,658$ -$ -$ -$ 27,727,658$
Construction in progress 1,555,600 2,112,153 - (1,109,612) 2,558,141
Total 29,283,258 2,112,153 - (1,109,612) 30,285,799
Other capital assets:
Buildings and improvements 42,847,150 761,334 (8,871) 831,072 44,430,685
Vehicles and equipment 19,762,626 1,288,954 (368,996) 17,906 20,700,490
Infrastructure 73,982,921 618,533 - 278,540 74,879,994
Total 136,592,697 2,668,821 (377,867) 1,127,518 140,011,169
Less accumulated depreciation for:
Buildings and improvements (15,037,217) (1,199,554) 7,366 - (16,229,405)
Vehicles and equipment (14,533,302) (1,578,170) 345,858 (17,906) (15,783,520)
Infrastructure (36,452,001) (1,490,317) - - (37,942,318)
Total accumulated depreciation (66,022,520) (4,268,041) 353,224 (17,906) (69,955,243)
Other capital assets, net 70,570,177 (1,599,220) (24,643) 1,109,612 70,055,926
Governmental capital assets, net 99,853,435$ 512,933$ (24,643)$ -$ 100,341,725$
Depreciation was charged to governmental activities as follows:
General government 686,280$
Public safety 516,570
Public works 2,007,569
Cultural and recreational 852,281
Library 205,341
Total 4,268,041$
- 37 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(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$ 251,077$ -$ -$ 9,511,594$
Construction in progress - 4,565,719 - - 4,565,719
Total 9,260,517 4,816,796 - - 14,077,313
Other capital assets:
Buildings and improvements 2,727,668 157,667 - - 2,885,335
Vehicles and equipment 13,618,006 782,662 (12,799) (17,905) 14,369,964
Distribution and collection system 102,583,336 2,640,932 (108,085) - 105,116,183
Total 118,929,010 3,581,261 (120,884) (17,905) 122,371,482
Less accumulated depreciation for:
Buildings and improvements (1,533,972) (58,116) - - (1,592,088)
Vehicles and equipment (10,828,904) (714,105) 6,398 17,905 (11,518,706)
Distribution and collection system (41,799,614) (2,504,922) 85,791 - (44,218,745)
Total accumulated depreciation (54,162,490) (3,277,143) 92,189 17,905 (57,329,539)
Other capital assets, net 64,766,520 304,118 (28,695) - 65,041,943
Capital assets, net 74,027,037$ 5,120,914$ (28,695)$ -$ 79,119,256$
Component Unit – Public Library
Vehicles and equipment 507,562$ 38,570$ -$ -$ 546,132$
Less accumulated depreciation (461,574) (25,860) - - (487,434)
Capital assets, net 45,988$ 12,710$ -$ -$ 58,698$
Component Unit – Airport Authority
Capital assets not subject to depreciation:
Land 10,674,228$ -$ -$ -$ 10,674,228$
Construction in progress 50,191 712,337 - (513,031) 249,497
Total 10,724,419 712,337 - (513,031) 10,923,725
Other capital assets:
Buildings and improvements 10,954,940 512,000 - 274,868 11,741,808
Vehicles and equipment 98,885 29,600 - - 128,485
Runways 19,148,990 - - 238,163 19,387,153
Total 30,202,815 541,600 - 513,031 31,257,446
Less accumulated depreciation for:
Buildings and improvements (3,227,619) (275,981) - - (3,503,600)
Vehicles and equipment (98,885) (2,220) - - (101,105)
Runways (2,341,731) (257,701) - - (2,599,432)
Total accumulated depreciation (5,668,235) (535,902) - - (6,204,137)
Other capital assets, net 24,534,580 5,698 - 513,031 25,053,309
Capital assets, net 35,258,999$ 718,035$ -$ -$ 35,977,034$
- 38 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 7 SHORT-TERM DEBT
In November 2020, the City obtained a $5,000,000 line of credit to finance the storm damage caused by
Hurricane Sally. The line of credit bears interest on the outstanding balances at 0.78% and matures on
November 19, 2022.
Short-term debt activity for the year ended September 30, 2021:
Balance at beginning of year -$
Draws 5,000,000
Payments (5,000,000)
Balance at end of year -$
The amount of unused line of credit totaled $5,000,000 at September 30, 2021.
NOTE 8 LONG-TERM DEBT
Long-term debt activity for the year ended September 30, 2021:
Amounts
Beginning Ending due within
Balance Additions Reductions Balance one year
GOVERNMENTAL ACTIVITIES
Notes payable 1,200,000$ -$ (300,000)$ 900,000$ 300,000$
Capital leases 1,003,573 - (479,020) 524,553 389,819
Compensated absences 1,297,480 1,030,297 (906,697) 1,421,080 373,472
Governmental activities
long-term liabilities 3,501,053 1,030,297 (1,685,717) 2,845,633 1,063,291
BUSINESS-TYPE ACTIVITIES
Direct placements 23,870,000 - (12,570,000) 11,300,000 1,700,000
Less issuance discounts (11,589) - 11,589 - -
Total direct placements 23,858,411 - (12,558,411) 11,300,000 1,700,000
Compensated absences 551,983 415,493 (366,686) 600,790 144,904
Business-type activities
long-term liabilities 24,410,394 415,493 (12,925,097) 11,900,790 1,844,904
Total long-term debt 27,911,447$ 1,445,790$ (14,610,814)$ 14,746,423$ 2,908,195$
- 39 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 8 LONG-TERM DEBT (CONTINUED)
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 $1,500,000 is
interest free, with annual principal payments payable July 1, 2020 through July 1, 2024. Any imputed
interest would not be material and therefore the City has elected to not impute interest on this note.
The following schedule illustrates debt service to maturity for the note payable at September 30, 2021:
Year
Ending
September 30,Principal Interest Total
2022 300,000$ -$ 300,000$
2023 300,000 - 300,000
2024 300,000 - 300,000
900,000$ -$ 900,000$
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 1,146,928$
Less accumulated depreciation 501,151
Totals 645,777$
- 40 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 8 LONG-TERM DEBT (CONTINUED)
Capital Leases – Governmental Activities (Continued)
The future minimum lease obligations and the net present value of these minimum lease payments as of
September 30, 2021, were as follows:
Year ending September 30:
2022 405,057$
2023 138,527
543,584
Less amount representing interest 19,031
Present value of minimum lease payments 524,553$
Warrants from Direct Placements – Business-type Activities
The following is a summary of warrants from direct placement in proprietary funds as of September 30,
2021:
11,300,000$
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 City’s outstanding warrants from direct placement related to business-type activities of $11,300,000
contain a provision that in event of default, outstanding amounts become due immediately if the City is
unable to make payment.
- 41 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 8 LONG-TERM DEBT (CONTINUED)
Warrants from Direct Placements – Business-type Activities (Continued)
The following schedule illustrates debt service to maturity for warrants from direct placement in
proprietary funds at September 30, 2021:
Year
Ending
September 30,Principal Interest Total
2022 1,700,000$ 134,760$ 1,834,760$
2023 1,720,000 111,872 1,831,872
2024 1,740,000 89,728 1,829,728
2025 1,765,000 67,296 1,832,296
2026 1,785,000 44,576 1,829,576
2027-2031 2,590,000 83,840 2,673,840
11,300,000$ 532,072$ 11,832,072$
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, 2021:
6,470,629$
Airport Improvement Refunding Bond, Series 2021, dated March
16, 2021, original debt obligation of $6,695,629, interest rate
1.14%, principal payable annually through September 1, 2027.
The Series 2021 Airport Improvement Refunding Bond was issued on March 16, 2021, for the purpose
of refunding the Series 2017 Airport Improvement Refunding Bond. The Airport Authority will see an
increase in cash flows required to service debt of $60,322 over the life of the new bonds. The economic
gain (difference between present value of the debt service payments on the old and the new debt) as a
result of the refunding is $282,614.
- 42 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 8 LONG-TERM DEBT (CONTINUED)
Bond from Direct Placements – Component Units (Continued)
The Airport Improvement Refunding Bond, Series 2021, is secured by a pledge of payments received
from the City pursuant to the 2020 Funding Agreement, dated March 16, 2021. The 2021 Funding
Agreement states the City shall appropriate to the Airport Authority the amount needed to satisfy the
annual debt service of the Airport Improvement Refunding Bond, Series 2021.
The following is a summary of debt service requirements to maturity of long-term debt of the Airport
Authority as of September 30, 2021:
Year
Ending
September 30,Principal Interest Total
2022 250,000$ 73,765$ 323,765$
2023 250,000 70,915 320,915
2024 275,000 68,065 343,065
2025 275,000 64,930 339,930
2026 275,000 61,795 336,795
2027 5,145,629 114,185 5,259,814
6,470,629$ 453,655$ 6,924,284$
Direct Placements
Component Units
The Airport Authority’s outstanding bond from direct placement of $6,470,629 contains a provision that
in event of default, outstanding amounts become due immediately if the Airport Authority is unable to
make payment.
NOTE 9 SALARIES – PROPRIETARY FUNDS
The following is a summary of employees’ salaries for the business-type activities for the year ended
September 30, 2021:
Water and
Electric Natural Gas Waste Water
Fund Fund Fund
Total salaries 1,405,745$ 1,163,682$ 1,982,179$
Less:
Salaries capitalized for plant additions 48,746 104,647 108,945
Salaries charged to operations 1,356,999$ 1,059,035$ 1,873,234$
- 43 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 10 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 11 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 Code of
Alabama 1975, Section 36-27-6.
- 44 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 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.
Act 132 of the Legislature of 2019 allowed employers who participate in the ERS pursuant to Code of
Alabama 1975, Section 36-27-6 to provide Tier 1 retirement benefits to their Tier 2 members. Tier 2
members of employers adopting Act 2019-132 will contribute 7.5% of earnable compensation for
regular employees and 8.5% for firefighters and law enforcement officers. A total of 590 employers
adopted Act 2019-132.
- 45 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 PENSION PLAN (CONTINUED)
Benefits Provided (Continued)
The ERS serves approximately 907 local participating employers. The ERS membership includes
approximately 101,245 participants. As of September 30, 2020, membership consisted of:
ERS City Library
Retirements and beneficiaries currently receiving benefits 28,672 112 6
Terminated employees entitled to but not yet receiving benefits 1,974 10 -
Terminated employees not entitled to a benefit 14,133 46 9
Active members 56,369 337 13
Post-DROP participants who are still in active service 97 - -
Totals 101,245 505 28
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.
Employers participating in the ERS pursuant to Code of Alabama 1975, Section 36-27-6 were not
required by statue to increase covered member contribution rates but were provided the opportunity to do
so through Act 2011-676. By adopting Act 2011-676 Tier 1 regular members contribution rates increased
from 5% to 7.5% of earnable compensation and Tier 1 firefighters and law enforcement officers
increased from 6% to 8.5% of earnable compensation.
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.
- 46 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 PENSION PLAN (CONTINUED)
Contributions (Continued)
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 9.05% of
pensionable pay for Tier 1 employees, and 7.29% of pensionable pay for Tier 2 employees. The Fairhope
Public Library’s contractually required contribution rate for the year ended September 30, 2020, was
13.10% of pensionable pay for Tier 1 employees, and 12.15% 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 $1,557,865 and $40,428 from the Fairhope Public Library for the
year ended September 30, 2021.
- 47 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 PENSION PLAN (CONTINUED)
Net Pension Liability
The City’s and Fairhope Public Library’s net pension liabilities were measured as of September 30,
2020, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of September 30, 2019 rolled forward to September 30, 2020 using standard roll-
forward techniques as shown in the following table:
City of Fairhope
Expected Actual
(a) Total pension liability for September 30, 2019 48,297,664$ 49,117,289$
(b) Discount rate 7.70%7.70%
(c) Entry age normal cost for the period
October 1, 2019 to September 30, 2020 1,171,361 1,305,115
(d) Transfer among employers - 426,549
(e) Actual benefit payments and refunds for
October 1, 2019 to September 30, 2020 (2,884,262) (2,884,262)
(f) Total Pension Liability as of September 20, 2020
[(a) x (1+(b))] + (c) + (d) + [(e) x (1 + 0.5 x (b))] 50,192,639$ 51,635,678$
(g) Difference between expected and actual 1,443,039$
(h) Less liability transferred for immediate recognition 426,549
(i) Experience (gain)/loss 1,016,490$
- 48 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 PENSION PLAN (CONTINUED)
Net Penson Liability (Continued)
Fairhope Public Library
Expected Actual
(a) Total pension liability for September 30, 2019 1,422,090$ 1,457,126$
(b) Discount rate 7.70%7.70%
(c) Entry age normal cost for the period
October 1, 2019 to September 30, 2020 32,407 38,212
(d) Transfers among employers: - -
(e) Actual benefit payments and refunds for
October 1, 2019 to September 30, 2020 (65,814) (65,814)
(f) Total Pension Liability as of September 20, 2020
[(a) x (1+(b))] + (c) + (d) + [(e) x (1 + 0.5 x (b))] 1,495,650$ 1,539,188$
(g) Difference between expected and actual 43,538$
(h) Less liability transferred for immediate recognition -
(i) Experience (gain)/loss 43,538$
Actuarial Assumptions
The total pension liability as of September 30, 2020, was determined based on the annual actuarial
funding valuation report prepared as of September 30, 2019. 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
- 49 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 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, 2018, 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%
Alternatives 10.0%10.1%
Real Estate 10.0%7.5%
Cash equivalents 3.0%1.5%
100.0%
*Includes assumed rate of inflation of 2.75%
- 50 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 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, 2019 48,297,664$ 36,857,001$ 11,440,663$
Changes for the year:
Service cost 1,171,361 - 1,171,361
Interest 3,607,876 - 3,607,876
Changes of benefit terms 717,323 - 717,323
Differences between expected
and actual experience 299,167 - 299,167
Contributions – employer - 1,200,051 (1,200,051)
Contributions – employee - 913,202 (913,202)
Net investment income - 2,096,271 (2,096,271)
Benefit payments, including refunds
of employee contributions (2,884,262) (2,884,262) -
Transfers among employers 426,549 426,549 -
Net Changes 3,338,014 1,751,811 1,586,203
Balances at September 30, 2020 51,635,678$ 38,608,812$ 13,026,866$
- 51 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 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, 2019 1,422,090$ 984,565$ 437,525$
Changes for the year:
Service cost 32,407 - 32,407
Interest 106,967 - 106,967
Changes of benefit terms 22,441 - 22,441
Differences between expected
and actual experience 21,097 - 21,097
Contributions – employer - 32,554 (32,554)
Contributions – employee - 44,410 (44,410)
Net investment income - 56,580 (56,580)
Benefit payments, including refunds
of employee contributions (65,814) (65,814) -
Transfers among employers - - -
Net Changes 117,098 67,730 49,368
Balances at September 30, 2020 1,539,188$ 1,052,295$ 486,893$
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 19,082,232$ 13,026,866$ 7,938,029$
Net pension liability, Fairhope Public Library 615,195$ 486,893$ 376,692$
- 52 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 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, 2020. The supporting
actuarial information is included in the GASB Statement No. 68 Report for the RSA prepared as of
September 30, 2020. The auditor’s report dated April 30, 2021 on the Schedule of Changes in Fiduciary
Net Position by Employer and accompanying notes is also available. The additional financial and
actuarial information is available at 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, 2021, the City recognized pension expense of $612,730 while the
Fairhope Public Library recognized pension expense of $19,504. The fund in which the related payroll
costs are expended will be used to liquidate the net pension liability. At September 30, 2021, the City and
Fairhope Public Library reported deferred outflows of resources and deferred inflows of resources,
respectively, related to pensions of the following sources:
City of Fairhope
Deferred Deferred
Outflows of Inflows of
Resources Resources
Governmental Activities:
Differences between expected and actual experience 483,605$ 689,653$
Changes of assumption 398,486 -
Net difference between projected and actual earnings
on plan investments 873,285 -
Employer contributions subsequent to measurement date 1,121,541 -
Governmental activities pension related items 2,876,917 689,653
Business-type Activities:
Differences between expected and actual experience 173,378 88,898
Changes of assumption 142,861 -
Net difference between projected and actual earnings
on plan investments 313,084 -
Employer contributions subsequent to measurement date 221,724 -
Business-type activities pension related items 851,047 88,898
3,727,964$ 778,551$
- 53 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions (Continued)
Other than employer contributions subsequent to the measurement date, amounts reported as deferred
outflows of resources and deferred inflows of resources to pensions will be recognized in pension
expense as follows:
Year Ending
September 30,
2022 258,382$
2023 560,995
2024 499,539
2025 145,697
2026 110,279
Thereafter 31,256
1,606,148$
Fairhope Public Library
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience 18,097$ 20,028$
Changes of assumption 31,693 -
Net difference between projected and actual earnings
on plan investments 32,173 -
Employer contributions subsequent to measurement date 40,428 -
Total 122,391$ 20,028$
- 54 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 11 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions (Continued)
Other than employer contributions subsequent to the measurement date, amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Year Ending
September 30,
2022 20,464$
2023 19,732
2024 15,952
2025 5,787
2026 -
Thereafter -
61,935$
NOTE 12 COMMITMENTS
The City has various contractual commitments outstanding at year end. The commitments under these
contracts totaled $7,556,659. The commitments funded from governmental activities will be $299,286
and from business-type activities will be $7,257,373.
NOTE 13 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.
- 55 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 14 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, 2021, the following employees were covered by
the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 34
Active members 99
Totals 133
Total OPEB Liability
The City’s total OPEB liability of $10,633,660 was measured as of September 30, 2020 and was
determined by an actuarial valuation as of September 30, 2019.
- 56 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 14 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Total OPEB Liability (Continued)
Actuarial Assumptions and Other Inputs. The total OPEB liability in the September 30, 2020 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 2.66%
Measurement date 2.21%
Healthcare cost trend rates
Pre-Medicare 7.00% for 2020 decreasing to an ultimate
rate of 4.50% by 2030
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, 2020 reporting date was 2.66%. The discount rate used to compute
the total OPEB liability for the reporting date of September 30, 2021 was 2.21%.
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, 2020 valuation were based on the results of an actuarial experience
study for the period October 1, 2010 through September 30, 2015 and were submitted to and adopted by
the Board of Employees’ Retirement System of Alabama on September 29, 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, 2020 valuation were based on a review
of recent plan experience done concurrently with the September 30, 2020 valuation.
- 57 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 14 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Changes in Total OPEB Liability
Total OPEB
Liability
Balance at September 30, 2020 9,600,936$
Changes for the year:
Service cost 283,527
Interest 250,165
Differences between expected
and actual experience 462,366
Changes of assumptions or other inputs 431,719
Benefit payments (395,053)
Net Changes 1,032,724
Balance at September 30, 2021 10,633,660$
Changes in assumptions and other inputs reflect a change in the discount rate from 2.66% used in the
September 30, 2020 valuation to 2.21% used in the September 30, 2021 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 (1.21%) or 1-
percentage-point higher (3.21%) than the current discount rate:
1% Decrease Current Rate 1% Increase
(1.21%)(2.21%)(3.21%)
Total OPEB liability 11,447,934$ 10,633,660$ 9,867,703$
- 58 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 14 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 or 1-
percentage-point higher than the current healthcare cost trend rates:
1% Decrease Current Rate 1% Increase
Total OPEB liability 9,637,183$ 10,633,660$ 11,774,526$
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB
For the year ended September 30, 2021, the City recognized OPEB expense of $395,053. The fund in
which the related payroll costs are expended will be used to liquidate the total OPEB liability. At
September 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Governmental Activities:
Differences between expected and actual experience 307,881$ 1,541,526$
Changes of assumption 759,977 248,660
Employer contributions subsequent to measurement date 239,045 -
Governmental activities OPEB related items 1,306,903 1,790,186
Business-type Activities:
Differences between expected and actual experience 110,373 552,622
Changes of assumption 272,445 89,143
Employer contributions subsequent to measurement date 85,695 -
Business-type activities OPEB related items 468,513 641,765
1,775,416$ 2,431,951$
- 59 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 14 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB (Continued)
Other than employer contributions subsequent to the measurement date, 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,
2021 (568,996)$
2022 (568,996)
2023 (28,677)
2024 185,394
2025 -
Thereafter -
(981,275)$
NOTE 15 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 16 LEASE EXPENSE
The City rents equipment, primarily, on monthly arrangements. The leases are not significant to the
operations of the City.
NOTE 17 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 $2,160,000 at September 30, 2021.
- 60 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 17 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 $785,703 at September 30, 2021.
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 $750,857 at September 30, 2021.
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 $1,348,286 at September 30, 2021.
- 61 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 17 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 $420,000 at September 30, 2021.
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. Upon completion in fiscal year 2021, the Airport Authority reported a capital
improvement in the amount of $512,000 with a corresponding balance of $512,000 as a deferred inflow of
resources pursuant to the service concession arrangement. The balance of the deferred inflow of resources
is $494,933 at September 30, 2021.
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 $700,000, which will be
considered a deferred inflow of resources and rent revenue will be recognized over the life of the term of
the lease beginning at the completion date. The Airport Authority will report the capital improvements as
a capital asset and it will be depreciated in accordance with the Airport Authority's depreciation policy
upon completion.
- 62 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 18 FAIR VALUE DISCLOSURES
Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those
that GASB Statements require or permit in the statement of net position at the end of each reporting
period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s
fair value.
Level 1 inputs are quoted prices in active markets for identical assets.
Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Investments’ fair value measurements are as follows at September 30, 2021:
Level 1 Level 2 Level 3 Total
Treasury portfolio 3,349,350$ -$ -$ 3,349,350$
AMIC Insurance - - 36,090 36,090
Total 3,349,350$ -$ 36,090$ 3,385,440$
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 19 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, 2021 totaled $26,903.
The City does not collect property taxes. The Revenue Commissioner of Baldwin County is responsible
for such collection.
- 63 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 20 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 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 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.
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.
- 64 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(continued)
NOTE 20 EFFECT OF NEW PRONOUNCEMENTS (CONTINUED)
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.
GASB 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal
Revenue Code Section 457 Deferred Compensation Plans. This Statement requires that, for purposes of
determining whether a primary government is financially accountable for a potential component unit
(except for a potential component unit that is a defined contribution pension plan, a defined contribution
OPEB plan, or other employee benefit plan), the absence of a governing board should be treated the same
as the appointment of a voting majority of a governing board if the primary government performs the
duties that a governing board typically performs. Appointment of a voting majority is a criterion in
existing standards used to determine whether a legally separate entity should be incorporated into the
government’s financial statements. Requirements for this Statement will take effect for financial
statements whose fiscal year begins after June 15, 2021.
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REQUIRED SUPPLEMENTARY INFORMATION
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
City of Fairhope
2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 1,557,865$ 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 1,557,865 1,259,337 1,214,082 1,156,988 1,128,689 1,161,190 1,033,161
Contribution deficiency (excess)-$ -$ -$ -$ -$ -$ -$
Covered payroll 17,166,245$ 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 9%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 2021 were based on the September 30, 2018
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 24.4 years
Asset valuation method Five year smoothed market
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return 7.70%, 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 2021.
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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
2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 40,428$ 33,956$ 33,677$ 34,636$ 41,630$ 39,481$ 43,472$
Contributions in relation to the actuarially
determined contribution 40,428 33,956 33,677 34,636 41,630 39,481 43,472
Contribution deficiency (excess)-$ -$ -$ -$ -$ -$ -$
Covered payroll 478,807$ 473,525$ 501,964$ 489,687$ 486,684$ 426,252$ 426,252$
Contributions as a percentage of covered
payroll 8%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 2021 were based on the September 30, 2018
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 28.5 years
Asset valuation method Five year smoothed market
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return 7.70%, 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 2021.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 1,171,361$ 1,106,681$ 1,072,514$ 1,075,003$ 997,552$ 975,740$ 944,066$
Interest 3,607,876 3,433,949 3,393,813 3,286,149 3,131,861 2,977,603 2,852,227
Changes in benefit terms 717,323 - - - - - -
Differences between expected and actual
experience 299,167 557,843 (1,109,067) (296,198) (52,317) 83,217 -
Changes in assumptions - - 251,496 - 1,344,385 - -
Benefit payments, including refunds of
employee contributions (2,884,262) (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfer among employers 426,549 40,780 (113,767) (317,929) (76,441) - -
Net change in total pension liability 3,338,014 2,262,592 992,885 1,533,494 3,375,813 1,789,128 1,585,545
Total pension liability – beginning 48,297,664 46,035,072 45,042,187 43,508,693 40,132,880 38,343,752 36,758,207
Total pension liability – ending (a)51,635,678$ 48,297,664$ 46,035,072$ 45,042,187$ 43,508,693$ 40,132,880$ 38,343,752$
Plan fiduciary net position
Contributions – employer 1,200,051$ 1,160,273$ 1,107,892$ 1,082,206$ 1,163,477$ 1,035,070$ 1,011,234$
Contributions – member 913,202 807,355 796,436 679,081 680,391 621,817 599,215
Net investment income 2,096,271 933,591 3,146,676 3,943,420 2,891,544 337,639 3,115,563
Benefit payments, including refunds of
employee contributions (2,884,262) (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfers among employers 426,549 40,780 (113,767) (317,929) (76,441) (16,923) (36,268)
Net change in plan fiduciary net position 1,751,811 65,338 2,435,133 3,173,247 2,689,744 (269,829) 2,478,996
Plan net position – beginning 36,857,001 36,791,663 34,356,530 31,183,283 28,493,539 28,763,368 26,284,372
Plan net position – ending (b)38,608,812$ 36,857,001$ 36,791,663$ 34,356,530$ 31,183,283$ 28,493,539$ 28,763,368$
Net pension liability (asset) – ending (a)-(b)13,026,866$ 11,440,663$ 9,243,409$ 10,685,657$ 12,325,410$ 11,639,341$ 9,580,384$
Plan fiduciary net position as a percentage
of the total pension liability 74.77%76.31%79.92%76.28%71.67%71.00%75.01%
Covered payroll 16,022,575$ 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 81%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 2020.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 32,407$ 29,287$ 28,941$ 31,457$ 37,134$ 37,305$ 36,648$
Interest 106,967 103,340 98,796 93,059 83,555 82,203 79,859
Changes in benefit terms 22,441 - - - - - -
Differences between expected and actual
experience 21,097 (11,203) (9,007) 5,392 (40,331) (8,514) -
Changes in assumptions - - 5,140 - 132,947 - -
Benefit payments, including refunds of
employee contributions (65,814) (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers - (12,994) - - - - -
Net change in total pension liability 117,098 51,601 67,530 74,491 154,750 (18,628) 67,716
Total pension liability – beginning 1,422,090 1,370,489 1,302,959 1,228,468 1,073,718 1,092,346 1,022,630
Total pension liability – ending (a)1,539,188$ 1,422,090$ 1,370,489$ 1,302,959$ 1,228,468$ 1,073,718$ 1,090,346$
Plan fiduciary net position
Contributions – employer 32,554$ 33,178$ 33,039$ 40,040$ 39,583$ 43,472$ 43,802$
Contributions – member 44,410 23,823 22,728 22,527 21,976 20,166 19,155
Net investment income 56,580 24,809 82,409 100,700 72,223 8,684 81,118
Benefit payments, including refunds of
employee contributions (65,814) (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers - (12,994) - - - - -
Net change in plan fiduciary net position 67,730 11,987 81,836 107,850 75,227 (57,300) 95,284
Plan net position – beginning 984,565 972,578 890,742 782,892 707,665 764,965 669,681
Plan net position – ending (b)1,052,295$ 984,565$ 972,578$ 890,742$ 782,892$ 707,665$ 764,965$
Net pension liability (asset) – ending (a)-(b)486,893$ 437,525$ 397,911$ 412,217$ 445,576$ 366,053$ 325,381$
Plan fiduciary net position as a percentage
of the total pension liability 68.37%69.23%70.97%68.36%63.73%65.91%70.16%
Covered payroll 398,880$ 442,352$ 461,619$ 433,005$ 455,696$ 412,627$ 383,102$
Net pension liability (asset) as a percentage of
covered payroll 122%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 2020.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN TOTAL OPEB LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2020 2019 2018 2017
Total OPEB liability
Service cost 283,527$ 203,973$ 401,209$ 441,966$
Interest 250,165 340,720 442,731 371,696
Differences between expected and actual
experience 462,366 85,836 (4,733,827) 2,650
Changes in assumptions 431,719 1,071,768 45,224 (757,435)
Benefit payments (395,053) (499,978) (313,549) (373,128)
Net change in total OPEB liability 1,032,724 1,202,319 (4,158,212) (314,251)
Total OPEB liability – beginning 9,600,936 8,398,617 12,556,829 12,871,080
Total OPEB liability – ending 10,633,660$ 9,600,936$ 8,398,617$ 12,556,829$
Covered payroll 5,676,202$ 6,190,702$ 6,190,702$ 8,226,573$
Net OPEB liability as a percentage of
covered payroll 187.34%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 2020.
Notes to Schedule
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 2021.
Changes of assumptions and other inputs reflect a change in the discount rate from 2.66% to 2.21% due to a change in
the municipal bond rate.
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CITY OF FAIRHOPE, ALABAMA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report.
Variance
Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes 17,325,174$ 18,243,174$ 20,673,433$ 2,430,259$
Licenses and permits 4,308,000 4,308,000 4,544,325 236,325
Fines and forfeitures 200,000 200,000 194,677 (5,323)
Intergovernmental 597,000 497,000 9,972,820 9,475,820
Interest and rents 456,976 456,976 461,632 4,656
Charges for services 5,132,100 5,132,100 5,621,930 489,830
Golf course revenue 1,015,000 1,015,000 1,272,891 257,891
Recreation Department 257,400 257,400 393,744 136,344
Other 577,250 577,250 1,957,807 1,380,557
Total revenues 29,868,900 30,686,900 45,093,259 14,406,359
EXPENDITURES
General government
General 3,876,755 3,871,939 3,347,211 524,728
Planning 919,348 919,348 885,517 33,831
Building 956,197 956,197 951,561 4,636
Elected officials 277,729 277,729 264,037 13,692
Revenue 368,492 373,308 393,261 (19,953)
Judicial 317,012 317,012 306,639 10,373
Other 185,100 185,100 10,060,631 (9,875,531)
Public safety
Police 6,973,787 6,973,787 6,548,938 424,849
Fire 696,143 696,143 615,178 80,965
Public works
Sanitation 2,509,740 2,509,740 2,461,326 48,414
Street 4,170,568 4,170,568 4,370,641 (200,073)
Fleet maintenance 639,483 639,483 652,483 (13,000)
Cultural and recreational
Economic and community development 667,322 667,322 624,549 42,773
Adult recreation 456,740 456,740 346,200 110,540
Recreation 2,479,623 2,479,623 2,274,643 204,980
Golf 1,709,176 1,709,176 1,583,935 125,241
Marina 452,328 602,328 567,169 35,159
Civic Center 271,320 271,320 244,306 27,014
Museum and Welcome Center 200,854 218,854 186,868 31,986
Airport Authority 320,000 320,000 335,000 (15,000)
Public Library 816,431 816,431 816,431 -
Debt service payments:
Principal - - 300,000 (300,000)
Capital outlay 1,746,959 1,746,959 1,894,180 (147,221)
Total expenditures 31,011,107 31,179,107 40,030,704 (8,851,597)
Excess of revenues over (under) expenditures (1,142,207) (492,207) 5,062,555 5,554,762
OTHER FINANCING SOURCES (USES)
Transfers in 2,132,774 2,218,931 1,917,549 (301,382)
Transfers out (989,239) (1,739,239) (1,597,565) 141,674
Total other financing sources (uses) 1,143,535 479,692 319,984 (159,708)
Net change in fund balances 1,328$ (12,515)$ 5,382,539 5,395,054$
Fund balances – beginning of year 13,883,906
FUND BALANCES – END OF YEAR 19,266,445$
Budgeted Amounts
- 71 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2021
See independent auditors’ report.
NOTE 1 EXCESS EXPENDITURES
The following are General Fund expenditures in excess of final budget amounts:
Excess Excess Excess ExcessExpenditures Expenditures Expenditures Expenditures
General Government Revenue Street Department Golf Department
Overtime – General 1,824$ Salaries 14,984$ Overtime 80,986$ Overtime 3,740$
Health insurance 70,852 Payroll taxes 976 Training 425 Casualty/workers comp insurance 5,662
Sales tax collection fees 14,444 Required contributions – OPEB 15,147 Professional services 10,971 Printers and copiers 1,014
Grant expenditures 20,000 Casualty/workers comp insurance 3,427 General supplies 21,540 Dues 152
Professional services 6,680 Computer expense 3,796 Equipment and vehicle repair 76,523 Supplies – Clubhouse 2,198
Bank fees 26,065 Printers and copiers 625 Payroll taxes 2,184 Supplies – Grill 6,287
Casualty/workers comp insurance 10,826 General supplies 806 Equipment rental 10,891 Advertising and promotions 900
Office supplies 13,154 Communications 3,821 Utilities 11,074 Credit card processing fee 8,801
General supplies 840 Equipment and vehicle repair 25 Required contributions – OPEB 38,550 Beer and wine purchases 6,239
Communications 1,666 Uniforms 426 Casualty/workers comp insurance 33,410 Equipment rental 8,412
Publications and newspapers 268 Employment screening 474 Postage 11 Utilities 924
Dues 2,960 General maintenance 8,413 Cost-Pro shop sales 26,182
Equipment and vehicle repair 2,330 Judicial Department Communications 5,929 Health insurance 2,686
Training 3,753 Overtime 7,493 Gasoline and oil 11,581 Professional services 38
Miscellaneous 1,367 Employee retirement expense 530 Small equipment 65 General maintenance 188
Cash over or short 202 Health insurance 25 Beach repairs and maintenance 1,781 Uniforms 487
Gasoline and oil 3,725 Payroll taxes 60 Landscaping 25,054 Safety wear 819
Interest expense 17,967 Casualty/workers comp insurance 875 Capital Outlay 105,028
Computer expense 38,788 Data system 1,200 Marina
Postage 44 Salaries 1,956 Fleet Maintenance Department Casualty/workers comp insurance 3,924
Uniforms 219 Communications 285 Overtime 5,478 Salaries 4,924
Colony rent 23,894 Employee retirement expense 107 Payroll taxes 23
Recording fees 103 Casualty/workers comp insurance 1,825 Equipment and vehicle repair 91
Other Gasoline and oil 708 Gasoline and oil 146,299 Planning Department Audit & Accounting 927 Health insurance 12,010 Employee retirement expense 449
Overtime 1,871 Library Bldg Maint/Equipment 28,278 Utilities 920 Credit card processing fee 5,005
Professional services 2,032 Library Communications 7,398 Professional services 76
Computer expense 42,531 Parking Garage Maintenance 7,760 Salaries 5,515 Civic Center
Legal fees 37,108 Boys and Girls Club utilities 3,757 Printers and copiers 401 Overtime 691
Gasoline and oil 2,426 Boys and Girls Club Maint/Equ 3,021 General supplies 1,668 Casualty/workers comp insurance 1,305
Casualty/workers comp insurance 7,442 USA-Summit Bldg Capital Purch 27,650 Training 70
Publications and newspapers 424 Haven Capital Purch 12,600 Adult Recreation Department Salaries 540
Haven Communications 1,167 Building maintenance 5,767 Health insurance 236
Building Department Baldwin Co. Transit Hub 4,140 Communications 486
Overtime 3,546 General Supplies 49,749 Gasoline and oil 1,353 Museum and Welcome Center
Casualty/workers comp insurance 867 Hurricane Sally 9,456,292 Printers and copiers 585 Payroll taxes 1,720
Legal fees 10,806 Hurricane Zeta 12,872 Equipment and vehicle repair 717 Casualty/workers comp insurance 123
Uniforms 375 Credit card processing fees 415 General supplies 269
Credit card processing fees 17,292 Police Department Special programs 200 Printers and copiers 1,595
Professional services 36,157 Overtime 15,843 Capital Outlay 119,742 Equipment and vehicle repair 2,994
Computer expense 938 Health insurance 507
Communications 1,129 Casualty/workers comp insurance 5,856 Economic and Community Development Airport
Equipment and vehicle repair 685 Training 2,764 Professional services 177 Airport appropriation 15,000
Professional services 186 Printers and copiers 113
Elected officials Gasoline and oil 12,044 General supplies 1,630 Debt Service
Salaries 6,714 Equipment and vehicle repair 34,004 Communications 35,594 Principal payments 300,000
Payroll taxes 140 Safety wear 102
Casualty/workers comp insurance 2,233 Uniforms 3,097 Recreation Department Transfers
Professional services 1,400 Capital Outlay 6,808 Overtime 9,731 Transfers – Impact fee fund 347,774
Computer expense 6,555 Casualty/workers comp insurance 9,708 Transfers – Capital projects fund 158,337
Office supplies 2,025 Fire Department Postage 30
Printers and copiers 159 Health insurance 3,735 General supplies 14,038
General supplies 5,438 Fire call payments 44,812 Communications 2,167
General maintenance 262 Casualty/workers comp insurance 1,615 General maintenance 12,468
Communications 925 Postage 19 Equipment and vehicle repair 5,403
Communications 2,483 Costs – Tennis shop sales 526
Equipment and vehicle repair 4,076 Equipment rental 6,785
Capital Outlay 225,719 Utilities 6,077
Pool supplies 2,208
Sanitation Department Uniforms 2,411
Casualty/workers comp insurance 44,949 Safety wear 140
Printers and copiers 100 Credit card processing fee 1,517
Communications 1,166 Capital Outlay 268,988
Gasoline and oil 22,602
Safety wear 520
Equipment and vehicle repair 64,821
Landfill charges 21,739
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OTHER SUPPLEMENTARY INFORMATION
COMBINING FINANCIAL STATEMENTS
NONMAJOR GOVERNMENTAL FUNDS
- 72 -
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2021
See independent auditors’ report.
Municipal Rebuild Capital Federal Municipal American
Impact Fees Gas Tax Gas Tax Improvements Grants Court Rescue Debt Service TotalASSETSCash2,573,648$ 186,131$ 134,022$ 670,653$ 47,384$ 96,474$ 673,059$ -$ 4,381,371$
Receivables 455 8,649 11,864 - 467,801 - - - 488,769
Total assets 2,574,103$ 194,780$ 145,886$ 670,653$ 515,185$ 96,474$ 673,059$ - 4,870,140$
LIABILITIES
Accounts payable -$ -$ -$ -$ 265,415$ 79,433$ -$ -$ 344,848$ Unearned revenue - - - - - - 673,055 - 673,055 Due to other funds - - - - 249,770 17,021 - - 266,791
Total liabilities - - - - 515,185 96,454 673,055 - 1,284,694
FUND BALANCES
Restricted:
Road maintenance - 194,780 145,886 - - - - - 340,666
Capital improvements - - - 670,653 - - - - 670,653
Municipal Court - - - - - 20 - - 20
American Rescue - - - - - - 4 - 4
Committed:
Construction and road maintenance 2,574,103 - - - - - - - 2,574,103
Total fund balances 2,574,103 194,780 145,886 670,653 - 20 4 - 3,585,446
Total liabilities and fund balances 2,574,103$ 194,780$ 145,886$ 670,653$ 515,185$ 96,474$ 673,059$ -$ 4,870,140$
Special Revenue Funds
- 73 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report.
Municipal Rebuild Capital Federal Municipal American Debt
Impact Fees Gas Tax Gas Tax Improvements Grants Court Rescue Service TotalREVENUESTaxes-$ -$ 136,626$ -$ -$ -$ -$ -$ 136,626$
Intergovernmental - 92,806 - 157,662 557,248 - 297,674 - 1,105,390 Charges for services 1,128,036 - - - - - - - 1,128,036 Interest and rents 2,763 - 30 728 - 20 4 - 3,545
Other - - - - - - - 1,160 1,160
Total revenues 1,130,799 92,806 136,656 158,390 557,248 20 297,678 1,160 2,374,757
EXPENDITURES General government - - - - - - 297,674 - 297,674 Debt service Principal - - - - - - - 479,020 479,020 Interest - - - - - - - 29,847 29,847
Capital outlay - - - - 557,248 - - - 557,248
Total expenditures - - - - 557,248 - 297,674 508,867 1,363,789
Excess of revenues over
(under) expenditures 1,130,799 92,806 136,656 158,390 - 20 4 (507,707) 1,010,968
OTHER FINANCING SOURCES (USES)
Transfers in - - - - - - - 508,867 508,867 Transfers out (1,593,420) (132,500) (75,000) (304,080) - - - - (2,105,000)
Total other financing
sources (uses)(1,593,420) (132,500) (75,000) (304,080) - - - 508,867 (1,596,133)
Net change in fund balances (462,621) (39,694) 61,656 (145,690) - 20 4 1,160 (585,165)
Fund balances – beginning of year 3,036,724 234,474 84,230 816,343 - - - (1,160)4,170,611
FUND BALANCES – END OF YEAR 2,574,103$ 194,780$ 145,886$ 670,653$ -$ 20$ 4$ -$ 3,585,446$
Special Revenue Funds
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INDIVIDUAL FUND FINANCIAL STATEMENTS
DISCRETELY PRESENTED COMPONENT UNITS
- 74 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2021
See independent auditors’ report.
ASSETS
Cash and cash equivalents 825,725$
Prepaid items 7,169
Total assets 832,894$
LIABILITIES
Accounts payable and accrued liabilities 20,111$
FUND BALANCES
Nonspendable:
Prepaid items 7,169
Restricted:
Library improvements 379,036
Unassigned 426,578
Total fund balances 812,783
Total liabilities and fund balances 832,894$
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CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2021
See independent auditors’ report.
Fund balances as reported on page 74 812,783$
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.546,132
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.(487,434)
Other assets used in governmental activities are not financial resources and,
therefore, are not reported in the governmental funds.
Employment retirement contributions 122,391
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 (486,893)
Deferred inflows of resources (20,028)
Net position of governmental activities as reported on page 21 486,951$
- 76 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report.
REVENUES
Fines and lost books 8,834$
Donations, gifts, memorials and bequests 62,468
State aid 25,563
Payments from City of Fairhope 823,697
Miscellaneous 4,492
Total revenues 925,054
EXPENDITURES
Salaries 512,641
Payroll taxes 37,878
Insurance 11,311
Employees’ retirement 40,428
Books, periodicals, audio visual 96,364
Supplies 13,082
Janitorial service 21,199
Professional fees 10,162
Telecommunications 1,244
Capital outlay 44,547
Maintenance 34,394
Miscellaneous 48,425
Total expenditures 871,675
Net change in fund balances 53,379
Fund balances – beginning of year 759,404
FUND BALANCES – END OF YEAR 812,783$
- 77 -
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, 2021
See independent auditors’ report.
Net change in fund balances – total governmental funds, page 76 53,379$
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:
Capital outlay, reported as expenditures in governmental funds, is shown as
capital assets in the statement of net position. 38,570
Depreciation expense on governmental capital assets included in the
capital assets in the statement of net position. (25,860)
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 (19,504)
Change in net position of governmental activities, page 22 46,585$
- 78 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2021
See independent auditors’ report.
ASSETS
Cash and cash equivalents 186,205$
Receivables, net 208,124
Prepaid items 41,873
Capital assets not being depreciated:
Land 10,674,228
Construction in progress 249,497
Capital assets net of accumulated depreciation:
Buildings and improvements 8,238,208
Vehicles and equipment 27,380
Runways 16,787,721
Total assets 36,413,236$
LIABILITIES
Accounts payable and accrued liabilities 79,765$
Unearned revenue 6,007
Customer deposits 65,400
Long-term liabilities:
Due within one year 250,000
Due in more than one year 6,220,629
Total liabilities 6,621,801
DEFERRED INFLOWS OF RESOURCES
Service concession arrangement revenue
applicable to future years 5,959,779
NET POSITION
Net investment in capital assets 29,506,405
Unassigned (5,674,749)
Total net position 23,831,656
Total liabilities and fund balances 36,413,236$
- 79 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report.
OPERATING REVENUES
Fuel sales and rentals 249,854$
Total operating revenues 249,854
OPERATING EXPENSES
Insurance 76,770
Legal and professional 35,341
Maintenance 428,606
Depreciation 535,902
Other 11,499
Total operating expenses 1,088,118
OPERATING LOSS (838,264)
NONOPERATING REVENUES (EXPENSES)
Revenue from service concession arrangement 230,681
Intergovernmental revenue 748,765
Payments from City of Fairhope 320,000
Interest expense (120,244)
Miscellaneous 262,772
Interest income 302
Total nonoperating revenues (expenses) 1,442,276
Change in net position 604,012
Net position – beginning of year 23,227,644
NET POSITION – END OF YEAR 23,831,656$
- 80 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report.
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 537,433$
Paid to suppliers for goods and services (539,696)
Net cash used in operating activities (2,263)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Amounts received from City of Fairhope 320,000
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from borrowings 6,695,629
Repayment of debt (6,920,629)
Interest paid (120,147)
Capital grants received 595,970
Acquisition of capital assets (741,937)
Net cash used in capital and related
financing activities (491,114)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 302
NET DECREASE IN CASH (173,075)
CASH – BEGINNING OF YEAR 359,280
CASH – END OF YEAR 186,205$
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss (838,264)$
Adjustments to reconcile operating loss to
net cash used in operating activities:
Other nonoperating revenues 262,772
Depreciation 535,902
Change in operating assets and operating liabilities:
Increase in prepaid items (23,725)
Increase in accounts payable 36,245
Increase in unearned revenue 6,007
Increase in customer deposits 18,800
Net cash used in operating activities (2,263)$
- 81 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2021
See independent auditors’ report.
Church St. drainage improvement 857,117$
City street upgrades 511,908
Alabama trans rehab US 98 269,319
Oak St. drainage improvements 232,953
Stadium ADA platform and ramps 215,415
MPO Gayfer Greeno turn lanes 74,489
Volanta Park baseball project 60,912
Boys and Girls Club playground 51,515
Emergency watershed projects 50,779
Rock Creek stabilization project 41,300
Other projects 8,292
Total 2,373,999$
The above items are only from the capital projects fund.
- 82 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2021
See independent auditors’ report.
Natural Water and
Electric Gas Waste Water
Fund Fund Fund
A. Utility customers at September 30, 2021 were as follows:
Number of customers 6,897 12,273 19,868
Number of metered customers 6,897 12,273 19,868
Number of unmetered customers - - -
Number of waste water customers - - 12,054
B. Annual net income of utility operations Natural Water and
Electric Gas Waste Water
Fund Fund Fund Total
Income from operations 4,297,996$ 2,624,506$ 5,011,324$ 11,933,826$
Add:
Depreciation 979,889 475,895 1,821,360 3,277,144
Interest income 98,559 92,211 116,664 307,434
Annual net income as prescribed by debt covenants 5,376,444$ 3,192,612$ 6,949,348$ 15,518,404$
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 2022 $ 1,000,000
Buildings and facilities – expires January 2022 113,070,300
Equipment – expires January 2022 6,581,507
Automobile – expires January 2022
Liability 1,000,000
Uninsured motorist 50,000
Public officials errors and omissions liability – expires January 2022
Aggregate 2,000,000
Per occurrence 1,000,000
Police liability – expires January 2022
Aggregate 2,000,000
Per occurrence 1,000,000
Excess liability policy for general liability, police and public official – expires January 2022 6,000,000
D. The City has complied with all requirements of the respective bond indentures.
- 83 -
CITY OF FAIRHOPE, ALABAMA
SUMMARY OF DEPOSITS, WITHDRAWALS AND BALANCES OF SELECTED TRUST ACCOUNTS AS
REQUIRED UNDER CERTAIN TRUST INDENTURES
SEPTEMBER 30, 2021
See independent auditors’ report.
1996
Capital 2011 2011 2015 2015
Improvement Warrant Fund Reserve Fund Reserve Fund Warrant Fund
Balance October 1, 2020 50,611$ 608,215$ 1,415,679$ 376,669$ 311,111$
Deposits 5 11,484,481 281 193 62,976
Disbursements - (12,092,696) (1,415,960) (376,862) (374,087)
Balance September 30, 2021 50,616$ -$ -$ -$ -$
2020 URW
2020 URW Principal/Int 2020 URW 2020 URW
Reserve Fund Warrant Fund Trust Fund Warrant Fund
Balance October 1, 2020 41,413$ 3,236$ 11,484,476$ -$
Deposits 1,810,551 594,286 104 1,827,330
Disbursements (18,158) (597,522) (11,484,580) (362,402)
Balance September 30, 2021 1,833,806$ -$ -$ 1,464,928$
THIS PAGE INTENTIONALLY LEFT BLANK
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.84-89
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.90-95
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.96-99
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.100-101
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.102-104
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports
for the relevant year.
STATISTICAL SECTION
- 84 -
CITY OF FAIRHOPE, ALABAMA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(accrual basis of accounting)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Governmental activities
Net investment in capital assets 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$ 98,917,172$
Restricted 1,015,592 2,007,967 1,557,163 2,308,667 1,706,056 650,031 750,122 227,092 1,135,047 1,011,343
Unrestricted 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 6,658,072
Total governmental activities net position 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$ 106,586,587$
Business-type activities
Net investment in capital assets 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$ 67,819,256$
Restricted 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 3,349,350
Unrestricted 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 24,938,747
Total business-type activities net position 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$ 96,107,353$
Primary government
Net investment in capital assets 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$ 166,736,428$
Restricted 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 4,360,693
Unrestricted 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 31,596,819
Total primary government net position 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$ 202,693,940$
Fiscal Year
- 85 -
CITY OF FAIRHOPE, ALABAMA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Expenses
Governmental activities:
General government 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$ 16,825,075$
Public safety 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 7,699,709
Public works 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 9,536,641
Cultural and recreational 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 6,680,606
Airport Authority 281,124 443,000 443,000 412,632 428,000 342,000 320,000 320,000 320,000 335,000
Public Library Board 810,636 840,636 886,028 924,736 1,025,236 1,025,887 1,024,522 1,029,124 1,069,323 1,021,772
Interest on long-term debt 589,174 507,982 472,222 344,808 339,051 53,853 94,506 71,726 27,969 31,431
Total governmental activities expenses 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 42,130,234
Business-type activities:
Natural gas 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 6,172,162
Electric 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 17,605,905
Water and waste water 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 9,813,398
Total business-type activities expenses 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 33,591,465
Total primary government expenses 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$ 75,721,699$
Program Revenues
Governmental activities:
Charges for services:
General government 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$ 8,802,363$
Public safety 289,432 291,749 285,573 - - - - - - -
Public works 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 2,440,059
Cultural and recreational 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 2,420,846
Operating grants and contributions - - 9,144 - - 102,507 94,494 127,978 542,126 9,157,959
Capital grants and contributions 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 2,408,124
Total governmental activities program revenues 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 25,229,351
Business-type activities:
Charges for services:
Natural gas 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 8,744,718
Electric 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 21,910,226
Water and waste water 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 14,679,765
Operating grants and contributions - - - - - - - - 24,299 125,743
Capital grants and contributions - - - - - - - 253,028 2,304,665 -
Total business-type activities program revenues 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 45,460,452
Total primary government program revenues 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$ 70,689,803$
Fiscal Year
- 86 -
CITY OF FAIRHOPE, ALABAMA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net (expense)/revenue
Governmental activities (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)$ (16,900,883)$
Business-type activities 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 11,868,987
Total primary government net expense (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)$ (5,031,896)$
General Revenues and Other Changes in
Net Position
Governmental activities:
Taxes
Property taxes 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$ 6,847,201$
Sales tax 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 11,727,899
Liquor taxes 425,888 425,816 445,132 451,719 482,755 536,643 498,044 606,819 632,363 714,140
Lodging taxes 569,142 643,495 614,278 681,419 696,379 762,562 653,697 1,116,242 911,537 1,366,725
Other taxes 124,234 139,666 138,204 138,382 133,057 139,444 127,513 122,059 116,455 111,649
Intergovernmental 314,525 596,816 389,561 1,695,688 568,566 - - - - -
Investment earnings 226,642 251,512 239,205 228,670 302,181 335,106 59,157 126,115 274,246 174,777
Loss on sale of assets - - (261,340) - - - - - - -
Other 143,319 213,169 147,672 705,142 147,452 283,385 262,849 292,339 341,897 1,404,410
Transfers in/(out)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 1,536,517
Total governmental activities 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 23,883,318
Business-type activities:
Investment earnings 20,417 25,268 30,815 18,440 15,162 23,552 53,651 136,797 519,544 307,434
Other - - - - - 19,276 14,775 16,167 37,608 3,787
Transfers in/(out)(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) (1,536,517)
Total business-type activities (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) (1,225,296)
Total primary government 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$ 22,658,022$
Change in Net Position
Governmental activities 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$ 6,982,435$
Business-type activities 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 10,643,691
Total primary government 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$ 17,626,126$
Fiscal Year
- 87 -
CITY OF FAIRHOPE, ALABAMA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Beer, Wine
Fiscal Sales Ad Valorem Automobile and Liquor Cigarette Lodging Dog
Year Tax Tax Tax Tax Tax Tax Tax Total
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
2021 11,727,899 5,994,465 852,736 714,140 111,579 1,366,725 70 20,767,614
- 88 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCES OF GOVERNMENTAL FUNDS
(modified accrual basis of accounting)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General fund
Nonspendable -$ -$ -$ -$ -$ 85,490$ 303,387$ 323,647$ 136,037$ 203,736$
Committed 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 7,734,594
Unassigned 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 11,328,115
Total general fund 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$ 19,266,445$
All other governmental funds
Restricted:
Debt service – other governmental funds 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 35,936 122,173 208,535 227,092 318,704 340,666
Capital improvements - - - - - - - - 816,343 670,653
Other - - - - - - - - - 24
Committed, reported in:
Other governmental funds 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 2,574,103
Capital projects fund - 58,625 1,956,986 4,398,406 1,364,704 4,147,827 2,787,639 1,943,247 862,824 1,428,575
Unassigned:
Capital projects fund (1,069,424) 181,085 - - - - - - - -
Other governmental funds - - - - - - - (1,160) (1,160) -
Total all other governmental funds 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$ 5,014,021$
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
- 89 -
CITY OF FAIRHOPE, ALABAMA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
REVENUES
Local taxes 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$ 20,810,059$
Licenses and permits 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 4,544,325
Fines and forfeitures 289,432 291,749 285,573 278,837 236,724 284,893 273,887 237,812 199,228 194,677
Intergovernmental 667,344 1,022,649 991,614 639,523 693,761 876,086 954,086 1,090,181 2,470,197 11,205,009
Contribution from Public Library Board 1,000 1,500 - - - - - - - -
Interest and rents 226,748 253,003 239,205 228,669 302,181 335,106 401,705 470,753 576,479 465,462
Charges for services 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 6,749,966
Assessments 3,659 - - - - - - - - -
Golf course revenue 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 1,272,891
Recreation Department 368,493 391,024 436,453 444,410 476,772 466,437 442,324 456,362 238,811 393,744
BP settlement proceeds - - - 1,361,255 - - - - - -
Legal settlement - - - 598,640 - - - - - -
Other 184,411 253,146 196,913 180,644 223,293 338,058 368,387 660,915 1,219,633 1,958,967
Total revenues 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 47,595,100
EXPENDITURES
General government 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 16,506,531
Public safety 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 7,164,116
Public works 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 7,484,450
Cultural and recreational 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 5,827,670
Airport Authority 281,124 443,000 443,000 412,632 428,000 342,000 320,000 320,000 320,000 335,000
Public Library Board 600,000 630,000 674,100 714,100 814,600 814,600 814,600 818,477 859,401 816,431
Other 160,888 89,133 89,785 93,436 162,736 115,753 100,732 170,203 863,699 -
Debt service:
Principal 4,804,960 1,485,545 2,894,540 483,780 6,478,558 1,573,560 1,578,340 3,775,470 641,366 779,020
Interest 616,221 508,483 465,409 374,479 390,971 111,633 94,751 87,534 28,974 29,847
Capital outlay 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 4,825,427
Total expenditures 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 43,768,492
Excess (deficiency) of revenues
over expenditures (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) 3,826,608
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 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 5,239,082
Transfers out (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) (3,702,565)
Total other financing sources (uses) 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 1,536,517
Net change in fund balances 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)$ 5,363,125$
Debt service as a percentage of
noncapital expenditures 20.6% 9.5% 14.0% 4.1% 24.0% 7.2% 6.3% 13.0% 2.4% 2.1%
Fiscal Year
- 90 -
CITY OF FAIRHOPE, ALABAMA
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Fiscal Total Estimated
Year Less:Total Taxable Direct Actual
Ended Residential Commercial Industrial Tax Exempt Assessed Tax Taxable
September 30 Property Property Property Real Property Value Rate Value
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
2021 292,189,220 1,310,420 254,585,380 81,821,500 466,263,520 15 6,993,952,800
Source: Baldwin County Revenue Commissioner
- 91 -
CITY OF FAIRHOPE, ALABAMA
PROPERTY TAX RATES
DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN FISCAL YEARS
Total
Total Road/ Health Care Total Total Direct and
Fiscal General School Bond Tax City General Bridge Fire School Authority County General School Soldier State Overlapping
Year Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Rates
2012 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2013 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2014 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2015 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2016 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2017 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2018 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2019 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2020 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
2021 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0
Source: Baldwin County Commission
County State
Overlapping Rates
City
- 92 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL PROPERTY TAXPAYERS
YEARS ENDED SEPTEMBER 30, 2021 AND 2012
Taxable Taxable
Assessed Assessed
Taxpayer Value Rank Value Rank
Battles Road, LLC 5,023,240$ 1 1.1% -$ - 0.0%
Retreat at Fairhope Village, LLC 4,310,840 2 0.9% - - 0.0%
FST Wal-mart Stores East, L P 3,034,720 3 0.7% - - 0.0%
Arbor Gates Holdings, LLC 2,608,060 4 0.5% 2,007,700 2 0.7%
FST Mississippi Baldwin Square, LLC 2,147,300 5 0.5% 1,808,800 4 0.6%
PSM Alabama Holdings, LLC 1,994,420 6 0.4% - - 0.0%
A 1 Corte Jr Family Limited Partnership 1,666,900 7 0.4% 1,425,640 6 0.5%
Fairhope Ridge, LLC 1,589,680 8 0.3% - - 0.0%
FST Robert N. Graham, LLC 1,482,660 9 0.3% - - 0.0%
FST Bethes, John W. 1,397,480 10 0.3% - - 0.0%
Fairhope, LLC - - 0.0% 1,568,720 5 0.5%
CHS Properties, Inc. - - 0.0% 1,125,440 7 0.4%
Fairhope Yacht Club - - 0.0% 1,088,300 8 0.4%
Bones & Babies, LLC - - 0.0% 1,053,380 9 0.4%
Fairhope Commercial Investments - - 0.0% 1,022,020 10 0.4%
Point Clear Partners, LLC - - 0.0% 1,809,000 3 0.6%
Bayview II Developer, LLC - - 0.0% 7,646,500 1 2.6%
25,255,300$ 5.4%20,555,500$ 7.1%
Source: Baldwin County Revenue Commissioner
Assessed Value
2021
Percentage of
Total Taxable
Assessed Value
Percentage of
Total Taxable
2012
- 93 -
CITY OF FAIRHOPE, ALABAMA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISAL YEARS
Fiscal Year Total Tax Collections
Ended Levy for in Subsequent
September 30 Fiscal Year Amount Years Amount
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%
2021 6,940,698 6,876,963 99.08%8,903 6,885,866 99.21%
Source: Baldwin County Revenue Commissioner
Percentage of Levy
Collected within the
Total Collections to DateFiscal Year of the Levy
Percentage of Levy
- 94 -
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
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%
2021 2.00% 3.00% 4.00%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009.
- 95 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAXPAYERS
LAST TEN YEARS
Fiscal Top 25 Taxpayers
Year (approximate)Total Tax % of Total Tax
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%
2021 5,315,798 10,579,090 50%
Source: City Treasurer's Office and Alabama Department of Revenue
Note: State law prohibits the disclosure of tax information for specific taxpayers.
- 96 -
CITY OF FAIRHOPE, ALABAMA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
General General Utilities Total Percentage Liability
Fiscal Obligation Notes Capital Obligation Revenue Primary of Personal Per
Year Debt Payable Leases Debt Debt Government Income Capita
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
2021 - 900,000 524,553 - 11,300,000 12,724,553 1.36% 566
Governmental Activities Business-Type Activities
- 97 -
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
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% -
2021 - - - 0.00% -
- 98 -
CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30, 2021
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 1,424,553$ 100.00%1,424,553$
Overlapping Debt (Supported by ad valorem tax)
Baldwin County 95,130,499 8.57%(1)8,152,684
9,577,237$
(1) Percentage of net assessed value of property in City ($466,407,300) to net assessed value of property in Baldwin
County ($5,444,567,660) on October 1, 2020.
- 99 -
CITY OF FAIRHOPE, ALABAMA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Debt limit 57,884,120$ 53,765,340$ 55,043,560$ 60,737,532$ 65,350,300$ 69,525,192$ 75,223,856$ 80,826,248$ 86,102,724$ 93,281,460$
Total net debt applicable to limit 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 1,424,553
Legal debt margin 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$ 91,856,907$
Total net debt applicable to limit
as a percentage of debt limit 24.92% 24.04% 28.57% 23.18% 15.94% 11.05% 5.67% 1.47% 2.56% 1.53%
Legal Debt Margin Calculation for Fiscal Year 2021
Total assessed value 466,407,300$
Debt limit (20% of total assessed value) 93,281,460$
Debt applicable to limit:
General obligation warrants (including capital leases) 1,424,553
Legal debt margin 91,856,907$
Fiscal Year
- 100 -
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
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%
2021 22,477 935,335,401 41,613 5,537 3.0%
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
- 101 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
YEARS ENDED SEPTEMBER 30, 2021 AND 2012
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Thomas Hospital 1,151 1 12.6%1,000 1 16.9%
Grand Hotel 950 2 10.4%650 2 11.0%
Board of Education-Fairhope Schools 497 3 5.4%- - 0.0%
City of Fairhope 437 4 4.8%326 4 5.5%
Wal-Mart 312 5 3.4%325 3 5.5%
Publix 150 6 1.6%100 6 1.7%
Segers Aero 131 7 1.4%96 - 1.6%
Winn-Dixie 85 8 0.9%75 5 1.3%
Piggly Wiggly 80 9 0.9%60 - 1.0%
Homestead Village 77 10 0.8%- - 0.0%
Print Xcel - - 0.0%63 8 1.1%
Bruno's - - 0.0%- 9 0.0%
Balloons Everywhere - - 0.0%65 7 1.1%
3,870 42.2%2,760 46.7%
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
2012: 5,921 2021: 9,127
2021 2012
- 102 -
CITY OF FAIRHOPE, ALABAMA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function
General Government 53 48 48 49 49 49 53 62 64 66
Public Safety:
Police 44 48 46 46 45 49 52 59 59 61
Fire:
Firefighters and Dispatch 18 17 18 17 14 15 16 14 17 17
Highways and Streets:
Public Works 36 39 39 41 46 42 49 57 53 57
Sanitation 19 17 21 22 20 19 18 18 28 23
Cultural and Recreational:
Recreation 19 24 23 25 26 29 32 31 34 35
Adult Recreation 14 9 10 11 12 11 11 13 12 13
Gas Department 18 17 15 15 15 16 18 21 22 21
Electric Department 18 17 22 21 19 19 22 20 26 26
Water/Waste Water Department 26 24 23 23 22 26 29 31 34 36
Golf Department 14 15 16 18 20 19 18 22 21 22
Total 279 275 281 288 288 294 318 348 370 377
Source: City of Fairhope Human Resources Department
Full-time Equivalent Employees as of September 30,
- 103 -
CITY OF FAIRHOPE, ALABAMA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function
Police:
Physical arrests 603 759 750 1,423 983 1,350 1,542 1,538 1,462 866
Parking violations 128 22 49 121 240 359 89 22 52 202
Traffic violations 2,215 1,379 887 633 1,726 2,490 1,684 1,656 1,613 1,751
Fire:
Number of calls answered 657 690 853 836 865 1,025 1,058 1,023 1,236 1,283
Inspections 101 85 35 161 147 73 823 669 648 121
Highways and streets:
Street resurfacing (miles) 8.1 - - - 13.2 - 1.2 2.2 3.3 3.4
Potholes repaired* 450 1,345 1,480 1,620 2,933 2,300 4,928 5,466 1,152 1,720
Sanitation:
Garbage collected (tons/year) 8,711 7,564 8,509 8,236 8,654 9,222 9,554 10,108 11,949 12,042
Trash collected (tons/year) 5,767 5,513 6,292 5,545 5,902 8,228 7,189 7,741 6,907 4,256
Recyclables collected (tons/year) 1,508 1,512 1,714 1,779 1,855 1,843 1,835 1,803 947 824
Cultural and recreational:
Golf course rounds @ 9 hole rounds 65,500 62,266 59,261 57,405 56,613 58,416 53,995 55,971 53,740 62,151
Pavilion/park parties 56 58 61 59 44 28 32 22 19 36
Waste water:
Average daily sewage treatment
(millions of gallons) 1.8 1.8 1.8 2.0 2.2 2.4 2.4 2.3 2.6 2.5
Sources: Various government departments
* The City changed the calculation method for potholes for fiscal year 2016 resulting in an increase.
* The Fire Inspector position was vacant for all of 2021.
Fiscal Year
- 104 -
CITY OF FAIRHOPE, ALABAMA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Function
Public safety:
Police:
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 45 43 37 38 39 44 45 47 50 49
Fire stations 3 3 3 4 4 4 4 4 4 4
Highways and streets:
Streets (miles) 99.1 99.1 103.84 106.54 108.64 111.14 112.64 114.76 116.56 152.56
Cultural and recreational:
Parks acreage 248 248 356 504 504 504 504 657 657 657
Parks 51 51 52 54 54 54 54 56 56 56
Swimming pools 3 3 3 3 3 3 3 3 3 3
Tennis courts 6 6 6 6 12 12 12 16 16 16
Community center 3 3 3 3 3 3 3 3 3 3
Sewer:
Sanitary sewers (miles) 125 126 126 130 135 175 175 180 185 187
Storm sewers (miles) 17.25 17.25 19.17 20.57 22.77 25.77 27.29 29.5 30.73 31.41
Maximum daily treatment capacity
(millions of gallons) 4 4 4 4 4.2 4 4 4 4 4
Sources: Various government departments
Fiscal Year