HomeMy WebLinkAbout2024City of Fairhope, Alabama
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2024
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2024
PREPARED BY:
THE OFFICE OF THE CITY TREASURER
i
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2024
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal iv
Certificate of Achievement for Excellence in Financial Reporting ix
Organizational Chart x
City Elected and Appointed Officials xi
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 4
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 14
Statement of Activities 15
Fund Financial Statements
Governmental Fund Financial Statements
Fund Balance Sheets - Governmental Funds 16
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities 17
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 18
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 19
Proprietary Fund Financial Statements
Statement of Net Position - Proprietary Funds 21
Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 22
Statement of Cash Flows - Proprietary Funds 23
Discretely Presented Component Units
Combining Statement of Net Position - Discretely Presented
Component Units 24
Combining Statement of Activities - Discretely Presented
Component Units 25
Notes to the Financial Statements 26
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CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2024
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
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CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2024
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
Direct and Overlapping Sales Tax Rates 93
Principal Sales Taxpayers 94
Ratios of Outstanding Debt by Type 95
Ratios of General Bonded Debt Outstanding 96
Computation of Overlapping Debt 97
Legal Debt Margin Information 98
Demographic and Economic Statistics 99
Principal Employers 100
Full-time Equivalent City Government Employees by Function 101
Operating Indicators by Function 102
Capital Asset Statistics by Function 103
INTRODUCTORY SECTION
ix
x
CITY OF FAIRHOPE, ALABAMA
ORGANIZATIONAL CHART
SEPTEMBER 30, 2024
xi
CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2024
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, 2024.
FINANCIAL SECTION
Independent Auditors’ Report
Honorable Mayor and Members of
The City Council
City of Fairhope, Alabama
Report on the Audit of the Financial Statements
Opinions
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, 2024,
and the related notes to the financial statements, which collectively comprise the City’s basic financial
statements as listed in the table of contents.
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, 2024, 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.
Basis for Opinions
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. Our responsibilities under those standards are further described in
the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to
be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern
for twelve months beyond the financial statement date, including any currently known information that may
raise substantial doubt shortly thereafter.
105 Tallapoosa St, Suite 300 Montgomery, AL 36104 334.271.2200 warrenaverett.com
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Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a
guarantee that an audit conducted in accordance with generally accepted auditing standards and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements
are considered material if there is a substantial likelihood that, individually or in the aggregate, they would
influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing
Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
Obtain an understanding of internal control relevant to the audit 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 City’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period
of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that
we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis on pages 4 through 13 and the supplementary information on pages 65 through 71 be
presented to supplement the basic financial statements. Such information is the responsibility of management
and, 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.
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Supplementary 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 combining and individual nonmajor fund financial
statements, and other information on pages 81 through 83 are presented for purposes of additional analysis
and are not a required part of the basic financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records used to
prepare the basic financial statements. The 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
combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in
relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information
comprises the introductory and statistical sections, but does not include the basic financial statements and our
auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information,
and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the basic
financial statements, or the other information otherwise appears to be materially misstated. If, based on the
work performed, we conclude that an uncorrected material misstatement of the other information exists, we
are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 12, 2025, 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 12, 2025
THIS PAGE INTENTIONALLY LEFT BLANK
MANAGEMENT’S DISCUSSION AND ANALYSIS
(UNAUDITED)
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MANAGEMENT’S DISCUSSION AND ANALYSIS
(UNAUDITED)
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,
2024. 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, 2024.
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 $278,229,124, at the close of the fiscal year ended September
30, 2024. An unrestricted surplus exists in the amount of $41,607,890, which may be used to
meet the government’s ongoing obligations.
The City’s total net position increased by $28,404,604, or 11.4% in comparison to the net
position at the beginning of the year. Net position of governmental activities increased
$15,603,395, or 11.8% and net position of business-type activities increased $12,801,209 or
10.9%.
At the close of the current fiscal year, the City’s governmental funds reported a combined fund
balance of $40,309,101. This was an increase of $620,302 or 1.56% from the prior year.
At the end of the current fiscal year, total fund balance for the General Fund was $29,729,710, a
decrease of $3,304,834, or 10% from the prior year. This is due to transfers from the General
Fund to the Capital Projects Fund for projects.
Sales and use tax, the City’s single largest revenue source, increased $519,926 or 3.5% from the
prior year, reflecting a continued steady local economy.
The following schedule presents a comparison of revenues for all Governmental Funds for the
fiscal year ended September 30, 2024, to fiscal year ended September 30, 2023. Revenues
increased $7,657,139 or 16.28%, as compared to the previous year. The majority of this increase
was attributable to local tax revenues due to growth and increase in investment income due to
interest rates.
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Increase % Increase
Revenues 2024 % of Total 2023 (Decrease) (Decrease)
Local taxes 28,176,281$ 51.51% 26,143,167$ 2,033,114$ 7.78%
Licenses and permits 5,689,718 10.40% 6,292,136 (602,418) -9.57%
Fines and forfeitures 280,773 0.51%298,611 (17,838) -5.97%
Intergovernmental 9,532,399 17.43% 4,172,243 5,360,156 128.47%
Interest and rents 2,083,376 3.81% 1,547,696 535,680 34.61%
Charges for services 5,410,886 9.89% 5,482,972 (72,086) -1.31%
Golf course revenue 1,418,352 2.59% 1,381,262 37,090 2.69%
Recreation department 676,709 1.24%657,288 19,421 2.95%
Other 1,435,390 2.62% 1,071,370 364,020 33.98%
54,703,884$ 100.00% 47,046,745$ 7,657,139$ 16.28%
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, Water and Waste Water Fund, and the Sanitation 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 Board 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
fiscal 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 nine (9) 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 balances of the major funds. Data from five (5) 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 funds. 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, Water and Wastewater Fund, and
Sanitation 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 26.
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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 a whole. The City’s net position
at fiscal year-end is $278,229,124. This is a $28,404,604 increase over last year’s adjusted net position. The
following table provides a summary of the City’s net position.
2024 2023 2024 2023 2024 2023
Current and other assets
(net of internal balances)49,450,625$ 47,226,849$ 53,771,734$ 34,959,836$ 103,222,359$ 82,186,685$
Internal balances (716,894) (579,620) 716,894 579,620 - -
Capital assets 122,653,701 107,329,390 121,826,845 106,665,599 244,480,546 213,994,989
Total Assets 171,387,432 153,976,619 176,315,473 142,205,055 347,702,905 296,181,674
Deferred charge on refunding - - 49,285 56,325 49,285 56,325
Pension related items 4,846,479 6,704,755 2,225,575 3,245,905 7,072,054 9,950,660
OPEB related items 388,427 652,043 178,389 333,723 566,816 985,766
Total Deferred Outflows
of Resources 5,234,906 7,356,798 2,453,249 3,635,953 7,688,155 10,992,751
Long-term liabilities 18,053,002 17,220,236 37,268,381 16,996,901 55,321,383 34,217,137
Other liabilities 8,280,237 8,182,444 10,323,765 9,721,739 18,604,002 17,904,183
Total Liabilities 26,333,239 25,402,680 47,592,146 26,718,640 73,925,385 52,121,320
Pension related items 111,437 244,927 51,175 118,574 162,612 363,501
OPEB related items 2,106,507 3,218,050 967,432 1,647,034 3,073,939 4,865,084
Total Deferred Inflows
of Resources 2,217,944 3,462,977 1,018,607 1,765,608 3,236,551 5,228,585
Net position
Net Investment in Capital
Assets 122,482,490 106,694,188 108,097,763 97,862,369 230,580,253 204,556,557
Restricted 2,609,565 1,131,211 3,431,416 3,413,062 6,040,981 4,544,273
Unrestricted 22,979,100 24,642,361 18,628,790 16,081,329 41,607,890 40,723,690
Total Net Position 148,071,155$ 132,467,760$ 130,157,969$ 117,356,760$ 278,229,124$ 249,824,520$
Governmental
Activities
Business-type
Activities Total
Total assets increased $51,521,231 or 17.5% from the previous fiscal year. This was primarily due to an
increase in capital assets of $30,485,557. Current year additions totaled $39,622,646 and consisted of
equipment, building and street improvements, and upgrades of the utility system. Current year depreciation
totaled $9,114,021. Also, an increase in cash of $17,883,937 which is primarily due to unspent proceeds
from the $25 million borrowings received upon issuance of the 2024 General Obligation Warrant for Water
and Waste Water system upgrades.
Total liabilities increased $21,804,065 or 41.8% from the previous fiscal year. This was primarily due to the
issuance of a warrant for the Water and Wastewater Fund as of September 30, 2024.
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The largest portion of the City’s net position (76.5%) reflects its investment in capital assets (e.g., land,
buildings, infrastructure, equipment, etc.) less any related debt used to acquire those assets that are 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 portion of the City’s net position (2.2%) 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 $18,628,790 which is an increase
of $2,547,461 from the prior year. The increase is primarily due to the unspent proceeds from the 2024
General Obligation Warrant issued for the necessary system improvements for Water and Waste Water.
2024 2023 2024 2023 2024 2023
Revenues
Program revenues
Charges for services 13,756,843$ 14,222,441$ 54,266,963$ 53,144,812$ 68,023,806$ 67,367,253$
Operating Grants and
contributions 855,929 677,863 683,875 137,489 1,539,804 815,352
Capital grants and
contributions 9,830,891 4,286,518 - - 9,830,891 4,286,518
General revenues
Property taxes 10,132,947 8,648,008 - - 10,132,947 8,648,008
Sales taxes 15,335,550 14,815,624 - - 15,335,550 14,815,624
Other taxes 2,626,184 2,622,749 - - 2,626,184 2,622,749
Other 2,222,602 2,045,994 1,679,376 1,344,778 3,901,978 3,390,772
Total revenues 54,760,946 47,319,197 56,630,214 54,627,079 111,391,160 101,946,276
Expenses
General government 10,969,080 9,376,769 - - 10,969,080 9,376,769
Public safety 9,814,468 8,520,492 - - 9,814,468 8,520,492
Public works 8,625,435 7,635,053 - - 8,625,435 7,635,053
Cultural and recreational 8,166,743 7,342,832 - - 8,166,743 7,342,832
Airport Authority 320,000 320,000 - - 320,000 320,000
Public Library Board 1,135,689 1,080,341 - - 1,135,689 1,080,341
Interest on long-term debt 6,150 9,529 - - 6,150 9,529
Electric - - 19,642,713 20,399,421 19,642,713 20,399,421
Natural gas - - 7,018,857 6,944,703 7,018,857 6,944,703
Water and Waste Water - - 13,898,407 11,331,087 13,898,407 11,331,087
Sanitation - - 3,389,014 3,145,593 3,389,014 3,145,593
Total expenses 39,037,565 34,285,016 43,948,991 41,820,804 82,986,556 76,105,820
Increase in net position
before transfers 15,723,381 13,034,181 12,681,223 12,806,275 28,404,604 25,840,456
Transfers in (out)(119,986) 177,900 119,986 (177,900) - -
Increase in net position 15,603,395 13,212,081 12,801,209 12,628,375 28,404,604 25,840,456
Net position - beginning 132,467,760 119,255,679 117,356,760 104,728,385 249,824,520 223,984,064
Net position - ending 148,071,155$ 132,467,760$ 130,157,969$ 117,356,760$ 278,229,124$ 249,824,520$
Governmental
Activities
Business-type
Activities Total
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Governmental Activities
Governmental activities for the current year increased the City’s net position by $15,603,395. Key elements
of this change are as follows:
Sales and use tax increased by approximately $519,926 or 3.5% due to an increase in consumer
spending.
Lodging tax decreased by approximately $21,534 or 1.2% due to a slight decrease in tourism.
Property tax increased by approximately $1,484,939 or 17.2% due to an increase in assessed
property values and growth.
Capital grants and contributions increased by $5,544,373 or 129.3% due to an increase in capital
projects.
Revenues continue to outpace expenses as total revenues increased by 16% overall while
corresponding expenses increased only 14%, resulting in an 18% increase to net assets for 2024.
Business-type Activities
Business-type activities increased the City’s net position by $12,801,209. 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, and Sanitation 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 $40,309,101,
of which $18,341,324 is unassigned. The non-spendable fund balance is $653,792 and stems from
inventory, prepaid expenses and advance to Component Unit. Restricted fund balance is $2,609,565 and
comprises funds with restrictions imposed by outside parties or constitutional provisions. Committed fund
balance is $18,704,420 and comprises funds with constraints imposed by formal action of the City Council.
In particular, unassigned fund balance may serve as a useful measure of the City’s net resources available
for discretionary use as it represents the portion of fund balance that is not limited for a particular use. The
table below illustrates the breakdown of governmental funds for fiscal year 2024.
- 10 -
American
Capital Rescue Federal Other Total
General Projects Plan Grants Governmental Governmental
Total revenues 44,536,545$ 1,033,578$ 176,943$ 7,137,301$ 1,819,517$ 54,703,884$
Total expenditures 40,667,278 6,145,981 2,060 7,202,027 6,267 54,023,613
Total other financing sources (uses)(7,174,101) 6,678,957 (114,850) 1,186,365 (636,340) (59,969)
Net change in fund balances (3,304,834) 1,566,554 60,033 1,121,639 1,176,910 620,302
Fund balances, beginning of year 33,034,544 3,406,740 53,810 7,710 3,185,995 39,688,799
Fund balances, end of year 29,729,710$ 4,973,294$ 113,843$ 1,129,349$ 4,362,905$ 40,309,101$
Percent of fund balance to expenditures 73%81%5526%16%69617%75%
All Governmental Funds
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, 2024, the total fund balance of the general fund was $29,729,710, a decrease of
$3,304,834. The decrease in the General Fund is primarily due to transfers to the capital projects fund for
various capital outlay purchases.
Total revenue of the General Fund increased by $2,505,506 or 5.9% in 2024 compared to the previous year.
This was mostly attributable to increase in revenue from local taxes due to growth and increase in property
values as well as an increase in investment income.
Capital Projects Fund
The Capital Projects 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 $1,566,554 from the previous
year.
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, Water and Waste Water Fund and
Sanitation Fund at the end of the year was $130,157,969. Total net position increased for enterprise funds by
$12,801,209 or 10.9% in 2024 from the previous year. Both increased revenue and expenditures were
largely attributable due to the following:
Increase in Water and Waste Water service fees due to rate increase.
Decrease in operating expense due to decreases in electric cost of energy due to lower demand and;
Decrease in natural gas energy costs which is passed onto customers.
- 11 -
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, 2024, the internal service fund reported $799,542 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,
2024, was $244,480,546 (net of accumulated depreciation). Capital asset investments include land,
buildings, construction in progress, infrastructure, improvements other than buildings, and machinery and
equipment, net of depreciation.
2024 2023 2024 2023 2024 2023
Land 27,981,158$ 27,743,658$ 9,511,594$ 9,511,594$ 37,492,752$ 37,255,252$
Buildings and improvements 35,247,046 28,525,972 2,147,996 1,575,964 37,395,042 30,101,936
Vehicles and equipment 6,170,748 4,836,667 5,914,404 6,105,536 12,085,152 10,942,203
Infrastructure 43,451,611 39,937,442 - - 43,451,611 39,937,442
Distribution and collection systems - - 99,240,705 85,684,259 99,240,705 85,684,259
Construction in progress 9,803,138 6,285,651 5,012,146 3,788,246 14,815,284 10,073,897
122,653,701$ 107,329,390$ 121,826,845$ 106,665,599$ 244,480,546$ 213,994,989$
Activities Activities
Governmental Business-type
Total
Additional information on the City’s capital assets can be found in Note 6 beginning on page 39 of this
report.
Long-term debt
At the fiscal year end, the City of Fairhope had $171,211 of governmental debt and $31,640,443 of
business-type debt outstanding for the Utilities enterprise funds.
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 $719,346,340 with a current debt limit for the City of $143,869,268. Current debt
applied to the debt limit total is $671,654 leaving the City with a legal debt margin of $144,540,922.
2024 2023
Increase
(Decrease)
Utility Revenue Warrants 6,140,000$ 7,880,000$ (1,740,000)$
Notes Payable 671,654 1,614,757 (943,103)
General Obligation Warrants 25,000,000 - 25,000,000
31,811,654$ 9,494,757$ 22,316,897$
See Note 7, beginning on page 41, 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.
- 12 -
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, 2024, actual revenues were less than budgeted revenues by $4,785,006 or
9.7%. Detailed variances are as follows:
Actual taxes were more than budgeted by $898,843 or 3.3% due to increases in consumer spending
and assessed property values.
Actual intergovernmental revenues were more than budgeted by $106,327 or 10.7% primarily due
to increase in City’s portion of State of Alabama’s distribution of financial institution excise tax.
Revenue budget rollover from FY2023 was $7,275,223 which attributes the largest portion of the
variance compared to actual revenues.
Actual interest and rents were more than budgeted by $784,945 or 88.6% due to increase in
investment income earned on deposits.
Contributions received for the library second floor remodeling was not included in budgeted
revenue in the amount of $462,000.
For the year ended September 30, 2024, actual total expenditures were less than budgeted expenditures by
$3,706,649 or 8.4%. Detailed variances are in the following functions:
General Government actual expenditures were more than budgeted expenditures by $434,029 or
4.3%.
Public Safety actual expenditures were more than budgeted expenditures by $36,671 or 0.4%.
Public Works actual expenditures were more than budgeted expenditures by $546,494 or 8.9%.
Cultural and Recreational actual expenditures were less than budgeted expenditures by $599,935
or 7.9%.
Capital Outlay actual expenditures were less than budgeted expenditures by $4,294,049 or 43.4%.
The variances to budget noted above are primarily due to decrease in salaries expense across departments
attributable to unfilled positions as well as decrease in expenses due to inability to procure budgeted
vehicles due to market unavailability.
Additional information concerning Actuals compared to Budget for the year ended September 30, 2024, can
be found beginning on page 70 of this report.
Economic Factors and Year 2024
The City relies on taxes (property, sales, lodging, etc.), and fees (license, permits, etc.) for their
governmental activities. The analysis of a few of these taxes contained in the Statistical Section serves as a
good indicator of economic trends. Certain governmental activities (sanitation, recreational activities, etc.)
require the user to pay a related fee or charge associated with the service.
The following factors were considered in preparing the City’s Budget for Fiscal Year 2024:
The unemployment rate for the City of Fairhope for 2024 was 2.9%.
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The City’s financial condition remains strong due to reduction in expenditures and continued fiscal
oversight by management and the Council.
Property tax revenue is expected to increase 11.2% due to growth.
Continued sales tax revenue growth in 2024 over the previous year due to steady economic growth.
Infrastructure and growth continue to be a concern and the primary focus for Utilities investment of
$56,151,724, streets resurfacing of $1,123,000 and roundabout construction of $1,895,621.
Protecting our natural environment for the enjoyment of all with investment in Parks and Recreation
of $8,296,518.
Investment in capital equipment of $7,459,431.
We continue to explore grant opportunities throughout the year.
On September 30, 2024, fund balance in the General Fund was $29,729,710. The City will continue to
provide services to its citizens, keep a level of essential staff to provide services to the community, and pay
for one-time expenditures for capital needs from the funds appropriated in the 2025 budget.
Requests for Information
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a
general overview of the City of Fairhope’s finances. Questions concerning any of the information provided
in this report or requests for additional financial information should be addressed to: The Office of the
Treasurer, P.O. Drawer 429, Fairhope, Alabama 36533. This report is also available online at
www.fairhopeal.gov.
BASIC FINANCIAL STATEMENTS
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CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash 44,690,249$ 40,016,311$ 84,706,560$ 1,220,700$
Restricted cash - 3,431,416 3,431,416 -
Receivables, net 4,071,658 8,019,222 12,090,880 210,866
Internal balances (716,894) 716,894 - -
Inventories 204,535 2,251,759 2,456,294 - Prepaid items 39,264 16,936 56,200 49,081 Other assets 34,926 36,090 71,016 - Advance to component unit 409,993 - 409,993 - Capital assets not being depreciated:
Land 27,981,158 9,511,594 37,492,752 10,674,228
Construction in progress 9,803,138 5,012,146 14,815,284 511,778
Capital assets net of accumulated
depreciation:
Buildings and improvements 35,247,046 2,147,996 37,395,042 12,022,308
Vehicles and equipment 6,170,748 5,914,404 12,085,152 76,908
Infrastructure 43,451,611 - 43,451,611 -
Distribution and collection systems - 99,240,705 99,240,705 - Runways - - - 16,012,236
Total assets 171,387,432 176,315,473 347,702,905 40,778,105
DEFERRED OUTFLOWS OF
RESOURCESDeferred charge on refunding - 49,285 49,285 - Pension related items 4,846,479 2,225,575 7,072,054 129,937
OPEB related items 388,427 178,389 566,816 -
Total deferred outflows of resources 5,234,906 2,453,249 7,688,155 129,937
Total assets and deferred
outflows of resources 176,622,338$ 178,768,722$ 355,391,060$ 40,908,042$
LIABILITIES
Accounts payable and
accrued expenses 5,600,540$ 4,663,652$ 10,264,192$ 156,671$
Unearned revenue 1,944,797 562,722 2,507,519 36,314
Customer deposits 5,000 2,394,839 2,399,839 36,370 Noncurrent liabilities:Due within one year:Total OPEB liability 165,712 203,724 369,436 - Other 564,188 2,498,828 3,063,016 275,000 Due in more than one year:
Net pension liability 13,570,327 6,148,087 19,718,414 547,459
Total OPEB liability 3,193,659 1,339,097 4,532,756 -
Other 1,289,016 29,781,197 31,070,213 5,420,629
Advance from primary government - - - 409,993
Total liabilities 26,333,239 47,592,146 73,925,385 6,882,436
DEFERRED INFLOWS OF
RESOURCES
Pension related items 111,437 51,175 162,612 12,104
OPEB related items 2,106,507 967,432 3,073,939 -
Service concession arrangementrevenue applicable to future years - - - 7,378,923
Total deferred inflows of
resources 2,217,944 1,018,607 3,236,551 7,391,027
NET POSITION
Net investment in capital assets 122,482,490 108,097,763 230,580,253 33,601,829 Restricted for:Debt service - 3,378,564 3,378,564 - Road maintenance 444,865 - 444,865 - Capital improvements 2,042,702 52,852 2,095,554 -
Municipal Court 8,155 - 8,155 -
American Rescue 113,843 - 113,843 -
Library improvements - - - 299,881
Unrestricted 22,979,100 18,628,790 41,607,890 (7,267,131)
Total net position 148,071,155 130,157,969 278,229,124 26,634,579
Total liabilities, deferred inflows
of resources, and net position 176,622,338$ 178,768,722$ 355,391,060$ 40,908,042$
- 15 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2024
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 10,969,080$ 10,768,317$ 4,854$ 124,912$ (70,997)$ -$ (70,997)$ -$
Public safety 9,814,468 - 362,851 338,982 (9,112,635) - (9,112,635) -
Public works 8,625,435 - 487,924 8,371,192 233,681 - 233,681 -
Cultural and recreational 8,166,743 2,988,526 300 533,805 (4,644,112) - (4,644,112) -
Airport Authority 320,000 - - - (320,000) - (320,000) -
Public Library Board 1,135,689 - - 462,000 (673,689) - (673,689) -
Interest on long-term debt 6,150 - - - (6,150) - (6,150) -
Total governmental activities 39,037,565 13,756,843 855,929 9,830,891 (14,593,902) - (14,593,902) -
Business-type activities:
Electric 19,642,713 22,215,527 40,278 - - 2,613,092 2,613,092 -
Natural gas 7,018,857 8,703,753 643,597 - - 2,328,493 2,328,493 -
Water and Waste Water 13,898,407 20,447,502 - - - 6,549,095 6,549,095 -
Sanitation 3,389,014 2,900,181 - - - (488,833) (488,833) -
Total business-type activities 43,948,991 54,266,963 683,875 - - 11,001,847 11,001,847 -
Total primary government 82,986,556$ 68,023,806$ 1,539,804$ 9,830,891$ (14,593,902) 11,001,847 (3,592,055) -
Component Units 2,115,188$ 591,526$ 1,561,681$ 1,865,679$ 1,903,698
General revenues:
Property taxes 10,132,947 - 10,132,947 -
Sales tax 15,335,550 - 15,335,550 -
Liquor taxes 768,319 - 768,319 -
Lodging taxes 1,763,242 - 1,763,242 -
Other taxes 94,623 - 94,623 -
Investment earnings 1,851,892 1,585,186 3,437,078 19,186
Other 313,260 - 313,260 9,694
Gain on sale of capital assets 57,450 94,190 151,640 -
Transfers (119,986) 119,986 - -
Total general revenues and transfers 30,197,297 1,799,362 31,996,659 28,880
Change in net position 15,603,395 12,801,209 28,404,604 1,932,578
Net position - beginning 132,467,760 117,356,760 249,824,520 24,702,001
Net position - ending 148,071,155$ 130,157,969$ 278,229,124$ 26,634,579$
Changes in Net Position
Primary Government
Program Revenues
Net (Expense) Revenue and
- 16 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
American Other Total
Capital Rescue Federal Governmental Governmental
General Projects Plan Grants Funds Funds
ASSETSCash 29,509,129$ 6,043,712$ 1,415,252$ 2,360,762$ 4,426,371$ 43,755,226$
Receivables, net 2,268,649 115,979 - 1,527,545 28,608 3,940,781
Inventory 204,535 - - - - 204,535
Prepaid items 39,264 - - - - 39,264
Due from other funds 722,622 - - - - 722,622
Advance to component unit 409,993 - - - - 409,993
Other assets 34,926 - - - - 34,926
Total assets 33,189,118$ 6,159,691$ 1,415,252$ 3,888,307$ 4,454,979$ 49,107,347$
LIABILITIES
Accounts payable 2,357,705$ 442,769$ -$ 1,597,042$ 65,047$ 4,462,563$
Accrued expenditures and taxes 886,934 - - - - 886,934
Customer deposits 5,000 - - - - 5,000
Unearned revenue 209,769 743,423 1,186,559 - - 2,139,751
Due to other funds - 205 114,850 1,161,916 27,027 1,303,998
Total liabilities 3,459,408 1,186,397 1,301,409 2,758,958 92,074 8,798,246
FUND BALANCES
Nonspendable:
Prepaid items 39,264 - - - - 39,264
Inventory 204,535 - - - - 204,535
Advances 409,993 - - - - 409,993
Restricted:
Road maintenance - - - - 444,865 444,865
Capital improvements - - - 1,129,349 913,353 2,042,702
Municipal Court - - - - 8,155 8,155
American Rescue - - 113,843 - - 113,843
Committed:
Council approved emergencies 10,000,000 - - - - 10,000,000
Construction and road maintenance - - - - 2,996,532 2,996,532
Debt service 699,594 - - - - 699,594
Capital projects 35,000 4,973,294 - - - 5,008,294
Unassigned 18,341,324 - - - - 18,341,324
Total fund balances 29,729,710 4,973,294 113,843 1,129,349 4,362,905 40,309,101
Total liabilities and fund balances 33,189,118$ 6,159,691$ 1,415,252$ 3,888,307$ 4,454,979$ 49,107,347$
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CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
Fund balances as reported on page 16 40,309,101$
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.201,069,715
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.(78,416,014)
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unearned revenue in fund financial statements.209,770
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.4,846,479
Deferred outflows of resources related to OPEB obligations.388,427
Deferred inflows are not financial resources and, therefore, are not reported
in fund financial statements.
Deferred inflows of resources related to net pension liability.(111,437)
Deferred inflows of resources related to OPEB obligations.(2,106,507)
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. 664,523
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:
Notes payable (171,211)
Net pension liability (13,570,327)
OPEB obligations (3,359,371)
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements.(1,681,993)
Net position of governmental activities as reported on page 14 148,071,155$
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CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
American Other Total
Capital Rescue Federal Governmental Governmental
General Projects Plan Grants Funds Funds
REVENUES
Local taxes 27,991,730$ -$ -$ -$ 184,551$ 28,176,281$
Licenses and permits 5,689,718 - - - - 5,689,718
Fines and forfeitures 280,773 - - - - 280,773
Intergovernmental 1,100,487 862,941 114,850 7,124,709 329,412 9,532,399
Interest and rents 1,670,486 170,637 62,093 12,592 167,568 2,083,376
Charges for services 4,272,900 - - - 1,137,986 5,410,886
Golf course revenue 1,418,352 - - - - 1,418,352
Recreation department 676,709 - - - - 676,709
Other 1,435,390 - - - - 1,435,390
Total revenues 44,536,545 1,033,578 176,943 7,137,301 1,819,517 54,703,884
EXPENDITURES
General government 10,570,792 2,833 2,060 - 6,267 10,581,952
Public safety 9,094,095 - - - - 9,094,095
Public works 6,703,111 - - - - 6,703,111
Cultural and recreational 6,994,187 - - - - 6,994,187
Airport Authority 320,000 - - - - 320,000
Public Library Board 918,750 - - - - 918,750
Debt service payments:
Principal 463,991 - - - - 463,991
Interest 6,150 - - - - 6,150
Capital outlay 5,596,202 6,143,148 - 7,202,027 - 18,941,377
Total expenditures 40,667,278 6,145,981 2,060 7,202,027 6,267 54,023,613
Excess of revenues over
(under) expenditures 3,869,267 (5,112,403) 174,883 (64,726) 1,813,250 680,271
OTHER FINANCING
SOURCES (USES)
Proceeds from sale of capital assets 80,518 - - - - 80,518
Transfers in 1,059,481 6,678,957 - 1,186,365 - 8,924,803
Transfers out (8,314,100) - (114,850) - (636,340) (9,065,290)
Total other financing
sources (uses)(7,174,101) 6,678,957 (114,850) 1,186,365 (636,340) (59,969)
Net change in fund balances (3,304,834) 1,566,554 60,033 1,121,639 1,176,910 620,302
Fund balances – beginning of year 33,034,544 3,406,740 53,810 7,710 3,185,995 39,688,799
FUND BALANCES – END OF YEAR 29,729,710$ 4,973,294$ 113,843$ 1,129,349$ 4,362,905$ 40,309,101$
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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, 2024
See independent auditors’ report and notes to the financial statements.
Net change in fund balances – total governmental funds, page 18 620,302$
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. 19,757,638
Depreciation expense on governmental capital assets is included in
capital assets in the statement of net position. (4,430,760)
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. (23,068)
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 463,991
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.(388)
(Continued)
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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, 2024 (CONTINUED)
See independent auditors’ report and notes to the financial statements.
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 (173,297)$
Pensions (1,154,162)
Postemployment benefit plans other than pensions 774,123
Transfer of certain items to business-type activities increase (decrease) net
position in the statement of net position but do not appear in the
governmental fund because they are financial resources.
Capital assets 20,501
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.(251,485)
Change in net position of governmental activities, page 15 15,603,395$
- 21 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
Governmental
Water and Activities -
Electric Natural Gas Waste Water Sanitation Internal
Fund Fund Fund Fund Total Service Fund
ASSETSCurrent assets:
Cash and cash equivalents 6,478,358$ 12,123,904$ 21,127,900$ 286,149$ 40,016,311$ 935,023$
Restricted cash held by fiscal agent 80,612 80,612 3,270,192 - 3,431,416 - Receivables, net 5,416,363 893,692 1,528,276 180,891 8,019,222 130,877
Inventories 866,950 842,766 542,043 - 2,251,759 -
Prepaid items 5,453 1,485 4,669 5,329 16,936 - Due from other funds - 299 1,276,766 - 1,277,065 -
Total current assets 12,847,736 13,942,758 27,749,846 472,369 55,012,709 1,065,900
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 -
Construction in progress 3,044,491 1,967,655 - - 5,012,146 -
Buildings and improvements 1,749,852 1,064,736 892,696 296,656 4,003,940 - Vehicles and equipment 6,868,796 4,606,847 6,406,762 5,186,463 23,068,868 -
Distribution and collection systems 36,404,465 18,168,555 97,563,645 - 152,136,665 -
Less accumulated depreciation (21,064,550) (11,374,369) (35,814,559) (3,652,890) (71,906,368) -
Total noncurrent assets 34,721,324 16,061,626 69,249,756 1,830,229 121,862,935 -
Total assets 47,569,060 30,004,384 96,999,602 2,302,598 176,875,644 1,065,900
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - - 49,285 - 49,285 - Pension related items 520,503 394,620 843,696 466,756 2,225,575 -
OPEB related items 41,720 31,650 67,615 37,404 178,389 -
Total deferred outflows of
resources 562,223 426,270 960,596 504,160 2,453,249 -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 1,789,465 692,007 2,050,259 131,921 4,663,652 251,043 Unearned revenue 72,212 56,397 434,113 - 562,722 14,815
Customer deposits 1,071,861 883,910 420,214 18,854 2,394,839 -
Warrants and notes payable 42,183 42,184 1,680,633 500,443 2,265,443 - Compensated absences 64,019 45,453 82,352 41,561 233,385 -
Due to other funds 26,041 28,999 601,511 38,638 695,189 500
Total OPEB liability 33,858 56,073 94,553 19,240 203,724 -
Total current liabilities 3,099,639 1,805,023 5,363,635 750,657 11,018,954 266,358
Noncurrent liabilities: Compensated absences 193,590 84,341 69,805 58,461 406,197 -
Warrants and notes payable 104,563 104,562 29,165,875 - 29,375,000 -
Net pension liability 1,701,371 1,125,877 2,028,805 1,292,034 6,148,087 - Total OPEB liability 326,963 217,653 490,226 304,255 1,339,097 -
Total noncurrent liabilities 2,326,487 1,532,433 31,754,711 1,654,750 37,268,381 -
Total liabilities 5,426,126 3,337,456 37,118,346 2,405,407 48,287,335 266,358
DEFERRED INFLOWS OF RESOURCES
Pension related items 11,969 9,074 19,400 10,732 51,175 -
OPEB related items 226,254 171,641 366,688 202,849 967,432 -
Total deferred inflows of
resources 238,223 180,715 386,088 213,581 1,018,607 -
NET POSITION
Net investment in capital assets 34,562,548 15,902,850 56,302,579 1,329,786 108,097,763 - Restricted:
Debt service 80,612 80,612 3,217,340 - 3,378,564 -
Capital improvements - - 52,852 - 52,852 - Unrestricted 7,823,774 10,929,021 882,993 (1,142,016) 18,493,772 799,542
Total net position 42,466,934$ 26,912,483$ 60,455,764$ 187,770$ 130,022,951 799,542$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 135,018
Net position of business-type activities 130,157,969$
Business-type Activities - Enterprise Funds
- 22 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
Governmental
Water and Activities -Electric Natural Gas Waste Water Sanitation Internal
Fund Fund Fund Fund Total Service Fund
OPERATING REVENUES
Sales and services 21,702,631$ 8,571,904$ 17,812,388$ 2,899,855$ 50,986,778$ 4,944,958$
Other charges, sales and receipts 512,896 131,849 2,635,114 326 3,280,185 -
Total operating revenues 22,215,527 8,703,753 20,447,502 2,900,181 54,266,963 4,944,958
OPERATING EXPENSES
Energy purchases and
cost of goods sold 13,281,386 1,758,220 568,687 371,240 15,979,533 -
Salaries 1,813,387 1,374,466 2,798,113 1,358,589 7,344,555 -
Depreciation 1,174,384 597,039 2,558,829 353,009 4,683,261 -
Insurance 547,554 338,033 736,055 153,055 1,774,697 -
Electric energy furnished
to other departments 62,818 42,667 358,548 - 464,033 -
Maintenance 903,240 691,545 2,219,678 25,408 3,839,871 -
Benefit payments - - - - - 5,308,920
Other operating expense 1,843,738 2,117,947 4,060,645 1,109,745 9,132,075 -
Total operating expenses 19,626,507 6,919,917 13,300,555 3,371,046 43,218,025 5,308,920
OPERATING INCOME (LOSS)2,589,020 1,783,836 7,146,947 (470,865) 11,048,938 (363,962)
NONOPERATING
REVENUES (EXPENSES)
Interest expense (1,967) (1,967) (569,438) (17,968) (591,340) -
Interest income 314,988 556,915 701,546 11,737 1,585,186 54,442
Gain on sale of capital assets 11,100 25,630 8,460 49,000 94,190 -
Intergovernmental revenue 40,278 643,597 - - 683,875 -
Distribution of joint
revenue (expense) – net - (81,590) - - (81,590) -
Other (14,071) (6,430) - - (20,501) -
Total nonoperating
revenues (expenses)350,328 1,136,155 140,568 42,769 1,669,820 54,442
INCOME (LOSS) BEFORE TRANSFERS
AND OTHER ITEMS 2,939,348 2,919,991 7,287,515 (428,096) 12,718,758 (309,520)
Transfers in - - 176,415 995,775 1,172,190 -
Transfers out (507,077) (234,302) (290,324) - (1,031,703) -
Change in net position 2,432,271 2,685,689 7,173,606 567,679 12,859,245 (309,520)
Net position – beginning of year 40,034,663 24,226,794 53,282,158 (379,909) 117,163,706 1,109,062
NET POSITION – END OF YEAR 42,466,934$ 26,912,483$ 60,455,764$ 187,770$ 799,542$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds (58,036)
Change in net position of business-type activities 12,801,209$
Business-type Activities - Enterprise Funds
- 23 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
Governmental
Water and Activities -
Electric Natural Gas Waste Water Sanitation Internal
Fund Fund Fund Fund Total Service Fund
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 21,461,417$ 8,247,537$ 19,784,720$ 2,898,690$ 52,392,364$ 4,980,682$
Paid to suppliers for goods and services (17,253,800) (4,774,858) (8,620,653) (1,670,073) (32,319,384) (5,323,249)
Paid to personnel for services (1,938,892) (1,329,709) (2,899,847) (1,419,940) (7,588,388) -
Net cash provided by (used in) operating activities 2,268,725 2,142,970 8,264,220 (191,323) 12,484,592 (342,567)
CASH FLOWS FROM INVESTING ACTIVITIES
Distribution of joint expense - (81,590) - - (81,590) -
Interest income 314,988 556,915 701,546 11,737 1,585,186 54,442
Net cash provided by investing activities 314,988 475,325 701,546 11,737 1,503,596 54,442
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Repayment of debt (41,586) (41,586) (1,656,828) (479,112) (2,219,112) -
Issuance of debt - - 25,000,000 - 25,000,000 -
Interest paid (2,145) (2,145) (651,185) (17,968) (673,443) -
Proceeds from disposal of capital assets 10,100 25,630 8,460 49,000 93,190 -
Acquisition of capital assets (2,339,212) (3,317,699) (13,964,367) (243,730) (19,865,008) -
Net cash provided by (used in) capital and related
financing activities (2,372,843) (3,335,800) 8,736,080 (691,810) 2,335,627 -
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable 56,202 6,445 (785,436) - (722,789) -
Change in interfund payable 11,986 (3,634) 537,669 (18,540) 527,481 -
Government grants 40,278 643,597 - - 683,875 -
Net cash payments to (from) other funds (507,077) (234,302) (113,909) 995,775 140,487 -
Net cash provided by (used in) noncapital and related
financing activities (398,611) 412,106 (361,676) 977,235 629,054 -
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (187,741) (305,399) 17,340,170 105,839 16,952,869 (288,125)
CASH AND CASH EQUIVALENTS – BEGINNING
OF YEAR 6,746,711 12,509,915 7,057,922 180,310 26,494,858 1,223,148
CASH AND CASH EQUIVALENTS – END OF YEAR 6,558,970$ 12,204,516$ 24,398,092$ 286,149$ 43,447,727$ 935,023$
Cash and cash equivalents 6,478,358$ 12,123,904$ 21,127,900$ 286,149$ 40,016,311$ 935,023$
Restricted cash held by fiscal agent 80,612 80,612 3,270,192 - 3,431,416 -
6,558,970$ 12,204,516$ 24,398,092$ 286,149$ 43,447,727$ 935,023$
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Operating income (loss) 2,589,020$ 1,783,836$ 7,146,947$ (470,865)$ 11,048,938$ (363,962)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 1,174,384 597,039 2,558,829 353,009 4,683,261 -
Proceeds from disposal of noncapital assets 1,000 - - - 1,000 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable (803,258) (568,821) (126,127) (101) (1,498,307) 34,521
Decrease (increase) in inventories (300,470) (24,027) (36,227) - (360,724) -
Decrease (increase) in prepaid expenses (376) 94 68 214 - -
Decrease (increase) in deferred outflow of resources 331,221 204,359 280,711 359,373 1,175,664 -
Increase (decrease) in accounts payable (300,557) 214,677 (780,220) (3,987) (870,087) (14,329)
Increase (decrease) in customer deposits 111,986 91,555 13,002 (1,390) 215,153 -
Increase (decrease) in net unearned revenue (63,838) 21,050 (549,657) - (592,445) 1,203
Increase (decrease) in deferred inflow of resources (247,140) (118,988) (198,213) (182,660) (747,001) -
Increase (decrease) in net pension liability (139,277) (73,655) (16,906) (193,083) (422,921) -
Increase (decrease) in compensated absences 20,880 26,702 (56,548) (204) (9,170) -
Increase (decrease) in net OPEB obligation (104,850) (10,851) 28,561 (51,629) (138,769) -
Net cash provided by (used in) operating activities 2,268,725$ 2,142,970$ 8,264,220$ (191,323)$ 12,484,592$ (342,567)$
Business-type Activities - Enterprise Funds
THIS PAGE INTENTIONALLY LEFT BLANK
- 24 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF NET POSITION
DISCRETELY PRESENTED COMPONENT UNITS
SEPTEMBER 30, 2024
See independent auditors’ report and notes to the financial statements.
Public Library Airport
Board Authority Total
ASSETS
Cash 847,938$ 372,762$ 1,220,700$
Receivables, net - 210,866 210,866
Prepaid items 7,169 41,912 49,081
Capital assets not being depreciated:
Land - 10,674,228 10,674,228
Construction in progress 198,454 313,324 511,778
Capital assets net of accumulated
depreciation:
Buildings and improvements - 12,022,308 12,022,308
Vehicles and equipment 49,720 27,188 76,908
Runways - 16,012,236 16,012,236
Total assets 1,103,281 39,674,824 40,778,105
DEFERRED OUTFLOWS OF
RESOURCES
Pension related items 129,937 - 129,937
Total assets and deferred
outflows of resources 1,233,218$ 39,674,824$ 40,908,042$
LIABILITIES
Accounts payable and accrued liabilities 26,310$ 130,361$ 156,671$
Unearned revenue - 36,314 36,314
Customer deposits - 36,370 36,370
Long-term liabilities:
Due within one year - 275,000 275,000
Due in more than one year - 5,420,629 5,420,629
Net pension liability 547,459 - 547,459
Advance from primary government - 409,993 409,993
Total liabilities 573,769 6,308,667 6,882,436
DEFERRED INFLOWS OF
RESOURCES
Pension related items 12,104 - 12,104
Service concession arrangement revenue
applicable to future years - 7,378,923 7,378,923
Total deferred inflows of resources 12,104 7,378,923 7,391,027
NET POSITION
Net investment in capital assets 248,174 33,353,655 33,601,829
Restricted:
Library improvements 299,881 - 299,881
Unrestricted 99,290 (7,366,421) (7,267,131)
Total net position 647,345 25,987,234 26,634,579
Total liabilities, deferred inflows of
resources, and net position 1,233,218$ 39,674,824$ 40,908,042$
- 25 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF ACTIVITIES
DISCRETELY PRESENTED COMPONENT UNITS
FOR THE YEAR ENDED SEPTEMBER 30, 2024
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 1,053,725$ 203,568$ 955,241$ -$ 105,084$ -$ 105,084$
Business-type activities:
Airport Authority 1,061,463 387,958 606,440 1,865,679 - 1,798,614 1,798,614
2,115,188$ 591,526$ 1,561,681$ 1,865,679$ 105,084 1,798,614 1,903,698
General revenues:
Investment earnings - 19,186 19,186
Other - 9,694 9,694
Total general revenues - 28,880 28,880
Change in net position 105,084 1,827,494 1,932,578
Net position – beginning 542,261 24,159,740 24,702,001
Net position – ending 647,345$ 25,987,234$ 26,634,579$
Changes in Net PositionProgram Revenues
Net (Expense) Revenue and
THIS PAGE INTENTIONALLY LEFT BLANK
NOTES TO THE FINANCIAL STATEMENTS
- 26 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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 Board (the 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 Airport Authority) – The Airport 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 to support 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.
- 27 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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.
- 28 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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 Projects Fund – The capital projects fund is 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, Water and Waste Water Fund, and Sanitation 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.
- 29 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. MAJOR FUNDS
The City reports the following major governmental funds:
General Fund – This is the City’s primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
Capital Projects Fund – Accounts for the acquisition and construction of major capital facilities
other than those financed by proprietary funds.
American Rescue Plan Fund – Accounts for the Coronavirus State Local and Fiscal Recovery Funds
received from the U.S. Department of the Treasury.
Federal Grants Fund – Accounts for funds received in connection with the Gulf Coast Ecosystem
Restoration Council Oil Spill Impact Program.
The City reports the following major enterprise funds:
Electric Fund – Accounts for the operation of providing power to residents.
Natural Gas Fund – Accounts for the operation of providing natural gas to residents.
Water and Waste Water Fund – Accounts for the operation of providing water and sewer to
residents.
Sanitation Fund – Accounts for the operation of providing waste removal to residents.
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 statement 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
Activities 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.
- 30 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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 64,866$ 7,482$ 72,348$
Materials and supplies 139,669 2,244,277 2,383,946
Totals 204,535$ 2,251,759$ 2,456,294$
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.
- 31 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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 assets that applies to a future period(s) and so will not be recognized as an outflow of
resources (expense/expenditure) until then. The City has several items that qualify for reporting in
this category. First is the deferred charge on refunding reported in the government-wide statement
of net position. A deferred charge on refunding results from the difference in the carrying value of
refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of
the life of the refunded or refunding debt. In addition, the City also reports deferred outflow items
related to the City’s pension plan which are described further in Note 10, and deferred outflow
items related to the City’s postemployment benefits other than pensions which are described
further in Note 13.
In addition to liabilities, the statement of financial position will sometimes report a separate section
for deferred inflows of resources. This separate financial statement element represents an
acquisition of net assets 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 10, and deferred inflow items related to the City’s postemployment
benefits other than pensions which are described further in Note 13. The Airport Authority reports
deferred inflow items related to service concession arrangements which are described further in
Note 15.
- 32 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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, 2024 totaled $4,902,192. 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 Annual Comprehensive Financial Report. The
pension liability is typically liquidated by the General Fund.
- 33 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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.
- 34 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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. In other governmental funds it is not
appropriate to report a positive unassigned fund balance amount. However, in
governmental funds other than the General Fund, if expenditures incurred for specific
purposes exceed the amounts that are restricted, committed, or assigned to those
purposes, it may be necessary to report a negative unassigned fund balance in that fund.
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.
- 35 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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 12 2025, the date which the financial
statements were available to be issued. There were no material subsequent events which require
disclosure at September 30, 2024.
- 36 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
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.
(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, 2024, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $3,431,416. The average
maturity of the portfolio was 32 days.
Investment Risk – The City does not have a formal investment policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk – State statutes authorize the City’s investments. The City is authorized to invest in U.S.
Government obligations and its agencies or instrumentalities, direct obligations of the state, or SEC
registered mutual funds. The City has no investment policy that further limits investment choices. As of
September 30, 2024, the City’s mutual fund investments principal stability rating was AAAm as
reported by Standard & Poor’s.
- 37 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 3 DEPOSIT AND INVESTMENT RISK (CONTINUED)
Custodial Credit Risk – The City is a participant in the Security for Alabama Funds Enhancement
(SAFE) Program, a multiple financial institution collateral pool, administered by the State of Alabama.
The program, by law, provides administration of pledged collateral coverage for all governments and
agencies in the State and requires qualified financial institutions to provide collateral to the
administrator adequate to secure all deposits of public funds in that financial institution. The State
guarantees deposits identified as “public funds” will be adequately secured by insurance or collateral.
Any collateral shortages of one financial institution are assessed to other member financial institutions.
NOTE 4 RECEIVABLES
Receivables as of September 30, 2024, for the government’s individual major and nonmajor funds, and
the discretely presented components units, including the applicable allowances for uncollectable
accounts, are as follows:
Nonmajor
Capital Federal Governmental
General Projects Grants Funds Electric
Taxes 2,909,546$ -$ -$ 28,608$ -$
Accounts 40,110 - - - 5,656,810
Intergovernmental 703,458 115,979 1,527,545 - 14,635
3,653,114 115,979 1,527,545 28,608 5,671,445
Less allowance for uncollectable
accounts (1,384,465) - - - (255,082)
Total receivables 2,268,649$ 115,979$ 1,527,545$ 28,608$ 5,416,363$
Water and
Natural Waste Water Sanitation Airport
Gas Fund Fund Authority Total
Taxes -$ -$ -$ -$ 2,938,154$
Accounts 920,787 1,768,780 216,086 6,520 8,609,093
Intergovernmental 191 2,808 - 204,346 2,568,962
920,978 1,771,588 216,086 210,866 14,116,209
Less allowance for uncollectable
accounts (27,286) (243,312) (35,195) - (1,945,340)
Total receivables 893,692$ 1,528,276$ 180,891$ 210,866$ 12,170,869$
- 38 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(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, 2024 is shown below.
Due to/from other funds
Receivable Fund Payable Fund Amount
General Natural Gas 28,999$
Electric 26,041
Capital Projects 205
Water and Waste Water 601,212
Sanitation 38,638
Pre-paid Health 500
Nonmajor Governmental 27,027
Natural Gas Water and Waste Water 299
Water and Waste Water American Rescue Plan 114,850
Federal Grants 1,161,916
Total 1,999,687$
Interfund Transfers
Capital Federal Water and
General Projects Grants Waste Water Sanitation Total
General -$ 6,070,395$ 1,186,365$ 61,565$ 995,775$ 8,314,100$
American Rescue Plan - - - 114,850 - 114,850
Nonmajor Governmental 69,090 567,250 - - - 636,340
Electric 507,077 - - - - 507,077
Natural Gas 192,990 41,312 - - - 234,302
Water and Waste Water 290,324 - - - - 290,324
Totals 1,059,481$ 6,678,957$ 1,186,365$ 176,415$ 995,775$ 10,096,993$
Transfer In
Transfer Out
Transfers are used to move revenues from the fund that collects them to the fund that the budget requires
to expend them, and use unrestricted revenues collected in the General Fund to finance various
programs accounted for in other funds in accordance with budgetary authorizations.
- 39 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 6 CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2024 was as follows:
Beginning Ending
Balance Increases Decreases Transfers Balance
Governmental Activities
Capital assets not subject
to depreciation:
Land 27,743,658$ 237,500$ -$ -$ 27,981,158$
Construction in progress 6,285,651 12,718,110 - (9,200,623) 9,803,138
Total 34,029,309 12,955,610 - (9,200,623) 37,784,296
Other capital assets:
Buildings and improvements 47,175,998 2,701,725 - 5,363,610 55,241,333
Vehicles and equipment 19,515,116 2,733,114 (493,165) 101,768 21,856,833
Infrastructure 80,983,051 1,367,189 - 3,837,013 86,187,253
Total 147,674,165 6,802,028 (493,165) 9,302,391 163,285,419
Less accumulated depreciation for:
Buildings and improvements (18,650,026) (1,344,261) - - (19,994,287)
Vehicles and equipment (14,678,449) (1,396,466) 470,097 (81,267) (15,686,085)
Infrastructure (41,045,609) (1,690,033) - - (42,735,642)
Total accumulated depreciation (74,374,084) (4,430,760) 470,097 (81,267) (78,416,014)
Other capital assets, net 73,300,081 2,371,268 (23,068) 9,221,124 84,869,405
Governmental capital assets, net 107,329,390$ 15,326,878$ (23,068)$ 20,501$ 122,653,701$
Depreciation was charged to governmental activities as follows:
General government 786,343$
Public safety 533,826
Public works 1,828,658
Cultural and recreational 1,064,994
Library 216,939
Total 4,430,760$
- 40 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 6 CAPITAL ASSETS (CONTINUED)
Beginning Ending
Balance Increases Decreases Transfers Balance
Business-type Activities
Capital assets not subject to depreciation:
Land 9,511,594$ -$ -$ -$ 9,511,594$
Construction in progress 3,788,246 1,567,752 - (343,852) 5,012,146
Total 13,299,840 1,567,752 - (343,852) 14,523,740
Other capital assets:
Buildings and improvements 3,360,715 465,943 - 177,282 4,003,940
Vehicles and equipment 22,554,943 952,034 (502,909) 64,800 23,068,868
Distribution and collection system 135,257,386 16,879,279 - - 152,136,665
Total 161,173,044 18,297,256 (502,909) 242,082 179,209,473
Less accumulated depreciation for:
Buildings and improvements (1,784,751) (71,193) - - (1,855,944)
Vehicles and equipment (16,449,407) (1,289,235) 502,909 81,269 (17,154,464)
Distribution and collection system (49,573,127) (3,322,833) - - (52,895,960)
Total accumulated depreciation (67,807,285) (4,683,261) 502,909 81,269 (71,906,368)
Other capital assets, net 93,365,759 13,613,995 - 323,351 107,303,105
Capital assets, net 106,665,599$ 15,181,747$ -$ (20,501)$ 121,826,845$
Component Unit – Public Library Board
Capital assets not subject to depreciation:
Construction in progress 184,744$ 13,710$ -$ -$ 198,454$
Other capital assets:
Vehicles and equipment 577,534 - - - 577,534
Less accumulated depreciation (517,013) (10,801) - - (527,814)
Capital assets, net 245,265$ 2,909$ -$ -$ 248,174$
Component Unit – Airport Authority
Capital assets not subject to depreciation:
Land 10,674,228$ -$ -$ -$ 10,674,228$
Construction in progress 319,785 2,376,527 - (2,382,988) 313,324
Total 10,994,013 2,376,527 - (2,382,988) 10,987,552
Other capital assets:
Buildings and improvements 12,582,183 1,502,852 - 2,382,988 16,468,023
Vehicles and equipment 139,345 - - - 139,345
Runways 19,387,153 - - - 19,387,153
Total 32,108,681 1,502,852 - 2,382,988 35,994,521
Less accumulated depreciation for:
Buildings and improvements (4,102,434) (343,281) - - (4,445,715)
Vehicles and equipment (108,111) (4,046) - - (112,157)
Runways (3,116,422) (258,495) - - (3,374,917)
Total accumulated depreciation (7,326,967) (605,822) - - (7,932,789)
Other capital assets, net 24,781,714 897,030 - 2,382,988 28,061,732
Capital assets, net 35,775,727$ 3,273,557$ -$ -$ 39,049,284$
- 41 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 7 LONG-TERM DEBT
Long-term debt activity for the year ended September 30, 2024:
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES
Notes payable 635,202$ -$ (463,991)$ 171,211$ 171,211$
Compensated absences 1,508,696 1,122,711 (949,414) 1,681,993 392,977
Governmental activities
long-term liabilities 2,143,898 1,122,711 (1,413,405) 1,853,204 564,188
BUSINESS-TYPE ACTIVITIES
Direct placements 7,880,000 25,000,000 (1,740,000) 31,140,000 1,765,000
Notes payable 979,555 - (479,112) 500,443 500,443
Compensated absences 648,752 487,341 (496,511) 639,582 233,385
Business-type activities
long-term liabilities 9,508,307 25,487,341 (2,715,623) 32,280,025 2,498,828
Total long-term debt 11,652,205$ 26,610,052$ (4,129,028)$ 34,133,229$ 3,063,016$
Notes Payable – Governmental Activities
Notes payable at September 30, 2024 is comprised of the following:
171,211$
Note payable with United Bank dated September 28, 2022,
original obligation of $496,404, interest rate 1.403%, principal
payments through September 28, 2025. The note is collateralized
by the underlying equipment purchased.
The following schedule illustrates debt service to maturity for the note payable at September 30, 2024:
Year
Ending
September 30,Principal Interest Total
2025 171,211$ 2,355$ 173,566$
- 42 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Warrants from Direct Placements – Business-type Activities
The following is a summary of warrants from direct placement in proprietary funds as of September 30,
2024:
6,140,000$
25,000,000
31,140,000$
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.
General Obligation Water and Sewer Warrants, Series 2024 dated
April 11, 2024, original debt obligation of $25,000,000, interest
rate 4.10%, interest payable on September 30, 2024 and May 1,
2026, and principal due May 1, 2026.
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 $31,140,000
contain a provision that in event of default, outstanding amounts become due immediately if the City is
unable to make payment.
The following schedule illustrates debt service to maturity for warrants from direct placement in
proprietary funds at September 30, 2024:
Year
Ending
September 30,Principal Interest Total
2025 1,765,000$ 1,092,296$ 2,857,296$
2026 26,785,000 642,727 27,427,727
2027 505,000 29,920 534,920
2028 510,000 23,424 533,424
2029 515,000 16,864 531,864
2030-2032 1,060,000 13,632 1,073,632
31,140,000$ 1,818,863$ 32,958,863$
Direct Placements
Business-type Activities
- 43 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
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.
Note Payable – Business-type Activities
Note payable in proprietary funds at September 30, 2024 is comprised of the following:
500,443$
Note payable with United Bank dated September 28, 2022,
original obligation of $1,450,315, interest rate 1.403%, principal
payments through September 28, 2025. The note is collateralized
by the underlying equipment purchased.
The following schedule illustrates debt service to maturity for the note payable in proprietary funds at
September 30, 2024:
Year
Ending
September 30, Principal Interest Total
2025 500,443$ 6,880$ 507,323$
Bond from Direct Placements – Component Units
The following is a summary of the long-term debt of the Airport Authority as of September 30, 2024:
5,695,629$
Airport Improvement Refunding Bond, Series 2021, dated March
16, 2021, original debt obligation of $6,695,629, interest rate
1.14%, principal payable annually through September 1, 2027.
The Airport Improvement Refunding Bond, Series 2021, is secured by a pledge of payments received
from the City pursuant to the 2020 Funding Agreement, dated March 16, 2021. The 2021 Funding
Agreement states the City shall appropriate to the Airport Authority the amount needed to satisfy the
annual debt service of the Airport Improvement Refunding Bond, Series 2021.
- 44 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Bond from Direct Placements – Component Units (Continued)
The following is a summary of debt service requirements to maturity of long-term debt of the Airport
Authority as of September 30, 2024:
Year
Ending
September 30,Principal Interest Total
2025 275,000$ 64,930$ 339,930$
2026 275,000 61,795 336,795
2027 5,145,629 114,185 5,259,814
5,695,629$ 240,910$ 5,936,539$
Direct Placements
Component Units
The Airport Authority’s outstanding bond from direct placement of $5,695,629 contains a provision that
in event of default, outstanding amounts become due immediately if the Airport Authority is unable to
make payment.
NOTE 8 SALARIES – PROPRIETARY FUNDS
The following is a summary of employees’ salaries for the business-type activities for the year ended
September 30, 2024:
Water and
Electric Natural Gas Waste Water Sanitation
Fund Fund Fund Fund
Total salaries 1,846,071$ 1,413,713$ 2,859,241$ 1,358,793$
Less:
Salaries capitalized for plant additions 32,684 39,247 61,128 204
Salaries charged to operations 1,813,387$ 1,374,466$ 2,798,113$ 1,358,589$
NOTE 9 RISK MANAGEMENT AND CONTINGENCIES
The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City obtains coverage
from commercial insurance companies and effectively manages risk through various employee
education and prevention programs. There were no instances where settlements exceeded insurance
coverage in the last three years.
Various lawsuits are pending against the City. City management believes that the potential adverse
impact of these claims is mitigated by insurance and will not be material to the financial statements of
the City.
- 45 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 9 RISK MANAGEMENT AND CONTINGENCIES (CONTINUED)
The City receives Federal and State grants for specific purposes that are subject to review and audit by
the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for
expenditures disallowed under the terms of the grant. City management believes such disallowances, if
any, will be immaterial.
NOTE 10 PENSION PLAN
Plan Description
The 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 15 trustees. Act 390 of the Legislature of 2021 created two additional
representatives to the ERS Board of Control Effective October 1, 2021. 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 15 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) Eight 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. One vested active employee of a participating municipality or city in ERS pursuant to
the Code of Alabama 1975, Section 36-27-6.
d. One vested active employee of a participating county in ERS pursuant to the Code of
Alabama 1975, Section 36-27-6.
e. One vested active employee or retiree of a participating employer in ERS pursuant to
the Code of Alabama 1975, Section 36-27-6.
f. One vested active employee of a participating employer other than a municipality, city
or county in ERS pursuant to the Code of Alabama 1975, Section 36-27-6.
- 46 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Benefits Provided
State law establishes retirement benefits as well as death and disability benefits and any ad hoc increase
in postretirement benefits for the ERS. Benefits for ERS members vest after 10 years of creditable
service. State employees who retire after age 60 (52 for State Police) with 10 years or more of creditable
service or with 25 years of service (regardless of age) are entitled to an annual retirement benefit, payable
monthly for life. Local employees who retire after age 60 with 10 years or more of creditable service or
with 25 or 30 years of service (regardless of age), depending on the particular entity’s election, are
entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement
benefits are based on a guaranteed minimum or a formula method, with the member receiving payment
under the method that yields the highest monthly benefit. Under the formula method, members of the
ERS (except State Police) are allowed 2.0125% of their average final compensation (highest 3 of the last
10 years) for each year of service. State Police are allowed 2.875% for each year of State Police service
in computing the formula method.
Act 377 of the Legislature of 2012 established a new tier of benefits (Tier 2) for members hired on or
after January 1, 2013. Tier 2 ERS members are eligible for retirement after age 62 (56 for State Police)
with 10 years or more of creditable service and are entitled to an annual retirement benefit, payable
monthly for life. Service and disability retirement benefits are based on a formula method. 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 up to 80% of their average
final compensation. 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 618 employers adopted Act
2019-132 as of September 30, 2023.
Act 316 of the Legislature of 2019 allows employees at the time of retirement to receive a partial lump
sum (PLOP) distribution as a single payment not to exceed the sum of 24 months of the maximum
monthly retirement allowance the member could receive. This option may be selected in addition to the
election of another retirement allowance option at a reduced amount based upon the amount of partial
lump sum distribution selected.
- 47 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Benefits Provided (Continued)
The ERS serves approximately 884 local participating employers and one state employer. The ERS
membership includes approximately 113,079 participants. As of September 30, 2023, membership
consisted of:
ERS City Library
Retirees and beneficiaries currently receiving benefits 31,481 135 7
Terminated employees entitled to but not yet receiving benefits 2,350 19 1
Terminated employees not entitled to a benefit 20,556 110 9
Active members 58,659 354 16
Post-DROP participants who are still in active service 33 - -
Totals 113,079 618 33
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.
Employers participating in the ERS pursuant to Code of Alabama 1975, Section 36-27-6 were not
required by statute 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 certified law enforcement, correctional
officers’, and firefighters’ member contribution rates 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.
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, 2024, the City’s active employee contribution rate was 10.00% of covered employee payroll. The
Fairhope Public Library’s active employee contribution rate was 9.00% of covered employee payroll.
- 48 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Contributions (Continued)
The City’s contractually required contribution rate for the year ended September 30, 2024, was 9.89% of
pensionable pay for Tier 1 employees, and 8.23% of pensionable pay for Tier 2 employees. The Fairhope
Public Library’s contractually required contribution rate for the year ended September 30, 2024, was
12.62% of pensionable pay for Tier 1 employees, and 11.56% of pensionable pay for Tier 2 employees.
These required contribution rates are based upon the actuarial valuation as of September 30, 2021, 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 $2,387,632 and $59,388 from the Fairhope Public Library for the
year ended September 30, 2024.
Net Pension Liability
The City’s and Fairhope Public Library’s net pension liabilities were measured as of September 30,
2023, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of September 30, 2022 rolled forward to September 30, 2023 using standard roll-
forward techniques as shown in the following table:
City of Fairhope
Expected Actual
(a) Total pension liability for September 30, 2022 60,980,320$ 61,823,679$
(b) Discount rate 7.45%7.45%
(c) Entry age normal cost for the period
October 1, 2022 to September 30, 2023 1,711,973 1,711,973
(d) Transfer among employers - (163,874)
(e) Actual benefit payments and refunds for
October 1, 2022 to September 30, 2023 (3,435,700) (3,435,700)
(f) Total Pension Liability as of September 30, 2023
[(a) x (1.0745)] + (c) + (d) + [(e) x (1.03725)] 63,671,647$ 64,413,962$
(g) Difference between expected and actual 742,315$
(h) Less liability transferred for immediate recognition (163,874)
(i) Experience (gain)/loss 906,189$
- 49 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Net Penson Liability (Continued)
Fairhope Public Library
Expected Actual
(a) Total pension liability for September 30, 2022 1,702,013$ 1,715,208$
(b) Discount rate 7.45%7.45%
(c) Entry age normal cost for the period
October 1, 2022 to September 30, 2023 41,628 41,628
(d) Transfer among employers - (53,267)
(e) Actual benefit payments and refunds for
October 1, 2022 to September 30, 2023 (90,605) (90,605)
(f) Total Pension Liability as of September 30, 2023
[(a) x (1.0745)] + (c) + (d) + [(e) x (1.03725)] 1,776,461$ 1,737,372$
(g) Difference between expected and actual (39,089)$
(h) Less liability transferred for immediate recognition (53,267)
(i) Experience (gain)/loss 14,178$
Actuarial Assumptions
The total pension liability as of September 30, 2023, was determined based on the annual actuarial
funding valuation report prepared as of September 30, 2022. The key actuarial assumptions are
summarized below:
Inflation 2.50%
Salary increases 3.25% – 6.00%
Investment rate of return *7.45%
* Net of pension plan investment expense
- 50 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Actuarial Assumptions (Continued)
Mortality rates were based on the Pub-2010 Below-Median Tables, projected generationally using the
MP-2020 scale, which is adjusted by 66-2/3% beginning with year 2019:
Set Forward (+)
Group Membership Table Set Back (-)Adjustment to Rates
Non-FLC Service Retirees General Health Below Median Male: +2, Female: +2
Male: 90% ages < 65, 96% ages >= 65 Females: 96%
all ages
FLC/State Police Service Retirees Public Safety Health Below Median Male: +1, Female: None None
Beneficiaries Contingent Survivor – Below Median Male: +2, Female: +2 None
Non-FLC Service Disabled Survivors General Disability Male: +7, Female: +3 None
FLC/State Police Disabled Retirees Public Safety Disability Male: +7, Female: None None
The actuarial assumptions used in the September 30, 2022 valuation were based on the results of an
actuarial experience study for the period October 1, 2015 – September 30, 2020.
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 15.0%2.8%
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%9.0%
Real Estate 10.0%6.5%
Cash equivalents 5.0%1.5%
100.0%
*Includes assumed rate of inflation of 2.00%
- 51 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Discount Rate
The discount rate used to measure the total pension liability was the long-term rate of return, 7.45%. 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 ERS 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, 2022 60,980,320$ 40,268,361$ 20,711,959$
Changes for the year:
Service cost 1,711,973 - 1,711,973
Interest 4,415,054 - 4,415,054
Changes of assumptions - - -
Differences between expected
and actual experience 906,189 - 906,189
Contributions – employer - 1,515,182 (1,515,182)
Contributions – employee - 1,332,570 (1,332,570)
Net investment income - 5,179,009 (5,179,009)
Benefit payments, including refunds
of employee contributions (3,435,700) (3,435,700) -
Transfers among employers (163,874) (163,874) -
Net Changes 3,433,642 4,427,187 (993,545)
Balances at September 30, 2023 64,413,962$ 44,695,548$ 19,718,414$
- 52 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Changes in Net Pension Liability (Continued)
Fairhope Public Library
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
Balances at September 30, 2022 1,702,013$ 1,094,891$ 607,122$
Changes for the year:
Service cost 41,628 - 41,628
Interest 123,425 - 123,425
Changes of assumptions - - -
Differences between expected
and actual experience 14,178 - 14,178
Contributions – employer - 58,307 (58,307)
Contributions – employee - 41,316 (41,316)
Net investment income - 139,271 (139,271)
Benefit payments, including refunds
of employee contributions (90,605) (90,605) -
Transfers among employers (53,267) (53,267) -
Net Changes 35,359 95,022 (59,663)
Balances at September 30, 2023 1,737,372$ 1,189,913$ 547,459$
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 7.45%,
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 (6.45%) or 1% higher (8.45%) than the current rate:
1% Decrease Current Rate 1% Increase
(6.45%)(7.45%)(8.45%)
Net pension liability, City 27,684,747$ 19,718,414$ 13,069,404$
Net pension liability, Fairhope Public Library 698,990$ 547,459$ 417,528$
- 53 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued
RSA Annual Comprehensive Financial Report for the fiscal year ended September 30, 2023. The
supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared
as of September 30, 2023. The auditor’s report 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/financialreports/gasb-68-reports/.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
Pensions
For the year ended September 30, 2024, the City recognized pension expense of $1,573,015 while the
Fairhope Public Library recognized pension expense of $54,278. The fund in which the related payroll
costs are expended will be used to liquidate the net pension liability. At September 30, 2024, the City and
Fairhope Public Library reported deferred outflows of resources and deferred inflows of resources,
respectively, related to pensions of the following sources:
City of Fairhope
Governmental Business-type
Activities Activities Total
Deferred Outflows of Resources:
Differences between expected and actual experience 1,590,619$ 730,436$ 2,321,055$
Changes of assumption 789,224 362,423 1,151,647
Net difference between projected and actual earnings
on plan investments 1,232,216 565,852 1,798,068
Employer contributions subsequent to measurement date 1,234,420 566,864 1,801,284
Total 4,846,479$ 2,225,575$ 7,072,054$
Deferred Inflows of Resources:
Differences between expected and actual experience 111,437$ 51,175$ 162,612$
Changes of assumption - - -
Total 111,437$ 51,175$ 162,612$
- 54 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
Pensions (Continued)
Amounts reported as deferred outflows of resources related to pensions resulting from the City’s
contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended September 30, 2025. Other 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,
2025 1,239,915$
2026 1,204,499
2027 2,240,870
2028 230,701
2029 192,173
Thereafter -
5,108,158$
Fairhope Public Library
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience 12,157$ 12,104$
Changes of assumption 8,678 -
Net difference between projected and actual earnings
on plan investments 49,265 -
Employer contributions subsequent to measurement date 59,837 -
Total 129,937$ 12,104$
- 55 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
Pensions (Continued)
Amounts reported as deferred outflows of resources related to pensions resulting from the Fairhope Public
Library’s contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability in the year ended September 30, 2025. Other 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,
2025 21,128$
2026 7,605
2027 41,133
2028 (11,870)
2029 -
Thereafter -
57,996$
NOTE 11 COMMITMENTS
The City has various contractual commitments outstanding at year end. The commitments under these
contracts totaled $29,635,709. The commitments funded from governmental activities will be
$15,573,509 and from business-type activities will be $14,062,200.
NOTE 12 DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue
Code Section 457. The plan permits employees to defer a portion of their salary until future years. The
plan was established by and is administered by the Retirement Systems of Alabama. Any plan changes
are at the discretion of the administrator. The deferred compensation is not available to employees until
termination, retirement, death, or unforeseeable emergency. The City makes no contributions to the
plan.
All amounts of compensation deferred under the plan, all property and rights purchased with those
amounts, and all income attributable to those amounts, property, or rights are (until paid or made
available to the employee or other beneficiary) solely the property and rights of the individuals who
participate in the deferred compensation plan and are not subject to the claims of the City's general
creditors.
- 56 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
GASB Statement No. 75, Accounting and Financial Reporting by Employers for Post-Employment
Benefits Other Than Pensions, requires governments to account for other post-employment benefits
(OPEB) on an accrual basis, rather than on a pay-as-you-go basis. The effect is the recognition of an
actuarially determined expense when a future retiree earns their post-employment benefits, rather than
when they use their post-employment benefit. The total OPEB liability is recorded at the fund level for
proprietary activities and the allocated amount for governmental activities is presented at the government-
wide level. The annual OPEB cost is included in the line item of salaries for proprietary fund statements
and is allocated by function for governmental activities on the government-wide financial statements.
General Information About the OPEB Plan
Plan Description. The Plan is a single-employer defined benefit healthcare plan administered and
governed solely by the City. The City has the authority to establish and amend benefit provisions. No
assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 and a
separate report was not issued for the plan.
Benefits Provided. The City provides a comprehensive medical plan to eligible retirees and their spouses
through the City’s group health insurance plan, which covers both active and retired members.
Employees Covered by Benefit Terms. At September 30, 2022, the following employees were covered by
the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 34
Active members 79
Totals 113
Total OPEB Liability
The City’s total OPEB liability of $4,902,192 was measured as of September 30, 2023 and was
determined by an actuarial valuation as of September 30, 2022.
- 57 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Total OPEB Liability (Continued)
Actuarial Assumptions and Other Inputs. The total OPEB liability in the September 30, 2023 actuarial
valuation was determined using the following actuarial assumptions and other inputs, applied to all periods
included in the measurement, unless otherwise specified:
Inflation 2.50%
Real wage growth 0.25%
Wage inflation 2.75%
Salary increases 3.25% – 6.00%
Municipal bond index rate
Prior measurement date 4.02%
Measurement date 4.09%
Healthcare cost trend rates
Pre-Medicare 7.00% for 2022 decreasing to an ultimate
rate of 4.50% by 2032
The City selected a Municipal Bond Index Rate equal to the Bond Buyer 20-year General Obligation
Bond Index published at the last Thursday of September by The Bond Buyer, and the Municipal Bond
Index Rate as of the measurement date as the discount rate used to measure the TOL.
Mortality rates were based on the Pub-2010 Public Mortality Plans Mortality Tables, with adjustments for
AL ERS experience and generational mortality improvements using Scale MP-2020, with an adjustment of
66-2/3% to the table beginning in year 2019.
The demographic actuarial assumptions for retirement, disability incidence, withdrawal, and salary
increases used in the September 30, 2022 valuation were based on the actuarial experience study for the
period October 1, 2015 – September 30, 2020, and were submitted to and adopted by the Board of the
Employees’ Retirement System of Alabama on September 14, 2021.
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, 2022 valuation were based on a review
of recent plan experience performed concurrently with the September 30, 2022 valuation.
- 58 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Changes in Total OPEB Liability
Total OPEB
Liability
Balance at September 30, 2023 4,967,157$
Changes for the year:
Service cost 115,406
Interest 194,905
Differences between expected
and actual experience (113,602)
Changes of assumptions or other inputs (21,773)
Benefit payments (239,901)
Net Changes (64,965)
Balance at September 30, 2024 4,902,192$
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 (3.09%) or 1-
percentage-point higher (5.09%) than the current discount rate:
1% Decrease Current Rate 1% Increase
(3.09%)(4.09%)(5.09%)
Total OPEB liability 5,221,481$ 4,902,192$ 4,601,140$
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 4,487,325$ 4,902,192$ 5,369,786$
- 59 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB
For the year ended September 30, 2024, the City recognized OPEB expense of $239,901. The fund in
which the related payroll costs are expended will be used to liquidate the total OPEB liability. At
September 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Governmental Business-type
Activities Activities Total
Deferred Outflows of Resources:
Differences between expected and actual experience 49,085$ 22,543$ 71,628$
Changes of assumption 93,777 43,068 136,845
Employer contributions subsequent to measurement date 245,565 112,778 358,343
Total 388,427$ 178,389$ 566,816$
Deferred Inflows of Resources:
Differences between expected and actual experience 1,751,406$ 804,348$ 2,555,754$
Changes of assumption 355,101 163,084 518,185
Total 2,106,507$ 967,432$ 3,073,939$
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,
2024 (1,301,853)$
2025 (1,415,190)
2026 (145,441)
2027 (2,982)
2028 -
Thereafter -
(2,865,466)$
NOTE 14 OPERATING LEASES
The City holds various leases with entities for use of City property. Most of these leases are monthly and
insignificant. In addition, the City rents certain facilities to groups for events and activities on a per use
basis.
- 60 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 15 SERVICE CONCESSION ARRANGEMENTS
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 $1,957,500 at September 30, 2024.
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 $654,752 at September 30, 2024.
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 $657,000 at September 30, 2024.
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 $1,179,750 at September 30, 2024.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 15 SERVICE CONCESSION ARRANGEMENTS (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 $375,000 at September 30, 2024.
In fiscal year 2020, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 30 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $5,126 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 18
months of the lease. The total value of the capital improvements, $512,000 was considered a deferred
inflow of resources and rent revenue will be recognized over the life 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 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 $443,733 at September 30, 2024.
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, $700,000 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 2022, the Airport Authority
reported a capital improvement in the amount of $700,000 with a corresponding balance of $700,000 as a
deferred inflow of resources pursuant to the service concession arrangement. The balance of the deferred
inflow of resources is $646,154 at September 30, 2024.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 15 SERVICE CONCESSION ARRANGEMENTS (CONTINUED)
In fiscal year 2024, 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 $4,129 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, $385,000 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 2024, the Airport Authority
reported a capital improvement in the amount of $385,000 with a corresponding balance of $385,000 as a
deferred inflow of resources pursuant to the service concession arrangement. The balance of the deferred
inflow of resources is $375,128 at September 30, 2024.
In fiscal year 2024, 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 $7,159 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, $1,117,852 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 2024, the Airport Authority
reported a capital improvement in the amount of $1,117,852 with a corresponding balance of $1,117,852 as
a deferred inflow of resources pursuant to the service concession arrangement. The balance of the deferred
inflow of resources is $1,089,906 at September 30, 2024.
NOTE 16 FAIR VALUE DISCLOSURES
Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those
that GASB Statements require or permit in the statement of net position at the end of each reporting period.
Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair
value.
Level 1 inputs are quoted prices in active markets for identical assets.
Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Investments’ fair value measurements are as follows at September 30, 2024:
Level 1 Level 2 Level 3 Total
Treasury portfolio 3,431,416$ -$ -$ 3,431,416$
AMIC Insurance - - 36,090 36,090
Total 3,431,416$ -$ 36,090$ 3,467,506$
- 63 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
(continued)
NOTE 16 FAIR VALUE DISCLOSURES (CONTINUED)
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 17 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 property tax abated for the year ended September 30, 2024 totaled $10,834.
The City does not collect property taxes. The Revenue Commissioner of Baldwin County is responsible for
such collection.
NOTE 18 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 101, Compensated Absences. This Statement aligns recognition and measurement guidance for all
types of compensated absences under a unified model which will result in governments recognizing a
liability that more appropriately reflects when they incur an obligation for compensated absences.
Requirements for this Statement are effective for financial statements whose fiscal year begins after
December 15, 2023.
GASB 103, Financial Reporting Model Improvements. This Statement improves key components of the
financial reporting model to enhance its effectiveness in providing information that is essential for
decision making and assessing a government’s accountability, as well as addresses certain application
issues. Requirements for this Statement are effective for financial statements whose fiscal year begins
after June 15, 2025.
- 64 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
NOTE 18 EFFECT OF NEW PRONOUNCEMENTS (CONTINUED)
GASB 104, Disclosure of Certain Capital Assets. This Statement requires certain types of capital assets
to be disclosed separately in the capital assets note disclosures required by Statement 34. Lease assets
recognized in accordance with Statement No. 87, Leases, and intangible right-to-use assets recognized in
accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability
Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital
assets note disclosures. Subscription assets recognized in accordance with Statement No. 96,
Subscription-Based Information Technology Arrangements, also should be separately disclosed. In
addition, this Statement requires intangible assets other than those three types to be disclosed separately
by major class. Requirements for this Statement are effective for financial statements whose fiscal year
begins after June 15, 2025.
THIS PAGE INTENTIONALLY LEFT BLANK
REQUIRED SUPPLEMENTARY INFORMATION
- 65 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30
See independent auditors’ report.
City of Fairhope
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 2,387,632$ 2,115,616$ 1,249,119$ 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 2,387,632 2,115,616 1,249,119 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 22,853,678$ 20,219,474$ 18,241,358$ 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 10%10%7%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 2024 were based on the September 30, 2021 actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 23.2 years
Asset valuation method Five year smoothed market
Inflation 2.5%
Salary increases 3.25% – 6.00%, including inflation
Investment rate of return 7.45%, net of pension plan investment
expense, including inflation
- 66 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30
See independent auditors’ report.
Fairhope Public Library
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 59,388$ 60,021$ 58,907$ 40,428$ 33,956$ 33,677$ 34,636$ 41,630$ 39,481$ 43,472$
Contributions in relation to the actuarially
determined contribution 59,388 60,021 58,907 40,428 33,956 33,677 34,636 41,630 39,481 43,472
Contribution deficiency (excess)-$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Covered payroll 629,747$ 529,976$ 537,297$ 478,807$ 473,525$ 501,964$ 489,687$ 486,684$ 426,252$ 426,252$
Contributions as a percentage of covered
payroll 9%11%11%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 2024 were based on the September 30, 2021 actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 26 years
Asset valuation method Five year smoothed market
Inflation 2.5%
Salary increases 3.25% – 6.00%, including inflation
Investment rate of return 7.45%, net of pension plan investment
expense, including inflation
- 67 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30
See independent auditors’ report.
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 1,711,973$ 1,590,312$ 1,391,051$ 1,171,361$ 1,106,681$ 1,072,514$ 1,075,003$ 997,552$ 975,740$ 944,066$
Interest 4,415,054 4,158,760 3,864,090 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 906,189 863,966 1,266,920 299,167 557,843 (1,109,067) (296,198) (52,317) 83,217 -
Changes in assumptions - 48,529 1,996,549 - - 251,496 - 1,344,385 - -
Benefit payments, including refunds of
employee contributions (3,435,700) (3,206,894) (2,905,374) (2,884,262) (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfers among employers (163,874) 99,916 176,817 426,549 40,780 (113,767) (317,929) (76,441) - -
Net change in total pension liability 3,433,642 3,554,589 5,790,053 3,338,014 2,262,592 992,885 1,533,494 3,375,813 1,789,128 1,585,545
Total pension liability – beginning 60,980,320 57,425,731 51,635,678 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)64,413,962$ 60,980,320$ 57,425,731$ 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 1,515,182$ 1,361,751$ 1,342,614$ 1,200,051$ 1,160,273$ 1,107,892$ 1,082,206$ 1,163,477$ 1,035,070$ 1,011,234$
Contributions – member 1,332,570 1,145,173 1,057,424 913,202 807,355 796,436 679,081 680,391 621,817 599,215
Net investment income 5,179,009 (5,949,088) 8,537,210 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 (3,435,700) (3,206,894) (2,905,374) (2,884,262) (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfers among employers (163,874) 99,916 176,817 426,549 40,780 (113,767) (317,929) (76,441) (16,923) (36,268)
Net change in plan fiduciary net position 4,427,187 (6,549,142) 8,208,691 1,751,811 65,338 2,435,133 3,173,247 2,689,744 (269,829) 2,478,996
Plan net position – beginning 40,268,361 46,817,503 38,608,812 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)44,695,548$ 40,268,361$ 46,817,503$ 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)19,718,414$ 20,711,959$ 10,608,228$ 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 69.39%66.04%81.53%74.77%76.31%79.92%76.28%71.67%71.00%75.01%
Covered payroll 18,793,934$ 17,483,038$ 16,295,170$ 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 105%118%65%81%78%69%83%95%100%84%
City of Fairhope
- 68 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30
See independent auditors’ report.
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 41,628$ 38,120$ 27,256$ 32,407$ 29,287$ 28,941$ 31,457$ 37,134$ 37,305$ 36,648$
Interest 123,425 120,099 115,535 106,967 103,340 98,796 93,059 83,555 82,203 79,859
Changes in benefit terms - - - 22,441 - - - - - -
Differences between expected and actual
experience 14,178 (21,671) (6,017) 21,097 (11,203) (9,007) 5,392 (40,331) (8,514) -
Changes in assumptions - - 60,163 - - 5,140 - 132,947 - -
Benefit payments, including refunds of
employee contributions (90,605) (93,192) (77,468) (65,814) (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers (53,267) - - - (12,994) - - - - -
Net change in total pension liability 35,359 43,356 119,469 117,098 51,601 67,530 74,491 154,750 (18,628) 67,716
Total pension liability – beginning 1,702,013 1,658,657 1,539,188 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)1,737,372$ 1,702,013$ 1,658,657$ 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 58,307$ 49,766$ 39,288$ 32,554$ 33,178$ 33,039$ 40,040$ 39,583$ 43,472$ 43,802$
Contributions – member 41,316 28,488 25,137 44,410 23,823 22,728 22,527 21,976 20,166 19,155
Net investment income 139,271 (161,653) 232,230 56,580 24,809 82,409 100,700 72,223 8,684 81,118
Benefit payments, including refunds of
employee contributions (90,605) (93,192) (77,468) (65,814) (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers (53,267) - - - (12,994) - - - - -
Net change in plan fiduciary net position 95,022 (176,591) 219,187 67,730 11,987 81,836 107,850 75,227 (57,300) 95,284
Plan net position – beginning 1,094,891 1,271,482 1,052,295 984,565 972,578 890,742 782,892 707,665 764,965 669,681
Plan net position – ending (b)1,189,913$ 1,094,891$ 1,271,482$ 1,052,295$ 984,565$ 972,578$ 890,742$ 782,892$ 707,665$ 764,965$
Net pension liability (asset) – ending (a)-(b)547,459$ 607,122$ 387,175$ 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 68.49%64.33%76.66%68.37%69.23%70.97%68.36%63.73%65.91%70.16%
Covered payroll 494,106$ 450,741$ 419,081$ 398,880$ 442,352$ 461,619$ 433,005$ 455,696$ 412,627$ 383,102$
Net pension liability (asset) as a percentage of
covered payroll 111%135%92%122%99%86%95%98%89%85%
Fairhope Public Library
- 69 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN TOTAL OPEB LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2023 2022 2021 2020 2019 2018 2017
Total OPEB liability
Service cost 115,406$ 317,799$ 307,242$ 283,527$ 203,973$ 401,209$ 441,966$
Interest 194,905 219,910 231,803 250,165 340,720 442,731 371,696
Differences between expected and actual
experience (113,602) (4,675,601) (227,382) 462,366 85,836 (4,733,827) 2,650
Changes in assumptions (21,773) (429,781) (730,010) 431,719 1,071,768 45,224 (757,435)
Benefit payments (239,901) (389,221) (291,262) (395,053) (499,978) (313,549) (373,128)
Net change in total OPEB liability (64,965) (4,956,894) (709,609) 1,032,724 1,202,319 (4,158,212) (314,251)
Total OPEB liability – beginning 4,967,157 9,924,051 10,633,660 9,600,936 8,398,617 12,556,829 12,871,080
Total OPEB liability – ending 4,902,192$ 4,967,157$ 9,924,051$ 10,633,660$ 9,600,936$ 8,398,617$ 12,556,829$
Covered employee payroll 4,842,876$ 4,842,876$ 5,676,202$ 5,676,202$ 6,190,702$ 6,190,702$ 8,226,573$
Net OPEB liability as a percentage of
covered employee payroll 101.22% 102.57% 174.84% 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 2023.
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 2024.
Changes of assumptions and other inputs reflect a change in the discount rate from 4.02% to 4.09% due to a change in the municipal bond rate.
- 70 -
CITY OF FAIRHOPE, ALABAMA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report.
Variance
Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes 27,092,887$ 27,092,887$ 27,991,730$ 898,843$
Licenses and permits 5,711,450 5,711,450 5,689,718 (21,732)
Fines and forfeitures 237,000 237,000 280,773 43,773
Intergovernmental 1,094,160 994,160 1,100,487 106,327
Interest and rents 823,976 885,541 1,670,486 784,945
Charges for services 4,272,900 4,272,900 4,272,900 -
Golf course revenue 1,346,000 1,346,000 1,418,352 72,352
Recreation Department 560,000 560,000 676,709 116,709
Other 5,090,613 8,221,613 1,435,390 (6,786,223)
Total revenues 46,228,986 49,321,551 44,536,545 (4,785,006)
EXPENDITURES
General government
General 2,900,432 2,887,545 3,447,492 (559,947)
Planning 1,261,938 1,254,938 1,096,244 158,694
Building 1,231,645 1,231,645 1,097,500 134,145
Elected officials 292,428 292,428 318,196 (25,768)
Revenue 664,988 664,988 741,713 (76,725)
Judicial 283,033 283,033 317,254 (34,221)
Appropriations 265,740 265,740 265,740 -
Human Resources 502,528 509,415 489,422 19,993
Meter 724,205 724,205 645,947 78,258
Information Technology 1,171,631 1,185,131 919,037 266,094
Other 837,695 837,695 1,232,247 (394,552)
Public safety
Police 8,184,588 8,192,088 8,281,475 (89,387)
Fire 861,936 865,336 812,620 52,716
Public works
Street 4,105,670 4,105,670 4,124,815 (19,145)
Fleet maintenance 846,549 835,149 859,614 (24,465)
Landscape 1,215,798 1,215,798 1,718,682 (502,884)
Cultural and recreational
Economic and community development 731,418 731,418 727,988 3,430
Adult recreation 510,390 510,195 494,171 16,024
Recreation 3,096,542 3,102,327 2,866,983 235,344
Golf 1,980,332 1,982,257 1,720,919 261,338
Marina 768,226 768,226 623,876 144,350
Civic Center 289,954 295,954 358,908 (62,954)
Museum and Welcome Center 203,745 203,745 201,342 2,403
Airport Authority 320,000 320,000 320,000 -
Public Library Board 918,750 918,750 918,750 -
Debt service payments:
Principal 300,000 300,000 463,991 (163,991)
Interest - - 6,150 (6,150)
Capital outlay 9,910,835 9,890,251 5,596,202 4,294,049
Total expenditures 44,380,996 44,373,927 40,667,278 3,706,649
Excess of revenues over (under) expenditures 1,847,990 4,947,624 3,869,267 (1,078,357)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 100,000 100,000 80,518 (19,482)
Transfers in 2,250,252 2,250,252 1,059,481 (1,190,771)
Transfers out (4,198,242) (7,297,876) (8,314,100) (1,016,224)
Total other financing sources (uses)(1,847,990) (4,947,624) (7,174,101) (2,226,477)
Net change in fund balances -$ -$ (3,304,834) (3,304,834)$
Fund balances – beginning of year 33,034,544
FUND BALANCES – END OF YEAR 29,729,710$
Budgeted Amounts
- 71 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2024
See independent auditors’ report.
NOTE 1 EXCESS EXPENDITURES
The following are General Fund expenditures in excess of final budget amounts:
Excess Excess Excess Excess
Expenditures Expenditures Expenditures Expenditures
General Government Information Technology Fleet Maintenance Department Golf Department
Salaries 230,442$ Salaries 17,005$ Salaries 49,115$ Casualty/workers comp insurance 14,009$
Overtime 1,678 Casualty/workers comp insurance 1,519 Overtime 7,998 Computer expense 2,984
Employee payroll taxes 3,421 Camera expense 1,285 Employee payroll taxes 1,212 Printers 3,086
Employee retirement expense 769 Postage 12 Casualty/workers comp insurance 2,149 General maintenance 3,418
Casualty/workers comp insurance 24,798 General supplies 586 General Maintenance 1,582 Dues 3,297
Training 1,410 Communications 176 Credit card processing fees 3,449
Legal fees 7,570 Revenue Employment screening 652 Utilities 6,312
Professional services 1,758 Salaries 72,296 Small equipment 5,104 Food purchases 3,299
Office supplies 1,420 Overtime 396 Equipment and vehicle repair 6,846 Pro shop custom orders 9,548
Communications 10,812 Employee medical insurance 6,864 Employee payroll taxes 1,442
Employment screening 161 Casualty/workers comp insurance 2,119 Landscaping Postage 22
Cash over or short 18 Computer expense 5,145 Salaries 340,395 General supplies 45,908
Gasoline and oil 570 Office supplies 130 Overtime 44,587 Communications 131
Equipment and vehicle repair 244 Communications 586 Employee payroll taxes 23,308 Employment screening 34
Uniforms 318 Employment screening 534 Employee retirement expense 19,855 Gasoline and oil 3,731
Bank fees 7,980 Equipment and vehicle repair 122 Employee medical insurance 54,731 Capital outlay 566,951
Recording fees 201 Required contributions 14,880
Sales tax abatement 331,740 Judicial Department Casualty/workers comp insurance 2,151 Marina
Publication newspapers 43,540 Salaries 24,784 Training 4,778 Salaries 26,182
Book and sidewalk brick 2,448 Overtime 7,988 Professional services 2,605 Overtime 426
Sales tax collection fees 7,394 Employee payroll taxes 2,357 Computer expense 2,150 Employee retirement expense 112
Utilities 5,840 Employee retirement expense 2,530 Office supplies 478 Casualty/workers comp insurance 1,826
Capital outlay 237,500 Employee medical insurance 1,173 Employment screening 1,032 Training 99
Casualty/workers comp insurance 7 Equipment and vehicle repair 24,556 Printers 53
Planning Department Communications 515 Uniforms 2,291 Employment screening 105
Required contributions 14,019 NCIC data system 300 Safety wear and PPE 606 Credit card processing fee 9,760
Casualty/workers comp insurance 1,010 Equipment rental 3,795 Utilities 3,653
Legal fees 104,847 Other Flower 7,127 Capital outlay 2,024 Communications 1,374 Library capital purchases 462,000
Employment screening 255 Library communications 79 Adult Recreation Department Civic Center
Equipment and vehicle repair 11,441 Parking garage maintenance 15,194 Salaries 19,062 Salaries 11,864
Boys and girls club utilities 2,151 Casualty/workers comp insurance 4,199 Employee payroll taxes 530
Building Department Colony rent-Library 456 Computer expense 3,310 Employee retirement expense 660
Employee medical insurance 15,132 Haven maintenance 272 General supplies 2,516 Employee medical insurance 348
Casualty/workers comp insurance 715 Haven communications 1,004 Communications 869 Casualty/workers comp insurance 2,702
Printers 656 K-1 Center maintenance 2,461 Employment screening 303 General maintenance 50,378
General maintenance 864 Utilities 32,658 Credit card processing fees 1,281 Dues 45
Communications 2,332 Welcome center maintenance 19 Utilities 3,361
Employment screening 85 Police Department Kitchen supplies 311 Capital outlay 65,839
Equipment and vehicle repair 1,866 Overtime 150,710 Special programs 35
Credit card processing fees 76,187 Employee retirement expense 718 Museum and Welcome Center
Employee medical insurance 11,654 Economic and Community Development Salaries 6,001
Elected officials Casualty/workers comp insurance 20,744 Casualty/workers comp insurance 1,410 Employee payroll taxes 395
Salaries 949 Printers 269 Equipment and vehicle repair 1,429 Employee retirement expense 230
Employee retirement expense 55 Gasoline and oil 2,002 Community events 56,932 Employee medical insurance 127
Training 24,335 Equipment and vehicle repair 48,785 Casualty/workers comp insurance 2,141
Office supplies 37 Property rental 358 Recreation Department Printers 2,900
General supplies 167 Narcotic purchases 23,993 Overtime 5,692 Communications 1,586
Communications 4,182 Required contributions 4,366 Utilities 11
Dues 3,128 Fire Department Casualty/workers comp insurance 35,459
Salaries 15,408 Training 1,392 Transfers
Human Resources Employee payroll taxes 644 Computer expense 47 Transfers – Impact fee fund 1,190,771
Salaries 1,574 Employee retirement expense 647 Office supplies 436
Overtime 3,325 Employee medical insurance 6,765 General supplies 42,136 Debt Service
Employee medical insurance 1,050 Casualty/workers comp insurance 7,969 General maintenance 23,490 Principal payments 163,992
Casualty/workers comp insurance 1,073 Communications 1,392 Communications 2,073 Interest expense 6,150
Training 402 Dues 51 Employment screening 947
Computer expense 3,616 Small equipment 716 Small equipment 11,331
General maintenance 88 Utilities 2,303 Equipment and vehicle repair 12,950
Communications 685 Capital outlay 621 Tennis expense 1,482
Advertisement 749 Equipment rental 3,885
Publication newspapers 375 Street Department Tennis shop 3,337
Salaries 403 Credit card processing fees 10,655
Meter Casualty/workers comp insurance 30,190 Utilities 8,151
Overtime 2,280 Computer expense 5,017 Capital outlay 5,000
Casualty/workers comp insurance 1,691 Office supplies 2,838
General supplies 1,485 Printers 3,759
Capital outlay 1,755 General supplies 41,235
Communications 5,253
Employment screening 1,336
Gasoline and oil 23,972 Equipment and vehicle repair 25,165
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OTHER SUPPLEMENTARY INFORMATION
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special Revenue Funds include operating funds that are restricted as to use by the Federal or State governments and
special purpose funds established by authority of the City Council.
Impact Fees Fund accounts for funding from impact fees charged by the City. The use of this is committed by the City
Council for construction and road maintenance.
Gas Tax Fund accounts for proceeds from a state gasoline tax. The use of this funding is restricted to expenditures
related to construction, improvement, and maintenance of highways, bridges, and streets.
Rebuild Gas Tax Fund accounts for proceeds from a special state gasoline tax. The use of this funding is restricted to
expenditures related to construction, improvement, and maintenance of highways, bridges, and streets.
Municipal Capital Improvement Fund accounts for funds received from the Alabama County and Municipal
Government Capital Improvement Trust Fund. The use of this funding is restricted to expenditures related to capital
improvements.
Municipal Court Fund accounts for funds restricted for the municipal court and jail. The funds may be used for capital
acquisition or operations.
- 72 -
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2024
See independent auditors’ report.
Municipal
Rebuild Capital Municipal
Impact Fees Gas Tax Gas Tax Improvements Court Total
ASSETS
Cash 2,996,532$ 169,563$ 246,694$ 913,353$ 100,229$ 4,426,371$
Receivables - 10,715 17,893 - - 28,608
Total assets 2,996,532$ 180,278$ 264,587$ 913,353$ 100,229$ 4,454,979$
LIABILITIES
Accounts payable -$ -$ -$ -$ 65,047$ 65,047$ Due to other funds - - - - 27,027 27,027
Total liabilities - - - - 92,074 92,074
FUND BALANCES
Restricted:
Road maintenance - 180,278 264,587 - - 444,865
Capital improvements - - - 913,353 - 913,353
Municipal Court - - - - 8,155 8,155
Committed:
Construction and road maintenance 2,996,532 - - - - 2,996,532
Total fund balances 2,996,532 180,278 264,587 913,353 8,155 4,362,905
Total liabilities and fund balances 2,996,532$ 180,278$ 264,587$ 913,353$ 100,229$ 4,454,979$
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, 2024
See independent auditors’ report.
Municipal
Rebuild Capital Municipal
Impact Fees Gas Tax Gas Tax Improvements Court Total
REVENUES
Taxes -$ -$ 184,551$ -$ -$ 184,551$
Intergovernmental - 115,664 - 213,748 - 329,412
Charges for services 1,137,986 - - - - 1,137,986
Interest and rents 117,246 - 12,902 32,959 4,461 167,568
Total revenues 1,255,232 115,664 197,453 246,707 4,461 1,819,517
EXPENDITURES
General government 2,664 - 1,758 1,845 - 6,267
Total expenditures 2,664 - 1,758 1,845 - 6,267
Excess of revenues over
expenditures 1,252,568 115,664 195,695 244,862 4,461 1,813,250
OTHER FINANCING
USES
Transfers out (372,340) (104,000) (160,000) - - (636,340)
Total other financing
uses (372,340) (104,000) (160,000) - - (636,340)
Net change in fund balances 880,228 11,664 35,695 244,862 4,461 1,176,910
Fund balances – beginning of year 2,116,304 168,614 228,892 668,491 3,694 3,185,995
FUND BALANCES –
END OF YEAR 2,996,532$ 180,278$ 264,587$ 913,353$ 8,155$ 4,362,905$
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, 2024
See independent auditors’ report.
ASSETS
Cash and cash equivalents 847,938$
Prepaid items 7,169
Total assets 855,107$
LIABILITIES
Accounts payable and accrued liabilities 26,310$
FUND BALANCES
Nonspendable:
Prepaid items 7,169
Restricted:
Library improvements 299,881
Unassigned 521,747
Total fund balances 828,797
TOTAL LIABILITIES AND FUND BALANCES 855,107$
- 75 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2024
See independent auditors’ report.
Fund balances as reported on page 74 828,797$
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.775,988
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.(527,814)
Other assets used in governmental activities are not financial resources and,
therefore, are not reported in the governmental funds.
Deferred outflows of resources related to net pension liability 129,937
Long-term liabilities, including warrants, notes, capital lease obligations, pension
and OPEB obligations are not due and payable in the current period and,
therefore, are not reported in fund financial statements:
Net pension liability (547,459)
Deferred inflows of resources related to net pension liability (12,104)
Net position of governmental activities as reported on page 24 647,345$
- 76 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report.
REVENUES
Fines and lost books 12,613$
Donations, gifts, memorials and bequests 174,854
State aid 36,491
Payments from City of Fairhope 918,750
Miscellaneous 16,101
Total revenues 1,158,809
EXPENDITURES
Salaries 641,302
Payroll taxes 52,988
Insurance 9,223
Employees’ retirement 59,838
Books, periodicals, audio visual 61,694
Supplies 10,651
Janitorial service 21,199
Professional fees 13,158
Telecommunications 751
Capital outlay 36,667
Maintenance 50,695
Miscellaneous 73,807
Total expenditures 1,031,973
Net change in fund balances 126,836
Fund balances – beginning of year 701,961
FUND BALANCES – END OF YEAR 828,797$
- 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, 2024
See independent auditors’ report.
Net change in fund balances – total governmental funds, page 76 126,836$
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. 13,710
Depreciation expense on governmental capital assets included in
capital assets in the statement of net position. (10,801)
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 (24,661)
Change in net position of governmental activities, page 25 105,084$
- 78 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2024
See independent auditors’ report.
ASSETS
Cash and cash equivalents 372,762$
Receivables, net 210,866
Prepaid items 41,912
Capital assets not being depreciated:
Land 10,674,228
Construction in progress 313,324
Capital assets net of accumulated depreciation:
Buildings and improvements 12,022,308
Vehicles and equipment 27,188
Runways 16,012,236
Total assets 39,674,824$
LIABILITIES
Accounts payable and accrued liabilities 130,361$
Unearned revenue 36,314
Customer deposits 36,370
Long-term liabilities:
Due within one year 275,000
Due in more than one year 5,420,629
Advance from primary government 409,993
Total liabilities 6,308,667
DEFERRED INFLOWS OF RESOURCES
Service concession arrangement revenue
applicable to future years 7,378,923
NET POSITION
Net investment in capital assets 33,353,655
Unassigned (7,366,421)
Total net position 25,987,234
Total liabilities, deferred inflows of resources
and net position 39,674,824$
- 79 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report.
OPERATING REVENUES
Fuel sales and rentals 387,958$
Total operating revenues 387,958
OPERATING EXPENSES
Insurance 151,163
Legal and professional 129,057
Maintenance 73,882
Depreciation 605,822
Other 23,904
Total operating expenses 983,828
OPERATING LOSS (595,870)
NONOPERATING REVENUES (EXPENSES)
Revenue from service concession arrangement 286,448
Intergovernmental revenue 1,865,679
Payments from City of Fairhope 319,992
Interest income 19,186
Interest expense (77,635)
Miscellaneous 9,694
Total nonoperating revenues (expenses)2,423,364
Change in net position 1,827,494
Net position – beginning of year 24,159,740
NET POSITION – END OF YEAR 25,987,234$
- 80 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report.
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 436,336$
Paid to suppliers for goods and services (333,532)
Net cash provided by operating activities 102,804
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income 19,186
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Repayment of debt (275,000)
Interest paid (83,545)
Capital grants received 1,944,032
Acquisition of capital assets (2,376,527)
Net cash used in capital and related financing activities (791,040)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Amounts received from City of Fairhope 729,985
NET INCREASE IN CASH 60,935
CASH – BEGINNING OF YEAR 311,827
CASH – END OF YEAR 372,762$
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss (595,870)$
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation 605,822
Other nonoperating revenues 9,694
Change in operating assets and operating liabilities:
Increase in accounts payable 44,474
Increase in unearned revenue 36,314
Increase in customer deposits 2,370
Net cash provided by operating activities 102,804$
- 81 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2024
See independent auditors’ report.
City street upgrades 1,157,920$
Stadium ADA platform and ramps 1,046,845
Track at Founders Park 1,018,164
North Triangle nature park 889,740
BRATS Hub Transit Shelter 735,154
Drainage improvements 424,523
Clock corner improvements 301,863
Pine Street improvements 270,059
K-1 Center improvements 120,020
Founders pavilion 65,015
Pickleball courts 37,250
Parker Road Sidewalk 26,224
Sidewalks on Blue Island and Fairwood 18,159
Safe Room 14,998
Roundabout at N. Section and Hwy 104 11,964
Magnolia Beach improvements 5,250
Total 6,143,148$
The above items are only from the capital projects fund.
- 82 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2024
See independent auditors’ report.
Natural Water and
Electric Gas Waste Water Sanitation
Fund Fund Fund Fund
A. Utility customers at September 30, 2024 were as follows:
Number of customers 7,061 13,387 22,444 11,680
Number of metered customers 7,061 13,387 22,444 11,680
Number of unmetered customers - - - -
Number of waste water customers - - 13,230 -
B. Annual net income of utility operations Natural Water and
Electric Gas Waste Water Sanitation
Fund Fund Fund Fund Total
Income (loss) from operations 2,589,020$ 1,783,836$ 7,146,947$ (470,865)$ 11,048,938$
Add:
Depreciation 1,174,384 597,039 2,558,829 353,009 4,683,261
Interest income 314,988 556,915 701,546 11,737 1,585,186
Annual net income (loss) as prescribed
by debt covenants 4,078,392$ 2,937,790$ 10,407,322$ (106,119)$ 17,317,385$
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 2025 $ 1,000,000
Buildings and facilities – expires January 2025 135,120,005
Equipment – expires January 2025 7,364,671
Automobile – expires January 2025
Liability 1,000,000
Uninsured motorist 50,000
Public officials errors and omissions liability – expires January 2025
Aggregate 2,000,000
Per occurrence 1,000,000
Police liability – expires January 2025
Aggregate 2,000,000
Per occurrence 1,000,000
Excess liability policy for general liability, police and public official – expires January 2025 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, 2024
See independent auditors’ report.
1996
Capital 2020 URW 2020 URW
Improvement Reserve Fund Warrant Fund
Balance October 1, 2023 52,852$ 1,854,644$ 1,505,566$
Deposits 2,683 91,896 1,890,797
Disbursements - (91,381) (1,875,641)
Balance September 30, 2024 55,535$ 1,855,159$ 1,520,722$
THIS PAGE INTENTIONALLY LEFT BLANK
STATISTICAL SECTION
This part of the City of Fairhope, Alabama's annual comprehensive 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.90-94
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.95-98
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.99-100
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.101-103
Sources: Unless otherwise noted, the information in these schedules is derived from the annual comprehensive 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)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Governmental activities
Net investment in capital assets 76,208,248$ 83,545,906$ 86,900,546$ 88,279,810$ 94,795,255$ 97,649,862$ 98,917,172$ 100,568,874$ 106,694,188$ 122,482,490$
Restricted 2,308,667 1,706,056 650,031 750,122 227,092 1,135,047 1,011,343 775,703 1,131,211 2,609,565
Unrestricted 4,619,015 2,124,391 8,284,540 2,860,140 828,480 819,243 6,658,072 17,911,102 24,642,361 22,979,100
Total governmental activities net position 83,135,930$ 87,376,353$ 95,835,117$ 91,890,072$ 95,850,827$ 99,604,152$ 106,586,587$ 119,255,679$ 132,467,760$ 148,071,155$
Business-type activities
Net investment in capital assets 44,488,322$ 45,962,724$ 48,750,251$ 50,268,633$ 53,004,032$ 61,730,548$ 67,819,256$ 78,439,515$ 97,862,369$ 108,097,763$
Restricted 2,619,251 2,907,634 2,693,371 2,713,478 2,730,446 14,291,410 3,349,350 4,291,518 3,413,062 3,431,416
Unrestricted 5,238,460 7,587,850 8,586,317 12,564,193 18,201,729 9,441,704 24,938,747 21,997,352 16,081,329 18,628,790
Total business-type activities net position 52,346,033$ 56,458,208$ 60,029,939$ 65,546,304$ 73,936,207$ 85,463,662$ 96,107,353$ 104,728,385$ 117,356,760$ 130,157,969$
Primary government
Net investment in capital assets 120,696,570$ 129,508,630$ 135,650,797$ 138,548,443$ 147,799,287$ 159,380,410$ 166,736,428$ 179,008,389$ 204,556,557$ 230,580,253$
Restricted 4,927,918 4,613,690 3,343,402 3,463,600 2,957,538 15,426,457 4,360,693 5,067,221 4,544,273 6,040,981
Unrestricted 9,857,475 9,712,241 16,870,857 15,424,333 19,030,209 10,260,947 31,596,819 39,908,454 40,723,690 41,607,890
Total primary government net position 135,481,963$ 143,834,561$ 155,865,056$ 157,436,376$ 169,787,034$ 185,067,814$ 202,693,940$ 223,984,064$ 249,824,520$ 278,229,124$
Fiscal Year
- 85 -
CITY OF FAIRHOPE, ALABAMA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Expenses
Governmental activities:
General government 8,890,052$ 9,828,668$ 7,232,746$ 5,580,501$ 5,859,684$ 7,278,497$ 16,825,075$ 8,530,536$ 9,376,769$ 10,969,080$
Public safety 4,370,285 4,873,102 6,051,285 6,744,158 6,747,159 7,125,224 7,699,709 7,992,887 8,520,492 9,814,468
Public works 5,848,267 5,777,295 6,323,212 8,041,071 8,273,373 8,763,332 9,536,641 6,808,105 7,635,053 8,625,435
Cultural and recreational 3,055,121 3,564,948 4,896,744 6,899,557 6,921,431 6,491,954 6,680,606 6,982,402 7,342,832 8,166,743
Airport Authority 412,632 428,000 342,000 320,000 320,000 320,000 335,000 320,000 320,000 320,000
Public Library Board 924,736 1,025,236 1,025,887 1,024,522 1,029,124 1,069,323 1,021,772 1,064,341 1,080,341 1,135,689
Interest on long-term debt 344,808 339,051 53,853 94,506 71,726 27,969 31,431 10,520 9,529 6,150
Total governmental activities expenses 23,845,901 25,836,300 25,925,727 28,704,315 29,222,497 31,076,299 42,130,234 31,708,791 34,285,016 39,037,565
Business-type activities:
Electric 18,227,563 17,683,205 17,622,258 16,966,013 17,063,612 17,022,979 17,605,905 18,178,999 20,399,421 19,642,713
Natural gas 5,056,618 4,886,415 4,949,991 4,930,235 5,777,998 5,670,355 6,172,162 7,741,978 6,944,703 7,018,857
Water and waste water 7,085,714 8,042,137 8,413,111 7,631,278 8,486,035 9,213,371 9,813,398 10,295,634 11,331,087 13,898,407
Sanitation - - - - - - - 3,265,985 3,145,593 3,389,014
Total business-type activities expenses 30,369,895 30,611,757 30,985,360 29,527,526 31,327,645 31,906,705 33,591,465 39,482,596 41,820,804 43,948,991
Total primary government expenses 54,215,796$ 56,448,057$ 56,911,087$ 58,231,841$ 60,550,142$ 62,983,004$ 75,721,699$ 71,191,387$ 76,105,820$ 82,986,556$
Program Revenues
Governmental activities:
Charges for services:
General government 3,585,456$ 7,837,796$ 8,676,864$ 7,523,386$ 7,953,532$ 8,006,104$ 8,802,363$ 10,827,381$ 11,361,540$ 10,768,317$
Public works 4,730,645 1,547,682 1,594,839 1,769,059 1,916,788 2,073,829 2,440,059 - - -
Cultural and recreational 1,622,983 1,649,815 1,664,643 1,926,828 2,148,050 1,995,263 2,420,846 2,719,406 2,860,901 2,988,526
Operating grants and contributions - - 102,507 94,494 127,978 542,126 9,157,959 2,014,462 677,863 855,929
Capital grants and contributions 1,319,753 1,467,355 1,642,474 1,319,678 1,777,375 2,846,663 2,408,124 3,013,322 4,286,518 9,830,891
Total governmental activities program revenues 11,258,837 12,502,648 13,681,327 12,633,445 13,923,723 15,463,985 25,229,351 18,574,571 19,186,822 24,443,663
Business-type activities:
Charges for services:
Electric 20,527,031 20,218,941 19,244,121 20,767,707 20,779,858 20,298,577 21,910,226 20,477,525 22,921,242 22,215,527
Natural gas 7,354,080 6,276,414 6,382,976 7,410,880 7,771,857 7,428,215 8,744,718 10,298,544 8,817,304 8,703,753
Water and waste water 10,860,135 11,164,497 11,870,652 11,529,979 12,538,531 13,625,353 14,679,765 15,559,401 18,559,691 20,447,502
Sanitation - - - - - - - 2,773,365 2,846,575 2,900,181
Operating grants and contributions - - - - - 24,299 125,743 170,397 137,489 683,875
Capital grants and contributions - - - - 253,028 2,304,665 - - - -
Total business-type activities program revenues 38,741,246 37,659,852 37,497,749 39,708,566 41,343,274 43,681,109 45,460,452 49,279,232 53,282,301 54,950,838
Total primary government program revenues 50,000,083$ 50,162,500$ 51,179,076$ 52,342,011$ 55,266,997$ 59,145,094$ 70,689,803$ 67,853,803$ 72,469,123$ 79,394,501$
Fiscal Year
- 86 -
CITY OF FAIRHOPE, ALABAMA
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net (expense)/revenue
Governmental activities (12,587,064)$ (13,333,652)$ (12,244,400)$ (16,070,870)$ (15,298,774)$ (15,612,314)$ (16,900,883)$ (13,134,220)$ (15,098,194)$ (14,593,902)$
Business-type activities 8,371,351 7,048,095 6,512,389 10,181,040 10,015,629 11,774,404 11,868,987 9,796,636 11,461,497 11,001,847
Total primary government net expense (4,215,713)$ (6,285,557)$ (5,732,011)$ (5,889,830)$ (5,283,145)$ (3,837,910)$ (5,031,896)$ (3,337,584)$ (3,636,697)$ (3,592,055)$
General Revenues and Other Changes in
Net Position
Governmental activities:
Taxes
Property taxes 4,550,766$ 4,869,877$ 5,050,643$ 5,535,117$ 5,947,563$ 6,354,890$ 6,847,201$ 7,453,763$ 8,648,008$ 10,132,947$
Sales tax 6,797,757 7,422,726 8,069,350 8,444,241 9,269,702 9,930,150 11,727,899 13,691,152 14,815,624 15,335,550
Liquor taxes 451,719 482,755 536,643 498,044 606,819 632,363 714,140 733,897 739,563 768,319
Lodging taxes 681,419 696,379 762,562 653,697 1,116,242 911,537 1,366,725 1,668,841 1,784,596 1,763,242
Other taxes 138,382 133,057 139,444 127,513 122,059 116,455 111,649 105,778 98,590 94,623
Intergovernmental 1,695,688 568,566 - - - - - - - -
Investment earnings 228,670 302,181 335,106 59,157 126,115 274,246 174,777 219,012 1,346,130 1,851,892
Other 705,142 147,452 283,385 262,849 292,339 341,897 1,404,410 305,727 699,864 313,260
Gain on sale of capital assets - - - - - - - - - 57,450
Transfers in/(out)1,826,575 2,951,082 2,753,244 3,181,000 1,778,690 804,101 1,536,517 1,625,142 177,900 (119,986)
Total governmental activities 17,076,118 17,574,075 17,930,377 18,761,618 19,259,529 19,365,639 23,883,318 25,803,312 28,310,275 30,197,297
Business-type activities:
Investment earnings 18,440 15,162 23,552 53,651 136,797 519,544 307,434 368,554 1,150,912 1,585,186
Other - - 19,276 14,775 16,167 37,608 3,787 80,984 193,866 -
Gain on sale of capital assets - - - - - - - - - 94,190
Transfers in/(out)(1,826,575) (2,951,082) (2,753,244) (3,181,000) (1,778,690) (804,101) (1,536,517) (1,625,142) (177,900) 119,986
Total business-type activities (1,808,135) (2,935,920) (2,710,416) (3,112,574) (1,625,726) (246,949) (1,225,296) (1,175,604) 1,166,878 1,799,362
Total primary government 15,267,983$ 14,638,155$ 15,219,961$ 15,649,044$ 17,633,803$ 19,118,690$ 22,658,022$ 24,627,708$ 29,477,153$ 31,996,659$
Change in Net Position
Governmental activities 4,489,054$ 4,240,423$ 5,685,977$ 2,690,748$ 3,960,755$ 3,753,325$ 6,982,435$ 12,669,092$ 13,212,081$ 15,603,395$
Business-type activities 6,563,216 4,112,175 3,801,973 7,068,466 8,389,903 11,527,455 10,643,691 8,621,032 12,628,375 12,801,209
Total primary government 11,052,270$ 8,352,598$ 9,487,950$ 9,759,214$ 12,350,658$ 15,280,780$ 17,626,126$ 21,290,124$ 25,840,456$ 28,404,604$
Fiscal Year
- 87 -
CITY OF FAIRHOPE, ALABAMA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(accrual basis of accounting)
Fiscal Sales Ad Valorem Automobile Liquor Cigarette Lodging Dog
Year Tax Tax Tax Tax Tax Tax Tax Total
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
2022 13,691,152 6,472,730 981,033 733,897 105,757 1,668,841 21 23,653,431
2023 14,815,624 7,498,497 1,149,511 739,563 98,550 1,784,596 40 26,086,381
2024 15,335,550 8,951,184 1,181,763 768,319 94,568 1,763,242 55 28,094,681
- 88 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCES OF GOVERNMENTAL FUNDS
(modified accrual basis of accounting)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General fund
Nonspendable -$ -$ 85,490$ 303,387$ 323,647$ 136,037$ 203,736$ 205,704$ 190,553$ 653,792$
Committed 7,000,000 7,000,000 7,062,075 8,343,666 8,343,666 7,734,594 7,734,594 7,734,594 10,734,594 10,734,594
Unassigned 3,992,803 3,629,943 6,819,862 5,061,071 4,575,780 6,013,275 11,328,115 19,122,817 22,109,397 18,341,324
Total general fund 10,992,803$ 10,629,943$ 13,967,427$ 13,708,124$ 13,243,093$ 13,883,906$ 19,266,445$ 27,063,115$ 33,034,544$ 29,729,710$
All other governmental funds
Restricted:
Debt service – other governmental funds 348,720$ 516,120$ 527,858$ 541,587$ -$ -$ -$ -$ -$ -$
Road maintenance – other governmental funds 105,947 35,936 122,173 208,535 227,092 318,704 340,666 329,867 397,506 444,865
Capital improvements - - - - - 816,343 670,653 442,070 676,201 2,042,702
Other - - - - - - 24 3,766 57,504 121,998
Committed, reported in:
Capital projects fund 4,398,406 1,364,704 4,147,827 2,787,639 1,943,247 862,824 1,428,575 2,867,646 3,406,740 4,973,294
Other governmental funds 826,435 1,478,912 2,255,722 5,403,308 3,726,721 3,036,724 2,574,103 2,544,707 2,116,304 2,996,532
Unassigned:
Other governmental funds - - - - (1,160) (1,160) - - - -
Total all other governmental funds 5,679,508$ 3,395,672$ 7,053,580$ 8,941,069$ 5,895,900$ 5,033,435$ 5,014,021$ 6,188,056$ 6,654,255$ 10,579,391$
Fiscal Year
- 89 -
CITY OF FAIRHOPE, ALABAMA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
REVENUES
Local taxes 12,620,043$ 13,604,795$ 14,681,633$ 15,259,245$ 17,002,565$ 17,948,978$ 20,810,059$ 23,700,359$ 26,143,167$ 28,176,281$
Licenses and permits 3,306,620 3,596,049 3,945,641 4,364,902 4,570,915 4,315,235 4,544,325 6,137,069 6,292,136 5,689,718
Fines and forfeitures 278,837 236,724 284,893 273,887 237,812 199,228 194,677 267,322 298,611 280,773
Intergovernmental 639,523 693,761 876,086 954,086 1,090,181 2,470,197 11,205,009 4,559,019 4,172,243 9,532,399
Interest and rents 228,669 302,181 335,106 401,705 470,753 576,479 465,462 353,059 1,547,696 2,083,376
Charges for services 5,395,287 6,504,860 6,910,066 5,075,950 5,852,747 6,098,090 6,749,966 4,776,552 5,482,972 5,410,886
Golf course revenue 1,137,114 1,127,306 1,190,281 1,062,204 1,060,650 1,000,949 1,272,891 1,241,278 1,381,262 1,418,352
Recreation Department 444,410 476,772 466,437 442,324 456,362 238,811 393,744 636,242 657,288 676,709
BP settlement proceeds 1,361,255 - - - - - - - - -
Legal settlement 598,640 - - - - - - - - -
Other 180,644 223,293 338,058 368,387 660,915 1,219,633 1,958,967 983,969 1,071,370 1,435,390
Total revenues 26,191,042 26,765,741 29,028,201 28,202,690 31,402,900 34,067,600 47,595,100 42,654,869 47,046,745 54,703,884
EXPENDITURES
General government 8,289,346 8,738,427 6,451,497 4,912,047 5,303,050 5,994,284 16,506,531 7,914,820 8,873,181 10,581,952
Public safety 4,152,128 4,518,908 5,469,039 6,202,161 6,571,647 6,869,403 7,164,116 7,577,926 8,089,175 9,094,095
Public works 3,980,822 4,118,350 4,651,125 6,386,662 6,510,388 6,963,031 7,484,450 5,123,533 5,967,032 6,703,111
Cultural and recreational 2,664,900 2,989,627 4,017,963 6,028,022 6,238,487 5,783,450 5,827,670 6,185,841 6,557,742 6,994,187
Airport Authority 412,632 428,000 342,000 320,000 320,000 320,000 335,000 320,000 320,000 320,000
Public Library Board 714,100 814,600 814,600 814,600 818,477 859,401 816,431 859,000 875,000 918,750
Other 93,436 162,736 115,753 100,732 170,203 863,699 - - - -
Debt service:
Principal 483,780 6,478,558 1,573,560 1,578,340 3,775,470 641,366 779,020 689,819 595,936 463,991
Interest 374,479 390,971 111,633 94,751 87,534 28,974 29,847 15,238 12,732 6,150
Capital outlay 3,840,803 7,698,341 2,359,222 3,610,512 7,746,773 8,425,744 4,825,427 6,430,431 9,653,281 18,941,377
Total expenditures 25,006,426 36,338,518 25,906,392 30,047,827 37,542,029 36,749,352 43,768,492 35,116,608 40,944,079 54,023,613
Excess (deficiency) of revenues
over expenditures 1,184,616 (9,572,777) 3,121,809 (1,845,137) (6,139,129) (2,681,752) 3,826,608 7,538,261 6,102,666 680,271
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - - - - - - 56,559 157,523 80,518
Proceeds from issuance of debt - 3,975,000 - - - 1,500,000 - - - -
Proceeds from notes payable - - - - - - - 496,404 - -
Proceeds from capital lease - - - 292,323 990,929 155,999 - - - -
Transfers in 7,272,735 8,568,025 6,817,864 7,400,003 6,466,679 4,226,279 5,239,082 5,552,043 5,996,978 8,924,803
Transfers out (5,446,160) (5,616,944) (4,098,281) (4,219,003) (4,828,679) (3,422,178) (3,702,565) (4,672,562) (5,819,539) (9,065,290)
Total other financing sources (uses) 1,826,575 6,926,081 2,719,583 3,473,323 2,628,929 2,460,100 1,536,517 1,432,444 334,962 (59,969)
Net change in fund balances 3,011,191$ (2,646,696)$ 5,841,392$ 1,628,186$ (3,510,200)$ (221,652)$ 5,363,125$ 8,970,705$ 6,437,628$ 620,302$
Debt service as a percentage of
noncapital expenditures 4.1%24.0%7.2%6.3%13.0%2.4%2.1%2.5%1.9%1.3%
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
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
2022 334,297,780 1,265,580 297,929,700 91,809,500 541,683,560 15 8,125,253,400
2023 397,743,220 1,264,820 337,560,860 100,436,240 636,132,660 15 9,541,989,900
2024 391,629,580 1,396,860 445,100,780 118,968,500 719,158,720 15 10,787,380,800
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
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 15.0 0.5 24.5 2.5 3.0 1.0 6.5 46.0
2021 5.0 5.0 5.0 15.0 5.0 2.5 1.5 15.0 0.5 24.5 2.5 3.0 1.0 6.5 46.0
2022 5.0 5.0 5.0 15.0 5.0 2.5 1.5 15.0 0.5 24.5 2.5 3.0 1.0 6.5 46.0
2023 5.0 5.0 5.0 15.0 5.0 2.5 1.5 15.0 0.5 24.5 2.5 3.0 1.0 6.5 46.0
2024 5.0 5.0 5.0 15.0 5.0 2.5 1.5 15.0 0.5 24.5 2.5 3.0 1.0 6.5 46.0
Source: Baldwin County Commission
County State
Overlapping Rates
City
- 92 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL PROPERTY TAXPAYERS
YEARS ENDED SEPTEMBER 30, 2024 AND 2015
Taxable Taxable
Assessed Assessed
Taxpayer Value Rank Value Rank
CX Retreat at Fairhope Village DST 8,905,360$ 1 1.2% $ -- 0.0%
Battles Road, LLC 7,532,940 2 1.0% -- 0.0%
Dominion Senior Living of Fairhope LLC 6,376,540 3 0.9%2,098,340 2 0.7%
Arbor Gates Holdings LLC 4,032,600 4 0.6%2,979,840 1 1.0%
FST Wal-mart Stores East L P 3,838,440 5 0.5% - -0.0%
RW Battles LLC 3,391,700 6 0.5% - -0.0%
Corte Cave, Mitchell 1 LLC 2,800,520 7 0.4% - -0.0%
PSM Alabama Holdings LLC 2,467,380 8 0.3%1,542,540 4 0.5%
FST Mississippi Baldwin Square LLC 2,441,220 9 0.3%1,318,720 7 0.4%
Fairhope Ridge LLC 2,153,800 10 0.3%1,115,140 9 0.4%
CHS Properties Inc - - 0.0%1,802,480 3 0.6%
Fairhope, LLC - - 0.0%1,102,240 10 0.4%
Health Care Reit Inc.- - 0.0%1,184,240 8 0.4%
Truland Homes, LLC - - 0.0%1,385,300 5 0.5%
FST Fairhope Hospitality Group LLC - - 0.0%1,375,540 6 0.5%
43,940,500$ 6.0%15,904,380$ 5.4%
Source: Baldwin County Revenue Commissioner
Assessed Value
2024
Percentage of
Total Taxable
Assessed Value
Percentage of
Total Taxable
2015
- 93 -
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
2020 2.00% 3.00% 4.00%
2021 2.00% 3.00% 4.00%
2022 2.00% 3.00% 4.00%
2023 2.00% 3.00% 4.00%
2024 2.00% 3.00% 4.00%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009.
- 94 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAXPAYERS
LAST TEN YEARS
Fiscal Top 25 Taxpayers
Year (approximate) Total Tax % of Total Tax
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%
2022 5,732,173 11,936,711 48%
2023 6,196,491 13,187,398 47%
2024 6,458,487 13,478,014 48%
Source: City Treasurer's Office and Alabama Department of Revenue
Note: State law prohibits the disclosure of tax information for specific taxpayers.
- 95 -
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 Notes Primary of Personal Per
Year Debt Payable Leases Debt Debt Payable Government Income Capita
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 - 1,424,553 524,553 - 11,300,000 - 13,249,106 1.42%589
2022 - 1,231,138 - - 9,600,000 1,450,315 12,281,453 1.19%531
2023 - 635,202 - - 7,880,000 979,555 9,494,757 0.82%398
2024 - - 171,211 25,000,000 6,140,000 500,443 31,811,654 2.44%1,274
Governmental Activities Business-Type Activities
- 96 -
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
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 735,000 541,587 193,413 0.02%9
2019 - - - 0.00%-
2020 - - - 0.00%-
2021 - - - 0.00%-
2022 - - - 0.00%-
2023 - - - 0.00%-
2024 25,000,000 - 25,000,000 1.92%1,001
- 97 -
CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30, 2024
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 671,654$ 100.00% 671,654$
Overlapping Debt (Supported by ad valorem tax)
Baldwin County 96,703,142 8.15%(1)7,881,306
8,552,960$
(1) Percentage of net assessed value of property in City ($719,346,340) to net assessed value of property in Baldwin
County ($8,827,298,660) on October 1, 2024
- 98 -
CITY OF FAIRHOPE, ALABAMA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Debt limit 60,737,532$ 65,350,300$ 69,525,192$ 75,223,856$ 80,826,248$ 86,102,724$ 93,281,460$ 108,355,388$ 127,293,552$ 143,869,268$
Total net debt applicable to limit 14,079,616 10,415,000 7,680,000 4,265,804 1,188,940 2,203,573 1,424,553 2,681,453 635,202 671,654
Legal debt margin 46,657,916$ 54,935,300$ 61,845,192$ 70,958,052$ 79,637,308$ 83,899,151$ 91,856,907$ 105,673,935$ 126,658,350$ 143,197,614$
Total net debt applicable to limit
as a percentage of debt limit 23.18%15.94%11.05%5.67%1.47%2.56%1.53%2.47%0.50%0.47%
Legal Debt Margin Calculation for Fiscal Year 2024
Total assessed value 719,346,340$
Debt limit (20% of total assessed value)143,869,268$
Debt applicable to limit:
General obligation warrants (including capital leases)671,654
Legal debt margin 143,197,614$
Fiscal Year
- 99 -
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
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%
2022 23,147 1,030,828,498 44,534 5,888 2.5%
2023 23,859 1,154,346,138 48,382 5,924 2.9%
2024 24,974 1,302,643,840 52,160 5,909 2.9%
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.publicschoolreview.com
Fairhope, Alabama Population 2024 (worldpopulationreview.com)
Private School Review https://www.privateschoolreview.com/alabama/fairhope
Public School Review https://www.publicschoolreview.com/alabama/fairhope
www.schooldigger.com
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CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
YEARS ENDED SEPTEMBER 30, 2024 AND 2015
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Thomas Hospital 1,273 1 12.2% 1,000 1 14.6%
Grand Hotel 900 2 8.6%500 2 7.3%
Board of Education - Fairhope Schools 543 3 5.2%- - 0.0%
City of Fairhope 492 4 4.7%418 3 6.1%
Wal-Mart 305 5 2.9%320 4 4.7%
Segers Aero 185 6 1.8%130 6 1.9%
Publix 300 7 2.9%165 5 2.4%
Gulf Orthopedics 100 8 1.0%- - 0.0%
Winn-Dixie 80 9 0.8%155 7 2.3%
Piggly Wiggly 72 10 0.7%65 8 0.9%
Print Xcel - - 0.0%50 10 0.7%
Balloons Are Everywhere - - 0.0%60 9 0.9%
4,250 40.8%2,863 41.8%
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
2015: 7,450 2024: 10,409
2024 2015
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CITY OF FAIRHOPE, ALABAMA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Function
General Government 49 49 49 53 62 64 66 71 81 81
Public Safety:
Police 46 45 49 52 59 59 61 66 73 72
Fire:
Firefighters and Dispatch 17 14 15 16 14 17 17 13 5 5
Highways and Streets:
Public Works 41 46 42 49 57 53 57 53 60 67
Sanitation 22 20 19 18 18 28 23 26 26 25
Cultural and Recreational:
Recreation 25 26 29 32 31 34 35 34 19 22
Adult Recreation 11 12 11 11 13 12 13 10 4 3
Gas Department 15 15 16 18 21 22 21 22 20 23
Electric Department 21 19 19 22 20 26 26 26 27 28
Water/Waste Water Department 23 22 26 29 31 34 36 41 40 46
Golf Department 18 20 19 18 22 21 22 19 11 13
Total 288 288 294 318 348 370 377 381 366 385
Source: City of Fairhope Human Resources Department
Full-time Equivalent Employees as of September 30,
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CITY OF FAIRHOPE, ALABAMA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Function
Police:
Physical arrests 1,423 983 1,350 1,542 1,538 1,462 866 1,047 1,077 1,106
Parking violations 121 240 359 89 22 52 202 75 1,616 883
Traffic violations 633 1,726 2,490 1,684 1,656 1,613 1,751 1,670 2,107 1,460
Fire:
Number of calls answered 836 865 1,025 1,058 1,023 1,236 1,283 1,200 1,356 1,347
Inspections**161 147 73 823 669 648 121 767 802 722
Highways and streets:
Street resurfacing (miles)- 13.2 - 1.2 2.2 3.3 3.4 4.7 3.5 3.1
Potholes repaired*1,620 2,933 2,300 4,928 5,466 1,152 1,720 1,770 243 500
Sanitation:
Garbage collected (tons/year)8,236 8,654 9,222 9,554 10,108 11,949 12,042 15,286 11,246 11,363
Trash collected (tons/year)5,545 5,902 8,228 7,189 7,741 6,907 4,256 4,565 5,100 8,556
Recyclables collected (tons/year) 1,779 1,855 1,843 1,835 1,803 947 824 1,286 1,586 1,269
Cultural and recreational:
Golf course rounds @ 9 hole rounds 57,405 56,613 58,416 53,995 55,971 53,740 62,151 60,588 59,893 57,692
Pavilion/park parties 59 44 28 32 22 19 36 47 62 62
Waste water:
Average daily sewage treatment
(millions of gallons)2.0 2.2 2.4 2.4 2.3 2.6 2.5 2.3 2.0 2.2
Sources: Various government departments
* The City changed the calculation method for potholes for fiscal year 2023 resulting in an increase.
** The Fire Inspector position was vacant for all of 2021.
Fiscal Year
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CITY OF FAIRHOPE, ALABAMA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Function
Public safety:
Police:
Stations 1 1 1 1 1 1 1 1 1 2
Patrol units 38 39 44 45 47 50 49 52 52 55
Fire stations 4 4 4 4 4 4 4 4 4 4
Highways and streets:
Streets (miles)106.54 108.64 111.14 112.64 114.76 116.56 152.56 161.08 163.00 163.00
Cultural and recreational:
Parks acreage 504 504 504 504 657 657 657 657 657 657
Parks 54 54 54 54 56 56 56 56 56 56
Swimming pools 3 3 3 3 3 3 3 3 3 3
Tennis courts 6 12 12 12 16 16 16 16 16 16
Pickleball courts
Community center 3 3 3 3 3 3 3 3 3 3
Sewer:
Sanitary sewers (miles)130 135 175 175 180 185 187 190 194 214
Storm sewers (miles)20.57 22.77 25.77 27.29 29.5 30.73 31.41 32.22 32.41 32.41
Maximum daily treatment capacity
(millions of gallons)4 4 4 4 4 4 4 4 4 4
Fiscal Year