HomeMy WebLinkAbout2023
City of Fairhope, Alabama
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023
PREPARED BY:
THE OFFICE OF THE CITY TREASURER
i
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2023
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
ii
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2023
TABLE OF CONTENTS (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION
Schedules of Employer Contributions 66
Schedules of Changes in Net Pension Liability 68
Schedules of Changes in Total OPEB Liability 70
Budgetary Comparison Schedule - General Fund 71
Notes to Required Supplementary Information 72
SUPPLEMENTARY INFORMATION
Combining Balance Sheets - Nonmajor Governmental Funds 73
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Nonmajor Governmental Funds 74
Fund Balance Sheet - Fairhope Public Library Board 75
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities - Fairhope Public Library Board 76
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fairhope Public Library Board 77
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Fairhope Public Library Board 78
Statement of Net Position - Fairhope Airport Authority 79
Statement of Revenues, Expenses and Changes in Net Position -
Fairhope Airport Authority 80
Statement of Cash Flows - Fairhope Airport Authority 81
OTHER INFORMATION
Schedule of Capital Projects Expenditures 82
Schedule of Information Required by Bond Indentures 83
Summary of Deposits, Withdrawals and Balances of Selected Trust Accounts as
Required Under Certain Trust Indentures 84
iii
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2023
TABLE OF CONTENTS (continued)
Page
STATISTICAL SECTION
Net Position by Component 85
Changes in Net Position 86
Governmental Activities Tax Revenues by Source 88
Fund Balances of Governmental Funds 89
Changes in Fund Balances of Governmental Funds 90
Assessed Value and Estimated Actual Value of Taxable Property 91
Property Tax Rates - Direct and Overlapping Governments 92
Principal Property Taxpayers 93
Direct and Overlapping Sales Tax Rates 94
Principal Sales Taxpayers 95
Ratios of Outstanding Debt by Type 96
Ratios of General Bonded Debt Outstanding 97
Computation of Overlapping Debt 98
Legal Debt Margin Information 99
Demographic and Economic Statistics 100
Principal Employers 101
Full-time Equivalent City Government Employees by Function 102
Operating Indicators by Function 103
Capital Asset Statistics by Function 104
INTRODUCTORY SECTION
ix
x
CITY OF FAIRHOPE, ALABAMA
ORGANIZATIONAL CHART
SEPTEMBER 30, 2023
xi
CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2023
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, 2023.
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, 2023,
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, 2023, 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 statement 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
- 2 -
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 66 through 72 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.
- 3 -
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 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 section, statistical section and other information on pages 82 through 84, 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 8, 2024, 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 8, 2024
THIS PAGE INTENTIONALLY LEFT BLANK
MANAGEMENT’S DISCUSSION AND ANALYSIS
- 4 -
MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Fairhope, Alabama (the City), we present this narrative overview and
analysis designed to assist readers of the City’s financial statements for the fiscal year ended September 30,
2023. 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, 2023.
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 $249,824,520, at the close of the fiscal year ended September
30, 2023. An unrestricted surplus exists in the amount of $40,723,690, which may be used to
meet the government’s ongoing obligations.
The City’s total net position increased by $25,840,456, or 11.5% in comparison to the net
position at the beginning of the year. Net position of governmental activities increased
$13,212,081, or 11.1% and net position of business-type activities increased $12,628,375 or
12.1%.
At the close of the current fiscal year, the City’s governmental funds reported a combined fund
balance of $39,688,799. This was an increase of $6,437,628 or 19.4% from the prior year.
At the end of the current fiscal year, total fund balance for the General Fund was $33,034,544, an
increase of $5,971,429, or 22.1% from the prior year. This is due to unbudgeted growth in tax
revenue along with cost savings across departments.
Sales and use tax, the City’s single largest revenue source, increased $1,124,472 or 8.2% from the
prior year primarily due to economic growth over the prior year.
The City increased its General Fund financial reserves from $7,000,000 to $10,000,000 or 42.9%
increase from the prior year.
The following schedule presents a comparison of revenues for all Governmental Funds for the
fiscal year ended September 30, 2023, to fiscal year ended September 30, 2022. Revenues
increased $4,391,876 or 10.3%, as compared to the previous year. The majority of this increase
was attributable to local tax revenues due to growth and increase in investment income due to
interest rates.
- 5 -
Increase % Increase
Revenues 2023 % of Total 2022 (Decrease) (Decrease)
Local taxes 26,143,167$ 55.57% 23,700,359$ 2,442,808$ 10.31%
Licenses and permits 6,292,136 13.37% 6,137,069 155,067 2.53%
Fines and forfeitures 298,611 0.63%267,322 31,289 11.70%
Intergovernmental 4,172,243 8.87% 4,559,019 (386,776) -8.48%
Interest and rents 1,547,696 3.29%353,059 1,194,637 338.37%
Charges for services 5,482,972 11.65% 4,776,552 706,420 14.79%
Golf course revenue 1,381,262 2.94% 1,241,278 139,984 11.28%
Recreation department 657,288 1.40%636,242 21,046 3.31%
Other 1,071,370 2.28%983,969 87,401 8.88%
47,046,745$ 100.00% 42,654,869$ 4,391,876$ 10.30%
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.
- 6 -
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 ten (10) individual governmental funds. Information is presented separately
in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures
and changes in fund balance of the major funds. Data from seven (7) 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 71.
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.
- 7 -
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 71.
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 73 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 $249,824,520. This is a $25,840,456 increase over last year’s adjusted net position. The
following table provides a summary of the City’s net position.
2023 2022 2023 2022 2023 2022
Current and other assets
(net of internal balances)47,226,849$ 38,822,644$ 34,959,836$ 40,632,698$ 82,186,685$ 79,455,342$
Internal balances (579,620) 457,574 579,620 (457,574) - -
Capital assets 107,329,390 101,800,012 106,665,599 88,503,173 213,994,989 190,303,185
Total Assets 153,976,619 141,080,230 142,205,055 128,678,297 296,181,674 269,758,527
Deferred charge on refunding - - 56,325 63,366 56,325 63,366
Pension related items 6,704,755 3,545,294 3,245,905 1,502,313 9,950,660 5,047,607
OPEB related items 652,043 954,742 333,723 435,023 985,766 1,389,765
Total Deferred Outflows
of Resources 7,356,798 4,500,036 3,635,953 2,000,702 10,992,751 6,500,738
Long-term liabilities 17,220,236 15,929,028 16,996,901 18,133,048 34,217,137 34,062,076
Other liabilities 8,182,444 6,065,419 9,721,739 5,997,569 17,904,183 12,062,988
Total Liabilities 25,402,680 21,994,447 26,718,640 24,130,617 52,121,320 46,125,064
Pension related items 244,927 2,819,709 118,574 1,131,775 363,501 3,951,484
OPEB related items 3,218,050 1,510,431 1,647,034 688,222 4,865,084 2,198,653
Total Deferred Inflows
of Resources 3,462,977 4,330,140 1,765,608 1,819,997 5,228,585 6,150,137
Net position
Net Investment in Capital
Assets 106,694,188 100,568,874 97,862,369 78,439,515 204,556,557 179,008,389
Restricted 1,131,211 775,703 3,413,062 4,291,518 4,544,273 5,067,221
Unrestricted 24,642,361 17,911,102 16,081,329 21,997,352 40,723,690 39,908,454
Total Net Position 132,467,760$ 119,255,679$ 117,356,760$ 104,728,385$ 249,824,520$ 223,984,064$
Governmental
Activities
Business-type
Activities Total
Total assets increased $26,423,147 or 9.8% from the previous fiscal year. This was primarily due to an
increase in capital assets of $23,691,804. Current year additions totaled $32,021,765 and consisted of
equipment, building and street improvements, and upgrades of the utility system. Current year depreciation
totaled $8,284,947.
Total liabilities increased $5,996,256 or 13% from the previous fiscal year. This was primarily due to an
increase in Accounts Payable as of September 30, 2023, attributable to large infrastructure project invoices
totaling $3,141,000 along with ongoing increases to material costs.
- 8 -
The largest portion of the City’s net position (81.9%) 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 (1.8%) 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 $16,081,329 which is a $5,916,023
decrease from the prior year. The decrease is due to current year operations and investment in infrastructure.
2023 2022 2023 2022 2023 2022
Revenues
Program revenues
Charges for services 14,222,441$ 13,546,787$ 53,144,812$ 49,108,835$ 67,367,253$ 62,655,622$
Operating Grants and
contributions 677,863 2,014,462 137,489 170,397 815,352 2,184,859
Capital grants and
contributions 4,286,518 3,013,322 - - 4,286,518 3,013,322
General revenues
Property taxes 8,648,008 7,453,763 - - 8,648,008 7,453,763
Sales taxes 14,815,624 13,691,152 - - 14,815,624 13,691,152
Other taxes 2,622,749 2,508,516 - - 2,622,749 2,508,516
Other 2,045,994 524,739 1,344,778 449,538 3,390,772 974,277
Total revenues 47,319,197 42,752,741 54,627,079 49,728,770 101,946,276 92,481,511
Expenses
General government 9,376,769 8,530,536 - - 9,376,769 8,530,536
Public safety 8,520,492 7,992,887 - - 8,520,492 7,992,887
Public works 7,635,053 6,808,105 - - 7,635,053 6,808,105
Cultural and recreational 7,342,832 6,982,402 - - 7,342,832 6,982,402
Airport Authority 320,000 320,000 - - 320,000 320,000
Public Library Board 1,080,341 1,064,341 - - 1,080,341 1,064,341
Interest on long-term debt 9,529 10,520 - - 9,529 10,520
Electric - - 20,399,421 18,178,999 20,399,421 18,178,999
Natural gas - - 6,944,703 7,741,978 6,944,703 7,741,978
Water and Waste Water - - 11,331,087 10,295,634 11,331,087 10,295,634
Sanitation - - 3,145,593 3,265,985 3,145,593 3,265,985
Total expenses 34,285,016 31,708,791 41,820,804 39,482,596 76,105,820 71,191,387
Increase in net position
before transfers 13,034,181 11,043,950 12,806,275 10,246,174 25,840,456 21,290,124
Transfers in (out)177,900 1,625,142 (177,900) (1,625,142) - -
Increase in net position 13,212,081 12,669,092 12,628,375 8,621,032 25,840,456 21,290,124
Net position - beginning 119,255,679 106,586,587 104,728,385 96,107,353 223,984,064 202,693,940
Net position - ending 132,467,760$ 119,255,679$ 117,356,760$ 104,728,385$ 249,824,520$ 223,984,064$
Governmental
Activities
Business-type
Activities Total
- 9 -
Governmental Activities
Governmental activities for the current year increased the City’s net position by $13,212,081. Key elements
of this change are as follows:
Sales and use tax increased by approximately $1,124,472 or 8.2% due to an increase in consumer
spending.
Lodging tax increased by approximately $115,755 or 6.9% due to an increase in tourism.
Property tax increased by approximately $1,194,245 or 16% due to an increase in assessed
property values and growth.
Operational grants decreased by $1,336,599 or 6.6% as a result of FEMA reimbursement from
Hurricane Sally in 2022.
Business-type Activities
Business-type activities increased the City’s net position by $12,628,375. 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 $39,688,799,
of which $22,109,397 is unassigned. The non-spendable fund balance is $190,553 and stems from inventory
and prepaid expenses. Restricted fund balance is $1,131,211 and comprises funds with restrictions imposed
by outside parties or constitutional provisions. Committed fund balance is $16,257,638 and comprises funds
with constraints imposed by formal action of the City Council. In particular, unassigned fund balance may
serve as a useful measure of the City’s net resources available for discretionary use as it represents the
portion of fund balance that is not limited for a particular use. The table below illustrates the breakdown of
governmental funds for fiscal year 2023.
American
Capital Rescue Other Total
General Projects Plan Governmental Governmental
Total revenues 42,031,039$ 2,318,464$ 249,337$ 2,447,905$ 47,046,745$
Total expenditures 33,897,451 6,506,920 895 538,813 40,944,079
Total other financing sources (uses) (2,162,159) 4,727,550 (198,125) (2,032,304) 334,962
Net change in fund balances 5,971,429 539,094 50,317 (123,212) 6,437,628
Fund balances, beginning of year 27,063,115 2,867,646 3,493 3,316,917 33,251,171
Fund balances, end of year 33,034,544$ 3,406,740$ 53,810$ 3,193,705$ 39,688,799$
Percent of fund balance to expenditures 97% 52% 6012% 593% 97%
All Governmental Funds
- 10 -
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, 2023, the total fund balance of the general fund was $33,034,544, an increase of
$5,971,429. The increase in the General Fund is primarily due to increased tax revenues related to economic
growth and cost savings in departments.
Total revenue of the General Fund increased by $2,829,389 or 7.2% in 2023 compared to the previous year.
This was mostly attributable to increase in revenue from local taxes due to growth and an increase in
investment income due to interest rates.
Capital Project Fund
Capital Project Fund is used to account for the acquisition and construction of major capital facilities and
infrastructure. The fund balance of the Capital Project Fund increased $539,094 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 $117,356,760. Total net position increased for enterprise funds by
$12,628,375 or 12% in 2023 from the previous year. Both increased revenue and expenditures were largely
attributable due to the following:
Increase in customer electric service fees due to growth.
Increase in Water and Waste Water charges due to additional customers and rate increase.
Decrease in Gas service fees due to lower natural gas energy costs which is passed onto
customers.
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, 2023, the internal service fund reported $1,109,062 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,
2023, was $213,994,989 (net of accumulated depreciation). Capital asset investments include land,
buildings, construction in progress, infrastructure, improvements other than buildings, and machinery and
equipment, net of depreciation.
- 11 -
2023 2022 2023 2022 2023 2022
Land 27,743,658$ 27,743,658$ 9,511,594$ 9,511,594$ 37,255,252$ 37,255,252$
Buildings and improvements 28,525,972 27,416,060 1,575,964 1,422,951 30,101,936 28,839,011
Vehicles and equipment 4,836,667 4,481,750 6,105,536 4,450,932 10,942,203 8,932,682
Infrastructure 39,937,442 37,540,427 - - 39,937,442 37,540,427
Distribution and collection systems - - 85,684,259 68,421,784 85,684,259 68,421,784
Construction in progress 6,285,651 4,618,117 3,788,246 4,695,912 10,073,897 9,314,029
107,329,390$ 101,800,012$ 106,665,599$ 88,503,173$ 213,994,989$ 190,303,185$
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 $635,202 of governmental debt and $8,859,555 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 $636,132,660 with a current debt limit for the City of $127,226,532. Current debt
applied to the debt limit total is $635,202, leaving the City with a legal debt margin of $126,591,330.
2023 2022
Increase
(Decrease)
Utility Revenue Warrants 7,880,000$ 9,600,000$ (1,720,000)$
Notes Payable 1,614,757 2,681,453 (1,066,696)
9,494,757$ 12,281,453$ (2,786,696)$
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.
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, 2023, actual revenues were more than budgeted revenues by $5,388,875
or 14.7%. Detailed variances are as follows:
Actual taxes were more than budgeted by $2,972,324 or 12.9% due to increases in consumer
spending, tourism and assessed property values. Actual intergovernmental revenues were more
- 12 -
than budgeted by $259,595 or 34.6% primarily due to an increase in the City’s portion of State of
Alabama’s distribution of financial institution excise tax.
Actual licenses and permits were more than budgeted by $1,423,188 or 29.2% due to increase in
residential growth and development.
Actual interest and rents were more than budgeted by $990,487 or 342.8% due to increase in
interest rates earned on deposits.
For the year ended September 30, 2023, actual total expenditures were less than budgeted expenditures by
$2,896,230 or 7.9%. Detailed variances are in the following functions:
General Government actual expenditures were less than budgeted expenditures by $683,925 or
7.2%.
Public Works actual expenditures were less than budgeted expenditures by $13,654 or .2%.
Public Safety actual expenditures were less than budgeted expenditures by $870,220 or 9.7%.
Cultural and Recreational actual expenditures were less than budgeted expenditures by $408,262
or 5.9%
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, 2023, can
be found beginning on page 71 of this report.
Economic Factors and Year 2023
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 2023 was 2.9%.
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 14.9% due to growth.
Continued sales tax revenue growth in 2023 over the previous year due to steady economic
growth.
Infrastructure and growth continue to be a concern and the primary focus on Utilities investment
of $42,670,880, streets resurfacing of $1,523,000 and roundabout construction of $1,653,000.
Protecting our natural environment for the enjoyment of all with investment in Parks and
Recreation of $5,258,141.
Investment in capital equipment of $6,472,744.
We continue to explore grant opportunities throughout the year.
On September 30, 2023, fund balance in the General Fund was $33,034,544. The City will continue to
provide services to its citizens, keep a level of essential staff to provide services to the community, and pay
for one-time expenditures for capital needs from the funds appropriated in the 2024 budget.
- 13 -
Requests for Information
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a
general overview of the City of Fairhope’s finances. Questions concerning any of the information provided
in this report or requests for additional financial information should be addressed to: The Office of the
Treasurer, P.O. Drawer 429, Fairhope, Alabama 36533. This report is also available online at
www.fairhopeal.gov.
BASIC FINANCIAL STATEMENTS
- 14 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2023
See independent auditors’ report and notes to the financial statements.
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash 43,740,827$ 23,081,796$ 66,822,623$ 1,029,585$ Restricted cash - 3,413,062 3,413,062 -
Receivables, net 3,260,544 6,520,915 9,781,459 315,104 Internal balances (579,620) 579,620 - -
Inventories 165,369 1,891,035 2,056,404 - Prepaid items 25,184 16,938 42,122 49,081
Other assets 34,925 36,090 71,015 -
Capital assets not being depreciated:
Land 27,743,658 9,511,594 37,255,252 10,674,228
Construction in progress 6,285,651 3,788,246 10,073,897 504,529
Capital assets net of accumulated
depreciation:Buildings and improvements 28,525,972 1,575,964 30,101,936 8,479,749
Vehicles and equipment 4,836,667 6,105,536 10,942,203 91,755 Infrastructure 39,937,442 - 39,937,442 -
Distribution and collection systems - 85,684,259 85,684,259 - Runways - - - 16,270,731
Total assets 153,976,619 142,205,055 296,181,674 37,414,762
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - 56,325 56,325 - Pension related items 6,704,755 3,245,905 9,950,660 224,802
OPEB related items 652,043 333,723 985,766 -
Total deferred outflows of
resources 7,356,798 3,635,953 10,992,751 224,802
Total assets and deferred
outflows of resources 161,333,417$ 145,841,008$ 307,174,425$ 37,639,564$
LIABILITIES
Accounts payable and
accrued expenses 3,577,654$ 5,622,882$ 9,200,536$ 114,763$ Unearned revenue 2,249,610 1,155,167 3,404,777 25,884
Customer deposits 5,000 2,179,686 2,184,686 34,000 Noncurrent liabilities:
Due within one year:Net pension liability 1,298,004 588,916 1,886,920 60,021
Total OPEB liability 193,750 175,088 368,838 -
Other 858,426 2,405,061 3,263,487 275,000
Due in more than one year:
Net pension liability 12,842,947 5,982,092 18,825,039 547,101
Total OPEB liability 3,091,817 1,506,502 4,598,319 -
Other 1,285,472 7,103,246 8,388,718 5,695,629
Total liabilities 25,402,680 26,718,640 52,121,320 6,752,398
DEFERRED INFLOWS OFRESOURCES
Pension related items 244,927 118,574 363,501 22,645 OPEB related items 3,218,050 1,647,034 4,865,084 -
Service concession arrangement
revenue applicable to future years - - - 6,162,520
Total deferred inflows of
resources 3,462,977 1,765,608 5,228,585 6,185,165
NET POSITIONNet investment in capital assets 106,694,188 97,862,369 204,556,557 30,050,363
Restricted for:
Debt service - 3,360,210 3,360,210 -
Road maintenance 397,506 - 397,506 -
Capital improvements 676,201 52,852 729,053 -
Municipal Court 3,694 - 3,694 -
American Rescue 53,810 - 53,810 - Library improvements - - - 205,687
Unrestricted 24,642,361 16,081,329 40,723,690 (5,554,049)
Total net position 132,467,760 117,356,760 249,824,520 24,702,001
Total liabilities, deferred inflows
of resources, and net position 161,333,417$ 145,841,008$ 307,174,425$ 37,639,564$
- 15 - CITY OF FAIRHOPE, ALABAMA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2023 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Governmental Business-typeComponentFunctions/ProgramsExpenses Services Contributions Contributions Activities ActivitiesTotalUnitsPrimary GovernmentGovernmental activities:General government9,376,769$ 11,361,540$ -$ 30,000$ 2,014,771$ -$ 2,014,771$ -$ Public safety8,520,492 - 306,600 441,521 (7,772,371) - (7,772,371) - Public works7,635,053 - 371,163 3,198,483 (4,065,407) - (4,065,407) - Cultural and recreational 7,342,832 2,860,901 100 616,514 (3,865,317) - (3,865,317) - Airport Authority320,000 - - - (320,000) - (320,000) - Public Library Board1,080,341 - - - (1,080,341) - (1,080,341) - Interest on long-term debt9,529 - - - (9,529) - (9,529) - Total governmental activities34,285,016 14,222,441 677,863 4,286,518 (15,098,194) - (15,098,194) - Business-type activities:Electric20,399,421 22,921,242 137,489 - - 2,659,310 2,659,310 - Natural gas6,944,703 8,817,304 - - - 1,872,601 1,872,601 - Water and Waste Water11,331,087 18,559,691 - - - 7,228,604 7,228,604 - Sanitation3,145,593 2,846,575 - - - (299,018) (299,018) - Total business-type activities41,820,804 53,144,812 137,489 - - 11,461,497 11,461,497 - Total primary government76,105,820$ 67,367,253$ 815,352$ 4,286,518$ (15,098,194) 11,461,497 (3,636,697) - Component Units1,978,529$ 477,033$ 1,470,634$ 253,365$ 222,503 General revenues:Property taxes8,648,008 - 8,648,008 - Sales tax14,815,624 - 14,815,624 - Liquor taxes739,563 - 739,563 - Lodging taxes1,784,596 - 1,784,596 - Other taxes98,590 - 98,590 - Investment earnings1,346,130 1,150,912 2,497,042 - Other699,864 193,866 893,730 13,005 Transfers177,900 (177,900) - - Total general revenues and transfers28,310,275 1,166,878 29,477,153 13,005 Change in net position13,212,081 12,628,375 25,840,456 235,508 Net position - beginning 119,255,679 104,728,385 223,984,064 24,466,493 Net position - ending132,467,760$ 117,356,760$ 249,824,520$ 24,702,001$ Changes in Net PositionPrimary GovernmentProgram RevenuesNet (Expense) Revenue and
- 16 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2023
See independent auditors’ report and notes to the financial statements.
American Other Total
Capital Rescue Governmental Governmental
General Projects Plan Funds Funds
ASSETSCash 32,644,788$ 5,001,312$ 1,553,344$ 3,318,235$ 42,517,679$
Receivables, net 2,227,587 460,179 - 407,380 3,095,146
Inventory 165,369 - - - 165,369
Prepaid items 25,184 - - - 25,184
Due from other funds 299,559 - - - 299,559
Other assets 34,925 - - - 34,925
Total assets 35,397,412$ 5,461,491$ 1,553,344$ 3,725,615$ 46,137,862$
LIABILITIES
Accounts payable 1,523,698$ 989,607$ -$ 197,743$ 2,711,048$
Accrued expenditures and taxes 600,733 - - - 600,733
Customer deposits 5,000 - - - 5,000
Unearned revenue 210,158 934,589 1,301,409 - 2,446,156
Due to other funds 23,279 130,555 198,125 334,167 686,126
Total liabilities 2,362,868 2,054,751 1,499,534 531,910 6,449,063
FUND BALANCES
Nonspendable:
Prepaid items 25,184 - - - 25,184
Inventory 165,369 - - - 165,369
Restricted:
Road maintenance - - - 397,506 397,506
Capital improvements - - - 676,201 676,201
Municipal Court - - - 3,694 3,694
American Rescue - - 53,810 - 53,810
Committed:
Council approved emergencies 10,000,000 - - - 10,000,000
Construction and road maintenance - - - 2,116,304 2,116,304
Debt service 699,594 - - - 699,594
Capital projects 35,000 3,406,740 - - 3,441,740
Unassigned 22,109,397 - - - 22,109,397
Total fund balances 33,034,544 3,406,740 53,810 3,193,705 39,688,799
Total liabilities and fund balances 35,397,412$ 5,461,491$ 1,553,344$ 3,725,615$ 46,137,862$
- 17 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2023
See independent auditors’ report and notes to the financial statements.
Fund balances as reported on page 16 39,688,799$
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.181,703,474
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.(74,374,084)
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unearned revenue in fund financial statements.210,158
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.6,704,755
Deferred outflows of resources related to OPEB obligations.652,043
Deferred inflows are not financial resources and, therefore, are not reported
in fund financial statements.
Deferred inflows of resources related to net pension liability.(244,927)
Deferred inflows of resources related to OPEB obligations.(3,218,050)
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. 916,008
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 (635,202)
Net pension liability (14,140,951)
OPEB obligations (3,285,567)
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements.(1,508,696)
Net position of governmental activities as reported on page 14 132,467,760$
- 18 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report and notes to the financial statements.
American Other Total
Capital Rescue Governmental Governmental
General Projects Plan Funds Funds
REVENUES
Local taxes 25,975,781$ -$ -$ 167,386$ 26,143,167$
Licenses and permits 6,292,136 - - - 6,292,136
Fines and forfeitures 298,611 - - - 298,611
Intergovernmental 1,010,555 2,242,744 198,125 720,819 4,172,243
Interest and rents 1,279,463 75,720 51,212 141,301 1,547,696
Charges for services 4,064,573 - - 1,418,399 5,482,972
Golf course revenue 1,381,262 - - - 1,381,262
Recreation department 657,288 - - - 657,288
Other 1,071,370 - - - 1,071,370
Total revenues 42,031,039 2,318,464 249,337 2,447,905 47,046,745
EXPENDITURES
General government 8,868,274 994 895 3,018 8,873,181
Public safety 8,089,175 - - - 8,089,175
Public works 5,967,032 - - - 5,967,032
Cultural and recreational 6,557,742 - - - 6,557,742
Airport Authority 320,000 - - - 320,000
Public Library Board 875,000 - - - 875,000
Debt service payments:
Principal 461,132 - - 134,804 595,936
Interest 9,009 - - 3,723 12,732
Capital outlay 2,750,087 6,505,926 - 397,268 9,653,281
Total expenditures 33,897,451 6,506,920 895 538,813 40,944,079
Excess of revenues over
(under) expenditures 8,133,588 (4,188,456) 248,442 1,909,092 6,102,666
OTHER FINANCING
SOURCES (USES)
Proceeds from sale of capital assets 157,523 - - - 157,523
Transfers in 1,130,901 4,727,550 - 138,527 5,996,978
Transfers out (3,450,583) - (198,125) (2,170,831) (5,819,539)
Total other financing
sources (uses)(2,162,159) 4,727,550 (198,125) (2,032,304) 334,962
Net change in fund balances 5,971,429 539,094 50,317 (123,212) 6,437,628
Fund balances – beginning of year 27,063,115 2,867,646 3,493 3,316,917 33,251,171
FUND BALANCES – END OF YEAR 33,034,544$ 3,406,740$ 53,810$ 3,193,705$ 39,688,799$
- 19 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report and notes to the financial statements.
Net change in fund balances – total governmental funds, page 18 6,437,628$
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. 9,645,634
Depreciation expense on governmental capital assets is included in the
capital assets in the statement of net position. (4,071,704)
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. (45,014)
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 595,936
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. 159,942
(Continued)
- 20 -
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, 2023 (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 22,864$
Accrued interest 3,203
Pensions (1,086,632)
Postemployment benefit plans other than pensions 1,521,746
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 462
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.28,016
Change in net position of governmental activities, page 15 13,212,081$
- 21 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2023
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 6,666,471$ 12,429,677$ 3,805,338$ 180,310$ 23,081,796$ 1,223,148$
Restricted cash held by fiscal agent 80,240 80,238 3,252,584 - 3,413,062 -
Receivables, net 4,613,105 324,871 1,402,149 180,790 6,520,915 165,398 Inventories 566,480 818,739 505,816 - 1,891,035 -
Prepaid items 5,077 1,580 4,737 5,543 16,937 -
Due from other funds 56,202 6,762 491,349 - 554,313 -
Total current assets 11,987,575 13,661,867 9,461,973 366,643 35,478,058 1,388,546
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 3,235,290 552,956 - - 3,788,246 -
Buildings and improvements 1,481,773 1,039,792 572,344 266,806 3,360,715 -
Vehicles and equipment 6,516,969 4,584,486 6,222,667 5,230,821 22,554,943 -
Distribution and collection systems 34,646,918 16,377,494 84,232,974 - 135,257,386 -
Less accumulated depreciation (20,028,653) (10,835,534) (33,384,979) (3,558,119) (67,807,285) -
Total noncurrent assets 33,570,567 13,347,396 57,844,218 1,939,508 106,701,689 -
Total assets 45,558,142 27,009,263 67,306,191 2,306,151 142,179,747 1,388,546
DEFERRED OUTFLOWS OFRESOURCES
Deferred charge on refunding - - 56,325 - 56,325 -
Pension related items 801,028 574,153 1,081,637 789,087 3,245,905 - OPEB related items 92,416 56,476 110,385 74,446 333,723 -
Total deferred outflows of
resources 893,444 630,629 1,248,347 863,533 3,635,953 -
LIABILITIES
Current liabilities: Accounts payable and accrued liabilities 2,090,200 477,508 2,919,266 135,908 5,622,882 265,872
Unearned revenue 136,050 35,347 983,770 - 1,155,167 13,612
Customer deposits 959,875 792,355 407,212 20,244 2,179,686 - Warrants and notes payable 41,586 41,586 1,656,828 483,382 2,223,382 -
Compensated absences 49,514 38,969 62,996 30,200 181,679 -
Due to other funds 14,055 32,652 63,861 57,178 167,746 - Net pension liability 156,500 113,868 211,778 106,770 588,916 -
Total OPEB liability 33,858 56,074 65,916 19,240 175,088 -
Total current liabilities 3,481,638 1,588,359 6,371,627 852,922 12,294,546 279,484
Noncurrent liabilities:
Compensated absences 187,215 64,123 145,709 70,026 467,073 -
Warrants and notes payable 146,746 146,746 5,846,508 496,173 6,636,173 - Net pension liability 1,684,148 1,085,664 1,833,933 1,378,347 5,982,092 -
Total OPEB liability 431,813 228,503 490,302 355,884 1,506,502 -
Total noncurrent liabilities 2,449,922 1,525,036 8,316,452 2,300,430 14,591,840 -
Total liabilities 5,931,560 3,113,395 14,688,079 3,153,352 26,886,386 279,484
DEFERRED INFLOWS OF
RESOURCES
Pension related items 29,261 20,974 39,513 28,826 118,574 - OPEB related items 456,102 278,729 544,788 367,415 1,647,034 -
Total deferred inflows of resources 485,363 299,703 584,301 396,241 1,765,608 -
NET POSITION
Net investment in capital assets 33,370,205 13,147,034 50,385,177 959,953 97,862,369 - Restricted:
Debt service 80,240 80,238 3,199,732 - 3,360,210 -
Capital improvements - - 52,852 - 52,852 - Unrestricted 6,584,218 10,999,522 (355,603) (1,339,862) 15,888,275 1,109,062
Total net position 40,034,663$ 24,226,794$ 53,282,158$ (379,909)$ 117,163,706 1,109,062$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 193,054
Net position of business-type activities 117,356,760$
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, 2023
See independent auditors’ report and notes to the financial statements.
GovernmentalWater and Activities -Electric Natural Gas Waste Water Sanitation Internal Fund Fund Fund Fund Total Service Fund
OPERATING REVENUES
Sales and services 22,189,494$ 8,730,297$ 16,617,206$ 2,845,993$ 50,382,990$ 4,679,642$
Other charges, sales and receipts 731,748 87,007 1,942,485 582 2,761,822 1,500
Total operating revenues 22,921,242 8,817,304 18,559,691 2,846,575 53,144,812 4,681,142
OPERATING EXPENSES
Energy purchases and
cost of goods sold 14,595,455 2,586,584 603,100 351,479 18,136,618 -
Salaries 1,637,202 1,070,925 2,256,297 1,152,097 6,116,521 -
Depreciation 1,148,374 563,358 2,155,922 345,589 4,213,243 -
Insurance 512,149 309,633 678,965 133,912 1,634,659 -
Electric energy furnished
to other departments 46,048 40,303 313,278 - 399,629 -
Maintenance 302,265 335,413 1,781,822 23,514 2,443,014 -
Benefit payments - - - - - 4,691,944
Other operating expense 2,156,863 1,964,281 3,438,105 1,112,681 8,671,930 -
Total operating expenses 20,398,356 6,870,497 11,227,489 3,119,272 41,615,614 4,691,944
OPERATING INCOME (LOSS)2,522,886 1,946,807 7,332,202 (272,697) 11,529,198 (10,802)
NONOPERATING
REVENUES (EXPENSES)
Interest expense (2,498) (2,498) (106,577) (26,321) (137,894) -
Interest income 274,315 440,126 423,745 12,726 1,150,912 45,081
Gain on sale of capital assets 62,275 9,748 638 121,205 193,866 -
Intergovernmental revenue 137,489 - - - 137,489 -
Distribution of joint
revenue (expense) – net - (73,559) - - (73,559) -
Other - (461) - - (461) -
Total nonoperating
revenues (expenses)471,581 373,356 317,806 107,610 1,270,353 45,081
INCOME BEFORE TRANSFERS
AND OTHER ITEMS 2,994,467 2,320,163 7,650,008 (165,087) 12,799,551 34,279
TRANSFERS AND OTHER ITEMS
Transfers in 77,652 - 246,806 738,120 1,062,578 -
Transfers out (548,484) (223,856) (329,150) (138,527) (1,240,017) -
Total transfers and other items (470,832) (223,856) (82,344) 599,593 (177,439) -
Change in net position 2,523,635 2,096,307 7,567,664 434,506 12,622,112 34,279
Net position – beginning of year 37,511,028 22,130,487 45,714,494 (814,415) 104,541,594 1,074,783
NET POSITION – END OF YEAR 40,034,663$ 24,226,794$ 53,282,158$ (379,909)$ 1,109,062$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 6,263
Change in net position of business-type activities 12,628,375$
Business-type Activities - Enterprise Funds
- 23 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2023
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 21,893,546$ 8,987,861$ 18,533,632$ 2,846,026$ 52,261,065$ -$
Receipt from interfund services provided - - - - - 4,517,335
Paid to suppliers for goods and services (17,348,297) (5,624,294) (4,907,427) (1,593,676) (29,473,694) (4,741,493)
Paid to personnel for services (1,426,287) (1,099,365) (2,213,176) (1,249,812) (5,988,640) -
Net cash provided by (used in) operating activities 3,118,962 2,264,202 11,413,029 2,538 16,798,731 (224,158)
CASH FLOWS FROM INVESTING ACTIVITIES
Distribution of joint expense - (73,559) - - (73,559) -
Interest income 274,315 440,126 423,745 12,726 1,150,912 45,081
Net cash provided by investing activities 274,315 366,567 423,745 12,726 1,077,353 45,081
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Repayment of debt (41,108) (41,108) (1,637,784) (470,760) (2,190,760) -
Interest paid (2,673) (2,673) (74,696) (26,321) (106,363) -
Proceeds from disposal of capital assets 35,275 6,776 - 121,000 163,051 -
Acquisition of capital assets (2,765,996) (1,973,256) (16,484,260) (1,152,618) (22,376,130) -
Net cash used in capital and related
financing activities (2,774,502) (2,010,261) (18,196,740) (1,528,699) (24,510,202) -
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable (51,291) 17,350 134,309 30,009 130,377 129
Change in interfund payable (783,616) (67,245) (282,303) (28,146) (1,161,310) -
Government grants 137,489 - - - 137,489 -
Net cash payments to (from) other funds (422,151) (223,856) (131,025) 599,593 (177,439) -
Net cash provided by (used in) noncapital and related
financing activities (1,119,569) (273,751) (279,019) 601,456 (1,070,883) 129
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (500,794) 346,757 (6,638,985) (911,979) (7,705,001) (178,948)
CASH AND CASH EQUIVALENTS – BEGINNING
OF YEAR 7,247,505 12,163,158 13,696,907 1,092,289 34,199,859 1,402,096
CASH AND CASH EQUIVALENTS – END OF YEAR 6,746,711$ 12,509,915$ 7,057,922$ 180,310$ 26,494,858$ 1,223,148$
Cash and cash equivalents 6,666,471$ 12,429,677$ 3,805,338$ 180,310$ 23,081,796$ 1,223,148$
Restricted cash held by fiscal agent 80,240 80,238 3,252,584 - 3,413,062 -
6,746,711$ 12,509,915$ 7,057,922$ 180,310$ 26,494,858$ 1,223,148$
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Operating income (loss) 2,522,886$ 1,946,807$ 7,332,202$ (272,697)$ 11,529,198$ (10,802)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 1,148,374 563,358 2,155,922 345,589 4,213,243 -
Proceeds from disposal of noncapital assets 27,000 2,972 638 205 30,815 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable (1,085,654) 88,131 (387,303) 1,131 (1,383,695) (165,398)
Decrease (increase) in inventories (102,682) (298,639) (246,522) - (647,843) -
Decrease (increase) in prepaid expenses 350 (12) (296) (641) (599) -
Decrease (increase) in deferred outflow of resources (397,746) (261,340) (583,045) (400,161) (1,642,292) -
Increase (decrease) in accounts payable 359,110 (88,300) 2,163,166 32,567 2,466,543 (49,549)
Increase (decrease) in customer deposits 20,673 81,107 18,465 (1,885) 118,360 -
Increase (decrease) in net unearned revenue 10,285 (1,653) 342,141 - 350,773 1,591
Increase (decrease) in deferred inflow of resources 110,882 (30,017) (35,361) (99,893) (54,389) -
Increase (decrease) in net pension liability 726,595 559,608 1,142,964 853,689 3,282,856 -
Increase (decrease) in compensated absences (27,011) (5,098) (1,523) (5,777) (39,409) -
Increase (decrease) in net OPEB obligation (194,100) (292,722) (488,419) (449,589) (1,424,830) -
Net cash provided by (used in) operating activities 3,118,962$ 2,264,202$ 11,413,029$ 2,538$ 16,798,731$ (224,158)$
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, 2023
See independent auditors’ report and notes to the financial statements.
Public Library Airport
Board Authority Total
ASSETS
Cash 717,758$ 311,827$ 1,029,585$
Receivables, net - 315,104 315,104
Prepaid items 7,169 41,912 49,081
Capital assets not being depreciated:
Land - 10,674,228 10,674,228
Construction in progress 184,744 319,785 504,529
Capital assets net of accumulated
depreciation:
Buildings and improvements - 8,479,749 8,479,749
Vehicles and equipment 60,521 31,234 91,755
Runways - 16,270,731 16,270,731
Total assets 970,192 36,444,570 37,414,762
DEFERRED OUTFLOWS OF
RESOURCES
Pension related items 224,802 - 224,802
Total assets and deferred
outflows of resources 1,194,994$ 36,444,570$ 37,639,564$
LIABILITIES
Accounts payable and accrued liabilities 22,966$ 91,797$ 114,763$
Unearned revenue - 25,884 25,884
Customer deposits - 34,000 34,000
Net pension liability 60,021 - 60,021
Long-term liabilities:
Due within one year - 275,000 275,000
Due in more than one year - 5,695,629 5,695,629
Net pension liability 547,101 - 547,101
Total liabilities 630,088 6,122,310 6,752,398
DEFERRED INFLOWS OF
RESOURCES
Pension related items 22,645 - 22,645
Service concession arrangement revenue
applicable to future years - 6,162,520 6,162,520
Total deferred inflows of resources 22,645 6,162,520 6,185,165
NET POSITION
Net investment in capital assets 245,265 29,805,098 30,050,363
Restricted:
Library improvements 205,687 - 205,687
Unrestricted 91,309 (5,645,358) (5,554,049)
Total net position 542,261 24,159,740 24,702,001
Total liabilities, deferred inflows of
resources, and net position 1,194,994$ 36,444,570$ 37,639,564$
- 25 - CITY OF FAIRHOPE, ALABAMA COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2023 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Governmental Business-typeFunctions/Programs Expenses Services Contributions Contributions Activities Activities TotalGovernmental activities:Public Library Board958,938$ 120,788$ 902,004$ -$ 63,854$ -$ 63,854$ Business-type activities:Airport Authority1,019,591 356,245 568,630 253,365 - 158,649 158,649 1,978,529$ 477,033$ 1,470,634$ 253,365$ 63,854 158,649 222,503 General revenues:Other- 13,005 13,005 Total general revenues - 13,005 13,005 Change in net position63,854 171,654 235,508 Net position – beginning478,407 23,988,086 24,466,493 Net position – ending542,261$ 24,159,740$ 24,702,001$ Changes in Net PositionProgram RevenuesNet (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, 2023
(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 has its own governing body which operates the
City public library and is appointed by the City Council. The City provides significantly all the
annual operating financial support to the Library. The Library's other sources of revenue come
from State financial assistance, gifts, bequests and user fees. The Library is reported as a
governmental component unit. The Library Board does not issue separate financial statements.
Fairhope Airport Authority – The Authority operates the City Airport and has its own governing
body which is appointed by the City Council. The City provides a significant portion of the annual
operating funds 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, 2023
(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, 2023
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. BASIS OF PRESENTATION – GOVERNMENT-WIDE AND FUND LEVEL (CONTINUED)
Debt Service Fund – Debt service funds are used to account for the payment of interest and
principal on general long-term warrants and notes not accounted for in the proprietary funds.
Capital Project Fund – Capital project funds are used to account for the financial resources used to
construct or acquire major capital items (other than those financed by proprietary funds).
Enterprise Funds:
The Electric Fund, Natural Gas Fund, 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, 2023
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. MAJOR FUNDS
The City reports the following major Governmental funds:
General Fund
Capital Projects Fund
American Rescue Plan Fund
The City reports the following enterprise funds as major funds:
Electric Fund
Natural Gas Fund
Water and Waste Water Fund
Sanitation Fund
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term
investments with original maturities of three months or less from the date of acquisition.
The City maintains a system in which some excess cash is placed in interest bearing accounts. Cash
applicable to a particular fund is readily identifiable. Interest earned is allocated to each fund based
upon the proportionate balances of each fund’s cash in the account.
For purposes of the 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, 2023
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. RECEIVABLES AND PAYABLES (CONTINUED)
All ad valorem taxes levied by the state, county and any municipality in Baldwin County are
assessed and collected by the Revenue Commissioner of Baldwin County. The Baldwin County
property tax calendar requires the Revenue Commissioner to assess and attach taxes as enforceable
liens on property as of September 30, and taxes are due October 1 through December 31. Property
taxes not paid by January 1 are considered as delinquent. Tax collections received by the County
Revenue Commissioner are remitted to the City monthly. In accordance with GASB Statement No.
33, revenue is recorded based upon taxes assessed and considered available.
G. INVENTORIES AND PREPAID ITEMS
Inventories are stated at cost using the average cost method. Inventories of governmental funds are
recorded as expenditures when consumed rather than when purchased.
Inventories are summarized as follows:
Governmental Business-type
Activities Activities Total
Fuel 61,853$ 13,015$ 74,868$
Materials and supplies 103,516 1,878,020 1,981,536
Totals 165,369$ 1,891,035$ 2,056,404$
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, 2023
(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, 2023
(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, 2023 totaled $4,967,157. 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, 2023
(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, 2023
(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, 2023
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
O. SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS
For the year ended September 30, 2023, GASB Statement No. 96, Subscription-Based
Information Technology Arrangement was effective for the City. The primary objective of this
statement is to enhance the relevance and consistency of information about subscription activities.
This statement establishes a single model for subscription accounting based on the principle that
subscriptions are financings of the right to use an underlying asset. Under this statement, an
organization is required to recognize a subscription liability and an intangible right-to-use
subscription asset. GASB Statement No. 96 implementation was assessed and determined not
material to the financial statements.
P. 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.
Q. 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.
R. 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.
S. SUBSEQUENT EVENTS
The City has evaluated subsequent events through March 8, 2024, the date which the financial
statements were available to be issued. There were no material subsequent events which require
disclosure at September 30, 2023.
- 36 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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.
Deficit Fund Balance
Funds with deficit fund balance or net position are as follows:
Deficit
Amount
Sanitation 379,909$
NOTE 3 DEPOSIT AND INVESTMENT RISK
At September 30, 2023, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $3,413,062. The average
maturity of the portfolio was 32 days.
Investment Risk – The City does not have a formal investment policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk – State statutes authorize the City’s investments. The City is authorized to invest in U.S.
Government obligations and its agencies or instrumentalities, direct obligations of the state, or SEC
registered mutual funds. The City has no investment policy that further limits investment choices. As of
September 30, 2023, the City’s mutual fund investments principal stability rating was AAAm as
reported by Standard & Poor’s.
- 37 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 3 DEPOSIT AND INVESTMENT RISK (CONTINUED)
Custodial Credit Risk – The City is a participant in the Security for Alabama Funds Enhancement
(SAFE) Program, a multiple financial institution collateral pool, administered by the State of Alabama.
The program, by law, provides administration of pledged collateral coverage for all governments and
agencies in the State and requires qualified financial institutions to provide collateral to the
administrator adequate to secure all deposits of public funds in that financial institution. The State
guarantees deposits identified as “public funds” will be adequately secured by insurance or collateral.
Any collateral shortages of one financial institution are assessed to other member financial institutions.
NOTE 4 RECEIVABLES
Receivables as of September 30, 2023, for the government’s individual major and nonmajor funds, and
the discretely presented components units, including the applicable allowances for uncollectable
accounts, are as follows:
Nonmajor
Capital Governmental Natural
General Projects Funds Electric Gas
Taxes 3,061,089$ -$ 25,396$ -$ -$
Accounts 29,091 - - 4,731,767 365,875
Intergovernmental 614,909 460,179 381,984 152,124 191
3,705,089 460,179 407,380 4,883,891 366,066
Less allowance for uncollectable
accounts (1,477,502) - - (270,786) (41,195)
Total receivables 2,227,587$ 460,179$ 407,380$ 4,613,105$ 324,871$
Water and
Waste Water Sanitation Airport
Fund Fund Authority Total
Taxes -$ -$ -$ 3,086,485$
Accounts 1,634,826 215,767 10,716 6,988,042
Intergovernmental 2,808 - 304,388 1,916,583
1,637,634 215,767 315,104 11,991,110
Less allowance for uncollectable
accounts (235,485) (34,977) - (2,059,945)
Total receivables 1,402,149$ 180,790$ 315,104$ 9,931,165$
- 38 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2023 is shown below.
Due to/from other funds
Receivable Fund Payable Fund Amount
General Natural Gas 32,652$
Electric 1,200
Capital Projects 97,632
Water and Waste Water 63,842
Sanitation 57,178
Nonmajor Governmental 47,055
Electric General 23,279
Capital Projects 32,923
Natural Gas Electric 6,743
Water and Waste Water 19
Water and Waste Water Electric 6,112
American Rescue Plan 198,125
Nonmajor Governmental 287,112
Total 853,872$
Interfund Transfers
Capital Nonmajor Water and
General Projects Governmental Electric Waste Water Sanitation Total
General -$ 2,712,463$ -$ -$ -$ 738,120$ 3,450,583$
American Rescue Plan - - - - 198,125 - 198,125
Nonmajor Governmental 155,744 2,015,087 - - - - 2,170,831
Electric 499,803 - - - 48,681 - 548,484
Natural Gas 185,030 - - 38,826 - - 223,856
Water and Waste Water 290,324 - - 38,826 - - 329,150
Sanitation - - 138,527 - - - 138,527
Totals 1,130,901$ 4,727,550$ 138,527$ 77,652$ 246,806$ 738,120$ 7,059,556$
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, 2023
(continued)
NOTE 6 CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2023 was as follows:
Beginning Ending
Balance Increases Decreases Transfers Balance
Governmental Activities
Capital assets not subject
to depreciation:
Land 27,743,658$ -$ -$ -$ 27,743,658$
Construction in progress 4,618,117 6,649,315 - (4,981,781) 6,285,651
Total 32,361,775 6,649,315 - (4,981,781) 34,029,309
Other capital assets:
Buildings and improvements 44,820,831 827,976 - 1,527,191 47,175,998
Vehicles and equipment 18,203,258 1,562,583 (427,333) 176,608 19,515,116
Infrastructure 77,010,826 605,760 - 3,366,465 80,983,051
Total 140,034,915 2,996,319 (427,333) 5,070,264 147,674,165
Less accumulated depreciation for:
Buildings and improvements (17,404,771) (1,245,255) - - (18,650,026)
Vehicles and equipment (13,721,508) (1,251,239) 382,319 (88,021) (14,678,449)
Infrastructure (39,470,399) (1,575,210) - - (41,045,609)
Total accumulated depreciation (70,596,678) (4,071,704) 382,319 (88,021) (74,374,084)
Other capital assets, net 69,438,237 (1,075,385) (45,014) 4,982,243 73,300,081
Governmental capital assets, net 101,800,012$ 5,573,930$ (45,014)$ 462$ 107,329,390$
Depreciation was charged to governmental activities as follows:
General government 655,547$
Public safety 574,619
Public works 1,763,601
Cultural and recreational 872,596
Library 205,341
Total 4,071,704$
- 40 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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 4,695,912 3,407,760 - (4,315,426) 3,788,246
Total 14,207,506 3,407,760 - (4,315,426) 13,299,840
Other capital assets:
Buildings and improvements 3,143,932 216,783 - - 3,360,715
Vehicles and equipment 20,013,301 2,993,837 (363,711) (88,484) 22,554,943
Distribution and collection system 115,184,209 15,757,751 - 4,315,426 135,257,386
Total 138,341,442 18,968,371 (363,711) 4,226,942 161,173,044
Less accumulated depreciation for:
Buildings and improvements (1,720,981) (63,770) - - (1,784,751)
Vehicles and equipment (15,562,369) (1,338,771) 363,711 88,022 (16,449,407)
Distribution and collection system (46,762,425) (2,810,702) - - (49,573,127)
Total accumulated depreciation (64,045,775) (4,213,243) 363,711 88,022 (67,807,285)
Other capital assets, net 74,295,667 14,755,128 - 4,314,964 93,365,759
Capital assets, net 88,503,173$ 18,162,888$ -$ (462)$ 106,665,599$
Component Unit – Public Library Board
Capital assets not subject to depreciation:
Construction in progress 184,744$ -$ -$ -$ 184,744$
Other capital assets:
Vehicles and equipment 553,875 23,659 - - 577,534
Less accumulated depreciation (505,028) (11,985) - - (517,013)
Capital assets, net 233,591$ 11,674$ -$ -$ 245,265$
Component Unit – Airport Authority
Capital assets not subject to depreciation:
Land 10,674,228$ -$ -$ -$ 10,674,228$
Construction in progress 160,864 217,741 (58,820) - 319,785
Total 10,835,092 217,741 (58,820) - 10,994,013
Other capital assets:
Buildings and improvements 12,582,183 - - - 12,582,183
Vehicles and equipment 139,345 - - - 139,345
Runways 19,387,153 - - - 19,387,153
Total 32,108,681 - - - 32,108,681
Less accumulated depreciation for:
Buildings and improvements (3,794,700) (307,734) - - (4,102,434)
Vehicles and equipment (104,065) (4,046) - - (108,111)
Runways (2,857,927) (258,495) - - (3,116,422)
Total accumulated depreciation (6,756,692) (570,275) - - (7,326,967)
Other capital assets, net 25,351,989 (570,275) - - 24,781,714
Capital assets, net 36,187,081$ (352,534)$ (58,820)$ -$ 35,775,727$
- 41 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 7 LONG-TERM DEBT
Long-term debt activity for the year ended September 30, 2023:
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES
Notes payable 1,231,138$ -$ (595,936)$ 635,202$ 465,449$
Compensated absences 1,531,560 855,198 (878,062) 1,508,696 392,977
Governmental activities
long-term liabilities 2,762,698 855,198 (1,473,998) 2,143,898 858,426
BUSINESS-TYPE ACTIVITIES
Direct placements 9,600,000 - (1,720,000) 7,880,000 1,740,000
Notes payable 1,450,315 - (470,760) 979,555 483,382
Compensated absences 688,161 463,956 (503,365) 648,752 181,679
Business-type activities
long-term liabilities 11,738,476 463,956 (2,694,125) 9,508,307 2,405,061
Total long-term debt 14,501,174$ 1,319,154$ (4,168,123)$ 11,652,205$ 3,263,487$
Notes Payable – Governmental Activities
Notes payable at September 30, 2023 is comprised of the following:
300,000$
335,202
635,202$
Note payable with Baldwin County Board of Education dated
November 25, 2019, original obligation of $1,500,000, interest
rate 0.00%, principal payments through July 1, 2024.
Note payable with United Bank dated September 28, 2022,
original obligation of $496,404, interest rate 1.403%, principal
payments through September 28, 2025. The note is collateralized
by the underlying equipment purchased.
- 42 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Notes Payable – Governmental Activities (Continued)
The following schedule illustrates debt service to maturity for the note payable at September 30, 2023:
Year
Ending
September 30, Principal Interest Total
2024 465,449$ 4,690$ 470,139$
2025 169,753 2,355 172,108
635,202$ 7,045$ 642,247$
Warrants from Direct Placements – Business-type Activities
The following is a summary of warrants from direct placement in proprietary funds as of September 30,
2023:
7,880,000$
Utilities Revenue Warrants, Series 2020 dated September 30,
2020, original debt obligation of $11,565,000, interest rate 1.28%,
payable semi-annually, principal payable December 1, 2020
through December 1, 2030.
Revenue warrants from the proprietary funds were for the purpose of financing, or refinancing, new
water tanks, new water wells, UV Sewer System, new booster pump, radio system, support tower, phone
system, construction of warehouse building and mechanics shop, and extensions to the City’s water and
sewer lines. The revenue warrants are secured by a pledge of future utility revenues.
The City’s outstanding warrants from direct placement related to business-type activities of $7,880,000
contain a provision that in event of default, outstanding amounts become due immediately if the City is
unable to make payment.
- 43 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Warrants from Direct Placements – Business-type Activities (Continued)
The following schedule illustrates debt service to maturity for warrants from direct placement in
proprietary funds at September 30, 2023:
Year
Ending
September 30, Principal Interest Total
2024 1,740,000$ 89,728$ 1,829,728$
2025 1,765,000 67,296 1,832,296
2026 1,785,000 44,576 1,829,576
2027 505,000 29,920 534,920
2028 510,000 23,424 533,424
2029-2032 1,575,000 30,496 1,605,496
7,880,000$ 285,440$ 8,165,440$
Direct Placements
Business-type Activities
Sinking Funds
The cash and investments in these sinking funds (bond, reserve, and replacement funds) are restricted as
to their use in accordance with their respective bond indentures. Amounts in bond funds are included in
current assets, while amounts in reserve funds are separately listed as restricted assets.
Note Payable – Business-type Activities
Note payable in proprietary funds at September 30, 2023 is comprised of the following:
979,555$
Note payable with United Bank dated September 28, 2022,
original obligation of $1,450,315, interest rate 1.403%, principal
payments through September 28, 2025. The note is collateralized
by the underlying equipment purchased.
- 44 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Note Payable – Business-type Activities (Continued)
The following schedule illustrates debt service to maturity for the note payable in proprietary funds at
September 30, 2023:
Year
Ending
September 30, Principal Interest Total
2024 483,382$ 13,701$ 497,083$
2025 496,173 6,880 503,053
979,555$ 20,581$ 1,000,136$
Bond from Direct Placements – Component Units
The following is a summary of the long-term debt of the Airport Authority as of September 30, 2023:
5,970,629$
Airport Improvement Refunding Bond, Series 2021, dated March
16, 2021, original debt obligation of $6,695,629, interest rate
1.14%, principal payable annually through September 1, 2027.
The Airport Improvement Refunding Bond, Series 2021, is secured by a pledge of payments received
from the City pursuant to the 2020 Funding Agreement, dated March 16, 2021. The 2021 Funding
Agreement states the City shall appropriate to the Airport Authority the amount needed to satisfy the
annual debt service of the Airport Improvement Refunding Bond, Series 2021.
- 45 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Bond from Direct Placements – Component Units (Continued)
The following is a summary of debt service requirements to maturity of long-term debt of the Airport
Authority as of September 30, 2023:
Year
Ending
September 30, Principal Interest Total
2024 275,000$ 68,065$ 343,065$
2025 275,000 64,930 339,930
2026 275,000 61,795 336,795
2027 5,145,629 114,185 5,259,814
5,970,629$ 308,975$ 6,279,604$
Direct Placements
Component Units
The Airport Authority’s outstanding bond from direct placement of $5,970,629 contains a provision that
in event of default, outstanding amounts become due immediately if the Airport Authority is unable to
make payment.
NOTE 8 SALARIES – PROPRIETARY FUNDS
The following is a summary of employees’ salaries for the business-type activities for the year ended
September 30, 2023:
Water and
Electric Natural Gas Waste Water Sanitation
Fund Fund Fund Fund
Total salaries 1,781,389$ 1,185,377$ 2,318,496$ 1,157,874$
Less:
Salaries capitalized for plant additions 144,187 114,452 62,199 5,777
Salaries charged to operations 1,637,202$ 1,070,925$ 2,256,297$ 1,152,097$
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.
- 46 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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.
- 47 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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 608 employers adopted Act
2019-132 as of September 30, 2022.
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.
- 48 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Benefits Provided (Continued)
The ERS serves approximately 886 local participating employers. The ERS membership includes
approximately 108,890 participants. As of September 30, 2022, membership consisted of:
ERS City Library
Retirements and beneficiaries currently receiving benefits 30,598 124 7
Terminated employees entitled to but not yet receiving benefits 2,286 19 1
Terminated employees not entitled to a benefit 18,689 85 10
Active members 57,278 342 14
Post-DROP participants who are still in active service 39 - -
Totals 108,890 570 32
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, 2022, the City’s active employee contribution rate was 8.00% of covered employee payroll. The
Fairhope Public Library’s active employee contribution rate was 7.00% of covered employee payroll.
- 49 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Contributions (Continued)
The City’s contractually required contribution rate for the year ended September 30, 2023, was 9.19% of
pensionable pay for Tier 1 employees, and 7.44% of pensionable pay for Tier 2 employees. The Fairhope
Public Library’s contractually required contribution rate for the year ended September 30, 2023, 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, 2020, 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 $2,115,616 and $60,021 from the Fairhope Public Library for the
year ended September 30, 2023.
Net Pension Liability
The City’s and Fairhope Public Library’s net pension liabilities were measured as of September 30,
2022, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of September 30, 2021 rolled forward to September 30, 2022 using standard roll-
forward techniques as shown in the following table:
City of Fairhope
Expected Actual
(a) Total pension liability for September 30, 2021 57,425,731$ 58,273,420$
(b) Discount rate 7.45%7.45%
(c) Entry age normal cost for the period
October 1, 2021 to September 30, 2022 1,590,312 1,591,965
(d) Transfer among employers - 99,916
(e) Actual benefit payments and refunds for
October 1, 2021 to September 30, 2022 (3,206,894) (3,206,894)
(f) Total Pension Liability as of September 30, 2022
[(a) x (1.0745)] + (c) + (d) + [(e) x (1.03725)] 59,967,609$ 60,980,320$
(g) Difference between expected and actual 1,012,711$
(h) Less liability transferred for immediate recognition -
(i) Experience (gain)/loss 1,012,711$
- 50 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Net Penson Liability (Continued)
Fairhope Public Library
Expected Actual
(a) Total pension liability for September 30, 2021 1,658,657$ 1,638,489$
(b) Discount rate 7.70%7.45%
(c) Entry age normal cost for the period
October 1, 2021 to September 30, 2022 38,120 38,120
(d) Transfer among employers - -
(e) Actual benefit payments and refunds for
October 1, 2021 to September 30, 2022 (93,192) (93,192)
(f) Total Pension Liability as of September 30, 2022
[(a) x (1.0745)] + (c) + (d) + [(e) x (1.03725)] 1,723,684$ 1,702,013$
(g) Difference between expected and actual (21,671)$
(h) Less liability transferred for immediate recognition -
(i) Experience (gain)/loss (21,671)$
Actuarial Assumptions
The total pension liability as of September 30, 2022, was determined based on the annual actuarial
funding valuation report prepared as of September 30, 2021. 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
- 51 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2021 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%
- 52 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2021 57,425,731$ 46,817,503$ 10,608,228$
Changes for the year:
Service cost 1,590,312 - 1,590,312
Interest 4,158,760 - 4,158,760
Changes of assumptions 48,529 - 48,529
Differences between expected
and actual experience 863,966 - 863,966
Contributions – employer - 1,361,751 (1,361,751)
Contributions – employee - 1,145,173 (1,145,173)
Net investment income - (5,949,088) 5,949,088
Benefit payments, including refunds
of employee contributions (3,206,894) (3,206,894) -
Transfers among employers 99,916 99,916 -
Net Changes 3,554,589 (6,549,142) 10,103,731
Balances at September 30, 2022 60,980,320$ 40,268,361$ 20,711,959$
- 53 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2021 1,658,657$ 1,271,482$ 387,175$
Changes for the year:
Service cost 38,120 - 38,120
Interest 120,099 - 120,099
Changes of assumptions - - -
Differences between expected
and actual experience (21,671) - (21,671)
Contributions – employer - 49,766 (49,766)
Contributions – employee - 28,488 (28,488)
Net investment income - (161,653) 161,653
Benefit payments, including refunds
of employee contributions (93,192) (93,192) -
Transfers among employers - - -
Net Changes 43,356 (176,591) 219,947
Balances at September 30, 2022 1,702,013$ 1,094,891$ 607,122$
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 28,214,156$ 20,711,959$ 14,447,530$
Net pension liability, Fairhope Public Library 757,692$ 607,122$ 478,404$
- 54 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2022. The
supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared
as of September 30, 2022. 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, 2023, the City recognized pension expense of $1,484,806 while the
Fairhope Public Library recognized pension expense of $29,617. The fund in which the related payroll
costs are expended will be used to liquidate the net pension liability. At September 30, 2023, the City and
Fairhope Public Library reported deferred outflows of resources and deferred inflows of resources,
respectively, related to pensions of the following sources:
City of Fairhope
Governmental Business-type
Activities Activities Total
Deferred Outflows of Resources:
Differences between expected and actual experience 1,358,405$ 657,630$ 2,016,035$
Changes of assumption 1,010,781 489,339 1,500,120
Net difference between projected and actual earnings
on plan investments 3,267,994 1,582,101 4,850,095
Employer contributions subsequent to measurement date 1,067,575 516,835 1,584,410
Total 6,704,755$ 3,245,905$ 9,950,660$
Deferred Inflows of Resources:
Differences between expected and actual experience 244,927$ 118,574$ 363,501$
Changes of assumption - - -
Total 244,927$ 118,574$ 363,501$
- 55 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions (Continued)
Other than employer contributions subsequent to the measurement date, amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Year Ending
September 30,
2024 1,884,130$
2025 1,530,288
2026 1,494,871
2027 2,531,242
2028 521,074
Thereafter 41,144
8,002,749$
Fairhope Public Library
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience 6,711$ 22,645$
Changes of assumption 26,710 -
Net difference between projected and actual earnings
on plan investments 131,418 -
Employer contributions subsequent to measurement date 59,963 -
Total 224,802$ 22,645$
- 56 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions (Continued)
Other than employer contributions subsequent to the measurement date, amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Year Ending
September 30,
2024 46,959$
2025 29,060
2026 15,537
2027 50,638
2028 -
Thereafter -
142,194$
NOTE 11 COMMITMENTS
The City has various contractual commitments outstanding at year end. The commitments under these
contracts totaled $19,923,506. The commitments funded from governmental activities will be
$3,580,818 and from business-type activities will be $16,342,688.
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.
- 57 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
GASB Statement No. 75, Accounting and Financial Reporting by Employers for Post-Employment
Benefits Other Than Pensions, requires governments to account for other post-employment benefits
(OPEB) on an accrual basis, rather than on a pay-as-you-go basis. The effect is the recognition of an
actuarially determined expense when a future retiree earns their post-employment benefits, rather than
when they use their post-employment benefit. The total OPEB liability is recorded at the fund level for
proprietary activities and the allocated amount for governmental activities is presented at the
government-wide level. The annual OPEB cost is included in the line item of salaries for proprietary
fund statements and is allocated by function for governmental activities on the government-wide
financial statements.
General Information About the OPEB Plan
Plan Description. The Plan is a single-employer defined benefit healthcare plan administered and
governed solely by the City. The City has the authority to establish and amend benefit provisions. No
assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 and a
separate report was not issued for the plan.
Benefits Provided. The City provides a comprehensive medical plan to eligible retirees and their spouses
through the City’s group health insurance plan, which covers both active and retired members.
Employees Covered by Benefit Terms. At September 30, 2020, the following employees were covered by
the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 34
Active members 79
Totals 113
Total OPEB Liability
The City’s total OPEB liability of $4,967,157 was measured as of September 30, 2022 and was
determined by an actuarial valuation as of September 30, 2021.
- 58 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(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, 2022 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 2.26%
Measurement date 4.02%
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.
- 59 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Changes in Total OPEB Liability
Total OPEB
Liability
Balance at September 30, 2022 9,924,051$
Changes for the year:
Service cost 317,799
Interest 219,910
Differences between expected
and actual experience (4,675,601)
Changes of assumptions or other inputs (429,781)
Benefit payments (389,221)
Net Changes (4,956,894)
Balance at September 30, 2023 4,967,157$
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 (3.02%) or 1-
percentage-point higher (5.02%) than the current discount rate:
1% Decrease Current Rate 1% Increase
(3.02%) (4.02%) (5.02%)
Total OPEB liability 5,300,209$ 4,967,157$ 4,653,578$
- 60 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-
percentage-point higher than the current healthcare cost trend rates:
1% Decrease Current Rate 1% Increase
Total OPEB liability 4,576,305$ 4,967,157$ 5,407,543$
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB
For the year ended September 30, 2023, the City recognized OPEB expense of $389,221. The fund in
which the related payroll costs are expended will be used to liquidate the total OPEB liability. At
September 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Governmental Business-type
Activities Activities Total
Deferred Outflows of Resources:
Differences between expected and actual experience 123,805$ 63,365$ 187,170$
Changes of assumption 285,681 146,215 431,896
Employer contributions subsequent to measurement date 242,557 124,143 366,700
Total 652,043$ 333,723$ 985,766$
Deferred Inflows of Resources:
Differences between expected and actual experience 2,643,431$ 1,352,938$ 3,996,369$
Changes of assumption 574,619 294,096 868,715
Total 3,218,050$ 1,647,034$ 4,865,084$
- 61 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB (Continued)
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,
2023 (1,482,827)$
2024 (1,268,756)
2025 (1,382,092)
2026 (112,343)
2027 -
Thereafter -
(4,246,018)$
NOTE 14 OPERATING LEASES
The City holds various leases with entities for use of City property. Most of these leases are monthly and
insignificant. In addition, the City rents certain facilities to groups for events and activities on a per use
basis.
NOTE 15 SERVICE CONCESSION ARRANGEMENT
In fiscal year 2014, the Airport Authority entered into an agreement with the Baldwin County Board of
Education (BCBOE), under which the BCBOE will operate and collect tuition from the aviation training
facility at the airport for the next 40 years with an automatic extension of 5 years unless written notice is
received six months prior to the expiration of the initial term. BCBOE paid the City $2,700,000 upon
execution of the arrangement. The initial payment was used in the construction of the aviation training
facility. The initial payment was considered a deferred inflow of resources and rental revenue will be
recognized over the life of the initial term of the lease. Upon receipt, the City reported a cash balance in
the construction fund of $2,700,000 with a corresponding balance of $2,700,000 as a deferred inflow of
resources pursuant to the service concession arrangement. The balance of the deferred inflow of resources
is $2,025,000 at September 30, 2023.
- 62 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 15 SERVICE CONCESSION ARRANGEMENT (CONTINUED)
In fiscal year 2015, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 25 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $12,750 to the Airport
Authority and also required them to invest at least $850,000 in capital improvements on the premises
during the first year of the lease. The total value of the capital improvements, $1,091,254 was considered
a deferred inflow of resources and rent revenue will be recognized over the life of the term of the lease.
The Airport Authority reports the capital improvements as a capital asset and it is depreciated in
accordance with the Airport Authority's depreciation policy. Upon completion in fiscal year 2015, the
Airport Authority reported a capital improvement in the amount of $1,091,254 with a corresponding
balance of $1,091,254 as a deferred inflow of resources pursuant to the service concession arrangement.
The balance of the deferred inflow of resources is $698,403 at September 30, 2023.
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 $688,285 at September 30, 2023.
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 $1,235,929 at September 30, 2023.
- 63 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 15 SERVICE CONCESSION ARRANGEMENT (CONTINUED)
In fiscal year 2020, the Airport Authority entered into an agreement with a private company under which
the private company leased space at the airport for the next 30 years. The private company’s lease
agreement with the Airport Authority requires monthly rents in the amount of $3,362 to the Airport
Authority and also required them to invest in capital improvements on the premises during the first 18
months of the lease. The total value of the capital improvements, $450,000 was considered a deferred
inflow of resources and rent revenue will be recognized over the life of the term of the lease. The Airport
Authority reports the capital improvements as a capital asset and it is depreciated in accordance with the
Airport Authority's depreciation policy. Upon completion in fiscal year 2020, the Airport Authority
reported a capital improvement in the amount of $450,000 with a corresponding balance of $450,000 as a
deferred inflow of resources pursuant to the service concession arrangement. The balance of the deferred
inflow of resources is $390,000 at September 30, 2023.
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 $460,800 at September 30, 2023.
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 $664,103 at September 30, 2023.
- 64 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(continued)
NOTE 16 FAIR VALUE DISCLOSURES
Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those
that GASB Statements require or permit in the statement of net position at the end of each reporting
period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s
fair value.
Level 1 inputs are quoted prices in active markets for identical assets.
Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Investments’ fair value measurements are as follows at September 30, 2023:
Level 1 Level 2 Level 3 Total
Treasury portfolio 3,413,062$ -$ -$ 3,413,062$
AMIC Insurance - - 36,090 36,090
Total 3,413,062$ -$ 36,090$ 3,449,152$
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 total property tax abated for the year ended September 30, 2023 totaled $11,011.
The City does not collect property taxes. The Revenue Commissioner of Baldwin County is responsible
for such collection.
- 65 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
NOTE 18 EFFECT OF NEW PRONOUNCEMENTS
Management has not currently determined what, if any, impact implementation of the following
statements may have on the financial statements of the City.
GASB 100, Accounting Changes and Error Corrections. This Statement prescribes accounting and
financial reporting for each category of accounting change and error corrections. Requirements for this
Statement are effective for financial statements whose fiscal year begins after June 15, 2023.
GASB 101, Compensated Absences. This Statement aligns recognition and measurement guidance for
all types of compensated absences under a unified model which will result in governments recognizing
a liability that more appropriately reflects when they incur an obligation for compensated absences.
Requirements for this Statement are effective for financial statements whose fiscal year begins after
December 15, 2023.
THIS PAGE INTENTIONALLY LEFT BLANK
REQUIRED SUPPLEMENTARY INFORMATION
- 66 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
City of Fairhope
2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 2,115,616$ 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 2,115,616 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 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%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 2023 were based on the September 30, 2020
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 23.1 years
Asset valuation method Five year smoothed market
Inflation 2.75%
Salary increases 3.25% – 5.00%, including
inflation
Investment rate of return 7.45%, net of pension
plan investment
expense, including
inflation
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015 through 2023.
- 67 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
Fairhope Public Library
2023 2022 2021 2020 2019 2018 2017 2016
Actuarially determined contribution 60,021$ 58,907$ 40,428$ 33,956$ 33,677$ 34,636$ 41,630$ 39,481$
Contributions in relation to the actuarially
determined contribution 60,021 58,907 40,428 33,956 33,677 34,636 41,630 39,481
Contribution deficiency (excess)-$ -$ -$ -$ -$ -$ -$ -$
Covered payroll 529,976$ 537,297$ 478,807$ 473,525$ 501,964$ 489,687$ 486,684$ 426,252$
Contributions as a percentage of covered
payroll 11%11%8%7%7%7%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 2023 were based on the September 30, 2020
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 23.1 years
Asset valuation method Five year smoothed market
Inflation 2.75%
Salary increases 3.25% – 5.00%, including
inflation
Investment rate of return 7.70%, net of pension
plan investment
expense, including
inflation
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2016 through 2023.
- 68 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2022 2021 2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 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 4,158,760 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 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 (3,206,894) (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 99,916 176,817 426,549 40,780 (113,767) (317,929) (76,441) - -
Net change in total pension liability 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 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)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 1,361,751$ 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 1,145,173 1,057,424 913,202 807,355 796,436 679,081 680,391 621,817 599,215
Net investment income (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 (3,206,894) (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 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 (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 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)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)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 66.04% 81.53% 74.77% 76.31% 79.92% 76.28% 71.67% 71.00% 75.01%
Covered payroll 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 118%65%81%78%69%83%95%100%84%
City of Fairhope
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2014 through 2022.
- 69 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2022 2021 2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 38,120$ 27,256$ 32,407$ 29,287$ 28,941$ 31,457$ 37,134$ 37,305$ 36,648$
Interest 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 (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 (93,192) (77,468) (65,814) (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers - - - (12,994) - - - - -
Net change in total pension liability 43,356 119,469 117,098 51,601 67,530 74,491 154,750 (18,628) 67,716
Total pension liability – beginning 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)1,702,013$ 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 49,766$ 39,288$ 32,554$ 33,178$ 33,039$ 40,040$ 39,583$ 43,472$ 43,802$
Contributions – member 28,488 25,137 44,410 23,823 22,728 22,527 21,976 20,166 19,155
Net investment income (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 (93,192) (77,468) (65,814) (56,829) (56,340) (55,417) (58,555) (129,622) (48,791)
Transfers among employers - - - (12,994) - - - - -
Net change in plan fiduciary net position (176,591) 219,187 67,730 11,987 81,836 107,850 75,227 (57,300) 95,284
Plan net position – beginning 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)1,094,891$ 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)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 64.33% 76.66% 68.37% 69.23% 70.97% 68.36% 63.73% 65.91% 70.16%
Covered payroll 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 135% 92% 122% 99% 86% 95% 98% 89% 85%
Fairhope Public Library
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2014 through 2022.
- 70 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN TOTAL OPEB LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2022 2021 2020 2019 2018 2017
Total OPEB liability
Service cost 317,799$ 307,242$ 283,527$ 203,973$ 401,209$ 441,966$
Interest 219,910 231,803 250,165 340,720 442,731 371,696
Differences between expected and actual
experience (4,675,601) (227,382) 462,366 85,836 (4,733,827) 2,650
Changes in assumptions (429,781) (730,010) 431,719 1,071,768 45,224 (757,435)
Benefit payments (389,221) (291,262) (395,053) (499,978) (313,549) (373,128)
Net change in total OPEB liability (4,956,894) (709,609) 1,032,724 1,202,319 (4,158,212) (314,251)
Total OPEB liability – beginning 9,924,051 10,633,660 9,600,936 8,398,617 12,556,829 12,871,080
Total OPEB liability – ending 4,967,157$ 9,924,051$ 10,633,660$ 9,600,936$ 8,398,617$ 12,556,829$
Covered employee payroll 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 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 2022.
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 2023.
Changes of assumptions and other inputs reflect a change in the discount rate from 2.21% to 4.02% due to a change in
the municipal bond rate.
- 71 -
CITY OF FAIRHOPE, ALABAMA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report.
Variance
Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes 23,003,457$ 23,003,457$ 25,975,781$ 2,972,324$
Licenses and permits 4,868,948 4,868,948 6,292,136 1,423,188
Fines and forfeitures 230,000 230,000 298,611 68,611
Intergovernmental 650,960 650,960 1,010,555 359,595
Interest and rents 288,976 288,976 1,279,463 990,487
Charges for services 3,949,929 3,949,929 4,064,573 114,644
Golf course revenue 1,238,000 1,238,000 1,381,262 143,262
Recreation Department 481,000 481,000 657,288 176,288
Other 1,800,286 1,830,894 1,071,370 (759,524)
Total revenues 36,511,556 36,542,164 42,031,039 5,488,875
EXPENDITURES
General government
General 2,645,210 2,645,207 2,877,788 (232,581)
Planning 1,179,344 1,179,344 910,713 268,631
Building 1,150,797 1,150,797 1,168,587 (17,790)
Elected officials 291,238 291,238 286,528 4,710
Revenue 664,797 664,798 604,007 60,791
Judicial 305,946 305,946 286,990 18,956
Appropriations 256,740 256,740 256,740 -
Human Resources 494,907 507,407 507,111 296
Meter 695,618 695,618 693,782 1,836
Information Technology 1,206,287 1,206,287 879,979 326,308
Other 548,817 548,817 396,049 152,768
Public safety
Police 8,074,722 8,088,668 7,337,738 750,930
Fire 870,727 870,727 751,437 119,290
Public works
Street 5,127,872 5,177,761 5,136,171 41,590
Fleet maintenance 802,925 802,925 830,861 (27,936)
Cultural and recreational
Economic and community development 694,305 694,306 675,151 19,155
Adult recreation 409,150 409,150 470,474 (61,324)
Recreation 2,668,389 2,668,390 2,581,923 86,467
Golf 2,016,603 2,016,604 1,665,241 351,363
Marina 707,829 707,829 702,672 5,157
Civic Center 273,924 273,924 277,081 (3,157)
Museum and Welcome Center 195,801 195,801 185,200 10,601
Airport Authority 320,000 320,000 320,000 -
Public Library Board 875,000 875,000 875,000 -
Debt service payments:
Principal 300,000 300,000 461,132 (161,132)
Interest - - 9,009 (9,009)
Capital outlay 3,821,538 3,840,397 2,750,087 1,090,310
Total expenditures 36,598,486 36,693,681 33,897,451 2,796,230
Excess of revenues over (under) expenditures (86,930) (151,517) 8,133,588 8,285,105
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 157,523 157,523
Transfers in 1,200,050 1,264,637 1,130,901 (133,736)
Transfers out (1,113,120) (1,113,120) (3,450,583) (2,337,463)
Total other financing sources (uses)86,930 151,517 (2,162,159) (2,313,676)
Net change in fund balances -$ -$ 5,971,429 5,971,429$
Fund balances – beginning of year 27,063,115
FUND BALANCES – END OF YEAR 33,034,544$
Budgeted Amounts
- 72 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2023
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 Street Department Golf Department
Overtime 8,488$ Overtime 20,880$ Overtime 80,004$ Overtime 4,876$
Audit and accounting 12,537 Training 3,673 Professional services 15,863 Casualty/workers comp insurance 3,189
Legal fees 62,265 Casualty/workers comp insurance 931 General supplies 97,513 Clubhouse supplies 3,515
Communications 567 Postage 130 Equipment and vehicle repair 29,815 Small equipment 4,395
Employment screening 164 General supplies 349 Uniforms 4,695 Equipment and vehicle repair 1,877
Gasoline and oil 54 Equipment and vehicle repair 972 Equipment rental 2,167 Utilities 35,603
Uniforms 272 Safety supplies 114 Utilities 31,026 Gasoline and oil 726
Interest expense 25 Casualty/workers comp insurance 3,410 Credit card processing fees 7,371
Bank fees 10,945 Revenue Postage 107 Required contributions 10,316
Publications and newspapers 42,295 Computer expense 1,541 Employment screening 684 Equipment rental 7,376
Bad debts 956 Casualty/workers comp insurance 835 Training 9,169 General maintenance 30,761
Sales tax abatement 207,554 Uniforms 119 Computer expense 2,793 Uniforms 1,334
Grant expenditures 20,000 Office supplies 186 Flowers 15,900 Printers 4
Sales tax collection fees 16,540 General maintenance 21,394 Postage 23
City hall maintenance 14,673 Judicial Department Communications 1,615 Property rental 1,500
Overtime 26,160 Dues 429
Planning Department Training 1,279 Marina
Overtime 26 Casualty/workers comp insurance 164 Fleet Maintenance Department Diesel 3,454
Legal fees 44,851 General maintenance 65 Overtime 16,800 Casualty/workers comp insurance 2,394
General supplies 1,264 Credit card processing fees 50 General maintenance 2,528 Overtime 11,219
Employment screening 81 Data system 1,500 Casualty/workers comp insurance 446 Printers 94
Small equipment 1,333 Payroll taxes 1,438 General maintenance 27,022
Equipment and vehicle repair 1,092 Other Equipment and vehicle repair 3,257 General supplies 4,180
Library building maintenance 13,029 Utilities 5,808 Dues 635
Building Department Library communications 730 Salaries 25,051 Credit card processing fee 7,902
Building fees 69,107 Parking garage maintenance 613 Employee medical insurance 2,852 Employment screening 119
Overtime 4,013 Colony rent 6,613 Required contributions 1,455
Casualty/workers comp insurance 2,104 Haven capital purchase 94,374 Printers 36 Civic Center
Professional services 18,625 Postage 169 Salaries 404
General maintenance 251 Police Department Capital Outlay 32,724 Casualty/workers comp insurance 81
Employment screening 81 Overtime 33,717 Employee retirement expense 169
Credit card processing fees 36,435 Casualty/workers comp insurance 9,445 Adult Recreation Department Dues 55
Gasoline and oil 3,948 Camera expense 2 Casualty/workers comp insurance 472 General Supplies 3,415
Equipment and vehicle repair 6,191 Office supplies 3,110 Special programs 1,100 Utilities 22,500
General maintenance 26,359 Other 2,384
Elected officials Gasoline and oil 22,175 General supplies 67 Museum and Welcome Center
Salaries 281 Equipment and vehicle repair 65,277 Equipment and vehicle repair 2,099 Casualty/workers comp insurance 44
Training 6,396 Narcotic purchases 249 Credit card processing fees 1,278 Utilities 11,463
Casualty/workers comp insurance 262 Utilities 84,511 Employment screening 81 Capital Outlay 6,098
Employee retirement expense 62 Utilities 116,076
Fire Department Transfers
Human Resources Overtime 210 Economic and Community Development Transfers – Impact fee fund 133,736
Overtime 30,868 Fire call payments 6,035 Overtime 1,132 Transfers – Capital projects fund 2,337,463
Casualty/workers comp insurance 1,816 Postage 19 Casualty/workers comp insurance 766
Salaries 5,281 Casualty/workers comp insurance 2,926 General supplies 1,103 Debt Service
Employee payroll taxes 802 Small equipment 1,027 Salaries 3,292 Principal payments 161,133
Office supplies 965 Utilities 1,818 Community events 736 Interest expense 9,009
Employee retirement expense 1,074 Uniforms 402 Tourism 10,811
Communications 42 Gasoline and oil 2,996
Miscellaneous 1,659 Recreation Department
Overtime 27,715
Meter Casualty/workers comp insurance 6,662
Casualty/workers comp insurance 2,578 Postage 95
Employee medical insurance 11,843 Required contributions 485
General supplies 1,455 Tennis 19,798
Small equipment 3,000 General maintenance 6,425
Equipment and vehicle repair 16,179 Training 3,079
Professional services 26,500
Utilities 338,797
Pool supplies 81
Uniforms 1,293
Credit card processing fee 2,460
Camera expense 3,958
Printers 637
Employment screening 1,277
Small equipment 12,336
THIS PAGE INTENTIONALLY LEFT BLANK
OTHER SUPPLEMENTARY INFORMATION
COMBINING FINANCIAL STATEMENTS
NONMAJOR GOVERNMENTAL FUNDS
- 73 -
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2023
See independent auditors’ report.
Municipal
Rebuild Capital Federal Municipal Impact Fees Gas Tax Gas Tax Improvements Grants Court Debt Service Total
ASSETS
Cash 2,116,304$ 158,134$ 213,976$ 668,491$ 59,129$ 102,201$ -$ 3,318,235$ Receivables - 10,480 14,916 - 381,984 - - 407,380
Total assets 2,116,304$ 168,614$ 228,892$ 668,491$ 441,113$ 102,201$ - 3,725,615$
LIABILITIES
Accounts payable -$ -$ -$ -$ 125,936$ 71,807$ -$ 197,743$ Due to other funds - - - - 307,467 26,700 - 334,167
Total liabilities - - - - 433,403 98,507 - 531,910
FUND BALANCES
Restricted:
Road maintenance - 168,614 228,892 - - - - 397,506
Capital improvements - - - 668,491 7,710 - - 676,201
Municipal Court - - - - - 3,694 - 3,694
Committed:
Construction and road maintenance 2,116,304 - - - - - - 2,116,304
Total fund balances 2,116,304 168,614 228,892 668,491 7,710 3,694 - 3,193,705
Total liabilities and fund balances 2,116,304$ 168,614$ 228,892$ 668,491$ 441,113$ 102,201$ -$ 3,725,615$
Special Revenue Funds
- 74 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report.
Municipal
Rebuild Capital Federal Municipal DebtImpact Fees Gas Tax Gas Tax Improvements Grants Court Service TotalREVENUES
Taxes -$ -$ 167,386$ -$ -$ -$ -$ 167,386$ Intergovernmental - 115,128 - 208,441 397,250 - - 720,819 Charges for services 1,418,399 - - - - - - 1,418,399
Interest and rents 102,151 - 8,941 18,797 7,728 3,684 - 141,301
Total revenues 1,520,550 115,128 176,327 227,238 404,978 3,684 - 2,447,905
EXPENDITURES
General government 1,122 - 816 817 - 263 - 3,018
Debt service Principal - - - - - - 134,804 134,804
Interest - - - - - - 3,723 3,723
Capital outlay - - - - 397,268 - - 397,268
Total expenditures 1,122 - 816 817 397,268 263 138,527 538,813
Excess of revenues over
(under) expenditures 1,519,428 115,128 175,511 226,421 7,710 3,421 (138,527) 1,909,092
OTHER FINANCING
SOURCES (USES) Transfers in - - - - - - 138,527 138,527
Transfers out (1,947,831) (93,000) (130,000) - - - - (2,170,831)
Total other financing
sources (uses)(1,947,831) (93,000) (130,000) - - - 138,527 (2,032,304)
Net change in fund balances (428,403) 22,128 45,511 226,421 7,710 3,421 - (123,212)
Fund balances – beginning of year 2,544,707 146,486 183,381 442,070 - 273 - 3,316,917
FUND BALANCES –
END OF YEAR 2,116,304$ 168,614$ 228,892$ 668,491$ 7,710$ 3,694$ -$ 3,193,705$
Special Revenue Funds
THIS PAGE INTENTIONALLY LEFT BLANK
INDIVIDUAL FUND FINANCIAL STATEMENTS
DISCRETELY PRESENTED COMPONENT UNITS
- 75 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2023
See independent auditors’ report.
ASSETS
Cash and cash equivalents 717,758$
Prepaid items 7,169
Total assets 724,927$
LIABILITIES
Accounts payable and accrued liabilities 22,966$
FUND BALANCES
Nonspendable:
Prepaid items 7,169
Restricted:
Library improvements 205,687
Unassigned 489,105
Total fund balances 701,961
TOTAL LIABILITIES AND FUND BALANCES 724,927$
- 76 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2023
See independent auditors’ report.
Fund balances as reported on page 75 701,961$
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.762,278
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements.(517,013)
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 224,802
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 (607,122)
Deferred inflows of resources related to net pension liability (22,645)
Net position of governmental activities as reported on page 24 542,261$
- 77 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report.
REVENUES
Fines and lost books 13,613$
Donations, gifts, memorials and bequests 93,941
State aid 27,004
Payments from City of Fairhope 875,000
Miscellaneous 13,234
Total revenues 1,022,792
EXPENDITURES
Salaries 521,014
Payroll taxes 41,374
Insurance 8,720
Employees’ retirement 60,021
Books, periodicals, audio visual 94,518
Supplies 16,476
Janitorial service 21,199
Professional fees 11,543
Telecommunications 556
Capital outlay 24,678
Maintenance 79,212
Miscellaneous 61,684
Total expenditures 940,995
Net change in fund balances 81,797
Fund balances – beginning of year 620,164
FUND BALANCES – END OF YEAR 701,961$
- 78 -
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, 2023
See independent auditors’ report.
Net change in fund balances – total governmental funds, page 77 81,797$
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. 23,659
Depreciation expense on governmental capital assets included in the
capital assets in the statement of net position. (11,985)
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 (29,617)
Change in net position of governmental activities, page 25 63,854$
- 79 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2023
See independent auditors’ report.
ASSETS
Cash and cash equivalents 311,827$
Receivables, net 315,104
Prepaid items 41,912
Capital assets not being depreciated:
Land 10,674,228
Construction in progress 319,785
Capital assets net of accumulated depreciation:
Buildings and improvements 8,479,749
Vehicles and equipment 31,234
Runways 16,270,731
Total assets 36,444,570$
LIABILITIES
Accounts payable and accrued liabilities 91,797$
Unearned revenue 25,884
Customer deposits 34,000
Long-term liabilities:
Due within one year 275,000
Due in more than one year 5,695,629
Total liabilities 6,122,310
DEFERRED INFLOWS OF RESOURCES
Service concession arrangement revenue
applicable to future years 6,162,520
NET POSITION
Net investment in capital assets 29,805,098
Unassigned (5,645,358)
Total net position 24,159,740
Total liabilities and fund balances 36,444,570$
- 80 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report.
OPERATING REVENUES
Fuel sales and rentals 356,245$
Total operating revenues 356,245
OPERATING EXPENSES
Insurance 134,331
Legal and professional 64,106
Maintenance 106,466
Depreciation 570,275
Other 14,678
Total operating expenses 889,856
OPERATING LOSS (533,611)
NONOPERATING REVENUES (EXPENSES)
Revenue from service concession arrangement 248,630
Intergovernmental revenue 253,365
Payments from City of Fairhope 320,000
Interest expense (70,915)
Loss on sale of capital assets (58,820)
Miscellaneous 13,005
Total nonoperating revenues (expenses) 705,265
Change in net position 171,654
Net position – beginning of year 23,988,086
NET POSITION – END OF YEAR 24,159,740$
- 81 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report.
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 381,250$
Paid to suppliers for goods and services (261,161)
Net cash provided by operating activities 120,089
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Amounts received from City of Fairhope 320,000
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Repayment of debt (250,000)
Interest paid (70,915)
Capital grants received 165,620
Acquisition of capital assets (191,857)
Net cash used in capital and related financing activities (347,152)
NET INCREASE IN CASH 92,937
CASH – BEGINNING OF YEAR 218,890
CASH – END OF YEAR 311,827$
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss (533,611)$
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation 570,275
Other nonoperating revenues 13,005
Change in operating assets and operating liabilities:
Decrease in prepaid items 3,954
Increase in accounts payable 54,466
Increase in customer deposits 12,000
Net cash provided by operating activities 120,089$
- 82 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2023
See independent auditors’ report.
Track at Founders Park 1,957,074$
BRATS Hub Transit Shelter 1,170,825
Volanta Park baseball project 849,479
City street upgrades 697,266
Greeno and Gayfer turn lane construction 634,635
Drainage improvements 199,047
Volanta Park restrooms 190,169
Founders Park restrooms 189,672
Pickleball courts 132,122
Roundabout at N. Section and Hwy 104 118,116
North Triangle nature park 109,797
K-1 Center improvements 104,786
Clock corner improvements 70,438
Sidewalks on Blue Island and Fairwood 54,492
Stadium ADA platform and ramps 28,008
Total 6,505,926$
The above items are only from the capital projects fund.
- 83 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2023
See independent auditors’ report.
Natural Water and
Electric Gas Waste Water Sanitation
Fund Fund Fund Fund
A. Utility customers at September 30, 2023 were as follows:
Number of customers 7,184 13,014 21,830 11,546
Number of metered customers 7,184 13,014 21,830 11,546
Number of unmetered customers - - - -
Number of waste water customers - - 12,667 -
B. Annual net income of utility operations Natural Water and
Electric Gas Waste Water Sanitation
Fund Fund Fund Fund
Total
Income (loss) from operations 2,522,886$ 1,946,807$ 7,332,202$ (272,697)$ 11,529,198$
Add:
Depreciation 1,148,374 563,358 2,155,922 345,589 4,213,243
Interest income 274,315 440,126 423,745 12,726 1,150,912
Annual net income as prescribed
by debt covenants 3,945,575$ 2,950,291$ 9,911,869$ 85,618$ 16,893,353$
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 2024 $ 1,000,000
Buildings and facilities – expires January 2024 124,838,361
Equipment – expires January 2024 6,035,815
Automobile – expires January 2024
Liability 1,000,000
Uninsured motorist 50,000
Public officials errors and omissions liability – expires January 2024
Aggregate 2,000,000
Per occurrence 1,000,000
Police liability – expires January 2024
Aggregate 2,000,000
Per occurrence 1,000,000
Excess liability policy for general liability, police and public official – expires January 2024 6,000,000
D. The City has complied with all requirements of the respective bond indentures.
- 84 -
CITY OF FAIRHOPE, ALABAMA
SUMMARY OF DEPOSITS, WITHDRAWALS AND BALANCES OF SELECTED TRUST ACCOUNTS AS
REQUIRED UNDER CERTAIN TRUST INDENTURES
SEPTEMBER 30, 2023
See independent auditors’ report.
1996
Capital 2020 URW 2020 URW
Improvement Reserve Fund Warrant Fund
Balance October 1, 2022 50,791$ 1,839,486$ 1,477,950$
Deposits 2,061 92,559 2,026,856
Disbursements - (77,401) (1,999,240)
Balance September 30, 2023 52,852$ 1,854,644$ 1,505,566$
THIS PAGE INTENTIONALLY LEFT BLANK
STATISTICAL SECTION
This part of the City of Fairhope, Alabama's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says
about the government's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.85-90
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.91-95
Debt Capacity
These schedules present information to help the reader assess the affordability of
the government's current levels of outstanding debt and the government's ability
to issue additional debt in the future.96-99
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities
take place.100-101
Operating Information
These schedules contain service and infrastructure data to help the reader
understand how the information in the government's financial report relates
to the services the government provides and the activities it performs.102-104
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports
for the relevant year.
STATISTICAL SECTION
- 85 - CITY OF FAIRHOPE, ALABAMA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) 2014201520162017201820192020202120222023Governmental activities Net investment in capital assets74,804,467$ 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$ Restricted1,557,163 2,308,667 1,706,056 650,031 750,122 227,092 1,135,047 1,011,343 775,703 1,131,211 Unrestricted9,513,008 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 Total governmental activities net position85,874,638$ 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$ Business-type activities Net investment in capital assets42,025,762$ 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$ Restricted3,718,288 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 Unrestricted2,273,605 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 Total business-type activities net position48,017,655$ 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$ Primary government Net investment in capital assets116,830,229$ 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$ Restricted5,275,451 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 Unrestricted11,786,613 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 Total primary government net position133,892,293$ 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$ Fiscal Year
- 86 - CITY OF FAIRHOPE, ALABAMA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023ExpensesGovernmental activities: General government 9,067,340$ 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$ Public safety4,651,958 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 Public works 5,968,995 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 Cultural and recreational 2,893,490 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 Airport Authority443,000 412,632 428,000 342,000 320,000 320,000 320,000 335,000 320,000 320,000 Public Library Board 886,028 924,736 1,025,236 1,025,887 1,024,522 1,029,124 1,069,323 1,021,772 1,064,341 1,080,341 Interest on long-term debt 472,222 344,808 339,051 53,853 94,506 71,726 27,969 31,431 10,520 9,529 Total governmental activities expenses 24,383,033 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 Business-type activities: Electric 18,379,231 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 Natural gas 5,529,610 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 Water and waste water 7,165,113 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 Sanitation - - - - - - - - 3,265,985 3,145,593 Total business-type activities expenses31,073,954 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 Total primary government expenses55,456,987$ 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$ Program RevenuesGovernmental activities: Charges for services: General government6,225,471$ 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$ Public safety285,573 - - - - - - - - - Public works 1,462,243 4,730,645 1,547,682 1,594,839 1,769,059 1,916,788 2,073,829 2,440,059 - - Cultural and recreational 1,553,287 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 Operating grants and contributions 9,144 - - 102,507 94,494 127,978 542,126 9,157,959 2,014,462 677,863 Capital grants and contributions 8,416,283 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 Total governmental activities program revenues 17,952,001 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 Business-type activities: Charges for services: Electric 21,049,277 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 Natural gas 8,023,473 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 Water and waste water 10,018,231 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 Sanitation - - - - - - - - 2,773,365 2,846,575 Operating grants and contributions- - - - - - 24,299 125,743 170,397 137,489 Capital grants and contributions- - - - - 253,028 2,304,665 - - - Total business-type activities program revenues39,090,981 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 Total primary government program revenues57,042,982$ 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$ Fiscal Year
- 87 - CITY OF FAIRHOPE, ALABAMA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Net (expense)/revenueGovernmental activities (6,431,032)$ (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)$ Business-type activities 8,017,027 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 Total primary government net expense1,585,995$ (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)$ General Revenues and Other Changes in Net PositionGovernmental activities: Taxes Property taxes4,330,537$ 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$ Sales tax6,518,249 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 Liquor taxes445,132 451,719 482,755 536,643 498,044 606,819 632,363 714,140 733,897 739,563 Lodging taxes614,278 681,419 696,379 762,562 653,697 1,116,242 911,537 1,366,725 1,668,841 1,784,596 Other taxes138,204 138,382 133,057 139,444 127,513 122,059 116,455 111,649 105,778 98,590 Intergovernmental389,561 1,695,688 568,566 - - - - - - - Investment earnings239,205 228,670 302,181 335,106 59,157 126,115 274,246 174,777 219,012 1,346,130 Loss on sale of assets(261,340) - - - - - - - - - Other147,672 705,142 147,452 283,385 262,849 292,339 341,897 1,404,410 305,727 699,864 Transfers in/(out)3,612,482 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 Total governmental activities16,173,980 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 Business-type activities: Investment earnings30,815 18,440 15,162 23,552 53,651 136,797 519,544 307,434 368,554 1,150,912 Other- - - 19,276 14,775 16,167 37,608 3,787 80,984 193,866 Transfers in/(out)(3,612,482) (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) Total business-type activities(3,581,667) (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 Total primary government12,592,313$ 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$ Change in Net PositionGovernmental activities9,742,948$ 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$ Business-type activities4,435,360 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 Total primary government14,178,308$ 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$ Fiscal Year
- 88 - CITY OF FAIRHOPE, ALABAMA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (accrual basis of accounting) FiscalSales Ad Valorem Automobile LiquorCigarette Lodging DogYearTaxTaxTaxTaxTaxTaxTaxTotal20146,518,174$ 3,759,584$ 570,954$ 445,132$ 138,203$ 614,278$ 75$ 12,046,400$ 20156,797,757 3,950,750 600,015 451,719 138,298 681,419 85 12,620,043 20167,422,726 4,218,538 651,339 482,755 132,957 696,379 100 13,604,794 20178,069,350 4,310,029 740,614 536,643 139,380 762,562 64 14,558,642 20188,444,241 4,874,223 660,894 498,044 127,427 653,697 86 15,258,612 20199,269,702 5,270,773 676,789 606,819 122,006 1,116,242 54 17,062,385 20209,930,150 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
- 89 - CITY OF FAIRHOPE, ALABAMA FUND BALANCES OF GOVERNMENTAL FUNDS (modified accrual basis of accounting) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023General fund Nonspendable-$ -$ -$ 85,490$ 303,387$ 323,647$ 136,037$ 203,736$ 205,704$ 190,553$ Committed7,000,000 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 Unassigned3,449,523 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 Total general fund10,449,523$ 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$ All other governmental fundsRestricted: Debt service – other governmental funds357,156$ 348,720$ 516,120$ 527,858$ 541,587$ -$ -$ -$ -$ -$ Road maintenance – other governmental funds46,007 105,947 35,936 122,173 208,535 227,092 318,704 340,666 329,867 397,506 Capital improvements- - - - - - 816,343 670,653 442,070 676,201 Other- - - - - - - 24 3,766 57,504 Committed, reported in: Capital projects fund1,956,986 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 Other governmental funds851,448 826,435 1,478,912 2,255,722 5,403,308 3,726,721 3,036,724 2,574,103 2,544,707 2,116,304 Unassigned: Capital projects fund- - - - - - - - - - Other governmental funds- - - - - (1,160) (1,160) - - - Total all other governmental funds3,211,597$ 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$ The City implemented GASB Statement number 54 fiscal year 2011. This statement replaces the previous classifications of reserved, unreserved, designated and undesignated fund balances.Fiscal Year
- 90 - CITY OF FAIRHOPE, ALABAMA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023REVENUES Local taxes 12,046,399$ 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$ Licenses and permits 3,000,673 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 Fines and forfeitures 285,573 278,837 236,724 284,893 273,887 237,812 199,228 194,677 267,322 298,611 Intergovernmental 991,614 639,523 693,761 876,086 954,086 1,090,181 2,470,197 11,205,009 4,559,019 4,172,243 Contribution from Public Library Board- - - - - - - - - - Interest and rents 239,205 228,669 302,181 335,106 401,705 470,753 576,479 465,462 353,059 1,547,696 Charges for services 5,165,291 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 Golf course revenue 1,067,593 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 Recreation Department 436,453 444,410 476,772 466,437 442,324 456,362 238,811 393,744 636,242 657,288 BP settlement proceeds - 1,361,255 - - - - - - - - Legal settlement - 598,640 - - - - - - - - Other 196,913 180,644 223,293 338,058 368,387 660,915 1,219,633 1,958,967 983,969 1,071,370 Total revenues 23,429,714 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 EXPENDITURES General government 8,311,150 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 Public safety4,276,774 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 Public works4,379,670 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 Cultural and recreational2,491,611 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 Airport Authority443,000 412,632 428,000 342,000 320,000 320,000 320,000 335,000 320,000 320,000 Public Library Board 674,100 714,100 814,600 814,600 814,600 818,477 859,401 816,431 859,000 875,000 Other 89,785 93,436 162,736 115,753 100,732 170,203 863,699 - - - Debt service: Principal 2,894,540 483,780 6,478,558 1,573,560 1,578,340 3,775,470 641,366 779,020 689,819 595,936 Interest 465,409 374,479 390,971 111,633 94,751 87,534 28,974 29,847 15,238 12,732 Capital outlay1,908,464 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 Total expenditures25,934,503 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 Excess (deficiency) of revenues over expenditures(2,504,789) 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 OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets- - - - - - - - 56,559 157,523 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 in9,640,199 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 Transfers out(6,027,718) (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) Total other financing sources (uses) 3,612,481 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 Net change in fund balances1,107,692$ 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$ Debt service as a percentage of noncapital expenditures14.0%4.1%24.0%7.2%6.3%13.0%2.4%2.1%2.5%1.9%Fiscal Year
- 91 - CITY OF FAIRHOPE, ALABAMA ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS FiscalTotal EstimatedYearLess: Total Taxable Direct ActualEnded Residential Commercial Industrial Tax Exempt Assessed Tax TaxableSeptember 30 Property Property Property Real Property Value Rate Value2014 146,270,400$ 1,188,460$ 195,105,420$ 67,346,480$ 275,217,800$ 15$ 4,128,267,000$ 2015 173,467,000 1,448,760 185,206,880 56,434,980 303,687,660 15 4,555,314,900 2016 188,693,940 1,246,280 201,141,240 64,329,960 326,751,500 15 4,901,272,500 2017 204,961,080 379,420 207,388,960 65,103,500 347,625,960 15 5,214,389,400 2018 227,170,100 1,190,460 217,138,040 69,413,140 376,085,460 15 5,641,281,900 2019 252,096,200 1,136,540 221,101,860 70,209,480 404,125,120 15 6,061,876,800 2020 268,746,300 1,136,540 237,638,580 77,087,260 430,434,160 15 6,456,512,400 2021 292,189,220 1,310,420 254,585,380 81,821,500 466,263,520 15 6,993,952,800 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 Source: Baldwin County Revenue Commissioner
- 92 - CITY OF FAIRHOPE, ALABAMA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TotalTotal Road/ Health Care Total Total Direct andFiscal General School Bond Tax City General Bridge Fire School Authority County General School Soldier State OverlappingYear Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Rates2014 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02015 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02016 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02017 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02018 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02019 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02020 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02021 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 43.02022 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 43.02023 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.0Source: Baldwin County CommissionCountyStateOverlapping RatesCity
- 93 - CITY OF FAIRHOPE, ALABAMA PRINCIPAL PROPERTY TAXPAYERS YEARS ENDED SEPTEMBER 30, 2023 AND 2014 TaxableTaxableAssessedAssessedTaxpayerValueRankValueRankCX Retreat at Fairhope Village DST9,705,120$ 1 1.5% $ -- 0.0%Battles Road, LLC7,532,940 2 1.2% -- 0.0%Arbor Gates Holdings, LLC4,065,280 3 0.6%2,014,940 2 0.7%FST Wal-mart Stores East, LP3,293,340 4 0.5%2,915,780 1 1.1%Corte Cave, Mitchell 1 LLC2,837,340 5 0.5%- -0.0%PSM Alabama Holdings, LLC2,245,820 6 0.4%- -0.0%FST Mississippi Baldwin Square, LLC2,219,300 7 0.4%1,543,500 4 0.6%Fairhope Ridge, LLC2,153,820 8 0.3%1,102,900 6 0.4%CHS Properties, Inc.2,104,540 9 0.3%1,196,340 5 0.4%A 1 Corte Jr. Family Limited Partnership1,855,200 10 0.3%- - 0.0%Fairhope, LLC- - 0.0%1,782,880 3 0.6%Health Care Reit, Inc.- - 0.0%1,102,280 7 0.4%Bellsouth Tele Communications, LLC- - 0.0%1,043,100 8 0.4%Bones & Babies, LLC- - 0.0%991,980 9 0.4%MediaCom Southeast, LLC- - 0.0%991,760 10 0.4%38,012,700$ 6.0% 14,685,460$ 5.4% Source: Baldwin County Revenue CommissionerAssessed Value2023Percentage ofTotal TaxableAssessed ValuePercentage ofTotal Taxable2014
- 94 -
CITY OF FAIRHOPE, ALABAMA
DIRECT AND OVERLAPPING SALES TAX RATES
CURRENT AND LAST FOUR FISCAL YEARS
City
Fiscal Direct Baldwin State of
Year Rate County Alabama
2019 2.00% 3.00% 4.00%
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%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009.
- 95 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAXPAYERS
LAST TEN YEARS
Fiscal Top 25 Taxpayers
Year (approximate) Total Tax % of Total Tax
2014 3,673,425$ 6,518,249$ 56%
2015 3,624,562 6,733,115 54%
2016 3,788,930 7,232,073 52%
2017 4,059,864 7,865,989 52%
2018 4,871,492 8,249,479 59%
2019 4,450,078 8,723,465 51%
2020 4,727,284 9,166,330 52%
2021 5,315,798 10,579,090 50%
2022 5,732,173 11,936,711 48%
2023 6,196,491 13,187,398 47%
Source: City Treasurer's Office and Alabama Department of Revenue
Note: State law prohibits the disclosure of tax information for specific taxpayers.
- 96 - CITY OF FAIRHOPE, ALABAMA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS GeneralGeneral UtilitiesTotal Percentage LiabilityFiscal Obligation Notes Capital Obligation Revenue Notes Primary of Personal PerYearDebtPayable LeasesDebtDebtPayable Government Income Capita20149,789,376$ -$ -$ 5,904,220$ 20,571,057$ -$ 36,264,653$ 6.23%2,159$ 20159,307,360 - - 4,743,000 16,574,669 - 30,625,029 4.87%1,693 20166,833,058 - - 3,581,942 16,152,226 - 26,567,226 3.92%1,418 20175,259,498 - - 2,420,502 14,842,522 - 22,522,522 3.18%1,160 20183,681,158 - 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 Governmental ActivitiesBusiness-Type Activities
- 97 -
CITY OF FAIRHOPE, ALABAMA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
General Less: Amounts Percentage of Liability
Fiscal Obligation Available in Debt Net Taxable Per
Year Debt Service Fund Total Sales Capita
2014 15,693,596$ 357,156$ 15,336,440$ 2.64%913$
2015 14,050,360 348,720 13,701,640 2.18%757
2016 10,415,000 516,120 9,898,880 1.46%529
2017 7,680,000 527,858 7,152,142 1.01%368
2018 735,000 541,587 193,413 0.02%9
2019 - - - 0.00%-
2020 - - - 0.00%-
2021 - - - 0.00%-
2022 - - - 0.00%-
2023 - - - 0.00%-
- 98 -
CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30, 2023
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 635,202$ 100.00% 635,202$
Overlapping Debt (Supported by ad valorem tax)
Baldwin County 64,339,148 7.94%(1)5,108,528
5,743,730$
(1) Percentage of net assessed value of property in City ($636,132,660) to net assessed value of property in Baldwin
County ($8,008,765,580) on October 1, 2023
- 99 - CITY OF FAIRHOPE, ALABAMA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Debt limit55,043,560$ 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$ Total net debt applicable to limit15,724,616 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 Legal debt margin39,318,944$ 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$ Total net debt applicable to limitas a percentage of debt limit28.57%23.18%15.94%11.05%5.67%1.47%2.56%1.53%2.47%0.50%Legal Debt Margin Calculation for Fiscal Year 2023Total assessed value636,132,660$ Debt limit (20% of total assessed value)127,226,532$ Debt applicable to limit:General obligation warrants (including capital leases)635,202 Legal debt margin126,591,330$ Fiscal Year
- 100 -
CITY OF FAIRHOPE, ALABAMA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per
Capita
Fiscal Personal Personal School Unemployment
Year Population Income Income Enrollment Rate
2014 16,794 581,996,070$ 34,655$ 4,734 5.8%
2015 18,089 628,773,640 34,760 4,995 5.4%
2016 18,730 677,183,150 36,155 5,333 5.3%
2017 19,421 708,905,342 36,502 5,416 4.7%
2018 20,935 809,116,815 38,649 5,473 4.3%
2019 22,085 911,690,885 41,281 5,528 3.8%
2020 22,677 943,650,001 41,613 5,403 5.5%
2021 22,477 935,335,401 41,613 5,537 3.0%
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%
Sources: U.S. Census Bureau
Sperling's Best Places Website
State of Alabama Department of Industrial Relations
Eastern Shore Chamber of Commerce
Baldwin County Board of Education
www.schooldigger.com
www.publicschoolreview.com
Fairhope, Alabama Population 2023 (worldpopulationreview.com)
- 101 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
YEARS ENDED SEPTEMBER 30, 2023 AND 2014
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Thomas Hospital 1,256 1 12.8%1,048 1 15.3%
Grand Hotel 900 2 9.2%700 2 10.2%
Board of Education - Fairhope Schools 543 3 5.5%- - 0.0%
City of Fairhope 482 4 4.9%330 3 4.8%
Wal-Mart 305 5 3.1%325 4 4.7%
Publix 300 6 3.1%100 5 1.5%
Segers Aero 170 7 1.7%93 6 1.4%
Gulf Orthopedics 100 8 1.0%- - 0.0%
Winn-Dixie 80 9 0.8%75 7 1.1%
Piggly Wiggly 72 10 0.7%60 10 0.9%
Bayshore Christian School 40 - 0.4%- - 0.0%
Print Xcel - - 0.0%66 8 1.0%
Balloons Everywhere - - 0.0%65 9 0.9%
4,248 43.2%2,862 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
2014: 6,862 2023: 9,828
2023 2014
- 102 - CITY OF FAIRHOPE, ALABAMA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023FunctionGeneral Government 48 49 49 49 53 62 64 66 71 81 Public Safety: Police46 46 45 49 52 59 59 61 66 79 Fire: Firefighters and Dispatch18 17 14 15 16 14 17 17 13 50 Highways and Streets: Public Works39 41 46 42 49 57 53 57 53 83 Sanitation21 22 20 19 18 18 28 23 26 30 Cultural and Recreational: Recreation23 25 26 29 32 31 34 35 34 35 Adult Recreation10 11 12 11 11 13 12 13 10 4 Gas Department15 15 15 16 18 21 22 21 22 25 Electric Department22 21 19 19 22 20 26 26 26 36 Water/Waste Water Department23 23 22 26 29 31 34 36 41 53 Golf Department16 18 20 19 18 22 21 22 19 6 Total281 288 288 294 318 348 370 377 381 482 Source: City of Fairhope Human Resources DepartmentFull-time Equivalent Employees as of September 30,
- 103 - CITY OF FAIRHOPE, ALABAMA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023FunctionPolice: Physical arrests 750 1,423 983 1,350 1,542 1,538 1,462 866 1,047 1,077 Parking violations49 121 240 359 89 22 52 202 75 1,616 Traffic violations887 633 1,726 2,490 1,684 1,656 1,613 1,751 1,670 2,107 Fire: Number of calls answered853 836 865 1,025 1,058 1,023 1,236 1,283 1,200 1,356 Inspections**35 161 147 73 823 669 648 121 767 802 Highways and streets: Street resurfacing (miles)- - 13.2 - 1.2 2.2 3.3 3.4 4.7 3.5 Potholes repaired*1,480 1,620 2,933 2,300 4,928 5,466 1,152 1,720 1,770 243 Sanitation: Garbage collected (tons/year)8,509 8,236 8,654 9,222 9,554 10,108 11,949 12,042 15,286 11,246 Trash collected (tons/year)6,292 5,545 5,902 8,228 7,189 7,741 6,907 4,256 4,565 5,100 Recyclables collected (tons/year) 1,714 1,779 1,855 1,843 1,835 1,803 947 824 1,286 1,586 Cultural and recreational: Golf course rounds @ 9 hole rounds 59,261 57,405 56,613 58,416 53,995 55,971 53,740 62,151 60,588 59,893 Pavilion/park parties61 59 44 28 32 22 19 36 47 62 Waste water: Average daily sewage treatment (millions of gallons)1.8 2.0 2.2 2.4 2.4 2.3 2.6 2.5 2.3 2.0 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
- 104 - CITY OF FAIRHOPE, ALABAMA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023FunctionPublic safety: Police: Stations 1111111111 Patrol units 37 38 39 44 45 47 50 49 52 52 Fire stations 3444444444Highways and streets: Streets (miles) 103.84 106.54 108.64 111.14 112.64 114.76 116.56 152.56 161.08 163.00Cultural and recreational: Parks acreage 356 504 504 504 504 657 657 657 657 657 Parks 52 54 54 54 54 56 56 56 56 56 Swimming pools 3333333333 Tennis courts 6 6 12 12 12 16 16 16 16 12 Pickleball courts Community center 3333333334Sewer: Sanitary sewers (miles) 126 130 135 175 175 180 185 187 190 194 Storm sewers (miles) 19.17 20.57 22.77 25.77 27.29 29.5 30.73 31.41 32.22 32.41 Maximum daily treatment capacity (millions of gallons) 4444444444Fiscal Year