HomeMy WebLinkAbout2022City of Fairhope, Alabama
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022
PREPARED BY:
THE OFFICE OF THE CITY TREASURER
i
CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2022
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 13
Statement of Activities 14
Fund Financial Statements
Governmental Fund Financial Statements
Fund Balance Sheets - Governmental Funds 15
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities 16
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 17
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 18
Proprietary Fund Financial Statements
Statement of Net Position - Proprietary Funds 20
Statement of Revenues, Expenses and Changes in Net Position -
Proprietary Funds 21
Statement of Cash Flows - Proprietary Funds 22
Discretely Presented Component Units
Combining Statement of Net Position - Discretely Presented
Component Units 23
Combining Statement of Activities - Discretely Presented
Component Units 24
Notes to the Financial Statements 25
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CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2022
TABLE OF CONTENTS (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION
Schedules of Employer Contributions 65
Schedules of Changes in Net Pension Liability 67
Schedules of Changes in Total OPEB Liability 69
Budgetary Comparison Schedule - General Fund 70
Notes to Required Supplementary Information 71
OTHER SUPPLEMENTARY INFORMATION
Combining Balance Sheets - Nonmajor Governmental Funds 72
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Nonmajor Governmental Funds 73
Fund Balance Sheet - Fairhope Public Library Board 74
Reconciliation of Governmental Fund Balances to Net Position
of Governmental Activities - Fairhope Public Library Board 75
Statement of Revenues, Expenditures and Changes in Fund Balances -
Fairhope Public Library Board 76
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities - Fairhope Public Library Board 77
Statement of Net Position - Fairhope Airport Authority 78
Statement of Revenues, Expenses and Changes in Net Position -
Fairhope Airport Authority 79
Statement of Cash Flows - Fairhope Airport Authority 80
Schedule of Capital Projects Expenditures 81
Schedule of Information Required by Bond Indentures 82
Summary of Deposits, Withdrawals and Balances of Selected Trust Accounts as
Required Under Certain Trust Indentures 83
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CITY OF FAIRHOPE, ALABAMA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
SEPTEMBER 30, 2022
TABLE OF CONTENTS (continued)
Page
STATISTICAL SECTION
Net Position by Component 84
Changes in Net Position 85
Governmental Activities Tax Revenues by Source 87
Fund Balances of Governmental Funds 88
Changes in Fund Balances of Governmental Funds 89
Assessed Value and Estimated Actual Value of Taxable Property 90
Property Tax Rates - Direct and Overlapping Governments 91
Principal Property Taxpayers 92
Direct and Overlapping Sales Tax Rates 93
Principal Sales Taxpayers 94
Ratios of Outstanding Debt by Type 95
Ratios of General Bonded Debt Outstanding 96
Computation of Overlapping Debt 97
Legal Debt Margin Information 98
Demographic and Economic Statistics 99
Principal Employers 100
Full-time Equivalent City Government Employees by Function 101
Operating Indicators by Function 102
Capital Asset Statistics by Function 103
INTRODUCTORY SECTION
ix
x
CITY OF FAIRHOPE, ALABAMA
ORGANIZATIONAL CHART
SEPTEMBER 30, 2022
xi
CITY OF FAIRHOPE, ALABAMA
CITY ELECTED AND APPOINTED OFFICIALS
SEPTEMBER 30, 2022
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, 2022.
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, 2022,
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, 2022, 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.
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Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a
guarantee that an audit conducted in accordance with generally accepted auditing standards and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements
are considered material if there is a substantial likelihood that, individually or in the aggregate, they would
influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing
Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period
of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that
we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis on pages 4 through 12 and the supplementary information on pages 65 through 71 be
presented to supplement the basic financial statements. Such information is the responsibility of management
and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards
Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in the United
States of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management’s responses to our inquiries, the basic financial
statements and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not provide
us with sufficient evidence to express an opinion or provide any assurance.
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Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor
fund financial statements, other supplementary information and statistical section are presented for purposes
of additional analysis and are not a required part of the basic financial statements. Such information is the
responsibility of management and was derived from and relates directly to the underlying accounting and
other records used to prepare the basic financial statements. The information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated,
in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information
comprises the introductory and statistical sections but does not include the basic financial statements and our
auditor’s 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 29, 2023, 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 29, 2023
THIS PAGE INTENTIONALLY LEFT BLANK
MANAGEMENT’S DISCUSSION AND ANALYSIS
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of the City of Fairhope, Alabama (the City), we present this narrative overview and
analysis designed to assist readers of the City’s financial statements for the fiscal year ended September 30,
2022. 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, 2022.
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 $223,984,064 at the close of the fiscal year ended September 30,
2022. An unrestricted surplus exists in the amount of $39,908,454, which may be used to meet
the government’s ongoing obligations.
The City’s total net position increased by $21,290,124, or 10.5% in comparison to the net
position at the beginning of the year. Net position of governmental activities increased
$12,669,092, or 11.9% and net position of business-type activities increased $8,621,032 or 9.0 %.
At the close of the current fiscal year, the City’s governmental funds reported a combined fund
balance of $33,251,171. This was an increase of $8,970,705 or 36.9% from the prior year.
At the end of the current fiscal year, total fund balance for the General Fund was $27,063,115, an
increase of $7,796,670 or 40.5% 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 $1,963,253 or 16.7% from
the prior year primarily due to economic growth over the prior year.
In September 2022, the City entered into a note payable, to finance capital asset purchases, in the
amount of $1,946,719.
The following schedule presents a comparison of revenues for all Governmental Funds for the
fiscal year ended September 30, 2022, to fiscal year ended September 30, 2021. Revenues
decreased $4,940,231 or 10.4%, as compared to the previous year. The majority of this decrease
was FEMA Reimbursement for Hurricane Sally in FY2021.
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Increase % Increase
Revenues 2022 % of Total 2021 (Decrease) (Decrease)
Local taxes 23,700,359$ 55.55% 20,810,059$ 2,890,300$ 13.89%
Licenses and permits 6,137,069 14.39% 4,544,325 1,592,744 35.05%
Fines and forfeitures 267,322 0.63%194,677 72,645 37.32%
Intergovernmental 4,559,019 10.69% 11,205,009 (6,645,990) -59.31%
Interest and rents 353,059 0.83%465,462 (112,403) -24.15%
Charges for services 4,776,552 11.20% 6,749,966 (1,973,414) -29.24%
Golf course revenue 1,241,278 2.91% 1,272,891 (31,613) -2.48%
Recreation department 636,242 1.49%393,744 242,498 61.59%
Other 983,969 2.31% 1,958,967 (974,998) -49.77%
42,654,869$ 100.00% 47,595,100$ (4,940,231)$ -10.38%
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 and the Fairhope Airport Authority, for which
the City is financially accountable. Financial information for these component units is reported separately
from the information presented for the primary government.
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Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. Like most state and local governments, the City uses fund
accounting to ensure and demonstrate compliance with finance-related legal matters. All funds of the City
can be divided into two categories: governmental and proprietary funds.
Governmental Funds
Governmental funds are used to account for the same functions as those reported under the government-
wide statement of net position and statement of activities. However, unlike the government-wide financial
statements, governmental fund financial statements focus on events that produce near-term inflows and
outflows of expendable resources as well as the balances of expendable resources available at the end of the
year. Such information may be useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of government-wide financial statements, it
is useful to compare information presented in the governmental funds with similar information presented in
the governmental activities in the government-wide financial statements. By doing so, the reader may better
understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities.
The City of Fairhope maintains ten (10) individual governmental funds. Information is presented separately
in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures,
and changes in fund balance of the major funds. Data from 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 70.
Proprietary Funds
When the City charges customers for the services it provides, whether to outside customers or to other units
of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the
same way that all activities are reported in the statement of net position and the statement of activities. The
City uses enterprise funds to account for Natural Gas Fund, Electric Fund, Water and Wastewater Fund, and
Sanitation Fund which are used to account for the operations of the utilities. The City uses an internal
service fund to account for its employees’ medical insurance. The internal service fund is presented in the
fund financial statements.
Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to the full
understanding of the data presented in the government-wide and fund financial statements. The notes to the
financial statements start on page 25.
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Other Information
In addition to the basic financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the City’s General Fund budget. A budgetary comparison
schedule has been provided for the General Fund to demonstrate compliance with the budget on page 70.
Combining and individual statements and schedules referred to earlier, which present more detailed views of
nonmajor funds used in governmental and enterprise activities, can be found beginning on page 72 of this
report.
Government-Wide Financial Analysis
As year-to-year financial information is accumulated on a consistent basis, changes in net position may be
observed and used to discuss the changing financial position of the City as whole. The City’s net position at
fiscal year-end is $223,984,064. This is a $21,290,124 increase over last year’s adjusted net position. The
following table provides a summary of the City’s net position.
2022 2021 2022 2021 2022 2021
Current and other assets
(net of internal balances)38,822,644$ 29,089,992$ 40,632,698$ 39,206,817$ 79,455,342$ 68,296,809$
Internal balances 457,574 (441,797) (457,574) 441,797 - -
Capital assets 101,800,012 100,341,725 88,503,173 79,119,256 190,303,185 179,460,981
Total Assets 141,080,230 128,989,920 128,678,297 118,767,870 269,758,527 247,757,790
Deferred charge on refunding - - 63,366 70,406 63,366 70,406
Pension related items 3,545,294 2,876,917 1,502,313 851,047 5,047,607 3,727,964
OPEB related items 954,742 1,306,903 435,023 468,513 1,389,765 1,775,416
Total Deferred Outflows
of Resources 4,500,036 4,183,820 2,000,702 1,389,966 6,500,738 5,573,786
Long-term liabilities 15,929,028 19,423,994 18,133,048 17,919,664 34,062,076 37,343,658
Other liabilities 6,065,419 4,683,320 5,997,569 5,400,156 12,062,988 10,083,476
Total Liabilities 21,994,447 24,107,314 24,130,617 23,319,820 46,125,064 47,427,134
Pension related items 2,819,709 689,653 1,131,775 88,898 3,951,484 778,551
OPEB related items 1,510,431 1,790,186 688,222 641,765 2,198,653 2,431,951
Total Deferred Inflows
of Resources 4,330,140 2,479,839 1,819,997 730,663 6,150,137 3,210,502
Net position
Net Investment in Capital
Assets 100,568,874 98,917,172 78,439,515 67,819,256 179,008,389 166,736,428
Restricted 775,703 1,011,343 4,291,518 3,349,350 5,067,221 4,360,693
Unrestricted 17,911,102 6,658,072 21,997,352 24,938,747 39,908,454 31,596,819
Total Net Position 119,255,679$ 106,586,587$ 104,728,385$ 96,107,353$ 223,984,064$ 202,693,940$
Governmental
Activities
Business-type
Activities Total
Total assets increased $22,000,737 or 8.9% from the previous fiscal year. This was primarily due to an
increase in capital assets of $10,842,204. Current year additions totaled $18,696,078 and consisted of
equipment, building and street improvements, and upgrades of the utility system. Current year depreciation
totaled $7,835,428.
Total liabilities decreased $1,302,070 or 2.7% from the previous fiscal year. This was due primarily to debt
payments in the amount of $2,389,819. In September 2022, the City entered into a note payable for
equipment in the amount of $1,946,719.
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The largest portion of the City’s net position (79.9%) 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 position of the City’s net position (2.3%) 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 $21,997,352 which is a $2,941,395
decrease from the prior year. The decrease is due to current year operations and investment in infrastructure.
2022 2021 2022 2021 2022 2021
Revenues
Program revenues
Charges for services 13,546,787$ 13,663,268$ 49,108,835$ 45,334,709$ 62,655,622$ 58,997,977$ Operating Grants and
contributions 2,014,462 9,157,959 170,397 125,743 2,184,859 9,283,702 Capital grants and
contributions 3,013,322 2,408,124 - - 3,013,322 2,408,124
General revenues
Property taxes 7,453,763 6,847,201 - - 7,453,763 6,847,201
Sales taxes 13,691,152 11,727,899 - - 13,691,152 11,727,899
Other taxes 2,508,516 2,192,514 - - 2,508,516 2,192,514
Other 524,739 1,579,187 449,538 311,221 974,277 1,890,408
Total revenues 42,752,741 47,576,152 49,728,770 45,771,673 92,481,511 93,347,825
Expenses
General government 8,530,536 16,825,075 - - 8,530,536 16,825,075
Public safety 7,992,887 7,699,709 - - 7,992,887 7,699,709
Public works 6,808,105 9,536,641 - - 6,808,105 9,536,641
Cultural and recreational 6,982,402 6,680,606 - - 6,982,402 6,680,606
Airport Authority 320,000 335,000 - - 320,000 335,000
Public Library Board 1,064,341 1,021,772 - - 1,064,341 1,021,772
Interest on long-term debt 10,520 31,431 - - 10,520 31,431
Electric - - 18,178,999 17,605,905 18,178,999 17,605,905
Natural gas - - 7,741,978 6,172,162 7,741,978 6,172,162
Water and Waste Water - - 10,295,634 9,813,398 10,295,634 9,813,398
Sanitation - - 3,265,985 - 3,265,985 -
Total expenses 31,708,791 42,130,234 39,482,596 33,591,465 71,191,387 75,721,699
Increase in net position
before transfers 11,043,950 5,445,918 10,246,174 12,180,208 21,290,124 17,626,126
Transfers in (out)1,625,142 1,536,517 (1,625,142) (1,536,517) - -
Increase in net assets 12,669,092 6,982,435 8,621,032 10,643,691 21,290,124 17,626,126
Net position - beginning 106,586,587 99,604,152 96,107,353 85,463,662 202,693,940 185,067,814
Net position - ending 119,255,679$ 106,586,587$ 104,728,385$ 96,107,353$ 223,984,064$ 202,693,940$
Governmental
Activities
Business-type
Activities Total
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Governmental Activities
Governmental activities for the current year increased the City’s net position by $12,669,092. Key elements
of this change are as follows:
Sales and use tax increased by approximately $1,963,253, or 16.7%.
Lodging tax increased by approximately $302,116, or 22.1%.
Property tax increased by approximately $606,562, or 8.9%.
Operational grants decreased by $7,143,497 as a result of FEMA reimbursement from Hurricane
Sally in FY2021.
Business-type Activities
Business-type activities increased the City’s net position by $8,621,032. 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 $33,251,171,
of which $19,122,817 is unassigned. The nonspendable fund balance is $205,704 and stems from inventory
and prepaid expenses. Restricted fund balance is $775,703 and comprises funds with restrictions imposed by
outside parties or constitutional provisions. Committed fund balance is $13,146,947 and comprises funds
with constraints imposed by formal action of the City Council. In particular, unassigned fund balance may
serve as a useful measure of the City’s net resources available for discretionary use as it represents the
portion of fund balance that is not limited for a particular use. The table below illustrates the breakdown of
governmental funds for fiscal year 2022.
American
Capital Rescue Other Total
General Projects Plan Governmental Governmental
Total revenues 39,201,650$ 644,996$ 147,739$ 2,660,484$ 42,654,869$
Total expenditures 30,767,002 2,812,389 30,566 1,506,651 35,116,608
Total other financing sources (uses)(637,978) 3,606,464 (113,684) (1,422,358) 1,432,444
Net change in fund balances 7,796,670 1,439,071 3,489 (268,525) 8,970,705
Fund balances, beginning of year 19,266,445 1,428,575 4 3,585,442 24,280,466
Fund balances, end of year 27,063,115$ 2,867,646$ 3,493$ 3,316,917$ 33,251,171$
Percent of fund balance to expenditures 88%102%11%220%95%
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, 2022, the total fund balance of the general fund was $27,063,115, an increase of
$7,796,670. 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 decreased by $5,891,609 or 13.0% in 2022 compared to the previous
year. This was due to the transfer of the Sanitation operations from the General Fund to a separate Propriety
fund.
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 $1,439,074 from the previous year.
The increase is due to the City transferring $1,000,000 from General Fund for future capital projects.
Other Governmental Funds
Other governmental funds include various special revenue funds. Anything that has a legal requirement to
be accounted for separately and general grants the City received are segregated in various special revenue
funds because the funds are intended for specific uses. Capital project grants are also included in other
governmental funds.
Proprietary Funds
Proprietary fund statements provide the same information as in the business-type activities column of the
government-wide statements, but in greater detail and on a fund basis for enterprise funds and the City’s
internal service fund.
Enterprise Funds – Net position of the Electric Fund, Natural Gas Fund, Water and Waste Water Fund and
Sanitation Fund at the end of the year was $104,728,385. Total net position increased for enterprise funds by
$8,621.032 or 9.0% in 2022 from the previous year. Total operating revenue increased $3,774,126 or 8.3%
and total operating expenses increased $5,901,428 or 17.6% for enterprise funds. Both increased revenue
and expenditures were attributed to the Sanitation Fund.
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, 2022, the internal service fund reported $1,074,783 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,
2022, was $190,303,185 (net of accumulated depreciation). Capital asset investments include land,
buildings, construction in progress, infrastructure, improvements other than buildings, and machinery and
equipment, net of depreciation.
- 11 -
2022 2021 2022 2021 2022 2021
Land 27,743,658$ 27,727,658$ 9,511,594$ 9,511,594$ 37,255,252$ 37,239,252$
Buildings and improvements 27,416,060 28,201,280 1,422,951 1,293,247 28,839,011 29,494,527
Vehicles and equipment 4,481,750 4,916,970 4,450,932 2,851,258 8,932,682 7,768,228
Infrastructure 37,540,427 36,937,676 - - 37,540,427 36,937,676
Distribution and collection systems - - 68,421,784 60,897,438 68,421,784 60,897,438
Construction in progress 4,618,117 2,558,141 4,695,912 4,565,719 9,314,029 7,123,860
101,800,012$ 100,341,725$ 88,503,173$ 79,119,256$ 190,303,185$ 179,460,981$
Activities Activities
Governmental Business-type
Total
Additional information on the City’s capital assets can be found in Note 6 beginning on page 38 of this
report.
Long-term debt
At the fiscal year end, the City of Fairhope had $1,231,138 of governmental debt and $11,050,315 of
business-type debt outstanding for the Utilities enterprise funds. In September 2022, the City issued the
Capital Note Payable in the amount of $1,946,719.
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 $541,776,940 with a current debt limit for the City of $108,355,388. Current debt
applied to the debt limit total is $2,681,453, leaving the City with a legal debt margin of $105,673,935.
2022 2021
Increase
(Decrease)
Utility Revenue Warrants 9,600,000$ 11,300,000$ (1,700,000)$
Notes Payable 2,681,453 - 2,681,453
12,281,453$ 11,300,000$ 981,453$
See Note 7, beginning on page 40, 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, 2022, actual revenues were more than budgeted revenues by $5,948,781
or 17.9%. Detailed variances are as follows:
Actual taxes were more than budgeted by $2,487,878 or 11.8%.
- 12 -
Actual intergovernmental revenues were more than budgeted by $2,105,066 or 859.2%.
Actual interest and rents were more than budgeted by $125,866 or 59.9%.
Actual licenses and permits were more than budgeted by $1,532,265 or 33.3%.
For the year ended September 30, 2022, actual total expenditures were less than budgeted expenditures by
$1,725,838 or 5.3%. Detailed variances are in the following functions:
General Government actual expenditures were less than budgeted expenditures by $597,116 or
7.0%.
Public Works actual expenditures were less than budgeted expenditures by $101,877 or 2.0%.
Public Safety actual expenditures were less than budgeted expenditures by $452,280 or 5.6%.
Cultural and Recreational actual expenditures were less than budgeted expenditures by $204,147
or 3.2%
Economic Factors and Year 2022
The City relies on taxes (property, sales, lodging, etc.), and fee (license, permits, etc.) for their governmental
activities. The analysis of a few of these taxes contained in the Statistical Section serves as good indicator of
economic trends. Certain governmental activities (sanitation, recreational activities, etc.) require the user
pay a related fee or charge associated with the service.
The following factors were considered in preparing the City’s Budget for Fiscal Year 2023:
The unemployment rate for the City of Fairhope for 2022 was 2.5%.
The City’s financial condition remains strong, even with the national pandemic due to reduction
in expenditures and continued oversight by management and the Council.
Property tax revenue is expected to increase 13.1% due to growth.
Continued sales tax revenue growth in 2022 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 $43,000,000 and resurfacing of $533,000.
Protecting our natural environment for the enjoyment of all investment in Parks of $4,000,000.
Investment in capital equipment of $4,457,000.
We continue to explore grant opportunities throughout the year.
On September 30, 2022, fund balance in the General Fund was $27,063,115. The City did not appropriate
any fund balance from the 2022 fund balance for spending in the 2023 fiscal year budget. The City will
continue to provide services to its citizens, keep a level of essential staff to provide services to the
community, and pay for one-time expenditures for capital needs from the funds appropriated in the 2023
budget.
Requests for Information
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a
general overview of the City of Fairhope’s finances. Questions concerning any of the information provided
in this report or requests for additional financial information should be addressed to: The Office of the
Treasurer, P.O. Drawer 429, Fairhope, Alabama 36533. This report is also available online at
www.fairhopeal.gov.
BASIC FINANCIAL STATEMENTS
- 13 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
SEPTEMBER 30, 2022
See independent auditors’ report and notes to the financial statements.
Governmental Fund Types
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Cash 35,025,647$ 29,908,341$ 64,933,988$ 879,436$ Restricted cash - 4,291,518 4,291,518 -
Receivables, net 3,556,368 5,137,220 8,693,588 227,359 Internal balances 457,574 (457,574) - -
Inventories 181,818 1,243,192 1,425,010 - Prepaid items 23,886 16,337 40,223 53,035
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 4,618,117 4,695,912 9,314,029 345,608
Capital assets net of accumulated
depreciation:
Buildings and improvements 27,416,060 1,422,951 28,839,011 8,787,483
Vehicles and equipment 4,481,750 4,450,932 8,932,682 84,127
Infrastructure 37,540,427 - 37,540,427 -
Distribution and collection systems - 68,421,784 68,421,784 -
Runways - - - 16,529,226
Total assets 141,080,230 128,678,297 269,758,527 37,580,502
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - 63,366 63,366 - Pension related items 3,545,294 1,502,313 5,047,607 118,499
OPEB related items 954,742 435,023 1,389,765 -
Total deferred outflows of
resources 4,500,036 2,000,702 6,500,738 118,499
Total assets and deferred
outflows of resources 145,580,266$ 130,678,999$ 276,259,265$ 37,699,001$
LIABILITIES
Accounts payable and
accrued expenses 2,574,998$ 3,131,849$ 5,706,847$ 106,883$ Unearned revenue 2,511,544 804,394 3,315,938 -
Customer deposits 7,500 2,061,326 2,068,826 - Noncurrent liabilities:
Due within one year 971,377 2,384,048 3,355,425 250,000 Due in more than one year:
Net pension liability 7,320,076 3,288,152 10,608,228 387,175
Postemployment benefits Total OPEB liability 6,817,631 3,106,420 9,924,051 -
Other 1,791,321 9,354,428 11,145,749 5,970,629
Total liabilities 21,994,447 24,130,617 46,125,064 6,714,687
DEFERRED INFLOWS OFRESOURCES
Pension related items 2,819,709 1,131,775 3,951,484 106,672 OPEB related items 1,510,431 688,222 2,198,653 -
Service concession arrangementrevenue applicable to future years - - - 6,411,149
Total deferred inflows of resources 4,330,140 1,819,997 6,150,137 6,517,821
NET POSITIONNet investment in capital assets 100,568,874 78,439,515 179,008,389 30,200,043
Restricted for:Debt service - 3,317,436 3,317,436 -
Road maintenance 329,867 - 329,867 - Capital improvements 442,070 974,082 1,416,152 -
Municipal Court 273 - 273 - American Rescue 3,493 - 3,493 -
Library improvements - - - 173,485 Unrestricted 17,911,102 21,997,352 39,908,454 (5,907,035)
Total net position 119,255,679 104,728,385 223,984,064 24,466,493
Total liabilities, deferred inflows
of resources, and net position 145,580,266$ 130,678,999$ 276,259,265$ 37,699,001$
- 14 - CITY OF FAIRHOPE, ALABAMA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2022 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges for Grants and Grants and Governmental Business-type ComponentFunctions/Programs Expenses Services Contributions Contributions Activities Activities Total UnitsPrimary GovernmentGovernmental activities:General government 8,530,536$ 10,827,381$ -$ 62,500$ 2,359,345$ -$ 2,359,345$ -$ Public safety 7,992,887 - 312,643 310,880 (7,369,364) - (7,369,364) - Public works 6,808,105 - 1,701,819 1,456,568 (3,649,718) - (3,649,718) - Cultural and recreational 6,982,402 2,719,406 - 1,183,374 (3,079,622) - (3,079,622) - Airport Authority 320,000 - - - (320,000) - (320,000) - Public Library Board 1,064,341 - - - (1,064,341) - (1,064,341) - Interest on long-term debt 10,520 - - - (10,520) - (10,520) - Total governmental activities 31,708,791 13,546,787 2,014,462 3,013,322 (13,134,220) - (13,134,220) - Business-type activities:Electric 18,178,999 20,477,525 148,008 - - 2,446,534 2,446,534 - Natural gas 7,741,978 10,298,544 1,863 - - 2,558,429 2,558,429 - Water and Waste Water 10,295,634 15,559,401 18,911 - - 5,282,678 5,282,678 - Sanitation3,265,985 2,773,365 1,615 - - (491,005) (491,005) - Total business-type activities39,482,596 49,108,835 170,397 - - 9,796,636 9,796,636 - Total primary government71,191,387$ 62,655,622$ 2,184,859$ 3,013,322$ (13,134,220) 9,796,636 (3,337,584) - Component Units1,975,334$ 349,451$ 1,522,976$ 247,718$ 144,811 General revenues:Property taxes7,453,763 - 7,453,763 - Sales tax13,691,152 - 13,691,152 - Liquor taxes733,897 - 733,897 - Lodging taxes1,668,841 - 1,668,841 - Other taxes105,778 - 105,778 - Investment earnings219,012 368,554 587,566 - Other305,727 80,984 386,711 3,075 Transfers1,625,142 (1,625,142) - - Total general revenues and transfers25,803,312 (1,175,604) 24,627,708 3,075 Change in net position12,669,092 8,621,032 21,290,124 147,886 Net position - beginning 106,586,587 96,107,353 202,693,940 24,318,607 Net position - ending119,255,679$ 104,728,385$ 223,984,064$ 24,466,493$ Changes in Net PositionPrimary GovernmentProgram RevenuesNet (Expense) Revenue and
- 15 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEETS
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2022
See independent auditors’ report and notes to the financial statements.
American Other Total
Capital Rescue Governmental GovernmentalGeneral Projects Plan Funds Funds
ASSETSCash 24,436,297$ 3,706,979$ 1,616,711$ 3,863,564$ 33,623,551$
Receivables, net 3,143,546 5,741 - 407,081 3,556,368
Inventory 181,818 - - - 181,818
Prepaid items 23,886 - - - 23,886
Due from other funds 1,218,939 228,349 - - 1,447,288
Other assets 34,925 - - - 34,925
Total assets 29,039,411$ 3,941,069$ 1,616,711$ 4,270,645$ 38,867,836$
LIABILITIES
Accounts payable 1,341,745$ 70,579$ -$ 297,353$ 1,709,677$
Accrued expenditures and taxes 546,697 - - - 546,697
Customer deposits 7,500 - - - 7,500
Unearned revenue 50,216 999,989 1,499,534 - 2,549,739
Due to other funds 30,138 2,855 113,684 656,375 803,052
Total liabilities 1,976,296 1,073,423 1,613,218 953,728 5,616,665
FUND BALANCES
Nonspendable:
Prepaid items 23,886 - - - 23,886
Inventory 181,818 - - - 181,818
Restricted:
Road maintenance - - - 329,867 329,867
Capital improvements - - - 442,070 442,070
Municipal Court - - - 273 273
American Rescue - - 3,493 - 3,493
Committed:
Council approved emergencies 7,000,000 - - - 7,000,000
Construction and road maintenance - - - 2,544,707 2,544,707
Debt service 699,594 - - - 699,594
Capital projects 35,000 2,867,646 - - 2,902,646
Unassigned 19,122,817 - - - 19,122,817
Total fund balances 27,063,115 2,867,646 3,493 3,316,917 33,251,171
Total liabilities and fund balances 29,039,411$ 3,941,069$ 1,616,711$ 4,270,645$ 38,867,836$
- 16 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
SEPTEMBER 30, 2022
See independent auditors’ report and notes to the financial statements.
Fund balances as reported on page 15 33,251,171$
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. 172,396,690
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (70,596,678)
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are unearned revenue in fund financial statements. 50,216
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. 3,545,294
Deferred outflows of resources related to OPEB obligations. 954,742
Deferred inflows are not financial resources and, therefore, are not reported
in fund financial statements.
Deferred inflows of resources related to net pension liability. (2,819,709)
Deferred inflows of resources related to OPEB obligations. (1,510,431)
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. 887,992
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 (1,231,138)
Net pension liability (7,320,076)
OPEB obligations (6,817,631)
Accrued interest on long-term debt is not due and payable in the
current period and, therefore, not included in fund financial statements. (3,203)
Compensated absences not expected to be paid with current resources
as determined under Governmental Accounting Standards are not reported
in fund financial statements. (1,531,560)
Net position of governmental activities as reported on page 13 119,255,679$
- 17 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2022
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 23,536,708$ -$ -$ 163,651$ 23,700,359$
Licenses and permits 6,137,069 - - - 6,137,069
Fines and forfeitures 267,322 - - - 267,322
Intergovernmental 2,350,066 641,589 144,250 1,423,114 4,559,019
Interest and rents 335,842 3,407 3,489 10,321 353,059
Charges for services 3,713,154 - - 1,063,398 4,776,552
Golf course revenue 1,241,278 - - - 1,241,278
Recreation department 636,242 - - - 636,242
Other 983,969 - - - 983,969
Total revenues 39,201,650 644,996 147,739 2,660,484 42,654,869
EXPENDITURES General government 7,884,245 - 30,566 9 7,914,820
Public safety 7,577,926 - - - 7,577,926
Public works 5,123,533 - - - 5,123,533
Cultural and recreational 6,185,841 - - - 6,185,841
Airport Authority 320,000 - - - 320,000 Public Library Board 859,000 - - - 859,000
Debt service payments:
Principal 300,000 - - 389,819 689,819
Interest - - - 15,238 15,238 Capital outlay 2,516,457 2,812,389 - 1,101,585 6,430,431
Total expenditures 30,767,002 2,812,389 30,566 1,506,651 35,116,608
Excess of revenues over
(under) expenditures 8,434,648 (2,167,393) 117,173 1,153,833 7,538,261
OTHER FINANCING
SOURCES (USES)
Proceeds from sale of capital assets 56,559 - - - 56,559 Issuance of notes payable 496,404 - - - 496,404
Transfers in 1,540,522 3,606,464 - 405,057 5,552,043
Transfers out (2,731,463) - (113,684) (1,827,415) (4,672,562)
Total other financing
sources (uses)(637,978) 3,606,464 (113,684) (1,422,358) 1,432,444
Net change in fund balances 7,796,670 1,439,071 3,489 (268,525) 8,970,705
Fund balances – beginning of year 19,266,445 1,428,575 4 3,585,442 24,280,466
FUND BALANCES – END OF YEAR 27,063,115$ 2,867,646$ 3,493$ 3,316,917$ 33,251,171$
- 18 -
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, 2022
See independent auditors’ report and notes to the financial statements.
Net change in fund balances – total governmental funds, page 17 8,970,705$
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. 6,203,612
Depreciation expense on governmental capital assets is included in the
capital assets in the statement of net position. (4,060,257)
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. (18,392)
The net effect of transactions involving donations of capital assets is to
increase net position in the statement of net position. 46,834
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 689,819
Proceeds from issuance of note payable (496,404)
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. 12,872
(Continued)
- 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, 2022 (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 (204,259)$
Accrued interest 4,708
Pensions 388,394
Postemployment benefit plans other than pensions 216,084
Transfer of certain items to business-type activities increase (decrease) net
position in the statement of net position but do not appear in in the
governmental fund because they are financial resources.
Capital assets (713,510)
Compensated absences 93,778
Pensions 643,949
Postemployment benefit plans other than pensions 721,444
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.169,715
Change in net position of governmental activities, page 14 12,669,092$
- 20 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2022
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
ASSETS
Current assets: Cash and cash equivalents 7,168,229$ 12,083,882$ 10,487,232$ 168,998$ 29,908,341$ 1,402,096$ Restricted cash held by fiscal agent 79,276 79,276 3,209,675 923,291 4,291,518 - Receivables, net 3,527,451 413,002 1,014,846 181,921 5,137,220 -
Inventories 463,798 520,100 259,294 - 1,243,192 -
Prepaid items 5,427 1,567 4,441 4,902 16,337 -
Due from other funds 4,911 24,094 625,639 30,009 684,653 129
Total current assets 11,249,092 13,121,921 15,601,127 1,309,121 41,281,261 1,402,225
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 2,519,203 432,453 1,744,256 - 4,695,912 -
Buildings and improvements 1,430,166 1,021,792 572,344 119,630 3,143,932 -
Vehicles and equipment 6,038,470 4,321,715 5,096,314 4,556,802 20,013,301 -
Distribution and collection systems 33,180,980 14,895,542 67,107,687 - 115,184,209 -
Less accumulated depreciation (18,885,463) (10,361,745) (31,254,614) (3,543,953) (64,045,775) -
Total noncurrent assets 32,001,626 11,937,959 43,467,199 1,132,479 88,539,263 -
Total assets 43,250,718 25,059,880 59,068,326 2,441,600 129,820,524 1,402,225
DEFERRED OUTFLOWS OF
RESOURCES
Deferred charge on refunding - - 63,366 - 63,366 -
Pension related items 403,304 288,444 462,686 347,879 1,502,313 - OPEB related items 92,394 80,845 146,291 115,493 435,023 -
Total deferred outflows of resources 495,698 369,289 672,343 463,372 2,000,702 -
LIABILITIES
Current liabilities: Accounts payable and accrued liabilities 1,731,265 565,983 731,260 103,341 3,131,849 315,421 Unearned revenue 125,765 37,000 641,629 - 804,394 12,021 Customer deposits 939,202 711,248 388,747 22,129 2,061,326 -
Warrants and notes payable 41,108 41,108 1,637,784 476,729 2,196,729 -
Compensated absences 51,033 36,863 67,947 31,476 187,319 -
Due to other funds 797,671 99,878 346,145 85,324 1,329,018 -
Total current liabilities 3,686,044 1,492,080 3,813,512 718,999 9,710,635 327,442
Noncurrent liabilities: Compensated absences 212,707 71,327 142,281 74,527 500,842 - Warrants and notes payable 188,332 188,332 7,503,336 973,586 8,853,586 -
Net pension liability 1,114,053 639,924 902,747 631,428 3,288,152 -
Total OPEB liability 659,771 577,299 1,044,637 824,713 3,106,420 -
Total noncurrent liabilities 2,174,863 1,476,882 9,593,001 2,504,254 15,749,000 -
Total liabilities 5,860,907 2,968,962 13,406,513 3,223,253 25,459,635 327,442
DEFERRED INFLOWS OF
RESOURCES
Pension related items 228,310 201,820 388,225 313,420 1,131,775 -
OPEB related items 146,171 127,900 231,437 182,714 688,222 -
Total deferred inflows of resources 374,481 329,720 619,662 496,134 1,819,997 -
NET POSITION
Net investment in capital assets 31,760,156 11,696,489 34,377,415 605,455 78,439,515 -
Restricted:
Debt service 79,276 79,276 3,158,884 - 3,317,436 - Capital improvements - - 50,791 923,291 974,082 - Unrestricted 5,671,596 10,354,722 8,127,404 (2,343,161) 21,810,561 1,074,783
Total net position 37,511,028$ 22,130,487$ 45,714,494$ (814,415)$ 104,541,594 1,074,783$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 186,791
Change in net position of business-type activities 104,728,385$
Business-type Activities - Enterprise Funds
- 21 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report and notes to the financial statements.
Governmental
Water and Activities -Electric Natural Gas Waste Water Sanitation Internal Fund Fund Fund Fund Total Service Fund
OPERATING REVENUES
Sales and services 19,910,368$ 10,084,617$ 14,096,809$ 2,758,935$ 46,850,729$ 4,524,842$
Other charges, sales and receipts 567,157 213,927 1,462,592 14,430 2,258,106 -
Total operating revenues 20,477,525 10,298,544 15,559,401 2,773,365 49,108,835 4,524,842
OPERATING EXPENSES
Energy purchases and
cost of goods sold 13,394,653 3,761,281 524,405 365,072 18,045,411 -
Salaries 1,463,164 942,255 1,973,942 1,085,619 5,464,980 -
Depreciation 994,022 531,751 1,928,302 321,150 3,775,225 -
Insurance 501,113 322,927 702,112 136,788 1,662,940 -
Electric energy furnished
to other departments 66,231 34,419 270,620 - 371,270 -
Maintenance 442,337 373,161 1,963,799 39,440 2,818,737 -
Benefit payments - - - - - 4,329,272
Other operating expense 1,324,425 1,704,259 2,817,188 1,317,876 7,163,748 -
Total operating expenses 18,185,945 7,670,053 10,180,368 3,265,945 39,302,311 4,329,272
OPERATING INCOME (LOSS)2,291,580 2,628,491 5,379,033 (492,580) 9,806,524 195,570
NONOPERATING
REVENUES (EXPENSES)
Interest expense (3,024) (3,024) (127,500) - (133,548) -
Interest income 116,276 106,587 145,136 555 368,554 3,042
Gain on sale of capital assets 302 22,984 41,943 15,755 80,984 -
Intergovernmental revenue 148,008 1,863 18,911 1,615 170,397 -
Distribution of joint
revenue (expense) – net - (75,634) - - (75,634) -
Total nonoperating
revenues (expenses)261,562 52,776 78,490 17,925 410,753 3,042
INCOME BEFORE TRANSFERS
AND OTHER ITEMS 2,553,142 2,681,267 5,457,523 (474,655) 10,217,277 198,612
TRANSFERS AND OTHER ITEMS
Capital contributions (46,393) 31,758 (41,323) (689,703) (745,661) -
Transfers in 294,762 - 113,684 683,113 1,091,559 -
Transfers out (537,655) (401,644) (698,571) (333,170) (1,971,040) -
Total transfers and other items (289,286) (369,886) (626,210) (339,760) (1,625,142) -
Change in net position 2,263,856 2,311,381 4,831,313 (814,415) 8,592,135 198,612
Net position – beginning of year 35,247,172 19,819,106 40,883,181 - 95,949,459 876,171
NET POSITION – END OF YEAR 37,511,028$ 22,130,487$ 45,714,494$ (814,415)$ 1,074,783$
Adjustment to reflect consolidation of Internal Service Fund activities
related to Enterprise Funds 28,897
Change in net position of business-type activities 8,621,032$
Business-type Activities - Enterprise Funds
- 22 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2022
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 20,810,394$ 10,303,501$ 15,963,951$ 2,613,573$ 49,691,419$ -$
Receipt from interfund services provided - - - - - 4,536,863
Paid to suppliers for goods and services (15,803,148) (6,247,217) (6,178,432) (1,826,391) (30,055,188) (4,203,386)
Paid to personnel for services (1,866,966) (1,091,443) (2,050,202) (884,230) (5,892,841) -
Net cash provided by (used in) operating activities 3,140,280 2,964,841 7,735,317 (97,048) 13,743,390 333,477
CASH FLOWS FROM INVESTING ACTIVITIES
Distribution of joint expense - (75,634) - - (75,634) -
Interest income 116,276 106,587 145,136 555 368,554 3,042
Net cash provided by investing activities 116,276 30,953 145,136 555 292,920 3,042
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Proceeds from notes payable - - - 1,450,315 1,450,315 -
Repayment of debt (40,630) (40,630) (1,618,740) - (1,700,000) -
Interest paid (3,197) (3,197) (205,371) - (211,765) -
Proceeds from disposal of capital assets - 2,975 37,650 15,755 56,380 -
Acquisition of capital assets (3,616,810) (1,152,427) (6,992,233) (684,161) (12,445,631) -
Net cash provided by (used in) capital and related
financing activities (3,660,637) (1,193,279) (8,778,694) 781,909 (12,850,701) -
CASH FLOWS FROM NONCAPITAL AND RELATED
FINANCING ACTIVITIES
Change in interfund receivable 17,587 (24,094) (300,278) (30,009) (336,794) (129)
Change in interfund payable 788,079 66,943 324,716 85,324 1,265,062 -
Government grants 148,008 1,863 18,911 1,615 170,397 -
Net cash payments to (from) other funds (242,893) (401,644) (584,887) 349,943 (879,481) -
Net cash provided by (used in) noncapital and related
financing activities 710,781 (356,932) (541,538) 406,873 219,184 (129)
INCREASE (DECREASE) IN CASH 306,700 1,445,583 (1,439,779) 1,092,289 1,404,793 336,390
CASH – BEGINNING OF YEAR 6,940,805 10,717,575 15,136,686 - 32,795,066 1,065,706
CASH – END OF YEAR 7,247,505$ 12,163,158$ 13,696,907$ 1,092,289$ 34,199,859$ 1,402,096$
Cash and cash equivalents 7,168,229$ 12,083,882$ 10,487,232$ 168,998$ 29,908,341$ 1,402,096$
Restricted cash held by fiscal agent 79,276 79,276 3,209,675 923,291 4,291,518 -
7,247,505$ 12,163,158$ 13,696,907$ 1,092,289$ 34,199,859$ 1,402,096$
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Operating income (loss) 2,291,580$ 2,628,491$ 5,379,033$ (492,580)$ 9,806,524$ 195,570$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 994,022 531,751 1,928,302 321,150 3,775,225 -
Proceeds from disposal of noncapital assets 302 20,009 4,292 - 24,603 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable 438,190 (26,634) 107,323 (181,921) 336,958 -
Decrease (increase) in inventories (83,818) (223,815) (45,102) - (352,735) -
Decrease (increase) in prepaid expenses (228) 183 (364) (4,902) (5,311) -
Decrease (increase) in deferred outflow of resources (2,609) (44,219) (107,576) (111,706) (266,110) -
Increase (decrease) in accounts payable 34,261 172,189 151,856 103,341 461,647 125,886
Increase (decrease) in customer deposits (190,171) (8,618) (63,170) 22,129 (239,830) -
Increase (decrease) in net unearned revenue 84,548 20,200 356,105 - 460,853 12,021
Increase (decrease) in deferred inflow of resources 113,976 157,190 322,034 290,983 884,183 -
Increase (decrease) in net pension liability (160,839) (140,765) (254,441) (200,989) (757,034) -
Increase (decrease) in compensated absences 24,661 (19,047) (24,246) 12,225 (6,407) -
Increase (decrease) in net OPEB obligation (403,595) (102,074) (18,729) 145,222 (379,176) -
Net cash provided by (used in) operating activities 3,140,280$ 2,964,841$ 7,735,317$ (97,048)$ 13,743,390$ 333,477$
Business-type Activities - Enterprise Funds
THIS PAGE INTENTIONALLY LEFT BLANK
- 23 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF NET POSITION
DISCRETELY PRESENTED COMPONENT UNITS
SEPTEMBER 30, 2022
See independent auditors’ report and notes to the financial statements.
Public Library Airport
Board Authority Total
ASSETS
Cash 660,546$ 218,890$ 879,436$
Receivables, net - 227,359 227,359
Prepaid items 7,169 45,866 53,035
Capital assets not being depreciated:
Land - 10,674,228 10,674,228
Construction in progress 184,744 160,864 345,608
Capital assets net of accumulated
depreciation:
Buildings and improvements - 8,787,483 8,787,483
Vehicles and equipment 48,847 35,280 84,127
Runways - 16,529,226 16,529,226
Total assets 901,306 36,679,196 37,580,502
DEFERRED OUTFLOWS OF
RESOURCES
Pension related items 118,499 - 118,499
Total assets and deferred
outflows of resources 1,019,805$ 36,679,196$ 37,699,001$
LIABILITIES
Accounts payable and accrued liabilities 47,551$ 37,332$ 84,883$
Customer deposits - 22,000 22,000
Long-term liabilities:
Due within one year - 250,000 250,000
Due in more than one year - 5,970,629 5,970,629
Net pension liability 387,175 - 387,175
Total liabilities 434,726 6,279,961 6,714,687
DEFERRED INFLOWS OF
RESOURCES
Pension related items 106,672 - 106,672
Service concession arrangement revenue
applicable to future years - 6,411,149 6,411,149
Total deferred inflows of resources 106,672 6,411,149 6,517,821
NET POSITION
Net investment in capital assets 233,591 29,966,452 30,200,043
Restricted:
Library improvements 173,485 - 173,485
Unrestricted 71,331 (5,978,366) (5,907,035)
Total net position 478,407 23,988,086 24,466,493
Total liabilities, deferred inflows of
resources, and net position 1,019,805$ 36,679,196$ 37,699,001$
- 24 - CITY OF FAIRHOPE, ALABAMA COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2022 See independent auditors’ report and notes to the financial statements. Operating CapitalCharges forGrants and Grants and Governmental Business-typeFunctions/Programs Expenses Services Contributions Contributions Activities Activities TotalGovernmental activities:Public Library Board 1,002,385$ 39,495$ 954,346$ -$ (8,544)$ -$ (8,544)$ Business-type activities:Airport Authority 972,949 309,956 568,630 247,718 - 153,355 153,355 1,975,334$ 349,451$ 1,522,976$ 247,718$ (8,544) 153,355 144,811 General revenues:Other- 3,075 3,075 Total general revenues - 3,075 3,075 Change in net position (8,544) 156,430 147,886 Net position – beginning 486,951 23,831,656 24,318,607 Net position – ending 478,407$ 23,988,086$ 24,466,493$ Changes in Net PositionProgram RevenuesNet (Expense) Revenue and
THIS PAGE INTENTIONALLY LEFT BLANK
NOTES TO THE FINANCIAL STATEMENTS
- 25 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Fairhope, Alabama (the City) was incorporated in 1908. The City operates under a Mayor –
Council form of government chosen at large every four years.
The accounting policies of the City conform to accounting principles generally accepted in the United
States of America as applicable to municipal governments. The following is a summary of the more
significant policies.
A. REPORTING ENTITY
The financial statements of the City have been prepared in conformity with the accounting
principles generally accepted in the United States of America (GAAP) as specified by the
Governmental Accounting Standards Board (GASB).
These financial statements present the primary government (the City) and its discretely
presented component units, entities for which the government is considered financially
accountable. The component units are reported in a separate column of the government-wide
statements to emphasize they are legally separate from the primary government. The discretely
presented component units have a September 30 fiscal year end.
Component Units
Fairhope Public Library – The Library has its own governing body which operates the City
public library and is appointed by the City Council. The City provides significantly all the annual
operating financial support to the Library. The Library's other sources of revenue come from
State financial assistance, gifts, bequests and user fees. The Library is reported as a
governmental component unit. The Library Board does not issue separate financial statements.
Fairhope Airport Authority – The Authority operates the City Airport and has its own governing
body which is appointed by the City Council. The City provides a significant portion of the annual
operating funds support to the Airport. The Airport's other sources of revenue come from Hangar
and Office rentals, and fuel sales. The Airport Authority is reported as a business-type component
unit. The Airport Authority does not issue separate financial statements.
These financial statements do not include the following:
Bay Medical Clinic Board
Industrial Board of the City of Fairhope
Medical Clinic Board – East, West or North
Downtown Redevelopment Authority
Parking Authority
City management does not exert significant influence or control and does not guarantee any of their
outstanding debts.
- 26 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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.
- 27 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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.
- 28 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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.
- 29 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 57,184$ 16,228$ 73,412$
Materials and supplies 124,634 1,226,964 1,351,598
Totals 181,818$ 1,243,192$ 1,425,010$
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.
- 30 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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.
- 31 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2022 totaled $9,924,051. 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.
- 32 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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.
- 33 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
N. NET POSITION AND EQUITY CLASSIFICATIONS (CONTINUED)
Fund Financial Statements
In accordance with Governmental Accounting Standards Board Statement 54, Fund Balance
Reporting and Governmental Fund Type Definitions, the City classifies governmental fund
balances as follows:
Nonspendable – Includes fund balance amounts that cannot be spent either because they
are not in spendable form, or for legal or contractual requirements.
Restricted fund balance – Consists of fund balances with constraints placed on the use
either by (1) external groups such as creditors, grantors, contributors, or laws or
regulations of other governments; (2) or the City’s own laws through its enabling
legislation and other provisions of its laws and regulations.
Committed fund balance – Consists of fund balances that are useable only for specific
purposes by formal action of the government’s highest level of decision making authority.
The City’s highest level of decision making lies with the Mayor of the City and the City
Council. In order to establish, modify or rescind a fund balance commitment, the Mayor
and City Council must pass a law by formal action committing the funds, by passage of a
resolution.
Assigned fund balance – Consists of fund balances that are intended to be used for specific
purposes but are neither restricted nor committed. Intent should be expressed by (1) the
governing body itself, or (2) a subordinate high-level body or official who the governing
body has delegated the authority to assign amounts to be used for specific purposes. The
Mayor and the City Council have the power to assign fund balance amounts to specific
purposes. The governing body must vote to grant authorization of assigned fund balances
to specific purposes.
Unassigned fund balances – All other fund balances that do not meet the definition of
“restricted, committed or assigned fund balances.” The General Fund is the only fund that
reports a positive unassigned fund balance amount.
The City considers restricted fund balances to have been spent when both restricted and
unrestricted fund balances are available. Also, the City considers assigned and committed fund
balances to have been spent when unassigned or unrestricted amounts are available.
O. LEASES
For the year ended September 30, 2022, the financial statements include the adoption of GASB
Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and
consistency of information about governments' leasing activities. This statement establishes a single
model for lease accounting based on the principle that leases are financings of the right to use an
underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an
intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources.
- 34 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 29, 2023, the date which the financial
statements were available to be issued. There were no material subsequent events which require
disclosure at September 30, 2022.
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.
- 35 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED)
Budgetary Information (Continued)
(3) The budget is enacted through City Council action.
(4) Reports are submitted to the City Council, showing approved budget and actual operations.
(5) The Mayor is authorized to transfer budgeted amounts within departments within any fund;
however, any revisions that alter the total expenditures of any fund or transfer of funds between
departments must be approved by the City Council.
(6) Formal budgetary integration is employed as a management control device during the year for
the General Fund.
(7) Budgets are adopted on a basis consistent with accounting principles generally accepted in the
United States of America.
(8) Budgetary data, if any, for capital project funds are budgeted over the life of the respective
project and not on an annual basis.
(9) All appropriations lapse at year end.
Deficit Fund Balance
Funds with deficit fund balance or net position are as follows:
Deficit
Amount
Sanitation 814,415$
NOTE 3 DEPOSIT AND INVESTMENT RISK
At September 30, 2022, the City had investments in U. S. Treasury money market mutual funds
through its trustee agreement for debt sinking funds. The fair value was $3,368,226. The average
maturity of the portfolio was 28 days.
Investment Risk – The City does not have a formal investment policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk – State statutes authorize the City’s investments. The City is authorized to invest in U.S.
Government obligations and its agencies or instrumentalities, direct obligations of the state, or SEC
registered mutual funds. The City has no investment policy that further limits investment choices. As of
September 30, 2022, the City’s mutual fund investments principal stability rating was AAAm as
reported by Standard & Poor’s.
- 36 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 3 DEPOSIT AND INVESTMENT RISK (CONTINUED)
Custodial Credit Risk – The City is a participant in the Security for Alabama Funds Enhancement
(SAFE) Program, a multiple financial institution collateral pool, administered by the State of Alabama.
The program, by law, provides administration of pledged collateral coverage for all governments and
agencies in the State and requires qualified financial institutions to provide collateral to the
administrator adequate to secure all deposits of public funds in that financial institution. The State
guarantees deposits identified as “public funds” will be adequately secured by insurance or collateral.
Any collateral shortages of one financial institution are assessed to other member financial institutions.
NOTE 4 RECEIVABLES
Receivables as of September 30, 2022, for the government’s individual major and nonmajor funds, and
the discretely presented components units, including the applicable allowances for uncollectable
accounts, are as follows:
Nonmajor
Capital Governmental Natural
General Projects Funds Electric Gas
Taxes 2,828,690$ -$ 24,638$ -$ -$
Accounts 42,474 3,520 455 3,441,612 458,050
Intergovernmental 1,563,763 2,221 381,988 400,162 4,657
4,434,927 5,741 407,081 3,841,774 462,707
Less allowance for uncollectable
accounts (1,291,381) - - (314,323) (49,705)
Total receivables 3,143,546$ 5,741$ 407,081$ 3,527,451$ 413,002$
Water and
Waste Water Sanitation Airport
Fund Fund Authority Total
Taxes -$ -$ -$ 2,853,328$
Accounts 1,246,695 218,628 6,968 5,418,402
Intergovernmental 17,219 - 220,391 2,590,401
1,263,914 218,628 227,359 10,862,131
Less allowance for uncollectable
accounts (249,068) (36,707) - (1,941,184)
Total receivables 1,014,846$ 181,921$ 227,359$ 8,920,947$
- 37 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2022 is shown below.
Due to/from other funds
Receivable Fund Payable Fund Amount
General Natural Gas 91,536$
Capital Projects 2,855
Electric 752,165
Water and Waste Water 117,796
Sanitation 85,324
Nonmajor Governmental 169,263
Capital Projects Water and Waste Water 228,349
Electric Natural Gas 4,911
Natural Gas Electric 24,094
Water and Waste Water Electric 21,412
Natural Gas 3,431
American Rescue Plan 113,684
Nonmajor Governmental 487,112
Sanitation General 30,009
Internal Service Fund General 129
Total 2,132,070$
Interfund Transfers
Capital Nonmajor Water and
General Projects Governmental Electric Waste Water Sanitation Total
General -$ 1,976,463$ 71,887$ -$ -$ 683,113$ 2,731,463$
American Rescue Plan - - - - 113,684 - 113,684
Nonmajor Governmental 288,545 1,538,870 - - - - 1,827,415
Electric 537,655 - - - - - 537,655
Natural Gas 163,132 91,131 - 147,381 - - 401,644
Water and Waste Water 551,190 - - 147,381 - - 698,571
Sanitation - - 333,170 - - - 333,170
Totals 1,540,522$ 3,606,464$ 405,057$ 294,762$ 113,684$ 683,113$ 6,643,602$
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.
- 38 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 6 CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2022 was as follows:
Beginning Ending
Balance Increases Decreases Transfers Balance
Governmental Activities
Capital assets not subject
to depreciation:
Land 27,727,658$ 16,000$ -$ -$ 27,743,658$
Construction in progress 2,558,141 3,252,065 (13,954) (1,178,135) 4,618,117
Total 30,285,799 3,268,065 (13,954) (1,178,135) 32,361,775
Other capital assets:
Buildings and improvements 44,430,685 509,776 - (119,630) 44,820,831
Vehicles and equipment 20,700,490 1,381,241 (187,333) (3,691,140) 18,203,258
Infrastructure 74,879,994 1,091,364 - 1,039,468 77,010,826
Total 140,011,169 2,982,381 (187,333) (2,771,302) 140,034,915
Less accumulated depreciation for:
Buildings and improvements (16,229,405) (1,243,524) - 68,158 (17,404,771)
Vehicles and equipment (15,783,520) (1,288,652) 182,895 3,167,769 (13,721,508)
Infrastructure (37,942,318) (1,528,081) - - (39,470,399)
Total accumulated depreciation (69,955,243) (4,060,257) 182,895 3,235,927 (70,596,678)
Other capital assets, net 70,055,926 (1,077,876) (4,438) 464,625 69,438,237
Governmental capital assets, net 100,341,725$ 2,190,189$ (18,392)$ (713,510)$ 101,800,012$
Depreciation was charged to governmental activities as follows:
General government 676,868$
Public safety 546,013
Public works 1,761,535
Cultural and recreational 870,500
Library 205,341
Total 4,060,257$
- 39 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 4,565,719 3,848,359 - (3,718,166) 4,695,912
Total 14,077,313 3,848,359 - (3,718,166) 14,207,506
Other capital assets:
Buildings and improvements 2,885,335 121,053 - 137,544 3,143,932
Vehicles and equipment 14,369,964 2,108,446 (294,916) 3,829,807 20,013,301
Distribution and collection system 105,116,183 6,367,774 - 3,700,252 115,184,209
Total 122,371,482 8,597,273 (294,916) 7,667,603 138,341,442
Less accumulated depreciation for:
Buildings and improvements (1,592,088) (60,735) - (68,158) (1,720,981)
Vehicles and equipment (11,518,706) (1,170,810) 294,916 (3,167,769) (15,562,369)
Distribution and collection system (44,218,745) (2,543,680) - - (46,762,425)
Total accumulated depreciation (57,329,539) (3,775,225) 294,916 (3,235,927) (64,045,775)
Other capital assets, net 65,041,943 4,822,048 - 4,431,676 74,295,667
Capital assets, net 79,119,256$ 8,670,407$ -$ 713,510$ 88,503,173$
Component Unit – Public Library
Capital assets not subject to depreciation:
Construction in progress -$ 184,744$ -$ -$ 184,744$
Other capital assets:
Vehicles and equipment 546,132 7,743 - - 553,875
Less accumulated depreciation (487,434) (17,594) - - (505,028)
Capital assets, net 58,698$ 174,893$ -$ -$ 233,591$
Component Unit – Airport Authority
Capital assets not subject to depreciation:
Land 10,674,228$ -$ -$ -$ 10,674,228$
Construction in progress 249,497 51,742 - (140,375) 160,864
Total 10,923,725 51,742 - (140,375) 10,835,092
Other capital assets:
Buildings and improvements 11,741,808 700,000 - 140,375 12,582,183
Vehicles and equipment 128,485 10,860 - - 139,345
Runways 19,387,153 - - - 19,387,153
Total 31,257,446 710,860 - 140,375 32,108,681
Less accumulated depreciation for:
Buildings and improvements (3,503,600) (291,100) - - (3,794,700)
Vehicles and equipment (101,105) (2,960) - - (104,065)
Runways (2,599,432) (258,495) - - (2,857,927)
Total accumulated depreciation (6,204,137) (552,555) - - (6,756,692)
Other capital assets, net 25,053,309 158,305 - 140,375 25,351,989
Capital assets, net 35,977,034$ 210,047$ -$ -$ 36,187,081$
- 40 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 7 LONG-TERM DEBT
Long-term debt activity for the year ended September 30, 2022:
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES
Notes payable 1,424,553$ 496,404$ (689,819)$ 1,231,138$ 597,905$
Compensated absences 1,421,080 893,414 (782,934) 1,531,560 373,472
Governmental activities
long-term liabilities 2,845,633 1,389,818 (1,472,753) 2,762,698 971,377
BUSINESS-TYPE ACTIVITIES
Direct placements 11,300,000 - (1,700,000) 9,600,000 1,720,000
Notes payable - 1,450,315 - 1,450,315 476,729
Compensated absences 600,790 486,779 (399,408) 688,161 187,319
Business-type activities
long-term liabilities 11,900,790 1,937,094 (2,099,408) 11,738,476 2,384,048
Total long-term debt 14,746,423$ 3,326,912$ (3,572,161)$ 14,501,174$ 3,355,425$
Notes Payable – Governmental Activities
Notes payable at September 30, 2022 is comprised of the following:
600,000$
81,317
53,417
496,404
1,231,138$
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 Iberia Bank dated September 25, 2019, original
obligation of $236,912 interest rate 2.80%, principal payments
through October 15, 2022. The note is collateralized by the
underlying equipment purchased.
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.
Note payable with Iberia Bank dated February 5, 2020, original
obligation of $155,999 interest rate 2.77%, principal payments
through February 1, 2023. The note is collateralized by the
underlying equipment purchased.
- 41 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Notes Payable – Governmental Activities (Continued)
The following schedule illustrates debt service to maturity for the note payable at September 30, 2022:
Year
Ending
September 30, Principal Interest Total
2023 597,905$ 10,761$ 608,666$
2024 465,449 4,690 470,139
2025 167,784 2,355 170,139
1,231,138$ 17,806$ 1,248,944$
Warrants from Direct Placements – Business-type Activities
The following is a summary of warrants from direct placement in proprietary funds as of September 30,
2022:
9,600,000$
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 $9,600,000
contain a provision that in event of default, outstanding amounts become due immediately if the City is
unable to make payment.
- 42 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Warrants from Direct Placements – Business-type Activities (Continued)
The following schedule illustrates debt service to maturity for warrants from direct placement in
proprietary funds at September 30, 2022:
Year
Ending
September 30, Principal Interest Total
2023 1,720,000$ 111,872$ 1,831,872$
2024 1,740,000 89,728 1,829,728
2025 1,765,000 67,296 1,832,296
2026 1,785,000 44,576 1,829,576
2027 505,000 29,920 534,920
2028-2031 2,085,000 53,920 2,138,920
9,600,000$ 397,312$ 9,997,312$
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, 2022 is comprised of the following:
1,450,315$
Note payable with United Bank dated September 28, 2022,
original obligation of $1,450,315, interest rate 1.403%, principal
payments through September 28, 2025. The note is collateralized
by the underlying equipment purchased.
- 43 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Note Payable – Business-type Activities (Continued)
The following schedule illustrates debt service to maturity for the note payable in proprietary funds at
September 30, 2022:
Year
Ending
September 30, Principal Interest Total
2023 476,729$ 20,355$ 497,084$
2024 483,382 13,701 497,083
2025 490,204 6,880 497,084
1,450,315$ 40,936$ 1,491,251$
Bond from Direct Placements – Component Units
The following is a summary of the long-term debt of the Airport Authority as of September 30, 2022:
6,220,629$
Airport Improvement Refunding Bond, Series 2021, dated March
16, 2021, original debt obligation of $6,695,629, interest rate
1.14%, principal payable annually through September 1, 2027.
The Airport Improvement Refunding Bond, Series 2021, is secured by a pledge of payments received
from the City pursuant to the 2020 Funding Agreement, dated March 16, 2021. The 2021 Funding
Agreement states the City shall appropriate to the Airport Authority the amount needed to satisfy the
annual debt service of the Airport Improvement Refunding Bond, Series 2021.
- 44 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 7 LONG-TERM DEBT (CONTINUED)
Bond from Direct Placements – Component Units (Continued)
The following is a summary of debt service requirements to maturity of long-term debt of the Airport
Authority as of September 30, 2022:
Year
Ending
September 30, Principal Interest Total
2023 250,000$ 70,915$ 320,915$
2024 275,000 68,065 343,065
2025 275,000 64,930 339,930
2026 275,000 61,795 336,795
2027 5,145,629 114,185 5,259,814
6,220,629$ 379,890$ 6,600,519$
Direct Placements
Component Units
The Airport Authority’s outstanding bond from direct placement of $6,220,629 contains a provision that
in event of default, outstanding amounts become due immediately if the Airport Authority is unable to
make payment.
NOTE 8 SALARIES – PROPRIETARY FUNDS
The following is a summary of employees’ salaries for the business-type activities for the year ended
September 30, 2022:
Water and
Electric Natural Gas Waste Water Sanitation
Fund Fund Fund Fund
Total salaries 1,514,803$ 1,089,597$ 2,063,445$ 1,085,619$
Less:
Salaries capitalized for plant additions 51,639 147,342 89,503 -
Salaries charged to operations 1,463,164$ 942,255$ 1,973,942$ 1,085,619$
NOTE 9 RISK MANAGEMENT AND CONTINGENCIES
The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City obtains coverage
from commercial insurance companies and effectively manages risk through various employee
education and prevention programs. There were no instances where settlements exceeded insurance
coverage in the last three years.
Various lawsuits are pending against the City. City management believes that the potential adverse
impact of these claims is mitigated by insurance and will not be material to the financial statements of
the City.
- 45 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 Employees’ Retirement System (ERS), an agent multiple-employer public employee retirement plan,
was established as of October 1, 1945, pursuant to the Code of Alabama 1975, Title 36, Chapter 27 (Act
515 of the Legislature of 1945). The purpose of the ERS is to provide retirement allowances and other
specified benefits for state employees, State Police, and, on an elective basis, to all cities, counties, towns,
and quasi-public organizations. The responsibility for the general administration and operation of ERS is
vested in its Board of Control which consists of 13 trustees. The Plan is administered by the Retirement
Systems of Alabama (RSA). The Code of Alabama 1975, Title 36, Chapter 27 grants the authority to
establish and amend the benefit terms to the ERS Board of Control. The Plan issues a publicly available
financial report that can be obtained at www.rsa-al.gov.
The ERS Board of Control consists of 13 trustees as follows:
1) The Governor, ex officio.
2) The State Treasurer, ex officio.
3) The State Personnel Director, ex officio.
4) The State Director of Finance, ex officio.
5) Three vested members of ERS appointed by the Governor for a term of four years, no two of
whom are from the same department of state government nor from any department of which
an ex officio trustee is the head.
6) Six members of ERS who are elected by members from the same category of ERS for a term
of four years as follows:
a. Two retired members with one from the ranks of retired state employees and one from
the ranks of retired employees of a city, county, or a public agency each of whom is an
active beneficiary of ERS.
b. Two vested active state employees.
c. Two vested active employees of an employer participating in ERS pursuant to Code of
Alabama 1975, Section 36-27-6.
- 46 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Benefits Provided
State law establishes retirement benefits as well as death and disability benefits and any ad hoc increase
in postretirement benefits for the ERS. Benefits for ERS members vest after 10 years of creditable
service. State employees who retire after age 60 (52 for State Police) with 10 years or more of creditable
service or with 25 years of service (regardless of age) are entitled to an annual retirement benefit, payable
monthly for life. Local employees who retire after age 60 with 10 years or more of creditable service or
with 25 or 30 years of service (regardless of age), depending on the particular entity’s election, are
entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement
benefits are based on a guaranteed minimum or a formula method, with the member receiving payment
under the method that yields the highest monthly benefit. Under the formula method, members of the
ERS (except State Police) are allowed 2.0125% of their average final compensation (highest 3 of the last
10 years) for each year of service. State Police are allowed 2.875% for each year of State Police service
in computing the formula method.
Act 377 of the Legislature of 2012 established a new tier of benefits (Tier 2) for members hired on or
after January 1, 2013. Tier 2 ERS members are eligible for retirement after age 62 (56 for State Police)
with 10 years or more of creditable service and are entitled to an annual retirement benefit, payable
monthly for life. Service and disability retirement benefits are based on a guaranteed minimum or a
formula method, with the member receiving payment under the method that yields the highest monthly
benefit. Under the formula method, Tier 2 members of the ERS (except State Police) are allowed 1.65%
of their average final compensation (highest 5 of the last 10 years) for each year of service. State Police
are allowed 2.375% for each year of state police service in computing the formula method.
Members are eligible for disability retirement if they have 10 years of credible service, are currently in-
service, and determined by the RSA Medical Board to be permanently incapacitated from further
performance of duty. Preretirement death benefits equal to the annual earnable compensation of the
member as reported to the Plan for the preceding year ending September 30 are paid to the beneficiary.
Act 132 of the Legislature of 2019 allowed employers who participate in the ERS pursuant to Code of
Alabama 1975, Section 36-27-6 to provide Tier 1 retirement benefits to their Tier 2 members. Tier 2
members of employers adopting Act 2019-132 will contribute 7.5% of earnable compensation for
regular employees and 8.5% for firefighters and law enforcement officers. A total of 590 employers
adopted Act 2019-132.
The ERS serves approximately 907 local participating employers. The ERS membership includes
approximately 104,510 participants. As of September 30, 2020, membership consisted of:
ERS City Library
Retirements and beneficiaries currently receiving benefits 29,727 118 7
Terminated employees entitled to but not yet receiving benefits 2,130 15 -
Terminated employees not entitled to a benefit 16,415 66 9
Active members 56,184 336 14
Post-DROP participants who are still in active service 54 - -
Totals 104,510 535 30
- 47 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Contributions
Covered members of the ERS contributed 5% of earnable compensation to the ERS as required by statute
until September 30, 2011. From October 1, 2011, to September 30, 2012, covered members of the ERS
were required by statute to contribute 7.25% of earnable compensation. Effective October 1, 2012,
covered members of the ERS are required by statute to contribute 7.50% of earnable compensation.
Certified law enforcement, correctional officers, and firefighters of the ERS contributed 6% of earnable
compensation as required by statute until September 30, 2011. From October 1, 2011, to September 30,
2012, certified law enforcement, correctional officers, and firefighters of the ERS were required by
statute to contribute 8.25% of earnable compensation. Effective October 1, 2012, certified law
enforcement, correctional officers, and firefighters of the ERS are required by statute to contribute 8.50%
of earnable compensation. State Police of the ERS contribute 10% of earnable compensation. ERS local
participating employers are not required by statute to increase contribution rates for their members.
Employers participating in the ERS pursuant to Code of Alabama 1975, Section 36-27-6 were not
required by statue to increase covered member contribution rates but were provided the opportunity to do
so through Act 2011-676. By adopting Act 2011-676 Tier 1 regular members contribution rates increased
from 5% to 7.5% of earnable compensation and Tier 1 firefighters and law enforcement officers
increased from 6% to 8.5% of earnable compensation.
Tier 2 covered members of the ERS contribute 6% of earnable compensation to the ERS as required by
statute. Tier 2 certified law enforcement, correctional officers, and firefighters of the ERS are required by
statute to contribute 7% of earnable compensation. Tier 2 State Police members of the ERS contribute
10% of earnable compensation. These contribution rates are the same for Tier 2 covered members of
ERS local participating employers.
The ERS establishes rates based upon an actuarially determined rate recommended by an independent
actuary. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits
earned by employees during the year with additional amounts to finance any unfunded accrued liability,
the preretirement death benefit, and administrative expenses of the Plan. For the year ended September
30, 2020, the City’s active employee contribution rate was 8.00% of covered employee payroll. The
Fairhope Public Library’s active employee contribution rate was 7.00% of covered employee payroll.
The City’s contractually required contribution rate for the year ended September 30, 2022, was 9.05% of
pensionable pay for Tier 1 employees, and 7.29% of pensionable pay for Tier 2 employees. The Fairhope
Public Library’s contractually required contribution rate for the year ended September 30, 2022, was
12.37% of pensionable pay for Tier 1 employees, and 11.06% of pensionable pay for Tier 2 employees.
These required contribution rates are based upon the actuarial valuation as of September 30, 2019, a
percent of annual pensionable payroll, and actuarially determined as an amount that, when combined
with member contributions, is expected to finance the costs of benefits earned by members during the
year, with an additional amount to finance any unfunded accrued liability. Total employer contributions
to the pension plan from the City were $1,249,119 and $58,907 from the Fairhope Public Library for the
year ended September 30, 2022.
- 48 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Net Pension Liability
The City’s and Fairhope Public Library’s net pension liabilities were measured as of September 30,
2021, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of September 30, 2020 rolled forward to September 30, 2021 using standard roll-
forward techniques as shown in the following table:
City of Fairhope
Expected Actual
(a) Total pension liability for September 30, 2020 51,635,678$ 54,666,183$
(b) Discount rate 7.70%7.45%
(c) Entry age normal cost for the period
October 1, 2020 to September 30, 2021 1,391,051 1,523,699
(d) Transfer among employers - 176,817
(e) Actual benefit payments and refunds for
October 1, 2020 to September 30, 2021 (2,905,374) 2,905,374
(f) Total Pension Liability as of September 20, 2021
[(a) x (1.0745)] + (c) + (d) + [(e) x (1.03725)] 53,985,445$ 57,425,731$
(g) Difference between expected and actual 3,440,286$
(h) Less liability transferred for immediate recognition -
(i) Experience (gain)/loss 3,440,286$
- 49 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 10 PENSION PLAN (CONTINUED)
Net Penson Liability (Continued)
Fairhope Public Library
Expected Actual
(a) Total pension liability for September 30, 2020 1,539,188$ 1,591,041$
(b) Discount rate 7.70%7.45%
(c) Entry age normal cost for the period
October 1, 2020 to September 30, 2021 27,256 29,438
(d) Transfers among employers - -
(e) Actual benefit payments and refunds for
October 1, 2020 to September 30, 2021 (77,468) (77,468)
(f) Total Pension Liability as of September 20, 2021
[(a) x (1.0745)] + (c) + (d) + [(e) x (1.03725)] 1,604,511$ 1,658,657$
(g) Difference between expected and actual 54,146$
(h) Less liability transferred for immediate recognition -
(i) Experience (gain)/loss 54,146$
Actuarial Assumptions
The total pension liability as of September 30, 2021, was determined based on the annual actuarial
funding valuation report prepared as of September 30, 2020. The key actuarial assumptions are
summarized below:
Inflation 2.50%
Salary increases 3.25% – 6.00%
Investment rate of return *7.45%
* Net of pension plan investment expense
- 50 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2020 valuation were based on the results of an
actuarial experience study for the period October 1, 2015 – September 30, 2020.
The long-term expected rate of return on pension plan investments was determined using a log-normal
distribution analysis in which best-estimate ranges of expected future real rates of return (expected
returns, net of pension plan investment expense and inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting the expected
future real rates of return by the target asset allocation percentage and by adding expected inflation. The
target asset allocation and best estimates of geometric real rates of return for each major asset class are
as follows:
Long-term
Target Expected Rate
Allocation of Return *
Fixed Income 15.0% 2.8%
U.S. Large Stocks 32.0% 8.0%
U.S. Mid Stocks 9.0% 10.0%
U.S. Small Stocks 4.0% 11.0%
International Developed Market Stocks 12.0% 9.5%
International Emerging Market Stocks 3.0% 11.0%
Alternatives 10.0% 9.0%
Real Estate 10.0% 6.5%
Cash equivalents 5.0% 1.5%
100.0%
*Includes assumed rate of inflation of 2.00%
- 51 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2020 51,635,678$ 38,608,812$ 13,026,866$
Changes for the year:
Service cost 1,391,051 - 1,391,051
Interest 3,864,090 - 3,864,090
Changes of assumptions 1,996,549 - 1,996,549
Differences between expected
and actual experience 1,266,920 - 1,266,920
Contributions – employer - 1,342,614 (1,342,614)
Contributions – employee - 1,057,424 (1,057,424)
Net investment income - 8,537,210 (8,537,210)
Benefit payments, including refunds
of employee contributions (2,905,374) (2,905,374) -
Transfers among employers 176,817 176,817 -
Net Changes 5,790,053 8,208,691 (2,418,638)
Balances at September 30, 2021 57,425,731$ 46,817,503$ 10,608,228$
- 52 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2020 1,539,188$ 1,052,295$ 486,893$
Changes for the year:
Service cost 27,256 - 27,256
Interest 115,535 - 115,535
Changes of assumptions 60,163 - 60,163
Differences between expected
and actual experience (6,017) - (6,017)
Contributions – employer - 39,288 (39,288)
Contributions – employee - 25,137 (25,137)
Net investment income - 232,230 (232,230)
Benefit payments, including refunds
of employee contributions (77,468) (77,468) -
Transfers among employers - - -
Net Changes 119,469 219,187 (99,718)
Balances at September 30, 2021 1,658,657$ 1,271,482$ 387,175$
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 17,722,874$ 10,608,228$ 4,669,884$
Net pension liability, Fairhope Public Library 530,890$ 387,175$ 264,286$
- 53 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2021. The
supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared
as of September 30, 2021. 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, 2022, the City recognized pension expense of $518,365 while the
Fairhope Public Library recognized pension expense of $9,182. The fund in which the related payroll
costs are expended will be used to liquidate the net pension liability. At September 30, 2022, the City and
Fairhope Public Library reported deferred outflows of resources and deferred inflows of resources,
respectively, related to pensions of the following sources:
City of Fairhope
Deferred Deferred
Outflows of Inflows of
Resources Resources
Governmental Activities:
Differences between expected and actual experience 1,100,716$ 497,334$
Changes of assumption 1,387,059 -
Net difference between projected and actual earnings
on plan investments - 2,322,375
Employer contributions subsequent to measurement date 1,057,519 -
Governmental activities pension related items 3,545,294 2,819,709
Business-type Activities:
Differences between expected and actual experience 501,490 73,691
Changes of assumption 631,950 -
Net difference between projected and actual earnings
on plan investments - 1,058,084
Employer contributions subsequent to measurement date 368,873 -
Business-type activities pension related items 1,502,313 1,131,775
5,047,607$ 3,951,484$
- 54 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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,
2023 (74,479)$
2024 (135,935)
2025 (489,777)
2026 (525,194)
2027 511,177
Thereafter 383,939
(330,269)$
Fairhope Public Library
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual experience 12,403$ 14,261$
Changes of assumption 53,051 -
Net difference between projected and actual earnings
on plan investments - 92,411
Employer contributions subsequent to measurement date 53,045 -
Total 118,499$ 106,672$
- 55 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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,
2023 4,861$
2024 1,081
2025 (16,818)
2026 (30,342)
2027 -
Thereafter -
(41,218)$
NOTE 11 COMMITMENTS
The City has various contractual commitments outstanding at year end. The commitments under these
contracts totaled $19,042,530 The commitments funded from governmental activities will be
$1,655,966 and from business-type activities will be $17,386,564.
NOTE 12 DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan permits employees to defer a portion of their salary until future
years. The plan was established by and is administered by the Retirement Systems of Alabama. Any
plan changes are at the discretion of the administrator. The deferred compensation is not available to
employees until termination, retirement, death, or unforeseeable emergency. The City makes no
contributions to the plan.
All amounts of compensation deferred under the plan, all property and rights purchased with those
amounts, and all income attributable to those amounts, property, or rights are (until paid or made
available to the employee or other beneficiary) solely the property and rights of the individuals who
participate in the deferred compensation plan and are not subject to the claims of the City's general
creditors.
- 56 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 99
Totals 133
Total OPEB Liability
The City’s total OPEB liability of $9,,924,051 was measured as of September 30, 2021 and was
determined by an actuarial valuation as of September 30, 2020.
- 57 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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, 2020 actuarial
valuation was determined using the following actuarial assumptions and other inputs, applied to all periods
included in the measurement, unless otherwise specified:
Inflation 2.50%
Real wage growth 0.25%
Wage inflation 2.75%
Salary increases 3.25% – 6.00%
Municipal bond index rate
Prior measurement date 2.21%
Measurement date 2.26%
Healthcare cost trend rates
Pre-Medicare 7.00% for 2020 decreasing to an ultimate
rate of 4.50% by 2030
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, 2020 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, 2020 valuation were based on a review
of recent plan experience performed concurrently with the September 30, 2020 valuation.
- 58 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 13 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Changes in Total OPEB Liability
Total OPEB
Liability
Balance at September 30, 2021 10,633,660$
Changes for the year:
Service cost 307,242
Interest 231,803
Differences between expected
and actual experience (227,382)
Changes of assumptions or other inputs (730,010)
Benefit payments (291,262)
Net Changes (709,609)
Balance at September 30, 2022 9,924,051$
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using a discount rate that is 1-percentage-point lower (1.26%) or 1-
percentage-point higher (3.26%) than the current discount rate:
1% Decrease Current Rate 1% Increase
(1.26%) (2.26%) (3.26%)
Total OPEB liability 10,616,107$ 9,924,051$ 9,265,478$
- 59 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 8,961,013$ 9,924,051$ 11,024,891$
OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources Related to OPEB
For the year ended September 30, 2022, the City recognized OPEB expense of $291,263. The fund in
which the related payroll costs are expended will be used to liquidate the total OPEB liability. At
September 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Governmental Activities:
Differences between expected and actual experience 207,957$ 956,784$
Changes of assumption 502,979 553,647
Employer contributions subsequent to measurement date 243,806 -
Governmental activities OPEB related items 954,742 1,510,431
Business-type Activities:
Differences between expected and actual experience 94,755 435,954
Changes of assumption 229,179 252,268
Employer contributions subsequent to measurement date 111,089 -
Business-type activities OPEB related items 435,023 688,222
1,389,765$ 2,198,653$
- 60 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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,
2022 (774,886)$
2023 (234,567)
2024 (20,496)
2025 (133,834)
2026 -
Thereafter -
(1,163,783)$
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 $2,092,500 at September 30, 2022.
- 61 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 $742,053 at September 30, 2022.
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 $719,571 at September 30, 2022.
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 $1,292,107 at September 30, 2022.
- 62 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 $405,000 at September 30, 2022.
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 $477,867 at September 30, 2022.
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 $682,051 at September 30, 2022.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(continued)
NOTE 16 FAIR VALUE DISCLOSURES
Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those
that GASB Statements require or permit in the statement of net position at the end of each reporting
period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s
fair value.
Level 1 inputs are quoted prices in active markets for identical assets.
Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Investments’ fair value measurements are as follows at September 30, 2022:
Level 1 Level 2 Level 3 Total
Treasury portfolio 3,368,227$ -$ -$ 3,368,227$
AMIC Insurance - - 36,090 36,090
Total 3,368,227$ -$ 36,090$ 3,404,317$
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, 2022 totaled $25,421.
The City does not collect property taxes. The Revenue Commissioner of Baldwin County is responsible
for such collection.
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CITY OF FAIRHOPE, ALABAMA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
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 96, Subscription-Based Information Technology Arrangements. This Statement provides
accounting and financial reporting guidance for subscription-based information technology
arrangements (SBITAs). This Statement 1) defines a SBITA; 2) establishes that a SBITA results in a
right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; 3)
provides the capitalization criteria for outlays other than subscription payments, including implementation
costs of a SBITA; and 4) requires note disclosures regarding a SBITA. To the extent relevant, the
standards for SBITAs are based on the standards established in GASB 87, Leases, as amended.
Requirements for this Statement will take effect for financial statements whose fiscal year begins after
June 15, 2022.
GASB 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.
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REQUIRED SUPPLEMENTARY INFORMATION
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
City of Fairhope
2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 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 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 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 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 2022 were based on the September 30, 2019
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 24.4 years
Asset valuation method Five year smoothed fair value
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return 7.70%, net of pension
plan investment
expense, including
inflation
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015 through 2022.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF EMPLOYER CONTRIBUTIONS
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
Fairhope Public Library
2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 58,907$ 40,428$ 33,956$ 33,677$ 34,636$ 41,630$ 39,481$ 43,472$
Contributions in relation to the actuarially
determined contribution 58,907 40,428 33,956 33,677 34,636 41,630 39,481 43,472
Contribution deficiency (excess)-$ -$ -$ -$ -$ -$ -$ -$
Covered payroll 537,297$ 478,807$ 473,525$ 501,964$ 489,687$ 486,684$ 426,252$ 426,252$
Contributions as a percentage of covered
payroll 11%8%7%7%7%9%9%10%
Notes to Schedule
Actuarially determined contribution rates are calculated as of September 30, three years prior to the end of the fiscal
year in which contributions are reported. Contributions for fiscal year 2022 were based on the September 30, 2019
actuarial valuation.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age
Amortization method Level percent closed
Remaining amortization period 24.4 years
Asset valuation method Five year smoothed fair value
Inflation 2.75%
Salary increases 3.25% – 5.00%
Investment rate of return 7.70%, net of pension
plan investment
expense, including
inflation
*This schedule is presented to illustrate the requirement to show information for 10 years. However, currently,
information is only available for 2015 through 2022.
- 67 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2021 2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 1,391,051$ 1,171,361$ 1,106,681$ 1,072,514$ 1,075,003$ 997,552$ 975,740$ 944,066$
Interest 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 1,266,920 299,167 557,843 (1,109,067) (296,198) (52,317) 83,217 -
Changes in assumptions 1,996,549 - - 251,496 - 1,344,385 - -
Benefit payments, including refunds of
employee contributions (2,905,374) (2,884,262) (2,876,661) (2,502,104) (2,213,531) (1,969,227) (2,247,432) (2,210,748)
Transfer among employers 176,817 426,549 40,780 (113,767) (317,929) (76,441) - -
Net change in total pension liability 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 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)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 1,342,614$ 1,200,051$ 1,160,273$ 1,107,892$ 1,082,206$ 1,163,477$ 1,035,070$ 1,011,234$
Contributions – member 1,057,424 913,202 807,355 796,436 679,081 680,391 621,817 599,215
Net investment income 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 (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 176,817 426,549 40,780 (113,767) (317,929) (76,441) (16,923) (36,268)
Net change in plan fiduciary net position 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 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)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)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 81.53% 74.77% 76.31% 79.92%76.28% 71.67% 71.00% 75.01%
Covered payroll 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 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 2021.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN NET PENSION LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2021 2020 2019 2018 2017 2016 2015 2014
Total pension liability
Service cost 27,256$ 32,407$ 29,287$ 28,941$ 31,457$ 37,134$ 37,305$ 36,648$
Interest 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 (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 (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 119,469 117,098 51,601 67,530 74,491 154,750 (18,628) 67,716
Total pension liability – beginning 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)1,658,657$ 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 39,288$ 32,554$ 33,178$ 33,039$ 40,040$ 39,583$ 43,472$ 43,802$
Contributions – member 25,137 44,410 23,823 22,728 22,527 21,976 20,166 19,155
Net investment income 232,230 56,580 24,809 82,409 100,700 72,223 8,684 81,118
Benefit payments, including refunds of
employee contributions (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 219,187 67,730 11,987 81,836 107,850 75,227 (57,300) 95,284
Plan net position – beginning 1,052,295 984,565 972,578 890,742 782,892 707,665 764,965 669,681
Plan net position – ending (b)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)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 76.66% 68.37% 69.23% 70.97% 68.36% 63.73% 65.91% 70.16%
Covered payroll 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 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 2021.
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CITY OF FAIRHOPE, ALABAMA
SCHEDULES OF CHANGES IN TOTAL OPEB LIABILITY
LAST 10 FISCAL YEARS ENDING SEPTEMBER 30*
See independent auditors’ report.
2021 2020 2019 2018 2017
Total OPEB liability
Service cost 307,242$ 283,527$ 203,973$ 401,209$ 441,966$
Interest 231,803 250,165 340,720 442,731 371,696
Differences between expected and actual
experience (227,382) 462,366 85,836 (4,733,827) 2,650
Changes in assumptions (730,010) 431,719 1,071,768 45,224 (757,435)
Benefit payments (291,262) (395,053) (499,978) (313,549) (373,128)
Net change in total OPEB liability (709,609) 1,032,724 1,202,319 (4,158,212) (314,251)
Total OPEB liability – beginning 10,633,660 9,600,936 8,398,617 12,556,829 12,871,080
Total OPEB liability – ending 9,924,051$ 10,633,660$ 9,600,936$ 8,398,617$ 12,556,829$
Covered employee payroll 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 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 2021.
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 2022.
Changes of assumptions and other inputs reflect a change in the discount rate from 2.66% to 2.21% due to a change in
the municipal bond rate.
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CITY OF FAIRHOPE, ALABAMA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
Variance
Actual with Final
Original Final Amounts Budget
REVENUES
Local taxes 20,048,830$ 21,048,830$ 23,536,708$ 2,487,878$
Licenses and permits 4,604,804 4,604,804 6,137,069 1,532,265
Fines and forfeitures 200,000 200,000 267,322 67,322
Intergovernmental 245,000 245,000 2,350,066 2,105,066
Interest and rents 209,976 209,976 335,842 125,866
Charges for services 3,713,154 3,713,154 3,713,154 -
Golf course revenue 1,114,500 1,114,500 1,241,278 126,778
Recreation Department 378,000 378,000 636,242 258,242
Other 1,738,605 1,738,605 983,969 (754,636)
Total revenues 32,252,869 33,252,869 39,201,650 5,948,781
EXPENDITURES
General government
General 2,331,852 2,331,852 2,459,092 (127,240)
Planning 1,051,906 1,051,906 761,733 290,173
Building 1,003,564 1,003,564 1,022,082 (18,518)
Elected officials 284,871 284,871 285,978 (1,107)
Revenue 605,300 605,300 570,229 35,071
Judicial 287,537 287,537 305,275 (17,738)
Appropriations 252,600 252,600 251,540 1,060
Human Resources 387,994 387,994 371,640 16,354
Meter 649,154 649,154 647,196 1,958
Information Technology 1,034,009 1,034,009 815,024 218,985
Other 592,574 592,574 394,456 198,118
Public safety
Police 7,259,939 7,259,939 6,841,901 418,038
Fire 770,267 770,267 736,025 34,242
Public works
Street 4,473,716 4,473,716 4,408,881 64,835
Fleet maintenance 761,494 751,694 714,652 37,042
Meter -
Cultural and recreational
Economic and community development 622,470 622,470 556,601 65,869
Adult recreation 466,803 466,803 428,576 38,227
Recreation 2,518,531 2,518,531 2,431,126 87,405
Golf 1,778,733 1,778,733 1,565,995 212,738
Marina 555,165 555,165 778,546 (223,381)
Civic Center 268,300 268,300 228,136 40,164
Museum and Welcome Center 192,986 179,986 196,861 (16,875)
Airport Authority 320,000 320,000 320,000 -
Public Library 859,000 859,000 859,000 -
Debt service payments:
Principal 300,000 300,000 300,000 -
Capital outlay 2,864,075 2,886,875 2,516,457 370,418
Total expenditures 32,492,840 32,492,840 30,767,002 1,725,838
Excess of revenues over (under) expenditures (239,971) 760,029 8,434,648 7,674,619
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 56,559 56,559
Issuance of note payable - - 496,404 496,404
Transfers in 1,340,761 1,340,761 1,540,522 199,761
Transfers out (1,100,790) (2,100,790) (2,731,463) (630,673)
Total other financing sources (uses)239,971 (760,029) (637,978) 122,051
Net change in fund balances -$ -$ 7,796,670 7,796,670$
Fund balances – beginning of year 19,266,445
FUND BALANCES – END OF YEAR 27,063,115$
Budgeted Amounts
- 71 -
CITY OF FAIRHOPE, ALABAMA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2022
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
Salaries 18,524$ Overtime 15,144$ Overtime 13,594$ Overtime 5,124$
Overtime 831 Payroll taxes 778 Professional services 9,274 Casualty/workers comp insurance 506
Required contributions – OPEB 3,505 Employee retirement expense 1,343 General supplies 63,316 Computer expense 8,935
Casualty/workers comp insurance 7,829 Casualty/workers comp insurance 62 Equipment and vehicle repair 74,987 Small equipment 29,884
Audit & Accounting 18,636 Office supplies 559 Uniforms 5,548 Pro Shop-Custom Orders 11,113
Professional services 82,087 Postage 246 Equipment rental 3,197 Training 140
Computer expense 44,422 General supplies 44,416 Utilities 40,971 Gasoline and oil 3,347
Dues 8,075 General maintenance 13,667 Casualty/workers comp insurance 5,815 Credit card processing fee 4,362
Gasoline and oil 3,991 Gasoline and oil 346 Postage 250 Food purchases 7,283
Uniforms 216 Employment screening 139 Equipment rental 2,294
Interest expense 67 Revenue Gasoline and oil 45,223 General maintenance 25,507
Bank fees 11,245 Gasoline and oil 95 Small equipment 837 Uniforms 959
Publications and newspapers 36,567 Casualty/workers comp insurance 2,451 Flowers 2,652
Historical district 16,733 Uniforms 25 Landscaping 43,098 Marina
City Hall Maintenance 8,368 Employment screening 366 Diesel 49,945
Grant expenditures 20,000 Fleet Maintenance Department Casualty/workers comp insurance 3,530
Sales tax collection fees 12,432 Judicial Department Overtime 5,215 Overtime 2,031
Capital Outlay 34,182 Overtime 22,135 General maintenance 4,141 Postage 44
Payroll taxes 406 Casualty/workers comp insurance 1,653 General maintenance 39,878
Planning Department Casualty/workers comp insurance 383 Gasoline and oil 810 Gasoline and oil 169,839
Required contributions – OPEB 10,514 Data system 900 Equipment and vehicle repair 7,299 Employee retirement expense 93
Training 6,174 Computer expense 10,141 Utilities 2,208 Credit card processing fee 3,918
Printers and copiers 14 Postage 52 Capital Outlay 346,650 Capital Outlay 151,822
Computer expense 21,922 Professional services 819
Gasoline and oil 57 Adult Recreation Department Civic Center
Casualty/workers comp insurance 2,886 Other Casualty/workers comp insurance 2,662 Overtime 353
Publications and newspapers 2,262 Library Capital Purchases 4,910 Professional services 450 Casualty/workers comp insurance 170
Parking Garage Maintenance 1,631 Gasoline and oil 786 Computer expense 894
Building Department Boys and Girls Club Capital Purch 2,125 General supplies 107 Printers and copiers 54
Building fees 36,954 Boys and Girls Club utilities 2,943 Equipment and vehicle repair 1,842 General Supplies 1,089
Health insurance 943 Boys and Girls Club Maintenance 4,660 Credit card processing fees 234 General maintenance 7,002
Casualty/workers comp insurance 2,047 USA-Summit Bldg Capital Purch 4,248 Dues 996 Employment screening 16
Legal fees 2,043 USA-Summit Bldg Maintenance 195 Employment screening 286 Equipment and vehicle repair 343
General maintenance 8,320 Haven Communications 1,195 Welcome center maintenance 35
Uniforms 1,108 Hurricane Sally 6,553 Museum and Welcome Center
Computer expense 19,127 Economic and Community Development Overtime 300
Communications 5,730 Police Department Overtime 333 Payroll taxes 2,541
Gasoline and oil 4,793 Overtime 13,854 Casualty/workers comp insurance 375 Casualty/workers comp insurance 875
Equipment and vehicle repair 252 Casualty/workers comp insurance 17,099 General supplies 150 Computer expense 4,056
Capital Outlay 4,373 Computer expense 9,183 Communications 192 Printers and copiers 45
Postage 61 Training 691 General maintenance 15,627
Elected officials Line of duty equip & supplies 2,056 Computer expense 1,563 Utilities 768
Salaries 690 Gasoline and oil 59,920 Dues 143 Capital Outlay 826
Training 2,526 Equipment and vehicle repair 44,305 Gasoline and oil 184
Casualty/workers comp insurance 286 Data system 2,670 Transfers
Printers and copiers 223 DEA Funds Purchases 5,976 Recreation Department Transfers – Sanitation Fund 378,021
General supplies 666 Capital Outlay 126,838 Overtime 15,409 Transfers – Capital projects fund 356,463
Communications 1,269 Casualty/workers comp insurance 730
Fire Department Postage 143
Appropriations Overtime 118 General supplies 54,430 Baldwin Co. Transit Hub 4,140 Health insurance 364 Tennis 7,557
Employment screening 161 General maintenance 100,452
Human Resources Casualty/workers comp insurance 616 Costs – Tennis shop sales 4,608
Overtime 17,757 Computer expense 527 Equipment rental 6,510
Casualty/workers comp insurance 355 General supplies 28,839 Utilities 67,302
Legal fees 6,303 General maintenance 5,374 Pool supplies 12,046
Professional services 642 Uniforms 191 Uniforms 2,323
Office supplies 1,586 Communications 3,190 Credit card processing fee 3,049
Printers and copiers 1,349 Equipment rental 8,754 Office supplies 280
General supplies 375 Gasoline and oil 10,463 Supplies-Concession 7,001
Employee screening 83 Dues 795
Gasoline and oil 316 Gasoline and oil 5,564
Equipment and vehicle repair 29 Small equipment 870
Uniforms 355 Land/Right of Way Acquisitions 26,192
Capital Outlay 58,974
Meter
Casualty/workers comp insurance 960
Training 1,554
General maintenance 132
Gasoline and oil 17,513
Equipment and vehicle repair 11,770
Safety supplies 1,247
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OTHER SUPPLEMENTARY INFORMATION
COMBINING FINANCIAL STATEMENTS
NONMAJOR GOVERNMENTAL FUNDS
- 72 -
CITY OF FAIRHOPE, ALABAMA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2022
See independent auditors’ report.
Municipal Rebuild Capital Federal Municipal
Impact Fees Gas Tax Gas Tax Improvements Grants Court Debt Service TotalASSETSCash2,544,252$ 209,123$ 168,827$ 442,070$ 397,431$ 101,861$ -$ 3,863,564$
Receivables 455 10,084 14,554 - 381,988 - - 407,081
Total assets 2,544,707$ 219,207$ 183,381$ 442,070$ 779,419$ 101,861$ - 4,270,645$
LIABILITIES Accounts payable -$ -$ -$ -$ 218,525$ 78,828$ -$ 297,353$ Due to other funds - 72,721 - - 560,894 22,760 - 656,375
Total liabilities - 72,721 - - 779,419 101,588 - 953,728
FUND BALANCES
Restricted:
Road maintenance - 146,486 183,381 - - - - 329,867
Capital improvements - - - 442,070 - - - 442,070
Municipal Court - - - - - 273 - 273
Committed:
Construction and road maintenance 2,544,707 - - - - - - 2,544,707
Total fund balances 2,544,707 146,486 183,381 442,070 - 273 - 3,316,917
Total liabilities and fund balances 2,544,707$ 219,207$ 183,381$ 442,070$ 779,419$ 101,861$ -$ 4,270,645$
Special Revenue Funds
- 73 -
CITY OF FAIRHOPE, ALABAMA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
Municipal Rebuild Capital Federal Municipal DebtImpact Fees Gas Tax Gas Tax Improvements Grants Court Service TotalREVENUESTaxes-$ -$ 163,651$ -$ -$ -$ -$ 163,651$ Intergovernmental - 114,427 - 207,102 1,101,585 - - 1,423,114 Charges for services 1,063,398 - - - - - - 1,063,398 Interest and rents 7,908 - 630 1,521 - 262 - 10,321
Total revenues 1,071,306 114,427 164,281 208,623 1,101,585 262 - 2,660,484
EXPENDITURES General government - - - - - 9 - 9 Debt service Principal - - - - - - 389,819 389,819 Interest - - - - - - 15,238 15,238
Capital outlay - - - - 1,101,585 - - 1,101,585 Total expenditures - - - - 1,101,585 9 405,057 1,506,651
Excess of revenues over
(under) expenditures 1,071,306 114,427 164,281 208,623 - 253 (405,057) 1,153,833
OTHER FINANCING
SOURCES (USES) Transfers in - - - - - - 405,057 405,057 Transfers out (1,100,702) (162,721) (126,786) (437,206) - - - (1,827,415)
Total other financing
sources (uses)(1,100,702) (162,721) (126,786) (437,206) - - 405,057 (1,422,358)
Net change in fund balances (29,396) (48,294) 37,495 (228,583) - 253 - (268,525)
Fund balances – beginning of year 2,574,103 194,780 145,886 670,653 - 20 - 3,585,442
FUND BALANCES –
END OF YEAR 2,544,707$ 146,486$ 183,381$ 442,070$ -$ 273$ -$ 3,316,917$
Special Revenue Funds
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INDIVIDUAL FUND FINANCIAL STATEMENTS
DISCRETELY PRESENTED COMPONENT UNITS
- 74 -
CITY OF FAIRHOPE, ALABAMA
FUND BALANCE SHEET
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2022
See independent auditors’ report.
ASSETS
Cash and cash equivalents 660,546$
Prepaid items 7,169
Total assets 667,715$
LIABILITIES
Accounts payable and accrued liabilities 47,551$
FUND BALANCES
Nonspendable:
Prepaid items 7,169
Restricted:
Library improvements 173,485
Unassigned 439,510
Total fund balances 620,164
Total liabilities and fund balances 667,715$
- 75 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
SEPTEMBER 30, 2022
See independent auditors’ report.
Fund balances as reported on page 74 620,164$
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. 738,619
Depreciation is provided for the above capital assets in government-wide
reporting, but is not in fund financial statements. (505,028)
Other assets used in governmental activities are not financial resources and,
therefore, are not reported in the governmental funds.
Employment retirement contributions 118,499
Long-term liabilities, including warrants, notes, capital lease obligations
and OPEB obligations are not due and payable in the current period and,
therefore, are not reported in fund financial statements:
Net pension liability (387,175)
Deferred inflows of resources (106,672)
Net position of governmental activities as reported on page 23 478,407$
- 76 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
REVENUES
Fines and lost books 12,613$
Donations, gifts, memorials and bequests 12,462
State aid 95,346
Payments from City of Fairhope 859,000
Miscellaneous 14,420
Total revenues 993,841
EXPENDITURES
Salaries 546,230
Payroll taxes 41,537
Insurance 9,891
Employees’ retirement 58,907
Books, periodicals, audio visual 98,558
Supplies 15,218
Janitorial service 21,199
Professional fees 12,419
Telecommunications 717
Capital outlay 89,434
Maintenance 220,386
Miscellaneous 71,964
Total expenditures 1,186,460
Net change in fund balances (192,619)
Fund balances – beginning of year 812,783
FUND BALANCES – END OF YEAR 620,164$
- 77 -
CITY OF FAIRHOPE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
FAIRHOPE PUBLIC LIBRARY BOARD
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
Net change in fund balances – total governmental funds, page 76 (192,619)$
Amounts reported for governmental activities in the statement of activities
are different from the statements of revenues, expenditures and changes in
fund balances – governmental funds because:
Capital outlay, reported as expenditures in governmental funds, is shown as
capital assets in the statement of net position. 192,487
Depreciation expense on governmental capital assets included in the
capital assets in the statement of net position. (17,594)
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 9,182
Change in net position of governmental activities, page 24 (8,544)$
- 78 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF NET POSITION
FAIRHOPE AIRPORT AUTHORITY
SEPTEMBER 30, 2022
See independent auditors’ report.
ASSETS
Cash and cash equivalents 218,890$
Receivables, net 227,359
Prepaid items 45,866
Capital assets not being depreciated:
Land 10,674,228
Construction in progress 160,864
Capital assets net of accumulated depreciation:
Buildings and improvements 8,787,483
Vehicles and equipment 35,280
Runways 16,529,226
Total assets 36,679,196$
LIABILITIES
Accounts payable and accrued liabilities 37,332$
Customer deposits 22,000
Long-term liabilities:
Due within one year 250,000
Due in more than one year 5,970,629
Total liabilities 6,279,961
DEFERRED INFLOWS OF RESOURCES
Service concession arrangement revenue
applicable to future years 6,411,149
NET POSITION
Net investment in capital assets 29,966,452
Unassigned (5,978,366)
Total net position 23,988,086
Total liabilities and fund balances 36,679,196$
- 79 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
OPERATING REVENUES
Fuel sales and rentals 309,956$
Total operating revenues 309,956
OPERATING EXPENSES
Insurance 120,877
Legal and professional 97,125
Maintenance 130,841
Depreciation 552,555
Other 10,550
Total operating expenses 911,948
OPERATING LOSS (601,992)
NONOPERATING REVENUES (EXPENSES)
Revenue from service concession arrangement 248,630
Intergovernmental revenue 247,718
Payments from City of Fairhope 320,000
Interest expense (61,001)
Miscellaneous 3,075
Total nonoperating revenues (expenses) 758,422
Change in net position 156,430
Net position – beginning of year 23,831,656
NET POSITION – END OF YEAR 23,988,086$
- 80 -
CITY OF FAIRHOPE, ALABAMA
STATEMENT OF CASH FLOWS
FAIRHOPE AIRPORT AUTHORITY
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
CASH FLOWS FROM OPERATING ACTIVITIES
Received from customers 263,624$
Paid to suppliers for goods and services (399,202)
Net cash used in operating activities (135,578)
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 (67,618)
Capital grants received 228,483
Acquisition of capital assets (62,602)
Net cash used in capital and related
financing activities (151,737)
NET INCREASE IN CASH 32,685
CASH – BEGINNING OF YEAR 186,205
CASH – END OF YEAR 218,890$
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss (601,992)$
Adjustments to reconcile operating loss to
net cash used in operating activities:
Depreciation 552,555
Other nonoperating revenues 3,075
Change in operating assets and operating liabilities:
Increase in prepaid items (3,993)
Decrease in accounts payable (35,816)
Decrease in unearned revenue (6,007)
Decrease in customer deposits (43,400)
Net cash used in operating activities (135,578)$
- 81 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF CAPITAL PROJECTS EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2022
See independent auditors’ report.
City street upgrades 1,517,650$
Volanta Park baseball project 616,799
Church St. drainage improvement 489,317
Boys and Girls Club playground 87,152
Track at Founders Park 48,913
Stadium ADA platform and ramps 43,698
Oak St. drainage improvements 5,835
Other projects 3,025
Total 2,812,389$
The above items are only from the capital projects fund.
- 82 -
CITY OF FAIRHOPE, ALABAMA
SCHEDULE OF INFORMATION REQUIRED BY BOND INDENTURES
SEPTEMBER 30, 2022
See independent auditors’ report.
Natural Water and
Electric Gas Waste Water Sanitation
Fund Fund Fund Fund
A. Utility customers at September 30, 2022 were as follows:
Number of customers 7,137 12,701 21,269 11,319
Number of metered customers 7,137 12,701 21,269 11,319
Number of unmetered customers - - - -
Number of waste water customers - - 12,361 -
B. Annual net income of utility operations Natural Water and
Electric Gas Waste Water Sanitation
Fund Fund Fund Fund Total
Income (loss) from operations 2,291,580$ 2,628,491$ 5,379,033$ (492,580)$ 9,806,524$
Add:
Depreciation 994,022 531,751 1,928,302 321,150 3,775,225
Interest income 116,276 106,587 145,136 555 368,554
Annual net income (loss) as prescribed
by debt covenants 3,401,878$ 3,266,829$ 7,452,471$ (170,875)$ 13,950,303$
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 2023 $ 1,000,000
Buildings and facilities – expires January 2023 120,579,245
Equipment – expires January 2023 7,392,040
Automobile – expires January 2023
Liability 1,000,000
Uninsured motorist 50,000
Public officials errors and omissions liability – expires January 2023
Aggregate 2,000,000
Per occurrence 1,000,000
Police liability – expires January 2023
Aggregate 2,000,000
Per occurrence 1,000,000
Excess liability policy for general liability, police and public official – expires January 2023 6,000,000
D. The City has complied with all requirements of the respective bond indentures.
- 83 -
CITY OF FAIRHOPE, ALABAMA
SUMMARY OF DEPOSITS, WITHDRAWALS AND BALANCES OF SELECTED TRUST ACCOUNTS AS
REQUIRED UNDER CERTAIN TRUST INDENTURES
SEPTEMBER 30, 2022
See independent auditors’ report.
1996
Capital 2020 URW 2020 URW
Improvement Reserve Fund Warrant Fund
Balance October 1, 2021 50,616$ 1,833,806$ 1,464,928$
Deposits 175 6,329 2,308,510
Disbursements - (649) (2,295,488)
Balance September 30, 2022 50,791$ 1,839,486$ 1,477,950$
THIS PAGE INTENTIONALLY LEFT BLANK
STATISTICAL SECTION
This part of the City of Fairhope, Alabama's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says
about the government's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.84-89
Revenue Capacity
These schedules contain information to help the reader assess the government's
most significant local revenue sources, the sales tax and the property tax.90-94
Debt Capacity
These schedules present information to help the reader assess the affordability of
the government's current levels of outstanding debt and the government's ability
to issue additional debt in the future.95-98
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities
take place.99-100
Operating Information
These schedules contain service and infrastructure data to help the reader
understand how the information in the government's financial report relates
to the services the government provides and the activities it performs.101-103
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports
for the relevant year.
STATISTICAL SECTION
- 84 - CITY OF FAIRHOPE, ALABAMA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) 2013201420152016201720182019202020212022Governmental activities Net investment in capital assets65,671,272$ 74,804,467$ 76,208,248$ 83,545,906$ 86,900,546$ 88,279,810$ 94,795,255$ 97,649,862$ 98,917,172$ 100,568,874$ Restricted2,007,967 1,557,163 2,308,667 1,706,056 650,031 750,122 227,092 1,135,047 1,011,343 775,703 Unrestricted8,586,709 9,513,008 4,619,015 2,124,391 8,284,540 2,860,140 828,480 819,243 6,658,072 17,911,102 Total governmental activities net position76,265,948$ 85,874,638$ 83,135,930$ 87,376,353$ 95,835,117$ 91,890,072$ 95,850,827$ 99,604,152$ 106,586,587$ 119,255,679$ Business-type activities Net investment in capital assets29,971,506$ 42,025,762$ 44,488,322$ 45,962,724$ 48,750,251$ 50,268,633$ 53,004,032$ 61,730,548$ 67,819,256$ 78,439,515$ Restricted3,698,889 3,718,288 2,619,251 2,907,634 2,693,371 2,713,478 2,730,446 14,291,410 3,349,350 4,291,518 Unrestricted10,197,284 2,273,605 5,238,460 7,587,850 8,586,317 12,564,193 18,201,729 9,441,704 24,938,747 21,997,352 Total business-type activities net position43,867,679$ 48,017,655$ 52,346,033$ 56,458,208$ 60,029,939$ 65,546,304$ 73,936,207$ 85,463,662$ 96,107,353$ 104,728,385$ Primary government Net investment in capital assets95,642,778$ 116,830,229$ 120,696,570$ 129,508,630$ 135,650,797$ 138,548,443$ 147,799,287$ 159,380,410$ 166,736,428$ 179,008,389$ Restricted5,706,856 5,275,451 4,927,918 4,613,690 3,343,402 3,463,600 2,957,538 15,426,457 4,360,693 5,067,221 Unrestricted18,783,993 11,786,613 9,857,475 9,712,241 16,870,857 15,424,333 19,030,209 10,260,947 31,596,819 39,908,454 Total primary government net position120,133,627$ 133,892,293$ 135,481,963$ 143,834,561$ 155,865,056$ 157,436,376$ 169,787,034$ 185,067,814$ 202,693,940$ 223,984,064$ Fiscal Year
- 85 - CITY OF FAIRHOPE, ALABAMA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022ExpensesGovernmental activities: General government 7,451,793$ 9,067,340$ 8,890,052$ 9,828,668$ 7,232,746$ 5,580,501$ 5,859,684$ 7,278,497$ 16,825,075$ 8,530,536$ Public safety4,848,790 4,651,958 4,370,285 4,873,102 6,051,285 6,744,158 6,747,159 7,125,224 7,699,709 7,992,887 Public works 5,820,858 5,968,995 5,848,267 5,777,295 6,323,212 8,041,071 8,273,373 8,763,332 9,536,641 6,808,105 Cultural and recreational 2,910,651 2,893,490 3,055,121 3,564,948 4,896,744 6,899,557 6,921,431 6,491,954 6,680,606 6,982,402 Airport Authority443,000 443,000 412,632 428,000 342,000 320,000 320,000 320,000 335,000 320,000 Public Library Board840,636 886,028 924,736 1,025,236 1,025,887 1,024,522 1,029,124 1,069,323 1,021,772 1,064,341 Interest on long-term debt507,982 472,222 344,808 339,051 53,853 94,506 71,726 27,969 31,431 10,520 Total governmental activities expenses22,823,710 24,383,033 23,845,901 25,836,300 25,925,727 28,704,315 29,222,497 31,076,299 42,130,234 31,708,791 Business-type activities: Electric17,164,781 18,379,231 18,227,563 17,683,205 17,622,258 16,966,013 17,063,612 17,022,979 17,605,905 18,178,999 Natural gas 5,234,887 5,529,610 5,056,618 4,886,415 4,949,991 4,930,235 5,777,998 5,670,355 6,172,162 7,741,978 Water and waste water7,294,799 7,165,113 7,085,714 8,042,137 8,413,111 7,631,278 8,486,035 9,213,371 9,813,398 10,295,634 Sanitation- - - - - - - - - 3,265,985 Total business-type activities expenses29,694,467 31,073,954 30,369,895 30,611,757 30,985,360 29,527,526 31,327,645 31,906,705 33,591,465 39,482,596 Total primary government expenses52,518,177$ 55,456,987$ 54,215,796$ 56,448,057$ 56,911,087$ 58,231,841$ 60,550,142$ 62,983,004$ 75,721,699$ 71,191,387$ Program RevenuesGovernmental activities: Charges for services: General government6,052,493$ 6,225,471$ 3,585,456$ 7,837,796$ 8,676,864$ 7,523,386$ 7,953,532$ 8,006,104$ 8,802,363$ 10,827,381$ Public safety291,749 285,573 - - - - - - - - Public works1,431,883 1,462,243 4,730,645 1,547,682 1,594,839 1,769,059 1,916,788 2,073,829 2,440,059 - Cultural and recreational1,544,278 1,553,287 1,622,983 1,649,815 1,664,643 1,926,828 2,148,050 1,995,263 2,420,846 2,719,406 Operating grants and contributions- 9,144 - - 102,507 94,494 127,978 542,126 9,157,959 2,014,462 Capital grants and contributions438,033 8,416,283 1,319,753 1,467,355 1,642,474 1,319,678 1,777,375 2,846,663 2,408,124 3,013,322 Total governmental activities program revenues9,758,436 17,952,001 11,258,837 12,502,648 13,681,327 12,633,445 13,923,723 15,463,985 25,229,351 18,574,571 Business-type activities: Charges for services: Electric 19,647,662 21,049,277 20,527,031 20,218,941 19,244,121 20,767,707 20,779,858 20,298,577 21,910,226 20,477,525 Natural gas6,769,649 8,023,473 7,354,080 6,276,414 6,382,976 7,410,880 7,771,857 7,428,215 8,744,718 10,298,544 Water and waste water9,980,089 10,018,231 10,860,135 11,164,497 11,870,652 11,529,979 12,538,531 13,625,353 14,679,765 15,559,401 Sanitation- - - - - - - - - 2,773,365 Operating grants and contributions- - - - - - - 24,299 125,743 170,397 Capital grants and contributions- - - - - - 253,028 2,304,665 - - Total business-type activities program revenues36,397,400 39,090,981 38,741,246 37,659,852 37,497,749 39,708,566 41,343,274 43,681,109 45,460,452 49,279,232 Total primary government program revenues46,155,836$ 57,042,982$ 50,000,083$ 50,162,500$ 51,179,076$ 52,342,011$ 55,266,997$ 59,145,094$ 70,689,803$ 67,853,803$ Fiscal Year
- 86 - CITY OF FAIRHOPE, ALABAMA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Net (expense)/revenueGovernmental activities(13,065,274)$ (6,431,032)$ (12,587,064)$ (13,333,652)$ (12,244,400)$ (16,070,870)$ (15,298,774)$ (15,612,314)$ (16,900,883)$ (13,134,220)$ Business-type activities6,702,933 8,017,027 8,371,351 7,048,095 6,512,389 10,181,040 10,015,629 11,774,404 11,868,987 9,796,636 Total primary government net expense(6,362,341)$ 1,585,995$ (4,215,713)$ (6,285,557)$ (5,732,011)$ (5,889,830)$ (5,283,145)$ (3,837,910)$ (5,031,896)$ (3,337,584)$ General Revenues and Other Changes in Net PositionGovernmental activities: Taxes Property taxes4,298,046$ 4,330,537$ 4,550,766$ 4,869,877$ 5,050,643$ 5,535,117$ 5,947,563$ 6,354,890$ 6,847,201$ 7,453,763$ Sales tax5,437,863 6,518,249 6,797,757 7,422,726 8,069,350 8,444,241 9,269,702 9,930,150 11,727,899 13,691,152 Liquor taxes425,816 445,132 451,719 482,755 536,643 498,044 606,819 632,363 714,140 733,897 Lodging taxes643,495 614,278 681,419 696,379 762,562 653,697 1,116,242 911,537 1,366,725 1,668,841 Other taxes139,666 138,204 138,382 133,057 139,444 127,513 122,059 116,455 111,649 105,778 Intergovernmental596,816 389,561 1,695,688 568,566 - - - - - - Investment earnings251,512 239,205 228,670 302,181 335,106 59,157 126,115 274,246 174,777 219,012 Loss on sale of assets- (261,340) - - - - - - - - Other213,169 147,672 705,142 147,452 283,385 262,849 292,339 341,897 1,404,410 305,727 Transfers in/(out)3,236,251 3,612,482 1,826,575 2,951,082 2,753,244 3,181,000 1,778,690 804,101 1,536,517 1,625,142 Total governmental activities15,242,634 16,173,980 17,076,118 17,574,075 17,930,377 18,761,618 19,259,529 19,365,639 23,883,318 25,803,312 Business-type activities: Investment earnings25,268 30,815 18,440 15,162 23,552 53,651 136,797 519,544 307,434 368,554 Other- - - - 19,276 14,775 16,167 37,608 3,787 80,984 Transfers in/(out)(3,236,251) (3,612,482) (1,826,575) (2,951,082) (2,753,244) (3,181,000) (1,778,690) (804,101) (1,536,517) (1,625,142) Total business-type activities(3,210,983) (3,581,667) (1,808,135) (2,935,920) (2,710,416) (3,112,574) (1,625,726) (246,949) (1,225,296) (1,175,604) Total primary government12,031,651$ 12,592,313$ 15,267,983$ 14,638,155$ 15,219,961$ 15,649,044$ 17,633,803$ 19,118,690$ 22,658,022$ 24,627,708$ Change in Net PositionGovernmental activities2,177,360$ 9,742,948$ 4,489,054$ 4,240,423$ 5,685,977$ 2,690,748$ 3,960,755$ 3,753,325$ 6,982,435$ 12,669,092$ Business-type activities3,491,950 4,435,360 6,563,216 4,112,175 3,801,973 7,068,466 8,389,903 11,527,455 10,643,691 8,621,032 Total primary government5,669,310$ 14,178,308$ 11,052,270$ 8,352,598$ 9,487,950$ 9,759,214$ 12,350,658$ 15,280,780$ 17,626,126$ 21,290,124$ Fiscal Year
- 87 - CITY OF FAIRHOPE, ALABAMA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (accrual basis of accounting) Beer, WineFiscalSales Ad Valorem Automobile and Liquor Cigarette Lodging DogYearTaxTaxTaxTaxTaxTaxTaxTotal20135,437,863$ 3,738,511$ 559,534$ 425,816$ 139,526$ 643,495$ 141$ 10,944,886$ 20146,518,174 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
- 88 - CITY OF FAIRHOPE, ALABAMA FUND BALANCES OF GOVERNMENTAL FUNDS (modified accrual basis of accounting) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022General fund Nonspendable-$ -$ -$ -$ 85,490$ 303,387$ 323,647$ 136,037$ 203,736$ 205,704$ Committed7,000,000 7,000,000 7,000,000 7,000,000 7,062,075 8,343,666 8,343,666 7,734,594 7,734,594 7,734,594 Unassigned3,447,451 3,449,523 3,992,803 3,629,943 6,819,862 5,061,071 4,575,780 6,013,275 11,328,115 19,122,817 Total general fund10,447,451$ 10,449,523$ 10,992,803$ 10,629,943$ 13,967,427$ 13,708,124$ 13,243,093$ 13,883,906$ 19,266,445$ 27,063,115$ All other governmental fundsRestricted: Debt service – other governmental funds339,308$ 357,156$ 348,720$ 516,120$ 527,858$ 541,587$ -$ -$ -$ -$ Road maintenance – other governmental funds274,746 46,007 105,947 35,936 122,173 208,535 227,092 318,704 340,666 329,867 Capital improvements- - - - - - - 816,343 670,653 442,070 Other- - - - - - - - 24 3,766 Committed, reported in: Capital projects fund58,625 1,956,986 4,398,406 1,364,704 4,147,827 2,787,639 1,943,247 862,824 1,428,575 2,867,646 Other governmental funds1,252,213 851,448 826,435 1,478,912 2,255,722 5,403,308 3,726,721 3,036,724 2,574,103 2,544,707 Unassigned: Capital projects fund181,085 - - - - - - - - - Other governmental funds- - - - - - (1,160) (1,160) - - Total all other governmental funds2,105,977$ 3,211,597$ 5,679,508$ 3,395,672$ 7,053,580$ 8,941,069$ 5,895,900$ 5,033,435$ 5,014,021$ 6,188,056$ The City implemented GASB Statement number 54 fiscal year 2011. This statement replaces the previous classifications of reserved, unreserved, designated and undesignated fund balances.Fiscal Year
- 89 - CITY OF FAIRHOPE, ALABAMA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022REVENUES Local taxes 10,944,885$ 12,046,399$ 12,620,043$ 13,604,795$ 14,681,633$ 15,259,245$ 17,002,565$ 17,948,978$ 20,810,059$ 23,700,359$ Licenses and permits 2,731,766 3,000,673 3,306,620 3,596,049 3,945,641 4,364,902 4,570,915 4,315,235 4,544,325 6,137,069 Fines and forfeitures 291,749 285,573 278,837 236,724 284,893 273,887 237,812 199,228 194,677 267,322 Intergovernmental 1,022,649 991,614 639,523 693,761 876,086 954,086 1,090,181 2,470,197 11,205,009 4,559,019 Contribution from Public Library Board 1,500 - - - - - - - - - Interest and rents 253,003 239,205 228,669 302,181 335,106 401,705 470,753 576,479 465,462 353,059 Charges for services 5,317,255 5,165,291 5,395,287 6,504,860 6,910,066 5,075,950 5,852,747 6,098,090 6,749,966 4,776,552 Golf course revenue 1,113,277 1,067,593 1,137,114 1,127,306 1,190,281 1,062,204 1,060,650 1,000,949 1,272,891 1,241,278 Recreation Department 391,024 436,453 444,410 476,772 466,437 442,324 456,362 238,811 393,744 636,242 BP settlement proceeds - - 1,361,255 - - - - - - - Legal settlement- - 598,640 - - - - - - - Other253,146 196,913 180,644 223,293 338,058 368,387 660,915 1,219,633 1,958,967 983,969 Total revenues22,320,254 23,429,714 26,191,042 26,765,741 29,028,201 28,202,690 31,402,900 34,067,600 47,595,100 42,654,869 EXPENDITURES General government6,862,394 8,311,150 8,289,346 8,738,427 6,451,497 4,912,047 5,303,050 5,994,284 16,506,531 7,914,820 Public safety4,477,321 4,276,774 4,152,128 4,518,908 5,469,039 6,202,161 6,571,647 6,869,403 7,164,116 7,577,926 Public works4,002,098 4,379,670 3,980,822 4,118,350 4,651,125 6,386,662 6,510,388 6,963,031 7,484,450 5,123,533 Cultural and recreational2,512,499 2,491,611 2,664,900 2,989,627 4,017,963 6,028,022 6,238,487 5,783,450 5,827,670 6,185,841 Airport Authority443,000 443,000 412,632 428,000 342,000 320,000 320,000 320,000 335,000 320,000 Public Library Board 630,000 674,100 714,100 814,600 814,600 814,600 818,477 859,401 816,431 859,000 Other 89,133 89,785 93,436 162,736 115,753 100,732 170,203 863,699 - - Debt service: Principal 1,485,545 2,894,540 483,780 6,478,558 1,573,560 1,578,340 3,775,470 641,366 779,020 689,819 Interest 508,483 465,409 374,479 390,971 111,633 94,751 87,534 28,974 29,847 15,238 Capital outlay1,418,813 1,908,464 3,840,803 7,698,341 2,359,222 3,610,512 7,746,773 8,425,744 4,825,427 6,430,431 Total expenditures 22,429,286 25,934,503 25,006,426 36,338,518 25,906,392 30,047,827 37,542,029 36,749,352 43,768,492 35,116,608 Excess (deficiency) of revenues over expenditures (109,032) (2,504,789) 1,184,616 (9,572,777) 3,121,809 (1,845,137) (6,139,129) (2,681,752) 3,826,608 7,538,261 OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets - - - - - - - - - 56,559 Proceeds from issuance of debt - - - 3,975,000 - - - 1,500,000 - - Proceeds from notes payable - - - - - - - - - 496,404 Proceeds from capital lease - - - - - 292,323 990,929 155,999 - - Transfers in 7,236,241 9,640,199 7,272,735 8,568,025 6,817,864 7,400,003 6,466,679 4,226,279 5,239,082 5,552,043 Transfers out (3,999,990) (6,027,718) (5,446,160) (5,616,944) (4,098,281) (4,219,003) (4,828,679) (3,422,178) (3,702,565) (4,672,562) Total other financing sources (uses) 3,236,251 3,612,481 1,826,575 6,926,081 2,719,583 3,473,323 2,628,929 2,460,100 1,536,517 1,432,444 Net change in fund balances3,127,219$ 1,107,692$ 3,011,191$ (2,646,696)$ 5,841,392$ 1,628,186$ (3,510,200)$ (221,652)$ 5,363,125$ 8,970,705$ Debt service as a percentage of noncapital expenditures9.5%14.0%4.1%24.0%7.2%6.3%13.0%2.4%2.1%2.5%Fiscal Year
- 90 - 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 Value2013 142,695,840$ 1,188,460$ 189,033,860$ 64,091,460$ 268,826,700$ 15$ 4,032,400,500$ 2014 146,270,400 1,188,460 195,105,420 67,346,480 275,217,800 15 4,128,267,000 2015 173,467,000 1,448,760 185,206,880 56,434,980 303,687,660 15 4,555,314,900 2016 188,693,940 1,246,280 201,141,240 64,329,960 326,751,500 15 4,901,272,500 2017 204,961,080 379,420 207,388,960 65,103,500 347,625,960 15 5,214,389,400 2018 227,170,100 1,190,460 217,138,040 69,413,140 376,085,460 15 5,641,281,900 2019 252,096,200 1,136,540 221,101,860 70,209,480 404,125,120 15 6,061,876,800 2020 268,746,300 1,136,540 237,638,580 77,087,260 430,434,160 15 6,456,512,400 2021 292,189,220 1,310,420 254,585,380 81,821,500 466,263,520 15 6,993,952,800 2022 334,297,780 1,265,580 297,929,700 91,809,500 541,683,560 15 8,125,253,400 Source: Baldwin County Revenue Commissioner
- 91 - CITY OF FAIRHOPE, ALABAMA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TotalTotalRoad/Health Care TotalTotal Direct andFiscalGeneral School Bond TaxCityGeneral BridgeFireSchool Authority County General SchoolSoldierState OverlappingYearMillage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage Millage MillageRates2013 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02014 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02015 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02016 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02017 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02018 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02019 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02020 5.0 5.0 5.0 15.0 5.0 2.5 1.5 12.0 0.5 21.5 2.5 3.0 1.0 6.5 43.02021 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 43.0Source: Baldwin County CommissionCountyStateOverlapping RatesCity
- 92 - CITY OF FAIRHOPE, ALABAMA PRINCIPAL PROPERTY TAXPAYERS YEARS ENDED SEPTEMBER 30, 2022 AND 2013 TaxableTaxableAssessedAssessedTaxpayerValueRankValueRankCX Retreat at Fairhope Village DST8,822,740$ 1 1.6% $ - -0.0%Battles Road, LLC6,848,120 2 1.3% - -0.0%Arbor Gates Holdings, LLC3,742,000 3 0.7%2,007,120 2 0.7%FST Wal-mart Stores East, LP3,234,820 4 0.6% - -0.0%PSM Alabama Holdings, LLC2,044,100 5 0.4% - -0.0%FST Mississippi Baldwin Square, LLC2,017,540 6 0.4%1,544,460 5 0.6%Fairhope Ridge, LLC1,958,020 7 0.4% - -0.0%A 1 Corte Jr. Family Limited Partnership1,700,640 8 0.3%1,252,380 7 0.5%FST Bethea, John W.1,660,800 9 0.3% - -0.0%FST Robert N Graham, LLC1,535,600 10 0.3% - -0.0%Fairhope, LLC- - 0.0%1,558,820 4 0.6%CHS Properties, Inc.- - 0.0%1,205,740 8 0.4%Bellsouth Tele Communications, LLC- - 0.0%1,085,300 10 0.4%Health Care Reit, Inc.- - 0.0%1,104,460 9 0.4%Point Clear Partners, LLC- - 0.0%1,369,280 6 0.5%MediaCom Southeast, LLC- - 0.0%1,639,700 3 0.6%Bayview II Developer, LLC- - 0.0%2,252,200 1 0.8%33,564,380$ 6.3% 15,019,460$ 5.5%Source: Baldwin County Revenue CommissionerAssessed Value2022Percentage ofTotal TaxableAssessed ValuePercentage ofTotal Taxable2013
- 93 -
CITY OF FAIRHOPE, ALABAMA
DIRECT AND OVERLAPPING SALES TAX RATES
CURRENT AND LAST FOUR FISCAL YEARS
City
Fiscal Direct Baldwin State of
Year Rate County Alabama
2018 2.00% 3.00% 4.00%
2019 2.00% 3.00% 4.00%
2020 2.00% 3.00% 4.00%
2021 2.00% 3.00% 4.00%
2022 2.00% 3.00% 4.00%
Source: City Clerk's Office
The City implemented its first sales tax effective July 1, 2009.
- 94 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL SALES TAXPAYERS
LAST TEN YEARS
Fiscal Top 25 Taxpayers
Year (approximate) Total Tax % of Total Tax
2013 2,641,175$ 5,437,863$ 49%
2014 3,673,425 6,518,249 56%
2015 3,624,562 6,733,115 54%
2016 3,788,930 7,232,073 52%
2017 4,059,864 7,865,989 52%
2018 4,871,492 8,249,479 59%
2019 4,450,078 8,723,465 51%
2020 4,727,284 9,166,330 52%
2021 5,315,798 10,579,090 50%
2022 5,732,173 11,936,711 48%
Source: City Treasurer's Office and Alabama Department of Revenue
Note: State law prohibits the disclosure of tax information for specific taxpayers.
- 95 - CITY OF FAIRHOPE, ALABAMA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS GeneralGeneral UtilitiesTotal PercentageFiscal Obligation Notes Capital Obligation Revenue Notes Primary of PersonalYearDebtPayable LeasesDebtDebtPayable Government Income201312,682,152$ -$ -$ 209,680$ 21,636,094$ -$ 34,527,926$ 6.93%20149,789,376 - - 5,904,220 20,571,057 - 36,264,653 6.23%20159,307,360 - - 4,743,000 16,574,669 - 30,625,029 4.87%20166,833,058 - - 3,581,942 16,152,226 - 26,567,226 3.92%20175,259,498 - - 2,420,502 14,842,522 - 22,522,522 3.18%20183,681,158 - 292,323 1,258,842 14,017,818 - 19,250,141 2.38%2019- - 1,188,940 - 13,168,115 - 14,357,055 1.57%2020- 1,200,000 1,003,573 - 23,858,411 - 26,061,984 2.76%2021- 900,000 524,553 - 11,300,000 - 12,724,553 1.36%2022- 689,819 631,138 - 9,600,000 1,450,315 12,371,272 1.20%Governmental ActivitiesBusiness-Type Activities
- 96 -
CITY OF FAIRHOPE, ALABAMA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
General Less: Amounts Percentage of Liability
Fiscal Obligation Available in Debt Net Taxable Per
Year Debt Service Fund Total Sales Capita
2013 12,891,832$ 339,308$ 12,552,524$ 2.52%766$
2014 15,693,596 357,156 15,336,440 2.64%913
2015 14,050,360 348,720 13,701,640 2.18%757
2016 10,415,000 516,120 9,898,880 1.46%529
2017 7,680,000 527,858 7,152,142 1.01%368
2018 4,940,000 541,587 4,398,413 0.54%210
2019 - - - 0.00%-
2020 - - - 0.00%-
2021 - - - 0.00%-
2022 - - - 0.00%-
- 97 -
CITY OF FAIRHOPE, ALABAMA
COMPUTATION OF OVERLAPPING DEBT
SEPTEMBER 30, 2022
Percentage Amount
of debt of debt
Applicable Applicable
Outstanding to the City of to the City of
Debt Fairhope (1) Fairhope
Direct debt of the City 2,681,453$ 100.00% 2,681,453$
Overlapping Debt (Supported by ad valorem tax)
Baldwin County 71,501,296 8.27%(1)5,910,452
8,591,905$
(1) Percentage of net assessed value of property in City ($541,776,940) to net assessed value of property in Baldwin
County ($6,554,109,700) on October 1, 2022.
- 98 - CITY OF FAIRHOPE, ALABAMA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Debt limit53,765,340$ 55,043,560$ 60,737,532$ 65,350,300$ 69,525,192$ 75,223,856$ 80,826,248$ 86,102,724$ 93,281,460$ 108,355,388$ Total net debt applicable to limit12,924,616 15,724,616 14,079,616 10,415,000 7,680,000 4,265,804 1,188,940 2,203,573 1,424,553 2,681,453 Legal debt margin40,840,724$ 39,318,944$ 46,657,916$ 54,935,300$ 61,845,192$ 70,958,052$ 79,637,308$ 83,899,151$ 91,856,907$ 105,673,935$ Total net debt applicable to limitas a percentage of debt limit24.04%28.57%23.18%15.94%11.05%5.67%1.47%2.56%1.53%2.47%Legal Debt Margin Calculation for Fiscal Year 2022Total assessed value541,776,940$ Debt limit (20% of total assessed value)108,355,388$ Debt applicable to limit:General obligation warrants (including capital leases)2,681,453 Legal debt margin105,673,935$ Fiscal Year
- 99 -
CITY OF FAIRHOPE, ALABAMA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per
Capita
Fiscal Personal Personal School Unemployment
Year Population Income Income Enrollment Rate
2013 16,385 497,890,995$ 30,387$ 4,526 6.1%
2014 16,794 581,996,070 34,655 4,734 5.8%
2015 18,089 628,773,640 34,760 4,995 5.4%
2016 18,730 677,183,150 36,155 5,333 5.3%
2017 19,421 708,905,342 36,502 5,416 4.7%
2018 20,935 809,116,815 38,649 5,473 4.3%
2019 22,085 911,690,885 41,281 5,528 3.8%
2020 22,677 943,650,001 41,613 5,403 5.5%
2021 22,477 935,335,401 41,613 5,537 3.0%
2022 23,147 1,030,828,498 44,534 5,888 2.5%
Sources: U.S. Census Bureau
Sperling's Best Places Website
State of Alabama Department of Industrial Relations
Eastern Shore Chamber of Commerce
Baldwin County Board of Education
www.schooldigger.com
- 100 -
CITY OF FAIRHOPE, ALABAMA
PRINCIPAL EMPLOYERS
YEARS ENDED SEPTEMBER 30, 2022 AND 2013
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment Employees Rank Employment
Thomas Hospital 1,256 1 13.4% 1,000 1 14.8%
Grand Hotel 800 2 8.5%698 2 10.3%
Board of Education-Fairhope Schools 533 3 5.7%- - 0.0%
City of Fairhope 413 4 4.4%330 3 4.9%
Wal-Mart 312 5 3.3%325 4 4.8%
Publix 150 6 1.6%100 5 1.5%
Segers Aero 143 7 1.5%92 6 1.4%
Winn-Dixie 74 8 0.8%75 7 1.1%
Bayshore Christian School 68 9 0.7%- - 0.0%
Piggly Wiggly 60 10 0.6%60 10 0.9%
Print Xcel - - 0.0%66 8 1.0%
Balloons Everywhere - - 0.0%65 9 1.0%
3,809 40.5%2,811 41.7%
Sources: Eastern Shore Chamber of Commerce and State Department of Industrial Relations
Note: Total city employment number represents people residing in City of Fairhope that are employed
(place of residence) rather than employment for City of Fairhope businesses
2013: 6,748 2022: 9,408
2022 2013
- 101 - CITY OF FAIRHOPE, ALABAMA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022FunctionGeneral Government 48 48 49 49 49 53 62 64 66 71 Public Safety: Police48 46 46 45 49 52 59 59 61 66 Fire: Firefighters and Dispatch17 18 17 14 15 16 14 17 17 13 Highways and Streets: Public Works39 39 41 46 42 49 57 53 57 53 Sanitation17 21 22 20 19 18 18 28 23 26 Cultural and Recreational: Recreation24 23 25 26 29 32 31 34 35 34 Adult Recreation9 10 11 12 11 11 13 12 13 10 Gas Department17 15 15 15 16 18 21 22 21 22 Electric Department17 22 21 19 19 22 20 26 26 26 Water/Waste Water Department24 23 23 22 26 29 31 34 36 41 Golf Department15 16 18 20 19 18 22 21 22 19 Total275 281 288 288 294 318 348 370 377 381 Source: City of Fairhope Human Resources DepartmentFull-time Equivalent Employees as of September 30,
- 102 - CITY OF FAIRHOPE, ALABAMA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022FunctionPolice: Physical arrests 759 750 1,423 983 1,350 1,542 1,538 1,462 866 1,047 Parking violations22 49 121 240 359 89 22 52 202 75 Traffic violations1,379 887 633 1,726 2,490 1,684 1,656 1,613 1,751 1,670 Fire: Number of calls answered690 853 836 865 1,025 1,058 1,023 1,236 1,283 1,200 Inspections**85 35 161 147 73 823 669 648 121 767 Highways and streets: Street resurfacing (miles)- - - 13.2 - 1.2 2.2 3.3 3.4 4.7 Potholes repaired*1,345 1,480 1,620 2,933 2,300 4,928 5,466 1,152 1,720 1,770 Sanitation: Garbage collected (tons/year)7,564 8,509 8,236 8,654 9,222 9,554 10,108 11,949 12,042 15,286 Trash collected (tons/year)5,513 6,292 5,545 5,902 8,228 7,189 7,741 6,907 4,256 4,565 Recyclables collected (tons/year) 1,512 1,714 1,779 1,855 1,843 1,835 1,803 947 824 1,286 Cultural and recreational: Golf course rounds @ 9 hole rounds 62,266 59,261 57,405 56,613 58,416 53,995 55,971 53,740 62,151 60,588 Pavilion/park parties58 61 59 44 28 32 22 19 36 47 Waste water: Average daily sewage treatment (millions of gallons)1.8 1.8 2.0 2.2 2.4 2.4 2.3 2.6 2.5 2.3 Sources: Various government departments* The City changed the calculation method for potholes for fiscal year 2016 resulting in an increase.** The Fire Inspector position was vacant for all of 2021.Fiscal Year
- 103 - CITY OF FAIRHOPE, ALABAMA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022FunctionPublic safety: Police: Stations 1111111111 Patrol units 43373839444547504952 Fire stations 3344444444Highways and streets: Streets (miles) 99.1 103.84 106.54 108.64 111.14 112.64 114.76 116.56 152.56 161.08Cultural and recreational: Parks acreage 248 356 504 504 504 504 657 657 657 657 Parks 51 52 54 54 54 54 56 56 56 56 Swimming pools 3333333333 Tennis courts 6 6 6 12 12 12 16 16 16 16 Community center 3333333333Sewer: Sanitary sewers (miles) 126 126 130 135 175 175 180 185 187 190 Storm sewers (miles) 17.25 19.17 20.57 22.77 25.77 27.29 29.5 30.73 31.41 32.22 Maximum daily treatment capacity (millions of gallons) 4 4 4 4.2444444Sources: Various government departmentsFiscal Year