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2010 CAFRThe Village of North Palm Beach, FL ~- ~~ .. ~. :~ :-:. _ ~_ ._ ~~ I~ ~ ~-.- -,e'S=~.. fi"""r ~ r.~~~i~''~~~'tiC~`. °~ -O .~ """ rr. z ~~ .. < <. _ _. ~- :~" r ~ ~~ tiii~s Y^ ?~ ~. COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2010 The Village of North Palm Beach, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2010 Prepared by: Finance Department Samia Janjua Director of Finance THE VILLAGE OF NORTH PALM BEACH, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 2010 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal .................................................................................... List of Principal Village Officials ............................................................... Organization Chart ...................................................................................... GFOA Certificate of Achievement for Excellence in Financial Reporting . FINANCIAL SECTION Independent Auditors' Report ............... Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Assets .................................................................................. Statement of Activities .................................................................................... Fund Financial Statements: Balance Sheet -Governmental Funds ............................................................. Reconciliation of the Balance Sheet -Governmental Funds to the Statement of Net Assets .................................................................. Statement of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds ...................................................... Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities Statement of Net Assets -Proprietary Fund .................................................... Statement of Revenues, Expenses, and Changes in Net Assets -Proprietary Fund .......................................................................... Statement of Cash Flows -Proprietary Fund .................................................. Statement of Fiduciary Net Assets -Fiduciary Funds ..................................... Statement of Changes in Fiduciary Net Assets -Fiduciary Funds ................. Notes to Basic Financial Statements ..................................................................... REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Funding Progress- Other Post Employment Benefits......... Schedule of Funding Progress -Retirement Funds ............................... Schedule of Employer and State Contributions .................................... Notes to the Trend Data ........................................................................ Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual -General Fund .................................................. Notes to the Budgetary Required Supplementary Information ............. ............................... vii ... ............................... viii ................................. ix 1 3 13 14 16 .................................17 18 .................................19 .................................20 ..................................65 ..................................66 ..................................67 ..................................68 69 70 THE VILLAGE OF NORTH PALM BEACH, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 2010 TABLE OF CONTENTS (Continued) OTHER SUPPLEMENTARY INFORMATION: Schedule of Departmental Expenditures- Budget and Actual -General Fund ....................................71 Combining Balance Sheet - Nonmaj or Governmental Funds ..............................................................74 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmaj or Governmental Funds ........................................................................................................75 Combining Statement of Net Assets -Fiduciary Funds .......................................................................76 Combining Statement of Changes in Fiduciary Net Assets -Employee Retirement Funds ................77 Combining Statement of Agency Net Assets .......................................................................................78 Combining Schedule of Changes in Agency Net Assets and Liabilities ...............................................79 Schedule of Departmental Expenses -Budget and Actual -Country Club Fund -Budgetary Basis ..80 STATISTICAL SECTION Net Assets by Component ............................................................................................ ........................81 Changes in Net Assets .................................................................................................. ........................82 Fund Balances, Governmental Funds ........................................................................... ........................84 Changes in Fund Balances, Governmental Funds ........................................................ ........................85 Net Assessed Value and Estimated Actual Value of Taxable Property ....................... ........................87 Property Tax Rates -Direct and Overlapping Governments ......................................... ........................88 Principal Property Taxpayers ....................................................................................... ........................89 Property Tax Levies and Collections ........................................................................... ........................90 Ratios of Outstanding Debt by Type ............................................................................. ........................91 Direct and Overlapping Governmental Activities Debt ................................................ ........................92 Pledged-Revenue Coverage .......................................................................................... ........................93 Demographic and Economic Statistics .......................................................................... ........................94 Principal Employers ..................................................................................................... ........................95 Full-Time Equivalent Village Government Employees by Function ............................ ........................96 Operating Indicators by Function/Program .................................................................. ........................97 Capital Asset Statistics by Function/Program ............................................................... ........................98 REQUIRED REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ..................................99 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida ...............................................................................................................................101 INTRODUCTORY SECTION THE VILLAGE OF NORTH PALM BEACH "THE BEST PLACE TO L/ VE UNDER THE SUN" March 24, 2011 The Honorable Mayor and Members of the Village Council Village of North Palm Beach North Palm Beach, Florida The Finance Department and Village Manager's Office are pleased to submit the Comprehensive Annual Financial Report for the Village of North Palm Beach, Florida for the fiscal year ended September 30, 2010. This report is published to provide the Village Council, Village staff, our citizens, our lenders, and other interested parties with detailed information concerning the financial condition and activities of the Village government. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Village. To the best of our knowledge and belief, the enclosed data are accurate in all material respects, and are organized in a manner designed to fairly present the financial position and results of operations of the Village as measured by the financial activity of its various funds. We also believe that all disclosures necessary to enable the reader to gain the maximum understanding of the Village's financial affairs have been included. THE REPORT Nowlen, Holt & Miner, P.A., Certified Public Accountants, have issued an unqualified ("clean") opinion on the Village of North Palm Beach's financial statements for the year ended September 30, 2010. The independent auditor's report is located at the front of the financial section of this report. Management's Discussion and Analysis (MD&A) immediately follows the independent auditor's report and provides a narrative, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. The CAFR's role is to assist in making economic, social and political decisions and to assist in assessing accountability to the citizenry by: • comparing actual financial results with the legally adopted budget, where appropriate; • assessing financial condition and results of operations; • assisting in determining compliance with finance related laws, rules and regulations; • assisting in evaluating the efficiency and effectiveness of Village operations. 501 U.S. Highway 1, North Palm Beach, FL 33408-4902 (561) 841-3380 * Fax (561) 848-3344 VILLAGE PROFILE The Village The Village of North Palm Beach is primarily a residential community, having been incorporated as a political subdivision of the State of Florida in 1956. The registered population of the Village is approximately 13,000 which increases to approximately 18,000 during the winter months by residents who list their northern homes as their official place of residence. Residents are generally in the middle to upper income brackets. Located in the northeastern quadrant of Palm Beach County, Florida, the Village has an abundant amount of waterfront property created by a number of lakes, canals, and the Atlantic Ocean. The governing body of the Village consists of a five member Village Council, each of whom is elected to two-year overlapping terms. The Mayor is selected by majority vote of the Council and serves for a term of one year. Day to day affairs of the Village are under the leadership of a Village Manager who is appointed by the Council. FINANCIAL DATA Financial Reporting System and Budgetary Controls The Village's financial records for its general governmental operations are maintained on the modified accrual basis, which means that revenues are recorded when available and measurable, and expenditures are reported when goods and services are received and the related liabilities are incurred. Financial reporting for its Enterprise Fund (i.e., the Country Club operation) is presented using the full accrual basis of accounting required by GAAP for its annual financial report. The Country Club annual budget is adopted using a modified accrual basis of accounting (identical to the general government operations mentioned above) which is consistent with how general ledger financial records are maintained throughout the year by the Village administration. In developing and evaluating the Village's financial and accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (a) the safeguarding of assets against loss from unauthorized use or disposition; and (b) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (a) the cost of a control should not exceed the benefits likely to be derived; and (b) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the Village's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The Village of North Palm Beach maintains budgetary controls through the annual budget public hearing and approval process for GAAP-based budgets. The formal budget approval for each fiscal year is accomplished in a manner compliant with Florida State Statute 200.065, commonly referred to as Truth-in-Millage (TRIM). Budget amendments require Village Council approval at public meetings. Budgetary control is maintained at the department level within the fund by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders, which result in an overrun of approved departmental appropriations within the fund, are not released until additional appropriations are made available. Encumbered amounts lapse at year-end; however, they are re-appropriated as part of the following year's budget. ECONOMIC OUTLOOK Property Values The Village obtains a major portion of its annual General Fund financial resources (56%) from ad valorem property taxes. Gross assessed property values increased substantially between the years of 2002 through 2006 but slowed significantly in 2007. In years 2008, 2009 and 2010 area property values declined in value, in many instances significantly, as a result of the economic downturn. This unprecedented decline in property values is only exacerbated by the number of properties in various stages of foreclosure. Both of these real-estate issues have had and will continue to have an adverse impact upon the financial resources of the Village. The Village does not anticipate a change in the pace of planned new growth since most vacant property within the municipal limits has already been developed. There continues to be an obvious softening of the real-estate market significantly impacting both home values and sales. The Village's property tax valuation continues to be negatively impacted since the passing of Amendment One (Property Tax Reform) in January 2008! Three primary factors play a role in that impact: doubling the Homestead exemptions to fifty thousand dollars; the capping of assessed property values for homes not currently homesteaded; and portability. Political discussions continue regarding alternative taxations which make future forecasts of Village property tax valuation uncertain. The Village will continue to pursue annexation of surrounding unincorporated areas that complement and enhance the services and values of our existing community. The focus of Village annexation efforts will be providing exemplary municipal services that are revenue "neutral" to both the annexed areas and to the Village. In Fiscal Year 2010 the Village was successful in acquiring both developed and undeveloped parcels of land through such annexation efforts. Investment Revenues: The economic downturn and softening of the Money Market continues to have significant consequences to the Village's investment revenues. In the short-term the Village made a conscious decision to modify its investment strategies towards the Treasury Market to better protect and ensure the availability of the Village's investment balances. This move proved successful in safeguarding Village investments during this Market freefall but impacted the interest/dividend revenues to the Village. Three years ago the Village adopted, with the assistance of the Village's Audit Committee, a "revised" Investment policy designed to provide safety and liquidity while maximizing investment return(s). The newly adopted policy provides numerous investment strategies, parameters, and safeguards. The policy additionally provides for 1/12 of its annual operating budget to be deposited in a liquid interest bearing account so as not to impede operations should other funds be temporarily unavailable. Personnel Costs The Village will continue to face challenges primarily in areas of increased personnel costs for both salaries and benefits as well as increased insurance and energy costs. In past years, several retirement plan amendments were implemented by the Village and then followed by significant salary adjustments that magnified the impact and cost of the retirement changes. The combination of these changes resulted in significant increases to -and continuing requirements for -annual Village pension costs. The Village has also encountered significant increases in annual health insurance costs during the past few years. In 2005, the Village transitioned away from its self-insured health program to a contractual, fixed-fee Health/Dental program. This new health program more accurately reflects and contains annual Village costs while re-establishing acost-sharing partnership with employees by adjusting the amount of their annual contribution for health coverage. Agreements for all three of the Village's collective bargaining units (police, fire, and public service workers) were successfully bargained and ratified during fiscal year 2010. All Collective Bargaining Agreements will run through September 30, 2013. All wage provisions "sunset" each year and must be renegotiated pursuant to the annual re-opener provisions outlined in the respective Collective Bargaining Agreements thereby giving the Village a more accurate means by which to calculate future year salaries and benefit costs. The impacts of personnel salaries and benefits in the coming years will have a large and continuing effect on future Village financing and service priorities in the areas of staffing, public services and public projects. INITIATIVES AND FUTURE PROJECTS Public Safety: The Department of Law Enforcement will seek its first reaccredidation through CALEA in this upcoming year. The purpose of CALEA's Accreditation Programs is to improve the delivery of public safety services, primarily by: maintaining a body of standards, developed by public safety practitioners, covering a wide range of up-to-date public safety initiatives; establishing and administering an accreditation process; and recognizing professional excellence. Specifically, CALEA's goals are to: Strengthen crime prevention and control capabilities; Formalize essential management procedures; Establish fair and nondiscriminatory personnel practices; Improve service delivery; Solidify interagency cooperation and coordination; and Increase community and staff confidence in the agency. The CALEA Accreditation Process is a proven modern, management model. Once implemented, it presents on a continuing basis to the agency's Chief Executive Officer (CEO) a blueprint that promotes the efficient use of resources and improves service delivery-regardless of the size, geographic location, or functional responsibilities of the agency. Communication/Automation upgrade: In 2010 the Village of North Palm Beach migrated from utilizing AT&T as its sole-source phone and data provider. iv Staff works diligently and understands the significance of developing new ways to cut costs during these tough economic times. After several months of research, the Information Systems Department identified a solution that: cut costs; maximized network performance; increased bandwidth by more than two times; and provided financial statements catered to the Village's needs. Nuvox Technologies, a premier phone /data service provider, was chosen to provide local telephone service, 5,000 minutes of long distance per month, interoffice connectivity and a secure network access. This solution provides an extended local calling area from Sebastian to Key West, as well as Long Distance Roll Over minutes for all locations. The entire solution is fully managed on Nuvox's Cisco-certified network. The total cost of data services from Nuvox is $4,188 monthly, or $50,256 annually. That is an annual savings of nearly $85,000 dollars. Northlake Boulevard Corridor Task Force: An initial $500,000 grant from the State DOT allowed the Village to award a local company the bid for construction of Phase 1 of the Northlake Boulevard streetscape improvement. This first phase provided sidewalk widening and median / swale area landscaping improvements from US1 westward to Southwind Drive. Replacement of deficient vegetation was completed in February 2007. The Task Force has begun to work on the implementation of Phase II which extends from Southwind Drive westward to Alternate A1A, but funding remains to be a challenge for all Task Force entities. This project remains ongoing but has slowed significantly due to the economic conditions and financial challenges facing the respective municipal entities. Canal Dredging: One of the noted development signatures of the Village is its intricate network of canals and waterways. The canals and waterways enhance the property values of the Village and give it character as a boating community. The canals were built in the 1950's as part of the original development of North Palm Beach; however, the canals were not maintained by the Village since that time and, as a result, have silted up and created navigational problems for boaters. In order to alleviate this problem, the Village has been going through an extensive dredging program to upgrade the quality of the canals and the North Palm Beach waterways. The dredging program was developed and implemented as a four-phase program, with the first and second phases completed in 2004 and phase three reaching completion in 2005. In 2010 the remaining two canals were completed. Work on these canals had previously been stalled for years due to the identification of Johnson's sea-grass, which is a natural food source for the manatee population and is highly regulated by various Federal and State agencies. Public Works: The Public Works Department, Streets/Grounds Division has identified five (5) storm water drain systems in need of repair. Four of the five projects involve the excavation and replacing of pipe joints which have separated and are creating sinkholes. The fifth project entails the replacement of an outfall pipe that dumps into the Intracoastal Waterway. The support structure has settled and has allowed the joints on the pipe to open up. The estimated cost to make these necessary repairs is approximately $49, 410. v Parks and Recreation: The Village of North Palm Beach Parks and Recreation Department will address structural defects in the Pool [mechanical] Pump Room at the North Palm Beach Country Club during the upcoming year. These structural repairs do need immediate attention and will likely render the pool unusable for an extended period of time. This will have a negative impact upon recreational revenues. The Village will be looking to resubmit its application to FRDAP seeking a $50,000 non-matching grant to erect a "Veterans Memorial" to the rear of Village Hall and adjacent to the Public Library. OTHER INFORMATION Independent Audit Article 11, Section 2.18 of the Village Charter requires an annual audit of the books of account, financial records and transactions of all administrative departments of the Village by independent certified public accountants selected by the Village Council. This requirement has been complied with and the independent auditor's report has been included in this report. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement of Excellence in Financial Reporting to the Village of North Palm Beach for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2009. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. Resp~ctf~+lly utamitted, Samna Janjua ~ireexor cf Finar7~e night M~n~ger vi THE VILLAGE OF NORTH PALM BEACH, FLORIDA PRINCIPAL VILLAGE OFFICIALS SEPTEMBER 30, 2010 Title Mayor Vice Mayor President Pro Tem Council Member Council Member Village Manager Director of Finance Village Clerk Name William L. Manuel Darryl C. Aubrey David B. Norris Robert A. Gebbia T.R. Hernacki Jimmy Knight Samia Janjua Melissa Teal vii ~ ~ _ ~ ~ U ~ U ~ ~ ~ ~ ~ a +r ~ U O ~ ~ _ Y ~ ~ °~ ~ o a N. ~~> ~o a o ~ mL ~ ~~a m~ ~ w o ~~> Q ~° ~m m ~~ Q (~ U ~Q ~, = .o.~ ~ ~ a~ ~~ J Q J ~ ~ ~ ~ `~ ~ ~ ~ ~ C~ U m .~_ }' ~ ~ L ~ J ~ 0 0 ~ N (Q N [0 O N .. ~ a ~c~ ~ ~a~ ~N ~ v ~ ~~~ W i ~ ~ ~ ~ m ~ o ~ t L O ~ O i ~ ~..r ~ _ J N ~ • ~ ~ ~--' ~ ~ ~ a~ c~ ~ T ~ ~ ~ ~ o ~ ° o Z ~ ~ ~ v ~ ~ ~ O as a~ L ~ O ~ ^^'' W ~ ~ AA,, W ~ ~ ~ W > > ~ v J ~ J ~ ~ o ~ ~ = ai ~ W 2 ~ ~ m L a T~ ~~ ~Q ~s ~~ o> V~~~ '~r~~i.~ c~1rr~~ 1 ~"1 ~' 1I~1 ~.~11 cl~ ~~r~~ l'resenke~cj k~3 ~`l~ri ~CLE' ' k5 {_~+3a37~1'C~'YC11~14'C .~Cl17ll~1~ 1='Gnara~iai i~epur~ iar the Fiscal 1'c~r ria~~c] A ~.elrtil`ICa1e of~4clricvcnunt Ior ~.~cc~l'~ncc il~ I' i~7alrcial f~r:r)rli:l~ i; E~re~ntcd b}• t~lC G43'CI'.1n1C11S G Ir'21LIC;'. (,1r'~~cr4 Ass4c,aLi41~ oftlu~ lv'~rrkcd SC~[rs ;In~:i C'xr3~uela tll ~44'Cl~IlGYI4'~I~ UrLli} 1~]1lI ~}LL}~~Ll' Cfl7~J~sJ~'k't' 9lEll'4'll~k'.r'~t s}°~;e;i7s x~"Isose Corri~,rcflenci~'e annal.:.l lin~lncial L~parls [~:.~FR~) ~c~ieu~ he Itii~l~est stsndt7rds in ~vr"ernln~-rt;LCt4~aII1Li91rry ~Lltid firla~ncia~~ ra~aortilbti, i Prt~i~lclll )':~:r'culi~~e L?~reclor ix FINANCIAL SECTION NH &M C +~„~'~ Cl°I!?,~] €'t7FSt-~~C=.fide-~U[a N ] A~1']:'~ Wf~I P1433.1 ~.i,L93 L1CE 215 P]PFES S'1R4sT, SL~.'lE 2134 w$4T rtr<r hi na+~cl[, Ei,O(~][}fi ~.~+}~ 4417 'I'F. YYH[]4E' (16'.r d~}~'JLlfjr} INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of the Village Council The Village of North Palm Beach, Florida EYIERF'CT R h~Y.l FN ;1 G90.' GHlI, CPJ4 i rwtiu~ i ii4i i, Citis af]RFRT 4V. HF'd RC.K .R., CRl4 ,~,wi - n i7+t~~ ip vii i~ Cpu IUfTHLE=N..~ ilh.R, CR5 Tr,.tim i h1C5R1f}N,.R , Gra, h': H{71NLU llLVYL"1, C;IhS ~L 4l`G!-AE_ 5-•= ifE\S, CR4 :LL F7CAC VARCA, CI44 ~1f11 J EIHLSC: U C:! ~, C:IhS 14+AJ4 7 'Ef=RSCH, CR5 bCi4k44fiC] T Hlfll -, .fl . CA4 RFI I F ~I A.lSF QFFI~F ;3:i3 $ F ~n~ $TRFFT P46TpFF~F R'OK 37Q ~d<F ~L~rxF, Fl QRI[Sd 73t3~ ~3.~9 TELEF'HCNF {~ 1 J B6&561 ~ F'hk {5+~ 1 J 886-92~ We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida as of and for the year ended September 30, 2010, which collectively comprise the Village's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Village of North Palm Beach, Florida's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with U. S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida as of September 30, 2010, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with U.S. generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated March 11, 2011, on our consideration of the Village of North Palm Beach, Florida's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and AMERIG,4N INSTTUTE ^F C.RTIFIED PUBLIC fiCGQUNTANTS • FLORIDA INSTITUTE OF CERTIFIED ~UBLIG,4CCQL1hTANT5 • CPAMERICA INTERNATI^NAL the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standczr~•ds and should be read in conjunction with this report in considering the results of our audit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 12, Pension and Other Post Employment Benefit trend information on pages 65 through 68, and budgetary comparison information on pages 69 through 70 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of North Palm Beach, Florida's financial statements as a whole. The introductory section, other supplemental information and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The other supplemental information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. March 11, 2011 West Palm Beach, Florida 2 MANAGEMENT'S DISCUSSION AND ANALYSIS The Village of North Palm Beach, Florida's (Village) Administration offers readers of the Village's financial statements this narrative overview and analysis of the financial activities of the Village for the fiscal year ended September 30, 2010. Please read it in conjunction with the accompanying transmittal letter beginning on page i, and the accompanying basic financial statements. TABLE 1 FINANCIAL HIGHLIGHTS (in millions) Septemb er 30, Increase/ Statement 2010 2009 (Decrease) Page # Total net assets $31.84 $30.79 $1.05 13 Unrestricted net assets available for future use $10.97 $11.45 ($0.48) 13 Governmental net assets $29.14 $27.99 $1.15 13 Total revenues from all sources $22.66 $25.10 ($2.44) 14 Governmental revenues $1937 $21.69 ($2.32) 14 Total cost of all Village programs $21.62 $20.75 $0.87 14 Governmental revenues over (under) expenses $1.15 $4.24 ($3.09) 15 General fund revenues over (under) expenses $0.60 $1.89 ($1.29) 18 General fund unreserved fund balance $10.54 $10.05 $0.49 16 As a percent of general fund expenditures 55.45% 55.56% (0.11) Country Club revenues over (under) expenses ($0.10) $0.10 ($0.20) 21 Change in total long-term debt for the Village ($2.40) ($1.77) ($0.63) USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The three components of the financial statements are: (1) Government-wide financial statements that include the Statement of Net Assets and the Statement of Activities. These statements provide information about the activities of the Village as a whole. (2) Fund financial statements tell how these services were financed in the short term, as well as what remains for future spending. Fund financial statements also report the Village's operations in more detail than the government-wide statements by providing information about the Village's most significant funds. (3) Notes to the basic financial statements expand upon information reported in the government- wide and governmental fund statements. REPORTING THE VILLAGE AS A WHOLE Statement of Net Assets and the Statement of Activities (Government-wide) A frequently asked question regarding the Village's financial health is whether the year's activities contributed positively to the overall financial well being. The Statement of Net Assets and the Statement of Activities report information about the Village as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account, regardless of when cash is received or paid. These two statements report the Village's net assets and changes therein. Net assets, the difference between assets and liabilities, are one way to measure the Village's financial health, or financial position. Over time, increases or decreases in net assets are an indicator of whether the financial health is improving or deteriorating. The Statement of Net Assets and the Statement of Activities present information about the following: • Governmental activities -All of the Village's basic services are considered to be governmental activities, including general government, community development, public safety, public services, library, and recreation. Property taxes, sales taxes, utility taxes, and franchise fees finance most of these activities. Proprietary activities/Business type activities -The Village charges a fee to customers to cover all or most of the cost of the services provided. The Village's Country Club is reported in this category. REPORTING THE VILLAGE'S MOST SIGNIFICANT FUNDS Fund Financial Statements The fund financial statements provide detailed information about the most significant funds -not the Village as a whole. Some funds are required to be established by State law. However, management establishes other funds, which aid in the management of money for particular purposes or meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The Village's three kinds of funds -governmental, proprietary, and fiduciary -use different accounting approaches as explained below. Governmental Funds Most of the Village's basic services are reported in governmental funds. Governmental funds focus on how resources flow in and out, with balances remaining at year-end that are available for spending. These funds are reported using an accounting method called the modified accrual accounting method, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Village's general government operations and the basic services it provides. Governmental fund information shows whether there are more or fewer financial resources that can be spent in the near future to finance the Village's programs. The Village maintains six individual governmental funds: the General Fund, one Capital Projects Fund, and four Special Revenue 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 for the General Fund. The remaining funds are considered non-major funds and data from these governmental funds are combined into a single column for an aggregated presentation. The basic governmental fund financial statements can be found on pages 16-19 of this report. Proprietary Funds The Village's only proprietary fund is the Country Club Fund, which charges customers for the services it provides. 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 Assets and the Statement of Activities. The basic proprietary fund financial statements can be found on pages 20-22 of this report. • Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The funds in this category are the Village's Pension Trust Funds and Agency Funds. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 23-24 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the Village, assets exceeded liabilities by $31.84 million at the close of the most recent fiscal year. A significant portion of the Village's net assets (64.32%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The Village uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Village's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 2 Village of North Palm Beach Net Assets (In Thousands) Governmental Business Activities Activities Total Assets: Current and other assets Capital assets Total assets Liabilities: Current liabilities Long-term debt outstanding Total liabilities Net assets: Invested in capital assets, net of debt Restricted Unrestricted Total net assets 2010 2009 2010 2009 2010 2009 $ 14,033 $ 14,185 $ 988 $ 1,136 $ 15,021 $ 15,321 18,183 19,177 6,576 6,795 24,759 25,972 32.21 h 333h2 7_Sh4 7.931 39.780 41.293 1,230 1,584 509 630 1,739 2,214 1,843 3,783 4,357 4,502 6,200 8,285 3,073 5,367 4,866 5,132 7,939 10,499 18,184 16,643 2,295 2,365 20,479 19,008 391 251 391 251 10,568 11,101 403 434 10,971 11,535 $ 29,143 $ 27,995 $ 2,698 $ 2,799 $ 31,841 $ 30,794 5 Governmental Activities The cost of all governmental activities this year was $18.22 million. As shown on Table 3, Changes in Net Assets, those who directly benefited from the programs paid for $2.80 million of this cost and $15.24 million was financed through general revenues. Governmental activities increased the Village's net assets by $1.15 million, thereby accounting for 110% of the total increase in the net assets of the Village. Key elements of this increase are as follows: • Program revenues are higher due to expanded recreational activities. • Increase in investment income due to the change in investment strategy. The Village hired an investment advisor to increase investment diversity of its core funds and to maximize the return on investment. • Due to discounts for prompt payments, State law requires that only 95% of the gross ad-valorem taxes be budgeted as revenue ($10.97 million). For the current year, the Village received $11.05 million. • Re-structuring of our emergency medical transport billing resulted in an increase in overall revenues. • In its pursuit of debt-free status, the Village budgeted revenues to pay off its last debt instrument. This was not an expense on the government-wide entity statement. The increase in the above-mentioned revenues, while holding the line on operating costs, resulted in a positive impact on the Village's Governmental Activities. Additional detail is shown in Table 3, which follows on the subsequent page: Table 3 Village of North Palm Beach Changes in Net Assets (In Thousands) Governmental Business Activities Activities Total Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Local option gas taxes Utility service taxes Sales and use taxes Franchise taxes Investment earnings Miscellaneous Contribution-Support Our Troops Gain (loss) on asset disposals Total revenues Expenses: Program expenses: General Government Public Safety Public Works Community Development & Planning Leisure Services Reserves & Other Interest on long-term debt Country Club Total expenses Subtotal Transfers Increase (decrease) in net assets Net assets - beginning of year Net assets -end of year 2010 2009 2010 2009 2010 2009 $ 2,802 $ 2,507 $ 3,228 $ 3,405 $ 6,030 $ 5,912 97 105 97 105 76 2,017 76 2,017 11,053 11,917 11,053 11,917 266 268 266 268 2,261 2,239 2,261 2,239 1,115 1,116 1,115 1,116 1,204 1,257 1,204 1,257 280 (1) 14 7 294 6 186 211 186 211 - 7 - 7 28 52 55 83 52 19,368 21,695 3,297 3,412 22,665 25,107 2,679 2,239 2,679 2,239 7,304 7,011 7,304 7,011 4,595 4,083 4,595 4,083 807 826 807 826 2,830 3,174 2,830 3,174 4 27 4 27 3,398 3,309 3,398 3,309 18,219 17,360 3,398 3,309 21,617 20,669 1,149 4,334 (101) 104 1,048 4,438 1,149 27,994 4,334 23,661 (101) 2,799 104 2,695 1,048 30,793 4,438 26,356 $ 29,143 $ 27,995 $ 2,698 $ 2,799 $ 31,841 $ 30,794 7 The Village's programs include General Government, Public Safety, Public Works, Community Development & Planning, and Leisure Services. Each program's net cost (total cost, less revenues generated by the activities) is presented below. The net cost shows the extent to which the Village's general taxes support each of the Village's programs. Table 4 Village of North Palm Beach Cost of services (In Thousands) 2010 2009 Total Cost Net Cost Total Cost Net Cost of Services of Services of Services of Services General government $ 2,679 $ (2,547) $ 2,240 $ (2,082) Public safety 7,304 (6,771) 7,095 (6,642) Public works 4,595 (4,132) 4,083 (3,684) Community development and planning 807 (72) 826 (127) Leisure services 2,830 (1,718) 3,174 (254) Interest on long-term debt 4 (4) 27 (27) $ 18,219 $ (15,244) $ 17,445 $ (12,816) At the end of the current year, as compared to prior year, many of the departments realized an increase in their overall costs (for example, General Government increased by $0.44 million, Public Safety increased by $0.21 million and Public Works increased by $0.51 million), as a result of mandatory employee- related costs. These cost increases are not typically within the control of the Department and follow various collective bargaining agreements and contracts. For the Leisure Services Department, the increase in employee costs was offset by the centralization of services for park maintenance; therefore the department realized a reduction in their overall departmental cost. The Public Works total cost conversely, increased for the addition of this maintenance component. Business Type Activities Charges for Services (revenues) in the Business Type Activities experienced an overall decline ($0.18 million) from that of the previous year. Also, during this same time period, expenses increased by $0.09 million. The negative impact in the Business Type Activities was most prominent in the area of Club memberships, which is directly tied to the struggling economy, and also in the area of Food & Beverage. The Village originally extended lease payment amnesty to the then independent Restaurant vendor but ultimately was forced [at mid year] to assume that operation and incurred initial startup costs associated with the Food and Beverage operations. Net assets of the Proprietary Fund (Country Club) at September 30, 2010, were $2.69 million. Net assets decreased by $100,640. FINANCIAL ANALYSIS OF THE VILLAGE'S FUNDS As noted earlier, the Village uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds -The focus of the Village's governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Village's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the combined fund balance for all Governmental Funds was $11.95 million, a $0.70 increase over the 2009 fund balance of $11.29 million. Approximately 96% of the combined ending fund balance ($11.44 million) constitutes unreserved fund balance, which is available for spending at the government's discretion. The remainder of fund balance ($0.51 million) is reserved to indicate that it is not available for new spending because it has already been committed for a variety of other restricted purposes. The General Fund is the chief operating fund of the Village. At the end of the current fiscal year, unreserved fund balance of the General Fund was $10.54 million while the General Fund total fund balance was $11.05 million. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance is 54% of total general fund expenditures, while total fund balance represents 58% of that same amount. The general fund unreserved fund balance ($10.54 million) represents an increase of $0.49 million over the 2009 unreserved general fund balance of $10.05 million. Key elements of this increase are listed below: • Program revenues are higher due to expanded recreational activities. • Increase in investment income due to the change in investment strategy. This revenue source had declined significantly over the past few years and, therefore, the Village decided to change its approach on its investment practices. The Village hired an investment advisor to increase investment diversity of its core funds and to maximize the return on investment. • Due to discounts for prompt payments, State law requires that only 95% of the gross ad-valorem taxes be budgeted as revenue ($10.97 million). For the current year, the Village received $11.05 million. • Re-structuring of our emergency medical transport billing resulted in an increase in overall revenues . The increase in the above-mentioned revenues, while holding the line on operating costs, resulted in a positive impact in the Village's General Fund. General Fund Budgetary Highlights Differences between the original budget and the final amended budget were $1,728,000 and can be briefly summarized as follows: General Fund Debt Payoff ($1,568,000) Pool Resurfacing-Recreation Impact Fees ($160,000) General Fund Budget Analysis As shown on pages 71-73 of this report, in the Schedule of Departmental Expenditures -Budget and Actual, there was a favorable budget to actual cost variance of $606,531 in General Fund Departmental Expenditures. To counter the decrease in revenue brought about by property tax reform and the economic downturn, the Village Manager asked Department Directors to reduce spending in a manner that would minimize the impact on our residents. This required seeking new ways to serve our customers. The Directors did an admirable job identifying areas to cut costs resulting in favorable budget variances. The areas of significant budget to actual variances for the General Fund expenditures are summarized below: • Contractual Services in Facility Services and Street Maintenance had a budgetary savings of $44,028. The outsourcing of maintenance costs was less than anticipated. Also, at budget preparation, it was anticipated that the Village would have to maintain all the Swale area along Prosperity Farms Road. The residents of the abutting properties were encouraged to maintain these areas and they responded, thus resulting in the Village not having to expend those funds. • The Facility Services Division also realized a savings of $22,807 in its repair and maintenance of building and grounds. The savings were derived from diligent research and price comparisons. • The Village budgets a 1.25% contingency reserve for unanticipated expenditures. The entire amount was not used during the year which resulted in a savings of $82,551. • The Village saw an overall savings in its utility costs ($74,209): the budgeted amount included a ten percent increase for utilities but the actual costs were well under the budgeted amount. • There was also an overall savings in fuel costs ($27,640): through better scheduling of projects and crews and a decrease in the estimated price of fuel, the Village realized savings in this particular category. • During the current year, the Village implemented a Small Business Grant Program and appropriated $100,000 from Council Contingency to fund this program. The program is administered through the Community Development Department and is structured to provide matching grants of up to $5,000 for improvements to small business properties. Businesses would be required to match each dollar of grant funds with one dollar from their own funds. Businesses must complete an application and will have to meet certain criteria to qualify. In 2010, there were no applicants which resulted in a budgetary savings ($100,000) in the Community Development Department. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The capital assets of the Village are those assets that are used in the performance of Village functions. Capital assets include equipment, buildings, land, and park facilities etc. The Village has elected to retroactively apply the capitalization requirements of GASB Statement No 34 to major general infrastructure assets acquired in fiscal years ending after June 30, 1980, or that were significantly reconstructed or improved during that multiyear period. 10 The Village's investment in capital assets for its governmental and business-type activities as of September 30, 2010 and 2009 amounts to $24.76 million and $25.97 million, respectively (net of accumulated depreciation). Table 5 Village of North Palm Beach Capital Assets (In Thousands) Governmental Activitie s 2010 2009 Business Activities 2010 2009 Total 2010 2009 Land $ 2,151 $ 2,151 $ 1,051 $ 1,051 $ 3,202 $ 3,202 Construction in progress 142 204 142 204 Buildings and improvements 21,647 21,137 1,405 1,405 23,052 22,542 Improvements other than buildings 6,999 7,300 357 354 7,356 7,654 Improvements -golf course 5,824 5,824 5,824 5,824 Furniture, fixtures and equipment 780 742 780 742 Total assets 30,939 30,792 9,417 9,376 40,356 40,168 Less accumulated depreciation (12,755) (11,615) (2,840) (2,581) (15,595) (14,196) Net assets $ 18,184 $ 19,177 $ 6,577 $ 6,795 $ 24,761 $ 25,972 Additional information on the Village's capital assets can be found in Note 7 on page 43 of this report. Debt Currently, the Village uses debt financing on an as-needed basis each year. At the end of the current fiscal year, the Village had total long-term debt of $4.3 million, all of which is in business-type activities. The last outstanding debt instrument in the General Fund was satisfied in 2010; therefore, there is no long- term debt outstanding in the Village's governmental activities. None of the Village's long-term debt comprises debt backed by the full faith and credit of the government. Table 6 Village of North Palm Beach Outstanding Debt (In Thousands) Governmental Business Activities Activities Total 2010 2009 2010 2009 2010 2009 Loans payable $ - $ 2,250 $ 4,090 $ 4,383 $ 4,090 $ 6,633 Capital leases - 235 97 235 97 Total $ - $ 2,250 $ 4,325 $ 4,480 $ 4,325 $ 6,730 Additional information on the Village's debt can be found in Note 8 on page 45 of this report. 11 NEXT YEAR'S BUDGET AND ECONOMIC FACTORS The Village's Unappropriated Fund Balance is viewed by the Administration as a measurement of Village financial stability. Unreserved general fund balance increased to $10.54 million during the current 2010 fiscal year. The Village is now ready to address the economic challenges anticipated in the next few years. The economic outlook for the primary revenue source for Florida municipalities will be challenging, as cities are facing state mandated reductions of property taxes. In an effort to provide tax relief and spur the slumping housing market, the State legislature focused on property tax reform in the 2007 session. House Bill 1B was enacted to limit the authority of local governments to levy ad valorem taxes for the FY 2008 budget year and beyond. The economic downturn and decline in property values have significantly impacted Village revenues. To address the impact of the legislation, continuing increases in the cost of employee compensation and benefits, and the reduction of revenues, the Village will need to continue to prioritize essential services and desired levels of service to allocate sufficient funding in future budget years. CONTACTING THE VILLAGE'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the Village's finances and to show the Village's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Village's Finance Department, at the Village of North Palm Beach, 501 U.S. Highway 1, North Palm Beach, Florida 33408. 12 BASIC FINANCIAL STATEMENTS THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Net Assets September 30, 2010 Governmental Business-type Activities Activities Total Assets Cash and cash equivalents $ 3,615,056 $ 834,922 $ 4,449,978 Investments 8,399,541 8,399,541 Accounts receivable 304,024 36,921 340,945 Developer fee receivable 425,000 425,000 Inventories 31,433 60,274 91,707 Prepaids 135,675 11,761 147,436 Due from other governments 346,093 346,093 Restricted assets: Cash and cash equivalents 342,702 342,702 Net pension assets 431,999 431,999 Intangible assets, net of amortization 44,080 44,080 Capital assets: Nondepreciable 2,292,940 1,051,311 3,344,251 Depreciable (net of depreciation) 15,891,568 5,525,194 21,416,762 Total assets 32,216,031 7,564,463 39,780,494 Liabilities Accounts payable 329,509 83,814 413,323 Accrued liabilities 571,158 571,158 Accrued interest payable 598 598 Deposits 3,533 3,533 Deferred revenue 328,827 420,465 749,292 Noncurrent liabilities: Due within one year 735,050 321,936 1,056,986 Due in more than one year 1,108,304 4,035,731 5,144,035 Total liabilities 3,072,848 4,866,077 7,938,925 Net Assets Invested in capital assets, net of related debt 18,184,508 2,295,125 20,479,633 Restricted for: Library 22,529 22,529 Recreation 262,646 262,646 Public safety 49,054 49,054 Other purposes 55,852 55,852 Unrestricted 10,568,594 403,261 10,971,855 Total net assets $ 29,143,183 $ 2,698,386 $ 31,841,569 See notes to the financial statements. 13 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Activities For the Year Ended September 30, 2010 Charges for Functions/Programs Expenses Activities Government: Governmental activities General government Public safety Public works Community development and planning Leisure services Interest on long-term debt Total governmental activities $ 2,679,192 $ 126,968 7,304,233 465,263 4,594,738 411,722 806,536 734,718 2,830,292 1,063,748 4,384 18,219,375 2,802,419 Business-type activities -country club Total business-type activities Total government 3,398,206 3,227,580 3,398,206 3,227,580 $ 21,617,581 $ 6,029,999 14 Program Revenues Operating Capital Grants and Grants and Contributions Contributions $ 5,376 $ 23,319 44,345 51,018 16,957 96,670 Net Expense (Revenue) and Changes in Net Assets Governmental Business-type Activities Activities Total 31,500 75,845 $ (2,546,848) $ (6,771,306) (4,131,998) (71,818) (1,718,087) (4,3 84) (15,244,441) $ (2,546,848) (6,771,306) (4,131,998) (71,818) (1,718,087) (4,3 84) (15,244,441) ~170,626~ ~170,626~ ~170,626~ ~170,626~ $ 96,670 $ 75,845 (15,244,441) (170,626) (15,415,067) General Revenues: Taxes: Property taxes Local option gas taxes Utility service taxes Franchise taxes Sales and use taxes Investment income Gain on disposal of capital assets Miscellaneous Total general revenues Change in net assets 11,053,128 11,053,128 266,077 266,077 2,261,375 2,261,375 1,204,328 1,204,328 1,114,945 1,114,945 280,217 14,686 294,903 27,909 55,300 83,209 185,516 185,516 16,393,495 69,986 16,463,481 1,149,054 (100,640) 1,048,414 Net assets, beginning of year, as restated 27,994,129 2,799,026 30,793,155 Net assets, end of year $ 29,143,183 $ 2,698,386 $ 31,841,569 See notes to the financial statements. 15 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Balance Sheet Governmental Funds September 30, 2010 Assets Cash and cash equivalents Investments Accounts receivable Developer fee receivable Inventories Prepaids Due from other funds Due from other governments Restricted cash and cash equivalents Total assets Nonmajor Total Governmental Governmental General Funds Funds $ 2,715,300 $ 899,756 $ 3,615,056 8,399,541 8,399,541 304,024 304,024 425,000 425,000 31,433 31,433 135,675 135,675 31,808 44,028 75,836 261,071 85,022 346,093 342,702 342,702 12,646,5 54 1,028, 806 13,675,360 Liabilities and fund balances Liabilities Accounts payable Accrued liabilities Due to other funds Deferred revenue Total liabilities Fund balances Reserved for: Inventories and prepaids 167,108 Library 22,529 Recreation 218,500 Public safety 47,807 Other purposes 53,866 Unreserved: Special revenue funds Capital project funds Designated for small business grants 100,000 Undesignated 10,443,099 Total fund balances 11,052,909 $ 268,660 $ 60,849 $ 329,509 571,158 571,158 75,836 75,836 753,827 753,827 1,593,645 136,685 1,730,330 Total liabilities and fund balances 12,646,554 167,108 22,529 218,500 47,807 53,866 47,379 47,379 844,742 844,742 100,000 10,443,099 892,121 11,945,030 1,028,806 13,675,360 See notes to the financial statements. 16 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Reconciliation of the Balance Sheet -Governmental Funds to the Statement of Net Assets Governmental Funds September 30, 2010 Fund balances -total governmental funds $ 11,945,030 Amounts reported for governmental activities in the statement of net assets are differentbecause: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds: Governmental capital assets $ 30,939,965 Less accumulated depreciation (12,755,457) 18,184,508 Revenue is recognized when earned in the government-wide statements, regardless of activity. Governmental funds report based on modified accrual, i.e., both measurable and available: Developer fee 425,000 425,000 Net pension assets related to defined benefit pension plans are not available to pay for current-period expenditures and, therefore, are not reported as assets in the governmental funds: 431,999 Long-term liabilities, including notes and bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds. Long term liabilities at year-end consist of: Claims and setklements (142,838) Other postemployement benefits (518,292) Accrued compensated absences (1,182,224) (1,843,354) Net assets of governmental activities $ 29,143,183 See notes to the financial statements. 17 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2010 Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment Miscellaneous Total revenues Expenditures Current General government Public safety Public works Community development and planning Leisure services -recreation Capital outlay Debt service Principal payments Interest paid on debt Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances Beginning of year End of year Nonmajor Total Governmental Governmental General Funds Funds $ 14,784,906 $ $ 14,784,906 910,997 910,997 1,269,509 498,879 1,768,388 1,944,245 1,944,245 142,048 142,048 280,218 280,218 278,062 278,062 19,609,985 498,879 20,108,864 2,496,342 2,496,342 6,766,641 254,590 7,021,231 3,887,034 3,887,034 774,121 774,121 2,361,388 2,361,388 475,007 188,575 663,582 2,250,000 2,250,000 4,384 4,384 19,014,917 443,165 19,458,082 595,068 55,714 650,782 163,490 163,490 (163,490) (163,490) (163,490) 163,490 431,578 219,204 650,782 10,621,331 672,917 11,294,248 $ 11,052,909 $ 892,121 $ 11,945,030 See notes to the financial statements. 18 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Activities For the Year Ended September 30, 2010 Net change in fund balances -total governmental funds $ 650,782 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense: Expenditures for capital assets $ 663,582 Less: current year depreciation (1,620,932) (957,350) Gains and losses on disposal of capital assets are reported in the statement of activities, whereas in the governmental funds the proceeds from the sale increases financial resources. The difference is the net book value of the assets retired: Net book value for retired assets (35,901) Governmental funds report revenues when earned and available. However, in the Statement of Activities, revenues are recognized when earned, regardless of availability: Florida Recreation Development Assistance Program grant (199,944) Developer fee (250,000) (449,944) Repayment oflong-term debt is reported as an expenditure on the governmental funds, but a reduction oflong-term liabilities in the statement of net assets: 2,250,000 Expenses that do not use current financial resources are not reported on the governmental funds but are included in the statement of activities: Change in long-term compensated absences (39,627) Change in net pension asset of defined benefit pension plans 1,625 Change in other postemployement benefits (233,775) Change in insurance liability (36,756) (308,533) Change in net assets $ 1,149,054 See notes to the financial statements. 19 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Net Assets Proprietary Fund September 30, 2010 Assets Current assets Cash and cash equivalents Accounts receivable Inventories Prepaids Total current assets Non-current assets Intangible asset, net Land, buildings, and equipment, net Total non-current assets Total assets Liabilities Current liabilities Accounts payable Accrued interest payable Deposits Deferred revenue Compensated absences -current portion Capital leases -current portion Loans payable -current portion Total current liabilities Non-current liabilities Other postemployement benefits Compensated absences Capital leases Loans payable Total non-current liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Unrestricted Total net assets Enterprise $ 834,922 36,921 60,274 11,761 943,878 44,080 6,576,505 6,620,585 7,564,463 83,814 598 3,533 420,465 11,746 62,093 248,097 830.346 19,355 1,106 173,083 3,842,187 4.03 5.731 4,xbb,U / / 2,295,125 403,261 $ 2,698,386 See notes to the financial statements. 20 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Fund For the Year Ended September 30, 2010 Operating revenue Greens fee/cart rentals/membership fees Golf shop revenues Driving range revenues Restaurant revenues Miscellaneous Total operating revenues Operating expenses Golf course maintenance expenses Clubhouse grounds expenses Golf shop expenses Food and beverage expenses Administrative and general Insurance Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating revenues (expenses) Interest revenue Interest expense Gain on disposal of capital assets Total nonoperating revenues (expenses) Change in net assets Net assets -beginning Net assets -ending See notes to the financial statements. Enterprise $ 2,520,364 225,699 174,929 244,359 62,229 3,227,580 1,250,612 103,377 607,452 452,516 257,590 56,923 476,583 3,205,053 22,527 14,686 (193,153) 55,300 (123,167) (100,640) 2,799,026 $ 2,698,386 21 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Cash Flows Proprietary Fund For the Year Ended September 30, 2010 Cash flows from operating activities: Receipts from customers Payments to suppliers for goods or services Payments to employees for services Net cash provided (used) by operating activities Cash flows from capital and related financing activities: Proceeds from sale of capital assets Proceeds from capital lease Principal paid on long term debt Interest paid on debt Acquisition of capital assets Net cash provided (used) by capital and related financing activities Cash flows from investing activities: Interest and dividends on investments Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation Other revenues Change in assets and liabilities Decrease in accounts receivable (Increase) in inventory Decrease in prepaids Increase in accounts payable (Decrease) in deposits Increase in compensated absences payable (Decrease) in deferred revenue Increase in other postemployment benefits Total adjustments Net cash provided by operating activities See notes to the financial statements. Enterprise ~ 3,126,082 (2,021,867) (696,873) 407,342 124,000 284,000 (43 8,622) (194,652) (320,972) (546,246) 14,686 (124,218) 959,140 $ 834,922 $ 22,527 476,583 26,888 (30,777) 22,371 8,103 (9,467) 1,303 (118,919) 8,730 384,815 $ 407,342 22 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Fiduciary Net Assets Fiduciary Funds September 30, 2010 Assets Cash and cash equivalents Investments: Common equity securities U. S. Government agencies Municipal bonds Corporate bonds U. S. Treasury bonds Equity mutual funds Common trust funds Fixed annuity funds Accrued interest and dividends Accounts receivable Prepaids Total assets Employee Retirement Funds $ 1,417,712 5,523,686 1,489,881 176, 972 2,160,779 296,050 24, 624 5,707,329 106,226 45,051 99,471 Agency Funds $ 344,354 1,626 17,049,407 344,354 Liabilities Accounts payable Due to others Total liabilities Net Assets Held in trust for pension benefits and other purposes 35,570 344,354 35,570 344,354 $ 17,013,837 $ See notes to the financial statements. 23 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2010 Employee Retirement Funds Additions Contributions Employer $ 1,417,421 Plan members 238,674 State on-behalf payments 254,590 Total contributions 1,910,685 Investment earnings Dividends and interest 302,756 Net increase in fair value of investments 1,002,687 Total investment income 1,305,443 Less investment expenses 91,751 Total net investment earnings Total additions Deductions Administrative expense Benefits Refund of contributions Total deductions Change in net assets Net assets -beginning Net assets -ending See notes to the financial statements. 1,213,692 3,124,377 112,830 1,394,417 5,719 1,512,966 1,611,411 15,402,426 $ 17,013,837 24 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Village of North Palm Beach, Florida ("the Village") was incorporated in 1956 pursuant to Chapter 31481, Laws of Florida, Extraordinary Session 1956. The Village is located in the northeast portion of Palm Beach County, Florida. Its municipal area comprises approximately 1,900 acres of land and 1,200 acres of lakes, canals and lagoons. The Village's nonseasonal population consists of approximately 13,000 residents, which increases during the winter months to approximately 18,000 people. The Village operates under the Council-Manager form of government and provides the following services to its residents: public safety, planning and zoning, sanitation, library, parks, marinas, and a country club. The Village Council (the "Council") is responsible for legislative and fiscal control of the Village. In accordance with Statement 14 of the Government Accounting Standards Board, the underlying concept of the governmental financial reporting entity is that governmental organizations are responsible to elected governing officials; therefore, financial reporting should report the elected officials' accountability for those organizations. Furthermore, the financial statements of the reporting entity should allow users to distinguish between the primary government and its component units, if any, by communicating information about the component units and their relationships with the primary government. A component unit is a legally separate organization for which the elected officials of the primary government are financially accountable. Determining factors of financial accountability includes appointment of a voting majority, imposition of will, financial benefit or burden on a primary government, or fiscal dependency. In addition, component units can be other organizations for which the nature and significance of their relationship with a primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Based on the application of these criteria, management has determined that no component units exist which would require inclusion in this report. Further, the Village is not aware of any entity that would consider the Village to be a component unit. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non-fiduciary activities of the Village. For the most part, the effect of interfund activities has been removed from these statements. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 25 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements and proprietary fund financial statements are reported using the accrual basis of accounting and the economic resources measurement focus. Fiduciary funds use the accrual basis of accounting and, except for agency funds, the economic resources measurement focus. Agency funds do not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, licenses, interest associated with the current fiscal period and all other revenue items are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. 26 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) The Village reports the following major governmental funds: General Fund The general fund is the primary operating fund and is used to account for all financial resources applicable to the general operations of the Village except those required to be accounted for in another fund. The Village reports the following major (and only) proprietar. f Country Club Enterprise Fund The fund accounts for the activities related to the Country Club. Additionally, the Village reports the following fund types: Special Revenue Funds The Village has four special revenue funds to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific sources. The funds are the Public Safety Fund, Northlake Boulevard Fund, Recreation, and On-Behalf Pension Contributions. Capital Projects Fund The capital projects fund is used to account for the cost of acquiring, constructing and placing into service those capital improvements which are associated with activities in the General Fund and are financed by long-term debt issues which are repaid by the recurring operating revenues in the General Fund. Employee Retirement Funds The pension trust funds account for the activities of the General Employees Retirement Fund, the Fire and Police Officers Retirement Fund and the Volunteer Firemen's Length of Service Award Pension Fund, which accumulate resources for pension benefits to qualified employees. 27 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Agency Funds The Agency Funds account for assets that are held for other parties and cannot be used to finance the Village's own programs. The two agency funds are the Northlake Boulevard Task Force, which is for the streetscape improvement of Northlake Boulevard, and the Manatee Protection Fund, in which the assets are held in trust for the protection of manatees through the enforcement of boat speed zones on the Intracoastal and inland waterways. Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of GASB. Governments also have the option of following subsequent private sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Village has elected not to follow subsequent private sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the government's country club and various other functions of the Village. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Village's Country Club Enterprise Fund are charges to customers for sales and services. Operating expenses for the Enterprise Fund include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the Village's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities, and Net Assets or Equity Cash and Cash Equivalents All short-term investments that are highly liquid are considered to be cash equivalents. Cash equivalents are readily convertible to a known amount of cash, and at the day of purchase, have a maturity date no longer than three months. 28 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Accounts Receivable Accounts receivable of the General Fund consists of billed and unbilled receivables. Concentration of Credit Risk The Village performs ongoing credit evaluations of its customers and does not require collateral. The Village maintains an allowance for uncollectible accounts at a level which management believes is sufficient to cover potential credit losses. Investments Investments are reported at fair value, which is determined by using various third-party pricing sources. The Local Government Surplus Funds Trust Fund, administered by the Florida State Board of Administration, is a " 2a-71ike" pool and these investments are valued using the pooled share price. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to" or "due from other funds". Any residual balance outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Transfers and interfund balances totally within governmental activities and those that are totally within business-type activities are eliminated and not presented in the government wide financial statements. Transfers and balances between governmental and business-type activities are presented in the government-wide financial statements. Inventories and prepaid items Inventories are valued at cost determined on a last-in, first-out basis (LIFO). Inventories in the General Fund consist of expendable supplies held for consumption. Inventories in the Enterprise Fund consist of goods for sale to the public. The initial cost is recorded as an asset at the time the individual inventory items are purchased and are charged against operations in the period when used. 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. 29 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Capital Assets and Depreciation Capital assets, which include property, plant, infrastructure, and equipment, are reported in the applicable governmental or business-type activities column in the government-wide financial statements. The Village defines capital assets as assets with an initial individual cost of $2,500 or more and an estimated life in excess of one year. The Village has elected to retroactively apply the capitalization requirements of GASB Statement No. 34 to major general infrastructure assets acquired in fiscal years ending after June 30, 1980, or that were significantly reconstructed or improved during that multi-year period. Infrastructure is reported in buildings and improvements. The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. General capital assets are assets of the Village as a whole. When purchased, such assets are recorded as expenditures in the governmental funds and capitalized as assets in the government-wide statement of net assets. General capital assets are carried at historical cost. Where cost cannot be determined from the available records, estimated historical cost has been used to record the estimated value of the assets. Assets acquired by gifts or bequests are recorded at their fair value at the date of acquisition. Capital assets of the Enterprise Fund are capitalized in the fund. The valuation basis for Enterprise Fund capital assets is the same as those used for General capital assets. Additionally, net interest cost is capitalized on Enterprise Fund projects during the construction period. Additions, improvements, and other capital outlay that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation has been provided over the estimated useful lives using the straight-line method of depreciation. The estimated lives for each major class of depreciable capital assets are as follows: Buildings, improvements and infrastructure 5-30 years Golf course improvements 5-30 years Machinery and Equipment 3-15 years Vehicles 3-20 years 30 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Deferred Revenue The government reports deferred revenue on its government wide statement of net assets, proprietary statement of net assets, and governmental funds balance sheet. Deferred revenues arise when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized. Compensated Absences The Village's employees are granted compensated absence pay for vacation and sick leave in varying amounts based on length of service. Unused compensated absences are payable upon separation from service. Vacation is accrued as a liability when the employee earns benefits. This means that the employee has rendered services that give rise to a vacation liability and it is probable that the Village will compensate the employee in some manner, e.g., in cash or paid time-off, now or upon termination or retirement. The Village uses the vesting method in accruing sick leave liability. Under the vesting method, the liability for sick leave is accrued for employees who are eligible to receive termination payments upon separation. Compensated absences are accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements. For the governmental funds, compensated absences are liquidated by the General Fund. Long-Term Obli atg ions In the government-wide financial statements, and proprietary fund types in the fund 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 assets. Bond premiums and discounts, as well as issuance costs, 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. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. 31 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Long-Term Obli atg ions (Continued) 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 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. Nvt ,4 ccvtc Equity in the government-wide statement of net assets and the proprietary fund is displayed in three categories: 1) invested in capital assets net of related debt, 2) restricted, and 3) unrestricted. Net assets invested in capital assets net of related debt consists of capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct, or improve those assets. Net assets are reported as restricted when there are legal limitations imposed on their use by Village legislation or external restrictions by other governments, creditors, or grantors. Unrestricted net assets consist of all net assets that do not meet the definition of either of the other three components. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Unreserved fund balance amounts that are reported as designations of fund balances represent tentative plans for financial resource utilization in a future period. The following is a description of the reserves and designations used by the Village. Reserved for inventories and prepaids -Indicates that a portion of fund balance is segregated since these items do not represent "available spendable resources." Reserved for restricted assets -Restricted for expenditures related solely to law enforcement, library, recreation facilities, and various other purposes. Designated for small business grants-This is a program the Village Council approved in the current fiscal year to provide matching grants of up to $5,000 for improvements to small business properties. Since this is not an external restriction it is reported as a designation instead of a reserve. 32 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) Use of~Estimates The financial statements and related disclosures are prepared in conformity with accounting principles generally accepted in the United States. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported. These estimates include the collectibility of accounts receivable, the use and recoverability of inventory, the useful lives and impairment of tangible assets, and the realization of net pension assets, among others. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results could differ from those estimates. Statement of Cash Flows For purposes of the statement of cash flows, the Village considers all short-term investments that are highly liquid to be cash equivalents. Cash equivalents are readily convertible to a known amount of cash, and at the day of purchase, have a maturity date no longer than three months. NOTE 2 -STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Bud~ry Data Formal budgetary integration is employed as a management control device during the year for the General Fund and the Enterprise Fund. The only governmental fund with a legally adopted annual budget is the General Fund. This budget is adopted on a basis consistent with generally accepted accounting principles. Except for budgeting capital expenditures and not budgeting for depreciation, the annual appropriated budgets for the Enterprise Funds are adopted on a basis consistent with generally accepted accounting principles. For budgeting purposes, current year encumbrances are not treated as expenditures. The procedures for establishing budgetary data are as follows: • In July of each year, the Village Manager submits a proposed operating budget to the Council for the next fiscal year commencing the following October 1st. The proposed budget includes expenditures and the means of financing them. • During the third week of July, the Council holds public meetings to obtain taxpayer comments. 33 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 2 -STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) A. Budgetary Data (Continued) • Upon completion of the public hearings and prior to October 1, a final operating budget is legally enacted through the passage of an ordinance. Estimated beginning fund balances are considered in the budgetary process. • The Village Manager is authorized to transfer budgeted amounts up to $10,000 within a department. Any change to the total departmental expenses must be approved by the Village Council. • Appropriations along with encumbrances lapse on September 30th. Budgeted amounts are as originally adopted, or as amended by appropriate action. During the year several supplementary appropriations were necessary. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g. purchase orders, contracts) outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. B. Property Taxes Under Florida law, the assessment of all properties and the collection of all county, municipal and school board property taxes are consolidated in the offices of the County Property Appraiser and the County Tax Collector. All property is reassessed according to its fair market value on January 1 of each year and each assessment roll is submitted to the State Department of Revenue for review to determine if the assessment rolls meet all of the appropriate requirements of State law. The laws of the State regulating tax assessment are also designed to assure a consistent property valuation method statewide. State Statutes permit municipalities to levy property taxes at a rate of up to 10 mills. The tax levy of the Village is established by the Council prior to October 1 of each year during the budget process. The Palm Beach County Property Appraiser incorporates the Village's millage into the total tax levy, which includes the County, County School Board, and special district tax requirements. The millage rate assessed by the Village for the year ended September 30, 2010, was 6.9000 ($6.90 for each $1,000 of assessed valuation). Taxes may be paid less a 4% discount in November or at declining discounts each month through the month of February. All unpaid taxes become delinquent on April 1 following the year in which they are assessed. Delinquent taxes on real property bear interest at 18% per year. On or prior to June 1 following the tax year, certificates are offered for sale for all delinquent taxes on real property. 34 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 2 -STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) B. Property Taxes (Continued) After sale, tax certificates bear interest at 18% per year or at any lower rate bid by the buyer. The certificate holder may make application for a tax deed on any unredeemed tax certificate after a period of two years. The County holds unsold certificates. Delinquent taxes on personal property bear interest at 18% per year until the tax is satisfied either by seizure and sale of the property or by the five-year statute of limitations. At September 30, 2010, unpaid delinquent taxes are not material and have not been recorded by the Village. NOTE 3 -DEPOSITS AND INVESTMENTS Deposits As of September 30, 2010, the carrying amount of the Village's deposits (including fiduciary funds) was $4,470,129 and the bank balances totaled $4,353,228. The Village also had $5,205 of petty cash resulting in a total cash carrying amount of $4,475,334. In addition to insurance provided by the Federal Depository Insurance Corporation, deposits are held in banking institutions approved by the State Treasurer of the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or other banking institution eligible collateral. In the event of failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. The Village's deposits at year end are considered insured for custodial credit risk purposes. The Village pools idle cash from all funds for the purpose of increasing income through investment activities. Investment income from the pool is allocated back to the respective funds based on each fund's equity in the pool with the exception of the Capital Projects Fund and the special revenue funds. TnVPCtmPntc At September 30, 2010, the Village had investments in the State Board of Administration Investment Pool B. The State Board of Administration is part of the Local Governments Surplus Funds Trust Fund and is governed by Chapter 19-7 of the Florida Administrative Code. These rules provide guidance and establish the general operating procedures for the administration of the Local Governments Surplus Funds Trust Fund. Additionally, the Office of the Auditor General performs the operational audit of the activities and investments of the State Board of Administration. The Local Government Surplus Funds Trust Fund is not a registrant with the Securities and Exchange Commission (SEC); however, the board has adopted operating procedures consistent with the requirements fora 2a-7 fund. 35 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 3 -DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) On November 29, 2007, the State Board of Administration implemented a temporary freeze on the assets held in the Pool due to an unprecedented amount of withdrawals from the Pool coupled with the absence of market liquidity for certain securities within the Pool. The significant amount of withdrawals followed reports that the Pool held asset-backed commercial paper that was subject to sub prime mortgage risk. On December 4, 2007, based on recommendations from an outside financial advisor, the State Board of Administration restructured the Pool into two separate pools. Pool A, (Local Government Surplus Funds Trust Fund Investment Pool) consisted of all money market appropriate assets. Pool B, (Surplus Funds Trust Fund) consisted of assets that either defaulted on a payment, paid more slowly than expected, and/or had any significant credit and liquidity risk. At the time of the restructuring all current pool participants had their existing balances proportionately allocated into Pool A and Pool B. On August 3, 2009, the SBA announced "Florida PRIlVIE" as the highly enhanced version of the SBA's prior Local Government Investment Pool. Pool A is now referred to as Florida PRIME, and Pool B is referred to as Fund B. From December 2007 through September 2010, the SBA transferred a total of $1.6 billion in distributions from Fund B to participants in Florida PRIME. This amount represents approximately 80% of their original adjusted Fund B balances. At September 30, 2010, Florida PRIME was assigned a "AAAm" principal stability fund rating by Standard and Poor's. Florida PRIlVIE is considered a SEC 2a7-like fund, thus, the account balances should be considered its fair value. Fund B is not rated by any nationally recognized statistical rating agency. Fund B is accounted for as a fluctuating NAV pool. The fair value factor for September 30, 2010 was 0.707058094 (i.e. total net asset value of Fund B divided by total participant balances of Fund B). The factor should be multiplied by the Fund B account balance in order to calculate the fair value of the investment in Fund B. The weighted average days to maturity (WAM) of Florida PRIlVIE at September 30, 2010 was 52 days. A portfolio's WAM reflects the average maturity in days based on final maturity or reset date, in the case of floating rate instruments. WAM measures the sensitivity of Florida PRIME to interest rate changes. The weighted average life based on expected cash flows (WAL) of Fund B at September 30, 2010 was 7.49 years. However, because Fund B consists of restructured or defaulted securities there is considerable uncertainty regarding the weighted average life. As of September 30, 2010, the Village's cost basis of its investment in Fund B was $320,000 and the fair value and adjusted book value was $226,259. Additional information regarding the Local Government Surplus Funds Trust Fund maybe obtained from the State Board of Administration. 36 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 3 -DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) As of September 30, 2010, the Village held the following investments: S&P's Weighted Credit Fair Average Rating Value Maturity Governmental Funds: Wells Fargo municipal money market fund N/R $ 1,150,690 N/A State Board of Administration Investment Fund B N/R 226,259 7.49 yrs. (WAL) Money Market Funds N/R 90,363 N/A U. S. Government Supported Corporate Debt AAA 1,520,035 1.40 yrs. U. S. Government and Agency Obligations AAA 2,856,408 1.78 yrs. U. S. Treasury Notes TSY 3,127,257 1.65 yrs. Net pending trades N/R 550,508 N/A Fiduciary Funds: Money Market Funds N/R 957,433 N/A GNMA, FNMA, FHLMC Pools N/R 931,617 19.77 yrs. U.S. Government Agencies AAA 255,293 9.07 yrs. Corporate Bonds AAA to BBB+ 2,160,779 6.41 yrs. U.S. Treasury Obligations AAA 296,050 14.15 yrs. Municipal Bonds AAA to AA 176,972 25.22 yrs. Common Equity Securities N/R 5,523,686 N/A Equity Mutual Funds N/R 327,595 N/A Common Trust Funds N/R 5,707,329 N/A Fixed Annuity Funds N/R 106,226 N/A Total investments $25,964,500 Investments are held in the governmental and fiduciary funds. Interest rate risk -Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the time to maturity, the greater the exposure to interest rate risks. 37 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 3 -DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Interest rate risk (Continued) The Village limits its exposure to fair value losses resulting from rising interest rates by structuring the investment portfolio so that the securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and investing operating funds primarily in short-term securities, money market mutual funds, or similar investment pools unless it is anticipated that long-term securities can be held to maturity without j eopardizing the liquidity requirements. The Retirement Funds do not have a formal investment policy that limits investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates. The Village's investment in asset backed securities consist of mortgage pass-through securities based on pools of residential home mortgage loans which are subject to prepayments and therefore highly sensitive to changes in interest rates. Custodial credit risk -For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Village will not be able to recover the value of its investments that are in the possession of an outside party. At September 30, 2010 all investments were insured or collateralized, except the Village's three pension funds, in which the underlying securities are held by counterparty, or by its trust department or agent but not in the Village's name and is uninsured and unregistered. However, all securities are registered in the funds' names. Concentrations of credit risk -Concentration of credit risk is defined as the risk of loss attributed to the magnitude of an investment in a single user. The Village places no limit on the amount they may invest in any one issuer, except those in the Fire and Police Retirement Fund. Not more than then (10) percent of the Fund's assets shall be invested in the common stock or capital stock of any one issuing company. The U.S. government and agency securities, money market mutual funds, bonds, stocks, asset backed securities and mutual and common trust funds are owned by the Pension Trust Funds. Authorized Investments -The Village has adopted an investment policy that applies to all the investment activity except the Employees' Pension Funds, which are organized and administered separately, as listed below, or for funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. The Village is authorized to invest its funds as follows: 1. Interest-bearing checking, savings and time deposits in banks from the most current top ten listed "qualified public depositories", as defined in Chapter 280, Florida Statutes; with a CAEL (Capital Adequacy, Asset Quality, Earnings, Liquidity) score of 3 or better; 38 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 3 -DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Authorized Investments (Continued) 2. Securities and Exchange Commission registered money/market mutual funds with the highest credit quality rating from S&P and Moody's rating agencies; 3. Insurance companies with a AM Best minimum rating of aaa; 4. Corporate interest notes with the highest credit quality rating from S&P and Moody's rating agencies; 5. The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Chapter 163, Florida Statutes; provided all components in each pool must satisfy the appropriate pre-qualification parameters noted for that institution; 6. Direct obligations of the United States Treasury; 7. Federal agencies and instrumentalities; The Village General Employees' Retirement Fund is authorized to invest its funds as follows: 1. Interest-bearing checking or savings accounts in qualified public depositories, as defined in Chapter 280, Florida Statutes; 2. Interest-bearing time deposits in qualified public depositories, as defined in Chapter 280, Florida Statutes; 3. The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Chapter 163, Florida Statutes; 4. Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; 5. Direct obligations of the United States Treasury; 6. Federal agencies and instrumentalities; 39 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 3 -DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Authorized Investments (Continued) 7. Securities of, or interest in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. sections 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; 8. Other investments authorized by law or by ordinance by the Village. Investments of the Fire and Police Retirement Fund can consist of the following: 1. Time or savings accounts of a national bank, a state bank insured by the Federal Deposit Insurance Corporation, or a savings, building and loan association insured by the Federal Deposit Insurance Corporation; 2. Obligations of the United States or obligations guaranteed as to principal and interest by Government of the United States; 3. Bonds, stocks, or any other evidence of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided: a. The corporation is listed on any one (1) or more of the recognized national stock exchanges and holds a rating in one of the three (3) highest classifications by a major rating service; and b. The board shall not invest more than five (5) percent of its assets in the common stock, capital stock, bonds or indebtedness of any one (1) issuing company, nor shall the aggregate investment of in any one (1) issuing company exceed five (5) percent of the outstanding capital stock of that company, nor shall the aggregate of its investments in equities at cost exceed sixty (60) percent of the pension funds' assets; 4. Not withstanding any provision of this section to the contrary, the board is specifically authorized to invest in foreign securities to the extent authorized by sections 175.071(1) and 185.06(1)(b), Florida Statutes. 40 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 3 -DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) A reconciliation of deposit and investments as shown on the statement of net assets and statement of fiduciary net assets for the Village is as follows: By Category Deposits $ 4,470,129 Petty cash 5,205 Investments 25, 964, 500 Total deposits and investments $30,439,834 Presented in the statement of net assets Governmental activities Cash and cash equivalents $3,615,056 Restricted cash and cash equivalents 342,702 Investments 8,399,541 Business-type activities Cash and cash equivalents 834,922 Total statements of net assets 13,192,221 Presented in the statement of fiduciary net assets Pension trust funds Cash and cash equivalents 1,417,712 Investments 15,485,547 Agency funds Cash and cash equivalents 344,354 Total fiduciary funds 17,247,613 Total deposits and investments $30,439,834 41 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 4 -RECEIVABLES Receivables at September 30, 2010, were as follows: Utility franchise fees & taxes Conroy Drive assessment Other accounts receivable Total accounts receivable NOTE 5 -DEVELOPER FEE RECEIVABLE General Fund Country Club $ 289,961 $ 10,268 3,795 36,921 $ 304,024 $ 36,921 Total $ 289,961 10,268 40,716 $ 340,945 The Village entered into an agreement with a developer on February 14, 2008, in which it agreed to accept payment of $1,175,000 in lieu of the dedication of land for public use. The developer paid $250,000 upon execution of the agreement. The balance due is to be paid in annual installments of $250,000 on the anniversary date of the agreement until paid, with a final payment of $175,000 in 2012. At September 30, 2010, the remaining amount receivable was $425,000. In accordance with Village ordinance Sec. 36-23, amounts received shall be utilized for parks and recreational purposes or the construction or expansion of any public facilities or other improvements designed to mitigate the impacts of the subdivision. NOTE 6 -INTANGIBLE ASSETS The intangible asset consists of the right to the availability and use of reclaimed water resulting from an agreement with Seacoast Utility Authority. The asset had an original value of $50,377 and is being amortized on a straight line basis over the period of the expected benefit of ten years. 42 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 7 -CAPITAL ASSETS Capital Assets activity for the year ended September 30, 2010, was as follows: Primary Government Governmental Activities: Capital assets not being depreciated: Land Construction in progress Capital assets being depreciated: Buildings Improvements Machinery and equipment Vehicles Total at historical cost: Less accumulated depreciation for: Buildings Improvements Machinery and equipment Vehicles Total accumulated depreciation Governmental activities capital assets, net Beginning $ 2,151,089 204,240 Ending $ $ $ 13,034 (75,423) $ 2,151,089 141,851 9,283,423 52,527 (30,000) 9,305,950 11,854,207 486,966 12,341,173 3,319,369 85,380 (42,500) 3,362,249 3,980,724 101,099 (444,170) 3,637,653 30,793,052 739,006 (592,093) 30,939,965 (3,946,718) (297,247) 28,298 (4,215,667) (2,774,154) (803,676) (3,577,830) (2,227,228) (249,461) 39,557 (2,437,132) (2,667,194) (270,548) 412,914 (2,524,828) (11,615,294) (1,620,932) 480,769 (12,755,457) $ 19,177,758 $ (881,926) ($ 111,324) $ $ 18.184.508 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 112,268 Public safety 396,823 Public works 656,460 Community development 16,557 Leisure services 438,824 Total depreciation expense, governmental activities $1,620,932 43 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 7 -CAPITAL ASSETS (Continued) Beginning Ending Business-type activities: Balance Additions Deletions Transfers Balance Capital assets not being depreciated: Land $ 1,051,311 $ $ $ $ 1,051,311 Construction in progress Capital assets being depreciated: Buildings 1,405,035 1,405,035 Improvements 6,177,849 2,668 6,180,517 Machinery and equipment 455,337 22,558 (5,917) 471,978 Vehicles 286,760 295,745 (274,800) 307,705 Total at historical cost: 9,376,292 320,971 (280,717) 9,416,546 Less accumulated depreciation for: Buildings (896,202) (32,815) (929,017) Improvements (1,110,137) (333,396) (1,443,533) Machinery and equipment (369,344) (24,736) 5,917 (388,163) Vehicles (204,830) (80,598) 206,100 (79,328) Total accumulated depreciation (2,580,513) (471,545) 212,017 (2,840,041) Business-type activities capital assets, net $ 6,795,779 ($ 150,574) ($ 68,700) $ $6,576,505 Construction Commitments Contracts awarded but not yet completed were as follows: Estimated Proj ect Description Cost Governmental activities: Pool resurfacing $ 198,765 44 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 8 -LONG TERM LIABILITIES Change in Long-Term Liabilities Long-term liability activity for the year ended September 30, 2010, was as follows: Governmental activities Loans payable Claims and settlements OPEB (see note 15) Compensated absences payable Total Business-type activities: Loans payable Capital leases OPEB (see note 15) Compensated absences payable Total Loans Payable Amount Balance Balance Due October 1, September 30, Within x(1(19 Arlrlitinnc Rerlnctinnc x(11(1 Clne Vear $2,250,000 $ ($2,250,000) $ $ 106,082 142,838 (106,082) 142,838 284,517 233,775 518,292 1,142,597 887,434 (847,807) 1,182,224 735,050 $3,783,196 $1,264,047 ($3,203,889) $1,843,354 $735,050 $4,383,033 $ 97,049 284,000 10,625 8,730 11,549 13,965 $4,502,256 $ 306,695 $860,000 Promissory Note ($ 292,749) $4,090,284 $ 248,097 (145,873) 235,176 62,093 19,355 (12,662) 12,852 11,746 ($ 451,284) $4,357,667 $ 321,936 The Village Council adopted Resolution No. 71-2000 authorizing the execution of a loan agreement in the amount of $860,000 for the purpose of refinancing an existing loan incurred for the renovation of the Village's Country Club restaurant and for capital expenditures in the General Fund. The General Fund portion has been repaid. Franchise fees and public service taxes of the Village secure the loan. Principal and interest payments are due quarterly, with a final maturity date of November 15, 2010. The interest rate on the loan is 5.22%. The interest rate will be adjusted by either of the following events: a change in the maximum corporate tax rate, or the event of taxability of the interest on this note. As of September 30, 2010, the principal amount outstanding was $17,740 and was for the purpose of business-type activities. 45 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 8 -LONG TERM LIABILITIES (Continued) $860,000 Promissory Note (Continued) Annual debt service requirements to maturity are as follows: Business-type activities: Year Ending Principal Interest Total 2011 $ 17,740 $ 241 $ 17,981 $6,560,000 Promissory Note The Village Council adopted Resolution No. 8-97 authorizing the issuance of a note in the principal amount of $6,560,000 to finance the acquisition, construction, equipping, and improving of a public safety building, a community center, and a recreation building. A portion of the proceeds was also used to refinance an existing loan incurred to make improvements to the Country Club. Franchise fees and public service taxes of the Village secure the promissory note. Principal payments of $190,000 are due semi-annually on January 1 and August 1, with a final maturity date of February 1, 2017. The interest rate is at the London InterBank Offered Rate ("LIBOR"), and adjusted as of the first day of each month. During the fiscal year ending September 30, 2010, the Village paid off the remaining principal balance outstanding totaling $2,250,000, prior to the note's maturity. $4,893,673 Promissory Notes The Village Council adopted Resolution No. 23-2006 authorizing the issuance of a note in the amount of $4,893,673 to finance certain capital expenditures relating to the municipal golf course and country club. Pledged revenues secure the loan. Principal and interest payments are due semi-annually in the amount of $197,450, with a final maturity date of April 1, 2024. The interest rate on the loan is 4.11% and is subject to adjustment in the event of taxability of the interest on this note. As of September 30, 2010, the principal amount outstanding was $4,072,544 and was for the purpose of business-type activities. 46 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 8 -LONG TERM LIABILITIES (Continued) $4,893,673 Promissory Notes (Continued) Annual debt service requirements to maturity are as follows: Business-type activities: Year Ending Principal Interest Total 2011 $ 230,357 $ 164,543 $ 394,900 2012 239,922 154,978 394,900 2013 249,884 145,016 394,900 2014 260,260 134,640 394,900 2015 271,066 123,834 394,900 2016 - 2020 1,533,804 440,696 1,974,500 2021 - 2024 1,287,251 106,952 1,394,203 $ 4,072,544 $ 1,270,659 $ 5,343,203 $274,800 Capital Lease The Village entered into a three year capital lease agreement for the purpose of financing the lease-purchase of $274,800 of equipment for the Country Club in December 2006. Principal and interest payments are due monthly, with a final maturity date of December 1, 2009. $284,000 Capital Lease The Village entered into a three year capital lease agreement for the purpose of financing the lease-purchase of $284,000 of equipment for the Country Club in October 2009. Principal and interest payments are due monthly, with a final maturity date in December 2013. The final payment includes a balloon payment of $96,000. As of September 30, 2010, the principal amount outstanding was $235,176 and the net book value of the equipment was $218,920. The rate used to impute interest was 6.3%. Annual debt service requirements to maturity are as follows: Year Ending Principal 2011 $ 62,093 2012 66,150 2013 106,933 $ 23 5,176 Interest Total $ 13,142 $ 75,235 9,085 75,235 1,606 108,539 $ 23,833 $ 259,009 47 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 8 -LONG TERM LIABILITIES (Continued) Claims and Settlements Effective October 1, 2006, the Village discontinued its participation in the Southeast Risk Management Association (SERMA) and joined the Florida Municipal Insurance Trust (FMIT). However, as a former participant in SERMA, the Village is liable for claims incurred through September 30, 2006. At September 30, 2010, there is a long-term governmental liability of $142,838 for pending claims activity for SERMA. (See related Note 9.) The liability is based on a recent valuation, which indicated that the reserve for incurred but not yet reported losses is inadequately funded and an additional contribution is required. The liability is payable in December 2011 and is included in governmental noncurrent liabilities in the Statement of Net Assets. SERMA, aquasi-governmental agency, was created by an interlocal agreement, as authorized by Chapter 163, Florida Statutes. Participating members pool their resources so as to provide a comprehensive risk management program, including insurance coverage, whose cost is less than the cost of each municipality obtaining insurance separately. The members are subject to supplemental assessments in the event of deficiencies, except to the extent that deficiencies result from a specific claim against a member in excess of the reinsurance available, such deficiency is solely the responsibility of that member. SERMA reinsures for workers compensation and property claims in excess of $250,000. Activity in the pool is allocated to participating members based upon the cumulative contributions to the pool. The amount of settlements in SERMA exceeded insurance coverage in the current fiscal year. Pledged Revenues The $860,000 Promissory Note and the $6,560,000 Promissory Note pledged the franchise fees and public service taxes revenues to secure the loans. The $4,893,673 Promissory Note pledged the revenues of Country Club fund to secure the loan. A comparison of the pledged revenues and the required principal and interest payments for the debt collateralized by those revenues follows: Pledged Required Debt R P.vP.fl 71 P. S ~ P.1'l71 CP. Franchise fees and public services taxes $ 3,465,700 $ 382,797 Country Club revenues $ 3,227,580 $ 394,900 48 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 9 -RISK MANAGEMENT The Village is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Village currently reports all of its risk management activities in the General Fund. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. Property and Casualt~p Effective October 1, 2006, the Village discontinued its participation in the Southeast Risk Management Association (SERMA) and joined the Florida Municipal Insurance Trust (FMIT). However, as a former participant in SERMA, the Village is liable for claims incurred through September 30, 2006. The governmental liability of $142,838 is for pending claims activity for SERMA (See related Note 8). The Village is also covered by Florida Statutes under the Doctrine of Sovereign Immunity which effectively limits the amount of liability of municipalities to individual claims of $100,000/$200,000 for all claims relating to the same incident. NOTE 10 -EMPLOYEE RETIREMENT PLANS The Village maintains the following two separate single employer defined benefit plans: Village of North Palm Beach Fire and Police Retirement Fund, covering firefighters and police officers, and Village of North Palm Beach General Employees Retirement Fund, covering substantially all other full-time Village employees. Both plans are reported as pension trust funds and included as part of the Village's reporting entity. The Police and Fire Fund will issue separate financial statements for the year ended September 30, 2010, the report may be obtained from the Village Clerk The General Employees Plan will not issue separate financial statements. Additional information on these plans can be found beginning on page 66. Each plan has its own board that acts as plan administrator and trustee: Board of Trustees (for the Fire and Police Retirement Fund) and General Employees Retirement Board. Each plan's assets may only be used for the payment of benefits to the members and beneficiaries of the plan in accordance with the terms of each plan document. The costs of administering each plan are financed in the appropriate pension trust fund. 49 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) The Florida Constitution requires local governments to make the actuarially determined contribution. The Florida Division of Retirement reviews and approves each local government's actuarial report prior to its being appropriated for use for funding purposes. Additionally, the State collects two locally authorized insurance premium surcharges (one for the Police Pension on casualty insurance policies and one for the Fire Pension Plan on certain real and personal property insurance policies within the corporate limits) which can only be distributed after the State has ascertained that the local government has met its actuarial funding requirement for the then most recently completed fiscal year. SLMMARY OF SIGNIFICANT ACCO UNTING POLICIES All Retirement Plans Basis of Accounting. The retirement plans are reported on the accrual basis of accounting. Plan member and state contributions are recognized as revenues in the period that the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Method Used to Value Investments. Investments are reported at fair value and are managed by third party money managers. The Village's independent custodians and individual money managers price each instrument using various third party pricing sources. Investments Concentrations. The following investments represent concentrations of 5% or more of net plan assets in investments that are not issued or guaranteed by the U. S. government. General Employees Retirement Fund No nongovernmental investments exceed 5% of net plan assets. Fire and Police Retirement Fund No nongovernmental investments exceed 5% of net plan assets. 50 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) PLANDESCRIPTIONAND CONTRIBUTIONINFORMATION The following schedule is provided for general information purposes only and is derived from the respective actual reports and Village information for the two retirement plans as of October 1, 2009, the date of the latest actuarial valuation. Plan participants should refer to the appropriate source documents for more complete information on the plans. Plan Description: Authority Asset Valuation: Reporting Legal Reserves Long-Term Receivable Internal/Participant Loans General Emplo.~ Fire and Police Village Ordinance Village Ordinance/State Fair Value Fair Value None None None None None None Membership of each plan consisted of the following at October 1, 2009, the date of the latest actuarial valuation: GERF F&P Active Participants: Vested 45 24 Non-vested 17 28 Retirees and Beneficiaries receiving benefits 7 7 Terminated vested members 50 11 Total 119 70 General Employees' Retirement System Plan Description. The plan is established under Code of Ordinances for the Village of North Palm Beach, Florida, Part II, Chapter 2, and was most recently amended under Ordinance No. 2010-07 passed and adopted on May 27, 2010. The Plan is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. The Plan provides retirement benefits as well as death benefits. All full time general employees who are not sworn police officers or firefighters shall become members of the system on October 1st following completion of 12 months of employment as a condition of employment. For those employees retired before February 1, 1982, those employees hired after September 30, 2000, or those employees hired before October 1, 2000, who elect to contribute an extra 2%, a 3% Cost of Living increase is paid annually from the Plan. Authority to establish and amend the benefit provisions of the plan rests with the Village Council. 51 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) General Employees' Retirement System (Continued) All benefits vest based on the following years of credited service. Years of Credited Service Vested Under 5 0% 5 or 6 50% 7 or 8 75% 9 or more 100% Employees become eligible for normal retirement benefits after attaining the age of 60 and completing nine years of credited service, or attaining the age of 65 (depending on employee contribution rate). The normal retirement benefit consists of a life annuity, options available, (subject to cost of living increases not to exceed 3% a year), of either 2%, 2.25%, or 2.5% (depending on employee contribution rate) of Average Monthly earnings (AME) times credited service up to 20 years plus 1% of AME times credited service over 20 years. Early retirement benefits can be received at age 55. The benefit is determined as for normal retirement and payable at normal retirement date or payable immediately after reduction by 5% for each year by which the benefit commencement date precedes the normal retirement date. If an active member dies, his beneficiary receives a refund of member contributions without interest. For a member who is age 55 and has at least five years of service but who dies before commencement of retirement benefits, a monthly benefit is payable to the designated beneficiary; the benefit is calculated as though the member had retired on his date of death and payable according to option elected by the employee. For an active member who has at least five years of credited service and dies prior to reaching normal retirement date, a benefit equal to his vested accrued benefit will be paid to his beneficiary for ten years. If an employee terminates his employment, he is entitled to the following: With less than five years of credited service, a refund of member contributions without interest and no other benefit. With five or more years of credited service, a refund of member contributions, the vested accrued benefit payable at normal retirement date or at any time after age 55 is attained, with the benefit being subject to the same reduction as for early retirement benefits. The vesting schedule is listed above. "Average monthly earnings" is the average during the 5 years within the last 10 years of employment which produces the highest average. 52 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) General Employees' Retirement System (Continued) "Credited service" consists of the total number of years and fractional parts of years of actual service with the Village and shall apply to an employee whose employment is terminated with the Village and who recommences fulltime employment within two years from the date of termination. Contributions. General employees may contribute 6%, 4%, 2% or 0% of earnings as elected by the employee, with the retirement benefit received being based on the amount contributed. The Village is required to contribute the amount necessary to fund the Plan properly according to the Plan's actuary. Contribution requirements of plan members and the Village are established and may be amended by the Village Council. Fire and Police Retirement System Plan Description. The plan is established under Code of Ordinances for the Village of North Palm Beach, Florida, Part II, Chapter 2, and was most recently amended under Ordinance No. 2010-01 passed and adopted on January 14, 2010. The Plan is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes and the Internal Revenue Code. The plan provides retirement benefits as well as death and disability benefits. All benefits vest after ten years of credited service. All fulltime police officers or firefighters are eligible for membership immediately upon hire. Previously, members were not eligible until October 1st following completion of 12 months of employment. Cost of living adjustments (COLA) are provided annually each October 1, to reflect changes in CPI (subject to maximum increases or decreases of 3% per year). Authority to establish and amend the benefit provisions of the plan rests with the Village Council. Employees become eligible for normal retirement benefits after attaining the age of 55, or the date on which the member attains age 52 and 25 credited years of service. Previously, employees became eligible for normal retirement benefits after attaining the age of 55, only. The normal retirement benefit consists of ten years certain and life thereafter, with other options available, (subject to cost of living adjustments not to exceed 3% a year), of 2.5% of AME times the years of credited services, with a maximum benefit of 60% of AME. Members are eligible for non-service connected disability, after ten years of credited service and a total and permanent disability. For service connected disability, a total and permanent disability with no service requirement, the disability benefit consists of a ten year certain and life annuity that can be provided by the single-sum value of the member's accrued pension benefit, 53 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) Fire and Police Retirement System (Continued) Plan Description (Continued) but is at least 42% of AME for service connected disability and at least 25% of AME for non- service connected disability. See the description of the General Employees' Retirement System for the remainder of the benefits, except that early retirement and termination benefits for vested members can be received at age 50. Contributions. Members are required to contribute 2% of their basic compensation to the plan. The Village is required to contribute the remaining amount to fund the plan using the Entry Age Actuarial Cost Method. Contribution requirements of plan members and the Village are established and may be amended by the Village Council. The Florida Constitution requires local governments to make the actuarially determined contribution. The Florida Division of Retirement reviews and approves each local government's actuarial report prior to its being appropriated for use for funding purposes. Additionally, the State collects locally authorized insurance premium surcharges which can only be distributed after the State has ascertained that the local government has met its actuarial funding requirement for the then most recently completed fiscal year. Contributions to the Plan from the State of Florida totaled $254,590 during the fiscal year ended September 30, 2010. All Retirement Plans Annual Pension Cost and Net Pension Obligation. The Village's 2010 annual pension cost and actual contributions for each plan are shown on the next page. The required contributions were determined as part of the October 1, 2009 actuarial valuation for each plan. State law allows the Village to use a portion of the State contribution to offset the Village's pension cost. Components of Annual Pension Cost and Net Pension Obli ag tion Annual Required Pension Village Cyst C~ntrihuti~n Eligible State C~ntri huti nn General Employees' Retirement Fund $739,767 $734,636 N/A Fire and Police Retirement Fund $884,415 $653,719 $230,696 54 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) The following schedule was determined as part of the October 1, 2009, actuarial valuation for the General Employees' and Fire and Police Retirement Plans. General Emplo.~ Fire and Police Annual required contribution (ARC) $ 734,636 $ 884,415 Interest on net pension obligation (NPO) (13,404) (b) Adjustment to ARC 18,535 (b) Annual pension cost 739,767 884,415 Actual contributions 741,392 884,415 Increase in NPO (1,625) NPO at beginning of year, revised(a) 165 388) 264 986) NPO at end of year 167 013) 264 986) (a) See Note 20. (b) Information was not provided in the October 1, 2009, actuarial valuation. Three-Year Trend Information Annual Percentage Net Pension Year Pension Annual of APC Obligation Ended Cost APC~ Contribution Contributed Asset) General Employees' 9/30/08 880,303 876,712 99.6% (167,553) 9/30/09 767,546 765,381 99.9% (165,388) 9/30/10 739,767 741,392 100.2% (167,013) Fire and Police 9/30/08 723,599 718,663 99.3% (181,998) 9/30/09 651,838 734,826 112.7 % (264,986) 9/30/10 884,415 884,415 100.0 % (264,986) 55 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) The following are the actuarial methods and significant actuarial assumptions: Valuation date Actuarial Cost Method Amortized Method Remaining Amortization Period Asset Valuation Method Actuarial assumptions: Investment rate of return* Projected salary increase* *Includes inflation at Cost of living adjustments General Employees' Fire and Police 10/1/2009 Frozen Entry Age Level percent closed 30 years Difference between actual and expected return recognized over five years 8% up to retirement, 5.25% thereafter. 5.5% 4% 3% for those retired before 2/1/82 or who contribute an extra 2%. 10/1/2009 Aggregate N/A (1) N/A (1) Five year smooth market. 8% 6% 4% 3% (1) The aggregate actuarial cost method does not identify or separately amortize unfunded actuarial liabilities. Schedule of Funding Progress As noted above, the Fire and Police Retirement System utilizes the aggregate actuarial cost method to determine contributions to the Plan. This method does not identify or separately amortize unfunded actuarial liabilities. The required schedule of funding progress immediately following the notes to the financial statements presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The schedule of funding progress was prepared using the entry age actuarial cost method to provide information that serves as a surrogate for the funding progress of the Plan. 56 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 10 -EMPLOYEE RETIREMENT PLANS (Continued) Fire and Police: Unfunded Actuarial AAL Actuarial Actuarial Accrued as % of Valuation Value of Liability Unfunded Funded Covered Covered Date Assets (AAL) AAL Ratio Payroll Payroll 10/01/09 10,650,648 12,656,293 2,005,645 84.2% 3,725,519 53.8% General Employees': Unfunded Actuarial AAL Actuarial Actuarial Accrued as % of Valuation Value of Liability Unfunded Funded Covered Covered Date Assets (AAL) AAL Ratio Payroll Payroll 10/01/09 6,048,808 10,456,011 4,407,203 57.9% 2,969,626 148.4% NOTE 11-PENSION PLAN FINANCIAL INFORMATION Generally accepted accounting principles (GAAP) requires that financial statements for individual pension plans be presented in the notes to the financial statements of the primary government if separate GAAP financial reports have not been issued. The Volunteer Fire and General Employees' pension funds do not have separate GAAP reports issued and the financial information for these is presented below. COMBINING STATEMENT OF FIDUCIARY NET ASSETS EMPLOYEE RETIREMENT FUNDS SEPTEMBER 30, 2010 Assets Cash and cash equivalents Investments: Equity mutual funds Common trust funds Fixed annuity funds Accrued interest and dividends Accounts receivable Total assets Liabilities Accounts payable Net Assets Held in trust for pension benefits and other purposes General Total Employee Volunteer Fire Employee's Retirement Pension Pension Funds $ $ 220,943 $ 220,943 302,971 302,971 5,707,329 5,707,329 106,226 106,226 22 22 35,541 35,541 106,226 6,266,806 6,373,032 10,679 10,679 $ 106,226 $ 6,256,127 $ 6,362,353 57 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 11-PENSION PLAN FINANCIAL INFORMATION (Continued) COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS EMPLOYEE RETIREMENT FUNDS For the Fiscal Year Ended September 30, 2010 Additions Contributions Employer Plan members Total contributions Investment earnings Dividends and interest Net decrease in the fair value of investments Less investment expense Total investment earnings Total additions Deductions Administration Benefits Total deductions Change in net assets Net assets -beginning Net assets -ending NOTE 12 - ON-BEHALF PAYMENTS Total General Employee Volunteer Fire Employees' Retirement Pension Pension Funds $ 4,173 $ 759,529 $ 763,702 163,213 163,213 4,173 922,742 926,915 4,076 12,159 16,235 16,179 514,881 531,060 (42,037) (42,037) 20,255 485,003 505,258 24,428 1,407,745 1,432,173 2,866 15,448 18,314 463,970 463,970 2,866 479,418 482,284 21,562 928,327 949,889 84,664 5,327,800 5,412,464 $ 106,226 $ 6,256,127 $ 6,362,353 The state makes a contribution to the Fire and Police Officers' Retirement System from the firefighters' and police officers' Insurance Premium Tax. For the fiscal year ended September 30, 2010, $254,590 was recorded as revenues and expenditures in the On-Behalf Pension Contribution Special Revenue Fund relating to on-behalf payments received from the state. 58 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 13 -DEFINED CONTRIBUTION PLAN Effective October 1, 2006, all employees of the Village may participate in one of three Money Purchase Plans that are qualified Defined Contribution Plans adopted under the provisions of Internal Revenue Code Section 401(a). The three pension plans include Directors, General Employees, and Municipal Employees. The defined contribution plans are administered by International City/County Management Association and Retirement Corporation (ICMA-RC). The ICMA-RC is a nonprofit corporation organized and existing under the laws of the State of Delaware. Contribution requirements of employees' and the Village are established and maybe amended by the Village Council. The vesting period for each defined contribution plan is five years, with a vesting of zero percent in the first year, and a vesting of twenty-five percent for each year thereafter. While the plans will not provide for retroactive funding, the vesting period shall run from each employee's original date of hire. No loans are permitted by the plan. The normal retirement age for the plan shall be age sixty. There is no waiting period for participation in the plan. The minimum age for participation is eighteen. The Village contributes 15% of participant earnings for the plan year. Earnings include regular and bonus compensation, but do not include overtime or commissions. Employee contributions are voluntary, after-tax contributions that are not matched by the Village. Employees may contribute 3%, 5%, 10%, or 15% of earnings to the plan. Contributions are remitted to the trusts every payroll period. Because the Village has little administrative involvement and does not perform the investing function for funds in the plans, the Village's activities do not meet the criteria for inclusion in the fiduciary funds of a government. Consequently, the plans are not included in the Village's financial statements. Plan detail for participating employees at September 30, 2010 is listed below: Director's Village contributions $52,470 General Municipal Employees Employees Total Employee contributions $26,319 $62,830 $63,004 $178,304 $14,194 $17,189 $57,702 59 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 14 -DEFERRED COMPENSATION PLAN ASSETS Employees of the Village may participate in a deferred compensation plan adopted under the provisions of Internal Revenue Code Section 457 (Deferred Compensation Plans with Respect to Service for State and Local Governments). The deferred compensation plan is available to all employees of the Village. Under the plan, employees may elect to defer a portion of their salaries and avoid paying taxes on the deferred portion until the withdrawal date. The deferred compensation amount is not available for withdrawal by employees until termination, retirement, death, or unforeseeable emergency. A third party administers the deferred compensation plan. In 1998, the Village Adopted GASB-32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The Village modified its Deferred Compensation Plan to conform with the changes in the Internal Revenue Code brought about by the Small Business Job Protection Act of 1996 (the "Act"). The Act requires that eligible deferred compensation plans established and maintained by governmental employers be amended to provide that all assets of the plan be held in trust, or under one or more appropriate annuity contracts or custodial accounts, for the exclusive benefit of plan participants and their beneficiaries. As a result of this change, these plan assets are not property of the Village and are not subject to the claims of the Village's general creditors. Because the Village has little administrative involvement and does not perform the investing function for funds in the Plan, the Village's activities do not meet the criteria for inclusion in the fiduciary funds of a government. NOTE 15 -OTHER POST EMPLOYMENT BENEFITS The Village implemented Governmental Accounting Standards Board Statement 45 (GASB 45), Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, effective October 1, 2008. The Village elected to implement prospectively, and the change in accounting principle had no effect on changes in net assets/fund equity for prior periods. Retirees of the Village pay an amount equal to the actual premium for health insurance charged by the carrier, but there is an implied subsidy in the healthcare insurance premium for retirees because the premium charged for these retirees is the same as the premium charged for active employees, who are younger than retirees on average. This implied subsidy constitutes other postemployment benefits (OPEB) under GASB 45. Plan Description The Village provides a single employer defined benefit health care plan to all of its employees. The plan allows its employees and their beneficiaries, to continue to obtain health and dental benefits upon retirement. The normal retirement age for police and firefighters is 55; the normal retirement age for all other Village employees is either age 60 or 65, depending 60 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 15 -OTHER POST EMPLOYMENT BENEFITS (Continued) Plan Description (Continued) on the option selected by the employee. The benefits of the plan are in accordance with Florida Statutes, which are the legal authority for the plan. The plan has no assets and does not issue a separate financial report. Funding Policy The Village does not directly make a contribution to the plan on behalf of retirees. Retirees and their beneficiaries pay the same group rates as are charged to the Village for active employees by its healthcare provider. However, the Village's actuaries, in their actuarial valuation, calculate an offset to the cost of these benefits as an Employer Contribution, based upon an implicit rate subsidy. This offset equals the total age-adjusted costs paid by the Village or its active employees for coverage of the retirees and their dependents for the year net of the retiree's own payments for the year. Annual OPEB Cost and Net OPEB Obli a The annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The annual OPEB cost and the net OPEB obligation for the Village for the current year and the related information is as follows: Required contribution rates: Employer Pay-as-you-go Plan members N/A Normal cost $ 245,351 Interest on normal cost 9,814 Amortization 152,437 Interest on amortization 6,097 Interest on net unfunded OPEB obligation 11,806 Annual OPEB cost 425,505 Contributions made (183,000 Increase in net OPEB obligation 242,505 Net OPEB obligation October 1, 2009 295,142 Net OPEB obligation September 30, 2010 537 647 61 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 15 -OTHER POST EMPLOYMENT BENEFITS (Continued) Trend Information Three-Year Trend Information Percentage of Fiscal Annual Annual Net Year OPEB OPEB Cost OPEB End Cost Contributed Obligation 09/30/08 N/A N/A N/A 09/30/09 $413,699 28.7% $ 295,142 09/30/10 $425,505 43.0% $ 537,647 Funded Status The funded status of the plan as of most recent actuarial valuation date was as follows: Actuarial valuation date 10/01/2008 Actuarial accrued liability $2,741,387 Actuarial value of plan assets $ Unfunded actuarial accrued liability (UAAL) $2,741,387 Funded ratio 0.0% Covered payroll $6,231,104 UAAL as a percentage of covered payroll 44.0% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are comparable with past expectations and new estimates are made about the future. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, will present multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Because the fiscal year ended September 30, 2009 was the year of implementation of GASB 45 and actuarial studies are only required every two years, only one year is presented in the schedule at this time. In future years, required trend data will be presented. The Village has not contributed assets to the plan at this time. Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and includes the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the Village and the plan members to that point. Actuarial calculations reflect along-term perspective and employ methods and assumptions that 62 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 15 -OTHER POST EMPLOYMENT BENEFITS (Continued) are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actual assumptions: Investment rate of return Healthcare cost trend 10/01/2008 Projected Unit Credit 30 Years, closed 29 years Unfunded 4% 6.6% for 2010 decreasing to 4% in 2083 NOTE 16 -VOLUNTEER FIREFIGHTERS PENSION The Village maintains a Length of Service Award Pension Plan that covers substantially all volunteer firefighters in the Village of North Palm Beach. The Plan is reported as a pension trust fund and is included as part of the Village's reporting entity. The Plan does not issue a stand- alone financial report. The Plan's financial statements are prepared using the accrual basis of accounting. The Plan is noncontributory for members. Employer contributions to the Plan are recognized when due and yearly contributions are required based on the most recent actuarial valuation. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Members are eligible to participate in the Plan after attaining the age of 18, and are entitled to receive benefits at age 60 and completion of one year of plan participation. One hundred percent vesting is achieved after five years of service. The monthly retirement benefit is $10 times each year of completed service, with a maximum monthly benefit of $300 and a minimum of $50. The Plan contains a death benefit that is the greater of $30,000 or the accrued benefit due at date of death. The Plan uses the modified aggregate funding method. Plan assets are held by Hartford Life. NOTE 17 -JOINTLY GOVERNED ORGANIZATION The Village, through an interlocal agreement with certain other municipalities and Palm Beach County, created the Seacoast Utility Authority ("Seacoast') which provides water and sewer service to the citizens of each of the participating municipalities and a portion of Palm Beach County. Seacoast's governing board consists of one member from each participating entity. Seacoast is an Independent Authority organized under the laws of the State of Florida, and the Village has no participating equity ownership in Seacoast. The Village paid $142,960 to Seacoast during the fiscal year for water and sewer service. 63 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Basic Financial Statements September 30, 2010 NOTE 18 - INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The composition of interfund balances at September 30, 2010, is as follows: Receivable Fund General Fund Capital Projects Fund Payable Fund Amount Public Safety Special Revenue Fund $31,808 Recreation Special Revenue Fund $44,028 The outstanding balance between funds results mainly from the time lag between the dates that payments between funds are made. Interfund transfers during the year ended September 30, 2010 are as follows: Transfer Out: Capital Projects Fund Transfer in: Capital Projects Fund Public Safety Special Revenue Fund $160,000 3,490 The transfers from the General Fund to the other governmental funds were to move restricted and unrestricted General Fund revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including amounts provided as subsidies or matching funds for various grant programs. NOTE 19 -CONTRACTS, COMMITMENTS AND CONTINGENCIES Contin eg ncies The Village is involved in various litigations and claims arising in the course of operations. It is the opinion of legal counsel that the likelihood of unfavorable outcome and the amounts of potential losses cannot be reasonably determined for all claims at this time. NOTE 20 -PRIOR PERIOD ADJUSTMENT Governmental Activities The beginning net assets of the Governmental Activities were restated on the government wide financial statements to record a prior period adjustment to correct the net pension asset for the Fire and Police Officers Pension Plan. A reconciliation of the prior period ending net assets to the beginning net assets for the Governmental Activities is presented below: Beginning net assets, as previously reported $ 27,910,955 Adjustments to increase net pension asset 83,174 Beginning net assets, as restated 27.994.129 The above adjustments had no effect on the change in net assets for the current year and increased the change in net assets by $83,174 in the prior year. 64 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A FIDUCIARY FUNDS Pension Trust Funds General Employees Pension Trust Fund Fire and Police Officers Pension Trust Fund THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2010 Schedule of Funding Progress Actuarial Accrued Actuarial Liability Unfunded Actuarial Value of (AAL)- AAL Funded Covered Valuation Assets Entry Age(1) (UAAL) Ratio Payroll Data (a) (b) (b-a) (a/b) (o) Other Post Employment Benefits (OPEB~ 10/O1/08* $ $ 2,741,387 $2,741,387 0.0% $ 6,231,104 * This was the only actuarial valuation performed to date. The schedule of funding progress presented above will present multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Because the fiscal year ended September 30, 2009 was the year of implementation of GASB 45 and the Villiage elected to apply the statement prospectively, only one year is presented in the schedule at this time. In future years, required trend data will be presented. The Villiage has not contributed assets to the plan at this time. UAAL as a Percentage of Covered Payroll ((b-a)/o) 44.0% 65 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2010 Schedule of Funding Progress Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL)- AAL Funded Covered of Covered Valuation Assets Entry Age(1) (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) General Employees Retirement Fund (1) 10/1/2004 $ 6,578,832 $12,084,785 $ 5,505,953 54.44% $ 4,275,981 128.76% 10/1/2005 3,817,605 9,116,599 5,298,994 41.88% 3,220,258 164.55% 10/1/2006 5,283,023 10,490,332 5,207,309 50.36% 3,680,960 141.47% 10/1/2007 6,481,382 10,997,783 4,516,401 58.93% 3,238,894 139.44% 10/1/2008 5,824,447 10,138,981 4,314,534 57.45% 2,977,995 144.88% 10/1/2009 6,048,808 10,456,011 4,407,203 57.85% 2,969,626 148.41% Fire and Police Retirement Fund (2) 10/1/2004 $ 6,771,959 $ 8,546,754 $1,774,795 79.23% $ 2,627,239 67.55% 10/1/2005 7,600,134 8,692,747 1,092,613 87.43% 2,405,634 45.42% 10/1/2006 8,312,363 10,294,848 1,982,485 80.74% 2,798,919 70.83% 10/1/2007 9,228,537 10,836,562 1,608,025 85.16% 3,110,081 51.70% 10/1/2008 10,376,733 11,719,336 1,342,603 88.54% 3,253,109 41.27% 10/1/2009 10,650,648 12,656,293 2,005,645 84.15% 3,725,519 53.84% General Employees Retirement Fund (1) The General Employees Retirement Fund uses the frozen entry age actuarial cost method. Fire and Police Retirement Fund (2) The Fire and Police Retirement Fund uses the aggregate actuarial cost method to determine contributions to the Plan. This method does not identify or separately amortize unfunded actuarial liabilities. The schedule of funding progress presented above was prepared using the entry age actuarial cost method to provide information that serves as a surrogate for the funding progress of the Plan. 66 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Required Supplemental Information September 30, 2010 Schedule of Employer and State Contributions Fiscal Year Annual Ended Required Actual State Percentage September 30 Contribution Contribution Contribution Contributed General Employees Retirement Fund 2005 $ 662,237 $ 662,237 N/A 100.0% 2006 1,007,695 1,007,695 N/A 100.0% 2007 866,069 873,872 N/A 100.9% 2008 875,126 876,712 N/A 100.2% 2009 761,943 765,381 N/A 100.5% 2010 739,767 741,392 N/A 100.2% Fire and Police Retirement Fund 2005 $ 509,800 $ 471,864 $ 138,200 119.7% 2006 690,186 551,986 138,200 100.0% 2007 539,651 401,451 138,200 100.0% 2008 715,784 580,463 138,200 100.4% 2009 728,729 596,626 138,200 100.8% 2010 884,415 653,719 230,696 100.0% 67 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Trend Data September 30, 2010 Contribution rates as of 9/30/10: Village Plan Members Actuarially Determined Contribution Contributions Made Valuation date Actuarial Cost Method Amortized Method Remaining Amortization Period Asset Valuation Method Administrative Costs General Employees Retirement Fund 23.72% 6.00% (1) $73 9,767 $741,392 10/1/2008 Frozen Entry Age Level percent closed 30 years Difference between actual and expected return recognized over five years. Expenses paid out of the fund other than investment related expenses are assumed to be equal to the average of actual expenses over the previous two years. Police and Fire Retirement Fund 25.73% 2.00% $884,415 $884,415 10/1/2008 Aggregate N/A (2) N/A (2) Five year smooth market Expenses paid out of the fund other than investment related expenses are assumed to be equal to the average of actual expenses over the previous two years. Actuarial Assumption Investment rate of return * 8% up to retirement 8% 5.25% thereafter. Projected salary increase * 5.5% 6% *Includes inflation at 4% 4% Cost of living adjustments 3% for those retired 3% before 2/1/82 or who contribute an extra 2%. (1) Except for certain members who have elected not to contribute and for other members who have elected to contribute only 2% or 4%. (2) The aggregate actuarial cost method do es not identify or separately amortize unfunded actuarial liabilities. 68 GENERAL FUND THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Revenues, Expenditures, and Changes in Fund Balance -Budget and Actual General Fund For the Year Ended September 30, 2010 Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment Miscellaneous Total revenues Expenditures Current General government Public safety Public works Community development and planning Leisure services -recreation Other government Capital outlay Debt service Principal payments Interest paid on debt Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Transfer out Total other financing sources (uses) Net change in fund balances Fund Balances Beginning of year End of year Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 14,449,648 $ 14,449,648 $ 14,784,906 $ 335,258 611,400 771,400 910,997 139,597 1,100,008 1,100,008 1,269,509 169,501 1,664,832 1,664,832 1,944,245 279,413 135,200 135,200 142,048 6,848 85,050 85,050 280,218 195,168 10,800 10,800 278,062 267,262 18,056,938 18,216,938 19,609,985 1,393,047 2,392,107 2,547,454 2,453,180 94,274 6,872,858 6,841,001 6,766,641 74,360 4,179,336 4,047,908 3,887,034 160,874 801,416 901,416 774,121 127,295 2,324,153 2,401,352 2,361,388 39,964 225,713 125,713 43,162 82,551 572,712 499,961 475,007 24,954 684,259 2,252,259 2,250,000 2,259 4,384 4,384 4,384 18,056,938 19,621,448 19,014,917 606,531 (1,404,510) 595,068 1,999,578 (163,490) (163,490) (163,490) (163,490) $ $ (1,568,000) 431,578 $ 1,999,578 10,621,331 $ 11,052,909 69 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Notes to the Budgetary Required Supplementary Information (RSIJ General Fund September 30, 2010 Note 1 -Basis of Accounting Generally accepted accounting principles (GAAP) serve as the budgetary basis of accounting. 70 OTHER SUPPLEMENTARY INFORMATION GENERAL FUND THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Departmental Expenditures -Budget and Actual General Fund For the Year Ended September 30, 2010 Village Council Personal services Operating expenses Total Village Council Village Manager Personal services Operating expenses Total Village Manager Village Finance Personal services Operating expenses Total Village Finance Village Attorney Operating expenses Village Clerk Personal services Operating expenses Total Village Clerk Information Technology Personal services Operating expenses Total Information Technology Human Resources Personal services Operating expenses Total Human Resources Police Personal services Operating expenses Total Police Fire Rescue Personal services Operating expenses Total Fire Rescue Public Works /Streets and Grounds Personal services Operating expenses Total Public Works Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative) Variance $ 50,555 $ 50,555 $ 50,470 $ 85 0.17 75,550 75,550 69,654 5,896 7.80 126,105 126,105 120,124 5,981 4.74 280,983 281,395 281,393 2 0.00 13,724 13,312 8,631 4,681 35.16 294,707 294,707 290,024 4,683 1.59 465,054 465,054 458,300 6,754 1.45 56,398 56,398 37,466 18,932 33.57 521,452 521,452 495,766 25,686 4.93 170, 000 16 8, 081 15 3, 3 5 6 14, 725 8.76 244,123 247,607 247,606 1 0.00 30,143 26,659 26,024 635 2.38 274,266 274,266 273,630 636 0.23 256,227 256,227 254,450 1,777 0.69 38,100 38,100 25,855 12,245 32.14 294,327 294,327 280,305 14,022 4.76 203,235 206,394 206,393 1 0.00 28,029 26,789 26,776 13 0.05 231,264 233,183 233,169 14 0.01 3,920,594 3,920,594 3,919,407 1,187 0.03 242,814 203,618 184,742 18,876 9.27 4,163,408 4,124,212 4,104,149 20,063 0.49 2,398,288 2,404,764 2,409,524 (4,760) -0.20 175,304 165,338 132,039 33,299 20.14 2,573,592 2,570,102 2,541,563 28,539 1.11 316,945 317,871 317,871 0.00 26,312 26,312 25,951 361 1.37 343,257 344,183 343,822 361 0.10 (Continued) 71 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Departmental Expenditures -Budget and Actual General Fund For the Year Ended September 30, 2010 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative) Variance (Continued) Sanitation Personal services $ 1,321,855 $ 1,288,582 $ 1,284,358 $ 4,224 0.33 Operating expenses 191,564 118,451 113,330 5,121 4.32 Total Sanitation 1,513,419 1,407,033 1,397,688 9,345 0.66 Facility Services Personal services 308,368 308,368 300,137 8,231 2.67 Operating expenses 371,965 372,997 294,449 78,548 21.06 Total Facility Services 680,333 681,365 594,586 86,779 12.74 Street Maintenance Personal services 576,084 549,084 539,426 9,658 1.76 Operating expenses 712,621 712,621 661,299 51,322 7.20 Total Street Maintenance 1,288,705 1,261,705 1,200,725 60,980 4.83 Vehicle Maintenance Personal services 185,094 185,094 182,276 2,818 1.52 Operating expenses 168,528 168,528 167,938 590 0.35 Total Vehicle Maintenance 353,622 353,622 350,214 3,408 0.96 Planning and Engineering Personal services 200,564 200,631 200,630 1 0.00 Operating expenses 16,905 117,168 17,168 100,000 85.35 Total Planning and Engineering 217,469 317,799 217,798 100,001 31.47 Building Personal services 450,742 450,742 449,150 1,592 0.35 Operating expenses 15,680 15,680 10,939 4,741 30.24 Total Building 466,422 466,422 460,089 6,333 1.36 Code Enforcement Personal services 111,283 111,283 91,688 19,595 17.61 Operating expenses 6,242 5,912 4,545 1,367 23.12 Total Code Enforcement 117,525 117,195 96,233 20,962 17.89 Leisure Services-Recreation Personal services 577,980 582,066 582,066 0.00 Operating expenses 345,182 316,182 315,832 350 0.11 Total Leisure Services-Recreation 923,162 898,248 897,898 350 0.04 Library Personal services 556,206 533,558 494,971 38,587 7.23 Operating expenses 158,657 181,305 181,304 1 0.00 Total Library 714,863 714,863 676,275 38,588 5.40 (Continued) 72 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Departmental Expenditures -Budget and Actual General Fund For the Year Ended September 30, 2010 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative) Variance (Continued) Tennis Personal services $ 81,283 $ 89,278 $ 89,278 $ 0.00 Operating expenses 227,921 313,690 313,690 0.00 Total Tennis 309,204 402,968 402,968 0.00 Pool Personal services 147,985 108,985 107,962 1,023 0.94 Operating expenses 141,939 198,620 198,619 1 0.00 Total Pool 289,924 307,605 306,581 1,024 0.33 Special Events Operating expenses 87,000 77,668 77,666 2 0.00 Total Special Events 87,000 77,668 77,666 2 0.00 Debt Service 688,643 2,256,643 2,254,384 2,259 0.10 Other Operating expenses 225,713 125,713 43,162 82,551 65.67 225,713 125,713 43,162 82,551 65.67 Non-Departmental Operating expenses 615,844 782,020 727,735 54,285 6.94 615,844 782,020 727,735 54,285 6.94 Capital Outlay Information Technology 5,800 5,800 5,104 696 12.00 Police 54,000 54,196 54,196 0.00 Facility Services 5,000 27,444 25,555 1,889 6.88 Street Maintenance 403,000 346,000 345,116 884 0.26 Leisure Services-Recreation 40,000 35,914 35,375 539 1.50 Library 29,912 29,912 9,661 20,251 67.70 Non-Departmental 35,000 695 695 100.00 Total Capital Outlay 572,712 499,961 475,007 24,954 4.99 Total expenditures $ 18,056,938 $ 19,621,448 $ 19,014,917 $ 606,531 3.09% 73 COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS Capital Projects Fund Special Revenue Funds Public Safety Fund Northlake Boulevard Fund Recreation Fund On Behalf Pension Contributions THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Balance Sheet Nonmajor Governmental Funds September 30, 2010 Special Revenue Funds Public Northlake On-Behalf Capital Total Nonmajor Safety Boulevard Pension Projects Governmental Fund Fund Recreation Contributions Fund Funds Assets Cash and cash equivalents $ $ 1,986 $ 88,174 $ $ 809,596 $ 899,756 Due from other funds 44,028 44,028 Due from other governments 34,665 50,357 85,022 Total assets $ 34,665 $ 1,986 $ 88,174 $ 50,357 $ 853,624 $ 1,028,806 Liabilities Accounts payable $ 1,610 $ $ $ 50,357 $ 8,882 $ 60,849 Due to other funds 31,808 44,028 75,836 Total liabilities 33,418 44,028 50,357 8,882 136,685 Fund balances Unreserved Undesignated 1,247 1,986 44,146 844,742 892,121 Total fund balances 1,247 1,986 44,146 844,742 892,121 Total liabilities and fund balances $ 34,665 $ 1,986 $ 88,174 $ 50,357 $ 853,624 $ 1,028,806 74 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2010 Revenue Funds Public Northlake On-Behalf Capital Total Nonmajor Safety Boulevard Pension Projects Governmental Fund Fund Recreation Contributions Fund Funds Revenues Intergovernmental $ 44,345 $ $ 199,944 $ 254,590 $ $ 498,879 Total revenues 44,345 199,944 254,590 498,879 Expenditures Current Public safety 254,590 254,590 Capital outlay 46,680 859 141,036 188,575 Total expenditures 46,680 859 254,590 141,036 443,165 Excess (deficiency) of revenues over (under) expenditures (2,335) 199,085 (141,036) 55,714 Other financing sources (uses) Transfers in 3,490 160,000 163,490 Total other financing sources (uses) 3,490 160,000 163,490 Net changes in fund balances 1,155 199,085 18,964 219,204 Fund balances -Beginning of year 92 1,986 (154,939) 825,778 672,917 Fund balances -End of year $ 1,247 $ 1,986 $ 44,146 $ $ 844,742 $ 892,121 75 FIDUCIARY FUNDS Pension Trust Funds Volunteer Fire Pension Trust Fund General Employees Pension Trust Fund Fire and Police Officers Pension Trust Fund THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Net Assets -Fiduciary Funds September 30, 2010 ASSETS Cash and cash equivalents Investments: Common equity securities U.S. Government agencies Municipal bonds Corporate bonds U. S. Treasury bonds Equity mutual funds Common trust funds Fixed annuity funds Accrued interest and dividends Accounts Receivable Prepaids Total assets LIABILITIES Accounts payable Total liabilities Net Assets Held in trust for pension benefits and other purposes Volunteer General Fire Employees Pension Pension Fire and Total Police Employee Officers Retirement Pension Funds $ $ 220,943 $ 1,196,769 $ 1,417,712 5,523,686 5,523,686 302,971 1,186,910 1,489,881 176,972 176,972 2,160,779 2,160,779 296,050 296,050 24,624 24,624 5,707,329 5,707,329 106,226 106,226 22 45,029 45,051 35,541 63,930 99,471 1,626 1,626 106,226 6,266,806 10,676,375 17,049,407 10,679 24,891 35,570 - 10,679 24,891 35,570 $ 106,226 $ 6,256,127 $ 10,651,484 $ 17,013,837 (1) A schedule of funding progress for the General Employees and Fire and Police Officers plans is presented on page 66. 76 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Changes in Fiduciary Net Assets Employee Retirement Funds For the Year Ended September 30, 2010 Additions Contributions Employer Plan members State on-behalf payments Total contributions Investment earnings Dividends and interest Net increase (decrease) in fair value of investments Investment expense Total investment earnings Total additions Deductions Administration Benefits Refund of contributions Total deductions Change in net assets Net assets -beginning Net assets -ending Fire and Total Volunteer General Police Employee Fire Employees Officers n,._.,._.._. n,._.,._.._. n,._.,._.._. Retirement r,~___.a,. $ 4,173 $ 759,529 $ 653,719 $ 1,417,421 163,213 75,461 238,674 254,590 254,590 4,173 922,742 983,770 1,910,685 4,076 12,159 286,521 302,756 16,179 514,881 471,627 1,002,687 (42,037) (49,714) (91,751) 20,255 485,003 708,434 1,213,692 24,428 1,407,745 1,692,204 3,124,377 2,866 15,448 94,516 112,830 463,970 930,447 1,394,417 5,719 5,719 2,866 479,418 1,030,682 1,512,966 21,562 928,327 661,522 1,611,411 84,664 5,327,800 9,989,962 15,402,426 $ 106,226 $ 6,256,127 $ 10,651,484 $ 17,013,837 ~~ AGENCY FUNDS Manatee Protection Agency Northlake Boulevard Task Force THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Statement of Agency Net Assets September 30, 2010 Agency Funds Manatee Northlake Total Protection Boulevard Agency Agency Task Force Funds Assets Cash and cash equivalents $ 282,750 $ 61,604 $ 344,354 Liabilities Due to others $ 282,750 $ 61,604 $ 344,354 78 THE VILLAGE OF NORTH PALM BEACH, FLORIDA Combining Schedule of Changes in Agency Net Assets and Liabilities For the Year Ended September 30, 2010 Manatee Protection Agency Assets Cash and cash equivalents Liabilities Due to others Northlake Boulevard Task Force Assets Cash and cash equivalents Liabilities Due to others Total All Agency Funds Assets Cash and cash equivalents Liabilities Due to others October 1, 2009 Additions Deductions September 30, 2010 278,574 $ 4,176 $ $ 282,750 $ 278,574 $ 4,176 $ $ 282,750 $ 60,695 $ 909 $ $ 61,604 $ 60,695 $ 909 $ $ 61,604 $ 339,269 $ 5,085 $ $ 344,354 $ 339,269 $ 5,085 $ $ 344,354 ~9 PROPRIETARY FUND (ENTERPRISE FUND) Country Club Fund THE VILLAGE OF NORTH PALM BEACH, FLORIDA Schedule of Revenues and Departmental Expenses -Budget and Actual Country Club Fund -Budgetary Basis For the Year Ended September 30, 2010 Variance with Final Budget Original Final Positive Percent Budget Budget Actual (Negative) Variance Revenue Greens fee/cart rentals/membership fees $ 2,801,289 $ 2,801,289 $ 2,520,364 $ (280,925) -10.03 Golf shop revenues 196,050 196,050 225,699 29,649 15.12 Driving range revenues 230,279 230,279 174,929 (55,350) -24.04 Restaurant revenues 134,334 134,334 244,359 110,025 81.90 Interest revenues 3,500 3,500 14,686 11,186 319.60 Sale of surplus property 124,000 124,000 Miscellaneous 37,325 37,325 62,229 24,904 66.72 Total revenues 3,402,777 3,402,777 3,366,266 (36,511) -1.07 Golf Maintenance Operating expenses 1,301,323 1,251,323 1,250,612 711 0.06 Capital outlay 100.00 Total Golf Maintenance 1,301,323 1,251,323 1,250,612 711 0.06 Golf Pro Shop and Range Personal services 338,151 362,951 367,253 (4,302) -1.19 Operating expenses 330,423 296,923 240,199 56,724 19.10 Capital outlay 5,000 Total Golf Pro Shop and Range 673,574 659,874 607,452 52,422 7.94 Food and Beverage Personal services 154,010 153,971 39 0.03 Operating expenses 73,840 298,678 298,545 Capital outlay 27,058 27,058 0.00 Total Food and Beverage 73,840 479,746 479,574 39 0.01 Administration Personal services 227,084 190,084 194,413 (4,329) -2.28 Operating expenses 73,847 51,847 51,525 322 0.62 Capital outlay Total Administration 300,931 241,931 245,938 (4,007) -1.66 Clubhouse and Grounds Operating expenses 126,313 104,313 103,377 936 0.90 Capital outlay 32,500 10,500 9,915 585 5.57 Total Clubhouse and Grounds 158,813 114,813 113,292 1,521 1.32 Insurance and General Liability Operating expenses 75,000 57,000 56,923 0.00 Reserves Operating 5,000 11,700 11,652 48 0.41 Contingency 235,395 7,489 7,489 100.00 Total Reserves 240,395 19,189 11,652 7,537 39.28 Debt service Debt service 578,901 578,901 631,775 (52,874) (9.13) Total expenses on the budgetary basis 3,402,777 3,402,777 3,397,218 5,349 0.16 Revenues over (under) expenses $ $ $ (30,952) $ (31,162) Adjustments to reconcile to the GAAP Basis Total expenses on the budgetary basis 3,397,218 Less capital outlay costs capitalized (36,973) Less debt service (631,775) Add depreciation expense 476,583 Total operating expenses $ 3,205,053 g0 STATISTICAL SECTION STATISTICAL SECTION This part of the Village of North Palm Beach's comprehensive annual financial report presents detailed unaudited information as a context for understanding what the information in the financial statement, note disclosures, and required supplementary information says about the Village's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the Village's financial performance and well-being have changed over time. These schedules include: Net Assets by Component 81 Changes in Net Assets 82 Fund Balances, Governmental Funds 84 Changes in Fund Balances, Governmental Fund 85 Revenue Capacity These schedules contain information to help the reader assess the Village's most significant local revenue source, the property tax. Net Assessed Value and Estimated Actual Value of Taxable Property 87 Property Tax Rates -Direct and Overlapping Governments 88 Principal Property Taxpayers 89 Property Tax Levies and Collections 90 Debt Capacity These schedules present information to help the reader assess the affordability of the Village's current levels of outstanding debt and the Village's ability to issue additional debt in the future. Ratios of Outstanding Debt by Type 91 Direct and Overlapping Governmental Activities Debt 92 Pledged-Revenue Coverage 93 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Village's financial activities take place. Demographic and Economic Statistics 94 Principal Employers 95 Operating Information These schedules contain service and infrastructure data to help understand how the informatior, in the Village's financial report relates to the services the Village provides and the activities it performs. Full-Time Equivalent Village Government Employees by Function 96 Operating Indicators by Function/Program 97 Capital Asset Statistics by Function/Program 98 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. VILLAGE OF NORTH PALM BEACH NET ASSETS BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASISOFACCOUNTING) Unaudited Fiscal Year 2003 2004 2005 2006 2007 Governmental Activities: Invested in capital assets, net of related debt $ 3,563,142 $ 3,762,961 $ 3,535,596 $ 8,118,773 $ 10,543,788 Restricted 613,459 470,155 19,828 154,073 113,269 Unrestricted 2,350,342 3,527,865 6,654,989 7,143,452 9,281,170 Total governmental activities net assets 6,526,943 7,760,981 10,210,413 15,416,298 19,938,227 Business-Type Activities: Invested in capital assets, net of related debt 2,165,529 2,131,367 1,919,194 1,999,123 2,195,630 Unrestricted (65,937) (5,195) 270,374 415,865 151,005 Total business-type activities net assets 2,099,592 2,126,172 2,189,568 2,414,988 2,346,635 Primary government Invested in capital assets, net of related debt 5,728,671 5,894,328 5,454,790 10,117,896 12,739,418 Restricted 613,459 470,155 19,828 154,073 113,269 Unrestricted 2,284,405 3,522,670 6,925,363 7,559,317 9,432,175 Total primary government net assets $ 8,626,535 $ 9,887,153 $ 12,399,981 $ 17,831,286 $ 22,284,862 2008 2009 2010 Governmental Activities: Invested in capital assets, net of related debt $ 12,845,093 $ 16,643,241 $ 18,184,508 Restricted 979,182 251,088 390,081 Unrestricted 9,836,912 11,016,626 10,568,594 Total governmental activities net assets 23,661,187 27,910,955 29,143,183 Business-Type Activities: Invested in capital assets, net of related debt 2,492,524 2,364,814 2,295,125 Unrestricted 202,802 434,212 403,261 Total business-type activities net assets 2,695,326 2,799,026 2,698,386 Primary government Invested in capital assets, net of related debt 15,337,617 19,008,055 20,479,633 Restricted 979,182 251,088 390,081 Unrestricted 10,039,714 11,450,838 10,971,855 Total primary government net assets $ 26,356,513 $ 30,709,981 $ 31,841,569 Note: Data not available prior to fiscal 2002 implementation of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements and Management's Discussion andAnalysisfor State and Local Governments. 81 VILLAGE OF NORTH PALM BEACH CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (ACCRUALBASISOFACCOUNTING) Unauc&ted Fiscal Year 2003 2004 2005 2006 2007 Expenses Governmental activities: Generalgovemment $ 2,781,333 $ 3,174,460 $ 2,127,009 $ 1,784,528 $ 2,698,187 Public safety 5,195,338 5,294,399 6,038,846 7,036,117 6,671,490 Public works 3,482,975 3,549,178 5,091,305 4,131,500 3,733,815 Communitydevelopmentandplanning - - - 657,112 737,165 Leisure services 1,539,771 1,280,483 1,635,784 2,562,627 2,781,658 Other government - - 842,561 2,049 - Interest on long-term debt 128,507 40,580 151,233 241,995 204,666 Total governmental activities expenses 13,127,924 13,339,100 15,886,738 16,415,928 16,826,981 Business-type activities: Country club 2,676,883 2,567,690 2,607,712 2,124,927 3,570,683 Total business-type activities 2,676,883 2,567,690 2,607,712 2,124,927 3,570,683 Total primary government expenses $ 15,804,807 $ 15,906,790 $ 18,494,450 $ 18,540,855 $ 20,397,664 Program Revenues Governmental activities: Charges for services: Generalgovemment $ 342,936 $ 355,118 $ 285,386 $ 158,160 $ 122,455 Public safety 258,723 273,391 329,081 388,671 345,731 Public works 727,016 895,291 1,326,820 140,923 217,975 Communitydevelopmentandplanning - - - 1,175,252 938,188 Leisure services 174,589 147,773 78,475 528,983 496,679 Other government - - - - - Operating grants and contributions 82,134 89,362 1,392,729 998,573 170,389 Capital grants and contributions 102,560 - - 462,394 1,454,526 Total governmental activities program revenues 1,687,958 1,760,935 3,412,491 3,852,956 3,745,943 Business-type activities: Charges for services: Country club 2,510,258 2,548,259 2,658,468 2,167,089 3,463,524 Operating grants and contributions - - - 68,883 - Capital grants and contributions 10,000 - - - - Total business-type activities program revenues 2,520,258 2,548,259 2,658,468 2,235,972 3,463,524 Total primary govemmentprogram revenues $ 4,208,216 $ 4,309,194 $ 6,070,959 $ 6,088,928 $ 7,209,467 Net (Expense)/Revenue Govemmentalactivities $ (11,439,966) $ (11,578,165) $ (12,474,247) $ ( 12,562,972) $ (13,081,041) Business-type activities (156,625) (19,431) 50,756 111,045 (107,159) Total primarygovemmentnetexpense $ (11,596,591) $ (11,597,596) $ (12,423,491) $ ( 12,451,927) $ (13,188,200) General revenues and other changes in net assets: Governmental activities: Taxes: Propertytaxes $ 6,365,000 $ 8,451,783 $ 10,070,977 $ 10,881,501 $ 12,076,184 Local option gas taxes - - - 307,043 292,332 Utility service taxes 1,755,153 1,830,339 1,955,403 2,001,164 2,001,443 Franchise taxes 890,285 861,708 890,297 1,150,974 1,207,552 Sales and use taxes 1,148,210 1,230,803 1,277,124 1,415,917 1,339,893 Unrestricted grants and contributions 276,302 291,710 421,254 - - Investment earnings 75,023 53,600 196,699 477,420 650,022 Miscellaneous 54,875 92,260 111,927 53,264 8,836 Contributions for Support Our Troops - - - - 15,502 Transfers - - - 36,445 5,111 Total governmental activities 10,564,848 12,812,203 14,923,681 16,323,728 17,596,875 Business-type activities: Investment income 4,586 3,450 12,640 112,841 43,917 Miscellaneous 99,553 42,560 - - - Transfers - - - (36,445) (5,111) Total business-type activities 104,139 46,010 12,640 76,396 38,806 Total primary government $ 10,668,987 $ 12,858,213 $ 14,936,321 $ 16,400,124 $ 17,635,681 Change in net assets Govemmentalactivities $ (875,118) $ 1,234,038 $ 2,449,434 $ 3,760,756 $ 4,515,834 Business-type activities (52,486) 26,579 63,396 187,441 (68,353) Total primary government $ (927,604) $ 1,260,617 $ 2,512,830 $ 3,948,197 $ 4,447,481 Note: Data not available prior to fiscal 2002 implementation of Governmental Accounting Standards Board StatementNo. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. g2 2008 2009 2010 $ 1,839,228 $ 2,239,511 $ 2,679,192 7,154,578 7,095,043 7,304,233 3,996,711 4,083,441 4,594,738 860,448 826,149 806,536 3,244,045 3,174,623 2,830,292 120,549 26,702 4,384 17,215,559 17,445,469 18,219,375 3,268,562 3,308,535 3,398,206 3,268,562 3,308,535 3,398,206 $ 20,484,121 $ 20,754,004 $ 21,617,581 $ 123,334 $ 122,569 $ 126,968 383,325 378,591 465,263 288,994 394,082 411,722 888,015 699,130 734,718 595,558 912,862 1,063,748 88,224 105,080 96,670 1,602,465 2,017,158 75,845 3,969,915 4,629,472 2,974,934 3,616,509 3,404,859 3,227,580 13,609 - - 3,630,118 3,404,859 3,227,580 $ 7,600,033 $ 8,034,331 $ 6,202,514 $ (13,245,644) $ (12,815,997) $ (15,244,441) 361,556 96,324 (170,626) $ (12,884,088) $ (12,719,673) $ (15,415,067) $ 11,915,355 $ 11,917,359 $ 11,053,128 278,649 267,557 266,077 2,018,071 2,239,002 2,261,375 1,212,562 1,256,831 1,204,328 1,227,341 1,116,107 1,114,945 194,652 (1,346) 280,217 55,719 263,459 213,425 16,959 6,796 49,296 16,968,604 17,065,765 16,393,495 36,431 7,376 14,686 - - 55,300 (49,296) (12,865) 7,376 69,986 $ 16,955,739 $ 17,073,141 $ 16,463,481 $ 3,722,960 $ 4,249,768 $ 1,149,054 348,691 103,700 (100,640) $ 4,071,651 $ 4,353,468 $ 1,048,414 83 VILLAGE OF NORTH PALM BEACH FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OFACCOUNTING) Unaudited General Fund Reserved Unreserved Total general fund All other Governmental Funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Total all other governmental funds General Fund Reserved Unreserved Total general fund All other Governmental Funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Total all other governmental funds 2003 2004 2005 2006 2007 $ 354,396 $ 218,882 $ 197,163 $ 308,836 $ 945,891 1,654,593 2,883,855 5,771,684 7,022,606 8,179,659 $ 2,008,989 $ 3,102,737 $ 5,968,847 $ 7,331,442 $ 9,125,550 $ 613,459 $ 470,155 $ 19,828 $ - $ - - - - 400,000 224,937 - - - 397,233 673,232 $ 613,459 $ 470,155 $ 19,828 $ 797,233 $ 898,169 2008 2009 2010 $ 775,339 $ 563,115 $ 509,810 8,265,513 10,058,216 10,543,099 $ 9,040,852 $ 10,621,331 $ 11,052,909 $ 239,979 $ - $ - 594,399 (152,861) 47,379 713,373 825,778 844,742 $ 1,547,751 $ 672,917 $ 892,121 Note: Data not available prior to fisca12002 implementation of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. 84 VILLAGE OF NORTH PALM BEACH CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASISOFACCOUNTING) Unaudited Revenues: Taxes Licenses and Permits Intergovernmental Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues Fiscal Year 2003 2004 2005 2006 2007 $ 9,292,822 $ 11,439,823 $ 13,236,952 $ 14,340,682 $ 15,577,511 686,548 712,184 1,131,903 1,128,658 880,266 1,280,228 1,350,104 2,804,985 2,914,057 2,750,021 665,496 719,589 647,915 1,003,660 1,082,569 113,391 122,407 234,513 165,496 132,158 75,023 53,600 196,699 477,421 650,022 139,354 175,431 83,205 130,515 194,716 12,252,862 14,573,138 18,336,172 20,160,489 21,267,263 1,360,072 1,532,561 2,061,545 1,648,131 2,304,654 4,758,982 5,019,361 5,713,904 6,494,578 6,609,801 3,285,603 3,280,274 5,019,739 4,708,196 3,558,264 651,331 735,155 1,216,156 1,256,066 1,376,950 1,682,030 2,430,403 1,298,492 1,186,730 817,293 2,049 2,542,819 581,938 - 1,917,377 2,737,805 939,396 955,184 903,225 879,527 789,048 136,676 40,580 151,233 199,373 207,088 15,538,196 13,852,694 16,043, 889 18,182, 592 19,372,218 (3,285,334) 720,444 2,292,283 1,977,897 1,895,045 Expenditures: General government Public safety Public works Community development and planning Leisure services -recreation Other government Capital outlay Debt service Principal payments Interest paid on debt Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses) Transfers in Transfers out Capital lease Proceeds from debt issuance Miscellaneous Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noncapital expenditures 1,471,529 593,884 (1,471,529) (593,884) 403,000 230,000 123,500 (56) 402,944 230,000 123,500 - - $ (2,882,390) $ 950,444 $ 2,415,783 $ 1,977,897 $ 1,895,045 9.03% 8.11% 7.03% 7.29% 6.41% 85 2008 2009 2010 $ 15,424,638 $ 15,680,749 $ 14,784,906 1,047,144 880,016 910,997 2,459,211 3,315,908 1,768,388 1,268, 774 1, 684,718 1,944, 245 23 5, 96 5 145, 3 40 142, 048 194,652 (1,345) 280,218 137,447 300,455 278,062 20,767, 831 22,005,841 20,108, 864 2,246,461 1,970,257 2,496,342 7,056,833 6,835,730 7,021,231 3,725,450 3,432,556 3,887,034 840,366 784,486 774,121 2,876,840 2,898,252 2,361,388 2,597,065 3,939,455 663,582 716,206 1,395,735 2,250,000 143,726 43,725 4,384 20,202,947 21,300,196 19,458,082 564,884 705,645 650,782 1,254,952 454,111 163,490 (1,254,952) (454,111) (163,490) $ 564,884 $ 705,645 $ 650,782 4.91% 8.07% 11.99% 86 VILLAGE OF NORTH PALM BEACH NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Unaudited Real Property Fiscal Year Ended Tax Role Residential Commercial Personal Total Net Market Total Direct Sept 30, Year Property Property Property -Assessed Value Tax Rate 2001 2000 745,237,484 122,793,250 40,169,760 908,200,494 5.75 2002 2001 823,286,154 124,216,202 42,791,419 990,293,775 5.60 2003 2002 963,091,506 128,216,552 44,276,499 1,135,584,557 5.80 2004 2003 1,092,433,722 147,927,933 44,914,124 1,285,275,779 6.80 2005 2004 1,180,028,585 208,240,338 49,767,286 1,438,036,209 7.27 2006 2005 1,441,249,707 179,827,665 44,422,817 1,665,500,189 6.80 2007 2006 1,700,678,282 235,776,768 45,084,335 1,981,539,385 6.30 2008 2007 1,744,202,888 229,300,592 43,735,861 2,017,239,341 6.10 2009 2008 1,575,367,916 230,599,951 41,471,282 1,847,439,149 6.70 2010 2009 1,394,954,867 221,443,121 40,552,276 1,656,950,264 6.90 Note: Assessed values are established by the Palm Beach Property Appraiser's office as of January 1, each year. Assessments were increased to 100% of market value as of 1980. Property in the Village is reassessed each year. Property is assessed at actual value, therefore the assessed values are equal to actual value. Tax rates are per $1,000 of assessed value. Source: Palm Beach County Property Appraiser 87 VILLAGE OF NORTH PALM BEACH PROPERTY TAX RATES -DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Unaudited Overlapping Rates (1) Village of Palm Beach Total N. Palm Beach County Palm Special Direct and Fiscal Tax Roll General School Beach Districts Overlapping Year Year Operations District County Rates 2001 2000 5.750 8.92 4.936 2.263 21.869 2002 2001 5.600 8.95 4.935 2.456 21.941 2003 2002 5.800 8.78 4.808 2.488 21.876 2004 2003 6.800 8.57 4.791 2.556 22.717 2005 2004 7.270 8.43 4.768 2.526 22.994 2006 2005 6.800 8.11 4.719 2.504 22.133 2007 2006 6.300 7.87 4.480 2.325 20.975 2008 2007 6.100 7.36 3.981 2.131 19.572 2009 2008 6.698 7.25 3.966 2.257 20.171 2010 2009 6.900 7.98 4.561 2.493 21.934 Note: All millage rates are based on $1 for every $1,000 of assessed value. Source: North Palm Beach: Notice of Ad Valorem Taxes and Non-Ad Valorem Assessments (1) Overlapping rates are those of local and county governments that apply to property owners within the Village of North Palm Beach. Not all overlapping rates apply to all Village of North Palm Beach property owners (i. e. The rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district.) 88 VILLAGE OF NORTH PALM BEACH PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND 2001 Unaudited 2009* Taxpayers Olen Residential Realty Crystal Tree NPB WCI Communities, Inc Sanctuary Bay Trust Corporation Greater Fla Inv Co & CF02 Palm Beach III LP Interevest Crystal Tree Domani Development, LLC North Palm Properties, LTD Village Shoppers at US 1 LLC Old Port Cove Holding, Inc Riverside National Bank of Florida 701 US One, Inc Transcontinental Atrium, Inc. Roschman, M. Elaine TR Pavilion Office Center Old Port Cove Dev. Total Taxable Assessed Value Rank $ 18,000,000 1 17,030,531 2 14,000,300 3 12,911,802 4 11,000,000 5 9,213,927 6 7,896,575 7 7,706,522 8 6,044,474 9 5,839,803 10 Percentage of Total Village Net Taxable Assessed Value 0.97% 0.92% 0.76% 0.70% 0.60% 0.50% 0.43% 0.42% 0.33% 0.32% 5,000,000 11 0.27% $ 114,643,934 6.22% 2001 Taxable Assessed Value $ 16,321,086 11,981,541 11,247,093 5,840,000 10,199,784 9,002,699 4,590,000 4,100,000 3,240,000 3,100,000 3,025,889 $ 82,648,092 *2010 Information not yet available Source: Palm Beach Country Appraiser Note: Assessed values are established by the Palm Beach Property Appraiser's offices as of January 1, each year. Rank 1 2 3 6 4 5 7 8 9 10 11 Percentage of Total Village Net Taxable Assessed Value 1.80% 1.32% 1.24% 0.64% 1.12% 0.99% 0.51% 0.45% 0.36% 0.34% 0.33% 9.10% 89 VILLAGE OF NORTH PALM BEACH PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN CALENDAR YEARS Unaudited Collected within the Fiscal Year Total Collections Fiscal Year Total Taxes of the Levy Collections in to Date Ending Tax Roll Levied for Percent Subsequent Percent Sept 30, Year Fiscal Year Amount of Levy Years Amount of Levy 2001 2000 5,196,021 5,013,269 96.48% 4,687 5,017,956 96.57% 2002 2001 5,562,239 5,357,206 96.31% 12,175 5,369,381 96.53% 2003 2002 6,597,909 6,359,478 96.39% 5,522 6,365,000 96.47% 2004 2003 8,825,061 8,441,383 95.65% 10,401 8,451,784 95.77% 2005 2004 10,463,873 10,059,478 96.14% 9,476 10,068,954 96.23% 2006 2005 11,329,648 10,690,869 94.36% 172,744 10,863,613 95.89% 2007 2006 12,624,307 11,802,457 93.49% 228,352 12,030,809 95.30% 2008 2007 12,360,135 11,546,732 93.42% 333,756 11,880,488 96.12% 2009 2008 12,401,519 11,530,384 92.98% 349,642 11,880,026 95.79% 2010 2009 11,564,281 10,683,829 92.39% 284,004 10,967,833 94.84% Source: Palm Beach Country Property Appraiser 90 VILLAGE OF NORTH PALM BEACH RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Unaudited Business-type Governmental Activities Activities Fiscal Year Percent of Ended Loans Capital Loans Capital Median Personal Per Sept 30, Payable Leases Payable Leases Total Income (1) Ca ita 1 2001 8,067,736 245,059 785,781 9,098,576 N/A 745.91 2002 7,334,853 736,967 651,058 8,722,878 N/A 715.11 2003 6,947,633 587,792 513,472 8,048,897 N/A 659.85 2004 6,376,387 433,855 411,573 7,221,815 N/A 592.05 2005 5,754,677 275,840 454,131 6,484,648 N/A 513.31 2006 4,941,765 209,224 5,185,978 10,336,967 17.20% 786.20 2007 4,280,842 81,100 5,026,895 9,388,837 14.67% 715.61 2008 3,605,639 40,097 4,662,833 192,892 8,501,461 12.92% 692.64 2009 2,250,000 - 4,383,033 97,049 6,730,082 10.14% 583.15 2010 - - 4,090,284 235,176 4,325,460 6.74% 371.64 Note: Details regarding the Village's outstanding debt may be found in the notes to the financial statements. (1) See the Schedule of Demographic and Economic Statistics on page 94 for personal income and population data. N/A Data not available. 91 VILLAGE OF NORTH PALM BEACH DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT SEPTEMBER 30, 2010 Unaudited Debt repaid with property taxes: Palm Beach County Palm Beach County School Board Other debt: Palm Beach County Palm Beach County School Board Subtotal, overlapping debt Village of North Palm Beach Direct Debt Total direct and overlapping debt Sources: Palm Beach County Tax Appraiser's Office Palm Beach County School Board Palm Beach County Clerk & Comptroller Percentage Amount Net Applicable to Applicable to Debt the Village of the Village of Outstanding North Palm Beach (1) North Palm Beach $ 250,470,000 1.17% $ 2,930,499 1.17% 907,950,000 1.17% 10,623,015 29,555,000 1.17% 345,794 13,899,308 100% - $ 13,899,308 Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Village. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Village of North Palm Beach. This process recognizes that, when considering the Village's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Value that is within the Village's boundaries and dividing it by the County's and School Board's total taxable assessed value. This approach was also used for the other debt. 92 VILLAGE OF NORTH PALM BEACH Pledged -Revenue Coverage Country Club Bonds Last Ten Fiscal Years Unaudited Fiscal Year Gross Operating Revenues (1) Expenses (2) Net Revenue Required Debt Service Coverage (3) (4) 2006 2007 2008 2009 2010 $ 2,348,813 $ 1,910,640 $ 438,173 $ 106,936 4.10 (4) 3,507,441 2,991,621 515,820 392,505 1.31 3,652,940 2,558,591 1,094,349 394,900 2.77 3,412,235 2,587,171 825,064 394,900 2.09 3,242,266 2,728,470 513,796 394,900 1.30 (1) Gross revenue includes interest revenue. (2) Operating expenses excludes depreciation. (3) Coverage should be not less than 1.00. (4) 2006 was the first year the debt was outstanding, and was not a complete year. 93 VILLAGE OF NORTH PALM BEACH DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Unaudited Calendar Year 2001 2002 2003 2004 2005 2006 (estimate) 2007 (estimate) 2008 (estimate) 2009 (estimate) 2010 (estimate) Sources: Note Per Palm Beach Median Capita County Personal Personal Unemployment Population (1) Income (1) Income (1) Rate (2) 12,198 - - 5.0 12,198 - - 6.0 12,198 - - 5.6 12,198 - - 5.0 12,633 - - 4.0 13,148 60,101 46,726 3.3 13,120 63,984 42,224 4.1 12,274 65,815 45,563 6.3 11,541 66,401 49,350 10.8 11,639 64,156 49,130 12.0 Business Development Board US Census Bureau (1) All information available at the current time is presented. (2) North Palm Beach is not large enough to track unemployment rates. Palm Beach County rates are presented. 94 VILLAGE OF NORTH PALM BEACH PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO Unaudited 2010*** 2001 Percentage Percentage of Total of Total Employer Employees Employment Employees Employment Palm Beach Country School Board 21,718 3.51% Palm Beach Country School Board 18,000 3.19% Palm Beach County Governrnent 11,381 1.84% Palm Beach County 9,000 1.59% State Governrnent 9,300 1.50% State Governrnent 8,600 1.52% Federal Government 6,300 1.02% Federal Government 5,200 0.92% Tenet Healthcare Corp (2) 5,127 0.83% HCA (Hospital Corp. of America) (1) 4,000 0.71% HCA (Hospital Corp. of America) (1) 4,150 0.67% Intracoastal Health Systems, Inc (2) 3,200 0.57% Florida Power & Light 3,658 0.59% Applied Cards (Financial -Credit Cards) 2,500 0.44% Wackenhut Corporation 3,000 0.48% Florida Power & Light Company (Utilities) 2,300 0.41% Florida Atlantic University 2,776 0.45% Florida Crystals 2,300 0.41% Bethesda Memorial Hospital 2,300 0.37% Boca Raton Resort & Club (Hotel) 1,850 0.33% Total 69,710 11.26% Total 56,950 10.09% Source: Business Development Board of Palm Beach County Employer: Palm Beach County Information is not available for the Village of North Palm Beach. ** Percentage of total employment is calculated using Palm Beach County's available labor force in each of the respective years presented. *** Data as of March 2010 Notes: (1) Formerly Columbia Palm Beach Health Care Systems, Inc (2) Intracoastal Health Systems, Inc -now part of Tenet Healthcare Corp 95 VILLAGE OF NORTH PALM BEACH Full-Tim e Equi valent Village Governm ent Employees by F unction LAST TEN FISCAL YEARS (*) Unaudited 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Number of Employees: General Government Village Manager -Full-Time 1 1 1 1 1 1 1 1 1 1 Assistant Village Manager -Full-Time 1 1 1 1 1 0 0 0 0 0 Systems Specialist Full-Time 1 1 1 1 1 2 2 2 2 2 Part-Time 0 0 0 0 0 0 0 0 1 1 Executive Secretary -Full-Time 1 1 1 1 1 1 1 1 1 1 Human Resources 2 2 2 2 2 Village Clerk -Full-Time 0 0 0 0 3 3 3 3 3 3 Finance Full-time 4 5 5 5 5 5 5 5 5 5 Part-Time 1 0 0 0 0 0 0 1 1 1 Public Works Full-time 61 61 61 61 62 54 47 48 38 37 Part-Time 4 4 8 8 6 3 0 0 0 0 Public Safety Full-time 63 63 66 66 61 66 68 68 67 67 Part-Time 12 12 14 14 15 14 13 12 11 12 Community Development and Planning Full-time 0 0 0 0 0 0 9 10 9 9 Part-Time 0 0 0 0 0 0 1 1 2 2 Leisure Services Library Full-time 9 9 9 9 8 7 7 7 6 6 Part-Time 8 8 7 7 7 8 8 8 10 10 Recreation Full-time 5 5 6 6 5 15 15 17 9 7 Part-Time 14 14 14 14 15 31 39 42 42 42 Other Government -Country Club Full-time 22 24 25 25 24 18 19 18 5 5 Part-Time 34 36 27 27 27 24 25 22 21 21 Total Number of Employees Budgeted FY Ending 241 245 246 246 242 254 265 268 236 234 * Variance exists due to the employment of seasonal and part-tim e employees . Source: Village of North Palm Beach Budget Report 96 VILLAGE OF NORTH PALM BEACH OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (1) Unaudited 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 FUNCTION/PROGRAM GENERAL GOVERNMENT Number of Parcels - - - - - - 7,411 7,422 7,472 7,466 PUBLIC WORKS Street Maintenance (No. of lane miles maintained) 31.155 31.155 31.155 31.155 31.155 31.155 31 31 31 31 Sanitation (Tons of Refuse Collected) 11,633 12,996 13,136 18,842 14,037 13,203 12,085 11,974 10,667 10,165 No. of collection units for solid waste (residential) 7,241 7,328 7,434 7,470 7,519 7,558 7,152 7,163 7,214 7,070 Number of vehicles maintained 93 95 95 95 95 95 104 104 110 110 Number of repair overlays completed (miles) 0.662 2.840 3.787 5.587 2.462 2.935 2 3 2.5 2.71 PUBLIC SAFETY Number of arrests by police officers 381 246 320 315 331 410 545 549 448 402 Number of traffic citations issued 6,502 3,936 2,564 3,110 5,743 4,272 4,269 5,520 6,305 4,951 EMS average response times (minutes) 5.43 3.33 2.94 4.42 3.98 4.69 4.73 5.17 5.01 5.12 NumberofEMScalls 812 853 922 1,066 965 1,056 1,034 1,114 1,214 1,146 COMMUNITY DEVELOPMENT & PLANNING Building Department -Number of Permits 278 205 224 201 201 (2) 1,875 1,619 1,548 1,744 Number of code enforcement violations - - - - - 1,767 1,617 729 613 391 Number of code violations brought to board (Calendar Yr End) - 101 120 145 165 144 126 115 73 38 RECREATION Number of community events presented 13 13 14 15 22 21 24 23 28 28 Number of registrants in athletic programs 2,185 2,185 1,750 1,575 1,400 1,520 1,600 1,400 1,125 1,005 LIBRARY Library -Number of Volumes 45,700 47,339 47,960 47,531 54,074 47,371 42,372 33,122 35,681 39,277 OTHER GOVERNMENT Country Club Number of Golf Members - - - - - 365 579 389 297 241 Number of Tennis Members - - - - - 136 171 171 180 174 (1) Available information for fiscal years 2001 through 20 10 is presented. (2) An accurate number of building permits issued for 200 6 is not availabl e -compu ter systems crash. Source: Village of North Palm Beach U.S. Census Bureau 97 VILLAGE OF NORTH PALM BEACH CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Unaudited 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Function/Program: General Government No. of General Government Buildings 11 11 11 11 11 11 11 11 23 23 Public Works Square Miles 5.18 5.18 5.18 5.18 5.18 5.18 5.18 5.18 5.18 5.18 Miles of Streets 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 Number of Street Lights 425 425 425 425 425 425 425 513 513 513 Public Safety Fire: Number of Stations 1 1 1 1 1 1 1 1 1 1 Number of Fireman & Officers 5 8 8 8 8 0 0 0 0 0 Number of Fireman/Paramedics 0 0 0 0 0 23 23 23 23 23 Police/EMS Protection: Number of Stations 2 2 1 1 1 1 1 1 1 1 Number of Policemen & Officers 56 33 35 35 35 33 32 32 31 31 EMS Protection 12 13 13 13 13 0 0 0 0 0 Leisure Services Recreation Number of Parks 4 4 4 4 4 4 4 4 4 4 Public Tennis Courts 4 4 4 4 4 2 2 2 2 2 Swimming Pool 1 1 1 1 1 1 1 1 1 1 Number of Marinas 1 1 1 1 1 1 1 1 1 1 Library Number of Libraries 1 1 1 1 1 1 1 1 1 1 Number of Volumes 45,700 47,339 47,960 47,531 54,074 47,371 42,372 33,122 35,681 39,277 Other Government Country Club Golf Course 1 1 1 1 1 1 1 1 1 1 Driving Range 1 1 1 1 1 1 1 1 1 1 Tennis Courts 10 10 10 10 10 10 10 10 10 10 Restaurant/Sanck Bar - - - - - - - - - 1 Source: Village of North Palm Beach 98 OTHER REPORTS NH &M C +~„~'~ Cl°I!?,~] €'t7FSt-~~C=.fide-~U[a N ] A~1']:'~ Wf~I P1433.1 ~.i,L93 L1CE 215 P]PFES S'1R4sT, SL~.'lE 2134 w$4T rtr<r hi na+~cl[, Ei,O(~][}fi ~.~+}~ 4417 'I'F. YYH[]4E' (16'.r d~}~'JLlfjr} REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT A UDITING STANDARDS The Honorable Mayor and Members of the Village Council North Palm Beach, Florida EYIERF'CT R h~Y.l FN ;1 G90.' GHlI, CPJ4 i rwtiu~ i ii4i i, Citis af]RFRT 4V. HF'd RC.K .R., CRl4 ,~,wi - n i7+t~~ ip vii i~ Cpu IUfTHLE=N..~ ilh.R, CR5 Tr,.tim i h1C5R1f}N,.R , Gra, h': H{71NLU llLVYL"1, C;IhS ~L 4l`G!-AE_ 5-•= ifE\S, CR4 :LL F7CAC VARCA, CI44 ~1f11 J EIHLSC: U C:! ~, C:IhS 14+AJ4 7 'Ef=RSCH, CR5 bCi4k44fif] T Hlfll -, .fl . CA4 RFI I F ~I AlSF QFFI~F ;3:i3 $ F ~n~ $TRFFT P46TpFF~F R'OK 37Q ~d<F ~L~rxF, Fl QRI[Sd 73t3~ ~3.~9 TELEF'HCNF {~ 1 J B6&561 ~ F'hk {5+~ 1 J 886-92~ We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida, as of and for the year ended September 30, 2010, which collectively comprise the Village of North Palm Beach, Florida's basic financial statements and have issued our report thereon dated March 11, 2011. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Village of North Palm Beach, Florida's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village of North Palm Beach, Florida's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Village of North Palm Beach, Florida's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. AMERIG,4N INSTTUTE ^F C.RTIFIED PUBLIC fiCGQUNTANTS • FLORIDA INSTITUTE OF CERTIFIED ~UBLIG,4CCQL1hTANT5 • CPAMERICA INTERNATI^NAL Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Village of North Palm Beach, Florida's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to the management of the Village of North Palm Beach, Florida in the attached Management Letter dated March 11, 2011. This report is intended solely for the information and use of management, the audit committee, Village Council, and federal and state awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. March 11, 2011 West Palm Beach, Florida 100 1~ H [ ~ ~t'1'[i•IE?d FL1A[_t~ A~[ ~['[,1[: N']'A V'] .'~ FVFhIFT! R hRti7 FN tto~o-• ~al+I, ~w i~uw.tifii~i iiOci, Ciy YFl__hM U..41h~R, tw ~fXs=RT W. HF4~R6~.R., Cw W.i.1N DII,i,C93 a€1~K'E ~r-tii - n iu~~i0~ viii, Div 215I7PF46 STR_.GT.5i',17Ts.2t#} F{]SC ~f~:C2iII47t?#7 T PALhS IIEI+~Q[, ElydRldl! 3.'+~F~ 'I' F~ ]'YH[]YE'_ {76'.i 6}'s~ JLIF1]' lft,T!{L~~{{ j~ NTY. R, .cw Fnx ~tia:; a~ey~?A TFS~y[, rriR'[1N..~+. C~+ ~713i'l4.\FC!d[:l:IJC'[ !s FIJCALU ULYNL'1, CW a. tiers-Arx s-~„s, Cw !1 FICA {: VAfiCA, C!4 U~ hN J [IHLSS: U4 S:! w, [:w 14+AJ4 7 'EC=R6C H, Cw MANAGEMENT LETTER er,KVSr~n~ i-[ni-.,n. C[v The Honorable Mayor and Members of the Village Council Rc3.i7 S FI ~+d & Fri PQ~T QFF`~F R{jK ;~[ Village of North Palm Beach, Florida BFI1 F ~L}J}F, Fl 2]RIdA aa~a~3a[ TfL.EPHCN~ ~y91J 96&S61i Fk7[ {591 J 88&-924E We have audited the financial statements of the Village of North Palm Beach, Florida, as of and for the year ended September 30, 2010, and have issued our report thereon dated March 11, 2011. We conducted our audit in accordance with U.S. generally accepted auditing standards, and the standards applicable to financial audits contained in Government Auditing Standar~•ds issued by the Comptroller General of the United States. We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 11, 2011, should be considered in assessing the results of our audit. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditor's report. PRIOR YEAR COMMENTS The Rules of the Auditor General require that we address in the management letter whether or not recommendations made in the preceding annual financial audit report have been followed. All prior year recommendations have been implemented. CURRENT YEAR COMMENTS The Rules of the Auditor General require that we address in the management letter any recommendations to improve financial management, accounting procedures, and internal controls. In connection with our audit for the fiscal year ended September 30, 2010, we did not have any such recommendations. AhAE RIC,4N INSTITUTE ~ F C= RTIF IE 6 PUE3LIC ACCOUNTANTS ~ FLC'RI ^A INSTITUTE dF C ERTIFI E d aUBL IC.4C.C6[1 rvTANTS + CPAMER I{yA INTERNATIONAL Investment of Public Funds Rules of the Auditor General, require our audit to include a review of the Village's compliance with Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit for the fiscal year ended September 30, 2010, the results of our procedures did not disclose any instances of noncompliance with Section 218.415, Florida Statutes. Violations of Contracts and Grant Provisions or Abuse Rules of the Auditor General, require that we address violations of provisions of contracts and grant agreements or abuse that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit for the fiscal year ended September 30, 2010, we did not have any such findings. Matters Inconsequential to the Financial Statements Rules of the Auditor General, require based on professional judgment, the reporting of the following matters that have an inconsequential to the financial statements, considering both quantitative and qualitative factors: (1) violations provisions of contracts or grant agreements, fraud, illegal acts, or abuse; and (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit for the fiscal year ended September 30, 2010, we did not have any such findings. Oversight Unit and Component Units The Village of North Palm Beach, Florida, is a municipal corporation incorporated in 1956 pursuant to Chapter 31481, Laws of Florida, Extraordinary Session 1956. Based upon the application of criteria defined in publications cited in Chapter 10.553, Rules of the Auditor General, the Village has determined that there are no component units related to the Village. Consideration ofFinancial Emergency Criteria Rules of the Auditor General require a statement be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, the results of our procedures did not disclose that the Village of North Palm Beach, Florida has met any of the conditions described in Section 218.503(1) during the fiscal year ended September 30, 2010. Annual Financial Report Rules of the Auditor General require that we determine whether the annual financial report for the Village of North Palm Beach, Florida for the fiscal year ended September 30, 2010, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year 102 ended September 30, 2010. In connection with our audit, we noted that the two reports were in substantial agreement. Financial Condition Assessment Procedures Rules of the Auditor General, require that we apply financial condition assessment procedures as of September 30, 2010. In connection with our audit, we applied financial condition assessment procedures. It is management's responsibility to monitor the Village's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provide by management. The results of our procedures did not disclose any matters that are required to be reported. Excess of Expenditures Over Appropriations There were no departments that had expenditures in excess of appropriations. Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of management, the audit committee, Village Council, federal and state awarding agencies and pass-through entities, and the Florida Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. March 11, 2011 West Palm Beach, Florida 103